TMI Tax Updates - e-Newsletter
September 28, 2021

Case Laws in this Newsletter:

GST Income Tax Customs Securities / SEBI Insolvency & Bankruptcy Service Tax CST, VAT & Sales Tax Indian Laws

Articles

1. Permitting the distribution or exhibition of films, recordings or programmes through licensing arrangements – proposed increase in rate to 18%

   By: Shilpi Jain

2. IMPACT OF GST COUNCIL’S DECISIONS ON HOSPITALITY SECTOR

   By: Dr. Sanjiv Agarwal

News

1. Webinars on ‘Functionality to fetch BoE details by Taxpayers’.

2. India and Australia must work towards enhancing the resilience of supply chains and greater engagement in the Indo-Pacific region - Shri Piyush Goyal, Minister of Commerce & Industry, Consumer Affairs, Food & Public Distribution, Textiles

3. Income Tax Department conducts searches in Maharashtra

4. India needs 4 -5 more banks like SBI to meet changing requirements of the Indian Economy: Nirmala Sitharaman

Notifications

DGFT

1. 32/2015-2020 - dated 25-9-2021 - FTP

Inclusion of Ports of Import in continuation to Notification No. 20/20215-20 dated 24.08.2021 and Notification No. 23/2015-20 dated 03.09.2021

GST - States

2. PWR-GST/2017/ADM-8 (E.O. No.58) - dated 24-9-2021 - Maharashtra SGST

Geographical Jurisdiction of Deputy Commissioner of State Tax (Amendment in Order No. PWR-GST/2017/01/ADM-8, dated 22nd June, 2017).

3. PWR-GST/2017/01/ADM-8 (E.O. No.61) - dated 24-9-2021 - Maharashtra SGST

Power delegation under MGST Act – Assistant Commissioner of State Tax (Investigation) (Amendment in Order No. DC.(A&R)-2/GST/PWR/Sections/2017-18/ADM-8, dated 10th October,2017)

4. PWR-GST/2017/01/ADM-8 (E.O. No.60) - dated 24-9-2021 - Maharashtra SGST

Power delegation under MGST Act – Deputy Commissioner of State Tax (Investigation) (Amendment in Order No. DC.(A&R)-2/GST/PWR/Sections/2017-18/ADM-8, dated 10th October,2017).

5. PWR-GST/2017/01/ADM-8 (E.O. No.59) - dated 24-9-2021 - Maharashtra SGST

Geographical Jurisdiction of Assistant Commissioner of State Tax (Amendment in Order No. PWR-GST/2017/01/ADM-8, dated 22nd June,2017).

Highlights / Catch Notes

Income Tax

• Section 54F Deduction Allowed: Independent Building with Multiple Units Qualifies as One Residential House, Overruling Tax Authority View.

  Case-Laws - AT : Deduction u/s 54F - Rejection of claim for Constructing more than one house - An independent building can have a number of residential units and it will not lose the character of “one residential house”. - we are unable to agree with the view taken by the tax authorities that each floor of the individual house/each portion in a floor is separate house property. - AT
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• Assessee's Uncontested Income Surrender u/s 271(1)(c) Lacks Coercion Claim; Peace of Mind Argument Unsupported.

  Case-Laws - AT : Penalty u/s 271(1)(c) - surrendered of the income - The assessee has nowhere disputed the said surrender being made under coercive circumstances or under compulsion. Even otherwise, the surrender is not without any basis but the entry of share application money is very much in existence which was accepted by the assessee as accommodation entries. Therefore, there is no substance or merit in the contention of the Ld. AR that surrender was made by the assessee to buy peace of mind. - AT
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• Assessee Must Prove Source of Unexplained Credits u/s 68, Not Assessing Officer; Relief Withdrawn by CIT (Appeals.

  Case-Laws - AT : Addition u/s 68 - unexplained credit - addition of share application money received - the assessee has proceeded on the basis as if the onus is on the Assessing Officer to demonstrate that the share subscriptions in question are malafide and cooked up and that the assessee has introduced his own unaccounted money by way of these share subscriptions; that is certainly incorrect. The burden is thus on the assessee to prove the nature and source of credits in his books of accounts, to the satisfaction of the Assessing Officer. Everything thus hinges on the explanation given by the assessee and on how acceptable is the explanation so given by the assessee - Relief granted by the CIT(A) withdrawn - AT
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• PCIT's Section 263 Revision Challenged: No TP Risk Justifying Mandatory TPO Reference u/s 92C, CBDT Instruction No. 3/16.

  Case-Laws - AT : Revision u/s 263 by CIT - Non reference of matter to the TPO - no prudent business person properly instructed in law would have inferred the TP risk parameter as a reason for scrutiny so as to mandatorily make reference u/s. 92C of the Act in terms of CBDT Instruction No. 3/16 and failure to make such reference made the assessment order erroneous. In our opinion, the TP risk parameter was not one of the reasons for limited scrutiny of the case and as such the PCIT was not justified in invoking jurisdiction u/s. 263 - AT
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• CIT Rightly Orders AO to Reassess Expenditure Allowability u/s 11 Due to Lack of Clear Basis in AO's Order.

  Case-Laws - AT : Revision u/s 263 - Exemption u/s 11 - If the order of the AO does not disclose the basis of his conclusion, then jurisdiction u/s 263 of the Act can be ignored. Therefore, the CIT was justified in directing the AO to examine the allowability of these items of expenditure. The assessee is always at liberty to show as to how the material found in the survey was not sufficient to make any additions in the hands of the assessee. We, therefore, confirm the order of the CIT. - AT
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Customs

• E-rickshaw Imports in CKD Without Batteries: No Type Approval Certificate Needed u/r 126; Customs Covers Warehousing Costs.

  Case-Laws - AT : Confiscation of goods - import of e-rickshaw in CKD condition without battery - requirement to produce the ‘Type Approval Certificate’ under the provisions of Rule 126 of Central Motor Vehicle Rules - Admittedly, the goods in question are freely importable, there being no restriction under the Foreign Trade Policy - The requirement of ‘Type Approval Certificate’ is not warranted for import of spare parts or kits in CKD condition. - The appellant shall not be responsible to pay any warehousing charges, and all such charges, if any, shall be borne by the Customs Department /Government - AT
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• Penalty Imposed u/s 114A Invalid Due to Lack of Proposal in Show Cause Notice; Appellants Entitled to Section 28(6) Claims.

  Case-Laws - AT : Levy of penalty - Misdeclaration of quantity in the impugned consignments - It is a settled principle of law that a corrigendum cannot be issued altering the issues causing undue disadvantage to the Noticee - The penalty was imposed under Section 114A, even though the same was not proposed in the Show Cause Notice. Therefore, the impugned order suffers from legal infirmities and such an order cannot be upheld. In this case, the appellants having adhered to the provisions of Section 28 of the Customs Act, 1962 have rightful claim as per the provisions of Section 28(6) ibid. - AT
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• Re-imported aircraft engines and parts exempt from additional duties, but customs duty applies on repair costs.

  Case-Laws - AT : Claim of benefit of exemption - re-imported air craft engines and parts thereof which were exported for the purposes of repairs/ reconditioning etc. - It is very clear that additional duty, integrated tax, compensation cess are exempted and customs duty would be limited to be taxed on the value of the fair cost of repairs carried out including cost of materials used in repairs, insurance and freight charges. - AT
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• Customs House Agent and G Card Holder Penalized for Misclassification u/ss 112 and 117 of Customs Act.

  Case-Laws - AT : Levy of penalty u/s 112 and 117 of CA on CHA and G card holder - mis-classification and mis-declaration of goods - The negligence of both the appellants herein is definitely the violation of their incumbent duty. This penalty has rightly been imposed upon them. - there are no infirmity when penalty under section 112 (b)(i) has been imposed instead of it being imposed under CBLR. Similarly, penalty has been imposed upon under section 117 which is for such contravention as are not expressly mentioned under the Customs Act, 1962. - AT
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• Customs Duty Refund Denied for Pilfered Goods Detected Post-Clearance; Sections 13 and 23 Inapplicable.

  Case-Laws - AT : Remission / Refund of Customs Duty - pilfered goods - the out of charge order i.e. order for clearance for home consumption was given on 18 May, 2011. Pilferage was noticed after the joint survey which was conducted on 23 May, 2011 i.e. after the said OOC was passed. It will not Section 23 which deals only with the permanent loss or damage to the goods that too before OOC but section 13 as shall be applicable which deals only with respect to goods pilfered but only if pilferage is noticed prior OOC. None is the fact of the present case. Neither duty exemption under Section 13 of Customs Act nor the remission of duty under Section 23 of Customs Act is available to the appellant. The question of refund of duty paid does not arise. - AT
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• Penalty Imposed u/s 117 of Customs Act for Illegal Removal of Goods; Custodian's Accountability Highlighted by Rule 5.

  Case-Laws - AT : Levy of penalty u/s 117 of CA - Legality of removal of goods from Customs Area - Statutory obligation and liability of Custodian - The use of words while ‘includes the custodian’ again corroborates the finding of the Adjudicating Authority Below. The legislature clearly intends for custodian to be always responsible about the duty as far as handling of cargo in customs area is concerned. Rule 5 of these Regulations talks about the conditions to be fulfilled by the Customs Cargo service provider. - AT
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Indian Laws

• High Court ruling overturned: Respondent failed to rebut presumption in cheque dishonor case due to insufficient funds.

  Case-Laws - SC : Dishonor of Cheque - insufficiency of funds - rebuttal of presumption - The case put forth by the respondent does not satisfy the requirement of rebuttal even if tested on the touchstone of preponderance of probability. Therefore, in the present facts it cannot be held that the presumption which had arisen in favour of the appellant had been successfully rebutted by the respondent herein. The High Court therefore was not justified in its conclusion. - SC
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• Sole Proprietor Liable for Cheque Payments Under Consumer Protection Act, Not Employee Consultant, Rules Court.

  Case-Laws - SC : Liability to pay the amount of certain cheques signed by him (as employee consultant) - Consumer Protection Act, 1986 - Since the opposite party is a sole proprietorship consultancy of Mr. I.J. Aneja, therefore, the liability of payment of investments would be that of Mr. I.J. Aneja and not of the employees who were engaged by Mr. Aneja at different places such as Nehru Place, NOIDA and Ghaziabad - Since, the complaint itself was not maintainable and the appellant is an employee engaged by the sole proprietorship consultancy, there cannot be any personal liability which can be inflicted upon the appellant by virtue of only being an employee of a sole proprietorship. - SC
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• Retrial Denied: Court Rules Error in Marking Documents Not a Failure of Justice, No Prejudice Proven by Applicant.

  Case-Laws - HC : If the accused is unable to show the failure of justice, a direction for re-trial/de novo trial cannot be granted. This Court is of the opinion that the failure on the part of the Trial Court in the facts and circumstances of the present case, to mark the documents produced by the Respondent no.1 as exhibits, at worse can be termed as an error/omission/irregularity but, there is nothing to show that the same occasioned failure of justice. The Appellate Court was fully justified in holding that the Applicant failed to demonstrate prejudice caused to him. - HC
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IBC

• ASK Investment Managers Ltd deemed a related party, barred from CoC participation u/ss 5(24)(m) & 5(24)(i) of IBC 2016.

  Case-Laws - AT : Validity of decision of IRP/RP holding that the claimant/ Applicant is a Financial Creditor but is not eligible to be a part of CoC - related party in terms of Section 5(24)(m) & 5(24) (i) of the Insolvency and Bankruptcy Code 2016 - Respondent No. 1 ASK Investment Managers Ltd is a related party to the Corporate Debtor; therefore, it cannot be made part of COC with voting rights - AT
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Service Tax

• Service Tax Demand Overturned Due to Lack of Proof on TDS Inclusion in Assessable Value.

  Case-Laws - AT : Demand of service tax - Valuation - Failure to include TDS amounts in the assessable value - The Revenue has not been able to establish any amount whatsoever has been deducted by service recipient and deposited with the Income Tax Authorities. - Additions deleted - AT
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VAT

• High Court Cautions Against Routine Use of Article 226 Writs in Tax Matters; Emphasizes Respect for Statutory Remedies.

  Case-Laws - HC : Rectification of mistake - petition not instituted, at least within the stipulated period for preferring an appeal - Invocation of the High Court’s power to issue high prerogative writs under Article 226 of the Constitution in matters relating to levy and collection of tax, in view of such fora made available by the statute, ought not to be permitted as a matter of course or else the will of the people expressed by the legislature in the relevant enactment would be rendered nugatory. - HC
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• Court Finds Gross Violations of Natural Justice in VAT and Sales Tax Case, Highlights Need for Procedural Fairness.

  Case-Laws - HC : Violation of principles of natural justice - Validity of assessment order - documents and details sought for by the Appellant have not been furnished - availability of alternative remedy or not - there has been a specific request made by the Appellant in the representation 18.11.2013 to grant an opportunity of personal hearing. - There have been gross violation of principles of natural justice, which would justify that the Appellant is entitled to invoke the extraordinary jurisdiction of this Court - HC
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Case Laws:

• GST

• 2021 (9) TMI 1113
  Seeking grant of bail - availment of irregular credit - evasion of GST - evidence present on the case file or not, to show that the applicant/ accused was involved in getting any fake firms registered as alleged or opened fake bank accounts - Section 132 (1) (b) (c) (i) of CGST Act of 2017 - HELD THAT:- This court is of the considered view that though the applicant/ accused is in custody since 04.02.2021, but taking into account the fact that the applicant is involved in a case involving fraud of Rs. 90 crores approximately and the alleged offence is an economic offence, which requires to be dealt with seriously and mere long custody would not be a ground for releasing him on bail. The economic offence having deep rooted conspiracies and involving huge loss of public funds needs to be viewed seriously and considered as grave offences affecting the economy of the country as a whole and thereby posing serious threat to the financial health of the court as is observed by the Hon ble Apex Court in NIMMAGADDA PRASAD VERSUS CENTRAL BUREAU OF INVESTIGATION [ 2013 (5) TMI 920 - SUPREME COURT] . This court is not inclined to grant concession of bail to the applicant/ accused at this stage and the bail application of the accused is hereby dismissed - Bail application dismissed.

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• Income Tax

• 2021 (9) TMI 1151
  Nature of expenses - software expenses incurred by the assessee - capital or revenue expenditure - functionality test - whether claim of license fee on software expenses paid to its parent company was for the utilization of the software which gave a enduring benefit and therefore capital in nature? - HELD THAT:- Tribunal was right in confirming the order passed by the CIT(A). We note the decision, which was referred to by the Tribunal in the case of CIT Vs. Raychem RPG Ltd. [ 2011 (7) TMI 953 - BOMBAY HIGH COURT] wherein the ERP package software, which facilitated the assessee s trading operation to conduct its business more efficiently or more profitably but was held to be not in the nature of profit-making apparatus and the software expenditure was allowable as revenue expenditure. With regard to the license fee, which was for acquiring a software license of shelf life of less than two years was held to be as allowable as revenue expenditure in CIT Vs. Toyota Kirloskar Motors (P.) Ltd. [ 2013 (2) TMI 108 - KARNATAKA HIGH COURT] - Thus substantial questions of law in favour of the assessee by treating the expenses incurred in developing/upgrading the software to be revenue expenditure.In CIT, Trichy Vs. Lakshmi Vilas Bank Ltd. [ 2018 (9) TMI 1094 - MADRAS HIGH COURT] expenditure incurred by the assessee towards software expenses was treated as revenue expenditure as advantage, though endured for an indefinite period, it merely facilitated assessee s trading operation, enabling it to carry on business more efficiently. We hold that the Tibunal was right in dismissing these appeals filed by the revenue. - Decided against revenue.

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• 2021 (9) TMI 1146
  Penalty notice u/s 271AAC - breach of principles of natural justice - HELD THAT:- As prior to the end date given in the show cause notice of 26th March, 2021, the impugned assessment order had been passed on 25th March, 2021. Consequently, the impugned assessment order, notice of demand as well as penalty notice dated 25th March, 2021 are quashed and the matter is remanded back to the Assessing Officer and he is directed to decide the same in accordance with law as expeditiously as possible. Petitioner is directed to file its reply to the show cause notice and draft assessment order within three working days. To facilitate filing of the said reply, AO is directed to open ITBA portal so that the petitioner can file its reply.

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• 2021 (9) TMI 1145
  Reopening of assessment u/s 147 - assessment reopened beyond four years from the end of the relevant Assessment Year - as submitted type of scrutiny was limited and therefore, the issues pointed out in the reasons were not subject matter of the scrutiny assessment under Section 143(3) - HELD THAT:- The scrutiny assessment was not a limited scrutiny. Apart from the fact that there is nothing on record to show that the assessee was intimated that the scrutiny was a limited scrutiny, in fact, we find that, on more than five occasions, the case has been discussed by the Assessing Officer with the assessee and on each occasion, the assessee has cooperated and furnished details. There is no allegation that the details were either inadequate or not fully or truly furnished or the facts or figures were distorted. Thus, the AOhaving been satisfied, has completed the assessment under Section 143(3) of the Act. In the reasons for reopening, dated 07.05.2018, all the materials which were subject matter of scrutiny assessment have been verbatim taken up on the alleged ground of reopening. That apart, these materials were culled out from the records, relating to the assessee, which are stated to be miscellaneous records. In any event, they are part of the assessment records and in the absence of any contention that the income chargeable to tax has escaped assessment on account of the reason of failure on the part of the assessee to disclose fully and truly all material facts, if a reopening is done, it would clearly amount to a case of change of opinion and a review of the earlier Assessment Order, which is impermissible in law. Assessee had rebutted the averments in Para No.18 of the counter affidavit, by giving full details regarding the professional receipts and that the credit of TDS on those credits was claimed in the hands of assessee, was absolutely false. The details in this regard have also been furnished in the rejoinder affidavit in Para No.18. Likewise, the averments in Para Nos.19 and 20 of the counter affidavit have also been denied and it was pointed out that the assessee had submitted copies of the Bank statements, as well as documents evidencing the sale and purchase of the property, and all the transactions were duly routed through the Bank and the statement of accounts were furnished and examined by the Assessing Officer and it cannot be stated that those aspects were neither called for nor examined - reopening of assessment was a clear case of change of opinion and what the Assessing Officer attempted was to review the scrutiny assessment, which is impermissible in law. - Decided in favour of assessee.

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• 2021 (9) TMI 1142
  Attachment orders - direction for furnishing copies of the documents that were considered for issuing the attachment order - HELD THAT- This court grants a limited indulgence in the matter as under and for the following reasons:- (a) It is the specific case of the Revenue that the impugned order of attachment being provisional in nature, has spent itself with the passing of the assessment order; that being the position, the question of quashing would not arise; the vehement submission of learned counsel for the petitioner that the Tax Recovery Officer has also clamped similar attachment under the provisions of II schedule to the Income Tax Act, 1961, need not be considered in this case since it constitutes an independent cause of action for which a separate challenge may be laid in accordance with law. (b) Petitioner has sought for certain information/documents from the hands of answering respondents; the contention of the Revenue that petitioner being a third person cannot be furnished with the same, is bit difficult to countenance; statutory scheme provides for grant of information subject to privacy issue, cannot be disputed; the person who seeks information/documents has to make the application in the prescribed form and pay the requisite fee therefor; if the petitioner makes such an application, the same needs to be considered in a time bound way; since the Revenue has taken a prima facie contention that petitioner being a third person, cannot be given the said information, because of privacy issues of the assessee , it needs to be made clear that petitioner who is holding pledge of the shares in question shall not be treated as a third person.

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• 2021 (9) TMI 1141
  Exemption u/s 11 - Charitable activity u/s 2(15) - rule of consistency - whether assessee is not engaged in trade, commerce and business and its dominant and prime objective is charitable in nature in accordance with section 2(15)? - HELD THAT:- Since assessee society has been held to be a charitable institution by the Hon ble Delhi High Court in AY 2009-10 and since then there is no change in the aims and objects of the assessee society, finding no illegality or infirmity in the impugned orders, both the aforesaid appeals filed by the Revenue are hereby dismissed.

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• 2021 (9) TMI 1139
  Rectification u/s 254 - determination of ALP in respect of international transaction of rendering software development services by the assessee to its wholly owned holding company which was Associated Enterprise (AE) in terms of section 92 - HELD THAT:- We find that the DRP in rejecting the plea of the assessee has placed reliance on the decision of M/s. Telcordia Technologies India Pvt. Ltd.[ 2012 (6) TMI 388 - ITAT MUMBAI] and Thyssen Krupp Industries India Pvt. Ltd.I. [ 2013 (11) TMI 930 - ITAT MUMBAI] . Both these decisions have been considered in the Bengaluru Bench of the Tribunal rendered in the case of Maxim India Integrated Circuit Design Pvt. Ltd.[ 2020 (11) TMI 563 - ITAT BANGALORE] . Tribunal, after noticing the fact that in the decision cited in the order of the DRP, the facts were different and would result in the same effect if the claim of the assessee is accepted. Besides the above, the Karnataka High Court has also taken a view in the case of Business Process Outsourcing India Pvt. Ltd., [ 2018 (7) TMI 380 - KARNATAKA HIGH COURT] that provision for bad and doubtful debts should be taken as operating expenses while computing profit level indicator of the comparable companies. In the light of the aforesaid decisions which have been cited at the time of hearing of the appeal, we are of the view that the claim of the assessee deserves to be accepted. Accordingly, ground No.4(h) raised by the assessee has to be allowed and is hereby allowed. Consequent to the aforesaid conclusion, portion of para 11 of the order of the Tribunal dated 24.06.2021 given in bold letters in the earlier part of this order will stand substituted by the observations made in Paragraph 6 to 10 of this order as paragraph 11.1 to 11.5 and the remaining part of paragraph 11 will stand substituted as paragraph 11.6. Miscellaneous petition is allowed to the extent indicated above.

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• 2021 (9) TMI 1138
  Deduction u/s 54F - Rejection of claim for Constructing more than one house - house property constructed by the assessee consisted of ground floor and 4 floors above it - As per AO the assessee has constructed more than one residential house and hence he would be entitled for deduction u/s 54F of the Act for construction of one residential house only - whether each floor of a single stand alone building should be considered as separate house? - HELD THAT:- An independent building can have a number of residential units and it will not lose the character of one residential house . Identical view has been expressed by another co-ordinate bench in the case of Shri Chandrashekar Veerabhadraiah [ 2020 (12) TMI 348 - ITAT BANGALORE ] we are unable to agree with the view taken by the tax authorities that each floor of the individual house/each portion in a floor is separate house property. Accordingly, we set aside the order passed by CIT(A) on this issue and hold that the house property received by the assessee is one residential house only within the meaning of sec.54F of the Act. Accordingly, we are of the view that the reasoning given by the AO to reject the claim for deduction u/s 54F is not justified. Appeal of the assessee is allowed.

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• 2021 (9) TMI 1137
  Disallowance of expenditure - Addition on the ground that assessee has not carried out any business activity and no business income has been declared and the assessee failed to produce the complete books of account, bills and vouchers etc. - HELD THAT:- Since the facts of the instant case are identical to the facts of the case decided in the case of Commissioner of Income Tax vs., Integrated Technologies Ltd. [ 2011 (12) TMI 48 - DELHI HIGH COURT] thus hold that merely because assessee has not earned any business income during the year, but, has every intention to revive the same, therefore, the various expenses debited to the P L A/c cannot be disallowed especially when the assessee is maintaining its Office and kept its infrastructure ready for future business. In this view of the matter, set aside the order of the Ld. CIT(A) and direct the A.O. to allow the expenses claimed - Decided in favour of assessee.

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• 2021 (9) TMI 1136
  Penalty u/s 271(1)(c) - Defective notice u/s 274 - surrendered of the income - assessee has submitted that the AO while issuing the show-cause notice has not specified whether the penalty is proposed to be levy for furnishing of inaccurate particulars of income or for concealment of particulars of income - Addition based on the surrendered of the income by the assessee being accommodation entries of share application money - HELD THAT:- Addition was made on the basis of the surrendered made by the assessee and hence this addition and the nature of the addition was very much known to the assessee right from the time when the assessee surrendered this amount in the statement recorded during the post search enquiry - this addition does not fall in the category where the Assessing Officer has made addition based on some enquiry or his decision but this addition was made on the basis of surrendered made by the assessee. Accordingly, the default and the charge for which the penalty was proposed to be levied was very much in the knowledge of the assessee being the surrendered made by the assessee. Assessing Officer has very much recorded the satisfaction in the assessment order and stated that the penalty proceedings u/s 271(1)(c) of the Act are initiated as the assessee has concealed the particulars of income. Therefore, to the extent of initiating penalty proceedings as well as levy of penalty proceedings u/s 271(1)(c) of the Act against addition based on the surrendered of the income by the assessee being accommodation entries of share application money there is no failure on the part of the Assessing Officer to make assessee known about the default of the assessee and charge for which the penalty was proposed to be levied. Addition by disallowing the claim of property tax - This was addition made by the Assessing Officer by disallowing the claim of expenditure and therefore this addition does not fall in the category of concealment of the particulars of income. The assessee is having show room on lease and for which the assessee is paying rent of Rs. 1 lakhs per month as well as the property tax. Therefore, even if the claim of the property tax is disallowed by the Assessing Officer, the same cannot be held to be the concealment of particulars of income but at the most it can be regarded as furnishing of inaccurate particulars of income. Addition based on surrender was made because of the enquiry conducted by the Investigation Wing during survey proceedings - The said addition of Rs. 50 Lakhs made by the Assessing Officer out of the surrendered made by the assessee has attained finality. The assessee has nowhere disputed the said surrender being made under coercive circumstances or under compulsion. Even otherwise, the surrender is not without any basis but the entry of share application money is very much in existence which was accepted by the assessee as accommodation entries. Therefore, there is no substance or merit in the contention of the Ld. AR that surrender was made by the assessee to buy peace of mind. Hence, the appeal of the assessee is devoid of any merit or substance so far as the levy of penalty against the addition of Rs. 50 Lakhs.

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• 2021 (9) TMI 1133
  Revision u/s 263 by CIT - unexplained cash deposits as realization from the advances and investments - AO erred in merely accepting the assessee s submissions as stated and in also accepting the cashbook furnished without verifying the existence of the debtors and into the genuineness of the transactions w.r.t recovery of the cash - HELD THAT:- As the tax returns for all these earlier assessment years including that of the subsequent AY 2017-18 have been filed by the assessee and accepted by the Revenue which is again a clear affirmation on part of the Revenue that the financial statements represent true and fair view of assessee s affairs and which have thus not been disputed by the Revenue. In such a scenario, where the past affairs of the assessee as reflected in his financial statements and also disclosed in the tax returns have not been disputed by the Revenue, the assessments have been completed and no adverse material is available on record, it is beyond any reasonable belief that the AO will have any apprehension that the debtors and advances so reflected and accepted in the earlier years are not genuine and have to be enquired again afresh in terms of identity, creditworthiness and genuineness of their individual transactions. Where the assessee has shown recovery from old outstanding advances and debtors and provided the necessary financial and tax filing records and the Assessing officer having examined the same thoroughly, we are of the considered view that the necessary enquiries and examination as reasonably expected have been carried out by the AO in discharge of his quasi-judicial function and he has taken a prudent, judicious and reasonable view in accepting the explanation of the assessee in support of the cash deposits after considering the entire material available on record and the order so passed u/s 143(3) of the Act cannot be held as erroneous in so far as prejudicial to the interest of Revenue. The impugned order passed by the ld PCIT u/s 263 is accordingly set aside and the order of the Assessing officer is sustained. - Decided in favour of assessee.

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• 2021 (9) TMI 1129
  Dependent Agent Permanent Establishment (DAPE) - income attributable for the PE of the assessee - HELD THAT:- It is not disputed that the AE has not been remunerated at ALP, no further income chargeable to tax in India can be said to be attributable for the PE of the assessee. Since, without prejudice to the ground is adjudicated in favour of the assessee, we are not adjudicating other grounds in this regard. Treatment of royalty - HELD THAT:- We note that the issue is now covered in favour of the assessee ENGINEERING ANALYSIS CENTRE OF EXCELLENCE PRIVATE LIMITED VERSUS THE COMMISSIONER OF INCOME TAX ANR. [ 2021 (3) TMI 138 - SUPREME COURT] - Decided in favour of the assessee.

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• 2021 (9) TMI 1128
  TP Adjustment - direction of Dispute Resolution Panel (DRP) in determining Arm s Length Price (ALP) at Nil on account of trademark charges - HELD THAT:- As explained before the DRP taking support from agreement and invoices, the DRP having no application seeking admission of those documents rejected to take cognizance of said documents as additional evidences. AR fairly conceded these documents were not at all before the TPO and requested for an opportunity to the assessee and remand the matter to the file of TPO for verification afresh in terms of documents filed. DR submits that the said documents and oral submissions as advanced by the ld. AR before this Tribunal were not before the TPO and requires fresh examination in terms of the same - we deem it proper to remand the issue to the file of TPO for its fresh verification in terms of evidences filed before this Tribunal by way of paper book and determine the ALP of international transactions on account of trademark license fees. Thus, ground No. 1 raised by the assessee is allowed for statistical purposes. Treatment of subvention money - Revenue or capital receipt - assessee has been treating the subvention money received as income treating the same as revenue receipt - HELD THAT:- As the Hon ble Supreme Court in the case of Siemens Public Communication Network (P.) Ltd. [ 2016 (12) TMI 1854 - SUPREME COURT] held the same as not a revenue receipt. We note that the details of amounts wherein the assessee received the said amount from its AE for operation support in A.Ys. 2009-10, 2010-11 and 2011-12 Since, it is not before the TPO, upon hearing both the parties, we deem it proper to remand this issue to the file of TPO for verification in terms of the principle laid down by the Hon ble Supreme Court in the case of Siemens Public Communication Network (P.) Ltd. (supra). The assessee is liberty to file evidences, if any, in support of its claim.

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• 2021 (9) TMI 1126
  Disallowance u/s 14A r.w.r. 8D - addition to the extent of exempt income - HELD THAT:- It is true that the assessee has suo moto disallowed Rs. 1,34,268/- on exempt income of Rs. 14,451/-. However, in light of the decision of M/S. CARAF BUILDERS CONSTRUCTIONS PVT. LTD.[ 2018 (12) TMI 410 - DELHI HIGH COURT ] contention of the assessee cannot be brushed aside lightly. We, therefore, direct the Assessing Officer to restrict the disallowance to the extent of exempt income as disallowance u/s. 14A of the Act cannot exceed exempt income. Education cess and secondary and higher education cess as a disallowable expenditure u/s. 40(a)(ii) - HELD THAT:- We find that such claim has been allowed by the co-ordinate benches in several cases and we refer to the decision in the case of EXLSERVICES. COM (INDIA) PVT. LTD. [ 2021 (9) TMI 361 - ITAT DELHI ] as held education cess is an allowable deduction while computing the income under the head Profits and gains from profession or business .Assessing Officer is directed to allow the deduction on cess, education cess and higher education cess.

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• 2021 (9) TMI 1125
  Disallowance u/s 14A - expenditure incurred in earning the dividend income - HELD THAT:- Revenue could not contradict the finding that the assessee has only earned exempt income to the tune of Rs. 148/-. The Revenue has also not rebutted the finding that no expenditure was incurred in earning for the dividend income. It is also contended that the Assessing Officer has not demonstrated the nexus between expenses incurred with the earning of the exempt income. The Hon ble Supreme Court in the case of Godrej and Boyce Manufacturing Company Ltd. [ 2017 (5) TMI 403 - SUPREME COURT] held that what cannot be denied is that the requirement for attracting the provisions of section 14A(1) of the Act is proof of the fact that the expenditure sought to be disallowed had actually been incurred in earning the dividend income - Decided against revenue.

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• 2021 (9) TMI 1124
  Addition u/s 68 - unexplained credit - addition of share application money received - validity of explanation of the assessee with respect to these credits - CIT-A deleted the addition - onus to prove bonafides or genuineness of the share application money credited in his books of accounts - HELD THAT:- The assessee is engaged in the business of trading in electrical wires and cables , and, at the other place, it is mentioned that the assessee company is engaged in the process of obtaining dealership of polycab wires and cables and that the assessee company is engaged in the business of investments and that there is no material change in the nature of business of company - In an earlier year s scrutiny assessment order, it is stated that the assessee is engaged in the business of trading- others - Undoubtedly, these statements are made in the scrutiny assessment orders for three different assessment years but it shows fluctuating stand of the assessee even with respect to the business the assessee was engaged in. There is not even whisper of an idea about who are the persons behind RVPL and other associated companies constituting this complex web of companies, in different tiers, and transferring monies from one company to another manner in almost a mechanical manner. There is complete opacity so far as the individuals behind this funding and the complex web of companies are concerned. The entities involved in the transactions only provide different layers to the transaction and de facto hide the true investor. Lets not forget that the investments are in private companies, these investments are substantial vis- -vis the size of the companies, are at huge premiums and without any management participation in the entities in which investments are made. These features are, by any standard, most unusual in real life business situations- and more so, as we will see a little later, when justifications for share premium are absolutely untenable. Buying shares at a huge premium (900% of the face value) in as much as over 10% of the equity capital in nondescript small private limited companies, without a share in management and control, is something extremely unusual unless the investor is very well known or close associate of the company in which investment is being made. As we have noted earlier, the assessee has no clue about the actual beneficial investor in his company. here are tiers after tiers of the companies and there is nothing to show light on the actual owners. Once again, the shares are issued at premium that too in a company which has no other activity except for routing the funds to another company, i.e. the assessee, by making investments therein at a huge premium. That defies logic, and such transactions donot take place in the real life world. The assessee company is stated to be not connected with Rohini Vyapar Pvt Ltd in any manner, and yet the share subscriber had such a faith in the assessee company that it subscribed to the shares at 900% premium. That is something quite unusual. Except for a capital investment of Rs. 8 crores in the financial year 2010-11, no increase in investments is provided for. It is also not clear as to on what basis does the valuer come to the conclusion that only additional investment required by the company is Rs. 8 crores. By any standard these are very optimistic computations particularly when the shareholder has no control in the company even though its shareholding is 10%. The investment so made, in the usual course of business, does not make any sense at all. The share premium, at which the shares are issued, is wholly unrealistic. The valuation report submitted before us does not inspire any faith and even a simple cross reference to the financial statements of the assessee company would show that cash inflows are exaggerated by 13,000% and then discounted accordingly. The assumption in the valuation report are unrealistic, and the base figure itself, being 250% increase over immediately preceding year, is doubtful. The explanation for the share premium in the shares of the assessee company does not, for the detailed reasons set out above, meet our approval. Undoubtedly, the company investing in the assessee company, i.e. RVPL, itself is owned by some other entities and the actual investors are thus not known in a transparent manner. The assessee does not throw any light beyond submitting the financial statements of the company investing shares. The genuineness of investment is far from established for this reason as well. Onus is on the assessee to prove genuineness of the transaction to the satisfaction of a fact finding authority-something which. he has miserably failed in, to justify the huge share premium received by the assessee- something which the material on record does not justify, and to demonstrate that the facts and circumstances of the transaction as whole must point towards the impugned transaction being a regular transaction in the normal course of business- something which is clearly missing. Quite to the contrary, the assessee has proceeded on the basis as if the onus is on the Assessing Officer to demonstrate that the share subscriptions in question are malafide and cooked up and that the assessee has introduced his own unaccounted money by way of these share subscriptions; that is certainly incorrect. The burden is thus on the assessee to prove the nature and source of credits in his books of accounts, to the satisfaction of the Assessing Officer. Everything thus hinges on the explanation given by the assessee and on how acceptable is the explanation so given by the assessee. - Decided against assessee.

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• 2021 (9) TMI 1123
  Short term capital gain addition on protective basis - Real beneficiary under Prohibition of Benami Transaction - HELD THAT:- We find no merit in the Revenue s instant sole substantive grievance seeking to revive the impugned protective addition in the assessee s hands due to the clinching reason that the prescribed Adjudicating Authority u/s. 71 of the Prohibition of Benami Transaction Act, 1988 s order dt. 19-12-2017 has already given a conclusive finding of the fact that the real beneficiary herein is one Smt. Renuka Datla only. We thus uphold the learned CIT(A) s action deleting the impugned addition(s) for this precise reason alone as there is no basis left for assessing the sum in issue in assessee s hands on protective basis. - Decided against revenue.

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• 2021 (9) TMI 1122
  Disallowance of bad debt written off - AO s contention is that such bad debts relate to the amalgamating company, i.e., Cadence AMS Design India Pvt. Ltd. and the provision for doubtful debts was to be allowed only in respect of the assessee and none else - HELD THAT:- DRP directed the ld. AO to verify the claim of the assessee regarding allowance for provision for doubtful debts in the case of amalgamating company in the earlier years and to verify the allowability of the same in the hands of the assessee in terms of the conditions laid down in section 36(2). Ld. Assessing Officer, however, apart from stating that income was booked in the account of another entity, i.e., Cadence AMS Design India Pvt. Ltd., which is not the assessee, does not give any reason, whatsoever, for making the relevant disallowance - direct the ld. Assessing Officer to verify the claim of the assessee regarding the disallowance of the provision for doubtful debts in the case of amalgamating company in the earlier years and if he finds them to be proper, allow the deduction in the hands of the amalgamated company. This ground is, accordingly, allowed for statistical purposes. Incorrect assessed income - AR prayed that directions may be given to the ld. Assessing Officer to dispose of the rectification application on due verification of the claim of the assessee in respect of the assessment of total income, non-grant of MAT credit and short grant of advance tax and TDS - HELD THAT:- DR fairly concedes that the matter may be sent back to the ld. Assessing Officer for taking a view while disposing of the rectification application. We, therefore, direct the ld. Assessing Officer to consider the grievance of the assessee in respect of the assessment of income at Rs. 1,15,72,72,280/- in the computation sheet instead of Rs. 1,11,96,13,210/-; in respect of grant of MAT credit; and in respect of short grant of advance tax and TDS. Accordingly, grounds allowed for statistical purposes. Education cess allowability - HELD THAT:- As assessee does not raise this issue at any stage before the authorities below. We, therefore, find force in the arguments of the ld. AR that this issue may be restored to the file of ld. Assessing Officer to take a view after giving opportunity to the assessee. Needless to say, the Assessing Officer shall give an opportunity to the assessee and take a view according to law. This ground is, accordingly, allowed for statistical purposes. Transfer pricing adjustment - bench marking of the interest outstanding on receivables - assessee entered into Bilateral Advance Pricing Agreement(BAPA) with CBDT on 03.03.2021 which covers the present assessment year and certain transactions (software development segment) and has already filed its modified return under section 92CD(1) on 28.06.2021 - HELD THAT:- As directions of ld. DRP were to calculate interest on net basis whereas the ld. TPO has ignored the amounts payable while doing the computation and if the net receivables are considered then no addition would arise - Learned DR fairly concedes the request of the assessee. We, therefore, set aside the impugned assessment order and direct the ld. Assessing Officer to take plausible view in compliance with DRP directions in the light of the decision of Hon ble Delhi High Court in CIT vs. Kusum Health care [ 2017 (4) TMI 1254 - DELHI HIGH COURT ] and also BAPA.

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• 2021 (9) TMI 1120
  Over invoicing of purchases and bogus expenses - AO made the addition on the basis of statement of the director of the company wherein he stated that he has forgotten as to why the invoice for vessel MV STX Clover for 77556 MT was raised to US $ 57 from US $ 31 FOB + fright charges at actual PMT in terms of agreement for sale and purchase dated 10.12.2012 - CIT- A deleted the addition - HELD THAT:- CIT(A) while allowing the appeal of the assessee noted that the assessee had entered into contract with PT Almoudi Natural Resources Tradmin for supply of Indonesian coal having specification of GCV 5100-5200 Kcal/Kg vide agreement dated 10.12.2012 and subsequently the specification of the coal was changed to CGCV 5600 Kcal/Kg, which is of higher quality and due to the user requirement, by an addendum dated 18.12.2012. Accordingly, rate in the invoice was changed due to change in quality of coal. We also find that similar addendum was made for other purchases from PT Almoudi Natural Resources Tradmin which have not been doubted by the AO. Ld. CIT(A) has recorded his finding to this effect in the appellate order. Besides the Ld. CIT(A) also recorded a finding of fact that the revised rate of invoice was comparable with the international rate published by Argus - we do not find any infirmity in the order of Ld. CIT(A) and accordingly same is upheld by dismissing the ground of the Revenue s appeal.

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• 2021 (9) TMI 1119
  Revision u/s 263 by CIT - Non reference of matter to the TPO in respect of international transactions and specified domestic transactions - case selected for scrutiny to consider the mismatch in the amount paid to related persons u/s. 40A(2)(b) reported in audit report and the international transactions entered by the assessee with AE referred to in section 92A(2) reported in Form 3CEB, the AO should have referred the matter to the TPO so as to ascertain the ALP of specific domestic transactions with related parties - as per PCIT AO failed to follow the CBDT Instruction No. 3/16 dated 10.3.2016, which expressly provides for determination of ALP of international transactions as well as specific domestic transactions - HELD THAT:- The case was not selected for limited scrutiny of specified domestic transactions or international transactions so as to draw inference that the case was selected on Transfer Pricing risk parameter. On the other hand, the case was selected for limited scrutiny one of the reasons being mismatch in amount paid to related persons u/s. 40A(2)(b) reported in audit report and ITR. From a reading of these reasons, we are of the view that no prudent business person properly instructed in law would have inferred the TP risk parameter as a reason for scrutiny so as to mandatorily make reference u/s. 92C of the Act in terms of CBDT Instruction No. 3/16 and failure to make such reference made the assessment order erroneous. In our opinion, the TP risk parameter was not one of the reasons for limited scrutiny of the case and as such the PCIT was not justified in invoking jurisdiction u/s. 263 of the Act so as to direct the AO to refer the matter to the TPO in respect of international transactions and specified domestic transactions listed in Form 3CEB and Form 3CD. As relying on Eveready Industries Ltd [ 2019 (12) TMI 1033 - ITAT KOLKATA ] we are inclined to quash the impugned revisionary order passed by the PCIT u/s. 263 of the Act. - Decided in favour of assessee.

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• 2021 (9) TMI 1118
  Revision u/s 263 - Exemption u/s 11 - certain payments out of trust money which were in violation of provisions of sections 11 to 13 - Trust has deviated from its core objective from promoting the education and has made it a commercial business by paying commission to agents by diverting the Trust funds for personal benefits of the Trustees - HELD THAT:- The order passed by the AO accepting the return of income does not make any reference to any of the arguments put forward on behalf of the assessee and has merely accepted the return of income filed by the assessee. In fact, the assessment of the sum of Rs. 10,34,000/- was on protective basis in the hands of Thomas P. John and therefore why substantive addition was not made on the assessee ought to have been set out by the AO in his Order of Assessment. As decided in INFOSYS TECHNOLOGIES LTD. [ 2012 (1) TMI 76 - KARNATAKA HIGH COURT] If the order of the AO does not disclose the basis of his conclusion, then jurisdiction u/s 263 of the Act can be ignored. Therefore, the CIT was justified in directing the AO to examine the allowability of these items of expenditure. The assessee is always at liberty to show as to how the material found in the survey was not sufficient to make any additions in the hands of the assessee. We, therefore, confirm the order of the CIT. - Decided against assessee.

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• 2021 (9) TMI 1116
  Estimation of income - Bogus purchases - CIT- Restricted 3% disallowance - HELD THAT:- AO himself has made similar disallowance in the subsequent years. In our considered opinion, there is no infirmity in the same. See ITO vs. M/s. Dinal Diamonds [ 2019 (3) TMI 796 - ITAT MUMBAI ] - Accordingly, we uphold the same.

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• 2021 (9) TMI 1114
  Addition u/s 69A - additions made in appellant s capital account - As per assessee it already stood disclosed in the books of accounts - HELD THAT:- In the instant case the entries relating to the advances received from Shri Hardev Singh and his son Shri Maninder Singh Sahi from Canada were recorded in the books of accounts and the assessee also explained that this amount was received as an advance for making the investment in the property by the said persons and the assessee was engaged in the property business. A.O. therefore was not justified in invoking the provisions of Section 69A of the Act particularly when the entries were recorded in the books of accounts maintained by the assessee and the explanation relating to the purpose of receiving the advances was given, identity of the person from whom amount was received, was not in doubt, the entries were through banking channel and it is not the case of the A.O. that the assessee went to Canada then put his money in the account of the depositor i.e; Shri Hardev Singh and Shri Maninder Singh Sahi which was remitted back, therefore, the addition made by the A.O. and sustained by the Ld. CIT(A) was not justified particularly when the credit in the similar circumstances from Shri Hardev Singh had been accepted but the advance received from his son Shri Maninder Singh Sahi was doubted and added to the income of the assessee. In our opinion the A.O. was not justified in blowing hot and cold in the same wind pipe. Assessee received the impugned amount through banking channel from Shri Maninder Singh Sahi of Canada for making the investment in the property. The assessee also furnished the relevant details to the A.O. and also requested to summon the concerned parties under section 131 of the Act but the A.O. did not accede to the request of the assessee and made the addition, therefore, the addition made by the A.O. and sustained by the Ld. CIT(A) was not justified. Entries were made in the books of account maintained by the assessee and the entries in question appeared in the ledger account of the assessee, those were appearing in the bank account. The assessee also furnished an affidavit, the statement made therein - the addition made by the A.O. and sustained by the Ld. CIT(A) was not justified. We therefore, delete the addition made by the A.O. and sustained by the Ld. CIT(A) - Decided in favour of assessee.

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• Customs

• 2021 (9) TMI 1150
  Maintainability of appeal - cost recovery charges for the period January, 2004 to March, 2021, along with applicable interest - HELD THAT:- This Court on due consideration of the matter, also taking note of Section 129 of the 1962 Act, by order dated 30.06.2021, suspended the impugned Order-in-Original dated 01.03.2021 subject to the applicant/petitioner, without prejudice to its rights and contentions as advanced by it, deposits before the Principal Commissioner 50% of the amount of Rs. 15,88,36,561/- within a period of two months from that day. In the attending facts and circumstances of the case, no modification of the order is called for - application dismissed.

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• 2021 (9) TMI 1140
  Confiscation of goods - import of e-rickshaw in CKD condition without battery - requirement to produce the Type Approval Certificate under the provisions of Rule 126 of Central Motor Vehicle Rules - HELD THAT:- The issue is no longer res integra. The applicability of the Rule 2(a) of General Rules of Interpretation read with Chapter 87 of the Customs Tariff, have been held to be not applicable for interpretation of the Import Export Policy or the Foreign Trade Policy, as early as in 1983 by the Hon ble Supreme Court in the case of UNION OF INDIA VERSUS TARACHAND GUPTA BROS. [ 1971 (1) TMI 53 - SUPREME COURT] and again a constitution bench of the Apex Court in COLLECTOR OF CUSTOMS VERSUS RELIANCE INDUSTRIES LTD. [ 1999 (12) TMI 62 - SUPREME COURT] . The show cause notice and the impugned order are in the teeth of the rulings of Apex Court. The e-rickshaw kits in CKD condition imported in the facts and circumstances of the present case, can be treated as a complete vehicle only for the purpose of customs tariff, and not for interpretation of the Import Export Policy /Foreign Trade Policy, or for the purpose of the CMV Act and the Rules thereunder. In the similar facts and circumstances, in LML LIMITED VERSUS COMMISSIONER OF CUSTOMS, BOMBAY [ 1998 (7) TMI 244 - CEGAT, NEW DELHI] , wherein M/s.LML had imported scooters in CKD condition, the Division Bench of this Tribunal had held that Rules of interpretation of tariff and Explanatory Notes to HSN, cannot be applied for the purpose of interpreting the import Trade Policy - there is no legal requirement for production of any Type Approval Certificate for clearance of e-rickshaw in CKD condition, which is applicable only for import of new vehicle(s). Admittedly, the goods in question are freely importable, there being no restriction under the Foreign Trade Policy - The requirement of Type Approval Certificate is not warranted for import of spare parts or kits in CKD condition. The appellant shall not be responsible to pay any warehousing charges, and all such charges, if any, shall be borne by the Customs Department /Government - the appellant is awarded litigation cost of Rs. 50,000/- (to be paid by the Customs Department) - the goods under import, presently lying in warehouse shall be released forthwith to the appellant (within a period of 15 days) from the date of receipt/service of a copy of the order - All demurrages, if any, suffered by the appellant shall also be re-imbursed by the Customs Department. Appeal allowed.

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• 2021 (9) TMI 1135
  Levy of penalty - Scope of the Show Cause notice (SCN) - corrigendum to the SCN - Misdeclaration of quantity in the impugned consignments - shifting of goods to an unit in free trade warehousing zone in Chennai - breach of trust - HELD THAT:- In the instant case a show cause notice was issued on 29.07.2020. The office of the Commissioner of Customs, Chennai III have vide letter dt.11.09.2020 informed the Additional Commissioner of Customs of Chennai VII Commissionerate that duty with interest and penalty has been paid in full within 30 days of the receipt of the demand cum show cause notice;the proceedings are deemed to be conclusive in respect of the matters stated therein under Section 28 (6) of the Customs Act, 1962; and that necessary order in this regard be issued - the payment of differential duty penalty and interest has been made on 28.08.2020 within one month of the issue of the show cause notice and the adjudicating authority was duly informed that corrigenda dt.28.09.2020 and 01.10.2020 have been issued much after the provisions of Section 28 have been complied with - the provisions of Section 28 (5) have been fully complied and have been endorsed by the authority who has investigated the case and issued the show cause notice. Under these circumstances, revision of show cause by way of Corrigenda, aftersuch compliance and subsequent adjudication of the case is not permissible. It defeats the very purpose of the provisions of Sections 28(5) and Section 28(6) of the Customs Act, 1962. It amounts to breach of Trust and defeats the very purpose of the provisions of Sections 28(5) and Section 28(6) of the Customs Act, 1962, which understandably, is to reduce the litigation. It is a settled principle of law that a corrigendum cannot be issued altering the issues causing undue disadvantage to the Noticee. The corrigenda to the SCN were issued well after the compliance contemplated in sub-section (5) of Section 28 of the Customs Act, 1962 has been made and accepted. No reasons whatsoever have been discussed in the OIO as to why the compliance under sub-section (5) of Section 28 was not accepted and as to why the proceedings were not treated as final in terms of sub-section (6) of Section 28.Therefore, the corrigenda issued and the OIO are to be held to have been issued without jurisdiction and without authority of law. The penalty was imposed under Section 114A, even though the same was not proposed in the Show Cause Notice. Therefore, the impugned order suffers from legal infirmities and such an order cannot be upheld. In this case, the appellants having adhered to the provisions of Section 28 of the Customs Act, 1962 have rightful claim as per the provisions of Section 28(6) ibid. The issue need to be deemed to have been finalised. Appeal allowed - decided in favor of appellant.

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• 2021 (9) TMI 1134
  Continuance of proceedings under Customs after initiation of CIRP under IBC - appointment of Resolution Professional under Insolvency and Bankruptcy Code, 2016 - HELD THAT:- The crux of the issue, as submitted by the Learned Counsel, is that even though the moratorium was imposed, it was on the claims by creditors and it was not applicable to the instant case which does not deal with any demand against the appellant but involves, on the contrary, a claim by the appellant themselves. On perusal of the order of NCLT, it is found that, either way, the proceedings can be continued. We also find that the second request of the appellant for change of address can also be incorporated in the cause title. Accordingly, Miscellaneous Applications filed by appellants can be allowed. The Miscellaneous applications stand accordingly disposed off. Claim of benefit of exemption - re-imported air craft engines and parts thereof which were exported for the purposes of repairs/ reconditioning etc. - HELD THAT:- It is very clear from the preamble of the notification that whole of additional duty, integrated tax, compensation cess leviable thereon respectively under sub-sections (1), (3), (5), (7) and (9) of Section 3 of Customs Tariff Act, are wholly exempt - It is very clear that additional duty, integrated tax, compensation cess are exempted and customs duty would be limited to be taxed on the value of the fair cost of repairs carried out including cost of materials used in repairs, insurance and freight charges. The appeal is allowed.

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• 2021 (9) TMI 1132
  Levy of penalty u/s 112 and 117 of CA on CHA and G card holder - mis-classification and mis-declaration of goods - branded car tyres imported under the guise of multi brand and multi size stock let off the road tyre - HELD THAT:- Bill of Entry as were filed for importing the tyres declared goods as multi brand and multi size stock let off the road tyre , which on physical verification, were found to be of multi brand multi size new radial car tyres that too without mandatory BIS markings. Not only this, the tyres were found excess in quantity. Thus apparently, present is the case of mis declaration of quantity of tyres as well as of mis-description of imported goods being imported by M/s. Sai Enterprises for M/s. Auto Mart India Ltd., proprietor Shri Navin Kumar. It is observed from the statement of Shri Suryajeet Singh iself, that he has called all the import documents from Shri Navin Kumar and had handed over the same to Shri Santosh Kumar Gupta, G Card holder of CHA to get the clearance of the goods. Statement of said Shri Santosh Kumar Gupta as was recorded on 1.04.2019 reflects that he has acknowledged about never receiving the detailed packing list; that he has not denied the receiving of importing documents from the importing firm. He stated that he never received the detailed packing list from the importer. The negligence of both the appellants herein is definitely the violation of their incumbent duty. This penalty has rightly been imposed upon them. There are no reason to differ therefrom. Though only challenge of the appellant is that penalty cannot be imposed under the provisions of Customs Act on account of noticed violation of CBLR, the said argument does not support the appellant s case. The penalties on Shri Santosh Kumar Gupta, CHA and G Card holder have been imposed under section 112(b)(i) of the Customs Act, 1962 and upon Shri R K Sharma, under section 117 of the Customs Act, 1962. The penalty under section 112 is for improper importation of goods and apparently the facts of the present appeals reflect the improper importation of goods that too the prohibited goods. Hence, there are no infirmity when penalty under section 112 (b)(i) has been imposed instead of it being imposed under CBLR. Similarly, penalty has been imposed upon under section 117 which is for such contravention as are not expressly mentioned under the Customs Act, 1962. There is notional fraud being committed while importing prohibited goods under mis-declaration of description as well as of quantum, there are no infirmity in the order under challenge not even with respect to the reasoning for reducing of penalty on CHA and his G Card holder, the appellant herein - appeal dismissed.

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• 2021 (9) TMI 1131
  Remission / Refund of Customs Duty - pilfered goods - direction to pass a speaking order about applicability of Section 27 of the Act - out of charge order for clearance for home consumption - sole contention is that the noticed pilferage in the given facts and circumstances was the pilferage which had occurred prior the out of charge was given, accordingly, benefit of remission of duty be given to the appellant - HELD THAT:- The common thing for section 13 23 is the time of applicability of these provisions i.e. after the unloading of the imported goods but before the proper Officer makes an order for clearance of imported goods for home consumption. Thus, the importer is not liable to pay the duty on the goods if pilfered during this period (as per Section 13). Similarly, importer shall be liable for remission of duty for the goods if lost and destroyed during this period, but not for the pilfered goods. Since all the goods imported in India and cleared for home consumption or liable to Customs Duty, the intention of Legislature from both these provisions is clear that the goods lost or destroyed permanently will never see the market of home consumption but the pilfered goods shall come to the market thus resulting into evasion of such duty. Only with the amendment effected by the Finance Bill, 1983, Section 23 (1) of the Act excluded from its purview goods pilfered before their clearance for home consumption being that in respect of pilferage of imported goods Section 13 alone and not Section 23 is applicable. It would be reasonable to infer that prior to the amendment, Section 23(1) did not exclude from its purview goods pilfered before their clearance for home consumption - the out of charge order i.e. order for clearance for home consumption was given on 18 May, 2011. Pilferage was noticed after the joint survey which was conducted on 23 May, 2011 i.e. after the said OOC was passed. It will not Section 23 which deals only with the permanent loss or damage to the goods that too before OOC but section 13 as shall be applicable which deals only with respect to goods pilfered but only if pilferage is noticed prior OOC. None is the fact of the present case. Neither duty exemption under Section 13 of Customs Act nor the remission of duty under Section 23 of Customs Act is available to the appellant. The question of refund of duty paid does not arise. There are no infirmity in the order under challenge when the benefit of remission of duty as applicable under Section 23 has been denied to the appellant while rejecting the refund of duty as was already paid by the appellant for the pilfered goods. Applicability of Section 13 - HELD THAT:- It is clearly apparent that Legislature has thought it fit to consider remission of duty held in the Customs area only for the period required for completion of Customs formalities and not beyond that. Appointment of custodian is mainly for the purpose of getting the customs formalities completed. Hence, his responsibilities also continued only to the stage when out of charge order for clearance either for home consumption or for depositing in warehouse is passed by the proper officer. Custodian is not suppose to take the custody of goods treating the entire custom area as a warehouse. If the importers still choose to keep the goods in the custom area, it is possible only at the importers own risk. Appeal dismissed.

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• 2021 (9) TMI 1130
  Levy of penalty u/s 117 of CA - Statutory obligation and liability of Custodian - Legality of removal of goods from Customs Area - statutory obligation of M/s. DIAL to be responsible for handling cargo in the Customs area - Outsourcing and Custodianship of goods - HELD THAT:- Bare perusal of the Act makes it clear that the person who approved by competent officer of Customs to be the Custodian of goods lying in customs area is duty bound for handling of cargo in the Customs area as mentioned in the sub clause (2)(b) of section 45 till the goods are removed from the Customs area. As per section 45(2)(b), the custodian is duty bound to not to permit such goods to be removed from the customs area except after proper permission. From the admitted facts, it is clear that approval of Principal of Commissioner of Customs was given in favour of M/s. DIAL and not in favour of M/s. CELEBI - it was the statutory mandate for the person so approved to furnish the custodian bond. The HCCR regulations define Customs Cargo Service provider to mean any person responsible in receipt, award, delivery, discharge or otherwise handling of imported goods and exported goods and includes the custodian as referred to in Section 45 of the Act and the persons as referred to in sub-section (2) of Section 141 of the said Act. The use of words while includes the custodian again corroborates the finding of the Adjudicating Authority Below - M/s. DIAL after taking notice of the impugned incidence of removal of package without filing of Bill of Entry have taken measures to avoid any such incidence in future. All the conditions which are required to be complied with under Rule 5 of HCCR, 2009, are admitted to have been complied with by M/s. DIAL post the impugned incidence. Rule 6(2) of HCCR restricts such contracting or outsourcing of Cargo handling functions. Even if the permission for outsourcing was given to M/s. DIAL vide the letter of Commissioner of Customs (IMG) dated 07.07.2012, the said permission was agreed to be coterminus with custodianship of M/s. DIAL and was held subject to fulfilment of provisions of Customs Act, 1962 and the Rules and Regulations made thereunder. - Admittedly the custodian bond was still of M/s. DIAL. M/s. CELEBI never substituted the same. The provisions of Customs Act and that of HCCR do not absolve the custodian of the responsibilities as mentioned in these Regulations to be observed by the Custodians itself, that there are no infirmity with the order under challenge where simultaneously penalty has been imposed upon M/s. DIAL as well. Appeal dismissed.

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• Securities / SEBI

• 2021 (9) TMI 1143
  Recovery proceedings - Offence under SEBI Act - Denial of natural justice - whether the recovery notice is sustainable in law? - HELD THAT:- The order does not fix any particular liability to be discharged by the writ-applicants. If upon such order recovery is sought to be undertaken of an amount then it was expected of the concerned authority to at least issue a notice to the writ-applicants and give an opportunity of hearing before arriving at a particular figure. The impugned recovery notice is hereby quashed and set aside. The matter is remitted to the respondent No.2. The respondent No.2 shall issue notice to the writ-applicants and fix a particular date so as to give an opportunity of hearing to the writ-applicants and thereafter determine a particular amount to be paid by the writ-applicants to the depositors in accordance with law.

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• Insolvency & Bankruptcy

• 2021 (9) TMI 1156
  Condonation of delay of 44 days (beyond a total period of 45 days) in preferring the appeal - powers to the Appellate Tribunal to condone the delay, which is only 15 more days - Section 61(2) of the IB Code - HELD THAT:- The appeal preferred before the NCLAT was under Section 61(2) of the IB Code. As per Section 61(2) of the IB Code, the appeal was required to be preferred within a period of thirty days. Therefore, the limitation period prescribed to prefer an appeal was 30 days. However, as per the proviso to Section 61(2) of the Code, the Appellate Tribunal may allow an appeal to be filed after the expiry of the said period of 30 days if it is satisfied that there was sufficient cause for not filing the appeal, but such period shall not exceed 15 days. Therefore, the Appellate Tribunal has no jurisdiction at all to condone the delay exceeding 15 days from the period of 30 days, as contemplated under Section 61(2) of the IB Code. In the present case, even the appellant applied for the certified copy of the order passed by the adjudicating authority on 8.4.2019, i.e., after a delay of 34 days. Therefore, even the certified copy of the order passed by the adjudicating authority was applied beyond the prescribed period of limitation, i.e., beyond 30 days. The certified copy of the order was received by the appellant on 11.04.2019 and the appeal before the NCLAT was preferred on 24.06.2019, i.e., after a delay of 44 days. As the Appellate Tribunal can condone the delay up to a period of 15 days only, the Appellate Tribunal refused to condone the delay which was beyond 15 days from completion of 30 days - it cannot be said that the learned Appellate Tribunal committed any error in not condoning the delay of 44 days, which was beyond the delay of 15 days which cannot be condoned as per Section 61(2) of the IB Code. An identical question came to be considered by a Constitution Bench of this Court in the case of NEW INDIA ASSURANCE CO. LTD. VERSUS HILLI MULTIPURPOSE COLD STORAGE PVT. LTD. [ 2020 (3) TMI 1368 - SUPREME COURT] , where the Constitution Bench has ultimately concluded that the District Forum has no jurisdiction and/or power to extend the time for filing of response to the complaint beyond the period of 15 days, in addition to 30 days, as envisaged under Section 13(2)(a) of the Consumer Protection Act. Considering the statutory provisions which provide that delay beyond 15 days in preferring the appeal is uncondonable, the same cannot be condoned even in exercise of powers under Article 142 of the Constitution. In view of the settled proposition of law and even considering the fact that even the certified copy of the order passed by the adjudicating authority was applied beyond the period of 30 days and as there was a delay of 44 days in preferring the appeal which was beyond the period of 15 days which maximum could have been condoned and in view of specific statutory provision contained in Section 61(2) of the IB Code, it cannot be said that the NCLAT has committed any error in dismissing the appeal on the ground of limitation by observing that it has no jurisdiction and/or power to condone the delay exceeding 15 days. Appeal dismissed.

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• 2021 (9) TMI 1121
  Validity of decision of IRP/RP holding that the claimant/ Applicant is a Financial Creditor but is not eligible to be a part of CoC - related party in terms of Section 5(24)(m) 5(24) (i) of the Insolvency and Bankruptcy Code 2016 - HELD THAT:- The Respondent No. 1 had a share in the profits of the Corporate Debtor Company and cannot be said to be a person acting solely on account of the conversion of debt. In the instant case, the Corporate Debtor had issued non-convertible debentures to Respondent No. 1, which SEBI does not regulate. The SEBI only regulates the issue of debentures relating to convertible securities - In the present case, it was not a case of a convertible security. Appellant has annexed the xerox copy of the debenture certificate, which states that debentures is not convertible but redeemable on maturity - It is also evident that 2nd proviso to Section 21 (2) of the Code applies where instruments convertible into equity shares were converted prior to the insolvency commencement date. Therefore, 2nd proviso to Section 21(2) is not applicable in the present case and does not enure the benefit to Respondent No 1 ASK . It is evident that ASK has a substantial interest in the operations of the Corporate Debtor. Moreover, the intent is to increase the same is clear from their stake to claim a considerable ownership interest in the Corporate Debtor Company, i.e. 89.9%. Their significant involvement in the operations and day-to-day decision-making of the Corporate Debtor is substantiated - ASK is, in effect, an insider of the Corporate Debtor having substantial interest in the ownership of the Corporate Debtor. Hence ASK being a related party, and their claim with the IRP concerning the mentioned CIRP should be rejected, and they are not entitled to participate in the CoC. The Hon ble Supreme Court, in Municipal Corporation of Greater Mumbai v Abhilash Lal [2019 (11) TMI 844 - SUPREME COURT] , has affirmed the principles that if any statute requires a thing to be done in a particular manner, it should be done in that in that manner or not at all and that there can be no estoppel against the express provisions of law. Therefore, the mere fact that the improperly constituted Committee of Creditors has approved a Resolution Plan during the pendency of the present Appeal can have no bearing on the merits of the Appeal. Respondent No. 1 ASK Investment Managers Ltd is a related party to the Corporate Debtor; therefore, it cannot be made part of COC with voting rights - Appeal allowed.

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• 2021 (9) TMI 1117
  Maintainability of CIRP - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditor - providing e-advertisement campaigning services to the corporate debtor - existence of debt and dispute or not - HELD THAT:- The validation of the data generated after completion of services were sent every month before issuance of invoices by corporate debtor to applicant, which indicates that there was a consensus between the parties for raising invoices. The corporate debtor has not placed any document on record in order to show that any invoice raised by applicant was ever disputed by it after issuance, in fact part payment was also made during April, 2019 to the applicant after receiving invoice. It is clearly established that the default in payment of the operational debt has occurred by the corporate debtor. Though the corporate debtor has raised dispute with regards the defective services, but has not placed on record any document which proves the invoices were disputed even after validation of the data. There is no merit in the so-called dispute raised by the corporate debtor as mere reply filed by the corporate debtor to the present application, is unable to establish any pre-existing dispute of genuine nature. Moreover, there are data for leads generated which was validated vide emails and only thereafter invoice was raised. Thus, it can be concluded that the applicant has established its claim which is due and payable by the corporate debtor - Application admitted - moratorium declared.

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• 2021 (9) TMI 1115
  Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - corporate guarantor in respect of loan given by Financial Creditor to the principal borrower - existence of debt and dispute or not - HELD THAT:- There is a debt which is due and payable, both in law and in fact, and default has occurred, hence, prima-facie, the application filed by the Applicant/Financial Creditor appears to be maintainable. As far as various legal aspects relating to the liability of corporate guarantor, being independent of default by the principal borrower and recovery from corporate guarantor either simultaneously or independently, are concerned the principles as settled now state that approval of resolution plan per se does not extinguish the liability of corporate guarantor. The only requirement which is to be seen that the amount recovered under resolution plan should not be recovered again from the corporate guarantor - It has specifically been stated by the Applicant/Financial Creditor that in the present case, the Financial Creditor is not seeking the recovery of the amount which has already been recovered under resolution plan and this fact has remained un-controverted. There are no merit in any of the allegations made by the Corporate Debtor as regard to malicious initiation of CIRP against the Corporate Debtor in filing of application under Section 7 of IBC, 2016 - application admitted - moratorium declared.

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• Service Tax

• 2021 (9) TMI 1127
  Demand of service tax - Valuation - Failure to include TDS amounts in the assessable value - HELD THAT:- From examination of invoices submitted by the appellant it is observed that factually the observations of the original adjudicating authority are correct. The Revenue has not been able to establish any amount whatsoever has been deducted by service recipient and deposited with the Income Tax Authorities. There are no merit in this impugned order - appeal allowed - decided in favor of appellant.

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• CST, VAT & Sales Tax

• 2021 (9) TMI 1153
  Validity of adjustment of refundable amount against an admitted liability payable by the Petitioner towards interest levied - Orissa Entry Tax Act (OET Act) - exercising powers both under the CST Act as well as the OET Act - HELD THAT:- While it may be correct that it is the same person who exercises powers under both the Acts, but the functions performed as an Assessing Officer under the CST Act is distinguishable from the functions performed under the OET Act. Theoretically, it is possible that two different persons could be exercising these functions under the respective enactments. That by itself does not permit, in the absence of any express provision under the CST Act or corresponding provisions under the OET Act to permit the refund payable under the one Act to be adjusted against the liability under the other Act. Secondly, as rightly pointed out this cannot be treated as garnishee proceedings unless there is an express provision under the statute that permits this kind of an adjustment. The Court would like to clarify that it should not be understood as holding that the Petitioner does not owe the Department Rs. 79,44,056/- as admitted by it towards interest under the OET Act for the period from 1st April, 2009 to 31st May, 2017. At the same time, as clarified by Mr. Mishra, the Department also does not question that Rs. 65,34,213/- is payable as refund to the Petitioner under the CST Act as a result of the order of the ACST (Appeal), Balasore - it is an admitted position that the above adjustment was sought to be done unilaterally without any notice whatsoever to the Petitioner. Even on that ground the office order dated 16th July, 2020 is unsustainable in the eye of law. The Court sets aside the office order dated 16th July, 2020 but clarifies that it would be open to the department to proceed to recover the sum of Rs. 79,44,056/- admitted by the Petitioner to be payable towards interest under the OET Act, in accordance with law - the refund of the excess CST amount as already determined will now be made to the Petitioner not later than four weeks from today - petition allowed.

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• 2021 (9) TMI 1152
  Rectification of mistake - petition not instituted, at least within the stipulated period for preferring an appeal - law of time limitation - HELD THAT:- The time period for filing an appeal is 60 days. Without carrying the orders aforesaid dated May 16, 2019 and October 30, 2019 in an appeal under Section 26 of the MVAT Act within the stipulated time, the writ jurisdiction of this Court has been invoked. There is no reason or explanation as to why the writ petition was not instituted, at least within the stipulated period for preferring an appeal. Although the law of limitation is not applicable to writ proceedings, delay and laches are factors that the Court ought to bear in mind while entertaining a writ petition. Certainly, a litigant cannot knock the doors of the High Court at leisure after lapse of the time period for preferring an appeal. In such a case, the Court may refuse to exercise its discretionary power. Insofar as taxing statutes are concerned, interference by a writ court should be few and far between. It cannot be disputed that the MVAT Act was introduced with the object of consolidating and amending the law relating to the levy and collection of tax on the sale and purchase of certain goods in the State of Maharashtra. A complete machinery is envisaged for the purposes of levy of tax and its collection, which is in the nature of a liability for the assessee, as well as providing avenues to seek relief in respect of improper or erroneous orders made by the authorities vested with power to levy and collect tax, which is in the nature of a right of the assessee. The MVAT requires the relevant authority, at or about the time an adjudication is in progress, to ascertain facts and apply the law that are applicable to a particular situation, to return findings on each and every point that would arise in course of the proceedings and to end his order by recording his conclusions. Invocation of the High Court s power to issue high prerogative writs under Article 226 of the Constitution in matters relating to levy and collection of tax, in view of such fora made available by the statute, ought not to be permitted as a matter of course or else the will of the people expressed by the legislature in the relevant enactment would be rendered nugatory. It is only in very exceptional cases when a party complains of infringement of fundamental rights, or where facts are not disputed and such party establishes assumption of jurisdiction by an authority without being possessed thereof, or the complaint of violation of natural justice is so pronounced and gross, that a writ court in the judicious exercise of its discretion may choose to interfere. Petition dismissed.

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• 2021 (9) TMI 1149
  Violation of principles of natural justice - penalty order was passed without considering that the assessment order - seeking stay on recovery of the disputed penalty pending the appeal - HELD THAT:- There are merits in the submission of the petitioner that since the appeal against the assessment order is pending, which according to the petitioner was passed during pandemic conditions without adequate opportunity being given to the petitioner to place relevant records before the assessing officer, as contended in the appeal proceeding, an arguable case has been made out in his favour and an order of stay of collection of the remaining penalty ought to have been passed on conditions. The impugned order is set aside and it is directed that deposit of 25% of the disputed penalty after adjusting the amount already deposited within a period of four (4) weeks from date, there shall be suspension of realization of the remainder of the disputed penalty till the disposal of the appeal. Petition allowed.

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• 2021 (9) TMI 1144
  Violation of principles of natural justice - Validity of assessment order - documents and details sought for by the Appellant have not been furnished - availability of alternative remedy or not - HELD THAT:- The Respondent has virtually ignored the reply dated 18.11.2013, wherein the Appellant, apart from giving its preliminary objections for the revision of assessment, has also sought for certain details and documents. That apart, there has been a specific request made by the Appellant in the representation 18.11.2013 to grant an opportunity of personal hearing. This has also been brushed aside, while issuing the second notice dated 03.12.2013. That apart, in the Assessment orders the Assessing Officer has stated that the Appellant has not furnished any reply to the second notice, whereas it has been admitted in the Counter-affidavit that the reply / objections dated 06.12.2013 has been received. There have been gross violation of principles of natural justice, which would justify that the Appellant is entitled to invoke the extraordinary jurisdiction of this Court - matters are remitted to the Assessing Officer and the Assessing Officer is directed to issue notice to the Appellant to appear in-person and during their personal appearance, the Appellant is directed to submit a further reply, clearly specifying as to what are all documents and details they would require - Petition not maintainable and is dismissed - appeal allowed by way of remand.

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• Indian Laws

• 2021 (9) TMI 1159
  Dishonor of Cheque - insufficiency of funds - rebuttal of presumption - evidence on record to show that the appellant possessed the funds and the same had been actually paid by him to the respondent to constitute legally recoverable debt or not - preponderance of probablity - HELD THAT:- The signature on the documents at Exhibits P6 and P2 is not disputed. Exhibit P2 is the dishonoured cheque based on which the complaint was filed. From the evidence tendered before the JMFC, it is clear that the respondent has not disputed the signature on the cheque. If that be the position, as noted by the courts below a presumption would arise under Section 139 in favour of the appellant who was the holder of the cheque. On the position of law, the provisions referred to in Section 118 and 139 of N.I. Act as also the enunciation of law as made by this Court needs no reiteration as there is no ambiguity whatsoever. The legal position relating to presumption arising under Section 118 and 139 of N.I. Act on signature being admitted has been reiterated. Hence, whether there is rebuttal or not would depend on the facts and circumstances of each case. As is evident from the records the notice issued by the appellant intimating the dishonorment of the cheque and demanding payment, though received by the respondent has not been replied. In such situation, the first opportunity available to put forth such contention if true was not availed. Even in the proceedings before the learned JMFC, the respondent has not put forth such explanation in the statement recorded under Section 313 of CrPC nor has the respondent chosen to examine himself or any witness in this regard. The said contention had not been raised even in the appeal filed before the learned Sessions Judge. The case put forth by the respondent does not satisfy the requirement of rebuttal even if tested on the touchstone of preponderance of probability. Therefore, in the present facts it cannot be held that the presumption which had arisen in favour of the appellant had been successfully rebutted by the respondent herein. The High Court therefore was not justified in its conclusion. In the facts and circumstances of the instant case, if an enhanced fine is imposed it would meet the ends of justice. Only in the event the respondent accused not taking the benefit of the same to pay the fine but committing default instead, he would invite the penalty of imprisonment - sentence to undergo simple imprisonment for six months and fine of Rs. 2,00,000/- is however modified. The Respondent/Accused is instead sentenced to pay the fine of Rs. 2,50,000/- within three months. In default of payment of fine the Respondent/Accused shall undergo simple imprisonment for six months - From the fine amount, a sum of Rs. 2,40,000/- shall be paid to the Appellant/Complainant as compensation. Appeal allowed in part.

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• 2021 (9) TMI 1158
  Joint Hindu Family - Maintainability of complaint - appellant had availed the services for consideration on behalf of his sister-in-law, being the Karta of Joint Hindu Family - whether the appellant could file a complaint in respect of deficiency in service on part of the respondent regarding the treatment given to his sister-in-law Kiran Srivastava? - HELD THAT:- A consumer means any person who hires or avails of any services for a consideration which has been paid or promised or partly paid and partly promised and includes a beneficiary of services. The brother-in-law of a pregnant woman would not be a beneficiary of any services rendered by the respondent. There is no allegation that he has paid or promised any consideration for engaging the services of the respondent. The only assertion in the complaint is that he is the Karta of a Joint Hindu Family, therefore, he is entitled to file a complaint on account of the alleged deficiency of service by the respondent. The appellant herein is the Karta of a Joint Hindu Family. He cannot be said to be availing the services of a medical practitioner in respect of the pregnancy of his sister-in-law. The concept of Joint Hindu Family does not extend to the treatment of a pregnant sister-in-law. It is needless to mention that no objection regarding maintainability of complaint was raised either before the State Commission or the National Commission, but such issue of maintainability of the complaint goes to the root of the case and it is found to be non-maintainable on the bare assertions of the complaint alone. The complaint itself was not maintainable - Appeal dismissed.

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• 2021 (9) TMI 1157
  Liability to pay the amount of certain cheques signed by him along with interest at the rate of 9% p.a. - jurisdiction of the NCDRC - complainant in terms of Section 2(1)(b) of the Consumer Protection Act, 1986 - HELD THAT:- The complainant before the NCDRC is neither a voluntary consumer association registered under the Companies Act, 1956 nor under any other law for the time being in force. The complaint is maintainable on behalf of the numerous consumers having the same interest in terms of clause (iv) of Section 2(1)(b) of the Act - A complaint on behalf of one or two consumers having same interest can be filed only with the permission of the forum of which the jurisdiction is invoked. Since the complainant is neither a voluntary consumer association nor a registered body, nor the permission of the appropriate forum has been sought, therefore, the complaint itself was not maintainable. Since the opposite party is a sole proprietorship consultancy of Mr. I.J. Aneja, therefore, the liability of payment of investments would be that of Mr. I.J. Aneja and not of the employees who were engaged by Mr. Aneja at different places such as Nehru Place, NOIDA and Ghaziabad - Since, the complaint itself was not maintainable and the appellant is an employee engaged by the sole proprietorship consultancy, there cannot be any personal liability which can be inflicted upon the appellant by virtue of only being an employee of a sole proprietorship. The order passed by the NCDRC is set aside and the complaint is dismissed - Appeal allowed - decided in favor of appellant.

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• 2021 (9) TMI 1155
  Monetary amount involved in National Consumer Disputes Redressal Commission - claim is below the enhanced pecuniary jurisdiction of the NCDRC or not - NCDRC by its order dated 30 July 2020 dismissed the consumer case on the ground that after the enforcement of the Act of 2019, its pecuniary jurisdiction has been enhanced from rupees one crore to rupees ten crores - in the present case, the claim of Rs. 2.19 crores is made - right to a forum - accrued right or not - HELD THAT:- While Section 6(e) of the General Clauses Act protects the pending legal proceedings for the enforcement of an accrued right from the effect of a repeal, this does not mean that the legal proceedings at a particular forum are saved from the effects from the repeal. The question whether the pending legal proceedings are required to be transferred to the newly created forum by virtue of the repeal would still persist - In considering the expression of intent in the repealing enactment in the present case, it is apparent that there is no express language indicating that all pending cases would stand transferred to the fora created by the Act of 2019 by applying its newly prescribed pecuniary limits. In deducing whether there is a contrary intent, the legislative scheme and procedural history may provide a relevant insight into the intention of the legislature. A consumer who has engaged legal counsel at the headquarters of the NCDRC would have to undertake a fresh round of legal representation before the SCDRC incurring expense and engendering uncertainty in obtaining access to justice. Likewise, where complaints have been instituted before the SCDRC, a transfer of proceedings would require consumers to obtain legal representation before the District Commission if cases were to be transferred. Such a course of action would have a detrimental impact on the rights of consumers. Many consumers may not have the wherewithal or the resources to undertake a fresh burden of finding legal counsel to represent them in the new forum to which their cases would stand transferred - It is a developer who opposed the continuation of the proceedings before the NCDRC on the ground that under the new consumer legislation the pecuniary limits of the jurisdiction exercisable by the NCDRC have been enhanced and the complaint filed by the Appellant which was validly instituted under the erstwhile law should be transferred to the SCDRC. Such a course of action will result in thousands of cases being transferred across the country, from the NCDRC to the SCDRCs and from the SCDRCs to the District Commission. The proceedings instituted before the commencement of the Act of 2019 on 20 July 2020 would continue before the fora corresponding to those under the Act of 1986 (the National Commission, State Commissions and District Commissions) and not be transferred in terms of the pecuniary jurisdiction set for the fora established under the Act of 2019 - the impugned judgment and order of the NCDRC dated 30 July 2020 and the review order dated 5 October 2020, directing a previously instituted consumer case under the Act of 1986 to be filed before the appropriate forum in terms of the pecuniary limits set under the Act of 2019, shall stand set aside. Appeal allowed.

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• 2021 (9) TMI 1154
  Refund of the amounts deposited by the Apartment Buyers - inordinate delay in completing the construction and obtaining the Occupation Certificate - determination of the date from which the 42 months period for handing over possession is to be calculated - whether it would be from the date of issuance of the Fire NOC as contended by the Developer or, from the date of sanction of the Building Plans, as contended by the Apartment Buyers? - terms of the Apartment Buyer s Agreement were one-sided - applicability of such terms on the Apartment Buyers - Real Estate (Regulation and Development) Act, 2016 having primacy over the Consumer Protection Act, 1986 or not - termination of agreement on account of the inordinate delay in handing over possession. Determination of the date for handing over Possession - whether the 42 months period is to be calculated from the date when the Fire NOC was granted by the concerned authority, as contended by the Developer or, the date on which the Building Plans were approved, as contended by the Apartment Buyers? - HELD THAT:- It was a mandatory requirement under the Haryana Fire Safety Act, 2009 to obtain the Fire NOC before commencement of construction activity. This requirement is stipulated in the sanctioned Building Plans, as also in the Environment Clearance. The 42 months period in Clause 13.3. of the Agreement for handing over possession of the apartments would be required to be computed from the date on which Fire NOC was issued, and not from the date of the Building Plans being sanctioned - In the present case, the Developer obtained approval of the Building Plans from the Directorate, Town and Country Planning, Haryana, on 23.07.2013. The Developer applied for issuance of Fire NOC for the Fire Fighting Scheme of the Group Housing Colony within the 90 days period before the Director, Fire Service, Panchkula. On 27.11.2014, the Director, Haryana Fire Service granted approval to the Fire Fighting Scheme subject to the conditions mentioned therein. The computation of the period for handing over possession would be computed from this date. The Commitment Period of 42 months plus the Grace Period of 6 months from 27.11.2014, would be 27.11.2018, as being the relevant date for offer of possession - thus, there is a delay of approximately 7 months in obtaining the Fire NOC by the Developer. Whether the terms of the Apartment Buyer s Agreement are one-sided? - the Agreement in this case, contains wholly one-sided clauses or not - HELD THAT:- The incorporation of such one-sided and unreasonable clauses in the Apartment Buyer s Agreement constitutes an unfair trade practice Under Section 2(1)(r) of the Consumer Protection Act. Even under the 1986 Act, the powers of the consumer fora were in no manner constrained to declare a contractual term as unfair or one-sided as an incident of the power to discontinue unfair or restrictive trade practices. An unfair contract has been defined under the 2019 Act, and powers have been conferred on the State Consumer Fora and the National Commission to declare contractual terms which are unfair, as null and void. This is a statutory recognition of a power which was implicit under the 1986 Act - the Developer cannot compel the apartment buyers to be bound by the one-sided contractual terms contained in the Apartment Buyer s Agreement. Whether primacy to be given to RERA over the Consumer Protection Act? - HELD THAT:- In a recent judgment delivered by this Court in IMPERIA STRUCTURES LTD. VERSUS ANIL PATNI AND OTHERS [ 2020 (11) TMI 189 - SUPREME COURT ] , it was held that remedies under the Consumer Protection Act were in addition to the remedies available under special statutes. The absence of a bar Under Section 79 of the RERA Act to the initiation of proceedings before a fora which is not a civil court, read with Section 88 of the RERA Act makes the position clear. Section 18 of the RERA Act specifies that the remedies are without prejudice to any other remedy available . Whether the Apartment Buyers are entitled to terminate the Agreement, or refund of the amount deposited with Delay Compensation? - HELD THAT:- The factum of delay in completing the construction and making the offer of possession is an undisputed fact in this case - the Developer is directed to refund the entire amount deposited by this Respondent alongwith Interest @ 9% S.I. p.a. within a period of 4 weeks from the date of this judgment. The failure to refund the amount within 4 weeks will make the Developer liable for payment of default interest @ 12% S.I. p.a. till the payment is made. Appeal disposed off.

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• 2021 (9) TMI 1148
  Dishonor of Cheque - insufficiency of funds - failure on the part of the Court of Magistrate to mark the documents as exhibits - vitiation of the proceedings to such an extent that a case for retrial was made out by the Applicant or not - Section 465 of the Cr.P.C. - HELD THAT:- In the present case, the Applicant failed to raise any objections to the aforesaid documents brought on record on behalf of the Respondent, the documents stood admitted. The Applicant referred to the documents at the stage of cross-examination of the witness to Respondent no.1 and, therefore, the question of prejudice sought to be raised on behalf of the Applicant, is not only misplaced but it is clearly an afterthought. The Appellate Court was justified in rendering findings against the Applicant in this context. Section 465 of the Cr.P.C. - HELD THAT:- In the case of AJAY KUMAR GHOSHAL AND ORS. VERSUS STATE OF BIHAR AND ORS. [ 2017 (1) TMI 1764 - SUPREME COURT] the Hon ble Court has elaborated upon the conditions in which the Court may direct re-trial/de novo trial. It has been emphasized that a prayer for directing re-trial is not to be casually considered and that the error, omission, or irregularity completed by the accused must be shown to have occasioned a failure of justice. The Hon ble Supreme Court referred to several judgments and found that a direction for a re-trial/de novo trial should be a last resort and that too only when such a course becomes indispensable - Thus, it becomes clear that if the accused is unable to show the failure of justice, a direction for re-trial/de novo trial cannot be granted. This Court is of the opinion that the failure on the part of the Trial Court in the facts and circumstances of the present case, to mark the documents produced by the Respondent no.1 as exhibits, at worse can be termed as an error/omission/irregularity but, there is nothing to show that the same occasioned failure of justice. The Appellate Court was fully justified in holding that the Applicant failed to demonstrate prejudice caused to him. It is evident that the Application cannot succeed in seeking a direction of retrial/ de novo trial by merely referring to Rules 33 and 34 of Chapter VI of the Criminal Manual or Section 294 of the Cr.P.C. - no case is made out for exercise of revisionary jurisdiction in the facts and circumstances of the present case. The criminal revision is found to be without any merits and deserves to be dismissed. Respondent no.1 is permitted to withdraw the amounts deposited by the Applicant before the Court - the Criminal Revision Application is dismissed.

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• 2021 (9) TMI 1147
  Direction for filing of an affidavit by the Chief Executive Officer of the petitioner company - direction to Chief Executive Officer of the petitioner company to be present personally through video conferencing - HELD THAT:- This Court is of the view that there was no occasion for the NCDRC to direct filing of an affidavit by the Chief Executive Officer of the petitioner company or to direct the Chief Executive Officer of the petitioner company to be present personally through video conferencing, taking into account that the reply of the complaint has been filed within the stipulated time period. The Consumer Protection Act, 1986 (the Act) and the rules framed thereunder contain a well defined procedure for deciding a complaint. While this Court appreciates the intent shown by the NCDRC to effectuate a settlement between the parties, the procedure for adjudication of the complaint as per the provisions of the Act has to be adhered to. No reasons have been provided for directing filing of an affidavit by the Chief Executive Officer or for directing the Chief Executive Officer to be present in person on the next date of hearing. The NCDRC shall proceed to adjudicate the complaint on merits, as per the procedure laid down under the Act and the rules framed thereunder - the impugned order passed by the NCDRC is set aside - petition disposed off.

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• 2021 (9) TMI 1112
  Auction conducted by Moradabad Development Authority (MDA) in respect of the land - auction purchaser who purchased the suit land from the MDA - transferable owner and cultivator of lands - respondent challenged the auction proceedings in the suit on the ground that MDA had title only over the land measuring 200 sq. mt. of the auctioned land, and thus the sale of the remaining land measuring 400 sq. mt. was null and void - HELD THAT:- There is a specific finding of fact in the judgment of the Trial Court that the permission which was issued on 5 May 1993 to Zahid Hussain for the transfer of 1295.04 sq mt of land was in modification of an earlier order dated 29 March 1993. The permission was in respect of the 2000 sq. mt of land which was retained by Zahid Hussain. The High Court has not adverted to this finding of fact at all nor has it found any substantive basis to displace the finding. That apart, it is evident, that the order of the Competent Authority dated 16 March 1988 was set aside in appeal by the District Judge on 6 January 1993 and the case was remanded for fresh adjudication of the excess land in view of the amended Master Plan. In such an instance, when the case was remanded, Zahid Hussain could not have transferred the suit property, having regard to the clear bar which is contained in the provisions of Section 5(3). No transfer of the land could have been lawfully made and any such transfer in contravention with the provision would be null and void. The effect of the amendment was considered in Banarsi Ors. v. Ram Phal [ 2003 (2) TMI 493 - SUPREME COURT] , where this Court held that after the 1976 amendment, the respondent could file cross-objections against the findings of the lower court, while previously cross-objections could only be filed when the decree of the lower court was partly against the respondent. On a perusal of the above authorities, it is evident that the principle stipulated in Order XLI Rule 22 of CPC can be applied to petitions under Article 136 of the Constitution because of this Court s wide powers to do justice under Article 142 of the Constitution. Since the principle in Order XLI Rule 22 of the CPC furthers the cause of justice by providing the party other than the aggrieved party to raise any adverse findings against them, this Court can draw colour from Order XLI Rule 22 CPC and permit objections to findings - it is thus established that it is not necessary that a challenge to the adverse findings of the lower court needs to be made in the form of a memorandum of cross-objection. In the present case, it is noted that the appellant had raised an objection to the jurisdiction of the Trial Court for entertaining the suit on the ground that an injunction and declaratory relief could not have been given. Although the Trial Court passed a decree in favour of the appellant, it had decided against the appellant on the question of jurisdiction. This finding was not challenged by the appellant before the High Court in the form of a memorandum of cross-objection. The judgment of the High Court makes no mention that a plea of lack of jurisdiction was taken by either the appellant or the MDA. Before this Court, the appellant has not filed the counter-affidavit it had filed before the High Court. Both the High Court and Trial Court have failed to correctly assess the issue regarding the jurisdiction of the civil court to try a suit, which in its essence, arises out of matters pertaining to the ULCRA. The first respondent has made efforts to artfully draft the plaint in a manner that would make it appear as if the issue only pertains to the auction notice issued by MDA. This Court, has time and again, warned against drafting of this nature which seeks to distract attention away from the real cause of action - The findings of the High Court are a non-sequitur since even if Zahid Hussain had title and possession of the suit land at the time of transfer, the purported transfer to the first respondent is null and void. The High Court ought to have upheld the dismissal of the suit on this ground. A plaintiff has to stand on their own legs and the respondent plaintiff had no valid title or interest in law on the basis of which the suit could have been founded. The respondent plaintiff had no cause of action to challenge the auction by MDA in favour of the appellant, once the purported transfer was invalid. The purported transfer of the suit land by Zahid Hussain to the first respondent was before the Repeal Act was enacted. The dual conditions stipulated under Section 5(3) of ULCRA were not fulfilled before the transfer was made since the statement under Section 6 had not been submitted and the Competent Authority had not issued a notification under Section 10(1) of the ULCRA (which was in operation at the time). Therefore, even if the Zahid Hussain had the title to the suit land, the transfer to the first respondent was null and void under section 5(3) of ULCRA - the suit is dismissed. Appeal allowed.

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