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Showing 501 to 520 of 839 Records
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2020 (6) TMI 339
Disallowance of expenditure incurred stating it to be expenditure incurred for persons expenses - AO has disallowed 20% of the claim of conveyance expenditure because no proper explanation was submitted by the assessee - HELD THAT:- There was scope for conveyance expenditure being incurred for personal purposes which is embedded in the total claim of conveyance expenditure. The assessee had also not furnished proper explanation before the Ld. CIT (A) therefore he confirmed the order of the Ld. AO. In this situation, we do not find much strength in the arguments advanced by the ld. AR - disallowance of ₹ 20% of the total claim of conveyance expenses would be on the higher side and accordingly sustaining the disallowance of conveyance expenditure at 15% of the total claim of conveyance expenditure
Addition on the ground of undisclosed rental income received by the assessee from NTPC - HELD THAT:- AO observed from the AIR data that the assessee had received rental income from NTPC. However, on perusing the return of income it was revealed that the assessee has not disclosed the same. The assessee also failed to furnish details as regards to the rental income earned by him from NTPC. Hence, the Ld. AO added the undisclosed rental receipt to the income of the assessee. The Ld. CIT (A) in his order has mentioned that the assessee admitted for having failed to disclose the rental income received from NTPC in his return of income. CIT (A) confirmed the order of the Ld. AO. Before us also neither the assessee nor the Ld. AR could produce any details for deleting the addition. In this situation, we do not have any other alternative but to confirm the orders of the Ld. Revenue Authorities on the issue. Accordingly, this ground is decided against the assessee.
Addition of business receipt not disclosed in the return of income - HELD THAT:- AR could not produce any material to justify the discrepancy observed by the Ld. Revenue Authorities. However, considering the nature of business conducted by the assessee, and the expenditure the assessee would have incurred for earning such income, an estimate of 15% of the undisclosed business reciepts would suffice to meet the ends of the justice for both parties. Accordingly, we hereby direct the Ld. AO to sustain the addition
Addition being the amount deposited in the bank account of the assessee by holding that the source is not explained - HELD THAT:- Assessee has disclosed total income of ₹ 3,39,490/- in his return of income for relevant assessment year and the addition sustained by us for ₹ 2,80,000/- towards undisclosed receipts for which telescoping effect has to be given and the accumulated earnings of the assessee, I am of the view that an addition of ₹ 6 lakhs would suffice to explain the source for the bank deposit of ₹ 12 lakhs. Accordingly, hereby sustain the addition of ₹ 6 lakhs on this count. It is ordered accordingly.
Interest U/s. 234A & 234B - HELD THAT:- Levy of interest U/s. 234A and 234B of the Act is consequential in nature and accordingly the ground does not survive.
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2020 (6) TMI 338
Addition as commission income - rejected the books of accounts of the assessee and estimated the commission income of the assessee from business of entry providing @ 0. 50% of the gross receipts - CIT-A delete the addition - HELD THAT:- Assessee have been duly examined and verified by the CIT(A) during the appellate proceedings. No adverse material has been found against the assessee to hold that the assessee was not in the actual business. CIT(A) has observed that the commission income has been assessed at a higher rate merely on the basis of presumption because the assessee had shown a very small margin, otherwise, there was no convincing evidence before the AO to hold so. CIT(A) has duly applied his mind to the facts and evidence presented before him and has passed a well-reasoned order on this issue. We do not find any infirmity in the order of the CIT(A) in this respect. Ground of the appeal of the Revenue are, therefore, dismissed.
Addition on account of difference in balances - AO observed that assessee had paid huge amounts to various parties under the head Loans and Advances, however, there were discrepancies in the amounts when compared with the balance sheet of the other parties - HELD THAT:- Assessing Officer could not point out any specific discrepancy in the submission / explanation given by the assessee. Even, we could not understand how the mismatch, if any, in figures in the balance sheet when compared with the balance sheet of other parties, can automatically be assumed as unexplained income of the assessee. The Assessing Officer has neither doubted nor made any inquiries regarding the source of funds of the payments received by the assessee nor of other parties from whom the assessee received payments.- Decided in favour of assessee.
Addition on account of 'difference in balances' - CIT(A) considering the above submissions and after verifying the evidences furnished by the assessee deleted the additions - HELD THAT:- CIT(A) has duly examined and reconciled the accounts. The source of the payments being from bank accounts of the respective parties has been duly proved. The ld. CIT(A) has duly and elaborately discussed the details of the entries as noted above and has also found that in the case of first two parties, there were old balances outstanding and that the addition to that extent cannot be made in the assessment carried in the subsequent year and further that the share application money received during the year was transferred from the bank accounts of the respective parties. In the case of the third party, no amount was advanced during the year and that the same was an old balance given out of the regular sources and appearing in the balance sheet of the preceding years. DR could not point out any distinguishing fact justifying our interference in the above well-reasoned order of the CIT(A).
Addition u/s 68 - Sundry Payable - HELD THAT:- As discussed by the Ld. CIT(A), the impugned additions had been made by the AO on mere suspicion without bringing on file as how the continuous and regular balances outstanding since assessment year 2010-11 onwards and reflected in the relevant balance sheets can be treated as unaccounted income of the assessee for the year under consideration. Even in the assessment carried out in the case of the creditor, no doubt as to the source of the amount has been made by the AO. Without bringing any adverse evidence on the file or pointing any discrepancy in the explanations submitted by the assessee, the AO was not justified in making the impugned additions.
Undisclosed income u/s 68 - addition into the income under the head ‘difference of balances’ - HELD THAT:- The concern M/s. Vasu Trading Co. was an old existing shareholder of the assessee and the addition had been made only on the ground that it was merely entry provider whereas no adverse inference has been drawn in past when it acquired the shares of the assessee in the preceding years. That Sh. Vasu Kalia Prop. M/s. Vasu Trading Co. was a regular income tax assessees and assessment for assessment year 2012-13 was completed under scrutiny u/s 143(3) where no such adverse view was taken. Moreover, the AO did not call upon the assessee or Sh. Vasu Kalia to prove the source of the funds. The addition made by the AO was only on the basis of mere doubt or suspicion which was not sustainable as per law. The Ld. CIT(A) has, therefore, rightly deleted the addition.
Addition on account of commission income - AO then estimated the Commission income from business of entry providing @ 0. 50% of the gross receipts - CIT-A deleted the addition - HELD THAT:- addition has been made by the AO merely on the basis of suspicion only without any evidence on the file that the assessee was an entry provider only. The AO did not make any effort to verify the veracity of the business transactions by summoning the concerned parties, whereas, the assessee duly explained its nature and manner of business and the same being accepted in the earlier years by the AO. We, therefore do not find any infirmity in the order of the CIT(A)
Addition on account of the sum shown as payable in the name of M/s. Metro Synthetics u/s 68 - CIT-A deleted the addition - HELD THAT:- CIT(A) has duly verified the accounts of the assessee and other concerns. The Ld CIT(A) has noted that no adverse inference was drawn by the same AO while completing the assessment in the case of Sh. Rajinder Kumar Prop. M/s. Metro Synthetics for assessment year 2013-14 in respect of the outstanding balances in the name of the assessee. The books of account of the assessee were duly audited and that the assessee was regular income tax payee. No enquiry was made by the AO as to the source of M/s Metro Synthetic. In view of the above, the Ld CIT(A) was justified in deleting the impugned additions.
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2020 (6) TMI 337
Validity of reopening of assessment u/s 147 - Addition u/s 56(2)(v) - gifts received by the assessee from the HUF interpreted as the gift from the relatives - HELD THAT:- AO called for the details with regard to gifts received by the assessee - assessee was asked to furnish the bank account details, books of accounts etc. and also called for some more information and the assessee submitted the confirmation letter from HUF and confirmed the gift to Shri K.Ramachandraiah, individual for a sum of ₹ 10 lakhs. Both Shri K.Ramachandraiah, HUF and Shri K.Ramachandriah, individual are assessed to tax. After duly verifying the information furnished by the assessee, the assessment was completed by an order u/s 143(3) dated 23.05.2011, thus the source of credit was explained by the assessee in the original assessment.
There is no failure on the part of the assessee and no fresh information was received by the AO for reopening the assessment. The information was already made available in the assessment, hence, reopening the assessment on the same issue which was already considered by the AO and taken a view amounts to difference of opinion and on difference of opinion, reopening of assessment is not permissible. We have called for the reasons recorded for reopening the assessment.
After giving couple of opportunities, the Ld.DR submitted that the reasons could not be traced since the assessment pertained to A.Y.2009-10 which was very old. In the absence of production of reasons, we are of the view that no reasons were recorded by the AO for reopening the assessment. Since reopening of assessment is not permissible on difference of opinion and the fact that the department failed to furnish the reasons recorded for reopening the assessment, we hold that the issue of notice/s 148 is bad in law and the same is quashed. - Decided in favour of assessee.
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2020 (6) TMI 336
Undisclosed income u/s 68 - Unexplained deposit of cash in Vijaya Bank Account - HELD THAT:- Assessee before the revenue authorities submitted copy of service tax registration relating to Coaching Institute. The assessee also submitted that his wife is a taxpayer having source of income from Coaching Institute, rental income and bank interest and regularly files income tax return.
Copy of ITR, Balance sheet and profit and loss account was also filed. The assessee also explained that rental income of the assessee and his wife is deposited in this saving account and his wife is at liberty to withdraw or deposit from her bank as per her requirement.
That it is wrong to assume that the assessee is sole owner of funds in the said bank account. The evidences as narrated above clearly establish that ₹ 1,00,000/- related to her wife but the revenue authorities failed to consider the same. Direct the AO to delete the addition - Decided in favour of assessee.
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2020 (6) TMI 335
Disallowance of expenses made pertaining to those incurred for the purpose of earning exempt income, as per the provisions of section 14A of the Act r. w. r. 8 D - HELD THAT:- Assessee has demonstrated the availability of sufficient own funds for the purpose of making investment of own funds available as against total investment we hold that the said facts and circumstances of the assessee warrant no disallowance of interest in the present case, following the decision of the ITAT in the case of the assessee for assessment year 2011 - 12 [2019 (3) TMI 990 - ITAT CHANDIGARH]
Similarly in the case of administrative expenses we have noted that almost entire amount of dividend income has been earned from subsidiary company of the assessee in which investment was made in the preceding years only. As noted by the ITAT in the case of the assessee for assessment year 2011 - 12 since the investment in subsidiaries do not require much administrative indulgence, the disallowance cannot be calculated as prescribed by Rule 8 D in the ratio of investments made and considering the past history of the assessee wherein against exempt income earned and in assessment years 2006 - 07 and 2007 - 08 [2018 (12) TMI 1623 - ITAT CHANDIGARH] disallowance has been upheld by the ITAT. We direct the disallowance in the present case wherein the facts indicate that the assessee has earned dividend income. Direct the AO to restrict the disallowance in all u/s 14 A in the present case. This ground of appeal raised by the assessee is, therefore, allowed in above terms.
Treatment of interest earned - as income from other sources OR income from business and profession - HELD THAT:- Since the issue of interest income to be taxable under the head ‘other sources’ stands adjudicated by the ITAT against the assessee the said decision will squarely apply in the present case also and following the directions of the ITAT in the said year, we uphold the plea of the assessee to netting of interest expenditure against the said income directing the AO to allow netting of subject to there being direct nexus between the interest income earned as directed by the I TAT in the case of the assessee in assessment years 2006 - 07 and 2007 - 08 above. Ground raised by the assessee is allowed in above terms.
Disallowance of deduction u/s 80 IC/ 80 IB - HELD THAT:- Receipts no arguments have been forwarded by the assessee and, therefore, the disallowance of deduction u/ s 80 IB/ 80 IC on the same amounting is upheld. As for the interest received from bank and other, we do not find any merit in the claim of the assessee that having been earned on security deposits made with Electricity Board they were purely in the nature of business income and hence eligible for deduction u/ s 80 IB/ 80 IC. The said income as described by the assessee does not have any first degree nexus with the industrial undertakings of the assessee and, therefore, we hold that the same is not eligible for deduction u/ s 80 IB/ 80 IC of the Act.
We hold that the assessee is eligible to deduction u/s 80 IB/ 80 IC of the Act on the damages against cancellation, commission from shipping while it is held not eligible for deduction on the other receipts, interest receipts from bank and others and rental income, which we direct the AO to restrict the disallowance to the net rental income excluding the expenses incurred for earning the same.
Allocation of head office expenses to units claiming deduction u/s 80 IB/ 80 IC - HELD THAT:- CIT(A) directed the AO to allocate head office expenses net of head office income for the said purpose following the decision of the ITAT in assessee’ s own case [2018 (12) TMI 1623 - ITAT CHANDIGARH]
Treatment of line/ bay charges - Revenue or capital expenditure - HELD THAT:- This issue stood adjudicated in favour of the assessee in its own case by the ITAT in assessment years 2011 - 12 and 2012 - 13 treat the aforesaid expenditure as Revenue expenditure.
No infirmity in the order of the CIT(A) treating the interest received on account of delayed payments from customers and suppliers as business income.
Deduction u/s 80 IB and 80 IC on the interest from customers and employees, miscellaneous receipts comprising brokerage from ocean freight, foreign exchange gains, insurance claim and rebate discount - HELD THAT:- We agree with the Ld. Counsel for the assessee that the issue of claim of deduction u/ s 80 IB/ 80 IC of the Act on interest income received from customers and misc. receipts in the nature of ocean freight, forex gain already stand decided in favour of the assessee by the ITAT in preceding years in the case of the assessee itself. We therefore see no reason to interfere in the order of the LD. CIT(A) with respect to allowance of the aforesaid claims.
As for claim of deduction u/ s 80 IB/ 80 IC of the Act on insurance claim received, the issue is restored back to the AO with the direction to adjudicate it in accordance with the direction of the ITA T in the case of the assessee on the identical issue in A. Y 2011- 12
Treatment of interest received under TUF Scheme as capital receipt.
Sales tax subsidy to be treated as capital receipt - See Chaphalker Brothers Pune [2017 (12) TMI 816 - SUPREME COURT]
Mat credit shall include surcharge and cess. See VMT Spinning Company Ltd. [2015 (7) TMI 1334 - ITAT CHANDIGARH]
Interest income as assessable under the head Business Income is rejected but at the same time its plea of netting the said income is accepted and the AO is directed to allow netting subject to there being direct nexus between the interest income and expenditure incurred.
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2020 (6) TMI 334
Expenses on account of construction - Charitable Trust - CIT- A deleted addition - whether CIT(A) erred in admitting additional evidence without offering an opportunity to the Assessing Officer for examining the same, in violation of Rule 46A of the I.T. Rues? - HELD THAT:- The objects of the assessee are very clear that the assessee is running various homes for different purposes to run such huge activity various buildings are required, therefore the assessee continuously carrying the construction activity according to the objects of the society, therefore the Assessing Officer without examining the issue and without considering the details filed, simply disallowed the entire expenditure incurred by the assessee is not correct. Further, the assessee started the construction activity in earlier years i.e. A.Ys. 2010-11, 2011-12, 2012-13 & 2014-15 all the years the AO has allowed the expenditure incurred by the assessee. The only year under consideration, AO without giving proper opportunity has disallowed the expenditure incurred by the assessee is not correct.
CIT(A) after examining each and every detail directed the Assessing Officer to delete the addition. Under the above facts and circumstances of the case the ld. CIT(A) has not violated rule 46A of the I.T. Rules and adjudicated the issue after examining all the details. Under these facts and circumstances of the case, we are of the opinion that no remand report is required, for the reason that the expenditure incurred by the assessee is very clear from the records.
CIT(A) rightly directed the Assessing Officer to delete the addition. In view of the above, the ld. CIT(A) not violated rule 46A of the I.T. Rules. - Decided against revenue
Addition of building expenditure - HELD THAT:-The addition made by the Assessing Officer is deleted by the ld.CIT(A) by considering the relevant material available on record, no interference is warranted, therefore same is dismissed.
Assessment of trust - Assessee has spent 85% of the gross receipts for charitable purpose - HELD THAT:- As per section (11)(1)(a), the income accumulated by the assessee is less than 15%, therefore the entire income of the assessee is exempt u/sec. 11(1) of the Act. We have examined the entire facts and circumstances of the case and find that assessee is running the trust in accordance with the objects. The activities carried by the assessee in running the trust are charitable in nature, the expenditure incurred by the assessee is also a genuine expenditure. CIT(A) after examining the details in respect of expenditure incurred by the assessee gave a finding that the assessee has applied his income more than 85%, therefore as per section 11(1), the entire income of the assessee is exempt. We find no reason to interfere with the order passed by the ld. CIT(A).
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2020 (6) TMI 333
Maintainability of petition - initiation of CIRP - power of Tribunal to review or recall order - main contention which is projected by the Respondent/ Operational Creditor in its Counter is that this Tribunal does not have power either to recall or review the Order which was passed on merits - HELD THAT:- By virtue of the exercise of power under Section 434 of the said Act, even though the Petitioners who had filed winding up Petitions and whose cases are to be transferred in accordance with the said provision as well as Notification by the Central Government thereunder, are still left with a forum, namely NCLT to proceed with their claim and while delegating the power to the Central Government, the Legislature had seen to that, those Petitioners thereunder have not been left high and dry, which will be the case in the present instance, if the argument of the Applicant is taken at face value that the Notification dated 24.03.2020 is to be applied retrospectively and to be given a retroactive effect.
Since this Tribunal being a creature of statute, does not have the power of judicial review in relation to scrutiny of enactments or even the Rules and Regulations framed thereunder including the Notification as the present one issued by the Central Government dated 24.03.2020, this Tribunal confines itself only to a careful reading of the Notification and the provisions under which it has been issued, and find that the provision under which the Notification had been issued do not expressly confer any power on the delegate to issue the Notification making it retrospective in its operation nor any necessary intendment can also be gathered therefrom, however, laudable as sought to be given colour off by the Applicant/ Corporate Debtor.
Thus, it is not necessary for this Tribunal to exercise itself upon the nature of right which had accrued i.e., 'vested' or 'conditional' in the absence of any express power granted which can be gathered from the statute itself, namely I&B Code, 2016 to the delegate to make the Notification dated 24.03.2020 to be applied retrospectively.
Pecuniary limit which is required to be applied in relation to the main C.P. - HELD THAT:- The list of dates clearly brings out the fact that the main C.P. was heard and reserved for Orders on 04.03.2020 when the pecuniary limit to entertain the Petition was ₹ 1 lakh, even though on the date of pronouncement of the Order pecuniary limit had been enhanced to Rs.l Crore. Enhancement of pecuniary limits in order to entertain Suits by Civil Courts by virtue of the power granted to the State has been exercised from time to time by the Executive keeping in mind the existing state of affairs prevalent in the State including economical.
In the absence of any power of recall or review available to this Tribunal and in the case on hand, I find it does not fall within the confines of Section 420 of the Companies Act, 2013 nor Rule 11 of NCLT Rules, 2016, and as the recourse, if at all for the party aggrieved, namely the Applicant/ Corporate Debtor, should have been to approach the Appellate Tribunal under Section 61 of I&B Code, 2016, if so advised and not this Tribunal by way of this Application and this Tribunal is hence constrained to dismiss this Application - Further, the Notification issued by the Central Government through the Ministry of Corporate Affairs dated 24.03.2020 bearing S.O 1205(E), in view of the detailed discussions in relation to the issue of its Applicability, can be considered only as prospective, (i.e.) applicable from 24.03.2020. The law which was prevalent on the date when the main CP in IBA/ 1031/2019 was filed, proceeded with and when the matter was finally heard and reserved thereafter on 04.03.2020, is required to be disposed of by this Tribunal considering only the pecuniary limits of ₹ 1 Lakh for maintaining a Petition under Section 9 of I&B Code, 2016 by an Operational Creditor, and in the circumstances, this Tribunal at the time of pronouncement hence was not lacking in pecuniary jurisdiction.
Application dismissed.
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2020 (6) TMI 332
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - pre-existing dispute or not - bone of contention raised by the Corporate Debtor is that the Operational Creditor is not entitled to receive any payment as the Operational Creditor has failed to install the equipment in the premises of the Corporate Debtor and also failed to provide adequate training to the staff of the Corporate Debtor in order to operate the said equipment.
HELD THAT:- A careful reading of the terms and conditions of the Purchase order manifests that "the installation and training of the system will be done by the Factory trained engineers" and it does not state that the payments will be made only after Installation & Training of the equipments as alleged by the Corporate Debtor. Further, it may be seen that the delay in installation of the equipments in the premises of the Corporate Debtor is attributable to the Corporate Debtor as the Director of the Corporate Debtor is the one who wants the equipment to be installed in a new place and as such he has delayed in installation of the said equipment and now he cannot plead to the contrary by stating that the Operational Creditor has not installed the equipments and hence they are not entitled for any payments.
Even though the Corporate Debtor has alleged that the Operational Creditor has delayed in installing the equipments at the premises of the Corporate Debtor, the Corporate Debtor has not placed on record any documents to show, nor any exchange of e-mails between the parties, in relation to the delay in installation of the equipment on the part of the Operational Creditor and as such the Corporate Debtor, with an intent only to evade the payments to be made to the Operational Creditor has raised such a contention, and furthermore the said plea was raised by the Corporate Debtor only after the issuance of the Demand Notice and as such the same cannot be termed as a "pre-existing dispute" - after conscientious examination of the records and taking into consideration the facts and circumstances of the case as well as the position of Law, it is considered appropriate that the Petition as filed by the Operational Creditor is required to be admitted under Section 9(5) of the IBC, 2016.
Application admitted - moratorium declared.
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2020 (6) TMI 331
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - exisetnce of debt and dispute or not - HELD THAT:- On perusal of the record it is found that the corporate debtor has not filed any reply. During the course of hearing, learned lawyer for respondent conceded that he does not wish to file reply and fairly admitted the debt under the instruction of the corporate debtor - On perusal of the record it is also found that the instant petition filed by the applicant is well within limitation and there is no denial of the operational debt and/or any pre-existing dispute regarding the operational debt from the corporate debtor.
In the instant application, from the material placed on record by the Applicant, this Authority is satisfied that the application is complete in all respect and the Corporate Debtor committed default in paying the operational debt to the Applicant - the documents produced by the operational creditor clearly establish the 'debt' and there is default on the part of the Corporate Debtor in payment of the 'operational debt'.
The respondent has defaulted the debt and has admitted the operational debt - petition admitted - moratorium declared.
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2020 (6) TMI 330
Jurisdiction - power of Commissioner of Central Excise to revise any order passed by an officer subordinate to him and pass an order-in-revision - conflicting decisions - matter referred to Larger Bench.
HELD THAT:- The same yardstick should be applied regardless of which party appeals and in view of the conflicting decisions between the Tribunal Bangalore and the Tribunal Mumbai, it is found that this is a fit case to be referred to larger bench for a decision on the maintainability of appeals filed under Section 86 after 19.08.2009 by both the Revenue and the assessee against orders-in-revision passed by the Commissioners.
Registry is directed to present the file before the Hon’ble President for constitution of a larger bench to decide the following question:-
“Are appeals by the Revenue and assessee against orders-in-revision passed after 19.08.2009 maintainable before the CESTAT in the absence of any specific saving clause in Section 86 of the Finance Act 1994? ”
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2020 (6) TMI 329
Clearance of Cement - Benefit of exemption Notification No. 4/2007-CE dated 01.03.2007 (Sl No. 1A) - clearance of cement to M/s Andhra Pradesh Housing Corporation Ltd (APHCL) as well as for their own use in 50 kg bags declaring a retail sale price of less than ₹ 190/- per bag - Misstatement of facts or not - extended period of limitation - Interest and penalties - HELD THAT:- There is no dispute that the goods manufactured by the appellant fall under the Chapter Heading 252329. Sl No. 1 of the exemption notification is not applicable to the present case as the appellant is not a mini cement plant.
Sl No. 2 defines what constitutes the retail sale price and its third proviso says where the retail sale price of the goods are not required to be declared under Standards of Weights and Measures (Packaged Commodities) Rules 1977 and thus not declared, the duty shall be determined as is in the case of goods cleared in other than packaged form. In other words, if the retail sale price is not required to be declared and hence also not declared the goods shall be treated as if they are cleared in other than packaged form and charged to duty accordingly. Such cases are covered by Sl No. 1C of the exemption notification.
Such cases are covered by Sl No. 1C of the exemption notification. In the case of Rain Commodities Ltd Vs CCE Tirupathi [2011 (1) TMI 490 - CESTAT, BANGALORE] where the cement was supplied to institutional buyers it has been held that Sl No 1A and 1B of the notification is not available to the appellant as in that case, clearance of the product was in bulk form which was not disputed.
Time Limitation - HELD THAT:- The demand is also time barred and no evidence of fraud, or collision or wilful misstatement or suppression of facts with an intent to evade payment of duty has been brought on record. It was only a case of the appellant’s claim Vs the Revenue’s claim. In such a case, once the ER-1 returns are filed, it would be reasonable to expect the Revenue officers to assess them and in case of any dispute, raise a demand within the normal period of limitation - there is favour of the assessee on the ground of limitation.
Interest and penalties - HELD THAT:- As the demand is not sustainable on merits the question of interest and imposition of penalties either on the assessee or on their Chief Manager do not arise.
Appeal allowed - decided in favor of appellant.
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2020 (6) TMI 328
Transfer of property in goods involved in the execution of the works contract - Taxability - consumable goods - purchase of ink for printing polythene rolls - exemption under Section 3-B(2)(e) of the Tamil Nadu General Sales Tax Act, 1959 - HELD THAT:- The judgment in State of Tamil Nadu Vs. Premier Litho Works and another, [2009 (7) TMI 1159 - MADRAS HIGH COURT], examined the question whether a particular transaction is an inter-state sale or a works contract. In the instant case, there is no quarrel that the appellants are involved in works contract. The judgment is distinguishable on facts and on law and reliance placed by the appellant on the said judgment is totally misconceived. The 46th Amendment to the Constitution of India and the insertion of Clause 29-A in Article 366 and Section 3-B(2)(e) of the Tamil Nadu General Sales Tax, 1959, were not brought to the attention of the Division Bench, since the issue involved was entirely different.
The correct position of law as repeatedly and consistently pointed out by the Hon'ble Supreme Court, finally in STATE OF KARNATAKA ETC. VERSUS M/S PRO LAB & ORS. ETC. [2015 (2) TMI 388 - SUPREME COURT] is “to sum up, it follows from the reading of the aforesaid judgment that after insertion of clause 29-A in Article 366, the Works Contract which was indivisible one by legal fiction, altered into a contract, is permitted to be bifurcated into two: one for "sale of goods" and other for "services", thereby making goods component of the contract exigible to sales tax.
Further, while going into this exercise of divisibility, dominant intention behind such a contract, namely, whether it was for sale of goods or for services, is rendered otiose or immaterial. It follows, as a sequitur, that by virtue of clause 29-A of Article 366, the State Legislature is now empowered to segregate the goods part of the Works Contract and impose sales tax thereupon. It may be noted that Entry 54, List II of the Constitution of India empowers the State Legislature to enact a law taxing sale of goods. Sales tax, being a subject-matter into the State List, the State Legislature has the competency to legislate over the subject.
Since the question of law has been resolved on the basis of authoritative pronouncements of the Hon'ble Supreme Court, it would be a fruitless exercise to refer the Writ Appeal once again to the Division Bench.
Appeal dismissed.
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2020 (6) TMI 327
Jurisdiction - powers of the competent authority to initiate the revision of the assessment as per Section 25(1) after lapse of six years - HELD THAT:- The issue is decided by the judgment of this Court in BAIJU A.A. AND OTHERS VERSUS STATE TAX OFFICER, STATE OF KERALA AND OTHERS [2019 (12) TMI 469 - KERALA HIGH COURT]. In Para 21, the amendments to Section 25 of the KVAT Act through the Kerala Finance Act 2018 was declared to be illegal and unconstitutional in as much beyond the legislative competence of the State Legislature. Be that as it may, the limitation in the instant case expired as per the provisions of the 25(1) of the KVAT Act on 31st of March 2018, whereas the Ext.P1 assessment order is dated 26th March 2019 much beyond thereof.
The assessment order dated 26th March 2019 could not have been revised after expiry of six years - the assessment order is devoid of the merits, and is quashed - petition allowed.
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2020 (6) TMI 326
Filing of form GST TRAN-1 - transitional credit - transition to GST regime - Central Goods and Services Tax Act, 2017 - it was held by Delhi High Court that a direction is issued to the Respondent to either re-open the Portal to enable the Petitioner to file its TRAN-1 Form electronically failing which to permit it to file manually on or before 13th September, 2019.
HELD THAT:- There are no reason to interfere with this SLP - SLP dismissed.
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2020 (6) TMI 325
Reopening of assessment u/s 147 - stock-in-trade had to be valued at the present market value - HELD THAT:- The true purpose of crediting the value of unsold stock is to balance the cost of those goods entered on the other side of the account so that the cancelling out of the entries relating to the same stock from both sides of the account would leave only the transactions on which there had been actual sales in the course of the year showing the profit or loss actually realised on the year’s trading.
While anticipated loss is taken into account, anticipated profit in the shape of appreciated value of the closing stock is not brought into the account as no prudent trader would care to show increased profit before its actual realisation. This is the theory underlying the rule that the closing stock has to be valued at cost or market price whichever is lower and it is now generally accepted as an established rule of commercial practice and accountancy. Taking the view that profits for income tax purposes are to be computed in conformity with the ordinary principles of commercial accounting unless such principles have been superseded or modified by legislative enactments, it would be a misconception to think that any profit arises out of valuation of the closing stock.
Computation of ‘capital gains’ - stand of the assessee is that it had rightly deducted the cost incurred in acquiring the property from the fair market value of the land converted into stock-in-trade - HELD THAT:- For computing the income under the head ‘capital gains’, the full value of consideration received as a result of transfer of the capital asset shall be deducted by the expenditure incurred in connection with such transfer, cost of acquisition of the asset and the cost incurred in improvement of the asset. The expression ‘the full value of the consideration’ would mean the fair market value of the asset on the date of such conversion. The meaning of the expressions ‘cost of improvement’ and ‘cost of acquisition’ are explained in Sections 55(1) and 55(2) of the Act respectively.
In the case of Miss Piroja C. Patel [1999 (3) TMI 38 - BOMBAY HIGH COURT] the question before this Court was whether the Tribunal was justified in holding that the amount in question being compensation paid by the assessee to the hutment dwellers for vacating the land was an allowable expenditure within the meaning of Section 48 read with Section 55 of the Act. This Court held that on eviction of the hutment dwellers from the land in question, the value of the land increases and therefore, the expenditure incurred for having the land vacated would certainly amount to cost of improvement.
Third ground is concerned, we do not find any rationale in the view taken by the Assessing Officer. The cost incurred on stamp duty etc. together with the cost incurred in carrying out eviction of the hutment dwellers would certainly add to the value of the asset and thus amount to cost of improvement which is an allowable deduction from the full value of consideration received as a result of the transfer of the capital asset for computing the income under the head ‘capital gains’.
AO has taken the view that long term capital gains arising out of sale or transfer of land would be assessed to tax only in the year in which the land is sold or otherwise transferred by the assessee? - What the partner gets upon dissolution of the partnership or upon retirement from the partnership is the realisation of a pre-existing right or interest - There was nothing strange in the law that a right or interest should exist in praesenti but its realisation or exercise should be postponed. Applying the above principle, it can certainly be said that upon purchase of the flat, the purchaser certainly acquires a right or interest in the proportionate share of the land but its realisation is deferred till formation of the co-operative society by the flat owners and transfer of the entire property to the co-operative society.
There was no basis or justification for respondent No.1 to form a belief that any income of the assesee chargeable to tax for the assessment years under consideration had escaped assessment within the meaning of Section 147 - reasons rendered could not have led to formation of any belief that income had escaped assessment within the meaning of the aforesaid provision. Therefore impugned notices issued under Section 148 of the Act cannot be sustained. - Decided in favour of assessee.
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2020 (6) TMI 324
Money Laundering - allegation of depositing demonetized notes of more than ₹ 44 crores in accounts of various persons, including his own, and thereafter transferring it through RTGS into accounts of various other persons at Delhi and Kolkata, mostly in fictitious accounts - HELD THAT:- The petitioner is in fact the main player in the whole episode. It was submitted that he is the person who actually brought the demonetized cash to the Bank where it was allowed to be deposited in the accounts of others persons without their knowledge and subsequently, they were transferred through RTGS to other accounts. It was submitted that Shashi Kumar and Rajesh Kumar had given blank cheques to the Bank for being used in case they defaulted in the loan repayment and, having been given in good faith, were misused, in connivance with the Bank officials by using them for RTGS transfer from their accounts to various other accounts. It was submitted that under such circumstances, it was the petitioner who had laundered the demonetized illegal cash into legal cash through the mode of depositing it in connivance with the Bank officials and then getting the same transferred to various other accounts, most of which were fictitious.
The petitioner should not be enlarged on bail - application dismissed.
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2020 (6) TMI 323
Bogus purchases - gp estimation @12.5% on non-genuine purchases - HELD THAT:- It is a well settled law that in case of bogus purchases only the profit embedded in non-genuine purchases should be brought to tax. In our considered opinion, estimation of GP @12.5% is on the higher side keeping in view assessee’s nature of business - Ends of justice would meet if GP on bogus purchases is estimated at 5% over and above the GP declared by the assessee.
Order being pronounced after ninety (90) days of hearing - COVID-19 pandemic and lockdown - HELD THAT:- Taking note of the extraordinary situation in the light of the COVID-19 pandemic and lockdown, the period of lockdown days need to be excluded. See case of DCIT vs. JSW Limited [2020 (5) TMI 359 - ITAT MUMBAI]
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2020 (6) TMI 322
Disallowance u/s 14A r.w.r. 8D - assessee has earned dividend income - assessee made suo-motu disallowance under section 14A - HELD THAT:- For disallowance under Rule 8D(2)(i) and (ii), the disallowance made by AO was unwarranted. Demat charges were related to assessee’s Share Broker business and were unrelated to earning of exempt income. As regards interest expenditure, the assessee has shown from the Balance Sheet as on 31/3/2012, that own funds of the assessee were much more than the investments made. It is a well settled legal proposition that were both, interest bearing and own interest free funds are available, it shall be presumed that investments are made from own funds. Disallowance made under rule 8D (2)(i) & (ii) were uncalled for. In so far as disallowance under rule 8D (2)(iii) is concerned, the assessee has made suomotu disallowance of ₹ 10,000/- as against dividend income of ₹ 1,21,155/-.
Apex Court in the case of PCIT v. State Bank of Patiala [2018 (11) TMI 1565 - SC ORDER] has approved that disallowance under section 14A r.w. Rule 8D(2)(iii) cannot exceed the exempt income earned. We find no merit in ground No.1 of the appeal, the same is dismissed, accordingly.
Disallowance of Client referral fees - HELD THAT:- A perusal of the table furnished by the assessee clearly indicates that percentage of the fees paid in each year varies and there is no fixed pattern of payment of Client referral Fees. AO should have examined genuineness of the payments made rather than estimating by applying percentage of the earlier assessment year. In the facts of the case, we deem it appropriate to restore this issue back to the file of AO to verify genuineness of the payments made to the parties concerned. AO while verifying genuineness of the payments, shall grant reasonable opportunity of hearing to the assessee, in accordance with law.
Order being pronounced after ninety (90) days of hearing - COVID-19 pandemic and lockdown - HELD THAT:- Taking note of the extraordinary situation in the light of the COVID-19 pandemic and lockdown, the period of lockdown days need to be excluded. See case of DCIT vs. JSW Limited [2020 (5) TMI 359 - ITAT MUMBAI]
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2020 (6) TMI 321
Absolute Confiscation - Penalty - Smuggled Cigarettes - present and past consignments - aluminum scrap confiscated on the premise that the same had been camouflaged to cover up the smuggled cigarettes - whether the appellant have smuggled cigarettes by concealing in the consignment of aluminum scrap in the case of past consignment or otherwise? - HELD THAT:- In respect of all the consignments physical examination of the container was carried out and no discrepancy was found therefore, as per the physical examination of imported aluminum scrap there is no evidence that the cigarettes were concealed under the imported aluminum scrap. The revenue’s sole reliance is on email retrieved from the email ID of Shri Bharat Patel. However, even if it is accepted that email was sent to Shri Bharat Patel but on the face of the examination order it is clear that cigarettes were not supplied along with the aluminum scrap in the past consignment.
As regard import of Metal Scrap a circular No. 43/2001-Cus dated 06.08.2001 as amended from time to time was issued. In terms of such circular Metal Scraps imported in unshredded should be accompanied by pre shipment inspection certificate. The said consignment is required to be examined by 25% in respect of manufacturer importers and 50% in respect of traders - the custom officer has examined the goods as evident from the examination order and during examination the officers did not find the cigarette concealed under the said scrap. After examination the goods for past imports were allowed clearances for home consumption without any hindrances. This shows that the procedure as required under Section 47 which is mandatory has been complied with.
In view of the examination of the goods, it is important to note that examining officers have not been questioned about the manner of examination of the past consignment. If this be so, the examination report cannot be discarded. If at all there is any lapse on the examination officer, some action should have been taken by the department. In this fact in one hand department accepted the examination of goods and on the other hand solely relying on an email held that appellants have smuggled cigarettes concealing under Aluminum scrap in past consignment, which cannot be accepted.
In the present case, since the goods were physically examined and Custom officer did not find the cigarettes concealed with the consignment of aluminum scrap. Hence the statements given by the witnesses found to be incorrect. In these circumstances, the documentary evidences i.e. Examination Order will be the prevailing evidence over the statements recorded under Section 108 of the Customs Act. Therefore, as per the facts of the present case, the statements have no evidentiary value therefore, on that basis it cannot be concluded that the appellants have smuggled cigarettes concealed under the past consignment of aluminum scrap. It is further noticed that as regard the past import by M/s. Dwarkesh Recycling there is no reference made in the email retrieved from email ID of Shri Bharat Patel. Therefore, in any case in respect of past import made by M/s. Dwarkesh Recycling it cannot be disputed particularly on the basis of email.
The identical issue has been considered by the Hon’ble Andhra Pradesh High Court in the case of SYED IRFAN MOHAMMED AND ANOTHER PETITIONERS VERSUS THE UNION OF INDIA, REP. BY ITS SECRETARY, DEPARTMENT OF REVENUE, MINISTRY OF FINANCE [2017 (2) TMI 961 - ANDHRA PRADESH HIGH COURT] wherein on the basis of the live consignment in respect of past consignment also demand of duty and penalty was made. In the live consignment. Custom Authority found cigarettes and on the basis of the Modus-Operandi in respect of live consignment the demands were raised on the premise that similar Modus-operandi was adopted in the past consignment. The Hon’ble High Court held that when the goods were examined by the Custom officer and did not find any mis-declaration it cannot be held that what was found in the live container was carried out in the past container specifically when all the statutory formalities were carried and goods were cleared for home consumption.
There is no dispute that the cigarettes were found concealed under the consignment of aluminum scrap therefore, the goods are liable for confiscation. For the purpose of confiscation of goods mens rea is not required. There is clearly a misdeclaration as per the physical examination of the goods, therefore, we agree with the Adjudicating Authority that the cigarettes concealed with aluminum scrap were rightly confiscated absolutely - The penalty was also imposed towards confiscation of aluminum scrap for which there was no fault of the appellant as there was no mis-declaration. As regard the aluminum scrap the import documents are also for import of aluminum scrap therefore, penalty with respect to aluminum scrap should not have been imposed.
Penalty u/s 114AA and 112a of CA - HELD THAT:- The penalty under Section 114AA was imposed upon M/s. Shivanjali Corporation and Shri Bharat Patel is relating to past consignments and as we held that in the past consignment there is no case of smuggling of cigarettes, the penalty under Section 114 AA will not sustain - Keeping in view the smuggling of cigarettes in the past as well as live consignment since the demand of past consignment was set aside and in the live consignment the penalty was imposed under section 114A as well as Section 112a(i) there should not be further penalty under Section 114AA.
Appeal allowed in part.
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2020 (6) TMI 320
Penalty u/s. 271(1)(c) - Defective notice - not spelt out the specific fault/charge as to whether ‘assessee had concealed the particulars of his income’ or ‘furnished inaccurate particulars of such income’ - HELD THAT:- Show cause notice issued in the present case u/s 274 of the Act does not specify the charge against the assessee as to whether it is for concealing particulars of income or furnishing inaccurate particulars of income. See JEETMAL CHORARIA VERSUS A.C.I.T., CIRCLE-43, [2017 (12) TMI 883 - ITAT, KOLKATA]
The show cause notice u/s 274 of the Act does not strike out the inappropriate words. In these circumstances, we are of the view that imposition of penalty cannot be sustained.
Imposition of penalty in the present case cannot be sustained and the same is directed to be cancelled. We, therefore, hold that imposition of penalty and subsequently confirmed by the Ld. CIT(A) in the present case cannot be sustained and the same is hereby deleted. Appeal of assessee is allowed.
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