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2024 (4) TMI 1005
Cancellation of GST Registration retrospectively - closure of business - Defective Show Cause Notice - HELD THAT:- We notice that Show Cause Notice and the impugned order are also bereft of any details. Accordingly, the same cannot be sustained. Neither the Show Cause Notice, nor the order spell out the reasons for retrospective cancellation.
It is important to note that, according to the respondent, one of the consequences for cancelling a taxpayer’s registration with retrospective effect is that the taxpayer’s customers are denied the input tax credit availed in respect of the supplies made by the tax payer during such period. Although, we do not consider it apposite to examine this aspect but assuming that the respondent’s contention in required to consider this aspect while passing any order for cancellation of GST registration with retrospective effect. Thus, a taxpayer's registration can be cancelled with retrospective effect only where such consequences are intended and are warrant.
In view of the above that Petitioner does not seek to carry on business or continue the registration and an application for cancellation of registration appears to be filed, the impugned order dated 01.01.2021 modified to the limited extent that registration shall now be treated cancelled with effect from 30.04.2019 i.e., the date from which petitioner sought cancellation of GST registration.
Petition is accordingly disposed of in the above terms.
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2024 (4) TMI 1004
Validity of Order passed Ex-Parte - No opportunity of personal hearing - typographical error the on date of hearing - Violation of principles of natural justice - HELD THAT:- In the instant case, respondents decided to give petitioner an opportunity of hearing and accordingly, as per the respondents, fixed a date of 18.12.2023 for a personal appearance. Admittedly no notice for the said date was either sent or delivered to the petitioner. Consequently, petitioner was prejudiced, inasmuch as, petitioner could not be present at the time of personal hearing and the case was decided in his absence adversely. Consequently, we are of the view that the impugned order dated 28.12.2023 cannot be sustained and is liable to be set aside and the show cause notice restored on the file of the Adjudicating Authority.
Thus, the impugned order dated 28.12.2023 is set aside. The matter is remitted to the proper Officer to re-adjudicate the show cause notice in accordance with law. Petition is disposed of in the above terms.
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2024 (4) TMI 1003
Rejection of refund application - unutilised input tax credit - Without following the mandate of circular Circular No.135/05/2020 - GSTR 1, GSTR 3B and GSTR 2A returns does not match with GSTR Returns - HELD THAT:- The petitioner asserts that all relevant documents, including invoices raised by the supplier and invoices issued by the petitioner in respect of outward supplies were submitted. The respondent should have examined the application in accordance with Section 54 of applicable GST enactments, the rules framed thereunder and the Circular referred to above. Since such exercise has not been undertaken properly, the matter requires reconsideration.
Thus, the impugned order is set aside and the matter is remanded to the respondent for reconsideration. The petitioner is permitted to submit additional documents within a period of three weeks from the date of receipt of a copy of this order. Upon receipt thereof, the respondent is directed to provide a reasonable opportunity to the petitioner, including a personal hearing, and thereafter issue a fresh order within two months from the date of receipt of additional documents from the petitioner.
The Writ Petition is disposed of on the above terms. There shall be no order as to costs.
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2024 (4) TMI 1002
Validity Of Order passed u/s 73 - Proper Officer not applied his mind - excess claim Input Tax Credit [“ITC”] - demand - Penalty - HELD THAT:- Perusal of the Show Cause Notice dated 24.09.2023 shows that the Department has given separate headings i.e., excess claim Input Tax Credit [“ITC”]; scrutiny of ITC availed on reverse charge; ITC to be reversed on non-business transactions & exempt supplies; and under declaration of ineligible ITC. To the said Show Cause Notice, a detailed reply was furnished by the petitioner giving disclosures under each of the heads.
The observation in the impugned order dated 30.12.2023 is not sustainable for the reasons that the reply dated 17.10.2023 filed by the Petitioner is a detailed reply with supporting documents. Proper Officer had to at least consider the reply on merits and then form an opinion. He merely held that the reply is unsatisfactory, which ex-facie shows that Proper Officer has not applied his mind to the reply submitted by the petitioner.
Further, if the Proper Officer was of the view that any further details were required, the same could have been specifically sought from the Petitioner. However, the record does not reflect that any such opportunity was given to the Petitioner to clarify its reply or furnish further documents/details.
Thus, the impugned order dated 30.12.2023 cannot be sustained, and the matter is liable to be remitted to the Proper Officer for re-adjudication.
Petition is disposed of in the above terms.
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2024 (4) TMI 1001
Validity Of Order passed u/s 73 - cryptic order - input tax credit wrongly availed - demand - Penalty - No opportunity to clarify reply or furnish further documents/details - HELD THAT:- Perusal of the Show Cause Notice dated 30.09.2023 shows that the Department has given reasons under separate headings i.e., taxpayer has availed the more ITC as mentioned above in GSTR-3B in compression to the ITC available in GSTR-2A; short payment of tax in compression GSTR-1; and input tax credit has been wrongly availed and utilized by the taxpayer. To the said Show Cause Notice, detailed replies were furnished by the petitioner giving disclosures under each of the heads.
The observation in the impugned order dated 30.12.2023 is not sustainable for the reasons that the replies dated 26.10.2023 and 06.11.2023 filed by the Petitioner are detailed replies along with supporting documents. Proper Officer had to at least consider the replies on merit and then form an opinion. He merely held that that no proper reply/explanation has been received from the taxpayer, without dealing with the same, which ex-facie shows that Proper Officer has not applied his mind to the replies submitted by the petitioner.
the impugned order dated 30.12.2023 cannot be sustained, and the matter is liable to be remitted to the Proper Officer for re-adjudication. Accordingly, the impugned order dated 30.12.2023 is set aside and the matter is remitted to the Proper Officer for re-adjudication.
Petitioner may file a further reply to the Show Cause Notice within a period of 30 days from today. Thereafter, the Proper Officer shall re-adjudicate the Show Cause Notice after giving an opportunity of personal hearing and shall pass a fresh speaking order in accordance with law within the period prescribed u/s 75 (3) of the Act.
Petition is disposed of in the above terms.
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2024 (4) TMI 1000
Cancellation of GST registration retrospectively - limitation - Defective Show Cause Notice - No opportunity provided to object - HELD THAT:- We notice that the Show Cause Notice and the impugned order are bereft of any details. Accordingly, the same cannot be sustained. Neither the Show Cause Notice, nor the order spell out the reasons for retrospective cancellation.
It is important to note that, according to the respondent, one of the consequences for cancelling a taxpayer’s registration with retrospective effect is that the taxpayer’s customers are denied the input tax credit availed in respect of the supplies made by the tax payer during such period. Although, we do not consider it apposite to examine this aspect but assuming that the respondent’s contention in required to consider this aspect while passing any order for cancellation of GST registration with retrospective effect. Thus, a taxpayer's registration can be cancelled with retrospective effect only where such consequences are intended and are warranted.
In view of the facts that Petitioner does not seek to carry on business or continue with the registration, the impugned order dated 02.12.2022 is modified to the limited extent that registration shall now be treated as cancelled with effect from 16.10.2020 i.e., the date when Sh. Mohinder Mohan Singh passed away. Petitioner shall make the necessary compliances as required by Section 29 of the Central Goods and Services Tax Act, 2017.
Petition is accordingly disposed of in the above terms.
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2024 (4) TMI 999
Validity of an order u/s 83 - Seizure of the outward movement of funds from the bank account - Bank not permitting the operation - HELD THAT:- In view of Section 83 (2) of the Act, the life of an order of provisional attachment is only one year. In the instant case, the impugned communication is dated 14.08.2019 and a period of one year has elapsed from the issuance of the said communication. Consequently, the impugned order dated 14.08.2019 has ceased to be effective and cannot be any more implemented either by the respondents No. 1 and 2 or the HDFC Bank i.e., respondent No. 3. Accordingly, it is declared that order dated 14.08.2019 ceases to have effect. Consequently, respondent No. 3, HDFC Bank henceforth cannot restrain operation of the bank account of the petitioner based solely on the basis of order dated 14.08.2019.
Petition is accordingly disposed of in the above terms. It is, however, clarified that this order would be without prejudice to any other order of provisional attachment issued by either respondents No. 1 and 2 or any other authority communicated to the HDFC Bank. In case any such order is communicated to the HDFC Bank, the Bank shall give due credence to the same irrespective of this order.
Learned counsel for petitioner submits that petitioner has till date not been communicated any other order of attachment issued either by respondents No. 1 and 2 or any other authority and reserves the right of the petitioner to take appropriate proceedings against any order, if so communicated.
Dasti under signature of the Court Master.
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2024 (4) TMI 998
Validity Of Order-in-original - application seeking refund of tax - Period of limitation - Not fulfilled the mandate issued under circular - Payment of tax under the wrong head - HELD THAT:- In terms of the clarification issued by circular dated 25.09.2021, petitioner could have filed an application before expiry of two years from the date of payment of tax under the correct head i.e. before expiry of two years from 19.08.2019. However, the circular further clarifies that in cases where payment was made under the correct head prior to issuance of the circular, a further period of two years would be available from the date of circular, which implies that any application seeking refund filed on or before 23.09.2023 in respect of taxes paid under the correct head prior to 24.09.2021 would be considered within time.
In the subject case, petitioner filed the first application seeking refund on 11.05.2020, which was rejected on 29.06.2020 and the appeal against the said order was also dismissed on 30.06.2021 i.e. prior to the issuance of the clarification by the circular dated 25.09.2021.
After the issuance of the circular, petitioner filed a second application on 14.07.2022, which has been rejected by the order-in-original impugned before the Appellate Authority whose order is impugned before us.
Clearly, both the refund applications filed by the petitioner (one on 11.05.2020 and other on 14.07.2022) are covered by the circular dated 25.09.2021 and were within limitation. Consequently, the Appellate Authority has committed an error in not noticing the said circular and rejecting the appeal holding that the application was beyond time. Accordingly, said order is not sustainable and is set aside. The appeal is restored to its original number on the record of the Appellate Authority. The Appellate Authority is directed to consider and dispose of the appeal on merits in accordance with law.
Petition is allowed in the above terms.
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2024 (4) TMI 997
Validity of adjudication order - without any application of mind - Rejection of application seeking refund - Show Cause Notice issued by an incompetent officer - HELD THAT:- We are of the view that the course adopted by the Appellate Authority is not sustainable for the reason that once the Appellate Authority comes to the conclusion that the Show Cause Notice was issued by an officer who was not competent; reply was also considered by an incompetent authority and the Competent Authority had not applied its independent mind, the Appellate Authority could not have assumed original jurisdiction and proceeded further with the matter. The Appellate Authority could have only quashed the Show Cause Notice and the proceedings emanating therefrom while reserving the right of the Proper Officer to initiate appropriate proceedings in accordance with law.
In view of the above and particularly in view of the fact that the course adopted by the Appellate Authority is not acceptable in law, the impugned order dated 17.04.2023 is set aside to the extent that it decides the claim of the petitioner on merits. The finding returned by the Appellate Authority that the Show Cause Notice has been issued by an incompetent authority and the adjudication order has been passed without any application of mind are not interfered with. The sequitur to that is that the Show Cause Notice dated 25.11.2021 adjudication order dated 14.12.2021 are not sustainable in law and are consequently set aside.
Petition is allowed in the above terms. The appropriate authority shall consider the application of the petitioner seeking refund for the period April, 2022 to June, 2022 expeditiously in accordance with law.
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2024 (4) TMI 996
Cancellation of GST Registration retrospectively - Defective Show Cause Notice - No opportunity for personal hearing - HELD THAT:- We notice that Show Cause Notice and the impugned order are also bereft of any details. Accordingly, the same cannot be sustained. Neither the Show Cause Notice, nor the order spell out the reasons for retrospective cancellation.
It is important to note that, according to the respondent, one of the consequences for cancelling a taxpayer’s registration with retrospective effect is that the taxpayer’s customers are denied the input tax credit availed in respect of the supplies made by the taxpayer during such period. Although, we do not consider it apposite to examine this aspect but assuming that the respondent’s contention in required to consider this aspect while passing any order for cancellation of GST registration with retrospective effect. Thus, a taxpayer's registration can be cancelled with retrospective effect only where such consequences are intended and are warrant.
In view of the fact that the Petitioner does not seek to carry on business or continue the registration and since no application for cancellation of registration appears to have been filed, the impugned order dated 27.12.2021 is modified to the limited extent that registration shall now be treated cancelled with effect from 02.09.2021 i.e., the date of the issue of the Show Cause Notice.
Petition is accordingly disposed of in the above terms.
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2024 (4) TMI 995
Validity Of Order passed u/s 73 - demand in respect of denial of ITC to the petitioner with respect to the suppliers whose GST registration has been cancelled retrospectively - Denial of the right of cross-examination - Refund of coercive deposit of Rs 20 Lakhs during search and survey proceedings - HELD THAT:- Denial of the right of cross-examination can cause grave and serious prejudice to an entity. In the instant case, the proper officer has himself noticed that the proper officer has intended to summon the said person, however on account of paucity of time declined to do so. Such a course cannot be countenance for the same caused grave prejudice to the person against whom the said statement or document is sought to be relied upon.
Accordingly, in view of the fact that the proper officer himself intended to summon the said witnesses, however did not do so on account of paucity of time, the impugned order to the limited extent, of the denial of input credit tax in respect of cancelled dealers, cannot be sustained and is accordingly set aside. The Show Cause Notice is remitted to the proper officer for re-adjudication on the said aspect after summoning the said dealers/suppliers for the purpose of cross examination and giving an opportunity of hearing to the petitioner.
Since the contention of the petitioner is that the deposit was not voluntary and was under coercion and a request for refund was made to the proper officer, the proper office should have considered the same in accordance with law. Accordingly, while reconsidering the issue with regard to denial of input tax credit for cancelled dealer, the proper officer shall also consider the request of the petitioner for refund of the said amount of Rs. 20 lacs in accordance with law keeping in view the various pronouncements rendered by this Court with regard to involuntary deposit.
It is clarified that this Court has neither considered nor commented upon the nature of deposit made by the petitioner i.e. as to whether the same was voluntary or involuntary and also with regard to the contention of the respondent that even if the amount is held to be an involuntary deposit, the same is liable to be adjusted against a demand that is liable to be created against the petitioner.
All rights and contentions of the parties are left open.
Petition is accordingly petition is allowed in the above terms with a limited order of remit to the proper officer as noticed hereinabove.
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2024 (4) TMI 994
Cancellation of the GST registration retrospectively - Defective Show Cause Notice, not specify any cogent reason - No opportunity of personal hearing - HELD THAT:- It may be noticed that the Show Cause Notice dated 01.02.2023 and the impugned order dated 10.02.2023 are also bereft of any details. On the same identical ground a showcase notice was issued on 19.02.2020 and registration cancelled on 16.03.2020. Thereafter the same was revoked by order dated 30.01.2023 and immediately thereafter another notice has been issued within two days on the same ground. There is no reference to the earlier proceedings or any change in circumstances. Accordingly, the Show Cause Notice dated 01.02.2023 and the impugned order dated 10.02.2023 cannot be sustained and they also do not spell out the reasons for retrospective cancellation.
It is important to note that, according to the respondent, one of the consequences for cancelling a taxpayer’s registration with retrospective effect is that the taxpayer’s customers are denied the input tax credit availed in respect of the supplies made by the tax payer during such period. Although, we do not consider it apposite to examine this aspect but assuming that the respondent’s contention in required to consider this aspect while passing any order for cancellation of GST registration with retrospective effect. Thus, a taxpayer's registration can be cancelled with retrospective effect only where such consequences are intended and are warranted.
In view of the fact that Petitioner does not seek to carry on business or continue under the said registration, the impugned order dated 10.02.2023 is modified to the limited extent that registration shall now be treated as cancelled with effect from 19.02.2020 i.e., the date of issuance of the first Show Cause Notice. Petitioner shall make the necessary compliances as required by Section 29 of the Central Goods and Services Tax Act, 2017.
It is clarified that Respondents are also not precluded from taking any steps for recovery of any tax, penalty or interest that may be due in respect of the subject firm in accordance with law including retrospective cancellation of the GST registration after giving a proper show cause notice and an opportunity of hearing.
Petition is accordingly disposed of in the above terms.
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2024 (4) TMI 993
Demand of late fee u/s 47(1) of the CGST / SGST Act - delay in filing of returns - Amnesty Scheme - GST portal does not support payment of late fee for late filing GSTR-9C - date of filing of the GSTR-9C - HELD THAT:- From the reading of the amended Section 44, it would be relevant to note that two key changes have been made by the Finance Act, 2021 with effect from 01.08.2021 i.e Section 35(5) CGST / SGST Act stands omitted, Section 44 of the CGST / SGST stands substituted. Form GSTR-9C becomes applicable to taxpayers with an annual aggregate turnover of more than Rs. Five Crores. CA/ CMA certification stands removed from financial years 2020-2021. With effect from 01.08.2021, taxpayers are now required to self-certify a voluntary reconciliation statement and file it with the tax authorities on or before 31st December of the year following the relevant financial year. The format of Form GSTR-9C has been modified to support self-certification. It is evident from amended Section 44 which provides that the taxpayer “shall furnish an annual return which may include a self-certified reconciliation statement,… with the audited annual financial statement.”
It is not in dispute that the GST portal does not support payment of late fee for late filing GSTR-9C. The GST portal enables to charge late fee for GSTR-9 only. The other returns for which the late fee is collected are GST 3B (monthly return) GSTR 4 (annual return of composition levy) GSTR-5 (return for non-resident taxable person), GSTR-5A (summary return reporting OIDAR service from outside India made to non-taxable persons in India), GSTR-6 (monthly return by input service distributor), GSTR-7 (returns for persons deducting TDS), and GSTR-8 (monthly returns for e-commerce operators). Annual return GSTR-9 filed without 9C may be deficient attracting general penalty. However, late fee cannot be made applicable for regularising the GSTR-9 by filing GSTR-9C.
The Government itself has waived late fee under the two notifications Nos. 7/2023 dated 31.03.2023 and 25/2023 dated 17.07.2023 in excess of Rs. 10,000/-, in case of non-filers there appears to be no justification in continuing with the notices for non-payment of late fee for belated GSTR-9C, that too filed by the taxpayers before 01.04.2023, the date on which one time amnesty commences.
Thus, the notices are unjust and unsustainable to the extent it sought to collect late fee for delay in filing GSTR-9C. However, it is made clear that the petitioners will not be entitled to claim refund of the late fee which has already paid by them over and above Rs. 10,000/-
With aforesaid directions, all these writ petitions stand allowed.
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2024 (4) TMI 992
Input tax credit - transitional credit - Unutilized amount of Advanced VAT paid - transitional arrangements for input tax credit - Section 140 of the CGST / Telangana GST Act, 2017 - HELD THAT:- If the amount of advance tax had remained un-utilised under the VAT or under the TNVAT Act, 2006, it has to be allowed to be transitioned u/s 140 of the TNGST Act 2017. The language of Section 140 (1) of the TNGST Act, 2017 makes it clear that any amount of Value Added Tax and Entry Tax remaining un-utilized in the return shall be allowed to be transitioned and such a registered person is entitled to take credit of such amount in his electronic credit ledger.
Therefore, there is no scope for denying such amount which was transited u/s 140 of the TNGST Act, 2017. Thus, no reasons to sustain the impugned order. Therefore, the impugned order passed by the respondent in GSTIN stands quashed.
Accordingly, the Writ Petition stands allowed. No costs. Consequently, the connected miscellaneous petition is closed.
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2024 (4) TMI 991
Reopening of assessment u/s 147 - new notice issued rather than orders to be passed u/s 148A(d) - validity of the AO’s action in issuing the notice dated 23rd June 2022 - Whether contents of notice dated 23rd June, 2022 is distinct from the ‘reasons to believe’ dated 27th March, 2021? - As decided by HC [2022 (9) TMI 105 - DELHI HIGH COURT] a perusal of the notice dated 23rdJune, 2022 and impugned order dated 22nd July, 2022 shows that as per the AO the details of the transaction which form the basis of the notices dated 19th April, 2021 and 23rd June, 2021 are same. Pertinently, the petitioner has not offered any explanation for the transaction(s) entered with M/s Subhshree Financial Management Pvt. Ltd. Limited in the relevant financial year in her reply dated 27th June, 2022. In the absence of any explanation offered in her reply, we do not find any error in the impugned order issued by the AO.
HELD THAT:- The learned counsel for the petitioner submits that the prayer in the petition is not pressed at this stage since relief has already been obtained by the petitioner. The question of law, if any, is however left open for consideration.
The special leave petition and applications, if any, are accordingly disposed of as infructuous.
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2024 (4) TMI 990
Validity of Reassessment notices issued unsigned - maintainability of writ petition against this issue in HC - According to petitioner, absence of a signature on the impugned notice is a substantial defect and afflicts the impugned notice with manifest illegality and this defect is incurable - HELD THAT:- It is true that without the reasons to believe escapement of income, petitioner would not be able to file its objections to the notice issued under Section 148 of the Act. It is also true that this stand of illegality of the notice has been taken for the first time in the petition. In the two communications sent by petitioners' Chartered Accountant this stand has not been taken. We would hasten to add we are not giving any decision on waiver or estoppel.
We are only saying that against the notice petitioner has straight away approached this Court without even complying with the requirements stated by the Hon’ble Apex Court in GKN Driveshafts (India) Ltd. [2002 (11) TMI 7 - SUPREME COURT]. In our view, petitioner should have, on the basis of the ratio laid down by the Hon’ble Apex Court in GKN Driveshafts (India) Ltd. (Supra), filed return of income and then sought reasons for issuing the notice. In response, the Assessing Officer was bound to provide the reasons within a reasonable time. On receipt of reasons, petitioner was entitled to file objections and the Assessing Officer was bound to dispose the same by passing a speaking order. Therefore, in our view, this is not a fit case to exercise our jurisdiction under Article 226 of the Constitution of India in view of petitioner not complying with the ratio laid down by the Hon’ble Apex Court in GKN Driveshafts (India) Ltd. (Supra).
Petitioner may file objections to the impugned notice dated 26th March 2012 together with the return of income within four weeks from today. In the objections to be filed, petitioner may raise all defences including those raised in this petition. The Assessing Officer shall dispose the objections but before disposing the same, shall give a personal hearing to petitioners, notice whereof shall be communicated atleast five working days in advance. The order disposing objections shall be a reasoned order dealing with all objections and if the Assessing Officer intends to rely on any judgments/orders of any Court or Tribunal, a list thereof shall be made available with the notice for personal hearing so that petitioner will be able to deal with/distinguish the same. Thus without expressing any view on the merits of the matter, petition dismissed.
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2024 (4) TMI 989
Unexplained cash credit u/s 68 - non-establishment to prove the creditworthiness or the genuineness of a transaction - all investor companies are group companies - ITAT deleted the additions - HELD THAT:- CIT(A) has made an elaborate exercise to assess the creditworthiness of the investor companies as well as the genuineness. All the investor companies are group companies and the directors are closely related to the director of the assessee company and the director Mr. Agarwala himself is one of the directors in one of the investor companies, therefore, on a deeper scrutiny of the factual position would show that the investor company did not have a genuine creditworthiness and consequently the transaction has to be held to be not genuine. - As held earlier certificate of incorporation of the companies, payment by banking channel etc. cannot tantamount to satisfactory discharge of onus and the facts of the case on hand speaks for itself as it is obvious. Thus, the principle of Preponderance of Probabilities applies with full force to the case on hand which leads to the irresistible conclusion that the finding rendered by the CIT(A) is legal and valid.
The assessee in their submission contended that their business activity has increased considerably and for the purpose of expansion funds were required and therefore the assessee raised funds from various means, increment in share capital from associates being one of them. The fact clearly demonstrates that the source of the funds which have flown into the account of the assessee have substantially come from one company namely Gainwell Textrade Private Limited and the said company had contributed to the other companies and the funds transferred to those companies were transferred to the assessee company invariably on the same day leaving a bank balance which was almost negligible and the bank statements reveal that the prior to the inflow of the funds into those investing companies, the bank balance was negligible and after the transfer it was also negligible.
The assessee had contended before the tribunal that the amount was credited through proper banking channels and the investing companies are body corporate registered with the Registrar of Companies and individually assessed to income tax and therefore the genuineness of the parties is beyond doubt. However, this is not the litmus test to discharge the burden on the assessee to establish creditworthiness of the investing companies as well as the genuineness of the transaction. Thus, we have no hesitation to hold that the explanation offered by the assessee is neither proper, reasonable or acceptable.
In Swati Bajaj [2022 (6) TMI 670 - CALCUTTA HIGH COURT] the court held that based on the foundational facts the department has adopted the concept of “working backward” leading to the assessee. The department would be well justified in considering the surrounding circumstances, the normal human conduct of a prudent investor, the probabilities that may spill over and then arrive at a decision.
Thus the CIT(A) was right in adopting a logical process of reasoning considering the totality of the facts and circumstances surrounding the allegations made against the assessee taking note of the minimum and proximate facts and circumstances surrounding the events on which charges are founded so as to reach a reasonable conclusion and rightly applied the test that a reasonable/prudent man would apply to arrive at a conclusion.
On facts we are convinced to hold that the assessee has not established the capacity of the investors to advance moneys for purchase of above shares at a high premium. The credit worthiness of those investors companies is questionable and the explanation offered by the assessee, at any stretch of imagination cannot be construed to be a satisfactory explanation of the nature of the source. The assessee has miserably failed to establish genuineness of the transaction by cogent and credible evidence and that the investments made in its share capital were genuine. As noted above merely proving the identity of the investors does not discharge the onus on the assessee if the capacity or the credit worthiness has not been established.
Thus we hold that the assessee has failed to discharge legal obligation to prove the genuineness of the transaction and the credit worthiness of the investor which has shown to be so by a “round tripping” of funds. For all the above reasons, the revenue succeeds.
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2024 (4) TMI 988
LTCG - Receipt of additional amount towards Transferable Development Rights (TDR) - treatment to receipt of consideration the appellant ceased to be the owner of the property - compensation received for settlement of dispute in respect of allotment of Flat - HELD THAT:- If the Revenue had serious doubts on the genuineness of the letter or the understanding as reflected in the letter or the intention of the parties, it should have summoned the developer to confirm the same. It does not appear that the Revenue had summoned the developer or tried to find the veracity of the letter. We should also note that admittedly the letter is signed by the developer. The genuineness of the letter is also confirmed by the fact that a substantial amount has also been paid to assessee
. As per the letter, the developer committed to assessee that if in future the developer was able to obtain additional TDR and load it on the property being developed, an extra compensation at Rs. 1000/- per sq. ft. of the TDR utilised for additional construction of floors will be paid to assessee. In our view, the development agreement dated 29th September 1992 and the commitment letter also dated 29th September 1992 should be read as one agreement. The amount paid should be considered as payment under the development agreement itself.
Assessee’s arguments that even the Government records showed assessee to be the owner of the property and there has been no transfer of the capital asset has been dismissed by the ITAT by saying that it takes time to get names changed due to which owner continued in such official records or simply the name of assessee might have continued. The agreement reflects the intention of the parties to the agreement. Neither the developer has come forward and told the Assessing Officer nor was he called to come and depose that the intentions of the parties were different from what assessee informed the Income Tax Department. Therefore, in our view, the ITAT was not correct in confirming the view of the Assessing Officer that this amount of should be treated as income from other sources.
This amount should also be treated as consideration being paid for the developmental rights entered into on 29th September 1992 and treated as LTCG to be assessed in the year the amount was received. Assessee, we are informed, has paid LTCG on this amount in Assessment Year 1997-1998.
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2024 (4) TMI 987
Validity of Assessment order u/s 147 r.w.s. 144B - Assessment challenged being in violative of the principles of natural justice - HELD THAT:- Admittedly the petitioner was initially served with a notice on 12.11.2021 asking for the books of accounts and other documents mentioned in the annexure to the said notice. Another notice was served in this regard on 20.12.2021 giving reasons for re-opening of the assessment in the case of the petitioner for the year 2014-2015 u/s 147 - However, there has not been much of the developments till 17.03.2022 when the show cause notice was abruptly issued and the entire proceedings stood concluded within a period of less than fifteen (15) days time.
From the pleadings and documents and also the submissions made by Standing Counsel for the Income Tax Department, what also is not very clear is, whether after the reply which the petitioner had submitted on 19.03.2022, the respondent authorities did they ever issue any show cause notice to the assessee for any further proceedings drawn beyond the reply to the show cause notice which the petitioner had already filed. There is no proof of any notice of personal hearing or any other hearing calling upon the petitioner to personally make his submissions.
The presumption drawn by the petitioner for it to be a notice u/s 144C cannot be doubted. Another aspect which needs to be considered is that for the assessment year 2014-2015, the show cause notice was issued on 17.03.2022 and the time limit for response was up till 20.03.2022. This duration was too short a period, particularly, when the explanation and details have been sought of an assessment year about seven to eight years old. Thereafter, vide notice dated 21.03.2022 the authority concerned extended the period by another two days. Now there is no proof when these notices issued on 21.03.2022 extending the period from 21.03.2022 to 23.03.2022 have been effectively served upon the petitioner or not. Meanwhile, the petitioner did gave his reply on 19.03.2022 before the authority concerned.
No hesitation in reaching to the conclusion that the proceedings drawn by the respondent authorities apparently seems to be in a hasty manner without a reasonable opportunity being given to the petitioner. Thus, the impugned order therefore to the aforesaid extent is set aside/quashed. Since the impugned order is being quashed on the technical ground of fair opportunity not being provided, the matter stands remitted back to the authority concerned who in turn after hearing the petitioner may proceed and decide strictly in accordance with law without any further delay. WP stands allowed.
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2024 (4) TMI 986
Condonation of delay - substantial delay of 166 days before ITAT - as argued the assessment order was passed by the A.O on 16.12.2018 and was issued on 29.12.2018 without any reasons for keeping the same with him, reasons recorded under Section 148(2) of the Act were not supplied to the assessee by the A.O and appeal of the assessee was dismissed by the CIT(Appeals) vide an ex-parte order dated 29.03.2023 etc.
HELD THAT:-. Under section 69A of the Act, what is provided is that if an assessee is found to be the owner of any money, jewellery or any other valuable articles and such money is not recorded in the books of account and fails to offer any explanation about the nature and source thereof or in case any such explanation, if offered, is not satisfactory in the opinion of the AO, then it may be deemed to be the income of the assessee for such financial year. Ultimately, therefore, it would be dependent on the nature of the explanation submitted by the assessee and the satisfaction of the AO about the acceptability thereof, which is the sine qua non for invoking the provisions contained in section 69A of the Act.
In the present case, the assessee has failed to file his return of income but had also evaded his participation in the proceedings. In absence of any plausible explanation of the assessee as regards the delay in filing of the appeal, his request for condonation of the same, when read in the backdrop of his conduct before the authorities below cannot be summarily accepted on the very face of it. There is no substance in the claim of the assessee that the delay involved in filing of the appeal was due to bonafide reasons, as the same clearly smacks of the lackadaisical conduct on his part. In the totality of the facts leading to the delay in filing of the appeal read with the conduct of the assessee appellant before the AO and the CIT(Appeals), the request of the assessee for condoning the delay involved in filing of the appeal does not merit acceptance.
As rightly relied on by the ITAT that in the case of State of West Bengal Vs. Administrator, Howrah [1971 (12) TMI 106 - SUPREME COURT] had held that the expression “sufficient cause” should receive a liberal construction so as to advance substantial justice, particularly when there is no motive behind the delay. The expression “sufficient cause” will always have relevancy to reasonableness. The action which can be condoned by the Court should fall within the realm of normal human conduct or normal conduct of a litigant.
However, as the assessee appellant in the present case is habitually acting in defiance of law, where he had not only delayed in filing of the present appeal but also had adopted a lackadaisical approach and not participated in the course of the proceedings before the CIT(A), therefore, there can be no reason to allow his application and condone the substantial delay of 166 days involved in preferring of the captioned appeal. Now, when in the present appeal the appellant / assessee had failed to come forth with any good and sufficient reason that would justify condonation of the substantial delay involved in preferring of the captioned appeal, we hereby dismiss the present appeal upholding the reasons assigned by the learned ITAT. Assessee appeal dismissed.
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