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TMI Tax Updates - e-Newsletter
August 5, 2024
Case Laws in this Newsletter:
GST
Income Tax
Customs
Insolvency & Bankruptcy
PMLA
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
Articles
News
Notifications
Circulars / Instructions / Orders
Highlights / Catch Notes
GST
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Refund application filed on 17.09.2018 within limitation period deemed valid despite deficiency memo. Fresh application a continuation.
The petitioner filed a refund application within the two-year limitation period for the year 2017-2018 on 17.09.2018, and subsequently filed a fresh refund application on 2.01.2020 after receiving a deficiency memo. The High Court held that the original refund application filed on 17.09.2018 would be considered a proper refund application within the limitation period, and the fresh refund application filed pursuant to the deficiency memo would be considered a continuation of the first refund application. The impugned order dated 20.02.2020 rejecting the refund application on the ground of limitation was quashed and set aside, and the refund application filed on 17.09.2018 was restored for consideration on merits by the proper officer in accordance with the law.
Income Tax
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Award to non-resident individual not liable for TDS deduction, as per SC & HC precedents. Judgment debt exempt from TDS.
TDS cannot be deducted by the respondent on amounts awarded in favor of the petitioner, a non-resident individual, by an arbitral award under execution. The High Court held that once an amount stands awarded in an arbitral award, it acquires the character of a judgment debt and cannot be subjected to TDS deduction, following Supreme Court precedent in All India Reporter and High Court decisions in Voith Hydro Ltd and Glencore International. The omnibus restraint on deducting TDS in Prateek Infra Projects India Pvt Ltd v. Nidhi Mittal does not amount to a declaration that TDS is deductible on compensation payable to a builder.
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Notices by Joint Assessing Officer invalid due to lack of jurisdiction u/s 151A. Court followed Hexaware case, allowing petition.
Faceless assessment notices issued by Joint Assessing Officer instead of Facessing Assessing Officer held invalid as lacking jurisdiction u/s 151A read with Central Government notification dated 29 March 2022. Following Hexaware Technologies Ltd. decision, High Court allowed petition, declaring impugned notices illegal and invalid due to jurisdictional defect of issuance by Joint Assessing Officer.
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Property value difference not taxable income. AO failed to consider objections. Petitioner disclosed all facts. Reopening beyond 4 years invalid.
AO reopened assessment on basis of difference between market value and registration value of property, assuming petitioner was owner. Petitioner argued section 50C inapplicable as not owner, section 43CA not in force that year. HC held AO failed to consider petitioner's objections regarding no escapement of income due to value difference being non-taxable. No information with AO showing direct nexus with escaped income alleged. Petitioner disclosed all material facts, so AO lacked jurisdiction u/s 147 proviso to reopen beyond 4 years. Petition allowed.
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Reopening justified due to tangible material for escapement belief. Firm's brokerage income belonged to company as per partner's statement. Firm claimed bad debts to avoid tax.
Reopening of assessment u/s 147 justified due to tangible material available with Assessing Officer (AO) to form reasonable belief regarding escapement of income. Brokerage income shown in firm's profit and loss account belonged to petitioner company as confirmed by partner/director's statement recorded during survey. Firm claimed bad debts to offset brokerage income credited in its books to avoid tax liability for petitioner company which performed work. AO rightly relied on Supreme Court decision in ITO v. Atchaiah, as right person (firm) required to be taxed for income from work done for foreign company. Petitioner's contention of regularly showing brokerage income in firm's books is subject to AO's scrutiny during assessment proceedings. Based on facts, income prima facie escaped assessment in petitioner company's case, justifying reopening. In petitioner firm's case, no scrutiny assessment earlier, issues raised by AO prima facie justify reopening. Reliance placed by petitioner on assuming jurisdiction for reopening not applicable, particularly when partner's statement confirms brokerage income belongs to petitioner company. Statement's evidentiary value to be considered during assessment after hearing petitioner. No interference warranted in reopening notice. Petition dismissed.
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No adjustment of refund sans intimation. Revenue must follow Sec 245: prior notice, record reasons for withholding refunds.
Revenue cannot set off or withhold a refund without issuing an intimation u/s 245 of the Income Tax Act. Section 245(1) mandates that before setting off a refund against a demand, an intimation in writing must be given to the person about the proposed action. Section 245(2) allows withholding of refund if assessment/reassessment proceedings are pending and granting refund may adversely affect Revenue, but only after recording reasons and obtaining approval. Unilateral adjustments without prior intimation are contrary to the statute and settled court decisions. Stay applications and rectification applications must be disposed of promptly. The High Court made the rule absolute, directing Revenue to process and pay refunds within four weeks, and decide rectification applications within eight weeks.
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Revenue dept's request for delay in paying interest on delayed refunds rejected. Public money can't be wasted.
The High Court held that the Revenue department's request for two months to pay interest on refunds delayed by the department itself was audacious, as public money is utilized for interest payments. The Court directed the department to calculate interest up to March 1, 2024, and pay the balance interest by that date, failing which contempt proceedings would be initiated for willful disobedience of the Court's orders, emphasizing the need to save public funds and comply with judicial directives promptly.
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Reassessment invalid due to improper sanctioning authority. Principal Chief Commissioner's sanction mandatory for cases beyond 3 years.
Reassessment proceedings invalidated due to improper sanctioning authority. Sanction accorded by Principal Commissioner instead of Principal Chief Commissioner as mandated for cases beyond three years u/s 151(ii). Proviso to Section 151 inserting revised sanctioning authorities effective April 1, 2023, inapplicable. Impugned order and notice quashed, decided in assessee's favor, following Siemens Financial Services Private Limited case.
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Non-speaking order treating returns as invalid quashed. Issue of profession vs business unaddressed, violating natural justice.
Non-speaking, unreasoned order u/s 139(9) treating returns as invalid quashed. Petitioner contended engaged in profession, not business. Respondent claimed petitioner engaged in business. Issue not addressed in impugned order violating natural justice. Matter remitted for reconsideration after providing opportunity to petitioner, examining material on record, proceeding per law. Petition allowed.
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Reassessment notice invalid due to lack of reasonable opportunity to file reply. Bona fide mistake, sufficient cause shown. Natural justice violated. Order quashed, fresh consideration ordered.
Reassessment proceedings were ex-parte, violating principles of natural justice as petitioner was not provided reasonable opportunity to file reply documents due to notice u/s 148A(b) being delivered to inactive email id. Petitioner filed returns for other assessment years, but mistakenly believed income for AY 2018-19 was below exemption limit. Inability to reply was due to bona fide reasons and sufficient cause. Impugned notice, order violative of natural justice, quashed, matter remitted for fresh consideration in accordance with law.
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Deduction denied for houses owned pre-construction. Colony road insufficient for 'housing project'. Verify sale deeds for buyer loans. Await SC verdict on completion certificate.
Deduction u/s 80IB(10) denied as assessee constructed houses owned by buyers with sale deeds executed prior to construction, not developing housing project. Mere construction of colony road and facilities does not change residential plots into housing project. Evidence required to substantiate claim of sale deeds facilitating buyer loans. Completion certificate issue pending Supreme Court adjudication in Global Reality case, High Court judgment stayed. Matter remanded to Assessing Officer for fresh adjudication after verifying evidence on sale deeds for buyer loans, completion certificate issue to be decided as per Supreme Court outcome. Appeal allowed for statistical purposes.
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Deposited Rs. 36.5L SBNs during demonetization, AO added u/s [email protected]%. Tribunal: No addition when source proved. Upheld assessee's case.
During the demonetization period, the assessee deposited Rs. 36.50 lacs in Specified Bank Notes (SBNs) in their bank account. The Assessing Officer (AO) made an addition u/s 69A by applying the rate of 77.25% and attracting Section 115BBE instead of the normal tax slab. However, the assessee had shown opening cash in hand and provided details of cash expenses, which were not disputed by the authorities. The withdrawals and opening cash balance were also undisputed. Even after depositing Rs. 36.50 lacs, the assessee showed Rs. 9,72,482/- as cash in hand, which was not disputed. The Appellate Tribunal held that since the source of cash withdrawals was proved, no addition on account of SBN deposits was justified when the assessee had no option but to deposit the high-denomination notes during demonetization. The AO's action was based on mere suspicion and guesswork. The decision was in favor of the assessee.
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Partners' capital accounts revaluation taxed as transfer u/s 45(4). Fair market value, not revalued amount, is consideration u/s 48.
The CIT (Appeals) correctly invoked Section 45(4) to tax the increase in partners' capital accounts due to revaluation of firm assets, as this constitutes transfer of capital assets by the firm. The Supreme Court in Mansukh Dyeing case held revaluation and crediting partners' accounts is a transfer u/s 45(4). However, the CIT (Appeals) erred in considering the revalued amount as full value of consideration u/s 48. Fair market value on the transfer date should be considered, which the assessee proved as Rs. 7 lakh per acre based on Sub-Registrar's certificate. Capital gains are to be computed u/s 45(4) using this fair market value. The matter was decided partly in favor of the assessee.
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Income Tax Appellate Tribunal: Supply planning services not taxable as fees/royalty under India-UK tax treaty. Followed previous ruling.
The Income Tax Appellate Tribunal held that the receipt from supply planning services was not taxable as fees for technical services or royalty under the India-United Kingdom tax treaty. The coordinate bench had previously decided the identical issue, ruling that such receipts were not chargeable to tax. The Tribunal, following the coordinate bench's decision in the assessee's own case for the last 5 years, upheld the order of the Commissioner of Income Tax (Appeals) and dismissed the grounds of appeal raised by the Assessing Officer. The decision was rendered in favor of the assessee.
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Assessee sold plot in 2003, paid remaining amount in 2007. Transaction concluded in 2003 as per circle rate. No addition u/s 50C warranted.
When assessee allotted plot by Noida Authorities, entered agreement to sell on 07.02.2003 receiving Rs. 4,50,000/-, remaining Rs. 4,76,000/- paid to Noida Authorities as per schedule. Assessee paid remaining amount in 2007, Noida Authorities executed lease in buyer's favor. Buyer paid remaining amount to Noida Authorities who transferred lease. Since transaction between assessee and buyer concluded in 2003 as per prevailing circle rate, no addition u/s 50C warranted. Assessee's appeal allowed.
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Discrepancy in ITR & Form 26AS led to income addition & penalty. ITAT set aside penalty due to lack of specific allegation & rectified Form 26AS.
Assessee failed to justify receipt discrepancy between ITR and Form 26AS, AO made addition considering it as fees for technical services and imposed penalty u/s 270A for under-reporting income. ITAT held penalty order silent on assessee's submissions, penalty notice lacked specific allegation of misrepresentation/suppression, and subsequent rectification of Form 26AS removed discrepancy. Relying on Supreme Court judgment, ITAT set aside penalty considering entirety of circumstances and allowed assessee's grounds.
Customs
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Substantial compliance plea rejected if statutory prerequisite unmet. Procedural relaxation allowed for traders if claim verifiable. Exemption prevents double benefit.
The Hon'ble Supreme Court held that a plea of substantial compliance cannot be taken if a clear statutory prerequisite which effectuates the object and purpose of the statute has not been met. However, if the requirements are procedural or directory, not of the "essence" of the thing to be done but given for orderly conduct of business, they may be fulfilled by substantial compliance. The refund claim results from a conditional refund post import. Procedural relaxation can be provided to an importer trader, provided verification is made about the claim. The exemption aims to prevent double benefit by the buyer availing credit. Rejecting a claim due to procedural discrepancies, easily verifiable, would be harsh. The impugned order is set aside, and the appeal is allowed.
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Iron Ore Fines' Fe content on WMT basis to determine duty rate. Fe<58%, no export duty under Notification 15/2016. Order set aside, reassessment ordered.
Shipping bill assessment challenged regarding determination of Fe content in Iron Ore Fines for classification and duty rate. Fe percentage to be determined on Wet Metric Tonne (WMT) basis by deducting moisture and converting to WMT using recognized formula. As Fe content below 58%, no export duty payable under Notification 15/2016-Cus. Impugned order set aside, matter remanded for finalization of provisional assessment and refund of excess duty, if any, within one month.
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Anticipatory bail for alleged Rs. 5 cr arecanut smuggling at JNPT. No custody needed as goods seized. Bail if arrested: Rs. 25K.
Anticipatory bail sought for alleged smuggling of arecanuts worth Rs. 5 crore found in containers intercepted at JNPT meant for ICD Tughlakabad. Applicant neither filed bill of entry nor claimed goods. Customs action based on probability of applicant's involvement. No need for custodial interrogation as goods already seized. Applicant directed to cooperate, visit Customs office with advocate. If arrested, applicant to be released on Rs. 25,000 bail, attend Customs office fortnightly for two months, then as required.
DGFT
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Govt harmonizing Export Policy with ITC(HS) codes for Chapters 40-98 to streamline exports. Draft enclosed, comments by 11/08/24.
Directorate General of Foreign Trade, Government of India, is harmonizing Chapters 40 to 98 of Schedule-II (Export Policy) to 8-digit ITC(HS) codes, aligning existing description-based Export Policy to ITC(HS) codes for streamlining export control, facilitation, and clarity. Draft Schedule-II for Chapters 40 to 98 is enclosed for perusal, and stakeholders are requested to provide comments by 11.08.2024. Post comments, Chapters 40 to 98 will be re-notified accordingly. No substantive Export Policy amendments are proposed.
Bill
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Salary & family pension deductions enhanced for new tax regime. Standard deduction up from Rs. 50K to Rs. 75K. Family pension deduction up to Rs. 25K/33.33%.
Deduction on salary and family pension enhanced for taxpayers opting for new tax regime. Standard deduction on salary increased from fifty thousand to seventy five thousand rupees. Deduction on family pension increased from fifteen thousand to twenty five thousand rupees or thirty-three and one-third percent of such income, whichever is less. Amendments effective from April 1, 2025 for assessment year 2025-26 onwards.
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Employer's pension contribution deductible up to 14% of employee's salary from AY 2025-26. Sec 80CCD amended for higher deduction.
Clause (iva) of sub-section (1) of section 36 is amended to increase the deduction for employer contribution to a pension scheme u/s 80CCD from 10% to 14% of the employee's salary in the previous year. Sub-section (2) of section 80CCD is amended to allow deduction up to 14% of the employee's salary for contribution by non-government employers, where the employee's salary is chargeable u/s 115BAC(1A). The amendments are effective from April 1, 2025 and applicable from assessment year 2025-2026 onwards.
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Proposed amendments expand tax exemptions for retail funds, ETFs, Core Settlement Guarantee Funds & ease compliance for Venture Capital Funds & finance companies in IFSCs.
The proposed amendments aim to further incentivize operations from International Financial Services Centres (IFSCs) by expanding the scope of specified funds eligible for tax exemption to include retail funds and Exchange Traded Funds regulated under IFSCA. It also exempts specified income of Core Settlement Guarantee Funds set up by recognized clearing corporations in IFSCs. Venture Capital Funds regulated by IFSCA are proposed to be exempted from additional onus of proof for explaining source of funds u/s 68. Finance companies located in IFSCs are proposed to be excluded from the thin capitalization provisions u/s 94B, subject to prescribed conditions and activities.
Indian Laws
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Sec 141 NI Act: MDs liable for company's conduct, signatories covered. Complaint against directors quashed sans averments u/s 50(1). MD responsible.
The court interpreted Section 141 of the Negotiable Instruments Act, holding that managing directors and joint managing directors are responsible for the company's conduct by virtue of their position. Signatories of dishonored checks are also covered u/s 141(2). In the absence of averments u/s 50(1) of the 1984 Act in the complaint, the trial court could not take cognizance against the directors. However, the managing director would be responsible for the company's business. The complaint was quashed against the directors but allowed against the managing director and the company. The Supreme Court's order was modified accordingly.
IBC
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Plaintiff neglected to seek Resolution Plan from defendant. Court invoked s.151 CPC, dismissed Suit as infructuous post NCLT Resolution Plan.
Plaintiff failed to requisition defendant for Resolution Plan detailing alleged excess payments. Documents required for adjudication of IA 2769/2022 supplied to plaintiff, who made no effort to obtain Resolution Plan from NCLT. Invoking inherent powers u/s 151 CPC, Court relied on Rajan Gupta case to dismiss Suit as infructuous due to subsequent Resolution Plan passed by NCLT, rendering relief claimed unviable. Defendant succeeded in application.
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Rent dispute led to arbitration, award challenged in court. Petitioner claimed keys, respondent denied guards. Stay order with conditions.
The dispute arose between the parties regarding non-payment of rent. As per the agreement, the matter reached the Arbitrator, who allowed the petitioner/landlord's claim and directed recovery of a sum along with GST, interest, and other expenses. The petitioner claimed to have secured keys from security guards, while the respondent denied having any security guard. A criminal case was registered, and an application was filed on 17-10-2023. The vacation Court heard the matter and passed an order on 18-10-2023 after considering objections. The order stayed the Arbitrator's award, subject to the respondent furnishing a security deposit covering 5% of the award amount and granted a temporary injunction restraining the petitioner from disturbing the respondent's peaceful possession. The petitioner argued that the Court passed the order in a hurry, but the High Court dismissed the petition.
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Welfare statute for slum dwellers prevails over IBC; corporate debtor can't stall redevelopment for self-interest.
The High Court rejected the resolution professional's petition seeking a stay on the acquisition process under the Slum Rehabilitation Act, 1995. It held that provisions of the Insolvency and Bankruptcy Code (IBC) cannot prevail over the welfare statute aimed at protecting slum dwellers. Allowing the corporate debtor's "asset" preservation would deny slum dwellers the statutory promise of redeveloped premises indefinitely, at their cost, despite no fault. The IBC provisions are not meant to defeat slum redevelopment and allied statutes. Granting relief would put a premium on corporate wrongdoing and allow defaulting corporate debtors to secure restraint against slum dwellers' welfare through the resolution professional. The resolution professional's argument for a preferential right to self-redevelop was rejected as untenable since the corporate debtor had already obtained a Letter of Intent while being the owner. The petition was dismissed.
SEBI
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SEBI amends Mutual Fund rules for market abuse deterrence, whistle-blower policy, exempting recording communications. CEOs accountable.
SEBI amended Mutual Funds Regulations to insert provisions for identification and deterrence of market abuse, front-running, fraudulent transactions, whistle-blower policy, and exemption from recording face-to-face communications. Sub-regulations related to market abuse mechanisms come into force after 3-6 months, whistle-blower policy after 12 months. CEOs/MDs/CCOs accountable for implementation. Aimed at strengthening governance, compliance, and investor protection.
Service Tax
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Petitioner's SVLDRS benefit denial for 1-day late tax payment quashed. Revenue received payment, substantial justice prevailed.
Petitioner's denial of benefit under Sabka Vishwas (Legal Dispute Resolution) Scheme 2019 (SVLDRS) for short payment of service tax was challenged. The payment was made on 1st July 2020, one day after the due date of 30th June 2020. The High Court held that the objective of SVLDRS is to resolve tax disputes and disclose unpaid taxes, as observed in Capgemini Technology Services India Limited case. The payment mode, whether under service tax or SVLDRS, is immaterial as the revenue received the payment. Procedural irregularities cannot override substantial justice, and the petitioner's one-day delay was bona fide. Denying SVLDRS benefit would contradict the scheme's objective and cause injustice. Relying on Innovative Antares, Arjun Rampal, and Sitec Labs Ltd. cases, the High Court quashed the impugned communications and directed the respondents to issue Form SVLDRS 4 to the petitioner within four weeks.
Central Excise
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Electricity consumption alone can't determine duty liability. Demands based on Director's accepted documents upheld. Risers/runners demand & raw material shortage demand quashed.
Clandestine removal demand based on electricity consumption not sustainable as mere electricity consumption cannot be the sole basis for determining duty liability. Demand based on ledger pages recovered from Director's briefcase and accepted by him confirmed. Demand based on documents recovered from Directors' residences and accepted by Director confirmed. Demand for risers and runners based on electricity consumption set aside. Demand for shortage in raw material set aside due to lack of evidence. Demand for inadmissible Cenvat credit on scrap receipt from sister concern set aside as alleged transactions were paper transactions only. Equivalent penalties set aside or confirmed accordingly.
Case Laws:
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GST
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2024 (8) TMI 189
Denial of bail - allegation is that the petitioner has set up certain fake firms and is involved in a fraud relating to payment of input tax - HELD THAT:- Bearing in mind that the offence carries a maximum punishment of five years of imprisonment and the period of custody already undergone, we do not consider it appropriate to keep the petitioner languishing in jail any further. The petitioner shall accordingly be released on bail, subject to such terms and conditions as may be imposed by the Trial Court. SLP disposed off.
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2024 (8) TMI 188
Refund of accumulated Input Tax Credit due to inverted duty tax structure from July 2017 as per section 54 (3) (ii) of the Central Goods And Service Tax Act, 2017 - time limitation for filing the refund claim - HELD THAT:- It is apparent that the petitioner has filed refund application within the period of two years i.e. for year 2017-2018, refund application was filed on 17.09.2018 and subsequently, fresh refund application was filed after receipt of deficiency memo on 2.01.2020 and therefore, as per the decision of this Court in case of M/S. LA-GAJJAR MACHINERIES PRIVATE LIMITED VERSUS UNION OF INDIA ORS. [ 2023 (9) TMI 1518 - GUJARAT HIGH COURT] , original refund application filed by the petitioner on 17.09.2018 would be considered as a proper refund application within the period of limitation and fresh refund application filed pursuant to the deficiency memo, would be considered as in continuation of first refund application. The impugned order dated 20.02.2020 passed by respondent no. 2 rejecting the application for refund filed by the petitioner on the ground of limitation is quashed and set aside and the refund application filed by the petitioner in Form GST RFD-01A as prescribed at the relevant point of time dated 17.09.2018 is restored for consideration of proper officer so as to pass fresh order on merits in accordance with law - petition allowed.
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Income Tax
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2024 (8) TMI 190
TDS on an amount awarded in an arbitral award deducted by the judgment (award) debtor - whether TDS can be deducted by the respondent on the amounts awarded in favour of the petitioner by the arbitral award under execution? - contention of the respondent in the present case is that TDS is deductable from the amount payable to the petitioner in terms of Section 195 (1) of the Income Tax Act, as the petitioner is a non-resident individual, who is not a company. HELD THAT:- Supreme Court in Prateek Infra Projects India Pvt Ltd v. Nidhi Mittal [ 2020 (6) TMI 836 - SUPREME COURT (LB)] has not, therefore, pronounced on deductibility or otherwise, of TDS on the amount payable to the builder but has vacated the omnibus restraint on the builder from deducting TDS, stating that the deduction would be in accordance with law. This solitary sentence towards the closure of the judgment cannot be regarded as a declaration of the law within the meaning of Article 141 of the Constitution of India to the effect that TDS is deductible on the compensation payable to the builder. Besides, Decree Holders submits that the order passed by the NCDRC cannot be treated as a decree, so that the compensation granted by the said order does not partake of the character of a decretal debt. Given the view adopted by the Supreme Court in All India Reporter [ 1960 (11) TMI 21 - SUPREME COURT] as followed by this Court in Voith Hydro Ltd [ 2021 (3) TMI 1424 - DELHI HIGH COURT] and Glencore International [ 2019 (8) TMI 1206 - DELHI HIGH COURT] , the nature of the amount payable to the petitioner, once it stands awarded in an arbitral award, acquires the character of a judgment debt and, therefore, cannot be subjected to deduction of TDS. As the judgments of this Court in Voith Hydro Ltd [ 2021 (3) TMI 1424 - DELHI HIGH COURT] and Glencore International [ 2019 (8) TMI 1206 - DELHI HIGH COURT] , are directly on the point and followed the decision of the Supreme Court in All India Reporter, we are constrained to hold that the respondent cannot be permitted to deduct TDS from the amount awarded to the petitioner by the arbitral award under execution and directed to be paid by this Court vide order dated 11 March 2024.
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2024 (8) TMI 187
Validity of Faceless assessment of income escaping assessment - Challenge to notice u/s 148 as non-compliance with Section 151A of the Act - notices issued by JAO instead of FAO - HELD THAT:- JAO would not have jurisdiction to issue the impugned notices more particularly in view of the clear provisions of Section 151A read with notification dated 29 March, 2022 issued by the Central Government. As fairly conceded on behalf of the revenue, the challenge in the proceedings would stand covered by the decision of this Court in Hexaware Technologies Ltd. ( 2024 (5) TMI 302 - BOMBAY HIGH COURT] . The impugned notices would be required to be held to be illegal and invalid as and there is no dispute that the JAO had no jurisdiction to issue the impugned notice. We, accordingly, allow this petition in favour of assessee.
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2024 (8) TMI 186
Reopening of assessment - there was a difference of the market value i.e. Jantri rate and the value of registration and therefore, there is an escapement of the income - as argued submitted that section 43CA of the Act was not on Statute for the year under consideration and as the petitioner was not the owner of the land in question, section 50C of the Act would not be applicable - HELD THAT:- AO has considered the registration of sale of the plot of land as if the petitioner is the owner of the such property and thereby has assumed the jurisdiction to reopen the assessment on the basis of the difference between the market value of the property and the registration value. It appears that the AO while disposing of the objections, has not considered the objections raised by the petitioner to the effect that there is no escapement of income as the difference between the value for stamp duty and the value of registration shown in the document cannot be taxed in any of the provisions of the Act. There is no information available with the AO which has a direct nexus with the income which is alleged to have been escaped. The petitioner has also disclosed fully and truly all material facts and therefore, as per proviso to section 147 AO would not have any jurisdiction as the impugned notice is issued beyond the period of four years from the end of the relevant assessment year. The petition succeeds and is accordingly allowed.
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2024 (8) TMI 185
Validity of income tax assessment/reassessment proceddings against company dissolved - NCLT has approved the resolution plan for insolvency - AO jurisdiction to issue notice post transfer of case - HELD THAT:- As after the order of transfer of the case of the petitioner passed on 11.01.2023 under Section 127 (2) of the Act, the respondent No.1-Assessing Officer has no jurisdiction to issue the notice for re-opening for the Assessment Year 2019-20. Even otherwise, as held by this Court in case of Surya Exim Ltd. [ 2024 (4) TMI 937 - GUJARAT HIGH COURT ] when the NCLT has approved the application filed under Section 13 (6) of IBC, 2016 and resolution plan submitted by the applicant was approved, the respondent-Assessing Officer would not have any jurisdiction to re-open the assessment with regard to the Assessment Year 2019-20. The impugned notice u/s 148 as well as the order passed u/s 148A (d) of the Act are not tenable and are accordingly, quashed and set aside - Decided in favour of assessee.
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2024 (8) TMI 184
Reopening of assessment u/s 147 - reasons for re-opening the assessment - tangible material available with the AO to form a reasonable belief, formation of opinion - taxation in the hands of firm or petitioner company - reliance on statement of the partner/director recorded during a survey - whether brokerage income shown in the firm's profit and loss account belonged to petitioner company? HELD THAT:- As reasons recorded in case of the company as well as firm, it is not in dispute that the brokerage income is shown in the P L account of the firm whereas the actual income belonged to the petitioner company as confirmed by Shri Jignesh Shah that the whole work was performed by the petitioner company. It is also not in dispute that the firm has claimed bad debts in the books of accounts and to ensure that no liability of tax arises in the case of the petitioner company, as the said brokerage income is credited in the books of account of the firm so that the same can be set off against the bad debts claimed by the petitioner firm. The Assessing Officer has, therefore, rightly relied on the decision of ITO v. Atchaiah [ 1995 (12) TMI 1 - SUPREME COURT] as the right person i.e. firm is required to be taxed for the purpose of charging of income tax for doing work for M/s. Vema Lift Oy, Finland, as the entire brokerage income belongs to the petitioner company who has performed the work for the said company. Therefore, the contention raised on behalf of the petitioner firm that it was regularly showing such brokerage income in the books of accounts would be a matter of scrutiny during the course of assessment proceedings by the AO. As per the facts available on record in case of the petitioner company as well as firm, it is apparent that the company is not rightly taxed and the income prima facie has escaped assessment and therefore, the Assessing Officer was justified in assuming the jurisdiction for re-opening of the assessment. Similarly, in case of the petitioner firm also, there was no scrutiny assessment for the year under consideration and the issues which are raised by the Assessing Officer would prima facie justify the re-opening of the assessment and the reliance placed by the petitioner for assuming jurisdiction by the Assessing Officer to re-open the assessment would not be applicable in the facts of the case, more particularly, when it appears to be a fact not disputed on the basis of reply to the statement made by the partner of the firm that the entire brokerage income is belonging to the petitioner company as the work was done by the petitioner company for M/s. Vema Lift Oy, Finland. Whether such statement can be relied upon or what is the evidentiary value of the same can be considered during the course of assessment proceedings which will be proceeded by the Assessing Officer after giving opportunity of hearing to the petitioner to lead the evidence including the cross-examination. No interference is called for in the impugned notice for re-opening. Petition dismissed.
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2024 (8) TMI 183
Interpretation of Section 245 - set off or withhold a refund without an intimation under Section 245 - whether an intimation under this Section is or is not mandatory? - whether the Revenue can set off or withhold a refund without an intimation under Section 245 of the IT Act? - HELD THAT:- As Section 245(1) shows, it is permissible for the Revenue to set off a refund that is found due against a demand but only after an intimation is given in writing to the person of the action proposed, i.e., the proposed set off or adjustment. Sub section (2) of Section 245 was introduced by an amendment. It speaks of a set off of part of a refund or an alternative scenario where there is no set off and a refund becomes due. In that situation, if the Assessing Officer having regard to the fact that the proceedings for assessment or reassessment are pending, forms an opinion that the grant of a refund is likely to adversely affect the Revenue, he may, after recording reasons in writing and with the previous approvals of the Principal Commissioner, as the case may be, withhold the refund up to the date on which that assessment or reassessment is made. There are also relevant circulars of 2013 in regard to compliance of Section 245 before making any adjustment of a refund. The Affidavit in Reply on behalf of the Revenue is exceedingly peculiar. From paragraph 5.5 there are several sub-paragraphs that deal with the various assessment proceedings and the pendency of the stay proceedings. However, sub-paragraph (1) at internal page 6 clearly says that the adjustment by the CPC was effected without issuing a Notice under Section 245 of the IT Act. Sub-paragraphs (2) and (3) deal with a question of Tax Deducted at Source ( TDS ) credit but also mention an adjustment of the refund. It is therefore undisputed that no intimation under Section 245 of the IT Act was ever issued to the Petitioners. As decided in Hindustan Unilever Ltd. [ 2015 (7) TMI 366 - BOMBAY HIGH COURT ] the power under Section 245 is discretionary. The orders of stay have to be honoured before adjustment of the demand out of refund is done by the Revenue. If the Assessing Officer did not accept the assessee s contention at the time of making the adjustment, the petitioner should have been informed as to why the objections of the assessee to the adjustment is not sustainable. Unless the Assessing Officer exercising power under Section 245 of the Act subjects himself to this discipline, he would be exercising his powers in an arbitrary manner. Thus issue is that these unilateral adjustments without prior intimation are contrary to the specific wording of the statute itself. They are contrary to settled decisions of this Court. Dispossal of stay applications and rectification applications - We have yet to find a reason in the Affidavit in Reply justifying the failure to take up and dispose of the stay application and the rectification application. Having regard to these circumstances and the unambiguous state of the law in this regard, we make Rule absolute in terms of prayer clauses (a), a(i), a(ii), a(iii), (b) and (c) set out above. The Petition is disposed of in these terms with no order as to costs. All refunds are to be processed and paid out within a period of four weeks from today. We are told that the stay application has been decided after this Petition was filed and the Petitioner has no grievance in that regard. The rectification applications are to be taken up and decided on a priority basis as early as possible and preferably within a period of eight weeks from today.
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2024 (8) TMI 182
Interest on refunds - Delay in payment of interest by the department - as stated additional affidavit that the payment was received only on 8th June 2022 and, therefore, interest is payable up to and including 8th June 2022 - HELD THAT:- Respondents-Revenue states he has received instructions to make a statement that the interest will be paid, but the department needs two months to make said payment. In our view, that is a most audacious request the department could make because this interest also is being paid in view of the delay by the department. As noted time and again in various matters, the officers do not realize that it is a public money that is used to pay interest and an effort should be made to save this public money. In the circumstances, interest shall be calculated upto 1st March 2024 and we direct Respondents to pay the balance interest on or before 1st March 2024. It is made clear that failure to pay will be viewed as a willful disobedience of the orders of this Court and the Court will not hesitate to initiate contempt proceedings.
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2024 (8) TMI 181
Non responding to notice u/s 142(1) - Cash deposit during the demonetization period - as argued petitioner was not given an opportunity of hearing to explain the source of cash deposit during the demonetization period - HELD THAT:- This Court does not agree with the contention of the learned counsel for the petitioner that the petitioner was not given an opportunity of hearing to explain the source of cash deposit of Rs.10,00,000/- during the demonetization period. The facts mentioned in the counter affidavit would disclose that the petitioner has failed to avail an opportunity of hearing, despite having been served with notices. Therefore, the petitioner probably cannot contend that he was not afforded an opportunity of hearing. Revisional order u/s 264 without affording an opportunity of hearing - Question of giving an opportunity of hearing by the Revisional Authority is concerned, though Section 264 does not specifically provides giving an opportunity of hearing, but the opportunity of hearing has to be read in the provision, inasmuch as the revisional order has civil consequences and without affording an opportunity of hearing, the order would not be sustainable. Since, there has been violation of the principles of natural justice by the Revisional Authority in passing the impugned order without affording an opportunity of hearing, Ext.P11 order is set aside and the matter is remanded back to the 1st respondent. The 1st respondent is directed to issue a notice of hearing to the petitioner, and after hearing the petitioner pass a fresh order, in accordance with the law. It is made clear that, only one notice shall be issued to the petitioner and if the petitioner fails to avail the opportunity of hearing in pursuance to the said notice, no further opportunity shall be afforded to the petitioner.
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2024 (8) TMI 180
Validity of reassessment proceedings - Proper sanctioning authority - sanction to pass the order issued by the Principal Commissioner of Income Tax ( PCIT ) and not by the Principal Chief Commissioner of Income Tax (PCCIT ) - HELD THAT:- The impugned order and the impugned notice state that the Authority that has accorded the sanction is the PCIT, Mumbai-5. The matter pertains to AY 2018-2019 and since the impugned order as well as the notice are issued on 22nd April 2022, both have been issued beyond a period of three years. Therefore, the sanctioning authority has to be the PCCIT as provided under Section 151(ii) of the Act. The proviso to Section 151 of the Act has been inserted only with effect from 1st April 2023 and, therefore, shall not be applicable to the matter at hand. In the circumstances, as held by this Court in Siemens Financial Services Private Limited [ 2023 (9) TMI 552 - BOMBAY HIGH COURT] the sanction is invalid and consequently, the impugned order and impugned notice both u/s 148A(d) and 148 of the Act are hereby quashed and set aside. Decided in favour of assessee.
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2024 (8) TMI 179
Invalid Return - Seeking Quashing of impugned order u/s 139(9) - grievance of the petitioner that despite not carrying on any Profession but engaged in a Business, the respondent No.1 has issued the impugned non- speaking and un-reasoned order under Section 139(9) of the IT Act treating the returns filed by the petitioner for the assessment year 2021-22 as INVALID without assigning any reason whatsoever as to why the returns were treated as INVALID. HELD THAT:- A perusal of the material on record will indicate that while it is the specific contention of the petitioner that it is involved/engaged in a Profession and was not carrying on any Business, the respondent in the statement of objections, for the first time before this Court, contends that the petitioner was involved/engaged in a Profession. However, the said question/issue as to whether the petitioner was carrying on a Business or engaged in a Profession has neither been adverted to nor addressed in the impugned order at Annexure-D dated 29.12.2022, which is a non-speaking and unreasoned order being violative of principles of natural justice, and the same deserves to be set aside and the matter remitted back to the respondent No.1 for reconsideration afresh in accordance with law by providing one more opportunity to the petitioner to put forth its claim and for a direction to the respondent No.1 to examine the material on record and proceed further in accordance with law. Petition is hereby allowed.
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2024 (8) TMI 178
Validity of reassessment proceedings - Proceedings were ex-parte - as argued petitioner was not provided sufficient and reasonable opportunity to contest the proceedings by filing his reply documents, which is violative of principles of natural justice - HELD THAT:- Contention as urged by the respondents that the present petition was not maintainable in the light of availability of equally efficacious and alternative remedy by way of appeal is concerned, in the light of the material on record which indicates that by the impugned proceedings were ex-parte as against the petitioner who was not provided sufficient and reasonable opportunity to contest the proceedings by filing his reply documents, which is violative of principles of natural justice, the said contention urged by the respondents cannot be accepted especially when the petitioner did not receive the impugned notice under Section 148A(b) on account of the same having been delivered to an inactive e-mail id which had been shut down more than five years. The returns filed by the petitioner for the Assessment Years up to 2017 18 and subsequent to 2018 19 have been assessed by the respondents who have collected the requisite taxes and the present case relates to only one isolated AY 2018-19 in relation to which the petitioner specifically contented that he was under the bonafide impression that total income would be less than that of basic exemption limited to the sum of Rs.2,50,000/- and was mistakenly advised that there was no requirement to file the return of income in the said AY 2018-19. It is also borne out from the material on record that the inability and omission on the part of the petitioner to file his reply along with the documents to the notice under Section 148A(b) was due to bonafide reasons, unavoidable circumstances and sufficient cause. The impugned notice, order etc., are violative of principle of natural justice and the same deserves to be quashed and the matter remitted back to the respondent No.1 for reconsideration afresh in accordance with law.
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2024 (8) TMI 177
Addition solely on the basis of statement recorded during the course of survey action u/s 133A - whether no corroborative evidences/findings were brought on record by the Revenue? - HELD THAT:- There is no definition in the Act as to what constitutes a 'statement'. The dictionary meaning of 'statement' is 'something that is said formally and officially either orally on in written form which either confirms or denies any fact The clause (iii) of s/s (3) of section 133A of the Act empowers an income tax authority to record statement of any person which may be useful for or relevant in connection with ongoing survey proceedings. This provision however does not specify as to whether such statement is to be recorded on oath or otherwise, because a Statement recorded on oath carries evidential value and automatically binds the assessee unlike the statement recorded otherwise than on oath. In the instant case, admittedly the partner of the assessee firm in a statement recorded u/s 133A has admitted the impugned sum as an additional income of his firm towards probable errors omissions which was unknown to both the rival parties at the time of survey. The said disclosure/admission was simply made under the pretext that the Revenue may at any time thereafter would discover the same and probably tax it as non-business income of the assessee. As in the ITR filed the assessee offered all the additional income admitted by it in the statement recorded u/s 133A of the Act but the impugned sum, for the reasons that both the parties could neither discover any error or omission nor there was any in the records, books documents etc., came to surface. Insofar as the retraction of statement is concerned, unlike admission made in statement recorded u/s 133A of the Act, the assessee may specifically be required in writing to retract the admission made on statement on oath u/s 132 of the Act. The non-inclusion of admitted sum/amount in the return of income filed by the assessee itself solitarily sufficient to constitutes retraction from the admission so made while recording the statement u/s 133A of the Act. There is no separate written retraction requirement is fastened upon assessee either u/s 133A or any other provisions of the Act, therefore such requirement cannot be created one for the purpose of assessment/adjudication. The impugned addition made by the AO and sustained in appeal by the Ld. CIT(A) is founded merely on the basis of admission made u/s 133A of the Act but it badly lacked by corroborative evidence of presence of any errors or omissions in the records, hence deserves to be reversed, ordered accordingly. Assessee appeal allowed.
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2024 (8) TMI 176
Delay in filing the appeal before the CIT(A) - condonation of delay to place before the appellate authority - Delay of 2086 Days - HELD THAT:- In the instant case, admittedly, the assessee has not shown any action or vigilance for a period of more than five years after the assessment order was served upon it. The appellant has not proved any inaction or negligence on the part of a third party, much less have they pleaded any action or vigilance on their own part. Thus, the appellant failed to make out a case that there was sufficient cause for delay in filing the appeal before Ld. CIT(A) and remained negligent and did not initiate any steps at all. Inaction and want of diligence on the part of the appellant/applicant would not entitle it to the benefit of the provisions of section 249(2) - Therefore, appellant is found to be casual, non-serious and non-vigilant in preferring/instituting the appeal before CIT(A) against the assessment order. In order to avoid injustice to respondent revenue, the impugned order passed by the Ld. CIT(A) dismissing the appeal of the assessee in-limine is upheld.
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2024 (8) TMI 175
Gain on sale of land - business income or capital gains - nature of land sold - characterization of receipts/ income - main contention of the assessee is that even though the assessee has divided the land into plots and sold out the same, the assessee s income should not be treated as business income since the assessee has never engaged in any real estate business and also this is the only such transaction done by the assessee - HELD THAT:- It is an undisputed fact that the assessee has divided the land into small extents and sold the same. It is also undisputed fact that the land is situated within the Municipal Limits of Serilingampally Municipality. Therefore, even though it is an agricultural land, it attracted capital gain tax Considering the decision of CIT vs. Kasturi Estates (P) Ltd [ 1965 (10) TMI 7 - MADRAS HIGH COURT] we are of the considered view that even in the instant case, the said decision holds good as there is no material evidence to prove that the assessee has ever intended to engage in any trading activity. Therefore, we hereby allow Ground raised by the assessee with a direction to the Ld. AO that the entire sale consideration of the assessee should be treated as capital gains.
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2024 (8) TMI 174
Unexplained cash deposits in Bank account during demonetization - case of the assessee that the source of cash deposits in question bears direct nexus to cash sales made prior to such deposits - HELD THAT:- The issue involved is essentially a question of fact and depends on appraisal of all relevant evidences on record on cumulative basis. The income thus arising from cash sales has been duly subjected to taxation. The cash sales under cloud are also declared in the VAT returns filed before the concerned Govt. agencies. The cash and other sales are inseparable from imported purchases. No aspersions have been cast on purchases reported in the books for which the payments have been made through banking channel and custom duty have also been paid. Similar is the pattern in the earlier years as well as the subsequent years. Thus, where the propriety of purchase and stocks have been endorsed, casting aspersion on a minuscule cash sale gives infallible impression that the action of the AO is driven by suspicion, conjecture and surmises. Sale of goods has corresponding effect on the closing stock as well as the profitability. These aspects have not been questioned. The Assessing Officer has picked up the amount declared by way of cash sales and treated that as non-existent to hold the corresponding cash deposits as unexplained. The assessee, on the other hand, has demonstrated the factum of cash sales to be genuine by the direct and circumstantial evidences as noted above. The Revenue, in our view, has based itself findings on suspicion and conjectures and on improper rejection of tangible material. The assessee on the other hand has successfully demonstrated the propriety of cash sales by corresponding purchases, reduction in stock and declaration of profits on sales. The Revenue, in our view, has based itself findings on suspicion and conjectures and on improper rejection of tangible material. The assessee on the other hand has successfully demonstrated the propriety of cash sales by corresponding purchases, reduction in stock and declaration of profits on sales. Having assessed a credit of revenue character as income, it is outside the remit of the AO to subject the same credit under different provision i.e. section 68 yet again, inflicting double whammy on the assessee. Besides, the books of accounts and book results have been not rejected per se. No defect has been pointed out on the declarations made towards purchases, the closing stock and the profits either. The additions made have resulted assessment of cash sales twice which is not permissible in law. It is trite that suspicion, howsoever strong, cannot take the place of proof as held in Umacharan Shaw Bros. vs. CIT [ 1959 (5) TMI 11 - SUPREME COURT] The assessment should rest on principles of law and one should avoid presumption of evasion in every matter. The assessee, in the instant case, has sufficiently demonstrated the source of cash deposits. On a broader reckoning, the apprehension raised by the Revenue authorities militates against the tangible material and is thus extraneous. The additions made under section 68 of the Act is thus unsustainable - Decided in favour of assessee.
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2024 (8) TMI 173
Addition made on account of increase in GP - CIT(A) deleted addition admitting additional evidences - HELD THAT:- AO has commented upon the merits of the issues on which additions were made, however, no comments were provided on the admissibility of the additional evidence. Considering the above and on the fact that the additions were made on the basis of the documents which were submitted under rule 46A. The appellant had been a regular taxpayer and complying all the statutory requirements. The appellant has submitted that it was prevented by sufficient cause to submit the documents during the assessment proceedings and since these documents pertains to the root cause of allegations of the Ld. AO, these documents should be accepted. The term 'sufficient cause' needs to be construed liberally to ensure natural justice to the assessee considering the partial non-compliance observed in this case as bona fide. Addition of unexplained creditors - As per DR the assessee had not provided the list with PAN number of the sundry creditors who were having balances more than five lakh. The liabilities shown in shape of sundry creditors are not genuine - CIT(A) deleted addition - HELD THAT:- The assessee has provided the list of creditors during the assessment proceedings but the AO had made no effort to verify the genuineness of these creditors. A remand report was called out by the Ld CIT(A) but the AO had not disclosed the mistake in the details of creditors submitted by the assessee. The AO had the opportunity to verify the PAN numbers when the remand report was called out by the CIT(A) but without verifying the details the reply was submitted by the AO. CIT(A) has rightly deleted the addition made by AO. Addition for increase in GP - DR has submitted that the assessee has not produced the proper books of accounts along with stock register and assessee has not proved the genuineness of the fall in Gross profit rate in spite of the fact that quantum of sales has increased for the year under consideration - CIT(A) deleted addition - HELD THAT:- From the perusal of order of the CIT(A) it is evident that books of accounts were rejected by AO without any cogent reason. The assessee has not changed the accounting policy and explained the factors which led to fall in profit margins. The books of account cannot be rejected merely on the ground of the low profits. The assessee has maintained the books of accounts as per mercantile system. Books and accountant were audited as per Act which was filed by the assessee - The AO had rejected the books of accounts without any cogent reasons when the assessee has explained the factors which led to a fall in profit margins. Addition on account of credit card and commission and credit card risk insurance - DR has submitted that assessee has not produced the evidence of expenditure incurred on credit card commission and credit risk insurance premium - CIT(A) deleted addition - HELD THAT:-Perusal of the order of Ld CIT(A) reveals that the assessee has duly explained the nature as well the business exigency for both the expenses. The AO has mentioned the only reason for disallowing the expenses that the assessee had not incurred such expenses in the immediately preceding year. On this sole reason the expenses cannot be disallowed. The revenue cannot decide the reasonable expenditure for the business purposes. SEE SA Builders Ltd vs Commissioner of Income Tax [ 2006 (12) TMI 82 - SUPREME COURT] as held that no businessman can be compelled to maximize its profit. The income tax authorities must put themselves in the shoes of the assessee and see how a prudent businessman would act. The authorities must not look at the matter from their own view point but that of a prudent businessman Revenue appeal dismissed.
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2024 (8) TMI 172
Levy penalty u/s 271(1)(c) - Estimation of income on Bogus purchases - profit element embedded in the bogus purchases was estimated by CIT @ 10% as against 25% made by AO - CIT(A) deleted penalty levy - HELD THAT:- We consider that addition in the case of the assessee was purely made on estimated basis since the corresponding sales against the purchases was not disputed by the assessing officer. CIT(A) has deleted the penalty after following the decision of Fancy Diamond (I) Ltd. [ 2023 (6) TMI 1370 - ITAT MUMBAI] wherein held that penalty is not leviable in respect of addition made on estimated basis. We have also considered the other decision in the case of Bhuraram V. Choudhury [ 2024 (8) TMI 79 - ITAT MUMBAI] wherein after following the decision of ITAT, Mumbai in the case of Jatin Enterprise [ 2024 (3) TMI 1073 - ITAT MUMBAI] on the proposition that penalty levied in the case of assessee on estimated addition is not sustainable. No error in the decision of ld. CIT(A) in deleting the impugned penalty levied on estimated basis in the case of the assessee. Therefore, all the grounds of appeal of the Revenue are dismissed.
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2024 (8) TMI 171
Deduction u/s 80IB(10) - claim denied as assessee has not developed a housing project but he has simply constructed houses owned by buyers in whose favour the sale deed was executed by the assessee prior to the construction of the houses - HELD THAT:- Mere construction of the Colony Road and other facilities will not change the project of developing residential plots into a housing project. Once the plots of land were sold then the assessee has lost his status of owning the project much less the development of housing project unless some contrary is brought on record. Therefore, this is requires to furnish the evidence to substantiate the claim that the sale deeds were executed only to facilitate the buyer to take loan from banks/financial institutions. Completion certificate - This issue is pending adjudication before the Hon ble Supreme Court in case of Global Reality decided against the assessee [ 2015 (10) TMI 2384 - MADHYA PRADESH HIGH COURT] and further appeal is pending adjudication before the Hon ble Supreme Court. It is also brought to the notice of the Bench that operation of the judgment of Hon ble jurisdictional High Court has been stayed by the Hon ble Supreme Court. Accordingly in the facts and circumstances of the case where one of the issue is pending adjudication before Hon ble Supreme Court and other requires fresh adjudication after verification and examination of the supporting evidence to be filed by the assessee the matter is set aside to the record of the AO for afresh adjudication after proper verification and examination of the supporting evidences if any to be filed by the assessee to show that the sale deed of plots were executed only with a view to facilitate the buyers to take loans from the banks. Further the issue of completion certificate has to be decided as per outcome of the judgment of Hon ble Supreme Court. Appeal of the assessee is allowed for statistical purposes.
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2024 (8) TMI 170
Unexplained money u/s 69A - AO making the addition by taking the rate @ 77.25% by attracting Sec 115BBE instead of taxing as per normal tax slab - during demonetization period, the assessee has deposited Rs. 36.50 lacs in the form of Specified Bank Notes (SBN) in its bank account - HELD THAT:- The assessee deposited SBN in the form of Rs. 500 and 1000 notes during demonetization period. The assessee has also shown opening cash in hand, such cash in hand is not disputed either by the AO or by the ld. CIT(A). Rather the ld. CIT(A) accepted that as on April, 2016, the assessee was having opening cash in hand of Rs. 9,25,837/-. The withdrawals of each and every month is not at all in dispute. Assessee has given details of cash expenses, none of the figures of cash expenses are disputed by the lower authorities. Once, neither the withdrawal is disputed nor opening cash balance is disputed nor expenses is disputed, thus, disputing the availability of cash in hand is not justified . Even after deposit of Rs. 36.50 lacs, the assessee has shown Rs. 9,72,482/- as cash in hand, which is also not disputed by the Assessing Officer as well as by the ld. CIT(A) - action of AO is based on mere suspicion and guess work, therefore, when the assessee has proved the source of cash withdrawals, no addition on account of deposit during demonetization period is justified when the assessee has no option except to deposit the high denomination notes in bank. Decided in favour of assessee.
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2024 (8) TMI 169
Powers of the CIT (A) u/s 251(1) - jurisdiction of the CIT (A) to tax a new source of income - Applicability of Section 45(4) - increase in capital account of partners on account of revaluation of the assets held by the firm - HELD THAT:- In the present case, the issue considered by the Assessing Officer is increase in capital account of partners on account of revaluation of the assets held by the firm and credited such revaluation amount to the capital account of the partners and said issues falls under the provisions of section 45(4) of the I.T. Act, 1961, but, the AO has considered the issue u/s 68 of the Act as unexplained cash credit. CIT (A) having noticed the fact has rightly invoked the provisions of section 45(4). Therefore, in our considered view the powers exercised by the CIT (A) cannot be said to be beyond the scope of provisions of section 251(1) - what was considered by the learned CIT (A) is the very same income which arises out of the revaluation of the asset held by the firm and the same has been assessed under proper provisions of section and as per facts available on record. Therefore, we are of the considered view that there is no merit in the legal grounds taken by the assessee challenging the powers of the CIT (A) u/s 251(1) and thus, the additional grounds of appeal taken by the assessee are rejected. Capital gain computation - appellant firm has revalued its assets held in the books of account - whether the revaluation of assets and crediting the amount of said revaluation amount to the capital account of the partners is amounts to or tantamount to transfer of a capital asset by way of distribution of capital asset on the dissolution of a firm or otherwise ? - HELD THAT:- The provisions of section 45(4) of the I.T. Act, 1961 deals with the profits or gains arising from the transfer of a capital asset by way of distribution of capital asset on the dissolution of a firm or otherwise and as per the said provisions, the profits or gains shall be chargeable to tax as income of the firm of the previous year in which the said transfer takes place and for the purpose of section 48, the fair market value of the asset on the date of such transfer shall be deemed to be the full value of the consideration received or accruing as a result of the transfer. This issue is no legal res integra. Hon'ble Supreme Court in the case of Mansukh Dyeing and Printing Mills [ 2022 (11) TMI 1180 - SUPREME COURT] has considered an identical issue in light of provisions of section 45(4) of the I.T. Act, 1961 and after considering the relevant facts has held that the assets revalued and the credits into capital account of the respective partners can be said to be transfer and which fall in the category of otherwise and therefore, the provisions of section 45(4) inserted by the Finance Act, 1987 w.e.f. 1.4.1988 shall be applicable - revaluation of the asset held by the firm and crediting the amount of said revaluation to the partners capital account is a transfer which falls under section 45(4) and any profit or gain arising from the transfer needs to be taxed in the hands of the appellant firm. Therefore, to this extent, we fully agree with the findings given by the CIT (A). Deemed full value of the consideration for the purpose of section 48 - When the law specifically provides for considering the fair market value of the asset on the date of such transfer itself, it is incorrect on the part of the learned CIT(A) to direct the Assessing Officer to consider amount of said revaluation credited to the partners capital account as full value of the consideration for the purpose of section 48 of the I.T. Act, 1961, without having regard to computation/valuation procedures. Therefore, to this extent, the learned CIT (A) is erred in considering the amount of revaluation credit to the partners capital account for the purpose of computation of capital gain arising as a result of transfer of capital asset in terms of section 45(4) of the I.T. Act, 1961. The value recorded by the assessee in the books of account for the purpose of revaluation of asset cannot be a fair market value of the property because it is not ascertainable as what is the basis on which said value has been arrived at - guideline value fixed by the stamp duty authorities reflects the correct fair market value of any property and it may be a yardstick to determine the fair market value of the property. Therefore, in our considered view, in absence of contrary evidence to that effect, the fair market value fixed by the stamp duty value authorities should be taken as deemed full value of the consideration for the purpose of section 48. In the present case, the appellant has obtained a certificate from the Sub-Registrar, Shankarpally, RR District. As per the said certificate, the market value/guideline value of the property as on 1.1.2017 is at Rs. 7 lakh per acre. Since the appellant has filed relevant evidences to prove the fair market value of the property at Rs. 7 lakh per acre on the date of transfer of the capital asset, in our considered view for the purpose of section 48 of the I.T. Act, 1961, the fair market value of the asset on the date of such transfer should be adopted as per the guideline value of the property which is further supported by certificate issued by the stamp duty authorities. Capital gain arising out of transfer of capital asset by way of revaluation of asset and crediting said amount of revaluation to partners capital account should be computed in terms of section 45(4) of the I.T. Act, 1961 by considering the fair market value of the property at Rs. 7 lakh per acre to total extent of land revalued by the assessee. Thus, we reverse the findings of the learned CIT (A) on this aspect - Decided partly in favour of assessee.
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2024 (8) TMI 168
Validity of ex-parte order passed by CIT (A)-NFAC - non providing proper opportunity to the assessee of being heard - DR argued that several opportunities had been provided to the assessee however, on the given dates of hearing, neither the assessee nor her Representative has responded to the notices - HELD THAT:- CIT (A)-NFAC had posted the case on several occasions. However, there was no response on behalf of the assessee before the CIT(A)-NFAC on the dates of hearing with regard to the details / submissions as called for by the Ld. CIT(A)-NFAC. Therefore, the Ld. CIT (A)-NAFC was left with no other option except to adjudicate the appeal ex-parte and dismissed the appeal. In this situation, considering the issues involved in the appeal, CIT(A)-NFAC ought to have decided the case on merits instead of dismissing the appeal ex-parte. However, considering the prayer of the Ld. AR, and in the interest of justice, we hereby remit the matter back to the file of Ld. CIT (A)-NFAC in order to consider the appeal afresh and decide the case on merits by providing one more opportunity to the assessee of being heard in accordance with the principles of natural justice.
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2024 (8) TMI 167
Taxability of income in India - receipt from supply planning services treated as fees for technical services/royalty - taxation at the rate of 15% under the India United Kingdom tax treaty - PE in India or not? - HELD THAT:- We find that the coordinate bench by order [ 2023 (12) TMI 1339 - ITAT MUMBAI] has decided the identical issue wherein the receipt from SPS services is not chargeable to tax as fees for technical services or royalty as per the Indo UK Double Taxation Avoidance Agreement. DR could not show us any difference in the facts and circumstances of the case compared to those years in the current year, therefore, respectfully following the decision of the coordinate bench in assessee s own case for last 5 years, we also hold that the amount cannot be held to be taxable within the purview of royalty or under FTS as per India United Kingdom Double Taxation Avoidance Agreement. Accordingly, all the grounds of the appeal raised by the learned assessing officer are dismissed, order of the learned CIT A is upheld. Decided in favour of assessee.
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2024 (8) TMI 166
Penalty u/s 271(1)(c) - additions made in the assessment - HELD THAT:- As the original assessment-order which was the very basis for imposition of penalty u/s 271(1)(c) has already become non-est. When it so, there is no locus for the penalty-order to stand. Being so, we set aside the impugned penalty-order passed by AO. The AO is, however, at liberty to initiate fresh proceeding of penalty in accordance with law, if required on the basis of outcome of newer assessment-order. Assessee appeal allowed.
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2024 (8) TMI 165
Capital gain - rate adopted for working out the taxable sale consideration under Section 50C for the purpose of calculating taxable capital gains for the year under consideration - HELD THAT:- Assessee was allotted a plot by Noida Authorities. He entered into an agreement to sell on 07.02.2003 and the amount of Rs. 4,50,000/- have been duly received by the assessee. The remaining amount of Rs. 4,76,000/- has to be paid to the Noida Authorities as per the payment schedule of Noida Authorities. The assessee has paid the remaining amount to Noida Authorities in 2007 and the Noida Authorities had duly executed the lease deed in favour of the buyer. Thus, the transaction between the buyer and the assessee was concluded in 2003 itself. The buyer has not paid the remaining amounts to the assessee but to the Noida Authorities who inturn transferred the lease to the buyer and since, the amount of the circle rate as on the date of agreement and since the remaining amounts have been paid not to the assessee but to the Noida Authorities, keeping in view the fact that the transaction between the assessee and the buyer was concluded 2003 itself as per the prevailing circle rate, in the specific facts of the instant case, it is hereby held that no addition is called for u/s 50C - Appeal of the assessee is allowed.
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2024 (8) TMI 164
Deduction u/s 80P(2)(d) - interest income earned from a scheduled bank - HELD THAT:- We find that issue related with the deduction u/s 80(P)(2)(d) is squarely covered by the series of decisions in Surat Vankar Sahakari Sangh Ltd. [ 2016 (7) TMI 1217 - GUJARAT HIGH COURT] as well as by decisions of this Tribunal in favour of assessee including in the case of Vishal Co-operative Housing Services Society Limited [ 2024 (2) TMI 1407 - ITAT SURAT] wherein it was held that Co-operative Banks are primarily the Cooperative Society and the interest earned on deposit with Co-operative banks are eligible for deduction under section 80P(2)(d) - Decided in favour of assessee.
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2024 (8) TMI 163
Penalty u/s 270A - assessee has failed to justify the difference of receipt as reported in ITR and as reflected in Form 26AS - considering the same to be fees for technical services provided to Indian companies, AO made addition - AO also observed that as the assessee has under reported its income which is in consequence of misreporting thereof - HELD THAT:- We find substance in this argument as assessment order and penalty order are both silent on these submissions and, at the same time, make specific mention that no submissions were made. AR has also argued on the fact that the penalty notice is not a valid notice as there is no specific allegation of the fact of which misrepresentation was made or the fact which was suppressed for the purpose of specific limb of section 270A(9) of the Act. We are of considered view that this alone is sufficient to set aside the penalty. As during hearing it also transpired that in fact, subsequently the Form 26AS stands rectified and the alleged discrepancy no more exists on record. As findings in the assessment cannot be regarded as conclusive for the purpose of the penalty proceedings and before a penalty can be passed or sustained entirety of the circumstances must be taken into account for which we rely Hon ble Supreme Court judgment in case of Anantharam Veerasinghaniah Co.[ 1980 (4) TMI 2 - SUPREME COURT] - So taking notice of the explanation submitted along with subsequent developments of rectification of Form 26AS, we are inclined to allow the grounds.
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Customs
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2024 (8) TMI 162
Refund in terms of Notification No. 102/2007-Cus dated 14.9.2007 - rejection on the ground of lack of endorsement regarding the ADC not being made on the sales invoices - strict compliance (revenue) Vs substantial compliance (appellant) of refund procedures - HELD THAT:- The Hon ble Supreme Court in CCE VERSUS M/S HARI CHAND SHRI GOPAL [ 2010 (11) TMI 13 - SUPREME COURT ], held that a plea of substantial compliance cannot be taken if a clear statutory prerequisite which effectuates the object and the purpose of the statute has not been met. However, if the requirements are procedural or directory in that they are not of the essence of the thing to be done but are given with a view to the orderly conduct of business, they may be fulfilled by substantial, if not strict compliance. The refund claim in this case is the result of an import duty exemption given by way of a conditional refund, post the import of goods. The post import procedure framed is more suited to the needs of a manufacturer importer. Some procedural relaxation can be provided to an importer trader provided that a verification is made about the claim - The certificate can be challenged, and the refund applicant confronted if discrepancies are found on a test check or otherwise, which shows that the certificate is not truly reflective of its contents and that the object and the purpose of the notification has not been met. The exemption is available to importers with the object that the 4% Additional Duty of Customs being refunded is not also availed as credit by the buyer of the goods, thereby causing a loss to the exchequer by way of a double benefit. This issue was examined by a Division Bench of this Tribunal in Novo Nordisk India Pvt. Ltd. [ 2013 (11) TMI 756 - CESTAT MUMBAI ] where it was held that 'It is a settled position in law that, substantive benefit of an exemption notification should not be denied on the ground of procedure or technical infraction.' In this case the major discrepancy pointed out was that in the CA s certificate there is a non-mention of the period particulars to determine whether certificate pertains to the Bills of Entry under this refund claim. This doubt was easily verifiable by the department by writing to the CA or by physical verification. Rejecting a claim on this basis and due to certain procedural discrepancies, would be harsh. Further it is a well-accepted norm of judicial discipline that a Bench of lesser strength must follow the decision of the Bench of larger strength. The impugned order is set aside - appeal allowed.
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2024 (8) TMI 161
Challenge to assessment of the shipping bill - determination of Fe content of the Iron Ore Fines, for deciding the classification and rate of duty payable - Fe percentage of Iron Ore Fines is to be determined on Dry Metric Tonne (DMT) basis or Wet Metric Tonne (WMT) basis? HELD THAT:- The said issue has been examined by this Tribunal in the case of M/S BAGADIYA BROTHERS PRIVATE LIMITED VERSUS COMMISSIONER OF CUSTOMS (PORT) , KOLKATA AND COMMISSIONER OF CUSTOMS (PREVENTIVE) , BHUBANESWAR [ 2023 (9) TMI 827 - CESTAT KOLKATA ] wherein this Tribunal held that the classification is to be determined on the basis of Fe content on Wet Metric Tonne basis by deducting the moisture content given in the test report and thereafter, to convert the percentage of Fe at Dry Metric Tonne (DMT) basis to percentage of Fe on Wet Metric Tonne (WMT) basis by applying the universally recognized formula for determination of classification of Iron Ore Fines for export. In the present case, since as per the certificate produced by the appellant the percentage of Fe content works out to less than 58%, therefore, in terms of Notification No. 15/2016-Cus. dated 01.03.2016, when Fe content is below 58%, the appellant is not liable to pay export duty on the exported goods. The impugned order as well as the order of finalization of the shipping bill set aside - matter remanded back to the adjudicating authority for finalization of provisional assessment. Upon finalization, excess duty, if any, paid by the appellant shall be refunded to them within one month of finalization of such assessment. Appeal allowed by way of remand.
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2024 (8) TMI 160
Seeking anticipatory bail - smuggling of Arecanuts - actual importer of goods - initiation of investigation though there was no bill of entry and the goods landed at JNPT were meant for ICD Tughlakabad - need of custodial interrogation - HELD THAT:- It is a fact that, Arecanuts worth Rs.5 Croer and more were found in the containers which were intercepted. But the present applicant neither filed the bill of entry nor has claimed the goods. The goods were to be destined at Custom Office, Tughlabad. Prima facie the action initiated by Customs is based on probability, as in the reply itself it is stated that, it appears that, the applicant is involved in smuggling of Arecanuts. In such circumstances, more particularly when the goods are already seized and are in possession of respondents, there is no need of custodial interrogation. The applicant can be directed to cooperate with the respondent and visit their office in presence of his advocate at a visible distance and not at audible distance, as laid down by the Hon ble Parent High Court in case of Manishbhai Nareshbhai Saini. In the event of arrest, the applicant/ accused Vimal Kumar be released on bail of Rs.25,000/- - Applicant/accused to attend the office of Customs on every second and fourth Monday of the month from 10.00 a.m. to 01.00 p.m. for two months from today and thereafter, as and when called by the Customs Authority - Application allowed.
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Insolvency & Bankruptcy
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2024 (8) TMI 159
Directions to the defendant to produce on record the Resolution Plan - alleged excess payments made by the defendant to the plaintiff - HELD THAT:- On a query from this Court on whether any such requisition was made by the plaintiff to the defendant or its counsel, the learned counsel for the plaintiff fairly admits that no such requisition was made since last date of hearing. The documents that are required for a proper adjudication of IA no. 2769/2022, filed by the defendant, are supplied to the plaintiff. In any case, the plaintiff has also not made any effort to obtain a copy of the Resolution Plan from the NCLT - application disposed off. Dismissal of the instant Suit - Invocation of inherent powers of this Court under Section 151 of the CPC - HELD THAT:- This Court in RAJAN GUPTA VERSUS RAJAN GUPTA [ 2023 (2) TMI 1323 - DELHI HIGH COURT] , while relying on the law laid down in Shipping Corporation (supra), held that though the provisions of Order VII Rule 11 of the CPC may not apply on the facts of the case, however, the Court has ample power under Section 151 of the CPC to dismiss the Suit as having been rendered infructuous due to a subsequent development because of which relief claimed in the Suit cannot be granted. In my opinion, this Suit would be a fit case for the Court to exercise its powers under Section 151 of the CPC to scuttle such a suit as the relief prayed for in the present Suit, due to the subsequent development of the Resolution Plan passed by the learned NCLT, can no longer survive and be granted. The defendant/applicant succeeds in the application - Application allowed.
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2024 (8) TMI 158
Seeking an order of this Court at the instance of this RP staying an acquisition process under the Slum Rehabilitation Act, 1995 - Preferential right to self-redevelop - . Can it ever be suggested that the provisions of the IBC and specifically the pendency of a CIRP meant to protect the assets of a potentially insolvent corporate debtor can ever prevail over the considerations of a welfare statute and the concerns of individual citizens for whom that welfare statute is intended, such as the Slum Act? - HELD THAT:- If not in so many words, then by necessary implication, that until entire gamut of the CIRP process is completed, and whatever be the final outcome, the 4th Respondent s members must continue to suffer. They will not receive transit rent. They will not see any construction activity on site. The statutory promise of redeveloped premises will be denied to them and this will continue for an indefinite period of time. All this because the corporate debtor s asset must be preserved . At whose cost, we have to ask? And for what fault of the slum dwellers? The provisions of the IBC are not meant to defeat slum redevelopment and similar or allied statutes. To hold otherwise would simply be unthinkable. It would mean that a Writ Court would put a premium on corporate wrongdoing and that even a defaulting corporate debtor who had not complied with the terms of a LoI could now use the golden parachute of the IBC to secure through the RP a restraint against the welfare of slum dwellers. The fact cannot be lost sight that in the RP s anxiety to protect the asset of the corporate debtor not a thing is being said in this Petition about how that asset or its preservation can ever, let alone in the meantime pending a CIRP, be used for the benefit of those persons for whom the Slum Act is intended and for whose benefit essentially Truly Creative obtained an LoI in the first place. Preferential right to self-redevelop - HELD THAT:- The last argument on behalf of the RP is that it ought to have been given a preferential right to self-redevelop. The argument is so unstatable that we can scarcely credit that it is being made. This is understandable where no LoI is issued at all or has been issued to somebody else to the exclusion of the owner. The argument overlooks that Truly Creative had in fact obtained an LoI. It obtained an LoI while it was an owner of the property - A preferential right to an owner is available only when someone other than the owner is being preferred and the owner has never before been given or availed of a right to develop. There are no hesitation in rejecting the Petition - petition dismissed.
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2024 (8) TMI 157
Seeking stay of an award - Seeking an order of restraint restraining the petitioner from interring with its peaceful possession of the schedule property - Termination of lease and possession of the property - Non-payment of rent - Section 34 Arbitration and Conciliation Act, 1996 - HELD THAT:- The dispute having arisen between the two is also not in dispute. The dispute is with regard to non-payment of rent. In terms of the agreement, the matter reaches the table of the Arbitrator in A.C. No. 207 of 2022. Arbitration proceedings go on and the learned Arbitrator by his order dated 09-10-2023 allows the claim of the petitioner/land lord and directs recovery of a sum of qwertyuip 2.60 crores along with the amount of GST, interest and other expenses as detailed in the award. The claim of the petitioner is that, it has secured keys from the security guards and defence of the respondent is that, there was no such security guard with it. Since the crime had been registered before the jurisdictional police, an application is moved on 17-10-2023. The concerned Court was on vacation and the vacation Court was holding the proceedings. On the same day, the matter is taken up in the afternoon. By then, the petitioner files its objections to I.A. Nos. 1 and 2. The matter is heard at length by the concerned Court and an order is passed on 18-10-2023 after considering the objections so filed. Therefore, it is not a case where the matter was not heard. Taking of possession by the petitioner in the manner in which it is projected requires further evidence before the concerned Court. The award of the Arbitrator is stayed subject to the condition that the respondent herein shall furnish security deposit covering 5% of the entire amount of award and temporary injunction restraining the petitioner from disturbing peaceful possession of the respondent. Submissions are made by the petitioner that the concerned Court in a mortal hurry took up the matter and passed the aforesaid order and, therefore, this Court should declare the said order to be inspiring no confidence of this Court - petition dismissed.
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PMLA
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2024 (8) TMI 156
Money Laundering - predicate offence - Seeking for quashing of the ECIR proceedings - stand-alone nature of PMLA offence - even if a person is not an accused in the predicate offence, whether he/she could still be prosecuted for an offence under the PMLA, 2002? - HELD THAT:- It is seen from the record that the petitioner, who is shown as 2nd accused in C.C.No.14 of 2019, had filed S.L.P. (Criminal) No(s).13304 of 2023 before the Hon'ble Supreme Court, challenging the dismissal of her quash petition. The Hon'ble Supreme Court had quashed the proceedings against the petitioner by an order dated 23.04.2024. The allegation in the said case is that A1 to A7 have entered into a criminal conspiracy in the commission of offence relating to allotment of housing plots under Government Discretionary Quota; that A1 and A2 were allotted lands under the said quota; that the petitioner, even before the sale deed was executed in her favour, had handed over the possession of the plot to A5 and entered into a joint venture agreement with A5 and unjustly enriched herself. This Court has, in similar cases, expressed its view that the proceedings under the PMLA 2002 cannot proceed further, once the FIR/Final Report relating to the predicate offence is quashed. The law is well settled by the larger Bench of the Hon'ble Supreme Court in the case of Vijay Madanlal Choudhary and Others v. Union of India and Others [ 2022 (7) TMI 1316 - SUPREME COURT] , wherein, it is ruled ' The Authorities under the 2002 Act cannot prosecute any person on notional basis or on the assumption that a scheduled offence has been committed, unless it is so registered with the jurisdictional police and/or pending enquiry/trial including by way of criminal complaint before the competent forum. If the person is finally discharged/acquitted of the scheduled offence or the criminal case against him is quashed by the Court of competent jurisdiction, there can be no offence of money-laundering against him or any one claiming such property being the property linked to stated scheduled offence through him.' This Court is of the view that in view of the fact that the proceedings against the petitioner/A2 in the predicate offence, has been quashed by the Hon'ble Supreme Court, the impugned proceedings cannot be sustained. Hence, the Criminal Original Petition stands allowed.
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Service Tax
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2024 (8) TMI 155
Short payment of service tax - Denial of benefit of Sabka Vishwas (Legal Dispute Resolution) Scheme 2019 (SVLDRS) - denial on the ground that tax dues as per the said scheme was paid on 1st July 2020 which is after due date of 30th June 2020 - whether payment made on 1st July 2020 can be said to have been made as per SVLDR Scheme? HELD THAT:- The objective of SVLDR Scheme has been culled out by the Co-ordinate Bench of this Court in the case of Capgemini Technology Services India Limited Vs. Union of India [ 2020 (10) TMI 3 - BOMBAY HIGH COURT] wherein the High Court has observed ' From a reading of the statement of object and reasons, it is quite evident that the scheme conceived as a one time measure, has the twin objectives of liquidation of past disputes pertaining to central excise and service tax on the one hand and disclosure of unpaid taxes on the other hand. Both are equally important: amicable resolution of tax disputes and interest of revenue. As an incentive, those making the declaration and paying the declared tax verified as determined in terms of the scheme would be entitled to certain benefits in the form waiver of interest, fine, penalty and immunity from prosecution.' The payment whether made under a challan generated under service tax or under SVLDR Scheme would not make any difference, inasmuch as, admittedly in both the cases, it is only the correct challan which has not been filled, but the payment has admittedly been received in the coffers of Respondents , i.e., Union of India. It is settled position that procedural irregularities cannot come in the way of substantial justice - Petitioner could not be said to have had any mala fide intention in delaying the payment by one day, since the challan generated stated the expiry date as 1st July 2020. Petitioner was, therefore, under a bona fide belief that he could make the payment on 1st July 2020 which admittedly he has paid on said date. On the facts of the present case denying the benefit of SVLDR Scheme would not only be contrary to the objective of the Scheme, but also would be injustice to Petitioner declarant who otherwise is eligible. Petitioner is justified in placing reliance on decisions of Coordinate Bench of this Court in the case of Innovative Antares [ 2023 (2) TMI 12 - BOMBAY HIGH COURT] , Arjun Rampal [ 2023 (5) TMI 13 - BOMBAY HIGH COURT] and Sitec Labs Ltd. [ 2024 (6) TMI 585 - BOMBAY HIGH COURT] , wherein on similar facts and after considering the decision of Supreme Court in M/s. Yashi Constructions [ 2022 (3) TMI 110 - SC ORDER] directed revenue to accept SVLDRS declaration when payment could not be made due to technical glitch before 30 June 2020 in contrast to decision of Single Judge of Madhya Pradesh High Court in M/s. Dinesh Kumar Yadav [ 2022 (11) TMI 343 - MADHYA PRADESH HIGH COURT] . Communications dated 6th September 2021 and 27th September 2021 are quashed and set aside - Respondents are directed to issue Form SVLDRS 4 to Petitioner within a period of four weeks from the date of uploading of the present order. Petition disposed off.
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2024 (8) TMI 154
Levy of service tax - income from profession of advocacy - HELD THAT:- The issue decided in the case of MR. PRASHANTH SREEDHAR SHENOI, V. RAGHURAMAN, ADVOCATE, SRI C.V. SUDHINDRA, SRI THURUNAS KRISHNACHARI SURESH, SHRI MANOHAR JEERIGE, SHRI MADHUSUDAN R. BIDI, VERSUS ASSISTANT COMMISSIONER OF CENTRAL TAX, BANGALORE, JOINT COMMISSIONER OF CENTRAL TAX BANGALORE, UNION OF INDIA, THE SUPERINTENDENT OF CENTRAL TAX, DSD-2 BENGALURU, THE PRINCIPAL CHIEF COMMISSIONER OF CENTRAL TAX BENGALURU [ 2024 (5) TMI 466 - KARNATAKA HIGH COURT ] where it was held that 'individual lawyers and Partnership of firm of Advocates, Senior Advocates are exempted from payment of service tax under certain circumstances.' The impugned order is liable to be set aside - the matter is relegated to the stage of hearing after show cause notice - petition disposed off by way of remand.
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Central Excise
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2024 (8) TMI 153
Recovery of rebate already sanctioned on exported goods - rejection of claims of rebate which were pending for disposal - improper availment of CENVAT Credit - fake invoices - grey fabrics were never supplied by the dealers / manufacturers and only central excise invoices indicating duty payment were sent to the processors without supply of the goods - HELD THAT:- It would be germane to refer to the findings arrived at by the Revisional Authority on the basis of the records pertaining to the role of the petitioners which in no uncertain terms implicates the petitioners for the fraud which was detected during the course of the investigation for supply of the grey fabrics without there being any existent manufacturers and only paper invoices were issued without payment of excise duty. It is also revealed during the findings recorded by the Revisional Authority to the effect that the goods which were even provided to the processors by the petitioners which was purchased from the suppliers of the grey fabrics were not the same goods on which the CENVAT Credit was reversed later on by the processors. In case of Diwan Brothers [ 2014 (9) TMI 147 - GUJARAT HIGH COURT ], this Court did not grant the benefit of rebate on export on the ground that it was not proved that the supplier of the goods paid the duty on the very goods which came to be supplied and accordingly, held ' Under the circumstances, unless and until the same is established the case of the petitioner cannot be considered. In the present case as such it is found that the transactions between the petitioner and its supplier (M/s. Universal Textiles) were found to be fake. Even otherwise it is required to be noted that as such it is pointed out that M/s. Mamta Silk Mills Pvt. Ltd. has demanded the refund of the said duty in view of the subsequent proceedings initiated by it. Under the circumstances, on the aforesaid ground, the petitioner shall not be entitled to the rebate claim.' Thus, no interference is called for in the impugned order passed by the Revisional Authority - petition dismissed.
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2024 (8) TMI 152
Refund of accumulated CENVAT credit under Rule 5 of CENVAT Credit Rules, 2004 read with notification 27/2012-CE (NT) dated 18.6.2012 - although the claims were sanctioned after being verified by the Range Officer and also by the refund Sanctioning Authority, Revenue s appeal was preferred based on the Post-Audit report without furnishing a copy of the same to the Appellants, which amounts to violation of natural justice. HELD THAT:- The Commissioner, Appeals has forwarded the appeal memorandum [EA-2] filed by revenue to the appellant and granted personal hearing. It s not clear whether the Audit note was enclosed along with the appeal memorandum or whether the allegations in the note were substantially a part of the appeal filed. However, it is felt that the appellant cannot demand a copy of the post-audit note which is an internal document of the department. The department is free to use the said note in its entirety or only in part as is felt necessary for framing its appeal. No violation of natural justice is done even if the post-audit note of the department which is a correspondence between one wing of the department and another is not supplied to the appellant. The appellant is only required to meet the averments made in the appeal arising from within the issues before the Original Authority. A plain reading of the second proviso to Section 35A(3) of the CEA 1944 shows that if the Commissioner (Appeals) is of opinion that any duty of excise has been erroneously refunded, no order requiring the appellant to pay any duty erroneously refunded shall be passed unless the appellant is given notice within the time-limit specified in Section 11A to show cause against the proposed order. It is found that both the issues, which are a mixed question of fact and law, were not taken up before the Ld. Commissioner Appeals. The Appellant did not file any cross-objections to the appeals nor did they appear for a personal hearing on any of the three dates given to them. The Tribunal has an inherent power, indeed a duty, to prevent the right of appeal being abused by an appellant who keeps back till the stage of appeal, points of law or fact which he could have raised before the lower authority, without showing any reason and thus places the other side at a disadvantage - due to the non-joining of the appellant in the appeal proceedings, the factual position relating to the audit note and the alleged non-issue of SCN or the view of the Commissioner Appeals on these legal issues is not available before me. In the circumstances of this case and in the interest of justice the matter merits to be remanded. The matter remanded back to the Ld. Commissioner Appeals for a decision afresh - appeal disposed off by way of remand.
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2024 (8) TMI 151
CENVAT Credit - service tax paid on Expat Cost - input service or not - reverse charge mechanism - jurisdiction of Learned Additional Commissioner, Chennai - I - responsibility of the jurisdictional officer with whom the ISD has registered to decide the dispute regarding eligibility or otherwise of the service tax credit that the ISD passes on to others (Appellant). Jurisdiction of Learned Additional Commissioner, Chennai - I - responsibility of the jurisdictional officer with whom the ISD has registered to decide the dispute regarding eligibility or otherwise of the service tax credit that the ISD passes on to others (Appellant) - HELD THAT:- As regards the issue that it is the responsibility of the jurisdictional officer with whom the ISD has registered to decide the dispute regarding eligibility or otherwise of the service tax credit that the ISD has taken and proposes to pass on to others, it is seen that as per Rule 9 (5) of the Cenvat Credit Rules, 2004, the burden of proof regarding the admissibility of the CENVAT credit shall lie with the manufacturer or provider of output service taking such credit. This would be irrespective of whether the invoice is from an ISD or directly from a manufacturer / service provider. The Hon ble Apex Court too examined a matter pertaining to the availing of credit under Section 70 of the Karnataka VAT Act, 2003, in THE STATE OF KARNATAKA VERSUS M/S ECOM GILL COFFEE TRADING PRIVATE LIMITED [ 2023 (3) TMI 533 - SUPREME COURT] . The Hon ble Court at the cost of repetition, observed and held that unless and until the purchasing dealer discharges the burden cast on him and proves the genuineness of the transaction/ purchase and sale by producing the aforesaid materials, such purchasing dealer shall not be entitled to Input Tax Credit. A Coordinate Bench of this Tribunal in CLARIANT CHEMICALS (I) LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE [ 2015 (10) TMI 2754 - CESTAT MUMBAI] held that it would be seen from the definition that input service distributor is neither a service provider nor a manufacturer but is only an office of the service provider or manufacturer. Since input service distributor neither manufactures the goods nor provides the service, there is no question of input service distributor liable to pay any excise duty or service tax - Since the ISD is responsible to ensure that only eligible credit is distributed as per the conditions mentioned in the Rules, he has not 'availed' of any credit for the same to be reversed or denied. It is the duty of the recipient to take only eligible credit and thereby of the jurisdictional officer of the recipient assessee to verify the credit taken and take suitable action thereon, if necessary. Input service used in or in relation to the manufacture of final products - HELD THAT:- The input services received from the ISD should be meant for use in or in relation to the manufacture of final products being not satisfied. It is found that the list of services on which credit based on ISD invoice was taken and as to why it is not found to have been used in or in relation to the manufacture of finished products in the appellants factory where the credit has been availed, has not been dealt with in detail in the impugned order. Merely stating that revenue did not get a reply to their query from the appellant would not suffice. Moreover CBE C, vide Circular No. 33/33/94-CX dated 4-5-1994 has clarified that there is no 1:1 correlation between input and final product under the Cenvat scheme for utilisation of credit. Hence the credit cannot be denied on assumptions and presumptions. The demand in this case pertains to the period 2009 i.e. prior to the changes brought in by Notification No. 3/2011 dated 01/03/2011, w.e.f 01/04/2011 to the definition of Input service' under Rule 2 (l) of the Cenvat Credit Rules, 2004 substituting the earlier definition and omitting the expression activities relating to business'. Prior to the said date the scope of the term input and input service was very broad. On finding that the impugned order does not set out the actual facts for denying the credit, service credit wise or give any cogent reason for the denial and considering the broad scope of the term input service prior to 01/04/2011, without there being a 1:1 corelation with input and output, we are inclined to accept the appellants plea. The appellant was eligible for availing the credit and the demand for duty, interest and imposition of penalty in the impugned order cannot be sustained. The impugned order hence merits to be set aside and is so ordered - Appeal allowed.
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2024 (8) TMI 150
Distribution of credit of service tax paid to other two manufacturing units located at Pune and Gurgaon - Rule 7 of the CENVAT Credit Rules, 2004 - period April 2009 to March 2012 - HELD THAT:- There are no impediment in the appellant availing of the entire service tax credit paid on import of services for their unit at Gummidipoondi only and not distributing the credit of service tax paid on such services to their other two manufacturing units located at Pune and Gurgaon during the impugned period. The appellant was eligible for availing the credit and the demand for duty, interest and imposition of penalty in the impugned order cannot be sustained. The impugned order hence merits to be set aside and is so ordered - appeal allowed.
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2024 (8) TMI 149
Clandestine removal - MS ingots - onus to prove on parties - violation of provisions of section 6 of the Central Excise Act, 1944 read with Rule 9 of Central Excise Rules, 2002 (CER 2002) and Rules 6, 8 and 10 of the above Rules - Penalty under Rule 26 of C.E.R. 2002 - HELD THAT:- It must be stated that it is for the department to establish by methods known to law that duty was evaded and to bring out the role of the parties alleged to have been involved in a satisfactory manner. That onus cannot be shifted to the parties against whom allegations have been made. It is only when sufficient evidence, either direct or circumstantial, in respect of its allegations was disclosed by the Revenue that adverse inference could be drawn against the noticees. In the case of imposition of penalty, it has to be proved further by revenue that the person penalised was involved in the blame worthy act with which he is charged. On enquiry it was informed by revenue that the main noticee M/s. Vaibhav Corporation, Madurai has not filed an appeal. It is found that the impugned order is very cryptic about the part played by the appellants. The case against all the appellants has been bunched together and disposed of in a single para on generalities without discussing the specific wrong doings in each individual case. The Department has built up the case of clandestine removal against the appellants based on the third-party documents which were recovered and statements that were recorded from the M/S. Vaibhav Mercantile without any evidence collaborating the alleged activity at the appellants end, like goods receipt register, stock register, transporters trip sheets, consignment note, VAT assessment of the appellant on the particular period, profit Loss account/ yearly balance sheet of the appellants, statements etc. In fact, the appellants / company officials have in their statements categorically denied indulging in any unaccounted transactions. In such a situation it is difficult to sustain the charge of blame worthy conduct by the appellants merely on the assumptions and presumptions and hence no penalty could have been imposed on them. Revenue has failed to prove its case and hence the impugned order merits to be set aside. The impugned order is set aside in as much as it relates to the appellants - appeal allowed.
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2024 (8) TMI 148
Clandestine removal - demand on the basis of electricity consumption - demand for M.S. Ingots which has been calculated on the basis of ledger pages - demand on the basis of ledger pages not recovered from residence of Directors - demand on basis of ledger pages and documents recovered from the residence - demand in respect of risers and runners alleged to have been manufactured but not accounted for based on the electricity consumption of the unit - inadmissible Cenvat credit on receipt of scrap. Demand on the basis of electricity consumption - contention of the Appellant is that consumption of electricity varies between 900 to 1000 units per Ton - HELD THAT:- There is no corroborative evidence of procurement of any unaccounted raw material, transportation and/or seizure of any unaccounted raw material in the unit of the Appellant or during its transportation, payment trail for unaccounted raw material. No suppliers of unaccounted raw material have been identified. There was no discrepancy in stock of finished goods at the time of visit of the Officers. No finished goods were seized during their unaccounted removal. No purchasers of allegedly clandestinely cleared finished goods have been identified. No unaccounted cash has been recovered from the premises of the two units of the Appellant or from residence of Directors. Thus, allegation of clandestine removal is only on the basis of electricity consumption. In the case of COMMISSIONER OF C. EX., MEERUT-I VERSUS RA CASTINGS PVT. LTD. [ 2010 (9) TMI 669 - ALLAHABAD HIGH COURT] , Hon ble Allahabad High Court, while upholding the order of the Tribunal RA CASTINGS PVT. LTD. VERSUS COMMISSIONER OF C. EX., MEERUT-I [ 2008 (6) TMI 197 - CESTAT NEW DELHI] held that mere electricity consumption cannot be the sole basis for determining duty liability. The demand raised on the basis of electricity consumption is not sustainable and is set aside. Equivalent penalty on this ground is also set aside. Demand raised on the basis of ledger pages as per table 7(A) of SCN which has been compiled on the basis of RUD 9 - HELD THAT:- The documents have been recovered from the briefcase of Shri Nitin Agarwal. It is found that in his statement, Shri Nitin Agarwal, Director has accepted these transactions. He has not retracted from his statement at any time. Further, his statement is corroborated by the said documents and vice-versa. The demand of Central Excise duty of Rs.18,32,131/- and education cess of Rs.36,643/- and imposition of equivalent penalty of Rs.18,68,774/- confirmed. Demand on the basis of RUD-12 recovered from the briefcase of Shri Nitin Agarwal and on the basis of documents recovered from the residence of the Directors - HELD THAT:- These documents have also been accepted by Shri Nitin Agarwal in his statement. The demand of Rs.5,38,732/- and education cess of Rs.10,775/- along with imposition of equivalent penalty confirmed. Demand in respect of clandestine removal of risers and runners which are alleged to have been clandestinely manufactured and removed but not accounted for - HELD THAT:- The three financial years for which demand has been raised are 2004-05, 2005-06 and 2006-07. The demand of risers and runners has also been raised on the basis of electricity consumption per unit. This issue has already been discussed in detail in preceding paras. Accordingly, the demand of Central Excise duty of Rs.4,13,177/- and education cess of Rs.8,264/- in respect of risers and runners set aside. Equivalent penalty of Rs.4,21,441/- is also set aside. Demand on the basis of shortage in quantity of raw material noticed at the time of search - HELD THAT:- There is no record in panchnama of any weighment having been done. The SCN is silent on the mechanism adopted by the Officers who carried out the search to arrive at the shortage. The counsel for the Appellant also contended that the Officers have shown shortage only to book a case against the Appellant and the fact that there is no shortage in stock of any other raw material or in the stock of finished goods established the bona fides of the Appellant - the demand on alleged shortage and the equivalent penalty imposed for the alleged shortages set aside. Demand in respect of inadmissible Cenvat credit on receipt of scrap for the years 2004-05 and 2005-06 - HELD THAT:- The demand has been raised on the allegation that waste scrap shown to have been received by the Appellant from its sister concern Kunj Forgings Pvt. Ltd. were actually not received but were paper transactions only. Appeal disposed off.
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CST, VAT & Sales Tax
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2024 (8) TMI 147
Challenge to revenue recovery notices issued for recovery of amounts allegedly due from the appellant under the Kerala Value Added Tax Act (KVAT Act) and Central Sales Tax Act (CST Act) for various financial years - case of the appellant in the Writ Petition was that in respect of the tax dues under the CST Act and KVAT Act for various assessment years, he had opted for settlement in accordance with the Amnesty Scheme 2020 - HELD THAT:- It was open to the respondents to consider an adjustment of the refund amount due to the appellant towards the amounts due from him by way of settlement under the Amnesty Scheme. The reasons furnished by the respondents for not acceding to the request of the appellant are not legally sustainable. The ends of justice would be met by adjusting the Amnesty amount of Rs.1,60,465/- from the Rs.5 lakhs that is due to the appellant by way of refund, and utilising the remaining amount for settlement of the dues outstanding from the appellant in the assessment years other than those that were opted for settlement under the 2020 Amnesty Scheme. This Writ Appeal is allowed by setting aside the impugned judgment of the learned Single Judge, and by directing the respondents to deduct the amount of Rs.1,60,465/- from the amount of Rs.5 lakhs that is due to the appellant by way of refund and treat the dues for the assessment years opted for under the Amnesty Scheme 2020 as finally settled under the said Scheme - appeal disposed off.
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Indian Laws
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2024 (8) TMI 146
Complaint under Section 200 of the Code of Criminal Procedure, 1973 - offence of violating the provisions in Section 29A of the National Housing Bank Act, 1987 - HELD THAT:- A Bench of three Hon ble Judges of this Court had an occasion to interpret Section 141 of NI Act in the case of SMS PHARMACEUTICALS LTD. VERSUS NEETA BHALLA [ 2005 (9) TMI 304 - SUPREME COURT ] held that ' By virtue of the office they hold as managing director or joint managing director, these persons are in charge of and responsible for the conduct of business of the company. Therefore, they get covered under Section 141. So far as the signatory of a cheque which is dishonoured is concerned, he is clearly responsible for the incriminating act and will be covered under sub-section (2) of Section 141.' Hence, in the absence of the averments as contemplated by sub-section (1) of Section 50 of the 1984 Act in the complaint, the Trial Court could not have taken cognizance of the offence against the third to seventh accused, who are allegedly the directors of the first accused company. However, the second accused being the Managing Director, would be in charge of the company and responsible to the company for its business. Therefore, there was no justification for quashing the complaint against the second accused. No reasons have been assigned to quash the complaint against the first accused. The impugned order is modified, and it is directed that complaint C.C. No. 4331 of 2010 filed in the Court of the Judicial Magistrate, Egmore at Chennai shall stand quashed as against the third to seventh accused shown therein - Appeal allowed in part.
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