Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
September 20, 2024
Case Laws in this Newsletter:
GST
Income Tax
Customs
FEMA
PMLA
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
Highlights / Catch Notes
GST
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Tax Appeal Revived: Court Overrules Limitation Objection on Certified Copy.
Income Tax
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New monetary limits set for Income Tax appeals - Rs. 60L for ITAT, Rs. 2Cr for HCs, Rs. 5Cr for SC to reduce litigation.
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Auroville Foundation approved for social/statistical research - tax exemption for 5 years from 2025-26.
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Tax offense compounding timelines in guidelines invalid, exceeded statutory provisions. Fresh consideration ordered.
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Reopening tax assessment challenged, dismissed - no apparent error to review.
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Assessee's claim for export deduction upheld; reassessment disallowing it exceeded jurisdiction.
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Company under voluntary liquidation denied MAT exemption, book profit computation mandated despite inability claims.
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Cash deposit details inadequate to reopen tax assessment. Court quashes reassessment proceedings.
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Reopening of assessment upheld for undisclosed foreign bank account income despite denial of natural justice pleas.
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Real estate firm's case: Transfer pricing, PF/ESI, cash transaction rules examined.
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Tax on unexplained cash deposits; income sources unproven.
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Financial institution's takeover of immovable properties from guarantor for loan repayment leads to taxable capital gains.
Customs
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Streamlining customs exchange rate updates: automated SBI rates, holiday adjustments, manual overrides.
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New rules for Export Units' imports delayed till 2024 after concerns raised.
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Prolonged litigation allows discontinuation of bank guarantee, enabling refund after two decades of prejudice.
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Brush Cutters Misdeclared as Reapers to Evade Duty; Company Penalized for Knowingly Misclassifying Imports.
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Customs duty dispute: High seas transaction value upheld by court over notional additions.
DGFT
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Government caps export incentive scheme benefits for different exporter categories.
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India allows yearly import of 17,000 MT fresh areca nut from Bhutan through 4 land ports without price restriction.
FEMA
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US-Indian citizen penalized for illegal farmland purchase in India despite compliance.
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Foreign Exchange Violation: Payments Without RBI Approval Penalized.
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Penalty under FEMA for company's violations; in-charge liability reversed due to lack of knowledge and due diligence exercised.
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Forex company's appeal allowed, currency released; individual penalized for selling dollars at premium.
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Non-resident bank & CEO penalized for facilitating unauthorized forex transactions.
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Illegal foreign remittances disguised as import charges upheld - appellant controlled firms receiving funds sans actual imports.
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Forex violations by individual: Penalties reduced, some charges dropped, seized currencies released.
State GST
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IGST refund regularized for exporters who paid taxes on imported inputs.
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Solar cookers, sprinklers, poultry machinery parts get 12% GST; bulk agri packs exempt; govt subsidized supplies regularized.
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GST clarifications: Railways exemptions, reinsurance regularization, real estate authority fees exempt, bank incentives non-taxable, long-term accommodation exempted.
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Simplified Filing Process for CSD Refunds in West Bengal GST.
Indian Laws
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Old debt revived by cheque, attracts penal action for dishonor.
Law of Competition
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Competition law procedures: Evidence, penalties, fees, experts, monitoring.
PMLA
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Money Laundering Case: Bail Granted on Investments Not Prima Facie 'Proceeds of Crime'.
SEBI
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SEBI streamlines listing rules for non-convertible securities, expediting timelines and embracing digital modes.
Central Excise
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Govt scraps Special Additional Excise Duty on Crude Oil Production effective 18th Sept 2024.
Articles
Notifications
Circulars / Instructions / Orders
News
Case Laws:
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GST
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2024 (9) TMI 1067
Doctrine of merger - Refund of IGST - zero rated supply - export of services - reverse charge mechanism - adjustment of interest amount - time limitation - HELD THAT:- Applications for exemption from filing a certified copy of the impugned judgment and exemption from filing official translation are allowed. Delay condoned.
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2024 (9) TMI 1066
Maintainability of appeal - time limitation - appeal rejected on the ground that the same was barred by limitation, as the self attested copy of the order was not made available within time fixed as per Rule 108 of UPGST/CGST Rules - HELD THAT:- This Court in the case of Visible Alpha Solutions India Private Limited [ 2024 (2) TMI 718 - ALLAHABAD HIGH COURT] has set aside the order on the ground that appeal cannot be dismissed on the ground of limitation for non-filing of certified copy of the order. Thus, the impugned order cannot be sustained in the eyes of law and the same are hereby quashed - the matter is remanded to the authority concerned for deciding afresh by passing a reasoned and speaking order, after hearing all the stakeholder, within a period of two months from the date of production of certified copy of this order - petition allowed by way of remand.
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2024 (9) TMI 1065
Seeking provisional release of goods - 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 dated 23.11.2023 in W.P.Nos.29673 of 2023 batch [ 2023 (12) TMI 198 - MADRAS HIGH COURT] where it was held that 'Sl.No.(b) of Notification No.5/2015-2020, dated 07.05.2019, states that all electronics and IT goods notified under the Electronics and IT Goods (Requirement of Compulsory Registration) Order, 2012, as amended from time to time are restricted .' Petition disposed off.
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Income Tax
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2024 (9) TMI 1064
Review petition - Validity of reopening of assessment u/s Section 148 on the ground being without jurisdiction - error apparent on the face of the record justifying the court to exercise its power of review under Order 47 Rule 1 CPC - HELD THAT:- In the the present case, no final order has been passed. Moreover, the issue of jurisdiction has also been raised for the first time in the review petition. It is a settled legal proposition that wherever statutory remedy is available the High Courts could not normally interfere in the writ jurisdiction under Article 226 or supervisory jurisdiction of the Constitution of India. As such, no apparent error on the face of record is made out so as to interfere with the order passed in the writ petition. Accordingly, the present review petition is liable to be dismissed. Under the garb of filing a review petition, a party cannot be permitted to repeat old and overruled arguments for reopening the conclusions arrived at in a judgment. The power of review is not to be confused with the appellate power which enables the Superior Court to correct errors committed by a subordinate Court In our considered opinion, none of the grounds available for successfully seeking review as recognized by Order 47 Rule 1 CPC are made out in the present case. The Apex Court in the case of S. Bhagirathi Amaal Vs. Palani Roman [ 2007 (12) TMI 456 - SUPREME COURT] has held that in order to seek review, it has to be demonstrated that the order suffers from an error contemplated under Order 47 Rule 1 CPC which is apparent on the face of record and not an error which is to be fished out and searched. A decision or order cannot be reviewed merely because it is erroneous. Thus no error apparent on the face of record warranting interference in the order impugned.
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2024 (9) TMI 1063
Nature of expenses - expenditure incurred towards professional and consultancy charges - HELD THAT:- We find from the nature of the services that were provided by the consultant that the expenses were incurred in connection with obtaining benefits that were of an enduring nature. The findings of the Assessing Authority, the First Appellate Authority, and the Appellate Tribunal, relying, inter alia, on the decision of the Supreme Court in Brooke Bond India Ltd. [ 1997 (2) TMI 11 - SUPREME COURT] and Punjab State Industrial Development Corporation Ltd [ 1996 (12) TMI 6 - SUPREME COURT] therefore do not require any intervention. Claim of expenditure incurred in relation to IPO of shares - The claim for deduction of IPO related expenses, also cannot be legally countenanced. We find ourselves unable to accept the submission of the learned counsel for the appellant that an artificial distinction can be made between direct and indirect expenses incurred in connection with the IPO, and that although Section 35D permits only the deduction of direct expenses, the indirect expenses must nevertheless be permitted as a deduction under Section 37 of the Income Tax Act. In our view, there is no distinction to be made between direct and indirect expenses that are eligible for deduction under Section 35D. On the facts of the instant case, we find that Section 35D permits only certain capital expenses as deductible and not others. Thus, once it is an admitted fact that the appellant has already been granted the benefit of deduction of direct expenses incurred in connection with the IPO, he cannot claim deduction of the indirect expenses incurred in connection with the same object as revenue expense because his classification of the expense as direct or indirect does not really alter the nature of the expense itself which continues to remain a capital expense. Disallowance of payments towards employees' contribution to PF and ESI before the due date of filing of the Return of Income - HELD THAT:- Issue already covered against the appellant by the decision reported in CIT v. Merchem Ltd. [ 2015 (9) TMI 560 - KERALA HIGH COURT] Taking note of the said decision, the said question is therefore answered against the assessee and in favour of the revenue. Disallowance of prior period expenses - claim filled in revised return of income within the time limit prescribed u/s 139(5) - cannons of taxation to impose a tax liability on the same amount twice - HELD THAT:- Issued have been remanded to the assessing authority by the Appellate Tribunal, and in the proceedings that ensued, the assessing authority has allowed the claim of the appellant. Taking note of the said development, we find that the Questions (e) and (f) do not now arise for consideration in this appeal
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2024 (9) TMI 1062
Disallowing the claim for deduction of the cost of trademarks over a three year period - claim for the subsequent years when proportionate expenditure on trademarks referable to the first and second assessment after their acquisition years having been allowed by the Revenue in the preceding two assessment years - HELD THAT:- In the present case, it is clear from the factual matrix that the assessee has merely a right to use the trademark for a period of 36 months. Having regard to clear enunciation of law as held in the case Devidas Vithaldas Co [ 1972 (1) TMI 5 - SUPREME COURT] , the orders passed by the authorities are unsustainable. Further, as noticed above, reliance placed by the authorities on Sections 32 (1) and 43 (6) of the IT Act is ex facie untenable and liable to be rejected. As in the case of Jubiliant Foodwork Pvt. Ltd. Order [ 2014 (8) TMI 353 - DELHI HIGH COURT] a coordinate Bench of the Delhi High Court was considering as to whether franchise fees and expenditure incurred on advertisement was a revenue expenditure or a capital expenditure held that CIT(Appeals) and Tribunal have rightly come to the conclusion that; (i) no new asset came into existence on account of payment of franchise fee and (ii) the rights under the agreement were only for the tenure of the agreement and no enduring benefit was derived by the assessee. Further, it was not an expenditure incurred for acquisition of source of profit, but enabled the respondent-assessee to run the business profitably. The fixed assets of the assessee remained untouched and no enduring asset came into existence. As already noted above, the brand or the trademark in question was not owned by the respondent-assessee - Decided in favour of assessee. Disallowing claim for deduction u/s 80JJAA - permanent employees solely employed for less than 300 days during the relevant previous years - HELD THAT: - This issue is covered in the case of Texas Instruments India (P) Ltd. [ 2021 (4) TMI 1049 - KARNATAKA HIGH COURT] and said submission is not disputed by Revenue. Hence, substantial question of law answered in favour of the assessee and against the Revenue.
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2024 (9) TMI 1061
Reopening of assessment - Deduction u/s 10B - petitioner's claim for deduction u/s 10B countenanced on the basis of the information found in the course of a survey conducted - whether the deduction was rightly allowed in view of the fact that the units were not new units? - assessment u/s 143 (3) was completed disallowing the benefit u/s 10B on the ground that the processing of iron ore does not amount to manufacture within the meaning of section 10B and also Amona and Chitradurga units are not new units HELD THAT:- Tribunal allowed the claim for deduction under Section 10B. One of the questions that was raised in the Tax Appeal was whether the deduction was rightly allowed in view of the fact that the units were not new units. This Court in its order admitting the appeal vide order dated 23.09.2013 did not formulate this question. However, this Court in its judgment [ 2021 (5) TMI 466 - BOMBAY HIGH COURT] has noted the argument of Revenue to the effect that the Amona and Chitradurga units were not new units. The subject matter of Tax Appeal was the entitlement of the petitioner to a claim for deduction under Section 10B of the profits that are derived from its export oriented undertakings situated at Amona, Chitradurga and Codli. It is this claim which was adjudicated by the appellate authorities in the original assessment proceedings. Respondent no. 1 wants to reassess this claim by relying on certain additional evidence found in the course of the survey which according to him supports its case that the deduction under Section 10B could not be allowed. According to us, such a course of action cannot be countenanced as it would be in the teeth of the third proviso to Section 147. For the reasons stated above, in our opinion, respondent no. 1 has acted wholly without jurisdiction when he has sought to assume jurisdiction to reassess the petitioner's income so as to once again disallow a claim for deduction under Section 10B. Decided in favour of assessee.
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2024 (9) TMI 1060
Complaint u/s 276C (2) r.w.s. 278 (b) - Petitioners evaded tax and failed to carry out self-assessment - review of the order [ 2024 (7) TMI 1524 - BOMBAY HIGH COURT] Petition filed by the Applicants was disposed of with liberty to the Applicants to approach the Trial Court for filing the discharge application - HELD THAT:- The question before this Court is only with regard to order granting liberty to the Applicant to approach the learned Trial Court seeking discharge. Applicants has now pointed out that complaint being a private complaint, provisions of Section 258 of the Cr.P.C. are not applicable. Said Contention is supported by the decision of this Court in Unique Trading Company [ 2024 (2) TMI 405 - BOMBAY HIGH COURT] Accordingly, order is required to be recalled/varied.Application for review is therefore disposed of in above terms.
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2024 (9) TMI 1059
Rejection of application for compounding made u/s 279(2) on the basis of the Central Board of Direct Tax's Compounding Guideline dated 16 September 2022 - HELD THAT:- We note that while dealing with the validity of the time frames as prescribed in Compounding Guidelines, a Division Bench of the Court in Vikram Singh vs. Union of India [ 2017 (4) TMI 621 - DELHI HIGH COURT ] above clause is not one prescribing a period of limitation for filing an application for compounding. It gives a discretion to the competent authority to reject an application for compounding on certain grounds. Again, it does not mean that every application, which involves an offence committed by a person, for which the complaint was filed to the competent court 12 months prior to the receipt of the application for compounding, will without anything further, be rejected. As is manifest from the aforesaid extracts, the Court had found that Section 279 (2) constructs no time lines with in which an application for compounding could be made. The Circular thus clearly travels beyond the statutory provision and erects a condition of disability which is not even contemplated by the Act. In that view of the matter, the impugned order cannot possibly be upheld. We, accordingly, allow the writ petition and set aside the order dated 18 January 2024. The matter shall in consequence stand remanded to the Chief Commissioner of Income Tax (TDS) who shall consider the application for compounding afresh and bearing in mind the observations made here in above.
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2024 (9) TMI 1058
Reopening of assessment - Investment in the equity shares of Indian subsidiary of the writ petitioner - whether a capital account transaction? - HELD THAT:- As decided in Angelantoni Test Technologies [ 2024 (1) TMI 426 - DELHI HIGH COURT] wherein held that the fundamental premise of the Respondent that the above investment by the Petitioner in the shares of its subsidiary amounted to income which had escaped assessment was flawed. The question of such a transaction forming a live link for reasons to believe that income had escaped assessment is entirely without basis and is rejected as such. Thus, reassessment proceedings set aside - Decided in favour of assessee.
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2024 (9) TMI 1057
Action of the respondents seizing cash vide Seizure memo - cash seized from the petitioners has been handed over to the Income Tax Department, in pursuance to the requisition sent by the Income Tax Department u/s 132A - direction to return the seized cash to the petitioners - HELD THAT:- The stand of the respondents that the cash amount seized from the petitioners has been handed over to the Income Tax Department in pursuance to the requisition sent by the Income Tax Department, remedy for release of the cash lies before the Income Tax Department and the petitioners are free to approach the Income Tax Department. So far as the notice issued under Section 74(1) of CGST/SGST Act is concerned, the petitioners are granted one week further time to file reply, and if the petitioners file the reply on or before 12.04.2024, the same shall be considered. The adjudication proceedings shall be undertaken in accordance with the law.
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2024 (9) TMI 1056
Estimation of income - bogus purchases - CIT(A) deducted the Value Added Tax ( VAT ) amount and other expenses and restricted the disallowance to 12.5% of the balance amount of bogus purchases as confirmed by ITAT - HELD THAT:- AO did not accept the evidence but instead, made independent inquiries and added the amount in assessee s income. AO, however, has not disputed the sales made by assessee out of such purchases. CIT(A) has given detailed findings for justifying addition to the extent of 12.5% only. The Courts have time and again held that only the profit element in the alleged bogus purchases amount can be treated as income, particularly, when the sales has not been disputed. CIT(A) restricted the addition by estimating the gross profit at 12.5%. Whether that is a right estimate is a question of fact. The ITAT has accepted it. Therefore, we see no reason to interfere. Decided against revenue.
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2024 (9) TMI 1055
Two simultaneous proceedings - Income Tax Act and Black Money Act - Money on account of alleged undisclosed foreign income and assets - whether proceeding should be initiated under the Income Tax Act or Black Money Act or under both? - petitioner submits that both the authorities cannot proceed simultaneously in respect of the same undisclosed money. HELD THAT:- Appellant has brought to the notice of this Court that against the very same money, by the leave of this Court by the order dated 24th September, 2021, petitioners have already approached the Income Tax Settlement Commission and the proceeding before the Income Tax Settlement Commission is pending due to stay granted by this Court which has been extended till 25th February, 2022, Settlement Commission is not proceeding in the case in question. It is clarified that the pendency of this writ petition will not be a bar for the Income Tax Settlement Commission to proceed in the matter in accordance with law and to pass a final order, preferably within six months from the date of communication of this order. Liberty to mention.
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2024 (9) TMI 1054
Revision u/s 263 - MAT applicability u/s 115JB - assessee had not computed income under the provisions of Minimum Alternate Tax and had not computed book profit on the basis of claim that provisions of MAT were not applicable on him - D/R vehemently argued that there is no exception carved out for a company under voluntary liquidation for the purposes of taxation u/s 115JB. HELD THAT:- Any assessee covered under the provisions of Section 115JB of the Act will necessarily have to compute book profit for the purposes of MAT, until and unless such assessee is exempted specifically within the said provision itself. Clearly, this appellant s case does not fall within any of the exceptions contained in the said section and thus, the applicability of Section 115JB of the Act is clearly applicable in the present case and to this extent, the action of ld. Pr. CIT is upheld and ground no. 2 raised by the appellant is dismissed. Helplessness of the appellant in computing Book Profit for the purposes of MAT - As seen from the extract of submissions filed by the appellant there is a table indicating that for AYs 2022-23 to AY 2023-24, the assessee has disclosed a total income for the two assessment years. It is clear that whatever is the system of accounts being followed by the assessee, it is very much possible to determine profits and losses or to put it in the language of the Companies Act, 2013 and Section 115JB of the Act, preparing a statement of profit and loss which would lead to computation of MAT. This fact would be an additional factor against the appellant when he claims that because of the provisions of Companies Act, 2013/1956, he is unable to work out book profits for determining MAT liability. Appeal filed by the assessee is dismissed.
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2024 (9) TMI 1053
Validity of reassessment proceedings - reasons recorded the AO stated that an information was received from the office of ITO, Ward 33(1) that the assessee has deposited cash of Rs. 10 lakhs or more in savings bank account - assessee submits that the AO in the reasons recorded did not mention the exact amount of escapement and also did not mention in which bank account the assessee has deposited cash - HELD THAT:- The reasons are general and very vague. It appears that the AO is not even in possession of bank account of the assessee before recording reasons for reopening of assessment. The reasons recorded did not specify the exact amount of cash deposit made by the assessee and the name of the bank, the account number of the assessee and also the date of transaction. All these goes to show that the AO do not possess any credible information to form a belief that income had escaped assessment. Thus, the reassessment made u/s 143(3) r.w.s. 147 of the Act is hereby quashed in view of the above discussion. Ground no. 1 of grounds of appeal of the assessee is allowed.
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2024 (9) TMI 1052
Validity of Order passed u/s 147 r.w.s. 143(3) - undisclosed income from foreign bank account - Non providing sufficient opportunities and violation of principle of natural justice are dismissed - HELD THAT:- Once having denied the ownership of the accounts before the AO, the assessee cannot take a plea that no sufficient opportunity was allowed by the AO to explain the credit entries in the foreign bank account. It is found that the Ld. CIT(A) had also allowed sufficient opportunities to the assessee to explain the transactions in the foreign bank accounts by admitting the additional evidences filed before him. The assessee had made submissions before the AO in the course of remand proceeding as well as before the Ld. CIT(A) after receipt of the remand report. Even if the Ld. CIT(A) passed his order within a month of the remand report, it is not the case that the he didn t consider the submissions of the assessee on the rejoinder of the remand report. Rather, the ld. CIT(A) has passed a detailed order considering and taking into account the submissions of the assessee and has substantially reduced the additions as made by the AO. We, therefore, do not find any instance of violation of natural justice in this case. The assessee was allowed sufficient opportunities to explain the transactions in the foreign bank accounts. The case laws relied upon the assessee are not found applicable to the peculiar facts of this case as discussed above. Therefore, the grounds taken by the assessee in respect of providing insufficient opportunities and violation of principle of natural justice are dismissed. Reopening u/s 147 - Mere deposits in the bank account cannot lead to the conclusion or even inference that the income chargeable to tax has escaped assessment - The Explanation-2 to Section 147 of the Act enumerates certain conditions where the income chargeable to tax shall be deemed to have escaped assessment. As per Clause (d) of the said Explanation where a person is found to have any asset (including financial interest in any entity) located outside India, then such a case will be deemed to have escaped assessment. It is found that Explanation (2)(d) of Section 147 of the Act was directly applicable in this case. There is no dispute to the fact that the foreign bank accounts, which were confronted to the assessee in the course of his statement recorded u/s 132(4) of the Act during the search, were not disclosed in the income tax returns filed with the Department. In view of the specific provision of deemed escapement of income in respect of foreign assets (bank account of the assessee), the case laws as relied upon by the Ld. Sr. Counsel in this respect are not found applicable to the facts of the present case. Whether reopening was based on borrowed satisfaction? - We do not find any merit in this objection. The details received by the AO from FT TR Division of CBDT was an information based on which the AO had formed his opinion that the income chargeable to tax had escaped assessment - AO had recorded a detailed reasons (as reproduced above) and he had considered all the information as available including the statement of the assessee recorded u/s. 132(4) of the Act and the documents confronted therein as well as the information received through FT TR Division; analysed the information as available and thereafter recorded his detailed, independent and logical reason for escapement of income. We don t find any semblance of borrowed satisfaction on the part of the AO. Whether reason for reopening was vague, scanty and non-specific? - contention of the assessee that the reason for reopening was vague, scanty and non-specific and the nature of underlying transaction was not specified in the reason is also not found correct - AO has discussed in detail the reason for reopening of the cases on account of undisclosed foreign bank accounts of the assessee. The background of the case, the information available with the AO, the explanation of the assessee has been discussed in detail and taken into account, while the AO formed his opinion that the foreign bank accounts of the assessee were undisclosed and that the income had escaped assessment. Therefore, the ground taken by the assessee in this regard is found to be baseless, and is dismissed. The facts of the case laws as relied upon by the assessee in this respect are found to be totally different and not directly applicable to the facts of the present case, as the nature of underlying transaction was specified in the reasons recorded in this case. Whether quantification of escaped income is necessary? - The quantification of escaped income was necessary only if the case was reopened u/s.149(1)(b) of the Act, which stipulates that the cases beyond 4 years cannot be reopened unless the income escaped assessment is Rs. 1 Lakh or more. In the present case, the provision of Section 149(1)(c) of the Act was applicable and no quantification was required if the cases were reopened in respect of escapement of any income in relation to any asset located outside India. This specific provision the case laws relied upon by the assessee are not found applicable in the present case as those cases are not related to foreign account cases. Therefore, the objection of the assessee regarding non-quantification of escapement of income is without any merits, and is dismissed. Whether reopening was barred by limitation? - In view of the express language of the section 147 of the Act for reopening of cases up to 16 years in respect of foreign assets, the retrospective nature of amendment made vide the Finance Act, 2012 and the judicial pronouncements as discussed above; we are of the considered opinion that the AO had rightly reopened the assessment for the A.Ys. 2000- 01 to 2005-06. Further, in view of the discussions in para-29 to para-50 above we don t find any merit in the objection taken by the assessee against reopening of the cases for the A.Y. 2000-01 to 2009-10. Accordingly, the grounds taken by the assessee in this regard are dismissed. Completion of unabated assessment without incriminating material - DR submitted that in spite of being confronted with all the documentary evidences which clearly established that the foreign bank accounts belonged to the assessee, the assessee was in denial mode and didn t answer the specific questions about the foreign account transactions as evident from the seized documents. According to the CIT. DR, the statement recorded during the search also constituted incriminating material and the AO had rightly based his additions on this statement. No evidence was brought on record by the assessee in support of his contention that the foreign bank accounts belonged to his sister - AO had rightly made the addition after confronting the evidences available with the Department in the course of statement recorded during the search, which constituted incriminating material. Our finding on incriminating material - The essence of the judgement is that the incriminating material found during the search gives the AO the jurisdiction to assess or reassess the total income u/s 153A of the Act of the unabated/completed assessment. In the absence of any incriminating material unearthed during the search the AO would not have the jurisdiction to proceed in the unabated/completed year(s) only on the basis of other material. However, once the jurisdiction is assumed by the AO on the strength of incriminating material found during the search, the AO has to assess or reassess the total income of the unabated year not only on the basis of incriminating material found during the search but also taking into account the other material as available with him as well as the return of income. We have to, therefore, examine as to what were the incriminating materials found during the search and what were the other materials available with the AO, to assess/reassess the total income of the assessee. In the present case, incriminating materials regarding non-disclosure of foreign bank accounts in the Income Tax returns, was already available with the department in the form of the documents which were confronted to the assessee in the course of the statement recorded during the search. The correctness or authenticity of these other incriminating materials has not been questioned. Therefore, any evidence found in the course of search that corroborates the other materials as already available with the department, partakes the character of incriminating material found during the search. Such corroborating evidences found during the search may be documentary or oral and the same has to be considered by the AO during the search assessment as per section 153A of the Act. Therefore, we have to examine whether any documentary or oral evidence was found in this case during the search, which corroborates the incriminating material already available with the department regarding existence of foreign bank accounts of the assessee. Obviously, these documents were not available with the Revenue on the original date of search, else questions would have been put to the assessee in this respect on the date of original search itself. However, in the statement recorded on 27/01/2016 there is no mention in the questions raised by the Revenue as to from where these documents, which were confronted to the assessee, were found. Be that as it may, there is no doubt that evidences for foreign bank accounts as available with the Revenue and the bank statement of the foreign bank accounts of the assessee were confronted to the assessee in the course of statements recorded during the search u/s 132(4) of the Act. We have to, therefore, decide whether the statements recorded during the search can be considered as an incriminating material. Whether statement u/s 132(4) is incriminating material? - The statements recorded during the search wherein the assessee was confronted with other incriminating materials was also incriminating evidence collected during the search and such incriminating material/evidence can be utilised to compute the total income in the course of assessment u/s 153A of the Act. The statements were recorded with specific reference to the circumstantial evidences found during the search as well as the other materials available with the Department and such statement is incriminating evidence collected during the search which certainly can be used as evidence in any proceedings under the Act as expressly mandated by virtue of the explanation to Section 132(4) of the Act. Therefore, the grounds taken by the assessee in respect of completion of unabated assessment without incriminating material and against considering the statement u/s 132(4) as incriminating evidence, are dismissed. Deposits in foreign bank accounts - It is evident from the above statement that the cheques in the name of the assessee were deposited in the foreign bank account with Merill Lynch Bank, which is a conclusive proof that those bank accounts belonged to the assessee. The assessee couldn t explain how the cheque drawn in his name was deposited in the bank account, if the account belonged to her sister, as contented. When the assessee was specifically asked to produce documentary evidence that the accounts belonged to his sister, no documentary evidence could be provided and an evasive reply was given by the assessee that the documents will be available with the banker or Mr. Chaturvedi. If so, why the documents couldn t be obtained and furnished by the assessee. Not only the assessee had signed the account opening forms for all the foreign bank accounts, but he was also in constant touch with Merrill Lynch through his telephone number as acknowledged in the statement. The evidences as available with the Revenue leave no doubt that the assessee and the assessee only, along with his wife, were the actual owner of all the foreign bank accounts. Therefore, the action of the AO to treat all the foreign bank accounts as belonging to the assessee is upheld. The grounds taken by the assessee and his wife that they being settlors, no addition could have been made in their hands are rejected. Credit entries in the bank accounts as income of the assessee and accordingly made the addition in the hands of the assessee and his wife, 50% on substantive basis and 50% on protective basis - As rightly pointed out by the assessee only the real income has to be taxed as held by the Hon ble Supreme Court in the case of Godhara Electricity Co. Ltd. [ 1997 (4) TMI 4 - SUPREME COURT ] The real income can be worked out only after considering all the entries i.e., on the credit side as well as on the debit side as appearing in the foreign bank accounts. CIT(A) had rightly considered the totality of all the transactions as appearing in the foreign bank accounts and allowed relief to the assessee in respect of the expenses as evident from the bank accounts. The contention of the Revenue that all the additions were in the nature as mentioned in section 68 or section 69 of the Act is also not found correct. AO had reproduced the description of the credit entries appearing in the bank accounts in the assessment order from which it is found that large number of credit entries were in respect of dividend, interest, STCG, LTCG etc. and the assessee was entitled to claim deduction for the expenses incurred in earning the income of these nature - CIT(A) had rightly allowed the deduction for expenses as evident from the bank account itself. As a result, the ground taken by the Revenue against the deduction for expenses, as allowed by the ld. CIT(A), is dismissed. Addition on account of receipts in undisclosed foreign bank accounts described as spot transactions - Additional evidences as furnished by the assessee in the course of appeal were forwarded to the AO for verification in the remand proceeding. CIT(A) has given a finding that the AO had confirmed full verification of all the entries with ledgers. It is further mentioned in the order of the CIT(A) that spot transactions depicted in Hinduja Bank Account were contra (transfer) entries from one currency account to another currency account which were neither any receipt nor any payment - revenue had not come up with any facts or any specific submission as to how the finding as given by the CIT(A) was not correct. No reason to interfere with the order of the Ld. CIT(A) in this respect. The ground taken by the Revenue in this regard is, therefore, dismissed. Applicability of section 68/69A of the Act in respect of the credit entries appearing in the foreign bank accounts - One of the objections of the assessee is that credit entries in the foreign bank accounts cannot be treated as deemed income u/s 68 or 69A as the assessee had not maintained any books of accounts - No merit in the objection raised by the assessee. The foreign bank account ledgers were the accounts of the assessee only, the only difference being that it was maintained by a 3rd party i.e. the Bank. All the entries in the bank account ledgers pertained to the assessee only which was in essence the books of accounts of the assessee in respect of his bank transactions - CIT(A) had rightly upheld the applicability of section 68/69A of the Act in respect of the credit entries appearing in the foreign bank accounts. The ground taken by the assessee in this regard is, therefore, rejected. Carry forward of losses - The assessee has contended that the return for the block period was filed within the time. The provision of Section 139(3) of the Act stipulates that in order to carry forward a loss under the head business or capital gain , the return of income has to be filed within the time as allowed u/s 139(1) of the Act. Thus, according to this provision, the assessee must file his original return of income within the time stipulated u/s 131(1) in order to carry forward the loss. In the present cases, no return of income was filed claiming any loss within the time limit as prescribed u/s. 139(1) of the Act. Therefore, the direction of the CIT(A) that the assessee was not eligible for carry forward of loss, is found to be in accordance with the provisions of the Act and correct. The ground taken by the assessee in respect of allowing carry forward of losses is, therefore, rejected. Correctness of losses - Since the quantification of actual profit/loss in mutual funds / share transactions as appearing in foreign bank accounts is set aside to the file of the AO, the appeals of the assessee (except for A.Y. 2000-01 wherein no such transaction was involved) are deemed to be partly allowed for statistical purposes. Unexplained jewellery found during search - The assessee has filed Form No.3, Form No.4 and Form No.5 in respect of application of Jigishaben Patel under Vivad Se Vishwas Act, 2020 and it transpires therefrom that the declaration made by the assessee was accepted on payment of the disputed tax. In the Form-5, a reference of appeal pending before the ITAT is also appearing. It thus transpires that the entire substantive addition of the unexplained jewellery as made in the hands of Smt. Jigishaben Patel stands finalized and accepted in her hands. In view of these facts, we direct that the protective addition in respect of unexplained jewellery as made in the hands of Smt. Manjulaben Patel should be deleted. The ground taken by the assessee in the regard is allowed and the ground of the Revenue is dismised. Unexplained jewellery found from locker in the course of search - It is found that the Ld. CIT(A) has taken a holistic view of the entire jewellery found during the search and given a finding that the jewellery valued as unexplained. Since, the addition on account of unexplained jewellery was upheld in the hands of Shri Bipinbhai Patel, only remaining unexplained jewellery was considered for addition in the hands of Smt. Manjulaben Patel. We, therefore, do not find any reason to interfere with the order of the Ld. CIT(A). The addition in respect of unexplained jewellery as upheld in the hands of the assessee is confirmed. The ground taken by the assessee in this regard is dismissed. Substantive addition as well as protective addition made in the hands of Sri Bipinbhai P Patel and Smt. Manjulaben B Patel - As already mentioned earlier, Sri Bipinbhai P Patel had expired during the pendency of these appeals and Smt. Manjulaben B Patel has impleaded herself as legal heir of Sri Bipinbhai P Patel. As a result, the entire addition has now to be considered in the hands of Smt. Manjulaben B Patel as legal heir of Sri Bipinbhai P Patel only on substantive basis and there is no requirement for making any protective addition in her hand as Individual. Therefore, the ground taken by the assessee as well as the Revenue in respect of substantive verses protective addition in the two hands, has become infructuous and is dismissed.
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2024 (9) TMI 1051
Disallowance u/s 14A r.w.s 8D - absence of any exempt income during an assessment year - HELD THAT:- As decided in Elegant Dealmark Pvt. Ltd [ 2024 (9) TMI 952 - ITAT KOLKATA] if no exempt income is earned, disallowance u/s 14A is not warranted addition made by the AO is directed to be deleted. In light of this, the appellant succeeds on all the substantive grounds of appeal pertaining to disallowance u/s 14A of the Act read with Rule 8D of the Rules. Decided in favour of assessee.
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2024 (9) TMI 1050
Addition u/s 14A r.w.r. 8D - there were investments from which income was not includible in the taxable income - assessee had suo moto disallowed a sum u/s 14A and in the computation of income - AO was of the view that expenses were not properly appropriated towards activities from taxable income generated and activities from which no taxable income was generated and explanation was called in this regard - HELD THAT:- Respectfully following the order of the coordinate bench in the assessee s own case for the AY 2012-13 [ 2023 (9) TMI 1551 - ITAT KOLKATA] more so when the assessee himself had disallowed expenditure u/s 14A and the AO without giving any reason as to why the disallowance was not accepted and warranted the higher amount has applied Rule 8D the disallowance confirmed by CIT(A) cannot be sustained and is hereby set aside and the Ld. AO is directed to delete the addition. Hence, Ground No. 1 of the appeal is allowed.
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2024 (9) TMI 1049
Revision u/s 263 - huge cash deposits in the name of the company as well as in the name of its director - PCIT on examination of the record noted that AO had not properly examined the case and has not made addition on account of cash received from the in-laws of his brother by invoking the provisions of section 56(2) - HELD THAT:- Since the assessee is a very small assessee and had duly explained before the AO regarding the source of cash deposits in a consolidated reply of all the three family members who stay together and which has also not been disputed by the PCIT, who only was of the opinion that the provisions of section 56(2) of the Act should have been invoked, therefore, we are of the considered opinion that no revisionary proceedings u/s 263 of the Act are warranted in the instant case. In the instant case, we find the AO had examined the source of cash deposits of all the three family members together which were submitted with supporting evidences and has applied his mind though not to the satisfaction of the PCIT. The submission of assessee that the 263 proceedings were initiated on the basis of audit objection could not be controverted by DR. Therefore considering the smallness of the amount involved and the assessee being a very small assessee who is not having any taxable income, the provisions of section 263 in our opinion, are not warranted and are quashed. Decided in favour of assessee.
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2024 (9) TMI 1048
Revision u/s 263 - Validity of order passed u/s 143(3) - non-examination of provisions of section 43CA, late payment of PF and ESI to the credit of the central government, applicability of provisions of section 269SS and section 269T - PCIT held that the AO passed the order without making necessary examination, verification enquiries HELD THAT:- Provisions of section 43CAA - On perusal of the questions raised by the AO and the submissions made by the assessee from time to time shows that the AO during the course of assessment proceedings had asked the assessee to explain the difference between the sale consideration received and the value adopted by the stamp valuation authority. Assessee has replied before the AO that when the difference between the sale consideration received and the valuation adopted by the stamp valuation authority is less than 10%, the provisions of section 43CA of the Act are not applicable in view of the decision of Rahul Construction [ 2012 (1) TMI 229 - ITAT PUNE] So far as the flat sold to Mr. Sameer Kotkar is concerned, where the difference is 29.88%, the assessee has duly explained before the Assessing Officer that the flat consists of carpet area of 690.90 sq.ft and non-accessible terrace of 766.86 sq.ft aggregating to 1,457.76 sq.ft. It was explained that the carpet area and non-accessible terrace area was taken by the stamp valuation authority at Rs. 19,59,174/-, due to which the difference arose. We find the Assessing Officer after accepting the above contention of the assessee did not make any addition on this issue. Since the Assessing Officer in the instant case has after duly putting queries to the assessee and after considering his reply has not made any addition, therefore, PCIT is not justified in invoking the jurisdiction u/s 263. Late payment of employees contribution to PF and ESI - Since the assessee has admittedly deposited the employees contribution to PF and ESI before the due date of filing of return, therefore, the PCIT was not justified in invoking the provisions of section 263 of the Act by relying on the decision of Checkmate Services Pvt. Ltd. [ 2022 (10) TMI 617 - SUPREME COURT] which came subsequent to the order passed by the AO - PCIT is not justified in invoking the provisions of section 263 of the Act on the issue of late payment of employees contribution to PF and ESI. Applicability of provisions of section 269SS and section 269T - So far as the issue of loan taken amounting to Rs. 13,10,000/- is concerned, we find an amount of Rs. 8,10,000/- is on account of interest of Rs. 9 lacs less TDS of Rs. 90,000/-. Such amount has been provided through journal voucher and therefore, the provisions of section 269SS and 269T of the Act are not applicable for Rs. 8,10,000/-. For amount of Rs. 5 lacs we find the assessee explained before the PCIT that the amount was paid by Mrs. Shobha Jatte who subsequently requested to cancel the booking and transfer the same to her nephew Mr. Dnyandeo Aade against the booking of flat C-706 at the same project. Thus, there is no acceptance of advance of Rs. 5 lacs from Mr. Dnyandeo Aade in cash and therefore, the provisions of section 269SS of the Act are not applicable. For repayment of Rs. 1,40,00,000/- is concerned an amount of Rs. 1,35,00,000/- is repaid through RTGS and Rs. 5 lacs which is alleged to be repaid to Mrs. Shobha Jatte is due to cancellation of booking of the flat and subsequent transfer to her nephew account through journal entry. Under these circumstances, we are of the considered opinion that the provisions of sections 269SS and 269T of the Act are also not applicable and the PCIT is not justified in invoking the provisions of section 263 of the Act on account of violation of provisions of sections 269SS and 269T. Appeal filed by the assessee is allowed.
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2024 (9) TMI 1047
Reopening of assessment - cash deposited in the bank account unexplained - reasons recorded stated the fact that the assessee has not filed ITR -assessee contended that the deposit of cash is sourced from the sales that has been booked for which the profit is also taxed by the revenue - HELD THAT:- As noted from the records so produced before the ld. AO the ld. AO noted that that the assessee has filed the details of sales along with sales register and bank statement. AO did not find any specific defects except that he observed that the copy of cash book submitted by the assessee wherein opening balance was shown at Rs. 1,42,593.92 and cash received on 15.06.2012 at Rs. 6,520/-. Thus the total balance of Rs. 1,49,113.92/- was available with the assessee but he has deposited out of cash balance a sum of Rs. 2,00,000/-. So, there is a deficit of Rs. 50,886.08/- for which the assessee could not substantiate the source with tangible material that this cash is out of regular transactions recorded in the books so produced. Therefore, we feel that in the case of the assessee additions should be sustained instead partly [Rs. 50,886.08/-] - Appeal of the assessee is partly allowed.
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2024 (9) TMI 1046
Nature/characterization of gain - immovable properties of the guarantor is taken over by the financial institution against the loans of the company for which guarantor has stood guarantee - sale of immovable property should be considered as income from capital gains or not? - scope of condition of section 2(47) - sale deed refers to the urgent need of money for repayment of loan amount - whether the takeover of these properties results in capital gains taxable in the hands of the assessee? HELD THAT:- A perusal of the sale deed shows that there is no mention in the sale deed that the transfer of the immovable properties was on account of the enforcement of the guarantee clause. The recital to the sale deed refers to the urgent need of money for repayment of loan amount. The recital to the sale deed also clearly mentions that consideration has been received in full and final satisfaction from the vendee/purchaser. Admittedly, there is no clarity in the sale deed as to how the consideration has passed, whether it is in cash. Clause (2) of the sale deed specifically refers that vendors/sellers have delivered the possession of the scheduled property physically to the purchasers. Clause (6) of the sale deed specifically mentions that the scheduled land or any portion thereof have not been acquired by the government by way of lease nor it has been given as equitable mortgage to any bank or financial institution. A perusal of the above recording in the sale deed when compared with the recording as the guarantor to the loans and the guarantee clause and the mortgage clause clearly shows that though admittedly originally the said immovable properties were mortgaged, something has happened between them by which the mortgage has been released and the properties have been sold to the financial institutions as an asset free from any incumbrance. A perusal of the provisions of section 2 (47) of the Act defines the transfer to be inclusive definition. The facts in the present case clearly shows that the sale deed what has been executed is plain and simple sale deed and immovable properties of the assessee, herein, has been transferred for variable consideration. Once the condition of section 2(47) of the Act is applied, then the provisions of section 45 and 48 of the Act would come into play. The cost of the properties is very much available, the consideration of the properties sold is very much available, capital gains is very much computable and this is what has been done by the Assessing Officer and upheld by the ld CIT(A),which we are in full agreement. Sale deed is not the actual picture and the sale deed has been executed under compulsion for taking over of the immovable properties by the financial institutions due to defaults in payment of the loans of the various companies in respect of which the assessee has given guarantee - The same raises a lot of question. The loan was granted in September, 2014 and in six months, the guarantor s properties are taken away. In short, nearly Rs. .70 crores of loans taken by the various three companies from the financial institution has become bad and that too pay to such an extent that the guarantor s immovable properties has been acquired by the financial institution in this short period of time. It is an admitted fact that before giving loans, the financial institution would look for financial stability of the various companies but how such loans was granted knowing fully well or evident that the companies would sick. Even assuming that what is claimed by the assessee is true what normally happens is when the immovable properties of the guarantor is taken over by the financial institution against the loans of the company for which guarantor has stood guarantee. The guarantor steps into the shoes of the financial institution as a creditor in the books of account of the company, who has taken said loans. A valuable right accrues and is acquired by the said guarantor. The claim of the assessee that she has received no consideration or benefits would not stand to reason insofar as the assessee is a Director and that too having substantial shareholding pattern in all the said companies. She would have received salary and other benefits from the said companies. Thus, when she steps into the shoes of the financial institution to the extent of the loan, which has been repaid by the acquisition of the immovable properties in which she had put as guarantee, the consideration become evident insofar as she become the creditors to that extent. This view of our also find support from the decision of Attili N Rao [ 2001 (10) TMI 5 - SUPREME COURT] . The findings of the AO as upheld by the ld CIT(A) stands confirmed. Decided in favour of revenue.
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2024 (9) TMI 1045
Admissibility of fresh claims before appellate authorities - HELD THAT:- Assessee could make an allowable claim before the appellate authorities and the same has to be considered as the limitation of revised return for making a claim applies to the powers of the assessing officer and not of the appellate authorities. Allowability of claim of ESOP (Employee Stock Option Plan) expenses - AO rejected the claim stating that ESOP cost could not be allowed as business expenditure, there is no expenditure incurred by the company towards ESOP cost - HELD THAT:- As relying on own case [ 2023 (4) TMI 143 - ITAT KOLKATA] Biocon Ltd. [ 2020 (11) TMI 779 - KARNATAKA HIGH COURT] Shriram City Union Finance Ltd. [ 2024 (1) TMI 699 - MADRAS HIGH COURT] the assessee is found to be eligible for deduction u/s 37 in respect of ESOP expenditure claimed and the same made in the course of the assessment proceeding shall be allowed by the AO. Appeal of the assessee is allowed.
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2024 (9) TMI 1044
Estimation of profit on turnover - assessee has not filed the return of income within the time prescribed in the notice u/s 143(2) - though the return is filed belatedly, but prior to the completion of assessment - HELD THAT:- As admitted fact that the assessee maintained the books of accounts and got the accounts audited u/s 44AB and filed Form 3CB and 3CD in time. But he could not file the return of income due to personal reasons. Therefore, the AO estimated the net income @15% on the turnover as per audit report. Assessee has relied on the decision of Delhi Kalyan Samithi Ors [ 2016 (4) TMI 172 - DELHI HIGH COURT] wherein, categorically held that even though the return is filed belatedly, but prior to the completion of assessment has to be taken into consideration. In this case also, the return was filed much prior to the completion of assessment and the assessee has explained the source for cash deposits during the demonetization period, therefore, we are of the view that simply, delay in filing the return of income itself is not sufficient reason to estimate the profit of the assessee @15% on the turnover. If the assessee filed the return belatedly, there are other provisions to take action against the assessee, but simply, the AO cannot estimate the profit. Moreover, the assessee has filed audit report financials within the time prescribed under the Act. We find merit in the argument of the assessee, therefore, the grounds raised by the assessee are allowed.
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Customs
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2024 (9) TMI 1043
Discontinuation of the bank guarantee seeking refund of the bank guarantee amount - HELD THAT:- What emerges is the fact that pursuant to the order of this Court dated 11.11.2002, the appellant herein submitted the bank guarantee but what is of crucial importance is since November, 2002 and till date, there has been no conclusion of the lis between the parties one way or the other. The fact that the bank guarantee has been renewed and kept alive from time to time for the last twenty two years without there being any conclusion of the lis has in fact caused prejudice to the appellant herein who has, for no fault of his but on account of the protraction in litigation, been deprived of a huge amount which is a subject of the bank guarantee. The portion of the impugned order is set aside and the appellant herein permitted to discontinue the bank guarantee and direct refund of the said amount of the guarantee - Since the bank guarantee is permitted to be discontinued, the appellant to file an Affidavit of Undertaking before the High Court within a period of two weeks and thereafter permission will be granted to discontinue the bank guarantee, thereafter the appellant may discontinue the bank guarantee. Appeal allowed.
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2024 (9) TMI 1042
Dismissal of appeal for non-compliance with pre-deposit requirement - Section 129 E of the Customs Act, 1962 - HELD THAT:- Admittedly, in this case, on 27.08.2015, the appeals were dismissed. Subsequently, the appellants pre-deposited the amount within a week i.e., on 02.09.2015 and filed applications to restore the appeals. However, the Appellate Tribunal dismissed those applications on the ground that the Tribunal has become functus officio after the dismissal of the appeals. In the instant case, within one week of the dismissal of the appeals, the appellants have complied with the earlier orders and pre-deposited the respective amounts. Therefore, in view of the Judgments cited by the learned counsel for the appellants, the appeals are liable to be allowed. Appeal allowed.
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2024 (9) TMI 1041
Refund of duty - partial refund of duty denied on the ground that original documents towards payment of duty were not produced - principles of unjust enrichment - HELD THAT:- The Original Authority, having found that the appellant was eligible for refund should not have been in a hurry to reject the claims and could have given them time to furnish the original documents. It is expected that quasi-judicial authorities follow a fair procedure and ensure that the taxpayer is treated in a just and judicious manner. The Supreme Court, in the case of SAMBHAJI VERSUS GANGABAI [ 2008 (11) TMI 393 - SUPREME COURT] , has held that procedure cannot be a tyrant but only a servant. It is not an obstruction in the implementation of the provisions of the Act, but an aid. The procedures are handmaid and not the mistress. It is a lubricant and not a resistance. The matter is remanded to the Original Authority, only to examine the original challans which shall be submitted by the appellant before her/him and if found correct to sanction the refund without delay - Appeal disposed off by way of remand.
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2024 (9) TMI 1040
Classification of imported goods - Brush Cutters - to be misdeclared as Power Operated Reapers - suppression of facts or not - time limitation - HELD THAT:- The classification of Brush Cutters stands settled in the case of M/S. RATNAGIRI IMPEX PVT. LTD. AND S.A. GOPALAKRISHNA DIRECTOR VERSUS THE COMMISSIONER OF CUSTOMS, BANGALORE [ 2024 (3) TMI 194 - CESTAT BANGLORE] and in the case of HIKOKI POWER TOOLS INDIA PVT LTD AND SHRI DATTATREYA JOSHI VICE PRESIDENT COMPANY SECRETARY VERSUS COMMISSIONER OF CUSTOMS, BANGALORE [ 2024 (3) TMI 137 - CESTAT BANGALORE] wherein this Tribunal had clearly held that the Brush Cutters are classifiable under Chapter Heading 8467 8990. Following the ratio rendered in the above decisions, in the present appeal also, the classification of the Brush Cutters is upheld under Chapter Heading 8467 8990. Suppression of facts or not - HELD THAT:- The appellant knowing well that the goods are nothing but Brush Cutters , mis-declared them as Power Operated Reapers for claiming the benefit of duty under agricultural equipment. From the instruction manual placed on record, it is found that the product is clearly mentioned as Brush Cutter though the catalogue mentions it as Power Operated Reaper . This statement has not been retracted and therefore, the investigation clearly established that there was mis-declaration on the part of the appellant since the user manual clearly mentions the product as Brush Cutter and Shri Sreepada, Partner admits to having got the documents from the supplier to mention as Power Operated Reapers only for the purpose of availing subsidy on agricultural equipment. In view of the above, the impugned order is upheld to the extent of demand of differential duty of Rs.53,37,203/- in terms of Section 28(4) of the Customs Act 19962 along with applicable interest under Section 28AA and equivalent penalty u/s 114A of the Customs Act, 1962, on the appellant-company, as per law. The confiscation of goods valued at Rs.31,25,693/- is upheld, however, redemption fine is reduced to Rs.3,00,000/-. The penalty imposed on Shri Sreepada, Partner of the appellant-company is reduced to Rs. 50,000/- u/s 112 of the Customs Act, 1962. The penalties imposed u/s 114AA of the Customs Act, 1962 are set aside. Appeal disposed off.
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2024 (9) TMI 1039
Application for restoration of appeal - penalty u/s 114A of the Customs Act, 1962 - HELD THAT:- The appeal was filed in 2012 with an application for waiver of pre-deposit and an application for early hearing. The pre-deposit was waived by Order dated 11.03.2013 and the application for early hearing was dismissed by order dated 27.01.2014. The appeal was disposed of along with several other appeals by way of remand by order dated 06.07.2017. The appellant filed a miscellaneous application seeking restoration of the appeal and when that application was listed on 22.03.2024, Shri Richik Harikant, advocate appeared on behalf of the appellant and the miscellaneous order was passed on the same day in the court restoring the appeal subject to payment of the cost of Rs. 50,000/-. It was specified that it was the only opportunity to the appellant and it was directed that the appeal be listed to be heard on merits on 24 June 2024. The appellant did not pay the cost. Instead, it filed this miscellaneous application. There are no reason to modify the condition of payment of cost of Rs.50,000/- for getting the impugned appeal restored - petition disposed off.
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2024 (9) TMI 1038
Benefit of N/N.20/2006 dated 01.03.2006 (Sl.No.50) and Notification No.21/2012-Cus. (Sl. No. 12) dated 17.03.2012 - liability to pay SAD of 4% in view of the amendment dated 08.04.2011 brought in the First Schedule to Additional Duties of Excise (Goods of Special Importance) Act, 1957 - suppression of facts or not - invocation of the extended period of limitation - HELD THAT:- In similar set of facts and circumstances, this Bench in the case of M/S. SEWING SYSTEMS PVT. LTD. VERSUS THE COMMISSIONER OF CUSTOMS, BANGALORE [ 2024 (8) TMI 676 - CESTAT BANGALORE] , held ' this Court, through a catena of decisions, has held that the proviso to Section 28 of the Act finds application only when specific enumerated in the proviso to the said sub-section are more than one and if the Excise Department places reliance on the proviso it must be specifically stated in the show-cause notice which is the allegation against the assessee falling within the four corners of the said proviso.' - the appellant is liable to pay 4% SAD, thus the impugned order is upheld on merit. Suppression of facts or not - HELD THAT:- Since, the description, specific chapter heading and respective duties liable to be paid are clearly mentioned and assessed to duty by the officers, the question of reopening the assessments for the past period does not arise. There are no material facts that have been mis-declared or misrepresented except to state that in self-assessment, the appellant should have been vigilant and claimed only those benefits that were available to them. In view of the above, there are no reason to uphold the demand beyond the normal period. It is also noticed from the records that that the appellant has paid the entire duty amount of Rs.3,95,676/- for the normal period from February 2012 to October 2012. Thus, by following the decision of this Bench in the case of Sewing Systems Pvt. Ltd, the demand along with interest is confirmed for the normal period. Confiscation of the goods under Section 111(m) along with penalty imposed under Section 114A of the Customs Act, 1962 is set aside. Appeal allowed in part.
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2024 (9) TMI 1037
Valuation of imported goods - Phenol Acetone - Hydrogen Peroxide - High Sea Sale agreement - enhancement of value - rejection of declared value - HELD THAT:- The Appellant had produced sufficient evidence regarding the value and there is no dispute that the Appellant had paid anything over and above the value declared by them while procuring the goods. Hon ble Apex Court in the matter of HYDERABAD INDUSTRIES LTD. VERSUS UNION OF INDIA [ 2000 (1) TMI 46 - SUPREME COURT] , held that the responsibility to prove that the High Sea Sale transaction constituted an international transfer of goods lay with the importer. However, inspite of submitting sufficient evidence, the Adjudicating authority rejected the declared value on the ground that in the absence of actual High Sea Sale value for inclusion in the CIF value of the import goods, 2% notional value is taken for assessment and accordingly assessable value worked out . Further as per Circular No. 32/2004 dated 11.05.2004, actual High Sea Sale contract price paid by the last buyer would be construed as a transaction value under Rule 4 of the Customs Valuation Rules and inclusion of commission on notional basis may not be appropriate. The transaction value to be taken into consideration is the transaction between the high seas supplier M/s Jay Polychem India Ltd., and the appellant, which clearly shows that the consideration for the goods is as declared by the appellant. Therefore, the appeal is sustainable. Appeal allowed.
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FEMA
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2024 (9) TMI 1036
Violation of the provisions of the FEMA - petitioner is a citizen of United States of America and Overseas Citizen of India [ OCI ] Cardholder, and evidently, he purchased vast tracks of agricultural property located in India without RBI permission violating FEMA regulations - compounding proceedings were initiated - Penalty Computation - petitioner has urged that the respondent/RBI failed to appreciate that the petitioner bonafidely purchased the said agricultural property and despite complying with the directions of the respondent/RBI thereby selling the properties an Indian Citizen, the petitioner has been levied an exorbitant penalty without any basis. HELD THAT:- It appears that the computation method has not been shared with the petitioner as such, however the gist of the same is exemplified in the impugned order dated 19.08.2024. The bottom line is that the computation has been done in accordance with the prescribed Master Directions. There is nothing pointed out by learned counsel for the petitioner so as to challenge the manner in which the computation has been done. As a matter of fact, considering the cash component of the sale consideration in contravention of the provisions of FEMA,1999, unhesitatingly the petitioner has been dealt with quite fairly and has been imposed with a fine not exceeding 300% of the amount of contravention. There is no denial that before passing the impugned order, an opportunity of hearing was afforded but not availed. Thus, the decision by the respondent cannot be faulted on any legally sustained grounds. The present writ petition is dismissed. The pending application also stands disposed of.
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2024 (9) TMI 1035
Contravention of Sections 9(1)(b) 9(1)(d) - receiving payments from persons resident in India by order of person resident outside India and by making payments to persons resident in India by order of person resident outside India, without the general or special exemption of RBI - Alleged breach of principles of natural justice in the adjudication process. HELD THAT:- Adjudicating Authority has considered the subsequent retraction and recorded its opinion before accepting the statements. We also find that the confessional statements have been corroborated by other independent and cogent evidence as have been brought out in the paragraphs from the impugned Order which have been cited afore while dealing with the arguments of the Ld. Counsel for the Respondent. After service of the Show Cause Notice and having furnished the relied upon documents, even so during the proceedings of adjudication, there does not appear to be any prejudice caused to the interest of the Appellants by the denial of cross examination. A number of hearings were given to the Appellants during the course of the Adjudication proceedings. In the Appeals before us we find that the Ld. Adjudicating Authority has taken note of the statements of persons who were named in the seized documents and diaries as well as of documents recovered from them Contraventions by the two Appellants are established. Ld. Counsel for the Appellants has pleaded for reduction in penalties due to economic status of the two Appellants. In the order dated 01.08.2008, this Tribunal reduced the pre deposit to 10% of the penalty which have already been deposited by the two Appellants in 2011 and 2012. We find that the ends of justice will be met if the penalties are reduced to the amounts of pre deposit made. Therefore, the penalty on the Appellant Shri Mustaq Mohd. Patel is reduced to Rs. 13,50,000/- and the penalty on the Appellant Shri Mohammed Rafiq Ali Patel is reduced to Rs. 1,35,000/-.
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2024 (9) TMI 1034
Order passed u/s 19(1) of FEMA imposing penalty for contravention of Section 42(1) of FEMA - transactions were carried out in violation of various provisions of FEMA - liability of person who, at the time of contravention, was in-charge of, and responsible to the company for conduct of business of the Company - HELD THAT:- There is a deeming Clause to hold in-charge to conduct the business of the Company liable for the punishment. The Proviso, however, exclude those who submit that the contravention was without their knowledge and due diligence to prevent such contravention was taken. The case of the Appellant is that he was not Incharge for compliances rather it was Mohendar Ahuja. It was submitted that due safeguard was put in place for compliances and even comprehensive policy was prepared. It was to show that due diligence was exercised and otherwise contravention was not in his knowledge. We find the order of the Adjudicating Authority is silent on the issue rather the cryptic order has been passed in reference to the role of the Appellant and none of the argument has been dealt with while recording finding and imposing penalty. Adjudicating Authority should have dealt with the plea raised by the Appellant to the fact that contravention was not in his knowledge and otherwise he exercised due diligence to prevent the contravention. We find aforesaid to have been proved. Accordingly, we find the case in favour of the Appellant and thereby set aside the impugned order and with the aforesaid Appeal is allowed.
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2024 (9) TMI 1033
Confiscation of Foreign and Indian Currency recovered from the business premises - Imposition of penalties for contravention of FEMA, 1999 - Allegations of illegal dealings in foreign exchange - FFMC failed to apply with the conditions laid down by RBI in terms of Section 10 47 of FEMA, 1999 - penalty of Rs.5 lakhs was imposed on appellant Sumesh Duggal and Rs.15 lakhs on M/s Duggal Forex Pvt. Ltd HELD THAT:- As far as cash of Rs. 11,00,000/- is concerned, the same is duly explained by the appellants by way of tendering the statement of account of M/s Duggal Forex Pvt Ltd. which shows drawal of Rs. 5,00,000/- by way of cheque no. 343741 for sum of Rs. 8,00,000/- by way of cheque no. 343746. The sum of Rs. 11,00,000/- is stated to be out of the said drawn amount of Rs. 13,00,000/-. Accordingly, the said cash of Rs. 11,00,000/- is not an unaccounted money in any manner and is wrongly seized and ordered to be confiscated. Coming to the various foreign currency notes found in the premises of M/s Duggal Forex Pvt Ltd. and not tallying with the record, appellant has stated that the said amount is duly accounted for and produced the record in support of his contention (as referred by him in para no. 3 above), which reflects that there is no contravention on the part of M/s Duggal Forex Pvt Ltd. Perusal of the impugned order reflects that the Adjudicating Authority has not considered the said record and is silent on this aspect. Therefore, on the basis of record submitted by M/s Duggal Forex Pvt Ltd., the said company has not committed any contravention, as there is no irregularity in the account of the said company. Now, coming to Sumesh Duggal, the evidence on record clearly reflects that he used to sell US $ on premium rate to the officials/officers of Nigerian High Commission. In sequel to my findings in the preceding para, the appeal filed by M/s Duggal Forex Pvt Ltd is hereby allowed and the appeal filed by Sumesh Duggal is hereby dismissed. The Indian and foreign currency seized from the premises of M/s Duggal Forex Pvt. Ltd. is hereby directed to be released. Appellant Sumesh Duggal has already deposited the penalty of Rs. 5,00,000/- as pre-deposit of penalty for admitting his appeal. Hence, appellant Sumesh Duggal is not liable to pay any additional amount.
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2024 (9) TMI 1032
Applicability of FERA provision to not resident in India - transfers to non-resident convertible rupee accounts enabled payments to be made in Foreign Exchange to a person resident outside India - Appellant Bank has been charged for contravention of Section 64 (2) read with Section 6 (4), Section 6 (5) and Section 49 73 (3) of FERA - Contraventions in terms of Section 64 (2) of FERA for having abetted the Standard Chartered Bank, Mumbai. HELD THAT:- Section 6 (4) and 6 (5) and 49 73 (3) of FERA require that the banks which are ADs shall not engage in any transaction involving any foreign exchange which is not in conformity with the terms of its authorization as AD and to obtain necessary declarations in this regard from the person on whose behalf it undertakes such transactions as well as shall comply with the conditions of such permission. It is on 20 different occasions that the non-resident convertible rupee accounts of the Appellant Bank were credited. 19 transactions of credit occurred in its account with the ANZ Grindlays Bank between 24.07.1991 and 22.08.1991 and 1 transaction of credit happened in its account with the Standard Chartered Bank on 28.02.1991. The credits which happened in the ANZ Grindlays Bank were in a short period of about a month. The record reveals that there were telex messages from the Appellant Bank to the ANZ Grindlays Bank for ensuring that the impugned credits were made to its account with the ANZ Grindlays Bank. One of such specific instance has been brought out by the Ld. Adjudicating Authority in the paragraphs cited earlier. It is from the facts and circumstances of a case that the intention, instigation and engagement are to be ascertained. The facts of the present case speak for themselves. The plea that the Appellant Bank was not part of the Bilateral Group but was included in External Group does not help its case. In fact, the Appellants should have been more careful in facilitating credits in their accounts with the ANZ Grindlays Bank and with the Standard Chartered Bank by virtue of not being part of the Bilateral Group. Repeatedly credits were being facilitated in non-resident convertible rupee account by the Appellant Bank. The circumstances and the evidence in the present case reverse the burden on to the Appellant which it has failed to discharge. Therefore, the charge of the abetment against the Appellant Bank stands established as it contravened Section 64 (2) read with Section 6 (4), Section 6 (5) and Section 49 and Section 73 (3) of FERA. Charge against the individual Appellant /CEO - Adjudicating Authority has observed in the Impugned Order that no evidence was placed before him that the contraventions by the Appellant Bank had taken place without the knowledge of the CEO or that he exercised all due diligence to prevent such contravention. Mr. John Baden, then CEO of the Appellant Bank paid penalty of Rs. 500 imposed on him in the Impugned Order dated 11.02.2010 and has not filed Appeal against the said Order. We therefore find that the charge against the individual Appellant for the aforementioned contraventions in terms of Section 68 (1) of FERA is established in so far as his Appeal No. FPA-FE-195/MUM/2008 is concerned. Quantum of penalty imposed on the Appellant - In the facts and the circumstances of the case we do find that that amount of penalty is disproportionate to the allegation made against the Appellants. We accordingly reduce the penalties of Rs. 13,28,82,000/- on the Appellant Bank and Rs. 6,64,41,000/- on the individual Appellant in the Impugned Order dated 09.07.2008 to Rs. 1,00,00,000/- (Rupees One Crore Only) on the Appellant Bank and to Rs. 5,00,000/- (Rupees Five Lakhs Only) on the individual Appellant, which would meet the ends of justice.
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2024 (9) TMI 1031
Contravention of Sections 8 (3) r/w 8(4) and 9(1) (b) of FERA - illegal foreign exchange remittance abroad in the garb of charges being paid for the imports of the goods which never occurred - Composite penalty for contraventions. HELD THAT:- We find that Sections 8(3) and 8(4) of FERA are worded in terms of a person and there is no usage of importer . Similarly, Section 9(1)(b) is also worded in terms of a person . In the present case the Respondent Directorate had various statements before it, which conveyed that more than one concern was being controlled and owned by the Appellant Shri R.K. Verma. The investigations evoked suspicions as to fraud having been committed in filing of forged bills of entry with the bank. Hence, it became imperative to unearth the truth. It is, therefore, important for us to determine whether the remittances which were actually released were by Shri Verma, either directly or indirectly, and whether he was the person as has been referred to in the aforementioned Sections. Whether the bills of entry to demonstrate that the goods had actually been imported against the remittances made, were deposited or not with the bank ? - Appellants have claimed that these bills were in fact deposited with the bank but went missing. The Appellants have also maintained that the bills were not available since the prescribed period for its retention was over and in any case the bills had already been audited. However, the bank lodged a FIR with the Police for the missing import documents. The counter allegation is that the theft of the missing import documents was caused so to prevent detection of forgery. The Police failed to bring the case to conclusion. In fact, to raise this issue so as to contend that the bills of entry could have demonstrated that the imports of the goods occurred is to deviate from the correct evaluation of evidence on record. The documents from the bank clearly demonstrate that the amounts were remitted in the name of M/s. MICO Enterprises and M/s. Diamount. The reports from the Customs Department show that no diamonds were imported against the impugned remittances. Hence the question about the availability of the bills of entry is not germane to determine whether imports occurred against the impugned remittances. From the statements of Shri Vinod A. Shah it is clear that Shri R.K. Verma met him in Antwerp in the last quarter of 1990 and requested him to open a Company for him. He therefore opened a firm by name M/s. Diamblue in which major shareholder was Shri Rajesh Verma, a person introduced by Shri R.K. Verma. It therefore appears that M/s. Diamblue which received the remittances made by M/s. Diamount was in fact under the control of the Appellant Shri R.K. Verma. The inference that follows is about the key role that the Appellant Shri R.K. Verma played in the entire modus operandi to illegally remit the foreign exchange abroad in the garb of charges being paid for the imports of the goods which never occurred. Thus, we find that the contraventions of Sections 8 (3) read with 8(4) and 9(1) (b) of FERA are established against the Appellant Shri R.K. Verma and contraventions of Sections 8 (3) read with 8(4), 9(1) (b) and 64(2) of FERA are established against Shri R.A. Soni. We therefore, find no merit in the two Appeals.
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2024 (9) TMI 1030
Imposition of penalties under FEMA - Foreign currency confiscation as seized from the premises of the Appellant - Tribunal directed the Appellant to deposit 15% of the amount of penalty imposed and furnish bank guarantee for the remaining 85% as pre deposit - Appellant argued that the principles of natural justice have been violated in as much as cross examination of the Departmental Officers and witnesses was not permitted HELD THAT:- During the search of the residential premises a deposit slip of an overseas account along with a blank cheque book of HSBC Bank, Hongkong were seized. The seized deposit slip showed a deposit of US$ 100 in the said account. The Appellant deposed in his statement that he had not taken permission from RBI to open the account. However, he had subsequently produced a letter requesting the HSBC Bank to close the account. Notebook marked B seized from the resident of the Appellant on which there was an entry relating to one Jazer, the Ld. Adjudicating Authority inferred that it revealed illicit purchase of foreign currency of US$ 16000 by the Appellant. He in his statement on 07.03.2005 attributed this entry to the transaction of 160 optical frames sold by him at the price of Rs. 48.60 per piece to the said Jazer. In view of this statement tendered by the Appellant under Section 37 of FEMA, we are inclined not to accept the finding of Ld. Adjudicating Authority that the contravention of Section 3(a) of FEMA has happened for the said transaction. Therefore, we are inclined to uphold the finding of the Ld. Adjudicating Authority that the Appellant indulged in contravention of Section 3(a) of FEMA but for a reduced amount of US$ 99,770 not US$ 1,15,770 as the charge for the contravention of US$ 16000 is not found sustainable. 17. Ld. Adjudicating Authority found no contravention of FEMA for the seized Indian currency of Rs. 9.29 Lakh which has not been confiscated. We set aside the confiscation of the foreign currencyWe order the release thereof to the Appellant. We also order, as prayed by the Appellant, to release the seized Indian currency of Rs. 9.29 Lakh which was not confiscated. We find that the contravention of Section 3(a) of FEMA for an amount of US$ 99,770 by the Appellant is established. We also find that the contravention of Sections 3(a) 3(d) of FEMA for amounts US$ 5,95,738.4 and RMB 5,78,079.8 by the Appellant are established. Penalties imposed on the Appellant and for the aforementioned contraventions are disproportionately higher. We therefore reduce the consolidated penalty for the aforementioned contraventions to Rs. 15,00,000/- (Rupees Fifteen Lakh Only) on the Appellant.
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PMLA
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2024 (9) TMI 1029
Seeking grant of Regular Bail - money laundering - proceeds of crime - Non-Compliance and Misuse of Subsidized Coal - offences u/s 3/4 of the Prevention of Money Laundering Act, 2002 - HELD THAT:- The court has gone through the materials available on record and finds that admittedly there are various FIRs against Ram Binod Sinha in the year 2010-11, in which for the scheduled offence so far as the second ECIR is concerned, the FIR No. 10 of 2019 dated 20.01.2019. In the first ECIR, the petitioner was called upon and he has appeared on 18.05.2012 and on 09.03.2023 to 05.07.2023 i.e. eight times and the first search in light of Section 17 of the PML Act in the first ECIR was made on 03.03.2023. Second ECIR was registered on 12.12.2023, in which, 7 persons are named. The coal on truck bearing number JH-02-AR-6640 was to be delivered to M/s Om Coke Industry, Ramgarh, Jharkhand, however, the said truck was intercepted at Hesargarha on the allegation that Saiyyad Sulamani was taking the quantity of 19.56 MT coal from Toppa Colliery to Varanasi Mandi. It was pointed out that Varanasi is at the distance of 326 kms from the intercepted point and the Ramgarh is 11 Kms from the intercepted point. The second search was made on 16.01.2024 and allegations are made that 13 firms are non-operational / non-functional and further allegations are made that even the commission for getting the coal was at the subsidized rate. The search was conducted on 16.01.2024 and the petitioner was arrested on 07.50 PM on the same day. In Vijay Madanlal Choudhary [ 2022 (7) TMI 1316 - SUPREME COURT ], the Hon ble Supreme Court has explained the proceeds of crime saying that the property must be derived or obtained, directly or indirectly, as a result of criminal activity relating to a scheduled offence. It is further disclosed in the said judgment that the vehicle used in commission of scheduled offence may be attached as property in the concerned case (crime), it may still not be proceeds of crime within the meaning of Section 2 (1) (u) of the 2002 Act. Similarly, possession of unaccounted property acquired by legal means may be actionable for tax violation and yet, will not be regarded as proceeds of crime unless the concerned tax legislation prescribes such violation as an offence and such offence is included in the Schedule of the 2002 Act. In view of this judgment, the property associated with the schedule offence must be derived or obtained by a person, as a result of criminal activity, relating to a scheduled offence. In para-8.2 of the prosecution complaint, it is clearly stated that the petitioner after investing Rs. 29,50,36,622.79/-, wherein the words Paid and Purchase have been used, thus, prima facie it appears that that amount cannot be said to be the subject matter of amount used for the proceeds of crime. The petitioner is directed to be released on regular bail, on furnishing bail bond of Rs.50,000/- with two sureties of the like amount each to the satisfaction of learned Special Judge, PMLA, Ranchi, in connection with ECIR Case No. 01 of 2024. Bail application allowed.
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Service Tax
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2024 (9) TMI 1028
Time limitation for filing SCN - discrepancy between the figures reflected in balance sheets etc. and the service tax Returns - extended period of limitation - HELD THAT:- It is found that the case is made by the Department on the ground that there is discrepancy between the figures reflected in balance sheets etc. and the service tax Returns. No effort to co-relate the income/ receipt shown in the balance sheet to any particular service rendered by the appellants to any particular entity appears to have been made. It is not open for the Department to allege evasion of service tax on this count. The onus to prove the nexus between consideration and the service is on the Department who have made the allegations and issued the Show Cause Notice. Moreover, it is not open for the Revenue to invoke extended period under such circumstances. When no positive act, with intent to evade payment of duty, on the part of the appellant has been shown, has been evidenced. It has been held in a catena of judgments that under such circumstances, extended period cannot be invoked. By following the ratio of such decision, the Revenue has not made out any case for invocation of extended period. Moreover, the Department also does not have any case on merits on other issues. Learned Commissioner (Appeals) could have easily seen that the appellants have satisfactorily explained their stand and have displayed that no service tax is payable by them in respect of the issues raised in the Show Cause Notice. The appellants have also submitted copies of necessary certificates, affidavits, Chartered Accountant certificates. It was not proper on the part of Commissioner (Appeals) to brush aside the glaring evidence in favour of the appellants. In view of the same, it is found that neither the Show Cause Notice nor the impugned order can be sustained - appeal allowed.
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2024 (9) TMI 1027
Cash refund of accumulated CENVAT credit under Rule 5 of CCR, 2004 - only ground on which the refund claims were rejected by the adjudicating authority and upheld in the impugned order is that the appellant had not executed the bond while exporting the goods - HELD THAT:- This issue has been considered by this Tribunal in the case of C.C.,C.E. S. T-BELGAUM VERSUS BELLARY IRON ORES PVT. LTD. [ 2018 (10) TMI 219 - CESTAT BANGALORE] following the judgment of the Hon ble High Court of Bombay in the case of COMMISSIONER OF C. EX. CUS., AURANGABAD VERSUS JOLLY BOARD LTD. [ 2016 (9) TMI 1355 - BOMBAY HIGH COURT] it is observed ' cenvat credit is admissible in terms of Rule 6(6) when goods are exported and there is no requirement to execute any bond if the exported goods are exempted.' The impugned order is set aside and the appeals are allowed.
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2024 (9) TMI 1026
Liability of service tax on sub-contractor to main contractor - appellants are providing Site Formation services on Works Contract basis as sub-contractor to various clients - service tax on Site Formation services - service tax on MMRS provided for maintaining roads - service tax on Excavator rent - interest - penalty. Liability of service tax on sub-contractor to main contractor - appellants are providing Site Formation services on Works Contract basis as sub-contractor to various clients - HELD THAT:- It is found that the Larger Bench in the case of COMMISSIONER OF SERVICE TAX VERSUS MELANGE DEVELOPERS PVT. LTD. [ 2019 (6) TMI 518 - CESTAT NEW DELHI-LB] have set aside the confirmed demand amount on account of time bar after holding that on merits the Appeal fails. Following the ratio, the confirmed demand in respect of the services provided by the Appellant as sub-contractor is set aside. Service tax on Site Formation services - HELD THAT:- In respect of Site Formation services provided by the Appellant and completed before the service was notified, it is held that no Service Tax is payable and hence, we allow the Appeal by setting aside the demand of Rs.48,960/-. Service tax on MMRS provided for maintaining roads - HELD THAT:- In respect of MMRS provided by them for maintaining roads, it is found that retrospective effect has been given to give the benefit of exemption for the service providers who are taking up the management and maintenance of roads. Accordingly, the confirmed demand of Rs.14,53,536/- is set aside. Service tax on Excavator rent - HELD THAT:- The Appellant is not contesting and accordingly, these amounts are payable along with interest. Interest - HELD THAT:- In respect of interest of Rs.8,42,830/-, the Appellant is not contesting and is required to pay interest immediately. Penalty - HELD THAT:- Since almost the entire demand amount stands set aside on various counts, there are no justification for imposing penalty on the Appellant company. Accordingly, all the penalties imposed are set aside - In respect of penalty imposed on the second Appellant, it is found that he is only acting as an employee of the company. As major portion of the demand has also been set aside. Hence, there are no justification in imposing any penalty on the employee. Appeal allowed in part.
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2024 (9) TMI 1025
Dismissal of appeal on the ground that Appellant has failed to comply with the provisions of Section 35F of Central Excise Act without going into its merits - HELD THAT:- The provisions towards Pre-deposit under Section 35F were amended w.e.f. 06.08.2014. Learned Counsel submits that as per this, the Appellant is required to pay total 10% of the litigated amount when the matter is taken up for Hearing before the Tribunal. This condition has been fulfilled by them since they have made payment of Rs.4,13,960/- by way of challan - this amount is sufficient Pre-deposit for Hearing the case by the Commissioner (Appeals). Similar issue was before the Ahmedabad Bench of this Tribunal in the case of ACCRA PAC INDIA PVT LTD VERSUS C.C.E. S.T. -DAMAN [ 2023 (9) TMI 1552 - CESTAT AHMEDABAD] , wherein it was held that ' We find that though at the time of passing the said order by the Commissioner (Appeals) the amended provision of Section 35 F was not in force. However, in the matters coming before the Tribunal related to pre-deposit after the amendment of Section 35 F, this Tribunal taking a lenient view allowing the admission of the appeal on pre-deposit of 10% as prescribed under amended Section 35 F. Therefore, we are also of the view that since the appellant have already deposited 10% of the duty amount, the same is sufficient to hear the appeal on merit.' The matter remanded back to the Commissioner (Appeals) to take up the Appeal on record and decide the issue on merits.
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2024 (9) TMI 1024
CENVAT Credit - input services - accumulated credit on account of export of goods made during the relevant quarters under Rule 5 of CENVAT Credit Rules, 2004 - HELD THAT:- Since the input services in various decisions are held to be admissible to credit, therefore, denial of cash refund of accumulated CENVAT credit on export of services by the appellant during the relevant period cannot be denied. Reliance placed in GOLFLINKS SOFTWARE PARK PVT LTD VERSUS C.C.E C.S.T. -BANGALORE [ 2018 (8) TMI 331 - CESTAT BANGALORE] and OMEGA HEALTHCARE MANAGEMENT SERVICES PVT. LTD. VERSUS COMMISSIONER OF CENTRAL TAX, BENGALURU EAST [ 2021 (8) TMI 875 - CESTAT BANGALORE] . Appeals are allowed.
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Central Excise
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2024 (9) TMI 1023
Clandestine removal - evasion of duty by misusing small scale Exemption Notification No.08/2003-CE as amended - Clubbing of clearances - inspection charges paid to M/s. RITES by Indian Railways for inspection of the goods being supplied by MM and MMPL should be part of the assessable value of such goods cleared and be liable to central excise duty or not - levy of duty on goods manufactured and used for repairs and reconditioning - sale proceeds of unaccounted goods cleared clandestinely or not - confiscation - penalty. HELD THAT:- This Court is of the view that when the consideration has been given by the original authority by taking into consideration the various documents, i.e., Stock Register for Brush Holder etc. and hence, it was incumbent upon the appellate authority to re-appreciate the said documents for the purpose of coming to the conclusion and not only by going through the identity of both the firms, i.e., one being the Proprietary concern and another a Private Limited Company. The issue of clubbing together for the purpose of getting exemption requires consideration on the basis of the transaction of the business which cannot be assessed only on the basis of the fact that one unit is a Proprietary concern and another is Private Limited Company. The issue has been raised that the appellant has not raised the issue of perversity. Even accepting that the issue of perversity has not been raised but if the error is apparent on the face of the order, then the Court while considering the propriety of the order which has been challenged is to consider on the basis of the principle as to whether the order assailed suffers from perversity or not - Perversity means that if anything has not been considered if so placed or erroneously been considered and if that be so, it is incumbent upon the Court to law to go into the propriety of the order by taking into consideration the issue of perversity. This Court has considered the order impugned and after taking into consideration the specific consideration given by the original authority based upon the documents which is lacking in the order passed by the Tribunal - the finding so recorded in the impugned order needs to be interfered with. Appeal disposed off.
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2024 (9) TMI 1022
Utilization of CENVAT credit availed on inputs, capital goods and input services for paying Sugar Cess - period 2010-2011 - subrule (4) of Rule 3 of the CENVAT Credit Rules, 2004 - HELD THAT:- Hon ble Karnataka High Court in appellant s own case COMMISSIONER OF CENTRAL EXCISE VERSUS M/S SHREE RENUKA SUGARS LTD [ 2014 (1) TMI 1469 - KARNATAKA HIGH COURT] observed that Sugar Cess is nothing but a duty of excise and admissible to take credit under Rule 3 of the CCR, 2004. In the absence of any restriction of utilization under subrule (4) of Rule 3 of the CENVAT credit Rules, 2004 in discharging Sugar Cess, the utilization of accumulated credit in discharging liability of Sugar Cess cannot be denied. This Tribunal in DECCAN CEMENTS LTD, M/S BHARATHI CEMENT CORPORATION PVT LTD, M/S ZUARI CEMENT LTD, M/S PENNA CEMENT INDUSTRIES LTD UNIT IV, I, M/S RAIN CEMENTS LTD VERSUS COMMISSIONER OF CENTRAL TAX, RANGAREDDY, TIRUPATI GST, COMMISSIONER OF CUSTOMS, CENTRAL EXCISE SERVICE TAX, NELLORE, TIRUPATI [ 2019 (7) TMI 764 - CESTAT HYDERABAD] , comparing Sugar Cess with Clean Energy Cess observed that Sugar Cess as held by the Hon ble Karnataka High Court to be duty of excise stands in a different footing from Clean Energy Cess. Hence, the said judgment is not applicable to the facts and circumstances of the present case. The impugned orders are not sustainable in law and accordingly, the same is set aside - appeal allowed.
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2024 (9) TMI 1021
Valuation - inclusion of charges for testing conducted by third party on the request of the customer and reimbursement of such testing charges from the customer M/s Power Grid Corporation of India Limited in the assessable value - HELD THAT:- In the facts of the present case the testing was conducted not as a part of the obligation of the appellant but in a special case when the request was made by the customer to conduct such test. The test was conducted by third party on the request of the customer M/s Power Grid Corporation, in such case the testing charges cannot be part and partial of the manufacture of excisable goods in the hand of the appellant consequently the same is not includible in the assessable value of the excisable goods. On the identical facts and circumstances various judgments have been delivered wherein, it was held that the testing charges conducted on behalf of the appellant by third party and taking reimbursement of such testing charges by the manufacturer supplier is not includible in the assessable value. This issue has been considered by larger bench of this Tribunal in the case of BHASKAR ISPAT PVT. LTD [ 2004 (3) TMI 102 - CESTAT, NEW DELHI ] wherein, the larger bench answered the reference holding that ' cost of additional testing conducted at the request of the customer and the cost of such testing being borne by the customer, are not includible in the assessable value of the goods.' Thus, it is settled law that any testing charges for the testing done by third party on the request of the customer and reimbursement of the same to the manufacturer supplier, the said testing charges is not includible in the assessable value of the excisable goods supplied on payment of duty. The issue in hand is no longer res-integra in the light of the above judgments. Therefore, in the present case the testing charges is not includible in the assessable value of excisable goods manufactured and cleared by the appellant on payment of duty. The impugned order is set aside to the extent it upheld the demand, interest and penalty - Appeal allowed.
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2024 (9) TMI 1020
Recovery of Excise duty with interest and penalty - difference between the actual collection from 1st April 200 to 31st March 2003 and the amount required to be deposited - appellant opted for pre-payment of the amount - HELD THAT:- The Tribunal, relying upon the decision of the Tribunal in COMMISSIONER OF CENTRAL EXCISE, RAIGAD, BALKRISHNA INDUSTRIES LTD., ESSEL PROPACK LTD. VERSUS UTTAM GALVA STEELS LTD., BHUSHAN STEEL LTD., JSW ISPAT STEEL LTD., COMMISSIONER OF CENTRAL EXCISE, AURANGABAD [ 2015 (10) TMI 1727 - CESTAT MUMBAI ] has held, that ' the abatement towards sales tax has to be allowed in terms of the sales tax liability (as per law) at the time of clearance of the goods. Such abatement cannot be subsequently altered or restricted to the net present value of sales tax subsequently paid in complete discharge of such sales tax liability.' The impugned order is set aside - appeal allowed.
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2024 (9) TMI 1019
CENVAT Credit - inputs used for manufacturing sample vehicles exported for testing under rule 19 of the Central Excise Rules, 2002 without payment of duty by furnishing letter of undertaking - HELD THAT:- This issue is no more res integra and has been settled in the appellant s own case M/S MARUTI SUZUKI INDIA LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, DELHI-III [ 2023 (10) TMI 803 - CESTAT CHANDIGARH] which relates to earlier period and subsequent period. This Tribunal in appellant s own case M/S MARUTI SUZUKI INDIA LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, DELHI-III [ 2023 (10) TMI 803 - CESTAT CHANDIGARH] allowed the appeal filed by the appellant and held that testing of sample vehicles is integral to the activity of manufacture and thus Cenvat credit attributable to the inputs gone into manufacture of said products is admissible. As per Rule 3 of the Cenvat Credit Rules, 2004 provides that the manufacturer of a final goods shall be entitled to avail the credit of the specified duties in respect of inputs or capital goods received in factory of the manufacturer for use in or in relation to, the manufacture of the final products. The Tribunal in catena of decisions held that export of sample vehicle is integral part of the manufacturing process and hence the Cenvat credit cannot be denied on the input used to manufacture the sample vehicles. Since, the issue has already been settled in appellant s own case and by following the ratio of the said decisions the impugned orders are not sustainable in law and the same is set aside - Appeal allowed.
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CST, VAT & Sales Tax
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2024 (9) TMI 1018
Validity of assessment order - exigibility to tax under the Delhi Tax on Luxuries Act, 1996 - Club and Association service - doctrine of mutuality - it was held by High Court that 'The decision of the Commissioner assailed shall not be liable to be treated as a precedent for any assessment period post the promulgation of the 2012 Amendment Act. Any assessments made or proceedings pending would have to be considered bearing in mind the observations rendered' - HELD THAT:- List for final disposal at 2 p.m. after four weeks.
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Indian Laws
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2024 (9) TMI 1017
Dishonour of Cheque - funds insufficient - legally recoverable debt or not due to limitation - acquittal of the accused/respondent - HELD THAT:- The Supreme Court in A.V. Murthy v B.S. Nagabasavanna [ 2002 (2) TMI 1214 - SUPREME COURT ] recognized the application of Section 25 (3) of the ICA while disallowing a dismissal of a complaint under section 138 of NI Act, at the behest of a complainant, where a cheque had been given for a liability which was time-barred, it was held that ' Even under Section 139 of the Act, it is specifically stated that it shall be presumed, unless the contrary is proved, that the holder of a cheque received the cheque of the nature referred to in Section 138 for discharge, in whole or in part, of any debt or other liability. It is also pertinent to note that under sub-section (3) of Section 25 of the Indian Contract Act, 1872, a promise, made in writing and signed by the person to be charged therewith, or by his agent generally or specially authorized in that behalf, to pay wholly or in part a debt of which the creditor might have enforced payment but for the law for the limitation of suits, is a valid contract.' The Supreme Court in S. Natarajan v Sama Dharman Anr. [ 2014 (7) TMI 1330 - SUPREME COURT ] expressed the opinion that, the High Court had erred in quashing the complaint under section 138 NI Act, on the ground that debt or liability was barred by limitation since that question can be decided only after evidence has been adduced being a mixed question of law and fact. In assessing limitation, the Trial Court determines the date of loan as approximately 30th April 2012 (para 40 of the impugned order), taking the period of limitation to April 2015. Cheque in question was issued on 31st December 2015 and therefore, the Trial Court held in favour of the accused, that they were able to rebut the statutory presumption that there was no legally enforceable debt. Considering that the Trial Court has considered the evidence, the principles in S. Natarajan Yogesh Jain may not be fully applicable at this stage. The matter is now in appeal against the acquittal and the Court has perused the evidence on record. Based on the analysis above and that the Trial Court itself found it unbelievable that a cheque of Rs. 3,50,000/- would be given in 2015, despite the accused having asserted in the trial that he had repaid the debt of the father, the only question remains is on the legal enforceability of the debt. The furnishing of a cheque of a time-barred debt effectively resurrects the debt itself by a fresh agreement through the deeming provision under section 25 (3) of ICA. The original debt therefore, through section 25 (3) of the ICA, becomes legally enforceable to the extent of the amount the cheque has been given - Drawing of the cheque in itself, is acknowledgment of a debt or liability. It is the resurrection or the revival of the prior debt which would trigger the provisions under section 138 of NI Act. To deny a complainant/drawee of invoking the penal provisions under section 138 of NI Act, despite the categorical premise of section 25 (3) of the ICA recognizing a fresh agreement to pay, would be an unfortunate disentitlement. Impugned order dated 31st July 2017, acquitting the respondent no. 2, is set aside - List on 7th October 2024 for further directions. Respondent no. 2 be present on the next date scheduled.
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2024 (9) TMI 1016
Seeking grant of anticipatory bail - offence u/s 420, 477-A, 467 and 409 read with 34 of the Indian Penal Code, and Section 3 of the Maharashtra Protection of Interest of Depositors (in Financial Establishments) Act, 1999 - allegation of receiving embezzled sum of money - HELD THAT:- It is not in dispute that the investigation is almost complete, and the documents related to the crime consist of bank records. Additionally, there is no dispute that the applicant was involved in the trade of medical equipment and oxygen concentrators. Notably, one of the co-accused has already been granted bail by this Court. The applicant is ready to deposit Rs.22,00,000/- in the trial Court to show his bona fides. Prima facie, there is material to suggest that the applicant received the money through legitimate business transactions, as tax invoices were issued, and GST payments were made to the GST department. Furthermore, the transactions were conducted exclusively through the Bank. This Court is inclined to allow the present application - In the event of the applicant's arrest in CR No.811 of 2021, registered at Akluj Police Station, Solapur and investigated by EOW, Solapur, he shall be released on bail upon furnishing a PR Bond of Rs.25,000/- with one or two solvent sureties in the like amount, subject to the condition that the applicant shall deposit an amount of Rs.22,00,000/- in the trial Court within two weeks from today. The trial Court, however, shall not allow the withdrawal of this amount until the conclusion of the trial - Application allowed.
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2024 (9) TMI 1015
Seeking a direction for numbering and taking on file of the petition filed by the petitioners/defendants for setting aside the exparte order, under Order IX Rule 7 of CPC, pending on the file the Principle District Court (Commercial Court) at Chengalpattu - HELD THAT:- In view of Section 13 of the Commercial Courts Act, the appeal will lie only for the orders passed by the Commercial Court Act, that has been specifically enumerated under Order 43 of CPC. But, in the Order 43 of CPC, there is no provision for appeal, to set aside the exparte order under Order IX Rule 7 CPC. In such circumstances, since the Commercial Courts Act, does not preclude the applicability of Order IX Rule 7 of CPC in the commercial suit, the impugned order of return, passed by learned Principal District Judge, Chengalpattu, dated 18.12.2023 is liable to be set aside. The impugned returned order, dated 18.12.2023 is set aside. The learned Principal District Judge, Chengalpattu is directed to take on file the petition filed by the petitioners under Order IX Rule 7 and dispose of the same on merits. This civil revision petition is allowed.
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