TMI Tax Updates - e-Newsletter
September 12, 2024

Case Laws in this Newsletter:

GST Income Tax Customs Insolvency & Bankruptcy FEMA PMLA Central Excise

News

1. India-US working together in areas like critical minerals, supply chains and advanced technologies: Shri Piyush Goyal.

2. Trade Connect e-Platform for exports is single window, fast, accessible and transformational: Shri Piyush Goyal.

3. Shri Piyush Goyal inaugurates Akurli bridge, Mumbai; says Ganesh Chaturthi gift not just to North Mumbai but entire city.

4. IIFT Tops Worldwide in LinkedIn Global MBA Ranking 2024 in Networking, holds 51st position among top 100 programmes.

Notifications

Customs

1. 04/2024 - dated 10-9-2024 - CVD

Seeks to impose countervailing duty on imports of Welded Stainless-Steel Pipes and Tubes originating in or exported from China PR and Vietnam

IBC

2. G.S.R. 560(E) - dated 10-9-2024 - IBC

Insolvency and Bankruptcy Board of India (Salary, Allowances and other Terms and Conditions of Service of Chairperson and members) Amendment Rules, 2024.

Money Laundering

3. S.O. 3872(E) - dated 10-9-2024 - PMLA

Seeks to Amend in the notification of the Government of India in the Ministry of Finance (Department of Revenue), number S.O. 372(E), dated the 5th February, 2016. - Court of Session designated as Special Court under the Prevention of Money laundering Act, 2002 - Area specified for trial of offence punishable u/s 4 of PMLA

SEZ

4. S.O. 3881(E) - dated 9-9-2024 - SEZ

To set up a FTWZ at Athipattu, Nandiambakkam and Puludivakkam Villages, Ponneri Taluk, Tiruvalur District in the State of Tamil Nadu.

Highlights / Catch Notes

GST

• High Court Overturns Dismissal Due to Procedural Errors, Emphasizes Fairness in Allowing Corrections and Clarifications.

  Case-Laws - HC : Dismissal of an appeal by the appellate authority due to procedural defects, including the failure to submit a Board Resolution appointing the authorized signatory, the non-mentioning of the signatory's name, delay in filing the appeal, and incorrect mode of pre-deposit payment. The High Court held that the appellant was not given an opportunity to rectify these defects, which are minor procedural lapses. Relying on precedents, the court emphasized that justice cannot be denied for failure to comply with procedures without allowing the appellant to rectify the defects. The court also addressed the issue of pre-deposit payment through DRC-03, citing a previous case where the High Court directed the concerned authority to issue clarification on this industry-wide issue. Consequently, the High Court quashed the appellate order and remanded the matter for de novo adjudication by the appellate authority.
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• Court Denies Tax Refund on Ocean Freight; Payment Utilizable as Input Tax Credit, Deeming Issue Revenue Neutral.

  Case-Laws - HC : The petitioner's claim for refund of tax paid on reverse charge basis on ocean freight along with interest was rejected. The Court held that the Input Tax Credit availed by the assessee under GST Acts and rules would entitle utilization for discharging tax liability. The respondent should have examined this aspect before sanctioning the refund claim. Merely paying tax does not entitle the petitioner to refund, as the issue was revenue neutral. The amount paid by the petitioner on ocean freight would have been availed as Input Tax Credit and utilized. Therefore, the petitioner was not entitled to refund claim or interest. However, the rights accrued to the petitioner need not be disturbed. The petitioner's prayer shows greediness and taking undue advantage of Court proceedings, despite not suffering any prejudice. Only importers who paid IGST on ocean freight charges on reverse charge basis and were not liable can be said to have been prejudiced. Under these circumstances, there was no case for granting relief to the petitioner. The Court dismissed the petition, finding no reasons to interfere with the impugned order.
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• Improper notice & order for ITC reversal sans reasoned adjudication; remanded for fresh consideration.

  Case-Laws - HC : Principles of natural justice violated due to vague summary notice merely citing risk of excess ITC availed by petitioner on account of GSTR mismatch. Order u/s 73 of CGST Act set aside as proper officer failed to consider detailed replies with supporting documents filed by petitioner, merely stating they were unsatisfactory without application of mind. Reference to audit observation erroneous as no audit conducted u/s 65. Impugned order quashed, show cause notice remitted to proper officer for re-adjudication. Petition disposed of by remand.
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• Petitioner challenges tax order for lack of hearing opportunity, court remands for fresh decision after proper hearing.

  Case-Laws - HC : The petition raised issues regarding the maintainability of the appeal u/s 107 of the UPGST Act, 2017, violation of Section 75(4) of the Act, and denial of opportunity for personal hearing, amounting to a violation of principles of natural justice. The Court held that the impugned order was passed without fixing any date or issuing further notice for another hearing date, rendering it an ex parte order. Relying on a previous judgment, the Court remitted the matter to the Deputy Commissioner to pass a fresh order after affording due opportunity of hearing to the petitioner, thereby disposing of the petition by way of remand.
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• Bank account unfrozen as 1-year provisional attachment order lapses under CGST Act.

  Case-Laws - HC : Pursuant to Section 83(2) of the CGST Act, the provisional attachment order dated 27.01.2022 attaching the petitioner's Bank Account No. 5318491050161006 with Yes Bank Ltd. has ceased to have effect after one year from its issuance. The High Court held that the provisional attachment has lapsed and directed the respondent bank to forthwith permit operation of the said bank account without imposing any embargo based solely on the provisional attachment order. The petition was allowed.
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• Businesses granted relief to claim GST input credits despite technical lapses.

  Case-Laws - HC : The petitioners failed to reflect the remittance of Goods and Services Tax (GST) in their GSTR returns due to technical reasons, and there was a lack of clear proof of payment of consideration and tax towards the inward supply. The court granted liberty to the petitioners to claim the benefit of the relevant circulars, namely, Circular No. 183/15/2022-GST dated 27.12.2022 and Circular No. 193/05/2023-GST dated 17.07.2023, within one month before the appropriate authority. The authority shall examine the claim of the individual dealer and process the claim accordingly, following the reasoning, observations, and conclusions recorded in the cited judgment and connected matters.
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Income Tax

• Court Invalidates Tax Reassessment Notices Lacking Substantiated Belief of Income Omission; Mere Suspicion Insufficient.

  Case-Laws - HC : The High Court examined the validity of reopening assessments based on the report of the District Valuation Officer (DVO). It distinguished between "reason to believe" and "mere suspicion" as grounds for reopening. The court held that the proximity of reasons to the belief of income escaping assessment is determinative. Absence of reasons would render it a mere suspicion, which is insufficient for reopening. The Assessing Officer solely relied on the DVO's valuation estimate of renovation/reconstruction costs, despite the assessee declaring the property's cost under "Fixed Assets and Capital WIP." The reasons did not reflect the AO's application of mind to ascertain whether the assessee had already declared the property's value correctly. Following the Supreme Court's ruling in Dhariya Construction Company, the court decided in favor of the assessee, holding the reopening notices unsustainable due to lack of valid reasons.
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• Tax Settlement Order Can't Rectify Interest Levy Before 2011 or Reopen Concluded Proceedings.

  Case-Laws - HC : Settlement Commission lacks power to rectify order u/s 245F(1) by levying interest u/ss 234A, 234B, and 234C prior to 01.06.2011. Rectification order on 21.03.2003 was invalid as Settlement Commission did not have rectification power then. Supreme Court in Brij Lal case held interest u/s 234B is leviable only till date of order u/s 245D(1), not till Settlement Order u/s 245D(4). Settlement Commission cannot reopen concluded proceedings invoking Section 154 to levy interest u/s 234B due to Section 245I restriction.
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• Builder's claims on EDC, circle rate difference & flat buyers' PAN details partly allowed.

  Case-Laws - AT : Addition made on account of EDC paid to HUDA was considered reimbursable and not part of profit, hence disallowed. Addition u/s 43CA for difference between actual sale consideration and circle rate was remitted to AO for verification after considering facts. Addition u/s 68 for non-providing PAN of flat buyers was deleted as mere non-submission of PAN cannot lead to disallowance u/s 68 when relevant details were provided. Revenue's appeal was dismissed.
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• Tribunal Grants US LLC Treaty Benefits Under India-USA DTAA, Recognizes Fiscally Transparent Entities as Tax Residents.

  Case-Laws - AT : The assessee, a Limited Liability Company (LLC) under US tax laws, was denied treaty benefits under the India-USA Double Taxation Avoidance Agreement (DTAA) by the Assessing Officer (AO), who proposed to assess the income at 25% instead of the concessional 15% rate. The AO concluded that the LLC did not qualify as a 'Resident' under Article 4 of the DTAA, as only entities liable to tax in their country are considered residents. However, the Tribunal held that the assessee, being a resident under Article 4 by virtue of incorporation and recognition as a separate entity from its members, qualifies as a 'person'. The assessee is liable to tax in the US under its Income Tax Law, as LLCs have the option to be taxed as corporations or have their income clubbed with their owners' income. The tax authorities erred by considering the assessee a fiscally transparent entity without appreciating the phrase 'liable to tax'. The Tribunal gave precedence to the intent of the India-US Treaty, recognizing the concept of fiscally transparent entities and relying on the Mumbai Tribunal's judgment in Linklaters LLP case. The exclusion provision in paragraph 1(b) of Article 4 implies that fiscally transparent partnerships were already regarded as 'liable to tax'. Consequently, the.
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• Capital Reserve from Share Allotment in Amalgamation Not Income; Section 28(iv) Deemed Inapplicable by Tax Authority.

  Case-Laws - AT : Concerning the addition u/s 28(iv) for the amount credited to Capital Reserves on account of allotment of shares by the amalgamated company with respect to the shares held in the amalgamating company, it was held that such allotment of shares is not a voluntary transaction. The benefit accruing to the assessee due to amalgamation by way of merger is not in the revenue field and not of an income nature. Therefore, there was no occasion to invoke Section 28(iv) of the Act. The amalgamation is not an adventure in the nature of trade, and this transaction is clearly a capital account transaction. Consequently, the capital reserve could not be considered as a benefit accrued to the assessee u/s 28(iv), and the order of the CIT(A) deleting the addition was upheld.
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• Advance tax not payable if assessee claims agricultural land sale exempt.

  Case-Laws - AT : Advance tax payment obligation does not apply when assessee claims agricultural land sale proceeds are exempt u/s 2(14). CIT(Appeals) should admit appeal for adjudication on merits, treating advance tax payable as nil where assessee claims no taxable income. Dismissing appeal for non-payment of advance tax on disputed demand violates right of appeal when assessee disputes tax liability itself. Tribunal directed CIT(Appeals) to admit appeal and decide on merits, following precedents that right of appeal cannot be denied merely for non-payment of admitted tax due when liability itself is under dispute.
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• Interest-Free Loan Deemed Dividend Taxable Only for Shareholder, Not Borrower, Says Tribunal.

  Case-Laws - AT : Deemed dividend u/s 2(22)(e) arises when an interest-free loan is provided by a company to a substantially related concern in shareholding. The issue was whether the deemed dividend is taxable in the hands of the concern receiving the loan or in the hands of the common shareholder. The Tribunal, relying on Delhi and Bombay High Court decisions, held that the deemed dividend u/s 2(22)(e) is taxable only in the hands of the shareholder. The contention that since a common entity held more than 10% shares in both the lender and borrower companies, the loan attracted section 2(22)(e) was rejected. The Tribunal ruled that the addition made by the Assessing Officer on account of deemed dividend u/s 2(22)(e) in the hands of the assessee-borrower was required to be deleted.
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• Non-profit denied tax exemption for trustees' pay; overturned on appeal.

  Case-Laws - AT : Charitable trust was denied exemption u/ss 11 and 12 due to disallowance of salary/honorarium paid to trustees u/s 13(1)(c) read with Section 13(3) and 164(2), invoking Section 40A(2)(b) as unreasonable payment. Assessee claimed trustees were qualified and remuneration was commensurate with services rendered. ITAT held that Assessing Officer admitted trustees' qualifications and failed to substantiate excessive remuneration by producing comparable cases. Remuneration was accepted in earlier years. Facts remained unchanged. Department failed to distinguish observations from earlier favorable orders. ITAT dismissed department's appeals, upholding allowability of trustees' remuneration for exemption.
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• Deductibility of CSR & Sustainable Development Expenditure Upheld.

  Case-Laws - AT : Disallowance of Corporate Social Responsibility (CSR) and Sustainable Development (SD) expenses. Following the precedents established in the assessee's own cases and the case of PEC Ltd., it was held that the assessee company was obligated to incur CSR and SD expenses due to specific guidelines from the Government of India. Consequently, the expenditure incurred during the relevant assessment years of 2011-12 and 2012-13 was considered wholly and exclusively for the purposes of the assessee's business. Therefore, the deduction claimed by the assessee for both assessment years was deemed allowable, with the decision favoring the assessee.
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• Tribunal Grants Exemption for Gem Export Promotion Company, Aligns Activities with Non-Commercial Objectives.

  Case-Laws - AT : The assessee, a company registered u/s 25 of the Companies Act, 1956, with the main objective of supporting and promoting the export of gems and related activities, was denied exemption u/s 11 by the Assessing Officer (AO). The AO considered the exhibition activities conducted by the assessee as commercial, inferring a profit motive. However, the Tribunal held that the assessee's main object was covered u/s 2(15) and the AO failed to point out any deviations. The Tribunal observed that the assessee's activities were for the promotion of trade and business of its members, and the revenue could not establish any business transactions during the exhibitions. Relying on its own earlier orders, the Tribunal ruled that the assessee was eligible for exemption u/s 11 for the assessment year in question, and the denial of carry forward of deficit from earlier years was contrary to the jurisdictional High Court's binding judgment.
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• Cash deposits during demonetization substantiated by cash flow & bank statements despite no books of accounts.

  Case-Laws - AT : Cash deposits made during demonetization period from cash withdrawals and rental income received in cash were substantiated through cash flow statements and bank statements. The assessee, not required to maintain books of accounts, explained the cash deposits as accumulated over time from salary, rent, and interest income. Lower authorities rejected the cash flow statement demonstrating cash balance of Rs. 25,09,620 as on 8-11-2016, despite no dispute over the cash balance itself. The Tribunal found the assessee's submissions detailing the deposited amounts during demonetization period unambiguous, allowing the appeal.
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Customs

• Artworks imported for public museums/institutions to face customs duty from Sep 7, 2024 - policy shift.

  Notifications : This notification rescinds the earlier Notification No. 26/2011-Customs which exempted the import duty on works of art imported for exhibition in public museums or national institutions. Consequently, such imports will now attract applicable customs duties. The rescission takes effect from September 7, 2024, barring any actions taken prior to this date under the previous exemption notification. This change indicates a policy shift, potentially aimed at generating revenue or promoting domestic art exhibitions.
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• Non-compliance with Customs conditions rejected appeal; High Court allowed writ petitions challenging final CEGAT order in appropriate cases.

  Case-Laws - HC : Non-compliance with conditions imposed u/s 129(e) of Customs Act, 1962 led to rejection of appeal. The High Court held that writ petitions challenging final order of CEGAT are maintainable in appropriate cases heard by Division Bench, despite availability of statutory remedy u/s 35G of Central Excise Act. These petitions were treated as mercy petitions without involving any question of law. To balance interests, the impugned orders were set aside on condition of remitting Rs. 15 lakhs per appeal within four weeks.
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• Exporter wins right to claim export incentives under MEIS.

  Case-Laws - HC : The petitioner had exported goods eligible for the Merchandise Exports from India Scheme (MEIS) under Chapter 3 of the Foreign Trade Policy and claimed duty drawback u/s 75 of the Customs Act, 1975. There were no records indicating denial of parallel incentives. The export of goods stands confirmed. Courts have been liberal in granting reliefs to exporters under the scheme. Since the petitioner made legitimate exports and was not otherwise disentitled to export incentives under MEIS, the petition was allowed. Respondents were directed to ensure suitable amendment of shipping bills for the petitioner to claim MEIS benefits on exports, without prejudice to the Department's rights to recover incentives if discrepancies are noticed.
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• Tribunal Rules in Favor of Transferees, Overturns Customs Duty Recovery and Penalties Due to Invalid Grounds.

  Case-Laws - AT : Denial of benefit of Value Based Advance Licenses (VABAL) to the appellants-transferees and the recovery of customs duty, along with the imposition of penalties. The key points are: The DGFT authorities took action on certain licenses, but there was no indication of cancellation by them for the three VABAL licenses in question. The impugned order directing duty recovery has no legal basis and is contrary to CBEC instructions. The Tribunal held that since the VABAL licenses were not obtained through fraud, the ratio of the Supreme Court case involving forged documents does not apply. The DGFT authorities issued amendments for the three licenses, indicating they were not found to involve forgery. Precedents establish that if licenses were valid at import time, subsequent cancellation on fraud grounds does not impact the transferee. The benefit of notification cannot be denied to the transferee on the ground of breach of conditions. Consequently, the impugned order confirming demands, interest, and penalties is unsustainable, and the appeal is allowed.
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FEMA

• Regulations on Overseas Investments: Fees, Restrictions, and Limits Under India's FEMA for Reporting Delays and Financial Commitments.

  Circulars : This text provides instructions and regulations related to overseas investment transactions under India's Foreign Exchange Management Act (FEMA). Key points include: Late submission fees (LSF) matrix for delayed reporting of various overseas investment forms/returns. Fees calculated based on amount involved and years of delay. Maximum 3 years allowed for LSF payment option. Restrictions on further financial commitments if reporting delays exist. Prohibitions on transactions with entities engaged in certain activities or located in specified countries/jurisdictions. Limits on financial commitments through overseas direct investment (ODI), debt, guarantees, pledges/charges. Regulations for ODI in financial services sector. Provisions for overseas investments by resident individuals, mutual funds, venture capital funds, alternative investment funds, trusts/societies. Special provisions for investments in International Financial Services Centres (IFSCs) in India. Rules for acquiring/transferring immovable property outside India. Operational instructions to authorized dealer (AD) banks for processing, reporting overseas investment transactions through online OID application. Requirement for designated AD bank and routing all transactions through it.
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• Tribunal reduces exorbitant penalties for foreign exchange remittance error, considers inadvertent mistake & time lapse.

  Case-Laws - AT : Appellate Tribunal reduced penalty imposed on company u/s 50 of FERA, 1973 from Rs.2 crores to Rs.2.5 lakhs for contravention regarding two foreign exchange remittances totaling NLG 76,913.27 instead of alleged NLG 43,503,43.27 due to inadvertent error in impugned order. Personal penalties of Rs.40 lakhs each on three in-charges were set aside considering the matter being 25 years old and difficulty in tracing records. Impugned order was modified accordingly in the interest of justice.
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Corporate Law

• Accounting rules updated for sale-leaseback transactions under Ind AS 116.

  Notifications : This notification amends the Companies (Indian Accounting Standards) Rules, 2015 by inserting provisions related to accounting for sale and leaseback transactions under Ind AS 116 (Leases). The key amendments are: inserting paragraph 102A to provide guidance on subsequent measurement of right-of-use asset and lease liability for seller-lessee; modifying Appendix C for transition requirements; and adding a new Appendix D with illustrative examples on sale and leaseback transactions. The amendments aim to align Indian accounting standards with international practices and provide clarity on accounting treatment of sale and leaseback arrangements, ensuring consistent application by companies.
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• New Rules for Mergers: Foreign Holding Companies & Indian Subsidiaries Need RBI Approval, Compliance with Companies Act.

  Notifications : The notification amends the Companies (Compromises, Arrangements and Amalgamations) Rules, 2016 by inserting a new sub-rule (5) in rule 25A. It provides for the procedure to be followed in cases where a foreign holding company merges or amalgamates with its wholly owned Indian subsidiary company. The key requirements are: both companies must obtain prior approval from the Reserve Bank of India, the Indian transferee company must comply with Section 233 of the Companies Act, 2013, the application for merger/amalgamation must be made by the Indian transferee company to the Central Government u/s 233, and the declaration required under sub-rule (4) must be made at the time of making the application u/s 233. The amendment comes into force on 17th September, 2024.
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• Pay hike for Chairperson & Members of National Financial Reporting Authority.

  Notifications : The notification amends the National Financial Reporting Authority (Manner of Appointment and other Terms and Conditions of Service of Chairperson and Members) Rules, 2018. It increases the salary and allowances of the Chairperson and Members of the National Financial Reporting Authority. The Chairperson's salary is revised from Rs. 4,50,000 to Rs. 5,62,500, while the Members' salary is increased from Rs. 4,00,000 to Rs. 5,00,000. The amendment comes into force on the date of its publication in the Official Gazette.
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IBC

• Court Upholds Insolvency Board's Decision to Suspend Professional for Misconduct; Rejects Claims of Improper Procedure.

  Case-Laws - HC : The High Court dismissed the petition challenging the order of the Insolvency and Bankruptcy Board of India (IBBI) suspending the registration of the petitioner as an Insolvency Professional for two years. The court held that the contention of the petitioner regarding the improper constitution of the Disciplinary Committee was untenable. The IBBI was within its authority to investigate and take action against the petitioner for misconduct, irrespective of separate proceedings before the Adjudicating Authority. The material on record showed the petitioner's failure to preserve the assets, hand over records to the liquidator, and prevent unauthorized transfers, violating provisions of the Insolvency and Bankruptcy Code (IBC) and regulations. The court reiterated the limited scope of judicial review in commercial and technical matters, emphasizing restraint unless arbitrariness, unreasonableness, mala fide, bias, or irrationality is clearly established. The court found no reason to interfere with the IBBI's order, which followed due procedure.
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PMLA

• Money Laundering Investigations Governed by PMLA; Police Excluded; Section 50 Validated; Compliance with Summons Required.

  Case-Laws - SC : The Supreme Court held that the dispensation regarding Prevention of Money Laundering, Attachment of Proceeds of Crime, and Inquiry/Investigation of offence of Money Laundering, including issuing summons, recording statements, and calling for production of documents, is fully governed by the provisions of the PMLA itself. The jurisdictional police, governed by Chapter XII of the Code, cannot register or investigate the offence of money laundering due to the special procedure prescribed under the PMLA. The ratio in Vijay Madanlal case upheld the validity of Section 50, which enables the authorized Authority to summon any person for giving evidence or producing records during proceedings under the Act. The person summoned is bound to attend and state the truth, and cannot claim protection under Article 20(3) at the summons stage as it is not "testimonial compulsion". The challenge to the summons issued u/s 50 was dismissed as lacking merit. Persons summoned are bound to attend, state the truth, and produce documents as required under sub-sections (3) and (4) of Section 50, failing which they are liable u/s 174 of the IPC. Both appeals were dismissed.
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SEBI

• Guide to Registering as a Foreign Venture Capital Investor with SEBI: Key Requirements and Compliance Steps.

  Notifications : This appears to be an application form for registration as a Foreign Venture Capital Investor (FVCI) with the Securities and Exchange Board of India (SEBI). The key points covered are: 1. Applicant details - Name, address, contact information, regulatory status, type of entity etc. 2. Details of beneficial owners with controlling ownership interest or control over the applicant entity. 3. Income and source of income details of the applicant. 4. Declaration regarding any disciplinary history or violations. 5. Appointment of designated depository participant, custodian and bank for FVCI activities. 6. Details of any prior association with Indian securities market. 7. Self-certification regarding compliance with applicable regulations like FATCA, CRS etc. 8. Undertakings from the applicant to comply with FVCI regulations, anti-money laundering laws, and provide additional information as required. 9. Payment of applicable registration and renewal fees. 10. The form requires signature and declaration from the authorized signatory of the applicant entity. The document also contains the format for the FVCI registration certificate to be issued by SEBI upon successful application, as well as details on the fees payable for registration and renewal.
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Central Excise

• Refund Request for CVD and SAD Denied; Tribunal Affirms Only Existing Law Allows Cash Refunds, Not Applicable Here.

  Case-Laws - AT : The appellant sought refund of Countervailing Duty (CVD) and Special Additional Duty (SAD) paid in cash u/s 11B of the Central Excise Act, 1944 read with Section 142(3) and 142(6)(A) of the Central Goods and Service Tax Act, 2017. They argued that since they paid the duty after GST introduction and were eligible for credit of CVD and SAD, they were entitled to refund. The Tribunal held that Section 142 allows refund in cash only when refunds are admissible under existing law but cannot be refunded in credit. The existing law, i.e., Central Excise Act and Rules, provides for cash refund of credit taken by the assessee under limited provisions like Rules 5, 5A, and 5B of the Cenvat Credit Rules 2004, which do not cover the appellant's case. Therefore, Section 142 does not entitle them to cash refund. Further, Section 142(6) covers refund in cash when refund or credit admissibility is in dispute before judicial forums, which is not the case here. The refund in cash u/s 142(3) is admissible only if refund is otherwise admissible in cash under existing law, which is not the case. Hence, the appeal was dismissed.
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Case Laws:

• GST

• 2024 (9) TMI 541
  Levy of penalty on Driver - failure to issue notice within seven days of detention or seizure - seizure of goods vehicle. Penalty on driver - HELD THAT:- Sub-section (1) in section 129 commences with non-obstante clause, to include any person transporting goods or storing them while in transit. Proviso under the sub-section says no such goods or conveyance shall be detained or seized without serving an order of detentions or seizure on the person transporting the goods - it is clear thus that the provision includes the driver. Failure to issue notice within seven days of detention or seizure - HELD THAT:- In TVL. V.V. IRON AND STEELS, REPRESENTED BY ITS PROPRIETOR SARAVANA PANDIAN VERSUS THE STATE TAX OFFICER, RS-VII, INTELLIGENCE-II, CHENNAI [ 2023 (9) TMI 1241 - MADRAS HIGH COURT] the learned single Judge found facts to be that interception was on 30th August, 2023. In paragraph-12 there was calculation made to say that time for issuance of the notice would have expired on 6th September, 2023. Further facts in that case was, the notice was issued on 7th September, 2023. Reckoning by the learned Judge that time would expire on 6th September, 2023 was taking commencement of period of seven days for issuance of notice within the period of interception as on 31st August, 2023. Interception was on 30th August, 2023. It falls in line with reckoning of periods as in law, to be from the date following. In this case the seizure was on 7th August, 2024. Notice dated 14th August, 2024 issued to the driver thus, in our view, was within 7 days of the seizure. Petitioner in also having informed the authority on 14th August, 2024 that it is the owner of the goods, responsible therefor and ought to be noticed has by conduct sought to extend the period for issuance of the notice. As such the conduct militates against petitioner s contention on reckoning of the time. Petition disposed off.

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• 2024 (9) TMI 540
  Dismissal of appeal - failure to submit Board Resolution appointing the Authorized Signatory to sign Appeal documents under Companies Act, 1956 - failure on the part of Authorized Signatory to put her name under her signature - delay in filing of the Appeal of 27 days - payment of pre-deposit vide DRC-03 which is not a correct mode of payment of pre-deposit. Dismissal of appeal on the ground that the appeal has not been signed by authorised signatory and appellant has not submitted Board Resolution under the Companies Act, 1956 - HELD THAT:- Admittedly, petitioner was never called upon to file the same. In a similar matter in TATA CONSUMER PRODUCTS LTD. VERSUS UNION OF INDIA, [ 2024 (9) TMI 396 - BOMBAY HIGH COURT] , this Court had set aside the order passed by the Appellate Authority and remanded it for de novo consideration. Dismissal of appeal on the ground of non-mentioning of the name of the Authorized Signatory - HELD THAT:- The non-mentioning of the name of the Authorized Signatory is a minor procedural defect. Admittedly, respondent No. 2 never called upon petitioner to rectify the same - In Jem Exporter v. Union of India [ 2023 (8) TMI 173 - BOMBAY HIGH COURT] this Court held that justice cannot be denied for failure to comply with the procedure without giving an opportunity to appellant to rectify the procedural defects. Admittedly, respondent No. 2 never issued any defect memo to petitioner. If, respondent No. 2 had only brought this to the notice of petitioner at the time of personal hearing, it would have been cured. Dismissal of appeal on the ground of delay in filing the appeals - HELD THAT:- The petitioner submitted that if only respondent No. 2 had considered the appeal memo, he would have realised that there was actually no delay and the appeal was within time. Petitioner stated that order-in-original dated 25th March 2022 was received via e-mail on 19th April 2022 and that hence, the time to file the appeal expired on 20th June 2022. Admittedly, the appeal was filed on 20th June 2022. If respondent No. 2 had only brought this to the notice of petitioner at the time of personal hearing, it would have been clarified. Petitioner is agreed upon - In a similar matter in BYTEDANCE (INDIA) TECHNOLOGY PVT. LTD. VERSUS THE UNION OF INDIA ORS. [ 2024 (9) TMI 397 - BOMBAY HIGH COURT] this Court had set aside the order passed by the Appellate Authority and remanded it for de novo consideration. Payment of pre-deposit made through DRC-03 - HELD THAT:- This issue is no longer res integra. In Sodexo India Services Pvt. Ltd. V. Union of India [ 2022 (10) TMI 264 - BOMBAY HIGH COURT] the assessee had made the pre-deposit through DRC-03 for the filing of an appeal under Section 85 of the Finance Act, 1994 read with Section 35F of the Central Excise Act, 1944. The assessee s appeal was dismissed on the ground that pre-deposit made via Form DRC-03 was not proper. Noticing that the issue of pre-deposit was an industrywide issue, this Court directed the Central Board of Indirect Taxes to issue suitable clarification. The appellate orders were quashed and remanded to the appellate authority for de-novo adjudication. Petition disposed off.

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• 2024 (9) TMI 539
  Refund claim for the tax paid on reverse charge basis on ocean freight with interest - specific case of the petitioner is that the petitioner has paid tax, which was not due to the Department and therefore, collection was contrary to Article 265 of the Constitution of India - HELD THAT:- The fact remains that the Input Tax Credit that was availed by the assessee under the provisions of the respective GST Acts and the rules thereunder would entitle utilization of the Input Tax Credit for discharging the tax liability under the provisions of the respective GST Acts. This aspect ought to have been examined by the respondent before sanctioning the refund claim even though in the earlier round of litigation in M/S. SOUTH INDIA KRISHNA OIL AND FATS PVT LTD VERSUS THE ASSISTANT COMMISSIONER OF GST CENTRAL TAX, CENTRAL EXCISE, THANJAVUR [ 2023 (9) TMI 1548 - MADRAS HIGH COURT] , this Court had directed the petitioner to refund claim and disburse the amount within a period of four weeks from the date of receipt of the order. Merely because the tax was paid by the petitioner ipso facto would not entitle the petitioner to refund the amount paid as the issue was revenue neutral. The amount that was paid by the petitioner on ocean freight would have been availed as Input Tax Credit and utilized then and there. Therefore, the petitioner was as such, not entitled to refund claim much less interest. Be that as it may, the rights which have accrued to the petitioner so far need not be disturbed. The prayer of the petitioner in this writ petition shows that the petitioner is avaricious and is greedy and taking undue advantage of the Court proceedings even though the petitioner unilaterally has not suffered any prejudice. Only, where IGST on ocean freight charges were paid on reverse charge basis/mechanism and were borne by the importer, who was not liable/who is no more liable to pay GST alone can be said to have been prejudiced. Under these circumstances, there is no case made out for granting any relief to the petitioner. There are no reasons to interfere with the impugned order - petition dismissed.

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• 2024 (9) TMI 538
  Violation of principles of natural justice - summary notice issued was vague and merely on the risk of availment of excess ITC by the Petitioner on account of mismatch in GSTR-3B/9 and GTR-2A - order u/s 73 of the Central Goods and Services Tax Act, 2017 - HELD THAT:- The observation in the impugned order dated 30.04.2024 is not sustainable for the reasons that the reply dated 18.04.2024 and 24.04.2024 filed by the Petitioner are detailed replies with supporting documents. Proper Officer had to at least consider the reply on merits and then form an opinion. He merely held that the reply is not satisfactory and relevant/supporting documents not furnished which ex-facie shows that Proper Officer has not applied his mind to the reply submitted by the petitioner. As per the petitioner reference of an audit observation in the impugned order is also erroneous for the reason that there was no audit conducted of the petitioner in terms of Section 65 of Central Goods Services Tax Act, 2017 and the reference of an audit observations appears to be cryptic on account of an audit which was conducted on the GST Department itself. The impugned order dated 30.04.2024 cannot be sustained and is set aside. The Show Cause Notice is remitted to the Proper Officer for re-adjudication - Petition disposed off by way of remand.

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• 2024 (9) TMI 537
  Maintainability of petition - availability of remedy of appeal under Section 107 of of the UPGST Act, 2017 - violation of Section 75(4) of UPGST Act - denial of opportunity of personal hearing - Violation of principles of natural justice - HELD THAT:- In the present case as well the notice for filing of reply was issued on 21.12.2023 for the date 22.01.2024. No separate/other date was fixed for hearing. Yet, without passing any order on the date fixed, the impugned order has been passed on 29.04.2024 without fixing any date and without issuing any further notice for another date of hearing. The present order has remained wholly ex parte order that may not be sustained in view of the earlier order passed in MAHAVEER TRADING COMPANY VERSUS DEPUTY COMMISSIONER STATE TAX AND ANOTHER [ 2024 (3) TMI 334 - ALLAHABAD HIGH COURT] . The matter is remitted to the respondent no.1 - Deputy Commissioner, Sector - 1, State Tax, Gautam Budh Nagar to pass a fresh order, in accordance with law, after affording due opportunity of hearing to the petitioner - Petition disposed off by way of remand.

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• 2024 (9) TMI 536
  Attachment of Bank Account of petitioner - it is submitted that in terms of Section 83 (2) of CGST Act, the provisional attachment ceases to have effect after the expiry of one year from the date the order is made - HELD THAT:- It is held that the provisional attachment of the Bank Account No. 5318491050161006 with Yes Bank Ltd. in the name of petitioner has ceased to have effect. The respondent bank is accordingly directed to forthwith permit operation of the said bank account and not impose any embargo on the operation of the same based solely on the provisional attachment order dated 27.01.2022. Petition allowed.

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• 2024 (9) TMI 535
  Condonation of delay in filing the appeal - Section 5 of the Limitation Act - HELD THAT:- As rightly submitted by the learned counsel for the respondents, there is a delay in filing the appeal. Though the delay is explained by stating that the matter was being agitated before the learned Writ Court, in any event, an application under Section 5 of the Limitation Act has to be filed. The appellant/assessee is granted liberty to file such application and such application being filed, the department is directed to compute the delay and then list the application for hearing.

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• 2024 (9) TMI 534
  Writ of mandamus for all the requisite information regarding misuse/fraudulent use of his PAN Card - HELD THAT:- The petition is disposed off. Liberty is granted to the Petitioner to seek further information, if any, from the appropriate authority including the correct address of the person who was using the PAN number of the Petitioner herein and the mobile number, if any, available.

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• 2024 (9) TMI 530
  Failure to reflect the remittance of tax (GST) in their return GSTR due to some technical reasons - failure to remit the GST on the supply made by them to the petitioners - lack of clear proof of payment of consideration and tax towards the inward supply - HELD THAT:- The same points arise in the instant batch of writ petitions has been decided in [ 2024 (6) TMI 288 - KERALA HIGH COURT ] where it was held that The liberty is granted to the petitioners, who can claim the benefit of the two Circulars, namely, Circular No. 183/15/2022- GST dated 27.12.2022 and Circular No. 193/05/2023- GST dated 17.07.2023 to make their claim within one month from today before the appropriate authority who shall examine the claim of the individual dealer and process the claim. Hence, by adopting the reasoning, observations and conclusions recorded in the above judgment and connected matters, these writ petitions stand disposed of.

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• Income Tax

• 2024 (9) TMI 533
  TP Adjustment - AO has failed to bear in mind the Risk Parameters as framed - HELD THAT:- We find ourselves unable to sustain the challenge which stands raised bearing in mind the undisputed fact that Section 92CA of the Act confers a statutory power on the AO to make a reference to the TPO. An Instruction of the Board and the Risk Parameters, which may have been framed, are merely to act as guides for the purposes of exercise of that power. We fundamentally bear in mind the fact that the petitioner seeks to invoke our extraordinary jurisdiction under Article 226 of the Constitution, and that too at the stage of a mere reference to the TPO. We consequently find no justification for continuing the writ petition on our board. This, since all contentions of the petitioner-assessee including the fact that any order that the TPO may pass with respect to Arm s Length Price [ ALP ], or a Draft Assessment Order which may be framed, or even for that matter a direction by the Dispute Resolution Panel [ DRP ], and ultimately by the Income Tax Appellate Tribunal would themselves be in accordance with the scheme of Section 144C of the Act, and in respect of which the petitioner has adequate and efficacious remedies under the Act.

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• 2024 (9) TMI 532
  Revision u/s 263 - disallowance u/s 14A - Retrospective effect of amendments to Section 14A - HELD THAT:- The Hon ble Supreme Court in Chettinad Logistics (P.) Ltd [ 2018 (7) TMI 567 - SC ORDER] has categorically held that when no exempt income is earned, no disallowance u/s 14A can be made. AO, in the original assessment proceedings, had duly examined the issue by issuing a notice u/s 142(1) to which the assessee had responded. AO, after being satisfied with the submissions, passed the order u/s 143(3) r.w.s. 144B of the Act. PCIT has invoked Section 263, claiming that the AO did not properly examine the applicability of Section 14A resulting in an erroneous order prejudicial to the revenue. As argued by the assessee, the AO had duly inquired into the relevant facts and legal provisions during the original assessment proceedings. Considering the above, it is apparent that the twin conditions required for invoking Section 263 of the Act are not satisfied in this case as the AO had made inquiries and followed the law as interpreted by Courts, including the Hon ble Supreme Court. The fact that the PCIT has a different view does not make the order erroneous. The non-application of Section 14A of the Act was based on a judicially accepted position that no disallowance can be made, when no exempt income is earned. The amendment to Section 14A of the Act introduced by the Finance Act, 2022, cannot be applied retrospectively to the assessment year under consideration. The revisionary order u/s 263 of the Act, based on the assumption of retrospective applicability, is thus unsustainable. We hold that the PCIT was not justified in invoking jurisdiction under section 263 of the Act. The revisionary order is hereby quashed, and the appeal of the assessee is allowed.

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• 2024 (9) TMI 531
  Denying the exemption u/s 11 - assessee s return was processed u/s 143(3) - Assessee contended that despite the fact of the assessee having been granted registration u/s 12AA of the Act and the said fact being on the record of the Department, the assessee has been denied the benefit of exemption u/s 11 - HELD THAT:- We have noted the facts, as pointed out by the assessee as being granted registration u/s 12AA of the Act by the Department. CIT(A) is directed to take note of the same, and consider it while dealing with the assessee s appeal against intimation under section 143(1) of the Act denying the benefit of exemption of its income under section 11 of the Act.

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• 2024 (9) TMI 529
  Validity of reopening of assessment based on report of the District Valuation Officer [ DVO ] - reason to believe v/s reason to suspect - HELD THAT:- Proximity of the reasons with the belief of escapement of income is the determinative factor for re-opening of the assessment. Absence of reasons would obviate the possibility of a belief and would bring the case in the realm of mere suspicion which cannot be a ground for re-opening of assessment. On a perusal of the reasons recorded by the AO, it is apparent that the sole ground for reopening the assessment is the valuation of the Officer who had estimated the investment made in renovation/ reconstruction of the property even though, the petitioner had declared the cost of the said property under the head Fixed Assets and Capital WIP . Simply relying upon the report/estimate of the Valuation Officer, AO jumped to the conclusion that the amountrepresents the income of the assessee chargeable to tax which has escaped assessment for the AY 2011-12 and 2010-11. There is no statement or discussion by the AO as to what was the basis and why he should proceed on the valuation report, its contents and why he should rely on the same. The reasons do not reflect that AO has applied his mind to the facts of the case to ascertain as to whether in fact the assessee had already declared the value of the aforesaid property under Fixed Assets and Capital WIP or whether such valuation is correct and proper and not. Case of the petitioner is squarely covered by the ratio laid down by the Apex Court in the case of Dhariya Construction Company [ 2010 (2) TMI 612 - SC ORDER ] - Thus impugned notice (s) u/s 148 are unsustainable - Decided in favour of assessee.

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• 2024 (9) TMI 528
  Settlement Commission power of rectification - levy interest under sections 234A, 234B and 234C - order passed in terms of Section 245F(1) r.w.s. 154 by Settlement Commission as rectified the component of interest levied u/s 245F(1) - HELD THAT:- As the Settlement Commission has been vested with the power of rectification only with effect from 01.06.2011 by insertion of sub-section 6B in Section 245D of the Act, the impugned rectification could not have been effected on 21.03.2003 when such a power did not enure to the Settlement Commission. The provision is extracted below for clarity and completeness. The above position is fortified by a judgment of the Hon ble Apex Court in Brij Lal and others [ 2010 (10) TMI 8 - SUPREME COURT] as held that terminal point for the levy of interest under section 234B would be up to the date of the order under section 245D(1) and not up to the date of the Order of Settlement under section 245D(4).The Settlement Commission cannot re-open its concluded proceedings by invoking section 154 of the Act so as to levy interest under section 234B, particularly, in view of section 245I. WP allowed.

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• 2024 (9) TMI 527
  Validity of final order of assessment - Reassessment action could not have been initiated by the jurisdictional Assessing Officer [ AO ] - apart from the challenges which stand raised to the consequential demand and penalty notices which have been issued, it also seeks to impugn the notice issued u/s 148 - HELD THAT:- Section 148A(b) notice was issued as far back as on 15 March 2022. In response to the above, the petitioner submitted a detailed reply on 21 March 2022. On due consideration of the same, an order referable to Section 148A(d) came to be drawn on 07 April 2022 and which was followed by a formal Section 148 notice. Thus apparent that the petitioner chose to participate in the Section 148 proceedings and has approached this Court only after the passing of a final assessment order. It is only on a culmination of the reassessment proceedings that the petitioner now seeks to impugn the validity of the proceedings, based on the provisions of Section 151A of the Act and principally contends that the reassessment action could not have been initiated by the jurisdictional Assessing Officer [ AO ]. This, in our considered opinion, was a question which was available and open to be raised and the very assumption of jurisdiction challenged at the outset itself and way back in 2022 when the jurisdictional AO proposed to initiate reassessment. Thus no justification to invoke our extraordinary jurisdiction under Article 226 of the Constitution. WP dismissed.

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• 2024 (9) TMI 526
  Authority passing Final adjudication order had not issued show- cause notice but acted on show-cause notice issued by some other authority - valid exercise of power under the law or not? HELD THAT:- Prima facie, we find that the show-cause notice was issued by Assistant Commissioner whereas final order has been passed by Deputy Commissioner, who never heard the petitioner, therefore, there shall be stay of the impugned order. Taking into consideration the short issue involved, this petition is proposed to be finally disposed of on the next date of hearing.

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• 2024 (9) TMI 525
  TP Adjustment - MAM - ITAT justification in deleting Written Down Value of Cranes in the books of the Associated Enterprise of the Assessee as ALP as valid CUP - whether ITAT was correct in holding that the Written Down Value in the books of the associated enterprise of the assessee cannot be considered as ALP applying internal CUP and upholding the findings of the DRP that assessee justified the price paid by the valuation of an independent chartered engineer, or customs authorities or determined under DCF Method ? HELD THAT:- Although, it was vehemently argued before us that the three methodologies which were taken into consideration were wholly alien to the scheme of Rule 10B of the Rules, we find that ultimately the ITAT has on an overall consideration taken into account the transaction value as identified. Viewed in light of the above and an apparent failure of the appellant to bring forth any other comparable or any other methodology which may have been examined by the TPO, we find no ground to interfere with the view ultimately expressed by the ITAT.

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• 2024 (9) TMI 524
  Addition made on account of EDC (External Development Charges) paid to HUDA - amount misreported for income purposes in the accounts brought to tax - HELD THAT:- From the submissions, we observe that the EDC is nothing but an advance collected to provide common facilities and other services to the prospective flat owners and such provision of services are reimbursable, the same was collected in advance. As and when it is executed, the same are charged to the WIP. Since the project under consideration is not yet completed, the collected advance cannot be charged to profit and loss account. Assessee has collected the same for providing the common services on the approval of HUDA, this is only on the basis of reimbursement and there is no profit element. Therefore, it cannot be form part of Profit and loss Account. Therefore, the findings of ld CIT(A) are just and proper. Therefore, the case law relied by the ld DR also distinguishable. Hence, the grounds raised by the revenue are dismissed. Addition made u/s. 43CA - AO observed that the sales of 136 flats in the complex were made at rates below the circle rate and, therefore, the difference between the actual sale consideration and the circle rate had to be brought to tax as unaccounted income of the Assessee - HELD THAT:- We observe that the circle rate for the project of the assessee was not available at the time of completion of the assessment order and it was made available only during the appellate proceedings. The same was submitted before ld CIT(A) and ld CIT(A) having co terminus power, could have remitted the issue back to AO for verification or he can take call to complete the assessment by himself. He chose to complete the same after due verification. No reason to remit the issue once again back to the file of AO, since the ld CIT(A) has remitted the issue back to AO for giving effect after due verification of the facts on record. AO may verify the information submitted by the assessee and pass the relevant order on giving effect to the order of ld CIT(A).There is no need to remit this issue once again to the AO. Accordingly, the grounds raised by the revenue are dismissed. Addition u/s 68 on non providing PAN Numbers of certain flats buyers - AO opined that the sale figure remained unexplained due to the mandatory TDS not having been discharged and added that the creditworthiness, genuineness and identification were missing which would result in an addition - HELD THAT:- We observe that the AO made the addition by observing that the assessee has not provided the PAN details of the buyers of 14 flats. Mere non submission of the PAN details will not lead to disallowance u/s 68 of the Act. The ld CIT(A) has considered the relevant facts on record and deleted the addition, since the assessee had already brought on record the relevant details before AO as well as CIT(A). Appeal filed by the revenue is dismissed.

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• 2024 (9) TMI 523
  Taxability of Income under India-USA DTAA - 25% or 15% - denial of treaty benefits - status of assessee is a Limited Liability Company (LLC) and a fiscal transparent entities according to US tax laws -Relying Article 4 of the India-USA DTAA, the AO concluded that such Corporation do not qualify as Residents of USA in terms of Article 4 and only persons or entities that are liable to tax in their country under the laws of their country are considered resident for the purpose of DTAA thus proposed to assess the assessee by charging 25% - what is the status of such corporations of the nature LLC for India-US DTAA? HELD THAT:- Tax Residency Certificate as received from the United States Internal Revenue Service in accordance with the requirement of the law as applicable to the assessee, being an LLC, which is organized as body corporate as it fulfills all the requirements of a body corporate in the form of legal recognition of a separate existence of the entity from its Member and a perpetual existence distinct from its Members. Thus, the assessee being a resident under Article 4 of the Indo-US Tax Treaty by virtue of incorporation and its recognition as a separate existence from its Members qualifies as a person . Assessee is liable to tax in the resident State by virtue of US Income-tax Law as an LLC is given an option to either be taxed as a corporation or be taxed as a disregarded entity or partnership (depending on number of members) wherein the income of the LLC is clubbed in the hands of its owner who merely discharges the tax that is assessable in the case of the LLC. Tax authorities below have fallen at both the counts by though considering the assessee to be a fiscally transparent entity has not considered to be not qualifying to be a person under Article 4 and, at the same time, have failed to appreciate that the phrase liable to tax has to be interpreted in the way that the assessee is liable to tax under the authority of the US Income-tax law. We are of the considered view that the intent of the Indo-US Treaty has to be given precedence wherein the concept of fiscally transparent entity is the recognized way of recognizing the phrase liable to tax. The fact that paragraph 1(b) of Article 4 of the Indo-US Tax Treaty recognizes partnership as a resident of the US for the purpose Indo-US Treaty to the extent that the income derived by such partnership is subject to tax in the US as the income either in the hands of the partnership or in the hands of its partners or beneficiaries. In this context, the judgement of the Mumbai Tribunal in the case of Linklaters LLP vs. ITO [ 2010 (7) TMI 535 - ITAT, MUMBAI] can be relied. We also find force in the contention that this provision imposes a limitation on eligibility of a partnership to avail the benefits of India-US tax treaty as prescribed, i.e., it seeks to exclude from the eligibility of provisions of India-US tax treaty such income of the partnership which is not subject to tax in the US (either in the hands of partnership or partners) An exclusion provision can only exclude something if it was included at the outset. Hence, a fiscally transparent partnership was already regarded as liable to tax for the purposes of India-US tax treaty and this provision determines the scope of eligibility of such fiscally transparent partnership by excluding income which is not ultimately subject to tax in the US. Thus, tax authorities have fallen in error in not extending the treaty benefit to the assessee. Resultantly the appeal of the assessee is allowed.

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• 2024 (9) TMI 522
  Bogus LTCG - unexplained cash credit u/s 68 - disallowance of exempted capital gain u/s 10(38) - independent application of mind v/s borrowed satisfaction - HELD THAT:- The conduct of the assessee suggests that he was not involved in rigging or any wrongdoing. The case laws relied by the authorities below are distinguishable from the present facts of the case in so far there was SEBI enquiry conducted and found guilty of wrong practices, but it is not so in the case on hand. In our view, the income generated by the assessee cannot be held bogus only based on the modus operandi, generalisation, and preponderance of human probabilities. To hold income earned by the assessee as bogus, specific evidence has to be brought on record by the Revenue to prove that the assessee was involved in the collusion with the entry operator/ stockbrokers for such an arrangement. In absence of such finding, it is not justifiable to link the fact with the finding unearthed in case of some third party or parties with the transactions carried out by the assessee. There were not brought any evidence from independent enquiry to corroborate the allegation. As such, the AO has highlighted various suspicious circumstances, but no addition can be made merely on the basis of suspicious circumstances or presumption unless some cogent material evidence brought on record. Thus, in absence of any specific finding against the assessee in the investigation wing report, the assessee cannot be held to be guilty or linked to the wrong acts of the persons investigated as far as long-term capital gain earned on sale of share of M/s Comfort Intech Ltd is concern. We hold that the capital gain earned by the assessee cannot be held bogus merely based on some report finding unearthed in case of third party/parties - Decided in favour of assessee.

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• 2024 (9) TMI 521
  Addition u/s 28(iv) - amount credited to Capital Reserves on account of allotment of shares allotted by the amalgamated company with respect to the shares held in the amalgamating company by the assessee - Whether allotment of shares to the assessee is not a voluntary transaction? - CIT(A) deleted addition - HELD THAT:- As decided in M/s Kyal Developers Pvt. Ltd. [ 2013 (12) TMI 1544 - ITAT KOLKATA] the benefit, even if accruing to the assessee, on account of amalgamation by way of merger as not in revenue field, and not of an income nature. Accordingly, there was no occasion to invoke Section 28(iv) of the Act. According to us, CIT(A) was quite justified in his observations that the amalgamation is not an adventure in the nature of trade and that this transaction is clearly a capital account transaction and he was justified in deleting the addition. We upheld the order of the CIT(A) that the capital reserve could not be considered as benefit accrued to the assessee as per section 28(iv) - Assessee appeal allowed.

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• 2024 (9) TMI 520
  Denial of admission of appeal for adjudication by Commissioner (Appeals) - non adhering to advance tax payment requirements - HELD THAT:- Appeal of the assessee is not liable to be dismissed on the ground that for the purpose of admission of appeal, the assessee was under obligation to pay advance tax on the entire disputed demand relating to sale of agricultural land (which was held to be non-agricultural land for the purpose of computation of capital gains tax by the assessing officer). In the appeal filed before Ld. CIT(Appeals), the case of the assessee is that the land in question was always an agricultural land and there was no obligation on the assessee to pay any taxes on such sale of land in terms of section 2(14) of the Act. As decided in Balwinder Singh [ 2024 (6) TMI 325 - ITAT AMRITSAR ] observed that the assessee had filed documentary evidence of same before Assessing Officer demonstrating that he had no taxable income for year under appeal and his income was only agricultural income and receipts from sale proceeds sale of agricultural land was exempted income under Act and, therefore, there was no obligation to pay advance tax under section 208. The Tribunal held that Commissioner (Appeals) should have admitted appeal for adjudication on merits, and amount of advance tax payable by assessee for purpose of presenting appeal, as per provisions of section 249(4)(b), should be taken as nil. Where assessee had not filed his return of income as he had no taxable income, Commissioner (Appeals) could not have held that he had failed to comply with statutory conditions contemplated in section 249(4)(b) of the Act. In the case of T. Govindappa Setty [ 1997 (6) TMI 8 - KARNATAKA HIGH COURT ] the High Court held that where petitioner assessee disputed liability on ground that he could not have been assessed as HUF as on date of filing return and on date of assessment there was no HUF in existence, right guaranteed to petitioner to prefer an appeal could not be taken away under section 249(4) by taking view that petitioner had failed to pay tax due on income shown in return filed. The appeal of the assessee is directed to be admitted and the issue is set aside to the file of CIT(Appeals) to be decided on the merits of the case, in accordance with law. Appeal of the assessee is allowed for statistical purposes.

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• 2024 (9) TMI 519
  Rectification u/s 154 against adjustments made u/s 143(1)(a)(iv) / 143(1)(a)(ii ) - Disallowable u/s 36(1)(va) and Disallowance of deduction claimed u/s 80JJAA - HELD THAT:- As noted that the original return was processed u/s. 143(1)(a) on 08/05/2020, making various disallowance along with disallowance u/s. 36(1)(va), disallowance of deduction claimed u/s. 80JJAA of the act. The assessee filed rectification application u/s. 154 on 24/02/2021 which was partly accepted. In our view the CIT(A) should have considered the claims of assessee on merits of the additions that were retained in the order u/s. 154 of the act. In our view, the assessee has not committed any error by filing a rectification petition against the original intimation issued u/s. 143(1) dated 08/05/2020. We therefore in the interest of justice, remand the issue back to the Ld.AO to consider the claims of the assessee on the above two issues in accordance with law having regard to the evidences filed by the assessee. Needless to say that proper opportunity of being heard must be granted to the assessee in accordance with law. Ground allowed for statistical purposes.

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• 2024 (9) TMI 518
  Deemed dividend u/s. 2(22)(e) - interest free loan from its related company where it is substantially related in shareholding - whether deemed dividend is taxable in the hands of the concern in which the shareholders of the lender company has substantial interest or in the hands of such common shareholder has been a matter of debate before the courts? - since the assessee is not a shareholder of the lendor, the provisions of section 2(22)(e) is not applicable to the assessee with regard to loans taken from the lendor. HELD THAT:- From the perusal of section 2(22)(e) and the decisions of Hon ble Delhi High Court in the case of CIT Vs. Ankitech Pvt. Ltd. Others [ 2011 (5) TMI 325 - DELHI HIGH COURT ] and Universal Medicare Pvt. Ltd. [ 2010 (3) TMI 323 - BOMBAY HIGH COURT ] it is abundantly clear that the deemed dividend u/s. 2(22)(e) of the Act will liable to be taxed in the hands of the shareholder only. The contention of the DR that since M/s. Agarwal Agri Steel Private Limited was holding more than 10% of shares of both lendor and assessee, the lendor and assessee got automatically related and therefore the loan taken by the assessee from the lendor is covered u/s. 2(22)(e) is not correct. Therefore, we are of the considered opinion that the addition made by the AO on account of deemed dividend u/s. 2(22)(e) of the Act in the hands of the assessee is required to be deleted. Therefore, we direct the AO to delete the addition made on account of deemed dividend u/s. 2(22)(e) - Appeal of the assessee is allowed.

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• 2024 (9) TMI 517
  Benefit of exemption u/s 11 and 12 - AO disallowed the salary/honorarium paid to Trustees u/s 13(1)(c) r.w.s. 13(3) and 164(2) thereof invoking the provisions of Section 40A(2)(b) holding such payment to be unreasonable - assessee claimed before the AO that the specified persons had not benefited from the contract, but they were qualified persons and the salary being paid to them was in accordance with the services provided by them - HELD THAT:- Assessee society was availing the services of the members of the society and if they had not provided those services to the assessee society, it would have engaged persons from outside, to whom, salary was required to be paid. AO himself admitted that the specified persons were having the higher qualification and no comparable case was brought on record to substantiate that the salary / remuneration paid to them was excessive. The remuneration/ salary paid to the same persons in the earlier years had been accepted while framing the assessment orders u/s 143(3) of the Act. As seen that for the years under consideration, as rightly submitted on behalf of the assessee and not disputed on behalf of the Department, the facts have not undergone any change whatsoever. The specified persons also remain the same. Department has not been able to show as to how, as contended in Ground No.1, the observations of the AO in the years under consideration, are effectively any different from those made by the AO for assessment years 2010-11, 2014-15 and 2015-16, the years decided by the Tribunal in favour of the assessee. No merit in the appeals filed by the Department, which appeals are liable to be dismissed.

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• 2024 (9) TMI 516
  Disallowance of Corporate Social Responsibility (CSR) expenses and Sustainable Development expenses - HELD THAT:- In consonance with the views taken in assessee s own case [ 2023 (2) TMI 1335 - ITAT RANCHI] and [ 2022 (11) TMI 1514 - ITAT RANCHI] and also case of PEC Ltd. [ 2022 (12) TMI 759 - DELHI HIGH COURT] we are of the view that the assessee company was obliged to incur CSR and SD expenses in view of specific guidelines of Govt. of India. It is, therefore, held that the expenditure have been incurred during the relevant assessment years 2011-12 and 2012-13, by the assessee wholly and exclusively for the purposes of business of the assessee. Thus, the deduction claimed by the assessee for both the assessment years is allowable. Decided in favour of assessee.

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• 2024 (9) TMI 515
  Denial of exemption u/s 11 - Charitable activity or not? - assessee is a facilitator and arranges the exhibition for its members for development of the business and trade in India and outside India - HELD THAT:- There is no deviation of assessee s main object which is covered by section 2(15) - AO in assessment order has not pointed out any of the deviations of the main object of the assessee. AO observed receipts from membership, subscription fees, grants from Government of India, income from publication, exhibitions, award functions etc. Regarding the activity of conducting exhibitions, the ld. AO was of the view that was a commercial activity trade or business, in view of expression meaning of Business is wide in fiscal statues. He also inferred profit motive to assessee. Whether ld. AO erred in upholding the denial of carry forward of deficit relating to the earlier years contrary to the binding judgment of the jurisdictional High Court in the assessee s own case for assessment year 2004-05. The assessee is a started on 27/04/1966 U/s 25 of the Companies Act, 1956 with the main object to support, protect, maintain, increase and promote the export of gems and etc. For the assessment year under consideration, the assessee filed return of income along with income and expenditure account, balance sheet and audit report in prescribed of Income-tax Rules, 1962. Considering the assessee s transaction in impugned assessment year exhibition in India and outside after deleting the membership fees and the interest from investment, the assessee had incurred loss in exhibitions for promotion of trade and business of the members as well as the benefit should be carried over to other business entities who run as the members of the assessee s organization. In larger aspect, the assessee s GPU is duly covered U/s 2(15) of the Act. The business of trading, sale and purchase are duly restricted during the time of exhibition. The revenue was unable to establish that the assessee is doing any business transactions during its activities. We rely on the orders of our co- ordinate bench of ITAT, Mumbai in assessee s own case. Accordingly, we restrict the revenue for rejecting the exemption which the assessee is entitled to get as per the registration u/s 12A of the Act. We are not intervening in the impugned appeal order. The assessee is eligible for the benefit of exemption u/s 11 of the Act in impugned assessment year. DR respectfully relied on case of DIT (Exemption) vs Trustees of Singhania Charitable Trust [ 1991 (7) TMI 16 - CALCUTTA HIGH COURT ] In our respectful observation, that is distinguished from our case. In our considered view, we are not intervening the impugned appeal order of the assessee.

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• 2024 (9) TMI 514
  Addition u/s 69A - cash deposited during demonetization out of cash withdrawal - validity of cash flow statements - HELD THAT:- As noted from the submissions of the assessee that the assessee was having income from salary, rent from house property which was received in cash and the assessee also earned interest from saving bank. Assessee was not required to maintain book of accounts. Assessee submitted cash flow statement alongwith supporting bank statement during the assessment proceedings as well as first appellate proceedings. It is noteworthy to mention that cash flow statement is the only method from which availability of cash for deposition can be examined. It is also noted that the assessee had received rental income in cash which has also been shown in the ITR and the same was also not disputed. Also noted that the assessee had admitted that he had deposited Rs. 1.500 lacs prior to demonetization out of cash withdrawal from bank. As during the proceedings before the AO and ld. CIT(A), the assessee had explained that the cash was deposited out of cash in hand accumulated over a period of time for which cash flow statement for the period 01-10-2015 to 31-12- 2016 demonstrating the history and status of the cash in hands was submitted which was rejected by the lower authorities. From the perusal of the cash flow statement, it is noted that the assessee was having balance of Rs. 25,09,620/- as on 8-11-2-016 which shows that the cash was lying with the assessee and it is also noted that cash balance was never disputed by the lower authorities during the proceedings. Thus assessee had deposited in cash in bank accounts during the demonetization whose details were put forth before the lower authorities by the assessee as mentioned in the cash flow statement and supporting bank statement. We found that the assessee has submitted full details of amount through his written submission and there remains no ambiguity in the submission giving the details deposited during the demonetization period - Asssessee appeal allowed.

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• 2024 (9) TMI 506
  Undisclosed cash deposits made in bank accounts - there were incriminating material and information revealed during the course of survey and that Husband of assessee, in his statement recorded on oath u/s 131 during survey had admitted such deposits as assessee s undisclosed income - CIT(A) deleted addition - HELD THAT:- It is not denied that the Assessee has been maintaining regular books accounts which consisted of cash books which were subjected to tax audit. Some undisputed facts are that there was a huge turnover of more than Rs. 43 Crores and upto 12.11.2016 total business receipts are Rs. 30,76,17,041/- on account of advertising receipts and most of the transactions were routed through banking channels, which resulted into cash balance of Rs. 77,66,449/- on 08.11.2016. Pertinently, there is no dispute that the accounts including the cash book were produced before the lower authorities during the assessment appellate proceedings and were not found any fault with nor were rejected invoking S. 145 and therefore, as per mandate of that provision, they were binding upon the authorities below. Difference between the cash balance shown in the impounded cash book and as shown in the regularly maintained cash book on 08.11.2016 - AO vaguely whispered of some manipulation but failed to establish as such. However, the alleged difference was also explained by the assessee stating that various expenses on account of repair maintenance, business promotion, etc. were pending and could not be entered therein. We agree with the contention of the ld. AR Adv. Mahendra Gargieya that the survey was carried out mid of the year and it is not abnormal if various transactions remained to be recorded. The correct picture can be seen only after the completion of the accounts from all aspects, more particularly when they are audited. The ld. CIT(A) has already dealt with this issue but the revenue has not taken any specific ground on the aspect of the difference of Rs. 79.95 lakhs. We find no reason as to why the statement admitting the bank deposits as income (that too on behalf of the assessee but not even by the assessee) should be accepted. The alleged admission is claimed to have been retracted by filing affidavit dt. 14.02.2017 (APB 140-143) before the ADIT (INV) on 06.04.2017 i.e within a period around 2 months after the survey when admission was made.CIT(A) although rejected the claim of the assessee of filing retraction in absence of any evidence brought on record of approaching to the higher authorities. However, he appreciated the contents of the impounded documents and the explanation furnished by the assessee thereon and recorded independent finding, while granting relief. Therefore, he recorded a categorical finding that the retraction from the earlier statement was with sufficient, credible and corroborate evidence to support the claim of the assessee. We have also carefully considered the claim of filling retraction; however, in view of the contrary claim raised, we are not going into this controversy. CIT(A) was justified in its approach. In the ultimate analysis taking a conspectus view of the entire facts circumstances and the legal position, we find no perversity in the order of the CIT(A). There is no case made out by the revenue to reverse the findings of the first appellate authority. Hence this ground No. 1 of the revenue is hereby dismissed. Undisclosed income surrendered during the survey - CIT(A) deleted addition - HELD THAT:- As carefully gone through the findings recorded by the AO in the assessment order and also the detailed findings recorded by the ld. CIT(A). After careful consideration of the entire matter, we find no substance in this ground taken by the revenue in view of the detailed findings recorded by the ld. CIT(A) and also in view of the fact that admittedly no incrementing material to support this addition was found nor any other document has been relied upon by the AO. This addition appears to be a part of the surrender of Rs. 2 Crore made by the assessee which was firstly retracted and secondly was not otherwise supported by any documentary evidence as such found during survey. Ground No. 2 of the revenue is hereby dismissed.

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• 2024 (9) TMI 505
  Evidentiary value of statements recorded during the survey - whether the statement recorded by the authorities during the course of survey carried out u/s 133A of the Act has evidential value so that the admission made, if any in such statement (whether on oath or otherwise), can be used against the assessee? - HELD THAT:- The plea of the Revenue that the CIT(A) should have solely relied upon the survey statement of Shri Naresh Jain recorded u/s 133A(3)(iii) (or even u/s 131 on oath) admitting income but ignoring the impounded documents found and the explanation furnished thereon with the supporting evidences should be ignored, can not be accepted. We are thus not in agreement with the dissenting findings recorded by the CIT(A) on this aspect. For the above reasons, the modified ground of appeal no. 2 taken by the assessee is allowed. Eligibility of statement of the assessee alleging admission - AO used the statement to corroborate said material found during the survey but, at the same time, the assessee had successfully explained the contents of the said impounded document/s in responding to the additions made by the AO and thus, were rightly deleted as by the CIT(A). Hence, no blind reliance could be placed on the statement of the assessee alleging admission. The law is well settled that no addition can be made solely based on the statement. Even the CBDT directed the subordinate authorities not to press the assessee to make surrenders. We also find that the CIT(A) rightly placed reliance on the decision of C.K. Abdul Aziz [ 2019 (9) TMI 357 - KERALA HIGH COURT] Thus, we find no infirmity in the order of the CIT(A) on this aspect. It is necessary to clarify that we have confirmed the deletions of additions by the CIT(A) on merits independent of these legal aspects. Therefore, the ground of the Revenue, on the aspect of the admission by the assessee in statement is hereby dismissed. Alleged admission is claimed to have been retracted by filing affidavit before the ADIT (INV) within a period around 2 months after the survey when admission was made - CIT(A) although rejected the claim of the assessee of filing retraction in absence of any evidence brought on record of approaching to the higher authorities. However, he appreciated the contents of the impounded documents and the explanation furnished by the assessee thereon and recorded independent finding, while granting relief. Therefore, he recorded a categorical finding that the retraction from the earlier statement was with sufficient, credible and corroborate evidence to support the claim of the assessee. We have also carefully considered the claim of filling retraction; however, in view of the contrary claims raised, we have not gone into this controversy. Addition based on impounded document which is a registered sale deed - Though the assessee admitted that it was a cash payment not recorded anywhere in the accounts however, no evidence in support of this statement was found and needless to say that, it usually happens for want of availability of the record and because of tensed moments, an assessee is used to admit. But the fact remain that the payment of said advance is recorded in the Balance Sheet which was submitted before the authorities below through a letter. Neither the accounts were rejected nor this contention was disproved by the Revenue and therefore, the same shall prevail over the verbal statement of the assessee. We thus find no force in the addition, so made by the AO. Even there was no occasion for the AO to have made an addition of the entire Rs. 20,22,500/- and since the CIT(A) has already deleted Rs. 9,75,000/-, the balance addition is also deleted. Payment did not pertain to the year under consideration - Addition made on account of the alleged cash payments to one Ajay Modi in connection with taking over the management of Bhagat Public School - We are in full agreement with the contention of the ld. AR that, (alternatively), such addition (if at all required) could have been made only in A.Y. 2014-15, but not in any case in A.Y. 2016-17. Such interpretation is supported by the language of S. 69 of the Act, based on the jurisdictional facts, which could not be disputed by the Revenue - we find no justification for making the impounded addition and the same is deleted. Application of Sec 115BBE - Only identifiable source of investment or asset or expenditure, which were alleged to be unexplained and additions were made by the AO, emanates from the only source of income being advertising business in his proprietary namely M/s Quick Advertising Company, as per the computation of total income. There is no other known source of income, which could give rise to undisclosed income, under consideration. We find support from the decisions of Ram Narayan Birla [ 2016 (9) TMI 1354 - ITAT JAIPUR] Rekha Shekawat 2022 (8) TMI 791 - ITAT JAIPUR] and Bajranggan Traders [ 2017 (11) TMI 388 - RAJASTHAN HIGH COURT] - Thus, otherwise also in the facts circumstances of the present case Sec 115BBE could not have been invoked. For the above reasons the invoking of Sec 115BBE is therefore, quashed, and this ground taken by the assessee is therefore, allowed. Addition u/s 69C on account of unexplained agriculture expenses - We find no force in the ground so taken as the ld. CIT(A) has recorded cogent and detailed findings while rejecting this ground taken by the assessee before him. Therefore, this ground No. 7 taken by the assessee is dismissed.

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• Customs

• 2024 (9) TMI 513
  Rejection of appeal - non-compliance with the conditions imposed under Section 129(e) of Customs Act, 1962 - HELD THAT:- The first issue to be addressed is the maintainability of these writ petitions challenging a final order of the CEGAT in the face of an alternate statutory remedy by way of Civil Miscellaneous Appeal under Section 35G of the Central Excise Act. However, we take succour from a decision of this Court in the case of Tiruchitrambalam Projects Ltd. V. CESTAT, Chennai [ 2016 (7) TMI 472 - MADRAS HIGH COURT ] where a Division Bench of this Court has held the view that in appropriate cases where the writ petitions are heard by a Division Bench, it is permissible that a writ petition be maintained as against a final order of the CEGAT. The present writ petitions are more along the lines of mercy petitions. No question of law arises for decision and the plea of the petitioners is that they were unable to comply with directions of the CEGAT in time, but may be permitted to comply with the same now. With a view to balancing the interests of the parties, the plea of the petitioners and set aside impugned orders dated 21.05.2003 upon condition that the petitioners remit a sum of Rs. 15 lakhs per appeal within a period of four (4) weeks from date of receipt of a copy of this order. Petition allowed.

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• 2024 (9) TMI 512
  Eligibility for the benefit of Merchandize Exports from India Scheme (MEIS) under Chapter 3 of the Foreign Trade Policy - Amendment of shipping bills as sought for in the petitioner s representation - transmission of the shipping bills online to the DGFT server to enable the petitioner to claim the MEIS benefit - HELD THAT:- There are no dispute that the petitioner had exported the goods namely Fruit pulp, Mango puree etc., which are eligible for the benefit of Merchandize Exports from India Scheme (MEIS) under Chapter 3 of the Foreign Trade Policy. There is no dispute that the petitioner has also claimed duty drawback under Section 75 of the Customs Act, 1975 read with Customs, Central Excise and Service Tax Duty drawback Rules, 1995. There are no records to indicates that the parallel incentives under Section 75 of the Customs Act, 1961 read with the aforesaid Rule and the Customs Notification has been denied to the petitioner. Therefore the benefit of Merchandize Exports from India Scheme (MEIS) under Chapter 3 of the Foreign Trade Policy ought not to be denied. The export of goods stands confirmed. The Courts have been liberal and have been granting reliefs to the exporters under the scheme. No contrary stand is taken in this writ petition. That apart, the legitimate exports cannot be denied, if the petitioner had made actual exports. Since there is no other material available to come to a conclusion that the petitioner was not otherwise dis-entitled for export incentives under the Merchandize Exports from India Scheme, this writ petition has to be allowed. The respondent Nos.3 and 4 are therefore directed to ensure that the shipping bills are suitably amended for the petitioner to claim export incentives on the exports made by the petitioner under the Merchandize Exports from India Scheme. Incentives to be granted to the petitioner will be without prejudice to the rights of the Department to recover the same, in case, any other discrepancies are noticed in the exports made by the petitioner - petition allowed.

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• 2024 (9) TMI 511
  Denial of benefit of Value Based Advance Licenses (VABAL) to the appellants-transferee of such Licenses - recovery of customs duty u/s 28, which was foregone on import on utilizing the VABAL Licenses - overvaluation of goods - penalty imposed on the appellants u/s 114A of CA - What exactly is the criteria for entitlement to duty free imports under a VABAL License, whether the value mentioned in licensee or the quantity mentioned in the license? - HELD THAT:- The DGFT authorities have taken action on certain licenses, where they found it fit for taking further necessary action as per the merits of the case. In the three VABAL licenses, relating to the appeals before us there is no indication of such action for cancellation having taken by DGFT authorities or any information provided by Revenue that such an action was later taken by DGFT authorities. Thus, it is found that in terms of the CBEC instructions too, the impugned order directing the recovery of demand has no legal basis and is contrary to the directions contained in the aforesaid circular. Therefore, the impugned order confirming the duty on the appellants and imposition of penalty on them is not sustainable. The Tribunal in similar matter of the self-same appellant M/s Lark Chemicals Pvt. Ltd. [ 2019 (5) TMI 924 - CESTAT MUMBAI ] have held that inasmuch as the facts of the case establish that the VABAL license has not been obtained by fraud, the ratio of the COMMNR. OF CUSTOMS (PREVENTIVE) VERSUS M/S AAFLOAT TEXTILES (I) PVT. LTD. [ 2009 (2) TMI 75 - SUPREME COURT] decided by the Hon ble Supreme Court in the case of licenses obtained forged documents does not apply for the case involving issue of amendment in the license. The three VABAL licenses relate to amendment in respect of quantity etc., which have been subsequently considered by the jurisdictional DGFT authorities. In the case of three VABAL licenses relevant to the present appeals necessary amendments have been issued as follows: License No. P/K/491011 dated 31.03.1995, amendment was issued on 11.08.1995; License No. P/K/2145479 dated 19.07.1994, amendment was issued on 02.03.1995 and for License No. P/K/2145478 dated 19.07.1994, amendment was issued on 01.03.1995. Thus, it clearly proves that the jurisdictional DGFT/licensing authorities have not found the present three licenses to be a case involving forgery, where further action of cancellation of license etc. have been initiated. It is also found that in the case of Ajay Kumar Co. [ 2006 (4) TMI 377 - CESTAT, NEW DELHI ], the Tribunal have held that if the scrips/licenses were valid at the time of import, then subsequent cancellation of the same on the ground of fraud etc. will not have bearing on the transferee appellant. In the case of Hico Enterprises [ 2005 (9) TMI 625 - CESTAT MUMBAI (LB) ], the Larger Bench of the Tribunal has held that benefit of notification cannot be denied to the transferee on the ground of breach of conditions of the notification. The impugned order dated 31.01.2014 with regard to confirmation of adjudged demands along with interest and imposition of penalties are not sustainable - Appeal allowed.

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• Insolvency & Bankruptcy

• 2024 (9) TMI 510
  Suspension of registration of the Petitioner as an Insolvency Professional for a period of two years - Constitution and composition of the Disciplinary Committee - HELD THAT:- The contention of the Petitioner that the Oder of the IBBI suffers from corum non-judice inasmuch as it was only a single member committee which passed the impugned Order, is not tenable in law. The contention of the learned Counsel for the Petitioner that the IBBI ought to have awaited the proceedings before the Adjudicating Authority instead of rushing with enquiry awarding punishment, cannot be accepted. Both the proceedings are entirely distinct from each other. IBBI has been constituted to oversee the conduct of the IRPs and the Liquidators and to see as to whether the IRPs and Liquidators are acting in compliance with the mandate of the IBC. The IBBI can proceed ahead to investigate into the conduct of the IRPs and the Liquidators even if on getting information that the IRP has committed a misconduct. Material on record shows that the Petitioner has failed to preserve the assets of the Corporate Debtor. He has not handed over the complete record of the Corporate Debtor to the Liquidator. The Petitioner has allowed suspended ex-Directors to transfer money from the Corporate Debtor s account to his account and has therefore failed to take control and custody of the Corporate Debtor and business records. Material on record discloses that the Petitioner has violated several provisions of the IBC and the Regulations. In Silppi Constructions Contractors v. Union of India [ 2019 (6) TMI 1449 - SUPREME COURT ], the Hon ble Supreme Court has followed the aforesaid judgments and reiterated the principle that Courts should exercise a lot of restraint while exercising powers of judicial review in respect of matters pertaining to technical issues as the Courts lack the expertise to adjudicate upon technical issues. The scope of interference by way of judicial review in commercial matters is extremely limited and can only be justified when a case of arbitrariness, unreasonableness, mala fide, bias, or irrationality is clearly made out. Further, the Courts lack the requisite expertise to adjudicate upon technical issues which are often involved in commercial matters. The Order of the Disciplinary Committee shows that the reply given by the Petitioner has been considered and all the aspects have been taken care of by the Board and the decision has been taken by the Board after following the due procedure. This Court has gone through the Orders of the Board and the material on record and is of the opinion that the procedure has been followed by the Board before passing the Order suspending the Petitioner herein. The attempt of the Petitioner has been to persuade this Court to substitute its conclusion to the one arrived at by the Board, which is outside the scope of Article 226 of the Constitution of India. This Court, therefore, does not find any reason to interfere with the Order passed by the Respondents - Petition dismissed.

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• FEMA

• 2024 (9) TMI 509
  Contravention with respect to Foreign Exchange Remittance and non-submission of import document along with Exchange Control Copy of Bill of Entry - penalty of Rs.2 crores was imposed on M/s Owens Brockway (I) Ltd. under Section 50 of FERA, 1973 and personal penalty of Rs.40 lakhs each on three in-charge of and responsible to the said company for the conduct of day-to-day business of the company - HELD THAT:- Appellant company is able to prove the import of consignment with respect to three remittances and the only contravention is with respect to two remittances of NLG 31764.12 and NLG 45149.15, totaling to NLG 76913.27. Therefore, the total contravention is not equivalent to NLG 43,503,43.27, but only NLG 769,13.27 i.e. only 1.76% to the alleged contravention, as inadvertently/wrongly mentioned in the impugned order. Therefore, in the facts and circumstances of the case and in the interest of justice, the penalty amount needs to be reduced, instead of remanding it back to the Adjudicating Authority, as the matter is about 25 years old and the chances of tracing out the record by both the sides seems to be difficult. In sequel to our discussion in the preceding para, the amount of penalty imposed on erstwhile M/s Owens Brockway India Pvt., now, Hindustan National Glass Industries Ltd. is hereby reduced to Rs. 2.5 lakhs. The impugned order passed by the Adjudicating Authority is modified accordingly.

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• PMLA

• 2024 (9) TMI 508
  Seeking quashing of the Summons and seeking further direction against the Respondent not to issue any Summons under Section 50 of PMLA to the Appellants for their appearance in New Delhi - illegal excavation and theft of Coal taking place in the leasehold areas of Eastern Coalfields Limited (ECL) - offences under Section 120B and 409 of IPC and Section 13(2) r/w 13(1)(a) of the Prevention of Corruption Act, 1988 - HELD THAT:- The dispensation regarding Prevention of Money Laundering, Attachment of Proceeds of Crime, and Inquiry/Investigation of offence of Money Laundering including issuing summons, recording of statements, calling upon persons for production of documents etc. upto filing of the Complaint in respect of offence under Section 3 of PMLA is fully governed by the provisions of the said Act itself. The jurisdictional police who is governed by the regime of Chapter XII of the Code, can not register the offence of money laundering, nor can investigate into it, in view of the special procedure prescribed under the PMLA with regard to the registration of offence and inquiry/investigation thereof, and that the special procedure must prevail in terms of Section 71 of the PMLA. The ratio laid down in Vijay Madanlal [ 2022 (7) TMI 1316 - SUPREME COURT ] clinches the contentions raised by the learned counsels for the appellants with regard to the provisions of Section 50 being violative of Article 20(3) or Article 21 of the Constitution, and it is not required to further elaborate the same, nor it is needed to deal with the decisions of this Court on the said issue which have already been dealt with in Vijay Madanlal. Suffice it to say that Section 50 enables the authorized Authority to issue summon to any person whose attendance he considers necessary for giving evidence or to produce any records during the course of the proceedings under the Act, and that the persons so summoned is bound to attend in person or through authorized agent, and to state truth upon the subject concerning which he is being examined or is expected to make statement and produce documents as may be required by virtue of subsection (3) of Section 50. At the stage of issue of summons, the person cannot claim protection under Article 20(3) of the Constitution, the same being not testimonial compulsion . There are no substance in the challenge made by the Appellants to the Summons issued to the Appellants under Section 50 of the PMLA. As contemplated in the sub-section (3) of Section 50, all the persons summoned are bound to attend in person or through authorized agents as the officer may direct and are bound to state the truth upon any subject respecting which they are examined or make statements, and to produce the documents as may be required. As per sub-section (4) thereof every proceeding under sub-sections (2) and (3) is deemed to be a Judicial proceeding within the meaning of Section 193 and Section 228 of the IPC. As per sub-section (4) of Section 63, a person who intentionally disobeys any direction issued under Section 50 is liable to be proceeded against under Section 174 of the IPC. Both the Appeals being devoid of merits are dismissed.

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• Central Excise

• 2024 (9) TMI 507
  Eligibility for refund of CVD and SAD in cash in terms of Section 11B of the Central Excise Act, 1944 read with Section 142(3) and 142(6)(A) of the Central Goods and Service Tax Act, 2017 - case of appellant is that since they paid the duty only after introduction of GST and they were otherwise eligible to take credit of CVD and SAD, they were entitled for refund. Whether the appellant can claim the refund in cash in respect of CVD and SAD paid in GST era after being non-eligible for relaxation for making export obligation, relying on the provisions under Section 142 or otherwise? HELD THAT:- A plain reading of Section 142 would indicate that it primarily provides that in only such situations where the refunds are otherwise admissible under the existing law and it is not possible to refund the same in credit, the said amount will have to be refunded in cash. The Original Authority has examined the eligibility of the refund under the existing law and held that there was no provision for refund of said duty in cash under the existing law in the event of failure of export obligation, for which admittedly he has discharged the said duty. The Hon ble High Court of Jharkhand in the Rungta Mines Ltd. case, [ 2022 (2) TMI 934 - JHARKHAND HIGH COURT ], has held that the claim for refund has to be examined within the provisions of the existing law i.e. in this case Central Excise Act and Rules made there under. There are only limited provisions for the cash refund in the existing law in respect of refund of credit taken by the assessee i.e. Rule 5, 5A and 5B of Cenvat Credit Rules 2004, and admittedly the case of the appellants are not falling within these rules, therefore, in the event they were not entitled for refund of credit in cash in respect of CVD and SAD under the existing law, then the provisions of Section 142 would not make them otherwise entitled for the said refund in cash. Further, in the facts of the case, it is to be clearly understood that they are not seeking refund of CVD and SAD paid due to non compliance of condition for grant of Advance Licence/Advance Authorisation, as they have rightly paid the duty being not eligible for exemption. They are in fact seeking refund in cash of the credit of duty paid towards CVD and SAD, which would have occurred to them as credit under the existing law. Denial of refund under Section 142(6) of the Act - HELD THAT:- It is obvious that in facts of the case, it would not fall within the provisions of Section 142(6) as there was never a dispute or assessment relating to entitlement of credit, per se, before or after 01.07.2017. This provision covers a situation where there is any refund or admissibility of credit is in dispute and pending before any Judicial or Appellate Forum, who finally decides in favour of appellant post 2017 and as a consequence the person is entitled to said credit or refund. Since, post 01.07.2017, there is no provision to take said consequential credit, Section 142(6) covers grant of refund in cash under such situations. The refund in cash under Section 142(3) would be admissible only if the said refund is otherwise admissible for refund in cash under the existing law, which is not the case in the present appeal - there are no infirmity in the Order of the Commissioner (Appeals) - appeal dismissed.

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