TMI Tax Updates - e-Newsletter
August 20, 2024

Case Laws in this Newsletter:

GST Income Tax Customs Securities / SEBI Insolvency & Bankruptcy Service Tax Central Excise CST, VAT & Sales Tax Indian Laws

Highlights / Catch Notes

GST

• Dealer must prove actual goods movement, freight payment & delivery to claim ITC.

  Validity of input tax credit (ITC) u/s 16 of the UP GST Act hinges on compliance with specified conditions to avoid double taxation. The burden lies on the dealer to prove fulfillment of conditions for claiming ITC. Merely producing tax invoices, e-way bills, and banking channel payments is insufficient. Proof of actual physical movement of goods, genuineness of transportation, payment of freight charges, acknowledgment of delivery, toll receipts, and filing of GSTR 2A is necessary. The Supreme Court has held that the primary burden is on the dealer to furnish details like selling dealer, vehicle number, freight payment, delivery acknowledgment, tax invoices, and payment particulars to establish actual goods movement. Submitting only invoices, e-way bills, or payment details is inadequate. Consequently, the High Court dismissed the writ petition, upholding the orders denying ITC for non-compliance with statutory conditions.
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• Unfair assessment order quashed, authority directed to grant personal hearing.

  The impugned order was passed ex parte without providing notice to the petitioner for the subsequent hearing date, violating principles of natural justice. Relying on a coordinate bench judgment in M/s Shubham Steel Traders Vs. State of U.P. and Another, where it was held that by not passing the order on the scheduled date and not communicating the next date, the assessing authority forced an ex-parte order, the court quashed the impugned order dated March 1, 2024, and directed the authority to grant an opportunity of personal hearing to the petitioner and pass a reasoned order in accordance with law. The petition was disposed of.
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• Bail granted in tax fraud case, fake GST certificate allegations.

  The court granted regular bail to the petitioner in a case involving allegations of fraudulent claim of Input Tax Credit (ITC) and furnishing fake GST certificate for opening a bank account. The first allegation pertained to claiming ITC of Rs. 3,65,23,076/- without the corresponding tax being deposited by the supplying firms. The court held that prosecution u/s 132 of the CGST Act for fraudulently obtaining refund requires prior sanction from the Commissioner. Regarding the second allegation of using a fake GST certificate to open a bank account with transactions of Rs. 196 crores, the court observed a lack of evidence on whether the petitioner cheated anyone. As the case is triable by a Magistrate and based on documentary evidence, keeping the petitioner in custody would serve no purpose. The petitioner was granted regular bail upon furnishing bail bonds/surety bonds of Rs. 10,00,000/- with conditions imposed by the trial court.
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• Retrospective GST registration cancellation upheld from business closure date, subject to address & KYC update.

  GST registration cancellation does not affect taxpayer's liability or recovery of dues. Petitioner's registration cancelled retrospectively, challenged effective date. Court held cancellation valid from date petitioner stopped business operations, subject to furnishing correspondence address and KYC documents within two weeks to satisfaction of proper officer. Petition disposed.
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• Non-reconciliation ITC demand orders quashed for lack of reasoning, non-adherence to natural justice.

  The impugned orders u/s 16(2)(c) of the CGST/DGST Act, 2017 demanding excess Input Tax Credit (ITC) due to non-reconciliation of information are set aside as they lack reasoning and violate principles of natural justice by not dealing with explanations submitted. The Court noticed a pattern of unreasoned orders being passed near the limitation period's expiry, merely reproducing show cause notice details without addressing taxpayer explanations. The respondent conceded the retrospective GST registration cancellation of M/s Feron Life Sciences was restored, a relevant factor for considering the petitioner's demand. Consequently, the matter is remanded to the Proper Officer for fresh consideration, examining the petitioner's reply and affording a personal hearing opportunity. The petition is disposed of by way of remand.
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• GST Registration Reinstated After Improper Cancellation During COVID-19 Lockdown.

  Cancellation of a petitioner's Goods and Services Tax (GST) registration. The Show Cause Notice (SCN) did not provide specific details of the allegations, violating principles of natural justice. The petitioner had applied for revocation of the cancellation order, stating that business activities were halted due to COVID-19 but would resume gradually. The petitioner provided property tax receipts and explained ownership of the principal place of business. The cancellation order was passed by the Proper Officer based on directions from another authority, which was impermissible. The Proper Officer was required to independently assess the reasons for cancellation. The High Court set aside the SCN, cancellation order, and appellate order, directing the respondents to restore the petitioner's GST registration forthwith.
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• Registration cancelled due to time limit, GST authority's decision upheld.

  The High Court dismissed the appeal against the cancellation of the petitioner's GST registration in Form GST REG-19 with effect from 01.05.2023, on the ground of time limitation. The Court upheld the order of the appellate authority rejecting the appeal in limine, in view of the statutory limitation prescribed under the Act. The issue was covered on merits by a previous decision of the Court, where it was held that if any Input Tax Credit has remained unutilized, it shall not be utilized until it is scrutinized and approved by a competent officer of the Department. The petition was allowed.
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• Cancellation of GST registration upheld due to delay; restoration possible within 7 days after fulfilling requirements.

  Petition challenging cancellation of GST registration dismissed on grounds of limitation. Petitioner directed to approach competent authority for restoration of GST number within seven days, subject to completion of requisite formalities, filing returns, and depositing taxes, penalty, and interest. Order based on similar previous decisions, without examining maintainability of writ petition despite availability of alternative remedy. Clarification provided that the order should not be construed as an opinion on maintainability of writ petitions in such cases.
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• Firm's bank accounts attached over directors' personal liability; High Court orders reconsideration within 1 month.

  This legal matter concerns the attachment of two bank accounts belonging to the petitioner, a private limited company, due to personal liability imposed on its directors. The High Court disposed of the petition by directing the respondent to consider and resolve the petitioner's representation dated 20-9-2023 within one month. The respondent must provide a reasonable opportunity to the petitioner and consider the provisions of the Finance Act while disposing of the representation. No costs were awarded.
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Income Tax

• Incriminating evidence essential for additions in completed assessments, reopening permissible if statutory conditions met.

  Absence of incriminating material during search precludes additions in completed assessments, as per Supreme Court's ruling in Principal Commissioner of Income-tax, Central-3 Vs. Abhisar Buildwell (P.) Ltd. However, completed/unabated assessments can be reopened by the Assessing Officer u/s 147/148, subject to fulfilling prescribed conditions. The High Court clarified that while no additions can be made without incriminating evidence from search/requisition, reopening of assessments is permissible if statutory requirements u/s 147/148 are met. Contentions regarding reopening were expressly kept open.
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• Tax reassessment notice quashed over lack of proper sanction.

  Reopening of assessment u/s 147 was invalid due to lack of valid sanction as required u/s 151. The competent authority must independently apply its mind based on material before granting approval/sanction, which is not an empty formality. The approval granted for 111 reassessment cases through a general order, without referring to any specific material or case details, does not fulfill the requirement of meaningful application of mind. The sanction order lacks any reference to the material of the present case. Mere ritualistic or formal approval without recording satisfaction after due application of mind is inadequate. Consequently, the approval granted by the Principal Commissioner of Income Tax for action u/ss 147/148 is invalid, rendering the impugned notice u/s 148 and subsequent proceedings null and void. The matter was decided in favor of the assessee.
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• Unfair tax assessment quashed for denying reasonable response time to assessee, violating natural justice principles.

  Assessment order quashed due to breach of principles of natural justice. Standard Operating Procedure mandates seven days' response time to show cause notice, but assessing officer granted only four days, breaching prescribed procedure. This arbitrary exercise of jurisdiction by not following due process resulted in denial of fair and reasonable opportunity to assessee, causing prejudice. High Court held such approach violative of principles of natural justice and quashed assessment order in favor of assessee.
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• Compensation for compulsory land acquisition exempt from income tax under Land Act & IT Act.

  Compensation received under an award passed by the Land Acquisition Officer u/s 24(1) of the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013 is not exigible to income tax under the Income Tax Act, 1961. Section 10(37) of the Income Tax Act, 1961 exempts income arising from the transfer of agricultural land by way of compulsory acquisition from capital gains tax. Circular No. 36 of 2016 issued by the Ministry of Finance clarifies that compensation received for compulsory acquisition of agricultural or non-agricultural land is exempted from income tax u/s 96 of the Land Acquisition Act, 2013, except for the amount received u/s 46. The High Court dismissed the petition as infructuous, finding no assessment order or demand notice issued by the Income Tax Authority against the petitioner.
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• Local council overlooked TCS on parking fees, cited lack of awareness but promptly complied. Tribunal waived penalties for reasonable cause.

  The assessee, a Nagar Palika Parishad, failed to collect tax at source (TCS) on payments received for granting a license for a parking lot. However, the assessee contended that the money collected was on behalf of the government and expended for the welfare of citizens. As a non-profit organization, the assessee faced constraints in understanding tax laws and did not receive advice on TCS collection. Upon being informed of the default, the assessee swiftly complied. Considering these circumstances, the Appellate Tribunal held that the assessee cannot be treated as an assessee in default per se, and there existed reasonable cause for the technical default. Consequently, the penalties imposed u/ss 271CA and 271C were deleted, and the assessee's appeal was allowed.
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• Sportsman's Tax Exemption: ITAT Rectifies Mistake, Allows Relief on Award Money from BCCI.

  The case pertains to rectification of mistake u/s 154 regarding the eligibility of exemption u/s 10(17A) for the award money received from BCCI. The assessee, a sportsman, had initially filed the award amount as taxable income from other sources, despite it being exempt u/s 10(17A) as clarified by CBDT Circular No. 2/2014. The ITAT held that since the assessee is not a professional and the award was received in the capacity of a sportsman, the amount is exempt from tax. The mistake in filing the return appears bonafide. Following the precedent in Mr. Chanrkant Gulabrao Borde vs. ITO, the assessee is entitled to relief, and the CIT(A)'s order is unsustainable. The assessee's appeal is allowed.
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• Eligibility for tax deduction under 80IC upheld for Himachal Pradesh manufacturing unit despite initial doubts.

  The assessee's claim for deduction u/s 80IC for the finished products manufactured at Unit No. III at Paonta Sahib, Himachal Pradesh, was initially allowed but later doubted by the Assessing Officer (AO) from the assessment year 2014-15 onwards, citing concerns about the available machinery and electricity consumption not supporting the claimed quantum of production. The Tribunal, in its order dated 02.06.2020, factually verified the issue and concluded that the assessee is entitled to claim the deduction u/s 80IC for Unit III. For the assessment years 2011-12, 2012-13, and 2013-14, the disallowances were confirmed as the Tribunal's decision was not available before the First Appellate Authority (FAA). However, for the assessment year 2010-11, the FAA not only held the reopening of assessment u/s 147 to be invalid due to a mere change of opinion but also decided the issue on merits following the Tribunal's decision for the assessment year 2014-15. The facts across all assessment years were identical, and the Tribunal's decision for the assessment year 2014-15 covered the issue for the assessment year 2010-11 as well. Ultimately, the assessee was entitled to claim the deduction u/s 80IC.
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• Tax treatment of membership fees, interest on plot installments, disallowances & TDS on credit card charges.

  Income tax treatment of membership fees received in advance: The membership fees comprise a non-refundable portion and an advance amount for availing discounted services. The non-refundable portion is taxable upfront, while the advance amount is taxable on a deferred basis over the service period, unless there is evidence of a different revenue recognition pattern. The assessee's methodology of offering the entire amount to tax has been accepted by the Revenue authorities in previous years. Disallowance u/s 14A: No disallowance is required u/s 14A in the absence of any exempt income earned by the assessee. Interest paid on plot installments: The interest expenditure incurred on acquisition of a capital asset is not allowable as a deduction under the proviso to Section 36(1)(iii). The interest cost should be added to the cost of the land acquired. Ad-hoc disallowance of expenses: No ad-hoc disallowance of expenses, such as 5% of business promotion, traveling, and telephone expenses, is permissible without providing a rationale for such disallowance. TDS on credit card transaction charges: As per Notification No. 56/2012 and the Delhi High Court's decision in JDS Apparels Pvt. Ltd., no TDS is required to be deducted u/s 194H on transaction charges levied by banks on credit card payments received from customers.
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• Property developer's tax disputes: Rental income exclusion, litigation properties, self-occupied flats, windmill expenses deduction.

  The assessee, a company engaged in development/construction and sale of flats and plots, had classified its properties into four categories: flats open for sale, let-out flats, self-occupied flats, and flats under litigation. The Tribunal upheld the exclusion of let-out properties from Annual Lettable Value (ALV) calculation, following its earlier orders. For properties under litigation, the issue was restored to the Assessing Officer to examine evidence for non-inclusion of ALV. For self-occupied properties, the Tribunal upheld the CIT(A)'s decision to exclude ALV, as per Section 22 of the Act. Regarding windmill income, the Tribunal directed the Assessing Officer to allow deduction for expenses incurred during the first three months, corresponding to the income taxed for that period. The Tribunal upheld the CIT(A)'s findings on slump sale and revenue clause. On basement ALV, the Tribunal upheld the CIT(A)'s estimation of 50% ALV due to restricted usage. The issue of disallowance of employees' PF/ESI contribution was restored to the Assessing Officer for fresh adjudication. The Tribunal allowed the revenue's ground on addition u/s 43CA, as the assessee did not contest it.
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• Interest Deduction Controversy: AO's Scrutiny Upheld, Revenue's Revision Rejected.

  The Income Tax Appellate Tribunal examined the revisionary powers u/s 263 regarding the allowability of deduction claimed u/s 36(1)(iii). The Assessing Officer (AO) called for information on interest expenses, loans, advances, and the accounting method followed. The Tribunal held that the AO applied their mind, verified the facts, and considered one of the possible views based on the information provided. Mere non-discussion of a query responded to by the assessee in the assessment order does not imply non-application of mind. The Tribunal concluded that the Principal Commissioner's order did not satisfy the twin conditions of being erroneous and prejudicial to revenue interests. Consequently, the Tribunal set aside the Principal Commissioner's order and allowed the assessee's appeal.
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• Contractor denied tax deduction for advisory services to separate SPVs executing infrastructure projects u/s 80IA.

  The assessee provided project advisory services to Special Purpose Vehicles (SPVs) formed to execute infrastructure contracts obtained from NHAI. The assessee contended that the SPVs were its 'enterprise' or 'undertaking' for claiming deduction u/s 80IA. However, it was held that the SPVs were separate legal entities executing the infrastructure facility development and operation work. The assessee raised invoices on the SPVs for its services, indicating recognition of the SPVs as separate entities. The SPVs filed separate returns, and the assessee's income was not credited to its profit and loss account, contrary to an owned enterprise. The consortium members charged the SPVs more than their costs, earning profits. Therefore, the SPVs could not be considered the assessee's undertaking, and the assessee merely executed a works contract for the SPVs. Consequently, the assessee was ineligible for deduction u/s 80IA as a works contractor. The Appellate Tribunal upheld the rejection of the Section 80IA deduction claim.
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• Taxpayer wins chance to present crucial evidence in income tax dispute after personal tragedy.

  The Income Tax Appellate Tribunal (ITAT) allowed the assessee's appeal and admitted additional evidence. The assessee did not disclose income from other sources, which was treated as undisclosed income and taxed u/s 115BBE. The assessee claimed deduction u/s 54F in the return filed u/s 148, though no such claim was made in the original return. The ITAT noted that the assessee was not given an opportunity of being heard and was passing through a difficult time due to the demise of his wife. The assessee could not produce details before the Assessing Officer (AO) but filed additional evidence before the Commissioner of Income Tax (Appeals) [CIT(A)]. The ITAT held that the CIT(A) should have considered the application u/r 46A and admitted the additional evidence crucial for disposal of the appeal. The matter was set aside to the AO to decide based on the additional evidence and pass an order in accordance with law, without any reflection on the merits of the dispute.
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• Tax officer raises questions on cash deposits, excess cash balance & unexplained debtors; assessee fails to justify before appellate forums.

  In a limited scrutiny assessment under CASS, the Assessing Officer made additions to the assessee's income on account of cash deposits, excess closing cash balance over opening balance and net income, and unexplained debtors balance. The CIT(A) partly allowed relief. The ITAT dismissed the assessee's appeal, confirming the CIT(A)'s action, as the assessee failed to substantiate or produce documentary evidence to controvert the CIT(A)'s findings during the appellate proceedings before the Tribunal.
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Customs

• Customs duty row: Vitamin premix imports - goods classification tussle.

  Vitamin pre-mixes imported goods classification dispute under Customs Tariff Act, 1975 - whether classifiable under heading 29.36 or 23.09. High Court set aside impugned order dated 8th July 2022, remanded matter for fresh consideration. Respondent directed to pass reasoned order by 15th October 2024 after personal hearing of appellant, allowing written submissions within 3 working days post hearing. Appeal disposed.
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• Duty recovery time limit: Mixed question of law & fact, statutory appeal route advised.

  The High Court held that the question of whether the recovery of short-levied duty along with interest is barred by the limitation period prescribed under sub-section (9) of Section 28 of the Customs Act, 1962 is a mixed question of law and fact, which cannot be adjudicated in the writ petition. The appellant was directed to prefer a statutory appeal and raise the limitation plea before the appellate authority. The appellate authority was instructed to consider the appeal on merits, untrammeled by the findings in the impugned judgment. The time during which the appellant prosecuted the writ petition was ordered to be excluded while computing the period of limitation. The appeal was disposed of accordingly.
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• Cargo handler penalized for violating Customs regulations on area notification and compliance.

  The appellant, Container Corporation of India, was granted custodianship as a Customs Cargo Service Provider (CCSP) under the Handling of Cargo in Customs Areas Regulations (HCCAR), 2009. The approval of CCSP is subject to conditions under Regulation 5, and responsibilities are outlined in Regulation 6. During the renewal process, discrepancies were found regarding non-compliance with Regulations 5(1)(i)(c)(f)(g)(n) and clause (iii), leading to penalties under Regulation 12(8) of HCCAR, 2009. Additionally, the custodian operated from an area not notified u/s 8 of the Customs Act, 1962, violating Sections 45, 7, and 8, resulting in a penalty u/s 117. The Appellate Tribunal upheld the penalties but reduced the amounts to Rs. 10,000/- under Regulation 12(8) of HCCAR, 2009, and Rs. 25,000/- u/s 117 of the Customs Act, 1962.
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• Multimedia Speakers Classified Correctly Under Tariff Heading 8518, Not Covered by MRP Notification.

  Multimedia speakers imported were classified under Customs Tariff Heading (CTH) 8518 2200, not CTH 8519 8100 and CTH 8527 9990. Notification No. 49/2008-CE(NT) dated 24.12.2008 regarding MRP-based assessment is not applicable as the goods were not classifiable under CTH 8519 and 8527. Following the Tribunal's decision in Logic India Trading Co. case, the predominant function of the imported goods being speakers, they were rightly classified under CTH 8518 2200 as 'digital printers'. The impugned orders upholding this classification were affirmed, and Revenue's Appeals were dismissed.
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Indian Laws

• Court declines to rule on electoral bonds related amendments, cites non-exhaustion of legal remedies.

  The Supreme Court declined to exercise its jurisdiction under Article 32 of the Constitution to challenge the constitutionality of the Electoral Bond Scheme and related amendments to various statutes such as the Representation of the People Act 1951, the Companies Act 2017, and the Income Tax Act 1961. The Court held that it would be premature and inappropriate to intervene at this stage, as normal legal remedies available under the law have not been exhausted. Allegations of criminal wrongdoing should be pursued through appropriate legal channels rather than directly invoking the Court's jurisdiction. Matters pertaining to income tax assessments fall under the statutory jurisdiction of assessing authorities. The Court dismissed the petitions, stating that the only remedy for challenging legislative changes lies in invoking the power of judicial review after exhausting other available legal remedies.
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IBC

• Insolvency proceedings marred by eligibility issues, procedural lapses & overstepping jurisdiction.

  Violation of res judicata principles u/s 11 of the Code of Civil Procedure, 1908, suppression of relevant facts from the Committee of Creditors (CoC), discrepancy in examining financial capability and eligibility of a Joint Resolution Applicant who is a former director of the Corporate Debtor and also a director in another company undergoing CIRP proceedings, disposal of the Corporate Debtor's assets without CoC approval, executing lease agreements with Prospective Resolution Applicants without CoC approval, and the review of an order by the Disciplinary Committee. The key issues are the eligibility of the Joint Resolution Applicant, non-compliance with Section 30(2) of the Insolvency and Bankruptcy Code regarding the Resolution Professional's obligations, and the Disciplinary Committee's jurisdiction to sit in appeal against its own order. The court held that the principles of res judicata do not apply, the Resolution Professional failed to exercise due diligence, and the Disciplinary Committee's determination regarding the Resolution Professional's contraventions was appropriate, leading to the dismissal of the petition.
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• Existing securities, including guarantees, remain valid for revised loan repayment and fresh credit facilities. No novation of contract.

  The sanction letter clearly mentioned that all existing securities, including the guarantees dated 22.08.2015 and 18.11.2016, would continue to cover the existing facilities with the revised repayment schedule and the fresh FITL facility. The Section 7 Application pertained to Cash Credit, Term Loan, FITL, and Cash Credit Adhoc facilities, for which the guarantees dated 22.08.2015 and 18.11.2016 were applicable. The Consortium Agreement executed on 06.11.2020 did not affect the existing securities, and there was no novation of the contract. The disbursements made pursuant to the 2013 sanction and the guarantees issued by the corporate guarantor on 22.08.2015 and 18.11.2016 continued to bind the corporate guarantor. The subsequent Adhoc Limit and FITL sanctioned on 26.12.2019 and 09.09.2020 were also covered by the existing securities. The bank's invocation of the guarantee on 06.03.2023 was valid, obliging the corporate guarantor to clear the dues. The Appellant did not contest the debt or default but sought to avoid liability on the grounds of novation, which was rejected. The Adjudicating Authority's order admitting the Section 7 Application was upheld, and the appeal was dismissed.
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SEBI

• Insider Trading Crackdown: Profit Makers Earned INR 7.41 Cr Through Advance Stock Tips.

  Substantial profits were generated by trading entities based on advance receipt of non-public information regarding stock recommendations from guest experts appearing on a business channel. Evidence shows correlation between trades executed by suspect entities and recommendations made by guest experts. Profit Makers collectively earned around INR 7.41 crore from 1047 instances of such trades, constituting 54% of their total profits during the relevant period. Guest experts admitted to having profit-sharing arrangements with Profit Makers for providing recommendations in advance. Trades were executed by Profit Makers in their accounts as well as accounts of other connected entities. The acts prima facie violate provisions of the SEBI Act prohibiting fraudulent and unfair trade practices by dealing in securities while possessing non-public information and devising schemes to defraud investors. A registered research analyst shared recommendations with her spouse before public dissemination, facilitating unfair trading, violating research analyst regulations. An interim ex-parte order is proposed to insulate markets, protect investors, prevent siphoning of unlawful gains, and issue show-cause notices for disgorgement, market debarment, and restraining registered analysts from advisory activities. Joint and several liabilities are proposed against relevant entities for the unlawful gains.
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VAT

• Taxpayer wins against unlawful re-assessment order due to lack of initial assessment within time limit.

  This case involves a challenge to an order of re-assessment under the relevant tax laws. The key points are: The petitioner failed to submit monthly returns within the prescribed time for the assessment year 2014-2015, leading to an escapement of assessment. The court referred to precedents holding that an assessment cannot be made after the expiry of the prescribed time limit, and that a return must be filed within the time limit for an assessment to be valid. Section 39 of the applicable Act mandates completion of assessment within 5 years from the end of the relevant year. In this case, the assessment for 2014-2015 should have been completed by 31.03.2020, but it was not. Instead, re-assessment proceedings u/s 40 were initiated without completing the initial assessment u/ss 34-37. The court held that the existence of an initial assessment is a prerequisite for re-assessment u/s 40. Since no self-assessment was deemed u/s 35 within the prescribed period, the re-assessment order dated 05.03.2022 and the demand notice dated 08.07.2021 were quashed as illegal and without jurisdiction.
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TMI Short Notes

• GST:

  Interpreting "Or": The Disjunctive Mandate for Personal Hearing in Tax Matters

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• Income Tax:

  Navigating the Registration Process u/s 80G: Insights from the ITAT Ruling

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• Income Tax:

  Ensuring Fair Proceedings: The Importance of Proper Notice Service in Income Tax Matters

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Articles

• RECENT DEVELOPMENTS IN GST
• PRODUCING E-WAY BILL BEFORE ISSUE OF SEIZURE ORDER

Notifications

• Central Excise

• 20/2024 - dated 16-8-2024 - CE
  Seeks to amend No. 18/2022-Central Excise, dated the 19th July, 2022 to reduce the Special Additional Excise Duty on production of Petroleum Crude

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• FEMA

• S.O. 3492(E) - dated 16-8-2024 - FEMA
  Foreign Exchange Management (Non-debt Instruments) (Fourth Amendment) Rules, 2024.

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News

• THE FINANCE (No. 2) ACT, 2024 updated 16-08-2024

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• APEDA facilitates first shipment of Fig Juice to Poland

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• Cabinet approves development of new Civil Enclave at Bagdgora Airport, West Bengal at an estimated cost of Rs.1549 crore

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• Cabinet approves Development of New Civil Enclave at Bihta, Bihar at an estimated cost of Rs.1413 crore

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• Department of Economic Affairs amends Foreign Exchange Management (Non-debt Instruments) Rules, 2019 in pursuance of Union Budget 2024-25 announcement

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Case Laws:

• GST

• 2024 (8) TMI 904
  Validity of ITC - Compliance with conditions under Section 16 of the U.P. GST Act - double taxation - burden to ptove - HELD THAT:- Admittedly, the scheme of input tax credit is being introduced with an object to avoid cascading effect of tax. The purchasing dealer can avail the input tax credit on tax paid on its purchase whereas manufacturer can avail the same on purchase of its raw material used for manufacturing or selling of its final product which will avoid double taxation. The benefit of concession / I.T.C. under the tax statute can be availed only on fulfilment of certain conditions or restrictions as stipulated under the Act. In the event of breach of any of the conditions as enumerated under the Act, no benefit can be conferred to the dealer. Section 16 (2) further provides that no registered dealer shall be entitled to the credit of any input tax in respect of any supply of goods or services or both to him unless the conditions mentioned therein is fulfilled. In other words, Section 16 specifically provides the registered dealer to fulfil the conditions as provided therein for availment of input tax credit. In the case in hand, the petitioner has only brought on record the tax invoices, e-way bills, and payment through banking channel, but no such details such as payment of freight charges, acknowledgement of taking delivery of goods, toll receipts and payment thereof has been provided. Thus in the absence of these documents, the actual physical movement of goods and genuineness of transportation as well as transaction cannot be established and in such circumstances, further no proof of filing of GSTR 2 A has been brought on record, the proceeding has rightly been initiated against the petitioner. The Apex Court in the case of State of Karnataka Vs. M/s Ecom Gill Coffee Trading Private Limited [ 2023 (3) TMI 533 - SUPREME COURT ], while considering the pari materia of section 70 of the Karnataka Value Added Tax Act, 2003, where the burden was upon the dealer to prove beyond doubt its claim of exemption and deduction of ITC - In the said judgement Hon ble the Apex Court has held that primarily burden of proof for claiming the input tax credit is upon the dealer to furnish the details of selling dealer, vehicle number, payment of freight charges, acknowledgement of taking delivery of goods, tax invoices and payment particulars etc. to prove and establish the actual physical movement of the goods. Further by submitting tax invoice, e-way bill, GR or payment details is not sufficient. Thus, no interference is called for by this Court in the impugned orders - the writ petition fails and is dismissed.

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• 2024 (8) TMI 903
  Violation of principles of natural justice - impugned order was passed ex parte and was not passed on the date fixed for hearing and for subsequent date no notice was given to the petitioner - HELD THAT:- Reliance placed on the coordinate Bench judgment of this Court in M/s Shubham Steel Traders Vs. State of U.P. and Another [ 2024 (2) TMI 1180 - ALLAHABAD HIGH COURT] where it was held that ' By not passing the order on 06.11.2023 and not communicating the next date fixed in the proceedings, the assessing authority forced the ex-parte nature of the order on the petitioner, by its own conduct.' In light of the same, as the facts of the present case are quite similar to one in M/s Shubham Steel Traders, there are no reason why this Court should take a different view of the matter. Accordingly, the impugned order dated March 1, 2024 is quashed and set aside with a direction upon the authority concerned to grant an opportunity of personal hearing to the petitioner and thereafter, pass a reasoned order in accordance with law. Petition disposed off.

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• 2024 (8) TMI 902
  Violation of principles of natural justice - no proper opportunity of hearing was granted to the petitioner as on the very date of show cause notice - HELD THAT:- The judgement in M/s Shree Sai Palace Vs. State of U.P. and Ors. [ 2024 (3) TMI 49 - ALLAHABAD HIGH COURT ] applies to the factual matrix of the present case. It is clear that statutory obligation of Section 75(4) of Uttar Pradesh Goods and Service Tax Act, 2017 has not been fulfilled. The impugned order dated July 3, 2024 is quashed and set aside with a direction upon the authority concerned to grant another opportunity of hearing to the petitioner and thereafter, pass a reasoned order in accordance with law - Petition disposed off.

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• 2024 (8) TMI 901
  Seeking grant of regular bail - freezing of bank account of petitioner - wrong claim of Input Tax Credit - The first allegation against the petitioner is that he claimed amount of Rs. 3,65,23,076/- by way of ITC, but that tax amount was not deposited by the firms, which supplied the goods - HELD THAT:- As per provisions of Section 132 of the CGST Act, if a person fraudulently obtains refund, then he is liable to be prosecuted under Section 132 of the CGST Act. Such prosecution can only be launched with the previous sanction of the Commissioner as per Section 132 (6) of the CGST Act. Since it is a special Act, so, it is debatable whether provisions contained in Code of Criminal Procedure are applicable for prosecution of such person by lodging FIR. The second allegation against the petitioner is that he furnished fake GST Certificate in the name of his alleged firm M/s Salasar Balaji Industry at the time of opening bank account, in which there are debit and credit entries of Rs.196 crores on each side - HELD THAT:- The Challan in this case has already been presented. Regarding first allegation, complaint under Section 132 of the CGST Act is maintainable. Regarding second allegation that the petitioner has used fake Certificate for opening bank account, no evidence has been collected, whether from the bank account in question, the petitioner has cheated anybody or not. The entire case is based on the documentary evidence. The case is triable by Magistrate. Culpability of the petitioner would be decided during trial of the case - since completion of trial will take a long time, no useful purpose would be served by keeping the petitioner behind bars for a long time. The petitioner is directed to be released on regular bail, on his furnishing bail bonds/surety bonds in the sum of Rs.10,00,000/-, with one surety of the like amount, to the satisfaction of learned Trial Court/Duty Magistrate concerned subject to fulfilment of conditions imposed - bail application allowed.

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• 2024 (8) TMI 900
  Cancellation of petitioner s Goods and Services Tax (GST) registration - impugned cancellation order does not set out any reason for cancelling the petitioner s GST registration - violation of principles of natural justice - HELD THAT:- There are merit in the petitioner s contentions that the SCN and the impugned cancellation order are unreasoned. The SCN records no reason for proposing to cancel the petitioner s GST registration. It merely states that proceedings for cancellation of the GST registration have been initiated. The impugned cancellation order is also unreasoned. Thus the SCN as well as the impugned cancellation order are liable to be set aside for the said reason alone. The impugned cancellation order cancelling the petitioner s GST registration is revoked. The respondents are directed to restore the petitioner s GST registration forthwith - Petition diposed off.

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• 2024 (8) TMI 899
  Cancellation of petitioner s Goods and Services Tax (GST) registration with retrospective effect - the impugned order does not mention any reason for cancelling the petitioner s GST registration but merely states that the same is in reference to the SCN and that the petitioner did not appear on the date fixed for hearing - violation of principles of natural justice - HELD THAT:- The impugned order cancels the petitioner s GST registration with retrospective effect from 17.07.2021. However, the SCN does not mention any such proposed action. More importantly, the impugned order also does not reflect any reason for the same. It is directed that the impugned order cancelling the petitioner s GST registration would be operative with effect from 21.12.2021 and not with effect from 17.07.2021. The impugned order is modified to the aforesaid extent. Petition disposed off.

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• 2024 (8) TMI 898
  Cancellation of GST registration - petitioner is aggrieved by the cancellation, being cancelled retrospectively with effect from 29.11.2019 - petitioner submits that the petitioner s registration be cancelled with effect from 01.10.2022 and not from a date prior to that - HELD THAT:- It is settled law that cancellation of GST registration does not affect the taxpayer s liability under relevant enactments. It also does not preclude the concerned authority from initiating proceedings for any statutory violation or for recovery of dues from the taxpayer. Considering that the petitioner has stopped carrying on its business, the petitioner s application for cancellation of his GST registration is required to be allowed. However, the petitioner is required to furnish the documents evidencing its address for future correspondence and KYC documents, to the satisfaction of the proper officer. It is considered apposite to direct the proper officer to reconsider the petitioner s application for cancellation of its GST registration with effect from 01.10.2022 - the petitioner shall, within a period of two weeks from date, furnish documents evidencing its future correspondence address as well as KYC documents. The proper officer, if satisfied with the same, shall proceed to allow the petitioner s application. The petiiton is disposed off.

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• 2024 (8) TMI 897
  Cancellation of registration, modified to be operative prospectively from the date of the Show Cause Notice dated 22.12.2022 - impugned cancellation order does not reflect any reason for cancellation of the petitioner s GST registration - violation of principles of natural justice - HELD THAT:- The SCN as well as the impugned cancellation order are liable to be set aside. The SCN does not provide any clue to the reasons for proposing to cancel the petitioner s GST registration. It refers to a complaint, which was not forwarded to the petitioner, and therefore, the petitioner had no opportunity to address any allegations that may have been made in the complaint. The impugned cancellation order is also liable to be set aside for the same reason. It is the petitioner s stand that he has closed his business and has since been filing Nil returns. It is also apparent that the petitioner also seeks that his GST registration be cancelled - this Court considers it apposite to direct that the petitioner s GST registration be cancelled prospectively from the date of the impugned cancellation order and not retrospectively with effect from 29.11.2018. Petition disposed off.

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• 2024 (8) TMI 896
  Vires of Section 16 (2) (c) of the CGST Act, 2017/DGST Act, 2017 - excess Input Tax Credit (ITC) demand on account of non-reconciliation of information - impugned orders are not informed by reasons as they do not deal with any of the explanation submitted by the petitioner - violation of principles of natural justice - HELD THAT:- The impugned orders are not informed by reasons as they do not deal with any of the explanation submitted by the petitioner. The impugned orders are similar to those passed on the last few days of the expiry of limitation period for making such orders. This Court has noticed in several cases that unreasoned orders are being passed in the last few days prior to the expiry of the period of limitation whereby a tabular statements as set out in the show cause notice are reproduced and the demands are confirmed, without alluding to the explanations provided by the tax payer. The respondent points out that the retrospective cancellation of the GST registration of M/s Feron Life Sciences Private Limited was restored by this Court in M/S. FERON LIFE SCIENCES PVT. LTD. VERSUS COMMISSIONER, DELHI GST AND ORS. [ 2024 (7) TMI 1065 - DELHI HIGH COURT] . He submits that the same would be a relevant factor in considering the demand raised from the petitioner. He concedes that the impugned orders be set aside and the matter be remanded to the Proper Officer for consideration afresh - the petitioner submits that he would be satisfied if the order to that effect is passed by this Court. The impugned orders are set aside and the matter is remanded to the Proper Officer for consideration afresh. The Proper Officer shall examine the reply furnished by the petitioner and also afford an opportunity to the petitioner for a personal hearing - Petition disposed off by way of remand.

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• 2024 (8) TMI 895
  Cancellation of petitioner s Goods and Services Tax (GST) registration - the SCN did not set out any specific details of the allegation against the petitioner - violation of principles of natural justice - HELD THAT:- The petitioner in his application dated 27.04.2022 seeking revocation of the order of cancellation which was subsequently allowed by an order dated 13.05.2022 had clearly stated that no business activities were being carried out by him on account of him suffering with COVID-19. He had further stated that he was gradually stable and will continue and carry on further business activities . It is also stated that the petitioner has thereafter filed NIL returns on account of lack of business activity. Undisputedly, the petitioner has a fundamental right to carry on legitimate business and the same cannot be interdicted by cancellation of his GST registration. The petitioner had provided property tax receipts and had also explained that he was the owner of his principal place of business. None of these facts were disputed. It is material to note that the said facts form the contents of the petitioner s application dated 27.04.2022 for seeking revocation of cancellation of his GST registration which was allowed. The impugned cancellation order was passed by the Proper Officer based on the directions issued by another authority which is impermissible. The Proper Officer was required to satisfy himself as to the reasons for cancelling the petitioner s GST registration - The impugned SCN; the impugned cancellation order and the impugned appellate order are set aside. The respondents are directed to forthwith restore the petitioner s GST registration. Petition allowed.

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• 2024 (8) TMI 894
  Cancellation of petitioner's GST registration in Form GST REG-19 with effect from 01.05.2023 - appeal dismissed on the ground of time limitation - HELD THAT:- There are no error in the order of the appellate authority rejecting the appeal in limine, in view of the statutory limitation prescribed under the Act. The issue is squarely covered on merits by a decision of this Court rendered in Tvl.Suguna Cutpiece Centre Vs. The Appellate Deputy Commissioner (ST) (GST) and another [ 2022 (2) TMI 933 - MADRAS HIGH COURT] where it was held that ' If any Input Tax Credit has remained utilized, it and etc. batch shall not be utilised until it is scrutinized and approved by an appropriate or a competent officer of the Department.' Petition allowed.

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• 2024 (8) TMI 893
  Cancellation of GST registration by Sales Tax Officer - appeal dismissed on the ground that the same was barred by limitation - invocation of Article 226 of the Constitution of India - HELD THAT:- In view of the fact that the case in hand is similar and identical to the decisions in [BASHIR AHMAD DAR VERSUS UT OF J K AND OTHERS [ 2024 (7) TMI 598 - JAMMU KASHMIR AND LADAKH HIGH COURT ], and [ABDUL AHAD WANI VERSUS UNION TERRITORY OF J K ORS. [ 2024 (4) TMI 762 - JAMMU AND KASHMIR AND LADAKH HIGH COURT ] and, therefore, this petition is disposed of by directing the petitioner to approach the Competent Authority for registration of his GST number within a period of seven days from today. The Competent Authority shall restore GST number of the petitioner immediately, subject to the completion of all requisite formalities. The petitioner shall file the returns and deposit the taxes and penalty along with interest within a period of seven days. In the event the needful is not done by the petitioner within stipulated period, this order shall cease to be in operation. Since this petition has been disposed of based on the peculiar facts and circumstances of the case, and also on the analogy of the cases earlier decided, this Court has not gone into the legal issue raised by the learned Advocate General on behalf of the respondents - Nothing said in this order shall be construed as an expression of opinion by this Court that notwithstanding the availability of the alternative remedy of appeal, petition under 226 is directly maintainable. Appeal disposed off.

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• 2024 (8) TMI 892
  Challenge to SCN issued u/s 73 of the Central Goods and Services Tax Act, 2017 - recovery of Input Tax Credit (ITC) which the petitioner had allegedly obtained wrongfully refund under Section 54(3)(ii) of the said Act - HELD THAT:- Taking note of the fact that in an identical set of facts questioning legality of the show cause, the previous writ petition in M/S. INDORAMA INDIA PVT. LTD. VERSUS UNION OF INDIA ORS. [ 2024 (3) TMI 1343 - CALCUTTA HIGH COURT] and M/S. INDORAMA INDIA PRIVATE LIMITED VERSUS UNION OF INDIA ORS. [ 2024 (4) TMI 1166 - CALCUTTA HIGH COURT] had been admitted and since, the petitioner raises jurisdictional issue as regards competence of the proper officer to determine the amount of ITC wrongly refunded by proceeding under Section 73 of the said Act, it is opined that the writ petition should be heard. Let affidavit-in-opposition to the present writ petition be filed within a period of six weeks from date. Reply thereto, if any, be filed within three weeks thereafter - Liberty to mention upon expiry of the period for exchange of affidavits.

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• 2024 (8) TMI 891
  Attachment on two bank accounts of the petitioner - personal liability on directors of a private limited company - HELD THAT:- The petition is disposed of by directing the respondent to consider and dispose of representation dated 20-9-2023 after providing a reasonable opportunity to the petitioner and by taking into account the provisions of the Finance Act. Such representation shall be disposed of within a period of one month from the date of receipt of a copy of this order. There will be no order as to costs.

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• Income Tax

• 2024 (8) TMI 890
  Settlement application as abated on account of it not being true and full disclosure of unaccounted income - report submitted by the Income Tax Department i.e. Volumetric Report relied upon - As decided by HC [ 2017 (5) TMI 427 - MADHYA PRADESH HIGH COURT] Order passed u/s 245D(4) by the Settlement Commission is perverse and devoid of merits, both in law and on facts and hence deserves to be set aside and is accordingly set aside. The Settlement Commission has erred in upholding the survey report dated 24/07/2012 merely because Total Station Method and 3D scanning technique was used without considering the fact that the person preparing the said report was incompetent and did not possess the necessary qualification to prepare the said report and gross inaccuracies were writ large on the face of the report, like Manganese Ore being 83% and waste being 27% which is impossible. Moreover, the gross production for six years determined at 16 lac MT was more than the estimated reserve determined as epr the mining plan which again is impossible. The Settlement Commission has also erred in rejecting the report dated 17/06/2012 prepared by the State Government at the directions of this Court - HELD THAT:- We are not inclined to interfere with the impugned judgment(s) passed by the High Court. The special leave petitions stand dismissed. Pending application(s), if any, stand disposed of.

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• 2024 (8) TMI 889
  Maintainability of SLP on low tax effect - TP Adjustment - allocation of certain common expenditure - Expenditure incurred as common for two different segments - comparability selection As decided by HC [ 2019 (2) TMI 1993 - DELHI HIGH COURT] choice of the assessee in relying upon the headcount principle per se could not have been rejected and remitted the matter for consideration of one of the comparables i.e. for M/S Indus Technical and Financial Consultants Ltd as this comparable was included by the TPO relying upon the material available at that time from the internet - HELD THAT:- As it is not in dispute that the tax effect comes to Rs.81,27,390/- (Rupees Eighty One Lakh Twenty Seven Thousand Three Hundred and Ninety Only) which is below the limit of 2 crores fixed under the policy. In view of Clause 4 of the Circular dated 11th July, 2018, the case will be covered by the policy of the Union of India. Hence, we dispose of the petition on the ground of low tax effect. All questions of law are kept open.

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• 2024 (8) TMI 888
  Stay of demand - direction as called upon the writ petitioner to make a pre-deposit of 20% - as decided by HC [ 2024 (5) TMI 734 - DELHI HIGH COURT] respondents have clearly erred in proceeding on the assumption that the application for consideration of outstanding demands being placed in abeyance could not have even been entertained without a 20% pre-deposit. The aforesaid stand as taken is thoroughly misconceived and wholly untenable in law HELD THAT:- We dispose of this appeal by directing that pending disposal of the appeal filed by the appellant herein before the ITAT there shall be stay of further recovery of the outstanding dues. The aforesaid order is being made having regard to the admitted fact that 30% of the demand has already been recovered by the respondent. ITAT shall consider the appeal of the appellant in accordance with law on its own merits and without being prejudiced or influenced by any of the observations made by the High Court in the impugned order which has been modified by us as above. The judgment of the High is modified in the aforesaid terms. Appeal is disposed of in the aforesaid terms.

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• 2024 (8) TMI 887
  Review petition - Enforceability of treaty - Necessary notification not issued by the Government for brining the treaty into force - Most Favoured Nation (MFN) - Indian treaties with countries that are members of the Organisation for Economic Cooperation and Development ( OECD ) - protocol for changing terms or conditions in treaty - lowering of rate of taxation at source on dividends, interest, royalties or fees for technical services (hereafter FTS ) - bilateral treaties in question are between India and Netherlands, France, and Switzerland, respectively - As decided by SC [ 2023 (10) TMI 981 - SUPREME COURT] notification u/s 90(1) is necessary and a mandatory condition for a court, authority, or tribunal to give effect to a DTAA, or any protocol changing its terms or conditions, which has the effect of altering the existing provisions of law. The fact that a stipulation in a DTAA or a Protocol with one nation, requires same treatment in respect to a matter covered by its terms, subsequent to its being entered into when another nation (which is member of a multilateral organization such as OECD), is given better treatment, does not automatically lead to integration of such term extending the same benefit in regard to a matter covered in the DTAA of the first nation, which entered into DTAA with India. In such event, the terms of the earlier DTAA require to be amended through a separate notification under Section 90. The interpretation of the expression is has present signification. Therefore, for a party to claim benefit of a same treatment clause, based on entry of DTAA between India and another state which is member of OECD, the relevant date is entering into treaty with India, and not a later date, when, after entering into DTAA with India, such country becomes an OECD member, in terms of India s practice. HELD THAT:- Permission to file the review petition(s) is granted. Prayer for listing the review petitions in open Court is rejected. Delay condoned. We have carefully perused the review petitions as also the grounds in support thereof. In our opinion, no case for review of the order dated 19.10.2023 is made out. The review petitions are, accordingly, dismissed. Pending application(s), if any, shall stand disposed of.

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• 2024 (8) TMI 886
  Validity of assessment u/s 153A - no incriminating material found during search - HELD THAT:- In view of the authoritative pronouncement of the Supreme Court in Principal Commissioner of Income-tax, Central-3 Vs. Abhisar Buildwell (P.) Ltd. [ 2023 (4) TMI 1056 - SUPREME COURT] held that in respect of completed assessments/ unabated assessments, no addition can be made by Assessing Officer in absence of any incriminating material found during course of search under Section 132 or requisition under Section 132A. It is also, however, held that completed/ unabated assessments can be reopened by Assessing Officer in exercise of powers under Section 147/148 subject to fulfillment of conditions as envisaged under Section 147/148 and those powers were saved Thus, the question of law as raised by the revenue would not arise for consideration. As clarified that the completed/unabated assessments can be reopened by the AO in exercise of powers under Section 147/148 subject to fulfillment of conditions as envisaged under the said provisions and as may be permissible in law. All contentions of the parties in that regard are expressly kept open.

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• 2024 (8) TMI 885
  Validity of Reopening of assessment u/s 147 - no valid sanction in terms of Section 151 provided - HELD THAT:- Grant of approval/sanction is neither an empty formality nor a mechanical exercise. The Competent Authority must apply its mind independently on the basis of material placed before it before grant of approval/ sanction. It is evident that the approval is in respect of 111 cases of reassessment. It is a general order of approval for all the 111 cases. There is not even a whisper as to what material had weighed in the grant of approval in the present case. While the PCIT is not required to record elaborate reasons, he has to record satisfaction after application of mind. The approval is a safeguard and has to be meaningful and not merely ritualistic or formal. The sanction order does not refer to the material of any of the 111 cases. The grant of approval in such a manner does not fulfil the requirement of section 151 of the Act. Thus, we are of the firm opinion that the PCIT has failed to satisfactorily record its concurrence and by no stretch of imagination, the approval granted by common order, could be considered to be a valid approval. Hence we are of the view that the approval granted by PCIT for action under Section 147/148 of the Act is not valid. Consequently, the impugned notice issued u/s 148 and the proceedings emanating therefrom are set aside and quashed. Decided in favour of assessee.

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• 2024 (8) TMI 884
  Validity of assessment order passed u/s 144 r.w.s.144B - Petitioner being granted less than 24 Hours to respond the Show Cause Notice - breach of the principles of natural justice - HELD THAT:- Standard Operating Procedure (SOP) for the Faceless Assessment provisions of Section 144B clearly provides a response time of seven days from the issuance of the Show Cause Notice to the assessee to submit his reply. In the present case, the Show Cause Notice was issued on 22 March, 2024. It is also clear that sufficient time was available to the Assessing Officer to pass an assessment order even if he was to grant seven days time to the Petitioner to file reply to the Show Cause Notice. AO granted only two days time at the first instance and thereafter extended the same by another two days, which apart from being not sufficient, was certainly, not in accordance with the time to respond the Show Cause Notice, as prescribed under the SOP (supra). AO appears to have arbitrarily exercised jurisdiction by granting an extension of only two days. In our opinion, such approach on the part of the Respondents was clearly in breach of the SOP, which has also resulted in breach of the principles of natural justice, which guaranteed to the Petitioner a fair and reasonable opportunity to respond to the Show Cause Notice under the procedure prescribed, in undertaking the assessment proceedings. This has surely caused a prejudice to the Petitioner. Assessment order quashed - Decided in favour of assessee.

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• 2024 (8) TMI 883
  Income tax demand on amount received under the award passed under the Land Acquisition Act, 2013 - compensation in terms of an award passed by the Special Land Acquisition Officer, Municipal Corporation Agra u/s 24 (1) of the right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013 (the Land Acquisition Act of 2013) - HELD THAT:- We are of the considered opinion that amount of compensation received under an award passed under Land Acquisition Act, 2013, is not exigible to income tax under the Income Tax Act, 1961. Section 10(37) of the Income Tax Act, 1961 also provides clearly that any income arising from the transfer of agricultural land will not be exigible to Income Tax under the head Capital gains if such transfer of agricultural land is by way of compulsory acquisition under any law. The position has been further made clear by Circular No. 36 of 2016 issued by the Government of India, Ministry of Finance, Department of Revenue, Central Board of Taxes on 25th October, 2016 in which it has been made abundantly clear that in terms of Section 96 of the Land Acquisition Act, 2013, a compensation received for compulsory acquisition of agricultural land or non-agricultural land is exempted from income tax. Thus, the apprehension raised by the petitioner in this petition is without any substance. The legal position is amply clear that any compensation received by a person under an award passed in terms of the Provisions of Land Acquisition Act, 2013 is exempted from payment of income tax except the amount received in reference to Section 46. Petitioner has not brought to our notice any assessment order passed against the petitioner demanding the income tax on the aforesaid income of the petitioner-company nor is there placed on record any demand notice issued by any Income Tax Authority. We dispose of this petition as infructuous.

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• 2024 (8) TMI 882
  Penalty u/s 271CA and 271C - assessee has failed to collect tax at source (TCS) on parking lot being given on license - HELD THAT:- As assessee submits that assessee is a Nagar Palika Parishad supervising the area of Hapur. As pointed out that the money from contract on parking lot is collected on behalf of the Govt. from citizens and the same is expended on the welfare of the citizens of the town. The assessee is a non-profit organization and has constraints, at times, in correct understanding of tax laws. No advise was received towards collection of TCS on such payment and as soon as the default was pointed out, the assessee made swift compliance. Thus, we are of the considered view that assessee cannot be treated as assessee in default per se in the present circumstances and there exists reasonable cause giving rise to such technical default. Penalty imposed u/s 271CA/271C in all the three captioned appeals stands deleted.- Assessee appeal allowed.

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• 2024 (8) TMI 881
  Rectification of mistake u/s 154 - award money received from BCCI - Eligibility to exemption u/s 10(17A) - sum received as award from BCCI (Board of Cricket Control of India) which otherwise was exempted u/s 10(17A) with clarification vide circular no. 2/2014 issued by CBDT, was filed as taxable income as income from other sources. HELD THAT:- Assessee / appellant is not a professional and award in question is not the receipt for the professional reasons and received simply in the capacity of a sportsman and so amount of award is exempted from tax in view of the relevant circular no. 447 - It does not make any difference that assessee previously showed in ITR as taxable income, since it seems to be a bonafide mistake only. The case of assessee / appellant is wholly and squarely covered by order in the case of Mr. Chanrkant Gulabrao Borde vs. ITO [ 2018 (12) TMI 1488 - ITAT PUNE] and hence entitled to get relief as prayed, appeal deserves to be allowed and order of Ld. CIT(A) is not sustainable. Appeal of assessee allowed.

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• 2024 (8) TMI 880
  Validity of ex-parte order of CIT(A) passed u/s 250 - denial of reasonable opportunity to assessee - CIT(A) issued the notice in the wrong email account - HELD THAT:- Several notices are issued in the wrong email address which was deemed to be absence of service on the assessee and the assessee has no information about the notice of the appellate authority. Finally, the notice was correctly issued in the email as mentioned by the assessee and the assessee filed an adjournment petition for filing the evidence before ld. CIT(A). Further, the Ld.AR mentioned that the employee, who was entrusted with the matter has already left the job. As reasonable opportunity was denied to the assessee which is gross violation of the natural justice. The assessee was prevented from submitting the evidence before the ld.CIT(A) in due appeal proceedings. We fully relied on the order of Premkumar Arjundas Luthra (HUF) [ 2016 (5) TMI 290 - BOMBAY HIGH COURT] . We dismiss the appeal order and direct to remand back the matter to file of the CIT(A) to pass a speaking order. Both the rival parties have accepted the direction of the bench. We are not expressing any view on merit which will impair the appeal proceedings before the ld. CIT(A). Assessee appeal allowed for statistical purposes.

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• 2024 (8) TMI 879
  Deduction u/s. 80P(2)(d)/ 80P(2)(a)(i) - interest received from various Cooperative Banks - as per AO interest income earned is clearly not attributable to the activity of the appellant society of providing credit facilities to its Members or its operational income, thus the income does not qualify for deduction - HELD THAT:- Admittedly the interest income was earned from various cooperative banks. On perusal of provisions of section 80P(2)(d), it is clear that the income derived by a cooperative society from its investment held with other cooperative societies shall be exempt from the total income of a cooperative society. Therefore, what is relevant for claiming of deduction u/s 80P(2)(d) is that interest income should have been derived from the investment made by the assessee cooperative society with any other cooperative society. This issue was considered in the case of CIT vs. Totagars Cooperative Sale Society, [ 2017 (1) TMI 1100 - KARNATAKA HIGH COURT] wherein after referring to the decision of Totgar s Co-operative Sale Society Ltd.Vs. ITO ( 2010 (2) TMI 3 - SUPREME COURT] held that the ratio of decision of the Hon ble Supreme Court is not to be applicable in respect of interest income on investment as same falls under the provisions of section 80P(2)(d) and not u/s 80P(2)(a)(i) of the Act. Thus, the interest income earned by cooperative society on deposits made out of surplus funds with cooperative banks qualifies for deduction under the provisions of section 80P(2)(d) of the Act. Therefore, the solitary ground raised by the appellant stands allowed.

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• 2024 (8) TMI 878
  Deduction u/s. 80P(2)(a)(i) - HELD THAT:- We remit these issues to the Ld.AO to consider the claim of assessee in accordance with the decisions of Hon ble Supreme Court in case of Mavilayi Service Co- operative Bank Ltd [ 2021 (1) TMI 488 - SUPREME COURT] and Kerala State Co-operative Agricultural and Rural Development Bank Ltd. [ 2023 (9) TMI 761 - SUPREME COURT] . We also direct the Ld.AO to consider the decisions of this Tribunal wherein the claim in respect of interest on fixed deposits if any is not allowed u/s. 80P(2)(d) has to be considered in accordance with law by allowing the expenditure u/s. 57. Various decisions of this Tribunal may also be referred to for the sake of completeness of this issue. Appeals filed by the assessee stands allowed for statistical purposes.

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• 2024 (8) TMI 877
  Validity of reopening of assessment u/s 147 - bogus LTCG on share transactions - transactions pertain to HUF or to individual - HELD THAT:- Referring to assessee submission that the objection and mentioned that the LTCG transaction was not made by the assessee, but by the HUF. AO finally submitted the rebuttal and disposed the objection without any verification from his end. AO duly relied on the observation of the Investigation Department only. No separate investigation was made. AO referred that the verification was made from broker house, but no such evidence was supplied to assessee for cross verification. The certificate from Banas Finance Ltd is duly annexed by the assessee where it is clearly mentioned that the share was issued in the name of HUF and not to an individual. There is no reflection in bank account or in the account statement that the assessee has made the transactions. The Ld.AO was not able to specify the documents / evidence that the assessee had made the transaction and the demat account which is filed by the assessee before the Bench and the Revenue. There is no reflection of the shares in question. The assessee has taken this ground before the CIT(A) but CIT(A) had passed very cryptic order and without considering the submission of the assessee. The reason recorded by the AO itself is erroneous and perverse - AO had no jurisdiction for reopening the assessment u/s 148. So, the recorded reason is baseless and liable to be quashed. Decided in favour of assessee.

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• 2024 (8) TMI 876
  Estimation of income - bogus purchases - HELD THAT:- As assessee himself pleaded before the Ld. CIT (A) that considering the industry and facts of the case, a G.P. rate of 3% should have been applied. To support his contentions, assessee furnished an assessment order of his known /family member M/s. V. Gunvant Co. for same assessment year u/s. 143(3) r.w.s. 147 of the Act before the AO and the Ld. CIT (A). Thus the matter of the assessee should also get the same treatment. Hence we direct the AO to apply G.P. @ 3% on alleged bogus purchase and work out the income of the assessee accordingly.

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• 2024 (8) TMI 875
  Unexplained cash credit u/s 68 - prove of source of the source - HELD THAT:- We find that the assessment year, involved in the assessee`s case under consideration, is the assessment year 2009-10, where the assessee need not to prove source of the source , however, we note that the assessee has proved the source in a satisfactory manner, as noted by us above. Therefore, we note that assessee has discharged his initial onus, and once that onus is discharged, it is for the Revenue to prove that the credit found in the books of accounts of the assessee is the undisclosed income of the assessee. Our view is fortified by the judgement of Nemi Chand Kothari [ 2003 (9) TMI 62 - GAUHATI HIGH COURT] wherein it was held that the burden of the assessee to prove the genuineness of the transactions as well as creditworthiness of the creditor is confined to the transactions which have taken place between the assessee and the creditors, and it is not the burden of the assessee to show the source of his creditor or to prove the creditworthiness of the source of the sub-creditors. Unexplained cash credit for the loan taken from M/s. Deepika Roadlines - We find that such loan was taken by the assessee, by an account payee cheque, through proper banking channel, and necessary interest have been accrued. Name and address and PAN number of the party from whom the loan was taken, have been submitted by the assessee, before the assessing officer, during the assessment proceedings. We note that in the case of CIT V/s. Ranchod JivabhaiNakhava [ 2012 (5) TMI 186 - GUJARAT HIGH COURT] held that once the assessee has established that he has taken money by the way of accounts payee cheques from the lenders who all are Income Tax assessee, whose PAN have been disclosed, the initial burden u/s 68 of the Act was discharged. Addition on account of difference in the accounts with M/s Star Shine Pvt. Ltd. - HELD THAT:- The assessee has not recorded any transactions in its books of account, as the assessee has not purchased such goods from M/s Vision Impex, the said good was transferred to M/s Star Shine on high sea sale and therefore the said party has credited such transactions in the name of assessee, however, the said party was required to credit the said purchases from M/s Vision Impex. The details of the bills which are issued on high sea sales by M/s Vision Impex to M/s Star Shine Clothing Pvt. Ltd,were submitted by the assessee, before the lower authorities.The copy of confirmation of the accounts obtained from M/s Star Shine Pvt Ltd was also submitted by the assessee. Based on the factual position, narrated above, we are of the view that no addition should be made in the hands of the assessee, as the assessee has explained the transaction with document evidences, as noted by us above, hence, we are not inclined to accept the contention of the AO in any manner and hence the addition so made is deleted. Hence this ground of the assessee is allowed.

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• 2024 (8) TMI 874
  Addition u/s 69A - deposit in SBN during demonetization period), in his bank account - assessee could not produce documentary evidences and cash book to substantiate the deposits of SBN in bank account and the necessary evidences required for determination of business income - HELD THAT:- Assessee needs to explain the SBN deposits with proper books of accounts and other documentary evidences, which has not been done in this case. It is also not clear to us whether the notices from first appeal office is served through ITBA portal or otherwise. As such in the interest of justice, we remand the matter back to the files of the CIT (A), to allow the assessee an opportunity of producing all documentary evidences needed to explain and establish his case in relation to the grounds of appeal contained in form 35, and to pass an order on merits of the case, after obtaining necessary report from the AO as per provisions of law, and the assessee is also directed to fully cooperate in appellate proceedings and file all documentary evidences to establish his claim. Notice of hearing from the CIT (A) office may be issued as per provisions of section 282 as per observation in the case of Munjal Bcu Centre Of Innovation [ 2024 (3) TMI 479 - PUNJAB HARYANA HIGH COURT] Appeal of the assessee is allowed for statistical purposes.

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• 2024 (8) TMI 873
  Addition of capitation and regular fees payment to medical colledge for son's education - statement of Dr. P.Mahalingam recorded during the course of search u/s. 132(4) - as argued AO failed to supply the copy of statement of Dr. P.Mahalingam and no cross-examination was allowed - HELD THAT:- The addition of Rs. 50 lakhs was made based on the statement of Dr. P.Mahalingam, and even though, assessee requested for cross-examination by filing an application before the Addl.CIT, the same was denied which act of omission on the part of the AO/ACIT violates the natural justice, and therefore, we do not countenance such an action of the AO and for that we rely on the decision of the Hon ble Supreme Court in the case of Kishan Chand Chellaram v[ 1980 (9) TMI 3 - SUPREME COURT] and also the decision of M/s Andaman Timber Industries [ 2015 (10) TMI 442 - SUPREME COURT] wherein, their Lordships are held omission to cross-examination of third party statement would make the statement null in the eyes of law. It would be gainful to refer to the order of Naresh Pamnani [ 2019 (3) TMI 1787 - ITAT DELHI] which has been referred in the subsequent order in the case of Shri Manjit Singh Gahlot [ 2022 (10) TMI 399 - ITAT DELHI] - Thus we held that the AO s action of omission to allow assessee cross-examination of Dr. P. Mahalingam vitiates the addition and therefore, we direct deletion of addition of Rs. 50 lakhs. Assessee appeal allowed.

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• 2024 (8) TMI 872
  Addition u/s 68 - unexplained cash credit - in assessee s case, no such books of accounts have been maintained - HELD THAT:- The provision regarding unexplained cash credit has been invoked after verifying and taking cognisance of the cash deposits and the savings account of the assessee with Bank of Baroda. Thus, the transaction was very well recorded in the bank statement and, per se, the bank statement which is savings account of the assessee has to be treated as books of the assessee as the assessee is an individual and is not filing books of account in the common parlance that of the Company s books of account. Thus, the contention of the assessee that Section 68 of the Act cannot be invoked does not sustain. As regards to the component of cash deposits assessee before the CIT(A) has categorically mentioned that the sale receipt of property sold was received in cheques and he has explained these receipts correctly for which the CIT(A) has accepted the assessee s contention. The component of cash deposit cannot be corelated with the sale receipts of the property as the cash component is related to the assessee s savings account for which the assessee has given explanation are out of cash deposits made by the assessee out of his known source of income and the same was duly submitted as the assessee is having source of income from house property, income from other sources and income from agricultural activity. Since the said aspects should have been taken into consideration and should have been verified by the AO, therefore, on merit, this aspect requires to be remanded back to the file of the AO for proper adjudication and verification as per Income Tax provisions. Appeal of the assessee is partly allowed for statistical purpose.

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• 2024 (8) TMI 871
  Reopening of assessment - unexplained cash deposits - assessee has submitted that the assessee is regularly filing the income tax return and taking into account the accumulated cash in hand for the past so many years coupled with the opening cash in hand as on 01.04.2016 as well as the income earned prior to announcement of demonetization scheme, the assessee had sufficient cash in hand to explain the source of alleged cash deposit. HELD THAT:- Consideration the old age of the assessee and that regular return of income is being filed by her, justice will prevail if the assessee is granted one more opportunity. Therefore restore the issue raised on merits about explaining the source of alleged cash deposit to the file of A.O for deciding it afresh for which reasonable opportunity of being heard to be provided to the assessee and also Ld. A.O is directed to entertain the additional evidence to be filed by the assessee for explaining the source of alleged cash deposits. The assessee is also directed to be vigilant and not to seek any adjournment without reasonable cause and should furnish the requisite details to the A.O at the earliest so that Ld.A.O can decide in accordance with the law. Accordingly the finding of Ld. CIT(A) is set aside and Ground of appeal allowed for statistical purpose.

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• 2024 (8) TMI 870
  Denial of deduction u/s 80IC - finished products manufactured at Unit No. III at Paonta Sahib, Himachal Pradesh from assessment year 2010-11 onwards - assessee s claim of deduction u/s 80IC was allowed in the initial assessment years - For the first time in assessment year 2014-15, AO expressed doubt/reservation with regard to assessee s claim of deduction as he was of the view that the machinery available with the assessee does not support the claim of deduction and observed that the electricity consumption cannot support claim of quantum of production. HELD THAT:- While deciding the issue in order [ 2020 (6) TMI 136 - ITAT DELHI] dated 02.06.2020, learned Tribunal factually verified the issue and ultimately concluded that the assessee is entitled to claim deduction u/s 80IC of the Act in respect of Unit III situated at Paonta Sahib. Since, the aforesaid decision of the Tribunal was not available before learned first appellate authority while deciding appeals for assessment years 2011-12, 2012-13, 2013-14, the disallowances were confirmed. While deciding the appeal for assessment year 2010-11, FAA not only held the reopening of assessment u/s 147 of the Act to be invalid as it was on a mere change of opinion, but he also decided the issue on merits following the decision of the Tribunal in assessment year 2014- 15. The facts discussed above clearly establish that all the assessment years under appeal, factually, stand on identical footing. Therefore, the contention of learned Departmental Representative that the assessment order for assessment year 2010-11 was not considered by the Tribunal while deciding the appeal for assessment year 2014-15, in our view, is irrelevant and immaterial. Considering the fact that in the reassessment order for assessment year 2010-11, the AO himself has made it clear that reopening of assessment is based on the decision taken by the AO in the assessment order passed for assessment year 2014-15. Thus, in our view, the issue is squarely covered by the decision of the Coordinate Bench in assessment year 2014-15. Assessee is entitled to claim deduction under section 80IC of the Act. Decided in favour of assessee.

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• 2024 (8) TMI 869
  Reopening of assessment - bogus purchases - HELD THAT:- Admittedly in this case, the information was received that assessee is one of the beneficiaries of obtaining accommodation bills of bogus purchases from one party. There is tangible material, information available from the sales tax department as well as the director general of income tax investigation. Assessee did not respond to the notice u/s 148 of the act. He did not file the return of income as well as did not file any objection before the learned AO. Therefore, no fault can be found in the reopening of the assessment. Reopening of assessment without proper opportunity of cross-examination - The opportunity of cross-examination does not hamper the case of the assessee because the assessee on its own could not fulfil and show the genuineness of the purchases, therefore, there is no ground to entertain the argument of the learned authorized representative about failure on part of the assessing officer to grant an opportunity of cross-examination. Estimation of income - Assessee is into the business of ferrous and nonferrous metal as a trader, therefore if there is a bogus purchase, and quantitative details are available, only the profit embedded therein is required to be taxed in the hands of the assessee. Honourable Bombay High Court in case of Monmouth Haji Adam [ 2019 (2) TMI 1632 - BOMBAY HIGH COURT] has laid down the amount of addition required to be made in the hands of the assessee if the purchases are bogus. Therefore, we direct the learned assessing officer to make the addition to that extent only. For this purpose, as the information is not available before us, we are handicap and restore the issue back to the file of the learned assessing officer with a direction to the assessee to produce the net profit ratio of purchases which are not alleged to be bogus and net profit ratio of purchases which are alleged to be bogus. The learned assessing officer after examination may decide the issue afresh. Appeal of assessee partly allowed.

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• 2024 (8) TMI 868
  Accrual of income - Receipt of membership fee - AR argued that the membership fees received has been offered to tax as and when the customers have been offered after completion of provision of services like beauty treatment and restaurant - amounts are received in advance and the Revenue cannot expect to offer all the advances received to tax - HELD THAT:- Generally any membership fee comprises either of amount, the member pays which is non-refundable or it is an advance paid by the member in lieu of the services being provided. It consists of a non-refundable portion of an upfront payment and an amount paid for availing discount for the services offered which are accounted and taxed on deferred basis. Normally, the revenue related to these arrangements should be recognized on a straight line basis unless there is evidence that the revenue is earned any different pattern. In this case, the assessee is providing beauty health packages and there is an input cost which is variable from year to year whereas the members desirous of availing the services pay the amount in advance. The entire amount has been offered to tax. The working of the amounts offered for taxation given by the assessee has not been disputed by the Revenue authorities in the years before us and also accepted the methodology in the A.Y. 2012-13 and A.Y. 2013-14. Hence, keeping in view the entire facts and circumstances peculiar to the instant case, the appeal of the assessee is hereby allowed. Disallowance u/s 14A - no exempt income earned - HELD THAT:- Both the parties fairly submitted that the assessee has not earned any exempt income. Now, it is a settled matter that no disallowance is called for in the absence of any exempt income u/s 14A resulting in deletion of disallowance. Interest paid to NOIDA on plot installment - expenditure incurred on account of interest and acquisition of the capital asset is not allowable as per the proviso to Section 36(1)(iii) - CIT(A) affirmed the decision of the AO holding that interest cost should be added to the cost of land allotted by the NOIDA and hence the same cannot be held to be business expenditure - HELD THAT:- The expenditure incurred on account of interest and acquisition of the capital asset is not allowable as per the proviso to Section 36(1)(iii). Disallowance being 5% of expenses on business promotion, travelling, telephone expenses - HELD THAT:-We hold that no ad-hoc disallowance is permissible without bringing any rationale for such disallowance. TDS u/s 194H - Non-deduction of TDS on transaction charges levied by the bank on credit card transactions - HELD THAT:- Notification No. 56/2012 - CBDT facilitates payment without TDS of credit/debit card commission on transaction between the merchant establishment and acquirer banks. The notification obviates the uncertainty about the applicability of specific TDS provisions on payments mentioned above and consequent litigation. Hon'ble Delhi High Court in JDS Apparels Pvt. Ltd. [ 2014 (11) TMI 732 - DELHI HIGH COURT] held that commission to bank on payments received from customers who had made purchases through credit cards is not liable to TDS u/s 194H of the Act. Thus, we hold that no disallowance on credit card transactions for default of TDS is called for.

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• 2024 (8) TMI 867
  Unexplained deposits in bank account - assessee explained that the assessee has received sum from the mother of the assessee, who had expired and Copy of Bank Statements was filed to demonstrate the transactions of loan given by a mother to a Son with duly sworn Affidavit of the assessee - HELD THAT:- Since the Mother of the assessee has expired long ago and sufficient evidences have been filed by the assessee to demonstrate the transaction, we set aside the impugned order passed by the learned CIT(A) on this issue and delete the addition on account of unexplained deposit. Now, there remains a small deposit of ₹ 1,000, which is unexplained and this amount can be ascribed out of past savings. Hence, addition of ₹ 1,000, is also hereby deleted. Thus, ground no.2, is hereby allowed. Capital gain from sale of jewellery as short term capital gain - assessee argued that the authorities below have assessed the amount received from sale of jewellery as short term capital gain that too without giving benefit of cost of acquisition - HELD THAT:- Assessee filed two purchase bills wherein the year of purchases is 1998. In view of this, we direct the AO to compute the long term capital gain considering Sale Consideration Less Index Cost of Acquisition. Enhancing the income of the assessee on account of interest income of the assessee - HELD THAT:- We find that in the remand report dated 20/02/2020, the Assessing Officer stated that the assessee has received interest income which has not been included in the total income. CIT(A) observed that in the reply filed by the assessee in response to the remand report, has not made any comment on this issue and hence the addition was confirmed. Assessee fairly accepted that the addition be confirmed. Consequently, no interference is warranted in the order of the learned CIT(A) on this issue. Thus, ground no.4, is dismissed. Enhancing the income of the Appellant on account of income from house property from the houses owned by the Appellant - HELD THAT:- CIT(A) has granted sufficient opportunities to enable the assessee to counter the remand report which the assessee failed to do so and hence the direction of the learned CIT(A) on this issue is found appropriate and no interference is called for in the order passed by the learned CIT(A) on this issue. Accordingly, ground no.5, is also dismissed. Computation of capital gain on the basis of the value adopted for registration process - HELD THAT:- As we find that there is a difference between sale consideration of ₹ 14,43,000 and value as per registration is at ₹ 18,75,500. We strongly feel that it was bounden duty of the AO to refer the matter to the Valuation Officer in accordance with the judgment of Sunil Kumar Agrawal [ 2014 (6) TMI 13 - CALCUTTA HIGH COURT] Accordingly, we set aside the impugned order passed by the CIT(A) on this issue and restore the matter to the file of the AO and direct him to re compute the capital gain in accordance with law. Unexplained deposits in bank account sustained for the credit entries appearing in two bank accounts in the State Bank of India - HELD THAT:- The addition has been sustained with reference to the credit entries in the bank account. During the course of hearing, assessee fairly submitted that he is not in a position to explain the same in view of the long passage of time. He requested before the Bench to take a reasonable view in this regard. Consequently, keeping in view the withdrawals which may have been re circulated and keeping in mind that the litigation is pending for over a decade and the assessee has tried to co operate at all levels, we confirm the addition in lump sum to end the dispute. Accordingly, the assessee gets relief. Unexplained deposits in bank account - addition with respect to sum total of credits appearing in the bank account of the assessee - HELD THAT:- Automatic closure of Fixed Deposit upon maturity which is credited to saving bank account as per the extent procedures of the Bank and hence, the sum cannot be considered to be unexplained credit in the bank account. As per the balance amount of ₹ 1,51,358, he fairly submitted that ₹ 25,202, is income from interest which merits addition in full. The balance amount of ₹ 1,26,156, is income from house property as it is evident that the credit on account of rent. The addition under section 24 of the Act to the extent of 30% is allowable on such income and so the net addition may be restricted to ₹ 88,309, as income from house property. Addition is restricted to ₹ 88,309, as income from house property and ₹ 25,202, towards interest aggregating to ₹ 1,13,511. So the assessee gets relief of ₹ 6,68,783.

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• 2024 (8) TMI 866
  Addition u/s 68 - bogus LTCG on sales transactions of shares - denial of exemption u/s. 10(38) - SEBI has passed an order wherein it has found that the share price of Sunrise Asian Limited was manipulated and the trading of said scrip was banned by the SEBI - HELD THAT:- We are not going into details of various judgments wherein additions have been deleted on this scrip of M/s. Sunrise Asian Ltd and statement of Shri Vipul Vidur Bhatt has been discarded on the ground assessee was not given cross examination. We have given our finding based on various other factors and the most crucial one, the order of the SEBI brought on record before us wherein there is detailed investigation and enquiry and finding in the case of M/s. Sunrise Asian Ltd. and how various other entities and persons connected with the manipulation and rigging of the prices in the stock exchange recommend to provide accommodation entry. Thus, the addition made u/s. 68 is confirmed. Addition of brokerage alleged to have been paid to the broker - Though we have confirmed the aforesaid addition that assessee s transaction is not genuine based on the discussion made above, however, the presumptive addition on account of brokerage which assessee might have paid to the broker cannot be sustained without any actual material of outgoing by the department. Accordingly, addition made by the ld. AO is deleted. Appeal of the assessee is partly allowed.

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• 2024 (8) TMI 865
  Revision u/s 263 - Allowability of deduction claimed u/s 36(1)(iii) - HELD THAT:- A.O has called for the information on the interest expenses, loans and advances and the method of accounting fallowed and there cannot be any non application of mind by the A.O. We find that the A.O has considered one of the possible views based on the information and it is not necessary that the A.O should put all the discussions/observations in the assessment order, as per explanations (2) to sec 263 of the Act the authority has to invoke provisions only when there is no verification and enquiry conducted by the A.O. Whereas the A.O has applied his mind and verified the facts. If any query is raised in the assessment proceedings and it was responded by the assessee, mere fact that it is not dealt within by the A.O. in the order cannot implied that there is no application of mind and the A.O. has applied one of the possible view. Hence, the action of the Pr.CIT cannot be acceptable as the order passed by the A.O. does not satisfy the twin conditions of erroneous and prejudicial to the interest of the revenue. Accordingly, we set aside the order of the Pr.CIT and allow the grounds of appeal in favour of the assessee.

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• 2024 (8) TMI 864
  Deduction u/s 80IA - Assessee received fees as provided Project Advisory Services to three companies as Special Purpose Vehicles (SPV) formed to execute the contract obtained from National Highways Authority of India Ltd (NHAI) - as contended that the SPV is only an enterprise or undertaking of the assessee - HELD THAT:- It is the SPVs which are actually executing the work of development and operation of infrastructure facility. We noticed earlier that the SPVs have divided entire work of execution of infrastructure facility and each of the said work have been allocated to members of the consortium. That s how the assessee has been allotted project advisory work. In addition to the assessee, other consortium members have also executed the part of the work allocated to them. It was stated that the assessee has raised invoices upon the SPVs by including its mark-up over the costs incurred by it. That is how the assessee has earned income on the work executed by it for the SPVs. This fact also shows that the assessee has also recognised the SPVs as separate legal entity and not its own enterprise/undertaking. All the Special Purpose Vehicles are filing their return of income separately. If the enterprise is owned by the assessee, the income earned by the enterprise would be credited to the profit and loss account of the assessee, which is not the case here. The members of consortium are also charging the SPVs at more than the cost incurred by them and thus making their own profits. SPVs cannot be considered as an undertaking or enterprise owned by the assessee. Hence, we are of the view that the AO was right in holding that the assessee has only executed a works contract allotted to it by the SPVs. There should not be any dispute that the deduction u/s 80IA is not available to the persons executing works contract. CIT(A) was justified in affirming the decision of the AO in rejecting the claim for deduction u/s 80IA of the Act. Decided against assessee.

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• 2024 (8) TMI 863
  Reopening of assessment u/s 147 - Admission of additional evidences denied - assessee did not disclosed the income from other sources and no detail has been furnished in this regard - sum treated as undisclosed income of the assessee and taxed as per provision of 115BBE - also assessee has claimed deduction u/s 54F in the return under section 148 while in the original return no such claim was there - HELD THAT:- The bench noted that the appeal of the assessee dismissed without affording the opportunity of being heard to the assessee. The bench also noted that wife of the assessee expired and the assessee was passing through the tremor. Therefore could not submit the required documents before the ld. AO, moreover looking to the fact of the case that the assessment is made in these year on account of the fact that income wife after her death partly to be assessee in her name and partly in his name for the year under consideration as well as for the subsequent year. On account of the death of wife of the assessee he could not produce the details as it was not found properly at the time of proceeding before the lower authority. Even the status of mind of the assessee was under tremor. This resulted the non compliance before the ld. AO but at the first appeal stage before the ld. CIT(A) the assessee filed the additional evidence and prayed that the same be considered in light of the facts stated herein above. He further based on these facts submitted that the ld. CIT(A) should have considered the applications under rule 46A as the assessee being a village man, not technically equipped and unaware of such notice uploaded on the portal for which no intimation was received through mail or SMS skipped to check the portal and by time she assessed her e-portal she left heavenly abode. The assessment was completed. Therefore, we admit this evidence. Since, these additional evidence is also required to be tested on its merits in order to bring the correct fact on record and in order to charge the correct tax on the income of the assessee. As the ld. AR prayed that these facts are not examined by the CIT(A) and if given a chance the assessee would like to plead these contentions before the CIT(A) and based on these arguments he prayed to set aside the issue to the file of the ld. CIT(A). On the other hand, we found that the DR raise any general objection but there is no specific objection as to why the prayer of the assessee should not be accepted based on the factual aspect of the matter. These facts is not disputed by the revenue. Therefore, we are of the considered view that the assessee is deprived of justice. Assessee relied upon the judgement in the case of CIT vs. Virgin Securities and Credits (P) Ltd. [ 2011 (2) TMI 207 - DELHI HIGH COURT] wherein the court held that CIT(A) should admit the additional evidence if he finds that the same is crucial for disposal of the appeal of the assessee. Here we note that the additional evidence filed by the assessee is required to be seen to verify the nature of the income and under whose name it is to be taxed ergo we admit the additional evidence and set a side the matter to the file of the ld. AO to decide the issue based on the additional evidence and pass the order in accordance with the law. Our decision to restore the matter back to the file of the ld. AO shall in no way be construed as having any reflection or expression on the merits of the dispute, which shall be adjudicated by the ld. AO independently in accordance with law. Appeals of the assessee are allowed for statistical purposes.

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• 2024 (8) TMI 862
  Cash deposited in bank and excess cash in hand - assessee was selected for Limited scrutiny under CASS - Assessee furnished various details and information as sought by AO, thus completed assessment by making three additions, Cash deposits, excess of closing cash in hand over opening balance of cash in hand (plus net income for the year) by alleging the same as undisclosed income and debtors balance on the ground that there were not debtors in preceding year - CIT(A), who partly allowed relief - HELD THAT:- The Bench has taken into consideration the submissions of the assessee from which it appears that the ld. AR of the assessee neither substantiated nor produced any documentary evidence to controvert the findings of the ld CIT(A). In this situation, the Bench has no other alternative except to confirm the action of the ld. CIT(A). Thus the appeal of the assessee is dismissed.

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• 2024 (8) TMI 861
  Addition made on Annual Lettable Value (ALV) of properties where rent has been considered as business income - HELD THAT:- The assessee is a company engaged in the business of development / construction and sale of flats, plot etc. It is not in dispute that the assessee had held properties as stock in trade and the same are classified in four categories. Flats open for sale, Flats that were actually let out by the assessee, Flats that were used for the purpose of business by the assessee and Flats under litigation for which approval was not granted by Municipal Corporation of Delhi (MCD).] The issue is already covered in favour of the assessee by the order of this Tribunal in assessee s own case [ 2022 (2) TMI 1460 - ITAT DELHI] wherein as before the ld. CIT(A), the assessee furnished assessment orders for Assessment Year 2011-12 and 2012-13 wherein the Assessing Officer has excluded the properties which have been given on rent for calculation of notional rental value. Following the findings given in AY 2011-12 and 2012-13, the Id. CIT(A) directed to exclude such properties. Decided in favour of assessee. Determination of ALV in respect of property under litigation - Issue already covered in favour of the assessee by the order of this Tribunal in assessee s own case for Asst Years 2013-14 and 2014-15 [ 2022 (2) TMI 1460 - ITAT DELHI] wherein held evidences have not been submitted before the lower authorities, this grievance has been decided against the assessee. In the interest of justice and fair play, we restore this issue to the file of the Assessing Officer. The assessee is directed to furnish necessary documentary evidences to justify its claim of non inclusion of ALV of storage of 7511 sq. ft in Jyoti Shikar, Janakpuri. The Assessing Officer is directed to examine the evidences and decide the issue afresh. Determination of ALV in respect of property under self-occupation - Issue already covered in favour of the assessee by the order of this Tribunal in assessee s own case for Asst Years 2013-14 and 2014-15 [ 2022 (2) TMI 1460 - ITAT DELHI] as held section 22 of the Act itself excludes ALV of such properties of which the assessee is owner and has occupied for the purpose of any business or profession carried on by him. Since the assessee has furnished necessary evidences which have been duly verified by the Id. CIT(A), we to interfere with the findings of the CIT(A). Decided in favour of assessee. Addition of business income in respect of sales for the period of first three months on a proportionate basis - addition made by the ld. AO on account of sales for the whole year and sustaining it only for first 3 months - assessee had not offered any revenue from windmills net of expenses during the year under consideration to tax on the ground that the buyer had offered the entire revenue from operations of windmills and its related expenses for the whole year to tax in its income tax returns - HELD THAT:- CIT(A) had gone by the specific clause 5(xi) of the Agreement dated 22.7.2014 and had held that the revenue from operation of windmills for the period 1.4.2014 to 30.6.2014 (first three months) would be taxable in the hands of the assessee company. We find that while holding so, the ld. CIT(A) did not give corresponding deduction for expenses incurred for the same period of 3 months under the head income from business . In our considered opinion, the assessee would be duly entitled for deduction of expenses incurred qua the windmill unit for the period of 1.4.2014 to 30.6.2014 subject to verification of the figures stated thereon by the ld. AO . Hence the ld. AO is directed to examine the veracity of the figure stated by the assessee and grant deduction accordingly. The assessee is hereby directed to furnish the break up of figures before the ld. AO and prove that the same were incurred for the purpose of windmill division and pertains to the period of first three months of the year under consideration. Slump sale - Both the buyer and seller had undertaken various acts which demonstrates that the beneficial ownership of the windmills got transferred in favour of the buyer by the seller i.e. the assessee herein. The legal ownership alone stood transferred by the assessee in favour of the buyer by way of Slump Sale Agreement We find that the revenue clause as agreed in the Agreement dated 22.7.2014 is operative and forms integral part of the Slump Sale Agreement dated 23.3.2015. This goes to prove that the original agreement dated 22.7.2014 was acted upon by the parties and it finally stood culminated into Slump Sale Agreement. Thus, we hold that the order of the ld. CIT(A) requires to be modified only to the limited extent of granting deduction for expenses incurred during the period 1.4.2014 to 30.6.2014 in the windmill division and other findings given by the ld. CIT(A) does not require any interference. Action of the CIT(A) in determining the ALV of the property at 50% for basement area in respect of properties located at ground floor on the ground that it is arbitrary in nature - CIT(A) observed that the basement area of the property could at best be used only for storage facilities and ALV of such storage space could be estimated to be roughly 50% of the property. CIT(A) also appreciated the fact that there are lot of restrictions in use of basement area when compared to ground floor and above. The revenue has challenged the relief of 50% granted by the ld. CIT(A). We find that the MCD guidelines do not permit the usage of basement for residential purposes. It could be let out only for storage purposes or car parking purposes. Hence we find that the ld. CIT(A) had fairly estimated the usage of basement area to be 50%. We further find that the assessee had not challenged the action of the ld. CIT(A) before us in this regard. It is a fact that the basement area could not be utilized for residential purposes. We duly appreciate the fact that the basement area could have only restrictive usage and cannot command the same rental value as the ground floor commands. Hence the relief granted by the ld. CIT(A) at the rate of 50% is correct and would meet the ends of justice in the peculiar facts and circumstances of the instant case. Decided against revenue. Disallowance of Employees contribution to PF and ESI - CIT(A) deleted addition - HELD THAT:- AR argued that once the date on which cheques were tendered to the bank by the assessee, the assessee loses control over it. He prayed for setting aside of this issue to the file of ld. AO. The ld. DR vehemently relied on the order of the ld. AO. We find that the claim made by the assessee requires factual verification by the ld. AO. Hence we deem it fit and appropriate to restore this issue to the file of ld. AO for denovo adjudication in accordance with law. Accordingly, the Ground No. 2 raised by the revenue is allowed for statistical purpose. Addition made u/s 43CA - AR before us stated that the issue in dispute is to be decided in favour of the revenue and the ld. CIT(A) erred in granting relief to the assessee. Since no arguments were advanced by the ld. AR responding to the arguments of the ld. DR on this issue, the Ground No. 3 raised by the revenue is allowed.

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• Customs

• 2024 (8) TMI 860
  Classification of imported goods - Vitamin Pre-mixes - classifiable under heading 29.36 of the Customs Tariff Act, 1975 or under 23.09? - HELD THAT:- The impugned order dated 8th July 2022 is set aside and the matter remanded for de novo consideration. Respondent no. 6 shall pass a reasoned order dealing with all submissions of appellant on or before 15th October 2024. Before passing any order, he shall give a personal hearing to appellant, notice whereof shall be communicated atleast 5 working days in advance - After the personal hearing, should appellant wishes to file any written submissions recording what transpired during the course of personal hearing, same shall be filed within 3 working days of personal hearing and that shall also be dealt with in the final order. Appeal disposed off.

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• 2024 (8) TMI 859
  Recovery of short levied duty alongwith interest - period of limitation prescribed under sub-section (9) of Section 28 of the Customs Act, 1962 - HELD THAT:- The question whether Ext.P10 is barred by limitation or not is a mixed question of law and fact, which cannot be adjudicated in the writ petition. Therefore, the remedy open to the appellant is to prefer a statutory appeal and take the limitation plea before the appellate authority. The Learned Counsel for the appellant submitted that in the impugned judgment, the Learned Single Judge had already entered a finding regarding limitation on merits against the appellant, and as such, the appellate authority cannot take a different stand. Since the Learned Single Judge has decided to relegate the appellant to the appellate remedy, a finding on the question of limitation ought not to have been entered into as rightly submitted by the Learned Counsel for the appellant. The appellate authority is directed to consider the appeal on merits untrammeled by the findings in the impugned judgment. The time during which the appellant has been prosecuting the writ petition shall be excluded while computing the period of limitation. Appeal disposed off.

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• 2024 (8) TMI 858
  Rejection of request of renewal of custodianship granted under Section 45 of the Act read with Regulation 30 of HCCAR, 2009 - revocation of custodianship/approval as CCSP under Section 45 read with HCCAR, 2009 under Regulation 11 read with Regulation 12 of HCCAR, 2009 - imposition of penalties. HELD THAT:- The appellant, Container Corporation of India was given custodianship under HCCAR, 2009 as a Customs Cargo Service Provider (CCSP). The approval of CCSP is under Regulation 10 of the HCCR 2009, which is given by the jurisdictional Commissioner of Customs on fulfillment of conditions under Regulation 5, ibid. Further the responsibilities of the CCSP are mentioned at Regulation 6, ibid. It is found that the custodianship would have been issued to CCSP i.e. after the satisfaction of all the conditions prescribed in Regulation 5. The CCSP has applied for renewal of the custodianship - the issues raised by the Customs on audit of the appellant-custodian pertained to the conditions mentioned in Regulation 5 and the discrepancies were found at the time of renewal could be because of certain new requirements, which should have arisen between the period of issue of custodianship and the application for renewal. It is found that the custodian has operated from the area, which is not notified under Section 8, of the Customs Act, 1962. As regards Section 45, the appellant contends there is no allegation or incident, where there is any unauthorized clearance of goods from the approved premises of the CCSP nor there was any pilferage of goods alleged. Hence, imposition of penalty under Section 117 is not tenable - Learned Commissioner has observed that the custodian is operating from an area beyond the notified area without approval from the proper officer as per the inquiry report. In these circumstances, operating from an area which is not notified tantamount to violation of Section 45 read with Section 7 and 8 of the Customs Act, 1962, since storing and clearing of the cargo from such unnotified area would be a violation of provisions of Section 45 of the Customs Act, 1962. Therefore, the imposition of penalty under Section 117 is tenable. The discrepancies/non-adherence noticed on audit of the appellant-custodian (CCSP) are found to be non-fulfillment of conditions under Regulation 5(1)(i) (c) (f) (g) (n) and clause (iii) of Regulation 5 of HCCAR, 2009, hence the penalty imposed under Regulation 12(8) of HCCAR, 2009 is tenable. The penalty of Rs. 50,000/- imposed on the Custodian (CCSP) reduced to Rs. 10,000/- under Regulation 12(8) of HCCAR, 2009 - Further, the penalty imposed under Section 117 of the Customs Act, 1962 is reduced from Rs. 4,00,000/- to Rs. 25,000/-. Appeal disposed off.

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• 2024 (8) TMI 857
  Classification of imported Multimedia speakers - to be classified under Customs Tariff Heading (CTH) 8518 2200 or to be classified under CTH 8519 8100 and CTH 8527 9990? - applicability of MRP based assessment as per Sl. No.101-A of Notification No. 49/2008-CE(NT) dated 24.12.2008 - HELD THAT:- The N/N. 49/2008-CE(NT) dated 24.12.2008 would be applicable to the goods which are classifiable under CTH 8519 and 8527 - However, in the present case, this Tribunal after recording its reasons in the case of Logic India Trading Co. [ 2016 (3) TMI 5 - CESTAT BANGALORE ], held ' the multifunctional printing machines having fax facility and screening facility would continue to fall under Heading 8471 of the Customs Tariff Act as digital printers only inasmuch as the predominant function of the machine in question was printing.' Since the classification has been settled under CTH 8518 2200, therefore, the applicability of N/N. 49/2008-CE(NT) dated 24.12.2008 to the imported goods as argued by the learned Authorised Representative for the Revenue, cannot be accepted. The impugned orders on this count are upheld and Revenue s Appeals are dismissed.

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• Securities / SEBI

• 2024 (8) TMI 856
  Trading based on the stock recommendations given by Guest Experts appearing on Zee Business Channel - Sharing of non-public information regarding recommendations, by Guest Experts to Profit Makers in advance - Pattern of correlation of trades of suspect entities with recommendations made by guest experts - HELD THAT:- Profit generated in the accounts of the Profit Makers are quite substantial, when compared with the profits on trades otherwise executed in the accounts of these Profit Makers. It is also seen that from the trades that are observed to have been executed based on the advantage of advance receipt of information about recommendations of Guest Experts, the Noticees have collectively earned substantial profit to the tune of INR 7,41,29,648 from 1047 instances, constituting 54% of the total profit earned during the relevant period. From the above, it can be seen that a considerable portion of their respective profit was earned through trades based on recommendations vis- a-vis their total trades. Further, Table No. 31 also provides the detailed breakup of the profit earned by the Noticee No. 1 to 5 (Guest Expert wise) and number of instances of trades executed based on the sharing of recommendation by Guest Experts. Sharing of profits amongst Noticees - From the screenshots of WhatsApp Chat, it is seen that there are certain messages shared between Nirmal Kumar Soni and Guest Experts which had picture of currency notes in them (highlighting the serial number of the note). Further, in the statements recorded on January 19, 2023 of Noticee Nos. 1, 11, 12, 14 and 15 (produced in the subsequent paragraph), it has been admitted by Guest Experts that they had a profit-sharing arrangement with Nirmal Kumar Soni for sharing their recommendations with Nirmal Kumar Soni prior to giving the recommendations on Zee Business. Some of the Statements also shows that the amount already paid to the Guest Experts in cash and the balance amount to be paid to them by Nirmal Kumar Soni. There was an arrangement between Nirmal Kumar Soni and Guest Experts to share the wrongful gain earned through recommendation based trades. The evidence in the form of statement further shows the arrangement entered into amongst Profit Makers and Guest Experts that profit earned through recommendation based trades would be shared among them in terms of the oral agreement. As observed in the course of investigation Nirmal Kumar Soni, having received the information from Guest Experts, had executed trades not only in his own account but also in the accounts of Noticee Nos. 3, 4 and 5. Pursuant to the generation of profit, the same got shared among them as per their understanding. However, in the case of Noticee No. 2, it is observed that after receipt of information from Guest Experts, trades were executed in his own account. Hence, it is held, prima facie, that an amount of INR 7,41,29,648 calculated as per Table No. 30 and 31 is a profit which has been earned by Profit Makers from trades executed on the basis of advance receipt of non-public information of recommendations provided by Guest Experts. Enablers have helped Profit Makers in executing these transactions. A part of the profit has also been shared with Guest Experts. Examination of violation of provisions of SEBI Act and regulations made thereunder - There are evidences of connections amongst Noticees, sharing of advance information about recommendations of Guest Experts with Profit Makers, taking advance position in trades by these Profit Makers based on such advance non-public information. Apart from evidences, these acts of commission have also been admitted by Noticees in deposition made before the investigating authority. These acts are detrimental to the interest of integrity of the securities market and also adverse to the interest of investors who invest based on recommendations of Guest Experts totally unaware of any scheme being employed by them. Further, it has been set out in detail that the unfair gains so earned by Profit Makers have also been shared with Guest Experts which has been admitted under statement on oath and there are evidences of such gains being shared through non-banking channels. Hence, not only Noticees have dealt in securities while in possession of non-public information, they have also devised a scheme to defraud investors in connection with dealing in listed securities. All this seen together would clearly demonstrate that there is a prima facie case of violation of provisions of section 12A of SEBI Act and Regulations 3 and 4 of PFUTP Regulations. This finding is further strengthened in subsequent paragraphs. The act of Profit Makers in trading in securities on the basis of advance information gives them undue, unfair and illegal advantage over investors who otherwise invested in such securities based on recommendation without being aware of the manipulative scheme entered into by Profit Makers and Guest Experts with the help of Enablers. Thus there is a prima facie case of manipulative, fraudulent and unfair trade practice carried out by Noticees which ultimately generated large amount of unlawful gains (approximately INR 7.41Crore) in the accounts of Noticee nos. 1 to 5. Infact, a thorough analysis of facts and legal position lead me to the conclusion that all the five violations listed earlier at para 148 of this order with respect to Section 12A of the SEBI Act and Regulations 3 4 of PFUTP Regulation have been committed in this case. Noticee No. 15 namely Simi Bhaumik, being a registered Research Analyst, falls under the purview of the RA Regulations. As already been seen that Simi Bhaumik shared her recommendations with Partha Sarathi Dhar (registered as spouse in the AOF provided by Bank) before recommending the same on Zee Business thereby facilitating Partha Sarathi Dhar to trade based on such prior knowledge of recommendations. As can be inferred from the evidence gathered during the investigation, the trading instances of Partha Sarathi Dhar were significantly influenced by the advance information provided by Simi Bhaumik - spouse is included as associate in terms of the definition under regulation 2(1)(b) of SEBI (Intermediaries) Regulations. It has been found and recorded above that Partha Sarthi Dhar, spouse of Simi Bhaumik had traded in scrip/contract after receipt of information pertaining to her recommendation to be broadcasted on the Zee Business. It is therefore, held prima facie that Simi Bhaumik has violated provisions of regulation 16(2) of SEBI (Research Analyst) Regulations, 2014 by sharing information with her husband who dealt in those securities and made unfair profits. Need for interim ex-parte order - It is a fit case to pass ad interim ex parte order to insulate the securities market from the mischievous act of Noticees and also to prevent these Noticees in conducting similar activities which are prima facie against the interest of investors as well as against the development of securities market. Further, there is an urgency to protect the wrongful gains from getting siphoned off beyond the regulatory reach. Urgency of this interim ex parte order as Investors education is very important as it empowers investors to protect their own interest. It is important for investors to exercise due diligence before accepting any free flowing advice on TV or social media. There are many experts who are spreading financial literacy in India and empowering investors to take their own decision. Most of the experts fall in this category and are doing a very good job which has resulted in robust securities market that we have today. However, the same cannot be said about a few other experts who take advantage of their mass following to make unfair profits by misguiding innocent investors. This is a fit case to invoke the statutory powers vested in SEBI to pass interim directions against Noticees through this order. Joint and several liability - Noticees are jointly and severally liable for impounding of the proceeds (to the tune of INR 7,41,29,648/-) generated from the trades which are not in conformity with the provisions of securities laws as mentioned in the below table. Such joint and several liability is restricted amongst those Noticees who made these unfair profits, who enabled certain Noticee to make unfair profits or whose recommendations led to such unfair profits. This amount is arrived at based on Table no 30 where details of unlawful gains made by Profit Makers is computed separately for each of them. The amount of wrongful gain for which the Noticees are jointly and severally liable, is accordingly arrived at the below table no 33. It is clarified that the Noticee mentioned at column no. 1 is jointly and severally liable for the amount of wrongful gains, mentioned at column no. 2, along with Noticees mentioned at column 3. Joint and several liabilities of Noticees mentioned at column no. 3 is restricted to the extent of the amount mentioned against their respective names in Table 30. In addition, Nirmal Kumar Soni is also held as joint and several liable for the amount along with SAAR Commodities, Manan Sharecom Private Limited and Kanhaya Trading Limited for the amount mentioned against their respective names. Ex-parte Interim Order - It is a fit case to pass interim directions to insulate the securities market and investors from the mischievous acts of the entities and also to urgently prevent these entities from continuing with their prima facie fraudulent activities while dealing in the securities market. All the prima facie findings recorded in this Order shall be treated as allegations to the violations of the provisions of the SEBI Act, 1992 and PFUTP Regulations against the respective Noticees, and the instant order may be treated as an interim order cum show cause notice to the Noticees. Hence, the Noticees are hereby called upon to show cause as to why suitable directions, including the following, should not be issued/imposed against them under Sections 11(1), and 11B(1) of the SEBI Act, 1992, as proposed hereunder: a) Direction to disgorge an amount equivalent to the alleged unlawful profits made on account of the scheme as described above, along with interest. b) Directing them to refrain from accessing the securities market and prohibiting them from buying, selling or otherwise dealing in securities for an appropriate period. c) Directing the registered RAs to refrain from undertaking any activity relating to research advisory.

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• Insolvency & Bankruptcy

• 2024 (8) TMI 855
  Violation of principles of res judicata as provided under Section 11 of the Code of Civil Procedure, 1908 - Suppression of relevant facts from the CoC - discrepancy in examining financial capability and eligibility of a Joint Resolution Applicant, [PRA] Mr. Sushant Chabbra, who is a former director of the Corporate Debtor and also a director in Unitech Machines Limited, a company undergoing CIRP proceedings - disposal of the assets of Corporate Debtor without the approval of CoC - executing lease agreement with the Prospective Resolution Applicants with respect to assets of Corporate Debtor without the approval of CoC - Review of order by Disciplinary Committee - Disciplinary Committee can sit in appeal against its own order or not. HELD THAT:- In the first round, when the Petitioner was confronted with Mr. Sushant Chabbra s suspension, he responded by saying that since Corporate Debtor was registered under the Micro, Small and Medium Enterprises Development Act, 2006, in 2007, the ineligibilities under Clause (c) and (h) of Section 29A of the Code were not applicable and, thus, Mr. Sushant Chabbra is eligible to be a Joint Resolution Applicant. Subsequently, it came to light that the MSME certificate furnished by Petitioner stood cancelled on 22nd December, 2017 and, thus, it emerged that Corporate Debtor was not an MSME as on the date of commencement of CIRP, i.e., 04th July, 2019. Considering the date of initiation of the CIRP proceedings of Corporate Debtor, the criteria for classification of an enterprise as MSME would have to be governed by the provisions of Ministry of MSME Office Memorandum (OM) F. No. 12(4)/2017-SME dated 08th March 2017, as per which gross block for investment in plant and machinery as shown in the audit accounts were taken into account - It can be seen that that investment in plant and machinery in the three years preceding the commencement of CIRP was more than INR 10 crores. Therefore, in terms of Ministry of MSME Office Memorandum dated 08th March, 2017, Corporate Debtor was not an MSME. In light of the new information received by IBBI, in the opinion of the Court, the foundation of the Second SCN is based on a different issue altogether. Thus, Petitioner s thrust of arguments that SCN is only a mirror copy of the First SCN and the principles of res judicata would apply, is not appealing. The concerns with respect to Mr. Chabbra s eligibility as dealt with pursuant to the Second SCN were not raised in the First SCN. One of the main functions of IBBI is to investigate the conduct of its registered Insolvency Professionals. Cancellation of Corporate Debtor s MSME certificate and non-disclosure by Petitioner of Avoidance Application against Mr. Sushant Chabbra comprises of new information that ought to be dealt with by IBBI de novo - Petitioner s contention that the Second SCN is passed on the same cause of action as the First SCN, in the opinion of the Court, is devoid of merit. Non-compliance of Section 30(2) of the Code - HELD THAT:- Section 30(2) of the Code places an obligation upon the Resolution Professional to confirm that the Resolution Plan does not contravene any provisions of law and requires the Resolution Professional to examine the mandatory compliances before submitting the Resolution Plan for approval by the CoC. Section 29A aims to prevent those persons from gaining control of the Corporate Debtor from persons who have contributed to the defaults of the Corporate Debtor. Since there is an explicit bar under Section 29A of the Code, prohibiting the suspended board of directors of the Corporate Debtor to submit a Resolution Plan for the Corporate Debtor, Petitioner as a Resolution Professional cannot escape the liability of failure to carry out due diligence. Therefore, Petitioner s contention before the Disciplinary Committee that due to non-availability of complete data, he was not able to ascertain MSME status of Corporate Debtor, cannot be accepted - Petitioner s lack of due diligence in exercising its statutory obligations ought to be dealt with in accordance with the framework provided under the law. The determination made by Respondent that Petitioner has contravened the provisions of the Code and its Regulations, in the opinion of the Court, is after due consideration of all the relevant material placed before them. The Court finds no ground to interfere in the said decision and accordingly, the present petition is dismissed.

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• 2024 (8) TMI 854
  Admissibility of Section 7 application - novation of the contract - non-invocation of the subsequent guarantee - HELD THAT:- In the sanction letter, clause 4 clearly mentions that all existing securities in the captioned facilities will continue to be the security for the existing facilities with the revised repayment schedule. It was further mentioned that the said securities will also cover the fresh FITL facility opened to part the interest on the captioned working capital facilities. Thus, the sanction letter dated 09.09.2020 was fully covered by existing securities which included the guarantees dated 22.08.2015 and 18.11.2016. Part-IV of the Section 7 Application, Cash Credit, Term Loan, FITL and Cash Credit Adhoc are the facilities for which with regard to amount disbursed default was claimed. Admittedly, for Cash Credit and Term Loan, Guarantees dated 22.08.2015 and 18.11.2016 are very much covering the said Cash Credit, Term Loan and for sanction of Adhoc Cash Credit and FITL. Sanction letter as extracted above clearly indicate that the existing securities shall cover. The Consortium Agreement which was executed on 06.11.2020 between the parties clearly mentions that it was not to affect existing securities. There are no novation of contract between the parties. Disbursement made pursuant to sanction made in the year 2013 and the guarantees issued by the corporate guarantor on 22.08.2015 and 18.11.2016 are still continuing and binds the corporate guarantor to discharge the debt. Subsequent to disbursement, Adhoc Limit and FITL sanctioned on 26.12.2019 and 09.09.2020 are also covered by the existing securities - the invocation of guarantee on 06.03.2023 by the Bank was right invocation which obliges the corporate guarantor to clear the dues. It is relevant to notice that there is no submission of the Appellant that no amount is due. Debt and default is not even contested. Appellant sought to get over his liabilities on the ground that contract is novated and there is no liability of the corporate guarantor. There are no error in the order passed by the Adjudicating Authority admitting Section 7 application. There is no merit in the Appeal - appeal dismissed.

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• Service Tax

• 2024 (8) TMI 853
  Maintainability of appeal in view of statutory provisions under Section 35 and especially under Section 35B of Central Excise Act as made applicable to Service Tax - Wrongful filing of appeal under service tax under Section 35F of the Central Excise Act - admissibility of refund or transfer of credit. Whether the appeal filed by the appellant is maintainable before this Tribunal or otherwise? - HELD THAT:- A creation of statute like CESTAT cannot traverse beyond what has been explicitly provided within the governing statute. Thus, in view of explicit statutory provisions, discussed supra, regarding the appeal before CESTAT, the impugned order issued by Superintendent-Registry cannot fall under the purview of CESTAT. Admissibility of the refund/transfer of credit etc., on merit under Section 140 or 142 - HELD THAT:- It cannot got into merit of the refund claim without first deciding the maintainability of appeal itself before this Tribunal and retrain from expressing any view on the merit of case in so far as it relates to transfer/refund of credit. Therefore, without getting into the eligibility of refund or transfer under Tran-A or otherwise in the facts of the case, on the short question of maintainability of this appeal before this Tribunal itself, the appeal is liable to be dismissed - Appeal is dismissed being non-maintainable.

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• 2024 (8) TMI 852
  Classification of service - manpower supply service or support services of business treating it as Data Entry Services? - invocation of extended period of limitation. Classification of service - HELD THAT:- It is not in dispute that the appellants believed that the said service falls under the category of manpower supply services. It is also not in dispute that M/s. BSNL also believe that the said service is manpower supply services. The Chartered Accountant has confirmed that M/s.BSNL has paid the service tax throughout for this transaction. In these circumstances, even if the said service is treated as a service other than manpower supply service, the demand cannot be confirmed in view of the decision in the case of MANDEV TUBES VERSUS COMMISSIONER OF CENTRAL EXCISE, VAPI [ 2009 (5) TMI 102 - CESTAT, AHMEDABAD] . Ld. Authorised Representative has relied on the decision of Hon ble Apex Court in the case of Om Sai Fabricators [ 2023 (7) TMI 1064 - SC ORDER ]. It is seen that the said case relates to the liability of service tax payment of sub-contractor vis- -vis the payment of service tax by the main contractor. It is seen that the facts in the said case was different and the situation is not necessarily revenue neutral like in the instant case. Therefore, the said case is not applicable to the instant situation. Invocation of extended period of limitation - HELD THAT:- From the facts of the case, it is apparent that the appellant bonafidely believe that the said services fall under the category of manpower supply services and the service tax was being regularly paid by the service recipient. Therefore, invocation of extended period of limitation was also not justified. Appeal allowed.

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• 2024 (8) TMI 851
  Failure to discharge correct service tax liability, by suppressing the gross value, not declared in the statutory ST-3 returns - recovery of service tax with penalty - invocation of extended period of limitation - HELD THAT:- There is no dispute as regards the chargeability of the service tax on the services provided by the appellant to the recepients and neither side is disputing the same. However, what is being disputed, apart from the limitation aspect, is that the liability pointed out by the Department has already been met by the appellant when they filed the service tax return on 03.12.2021, wherein, they have already availed and utilised the credit admissible to them. It is further found that though it is an admitted position that the ST-3 returns have been filed, it is not clear whether any dispute has been raised by the Department against such filed ST-3 returns or any separate action has been initiated for denying the benefit of credit claimed in the said ST-3 returns by the appellant. Further, the Commissioner (Appeals) has decided the issue of non-entitlement of credit in a rather cryptic manner by merely reiterating the grounds taken by the Original Adjudicating Authority. It is observed that in his findings, the Commissioner (Appeals) has not effectively addressed the issues raised by the appellant in support of their being eligible for credit. Various grounds for denying the credit has to be evaluated in the backdrop of the factual matrix and various case laws relied upon by the appellant. Therefore, in the interest of justice, the matter needs to be remanded back to the Commissioner (Appeals) to evaluate all the evidences and case laws adduced by the appellant and after hearing the same, he should decide whether they are entitled for such credit as claimed and availed by them or otherwise. Time limitation - HELD THAT:- The matter needs to be re - examined in the light of evidences on record and certain evidences as argued by the Learned Advocate i.e screen shots of their having tried to file ST-3 returns during the relevant time, correspondence with the Department in this regard etc., may have to be taken into consideration. Appeal is disposed off by way of remand to the Commissioner (Appeals).

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• 2024 (8) TMI 850
  Classification of service - renting of immovable property service or not - facility of allowing car parking to visitors of mall - whether the appellant is liable to pay service tax for the parking area of car or not? - HELD THAT:- The land used for parking purposes is not chargeable to service tax under the category of renting of immovable property service . This Tribunal in the case of MAHESH SUNNY ENTERPRISES PVT. LTD. VERSUS COMMISSIONER, SERVICE TAX COMMISSIONERATE [ 2014 (2) TMI 1001 - DELHI HIGH COURT] where it was held that ' Now, parking services - regardless of wherever it is carried on-stand excluded in entirety. Therefore, it is not open now for the revenue to argue that it falls within the expression airport service under Section 65(105)(zzm). Parliament would have manifested its intention to bring to tax a part of the activity, carried out in airport premises, if it wished, in more express and clearer terms.' Admittedly, in this case, the appellant has not recovered any parking charges from the tenants/owners of the shops or their employees. Thus, no Service Tax is payable by the appellant for car parking fees under the category of renting of immovable property service . Therefore, the demand raised against the appellant on car parking charges is set aside - no penalty is imposable on the appellant. The impugned order is set aside - appeal allowed.

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• Central Excise

• 2024 (8) TMI 849
  Failure to discharge duty on 39 numbers of SMPS alleged to have been cleared during the period December 2004 to February 2005 without following Central Excise procedure and discharging appropriate duty - HELD THAT:- It is found that the objection has been raised by the audit during the course of scrutiny of their records subsequent to obtaining their registration as a manufacturer. The period in question is relating to time when they were engaged in trading of rectifiers of SMPS. The relevant invoices against which the SMPS were purchased by the appellant from UTL are enclosed with the paper book. The Revenue could not produce any evidence that supply of additional items along with SMPS purchased from UTL resulted into emergence of a new manufactured product and the activity of assembly carried out by them amounts to manufacture. Neither investigation initiated nor statements have been recorded from the appellant about the activity of assembling, if any, of the additional items supplied with SMPS as observed in the impugned order. There are no merit in the impugned order - Consequently, the same is set aside and appeal is allowed.

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• 2024 (8) TMI 848
  100% EOU - refund of unutilised CENVAT credit used in the goods that were exported during the period January 2008 to March 2009 - Eligible input service or not - mining activity amounts to manufacture or not. 100% EOU - refund of unutilised CENVAT credit used in the goods that were exported during the period January 2008 to March 2009 - HELD THAT:- The basis on which the original authority had rejected the refund claims vide Order-in-Appeal No.138/2008 dated 31.10.2008 now stands set aside by this Tribunal [ 2017 (5) TMI 99 - CESTAT BANGALORE ] wherein it was observed that ' I also find that in few appeals which are cited in the table, the assessee has not contested certain amount on account of not having sufficient document in their possession and to that extent I reject their refund claims.' Similarly in [ 2017 (10) TMI 500 - CESTAT BANGALORE ] in the appellant s own case for the period October 2006 to September 2007, relying upon the above decision of this Tribunal, the impugned orders were set aside and allowed the refund claims filed by the appellant. Eligible input service or not - mining activity amounts to manufacture or not - HELD THAT:- Taking into consideration the fact that the appellate order relied upon by the Original Authority have been set aside by this Tribunal holding that the mining activity amounts to manufacture and the input services were eligible, the refund claims filed by the appellant for the unutilised CENVAT credit is to be allowed. The impugned orders are set aside - appeals are allowed.

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• 2024 (8) TMI 847
  Valuation of physician samples - whether it is under Section 4(1)(a) or cost construction method proportionate to MRP in terms of Section 4(1)(b) - HELD THAT:- The issue is no longer res-integra as the same has been decided in the appellant s own case vide various orders of this Tribunal. One of such order is SUN PHARMACEUTICALS INDUSTRIES LIMITED, UNIMED TECHNOLOGIES LIMITED) VERSUS C.C.E. S.T. -VADODARA-II [ 2023 (9) TMI 913 - CESTAT AHMEDABAD] where it was held that ' When we find that price was charged by the assessee from the distributors, the show cause notice is clearly founded on a wrong reason. The case would squarely be covered under the provisions of Section 4(1)(a) of the Act. In view thereof, the Central Excise Rules would not apply in the instant case.' In view of the above decision of this Tribunal along with other orders of this Tribunal, the issue stand settled in the appellant s case. Accordingly the demand is not sustainable hence the impugned orders are set-aside - appeal allowed.

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• 2024 (8) TMI 846
  Classification of service - GTA Service under reverse charge mechanism or not - payment towards freight charges for the transportation of goods - HELD THAT:- The appellant have received transportation service in respect of supply of building material and in some of the cases the transporter itself has raised the bill for supply of material and not for transportation and in all the cases of transportation, there is no consignment note issued by the transporter. In one case there is supply of tangible goods which cannot be regarded as GTA service. As regards the major demand categorized under GTA service which are liable for service tax or otherwise, in number of judgments it has been held that even though there is transportation service but if no consignment note has been issued, the said service cannot be classified as GTA service. It was held in the case of M/S. VEDANTA LIMITED VERSUS COMMISSIONER OF GST AND CENTRAL EXCISE TIRUNELVELI COMMISSIONERATE, [ 2023 (9) TMI 1063 - CESTAT CHENNAI] where it was held that 'In the present case, the demand has been raised upon the appellant alleging that they are the recipient of services of goods transport agency services provided by the CHA. Admittedly, the appellant has not been issued a consignment note.' It was held in the case of AIMS Industries vs. CCE [ 2024 (1) TMI 721 - CESTAT AHMEDABAD] where it was held that 'Thus, it is categorically held that in case transportation made by vehicle operator (in the present case tractor trolley owners) and no consignment note was issued, the service cannot be held as goods transport agency service liable to Service Tax. Therefore, the impugned order is not sustainable.' Thus, it is settled that as per facts involved in the present case, applying the ratio of the above judgments, the demand under GTA service is not sustainable - the impugned order is set-aside and appeal is allowed.

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• 2024 (8) TMI 845
  Entitlement for exemption of Sugar Cess under N/N. 42/2001-CE (NT) dated 26.06.2001 for export of sugar - HELD THAT:- This issue is no longer res-integra in light of the judgment in this Tribunal in the case of SHREE MAHUVA PRADESH SAHAKARI KHAND UDYOG MANDLI LIMITED VERSUS COMMISSIONER OF CENTRAL EXCISE ST, SURAT-I [ 2024 (8) TMI 773 - CESTAT AHMEDABAD] where it was held that ' the demand of sugar cess raised as per the impugned order is not sustainable. Hence, the impugned orders are set-aside and the appeals are allowed.' Thus, the issue is no longer res-integra and according to the said judgment on export of sugar, the sugar cess is not required to be paid. The impugned orders are set aside - Appeals are allowed.

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• 2024 (8) TMI 844
  Recovery of CENVAT Credit, education cess, interest and penalty - failure to decide the SCN issued to certain noticees - HELD THAT:- It is found that in this case, the Revenue has filed this appeal against the M/s SMS Smelters and the ld.Adjudicating Authority has not granted relief to M/s SMS Smelters. The appeal filed by the Revenue is to challenge the impugned order that the ld.Adjudicating Authority should have taken cognizance of the Noticee Nos.7/7A/7B, 8/8A/8B, 9/9A, 10, 11, 12, 13, 14 15 to the show-cause notice, which is not the part of the appeal filed by the Revenue. There are no merit in the appeal filed by the Revenue. Accordingly, the same is dismissed.

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• CST, VAT & Sales Tax

• 2024 (8) TMI 843
  Stay on attachment order - pre-deposit has already been made by the petitioner for the Assessment Year 2010-11 and 2011-12, and complete amount has been paid for Assessment Years 2013-14, 2014-15 and 2015-16 - HELD THAT:- This Court had stayed the attachment orders on the ground that the pre-deposit has already been made by the petitioner for the Assessment Year 2010-11 and 2011-12, and complete amount has been paid for Assessment Years 2013-14, 2014-15 and 2015-16. The Court also while passing the order of interim stay, observed that officials of the petitioner-Company and officials of respondent No.2 may sit together and sort out the issue. However, it is found that, apparently, nothing is coming out from the said observations, as the same time, since the pre-deposit has already been made, it is deemed appropriate to direct the Appellate Authority to proceed and decide the appeal on merits. In view of the appeal being considered on merits, there is no question of the attachment of the bank accounts of the petitioner. The plea of learned counsel for the respondents to block the bank accounts is also found not in accordance with law - petition disposed off.

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• 2024 (8) TMI 842
  Challenge to order of re-assessment - escapement of assessment - reason to believe that the turnover of the petitioner s business assessable to tax for the assessment period from 2014 2015 has escaped assessment as the petitioner has failed to deposit VAT on transmission charge - HELD THAT:- The monthly returns for the annual year 2014 - 2015 was not submitted within the 21st day of the succeeding month, in other words, it was not submitted within the time prescribed under 17 (1) of the said Rules, 2005, which is within next 21 days of the succeeding months. Reference is made to the decisions of the Division Bench of this Court in the case of INDIAN OIL CORPORATION LTD. VERSUS STATE OF ASSAM AND OTHERS [ 2012 (8) TMI 872 - GAUHATI HIGH COURT ] wherein it has been held that when the time limit for completion for assessment has been indicated and after expiry of the said period no assessment can be made. Reference is made to the decision of the Apex Court in the case of Vs. Regional Assistant Commissioner Of Sales Tax Nagar [ 1963 (8) TMI 2 - SUPREME COURT] , wherein the Apex Court held that unless return is filed within the time limit, there cannot be an assessment. Section 39 of the said Act, 2003 provides that no assessment shall be completed after the expiry of five years from the end of the year to which the assessment relates and as evident from the above, in the present case, no assessment under section 34, 35, 36 or 37 of the Act, 2003 was completed by the assessing authorities. Therefore, assessment for the year 2014 2015 ought to have been completed within 5 years from the end of the year in respect of which the assessment relates. In terms of Section 39 of the said Act, 2003, assessment for the assessment year 2014 2015 got barred by limitation on 31.3.2020 - Since, the time limit for completion of assessment as in terms of Section 39 of the Act expired on 31.03.2020, it appears that the assessing authority did not complete assessment within the prescribed time period. However, assessment was initiated under Section 40 of the Act without completion of assessment under Sections 34, 35, 36 or 37 of the Act, 2003. Since in the facts of the instant case, no self-assessment can be deemed under Section 35 of the Act, 2003 re-assessment under Section 40 of the said Act, 2003 could not have been made under the provisions of the said Act. The existence of assessment is a condition precedent for making a reassessment under Section 40 of the Act, 2003 and if such condition precedent exist, the assessing authorities had no jurisdiction to make the reassessment. As such, without assessment under section 34, 35, 36 or 37 of the Act, 2003, the respondent authorities could not have resorted to the provisions of the reassessment stipulated under Section 40 of the said Act. In the present case, there was no assessment under section 35 of the Act, 2003, made during the prescribed period. Therefore, no assessment can be deemed to have been made in law - the said order of re-assessment having been completed without any assessment made under section 35 of the Act, 2003, the order of reassessment dated 05.03.2022 is absolutely illegal and without jurisdiction. As such, the very initiation of proceedings under section 40 of the Act, 2003 is absolutely illegal, without jurisdiction and not tenable in law - the impugned Order of re-assessment dated 05.03.2022 and the Notice of Demand dated 08.07.2021 are set aside and quashed - Petition allowed.

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• Indian Laws

• 2024 (8) TMI 841
  Constitutionality of Electoral Bond Scheme and provisions in cognate legislation including those Representation of the People Act 1951, the Companies Act 2017 and the Income Tax Act, 1961 - invocation of jurisdiction under Article 32 of the Constitution - HELD THAT:- At the present stage, absent a recourse to the remedies which are available under the law to pursue such grievances, it would both be premature and inappropriate for this Court; premature because the intervention of this Court under Article 32 of the Constitution must be preceded by the invocation of normal remedies under the law and contingent upon the failure of those remedies; and inappropriate because the intervention of this Court, at the present stage, would postulate that the normal remedies which are available under the law would not be efficacious. This Court entertained a batch of petitions challenging the constitutional validity of statutory provisions embodying the Electoral Bond Scheme and the consequential amendments which were made to diverse statutes. The only remedy for challenging such legislative changes lies in the invocation of the power of judicial review. Allegations involving criminal wrong doing, on the other hand, are of a distinct nature where recourse to the jurisdiction of this Court under Article 32 of the Constitution should not be taken as a matter of course particularly, in view of the remedies available in law. The constitution of an SIT headed by a former Judge of this Court or otherwise should not be ordered in the face of remedies which are available under the law governing the criminal procedure. Likewise, matters, such as the reopening of assessments pertain to the specific statutory jurisdiction conferred upon assessing authorities under the Income Tax Act 1961 and other statutes. The jurisdiction under Article 32 of the Constitution is declined to be exercised - petition dismissed.

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