TMI Tax Updates - e-Newsletter
September 22, 2020

Case Laws in this Newsletter:

GST Income Tax Benami Property Customs Corporate Laws Insolvency & Bankruptcy PMLA Service Tax Indian Laws

Articles

• Due dates under GST linked with September
• RECENT DEVELOPMENTS IN GST

News

• Borrowing of money to meet GST revenue shortfall

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• Auction for Sale (Re-Issue) of ‘5.09% GS 2022’, Auction for Sale

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• Promotion of FDI

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• Steps to Boost The Growth of Industries

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• Setting up of Industries by Foreign Companies

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• Granting Trademark under startup India

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• e-MARKET

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• Measures to Boost Export Credit

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• THE FOREIGN CONTRIBUTION (REGULATION) AMENDMENT BILL, 2020 - AS INTRODUCED IN LOK SABHA

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• Insurance coverage to PMJDY account holders

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• Fiscal and monetary policies to deal with slowdown due to COVID-19

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• 35,074 taxpayers opt for Vivad Se Vishwas Scheme

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• Government struck off 3,82,581 shell companies during last three years

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• SPICe+ Portal deployed by MCA

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• Performance of NCLTs

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• Banking facilities in rural areas

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• Government issued Advisory to PSBs to moot action against personal guarantors of corporate debtors

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Notifications

Customs

• 46/2020-Customs (N.T./CAA/DRI) - dated 17-9-2020 - Cus (NT)
  Appointment of CAA by Pr. DGRI

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• 45/2020-Customs (N.T./CAA/DRI) - dated 17-9-2020 - Cus (NT)
  Amendment in Notification No. 31/2020- Customs (N.T./CAA/DRI) dated 31.07.2020

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GST - States

• 74/GST-2 - dated 11-9-2020 - Haryana SGST
  Haryana Goods and Services Tax (Eleventh Amendment) Rules, 2020.

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• 51/2020 – State Tax - dated 4-9-2020 - Jharkhand SGST
  Provide relief by lowering of interest rate for a prescribed time for tax periods from February, 2020 to July, 2020

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• 50/2020 – State Tax - dated 4-9-2020 - Jharkhand SGST
  Jharkhand Goods and Services Tax (Seventh Amendment) Rules, 2020.

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• 49/2020-State Tax - dated 4-9-2020 - Jharkhand SGST
  Appoints the 30th day of June, 2020, as the date on which the provisions of sections 2 and 12 of the Jharkhand Goods and Services Tax (Amendment) Ordinance, 2020, shall come into force.

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• 48/2020-State Tax - dated 4-9-2020 - Jharkhand SGST
  Jharkhand Goods and Services Tax (Sixth Amendment) Rules, 2020.

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• 47/2020 – State Tax - dated 4-9-2020 - Jharkhand SGST
  Seeks to amend Notification No. 35/2020- State Tax, dated the 17th August, 2020

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• 46/2020 – State Tax - dated 4-9-2020 - Jharkhand SGST
  Seeks to extend period to pass order under Section 54(7) of JGST Act

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• F A 3-27/2017/1/V(53) - dated 11-9-2020 - Madhya Pradesh SGST
  Amendment in Notification No. F A-3-27-2017-I-V-(54) dated the 30th June, 2017

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• FIN/REV-3/GST/1 /08 (Pt-1) (Vol II) /141 - dated 27-6-2020 - Nagaland SGST
  Seeks to amend Notification No. FIN/REV-3/GST/1/08(Pt-1) (Vol.II)/126 dated the 9th June 2020

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Circulars / Instructions / Orders

SEBI

• SEBI/HO/CDMRD/DRMP/CIR/P/2020/176 - dated 21-9-2020
  Alternate Risk Management Framework Applicable in case of Near Zero and Negative Prices

Highlights / Catch Notes

GST

• Renting of immovable property service - Valuation of rental income - The applicant can’t deduct the property taxes and other statutory levies for the purpose of arriving at the value of rental income. - The notional interest on the security deposit shall be taken into consideration, for the purposes of arriving at total income from rental, only if it influences the value supply of RIS service i.e. monthly rent. - AAR
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• Levy of GST - Levy of GST - Services are in relation to conduction of examination - job to scan the OMR Flying slip, OMR marks Foil with barcode sticker, scanning of OMR attendance sheet and scanning OMR Absentee sheet along with data extraction and finalization of data - The activity of the applicant, is covered under “Other Educational Support Services”, under SAC 999299, and is related to conduct of examination and hence is exempted - AAR
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• Provisional attachment order - no proceeding pending under Sections 62, 63, 64, 67, 73 and 74 of CGST Act - It is deemed appropriate to direct the respondent No.1 to treat the present writ petition as an objection under Rule 159(5) of the Central Goods and Services Tax Rules, 2017 and decide the same within a week by way of a reasoned order after giving an opportunity of hearing to the petitioner - HC
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Income Tax

• Carry forward of the depreciation loss - once the Circular No.14 of 2001 clarified that the restriction of 8 years for carry forward and set off of unabsorbed depreciation had been dispensed with, the unabsorbed depreciation from A.Y.1997-98 upto the A.Y.2001-02 got carried forward to the assessment year 2002-03 and became part thereof, it came to be governed by the provisions of section 32(2) as amended by Finance Act, 2001 and were available for carry forward and set off against the profits and gains of subsequent years, without any limit whatsoever. - HC
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• Penalty proceedings u/s 271AAA - the penalty was initiated u/s 271AAA in the quantum assessment order whereas the same has finally been levied u/s 271AAB which would show non- application of mind on the part of Ld. AO to factual matrix of the case. It is noted that the penal provisions of Sections 271AAA were not, at all, applicable to the facts of the case since the search was conducted on the assessee after 01/07/2012. Therefore, from any angle, the penalty would not be sustainable in the eyes of law - AT
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• Gross profit addition - AO during the assessment proceedings, agreed to estimation of gross profit @ 56% of sales/turnover and this act of the assessee obviously stopped the AO from making further enquiry or observations and going deep into the books of account of the assessee and to take recourse of procedure mandated in section 145(3) - assessee cannot be held as aggrieved from such addition which has been made on the voluntary consent of the assessee before the AO during assessment proceedings in the line of the Income Tax Settlement Commission. - AT
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• Complete Scrutiny v/s Limited scrutiny - In the assessee`s case under consideration the issue of mismatch of sales shown in the audit report vis-à-vis ITR was for ‘Limited Scrutiny’ but the assessing officer has expanded the scope of limited scrutiny without taking permission from the concerned Pr.CIT/CIT, since there is no whisper of any sanction or approval of the Pr.CIT/CIT therefore action of AO to assess the loss is beyond his jurisdiction and in violation of the CBDT circular which he was bound to obey. - AT
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• Valuation of Excess stock found during search - argument of the AO for not allowing deduction of GP embedded in the estimated market value, is devoid of any merit - AT
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• Delayed payment of certain Govt. dues - the differential amount of sales tax (Normal rate – Concessional Rate) and interest on delayed payment of Sales Tax amounting deposited by the assessee is not in the nature of penalty for contravention of any law. Therefore, the assessee is entitled for deduction of such amount u/s 37(1) - AT
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• Disallowance of brokerage expenses while working out the capital gains - when the assessee has duly filed confirmations from all the brokers to whom commission has been paid and they are also assessed to tax, adverse inference cannot be drawn against the assessee if the brokers to whom the brokerage amount has already been paid and the assessee even had no moral pressure. - AT
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• Disallowance u/s 36(1)(iii) - interest free loan to its subsidiaries - the amount of advances received from the customers cannot form part of own fund of the assessee. Therefore, the amount of interest on the borrowed funds diverted to the non-interest bearing advances should be disallowed. - AT
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Customs

• MEIS Scheme - mistake while submitting Shipping bills - the petitioner's representative instead of entering 'Y' for each line item, selected 'Y' only for the first line item and did not make any selection for remaining items - this was a sheer inadvertent mistake committed by the writ petitioner's representative. - The petitioner is permitted to make a formal request to the third respondent to avail the benefit of scheme - HC
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Corporate Law

• Seeking Convening and holding of AGMs - Default as per Section 96 of the Companies Act, 2013 - The section confers on the Tribunal to order the AGM of the company to be conducted if there is a default. The Respondent No.4 has submitted on oath in the form of affidavit that there is no possibility of any business relationship between it and the Petitioner that could contribute to reviving the business of the Respondent No.1 Company. - Tri
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• Restoration of the name of the Company in the Register of Companies - The petitioner-company has earned revenue in the financial year 2013-14 to 2016-17, therefore, it is just and equitable to restore the name of the petitioner-company into the Register of Companies, maintained by the ROC - the ingredients provided for in Section 252(3) of the Act, are satisfied. - Tri
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Service Tax

• Refund - respondent has deposited lumpsum amount during investigation and same was not recovered from the customers - Principles of Unjust Enrichment - Revenue failed to point out any evidence which may indicate that the burden was passed on by the respondent - Refund allowed by tribunal cannot be said to be perverse. - HC
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Case Laws:

• GST

• 2020 (9) TMI 784
  Renting of immovable property service - Deduction of property taxes and other statutory levies - Valuation of rental income - inclusion of notional interest on the security deposit - exemption of tax under the general exemption of ₹ 20 lakhs - whether the property tax other statutory levies paid/ payable by the applicant be deducted from the rental income for the purpose of arriving at the value of rental income? - HELD THAT:- It could easily be inferred from Section 15(2) that any taxes, duties, cesses, fees and charges, levied under any law for the time being in force, shall include in the value of taxable supply. In the instant case the property tax is levied, under the Karnataka Municipalities Act 1964, by the BBMP in Bangalore. Further the only exclusions from the value of the taxable supply are the taxes, duties, cesses, fees and charges levied under the CGST Act 2017, SGST (KGST) Act 2017, UTGST Act 2017 GST (Compensation to States) Act, subject to the condition that they are charged separately by the supplier - It is observed that in the instant case, the supplier (applicant) and the recipient are not related; price is the sole consideration of the supply and monthly rent is the price payable. Thus the monthly rent is the transaction value and the same would be the value of supply of the impugned service of RIS - the property tax is not deductable from the value of taxable supply of Renting of Immovable Property service. Whether notional interest on the security deposit should be taken into consideration for the purposes of arriving at total income from rental? - HELD THAT:- The security deposit is collected normally equivalent to 6 months or 12 months rent. Also it is a known fact that the higher the security deposit lower the monthly rent amount. In the instant case, an amount of ₹ 5 Crore is proposed to be collected as security deposit and a monthly rent of ₹ 1.5 Lacs. However the applicant has not furnished adequate date / information so as to decide whether actually the notional interest influences the monthly rental amount or not - the notional interest has to be considered as part of value of supply of service, if and only if the said notional interest influences the value of supply i.e. value of RIS service / monthly rent and is leviable to GST along with monthly rent at the rate applicable to monthly rent. Whether the applicant is entitled for exemption of tax under the general exemption of ₹ 20 lakhs? - HELD THAT:- The interest free security deposit does not come under the purview of supply as per Section 7 of CGST Act, 2017 since it is not a consideration. However, the notional interest on security deposit becomes part of consideration along with monthly rent, if it influences the value of the supply - in view of the submission made by the applicant that they have no other business besides what they have submitted to this Authority, it is found that they are entitled for the general exemption for registration purpose, subject to the condition that their annual total turnover which includes monthly rent and notional interest, if it influences the value of supply, does not exceed the threshold limit.

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• 2020 (9) TMI 783
  Levy of GST - Services are in relation to conduction of examination - Bihar School Education Board, educational institution - Whether the services performed by them are exempted by virtue of item (b) of Sr. No. 66 of Notification No. 12/2017-CT (R) dated 28.06.2017? - HELD THAT:- The Notification No. 14/2018-CentaI Tax (Rate) dated 26.07.2018 inserted a clarification in Notification No. 12/2017 -Central Tax (Rate) dated 28.06.2017 that the Central and State Educational Boards shall be treated as Educational Institution for the limited purpose of providing services by way of conduct of examination to the students. Thus the BSEB becomes an Educational Institution for the purpose of conduction of examination, in terms of the Notification. It is observed, from the letter dated 06.12.2018 of BSEB, submitted by the applicant containing reference of work order dated 10.11.2018, that the applicant was given the job to scan the OMR Flying slip, OMR marks Foil with barcode sticker, scanning of OMR attendance sheet and scanning OMR Absentee sheet along with data extraction and finalization of data in all the four categories . Whether the aforesaid work, allotted to the applicant by the BSEB, covered under the conduction of examination or not? - HELD THAT:- It is an undisputed fact that the process of conducting examination is not limited/ restricted to a test centre. Examination is an incomplete activity without assessment. Scanning of answer sheets and quantifying marks is an essential part albeit main objective of the examination process. Educational institutions or the examinees do not look at these activities in isolation. The stated activity of the applicant is exempted by virtue of Sr. No.66 of Notification No. 12/2017-CT (R) dated 28.06.2017.

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• 2020 (9) TMI 782
  Territorial Jurisdiction - case of petitioners is that the complaint against the two accused relates to matters outside the jurisdiction of the Gurugram court and, therefore, the proceedings should be transferred to a competent court at Delhi - petitioner next submits that all the referable 16 firms/companies, their Bank Accounts and Registered Offices are in Delhi and that is how, the Gurugram court gave a prima facie view on the jurisdictional aspect, in its order dated 20.03.2020. HELD THAT:- Let notice be issued, returnable in three weeks.

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• 2020 (9) TMI 781
  Provisional attachment order - no proceeding pending under Sections 62, 63, 64, 67, 73 and 74 of CGST Act - exercise of power under Section 83 of CGST Act - HELD THAT:- This Court is of the view that Rule 159(5) of the Central Goods and Services Tax Rules, 2017 is squarely applicable to the facts of the present case - the rule states that Any person whose property is attached may, within seven days of the attachment under sub-rule (1), file an objection to the effect that the property attached was or is not liable to attachment, and the Commissioner may, after affording an opportunity of being heard to the person filing the objection, release the said property by an order in FORM GST DRC-23 . It is deemed appropriate to direct the respondent No.1 to treat the present writ petition as an objection under Rule 159(5) of the Central Goods and Services Tax Rules, 2017 and decide the same within a week by way of a reasoned order after giving an opportunity of hearing to the petitioner - petition disposed off.

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• 2020 (9) TMI 779
  Constitutional Validity of Rule 90(3) of the CGST Rules - Refund the excess tax - HELD THAT:- Issue notice. List on 09th December, 2020. The order be uploaded on the website forthwith.

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• 2020 (9) TMI 778
  Filing of amended undertaking for the payment of tax in installments - Manual filing of Form GSTR 3B - revocation of cancelled GST registration number - enabling the facility to allow filing Form GSTR 3B return with part payment of tax - HELD THAT:- When Mr. Podar was confronted whether his client has abided by the undertaking filed by him in this Court, Mr. Podar submitted that his client has not been able to comply with the terms of the undertaking. In such circumstances, there is no further scope of examining the main matter - As the main matter itself is dismissed for non-compliance of the order passed by this Court, the civil application, which is on board today, also stands disposed of accordingly.

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• 2020 (9) TMI 777
  Refund of SGST IGST - export of goods - Zero Rated Supply - rejection of refund on the ground that the petitioner had availed duty drawback on export of the goods @1% of FOB Value do not call for interference under writ jurisdiction - HELD THAT:- The authority found that the refund of Input Tax Credit on export of goods and services was without payment of tax for the period August 2017. In fact, the assessee had availed duty drawback at the rate specified in column - All these facts were in the mind of the officer to deny the refund. It is restrained further for commenting further with regard to the eligibility or otherwise qua claim of refund on IGST and CGST, as it would be in the domain of the appellate authority to examine issue, in case the petitioner chooses to avail the remedy, in accordance with law. Petition dismissed.

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• 2020 (9) TMI 776
  Best Judgement Assessment - Levy of GST - allegation that the appellant has failed to respond to the above notices issued and failed to avail the opportunities of personal hearing provided to them in the present appeal - filing of GSTR-3B - wilful suppression of facts or not - levy of interest - penalty - January, 2019 to February, 2019 - CGST/APGST Act, 2017. Whether the best judgment orders through estimating the outward taxable supplies by A.A, are based on any dependable and authentic evidence/basis or not? - HELD THAT:- The best judgment assessment under Section 62 can be made only when the dealer fails to file the return specified in Section 39(1) of the Act, read with Rule 61(1) of the Rules, that is the return in Form GSTR-3. Nothing else. Whether the appellant's contention that Section 62 cannot be invoked as GSTR-3B is not any return prescribed under Section 39 of the Act, hence these orders are legal or not? - HELD THAT:- The best judgment assessment under Section 62 can be made by taking into account all the relevant material which are already available and/or the material available which is gathered from the other sources. It is also clear from the settled judicial principles on best judgment assessment that the estimations involved in the best judgment assessment should not be based on mere surmises and/or conjectures. Though estimations are involved in the best judgment assessment, the same cannot be without any basis or with some basis. In the instant case, uniformly the suppressed turnovers for a particular month are estimated either mostly on the basis of returns of the outward supplies of the dealer in Form GSTR-1 of that month or on the basis of the return in Form GSTR-3B for the preceding month. The quantum of the outward supplies declared by the dealer in such return is held to be incorrect and incomplete and the same is inflated to 150% of the declared outward supplies to arrive at the probable suppressed outward supplies for that month @ 50% - This cannot be treated as the correct basis for the estimation. No attempt is made by the CTO to gather any material to at least indicate, not to talk of establish, that the quantum of the outward supplies declared by the dealer/supplier in Form GSTR-1 for that month is incorrect and incomplete. It is not even rejected by the AA. But, still the best judgment of the quantum of the outward supplies is made declaring uniformly for all the months that the dealer has suppressed 50% of its declared outward supplies in the relevant months. Thus, the estimations involved in the best judgment assessment herein are not sustainable. They are whimsical. They have no basis. It is declared accordingly. The same are deleted. In view of the above emerged anomalies involving invoking of Section 62 unlawfully, because the relevant Section 39 does not speak of GSTR-3B in the listed returns for the disputed period, as clarified in the above discussed judgment and in view of the erroneous method adopted by A.A for estimating outward taxable supplies through best judgment without mentioning reasons/evidence, hence the tax so levied by the A.A of ₹ 3,43,96,432/- is annulled and modified as per actual tax liability of the appellant for the period from January, 2019 to February, 2019. In the result, the appeal is modified by fixing the actual tax liability from ₹ 3,43,96,432/- (annulled) (to be determined as per GSTR-1 returns of the appellant for the period from January, 2019 to February, 2019. Whether the willful suppression aspect and resultant levy of 100% penalty, is found to be having any basis and such willfulness, has been established by A.A or not? - HELD THAT:- The additions made by the AA towards the probable suppressions that formed the basis for the levy of penalty should also fall to the ground. It is trite to say that when the tax is set aside the corresponding penalty should also be set aside. Hence, the penalty which is proportionate to the tax additions made towards the probable suppression is also set aside - Besides, there is not even an iota of evidence established by the AA pointing out the willfulness in the omission to file the return in Form GSTR-3B and/or in the determined suppression of outward tax. None of the facts that could give rise to the inferences of the 'willfulness' are specified in the very brief pre-common assessment Show-Cause Notice and also in the common assessment orders in Form GST ASMT-13. Hence, the levy of penalty @ 100% of determined turnovers are also to be deleted. Thus, a case is made in favour of the appellant to struck down the penalty as the levy is not justifiable. Hence, the total penalty of ₹ 3,43,96,432/- annulled and appeal allowed on this aspect in favour of the appellant. Whether the interest levied by A.A, is in tune with the provisions of the GST Act or not? - HELD THAT:- The levy of interest is upheld, but the A.A is directed to compute leviable interest as on date against the actual tax to be paid by the appellant as discussed at above paras. In the end, appeal on this aspect is confirmed. The appellant also not advanced any objections on this aspect. The assessment is partly modified, partly annulled and partly confirmed on the levy made by the assessing authority.

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• 2020 (9) TMI 775
  Profiteering - foot wear (Shoes) - allegation that the Respondent had not passed on the benefit of rate reduction when the rate of GST was reduced - contravention of provisions of Section 171 (1) of the CGST Act, 2017 - penalty - HELD THAT:- It has been revealed that the Respondent had not passed on the benefit of rate reduction when the rate of GST was reduced from 18% to 5% on foot wear, as per the provisions of Section 171 (1) of the CGST Act, 2017 for the period w.e.f. 27.07.2018 to 30.11.2018 and hence, the Respondent has violated the provisions of Section 171 (1) of the CGST Act, 2017. It is also clear from the record that the Respondent has also paid the entire profiteered amount in the Consumer Welfare Funds of the Central and the State Governments along with interest. It is also revealed from the perusal of the CGST Act and the Rules framed under it that no penalty had been prescribed for violation of the provisions of Section 171 (1) of the above Act, therefore, the Respondent was issued show cause notice to state why penalty should not be imposed on him for violation of the above provisions as per Section 122 (1) (i) of the above Act as he had apparently issued incorrect or false invoices while charging excess consideration and GST from the buyers. However, from the perusal of Section 122 (1) (i) it is clear that the violation of the provisions of Section 171 (1) is not covered under it as it does not provide penalty for not passing on the benefits of tax reduction and hence the above penalty cannot be imposed for violation of the anti-profiteering provisions made under Section 171 of the CGST Act - Since, no penalty provisions were in existence between the period w.e.f. 27 07 2018 to 30.11.2018 when the Respondent had violated the provisions of Section 171 (1), the penalty prescribed under Section 171 (3A) also cannot be imposed on the Respondent retrospectively. Accordingly, the notice dated 03.07.2019 issued to the Respondent for imposition of penalty under Section 122 (1) (i) is hereby withdrawn and the present penalty proceedings launched against him are accordingly dropped.

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• Income Tax

• 2020 (9) TMI 774
  Royalty payment - extraordinary jurisdiction of this Court - HELD THAT:- Royalty payment for one company was only for the 'technology' component like in Maruti Suzuki India Ltd., while the royalty payment was for 'technology and the use of brand' as in assessee / appellant company. Such inherent deficiencies were pointed out thereby making the entire system faulty and fraught with loopholes. Now, it is revealed, during the course of the arguments that the TPO's order was accepted by the AO and the final order of assessment was passed in November 2019. It is not clear whether the assessee / appellant approached the DRT with objections against the draft assessment order. The assessee / appellant ought to have approached the ITAT against this final order of assessment. In such circumstances, this Court opines that the remedies are available in the system and the assessee / appellant ought to have approached the ITAT before approaching this Court, but instead challenged the TPO's order in this Court. We may note, even in the first instance the assessee did the same thing by approaching the Tribunal against the final assessment made. Certainly, as done by it earlier, all the issues can be agitated before the Tribunal. In the final order, the Single Judge had also observed that this Court is of an undoubted opinion that the writ petitioner has not made out any case for the purpose of waiving the efficacious alternate remedy available to the writ petitioner under the provisions of the Act and therefore, this Court is not inclined to entertain the writ petition on merits and adjudicate the issues involved in respect of fixing of average rate of royalty payment. We would like to reiterate the legal position involving invocation of the extraordinary jurisdiction of this Court by placing reliance upon the judgment of a Division Bench of this Court in KALANITHI MARAN, KAVERY KALANITHI [ 2014 (7) TMI 605 - MADRAS HIGH COURT] Writ appeal is disposed of with the above observations with liberty to the assessee / appellant to approach the Tribunal within four weeks from the date of receipt of a copy of this order.

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• 2020 (9) TMI 773
  TDS u/s 195 - payments made to Opportunity International as Fees for Technical Services - disallowance under Section 40(a)(ia) - provisions of Section 90 of the Income Tax Act read with the Double Taxation Avoidance Agreement between India and USA - HELD THAT:- Admittedly, the issue relating to Section 90 of the Income Tax Act read with Double Taxation Avoidance Agreement between India and United States of America has not been raised before the Assessing Officer or before the CIT (Appeals) or before the ITAT. But for the first time, the appellant/assessee has raised the issue before this Court and the said issue has also been raised in the substantial questions of law - There is no occasion to decide this issue viz., as to whether the disallowance under Section 40(a)(ia) without considering the provisions of Section 90 of the Income Tax Act read with Double Taxation Avoidance Agreement between India and USA, is correct or not, since the said point has not been discussed before the authorities below. The contention of the appellant/assessee is that as per Section 90 of the Act, the assessee is not liable to deduct the tax at source as the assessee did not make available any technical knowledge and therefore, the payment need not be treated as Fees for Technical Services. Admittedly, this point has not been raised before any of the authorities below, but for the first time, this point is raised as substantial question of law, hence, there is no occasion to deal with the said issue in this Tax Case Appeal. This is a fit case for remitting the matter back to the Assessing Officer for considering the issue by taking into account the claim made by the assessee. Assessing Officer, after giving due opportunity to the appellant, shall decide the matter in accordance with law.

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• 2020 (9) TMI 772
  Assessement framed u/s.143(3) based on a non-est return filed - Whether the return filed on 31/03/2014 for the Assessment Year 2012-13 is a non-est return and not a return u/s.139(5)? - Before the Income Tax Appellate Tribunal, the learned counsel who appeared on behalf of the assessee, contended that an opportunity of cross examination of Shri. Stephen John was not provided to the assessee by the CIT (Appeals) that too even after raising the said issue before the CIT(Appeals) - HELD THAT:- Since the appellant/assessee has raised the issue of opportunity of cross examination of Stephen John and the same was given to the assessee and for the same, the matter is remitted back to the CIT (Appeals), we are of the view that there is no infirmity in the order of the Income Tax Appellate Tribunal and thus, we find no merit in the Tax Case appeal and the Appeal is liable to be dismissed. Since the Income Tax Appellate Tribunal has remitted back the matter to the CIT (Appeals) giving opportunity to the assessee for cross examination, and further directed the CIT (Appeals) to decide the matter, after giving opportunity of cross examination to the assessee, the substantial questions of law 1 and 2 are concerned, they are left open to the CIT (Appeals) to decide the same on merits and in accordance with law.

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• 2020 (9) TMI 771
  Jurisdiction of Court entertaining this appeal - whether situs of the Settlement Commission was within the jurisdiction of this Court? - HELD THAT:- Doctrine of dominus litis or doctrine of situs of the appellate Tribunal do not go together; and a dominus litis indicates that the suitor has more than one option, whereas the situs of an Appellate Tribunal refers to only one High Court wherein the appeal can be preferred. As pointed out that situs of a Tribunal may vary from time to time and it could be Delhi or some other place or Chennai as in the case on hand and the determination of jurisdiction of the High Court should be based on the relevant Statute and that the Parliament never contemplated to have a situation of this nature and if the cause of action doctrine is given effect to, invariably more than one High Court may have jurisdiction, which is not contemplated. Appellant is an assessee on the file of the third respondent namely the DCIT, Company Circle 4(1)(Inv.), IV Floor, Kendriya Sadan, Koramangala, Bangalore. The Appellate Authority, before whom the assessee filed the appeal is the second respondent herein namely the Commissioner of Income Tax, Bangalore-III, Bangalore. Therefore, the learned Single Judge was justified in rejecting the writ petition on the ground that due to lack of territorial jurisdiction, the order passed by the Settlement Commission did not call for interference. Writ appeal is dismissed leaving it open to the appellant to move the High Court of Karnataka if they are so advised. It is also made clear that the above writ appeal has been dismissed solely on the ground of lack of territorial jurisdiction to entertain the appeal/writ petition and the merits of the case of the appellant have not been dealt with in this judgment.

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• 2020 (9) TMI 770
  Carry forward of the depreciation loss - beyond the eight year period mandated under the provisions of Section 32 - HELD THAT:- The restriction of 8 years for carry forward and set off of unabsorbed depreciation was dispensed with, with a view to enable the industries to conserve sufficient funds to replace plant and machinery. Standing Counsel appearing for the Revenue would point out that those amendments took place with effect from 01.4.2002 and would accordingly apply in relation to the assessment year 2002-03 and the subsequent years whereas in the assessee's case, the depreciation loss, which they sought to carry forward is for the assessment year 1997-98. The proper manner, in which, the modification has to be understood, is to the effect that from the assessment year 2002-03, if the eight years' period was not lapsed, then the assessee would be entitled to carry forward the loss without any restriction on the time limit. This aspect has been dealt with elaborately in the decision of case of General Motors India (P) Ltd. Vs. DCIT [2012 (8) TMI 714 - GUJARAT HIGH COURT] where there is current depreciation for such succeeding year the unabsorbed depreciation is added to the current depreciation for such succeeding year and is deemed as part thereof. If, however, there is no current depreciation for such succeeding year, the unabsorbed depreciation becomes the depreciation allowance for such succeeding year. We are of the considered opinion that any unabsorbed depreciation available to an assessee on 1st day of April 2002 (A.Y. 2002-03) will be dealt with in accordance with the provisions of section 32(2) as amended by Finance Act, 2001. And once the Circular No.14 of 2001 clarified that the restriction of 8 years for carry forward and set off of unabsorbed depreciation had been dispensed with, the unabsorbed depreciation from A.Y.1997-98 upto the A.Y.2001-02 got carried forward to the assessment year 2002-03 and became part thereof, it came to be governed by the provisions of section 32(2) as amended by Finance Act, 2001 and were available for carry forward and set off against the profits and gains of subsequent years, without any limit whatsoever. - Decided against the Revenue

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• 2020 (9) TMI 769
  Disallowance u/s 14A read with Rule 8D - disallowance for deduction u/s 10A - HELD THAT:- No expenditure was incurred by them for earning the exempt income. The assessee were not able to substantiate that fact before the authorities or before the Tribunal. Both CIT(A) and the Tribunal re-appreciating the factual matrix and found that the investment during the year increased from Opening Balance of ₹ 3,21,68,40,000/- to Closing Balance of ₹ 5,17,93,70,000/-. Assessing Officer also found that the value of the assets also increased substantially to ₹ 1,84,18,32,000/- from ₹ 1,76,96,30,000/- and therefore applied Rule 8D and made additions under Section 14A of the Act and we find no error in the order of the Assessing Officer as confirmed by the CIT(A) and the Tribunal. Accordingly the Substantial Question of Law No.1 is answered against the assessee. Computing deduction under Section 10A - Exclusion of foreign currency from the 'Export Turnover' - HELD THAT:- In the case of M/s.Renault Nissan Technology Business Centre India Private Limited [ 2020 (8) TMI 19 - MADRAS HIGH COURT ] this Court has considered the Substantial Question of Law as to whether the Tribunal erred in holding that the expenditure incurred in foreign exchange by the assessee therein was to be excluded from the 'Export Turnover' for the purpose of computing deduction under Section 10AA of the Act and the question was answered in favour of the assessee

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• 2020 (9) TMI 768
  Stay of demand - as directed the petitioner to pay 20% of the disputed amounts, as a pre-condition for stay of the remaining amount confirmed against the petitioner, pending disposal of the appeal - HELD THAT:- Dispose the writ petition by quashing Exts.P4, P9 and P14 orders of the 2 nd respondent and directing the 1st respondent to consider and pass orders on Exts.P3, P8 and P13 appeals within an outer time limit of six months from the date of receipt of a copy of this judgment, after hearing the petitioner. Also make it clear that till such time as orders are passed by the 1st respondent in the appeal as directed above, and the order communicated to the petitioner, recovery steps pursuant to Exts.P2, P7 and P12 demand notices shall be kept in abeyance. The petitioner shall produce a copy of this judgment together with a copy of the writ petition before the 1 st respondent for further action.

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• 2020 (9) TMI 767
  Penalty u/s 271(1)(c) - Defective notice - non specification of charge - HELD THAT:- Since appropriate limb has not been specified in the subject notice and therefore, the principles of natural justice could be said to be have been violated. More or less, similar proposition has been laid in other binding judicial precedents as tabulated by us. Failure to frame specific charge against the assessee during penalty proceedings would be fatal to penalty proceedings itself and the same could not be sustained in the eyes of law. The revenue is unable to demonstrate that specific charge was ever framed and confronted to the assessee during penalty proceedings. Therefore, respectfully following the binding judicial precedents favoring the assessee, on the issue, we find substantial force in legal grounds raised by Ld. AR, in this regard. Provisions of Explanation-5A to Section 271(1)(c), as invoked by learned first appellate authority for the first time, which were never invoked by Ld. AO and which was never confronted to the assessee during penalty proceedings, could also not be sustained. Moreover, the condition of framing of specific charge, in any case, was required to be fulfilled before invoking Explanation 5A against the assessee - we hold that impugned penalty was unsustainable in the eyes of law and therefore, we direct for deletion of the same. -Decided in favour of assessee. Penalty proceedings u/s 271AAA - notice u/s 274 read with Section 271AAA was issued to the assessee without specifying the exact charge - HELD THAT:- It is quite evident that beside failure to frame specific charges against the assessee, the penalty was initiated u/s 271AAA in the quantum assessment order whereas the same has finally been levied u/s 271AAB which would show non- application of mind on the part of Ld. AO to factual matrix of the case. It is noted that the penal provisions of Sections 271AAA were not, at all, applicable to the facts of the case since the search was conducted on the assessee after 01/07/2012. Therefore, from any angle, the penalty would not be sustainable in the eyes of law. - Decided in favour of assessee.

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• 2020 (9) TMI 766
  Estimation of income - bogus purchases - HELD THAT:- We direct the AO to restrict the addition limited to the extent of bringing the G.P. rate on disputed purchases at the same rate of other genuine purchases. Disallowance of interest - CIT(A) deleted the said addition on the ground that the interest free funds available with the assessee at the beginning of the year whereas the interest free advance - HELD THAT:- We find that the Ld.CIT(A) has rightly followed the decision in Reliance Utilities Power Limited [ 2009 (1) TMI 4 - BOMBAY HIGH COURT] as the interest free funds available with the assessee at the beginning of the year was much more then the interest free advances. We uphold the order of the CIT(A) and dismiss the second ground of appeal of the revenue.

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• 2020 (9) TMI 765
  Gross profit addition - non rejection of books of accounts - Assessee accepting gross profit @ 56% as per the order of Settlement Commission for immediately preceding seven assessment years - CIT-A granted part relief to the assessee in a non-maintainable appeal - HELD THAT:- Assessee, before the AO during the assessment proceedings, agreed to estimation of gross profit @ 56% of sales/turnover and this act of the assessee obviously stopped the AO from making further enquiry or observations and going deep into the books of account of the assessee and to take recourse of procedure mandated in section 145(3) - assessee cannot be held as aggrieved from such addition which has been made on the voluntary consent of the assessee before the AO during assessment proceedings in the line of the Income Tax Settlement Commission. We safely presume that the appeal of the assessee was neither maintainable before the CIT (A) nor before this Tribunal in view of the various decisions, as relied in the case of Vamadevan Bhanu [ 2009 (12) TMI 591 - KERALA HIGH COURT] Therefore, in our considered opinion, firstly, ld CIT(A) has admitted and adjudicated the appeal which was not maintainable as per provisions of section 246A r.w. 250 of the Act. CIT(A) held that the action of the AO in estimating the gross profit margin at the figure higher of 56% of sales/turnover than the reported value of 53.88% is not entirely unjustified and same is upheld. Thereafter, the ld CIT(A) after noting the arguments of the assessee recorded hypothetical observation without any basis only based on surmises and conjunctures and without referring to the financial results of the assessee, without referring to ITSC order and voluntary consent of assessee for estimating GP rate @ 56% of sales/turnover and reduced the GPM from 56% to 55% ignoring vital facts supporting the action of the AO. Therefore, in our opinion, ld CIT(A), first of all, admitted and adjudicated the non-maintainable appeal and, therefore, gave relief to the assessee without any justified reason and legal basis tenable under provisions of the Act. AO was right in making addition on the consent of the assessee and keeping in view the order of ITSC for immediately previous seven assessment years by estimating G.P @ 56% of sales/turnover. We also hold that the ld CIT(A) has granted part relief to the assessee in a nonmaintainable appeal without any valid basis, thus, same is not sustainable and thus, we set aside the same.

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• 2020 (9) TMI 764
  Revision u/s 263 - proceedings for reopening the assessment were initiated and assessment was completed u/s 148/143(3) - assessee has wrongly shown this income under the head of capital gain which was actually business income - As per CIT assessee has sold the land of same area which was purchased and in the original return filed the transaction for the land sale was shown under the head capital gain whereas in the return filed in reopening proceedings it was shown as business income and the same was accepted by the AO and he had not examined this issue - HELD THAT:- The finding of the Pr. CIT are not correct because the assessee has purchased agriculture land measuring 36/68 part of 0.86 hectare whereas she sold the 3600 square meter industrial plot. So the land sold and land purchased was not same and the finding in the order u/s 263 is not correct. The important fact which has been ignored by the PCIT is that in computation of income filed with the original return the assessee has made a mistake that he has shown the land transactions under the head capital gain income whereas the transaction was purely a business transaction. The object behind the purchase of land is to convert it into the industrial land and after development sale it on good price for earning profit. Transaction of purchase and sale and conversion is purely a business transaction and the assessee has wrongly shown it as capital gain which has been corrected vide filing the revised return copy of which is placed on paper book. By filing return in response to notice u/s 148 the assessee has corrected her mistake and shown this transaction in business income. AO has examined all the issues regarding sale of lands. All the details were submitted before the learned AO. The assessment order passed by AO was neither erroneous, nor prejudicial to the interest of the revenue. Revision under section 263 by PCIT was not justified as all the four issues questioned by PCIT were thoroughly examined by AO during the assessment proceedings, and after considering relevant facts and explanations furnished by assessee had chosen to accept the claim of the assessee and hence, the same could not be termed as non consideration of issues or AO had failed to carry out required enquiries, which ought to have been carried out in accordance with law. Thus the order passed by the learned PCIT deserves to be quashed. Brokerage and commission payment - During the reassessment proceedings the assessee has submitted details of brokerage payment the vouchers and other details are placed on paper book page and TDS was also deducted on brokerage payment treating the transaction as business transaction. Therefore the expenditure incurred on brokerage and commission was fully verifiable and the detail was submitted during the reassessment proceedings.Therefore this objection was also not sustainable. Interest received are shown more as against the interest received - The reason for the difference was duly explained and the learned AO has verified the same. Therefore again this objection was not acceptable for invoking the provisions of section 263. Difference in Proprietor s capital against the capital shown in earlier return - As clarified that the assessee was maintaining books of account for his business of M/s Gupta Engineering Works separately and individual books are kept separately. The individual capital of the assessee was ₹ 1,23,40,013/- out of which the assessee has invested capital of ₹ 26,21,641/- in M/s Gupta Engineering Works. So the capital in individual capacity was ₹ 1,23,40,000/- and capital of M/s Gupta Engineering was ₹ 26,21,641/-. Copy of balance sheet, Profit Loss A/c and other relevant documents are placed on paper book page no. 71 to 82. Therefore the difference in the figures of other income and interest income was duly explained and the objection in this regard is also not sustainable. It is not a fit case for passing the order u/s 263 of the Act by the ld. Pr.CIT . The order passed u/s 143(3) r.w.s. 148 of the Act by the AO was neither erroneous nor prejudicial to the interest of the revenue. Thus the order passed by the AO is confirmed and the main grounds of appeal of the assessee are allowed.

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• 2020 (9) TMI 763
  Complete Scrutiny v/s Limited scrutiny - Expansion of scope of limited scrutiny - speculation loss - mismatch between turnover reported in the audit report vis- -vis turnover in the Income Tax Return - HELD THAT:- Assessee appeared before AO along with the books of accounts and has reconciled the mismatch between turnover reported in the audit report vis- -vis turnover in the Income Tax Return and AO has not taken any adverse view in respect of this issue for which the CASS has selected the return of income of the assessee for scrutiny u/s 143(3). CBDT Circular issued u/s 119 of the Income Tax Act is binding on the Income Tax Authorities.The Assessing Officer s jurisdiction is limited to the issue identified by the CASS in case of Limited Scrutiny cases. In the assessee`s case under consideration the issue of mismatch of sales shown in the audit report vis- -vis ITR was for Limited Scrutiny but the assessing officer has expanded the scope of limited scrutiny without taking permission from the concerned Pr.CIT/CIT, since there is no whisper of any sanction or approval of the Pr.CIT/CIT therefore action of AO to assess the loss is beyond his jurisdiction and in violation of the CBDT circular which he was bound to obey. We find merit in the assessee s grounds of appeal that the action of the AO to make addition on account of loss is beyond jurisdiction and therefore null in the eyes of law and hence we delete the addition. Reopening of cases for last preceding six years - CIT(A) does not have power to give directions to the assessing officer for reopening of cases for last preceding six years and subsequent years of the assessee. Therefore, according to ld Counsel it is illegal and beyond jurisdiction. CIT(A) who is the first appellate authority can do what the AO can do. The first appellate proceedings is an extension of the assessment proceedings. So, it means that what the Assessing Officer cannot do, the CIT(A) cannot do. As per the scheme of the Act when an assessee files a return of income the Assessing Officer accepts the return of income u/s 143(1) of the Act or scrutinize the assessment and pass the order u/s 143(3) of the Act and if the time limit to issue the notice 143(2) has lapsed then assessing officer cannot frame the assessment u/s 143(3) of the Act. The assessing officer can do the assessment for the year for which assessee filed the return of income. The assessing officer can not frame the assessment for preceding years and subsequent years. CIT(A) could not have given directions to the AO for which the AO was not empowered to do, as discussed above and for that we rely on the judgment in the case of B. Mohta [1964 (7) TMI 39 - BOMBAY HIGH COURT] - Appeal filed by the assessee is allowed.

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• 2020 (9) TMI 762
  Validity of assessment order passed u/s 143(3) - beyond period of limitation - HELD THAT:- The impugned notide dated 14/08/2018 is issued beyond the period of limitation. Respectively following view taken in case of Kunal Structures India Pvt.Ltd. [ 2020 (2) TMI 725 - GUJARAT HIGH COURT] we quash and set aside impugned notice dated 14/08/2018 issued under section 143(2) of the Act, and all proceedings taken pursuant thereto. - Appeal filed by assessee stands allowed.

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• 2020 (9) TMI 761
  Unexplained cash found during the course of search - statement recorded on oath u/s 132(4) and 131 relied upon - HELD THAT:- We found that as on the date of search, the books of account of M/s Jewels Emporium were incomplete and the printouts of cash books as taken by the search team did not reflect the true and correct balance available which is made part of the seized papers. Cash balance as appearing in such incomplete books of accounts and taken as recorded cash balance as per books as on the date of search is wrong being not updated. The statements recorded u/s 132(4) cannot be made the sole basis for making additions unless it is supported by any documentary evidence. CBDT has clarified by clarification dated 10/03/2003 (No. 286/2/2003-Income Tax) that while recording statement during the course of search and seizure and survey operations no attempt should be made to obtain confession as to the undisclosed income. Additions based on the alleged surrender obtained during the course of search are in contravention to the circular and instruction of the CBDT and therefore the same deserves to be deleted. One major fact was ignored by the AO as well as by ld. CIT(A) that the sale was duly recorded in the books of accounts and after inclusion of the same in total sales, cash balance, profits and stocks were derived which were accepted by both the authorities without any doubts - further addition by alleging the same as excess cash tantamount to taxation of an income twice. One in the shape of sales and profits embedded therein and again by making addition by alleging the same as unexplained excess cash - we do not find any merit in the addition upheld by the ld. CIT(A) on account of excess cash. The A.O. is directed to delete the same. Excess stock found during search and admitted by partner in the statements recorded during the search operation - HELD THAT:- Statement of Shri Anup Bohra was recorded many times in bits and pieces and he was naturally under tremendous pressure, and he was satisfied about the inventory of physical stock so prepared in so far as quantity of the items are concerned but he is not a person well versed with the accounting principles, he accepted the working of the excess stock so done by the search team in good faith and without going deep into the accounting principles that from the market value of stock so estimated by the approved valuer, the Gross Profit embedded in it is to be reduced for arriving at the cost price for proper and fair comparison with the stock as per books of accounts. There is no retraction from the side of the assessee inasmuch as that the assessee has not retracted or disputed the inventory of the physical stock in quantitative term and has also not disputed the estimated market value of the various items. It is only the calculation part of the arriving at the value of the excess stock that the accounting mistake occurred at the time of search which should be rectified while working out the quantum of excess stock found, if any. As during the course of assessment proceedings before AO, assessee had filed a table showing party-wise purchases made in the preceding six and half years by the assessee in respect of few item which is placed at paper book pages 60-80 according to which the average rate of gold per gram works out to ₹ 2262/- which is very much lower than the rate adopted by DVO (₹ 2714/- per gram). Similarly, average rate of purchase of emerald comes to ₹ 1390/- per ct. as against average fair market rate / value taken by DVO at ₹ 4500/- per ct. Similar is a position in respect of diamond where average purchase cost is ₹ 18567/- per ct. whereas DVO has taken the rate ₹ 25438/- per ct. Thus, this argument of the AO for not allowing deduction of GP embedded in the estimated market value, is devoid of any merit - we uphold the deletion of addition in respect of excess stock found during the course of search - Decided against revenue.

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• 2020 (9) TMI 760
  Delayed payment of certain Govt. dues - differential amount of tax (Normal rate Concessional Rate) and interest on delayed payment of Sales Tax - non-submission of certain forms - HELD THAT:- Since the requisite forms could not be deposited by the assessee to the Sales Tax Department, therefore, the assessee company was required to deposit the sales tax amount at normal rate as against concessional rate of tax, resultantly, the differential amount was deposited by the assessee company. Such amount of tax deposited by the assessee company is certainly not in the nature of penalty for contravention of any law. It was only a tax which was paid by the assessee company as route of concessional rate of tax was blocked as the assessee was not able to deposit the requisite forms with the Sales Tax Department. In the case of Malwa Vanaspati Chemicals Co [ 1996 (10) TMI 5 - SUPREME COURT] had held that where the assessee had to pay the amount of tax at actual rates instead of concessional rates and something more, then it comprises both the elements of compensation and penalty. Therefore, compensation insofar as payment of tax at full rate is obligatory and something more, is in the character of a penalty. Hence, the assessee shall be entitled to the deduction u/s 37(1) of the Act insofar as the payments partake the element of compensation i.e. upto 100% of the sales tax rate actually payable. We do not concur with the findings of the ld. CIT(A) and we are of the considered view that the differential amount of tax (Normal rate Concessional Rate) and interest on delayed payment of Sales Tax amounting deposited by the assessee is not in the nature of penalty for contravention of any law. Therefore, the assessee is entitled for deduction of such amount u/s 37(1) - Decided in favour of assessee.

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• 2020 (9) TMI 759
  Disallowance while working out the capital gains - disallowance of brokerage expenses - HELD THAT:- Hon'ble Allahabad High Court in the case of EMC (Works) Pvt. Ltd vs. ITO [ 1963 (4) TMI 79 - ALLAHABAD HIGH COURT] wherein it has been held that where application is made by the assessee requesting the AO to issue notice u/s 131 and application was rejected by the AO summarily and assessment completed, action of the AO was held to be without jurisdiction. Reliance is also placed on the decision in the case of Munnalal Murlidhar [ 1970 (7) TMI 11 - ALLAHABAD HIGH COURT] wherein it was held that the failure on the part of the AO to call for and examine the evidence which is offered by the assessee materially prejudices the assessee and it is denial to the assessee of opportunity to produce evidence in support of its case. As per our considered view when the assessee has duly filed confirmations from all the brokers to whom commission has been paid and they are also assessed to tax, adverse inference cannot be drawn against the assessee if the brokers to whom the brokerage amount has already been paid and the assessee even had no moral pressure. There is no justification for the disallowance on account of brokerage paid by the assessee. We direct the A.O. to delete the disallowance of brokerage - appeal of the assessee is allowed. Interest paid on money borrowed for purchase of asset - HELD THAT:- The A.P High Court in case of Addl. CIT Vs. K.S. Gupta [ 1976 (8) TMI 9 - ANDHRA PRADESH HIGH COURT] has following judgement of Delhi High Court in CIT Vs. Mithilesh Kumari [ 1973 (2) TMI 11 - DELHI HIGH COURT] held that interest paid on amount borrowed for purchase of open plot of land forms part of cost of acquisition - the assessee has correctly claimed the interest paid on borrowings for purchase of plot as cost of improvements. The action of the A.O. and Ld. CIT(A) is contrary to law and thus cannot be sustained. Thus, the addition is grossly wrong and bad in law and accordingly deleted. Capital gain computation - brokerage payment disallowance - HELD THAT:- Since, the assessee has duly filed confirmations from all the brokers to whom commission has been paid and they are also assessed to tax, adverse inference cannot be drawn against the assessee if the brokers to whom the brokerage amount has already been paid and the assessee even had no moral pressure. Accordingly, we direct the A.O. to delete the disallowance of brokerage - Decided in favour of assessee.

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• 2020 (9) TMI 758
  Penalty u/s 271(1)(c) - defective notice - non striking off the irrelevant portion of the printed show cause notice - addition on account of application of G.P. Rate of 8% - HELD THAT:- Definite finding is required to be recorded by the Revenue Officer for reaching to a conclusion with regard to concealment of income or furnishing of inaccurate particulars of income and without any such findings, there cannot be any question of imposition of any penalty. The mere revision of income to a higher figure by the AO does not automatically warrant an inference of concealment of income by the assessee. Addition to the income of the assessee in this case is based on estimate basis whereas the concealment in our views implies some deliberate act on the part of the assessee in withholding the true facts from the authorities. As in this case the additions were made on the basis of estimation and as discussed in KR. CHINNI KRISHNA CHETTY [ 1998 (6) TMI 5 - MADRAS HIGH COURT] the penalty cannot be levied on the basis of estimated additions - Decided in favour of assessee.

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• 2020 (9) TMI 757
  Disallowance of share premium received on issue of share - undisclosed income of the assessee u/s 68 - HELD THAT:- AO has not been able to prove that the premium charged by the assessee is unjustified or bogus or sourced from undisclosed or unexplained funds/ source. It is also noted from the available records that most of the corporate subscribers were filing returns and they were being regularly assessed to tax. The AO has not brought any adverse findings against them. Assessee had submitted a valuation report for charging of premium before the AO during the assessment proceeding but the same had neither been mentioned nor controverted in the assessment order by the AO. If the AO had any doubts regarding the source of investment of the subscribers, he could have examined the bank accounts from where the investment was routed. AO is duty bound to investigate the creditworthiness of the creditors/ subscribers, verify the identity of the subscribers and ascertain whether the transaction is genuine or these are bogus entries of name lenders but it was not properly done. - Decided against revenue.

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• 2020 (9) TMI 756
  Disallowance u/s. 36(1)(va) r.w.s.2(24)(x) - Delayed payment of employee contribution made by the assessee towards ESI - whether the sum was deposited within 21 days from the end of the month of payment of salary as contemplated under the provisions of Employees Provident Funds Miscellaneous Provisions Act, 1952 and Employees State Insurance Act, 1948? - HELD THAT:- Payment under section 36(1)(va) would be allowed in respect to the payment of employee contribution towards ESI if such payment is made on/before due date as specified under the relevant Act (i.e. 15 days from the month for which salary is due). Thus the payment made by the assessee on account of employee contribution towards ESI after due date stands disallowed in view of the judgment in the case of M/s Checkmate Facility and Electronics Solutions Pvt. Ltd. [ 2018 (10) TMI 994 - GUJARAT HIGH COURT]. We uphold the order of the lower authorities. Hence the ground of appeal of the assessee is dismissed. Disallowance u/s 36(1)(iii) - interest free loan to its subsidiaries - diversion of interest bearing fund for non-commercial activities - HELD THAT:- We note that the assessee has treated the advances received from the customers as part of the capital which is not correct. It is because the advances received by the assessee from the customers represents the current liability which has to be utilized for the supply of the goods/materials to the concerned parties. As such amount represents the current working capital of the assessee which cannot be used for advancing the interests free advances as discussed above. We hold that the amount of advances received from the customers cannot form part of own fund of the assessee. Therefore, the amount of interest on the borrowed funds diverted to the non-interest bearing advances should be disallowed. Amount of capital including reserve available to the assessee, shall be presumed to have been utilized in advancing such interest free advance. In holding so we draw support from the judgment in case of CIT v. Max India Ltd. [ 2017 (3) TMI 1254 - PUNJAB AND HARYANA HIGH COURT] No disallowance of interest expense claimed by the assessee can be made on account of diversion of fund to the extent of own fund available with it as on 31-3-2015 - we direct the authorities below to work out the amount of disallowance towards interest expenses after considering/adjusting the own fund including reserve available to the assessee as on 31-3-2015. Hence, this ground of appeal of the assessee is party allowed.

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• Benami Property

• 2020 (9) TMI 755
  Transaction under the Benami Transactions (Prohibition) Act - plaint schedule land and building were attempted to be taken forcible physical possession by the CPI [Indian Communist Party] on the allegation that they are the owners of the same - land and the building described in the plaint schedule, were purchased and constructed by their members, though it was registered in the name of the CPI - HELD THAT:- Ext.A2 cash book shows various amounts stated to have been collected by certain individuals in the year 1993-1994; however, this book contains a docket showing the name of the appellant Union, which limpidly can only mean that they took possession of the same after they were formed in the year 2004. The persons mentioned in the said cash book have not been identified nor is there anything to show that they are members of the appellant Union. No different is the case of the receipt books, namely Exts.A4 to A25, wherein again various persons and institutions have shown to be the subscribers and contributors to the construction, but without any evidence being led by the appellant Union that they are their members or in any manner connected with them. Therefore, a case under the Benami Prohibition Act can never be maintained by the appellant on the afore factual foundations because, if they have to do so, they would have to first establish expressly that they had contributed the entire consideration and that the purchase of the land and the construction of the building were intended for their use immediately or in future. As already seen above, when the land was purchased or when the building was constructed, the appellant Union had not come into being and it can, therefore, never be taken that they had made any contribution, either for the purchase or construction, which is ineluctable because they themselves admit that it is allegedly their members who had made the contribution but not them. However, this would not be of any avail to them, because neither is their membership register brought on record nor is there anything to establish, even in a whispering note, that the persons shown in Ext.A2 cash book or Exts.A4 to A25 receipt books are their members or in any manner even remotely connected with them. Members of the Union have not been made parties, either as appellants or as respondents, and in their absence on the party array, the allegations made in the plaint can certainly never be proved. CPI seeking recovery of possession of the plaint schedule land and building based on title - Appellant Union does not assert any rights over the property as a trespasser or as an interloper, but solely as the title holder, invoking the provisions of the Benami Prohibition Act. They do not even say that they have a licence to remain in the property or that there is any other interest created in their favour by the CPI. Obviously, therefore, the plea of the CPI to seek recovery of the property becomes manifestly justified.

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• 2020 (9) TMI 754
  Benami transaction - Prohibition of the right to recover property held benami - fifth defendant raised plea that in view of the introduction of the Prohibition of Benami Property Transactions Act, 1988, the entire transaction is hit under Section 4(2) of the said Act - whether the first plaintiff is entitled to raise plea in view of the introduction of Prohibition of Benami Property Transactions Act, 1988 ? - HELD THAT:- In the case on hand, even before the said Act, the suit was filed and therefore the suit is very much maintainable and Section 4 (2) of the said Act is not applicable to the case on hand. Further, in case of G.Mahalingappa Vs. G.M.Savitha [2005 (8) TMI 688 - SUPREME COURT] held that it is not permissible to the High Court in the second appeal to come to contrary findings of its own only on the basis of arguments of learned counsel without considering the findings of the trial court as well as the first appellate court. The High Court in the second appeal is not entitled to interfere with the concurrent findings of fact arrived at by the courts below until and unless it is found that the concurrent findings of fact are perverse and not based on the sound reasoning. This Court does not find that the concurrent findings of the fact arrived at by the courts below are either perverse or without any reason or based on the non consideration of important piece of evidence or admission of some of the parties. Therefore, this Court is of the view that there is absolutely no warrants to interfere with the concurrent findings of fact arrived at by the courts below, which rendered on consideration of pleadings as well as the oral and documentary evidence on record. Accordingly, this Court is of the considered opinion that no substantial questions of law are involved in the second appeal. Be that as it may, all the substantial questions of law formulated by this Court in this Second Appeal, are answered in favour of the plaintiffs and as against the defendants.

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• 2020 (9) TMI 753
  Benami Transaction - suit filed by the plaintiff seeking declaration of title on the basis that the suit property - decree for declaration of title - HELD THAT:- Section 4 of the Act provides for prohibition of the right to recover property held benami. Section 4 (1) of the Act provides that no suit, claim or action to enforce any right in respect of any property held benami against the person in whose name the property is held or against any other person shall lie by or on behalf of a person claiming to be the real owner of such property. The Supreme Court, in the matter of Om Prakash v. Jai Prakash [ 1992 (1) TMI 359 - SUPREME COURT] has held that by virtue of Section 4 of the Act, there is a total prohibition against any suit based on benami transaction and the plaintiff/respondent is not entitled to get any decree in such a suit or in appeal. Suit filed by the plaintiff seeking declaration of title on the basis that the suit property was purchased by his father on 08/05/1981 in the name of defendant No. 1 by making payment of the consideration amount to the seller Ameena Bai is totally barred by Section 4(1) of the Act of 1988. In view of that, find no illegality or perversity in the finding recorded by both the Courts below that plaintiff has failed to prove that his father purchased the suit property on 08/05/1981 in the name of defendant No. 1 and therefore, he is not entitled for decree for declaration of title.

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• Customs

• 2020 (9) TMI 752
  Request for return of passport - Smuggling - Gold Bars - It is challenged only on the ground that if the passport is returned to the respondent, he will flew away from India and there is possibility of abscond and he will not return to India for investigation - Sections 135(1) (a), 135 (1) (b), 135(1) (i) (a) of Customs Act, 1962 - HELD THAT:- A solution has to be found within the parameters of law to deal with the case of the petitioners. The petitioners will have to face proceedings under the Customs Act for the alleged violations. Therefore, their passports cannot be handed over to them at this juncture. In order to strike an harmonious balance between the necessities of law and the requirements of the petitioners to have their stay in India validated so as to avoid being prosecuted under the Foreigners Act, 1946, the FRRO, Chennai, who is present before this Court made some welcome suggestions. He stated that his office is ready and willing to extend the petitioner's Visas for a reasonable period as required by the DRI, which is the prosecuting agency. The respondent came to India by ETA business visa. His entry was on 28.11.2019, and the permission to stay expired on 28.04.2020. Therefore his stay at India became illegal under Section 14 of Foreigners Act without Registration Request to FRRO, Chennai prior to valid e-visa period, namely 25.04.2020. Since the petitioner was arrested and his passport was seized, he was not able to register his request for extension of his visa at FRRO, Chennai. That apart, the offence registered as against the petitioner are not related to the passport of the petitioner. Therefore, the learned Judicial Magistrate, Special Court for Customs, Alandur, Chennai rightly ordered to return his passport on certain conditions - The respondent shall not depart India till the completion of proceedings in O.S.No.116 of 2019 on the file of the petitioner / complainant.

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• 2020 (9) TMI 751
  MEIS Scheme - mistake while submitting Shipping bills - the petitioner's representative instead of entering 'Y' for each line item, selected 'Y' only for the first line item and did not make any selection for remaining items - contention of respondents is that the Director General of Foreign Trade cannot be blamed for the lapse committed by the writ petitioner - HELD THAT:- The exporter ought not to suffer for the inadvertent mistake committed by him. When the filing was done manually, Section 149 of Customs Act provides for effecting corrections. Now, there has been a shift from the manual system to EDI System. In the EDI System, approval is also automated. Since the petitioner had opted only for 'Yes', as far as the first line item is concerned and did not opt for the remaining items, by system default, for the remaining items the system opted 'No' automatically. As already pointed out, this was a sheer inadvertent mistake committed by the writ petitioner's representative. The petitioner had actually intended to claim the benefit under the aforesaid Scheme. The petitioner deserves to be given one more opportunity to set right things. After the shipping bills were filed, they are transferred to NSDL (National Securities Depository Limited), which is a Digital Depository. Unless, the third respondent specifically instructs NSDL, they will not be in a position to forward the petitioner's shipping bills to the second respondent. It is seen that the petitioner had been corresponding only with NSDL all these months. The petitioner is permitted to make a formal request to the third respondent. After the third respondent receives such a request from the petitioner herein, the 3rd respondent /Commissioner of Customs, Tuticorin will issue No Objection Certificate to enable the petitioner to avail the benefit and also instruct NSDL to transmit all the relevant materials to the Development Commissioner, MEPZ, Tambaram, Chennai - petition disposed off.

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• Corporate Laws

• 2020 (9) TMI 750
  Removal of name of the Petitioner from the impugned List of Disqualified Directors prepared by the Respondents - change of status of the Petitioner in the records of the Respondents No.1 and 2 from disqualified directors - disqualified directors under Section 164(2)(a) of the Companies Act, 2013 - HELD THAT:- In the case of MUKUT PATHAK ORS., YOGESH KHANTWAL, AARTI KHANTWAL, AND VINEET WADHWA VERSUS UNION OF INDIA AND ANR. [ 2019 (11) TMI 319 - DELHI HIGH COURT] , this Court has come to a categorical conclusion that the proviso to Section 167(1)(a) of the Act, which came into force w.e.f. 07.05.2018, cannot be applied retrospectively. In the present case, admittedly, the Company itself stood struck off the register on 30.06.2017 and was restored only on 22.10.2019, and the default on its part as also that of the petitioners took place prior to 30.06.2017. This implies that the ratio of the decision in Mukut Pathak (supra) is squarely applicable to the facts of this case since it specifically clarifies that any Company or Directors committing defaults under Section 164(1) of the Act before 07.05.2018 cannot invite application of the proviso to Section 167(1)(a) of the Act and a necessary corollary thereof is that their DINs and the DSCs cannot be cancelled either. In view the fact that the petitioners, in order to apply for the CFSS, need to file their statutory returns on/by 30.09.2020, the respondents are directed to reactivate the DINs and the DSCs of the petitioners within three days from today so that they can do the needful to apply for the Scheme - Petition allowed.

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• 2020 (9) TMI 749
  Seeking Convening and holding of AGMs - situation of deadlock on the Board of the company - It is the case of the Petitioner that Respondents No.2 and No.4 did not take active part in the day to day affairs of the Respondent No.1 Company, and that it was the Petitioner and Respondent No.3 who took efforts to promote the business of the Respondent No.1 - HELD THAT:- The admitted position is that there is a default within the meaning of section 96 of the Companies Act, 2013 in conducting the AGM of the company, albeit with both sides blaming each other for the default. There was exchange of correspondence in so far as the financials were concerned. Given the indurate positions of both sides as revealed during the course of arguments, we do not see this being resolved to satisfaction at all. The internecine quarrel has already taken its toll on the Respondent No.1 Company, with visible scars that cannot be erased by ordering the AGMs to be conducted. The RoC has also issued notice asking the Respondent No.1 Company to show cause why the name of the company should not be struck off from the Register of Companies. The section confers on the Tribunal to order the AGM of the company to be conducted if there is a default. The Respondent No.4 has submitted on oath in the form of affidavit that there is no possibility of any business relationship between it and the Petitioner that could contribute to reviving the business of the Respondent No.1 Company. There is also the matter of the petition bearing CP No.2530/2018 filed under sections 271-272 of the Companies Act, 2013 for winding up of Respondent No.1 Company, which is pending before a coordinate bench of this Tribunal - The exercise of judicial discretion vested in us by virtue of section 97 ibid should be used with great circumspection, and carefully calibrated to do good to the Respondent No.1 company. In a milieu of paralysis caused by two sets of members holding equal shares and having coequal powers on the Board not willing to bury the hatchet and come to terms with each other, ordering the AGMs of the Respondent No.1 Company, while being legally sustainable in terms of section 97 of the Companies Act, 2013, would not be practically of any use except prolonging the agony and delaying the inevitable that stares us in the face. Petition dismissed.

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• 2020 (9) TMI 748
  Restoration of the name of the Company in the Register of Companies - Section 252(3) of the Companies Act, 2013 - HELD THAT:- The true copy of Income Tax Returns for financial years 2013-14, 2014-15, 2015-16 and 2016-17 along with TAN Certificate have been found attached with the petition as Annexures A8 (colly), respectively - It could also be seen that the petitioner-company has maintained bank account with State Bank of India and the statement from 01.04.2015 to 31.03.2017 and another account maintained with Kotak Mahindra Bank ranging from 01.04.2015 to 31.03.2017 have been attached at Annexure A-9 of the petition. The petitioner-company has earned revenue in the financial year 2013-14 to 2016-17, therefore, it is just and equitable to restore the name of the petitioner-company into the Register of Companies, maintained by the ROC - the ingredients provided for in Section 252(3) of the Act, are satisfied. The name of the company is restored in the Register of Companies, subject to deposit of ₹ 20,000/- as costs with the Pay and Accounts Officer, Ministry of Corporate Affairs within a period of three weeks from the receipt of certified copy of this order - petition allowed.

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• Insolvency & Bankruptcy

• 2020 (9) TMI 747
  Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational debt - existence of debt and dispute or not - HELD THAT:- Section 5(21) of the IBC defines an Operational Debt to mean a claim in respect of the provision of goods or services including employment or a debt in respect of the payment of dues arising under any law for the time being in force and payable to the Central Government, any State Government or any local authority. Section 5(2) of the IBC defines the term Operational Creditor to be a person to whom an operational debt is owed and includes any person to whom such debt has been legally assigned or transferred - Thus, only if the claim falls within one of the three categories as listed above, can it be classified as an operational debt. If the amount claimed does not fall under any of the above categories, then the claim cannot be categorised an operational debt, even though there may be a liability or obligation from one person to another. This is a case where the existence of a jural relationship between the Operational Creditor and the Corporate Debtor has not been established. There is no claim in respect of any provision of goods or services. The respondent was expected to purchase a licence for public performance and broadcast of songs, in respect of which the petitioner is an assignee of copyright. This does not satisfy the definition of Operational Debt within the meaning of section 5(21) of the IBC. Consequently, the petitioner cannot be treated as an Operational Creditor, and the petition itself cannot be maintained under section 9 of the IBC. Petition dismissed.

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• 2020 (9) TMI 746
  Maintainability of application - initiation of CIRP - Corporate debtor failed to make repayment of its dues - existence of debt and dispute or not - HELD THAT:- The application made by the Operational Creditor is complete in all respects as required by law. It clearly shows that the Corporate Debtor is in default of a debt due and payable, and the default is in excess of minimum amount of one lakh rupees stipulated under section 4(1) of the IBC at the relevant time. Therefore, the default stands established and there is no reason to deny the admission of the Petition. In view of this, this Adjudicating Authority admits this Petition and orders initiation of CIRP against the Corporate Debtor. Petition admitted - moratorium declared.

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• 2020 (9) TMI 745
  Unauthorized and illegal withdrawal of amount made by the ex-management of the Corporate Debtor - CIRP process - Section 66(1) of I B Code - HELD THAT:- This Bench does not have any doubt that in terms of Section 66(1) of the Code, the Respondents No. 1, 2 and 3, during the Corporate Insolvency Resolution Process period, carried out these transactions with intent to defraud the creditors of the Corporate Debtor. This case is fully covered under Section 66(1) of the Code. This Bench is also satisfied that the ex-directors were aware of the Moratorium Order of 17.09.2019 under Section 14 of the Code. This Bench finds the ex-directors of the Corporate Debtor Company to be guilty of willful disobedience of the Order of this Bench dated 17.09.2019. The Respondents No. 1 and 2, i.e., the ex-directors of the Corporate Debtor being found violating the Moratorium imposed under Section 14 of the Code, are punishable with imprisonment for a term which shall not be less than 3 years, but may extend to 5 years or with fine which shall not be less than ₹ 1 Lakh but may extend to ₹ 3 lakh or with both. Respondent No. 3, who has connived and is the beneficiary of the fraudulent transaction and is squarely covered under Section 66(1) of the Code, shall deposit ₹ 2,42,54,121/- within a period of 2 weeks in the Corporate Debtor s account at Oriental Bank of Commerce - Respondents No. 1 and 2 to deposit a sum of ₹ 9,192/- withdrawn unauthorizedly and illegally despite the imposition of Moratorium. The amount be deposited within a period of 2 weeks in the Corporate Debtor s account at Oriental Bank of Commerce - Respondents No. 1 and 2, each to pay a fine of ₹ 1,00,000/- for violating the Moratorium under Section 14 of the Code. The amount be deposited within a period of 2 weeks in the Corporate Debtor s account at Oriental Bank of Commerce.

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• 2020 (9) TMI 744
  Extension of time granted to the Applicant to make deposit - restraint on Liquidator of the Respondent Company from alienating the property and/or creating any interest of whatsoever nature - HELD THAT:- The liquidator was present during the virtual hearing and did not raise any objection for the request made by the Applicant. This Bench considering the extraordinary situation created by the Covid-19 Pandemic is inclined to grant time for the Applicant to make the payment. This Application was filed on 26/06/2020 - Even though the time sought by the Applicant had already elapsed, considering the overall situation, the Applicant is allowed to make the balance payment along with interest at the rate of 12% per annum within 30 days from the date of this order. Application allowed.

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• 2020 (9) TMI 743
  Disciplinary proceedings against the Insolvency Professional (IP) who is member of ICSI - Assignment of Liquidator - alleged contraventions of sections 208(2)(a) and 208(2)(e) of the Insolvency and Bankruptcy Code, 2016 (Code), regulations 7(2)(a), 7(2)(h) and 7A of the IBBI (Insolvency Professionals) Regulations, 2016 (IP Regulations) read with clauses 1, 2, 11, 12 and 14 of the Code of Conduct contained in the First Schedule of the IP Regulations - inadvertent error or not - voluntary liquidation process - rejection of AFA. HELD THAT:- From Regulation 7A of IP regulations, it is clear from the said Regulation that one of the essential conditions for undertaking any assignment by an IP is that he should have a valid AFA which is issued by the IPA with which he is enrolled. In other words, without AFA, an IP is not eligible to undertake assignments or conduct various processes thereof. Regulation 7A was inserted in the IP Regulations vide notification dated 23rd July 2019, much before 31st December, 2019. Adequate time was given to the professionals to obtain AFA from respective IPAs. The bye laws of ICSI Institute of Insolvency Professionals defines in para 4(1)(aa) the expression authorisation for assignment as an authorisation to undertake an assignment, issued by an insolvency professional agency to an insolvency professional, who is its professional member, in accordance with its bye-laws regulation. An application for grant of AFA can be made to the IPA under para 12A of said bye laws. In the present matter, Mr. Sharma accepted the assignment of voluntary liquidation in matter of Indian Transelectric Company Limited on 2nd March 2020 and A.B.S. Enterprises Private Limited on 5th June 2020 without holding valid AFA after 31.12.2019 which is in express contravention of regulation 7A of IP Regulations. This requirement also applies to IPs undertaking voluntary liquidation process under the Code. In consequence, he also contravened code of conduct under section 208(2)(a) and(e) of the Code and regulations 7(2)(a) and (h) of the IP Regulations read with clauses 1, 2, 11, 12 and 14 of the Code of Conduct contained in the First Schedule of the IP Regulations - The DC finds that an order has been passed against Mr. Sharma on 7.09.2020 by the Disciplinary Committee of IPA for accepting assignment as Voluntary Liquidator after 31.12.2019 without holding a valid AFA in the matter of Indian Transelectric Company Limited and A.B.S. Enterprises Private Limited, and imposed penalty of ₹ 10,000/- for contravention of regulation 7A of IP Regulations. In view of the fact that ICSI Institute of Insolvency Professionals has already taken disciplinary action against Mr. Ravi Sharma for accepting assignment as Voluntary Liquidator after 31.12.2019 without holding a valid AFA in the matter of Indian Transelectric Company Limited and A.B.S. Enterprises Private Limited, the DC, in exercise of the powers conferred under Regulation 11 of the IBBI (Insolvency Professionals) Regulations, 2016, disposes of the SCN without any direction against Mr. Ravi Sharma - A copy of this order shall be forwarded to the ICSI Institute of Insolvency Professionals where Mr. Ravi Sharma is enrolled as a member.

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• PMLA

• 2020 (9) TMI 742
  Provisional attachment order - It is alleged that the police without any justification and cause have implicated the petitioner in a frivolous case on the basis of a disclosure statement made by one Mushfiq Ahmad Lone in FIR No.254 /2009 for offences under Section 120, 120-B, 121, 121/A RPC and 11, 18, 20 and 40A of ULA(P) Act of Police Station, Saddar, Srinagar - HELD THAT:- It is clear that whosoever, directly or indirectly, attempts to indulge or knowingly assists or is knowingly part or is actually involved in any process or activity connected with the proceeds of crime etc. etc. is guilty of offence of money laundering. The expressions used in the provision are directly and knowingly assists . These expressions convey that it is not necessary that proceeds of crime should have been actually and directly concealed, possessed, acquired or used by an offender. Even an indirect link or assistance in an activity connected with proceeds of crime constitutes an offence of money laundering. So the mere fact that the proceeds of crime in the instant case have not been recovered from the possession of the petitioner does not mean that he has nothing to do with the amount that has been provisionally attached, particularly when there are allegations in the impugned order of Provisional Attachment that the petitioner was in league and in touch with other accused from whom the money was seized. While confirming the Provisional Attachment Order, it is necessary that the above aspects of the case i.e. whether the petitioner was in any manner linked or associated with the co-accused, from whom the money was seized, are required to be gone into. This aspect of the matter involves disputed questions of fact which cannot be gone into in these proceedings. Therefore, to say that the impugned shown cause notice has been issued by the Adjudicating Authority without jurisdiction does not hold any merit - the Adjudicating Authority was well within its jurisdiction to issue the show cause notice to the petitioner so as to offer him an opportunity to present his case qua the allegations leveled against him in the impugned Provisional Attachment Order. The facts regarding possession of proceeds of crime or its use or concealment or its acquisition can be determined only after adjudicating the facts and circumstances and by verifying the documents and other relevant record. In the instant cases, there is material on record giving the Authorities reason to believe for initiation of proceedings against the petitioner and other accused persons. Therefore, institution of the proceedings by the respondents under the provisions of the Act cannot be found fault with - The proceedings before the Authority under the Act are aimed at unearthing the truth relating to the offences under the Act. If the Authorities come to the conclusion that the offence under Money Laundering Act is made out, thereafter they can proceed against the offender while undertaking the process of investigation relating to truth or otherwise behind the allegation of money laundering. The High Court cannot entertain a writ petition so as to quash the entire proceedings. The Authorities under the Act must be allowed to investigate freely and fairly in accordance with the procedure contemplated under the Act. This Court has no hesitation in coming to the conclusion that the present writ petition is premature and it raises complex issues of fact which cannot be adjudicated upon in these proceedings in view of the fact that the petitioner has not exhausted the remedies available to him under the provisions of the Money Laundering Act - Petition dismissed.

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• 2020 (9) TMI 741
  Grant of Bail - fraudulent high value forex outward remittances/transactions exceeding ₹ 3500 crores, taken place in the current accounts - outward remittances made without making corresponding imports into the domestic tariff area and without disclosing the beneficial owners inside the country and outside the country and end-use of the proceeds of crime in the other country - HELD THAT:- The petitioner have committed very serious offence in nature and there are ample chances to tamper the evidences and hamper the witnesses. Now the respondent laid charge sheet and the same has been taken cognizance in C.C.No.26 of 2019 on the file of the Principal Session Judge, Chennai and it is pending. This Court already dismissed the bail petition on two occasions and this Court does not find any change of circumstances to consider the bail application filed by the petitioner and this Court finds no change of circumstances to consider the third bail petition of the petitioner. Therefore this Court is not inclined to grant bail to the petitioner. Petition dismissed.

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• 2020 (9) TMI 740
  Grant of Order of Status Quo - provisional attachment order - Ad-interim stay of the operation of impugned order - Eviction notice - HELD THAT:- There is no dispute that the aforesaid appellants are either FIR or ECIR named accused and that there is no allegations against these appellants that the aforesaid amounts that have been paid to the builders are out of proceeds of crime and that it is not denied by the Respondent that the aforesaid amounts have not been paid by these appellants and that it is an admitted fact that the appellants are not physically residing in the aforesaid flats and the flats are under lock and key. Having due regard to the facts and circumstances of the case, justice would be served, at this stage, if the conditional order of status quo is passed with respect to the aforesaid properties. Both the parties are directed to maintain status quo as on today till the next date of hearing. List the stay applications alongwith the appeals on 27th November, 2020.

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• Service Tax

• 2020 (9) TMI 780
  Refund of service tax - respondent has deposited lumpsum amount during investigation and same was not recovered from the customers - Principles of Unjust Enrichment - HELD THAT:- It is evident that concurrent finding of fact has been recorded that respondent has not passed on burden of ₹ 1,00,00,000/- to the customers which was deposited by him during investigation/adjudication. Finding so recorded is a finding of fact, based on consideration of relevant material on record. We, repeatedly asked the learned counsel for the appellant to point out any evidence which may indicate that the burden was passed on by the respondent, but the learned counsel for the appellant has failed to show any document, therefore, concurrent finding of fact recorded by the Tribunal and the authorities below cannot be said to be perverse. Appeal dismissed.

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• Indian Laws

• 2020 (9) TMI 739
  Dishonor of Cheque - appellant submits that since the date of service of notice is not mentioned in the complaint so the necessary ingredients for making section 138 of Negotiable Instruments act are lacking - HELD THAT:- Although the service of notice is not mentioned in the complaint, on this ground the summoning order could not be quashed. The question as to whether the complaint is premature would be open to be decided by trial court. So in these circumstances, it cannot be said that no offence is made out against the applicant. All the submission made at the bar relates to the disputed question of fact, which cannot be adjudicated upon by this Court in exercise of power conferred under Section 482 Cr.P.C. The prayer for quashing the abovesaid summoning order and proceedings is refused - However, it is provided that if the applicant appear and surrender before the court below within 30 days from today and applies for bail, then the bail application of the applicant be considered and decided expeditiously in view of the settled law laid by Hon'ble Supreme Court. For a period of 30 days from today or till the disposal of the application for grant of bail whichever is earlier, no coercive action shall be taken against the applicant. However, in case, the applicant do not appear before the Court below within the aforesaid period, coercive action shall be taken against him - For a period of 30 days from today, non-bailable warrant issued against the applicant, shall be kept in abeyance. Application disposed off.

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• 2020 (9) TMI 738
  Adjudication of testimonial worth of prosecution evidence - Dishonor of Cheque - Submission is that the Apex Court decision has taken cognizance of the heavy pendency of the cases in the courts which may result ultimately in the chocking of criminal justice system - HELD THAT:- As requested by the counsel, it is directed that the accused may appear before the court below within a period of one month from today through the representing counsel and move an application seeking compounding of offence through compromise. On such application being moved the concerned court may take adequate steps in accordance with law in this regard and shall provide further opportunity to the accused which shall not exceed a maximum period of four months from today to make an endeavour in this direction. If the decision of the Court given in the light of the application does not conclude the proceedings against the accused and he is further required to appear and face the trial, the court shall be at liberty to proceed in accordance with law against the accused and take all necessary steps and measures to procure his attendance as the law permits - In the aforesaid period of four months or till the decision given in the light of the application, whichever is earlier, no coercive measures shall be adopted against the accused applicant. Application disposed off.

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