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Showing 1 to 20 of 1244 Records
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2014 (8) TMI 1246
Deduction u/s 80P(2)(i) - interest income earned by the assessee, from the fixed deposits - finding recorded by the AO and Tribunal is that the appellant-assessee had surplus funds, which were not required for carrying on the business of granting credit facilities to the members. The said surplus funds were invested in fixed deposit receipts with commercial banks, for an average maturity period of 500 days
HELD THAT:- The term or expression, "income" has been defined in Section 2(24) of the Act. By way of Finance Act, 2006, sub-section (viia) was inserted to stipulate that profits and gains of business of banking, including credit facilities, carried on by a cooperative society with its members, is taxable and is included in the term, "income". The aforesaid definition of term "income" is inclusive and a broad one. Thus, the income of the assessee would be taxable u/s 2(24), including the income earned by way of interest on the FDRs with commercial banks. Section 80P provides partial exemption, restricted to the specified "earning" or "incomes" in sub- section (2), and not the entire income. For the purpose of the present appeal, Section 80P(2) clause (a)(i) is material.
The present case is of surplus funds, which were not required for carrying on business of providing credit facilities to members. Half of the funds mobilised/collected from the members could be used for providing credit to the members. The balance amount had to be retained and used for specified purpose, other than providing credit facilities to members. This amount was deposited in FDRs for an average period of 500 days. Bye-laws of the appellant cooperative society prescribed that 50% of the amount mobilised/collected would not be given on credit to the members.
These constituted surplus funds as has been held by the AO and by the Tribunal. It is on these funds that the interest was earned. The interest earned from the aforesaid funds as held by the Supreme Court in Totgars' Cooperative Sale Society Ltd. [2010 (2) TMI 3 - SUPREME COURT] would fall u/s 56 and would be taxable under the head "income from other sources".
Appellant-assessee has pointed out that the CIT (A) had decided the issue in their favour, and therefore other contentions raised regarding expenses covered u/s 57(3) i.e. allowability of expenditure having nexus with earning of the said income was not examined. This ground/argument was in alternative.
Revenue submits that this question may be remitted to the CIT (A) as he had not decided the said question having allowed the appeal in entirety holding that the entire interest was exempt u/s 80P. We appreciate the stand taken by the learned counsel for the Revenue and accordingly the matter is remitted on the said aspect to the CIT (Appeals) for decision.
Claim for deduction u/s 80P(2)(i), we find that there was no discussion or finding by the CIT ( A), though this ground/issue was raised. This has happened because the CIT (A), as noted above, had granted exemption to the entire income earned by the appellant-assessee u/s 80P(2)(i)(a). Revenue submits that this issue could be examined by the Commissioner of Income Tax (Appeals) on merits.
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2014 (8) TMI 1245
Dishonour of Cheque - conviction of accused - adequate sentence imposed or not - HELD THAT:- In Suganthi Suresh Kumar v. Jagdeeshan, [2002 (1) TMI 1284 - SUPREME COURT], this Court was considering the propriety of inadequate sentence imposed by courts on the accused charged under Section 138 of the NI Act. This Court expressed displeasure about courts imposing a flea-bite sentence on the accused.
Again, in R. Vijayan v. Baby and Anr. [2012 (6) TMI 519 - SUPREME COURT] this Court considered the same question. This Court also examined the need to award compensation to the complainant. This Court was of the opinion that the traditional view that the criminal proceedings are for imposing punishment on the accused, either punishment or fine or both, and there is no need to compensate the complainant, particularly if the complainant is not a victim in the real sense, but is a well-to-do financier or financing institution, gives rise to difficulties and complications. This Court further observed that in those cases where the discretion to direct payment of compensation is not exercised, it causes considerable difficulty to the complainant, as invariably, by the time the criminal case is decided, the limitation for filing civil cases would have expired - This Court further observed that the direction to pay compensation by way of restitution in regard to the loss on account of dishonour of the cheque should be practical and realistic which would mean not only the payment of the cheque amount but interest thereon at a reasonable rate.
The impugned order needs to be modified - the Respondent-accused sentenced to undergo simple imprisonment for a period of six months for offence under Section 138 of the NI Act - Considering the fact that the cheque amount is Rs. 6,19,488/-, the Respondent-accused is directed to pay compensation of Rs. 10,00,000/- to the Appellant. In default of payment of compensation, the Respondent-accused will have to undergo simple imprisonment for a period of six months.
Appeal disposed off.
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2014 (8) TMI 1244
Seeking release of vehicle - evasion of tax - creation of fictitious firm with intent to evade tax - HELD THAT:- As per the detailed order passed by the Chairman, VAT Tribunal, Punjab it has been observed that the transaction has been duly recorded in account books and in the original books could have been produced. The petitioner is a registered dealer and the nature of transaction can be decided by the said assessing authority if the matter is referred to him and on referring the matter the assessing authority can assess the matter. Even if the transaction is to get oil from Sangria to Amritsar, even then no attempt to evade the tax due under the Act has been established because in case of interstate transaction, the tax was to be collected by the Rajasthan State.
In the present case after going through the orders passed by the Chairman, Value Added Tax Tribunal, Punjab, Chandigarh, the continuation of the proceedings in the FIR would amount to process of Court. Consequently, FIR under Section 420, 406, 467, 468, 471, 201, 120-B of the Indian Penal Code, at Police Station Lambi District Muktsar Punjab are quashed along with subsequent proceedings arising out of the qua the petitioners.
Appeal allowed.
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2014 (8) TMI 1243
Charge memo issued to CIT(A) - disciplinary actions on allegations of mala fide against an officer exercising quasi-judicial powers - as alleged CIT (Appeals), had allowed certain appeals without properly appreciating the facts or going through the records - Secret Note was forwarded for examination to Director of Income Tax (Vigilance), who in the reports stated that out of nineteen appellate orders passed by the CIT(Appeals/respondent and inspected by him, irregularities were noticed in six appellate orders - Whether Tribunal had erred in holding that the Articles of Charge were not sustainable since they were based on quasi-judicial orders passed by the respondent in his capacity as CIT (Appeals)?
HELD THAT:- In the present case, a plain reading of the Articles of Charge as well as the statement of imputations clearly indicate that the sole basis for making the charges is the correctness of the decisions rendered by the respondent while he was acting as CIT (Appeals)
HELD THAT:- The gravamen of the charges levelled against the respondent are not based on his conduct. Although it has been alleged that certain decisions rendered indicate a lack of devotion to duty, but a bare perusal of the statement of imputation and the Articles of Charge indicate that the gravamen of the charges is only that the respondent had rendered decisions which, according to the Revenue, were erroneous. This is certainly not the basis on which the proceedings for misconduct can be commenced against a officer who is charged with a quasi-judicial function.
As decided in KK. DHAWAN [1993 (1) TMI 255 - SUPREME COURT]there was a specific allegation that the Officer had completed the assessment “apparently with a view to confer to undue favour upon the assessee’s concern”. The test laid down by the Supreme Court in that case must be read in the context of the facts placed before the Court. Although, the Court had held that where an officer had acted in a manner which would reflect upon his reputation for integrity or good faith or devotion to duty, a disciplinary action could be initiated. However, an act of an Officer which would reflect on his devotion to duty must be read in the context of his conduct and not the correctness of the decisions rendered by him in a multi-tiered appellate structure. The conduct of an officer must be alleged to be one, which reflects recklessness or complete disregard for the function that he is performing. Mere erroneous decisions on account of a mistake of law or facts, cannot be the basis of commencing proceedings for misconduct.
The decision in the case of K.K. Dhawan (supra) cannot be read to mean that misconduct proceedings can be commenced, alleging lack of devotion of duty, in cases where the decisions rendered by quasi-judicial authority are alleged to be erroneous. There has to be something more than mere allegation of erroneous decisions to charge an employee for misconduct; the conduct of an employee must be alleged to be reckless or for motives. In absence of such imputations, a charge made solely on the basis of a decision rendered by a quasi-judicial authority would not be sustainable.
The petitioner’s contention that the tribunal erred in relying on the statement of law in Nagarkar (supra) as the law stated by the Supreme Court in that case is no longer good law, also cannot be accepted.
It is also necessary to bear in mind that a CIT (Appeals), essentially has to decide the cases based on the contentions canvassed before him. Proceedings before a CIT (Appeals) are adversarial proceedings and are bound to be decided in favour of one or the other party. It is necessary to ensure that a CIT (Appeals) or any other quasi-judicial authority is not put under any pressure in discharging his functions. The idea that the Government could commence disciplinary proceedings if, the decisions were rendered against the department, would be pernicious to the effectiveness of the role that is required to be performed by the CIT (Appeals).
We concur with the reasoning of the Tribunal that a quasi-judicial authority is to act without fear and levelling charges which are based solely on the decisions rendered by the quasi-judicial authority would certainly instill fear in the minds of the officers and, thus, cannot be permitted. No reason to interfere with the decision of the Tribunal
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2014 (8) TMI 1242
Permission to applicant bank to remain outside the winding up proceedings for enforcing its security interest in the secured assets of the Company (in liquidation) - permission to applicant bank to sell the secured assets of the Company (in liquidation) under the provisions of the Securitisation And Reconstruction of the Financial Assets and Enforcement of Security Interest Act, 2002 - permission to applicant bank to proceed with the sale by e-auction fixed on 28.3.2014 - HELD THAT:- The provisions of SARFAESI especially section 13 and proviso there under are required to be read along with provision of Section 37 and other provisions and bare reading of the provision of Section 37 would make it incumbent upon all the concerned to accept that the provision of SARFAESI Act are not to be treated as interrogation of any provision of law, including Companies Act. Therefore bear-in-mind provision of Section 37 and its mandate which has been embedded in the very Special Act the submission of counsel for the bank and sole bidder is required to be viewed. The submission in respect of Section 13(9) that the only obligation upon the agency invoking SARFAESI provisions in respect of the company in liquidation is for reserving the funds from the sale proceeds, to meet with the liability of the company qua its workmen, is to say the least inadequate and truncated reading of the provisions without any reference to the detailed provisions of the Companies Act as well as the SARFAESI Act and the Rules. The proviso of Companies Act is not to be brushed aside and the Companies Act cast an obligation upon all the concerned to see to it that the company in liquidation and its assets are to be treated in a manner so as to satisfy the larger segment.
The provision of making reserve or providing for reserve from the sale proceeds cannot be said to be an unfettered license in SARFAESI Act to deal with the property which may not be commensurate with commercial prudence and tenets flowing there from. The Court hasten to add here that the provision of section 13 (9) of SARFAESI Act and proviso thereto are to be read bear-in-mind that the agency invoking SARFAESI Act in a case of company under liquidation will take all the care and precaution to see to it that the provisions of SARFAESI Act are completely complied with, and it may not in any manner violate principles of Company Law - The Court is in full agreement with the counsels of the applicants that in a given case when there is proper justification for the secured creditor who is sought to invoke SARFAESI Act shall take precedence over all other creditors and essentially when it has chosen to remain outside the proceedings of winding-up. But that also will not absolve that agency of observing minimal of principle of reasonableness in dealing with the property.
The secured creditor even if is permitted to remain outside the winding up proceedings, cannot be permitted to ignore or over look the interest of other creditor so as to deprive them of their right to realise the dues. Ofcourse the secured creditors are to be given priority than unsecured creditors but that in itself would not cloth the secured creditor with power to sale property for song.
The Court, therefore is of the considered view that the bank is required to be directed to issue fresh advertisement after obtaining fresh valuation in consultation with Official Liquidator, and make it clear in the advertisement itself that the company is in liquidation, that the bank shall after fresh valuation prepared of the entire property in consultation with the Official Liquidator, fix the reserve price, which shall not be less than Rs.6,25,00,000/- as it is in bank’s own assessment for offering finance on this very property. In any manner if the valuation is more than Rs.6,25,00,000/- then the bank is at liberty to fix appropriate reserve price / upset price also.
Application disposed off.
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2014 (8) TMI 1241
Right to statutory bail - Interpretation of statute - proviso to sub-Section 2 of Section 43D of the Unlawful Activities (Prevention) Act, 1967 - interplay of sub-Section 2 of Section 173 of the Code of Criminal Procedure, 1973 with sub-Section 8 thereof - HELD THAT:- The undisputed legal position on which neither side was at variance is that for offences under the Unlawful Activities (Prevention) Act, 1967 investigation can be conducted by the National Investigating Agency and the provisions of the Code of Criminal Procedure, 1973 would apply concerning investigation as also cognizance of offences by Courts, but as modified by the applicable provisions of the Unlawful Activities (Prevention) Act, 1967. The cognizance of reports had to be by the Designated Courts constituted as per law under the NIA Act.
The centre of gravity of the first argument concerns the first proviso to sub-Section 2 of Section 43D of the Unlawful Activities (Prevention) Act, 1967. It reads: Provided further that if it is not possible to complete the investigation within the said period of ninety days, the Court may if it is satisfied with the report of the Public Prosecutor indicating the progress of the investigation and the specific reasons for the detention of the accused beyond the said period of ninety days, extend the said period up to one hundred and eighty days - Now, as a matter of fact, when the 90 days period of detention was about to expire, pleading that the investigation was still in progress, an application was filed contents whereof have been reproduced in paragraph 3 by us for detention to be extended up to 180 days and along with the application a report of the learned Public Prosecutor was filed.
The report of the Public Prosecutor makes a reference to the application prepared by the Investigating Officer. It also records that the learned Public Prosecutor has perused the case diary. The report highlights that a large number of call details and e-mails as also IDs of suspects have to be collected. It records that the investigation is voluminous and lengthy.
The contention that the report was prepared first and the application later on for the reason in the application it was written that the report of the Public Prosecutor was separately attached and therefore it has to be inferred that the report of the Public Prosecutor could not be based on the contents of the application, would presume that reference of one document in the other would make the existence of one antithetical to the existence of the other. The argument is fallacious.
It is trite that every investigation needs to be completed without unnecessary delay as per the mandate of sub-Section 1 of Section 173. Under sub-Section 2 as soon as the investigation is completed the report has to be forwarded to the Magistrate empowered to take cognizance of the offence. The contents of the report have to be as per sub-clauses (a) to (h) of sub-Section 2 - Now, an investigation would be complete if the Investigating Officer is able to gather all the facts, information and evidence as also is able to identify the accused and the requirements of sub-clause (a) to (d) are complied with in respect to the contents of the report. But sub-Section 8 of Section 173, which begins with a non-obstinate clause with a deeming provision interwoven, permits further investigation in respect of an offence after a report under sub-Section 2 has been furnished to the Magistrate.
To put it pithily the mandate of the law would be that if within the statutory period prescribed by law within which a charge sheet has to be filed, if the same is not filed the accused would be entitled to statutory bail; and the charge sheet being the report of the investigation forwarded as per sub-Section 2 of Section 173 of the Code of Criminal Procedure, 1973. The right to statutory bail would terminate with the filing of the charge sheet. The charge sheet filed has to be treated as the report of investigation. The further investigation under sub-Section 8 of Section 173 of the Code of Criminal Procedure supplements the charge sheet already filed and is not to be confused with the report of the investigation contemplated by sub-Section 2 of Section 173 of the Code of Criminal Procedure, 1973.
Appeal dismissed.
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2014 (8) TMI 1240
Eligibility of deduction u/s 80P - income earned by a co-operative credit society to provision of credit facilities to its members - whether the Assessee is a cooperative bank or not? - HELD THAT:- The deposits so accepted are used by the Assessee co-operative society for lending or investment. Even out of the deposits so received, the loans have been given to the members of the society in accordance with the objects as enumerated above. Thus, in our opinion, condition no.1 does stand satisfied and it can be said that the Assessee society was carrying on banking business as it was accepting deposits from the persons who were not members.
The authorised representative took the plea that the assessee has not obtained banking licence. In our opinion it is not necessary that the cooperative society should have a banking licence as per the definition under the Income Tax Act for carrying on banking business. If licence is not obtained it may be an illegal banking business under the other statute. What we have to see whether the nature of the business carrying on by the assessee is a banking business or not. The Income Tax in our opinion is not concerned whether the banking business carried on by the assessee is legal or illegal. The income has to be assessed u/s 14 of the Income Tax Act under the same head even if the nature of the business is illegal. If we look into the bye-laws which consists of fund of the society, we noted that the types of the deposits which the assessee has accepted as per bye-laws are the same as are being accepted during the course of the carrying out the banking activities.
So far as the second condition is concerned, there is no dispute that the paid up share capital and reserves in the case of the Assessee is more than Rs. 1 lac. Therefore, the Assessee satisfies the second condition.
So far as the third condition is concerned, we noted that Sec. 16 of The Karnataka State Co-operative Societies Act, 1959 permits admission of any other co-operative society as a member.
In case the rules and bye-laws of the other co-operative society provides otherwise, the co-operative society may not be admitted as a member of the co-operative society. The person, as per sub-section (2), must be qualified for becoming member not only u/s 16(1) but also as per the rules and bye-laws of the co-operative society. We cannot read sub-section (2) in the manner that the rules and bye-laws cannot permit the admission of any other cooperative society as a member of the co-operative society. Had that been the intention of the legislature, they would have not used the words “this Act, rules and bye-laws” in sub-section (2).
Thus we hold that the Assessee has to be regarded to be a primary co-operative bank as all the three basic conditions are complied with, therefore, it is a co-operative bank and the provisions of Sec. 80P(4) are applicable in the case of the Assessee and Assessee is not entitled for deduction u/s 80P(2)(a)(i). We, therefore, confirm the order of the CIT(A) not allowing deduction u/s 80P(2)(a)(i) to the assessee. Appeal filed by the assessee is dismissed.
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2014 (8) TMI 1239
Maintainability of petition - availability of alternative remedy of appeal - Section 45 of the HP VAT Act, 2005 - HELD THAT:- Petition dismissed with liberty to the petitioner to file an appropriate application before the Appellate Authority within 15 days' time from today.
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2014 (8) TMI 1238
Deduction u/s 80P(2)(a)(i) - Claim denied as assessee was not advancing loans for agricultural purposes only, so, it did not fall under the definition of ‘Primary Agricultural Credit Society’, but it was a cooperative bank - As per AO assessee was not advancing loans for agricultural purposes only, so, it did not fall under the definition of ‘Primary Agricultural Credit Society’, but it was a cooperative bank carrying on banking business and was not entitled for deduction u/s 80P as provided in section 80P(4) - HELD THAT:- As in the present case, it is not clear as to whether the assessee is a ‘primary agricultural credit society’ doing business of providing financial accommodation to its members only for agricultural purposes or it is a ‘cooperative bank’ doing banking business.
In the present case, AO quoted the submissions of assessee that somewhere he stated that the assessee –society was a bank carrying on banking business and somewhere he stated that the assessee society was a ‘primary agricultural credit society’, but AO had not given a concrete finding on the basis of the evidence available on the record that the assessee society was a ‘cooperative bank’ carrying on banking business.
It also appears that the decision of Jayalakshmi Mahila Vivododeshagala Souharda Sahakari Ltd. [2012 (8) TMI 185 - ITAT PANAJI] was not brought to the notice of neither the AO nor the Ld. CIT(A). In the present case, it is also not clear what happened to the order of the Ld. CIT(A) for the A.Y. 2007-08 which has been followed by the Ld. CIT(A) while deciding the issue for the year under consideration. We therefore, in the absence of clear facts available on the record, deem it appropriate to set aside this issue back to the file of the Assessing Officer to be adjudicated afresh in accordance with law after providing due and reasonable opportunity of hearing to the assessee.
Appeal of the assessee is allowed for statistical purposes.
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2014 (8) TMI 1237
Penalty proceedings u/s 271(1)(c) - determination of correct head of income - Gain on sale of shares - LTCG OR Business Income - income from capital gain was held to be assessable under the head ‘income from business and profession’ because according to AO the shares were purchased for trading purposes - also assessee has claimed deduction u/s 80G but the assessee had not filed any evidence regarding exemption - HELD THAT:- it was a finding of fact that shares were not held as investment which was confirmed by the Hon'ble High Court. However, at the same tome we find that there is no bar in the Companies Act to convert the stock in trade into investments. Merely because the assessee has treated a particular item of income and the Revenue has changed that treatment would not attract the penal action. See Cement Marketing Co. of India Ltd v Assistant Commissioner of Sales Tax
Wherever the assessee has a bonafide explanation to treat an item in a particular fashion and if that view is not accepted then the same cannot be fastened with penal consequences. See Reliance Petroproducts (P) Ltd [2010 (3) TMI 80 - SUPREME COURT]
Thus the assessee has duly disclosed the facts regarding sale of shares but the only difference is that since shares were treated as investment, therefore, gains were declared under the head ‘capital gain’ whereas same were assessed as income from business and profession by the Assessing Officer. This cannot be called to be a case of concealment of income or furnishing of inaccurate particulars of income. Merely the change in the heads of income would not lead to levy of penalty u/s 271(1)(c)
Rejection of claim on account of donation u/s 80G - As we find force in the submissions of assessee that assessee had itself added back his claim of donation in the computation of income, copy of which is available at page 5 of the paper book. In any case this claim was denied simply because the assessee could not file the certificate of eligibility for exemption u/s 80G and as far as payment is concerned, the same has not been doubted. Therefore penalty is not leviable in this case and accordingly we set aside the order of Ld. CIT(A) and delete the penalty. Assessee appeal allowed.
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2014 (8) TMI 1236
Filling of vacancy in the panel of arbitrators - Former Chief Justice of the Sikkim High Court had been appointed as the arbitrator to resolve the disputes and differences between the parties - HELD THAT:- In the present case Clauses 64(3)(a)(ii) and (iii) of the General Conditions of Contract do not prescribe any specific qualification of the arbitrators that are to be appointed under the agreement except that they should be railway officers. Even if the arbitration agreement was to specifically provide for any particular qualification(s) of an arbitrator the same would not denude the power of the Court acting Under Section 11(6), in an appropriate case to depart therefrom.
A period of nearly two decades has elapsed since the contractor had raised his claims for alleged wrongful termination of the two contracts. The situation is distressing and to say the least disturbing. The power of the Court under the Act has to be exercised to effectuate the remedy provided thereunder and to facilitate the mechanism contemplated therein. In a situation where the procedure and process under the Act has been rendered futile, the power of the Court to depart from the agreed terms of appointment of arbitrators must be acknowledged.
Thus, no infirmity much less any illegality or failure of justice can be said to be occasioned by the order passed by the High Court so as to warrant any interference - appeal dismissed.
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2014 (8) TMI 1235
Capital gain computation - cost of construction of the godown - Assessee after considering the cost of acquisition had worked out the capital gains which was not acceptable to AO - CIT(A) while allowing the appeal of Assessee has noted that the valuation report of the valuer had also estimated the cost of construction of the godown and therefore the Assessee’s share of ½ worked and thus he has considered the cost of acquisition of Rs. 27 lacs considered by Assessee to be in order - HELD THAT:- Before us, Revenue has not brought any material to controvert the finding of ld. CIT(A). Assessee has submitted that the balance ½ share which belonged to his brother and in his assessments, the cost of acquisition of the same godown has been accepted by the Revenue. Before us, no material has been brought on record to show that the valuation of the godown in the case of Assessee’s brother has been challenged in appeal before Tribunal.
We further find that in the case of CIT vs. Kumararani Meenakshi Achi [2006 (10) TMI 123 - MADRAS HIGH COURT] has held that the differential treatment cannot be meted out to another co-owner while making the assessment of same property or while valuing the same property. In view of the aforesaid facts and relying on the aforesaid decision of Hon’ble Madras High Court, we find no reason to interfere with the order of Ld. CIT(A) and thus these grounds of Revenue are dismissed.
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2014 (8) TMI 1234
Deduction u/s 10B - tribunal justification in treating the interest earned from the fixed deposits, interest earned on staff loans and fines collected from the staff and the insurance claim is not in connection with business as provided under Section 10B - HELD THAT:- In the assessee’s case itself, for the assessment year 1998-99, this Court [2010 (4) TMI 1147 - KARNATAKA HIGH COURT] held the said income has to be included in the business income. This Court also had an occasion to consider this question in extenso in the case of the Commissioner of Income Tax vs Motorola India Electronics (P) Ltd. [2014 (1) TMI 1235 - KARNATAKA HIGH COURT] where interpreting Section 10B held what is exempted is not merely the profits and gains from the export of articles but also the income from the business of the undertaking.
The impugned order passed by the tribunal cannot be sustained. Appeal is allowed. The substantial question of law framed is answered in favour of the assessee.
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2014 (8) TMI 1233
Reopening of assessment u/s 147 - Reason to believe - HELD THAT:- As decided in [2014 (1) TMI 1928 - ITAT HYDERABAD] it is the duty of the assessing officer to record valid reasons for reopening of the assessments as otherwise re-opening becomes bad in law since there is no live link/nexus between the reasons recorded and the formation of a belief in order to invoke the provisions concerning escapement of income - facts and circumstances in the group of cases posted now are mutatis mutandis identical since the statement of Shri Raju does not indicate anything about the present companies and no further investigation was made by the assessing officer before issuance of notice u/s 148 of the Act and thus the re-opening of assessments is bad in law. Decided in favour of assessee.
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2014 (8) TMI 1232
Recovery of dues - validity of claim of interest in addition to amount due - Cheque was given as security - non admission of liability - HELD THAT:- There is no material on record to show that there is an agreement between the parties regarding the claim of interest. Moreover, the claim for interest cannot be said to be a liquidated demand.
A perusal of Order 37, Rule 1, sub-rule 2 of the Code makes it clear that the dispute does not fall in any of the sub-clauses of sub-rule 2, in view of the claim of interest made by the petitioner. This alone raises a triable issue. Therefore, in the view of this Court, unconditional leave to defend has rightly been granted by the City Civil Court.
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2014 (8) TMI 1231
Dishonor of Cheque - cheque was issued by the petitioner or not - allegation raised in the complaint filed against the wife of the defacto complainant and the defacto complainant is that 5 cheques were stolen and the occurrence of the offence was stated to be between August 2011 and 27.3.2012 - HELD THAT:- This court is not inclined to accept such contention raised on the side of the petitioner/accused - Here is the case, wherein the private complaint was filed on 30.7.2012 stating that the amount of Rs.7,00,000/- was paid by way of cash to the accused and the cheque bearing No.114866 dated 5.6.2012 drawn on ICICI bank issued by the accused for the same, assuring that the same will be honoured on presentation. When it was presented for collection on 5.6.2012, it was returned dishonoured for the reason of “Account Blocked situation” through return memo dated 7.6.2012 etc. Whereas, the complaint regarding missing of cheques was given only on 19.12.2013. Had it been true, the petitioner would have thought it fit to give complaint during 2011 itself. Though the date of occurrence was between 2011 and March 2012, the complaint was given on 19.12.2013 much after the issuance of statutory notice.
This court is not inclined to accept the theory as put forth before this court, to quash the proceedings - the same is available by way of defence to the accused to be agitated before the trial court and the truthfulness or otherwise of such theory cannot be gone into by this court in this quash petition, which is summary in nature.
This court feels that it is not a fit case to quash the proceedings initiated against the petitioner herein - petition disposed off.
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2014 (8) TMI 1230
Validity of Arbitral Award - no arbitration agreement between the petitioner and the respondent - arbitrator had jurisdiction to decide the dispute between the parties or not - notice of the arbitral proceedings have been served upon the petitioner or not - whether the award deals with the dispute which is beyond the statement of claim - time limitation - HELD THAT:- Admittedly, all the three persons to the transaction are members of IMPAA and the Articles of Association of IMPAA provides for resolution of the disputes inter se it's members, by way of arbitration conducted by "Sub-Committee of Producers Grievances Cell and In-House Settlement". It is nobody's case that the IMPAA makes any distinction amongst it's members. Therefore, even if the dispute between it's members arises out of any capacity other than strictly that of a producer in the transaction between the parties, there can be no escape from the arbitration clause in the Articles of Association.
There is one more reason for rejecting the argument of Mr. Davar of want of Arbitration agreement between the parties. It is the specific case of the respondent that father of the petitioner carried on business of film producing in the name and style of M/s. V.R. Pictures. The petitioner, who is also a producer, on the death of his father, continued the business of the father in the same name i.e. M/s. V.R. Pictures from the same business premises. Therefore, on the death of the father, he stepped into shoes of the father and became liable to repay the loan in the capacity of the principal borrower as well. There is no material on record to challenge this contention of the respondent.
The petitioner next complains that notice of arbitration proceedings was not served upon him - HELD THAT:- Perusal of the impugned award shows that, on receipt of the complaint from the respondent, IMPPA had called for the comments from the petitioner. When he failed to respond, IMPPA assigned the complaint to the Committee for arbitration. The Committee sent notice of the arbitration dated 17th September, 2007 to the petitioner calling upon him to remain present before itself for the arbitration proceedings - The final notice came to be issued on 24th March, 2008 with a specific intimation to the petitioner that on his failure to attend the meeting, an ex-parte decision will be taken in the dispute. Even thereafter, two more notices i.e. notices dated 6th May, 2008 and 26th June, 2008 were given by the Committee to the petitioner before passing the arbitral award. This material from the record is neither disclosed in the petition nor dealt with by the petitioner. In any case, the record shows that the petitioner had appointed Advocate Gajendra Singh to represent him in the arbitral proceedings. That is how the advocate had, received the award on his behalf. Therefore, there is no merit in the contention of non-service of notice of arbitration proceedings.
Next ground of challenge canvassed is that, the award deals with the dispute which is beyond the statement of claim - HELD THAT:- The details of this contention are not stated anywhere in the arbitration petition. The reference to the arbitration had been made by the letter dated 27th July, 2007 sent by the respondent to the Secretary, IMPPA for taking up the case with M/s. V.R. Pictures for refund of the amount of Rs. 57,0,000/- with interest thereon. The letter specifically refers to the extension of time to repay until 18th June, 2006. Therefore, it cannot be said that the reference to the arbitration was of a claim that beyond the statement of claim.
There are no merit in the petition - petition dismissed.
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2014 (8) TMI 1229
Penalty u/s 271(1)(b) - HELD THAT:- Assessee admits that the summon was received personally by the assessee, which was handed over to the Chartered Accountant but the Chartered Accountant could not appear due to his personal illness. This fact was brought to the notice of the income tax authorities.
We are of the view that for the fault of the Chartered Accountant, the assessee cannot be punished as per the ratio laid down in the case of Commissioner of Income Tax Vs. S. Dhanabal [2008 (8) TMI 15 - DELHI HIGH COURT].
We cancel the levy of penalty order. All the impugned orders are hereby set aside. The assessee will get the relief accordingly.
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2014 (8) TMI 1228
Unexplained investment u/s. 69B - addition was made by the AO on the basis of entries made in the diary which had been found in the course of search (of Ashok Kumar Chowta) which was seized - AO based on the entries in the seized diary came to the conclusion that the assessee had paid the aforesaid sums over and above the amount recorded in the registered document and accordingly treated the same as unexplained investment u/s. 69B - HELD THAT:- The assessment is based purely on statement made at the time of Survey as well as on 11.5.2009 before the ADIT (Inv.) Mangalore, which according to us is a conditional statement and cannot form the basis for making an assessment. In our view, the assessee has been consistently taking a stand that the cash payments recorded in the seized diary was for procuring materials on behalf of Chowta and has nothing to do with the contract receipts of the assessee.
Cash payments were only payments made to the assessee for procuring materials for Ashok Kumar Chowta and it has nothing to do with the contracts executed by the assessee for Ashok Kumar Chowta. In fact as we have already seen the assessee had affixed his signature in the seized diary only for the reason that the payments for contract work executed by the assessee would be realized by Ashok Kumar Chowta only if such signature is made by the assessee. This will be clear from answer by the assessee to question 27 in the statement recorded at the time of survey.
Revenue has failed to bring in material on record to corroborate its conclusion that the entries found in the seized diary are unaccounted contract receipts of the assessee and therefore the profit element in executing such receipts has to be brought to tax.
There was no basis for the CIT (A) to have come to a conclusion that 1.5% of the receipts as evidenced in the seized diary should be brought to tax in the hands of the assessee. We, therefore, uphold the order of the CIT (A) deleting the addition of 8% of the receipts as found in the seized diary, however hold that the action of the CIT (A) in bringing to tax 1.5% of the cash receipts recorded in the seized diary was without any basis. There was no statement admitting any other income and the CIT(A) has based his conclusions in sustaining addition at 1.5% of cash receipts recorded in the seized diary based on an non-existent admission of other incomes not declared. Thus the relevant grounds of the assessee in its appeal as well as the cross objections are allowed while the appeals by the revenue on this aspect as raised in its appeals are dismissed.
Addition made of investment in properties for A. Ys. 2007-08 - AO has made the addition based on the entries found in the seized diary - The assessee in the statement recorded on 11.05.2009 in reply to question no.9 has stated that the cash payments to Ashok Kumar Chowta for purchase of residential and commercial premises was adjusted against the contract amounts due to the assessee. There is thus an admission by the assessee with regard to cash payments for purchase of properties in the statement recorded on 11.05.2009. His only stand has been that the cash payments were adjusted against contract amounts due to the assessee. This admission continues to remain without being retracted or explained as incorrect admission. It is thus clear that there were cash payments for acquiring the aforesaid properties over and above what is recorded in the registered documents as well as the books of accounts. The entries in the seized diary only corroborate the fact that there were cash payments in acquiring the aforesaid properties.
The fact that Soumya Shetty was not available to explain the entries, in our view, will not be material. The fact that the assessee made cash payments for acquiring these properties having been admitted it was incumbent upon the assessee to explain the source of funds for making the aforesaid cash payments. In our view, the assessee has not given any valid explanation in this regard. This admission by the assessee remains uncontroverted through out. We are, therefore, of the view that the addition to this extent deserves to be sustained.
Reopening of assessment u/s 147 - In the present case there was a search and recovery of seized diary which was new material based on which the Assessing Officer can entertain reason to believe regarding escapement of income - Similarly with regard to the decision of the Hon'ble Punjab and Haryana High Court in the case of Paramjit Kaur [2007 (8) TMI 323 - PUNJAB AND HARYANA HIGH COURT] the Assessing Officer in the present case after the survey had examined the assessee and on such examination the assessee offered to tax income, but did not file return of income as agreed. In such circumstances, the Assessing Officer entertained the belief regarding escapement of income and therefore it cannot be said that the reopening was not valid.
Similarly, the CBDT Instruction dt 10.03.2003 is only a direction not to take confession and it cannot be said that a reopening cannot be made on the basis of statement made at the time of search or survey. We are therefore unable to agree with the grounds raised by the assessee that reopening of assessment proceedings for A. Ys.2004-05 to 2008-09 was not proper.
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2014 (8) TMI 1227
Rectification of mistake u/s 154 - mistake was occurred in calculation of deduction u/s 80HHC of the Income Tax Act, 1961 while giving appeal effect u/s 251 - HELD THAT:- We find that the Tribunal while dismissing the appeal preferred by the Revenue has held It is a fact that the AO while giving appeal effect to the order of CIT(A) u/s. 251 of the Act dated 30.05.2006 allowed deduction u/s. 80HHC of the Act and that deduction was allowed on the basis of Form No.10CCAC as well as in view of the direction of CIT(A). The AO has taken recourse to the rectification proceedings as he wanted to compute the turnover and computation of turnover is a highly debatable issue as the assessee in original allowance i.e. giving appeal effect to the order of CIT(A) has given his opinion, which he cannot rectify while acting u/s. 154 of the Act. Once this is a position, we are of the view that the CIT(A) has rightly quashed the rectification proceedings carried out by the AO u/s.154
The provision for rectification of mistake under Section 154 of the Income Tax Act, in our view, is “to rectify any mistake apparent from the record”, that is, the mistake should be palpable and as the Tribunal had held that in the instant case it is “a highly debatable issue”, we are of the view that no substantial question of law arises out of the order passed. The revenue was unable to demonstrate that the rectification of computation made arose out of a mistake apparent from the record.
Therefore, the application and the appeal are dismissed.
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