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TMI Tax Updates - e-Newsletter
August 22, 2024
Case Laws in this Newsletter:
GST
Income Tax
Customs
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
TMI Short Notes
Articles
News
Notifications
Circulars / Instructions / Orders
Highlights / Catch Notes
GST
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Firm can appeal against GST penalty without further pre-deposit if conditions met.
The High Court held that once the petitioner made the payment of Rs.10 lakhs and furnished a bank guarantee for the balance amount as per the court's earlier order, the petitioner's right to file an appeal against the order u/s 129(3) of the WBGST/CGST Act, 2017 crystallized. The respondents cannot insist on further pre-deposit of 25% of the penalty determined u/s 129(3) for entertaining the appeal. If the petitioner files an appeal within two weeks, the respondents shall hear and dispose of it on merits without demanding any additional pre-deposit. The petitioner may not be entitled to a refund of Rs.5,22,500/- or part thereof.
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Retrospective GST registration cancellation - Insufficient reasoning on tax credits. Matter remanded for reconsideration.
The High Court found that the respondents failed to properly consider the petitioner's contentions regarding the retrospective cancellation of GST registration of its suppliers and the petitioner's claim of having paid taxes on its supplies. The impugned order did not specifically state whether the suppliers had paid taxes for which the petitioner claimed input tax credit. The court deemed the impugned order as lacking reasoning and remanded the matter to the Proper Officer for fresh consideration, disposing of the petition through remand, despite the petitioner having an efficacious appeal remedy available.
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Overseas recruiters face IGST scrutiny on expat salaries - Court directs tax body to consider circular.
Petitioner sought to quash the show-cause notice (SCN) demanding Integrated Goods and Services Tax (IGST) along with interest and penalty on salaries paid to expatriates. The issue pertained to whether the supply of manpower and recruitment services from overseas group entities to the petitioner attracted IGST. The High Court did not delve into the merits but relegated the matter to the stage of reply to the SCN. The authorities were directed to consider the applicability of Circular No. 210/4/2024-GST dated 26.06.2024 while adjudicating the reply. The petitioner was granted three weeks to file the reply from the receipt of the order's certified copy.
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Unlawful recovery notice issued; GST Act & natural justice violated. Taxpayer's representation to be reconsidered within 2 weeks.
Recovery notice issued without proper reasons, violating Section 78 of GST Act and principles of natural justice. Petitioner filed representation challenging notice. High Court directed respondent authority to consider petitioner's representation and dispose of the same on merits within 2 weeks, in accordance with law. Petition disposed of.
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Bail upheld for alleged tax credit fraud; agency criticized for delayed investigation.
Petition seeking cancellation of bail granted to respondents in a case involving filing of input tax credit for non-operational firms was dismissed. The Department contended that bail was granted at an early stage without opportunity for custodial interrogation, and that investigation into claimed input tax credits from firms with no supplies and background checks of firms and transporters is ongoing. However, the Court opined that cancellation of bail after seven months is unnecessary, as the investigation for such offenses is primarily documentary in nature, which the Investigating Agency can procure.
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Court upholds authority's power to issue notice alleging fraud, asks petitioner to respond - no interference at this stage.
The respondents were permitted to proceed against the petitioner under the provisions of the Act, including invoking powers u/s 74, following the court's modification order granting liberty to consider the matter beyond Section 73. The challenge to the notice issued u/s 74 alleging fraud or suppression of facts cannot be assailed. The determination of whether suppression of facts warranting invocation of Section 74 occurred is a factual issue, and the authority has jurisdiction to issue a notice under that section. The writ court should not intervene at this stage when the petitioner is merely asked to show cause against the proposed action. The petition is disposed of.
Income Tax
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Agricultural commission agent wins TDS credit dispute: Court recognizes commission income, not principal's sales turnover.
The assessee, a licensed commission agent in the Agricultural Market Committee Yard, Guntur, claimed credit for the entire amount deducted as tax at source u/s 194Q from commission income, which was deducted as tax at source u/s 194A from interest income. The assessee relied on CBDT Circular No. 452 and the case of Yagneswari General Traders, stating that the turnover of Kaccha Arahtias includes only the gross commission and not the sales effected on behalf of principals. The ITAT held that since the assessee acted as an agent (Kaccha Arahtia), the CBDT Circular applied, and the assessee was eligible to get credit for the entire amount deducted as tax at source. Consequently, there was no shortfall of TDS as concluded by the Revenue Authorities, and the assessee's appeal was allowed.
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Tax assessment quashed due to compliance with Income Declaration Scheme.
The High Court quashed the assessment order passed u/s 147 read with Sections 144 and 144B, as well as the consequential notices u/ss 156 and 274 read with 271AA(1) of the Income Tax Act. The court held that the petitioner had complied with the requirements of the Income Declaration Scheme, 2016 (IDS) by making a declaration and depositing the appropriate tax amount. Consequently, the petitioner was entitled to the benefits under the IDS. The court directed the respondents to issue an appropriate certificate of tax deposit under the IDS to the petitioner within four weeks.
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Assessing Officer misses statutory deadline, fresh assessment order quashed; refund due for excess tax paid.
The High Court held that the limitation period prescribed in Section 153(3) of the Income Tax Act for issuing a fresh assessment order pursuant to an order u/s 254 (by the Appellate Tribunal) must be strictly construed. The Assessing Officer failed to comply with the Tribunal's remand order within the stipulated six-month period, and the statutory limitation period of nine months from the end of the financial year in which the Tribunal's order was received also expired. Passing a fresh assessment order beyond the statutorily prescribed limitation period is impermissible. Consequently, the impugned assessment order and notices were set aside, and the income returned by the assessee was accepted. The excess tax paid for the relevant assessment year must be refunded to the assessee.
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Taxpayer wins refund battle as tax authority misses deadline for fresh assessment.
The High Court held that the delay in issuing the tax refund was subject to the strict limitation period prescribed u/s 254 read with Section 153(3). The Assessing Officer failed to adhere to the Tribunal's directions and pass a fresh assessment order within the stipulated six-month period. The statutory limitation period u/s 153(3) expired on 30.09.2021. The Legislature's intent behind Section 153(3) was strict adherence to the time limit for passing a fresh assessment order after remand. The notices for initiating fresh assessment issued beyond the prescribed period were unsustainable and had to be set aside. Relying on the Supreme Court's decision in Shelly Products, since the Department failed to comply with the Tribunal's order within the stipulated time, the income as returned by the assessee would stand accepted, and the excess tax paid for the relevant assessment year would have to be refunded.
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Reassessment Notices by Joint Assessing Officer Quashed for Lack of Jurisdiction.
The court held that the Joint Assessing Officer (JAO) lacked jurisdiction to issue notices u/s 148 of the Income Tax Act for reassessment, as per Section 151A read with the Central Government notification dated 29 March 2022. This provision mandates that such notices be issued by the Faceless Assessment Officer (FAO). Relying on the Hexaware Technologies Ltd. case, the court concluded that the impugned notices issued by the JAO were illegal and invalid due to lack of jurisdiction. Consequently, the court allowed the petition in favor of the assessee, quashing the reassessment notices.
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Jurisdiction deficiency invalidates income reassessment notices - Court upholds taxpayer's stance.
The High Court ruled that the Joint Assistant Commissioner (JAO) lacked jurisdiction to issue notices u/s 148 for reassessment of income escaping assessment. The notices were deemed illegal and invalid due to non-compliance with Section 151A, which mandates such notices to be issued by the Faceless Assessment Officer (FAO) as per the Central Government's notification dated March 29, 2022. The Court concurred with its previous decision in Hexaware Technologies Ltd., acknowledging the JAO's lack of authority in issuing the impugned notices. Consequently, the petition was allowed in favor of the assessee, nullifying the notices issued by the JAO.
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Income Tax authority issued notices disregarding appellate orders; Court calls it travesty, imposes costs.
The court held that the Jurisdictional Assessing Officer (JAO) lacked jurisdiction to issue the impugned notices u/s 148, particularly in view of the provisions of Section 151A read with the Central Government's notification dated March 29, 2022. The court observed that the JAO disregarded the orders passed by the Commissioner of Income Tax (Appeals) involving the very amounts in question, which amounted to a travesty of law and nullified the binding effect of the appellate authority's orders. The court criticized the JAO and the Chief Commissioner of Income Tax for acting with gross non-application of mind and mechanically according approval for issuing the notices, without considering the relevant materials on record. The court deemed it a fit case to grant relief to the petitioner and deprecated the untenable stand taken by the respondents in disregarding the court's decision in Hexaware Technologies Ltd. The court imposed personal costs of Rs. 25,000 each on the JAO and the Chief Commissioner for their conduct.
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Income from discretionary trust taxed as AOP's total income, but beneficiaries eligible for deductions.
The Income Tax Appellate Tribunal (ITAT) examined the taxability of income from a discretionary trust u/s 164(1) read with clause (ii) of Explanation 1 to Section 164 of the Income Tax Act, 1961. The key points are: Since the trustees have absolute discretion to apply the trust's income and corpus, and the beneficiaries' shares are not determined, the trust is considered a discretionary trust. The income is taxable at the maximum marginal rate as if it were the total income of an association of persons (AOP). However, the beneficiaries, being individuals, cannot be denied deductions u/ss 80C and 80TTA due to the deeming fiction of AOP. The Assessing Officer must consider allowing credit for TDS and deduction u/s 80C after verification. The ITAT emphasized that the correct income must be taxed strictly per the Act, regardless of any deficiencies in the prescribed ITR forms. The assessee's appeal was partly allowed.
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Software licensing costs accepted as revenue expense; TDS non-deduction partly allowed.
Software license expenses incurred by the assessee were held to be revenue expenditure based on the coordinate bench's decision in DCIT v/s M/s First Advantage Private Limited for the preceding year. Regarding disallowance u/s 40(a)(ia), the assessee admitted deducting TDS at a lower rate on Rs. 98,363 and offered 30% of this amount for disallowance. The CIT(A) rightly deleted the disallowance made by the AO, as the assessee had already disallowed 30% of the relevant payments. The ITAT affirmed the CIT(A)'s order on this issue.
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Undisclosed cash deposits warrant income tax reassessment, AO's reason suffices to reopen case.
The case pertains to the reopening of assessment u/s 147/148 of the Income Tax Act due to undisclosed cash deposits in the assessee's bank accounts. The key points are: The Assessing Officer (AO) had sufficient information to believe that the assessee's income had escaped assessment, justifying reopening u/s 147. The existence of tangible material forming the AO's belief is relevant, not its sufficiency at the reopening stage. The assessee did not file a return of income or participate in the reassessment proceedings. The assessee failed to explain the source of cash deposits. The Tribunal admitted additional evidence filed by the assessee regarding peak cash credits, requiring verification by lower authorities. The matter was remanded to the CIT(A) for readjudication on merits, as both assessment and appellate proceedings were ex-parte. The mandate is to bring the correct income to tax in the hands of the correct assessee for the correct assessment year.
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Sale consideration from bank auction at fair market value, no addition for undervalued property.
Section 56(2)(x) addition - difference between fair market value and sale consideration not applicable when property purchased through bank auction, being a statutory process without scope for understatement of consideration. Tribunal's view upheld that Assessing Officer erred in making such addition, set aside Commissioner's order in assessee's favor.
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Cash payment of Rs. 125 lacs received for facilitation but not recorded; Assessee failed to prove non-income nature.
The assessee received Rs. 125 lacs in cash from SGCFCL for facilitation work, which was not recorded in the books. The assessee claimed the amount was paid to 2500 shareholders, but failed to provide evidence of such payments. The onus was on the assessee to prove the impugned payment did not constitute income, which the assessee failed to discharge. The assessment was based on incriminating material and the assessee's statement admitting receipt of cash payment. The Appellate Tribunal upheld the assessment, rejecting the assessee's arguments.
Customs
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Non-submission of "Bill of Export" not grounds for non-discharge of Export Obligation under Foreign Trade Policy, rules Court.
The High Court ruled on the legality and validity of decisions taken by the Policy Relaxation Committee (PRC) regarding non-submission of the "Bill of Export" document. The court held that if the party can show proof of supply to the SEZ Unit, then non-submission of the "Bill of Export" cannot be treated as non-discharge of proof of Export Obligation (EO) of Advance Authorisation (AA) under the Foreign Trade Policy (FTP). The petitioner was granted two weeks to submit the required documents, which the respondents will examine and issue the EODC within four weeks if the documents are in order. If the respondents have any queries, they shall provide a personal hearing with at least three working days' notice. The petition was disposed of accordingly.
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Customs broker's advice to importer for mislabeling lethal weapons as "blank guns" leads to penalties.
The appellant, a customs broker, was found responsible for advising the importer to follow rules and regulations governing clearance of imported goods, and any non-compliance should have been brought to the customs authorities' notice. The appellant suggested the importer mis-declare the imported goods, described as "blank guns" which could have been modified into lethal weapons, to circumvent requirements under the Foreign Trade Policy and the Arms Act, 1959 read with the Arms Rules, 2016. The appellant had knowledge of such mis-declaration and mis-classification under CTH 9503 as "Blank Firing Guns," requiring a DGFT license under the import policy and a license under the Arms Act. The factual findings led to the forfeiture of the security deposit. As the case involved only factual findings, no substantial questions of law arose, and the appeal was dismissed.
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Interest claims on wrongly utilized funds outside Foreign Trade Act's jurisdiction.
The High Court held that the Adjudicating Authority under the Foreign Trade (FT) Act lacks jurisdiction to adjudicate a claim for payment of interest on an amount utilized by the petitioner, to which they were not legally entitled. The Court observed that the FT Act only allows for imposition of penalties or confiscation, but does not provide for adjudication of interest claims. The interest claim must be enforced before a competent forum. The Court restrained the respondents from putting the petitioner's Importer-Exporter Code on the Denied Entity List and directed its removal if already done. The petition was allowed.
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Stadium floodlights exemption mix-up: No commercial vs non-commercial distinction, time-barred demand.
The adhoc exemption order did not restrict the use of floodlights solely for World Cup matches; it aimed to uplift the stadium's infrastructure standards. The department erroneously assumed that World Cup matches were non-commercial, while one-day internationals were commercial. The exemption order made no such distinction. The show cause notice lacked factual or legal basis for alleging a violation of condition (ii). Regarding time limitation, the notice did not allege suppression of facts or intention to evade customs duty. The department issued the notice after collecting documents from the appellant, indicating no suppression. With a lapse of over 7 years, the demand was time-barred as the proviso to Section 28(1) was not applicable. The Appellate Tribunal set aside the impugned order and allowed the appeal.
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Remanded for fresh speaking order on import value enhancement of aluminum scrap due to lack of proper examination.
The Assessing Officer failed to pass a detailed speaking order explaining the rationale for enhancing the declared value of aluminum scrap imported by the respondent company. The matter was decided based on the Supreme Court's judgment in Sanjivani Non-Ferrous Trading, but without examining the applicability of the judgment to the present case. The Commissioner (Appeals) upheld the decision without proper examination of facts and law. Consequently, the CESTAT remanded the matter to the Assessing Officer to pass a fresh speaking order after considering the relevant facts and the applicability of the Supreme Court judgment.
Indian Laws
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Prospective overruling: Balancing justice & consequences in Constitutional precedents.
The doctrine of prospective overruling is applied when a constitutional court overrules a well-established precedent by declaring a new rule but limits its application to future situations to avert injustice or hardships. The US Supreme Court has considered the existence of a statute or judicial decision as an "operative fact" having consequences that cannot be ignored, and the effect of a subsequent ruling on invalidity must be considered in light of various aspects. The Indian Supreme Court has adopted this doctrine, partly inspired by US jurisprudence. In cases like Golakh Nath v. State of Punjab and Jindal Stainless Ltd. v. State of Haryana, the Court applied the doctrine. Considering the substantial amount of tax demands and the delay in proceedings, the Court held that while states may levy or renew demands pertaining to Entries 49 and 50 of List II, the demand shall not operate on transactions prior to April 1, 2005. The payment of tax demand shall be staggered over twelve years from April 1, 2026, and the levy of interest and penalty on demands before July 25, 2024, shall stand waived.
Service Tax
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Indian company's 'indent commission' from overseas holding company not taxable as export of service.
The case deals with the levy of service tax on 'indent commission' received by an Indian company from its overseas holding company for providing business auxiliary services. The judgments of the Delhi High Court in Verizon Communication India Pvt. Ltd. and the Larger Bench of CESTAT in Paul Merchants Limited were analyzed. It was observed that the Indian company provided necessary details of customers in India to foreign steel mills, enabling them to execute contracts directly with Indian customers. The Indian company satisfied the conditions of the Export of Service Rules, 2005, as payments were received in convertible foreign exchange. Applying the principles laid down in the cited cases, it was held that the services rendered by the appellant to its holding company fell within the scope of the Export of Service Rules, 2005. Consequently, the demand for service tax could not be sustained, and the impugned orders were set aside.
VAT
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Goods for works contract sourced from outside state not taxable under local sales tax law.
The petitioner's obligation under the contract was to source non-standard goods, as per KINFRA's designs and specifications, from vendors outside the state for incorporation in the works contract in Kerala. Even though the goods initially entered Kerala before being incorporated, breaking the chain of movement, this did not alter the inter-state nature of the transaction as the goods were specifically sourced from outside for the contract. The mere intervening event of the goods entering Kerala could not render it an intra-state sale. Therefore, the petitioner was not liable to pay tax under the KGST Act on the inter-state supply of goods for the works contract execution in Kerala. The High Court allowed the revisions, setting aside the Appellate Tribunal's orders and answering the questions of law in favor of the assessee against the revenue.
Case Laws:
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GST
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2024 (8) TMI 988
Release of amount from the bank guarantee furnished by the petitioner - making payment of the pre-deposit for preferring the appeal which is a sum equal to 25 per cent of the penalty determined u/s 129(3) of the WBGST /CGST Act, 2017 - HELD THAT:- It is found that while the Coordinate Bench of this Court by its order in PARMAR SANDIP CHAMANBHAI VERSUS STATE TAX OFFICER, BUREAU OF INVESTIGATION, SOUTH BENGAL (HEAD QUARTER) ORS. [ 2023 (8) TMI 1495 - CALCUTTA HIGH COURT] had directed the petitioner to make payment of Rs.10 lakhs, and the balance amount of the penalty by bank guarantee, the Coordinate Bench of this Court had also granted the petitioner, the liberty to file the appeal. It is further noticed that the petitioner by making payment of Rs.10 lakhs, and by securing the balance amount though bank guarantee and by execution of bond had also got the goods released. The moment the petitioner had made the aforesaid payment of Rs.10 lakhs and caused the bank guarantee to be executed in terms of the order dated 10th August 2023, the right of the petitioner to prefer an appeal crystallized into a full-fledged right which can neither be taken away nor can the respondents call upon the petitioner to make payment of any additional amount in terms of the proviso to Section 107(6) of the said Act. The petitioner, though may not be entitled to the refund of Rs.5,22,500/- or any part thereof, the respondents cannot at the same time withhold the right of the petitioner to prefer an appeal from the order passed under Section 129(3) of the said Act, inter alia, on the ground that the petitioner has not made a further pre-deposit of 25 per cent of the determination already made under Section 129 (3) of the said Act. In the event, the petitioner files an appeal with the respondents within 2 weeks from date, such appeal shall be heard and disposed of on merits without the respondents insisting for any further pre-deposit - Petition disposed off.
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2024 (8) TMI 987
Retrospective cancellation of GST registration - failure to declare correctly tax liability in annual returns - HELD THAT:- It is apparent that the respondents have not considered contentions raised by the petitioner in its reply to the impugned SCN, including that it cannot be mulcted with liability on account of retrospective cancellation of the GST registration of its suppliers. The petitioner also claimed that it had paid the tax in respect of its supplies. The reply filed by the petitioner also indicates that the relevant documents including bank statements and invoices were also attached. It is also material to note that the impugned order does not specifically state that the suppliers to whom the petitioner availed supplies, had not paid the tax in respect of which ITC was claimed by the petitioner. It merely states that suppliers are cancelled due to GSTR-3B/suspicious transaction /non-existing/ Others . Although, the petitioner has efficacious remedy of an appeal against the impugned order. However, it is not considered apposite to relegate the petitioner to avail of the said remedy. This is also for the reason that the impugned order cannot be considered as a reasoned order. The matter remanded to the Proper Officer, to consider afresh - petition disposed off by way of remand.
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2024 (8) TMI 986
Seeking to quash the impugned SCN demanding IGST along with interest and penalty - IGST on salary made to expats by the petitioner - manpower and recruitment supply of services from the overseas group entities to the petitioner or not - HELD THAT:- Without entering into the merits of the matter, the petitioner is relegated to the stage of reply to the show-cause notice. The authorities while considering the reply to the show-cause notice ought to take note of the Circular bearing No.210/4/2024-GST dated 26.06.2024, part of which has been extracted above. Insofar as other points for consideration are concerned, no observation is made regarding the same and it is open to the authority to take considered decision regarding other contentions. The matter is relegated to the stage of reply to the show-cause notice. Needless to state the authorities concerned can take note of applicability of the Circular to the facts on hand. Reply of the petitioner to be made within a period of three weeks from the date of receipt of certified copy of the order.
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2024 (8) TMI 985
Validity of grant of anticipatory bail by the lower court - fake bills were made for the purchase of the cigarettes - Reversal of ITC - it was held by High Court that 'this Court is confirming the anticipatory bail granted to Jitender Kumar, he is warned that in the future, if he does not appear pursuant to summons issued by the DGGI, his anticipatory bail would be liable to be cancelled' - HELD THAT:- It is not required to interfere with the impugned judgment(s) and order(s) of the High Court; hence, the special leave petitions are dismissed.
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2024 (8) TMI 984
Challenge to recovery notice - issuanc eof notice without providing any proper reasons - violation of principles of natural justice - HELD THAT:- In the present case, it appears that the impugned recovery notice dated 27.06.2024 was issued by the respondent without assigning any proper reasons, which is contrary to the Section 78 of the GST Act. Hence, a reply/representation dated 15.07.2024 has been filed by the petitioner stating that the said notice has been issued in violation of the provisions of Section 78 of the GST Act and today, the learned counsel for the petitioner has restricted his relief and requested this Court to direct the 1st respondent to consider the reply/representation filed by the petitioner. Though this petition has been filed challenging the impugned recovery notice, considering the submissions made by the petitioner, this Court directs the 1st respondent to consider the reply/representation filed by the petitioner and dispose of the same on its own merits and in accordance with law within a period of 2 weeks from the date of receipt of a copy of this order. Petition disposed off.
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2024 (8) TMI 983
Seeking cancellation of bail granted to the respondents - filing of input tax credit for firms which were found to be non-operational - HELD THAT:- It is stated by the learned counsel for the Department that the bail was granted at a very early stage of the investigation and they did not have a chance for his custodial interrogation - However, it is stated that inputs tax credits were claimed from firms which had no supplies and background checks was carried out for the said firms, which process is still undergoing, including that of the transporters as well. The Court is of the opinion that there is no purpose of cancellation of bail, considering it is already seven months since the accused/respondent has been granted bail and the investigation required for the offence of the nature is mostly documentary in nature, which the Investigating Agency would be able to procure. Petition dismissed.
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2024 (8) TMI 982
Challenge to SCN - respondents have proceeded to issue notice under Section 74 of the Act, which is against the directions of the Court - fraud or suppression or concealment of facts - HELD THAT:- The respondent were allowed to proceed against the petitioner invoking powers under Section 73 of the Act. It, however, appears that later on, the respondents moved an application before this Court seeking appropriate modification in order dated 25.07.2023 and liberty to the extent that instead of Section 73 of the Act the issue may be left open to be considered/adjudicated under the provisions of the Act. The text and tenor of the aforesaid order, in the light of the prayer which was made by the department, clearly appears to be a liberty given to the department to proceed against the petitioner. The very object and purpose of filing modification application was to remove the restriction which was imposed on the department to proceed only under Section 73 of the Act - The liberty which was granted by the court clearly meant that the respondents would be at liberty to proceed under the provisions of the Act which included powers which are exercisable under any of the provisions of the Act and could not be restricted to Section 73 alone - the challenge to impugned notice under Section 74 of the Act, cannot be allowed to be assailed. The second ground which has been raised by learned counsel for the petitioner, in our opinion, is premature at this stage - HELD THAT:- Though, learned counsel for the petitioner disputes this aspect, we do not see any reason why writ court should interdict at this stage when the petitioner is only asked to show cause against proposed action. The authority, undoubtedly has jurisdiction to issue notice under Section 74. Whether or not present is a case of suppression of fact, warranting invocation of jurisdiction under Section 74 of the Act, is an issue of fact and not of law. Petition disposed off.
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2024 (8) TMI 981
Rejection of appeal - time limitation - appeal rejected solely because such appeal was presented 29 days beyond the three month time period - HELD THAT:- The appellate order records that the order in original was communicated to the petitioner on 31.10.2023. If computed from such date, the three month period elapsed on 30.01.2024, whereas the petitioner is entitled to seek condonation of delay for further 30 days. The appeal was presented on 29.02.2024 which is within the said condonable period. On perusal of the order in original, such order was issued without the petitioner being heard. In these circumstances, the interest of justice warrants that the petitioner's appeal be considered on merits by the appellate authority. The impugned order dated 02.04.2024 is set aside and the matter is remanded to the appellate authority - Appeal disposed off by way of remand.
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Income Tax
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2024 (8) TMI 980
Denial of Credit of TDS - credit for entire amount as deducted as tax at source u/s. 194Q from the commission income that was deducted as tax at source u/s. 194A of the Act from interest income - AR submitted that as per the Circular No.452, dated 17th March, 1986 issued by the Central Board of Direct Taxes [CBDT] the actual turnover of the Kaccha Aarahtias is the commission charged and it does not include the sales affected on behalf of the principals HELD THAT:- As gone through the CBDT Circular No. 452, dated 17th March, 1986 relied upon assessee and case of Yagneswari General Traders [ 2024 (3) TMI 1344 - ITAT VISAKHAPATNAM] Kaccha Arahtias turnover includes only the gross commission and not the sales effected on behalf of their principals. In the present case, it is a f act that the assessee is only a licensed commission agent in Agricultural Market Committee Yard, Guntur which is formed under the rules and regulation of the Government of Andhra Pradesh. Therefore, the Circular issued by the CBDT (supra) squarely applies to the assessee and hence assessee is acted only as an agent (kaccha arahtia) and therefore it is eligible to get credit of the entire amount deducted as tax at source and there is no short fall of TDS as concluded by the Ld. Revenue Authorities. Appeal of the assessee is allowed.
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2024 (8) TMI 979
Non compliances with Income Declaration Scheme, 2016 (IDS) compliances - validity of assessment order passed u/s 147 r.w.s. 144 and 144B and also to issue the consequential notice u/s 156 and the penalty notice u/s 274 r/w 271AA (1) - as argued Petitioner had although made a declaration/ in form-1 under Income Declaration Scheme, 2016 (IDS) brought into effect from 1 June 2016, had not deposited the tax amounts which would liable to be deposited - HELD THAT:- We are of the opinion that the contention as urged on behalf of the Respondents in the reply affidavit, that the Petitioner in fact complied with all the requirements under the IDS as also appropriate amount of tax was deposited is sufficient for this Court to accept the case of the Petitioner. Thus, the impugned assessment order cannot be held to be legal. It would be accordingly required to be quashed and set aside on the Respondents own showing that the Petitioner had deposited all the amounts under the IDS. The Petitioner accordingly had become entitled to the benefit under such scheme. We accordingly allow this petition in terms of prayer clause (A) and (B). The Respondents are also directed to issue an appropriate certificate of the deposit of tax under IDS to the Petitioner within a period of four weeks from the date of a copy of this order being presented before the competent officer.
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2024 (8) TMI 978
Delay in issuing the refund of tax - limitation period for remand to be strictly construed as per section 254 r.w.s.153 (3) - HELD THAT:- Sub Section 3 of Section 153 of the Act stipulates that an order for fresh assessment pursuant to an order under Section 254 or Section 263 or Section 264 of the Act may be made at any time before the expiry of period of nine months. The said provision further encapsulates that the aforesaid period has to be calculated from the end of the financial year in which the order u/s 254 of the Act is received by the authorities mentioned in the said Sections.' Admittedly, respondents did not file any appeal challenging the order dated 11.10.2019 passed by the Tribunal. The directions given by the Tribunal were to be carried out by the AO within a period of six months, but AO woefully failed to adhere to the stipulated timeline. No action was taken by the AO to give effect to the order of the Tribunal within the stipulated period. The statutory limitation period prescribed in sub section 3 of Section 153 also expired on 30.09.2021 i.e. 12 months from the end of the financial year in which the order was passed u/s 254 by the Tribunal. The underlying rationale of the Legislature behind the enactment of Section 153 (3) and setting the limitation therein, cannot be envisaged to expand the time limit for passing of a fresh assessment. In fact, the said provision entails a strict adherence to the time period within which the remand order in the present case should have been passed by the respondents. The Assessment Order dated 11.08.2023 is thus clearly beyond the statutorily prescribed period of limitation. In view of the above, the contention that passing of a fresh Assessment Order pursuant to the Tribunal s order dated 11.10.2019 is barred under the provisions of Section 153 (3) of the Act is merited and therefore the impugned notices issued by respondent No. 1 as also the Assessment Order dated 11.08.2023 cannot be sustained and need to be set aside. Since the respondents have failed to comply with the order of the Tribunal in passing a fresh Assessment Order within the stipulated time, we hold that the income as returned by the petitioner, Ms. Kanika Chawla would stand accepted. The logical consequence of refund of amount in excess of admitted liability insofar as the tax paid in the year AY 2004-05 will have to be made good by the respondent department to the petitioner.
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2024 (8) TMI 977
Delay in issuing the refund of tax - limitation period for remand to be strictly construed as per section 254 r.w.s.153 (3) - HELD THAT:- Admittedly, respondents did not file any appeal challenging the order dated 11.10.2019 passed by the Tribunal. The directions given by the Tribunal were to be carried out by the AO within a period of six months, but AO woefully failed to adhere to the stipulated timelines. No action was taken to give effect to the order of the Tribunal within the stipulated period. The statutory limitation period prescribed in sub section (3) of Section 153 also expired on 30.09.2021 i.e. 12 months from the end of the financial year in which the order was passed under Section 254 by the Tribunal. The underlying rationale of the Legislature behind the enactment of Section 153 (3) and setting the limitation therein, cannot be envisaged to expand the time limit for passing of a fresh assessment. In fact, the said provision entails a strict adherence to the time period within which the remand order in the present case should have been passed by the respondents. The notices dated 21.07.2023, 09.08.2023 and 16.08.2023 for initiating fresh assessment were issued much beyond the statutorily prescribed period of limitation. The contention that passing fresh Assessment Order pursuant to the Tribunal s order dated 11.10.2019 is barred under the provisions of Section 153 (3) of the Act is merited and therefore the impugned notices issued by respondent No. 1 dated 21.07.2023, 09.08.2023 and 16.08.2023 cannot be sustained and need to be set aside. Effect of the failure to make an order of assessment within the limitation period, after the earlier assessment made is set aside or nullified in appropriate proceedings - As relying on Shelly Products and Another [ 2003 (5) TMI 4 - SUPREME COURT] since the respondents have failed to comply with the order of the Tribunal in passing a fresh Assessment Order within the stipulated time, we hold that the income as returned by the petitioner, Mr. Ramesh Chawla (HUF) would stand accepted. The logical consequence of refund of amount in excess of admitted liability insofar as the tax paid in the year AY 2004-05 will have to be made good by the respondent Department to the petitioner.
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2024 (8) TMI 976
Validity of Faceless assessment of income escaping assessment - Challenge to notice u/s 148 as non-compliance with Section 151A of the Act - notices issued by JAO instead of FAO - HELD THAT:- JAO would not have jurisdiction to issue the impugned notices more particularly in view of the clear provisions of Section 151A read with notification dated 29 March, 2022 issued by the Central Government. As fairly conceded on behalf of the revenue, the challenge in the proceedings would stand covered by the decision of this Court in Hexaware Technologies Ltd. ( 2024 (5) TMI 302 - BOMBAY HIGH COURT] . The impugned notices would be required to be held to be illegal and invalid as and there is no dispute that the JAO had no jurisdiction to issue the impugned notice. We, accordingly, allow this petition in favour of assessee.
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2024 (8) TMI 975
Deduction u/s 80HHC - exclusion of 90% interest received from customers for the eligible profits of business while calculating deduction u/s 80HHC - HELD THAT:- As decided in Atul Ltd. [ 2017 (2) TMI 224 - GUJARAT HIGH COURT] as in complete agreement with the view that the interest earned/charged by the assessee on the delayed payment of sale consideration (for 90 days) is not required to be excluded for the purpose of computation of deduction u/s 80HHC. Exclude the export turnover and total turnover of 100% EOU for the eligible export turnover and total turnover of the company while calculating deduction under Section 80 HHC - As decided in M/s Mahavir Spinning Mills Ltd. [ 2016 (9) TMI 156 - PUNJAB AND HARYANA HIGH COURT ] assessee and the profits of the business. None of these components has reference to the expression total income. The deduction has to be computed on the basis of these components. A literal reading of the provisions and literal application of the formula does not enable us to exclude the export turnover of the unit in the EPZ from the export turnover of such goods nor from the total turnover of the business. The profit arising out of these units in the EPZ is also not excludable from the profits of the business. We may note that Section 80HHC is a beneficial provision for the purposes of encouraging exports. Although in this case, there is no doubt with regard to the interpretation or the manner in which the deduction under Section 80HHC is to be computed, even if there were any such doubts, the provision would have to be interpreted to fulfill the objective of giving a benefit to the assessee who indulges in exports. We are of the opinion that the export turnover from the unit in the EPZ is not to be excluded while computing the deduction under Section 80HHC. The deduction that is to be computed is without reference to the total income. Once the deduction is computed in terms of the formula prescribed in Section 80HHC (3), the amount so arrived at is to be deducted from the total income. However, while computing the deduction, reference to total income' is not called for - Also see Ambatture Clothing Ltd. [ 2010 (8) TMI 633 - MADRAS HIGH COURT ]
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2024 (8) TMI 974
Validity of Faceless assessment of income escaping assessment - Challenge to notice u/s 148 as non-compliance with Section 151A of the Act - notices issued by JAO instead of FAO - HELD THAT:- JAO would not have jurisdiction to issue the impugned notices more particularly in view of the clear provisions of Section 151A read with notification dated 29 March, 2022 issued by the Central Government. As fairly conceded on behalf of the revenue, the challenge in the proceedings would stand covered by the decision of this Court in Hexaware Technologies Ltd. ( 2024 (5) TMI 302 - BOMBAY HIGH COURT] . JAO had no jurisdiction to issue the impugned notice. The impugned notices would be required to be held to be illegal and invalid as and there is no dispute that the JAO had no jurisdiction to issue the impugned notice. We, accordingly, allow this petition in favour of assessee.
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2024 (8) TMI 973
Absolute abuse of the powers vested in the public officer - Jurisdictional Assessing Officer/ JOA - Validity of Faceless assessment of income escaping assessment - actions initiated by concerned officers against the petitioner, is that the impugned proceedings are initiated with gross non-application of mind and/or much more than mechanically, as the entire basis of such notices is the amount which was subject matter of consideration of the AO in the assessment order which has ultimately resulted in its deletion - notice contrary to the provisions of Section 151A, HELD THAT:- JAO would not have jurisdiction to issue the impugned notices more particularly in view of the clear provisions of Section 151A read with notification dated 29 March, 2022 issued by the Central Government. As fairly conceded on behalf of the revenue, the challenge in the proceedings would stand covered by the decision of this Court in Hexaware Technologies Ltd. ( 2024 (5) TMI 302 - BOMBAY HIGH COURT] . We must observe that although we have a pronouncement of a co-ordinate Bench of this Court on the provisions of law, in Hexaware Technologies Limited (Supra) , an affidavit cannot be filed before this Court, to challenge such pronouncement. We are unaware as to how and in what manner the JAO/ the Respondents are advised to file such affidavits. Clearly on affidavit a position being taken that the judgment on a point of law declared by this Court, is not acceptable, is wholly irresponsible. The concerned officers who are supposed to know the Income Tax Act and the law, that the decisions of the jurisdictional High Court would bind them, cannot have an approach of such open disregard to the orders passed by this Court. It is also not the case that before they file any affidavit in the Court they are not legally advised, as to what ought to be an appropriate and proper content of an affidavit, as the law would require the department to file. Also the officer/ deponent needs to know the purpose for which a reply affidavit is necessary in a legal proceeding. A reply affidavit certainly cannot be a mechanical exercise and an empty formality and / or for that matter for any statistical purpose. The present case reflects a very poor state of affairs on the part of the JAOs which is also not being corrected by the higher officials namely, the Commissioner and Chief Commissioner of Income-tax. In the present case even the Chief Commissioner of Income Tax has acted with total non-application of mind. As seen what has been mechanically done is, by some method of online as well as offline, an approval has been accorded by the Chief Commissioner of Income Tax on 7 March, 2024, the same being made available on the order sheet for issuance of the impugned notice. There is no explanation whatsoever as to why such materials which were on the record of the department were not considered and dealt in according such approval. It thus appears that the Chief Commissioner of Income Tax has also acted without application of mind, this has clearly caused prejudice and harassment to the Petitioner. Nowhere the provisions of the Act would justify such action permitting the Chief Commissioner to exercise powers u/s 151 in such manner. In fact in exercising authority in such manner, the whole purpose of a sanction under Section 151 stands defeated, which would be actions against the object and spirit of the provisions of law resulting in civil consequences. It appears that in the present proceedings the Chief Commissioner has also acted, with quite a haste. For all these reasons, we are more than sure that this is a fit case, where not only the reliefs as prayed by the Petitioner are required to be granted, but also the brazen untenable stand of the Respondents on what has been observed hereinabove needs to be deprecated. JAO has refused to acknowledge the orders passed by the CIT (A) involving the very amounts in regard to which the reply affidavit is blissfully silent. This is in fact travesty of law and nullifying the binding effect of the orders passed by the appellate authority. We would be failing in our duty if we do not reprimand such conduct of the JAO in discarding materials which, in fact, prohibited him from issuing the impugned notice as also the Chief Commissioner when he accorded a mechanical sanction. Apart from this, except for the brazen stand taken by the JAO that the decision of this Court in Hexaware Technologies Limited (Supra) is not accepted by the department, so as to justify the impugned notices, there is no acceptable justification as to why the proceedings qua the impugned notice under Section 148 would not stand covered by the decision in Hexaware Technologies Limited (Supra). We direct the JAO as also the Chief Commissioner to deposit personal cost of Rs.25,000/- each,
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2024 (8) TMI 972
Taxing the assessee at maximum marginal rate - Denial of credit of TDS as per 26AS and taxed the assessee at the maximum marginal rate at 42.17% - HELD THAT:- Since, both the sons are Joint Trustees of the assets of the Trust as well to the income accruing thereof , it could be very well said that she cherished and desired that both the branches of families of her sons(including both the sons) who are beneficiaries of the Trust should have equal share, but individually the shares of beneficiaries were not determined and defined in her WILL, and it was left to the absolute discretion of the Trustees to deal with the income arising out of the Trust Fund as well to deal with the assets on dissolution of the assets and corpus of the Trust, with the limitation that it has to be for benefit of beneficiaries but the specific share of each beneficiary on whose behalf income is received by the Trustees are indetermined and unknown, as the same is not specified in the WILL. Under this fact situation, section 164(1) read with clause (ii) to Explanation 1 to Section 164 will become relevant and shall come into play, and such relevant income shall be chargeable to tax at maximum marginal rate. As could be seen vide the terms of WILL, that the trustees have the absolute discretion to apply the income as well the corpus of the Trust. The beneficiaries no doubt under the WILL of Smt. Pashiben Shambhubahi Prajapati have an interest and right to be considered as a potential recipient of benefits under the Trust by Trustees , but that interest or right does not stretch to claiming a particular and specific share in the income and the corpus of the Trust in the absence of determinate and known share specified in the WILL, and thus, each beneficiary does not have specific enforceable right to claim any part of the income or the corpus of the trust , but rather it is a right to be considered by the Trustees, and hence it is merely an hope that the discretion shall be exercised by Trustee in his favour . But at the same time, it could not be said that the Trustees can use their discretion in an arbitrary manner , rather it has to be used by Trustees in the fair and judicious manner , otherwise the beneficiaries have other recourses under the Indian Trust Act, 1882 and under the court of equity, if the discretion is used by Trustee maliciously or capriciously, but it will not militate against the Trust being a discretionary trust liable and chargeable to tax under the Income-tax Act, 1961 to be taxed u/s 164(1) read with clause (ii) to first proviso to Section 164(1) , keeping in view the fact situation in the instant case. At this stage it will be relevant to refer to CBDT Circular No. 577, dated 04.09.1990. It will also be relevant to refer to judgment and order of Hon ble Supreme Court in the case of CIT v. Smt Kamalini Khatau, [ 1994 (5) TMI 1 - SUPREME COURT] and Gosar Family Trust [ 1995 (4) TMI 2 - SUPREME COURT] Thus, hold that the income of the assessee shall be chargeable to be taxed under the provisions of Section 164(1) read with clause(ii) of the first proviso to Section 164(1), as it were the total income of an association of person(AOP). Denial of deduction u/s 80C and 80TTA - All the beneficiaries under the Trust are individuals, and it is by virtue of deeming fiction created u/s 164(1) read with clause(ii) of the first proviso to Section 164(1), that the tax will be charged on the relevant income, in the instant case, as if it were the total income of an association of person(AOP), but that deeming fiction cannot be extended to denial of deduction u/s 80C and 80TTA as the trust per-se is not a person defined u/s 2(31) and the trustees in the instant case are to taxed as representative assessee u/s 160(1)(iv) of the 1961 Act, and the beneficiaries of the Trust in the instant case being all individuals, in my considered view, deduction u/s 80C cannot be denied to the assessee albeit by deeming fiction u/s 164(1) read with clause (ii) of first proviso , the tax shall be charged on the relevant income as if it were total income of an AOP, but that deeming fiction cannot extend to an extent of denial of deduction u/s 80C and 80TTA which is otherwise available to individuals , as all the beneficiaries under the instant Trust being individuals. Denial of TDS credit - Reasons and justification for the Revenue to deny the benefit of credit of TDS claimed by the assessee. The AO shall consider grievance of the assessee as to non credit of TDS and non allowability of deduction u/s 80C, and shall grant the same, after due verifications, if so warranted. Chargeability to income-tax and scope of income is defined under the 1961 Act by the provisions of Section 4 and 5 of the Act, and it is irrelevant as to any deficiency in the prescribed ITR Forms, as the mandate of the 1961 Act is to collect correct income-tax from the correct assessee for the correct assessment year, strictly in accordance with the provisions of the 1961 Act , and any lacuna/deficiency etc. in the prescribed form of return of income(Form-ITR) is irrelevant. There is no reasons and justification to punish the assessee s, if at all there was any deficiency in the prescribed ITR Forms, so long as the correct income as per mandate of the 1961 Act is brought to tax in the hands of the assessee. The appeal of the assessee is partly allowed
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2024 (8) TMI 971
Addition u/s 68 - assessee has received share premium from various entities and failed to establish the identity and creditworthiness of the share applicants and also genuineness of the transaction - HELD THAT:- We observe that during the impugned assessment year i.e. 2013-14 based on the material found during search, AO observed that certain funds were moved through the assessee by Surya Processed Food Pvt. Ltd. which belongs to Priya Gold Group. AO made substantive addition in the hands of Surya Processed Food Pvt. Ltd. and protective addition in the hands of the assessee. CIT (A) deleted the protective assessment in the hands of the assessee considering the fact that assessee is only a paper company and substantive addition is already made in the hands of Surya Processed Food Pvt. Ltd.. No reason to disturb the findings of ld. CIT(A). Accordingly, the appeal filed by the Revenue is dismissed. AO has determined the commission @ 2.5% on the value which was transferred by book entry to Surya Processed Food Pvt. Ltd.. Since no representation from the assessee side we are not in a position to appreciate the facts on record and ld. CIT (A) has sustained the above said addition, we do not see any reason to disturb the same. Accordingly, the appeal filed by the assessee is dismissed.
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2024 (8) TMI 970
Nature of expenses - software license expenses - revenue or capital expenditure - HELD THAT:- Whether software license expenditure incurred by the assessee is revenue or capital expenditure, is recurring in nature and has been decided in favour of the assessee by the coordinate bench of the Tribunal in preceding years. We find that in DCIT v/s M/s First Advantage Private Limited [ 2015 (6) TMI 1052 - ITAT MUMBAI] for the assessment year 2010-11, the coordinate bench of the Tribunal vide order dated 30/06/2015 held the software license expenditure on similar products to be revenue in nature - Decided in favour of assessee. Disallowance u/s 40(a)(ia) - assessee made a payment of to the contractors and fee for professional or technical service, which were subject to TDS under section 194C and 194J - HELD THAT:- The assessee admitted that out of the aforesaid amount, on an amount of Rs. 98,363 the tax was deducted at a lesser rate than what was prescribed in the statute, by an amount of Rs. 629 and Rs. 6,591 under section 194C and 194J, respectively. There is no material contrary to the assessee s submission that the relevant details were submitted before the CIT(A) in this regard and 30% of Rs. 98,363, i.e. Rs. 29,063 was disallowed in its computation of income by the assessee. Such being the facts, we are of the considered view that the learned CIT(A) has rightly deleted the disallowance made by the AO u/s 40(a)(ia) of the Act, and found disallowance of 30% of the total payments to be unjustified. Accordingly, the order passed by the learned CIT(A) on this issue is affirmed. - Decided against revenue.
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2024 (8) TMI 969
Reopening of assessment - undisclosed cash deposits - HELD THAT:- Despite entering into massive financial transactions, the assessee had not filed any return of income was filed u/s 139, thus, in our considered view keeping in view factual matrix as is emerging from the records, the AO was having sufficient and tangible incriminating information that the income of the assessee has escaped assessment and in my considered view, the AO has rightly invoked provisions of Section 147/148. Existence of reasons to belief by way of tangible material and its live link/nexus with formation of belief by the AO that income of the assessee has escaped assessment is relevant, and not the sufficiency of material because at the stage of reopening prima-facie belief of the AO based on material on record that income has escaped assessment. Reference is drawn to judgment and order of Rajesh Jhaveri Stock Brokers Private Limited [ 2007 (5) TMI 197 - SUPREME COURT] . Thus, uphold reopening of the assessment by the AO by invoking provisions of Section 147. The cash stood deposited in the bank accounts of the assessee. The assessee did not denied that the bank account did not belong to the assessee nor any denial is there that cash was not deposited by the assessee. The onus is on the assessee to explain the source of cash deposit in the bank account. The assessee also did not filed return of income in pursuance to notice u/s 148.The assessee never asked for reasons recorded by the AO u/s 147 for reopening of the assessment. The assessee did not participated in reassessment proceedings before the AO, nor appellate proceedings before the ld. CIT(A). The assessee has now obtained reasons recorded u/s 147 by the AO for reopening of the assessment, through RTI application. The assessee has not brought on record any evidences for explaining sources of cash deposits in the bank accounts held by it with Vijaya Bank and Indusind Bank. Addition u/s 68 - Ex-parte assessment under Section 144 - So far as merits of the additions are concerned, assessee has now taken a plea before ITAT for the first time, which plea is taken without prejudice, that only peak credit can be added with respect to cash deposits and entire cash deposits cannot be added, and in context thereof the assessee has filed additional evidences before the Tribunal by way of working of peak cash credits to the tune of Rs. 1174,730/- as well bank statements of both the bank accounts viz. Vijaya Bank and Indusind Bank for the relevant period are filed, and contentions are made that the entire cash deposits in the bank cannot be added and it is the peak amount which could be added, as there were cash deposits as well cash withdrawals from the Bank. The additional evidences filed requires verification by authorities below. The mandate of the 1961 Act is to bring to tax correct income in the hands of the correct assessee for the correct assessment year, keeping in view provisions of the 1961 Act. Thus, Revenue has right to collect correct taxes. Admit the additional evidence filed by the assessee by way of working of peak credit, although filed without prejudice, which requires verification by authorities below. Whatever may be the reasons, it is a fact on record, that both the assessment as well appellate proceedings were adjudicated ex-parte in the absence of the assessee. Thus, in the interest of justice, restore the matter back to the file of ld. CIT(A) to re-adjudicate the issue of additions made by the AO on merits in accordance with law - The appeal of the assessee is partly allowed for statistical purposes.
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2024 (8) TMI 968
Appeal before the CIT(A)/NFAC with a delay of 407 days - CIT(A)/NFAC had dismissed the appeal without condoning the delay by stating that neither the appellant had filed any condonation petition nor any reasons were mentioned in Form No.35 - HELD THAT:- Addl/JCIT(A) ought to have condoned the delay as the period from the date of passing the order by the AO, i.e. 09.12.2019 till 19.01.2021 is covered by the pandemic Covid-19 prevailed all over the country. Therefore, the said delay cannot be reckoned for the purpose of computation the limitation period by virtue of the judgment of the Hon ble Supreme Court in Cognizance for Extension of Limitation, In re [ 2021 (11) TMI 387 - SC ORDER] read with judgment in Cognizance for Extension of Limitation, In re [ 2021 (3) TMI 497 - SC ORDER] . Therefore direct the Addl./JCIT(A) to condone the delay and dispose of the appeal on merits. In the interest of justice, we deem it appropriate to remit the matter to the file of Addl/JCIT(A) for adjudication of the issue afresh on merits after giving due opportunity of hearing to the appellant. Appeal filed by the assessee is partly allowed for statistical purposes.
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2024 (8) TMI 967
Addition u/s 56(2)(x) - difference between fair market value and sale consideration - property is purchased through an auction conducted by the Bank - HELD THAT:- As there in SOUTHERN STEEL LTD. [ 2018 (1) TMI 582 - ITAT HYDERABAD] there is no scope of substitution of fair market value in case the property is purchased through auction. Hence, the same being a statutory process and there cannot be any scope of understatement of consideration, therefore, we hold the AO was not justified in making addition under section 56(2)(x) of the Act which was confirmed by the learned CIT(A). Consequently, we set aside the impugned order passed by the learned CIT(A) and allow the issue raised in ground by the assessee.
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2024 (8) TMI 966
Additions arising out of search proceedings - cash payment was made by the Gokulam Group only towards income of the Appellant during assessment - HELD THAT:- It is admitted position that the amount of Rs. 125 Lacs in cash has exchanged hands between SGCFCL and the assessee. The same has not been recorded n the books of any of the parties. It may be true that the assessee was carrying out legal and facilitation work for SGCFCL for taking over of another entity i.e., the South India Wire and Ropes Pvt. Ltd. To settle these amounts, all the payments were received in cheques by the assessee. The same were also settled through banking channels only which is evident from 3 receipts as placed by the assessee on record. The assessee could not produce even minor details of payment to 2500 shareholders stated to be paid in cash before lower authorities. Even before us, the assessee has placed bald list of shareholders which do not show that any such payment was made even to a single shareholder. In our considered opinion, the onus was on assessee to establish that the impugned payment did not constitute the income of the assessee and this amount was disbursed to the shareholders. Assessee has miserably failed to prove the same and there is nothing on record to support this submission. Nothing has been shown to us that the assessee has otherwise admitted any income against the facilitation work stated to be carried on behalf of SGCFCL. Therefore, the arguments of Ld. AR are not acceptable. Ground Nos. 1 to 5 stands dismissed. Assessment was not based on any incriminating material that was ever found during the course of search - This argument is to be summarily rejected since the only basis to make the assessment in the case of the assessee is the incriminating material coupled with the statement made by Shri M. Suresh Babu indicating that the same shall have bearing on determination of total income of the assessee. The assessee himself has admitted the receipt of payment in cash. Therefore, the reasons to make the impugned assessments are well founded and we do not find any infirmity in the jurisdiction of Ld. AO.
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Customs
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2024 (8) TMI 965
Legality and validity of decisions taken by the Policy Relaxation Committee (PRC) - non-submission of Bill of Export - rejection of request of Petitioner by holding that Bill of Export is a mandatory document in terms of Foreign Trade Policy (FTP) for discharge of Export Obligation (EO) of Advance Authorisation (AA) - HELD THAT:- The law as its stands today is that if the party is able to show the proof of supply to SEZ Unit, then non-submission of Bill of Export cannot be treated as non-discharge of proof of EO. It is submitted that the required documents will be submitted within two weeks. The same will be examined by Respondents and if the documents are in order, the EODC shall be issued within four weeks of the submissions of the documents. If Respondents have any query they shall give a personal hearing, notice whereof shall be communicated atleast 3 working days in advance. Petition disposed off.
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2024 (8) TMI 964
Forefeiture of security deposit - goods sought to be cleared, were blank guns which could have been modified into lethal weapons jeopardizing the National Security - HELD THAT:- In the order-in-original respondent had given a factual finding against appellant holding that appellant was responsible to advise the Importer to follow rules and regulations governing clearance of the imported goods and any non-compliance should have been brought to the notice of the Customs Authorities. There is also a factual finding that appellant had suggested to the Importer to mis-declare the imported goods in order to aid and abet the Importer in circumventing the requirement under both Foreign Trade Policy and the Arms Act, 1959 read with the Arms Rules, 2016 as amended. There is a factual finding that appellant was having knowledge of such mis-declaration and accordingly mis-classification under CTH 9503 being Blank Firing Guns and required DGFT license under the import policy and license under the Arms Act, 1959 read with Arms Rules, 2016. Therefore, since it was only on the basis of factual finding, thus, no substantial questions of law arise - appeal dismissed.
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2024 (8) TMI 963
Jurisdiction - whether the demand for interest can be subject matter for adjudication by the adjudicating authority? - HELD THAT:- The Adjudicating Authority i.e. JDGFT purporting to exercise powers under Section 13 of the FT Act called upon the petitioner to pay interest on this amount which the respondent had paid to the petitioner as per the order of the Supreme Court. It is already referred to the definition of 'Adjudicating Authority' and also dealt with Section 13 in the earlier part of this order. As per Section 13 what can be imposed is any penalty or any confiscation may be adjudged under the FT Act. Section 1 1 of the FT Act deals with contravention of provisions of FT Act, rules, orders and foreign trade policy. In the present case, the Supreme Court held that the petitioner was exporting a product which was inadmissible as per Appendix 12 of Exim Policy. Consequently, the petitioner was not entitled to the benefits of the claim of cash amount of 20% premium that would be paid against the additional licence. The contravention of the provisions of the FT Act, rules, orders and foreign trade policy lead to the consequences provided under the FT Act. The demand by the respondent is for payment of interest on the amount of Rs. which according to the respondent was utilized by the petitioner to which they were not legally entitled to. The respondent may have a claim against the petitioner for payment of interest but in our opinion the same cannot be adjudicated under the provisions of the FT Act, 1992. Under the provisions of the FT Act, any penalty may be imposed or any confiscation may be adjudged. We do not find any provision in the FT Act providing for adjudication of a claim of interest on the amount as is the subject matter in the present petition. It is not found that any provision in the FT Act for levy of interest on such delayed payment moreso when the amounts were paid under the orders of the Supreme Court subject to furnishing of a bank guarantee. The interest cannot be construed to be a penalty to confer jurisdiction on the adjudicating authority to adjudicate the claim for payment of interest. The Supreme Court in INDIA CARBON LTD. VERSUS STATE OF ASSAM (AND OTHER APPEALS) [ 1997 (7) TMI 566 - SUPREME COURT ] has held that the interest can be levied and charged on delayed payment of tax only if the statute that levies and charges tax makes a substantive provision in this behalf. This Court cannot overlook the competency of the authority in adjudicating the claim for grant of interest. The claim for interest has to be enforced before a forum competent to award interest. It is made clear that it is held that in the facts of the present case, the adjudicating authority under the FT Act has no authority/jurisdiction to adjudicate the claim for payment of interest. It is open for the respondents to enforce the claim for payment of interest as against the petitioner in accordance with law. The respondents are further restrained from putting the Importer-Exporter Code number (IEC) of the petitioner on the Denied Entity List (DEL) and in case already done, the respondents are directed to remove the petitioner from the said list - the petition is allowed.
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2024 (8) TMI 962
Refund of SAD - rejection of refund claims on the ground that there is mismatch between the description of goods in the bills of entry and sales invoice and that the CST/VAT discharged were less than the SAD paid - HELD THAT:- The fact remains that the appellant has produced a Chartered Accountant s Certificate along with the reconciliation statement as required by Boards Circular No. 6/2008, dated 28-4-2008. In such a case the decision to discard the certificate should be based on certain incriminating and reliable documents and the reasons for disbelieving the certificate should be clearly spelt out. In the absence of such action the claim cannot be rejected. In CHOWGULE COMPANY PVT LTD VERSUS COMMISSIONER OF CUSTOMS CENTRAL EXCISE [ 2014 (8) TMI 214 - CESTAT MUMBAI (LB)] , a Larger Bench of this Tribunal examined a reference of a related matter as to whether to avail the benefit of Notification No. 102/2007, the condition 2(b) of the Notification is mandatory for compliance being a trader who cleared the goods on the strength of commercial invoices. - The judgment went on to examine the genesis and object of the levy and the role of the exemption notification, which is very useful in understanding the issue and it was held that 'non-declaration of the duty in the invoice issued itself is an affirmation that no credit would be available. Therefore, non-declaration/ non-specification of the duty element as to its nature and quantum in the invoice issued would itself be a satisfaction of the condition prescribed under clause (b) of para 2 of the Notification 102/2007.' A similar view is also relevant for discrepancies noticed in the description of goods between the sales invoice and the Bill of Entry in the impugned matter as above. As rightly stated by the appellant, such minor discrepancies of description mentioned in the invoice vis- -vis the Bill of entry do not go to the root of the validity of the refund claim and are curable. Similarly the mismatch in the SAD vs VAT / CST paid caused by different rates at which the tax is paid cannot be held against the refund applicant. There is no allegation that the VAT / CST were not paid at the effective rate. The CA s Certificate along with the reconciliation statement has been prescribed in Boards Circular to provide a ledger/ document-based scrutiny of the claim and should ordinarily be relied upon to sanction the claim. The impugned order rejecting the refund claims is not proper. The impugned order is hence set aside. The appeal is allowed.
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2024 (8) TMI 961
Confiscation of the goods - imposition of redemption fine and penalty - demand of customs duty - violation of condition of the adhoc exemption order No.338/95 dt. 21.12.1995 - Continuing nature - time limitation - HELD THAT:- The adhoc exemption order does not say that the flood lights can be used only for world cup matches. Though the request was made during the preparation for the world cup matches, the intention was to uplift the infrastructure standards of the stadium. When the Government has granted exemption from Customs duty, the department has sought to deny the exemption by alleging that the flood lights have been used for cricket matches other than the world cup. It is thus assumed by the department that the conduct of world cup international matches is for non--commercial purpose and that the conduct of one day international matches is for commercial purpose. The adhoc exemption order does not make any such distinction. The entire SCN has been issued on assumptions and presumptions. There are no factual or legal basis to hold that there is a violation of condition (ii) as alleged by the department. The issue on merits is answered in favour of the appellant and against the Revenue. Time Limitation - suppression of facts or not - HELD THAT:- The SCN has been issued under Section 25 (1) and also demanding duty under proviso to Section 28 (1) of the Customs Act, 1962. On perusal of the SCN, there are no whisper alleging that there is suppression of facts with intention to evade customs duty on the part of the appellant. So also, there is no evidence adduced by the department to show that the appellant has suppressed facts. In fact, the department has issued the SCN after collecting the documents from the appellant that they have conducted 3 one day international matches during the years 1996, 1997 and 1998. The SCN has been issued after a lapse of more than 7 years. Thus, the ingredients of proviso to Section 28 (1) are not present in the case on hand. The demand raised is therefore time--barred. The issue on limitation is also answered in favour of appellant and against the Revenue. The impugned order is set aside - appeal allowed.
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2024 (8) TMI 960
Assessment of value of the qualities of aluminum scrap imported by M/s CMR Nikkei India Private Limited through the 56 Bills of Entry on the value declared by the respondent - Assessing Officer had not passed a speaking order for enhancement of the value - HELD THAT:- The Assessing Officer was required to pass a detailed order after stating the facts of the matter before him and giving reasons as to whether the judgment of the Supreme Court in Sanjivani Non-Ferrous Trading [ 2018 (12) TMI 738 - SUPREME COURT ] would be applicable since the matter was decided in terms of this judgment. The Commissioner (Appeals), however, without any examination of facts and law has merely held that the matter stands covered by the judgment of the Supreme Court in Sanjivani Non-Ferrous Trading. The matter would, therefore, have to be remanded to the Assessing Officer to pass a fresh speaking order. The order dated 31.01.2020 passed by the Commissioner (Appeals), therefore, cannot be sustained and is set aside - Petition disposed off by way of remand.
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Service Tax
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2024 (8) TMI 959
Levy of service tax - business auxiliary service - receiving indent commission from their overseas holding company - HELD THAT:- After analysing the judgments of the Hon ble Delhi High Court in VERIZON COMMUNICATION INDIA PVT. LTD. VERSUS ASSISTANT COMMISSIONER, SERVICE TAX, DELHI III, DIVISION-XIV ANR. [ 2017 (9) TMI 632 - DELHI HIGH COURT ] which approved the view taken by the M/S PAUL MERCHANTS LIMITED OTHERS VERSUS CCE, CHANDIGARH [ 2012 (12) TMI 424 - CESTAT, DELHI (LB) ] and other judgments on the subject, the Larger Bench observed ' Arcelor India provides the necessary details of the customers in India to the foreign steel mills and, thereafter, the foreign steel mills and the Indian customers execute a contract for supply of the goods. The goods are directly supplied by the foreign steel mills to the Indian customers. Arcelor India also satisfies condition (b) of rule 3(2) as payments for such service have been received in convertible foreign exchange.' The principle laid down by the Larger Bench in the aforesaid case is squarely applicable to the facts of the present case. Hence, the services rendered by the appellant to their holding company would fall within the scope of Export of Service Rules, 2005. Consequently, the demand cannot be sustained. The impugned orders are aside - appeals are allowed.
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Central Excise
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2024 (8) TMI 958
Transfer of CENVAT Credit - shifting of unit situated in Chrompet to another of their unit in Appur village during the period from July 2007 to November 2007 - the department informed the appellant that the credit taken beyond October 2007 is not eligible for transfer as the unit at Chrompet had stopped production and was merged with Appur unit - HELD THAT:- Under the CENVAT scheme there is no one to one correlation between the inputs and the final product. During the impugned period there was no time limit during which credit had to be taken on duty paid documents. In the absence of any allegation of fraud or that the documents on which the credit was availed was not proper or that the inputs were not at all used for the manufacture of the final product, the credit cannot be denied. Procedural issues like the ER1 returns being belatedly filed etc. should not come in the way of substantial justice, when the law does not bar such a relief. Justice V.R. Krishna Iyer speaking for a Division Bench in State of Punjab Anr. Vs. Shamlal Murari Anr. [ 1975 (10) TMI 105 - SUPREME COURT ] had held ' We must always remember that processual law is not to be a tyrant but a servant, not an obstruction but an aid to justice. It has been wisely observed that procedural prescriptions are the handmaid and not the mistress, a lubricant, not a resistant in the administration of justice.' In facts of the case as discussed, the impugned order approving the rejection of appellants request for transfer of credit as per letter of the Assistant Commissioner, Chrompet Division, is set aside and the appellants prayer allowed - appeal disposed off.
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CST, VAT & Sales Tax
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2024 (8) TMI 957
Liability to pay tax under the KGST Act on the value of the goods supplied inter-State for execution of the works contract in Kerala - intra-State sale - HELD THAT:- The scope of the petitioner s obligation under the contract was to source the goods, forming part of the electric Sub-Station, from specified vendors or from its own manufacturing units outside the State and make them available for incorporation in the works contract carried out in the State. It will also be apparent that the goods in question were non-standard goods which had to be in accordance with the designs and specifications supplied by KINFRA. The goods to be supplied were not standard goods which the petitioner company could have fabricated based on its own designs and specifications. It follows therefore that when such goods, as were covered by the contract entered into between the petitioner and KINFRA, were sourced from outside the State, the mere fact that there was an initial transaction whereby the petitioner obtained possession/title of the goods in Kerala from a movement of the goods that originated from outside of Kerala, could not have made a difference while determining the nature of the sale transaction namely inter-State or intra-State . In the instant case, the movement of the goods, in respect of which the petitioner had claimed exemption from tax under the KGST Act, was clearly incidental to their obligations under the contract entered into with KINFRA. The goods themselves were not standard goods but goods that answered to the specifications and make that was prescribed in the contract entered into between the petitioner and KINFRA. Under such circumstances, merely because there was an intervening event that broke the chain of movement of the goods from outside the State to within the State, prior to their incorporation in the works contract, the transaction could not have been viewed as an intra-State sale . These S.T. Revisions allowed by setting aside the impugned orders of the Appellate Tribunal and answering the questions of law raised in these Revision Petitions in favour of the petitioner assessee and against the Revenue.
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Indian Laws
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2024 (8) TMI 956
Doctrine of prospective overruling - Demands for tax under state legislation pertaining to Entries 49 and 50 of List II of the Seventh Schedule - Infringement of fundamental rights in Part III of the Constitution - HELD THAT:- The doctrine of prospective overruling is applied when a constitutional court overrules a well-established precedent by declaring a new rule but limits its application to future situations. The underlying objective is to avert injustice or hardships. The doctrine was applied by the courts in the US on the basis that the US Constitution neither prohibits nor requires retroactive effect. The US Supreme Court has considered the existence of a statute or judicial decision as an operative fact having consequences which cannot justly be ignored or erased by a new judicial declaration. Therefore, it was held that the effect of a subsequent ruling as to invalidity may have to be considered in light of various aspects. This Court has adopted the doctrine of prospective overruling, partly inspired by the jurisprudence developed in the US. In GOLAKH NATH VERSUS STATE OF PUNJAB [ 1967 (2) TMI 95 - SUPREME COURT] a Bench of eleven Judges of this Court was called upon to decide the validity of the Constitution (Seventeenth Amendment) Act 1964 which included certain state agrarian laws in the Ninth Schedule of the Constitution. The majority held that an amendment to the Constitution was law according to the definition under Article 13. Further, it was held that constitutional amendments are also subject to limitations prescribed under Article 13 (2). In JINDAL STAINLESS LTD. AND ANR. VERSUS STATE OF HARYANA AND ORS. [ 2016 (11) TMI 545 - SUPREME COURT (LB)] a Bench of nine Judges of this Court held that a non-discriminatory tax does not per se constitute a restriction on the right to free trade, commerce and intercourse guaranteed under Article 301. This Court overruled long-standing precedents that held that taxes, except for compensatory taxes, offend Article 301. The total amount, that is the principal plus the interest, due by the assesses in the pending matters may be substantial in comparison to their total net worth. Steel Authority of India has stated on affidavit that retrospective application of MADA (supra) will lead to revival of cumulative demands to the tune of approximately Rupees three thousand crores from different States. The delay in the court proceedings should not be to the detriment of the assesses. While the States may levy or renew demands of tax, if any, pertaining to Entries 49 and 50 of List II of the Seventh Schedule in terms of the law laid down in the decision in MADA the demand of tax shall not operate on transactions made prior to 1 April 2005 - The time for payment of the demand of tax shall be staggered in instalments over a period of twelve years commencing from 1 April 2026 - The levy of interest and penalty on demands made for the period before 25 July 2024 shall stand waived for all the assesses.
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