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Showing 461 to 480 of 23051 Records
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2019 (12) TMI 1227
Assessment u/s 153A - addition on account of liquor sales - Estimation of undisclosed Restaurant Sales and Consequent Profits - HELD THAT:- In the present case, there was no seized material found during the course of search to estimate the liquor sales, restaurant sales or income from M/s. Kwality Restaurant to sustain the addition. Even while conducting enquiry after search also, the Assessing Officer has not come across any material which relates to the assessee so as to make addition in these assessment years. We could have confirmed the addition , had there been any post search evidence/material found by the Assessing Officer. Neither seized material was found during the course of search nor any material found during the post search enquiry. There is also no allegation that the original assessment was found to be wrong in view of wrong claim made by the assessee. In other words, since the assessment was framed u/s. 153A r.w.s. 143(3) of the I.T. Act, the Assessing Officer could make addition, which he could make u/s. 143(3), even without seized material.
There was hardly any evidence to estimate turnover and income of Kwality Restaurant and club the same with the appellant for A.Ys 2001-02 to 2006-07 and also for the period up to 31st December, 2006 for AY 2007-08. Thus, the Assessing Officer was not justified in clubbing the income of Kwality Restaurant in the hands of the assessee for the above period.
In view of the above, we hold that estimation of undisclosed turnover from Kwality Restaurant and computing the undisclosed income on the same by the Assessing officer was not backed by any evidence and was purely a guess work and therefore, the addition worked out by the Assessing officer in the A.Y. 2001-2002 is to be deleted. Being so, business income from Kwality Restaurant cannot be assessed in the hands of the assesse and we do not find any infirmity in the orders of CIT(A) on this issue. Thus, this ground of appeal of the assessee is allowed and that of the Revenue is dismissed. The appeal of the assessee is allowed and the appeal of the Revenue is dismissed.
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2019 (12) TMI 1226
Nature of income - professional fees received by the doctor from the Hospital - Taxable as salary or Income from Business or profession - Deduction of claim of expenditure - AO observed that, retainership fee received by the assessee from the company “North Bengal Eye Centre Pvt. Ltd.” was not in the nature of professional fees assessable under the head ‘income from profession’, but was in the nature of salary income assessable under the head ‘income from salary’ - HELD THAT:- AO has in his assessment order assessed the income in question under the head ‘income from profession’, though in the body of the order, he was of the opinion that the income in question was assessable under the head ‘income from salary’. He simply disallowed the claim of exemption made by the assessee and assessed the gross receipts as professional income.
A perusal of the agreement demonstrates that the assessee was rendering professional services. It does not lead us to a conclusion that there is an ‘employer-employee’ relationship between the assessee and the company.
There is no master-servant relationship between the assessee and the hospital. There is no vicarious liability on the company, as only the assessee is liable for any professional negligence and he has indemnified the company.
The hospital deducted tax at source on the payments made u/s 194J of the Act as it was of the opinion that the payment was for professional services. Hence, we are of the opinion that the income in question is assessable under the head ‘income from profession’.
As already stated, the AO has assessed the income under the head ‘income from business or profession’. No reason is given for disallowing the claim of the expenditure except that such deduction is not allowable when computing income under the head ‘salary’. This finding has been overruled by us. Thus, we direct the allowance of the amount of expenditure as claimed by the assessee. - Appeal of the assessee is allowed.
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2019 (12) TMI 1225
Assessment u/s 153C - recording of satisfaction - CIT(A) deleted the addition by holding that the jurisdiction u/s 153C is not assumed properly - Papers found during the search of another person - AO wrote a satisfaction note, and held that these papers belong to the assessee and issued notice u/s 153C to the assessee. - HELD THAT:- CIT(A) while giving the finding observed that the satisfaction note is not recorded in the file of the assessee searched u/s 132 and documents claimed to be owned by the assessee was transferred to the file of the assessee. Therefore, the jurisdiction assumed u/s 153C in the case of the assessee is not in accordance with provisions of section 153C wherein satisfaction note in the searched persons proceeding has to be recorded separately. The Ld. DR from the records has not submitted the proper satisfaction except pointing out that the name of the assessee is mentioned in the satisfaction note.
In response to notice u/s 153C, the assessee filed return declaring income of Nil on 20.12.2012. All these contentions were dealt with by the CIT(A) while giving finding to that extent with reasoned order. The case laws referred by the Ld. DR that of PCIT vs. Sheetal International Pvt. Ltd. [2017 (7) TMI 738 - DELHI HIGH COURT] , PCIT vs. Instronics Ltd. [2017 (5) TMI 1426 - DELHI HIGH COURT] and Ganpati Fincap Services (P) Ltd. vs. CIT [2017 (5) TMI 1425 - DELHI HIGH COURT] are factually distinguishable as in present assessee’s case no satisfaction was recorded separately by the Assessing Officer of the searched person. Thus, these case laws will not be applicable in assessee’s case. Therefore, appeal of the Revenue is dismissed.
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2019 (12) TMI 1224
Exemption on account of Gratuity and leave encashment u/s 10(10)(i) and 10(10AA)(i) - HELD THAT:- Assessee was an employee of Chaudhary Charan Singh Haryana Agricultural University, Hisar, a State University, established under ‘The Haryana and Punjab Agricultural Universities Act, 1970’ and notified under University Grants Commission.
The Tribunal in case of Ram Kanwar Rana [2016 (6) TMI 687 - ITAT DELHI] held that the exemption u/s 10(10)(i) and 10(10AA)(i) are available to the assessee in respect of the arrears of gratuity and dismissed the grounds about the initiation of the re-assessment.
Similar view has been taken in several decisions including Raghubir Singh Panghal vs. ITO [2016 (6) TMI 1163 - ITAT DELHI] . As in the present case also the assessee is found to be an employee holding a civil post under a State, therefore, the provisions of Section 10(10)(i) of the Act are attracted in this case and the assessee is entitled to exemption in respect of gratuity amount received in total upto ₹ 10 lac which covers a sum of ₹ 6,50,000/- received during the year. As regards the arrears of leave encashment, it is also on the same footing to that of exemption claimed under Section 10(10)(i). Therefore, the assessee is entitled for the exemption claimed under Section 10(10)(i) and 10(10AA)(i) of the Act. The CIT(A) as well as the Assessing Officer was not right in disallowing the same - Decided in favour of assessee.
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2019 (12) TMI 1223
Penalty u/s. 271(1)(c) - Bogus purchases - estimation of Gross Profit was made by the Assessing Officer restricting the profit element in the alleged bogus purchases at 12.11% - HELD THAT:- Similar view has been taken in the case of CIT v. Aero Traders Pvt. Ltd. [2010 (1) TMI 32 - DELHI HIGH COURT] wherein the Hon'ble High Court affirmed the order of the Tribunal in holding that estimated rate of profit applied on the turnover of the assessee does not amount to concealment or furnishing inaccurate particulars.
In the case on hand the AO has only estimated the Gross Profit on the alleged non-genuine purchases without there being any conclusive proof of concealment of income or furnishing inaccurate particulars of such income. Thus, we do not observe any infirmity in the order passed by the CIT(A) in deleting the penalty imposed by the Assessing Officer. Appeal of the Revenue is dismissed.
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2019 (12) TMI 1222
Disallowance of bogus purchases - condonation of delay - AO made additions/ disallowance by taking view that the assessee has shown purchases from the parties which are identified as hawala dealers by Sales Tax department of the State Government - HELD THAT:- Assessee has fairly stated in the application/affidavit for condonation of delay that the impugned order dated 30.06.2016 was received on 16.07.2016. Considering the contents of the affidavit of the partner of the assessee that he was observing Jain Parushan from 29th August 2016 to 5th September 2016 and thereafter attend pilgrimage at Pali Thana Jain Temple and return to Mumbai only on 13.09.2016 and the appeal was filed immediately after proper consultation with Advocate on 27.09.2016. The assessee has shown bonafidely explained the delay and we have further seen that the delay is of only 13 days, thus, the delay in filing of the appeal is condoned.
Bogus purchases - Even if the transaction is not verifiable, the only taxable is the taxable income component and not the entire transaction. And after considering the facts of the case and the rival contentions of the parties we are of the opinion that in order to fulfill the gap of revenue leakage the disallowance of reasonable percentage of such purchases would meet the end of justice.
The Hon’ble Bombay High Court in CIT Vs Hariram Bhambhani [2015 (2) TMI 907 - BOMBAY HIGH COURT] held that revenue is not entitled to bring the entire sales consideration to tax, but only the profit attributable on the total unrecorded sales consideration alone can be subject to income tax. Considering the facts of the present case the disallowance on account of bogus purchases is restricted to 12% of the total impugned (disputed) purchases. The assessing officer is directed accordingly.
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2019 (12) TMI 1221
Order passed by the Addl. JCIT u/s 92CA (3) - Disharge of function of Transfer pricing officer (TPO) by the additional Commissioner Of Income Tax - assessee submitted that order passed u/s 92CA was passed by The Additional Commissioner Of Income Tax and he is not the authorised officer to pass such an order - HELD THAT:- Here it is not the case of the assessee that the additional Commissioner of income tax who passed the order of the transfer pricing under section 92CA (3) of the act was not authorised by the central board of direct taxes to perform all or any of the functions of an assessing officer specified u/s 92C of the Act. Here it is not the case of the assessee that the additional Commissioner of income tax who passed the order of the transfer pricing under section 92CA (3) of the act was not authorised by the central board of direct taxes to perform all or any of the functions of an assessing officer specified u/s 92C of the Act.
Thus we hold that, the order passed by the additional Commissioner of income tax u/s 92CA (3) of the income tax act is appellate order passed by a transfer pricing officer in case of the assessee for assessment year 2002 – 03. In view of this, the additional ground raised by the assessee in the cross objection is dismissed.
Cost for working out PLI of the assessee for benchmarking international transactions - Whether third-party cost should be included in the total cost of the assessee for providing marketing support services and therefore markup thereon should also be placed to determine the arm’s-length price of the market support and services fee on by the assessee? - In this case the agreement between the assessee and the associated enterprise was not produced before the lower authorities. In absence of examination of such agreement with the actual conduct of the parties, it cannot be decided that what are the ‘operating costs’ incurred by the assessee for marketing support services functions, therefore, the order of the learned CIT – A cannot be sustained. Further, we do not find that on what basis certain cost not allocated to the marketing support function of the assessee have been accepted by the learned CIT – A. No basis has been given for accepting the contention of the assessee by him. As the assessee has also produced the agreement between the associated enterprise and the assessee now (it was not before the learned assessing officer, the transfer pricing officer or before the learned CIT appeal) before us, there is no explanation with respect to what is the operating cost as well as what is the indirect overhead on which the assessee is required to be remunerated, the whole issue is required to be set aside to the file of the learned Assessing Officer/Transfer Pricing Officer with a direction to the assessee to produce all relevant agreement as well as to demonstrate the conduct of the assessee in accordance with those agreements , and to justify what the parties mean by the ‘operating cost’ and ‘indirect overhead’.
Thereafter the learned transfer-pricing officer may determine the arm’s-length price of the market support service fee, which would have been charged by an independent party to the associated enterprise. Accordingly, we set aside this issue to the file of the learned transfer-pricing officer accordingly. Thus, ground number one of the appeal of the learned assessing officer challenging the order of the learned CIT – A, wherein it has been held that no mark up was required on 3rd party cost incurred by the taxpayer on account of sales promotion, marketing and other expenses and expenses incurred for distribution of the digital satellite receiver for which dealers/agents were engaged and also the commission paid to dealers and agents for selling such digital satellite receiver is allowed for statistical purposes as per above directions.
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2019 (12) TMI 1220
Disallowance of expenses relatable to exempt income by invoking the provisions of section 14A of the Act read with Rule 8D - HELD THAT:- Once the assessee’s own interest free funds in the shape of share capital and reserve and surplus is more than investment in giving tax free bonds of Unit Trust of India, no disallowance on account of can be made. Hence, we delete the addition.
Disallowance of administrative expenses - HELD THAT:- We noted that the CIT(A) has restricted the disallowance at ₹38,690/- as against the amount offered by suo mot at ₹60,913/-. We find no infirmity in the order of CIT(A) and this issue of the assessee’s appeal is dismissed.
Disallowance of commission expenses simplicitor - revised return filed on 19.12.2009 was invalid return filed belatedly - HELD THAT:- We are of the view that this issue needs detailed verification at the level of AO afresh. Hence, we set aside the orders of the lower authorities i.e. the order of CIT(A) and that of the AO and remand the matter back to his file for fresh adjudication. The assessee committed before us that he will file all the required details to prove the commission expenses before the AO and incase assessee fails to explain the same, the AO can repeat the addition. Hence, this issue is set aside to the file of the AO.
Claim of deduction in respect of education cess - HELD THAT:- Education-cess is part of the Income tax and cannot be allowed as deduction. See K. SRINIVASAN [1971 (11) TMI 2 - SUPREME COURT]
Deduction under section 80IA - HELD THAT:- We noted that the Revenue has now only relied on the assessment order and no arguments were made. We noted that even this issue is covered by the CBDT Circular No 1/2016 dated15.02.2016, wherein the initial assessment order is defined. Even this provision is interpreted by the Hon’ble Supreme Court in the case of Velayudhaswamy Spinning Mills (P) Ltd. [2012 (10) TMI 1125 - SC ORDER] . Hence, we are of the view that the CIT(A) has rightly allowed the claim of the assessee and we upheld the same. This issue of Revenue’s appeal is dismissed.
Addition u/s 14A - disallowance of interest expenditure under Rule 8D(2)(ii) - Disallowance under Rule 8D(2)(iii) being administrative expenses - HELD THAT:- The assessee’s own funds as on 31.03.2008 is amounting to ₹174.78 crores on account of reserve and surplus and share capital whereas, investment capable of yielding tax free income amounting to ₹22.3 crores and hence, presumption is that the entire investment has been made out of own funds and not out of borrowing. The learned Counsel for the assessee relied on the decision of Hon’ble Bombay High Court in the case of CIT vs. HDFC Bank Ltd. [2014 (8) TMI 119 - BOMBAY HIGH COURT] . The facts and circumstance are exactly identical what to AY 2007-08, hence this interest disallowance cannot be sustained and we delete the same
We direct the AO to include the investments for the disallowance of expenses under Rule 8D(2)(iii) to the extent of investments which give rise to exempt income only. We direct the AO accordingly.
Charging of interest u/s 234B - HELD THAT:- In view of the provisions of section 234B(2)(1) only an amount of interest paid as a part of self-assessment tax ought to be reduced from tax paid under section 140A of the Act while computing the interest under section 234B of the Act. Hence, we find no infirmity in the order of CIT(A) directing the AO to recompute the interest accordingly under section 234B
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2019 (12) TMI 1219
Refund of Additional Customs Duty (CVD) - excess payment made under protest - import under Section 3 (1) of Customs Tariff Act, 1975 read with Sl. No. 263 A and condition No.16 of Notification No. 12/2012-EX dated 17.03.2012 - tax burden passed to buyers or not - principles of unjust enrichment - liability to deposit to Consumer Welfare Fund - HELD THAT:- Apparently and admittedly all the relevant documents were made good the deficiency by the assessee-respondent as were sufficient to sanction the refund. Partial amount of claim was rejected only on the ground that Balance-sheet was not showing the accountable of the amount of impugned Bill of Entry.
When assessees’ invoice showed a composite price and duty was not indicated separately and the sale price of the goods before as well as after the reclassification, revaluation etc. remained the same, it can be concluded that the incidence of duty was not passed on to the consumer. Merely because the Excise duty is booked as expenditure in Profit & Loss account, it cannot be said the incidence of duty has been passed on.
Mere fact that the amount of differential CVD is shown as recoverable in profit and loss account is, in itself, not sufficient to prove that burden thereof has been passed by the assessee to the buyers. Onus otherwise rests upon the Department to prove the same. There is no such evidence produced by the Department. On the contrary, the assessee has placed on record the C.A. Certificate falsifying the allegations of unjust enrichment. Same cannot be ignored, that too, in absence of any evidence to the contrary.
The questions decided in favour of the assessee-respondents - Appeal dismissed - decided against Revenue.
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2019 (12) TMI 1218
Valuation of imported goods - misdeclaration - rejection of declared value on the basis of contemporaneous import value - RUDs not provided - time limitation - penalty.
Undervaluation - confiscation - HELD THAT:- The facts on the basis of which the allegation of undervaluation have been made, like NIDB data or import value of M/s EGPL were available to Revenue all throughout. It is admitted that M/s EGPL is also a regular importer of O-General ACs directly from the manufacturer located at Thailand - Accordingly, the demand with respect to 11 past bills of entry which were filed and assessed prior to 13.03.2012 is held time barred and accordingly set aside - Consequently, the revaluation and confiscation is also set aside with respect to these 11 bills of entry.
Rejection of transaction value with respect to the live bill of entry - goods found and seized in the godown - HELD THAT:- Admittedly, in the facts of the case the buyer and seller are not related. Further, there is no allegation by Revenue that the appellant have remitted any amount directly or indirectly to the seller and shipper of the goods other than through normal banking channel, than the amount mentioned in the import documents. Accordingly, rejection of transaction value by Revenue is held to be against Section 14 of the Customs Act and the same is set aside. Further, the differential duty worked out and demanded from the appellant based on MRP of M/s EGPL is also bad and untenable for the reason that the goods are not manufactured in India. Thus, there is no prescribed MRP by the manufacturer under the legal Metrology Act read with the rules thereunder.
In case of import, the importer is free to determine his retail selling price or MRP. There is no law under which the present appellants are bound to sell the goods at the retail selling price or MRP by M/s EGPL. Further distinguishing features in the sales made by M/s EGPL like providing of free installation, providing of copper tubing etc and after sales service are not being done or provided by the present appellants. In this view of the matter, the MRP of the appellant is not comparable with the MRP of M/s EGPL - Further, it is admitted fact that the imported goods found in the godown of the appellant have been imported by filing proper bills of entry which have been duly assessed by the competent officer of the customs. In this view of the matter, the impugned order suffers from impropriety and at the same time is erroneous.
The penalty imposed on Shri Rohit Sakhuja is also set aside.
Appeal allowed - decided in favor of appellant.
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2019 (12) TMI 1217
Rejection of declaration under Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 - cases involving confiscation and redemption fine - Designated Committee has held that the cases involving confiscation and redemption fine have not been covered under the Scheme and, therefore, the declarations cannot be accepted and no relief can be granted to the petitioners under the Scheme - HELD THAT:- On a plain reading of clauses (a) to (h) of section 125 of the Finance Act, it is abundantly clear that persons whose cases involve confiscation and fine in lieu of confiscation are not placed in the categories of persons who are not eligible to make declarations under the Scheme. Thus, persons who have been ordered to pay fine in lieu of confiscation or to whom show cause notices proposing confiscation of goods have been issued, have not been declared to be ineligible to make a declaration under the Scheme - while clause (a) of subsection (1) of section 129 of the Finance Act provides that the declarant shall not be liable to pay further duty, interest or penalty, it does not expressly provide that the declarant shall not be liable to pay fine/redemption fine; which is why the present controversy has arisen. It may be noted that while under the Scheme no express provision has been made discharging the declarant from the liability to pay fine, the Directorate General of Taxpayer Service, Central Board of Indirect Taxes and Customs has issued FAQs, flyers and press notes wherein it is specifically stated that the most attractive aspect of the Scheme is that it provides substantial relief in the tax dues for all categories of cases as well as full waiver of interest, fine and penalty. In all these cases, there would be no other liability of interest, fine or penalty. There is also complete amnesty from prosecution.
It is not the case of the Board that declarations involving redemption fine cannot be accepted. This court, however, is prima facie of the view that the stand of the Board that in case where redemption fine is imposed and quantified, discharge certificate can only be issued after settlement of redemption fine, is not in consonance with the Scheme which contemplates putting an end to the matter - this court is of the view that the matter requires consideration. Hence issue Rule, returnable on 23rd January, 2020. This court is further of the view that a prima facie case has been made out for grant of interim relief inasmuch as if the interim relief as prayed for is not granted, the petitioners would not be in a position to file fresh declarations before the last day for filing declarations under the Scheme, which may either create an irreversible situation or unnecessary complications.
Having regard to the fact that if all similarly situated declarants were to approach this court, the same would needlessly lead to multiplicity of proceedings, the court is of the view that the benefit of this order may be granted to even those declarants who have not approached this court, subject to the declarants filing an undertaking before the Designated Committee that in case the outcome of the present petition is against the petitioners, they would pay the redemption fine, failing which, the discharge certificate shall be revoked.
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2019 (12) TMI 1216
Clandestine removal - MS Ingots - allegation that the appellants were carrying out activities of clandestine clearances in a pre-mediated manner with sole objective of defrauding the Government of its legitimate revenue in the form of Central Excise Duty - demand based on the statement of Shri Pawan Bansal, Director of M/s. Shree Jagdambay Castings Pvt. Ltd. as was recorded on 29.07.2013 - denial of cross-examination - Onus of proof - HELD THAT:- It is found that the said statement got subsequently retracted by Shri Pawan Bansal. It is further apparent that though the appellants received the relied upon documents, but they have been aggrieved of those not being legible. Legible copies thereof were insisted but were never made available. Adjudicating Authority below is observed to have ignored the repeated requests of the assessees for the legible documents. Copies of documents though are on record but perusal makes it clear that many of them are not at all legible.
Denial of cross-examination - HELD THAT:- The denial of coss-examination in the given circumstances is opined to be unfair and unjustified. The order under challenge records that, “the case is mainly based on the record of M/s.BRMPL, which is duly corroborated by the statements of directors of BRMPL and the persons who were maintaining the records”. But no such record and the corroboration thereof has been specified by the adjudicating authority below.
Onus of proof - HELD THAT:- The law is well settled that in respect of any allegation of clandestine removal the onus is squarely and solely on the Revenue to prove what it alleges and that onus of the revenue cannot be shifted to the assessee. The assessee cannot be called upon to prove the negative. There is no investigation whatsoever or any proof brought on record by the revenue in regard to the alleged clandestine production and unaccounted removal of excisable goods by the assessee. Mere allegation by the Revenue cannot take the place of proof.
There is no iota of evidence apparent on record specifically to the corroboration of the software data recovered during search. There is no compliance of Section 36B of Central Excise Act Sub Clauses (2) & (4) prescribes very stringent conditions for Computer Printouts to be a piece of admissible evidence. Not even Section 45A has been resorted as there is no apparent opinion of examiner of electronic evidence - The law is also well settled that the adjudication in a quasi-judicial proceeding must be fair and objective and the authority concerned must act correctly in accordance with law. In the present case the adjudicating authority is opined to have acted solely to confirm demands mechanically with predetermined negative mind because of his bias and prejudice and no willingness to appreciate the facts and records and apply the law correctly.
Appeal allowed - decided in favor of appellant.
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2019 (12) TMI 1215
Release of confiscated conveyance - section 130 of the Central Goods and Services Tax Act, 2017 - HELD THAT:- This matter was earlier heard on 23.12.2019. Subsequently, the applicant herein had furnished the details of the person at whose instance the goods were loaded in the applicant’s conveyance at Morbi. By the notice dated 13.7.2019 issued in Form GST MOV-10 under section 130 of the Central Goods and Services Tax Act, 2017, the respondents have proposed fine of ₹ 60,795/- in lieu of confiscation of conveyance - Since the applicant seeks only release of the conveyance, at this stage, the court deems it fit to allow the application and modify the earlier order dated 27.9.2019 whereby the court had ordered that upon the petitioner depositing a sum of ₹ 4,00,000/- with the concerned authority, which shall be under protest, the respondents shall release the truck in question.
The order is modified by directing the respondents to release Truck belonging to the applicant petitioner upon the petitioner depositing a sum of ₹ 60,795/- proposed to be levied by way of fine in lieu of confiscation of conveyance in the notice issued by the respondents under section 130 of the CGST Act - application allowed.
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2019 (12) TMI 1214
Bail application - allegation that GST invoices issued without any supply of the goods to the buyers on commission basis causing loss of more than 98 crores approximately - Section 167 of the Criminal Procedure Code - HELD THAT:- The authority who is empowered to interfere with the liberty of a person by issuing an order of arrest on reasonable belief about necessity of arrest under Section 69(1) of the CGST Act, is also statutory obligated to decide, albeit on logical assessment of facts, that the person concerned is to be ‘prosecuted’. Such requirement of ‘sanction’ must be evident from the records and as the indispensable procedure of law mandates, must be backed by reasons which are prima facie intelligently acceptable.
In the present case loss caused to Government Exchequer amounts to ₹ 141,76,46,639/-. Therefore in such a huge economic offence he should not be enlarged on bail.
In consideration of the gravity of the economic offence, the petitioner is not entitled to be enlarged on bail, however, the petitioner is at liberty to approach the authority for compounding of the offence under Section 138 of CGST Act - petition dismissed.
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2019 (12) TMI 1213
Interpretation of statute - Detention / Confiscation of goods alongwith conveyance - exercise of power arbitrarily and without any application of mind. - Sections 129 and 130 respectively of the Central Goods & Services Tax Act, 2017 - whether the two provisions overlap or are independent of each other? - truck detained by the officer concerned on the ground of absence of the e-way bill in respect of the goods - It is the case of the writ applicants that having come to know about the detention of the truck, they promptly generated the e-way bill in respect of the transaction. The authorities, however, declined to release the goods on the ground that while the goods were being transported, the driver of the vehicle was not carrying the e-way bill - authorities insisted for payment of tax and 100% penalty under Section 129 of the Act as well as redemption fine in lieu of the confiscation equal to the value of goods under Section 130 of the Act.
The sum and substance of the submissions canvassed on behalf of the writ applicants is that the proceedings for confiscation of goods or conveyance cannot be initiated under Section 130 of the Act without first complying with the procedure as prescribed under Section 129 of the Act and the second limb of the submission is that once the tax and the penalty is paid under Section 129 of the Act, then the authority has no power to proceed further under Section 130 of the Act for the purpose of confiscation of the goods and the conveyance.
HELD THAT:-
AS PER J. B. PARDIWALA, J: [Concurrent]
(i) Section 129 of the Act talks about detention, seizure and release of goods and conveyances in transit. On the other hand, Section 130 talks about confiscation of goods or conveyance and levy of tax, penalty and fine thereof. Although, both the sections start with a non-obstante clause, yet, the harmonious reading of the two sections, keeping in mind the object and purpose behind the enactment thereof, would indicate that they are independent of each other. Section 130 of the Act, which provides for confiscation of the goods or conveyance is not, in any manner, dependent or subject to Section 129 of the Act. Both the sections are mutually exclusive. .
(ii) The phrase "with an intent to evade the payment of tax" in Section 130 of the Act assumes importance. When the law requires an intention to evade payment of tax, then it is not mere failure to pay tax. It must be something more. The word "evade" in the context means defeating the provisions of law of paying tax. It is made more stringent by use of the word "intent". The assessee must deliberately avoid the payment of tax which is payable in accordance with law. However, the element of mens rea cannot be read into Section 130 of the Act.
(iii) For the purpose of issuing a notice of confiscation under Section 130 of the Act at the threshold, i.e., at the stage of detention and seizure of the goods and conveyance, the case has to be of such a nature that on the face of the entire transaction, the authority concerned should be convinced that the contravention was with a definite intent to evade payment of tax. The action, in such circumstances, should be in good faith and not be a mere pretence. In other words, the authorities need to make out a very strong case. Mere suspicion may not be sufficient to invoke Section 130 of the Act straightway.
(iv) If the authorities are of the view that the case is one of invoking Section 130 of the Act at the very threshold, then they need to record their reasons for such belief in writing, and such reasons recorded in writing should, thereafter, be looked into by the superior authority so that the superior authority can take an appropriate decision whether the case is one of straightway invoking Section 130 of the Act.
(v) Even if the goods or the conveyance is released upon payment of the tax and penalty under Section 129 of the Act, later, if the authorities find something incriminating against the owner of the goods in the course of the inquiry, if any, then it would be permissible to them to initiate the confiscation proceedings under Section 130 of the Act.
(vi) Section 130 of the Act is not dependent on clause (6) of Section 129 of the Act.
(vii) Sections 129 and 130 respectively of the Act are mutually exclusive and independent of each other. If the amount of tax and penalty, as determined under Section 129 of the Act for the purpose of release of the goods and the conveyance, is not deposited within the statutory time period, then the consequence of the same would be forfeiture of the goods and the vehicle with the Government. This does not necessarily imply that the confiscation proceedings can be initiated only in the event of the failure on the part of the owner of the goods or the conveyance in depositing the amount towards the tax and liability determined under Section 129 of the Act.
(viii) For the purpose of Section 129(6) of the Act, it would not be necessary for the department to establish any intention to evade payment of tax. If the tax and penalty, as determined under Section 129, is not deposited within the statutory time period, then the goods and the conveyance shall be liable to be put to auction and the sale proceeds shall be deposited with the Government.
(ix) Similarly, the reference to Sections 73 and 74 respectively of the Act is not warranted for the purpose of interpreting Sections 129 and 130 of the Act, more particularly, when they all are independent of each other. The provisions of Sections 73 and 74 of the Act are similar to the provisions of Section 11A of the Central Excise Act and Section 28 of the Customs Act, which deal with the adjudication proceedings. Despite this, Section 110 is present in the Customs Act, which speaks about seizure and similarly, Section 129 is present in the Act for detention/seizure. Therefore, Sections 129 and 130 of the Act have non-obstante clauses, whereby they can be operated upon in spite of Sections 73 and 74 of the Act.
(x) The provisions of sections 73 and 74 respectively of the Act deal with the 'demands and recovery' to be made by the assessing officer based upon the assessment, whereas the provisions of Section 129 of the Act deal with the 'detention/ seizure'. While assessing the returns, if the assessing officer finds that the amount of tax has not been paid or erroneously refunded, or where the input tax credit has been wrongly availed or utilized for any reason, either with mala fide intention or without the same, as the case may be, the provisions of Section 73/74 of the Act would be invoked. However, the provisions of Section 129 of the Act deal with situation where the evasion of tax/contravention of the Act/Rules is detected during transit itself, requiring the adoption of summary like proceedings. Therefore, the said provisions operate in different spheres.
(xi) The comparison of the provisions of Customs Act/ Excise Act on one hand and the provisions of the Act on the other, as sought to be drawn on behalf of the writ applicants, is not correct. Section 110(1) of the Customs Act is not comparable to Section 129(1) of the Act inasmuch as, the provisions of Section 110 of the Customs Act contemplates that the proper officer may seize the goods which are liable for confiscation, whereas the provisions of Section 129 contemplate that the proper officer may detain/ seize the goods/ conveyance in transit in contravention of the provisions of the Act or the Rules.
(xii) The provisions of Sections 110(2) and 124 of the Customs Act do not contemplate that the goods which are seized are to be released in a specific time limit, much less, within a period of six months. Apropos this, the said sections merely cast a duty on the department to issue a show cause notice within a period of six months from the date of seizure of goods, but the same does not contemplate as to in how much time, the same has to be adjudicated upon. Therefore, the contention raised on behalf of the writ applicants that the goods which are seized are to be released within a short span of time and that the legislature has not contemplated to retain the goods pending the confiscation proceedings. is not tenable. In addition to the above, even otherwise, the provisions of Section 110A of the Customs Act, which deal with the 'provisional release' of the goods, do not contemplate the release of the goods only on payment of penalty and interest but the proposed amount of fine is also to be included for provisional release of the goods. In view of this, the amount of fine should be taken into account while directing the provisional release of the goods/ conveyance as per Section 129(2) read with Section 67(6) of the Act read with Rule 140 of the Rules.
(xiii) Although there is no serious challenge to the validity of the provisions of Sections 129 and 130 respectively of the Act, yet it is a settled principle of law that the power to levy tax includes all the incidental powers to prevent the evasion of such tax. The power to seize and confiscate the goods in the event of evasion of tax and the power to levy penalty are meant to check tax evasion and is intended to operate as a deterrent against the tax-evaders and are, therefore, ancillary or incidental to the power to levy tax on the goods and thus, fall within the ambit and scope of the legislative powers.
(xiv) The goods are not liable to be detained on the ground that the tax paid on the product was less. In such circumstances, the Inspecting Authority is expected to alert the Assessing Authority to initiate appropriate proceedings "for assessment of any alleged sale at which the dealer will have his opportunities to put forward his pleas on law and on fact. The process of detention of the goods cannot be resorted to when the dispute is bona fide, especially concerning the exigibility of tax and, more particularly, the rate of that tax.
(xv) Even in the absence of the physical availability of the goods or the conveyance, the authority can proceed to pass an order of confiscation and also pass an order of redemption fine in lieu of the confiscation. In other words, even if the goods or the conveyance has been released under Section 129 of the Act and, later, confiscation proceedings are initiated, then even in the absence of the goods or the conveyance, the payment of redemption fine in lieu of confiscation can be passed.
(xvi) The extraordinary powers under Article 226 of the Constitution, directing for release of the vehicles or goods, during the pendency of the confiscation, can only be sparingly exercised under extraordinary situations and circumstances when injustice occurs because of non-fulfillment of the conditions for confiscation
AS PER : HONOURABLE MR.JUSTICE A.C.RAO: [Addendum]
From the plain reading of Sections 129 and 130 of the Act, it is clear that the suppliers or receivers of the goods transport any goods in contravention of provisions of the Act or the Rules made thereunder are liable for the detention or seizure of the goods under Section 129 of the Act and under Section 130 (i)(v) of the Act for confiscation of the goods and conveyance. Thus, for the same breach and/or contravention of the provisions of the Act, there are two types of penalties provided under Section 129 and Section 130(i)(v) of the Act - the Legislature should, once again, look into both the provisions, i.e, Sections 129 and 130 of the Act and amend the sections accordingly so as to remove certain inconsistencies in the two provisions. Let this aspect be looked into by the State Government in accordance with law.
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2019 (12) TMI 1212
Certificate u/s 197 (1) - application of the petitioner to grant a certificate for ‘NIL’ deduction of tax at source, on the payments made to it, by Oil and Natural Gas Corporation Ltd. (ONGC-Deductor) - writ of mandamus directing the Assessing Officer to grant a certificate authorizing the aforesaid deductor to make payments to the petitioner without deducting tax at source - HELD THAT:- In absence of a certificate of deduction of tax at source at a lower rate or nil rate, a payer-whose liability it is to deduct tax at source under Section 195 of the Act, is likely to incur a risk of being declared a defaulter. However, if a certificate under Section 197 of the Act is in operation, such a consequence would not arise. At the same time, the certificate under Section 197 of the Act for deduction of tax at lower rate or nil rate, also benefits the Assessee, who would be entitled to receive full payment from the payer without deduction.
It is well settled that in matters of taxation there is no question of res judicata because each year’s assessment is final only for that year and does not govern later years, because it determines only the tax for a particular period.” [Ref: Instalment Supply (P) Ltd. v. Union of India [1961 (5) TMI 53 - SUPREME COURT] ].
We cannot direct the Revenue to hold that the petitioner does not have a PE and give the consequent effect of such finding while deciding an application under Section 197 of the Act. Determination of all these questions would have to be undertaken during the course of regular assessment. The manner of determination of issues relating to the tax deduction and regular assessment are inherently and fundamentally different. While there may be certain circumstances where the finding with respect to the previous year can be taken into consideration, however, in the instant case, we cannot find any reason to hold the approach of Respondents to be patently illegal or erroneous on the face of it. The question of existence of permanent establishment, which requires a detailed enquiry, is not envisaged at the stage of deciding the application for issuance of certificate under Section 197 of the Act. The full fledged investigation can be done by the Assessing Officer during the course of assessment.
Petitioner contends that the aforesaid concession was made “without prejudice to its legal position”, and cannot deprive the petitioner to contest the legal position. However, we cannot ignore the fact that Petitioner took categorical stand and prevailed upon the revenue to accept the declaration made in the said communication. Although the declaration was qualified, yet, since the petitioner requested the respondent to deduct the tax @ 4%+applicable surcharge & cess for the entire contractual revenues, revenue was justified in accepting the same and the petitioner cannot be permitted to resile there from, once the department has accepted petitioner’s proposal. Writ petition is dismissed
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2019 (12) TMI 1211
Addition u/s 37 and 40A - Disallowance of excess cane price paid to members and non members - Respondents who are sugarcane co-operative societies governed by the Maharashtra Co-operative Societies Act, 1960 had paid a price of sugarcane purchased from its members and non-members at a certain rate - AO had disallowed the price paid by the Respondents – Assessee to its members as well as non-members as it was in variance with the minimum ex-factory price fixed by the Central Government under Clause 3(1) in Sugarcane (Control) Order, 1966 as revised from time to time
HELD THAT:- The learned Counsel for the parties are ad idem that in view of these decisions, the impugned orders passed by the Income Tax Appellate Tribunal and the Commissioner of Income Tax (Appeals) will have to be set aside. The learned Counsel further points out that though the Division Bench of this Court in The Commissioner of Income Tax-I v. Kadwa Sahakari Sakhar Karkhana Ltd [2019 (4) TMI 1804 - BOMBAY HIGH COURT] in identical circumstances, had set aside the orders passed by the Tribunal and the Commissioner (Appeals) and had remanded the proceedings to the Commissioner of Income Tax (Appeals) for reconsideration, in view of the decision of the Supreme Court in the case of Tasgaon Taluka SSK Ltd. [2019 (3) TMI 321 - SUPREME COURT] wherein the Apex Court had sent the proceedings to the Assessing Officer, they will have to be sent to the Assessing Officer.
In view of this consensus at the bar, these appeals filed by the Revenue are allowed. The impugned orders passed by the Income Tax Appellate Tribunal and the Commissioner of Income Tax (Appeals) in these Appeals are quashed and set aside. The proceedings stand restored to the file by the respective Assessing Officers to be considered in the light of the law laid down by the Supreme Court in the cases of Tasgaon Taluka SSK Ltd. [2019 (3) TMI 321 - SUPREME COURT] and Shri Satpuda Tapi Parisar SSK Ltd. [2010 (1) TMI 117 - SUPREME COURT].
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2019 (12) TMI 1210
Reopening of assessment u/s 147 - reopening after four years - Bogus purchases - HELD THAT:- The reasons supplied along with the impugned notice contain no assertion there was any failure of the petitioner to disclose fully and truly all material facts necessary for the assessment. This omission can be a ground to set aside the Reassessment notice.
Pursuant to the reasons given along with first reopening notice Petitioner had supplied all the material regarding the very same allegations against the Petitioner and the same were examined by the AO. All the material was placed before the Assessing Officer by the Petitioner. Acting upon this material, the Assessing Officer had, in fact, made certain additions. Therefore, it cannot be said that there was a failure by the Petitioner to disclose all material facts fully and truly. In the circumstances, the jurisdictional requirement to reopen the assessment proceeding after four years is not present. Neither it has been alleged.
In the reasons supplied along with first reopening notice, the issue of bogus accommodation of entries regarding purchases was discussed. The reasons given for second reopening notice reproduced above also refer to the said fact.
The reasons also refer to a decision of the Supreme Court in the case of M/s.N.K.Proteins Ltd. [2017 (1) TMI 1090 - SC ORDER] Even this decision was before the Assessing Officer in the proceeding pursuant to first reopening notice. The Petitioner, along with its objections, placed explanatory note as to how the said decision of the Supreme Court in M/s.N.K.Proteins did not apply to the facts of the case. Therefore, this aspect was also considered when the proceeding under the first reopening notice was conducted. In the circumstances, the contention of the Petitioner that the impugned reopening notice is issued only on mere change of opinion will have to be accepted.
Since we are satisfied that the jurisdictional requirements for reopening of the assessment of the Petitioner for the assessment year 2012-13 after four years are absent, and the action of the Respondent No.1- Assessing Officer is without jurisdiction, the Petitioner is entitled to succeed.
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2019 (12) TMI 1209
Levy of penalty u/s 271(1)(c) - as contended that the instant case of the assessee is covered under the provisions of Section 271AAA - HELD THAT:- Since in the present case search was conducted on 30.7.2009, hence section 271AAA is applicable for the assessment year 2010-11 only as the date of filing the return of income under sub-section (1) of section 139 for such year has not expired before the date of search.
Explanation 5A(b) to section 271(1)(c) was applicable for the assessment years 2005-06, 2006-07 and 2007-08 as the date for filing the returns has already been expired and the assessee has not declared this income in the returns. From the assessment orders, we find that the assessee has not declared the surrendered income in the returns filed in response to the notice issued u/s 153A(1)(a). Thus, the submissions of the ld. AR arguing that the income surrendered has been reflected/assessed is not correct on facts. Rather, it is the addition made by the Assessing Officer based on the material found and seized during the course of search.
The assessee has not declared any income in the returns filed in response to the notice issued u/s 153A(1)(a) more than what has been declared in the regular returns.The addition has been made by the revenue based on the seized material. The due date of filing of return has already been expired.
AR contention that the presidential assent has been received on 13.08.2009, hence not applicable cannot be accepted as the provisions of the Act clearly says that this provision is applicable with retrospective effect from 01.06.2007.
Keeping in view, since no prima facie case can be made on applicability of any legal ground on this issue, we hereby decline to admit the additional grounds taken by the assessee on this issue.
Issue of notice u/s 274 read with Section 271(1)(c) dated 23.12.2011, we find that the Assessing Officer has not specified under which limb of the provisions of Section 271(1)(c), the penalty is being initiated and levied. The specific mention whether the penalty is levied whether for concealment of particulars of income or for furnishing inaccurate particulars of income.
As relying on M/S. SAHARA INDIA LIFE INSURANCE COMPANY, LTD. [2019 (8) TMI 409 - DELHI HIGH COURT] we hereby hold that the penalty levied by the Assessing Officer is liable to be obliterated. - Decided in favour of assessee.
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2019 (12) TMI 1208
MAT credit - after the appeal effects are given by the AO for earlier years, the balance MAT credit may be allowed in the hands of the assessee - HELD THAT:- We find merit in the claim of the assessee and direct the AO to allow the MAT credit, if any, determined after giving appeal effect in earlier years. The Ground of appeal is thus allowed.
Short credit of tax deducted at source - HELD THAT:- We hold that where the assessee is able to furnish the necessary details with regard to tax deduction at source out of the amounts due to it, then the action which follows is allowing the credit of such tax deducted at source to the account of the deductee. In case where the deductor deposits the tax deducted at source to the credit of the Central Government and the deduction reflects in Form No.26AS may be on a later date, then it is incumbent upon the assessee to produce the necessary evidence in this regard and it is also the duty of the Assessing Officer to allow such credit of tax deducted at source, as taxes paid in the hands of the deductee assessee.
We direct the Assessing Officer to allow the credit of tax deducted at source in the hands of the assessee, where the assessee produces the primary evidence of same being deducted tax at source out of the amount due to it. The ground of appeal no. 6 is thus allowed.
Charging of interest u/s 234A - assessee had filed the return of income on 30.11.2015 which was the prescribed due date for filing the return of income by the assessee u/s 139(1) - HELD THAT:- We find merit in the plea of the assessee that where the due date of filing return of income was 30.11.2015 and since the assessee had filed return of income on 30.11.2015, then there was no merit in charging of interest u/s 234A
Charging of interest u/s 234C - The said interest is to be computed on the returned income of the assessee and not the income assessed by the Assessing Officer. The Assessing Officer may verify the stand of the assessee in this regard and re-compute the interest chargeable u/s 234C
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