TMI Tax Updates - e-Newsletter
September 12, 2022

Case Laws in this Newsletter:

GST Income Tax Customs Insolvency & Bankruptcy Service Tax Central Excise CST, VAT & Sales Tax Indian Laws

Articles

1. THRESHOLD LIMIT FOR PROSECUTION, ARREST AND BAIL UNDER CUSTOMS ACT, 1961

   By: DR.MARIAPPAN GOVINDARAJAN

2. CBIC GUIDELINES ON PROSECUTION UNDER GST LAW

   By: Dr. Sanjiv Agarwal

3. Interest is leviable despite the availability of credit in cash/credit ledgers if no payment was made in GST

   By: Bimal jain

News

1. Both India and USA desire to strengthen economic relations & strategic partnership: Shri Piyush Goyal

2. Indo-Pacific Economic Framework (IPEF) for Prosperity ministerial meet was inclusive and fruitful: Shri Piyush Goyal

3. Direct Tax Collections for F.Y. 2022-23 up to 08.09.2022

Notifications

GST - States

1. S. R. O. No. 707/2022 - dated 18-7-2022 - Kerala SGST

Seeks to amend Notification G.O. (P) No.63/2017/TAXES, dated 30th June, 2017

2. S. R. O. No. 706/2022 - dated 18-7-2022 - Kerala SGST

Amendment in Notification G.O.(P) No.62/2017/TAXES, dated 30th June, 2017

3. S. R. O. No. 705/2022 - dated 18-7-2022 - Kerala SGST

Seeks to amend Notification G.O. (P) No.74/2017/TAXES, dated 30th June, 2017

4. S. R. O. No. 704/2022 - dated 18-7-2022 - Kerala SGST

Seeks to amend in Notification G.O. (P) No. 73/2017/TAXES, dated 30th June, 2017

5. S. R. O. No. 703/2022 - dated 18-7-2022 - Kerala SGST

Seeks to amend in Notification G.O. (P) No.72/2017/TAXES dated 30th June, 2017

Circulars / Instructions / Orders

GST

1. 180/12/2022 - dated 9-9-2022

Guidelines for filing/revising TRAN-1/TRAN-2 in terms of order dated 22.07.2022 & 02.09.2022 of Hon’ble Supreme Court in the case of Union of India vs. Filco Trade Centre Pvt. Ltd.

Customs

2. 17/2022 - dated 9-9-2022

Customs procedure for export of cargo in closed containers from ICDs to Bangladesh using inland waterways

Highlights / Catch Notes

GST

• Refund Claim Denied: Assessee Lacks Required Documentary Evidence for CGST, SGST, IGST Credit on Zero-Rated Supplies.

  Case-Laws - HC : Refund of accumulated CGST, SGST and IGST credit - zero rated supplies - The assessee could not provide any such corroborative evidence in the form of document s even before the Appellate Authority what to say before the assessment proceeding, to substantiate its claim of zero rated supply so that its claim could be validated. The law is very clear that merely claiming any refund on the basis of averments would not suffice unless and until the said claim of any assesse is corroborated by documentary evidence - HC
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• Appellate Authority wrongfully dismisses appeal, denies delay condonation request in GST cancellation case; decision must be overturned.

  Case-Laws - HC : Delay in seeking revocation of the GST cancellation - bonafide reasons and sufficient cause - the Appellate Authority / respondent No.1 clearly committed an error in summarily rejecting the appeal filed by the petitioner and also rejecting the request to condone the delay in filing the appeal without assigning proper, valid and cogent reasons and that the same deserves to be set aside. - HC
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Income Tax

• Court Rules Notices u/s 148 Invalid Due to Lack of Jurisdiction and "Unsigned Approval" Challenge.

  Case-Laws - HC : Reopening of assessment u/s 147 - valid approval u/s 151 - “unsigned approval” issued in electronic form - The point of time when the AO issued notices u/s 148, he was having no jurisdiction to issue the impugned notices under section 148 of the Act, 1961. Consequently the impugned notices issued by the AO u/s 148 were without jurisdiction. The questions no. (a) and (b) are answered accordingly. - HC
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• High Court Upholds AO's Authority to Reopen Assessments u/s 153A for Undisclosed Income Despite Previous Returns.

  Case-Laws - HC : Validity of assessment u/s 153A - AO would be competent to reopen the assessment proceeding already made and determine the total income of the assessee. The Assessing Officer, while exercising the power under Section 153A of the Act, would make assessment and compute the total income of the assessee including the undisclosed income, notwithstanding the assessee had filed the return before the date of search which stood processed under Section 143(1)(a) of the Act. - Order of ITAT deleting the additions set aside - HC
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• Assessee's Section 80P deduction denied due to e-return delay; password reset issues cited. Matter referred to CBDT.

  Case-Laws - AT : Deduction u/s. 80P - hardship to file e-return of income - login problem - In the instant case the assessee faced genuine hardship, which mainly arised on account of resetting of login password, which is necessary for e-filing the return - As observe that the genuineness of claim of the assessee regarding deduction u/s. 80P of the Act has not been examined and the claim was denied merely for delay in filing e-return. - AO directed to place the matter before CBDT / Board and decide the matter accordingly - AT
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• Deduction Denied: Ownership of Two Properties Disqualifies Assessee from Section 54F Benefits for Long-Term Capital Gains.

  Case-Laws - AT : Deduction u/s. 54F - LTCG - Claim denied since the assesse was owning two house property - Assessee claimed that these properties are Farm House / Commercial property instead - assessee’s claim of agricultural activity and dairy activity is not substantiated with proof of evidence - Claim was rightly denied - AT
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• Assessment Error: Wrong PAN and Assessee Name Lead to Mistaken Addition in Goni Book Shop Case.

  Case-Laws - AT : Assessment mentioning the wrong PAN - PAN of the assessee was wrongly mentioned including the erroneous name in assessment order. The revenue authority was erred to make addition in the hand of the assessee which was not related at all to assessee. The deposit of cash in the bank is recorded in the books of accounts of M/s. Goni Book Shop Bhaderwah which is related to his father & uncle. The two assessments cannot be done under the same PAN. - AT
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• Reopening of Assessment u/s 147 Invalidated as AO Relied on Borrowed Satisfaction Without Independent Analysis.

  Case-Laws - AT : Reopening of assessment u/s 147 - AO has made addition on the basis of the borrowed satisfaction. He has not applied his mind and in our opinion, he ought to have done independent home work but in the present case no such exercise was done by the learned AO for the reason best known to him. Therefore, in our considered opinion, in such case, addition cannot be made. - AT
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• CIT Revision Section 263 Stresses Detailed Assessment Orders; Tax Authorities Must Guide Assessing Officers on Documentation.

  Case-Laws - AT : Revision u/s 263 by CIT - no discussion or elaborate discussion in the assessment order - It is for the Tax Authorities to ensure that the Assessing Officers are well instructed to write the order elaborating the issues enquired into; the evidences considered to allow the claim and also discussions on how the claim is rejected. The assessee has no role to play as how the assessment orders are written. - AT
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• Interest from Previous Years on Accrual Basis Not Added as Additional Income for NPA Account.

  Case-Laws - AT : Accrual of income - addition on account of accrued interest on NPA account as income - the assessee had adequately established that the interest received during the year as pertained to interest of those years when the assessee was accounting for the interest on accrual basis - No additions - AT
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Customs

• High Court Clarifies: Only Owners Can Get Provisional Release of Seized Goods Under Customs Act Section 110A.

  Case-Laws - HC : Seeking provisional release of the seized goods - to whom - A reading of Section 110 A makes it abundantly clear that goods seized may be released to the owner. The said section does not include or envisage release of goods provisionally in favour of an importer of goods much less does it envisage, a release in favour of ‘any person’, in addition to the owner as mentioned in Section 124 of the Act, who has been served a notice under the said section - the Tribunal has in fact committed an error in importing the definition of an ‘importer’ as defined under Section 2(26) of the Act and reading the same in Section 110A of the Act.- HC
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• Customs Broker Penalized for Negligence, Violating Duty to Protect Importers and Authorities; License Misuse Highlighted in Compliance Breach.

  Case-Laws - AT : Levy of penalty on customs broker - The Customs Broker has a very important position and has to safeguard the interest of both the importer and the Customs - The Regulation is intended to make the clearance of export and import in a hassle-free manner for both importer/exporter and the customs. The trust embedded in the Customs Broker who has been issued a licence cannot be used in a negligent manner so as to permit undeclared / prohibited goods in large quantities. - AT
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IBC

• Liquidation Order Upheld: Resolution Professional's Actions and Directors' Non-Cooperation Lead to Unanimous COC Vote for Liquidation.

  Case-Laws - AT : CIRP proceedings - validity of order of liquidation - Wither the Resolution Professional (RP) has not at all taken any sincere efforts for obtaining appropriate resolution plan - there was complete non-cooperation by the appellants who were suspended directors of the corporate Debtor. It is further evident that COC resolution was with 100% voting for liquidation of the Corporate Debtor and as such we do not find any justification to interfere with the impugned order. - AT
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• NCLT Rules Application for Insolvency Process Time-Barred Due to Expired Limitation Period in MoU Breach Case.

  Case-Laws - AT : Initiation of CIRP - period of limitation - NCLT admitted the application - The time is not the essence of contract with regard to sale of immovable property, unless there are special features and terms and conditions in the contract, which makes the time as essence of the contract - the right to sue accrued to Respondent for breach of Clause-10 of the MoU dated 25.01.2013 on 25.07.2013, thereafter on 25.01.2016 and the application filed on 06.11.2020 is clearly barred by time. - AT
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Service Tax

• Exclusive Trademark License Exempt from Service Tax as "Transfer of Right to Use" Under Agreement Terms.

  Case-Laws - AT : Levy of service tax - deemed sale - right to use component of the Trademark License Agreement - in the case of the Trademark License Agreement an exclusive license to use the trademark in any manner during the term of the agreement was granted. Such a license could not be granted to any other person during the period of the agreement. This would clearly fall within the meaning of the phrase “transfer of right to use the goods” - No service tax liability - AT
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Central Excise

• Court Criticizes Order for Lack of Detail; Fails to Address Key Legal Issues and Cited Case Law Properly.

  Case-Laws - HC : Principles of natural justice - the impugned order is certainly cryptic. It does not discuss the legal issue raised by the petitioner with reference to documents on records, in as detailed a fashion as may have been appropriate. - The flaw in the present impugned order is that it is rather nonspeaking and omits to consider the circular and case law cited. However, this is not an error so grave so as to justify invoking the extraordinary jurisdiction of this Court. - HC
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• CENVAT Credit Case: Demand for Duty Time-Barred Due to Vague Allegations and Invoice Name Mismatch.

  Case-Laws - AT : CENVAT Credit - Extended period of limitation - mismatch of names in the invoices - The department was given intimation with regard to import of goods and they have also filed E.R.1 returns disclosing credit availed by them. On such score, a very vague allegation that the appellant has suppressed facts with intention to evade payment of duty cannot be the basis for invoking extended period - the demand is time-barred. - AT
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VAT

• Appellate Authority can consider new claims if justified; Tribunal accepts 'C' forms for 2005-2006 not previously submitted.

  Case-Laws - HC : The Appellate Authority has very wide powers and can exercise its discretion to consider a claim or a ground not considered by the assessing authority for a sufficient cause. The Tribunal has accepted and considered the ‘C’ forms of M/s Varsha Controls Gear which could not have been furnished before the assessing authority, though the same undisputedly, pertain to the assessment year 2005-2006 - HC
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• Court Rules Excess Pre-Deposit Must Be Refunded Post IBC Resolution Plan Approval, With Applicable Interest.

  Case-Laws - HC : Refund of amount paid as pre-deposit with the appeals (along with interest) - Approval of resolution plan under IBC - ex parte assessment orders - Once the tax liability raised by the Department had been fixed by effect of acceptance of Resolution Plan, manifestly, the Department could not hold on to any payment made by the assessee in excess of what has been approved under the Resolution Plan - HC
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Case Laws:

• GST

• 2022 (9) TMI 484
  Validity of adjudication order passed by the respondent authority - full text of the order was not communicated to the appellant - non-speaking order - violation of principles of natural justice - Section 74 (9) of the West Bengal G.S.T. Act, 2017 - HELD THAT:- It is no doubt true that an appeal is a continuation of original proceeding but nevertheless an opportunity before the original authority can never be equated to an opportunity before the first appellate authority. Therefore, the appellant can be granted one more opportunity to submit a proper reply and the adjudicating authority can decide the matter after affording an opportunity of personal hearing to the appellant, which appears to have not been extended before the order dated 19th February, 2021 was passed. The appeals are disposed of modifying the direction issued by the learned single Bench by directing the appellant to treat the order dated 19th February, 2021 as an additional show-cause notice and submit his objection within two weeks from the date of receipt of server copy of this judgment and order - the said authority shall conclude the proceeding and pass a speaking order on merits and in accordance with law as expeditiously as possible but preferably within a period of six weeks from the date on which the personal hearing is concluded.

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• 2022 (9) TMI 483
  100% EOU - Refund of accumulated CGST, SGST and IGST credit - zero rated supplies - case of the petitioner is that the respondent No.3 without considering the explanation given by the petitioner and without even providing an opportunity of personal hearing passed an order - violation of principles of natural justice - HELD THAT:- The petitioner has not produced any documentary evidence for his claim of refund; either before the adjudicating authority or before the appellate authority though he was afforded personal hearing but the petitioner failed to prove that the declaration zero rated value of GSTR 1 was legal and genuine. The assessee could not provide any such corroborative evidence in the form of document s even before the Appellate Authority what to say before the assessment proceeding, to substantiate its claim of zero rated supply so that its claim could be validated. The law is very clear that merely claiming any refund on the basis of averments would not suffice unless and until the said claim of any assesse is corroborated by documentary evidence. In the instant case the petitioner is making claim without furnishing any documentary evidence to support their contention. Application dismissed.

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• 2022 (9) TMI 482
  Provisional attachments - unblocking of ITC - non-processing Petitioner s refund application - HELD THAT:- In Paragraph 5 of the Affidavit of Vinayak Azaad, affirmed on 7th September 2022, there is an averment that credible intelligence exist on file and Petitioner has availed illegal and ineligible input credit from its vendors and one such vendor had also been arrested by the CGST, Delhi, North Commissionerate. Mr. Raichandani states that since the copy of the Affidavit has been handed over to him in the Court when the matter was called out, there has been no time to file Affidavit of Petitioner denying these allegations. At the same time, Mr. Raichandani, on instructions, states that Petitioner has not availed of any illegal and ineligible input credit from any vendors. Mr. Raichandani states that the entry from the vendor Vikram Goel has been reversed by Petitioner at a great loss to Petitioner under protest and, therefore, it should be a non issue. Petition disposed off.

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• 2022 (9) TMI 481
  Permission to allow the petitioner to file Form GST TRAN-I - carry forward of transitional credit into its electronic credit ledger from the Pre GST Regime to GST Regime - HELD THAT:- Reliance placed in the Apex Court in the Case of UNION OF INDIA ANR. VERSUS FILCO TRADE CENTRE PVT. LTD. ANR. [ 2022 (7) TMI 1232 - SC ORDER] , where it was held that the time for opening of GST common Portal has been extended for a further period of four weeks from the date of the order. The time for opening of GST common portal has been extended for a further period of four weeks from the date of the order. As such, petitioner, who could not submit its TRAN-1 application, may submit TRAN-1 application within the window period as per direction of the Apex Court. The case of the petitioner shall accordingly abide by the directions passed by the Apex Court. The writ petition is disposed off.

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• 2022 (9) TMI 480
  Violation of Principles of natural justice - ex-parte adjudication order passed - no relied upon documents were ever provided to the petitioner - opportunity of personal hearing not granted - HELD THAT:- It appears that no relied upon documents were ever provided to the petitioner nor opportunity of personal hearing was granted. The law casts an obligation upon the parties to serve the documents/inspection report/intelligence note which has been relied upon by either of the parties in a proceedings - In the instant case, no document has ever been served upon the Petitioner and/or no opportunity of hearing was given being in violation of Principles of Natural Justice and also the mandate of the Act. The Hon ble Supreme Court in the case of AYAAUBKHAN NOORKHAN PATHAN VERSUS THE STATE OF MAHARASHTRA OTHERS [ 2013 (8) TMI 563 - SUPREME COURT ] has held that in a case where the respondents have relied upon the documents obtained during inspection in the premises of the petitioners on the basis of intelligence note, it should be given to the petitioners to enable them to properly answer the charges there passed upon - In the case at hand, it clearly transpires that the impugned adjudication order dated 15.09.2020, has been passed in utter violation of principles of natural justice and also in utter defiance to the provisions of section 75(4) and section 75 (5) of the JGST Act. As a matter of fact, in the instant case the ex-parte adjudication order under section 73 of the JGST Act has been passed without giving any opportunity of hearing to the Petitioner as per section 75(4) of the Act and even without appreciating the documents on record and without verifying the electronically uploaded forms and information, merely on the behest of the superior authority. Since opportunity of personal hearing was not given to the petitioner nor relied upon documents were provided; interest of justice would suffice by remitting the matter back to the authority for compliance of the necessary provision especially Section 75(4) of the JGST Act. Consequentially, adjudication order dated 15.09.2020 is quashed and set aside. The matter is remitted back to the concerned respondent who shall issue a fresh notice to the petitioner for personal hearing and after providing relied upon documents and hearing the petitioner following proper principle of natural justice pass a fresh order.

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• 2022 (9) TMI 479
  Delay in seeking revocation of the GST cancellation - bonafide reasons and sufficient cause, for the delay provided or not - HELD THAT:- In view of the fact that the petitioner has explained the delay in seeking revocation of the GST cancellation by contending that the same was due to Covid-19 pandemic and on account of bonafide reasons and sufficient cause, it is opined that the Appellate Authority / respondent No.1 clearly committed an error in summarily rejecting the appeal filed by the petitioner and also rejecting the request to condone the delay in filing the appeal without assigning proper, valid and cogent reasons and that the same deserves to be set aside. It is also relevant to state that while passing the impugned order, respondent No.1 / Appellate Authority has failed to consider and appreciate the notification issued by the Central Government at Annexure Q whereby the time limit for making application and appeal seeking revocation of cancellation of registration was extended upto 30.09.2021 and the petitioner having filed an appeal on 12.08.2021, was entitled to the benefit of said notification and failure to appreciate this has resulted in erroneous conclusion. In view of the fact that the petitioner has offered valid and proper explanation as stated supra for not seeking revocation of the cancellation of the registration within the prescribed period, it is also necessary to set aside the cancellation order (Annexure B) and restore the GST registration in favour of the petitioner. Petition allowed.

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• Income Tax

• 2022 (9) TMI 478
  Reopening of assessment u/s 147 - valid approval u/s 151 - unsigned approval issued in electronic form - Valid Satisfaction noted by Prescribed Authority under section 151 - Whether an unsigned content in an electronic record said to be pushed through electronic mode at a particular point of time, can be said to be a valid satisfaction of the PCIT under Section 151 for assumption of jurisdiction by the Assessing Officer to issue jurisdictional notice to an assessee under Section 148 of the Act, 1961? - HELD THAT:- The expression shall be signed used in Section 282A(1) of the Act 1961 makes the signing of the notice or other document by that authority a mandatory requirement. It is not a ministerial act or an empty formality which can be dispensed with. Signed means to sign one s name; to signify assent or adhesion to by signing one s name; to attest by signing or when a person is unable to write his name then affixation of mark by such person. The document must be signed or mark must be affixed in such a way as to make it appear that the person signing it or affixing his mark is the author of it. Therefore, a notice or other document as referred in Section 282A (1) of the Act, 1961 will take legal effect only after it is signed by that Income Tax Authority, whether physically or digitally. The usage of the word shall make it a mandatory requirement. In the case of Chhugamal Rajpal vs. S.P. Chaliha and others [ 1971 (1) TMI 9 - SUPREME COURT] Hon ble Supreme Court considered the validity of recording satisfaction under Section 151 by the Commissioner for the purposes of issuance of notice under Section 148 of the Act, 1961. In the present set of facts there was no valid satisfaction recorded by the by the Prescribed Authority under section 151 of the Act, 1961 when the AO issued notice to the assessees under section 148 of the Act, 1961. At the time when the notice under section 148 was issued by the Assessing Officer to the petitioner there was no valid satisfaction recorded by the Prescribed Authority i.e. the Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner. Subsequent to issuance of the notice under section 148 by the Assessing Officer, the satisfaction under section 151 was digitally signed by the Prescribed Authority. The point of time when the AO issued notices u/s 148, he was having no jurisdiction to issue the impugned notices under section 148 of the Act, 1961. Consequently the impugned notices issued by the AO u/s 148 were without jurisdiction. The questions no. (a) and (b) are answered accordingly. There was no valid satisfaction under section 151, therefore, the question whether Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner of Income Tax for the purposes of recording of satisfaction under section 151 is a designated Income Tax Authority under section 282 A of the Act 1961, is left open.

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• 2022 (9) TMI 477
  Validity of assessment u/s 153A - Whether assessment or re-assessment under Section 153-A can be framed only on the basis of incriminating material found during the course of search under Section 132 ? - Substantial question of law - HELD THAT:- The aforesaid substantial questions of law have been answered by this Court in a bunch of appeals in M/s Shri Mehndipur Balaji [ 2022 (7) TMI 294 - ALLAHABAD HIGH COURT] wherein taking note of the Division Bench judgment of this Court in Kesarwani Zarda Bhandar Sahson Alld [ 2017 (4) TMI 57 - ALLAHABAD HIGH COURT] and other connected appeals, the substantial question of law involved therein were answered stating in cases where the assessment or reassessment proceedings have already been completed and assessment orders have been passed, which were subsisting when the search was made, the Assessing Officer would be competent to reopen the assessment proceeding already made and determine the total income of the assessee. The Assessing Officer, while exercising the power under Section 153A of the Act, would make assessment and compute the total income of the assessee including the undisclosed income, notwithstanding the assessee had filed the return before the date of search which stood processed under Section 143(1)(a) of the Act. In the light of the aforesaid, the reasons given by the Tribunal that no material was found during the search cannot be sustained, since we have held that the Assessing Officer has the power to reassess the returns of the assessee not only for the undisclosed income, which was found during the search operation but also with regard to the material that was available at the time of the original assessment. The impugned order of the Income Tax Appellate Tribunal is hereby set aside and the appeal before the Tribunal is restored to its original number.

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• 2022 (9) TMI 476
  Assessment u/s 153A - Addition u/s 68 - incriminating material found during the search or not? - HELD THAT:- It is undisputed that the assessment was completed before the date of search. Nowhere it was the case of the authorities below that the said bank was not earlier disclosed. In these circumstances, by referring to the bank statement of said bank which was already disclosed, additions made cannot be said to be based upon incriminating material found during the search. As a matter of fact, ld. CIT (A) himself deleted the addition based upon the deposits in the said bank account on the ground that no incriminating material was found during search. Hence ld. CIT (A) on this issue is himself taking contradictory stand. In the orders of the authorities below, there was no mention that bank account has not been disclosed in the earlier return of income, hence addition made de hors on incriminating material found during the search is not sustainable as has been held in the case of CIT vs. Kabul Chawla [ 2015 (9) TMI 80 - DELHI HIGH COURT ] - Accordingly, on the jurisdictional issue, we hold that addition is not sustainable inasmuch as it was made de hors incriminating material found during search. Since we hold that addition was without jurisdiction, the addition on merits is not dealt with - Appeal filed by the assessee stands allowed.

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• 2022 (9) TMI 475
  Exemption u/s. 80P(2)(a)(i) - Taxability of interest income earned by cooperative society from Syndicate Bank - appellant society earned interest income on FDs with Syndicate Bank - Admittedly, these fixed deposits were not made for the purpose of procurement of bank guarantee for its business purpose - HELD THAT:- Fixed deposits were not made for the purpose of procurement of bank guarantee for its business purpose. The material on record clearly does not indicate the source of the investments. It is settled position of law that if the FDs are placed out of the surplus generated by the cooperative society, such interest income, partakes the same character as the business income of the cooperative society. In the present case, the material on record does not indicate the source of funds for making FDs in Syndicate Bank. Therefore, we are of the considered opinion that the matter requires to be remanded to the file of the Assessing Officer to decide the issue of eligibility of the interest income for exemption under the provisions of section 80P of the Act in terms of the decision of this Tribunal in NASHIK ROAD NAGARI SAHKARI PATSANSTHA LIMITED [ 2021 (12) TMI 1259 - ITAT PUNE] - Thus, the grounds of appeal filed by the assessee stands partly allowed.

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• 2022 (9) TMI 474
  Deduction u/s. 80P - hardship to file e-return of income before the due date as per provisions of section 139(1) - delay in filing the return was on account of two reasons, firstly, assessee s accountant left midway without informing and handover of pending duties and secondly, it took long time to reset login password, which was necessary to file e-return - HELD THAT:- Assessee is dissatisfied with the denial of deduction u/s. 80P by CIT(A) by applying the provisions of section 80AC - The undisputed facts remains that the assessee filed belated e-return on 18-07-2020 for the AY 2019-20, which was beyond the due date prescribed u/s.139(1). As per amendment brought in by Finance Act, 2018 w.e.f 1-4-2018 in section 80AC of the Act, as per clause (ii) of the said section on or after first day of April, 2018, no deduction is admissible under any provisions of Chapter VIA of the Act unless the assessee furnishes return of income for such assessment year on or before the due date specified under sub-section (1) of section 139. The assessee in order to claim deduction u/s. 80P was required to file the return before the due date as specified in sub-section (1) of section 139 of the Act. Assessee has stated to have faced genuine hardship, which prevented it to file the return of income before the due date. In the instant case the assessee faced genuine hardship, which mainly arised on account of resetting of login password, which is necessary for e-filing the return - As observe that the genuineness of claim of the assessee regarding deduction u/s. 80P of the Act has not been examined and the claim was denied merely for delay in filing e-return. It will certainly create hardship to the assessee if such claim which may be a genuine claim is denied for this technical error. In the interest of justice restore the issue to the file of the AO and direct him to place the application of assessee of having faced genuine hardship to file e-return of income before the due date as per provisions of section 139(1) before the Board(Central Board of Direct Taxes(CBDT) for considering the same and in case the Board decides in favour of the assessee, then the claim of assessee u/s. 80P may be examined on merits in accordance with law. We direct the assessee to file necessary documents and application as referred above before the AO. Appeal of the assessee is allowed for statistical purpose.

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• 2022 (9) TMI 473
  Addition of accrued interest on delayed Payment - accrued interest not recoverable - assessee was following the mercantile system of accounting and the assessee did not actually written off or reversed the interest credit entry in its accounts - CIT-A deleted the addition - HELD THAT:- We find that CIT(A) after considering the submissions of the assessee has given a finding that the aforesaid amount was not taxable in the year under consideration in view of real income theory. Before us, AR has also placed on record the copy of the computation of income for the A.Y. 2016-17 demonstrating that the aforesaid amount has been offered to tax in the year under consideration. In absence of any fallacy pointed by the Revenue in the findings of the Ld. CIT(A), we find no reason to interfere with the order of the CIT(A) on this ground. We, therefore, dismiss grounds of appeal nos.1 and 2 of the Revenue. Addition u/s 68 - Unexplained cash deposits - HELD THAT:- We find that before both the authorities the assessee had explained the source of cash deposits in the bank account of Mr. Pawan Goyal, from whom the assessee had received the share application money, to be out of the income surrendered on account of unaccounted sale during the course of search. Before us, the Revenue has not placed any material on record to demonstrate that the income surrendered in the case of share application money has not been accepted by the Revenue. In absence of any fallacy pointed to in the findings of the CIT(A), we find no reason to interfere with the order of CIT(A) and thus, ground of appeal of the Revenue is dismissed. Addition on account of business promotion expenses and on account of Diwali expenses - HELD THAT:- We find that CIT(A) after considering the detailed submissions made by the assessee before him has given a finding that there is no doubt about the genuineness of the expenditure and there is no finding in the assessment order that the business promotion expenses and Diwali expenses were incurred for the personal purpose / extraneous nature of expenses in the hands of Directors. CIT(A) after considering that since the assessee could not give the full details, restricted the disallowance to the extent of 10% on business promotion expenses after considering the business and turnover of the assessee and similarly granted partial relief on account of Diwali expenses against a sum claimed by the assessee on account of Diwali expenses . Before us, the Revenue has not pointed out any fallacy in the finding of the CIT(A). We, therefore, find no reason to interfere with the order of the Ld. CIT(A) and thus, the grounds of appeal of Revenue are dismissed.

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• 2022 (9) TMI 472
  Disallowance of claim for loss - trading loss claimed by the assessee in the transactions of gold and diamonds with the closely held/related parties - HELD THAT:- Tribunal thus passed a well-considered and a well-discussed order and decided the similar issue involved in AY 2009-10 [ 2017 (1) TMI 1759 - ITAT AHMEDABAD ] in favour of the assessee after taking into consideration all the facts of the case as well as the arguments raised by both the sides. . At the time of hearing before us, even though the learned DR has contended that every assessment year is separate and the similar loss incurred by the assessee in the similar transaction year after year cannot be accepted being artificial one, he has not been able to point out any distinction in the facts involved in the year under consideration vis- -vis the facts involved in AYs 2009-10 [ 2017 (1) TMI 1759 - ITAT AHMEDABAD ] and 2011-12 [ 2021 (8) TMI 983 - ITAT AHMEDABAD ] wherein a similar issue is decided by the Tribunal in favour of the assessee. He has also not been able to support and substantiate his contention that the loss in question claimed by the assessee and supported by the relevant documentary evidence in the form of bills/vouchers, complete quantitative details, audited books of account etc is an artificial loss. We, therefore, find no justifiable reason to take a different view on this issue in the year under consideration than the view taken by the Tribunal in AYs 2009-10 and 2011-12 by passing a well discussed and well reasoned order. - Decided in favour of assessee.

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• 2022 (9) TMI 471
  Unexplained cash payments - additions made after the date of search - HELD THAT:- The return deed subsequent to the date of search on 24-06-2013 seems to be an afterthought since no mention thereof was made at time of post search proceedings on 10-01-2013, however at the same time, it cannot be ignored that the original registered sale deed entered into between the assessee and the buyer contained a specific schedule of payment both by way of cheque and cash, and the Department has not been able to bring anything concrete to prove that the entire payment in cash as mentioned in the registered sale deed was made at the time of registration of sale deed itself i.e. entire cash payment was made prior to the scheduled date of cash payments as per the registered sale deed. We are in agreement with the view of the CIT(Appeals) that reasonably, unaccounted cash component should be restricted to scheduled cash payments (as per registered sale deed) which were supposed to be made up to such date when search was conducted at the premises of the assessee on 09-01-2013. Accordingly, we find no infirmity in the order of Ld. CIT(Appeals) in restricting the addition on account of unexplained cash payments to the extent of schedule of payments till the date of search conducted at the premises of the assessee on 09-01-2013. Appeal of the Department is dismissed.

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• 2022 (9) TMI 470
  Nature of receipt - receipt on sale of shops and flat - Income from Other Sources u/s 56(1) or Income from Business - HELD THAT:- It is not in dispute that the MOUs entered into by the assessee for acquisitions of shops and flats were not registered. No stamp duty has been paid by the assessee at the time of its acquisition as the transactions had not been routed through the Stamp duty authorities. No evidence to prove that assessee had taken possession of the shops and flats acquired pursuant to MOUs. Accordingly, the compliance to Transfer of Property Act provisions were also not made by the assessee. This fact has not been controverted by the AR before us by providing contrary evidences. Hence in principle, we uphold the finding of the CIT(A) that the sale proceeds is to be taxed only under the head income from other sources. However, the cost of shops / flat would certainly be allowable as deduction even under the head income from other sources. Hence the ld. AO is directed to allow deduction of cost of 7 shops and 1 flat as expenditure under the head income from other sources. Accordingly, the Ground No. 1 raised by the assessee is partly allowed. Disallowance of depreciation being the correct amount (though wrongly disallowed by AO) on assets purchased from Iping Technologies Pvt Ltd. - HELD THAT:- It is a fact on record that the assessee had actually paid consideration to Iping for purchase of assets. It is also a fact on record that the said consideration has been shown as receipt in the books of Iping, which fact is also confirmed by them in response to notice u/s 133(6) of the Act directly filed before the ld. AO. We hold that without the usage of the assets acquired from BPO division of Iping, the assessee could not have earned any revenue from BPO services during the year under consideration and offered business income thereon. Hence it could be safely concluded that the assets acquired from Iping had been duly put to use and utilized by the assessee for the purpose of its BPO services and hence depreciation would be eligible for the same to the assessee. The entire transactions have been duly confirmed by Iping directly before the ld. AO in response to notice u/s 133(6) - Even if all the alleged defects pointed out by the revenue is to be accepted, still the fact remains that the assets so acquired had been utilized by the assessee herein for the purpose of its BPO services and business income derived thereon. We hold that in this regard, the reliance has been rightly placed by the ld. AR on the decision of Mysore Minerals Ltd [ 1999 (9) TMI 1 - SUPREME COURT] . Hence we have no hesitation in directing the ld. AO to grant depreciation to the assessee for the correct amount and make corresponding rectification for the mistakes committed by him while calculating the depreciation. Accordingly, the Ground raised by the assessee is allowed. TDS u/s 194C - Disallowance being amount reimbursed to Iping u/s 40(a)(ia) - HELD THAT:- CIT(A) having accepted that it is only reimbursement of expenses, he ought not to have confirmed the disallowance u/s 40(a)(ia) of the Act for violation, if any, of provisions of section 194C of the Act. We hold that the provisions of section 194C of the Act cannot be applied for actual reimbursement of expenses without any mark up. Hence we hold that the ld. CIT(A) grossly erred in this aspect in his order. CIT(A) had observed that the second proviso to section 40(a)(ia) and 201 of the Act would be applicable only from 1.7.2012 onwards and cannot be applied for Asst Year 2012-13. In this regard, we find that the Hon ble Delhi High Court in the case of CIT vs Ansal Landmark Township (P) Ltd [ 2015 (9) TMI 79 - DELHI HIGH COURT] had categorically held that the second proviso brought in section 40(a)(ia) and section 201 of the Act need to be applied retrospectively. Accordingly, even on this count, no disallowance u/s 40(a)(ia) of the Act could be made in the instant case. Hence the Ground No. 3 raised by the assessee is allowed. Disallowance of brokerage in relation to sale of capital assets as deduction u/s 48 of the Act - AO disallowed such claim of the assessee by observing that no details for services rendered were shown on the bill that was raised and also on the ground that the said claim was not made by filing a revised return of income - HELD THAT:- It is not in dispute that the assessee had furnished the bills for brokerage before the ld. AO and the brokerage paid was exactly 2% of the consideration amount, which is the normal prevailing market rate for immovable property. We find that the assessee had indeed made the claim of brokerage as deduction in the return of income under the head income from business. During the course of assessment proceedings, the assessee had only sought to shift the head of income from income from business to income from capital gains , as the brokerage would be eligible for deduction u/s 48 of the Act as expenses on transfer while computing capital gains. The bill for brokerage submitted contained even the PAN of the broker. In view of the aforesaid observations there is no question of doubting the said expenditure on brokerage. Hence we direct the ld. AO to grant deduction for brokerage in the sum as expenditure incurred on transfer of capital assets and recompute the capital gains accordingly. The Ground raised by the assessee is allowed.

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• 2022 (9) TMI 469
  TDS u/s 195 - fees received by applicant for services provided to Indian companies - PE in India - assessee offers clinical trial solutions to the biopharmaceutical and generic industry and a part of the trials related services were outsourced by the assessee to Lambda Canada - services were utilised in India for provision of completed package services to its clients in India - action of AO in treating the amount of remittance to Canada as Fees for Technical Services u/s. 9(l)(vii) of the Act and Fees for Included Services under Art. 12 of the India-Canada DTAA - assessee s primary contention was that no taxes were required to be deducted on payments since the same did not qualify as fee for technical services under Article 12 India Canada Tax Treaty since the condition of make available as contained in the India Canada Treaty were not satisfied in the instant facts - HELD THAT:- The case of the assessee is directly covered by the case of Anapharm Inc., In re [ 2008 (9) TMI 27 - AUTHORITY FOR ADVANCE RULINGS] where the applicant is a company incorporated in Canada which provides clinical and bioanalytical services to assist pharmaceutical companies around world in development of new drugs or generic copies of drugs already being marketed. The clients pay fees to applicant in lieu of above services The AAR held that fees received by applicant for services provided to Indian companies cannot be considered to be fees for included services within meaning of article 12(4) of the India Canada Treaty. AAR further held that fee paid by Indian companies to applicant in respect of bioequivalence tests conducted by it is in nature of business profits under article 7 of DTAA between India and Canada and same is not taxable in India, as applicant does not have a permanent establishment in India. Determining the applicability of make available clause - From the terms of the Agreement, and copies of invoices produced before us, it does not seem that there is any intention on behalf of Lambda Canada to make available technical knowhow/ technical knowledge to the assessee so that the assessee can deploy similar technology or techniques in future without depending on the provider. In fact, it has been argued as is also evident from the terms of agreement that Lambda India also had similar technology available with it to conduct similar analysis/testing and preparation of feasibility report and the only purpose for entering the agreement was for the reason that the time being the assessee was loaded with excess work and accordingly part of the work was assigned to Lambda Canada - evidently there was no intention between the parties that any technology be made available to the assessee. Accordingly, we are of the considered view that in the instant facts no technology was made available to the assessee in respect of the above payments and hence there was no requirement to deduct tax at source under Article 12 of the India Canada DTAA. Appeal of assessee allowed.

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• 2022 (9) TMI 468
  Deduction u/s. 54F - LTCG - Claim denied since the assesse was owning two house property - Assessee claimed that these properties are Farm House / Commercial property instead - assessee s claim of agricultural activity and dairy activity is not substantiated with proof of evidence and not declared in the Return of Income filed by the assessee - CIT(A) held that Vishubag Property is the second residential property of the assessee s residence property and therefore not eligible for deduction u/s. 54F as well as the assessee having failed to declare any agricultural income from the Farm property, on that count also the claim of the assessee the Farm property as a commercial property was rejected by CIT-A HELD THAT:- The assessee has built Residence/Bungalow, Manager soffice, Workers residence/Outhouse, Storehouse/farm equipments, Cow shed, etc. in 22 acres of land at Vishubaug to substantiate the claim that there is a residence property or Bungalow in Vishubaug property by the assessee. The assessee ought to have produced the property tax details and electricity connection details to prove the nature of the above property however, the same is not produced before us or before the Lower Authorities. Therefore the claim made by the assessee is hereby rejected. Further the assessee has not offered the agricultural income/loss in its Return of Income. Therefore the claim of the assessee, it was a commercial property cannot be entertained. Therefore the grounds raised by the assessee are devoid of merits and the same are rejected. Appeal filed by the Assessee dismissed.

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• 2022 (9) TMI 467
  Reopening of assessment u/s 147 - Bogus LTCG - HELD THAT:- Following the earlier order of Tribunal in the case of Sarita Dudheria cited [ 2022 (3) TMI 1418 - ITAT BANGALORE] the issue in dispute relating to the reopening is decided against the assessee. However, on merit, the issue is remitted to the file of AO for fresh consideration on similar directions as in the case of Sarita Dudheria cited (supra) - Appeals of the assessee are partly allowed for statistical purposes.

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• 2022 (9) TMI 466
  Revision u/s 263 by CIT - Denial of natural justice - assessee argued non-providing of an opportunity of being heard to the Assessee and passing of the impugned order u/sec. 263 hurriedly without following the procedural provided in the law and clearly violating the principles of natural justice - HELD THAT:- On the aforesaid analyzations and considerations and following the mandates of the Hon ble Apex Court, in the case of Amitabh Bachchan [ 2016 (5) TMI 493 - SUPREME COURT ] wherein it was held that failure to give such an opportunity would render the revisional order legally fragile not on the ground of lack of jurisdiction but on the ground of violation of principles of natural justice and in the case of Maneka Gandhi vs. Union of India [ 1978 (1) TMI 161 - SUPREME COURT ] wherein it was held that if the order is passed by the authority without providing the reasonable opportunity of being heard to the person affected by it adversely will be invalid, the question of remanding the case to the file of Ld. PCIT as prayed for by the Ld. DR, at this juncture at all does not arise as held by co-ordinate Benches as well in the aforesaid cases. In overall effect, the impugned order has violated the principles of natural justice which is essence of fair trial, thus the same is quashed. We are of the considered view that the order passed by the Pr. CIT violates the principles of natural justice and in terms of the request made by the ld. DR we set-aside the order of PCIT with a direction to pass the order after giving sufficient opportunity of being heard. Thus, the ground no. 1 raised by the assessee is allowed for statistical purposes.

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• 2022 (9) TMI 465
  Unexplained cash deposits - cash withdrawn was utilized / used for some other purpose - HELD THAT:- CIT(Appeals) has not erred in facts and in law in coming to the conclusion that there is a reasonable presumption that once there are substantial withdrawals from the bank account, then in the absence of the Department being able to establish that such withdrawals were utilised by the assessee elsewhere, it can be reasonably presumed that the same were re-deposited in the bank account. Therefore, in our considered view, Ld. CIT(Appeals) has not erred in facts and in law in deleting the aforesaid addition on account of unexplained cash deposits. Decided in favour of assessee. Addition on account of unexplained expenditure under section 69C - HELD THAT:- Punjab and Haryana High Court in the case of CIT v V.P. Singh [ 2013 (11) TMI 18 - PUNJAB AND HARYANA HIGH COURT] held that where assessee had submitted balance-sheet before Assessing Officer and in balance-sheet closing balance or cash in hand was disclosed and entries in balance-sheet had not been disputed by Assessing Officer, opening balance could not be regarded to be undisclosed income. In the case of ITO Vs Rahul kantilal Shah [ 2022 (9) TMI 375 - ITAT MUMBAI] ITAT held that addition on the basis of the opening balance of unsecured loan treating the same as current year transaction by invoking section 68 of the Income Tax Act is unsustainable - CIT(Appeals) has not erred in facts and in law in allowing part relief to the assessee which is the opening cash balance as on 1st April 2001, on the ground that the same could not be considered as income for the impugned year under consideration. Decided in favour of assessee. Addition u/s 40A(3) disallowing 20% for advances given for purchase of land - assessee contended that since no expenditure has been claimed by the assessee, the provisions of 40A(3) of the Act cannot be invoked - HELD THAT:- CIT(Appeals) has correctly applied the law that for the purpose of invoking provisions of section 40A(3) of the Act, it is a prerequisite that expenditure should have been claimed by the assessee. In the instant facts, admittedly, no expenditure was claimed by the assessee in respect of the amount for advances given for purchase of land. Accordingly, Ld. CIT(Appeals) has not erred in facts or law in deleting the additions which were made by invoking provisions of section 40A(3) of the Act. - Decided in favour of assessee.

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• 2022 (9) TMI 464
  Assessment u/s 153A - Addition of gross profit on unrecorded sales - HELD THAT:- As on the date of search the assessment in the case of the assessee are unabated, then, in absence of any incriminating material surfacing in respect of the said year, no addition could validly be made by the A.O while framing the assessment u/s.153A - See SMT. SANJANA MITTAL [ 2019 (3) TMI 1757 - ITAT AMRITSAR] , KABUL CHAWLA [ 2015 (9) TMI 80 - DELHI HIGH COURT] , M/S. MURLI AGRO PRODUCTS LTD. [ 2010 (10) TMI 1052 - BOMBAY HIGH COURT] and CONTINENTAL WAREHOUSING CORPORATION (NHAVA SHEVA) LTD., ALL CARGO GLOBAL LOGISTICS LTD. [ 2015 (5) TMI 656 - BOMBAY HIGH COURT] observed, that where as on the date of the initiation of search and seizure proceedings under section 132 of the Act, no assessment proceedings for the year under consideration were pending, then, in the absence of any incriminating evidence found during the course of search and seizure proceedings no addition/disallowance could have been made in respect of the unabated assessment of the assessee for the said year. Thus we concur with the claim of the Ld. AR that now when as on the date of the initiation of search and seizure proceedings under section 132 of the Act as no assessment or reassessment proceedings for the years under consideration were pending in its case for AY 2006-07 to AY 2010-11, therefore, in the absence of any incriminating evidence found during the course of search and seizure proceedings for the said years, no addition/disallowance could have been made in respect of the unabated assessment of the assessee for the said respective years. Unexplained cash credits u/s.68 - When the assessee had discharged the onus that was cast upon it as regards proving the identity and creditworthiness of the share applicant companies, as well as the genuineness of the transactions in question, therefore, no addition of the amounts so received from them could have been made by dubbing the same as unexplained cash credits u/s.68 of the Act, uphold his order to the said extent. The Grounds of appeal of revenue dismissed. Addition on account of initial unrecorded investment for making unrecorded sales - HELD THAT: No infirmity in the view taken by the CIT(A) who by way of a well reasoned order vacated the additions made by the A.O towards unaccounted income arising from the alleged undisclosed sales for AY 2006-07 to AY 2012-13; as well as the addition of the unexplained investment for carrying out undisclosed sales in A.Y.2006-07 to A.Y.2012-13, uphold her order to the said extent.

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• 2022 (9) TMI 463
  Deposit of cash in credit card account and salary earned by the assessee and the interest earned from bank - HELD THAT:- The source of the deposit in cash was from salary. Neither the assessing authority nor the appellate authority had made any verification related to deposit of cash and related to earning of salary. None of the revenue authorities made any verification to employer, or bank or credit card authority related to those transactions of assessee. The entire addition was made on the basis of the AIR DATA. For ascertaining the total income mere verification is required by the revenue authorities. Further the assessment was made u/s. 144. Even the CIT(A) did not take any cognizance to complete the proceeding to allow the opportunity to AO to complete the verification. The entire addition was on basis of assumption presumption. Accordingly, the order of the CIT(A) is setting aside. The matter is remanded back to Ld. CIT(A) for further adjudication.The evidence/explanations submitted by assessee in its defense shall be admitted by CIT(A), and adjudicated by CIT(A) on merits in accordance with law. Appeal of assessee allowed for statistical purposes.

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• 2022 (9) TMI 462
  Disallowance of expenses like manufacturing charges, wages, labour charges, salary, travelling, conveyance, staff welfare and maintaining - HELD THAT:- The assessee had paid the expenses through banking channel. The amount was incurred out of such imprest booked on 31.03.2007, the details explanation was filed by the assessee - The expenses are paid in job-site and all the expenses are accumulated from different site to head office which was entered in books of accounts on dated 31.03.2007. AO did not find any specific lacuna or did not point out any discrepancies related to the expenses disallowed - Without any specific finding the addition of expenses is liable to be deleted. TDS u/s 194C - Disallowance u/s. 40(a)(ia) - HELD THAT:- The assessee paid the transporter amount of Rs. 22,850/- and on date 26.06.2006 and dated 27.02.2007 amount of Rs. 22,850/-, accordingly the total amount is worked out amount to Rs. 49,573/- which is contravention of section 194C of the Act for non-deduction of TDS. The assessee was not able to clarify properly for reason for non-deduction of TDS on payment to transporter. The assessee was unable to mention any supporting case law in support of its reason for non-deduction of tax by contravening section 194C. Accordingly, this ground of the assessee is deleted. Appeal partly in favour of assessee.

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• 2022 (9) TMI 461
  Assessment mentioning the wrong PAN - assessment on attaining the age of majority - assessee was a party of saving bank account in 1981 when he was minor and bank was operated by his father and uncle - HELD THAT:- The assessment of the assessee was made after attaining the age of majority in relation to the deposit of cash in bank account. The source of deposit was already accepted by the revenue authority in the hands of father related to assessment order as mentioned above for same bank account. PAN of the assessee was wrongly mentioned including the erroneous name in assessment order. The revenue authority was erred to make addition in the hand of the assessee which was not related at all to assessee. The deposit of cash in the bank is recorded in the books of accounts of M/s. Goni Book Shop Bhaderwah which is related to his father uncle. The two assessments cannot be done under the same PAN. The revenue assessed the assessee under wrong PAN. The entire order of assessing authority is non-est. The assessment order passed by the AO is itself erroneous and liable to be quashed.

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• 2022 (9) TMI 460
  Assessment u/s 153A - unexplained cash credit due to bogus share capital - Proof of incriminating material for the purpose of doing assessment u/s.153A - HELD THAT:- The facts in the present case shows that by treating the share application money received by the assessee as unexplained cash credit, the revenue is not explaining as to what happens to the value of the shares, as the shares are out of the control of the assessee. Shares have gone into the open market, it has intrinsic value. In short, if the share capital received by the assessee is treated as its income, it is in effect forcing the assessee to reduce its capital value and by maintaining the number of shares which stands allotted. Keeping this in mind when one see the assessment framed u/s.153A, what is noticed is that there is no evidence in any manner whatsoever which has been found in the course of search, which could even lead to presumption much less reveal that any income much less represented in the form of asset, has escaped assessment for the relevant assessment year, which could give power to the AO to extend the provisions of section 153A for a period of ten years. In the absence of such evidence, which could reveal escapement of income from the assessment for the relevant assessment year having been found in the course of search, the initiation of proceedings u./s.153A for the relevant assessment year is not permissible and consequently, same is liable to be quashed and we do so. Findings of the CIT(A) that no incriminating material has been found in the course of search and consequently quashing of the assessment proceedings, the facts in the present case clearly show that the assessee has filed his return of income for the relevant assessment year and said return has also been processed u/s.143(1) - The time limit of issuance of notice u/s.143(2) of the Act as also for the purpose of reopening of the assessment has expired. Consequently, the intimation issued in the case of the assessee u/s.143(1) would have to be deemed to be completed assessment proceedings and in view of the decision of Param Diary ltd [ 2021 (2) TMI 764 - DELHI HIGH COURT] wherein as followed its own decision in the case of Chintels India ltd., [ 2017 (7) TMI 746 - DELHI HIGH COURT] has held that once the assessee does not receive notice u/s.143(2) within the stipulated period, such an assessee take it that the return filed by him has became final and no scrutiny proceedings are to be undertaken with respect to that return. Thus, in the case of the assessee, the intimation having been issued u/s.143(1) of the Act, and in view of the principles laid down by the Hon ble Delhi High Court in the case of Kabul Chawla [ 2015 (9) TMI 80 - DELHI HIGH COURT] and in the case of Meeta Gutgutia [ 2017 (5) TMI 1224 - DELHI HIGH COURT] as no incriminating material has been found which could show escapement of income in the case of the assessee in the relevant assessment year, no assessment u/s.153A could be done on the assessee. A perusal of the decision of Kurele Paper Mills Pvt Ltd [ 2015 (9) TMI 115 - DELHI HIGH COURT] shows that this was also a case of share application money and in that case also no incriminating material was found and consequently, the Hon ble Delhi High Court quashed said proceedings u/s.153A - as the facts clearly reveal that no incriminating materials have been found in the course of search, which could lead to the AO to initiate the proceedings u/s.153A. Consequently, we are of the view that the findings of the ld CIT(A) on this issue is on right footing and does not call for any interference. Non-availability of incriminating material found in the course of search for the purpose of invoking provisions of section 153A - As in the relevant assessment year.alternative prayer of the revenue is nothing but the arguments against the findings of the ld CIT(A) that no incriminating material has been found in the course of search for invoking section 153A. Thus, it cannot be treated as alternate argument but it is only an additional arguments by the revenue. Coming to the issue that counter judgments are available in respect of incriminating material, we are bound by the proposition laid down in the case of Vegetable Products [ 1973 (1) TMI 1 - SUPREME COURT] wherein, held that when two views are possible, the view in favour of the assessee should be follows.

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• 2022 (9) TMI 459
  Delayed deposit of employee contribution to PF/ESI - payment made before due date of filing of return - HELD THAT:- As relying on we find that the issue herein involved is squarely covered by the order passed by the Tribunal in the case of M/s Ind Synergy Limited [ 2022 (4) TMI 36 - ITAT RAIPUR ] direct the AO to vacate the disallowance made by him u/s.36(1)(va) of the Act qua the delayed deposit of the employees share of contribution of EPF/ESIC. The Ground of appeal allowed in terms of our aforesaid observations. Appeal of assessee allowed.

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• 2022 (9) TMI 458
  Reopening of assessment u/s 147 - Reassessment on basis of the survey operation u/s 133A - assessee has introduced share capital on fictitious names and in the names of companies and entities who were not having financial capabilities over such investment - whole cases evolving on the statement made by Shri Rupang Shah before the Investigation Wing of the Department - HELD THAT:- In the said statement, Shri Rupang Shah had admitted the business of share investment and trading. The statement indicates that Shri Mahendra Shah one of the Director in the company had made cash payment who introduced unaccounted income in the garb of share capital and share premium in M/s. Goldfinch Jewellery Ltd. But the statement of Shri Rupang Shah was never supplied to the assessee, for which, assessee wrote a letter to AO on 16.12.2011 requesting him to supply a copy of Investigation Wing . He also stated that unless and until some cogent evidences in support of contention is made available to the assessee to its reserve its right of cross examination of Shri Rupang Shah. AO passed the said assessment order on 22.12.2011 and investments have been made through banking channel and addresses were supplied to the AO. But, learned AO did not inquire from the return of income of the person whom shares were transferred. It is pertinent to note that copy of PAN Card was supplied to the AO alongwith computation of income. Bank statements from where investment had been made but learned AO did not examine abovesaid documents rather learned AO made addition solely on the basis of the Investigation Wing Report. AO has made addition on the basis of the borrowed satisfaction. He has not applied his mind and in our opinion, he ought to have done independent home work but in the present case no such exercise was done by the learned AO for the reason best known to him. Therefore, in our considered opinion, in such case, addition cannot be made. Appeal of assessee allowed. Depreciation claimed on two wheeler vehicles and motor car - Real owner - AO had not granted the depreciation in the name of the Directors of assessee company for the reason that no proof for evidences have been submitted to substantiate claim that the two wheeler vehicles and car under question was actually used for the business purpose of the company - HELD THAT:- As decided in own case[ 2019 (3) TMI 891 - ITAT AHMEDABAD] beneficial ownership vest with the assessee. It is because the payment was made for the purchase of the assets by the assessee though the assets were registered in the name of the directors of the company. Since this fact has not been doubted by any of the authorities below, therefore, we can safely presume that the assessee is the beneficial owner of the assets - authorities below have made the addition on account of depreciation without the application of mind. - Decided in favour of assessee. Disallowance @ 25% of labour charges claimed by the assessee - HELD THAT:- As decided in own case [ 2019 (3) TMI 891 - ITAT AHMEDABAD] payment was made by the assessee periodically after the deduction of TDS. Thus, the assessee cannot be penalized if the laborers have raised the bills at the end of the accounting year - assessee has shown huge turnover from the sale of jewelry amounting to Rs 98.89 crores and against such sale the assessee has claimed Labour expenses which is constituting less than 1% of the turnover. As such the genuineness of the Labour expenses cannot be doubted considering the huge turnover of the assessee - Decided in favour of assessee. Addition u/s 68 - amounts received as share Capital Share Premium - HELD THAT:- It is pertinent to mention here that as per Ministry of Corporate Affairs Website still shares are held in the name of respective companies to whom shares were allotted. As learned AO provided merely three days time to produce the investor companies Directors same is like justice hurried, justice buried and learned CIT(A) did not admit additional evidences and to our mind assessee company has discharged its onus by providing share application form, Bank details, PAN Numbers, return of income and audited balance sheet and other relevant details but lower authorities failed to appreciate evidences submitted by the assessee. In view of the aforesaid observation and after going through the aforesaid judgments, therefore, in such case, the addition cannot be made in the hands of the assessee company. Thus, we delete the addition made by lower authorities and allow this ground of appeal.

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• 2022 (9) TMI 457
  Revision u/s 263 by CIT - lack of enquiry or inadequate enquiry - unexplained purchases - reopening of assessment - HELD THAT:- PCIT has referred to a particular agreement to sell which the assessee has denied as having entered into with the seller Shri Nirmal Singh. It is also note-worthy that the said agreement to sell does not contain the signature of the assessee. In absence of her signatures, no evidentiary value can be attached to the said agreement to sell. In our considered view, based on the record before him, the AO took a conscious view after due application of mind and after deciding that no further enquires were required, he accepted the returned income of the assessee. AO took one of the possible views which he could have taken and he chose to accept the contention of the assessee. It is settled law that no assessment order would become erroneous and/or prejudicial to the interest to the revenue only because the AO has accepted the contention of the assessee. Issue of lack of enquiry and inadequate enquiry, it would be relevant to make a reference to the order of the coordinate Bench in the case of Sanjay Jain Others [ 2022 (3) TMI 1189 - ITAT CHANDIGARH] wherein, the co-ordinate Bench relied upon the judgment of the Hon ble Delhi High Court in the case of CIT Vs. Sunbeam Auto Ltd. [ 2009 (9) TMI 633 - DELHI HIGH COURT] and also the judgment in the case of ITO Vs. DG Housing Projects Ltd. [ 2012 (3) TMI 227 - DELHI HIGH COURT] wherein High Court has ruled that one has to keep in mind the distinction between lack of inquiry and inadequate inquiry and further if any inquiry was found to be inadequate, that would not by itself give occasion to the Commissioner to pass the order u/s 263 merely because he has a different opinion in the matter. Further, the Ld. PCIT has not pointed out as to what further inquiries were required to be made and how without those inquiries, the order of the Assessing Officer was erroneous in so far as being prejudicial to the interests of revenue. Contention of the assessee that in the case of husband, Shri Inderjit Singh, on similar facts and circumstances, 148 proceedings were filed has also to be duly considered as on the same set of facts, there cannot be two separate conclusions and further on account of consistency, the order of the ITAT Chandigarh Bench in the case of Smt. Amarjit Kaur [ 2019 (6) TMI 1645 - ITAT CHANDIGARH] is quite relevant. Thus both on the issue of application of mind and adequate inquiry having been made by the Assessing Officer as well as on the issue of consistency, as elaborated above, we have no hesitation to quash the order as passed by the Ld. PCIT under section 263 of the Act. Assessee appeal allowed.

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• 2022 (9) TMI 456
  Addition u/s 68 - assessee said to have repaid the amount in subsequent years and no details is being produced - HELD THAT:- There is a Paper Book filed by the assessee which is running wherein copies of the Ledger Account, Purchase Bills, Purchase Register and Sales Register were being filed. But no details about copy of the bank statements on the Repayment of the above amount to ACE Enterprises by the assessee during the Financial Year 2014-15 2015-16. A.O. during the remand proceedings confirmed that mere filing of purchase bill, purchase register alongwith sales register does not serve the purpose of confirming the outstanding liability in the name of ACE Enterprise. Further verification by the Department it was found that no such person in the above address and it was only a residential complex.The assessee failed to provide necessary details before any of the Authorities. We have no hesitation in upholding the order passed by the Ld. CIT(A) and confirming the addition. Decided against assessee.

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• 2022 (9) TMI 455
  Addition u/s 68 - Bogus long term capital gain by sale of shares - onus to prove - deceased assessee earned LTCG from the sale of shares and claimed the exemption under section 10(38) which was denied by the AO - HELD THAT:- As decided in case of the father of the deceased assessee namely Shri Jatinder Kumar Jain, [ 2022 (8) TMI 21 - ITAT CHANDIGARH] considering the evidences furnished by the assessee, which the AO did not negate with any counter evidence, we are of the considered opinion that the assessee has successfully discharged the onus cast upon him in terms of provisions of section 68 of the Act and this discharge of onus is a pure question of fact and, therefore, the various decisions relied upon by the Department on the question of law would not be of any assistance to the Department. Since, in our considered view, on the facts of the case, the assessee has been able to successfully discharge the onus cast upon him, the impugned addition has no feet to stand. We accordingly set aside the order of the Ld. CIT (A) and direct the deletion of the impugned addition. - Decided in favour of assessee.

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• 2022 (9) TMI 454
  Revision u/s 263 by CIT - deduction u/s. 54 and 54F - status of the property - whether on facts, the AO can be said to have passed the order after making due enquiries wherein deductions claimed u/s. 54, 54F and 54EC have been allowed on facts or should the order passed by the AO on facts be set aside upholding the impugned order? - HELD THAT:- We find that the decision in the case of Sanjeev Lal [ 2014 (7) TMI 99 - SUPREME COURT] more latest in point of time is in the context of the relevant provisions of the Income Tax Act. The said decision has been rendered on 01.07.2014 and is in the context of Section 54 r.w.s. 2(47) - On a reading of the impugned order, it is further seen that all these decisions have been cited by the assessee before the CIT(A) and no attempt has been made by the PCIT nor by the ld. CIT-DR to distinguish the applicability of the said decision from the facts of the present case. Roping in the allegation of colorable device by citing the decision of the Apex Court in the case of McDowell Company [ 1985 (4) TMI 64 - SUPREME COURT] on facts is completely unwarranted and misplaced. We find on going through the impugned order that except for suspicions no valid violation of any law u/s. 54, 54F and 54EC has been referred to. We have taken into consideration the decisions of the various Courts including the Apex Court in the case of Sanjeev Lal [ 2014 (7) TMI 99 - SUPREME COURT] another decision of the Apex Court in the case of T.R. Arvinda Reddy [ 1979 (10) TMI 1 - SUPREME COURT] and the Hon ble Delhi High Court in the case of Balraj Vs. CIT [ 2001 (12) TMI 51 - DELHI HIGH COURT] and the decision of the ITAT in the case of Shri Bassheer Noorullah Khan [ 2019 (8) TMI 180 - ITAT BANGALORE] have all been taken into consideration. Accordingly, we find that the impugned order cannot be sustained. We find that when read along with the reply on behalf of the assessee before the ld. PCIT, we find that the appeal of the assessee has to be allowed. Revisionary Powers cannot be exercised arbitrarily. The twin conditions necessary for exercising the powers in the facts of the present case are found to be missing. Coming to the issues on which no Show Cause Notice was issued to the assessee, we find that legally such an action is not permissible and even otherwise, on merits we find that six month period, as considered by the AO has judicial recognition. We find that the Co-ordinate Benches have held that the term month has not been defined in the Income Tax Act and hence resorting to the term as defined in the General Clauses Act, 1897 it has been held that a month shall mean as reckoned according to the British Calendar. Accordingly, we find that the view taken by the AO is very much within the four parameters of law. Merely because there is no discussion or elaborate discussion in the assessment order to the extent considered necessary by the ld. PCIT, we find that the assessee cannot be held liable as the remedy lies within. It is for the Tax Authorities to ensure that the Assessing Officers are well instructed to write the order elaborating the issues enquired into; the evidences considered to allow the claim and also discussions on how the claim is rejected. The assessee has no role to play as how the assessment orders are written. The said issue has many times been addressed by various Courts. Reference may be made to the decision of the jurisdictional High Court in the case of Hari Iron Trading Co. [ 2003 (5) TMI 48 - PUNJAB AND HARYANA HIGH COURT] where the Court considering the non-discussion on the issues in the assessment order observed The assessee had no control over the way the assessment order was drafted. Appeal of the assessee is allowed.

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• 2022 (9) TMI 453
  TP Adjustment - Analysing the international transaction - services rendered by assessee to be ITES by the Ld. TPO, as against back office support services carried considered by assessee - HELD THAT:- We note that analysing the international transaction based on wrong assumption of the services rendered would prejudice the computation of arms length. In the interest of justice, we remand the entire computation of arms length to the Ld. TPO for denovo assessment. Needless to say that proper opportunity of being heard must be granted to assessee in accordance with law. Accordingly, the grounds raised by assessee stands allowed for statistical purposes.

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• 2022 (9) TMI 452
  Rectification u/s 154 - treatment to loss on sale of shares claimed as a trading loss or capital loss - AO has initiated proceeding u/s 154 qua the claim of loss on the ground that the shares were held as investment and not as stock in trade - HELD THAT:- As in reply to show-cause notice issued under section 154 of the Act, the assessee has clearly and categorically submitted that the shares were held as stock in trade and the issue was examined in course of scrutiny assessment. Thus, from the aforesaid facts, it is patent and obvious that the issue, whether the loss on sale of shares claimed by the assessee is a trading loss or capital loss is a highly debatable issue. That being the factual position emerging on record, in my considered opinion, proceeding under section 154 of the Act could not have been initiated by the Assessing Officer to rectify the so called mistake as it is not a mistake in the nature of mistake apparent on the fact of record. Therefore, we delete the addition - Ground raised is allowed.

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• 2022 (9) TMI 451
  Capital gain computation - Property acquired by inheritance - cost of acquisition and benefit of indexation - Determination of Original cost and the period of acquisition of the property by the previous owner - plot/property was originally acquired by Assessee s father in the year 2006-07 which was subsequently acquired by inheritance by the Assessee and his brothers on demise of his father - HELD THAT:- The plot/land under consideration was acquired by the Assessee s deceased father on 05.02.2007 and after his demise, the Assessee along with his 02 brothers by dividing the assets on dated 11.12.2013, got executed a conveyance deed with M/s. BPTP Ltd. (seller). Subsequently, on 08.07.2015, the Assessee along with his two brothers sold the plot jointly on a consideration of Rs.65 lacs after paying brokerage of Rs.60,000/- and consequently received 1/3 of the said amount and accordingly claimed the benefit of cost u/s. 49 read with section 55 of the Act by working out cost of acquisition of 16,74,212/- and capital gain of Rs.4,72,455/-on the premise that the Assessee had acquired the right in plot/property on the death of his father on dated 18.11.2009. As per section 49 of the Act, where the capital asset became the property of the Assessee on any distribution of assets on the total or partial partition of a Hindu undivided family etc. etc. etc., the cost of acquisition of the asset shall be deemed to be the cost for which the previous owner of the property acquired it, as increased by the cost of any improvement of the assets incurred or borne by the previous owner or the Assessee, as the case may be. Hence, the original cost and the period of acquisition of the property by the previous owner which in the instant case is the father of the Assessee, who got allotted the property on dated 05.02.2007 from M/s. BPTP Ltd, is relevant for computation cost of acquisition and benefit of indexation for claim of capital gain. Consequently, the Assessing Officer is directed to recompute the capital gain while considering the cost of acquisition and benefit of indexation period, as the cost incurred and date of the acquisition respectively, by the father of the Assessee as on 05.02.2007.

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• 2022 (9) TMI 450
  Penalty u/s. 271(1)(c) - Allegation of defective notice u/s 274 - disallowances on account of property loss claimed and electricity expenses - HELD THAT:- The penalty provisions of section 271(1)(c) of the Act are attracted, where the Assessee has concealed the particulars of income or furnished inaccurate particulars of such income. It is also a well-accepted proposition that the aforesaid two limbs of section 271(1)(c) of the Act carry different meanings. Therefore, it is imperative for the Assessing Officer to specify the relevant limb so as to make the Assessee aware as to what is the charge made against him so that he can respond accordingly. Having regard to the manner in which the Assessing Officer has issued the notice dated 28.12.2011 under section 274 r.w.s. 271(1)(c) of the Act without specifying the limb under which the penalty proceedings have been initiated and proceeded with, apparently goes to prove that notice in this case has been issued in a stereotyped manner without applying mind which is bad in law, hence can not be considered a valid notice sufficient to impose penalty u/s 271(1)(c) of the Act and therefore we are of the considered view that under these circumstances, the penalty is not leviable - Appeal filed by the Assessee is allowed.

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• 2022 (9) TMI 449
  TP Adjustment - comparable selection - Provision of software development services - application of upper turnover filter and thereby exclusion of 7 companies from the comparable list - HELD THAT:- The Bangalore Bench of the Tribunal in the case of BORQS Software Solutions Pvt. Ltd. [ 2021 (10) TMI 1351 - ITAT BANGALORE] has considered a host of rulings on this issue including that of Hon ble High Courts wherein divergent views were taken with respect to the application of different filters. It was held by the Tribunal that the application of the turnover filter is justified on the basis of the classification of companies as per the report of Dun and Bradstreet. Since the assessee, in the present case, has disclosed an operating income companies reporting turnover above a threshold are considered not comparable. Accordingly, by following the order of the Tribunal, we direct the AO / TPO to apply the appropriate upper turnover filter and exclude the following 7 companies having turnover in excess of Rs.200 crores, i.e. Larsen and Toubro Infotech Limited, Nihilent Technologies Limited, Persistent Systems Limited, Thirdware Solutions Limited, Infosys Limited, Aspire Systems (India) Private Limited and Cybage Software Private Limited. Sagarsoft (India) Limited and Evoke Technologies Limited - DRP has rejected the objection of the assessee for its inclusion by claiming that the same does not feature in the TPO s search matrix, thereby amounting to cherry-picking of companies with low margins - HELD THAT:- Since the learned AR has demonstrated that the same is appearing in the TPO s list of comparable companies and are deriving 100% of its revenue from software development services, we direct the AO / TPO to re-examine the compatibility of these two companies. We accordingly allow the grounds of the assessee for statistical purposes. Computing operating margins of certain companies considered comparables which are arising out of arithmetical inaccuracies - In the view of principles of natural justice, we deem it appropriate to remand the matter back to the files of the AO / TPO to examine the claims of the assessee with regard to erroneous computation of operating margin. We direct the AO / TPO to specifically adjudicate each of the items of either expenses / income with respect to its inclusion or exclusion in calculating the operating margins. The ground of the assessee is accordingly allowed for statistical purposes. Working capital adjustment - assessee has submitted that TPO did not allow any adjustment on working capital - HELD THAT:- We have heard rival submissions and perused the material on record. In the view of the ruling in the case of M/s.Huawei Technologies India (P) Ltd.[ 2018 (10) TMI 1796 - ITAT BANGALORE] the basis of rejection of the relief by the DRP is no longer valid. We direct the AO/TPO to consider the workings in the light of the aforesaid ruling and allow appropriate adjustment in arriving at an arm s length price. Interest on outstanding receivables - HELD THAT:- The details with respect to the terms of the Master Service Agreement, credit period allowed thereunder, invoicing details, the realization data, and such other particulars as may be relevant to adjudicate on this issue, are not emanating from the DRP s directions / TPO s order. We accordingly direct the AO / TPO to examine the factual aspect. The AO / TPO is also directed to examine computation of debtors holding period of comparable vis- -vis that of the assessee. If the debtors holding period of comparable is higher than that of the assessee, then prima facie, no TP adjustment is required on the amounts outstanding from the AEs. We, accordingly, allow the ground for statistical purposes. Operating margins of the Assessee considering foreign exchange gain as non-operating by taking the values as per TP study - assessee could not raise this ground before the DRP / AO /TPO on account of omission - HELD THAT:- TPO in its initial orders under section 92CA dated 31.10.2019 has considered the foreign exchange gain/loss as operating in computing the operating margins of comparable companies. The Assessee has claimed an inconsistent approach in the computation of operating margins of the tested party vis-a-vis the comparable companies. It is well accepted that the benchmarking exercise should result in a comparison of Apple with Apple. Since there is inconsistency in computing the margins, we direct the AO / TPO to verify the issue afresh. It is ordered accordingly. In the result, the additional ground raised by the assessee is allowed for statistical purposes.

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• 2022 (9) TMI 448
  Disallowance of depreciation claimed on securities - assessee had claimed depreciation on conversion of securities classified as Held to Maturity (HTM) to those classified as Available for Sale (AFS) - Claim disallowed by the A.O. primarily for the reason that the HTM securities were capital assets and the loss therefore was capital in nature and there was no specific provisions under the Income Tax Act allowing such loss in the case of the assessee - HELD THAT:- Having considered the regulatory framework in which the assessee cooperative Bank operates and the position of law with regard to the treatment of their activity of dealing in securities as above, we shall now deal with the facts of the present case in the above background. In the present case the assessee has converted HTM securities to AFS securities which has resulted in depreciation of their value - Clearly this conversion and its valuation is in accordance with the Guidelines issued by the RBI as reproduced above for cooperative Banks. The said guidelines also require full provision to be made for the depreciation so effected. The said valuation is approved by the ICDS issued under the Act which though applicable from AY 2017-18 is still reflective of the position of the Department/Revenue in this regard. The activity of investments by Banks being accepted by the Revenue as its Business activity and the claim of the assessee to depreciation in value on conversion of HTM securities to AFS securities, being in accordance with RBI guidelines in this regard and even the Accounting Standards recommended under the Act, the Ld.CIT(A) we hold ,has rightly held the said claim to be allowable for the purposes of computing its business income. No reason to interfere in the order of the Ld. CIT(A) allowing the claim of depreciation - Ground no. 1 raised by the Revenue is dismissed. Accrual of income - addition on account of accrued interest on NPA account as income - CIT-A deleted the addition - HELD THAT:- We find that the assessee has proved with necessary documents that the outstanding interest on bad and doubtful advances pertained to advances given to of Moviya Seva Sahakari Mandali Ltd. and also that the entire interest pertained to the period up to 30th June, 2006 accounted for as interest income of the assessee bank till them and that subsequently no interest income on this account was being accounted for on accrual basis. That it was against the outstanding interest accrued that the assessee had received an amount during the year on the recommendations of the Vaidyanathan Committee. Thus, we find that the assessee had adequately established that the interest received during the year as pertained to interest of those years when the assessee was accounting for the interest on accrual basis. - Decided in favour of assessee.

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• Customs

• 2022 (9) TMI 447
  Seeking provisional release of the seized goods - to whom / any person - iPhones - Respondent s ownership of such goods itself is seriously disputed - contravention of Section 110 A of the Customs Act, 1962 - HELD THAT:- On a perusal of the provision of Section 124 of Customs Act, it can be seen that issuance of a show cause notice in terms of Section 124 does not necessarily establish that the person in whose name it is issued, is necessarily the owner. The phrases penalty on any person and the owner of goods or such person suggests that before an order of confiscation is passed, an owner or any other person shall have to be given a notice of the proposed confiscation of goods. Therefore, the mere fact that a show cause notice has been issued in the name of the Respondent does not necessarily imply that he is to be treated as an owner of the goods seized, which are sought to be confiscated. A reading of Section 110 A makes it abundantly clear that goods seized may be released to the owner. The said section does not include or envisage release of goods provisionally in favour of an importer of goods much less does it envisage, a release in favour of any person , in addition to the owner as mentioned in Section 124 of the Act, who has been served a notice under the said section - the Tribunal has in fact committed an error in importing the definition of an importer as defined under Section 2(26) of the Act and reading the same in Section 110A of the Act. Appeal allowed.

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• 2022 (9) TMI 446
  Principles of natural justice - opportunity of cross examination denied - identity of Jallaludeen and as to whether he had had any role to play in the transaction - illegal transportation - retraction of statements - HELD THAT:- In view of the admitted relationship between the parties and the close nexus between the facts and circumstances as noticed, the grounds raised by the petitioners in regard to lack of opportunity of cross examination is rejected as being a mere ploy and devise to delay proceedings with the ultimate hope of frustrating the same. Prosecution, under Section 138A, falls under Chapter XVI, entitled Presumption of culpable mental state . The language used therein is categoric to the effect that the Department must, beyond any reasonable doubt, establish guilt of the accused. However, such language is conspicuously absent when seen on a combined reading of Sections 111 and 112 of the Act. In matters of the present nature that the Revenue establish preponderance of possibilities and the Court must, while taking a decision in such cases, adopt a practical, holistic and pragmatic approach that would not place an unreasonable and artificial strain upon the Revenue in matters of burden of proof - the petitioners have exhausted revisional remedies where the findings of fact clearly set out. Thus, in light of the concurrent findings of fact there would be very limited avenue for this Court to intervene under Article 226 of the Constitution of India. Prior to 2018, the Act extended to the whole of India and post amendment, by way of insertion of the portion in parenthesis above, the Act had saved those transactions wherein persons/entities outside the territory of India had played a role, in relation to egregious/violative acts committed in the territory/on the soil, of India - In the present case, the act warranting imposition of penalty is for improper importation of gold, which is an act committed on Indian soil. All players in connection with this act where ever situated would thus come within the frame work and application of the Indian Customs Act. Petition dismissed.

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• 2022 (9) TMI 445
  DEPB scheme - related parties or not - connection between the petitioner and the vendor from whom scrips were purchased or not - misrepresentation and suppression of facts - furnishing of forged certificates from the bank or not - bona fide purchaser who has transacted in the purchase of the scrips for valuable consideration - HELD THAT:- The original vendor has purchased the scrips in compliance of the procedure set out under the Handbook of Procedure to the Export Import Policy 1997-2002. The objectives of the Handbook are set out in para 2.1 thereof, that is, to implement the provisions of the Foreign Trade (Regulation, Development and Regulation) Act, 1992 as well as the export policy for the relevant period. It is only upon confirmation of receipt of export realisations that the scrip shall be endorsed to be non-transferable. This is what has transpired in the present case as well. Admittedly and undoubtedly, there is a presumption that the officer endorsing the scrips to be transferable would and should have satisfied himself that the conditions precedent to issuance of the scrips are in order. The endorsement of transferability was made only after such satisfaction by the officer, and the fatal error, in this case, has transpired at this stage, and not at the instance of the petitioner - Separately, the original vendor had forged the bank realisation certificates. In such an event, the fraud is attributable to the original vendor only and not to the petitioner who is a subsequent purchaser. In fact, the impugned show cause notices, in conclusion, attribute fraud only to the original vendor and not to the importer. There is an unambiguous findings of fact to the effect that the appellants in that case (the subsequent purchasers) were engaged in dubious practices and secret arrangements and the nexus between those entities and the fraudulent acts have been clearly established by the revenue in that case. This is absent in this case and in fact, there is not even an allegation of collusion, willful misstatement or suppression of facts in the present case. In the instant case, the scrip had been obtained on the strength of a forged Bank Realisation Certificate (BRC). However, while the scrip itself stands vitiated, the Department had clearly been remis in not just issuing the scrip, but in enforcing the same as transferable six months after the issuance thereof. Moreover, the petitioner has admittedly obtained the scrip, bonafide and for valuable consideration and only after an endorsement of transferability was made upon it by the officers. No fraud has been attributed to it, and rightly so, as it had entered into the transaction with the legitimate expectation that the scrip was genuine, with an endorsement/stamp of departmental approval. Thus, by stating that the exporter had obtained the scrip by misrepresentation and making a misstatement before the authority and thereafter proceeding to make a clear distinction between the exporter and the importer, i.e., the noticee in the present case, the officer makes it abundantly clear that the petitioner has no role whatsoever to play in this transaction and was an innocent and bonafide bystander/ victim in the proceedings. Petition allowed.

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• 2022 (9) TMI 444
  Levy of penalty on customs broker - 112(a) of the Customs Act, 1962 - mis-declaration (undeclared) of imported goods - on examination it is found that the consignment contained undeclared goods and also goods which infringed IPR - HELD THAT:- Although the goods were declared as metal Frame, building material accessories, building material gutter, screw etc. in the Bill of Entry, on examination it was seen that more than 90% of the goods were undeclared items. Only 25 cartons out of 717 cartons contained the goods described in the Bill of Entry. The total number of cartons also exceeded the declared number of cartons and were found to be 775 cartons. There is misdeclaration and undeclaration of goods. Further, most of the undeclared goods bear the brand of reputed companies and they were found to be counterfeit products. Thus, there is infringement of IPR laws also. Though it can be seen that the appellant who is a Customs Broker has filed the Bill of Entry on the basis of the documents handed over to him by a person representing the importer, in the present case, it has to be seen that the importer is not traceable as the company s address and GST registration shown in the documents are fake. The importer did not care to appear or attend the proceedings. He has not come forward to claim the goods. The main argument put forward by the learned counsel for appellant is that the allegations would only be violation of CBLR, 2018 and that the Customs Broker cannot be held responsible under sec. 112(a) of the Customs Act, 1962. Though it may be true that the Customs Broker acts as per the instructions of the importer, in the present case, as the importer himself is not traceable and the address as well as GST registration reflected in the documents are found to be fake, the act of the Customs Broker in filing the Bill of Entry acquires deep introspection. The Customs Broker has a very important position and has to safeguard the interest of both the importer and the Customs - The Regulation is intended to make the clearance of export and import in a hassle-free manner for both importer/exporter and the customs. The trust embedded in the Customs Broker who has been issued a licence cannot be used in a negligent manner so as to permit undeclared / prohibited goods in large quantities. There are no grounds to set aside the penalty imposed under sec. 112(a) of the Customs Act, 1962 on the appellant - penalty of Rs.50,000/- has been imposed on the appellant as per Order in Original dated 8.9.2020 under CBLR, 2018 - the penalty of Rs. 5,00,000/- imposed under section 112(a) of the Customs Act, 1962 is high and requires to be reduced - Appeal allowed in part.

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• 2022 (9) TMI 443
  Rejection of request of provisional assessment - Respondent was entitled to deduction of discounts known at the time of clearance of goods from the depot but quantified later on - HELD THAT:- The Tribunal placed reliance upon the decisions of the Supreme Court in UNION OF INDIA OTHERS VERSUS BOMBAY TYRES INTERNATIONAL PVT. LTD. [ 1983 (11) TMI 70 - SUPREME COURT ] and GOVERNMENT OF INDIA VERSUS MADRAS RUBBER FACTORY LTD. [ 1995 (5) TMI 28 - SUPREME COURT ] where it was held that at the time of clearance of goods, since there is no quantification of demand, provisional assessment needs to be resorted to. The two decision of the Tribunal, on which reliance has been placed by learned authorized representative appearing for the department, would not be applicable in the present case as they do not deal with discounts which though known at the time of clearance of the goods cannot be quantified at that stage and are quantified later. The appeal filed by the department deserves to be dismissed and is dismissed.

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• 2022 (9) TMI 442
  100% EOU - re-export of finished goods imported after repacking and labelling - non-fulfilment of export obligation - demand merely on the presumption that the appellant have not achieved the minimum value addition of 20% - HELD THAT:- This demand is bad and illegal in view of the admitted facts on record, particularly, the communication of the learned Commissioner, Thane to the Member CBEC dated 23rd August 2004, wherein, it has been admitted that there have been error in the calculation and the appellant have achieved min. value addition of 20%, and therefore have complied with the condition. Accordingly, the demand of Rs. 33,00,23,408/- along with the penalty imposed is set aside. Non-application of mind - Demand of Rs. 64 lakhs approx - it is urged that the learned Commissioner have erred in holding that the appellant is liable to pay duty on capital goods, without considering the fact that Serial No. 1 of Annexure 1 to the SCN, relates to import of capital goods which were used to repack/re-labelling the imported finished goods listed at of Annexure II to the SCN - HELD THAT:- Admittedly the appellant pursuant to import have brought the capital goods to the factory (in the bonded warehouse). Such goods have admittedly, not been removed by the appellant and are still lying under bond, under the control of the Customs Department. In spite of several requests by the appellant for de-bonding, the Customs Department have not cared to allow the de-bonding, which is wholly arbitrary. It is established law that duty can be demanded on the capital goods from an EOU on the event of de-bonding. Accordingly, the demand with penalty is set aside - the respondent Commissioner are directed to allow the de-bonding of the capital goods and the appellant shall be liable to pay duty on the depreciated value, as per the applicable rate on the date of de-bonding. There being no liability to pay duty on import of the goods (for re-export) under the provisions of the Central Excise Act r/w the Customs Tariff Act, the penalty imposed under Rule 173 Q(1) of Central Excise Rules is bad and accordingly set aside. Appeal allowed.

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• Insolvency & Bankruptcy

• 2022 (9) TMI 441
  CIRP proceedings - validity of order of liquidation - Wither the Resolution Professional (RP) has not at all taken any sincere efforts for obtaining appropriate resolution plan - Section 33(2) of the IBC - HELD THAT:- On going through the impugned order it is evident that CIRP was initiated long back on 03.09.2019. As per scheme of IBC and also statutory provisions mentioned therein, such proceeding is required to be concluded within a specified time. The impugned order quoted hereinabove reflects that even after expiry of statutory period 90 days further time was granted but no resolution plan could be approved. In such situation the RP was having no alternative than to proceed with a petition under Section 33(2) of the IBC. On bare perusal of provisions of Section 33(2) of the IBC, once Resolution Professional in compliance with the conditions mentioned in sub-section (2) with a prayer to liquidate Corporate Debtor, the Adjudicating Authority has no option but to pass an order for liquidation. The word shall in sub-section (2) has been inserted and as such on being intimated by the RP, in the present case, the COC has resolved for liquidation in terms of sub-section (2) of Section 33 and as such the Adjudicating Authority was having no option but to pass order for initiation of the liquidation proceeding. Moreover, on examination of the impugned order itself it is evident that there was complete non-cooperation by the appellants who were suspended directors of the corporate Debtor. The appeal stands dismissed without cost.

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• 2022 (9) TMI 440
  Initiation of CIRP - period of limitation - NCLT admitted the application - whether the Application filed by Respondent No.1 on the ground that Corporate Debtor has committed breach of terms and conditions of the MoU, hence liable to refund the amount with liquidated damages was filed within the period of limitation as prescribed under Article 137 of the Limitation Act, 1963? - whether a transaction entered between the parties under the MoU is a transaction within the meaning of Section 5(8) of the Code, so as to hold the transaction as a financial transaction? - transaction under MoU pertained to sale and purchase of the real estate property with motive of profit is in the nature of financial debt or not - Application filed under Section 7 by Respondent No.1 is for the claim of damage under the MoU and not for the claim of any financial debt? Whether the Application filed by Respondent No.1 on 06.11.2020 on the ground that Corporate Debtor has committed breach of terms and conditions of the MoU, hence liable to refund the amount with liquidated damages was filed within the period of limitation as prescribed under Article 137 of the Limitation Act, 1963? - Whether exercising the option to void the MoU dated 25.01.2013 on 07.03.2020 can be said to be in exercise of option by the Second Party as per MoU dated 25.01.2013, in accordance with law? - HELD THAT:- The maximum period for which the agreement was to continue was 36 months. In event there is breach of Clause 10, that is, 180 days, if the First Party has not launched the scheme, the cause of action become available to the Second Party. Further, the entire period of agreement being 36 months at maximum, when a breach is committed by Corporate Debtor of compliance of terms and conditions of the MoU, that is, handing over possession of flats/ units or transfer / assignment of the entire super built up area/ flats within 36 months, the cause arose to Second Party, that is, Respondent to sue for its breach. Right to exercise of option arose to the Second Party after 180 days and also after 36 months when period of contract came to an end. By not exercising the option when right to exercise of option arose, the Second Party cannot stop running of period of limitation on the pretext that it exercised its option only on 07.03.2020. The exercise of option after seven years from entering into the MoU and filing of the Application after seven years from the date when right to exercise of option arose, is unsustainable. The time is not the essence of contract with regard to sale of immovable property, unless there are special features and terms and conditions in the contract, which makes the time as essence of the contract - the right to sue accrued to Respondent for breach of Clause-10 of the MoU dated 25.01.2013 on 25.07.2013, thereafter on 25.01.2016 and the application filed on 06.11.2020 is clearly barred by time. Whether a transaction entered between the parties under the MoU dated 25.01.2013 is a transaction within the meaning of Section 5(8) of the Code, so as to hold the transaction as a financial transaction? - Whether transaction under MoU pertained to sale and purchase of the real estate property with motive of profit is in the nature of financial debt within the meaning of Section 5(8) of the Code? - Whether the Application filed under Section 7 by Respondent No.1 is for the claim of damage under the MoU and not for the claim of any financial debt? - HELD THAT:- There is no dispute regarding payment of an amount of Rs.1,26,00,000/- by Respondent No.1 to the Corporate Debtor on 25.01.2013. The Appellant has deposited the Bank Draft including the interest @ 12%. In the interest of justice, we are of the view that the amount deposited under orders of this Tribunal dated 03.06.2022, be refunded to Respondent No.1 to avoid further litigation between the parties. The impugned order was passed on 04.05.2022 and the Appeal was immediately filed on 09.05.2022 and this Tribunal passed an interim order on 13.05.2022 directing the IRP not to constitute the CoC. Subsequently, by another order dated 03.06.2022, a direction was issued not to take any further steps in the CIRP process. In the impugned order Adjudicating Authority has directed the Financial Creditor to deposit Rs.2,00,000/- with the IRP. In addition to amount directed by Adjudicating Authority of Rs.2,00,000/-, the IRP shall be entitled to actual expenses incurred by her in publication and other actual expenses incurred by her. On submission of bill for actual expenses incurred by the IRP, Respondent No.1 (who filed Section 7 Application) shall make the payment of expenses within a period of two weeks. The order dated 04.05.2022 passed by the Adjudicating Authority is set-aside - Appeal allowed.

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• 2022 (9) TMI 439
  Seeking disbursement of payment of dues of workers and employees of the Company working at Dharwad Plant of the company in Karnataka in a regular and timely manner - restraint on respondent/Liquidator by an order of injunction from taking any coercive steps for closing the operations of the company s plant at Dharwad, Karnataka - restraint by an order of injunction from terminating, or taking any decision to terminate, the agreement between the company and Jeju Metals Private Limited - appointment of competent and independent agency to investigate the manner in which the respondent/Liquidator has been conducting his affairs as such Liquidator, and a report be called for from such agency. HELD THAT:- The conduct of the Appellants are noted, who have not come with clean hands in filing this Appeal. Out of 42 Appellants, 20 have been paid in full and final settlement and so far as the remaining Appellants are concerned, they have not been handed over charge and have obstructed in taking of the possession of Dharwad unit. The reasons recorded by the Adjudicating Authority for dismissing the application are within the framework of law and require no interference. The impugned order dated 03.05.2021 passed by the Adjudicating Authority (National Company Law Tribunal, Kolkata Bench, Kolkata) is hereby affirmed. There is no merit in the Appeal. Appeal dismissed.

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• 2022 (9) TMI 438
  Resolution Plan approved - claiming pre-CIRP dues, post approval of Resolution Plan - HELD THAT:- Resolution Plan of the Corporate Debtor was approved on 12th February, 2018 subsequently certain demands were issued by the Appellant to the Successful Resolution Applicant for certain charges from the Successful Resolution Applicant such as Terminal Charge, Demurrage Charges, etc. - As submitted by Learned Counsel for the Respondent the application was only with regard to the pre-CIRP dues and hence the order dated 25.11.2021 shall have no effect on the payments claimed by any subsequent period after approval of the Resolution Plan on 12th February, 2018. The statement of Counsel for the Successful Resolution Applicant is recorded and it is clarified that Order dated 25.11.2021 is confined to only pre-CIRP dues and has no bearing on any claim after 12.02.2018. Appeal dismissed.

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• 2022 (9) TMI 437
  Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - existence of debt and dispute or not - time limitation - service of notice - notice under section 8 of the Code when returned with the endorsement Unclaimed is a good service or not? - HELD THAT:- Reliance placed on on CROWN WORLDWIDE HOLDINGS LTD. AND ORS. VERSUS CROWN RELOCATIONS MOVERS AND PACKERS [ 2016 (11) TMI 1725 - BOMBAY HIGH COURT] by the Hon ble High Court at Bombay, where the court held that this is settled by a long line of authority on an interpretation of Section 27 of the General Clauses Act and Section 114 of the Evidence Act. Hence, is a well-established presumption that the return of packet with the endorsement unclaimed is good service. In this instant case it can be construed that there is no contemporaneous denial on the claim of the petitioner, by the Corporate Debtor because they have duly acknowledged the outstanding dues in the minutes of meeting dated 31 October, 2018. It is also pertinent to mention that as per the tracking record of the Petition, the delivery of the Section 8 notice was put on hold on the Addressee Instructions i.e., the Corporate Debtor. Time Limitation - HELD THAT:- It is pertinent to mention that the last bill dated 05 October, 2015 fell due on 05 November, 2015. Technically, the limitation period would end on 05 November, 2018 but since, the minutes of meeting between the parties was on 31 October, 2018, where the Corporate Debtor acknowledged the debt and assured to make the payment in four instalments. This acknowledgement of the Corporate Debtor is within the limitation period, hence, attracting section 18 of the Limitation Act, 1963. The present petition made by the Operational Creditor is complete in all respects as required by law. The Petition establishes that the Corporate Debtor is in default of a debt due and payable and that the default is more than the minimum amount stipulated under section 4 (1) of the Code, stipulated at the relevant point of time. Application admitted - moratorium declared.

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• Service Tax

• 2022 (9) TMI 436
  Levy of service tax - right to use component of the Trademark License Agreement - grant of license under the Trademark License Agreement would amount to deemed sale under article 366 (29A) of the Constitution, or not - period of dispute in the present appeal is from 2008-009 to 2013-14 - HELD THAT:- It can safely be said that under Sales Tax, there is transfer of possession and effective control in goods, while there is no such transfer of possession and effective control under Service Tax. A perusal of the terms of the Trademark License Agreement dated August 27, 2008 and the Retail License Agreement executed on October 01, 2007 would show that there is a noticeable difference between the two. In the case of the Retail License Agreement only a non-exclusive and non-transferrable license to use the trademark was granted by the respondent to Pantaloon. Pantaloon also agreed that the respondent would have the right to control the standard and quality of the products. There is also no restriction in granting the license to others during the license period. This agreement is clearly, therefore, outside the purview of article 366 (29A) (d) of the Constitution that defines tax on the sale or purchase of the goods. Service tax would, therefore, be chargeable. However, in the case of the Trademark License Agreement an exclusive license to use the trademark in any manner during the term of the agreement was granted. Such a license could not be granted to any other person during the period of the agreement. This would clearly fall within the meaning of the phrase transfer of right to use the goods and would be covered by article 366 (29A) (d) of the Constitution. Service Tax would, therefore, not be payable. The Principal Commissioner, therefore, committed no illegality in holding that service tax could not be levied on the right to use component of the Trademark License Agreement - Appeal dismissed.

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• 2022 (9) TMI 435
  Classification of services - Transportation of Goods by Road (GTA) Services or otherwise - Respondent coal companies are availing transportation services at their mines - reverse charge mechanism - HELD THAT:- The issue is no longer res-integra inasmuch as the same has been decided by this Tribunal in the case of SOUTH EASTERN COAL FIELDS LTD. VERSUS C.C.E., RAIPUR [ 2016 (8) TMI 677 - CESTAT NEW DELHI] , wherein it has been held that the transportation services cannot be classified under GTA services where the consignment notes are not issued by the transporters. The issue has also been examined in detail in the case of M/S. MAHANADI COALFIELDS LTD. VERSUS COMMR. OF CENTRAL EXCISE SERVICE TAX, BBSR-I [ 2019 (7) TMI 1803 - CESTAT KOLKATA] where it was held that the essential requirement of issuance of consignment note , in order to attract the definition of Goods Transport Agency , we hold that the transport contractors rendering the coal transportation services in mines cannot be said to be Goods Transport Agency and therefore, their services cannot be made amendable to levy of service tax in the category of transportation of goods by road services . The findings made by the Ld. Commissioner cannot be interfered with and hence, the demand has been rightly dropped in the impugned adjudication orders - the instant appeals filed by the Revenue are rejected.

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• Central Excise

• 2022 (9) TMI 434
  Condonation of delay in filing the appeal - time limitation - power of Court to direct the statutory appellate authority to entertain an appeal beyond the period of limitation prescribed under the Act - HELD THAT:- The learned Single Bench has noted the decision in the case of SINGH ENTERPRISES VERSUS COMMISSIONER OF C. EX., JAMSHEDPUR [ 2007 (12) TMI 11 - SUPREME COURT ]. The aforementioned legal position is a settled legal position and the learned Single Judge was perfectly right in not granting relief sought for by the appellant. However, we are of the view, a party should not be left remediless. No doubt the conduct of the party needs to be considered, which can be given a liberal approach, more particularly, when the appellant had suffered an order in the hands of the appellate authority on the ground that the appeal was barred by time and before the learned Writ Court on the technical ground that the limitation for preferring an appeal cannot be extended. Since the Tribunal is the last fact finding forum in the hierarchy of authorities, the appellant can be granted liberty to file an appeal before the Tribunal subject to certain conditions. Application is allowed in part and the order passed by the learned Single Judge is modified with the direction directing to the appellant to pay 25% of the due demand of Central Excise within a period of six weeks from the date of receipt of the server copy of this order.

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• 2022 (9) TMI 433
  Maintainability of appeal - appropriate forum - Clandestine Removal - grey fabrics - yarn cleared without payment of duty by M/s. Filatex under Rule 12B of Central Excise Rules, 2002 to their job workers - yarn diverted and sold elsewhere and records payment transactions had been manipulated for such fictitious sale of fabrics - POY has been diverted without payment of duty under the garb of its clearance under the Rule 12B of Central Excise Rules, 2002. HELD THAT:- An appeal shall lie against the order of the Appellate Tribunal if the High Court is satisfied that the case involves a substantial question of law. The Revenue appears to be agitating factual aspects in the matter. A perusal of the Tribunal order indicates that the Tribunal after having heard both sides and after having perused the case records has given a fact finding on the issues raised on behalf of the Appellant-Revenue. It has found that in the present case the fabric was shown to have been manufactured from six job workers, viz., M/s. Rama Filament Pvt. Ltd., M/s. Geena Synthetics Pvt. Ltd., M/s. A. P. Textiles Ltd., M/s. Mansa Synthetics Pvt. Ltd., M/s. Micro Polyester Pvt. Ltd. and M/s. Good Luck Synthetics Ltd. The Tribunal has given a finding that it is undisputed that the Department was in knowledge of the job work activities, that while sending goods, the challans were prepared and the yarn was acknowledged by the job workers of having been received. Respondent-Company has paid job work charges to the said job workers and also deducted TDS on such payments as found by the Tribunal from Form-16A issued to all six job workers. It is also recorded by the Tribunal that during investigation, the statements of the Joint Managing Director, Director and employees of Respondent-Company were recorded and all of them has stated that the goods were sent for job work. The Tribunal also records that in respect of M/s Geena Synthetics, M/s. Rama Filaments, M/s. Mansa Synthetics, M/s. Micro Polyester and M/s. Good Luck Synthetics were existing at the time of investigation. It is further recorded that none of the statements from the job workers recorded by the investigation deny the fact that they had undertaken job work activity on behalf of Respondent-Company. All the factual aspects raised on behalf of the Revenue, appear to have been answered by the Tribunal. The Revenue has not been able to controvert any of these findings nor is there any material shown to us that demonstrates anything to the contrary. Appeal dismissed.

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• 2022 (9) TMI 432
  Principles of natural justice - petitioner would argue mainly on the fact that the Appellate Order has been passed in a non-speaking fashion and without having considered the impact of Circular No.32/2004 dated 11.05.2004 - HELD THAT:- In the present case, the impugned order is certainly cryptic. It does not discuss the legal issue raised by the petitioner with reference to documents on records, in as detailed a fashion as may have been appropriate. That apart, the petitioner is also factually correct in that, the case-law as well as Circular cited and relied upon have been omitted to be considered. The aforesaid finding is based upon appeal records that have been called for and verified. The threshold for interference would also depend on whether the order challenged is an original order of assessment passed by the Assessing Officer or one passed in Appeal and in the later circumstances, unless, the error pointed out is patent and goes to the root of the matter, the preferred course of action must continue with the appellate hierarchy itself - the threas-hold has not been achieved. No doubt, the Appellate Authority, being a quasi-judicial authority, has to pass a reasoned and speaking order, taking note of all arguments advanced, and materials submitted by the Assessee. The flaw in the present impugned order is that it is rather nonspeaking and omits to consider the circular and case law cited. However, this is not an error so grave so as to justify invoking the extraordinary jurisdiction of this Court. The petitioner herein has remitted 100% of the disputed tax and is clearly not pursuing Writ remedy merely as a ruse to avoid the question of pre-deposit - Petition dismissed.

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• 2022 (9) TMI 431
  Valuation - demand of differential duty - PP medicaments falling under Chapter 30 of Central excise Act - physician samples sold - to be valued at Pro rata on MRP Basis or not - Section 4A of Central Excise Act, 1944 - HELD THAT:- The fact of the case is not under dispute that the appellant have sold the Physician Sample of PP medicine on Principle to Principle basis to the Brand Owner. Therefore, the valuation under Section 4 (1) (a) was correctly done by the appellant. The proposal by the department that the valuation should have been done by the appellant on Pro- rata of MRP is not applicable in the present case for the reason that such valuation was already opted by the appellant in case of removal of goods manufactured on job work basis for the reason that the said transaction does not involve sale. Since in the present case the transaction is clearly of sale on Principle to Principle basis, the principle of pro rata of MRP shall not apply. From the judgment, in the case of SOFTECH PHARMA PVT. LTD. VERSUS C.C.E, S.T. - DAMAN (VICE-VERSA) [ 2019 (5) TMI 575 - CESTAT AHMEDABAD] , it is settled that in case of manufacture and sale of Physician Sample valuation is governed under Section 4 (1)a) of central Excise Act, 1944. Therefore, the issue is no longer res- integra. Appeal allowed - decided in favor of appellant.

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• 2022 (9) TMI 430
  Valuation - manufacture of Co-Extruded Multi Layer Printed Plastic Film (PPF) - Revenue alleged that the price at which the PPF is sold to DCMPUs/associate members (dairies) is not normal transaction between the appellant and the dairies - price is the sole consideration for sale or not - related party transaction - inter-connected undertakings - mutuality of interest between the members and the GCMMF - HELD THAT:- Only if the parties are related in terms of Clause (ii), (iii), (iv) of Section 4(3)(b) of Central Excise Act, would they be treated as related persons. Analysis of the impugned order shows that the said order after reaching at the conclusion that the two namely, the appellant and the Dairies are inter-connected undertakings does not proceed further. The impugned order holds that since GCMMF holds control that both the appellants as well as Dairies, there is mutuality of interest between the appellant and the dairies. The impugned order hold that M/s. GCMMF has a decisive role to play in financial matter on which the price of products is done. The impugned order holds that as per bylaw no.5.2.9, it is incumbent on GCMMF to plan overall production programme for the federation and its members keeping in view the market strategy. Bylaw no. 5.2.13 casts obligation on M/s. GCMMF to purchase or assist in purchasing raw material, etc and manufacture or collaborate with someone when required and bylaw no. 5.2.19 authorizes GCMMF to advise the members on price fixation, price policy, public relations and allied matters. All the bylaws cited by the Commissioner shows some kind of control of GCMMF over the member unions/dairies and on the appellant however, there is not an iota of evidence to suggest that the appellant had any control over the dairies or vice-versa. There are no evidence to hold that the appellant and the dairies are related in terms of Section 4(3)(b) of Central Excise Act - appeal allowed.

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• 2022 (9) TMI 429
  CENVAT Credit - denial of credit on 35 invoices is that the services were not provided by M/s.KJF Logistics, Chennai - services outsourced to third parties - mismatch of names in the invoices - time limitation - HELD THAT:- It is brought out from the facts that M/s.KJF Logistics, who was the CHA acting on behalf of the appellant for import and clearance of goods, had outsourced certain services in the nature of steamer agent service, CFS service, De-stuffing service etc. to other persons. They had collected charges in the nature of steamer agent charges, CFS charges, De-stuffing charges, survey charges. The third parties to whom the services were outsourced by M/s.KJF Logistics had raised the invoices in the name of M/s.KJF Logistics, Chennai and not in the name of the appellant. Though the services were provided to the appellant the invoices were raised in the name of KJF Logistics. The Department has taken the view that since the services were outsourced, M/s.KJF Logistics is the service recipient and therefore the credit is not eligible to the appellant. On perusal of the invoices, it can be seen that the appellant has paid the service tax on such charges as collected by M/s.KJF Logistics. It is also established by the letter issued by KJF Logistics that they have not availed credit on the service tax mentioned in the invoices issued by third parties. On such score, the department cannot deny the credit alleging that invoices were raised in the name of CHA, M/s.KJF Logistics and that services were not provided to the appellant - there is no dispute with regard to service availed by the appellant and service tax paid by them, the credit cannot be denied at the service recipient s end. The credit availed on 19 invoices has been denied alleging that name in the invoices show the name of M/s. M/s.Mitsubishi Corporation India Pvt. Ltd. and not that of the appellant - HELD THAT:- The original importer had engaged various service providers for import of the goods and clearance of the goods. After purchase of the goods by the appellant, these services providers had provided services to the appellant for clearances of the goods. However, the invoices were issued in the name of original importer M/s.Mitsubishi Corporation India Pvt. Ltd. It is clear from the records that the appellant had paid service tax for the services availed - denial of credit alleging that invoices mention the name of the original importer is too technical and cannot be accepted. Time Limitation - HELD THAT:- There is no positive evidence put forward by the department to show that the appellant had intentionally done some act to avail wrong credit. All the issues required interpretation of provisions of law with regard to availment of credit and there is no ulterior motive or overt act established by the department to show that appellant has done some fraud or suppressed facts so as to evade payment of duty. The department was given intimation with regard to import of goods and they have also filed E.R.1 returns disclosing credit availed by them. On such score, a very vague allegation that the appellant has suppressed facts with intention to evade payment of duty cannot be the basis for invoking extended period - the demand is time-barred. Appellant succeeds on the ground of limitation also. Appeal allowed.

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• 2022 (9) TMI 428
  Clandestine removal - corroboration of the details of alleged clandestine clearances found in the diaries of the brokers with the consumption of electricity - demand on the basis of diaries of brokers - separate demand on the basis of these weighment slip recovered from Juvansinh Jeshabhai Solanki - HELD THAT:- It is admitted fact of both sides that most of the investigation in the present case are not only identical but common to the case of SHRI HARI STEEL INDUSTRIES, NAGJIBHAI JIVRAJBHAI DODIYA AND HIMANSHUBHAI NANDLAL JAGANI VERSUS C.C.E. S.T. -RAJKOT AND C.C.E. S.T. -BHAVNAGAR [ 2022 (8) TMI 1251 - CESTAT AHMEDABAD ]. It is a fact that in case of Shri Hari Steel Industries also no shortage or excess were found in the factory premises, no investigation at the buyer s end was conducted and no investigation in respect of Electricity raw material etc. was conducted. It is also a fact that in case of Shri Hari Steel Industries no examination in chief or cross examination was done. In these circumstance the decision of Shri Hari Steel Industries would be squarely applicable in respect of the demand raised on the basis of the diaries recovered from the brokers. Coming to the evidence collected from the residence of Juvansinh Jeshabhai Solanki, it is seen that the said slip are reproduced in the impugned order in para 3.4.8. It is seen from the said slips that there is no mention of the manufacturer s name and therefore there is no direct correlation with the main noticee in this case, namely Pure Alloys Limited. Moreover, it is seen that there was no examination in chief or cross examination done and therefore, the only link between these weighment slips and the alleged manufacturer namely Pure Alloys, is the statements of Juvansinh Jeshabhai Solanki and Nareshbhai Ramsang Rana which cannot be admitted as evidence in absence of Examination under Section 9D of Central Excise Act. In these circumstances, no penalties in respect of these weighment slips also can be imposed. The penalties imposed against various appellants are set aside - Appeal allowed - decided in favor of appellant.

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• CST, VAT & Sales Tax

• 2022 (9) TMI 427
  Scope of assessment order - claim made by an assessee which is not before the assessing officer - Disallowance of Respondent s claim for concessional rate of tax in respect of transaction stated in C forms - true and proper construction of Section 23(5) of Maharashtra Value Added Tax, 2002 - Consideration of claim of the Respondent which was not part of the Assessment Order - liberal interpretation and expansion of scope of the statutory provisions contained in Section 23(5) of the MVAT Act, 2002, when there is no ambiguity in the statute. Whether an Appellate Authority has the power to consider a claim made by an assessee which is not before the Assessing Officer? - whether the Tribunal committed an error in allowing the Respondent-Dealer s claim for concessional rate of tax with respect to the transactions stated in the C forms issued by M/s. Varsha Controls Gear? HELD THAT:- The Supreme Court in the case of Commissioner of Income Tax, U.P., Lucknow Vs. Kanpur Coal Syndicate, Kanpur [ 1964 (4) TMI 18 - SUPREME COURT ] , considering powers of an appellate authority under the Income Tax Act, 1961, observed that the Appellate Commissioner while disposing of an appeal against an order of an Income Tax Officer has plenary powers. The scope of his power is co-terminous with that of the Income Tax Officer. He can do all that Income Tax Officer can do and also direct him to do what he has failed to do. If the Income Tax Officer has the option to assess one or other of the entities in the alternative, the Appellate Assistant Commissioner can direct him to do what he should have done in the circumstances. The Apex Court observed that the Appellate Commissioner in disposing of such an Appeal could confirm, reduce, enhance or annul the assessment and he may also set aside the assessment and direct the Income Tax Officer to make a fresh assessment. A Full Bench of Madras High Court in State of Tamil Nadu Vs. Arulmurugan and Company [ 1982 (11) TMI 143 - MADRAS HIGH COURT ] had the occasion to consider a similar issue with respect to C forms declaration. It was observed therein that though the expression appeal and assessment may be different, but the difference lies only in the particular stage of the proceeding and in the particular authority having jurisdiction in the two stages. The Court observed that basically an Appeal does not differ from an assessment. Just as is the case with any other appeal under our legal system, an appeal from a sales tax assessment is only a rehearing or a retrial and in the absence of any statutory inhibitions or restrictions, an Appellate Authority has the same powers exercisable in the same manner and to the same extent, as the assessing authority has in the first instance. If this were not the position, no Appellate Authority can effectively function while hearing and determining an appeal from an assessment. The Appellate Authority including the Tribunal have discretion to consider fresh grounds on law as well as on facts. There is no reason why the Appellate Authority cannot modify the assessment order on an additional ground even if it is not raised before the assessing authority. The raising of an additional ground before the Appellate Authority is permissible even if the ground so raised was not raised when the return was filed or an assessment order was made or that the ground became available on account of change of circumstances or law - The jurisdiction of the Appellate authorities to consider a fresh or a new ground or a claim is not restricted to cases where such a ground did not exist when the return was filed and the assessment order was made. The Appellate Authorities have very wide powers while considering an appeal which may be filed by an assessee. The Appellate Authority has very wide powers and can exercise its discretion to consider a claim or a ground not considered by the assessing authority for a sufficient cause. The Tribunal has accepted and considered the C forms of M/s Varsha Controls Gear which could not have been furnished before the assessing authority, though the same undisputedly, pertain to the assessment year 2005-2006. There was sufficient cause to consider the C forms by M/s Varsha Controls Gear as the same pertained to the transactions in relation to the business of the Respondent for the assessment period in question. It cannot therefore be said that the C forms were not available when the return was filed. The Appellate Authority has the power to consider a claim made by an assessee which is not before the assessing officer. The Tribunal has correctly and for sufficient cause exercised its discretion and directed the Appellate Authority to take into consideration the Respondent-Debtor s claim for consessional rate of tax with respect to the transactions stated in the said C forms issued by M/s Varsha Controls Gear. No fault can be found with the order of the Tribunal nor is there any perversity. Appeal dismissed.

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• 2022 (9) TMI 426
  Validity of assessment order - Refund claim alongwith the interest - suppression of facts or not - time limitation - section 16 (1) (a) of the TNGST Act - HELD THAT:- No doubt the petitioner has approached the appellate authorities. However, admittedly, the refund in question arises in respect of those issues that had not travelled in appeal and had attained finality. It was only as regards the remainder of the issues as well as penalty that the petitioner has approached the statutory authorities and some of those appeals are still stated to be pending. The claim of interest is maintainable even in the absence of a statutory Form. It was never the case of the Department at any stage, that the claim ought to have been made in statutory Form. The petitioner s request dated 07.03.2008 seeks only refund under threat of legal action. Interest upon the refund claimed shall be quantified and paid over within a period of four (4) weeks from date of receipt of a copy of this order - Petition allowed.

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• 2022 (9) TMI 425
  Refund of amount paid as pre-deposit with the appeals (along with interest) - Approval of resolution plan under IBC - ex parte assessment orders - Section 82 (3) of the Rajasthan Value Added Tax Act, 2003 - HELD THAT:- Pre-deposit of a percentage of the assessed amounts was paid with the appeals by way of mandatory statutory obligation as per Section 82 (3) of the Act of 2003 - Section 82(3) of the Act of 2003 imposes a mandatory statutory obligation of making a pre-deposit for entertaining an appeal. In appeals against ex parte assessment orders, the mandatory statutory pre-deposit would be 5% of the Value Added Tax and 10% of the Value Added Tax amount in other cases. On going through the provisions of the Act of 2003 and the Rules of 2006, it becomes clear that mandatory statutory obligation pre-deposit with the appeal comprises of a proportion of VAT liability imposed upon the assessee by the assessing authority. It is not in dispute that the respondent Department had submitted a claim for an outstanding amount of Rs. 479,73,13,819/- before the NCLAT in the resolution proceedings in the capacity of an operational creditor. The amount so claimed would relate to Value Added Tax and nothing else. The NCLAT disposed of the demands raised by all corporate/operational creditors including the respondent Department while accepting its claim only for a sum of Rs. 61.05 crores - the liability of the petitioner towards the respondent Department was fixed at Rs. 61.05 crores. Any demand made or amount retained by the Department beyond the said sum of Rs. 61.05 crores either from the sick unit or from the petitioner would, thus, be invalid as being contrary to the Resolution Plan approved by the NCLAT. Once the tax liability raised by the Department had been fixed by effect of acceptance of Resolution Plan, manifestly, the Department could not hold on to any payment made by the assessee in excess of what has been approved under the Resolution Plan, i.e. Rs. 61.05 crores - The Resolution Plan having been approved and the claim of the Department having been finally decided by the NCLAT, if at all the Department was desirous of claiming that the pre-deposit amounts were exclusive and beyond the claim filed by the Department before the NCLAT, then the burden would be on the Department to prove the same. The assessee discharged the burden put upon it by Section 53 (5) of the Act of 2003 by virtue of the Resolution Plan finalized by the NCLAT. Thus, the finding recorded by the Tax Board that the amount of pre-deposits were distinct and were not covered under the claim filed by the Department before the NCLAT has no foundation whatsoever. As the original assessee, i.e. M/s. Binani Cement Ltd., was compelled to file the appeals with pre-deposits of a percentage of the tax liability by way of mandatory statutory obligation as per the assessment orders issued by the Commercial Taxes Department, the consequential relief pursuant to extinguishment of the demands under the assessment order would definitely require a direction for refund of the amount to the successful Resolution Applicant, i.e. the petitioner herein, who took over the assets and liabilities of the sick unit according to the Resolution Plan approved by the NCLAT. The consolidated impugned order dated 28.12.2020 passed by the Rajasthan Tax Board, Ajmer in the appeals filed by the petitioner is set aside to the extent the applications filed by the petitioner for refund of pre-deposit amounts with interest were rejected - revision allowed.

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• Indian Laws

• 2022 (9) TMI 424
  Dishonor of Cheque - insufficient funds - existence of legally enforceable debt or liability - acquittal of the accused - burden to prove - preponderance of probability - section 138 of NI Act - HELD THAT:- There was no need or necessity for him to go into the witness box and to give his evidence. There was no compulsion to the accused to give his evidence. It was for the complainant to establish his case basing on the preponderance of probabilities. The burden was heavily upon the complainant that he had advanced money to the accused. No Income Tax Returns were filed by the complainant, as such, the Appellate Court held that the complainant miserably failed to establish the offence under Section 138 of N.I. Act; and that the accused was entitled for acquittal. In Rangappa v. Mohan case [ 2010 (5) TMI 391 - SUPREME COURT ] , the Hon ble Apex Court held that ordinarily in cheque bouncing cases, what the courts have to consider is whether the ingredients of the offence enumerated in Section 138 of the N.I. Act have been met and if so, whether the accused was able to rebut the statutory presumption contemplated by Section 139 of the Act . Coming to the facts in the present Revision, the accused herein also failed to give reply to the statutory notice given by the complainant under Section 138 of N.I. Act which would lead to an inference that there was merit in the version of the complainant. If the accused repaid the amounts taken by him as handloans earlier, then why the accused had not demanded the complainant to return the said cheque which the accused had given as security, was not explained by the accused - both the Courts below had placed the burden of proof on the complainant to show that it was the complainant who had to establish that there was a legally enforceable debt, even though the accused had not disputed the issuance of cheque to the complainant. As such, it is considered fit to convict the accused and to sentence him to undergo simple imprisonment till rising of the day and to pay a fine of Rs.2,43,000/- with default sentence of three months simple imprisonment - the concerned Magistrate is directed to secure the presence of the accused by issuing a warrant to undergo the sentence in the open court and to cause recover the fine amount; and on such recovery, the fine shall be paid to the complainant as compensation under Section 357 of Criminal Procedure Code. The Criminal Revision Case is allowed.

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• 2022 (9) TMI 423
  Dishonor of Cheque - petitioner submits that Section 138 N.I. Act proceedings are primarily a civil wrong - rebuttal of presumption - HELD THAT:- The offence under Section 138 of N.I. Act, although a criminal offence, it can certainly be considered as a civil wrong for the purpose of invoking Section 258 of the Cr.P.C. - This Court further takes note of the fact that in the year 2011 itself there was a clear refusal on the part of the respondent to accept the amount for compounding the offence herein. Since the parties have settled the dispute and complainant respondent No.2 had accepted the sum towards full and final settlement of the cheque, on the satisfaction of the complainant and in the light of provisions of Section 147 of NI Act - in view of law laid down by the Hon ble Apex Court in the case of DAMODAR S. PRABHU VERSUS SAYED BABALAL H. [ 2010 (5) TMI 380 - SUPREME COURT] , the sentence awarded to the petitioner for offence under Section 138 NI Act is liable to be set aside. The petitioner is directed to deposit 15% of the cheque amount with the State Legal Services Authority, Jodhpur within a period of two weeks from today - Application disposed off.

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• 2022 (9) TMI 422
  Dishonor of Cheque - Permission to lead further defence evidence and forward the cheque in dispute to the Hand Writing Expert for opinion - grant of opportunity to the petitioner to adduce evidence by way of rebuttal - rebuttal of presumption raised under section 118 (a) or 139 of NI Act - discharge of burden to prove - HELD THAT:- There cannot be any two opinions about the right of an accused to have a fair trial. The accused has a right to defend himself as a part of his human as well as fundamental right as enshrined under Article 21 of the Constitution of India. The right to defend oneself and for that purpose to adduce evidence is recognized by the Parliament in terms of sub-section (2) of Section 243 of the Criminal Procedure Code. When a defence is raised on behalf of the accused that complainant has misused the cheque, even in a case where a presumption can be raised under section 118 (a) or 139 of the said Act, an opportunity must be granted to the accused for adducing the evidence in rebuttal thereof. As the law places burden on the accused, he must be given an opportunity to discharge his burden. In case of T. NAGAPPA VERSUS Y.R. MURALIDHAR [ 2008 (4) TMI 789 - SUPREME COURT] , it is held by the Apex Court that while granting permission to the accused to lead defence evidence by way of fair trial, he should not be allowed to unnecessarily protract the trial or summon the witnesses whose evidence would not be at all relevant. The proceedings of a case of dishonour of cheque is dragged for more than six years approximately. If the petitioner really wanted to forward the cheque in dispute for hand writing expert s opinion, he could have fled an application immediately after examining his defence witness or after short interval. The evidence of defence witness was recorded on 18.9.2019 and thereafter, the petitioner went on taking adjournments on 29.10.2021, 21.11.2021, 13.12.2021 and 18.12.2021. The petitioner even did not make any attempt to move such application for forwarding the cheque in dispute to the hand writing expert and ultimately, the learned Magistrate was constrained to pass the order to close defence evidence on 18.12.2021 - There was no denial of opportunity. It is rightly observed by the learned Magistrate that the petitioner/accused cannot be allowed to harass the complainant under the guise of fair trial for the accused. I fully endorse the view taken by the learned Magistrate in this regard. The petitioner/accused while facing the cross-examination in paragraph no.8 has candidly admitted that signature and amount on the cheque are written by him. In view of candid admission given by the petitioner, there is no propriety to forward the cheque in dispute to the hand writing expert for opinion mere for the sake of petitioner. It is nothing but one more attempt to delay the proceedings. There is no merit in the petition - The petition is liable to be dismissed by imposing certain costs in order to prevent such abuse of process of law.

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