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Newsletter: Where Service Meets Reader Approval. TMI Tax Updates - e-Newsletter August 3, 2022 Case Laws in this Newsletter: GST Income Tax Customs Corporate Laws Insolvency & Bankruptcy FEMA Service Tax Central Excise CST, VAT & Sales Tax Indian Laws Articles 47th GST COUNCIL MEETING -Outcomes No Recovery of Central Excise Duty, Interest, and Penalty without serving of Adjudication Order CONTRONYMS IN TAXATION-RICE AND GST By G. Jayaprakash Advocate News Introducing Single Click Nil Filing of GSTR-1 DEA conducts training programme as a part of Capacity Building initiatives in infrastructure sector, in association with Indian School of Business (ISB), Mohali, and Indian Institute of Management, Calcutta CCI approves acquisition of stake in IDFC Asset Management Company Limited and IDFC AMC Trustee Company Limited by Bandhan Financial Holdings Limited, ChrysCapital and GIC CCI approves acquisition of 50.1% of the equity share capital of Sanmina-SCI India Private Limited (SCIPL) by Reliance Strategic Business Ventures Limited (RSBVL) CCI approves Composite Scheme of Arrangement and Amalgamation between Shriram Group Companies Income Tax Department conducts searches in Gujarat Announcement of Results for Patent Agent Examination 2022 Auction for Sale (re-issue) of (i) ‘6.69% GS 2024’, (ii) ‘7.10% GS 2029’, (iii) ‘6.54% GS 2032’ (iv) ‘6.95% GS 2061’ Real GDP growth in 2021-22 stands at 8.7 per cent, 1.5 per cent higher than the real GDP of 2019-20 Various communication and outreach initiatives to spread financial and tax literacy awareness among masses New record of over 72.42 lakh (7.24m) ITRs filed on a single day 1,67,080 companies registered in FY 2021-22 as compared to 1,55,377 in FY 2020-21 Notifications GST 17/2022 - dated 1-8-2022 - CGST Seeks to implement e-invoicing for the taxpayers having aggregate turnover exceeding Rs. 10 Cr from 01st October, 2022. GST - States G.O.MS.No.542 - dated 25-7-2022 - Andhra Pradesh SGST Amendment in Notification Go.Ms.No.254, Revenue (CT-II) Department, dated 20.03.2019 G.O.MS.No. 543 - dated 25-7-2022 - Andhra Pradesh SGST Amendment to Go.Ms.No.252, Revenue (CT-II) Department, dated 20.03.2019 and Go.Ms.No.277, Revenue (CT-II) Department, dated 22.04.2022 G.O.MS.No.538 - dated 21-7-2022 - Andhra Pradesh SGST Extension of due date of furnishing FORM GST CMP-08 for the quarter ending June 2022 till – 31.07.2022 G.O.MS.No.537 - dated 21-7-2022 - Andhra Pradesh SGST Extension of waiver off Late fee under Section 47 for delay in filing FORM GSTR-4 for the F.Y 2021-2022 till 28.07.2022 G.O.MS.No.535 - dated 20-7-2022 - Andhra Pradesh SGST Extension of dates of specified compliances in exercise of power under section 168 of the Andhra Pradesh Goods and Services Tax Act, 2017 9/2022-State Tax (Rate) - dated 18-7-2022 - Himachal Pradesh SGST Seeks to amend Notification No. 5/2017-State Tax (Rate), dated the 30th June, 2017 8/2022-State Tax (Rate) - dated 18-7-2022 - Himachal Pradesh SGST Seeks to amend in Notification No. 3/2017-State Tax (Rate), dated the 30th June, 2017 11/2022-State Tax (Rate) - dated 18-7-2022 - Himachal Pradesh SGST Rescinds notification No.45/2017-State Tax (Rate), dated the 15th November, 2017 10/2022-State Tax (Rate) - dated 18-7-2022 - Himachal Pradesh SGST Seeks to amend Notification No. 02/2022-State Tax (Rate), dated the 23rd April, 2022 Income Tax 87/2022 - dated 1-8-2022 - IT Income-tax (Twenty Third Amendment) Rules, 2022 SEBI SEBI/LAD-NRO/GN/2022/91 - dated 1-8-2022 - SEBI Securities and Exchange Board of India (Intermediaries) (Amendment) Regulations, 2022 VAT - Delhi F. 10/21/2022-23/SRD/Fin/1920-1929 - dated 1-8-2022 - DVAT Delhi VAT - List of Goods Taxed at 20% - Seek to rescind the Notification No. F.3(107)/Fin.(Exp.-I)/2021-22/DS-I/295 dated the 10th November, 2021. Circulars / Instructions / Orders DGFT 20/2015-2020 - dated 1-8-2022 Enlistment of an Agency under Appendix 2E of FTP, 2015-2020 - authorized to issue Certificate of Origin (Non-preferential) Highlights / Catch Notes GST Cancellation of petitioner's registration - rejection of petition on the ground of time limitation - That being the intent of the Government to grant relaxation of limitation with respect to an order for cancellation of registration, it would defy plain logic to restrict that benefit to proceedings for revocation on such orders and to not extend the same to appeal proceedings. That construction if made, would give rise to an absurd situation. There would exist two dates of order cancelling a registration - one for the purpose of filing an application to revoke that order and another to file appeal there against. - The appellate authority has clearly erred in rejecting the appeal as time barred. - HC Visit to Get Source Levy of penalty - Detention of goods alongwith vehicle - wrong E-way bill - in penal provision such as Section 129 of the GST Act, the element of intention to evade tax must be present to sustain an order of penalty. To gather the intention of the petitioner an inquiry has to be undertaken to ascertain whether the mistake was inadvertent with no element of malice or intention to evade tax - It does not appear that either the Taxing Authority or the appellate authority has undertaken the said exercise of conducting an inquiry to ascertain the real intent behind the act of petitioner to mention wrong address. - HC Visit to Get Source Profiteering - purchase of flat - The present investigation has been conducted up to 31.12.2018 only. However, the Respondent has not obtained the Completion Certificate (CC) till that date. Therefore, he is liable to pass on the benefit of ITC which would become available to him till the date of issue of CC. Accordingly, the concerned jurisdictional Commissioner CGST/SGST are directed to ensure that the Respondent passes on the benefit of ITC to the eligible flat buyers as per the methodology approved by this Authority in the present case - NAPA Visit to Get Source Profiteering - purchase of flat - The present investigation has been conducted up to 31.12.2018 only. However, the Respondent has not obtained the Completion Certificate (CC) till that date. Therefore, he is liable to pass on the benefit of ITC which would become available to him till the date of issue of CC. Accordingly, the concerned jurisdictional Commissioner CGST/SGST are directed to ensure that the Respondent passes on the benefit of ITC to the eligible flat buyers as per the methodology approved by this Authority in the present case - NAPA Visit to Get Source Income Tax Withholding of refund u/s 241A - It is settled law that the refund due to the Petitioner is liable to be released at the time of issuance of the intimation/order under Section 143(1) of the Act unless an Order for withholding of refund has been passed under Section 241A of the Act explicitly recording that the grant of refund is likely to adversely affect the Revenue. - the impugned Order lacks sufficient reasoning to hold that the Revenue would be adversely affected by the grant of refund - HC Visit to Get Source Validity of order - Faceless Assessment - draft assessment order u/s 144B - It hardly stood to reason that the department refused the request of the assessee for grant of time to file his response to the draft assessment order. There was sufficient time available for the final assessment to be made. Furthermore, it was pandemic time when the department should have adopted liberal approach in refusing the request for time for filing objection to the draft assessment order and finally passing the assessment order. The department acted thick skinned. - HC Visit to Get Source MAT - Adjustments to book profit - Disallowance as per the clause (f) to Explanation-1 of Sec. 115JB of the Act independently - there is no mechanism provided under the clause (f) to Explanation-1 of Sec. 115JB of the Act to make the disallowance independently. Therefore our action for restoring back the issue to the file of AO would unnecessarily cause further litigation. Thus we limit the disallowance on an ad-hoc basis @ 1 % of the exempted income as per the clause (f) to Explanation-1 of Sec. 115JB of the Act. - AT Visit to Get Source TP Adjustment - Addition on account of corporate guarantee - International transaction - guarantee fees / commission @ 0.35% will meet the arm’s length criteria in the present case for which assessee has furnished the details relating to interest charged by the lenders of Cyprus and Nepal subsidiaries - Further, on the submission made that the guarantee charge should be apportioned based on number of days for which the guarantee was effective and not to be charged for the full year as done by the ld. AO, we are inclined to direct the ld. AO to give effect to this submission while computing the charge of guarantee fees for both the subsidiaries (AEs) by taking recourse to the details produced in the chart placed at page 100 of the order of ld. CIT(A). - AT Visit to Get Source Revision u/s 263 - Sure, the AO having not considered this aspect of the matter at all, there was no occasion for the assessee to clarify anything thereto, much less qua the date of transfer, which forms the fulcrum of his case/s. It does not, however, lie in the mouth of the assessee, who “explained” the source of the investment in property purchased during the year, to contend that the date of the said purchase falls in the immediately preceding year i.e., in the facts and circumstances of the case and the law in the matter. - Revision proceedings sustained - AT Visit to Get Source Validity of assessment proceedings initiated u/s 153C - In case of other person u/s 153C of the Act, the starting point for computation of the block period would be the date from on which based on the seized documents, notice is issued to the other person - As further held that the amendment made in section 153C by Finance Act 2017 w.e.f. 1st April 2017 which states that block period for the “searched person” as well as the “other person” would be same six AYs immediately preceding the year of search is only prospective. It makes the things clear that the search that took place in this case is prior to amendment unaffected by the amendment made by way of Finance Act 2017. - assessment order passed u/s 153C of the Act, is wholly without jurisdiction, hence, invalid - AT Visit to Get Source Unexplained investment u/s 69 - Addition on account of jewellery (Gold Jewellery and Silver Jewellery) found from the residence as well as bank locker of the assessee during the course of search - after considering the overall factual position in this case and keeping in view of high status, family tradition, deduction on account of purity and the deduction towards Streedhan, the excess jewellery found were nominal. In this view of the matter, the addition sustained by the ld. CIT(A) deserves to be deleted and the grounds raised by the assessee are allowed. - AT Visit to Get Source Unexplained investment u/s 69 - Addition on account of jewellery (Gold Jewellery and Silver Jewellery) found from the residence as well as bank locker of the assessee during the course of search - after considering the overall factual position in this case and keeping in view of high status, family tradition, deduction on account of purity and the deduction towards Streedhan, the excess jewellery found were nominal. In this view of the matter, the addition sustained by the ld. CIT(A) deserves to be deleted and the grounds raised by the assessee are allowed. - AT Visit to Get Source Addition made to the income of the assessee on account of cash deposit remaining unexplained - addition u/s. 69A - having accepted the fact that the assessee had conduced business to the tune of Rs. 20 lakhs odd which in all probability was conducted in cash and the department having found out no other source of income available with the assessee, the entire deposits in cash in the bank can be safely attributed to the business receipts of the assessee only. - AT Visit to Get Source Unexplained money u/s. 69A - cash deposit made by the assessee during the demonetization period i.e. from 09.11.2016 to 30.12.2016 - mere possibility of assessee earning considerable amount out of cash sales on the date of announcement of demonetization - The guess work adopted by AO in arriving at probable sales value - CIT(A) rightly deleted the additions - AT Visit to Get Source Customs Revocation of Customs Broker Licence - forfeiture of security deposit - There are no answers to the appellant’s contention that “Let Export” orders were issued after due verification by the concerned officials and that export manifest was also generated, implying thereby that the goods in question had cross the border. But, in any case, other than mere allegations of no advice and no due diligence, as Revenue has not brought on record the role/roles played by the Appellant and that which amounted to connivance etc., since it is the settled position of law that allegations howsoever strong, cannot take the place of proof. - AT Visit to Get Source Corporate Law Oppression and mismanagement - Transfer of shares - Once it is accepted that the Appellant can also challenge the transfer of shareholding as being oppressive and as being intended only to defeat the right of the Appellant to maintain his petition under Section 397/398 of the Act, an opportunity should have been granted to the Appellant to peruse the register of members and, if so advised, challenge the same in accordance with law. The Company Petition, on the averments made in the Petition itself, could not have been thrown out at the threshold without granting such opportunity to the Appellant. - HC Visit to Get Source Indian Laws Dishonor of Cheque - vicarious liability - rebuttal of presumption - non-Executive Independent Directors - What the High Court overlooked was, the contention of these Appellants that they were non-Executive Independent Directors of the Accused Company, based on unimpeachable materials on record. - there could be no justification for not dispensing with the personal appearance of the Appellants, when the Company had entered appearance through an authorized officer. - SC Visit to Get Source IBC Initiation of CIRP - Period of limitation - to be recognized from the date of NPA or Balance Sheet recognizing the debt - An application under Section 7 of the IBC would not be barred by limitation, on the ground that it had been filed beyond a period of three years from the date of declaration of the loan account of the Corporate Debtor as NPA, if there were an acknowledgement of the debt by the Corporate Debtor before expiry of the period of limitation of three years, in which case the period of limitation would get extended by a further period of three years - SC Visit to Get Source CIRP - Personal Guarantor - The statutory scheme of the code does not contain any indication that the Personal Guarantor of a Corporate Debtor can escape from its liability under the Personal Guarantee Deed merely on the ground that he is now started residing in another country and acquired citizenship of another country and is no more an Indian citizen. It is well settled principle of statutory interpretation that such interpretation of a statute should be adopted which makes the statute functional and does not make a statute non-functional - AT Visit to Get Source Service Tax Liability of service tax - unbilled revenue amount - mobilization advance - The Service tax is paid on the basis of the revenue realized towards the provision of the taxable services and not on the basis of the revenue recognition. Impugned order do not point out a single case whereby the amounts realized by the appellant against any of the project undertaken by the appellant were not reflected in their ST-3 return. ST-3 return is based on the revenues realized by the appellant during the period of the return and not on the basis of revenue recognition. Accordingly, there are no merits in the impugned order - AT Visit to Get Source Central Excise Recovery of excise duty, penalty, etc., from the petitioner - fixation of special rate of excise duty - The petitioner has been able to show a prima facie case for hearing because if the requirement of requesting for fixation of a special rate in respect of value addition to the manufactured goods had arisen only after the final judgment of the Supreme Court of India on 22-4-2020, the period of limitation would stand extended for a period of 90 days from 3-10-2021 and therefore, the application which was submitted on 20-10-2021 by the petitioner was well within the period of limitation. Therefore, the balance of convenience tilts in favour of interim protection to the petitioner. - HC Visit to Get Source VAT Initiation of re-assessment proceedings/revision - Jurisdiction - The only error that appears to have crept in the order of the appeal authority as has been confirmed by the Tribunal is not to have made specific observation to compel the assessing authority to deal with the objection as to jurisdiction - Once the matter is engaging the attention of the original authority, it is advisable that the assessee may raise a preliminary issue of lack of jurisdiction as well. Only if the authority is satisfied as to existence of its jurisdiction, it may proceed to give effect to the directions issued by the first appeal authority as confirmed by the Tribunal. - HC Visit to Get Source Interstate sale or Stock transfer - Merely because quantities of camphor may have been transferred in entirety or soon after receipt at the branch also did not create any presumption of prior contract of sale. Further, the fact that tax may not have been paid by the assessee at Delhi would remain a matter outside the jurisdictional sphere of the taxing authority in the State of U.P. Non payment of tax in one State does not create liability to pay tax in another State. In any case, in the context of inter-State sale, existence of prior contract of sale was mandatory as may have occasioned the movement of goods from UP to Delhi was necessary to be established. - HC Visit to Get Source Assessment of sales shown in accounts at low prices - Benefit of exemption from VAT - sale of footwear - The language of the section is specific insofar as it states that the pricing should be 'abnormally low' when compared to the 'prevailing market price of such goods'. The prevailing market price must be taken into account which means that comparison must have been arrived at as between the prices of the manufacturer/petitioner and other identically placed manufacturers. This has admittedly not been done. - HC Visit to Get Source Interpretation to the addendum of notification - Available limit of exemption - The Restrictive Notification is not an addendum or corrigendum to the Exemption Notification. It is an independent notification issued under Section 4-AA of the Act. By its very nature, such notifications were issued by the State Government, at the relevant time, to grant exemption to a unit, based on employment granted - to persons belonging to specified categories. The assessee had not claimed that exemption. - HC Visit to Get Source Case Laws: GST 2022 (8) TMI 97 Cancellation of petitioner's registration - rejection of petition on the ground of time limitation - date of the order impugned iss 11.09.2019 whereas the date of filing the appeal by the petitioner is 18.09.2021 - HELD THAT:- Since the facts are not in dispute and they are self apparent from the perusal of the order of the appellate authority and the original authority and since the petitioner is not contesting the date of the original order, the petition is being disposed of, at this stage without calling for any counter affidavit. Once the Government exercised its powers and reached a satisfaction (that there were defects on the common portal with respect to service of orders) and, provided relaxation of limitation, by suspending the period of limitation with respect to orders passed up to 12 June, 2020 and placed the date of any order passed up to that date, to be 31.08.2020 (on deemed basis) and further since the Government Notification dated 29.08.2021 suspended the period of limitation to file revocation applications for the period 01.03.2020 to 31.08.2021, it may never have been said that such an application if filed by the petitioner within the extended period of limitation, on 18.09.2021, would have been beyond time - That being the intent of the Government to grant relaxation of limitation with respect to an order for cancellation of registration, it would defy plain logic to restrict that benefit to proceedings for revocation on such orders and to not extend the same to appeal proceedings. That construction if made, would give rise to an absurd situation. There would exist two dates of order cancelling a registration - one for the purpose of filing an application to revoke that order and another to file appeal there against. The appellate authority has clearly erred in rejecting the appeal as time barred. The order dated 31.03.2022 is set aside and the matter is remitted to the appellate authority to pass a fresh orders, strictly in accordance with law, treating the appeal filed by the petitioner to be within limitation - Petition allowed. 2022 (8) TMI 96 Levy of penalty - Detention of goods alongwith vehicle - wrong E-way bill - levy of tax and penalty on the ground of petitioner s transporter on being intercepted was found to carry GST paid goods to petitioner s office at Jabalpur whereas e-way bill generated showed destination at Indore - Section 129 of CGST Act - HELD THAT:- It is evident that strictly going by the terminology used in the immunity provision under Clause 5 of the circular dated 14.09.2018, the benefit flowing wherefrom may not be available to the petitioner but this Court hastens to add that in penal provision such as Section 129 of the GST Act, the element of intention to evade tax must be present to sustain an order of penalty. To gather the intention of the petitioner an inquiry has to be undertaken to ascertain whether the mistake was inadvertent with no element of malice or intention to evade tax - It does not appear that either the Taxing Authority or the appellate authority has undertaken the said exercise of conducting an inquiry to ascertain the real intent behind the act of petitioner to mention wrong address. This Court has no manner of doubt that an inquiry needs to be conducted at the level of appellate authority to ascertain whether there was any malicious intention to evade tax on the part of the petitioner or not. Petition allowed in part. 2022 (8) TMI 95 Profiteering - Purchase of flat - allegation is that the Respondent had not passed on the benefit of Input Tax Credit (ITC) to him by way of commensurate reduction in the price - contravention of of Section 171 of the CGST Act, 2017 - penalty - HELD THAT:- It Is clear from a plain reading of Section 171 (1) that it deals with two situations:- one relating to the passing on the benefit of reduction in the rate of tax and the second about the passing on the benefit of the ITC. On the issue of reduction in the tax rate, it is apparent from the DGAP's Report that there has been no reduction in the rate of tax in the post-GST period; hence the only issue to be examined is whether there was any benefit of ITC with the introduction of GST. On this issue, it has been revealed from the DGAP's Report that the ITC as a percentage of the turnover that was available to the Respondent during the pre-GST period (April 201.6 to June 2017) was 3.31% and during the post-GST period (July 2017 to April-2020), It was 5.42% for the Project 'The Peaceful Homes'. This confirms that post-GST, the Respondent has benefited from additional ITC to the tune of 2.11% (5.42% - 3.31%) of his turnover, and the same was required to be passed on to the customers/flat buyers/recipients, The DGAP has calculated the amount of ITC benefit availed by the Respondent which needs to be passed on to all the recipients of supply Including the Applicant No. 1 as Rs. 3,52,59,318/-. The details of such calculations are mentioned in Table- B supra. The above amount is Inclusive of profiteered amount of Rs. 48,952/- In respect of the Applicant No. 1. The Authority finds that the Respondent has profiteered by an amount of Rs. 3,52,59,318/- during the period of investigation i.e. July 2017 to April 2020. The above amount that has been profiteered by the Respondent from his home buyers shall be refunded by him, along with interest @ 18% thereon, from the date when the above amount was profiteered by him till the date of such payment, in line with the provisions of Rule 133 (3) (b) of the CGST Rules 2017 - This Authority under Rule 133 (3) (a) of the CGST Rules, 2017 orders that the Respondent shall reduce the prices to be realized from the buyers of the flats commensurate with the benefit of ITC received by him. Interest - HELD THAT:- The Respondent is also liable to pay interest as applicable on the entire amount profiteered, i.e. Rs. 3,52,59,318/- Hence the Respondent is directed to also pass on Interest @ 18% to the customers/ flat buyers/ recipients on the entire amount profiteered, starting from the date from which the above amount was profiteered till the date of passing on/ payment, as per provisions of Rule 133 (3) (b) of the CGST Rules 2017. Penalty - HELD THAT:- It Is also evident from the above narration of facts that the Respondent has denied the benefit of ITC to his home buyers in contravention of the provisions of Section 171 (1) of the CGST Act, 2017 and has committed an offence under Section 171. (3A) of above Act. That Section 171 (3A) of the CGST Act, 2017 has been inserted in the CGST Act, 2017 vide Section 112 of the Finance Act, 2019, and the same became operational w.e.f. 01.01.2020. As the period of investigation was July 2017 to April 2020, therefore, the Respondent is liable for imposition of penalty under the provisions of the above Section for the amount profiteered from 01.01.2020 onwards. This Order having been passed today falls within the limitation prescribed under Rule 133(1) of the CGST Rules, 2017. 2022 (8) TMI 94 Profiteering - purchase of flat - it is alleged that the Respondent had not passed on the benefit of input tax credit to him by way of commensurate reduction in price - Contravention of Section 171 of the Central Goods and Services Tax Act, 2017 - penalty - HELD THAT:- The Authority finds that, the Respondent has benefited from the additional ITC to the extent of 0.46% of the turnover during the period from 01.07.2017 to 31.12.2018 and hence the provisions of Section 171 of the CGST Act, 2017 have been contravened by the Respondent as he has not passed on the above benefit to his customers. The Authority determines that, the Respondent has realized an additional amount of Rs. 3,763/- which includes both the profiteered amount @ 0.46% of the taxable amount (base price) and 12% GST on the said profiteered amount from the Applicant No. 1. The Authority determines that, the Respondent has realized an additional amount of Rs. 49,22,281/- which includes both the profiteered amount @ 0.46% of the taxable amount (base price) and GST @ 8% / 12% on the said profiteered amount from the 394 flat buyers other than the Applicant No. 1. The Authority determines that, the Respondent has profiteered an amount of Rs. 49,26,054/- inclusive of GST @ 8% / 12% as calculated in the aforesaid Report dated 31.08.2020 for the stated period. Hence, the Authority holds that the Respondent is required to pass on the benefit of ITC along with the interest @ 18% per annum from the dates from which the above amount was collected by him from them till the payment is made as prescribed under Rule 133 (3)(b) of the CGST Rules, 2017, within a period of 3 months from the date of this Order as per the details mentioned in Annexure-A to this Order. - this Authority under Rule 133 (1) (a) of the CGST Rules, 2017 orders that the Respondent shall reduce the prices to be realized from the buyers of the flats of the above Project commensurate with the benefit of ITC received by him. The present investigation has been conducted up to 31.12.2018 only. However, the Respondent has not obtained the Completion Certificate (CC) till that date. Therefore, he is liable to pass on the benefit of ITC which would become available to him till the date of issue of CC. Accordingly, the concerned jurisdictional Commissioner CGST/SGST are directed to ensure that the Respondent passes on the benefit of ITC to the eligible flat buyers as per the methodology approved by this Authority in the present case and submit report to this Authority through the DGAP. The Applicant No.1 or any other flat buyer shall also be at liberty to file complaint against the Respondent before the Maharashtra State Screening Committee in case the remaining benefit of ITC is not passed on to them. Penalty - HELD THAT:- The Authority finds that vide Section 112 of the Finance Act, 2019 specific penalty provisions have been added for violation of the provisions of Section 171 (1) which have come in to force w.e.f. 01.01.2020, by inserting Section 171 (3A), Since, no penalty provisions were in existence between the period from 01.07.2017 to 31.12.1018 i.e. the period of the present investigation for which the profiteered amount has been calculated and the Respondent is found to have violated the provisions of Section 171 (1), the penalty prescribed under Section 171 (3A) cannot be imposed on the Respondent for profiteering done during such period. This Order having been passed today falls within the limitation prescribed under Rule 133(1) of the CGST Rules, 2017. 2022 (8) TMI 54 Negative blocking of the Electronic Credit Ledger - Challenge to blocking on the ground that such harsh action has been taken during the pendency of the adjudication proceedings in question - without disposing of the reply to the show-cause-notice the impugned action of negative blocking of ITC has been taken by the respondents - violation of principles of natural justice - HELD THAT:- This writ petition is disposed of by directing the Officer concerned to consider and dispose of the reply filed by the petitioner on 13th June, 2022 to the impugned show-cause-notices expeditiously and preferably within three weeks from the date of communication of this order in accordance with law and by passing a reasoned and speaking order and by providing opportunity of hearing to the petitioner or his authorised representative and finally if the petitioner is able to make out a case in course of hearing for revoking of the negative blocking of ITC, the Officer concerned shall take immediate steps for revoking the same. Application disposed off. Income Tax 2022 (8) TMI 93 Withholding of refund u/s 241A - Eligibility of Interest on refunds - Notice u/s 143(2) of the Act has been issued and the Respondents want to verify the claim for deduction u/s10AA - HELD THAT:- This Court is of the view that an Order under Section 241A of the Act cannot be passed in a mechanical and routine manner. Refunds cannot be withheld just because the Notice under Section 143(2) of the Act has been issued and the Respondents want to verify the claim for deduction u/s 10AA of the Act. In the present case the impugned Order u/s 241A of the Act is a generic Order and no attempt has been made by the Respondents to substantiate how the grant of the refund is likely to adversely affect the Revenue. It is settled law that the refund due to the Petitioner is liable to be released at the time of issuance of the intimation/order under Section 143(1) of the Act unless an Order for withholding of refund has been passed under Section 241A of the Act explicitly recording that the grant of refund is likely to adversely affect the Revenue. As the impugned Order lacks sufficient reasoning to hold that the Revenue would be adversely affected by the grant of refund. Accordingly, the impugned Order dated 15th June, 2022 passed under Section 241A of the Act is quashed and the matter is remanded back to the Office of the Assistant Commissioner of Income Tax Circle 43(1), Delhi with a direction to pass a fresh speaking order within six weeks. As the tax amount payable on the disputed amount of Rs.10.95 crore (being the claim for deduction under Section 10AA) under Section 115JB would be Rs.2,36,14,691/- and under the normal provisions of Act would be Rs.3,82,94,093/-, this Court is of the view that even if the higher amount of the aforesaid amounts is withheld, the Petitioner would still be entitled to refund of Rs.16,68,98,449/- forthwith along with applicable interest under Section 244A of the Act (which we are informed totals to Rs.2,42,00,275/- till 01st August, 2022). Till the Assistant Commissioner of Income Tax Circle 43(1), Delhi passes a fresh Order within the stipulated time, this Court directs the Respondents to refund Rs.16,68,98,449/- along with applicable interest under Section 244A of the Act till the date of refund within two weeks. 2022 (8) TMI 92 Reopening of assessment u/s 147 - whether the writ petition challenging the order passed u/s 148A (d) and notice issued u/s 148 is maintainable or not? - HELD THAT:- Complete mechanism for determination of escape amount has been provided under the statute and the Assessing Authority, in the present case, while considering the submissions, reply made by the petitioner, has applied its mind and passed the impugned order u/s 148A(d) - In fact, in the present writ petition, the petitioner has raised grounds denying the fact that the petitioner did not enter into any purchase or sale transaction with M/s Panveer Trading Private Limited and he has also not claimed any input tax credit with respect to goods and service tax purportedly paid by M/s Panveer Trading Private Limited and he has also not entered any transaction with M/s Panveer Trading Company, as such there is no question of escapement of income chargeable to tax by making claim of bogus expenditure in terms of bogus purchases. These facts are his defence which can be examined while conducting proceeding under Section 148A. The grounds which have been taken by the petitioner in the writ petition is his defence that cannot be examined at the stage of issuance of notice under section 148 as the Assessing Authority before issuance of notice under Section 148 of the Act, 1961 has to rely upon credible information which in the impugned order under Section 148A (d) of the Act, 1961 has already been furnished and thereafter, considering the material it has recorded a finding that it is a fit case where notice under Section 148 of the Act, 1961 can be issued. Petitioner is unable to point out that the findings which have been recorded by the Assessing Authority are contrary to the material on record and the Assessing Authority has not applied its mind or Assessing Authority has not considered the reply filed by the petitioner. Therefore, the writ petition, at this juncture is not maintainable and deserves to be dismissed. Writ petition being devoid of merit is liable to be and is hereby dismissed 2022 (8) TMI 91 Validity of order passed - Faceless Assessment Scheme - Penalty u/s 274 read with Section 270A imposed - draft assessment order u/s 144B - Whether in the facts of the case the Department was justified in not granting time to file reply especially when, the seeking of time by the assessee was during the pandemic period-is the question posed? - HELD THAT:- We fail to understand when the assessment was to be finalized before 30.06.2021, what prevented the Department from granting time to the petitioner-assessee up to 06.06.2021. The assessee congenial approach should be reflected not only in the application of taxation laws but also in the procedural mechanism to be applied towards assessee in treating him for the purpose of tax. It hardly stood to reason that the department refused the request of the assessee for grant of time to file his response to the draft assessment order. There was sufficient time available for the final assessment to be made. Furthermore, it was pandemic time when the department should have adopted liberal approach in refusing the request for time for filing objection to the draft assessment order and finally passing the assessment order. The department acted thick skinned. For the above reasons, the petitioner deserves to be granted a relief. The assessment order dated 27.05.2021 under Section 143(3) read with Section 144B of the Act as well as the notice dated 27.05.2021 u/s 274 read with Section 270A of the Act are hereby set aside. The assessment proceedings are remanded to the AO to be taken up afresh from the stage of the draft assessment order. The Assessing Officer shall pass appropriate order after giving opportunity to the petitioner to file reply. The entire assessment proceedings culminating into the final assessment order shall be completed within twelve weeks from the date of receipt of this order. 2022 (8) TMI 90 TP Adjustment - comparable selection - ITAT excluding Excel Infoways Ltd - HELD THAT:- This Court is of the view that the intent of Chapter X of the Act is to compute the income in relation to a controlled transaction between an assessee and its associated enterprise having regard to the arm s length price in order to nullify the effect of transfer of income to a jurisdiction outside India, if any, in respect of the controlled transaction. The exercise of determining the arm s length price in respect of international transactions between related enterprises is aimed at determining the price which would have been charged for products and services, as nearly as possible, if such international transactions were not controlled by virtue of their being executed between related parties. The object of the exercise is to remove the effect of any influence on the prices or costs that may have been exerted on account of the international transactions being entered into between related parties. It is clear that for the exercise of determining the arm s length price to be reliable, it is necessary that the controlled transactions be compared with uncontrolled transactions which are similar in all material aspects. As in the present case Excel Infoways Pvt. Ltd. fails not only the service revenue from export/ITES filter of 75% insisted upon by the TPO but also the diminishing revenue filter as is apparent from the chart reproduced hereinabove, no interference is called for in the finding recorded by the Tribunal. 2022 (8) TMI 89 Revision u/s 263 by CIT - eligibility of deduction u/s 80P - assessment order as an erroneous one causing prejudice to the interest of Revenue - Assessing Officer had wrongly accepted its section 80P(2)(a) deduction claim regarding interest income derived from deposits made in the co-operative banks - HELD THAT:- As decided recently in RENA SAHAKARI SAKHAR KARKHANA LTD [ 2022 (1) TMI 419 - ITAT PUNE] though the co-operative banks pursuant to the insertion of sub-section (4) to Sec. 80P would no more be entitled for claim of deduction under Sec. 80P of the Act, but as a co-operative bank continues to be a co-operative society registered under the Co-operative Societies Act, 1912 (2 of 1912), or under any other law for the time being in force in any State for the registration of co-operative societies, therefore, the interest income derived by a co-operative society from its investments held with a co-operative bank would be entitled for claim of deduction under Sec.80P(2)(d). As the A.O while framing the assessment had taken a possible view, and allowed the assessee‟s claim for deduction under Sec. 80P(2)(d) on the interest income earned on its investments/deposits with co-operative banks, therefore, the Pr. CIT was in error in exercising his revisional jurisdiction u/s 263 of the Act for dislodging the same. Accordingly, finding no justification on the part of the Pr. CIT, who in exercise of his powers under Sec. 263 of the Act, had dislodged the view that was taken by the A.O as regards the eligibility of the assessee towards claim of deduction under Sec. 80P(2)(d), we set-aside his order and restore the order passed by the A.O under Sec. 143(3) - Decided in favour of assessee. 2022 (8) TMI 88 Disallowance on account additional depreciation in respect of windmills under the provisions of Section 32(1)(iia) - Proof of manufacturing activity provided or not? - HELD THAT:-we note that the Hon ble Madras High Court, in the case of S. Srinivasaraghavan[ 2022 (5) TMI 1066 - MADRAS HIGH COURT] involving identical facts and circumstances for A.Y. 2006-07, has allowed the additional depreciation on windmill considering the activity of generating the electricity as manufacturing in nature. Addition u/s 14 A while calculating the book profit u/ 115JB of the Act - HELD THAT:- We note that in the recent judgment of Special Bench of Hon ble Delhi Tribunal in the case of ACIT vs. Vireet Investment Pvt. Ltd. [ 2017 (6) TMI 1124 - ITAT DELHI] has held that the disallowances made u/s 14A r.w.r. 8D cannot be the subject matter of disallowances while determining the net profit u/s 115JB. We hold that the disallowances made under the provisions of Sec. 14A r.w.r. 8D of the IT Rules, cannot be applied to the provision of Sec. 115JB of the Act as per the direction of the Hon'ble Calcutta High Court in the case of CIT Vs. Jayshree Tea Industries Ltd [ 2014 (11) TMI 1169 - CALCUTTA HIGH COURT] Disallowance as per the clause (f) to Explanation-1 of Sec. 115JB of the Act independently - HELD THAT:- We feel that ad-hoc disallowance will serve the justice to the Revenue and assessee to avoid the multiplicity of the proceedings and unnecessary litigation. Thus we direct the AO to make the disallowance of 1% of the exempted income as discussed above under clause (f) to Explanation-1 of Sec. 115JB of the Act subject to the maximum amount of disallowance made by the lower authorities. We also feel to bring this fact on record that we have restored other cases involving identical issues to the file of AO for making the disallowance as per the clause (f) to Explanation- 1 of Sec. 115JB of the Act independently. But now we note that there is no mechanism provided under the clause (f) to Explanation-1 of Sec. 115JB of the Act to make the disallowance independently. Therefore our action for restoring back the issue to the file of AO would unnecessarily cause further litigation. Thus we limit the disallowance on an ad-hoc basis @ 1 % of the exempted income as per the clause (f) to Explanation-1 of Sec. 115JB of the Act. Thus the ground of appeal of the Revenue is partly allowed. 2022 (8) TMI 87 Reopening of assessment u/s 147 - change of opinion - income for trading in shares and mutual funds - business income v/s capital gain - HELD THAT:- As by issuing notice u/s 148 AO wanted to treat the entire income as business income and not as capital gain as computed by the AO in the original assessment order under section 143(3) of the Act dated 31.12.2010. We find that the assessee has fully and truly furnished all the details before the AO and by considering the details filed by the assessee, the assessment was completed u/s 143(3) dated 31.12.2010 and the AO has accepted the claim of the assessee in respect of capital gains. Subsequently, AO wanted to treat the very same capital gain as business income on the basis of the same material available on record. Obviously, the reopening is only a change of opinion and no new tangible material came to the notice of the Assessing Officer to come to a different conclusion and thus, the change of opinion is not permissible in law as the judgement in the case of CIT v. Kelvinator of India Ltd. [ 2010 (1) TMI 11 - SUPREME COURT] applies. CIT(A) has rightly held that the action of the AO in reopening the assessment does not satisfy the proviso to section 147 of the Act. We find no infirmity in the order passed by the ld. CIT(A) and thus, the ground raised by the Revenue is dismissed. 2022 (8) TMI 86 Deduction u/s 80IB - profits derived from its industrial undertakings located at Jammu - Apportionment of common head office and selling expenses for the purpose of computation of profit of units eligible for deduction u/s. 80IB - HELD THAT:- As there is no change in the fact pattern and applicable law in respect of the claim of deduction made by the assessee u/s 80IB in the years under consideration before us vis- -vis the years for which appellate orders of Co-ordinate of ITAT Kolkata [ 2017 (4) TMI 106 - ITAT KOLKATA ] or that of Hon ble jurisdictional High Court of Calcutta in assessee s own case [ 2011 (5) TMI 1133 - CALCUTTA HIGH COURT ] have been referred and relied upon. The methodology adopted by the assessee for apportionment of common head office expenses and selling expenses has consistently been followed year-on-year basis which has been held to be reasonable and scientific. It is thus noted that the issue in hand before us is no longer res integra considering the decisions in assessee s own case. Disallowance made u/s 14A read with rule 8D - HELD THAT:- We delete the disallowance made by the ld. AO and upheld the findings given by the ld. CIT(A). While holding so on the given set of facts, we also find force from the decision in the case of South Indian Bank Ltd [ 2021 (9) TMI 566 - SUPREME COURT] wherein it was held that where interest free own funds available with assessee-banks exceeded their investments in taxfree securities; investments would be presumed to be made out of assessee's own funds and proportionate disallowance was not warranted under section 14A on ground that separate accounts were not maintained by assessee for investments and other expenditure incurred for earning tax-free income. Accordingly, ground no. 2 is dismissed. Deduction u/s 80IB - Whether income from sale of scrap generated in the manufacturing process employed in the eligible unit can be taken into consideration for deduction u/s 80IB? - HELD THAT:- As decided in own case [ 2017 (4) TMI 106 - ITAT KOLKATA ] held that scrap generated in the manufacturing activity is eligible for deduction and respectfully following the same, we hold that the Assessee is entitled to claim deduction under the provisions of the section 80IB. TP Adjustment - Addition on account of corporate guarantee - International transaction - HELD THAT:- As the transaction cannot be covered in the definition of international transaction to hold it chargeable for corporate guarantee commission / fees for which he explained the objective behind the transaction undertaken by the assessee with its Cyprus and Nepal AEs. According to him, when the assessee embarked on the acquisition of the Polish company, it had committed itself to providing the entire fund by way of equity. The provision of funds by way of equity by the assessee to the Cyprus Subsidiary to fully fund the acquisition was on the cards from day one. Borrowing from banks was an interim measure till funds by way of equity became available. The assessee having already committed to fund the acquisition on capital account before it furnished the corporate guarantee, it cannot be said that the transaction of furnishing of corporate guarantee had any bearing on the profits, income, losses or assets of the assessee. Subsequent issue of equity shares by the Cyprus Subsidiary to the assessee would add to the assessee's assets by way of investment but such issue of equity is not the transaction under consideration rather it is the issue of provision of corporate guarantee which is under consideration. Issue relating to whether corporate guarantee is an international transaction or not is no longer res integra. Reliance placed by ld. CIT(A) on the decision of Tega Industries Ltd [ 2016 (9) TMI 1456 - ITAT KOLKATA] to hold that it is not an international transaction, has been held to be per incuriam by the Co-ordinate bench of ITAT Kolkata in the case National Engineering Industries Ltd [ 2018 (9) TMI 1545 - ITAT KOLKATA] We are inclined to follow the recent judgment of PCIT v. Redington (India) Ltd [ 2020 (12) TMI 516 - MADRAS HIGH COURT] which has held that corporate guarantees are covered by the definition of international transaction after the retrospective amendment made by the Finance Act, 2012. Charge of guarantee commission / fees in the range of 0.2% and 0.5% - We hold that guarantee fees / commission @ 0.35% will meet the arm s length criteria in the present case for which assessee has furnished the details relating to interest charged by the lenders of Cyprus and Nepal subsidiaries - Further, on the submission made that the guarantee charge should be apportioned based on number of days for which the guarantee was effective and not to be charged for the full year as done by the ld. AO, we are inclined to direct the ld. AO to give effect to this submission while computing the charge of guarantee fees for both the subsidiaries (AEs) by taking recourse to the details produced in the chart placed at page 100 of the order of ld. CIT(A). This ground no. 4 is partly allowed. 2022 (8) TMI 85 Revision u/s 263 - CIT, examining the assessment record, found a substantial difference between the stated consideration and the stamp valuation thus Section 56(2)(vii)(b)(ii) deemed the same as the income of the purchaser, an aspect of the matter which the AO ought to have, in his view, examined, though had failed to - HELD THAT:- As on, the applicability or otherwise of s. 56(2)(vii)(b)(ii) is within the scope of the limited scrutiny in the instant case. Any provision of law incident on the transaction under scrutiny, would fall to be considered, and the enquiry by the AO in the instant case, for example, could not be said to be limited to the applicability of s. 69 alone. Reference for the purpose may be made to the decisions by the Jabalpur Bench of the Tribunal in Vishal Sethi [ 2020 (9) TMI 407 - ITAT JABALPUR] and Nitin Sharma [ 2020 (10) TMI 75 - ITAT JABALPUR] . The assessee has fairly not contested this aspect. As regards the revision order, the same cannot be regarded as infirm on account of remission of the matter for examination and adjudication by the AO considering that there has admittedly been no examination/consideration by him in the matter. It is trite law that the order becomes per se erroneous and prejudicial to the interests of the Revenue, liable for revision, in the absence or lack of enquiry, which ought to have been made in the facts and circumstances of the case, i.e., for non-application of mind ( In fact, even on merits, we find no case having been set-up or canvassed before the revisionary authority, for it to be contended, as was before us, that the revisionary authority ought to have under the circumstances decided the matter himself, even as the same would not extend to redoing the assessment himself. As the provisions of Registration and Other Relevant Laws (Amendment) Act, 2001 may also be relevant in the matter. Further still, the property under reference, as a perusal of the sale deed , also read-out during hearing, shows, is a lease , so that there can apparently be no sale , which implies transfer of absolute rights, i.e., on freehold basis. That is, even on merits of the assessee s case before us, the matter has been, in the facts and circumstances of the case, rightly remitted by the ld. Pr. CIT to the file of the assessing authority for fresh consideration. Sure, the AO having not considered this aspect of the matter at all, there was no occasion for the assessee to clarify anything thereto, much less qua the date of transfer, which forms the fulcrum of his case/s. It does not, however, lie in the mouth of the assessee, who explained the source of the investment in property purchased during the year , to contend that the date of the said purchase falls in the immediately preceding year i.e., in the facts and circumstances of the case and the law in the matter. Even so, being admittedly germane, and an aspect not looked into, be not examined, which is what in effect the ld. Pr. CIT in exercise of his revisionary power requires the assessing authority to do. We may though, as a matter of abundant caution, clarify that it is not a case of approval of the impugned order on ground/s different from that assumed by the revisionary authority, which is impermissible, but merely explaining the untenability of the assessee s argument/case before us. - Decided against assessee. 2022 (8) TMI 84 Validity of assessment proceedings initiated u/s 153C - Assessment without jurisdiction and barred by limitation - applicability of amendment to sections 153A and 153C - HELD THAT:- As amended provisions of section 153C of the Act would apply where search and seizure is made after the amendment. Considered in the aforesaid perspective, the apprehension of the Revenue that if the amended provisions are not applied with reference to the date of recording of satisfaction there will be different sets of assessment years for the searched person and the person other than the searched person, in our view, is completely misplaced. This is so, because, once the amended provisions of sections 153A and 153C are applicable in respect of search and seizure operation initiated under section 132 or requisition made u/s 132A of the Act post 01.04.2017, the provisions of sections 153A and 153C would be applicable to the same set of assessment years, both in case of the searched person and the person other than the searched person. In case of other person u/s 153C of the Act, the starting point for computation of the block period would be the date from on which based on the seized documents, notice is issued to the other person - As further held that the amendment made in section 153C by Finance Act 2017 w.e.f. 1st April 2017 which states that block period for the searched person as well as the other person would be same six AYs immediately preceding the year of search is only prospective. It makes the things clear that the search that took place in this case is prior to amendment unaffected by the amendment made by way of Finance Act 2017. As respectfully following the decision ARINA AIRLINES INTERNATIONAL LIMITED VERSUS ACIT, CIRCLE-05, NEW DELHI [ 2022 (2) TMI 1270 - ITAT DELHI] we hold that the impugned assessment order passed under section 153C of the Act, is wholly without jurisdiction, hence, invalid. Accordingly, we quash the same. Consequently, the order of learned Commissioner (Appeals) is set aside. - Decided in favour of assessee. 2022 (8) TMI 83 Allowance of R D expenditure u/s.35(2AB) as weighted deduction - HELD THAT:- It is the settled proposition of law that for claiming any expenditure as an allowable deduction, the onus is always on the assessee to explain to the satisfaction of the AO that such expenditure has been laid out wholly and exclusively for the purpose of business. In the instant case although there is no dispute to the fact regarding the incurring of such expenditure, the only reason of the ld.CIT(A) for disallowing the same is that the assessee never explained whether the business carried on by the assessee and the income generated by it has any relation or connection with such expenditure claimed. A perusal of the assessment order shows that assessee claimed R D expenditure u/s.35(2AB) as weighted deduction. As per Form 3CL, the R D expenditure is eligible for deduction at Rs. 2,68,28,000/- and therefore, the AO held that the assessee has claimed excess R D expenditure of Rs. 25,40,763/- and accordingly disallowed the amount of Rs. 12,69,409/- being 50% of Rs.25,40,763/-. We find the ld.CIT(A) has given a finding that similar issue has been decided against the assessee. However, nothing was brought to our notice about the final outcome of the same. We therefore deem it proper to restore the issue to the file of the AO with the direction to verify the record and decide the issue afresh and as per fact and law after giving due opportunity of being heard to the assessee. We hold and direct accordingly. The ground of appeal No.2 is accordingly allowed for statistical purposes. Disallowances of depreciation on lease hold rights @ 25% - Since according to the AO the premium paid by the assessee to acquire the lease hold rights should be amortized over a period of 33 years and depreciation on the same is not allowable, therefore, he issued a show-cause notice to the assessee to explain as to why depreciation should not be disallowed - HELD THAT:- We find the issue stands decided in favour of the assessee in assessee s own case in the immediately preceding assessment year [ 2021 (8) TMI 1328 - ITAT HYDERABAD] wherein the issue in assessee s favour that a right to operate any asset forms an intangible asset u/s.32(1)(ii) of the Act entitled for depreciation.- Decided in favour of assessee. 2022 (8) TMI 82 Unexplained investment u/s 69 - Addition on account of jewellery (Gold Jewellery and Silver Jewellery) found from the residence as well as bank locker of the assessee during the course of search - HELD THAT:- Assessee belongs to Rajput Community of Rajasthan and as per customs of the Community, some of the Gold/Silver Jewellery/articles are passed on to the subsequent generations and some of the jewellery was received on various festivals/ auspicious occasions and ceremonies. In fact, the assessee had furnished photographs of functions and marriages to show that ladies of his family wearing heavy gold jewellery which according to him is a part of STREEDHAN and deserves to be treated as explained. Assessee has also drawn our attention to the cash withdrawn by him from his bank account for purchasing some jewellery from time to time in past many years out of his own savings. Therefore, according to the ld. AR of the assessee, the acquisition of jewellery is not excessive looking to the social status of the assessee. In our view the intention of law is to stick to the jewellery limits mentioned in the Circular. There was no point in inserting the provision at clause (iii) which grants discretionary power to the Income Tax Authorities to decide as to what can be reasonable quantity of jewellery held by an assessee in view of community practices and social status. As we are of the considered view that the AO had ignored the factual position as well as failed to verify the fact that the assessee is living with his parents and belonged to a Rajput Family where the fact of having jewellery as Streedhan by the assessee s mother and wife cannot be ignored. Thus after considering the overall factual position in this case and keeping in view of high status, family tradition, deduction on account of purity and the deduction towards Streedhan, the excess jewellery found were nominal. In this view of the matter, the addition sustained by the ld. CIT(A) deserves to be deleted and the grounds raised by the assessee are allowed. 2022 (8) TMI 81 Beneficial tax rate under section 112(1) - sale of the equity shares - HELD THAT:- As examined the decision of the Hon ble Jurisdiction High Court in case of Cairn UK Holdings Ltd.[ 2013 (10) TMI 430 - DELHI HIGH COURT] we find, the Hon ble Delhi High Court after analyzing the provisions of section 48 and 112(1) of the Act has concluded that the assessee is entitled to avail the beneficial tax rate u/s 112(1) of the Act. Thus, in view of the aforesaid binding precedent of the Hon ble Jurisdictional High Court, we do not find any infirmity in the decision of learned Commissioner (Appeals). 2022 (8) TMI 80 Addition made to the income of the assessee on account of cash deposit remaining unexplained - addition u/s. 69A in respect of cash deposits made by an appellant by treating it as unexplained money - HELD THAT:- Assessee still needs to substantiate his turnover with certain documentary evidences so that the correct estimation of his net profits by applying the rate specified under the section can be made. However in the peculiar facts of the case before us the assessee was asked to justify this fact after a lapse of six years in re-assessment proceedings. Considering the fact that he was a very small businessman, operating in unorganized sector, it was asking for too much to produce bills to substantiate his turnover in cash that too after a lapse of six years. In these peculiar facts and circumstances we are of the view that having accepted the fact that the assessee had conduced business to the tune of Rs. 20 lakhs odd which in all probability was conducted in cash and the department having found out no other source of income available with the assessee, the entire deposits in cash in the bank can be safely attributed to the business receipts of the assessee only. We may add that very small businessmen like the assessee for whom the law itself provides a convenient method for declaring their incomes by returning taxes on at a presumptive rate, thus doing away with the onerous requirement of maintaining books of account and other documents, noting that it acted as a detterent to such businessmen from declaring their income, the Revenue is expected to take a considerate and holistic view on such matters and not waste its efforts and energies in making such paltry additions. Addition on account of alleged unexplained cash deposit be deleted. Appeal of assessee allowed. 2022 (8) TMI 79 Unexplained money u/s. 69A - cash deposit made by the assessee during the demonetization period i.e. from 09.11.2016 to 30.12.2016 - mere possibility of assessee earning considerable amount out of cash sales on the date of announcement of demonetization - HELD THAT:- Comparability of the circumstances which existed on the day of demonetization announcement, he pointed to the occasion of Dhanteras which is a festival wherein similar kind of high traffic volume of customers happens for the purchase and sale of gold/bullion/jewellery, it being an auspicious day for making such investments. It was placed on record that on the day of Dhanteras which fell on 28.10.2016 i.e. prior to the day of announcement of demonetization, sales bills to the tune of 229 numbers were generated while dealing with those many customers which was also during the smaller time window available on that day depending on the muhurats. As pointed out that the VAT returns filed by the assessee for the year under consideration have not been revised in any manner so as to reflect any kind of adjustment or accommodation made in the accounted data of the assessee. All these facts and explanations were placed before the lower authorities, copies of which are placed. The guess work adopted by AO in arriving at probable sales value and the judicial precedents relied upon, we find no reason to interfere with the factual findings given by the CIT(A) in deleting the addition made by the ld. AO. Accordingly, the appeal of the revenue stands dismissed. 2022 (8) TMI 53 Validity of Reopening of assessment u/s 147 - notice u/s 148A - Denial of natural justice - period shall be not less than 7 days and but not exceeding 30 days from the date on which such notice was issued together with a power to grant further time on an application made by the assessee - As argued adequate opportunity has not been granted to the appellant though the statute specifies that minimum 7 days time should be granted to the assessee to respond and the assessee should be heard in the matter - reasonable opportunity was not being granted to the appellant - HELD THAT:- As rightly pointed by the learned senior Advocate for the appellant that nowhere in the reply given by the assessee, there is any elaborate discussion about Section 148, 148A of the Act and probably there occurred a factual mistake at the hands of the Assessing Officer. The assessee had enclosed certain documents along with the reply and had made submissions on merit and on our reading, we find that no elaborate discussion about Section 148 or 148A of the Act. Be that as it may, the opportunity of hearing to be provided should be reasonable and not illusory. If the appellant had received the show cause notice on 17th March, 2022 online, then for calculating the period of 7 days, namely 17th March, 2022 has to be excluded. If that is so, the period of 7 clear days does not stand fulfilled in the case on hand. Apart from that, 18th March, 2022, 19th March, 2022 and 20th March, 2022 are to be excluded since they are all holidays on account of Holi festival.Further, we state that the State of West Bengal had declared 17th March, 2022 also as a holiday though for the Central Government, no such holiday was declared and an identical issue was considered by us in the case M/s. R. N. Fashion[ 2022 (6) TMI 84 - CALCUTTA HIGH COURT] We are of the view that the assessee should be granted an opportunity by the Assessing Officer in terms of Clause (b) of Section 148A of the Act, which provides for an opportunity of being heard to the assessee. For such reason, we are inclined to remand the matter back to the Assessing Officer for fresh consideration. The notice issued under Section 148 of the Act dated 29th March, 2022 shall not be enforced and a fresh action can be initiated in accordance with law after complying with the following direction. The appellant shall submit a fresh reply within two weeks from the date of receipt of the server copy of this judgment and order and upload the reply online and the appellant is at liberty to also refer to the order dated 29th March, 2022 under Section 148A (b) of the Act and also give his reply. On receipt of the said reply, the authorised representative of the appellant shall be given an opportunity of personal hearing through video conferencing and the documents that the assesee may produce shall also be considered and fresh order under Clause (d) of Section 148A of the Act be passed in accordance with with law. The appellant has requested for copies of certain documents. The Assessing Officer before affording an opportunity of hearing shall take note of the said representation and take a decision on merits and in accordance with law and thereafter proceed further in terms of the directions. Customs 2022 (8) TMI 77 Seeking grant of Bail - Smuggling - foreign markings Gold Bars - burden to prove - presence of corroborative evidences or not - section 123 of Customs Act,1962 - HELD THAT:- At present the prosecution is relying upon the statement of applicant recorded under section 108 of Customs Act which as per the judgement in the case of UNION OF INDIA VERSUS KISAN RATAN SINGH, KALU SINGH RAJPUT AND STATE OF MAHARASHTRA [ 2020 (1) TMI 510 - BOMBAY HIGH COURT] , GOPI CHAND SONI AND ORS. VERSUS CUSTOMS, EXCISE SERVICE TAX APPELLATE TRIBUNAL AND ORS. [ 2011 (8) TMI 1366 - ALLAHABAD HIGH COURT] and SEVANTILAL KARSONDAS MODI VERSUS STATE OF MAHARASHTRA [ 1979 (1) TMI 113 - SUPREME COURT] cannot be a sole basis of conviction in absence of corroborative evidence. At the stage of consideration of bail application of the accused this court finds that complaint against the applicant has already been filed, show cause notice for confiscation of gold and imposing penalty has already been issued against the applicant. In order to attract section 123 of Customs Act,1962, it is essential that goods must be smuggled.It means goods of foreign origin and imported from abroad. There must be something proving their importation from abroad. Only an account of being unaccounted they cannot be inferred to be smuggled, they may be stolen too. Applicant claims that he has no passport and will not leave the country his whole family and business is at Kannuaj and Kanpur. There is no possibility of tampering with witnesses. Keeping in view the nature of the offence, argument advanced on behalf of the parties, evidence on record regarding complicity of the accused, larger mandate of the Article 21 of the Constitution of India and the dictum of Apex Court in the case of DATARAM SINGH VERSUS STATE OF UTTAR PRADESH AND ANR. [ 2018 (2) TMI 410 - SUPREME COURT] and without expressing any opinion on the merits of the case, the Court is of the view that the applicant has made out a case for bail. Let the applicant be released on bail on his furnishing a personal bond and two sureties each in the like amount to the satisfaction of the court concerned subject to conditions imposed - Bail application allowed. 2022 (8) TMI 76 Seeking the rectification of the order - classification of goods - Populated Printed Circuit Boards (PPCB) for DWDM Equipment Photonic Service Switch - Small Factor Pluggable (SFP) - exemption under Notification No. 24/2005-Cus dated 1.3.2005 - HELD THAT:- The classification of Populated Printed Circuit Boards for DWDM Equipment Photonic Service Switch has been decided in COMMISSIONER OF CUSTOMS-MUMBAI (AIR CARGO IMPORT) AND COMMISSIONER OF CUSTOMS-MUMBAI (ACC) VERSUS RELIANCE JIO INFOCOMM LTD. [ 2022 (6) TMI 1051 - CESTAT MUMBAI] - the arguments put-forth to the impugned goods i.e. SFP in this case also as may be applicable. The appeals filed by the Department are rejected. 2022 (8) TMI 75 Valuation - Calculation of correct Fe content - Iron Ore Fines - HELD THAT:- The matter lies on a very narrow compass inasmuch as, the first appellate authority has only remanded the matters to the adjudicating authority for fresh decision, to follow the guidelines issued by the Hon ble Apex Court in the case of UNION OF INDIA VERSUS GANGADHAR NARSINGDAS AGGARWAL [ 1995 (8) TMI 73 - SUPREME COURT] and also the Board s Circular No.4/2012-Cus dated 17.02.2012 ibid. Further, in the case of M/S VEDANTA LTD. VERSUS COMMISSIONER OF CUSTOMS (EXPORT) , KOLKATA [ 2022 (8) TMI 11 - CESTAT KOLKATA] , this very Bench has also remanded the matter to the original adjudicating authority to pass a fresh order as per the guidelines issued by the Hon ble Apex Court in the case of Gangadhar Narsingdas Aggarwal, in so far as valuation is concerned. Since the valuation has to be arrived at based on the Fe content in the Iron Ore Fines exported as per the guidelines in the case of Gangadhar Narsingdas Aggarwal which is the domain of Adjudicating authority and since no such exercise appears to have been done in these cases also, it is deemed proper and appropriate to concur with the remand order of the first appellate authority. There are no justifiable reasons to interfere with the impugned orders since there is no finding on merits given by the First Appellate Authority - appeal dismissed - decided against Revenue. 2022 (8) TMI 74 Revocation of Customs Broker Licence - forfeiture of security deposit - fake exports for the claim of drawback by a number of exporters - fake exports of various consignments to Bangladesh through Petrapol Land Customs Station - HELD THAT:- There are no answers to the appellant s contention that Let Export orders were issued after due verification by the concerned officials and that export manifest was also generated, implying thereby that the goods in question had cross the border. But, in any case, other than mere allegations of no advice and no due diligence, as Revenue has not brought on record the role/roles played by the Appellant and that which amounted to connivance etc., since it is the settled position of law that allegations howsoever strong, cannot take the place of proof. The revocation of licence was definitely not called for and hence the impugned order is set aside in so far as it relates to the revocation of Customs Broker Licence. But, however, since the Appellant was also unable to satisfy us on the aspect of advising its client and exercising due diligence, we are of the opinion that it would meet the ends of justice if a penalty by way of deterrent is imposed, inasmuch as, instead of forfeiture of the full Security Deposit, Rs.25,000/- of the sum is ordered to be forfeited under the provisions of Regulation 14 of CBLR, 2018. Forfeiture of full Security Deposit as ordered is also set aside, but however, the same is restricted to a forfeiture to the extent of Rs.25,000/- - impugned order to the extent of revocation of Appellant s licence is set aside - appeal allowed. 2022 (8) TMI 73 Rectification of Mistake - error apparent on the face of record or not - classification of Cards (Populated Printed Circuit Boards) for DWDM Equipment Photonic Service Switch - Small Factor Pluggable (SFP) - claim of exemption under Notification No. 24/2005-Cus dated 01.03.2005 - HELD THAT:- It is found that there is an apparent error on record while disposing the appeals. Therefore, in the interest of justice, it is opined that these three appeals are required to be delinked and relisted for fresh consideration of the merits. Corporate Laws 2022 (8) TMI 72 Oppression and mismanagement - Transfer of shares - failure to constitute 1/10th of the total number of members of the Respondent no. 1 Company as on the date of filing of the Company Petition - Section 397/398 of Companies Act - HELD THAT:- In DAYAGEN (P.) LTD. VERSUS RAJENDRA DORIAN PUNJ [ 2008 (7) TMI 569 - HIGH COURT OF DELHI] , this Court considered the challenge to an order passed by the learned CLB wherein the learned CLB had refused to dismiss the Company Petition at a preliminary stage on the ground that the very issue of additional shares was in question in the Company Petition therein. This Court held that a petition can be dismissed at a preliminary stage only if the claim put forward by the applicant cannot be established even if all the allegations made in the Company Petition are accepted to be true. The test is whether, even if the facts pleaded by the Petitioner in his petition under Sections 397 and 399 of the Act are assumed to be true, the Company Petition filed by him can be held to be not maintainable - If an allotment of shares, increase in the issued share capital, or increase in the number of members is done with the sole aim of gaining control over the management of the Board/Company and to defeat the legitimate right of other shareholders, the Court can always set aside such an increase or allotment. The interpretation to be placed on section 41(2) vis-a-vis petitions filed seeking relief from oppression and mismanagement should be governed not strictly by the requirements of the sub-section, so long as in substance and effect the person complaining of acts of oppression and mismanagement has been recognised or treated as shareholder/member by the conduct of the company, and that in giving effect to the remedies against the grievance, considerations of equity and justice should be allowed to prevail. The Respondents merely produced the Register of Members before the learned CLB. It did not even file any application before the learned CLB challenging the maintainability of the Company Petition. The learned CLB placed reliance on the register of members so produced, without giving any opportunity to the Appellant to challenge the entries made therein. In fact, even a copy thereof was not supplied to the Appellant. Once it is accepted that the Appellant can also challenge the transfer of shareholding as being oppressive and as being intended only to defeat the right of the Appellant to maintain his petition under Section 397/398 of the Act, an opportunity should have been granted to the Appellant to peruse the register of members and, if so advised, challenge the same in accordance with law. The Company Petition, on the averments made in the Petition itself, could not have been thrown out at the threshold without granting such opportunity to the Appellant. The learned CLB has acted in haste in dismissing the Company Petition filed by the Appellant without affording an adequate opportunity to the Appellant to satisfy the learned CLB on the maintainability of the Company Petition, by amending the Company Petition, if so required. The Company Petition is restored back to its original number. 2022 (8) TMI 71 Oppression and Mismanagement - allegation of oppression of rights of petitioner by respondents no. 2 and 3 relating to affairs of respondent no. 1 company though he is holding more than 35% shares - it is also alleged that respondent no. 2 is mismanaging the company's affairs - seeking to restrain respondents no. 2 and 3 from creating any third party interest in the property owned by respondent no. 1 company - section 241-242 of the Companies Act, 2013 - HELD THAT:- It is not in dispute that the petitioner holds more than 35% of the shares. Respondent no. 2 is managing the day-to-day affairs of respondent no. 1 company. On 05.03.2021, respondent no. 2 on behalf of the company executed the agreement to sell of company's property viz. Final Plot No. 135/B in Survey No. 349/2 Paiki and 350/2 Paiki of the sim of Dariapur-Kazipur of Taluka Asarwa of Sub-District Ahmedabad-6 (Naroda) in favour of one M/s. J.K. Aai Ma Realty Pvt. Ltd. The petitioner wanted to stay execution, implementation, and operation of the sale agreement dated 05.03.2021 - Such injunction cannot be issued for the simple reason that the purchaser of the property is not a party here. If any such order is passed, it will greatly affect the proposed purchaser's right in the property although he had already paid a sum of Rs. 1,00,00,000/- to respondents no. 1 to 3. Now, because of the dispute between two brothers who are having an equal shareholding in respondent no. 1 company, the third party should not suffer. Moreover, the Civil Court has already seized with that dispute. Coming back to one material fact that although respondent no. 2 received a sum of Rs. 1,00,00,000/- on behalf of respondent no. 1 company but did not account for the cash component of Rs. 50,00,000/-. Hence, it is opined that respondent no. 2 appears to be mismanaging the affairs of the company. In such a situation, the company's other assets are required to be preserved till the disposal of this petition. Hence, respondents no. 1 to 3 are directed to maintain the status quo in respect of other assets of the company other than mentioned in the agreement dated 05.03.2021 till the disposal of the main company petition. Application disposed off. Insolvency & Bankruptcy 2022 (8) TMI 70 Initiation of CIRP - Period of limitation - to be recognized from the date of NPA or Balance Sheet recognizing the debt - Respondents argued that the Appellant was relying on the Financial Statements from 2014-15 onwards as acknowledgments to save limitation - whether Corporate Insolvency Resolution Process (CIRP) initiated by the Appellant against the Corporate Debtor, V. Hotels Ltd. was barred by limitation? - HELD THAT:- On a careful reading of the provisions of the IBC and in particular the provisions of Section 7(2) to (5) of the IBC read with the 2016 Adjudicating Authority Rules, there is no bar to the filing of documents at any time until a final order either admitting or dismissing the application has been passed - The time stipulation of fourteen days in Section 7(4) to ascertain the existence of a default is apparently directory not mandatory. The proviso inserted by amendment with effect from 16th August 2019 provides that if the Adjudicating Authority has not ascertained the default and passed an order under sub-section (5) of Section 7 of the IBC within the aforesaid time, it shall record its reasons in writing for not doing so. No other penalty is stipulated. Furthermore, the proviso to Section 7(5)(b) of the IBC requires the Adjudicating Authority to give notice to an applicant, to rectify the defect in its application within seven days of receipt of such notice from the Adjudicating Authority, before rejecting its application under Clause (b) of sub-section (5) of Section 7 of the IBC. When the Adjudicating Authority calls upon the applicant to cure some defects, that defect has to be rectified within seven days. However, in the absence of any prescribed penalty in the IBC for inability to cure the defects in an application within seven days from the date of receipt of notice, in an appropriate case, the Adjudicating Authority may accept the cured application, even after expiry of seven days, for the ends of justice. There is no specific period of limitation prescribed in the Limitation Act, 1963, for an application under the IBC, before the Adjudicating Authority (NCLT). An application for which no period of limitation is provided anywhere else in the Schedule to the Limitation Act, is governed by Article 137 of the Schedule to the said Act. Under Article 137 of the Schedule to the Limitation Act, the period of limitation prescribed for such an application is three years from the date of accrual of the right to apply - There can be no dispute with the proposition that the period of limitation for making an application under Section 7 or 9 of the IBC is three years from the date of accrual of the right to sue, that is, the date of default. As per Section 18 of Limitation Act, an acknowledgement of present subsisting liability, made in writing in respect of any right claimed by the opposite party and signed by the party against whom the right is claimed, has the effect of commencing a fresh period of limitation from the date on which the acknowledgement is signed. Such acknowledgement need not be accompanied by a promise to pay expressly or even by implication. However, the acknowledgement must be made before the relevant period of limitation has expired - It is well settled that entries in books of accounts and/or balance sheets of a Corporate Debtor would amount to an acknowledgment under Section 18 of the Limitation Act. An application under Section 7 of the IBC would not be barred by limitation, on the ground that it had been filed beyond a period of three years from the date of declaration of the loan account of the Corporate Debtor as NPA, if there were an acknowledgement of the debt by the Corporate Debtor before expiry of the period of limitation of three years, in which case the period of limitation would get extended by a further period of three years - The Corporate Debtor acknowledged its liabilities in its financial statements from 2008-09 till 2016-17. The application under Section 7(2) of the IBC was filed on 3rd April 2018, well within the extended period of limitation. The impugned judgment and order of the NCLAT is set aside - The appeals are, accordingly allowed. 2022 (8) TMI 69 Maintainability of application - insolvency resolution process was initiated against the Appellant Personal Guarantor - Principal challenge to the impugned order by the Appellant is that the Adjudicating Authority has returned finding of default in the order by appointing the Resolution Professional which is not permissible - whether Personal Guarantee given by the Appellant by Guarantee Deed dated 19.10.2015 shall extinguish, on Appellant, the Personal Guarantor acquiring citizenship of Singapore w.e.f. 18.06.2018? - Whether it was necessary for the Central Government to enter into an agreement as required under Section 234-235 of the Code to enable the Adjudicating Authority to proceed against the Appellant, a Singapore citizen under Section 95(1) where the Appellant has executed Guarantee Deed dated 19.10.2015? - HELD THAT:- Section 60(1) categorically provides that the Adjudicating Authority, in relation to insolvency resolution for corporate persons including Corporate Debtors and Personal Guarantors shall be the National Company Law Tribunal having territorial jurisdiction over the place where the registered office of the corporate persons locate. Hence, the insolvency resolution process is to be initiated before the Adjudicating Authority within whose territorial jurisdiction registered office of the Corporate Person is located. The provision under Section 60(1) makes it clear that the residence of Personal Guarantor is not taken into consideration when proceedings against the Personal Guarantor are initiated - The personal guarantors as used under Section 60(1) are personal guarantors irrespective of the fact as to whether they are Indian citizen or foreign nationals. In event for a Corporate Debtor a personal guarantee has been given by a person who is residing outside of India or is a foreign national, in event personal guarantee is accepted, he shall be bound by the personal guarantee. Further, there is no indication in the statutory scheme that a Personal Guarantor who has given guarantee to a Corporate Debtor can escape from his liability under the Guarantee Deed only for the reason that he has after execution of the Guarantee Deed has obtained citizenship of a foreign country. In event, such Personal Guarantors are allowed to wash off from their obligation under the Guarantee Deed, the easiest way for a Personal Guarantor is to run away out of the country and say that now I am not liable to perform my obligation under the Deed of Guarantee since I am no more Indian citizen. Applicability of Section 234 of IBC - HELD THAT:- The key word in Section 234 of the Code is in relation to assets or property of corporate debtor or debtor, including a personal guarantor of a corporate debtor, as the case may be, situated at any place in a country outside India . Applicability of Section 234 arises only in a case where assets or property of personal guarantor are situated at any place in a country outside India. Present is a case where assets of the Personal Guarantor, as claimed in application under Section 95, are not claimed to situate in any place outside India. Present is not a case where CIRP has been initiated with regard to any of the assets of the Personal Guarantor which are situated outside the country, hence, reliance on Section 234 and 235 are wholly misplaced. Thus, the Deed of Guarantee of the Appellant executed on 19.10.2015 still continues and bind him and he cannot escape his obligation under the Personal Guarantee given by him on mere fact that he has obtained citizenship of Singapore w.e.f. 18.06.2018. The statutory scheme of the code does not contain any indication that the Personal Guarantor of a Corporate Debtor can escape from its liability under the Personal Guarantee Deed merely on the ground that he is now started residing in another country and acquired citizenship of another country and is no more an Indian citizen. It is well settled principle of statutory interpretation that such interpretation of a statute should be adopted which makes the statute functional and does not make a statute non-functional - The Adjudicating Authority is well within its jurisdictions to initiate insolvency resolution process against the Appellant, the Personal Guarantor of the Corporate Debtor, in accordance with the scheme of Section 95(1) r/w Section 60 of the Code. Appeal dismissed. 2022 (8) TMI 68 Seeking withdrawal of application filed for initiation of CIRP - Section 12A of IBC, 2016 read with Regulation 30A of Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2019 - HELD THAT:- The Hon'ble Supreme Court in KAMAL K. SINGH VERSUS DINESH GUPTA ANR. [ 2021 (10) TMI 479 - SC ORDER ], it was held that the applicant/respondent no. 1 was justified in filing the application under Rule 11 of the NCLT Rules for withdrawal of the company petition on the ground that the matter has been settled between the parties. In view of the fact that the fees of the IRP has been paid in full, this instant Application stands allowed and, in the circumstances, IBA/606/2020 stands dismissed as withdrawn. Consequently, the CIRP initiated against the Corporate Debtor also stands withdrawn. The Corporate Debtor is released from the rigors of IBC, 2016 - Application allowed. 2022 (8) TMI 67 Seeking direction upon the Respondent No. 3 to accept the Expression of Interest (EoI) submitted by the Applicant and to evaluate the same - seeking direction upon the Respondent No. 3 and the Committee of Creditors (CoC) to allow and consider the EoI by the Applicant - HELD THAT:- It is to be noted that the CoC in its 5th meeting had extended the time for submission of the EoI to 9th May, with a view to have a larger competition. At this stage, the process of submission of Resolution Plans is going on hence it is found that allowing the present I.A. shall not prejudice the other prospective Resolution Applicants. The application is allowed and the delay in filing the EoI is condoned. The Resolution Professional is directed to provide the applicant with the information memorandum to enable the Applicant to file EoI and Resolution Plan within a day from the date of this order i.e. 21 July 2022, any clarification, if any shall be resolved within a day i.e. 22 July 2022. Considering the judicial time taken for deciding the application, the Applicant shall file its Resolution Plan within three days i.e. 25 July 2022. No further time shall be granted to the Applicant - List the main Company Petition on 04 August 2022. 2022 (8) TMI 66 Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - existence of debt and dispute or not - HELD THAT:-The Corporate Debtor has raised a counter-claim of greater amount on the basis of deficiency of services by the Operational Creditor itself. Further, the Operational Creditor has himself admitted that the Corporate Debtor was duly clearing the dues and honoring various invoices till 2018. About 2018 onwards, the work allegedly came to halt or became delayed and it was only around that time that as a result of non-delivery of drawings by the Operational Creditor, the Corporate Debtor defaulted in the payment of invoice number 27 dated 24.10.2018, invoice no. 28 dated 28.03.2018 amounting to 6,30,000, invoice number 24R1 dated 28.03.2018 amounting to 3,90,000, invoice no. 25R1 dated 28.03.2018 amounting to 6,80,000 and invoice no. 26 dated 28.03.2018 amounting to 250000. This clearly indicates that the default by the Corporate Debtor in payment of these later invoices occurred when the dispute regarding non-delivery of drawings/services by the Operational Creditor arose and lends credence to the claim of the Corporate Debtor that he had repeatedly raised the issue of non-delivery of drawings by the Operational Creditor and which the Operational Creditor had failed to provide timely as per the agreement. There is therefore, a pre-existing dispute and all the claims of the Corporate Debtor were mentioned in the relevant emails annexed under 'Annexure R1' and 'Annexure R2' of the Reply filed by them. After giving careful consideration to the entire matter, hearing the arguments of the learned counsels for the Operational Creditor and the Corporate Debtor; and upon appreciation of the documents placed on record to substantiate the claims, this Adjudicating Authority is of the view that there is a pre-existing dispute under S. 8 r/w S. 9 of Insolvency and Bankruptcy Code, 2016 - Application dismissed. 2022 (8) TMI 65 Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operation al Creditors - existence of debt and dispute or not - time limitation - HELD THAT:- The Operational Creditor supplied the goods to the corporate debtor from time to time and raised several invoices in respect of the goods supplied. The Operational Creditor had submitted its last bill dated 11.09.2019 to the Corporate Debtor. Thus, from the facts, it is clear that there is continuous cause of action and period of limitation for filing the present petition commences when the last bill was submitted by the Operational Creditor. The facts clearly establish that both the parties were maintaining a running account in lieu of which invoices were being raised and part payment had been made and as the petition has been filed on 18.01.2020, hence it is well within the limitation period. The Corporate Debtor has contended that there exist preexisting disputes with respect to quality of the product supplied by the Operational Creditor to the Corporate Debtor and enclosed the email dated 04.12.2020 and 05.12.2020 which were sent by the Corporate Debtor to the Operational Creditor in respect of inferior quality of the product of the Operational Creditor - It is observed that both the emails dated 04.12.2020 and 05.02.2020 were sent by the Corporate Debtor after issuance of Demand Notice dated 02.12.2019. The Corporate Debtor has not placed on record any other document to prove that there is pre-existing dispute before the issuance of Demand Notice - there exist no pre-existing dispute between the Operational Creditor and Corporate debtor. After giving careful consideration to the entire matter, hearing the arguments of the learned counsel for the Operational Creditor as well as the Learned Counsel for the Corporate Debtor and upon appreciation of the documents placed on record to substantiate their respective claims, this Adjudicating Authority is of the view that there is an operational debt which is due from the corporate debtor and the corporate debtor has defaulted in making payment of the amount due and along with that, in the absence of any pre-existence of dispute, this tribunal admits this application and initiates CIRP on the Corporate Debtor with immediate effect. Application admitted - moratorium declared. FEMA 2022 (8) TMI 64 Offence under FEMA - cash money which was seized from the residence the husband of the petitioner No.1 and two other petitioners, who are the daughters, belonged to the petitioners - noticees referred therein were asked to give response to the same within 30 days from the date of receipt of the said notice as to why adjudication proceedings as contemplated under Section 16 read with Section 13 of FEMA, 1999 should not be held against them - HELD THAT:- Writ Court in exercise of its Constitutional writ jurisdiction under Article 226 of the Constitution should not investigate the ownership of such disputed amount of cash money seized from the possession of one of the noticees at Kolkata in course of search and seizure in question while petitioners are claiming the same as their own money. It is well settled principle of law that High Court in exercise of its Constitutional writ jurisdiction under Article 226 of the Constitution of India should not investigate and adjudicate the title or ownership of any disputed immovable or movable properties and declare the ownership of the same in favour of one party. Considering the facts and circumstances of the case and the submission of the parties and in view of the fact that this Writ Petition filed by the petitioners challenging the impugned show-cause notice and prayed for quashing of the same are by none of the noticees and noticees have not challenged the same which has been issued by the Enforcement Authority at Jaipur in Rajasthan and none of the noticees have filed this Writ Petition challenging the impugned adjudication proceedings in question arising out of the impugned search and seizure proceedings out of which impugned adjudication proceedings are pending at Chandigarh and in view of the fact that the highly disputed question of ownership of the seized cash amount in question is involved which is a part of the said pending adjudication proceeding at Chandigarh which the petitioners want release by the order of this writ court, I am not inclined to entertain this writ petition. Service Tax 2022 (8) TMI 63 Liability of service tax - unbilled revenue amount - mobilization advance - credit balance of erection and labour charge as reflected in trial balance during the period 2012-2013 - debit balance reflected in Service Tax ledger during the period 2010-2011 2011-2012 - HELD THAT:- The appellant is a construction company engaged in providing various taxable services as referred in para 2. Construction contracts are the contracts which run over period of time and are not limited strictly by the Financial Year - it is evident that Accounting Standard AS-7 provides for method of recognition of costs, expenses and revenues during the particular period and the manner of disclosure of the same in the book of accounts. This standard uses the word expected and recognition and would not reflect the actual realization of the revenue by the contractor against a particular project. The Service tax is paid on the basis of the revenue realized towards the provision of the taxable services and not on the basis of the revenue recognition. Impugned order do not point out a single case whereby the amounts realized by the appellant against any of the project undertaken by the appellant were not reflected in their ST-3 return. ST-3 return is based on the revenues realized by the appellant during the period of the return and not on the basis of revenue recognition. Accordingly, there are no merits in the impugned order - the entire demand is for the period of the running contracts during the period 2008 to 2012 and would have been completed by now. Revenue should reconcile the revenue realized contract wise, with the service tax return, and if there all the revenues realized either as advance or on the completion of the contract can be reconciled with the ST-3 returns then demands need to be set aside or restricted to the unexplained amounts realized and not reflected in the ST-3 return. With the above observation, the matter is remanded to the original authority for reconciliation. Appeal allowed in part and part matter on remand. 2022 (8) TMI 62 Recovery of service tax alongwith Interest and penalty - Business Auxiliary services - job of bottling, blending and labeling of Indian made Foreign Liquor (IMFL) in their work premises - Circular dated 27.10.2008 issued by Central Board of Excise Customs - HELD THAT:- From the definition of Business Auxiliary Service as contained in Section 65/95 of the Finance Act, 1994 as amended any process which amounts to manufacture in terms of Section 2(f) of Central Excise Act has been excluded from the definition of Business Auxiliary Service - Since in view of the Circular Ld.Commissioner has held that the processes undertaken would not amount to a taxable service under the category of Business Auxiliary Service . In para 9 (b) after examining the agreements entered by the Appellant with the prime manufacturer, Ld.Commissioner has observed that HTB has raised bills of different charges/expenses such as bottling charges, manufacturing charges etc. incurred by them for production of IMFL on behalf of clients and have been paid also. There are no reason to differ with the conclusions arrived at by the Ld.Commissioner. Nothing has been stated by the Revenue while filing this Appeal - appeal dismissed - decided against Revenue. Central Excise 2022 (8) TMI 61 Maintainability of appeal - monetary amount involved in the appeal - shortage of excisable goods has been beyond the maximum condonable limit of 2% - suppression of material facts - Section 11A of the Central Excise Act - HELD THAT:- It is found that the Central Excise Duty demanded from the respondent is Rs.55,06,320.00. If that be the case, the revenue cannot pursue the appeal on the ground of low tax effect. For such reason, the appeal stands disposed of on the ground of low tax effect. Appeal disposed off. 2022 (8) TMI 60 Recovery of excise duty, penalty, etc., from the petitioner - area based exemption - fixation of special rate of excise duty before initiating any process for recovery of excise duty, penalty, etc. - benefit of notification dated 25-4-2007 - HELD THAT:- In the case of M/S JYOTHY LABS LTD. (ERSTWHILE JYOTHY LABORATORIES LTD.) VERSUS UNION OF INDIA AND 2 ORS., PRINCIPAL COMMISSIONER CGST COMMISSIONERATE, ASSTT. COMMISSIONER OF GST AND CENTRAL EXCISE [ 2021 (8) TMI 726 - GAUHATI HIGH COURT] , this Court had categorically held that the requirement of requesting for fixation of a special rate in respect of value addition to the manufactured goods had arisen only after the final judgment of the Supreme Court of India in UNION OF INDIA ANOTHER ETC. ETC. VERSUS M/S V.V.F LIMITED ANOTHER ETC. ETC. [ 2020 (4) TMI 669 - SUPREME COURT] . It is seen that by virtue of orders passed by the Supreme Court of India in IN RE COGNIZANCE FOR EXTENSION OF LIMITATION [ 2021 (5) TMI 564 - SC ORDER] arising out of the said case, the period of limitation, whether condonable or not stood extended from 15-3-2020 till 2-10-2021 and it was further provided that In cases where the limitation would have expired during the period between 15-3-2020 till 2-10-2021, notwithstanding the actual balance period of limitation remaining, all persons shall have a limitation period of 90 days from 3-10-2021. In the event actual balance period of limitation remaining, with effect from 3-10-2021, is greater than 90 days, that longer period shall apply. The petitioner has been able to show a prima facie case for hearing because if the requirement of requesting for fixation of a special rate in respect of value addition to the manufactured goods had arisen only after the final judgment of the Supreme Court of India on 22-4-2020, the period of limitation would stand extended for a period of 90 days from 3-10-2021 and therefore, the application which was submitted on 20-10-2021 by the petitioner was well within the period of limitation. Therefore, the balance of convenience tilts in favour of interim protection to the petitioner. The Court is of the considered opinion that the petitioner is entitled to interim protection till disposal of the application dated 20-10-2021 by the competent authority of the respondent Nos. 2 and 3 - the respondent Nos. 2 and 3 authority are restrained from coercive action against the petitioner for enforcing refund in terms of demand cum-show cause notice till disposal of the application dated 20-10-2021 - Application disposed off. CST, VAT & Sales Tax 2022 (8) TMI 78 Initiation of re-assessment proceedings/revision - Jurisdiction - information received from a third party dealer could be relied upon for purposes of re-assesment under Section 21 of the U.P. Trade Tax Act even when the copies of the information received had neither been supplied nor opportunity of cross examination afforded in spite of specific requests being made to the assessing authority by the applicant or not - relevant material on record or not,to believe that any part of the turnover had escaped assessment of tax - Whether the Tribunal was justified in upholding the remand of the case to the assessing authority, without dealing with the issue of validity of initiation of re-assessment proceedings, when the said issue was specifically raised by the applicant and the appellate authority failed to address the same? HELD THAT:- There can be no doubt that that the ground raised in the context of re-assessment proceedings goes to the root of the matter. Unless jurisdiction is shown to exist on the date of initiation of re-assessment proceedings, the entire edifice of the assessment that arises in such re-assessment proceedings may never be sustained. It is equally true, for such issue to be decided, an objection must be raised at the initial stage itself. Here the assessee is quite right in submitting that such objection was raised before the assessing authority itself as is clear from the written objection filed by the assessee before the assessing authority and the recital made in the assessment order dated 30.3.2011. In the present case, the appeal authority has reached a firm conclusion that the assessee was not confronted with the adverse material and was not given any opportunity to cross examine the third party from whom Central Excise authorities may have seized certain documents. Thereafter, the appeal authority has remitted the matter to the assessing authority to pass fresh order after giving such opportunity to the assessee. Thus, the matter has been made pending before the original authority - It also cannot be denied that the assessee had raised objection before the assessing authority and the assessing authority had not considered the same. The only error that appears to have crept in the order of the appeal authority as has been confirmed by the Tribunal is not to have made specific observation to compel the assessing authority to deal with the objection as to jurisdiction - Once the matter is engaging the attention of the original authority, it is advisable that the assessee may raise a preliminary issue of lack of jurisdiction as well. Only if the authority is satisfied as to existence of its jurisdiction, it may proceed to give effect to the directions issued by the first appeal authority as confirmed by the Tribunal. Revision disposed off. 2022 (8) TMI 59 Revision of assessment regarding to stock variation - reversal of ITC - Levy of tax and penalty - Suppression of facts or not - HELD THAT:- Considering the submission and perusal of the materials, it is seen that the Department Enforcement Wing conducted VAT audit on 19.01.2015 and at that time found various violations, collected documents, pre-revision notice issued on 14.12.2016. Thereafter, reply received from the petitioner on several days. In the meanwhile, revision notice issued on 01.12.2019 and thereafter reply received and personal hearing given to the petitioner on 13.12.2019. After issuance of revision notice, the petitioner's objections considered. Thereafter, proposal to reverse ITC dropped, as regards stock variations since no records produced. The second respondent passed the impugned order. This Court does not express any opinion on the merits of the case, if the petitioner intends to approach the appellate authority to file an appeal under Section 51 of TNVAT Act. Appeal to be filed within a period of 30 days from the day of receipt of copy of this order - Petition dismissed. 2022 (8) TMI 58 Interstate sale or Stock transfer - evidence of prior contract of sale having occasioned the movement of goods from Bareilly to Delhi - HELD THAT:- There is no dispute to the fact that the assessee's factory is situated at Bareilly. Also, there is no dispute to the Franchise Agreement executed between the parties, wherein the assessee was obligated to make supplies of camphor and camphor products both for the purposes of processing and trading. Again, it is not in dispute, the Franchise had its place of business in Delhi. The movement of goods from factory premises of the assessee located in the State of U.P. to the Delhi is also not disputed. Any sale or purchase may be deemed to be an inter-State sale, if such sale or purchase occasions the movement of goods from one State to another. The consequence of such fiction arising would be the charge of tax being created under the Central Act and rights being governed accordingly. Therefore, in each case, a critical link to be established is, whether the movement of goods from one State to another occasioned by an identifiable or visible contract of sale or purchase of goods. If yes, the deeming fiction would attach with full force. If however, that contract of sale or purchase is not visible, suspicions howsoever strong may not lead to levy of central sales tax. Though, under the Franchise Agreement quantities of camphor and camphor products were to be supplied by the assessee to the Franchise at Delhi yet, there was no firm order in existence as may have been placed on the assessee on the date of transfer of camphor and camphor products made by it from its factory at Bareilly to Delhi. Besides strong suspicion expressed by the revenue authorities, no credible material or evidence could be gathered by them to establish existence of a single contract of sale that may have occasioned the movement of goods from Bareilly to Delhi. In fact, undisputed statement of account as has been noted, reveals only part quantity of camphor and camphor products transferred by the assessee to its branch at Delhi were sold to the franchise at Delhi. The remaining quantities were sold to other persons. The fact that the assessee's branch was found situated within the factory premises of the Franchise would also not create a presumption of existence of prior contract of sale. Letting of premises and setting up of businesses is governed by separate set of laws. Those laws do not create any presumption of single identity or presumption of sale. That material considered by the revenue authorities may have raised a suspicion, that may have only warranted an enquiry - Merely because quantities of camphor may have been transferred in entirety or soon after receipt at the branch also did not create any presumption of prior contract of sale. Further, the fact that tax may not have been paid by the assessee at Delhi would remain a matter outside the jurisdictional sphere of the taxing authority in the State of U.P. Non payment of tax in one State does not create liability to pay tax in another State. In any case, in the context of inter-State sale, existence of prior contract of sale was mandatory as may have occasioned the movement of goods from UP to Delhi was necessary to be established - After that remand orders made by this Court, the authorities have yet not been able to unearth any material as may lead to that finding. In fact, in the first remand order, the Court had required the authorities to make a proper reading of Clause 6 of the Franchise agreement. Plainly, that clause is in favour of the assessee's case. It indicates, the parties had agreed not to perform inter- State sale from Bareilly to Delhi. Whatever it may be worth, it was for the revenue to lead evidence of prior contract of sale as may have caused movement of goods. That burden remained undischarged in face of other findings of fact recorded by the Tribunal. Answered in the negative i.e. in favour of the assessee against the revenue - the present revision is allowed. 2022 (8) TMI 57 Assessment of sales shown in accounts at low prices - Benefit of exemption under Entry-30/Part B/Schedule-IV of the Tamil Nadu Value Added Taxes Act, 2006 - sale of footwear - Since the petitioner has priced the pairs at less than Rs.200/-, this has triggered a suspicion in the minds of the revenue that the prices have been tampered so as to bring them within the cover of the exemption - HELD THAT:- While Section 24 provides for a limitation of six years from the expiry of the year to which the tax relates, Section 27 provides for limitation of six years from the date of original assessment. Some of the assessments are seen to be barred by limitation whether one reckons limitation in terms of Section 24 or 27, as the case may be. There is no reference in the order as to what the specific materials are that lead to the conclusion that the price of the products are undervalued. Though reference is made to the visit of officials from Enforcement, there is no detail in regard to what those officials found to have led to a suspicion of undervaluation either - In the discussion, the authority states that the pricing arrived at by a manufacturer should take into account expenses on advertisement, promotion and transport, royalty and other expenses that would have an impact upon the cost of production. The petitioner has admittedly received royalty from the use of the brand 'VKC' and according to it, the royalty as well as the expenses enumerated by the officer have been taken into account by it, in arriving at the pricing. The petitioner is right in stating that apart from general observation on how proper is to be arrived at, there is nothing brought on record by the officer to support a conclusion that such factors have not been taken into account in arriving at the pricing. There is no scientific assessment of the pricing itself set out in support of the conclusion that relevant parameters to determine fix/pricing have been omitted, thus, leading to a conscious undervaluation. There is an apprehension in the minds of the authorities that the fixation of the prices is abnormal, perhaps for the reason that all the footwear have been priced at sums less than Rs.200/- per pair, and taking note of the variation of the prices at every stage of sale, manufacturer/wholesaler/retailer. Such differences however, may well arise on account of the costs incurred at each stage and the profit margin of each of the entities. Section 24 of the Act has been enacted in pari materia with Section 12A of the Tamil Nadu General Sales Tax Act to address transactions that are not bonafide and have been consciously and willfully undervalued and understated with a view to evade payment of tax. In the present case, the argument of the revenue is that the petitioner has undervalued the transactions merely to obtain the benefit of exemption under Entry-30/Part-B/Schedule-IV of the Act - Section 24 specifically requires undervaluation to be established qua other identically placed manufacturers / dealers. The language of the section is specific insofar as it states that the pricing should be 'abnormally low' when compared to the 'prevailing market price of such goods'. The prevailing market price must be taken into account which means that comparison must have been arrived at as between the prices of the manufacturer/petitioner and other identically placed manufacturers. This has admittedly not been done. In fact, nowhere in the Show Cause Notice nor the impugned order, does the officer enter into such a discussion at all. Thus, though the provision has been referred to in passing, the ingredients of Section 24 have not been referred to, much less satisfied in the impugned order. Petition allowed. 2022 (8) TMI 56 Interpretation to the addendum of notification - Available limit of exemption under section 4-A of the U.P. Trade Tax Act, 1948 - Eligibility Certificate creating exemption from tax (under the Act), for a period of 8 years, beginning from the date of the starting production - whether the Restrictive Notification was applicable to the case of the assessee and whether the 'Explanation' appended to the Restrictive Notification, ousted the claim of the assessee to exemption - to the full extent, under the Exemption Notification or whether it was restricted to 5% of the sale price, under Clause 2 of the Exemption Notification? HELD THAT:- In the first place, the language of proviso (ii) Clause 2 of the Exemption Notification leaves no doubt, the legislature adopted the mode - legislation by incorporation. It bodily lifted and incorporated the 'Conditions Restrictions' contained in the Restrictive Notification, to the Exemption Notification, as a further condition to be fulfilled, to avail exemption. Legislation by incorporation is clearly a well-recognized mode of legislation. In that, the legislature only avoids repetition of words, phrases, and even whole provisions - by virtue of proviso (ii) of Clause 2 of the Exemption Notification, the legislature chose to provide three conditions to be fulfilled to exclude the applicability of Clause 2 of the Exemption Notification. First, it excluded applicability of the restrictive Clause to new units established in specified districts. Second, it excluded that restrictive Clause to new units providing employment to members of specified categories, in prescribed percentages. Such new units would avail full/unrestricted exemption. Third, it was provided, the restrictive Clause 2 would not apply if Conditions and Restrictions specified in the Restrictive Notification, were fulfilled. The Restrictive Notification is not an addendum or corrigendum to the Exemption Notification. It is an independent notification issued under Section 4-AA of the Act. By its very nature, such notifications were issued by the State Government, at the relevant time, to grant exemption to a unit, based on employment granted - to persons belonging to specified categories. The assessee had not claimed that exemption. Whether the 'Explanation' to the Restrictive Notification also constitutes part of the 'Conditions and Restrictions' contained therein? - HELD THAT:- For the Exemption Notification, the legislature - in its wisdom, restricted the computation of 'total employment' to such employees/workmen only, who may be making contributions to the provident fund. Seen in that light, the 'Explanation' is likely to work in favour of the new unit claiming exemption, under Section 4-A of the Act. A new unit where provident fund contribution may be made by some employees, only such number of employees would be included in the list of 'total employment', who may be making that contribution. The larger body of workmen including those who may not be making such contribution would stand excluded in that computation. It is seen, the computation of 'total employment' provided under the Restrictive Notification appears to run to the benefit of the assessee, to exclude therefrom such workmen who may have been engaged on casual basis and with respect to whom the requirement to make contributions to provident fund would not apply. Computed on that basis, there is no dispute that the Explanation to the Restrictive Notification was satisfied - In the present case, it is found - though the 'Explanation' appended to the Restrictive Notification would apply to the reading of Clause 2 of the Exemption Notification, at the same time, it would remain a directory provision of law. Where the figure of employment to be computed under the Restrictive Notification remained indeterminate, the same would be read as 'total employment' granted otherwise. There is no dispute to the fact, considering that figure, the percentage of employment granted by the assessee to the members of Scheduled Castes, Scheduled Tribes and Other Backward Classes and minorities was met, satisfactorily. Thus, substantial compliance of the directory provision had been made by the assessee - the proviso (ii) to Clause 2 of the Exemption Notification wholly applied to the assessee's case. Consequently, the restrictive Clause 2 of the Exemption Notification did not apply to it. Still, consequentially, the assessee was entitled to full exemption under the Exemption Notification, as provided under Annexure No. I thereto. The question of law is answered in the negative i.e., in favour of the assessee and against the revenue - Revision allowed. Indian Laws 2022 (8) TMI 55 Dishonor of Cheque - vicarious liability - rebuttal of presumption - non-Executive Independent Directors - In the High Court, it was contended that the Judicial Magistrate, 2nd Court, Suri, dealt with the application under Section 205 of the Cr.P.C. without considering whether any useful purpose would be served by requiring the personal attendance of the Accused or whether the progress of the trial was likely to be hampered on account of their absence - HELD THAT:- While it is true that inherent jurisdiction under Section 482 should be exercised sparingly, carefully and with caution and only when such exercise is justified by the tests specially laid down in the Section, the Court is duty bound to exercise its jurisdiction under Section 482 of the Cr.P.C. when the exercise of such power is justified by the tests laid down in the said Section. Jurisdiction under Section 482 of the Cr.P.C. must be exercised if the interest of justice so requires. The High Court rightly held that when a complaint was filed against the Director of a company, a specific averment that such person was in charge of and responsible for the conduct of business of the company was an essential requirement of Section 141 of the NI Act. The High Court also rightly held that merely being a Director of the company is not sufficient to make the person liable under Section 141 of the NI Act. The requirement of Section 141 of the NI Act was that the person sought to be made liable should be in charge of and responsible for the conduct of the business of the company. This has to be averred as a fact - The High Court also rightly held that the Managing Director or Joint Managing Director would admittedly be in charge of the company and responsible to the company for the conduct of its business by virtue of the office they hold as Managing Director or Joint Manging Director. These persons are in charge of and responsible for the conduct of the business of the company and they get covered under Section 141 of the NI Act. A signatory of a cheque is clearly liable under Section 138/141 of the NI Act. There can be no doubt that in deciding a Criminal Revisional Application under Section 482 of the Cr.P.C. for quashing a proceeding under Section 138/141 of the NI Act, the laudable object of preventing bouncing of cheques and sustaining the credibility of commercial transactions resulting in enactment of the said Sections has to be borne in mind. The provisions of Section 138/141 of the NI Act create a statutory presumption of dishonesty on the part of the signatory of the cheque, and when the cheque is issued on behalf of a company, also those persons in charge of or responsible for the company or the business of the company. Every person connected with the company does not fall within the ambit of Section 141 of the NI Act - the High Court correctly observed that three categories of persons were covered by Section 141 of the NI Act the company who committed the offence as alleged; everyone who was in-charge of or was responsible for the business of the company and any other person who was a Director or a Manager or a Secretary or Officer of the Company with whose connivance or due to whose neglect the company had committed the offence. A Director of a company who was not in charge or responsible for the conduct of the business of the company at the relevant time, will not be liable under those provisions. - What the High Court overlooked was, the contention of these Appellants that they were non-Executive Independent Directors of the Accused Company, based on unimpeachable materials on record. The High Court observed that in the petition it had specifically been averred that all the accused persons were responsible and liable for the whole business management of the Accused Company, and took the view that the averments in the complaint were sufficient to meet the requirements of Section 141 of the NI Act. The judgment and order of the High Court is set aside - appeal allowed.
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