TMI Tax Updates - e-Newsletter
September 26, 2022

Case Laws in this Newsletter:

GST Income Tax Customs Securities / SEBI Insolvency & Bankruptcy Service Tax Central Excise CST, VAT & Sales Tax Wealth tax

Articles

1. SERIOUS FRAUD INVESTIGATION OFFICE

   By: DR.MARIAPPAN GOVINDARAJAN

2. RIGHT TO LIVELIHOOD IS ULTIMATELY PUT AT RISK BY CANCELLATION OF GST REGISTRATION

Notifications

Customs

1. 81/2022 - dated 23-9-2022 - Cus (NT)

Courier Imports and Exports (Electronic Declaration and Processing) Second Amendment Regulations, 2022

GST - States

2. 23270-FIN-CT1-TAX-0005/2019 - dated 19-9-2022 - Orissa SGST

Delegation of power to Commissioner of CT & GST, Odisha under OGST Act

3. 23017-FIN-CT1-TAX-0016/2022 - dated 16-9-2022 - Orissa SGST

Commencement of the provision of section 13 of the OGST(Amendment) Act, 2022

4. 628/XI-2-22-9(47)/17-T.C.196-U.P.Act-1-2017-Order-(246)-2022 - dated 18-7-2022 - Uttar Pradesh SGST

Seek to amend notification No. KA. NI.-2-1823/XI-9(47)/17-U.P. Act-1-2017-Order-(89)-2017 Dated 04.12.2017

5. 627/XI-2-22-9(47)/17-T.C.195-U.P.Act-1-2017-Order-(245)-2022 - dated 18-7-2022 - Uttar Pradesh SGST

Seek to amend notification No. KA. NI.-231/XI-2-22-9(47)/17 T.C.180 U.P. Act-1-2017-Order-(231)-2022 Dated 31.03.2022

6. 626/XI-2-22-9(47)/17-T.C.194-U.P.Act-1-2017-Order-(244)-2022 - dated 18-7-2022 - Uttar Pradesh SGST

Seek to amend notification No. KA. NI.-2-850/XI-9(47)/17-U.P. Act-1-2017-Order-(17)-2017 Dated 30.06.2017

Highlights / Catch Notes

GST

• Petitioner's Registration Cancellation Challenged Over Invalid Show Cause Notice, No Prior Notice for Inspection, Violating CGST Rule 25.

  Case-Laws - HC : Cancellation of petitioner's registration - scope and validity of SCN - Although, as per the impugned order, the Range Inspector appears to have physically verified the petitioner’s premises, neither was any notice given of the physical verification, nor is the report which was generated after the verification, uploaded on the portal - This was required to be done, as provided in Rule 25 of the CGST Rules. - HC
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• Court Allows Filing of Pre-Cancellation Tax Returns; Payment Due in 45 Days with Interest and Fines.

  Case-Laws - HC : Cancellation of registration of petitioner - The petitioners are permitted to file their returns for the period prior to the cancellation of registration, if such returns have not been already filed, together with tax defaulted which has not been paid prior to cancellation along with interest for such belated payment of tax and fine and fee fixed for belated filing of returns for the defaulted period under the provisions of the Act, within a period of forty five (45) days from the date of receipt of a copy of this order, if it has not been already paid - HC
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• Anticipatory bail sought in shell firms tax evasion case; recording accused's statement not valid reason to deny bail.

  Case-Laws - DSC : Seeking grant of anticipatory bail - shell firms/entities - tax evasion - Merely, because statement of the accused has to be recorded, is not a reason for declining pre arrest bail to the accused. Further, the stand of the IO that accused is required to be arrested, while apparently, no decision in that regard has been taken by the competent authority under the Act, further strengthens the claim of the applicants. - DSC
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Income Tax

• High Court Allows Respondent to Travel Abroad Despite Look Out Circular, Requires Fixed Deposit as Security.

  Case-Laws - HC : Look Out Circular (LOC) issued - Offence punishable u/s 276C(1)(i) r.w.s. 278B(1) of the Income Tax Act - Taking into account the factum that there is no extradition treaty of our country with China, the respondent thus falls within the category of a flight risk, but, the factum that he is alleged to have committed only a non-cognizable and an alleged bailable offence can also not be overlooked. - Respondent be permitted to travel out of India only subject to the respondent submitting an FDR drawn on a nationalized Indian bank - HC
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• Remittances to GEISA for Pro-E software not royalty income; no default under Income Tax Act Section 201.

  Case-Laws - AT : TDS u/s 195 - the remittances made to GEISA towards use of Pro-E software or Global Web are not royalty income chargeable to tax under the Act as well as under the treaty and consequently the assessee cannot be treated as an ‘assessee-in-default’ under section 201 of the Act for non-deduction of taxes under section 195 - AT
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• Tribunal Rejects New Claim on Agricultural Land Sale; No Admission u/rs 11 and 29 Due to Lack of Facts.

  Case-Laws - AT : Admission of additional grounds under Rule 11 and 29 of the Income Tax (Appellate Tribunal) Rules, 1963 - In the absence of relevant facts available before revenue authorities, we are not inclined to admit the additional ground for adjudication. The additional grounds raised towards a new claim that the agricultural land sold is outside the purview of definition of capital assets is thus rejected as inadmissible. - AT
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• CIT(A) Incorrectly Categorizes Trade Payables as Accommodation Entry u/s 68 of Income Tax Act.

  Case-Laws - AT : Addition u/s 68 - accommodation entry - unsecured loan shown under the head of trade payables - Though the objection that the assessee has not conducted any business and there is hardly any bank balance or cash on hand, the CIT(A) has ignored the main aspect of trade payables which was shown by the assessee in his balance sheet. If the analogy of the CIT(A) is accepted then Balance Sheet determined by the assessee company itself will become nullity. CIT(A) was not correct in taking the said trade payables as accommodation entry - AT
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• Court Rules Mere Admission of On-Money Payment Insufficient for Undisclosed Income Without Incriminating Evidence Found in Search.

  Case-Laws - AT : Undisclosed income - receipt of on-money by cash - Simply because the purchaser has admitted on-money payment is not sufficient. Particularly, in this case, a search was conducted and no incriminating material has been found in respect of on-money receipt. - AT
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• Consistent Rulings Required When Facts and Law Unchanged; Exceptions Include Per Incuriam or Distinguished Decisions.

  Case-Laws - AT : Judicial discipline - Where facts and law in a subsequent assessment year are the same, no authority whether quasi judicial or judicial can generally be permitted to take a different view. This mandate is subject only to the usual gateways of distinguishing the earlier decision or where the earlier decision is per incuriam. However, these are fetters only on a coordinate bench which, failing the possibility of availing of either of these gateways may yet differ with the view expressed and refer the matter to a bench of superior strength or in some cases to a bench of superior jurisdiction. - AT
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• Disallowing depreciation on a business delivery van is unjust if AO accepts claims on passenger vehicles without evidence.

  Case-Laws - AT : Disallowance of depreciation on vehicle on the ground of personal use - Once the claim of depreciation on passenger vehicle is accepted by the AO then the depreciation on delivery van cannot be disallowed on the ground of personal use. AO has otherwise made this disallowance on presumption and surmises without the actual fact of the use of the vehicle. Even otherwise the delivery van is hardly used for personal purpose and can be used only for the business purpose of the assessee. - AT
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Customs

• Fraudulent DEPB Scrips Rendered Void, Justifying Extended Limitation Period for Customs Duty Evasion Investigation.

  Case-Laws - SC : DEPB Scheme - forged DEPB Scrips - intent to evade Customs Duty or not - the DEPB licenses/Scripps were not issued at all. - fraud vitiates everything and such forged/fake DEPB licenses/Scripps are void ab initio, it cannot be said that the Department acted illegally in invoking the extended period of limitation. - SC
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• Authorities Review Provisional Release of Seized Goods for Non-Compliance with Food Safety Standards; Decision Pending.

  Case-Laws - HC : Seeking provisional release and re-export of the goods - seizure on the ground of non-observance of conditions of Food Safety and Standards - When the applications seeking provisional release are pending before the authorities, it is entirely for the authorities to consider the same and to further assess the requirements of the nature of the security to be obtained for the provisional release. - HC
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• Appeal Denied: Shipping Bill Amendment Rejected Due to Appellant's Failure to Submit Required Documents as Directed by Tribunal.

  Case-Laws - AT : Rejection of amendment/ conversion of Shipping Bills - non-submission of necessary documents - It does not lie in the mouth of the appellant to contend that though the Tribunal had directed the appellant to submit documents before the Commissioner to prove its claim, the Commissioner should on his own have called for the documents from his office even if the appellant had failed to produce the documents. - AT
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• CVD refund claim denied due to time limits; Supreme Court ruling not applicable for third-party benefit u/s 27.

  Case-Laws - AT : Refund of CVD - rejection of refund claim on the ground of time limitation - It was nearly after ten years that the judgement of the Hon’ble Apex Court in M/s. Enterprises International Ltd. [2017 (4) TMI 80 - SC ORDER] was passed, which the appellant is trying to take advantage of by claiming that its application for refund is within one year from the date of the above judgement. This is clearly an afterthought, which cannot be accepted, since the scope of Section 27 ibid. is limited to the claimant who pursues by means of litigation before higher authorities and hence, any third person cannot derive any benefit out of the same. - AT
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IBC

• Shareholder Nomination Valid Despite Lack of Unanimity; Liquidator Can't Dismiss Based on Majority Support per Regulation 31A(4).

  Case-Laws - AT : Constitution of Stakeholders Consultation Committee (‘SCC’) - the nomination of the first Respondent as the representative of the Shareholders cannot be rejected by the Liquidator simply on the ground that the said nomination was not made unanimously by all the Shareholders and has further held that as the first Respondent was nominated by or i.e., the 3 out of 5 Shareholders, the question of applicability of the provisions under Regulation 31A(4) does not arise. - AT
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• Resolution Professional Cannot Admit Claims Suo-Motu in Insolvency; Claims Must Be Filed by Creditors in Form-B or Form-C.

  Case-Laws - AT : Power of RP to admit the Claims suo-motu - There is no such provision that the IRP shall admit the Claim without filing a Claim either in Form-B or in Form-C. - the IRP suo-motu cannot admit the Claims without their being a Claim by the Claimants viz. Operational Creditors, Financial Creditors and the Claims by other Creditors. Every Claim shall be submitted by the ‘Claimant’ with proof. Accordingly, the issue is answered. - AT
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SEBI

• Insider Trading Allegation Under SEBI Act: Sale of GIPL Shares Deemed Distress Sale, Not Insider Trading Violation.

  Case-Laws - SC : Offence under SEBI ACT - Insider trading - the information regarding the termination of the two contracts can be characterised as price sensitive information, in that it was likely to place the existing shareholders in an advantageous position, once the information came into the public domain - the sale by the respondent, of the shares held by him in GIPL would not fall within the mischief of insider trading, as it was somewhat similar to a distress sale, made before the information could have a positive impact on the price of the shares. - SC
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Service Tax

• Court Rejects Service Tax on Loan Restructuring Premiums; Not Classified Under 'Banking and Financial Services'.

  Case-Laws - AT : Levy of service tax - banking and other financial services - premium on interest restructuring of loan as interest on loans - It is not possible to accept the contention of the Department that restructuring premium charged by the respondent would fall under ‘lending’ and would be subjected to levy of service tax under ‘banking and other financial services’. - AT
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• Tax on Transport and Forwarding Services: Misalignment in Collection Methods and Overlooked Finance Act Sections 65A & 66F.

  Case-Laws - AT : Legislative disbarment of levy of tax on goods transport agency service - clearing and forwarding agency - The two services sought to be amalgamated are not only independently taxable but differs in the mechanism of collection and should, intuitively, be immiscible. The provisions of section 65A of Finance Act, 1994 and section 66F of Finance Act, 1994 have not been appreciated in its context. - AT
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Central Excise

• Assessee's raw material not classified as manufactured goods; not subject to confiscation u/r 25 of Excise Rules.

  Case-Laws - AT : Clandestine Removal - Since the raw material of assessee cannot be held to be goods manufactured by assessee, same is definitely beyond the scope of confiscation under Rule 25 of Excise Rules. Merely because raw material of an assessee is marketable as such, same can not be held to be the excisable goods. - AT
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VAT

• Court Upholds Requirement for Dealers to Provide Bank Guarantee for Interstate Sales with C-Forms, Denies Mandamus Petition.

  Case-Laws - HC : Supplier company (IOCL) seeking security depositing against interstate sale - C-Forms - differential sales tax - There is no doubt that a dealer can be called upon to furnish a Bank Guarantee in any exigency as contemplated by the Corporation, and the dealers would have no choice but to comply - the mandamus as sought for by the petitioners is not liable to be granted and the prayer is rejected. - HC
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Case Laws:

• GST

• 2022 (9) TMI 1108
  Maintainability of petition - availability of alternative remedy of appeal - Release of detained goods alongwith vehicle - opportunity of hearing to the petitioner not provided - principles of natural justice - HELD THAT:- Considering the facts and circumstances and that the petitioner has alternative remedy of appeal under Section 107 of CGST Act, petitioner is allowed liberty to approach the appellate authority against the impugned order 29th July, 2020 passed under FORM GST MOV-09. On his approaching, the Deputy Commissioner, CGST Central Excise, Division, Ramgarh (respondent no. 2) shall provide GSTIN No. with ID and password to the petitioner, so that the petitioner can prefer an appeal on-line. In case, the appeal is not accepted on-line for any technical reason, he may have liberty to prefer an appeal manually before the appellate authority, CGST and Central Excise, Ranchi. Writ petition is disposed off.

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• 2022 (9) TMI 1107
  Cancellation of petitioner s registration - scope and validity of SCN - SCN did not mention the reason why the concerned authority proposed the cancellation of registration - HELD THAT:- A plain reading of the order would show, that the petitioner s registration was cancelled on account of an enquiry pending against the petitioner, which evidently is being carried out by DGGI, Chennai concerning supply of spurious goods - Furthermore, it is also indicated, as is evident on a plain reading of the impugned order, that the premises of the petitioner were physically verified by the Range Inspector, after receiving approval from the competent authority, and that it was found that the premises had been sealed by DGGI, Chennai. Although, as per the impugned order, the Range Inspector appears to have physically verified the petitioner s premises, neither was any notice given of the physical verification, nor is the report which was generated after the verification, uploaded on the portal - This was required to be done, as provided in Rule 25 of the CGST Rules. Petition allowed.

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• 2022 (9) TMI 1106
  Cancellation of registration of petitioner - petitioners have missed the bus in regard to several opportunities that were extended to them post-cancellation of the registrations by way of Amnesty Schemes - HELD THAT:- The learned Judge has considered interim events including the position that Amnesty Schemes had not been availed by those petitioners. In fine, the learned Judge accepts the case of the petitioners, imposing certain conditions in para 229 of the order. A specific query was put to the State Counsel as to whether order dated 31.01.2022 has attained finality. He brings to my notice a communication that has been addressed by the Additional Chief Secretary/Commissioner of Commissioner of Commercial Tax to the GST Council on 31.03.2022 seeking the view of the Council and its guidance/directions in regard to the order of this Court dated 31.01.2022. There has been no response to the above communication and the State, like Samuel Beckett s Godot, has merely been waiting, much past the time for filing of writ appeal before this Court. In my view, this tantamounts to their having accepted the order of this Court dated 31.01.2022 as a conscious decision has been taken by the State to let the limitation slip. The petitioners are permitted to file their returns for the period prior to the cancellation of registration, if such returns have not been already filed, together with tax defaulted which has not been paid prior to cancellation along with interest for such belated payment of tax and fine and fee fixed for belated filing of returns for the defaulted period under the provisions of the Act, within a period of forty five (45) days from the date of receipt of a copy of this order, if it has not been already paid - Petition allowed.

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• 2022 (9) TMI 1105
  Seeking grant of anticipatory bail - shell firms/entities - tax evasion - manufacture of of Tobacco products - entire case is based on a presumption that 33 trucks dropped raw material at the factory which was unaccounted, but there is no claim as to how the finished products were removed from the factory - HELD THAT:- In present case, there is no claim that accused has been shifting factories, there is no claim that statements of the accused wherein the guilt has been admitted in terms has been recorded, there is no statement by the proprietors of the alleged fictitious firms that they were only dummy owners and the real owners/beneficiaries are the accused, there is no statement by the sellers directly implicating the applicants, there is no claim that on being summoned, the employees of the accused persons have not responded to the summons because of any threat or inducement by the applicants/accused - The entire case is based on a presumption that 33 trucks dropped raw material at the factory which was unaccounted, but there is no claim as to how the finished products were removed from the factory. Raw material and finished products are two sides of the same coin and one is directly corelated to the other. Merely, because statement of the accused has to be recorded, is not a reason for declining pre arrest bail to the accused. Further, the stand of the IO that accused is required to be arrested, while apparently, no decision in that regard has been taken by the competent authority under the Act, further strengthens the claim of the applicants. Considering that the accused is not a fly by night entity and has been paying considerable amount of taxes, which is not disputed, it is directed that in the event of the arrest of the accused, he be admitted to bail on furnishing of bail bonds, two surety bonds in the sum of Rs.1,00,000/- each. Application disposed off.

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• 2022 (9) TMI 1104
  Seeking modification of Bail conditions - conditions regarding prior permission before travelling abroad and condition regarding deposit of passport - HELD THAT:- The power granted by the Code under Sec. 437 to impose certain conditions including restriction on movement while granting bail in non bailable offence can be taken as procedure established by law as stated in Article 21 of the Constitution. The criminal courts have to take extreme care in imposing such condition. It cannot mechanically, and in every case where an accused has a passport impose a condition for its surrender. Law presumes an accused to be innocent till he is declared guilty. As a presumably innocent person he is entitled to all the fundamental rights guaranteed to him under the Constitution. At the same time, interest of the society has also to be protected. The court has to strike a balance between personal liberty of the accused guaranteed under Article 21 of the Constitution, investigation rights of the police. The criminal court has to consider possibility of the accused if released on bail, fleeing justice and thereby thwarting the course of justice which affects the majesty of the law, as also the individual rights of the accused - The condition that accused should seek permission of the court before undertaking any travel is imposed to prevent his fleeing from the court. The said purpose can very well be achieved even if he is asked to give advance detailed intimation to the court as well as the Department of his proposed/intended travel. In case, the Department is of the view that travel to a particular country or during the days proposed is going to hamper the investigation or trial, in any manner, the concerned court can always be asked to restrain the applicant from so undertaking the travel. Where there is no objection, the Trial Court need not waste its time in processing applications seeking permission. The present application is allowed and the condition of seeking prior permission before leaving for abroad is modified to the extent that the applicants shall be bound to give 7 working days prior intimation to the Department before undertaking any foreign travel - Application disposed off.

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• 2022 (9) TMI 1051
  Cancellation of registration of the petitioner s firm - time limitation - appeal has been dismissed as being beyond the period prescribed for filing of appeal under section 107(4) of the CGST Act - HELD THAT:- Considering the fact that the appellate tribunal has not yet been created as is prescribed under the Act, this court is to consider the validity of both the orders under challenge. The submission of the counsel for the petitioner cannot be accepted, in so far as it relates to the appellate order dated 29.03.2022. However, the submission of the petitioner made against the order dated 15.03.2019, is accepted. A perusal of the Annexure no.2, makes it clear that no reasons whatsoever have been recorded while passing the order of cancellation of the registration of the petitioner s firm. The order clearly being without any reason cannot be accepted to be an order in accordance with law. It is essential that every administrative authority or a quasi judicial authority should indicate the reasons, howsoever, brief they may be before passing an order of the nature which has been done by the authority. The order passed dated 15.03.2019 has a very harsh consequences and the same being without any reason whatsoever, fails to satisfy the test of a judicial order and suffers from the vice of violation of Article 14 of the Constitution of India, as such, the order dated 15.03.2019 is set aside with direction to the petitioner to file his response to the show cause notice before the respondent no.3 who shall pass fresh order after giving an opportunity of hearing to the petitioner with all expedition. Petition allowed.

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• 2022 (9) TMI 1050
  Maintainability of appeal - fair and sufficient opportunity of hearing provided to the Petitioner or not - non-application of mind - principles of natural justice - Section 107 of the Central Goods and Services Tax Act, 2017 - HELD THAT:- A perusal of the impugned endorsement will indicate that respondent No.1 has not considered or appreciated the scope and ambit of Section 107 R/w. Section 121 of the said Act of 2017 and consequently, the impugned endorsement being unreasoned, non-speaking, arbitrary, cryptic and laconic, the same deserves to be quashed. So also, in view of the specific assertion on the part of the petitioner that no opportunity was granted to the petitioner to urge all their contentions before respondent No.1, by adopting a justice oriented approach and in order to provide one more opportunity to the petitioner to put forth all contentions in support of its claim, it is deemed just and appropriate to set aside the impugned endorsement and remit the matter back to respondent No.1, the appellate authority for reconsideration afresh in accordance with law. The matter is remitted back to respondent No.1-Appellate Authority for reconsideration afresh in accordance with law - Petition allowed by way of remand.

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• Income Tax

• 2022 (9) TMI 1103
  Addition u/s 69 - addition of peak balance - relevant assessment year - ITAT deleted the addition holding that there is no loss to revenue as assessee has shown the said income for Assessment Year 2007-08 and paid taxes on such undisclosed income - HELD THAT:- This Court is of the view that even assuming that the statement of the assessee is paramount and sacrosanct, then also there is no denial by the revenue authorities that the assessee has honoured his statement and offered Rs.2,23,68,000/- in his return of income for the Assesment Year 2007 08 and has paid taxes thereon. The peak credit had been calculated by the tax authorities and at the behest of the tax authorities, the assessee had offered the amount calculated by them in his income for the Assessment Year 2007 08 and paid taxes thereon, which return of income has been accepted by the Revenue. Since the tax rate in both the Assessment Years i.e. 2006-07 and 2007-08 was same, this Court is of the view that if the present appeals are allowed and an amount is added to the assessee s income in the assessment year 2006-07, it would amount to double taxation, inasmuch as, the said amount is admittedly a part of the amount offered to taxation in the assessment year 2007-08. The learned predecessor Division Bench in PCIT(Central) Vs. Krishan Kumar Modi [ 2021 (2) TMI 1182 - DELHI HIGH COURT] has held, In our view of the aforesaid, the learned ITAT has rightly held that there could not be any dispute on the legal proposition that the very same amount cannot be taxed twice in the two assessment years . The amount offered for by assessee for taxation is also not in dispute. The dispute has arisen only with respect to the relevant assessement year. However, the ITAT has held that the said amount was declared at the behest of the revenue and the calcualtion of the peak credit was also at the behest of the tax authorities. There is no challenge to the said finding of the ITAT in the grounds of appeal. No substantial question of law arises

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• 2022 (9) TMI 1102
  Difference between a question of law and a substantial question of law - Addition u/s 68 - creditworthiness of the companies with whom assessee company had executed large scale transactions - ITAT upheld the findings of the CIT (A) and dismissed the appeal of the Revenue - addition made u/s 37(1) assessee has claimed and received excess incentive on the basis of erroneous declaration - HELD THAT:- Appellate Authorities below have recorded concurrent findings of fact on both the issues - no substantial question of law arises for consideration in the present appeal and accordingly the same is dismissed. The Supreme Court in the case of Ram Kumar Aggarwal Anr. vs. Thawar Das [ 1999 (8) TMI 1008 - SUPREME COURT] has reiterated that under Section 100 of the Code of Civil Procedure the jurisdiction of the High Court to interfere with the orders passed by the Courts below is confined to hearing on substantial question of law and interference with finding of the fact is not warranted if it involves re-appreciation of evidence. Supreme Court in State of Haryana Ors. vs. Khalsa Motor Limited Ors.[ 1990 (8) TMI 416 - SUPREME COURT] has held that the High Court was not justified in law in reversing, in second appeal, the concurrent finding of the fact recorded by both the Courts below. The Supreme Court in Hero Vinoth (Minor) vs. Seshammal,[ 2006 (5) TMI 478 - SUPREME COURT] has also held that in a case where from a given set of circumstances two inferences of fact are possible, the one drawn by the lower appellate court will not be interfered by the High Court in second appeal. Adopting any other approach is not permissible. It has also held that there is a difference between a question of law and a substantial question of law .

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• 2022 (9) TMI 1101
  Offence punishable u/s 276C(1)(i) r.w.s. 278B(1) of the Income Tax Act - provisional attachment orders u/s 132(9B) - Look Out Circular (LOC) issued against petitioner - discrimination between a foreign National and an Indian National - Petitioner as submitted that the contention that the petitioner is just an employee of the company - HELD THAT:- It is essential to observe that as rightly observed by the learned Trial Court the offences alleged against the respondent are non-cognizable and bailable in relation to the allegations levelled against the respondent in the complaint filed by the complainant wherein he is arrayed as accused No.2 with it having been averred in the said complaint that it had been filed qua commission of offences punishable under Section 275B r.w.s 278B wherein it had been averred to the effect that there had been a non-congregation on part of the accused company through its team persons, namely, Mr. Li Xiongwei, Chief Executive Officer; Mr. Long Cheng, in-charge of Transfer Pricing matters; Mr. Sandeep Bhatia, Deputy CFO; and Mr. Amit Duggal, Head of Taxation on account of denial of the adequate facility to the Authorized officers empowered u/s 132 of the Income Tax Act. The said accused no.1/company is assessed for A.Y 2020-21 with office of Circle 1(1), Gurgaon. Subsequently the case has been centralized with Central Circle 02 under the jurisdiction of CCIT (Central) Delhi. Taking into account the factum that there is no extradition treaty of our country with China, the respondent thus falls within the category of a flight risk, but, the factum that he is alleged to have committed only a non-cognizable and an alleged bailable offence can also not be overlooked. Verdicts that the petitioner has relied upon all relate to alleged commission of non-bailable offences in which the issuance of the LOCs have been upheld in as much as they relate to offences inter alia punishable under the Prevention of Money Laundering Act, 2002, Prevention of Corruption Act, 1988, the Central Goods and Services Tax Act, 2017 and the non bailable offences under the Indian Penal Code, 1860. Though it is not considered appropriate by the Court to set aside the impugned order of the Trial Court which has set aside the LOC against the respondent in addition to the conditions imposed by Trial Court to the effect that in case of resignation, retirement or cessations of employment etc. of the respondent company, M/s Huawei Telecommunications (India) Company Private Limited (HTICPL) shall withhold the severance pay/severance package and other incentives/emoluments payable to the respondent and the same shall not be released without permission of this Court to which effect an undertaking has been directed to be submitted of the company to be filed before the Trial Court under intimation to the petitioner which the respondent submits has already been so submitted copy of which has also been submitted before this Court, the appropriateness of the undertaking being in consonance with the order of the learned Trial Court is an aspect to be considered by the Trial Court as has already observed herein above, it is considered appropriate to direct further in addition to the effect that the respondent shall further submit an undertaking to the Trial Court that he shall continue to join the investigation as and when directed by the Investigating Officer through video conferencing and furthermore, the respondent shall submit an undertaking to the Trial Court that on commencement of the trial, if any, against him, he shall appear before the Trial Court as and when directed and in the mode directed by the Trial Court. Respondent be permitted to travel out of India only subject to the respondent submitting an FDR drawn on a nationalized Indian bank in the learned Trial Court which on deposit is to be renewed in an automatic renewal mode which on the failure of the respondent to join the investigation twice shall stand forfeited and which also on failure to appear before the Trial Court as and when directed by the Trial Court shall be forfeited - the release of the said FDR would be subject to the determination and adjudication of the criminal complaint filed by the petitioner against the respondent herein. The respondent shall also adhere to the conditions imposed vide order in the bail order of the learned Trial Court of informing the complainant seven days prior to leaving India. The directions qua the imposition of the conditions of deposit of an FDR of an amount of Rs.5 Crores drawn on a nationalized Indian Bank and forfeiture thereof on non-joining of the investigation and non-appearance as and when directed by the Trial Court have been imposed to take into account the eventuality of the alleged commission of an offence punishable under Section 276C(1)(i) read with Section 278B(1) if any, committed by the respondent.

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• 2022 (9) TMI 1100
  Offence punishable under Section 276(B) r/w 278(B) - delayed payment of tax deducted at source - HELD THAT:- The Income Tax Act comes up with a very specific provision under Section 2(35) of the Act, wherein notice can be issued to all the directors treating them as principal officers. The Hon ble Apex Court in the above judgment has categorically held that once such notice is given and necessary averments are also made in the complaint, the fact as to whether the director is a principal officer or not can only be decided in trial. This ratio will squarely apply to the facts of the present case. That is the reason why, the learned Single Judge, while dismissing two other quash petitions filed by the petitioner challenging two other complaints of similar nature, rightly relied upon the judgment of the Hon ble Apex Court in Madhumilan Syntex Ltd., [ 2007 (3) TMI 670 - SUPREME COURT] and dismissed those petitions. The present petitions are also liable to be treated in the same manner and this Court does not find any ground to interfere with the proceedings of the Court below. The presence of the second petitioner is dispensed with and she shall be represented through her counsel. The second petitioner shall be present before the Court at the time of questioning u/s 313 Cr.P.C. and at the time of passing judgment in the complaint. The learned counsel appearing on behalf of the second petitioner shall cross-examine the witnesses on the same day or on the next hearing date, the witnesses who are examined in chief. It goes without saying that it will be left open to the second petitioner to raise all the grounds before the Court below and the Court below shall consider the same on its own merits and in accordance with law, without being influenced by any of the observations made in this order. In the result, all the criminal original petitions stand dismissed and there shall be a direction to the learned Judicial Magistrate No.1, Tiruchirappalli within a period of three months from the date of receipt of a copy of this order.

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• 2022 (9) TMI 1099
  Black Money - scope of Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015 - maintainability of the present Petitions before this Court - asset created by a Non-Resident Indian out of income generated abroad - Petitioner contended that she is a beneficiary of a Trust which was created and established abroad AND had brought benefit/money of her share in the country upon permission granted by the Reserve Bank of India - Petitioners deny their liability to be assessed under the Act of 2015 as the foreign asset does not come within the contours of the income to be charged to tax - HELD THAT:- Act of 2015 provides complete machinery for the person aggrieved of any action taken by the Assessing Officer and the said person could not be permitted to abandon that machinery and to invoke the jurisdiction of the High Court under Article 226 of the Constitution when he had the adequate remedy open to him by way of an appeal to the Commissioner of Appeals. The remedy under the statute, however, must be effective and not a mere formality with no substantial relief. In the present case, neither have the Petitioners described the available alternate remedy under the Act of 2015 as ineffectual and non-efficacious while invoking the Writ jurisdiction of this Court nor have they ascribed cogent and satisfactory reasons before the Court so as to enable it to exercise jurisdiction under Article 226 of the Constitution in tune with the facts and circumstances of the case. All the contentions of the Petitioners, as raised in these Petitions, including the issue of jurisdiction, applicability or otherwise of the act, can very conveniently be dealt with by the Appellate Authority in tune with the mandate of Sections 15 and 17 of the Act of 2015. Reference, in this behalf, can be had to the law laid down by the Hon ble Apex Court in case titled Commissioner of Income Tax Ors. v. Chhabil Dass Agarwal reported as [ 2013 (8) TMI 458 - SUPREME COURT] , as cited by the learned Counsel representing the Respondent Nos. 2 and 3. We declare that these Writ Petitions are not maintainable before this Court in view of the efficacious and statutory remedy of appeal being available to the Petitioners in terms of the mandate of Sections 15 and 17 of the Act of 2015. Accordingly, the preliminary objection raised by the Respondents with regard to the maintainability of these Petitions before this Court sustains, as a sequel thereto, all these Petitions shall stand dismissed. This shall also dispose of any pending miscellaneous application(s) accordingly. Having regard to the fact that the Petitioners have been bonafidely pursuing their claim before this Court by filing these Writ Petitions under Article 226 of the Constitution at the relevant point of time and, admittedly, the decision in these Writ Petitions has consumed more than one year, grant liberty to the Petitioners to avail the aforesaid statutory remedy of appeal against the proceedings initiated against them by the Respondent No.3, including the show cause notices, assessment orders, penalty notices, demand notices, within one month from the date of announcement of this Judgment. In the event any such appeal/s is/ are filed before the appellate authority within the time so granted by this Court in accordance with the mandate of the Act of 2015, the appellate authority shall consider the same only on merits without making any reference to the period of limitation and, till then, no punitive action shall be taken against the Petitioners.

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• 2022 (9) TMI 1098
  Validity of Reopening of assessment u/s 147 - Reopen v/s review - communication of the DGIT Investigation that has triggered the reassessment - differential pricing of the shares issued to the petitioners, at par, and those issued to South Asia Entertainment Holdings ltd., at a premium - HELD THAT:- While it is a settled position that a re-assessment does not permit of a review, the critical difference between the one and the other is that while a review is premised upon the same material upon which two officers adopt differing views or even a situation where the same officer has had a change of heart/mind in regard to the view previously taken, a re-assessment has to survive only based upon new material. The critical test is therefore as to whether the Department had in its possession any material over and above those available in the original records. In this case, the reasons disclose so. The Assessing Authority refers to material received from the DGIT Investigation bringing to his notice information relating to the allegedly offending share allocation and pricing. This constitutes tangible material on the basis of which jurisdiction has been assumed. As in the case of Commissioner of Income Tax. Delhi V. Kelvinator of India [ 2010 (1) TMI 11 - SUPREME COURT] considered the impact of re-assessment proceedings initiated within four years, and upon noticing that there was no new material that had come to the possession of the Department held that the re-assessment was nothing but a review. The assumption of jurisdiction in this case, is based upon additional material over and above what formed part of the records, that have lead to the belief that income has escaped assessment and not a review of existing materials that found part of the assessment records of the petitioners. This issue is answered in favour of the revenue.

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• 2022 (9) TMI 1097
  TDS u/s 195 - remittances made by the assessee to GEISA towards use of Pro-E software or Global Web - non deduction of tds - CIT(A) concluded that this software not only furnishes the instructions but also actually designs the machines, and, therefore, any payment made to derive such benefit answers the description of royalty - HELD THAT:- Nothing could be more clear that the contents of the agreement referred to above to show that PTC is the sole owner of the Pro-E software and GEISA/GEIE only has limited right to use the software subject to the conditions stipulated in the agreement. There is no sale of copyright of software, but the sale is only in respect of the rights to use the software and not the right to the code in itself. When once the transaction is very clear that no copyright of the software is sold but only the rights to use the software were sold without impacting any rights to the source code, merely because the assessee puts it to a particular use, such a usage will not relate back to change the nature of transaction from the sale of product to the sale of copyright. Facts of the case involved in this matter are squarely covered by the decision in the case of Engineering Analysis Centre Of Excellence (P) Ltd [ 2021 (3) TMI 138 - SUPREME COURT] . We, therefore, while respectfully following the same hold the issue in favour of the assessee and inasmuch as such payments do not result in any income taxable in India, the person referred to in section 95 of the Act is not liable to deduct any tax under section 195 of the Act. We, therefore, hold that the remittances made by the assessee to GEISA towards use of Pro-E software or Global Web are not royalty income chargeable to tax under the Act as well as under the treaty and consequently the assessee cannot be treated as an assessee-in-default under section 201 of the Act for non-deduction of taxes under section 195 of the Act. Grounds of appeal are accordingly allowed.

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• 2022 (9) TMI 1096
  Reopening of assessment u/s 147 - reliance on seized material belonging to, pertaining to relating to the group companies - HELD THAT:- Reasons do not disclose that any material belonging, pertaining relating to the assessee says that during the search proceedings in the case of M/s Kapil consultancy services private Ltd. There is no expiration forthcoming from the assessee as to how the case on hand is different either in fact or law from the ones in the case of group companies. Apart from this, the reasons recorded by AO in this matter, as could be found at paragraph No. 3 of the assessment order, do not reveal any information gathered at the time of the sec. since the proceedings in the case of M/s Kapil consultancy services private Ltd nor any reference to the sec, since the proceedings in the case of M/s Kapil consultancy Pvt. Ltd to be found therein. The reopening in this matter has nothing to do with the search and seizure proceedings in the case of M/s Kapil consultancy Pvt. Ltd. Merely because they happen to be certain search action against M/s Kapil consultancy services Pvt. Ltd, it need not ipso facto be inferred that the present reopening proceedings have something to do with such search action. The reopening in this matter is altogether independent, as could be gathered from the reasons recorded in this matter, and therefore, the non obstante cause has no obligation to the facts of the case. We accordingly hold that the learned AO had rightly initiated the proceedings u/s 147 by issuing notice under section 148 - Ground No. 2 is accordingly dismissed. Addition relating to the notional interest on redeemable debentures - Since there is no change in facts or law, while respectfully following the view taken in the case of group companies [ 2022 (3) TMI 1422 - ITAT HYDERABAD] we set aside the findings of the authorities below and restore the issue to the file of the learned Assessing Officer to verify the fact relating to the debentures the scheme and also whether the assessee received and credited any such interest in their books in the relevant previous year. This ground is allowed for statistical purpose.

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• 2022 (9) TMI 1095
  Admission of additional grounds under Rule 11 and 29 of the Income Tax (Appellate Tribunal) Rules, 1963 - Denial of deduction from Long Term Capital Gain u/s 54B/54F - Assessee before us took a new stand that the agricultural land giving rise to impugned capital gain is situated beyond 8 kms of municipal limits of Bhiwadi and thus does not fall within the definition of expression capital asset under Section 2(14) - exemption claimed u/s 54B as well as alternative claim made under Section 54F was rejected by the Assessing Officer on the premise that the conditions for claim of deduction are not fulfilled either under Section 54B - HELD THAT:- Power of the Tribunal to admit additional grounds in respect of matter relating to which necessary information is on record, is now well established. As held in the case of CIT vs. Stepwell Nature Limited [ 1997 (8) TMI 5 - SUPREME COURT] that where a claim was not made either before the Assessing Officer or the first appellate authority and the relevant facts on the basis of which the claim could be adjudicated upon are not available in the records of either the Assessing Officer or the First Appellate Authority, the claim ought not to be entertained by the Tribunal. As in National Thermal Power Company Ltd . [ 1996 (12) TMI 7 - SUPREME COURT] also observed that the Tribunal has jurisdiction to examine a question of law which arises from facts available on the records of Revenue authorities. Hence as per the judicial precedents, the Tribunal cannot entertain a new ground unless such ground can be decided with reference to the material already on record. In the instant case, it is an admitted position that the evidences to support the additional ground were not available before the Revenue authorities and sought to be placed for admission by way of additional evidence before us. In the absence of relevant facts available before revenue authorities, we are not inclined to admit the additional ground for adjudication. The additional grounds raised towards a new claim that the agricultural land sold is outside the purview of definition of capital assets is thus rejected as inadmissible. We do not find any compelling reason in the petition for admission of additional evidence in terms of Rule 29 of the Income Tax Appellate Tribunal Rules, 1963. Rule 29 of the ITAT Rules provide for stringent stipulation for admission of additional evidence. The assessee has not given any cogent reason for failing to adduce the additional evidence sought to be admitted on this belated stage. Therefore, we also decline to entertain the additional evidences. Appeal of the assessee is dismissed.

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• 2022 (9) TMI 1094
  Validity of re-opening of assessment u/s 147 - Disallowance of loss in trading in shares and derivatives - whether the information received regarding client code modification could be a reason for reopening of assessment? - HELD THAT:- We hold that the reopening of assessment is bad in law. On merits also, we notice that the claim of the assessee is duly supported by various evidences and further the code modifications carried out by the stock broker should not affect the claim of the assessee unless it is proved that the assessee has colluded with the stock broker in carrying out the modification, which is not the case here. Accordingly, we are of the view that the AO could not have disallowed the loss claimed by the assessee. Accordingly, we quash the orders passed by the tax authorities. Appeal filed by the assessee is allowed.

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• 2022 (9) TMI 1093
  Taxability at the rate prescribed u/s 115BBE - unexplained investment - Return u/s.44AD declaring income @8% on sales - assessee is engaged in business of sale and purchase of jewellery and filed return declaring income under presumptive scheme at 8% of the gross revenue - HELD THAT:- As seen that the assessee has been regularly engaged in the jewellery business. He has declared revenue of Rs.62.03 lakh for the year under consideration. It goes without saying that no business can be carried out without maintaining stock, more specifically if it is business of jewellery. Once the assessee has declared his income u/s.44AD and it is a no-account case, the AO cannot resort to the balance sheet filed by the assessee during the course of assessment proceedings to pick up the item of inventory of gold and make addition for the same. If that be the logic, then the AO will end up making addition for all the items of assets shown in the balance sheet, which is unfounded. We, therefore, order to delete the addition. Appeal is partly allowed.

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• 2022 (9) TMI 1092
  Estimating net profit by adopting profit rate of 8% on gross receipts - assessee submitted that only the profit embedded in the contractual receipts can be subject to tax and it would be capricious to tax entire receipts as income of the assessee - HELD THAT:- The assessee has not been able to bring forth any supporting evidences in respect of expenses incurred in earning the contractual income. The assessee has cited examples of assessee s in similar line of business and submitted that the profit margin in their case was less than 5%. Since the assessee has been unable to submit any supporting evidences in respect of expenses before us, we are of the considered view that the ld. CIT(A) has been reasonable in estimating profit by apply the rate of 8%. In the result, we uphold the order of ld. CIT(A) in the instant set of facts.

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• 2022 (9) TMI 1091
  Addition u/s 68 - unsecured loan shown under the head of trade payables - CIT(A) while deleting the addition has observed that the Assessing Officer has accepted the fact that no business has been conducted by the assessee as well as observed in the assessment order that there were hardly any bank balance or cash on hand in assessee s account AND that the assessee informed that the rate of commission had been calculated @ 1% on total bank credits in the case of entry providers - HELD THAT:- AO has only referred to the credit in respect of letters issued under Section 133(6), letters which were returned back and the parties whose addresses were not provided by the assessee. This direction by the CIT(A) clearly has not given the picture as to on what basis the assessee is dealing with entry providers or giving accommodation entry. CIT(A) has also not taken cognisance of the evidences provided by the assessee and simplicitor directed the AO to calculate the commission income of the assessee @ 1% on total bank credit. Though the objection that the assessee has not conducted any business and there is hardly any bank balance or cash on hand, the CIT(A) has ignored the main aspect of trade payables which was shown by the assessee in his balance sheet. If the analogy of the CIT(A) is accepted then Balance Sheet determined by the assessee company itself will become nullity. CIT(A) was not correct in taking the said trade payables as accommodation entry and directing the Assessing Officer to calculate the commission income @ of 1% on total bank balance. In fact, the assessee has not given any confirmation from other parties whom the letters under Section 133(6) of the Act were issued. Thus ground no.1 of Revenue s appeal is allowed. Disallowance u/s 14A - HELD THAT:- As it appears that there is no exempt income. The assessee has not derived any exempt income and, therefore, the Assessing Officer was not right in making disallowance under Section 14A of the Act. Ground no.3 is dismissed.

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• 2022 (9) TMI 1090
  Revision u/s 263 by CIT - as per CIT, AO has failed to make adequate inquiry w.r.t. to section 14A disallowance and merely accepted assessee s submission - whether the AO made inquiries in respect of deduction of claim under section14A of the Act during the course of assessment proceedings? - HELD THAT:- Before the AO, the assessee submitted that the assessee had interest-free capital of the proprietor amounting to Rs. 1,53,73,45,614/- as on 31-03-2017. Out of the same, the total investment in interest free funds is amounting to Rs. 7,71,58,852/-. Therefore, considering the investment in the firms from which tax free income is earned, it is just 5% of the total interest-free capital of the proprietor. Further, the assessee submitted that there is no interest-bearing loan in the personal balance sheet of the assessee. Therefore, the assessee submitted before the AO that no interest-bearing funds were utilised in the investment which generated interest-free income in the hands of the proprietor. It was further submitted that there is no new investment during the year under consideration with reference to investment generating exempt income. Therefore interest or other expenses incurred during the year under consideration cannot be directly or indirectly related to exempt income, as no new fund has been invested for the investment generating exempt income. As in the instant set of facts, the assessee gave detailed explanation in respect of its claim u/s 14A of the Act. The assessee placed various documents on record to substantiate that since he was having adequate interest-free funds at its disposal, then in view of several jurisdiction Gujarat High Court decisions, it would be reasonable to presume, that interest-bearing funds were not utilised the purpose of making investments in instruments which will yield interest free income. In view of the explanation given by the assessee with respect to claim of deduction u/s. 14A of the Act, in our view, the view taken by the A.O. is a legally plausible view. It is a well settled position of law that if from the assessment records, it is evident that the Ld. AO has made due enquiries in response to which assessee has filed detailed submissions, then even if the assessment order does not discuss all aspects in detail with regards to claim of the assessee, it cannot be held that the order is erroneous and prejudicial to the interests of the Revenue. See M/S RELIANCE COMMUNICATION LTD. [ 2016 (4) TMI 173 - BOMBAY HIGH COURT] , SMT. ANUPAMA BHARAT GUPTA [ 2021 (4) TMI 1000 - ITAT AHMEDABAD] , GOYAL PRIVATE FAMILY SPECIFIC TRUST [ 1987 (10) TMI 43 - ALLAHABAD HIGH COURT] - Appeal of assessee allowed.

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• 2022 (9) TMI 1089
  Deduction u/s. 54 - Non deposit of the sale consideration in capital gain scheme account prior to due date of filing of return under section 139(1) - investment prior due date of filing of return of income under section 139(4) - investment in new property which was not made within the due date of furnishing return of income under section 139(1) of the Act, but was made within the timelines provided under section 139(4) - scope of due date of filing return under section 139(1) - HELD THAT:- It is a fit case for allowing deduction under section 54F of the Act in the instant set of facts. Various Courts and Tribunals have on numerous occasions held that 54F is a beneficial provision and the same date should be construed liberally. Further, from the plain language of section 54F of the Act, it is seen that only section 139 is mentioned in the context of the unutilised portion of the capital gain on sale of property and therefore investment in new property under section 139 cannot be confined only to provisions of section 139(1) of the Act, but includes all the subsections of section 139 of the Act. In the case of CIT v Rajesh Kumar Jalan [ 2006 (8) TMI 126 - GAUHATI HIGH COURT] on similar facts held that assessee is eligible for claiming deduction under section 54F of the Act in case of HV investment property section 139(4) of the Act. The Delhi Tribunal in the case of Smt. Harinder Kaur [ 2021 (2) TMI 580 - ITAT DELHI] held that where assessee paid amount of sale consideration received from sale of a residential house for purchase of another residential property prior to due date of filing of return of income under section 139(4), his claim for exemption under section 54 was to be allowed - Appeal of assessee allowed. Allowability of deduction of renovation and brokerage expenses claimed as deduction by way of cost of improvement from sale of consideration - HELD THAT:- As on the basis of supporting evidences furnished before us, we are of the view that the assessee has been able to substantiate that he had expenses in connection with renovation/brokerage expenses. Accordingly, we are hereby allowing the assessee s ground of appeal in relation to allowability of renovation and commission expenses by way of deduction as cost of improvement from sale consideration, while computing capital gains tax on sale of property. Assessee appeal allowed.

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• 2022 (9) TMI 1088
  TDS u/s 194IA - Purchase of agricultural land - HELD THAT:- In the present case, such land is situated beyond 6 km from the local limits of Panvel municipality, which has a population of more than 1 lakh but not exceeding 10 lakhs. Assessee has submitted the aerial distance of the land purchased showing that it is situated at a distance of more than 6 km aerially from limits of Panvel Municipality. A communication was also submitted from Panvel Nagar Parishad. Revenue failed to bring on record any evidence, which proves that the impugned land is not an agricultural land. Therefore, find that the impugned land is an agricultural land and no tax is required to be deducted on purchase of land under Section 194-IA of the Act. Accordingly, we confirm the order of the learned CIT (A) on this count and dismissed grounds no.1 to 5 of the appeal of the Revenue. Addition u/s 69C - unexplained expenditure with respect to Panvel project - CIT (A) noted that in the order of settlement commission the total expenditure was considered as an application of income against the disclosure made by the group before the settlement commission - HELD THAT:- In the order of the settlement commission the capitalization was granted to the assessee about the only earned which has been utilized by incurring the expenditure of this company. The fact shows that Wadhwa group Holdings private limited has admitted to certain receipts in the nature of loans as belonging to it. Having so admitted the receipts, that applicant also owns up outgoing in the seized material is being spent by the applicant Wadhwa Group Holdings Pvt Ltd on various projects of different entities of the group which also included the assessee and same are not in the nature of any tangible asset. In the settlement commission the expenditure incurred with respect to the projects of the assessee was also considered for capitalization. The settlement commission allowed the same. Therefore, We do not find any infirmity in the order of the learned CIT (A) in deleting the above addition and therefore, ground of the appeal is dismissed. Unaccounted cash receipt - HELD THAT:- As during the course of search it was found that Group was maintaining the record of unaccounted cash receipts and payments on a cloud based software i.e. HR Points. The entries were made in coded language. The data was analyzed and it was found that sum of Rs.4 lacs is belonging to the appellant. The assessee has not undertaken sales of any of the project. AO found that out of that only 8% of such income has been offered as income, the balance Rs.3,68,000/- were added in the hands of the assessee. As in the case of the assessee any expenditure incurred by the assessee were considered before settlement commission and there was no income offered on account of assessee, CIT (A) confirmed the same. We find that as there is no evidence given by the assessee with respect to any income, we do not find any infirmity in the orders of lower authorities in confirming the addition - Accordingly, the solitary ground of appeal of the assessee is dismissed. Disallowance under Section 14A - CIT (A) restricted Addition to the extent of exempt income earned - HELD THAT:- No infirmity is pointed out in the order of the learned CIT (A). Based on several judicial precedents, CIT (A) has held that disallowance cannot exceed the exempt income. Accordingly, we confirm the order of the learned CIT (A) and dismiss the ground of the appeal. Addition u/s 68 - Unexplained cash credit - CIT-A deleted the addition - HELD THAT:- Both the companies are registered with RBI as non-banking financial companies in the category of non-deposit taking systemically important companies - remand report clearly shown that these companies were enquired by the learned Assessing Officer and complete replies are submitted by them. AO on receipt of the reply did not have anything adverse to comment. It is also apparent that assessee has proved identity and creditworthiness of the depositor as well as the genuineness of the deposit of money in the form of debentures. In view of this, we do not find any infirmity in the order of the learned CIT (A) in deleting the addition under Section 68. Appeal of revenue dismissed.

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• 2022 (9) TMI 1087
  Undisclosed income - receipt of on-money by cash - cash received for the sale of property - case of the purchaser is that payment was made through an office staff of her husband and paid to a staff of the assessee just before registration - HELD THAT:- Assessing Officer was not able to establish that the assessee received the on-money payment except statement given by Mrs. Pramila and her son and moreover, there was no documentary evidence to prove that the assessee has received on-money. It is a clear evidence that the assessee has received the sale consideration what is mentioned in the sale deed. If at all the assessee has received other than the sale consideration, the Assessing Officer has to show necessary documentary evidence. In this case, no documentary evidence was brought on record by the Assessing Officer. Apart from that, the payment was neither directly paid by the purchaser nor received by the assessee. The on-money payment is stated to have made through servant of the purchaser and also received by the servant of the assessee. AO ignoring to examine relevant persons, who are material evidence in this case, proceeded to make addition in the hands of the assessee. The only documentary evidence available with the AO is that after conducting search, the purchaser has accepted in her sworn statement in respect of on-money payment. AO has made addition in the hands of the purchaser Smt. Pramila. Simply because the purchaser has admitted on-money payment is not sufficient. Particularly, in this case, a search was conducted and no incriminating material has been found in respect of on-money receipt. Therefore addition cannot be made in the hands of the assessee. In view of the above, we set aside the order of the ld. CIT(A) on this issue and the ground raised by the assessee is allowed. Disallowance of selling expenses - assessee has contended that amount was paid as a comprise amount as compensation for seeking them to release the assessee from an existing contract and that the original documents filed alone are to be considered and that the transactions are all in tandem to the terms of the contract - HELD THAT:- CIT(A) has observed that the whole sequence of events attendant with the inconsistencies/ defects pointed out by the Assessing Officer in the assessee s claim indicates whereby, the assessee has made an untenable claim under the guise of compensation to be paid to a related party. Under the above facts and circumstances, we find no reason to interfere with the order passed by the ld. CIT(A) and accordingly, the ground raised by the assessee is dismissed.

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• 2022 (9) TMI 1086
  Exemption u/s 11 - assessee-trust had accumulated the capital receipt - nature of corpus donation is capital receipt irrecoverable - Whether corpus donation was received for specific purpose related charitable activity of the assessee-trust before the registration u/s 12A/12AA? - HELD THAT:- Corpus donations received by the Trusts, which is not registered u/s.12A/12AA of the Act, are not taxable as they assume the nature of Capital receipt the moment the donations are given to the Corpus of the Trust . We find the provisions of section 2(24)(iia)/12(1)/11(1)(d)/35/56(2) are relevant for deciding the current issue. It is a settled legal proposition, in case of a registered Trust under the Income-Tax Act, the corpus specific Voluntary Contributions are outside the scope of income as defined in section 2(24)(iia) of the Act due to their Capital nature . But it is a case of un-registered Trust. Despite the detailed deliberations made by the DR, we find the principles relating to judicial discipline assume significance and the priority. It is also decided issue that there is need for upholding the favourable view if there exist divergent views on the issue. As discussed in the preceding paragraphs above, there are multiple decisions in favour of the assessee. The two issues must be settled during registration u/s 12AA which are genuinity of trust activities are related to main object of trust. The two limbs must be considered during registration. CIT(E) is silent about the second issue. The first issue is adjudicated in favour of assessee-trust.

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• 2022 (9) TMI 1085
  Disallowance of exemption claimed u/s 54 - Long Term Capital Gain on sale of residential house property - whether the assessee is entitled to deduction u/s 54 of the Act or not and what is the date of acquisition of new residential house for the purpose of deduction u/s 54? - HELD THAT:- Provision of Section 54 shows that whether any individual or a HUF invest, the capital gain arise on transfer of residential house within a period of 1 year before or two years after the date of transfer of the house property then the amount of capital gain invested in purchase of new house property, the capital gain was not chargeable to tax. Here the fact shows that the residential property was sold on 12th May, 2006 and agreement to purchase the new house property was registered on 16th March, 2005, whereas the possession of the new house property was granted to the assessee on 16th July, 2005. As admitted fact that the date of possession was not available before the learned Assessing Officer and therefore, he took the date of agreement to sale as the date of purchase of the property. Therefore, he denied the deduction under Section 54 of the Act. This fact was available before the learned CIT (A), however, he rejected the same stating that this is additional evidence filed by the assessee and same is not in conformity with the Rule 46A of the Income Tax Rules, 1962. We find that Rule 46A, does not mandate compulsorily by making return application for admission of additional evidence. It is for the CIT (A) to record the reason if such additional evidences are admitted. CIT (A) rejected the claim of the assessee on flimsy ground - we set aside the whole issue to the file of AO with a direction to the assessee to submit the evidence of possession letter of the new property, AO may examine the same and decide the issue whether the claim of the assessee is eligible for deduction u/s 54F or not. The learned AO may grant an opportunity of hearing to the assessee. After hearing, the AO may decide the issue on the merits of the case. Accordingly, the appeal of the assessee is allowed for statistical purposes.

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• 2022 (9) TMI 1084
  Unexplained cash credit u/s. 68 - as per AO appellant failed to prove the identity, creditworthiness of the party and genuineness of the transactions, when all the details and evidences were filed to prove the same, the AO made enquiry u/s 133 (6) and did not proceed further and as such the assessee discharged the onus that lay upon him - HELD THAT:- The Assessee in this case, as explained about the identity, creditworthiness and financials etc. of each of the share subscriber company individually. However, we note that in the assessment order that the AO has not even mentioned the names of the share subscriber companies and even has not mentioned a word as to which of the share subscriber company or the corresponding transaction thereof was not genuine and on what grounds. AO, in our view, could have taken an adverse inference, only if, he would have pointed out the discrepancies or insufficiency in the evidences and details received in his office and pointed out as to on what account further investigation was needed by way of recording of statement of the directors of the subscriber companies. Even if the directors of the subscriber companies have not come personally in response to the summons issued by the AO, in our view, adverse inference cannot be taken against the assessee solely on this ground as it is not under control of the assessee to compel the personal presence of the directors of the shareholders before the AO. In this case, as detailed in the written submissions of the assessee, the assessee had duly submitted details and evidences to prove the identity and creditworthiness of each of the share subscribers separately. However, the ld. AO, in the impugned Assessment Order has not recorded any peculiar facts of circumstance which would suggest that the assessee had routed his own money through the above stated subscribers. The AO has not brought any material or evidence on the file to show that these share applicants were fictitious persons. The AO has passed the impugned Assessment Order in a hurried manner even without pointing out any defect or discrepancy in the evidences and details furnished by the assessee. A perusal of the impugned order of the ld. CIT(A) shows that the ld. CIT(A) has not discussed anything about the material facts of the case. He has not pointed out any defect and discrepancy in the evidences and details furnished by the assessee but simply cited certain case laws even without pointing out as to how these case laws were applicable to the facts and circumstances of this case. The order of the CIT(A) is a non-speaking order. By simply reproducing the contents of the case laws without discussing about their application on the facts of the case, in our view, would not make the order of the ld. CIT(A) justifiable speaking order and hence, the same is not sustainable as per law. Appeal of the assessee stands allowed.

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• 2022 (9) TMI 1083
  TP Adjustment - Interest on delayed receivables - AO treated interest on delayed receivables as a separate international transaction and called on the assessee to furnish invoice-wise details of all trade receivables from AE during the year - HELD THAT:- As considering the decision of the of the coordinate bench of the Tribunal and the judgment in the case of AMD (India) Pvt. Ltd. [ 2018 (8) TMI 2094 - KARNATAKA HIGH COURT] we hold that the treatment of interest on deferred receivables is rightly considered as an independent international transaction and benchmarked separately by the revenue authorities. Calculation of interest we notice that the assessee had submitted the invoice wise details before the AO. In respect of the services rendered by the Assessee to its AE, it raises invoices, under which the AE is granted 90 days time to make payment. During the course of hearing the AR brought to our attention that the TPO in assessee s own case for the assessment year 2014-15 has allowed the credit period of 90 days and prayed that the same may be allowed for the year under considered. Since the TPO has not done a separate bench marking for the interest on delayed receivables, we remit the issue back to the TPO for fresh consideration. TPO is directed to consider the payables by the assessee to AEs and also the fact that TPO in the AY 2014-15 has given a credit period of 90 days while computing the interest on receivables. Needless to say that the assessee may be given reasonable opportunity of being heard. Depreciation on networking equipment - HELD THAT:- We find that the issue is no longer res-integra and has been decided in the case of Mphasis Ltd. [ 2021 (3) TMI 1072 - KARNATAKA HIGH COURT] wherein held that computer accessories such as switches and routers form part of peripherals of computer system and hence entitled to depreciation at 60%. Following the same, we allow this ground by the assessee. Disallowance u/s. 14A - HELD THAT:- In the instant case, the AO has considered the entire investments for the purpose of arriving at the average investments, which is not in conformity with the ratio laid down by the decision of VIREET INVESTMENT (P.) LTD. [ 2017 (6) TMI 1124 - ITAT DELHI] - Respectfully following this decision of the Special Bench, we remit the issue back to the AO to recompute the disallowance u/s. 14A r.w.r.8D(2)(iii) taking into account only those investments for computing average value of investment which yielded exempt income during the year. Non-granting of deduction u/s. 80G - We direct the AO to verify and allow deduction u/s. 80G towards the donations made by the assessee in accordance with law after giving reasonable opportunity of being heard. MAT credit - AO is directed to grant relief of additional MAT credit on the recomputed income as per the directions given above. Short credit of TDS - As submitted that the AO has not given the credit for TDS as has been claimed by the assessee. We therefore direct the AO to verify the claim of the assessee and allow the tax credit in accordance with law.

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• 2022 (9) TMI 1082
  Validity of proceeding u/s 147 - validity of the assessment order passed under the said provision - as argued notice was not validly served on the assessee - HELD THAT:- The address of the assessee as mentioned in the assessment order does not match with the address in which the notice u/s 148 was issued. It is further relevant to observe, much prior to initiation of proceeding under section 147 of the Act, the assessee had filed return of income for some other assessment years mentioning the address as has been mentioned in the assessment order. Even, copy of the Aadhar Car and Passport placed in the paper-book mentions the address as H. No. 124, Ward No. 1, Panipat. Therefore, there cannot be any manner of doubt that the correct address of the assessee is, as mentioned in the body of the assessment order and not on which the notice under section 148 of the Act was issued. Therefore, it is evident, the notice issued by the Assessing Officer was not validly served on the assessee. Valid service of notice under section 148 of the Act is sine qua non for proceeding under section 147 of the Act. In absence of valid service of notice under section 148 of the Act, the assessment proceeding under section 147 of the Act has to be declared as invalid - Thus the impugned assessment order passed under section 147/144 of the Act is invalid in absence of a valid service of notice issued under section 148 of the Act on the assessee - Appeal of assessee allowed.

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• 2022 (9) TMI 1081
  Revision u/s 263 by CIT - application of principle of consistency - Judicial discipline - assessee had made a claim to be surplus through audit trial that assessee had made a provision on account of anticipated loss that was debited to its profit and loss - assessee was following the percentage completion method from year to year for computing the income of the Assessee - As per CIT, AO failed to examine the factual aspect ignoring the provisions of Section 145(1) and (2) of the IT Act AND the loss to be contingent nature and therefore, disregarded assessee s recognized income or loss percentage computation method (POCM) as prescribed in the accounting standard-(AS)7 - HELD THAT:- In the present case as Revenue has accepted the Accounting Method followed by the Assessee for year to year, in the middle of the completion of the project, neither the AO nor the PCIT can not disturb the method of accounting followed by the Assessee, if the accounting method is allowed to be disturb on an assessment year, which will give distort picture of the Assessee s financial position. Thus the Order passed by the AO cannot set to be erroneous if the same view that of the earlier years has been accepted by the AO in the year under consideration, thus the Ld. A.O. has applied his mind and came to the correct conclusion. The Ld. PCIT cannot interfere in an issue which has been accepted by the Revenue for number of years. When the facts in the Assessment year are same that of the Earlier Years, then the AO cannot take contrary view to the view taken in the earlier years. As the AO has accepted the accounting method followed by the assessee from year to year, in the relevant Assessment Year, the AO cannot take contrary view. Where facts and law in a subsequent assessment year are the same, no authority whether quasi judicial or judicial can generally be permitted to take a different view. This mandate is subject only to the usual gateways of distinguishing the earlier decision or where the earlier decision is per incuriam. However, these are fetters only on a coordinate bench which, failing the possibility of availing of either of these gateways may yet differ with the view expressed and refer the matter to a bench of superior strength or in some cases to a bench of superior jurisdiction. In the absence of any material change justifying the Revenue to take a different view of the matter-and if there was no change it should be in support of the assesses-we do not think the question should have been reopened and contrary to what had been decided by the A.O in the earlier proceedings. Invoking jurisdiction u/s. 263 of the Act by the Ld. PCIT is bad in law, accordingly we quash the impugned order of the Ld. PCIT passed under section 263 of the Act. - Decided in favour of assessee.

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• 2022 (9) TMI 1080
  TDS u/s 194A - Addition u/s. 40(a)(ia) - non-deduction of TDS on interest payments made to its members - HELD THAT:- We find no merit in the Revenue s instant arguments as we are in assessment year 2010-11 whereas a cooperative bank has been excluded from the purview of section 194(A)(3)(v) vide Finance Act 2015 w.e.f. 01.06.2015 only. As in Saraswat co-operative Bank 2017 (3) TMI 741 - BOMBAY HIGH COURT] take note of forgoing legislation developments to hold that a co-operative bank/ assessee has no liability to deduct TDS on interest payments made to members. We thus delete the impugned section 194A r.w.s. 40 (a)(ia) disallowance of Rs.3,49,386/- in very terms therefore. The assessee s third substantive grievance is accepted.

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• 2022 (9) TMI 1079
  Revision u/s 263 - Disallowance u/s 40A(3) - Payments in cash exceeding the permisiable limit - HELD THAT:- AO observed that the payments have been made exceeding Rs. 20000/- in cash on single day, and no explanation has been offered by the assessee, which led AO to invoke provisions of Section 40A(3) and cash payments towards labour payments, stood added to the income of the assessee passed by AO u/s 143(3) read with Section 263 - CIT(A) has given erroneous finding that the books of accounts were produced by the assessee before the AO. Infact no vouchers, invoices, cash book, books of accounts were produced, and merely ledger accounts were produced and that too were changed by assessee in assessment proceedings conducted in consequences to revisionary order passed by ld. Pr. CIT u/s 263. The assessee is claiming deduction towards material purchases and labour payments from its income chargeable to tax, and thus the onus is on the assessee to bring on record cogent material to substantiate the same as well that compliances of statutory provisions such as Section 40A(3) were made, before being allowed deduction by Revenue. No infirmity in the order of the Assessing Officer , the ld. CIT(A) has misdirected itself by applying net profit rate , despite the assessee having admitted to have cash payment in violation of Section 40A(3) and the case also does not fall under exceptions as are provided in Rule 6DD of the 1962 Rules. The appellate order passed by ld. CIT(A) cannot be sustained and is reversed and the assessment order passed by the AO is confirmed so far as additions disallowance u/s. 40A(3) with respect to material consumed and labour payments are concerned. This disposes of ground number 2 and 3 raised by Revenue in its memo of appeal filed with tribunal , which stood allowed. Ground concerning disallowance of depreciation is not adjudicated by ld. CIT(A) - rectification of mistake - HELD THAT:- The assessee filed its first appeal with CIT(A), and in case if the ground no. 6 raised by assessee concerning disallowance of depreciation is not adjudicated by CIT(A), the assessee stood prejudiced and it is not shown that the assessee has come in an appeal before tribunal to seek redressal of its grievance, nor it could be shown that C.O. is filed by the assessee being aggrieved by the decision of CIT(A) in not adjudicating ground number 6 concerning disallowance of depreciation - But, however, it is observed that while reproducing grounds of appeal number 6 raised by the assessee bfore ld. CIT(A) , it was erroneously typed as Rs. 33,75,200/- instead of Rs. 3,37,520/-in the appellate order passed by ld. CIT(A), which is a mistake apparent from record , which we direct to correct the same at page number 2 of the appellate order passed by ld. CIT(A). To the extent of correcting aforesaid mistake apparent from record, we modify the order of ld. CIT(A) concerning this ground number 4 raised by Revenue before tribunal. This ground is partly allowed in favour of Revenue.

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• 2022 (9) TMI 1078
  Unexplained jewellery - search action at the residential premises and locker, various items of gold jewellery and diamond jewellery were found which were valued from the Government Approved Valuer - Jewellery earned as per Indian customs and traditions - HELD THAT:- It is undisputed fact that during the time of search, the assessee has stated that these jewelleries mainly belongs to his wife and his mother and are ancestral jewellery which were gifted during the time of his marriage by his relatives, parents and grand parents and also the parents of his wife. During the course of assessment proceedings itself, the assessee filed the copies of valuation report which proves that these jewelleries are 10-30 years old belonging to the family members. The details of which have been incorporated in the appellate order. Some of the valuation reports were for the year 1990, 2002 and 2009. AO nowhere mentioned about the valuation report which was filed before him and duly noted by Ld. CIT (A) who has tallied the description of the jewelleries as given in the valuation report filed by the assessee from the valuation report of the Govt. Approved Valuer. It was after taking into account the said reports, he has given part relief. Thus, the jewellery which was found on the possession of his wife and mother were old jewelleries and ancestral inheritance and also gifted 2-3 decades ago. CBDT Instruction no. 1916 which has been subject matter of interpretation by various courts in the case of Smt. Pati Devi [ 1999 (2) TMI 43 - KARNATAKA HIGH COURT] , CIT vs. Ghanshyam Das Johri [ 2013 (10) TMI 1187 - ALLAHABAD HIGH COURT] and Ratanlal vs. Yaparilal Jain [ 2010 (7) TMI 769 - GUJARAT HIGH COURT] and others and several other decisions of the Coordinate Bench, the courts have held that CBDT instruction should be taken as guiding factor for presuming assessee to the extent of limit prescribed for the family members should be treated as explained looking to the Indian customs and traditions where jewelleries were given to the ladies at the time of marriage and other occasions. Thus, when the various Hon ble High Courts have held this proposition in favour of the assessee, we find that the ratio laid down has more pursusive value. CBDT circular strongly prescribed that in excess of assessee wealth tax, gold jewellery ornaments found in excess of the carat weight declared in the wealth tax return only need to be assessed. Thus on the peculiar facts, the addition was confirmed by the Hon ble High Court, which ratio cannot be made applicable here. Accordingly, the order of Ld. CIT(A) giving part relief is confirmed. Therefore the ground raised by the revenue is dismissed. Addition on account of unaccounted cash - As not only assessee had shown there was huge withdrawal from his regular bank account but has also shown withdrawals of bank account more than 11 lakhs and also in the income tax return for AY 2016-17, Rs. 4,93,824/- was shown as cash in hand. Thus to this extent, Ld. CIT(A) has rightly held that the said cash cannot be treated as unexplained or undeclared. Accordingly, the order of Ld. CIT(A) on this ground is confirmed.

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• 2022 (9) TMI 1077
  Accrual of income - Addition on account of interest income as reflected in Form No. 26AS - assessee has submitted that at the time of filing the return of income, no such interest receipt was reflected in Form 26AS and therefore, the assessee has not taken this interest amount as part of the declared income - HELD THAT:- The assessee has explained that this interest does not belonging to the assessee but the same pertains to Smt. Usha Gupta, who has invested the money in M/s Sanrachna Infra Project Pvt. Ltd,. The learned AR has referred to the income tax return of Smt. Usha Gupta, the proprietorship of Shri. Tirupati Distributors. As pertinent to note that if the said interest income was already offered to tax by Smt. Usha Gupta in her return of income then the same cannot be taxed twice. From the details filed by the assessee it is not clear in the absence of the bifurcation of the interest income of Smt. Usha Gupta as to whether she has included this amount of interest in the total income declared in the return of income. It is also a matter of verification whether this entry as reflected in Form 26AS is due to the mistake of the PAN of the assessee taken instead of Smt. Usha Gupta. Accordingly, in the facts and circumstances of the case, this issue is set aside to the record by the Assessing Officer for deciding the same afresh after proper verification and enquiry to ascertain the correct facts from the record and documents to be filed by the assessee. If it is found that the said interest income belongs to Smt. Usha Gupta and not to the assessee then the same cannot be added to the income of the assessee. Needless to say before passing the fresh order, the assessee be given an opportunity of hearing. Disallowance of depreciation on vehicle on the ground of personal use - HELD THAT:- Assessing Officer has not disputed the claim of the assessee on the second vehicle which is Mahindra XUV which is otherwise a passenger vehicle. Once the claim of depreciation on passenger vehicle is accepted by the AO then the depreciation on delivery van cannot be disallowed on the ground of personal use. AO has otherwise made this disallowance on presumption and surmises without the actual fact of the use of the vehicle. Even otherwise the delivery van is hardly used for personal purpose and can be used only for the business purpose of the assessee. Accordingly, the disallowance made by the Assessing Officer on depreciation on the delivery van is not justified and the same is deleted, hence the ground no. 2 is allowed.

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• 2022 (9) TMI 1048
  Addition being professional fees diverted by overriding title to retired partners in terms of the Partnership Deed - assessee s claim of deduction paid to retired partners, claimed on the ground that the amount represented diversion by overriding titlewas rejected by the Assessing officer; and the amount was added to assessee s income - HELD THAT:- Representatives of both sides were in agreement at the time of hearing before us that the issue in the present appeal before us for Asst. Year 2009-10 is identical to the issue in Asst. Year 2011-12. Representatives of both sides were also in agreement at the time of hearing before us that the facts and circumstances for Asst. Year 2009-10, to which the present appeal before us pertains, are similar to the facts and circumstances of Asst. Year 2011-12 to which aforesaid order [ 2021 (1) TMI 738 - ITAT DELHI] of Co-ordinate Bench of ITAT, Delhi pertains. - Decided in favour of assessee.

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• Customs

• 2022 (9) TMI 1076
  DEPB Scheme - forged DEPB Scrips - intent to evade Customs Duty or not - evasion of duty by seeking exemption against debits in releasing the advices, which were forged and which were not genuinely issued by the competent authority - time limitation - HELD THAT:- It is found from the findings recorded by the Department, it has been found that the DEPB licenses/Scripps, on which the exemption benefit was availed of by the appellant(s) (as buyers of the forged/ fake DEPB licenses/Scripps) were found to be forged one and it was found that the DEPB licenses/Scripps were not issued at all. A fraud was played and the exemption benefit was availed on such forged/fake DEPB licenses/Scripps. In that view of the matter and on the principle that fraud vitiates everything and such forged/fake DEPB licenses/Scripps are void ab initio, it cannot be said that the Department acted illegally in invoking the extended period of limitation. In the facts and circumstances, the Department was absolutely justified in invoking the extended period of limitation. The Customs Duty was paid under protest to avoid any further coercive action. Be that as it may, the fact remains that the DEPB licenses/Scripps on which the exemption was availed by the appellant(s) was/were found to be forged one and, therefore, there shall be a duty liability and the same has been rightly confirmed by the Department, which has been rightly confirmed by the Tribunal as well as the High Court. As the penalty proceedings are reported to be pending pursuant to the remand order passed by the Tribunal, we direct the adjudicating authority to complete the penalty proceedings on remand, at the earliest preferably within a period of six months from today - appeal dismissed.

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• 2022 (9) TMI 1075
  Seeking provisional release and re-export of the goods - seizure on the ground of non-observance of conditions of Food Safety and Standards Act, 2006 read with Food Safety Standard Rules, 2011 as well as the Food Safety and Standard (Import) Regulation, 2017 and other applicable FSSAI norms - Section 110A of the Customs Act, 1962 - HELD THAT:- While the petitioner has prayed for direction against the respondent no.3 to order provisional release and permit re-export of the goods seized under the seizure memo in question dated 13.4.2022, on admitted facts, the court found the part of the prayer relating to permission to re-export of the goods to the petitioner, could hardly be granted inasmuch as the goods were already transported away from the Mundra Port and came to be intercepted admittedly at a place near Sanand and thereafter, the authorities have kept the goods in a warehouse near Ahmedabad. Nothing is expressed about petitioner s claim for re-export. The petitioner may take legal recourse in this regard by approaching authorities, as may be available and permissible under the law. Prayer for provisional release of the seized goods - HELD THAT:- The provisional release is granted in terms of section 110A of the Customs Act. In this regard, it is to be noticed from the contents of the affidavit-in-reply filed by respondent No.3 Customs that the petitioner has already made applications in form of letters dated 4.6.2022 and 1.7.22 seeking provisional release of the goods. The affidavit-in-reply in para 8.9 inter alia mentions that while seeking provisional release, the petitioner has expressed its inability to give bank guarantee as required for safeguarding the interest of the Customs. It would be a proper course if the letters-cum-applications of the petitioner pending with the authorities seeking provisional release of the goods are decided by the authorities in exercise of powers under section 110A of the Act. It will be for the competent Customs authorities to take a proper decision about the provisional release imposing conditions for such release as may be deemed fit by the authorities - When the applications seeking provisional release are pending before the authorities, it is entirely for the authorities to consider the same and to further assess the requirements of the nature of the security to be obtained for the provisional release. The competent authority of the Customs department shall consider the pending applications/letters containing the prayer of the petitioner for provisional release of the goods by imposing appropriate conditions within a period of one week from today - Petition disposed off.

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• 2022 (9) TMI 1074
  Rejection of amendment/ conversion of 14 Shipping Bills from Scheme Code 00 (free Shipping Bill involving remittance of foreign exchange) to Scheme Code 11 - non-submission of necessary documents - EPCG Scheme - HELD THAT:- It is not possible to accept submission made by the learned counsel for the appellant. Once there was a positive direction by the Tribunal to the appellant to provide all the documents to prove its claim, it was absolutely necessary for the appellant to submit such documents as these documents were necessary to examine whether the appellant was entitled for conversion of the free shipping bills to EPCG Scheme. It does not lie in the mouth of the appellant to contend that though the Tribunal had directed the appellant to submit documents before the Commissioner to prove its claim, the Commissioner should on his own have called for the documents from his office even if the appellant had failed to produce the documents. There are no infirmity in the order passed by the Commissioner - appeal dismissed.

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• 2022 (9) TMI 1073
  Refund of CVD - rejection of refund claim on the ground of time limitation - merits of the case, not gone into - non-speaking orders - HELD THAT:- There is no dispute that after adjudication / assessment, the appellant did remit the CVD plus BCD and the same was not under protest and, as could be seen from the pleadings as well as the orders of both the lower authorities, the said adjudication / assessment had reached finality for the same reason. This happened perhaps in the year 2008 and since then, there is nothing available on record to suggest that the appellant had litigated directly or indirectly and that its litigation was pending before any of the authorities including CESTAT. There is also no whisper about intimating the Revenue about the pendency of any litigation before any fora in this regard. It was nearly after ten years that the judgement of the Hon ble Apex Court in M/s. Enterprises International Ltd. [ 2017 (4) TMI 80 - SC ORDER] was passed, which the appellant is trying to take advantage of by claiming that its application for refund is within one year from the date of the above judgement. This is clearly an afterthought, which cannot be accepted, since the scope of Section 27 ibid. is limited to the claimant who pursues by means of litigation before higher authorities and hence, any third person cannot derive any benefit out of the same. The appellant having slept over its right for nearly ten years, cannot take shelter as it has taken, which is not permitted under law - Appeal dismissed.

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• 2022 (9) TMI 1049
  Seeking provisional release of imported goods - used Digital Multifunctional Printers / Devices (MFDs) - prohibited goods or not - non-compliance with the provisions of Domestic laws under the Bureau of Indian Standards (BIS) Act, 2016 read with the Electronics and Information Technology Goods (Requirements for Compulsory Registration) Order (CRO), 2012 - failure to obtain DGFT authorization as required for the import of second hand goods - misdeclaration of value of the imported used MFDs in violation of Section 14 of the Customs Act, 1962 - HELD THAT:- The Hon ble Apex Court in M/S DELHI PHOTOCOPIERS VERSUS THE COMMISSIONER OF CUSTOMS (GR. 5) CHENNAI II ORS. [ 2021 (8) TMI 1244 - SUPREME COURT] , while staying confiscation of the goods in view of the fact that the Notification dated 01.04.2020 was the subject matter of controversy before the Apex Court, had allowed the provisional release of the goods involved. This Court in COMMISSIONER OF CUSTOMS VERSUS M/S S.P ASSOCIATES, ARIHANT ENTERPRISES, EXCEL COPIERS, CITY OFFICE EQUIPMENTS, PHOTOFAX SYSTEMS, SKYLARK OFFICE MACHINES, STAR COPIERS, SRK OVERSEAS, RANK OFFICE AUTOMATION, PRIUS TECHNOLOGIES, GENUINE COPIER SYSTEMS, AMAR ENTERPRISES, ATUL AUTOMATION PVT. LTD., DELHI PHOTOCOPIERS, KUTTY IMPEX, PHOTO FAX SYSTEM, GEE KAY COMPUTERS AND BEST MEGA INTERNATIONAL) [ 2021 (9) TMI 183 - CESTAT CHENNAI] while considering an almost identical issue, has held that It is undisputed that the goods were second hand in nature and were examined by the Customs under first check and were verified by expert Chartered Engineer and the import duty was recalculated accordingly under CVR 2007. Neither side is disputing the valuation. Therefore, the valuation of the imported goods does not call for any interference. This Bench has also held that the valuation which was not disputed by either of the parties did not call for any interference. With regard to the goods in question being hazardous in nature within the meaning of the provisions of the Hazardous and Other Wastes (Management and Transboundary Movement) Rules, 2008, the Bench has observed that the goods in question were useful goods with residual life and therefore, cannot be called as hazardous waste . The facts being identical, as canvassed at the bar, there are no reasons to deviate from the findings arrived at by this Bench in the case of M/s. S.P. Associates and hence, the First Appellate Authority has correctly ordered provisional release of the impugned goods. When goods are held not confiscatable under Section 111(d) ibid., then it can be reasonably held that the import was not prohibited. The appeal filed by the Revenue, being devoid of merits, is dismissed.

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• Securities / SEBI

• 2022 (9) TMI 1072
  Offence under SEBI ACT - Insider trading - violation of SEBI (Prohibition of Fraudulent and Unfair Trade Practices relating to Securities Market) Regulations, 2003 - HELD THAT:- The contention of the appellant that SEBI took note of the situation in which the respondent was placed and the dire need that he had to sell the shares and that therefore SEBI confined the final order only to disgorgement, is neither here nor there. This argument is actually an argument of convenience. It so happened in this case that according to SEBI the closing price of the stock on 03.09.2013 showed favourable position for the respondent and SEBI was able to calculate as though the respondent made a profit. But if a company is likely to gain strength by making a significant change in its policy, the price of its securities is likely to shoot up. Despite such a natural phenomena, if a person sells his stocks without waiting for the market trend to show up, it can only be taken as a sale, devoid of any desire to make unlawful gains, even if it cannot be termed as a distress sale. In SEBI vs. Kishore R. Ajmera [ 2016 (2) TMI 723 - SUPREME COURT] this Court was concerned with the question as to what is the degree of proof required to hold a broker liable for fraudulent/manipulative practices under SEBI (Prohibition of Fraudulent and Unfair Trade Practices relating to Securities Market) Regulations, 2003 as well as the Conduct Regulations of 1992. After taking note of the fact that SEBI Act and the Regulations framed thereunder are intended to protect the interest of investors and that the provisions of the Act and the Regulations have to be understood and interpreted An attempt by the insider to encash the benefit of the information is not exactly the same as mens rea. Therefore, the Court can always test whether the act of the insider in dealing with the securities, was an attempt to take advantage of or encash the benefit of the information in his possession. This is the test we have applied to the case on hand. In Chintalapati Srinivasa Raju [ 2018 (5) TMI 931 - SUPREME COURT] this Court approved the minority judgment of the Securities Appellate Tribunal (in para 20), which took note of the compelling circumstances under which the individual was selling shares. The fact that this has been taken note of by WTM as a mitigating factor, while passing a mere restitutionary order, does not take away the validity of the defence taken by the respondent. We are of the view on Question No.1 that the information regarding the termination of the two contracts can be characterised as price sensitive information, in that it was likely to place the existing shareholders in an advantageous position, once the information came into the public domain. In such circumstances, our answer to Question No.2 would be that the sale by the respondent, of the shares held by him in GIPL would not fall within the mischief of insider trading, as it was somewhat similar to a distress sale, made before the information could have a positive impact on the price of the shares. Appeal is dismissed

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• Insolvency & Bankruptcy

• 2022 (9) TMI 1071
  Seeking release of seized vehicle alongwith goods - seizure for non-payment of the tax and penalty irrespective of the vehicles under the Orissa Motor Vehicles Taxation Act - opportunity to rebut the factual aspect that the Petitioner had not raised any claim when the Interim Resolution Professional made an advertisement to raise such claims, were not provided - violation of principles of natural justice - HELD THAT:- Admittedly the Petitioner has not amended the prayer in the writ petitions nor incorporated the facts by way of an amendment. But by fling an additional affidavit, drawing the notice of the Court to the subsequent development in the NCLT i.e. the finalization of the Resolution Plan approved by the NCLT, he has sought for the relief. Since the Petitioner has not incorporated the aforesaid plea in the writ petitions nor he has amended the prayer, allowing such prayer of the Petitioner would amount to take the Opposite Party by surprise that too without giving any opportunity to rebut such factual aspect that the Petitioner had not raised any claim when the Interim Resolution Professional made an advertisement to raise such claims under Section 15 of the Insolvency and Bankruptcy Code, 2016. The same would amount to violation of the principle of natural justice.

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• 2022 (9) TMI 1070
  Constitution of Stakeholders Consultation Committee ( SCC ) - Nominations of members - entity hostile to the interest of the Corporate Debtor - Regulation 31A(3) of the Liquidation Regulations - HELD THAT:- It is the case of the Respondent that the SCC has to be constituted based on the list of Stakeholders which in turn is prepared on the basis of the claims received and accepted by the Stakeholders. The list of Stakeholders present in the case does not contain the name of the Appellant and therefore the Liquidator has erred in adding the Appellant as a representative of the Shareholder. A perusal of the material on record shows that as none of the Shareholders have filed their claims before the Liquidator, in terms of Regulation 20 of the Liquidation Regulations, their names do not appear in the list of Stakeholders prepared in terms of Regulation 31 of the Liquidation Regulations. The Liquidator constituted SCC in terms of the Regulation 31A based on the Shareholding pattern of the Corporate Debtor as per the available records. As provided for under Regulation 31A(3) of the Liquidation Regulations, the Liquidator, to facilitate the class of Shareholders to nominate the representatives sent emails to all the five Shareholders on 06.02.2021. Admittedly, the first Respondent has been nominated as a representative by three of the five Shareholders, including himself having a combined shareholding of 24.99%. The other two Shareholders having 75.01% combined shareholding have not nominated the Appellant as their nominated representative and in fact did not nominate anyone. Therefore, the Liquidator rejected the nomination of the first Respondent on the ground that the nomination was not made unanimously by all the Shareholders. The Adjudicating Authority has rightly held that the nomination of the first Respondent as the representative of the Shareholders cannot be rejected by the Liquidator simply on the ground that the said nomination was not made unanimously by all the Shareholders and has further held that as the first Respondent was nominated by or i.e., the 3 out of 5 Shareholders, the question of applicability of the provisions under Regulation 31A(4) does not arise. This Appeal fails and is accordingly dismissed.

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• 2022 (9) TMI 1069
  Seeking direction to Resolution Professional to restore the claim of the applicant as it was lodged in accordance with the arbitration award - seeking to direct the RP to provide details, documents and information sought by the applicant in stipulated time period - HELD THAT:- The Respondent admitted the claim based on calculation of the Appellant wherein the Appellant itself has given treatment to the security deposit by deducting it from the outstanding amount, the interest rate as per the arbitration award dated 04.04.2016 was @ 18% which is also not disputed by the Appellant and further treatment also has been given to the information provided by the RBI on 19.12.2019 with respect to the interest on the security deposit, which again has been admitted by the Appellant before the RBI. The Resolution Professional has therefore not adjudicated but only has collated the information provided by the Appellant, Corporate Debtor and the RBI. Hence, we are of the view that there is no merit in the Appeal, the instant Appeal deserves to be dismissed. The Adjudicating Authority has considered the submissions made by the Appellant and have held that the Hon ble Supreme Court in the case of COMMITTEE OF CREDITORS OF ESSAR STEEL INDIA LIMITED THROUGH AUTHORISED SIGNATORY VERSUS SATISH KUMAR GUPTA OTHERS [ 2019 (11) TMI 731 - SUPREME COURT] relied by the Resolution Professional, wherein it is observed that it is the responsibility of the Resolution Professional to collect, collate and finally admit claims of all creditors, the role of the Resolution Professional is not adjudicatory but administrative. Registry to upload the Judgment on the website of this Appellate Tribunal and send the copy of this Judgment to the Adjudicating Authority (National Company Law Tribunal, Ahmedabad Bench, Ahmedabad Court 2), forthwith.

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• 2022 (9) TMI 1068
  Seeking release of Corporate Debtor from the rigor of Corporate Insolvency Resolution Process - non-payment of installment and interest the loan accounts, categorized as NPA - Section 13(2) of the SARFAESI Act, 2002 - HELD THAT:- The amount reflected in the Balance Sheet as on 31.03.2018 at page no. 357 of the Affidavit in Reply reflects Principal amount of Rs. 30,11,22,262/- and interest outstanding Rs. 388,47,984/- the details of security are also reflected therein. In Note-VII interest accrued and due on borrowings of these non- convertible debentures is reflected in other current liabilities at Rs. 50,57,75,337/-. All these reflects that there is a large amount due as far as the job of reconciliation is concerned the code goes by the filing of claim and its scrutiny in accordance with the Code and related Regulation to be verified in primarily by the Interim Resolution Professional/Resolution Professional followed by the scrutiny and approval by Committee of Creditors and its acceptance by the Adjudicating Authority. There is no iota of doubt that the debentures being a long term borrowing a debt under Section 5 (8) - it is very much clear that the debt is due and payable in law and the amount is exceeding the basic threshold of the Code and hence, we are in agreement with the order of Adjudicating Authority and accordingly, the order of Adjudicating Authority is upheld. The Appeal is accordingly dismissed.

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• 2022 (9) TMI 1067
  Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - existence of debt and dispute or not - Time Limitation - service of demand notice - whether the demand notice in Form 3 dated 21.01.2020 was properly served? - HELD THAT:- The demand notice was served to the respondent/corporate debtor and in response to the same only, the respondent/corporate debtor vide its e-mail dated 26.01.2020 requested the petitioner for granting some more time to clear the outstanding amount. Whether the operational debt was disputed by the corporate debtor? - HELD THAT:- The petitioner/operational creditor has filed an affidavit under Section 9(3)(b) of the Code, wherein it has been deposed that the no notice was given by the corporate debtor relating to a dispute of the unpaid operational debt. Thus, it can be inferred that there is no pre-existing dispute between the parties. Whether this application was filed within limitation? - HELD THAT:- A perusal of the case file shows that the application was filed vide Diary No.01243 on 30.12.2020 (refiled on 12.01.2021), whereas the date of default is 31.07.2020, therefore, this Adjudicating Authority finds that this application has been filed within limitation. It is seen that the petition preferred by the petitioner is complete in all respects. The material on record clearly goes to show that the respondent committed default in payment of the claimed operational debt even after demand made by the petitioner. In view of the satisfaction of the conditions provided for in Section 9(5)(i) of the Code, the petition for initiation of the CIRP in the case of the corporate debtor, Govind Electrica Private Limited is admitted - moratorium declared.

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• 2022 (9) TMI 1066
  Consideration and acceptance of claim filed by the Respondent as a Financial Creditor in Form-C to the Committee of Creditors (CoC) - consideration of reconstitution of the CoC - HELD THAT:- The Respondent did not file the claim before the RP during CIRP period therefore, there was no question of considering the same by the CoC at such a belated stage - The Hon ble Supreme Court in GHANASHYAM MISHRA AND SONS PRIVATE LIMITED THROUGH THE AUTHORIZED SIGNATORY VERSUS EDELWEISS ASSET RECONSTRUCTION COMPANY LIMITED THROUGH THE DIRECTOR ORS. [ 2021 (4) TMI 613 - SUPREME COURT] , the Hon ble Supreme Court held that the resolution plan approved by the Adjudicating Authority shall also be binding on the Central Government, any State Government or any local authority to whom a debt is owed in respect of payment of dues arising under any law for the time being enforce, such as authorities to whom statutory dues are owed, including tax authorities. However, in the present case, an application for approval of plan was pending before the Adjudicating Authority and the Adjudicating Authority vide the impugned order disposed of the said I.A. and against the same an appeal is also pending before this Tribunal, in which the matter was heard and Reserved for Orders - this Tribunal finds that the Claim of the Respondent is belated and cannot be considered and the finding of the Adjudicating Authority in directing the Appellant / RP to place the Claim of the Respondent in Form-C before CoC per se illegal and unsustainable. Accordingly, the point is answered against the Respondent. Whether the Resolution Professional has power to admit the Claims suo-motu? - HELD THAT:- The I B Code, 2016, prescribes the duties to be performed by the Interim Resolution Professional and Resolution Professional as per Section 18 and Section 25 of the Code. The IBBI CIRP Regulations prescribed the procedure to be adopted followed. As per Chapter IV Regulation 7 the claims by Operational Creditor to be submitted with proof to the IRP in Form-B and as per Regulation 8 of the Regulations the Financial Creditors shall submit the Claims to the IRP in Form-C. After receipt of claims, the IRP shall verify the Claims in accordance with Regulation 13 and the IRP maintained list of creditors containing Names of Creditors along with the amount claimed by them, the amount of their Claims admitted and the Security Interest, if any, in respect of such claims. There is no such provision that the IRP shall admit the Claim without filing a Claim either in Form-B or in Form-C. Therefore, this Tribunal, is of the view that the IRP suo-motu cannot admit the Claims without their being a Claim by the Claimants viz. Operational Creditors, Financial Creditors and the Claims by other Creditors. Every Claim shall be submitted by the Claimant with proof. Accordingly, the issue is answered. This Tribunal comes to a resultant conclusion that the Order passed by the Adjudicating Authority is per se illegal and unjustifiable - Appeal allowed.

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• 2022 (9) TMI 1065
  Liquidation of Corporate Debtor - Section 33(2) read with section 60(5) of the Insolvency and Bankruptcy Code, 2016 - HELD THAT:- The present application is filed under section 33(2) of the Insolvency and Bankruptcy Code. The CoC has expressed its opinion in the 2nd CoC meeting held on 04.06.2022 that there is no scope of revival or selling the company as going concern and that the Corporate Debtor may be liquidated. Therefore, this Tribunal sees no merit in interfering with the commercial wisdom of the CoC. The application is allowed by ordering liquidation of the corporate debtor, namely M/s. VRJ Traders Private Limited with directions imposed.

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• 2022 (9) TMI 1064
  Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - existence of debt and dispute or not - HELD THAT:- In view of the facts and circumstances of the case and in the interest of justice, it is deemed appropriate to provide one last and final opportunity to the Applicant/Corporate Debtor to file the reply within 10 days from today - However, the aforesaid permission is subject to cost of Rs. 25,000/- to be deposited by the applicant herein in the Prime Minister s Relief Fund within 3 days. It is made clear that if cost is not deposited, the reply shall not be taken on record. Application disposed off.

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• Service Tax

• 2022 (9) TMI 1063
  Levy of Service Tax - Repair and Maintenance Service - repairs of nozzles - period involved is 2006-07 and 2008-09 - suppression of facts or not - invocation of extended period of limitation - HELD THAT:- It is found from 16.05.2005 there was a clear liability of service tax on Repair and Maintenance, ignorance of law cannot be of any excuse for discharging the statutory liability of the taxes. The appellant have not registered themselves nor filed any return during the relevant period therefore, there was clear suppression of facts on the part of the appellant. Cum-tax value - HELD THAT:- The appellant is agreed upon that where any gross amount is charged from the service recipient, the same shall be treated as value inclusive of all including service tax. Levy of simultaneous penalties under Section 76 and 78 - HELD THAT:- The issue is no longer res-integra in view of the judgment in the case of M/S RAVAL TRADING COMPANY VERSUS COMMISSIONER OF SERVICE TAX [ 2016 (2) TMI 172 - GUJARAT HIGH COURT] that simultaneous penalties under Section 76 and 78 cannot be imposed, the appellant is not liable for penalty under Section 76. Appeal allowed in part.

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• 2022 (9) TMI 1062
  Levy of service tax - banking and other financial services - premium on interest restructuring of loan as interest on loans - whether restructuring premium charged by respondent falls under lending or not? - suppression of facts or not - extended period of limitation - HELD THAT:- The respondent was to receive total interest of Rs. 10,800 in next 3 years at the original interest rate of 9% as agreed upon but due to lowering down the interest rate to 6%, respondent will now receive Rs. 07,200 at 6% rate of interest in next 3 years. Therefore, to compensate for the loss of interest that is going to be caused to the respondent for reduction in rate of interest due to interest restructuring, respondent computed net present value of such loss (which comes out to Rs. 03,269.88/-) and collected 50% of the same as premium for interest restructuring while remaining 50% is the benefit gained by the customer due to interest restructuring. The premium so charged by the respondent from its customers due to interest restructuring is nothing but net present value of loss of interest that will be caused to the respondent. It is not possible to accept the contention of the Department that restructuring premium charged by the respondent would fall under lending and would be subjected to levy of service tax under banking and other financial services . Extended period of limitation - HELD THAT:- The extended period of limitation could not have been invoked in the facts and circumstances of the case. The respondent believed that the activities carried on by it was not taxable and the belief of the respondent stands justified by the order of the Commissioner dropping the charges. It also needs to be noted that the respondent had duly disclosed and recorded the information in its books of account. It cannot, therefore, be alleged that it had concealed or suppressed information with an intent to evade payment of service tax. The impugned order passed by the Commissioner, therefore, does not call for any interference in this appeal - appeal dismissed.

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• 2022 (9) TMI 1061
  Valuation of mining services - inclusion of free of cost fuel/diesel supplied by service recipient i.e., ONGC in terms of agreement is includible in taxable value of mining services - HELD THAT:- The decision in the case of COMMISSIONER OF SERVICE TAX ETC. VERSUS M/S. BHAYANA BUILDERS (P) LTD. ETC. [ 2018 (2) TMI 1325 - SUPREME COURT] is squarely on the issue under consideration, where it was held that The service tax is to be levied in respect of taxable services and for the purpose of arriving at 33% of the gross amount charged, unless value of some goods/materials is specifically included by the Legislature, that cannot be added. Appeal allowed - decided in favor of appellant.

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• 2022 (9) TMI 1060
  Legislative disbarment of levy of tax on goods transport agency service - clearing and forwarding agency service - inclusion of the value thereof in support service of business and commerce - Amalgamation of two services - HELD THAT:- The two services sought to be amalgamated are not only independently taxable but differs in the mechanism of collection and should, intuitively, be immiscible. The provisions of section 65A of Finance Act, 1994 and section 66F of Finance Act, 1994 have not been appreciated in its context. The said statutory enablement is intended to be invoked when the nature of the service, and the consideration thereto, are not perceptibly divisible and differential treatment necessitates adoption of the appropriate rate of tax to the whole. In the present dispute, the rate of tax does not pose any difficulty; it is only the availability of abatement to isolate the service component and the transference of responsibility to discharge liability that distinguishes. The two services are rendered independently even if the transactions of the appellant are with the same recipient and, therefore, is not clearing and forwarding agency service. The treatment of goods transport agency provided after 1st July 2012 continues to remain unchanged and the substitution of support service of business and commerce or of clearing and forwarding agent service with the omnibus service has not altered the delineation to offer any support to the finding in the two impugned orders - Appeal allowed.

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• 2022 (9) TMI 1059
  CENVAT Credit - documents evidencing availment of proper credit though were not submitted before the Department at the time of adjudication of the proceeding - Non-imposition of penalty - HELD THAT:- Since both sides agree that the issue regarding availment of CENVAT Credit and imposition of penalty should be looked into afresh by the original authority, the matter is remanded with a direction to re-adjudicate the matter with regard to the findings made in the impugned order, concerning availment of CENVAT Credit and imposition of penalty therein. Further, the original authority should also examine the taxability issue of the disputed service whether the same should be liable for payment of Service Tax under the provisions of Service Tax statute. The matter is remanded to the original authority for fresh adjudication of the matter - the appeals are allowed by way of remand to the original authority.

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• 2022 (9) TMI 1058
  Validity of adjudication order - reasonable opportunity of hearing to the appellant not provided - principles of natural justice - HELD THAT:- The original authority at paragraph 5.1 in the adjudication order dated 07.04.2017 has stated that he is taking up the matter for adjudication and passing the order ex-parte inasmuch as the appellant did not appear for the personal hearing fixed on several dates - it transpires that the principles of natural justice have not been properly followed, while passing both the adjudication as well as the impugned order by the lower authorities. Hence, under such facts and circumstances of the case, we are of the considered view that the matter should go back to the original authority for fresh adjudication of the dispute. Matter remanded to the original authority for fresh adjudication, and for that purpose, the adjudicating authority should examine the evidences, including the judgements relied upon by the learned Advocate for the appellant - the appeal is allowed by way of remand to the original authority.

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• Central Excise

• 2022 (9) TMI 1057
  Refund Cenvat Credit availed on service tax paid on GTA services - rejection on the ground of time limitation - Section 11B of the Central Excise Act, 1944 - HELD THAT:- In the instant case, as found by the adjudicating authority, the Orders-in-Original came to be passed on 30.11.2019 and 30.12.2019, consequent to which the application for refund was filed by the appellant on 31.03.2021. The appellant in response to the show cause notice has taken support from the Order of the Hon ble Apex court in Miscellaneous Application No. 665/2021 in SMW(C) No. 3/2020 dated 27.04.2021 whereby, taking judicial notice of the steep rise in COVID-19 Virus cases, the Apex Court has directed that the period(s) of limitation as prescribed under any general or special laws in respect of all judicial or quasi-judicial proceedings, whether condonable or not, shall stand extended till further orders. It is also clear directions of the jurisdictional High court, the order of the Larger Bench in the case of M/S VEER OVERSEAS LTD. VERSUS CCE, PANCHKULA [ 2018 (4) TMI 910 - CESTAT CHANDIGARH] , relied upon by the first Appellate Authority for denying the refund does not survive. The appeal has to be allowed by way of remand to the file of the adjudicating authority - Appeal allowed by way of remand.

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• 2022 (9) TMI 1056
  Clandestine Removal - unaccounted raw material, semi finished goods and finished goods in the premises - failure to produce any record to justify the legal possession of the said goods - Confiscation - penalty - HELD THAT:- The appellant admittedly is engaged in manufacture of diaries, calendars etc. All his final products are being manufactured at the same premises with common electricity, labour etc. Even the registrant for two different excise registrations ( one for diary and another for calendar) is same i.e. the appellant. The explanation given by the appellant about the raw materials, semi finished goods and finished goods found at their different premises at the time of search, has not been accepted by the department for want of job work challans for transferring the material by their diary division to calendar division. The transfer of raw material even to its unregistered units i.e. sales office / godown without any job work challan or proper invoices has been the basis for presuming that appellant in general have adopted the dubious method for organising their manufacture, procurement of raw material and clearance of finished /semi finished goods from their premises with the help /abatement of their Director and employees with an intent to evade central excise duty. The department presumed that appellant deliberately did not maintain proper accounts of raw material to prove their actual production and for facilitating the clandestine removal - The goods which have been ordered for confiscation were admittedly lying within the premises of appellants and those include raw material as well. It has been the main ground of the contention of the appellants that Rule 25 is only about confiscating excisable goods and not the raw material. Bare perusal makes it clear that the Rule pertains to excisable goods i.e. goods which are manufactured by the assessee. Since the raw material of assessee cannot be held to be goods manufactured by assessee, same is definitely beyond the scope of confiscation under Rule 25 of Excise Rules. Merely because raw material of an assessee is marketable as such, same can not be held to be the excisable goods. As per Section 2(d) of Central Excise Act, 1944, goods which are subjected to duty of excise are excisable. Hence, these are the goods manufactured for clearance from place of manufacture which are excisable and are thus covered under Rule 25 of Excise Rules. Confiscation of finished and semi -finished goods - HELD THAT:- The only evidence is departments presumption based upon the stock found lying in the premises that the goods were in excess and were not accounted. The onus was upon the department to prove the said presumption. It is observed that there is no evidence except the Relied upon documents in Annexure A to the show cause notice. Perusal thereof reveals that except the statements recorded during investigation and the Panchnamas drawn during search, there is no other evidence produced by the department - Otherwise also, it has been a settled law that shortage by itself cannot be held to be a sufficient evidence so as to lead to inevitable conclusion that assessee is involved in unaccounted procurement of raw material and manufacture of excisable goods with the sole intent to clear the same without payment of Central Excise duty leviable thereupon. The departmental investigating agencies as well as the adjudicating agencies have not yet started observing compliance of mandatory statutory provisions i.e. section 9D of Central Excise Act, 1944 and section 138 B of Customs Act, 1962 without which the statement recorded at the stage of inquiry / investigation will not be relevant for the purpose of proving the truth of requisite facts during prosecution. It is therefore desired that department may come with certain guidelines so that the efforts of investigating team may not be in vain only for the reason of noncompliance of aforesaid provisions. The order under challenge, as passed by Commissioner (Appeals) ordering confiscation of goods (raw material, finished and semi finished goods) recovered from various premises of appellants and imposing penalties on appellants is hereby set aside - Appeal allowed.

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• 2022 (9) TMI 1055
  SSI Exemption - use of brand name of other company - use of brand name Ramee Guestline Hotel on the packing material for packing cakes which belonged to another company - mis-utilization of exemption provided under Notification No. 8/2001-CE dated 01.03.2003 - HELD THAT:- It is quite evident that this show cause notice is based on investigation made for earlier show cause notice for the period April 2000 to March 2005 issued to the appellant. Further, para 3 of the annexure specifically states that there is no change in products manufactured and cleared and their manufacturing and clearing procedures. The department relies on the earlier investigation conducted and records obtained during the earlier proceedings. This clearly shows that the present show cause notice which has been issued is just in continuation of the earlier show cause notice without any new facts being brought on record. The show cause notice itself makes an averment that the appellants operate under the name and style of Ramee Guestline Hotel and have cleared the goods with the brand name and logo belonging to Ramee Guestline Hotel. If that is the case, then the appellants were clearing the goods under the brand name and logo held by them - they cannot be hit by clause 3(b) of Notification No.8/2003. Appeal allowed - decided in favor of appellant.

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• 2022 (9) TMI 1054
  CENVAT Credit - Input services - availment of Mediclaim Insurance Service for its employees and their dependents (group medical insurance service) - invoices issued by their Head Office at Chennai, in their capacity as Input Service Distributor (ISD) - it is alleged that the service has not been used directly or indirectly in or in relation to the manufacture of final products and clearance of final products up to the place of removal - period from April 2010 to March 2011 - HELD THAT:- The issue as to the eligibility of CENVAT Credit in respect group medical insurance service for the period prior to 01.04.2011 is no more res integra, since the same has been laid to rest by the orders of various judicial fora. It is seen that on an identical set of facts, the Mumbai Bench of the CESTAT in its order in the case of PTC SOFTWARE (INDIA) PVT. LTD. VERSUS COMMR OF CENTRAL EXCISE, PUNE-III [ 2014 (12) TMI 498 - CESTAT MUMBAI] , relied upon by the Learned Advocate for the appellant, has followed the judgements of the Hon ble Karnataka High Court in the cases of COMMISSIONER OF CENTRAL EXCISE SERVICE TAX VERSUS MICRO LABS LTD. [ 2011 (6) TMI 115 - KARNATAKA HIGH COURT] and COMMISSIONER OF CENTRAL EXCISE, BANGALORE-III, COMMISSIONERATE VERSUS STANZEN TOYOTETSU INDIA (P.) LTD. [ 2011 (4) TMI 201 - KARNATAKA HIGH COURT] to hold that credit of Service Tax paid on insurance premium on group insurance policy is allowable since the said service is an eligible input service. The disallowance of CENVAT Credit in respect of group medical insurance service for the disputed period is not sustainable, for which reason the impugned order upholding the order of the Adjudicating Authority disallowing the credit, is liable to be aside. Appeal allowed.

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• CST, VAT & Sales Tax

• 2022 (9) TMI 1053
  Supplier company seeking security depositing against interstate sale - C-Forms - differential sales tax - Section 43 of the PVAT Act - HELD THAT:- It is abundantly clear that IOCL is, by providing for this requirement, protecting itself against any unanticipated liability, including shortfall of C Forms in cases of defaulting dealers, to be made by a dealer either in cash or by way of security, whenever called upon by the Corporation, pending subsistence of the agreement. There is no doubt that a dealer can be called upon to furnish a Bank Guarantee in any exigency as contemplated by the Corporation, and the dealers would have no choice but to comply - the mandamus as sought for by the petitioners is not liable to be granted and the prayer is rejected. The dealers may, if they so desire, make representations to the Corporation setting out the track record of both, their history with the Corporation, as well as the tax authorities. Upon hearing the dealer concerned and considering the representation filed, the Corporation may, at its discretion, and on a case-to-case basis, waive the requirement of bank guarantee. Petition dismissed.

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• Wealth tax

• 2022 (9) TMI 1052
  Wealth tax assessment - addition being the value of the buildings (staff quarters) and an amount being the market value of the WDV at the beginning of the year of the vacant land - HELD THAT:- As submission of assessee that the assessee is covered by the exception stated in Explanation1 of the clause (i) of section 2(ea) of the Wealth Tax Act, 1957, there is no vacant land belonging to the assessee and the entire land is being used for industrial purposes. It is also his submission that if the additional evidences now filed are admitted, the same will substantiate that the assessee is not liable for any wealth tax. Since the additional evidences filed before us were neither produced before the Assessing Officer or the CWT (A) and since these additional evidences go to the root of the matter for deciding the appeal, therefore, considering the totality of the facts of the case and in the interest of justice, we admit the additional evidences and restore the issue to the file of the Assessing Officer with a direction to consider these additional evidences and decide the issue as per fact and law - Grounds raised by the assessee allowed for statistical purposes.

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