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TMI Tax Updates - e-Newsletter
September 18, 2024
Case Laws in this Newsletter:
GST
Income Tax
Customs
Securities / SEBI
PMLA
Service Tax
Central Excise
CST, VAT & Sales Tax
Highlights / Catch Notes
GST
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Invoice tax credit denial overturned for lack of reasoning, new order after hearing firm.
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Court rejects refund claim for unutilized credit of Education Cess, Secondary & Higher Education Cess and Krishi Kalyan Cess under GST regime.
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Tax assessment order set aside for lack of fair hearing & notice.
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Tax Dispute: Discretionary Jurisdiction & GST Registration Cancellation.
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Taxpayer's filing error led to notice, but lack of show cause notice & order on portal made the order unsustainable. Court set it aside.
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GST registration woes after family feud: Court orders swift processing sans NOC.
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Discrepancies in GST returns ignored petitioner's replies, violating natural justice; order set aside for reconsideration.
Income Tax
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Tax evasion case: Petitioners' delay in responding & lack of self-assessment evidence. Granted chance to prove 2018 tax payment.
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Tax reassessment denied: Full disclosure, no new evidence - just change of opinion.
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Exploration firm's earnings in India not taxable due to activity duration under India-Singapore tax treaty.
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Non-compliance with faceless assessment regime vitiates reassessment proceedings.
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Tax Dept's attempt to reopen assessment beyond 6-yr limit fails due to mere change of opinion.
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Tax officer's appeal against Tribunal's deletion of additions dismissed; mere dispute over factual findings not allowed.
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Court quashes tax demand on consultancy fees paid to foreign company as passed beyond limitation period.
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Tax Reopening Quashed: Lack of New Material & Borrowed Satisfaction.
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Compensatory Afforestation Fund contribution is revenue expenditure, not capital, as per court rulings.
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Properties held as stock-in-trade not liable for deemed rental income tax before 2018-19.
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Reopening assessment without new facts & treating share sale as business income rejected.
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Reassessment validity questioned due to lack of new tangible material or fresh information with Tax Officer.
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Undisclosed income from excess cash/stock partially taxed due to AO's inconsistency in applying 115BBE.
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CIT questioned higher rate on unexplained stock expenses but lost due to reasonable AO view.
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Penalty for not filing ROI quashed despite non-taxable income & TDS deduction.
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Refund adjustment order: Adjust refund against interest first, then tax - fair principle applied.
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Undisclosed income addition upheld by applying peak credit method for cash deposits.
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Delayed TDS filing attracts late fees despite reasonable cause claim.
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Excess stock found during survey at business premises, led to surrendered income. Court rules it should be taxed as business income at normal rates, not u/s 115BBE deeming provisions.
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Income Tax assessment order quashed for non-compliance with time limit to give effect to DRP directions.
Customs
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Customs duty classification dispute: Quick Lime under CTH 2522 1000, not 2825; refund with 12% interest.
State GST
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Corporate guarantee tax: Valuation & taxability under GST rules.
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Post-appeal recovery guidelines: Pre-deposit via e-register for stay, adjust DRC-03 via DRC-03A.
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Refund mechanism for exporters on upward price revision of exported goods after exports.
PMLA
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Bribe money obtained through corrupt activities is covered under anti-money laundering laws, even before legal amendments.
SEBI
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Streamlining Bonus Shares: SEBI Outlines T+2 Trading Process for Issuers & Stock Exchanges +2Trading : +2Trading.
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Quarterly reporting norms for Foreign Venture Capital Investors revised by SEBI.
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Optional centralized fee payment platform launched for Investment Advisers & Research Analysts to enhance transparency.
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SEBI extends record maintenance period for share transfer agents from 3 to 8 years.
VAT
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Secured creditor's claim over attached asset prevails due to tax dept's procedural lapse in attachment.
Service Tax
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Educational services for overseas institutions - export or intermediary? Tribunal rules export, nixes service tax demand.
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Tax Dispute Resolved: Exporters Secure Refund Despite Address Mismatch on Invoices.
Central Excise
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Sealing Machine Supplier Wins SSI Exemption Case Against Revenue's "Dummy Unit" Allegations.
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Oxygen not used in sulphuric acid manufacturing, exempt per Notification 67/95.
TMI Short Notes
Articles
Notifications
News
Case Laws:
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GST
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2024 (9) TMI 909
Seeking grant of regular bail - offence u/s 132 (1) (b), 132 (1) (f) (i) of the Central Goods and Service Tax Act, 2017 - HELD THAT:- Having considered the submissions made and looking to the period of incarceration and the allegations as alleged which relate to the documentary evidence in which after completion of the investigation, the challan has already been filed and the trial may take some time, therefore, at present, without expressing any opinion on the merits of the case,it is inclined to allow this petition and direct to release the petitioner on bail on furnishing the bail bonds to the tune of Rs. 1,00,000/- and sureties of the like amount and on such other terms and conditions as may be deemed fit by the trial court. Petition allowed. 2024 (2) TMI 285 - MADHYA PRADESH HIGH COURT
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2024 (9) TMI 908
Requirement to file an appeal against the adjudication order, raising pleas and contentions other than those which have been decided by the High Court - HELD THAT:- It is not required to issue notice in the present Special Leave Petition. However, we permit the petitioner to raise all contentions in the appeal, except those which have been specifically decided by the High Court. In case, any such appeal is preferred within a period of four weeks from today, it shall not be dismissed on the ground of limitation. SLP dismissed.
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2024 (9) TMI 907
Invocation of Section 74 of the CGST Act, 2017 - limitation available under Section 73 of the CGST Act, 2017 expired - HELD THAT:- Post on 30.09.2024. In the circumstances, there shall be a stay of all further proceedings in relation to the impugned show-cause notice dated 06.08.2024, for a period of six (6) weeks.
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2024 (9) TMI 906
Blocking of input tax credit (ITC) - application was rejected out of hand without any reason on impugned communication - non-application of mind - violation of principles of natural justice - HELD THAT:- Perusal of impugned communication does not reveal any application of mind by the authority regarding the redressal provision invoked by petitioner. Contention on its behalf has been, the blocking can be done and it was done by due exercise of jurisdiction. Only reasons are required to be given, subsequently supplied to petitioner but in no way is petitioner entitled to be heard on the decision to block. Significantly, there was no assertion that the petition/application was misconceived. Petitioner is entitled to interference. Impugned communication is set aside and quashed. The application under rule 86A (2) is restored to the authority for passing fresh order. Here we may add, by rule 86A(1) there can be blocking by the authority on reasons to be given. Petition disposed off.
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2024 (9) TMI 905
Refund of unutilized credit on account of payment of Service Tax, EC, SHEC, and KKC under the GST regime - transition of EC, SHEC and KKC Credit - HELD THAT:- The petitioner has not made out any case for the grant of any of the reliefs sought in the writ petition. A reading of the provisions of the CENVAT Rules indicates that the EC, SHEC and KKC can be utilized only for payment of such Cess and not for any other purposes (See the First and Second provisos to Rule 3(7)(b) Rule 3(7)(d) of the CENVAT Credit Rules, 2004). It is clear that there is no cross-utilization of EC, SHEC and KKC against tax payable on account of Service Tax under the provisions of the Finance Act, of 1994. It is evident from the judgment of the Division Bench of the Madras High Court in ASSISTANT COMMISSIONER OF CGST AND CENTRAL EXCISE, COMMISSIONER CGST AND CENTRAL EXCISE, UNION OF INDIA, CENTRAL BOARD OF EXCISE AND CUSTOMS VERSUS SUTHERLAND GLOBAL SERVICES PRIVATE LIMITED, GOVERNMENT OF TAMIL NADU, THE CHAIRMAN GSTN [ 2020 (10) TMI 804 - MADRAS HIGH COURT] that there cannot be any transitioning of Cess paid as EC, SHEC and KKC under the provisions of Section 140 of the CGST Act. Coming to the claim of the petitioner that it is entitled to entertain a claim for refund under the provisions of Section 54 of the CGST Act, I am of the view that the said contention cannot be accepted in the light of clear provisions contained in Sub-Section (3) of Section 54 of the CGST Act. It is clear from a reading of Sub- Section (3) of Section 54 of the CGST Act that a claim for refund of the CGST/SGST/IGST (in cash) can be entertained only in two circumstances. The first is where there is a zero-rated supply of goods or services and the second one is, where the refund application arises on account of an inverted duty structure, i.e where the duty to be paid or paid on output services or goods is less than the duty paid on input services or input goods. That apart, the question of entertaining any application for a refund under the provisions of Section 54 of the CGST Act does not arise in the case of the petitioner. The contention of the learned counsel appearing for the petitioner that various Tribunals had taken a view contrary to the view taken by this Court and has held that EC, SHEC and KKC paid at the relevant time under the provisions of the Finance Act 1994 can be refunded cannot be accepted. In view of the statutory provisions, the view taken by various Tribunals does not appear to be in accordance with the statutory provisions. There are no merit in any of the contentions of the learned counsel appearing for the petitioner - petition dismissed.
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2024 (9) TMI 904
Cancellation of GST registration of the petitioner - non-filing of the GST return for a continuous period of six months - HELD THAT:- The matter is covered by the order passed in SHIRDI PACKAGING [ 2023 (1) TMI 1365 - UTTARAKHAND HIGH COURT ], the present writ petition is also decided in terms of the said order. The petitioner shall be at liberty to move an application for revocation or cancellation of the order under Section 30 (2) of the CGST Act, 2017, within two weeks. With this application the petitioner shall also furnish all the GST returns, which he fails to submit and he will also deposit the outstanding tax and dues of the goods and service tax with his application. If he makes such an application within stipulated period Competent Authority shall consider petitioner s application and pass appropriate order as per law, within four weeks thereafter. Petition disposed off.
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2024 (9) TMI 903
Challenge to assessment order - mismatch of tax liability filed by the petitioner for the financial year 2017-2018 - opportunity of personal hearing not provided to petitioner - violation of principles of natural justice - HELD THAT:- It is evident that the impugned show cause notice was uploaded on the GST Portal Tab. According to the petitioner, the petitioner was not aware of the issuance of the show cause notice issued through the GST Portal and the original of the said show cause notice was not furnished to them. In such circumstances, this Court is of the view that the impugned order came to be passed without affording any opportunity of personal hearing to the petitioner to establish its case, thereby violating the principles of natural justice and that it is just and necessary to provide an opportunity to the petitioner to establish their case on merits and in accordance with law. The order impugned herein is set aside and the matter is remanded to the first respondent for fresh consideration in respect of the impugned assessement period. Since 20% of the disputed tax liability has already been paid by the petitioner, this Court is not inclined to impose any further condition - Petition disposed off by way of remand.
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2024 (9) TMI 902
Violation of principles of natural justice - petitioner did not have reasonable opportunity to contest the tax demand - wrongful availment of ITC in respect of purchase of a motor vehicle - HELD THAT:- On perusal of the impugned order, it is evident that the tax proposal pertains to wrongful availment of ITC in respect of purchase of a motor vehicle. Learned counsel for the petitioner contends that such purchase was for business purposes and ITC was not wrongly availed. The documents on record evidence that a sum of Rs.2 lakhs was appropriated towards the total tax liability of about Rs.4.28 lakhs. In these circumstances, it is just and necessary to provide an opportunity to the petitioner to contest the disputed tax demand on merits. The impugned order dated 11.10.2023 is set aside and the matter is remanded for reconsideration - Petition disposed off by way of remand.
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2024 (9) TMI 901
Violation of principles of natural justice - petitioner did not have reasonable opportunity to contest the tax demand - attachment of bank account of the petitioner - HELD THAT:- On perusal of orders impugned herein, it is evident that such orders were issued without hearing the petitioner on the merits of the tax proposals. In these circumstances, especially by taking note of the fact that the petitioner's bank accounts were attached, it is just and appropriate to provide an opportunity to the petitioner by putting the petitioner on terms. The orders impugned in these writ petitions are set aside subject to the condition that the petitioner remits 10% of the disputed tax demand in respect of each order within three weeks from the date of receipt of a copy of this order - petition disposed off.
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2024 (9) TMI 900
Challenge to circular no.34/8/2018-GST dated 01.03.2018 under Annexure-7 as well as the notification no.9/2023-CT dated 31.03.2023 - seeking to transmit all records relating to the present case so that conscionable justice may be done upon considering the same - HELD THAT:- In the opinion of this Court, the matter requires consideration. Issue notice.
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2024 (9) TMI 899
Cancellation of GST registration - petitioner submits that petitioner has closed his business and has applied for cancellation of registration on 22.01.2024, however, the application has till date, not been disposed of - HELD THAT:- This petition is disposed of permitting the petitioner to furnish the details as sought for by the proper officer by letter dated 24.01.2024. The details be provided within one week and proper officer shall thereafter decide the application of the petitioner in accordance with law within a period of four weeks from today.
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2024 (9) TMI 898
Challenge to SCN - second SCN for the same tax period has been adjudicated and a demand of the exact same amount created against the petitioner - identical demand raised by two different officers of the same jurisdiction - HELD THAT:- Perusal of the order dated 25.12.2023 passed on show cause notice dated 21.09.2023 and order dated 17.12.2023 passed on show cause notice dated 24.09.2023 show that both the show cause notices and orders pertaining to the same tax period i.e. July, 2017 to March, 2018 and both orders have been passed by two different officers but of the same jurisdictional office i.e. AVATO, Ward-93, Zone-B, Delhi. Both the show cause notices create nearly identical demand. The order dated 25.12.2023 creates the demand of Rs. 15,53,240/- and the order dated 17.12.2023 creates a demand of Rs. 15,53,234/-. Keeping in view the fact that both the show cause notices and orders pertain to the same tax period i.e. July 2017 to March 2018 and raise identical demand by two different officers of the same jurisdiction and further noticing the submission of the petitioner that replies could not be filed to the show cause notices, both the orders dated 17.12.2023 and 25.12.2023 are set aside. The proceedings on the Show Cause Notices dated 21.09.2023 and 24.09.2023 are clubbed and shall be re-adjudicated by one proper officer in accordance with law. Petition disposed off.
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2024 (9) TMI 897
Alleged contravention of specific provisions of applicable GST statutes - Exercise of discretionary jurisdiction - cancellation of the petitioner's GST registration - tax proposals for the tax period 2018-19 - HELD THAT:- On perusal of the impugned show cause notices, it is evident that such show cause notice pertains to alleged contravention of specific provisions of applicable GST statutes. Since the challenge is to show cause notices, it is not required to exercise discretionary jurisdiction except to the limited extent of interfering with the suspension of registration. Except to such extent, it is always open to the petitioner to respond to the show cause notices and provide the necessary explanation. Petition disposed off.
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2024 (9) TMI 896
Seeking to quash the demand letter - HELD THAT:- The writ petition stands disposed of permitting the petitioner to pursue his remedy before the appropriate authority in accordance with law.
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2024 (9) TMI 895
Seeking adjournment in the contempt cases - seeking review of the judgment - contempt of court - HELD THAT:- Exercising the powers under Article 215 of the Constitution of India read with the provisions under the Contempt of Courts Act, 1971 and, as laid down in the High Court of Jharkhand Rules, the Registry shall issue a notice to the opposite party nos. 2 and 3 in Appendix-I with a direction to them to file their show-cause reply with in two weeks. Post these matters on 10th May 2024.
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2024 (9) TMI 894
Provisional attachment of property - Section 83 of the Central/Gujarat Goods and Service Tax Act, 2017 - HELD THAT:- As Cash Credit Account and OD Account of the petitioners have already been released vide order dated 23.08.2023, no further orders are required to be passed. Therefore, without going into the facts and merits of the matters, these petitions are disposed of and consequences of the impugned order shall follow as per the provisions of Section 83 of the Act. The petitions are accordingly disposed of.
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2024 (9) TMI 893
Violation of principles of natural justice - order passed without granting any opportunity of personal hearing to the Petitioner - ex-parte order passed - HELD THAT:- Without expressing any opinion on the merits of the case, since the Central Tax officer while passing the orders dated 28.11.2023 and 15.12.2023 has not been given opportunity of hearing to the Petitioner, the said orders cannot be sustained in the eye of law. The petition is disposed off.
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2024 (9) TMI 892
Mandate issuance of an intimation in Form GST DRC-01A - inadvertent error was committed by filling in details in column 4(3) of the GSTR-3B return instead of column 4(5) thereof - HELD THAT:- On perusal of notice in Form GST ASMT-10, it is noticeable that there is no annexure there to. Likewise, the show cause notice and the impugned order are in summary form and the detailed show cause notice and order are not available. It appears that such detailed show cause notice and order were not uploaded on the portal. In these circumstances, the impugned order cannot be sustained. The impugned order dated 31.12.2023 is set aside by leaving it open to the respondent to initiate proceedings in accordance with law. Petition disposed off.
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2024 (9) TMI 891
Violation of principles of natural justice - petitioner was unaware of proceedings culminating in the impugned order until his bank, Standard Chartered Bank, informed him about the order - discrepancy between the GSTR 3B and GSTR 1 returns - HELD THAT:- It appears that the tax liability pertains to the discrepancy between the GSTR 3B and GSTR 1 returns. It is also evident that the tax proposal was confirmed without the participation of the petitioner. At this juncture, the entire tax liability has been realised by appropriating the amount from the petitioner's bank account. As such, revenue interest stands fully secured. In these circumstances, it is just and appropriate that an opportunity be provided petitioner to contest the tax demand on merits. The impugned order dated 06.10.2023 is set aside and the matter is remanded for reconsideration - Petition disposed off by way of remand.
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2024 (9) TMI 890
Challenge to assessment order - petitioner did not have a reasonable opportunity to contest the tax demand on merits - difference between the petitioner's GSTR 1 statement and GSTR 3B returns - HELD THAT:- On perusal of the impugned order, it is evident that the confirmed tax proposal pertains to the difference between the petitioner's GSTR 1 statement and GSTR 3B returns. The petitioner has placed on record the GSTR 1 statement for the month of April in assessment period 2018-19 and the GSTR 9C reconciled statement - Prima facie it appears that the petitioner has paid the unreconciled amount in April 2018. However, no definitive conclusions can be drawn in these proceedings and the matter would have to be examined by the respondent. Nonetheless, in these circumstances, it is just and appropriate that the petitioner be provided an opportunity, albeit by putting the petitioner on terms. The petitioner agrees to remit 10% of the disputed tax demand as a condition for remand. The impugned order dated 19.10.2023 is set aside and the matter is remanded for reconsideration subject to the condition that the petitioner remits 10% of the disputed tax demand within two weeks from the date of receipt of a copy of this order - petition disposed off by way of remand.
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2024 (9) TMI 889
Challenge to assessment order dated 26.04.2023 - inability to respond to intimation dated 08.12.2022 or show cause notice dated 28.12.2022 on account of a technical problem in accessing the portal - HELD THAT:- On perusal of the impugned order, it is evident that the confirmed tax proposal pertains to the purchase of a motor vehicle. It also appears that 100% penalty was imposed. Since the petitioner did not participate in proceedings and the tax demand was confirmed in such circumstances, it is just and appropriate that the petitioner be provided an opportunity albeit by putting the petitioner on terms. The impugned order is set aside subject to the condition that the petitioner remits 10% of the disputed tax demand within two weeks from the date of receipt of a copy of this order. The petitioner is also permitted to submit a reply to the show cause notice within the aforesaid period - Petition disposed off.
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2024 (9) TMI 888
Violation of principles of natural justice - petitioner's replies to the show cause notice were not taken into consideration - HELD THAT:- On perusal of the impugned order, it is clear that such order was issued by the Assistant Commissioner (ST), Annur Assessment Circle, Coimbatore. On examining the reply dated 26.10.2023, such reply bears the acknowledgment of the office of the Assistant Commissioner (ST), Annur Circle. The subsequent communication from the petitioner dated 20.12.2023 was also issued to the same officer. Against this backdrop, when the impugned order is examined, it is noticeable that the petitioner's reply was not taken into account except for reply dated 20.12.2023, which is in the nature of a supplement to the primary reply. Since the petitioner's reply was not considered, the impugned order cannot sustained. The impugned order dated 29.12.2023 is set aside and the matter is remanded for re-consideration. The respondent is directed to provide a reasonable opportunity to the petitioner, including a personal hearing, take into consideration the petitioner's replies and issue a fresh order with in two months from the date of receipt of a copy of this order. Petition disposed off by way of remand.
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2024 (9) TMI 887
Violation of principles of natural justice - petitioner did not have a reasonable opportunity to contest the tax demand on merits - HELD THAT:- On perusal of the impugned order, it is evident that the tax proposal pertains to unreconciled turnover and that the respondent took note of the reconciliation statement. Since the petitioner did not respond to the show cause notice, it appears that the tax proposal was confirmed. Learned counsel for the petitioner points out that all necessary documents are available with the petitioner to explain the unreconciled turnover. In these circumstances, it is just and necessary to provide another opportunity to the petitioner in this regard. However, since the petitioner failed to respond to notices or participate in proceedings, the petitioner should be put on terms. The impugned order dated 26.12.2023 is set aside on condition that the petitioner remits a sum of Rs.50,00,000/- with in three weeks from the date of receipt of a copy of this order. Within the said period, the petitioner is also permitted to submit a reply to the show cause notice by enclosing all relevant documents - petition disposed off.
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2024 (9) TMI 886
Challenge to assessment orders pertaining to two distinct assessment periods - petitioner did not have a reasonable opportunity to contest the tax demand on merits - orders were uploaded on the View Additional Notices and Orders tab on the GST portal and not communicated to the petitioner through any other mode - violation of principles of natural justice - discrepancy between the petitioner's GSTR 3B returns and the auto-populated GSTR 2A returns - HELD THAT:- On perusal of the impugned order, it is evident that the tax proposal was confirmed because the petitioner did not file objections or participate in the personal hearing. The petitioner has asserted that he would be in a position to explain the discrepancy between the GSTR 3B and 2A returns if provided an opportunity. In these circumstances, it is just and appropriate that an opportunity be provided to the petitioner by putting the petitioner on terms. The orders impugned here in are set aside and the matters are remanded to the 1st respondent for reconsideration subject to the condition that the petitioner remits 10% of the disputed tax demand in respect of each assessment period as agreed to within a period of 15 days from the date of receipt of a copy of this order - Petition disposed off by way of remand.
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2024 (9) TMI 885
Direction to the respondents 1 to 3 to process and approve her application for GST registration, without insisting No Objection Certificate from the fourth respondent - HELD THAT:- It appears that the petitioner has dispute with her brother-in-law and mother-in-law after the death of her husband, namely, D.Dhamodaran, son of the fourth respondent and the brother of the fifth respondent. In this connection, the petitioner has applied for a fresh GST registration and has filed an application on 20.03.2024. The said application is yet to be processed, as a result of which, the petitioner will be unable to carry on business, once the old GST registration expires in the absence of co-operation by the private respondents. There are no impediment in allowing this Writ Petition by directing the third respondent to process the application submitted by the petitioner on 20.03.2024, bearing reference number in (ARN) AA330324062716C, within a period of two weeks from the date of receipt of a copy of this order. Petition disposed off.
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2024 (9) TMI 884
Cancellation of the petitioner's GST registration - order of cancellation was issued without providing a reasonable opportunity to the petitioner - Violation of principles of natural justice - HELD THAT:- In view of the submissions of learned senior standing counsel, petition is disposed of by directing the first respondent to consider and dispose of the petitioner's application for revocation of cancellation of registration within one month from the date of receipt of additional documents from the petitioner.
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2024 (9) TMI 883
Challenge to assessment order - discrepancy between the GSTR 1 and GSTR 3B returns - petitioner's replies were not taken into consideration - violation of principles of natural justice - HELD THAT:- The petitioner's replies were not taken into consideration while recording the conclusions. Hence, the impugned order is unsustainable. Therefore, impugned order dated 29.12.2023 is set aside and the matter is remanded for re-consideration. The respondent is directed to provide a reasonable opportunity to the petitioner, including a personal hearing, and thereafter issue a fresh order after taking into consideration the petitioner's replies and any documents annexed thereto. Petition disposed off by way of remand.
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2024 (9) TMI 882
Seeking to quash the demand arising out of GST DRC-07 and Order-in-Original - taxability of income from shares - HELD THAT:- After going through the records, if the income from shares has been excluded by virtue of Circular No.196/08/2023-GST dated 17.07.2023 issued by the Government of India, Ministry of Finance (Department of Revenue), Central Board of Indirect Taxes and Customs, GST Policy Wing, assessment made thereof by the authority on the basis of the audit report cannot be sustained in the eye of law. More particularly, the judgment of the High Court of Karnataka in M/S. YONEX INDIA PRIVATE LIMITED VERSUS UNION OF INDIA, STATE OF KARNATAKA, COMMISSIONER OF COMMERCIAL TAXES BANGALORE, ASSISTANT COMMISSIONER OF COMMERCIAL TAXES (AUDIT 2. 8) BANGALORE [ 2024 (2) TMI 59 - KARNATAKA HIGH COURT] is very clear that income from shares is not taxable. The demand arising out of GST DRC-07 and Order- in-Original dated 18.12.2023 under Annexure-10 cannot be sustained in the eye of law. Accordingly, the same is liable to be quashed and is hereby quashed. This Court remits the matter to the very same authority to hear the same afresh and pass appropriate order by giving opportunity of hearing to the petitioner. Petition disposed off.
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2024 (9) TMI 881
Challenge to assessment order - violation of principles of natural justice - SCN was uploaded on the View Additional Notices and Orders tab on the GST portal and not served on the petitioner through any other mode - HELD THAT:- Section 169 of applicable GST enactments provides for service of notice through any of the modes specified therein. The record shows that the impugned order was preceded by a show cause notice dated 19.05.2023 and reminder for a personal hearing. On perusal of the impugned order, it is evident that the confirmed tax demand pertains to the availment of Input Tax Credit (ITC) in respect of the purchase of a car. On account of the petitioner not being heard, the petitioner was not in a position to endeavor to persuade the respondent that the purchase of the car was in course of business. For that limited reason, the impugned order calls for interference by putting the petitioner on terms. The impugned order dated 20.07.2023 is set aside and the matter is remanded for reconsideration subject to the petitioner remitting 10% of the disputed tax demand as agreed to with in a period of two weeks from the date of receipt of a copy of this order - Petition disposed off by way of remand.
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2024 (9) TMI 880
Challenge to assessment order - petitioner did not have a reasonable opportunity to contest the tax demand on merits - violation of principles of natural justice - mismatch between the petitioner's GSTR 3B returns and the auto-populated GSTR 2A - HELD THAT:- On perusal of the impugned order, as contended by learned counsel for the petitioner, the tax demand pertains to mismatch between the petitioner's GSTR 3B returns and the auto-populated GSTR 2A. The impugned order records that the tax liability was confirmed because the petitioner did not file a reply to the show cause notice or participate in proceedings. In these circumstances, subject to putting the petitioner on terms, it is just and appropriate to provide another opportunity to the petitioner. The impugned order dated 28.08.2023 is set aside subject to the condition that the petitioner remits 10% of the disputed tax demand as agreed to with in a period of two weeks from the date of receipt of a copy of this order, and the matter is remanded for reconsideration - Petition disposed off.
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Income Tax
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2024 (9) TMI 913
Reopening of assessment - change of opinion - reopening within 4 years of the original assessment - new tangible material before the AO at the time of reopening of assessment or not? - HELD THAT:- All the information which formed reason to believe escapement of income, was already made available during the assessment proceedings. There was nothing new, which has been brought on record because these materials were on the face of documents available before the AO. Therefore, the ITAT came to a conclusion correctly that it was a clear case of change of opinion. No substantial question of law arises. Appeal dismissed.
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2024 (9) TMI 912
Validity of assessment order passed u/s 143(3) r.w.s. 144C(3) /144B as barred by limitation - HELD THAT:- The snap shot of the ITBA portal dated 16th October 2023 has been annexed to the affidavit in reply. But as regards to petitioner s averment of the petition that draft assessment order was received by petitioner on 23rd September 2023, the affidavit in reply is totally silent. There is not even a denial. To the petition a copy of the E- mail dated 23rd September 2023 is also annexed. If the AO was truthful, he would have annexed snap shot of the ITBA portal of 23rd September 2023 to the affidavit in reply but he has chosen not to do so. In fact, the AO has not even annexed the order sheet. Therefore, we have no hesitation in drawing adverse inference against respondent and observe that respondent is being economical with truth. We will accept petitioner s submission that the draft assessment order was served upon petitioner on 23rd September 2023. The 30 days period provided to file objections u/s 144C(2) would have expired on 22nd October 2023. Since no communication from petitioner having filed the objections with DRP was sent to the AO the last date for passing final assessment order u/s 144C(3)(b) r.w.s.144C(4)(b) of the Act would have expired on 30th November 2023. Therefore, the final assessment order dated 27th December 2023 is clearly barred by limitation.
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2024 (9) TMI 911
Reopening of assessment u/s 147 - reason to believe - concept of change of opinion - HELD THAT:- Petitioner has disclosed fully and truly all material facts at the time of regular assessment and therefore, as per proviso to Section 147 the impugned notice is without jurisdiction coupled with the fact that the reasons recorded clearly shows that the respondent no.1 - AO has recorded the belief only on verification of the record without there being any fresh tangible material to come to the conclusion that the income has escaped assessment resulting into mere change of opinion on the part of the respondent no.1. As decided in M/S. KELVINATOR OF INDIA LIMITED [ 2010 (1) TMI 11 - SUPREME COURT] conceptual difference between power to review and power to re-assess. AO has no power to review; he has the power to re-assess. But re- assessment has to be based on fulfillment of certain pre-condition and if the concept of change of opinion is removed, as contended on behalf of the Department, then, in the garb of re-opening the assessment, review would take place. One must treat the concept of change of opinion as an in- built test to check abuse of power by the Assessing Officer - Decided in favour of assessee.
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2024 (9) TMI 910
Denial of registration u/s 12AB - cancelling provisional registration and not granting recognition u/s 80G (5) - HELD THAT:- The notice was served on the assessee through e-portal, email and speed post. Another notice was issued to the assessee on 29.01.2023 by show cause notice as to why the application should not be rejected. In absence of any information, CIT(E) rejected the application. However, before us, the assessee has shown a letter dated 06.02.2023 which is not at all being considered by the learned CIT(E). If assessee has filed some explanation which needs to be considered and then issue may be decided. Non consideration, if any submission is made from the assessee, causes severe prejudice to the assessee, which must be corrected. Therefore, we restore the issue back to the file of the CIT(E) to consider the explanation furnished by the assessee on 06.02.2023 and decide the issue afresh. CIT(E) may carry out any enquiry, in accordance with law for verification of the genuineness of the activities for the purpose of granting registration. Appeals filed by the assessee stand allowed for statistical purposes.
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2024 (9) TMI 879
Income deemed to accrue or arise in India - licensing of software products of Microsoft in the Territory of India by the Respondent - TDS u/s 195 - whether taxable in India as Royalty u/s 9(1)(vi) of the Act read with Article 12 of the Indo US DTAA? As decided by HC [ 2022 (3) TMI 482 - DELHI HIGH COURT] amounts paid by resident Indian end-users/distributors to nonresident computer software manufacturers/suppliers, as consideration for the resale/use of the computer software through EULAs/distribution agreements, is not the payment of royalty for the use of copyright in the computer software, and that the same does not give rise to any income taxable in India, as a result of which the persons referred to in section 195 of the Income Tax Act were not liable to deduct any TDS u/s 195, thus decided in favour of assessee - HELD THAT:- We are not inclined to interfere with the impugned judgment and order passed by the High Court. The special leave petition is, accordingly, dismissed.
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2024 (9) TMI 878
Faceless assessment of income escaping assessment - validity of notice issued by the JAO as not in accordance w/sec 151A - not permissible for the Jurisdictional AO to issue a notice under Section 148, as the same would amount to breach of the provisions of section 151A - HELD THAT:- As decided in Hexaware Technology Ltd. [ 2024 (5) TMI 302 - BOMBAY HIGH COURT ] provisions of Section 151A of the IT Act had clearly brought a regime of faceless assessment. The Court held that it was not permissible for the Jurisdictional Assessing Officer to issue a notice under Section 148, as the same would amount to breach of the provisions of section 151A of the IT Act. There is no question of concurrent jurisdiction of the JAO and the FAO for issuance of notice u/s 148 of the Act or even for passing assessment or reassessment order. When specific jurisdiction has been assigned to either the JAO or the FAO in the Scheme dated 29th March, 2022, then it is to the exclusion of the other. To take any other view in the matter, would not only result in chaos but also render the whole faceless proceedings redundant. If the argument of Revenue is to be accepted, then even when notices are issued by the FAO, it would be open to an assessee to make submission before the JAO and vice versa, which is clearly not contemplated in the Act. Therefore, there is no question of concurrent jurisdiction of both FAO or the JAO with respect to the issuance of notice under Section 148. In the present case, it is apparent that the respondent-Revenue has not complied with the Scheme notified by the Central Government pursuant to Section 151A(2) of the Act. The Scheme has also been tabled in Parliament and is in the character of subordinate legislation, which governs the conduct of proceedings under Section 148A as well as Section 148 of the Act. In view of the explicit declaration of the law in Hexaware, the grievance of the petitioner-Assessee insofar as it relates to an invalid issuance of a notice is sustainable and consequently, the very manner in which the proceedings have been initiated, vitiates the proceedings.
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2024 (9) TMI 877
Reopening of assessment - reason to believe - Period of limitation - HELD THAT:- A perusal of Exts.P2 and P3 makes it clear that, as early as in the year 2011 itself, such details regarding accumulation for one purpose and utilization for another purpose have come to the attention of the department. The time limit of six years can be utilized by the department only in a situation where the department has a case that the assessee did not disclose fully and truly all the material facts necessary for the purpose of assessment. Such satisfaction should be with reference to the date of the notice. Notice at Ext.P5 has been issued on 30.03.2016. Almost four years back, all the above details were furnished before the assessing authority. Further, a perusal of the notice at Ext.P2 would make it clear that, even the department has noticed the above discrepancy, and that is why Ext.P2 was issued pursuant to a scrutiny assessment. In such circumstances, it cannot be said that the petitioner herein withheld certain information from the department. When that be the position, the department cannot be expected to have recourse to the extended period of six years for issuing the notice under Section 149. Whether the notice issued can be considered as a case of mere change of opinion on the part of the assessing authority ? - As decided in Kelvinator of India [ 2010 (1) TMI 11 - SUPREME COURT] AO has power to reopen, provided there is tangible material to come to the conclusion that there is escapement of income from assessment. Reasons must have a live link with the formation of the belief. Also decided in Marico Limited [ 2019 (8) TMI 1337 - BOMBAY HIGH COURT] parties have responded to it and the assessment order makes no reference to the above issue at all. However, once a query has been raised by the Assessing Officer during the assessment proceedings and the assessee has responded to that query, it would necessarily follow, as held by our court that the Assessing Officer has accepted the petitioner's/ assessee's submissions, so as to not deal with that issue in the assessment order. Thus, the notice issued by the 3rd respondent u/s 148 of the Act is to be evaluated. The said notice proposes to reopen the petitioner s assessment under Section 147. The reasons for such steps are informed through Ext.P7. The said reason is with reference to the accumulation and mobilization of amounts for different purposes. The contention of Sri. Jose Joseph, that the said reason at Ext.P7 is a different one cannot be accepted. A cursory glance at Ext.P2 notice, Ext.P3 reply, and Ext.P7 would show that the reasons highlighted for initiation of the steps under the act are one and the same. The reliance made by the standing counsel on the judgment of the apex court in Techspan India [ 2018 (4) TMI 1376 - SUPREME COURT] is not apposite. Thus, the issue raised in the case at hand is also to be decided against the revenue, in view of the fact that same issue was raised in Ext. P2 and clarified by the petitioner through Ext. P3. There was a query raised by the department and answered by the assessee. Therefore, the case at hand is a clear case of change of opinion . Assessee appeal allowed.
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2024 (9) TMI 876
Faceless assessment of income escaping assessment - validity of notice issued by the JAO as not in accordance w/sec 151A - non-compliance w/s 151A - HELD THAT:- As decided in Hexaware Technology Ltd. [ 2024 (5) TMI 302 - BOMBAY HIGH COURT ] provisions of Section 151A of the IT Act had clearly brought a regime of faceless assessment. The Court held that it was not permissible for the Jurisdictional Assessing Officer to issue a notice u/s 148, as the same would amount to breach of the provisions of section 151A of the IT Act.it is apparent that the Respondent- Revenue has not complied with the Scheme notified by the Central Government pursuant to Section 151A (2). The Scheme has also been tabled in Parliament and is in the character of subordinate legislation, which governs the conduct of proceedings under Section 148A as well as Section 148 of the Act. There is no question of concurrent jurisdiction of the JAO and the FAO for issuance of notice u/s 148 of the Act or even for passing assessment or reassessment order. When specific jurisdiction has been assigned to either the JAO or the FAO in the Scheme dated 29th March, 2022, then it is to the exclusion of the other. In view of the explicit declaration of the law in Hexaware, the grievance of the Petitioner-Assessee insofar as it relates to an invalid issuance of a notice is sustainable and consequently, the very manner in which the proceedings have been initiated, vitiates the proceedings. As the JAO had no jurisdiction to issue the impugned notice, the Writ Petition is accordingly allowed in terms of prayer clause (a).
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2024 (9) TMI 875
Faceless assessment of income escaping assessment - validity of notice issued by the JAO as not in accordance w/sec 151A - non-compliance w/s 151A - HELD THAT:- As decided in Hexaware Technology Ltd. [ 2024 (5) TMI 302 - BOMBAY HIGH COURT ] provisions of Section 151A of the IT Act had clearly brought a regime of faceless assessment. The Court held that it was not permissible for the Jurisdictional Assessing Officer to issue a notice u/s 148, as the same would amount to breach of the provisions of section 151A of the IT Act.it is apparent that the Respondent- Revenue has not complied with the Scheme notified by the Central Government pursuant to Section 151A (2) of the Act. The Scheme has also been tabled in Parliament and is in the character of subordinate legislation, which governs the conduct of proceedings under Section 148A as well as Section 148 of the Act. There is no question of concurrent jurisdiction of the JAO and the FAO for issuance of notice under Section 148 of the Act or even for passing assessment or reassessment order. When specific jurisdiction has been assigned to either the JAO or the FAO in the Scheme dated 29th March, 2022, then it is to the exclusion of the other. In view of the explicit declaration of the law in Hexaware, the grievance of the Petitioner-Assessee insofar as it relates to an invalid issuance of a notice is sustainable and consequently, the very manner in which the proceedings have been initiated, vitiates the proceedings. As the JAO had no jurisdiction to issue the impugned notice, the Writ Petition is accordingly allowed in terms of prayer clause (a).
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2024 (9) TMI 874
Maintainability of appeal to the High Court from a decision of the Tribunal - substantial question of law or fact - AO has rejected the books of the assessee u/s 145(3) and assessment was made ex-parte as per the manner provided in Section 144 - ITAT deleting the impugned additions, maintaining that the Assessing Officer has not pointed any specific defects especially in the rejection of books on account by the Assessing Officer under Section 145(3) - Whether non-determination of specific defects by learned ITAT emanates a substantial question of law u/s 260A(6) on this count? HELD THAT:- A finding of fact may give rise to a substantial question of law, inter alia, in the event the findings are based on no evidence and/or while arriving at the said finding, relevant admissible evidence has not been taken into consideration or inadmissible evidence has been taken into consideration or legal principles have not been applied in appreciating the evidence, or when the evidence has been misread.(See : Madan Lal Vs. Mst. Gopi Anr. [ 1980 (8) TMI 204 - SUPREME COURT ],Narendra Gopal Vidyarthi Vs. Rajat Vidyarthi [ 2008 (12) TMI 724 - SUPREME COURT ] and K.Ravindranathan Nair vs. CIT [ 2000 (11) TMI 3 - SUPREME COURT ] In the instant case no substantial question of law arises from the order of the Tribunal as the appellant has raised all the question of facts and have disputed the fact findings of the ITAT in the garb of substantial questions of law which is not permitted by the statute itself. This Court refrains from entertaining this appeal as there is no perversity in the order passed by the ITAT since the ITAT has dealt with all the grounds raised by the appellant in the order impugned and has passed a well reasoned and speaking order taking into consideration all the material available on record. The Tribunal being a final fact finding authority, in the absence of demonstrated perversity in its finding, interference with the concurrent findings of the CIT (A) as well as the ITAT therewith by this Court is not warranted. No hesitation in holding that no question of law, much less any substantial question of law arises from the order of the Tribunal requiring consideration of this court. There is no merit in the appeal as making addition/deletion cannot be said to be erroneous and prejudicial to the interest of revenue. Thus, in our opinion, the present case does not involve any substantial question of law so as to meet the provisions of Section 260(A) for admitting the appeal. Assessee appeal allowed.
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2024 (9) TMI 873
Validity of order passed u/s 201 passed beyond period of limitation - TDS u/s 195 on consultancy charges paid to foreign company - HELD THAT:- Admittedly, the transaction or payment made to MJR Consultancy Pvt. Ltd., based in Singapore relates to financial years 2006-07, 2007-08, 2008-09. Admittedly, under letter dated 31.1.2014 the appellant is asked to explain as to why the consultancy charges paid to foreign company shall not be treated as fees for technical service as per the provisions of Section 9 (1) (vii) of the Act. In pursuance to the said letter/show cause notice, order dated 6.3.2014 was passed under Section 201 (1) and 201 (1A) of the Act. The initiation of proceedings under letter dated 31.1.2014 or order passed on 6.3.2014 is clearly beyond four years. Therefore, following the decisions of the coordinate Benches of this Court in Bharat Hotels Ltd. [ 2015 (12) TMI 1469 - KARNATAKA HIGH COURT] and The Execution Engineer, M/s. Bangalore Water Supply and Sewerage Board [ 2020 (8) TMI 619 - KARNATAKA HIGH COURT] we answer the first substantial question of law in favour of the assessee and against the revenue.
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2024 (9) TMI 872
Validity of reopening of assessment - proceedings are initiated after four years - change of opinion - borrowed satisfaction - bogus share transaction - assessee failed to give treatment to the outstanding amount at NSEL and delivery of goods purchased at NSEL in his books of accounts - scope of statutory audit report u/s 142A - as contented in absence of purchase and sale transaction in the Assessment Year 2014-15, the question of impact of any difference in the value of stock on the profit and loss account of the company would not arise - HELD THAT:- It appears that the respondent assessment officer without considering the objections raised by the petitioner pointing out that there was no transaction or purchase or sale on the NSEL during the Financial Year 2013 14 A.Y. 2014-15, as per the Note no. 31 of the audited financial statement and report of the statutory audit conducted u/s 142A of the Act, wherein the statutory auditor has categorically stated there is no stock lying in the AY 2014-15 pertaining to NSEL transactions conducted during AY. 2013-14 as well as in absence of purchase and sales transactions in A.Y. 2014-15, the question of impact of any difference in the value of Stock on the Profit Loss Account of the Assessee Company does not arise. Thus, AO without application of mind only on the basis of the information and material made available by the NSEL confidential information which shows that outstanding dues to be paid by the petitioner for transactions carried out in earlier years is outstanding, and considering that outstanding amount payable by the petitioner to NSEL was determined during the F.Y. 2013-14, the impugned notice is issued for the alleged escapement of income. It can be said that the impugned notice is issued on borrowed satisfaction without considering the material available on record in form of statutory audit report u/s 142A of the Act. It is pertinent to note that during the regular assessment framed under Section 143 read with Section 144C and 142 (2A) of the Act, the entire issue was scrutinized by the then assessing officer and therefore, the issuance of impugned notice of reopening would also amount to change of opinion. Debt payable by the petitioner not appearing in the books of account - Notes Forming part of the Financial Aaccounts wherein it is mentioned that debt payable includes debt payable to third party Rs. Nil towards transaction on NSEL and hence the petitioner has made full and true disclosures during regular assessment and the same has been brushed aside while forming a belief of escapement of income. Moreover, it is not disputed by the respondent that there was no transaction or sale or purchase during the year under consideration. Therefore the reasons recorded by the respondent assessing officer for issuing notice is without jurisdiction on the face of the material available on record. Assessee appeal allowed.
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2024 (9) TMI 871
Validity of assessment order passed without affording an opportunity of hearing - appeal provided from the order, which has not been availed of - Petitioner only seeks for a remand so that an opportunity be afforded for a proper hearing - HELD THAT:- Under the scheme of the Income Tax Act, specifically after the faceless assessment was brought into force, a request has to be made for an oral hearing. There is a specific option provided, which has to be ticked in the affirmative, to make the request while uploading the objection. Unless the request is made, the faceless assessment would be concluded without an oral hearing, which again is as per the scheme of the Act. We do not think that the dictum of the Full Court applies here. We also notice that there is a provision for appeal where all the facts can be argued in person. The appellate authority also has sufficient power to get a report from the AO, after affording an opportunity of hearing before the AO. The High Court, can always refuse the exercise of discretion if there is an adequate and effective remedy elsewhere. High Court can exercise the power only if it comes to the conclusion that there has been a breach of principles of natural justice or due procedure required for the decision has not been adopted - High Court would also interfere if it comes to a conclusion that there is infringement of fundamental rights or where there is failure of principles of natural justice or where the orders and proceeding are wholly without jurisdiction or when the vires of an Act is challenged. The plea made of no oral hearing afforded has to be considered in the context of the option not having been exercised; which amounts to a waiver. We, however, reserve the liberty of the petitioner to approach the appellate authority. The period during which the writ petition, was filed from 20.04.2024, till today, shall not be reckoned as delay.
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2024 (9) TMI 870
Lack of opportunity to cross-examine a vendor and was not provided a copy of the statement of his vendor - HELD THAT:- Upon considering the submissions and on examining the documents on record, and find that this is not an appropriate case to exercise discretionary jurisdiction. Consequently, is disposed of by leaving it open to the petitioner to file a statutory appeal. If such appeal is filed within three weeks from the date of receipt of a copy of this order, the appellate authority is directed to receive and dispose of such appeal on merits.
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2024 (9) TMI 869
Nature of expenses - allowability of the assessee's contribution to the Compensatory Afforestation Fund (CAF) - HELD THAT:- This issue is no more res-integra as even in the case of Dr. Prafulla R. Hede and Another [ 2014 (7) TMI 1085 - BOMBAY HIGH COURT] has accepted that contribution to CAF will be revenue expenditure and not capital in nature. Even the Special Leave Petition that was filed by the Revenue against Dr. Prafulla R. Hede as been dismissed[ 2014 (11) TMI 1239 - SC ORDER] . No substantial question of law arises.
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2024 (9) TMI 868
Addition u/s. 69 - unexplained investment - HELD THAT:- With regard to agricultural income, before the AO the assessee has furnished the copies of confirmation letters along with Pattadar Passbooks of his family members. It is evident from the AO s order that the assessee has also furnished the certificates issued by the Village Revenue Officer [ VRO ] of Devudala Village, Regidi, Amudalavalasa Mandal, Srikakulam District wherein the VRO has certified that an aggregate income per yield will come from the agricultural lands of the assessee s family members. Further, with regard to the loan advanced by the assessee s brother, the assessee has also furnished the return of income to evidence the creditworthiness of Mr. Y. Rajasekhara Rao. Assessee has also produced the copies return of income his family members, confirmation letters from the assessee s family members, Pass Books of the assessee s family members evidencing their agricultural land holdings and the certificates issued by the VRO as well as the copy of the return of income filed by the assessee s brother Mr. Y. Rajasekhara Rao for the AY 2014-15 and 2015-16. On perusal of all these documents as well as the submissions of the assessee, the assessee s family members are having agricultural income and the assessee s brother is also having creditworthiness to advance loan to the assessee. We hereby grant relief to the assessee to the extent of Rs. 5 lakhs towards agricultural income and Rs. 2 lakhs towards the loan availed from the assessee s brother Mr. Y. Rajesekhara Rao as explained out of Rs. 15 lakhs additions made u/s. 69 AO s estimation of 5% of the total value of the stock put to sale as profit in the liquor business of the assessee - HELD THAT:- It is an undisputed fact that the assessee was engaged in the liquor business. During the proceedings before the Ld. Revenue Authorities, the assessee has not produced sales bills in support of the sales admitted during the year in the Trading and P L Account and has also not produced any books of account for verification. Under these circumstances, the Ld. AO proposed to reject the book results of the assessee and resorted to estimate the income on liquor business @ 5% on the stock put to use during the year under consideration. On similar set of facts and circumstances, the Division Bench of this Tribunal in the case of Kalla Viswanatha Babu [ 2022 (7) TMI 549 - ITAT VISAKHAPATNAM] has estimated the net profit @ 5% of the purchase price of the stock which was put to sale against 10% estimated by the Ld. CIT(A). We uphold decision of the CIT(A)-NFAC in sustaining the decision of the Ld. AO in estimating the net profit @ 5% of the purchase price of the stock that was put to sale which is net of deductions. Accordingly, this issue raised by the assessee is dismissed.
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2024 (9) TMI 867
Addition under the head Income from house property on unsold stock of flats held as stock in trade, as per the provisions of section 22 r.w.s. 23(4) - AO calculated deemed rental income on the vacant flats held as stock in trade u/s 22 r.w.s. 23(4) - HELD THAT:- From perusal of both the above sections, it is apparent that from assessment year 2018-19 the Legislature showed its intention to tax the deemed rental income from the property held as stock in trade and prior to that no such wording was used in section 23 of the IT Act, which clearly shows that it was never the intention of the Legislature to tax the deemed rental income from property held as stock in trade. It is only from assessment year 2018-19 that a new section 23(5) was inserted which permits the AO to calculate the deemed rental income of the property held as stock in trade even if such property is not let during the whole or any part of the previous year. Therefore, we are of the considered opinion that for assessment year 2016-17 there was no such provision which empowers the AO to calculate the deemed rental income/annual value of the property which was held as stock in trade by the builder. In the light of section 22, it is clear that if the property was held as stock in trade i.e. for the purposes of business of the assessee, the annual value of such property shall not be chargeable to income tax under the head Income from house property . Therefore, no annual value or deemed rental income can be determined of such property for the purposes of income tax prior to assessment year 2018-19. The intentions of the Legislature are very much clear because they introduced section 23(5) w.e.f. assessment year 2018-19 only and nowhere it was mentioned that it has been retrospectively made applicable. When the operation of this section was not made retrospective, it is very much clear that the annual value/deemed rental income of property held as stock in trade can be calculated and shall be chargeable to income tax only w.e.f. assessment year 2018-19 and not prior to that. The decision of Dimple Enterprises [ 2023 (9) TMI 426 - ITAT MUMBAI ] relied on by ld. DR does not support the case of the Revenue. Therefore, respectfully following the above decision of Pride Purple Properties [ 2023 (4) TMI 1353 - ITAT PUNE] we hold that the annual value/deemed rental income cannot be calculated for property held as stock in trade by the assessee for assessment year 2016-17, hence, we direct the AO to delete the addition made on account of deemed rental income u/s 22 r.w.s. 23(4) in respect of unsold units/flats held as stock in trade. Therefore, the grounds of appeal filed by the assessee are allowed.
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2024 (9) TMI 866
Disallowance of foreign tax credit - disregarding Form 67 filed by the appellant to claim the said credit as belated filed - Directory v/s mandatory obligation - HELD THAT:- We find that this issue has been raised before this Tribunal on multiple occasions and it has been consistently held that filing of Form 67 is directory in nature and therefore even if it is belatedly filed but is placed on record before the revenue authorities, that before passing of an order, if the facts are verifiable then the legitimate claim made by the assessee should be allowed. We find support from the decision of this Tribunal in the case of Bijender Singh [ 2024 (6) TMI 1397 - ITAT KOLKATA] and also Krishna Kumar Choudhury [ 2023 (7) TMI 5 - ITAT KOLKATA] . Respectfully following the consistently view taken by this Tribunal and on finding that the Form 67 has been filed with all necessary details, we therefore set aside the finding of Ld. CIT(A) and allow the grounds raised by the assessee claiming the alleged FTC and direct the AO to accept the Form 67 filed by the assessee and allow the alleged FTC in accordance with law. Assessee appeal allowed.
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2024 (9) TMI 865
Accrual of income in India - income from exploration activities in India - PE in India or India - AO Treated the gross receipt attributed to PE treating the same as deemed profit u/s 44BB had 10% and made addition - assessee contended before the A.O that its operation is less than 183 days it is covered under Article 5(5) of DTAA, which is special clause, rather than 5(1) of DTAA, which is a general clause of DTAA, which is a general clause, of DTAA between India- Singapore and therefore, doesn t have a PE and hence, its income from exploration activities in India is not taxable in India - HELD THAT:- Whether an assessee carrying out specific activity of providing services of facilities in connection with exploration, exploitation or extraction of mineral oils, which activity falls within the scope and definition given in Article 5(5) of DTAA, then, whether the general provision of Article 5 of the DTAA would apply or not has been decided in favour of the Assessee in the case of M/s Narodic Maritime Ptd. Ltd.[ 2020 (1) TMI 1697 - ITAT DELHI] once activities as defined para 5 or 3 are attracted, the minimum period test has to be applied and being specific activity based article, it will prevail over general rule of Article 5(1). If such activity based PE are to seen from the general rule perspective only then there is no requirement of such clauses in the treaty and threshold period. In that case there would be fixed place PE and agency PE. Even though the specific activity based PE can have a fixed place through which it carries out the activities, but prescribed threshold or minimum period has to be read into and such time period thus puts a limitation on the general rule of Article 5(1). Article 5(3) is an exception to Article 5(1) and 5(2) and would prevail notwithstanding Article 5(1) and 5(2). Since, the former is a specific provision. In the present case, admittedly, the services were carried out as per the contract between the assessee and Vedanta Ltd. for a period of 35 days in Financial Year 2019-20 and 58 days during Financial Year 2020-21 i.e. total 93 days, which being less than threshold of 183 days and in view of pacific Clause 5 of Article 5 of India-Singapore DTAA which mandates for providing services or facilities in contracting state for a period of more 183 days in a fiscal year in connection with exploration, exploitation and extraction of mineral oils in that contracting state, then only it shall be deemed to have a Permanent Establishment in a contracting state. In our opinion, the Department of Revenue has erroneously assumed that the assessee has PE in India. The said view of this Bench has already been fortified by the Co-ordinate Bench of the Tribunal in the case of M/s Narodic Maritime Ptd. Ltd. [ 2020 (1) TMI 1697 - ITAT DELHI] therefore, we find merit in the Grounds of appeal, accordingly, we delete the addition made in the order impugned by allowing the Grounds of Appeal of the assessee.
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2024 (9) TMI 864
Revision u/s 263 - prejudice caused to the revenue or the order is erroneous - debatable issue - Difference between stamp duty value and document value as computed which was not disclosed as income in view of the provisions of section 43CA - there is variation in documentary value and stamp duty value which and the same is to be treated as income of the assessee in view of the provisions of section 56(2)(vii)(b)(ii) - HELD THAT:- Pr.CIT, on perusal of assessment records may be of the opinion that there is difference in documentary transaction i.e., consideration recorded in sale deed and guideline value and value adopted by the stamp duty authorities that he would have to estimate income at figure higher than the one determined by the AO. That would not vest the by Pr.CIT with power to re-examine the accounts and re-determine the income at higher figure. It is because, the AO has exercised his quasi-judicial power vested in him, in accordance with law and arrived at a conclusion and such a conclusion cannot be termed as erroneous, insofar as prejudicial to the interests of the revenue, because the Pr.CIT does not feel satisfied with the conclusion. At the best, it can be said that in the opinion of the Pr.CIT, the order of the AO is prejudicial to the interests of the revenue, but that by itself, it does not give power to Pr. CIT for suo motu revision, because first requirement is order is erroneous is absent. In the present case also, the Pr.CIT has not recorded any finding, quo effect that there is any prejudice caused to the revenue or the order is erroneous i.e., reassessment order. In our view, any and every erroneous order cannot be subject matter of revision, because, second requirement also is to be fulfilled i.e., error in the order, which has not been pointed out by the Pr.CIT. As decided in Gabriel India Ltd. [ 1993 (4) TMI 55 - BOMBAY HIGH COURT] there must be some franchise material on record to show that tax which was lawfully exigible has not been imposed or that by application of the relevant statue on an incorrect or incomplete interpretation a lesser tax than what was just has been imposed. Thus there must be material available on record called for by the Pr.CIT to satisfy himself prima-face, that two requisite conditions i.e., erroneous and prejudicial to the interest of the Revenue are present in the order of the AO. Issues under revision are on simplicitor valuation of stamp duty and simplicitor valuation done on the guideline value adopted by the stamp valuation authority, which is just an estimate and cannot be subject matter of revision u/s. 263.See Shri Shanmuga Sundaram Govindaraj Vs ACIT [ 2022 (7) TMI 1150 - ITAT CHENNAI ] Issues raised by the Pr.CIT in regard to difference between the stamp duty value and documentary value for purchase and sale of lands and acquiring of the properties during financial year 2013-14 relevant to the assessment year 2014-15 by the assessee is nothing but an estimate and this is highly debatable issue. Even, in the case of CIT Vs. Mrs.Padmavathy [ 2020 (10) TMI 425 - MADRAS HIGH COURT ] has considered an identical issue and therefore, held that revision is not possible merely because guideline value was higher than the sale consideration shown in the deed of conveyance and hence, same cannot be sole reason for holding that assessment is erroneous, insofar as prejudicial to the interests of the revenue. Hence, we quash the revision order on this facet also. Decided in favour of assessee.
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2024 (9) TMI 863
Validity of reopening of assessment - change of opinion on the part of the AO - re-opening of assessment of the case on the basis of factual information given by the Audit Party - HELD THAT:- It is neither the case of the Revenue that the Audit Party has brought out any new facts (on this issue), which was not disclosed by the assessee during the original assessment nor it is the case of the Audit Party that assessee has not disclosed fully and wholly all material facts necessary for assessee s assessment on the issue of sale of shares of M/s. United Spirits. In this regard, it is noted that while re-opening the assessment, the AO has asserted that the assessee didn t produce any evidence to show that interest paid was part of the cost of acquisition of shares and the details of the interest paid has not been submitted viz., no ledger account of interest as well as loan was submitted etc., which omissions if any, on the part of the AO during the original assessment, could have been interfered by the Ld.PCIT exercising his jurisdiction u/s. 263 of the Act, and not the AO himself u/s. 147 of the Act, which power he doesn t enjoy. Therefore, in the facts of the present case reliance by department of the Hon ble Supreme Court decision in the case of PVS Beedies case [ 1997 (10) TMI 5 - SUPREME COURT ] does not come to the aid of Revenue, because, audit team has not brought any fact which AO has not noticed during the scrutiny assessment on 31.12.2015. Therefore, there is no merits in the grounds of appeal raised by the Revenue, so, it is dismissed and we confirm the action of the Ld.CIT(A) holding the re-assessment bad in law. Re-characterization of Short Term Capital Gains (STCG) from the sale of shares as business income, to be taxed at 30% instead of the beneficial rate of 15% under Section 111A - CIT(A) deleted the addition as the assessee has transacted in share of a single scrip, M/s. United Spirits and that share was held for a short period of time and noted that the AO had neither given any details of the share transaction nor reasons as to why these transactions needs to be treated as business transaction - According to the CIT(A), the AO failed to give the analysis of the frequency of the share transactions nor has given any information about the earlier activities of the assessee [preceding and succeeding years], reversed the action of the AO to treat the income from STCG as business income - HELD THAT:- We concur with the findings of the Ld.CIT(A), because, the AO didn t appreciate the relevant facts and materials in respect of the issue, which shows that the transaction of purchase and sale of single Scrip, M/s. United Spirits was in the nature of trade and hence, it can t be held that the transaction in question was an adventure in the nature of trade. It should be borne in mind that the question whether a transaction is in the nature of trade is a mixed question of fact and law; and the AO has to place on record all relevant facts and materials necessary for the purpose of determining whether transaction is in the nature of trade/adventure in the nature of trade. AO failed to place on record the relevant/primary facts necessary for determining this mixed question of fact as well as law. In order to hold the transaction of shares as business income of the assessee, it is noted that the AO hasn t even given the essential details viz., date of purchase and sale of scrips, holding period of scrips, sales of scrips, purchase/sale price etc., and the AO has not given the details as to whether the assessee was engaged in any such kind of transaction in the earlier/subsequent assessment years. No relevant details whatsoever have been brought on record by the AO. In the light of the aforesaid facts and circumstances of the case, we uphold the impugned action of the CIT(A) who held that transaction in question as not a trading transaction. Therefore, we concur with the action of the Ld.CIT(A) on merits as well and dismiss the appeal filed by the Revenue.
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2024 (9) TMI 862
Validity of reassessment proceedings - new tangible material or fresh information in the possession of AO or not? - as argued reopening was done in respect of unreconciled entries in NOSTRO account and amount received from Government under Agricultural Debt Relief and Debt Waiver Scheme based on the disclosures in annual accounts and in respect of amortization of investments based on the claim in the return of income. HELD THAT:- Having gone through the judgments of the Hon ble Supreme Court of India in the case of Kelvinator of India Ltd. [ 2010 (1) TMI 11 - SUPREME COURT ] and the order of Assessee s own case [ 2022 (6) TMI 745 - ITAT CHENNAI ] we find that reason to believe indispensably be based upon the new tangible material or fresh information in the possession of AO. In this case we find no new tangible material or fresh information in the possession of AO. Therefore,we are of the considered view that if, there is no new tangible material or fresh information in the possession of AO, then if ld.AO assume jurisdiction u/s 147 of the Act it would be nullity and all consequential proceedings pursuant to section 147 is liable to be set aside. Also just before reopening of original assessment, an appeal affect order was given by AO pursuant to order of CIT. The revenue had chance to invoke there issues u/s 263 of the Act but failed to raised these issues in proceedings u/s 263 of the Act. Thus, reopening proceedings set aside - Decided in favour of assessee.
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2024 (9) TMI 861
Revision u/s 263 - case during survey proceedings was found - Applicability of Section 115BBE for taxation of excess cash and stock found during survey proceedings - HELD THAT:- As in response to the question stated that the difference amount was income of M/s Sahil Paints earned from undisclosed sources during the year under consideration AO has ordered the said income liable to taxed under as per provision of section 115BBE of the Act but did not compute the tax in accordance with that provision of the Act. Therefore, on this aspect of the matter we consider the order of the ld. AO prejudicial to the interest of the revenue. Even the ld. AO issued 154 notice but since the proceeding u/s. 263 started it has not been clarified by the either party that order was passed by the ld. AO as per provision of section 154 of the Act or not. Since that aspect has not been disputed we considered the order of the ld. AO prejudicial to the interest of the revenue to that extent as the ld AO while passing the order already ordered to charge that income as per provision of section 115BBE of the Act but the same was not charged. Excess stock found , the bench noted that on this aspect statement of Shri Harsh Gupta was recorded. He was asked to give justification of excess stock found. In response to the question, he stated that he was unable to give justification on the excess stock found and surrendered the amount as income for the year under consideration. In the assessment proceedings, the assessee vide notice u/s 142(1) was asked to give justification as to how the undisclosed income is shown in the ITR filed. The reply of the assessee has been considered and AO noticed that on the same date a survey was also conducted on M/s Mahawar Electric Store related to the family member of the assessee wherein statement of husband of the assessee was recorded stated that at the godown situated at Vikas Colony, Rajgarh the stock of M/s Sahil Paints and M/s Mahawar Electric Store was lying. However, quantum was not differentiated then. Now, assessee submitted that the stock of Rs. 52,76,668/- found during the physical verification includes the stock of Rs. 12,34,965/- related to M/s Mahawar Electric Store. In support of this submission he furnished copy of bills vouchers of the items of the stock that is related to M/s Sahil Paints i.e. Rs. 38,35,321/- (5276668 - 1234965)/- and supporting bills vouchers of items mentioned in stock inventory that related to M/s Mahawar Electric Store for Rs. 12,34,965/-. To that extent the submission of the assessee is found acceptable by the ld. AO. Also the purchase bills of Rs. 2,59,282/- was not entered on the date of survey and the reply to the effect was given vide letter dated 13.10.2017. The assessee in support of it, has not filed supporting bills and the copy of the said letter. Also, the letter is also not found available on record. Thus, the submission of the assessee for the bills of Rs. 2,59,282/- said to be not entered in the books was not acceptable by the ld. AO. Therefore, the excess stock of Rs. 1,83,259/- is found from the business premises of the assessee for which the assessee fails to offer any proper justification. Since the assessee has already disclosed the amount on account of short stock income in the ITR, therefore, the amount of Rs. 1,70,335/- (Rs. 1,83,259 - Rs. 12,924) is held as income of the assessee for the year under consideration on account of unaccounted purchase and added in the total income of the assessee. Since on that aspect of the matter ld. AO consciously not considered to charge that income as per provision of section 115BBE of the Act. Thus, we are of the view that on this aspect of the matter the ld. AO has already applied his mind to considered that income emerges out of the business of the assessee and therefore, on this aspect of the matter we do not consider that the provision of section 263 of the Act shall apply, as the ld. AO has already taken a plausible view on the matter. Thus, ground raised by the assessee stands partly allowed.
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2024 (9) TMI 860
Revision u/s 263 - Rate of tax u/s 115BBE for the excess stock and cash found during the survey - assessee has purchased excess stock, out of Books of Accounts, using unexplained funds, therefore, the same is covered under the definition of unexplained expenditure u/s 69C whereon tax would be charged at special rates under the provisions of section 115BBE whereas as per Computation Sheet, tax was charged at Normal Rates - HELD THAT:- When the assessment has been completed after conducting all the enquiries and verification and ld. AO has taken the plausible view on the matter the ld. PCIT cannot quashed that assessment order u/s. 263 of the Act. As it is transpired from the record of the proceedings, in the present case, no presumption can be drawn that the AO had not applied his mind to the aspects for verification of income so disclosed by the assessee. Be that as it may, when the issue of applicability is examined by the ld. AO and the assessee has given a detailed reply about the applicability of the provision section 115BBE of the Act, the ld. PCIT cannot impose her view on the view taken by the ld. AO. We get support of our view from the decision of apex court in the case of Malabar Industrial Co. Ltd. [ 2000 (2) TMI 10 - SUPREME COURT ] where in the Court has taken the view that the phrase prejudicial to the interests of the revenue under Section 263 has to be read in conjunction with the expression erroneous order passed by the assessing officer. Every loss of revenue because of an order of the assessing officer cannot be treated as prejudicial to the interests of the revenue and where two views are possible and the Income Tax Officer has taken one view with respect to which the Commissioner does not agree, it cannot be treated as an erroneous order prejudicial to the interests of the revenue , unless the view taken by the Income Tax Officer is unsustainable in law. Decided in favour of assessee.
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2024 (9) TMI 859
Penalty u/s 271(1)(c) - assessee has not filed the ROI - bonafide belief of the assessee that income is non-taxable, and TDS was deducted on income - HELD THAT:- The assessee was a non-filer of ROI for the impugned assessment year. But there was sufficient amount of TDS was deducted on income. After receiving the notice under section 148, the return was filed which was before receiving of the recorded reason and the tax was paid in full. In the assessment ld. AO accepted ROI and tax paid and no other findings for concealment of income was found. The assessee is a welfare fund and not in the activity of profit making. All the personnel are employed in the State of Maharashtra. We respectfully relied on the order of Sudhir kumar Chottu bhai [ 2000 (3) TMI 14 - BOMBAY HIGH COURT] and City and Industrial Development Corporation of Maharashtra Limited [ 2012 (9) TMI 331 - ITAT MUMBAI] The levy of penalty is unjustified. So, the penalty under section 271(1)(c) is quashed. Appeal of assessee allowed.
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2024 (9) TMI 858
Addition being cash deposits as unexplained money u/s 69A - taxpayer who was engaged in the business of retail sale of ladies' garments - as argued cash deposited is out of opening balance, opening recovery and income earned during the year and offered for tax cannot be treated as unexplained money u/s 69A - HELD THAT:- Since the assessee has claimed to have filed her return of income, on a presumptive basis, by showing income from the business of retail sale of ladies' garments, then in the absence of documentary evidence, it can be reasonably presumed that the cash deposits could be from unaccounted sales from the business which the assessee had not disclosed in the return of income. As relying on JAYESH JAGAT PAREKH VERSUS INCOME TAX OFFICER 34 (2) (1) , MUMBAI [ 2024 (8) TMI 1361 - ITAT MUMBAI] we direct the AO to restrict the addition to 8% of the addition made u/s 69A of the Act. As a result, grounds raised in assessee s appeal are partly allowed.
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2024 (9) TMI 857
Ex-parte order without granting sufficient opportunity of being heard to the appellant - Rejection of book results/accounts u/s 145 - estimating the profits @ 4% of the total contractual receipts - CIT(A) dismissed the appeal of the assessee on the ground that the assessee did not pursue his appeal before the CIT(A) and did not furnish any supporting documentary evidence or written submission despite having been given sufficient opportunity of being heard - HELD THAT:- We have considered the above submissions and think it proper to remand the matter back to the file of the CIT (A) to decide the issue on merit after affording reasonable opportunities of being heard to the appellant considering the non-compliance due to Covid-19 Pandemic. The appellant is also directed to make compliance before the Ld. CIT (A) and explain its case on merit.
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2024 (9) TMI 856
Estimation of income - Bogus purchases - Addition restricted by CIT(A) to 4% - HELD THAT:- Now we have binding juduicial precedents of Honourable Bombay High court in Mohommad Haji Adam Co [ 2019 (2) TMI 1632 - BOMBAY HIGH COURT] We find that the assessee has shown the N.P. @ 5.97% on total purchases of Rs. 367,24,497/-. Out of that the tainted purchases are stated to be Rs. 30,67,810/-. Assessee has shown that the goods which were purchased from M/s Keshav Impex have been sold for Rs. 33,06,992/- whereas the purchases are 30,67,810/-. As the assessee has shown profit of approximately 10% which is higher than the regular N.P. shown by the assessee, naturally no further addition is required to be made. Therefore, we direct AO to delete the addition. Appeal of the assessee is allowed.
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2024 (9) TMI 855
Grant of interest u/s 244A - additional interest claimed by the assessee for the delayed refund - assessee argued that the AO had incorrectly calculated the interest due on the refund and AO should have first adjusted the refund against the interest component and then against the tax component, as per the principles of equity and fairness. Whether the assessee is entitled to additional interest under section 244A(1A) and whether the AO correctly adjusted the refund against the interest component? HELD THAT:- In the present case, the order giving effect to the CIT(A)'s order was passed on 04.05.2016, and the refund was granted on 05.07.2017. Therefore, the provisions of section 244A(1A) are applicable to the period from 01.06.2016 to 05.07.2017. The decision in Tata Sons Pvt. Ltd. [ 2023 (12) TMI 875 - ITAT MUMBAI] is directly applicable to this case. Tribunal held that the refund should be first adjusted against the interest component. While holding so the Tribunal emphasised that when an assessee pays a tax demand, the amount is first adjusted towards any interest due, and only the remaining balance, if any, is applied towards the tax payable. It also stated that there is no specific provision in Section 244A regarding the adjustment of a previously issued refund for calculating the interest owed by the revenue to the assessee on the refund due. Since the law is silent on this issue, the tribunal opined that fairness requires applying the same principles to refunds as are applied when collecting taxes. The assessee is not asking for interest on interest but merely for a fair method of adjusting refunds. This tribunal in the case of Nirma Ltd. [ 2024 (4) TMI 258 - ITAT AHMEDABAD] also ruled in favour of the assessee emphasizing the need for consistent and fair treatment by the revenue in tax matters, particularly concerning the adjustment and calculation of interest on refunds. We direct the AO to re-compute the interest under section 244A of the Act by first adjusting the refund against the interest component and thereafter against the tax component. The AO is also directed to grant additional interest u/s 244A(1A) of the Act for the period from 01.06.2016 to 05.07.2017 - AO is directed to re-compute the interest and refund due to the assessee - Appeal filed by the assessee is partly allowed.
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2024 (9) TMI 854
Revision u/s 263 - PCIT who found that assessee had claimed wrong deductions u/s 54B and 54F - HELD THAT:- Though the payment is claimed to have been made out of sale consideration but the Ld. AR has not submitted any documentary evidence i.e., copy of sale deed, details of mode and source of payment etc. in respect of purchase of both properties to prove that purchase of land for claiming deduction u/s 54B of the ACt was genuine. The assessee has submitted copy of sale deed of agricultural land at Kholwad but no copies of purchase deed have been submitted before us. In absence of such primary evidence, the claim of assessee of new investment for the purpose of deduction u/s 54B is not established. It was because of the same fact i.e., failure to furnish documentary evidence to prove purchase of these two agricultural lands that the Ld. PCIT and his predecessor had set aside the assessment orders. Before us also, the assessee has not supported his claim of payment with necessary documentary evidence. Therefore, it is a clear case of assessment order, passed by AO, without proper verification, inquiry and application of mind to the fact and relevant law on the impugned issue. We have clearly found that the assessee was not eligible for deduction u/s 54B in respect of both properties for the reasons stated above. We find that the Hon ble Rajasthan High Court in case of CIT vs. Emery Stone Mfg. Co. [ 1994 (7) TMI 36 - RAJASTHAN HIGH COURT] held that the powers of revision u/s 263 can be exercised by the CIT if he considers that any order passed by AO is erroneous in so far as it is prejudicial to the interests of revenue. Allowing certain deductions without proving the claim or without proper verification or in ignorance of the provisions of law are the various instances on the basis of which the order can be considered as prejudicial to the interests of revenue and can be set right in revisional jurisdiction. In a case where there is non-application of mind with regard to any particular provisions of law, the proper course is to set aside the assessment order and sent back to the AO for determining the said issue, in accordance with provisions of law, so that the necessary evidence come on record. The facts of the present case are clearly covered by the ratio of the above decision. The other decisions relied upon by the Ld. PCIT also furthers the cause of revenue. In view of the above factual and legal positions, we find no merit in the argument of the Ld. AR of the assessee and dismiss the appeal of the assessee.
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2024 (9) TMI 853
Undisclosed income of the assessee - Addition u/s 69A - Peak credit method application - HELD THAT:- CIT(A) satisfied with the business activities of the assessee and collection of cash, deposit in the bank accounts - CIT(A) reproduced the details of peak credit wherein, he considered opening balance in bank account, opening cash balance, opening balance of advance as on 01.04.2010 and income from money lending business less drawings other than family members. CIT(A), the peak credit and net fund available for explaining the peak credit determined the balance unexplained amount - Further, we find in order to come to such conclusion, the ld. CIT(A) placed reliance in the case of S. Kulanthaian [ 2019 (3) TMI 2065 - ITAT CHENNAI] who is relative of the assessee, wherein, the ITAT affirmed the order of the ld. CIT(A) in working the peak credit method. CIT(A) relied on the decision of the Hon ble Jurisdictional High Court in the case of PCIT v. S. Anbukannan [ 2019 (5) TMI 1129 - MADRAS HIGH COURT ] who is relative of the assessee, which held the method of peak credit was rightly adopted for addition of the alleged undisclosed income of the assessee and is a well settled common principle We find no infirmity in the order of the ld. CIT(A) in adopting peak credit method placing reliance of decision in the case of PCIT v. A. Anbukannan [ 2019 (5) TMI 1129 - MADRAS HIGH COURT ] and the case of assessee s relative in S. Kulanthaian [ 2019 (3) TMI 2065 - ITAT CHENNAI] - Thus, the ground raised by the Revenue fails and the appeal is dismissed.
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2024 (9) TMI 852
Late fees u/s 234E on account of late filing of TDS statement - order u/s 200A - whether there existed reasonable and bonafide cause which led to delay in filing of the TDS Statement? - HELD THAT:- In the instant case, admittedly, there is a delay in filing the TDS statement and there is no allegation that the A.O. has violated any of the provisions of Section 234E or Section 200A of the Act, the adjustment made by the A.O. on account of late filing fee u/s 234E of the Act therefore cannot be deleted on the ground of reasonable cause. In view of the same, we agree with the findings of the ld CIT(A) and are not inclined to examine the merits or veracity of claim of reasonable cause as so claimed by the assessee and the same are thus dismissed at the very threshold and levy of late filing fee u/s 234E is hereby confirmed. Decided against assessee.
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2024 (9) TMI 851
Addition u/s 69 r.w.s. 115BBE - excess stock found during survey in the business premises of assessee - Income so surrendered on account of excess stock during the course of survey - business income or unexplained income - AO s accepted the return figure without variation but has applied the tax rate u/s 115BBE of the Act, on the ground that no day to day stock register has been maintained by the assessee - HELD THAT:- Respectfully following the observation in the case of Bajargan Traders [ 2017 (11) TMI 388 - RAJASTHAN HIGH COURT ] and the decision M/s A.P. Knit Fab [ 2024 (5) TMI 637 - ITAT CHANDIGARH ] we are of the opinion, that the income so surrendered on account of excess stock during the course of survey cannot be brought to tax under the deeming provisions of section 69 of the Act 1961, and the same has to be assessed to tax under the head business income and the application of section 115BBE does not arise in this case. It shall be charged to tax at normal rates. As such the appeal of the assessee is allowed.
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2024 (9) TMI 850
Validity of the re-assessment order passed beyond the time limit stipulated u/s 144C(13) r.w.s. 143(3) - Reckoning of time limit u/s. 144C(13) for passing the Final Assessment Order - relevance of date of Directions of the DRP passed u/s. 144C(5) of the Act are received by the AO - HELD THAT:- In the instant case, it is not in dispute that the order of the ld. DRP was received by the Assessing Officer on 03/10/2018 and the last date for giving effect to the order of the DRP was one month from the end of the month in which the direction was received i.e., the last day to give effect was 30/11/2018. However, the assessment order in question has been framed on 06/12/2018, which is beyond the prescribed time limit. As decided in the case of Envestnet Asset Management (India) (P.) Ltd. [ 2014 (12) TMI 879 - ITAT COCHIN ] dealing with the similar issue has observed that where the Assessing Officer passed an assessment order after expiry of one month from the end of the month in which the directions of DRP was received in terms of Section 144C(13) of the Act, the said order was set aside for being barred by limitation. Similar view was also taken in the case of Dentsply India (P.) Ltd. v/s. ITO [ 2019 (5) TMI 1505 - ITAT DELHI ] Respectfully following the decisions supra and also considering the provisions of Section 144C(5) and (13) of the Act, we find that the directions of the ld. DRP u/s 144C(5) were issued on 25/09/2018 and the same were communicated to the Assessing Officer on 03/10/2018 and the time limit to give effect to the order of the ld. DRP was expiring on 30/11/2018 but since the AO failed to adhere to the said provisions and gave effect to the order of the ld. DRP on 06/12/2018, the impugned assessment orders u/s 144C(13)/147/143(3) of the Act for Assessment Year 2010-11 and similarly for Assessment Year 2011-12, are barred by limitation and, therefore, are quashed. Thus, the additional ground raised by the assessee are allowed.
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2024 (9) TMI 849
Validity of order passed u/s 143(3) r.w.s. 144C - TP Adjustment - rejection of aggregation approach as adopted by the appellant and rejection of comparables of the ld. TPO - as argued TPO had not considered the direction of the Hon ble DRP, so section 144C(13) will be applied for contravening the direction of the Hon ble DRP - A.R. argued that ld. TPO rejected the aggregation approach adopted by the appellant and held that the said transaction needs to be benchmarked separately. HELD THAT:- In our factual consideration, we find that the ld. TPO has passed the rectified order u/s 92CA(3) r.w.s. 144C(5) in pursuance of the direction of the Hon ble DRP. We accordingly fully rely on the order of Hon ble DRP. The method taken by the assessee, i.e. TNMM should be taken instead of ROCE and the aggregation method will be applicable for the TP Study. We further direct that the matter should be remitted back to the file of ld. TPO/AO for further adjudication on the two issues as directed above and the comparables should be taken by considering the Rule of Consistency. No such comparable is allowed in TP study related to the transaction of purchase of raw material and consumables and export of finished goods. TPO should follow the direction of Hon ble DRP and the issue of purchase of fixed assets applicability of ROCE will not be accepted and ld. TPO should make a separate re-workings of the margin, vis-a-vis the international transaction of purchase of fixed assets pursuant to the rejection of comparables of DRP s direction as retained the original transfer pricing adjustment vis-a-vis impugned transaction of purchase of fixed assets. In our considered view, the matter is restored to the file of ld. TPO/AO for further calculation of TP adjustment by considering the direction of the Hon ble DRP. Appeal of the assessee allowed for statistical purposes.
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2024 (9) TMI 848
Denial of claim of the assessee opting for the provisions of Sec. 115BBA - delay in filling of Form.No.10-IC - HELD THAT:- We find that the assessee has complied with the conditions as per CBDT circular discussed above. Whereas the CIT(A) order was passed on 27-07-2023, but the CBDT circular No.19/2023 was issued on 23-10-2023 and the assessee has filed the Form. No. 10-IC on 13.11.2023. And these details of filling of Form.No.10 IC and CBDT circular were not available at the time of processing of return of income U/sec 143(1) of the Act with the AO. Accordingly, we set aside the order of the CIT(A) and restore the issues to the file of the assessing officer to verify and examine the claim and consider the applicability of provisions under section 115BAA of the Act opted by the asseessee. And we allow the grounds of appeal for statistical purpose.
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Customs
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2024 (9) TMI 847
Import of second hand digital multifunction printing and copying machines - HELD THAT:- A batch of writ petitions pertaining to the same product were disposed of by order of this court in [ 2023 (12) TMI 198 - MADRAS HIGH COURT ] where it was held that ' That there shall be a direction to the respondents to consider the plea of the petitioners to release the goods by way of provisional release on condition that, the petitioner shall pay/deposit the enhanced duty amount.' Petition disposed off.
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2024 (9) TMI 846
Classification of imported goods - Quick Lime - to be classified under Customs Tariff Heading (CTH) 2522 1000 of the Customs Tariff Act, 1975 or under CTH 2825? - Levy of interest - HELD THAT:- The issue as to whether Quick Lime would be classifiable under CTH 2522 or CTH 2825 stands decided by the Delhi Bench of the Tribunal in the case of M/S. JINDAL STAINLESS (HISAR) LTD. VERSUS COMMISSIONER OF CUSTOMS NEW DELHI [ 2020 (8) TMI 743 - CESTAT NEW DELHI] wherein the Bench has held 'The ratio of decisions of Tribunal in the case of COMMISSIONER OF CENTRAL EXCISE, HYDERABAD-III VERSUS M/S BHADRADRI MINERALS PVT. LTD. [ 2015 (10) TMI 1836 - CESTAT BANGALORE] is applicable to the facts of the instant case where it was held that the purity of the burnt lime is 70 to 75% only. Therefore, in view of the Board s Circular as well as HSN Explanatory Note, the product manufactured by the respondent has to be classified under CTH 25 only.' Thus, Quick Lime is classifiable under CTH 2522 1000, as contended by the appellant, and not under CTH 2825, as is being canvassed by the Revenue. Levy of interest - HELD THAT:- Admittedly, the Customs Duty and interest had been paid by the appellant during April and May 2018 whereas the instant Show Cause Notice was issued on 29.03.2019. Therefore, this has to be taken as an amount deposited in the course of investigation . Since it has now been held that the goods are to be classified under CTH 2522 only, the amounts so paid by the appellant to the Revenue are not to be retained by them and are required to be refunded to the appellant, along with interest - In the cited case-law of M/S. INDORE TREASURE MARKET CITY PVT LTD. VERSUS COMMISSIONER OF CENTRAL GOODS AND SERVICE TAX AND CENTRAL EXCISE, INDORE [ 2024 (2) TMI 372 - CESTAT NEW DELHI] and M/S. PARLE AGRO PVT. LTD. VERSUS COMMISSIONER, CENTRAL GOODS SERVICE TAX, NOIDA (VICE-VERSA) [ 2021 (5) TMI 870 - CESTAT ALLAHABAD] , the Delhi and Allahabad Benches of the CESTAT have held that in case of refund of an amount paid during the investigation stage, the Revenue is required to pay interest at the rate of 12%. Appeal disposed off.
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Securities / SEBI
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2024 (9) TMI 845
Offence u/s 205(1A) and 205A of Companies Act - criminal proceedings under Section 482 of Cr.P.C - accused company declared a dividend of but failed to deposit the amount in a separate bank account within five days and did not disburse it to the shareholders within thirty days - respondent-M/S. Securities and Exchange Board of India (SEBI) admits that the amount has actually been paid. He, however, submits that under the statutory provisions, the appellants do not have an escape and therefore, the High Court has rightly declined to quash the proceedings. HELD THAT:- Considering the facts and circumstances of the case, we feel that interest of justice would be best served if the appellants are put to terms for the violation committed by them instead of allowing the trial to proceed. We, accordingly, impose a fine of Rs. 25,00,000/- (Rupees Twenty Five Lakhs) to be paid by the appellants which shall be deposited in Account No. 90552010165915 of the Armed Forces Battle Casualties Welfare Fund, Canara Bank, Branch South Block, Defence Headquarters, within eight weeks from today. This order is being passed in the peculiar facts and circumstances of the case and would not be treated as a precedent. If the appellants, after depositing the said amount in the aforesaid fund file proof of deposit with the Registry of this Court within ten weeks from today,the criminal proceedings initiated by the respondent-SEBI would stand closed.The appeals stand allowed to the above extent.
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PMLA
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2024 (9) TMI 844
Money Laundering - Bribe - proceeds of crime - obtaining illegal gratification from the passengers arriving at Chennai from foreign countries for clearance of their unaccompanied baggage by charging less or no duty through private person - HELD THAT:- Admittedly the Petitioner herein had fixed the bribe amount and received illegal gratification through Shri G Kumar for the fraudulent clearance of goods in commercial quantity in the guise of unaccompanied baggage during his tenure in the UB (Air) Unit. Hence, mere acquisition of bribe amounts to proceeds of crime and thereby falls under section 3 of PMLA. Hence, such a contention is ought to be rejected. Pertinently, the Division Bench of this Court, in the case of Padmanabhan Kishore Vs. Directorate of Enforcement [ 2021 (4) TMI 263 - MADRAS HIGH COURT ] supported the views raised by the petitioner in the present revision petition. However, the said case was taken by way of an appeal before the Hon ble Supreme Court of India by the Enforcement Directorate in the case of Directorate of Enforcement Vs. Padmanabhan Kishore [ 2022 (11) TMI 53 - SUPREME COURT ]. Therefore, the ground raised on restrospectivity by the petitioner deserves no merit consideration - involvement in corrupt activities itself is Proceeds of Crime within the definition of Section 2(1)(u) of PMLA. That being the scope of pre-amended Section 3, question of discharging the petitioners on the ground that they did not possess the Proceeds of Crime after 2009, is untenable and is rejected. The Trial Court considered both the pre-amended Section 3 and the principles laid down by the Apex Court in Vijay Madanlal Chaudhary's case [ 2022 (7) TMI 1316 - SUPREME COURT ], the scope of Section 2(1)(u) in conjunction with Section 3 has been considered by the Trial Court in a right direction as held by the Hon ble Supreme Court of India and thus, we do not find any infirmity in respect of the findings made by the Trial Court in the order impugned. The impugned order stands confirmed and accordingly, the present Criminal Revision Petitions are dismissed.
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Service Tax
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2024 (9) TMI 843
Demand of service tax and penalties - challenge to notices for recovery of government dues issued on 02.02.2024 - grievance of the writ petitioner is that the services rendered by the writ petitioner which have been found under the realm of Service Tax by the Assessing Authority is actually exempted under the Mega Exemption N/N. 25/12 dated 20.06.2012. HELD THAT:- Issue Notice, Returnable in four weeks. Matter be listed posted after four weeks to be listed on 17.07.2024.
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2024 (9) TMI 842
Valuation of service tax - inclusion of reimbursable expenses in the taxable value - reverse charge mechanism - HELD THAT:- The demand is made for not including the expenses incurred for providing the service and reimbursed. The issue is settled by the decision of the Hon ble Supreme Court in the case of Intercontinental Consultants and Technocrats, Pvt Ltd [ 2018 (3) TMI 357 - SUPREME COURT] where it was held that 'only with effect from May 14, 2015, by virtue of provisions of Section 67 itself, such reimbursable expenditure or cost would also form part of valuation of taxable services for charging service tax.' The demand of service tax for the impugned period cannot sustain and requires to be set aside. The impugned order is set aside - Appeal allowed.
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2024 (9) TMI 841
Classification of services - Intermediary Service or Export of Services? - providing services to the overseas educational institution from where they were getting certain commission on the basis of agreements with the overseas colleges/universities - HELD THAT:- The Adjudicating Authority vacated the demand of service tax on the Appellant by relying upon the decision of the Tribunal in the case of M/s Sunrise Immigration Consultants Private Limited vs. CCE ST, Chandigarh [ 2024 (9) TMI 409 - CESTAT CHANDIGARH ] and has held that the services rendered by the Appellant do not fall in the definition of Intermediary Service as defined under Rule 2(f) of the Place of Provision of Service Rules, 2012. Since the issue involved in the present case has already been decided in favour of the Appellant by the Tribunal in the case of M/s Sunrise Immigration Consultants Private Limited vs. CCE ST, Chandigarh holding that the services provided by the Appellant amount to Export of Services and not Intermediary Services . The learned Commissioner (Appeals) was wrong in remanding the matter back to the Adjudicating Authority; accordingly, the impugned order is set aside - appeal allowed.
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2024 (9) TMI 840
Refund of service tax paid - input services - service tax paid on input services used for export of Cut and Polished Diamonds for the period October, 2015 to March, 2016 refundable in terms of N/N. 41/2002-S.T. dated 29.06.2012 or not - denial of CENVAT Credit. Refund of service tax paid - input services - service tax paid on input services used for export of Cut and Polished Diamonds for the period October, 2015 to March, 2016 refundable in terms of N/N. 41/2002-S.T. dated 29.06.2012 or not - HELD THAT:- On perusal of the notification under which refund of service tax has been claimed, it transpires that the refund is being allowed in respect of service tax paid on the specified services used in respect of export of goods at the prescribed schedule of rates, subject to fulfillment of the conditions mentioned in clause (a) to (h) of paragraph 1; clause (a) to (h) of paragraph 2. It is the fact on record, that the original authority had scrutinized the refund claim filed 30.09.2016 and after recording the findings that the appellants have followed all the prescribed procedure and have also fulfilled all the conditions of the said Notification dated 29.06.2012, had sanctioned the refund. In order to claim the refund of service tax paid on the input services on export of goods as per the Notification No.41/2012-S.T. dated 29.06.2012, the only requirement in respect of the address of the appellants-exporter is that they should have taken registration as exporter with the Export Promotion Council sponsored by Ministry of Commerce which in the present case is the Gem Jewellery Export Promotion Council. Further, the appellants-exporter have also registered with the jurisdictional Service Tax authorities vide Service Tax registration No.AAAFL0356LST001. Hence, it is found that the requisite conditions for registration of the details with the departmental authorities have been duly fulfilled in the case. CENVAT Credit - denial on the ground that the address mentioned in the invoices were not the registered address of the appellants - HELD THAT:- It is found from the records of the case that an application for change of address in ST-2 Certificate issued for the appellants earlier, was made by them to the jurisdictional Service Tax authorities through online on 04.04.2014 and in physical form of letter dated 28.04.2014. This has been duly received by the department by acknowledging it on 29.04.2014, for single premises at their new address viz., GE-2022, 2nd Floor, Bharat Diamond Bourse, Bandra Kurla Complex, Bandra (East), Mumbai 400 051 . Further, it is also found that the said new address as above was also duly incorporated in the ST-2 certificate. Further, there is no dispute with respect to use of input service in the provision of final products being exported; except for the procedural aspect with respect to correct address. Hon ble Madras High Court have held in the case of COMMISSIONER OF SERVICE TAX-III, CHENNAI VERSUS CUSTOMS, EXCISE SERVICE TAX APPELLATE TRIBUNAL, CHENNAI M/S. SCIOINSPIRE CONSULTING SERVICES (INDIA) PVT LTD, CHENNAI [ 2017 (4) TMI 943 - MADRAS HIGH COURT] have held that right of the exporter for refund cannot be denied on account of not correlating the location of registered address. Thus, where the appellants-exporter have duly registered their address and the change in the address duly incorporated in the ST-2 Service Tax Registration Certificate, there are no merits in the impugned order to the extent of denying refund of input service tax paid in respect of export goods. The impugned order is set aside - appeal allowed.
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2024 (9) TMI 839
Refund of Service tax - input service used in export of goods - services provided by the Commission- Agency located outside India - N/N. 41/2007-S.T. dated 06.10.2007,- as amended - period April- 2008 to December, 2008 - time barred or not - HELD THAT:- There is an established internationally acceptable principle that taxes and duties should not be exported, to enable a level playing field in the international market for exports. Hence, indirect taxes on inputs and input services are to be refunded or rebated/reimbursed. As a number of input services are used in export of goods, the Government had provided a mechanism for such refund/remission of service tax involved in such exports. On plain reading of the instructions of the Ministry of- Finance dated 17.04.2008, it transpires that service tax paid on input services used in exports are required to be refunded by a mechanism provided therein. Such refund of service tax paid was introduced as trade facilitation measure with an aim to expeditiously process and sanction the refund claims, by allowing the exporters to file periodically (for each quarter) and with close monitoring at the highest level in the CBEC s field formations - The second notification dated 07.07.20209 further facilitated by specifically including a number of taxable services for which refund claims can be submitted by exporters and the time period for filing such refund claims was made for longer period of one year from the date of export of the relevant export of goods. It is also found that service provided by a commission agent located outside India and engaged under a contract or agreement or any other document by the exporter in India, to act on behalf of the exporter, to cause sale of goods exported by him is covered under the taxable category of sub-clause (zzb) of Section 65(105) of the Finance Act, 1994 and it was provided as one of the eligible services on which refund is permitted in the aforesaid notifications. Since there was certain doubts raised about the applicability of the superseding notification to the past exports made during the application of the earlier notification dated 06.10.2017, the Government had issued instructions on 01.01.2010 by clarifying that such refund benefits should be extended to those exports covered in the earlier period also - On careful perusal of the aforesaid instructions, it transpires that the Government had provided the refund of service tax involved in respect of exports, as a nature of benefit by simplifying the scheme further in providing certain minimum conditions such as (i) filing of refund claims within stipulated one year period, and (ii) that such refund claim has not been filed earlier with the departmental authorities. On perusal of the refund application dated 31.03.2010 filed by- the appellants, it is clearly seen therein that at Sl. No.6, they have specifically declared that no refund on this account has been claimed- or received by them earlier. Further, for the refund relating to the period April, 2009 to June, 2009 i.e., quarter ending 30.06.2009, the appellants have filed the refund on 31.03.2010, i.e., within stipulated- one year period. Thus, on account of both the conditions stipulated in the instructions dated 01.01.2010, the appellants fulfill the requirements for sanction of refund claim made before the departmental authorities. Further, there was no finding that these conditions have not been fulfilled by the authorities below in the impugned order. There is no merit in the impugned order to the extent that it had denied the refund claim of Rs.16,17,016/- by upholding the original order dated 06.01.2016. Accordingly, the impugned order dated 18.05.2018 is liable to be set aside as being factually incorrect and not legally sustainable. The impugned order dated 18.05.2018 is set aside - Appeal allowed.
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2024 (9) TMI 838
CENVAT Credit - input service - outward transportation service - period from 1st April, 2006 to 31st October, 2007 - HELD THAT:- The issue is also settled by the Hon ble Apex Court in the case of COMMISSIONER OF CENTRAL EXCISE, BELGAUM VERSUS M/S. VASAVADATTA CEMENTS LTD. [ 2018 (3) TMI 993 - SUPREME COURT] , wherein the Hon ble Supreme Court has held ' Thus from 1-4-2008, with the aforesaid amendment, the Cenvat credit is available only upto the place of removal whereas as per the amended Rule from the place of removal which has to be upto either the place of depot or the place of customer, as the case may be.' As the issue has already been settled up to 01.04.2008, the assessee is entitled to claim the cenvat credit on outward goods transportation service up to the place of removal. Thus, the appellant is entitled to take the cenvat credit on outward transportation service. Accordingly, the demand confirmed in the impugned order is set aside and no penalty is imposable on the appellant. The impugned order is set aside - appeal allowed.
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Central Excise
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2024 (9) TMI 914
Denial of SSI exemption under N/N. 08/2003CE dt.01.3.2003 - clearance value of sealing machines manufactured by each of the Units (called as mother units) - dummy Units created and controlled by Sepack - Confiscation - penalty - HELD THAT:- The undisputed facts are that the appellant(M/s. Sepack) during the relevant period engaged in trading, inter alia, of sealing machines. These sealing machines were manufactured by various independent units (DMUs) and supplied to Sepack at the price mutually agreed. The appellant after affixing their brand name and packing the sealing machines cleared to the end consumer at a price higher than the price at which the same were purchased from different units. Each of the DMUs engaged in the manufacture of sealing machines was registered with the respective village panchayats, but not registered with the Central Excise Department claiming SSI exemption under Notification No.08/2003-CE dated 01.3.2003 up to the aggregate value of clearances in the respective financial years being less than Rs. 150 lakhs. The allegation of the Revenue is that the individual units which are described as Decentralized Mother Units (DMUs) are dummy units being created and controlled by Sepack only for the purpose of claiming SSI exemption benefit under N/N. 8/2003-CE dated 01.03.2003 on the turnover of each of the said Units. Secondly, it is also alleged by the Revenue that the product sealing machines at the premises of the DMUs were not fully finished and attained the character of a marketable commodity; the sealing machines became complete and emerge only after the quality checking, and other processes in the premises of Sepack including the processes of branding, labelling, warranty agreement which enriches its value as well as make the sealing machines marketable. Thus, manufacturing of sealing machines becomes complete only after these incidental and ancillary processes undertaken by the appellant at their premises. Hence, Sepack is the manufacturer of the sealing machines. The learned Commissioner has observed that there is a financial flow-back from the appellant to DMUs inasmuch as the Sepack identify the supplier of raw materials who would supply the inputs at the least possible price to the DMUs; the reduction in the production cost by various methods including procurement of raw materials at a cheaper price and through other mutual efforts benefitting both Sepack and the DMUs; the benefit that accrues to Sepack by such means would definitely be considered as a financial flow-back to Sepack - The mother units started placing purchase orders of base and rocker arms with the diecasting units and could able to achieve better efficiency, uniformity and cost reduction and they could able recoup the investment on moulds within one year and returned the advances made by the mother units. Later the diecasting units were investing in the moulds themselves and recovering the cost through amortisation. The said statement of Shri Biju Philipose has been verified by the Department from the ledger account submitted and no discrepancy was noticed as recorded in the show-cause notice. Thus, the finding of the Commissioner that there is a financial flow back by way of investment in moulds cannot be sustained as it is within the normal practice of the trade. It is to be borne in mind that the entire allegation of the Revenue rests on the premises that all these individual DMUs were dummy units of Sepack, impliedly, these units do not have separate physical existence in practice and their existence was on paper only. On the contrary, from the various statements, it could easily be discerned that there has been commercial and healthy negotiations between Sepack and all DMUs by exchanging ideas and sharing of cost data and suggesting to arrive at the optimum cost of production so as to maximise the profit in the interest of both parties. Thus, it cannot be interpreted that the individual DMUs have no existence and all the units belong to Sepack and fully controlled by Sepack. In the event, the DMUs were in existence only on paper, then there was no need to conduct periodical monthly meetings and deliberate on the issues of reduction in cost and contributing to the efficiency in production. The second alternate allegation of the Revenue is that the sealing machines cleared by the DMUs to the Sepack were incomplete, since the processes of branding, packing and placing warranty cards have been undertaken by the Sepack in their premises. It is the Revenue s contention that these processes are ancillary and incidental; therefore, resulted into manufacture of sealing machines - it is found from the record that the Sepack initially carry out the process of inspection before delivery of sealing machines at their premises and accepts the same when it is found complete and also carry out a second time inspection before selling the goods to the consumers, which itself indicate that when they receive the sealing machines, the same was complete and ready to be used condition. Thereafter, Sepack affixes its brand name, placing the warranty card and packing the sealing machine, clears the same to their customers. Hence, it is incorrect to say that incomplete / unfinished sealing machines were received by Sepack from the DMUs. Thus, it could not be established by the Revenue that Sepack are required to pay duty by clubbing the turnover of the individual DMUs, denying each of the units the benefit of N/N.8/2003-CE dated 01.03.2003 and also considering Sepack as manufacturer of sealing machine during the period 2009 to 2014, on the price of sealing machines cleared by them. In the result, on merit, the impugned order cannot be sustained. The confiscation of seized goods, imposition of penalty on Sepack, penalty on other appellants under Rule 26 of Central Excise Rules, 2002 become academic and hence not deliberated - the impugned order is set aside and the appeals are allowed.
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2024 (9) TMI 837
Jurisdiction - Tribunal acted as the appellate authority under Section 35C of the Central Excise Act, 1944 properly or not - Hon'ble Tribunal does not explicitly address/verify whether oxygen manufactured from the plant of the Respondent was used in the manufacture of Sulphuric Acid - non-speaking order - N/N. 67/95-CE dated 16.03.1995. HELD THAT:- he Tribunal has rightly held that the issue raised in the appeals are no more res integra as the same has already been settled by the Hon ble Supreme Court in the case of UNION OF INDIA OTHERS VERSUS M/S. HINDUSTAN ZINC LTD. [ 2014 (5) TMI 253 - SUPREME COURT] which is followed by the Tribunal in the case of STERLITE INDUSTRIES INDIA LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, TIRUNELVELI [ 2015 (11) TMI 1247 - CESTAT CHENNAI] . The Tribunal has, extracted the relevant observations from the decision in the case of Sterlite Industries India Ltd, wherein the decision of the Hon ble Supreme Court is also referred to and it was held that ' The only condition is that sub-rule (2) of Rule 6 of CCR is required to be complied with. In the present case, as per sub-rule (2), appellant manufactured oxygen used in the manufacture of excisable product and they had no obligation to maintain separate accounts for oxygen used in the manufacture of Sulphuric Acid. It is established that appellant did not use oxygen produced in the manufacture of Sulphuric Acid. Accordingly, conditions of Notification No. 67/95 are complied. ' The Tribunal, in the case of Sterlite Industries India Ltd has considered that the waste gas which emerges out of process of purification of copper concentrate in Sulphur Dioxide which is further converted into Sulphur Trioxide which is absorbed in Sulphuric Acid to form Oleum and this Oleum is dissolved in water to get purest form of Sulphuric Acid. The Tribunal has also referred to the various provisions of the Environment (Protection) Rules, 1986 which provides that it is mandatory for the respondent to prevent emission of oxides of sulphur in Smelter and Convertor of copper and it stipulates that waste gases are to be utilized in the manufacture of Sulphuric Acid so as to prevent emission of Sulphur Dioxide. Thus, the findings of fact recorded by the Tribunal in the impugned order cannot be termed as perverse or contrary to the evidence on record. In the overall view of the matter, it is convincing that the decision of the Tribunal is correct and requires no interference. Appeal dismissed.
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2024 (9) TMI 836
Levy of Excise Duty - income shown in Profit and Loss Account can be presumed as income from sale of dutiable goods and subjected to excise duty in absence of any other evidence or not - CENVAT credit availed based on valid invoices and admittedly upon receipt of inputs/input services - denied on the ground of erroneous filing of NIL returns during the period - violation of principles of natural justice. HELD THAT:- The Adjudicating Authority has not provided the vital report given by the Divisional Assistant Commissioner to the appellant. Thus, he has gravely erred by not complying the principles of natural justice. Moreover, regarding difference between the ER1 return and profit and loss account the appellant claimed that they have submitted all the documents which were also not considered properly by the adjudicating authority. Therefore, the impugned order is suffered from non-compliance of principles of natural justice. The impugned order is set aside - matter remanded to the Adjudicating Authority - Appeal allowed by way of remand.
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2024 (9) TMI 835
Valuation of Excise Duty - non-inclusion of VAT realized from the customers in the assessable value - demand alongwith interest and penalties - invocation of extended period of limitation - penalty. Includability of the sales tax concession retained by the Appellant in the assessable value for the purpose of levy of Central Excise duty - HELD THAT:- The issue is no more res integra as the Hon ble Supreme Court in the case of COMMISSIONER OF CENTRAL EXCISE, JAIPUR-II VERSUS M/S. SUPER SYNOTEX (INDIA) LTD. AND OTHERS [ 2014 (3) TMI 42 - SUPREME COURT ], has held that the sales tax concession retained by the assessees is required to be added in the assessable value for the purpose of levy of Central Excise duty - By relying on the above decision of the Hon ble Supreme Court, it is held that the sales tax concession retained by the Appellant is required to be added in the assessable value for the purpose of levy of Central Excise duty. Extended period of limitation - Penalty - HELD THAT:- In the present case, it is observed that the ld. adjudicating authority has failed to show any positive act of suppression on the part of the Appellant. The details of VAT collected and retained by the Appellant are reflected in the audited Profit Loss account and balance sheet of the impugned periods. Accordingly, by following the above Circular issued by the Board, it is held that extended period is not invokable in this case and for the same reason, penalty under Section 11AC of the Central Excise Act, 1944 is also not imposable. Appeal disposed off.
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2024 (9) TMI 834
Applicability of Exemption N/N. 167/71-CE dated 11th September 1971 on prototypes of equipment and machinery used in the pharmaceutical industry - products cleared between November 2008 and March 2015 - HELD THAT:- The notification is a relic of antiquity when the process of clearance was vastly different and central excise officers could have had greater oversight of manufacture/clearance. The altered paradigm of clearances during the period of dispute, insofar as practice was concerned, and the absence of any stipulations in the changed circumstances, insofar as enforceability was concerned, was not considered by the adjudicating authority. It is moot if the exemption intended by the notification can be denied on speculative premises without requiring, let alone prescribing, certification, maintenance of records or inspection of premises for each clearance. These were not sought for at any stage; nor does the impugned order demonstrate the nature and characteristics of each impugned clearance. The findings are, thus, inadequate for disposal of the allegations in the notice. Matter back to the original authority for a fresh decision that denies the benefit of exemption notification on clear finding of non-compliance with the conditions expressly contained therein - impugned order set aside.
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2024 (9) TMI 833
Availment of inadmissible CENVAT credit and utilization of same for payment of central excise duty - inputs sourced in the context of the entire manufacturing operations through various job workers - contravention of provisions of Central Excise Rules, 2002 - HELD THAT:- M/s AIPL, Ludhiana had disputed the allegation raised by the department that they had no facility for manufacture of copper ingots inside the factory premises etc., at the initial stage of DGCEI investigation, by filing a civil suit against the local Commissioner of Central Excise and Customs before the Civil Judge (Senior Division) Ludhiana. In disposal of such application filed by M/s AIPL, under Order 26 Rule 9 CPC this case had culminated into passing of an order dated 04.10.2006, wherein the said Civil Judge had appointed a Local Commissioner who shall visit the spot and report about the actual and factual position of machinery lying installed in the factory of the plaintiff M/s AIPL. The conclusion arrived in the impugned order that the CENVAT credit taken on the basis of invoice issued by M/s AIPL, Ludhiana is without a prescription of material is contrary to the factual position, as indicated above. Further, during cross examination of the manager Shri Jaswantbhai Shah, he had clearly stated that he had received the invoice along with the material from M/s AIPL, Ludhiana. Therefore, there are no basis or any other evidence for coming to a conclusion that the receipt of copper ingots etc., by the appellants from M/s AIPL, Ludhiana, is improper. The Tribunal in case involving similar facts and for the same disputed supplier M/s AIPL, Ludhiana, in the case of M/S. STI INDUSTRIES VERSUS COMMISSIONER OF CENTRAL EXCISE S.T., VAPI [ 2015 (7) TMI 224 - CESTAT AHMEDABAD ] have held that the CENVAT credit cannot be denied, as the documents produced show that M/s AIPL was in existence and supplied the material with invoices. Thus, the appellants have duly availed the CENVAT credit, there are no merits in the impugned order to the extent of it had denied CENVAT credit facility and in confirmation of the adjudged demands on the appellants - appeal allowed.
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2024 (9) TMI 832
Clandestine removal - 411 MT of Portland Cement - shortage of cement - absence of any stock taking not being conducted by the Department - HELD THAT:- It is borne out of records that at the time of visit of Anti Evasion team on 01.02.2010, the Account s Manager, Shri Dinesh Agarwal had admitted that a quantity of 411 MT of cement were removed from their factory without payment of duty leviable on the value of the goods and sold in cash under the direction of Shri Samhu Agarwal, Director of the Appellant Company. Shri Sambhu Agarwal, Director in his statement recorded on 25.02.2010 accepted that the said goods were cleared without payment of duty. He only denied having given any specific direction to the Account s Manager for the sale of the said goods. In the present case as the duty was paid on the very next day and prior to the due date of filing the central excise return, no interest is leviable in the matter. As for the penalty payable @ one percent, the same as per law is to be calculated from the month following the month in which such duty was payable. Thus under the circumstances, as the duty itself was paid within the said month, question of imposition of penalty u/s 11A(6) would also not arise in the present matter. As for the appellants meek plea of ascertainment of clandestinely cleared quantity in the absence of stock taking, it is stated that it is a settled legal principle that admitted facts need not be proved. The order of the lower authority is upheld to the extent of confirmation and appropriation of duty amount leviable. I set aside the orders of the lower authority regarding imposition of penalties on the appellants - Appeal allowed in part.
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CST, VAT & Sales Tax
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2024 (9) TMI 831
Challenge to order of attachment - Priority of charge of Multi-State Co-operative Bank over Sales Tax Department for recovery of dues - Section 26 (E) of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 - HELD THAT:- There is no material placed on record by the Sales Tax Department that the attachment of the secured asset was made in accordance with the provisions of the Maharashtra Land Revenue Code, 1966 and the Rules framed thereunder. As held by the Full Bench in Jalgaon Janta Sahakari Bank Ltd and another [ 2022 (9) TMI 163 - BOMBAY HIGH COURT ], an attachment made under the Code should be followed by a proclamation as required by the Rules framed thereunder. If the said procedure has not been followed, then the Sales Tax Department would not be in a position to claim priority notwithstanding the fact that the order of attachment was passed prior to 24/01/2020. The affidavit filed on behalf of the Sales Tax Department is silent in that regard. Petition allowed.
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