Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
August 30, 2024
Case Laws in this Newsletter:
GST
Income Tax
Customs
Corporate Laws
Securities / SEBI
Insolvency & Bankruptcy
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
Highlights / Catch Notes
GST
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Small business tax reprieve: Court overturns unfair cancellation, allows filing returns amid pandemic losses.
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GST registration cancelled without reasons cited, flouting natural justice.
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Continuous supply tax confusion: When to raise invoices for refund claims?
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Petitioner's rights violated due to lack of proper notice, court remands case for fresh adjudication with opportunity for defense.
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Unfair show-cause notice under GST Act; opportunity for hearing denied, violating natural justice.
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Tax liability upheld: Works for industrial park not eligible for concessional GST rate.
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Dismissal of challenge against GST show cause notice proceedings & cash seizure.
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Bail granted in illegal mining case despite bypassing Sessions Court.
Income Tax
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Businesspersons avoid criminal liability under Black Money Act for non-disclosure of foreign assets before enactment.
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Tax reassessment rejected due to lack of new facts and procedural lapses.
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Income Tax Transfer Order Challenged, Court Upholds Validity Despite No Prior Hearing.
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Couple gets relief on farm income, but fined for non-compliance with tax notices.
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Procedural delay in filing Form 10CCB due to technical glitches allowed deduction u/s 80IA.
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Cancellation of NGO registration flawed due to lack of jurisdiction and retrospective application.
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Advance paid for land purchase: HUF vs individual addition scrutinized.
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Rental income rightfully classified as "house property" despite composite rent; TDS deducted correctly. Separate books maintained.
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Multinational tax disputes: Transfer pricing adjustment, royalties, expenses, and dividend tax refund.
Customs
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Customs Automation for EOUs: Embracing Tech-Driven Compliance.
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Customs seizure upheld due to timely notice served via email despite petitioner's objection.
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Tech glitch can't deny statutory benefits to eligible recipients - High Court.
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Importers win against customs rejection of declared poppy seed value from Turkey.
DGFT
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Simplified Export Rules on Spices, Drugs, Tea, Metals & More.
SEZ
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BoA meeting: Processing to non-processing area conversions approved for developers after duty refund; unit appeals remanded for fair hearing.
Corporate Law
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Share capital cut by cancelling 4,044 equity shares held by non-promoters for Rs. 66.9M from free reserves.
Indian Laws
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Directors escape liability in cheque bounce case due to lack of evidence on role.
IBC
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Corporate debtor's counterclaim can proceed despite moratorium under IBC.
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Corporate insolvency case resolved: CoC's approved resolution plan upheld despite delay.
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CIRP: Borrower denied debt liability, but balance sheets proved disbursement & accrued interest.
SEBI
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Eased listing norms for firms on IFSC stock exchanges; public shareholding cut to 10% from 25.
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IPO fraud case quashing challenged: Matter remanded to Division Bench for fresh decision post-SEBI settlement.
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Gynecologist wins against SEBI, bourses over demat freeze - Non-compliance wrongly attributed after exit as promoter.
Service Tax
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Statutory body exempted from service tax on construction, real estate & manpower supply; extended limitation period inapplicable.
Central Excise
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Appellate Tribunal Overturns Dept's Order on Cenvat Credit Denials Due to Lack of Evidence of Non-Supply.
VAT
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Secured creditor's dues take priority over Sales Tax dues; valid attachment by Tax Dept. required before claiming precedence.
Articles
Notifications
Circulars / Instructions / Orders
News
Case Laws:
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GST
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2024 (8) TMI 1318
Cancellation of registration of the petitioner under the provisions of the WBGST/CGST Act, 2017 - non-filing returns for a continuous period of six months - HELD THAT:- Although, an appeal was filed by the petitioner, such appeal was dismissed on the ground of limitation without there being any adjudication on merits - It may be noted that the petitioner is only a small businessman and claims that he had suffered reverses during the Pandemic. It is not the case of the respondents that the petitioner had been adapting dubious process to evade tax. Taking note of the fact that the suspension/revocation of license would be counterproductive and works against the interest of the revenue since, the petitioner in such a case would not able to carry on his business in the sense that no invoice can be raised by the petitioner and ultimately would impact recovery of tax, the respondents should take a pragmatic view in the matter and permit the petitioner to carry on his business - the petitioner through his Advocate has undertaken to comply with the provisions of the said Act and has agreed to make payment of tax, interest, fine and penalty as may be found due. The respondents are directed to activate the portal within one week from the date of communication of this order, so that the petitioner can file his returns, pays requisite amount of tax, interest, fine and penalty if not already paid - the order of cancellation dated 8th July, 2022 and the order dated 7th June, 2024 passed by the Appellate Authority also stands set aside. Petition disposed off.
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2024 (8) TMI 1317
Appeal dismissed on the ground of non-filing of certified copy of the order - appeal dismissed on the ground of delay - HELD THAT:- It is not in dispute that the appeal was filed well within the limitation on 12.11.2022 through electronic mode and thereafter certified copy of the decision has been filed. However without considering the merits of the case, the appeal has been dismissed on the ground of delay. This Court on various occasions has held that merely non filing of certified copy of the impugned order within time in the appeal filed through electronic mode is a technical error and on this technical ground, the appeal cannot be dismissed. This Court in the cases of M/s Enkay Polymers [ 2024 (5) TMI 917 - ALLAHABAD HIGH COURT ] and Jai Prakash Shiv Charan Bidi [ 2024 (4) TMI 418 - ALLAHABAD HIGH COURT ] have held that non filing of certified copy within the time in the appeal filed through electronic mode, is only a technical error and on this ground the appeal may not be dismissed on delay. The impugned order dated 31.5.2023 passed by the appellate authority is set aside. The matter is remanded to the appellate authority who shall decide the appeal on its own merit by reasoned and speaking order, expeditiously, preferably within a period of three months from the date of production of certified copy of this order. Petition allowed in part.
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2024 (8) TMI 1316
Violation of principles of natural justice - all notices/ communications were uploaded by the respondent under the column, viz., View Additional Notices and Orders , in the GST portal - petitioner was not aware of the said notices - HELD THAT:- In the present case, it appears that no opportunity of personal hearing was provided to the petitioner prior to the passing of impugned order. Hence, this Court is of the view that the impugned order was passed in violation of principles of natural justice. In such view of the matter, this Court is inclined to set aside the impugned order dated 20.07.2023 passed by the respondent. The impugned order dated 20.07.2023 is set aside and the matter is remanded to the respondent for fresh consideration on condition that the petitioner shall pay 10% of disputed amount to the respondent within a period of two weeks from today (09.08.2024) and the setting aside of the impugned order will take effect from the date of payment of the said amount - Petition disposed off by way of remand.
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2024 (8) TMI 1315
Violation of principles of natural justice - notices/ communications were uploaded under the View Additional Notices and Orders in the GST portal - petitioner is not aware of the notices uploaded in the GST portal and thus, failed to file their reply within the time - HELD THAT:- Having regard to the admitted fact that the impugned orders came to be passed without hearing the petitioner in violation of the principles of natural justice, and also considering the submissions made by the learned counsel on either side and as the disputed tax has already been recovered, this court has set aside the impugned order and remanded the matter to the respondent for fresh consideration. Petition disposed off.
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2024 (8) TMI 1314
Cancellation of GST registration of petitioner - SCN does not contain any reason or ground as to why the registration of the petitioner is sought to be cancelled - order of cancellation also does not contain any reason as to why the registration of the petitioner is being cancelled - Time to reply to SCN not given - violation of principles of natural justice - HELD THAT:- A perusal of the show-cause notice and the order of termination of cancellation of registration placed do not show any reasons either in the show-cause notice or in the order of cancellation. The contention of the respondents that there are certain restrictions on what can be placed in these documents cannot in any manner protect such orders when there is a violation of principles of natural justice. It is, at best, a case of self-inflicted injury. The fact that the specific allegation in regard to the signatures that are said to be appended by Sri B. Obulesh and Sri Munendra, has not been denied by the respondents is sufficient to hold that the said allegation is correct. Even otherwise, it is a very roundabout way of denying allegations by stating that the said allegations could have been placed before the 1st respondent. In these circumstances, this Court finds that the entire process of issuing show-cause notice and issuing the order for cancellation of registration without assigning any reason, is a clear case of violation of principles of natural justice. Petition disposed off.
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2024 (8) TMI 1313
Refund of the input tax credits available to the petitioner - petitioner had not filed the bill of shipping for supply of electricity - taxability of continuous supply of goods - HELD THAT:- Section 12 (2) of the CGST Act provides for fixing the time of supply on either of two eventualities. The time of supply can be fixed on the date when the invoice for such supply is prepared and sent by the supplier or on the date on which the payment for such supply is made by the person receiving such goods. However, the legislature has also stipulated that the earlier of these two eventualities would be treated as the time of supply for the purpose of assessment of tax - the time of continuous supply of goods is not relevant and it is only the point of time when the invoice is raised or price is paid, whichever is earlier, that would be relevant for determining the point of tax in time and consequently, the period of supply of goods for which an invoice is raised should be taken into account, rather than the point of time at which the invoice has been raised, should be taken as the relevant period . In the present cases, the undisputed fact is that the petitioner was required to raise an invoice for the supply of electricity for a particular month by the 7th day of the succeeding month. This stipulation is contained in the power purchase agreement executed between the petitioner and M/s. Bangladesh Power Development Board. This would mean that though supply of electricity was done in the month of December, the time of supply, by legal fiction, would be the date on which the bill was presented in the month of January and so on and so forth. In such circumstances, furnishing of the REA for the preceding month, while making an application for refund in the succeeding month would be in accord with the said provisions of the Act and Rules. These Writ Petitions are allowed, setting aside the orders in appeal and the orders in original.
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2024 (8) TMI 1312
Violation of principles of natural justice - none of the notices, that are said to have been sent by the 3rd respondent, had been received by the petitioner and as such the petitioner had no notice of any of the proceedings - HELD THAT:- The admitted fact is that the registration of the petitioner had been cancelled on 21.02.2019 and all proceedings resulting in the impugned orders had commenced only after the said cancellation of registration. It may also be noted that the registration had been cancelled on the ground that the petitioner was not filing GST returns. These facts coupled with the fact that the physical notices sent to the petitioner being returned with the noting Left should have been sufficient for the 3rd respondent to take steps to ascertain the whereabouts of the petitioner and to serve notices at such address. Though it cannot be said that service of notice on the petitioner by way of the E-Mail ID has not been done, the fact remains that the cancellation of the registration could have resulted in the petitioner not looking into the mails sent to the E-Mail ID which was registered with the department. In view of the fact that the petitioner is now aware of the order passed by the 3rd respondent, the present proceedings shall be treated as notice of the pending assessment before the 3rd respondent and the show cause notice dated 22.04.2022 as well as the impugned order dated 21.12.2022 shall be treated as show cause notices and the petitioner is granted three (03) weeks time to file his response to these notices. It would only be appropriate to give an opportunity to the petitioner to set out his case. Accordingly, the Writ Petition is allowed, setting aside the order of the 3rd respondent dated 21.12.2022 and remanding it back to the 3rd respondent for adjudication.
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2024 (8) TMI 1311
Invocation of provision of section 16 (2) (c) of the GST Act - respondent-Authority has not taken into consideration the detailed reply filed by the petitioner while arriving at a conclusion - It was submitted that there is a prima facie case in favour of the petitioner as the respondent-authorities could not have invoked the provision of section 16 (2) (c) of the GST Act - HELD THAT:- The petitioner has made out a strong prima facie case to grant interim relief and therefore, the impugned order dated 27.10.2023 passed under section 74 of the GST Act is hereby stayed during the pendency of the petition on the condition of depositing Rs. 20 Lakh by the petitioner with the GST authority within a period of two weeks from today. Application disposed off.
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2024 (8) TMI 1310
Principles of natural justice - Validity of SCN issued u/s 73(1) of the Central Goods and Services Act, 2017 - petitioner received the notice only on the date of personal hearing fixed - HELD THAT:- The respondents admittedly thought it proper to give third opportunity of personal hearing and accordingly, issued the notice, dated 13.03.2024. However, the there are substance in the argument of learned counsel for the petitioner that said opportunity became illusory for the petitioner, because of service of notice on the same date. The respondents have not paid any heed to the petitioner s prompt communication, dated 19.03.2024, informing that notice is received on the date of hearing and another opportunity may be granted. It is deemed proper to set aside the OIO, which has been passed without considering the petitioner s communication (Annexure P3) which shows that the notice was received by him on the date of hearing itself - petition disposed off.
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2024 (8) TMI 1309
Tax liability of the petitioner for the period 01.04.2021 to 01.01.2022 - Whether M/s. APIIC is a government entity? - whether any of the three conditions set out in the N/N. 24/2017 Central Tax (rate), dated 21.09.2017 (which provided for concessional rate of tax) are applicable to the works executed by the petitioner? - HELD THAT:- The works undertaken by the petitioner, as described above, are works taken up to create infrastructure in the Electronic Manufacturing Cluster and the Mega Industrial Hub at the locations mentioned above. The purpose of these constructions is to create infrastructure for assisting the entrepreneurs and others who would set up their manufacturing units or service units in these places which are created for such purposes. Whether the 4th respondent would be using these works for commerce industry or any other business or profession? - HELD THAT:- Though the 4th respondent is an entity of the Government and is involved in promotion of industry in the state, the fact remains that the 4th respondent is conducting the business of developing industrial parks and industrial areas and recovering the cost of development from the entrepreneurs who set up units in these areas by including the same in the price charged for selling the said developed lands to these entrepreneurs - it must be held that none of the three conditions would be applicable and the 1st respondent has not committed any error in assessing the tax payable by the petitioner @ 18% for the period 01.04.2021 to 01.01.2022. Though the petitioner is primarily liable to pay the aforesaid tax, the arrangement between the petitioner and the 4th respondent is that the 4th respondent would pay the tax due to the petitioner who would then pass it on to the GST Department. The letter dated 22.05.2023 reflects this arrangement. Further, there is no contention in the counter affidavit of the 4th respondent that it is not liable to pay such tax. In any event, the fact that the 4th respondent had paid 12% tax for the period 01.04.2021 to 01.01.2022, on account of the understanding of both the petitioner and the 4th respondent that the rate of tax is 12%, would also show that the arrangement between the two is that the 4th respondent would bear the burden of the payment of the GST through the petitioner. This Writ Petition is disposed of, affirming the impugned order passed by the 1st respondent for the tax period 01.04.2021 to 30.11.2022.
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2024 (8) TMI 1308
Juristion of carrying out impugned show cause notice proceedings - scope for seizure or confiscation of cash - HELD THAT:- The Court is of the view that there is no merits in the present Writ Petition and this Writ Petition is liable to be dismissed. The petitioner cannot scuttle the Show Cause proceedings initiated under the provisions of the respective GST enactments, merely because, the petitioner has secured favourable Order from the Tribunal in Naya Carnation Fireworks, Sri Cornation Fireworks Pvt. Ltd., Bee Cee Fireworks Industries, The Coronation Fireworks Factory, K. Balaji, K. Jeyakumar, A.R. Arumugarajan and B. Saravanan Versus Commissioner of GST Central Excise, Madurai [ 2024 (5) TMI 1109 - CESTAT CHENNAI ]. Further, the impugned show cause notice has also only sought to appropriate the amount that was seized on 08.10.2020 from the custody of the petitioner's partner. That apart, the amount, that was seized on 08.10.2020, can be appropriated only towards the tax liability, if any of the petitioner under the provisions of the respective GST enactments and it is for the petitioner to explain as to why the aforesaid amount should not be appropriated towards the tax liability of the petitioner. The petitioner is directed to participate in the impugned show cause notice proceeding by filing proper reply within a period of 30 days from the date of receipt of a copy of this order - Petition dismissed.
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2024 (8) TMI 1307
Seeking grant of custodial bail - accused declares that he has no criminal antecedents - illegal mining - revenue loss - HELD THAT:- In the present case, the petitioner chose to come straightway to this Court and has given reasons for that in para no. 3 of petition. Reasons for filing petition before this Court is that during the pendency of the quashing petition when petitioner prayed for stay on proceeding/investigation, this Court permitted him to file petition under Section 438 CrPC. Given the explanation, there would be no justification to dismiss the present petition only on the grounds that he has forfeited one of his rights to file a petition firstly to the Sessions Court. In fact by straightway coming to this Court any accused would lose one of the statutory right of getting their bail petition adjudicated by the Sessions Court first. In this process such an accused, who comes straightway to this Court in exercise of the concurrent jurisdiction under Section 439 CrPC would be deprived of jurisdiction of this Court under Article 227 of the Constitution of India. If an accused first files a bail petition before the Sessions Court and the same is rejected they still have right to exercise the jurisdiction of this Court under Section 439 CrPC which is also concurrent jurisdiction of this Court. Thus, in entirety it is such an accused, who would be loser by first coming to the High Court under Section 439 CrPC. Given above, the petitioner coming and filing a petition straightway to this Court is also not a ground not to entertain the same or to continue his detention just for these technical reasons. An analysis of above said submissions would lead to the outcome that the petitioner is in judicial custody from 11.04.2024. His remand is judicial not police. Thus, his current custody in a prison is not going to render any help to the investigator at this stage. Simply because, the custody is from 11.04.2024 i.e. only for 15 days is not a ground to deny bail to the petitioner. In Gurbaksh Singh Sibbia v State of Punjab [ 1980 (4) TMI 295 - SUPREME COURT] , a Constitutional Bench of Supreme Court held that the bail decision must enter the cumulative effect of the variety of circumstances justifying the grant or refusal of bail. Without commenting on the case's merits, in the facts and circumstances peculiar to this case, and for the reasons mentioned above, the petitioner makes a case for bail, subject to the following terms and conditions, which shall be over and above and irrespective of the contents of the form of bail bonds in chapter XXXIII of CrPC, 1973. Petitioner is granted bail subject to fulfilment of conditions imposed - petition allowed.
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Income Tax
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2024 (8) TMI 1319
Revision u/s 263 - date of filing of the original return of income -There was an international transaction - Assessee carried forward losses - HELD THAT:- Since there was an international transaction the assessee took the due date for its return of income as 30th November and as per the provisions of Section 92E of the Act, the assessee obtained a report from an accountant and furnished the same in Form 3CEB. Merely because the assessee had raised objections before the AO, who was referring the matter to the TPO, the PCIT cannot say that the assessee accepted the due date for filing its return of income as 30th October. In our considered view, the assessee may have objected for the reference to the TPO but that would not have changed the colour of the mandatory provisions of the Act as mentioned elsewhere. As per the provisions of Section 92E, since the assessee has entered into an international transaction it obtained the report from an accountant in Form 3CEB and furnished the same and since the AO was about to refer the matter to the TPO, it shows that there was an international transaction and, therefore, the due date for the assessee for filing the return of income was 30th November. Assessee has simply carried forward losses and the apprehension of the PCIT are premature as the same will be considered only when the assessee claims set off of brought forward losses which will happen in the subsequent AYs as and when the assessee claims the set off of losses. For the year under consideration the assessee has simply carried forward losses. Thus, we are of the opinion that the assessment order is neither erroneous nor prejudicial to the interest of the revenue - Appeal of the assessee is allowed.
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2024 (8) TMI 1306
Offence punishable u/s 50 of the Black Money Act - non-disclosure of foreign assets and false statements made by the petitioners - petitioners, office bearers of certain business establishments of two British Companies - The Act came into force on 01-07-2015, and the petitioners were summoned and assessed u/s 10 of the Act in 2018 HELD THAT:- As in the Criminal Petition, there was no challenge to the validity of Section 72(c) of the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015. Issue notice on the prayer for interim relief returnable on 20th September, 2024. As decided by HC [ 2024 (6) TMI 943 - KARNATAKA HIGH COURT] criminal law cannot be set into motion against the petitioners in the aforesaid facts of the case, as it cannot pass muster of Article 20 of the Constitution of India. A caveat, this Court is considering the criminal liability fastened upon the petitioners by the prosecution including under Section 72(c) of the Act and the consideration has led to an unmistakable conclusion that it falls foul of Article 20 of the Constitution of India. The Special enactment is a statute. Article 20 comes under Chapter III of the Constitution of India, a fundamental right. Constitution of India is not a statute. It is the fountain head of all statutes including the special statute. Therefore, the rigour of any provision of the Act should pass muster of Article 20 of the Constitution of India and it fails to pass such muster in the case at hand and the failure leads to obliteration of the crime against the petitioners. The aforesaid part of the impugned order will remain stayed.
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2024 (8) TMI 1305
Validity of reopening of assessment proceedings - Impugned Notice is that the foundational ingredients of Section 147, including jurisdictional facts, are absent - notice issued beyond period of four years - as argued very issuance of the Impugned Notice purported to be without jurisdiction - HELD THAT:- A vital precondition for invoking Section 147 after the expiry of four years from the end of the relevant assessment year, is that during the original assessment, the assessee ought to have failed to fully and truly disclose all material facts necessary for the assessment. It is evident from the face of the record that the reassessment was initiated in March 2021, which is five years after the end of the Assessment Year 2015-16. As examined the sanction granted u/s 151 for the reassessment, along with reasons put up for securing the sanction. These reasons are near-identical to what was eventually provided to the Petitioner on 6th August, 2021, with one paragraph of comments missing. We find that the jurisdictional fact necessary to invoke Section 147 for reassessment is absent. Considering that the reassessment is admittedly being undertaken after the four-year period, it is necessary to show that during the original assessment, there had been a failure 0n the part of the Petitioner to disclose fully and truly, the material facts necessary for the assessment. The original assessment had been conducted pursuant to scrutiny proceedings. It entailed active examination and thorough engagement between the Petitioner and the AO - The scrutiny proceedings led to the Assessment Order, which increased the total income from the level computed in the returns. Each of the four aspects set out in the reasons for reassessment, related to facts fully disclosed by the Petitioner in the course of the original assessment. During the original assessment, a notice u/s 143 (2) had been served on the Petitioner. A notice u/s 142 (1) had also been served. These notices were responded to. Detailed written replies dated 7th December, 2017 and 11th December, 2017 had been provided. Personal hearings had also been held on 29th November, 2017 and 8th December, 2017. On each of the four counts for which reassessment is being proposed, the facts had indeed been disclosed, as is seen from the very reasons provided by the Revenue in support of initiating reassessment. Therefore, it is evident that the Revenue is now seeking to express a different opinion based on the very same facts fully disclosed during the original assessment. Sanction Mechanism u/s 151 - The power to sanction reassessment u/s 151, is coupled with a duty to exercise such power reasonably, and not arbitrarily. It is trite law that absence of valid reasons constitutes arbitrariness. In the instant case, the entire process of according sanction demonstrates non-application of mind to the ingredients of Section 147, rendering the sanction to be arbitrary, calling for intervention by a writ court. Evidently, the proposal, the recommendation and the approval in the instant case was mechanical, without either application of mind to the law and the facts or even a modicum of how the ingredients of the law had been met. In short, the machinery u/s 151 completely failed. The imperative requirement of compliance with the ingredients of Section 147 and Section 148 is underlined in innumerable judgments. Decided in favour of assessee.
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2024 (8) TMI 1304
Validity of transfer order u/s 127 - petitioner case was transferred from CIT Mumbai to be centralized with Central Circle 20, Range-5, PCIT (Central) 2, New Delhi - breach of the principles of natural justice, in as much as no hearing was granted to the petitioner. HELD THAT:- In the facts of the present case, it cannot be said that there was no material which would lay down a foundation for the respondents to exercise powers u/s 127. Moreover, substantive material justifying the transfer was disclosed to the petitioner in the show cause notice dated 19 March 2021 issued to the petitioner. The receipt of such show cause notice is not denied by the petitioner. The search/survey on such related entities/parties and the pre- search and post-search investigations as undertaken by the department revealed that the petitioner, who is an Indian citizen but based in UAE, Dubai, had multiple financial interests in India and abroad. Such material also revealed the petitioner s involvement in evasion of taxes, abetment and facilitation of the evasion of taxes by various other individuals and companies and that the petitioner had many transactions with persons whose names are set out in the show cause notice. The cases of such related parties/persons were covered separately under Section 132 and their cases were also centralized in Central Circle, Delhi and it is for such reason, the petitioner s case was proposed to be centralized with Delhi charge for coordinated investigation. It is in such context and reasons the petitioner was called upon to reply to the show cause notice. As noted above, the petitioner responded to the show cause notice by his letter dated 01 April 2021, however, except for a vague denial and some health ground, the petitioner appears to have not made out any case against transfer of the said proceedings. It is most significant that on such show cause notice and even assuming that the reply of the petitioner was to be taken into consideration, an order on the show cause notice transferring the petitioner s case to Delhi Circle was passed on 14 June 2021 and what is further noteworthy is as to what transpired after the transfer of the petitioner s case from Mumbai Authority to the Delhi Circle. Throughout the flow of all these events after the transfer of jurisdiction under Section 127, the petitioner did not think it necessary to challenge the order dated 14 June 2021. These events being accepted by the petitioner gives an impression of the petitioner having acquiesced with the order of transfer, as the petitioner, after a period of more than one year after the impugned order being passed has moved this petition on 05 June 2022. The argument that the petitioner was unaware of the transfer proceedings does not inspire confidence since the very show cause u/s 127 had indeed been received and was also responded to. Therefore, even while the impugned order erroneously states that the petitioner had not replied to the show cause notice, in our opinion, the error of the Revenue does not turn the needle in the petitioner s favour. Thus, the impugned transfer order cannot be faulted on the ground that it is in breach of the principles of natural justice for several reasons. In such context the petitioner s contention that the impugned order furnishes no reasons or has insufficient reasons, or it furnishes incorrect reasons, in a decision being taken by the respondents to transfer the proceedings from Mumbai to the Delhi jurisdiction cannot be accepted on the face of the impugned order. This more pertinently when the petitioner has admitted that the petitioner had transactions with the persons whose cases are already centralized with the Delhi Authority. For such reason the respondents found it necessary, appropriate and in the eminent interest of the revenue that the petitioner s case is considered by the Central authorities at Delhi, who were seisin of the investigation, materials from the search and seizure operations, carried out not only in respect of the petitioner s premises, but also the premises of the related parties. As the impugned order transferring the proceedings in the petitioner s case from the Mumbai to Delhi Authority was passed on 14 June 2021 and as noted above, much water has flown under the bridge, namely after such order was passed, the petitioner was issued notices under Sections 153A, 143 (2), 142 (1) and 142 (2A) of the Act, as also an order of penalty under Section 270 of the Act was passed. These proceedings cannot be discarded and overlooked as these are substantial events which have transpired after passing of the impugned order dated 14 June 2021, till the filing of the petition. Thus, post transfer of the petitioners case to the Delhi authorities, it is implicit in the receipt of such notices and the several proceedings initiated against the petitioner under such notices, including an order passed against the petitioner of imposing penalty, that the petitioner has certainly acquiesced in the order dated 14 June 2021 passed under Section 127 of the Act, which was already implemented and acted upon. WP dismissed. No case for interference in exercise of our jurisdiction under Article 226 of the Constitution of India is made out by the petitioner, in assailing the impugned order passed u/s 127.
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2024 (8) TMI 1303
Reopening of assessment - Gross Profit (GP) rate determination on unrecorded transactions - HELD THAT:- The petitioner had disclosed all his undisclosed sale transactions of both years, but the Assessing Authority has assessed the gross profit @ 8%, thus, there was no failure on the part of the petitioner which can give reasons to believe to the AO to reopen the assessment, hence, relying on a judgment of Kelvinator of India [ 2010 (1) TMI 11 - SUPREME COURT] that Section 147 would give arbitrary power to the AO to reopen the assessment on the basis of mere change of opinion which cannot be per se reasons to reopen. A similar view has been taken in the case of CEAT Ltd. [ 2023 (1) TMI 73 - SC ORDER ] and well as in Financial Software Systems [ 2021 (9) TMI 200 - MADRAS HIGH COURT] Reassessment proceedings set aside. Decided in favour of assessee.
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2024 (8) TMI 1302
Addition u/s 68 - share capital/premium as unexplained cash credit - assessee has failed to prove the identity, creditworthiness of the subscribers and genuineness of the transaction - ITAT confirmed deletion of addition - HELD THAT:- The share subscriber company was a holding company of the assessee company and both the companies were having common directors and that the share subscribing/holding company was interested in the business of the assessee. The nature of business activity was examined by the tribunal and noted that the assessee company had completed multiple pieces of land in the State of UP for developing a project in phases. The estimated cost of the project at the relevant point of time was Rs.300 crores. The assessee company had registered its project before the Real Estate Development Authority, U.P. The tribunal noted that the funds of the investing company and its creditworthiness has been duly considered and discussed by the CIT[A] in its order dated 22.7.2020. The entire share subscription amount was received by the tribunal from its holding company, i.e., IBIPL which in turn is promoted by Infinity Infotech Parks Limited and provided funds for execution of the project either by own or through subsidiaries. Tribunal also took note that the CIT[A] called for a remand report from assessing officer in respect of various details and evidence was submitted by the assessee and thereafter after considering the remand report the CIT[A] passed the order. Tribunal also took note of the decisions of this Court in the case of Anmol Stainless (P) Ltd. [ 2022 (2) TMI 649 - CALCUTTA HIGH COURT] and ultimately dismissed the appeal. No substantial question of law arises.
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2024 (8) TMI 1301
Nature of land sold - capital asset or agricultural land - Whether land transferred by the assessee, against which exemption u/s 54B as been claimed, was an Agricultural land not failing within the ambit of capital asset as defined u/s 2(14)? - HELD THAT:- As it appears that the Tribunal has not considered the nature of the land situated at Motera as to whether the same would be agricultural land as per the provision of section 2(14) of the Act or not. In such facts, we deem it fit to remand the matter of the appellant to the Tribunal to decide only the issue qua the nature of the land situated at Motera as to whether such land is an agricultural land as per the provision of section 2(14) of the Act or not?.
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2024 (8) TMI 1300
Two separate assessment orders on best judgment against assessee husband and wife - non-receipt of notices issued by the Income Tax Department - HELD THAT:- It follows that the respective petitioner disclosed the entire income, including the entire alleged agricultural income. The reason for issuance of the assessment orders is the failure of the respective petitioner to submit documents to substantiate that the income for which exemption was claimed was indeed agricultural income. Petitioner has placed on record an additional typed set in each writ petition and such additional typed set contains alleged purchase bills with regard to alleged supplies by the respective petitioner. The said additional typed set also contains bank account statements to corroborate alleged receipts against the purchase bills. On account of non submission, none of these documents could be considered by the assessing officer. Although we are not wholly convinced with the explanation regarding non-receipt of notices issued by the Income Tax Department, the fact remains that the entire alleged agricultural income of the respective petitioner was added to the returned income to arrive at the respective petitioner's liability. This was done without considering the genuineness or validity of documents produced now by the respective petitioner to substantiate that said income is agricultural. If such documents are genuine and valid, there would be miscarriage of justice. Solely for the purpose of providing an opportunity to the respective petitioner to place those documents before the assessing officer for consideration, inclined to interfere with the orders impugned herein. In the facts and circumstances, the respective petitioner should be put on terms so as to ensure that such laxity is penalised. Respective assessment order and the penalty order under Sections 270A and 271AAC(1) are quashed. Since the respective petitioner was also directed to pay a penalty for non submission of responses to the notices u/s 142(1) the said penalty shall be paid as a precondition for fresh assessment. The petitioners are directed to pay a sum of Rs. 40,000/- each as penalty within a maximum period of two weeks.
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2024 (8) TMI 1299
Deduction u/s 80IA - delay in filing of form 10CCB - Income Tax portal glitch - statutory Form 10CCB which was to be filed on or before 31.10.2022 was actually filed at 01:22 AM on 01.11.2022 - CIT(A) allowed deduction as it was due to technical glitches that are claimed to have prevailed in the Income Tax portal on the night of 31.10.2022 at the time of filing of Form 10CCB relying only upon the statement provided by the assessee in Form 35 HELD THAT:- Delay involved in the present case for 1 Hour 22 Minutes caused even after continuous efforts of the assessee to upload the Form on the web portal of the income tax department, it cannot be construed that there was some discrepancies or failure on the part of the assessee, therefore, we are of the considered view that the Form 10CCB filed by the assessee shall be treated as filed within the prescribed time with no delay. It is pertinent to mention that the prescribed Form was filed and available before the Ld. AO(CPC) when the return of the assessee was processed u/s 143(1) of the Act, the department was very much in possession of Form 10CCB while the intimation was issued. Since, it is decided that delay in filing of Form 10CCB in present case was occasioned due to technical issues on the portal of income tax department for which the assessee cannot be held liable, therefore, the case laws relied upon by the revenue qua implementation of exemption notifications is irrelevant. CBDT s Circular 9/2015 regarding delay in filing refund claim and claim for carry forward losses u/s 119(2)(b) is also of no help as the delay was caused because of malfunction in the income tax website. As prescribed form was filed only with a delay of 1 Hour 22 Minutes also much before the due date of filing of the return. we hold that the assessee has substantiated that the Form 10CCB was attempted to be filed within the stipulated time, however, due to the reasons beyond control of the assessee i.e., technical glitches on the web portal of the department, the Form could not be filed in time but was uploaded with a slight delay of 1 Hour 22 Minute. As the delay was not attributed or occurred due to any negligence or inaction on the part of assessee, therefore, in the interest of justice also the assessee shall not be saddled with any penal action. Decided in favour of assessee.
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2024 (8) TMI 1298
Deduction u/s 80IA - assessee is engaged in the manufacturing and job work of electronically engraved copper roller , which are used for printing and packaging industries Income was generated on account of wind mill business (sale of power) - AO disallowed the claim of deduction u/s 80IA by following the decision of Goldmine Share and Finance Private Limited [ 2008 (4) TMI 405 - ITAT AHMEDABAD] wherein ITAT observed that while computing deduction u/s 80IA, the profit from the eligible business for the purpose of determination of the quantum of deduction u/s 80IA has to be computed after deduction of the notional brought forward losses and depreciation of eligible business even through they have been allowed to be set off against other income in earlier years - CIT(A) allowed the deduction u/s 80IA as claimed by the assessee HELD THAT:- It is well settled that if there are two contrary decision of Hon ble High Court wherein the said High Court s are non jurisdictional High Courts, then the decision favourable to the assessee shall apply, and more so the later decision of Hon ble Delhi High Court has taken a view in favour of the assessee after considering decision of Hon ble Karnataka High Court which has taken a view in favour of Revenue. Reference is drawn to the judgment and order of Hon ble Supreme Court in the case of CIT v. Vegetable Products [ 1973 (1) TMI 1 - SUPREME COURT] Thus, we upheld the view taken by ld. CIT(A) in favour of the assessee by following the judgment and order of Hon ble Madras High Court in the case of Velayudhaswamy [ 2010 (3) TMI 860 - MADRAS HIGH COURT] So far so good, there is no difficulty, but the difficulty arose that ld. CIT(A) has simply followed the decision of this Tribunal for assessment year 2009-10 to 2013- 14 and granted relief to the assessee. Presently, we are concerned with assessment year 2017-18. The verification of claim is a factual matter which requires factual verification of various aspects concerning installation/commissioning of wind mill as well computation thereof. CIT(A) did not considered the factual aspects that the assessee has commissioned new windmill at Nani Malti, Jamnagar in the financial year 2013-14, and the impugned assessment year is the initial assessment year , wherein the assessee is claiming the deduction u/s 80IA for the first time. No verification was done by ld. CIT(A). Similarly, the ld. CIT(A) did not consider that the deduction u/s 80IA w.r.t. Wind Mill at Navedra was claimed in the impugned assessment year being the last year of the allowability of said claim. Thus, the ld. CIT(A) whose powers are co-terminus with the powers of the AO, did not examine the factual matrix of claim of deduction u/s 80IA , its computation and its allowability thereof. Thus, with these observations, we are remitting the matter back to the file of ld. CIT(A) for verifying the claim of deduction u/s 80IA after considering the factual matrix as is emerging for the impugned assessment year. The appeal of the Revenue is allowed for statistical purposes. We order accordingly.
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2024 (8) TMI 1297
Cancellation of registration u/s 12AB(4) - violation of provisions of Section 11(1)(a) Section 11(1)(d) and Section 13(1)(c) - HELD THAT:- We are of the considered opinion that the reference made in terms of 2nd proviso of Section 143(3) of the Act to the PCIT to whom the AO was subordinate is not permissible rather it is the CIT(E) Delhi, having territorial jurisdiction specified in Column 4 of the Notification Nos. 52/2014 and 53/2014 both dated 22.10.2014 from whom exemption inter/alia u/s 12A is being claimed is the appropriate authority. In fact by and under the said notification the CIT(Exemption) has been constituted separately for the purposes mentioned therein. In that view of the matter the order passed by the PCIT cancelling registration of the appellant society on the reference made by the AO is found to be flawed and without jurisdiction. Apart from that after considering the 2nd proviso of Section 143(3) of the Act, we find that the reference granted u/s 12AA of the Act is permissible to be made only during the pendency of the assessment proceeding. However, in the case in hand the assessment proceeding has already been concluded on 29.03.2022. In fact, the reference could be made only during the course of assessment proceedings so as to enable the AO to give effect of the order passed on reference in the Assessment Order itself. Moreso, the said proviso has been inserted w.e.f 01.04.2022 in the statute to make reference to the PCIT by the AO u/s 12AA, 12AB of the Act. In that view of the matter application of a particular provision of law which was not in existence during the material point of time cannot be said to have been rightly invoked. So far as the provision of Section 12AB(4) of the Act as exercised by the PCIT is concerned the Ld. A.R relied upon a judgment passed in the case of M/s Islamic Academy of Education, Manglore [ 2024 (3) TMI 876 - ITAT BANGALORE] As in view of the provision of Section 12AA(5) of the Act as the provision of Section 12AA cannot be applied on order after 01.04.2021 the show cause notices issued by the PCIT to the appellant dated 05.07.2023 and 16.08.2023 are, thus, found to be erroneous and therefore liable to be quashed. Once the show cause is found to be non est in the eyes of law, the entire proceeding is naturally found to be on a wrong foundation of law and thus, liable to be set aside. Similarly, invoking the provision of Section 12AB(4) of the Act by the PCIT to cancel registration for specified violation is also not permissible at the same has not seen the light of day prior to 01.04.2022; the same is therefore, not applicable to Assessment Years 2015-16 to 2021-22 as wrongly has been applied in the case in hand. Thus, having regard to these particular facts and circumstances of the case the issuance of show cause notices proposing cancellation of registration alleging specified violation occurred prior to 01.04.2022 i.e. for Assessment Year 2015-16 to 2021-22 and the final order passed by the PCIT cancelling registration of the appellant society for AY 2015-16 to 2021-22 by wrongly invoking the provision of Section 12A r.w.s 12AA and 12AB(4) of the Act is found to be erroneous, bad in law, whimsical, in non application of mind and thus, unsustainable. Assessee appeal allowed.
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2024 (8) TMI 1296
Bogus LTCG - Addition u/s 68 - assessee was one of beneficiaries of the penny stock - reliance o Investigation report or independent enquiry - HELD THAT:- It is found that the coordinate benches of ITAT, Mumbai have already considered the sale of scrip of VAS Infrastructure Ltd. in several other cases. One of the Members of this Bench, while dealing with stock scrip of VAS Infrastructure, has also held in the case Kamalesh Mohandas Lakhwani [ 2023 (8) TMI 505 - ITAT MUMBAI ] wherein held mere suspicion that the assessee has invested in alleged penny stock scrip cannot be made basis of addition u/s. 69B of the Act. In the absence of any material evidences to corroborate the information received from DDIT that M/s. Vas Infrastructure Ltd. is a penny stock, we find no justification in upholding the addition made by the A.O. Even, the Hon ble Jurisdictional High Court of Bombay in the case of Indravadan Jain, HUF [ 2023 (7) TMI 1091 - BOMBAY HIGH COURT ] didn t find any infirmity in the orders passed by the ITAT on the issue of penny stock on facts by saying that there is no substantial question of law is involved. Thus, we also hold that transactions of share scrip of VAS infrastructure Ltd. cannot be termed as fictitious in the absence of any evidence of manipulation of that scrip. The orders of the Ld. AO and the Ld. CIT (A) are found to be based only on the modus operandi given in the Investigation report and not based on any independent enquiry. Decided in favour of assessee.
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2024 (8) TMI 1295
Penalty u/s 271(1)(c) - Addition of commission income - HELD THAT:- Though earning of alleged commission income by providing accommodation entry in itself is a doubtful activity, but AO has not doubted this activity. He has accepted the alleged commission income of the assessee in providing accommodation entry of huge sum of Rs. 78.9 crores. He only made changes that instead of half percent, it should be 1% of commission income. The assessee should have earned in this activity. To our mind, the income of the assessee has been revised on an estimate basis, which is based on difference of opinion without any scientific method. Therefore, on such an issue the AO as well as by the ld. CIT(Appeals) should have not been visited the assessee with penalty. Appeal of the assessee is allowed.
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2024 (8) TMI 1294
Levy of penalty u/s 271(1)(c) - addition of 12.5% of non-genuine purchases - HELD THAT:- Considering the facts, we are of the opinion that the AO has not fully established that, the assessee has concealed his income and made purchases from the grey market. Merely because the profit has been estimated and the assessee chose not to litigate further, would not amount to concealment of income or filing of inaccurate particulars. As decided in AARKAY SAREE MUSEUM [ 1990 (8) TMI 97 - BOMBAY HIGH COURT] merely because certain additions were made in the trading account by the Assessing Officer, it did not necessarily follow that the assessee had concealed its income. Thus we do not find any merit in the levy of impugned penalty u/s 271(1)(c) - Decided in favour of assessee.
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2024 (8) TMI 1293
Denial of grant of registration u/s.12A - Non sufficient time for compliances - appellant trust was asked to furnish certain information/clarification on discrepancies noticed in the information filed by on or before 11.03.2024 - HELD THAT:-CIT(Exemptions) has not given sufficient time to the appellant trust for compliance. The time given is a very short period, i.e. less than one week, which is against the Standard Operative Procedure ( SOP ) issued by the CBDT dated 19.11.2020, wherein, minimum period of 15 days is required to be given to the assessee to comply with notices u/s 142(1) from the date of issue of the notice. The Hon ble Delhi High Court in the case of Dauphin Travel Marketing Private Limited [ 2023 (7) TMI 1355 - DELHI HIGH COURT ] taking note of this SOP held that the grant of insufficient time to respond the notice violates the principles of natural justice and, therefore, set-aside the assessment. Thus, it is clear that the appellant trust was given unreasonably very short period of time to respond to the notice, which is against the principles of natural justice. Appeal of the appellant is partly allowed for statistical purposes.
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2024 (8) TMI 1292
Validity of the initiation of proceedings u/s 153C - Period of limitation - addition u/s 68 - addition in respect of share application money by holding that addition was not based on any incriminating material found during the search - HELD THAT:- The law as declared by the Hon ble Supreme Court in the case of Jasjit Singh [ 2023 (10) TMI 572 - SUPREME COURT] is binding and we can t shut our eyes to the fact that the proceeding initiated u/s 153C of the Act in this case was not in accordance with the law as laid down by the Hon ble Court in that case. After carefully examining the facts as available in the assessment order itself, we have already held that the AO had no jurisdiction to initiate proceedings u/s 153C for the A.Y. 2008-09, as it was beyond the permissible period of six years from the date of recording of satisfaction of the common AO and deemed handing over of the seized documents pertaining /belonging to the assessee. Therefore, the assessment order passed u/s 153C of the Act for the A.Y. 2008-09 is quashed due of the lack of jurisdiction of the AO to initiate the proceeding u/s 153C for this year. Since, the assessment order is quashed due to AO s lack of jurisdiction to initiate proceeding u/s 153C of the Act for the A.Y.2008-09, we do not deem it necessary to adjudicate the grounds taken by the Revenue as well as by the assessee.
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2024 (8) TMI 1291
Addition in the hands of HUF v/s individual - advance money for purchase of land - as argued payments were made by Darshan Kumar HUF, no separate addition should be made in the hands of Darshan Kumar as an individual - HELD THAT:- No addition was required to be made and ld. Counsel have also been able to demonstrate that the name of the seller and description of the property tallies with the legal notice. Even, a summary has been given in the Brief Synopsis, in which, it has been clarified that the deal was for Rs. 14 lacs per acre as stated in the agreement and on the basis of which, the addition has already been made of Rs. 20 lacs in the hands of Darshan Kumar HUF for Asstt. Year 2006-07,thus, since that addition has already been considered and made in the hands of Darshan Kumar HUF, the addition was not liable to be made on wrong interpretation of the facts of the case - Assessee appeal allowed.
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2024 (8) TMI 1290
Correct head of income - rental income received from the tenants income from house property or income from business - DR submitted that the assessee is solely engaged in the leasing out of the properties and the since the tenant is paying rent along with the amenities charges hence the income disclosed under the head income from house property is chargeable to tax under head income from business. HELD THAT:-. Prima-facie the assessee has received composite rent, and the payee/tenant has deducted TDS u/sec 194I of the Act in respect of rent of the premises and similarly on maintenance of space and other charges, the tenant has deducted TDS under the provisions of Sec.194C of the Act. The assessee has maintained separate books of accounts and are audited under the provisions of companies Act. In the Audited Profit Loss Account, in particular disclosure Under Income: Revenue From Operations Notes 17 the assessee has bifurcated the income (i) Sale of Services less service tax and at Notes 17.1 License fees and rental income, service charges and events . Similarly the assessee has disclosed at Notes 18 Other Income placed at Page 12 of the paper book to substantiate the composite rent is bifurcated between rental income and maintenance charges. We find that the assessing officer has accepted the method of accounting of offering of rental income under the income from house property and the common area maintenance charges under income from business rental income for the A.Y.2016-17 to A.Y.2021-22 and passed the orders u/sec 143(1) and U/sec143(3) CIT(A) has over looked various factual aspects/evidences and sustained the action of the assessing officer. Accordingly, we set aside the order of the CIT(A) on this ground of appeal and direct the AO to consider the rental income under the income from house property and the common area maintenance charges under income from business and allow the deductions incurred wholly and exclusively for earning the income. Ground of appeal no.1 decided in favour of the assessee on taxability of rental income under income from house property. Disallowing interest expenses considering the same pertains to expenses not incurred wholly for the purpose of business - HELD THAT:- Assessee could able to substantiate with the information and details of the availability of sufficient own funds but the reconciliation and the factual information has to be examined and we rely on the ratio laid down in the case of Reliance Utilities Power Ltd [ 2009 (1) TMI 4 - BOMBAY HIGH COURT] and accordingly we restore this issue to the file of assessing officer for verification and examination of facts and decide on merits. The assessee should be provided adequate opportunity of hearing and shall cooperate in submitting the information. Disallowing the adjustment of brought forward book loss to be set off against the book profits U/sec 115JB - HELD THAT:-Assessee could able to substantiate with the information and details. Therefore, considering the principles of natural justice shall provide with one more opportunity of hearing to the assessee to substantiate the case with evidences and information. Accordingly, set aside the order of the CIT(A) on this disputed issue and remit the entire disputed issues to the file of the Asssessing officer to Re-examine issue. Disallowance of interest expenses - Assessee has sufficient own funds and were utilized for the purpose of business and the interest claim cannot be denied - CIT(A) has erred in holding that the interest expenses are not incurred wholly and exclusively for the business purpose. Whereas these facts need to be examined and verified. Accordingly, we restore this issue to the file of assessing officer for verification.
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2024 (8) TMI 1289
TP adjustment - ALP of export commission paid to Honda Motor Co. Ltd., Japan - HELD THAT:- While deciding identical issue in assessee s own case in the latest order passed in assessment year 2017-18 [ 2023 (8) TMI 1179 - ITAT DELHI] assessee has successfully demonstrated not only the benefits but has also shown that the profitability is higher (as per the charts exhibited elsewhere). Considering the totality of the facts we have no hesitation in directing the AO/TPO to delete the impugned addition on account of export commission. TP adjustment of payment of royalty - As decided in own case [ 2023 (3) TMI 1520 - ITAT DELHI] allowed assessee s claim of deduction in respect of technical know-how payment. Disallowance of signage expenses - The expenditure was incurred on signage for display of the name of the assessee at the dealer's premises. However, once the same is fixed at dealers site then the Courts have held that it does not satisfy the test of ownership with the assessee and the expenditure is to be allowed as revenue expenditure - We find support from the ratio laid down in CIT vs Honda Siel Power Products Ltd [ 2017 (6) TMI 524 - SUPREME COURT] Thus, we are of the view that the expenditure to the extent claimed by the assessee is to be allowed in the hands of the assessee and not/the entire expenditure. Disallowance of sales tools expenses - Respectfully following the decision of the coordinate bench in assessee s own case for assessment year 2015 16 [ 2021 (5) TMI 949 - ITAT DELHI] we also hold that sales tool expenditure are revenue expenditure in nature and therefore the disallowance made by the learned assessing officer is directed to be deleted. Capitalizing a part of the royalty expenses - We must observe that neither the AO nor learned Dispute Resolution Panel have found any substantial difference in factual position relating to past assessment years and the impugned assessment year. As discussed earlier, the issue has been consistently decided in favour of the assessee in its own case in assessment years 2012-13 to 2017-18. Having gone through the facts and material available on record, we do not find any good reason to deviate from the consistent view taken by the Tribunal on the issue in earlier assessment years. Hence, respectfully following the decision of the Co-ordinate Bench in Assessment Years 2012-13 to 2017-18 we direct the AO to allow assessee s claim. Disallowance of deduction claimed towards education cess - Identical issue in assessee s own case in assessment year 2017-18 [ 2023 (8) TMI 1179 - ITAT DELHI] the coordinate Bench has followed the decision in case of JCIT vs. Chambal Fertilizers Chemicals Ltd., [ 2022 (12) TMI 1098 - SC ORDER] expounded that term tax u/s 40(a)(ii) of the Income Tax Act should include cess. Assessee in his elaborate submission tried to distinguish this case law. But we are not convinced. Hence, we decide this issue in favour of Revenue. Therefore, in our view, the issue is no more res integra. Moreover, an amendment has been brought to section 40(a)(ii) by Finance Act, 2022 with retrospective effect from 01.04.2005 by inserting Explanation-3, which explains that the term tax shall include and shall be deemed to have always included any surcharge or cess, by whatever name called, on such tax. Thus, in view of said amendment in the Act, assessee s claim is unsustainable. Accordingly we uphold the decision of the departmental authorities on this issue. Ground raised is dismissed. Refund of excess dividend distribution tax (DDT) paid - Though, on a reading of Total Oil India Pvt. Ltd [ 2023 (4) TMI 988 - ITAT MUMBAI (SB)] it is clear that the issue raised by the assessee is covered against it, however, before us, learned counsel appearing for the assessee submitted that there are certain facets relating to the issue, which needs to be examined, as on those aspects, the decision of Special Bench is either silent or can be distinguished. Be that as it may, considering the fact that the issue was never examined on merits by the departmental authorities, we are inclined to restore the issue to the file of the AO for de novo adjudication after considering the submissions of the assessee and keeping in view the decision (supra). Ground is allowed for statistical purposes. Disallowance of deduction of technical know-how expenses paid to parent company - AO disallowed assessee s claim summarily, as it was neither raised in the original return of income nor through revised return of income - HELD HAT:- It is the specific case of the assessee that similar claim made in earlier assessment years in course of proceedings before the departmental authorities have been allowed by the Tribunal. Since the issue has not been factually examined by the departmental authorities, as they rejected assessee s claim summarily, we are inclined to restore the issue to the AO for de novo adjudication after giving due and reasonable opportunity of being heard to the assessee. Ground is allowed for statistical purposes.
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Customs
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2024 (8) TMI 1320
Classification of imported goods - Heavy melting scrap or not - to be classified under Customs Tariff Heading 7204 4900 as claimed by the importer-appellant or under Customs Tariff Heading 7215 9090 for Iron Rods and under Customs Tariff Heading 7308 9010 for Channels as held by the adjudicating authority - valuation of imported goods - value declared by the appellant should be accepted as assessable value in the absence of any documentary evidence as urged in the grounds of appeal or not - difference of opinion - majority order. Classification of goods - HELD THAT:- On careful analysis of the observation of the learned Member(Judicial) as well as that of learned Member(Technical), it is found that there is no difference in finding on the issue of classification of the iron rods and channels to be under CTH 7215 9090 and CTH 7308 9010 of the Customs Tariff Act respectively. Learned Member(Judicial) has laid emphasis that the mutilation as per Section 24 of the Customs Act, 1962 should have been allowed for conversion of said iron rods and channels into scrap in the event if such option is not availed / exercised by the appellant, duty can be demanded for goods as iron rods under CTH 7215 9090 or channels under CTH 7308 9010 - In the present circumstances, since no such request for mutilation was advanced nor any direction for such mutilation was issued initially, the classification of the iron rods and channels would be under CTH 7215 9090 and CTH 7308 9010, respectively. Valuation of imported goods - HELD THAT:- It is noticed that initially for the entire 212.13 MTs of Heavy Melting Steel scrap imported, the value was declared as Rs. 36,01,729/-. After change in the classification, the adjudicating authority has applied contemporaneous import price of Rs. 20/- per kg. for 22.920 MTs of channels and 47.200 MTs of iron rods against the imported scrap price of Rs. 16.97 per kg. The appellant claimed that the contemporaneous import value should be adopted as Rs. 19/- per kg. However, no evidence has been placed by the appellant in support of their claim - there are no discrepancy in the said enhancement of value of the iron rods and channels based on contemporaneous import, once the classification of the scrap has been changed with regard to total quantity of 70.12 MTs. of channels and iron rods - the findings of the learned Member(Technical) on the issue of determination of value based on the contemporaneous import price of iron rods and channels, agreed upon. The matter may be placed before the regular Bench for appropriate action/order. As per the majority opinion, the impugned order is upheld - Appeal filed by the assessee is dismissed.
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2024 (8) TMI 1288
Seeking for Release / Return / Reexport of gold to the Petitioner - service of SCN - HELD THAT:- It is manifest that under Section 110 (2) of the Customs Act, a notice under Clause (a) of Section 124 has to be issued to the owner of the goods or other person concerned within six months of the seizure of the goods, failing which, such goods shall be returned to the person from whose possession they were seized. Section 153 of the Act prescribes the modes of service of such notice. The methods indicated in Section 153(1) are alternative methods, anyone of which could be attracted in the first instance. Petitioner made a failed attempt to show that she did not receive any e-mail dated 04.07.2023, by placing on record the screen-shot of the inbox taken from the mobile phone. However, the same cannot be relied for the reason that as per certificate under Section 65-B of the Evidence Act filed by the petitioner, such digital record was taken out from the computer and not from the mobile phone. The screen-shot of inbox produced by the petitioner is therefore not a trustworthy document and cannot be relied upon. The gold bars were admittedly seized on 21.01.2023, while the SCN was served through e-mail to the petitioner on 04.07.2023. The SCN was served within a period of six months, as provided under Section 110 (2) of the Customs Act, 1962, and therefore that being so, petitioner is not entitled to the release of gold bars at this stage. There are no merit in the instant writ petition - petition dismissed.
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2024 (8) TMI 1287
Maintainability of Review Petition seeking review of an Order whereby this Court has disposed of Writ Petition on the ground that it would be appropriate for the Petitioners to take recourse to the remedy of an Appeal as provided under Section 129-A of the Customs Act, 1962 - HELD THAT:- It is well settled in law that a review can be entertained if a person discovers new and important matter or evidence which, after the exercise of due diligence, was not within his knowledge or could not be produced by him at the time when the order was passed or on account of some error apparent on the fact of the record. In the present case, it is not even the case of the Petitioners that they have discovered any new or important matter or evidence which was not within their knowledge or which could not be produced by them when the said Order dated 5th February 2024 was passed. Therefore, this Review Petition is not maintainable on this ground. Further, when the Order dated 5th February 2024 was passed, the ground of limitation was not even taken in the Writ Petitions, and, therefore, the Petitioners cannot contend that there is any error apparent on the face of the record on that account. For this reason also, the present Review Petition is not maintainable - merely because the Petitioners have to deposit monies while filing an Appeal, does not mean that the said Writ Petitions should be entertained by this Court. The present Review Petition is dismissed.
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2024 (8) TMI 1286
RoSCTL Scheme benefits for exports made under specific shipping bills - whether right accrued pursuant to any law and/or Scheme in favour of the person can merely be denied due to any technical error and/or glitch? - HELD THAT:- The aforesaid question has already been answered by the coordinate Bench of this Court in case of BOMBARDIER TRANSPORTATION INDIA PVT LTD VERSUS DIRECTORATE GENERAL OF FOREIGN TRADE [ 2021 (3) TMI 9 - GUJARAT HIGH COURT] while considering the benefits under the MEIS Scheme. In the said decision, the facts were more or less similar to the case on hands. The proposition of law, therefore, could not be disputed by the learned advocate appearing for the respondent - It was held in the case that ' It is a settled law that the benefit which otherwise a person is entitled to once the substantive conditions are satisfied cannot be denied due to a technical error or lacunae in the electronic system.' The respondent Nos.1 and 2 are directed to grant benefit of RoSCTL Scheme within a period of eight weeks from the date of receipt of copy of this order - petition allowed.
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2024 (8) TMI 1285
Undervaluation of imported goods - white and yellow poppy seeds imported from Turkey - rejection of declared value by the appellants importer on the basis of values available in data base maintained by Turkish customs authorities and Public Ledger prices - whether the impugned order confirming demand of differential duty, and imposing of fine and penalty by the adjudicating authority in the impugned order is legally sustainable or not? HELD THAT:- It is a fact on record that the entire demand of differential duty is on the basis of documents obtained from Turkish Customs authorities and the chart indicating that there is undervaluation of goods as concluded in the DRI investigation. It is also found that the basic issue involving rejection of declared value by the appellants importer on the basis of values available in data base maintained by Turkish customs authorities and Public Ledger prices. The very same issue have been extensively examined by the Coordinate Bench of the Tribunal, in a similar set of same facts of the case of Ajay Exports [ 2023 (6) TMI 1090 - CESTAT MUMBAI] by determining the basic issues of valuation imported poppy seeds from Turkey in terms of Customs Valuation (Determination of Value of Imported Goods) Rules, 2007 and have held that rejection of declared value is without authority of law; and the confiscation of imported goods, imposition of redemption fine and penalties have also been set aside. In view of the decision taken by the Co-ordinate Bench of the Tribunal, it is opined that a different stand on the matters cannot be taken in involving similar set of facts and circumstances. The impugned order dated 20.01.2014 passed by the Commissioner of Customs (Import), Mumbai is not legally sustainable and the therefore the same is set aside - appeal allowed.
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Corporate Laws
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2024 (8) TMI 1284
Seeking for the reduction of issued, subscribed and paid-up equity share capital of the Petitioner company - Section 66 of the Companies Act, 2013 - HELD THAT:- The necessary compliance of the requirements of Section 66(1) along with its proviso; Section 66(2) Section 66(3) proviso has been made/satisfied by the Petitioner Company. In the circumstances, it is hereby ordered to confirm the reduction of share capital of the Petitioner Company by approving the Special Resolution dated 10.08.2023 read with the subsequent Circular Board Resolution dated 08.11.2023 where in it was resolved to reduce the issued, subscribed and paid-up equity share capital of the Petitioner Company from Rs.483,66,21,630/- consisting of 48,36,62,163/- equity shares of Rs. 10/- each to Rs. 483,65,81,190/- consisting of 48,36,58,119/- equity shares of Rs. 10/- each by cancelling and extinguishing the paid-up equity share capital of Rs. 40,440/- divided into 4,044 equity shares of Rs. 10/- each held by the non-promoter shareholders of the Petitioner Company representing in aggregate approximately 0.00083% (zero point zero zero zero eight three percent) of the total issued, subscribed and paid-up equity share capital of the Petitioner Company from the non-promoter equity shareholders being the Remaining Identified Shareholders more particularly set out herein below, for an aggregate consideration of Rs. 66,88,776/- being determined for 4,044 (Four Thousand Forty-Four) equity shares at 1,654/-per Equity share to be paid out of the free reserves of the Petitioner Company as per the latest audited financial statements. The copy of the Minutes approved along with the order shall be delivered to the ROC by filing the e-Form INC 28, within 30 days of the receipt of the copy of the order. Accordingly, the Registry shall prepare an order in Form No. RSC-6 as per the National Company Law Tribunal (Procedure for Reduction of Share Capital of the Company) Rules, 2016 and issue to the Applicant/Petitioner Company. The Petitioner Company shall publish this order of confirmation in The Hindu , English daily, Bengaluru edition and 'Udayavani' Kannada daily, Bengaluru Edition, expeditiously, and not later than 30 days from the receipt of copy of the order, as required under Section 66(4) of the Companies Act, 2013.
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Securities / SEBI
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2024 (8) TMI 1283
Validity of criminal proceedings once settlement before the SEBI on the adjudication side concluded - allegation of fraudulent activities committed in the Initial Public Offering (IPO) of the shares - Jurisdiction of Single Judge OR Division Bench - whether the respondent had made out a case for quashing the proceedings will be independently decided by the Division Bench which will now hear the matter on remand? - HELD THAT:- The first round of proceedings arising out of Writ Petition [ 2018 (2) TMI 2119 - BOMBAY HIGH COURT] was heard and disposed of by the Division Bench, with the Division Bench rejecting the contention of the respondent and dismissing the Writ Petitions. When the matter travelled to this Court, the respondent withdrew the Special Leave Petition with liberty to file a fresh petition. We feel that on the facts of this case considering the earlier order of the Division Bench and the order of this Court granting liberty to file a fresh petition, the present case in the second-round ought to have been heard by the Division Bench. We are refraining from pronouncing on the aspect whether there was any clever manipulation of the prayers to clutch at jurisdiction since anything said would prejudice the case of the parties. We say nothing more on this at this stage. Ld. Single Judge, who heard Writ Petition took the view that in view of the consent terms passed by SEBI, it would not be in the interest of justice to continue with the criminal proceedings as it would tantamount to an abuse of the process of the law. We have now adopted, we are refraining from commenting on the contentions of the parties with regard to the merits of the matter. As to whether the respondent had made out a case for quashing the proceedings will be independently decided by the Division Bench which will now hear the matter on remand. The Division Bench will not be influenced by the observations of the previous Division Bench, the order of the Single Judge and also by the present order which we have now passed. The Division Bench will independently decide the matter on its own merits and in accordance with law. Considering that the FIR was registered in 2006, we request the Division Bench to take up the matter and dispose of the two Writ Petitions expeditiously and, in any event, not later than three months from today. Since we are remitting the matter, we are inclined to grant an interim stay of further proceeding pending before the Special Judge (CBI), Greater Mumbai for a period of four weeks from today. Parties are at liberty to approach the Division Bench hearing the matter for appropriate extension/modification of this interim order and the Division Bench shall after hearing the parties make such order as it deems fit. We have held above, the impugned order [ 2022 (1) TMI 1451 - BOMBAY HIGH COURT] is set aside and the matter is remitted to the High Court of Judicature at Bombay.
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2024 (8) TMI 1282
Freezing of demat accounts held by the petitioner with NSDL are freezed at the behest of BSE / NSE under the directives of the SEBI on account of an alleged default of Shrenuj in compliance of the SEBI (LODR) Regulations - HELD THAT:- The petitioner, a practicing gyneacologist, did not exceed his professional position, to take interest in the formation of Shrenuj or to promote or manage its day-to-day affairs. Also, after the incorporation of the company and constitution of the Board of Directors, the status and role of the petitioner as a promoter had come to an end. Hence, the obligation of non-submission of Financial Results and non-compliance with the provisions of SEBI (LODR) Regulations could not have been fastened and imposed on the petitioner. Now coming to the impugned action of freezing of the demat accounts of the petitioner on the basis of SEBI Circular, it does not contemplate freezing of the demat account of the promoter in the manner as resorted qua the petitioner. Also the circular dated 26 October 2016, provided that at the first instance to freeze the entire shareholding of the promoter and the promoter group in the listed company which is held liable for non-compliance for two consecutive periods, and on a failure to comply with the notice issued by the concerned stock exchange as per paragraph 3 of Annexure II of Circular dated 30 November, 2015. It is significant that the second part of paragraph 2.2 of the Circular provides that in addition to the freezeing of shares in the non-compliant listed company, the holdings in the demat accounts of the promoter and promoter group in other securities shall be frozen to the extent of the liability which shall be calculated on a quarterly basis. In the present case, there is nothing placed on record that there is a semblance of compliance of paragraph 2.2 of the Circular even assuming that the same is applicable to the petitioner. No show cause notice or a prior opportunity of a hearing was granted to the petitioner before the letters dated 23 March 2017 and 13 April 2017 were addressed to the SHCIL by NDSL, freezing not only the petitioner s shares in Shrenuj but also the other shareholding of the petitioner in ITC Limited. For such reason also, the impugned action on the part of NSDL is required to be held to be brazenly illegal, unreasonable and arbitrary. As applicability of the Circular 26 October 2016 is concerned, in our opinion, this circular cannot make a provision when it provides in paragraph 2.2 that in addition to the freeze of shares in the non-compliant listed entity, the holdings in the demat accounts of promoter and promoter group in other securities shall also be frozen to the extent of liability which shall be calculated on a quarterly basis. This would be contrary to the statutory requirements. For all these reasons, to generally and/or casually freeze the securities of the promoters in a company other than the defaulter company, is an action in the teeth of the provisions of the SEBI Act as also illegal, arbitrary and unreasonable, violative of Articles 14, 21 and 300A of the Constitution. Circulars cannot have an overriding effect on the statutory provision under which it is issued and cannot be implemented in defiance of principles of natural justice. Looked from any angle, under none of the provisions of law and regulations, the impugned action of the respondent to freeze the petitioner s demat account can be sustained. Even recovery of the amount from the petitioner s demat account which is held with the depositories would certainly be governed by the provisions of the Depositories Act, 1996 and even if any fine, penalty, is to be recovered, it would be required to be recovered strictly adhering to the provisions of law which we have noted hereinabove. The recovery can also be in terms of what has been provided under Section 19F which necessarily attracts the provisions of Section 19H in regard to adjudication. Thus, looked from any angle, the impugned action of freezing the petitioner s demat account is grossly illegal, arbitrary and unconstitutional. For the aforesaid reasons, in our opinion, the freezing of the petitioner s demat account qua all the shares held by him was unwarranted, unjustified and in patent defiance of the principles of natural justice and brazenly illegal.The petitioner shall be free to deal with all his shares as held in the Demat accounts in question.The SEBI/BSE/NSE are directed to jointly pay to the petitioner cost of Rs.30 lakhs within a period of two weeks from today.
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Insolvency & Bankruptcy
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2024 (8) TMI 1281
Seeking modification of order - Grievance of appellant/ defendant no. 1 is that the application, whereby modification of the order dated 22.10.2019 was sought was not adjudicated and instead, simply notice was issued with a direction to the learned Joint Registrar to record evidence in the matter - HELD THAT:- Mere perusal of the provisions of Section 14 (1) of the IBC would show that once moratorium is declared by the adjudicating authority i.e., NCLT, it prohibits the institution of suits or continuation of pending suits or proceedings against the corporate debtor, which includes execution of any judgment, decree or order in any Court of law, tribunal, arbitration panel and other authorities. The corporate debtor in this case being the appellant/defendant no. 1, as alluded to above, the appellant/defendant no. 1 has preferred a counter claim. Clearly, the plain language of Section 14 (1) (a) of the IBC does not prohibit continuation of a counter-claim. The counter-claim, as defined under Order VIII Rule 6 (a) of the Code of Civil Procedure, 1908, typically as against a set off, can relate to a cause of action accruing to a defendant vis-a-vis the plaintiff, either before or after filing of the suit action. Counterclaim needs to be filed, as per the said provision, before the defendant has delivered his defence or before the time limit for delivering his defence has expired. Counter-claim cannot exceed the pecuniary limits of the jurisdiction of the Court concerned, where the suit action is instituted. Because counter claim can proceed to trial, evidence ought to be permitted to be recorded in the suit claim, is a submission which is misconceived in law. Such submission flies in the face of the plain language of Section 14 of the IBC and what constitutes a counter claim. Therefore, SSMP does not lay down the correction position in law. The recordal of evidence by the learned Joint Registrar (Judicial) will continue vis-a-vis the counter-claim preferred by the appellant/ defendant no. 1. However, moratorium will operate vis-a-vis the claim made by the respondent no. 1/ plaintiff - Appeal disposed off.
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2024 (8) TMI 1280
Correctness of action where the Plan was approved by the CoC after expiry of CIRP period - HELD THAT:- It is relevant to notice that in IA No.1748 of 2023, the Appellant has prayed for setting aside the minutes of the meeting of the CoC dated 27.07.2023, approving the Resolution Plan. In IA No.1420 of 2024, which has been rejected by the impugned order, the Appellant has again made a prayer to set aside the resolution of the CoC held on 27.07.2023. The Appellant having unsuccessfully challenged the Resolution Plan dated 27.07.2023 in IA No.1748 of 2023, which decision of NCLT was affirmed up to Hon ble Supreme Court, it cannot be allowed to again question the same decision by filing IA No.1420 of 2024. The Adjudicating Authority while having noticed the order dated 18.10.2023 has concluded that by allowing the extension of 30 days and excluding the period of pendency of the IA filed by RP for seeking extension. There is no infirmity in the order of the Adjudicating Authority rejecting IA No.1420 of 2024. There is no merit in the Appeal - appeal dismissed.
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2024 (8) TMI 1279
Admission of Section 7 Application filed by the Financial Creditor (Respondent herein) - premature application - disbursement of loan or not - Appellant challenging the impugned order submits that no debt was due or payable as the Application was filed on 28.04.2020. Whether Financial Creditor has able to prove disbursement of loan to the Corporate Debtor? - HELD THAT:- It is relevant to notice that in the present case, this Tribunal has directed the Appellant to file an affidavit and explain the entry of Rs.10,01,16,474. After the order of this Tribunal, an affidavit has been filed dated 17.01.2023, which is nothing but misleading affidavit containing false averments - the amount which was advanced to the Appellant by the Financial Creditor, was duly disbursed, which is proved by the Bank statement and is reflected in the balance sheet of 2010-11. The amount reflected in the balance sheet of year 2010-11 under the heading long term borrowing have been increasing in subsequent years, which indicates that interest component was added in subsequent balance sheets, which fully supports the case of the Financial Creditor that loan was with interest @ 12%. The plea of the Appellant that amount of Rs.10,01,16,474/- reflected in the balance sheet of 2016-17 and 2017-18 are amount which was given by loan to the Corporate Debtor by Romell Real Estates Pvt. Ltd. is rejected, which is false and misleading plea. Time limitation of application filed - Appellant submits that there is no acknowledgement in the balance sheet of the year 2017-18, since name of Respondent No.1 Financial Creditor is not reflected in the balance sheet, hence, there is no acknowledgement within the meaning of Section 18 of the Limitation Act and Adjudicating Authority committed error in reading the acknowledgement - HELD THAT:- The mere fact that name of Respondent No.1 is not mentioned as creditor in subsequent balance sheet including the balance sheet of 2017-18 is of no consequence, since the name of Respondent No.1 was mentioned as under the unsecured/ long term borrowings in 2011-12, which unsecured loan/ borrowings continued to be reflected in subsequent balance sheet of the Corporate Debtor. It is already noted the plea raised by the Appellant that amount of long term borrowings mentioned in balance sheet for the year 2017-18 is borrowing from Romell Real Estates Pvt. Ltd., which plea has not been accepted for reasons given above. The debt, which was reflected in 2011-12 of the Financial Creditor, continued to be reflected under the long term borrowing and there being continuous acknowledgement, the Application cannot be said to be barred by time. When the Corporate Debtor s case is that the Loan Agreement is fabricated and forged, it does not lie in the mouth of the Corporate Debtor to contend that as per Loan Agreement, the Application under Section 7 was premature. From the facts of the present case, as reflected from materials brought on the record, it is clear that the Corporate Debtor, who has not denied the disbursement of the amount in balance sheet of 2010-11 and subsequent balance sheet has not made any pleading or brought on record any material that amount at any time was paid to the Financial Creditor, although some repayment was made to the other family members of the Financial Creditor in 2015. Disbursement, reflection in the balance sheets and repayment to family members, who were part of the same Loan Agreement, are the materials on which conclusion can be drawn that loan was taken by the Corporate Debtor, but was not repaid and now the Appellant is making false and misleading pleas to somehow get out from the liability from the debt and default, which has been committed by the Corporate Debtor. Appeal dismissed.
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Service Tax
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2024 (8) TMI 1278
Exemption from service tax - construction of road for use by the general public - construction of railway siding - Demand of Service Tax amounting to Rs.7,68,021/- - GTA Service - Extended period of limitation. Exemption from service tax - construction of road for use by the general public - HELD THAT:- The appellant has rendered service in relation to construction of road between NH2 and Aerotropolis Township for M/s. Bengal Aerotropolis Limited. The appellant has pointed out that this road has been certified by the Andal Gram Panchayat as a road meant for public use . It is observed that construction of road is exempted in terms of Sl. No. 13(a) of Notification No. 25/2012-S.T. dated 20.06.2012 - it is clear that construction of road for use by the general public is exempted. The local authority, namely, Andal Gram Panchayat, has certified that the road constructed is meant for use by general public . Therefore, the demand confirmed in the impugned order on this count is not sustainable. Exemption from service tax - construction of railway siding - HELD THAT:- The appellant has also rendered service to RITS in connection with the construction of railway siding. They had also rendered the service of supplying and laying of blanketing material for the project construction of railway, formation of major and minor bridges, laying of railway track including supply of p. way fittings, etc., in connection with new railway siding for Sonepur Bazari Project of Eastern Coalfields Limited, near Pandabeswar, West Bengal to M/s. Bridge Roof Company (India) Ltd. It is observed that the above said services were rendered by the appellant to the Railways. It is observed that the issue of liability of Service Tax on railway sidings is no more res integra as the same has already been decided in favour of the appellant by the Tribunal, West Zonal Bench, Mumbai in the case of KONKAN RAILWAY CORPORATION LTD VERSUS COMMISSIONER OF CGST CENTRAL EXCISE [ 2023 (2) TMI 1175 - CESTAT MUMBAI] holding that any service in relation to railway siding constructed and erected are not liable to Service Tax, which has been affirmed by the Hon ble Supreme Court in COMMISSIONER OF CGST AND CENTRAL EXCISE VERSUS KONKAN RAILWAY CORPORATION LTD. [ 2023 (8) TMI 128 - SC ORDER] . The demand of Service Tax confirmed in the impugned order for the services rendered in connection with construction of railway sidings and the services rendered to M/s. Bridge Roof Company (India) Ltd. are not liable to Service Tax. Demand of Service Tax amounting to Rs.7,68,021/- - Extended period of limitation - HELD THAT:- The said demand pertains to the period 2013-14. The impugned Show Cause Notice was issued on 19.12.2016 on the basis of the differential value of ITR, 26AS and S.T.-3 Returns. There is no finding in the impugned order that the appellant has suppressed any information from the Department. Thus, it is observed that suppression of facts with the intention to evade payment of tax has not been established in this case and hence, the extended period of limitation is not invokable. Accordingly, the demand of Rs.7,68,021/- confirmed in the impugned order for the period 2013-14 by invoking the extended period of limitation is not sustainable. GTA Service - extended period of limitation - HELD THAT:- The suppression of facts with the intention to evade payment of tax on the part of the appellant has not been established in this case and therefore, the extended period of limitation is not invokable. Therefore, the demand confirmed under the category of GTA Service by invoking the extended period of limitation is not sustainable. Appeal disposed off.
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2024 (8) TMI 1277
Classification of services as Works Contract Services (WCS) or Erection, Commissioning, or Installation Services (ECIS) - whether the works carried out by the Appellant fall under the definition of 'Original Works' or not? - exemption N/N. 25/2012-ST dated 20.06.2012 - Management, Maintenance Repair service. Classification of services as Works Contract Services (WCS) or Erection, Commissioning, or Installation Services (ECIS) - whether the works carried out by the Appellant fall under the definition of 'Original Works' or not? - exemption N/N. 25/2012-ST dated 20.06.2012 - HELD THAT:- A perusal of the SCN indicates that the department had gathered intelligence that the appellant was executing contracts with different Government agencies and providing taxable services, but not discharging his service tax liability. During investigations, the appellant was asked to submit requisite documents/details for verification such as ST-2, ST-3 returns, copies of contract/work orders executed in respect of maintenance repair services, Erection Commissioning Services Works Contract Services, Balance Sheets, ITR, and other details for the financial years 2007-08 to 2011-12 - the department concluded their investigations purely on the basis of the documents submitted by the appellant. The argument of the Ld Counsel does not carry much weight in the light of repeated instances of non-cooperative attitude displayed by the appellant. This submission of the Ld. counsel cannot be accepted. A perusal of the said notice makes it clear that the department has sought to classify the activity as Erection Commissioning and/or Works Contract. This factual issue would have been clear had the appellant shared the details of the contracts and work orders with the department - as per section 65(105)(zzzza), Works Contract means a contract wherein, there is transfer of property in goods involved which is leviable to VAT, and such contract includes, inter alia, erection, commissioning or installation of plant, machinery, equipment or structures, whether pre-fabricated or otherwise, installation of electrical and electronic devices, plumbing, drain laying or other installations for transport of fluids, heating, ventilation or air-conditioning including related pipe work, duct work and sheet metal work, thermal insulation, sound insulation, fire proofing or water proofing, lift and escalator, fire escape staircases or elevators; or construction of a new building or a civil structure or a part thereof, or of a pipeline or conduit, primarily for the purposes of commerce or industry; or construction of a new residential complex or a part thereof; or completion and finishing services, repair, alteration, renovation or restoration of, or similar services, in relation to (b) and (c); or turnkey projects including engineering, procurement and construction commissioning (EPC) projects etc. The taxable service provided by the appellant prior to 01.07.2012 will be exempted under clause (b) of the definition of works contract service - the demand for the period 1.07.2012 to 31.03.2013 is liable to be dropped as the same is squarely covered by the exemption contained in Notification no. 25/2012-ST dated 20.06.2012. Management, Maintenance Repair service - HELD THAT:- The firefighting equipment installation is exempted from service tax, in view of the fact that the same was undertaken in Government buildings which are non-commercial, hence it is agreed with the submissions of the ld counsel that maintenance services provided to government buildings is covered by the retrospective amendment provided by Section 98 from 16.6.2005 till 28.05.2012. Consequently, the demand for its maintenance is also exempted. The appellant was not liable to service tax on the provision of services to PWD/CPWD. Accordingly, the impugned order is set aside - Appeal allowed.
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2024 (8) TMI 1276
Service tax on Construction and sale of Complex/Houses/Flats constructed by the appellant - Service tax on certain receipts under taxable category of Real Estate Agent service - Liability to pay service tax under Reverse Charge Mechanism on legal charges, manpower supply and works contract services - extended period of limitation. Service tax on Construction and sale of Complex/Houses/Flats constructed by the appellant - HELD THAT:- This issue has been decided against the Revenue by the judgment of Hon ble Orissa High Court in the case of LARSEN TOUBRO LIMITED VERSUS STATE OF ORISSA AND OTHERS [ 2007 (10) TMI 579 - ORISSA HIGH COURT ], wherein the Hon ble High Court has held that Circulars or other instructions could not provide the machinery provisions for levy of tax. The charging provisions as well as the machinery for its computation must be provided in the Statute or the Rules framed under the Statute - the service tax is not leviable on Construction of Complex Services . Service tax on certain receipts under taxable category of Real Estate Agent service - HELD THAT:- The appellant is not acting as a real estate agent and therefore, the service tax is not chargeable on the amounts/fees received by it in the course of performing of statutory duties - It has been consistently held by the Tribunal that charges collected by the builder for authorizing transfer of allotment of property before sale or as part of the sale agreement is on principle to principle basis and no service is provided to any person in relation to sale, purchase, leasing, renting of any real estate and therefore, such charges are not covered under the head of Real Estate Agent Services - none of the receipts/income of the appellant fall under the scope of services defined under Section 65(105)(b) of the Finance Act, 1994; hence, this issue is also decided in favour of the appellant. Liability to pay service tax under Reverse Charge Mechanism on legal charges, manpower supply and works contract services - HELD THAT:- The appellant is not liable to pay service tax on legal charges/fees, on supply of manpower and on execution of work contract, because the appellant is not a business entity. The appellant is admittedly a body corporate but it does not qualify for the criteria of business entity nor is it registered as such. Therefore, it cannot be held that the appellant Haryana Housing Board is liable for payment of service tax on reverse charge basis in respect of the services - the demand of service tax under Reverse Charge Mechanism is not sustainable. Extended period of limitation - HELD THAT:- The appellant, which is a governmental authority constituted under the Housing Board Act, 1971, has provided all the information as required by the department. Moreover, being a statutory authority, the appellant is required to maintain proper accounts, which are duly audited by the office of the Accountant General and the audited accounts accompanied by audit report have been forwarded to the State Government as required by the Act. Further, all the figures have been taken from balance sheets. Therefore, in view of this, there is no suppression or fraud with intent to evade the payment of tax - Hon ble Supreme Court in various cases and it has been consistently held that no suppression or fraud with intent to evade the service tax could be attributed to a government authority as there is no vested interest of the government authority to evade tax - in the present case, the department has failed to establish any of the ingredients which are required to prove in order to invoke extended period of limitation; therefore, the entire demand is barred by limitation. The impugned orders are not sustainable in law, accordingly, set aside - appeal allowed.
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Central Excise
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2024 (8) TMI 1275
Passing on fraudulent Cenvat Credit, for the period from April 2016 to June 2017 - fake invoices without actual supply of goods was investigated - evidence to indicate non supply of goods produced or not - HELD THAT:- The whole chain of evidence as mentioned by the department indicates that the goods did not move from various parties to M/s. Ridhi Sidhi as per testimonial evidence nor were supplied to M/s. Ridhi Sidhi and documents on the record on the Books of Accounts of M/s. Ridhi Sidhi were not genuine. However, the second link in the chain of evidence, which had to indicate that the goods in turn were not supplied to appellants by M/s. Ridhi Sidhi is missing in investigation of the department. As against this, the appellants have produced various documentary evidences including transport receipts, proof of payments, proof of receipt of such goods in their premises and their output indicating that the goods were actually received as per accounts. The department has not brought on record any worthwhile evidence to indicate non supply of goods from M/s. Ridhi Sidhi to the present appellants despite appellant s having brought on record various evidence by name of transporters, their receipts, invoice and the receipt of goods as well as payments made to M/s. Ridhi Sidhi. The documentary evidence given by them therefore has not been rebutted by any credible evidence. The stance of the department in upholding the second link in the chain of evidence is therefore purely based on presumptions and assumptions. Therefore, there is no reason to doubt the documentary evidence indicating receipt of finished material from M/s. Ridhi Sidhi. The same has also been left incomplete due to non-recording of statements of proprietor/director/authorised person of M/s. Ridhi Sidhi and also because of refusal of the adjudicating authority below to allow cross examination to afford opportunity to the present appellant who desired the same for their defence. Cumulatively department has failed to establish a case against the appellants making them eligible for relief. The impugned order is set aside - appeal allowed.
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2024 (8) TMI 1274
Failure to discharge applicable duty on the samples drawn for internal testing and control purposes - non-maintenance of proper records to account for the samples drawn for internal testing purposes and for control purposes - Extended period of limitation - HELD THAT:- On going through the SOPs that it is mentioned at Para 3.2 that after completion and review of the batch, the samples shall be discarded; a clear procedure for the destruction of samples drawn is given at Para 3.2.1. It is clear from the internal records maintained by the appellants that samples drawn are destroyed and therefore, the same would not have been cleared outside the factory - as long as the samples are not cleared outside the factory premises, no duty is payable by them. It is found that Department s contention that the appellants have not maintained appropriate records and therefore, in terms of Para 3 of Chapter 11 of Supplementary Instructions, duty requires to be paid, is not acceptable. Understandably, there are no records prescribed for this purpose. The internal records maintained by the appellants have to be taken into consideration. On the basis of the records available, it is found that the appellants have maintained records as far as the control samples are concerned and as far as internal samples are concerned, it can be gleaned from the Standard Operating Procedures adopted by the appellants that the samples are either consumed in the course of testing or destroyed. In the absence of any contrary proof put forth by the Revenue, the claim of the appellants cannot be brushed aside - as long as the samples are not cleared outside the factory, no duty is payable. Extended period of limitation - HELD THAT:- The Principal Bench in the case of SHYAM SPECTRA PRIVATE LIMITED (FORMERLY CITYCOM NETWORK PRIVATE LIMITED) VERSUS COMMISSIONER OF SERVICE TAX, DELHI II [ 2024 (8) TMI 95 - CESTAT NEW DELHI ] held, following the decision of the Hon ble Calcutta High Court, in the case of INFINITY INFOTECH PARKS LTD. VERSUS UNION OF INDIA [ 2014 (12) TMI 36 - CALCUTTA HIGH COURT] , held that when a notice is issued in support of transactions spread over a period of time and it is found that the extended period of invocation has been invoked, the notice cannot be treated as within limitation for some of the same transaction, once it is found that the extended period of limitation is not invocable. Appeal allowed.
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2024 (8) TMI 1273
Wrongful availment and utilization of CENVAT Credit representing Additional Duty of Customs and CVD on imported goods in the month of September 2011 - contravention of Rule 3(4) of the CENVAT Credit Rules, 2004 and Para 2B of Notification No. 20/2007-C.E. dated 25.04.2007. HELD THAT:- The Respondent has received capital goods in four bills of entry and they had taken the credit of CVD on the dates on which the goods were received. However, due to ignorance, they did not take the credit of the additional duty of customs, and when they came to know that such credit was admissible, they took credit of the entire amount in the month of September 2011. Rule 4(2)(a) of the CENVAT Credit Rules, 2004 prescribes the availability of CENVAT Credit on capital goods and it stipulates that CENVAT Credit in respect of capital goods shall be taken only for an amount not exceeding 50% of duty; as per Rule 4(2)(b) of these Rules, the balance amount of credit may be taken in any subsequent financial year. In terms of Rule 4(2)(a) of these Rules, in respect of capital goods received at any point of time in a given financial year, the CENVAT credit shall be taken only for an amount not exceeding 50% of duty paid on such capital goods in the same financial year - there are no provision under the CENVAT Credit Rules, 2004 which debars a manufacturer from taking the credit if by some reason they fail to avail the credit immediately on receipt of the capital goods. Since the Respondent has availed the credit belatedly, they have utilised this credit for payment of duty after September 2011. Thus, they got less refund for the period after September 2011. Thus, there is no violation of condition 2B of the Notification No. 20/2007-C.E. dated 25.04.2007. Accordingly, there is no merit in the allegation of the Revenue that the Respondent has received excess refund during the period prior to September 2011. The alleged inadmissible credit taken in September 2011 has been proposed to be recovered under Rule 14 of the CENVAT Credit Rules, 2004 read with Section 11A of the Central Excise Act, 1944 - the alleged credits taken by the Respondent belatedly were not in contravention of any of the provisions of CENVAT Credit Rules, 2004. the Credit availed can be considered as irregular only if it is taken in contravention of any of the provisions of CENVAT Credit Rules, 2004. Since the credit taken is not found irregular, Rule 14 of CENVAT Credit Rules, 2004 read with Section 11A of the Central Excise Act, 1944 cannot be applied for recovery of the credit in this case. There are no merit in the submissions made by the Revenue that the Respondent has availed wrong/irregular credit - there are no merit in the contention of the Revenue that the Respondent has received excess refund as they have availed the credit belatedly - the ld. adjudicating authority has rightly passed the impugned order allowing the belated credit availed by the Respondent - the appeal filed by the Revenue is dismissed.
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CST, VAT & Sales Tax
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2024 (8) TMI 1272
Interpretation of statute - term gross turnover as contained in the Composition Scheme 2006 - Composition Scheme for Gem and Stones, 2006 - exclusion of export amount from gross turnover for calculation of Composition Amount - N/N. F.12(63)FD/Tax/2005-37 dated 06.05.2006 - the High Court held that 'the assessee was rightly excluding the export sales form the gross turnover and was accordingly paying composition amount on gross turnover of local sales' - HELD THAT:- It is not required to interfere with the impugned judgment and order passed by the High Court. Hence, the Special Leave Petitions are dismissed.
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2024 (8) TMI 1271
Recovery of dues - priority of the secured creditor or the Sales Tax Department for recovering its dues from the borrower / entity - HELD THAT:- While the secured creditor seeks to rely upon the Deed of Equitable Mortgage dated 7th March 2007 as well as the orders passed in Company Petition No.119 of 2013 that was filed against the borrower, the Sales Tax Department seeks to rely upon the communication dated 7th September 2013 that was issued by it to the Talathi not to record any sale transaction in the Revenue Records on account of steps being taken by it for recovering its dues. This very issue based on the provisions of Section 26E of the SARFAESI Act as well as Section 38 of the Act of 2002 was the subject matter of consideration before the Full Bench of this Court in Jalgaon Janta Sahakari Bank Ltd. and Anr. [ 2022 (9) TMI 163 - BOMBAY HIGH COURT] . After considering the provisions of the Code as well as the Rules of 1967 along with other relevant provisions, it was held that ' if the immovable property of the defaulter is shown to have been attached in accordance with law prior to Chapter IV-A of the SARFAESI Act, or for that matter Section 31B of the RDDB Act, being enforced, and such attachment is followed by a proclamation according to law, the priority accorded by Section 26E of the former and Section 31B of the latter would not get attracted.' In the light of the aforesaid law it would be necessary to consider as to whether the Sales Tax Department has undertaken the attachment of the secured assets in the manner prescribed by the Code and the Rules of 1967. In the affidavit-in-reply filed on behalf of the Sales Tax Department it has stated that notices under Section 38 of the Act of 2002 came to be issued on 22nd July 2013 - Since the steps for attachment were taken prior to the provisions of Section 26E being brought on the statute book, the Sales Tax Department had the necessary priority to sell the assets in question. There is no material on record to indicate that an order of attachment was duly passed under the Code and the proclamation thereof was made in accordance with the Rules of 1967 prior to 24th January 2020 when Section 26E of the Securitization Act came into force or 1st September 2016 when Section 31B of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 was enforced, the Sales Tax Department would not have priority over the dues of the secured creditor. In absence of any valid order of attachment as well as a proclamation in that regard, the Sales Tax Department cannot claim precedence over the dues of the secured creditors in view of Section 26E of the Securitization Act. Mere issuance of communication to the Talathi not to permit sale of a secured assets would be of no consequence as the law requires passing of a valid order of attachment and issuance of a proclamation in accordance with the Rules of 1967 to claim priority. The communication dated 7th September 2013 issued by the 2nd respondent to the Talathi, Asangaon, Taluka Shahapur, District Thane would not preclude the petitioner from taking steps to enforce its security interest. Accordingly, the petitioner would have priority over the Sales Tax Department in respect of the secured assets referred to in the aforesaid communication. Petition disposed off.
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2024 (8) TMI 1270
Challenge to assessment order - required period of seven (07) days for hearing was not granted to the petitioner - violation of principles of natural justice - HELD THAT:- This Court would have to accept the fact that the notice of assessment was sent by the 1st respondent only on 25.06.2021 and the period of seven (07) days mentioned in the said notice was not granted to the petitioner before an assessment order was passed on 28.06.2021. There also remains the question of whether the petitioner received this notice as the petitioner has denied the receipt of notice. The petitioner had not been granted adequate opportunity to set forth his case. This Writ Petition is allowed setting aside the assessment order of the 1st respondent, dated 28.06.2021 and the matter is remanded back to the 2nd respondent, who is the assessing authority to the petitioner now, for completing the assessment for the year 2017-2018 after giving due notice and opportunity to the petitioner.
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Indian Laws
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2024 (8) TMI 1269
Legality of the High Court's order granting bail to respondent no.1 - High Court vide the Impugned Order has released him on bail noting that the material on record is not sufficient to establish his complicity - HELD THAT:- The High Court, there are no hesitation in saying so, erred in law. Ergo, for reasons recorded above and upon circumspect consideration of the attendant facts and circumstances, we hold that the discretion exercised by the learned Single Judge of the High Court to grant bail to the respondent no.1 was not in tune with the principles that conventionally govern exercise of such power, a plurality of which stand enunciated in the case-law supra. Moreover, though respondent no.1 had already suffered incarceration for a period of about six months at the time when bail was granted, yet in view of the nature of the alleged offence, his release on bail can seriously lead to dissipation of the properties where investments have allegedly been made out of Society funds. At the end of the day, the interests of the victims of the scam have also to be factored in. The impugned order stands set aside. Respondent No.1 is directed to surrender within a period of three weeks from today, failing which the trial Court shall proceed in accordance with law - appeal allowed.
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2024 (8) TMI 1268
Shifting and demolition of the school by DSGMC - whether the appellant-DSGMC has any valid ground so as to assail the impugned judgment of the High Court dated 9th December, 2009, whereby the NDMC was directed to reimburse the pay and perquisites including the pension and other benefits accruing to the staff of the school and then to recover the same from the appellant-DSGMC ? - HELD THAT:- Admittedly, the school in question being run by the appellant-DSGMC was receiving 95% grant from NDMC, and the same was closed down without due approval of the Director (Education), NDMC. As a consequence, the appellant-DSGMC cannot be allowed to take the shield of Rule 47 of the Delhi Education Rules so as to claim that the burden of re-employment and payment of salaries of the surplus teachers and the nonteaching staff upon closure of the school would be that of the NDMC. The question of absorption only arises when the closure of the school is done in accordance with law, which requires a full justification and prior approval of the Director as per Rule 46 supra. Since the closure of the school in question was undertaken de hors Rule 46, the argument advanced on behalf of the appellant- DSGMC that the onus to absorb the surplus teaching and nonteaching staff would be that of the NDMC, has no legal sanction and cannot be sustained. There are no merit in Civil Appeal preferred by the appellant-DSGMC, which are hereby dismissed. Seeking reimbursement of the entire amount from the DSGMC to staff - HELD THAT:- Since the principal amount has already been paid by the appellant-NDMC, there is no reason for this Court to interfere with the direction given by the Delhi High Court for payment of interest to the respondents, i.e., staff of the school, in terms of the impugned judgment - it is directed that appellant-NDMC shall pay all remaining dues including interest to the respondents-staff of the school, within a period of eight weeks from today - It is clarified and reiterated that the appellant-NDMC shall be entitled to take recourse of the appropriate remedy for reimbursement of the amounts paid to respondents-staff of the school from the DSGMC, in case the DSGMC voluntarily fails to reimburse the said amount. Appeal disposed off.
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2024 (8) TMI 1267
Dishonour of cheque - seeking quashing of summoning order and complaint under Section 138 read with Sections 141 and 142 of the NI Act - vicarious liability of a Director - HELD THAT:- There is unanimity in judicial opinion that necessary, specific and unambiguous averments ought to be made in a complaint under Section 138 of the NI Act, before the person accused of the offence is subjected to criminal prosecution and it is not enough to make a general and bald allegation that the person was in charge of the day to day affairs of the company. The least that is required is to ascribe a specific role to a person before any criminal liability can be fastened on him/her and from the complaint itself, a reasonable and plausible inference must be discernible that the person accused was in charge of and responsible to the firm for the conduct of its business, with a caveat that a hyper-technical approach should not be adopted in quashing the complaints since the laudable object is to prevent dishonour of cheques and sustain the credibility of commercial transactions, for which avowed purpose Legislature has enacted Sections 138 and 141 of the NI Act. In SABITHA RAMAMURTHY ANR. VERSUS RBS. CHANNABASAVARADHYA [ 2006 (9) TMI 490 - SUPREME COURT ] the Supreme Court restated the requirements of Section 141 of the NI Act and held that the complainant must make a clear statement of fact to enable the Court to arrive at a prima facie opinion, even if the allegations are that the accused is vicariously liable. Section 141 of the NI Act raises a legal fiction where a person although not personally liable for commission of an offence, would be vicariously liable but before a person can be made vicariously liable, strict compliance with statutory requirements is to be insisted. Coming to the facts of the present case, perusal of Form No. DIR-12 of the accused company BTIL reflects that Petitioners No. 1 and 3 were Independent Non-Executive Directors while Petitioner No. 2 was Non-Executive Director at the time of commission of the alleged offence. In view of Section 141 of NI Act and Section 149 of Companies Act, 2013, Petitioners could be held vicariously liable only if it was shown that they were in charge of and responsible for the conduct of the business of the company at the time of commission of offence and not otherwise and complainant was required to specifically aver in the complaint as to how the Petitioners were in charge of day to day affairs of the company BTIL as well as conduct of its business, as per settled law - There are no allegations that Petitioners had any role in the dishonour of the cheque on presentation and admittedly, Petitioners were not the signatories. It is settled that Section 141 is a penal provision creating vicarious liability and must be strictly construed and therefore, bald cursory statements in the complaint in the absence of a specific role being ascribed to a Director and without spelling out how and in what manner the accused were in charge of or responsible to the accused company for the conduct of its business, vicarious liability cannot be fastened. It is also settled that it is not enough to state in the complaint that a particular person was a Director, Managing Director, CEO, etc. As held by the Supreme Court in S.M.S. Pharmaceuticals [ 2005 (9) TMI 304 - SUPREME COURT] it may be that in a given case, a person may be a Director but may know nothing about the day to day functioning of the company and there is no universal rule that a Director is in charge of its everyday affairs. Sections 138 and 141 of the NI Act were introduced in the Act to encourage the wider use of a cheque and to enhance the credibility of the instrument. The intent of the Legislature in carrying out the amendment was to encourage people to have faith in the efficacy of banking transactions and use of cheques as negotiable instruments. To balance, a penal provision was enacted to ensure that the drawer of a cheque does not misuse the provisions and honours his commitment. The issue herein concerns the criminal liability arising out of dishonour of a cheque. Normally, the criminal liability is not vicarious i.e. one cannot be held criminally liable for the act of another. Section 141 of NI Act is, however, an exception where the offence under Section 138 is committed by a Company but the liability extends to the officers of the Company, subject to fulfilment of the conditions under Section 141, as a caveat - The present complaint fails to pass muster and basis the same, no criminal liability can be fastened on the Petitioners. Since the contents and averments in the complaint are insufficient to attract the provisions under Section 141 (1) of NI Act, the impugned order dated 14.12.2017 passed by learned MM (NI Act), Patiala House Courts, New Delhi, in CC No. 16632/2017 is set-aside to the extent of issuing summons to the present Petitioners for alleged commission of the offence punishable under Section 138 of Negotiable Instruments Act, 1881. Petition allowed.
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