Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
August 30, 2021
Case Laws in this Newsletter:
GST
Income Tax
Customs
Corporate Laws
Insolvency & Bankruptcy
PMLA
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
Articles
News
Notifications
Customs
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48/2021 - dated
27-8-2021
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ADD
Seeks to amend Notification number 56/2018-Customs(ADD) dated 4th December, 2018, to extend the levy on "uncoated copier paper" from Indonesia & Singapore upto 28th February, 2022.
GST - States
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G.O.Ms.No.223 - dated
18-8-2021
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Andhra Pradesh SGST
WAIVER OF PENALTY PAYABLE FOR NON-COMPLIANCE OF PROVISIONS OF NOTIFICATION ISSUED IN THE G.O.MS.NO.142, REVENUE (CT-II) DEPARTMENT, DATED: 15-5-2020.
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G.O.Ms.No.222 - dated
18-8-2021
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Andhra Pradesh SGST
Amendment in Notification G.O.Ms.No.263, dated: 29-6-2017
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27/2021-State Tax - dated
29-7-2021
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Chhattisgarh SGST
Chhattisgarh Goods and Services Tax (Fifth Amendment) Rules, 2021.
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26/2021-State Tax - dated
29-7-2021
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Chhattisgarh SGST
Amendment in Notification No. 11/2021–State Tax, dated the 18th June, 2021
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25/2021-State Tax - dated
29-7-2021
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Chhattisgarh SGST
Amendment in Notification No. 21/2019–State Tax dated the 23rd April, 2019
Highlights / Catch Notes
GST
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Seeking release of detained machinery - Expired E-Way bill - machines used in the business of dealing - detention on the ground that the excavator had no registration in the State of Tripura which was violative of Section 192A of the Motor Vehicles Act - the tax authorities must make a clear distinction between deliberate tax evasion and technical or minor defects which manifest no intention to evade tax. When the IGST liability has been fully discharged, no intention can be attributed on part of the petitioner to evade tax. - HC
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Seeking grant of bail - generation of invoices without actual supply of goods - the enlargement of the petitioner on bail, at this stage, is likely to hamper the investigation and tamper evidence which may amount to compromising with the entire investigation of the case. - Application rejected - HC
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Seeking grant of Bail - issuance of fake invoices - In appropriate cases, the detention of the Petitioner for a longer period can be ordered, even if he has undergone more than one-half of the sentence prescribed, but such discretion should be used to deny the benefit under Section 436-A of Cr.P.C. when the accused mischievously or purposefully delaying the trial and the delay in disposal is attributable to him. - trial Court directed to release the Petitioner on bail - HC
Income Tax
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Exemption u/s 11 - Registration u/s 12AA denied - manipulative treatment of funds - at the stage of registration, the CIT exemption cannot deny the registration merely on the basis of the receipt of loan amount. No other reason was given by the CIT exemption for rejecting the application for registration. - assessee is entitled to registration under section 12AA - AT
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Addition u/s 40A(2) - unreasonable professional fees to spouse - AO has not examined any details and has not given any valid reason and no comparable was brought on record and simply rejected the submissions made by the assessee. Therefore, we are of the opinion that the disallowance made by the Assessing Officer under section 40A(2) of the Act is not correct. - AT
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Disallowance of expenses and interest - When the AO required the assessee to furnish the relevant details, it was the assessee who was at fault. - Neither the AO was justified in making total disallowance of expenses nor the CIT(A) was justified in coming to the conclusion that no interest disallowance could be made without proper verification and further deleting disallowance by 90% of the remaining expenses. - Matter restored back - AT
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Understatement of income - treatment of lease transactions as sales transaction - The Income Tax Authorities has not doubted the legal effect of the lease deed (being unregistered one). When the lease is transfer of right to enjoy the property, such transfer can be made expressly or by implication. The mere fact that it is an unregistered lease deed would not stand in the way to determine whether in fact it was a transfer of property under lease - AT
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Addition of interest on overdue deposits - ascertained liability or not - Additions made in the rectification proceedings u/s 154 - when the Assessing Officer himself has accepted the claim of the assessee in assessment year 2009-10, then action of the assessing officer in rectifying the assessment order and making addition on the same ground in assessment year 2013-14 i.e. present assessment year, is not justified. - AT
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Retraction of surrender of LTCG - Transaction were accepted as bogus but later claimed as Genuine - Subsequent event of the SEBI order holding the transaction in the said scrip to be genuine was sufficient enough for the assessee to raise a legitimate ground before the Ld. CIT(A) for claiming the Long Term Capital Gains earned as exempt. - CIT(A) directed to admit the additional ground raised by the assessee and thereafter adjudicate the same in accordance with law - AT
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Eligibility of exemption u/s 10B - Export of IT services from STP - AO observed that, assessee could not provide details of input software purchased for rendering IT enabled services as well as output software for IT enabled services rendered by the assessee. He also emphasized that the assessee could not submit any evidence regarding job work done from third parties. - CIT-A deleted the addition. - Order of CIT(A) confirmed - AT
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Power of DRP to enhance the assessment u/s 144C(5) - The Dispute Resolution Panel being an Expert Panel, is bound to ascertain the correctness or otherwise of the Draft Assessment Order passed by the Assessing Officer. In the event of identifying omission or commission or excessive exercise, the Dispute Resolution Panel is empowered under sub-section (8) to confirm or reduce or enhance the variations. - there is no infirmity in respect of exercise of powers by the DRP and the notice issued for enhancement. - HC
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Reopening of assessment u/s 147 - objections in reassessment proceedings - whether violation of procedures since the reopening of the assessment proved ? - correctness of the reasons set out by the JCIT, and the rejection of objections raised by the respondent by order by the 2nd appellant, can be decided during the re-assessment proceedings and not in the writ. - HC
Corporate Law
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Requirement to deposit Stamp Duty and Registration Fee - conversion of the petitioner from ‘Partnership Firm’ to ‘Limited Liability Partnership’ - Once there is no transfer of immovable property under an instrument, then the question of compulsory registration of that non-existent instrument and payment of stamp duty on it is not warranted. Neither the stamp duty nor the registration fee, therefore, is payable in such circumstances. - HC
Indian Laws
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Dishonor of Cheque - acquittal of the accused - There is no finding recorded by the learned courts below regarding service of legal notice upon the petitioner, much less the date of receipt of legal notice by the petitioner although the petitioner had specifically denied receipt of the legal notice - The condition precedent for filing the case under Section 138 of the Negotiable Instruments Act, 1881, having not been satisfied, the complaint itself was not maintainable on the day it was filed and accordingly, the petitioners could not have been convicted under the said Section. - HC
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Dishonor of cheque - maintainability of appeal - correctness of acquittal of accused - Allegation is that the complainant has misused the signed cheque which was kept in the office of the accused was stolen - Though the accused denies, he admits that two cases are filed against him in the cross-examination and hence his evidence is not credible. - the appellate Court has committed an error in reversing the finding of the trial Court without drawing presumption available in favour of the complainant. Therefore, nothing inspires this Court that the evidence led by the accused amounts to rebutting the evidence of the complainant. - HC
IBC
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Initiation of CIRP - NCLT rejected the application - From the records it is clear that the loan amount has not come to the account of the Respondent Company. The transaction between the Appellant, a partnership firm and the Director of the Respondent Company in his personal capacity. - There is no doubt that the Financial contract means, a contract between a Corporate Debtor and Financial Creditor. However, the MoU dated 05.07.2019 does not fit in this clause, in view of its genuineness, as Questioned by the Respondent. - AT
Service Tax
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Delay in filing of appeal before the Commissioner (Appeals) - Non-Receipt of Order-in-original - Recovery of service tax - Even the SCN also not come to the notice of the appellant till the recovery proceedings were initiated against him - principles of natural justice - - Commissioner (Appeals) directed to decide the appeal on merit - AT
Central Excise
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Recovery of refund granted erroneously - It is settled legal position that inordinate delay in adjudication results into denial of principles of natural justice. In the case in hand, the assessee cannot be blamed for delay as they had never delayed the proceedings. Adjudication proceedings have to be culminated within reasonable time and if not, it would be vitiated. The act on the part of Revenue of keeping the show cause notice pending for unduly long period is arbitrary and it would, in my opinion, vitiate the entire proceedings. - AT
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Determination of aggregate Value - SSI Exemption - inclusion of value of goods destroyed in flood in the aggregate value of clearance or not - The value of such damaged goods, which were never cleared for home consumption, cannot be added to the total turnover - AT
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Reversal of cenvat credit - inputs used for the output goods supplied to BHEL under exemption for Mega Project - Job-Work - When the appellant took suo-moto re-credit, the same amounts to only correction of accounts, to which Rule 9(1) has no application - it is held that Rule 6(6) is squarely applicable in the present case, and therefore the credit was rightly taken by the appellant. - AT
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Interest on delayed refund - if Revenue is of the view that this amount could not be collected at that stage, the Revenue was free to refund the said amount but the respondent enjoyed the amount without any authority of law. - The ld. AR failed to show that in case the amount deposited under protest is governed under Section 11AB of the Act for claims of interest. - Interest @12% granted - AT
Case Laws:
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GST
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2021 (8) TMI 1180
Maintainability of petition - availability of alternative remedy of appeal - detention of conveyance and goods - section 129 and 130 of CGST Act - HELD THAT:- Though the learned Advocate Mr. Joshi has submitted that the order is passed by the respondent on presumptions and surmises, and merely relying on the statement of the driver, the said submission cannot be accepted. It transpires from the documents on record that the petitioner was afforded an opportunity of hearing by issuing a showcause notice, but the same was not responded to by the petitioner. Now, since a final order has been passed under Section 130 of the CGST Act, the proper course would be to file an Appeal as provided for under the Statute. As there is an alternative equally efficacious remedy available to the petitioner, the Court is not inclined to entertain the present petition - Petition dismissed.
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2021 (8) TMI 1179
Seeking release of detained machinery - Expired E-Way bill - machines used in the business of dealing - detention on the ground that the excavator had no registration in the State of Tripura which was violative of Section 192A of the Motor Vehicles Act - HELD THAT:- The department does not dispute that the petitioner has collected the necessary GST on the sale of machinery as indicated in the sale invoice. There is no allegation of such tax not being deposited with the Government revenue. The department is not in a position to dispute that the vehicle did arrive at Churaibari check post carrying proper e-way bill and within the validity period of the e-way bill. The validity expired on account of unforeseen and unexpected delay in crossing the check post since the transport department stopped the movement of the vehicle on the ground that the machinery was not registered in the State of Tripura. This issue was cleared when the transport department imposed a fine of ₹ 10,000/- which the petitioner paid. This process, however, took more than 24 hours and in the meantime, the validity of the e-way bill expired. Though the petitioner generated a new e-way bill, the GST department of the State was not prepared to accept it. Allowing the department to detain the machinery would be wholly impermissible. The fault of the petitioner if at all is rather technical. The machinery costs nearly half a crore of rupees on which the Government revenue has already earned substantial tax. Detaining such machinery at the check post would expose it to deterioration particularly in the present season of heavy rainfall - the tax authorities must make a clear distinction between deliberate tax evasion and technical or minor defects which manifest no intention to evade tax. When the IGST liability has been fully discharged, no intention can be attributed on part of the petitioner to evade tax. The respondents shall release the transport vehicle and the machinery in question forthwith. The learned counsel for the respondents shall communicate this order telephonically to the respondents to enable this release - petition allowed.
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2021 (8) TMI 1175
Seeking grant of bail - generation of invoices without actual supply of goods - offence u/s 132(5) of Central Goods and Service Act, 2017 - HELD THAT:- This complaint alleged a huge economic offence and therefore, a thorough and detail investigation is essential. Further, considering the materials so far collected by the Investigating Agency in respect of manipulation of invoices, etc and the role of this petitioner in facilitating commission of the offence of huge tax evasion of ₹ 28,97,85,917/-, the enlargement of the petitioner on bail, at this stage, is likely to hamper the investigation and tamper evidence which may amount to compromising with the entire investigation of the case. This Court has also taken note of the fact that the investigation of the case, involves a huge number of documents to be examined at different levels and at different places necessitating reasonably sufficient time to the Investigating Agency - the prayer for bail of the petitioner stands rejected.
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2021 (8) TMI 1172
Seeking grant of Bail - availment of fraudulent ITC - Offence u/s 132 (1) (b) C.G.S.T. Act - HELD THAT:- On going through nature of accusation and the severity of punishment in case of conviction and the nature of supporting evidence, prima facie satisfaction of the Court in support of the charge, reformative theory of punishment, and larger mandate of the Article 21 of the Constitution of India, 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 merit of the case, this is found to be a fit case for bail. The application is allowed.
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2021 (8) TMI 1170
Seeking grant of bail - fake invoices - Section 132(1)(B)(C) (F) (I) of Central Goods and Services Tax Act, 2017 read with sub-section 5 of Central Goods and Services Tax Act, 2017 - HELD THAT:- Taking into consideration the submissions advanced by learned counsels for the respective parties, the nature of allegation against the petitioner, his length of custody, filing of complaint, material contained therein, the offence being triable by Magistrate, the maximum punishment being 5 years and absence of criminal antecedents; but, without expressing any opinion on the merits of the case, this Court deems it just and proper to enlarge the petitioner on bail. Bail application allowed.
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2021 (8) TMI 1137
Review petition - Refund of unutilized Input Tax Credit - compensation cess - HELD THAT:- It is an admitted fact that there is no error of record as such, but the review petitioner is seeking review by placing certain so-called communication of resolution comment to the writ petitioner (annexure-2 to the review petitions) by stating that the same were not produced in the writ records due to inadvertence. This Court is of the considered view that bringing the so-called communication of resolution comment to the writ petitioner (annexure-2 to the review petitions) by filing the same in the review petition for the first time, cannot be a ground for review. It is not the case of the review petitioners that so-called communication proof, if any, was not within their knowledge at the time of filing of the counter affidavit in the writ petition. Failure to place so called communication of resolution comment in writ record due to inadvertence, cannot be a ground for review - this Court is of the considered view that no ground for review has been made out. These review petitions are dismissed.
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2021 (8) TMI 1136
Seeking grant of Bail - issuance of fake invoices - Offences punishable u/s 132(1)(b) and 132(1)(1) of the Central Goods and Services Tax Act, 2017 - HELD THAT:- In this case, nothing has been brought to the notice of the Court indicating the fact that the petitioner, who was all along in custody has contributed to the delay of conclusion of the trial, rather the order of the Magistrate speaks that the complainant is not producing the witnesses, as such, the delay. In such premises, even if right to be released on bail for such delay under the provision, is not an absolute right in view of the first proviso inasmuch as in appropriate cases, the detention of the Petitioner for a longer period can be ordered, even if he has undergone more than one-half of the sentence prescribed, but such discretion should be used to deny the benefit under Section 436-A of Cr.P.C. when the accused mischievously or purposefully delaying the trial and the delay in disposal is attributable to him. This Court extending the benefit of mandate of Section 436-A of Cr.P.C. directs the trial Court to release the Petitioner on bail in the case on such terms and conditions as it would deem just and proper - Application allowed.
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Income Tax
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2021 (8) TMI 1189
Reopening of assessment u/s 147 - objections in reassessment proceedings - whether violation of procedures since the reopening of the assessment proved ? - reasons for reopening that assessee has not fully and truly disclosed the material fact and that they had not commenced its business during the year and mere production of the account books or other evidence before the AO will not necessarily amount to disclosure -whether the notice sent by the 1st appellant for reopening of the assessment in respect of returns submitted by the assessee for the assessment year 2009-10, is right or wrong? - HELD THAT:- The appellants issued notice u/s.148 of the Act and on the request by the respondent herein/assesee seeking reason for reopening, reasons recorded was provided to assessee. Again the assessee raised objections and after considering the objections, 2nd appellant passed the order dated 25.10.2016 disposing the objections. So the answer is, each case shall be examined on its own merits keeping in view the scope of the judicial review while entertaining such matters. When a notice under Section 148 of the Act has been issued to the assessee for reopening the assessment, it shows it involved complex facts and circumstances and the same are to be adjudicated by producing documents and by adducing evidence by the assessee. Power exercised by the assessing officer to reopen the assessment - In this case, the appellants clearly stated that there is escapement of assessment and also stated the reason by its letter dated 04.05.2016, pointing out that the assessee company has not commenced its business during the year, therefore, the expense claimed needs to be capitalised. During the year, the assessee company has received other income and the same has to be treated as income from other sources . The material fact has not been disclosed fully and truly during the course of assessment proceedings. Therefore, there are definite reasons to believe that income has escaped assessment. Maintainability of writ - alternative statutory remedy - When there is hierarchy of appeals provided under the statute, the assessee must exhaust the statutory remedies. When there is an alternative statutory remedy, writ jurisdiction of this court under Article 226 of the Constitution of India ought not to be invoked. There is no bar to entertain the writ petition when alternative remedy is available if it is the case that the order passed by the concerned authority is prejudicially affecting their rights or interest. In the present case on hand, the appellants clearly stated the reason for reopening that particular fact has not been disclosed fully and truly in the assessment proceedings and so whether the assessee had disclosed it or not, can be decided by the authorities concerned. The respondent has got every right to make its submission during the enquiry under the reassessment proceedings and can furnish the required documents in support of its stand and if the statutory authority, not considered all the grounds, the assessee has right of appeal under the statutory provisions. Therefore, these questions cannot be decided in the writ proceedings - correctness of the reasons set out by the Joint Commissioner of Income Tax, and the rejection of objections raised by the respondent by order by the 2nd appellant, can be decided during the re-assessment proceedings and not in the writ.
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2021 (8) TMI 1188
Power of DRP to enhance the assessment u/s 144C - Assessment order u/s 144C(5) to make disallowance u/s 40(a)(i) in respect of Employees Secondment Charges and Reimbursement of Expenses - variations not identifiable in the Draft Assessment Order - HELD THAT:- As the present case is concerned, sub-section (8) is more relevant as the learned counsel for the petitioner states that the Dispute Resolution Panel has no power to enhance based on the variations which were not identifiable in the Draft Assessment Order. The explanation clarifies that the Dispute Resolution Panel have the power to consider any matter arising out of the assessment proceedings relating to the Draft Order. Thus, the requirement is that the variations proposed for enhancement must be relatable to the Draft Assessment Order and such issues must be arising out of the assessment proceedings. The very purpose and object of explanation is to ensure that in the event of any non-consideration of a particular point in the Draft Assessment Order by the Assessment Officer, the Dispute Resolution Panel being a Specialised Panel is provided with the power to propose such variations, relating to any matter arising out of the assessment proceedings. Therefore, the power of enhancement contemplated under subsection (8) is clarified through the explanation. Such a clarification cannot be construed as 'excessive power' as in the absence of such clarification by way of an explanation, the very purpose and object of sub-section (8) to Section 144C would be diluted. Explanation contemplates that any variation arising out of the assessment proceedings relating to the Draft Assessment Order shall be proposed and on such proposal, an opportunity is to be provided to the eligible assessee to defend their case. Thus, the requirement as contemplated is that the Dispute Resolution Panel is to provide pre-decisional hearing to the assessee in order to comply with the principles of natural justice. Once a Dispute Resolution Panel identified and picked up such variations arising out of the assessment proceedings relating to the Draft Assessment Order, then such variations are to be communicated to the Assessee, enabling them to file their objections on such variations. On receipt of objections, the same is to be disposed of meaningfully. There is a clear nexus between sub-section (8) and the Explanations provided to the sub-section. Explanation fulfils the purpose and object sought to be achieved under the said provision. In the absence of the explanation, there is a possibility of misinterpretation by either of the parties and therefore, the explanation became necessary as far as the subsection (8) is concerned and thus, the contention raised by the petitioner that the Explanation exceeds the provision is incorrect and thus, rejected. The Dispute Resolution Panel being an Expert Panel, is bound to ascertain the correctness or otherwise of the Draft Assessment Order passed by the Assessing Officer. In the event of identifying omission or commission or excessive exercise, the Dispute Resolution Panel is empowered under sub-section (8) to confirm or reduce or enhance the variations. - there is no impediment as such for the Dispute Resolution Panel to consider any matter arising out of the assessment proceedings relating to the Draft Assessment Order and no matter, such an issue was discussed in the Draft Assessment Order or not, but it should not be totally unconnected with the assessment proceedings or the Draft Assessment Order. This being the purposive interpretation to be adopted for the purpose of defining Section 144C and sub-section (8) as well as the Explanation, this Court is of the considered opinion that proposed notice issued to the writ petitioner is relatable to the assessment proceedings and to the Draft Assessment Order. Thus, there is no infirmity in respect of exercise of powers by the Dispute Resolution Panel and the notice issued for enhancement. The petitioner submitted its objections and such objections were also disposed of and finally, the assessment order was admittedly passed by the Assessing Officer on 05.10.2017. The relief as sought for by the petitioner in the present writ petition stands rejected - The petitioner is at liberty to prefer an appeal against the final Assessment Order passed by the competent authority on 05.10.2017 within a period of four weeks from the date of receipt of a copy of this order in a prescribed manner and by complying with the provisions of the Act and Rules;
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2021 (8) TMI 1187
Characterization of income - trading receipts - undistributed amount received by the assessee in the year 1999 towards the terminal benefits of the employees - ITAT concluded not to be treated as trading receipt during the year in appeal - HELD THAT:- Tribunal took note of the factual position, which was placed before it to establish that the remaining amount of ₹ 7.29 Crores, which was left in the hands of the assessee, was used to be adjusted against the students concession subsidy due to the assessee from the Government of Tamil Nadu in the subsequent years. The assessee was able to establish the said fact by producing a Government Order in G.O.Ms.No.44 dated 24.03.2009. Taking note of the said Government Order, the appeal filed by the assessee was allowed by the Tribunal. Government Order dated 24.03.2009 was not placed before the CIT(A), when it heard the appeal and passed the order dated 20.12.2011, but there can be no denying the fact that such an order was passed. The genuinity of the stand taken by the assessee was never in doubt before the Tribunal. No substantial question of law.
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2021 (8) TMI 1186
Disallowance of CSR expenses - allowable revenue expenditure or not? - Assessee argued that expediture incurred under the directions of BPE Govt. of India requiring Companies to spend a prescribed percentage of its profits on CSR and now also made mandatory under the Companies Act - HELD THAT:- As decided in own case [ 2018 (11) TMI 1717 - ITAT DELHI] and [ 2018 (4) TMI 1664 - ITAT DELHI] issue in dispute is squarely covered in favour of the assessee - thus direct the Assessing Officer to allow the assessee s claim for expenditure on account of Corporate Social Responsibility. - Decided in favour of assessee. Allowable business expenditure - expenses on tree plantation etc u/s 37 - HELD THAT:- As decided in own case expenses incurred as wholly and exclusively for the purpose of the business. Thus, the expenses incurred in the year under consideration are also eligible for deduction under section 37 of the Act.- Decided in favour of assessee.
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2021 (8) TMI 1185
Eligibility of exemption u/s 10B - Export of IT services from STP - AO observed that, assessee could not provide details of input software purchased for rendering IT enabled services as well as output software for IT enabled services rendered by the assessee. He also emphasized that the assessee could not submit any evidence regarding job work done from third parties. - CIT-A deleted the addition. HELD THAT:- CIT(A) dealt with all the objections of the Assessing Officer of old service agreement, evidence in support of input software as well as output software, No. of employees, quantum of plant and machinery, difference in export figures reported in the return of income and softtex forms. The Learned DR could not rebut any of the factual finding of Ld. CIT(A). Assessee has been allowed deduction under section 10B of the Act on the same activity for assessment year 2003-04 to 2008-09. Even in assessment year subsequent to the present assessment year i.e. AY 2010-11 also, the assessee has been allowed the deduction under section 10B - No justified reason for not allowing the deduction only in the year under consideration by the Assessing Officer. In our opinion, there is no infirmity or error in the order of the Learned CIT(A) on the issue in dispute of deduction under section 10B - Decided against revenue.
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2021 (8) TMI 1184
Addition u/s 43CA - Additions made without reference made to valuation officer (DVO) u/s 50C(2) / 50A - difference between the sale value recorded in books and stamp duty value - whether the A.O ought to have acceded to the request of the assessee to refer the dispute in respect of valuation of five (5) flats to the DVO in order to ascertain the fair market value of the property on the date of sale - assessee pleaded before the A.O that invoking blindly the provisions u/s 43CA and making additions based on the deeming provision would cause hardship to the assessee in genuine transfer of flats - HELD THAT:- As relying on SUNIL KUMAR AGARWAL [ 2014 (6) TMI 13 - CALCUTTA HIGH COURT] we set aside the order of the Ld. CIT(A) and remand the matter back to the AO with a direction to refer the valuation of flats to DVO for determination of the fair market value as on the date of sale of the property after giving opportunity to the assessee and thereafter to adopt the consideration of five (5) flats in question in accordance to law. Deduction u/s 80IB(10) - whether deduction be allowed on the entire income including any income (if any) determined u/s 43CA - HELD THAT:- We find force in the submission of the Ld. AR that if the income/profits from the sale of flats, in question, falls in the eligibility project for claiming deduction 80IB(10) of the Act, then even if there is any enhancement in the income of the assessee by virtue of valuation made by the DVO, then the A.O after examination of this fact should give the benefit of the deduction under Chapter VI-A on the enhanced amount if any, in accordance to law. Taking into consideration the Tribunal s decision in the case of Radhika Sales Corporation [ 2018 (11) TMI 1788 - ITAT PUNE] we are of the opinion that the proviso explaining the tolerance limit has to be read retrospectively, therefore, if the difference between the declared value by the assessee and the value decided by the DVO is less than 10%, no addition is warranted. With the aforesaid observations, the issue raised by the assessee is disposed off and the A.O is directed to assess the income of the assessee as per the directions given.
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2021 (8) TMI 1183
Retraction of surrender of LTCG - Transaction were accepted as bogus but later claimed as Genuine - CIT-A did not admit the additional ground of appeal - claiming the Long Term Capital Gains earned as exempt - surrender made by the assessee of alleged bogus Long Term Capital Gain by way of filing a revised return revoked by SEBI order - HELD THAT:- We find merit in the contention of the Ld. Counsel for the assessee that the additional grounds raised by the assessee before Ld. CIT(A) were wrongly refused to be admitted by him. The assessee has suitably demonstrated before us the reason for revoking the surrender originally made before the AO of Long Term Capital Gain as being on account of the scrip transacted in by the assessee having subsequently been found to be genuine by the order of the SEBI. The surrender no doubt was made on account of certain evidences collected during survey at the assessee s premises to the effect that the claim of Long Term Capital Gains on the sales as exempt was bogus. Subsequent event of the SEBI order holding the transaction in the said scrip to be genuine was sufficient enough for the assessee to raise a legitimate ground before the Ld. CIT(A) for claiming the Long Term Capital Gains earned as exempt. As rightly pointed out by the assessee it is settled law that the assessee is entitled to make a claim before the worthy CIT(A), for the first time. The decision of the Hon ble Apex Court in the case of Jute Corporation of India [ 1990 (9) TMI 6 - SUPREME COURT] and the decision of CIT v. Pruthvi Brokers Shareholders [ 2012 (7) TMI 158 - BOMBAY HIGH COURT] settles the said issue in favour of the assessee. CIT(A) directed to admit the additional ground raised by the assessee and thereafter adjudicate the same in accordance with law
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2021 (8) TMI 1182
Penalty u/s 271(1)(c) - Defective notice u/s 274 - non specification of charge - HELD THAT:- Bare perusal of the notices issued u/s 274 read with section 271(1)(c) in order to initiate the penalty proceedings against the assessee goes to prove that the AO himself was not aware / sure as to whether he is issuing notice to initiate the penalty proceedings either for concealment of particulars of income or furnishing of inaccurate particulars of such income by the assessee rather issued vague and ambiguous notice by incorporating both the limbs of section 271(1)(c). When the charge is to be framed against any person so as to move the penal provisions against him/her, he/she is required to be specifically made aware of the charges to be leveled against him/her. Following the decisions rendered in the cases of CIT vs. SSA s Emerala Meadows [ 2016 (8) TMI 1145 - SC ORDER] and Pr. CIT vs. Sahara India Life Insurance Company Ltd. [ 2019 (8) TMI 409 - DELHI HIGH COURT] we are of the considered view that when the notice issued by the AO is bad in law being vague and ambiguous having not specified under which limb of section 271(1)(c) of the Act, the penalty proceedings initiated u/s 271(1)(c) are not sustainable. - Decided in favour of assessee.
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2021 (8) TMI 1181
Disallowance u/s 80IA - reasoning of the Assessing Officer to make the disallowance was that the assessee had incurred expenditure like managerial remuneration, audit fee, staff welfare expenses, legal and professional expenses, etc. and the same have to be apportioned between 80IA units and non 80IA units - HELD THAT:- As relying on own case [ 2020 (9) TMI 1206 - ITAT BANGALORE] we direct the CIT(A) to consider the issue afresh. It is ordered accordingly. Addition of total income interest received on refund u/s 244A - HELD THAT:- Admittedly, the Income Tax Department had issued interest u/s 244A on Income-tax refund for assessment year 2012-2013 amounting to ₹ 1,53,504 on 08,07.2013. Since the assessee had received a sum of ₹ 1,53,504 during the relevant assessment year, the same has to be brought to tax as income from other sources, in view of the judicial pronouncements cited by the Assessing Officer at para 8.1 of the impugned assessment order. Therefore, the ground relating to interest income received on refund u/s 244A of the I.T.Act whether it can be taxed in the relevant assessment year, is rejected. Allowable expenditure of interest u/s 201(1A) - HELD THAT:- The Hon ble Apex Court in the case of Bharat Commerce Industry v. CIT [ 1998 (3) TMI 2 - SUPREME COURT] had held that interest for late payment of direct taxes is not a deductible expenditure. In view of the clear dictum laid down by the Hon ble Apex Court, the interest expenditure paid u/s 201(1A) of the I.T.Act cannot be allowed as a deduction.
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2021 (8) TMI 1173
Assessment u/s 153C - disallowance of expenditure u/s 140A(3) - whether any incriminating materials concerning the present Petitioner were found in the search? - HELD THAT:- There is no denial that no incriminating materials concerning the present Petitioner were found in the premises of the two searched persons i.e. Sri Jami Ramesh and Sri Jami Sivasai. The absence of the satisfaction note of the AO of the searched persons about any such incriminating material vis- -vis the present Petitioner is also not disputed - Assessment order challenged in the present petition relates to disallowance of expenditure u/s 140A(3) that is payable to the cultivators, expenses towards Hamali i.e. labour charges, unexplained money u/s 69A of the Act, negative cash and unaccounted stock. This was not on account of the discovery of incriminating materials concerning the Petitioner found in the course of the search. In fact there was no search warrant under Section 132 of the Act against the Petitioner firm. In the absence of incriminating materials vis-a-vis the present Petitioner being found in the course of the search of the searched persons viz., Sri Jami Ramesh and Sri Jami Sivasai, the impugned assessment order and the consequential demand order are unsustainable in law and are hereby set aside.
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2021 (8) TMI 1171
Unabsorbed depreciation loss set-off pertaining to assessment year 1997-98 against income of assessment year 2006-07 - HELD THAT:- Substantial questions of law framed for consideration have been answered against the Revenue in the case of CIT vs. Sanmar Speciality Chemicals Ltd. [ 2020 (9) TMI 770 - MADRAS HIGH COURT] - Decided against the Revenue.
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2021 (8) TMI 1167
Leasehold rights amortised by assessee during the lease period - HELD THAT:- Assessee obtained right to operate and manage Asian Heart Foundation by virtue of an agreement dated 20/01/2008 for 25 years, as paid by assessee. Assessee amortised the said amount over the lease period. When this issue came up before this Tribunal for the first time for assessment year 2009-10 - CIT(A) deleted the disallowance by following the above view taken by this Tribunal. Admittedly there is no difference in the facts considered by the co-ordiante bench for asst. year 2009-10 and the year under consideration. Amount paid towards the leasehold rights of Modern Medical Institute of society, Raipur - HELD THAT:- Admittedly the laundry observes that the said payment is made by assessee to operate and manage Modern Medical Institute of society, for a period of 15 years with an extension of five years. In the terms and conditions the consideration payable by assessee to Modern Medical Institute is 2.5% per annum of the gross revenue for each financial year of hospital or 1.25 crore per annum whichever is higher - Parties that in the first year 2.5% of the gross revenue shall be payable by assessee as in advance. Assessee has thus paid sum of ₹ 1.25 crore which stands adjusted towards the payment of outstanding loans as a precondition - as agreed between the parties that, all payment made by assessee to Modern Medical Institute shall be subjected to tax deducted at source - amortisation amount paid to Modern Medical Institute is different for every year. Under such circumstances, how the amortisation amount is determined by assessee for every year needs to be verified in terms of the payment condition agreed between the parties. We therefore remand this issue back to the AO for verification of the working. AO to apply the principle laid down by coordinate bench of this Tribunal while considering the payment made by assessee to Asian Heart Foundation. Disallowance made under corporate social responsibility - HELD THAT:- For year under consideration, it is not the case revenue that expenditure has not been incurred. As the facts are identical, and the expenditure incurred for CSR are of similar nature, in our opinion they are allowable as expenditure under section 37 of the Act, as it has been clearly incurred for furtherance of assessee s business in other parts of the country. Respectfully following the view taken by the co-ordinate Bench herein above we do not find any infirmity in the view taken by the Ld.CIT(A). Disallowance of provision of leave salary expenses - HELD THAT:- This issue now sand settle against assessee by the decision of Hon ble Supreme Court in case of UOI vs. Exide Industries [ 2020 (4) TMI 792 - SUPREME COURT] as upheld constitutional validity for the allowability of deduction for leave encashment u/s 43B(f) of the Income Tax Act, 1961, on payment basis.We therefore direct the Ld.AO to compute the disallowance to the extent of unpaid amount, in accordance with the ratio of Hon ble Supreme Court. Claim raised under section 35AD - Authorities below rejected the claim of assessee as it was not made before the Ld.AO by way of revised return - HELD THAT:- Similar issue was considered in case of Goetze India Ltd vs.CIT [ 2006 (3) TMI 75 - SUPREME COURT] held that the claim of deduction not made in the return cannot be entertained by the assessing officer otherwise than by filing a revised return. The court also held that the decision does not impinge upon the powers of the Tribunal under section 254 of the Act. Respectfully following the above ratio, we remand this issue back to the Ld.AO for consideration
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2021 (8) TMI 1166
Addition u/s 68 - receipt of share capital and premium - whether Appellant has established the Identity, Credit worthiness and Genuineness (ICG Test) in respect of share capital and premium received from the three share holder companies during the assessment proceedings by filing various documents with the AO - HELD THAT:- We note that Hon ble jurisdictional High Court in Veedhata Tower Pvt.Ltd. [ 2018 (4) TMI 1004 - BOMBAY HIGH COURT] has held that when all documentary evidences has been submitted by the assessee, and adverse inference is drawn only for non response by the concerned party, such adverse inference against the assessee is not sustainable. No adverse inference has been noted from the bank statement, balance sheet and other document of the parties from whom share capital share premium has been received, which were duly filed before AO. Hence, the addition on merits also is not sustainable. Accordingly, on the touchstone of above Hon ble jurisdictional High Court decision, we set aside the order of the authorities below and decide the issue in favour of the assessee
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2021 (8) TMI 1165
Revision u/s 263 by CIT - proof of AO's order as erroneous or prejudicial to the interest of revenue - violation of the provisions of section 40A(3) - Disallowance u/s 40(a)(ia) - HELD THAT:- AO as made enquiries into transactions of cash payment in excess of ₹ 20,000/-, and the action of assessing officer in accepting the claim of assessee that transactions in question were not in violation of the provisions of section 40A(3) of the Act, after detailed enquiry, is a plausible view. AO also made detailed enquiry about TDS to be deducted under section 40(a)(ia) of the Act, therefore, we find that the twin conditions required for exercising the jurisdiction u/s 263 is missing, that is, order passed by the assessing officer is neither erroneous nor prejudicial to the interest of revenue, therefore, the Ld. CIT ought not to have exercised his revisional jurisdiction under section 263 of the Act and, hence, we cancel the impugned revisional orders for assessment year 2010-11 and assessment year 2013-14 - Decided in favour of assessee.
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2021 (8) TMI 1164
Revision u/s 263 by CIT - proof of lack of enquiry - unaccounted income disclosed during the course of survey proceedings is taxable u/s68/69/69C being unaccounted income - no deduction in respect of any expenditure or allowance or set off any loss is allowable against such income in accordance with the provisions of section 115BBE - HELD THAT:- Assessee has no explanation to offer on this point and agrees that the claim of set off of brought forward loss against business income is a wrong claim, is required to be disallowed. PCIT was of the opinion that AO was required to treat the entire income disclosed during the survey as income taxable u/s 68/69/69C and not allow any standard deduction u/s 24 of the Act. The unaccounted income admitted during the survey but not disclosed in the return of income was also required to be added by the AO - as per provision of section 115BBE, the wrong set-off of brought forward loss against unaccounted business income should have been disallowed by the AO. Since no such disallowance and addition have been made by the AO in the assessment order u/s 143(3) dated 14/03/2016, therefore ld PCIT held that assessment order is erroneous and prejudicial to the interest of the revenue. We uphold the above findings of ld PCIT for assessment year 2013-14. Unaccounted income relating to the land at Katargam, Surat disclosed in the statement recorded during the survey proceedings - If test of human probabilities is applied to the facts of the case becomes evident that transaction reflecting in the above mentioned impounded document pertain to the assessee and have taken place otherwise no reason can be there to keep the record of any financial transaction. Shri Manjibhai Patel had admitted that these papers were found from his office which lends to credibility that the document impounded assumes much greater value than what it would have been otherwise - entries reflecting in the impounded document(s) cannot be washed away lightly. - impounded documents itself and more so because of the nature of entries contained therein do not make those papers as a dumb document - AO concerned ought to carry out enquiries in this aspect which was not done at all by him during the course of scrutiny proceedings - there are proof in form of receipts, who has received this payment, but the AO concerned failed to analyse the same and pass on the information to the jurisdictional AOs concerned. On the pages as discovered it is mentioned that Karan is having share of 53% rest 47% is of Gopalji. However, the AO concerned has accepted the fact that Shri Karankumar M Dungrant is having only 53% share in the land and he did not enquired about the ownership of remaining 47% in the impugned land whether the ownership of the remaining 47% is in just a dummy name or in name of some real person, has not been investigated. All these facts narrated above have been accepted without proper verification which has resulted in the assessment order being erroneous and prejudicial to revenue - we hold that assessment order passed by the AO is erroneous in so far it is prejudicial to the interest of revenue. Therefore, we do not find any infirmity, so far the above findings of ld PCIT is concerned for assessment year, 2014-15. We note that issues raised by the ld PCIT were not responded by the assessee during the assessment stage. The assessing officer also did not raised the queries by issuing notice under section 142(1) of the Act, therefore, it is a case of complete lack of inquiry. - Decided against assessee.
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2021 (8) TMI 1163
Revision u/s 263 - inadequate or improper enquiry by the AO - cash deposited in a particular Bank - HELD THAT:- AO has examined and verified the IndusInd Bank Account during the assessment stage, thus we note that, Ld. Pr. C.I.T. by invoking his jurisdiction u/s 263 of the Act, is giving another opportunity to the assessing officer to examine it again, which is not permissible. In the case of Ranka Jewellers [ 2010 (3) TMI 544 - BOMBAY HIGH COURT] relying on the decisions of Hon ble Supreme Court in the cases of Malabar Industrial Co. Ltd. vs. CIT [ 2000 (2) TMI 10 - SUPREME COURT ] and CIT vs. Max India Ltd. [ 2007 (11) TMI 12 - SUPREME COURT] has held that once the issue was considered by the A.O., the remedy of the revenue could not lie in invoking of the jurisdiction u/s 263 of the Act Therefore, the order of the Ld. C.I.T. was definitely outside the purview of section 263 of the Act. As noted above, the exercise aimed at ascertaining the correct income of the assessee has been fulfilled by the Ld. A.O. by exercising his quasi-judicial functions vis-a-vis passing the assessment order u/s 143(3) of the Act. Therefore, certainly it is not a case wherein adequate enquiries at the assessment stage were not carried out or assessment was made in haste. However, what is an opinion formed as a result of these enquiries and verification of the materials is something which is in exclusive domain of the Assessing Officer, and even if Ld. Pr. Commissioner does not agree with the results of such enquiries, the resultant order cannot be subjected to revision proceedings. - Decided in favour of assessee.
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2021 (8) TMI 1162
Disallowance u/s 14A r.w.r. 8D - Assessee contented that no disallowance in respect of interest expenditure should be made as the assessee has sufficient own interest free funds for making the investment, interest bearing funds were not utilized for the purpose of investments - HELD THAT:- For earning tax free income, the assessee made suo-motu disallowance - During the period relevant to the assessment year under appeal no new investments were made - assessee referred to Balance Sheet to show that own funds of the assessee are much more than the investments made. Since, this argument has been made for the first time at Second Appellate stage, we deem it appropriate to restore this issue to the file of Assessing Officer to examine availability of own funds of the assessee for investment. If own funds of the assessee are sufficient to meet the investments, no disallowance under Rule 8D(2)(ii) is warranted. Ground of the appeal of assessee is allowed for statistical purposes. Disallowance of interest expenses on loan converted into share application money - HELD THAT:- As relying on ROHIT EXHAUST SYSTEMS PVT. LTD. AND VICE-VERSA [ 2012 (10) TMI 1101 - ITAT PUNE] interest paid upto the date of allotment of shares i.e. 21/12/2012 is allowable as revenue expenditure. - Decided in favour of the assessee. MAT computation on disallowance u/s 14A - Inclusion of disallowance u/s 14A r.w. Rule 8D while computing Book Profit under Section 115JB - HELD THAT:- As decided in the case of ACIT vs. Vireet Investments Pvt. Ltd.[ 2017 (6) TMI 1124 - ITAT DELHI] has held that while determining book profit under section 115JB of the Act the provision of section 14A r.w. Rule 8D are not to be invoked. Thus, in light of the decision rendered by Special Bench, the assessee succeeds.
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2021 (8) TMI 1158
Registration u/s 12AA - proof of charitable activities u/s 2(15) - power of Commissioner to look into objects of society and genuineness of same - CIT(E) has rejected the application of the Assessee by holding that there are certain defects and deficiencies in the basic documents and rules and regulations and doubts about the charitable activities to verify basic purpose of objectives of the Society and that the Appellant Society was not incorporated for solely education purpose and had been engaged in profit making activities - HELD THAT:- Under section 12A, the provisions of sections 11 and 12 shall not apply in relation to the income of any trust or institution unless various conditions are fulfilled. The power of the Commissioner to look into the objects of the Society and the genuineness of the same cannot be doubted when the basis is of non-supply of information. In such circumstances, it would be appropriate that the Commissioner undertakes the exercise afresh, on the basis of the application which has already been filed, keeping in view the material which can be produced by the assessee or filed on record by digital mode. In the case of CIT-1, Chandigarh vs. Sri Guru Gorakh Nath Charitable Educational Society ,[ 2015 (5) TMI 363 - PUNJAB HARYANA HIGH COURT] had answered the question that Whether power of Commissioner to look into objects of society and genuineness of same could not be doubted when basis was of non-supply of information and as such it would be appropriate for Commissioner to undertake exercise afresh on basis of application which had been filed keeping in view material which could be produced by assessee and matter remanded back. Hon'ble Apex Court in the case of Ananda Social Education Trust Vs. CIT [ 2020 (2) TMI 1293 - SUPREME COURT] has held that Even without any activity having been undertaken by trust, it is entitled to be considered for registration under section 12AA and various high court on the issue for grant of registration, that the CIT(E) has to be examine the genuineness of the objects only the stage of registration, and not genuineness of activities - we hereby set aside the order of the CIT(E) with a direction to decide expeditiously, the application, filed for registration under Section 12AA, afresh with the following observation verify that whether the objectives of the assessee trust are charitable in nature and activities carried out are genuine during the year for which the registration is sought for by the assessee society in the light of evidences prima facie relevant, for the year under consideration for the purpose of grant of registration u/s. 12AA - Appeal is treated allowed for statistical purposes.
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2021 (8) TMI 1157
Exemption u/s 11 - Registration u/s 12AA denied - Assessment of trust - manipulative treatment of funds - genuineness of the activities carried out by the Appellant Society - contradictory treatment of the same amount in one year as Unsecured Loan and another year as Donation and that this is against the Accounting Principle - HELD THAT:- CIT exemption while denying the registration to the assessee had wrongly mentioned that as the assessee has shifted from the regime of 10(23C) to 12AA, the same is not permissible in the law and therefore the CIT exemption has denied the registration. Further CIT exemption mentioned above the acceptance of loan by the assessee in the previous year and thereafter the assessee in the financial year 2015-16 had claimed that the loan received by were in the nature of donation. Reasoning given by the CIT exemption cannot be countenanced as the same is contrary to the law laid down in Beant College of Engineering Technology[ 2019 (5) TMI 631 - PUNJAB AND HARYANA HIGH COURT] Therefore this ground of rejection is not sustainable and therefore we reject the same. Acceptance of loan and thereafter in the financial year 2015-16, alleging it to be the donation - Merely on the basis of receipt of loan, and subsequent conversion of loan into donation, Assessee would not be disentitled for the registration under section 12AA of the income tax Act. The correct stage to examination of funds/utilisation of the amount/corpus by the assessee, would be at the time of assessment. Disallowance can be made if any, on examination at the assessment stage it is found that the assessee is not entitled to the exemption under section 11 of the Act and the amount received was chargeable to income of the assessee - at the stage of registration, the CIT exemption cannot deny the registration merely on the basis of the receipt of loan amount. No other reason was given by the CIT exemption for rejecting the application for registration. For that purpose we may rely upon decision in the matter of Ananda Social Educational Trust [ 2020 (2) TMI 1293 - SUPREME COURT] - assessee is entitled to registration under section 12AA - Decided in favour of assessee.
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2021 (8) TMI 1156
Reopening of assessment u/s 147 - eligibility of reasons to believe - HELD THAT:- AO has failed to discharge the obligation cast upon him by the Statute by verifying the correctness of the information before initiating the proceedings. Before issuing a notice u/s 148 of the Act, the ITO must have either reasons to believe that by reason of the omission or failure on the part of assessee to make a return for any assessment year to the Income tax Officer or to disclose fully or truly all material facts necessary for assessment for that year, income chargeable to tax has escaped assessment for that year or alternatively notwithstanding that there has been no omission or failure as mentioned above on the part of assessee, the ITO has in consequence of information in his possession reason to believe that income chargeable to tax has escaped assessment for any assessment year. The records regarding filing of ITR is accessible on line as refund granted to the assessee for the assessment year under review, without information of ITR filed by him clearly indicated in Form No. 26AS, copy of which is enclosed, had the A.O. taken due care to verify the facts before reaching to the above reasons, there could have been not valid reasons for reopening the case u/s 147/148 - unless the requirement of clause (a) and (b) of Section 147 are satisfied, the ITO has no jurisdiction to issue a notice u/s 148 - The important safeguard provided in Sections 147 and 151 of the Act were lightly treated by the A.O. as well as by the Commissioner. Both of them appear to have taken the duty imposed on them under those provisions as of little importance. They have substituted the form for the substance. - Proceedings u/s 147 of the Act stands quashed and resultantly, the demand of tax stands deleted - Decided in favour of assessee.
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2021 (8) TMI 1147
Addition u/s 40A(2) - unreasonable professional fees to spouse - commission/professional fees paid the husband of the assessee - HELD THAT:- Once the assessee has placed all the relevant materials before the Assessing Officer and submitted that the assessee's spouse is having specialized knowledge and looking after all the medical, technical and administration of all the Hitech Diagnostic Centre and discharge all the duties and responsibilities in conducting various tests and therefore, the agreed payment was made, in our opinion, the assessee has discharged the burden casted upon her to satisfy with the payment is reasonable as per the MOU. If at all the AO is not agreed, he should have brought comparable case and by giving reasons, the disallowance ought to have been made. Assessing Officer has not examined any details and has not given any valid reason and no comparable was brought on record and simply rejected the submissions made by the assessee. Therefore, we are of the opinion that the disallowance made by the Assessing Officer under section 40A(2) of the Act is not correct. Unexplained expenditure u/s. 69C - CIT(A) has given a categorical finding that the assessee has paid professional fees to her husband. However, the ld. CIT(A) has not discussed anything about the 69C addition. Once the assessee has shown payment made to her spouse as professional fees and the same was offered by the assessee's spouse for taxation by filing the return of income, the provisions of section 69C of the Act has no application. Whether the assessee is in default under section 201 of the Act on account of failure to deduct TDS under section 194J of the Act warranting invocation of section 40a(ia)? - whether the operation of second proviso to section 40a(ia) of the Act introduced through Finance Act. 2012 with effect from 01.04.2013 is prospective or retrospective? - The effect of the said proviso is to introduce a legal fiction where an assessee fails to deduct tax in accordance with the provisions of Chapter XVII B. Where such assessee is deemed not to be an assessee in default in terms of the first proviso to sub-section (1) of section 201 of the Act, then, in such event, it shall be deemed that the assessee has deducted and paid the tax on such sum on the same of furnishing of return of income by the resident payee referred to in the said proviso. In the present case, the assessee's spouse filed return of income offering the professional fee receipt for taxation. Thus, the assessee cannot be considered as an assessee in default under section 201 of the Act. Therefore, we are of the considered opinion that no disallowance can be made under section 40(a)(ia) of the Act. Addition on account of capital gains - according to the assessee, the capital gain has to be taxed in the assessee and her spouse in the assessment year 2013-14 and not in the assessment year 2009-10 - HELD THAT:- The case of the Assessing Officer is that the acquisition as well as sale consideration received by her and recorded in her books of accounts and therefore, the same is taxed in her hands alone. We have gone through the sale agreement and find that in the sale agreement, both the wife and husband i.e., the assessee and her spouse are vendees. Not only that, the said property was purchased by the assessee along with her husband. The transaction towards sale consideration reflected in her books of account. It does not mean that the same is taxed in assessee's hands alone for the reason that the assessee along with her husband both purchased the property and both entered into sale agreement. Whether capital gain has to be taxed in the assessment year 2009-10 or in the assessment year 2013-14 - Before the authorities below, the AR of the assessee has not filed copy of the assessment order of the assessee reflecting the advance tax paid by her when she has offered the sale consideration for taxation. Under these facts and circumstances of the case, we are of the considered opinion that once the Assessing Officer has already taxed the same amount in the assessment year 2013-14, again it cannot be taxed in the assessment year 2009-10, which amounts to double taxation. Therefore, we set aside the orders of authorities below on this issue and remit the matter back to the file of the Assessing Officer to decide the issue afresh in accordance with law by considering the above observations after affording sufficient opportunities of being heard to the assessee. Thus, the ground raised by the assessee is allowed for statistical purposes.
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2021 (8) TMI 1145
Disallowance of expenses and interest - assessee though appeared in person on two occasions but did not furnish any supporting bills/vouchers - CIT(A) has deleted the addition towards interest by observing that the same cannot be disallowed without proper verification - HELD THAT:- Observation of the CIT(A) is not correct inasmuch as it was the assessee who did not furnish any details of the expenses including interest paid to others. There can be several reasons for the disallowance of interest. When the AO required the assessee to furnish the relevant details, it was the assessee who was at fault. AR submitted that the assessee had to shift its business premises because it was required to surrender under lock and key to the bank. No doubt, the assessee put in its appearance twice before the AO but did not furnish books of account which could have enabled the AO to examine and verify the details. AO in such circumstances should have found out a reasonable amount of deductible expenses on a certain parameter rather than disallowing the entire expense. Neither the AO was justified in making total disallowance of expenses nor the CIT(A) was justified in coming to the conclusion that no interest disallowance could be made without proper verification and further deleting disallowance by 90% of the remaining expenses. On a pertinent query, the ld. AR submitted that the books of account and vouchers, which were earlier under lock and key of the bank, are now available and can be produced before the AO. - Matter remanded back. Penalty u/s.271(1)(b) - HELD THAT:- We find that the AO imposed penalty on account of failure of the assessee to put in any appearance and furnishing the necessary evidence - the premises of the assessee was under lock and key of the bank. Despite that, the assessee put in its appearance twice before the AO during the course of assessment proceedings. Evidence could not be furnished because it was not available at the material time - no penalty u/s. 271(1)(b) can be imposed because there was a reasonable cause in terms of section 273B of the Act for not producing the evidence.
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2021 (8) TMI 1143
Disallowance u/s 14A r.w.r. 8D - suo moto disallowance by assessee - mandation of recording satisfaction - whether AO has recorded any dissatisfaction as regards suo-moto disallowance made by the appellant ? - HELD THAT:- Though it is incumbent upon the Ld. AO to record a satisfaction as to why the disallowance offered by the assessee was not sufficient which is sine qua non before proceeding to apply Rule 8D. Although there is no particular format or manner in which the satisfaction was to be recorded but the same should have been discernible from the order passed by the Ld. AO. We make it clear that no observation, howsoever, has been made as to the sufficiency or insufficiency of suo-moto disallowance offered by the assessee -no irregularities in the order passed by the Ld. CIT(A) in deleting such addition made by the Ld. AO in the absence of any dissatisfaction recorded by the Ld. AO as regards the amount of disallowance computed by the appellant under Section 14A without any ambiguity so as to warrant interference - Decided against revenue. Appellate authority had the power to admit the new ground - ESOP compensation expenses during assessment proceeding as the said claim was not made while filing of return of income by the assessee - HELD THAT:- Since the appellate authority had the power to admit the new ground or a legal contention in view of the order passed by the Hon ble Jurisdictional High Court in the case of CIT vs. Mitesh Impex, [ 2014 (4) TMI 484 - GUJARAT HIGH COURT] the said claim has been admitted by the Ld. CIT(A). No explanation is forthcoming as to how without verifying the records as regards the actual expenses incurred by the appellant s claim has been allowed - As considered the order passed in the case of Biocon Ltd.[ 2013 (8) TMI 629 - ITAT BANGALORE] where it has been held that ESOP compensation expenditure is not a notional expenditure but an allowable expenditure under Section 37(1) - object of issuing of shares at a lower issue price than the market price to the employees under ESOP must be taken into consideration and thereby it cannot be treated as short receipt of securities premium but a cost on account of compensation of employees - as principally the claim on account of deduction of ESOP compensation is allowable but in our considered opinion it would be in the fitness of things to remit the issue to the file of the Ld. AO to verify the actual expenses incurred by the appellant - Assessee s claim is allowed for statistical purposes.
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2021 (8) TMI 1142
Revision u/s 263 by CIT - as per CIT disallowance u/s 14A read with Rule 8D was not at all considered or examined by the AO during the course of assessment proceedings - HELD THAT:- As observed that a specific opportunity was given by the Ld. Pr. CIT to the assessee-company to offer its explanation on the issue of disallowance u/s 14A read with Rule 8D during the course of proceedings u/s 263. The assessee-company however did not avail this opportunity by offering any satisfactory explanation and as noted by the Ld. Pr. CIT in his impugned order, a very cryptic remark was made by the assessee in answer to every query raised in the notice issued u/s 263. As submitted by CIT DR, this issue relating to the disallowance u/s 14A read with Rule 8D was not at all examined by the Assessing Officer during the course of assessment proceedings and there is nothing brought on record on behalf of the assessee-company to show that any enquiry whatsoever was made by the AO on this issue during the course of assessment proceedings. As held in the case of CIT vs Maithan International [ 2015 (4) TMI 479 - CALCUTTA HIGH COURT] the role of the Assessing Officer is that of an investigator as well as adjudicator and where relevant enquiry was not undertaken before allowing the claim of the assessee, the order become erroneous as well as prejudicial to the interest of the revenue calling for revision u/s 263 - as specifically provided in clause (a) of Explanation 2 below Section 263, if in the opinion of Pr. CIT, an order passed by the AO is without making enquiries or verifications, which should have been made, the same shall be deemed to be erroneous in so far as it is prejudicial to the interest of revenue for the purpose of Section 263 calling for exercise of revisionary power. - Decided against assessee.
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2021 (8) TMI 1141
GP estimation - Rejection of books of accounts - fresh estimation of gross profit of 13% by the ld CIT(A) in the second round of litigation - G.P rate of 15.42% has already been applied by CIT(A) which has been upheld by the Tribunal in the first round of litigation - HELD THAT:- AO has made an addition towards unverified purchases to revised total income as computed after giving appeal effect u/s 143(3)/250 dated 16.02.2007 to order passed by the ld CIT(A) wherein he has estimated G.P rate of 15.42% - addition of ₹ 15,39,905/- is made over and above the G.P addition made in the first round of litigation wherein G.P rate has been taken at 15.42% as against 12.14% declared by the assessee. CIT(A) has rightly deleted the addition as we have noted above as there cannot be separate addition other than estimation of profits where the books of accounts have been rejected. CIT(A) has estimated G.P @ 13% failing to take into the consideration the fact that G.P has already been estimated earlier @ 15.42% and which has been accepted by both the parties and has attained finality and necessary effect given to by the AO while passing the impugned assessment order. In the contention so advanced by the AR and the addition so sustained by the ld CIT(A) amounting is hereby directed to be deleted. - Decided in favour of assessee.
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2021 (8) TMI 1140
Understatement of income - treatment of lease transactions as sales transaction - - Transfer of property under lease - Lease deed is unregistered one - efficacy of registration of lease deed and the impact of the same when it is unregistered one - HELD THAT:- Hon ble Kerala High Court in the case of CIT v. C.F.Raju [ 2006 (6) TMI 509 - KERALA HIGH COURT] had followed the judgment of case of Anthony v. K.C.Ittoop Sons [ 2000 (7) TMI 970 - SUPREME COURT] and held that even though the lease deed is unregistered, the same would not stand in the way to determine whether there is in fact a lease. In the instant case, the assessee is a statutory body constituted u/s 5 of Karnataka Industrial Areas Development (IIADB Act), 1966. The KIADB Act, 1966 is a special Act, which provides for expeditious acquisition of land for industrial and infrastructure purposes. The Income Tax Authorities has not doubted the legal effect of the lease deed (being unregistered one). When the lease is transfer of right to enjoy the property, such transfer can be made expressly or by implication. The mere fact that it is an unregistered lease deed would not stand in the way to determine whether in fact it was a transfer of property under lease - Appeal filed by the assessee is allowed.
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2021 (8) TMI 1132
Addition of interest on overdue deposits - ascertained liability or not - Additions made in the rectification proceedings u/s 154 - CIT(A) deleted the addition made in rectification on the ground that addition made under normal provisions was also deleted by the Learned CIT(A) in appeal against order u/s 143 (3) by the assessee holding that liability is ascertained liability - HELD THAT:- We find that in assessment year 2009-10 the matter was restored by the Tribunal to the file of the Assessing Officer. Assessing Officer in his order passed in compliance to the order of the Tribunal, has allowed the claim of the assessee of interest on overdue deposits. In the circumstances, when the Assessing Officer himself has accepted the claim of the assessee in assessment year 2009-10, then action of the assessing officer in rectifying the assessment order and making addition on the same ground in assessment year 2013-14 i.e. present assessment year, is not justified. We accordingly, uphold the order of the Learned CIT(A) on the issue in dispute. The ground of the appeal raised by the Revenue is dismissed.
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Customs
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2021 (8) TMI 1168
Absolute Confiscation - Smuggling - Gold Bars - 8 kgs Gold not claimed by anyone - 100 gms Gold recovered from Shri Ajesh A. Patel, Proprietor of M/s Patidar Bullion - levy of penalty u/s 112(b) of Customs Act, 1962 - HELD THAT:- Penalty on both the Appellants was imposed under Section112(b) of Customs Act, 1962 which provides for imposition of penalty on any person who acquires possession or is concerned in carrying, removing, depositing, harbouring, keeping, concealing, selling or purchasing, or in any other manner dealing with any goods which he knows or has reason to believe are liable to confiscation u/s 111 of the Customs Act 1962 - In the present case, the investigating DRI officers have booked two different type of cases investigated and covered in a Show Cause Notice and it being a common SCN, adjudicating authority has passed single Order-In-Original covering these two cases. Revenue has not proved smuggling of Gold into India. Hence, for imposing penalty u/s 112(b) ibid mens rea is necessary which is not coming out from records against the Appellant shri Jitendra Soni. Settled principle of law Suspicion, however strong it may be, it can not replace the facts needs to be applied in this case. Evidences on record are not sufficient to impose penalty on him. Suspicion in this case by Revenue has tried to replace the proof and this has resulted in an erroneous order passed by Adjudicating Authority against Appellant. Circumstantial evidence only is relied upon, unless it is conclusive on the fact of smuggling and Appellant dealt with smuggled goods knowingly, such circumstantial evidences cannot be taken to be the proof of the fact of smuggling for imposing penalty. If revenue wants that gold dealers of foreign marked gold in India should indicate the brand names with respect to each brand then foreign marked gold should have been declared as one of items under Chapter IVA of Customs Act, 1962 - This issue is settled (as revenue has not filed any appeal against above judgments). Thus, there is no requirement under prevailing law to mention brand or marks or numbers of foreign marked gold on sale/purchase documents. Hence, confiscation ordered deserves to be set aside in this case. Confiscation of 100 gms Gold recovered from Shri Ajesh A. Patel, Proprietor of M/s Patidar Bullion - HELD THAT:- Appellant has substantiated that the seized 100 gms gold was out of his stock inventory of legally purchased Gold. Appellant discharged burden of proof u/s 123 of Customs Act 1962 by maintaining normal business daily account with relevant documents of purchase/sale showing Opening Balance + Receipt issue = closing stock, while dealing in Gold/silver purchased and sold in open market on large scale in market. Thus, confiscation of 100 gms Gold is not sustainable in facts of this case and deserves to be set aside. Appeal allowed in part.
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2021 (8) TMI 1159
Conspiracy - Smuggling - prohibited goods or not - Chinese origin fire crackers - goods wrongly declared bicycle parts - principle of criminal jurisprudence - HELD THAT:- Apparently and admittedly, present appellant is the importer of bicycle products. Admittedly the impugned consignment was not in the name of M/s. Rahul Traders the importing firm of the appellant, but was in the name of M/s. Kirat Sales Corporation. Though the show cause notice recites that the consignment was initially booked in the name of M/s. Rahul Traders but in the light of the statement of Mr. Manish Shrivastava, Dy. Manager of Orient Overseas Life, the shipping agency and in the light of the document as that of Bill of Lading, the said allegations is not sustainable and the confirmation based thereupon is nothing but a result of presumption. This being a clear cut case of absence of any evidence against Rahul Sehgal, it shall be appropriate to hold that the adjudicating authority below has erred fastening liability upon the present appellant by way of imposition of penalty. The question of meeting of mind of the present appellant with said Saurabh Aggarwal gets closed with the element of doubt. Conspiracy being a criminal offence principle of criminal jurisprudence gets readily attracted. The foremost principle being that the benefit of doubt has to be extended in favour of the accused. In the present case there is not merely the doubt but the lack of substantial evidence as against Rahul Sehgal that the findings of authorities below cannot sustain. Appeal allowed - decided in favor of appellant.
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Corporate Laws
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2021 (8) TMI 1154
Sanction of scheme of amalgamation - seeking to dispense with the requirement of holding the meeting of the equity shareholders, preference shareholders and creditors of the Transferor Company and Transferee Company - Section 232 read with Section 230 of the Companies Act, 2013 and read with Rule 3 of the Companies (Compromises, Arrangements and Amalgamations) Rules, 2016 and other applicable provisions of the Companies Act, 2013 - HELD THAT:- This is the first stage Application seeking dispensation of convening meetings of Equity Shareholders, preference shareholders and Creditors of the Applicant Companies. All of them have given their consent in the form of Affidavits. The proposed scheme in question prima facie satisfy fundamental requirements for its sanction, subject to approval of this Tribunal - The Applicant Companies stated to be following all provisions of Companies Act, 2013, and rules made thereunder. In any case, dispensing with meeting in question would not deprive any aggrieved party to approach this Tribunal at any point of time, when the approval of scheme in question finally come for consideration. The Company application deserves to be allowed - The scheme is sanctioned.
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2021 (8) TMI 1153
Seeking to order for liquidation of the Corporate Debtor - Section 33(2) r/w Section 60 of the I B Code, 2016 - HELD THAT:- The Resolution Professional and the COC of the Corporate Debtor, have made their best efforts to find a suitable Resolution Plan to revive the business of the Corporate Debtor. However, in the absence of any Resolution Plan received, there is no other alternative for the COC except to seek to order to liquidate the Corporate Debtor as per the provisions of the Code. The Resolution to initiate liquidation was also approved by the COC in its 7th meeting held on 24th May 2021, with requisite majority and the instant Application is filed strictly in accordance with law. M/s. Antal Infotech Private Limited, Corporate Debtor is ordered to be liquidated in the manner as laid down in Chapter III of Part II of Code, R/w IBBI (Liquidation process) Regulations, 2016 - the scheme is approved - application allowed.
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2021 (8) TMI 1149
Sanction of Scheme of Amalgamation - Section 230(6) read with Section 232(3) of the Companies Act, 2013 - HELD THAT:- There appears to be no impediment in sanctioning the present Scheme. Consequently, sanction is hereby granted to the Scheme under section 230 232 of the Companies Act, 2013 upon the directions issued. The application is allowed.
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2021 (8) TMI 1148
Sanction of Scheme of Arrangement (demerger) - Section 230(6) read with Section 232(3) of the Companies Act, 2013 - HELD THAT:- Various directions with regard to holding, convening and dispensation with various meetings issued - directions regarding issuance of various notices also issued. The scheme is approved - application allowed.
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2021 (8) TMI 1135
Requirement to deposit Stamp Duty and Registration Fee - conversion of the petitioner from Partnership Firm to Limited Liability Partnership - permission to reflect such change of name in the revenue record granted - HELD THAT:- In view of provisions of Section 58(4)(b) of the Limited Liability Partnership Act, consequent upon conversion of firm to limited liability partnership, there is automatic vesting/transfer of all assets of firm to the LLP - Sub-section (4) of Section 58 of LLP Act starts with non- obstante clause notwithstanding anything contained in any other law for the time being in force . Therefore, principles of statutory vesting of properties will apply to the instant case as well. Necessity of execution of an instrument upon conversion of a partnership firm to limited liability partnership - HELD THAT:- Section 3 of the Indian Stamp Act talks about the instruments, which are chargeable with duties.Once there is no instrument of transfer of assets of erstwhile partnership firm to LLP, then question of payment of stamp duty and registration charges on it does not arise. The registration fee is payable on an instrument compulsorily registerable under Section 17 of the Registration Act. Once there is no transfer of immovable property under an instrument, then the question of compulsory registration of that non-existent instrument and payment of stamp duty on it is not warranted. Neither the stamp duty nor the registration fee, therefore, is payable in such circumstances. Whether conversion of firm to LLP involves change in constitution? - HELD THAT:- Conversion of petitioner-firm to LLP is admittedly without any consideration. Neither any sale deed nor any conveyance deed has been executed. Transfer of assets of erstwhile partnership firm to LLP is by operation of law. Conversion to LLP is normally undertaken for restructuring exercises. One of the object of Limited Liability Partnership Act is to view it as an alternative corporate business vehicle providing the benefits of limited liability, while allowing its members the flexibility of organizing their internal structure as a partnership, based on a mutually arrived agreement. Petition allowed.
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Insolvency & Bankruptcy
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2021 (8) TMI 1155
Seeking direction to RP to verify, entertain and accept the claim of the applicant - seeking permission to bring on record the averments that on the basis of the MoU - HELD THAT:- It is not the case that on 09.03.2018, while admitting the application, the IRP was not appointed by the Bench, rather on 30.07.2018, the earlier IRP Mr. Yogesh Tyagi was discharged and a new IRP Mr. Anurag Nirbhay was appointed. Therefore, we find, no force in the contention raised on behalf of applicant that since the IRP was not appointed on the date of admission of the application, therefore, the insolvency commencement date will shift to the date, when the IRP was appointed. Mere mentioning of an incorrect insolvency commencement date by the IRP/RP in Form A i.e. Public Announcement cannot change the position of law as referred to in Section 5(12) of IBC, 2016 - the contention of the applicant is not liable to be accepted. Seeking amendment in the earlier application - HELD THAT:- The only ground for seeking amendment is that the definition of the word allottee was not clear prior to pronouncement of the Judgment by the Hon'ble Supreme Court in the MANISH KUMAR VERSUS UNION OF INDIA AND ANOTHER [ 2021 (1) TMI 802 - SUPREME COURT] - A bare perusal of Section 5(8) of IBC, 2016 shows that there is no if and but regarding the meaning of financial debt so far as the expression allottee is concerned. By an amendment w.e.f. 06.06.2018, which is prior to the submission of claim by the applicant before the RP, it was crystal clear that any amount raised from an allottee under a real estate project shall be deemed to be an amount having the commercial effect of a borrowing and the expressions, allottee and real estate project shall have the meanings respectively assigned to them in clauses (d) and (zn) of section 2 of the Real Estate (Regulation and Development) Act, 2016. Merit of the amendment proposed - HELD THAT:- Since the applicant has already submitted his claim in Form B and so far as the reference to the MoU is concerned, that reference was already made in para 5 of the application IA/1442/2020 filed by the applicant, it cannot be said that these facts were not within the knowledge of the applicant at the time of filing of the earlier application - we are unable to accept the prayer of the applicant to permit him to make necessary amendment in the IA/1442/2020. Application dismissed.
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2021 (8) TMI 1151
Dissolution of Corporate Person - affairs of the Corporate Person have been completely wound up and its assets having completely liquidated - Section 59(7) of the Insolvency Bankruptcy Code, 2016 - HELD THAT:- The requirement of the provisions of Section 59, read with the relevant rules, have been satisfied by the Liquidator - Since there is no liability on the Company and no fraud has been found against it either by the Auditors in their report or by the Liquidator, particularly, in the absence of any response from the Registrar of Companies, West Bengal and the Official Liquidator, the dissolution of the Company Manraj Tradecom Private Ltd. is ordered. The Company, Manraj Tradecom Private Limited, stands dissolved under Section 59(8) of the Insolvency and Bankruptcy Code, 2016, from the date of the Order - application allowed.
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2021 (8) TMI 1150
Seeking re-initiation of the matter before the Hon'ble Tribunal for further proceedings - seeking appointment of a Liquidator - seeking direction to Liquidator to take steps towards recovery of Loan Advanced - HELD THAT:- The Applicant has failed to produce any provision of law by which this Adjudicating Authority is empowered to review its own order. Since the Liquidation proceeding has already been terminated by this Adjudicating Authority vide and the file has been consigned to the record room, there is no scope to review the Order dated 09th January, 2020 at this stage. Application dismissed.
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2021 (8) TMI 1134
Maintainability of application - initiation of CIRP - Dues are on the company or on the director in his personal capacity - Mortgage - Financial Creditors - Financial Agreement - right or title over any immovable property - Section 17 of the Registration Act, 1908 - HELD THAT:- The Appellant itself admitted the fact that the loan amount was released by the Appellant by way of RTGS to the account of the Managing Director of the Respondent Company. The Learned Adjudicating Authority also recorded the fact that the Appellant filed Statement of Account of State Bank of India (SBI) for the period from 01.04.2015 to 01.03.2017. From the said statement of account, a sum of ₹ 50,00,056/- was paid into the account of Mr. A. Francis, on 20.10.2015 through RTGS. From the records it is clear that the loan amount has not come to the account of the Respondent Company. The transaction between the Appellant, a partnership firm and the Director of the Respondent Company in his personal capacity. There is no doubt that the Financial contract means, a contract between a Corporate Debtor and Financial Creditor. However, the MoU dated 05.07.2019 does not fit in this clause, in view of its genuineness, as Questioned by the Respondent. This Tribunal does not find any illegality in the Order passed by the Adjudicating Authority - Appeal dismissed.
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2021 (8) TMI 1133
Maintainability of application - documents of doubtful origin annexed with the application - time limitation - whether the Section 9 application is legally maintainable in view of the claim that documents are of doubtful origin annexed with the application, and whether the Section 9 application is within limitation? - HELD THAT:- The IBC provides for action u/s 65 of IBC against the person who initiates proceeding under the IBC fraudulently or with malicious intent, for the purpose other than the resolution of Insolvency or liquidation under the Code. To levy a penalty under Section 65 of the Code, the decision is required to be arrived at by the Adjudicating Authority. In view of the provision in Section 65 (1), we feel that Adjudicating Authority is the correct forum to agitate this issue and we desist from commenting any further on this matter. On a close perusal of documents submitted by the operational creditor and other parties lead us to the conclusion that the application u/s 9 was not submitted within limitation and it contained documents of doubtful origin which do not inspire confidence, and which formed the basis of admission order. The allegations of collusion between the Operational Creditor and the corporate debtor raise reasonable doubt. Documents filed to hold debt was due, or payable do not raise confidence. Initiation of CIRP of a company which is a going concern, on the basis of a short defence note without a proper reply/defence called from the corporate debtor, and based on such documents attached with the admission application is certainly not proper and defeats the purpose and intent of the IBC in letter and spirit. The Interim Resolution Professional/Resolution Professional shall hand back charge of Corporate Debtor. Adjudicating Authority will pass orders regarding fees to be paid to Interim Resolution Professional/ Resolution Professional. The Corporate Debtor is released from the rigours of moratorium and CIRP - appeal allowed.
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PMLA
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2021 (8) TMI 1176
Attachment of property - proceeds of crime - first right or claim over the properties - HELD THAT:- The finding recorded is that the attached properties are not proceeds of crime. Mr. Vyas, the learned ASG is prima facie right in his submission that this particular finding recorded by the Appellate Tribunal would put an end to the criminal complaint filed by the appellant under the PMLA. It can be suggested that the Bank and the appellant may jointly put the properties to auction and try to fetch a good price. If successful in this exercise, then the amount shall neither go to the Bank nor shall go to the appellant, but we may ask them to deposit the entire amount with the Registry of this Court or we may ask them to open an Escrow Bank Account and deposit the same. We shall decide above the precedence once the auction is successful. Post this matter on 06.09.2021.
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Service Tax
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2021 (8) TMI 1161
Delay in filing of appeal before the Commissioner (Appeals) - Non-Receipt of Order-in-original - Recovery of service tax - Even the SCN also not come to the notice of the appellant till the recovery proceedings were initiated against him - principles of natural justice - HELD THAT:- It is apparent that the appellant could not appear before the Original Adjudicating Authority despite three opportunities for hearing was afforded to the appellant. But from the arguments of the appellant, it is coming apparent that appellant in-fact, was not served with even with the copy of Show Cause Notice which became the reason for him to not to appear before the Original Adjudicating Authority and the same was the reason for acquiring no knowledge of Order-in-Original dated 16.11.2018 till the recovery proceedings got initiated against the appellant. The affidavit to this effect is placed on record. Mere dispatch of the order cannot be considered as service. The period of 2 months for filing the appeal has to reckon not from the date of order announced but from the date of receipt of said order by the assessee in terms of Section 35 of Central Excise Act, 1944. Section 37 C further provided the mode of service. In view of those statutory provisions, it is not held appropriate to consider the proof of dispatch as sufficient proof of service - the circumstances reflect no fault on part of the appellant for while approaching Commissioner (Appeals) with his grievance. Since admittedly no acknowledgement receipt was received by the Revenue, question of the production thereof on the record does not at all arise - there are no option but to hold that the Original Adjudication order was not received by the appellant prior to 20th February, 2019. The appeal filed before Commissioner (Appeals) on 18.04.2019 was very-much within the period of two months as is required under section 35 of Central Excise Act. Commissioner (Appeals) definitely erred while rejecting the appeal on the ground of being barred by time. Appeal allowed by way of remand.
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2021 (8) TMI 1160
Maintainability of appeal - appeal not filed in time - non-compliance of Section 35 F of Central Excise Act - HELD THAT:- Apparently and admittedly the appeal against Order-in-Original date4d 20th March, 2019 was filed on 4th June, 2019. Admittedly the order was received by the appellant on 25th March, 2019. In terms of Section 35 F of CEA, 1944, the appeal against the said order would have been filed within two months reckoning from 25th March, 2019. Apparently and admittedly, the appeal was filed on 4th June, 2019 i.e. beyond the said period of two months. No doubt Section 35 F gives power to Commissioner (Appeals) to condone the delay for another a month and to accept the appeal which is filed not later than three months from the receipt of order challenged before him and the appeal in hand was filed within said three months period. But there has been a statutory mandate that the said time extension of one month could be provided only when there has been a sufficient cause which restrained the assessee from filing the appeal within the two months from the date of the receipt of the order. There are no reason to differ with the case law relied upon by the appellant but the said decisions are not applicable to the above discussed facts and circumstances of the present case. Even if, the date of appeal is allowed to be that of 4th June, 2019 instead of 29th June, 2019 still the appeal is beyond the permissible period of two months, with no sufficient explanation of delay beyond said two months. Appeal dismissed.
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Central Excise
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2021 (8) TMI 1169
Recovery of refund granted erroneously - section 11A of the Central Excise Act, 1944 - inordinate delay in adjudicating the show cause notice - violation of principles of natural justice - HELD THAT:- Insofar as the show cause notice in the instant case is concerned, the same has been issued under Section 11A of the Act on 18.8.2004 but it was adjudicated vide Order-in- Original dated 28.3.2017. According to learned Consultant, the show cause notice dated 19.8.2004 was decided by the Order-in-Original dated 28.3.2017 but the same was handed over to the appellants only on 21.9.2017. Although in his submissions, learned Authorised Representative tried to justify the delay in passing the adjudicating order but there was not a whisper about it in the Adjudicating Order or in the impugned order. The Adjudicating Authority only mentioned that the personal hearing was held on 14.3.2017, without mentioning anywhere that due to the pendency of department s appeal before the Hon ble Court the hearing of the show cause notice was delayed. It is settled legal position that inordinate delay in adjudication results into denial of principles of natural justice. In the case in hand, the assessee cannot be blamed for delay as they had never delayed the proceedings. Adjudication proceedings have to be culminated within reasonable time and if not, it would be vitiated. The act on the part of Revenue of keeping the show cause notice pending for unduly long period is arbitrary and it would, in my opinion, vitiate the entire proceedings. Appeal allowed - decided in favor of appellant.
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2021 (8) TMI 1152
CENVAT Credit - appellant did not produce the original copy of the Bills of Entry for verification before the department - HELD THAT:- When the matter was called for hearing, the learned Advocate appearing for the appellant submitted that the certificate issued by the Jurisdictional Customs Authorities, certifying that appropriate duty liability had already been discharged in respect of the goods imported under the disputed Bills of Entry. It is evident that the duty paid character of the goods and receipt of the same in the factory for use in the intended purpose have been duly complied with. On the strength of the certificate issued by the Jurisdictional Customs Authorities, the cenvat benefit should be available to the appellant - Appeal allowed - decided in favor of appellant.
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2021 (8) TMI 1146
Valuation - SSI Exemption - inclusion of value of goods destroyed in flood in the aggregate value of clearance or not - HELD THAT:- N/N. 08/2003 in para 2(vii) and para 3 clearly indicate that aggregate value of clearance for home consumption by a manufacturer is to be taken into account and admittedly para 3 has categorised 3 exclusions wherein damage by fire is not found mention. However, going by the strict literal interpretation of para 3 and 2(vii), it is crystal clear that only clearances for home consumption is to be taken into account and goods destroyed by fire were not clear for home consumption on any point of time but was directed by the insurance company to be destroyed as were unfit for consumption as revealed from the insurance settlement letter at page 30 of the appeal memo. The value of such damaged goods, which were never cleared for home consumption, cannot be added to the total turnover - appeal allowed.
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2021 (8) TMI 1144
Reversal of cenvat credit - inputs used for the output goods supplied to BHEL - Job-Work - exemption availed under N/N. 06/2006-CE dated 01.03.2006 - applicability of rule 14 of the cenvat credit rules, 2004 - HELD THAT:- Rule 9(1) applies when the appellant took credit for the first time, before reversing the same on the instructions of the Superintendent. When the appellant took suo-moto re-credit, the same amounts to only correction of accounts, to which Rule 9(1) has no application - it is held that Rule 6(6) is squarely applicable in the present case, and therefore the credit was rightly taken by the appellant. On this conclusion, it is held that reversal of credit was not required and hence the demand of cenvat credit, interest and penalty under rule 14 of the cenvat credit rules, 2004 cannot be sustained. The orders passed by the lower authorities regarding demand of cenvat credit, interest and penalty are therefore set-aside. The amount of ₹ 18,86,138/- deposited by the appellant consequent to rejection of stay application by this Tribunal, is directed to be refunded along with interest in accordance with law. The interest is held payable u/s 35FF from the date of deposit to the date of Refund @12% p.a. - appeal allowed.
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2021 (8) TMI 1131
Interest on delayed refund - the amount of which the refund is sought, was paid under protest - relevant time - refund from the date of deposit till its realization or not - HELD THAT:- The facts of the case are not in dispute that the appellant paid the amount during the period 2008-09 and 2009-10 under protest wherein the Revenue is of the view that the appellant is liable to pay the duty on zinc ash and zinc skimming. Later on, the levy was held unconstitutional. It was the understanding of the appellant that they are liable to pay duty, that s why they paid the duty under protest. In these circumstances, the amount deposited under protest is not to take the benefit of time limit, but liability of duty as alleged - Further, if Revenue is of the view that this amount could not be collected at that stage, the Revenue was free to refund the said amount but the respondent enjoyed the amount without any authority of law. The ld. AR failed to show that in case the amount deposited under protest is governed under Section 11AB of the Act for claims of interest. The appellant is entitled for interest on delayed refund from the date of deposit till its realization @12% p.a. - Appeal allowed.
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CST, VAT & Sales Tax
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2021 (8) TMI 1178
Maintainability of petition - availability of alternative remedy of appeal - Violation of principles of natural justice - enhancement of the petitioner's taxable turnover for assessment - TNVAT Act - HELD THAT:- The power of judicial review under Article 226 of the Constitution of India is to ensure that the processes through which a decision is taken by the Competent Authority in consonance with the provisions of the Act, but not the decision itself. This being the principles to be adopted while entertaining a writ petition, this Court is of the considered opinion that the factual disputes now raised, including the legal grounds are to be adjudicated before the Tribunal in these writ petitions. The consistency and uniformity in exercising the appeal remedy before approaching the High Court is to be developed both in the interest of the aggrieved person as well as in the interest of the institutions. Institutional respects are also to be protected by the High Court. Thus, this Court is of an opinion that mere pendency cannot be a ground for preferring an appeal and the High Court in such circumstances may take a lenient view by condoning the delay in preferring an appeal, if any arises. This being the principles to be considered, this Court is of an opinion that the petitioner has to approach the Tribunal in order to adjudicate the disputed facts as well as the legal grounds raised in these writ petitions. The petitioner is at liberty to prefer an appeal before the Jurisdictional Appellate Authority in the prescribed format and by complying with the provisions of the Act and the Rules, within a period of 60 days from the date of receipt of a copy of this order - petition disposed off.
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2021 (8) TMI 1139
Levy of VAT - traded goods (STB and remote) - purchase price treated as sale price - taxing the loss sustained by the Petitioner on sale of the set- up box - non-traded goods brought in by the Petitioner through Form F from other States by way of stock transfer and installed on entrustment basis without any consideration in the customer premises - HELD THAT:- It appears that the learned Tribunal has committed serious errors on material facts which includes the finding that the Set Top Boxes that were sold to the customers were a part of non-traded goods although, it was the specific case of the petitioner, that it was sold by the petitioner on which VAT was paid and does not form a part of non-trading goods. This Court further finds that the learned Tribunal has not considered the subscription contract which is the foundational document in connection with the transactions involved in the present cases. This Court is of the view that the subscription contract of the relevant period as well as the Provisions of Telecom Regulatory Authority of India and the regulations framed thereunder, by which the petitioner was governed even at the relevant point of time, are required to be scrutinized and considered by the Tribunal to come to a correct finding in connection with subscription contract of the petitioner with its consumers - This Court is also of the view that the factual errors which have been committed by the learned Tribunal are required to be taken care of by the learned Tribunal at the first instance for arriving at a considered decision. This Court is not inclined to rectify such factual errors, which has been committed by the learned Tribunal, in writ jurisdiction. This Court is of the considered view that these matters are fit for remand before the learned Tribunal for fresh consideration in accordance with law - the matters are remanded to the Tribunal for fresh consideration in accordance with law - appeal allowed by way of remand.
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Indian Laws
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2021 (8) TMI 1177
Smuggling - recovery of contraband - recording of statement under Section 67 of the NDPS Act - legally admissible evidence present or not - as per petitioner when the matter was listed for framing of charge before the learned Trial Court both the petitioner and the co-accused Erbil Han had difficulty in understanding English language which shows that the statements recorded under Section 67 of NDPS Act were not voluntary - HELD THAT:- In the present case there is substantive evidence against the petitioner dehors the statement under Section 67 NDPS Act in the form of CCTV footages and the photos in the mobile phone of the petitioner. Considering the fact that the petitioner is involved in trafficking of commercial quantity of contraband i.e. 50 kgs 800 gms and it cannot be said that there is no legally admissible evidence against the petitioner to show his complicity in the alleged offence, at this stage this Court finds no ground to grant bail to the petitioner. Petition dismissed.
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2021 (8) TMI 1174
Dishonor of Cheque - acquittal of the accused - no finding recorded with regards to service of statutory notice - pre-mature complaint - complaint was filed prior to expiry of the statutory time line - validity of setting aside the trial court s judgment of acquittal of the petitioner - rebuttal of presumption - preponderance of probablities - HELD THAT:- The present revision having been filed against judgement of appellate court, reversing the judgement of acquittal of the petitioner by the trial court for offence under Section 138 of the aforesaid Act of 1881. At the stage of trial, the complainant was the sole witness and has supported the prosecution case. The complainant exhibited the aforesaid documents. However, there was no evidence regarding service of legal notice dated 27.09.2010 upon the petitioner sent through registered post with A/D dated 27.09.2010, much less the date of service of notice. The complainant was fully cross examined - this Court also finds that the petitioner had taken a specific plea that he did not receive any legal notice and he obtained bail from the court after receiving notice from the court. Admittedly, the legal notice in connection with the cheque was sent to the petitioner on 27.09.2010 by registered post with A/D. There is no evidence regarding service of legal notice upon the petitioner, much less the date of service of notice. It has been simply alleged that the petitioner did not pay the cheque amount in spite of service of notice. There is no finding recorded by the learned courts below regarding service of legal notice upon the petitioner, much less the date of receipt of legal notice by the petitioner although the petitioner had specifically denied receipt of the legal notice - this Court finds that the Complainant mentioned the cause of action in the complaint from 31.03.2010, 17.04.2010, 21.09.2010 (date of cheque return memo) and continuing till the date of filing of the complaint case, filed on 04.11.2010. The condition precedent for filing the case under Section 138 of the Negotiable Instruments Act, 1881, having not been satisfied, the complaint itself was not maintainable on the day it was filed and accordingly, the petitioners could not have been convicted under the said Section. The question of any presumption regarding existing debt under Section 139 of the Negotiable Instruments Act, 1881 did not arise as the complaint itself was not maintainable. Accordingly, the conviction of the petitioner under Section 138 of the aforesaid Act of 1881 by the learned appellate court cannot be sustained in the eyes of law. Whether the accused has been able to displace such presumption and to establish a probable defence whereby, the onus would again shift to the complainant? - HELD THAT:- The issuance of cheque is not in dispute. Before the trial court, the argument of the counsel for the accused- petitioner was that the amount taken by the petitioner was returned in instalments and a receipt (Exhibit-A) was also issued by the complainant. It was also the case of the accused petitioner that the complainant withheld the cheque in spite of receiving the cheque amount as the cheque was missing and traceless in the hands of the complainant - The trial court held that a doubt was created in the prosecution case and accordingly, the prosecution failed to prove its case beyond reasonable doubts and acquitted the accused - petitioner. There is no doubt that mere denial of existing debt or discharge of debt may not be sufficient to discharge the burden of proof from the side of the accused on the principles of preponderance of probabilities , but, once the accused puts on record further material, the onus of the accused stands discharged on the principle of preponderance of probabilities . In such a scenario, the test of proportionality should guide the construction and interpretation of reverse onus and the accused is not expected to discharge an unduly high standard or proof and the accused need not discharge his burden to the extent of being beyond all reasonable doubt - Once a probable defence is put on record from the side of the accused, the onus shifts upon the complainant to prove the fact regarding existing debt. Upon perusal of the records, this Court finds that there is no material on record, either in the evidence in chief of the complainant or evidence in chief of the accused or even in their cross examination, that the blank signed pages were signed and handed over by the complainant to the accused petitioner in connection with the partnership firm and that the same has been misused by the accused- petitioner to create a document of receipt of the cheque amount i.e Exhibit-A - This Court is of the considered view that the defence taken by the petitioner on the basis of Exhibit-A that the entire cheque amount was returned by the petitioner to the complainant was certainly a probable defence when seen in the light of the principles of preponderance of probabilities and the appellate court erred in law in rejecting the defence of the petitioner and not considering the case on the principles of preponderance of probabilities . This Court is of the considered view that the materials on record suggest that the accused-petitioner had discharged his burden and rebutted the statutory presumption under Section 139 of the aforesaid Act of 1881 on the principles of preponderance of probabilities and the complainant failed to further shift the burden to the accused petitioner. This Court finds that the accused has been able to displace presumption under Section 139 of the aforesaid Act of 1881 and established a probable defence whereby, the onus again shifted to the complainant and the complainant failed to discharge the same - the conviction of the petitioner for offence under Section 138 of the aforesaid Act of 1881 passed by the learned appellate court cannot be sustained in the eyes of law. Petition allowed.
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2021 (8) TMI 1138
Dishonor of cheque - maintainability of appeal - correctness of acquittal of accused - Allegation is that the complainant has misused the signed cheque which was kept in the office of the accused was stolen - Whether the appeal lies against the order of acquittal passed by the First Appellate Court or whether the revision lies as contended by the learned counsel for the respondent? - HELD THAT:- In the case on hand, there are divergent findings given by the Trial Court as well as the First Appellate Court and hence, an appeal lies under Section 378 of Cr.P.C. and the complainant has rightly filed the appeal and the question of filing the revision does not arise as contended by the learned counsel for the appellant and the very contention that the revision lies cannot be accepted since, there is a clear bar to invoke Revisional jurisdiction when there is a provision for filing an appeal. Hence, the very contention of the learned counsel for the appellant that the appeal is not maintainable cannot be accepted - question answered in negative. Whether the First Appellate Court has committed an error in acquitting the accused? - HELD THAT:- On perusal of both oral and documentary evidence available on record, it is the specific case of the complainant that he had lent money to the accused on 15.10.2006 and in order to repay the said loan the accused had issued a cheque on 25.01.2007. When the cheque was presented it was dishonoured with a shara insufficient funds . The complainant has relied upon document Ex.P1-cheque. The accused did not dispute his signature available on Ex.P1. The complainant also relied upon Ex.P3-legal notice and the said notice was sent to the residential address of the accused Kurubarahalli and also to his driving school - The accused has to lead plausible evidence before the Court and this Court has taken note of the evidence of DW1 that his evidence cannot be believed and the same is not trustworthy and he makes an attempt to give evading answer in the cross-examination in respect of other two cases filed against him for cheque bouncing. Though he denies, he admits that two cases are filed against him in the cross-examination and hence his evidence is not credible. The statutory presumption available is in favour of the complainant. The other observation made by the appellate court that when the amount is paid in excess of ₹ 20,000/- and the said amount to be paid through cheque only under the Income Tax Act also cannot be accepted. Here, the transaction is between friends and both of them having acquaintance with each other and also running Crackers Chit. P.W.1 claims he was an agent and D.W.1 claims he was a Director - the appellate Court has committed an error in coming to the conclusion that the accused rebutted the evidence of the complainant and in the cross-examination PW1, nothing is elicited except they are good friends and the complainant was also visiting the driving school of the accused. Hence, the appellate Court has committed an error in reversing the finding of the trial Court without drawing presumption available in favour of the complainant. Therefore, nothing inspires this Court that the evidence led by the accused amounts to rebutting the evidence of the complainant. In the case on hand also, the accused has admitted the cheque available in Ex.P1 and failed to rebut the presumptions and nothing is placed before the Court and no cogent evidence to disbelieve the case of the complainant. Hence, the presumption is in favour of the complainant. Unless, a contrary evidence is placed before the Court, the contention of the learned counsel for the appellant that there was no transaction and the cheque has been stolen and misused cannot be accepted. Hence, the approach of the First Appellate Court is erroneous and it requires interference by this Court. Appeal allowed.
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2021 (8) TMI 1130
Issuance of prosecution sanction - non-application of mind - Allegation of taking Bribe - it was alleged that the petitioner was having an amount of ₹ 34,500/- in his pocket which was duly explained by the petitioner. - infringement of constitutional right of the petitioner or not - breach of rule of natural justice - requirement to remand the matter or not - HELD THAT:- This Court is of the firm view that if the Authority has not acted in accordance with the provisions as laid down and failed to exercise its discretion which is required to be exercised or failed to act according to the law as it is required to, this Court can interfere and set aside an order wherein the aforesaid principles are not followed. The State Government had already issued a circular on 15.5.2012 to the Head of Department to independently apply their mind before passing prosecution sanction - Admittedly, the Principal Secretary, Transport Department has only filled up the dotted lines. While issuing prosecution sanction dated 5.10.2017, he failed to take notice of the observations in the investigation report of the ACB. Thus, it is a case where this Court is satisfied that there has been a complete non-application of mind while issuing prosecution sanction. This Court deems it appropriate to quash the prosecution sanction dated 5.10.2017 issued by the Principal Secretary, Transport Department and the same is accordingly quashed. Whether the matter should be remitted back to the Authority for reconsideration of the matter and to pass a fresh order of sanction? - HELD THAT:- This Court finds that the petitioner has already attained superannuation and taking into consideration the allegations and observations made by the ACB investigation relating to the amount of ₹ 5160/- being as the personal amount and the opinion of Assistant Director (Prosecution) which has been taken notice in the connected criminal misc. petition, this Court is satisfied that no purpose would be served in remanding the matter to the authorities for prosecution sanction after a period of almost 9 years and this Court is inclined to give a quietus to the case so far as it relates to the petitioner. Accordingly, the proceedings against the petitioner are directed to be closed. Petition allowed.
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