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2025 (2) TMI 702
Disallowance of a commission paid to parties u/s 37(1) - HELD THAT:- Assessee has produced the confirmation of all the parties for having received the commission and some of the parties have also confirmed to have rendered the services to the Assessee for which they have earned commission. If some of the parties have not been produced by the Assessee, the A.O. cannot be make the addition as it is the duty of the A.O. to summon such parties u/s 131 of the Act and the A.O. made no such efforts.
Though the above referred order of the Tribunal in Assessee’s own case for Assessment Year 2011-12 [2018 (3) TMI 2051 - ITAT DELHI] is of the SMC Bench, ongoing through the merit of the case, we agree with the ratio laid down there on. Appeal of the Assessee is allowed.
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2025 (2) TMI 701
Assessment framed u/s 153C r.w.s. 153A - relevant assessment years - HELD THAT:- AO of the assessee has recorded the satisfaction note on 25.09.2018. As per the provisions of section 153C r.w.s. 153A, relevant search assessment year for the other person is the assessment year in which this satisfaction note is recorded. Accordingly, the relevant search assessment year for the assessee is AY 2019-20. Accordingly, the assessment years under consideration i.e. AYs 2011-12 & 2012-13 are outside the jurisdiction of revision proceedings u/s 153A r.w.s. 153C of the Act. Accordingly, assessment orders based u/s 153A(1)(b) of the Act is accordingly quashed.
Validity of the satisfaction note recorded by the AO for initiating proceedings u/s 153C - HELD THAT:- Satisfaction recorded by the AO for the block period for AYs 2011-12 to 2017-18 to initiate the proceedings u/s 153C of the Act through which it was sought to be reopened which could ultimately be said to be unexplained addition thereon could be made. We also hold that it is undisputed fact that these documents did not establish correlation document-wise with these assessment years under consideration. The very essential element for invoking the provisions of section 153C is, therefore, found to be not present in the impugned satisfaction note prepared by the AO. Accordingly, ground raised by the assessee is allowed.
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2025 (2) TMI 700
Assessment u/s 153A - variation between the returned income and assessed income as made up of credit card payment - as alleged AO did not bother to even cross check the information so gathered from the AIR whether they were a revenue receipt in the form of profit/income fit to be added as income or there were only transactions happened during the course of time - HELD THAT:- Assessee is a salaried employee who has income from salary, capital gain and other sources. Being a salaried employee, he does not have a books of account or a fund flow statement to explain the source of payments made. We also note that the payments for HDFC Credit card are small ranging from Rs 415/- to Rs 30,000/-. The source explained are borrowings, salary, cash in hand, recovery of loan etc.
In such a situation, we are of the opinion that the CIT(A) should have examined the bank account and salary statement before rejecting the assessee’s explanation completely. Therefore, we are of the considered view that the AO/CIT(A) have not properly examined the assessee explanation for the source of payment for the HDFC and ICICI credit card.
Payment for ICICI credit card, we find that the payments ranges from Rs 1000/- to Rs 35,000/- the source of which is explained as payments out of cash in AY 2013. For AY 2014- 15, he has explained as borrowings, salary, cash in hand, recovery of loan etc. Considering the assessee being a salaried employee, without any books of account or fund flow statement, it was incumbent upon the AO as well as the CIT(A) to examine the explanation of the assessee thoroughly.
Thus, we find it expedient to remit the issue back to the file of the AO to examine the assessee explanation for the credit cards payments, with reference to his bank statement, regarding source being borrowings, salary, cash in hand, recovery of loan.
Non issue of notice u/s 143(2) - As decided in the case of Ashok Chadda [2011 (7) TMI 252 - DELHI HIGH COURT] has held that there is no requirement of issuing notice u/s 143(2) for finalization of assessment u/s 153A.
Addition as undisclosed income under the provision of section 292C, on the basis of seized material found during the course of search - HELD THAT:- The presumption u/s 292C of the Act is rebuttable presumption and when the assessee denies knowledge of the contents of the document, the onus shifts to the AO to corroborate the documents with evidence. As held in Godwin Construction Pvt. Ltd. [2023 (1) TMI 415 - ITAT DELHI] case that provisions of section 292C of the Income Tax Act is only a deeming provision and the deeming provision cannot be applied mechanically, ignoring the facts of the case and surrounding circumstances.
In the facts of the instant case, we find that there is no whisper of any examination/investigation by the AO to show that amount mentioned in the document is undisclosed income of the assessee especially considering the fact that the assessee was only a salaried employee of SVIL having income from salary, interest and capital gain.
Thus, we hold that there is failure on the part of the Assessing Officer in discharging the onus that was shifted towards him by the assessee, of conducting further investigation into the seized documents and link it with the assessee. No addition of the impugned amount is called for and we direct the deletion of the additions made by AO and upheld by CIT(A).
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2025 (2) TMI 699
Denial of Foreign Tax Credit (‘FTC’) in the intimation issued u/s.143(1) - belated filling of Form 67, i.e. after the due date of filing the return - HELD THAT:- The Hon’ble Madras High Court in the case of Duraiswamy Kumaraswamy [2023 (11) TMI 1000 - MADRAS HIGH COURT] had held that filing of Form 67 is directory in nature and it is not a mandatory requirement. It was further held by the Hon’ble High Court that as long as Form 67 is available at the time of processing of return u/s.143(1) of the Act, the CPC needs to allow the FTC.
Filing of Form No.67 within the due date of filing the return of income u/s.139(1) of the Act is not mandatory requirement but directory. Hence, we direct the Revenue to grant the FTC as per Form No.67. It is ordered accordingly. Decided in favour of assessee.
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2025 (2) TMI 698
Denial of claim of calculating tax liability u/s 115BAA - failure of the assessee to file form 10-IC within the time provided for filing the return of income u/s 139(1) - as submitted by the CIT-DR that the last date for filing the return of income for A.Y. 20021-22 was 15.03.2022 and the assessee has filed the return of income belatedly on 29.03.2022, along with Form 10-IC - HELD THAT:- Provisions of Section 115BAA are beneficial legislation, aiming to extend certain benefits to domestic companies with a reduced rate of taxation. This essential provision was designed to boost the industries and reduce unnecessary litigation, and it should not be denied on account of some technical reasons.
In the present case, admittedly, the assessee has exercised his option for the previous year 2020-21 and thereafter, based on the same declaration, the assessee has filed the return of income for A.Y. 2022-23. However, the CPC, Bangalore, has rejected the claim of the assessee to opt for the regime u/s 115BAA of the Act on the pretext that the same was filed belatedly for the earlier year.
Law is fairly settled when the language used in the statute is clear and simple, then literal meaning is required to be given to the words used in the Statute while interpreting the Statute.
In the present case, sub-section (5) of Section 115BAA of the Act has not restricted the application for one year alone, even if it has filed belatedly, however, it has been extended and applicable for the subsequent assessment years.
If the application has been filed belatedly for the earlier year, as canvassed by the Revenue, on 29.03.2022 i.e., after the due date of filing of return of income on 15.03.2022, then the Revenue can withhold or deny the benefit of Section 115BAA for A.Y. 2021-22. But for the purpose of giving benefit for A.Y. 2022-23, the Revenue cannot raise this issue of filing of Form 10-IC belatedly for A.Y. 2022-23.
Needless to say the Frm 10-IC on 29.03.2022 for A.Y. 2021-22, will also be treated as filed for A.Y. 2022-23 and subsequent years. Therefore, in our considered opinion, the assessee is eligible for the benefit provided u/s 115BAA for the A.Y. 2022-23. Decided against revenue.
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2025 (2) TMI 697
Royalty expenses - assessee has acquired license of Audio & Audio visual rights of the non- Bollywood regional music content for exclusive commercial exploitation on mobiles & digital platform and for physical distribution & public performance - HELD THAT:- Assessee company was established to commercially exploit the music albums of various tracks available with Hungama and Zee Music. Assessee and Hungama entered into license agreement on 20.12.2015 and the license holder, Hangama granted permission to the assessee to use the above license held by it, which was previously acquired by another agreement entered by Hungama with Zee Music.
As per the terms of license agreement, the assessee has agreed pay the licensor i.e., Hangama a minimum guarantee fee of Rs. 11,73,62,500/- for 6 years. Therefore, it is only a minimum guarantee license fee not a Royalty payment towards transfer of property. The property right was only with licensor.
Technically, the assessee has given only a guarantee of revenue for 6 years that means the assessee has given guarantee of license fee. It is only a guaranteed amount and the assessee has to meet out the above license fees otherwise, it has to recompensate the same to the licensor. In the agreement, there is no mention of any commitment that guarantee is for every year or to be compensated at the end of the 6th year.
Therefore, it is closely linked to the earning of revenue. It is relevant to point out that the Hangama also entered into similar agreement with Zee Music and the same chart of music albums and date of commencement of dates are mentioned.
Licensor has taken similar license from Zee and sublet the same to the assessee. It cannot be treated as license fees paid and claimed as expenditure. The dates mentioned in the start date of each album are the starting date of commercial utilization of respective album not the payment of license fees.
Whether the license fees paid are to be considered as prior period expenses? - We observed that the AO has not understood the transaction and disallowed the part of royalty expenses as prior period expenses by observing the dates mentioned in the individual music titles, which is not date of acquiring the license but it is the date of start date of commercial exploitation of relevant tracks. In our considered view, the method adopted by the assessee as well as the disallowance made by the AO is not appropriate. Therefore, we direct the Assessing Officer to redo the assessment denovo and consider the above observation and allow the relevant expenditure as per law. At this stage, we cannot change the Balance Sheet even though followed the wrong method of recognition of income & expenditure.
AO has to determine the actual income and expenses by treating the license fees paid as deferred revenue expenditure and allow the relevant cost during the license period of six years. Needless to add that assessee may be given proper opportunity of being heard.
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2025 (2) TMI 696
Capital gain computation - Addition u/s.50C - accepting higher circle rate/stamp duty value as against the actual sales consideration on sale of flats - AO observed that the sale consideration reported by the assessee was less than the circle rate determined in terms of Section 50C - HELD THAT:- CIT(A) ought to have referred the matter to the file of DVO for determination of fair market value of the property in terms of Section 50C(2) of the Act which was not done in the instant case. In fact even if the assessee does not request for referring the matter to DVO, still the ld CIT(A) or the ld AO ought to have referred the matter to the DVO once the adoption of circle rate has been disputed by the assessee.
Admittedly, the adoption of circle rate has indeed been objected by the assessee which is evident from various points addressed by the assessee before the ld CIT(A) which are already mentioned herein above as to why the circle rate should not be adopted.
See Sunil Kumar Agarwal [2014 (6) TMI 13 - CALCUTTA HIGH COURT] wherein, it was held that when the agreed consideration as per conveyance deed and circle rates are different and assessee objects to the adoption of such circle rate, then the ld AO should refer the matter to valuation officer as contemplated in Section 50C(2) - direct the ld AO to refer the matter to ld DVO and determine/ recompute the capital gains in accordance with the provision of Section 50C(2) - Ground raised by the assessee is allowed for statistical purposes.
Unexplained cash receipt - HELD THAT:- There is absolutely no evidence brought on record by the AO or by CIT(A) to prove the fact that the assessee had indeed received a sum in cash on account of alleged excess sale consideration. No cross verification whatsoever was made by the lower authorities with the buyer of the property i.e. Shri Krishan Kumar.
Hence, there is no scope for making any addition on the ground of suspicion that assessee had received in cash on sale of property. Sale deed was ultimately registered by the assessee only on 05.04.2011, which falls in AY 2012-13. Hence, in any event, the alleged differential sale consideration figure cannot be brought to tax in the hands of the assessee for the year under consideration. Accordingly, ground Nos. 2 and 3 raised by the assessee are allowed.
Addition of cash paid towards construction cost - AO observed that the assessee failed to explain the source of payment - HELD THAT:- The assessee placed on record the cash flow statement also giving the daily cash balance available with him. This cash flow statement cannot be ignored to be of general in nature. We find that this cash flow statement requires factual examination of the ld AO to ascertain on a holistic basis as to whether the said statement would provide sufficient cash source to the assessee to explain the payment of Rs. 40 lakhs on 23.02.2011. To the extent of available cash source, the assessee certainly is entitled for relief. With these directions, we restore ground No. 4 to the file of the ld AO and allow for statistical purposes.
Unexplained cash credit and unaccounted expenditure - loose slip found - HELD THAT:- On perusal of the impounded documents, crucially we find that no date or year is mentioned. Hence, there is no cogent material brought on record by the revenue to justify the fact as to whether the said loose slip even pertains to the year under consideration.
The said loose slip nowhere states that Rs. 10 lakhs was either received by the assessee or paid by the assessee. Hence, it could be safely concluded that the said loose slip is nothing but a mere dumb document based on which no addition could be made in the hands of the assessee. AO relates this loose slip and interest payment for May and June to be relating to May and June 2009. If that be so , then it only pertains to AY 2010-11 and hence, no addition could be made for the year under consideration. The addition deserves to be deleted even on this count.
Addition u/s 68 - impounded document during the survey which consists of Kacha Khata of Vipin Sharma to whom the assessee had given loan - HELD THAT:- Before us, the assessee who was present in person confirmed the fact that he had sold old generator to his cousin Vipin Sharma and since the cheque given by Vipin got bounced, the assessee received in cash towards sale of old generator. We find only the date and figure and name of Vipin are mentioned in the said loose sheet.
The nature of payment or receipt is not even mentioned thereon. Hence, the explanation given by the assessee could be considered as a plausible explanation in the facts and circumstances of the case. However, this matter, in our considered opinion, requires factual verification. Hence, we deem it fit and appropriate in the interest of justice and fairplay, to restore this issue to the file of ld AO for de novo adjudication in accordance with law and also in the light of explanation given by the assessee before us. Accordingly, ground No. 6 raised by the assessee is allowed for statistical purposes.
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2025 (2) TMI 695
Challenging the notice u/s 143(2) issued by the ACIT, Corporate Circle-1(2), Bhubaneshwar, as being without jurisdiction - notice issued u/s 143(2) on the ground that the jurisdictional officer had not adjudicated upon returns as jurisdiction has been changed after returns had been filed - HELD THAT:- Plain language of the sections determining jurisdiction (both territorial and pecuniary) reveals that the mechanism for challenging the jurisdiction of an AO is contained in Part B of Chapter XIII of the Act and it is clearly within the administrative domain.
Since, in this case, the assessee never challenged the jurisdiction of the AO therefore, there was no occasion to administratively consider that issue.
The facts do not indicate that either of the two AOs: ITO and ACIT, did not have territorial jurisdiction, the absence of which might have brought in a legal fatality. It is just that a division of work was affected on account of division on the basis of returned income limits of an assessee, in other words the third limb of the categories of jurisdiction contained in section 120(3) of the Act, indicating pecuniary jurisdiction.
Catena of judgments relied upon in the earlier part of the discussion, especially in the case of Kalinga Institute of Industrial Technology [2023 (6) TMI 1076 - SC ORDER] and Mantoo Sarkar [2008 (12) TMI 719 - SUPREME COURT] it is held that the pecuniary jurisdiction challenged at this stage is unjustified and is at best, a curable defect, if at all it can be called a defect, considering the facts of the case. Ground No.3 and 4 of the assessee’s appeal are accordingly dismissed.
CIT(A) treated the entire quantum of sundry creditors as on 31.03.2015 as a discharged liability and used the provisions of section 41(1) of the Act to enhance the income - It is felt that there is an inherent error in this action, in as much as the credits added contain entries belonging to earlier years and in case it can be shown that the impugned sums represent bogus entries, then also they have to be added back in the appropriate year. Therefore, we deem it fit to remand the matter back to the file of the AO to determine the genuineness, or otherwise, of the sundry creditors and in case of any adverse findings then additions, if any, need to be made in any appropriate previous year, if the law permits reopening, considering the limitations involved as per the relevant statute. The assessee would do well to present all the facts before the AO to enable him to assess his income correctly.
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2025 (2) TMI 694
Prohibition of Benami Property Transaction - Initiating Officer (IO) had provisionally attached property - purchase of gold for which the amount was transferred through RTGS - Whether the transaction involving the transfer of Rs. 1 Crore for the purchase of gold constitutes a benami transaction under PBPTA?
HELD THAT:- Appellant has admitted in his statement that the gold was not delivered directly to Smt. Suman Dua, from whose account RTGS transfer of Rs. 1 Crore was received in the account of M/s Harsh Bullion, wherein he was a partner with Shri Anoop Kumar Agrawal. The copy of the identification documents of Smt. Suman Dua was received by the Appellant through Shri Mahendra Pal Malhotra to whom gold was admittedly delivered along with the invoice thereof.
Appellant believes that having received copy of the invoice signed by Smt. Suman Dua from Shri Mahendra Pal Malhotra was sufficient as proof of his delivery of gold worth Rs.1 Crore to Smt. Suman Dua. We observe that such belief is neither corroborated by normal business practice nor supported by the fact that the transaction involved gold sale of Rs.1 Crore. While it established that the funds were transferred from the account of Smt. Suman Dua, the Appellant failed to establish the delivery to the person from whose account the amount of Rs.1 Crore was transferred to his firm M/s Harsh Bullion.
Appellant has claimed that M/s Harsh Bullion is a bonafide business entity yet no convincing argument has been made as to why it closed the Punjab & Sind Bank account Janakpuri, Bareilly on 20.06.2017 and transfer the closure proceeds to M/s Bankey Bihari Bullion, another firm of the Appellant wherein Shri Mahendra Pal Malhotra is also a partner.
The argument of the Appellant that M/s Harsh Bullion had conducted a number of transactions of Rs.10 Lakh and more in the FY 2016-17 is good enough ground as not to regard transfer of Rs.1 Crore by Smt. Suman Dua as strange is not acceptable. The transfer is not strange because of its high value but because of the circumstances in which it occurred. The initiation of the transfer of funds in the name of Smt. Suman Dua, in the presence of Shri Mahendra Pal Malhotra from the branch in which Shri Malhotra had an account appears suspicious.
It is all the more strange that Smt. Suman Dua did not have an account in the same branch. She is supposedly to have deposited Rs.1 Crore in cash which was accepted by the Chief Manager of the said branch in spite of her not being an account holder in the same branch.
Appellant went on to deliver gold to Shri Malhotra. The Appellant was sure of having delivered it to Smt. Suman Dua because the invoice was signed by Smt. Dua, that too, in the absence of the Appellant and to accept the signed invoice received from Shri Malhotra as a token of receipt of gold worth Rs.1 Crore make the transaction ‘strange' and inexplicable.
Appellant cannot maintain that he acted in good faith. Shri Mahendra Pal Malhotra is also a partner in his other firm of M/s Bankey Bihari Bullion to which the closure proceeds of the account of M/s Harsh Bullion were transferred on 20.06.2017. The inconsistencies pointed out by the Appellant in the statements of Smt. Suman Dua cannot wipe out the circumstances under which the said transaction occurred. Appeal dismissed.
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2025 (2) TMI 693
Imposition of duty and penalty on the appellant on the pilfered goods in terms of Section 45 of the Customs Act, 1962 read with Regulation 6 of Handling of Cargo in Customs Area Regulations - principal contention of the appellant is that the appellant was not a party to the Panchnama and security of the container was the prime responsibility of the CISF deployed at ICD Tughlaqabad - it was held by High Court that 'In terms of Section 45 of the Act and the ‘HCCAR’, being the custodian of imported goods, appellant was burdened with the responsibility of safe custody of the imported goods. Appellant cannot escape such burden by shifting its responsibility upon the CISF and has therefore been rightly held liable to pay customs duty and penalty as prescribed under Section 45 (3) of the Act and Regulation 6 (1) (j) of HCCAR, 2009.'
HELD THAT:- The appeal is admitted - Issue notice on the application for grant of interim relief returnable on 28th March, 2025.
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2025 (2) TMI 692
Refund claim - amount paid by the appellants twice through their customs broker towards import duty liability for the imports - HELD THAT:- All the relevant issues relating to grant of refund has been examined by the original authority, to ascertain the fact whether the import duty has been twice on the very same consignment of imported goods. However, it is found that the learned Commissioner (Appeals) had held that the appellant importer have neither paid impugned duty not they submitted any documentary evidence that the said duty, for which they are claiming refund has been borne by them.
Further, on careful perusal of the records of the case, it is amply clear that in respect of imports through courier mode, the importer has to file the Bill of Entry through authorised customs broker. Such customs broker besides providing assistance for clearance of goods from customs control, may also provide services such as logistics, payment of duty on behalf of the importer as their agent, which charges are reimbursed by the importer on actual basis - The documents such as Bill of Entry for which the import duty has been assessed under the Customs statute and the challans in which the customs duty have been paid twice for the same amount and for the very same Bill of Entry are sufficiently evidence that the customs duty has been paid twice for one import.
Further, the chartered accountant certificate dated 23.08.2019 produced by the importer -appellants also demonstrates that the burden of duty have been borne by them on being had to pay the customs duty twice, and they had not passed on such burden to any other person. On the above basis, a clear case has been made out by the appellants and the original authority had verified the facts, before grant of refund to the importer-appellants in this case. Therefore, the impugned order is contrary to the factual position of the case as discussed herein and on this ground alone it is liable to be set aside.
The issue of refund arising on account of payment of duty/tax twice has been dealt with in detail by the by the Hon’ble High Court of Gujarat in the case of Swastik Sanitary wares Limited [2012 (11) TMI 149 - GUJARAT HIGH COURT], upon taking into account the judgement of the Hon’ble Supreme Court in Mafatlal Industries and it was held the assessee is eligible for refund of the amount paid for the second time.
Conclusion - i) A refund of customs duty is permissible when it is shown that the duty was paid twice due to an error, and the burden of the duty was not passed on to another party. ii) The impugned order is liable to be set aside, as it had denied refund to the appellants, which has been paid twice towards one single import activity on which customs duty applicable has already been paid at the first time, as per law.
The impugned order is set aside - appeal allowed.
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2025 (2) TMI 691
Classification of imported Cap Sub Assembly for Door Outside Handle - classifiable under CTH 87089900 as claimed by the appellant or 8708 2900 as alleged by the Department? - demand of differential duty with interest - HELD THAT:- The appellant had himself described the product as ‘door handles’ in the Bills of Entry. The goods so imported were described as RR door outside handle or FR door handle or outside door handle, clearly specifying the placement of each such door handle. It has been argued before us that the door handle cannot be affixed as such and the plastic base material has to be affixed around its base in order to manufacture door handle. The true test for classification is the test of commercial identity. It has to be ascertained as to how the goods in question are referred to in the market by those who deal with them. In the instant case, the imported goods are door handles for the front door, rear door and in commercially identifiable as such, forming part of the body of the car.
The Supreme Court in M/s Thermax Ltd Vs Commissioner of Central Excise, Pune [2022 (10) TMI 468 - SUPREME COURT] has reiterated the view that the HSN code is the bedrock of custom controls and procedures. It has also been held that as per the HSN, classification is done by placing the goods under the most apt and fitting sub-heading.
The Appellant had declared goods as "RR door outside handle or FR door handle or outside door handle". The CTH 87082900-other parts and accessories of bodies-is a specific description for the imported goods. The door handles are part of door as per Section note 3 of section XVII and HSN Explanatory note B of CTH 87.08 and Rule 3(a) of the GIR. When the appellant has specifically given the description of the goods as door handles at the time of import, mere addition of a plastic material to affix the imported goods on doors does not change its principal use. As per rule 2(a) of GIR, the incomplete/ unfinished door handles has the essential character of the complete or finished door handles. Therefore, the same can be considered as 'finished door handle' and accordingly is liable to be classified under CTH 87082900. Since, the imported goods are for specific use, therefore, considering Rule 3(a) of the GIR, the goods are classifiable under CTH 87082900.
The appellant is liable for the differential duty
Demand of interest - HELD THAT:- In the instance case, the customs duty had already been deposited at the time of import, hence, interest is not liable to be paid. As regards interest, Supreme Court in the case of Pratibha Processors & Ors vs Union of India & Ors [1996 (10) TMI 88 - SUPREME COURT] has held that “Interest is compensatory in character and is imposed on an assessee who has withheld payment of any tax as and when it is due and payable.” As the differential duty is liable to be paid, hence, the demand for interest is also upheld.
Conclusion - The imported goods are correctly classifiable under CTH 87082900, and the appellant is liable for the differential duty and interest.
Appeal dismissed.
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2025 (2) TMI 690
Maintainability of writ petition filed by respondent no. 1 under Article 226 of the Constitution - directions issued by the learned Single Judge were beyond the scope of the writ petition - main grievance of the respondent no. 1 (writ petitioner) is that there is a failure to exercise the power by the RBI in relation to the affairs of ECL - HELD THAT:- It is an elementary principle that when a public authority is vested with specific powers, it is duty bound to act accordingly. Therefore, any failure to exercise statutory powers gives rise to a cause of action to secure performance of such duty by way of issuance of writ of mandamus under Article 226 of the Constitution of India.
In the case of CAG vs. K. S. Jagannathan & Anr. [1986 (4) TMI 344 - SUPREME COURT], the Hon’ble Supreme Court held that a writ of mandamus can be issued where there is a failure to exercise power vested with a public authority.
A duty is implied by the vesting of statutory power upon a public authority. Further, the performance of such duty can be secured by proceedings under Article 226 of the Constitution of India.
The respondent no. 1 has sought for the interference of the learned Single Judge considering the failure of RBI to act in exercise of its power under Chapter-III-B and more particularly Section 45-IE and Section 45MA of the RBI Act. Such reliefs claimed are, therefore, clearly maintainable in proceedings under Article 226 of the Constitution of India.
The learned NCLT has no jurisdiction to issue prerogative writs to RBI to exercise such powers under the RBI Act. Therefore, this fact has no bearing on the merits of the dispute or such that is determinative of the outcome of these proceedings since the existence of the NCLT proceedings is duly disclosed and considered by the learned Single Judge while passing the impugned order - The impugned order dated 23rd October, 2024, has been passed by the learned Single Judge on the basis of clear findings of the RBI that there have indeed been violations of mandatory regulations by the ECL. These findings recorded by an apex expert body like the RBI, certainly warrant for issuance of protective ad-interim orders.
Conclusion - i) The High Court has the power to issue a writ of mandamus when a statutory authority fails to exercise its powers. ii) Proceedings before the NCLT and NCLAT do not preclude the High Court's jurisdiction under Article 226 to address issues related to the RBI's statutory duties. iii) The principles of natural justice are upheld when parties are given the opportunity to argue on both maintainability and merits.
Appeal dismissed.
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2025 (2) TMI 689
Seeking winding up of company - Sections 433(e)/434(1)(a)/439 of the Companies Act, 1956 - HELD THAT:- Upon an examination of the record, it is evident that the present winding-up petition is a non-starter. The proceedings remain at a preliminary stage, with neither a provisional liquidator nor an official liquidator having been appointed to assume control over the assets and affairs of the respondent company. Consequently, no substantive orders have been passed in this petition for seven years.
Hon’ble Apex Court in the case of Action Ispat and Power P. Ltd. v. Shyam Metalics and Energy Ltd. [2020 (12) TMI 535 - SUPREME COURT] held that those winding up proceedings pending before the High Courts, which have not progressed to an advanced stage, ought to be transferred to the NCLT.
In the present case, the respondent has submitted written submissions explicitly requesting the transfer of the winding-up petition to the NCLT. In view of the respondent’s express request for transfer and the legal precedents affirming that a formal application is not indispensable, this Court finds no impediment in treating the written submissions as an application for transfer of the present petition to the NCLT. The Court is not bound to insist on a separate application when the intent of the party seeking transfer is evident from the record.
Considering the express request by the respondent, the fact that no substantive proceedings have been undertaken towards winding up of the company, the present petition cannot be allowed to be continued before this Court. Hence, the instant petition is transferred to the NCLT, Delhi Bench, for further proceedings.
Conclusion - The petition should be transferred based on the respondent's request and the lack of substantive progress towards liquidation.
List before the NCLT on 10.03.2025 - Petition disposed off.
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2025 (2) TMI 688
Section 95 IBC Petition barred by limitation or not - service of Demand Notice at the wrong address - correctness of amount sought in the Demand Notice and the Section 95 IBC Petition - foundation of the loan amount of SBBJ Bank.
Whether the Demand Notice under Rule 7(1) of the IBC Rules, 2019, dated 28.06.2021 was sent to the wrong address by the Financial Creditor? - HELD THAT:- It is claimed that Rule 7 Notice cannot be substituted with Section 13(2) SARFAESI Notice. The nature of both the Notices are entirely different and one cannot substitute the other. The Appellant has given an example of a cheque bouncing notice under Section 138 of NI Act which cannot substitute a winding up Notice under Section 433 of the Companies Act. Similarly, a winding up notice under Section 433 cannot substitute a Section 13 (2) SARFAESI Notice. There are merit in the arguments of the Appellant but in the facts of the case sufficient time was available to the Appellant to provide repayment plan.
Even though there have been claims and counter claims with respect to the service of the Demand Notice and also Section 95 Application, it is found that it was the duty of the Appellant to have notified the current address to appropriate authorities, including banks and passport office when they had moved to Chennai. The RP was in touch with him later on even on WhatsApp and the Appellant had also filed his objections on the Report of the RP. In the circumstances of the case, there are no infirmity on the findings of the Adjudicating Authority on this count. Further, the purported non-service of Demand Notice under Rule 7(1) will not have any material impact on the main issue, which is being examined in subsequent paragraphs.
Whether the Section 95 IBC Petition was barred by limitation or not? - HELD THAT:- The Appellant has been able to demonstrate that the said amount of Rs 315 crores as in Section 95 application is an approximate total of SBI’s A/c No. 30451182299 [pg 535 APB] i.e. Rs 264 crores and A/c No. 61029643854 [pg 539 APB at the bottom] i.e. Rs 51.23 crores totalling to Rs 315 crores. And the later account [A/c No. 61029643854] has nothing to do with SBBJ as the account numbers mentioned in the Demand Notice under Rule 7(1) for SBBJ are 61253087296 and 61074975160 [pg 542/5 APB]. Thus, in both the Rule 7(1) Demand Notice and Section 95(1) of IBC Application, the Respondent No.1-SBI through RP has given a total claim without giving the details in the particulars. And the Appellant has been able to explain that this amount pertains to SBI only and rest amount pertains to some unrelated account of SBBJ.
Calculation of period of limitation which would start running from the date of NPA of 13.06.2012 - HELD THAT:- At best the limitation would start from Section 13(2) Notice dated 26.12.2013, when demand was made from the Appellant. Since Demand Notice under Rule 7(1) was issued on 28.06.2021, and the Application under Section 95 was filed on 03.12.2022, it is found that the said Application is prima facie beyond three years and is time barred. Without giving the details of each account, the Respondent No.1-SBI cannot overcome the limitation - the notices for debt and default under Rule 7(1) and Rule 7(2) are issued much beyond three years from the date of default and are therefore barred to be proceeded under the Limitation Act.
Section 95 application doesn’t satisfy the requirements of “details and documents relating to debts owed by the debtor to the creditor or creditors” as provided under Section 95 (4) of the Code. It is also found that all objections relating to Section 95 proceedings have not been disposed of, particularly relating to sufficient details and documents with respect to individual accounts in default. The total amount of default as claimed in the Section 95 application has to be individually substantiated with the details of separate accounts, particularly in the facts of the case, where two separate Banks merged and when earlier separate accounts were being maintained in different Banks and separate recovery proceedings were being pursued by both SBI & SBBJ separately. Be that as it may, in the interests of natural justice it is found appropriate to remand this case back to the Adjudicating Authority to examine all the objections relating to the details of individual accounts and their dates of default and whether debt is time barred - in full or in part amount - due to RC under SARFAESI Act 2002 and arrive at a conclusion.
Conclusion - i) Section 95 IBC Petition was time-barred, as it was filed beyond the three-year limitation period, even after excluding the COVID-19 period. ii) Section 95 application doesn't satisfy the requirements of 'details and documents relating to debts owed by the debtor to the creditor or creditors' as provided under Section 95 (4) of the Code.
The personal insolvency proceedings are remanded back to the Adjudicating Authority to determine afresh the limited question of whether on the basis of the materials on record the debt is barred by limitation or not and whether in full or in part amount and accordingly determine the issue of personal insolvency against the Appellant - Appeal allowed by way of remand.
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2025 (2) TMI 687
Power of NCLT to modify the resolution plan - HELD THAT:- The powers of the Ld NCLT with respect to the approval of the Resolution Plan does not extend to examine the commercial wisdom of the CoC and once it is found all the mandatory requirements have been duly complied with and taken care of by the Resolution Applicant, the process of judicial review under Section 31 of the Code cannot be stretched to carry out quantitative analysis concerning a particular creditor. Admittedly, the Resolution Plan has been approved by the CoC with 79.10% voting share after taking into account the feasibility and viability of the Resolution Plan.
The Ld. NCLT also does not have any jurisdiction to specifically direct and/or impose a condition for the distribution of an amount that may be received and/or recoverable by Corporate Debtor amongst the creditors while approving the Resolution Plan - The modification made to the resolution plan are set aside, and hence these three appeals are thus allowed.
Locus of Appellant, being the dissenting financial creditor of the Corporate Debtor to challenge the Resolution Plan - HELD THAT:- The Appellant, being the dissenting financial creditor of the Corporate Debtor, does not have the requisite locus to challenge the Resolution Plan as duly approved by the members of the CoC. In DBS Bank Ltd. v. Ruchi Soya Industries Ltd. [2024 (1) TMI 186 - SUPREME COURT], wherein the Hon’ble Supreme Court categorically held a dissenting financial creditor does not have any say when the Resolution Plan has been approved by a two-third majority of the CoC and a dissenting financial creditor can only object to the distribution of the proceeds under the Resolution Plan, when the proceeds are less than what the dissenting financial creditor would be entitled to in terms of Section 53(1) of the Code. It is not the case of the Appellant that it has been paid less than it is entitled to under Section 53(1) of the Code under the Resolution Plan. As such, the Appellant is precluded from raising objections to the Resolution Plan.
The Appellant has failed to raise any cogent ground that may warrant the setting aside of the Resolution Plan. Admittedly the Appellant has duly participated in all the CoC Meetings till the approval of the Resolution Plan and has indulged in extensive deliberations and negotiations with regards to the terms of the Resolution Plan. Therefore, it is clear the Appellant has preferred these Appeals as an afterthought.
Thus there is no merit in these two appeals and thus are dismissed.
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2025 (2) TMI 686
Penalty imposed on the Respondent for contravention of Section 3(c) of FEMA - Order passed on the facts that the officials of Police Station Rahon, Distt. Shaheed Bhagat Singh Nagar, Punjab intimated the ED Office that they had seized an amount involved in Hawala transaction from two persons - Investigation was initiated by the Enforcement Directorate under the provisions of FEMA - Special Director (Appeals) has held that the statement was retracted by the Respondent at the first possible opportunity.
HELD THAT:- In response to the notice under Section 17(4) of the FEMA Act, Sh. S.L. Chopra & Sh. Ravi Chopra, Advocate and Shri Pankaj Yadav, Legal Consultant of Enforcement Directorate appeared for hearing. The appellant's AR referred to the fact that the statement was retracted by the appellant at first possible opportunity. Also, it is seen from the records and submission of the appellant that the purchase of the car could not be completed, hence, no documentary evidence could be submitted. Further, for the source of money, the Appellant has filed CA certified copy of Cash book, which explains the source of cash.
Also, it is seen from the order that no proper investigation has been made by the Adjudicating Officer to establish clear chain of events or link between persons involved and no effort has been made to trace or record a statement of Shri Rocky Singh or trace the trail of money. In the absence of any proof or sound basis for levy of penalty or clear chain of events, allowing the appeal and directing the respondent to waive off the penalty and release the confiscated amount within 30 days of this order.
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2025 (2) TMI 685
Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 - Seeking direction to Petitioner to make the payment as per Form SVLDRS-3 and to issue discharge certificate in Form SVLDRS -4 under sub-section (8) of Section 127 of the scheme - recovery of CENVAT Credit on the ground of wrongful availment of Input Cenvat Credit and wrong utilization for the payment of duties - it was held by High Court that 'The Scheme being prerogative of the Government and since the petitioner had not abided by the terms and conditions of the Scheme -2019, there are no reason to interfere.'
HELD THAT:- No case for interference is made out in exercise of jurisdiction under Article 136 of the Constitution of India. The Special Leave Petition is accordingly dismissed.
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2025 (2) TMI 684
CENVAT Credit - capital goods or inputs - towers, shelters and accessories used by the appellant for providing business support services are immovable property or not - emergence of immovable structure at intermediate stage (assuming without admitting) is a criterion for denial of Cenvat Credit or not - suppression of facts or not - invocation of extended period of limitation.
HELD THAT:- The Hon’ble Supreme Court in M/s. Bharti Airtel Ltd. Vs. The Commissioner of Central Excise, Pune [2024 (11) TMI 1042 - SUPREME COURT] has held that Mobile Service Providers (MSPs) could avail the benefit of Central Value Added Tax/CENVAT Credit over excise duties paid on items such as mobile towers and prefabricated buildings (PFBs). The Hon’ble Supreme Court has further observed that the towers and PFBs, though themselves are not electrical equipments, are essential for proper functioning of antenna. Thus, tower being essential for rendering of the output service of mobile telephony, these items certainly can be considered to be “inputs” akin to antenna. It is further observed that without the towers and the pre-fabricated buildings (PFBs), there cannot be proper service of mobile telecommunication. Hence, these certainly would come within the definition of “input” under Rule 2 (k)(ii) of CENVAT Rules.
Conclusion - Towers and shelters are not immovable property and qualify as "inputs" and "capital goods" under the Cenvat Credit Rules, 2004.
Appeal allowed.
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2025 (2) TMI 683
Refund of amount paid twice towards service tax liability for the period April 2017 to June 2017 - time-barred refund claim under Section 11B of the Central Excise Act, 1944, as applied to service tax by Section 83 of the Finance Act, 1994 - HELD THAT:- Plain reading of Section 11B of the Central Excise Act, 1944 make the position very clear that the scope of Section 11B ibid, deals with refund of duty/tax and duty/tax refers to the duty/tax leviable as per the provisions of the Central Excise/ Service Tax statute. If there are certain taxable services provided over a period for which the service tax payable is “X” and when the same has been paid firstly as per law, and secondly by mistake inadvertently, it is obvious that the amount paid in the context of service tax for the second time has no legal basis, either for levy or for payment as service tax, inasmuch as there is no taxable event for which the levy and payment would apply.
The above issue has been dealt with in detail by the Co-ordinate Bench of the Tribunal in the case of Bansal Biscuits P Ltd. [2023 (11) TMI 615 - CESTAT KOLKATA], wherein it was held that the limitation of time prescribed under Section 11B ibid is not applicable.
The issue of payment of duty/tax for second time, has also been examined by the Hon’ble High Court of Gujarat in the case of Swastik Sanitary wares Limited [2012 (11) TMI 149 - GUJARAT HIGH COURT], upon taking into account the judgement of the Hon’ble Supreme Court in Mafatlal Industries and it was held the assessee is eligible for refund of the amount paid for the second time.
Conclusion - i) The limitation prescribed under section 11B of the Excise Act would not be applicable if an amount is paid under a mistaken notion as it was not required to be paid towards any duty/tax. ii) The amount paid in the context of service tax for the second time has no legal basis, either for levy or for payment as service tax, inasmuch as there is no taxable event for which the levy and payment would apply.
The impugned order is set aside - refund allowed - appeal allowed.
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