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2024 (5) TMI 856 - ITAT AHMEDABAD
Rectification u/s 154 - Substitution of addition u/s 269SS with 69A - unsecured loans - assessee engaged in banking business - Enhancement of tax liability u/s 115BBE - Initiation of penalty proceedings u/s. 270A of the Act in respect of the addition made u/s. 69A - HELD THAT:- While rectifying the order, the AO should have confronted the assessee in consonance with the application of 69A in respect of unsecured loans which the AO has failed to do so.
The rectification order is simply making it a typographical mistake but the assessee has made clear in application u/s.154 of the Act that it is a typographical mistake but the very applicability of section 269SS in assessee’s case will not/should not have been applied.
Thus, the rectification while giving the scope of 69A has not taken into any evidences as regards credibility of the loan, the source of the fund of the loan, identity of the parties for which the details are required and merely on the basis of PAN, voter card, form no. 16 and Addhaar card of the details of depositors will not suffice the said addition. These inquiries and verifications have not been done by the AO while making the said single line observation in the rectification order. These aspects were totally ignored by the CIT(A).
Thus, it will be appropriate that whether the applicability of section 69A is justifiable or not in assessee’s case and whether the assessee proves the nomenclature of unsecured loan and its proper demarcation in his profit and loss account, we are directing the AO to verify the same after calling upon the evidences to that effect. Needless to say, the assessee be given opportunity of hearing by following the principles of natural justice. Thus, is partly allowed for statistical purposes.
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2024 (5) TMI 855 - CESTAT AHMEDABAD
Exemption from Customs Duty - Import of HDPE Granules - mixing of minor quantity of Hexane - Notification 21/2002 and subsequently Notifications denied by the revenue, only on the ground that the HDPE imported by the appellant is chemically modified and the exemption is available only for the compounded HDPE - HELD THAT:- Following the order of Tribunal in Vikram Plasticizers [2023 (7) TMI 1068 - CESTAT AHMEDABAD], it can be seen that the very identical issue has been considered by this Tribunal and came to conclusion that by mere addition of small quantity of other chemical in the HDPE, the characteristic of HDPE does not get altered and the same remained as HDPE only. Once the product is HDPE even though the modified with miniscule quantity of other chemical it clearly falls under the exemption entry provided under Notification No. 12/2012-Cus dated 17.03.2012, therefore, in our considered view, the appellants import of HDPE even though modified clearly covered under the exemption notification No. 12/2012-Cus dated 17.03.2012 and other analogous notifications. Therefore, the impugned orders are set aside and appeals are allowed.
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2024 (5) TMI 854 - ITAT PUNE
Grant of approval u/s. 80G(5) - denial of approval as application was not filed within six months from the date of grant of provisional approval - as per DR in the absence of power to condone the delay the statutory authority cannot condone the delay - HELD THAT:- Tribunal constituted under the provisions of Income Tax Act, 1961 is not a Court but a Tribunal unless there is express power conferred by the said Act to condone the delay or exclude any period of limitation, the Tribunal would not be clothed with the power to condone the delay. It is trite law that in the absence of any conferment of power by the statute, the Tribunal cannot condone the delay in filing the application in Form 10AB.
Thus, the ld. CIT, Exemption had rightly denied the grant of approval u/s. 80G(5) by placing reliance on the judgment in the case of State of UP Vs. Harish Chandra [1996 (4) TMI 519 - SUPREME COURT OF INDIA] as well as Union of India Vs. Kirloskar Pneumatic Co. Ltd. [1996 (5) TMI 87 - SUPREME COURT]
In view of the above legal position, the ld. CIT, Exemption, Pune is justified in denying grant of approval u/s. 80G(5) - Assessee appeal dismissed.
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2024 (5) TMI 853 - ITAT PUNE
STCG - Addition u/s 50C - taxing the difference between govt. valuation and actual sale consideration - contention of assessee that due to the location of the property the assessee was compelled to sell the property below the guide line value - as argued impugned land located near river bank was vulnerable to floods, it was situated near cremation ground and did not have any approach road and hence, its fair market value was only around Rs. 8,00,000 therefore, the addition made u/s 50C was not justified - HELD THAT:- We find that the appellant assessee requested to allow the deduction of cost of the land sold & also disputed the determination of fair market value of the land sold on the basis of guide line value of stamp duty before LD CIT(A)/NFAC, but he has not bothered to refer the matter to the valuation officer in the light of section 50C(2) of the IT Act, but only directed the AO to allow the cost of the land sold for the purposes of calculation of short term capital gain. It was the
We find force in the contention of assessee that to overcome such situation in section 50C, an option is given to the assessee to object determination of fair market value on the basis of guide line value of stamp duty for the purposes of registration of the property & in such a case the AO is bound to refer the matter to the DVO. In the instant case the AO passed ex-parte order & therefore the request was made before LD CIT(A)/NFAC which was wrongly denied.
Therefore, now we deem it proper to set-a-side the order passed by both the subordinate authorities & remand the matter back to the file of the AO to refer the matter to the valuation officer for the purposes of section 50C of the IT Act - AO will refer the matter to the DVO for determining the fair market value of the land sold & pass the order as per law in the light of report of the DVO after providing reasonable opportunity of being heard to the assessee. We order accordingly. Ground of appeal raised by the assessee is allowed for statistical purpose.
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2024 (5) TMI 852 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , PRINCIPAL BENCH , NEW DELHI
Dismissal of application filed under Section 7 of the Insolvency and Bankruptcy Code, 2016 - CIRP - no relationship of financial creditor and the corporate debtor - no transaction in the nature of financial debt between the parties - no privity of contract between the parties - HELD THAT:- It is not in dispute that the Appellants had advanced the loan to PHPL and not to Respondent. There is no privity of contract between the parties. PHPL failed to return the money taken as loan from the Appellants - It was provided in clause 35 of the sale deed that the vendee shall pay to the confirming party and it is mentioned in so many words in the sale deed that the money has already been paid by the vendee to the confirming party but the allegation of the Appellants is that the said money has not been paid to them by the vendor.
In such circumstances, it is not a case which would fall within the provisions of the Code to trigger CIRP, invoking Section 7 of the Code and therefore, the Tribunal has rightly dismissed the application, however, liberty has been granted to the Appellants to pursue his other remedy for the purpose of recovery. It would also be not out of place to mention that the regime of the Code is not for recovery but for the resolution of debt by maximisation of the asset and to bring the CD on its own feet. Therefore, not only Respondent was dragged in the litigation at the instance of the Appellants before the Tribunal but also in this appeal in which no case is made out at all.
The present appeal is hereby dismissed.
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2024 (5) TMI 851 - ITAT BANGALORE
Exemption u/s. 80P(2)(a)(i) - deduction was claimed in respect of the amount of profits attributable to the activity of providing credit facilities to its members - AO disallowed the entire claim as the assessee had not earned investments from its members of the society but also from general public and in respect of the interest income of co-operative society, the disallowance was made by holding that the claim is not found to be eligible for deduction u/s. 80P(2)(d) and therefore treated the same as income from other sources.
HELD THAT:- We note that the disallowance has been made in the hands of the assessee as assessee was also having nominal members from whom deposits were taken and credit facilities were provided. In respect of associate/nominal members, in the case of Mavilayi Service Cooperative Bank Ltd [2021 (1) TMI 488 - SUPREME COURT] has held that the expression "Members" is not defined in the Income-tax Act. Hence, it is necessary to construe the expression "Members" in section 80P(2)(a)(i) of the Act in the light of definition of that expression as contained in the concerned co- operative societies Act.
As held in UP CO-OPERATIVE CANE UNION FEDERATION LIMITED [1997 (1) TMI 7 - SUPREME COURT] definition of 'member' under the Kerala Act, loans given to such nominal members would qualify for the purpose of deduction u/s 80P(2)(a)(i) - Grounds raised by the assessee stands allowed.
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2024 (5) TMI 850 - ITAT INDORE
Addition on the basis of declaration made by assessee during a search action u/s 132 - Addition on account of difference in amount declared u/s 132(4) and amount shown in returns of income - declaration basically related to unaccounted sales, which has already declared by the assessee and some part separately added in income - HELD THAT:- We find no merit in the arguments of revenue because of the simple reason that there appears no evidence for the impugned addition made by AO except the assessee’s statement during search forming basis of the impugned addition.
Perusal of statements recorded u/s 132(4) duly extracted by AO in assessment-order itself that the assessee surrendered a figure of Rs. 5,00,00,000/- and that too in his own hands as well as family member’s hands while agreeing to give year-wise/assessee-wise chart subsequently. Thus, the figure of Rs. 5,00,00,000/- cannot be said to be a final figure, it is in the nature of lump sum, an ad hoc figure. The assessee is very much entitled and justified to do homework after search and arrive at a correct figure for offer in return. Had the correct figure been higher than surrender, the AO would have been entitled to assess more and if it is lower, the AO must assess only lesser amount. This is for the reason that under the scheme of Income-tax, only correct income has to be taxed.
We find that the CBDT instruction dated 10.03.2003 is clearly placing restrictions in stricter terms at both levels, namely (i) while recording statements during the course of search/survey, no attempt should be made by search/survey authorities to obtain confession as to the undisclosed income, and (ii) while framing assessment, the AO should rely only upon the evidence/material gathered during the course of search/survey. Further, various judicial rulings of different courts, as filed by Ld. AR in Case Law Paper-Book, also carry a view that no addition can be made on the basis of mere surrender made during survey/search unless the same is corroborated by some tangible evidence.
We thus find no merit in the addition made by revenue authorities after appreciation of the factual matrix of present case in the light of CBDT Instruction as well as judicial rulings quoted at the behest of assessee. Resultantly, we are inclined to delete the addition made/ upheld by lower-authorities - Decided in favour of assessee.
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2024 (5) TMI 849 - CESTAT AHMEDABAD
Reversal of accumulated Cenvat credit under Rule 11 (3) of Cenvat Credit Rules, 2004 - lapse of accumulated unutilized Cenvat credit balance by availing N/N. 30/2004-CE in terms of Rule 11 (3) of Cenvat Credit Rules, 2004 - manufacture of excisable goods texturized polyester yarn falling under 5402 of the first schedule of tariff act, 1985 and is availing Cenvat credit under Cenvat Credit Rules, 2004 - HELD THAT:- From the Rule 11 (3) (ii) it can be seen that the provision of lapsing of credit is applicable only in the case where the assessee avails the absolute exemption notification. In the present case, the respondent has admittedly availed the exemption Notification No. 30/2004- CE - the Notification No. 30/2004-CE is not absolute notification but is it is a conditional one. Therefore, the provision of lapsing of the accumulated unutilized credit as provided under Rule 11 (3) (ii) of Cenvat Credit Rules, 2004 is not applicable in the facts of the present case.
This issue has been considered time and again in various judgments. This Tribunal in the case of Welspun India Ltd [2023 (8) TMI 177 - CESTAT AHMEDABAD] where it was held that 'the appellant is neither liable to reverse the accumulated Cenvat credit of ADE (T&TA) nor the demand of the same is sustainable.'
Thus, it was held that the assessee is not required to reverse the accumulated Cenvat credit under Rule 11 (3) of Cenvat Credit Rules, 2004 when the conditional notification is availed.
The order passed by the Learned Commissioner (Appeals) is legal and correct and does not require any interference there in - the impugned order is upheld - Revenue’s appeal is dismissed.
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2024 (5) TMI 848 - ITAT DELHI
Assessment u/s 153A - Unexplained money u/s 69A - HELD THAT:- As decided in the case of Kabul Chawla [2015 (9) TMI 80 - DELHI HIGH COURT] that in case where the assessment of an assessment year stood concluded at the time of search and remains unabated, the additions and disallowances are permissible in Section 153A proceedings only qua incriminating material found in the course of search.
In the instant case, no incriminating material was found during the search and referred in the assessment order and hence the AO is not entitled to make additions in such completed/unabated assessments. We declined to interfere with the findings of the CIT(A). The appeal by the Revenue is dismissed
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2024 (5) TMI 847 - CESTAT CHANDIGARH
Non-payment of service tax - certain reimbursements made to the foreign entities for the services received under Reverse Charge Mechanism - Classification of services - Royalty paid by Baxter India to Baxter Healthcare Inc., USA - classifiable under 'Franchise Services' or under 'Intellectual Property Services'? - Non-payment of service tax on networking charges and technical services.
Non-payment of service tax - certain reimbursements made to the foreign entities for the services received under Reverse Charge Mechanism - HELD THAT:- The appellant is rendering services to their overseas entities. Though, the services are performed in India, the beneficiary of the services is abroad and the payment for the same is coming to the appellants along with the reimbursed expenses; therefore, in view of the Circular No.111/05/2009-ST dated February 04, 2009, the services qualify to be export of services in view of the Export of Service Rules as the service is used outside India.
The Tribunal has held similarly in the case of CCE & ST Vs Glaxo SmithKline Pvt. Ltd. [2023 (10) TMI 998 - CESTAT CHANDIGARH] and Arcelor Mittal Stainless India Pvt. Ltd. [2023 (8) TMI 107 - CESTAT MUMBAI-LB].
Classification of services - Royalty paid by Baxter India to Baxter Healthcare Inc., USA - classifiable under 'Franchise Services' or under 'Intellectual Property Services'? - HELD THAT:- The activity of the appellants as seen from the Agreement is not in the nature of Management Consultancy Services; though, at some places, the word “Advice” is used; on going through the terms of the Agreement, it will be clear that this is in the nature of giving or passing on of information rather than giving a management advice. It is found that the appellants are providing various information which is available in India to M/s Baxter, Singapore. The contentions of the appellants are correct. Moreover, as contended by the appellant, classification of service does not matter as long as they are exported. There is no such averment on the part of the Revenue that the services are not exported - It is clear from the Agreement that it is a license to use the ‘Intellectual Property Rights’ but not a ‘Franchise Agreement’. There is no mention of grant of Representational Right so as to fall under the category of ‘Franchise’. Therefore, the Department has not made out any on this issue also.
Non-payment of service tax on networking charges and technical services - HELD THAT:- The appellant submits that service tax on the Reverse Charge Mechanism is not payable prior to 18.04.2006. It is found that the submission is acceptable as per the ratio of the judgment in Indian National Ship Owner’s Association and CST Delhi v. Sojitz Corporation [2022 (11) TMI 48 - SUPREME COURT]. Similarly, the appellant’s plea on the non-payment of service tax on reimbursement made by the appellant for certain receipt of services is acceptable. The appellant submits that these services are performance-based services and are performed outside India; the expenditure incurred by them in holding medical conferences abroad and attended by Indian doctors is reimbursed by their overseas entities - the learned Commissioner takes a long-drawn argument that the doctors after attending the conference come back to India and products whose quality has been tested abroad by the doctors are sold in India and therefore the same should form part of the assessable value. This conclusion is not agreed upon for the reason that service tax is not on expenses but is on that portion of the expenses which are paid for the services received.
The impugned order is not sustainable - appeal allowed.
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2024 (5) TMI 846 - CESTAT CHANDIGARH
Customs broker - Revocation of License - forfeiture of security deposit - Penalty - Subletting of licence - Smuggling of red sanders - Show-Cause Notice - Non-grant of opportunity to cross examine - Violation of various provisions of Regulations of CBLR, 2018 - HELD THAT:- We find that there is evidence to show that the appellant was very casual in his approach in transacting the work related to custom broker. We find that there are some inadequacies in the working of the appellant as far as the work of custom broker is concerned. We find that the custom broker vide his statement dated 04.04.2022 has accepted his fault. It is evident that the customs broker neither conducted the business personally nor through an authorized representative duly approved by customs; the custom broker shared his password with unauthorized persons and sublet his license for pecuniary benefit; he accepted that Shri Manish Kumar Shrivastav uploaded the documents in the icegate and that he has not authorized anyone; during his meeting with Shri Manjeet Singh he was offered many clients in lieu of the license; Shri Manish Kumar Shrivastav assured him to pay Rs. 20,000/- per month; Shri Manjeet Singh in fact paid Rs. 15,000/- for the renewal of the license; the custom broker got two lakhs for allowing four persons to represent his firm; he received all the payments from AS clearing belonging to Shri Manjeet Singh.
We find that the appellant custom broker has allowed his license to be used by unauthorized persons for pecuniary gains. We find that such a casual behavior by the appellant is certainly breach of the trust reposed on the custom broker by the department. Any continuation of the license would have been detrimental to the interest of the revenue and the exporters. Therefore, we hold that the revocation of license has been correctly done. However, having said so we are of the considered opinion that the penalty imposed should be commensurate with the omission or commission. We find that revocation of license itself is enough punishment in such cases. As the security deposit is ordered to be forfeited imposition of penalty of Rs. 50,000/- is not warranted. We are inclined to reduce the same to Rs. 10,000/-.
Thus, the appeal is partly allowed to the extent of reducing the penalty, imposed under regulation 18 read with regulation 14 [of CBLR, 2018, to Rs. 10,000/-; revocation of license and forfeiture of security deposit is however upheld.
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2024 (5) TMI 845 - ITAT CHENNAI
Assessment u/s 144C - Period of limitation - whether assessment proceedings are barred by limitation? - verification, if any, had to be conducted by AO, he has to do so within the time line given [viz within one month from the end of the month of receipt of the DRP direction] - HELD THAT:- As per sub-section (13) of section 144C of the Act, upon receipt of the directions under sub-section (5) from DRP, the AO shall inconformity with the directions of the DRP, complete the assessment without providing any further opportunity of being heard to the assessee within one month from the end of the month in which such direction is received.
As relying on M/s.Taeyang Metal India Pvt. Ltd [2024 (3) TMI 153 - MADRAS HIGH COURT] we hold that the final assessment order passed by the AO/DCIT, Corporate Circle-1(2), Chennai, dated 21.11.2017 for AY 2013-14 in the case of the assessee was barred by limitation and therefore, passed wholly without jurisdiction and therefore, null in the eyes of law andtherefore, we quash the impugned assessment order. Assessee appeal allowed.
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2024 (5) TMI 844 - SUPREME COURT
Legality and validity of the order of termination of the arbitral proceedings under clause (c) of subsection (2) of Section 32 of the Arbitration and Conciliation Act, 1996 - abandonment of claim filed before the learned Arbitrator - HELD THAT:- It is held and concluded as follows:
a. The power under clause (c) of subsection (2) of Section 32 of the Arbitration Act can be exercised only if, for some reason, the continuation of proceedings has become unnecessary or impossible. Unless the Arbitral Tribunal records its satisfaction based on the material on record that proceedings have become unnecessary or impossible, the power under clause (c) of subsection (2) of Section 32 cannot be exercised. If the said power is exercised casually, it will defeat the very object of enacting the Arbitration Act;
b. It is the Arbitral Tribunal's duty to fix a meeting for hearing even if parties to the proceedings do not make such a request. It is the duty of the Arbitral Tribunal to adjudicate upon the dispute referred to it. If, on a date fixed for a meeting/hearing, the parties remain absent without any reasonable cause, the Arbitral Tribunal can always take recourse to the relevant provisions of the Arbitration Act, such as Section 25;
c. The failure of the claimant to request the Arbitral Tribunal to fix a date for hearing, per se, is no ground to conclude that the proceedings have become unnecessary; and
d. The abandonment of the claim by a claimant can be a ground to invoke clause (c) of subsection (2) of Section 32. The abandonment of the claim can be either express or implied. The abandonment cannot be readily inferred. There is an implied abandonment when admitted or proved facts are so clinching that the only inference which can be drawn is of the abandonment. Only if the established conduct of a claimant is such that it leads only to one conclusion that the claimant has given up his/her claim can an inference of abandonment be drawn. Even if it is to be implied, there must be convincing circumstances on record which lead to an inevitable inference about the abandonment. Only because a claimant, after filing his statement of claim, does not move the Arbitral Tribunal to fix a date for the hearing, the failure of the claimant, per se, will not amount to the abandonment of the claim.
Appeal dismissed.
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2024 (5) TMI 843 - ITAT DELHI
Nature of expenses - Business Promotion Expenses & Advertisement - revenue or capital expenditure - AO considered 50% of the expenditure claimed as capital in nature - HELD THAT:- As decided in M/s. Jasper Infotech Pvt. Ltd. [2021 (12) TMI 443 - ITAT DELHI] the impugned expenses claimed by the assessee are purely revenue in nature and disallowance of 50% thereof holding it to be of capital in nature is not justified. Appeal of the Revenue is dismissed.
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2024 (5) TMI 842 - ITAT AHMEDABAD
LTCG - Addition u/s 50C - property sold by the assessee company was litigated property - difference between the valuation adopted by the Stamp Valuation Authority or that declared by the appellant - assessee in the details filed in Income Tax Return did not consider the Jantri Value in computation of gain - HELD THAT:- Issue decided in favour of assessee as relying on Bhojison Infrastructure Pvt. Ltd. [2023 (3) TMI 116 - ITAT AHMEDABAD] wherein on perusal of the records it can be seen that in the return of income in respect of land and the value as determined by the DVO is approximately 8.95% higher but less than 10%. This was never disputed or controverted by the Revenue at any point of time. As per third proviso to Section 50C brought on statute w.e.f. 01.04.2019, the Tribunal on various occasions has applied the said proviso retrospectively as the difference is less than 10% in the actual value taken than the DVO’s value. Assessee ground is allowed.
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2024 (5) TMI 841 - ALLAHABAD HIGH COURT
Validity of reassessment order - disallowance of ITC claim - purchase of various raw materials to manufacture 'Mentha Oil' - 'reason to believe' to reassess the petitioner was founded on the fact that the petitioner had sold 'Mentha Oil' in the course of export, against statutory 'Form I' issued under the Central Sales Tax Act 1956 - HELD THAT:- Plainly, ITC is not part of determination of turnover or tax liablity. On the contrary, it is an allowance that arises to certain dealers in the prescribed manner, upon fulfillment of specified circumstances. That amount may be corrected both at the instance of the assessee as also the assessing officer. Once crystallized, the allowance thus created would be adjusted against the gross tax liability that may arise against the assessee. By its very nature, ITC is different and distinct from assessment/determination of turnover. It is an allowance utilized to pay tax dues. Neither the legislature intended nor there is any warrant to otherwise reach a conclusion that computation of ITC allowance is part and parcel of procedure to assess the 'turnover of sale' or 'turnover of purchase' of goods.
Again, amount of ITC admissible has been included as part of the regular assessment that may be made.
Undeniably, Section 29(1) of the Act is the only provision that could give rise to jurisdiction to initiate reassessment proceedings. It does not include within its scope an eventuality where ITC may have been wrongly computed i.e. in excess of its entitlement. In absence of any jurisdiction vested (by the legislature), in the Assessing Officer to initiate reassessment proceedings to recompute the ITC or to disallow ITC or to RITC, there is no other principle in law available, as may allow the revenue to assume that jurisdiction - jurisdiction to reassess may never arise under Section 29 of the Act - to RITC, where purchase turnover giving rise to ITC was not first disturbed under Section 29 of the Act, for reason of it's escapement. The issue whether RITC may be done where jurisdiction may have been validly initiated, is not here.
Thus, the scheme of the Act is - the computation of correct ITC may be examined by the Assessing Authority, not later than the stage of making the regular assessment order i.e. at the stage of Section 28 of the Act. That order may remain amenable to jurisdiction of suo moto revision. Suffice to note, that jurisdiction has not arisen in the present case. Therefore, the reassessment proceedings initiated against the petitioner only to RITC was without jurisdiction.
Insofar as Section 29 of the Act did not empower the assessing authority to generally initiate the assessment proceedings on a sweeping allegation of escapement of "tax" but, on a specific allegation of escapement from assessment of any turnover of a dealer etc. based on a "reason to believe" (as discussed above), there are no merit in the objection being raised by the State that the reassessment proceedings were within jurisdiction, in this case - there was inherent and complete lack of jurisdiction to reassess the petitioner only to RITC. Also, the reassessment order was passed in complete violation of principles of natural justice. On both counts, the bar of alternative remedy is lifted, in the present facts.
Conduct of Reassessment Proceedings - Principles of Natural Justice - HELD THAT:- The court found that the reassessment proceedings were conducted in great haste, violating the principles of natural justice. The Additional Commissioner granted permission to the Assessing Officer on 18.3.2023, and the notice was issued on 22.3.2023, served on the petitioner on 24.3.2023, with the reassessment order passed on 28.3.2023. The court noted that the petitioner was not given a reasonable opportunity to respond, as only two days were provided to respond to the reassessment notice. The court held that such a procedure undermined the trust in the rule of law and was unacceptable.
The writ petition deserves and is allowed.
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2024 (5) TMI 840 - ITAT DELHI
Assessment made u/s 144 r.w.s. 142(1) OR 153C - recording of a satisfaction that the assets/documents seized belong to a person other than the person searched - HELD THAT:-As relying on Jasjit Singh [2023 (10) TMI 572 - SUPREME COURT] and RRJ Securities Ltd [2015 (11) TMI 19 - DELHI HIGH COURT] assessments made for A.Y. 2012-13 u/s 144 r.w.s. 142(1), consequent to the satisfaction note recorded ought to have been made u/s 153C of the Income Tax Act, 1961. Since, the provisions of Section 153C have not been invoked and since, the proceedings u/s 153C have not been initiated, the assessment made u/s 144 r.w.s. 142(1) is treated as void ab initio.
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2024 (5) TMI 839 - PUNJAB AND HARYANA HIGH COURT
Validity of Assessment u/s 153A - no search conducted u/s 132 and 132A as against the petitioner - authorisation issued to conduct search and seizure relating to the petitioner or not? - relevancy of panchnama as document - HELD THAT:- In the present case, we find that challenge is to the very initiation of proceedings at the initial stage; search under Section 132 of the Act and jurisdiction of the assessing officer by initiating proceedings u/s 153A of the Act which needs to be examined. The validity of initiating search proceedings cannot be examined by the Appellate Authority as is already held in Chandra Kishor Jha. [1999 (9) TMI 948 - SUPREME COURT], OPTO Circuit India Limited [2021 (2) TMI 117 - SUPREME COURT], M/s. J. M. Trading Corporation [2009 (6) TMI 988 - BOMBAY HIGH COURT] and Sarvmangalam Builders’ cases[2015 (12) TMI 1882 - DELHI HIGH COURT]
The petitioner has challenged the panchnama where its name has been entered and submits that it has already suffered search and seizure earlier resulting in an order passed under Section 153A of the Act and, therefore, proceedings again initiated under Section 153A were wholly unwarranted. The exercise of power under Section 153A based on panchnama was not available.
In the present case, we find that there is no authorisation issued to conduct search and seizure relating to the petitioner. The panchnama prepared at Gurgaon office of M3M India Limited only reflects the name of the petitioner company.
The term panchnama is not defined in the Income Tax Act. A panchnama is a document prepared in the ordinary course at a site of incident - panchnama would be a document which has to be prepared recording articles, material and objects which may be seized as incriminating documents at the time of conducting search of premises. Mentioning of the name of any company in the panchnama would only reflect that documents relating to that company were found during the search at the premises. A panchnama, therefore, cannot be treated to mean authorization issued to the authorities u/s 132.
Thus we find that the respondents were obliged to compulsorily follow the procedure for reassessment of the petitioner company in the manner as prescribed u/s 153C (1) alone and in no other manner. However, we find that the respondents have invoked and initiated proceedings u/s 153A of the Act, although neither there is any search initiated u/s 132 as against the petitioner nor it can be said that the search was conducted at its premises. Similar view has been taken in Hitesh Ashok Vaswani [2023 (11) TMI 347 - GUJARAT HIGH COURT] and Subhash Khattar’s cases[2017 (7) TMI 1091 - DELHI HIGH COURT] - Thus, the proceedings initiated under Section 153A are found to be vitiated.
When there was no search conducted u/s 132 and 132A as against the petitioner and only a panchnama reflects the name of the petitioner prepared at the registered office of M3M India Limited, the action of the respondents in passing second assessment order on 07.02.2024 on the basis of notice u/s 153A is held to be unjustified and without jurisdiction. Assessee appeal allowed.
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2024 (5) TMI 838 - CESTAT MUMBAI
Benefit of exemption - Duty Free Import Authorisations - DFIA scheme - Import of ‘saffron’/ ‘saffron pushali B’ - ‘food flavour’ and ‘food colour’ in edible goods - actual use condition and disclosure - HELD THAT:- No clarification emerges from that order to impact any of the other ‘authorizations’ impugned in this appeal. It is pertinent to note that reliance on this development strikes at the very pillar on which the impugned proceedings have been erected as none of the other ‘authorizations’ were similarly proceeded against and must be deemed, for want of similar outcome, as validated. In the light of importer being a transferee of ‘authorizations’ invalidated subsequent to its use, the detriment, flowing thereby from processing subsequent to transfer by the two entities who were issued with it, is hit by the bar of limitation in the absence of any finding that the ‘person liable to pay duty’ had been involved in obtaining of ‘authorization’ or in the exports that enabled transfer. There is no such finding and the consequence of invalidation is not only restricted to imports effected against those ‘authorizations’ but also barred from being deployed for recovery by lapse of normal period of limitation.
According to the adjudicating authority, ‘actual use’ attaches to the inputs, covered by the norms, at the time of export which is to mirrored even after the export obligation has been fulfilled and licence endorsed for transfer. Thus, it is the case of the adjudicating authority that the ‘pre-export’ entitlement remains unaltered ‘post-export’ and even after fulfillment of export obligation; impliedly, the incentive is nothing more or less than that would entitle as drawback. We have set out supra that the generality of description in ‘standard input output norms (SION)’ is intended to assist the policy objective of providing incremental incentive for export and, while that may not be entirely impossible in ‘pre-export’ importation, such possibility of alternative product being cleared in ‘post-export’ importation is not exactly not remote. The rigour of the expression ‘actual use’, to the extent inferred by the adjudicating authority, does not rule out such possibility
It is the case of the adjudicating authority that only the first aspect may be varied though neither the Foreign Trade Policy (FTP) nor the corresponding exemption notification contain anything that may suggest such limited perspective of ‘actual use’ which, with fulfillment of export obligation, implicitly and literally, does not continue to insist that the importer must deploy it in production or that it should be deployed in the very product that is specified in the authorization for domestic sale instead of being exported. There is no percentage in such insistence on one aspect of ‘actual use’, and conveniently selected, when such is not sanctioned either by the Foreign Trade Policy (FTP) or in the exemption notification without insisting on the other two aspects.
The adjudicatory jurisdiction should not have been extended beyond the contents of the authorizations which were themselves to be evaluated only in terms of claim of the appellant that ‘saffron’ is capable of use as ‘food flavour’ and ‘food colour’ which were the descriptions in the impugned authorizations. These are not disputed in the proceedings and the test of commercial viability, adopted in the impugned order, is not conceptually intrinsic to export promotion schemes in the Foreign Trade Policy (FTP) and, thus, undoing the foundation of both confiscation and recovery of duty in the impugned order.
Thus, the impugned order is set aside to allow the appeals.
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2024 (5) TMI 837 - SUPREME COURT
Money Laundering - Denial of benefit of anticipatory bail - whether power to arrest vesting in the officers of the Directorate of Enforcement (ED) under Section 19 of the PMLA cannot be exercised after the Special Court takes cognizance of the offence punishable under Section 4 of the PMLA? - order of the Court accepting bonds under Section 88 - HELD THAT:- There is no provision therein which is in any manner inconsistent with Section 205 of the CrPC. Hence, it will apply to a complaint under the PMLA. A summons is issued on a complaint to ensure attendance of the accused before the Criminal Court. If an accused is in custody, no occasion arises for a Court to dispense with the personal attendance of the accused - If the accused who appears pursuant to the summons issued on a complaint were deemed to be in custody, the lawmakers would not have provided for Section 205.
After examining the provisions of the PMLA, it is apparent that Section 88 is in no manner inconsistent with the provisions of the PMLA. Therefore, Section 88 will apply after filing of a complaint under Section 44(1)(b) of the PMLA. If Section 88 is to apply even before a summons is issued or served upon a complaint, there is no reason why it should not apply after the service of summons. A discretionary power has been conferred by Section 88 on the Court to call upon the accused to furnish bonds for his appearance before the Court. It does not depend on the willingness of the accused - when an accused appears before the Special Court under a summons issued on the complaint, if he offers to submit bonds in terms of Section 88, there is no reason for the Special Court to refuse or decline to accept the bonds. Executing a bond will aid the Special Court in procuring the accused's presence during the trial.
If a warrant of arrest has been issued and proceedings under Section 82 and/or 83 of the CrPC have been issued against an accused, he cannot be let off by taking a bond under Section 88. Section 88 is indeed discretionary. But this proposition will not apply to a case where an accused in a case under the PMLA is not arrested by the ED till the filing of the complaint. The reason is that, in such cases, as a rule, a summons must be issued while taking cognizance of a complaint. In such a case, the Special Court may direct the accused to furnish bonds in accordance with Section 88 of the CrPC.
Whether an order of the Court accepting bonds under Section 88 amounts to grant of bail? - HELD THAT:- When an accused furnishes a bond in accordance with Section 88 of the CrPC for appearance before a Criminal Court, he agrees and undertakes to appear before the Criminal Court regularly and punctually and on his default, he agrees to pay the amount mentioned in the bond. Section 441 of the CrPC deals with a bond to be furnished by an accused when released on bail. Therefore, an order accepting bonds under Section 88 from the accused does not amount to a grant of bail.
Contingency where after service of summons issued on a complaint under the PMLA, the accused does not appear - HELD THAT:- While cancelling the warrant, the Court can always take an undertaking from the accused to appear before the Court on every date unless appearance is specifically exempted. When the ED has not taken the custody of the accused during the investigation, usually, the Special Court will exercise the power of cancellation of the warrant without insisting on taking the accused in custody provided an undertaking is furnished by the accused to appear regularly before the Court. When the Special Court deals with an application for cancellation of a warrant, the Special Court is not dealing with an application for bail. Hence, Section 45(1) will have no application to such an application.
Once cognizance is taken of the offence punishable under Section 4 of the PMLA, the Special Court is seized of the matter - after cognizance of the complaint under 44(1)(b) of the PMLA is taken by the Court, the ED and other authorities named in Section 19 are powerless to arrest an accused named in the complaint. Hence, in such a case, an apprehension that the ED will arrest such an accused by exercising powers under Section 19 can never exist.
The impugned orders declining to grant anticipatory bail set aside - appeal allowed.
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