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2021 (12) TMI 1149
Seeking grant of Bail - Smuggling - rule of presumption of innocence - Section 45(1) of the PML Act - constitutional validity of the provision - HELD THAT:- This Court is of the opinion that the declaration by the Supreme Court in Nikesh Tarachand Shah's [2017 (11) TMI 1336 - SUPREME COURT] would render the twin conditions prescribed in Section 45(1) of the PML Act for release of an accused on bail to be void in toto; such conditions have to be disregarded of any legal force from its inception. They cease to be law and are rendered inoperative to the extent that they are to be regarded as if they had never been enacted. That being so, the twin conditions for grant of bail under Section 45(1) of the PML Act as are now sought to be pressed into service by the ED cannot be considered to have revived or resurrected only on the prospective substitution of the words “punishable for a term of imprisonment of more than three years under Part A of the Schedule” with the words “under this Act” especially without there being any amendment with regard to the twin conditions for grant of bail which had specifically been declared to be unconstitutional as also in the absence of any validating law in this regard with retrospective effect.
It was also brought to this Court’s notice that the Petitioner has been in custody for a period of about 8 years. “Justice delayed is justice denied” is the cornerstone in delivering justice and a speedy trial forms the essence of the entire criminal justice system. At the same time, “justice hurried is justice buried” and therefore, there has always existed a need to strike a balance between the two adages in the delivery of justice to the people.
The fundamental right to speedy trial is a result of judicial activism shown in respect of Article 21. In USA, the right to speedy trial has been guaranteed by the VI Amendment of the US Constitution. The VI Amendment of the US Constitution says that ‘in all criminal prosecutions, the accused shall enjoy the right to a speedy and public trial’ - The fundamental right to speedy trial is peculiar in character and is generically different from other constitutional rights of the accused. The right is in the interest of the accused if he is innocent. He does not suffer unduly for a long period. But it also works against him if he is actually guilty of the offence. The right is also in the interest of prosecution because it does not face the problems such as non-availability of witnesses and disappearance of evidence etc. But sometimes, it also goes against the prosecution specially when the prosecution does not have hundred per cent foolproof case against known or hardened criminals.
It is a matter of great concern that the Petitioner has been in detention for more than 8 years as on today, however, the trial in the instant case has not yet been commenced. The longevity of detention of the under-trial prisoners without commencement of trial defeats the very purpose of Criminal Justice System.
It is directed that the Petitioner be released on bail with some stringent terms and conditions as deemed just and proper by the learned court in seisin over the matter with further conditions imposed - application allowed.
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2021 (12) TMI 1148
Recovery of CENVAT Credit - fraudulent availment of CENVAT Credit on the strength of Cenvatable invoices - reliance placed on statements recorded by the third parties upon the documents recovered from the third party premises - Rule 11 of Central Excise Rules, 2002 - penalty on on Shri Pradeep Kumar Aggarwal whose statement has mainly been relied upon - HELD THAT:- There is no evidence to prove that the appellant have not received material from M/s. Sypher Impex Alloys Pvt. Ltd through the invoices No. 67, 69 and 90 dated 8.6.2012, 10.6.2012 and 2.7.2012 respectively. Irrespective Shri Yogesh Singh Director would have been involved in the practice of issuing fake invoices for permitting the purchasers of raw material to have fraudulent CENVAT Credit but there is no iota of any positive evidence for involvement of the present appellant in the said fraudulent availment. The Department has failed to falsify the statement of Shri O P Sharma and to falsify the documents produced by them for proving the transactions of impugned invoices as genuine.
Resultantly it stands clear that the confirmation of demand against the appellant has been confirmed based on the third party evidence. Since the sole challenge to the order is its reliance upon third party evidence, it is necessary to check the evidentiary value of the third party evidence - It is well settled law that there has to be some concrete evidence which would show clandestine manufacture of goods, as was reiterated by Tribunal, Delhi in the case of C.C.E. & S.T. -RAIPUR VERSUS P.D. INDUSTRIES PVT. LTD. [2015 (11) TMI 455 - CESTAT NEW DELHI].
The document recovered from the appellant premises shows that the appellant had maintained a record about the invoices being received from various companies whereupon the appellant has availed the Cenvat Credit. Merely because the company issuing invoice was found non-existent, the appellant could not be denied the availment of Cenvat Credit thereupon unless and until his involvement in terms of his knowledge about such non-existence and about the invoice to be bogus is not proved on record. Otherwise also there is no denial that the appellant has cleared his final product on payment of duty. In such circumstances and that the invoices were containing all the particulars as are required under Rule 9 of Cenvat Credit Rules and that the appellant was also making the record of all those details. The allegations based on the statements given by other manufacturers, first or second stage dealers or even by the transporters cannot be read against the appellant - Once assessee is found to have acted with all reasonable diligence in its dealings within the meaning of Rule 9 (3) of Cenvat Credit Rules, 2004 will amount to casting an impossible or impractical burden on the assessee and same would be contrary to the rules.
Levy of penalty on Shri Pradeep Kumar Aggarwal - HELD THAT:- The companies involved herein i.e. High Tides Infra Project Pvt. Ltd., RMS Steel Tech Pvt. Ltd., Jetking Trading and Agencies, Singh Materials & Infratech etc. were the companies in the said decision wherein it has been held that when sufficient document is produced by the appellant to prove the physical entry of inputs in the assessee’s premises along with the ledger account and RG-23 A Register maintained by the assessee along with the invoices. the burden is upon the Revenue to prove that it was merely a paper transaction and goods were not received by assessee appellant. It was held by this Tribunal in the said Final Order that Revenue has failed to produce such a record. Per contra, there is apparent compliance of Rule 9, CCR 2004 on part of the appellant. The allegations based on the fact that manufacturers as that of M/s.High Tides Infra Project Pvt. Ltd are found non-existent have been set aside.
The entire case of the Department is on the basis of statements of witnesses who were never allowed to be cross examined by the present appellants. There is no other material with the Revenue to justify its findings against the appellants. Withholding the opportunity to cross examination to the appellants definitely amounts to violation of principles of natural justice and the statutory mandate of section 9D of Central Excise Act, 1944 which becomes another reason for nullifying the impugned order.
Hon’ble Apex Court has also in the case of ANDAMAN TIMBER INDUSTRIES VERSUS COMMISSIONER OF CENTRAL EXCISE, KOLKATA-II [2015 (10) TMI 442 - SUPREME COURT] has held that non compliance of the provisions of section 9D and section 33 of Central Excise Act, 1944 nullify the order confirmed in demand.
Appeal allowed - decided in favor of appellant.
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2021 (12) TMI 1147
CENVAT Credit - eligibility to avail suo moto Cenvat Credit of Central Excise duty, without sanction by the proper department - invocation of extended period of limitation contained in the proviso to Section 11A of the Central Excise Act, 1944 - HELD THAT:- The period in dispute involved in this case is October 2005 and the show cause notice was issued on 09.03.2009 i.e. much after the normal period prescribed under Section 11A ibid. Insofar as invocation of the proviso to Section 11A ibid is concerned, it has been mandated that only in the eventuality of happening of fraud, collusion, wilful mis-statement etc., such proviso clause can be invoked and not otherwise. On perusal of the case records, it is found that the availment of suo moto Cenvat Credit was highly disputed at the material time, which was subsequently settled by the Larger Bench of the Tribunal in the case of BDH INDUSTRIES LTD. VERSUS COMMISSIONER OF C. EX. (APPEALS), MUMBAI-I [2008 (7) TMI 78 - CESTAT MUMBAI].
Since, the appellant had entertained the bona fide belief at the time of taking suo moto Cenvat Credit that it is entitled for the same as per the statutory provisions, in my considered view, the charges levelled against them regarding involvement in the activities, concerning fraud, collusion, wilful mis-statement etc., cannot be sustained.
Hon’ble Delhi High Court in the case of COMMISSIONER OF C. EX. VERSUS WONDERAX LABORATORIES, IPL. [2007 (10) TMI 388 - DELHI HIGH COURT] has held that when conflicting views were taken with regard to interpretation of Notification etc., the proviso clause appended to Section 11A ibid cannot be invoked, justifying recovery of the short levied duty etc. beyond the normal period of limitation.
The department in this case has not specifically adduced any evidence to substantiate that the appellant had really indulged into fraudulent activities in wrongly availing the Cenvat Credit - the extended period of limitation invoked in this case for initiation of show cause proceedings cannot stand of judicial scrutiny.
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2021 (12) TMI 1146
Dishonor of Cheque - insufficiency of funds - whether revisional powers can be exercised by this Court to compound the offence under Section 138 of the Act after conviction of the petitioner by appellate Court? - HELD THAT:- The legal position in this behalf was fluid until the judgment rendered in Damodar S. Prabhu Vs. Sayed Babalal H. [2010 (5) TMI 380 - SUPREME COURT] by the Supreme Court. In the said verdict, Supreme Court has examined the provisions of Section 138 and 147 of the Act threadbare and observed that compensatory aspect of the remedy should be given priority over the punitive aspect - While switching on to examine Section 147 of the Act, Supreme Court has observed that this being an enabling provision, it can serve as exception to the general rule incorporated in subsection ( 9) of Section 320 Cr.P.C. The Court, while laying emphasis on non-abstante clause under the aforesaid Section, further held that Section 147 inserted by way of amendment to special law will override the effect of Section 320(9) Cr.P.C.
Applying the ratio decidendi of Damodar S.Prabhu and the guidelines framed therein, on the strength of compromise arrived at between petitioner and the complainant, It is felt persuaded to exercise revisional jurisdiction for doing real and substantial justice in the matter for the administration of which alone the Courts exist.
Compounding of offence under Section 138 of the Act, obviously, entails acquittal of the petitioner - the instant revision petition is allowed.
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2021 (12) TMI 1145
Cancellation of Bail - violation of conditions of Bail - generation of black money and hawala transactions - issuance of fake paper invoices - Section 70 of the CGST Act, 2017 - HELD THAT:- It cannot be observed to the effect that the applicant/ petitioner had violated the condition no.4 of the order dated 05.12.2020 in as much as investigation in the matter qua any future commission of the offence after 05.12.2020 is still in progress as submitted on behalf of the respondent and presently there are only disclosure statements of two accused Manish and Vikas against the petitioner qua further alleged commission of offence after 05.12.2020, the condition no.4 of the order dated 05.12.2020 cannot be held to be violated presently.
In view thereof though the order dated 22.12.2021 of the learned CMM, New Delhi, PHC setting aside the grant of bail granted vide order dated 05.12.2020 is set aside, it is essential to observe that direction dated 22.12.2021 of the learned CMM, New Delhi whilst disposing of the application seeking cancellation of bail as filed by the respondent herein before the learned CMM, New Delhi after the cancellation of bail granted - Petition disposed off.
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2021 (12) TMI 1144
Provisional attachment of current Bank Account - direction to the Respondents to de-freeze the Petitioner’s bank account - Section 83 of the CGST Act, 2017 - HELD THAT:- In view of the position of law vis-a-vis Section 83 of the Act, present writ petition is allowed and the respondents are directed to defreeze the petitioner’s bank account bearing current bank Account No. 201001178495 maintained with M/s. IndusInd Bank Ltd., Ground Floor, 2w/3, West Patel Nagar, Opp. Metro Pillar No.195, New Delhi-110008.
Writ petition stands disposed of.
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2021 (12) TMI 1143
Seeking direction to make the payment/reimbursement of the applicable GST - Works Contract executed prior to GST implementation - HELD THAT:- It is deemed proper to direct the respondent No.3- Principal Secretary, Public Works Department, Government of M.P., Bhopal to decide the said representation which will be filed by the petitioner by a speaking order after providing opportunity of hearing to the representative of the petitioner within a period of three months from the date copy of this order is produced before him.
Petition disposed off.
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2021 (12) TMI 1142
Scope of Advance Ruling - Exempt goods or not - raw water that is supplied through tankers through the Bookwater platform - does the supplier of water through tankers come under supply of raw water or under transport services? - withholding of tax from the suppliers’ before making payments for the supply of raw water through our platform - transaction through an e-commerce operator - GST Registration applicable for all suppliers through the Bookwater platform - withholding of tax from the suppliers before making payments since the supplies have been made through our digital platform - HELD THAT:- It is evident that ‘advance ruling’ are decisions on questions specified in sub section 97(2) of the Act in relation to the supply of goods or services undertaken or proposed to be undertaken by the applicant seeking the some. Hence, supplies undertaken or proposed to be undertaken by the applicant alone are covered under the advance ruling as per Section 95(a) of the Act. The Act limits the Advance Ruling Authority to decide the issues earmarked for it under Section 97(2) and no other issue can be decided by the Advance Ruling Authority.
Section 52(1) of the Act, provides for collection of an ‘amount’ calculated @1% on the net value of taxable supplies made through it by other suppliers. Thus, it is evident that the provision itself clearly distinguishes that the e-commerce operator is different from the ‘Suppliers’. As per Section 95(a) read with Section 103 (applicability of the Ruling), it is clear that the ruling is applicable to the supply being made or proposed to be made and the ruling extended is binding only on the ‘Supplier’ who makes such supply, his jurisdictional officer and the concerned officer. In the case at hand, the applicant seeks ruling on the supplies being made through their platform by the ‘Concerned suppliers’ mentioned at Section 52 and the questions raised are not on the supplies being made or proposed to be made by him. Further, the provision at 97(2)(e) allows this authority to admit questions on determination of the liability to pay tax.
The applicant, who is an e-commerce operator, and not the ‘supplier’ of Raw water and Sewage Evacuation Services, the question raised on the classification of supply, applicability of Notification for such suppliers, is not the question on supplies being or proposed to be undertaken by him. Therefore, there are no hesitation, to hold that the questions raised, do not pertain to the supply of the applicant and are not admissible for ruling as per Section 95(a)/103 read with Section 97(2) of the Act.
Further, the applicant has sought ruling as to whether the applicant is to withhold TCS from the suppliers before making Payments to the ‘Concerned suppliers’. Section 52 of the Act governs the collection of amount by e-commerce operator in respect of supplies made through Such e-Commerce. The ambit of Advance Ruling do not provide for answering the questions raised on provisions relating to ‘Tax Collected at Source’ provided under Section 52 of the Act. Further the amount collected as TCS is not in the nature of ‘Tax’ - the questions are also not covered under the ambit of this authority as per Section 97(2) of the Act.
The application are not admitted and the same is rejected.
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2021 (12) TMI 1141
Benefit of DTVSV Act with respect to certain pending income tax litigations before various appellate levels - HELD THAT:- As here is a clear purpose and intent to the provisions of Section 9(c) of the DTVSV Act which is to ensure that revenue which has been clogged and the income which is being offered to tax is not shadowed by a likelihood of the same having arisen from socio-economic crimes for which prosecution has been instituted. The DTVSV Act does not and cannot be read as providing a window to “regularise” tainted money.
As at this point, noted that the pendency of criminal proceedings against petitioner is an admitted position. The petition itself provides which are the pending criminal proceedings against petitioner. There are two criminal proceedings pending against petitioner wherein petitioner is charged for having conspired (Section 120B of IPC) to commit offences of Cheating (Section 420 of IPC) as also offences under Section 13(1)(d) and Section 13(2) of the IPC Act. The charge against petitioner would have to be read as composite whole as framed and cannot be segregated, as read by Shri Nankani.
It is, however, the case of petitioner that despite the pendency of these two criminal proceedings, it would not fall within the ambit of Section 9(c) of the DTVSV Act since in the first proceeding prosecution has not yet been instituted and in the second proceeding, it is not punishable for offences under the PC Act. In our view, both these contentions are misconceived and baseless.
At the outset, with respect to the plea of prosecution not having been instituted, this issue stands squarely covered by Sashi Balasubramaniam [2006 (10) TMI 147 - SUPREME COURT]wherein the Hon’ble Apex Court, whilst considering the provisions of the KVSS and the provisions of Clause 95(iii) thereof, after raising a specific issue as to when is a prosecution said to be instituted, answered the same stating that word "prosecution" assumes significance. The term "prosecution" would include institution or commencement of a criminal proceeding. It may include also an inquiry or investigation. The terms "prosecution" and "cognizance" are not interchangeable. They carry different meanings. Different statutes provide for grant of sanction at different stages - The term "prosecution has been instituted" would not mean when charge-sheet has been filed and cognizance has been taken. It must be given its ordinary meaning
Both the proceedings are cases where prosecution was instituted since in both cases an FIR had been duly lodged, thus casting a shadow on the monies sought to be offered to tax. Also held that benefit of the KVSS 1998 scheme is not to be extended to those against whom a complaint is pending, therefore, this condition cannot be held to be arbitrary.
In any event, the submission of petitioner that prosecution can be said to be instituted only upon cognizance being taken is of no use to petitioner as even then cognizance was taken in the second proceeding where chargesheet has been filed. Hence, the said issue would not arise.
With respect to the second contention of petitioner, viz., that petitioner is not punishable for offences under the PC Act, the same also is faulty.
Therefore, not only would this enquiry arise before the Tax Authority but even assuming such an enquiry were to arise, the same require consideration.
Any finding by the Tax Authority on this issue, would amount to deciding on merits the two proceedings under the PC Act referred earlier.
In light of the above, both the proceedings are cases where prosecution was instituted since in both cases an FIR had been duly lodged. Both cases charge petitioner as having conspired to commit offences under the PC Act, thus casting a shadow on the monies sought to be offered to tax.
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2021 (12) TMI 1140
Reopening of assessment u/s 147 - Whether the reasons to believe has rational connection with the formation of the belief? - live link between the material connecting the notice of the Assessing Officer and the formation of belief regarding escapement of income - HELD THAT:- The reasons as made available to Petitioner merely indicates information received from the DDIT (Investigation), about certain entity entering into suspicious / questionable transactions. The entire information received has been reproduced in the reasons. In the information so reproduced, there is no mention or even a cursory reference to Petitioner. There is no link between the information received from the DDIT and Petitioner. The information / material received is not further linked by any reason to come to the conclusion that Petitioner has indulged in any activity which could give rise to reason to believe on the part of the Assessing Officer that income chargeable to tax has escaped assessment.
Recorded reasons even does not indicate the amount which according to the Assessing Officer has escaped assessment. In our view, this is evidence of a fishing enquiry and not a reasonable belief that income chargeable to tax has escaped assessment. Moreover, AO alleges that substantial income (specified as above) chargeable to tax has escaped assessment for AY 2014-15 and accordingly notice under Section 148 of the Act for AY 2014-15 has been issued for the purpose of re-assessment. This shows non-application of mind not only by the Assessing Officer but also the sanctioning authority. If both these persons had read the reasons before putting their signatures, they would have found the error in the assessment year.
There is nothing new in the reasons provided on 23/10/2019 save and except the assessment year has been corrected to reflect the correct assessment year in the last paragraph; but at the same time, our view expressed earlier that if only the sanctioning authority has read the reasons and applied his mind to the same, it would have indicated the error in the assessment year and that there is absolutely no link or nexus between the information received from DDIT and Petitioner. Therefore, in our view, the notice u/s 148 issued is set aside - Decided in favour of assessee.
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2021 (12) TMI 1139
Reopening of assessment u/s 147 - eligibility of reason to believe - change of opinion - HELD THAT:- Petitioner is correct in its submissions that it is nothing but change of opinion. It is pertinent to note that there was scrutiny assessment under Section 143(3) of the Act. In the reasons recorded indicate the grounds on which re-assessment is sought to be initiated.
Paragraph 3.1 starts with the words, “During the year, in the submissions furnished by the assessee, it is found that the assessee company had shown 7 outlets but the company showed sales only from 2 outlets, i.e., one at Bandra and other at Colaba, debited expenses on account of 7 outlets. ” The new Assessing Officer has problem with the earlier Assessing Officer having allowed expenditure relating to all the 7 outlets when sales was shown only from 2 outlets. Paragraph 3.1 ends with the words, “…. therefore, the said expenditure cannot be allowable as business expenditure during the relevant AY 20120-13 being expenditure not related to the period under consideration”. This is certainly change of opinion.
Paragraph 3.2 also relates to payment of rent for 5 outlets and repairs and renovation for all the outlets and that paragraph ends as, “….. The Assessing Officer has not examined these issues …..”. Therefore, it is nothing but change of opinion based on which assessment cannot be re-opened. - Decided in favour of assessee.
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2021 (12) TMI 1138
Specified date under the Direct Tax Vivad Se Vishwas Act, 2020 - procedure for the purpose of determination of the tax liability or a declaration which has been made - AA had declined to accept and extent the said benefit vide communication dated 25th January, 2021, on the ground, that as on the “specified date”, i.e. on 31.01.2020, the Appeal itself was not pending, as it was contemplated under the Act of 2020 - Contention of petitioners was that, since the Appeal was itself pending consideration as per the Act, their claim for determination of the tax liability will fall to be under Sections 3 and 4 of the Act - HELD THAT:- As pendency of a case or an appeal or a petition, as provided under Section 2 of the Act of 2020, has to be rationally considered to be pending, irrespective even if the appeal is pending along with the delay condonation application, and also in league and in agreement with the opinion expressed by the Division Bench that the Gujarat High Court, while dealing with such type of contingency or a situation as it cannot enlarge, the scope by widening its determination of consideration of an appellate jurisdiction by barging into its jurisdiction, to determine the question; as to whether at all the appeal itself was pending consideration at the time when, it was instituted when the Act was enforced w.e.f. 17th March, 2020.
So far the argument of the learned counsel for the respondents in the light of the provisions contained under Section 2 (1) (a) (i) is concerned, the said provision would not be attracted in the present case, for the reason being that the said exception, which has been carved out was only on those cases, where the Assessing Officer or an order, which has been passed by the Commissioner Appeals or the Income Tax Appellate Tribunal; in an appeal and the appeal or revision was not pending at the relevant time, but since, in the instant case, no such situation has arrived at because the appeal itself was pending consideration since 2017, along with the delay condonation application, the provisions of (ii) of Section 2 (1) (a) of the Act, would not be applicable.
In that view of the matter and for the reasons based on the principles consistently assigned by the law Courts, as already referred above, the Writ Petitions are allowed. The matter is remitted back to respondent No.1 to reconsider the application of declaration under Sections 3 and 4 of the Act of 2020 of the petitioner afresh exclusively on its own merits.
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2021 (12) TMI 1137
Penalty u/s. 271(1)(b) - assessee failed to give reasons for non-compliance of statutory notice u/s. 142(1) - HELD THAT:- We note that as rightly pointed by the ld. DR under scrutiny assessment proceedings the AO is required to issue notice u/s. 142(1) of the Act along with questionnaire seeking information regarding the subjects notified under scrutiny. The assessee has to comply the same, failing with the AO has power to exercise its jurisdiction to impose penalty u/s. 271(1)(b) of the Act for failure to furnish returns, comply with notices, concealment of income etc.
In the present case, the AO initiated proceedings under clause (b) of sub-section (1) of section 271 of the Act for failure to comply with a notice issued u/s. 142(1) of the Act. As discussed above and also born out from the orders of both the authorities below, we note that till the disposal of appeal by the CIT(A) the assessee failed to furnish required evidences, information, documents, vouchers, etc. before the authorities below and in penalty proceedings no reasonable cause was shown for non-compliance of notice issued u/s. 142(1) - Therefore, we find support in the arguments of the ld. DR that the CIT(A) rightly confirmed the penalty imposed by the AO u/s. 271(1)(b) of the Act for non-compliance on the part of the assessee. Therefore, we find no infirmity in the order of CIT(A) and it is justified. Accordingly, the sole ground raised by the assessee is dismissed.
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2021 (12) TMI 1136
Disallowance u/s.14A with rule 8D of Income Tax Rule - HELD THAT:- Admittedly, there was no exempted dividend income received by the assessee and therefore there cannot be any disallowance under the provisions of section 14A read with rule 8D of Income Tax Rule. In holding so we draw support and guidance from the judgment of Corrtech Energy Pvt. Ltd.[2014 (3) TMI 856 - GUJARAT HIGH COURT] - we hold that there cannot be any disallowance under the provisions of section 14A read with rule 8D of Income Tax Rule. Accordingly, we do not find any infirmity in the order of learned CIT (A) and thus we uphold the same. Hence the ground of appeal of the Revenue is dismissed.
Interest attributable on the amount diverted to non-commercial activities - HELD THAT:- Admittedly, the advance was given by the assessee in the earlier year. Before we touch the issue whether such advance was given for the purpose of the business or not, it is sufficient to note that the own fund being capital and reserve of the assessee at the beginning of the financial year in which amount was advanced stands which is much more than the capital advance as discussed above and this fact is undisputed. Thus it can be safely be presumed that the amount has been advanced by the assessee out of its own fund without involving any borrowed fund. Accordingly, the question of making the disallowance of the proportionate amount of interest on such capital advance does not arise. Hence, we do not find any reason to interfere in the order of the learned CIT (A). Thus we uphold the same. Hence the ground of appeal of the revenue is dismissed.
Deduction claimed under the provisions of section 80IA - Initial assessment year - whether the unabsorbed depreciation pertaining to the period prior to the initial assessment year should be first set off against the against the profit of the eligible undertaking for the year under consideration? - HELD THAT:- In the case on hand, the commercial activity started from the assessment year 2009-10. However, the assessee has not chosen the assessment year 2009-10 as the initial assessment year. As such the assessee has chosen the initial assessment year 2012-13 which is within the provisions of law. The issue with respect to the selection of the initial assessment year has been resolved by the CBDT in its circular No. 1 of 2016 dated 15th February 2016.From the above there remains no ambiguity that it is the option of the assessee to choose the initial assessment year. Admittedly, the assessee has chosen the assessment year as the initial assessment year 2012-13 for claiming the deduction under the provisions of section 80 IA.
The provisions of subsection 5 of section 80IA of the Act provides that the deduction shall be computed treating the eligible undertaking as the only eligible source of business. Thus, the provision itself provides that the deduction shall be computed without setting off the unabsorbed depreciation of earlier year when undertaking was not eligible. Indeed, the unabsorbed depreciation pertains to the eligible undertaking for the period post commencement of the commercial activities but before the initial assessment year when the units becomes eligible for deduction. This controversy has been answered by the Hon’ble Madras High Court in case of Velayudhaswamy Spining Mills (P.) Ltd[2010 (3) TMI 860 - MADRAS HIGH COURT].
Thus we hold that the assessee is eligible for deduction under section 80IA of the Act without setting of/adjusting the unabsorbed depreciation of earlier years as alleged by the AO. Hence, we do not find any infirmity in the order of learned CIT (A) and thus we decline to interfere in his order. Thus the ground of appeal of the Revenue is dismissed.
Disallowance on account of depreciation claimed on the cost incurred in relation to the land being non depreciable asset - AO during the assessment proceedings found that amount of depreciation claimed by the assessee on the windmill was inclusive of the depreciation on the cost incurred by the assessee for keeping the land open/ vacant near the area where the windmill was located - HELD THAT:- There is no dispute to the fact that the cost/expense was incurred by the assessee to keep the surrounding land where the windmill was installed as open and vacant. It was incurred for the effective functioning and maximum output of the windmill. Admittedly, the cost was incurred by the assessee for the purpose of the business and this fact was not doubted by the authorities below. The assessee has treated such cost as part of the cost of the windmill and therefore, the assessee has claimed the depreciation thereon. To our understanding, the impugned expenses were not incurred by the assessee for the acquisition of the land rather cost was incurred for effective functioning of the windmills. Therefore, such cost was directly connected with the functioning of windmill. Thus there was commercial expediency to incur the expenses hence assessee was eligible to claim such expenses. However we find that the assessee instead of claiming such expenditure separately added the same to the cost of windmill and claiming depreciation on the same which was accepted in the earlier years.- Decided against revenue.
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2021 (12) TMI 1135
Addition u/s 56(2)(vii)(b) - difference in the purchase value of the properties as compared to the value fitted by Stamp Duty Authority - applicability of amendment brought to Section 56(2)(vii)(b) of the Act vide Finance Act, 2013 w.e.f. 01.04.2014 - HELD THAT:- The said Act was brought at theeginning of the FY-2013-14 and received assent by the President of India on 10.05.2013 which shows that the Finance Act, 2013 was enacted at the beginning of FY-2013-14 which will be applicable to the AY-2014-15. Therefore, the plea of the ld. Counsel for the assessee that the amended provisions would be applicable for AY-2015-16, in our view, is not correct, hence not tenable. However, the ld. CIT(A) under the wrong presumption went on to hold that the said provisions of Section 56(2)(vii)(b) of the Act were explanatory and hence retrospectively applicable. Though we agree with that, the amended provisions of Section 56(2)(vii)(b) of the Act would be applicable for the assessment year under consideration however, the reasoning given by the ld. CIT(A) in our view, was not correct, rather it was a simple case where the amended provisions of Section 56(2)(vii)(b) of the Act were directly applicable for the assessment year under consideration. In view of the above observations, we do not find merit in these grounds raised by the assessee/appellant and the same are accordingly decided against the assessee.
Unexplained investment on purchase of the property - AO noticed that the assessee paid cash amount of ₹6,04,968/- in relation to the purchase of the aforementioned properties - HELD THAT:- During the appellate proceedings before the ld. CIT(A), the assessee argued that no such cash payment has been made for the purchase of the property. However, the assessee failed to submit any explanation regarding the source of the amount paid for the purchase of the property. In view of this, the ld. CIT(A) confirmed the additions made by the AO.
Before us, neither anyone appeared nor any document filed to show the source of the cash payment made for the purchase of the property. In view of this, we do not find merit on this issue also. Hence these grounds are also decided against the assessee.
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2021 (12) TMI 1134
Assessment u/s 153A - Proof of incriminating material found during the course of search - addition in the hands of the assessee which has been received by the assessee from employer - HELD THAT:- In the instant case, assessment was framed u/s 153A and it is an unabated assessment and no assessments were pending on the date of search initiated upon the assessee. While perusing the assessment order, we find that nowhere the AO has referred any incriminating material found during the course of search relating to the receipt of ₹ 10 lakhs by the assessee and, therefore, it clearly shows that no incriminating material found during the course of search conducted u/s 132 of the Act on 09/11/2017 in respect of receipt from employer.
As held by the Hon’ble High Court of Delhi in the case of Kabul Chawla, [2015 (9) TMI 80 - DELHI HIGH COURT] that if no incriminating material found during the course of search for making addition in the unabated assessment, addition cannot be made. We, therefore, following the above judgment, set aside the order of the CIT(A) and direct the AO to delete the addition of ₹ 10 lakhs received by the assessee from his employer - Decided in favour of assessee.
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2021 (12) TMI 1133
Revision u/s 263 by CIT - receipt of share premium - As per CIT AO had failed to enquire into the veracity of the valuation report of shares furnished by the Chartered Accountant. It is a case of total lack of enquiry on the part of AO - distinction between “lack of enquiry” and “inadequate enquiry” - HELD THAT:- As specifically brought to the notice of the Assessing Officer that the appellant company issued 47850 preference shares of face value of ₹ 10 per share at premium to M/s. Kumar Sinew Developers Pvt. Ltd., a sister concern of the appellant and received a share premium - The appellant company also issued 1120 equity shares of face value of ₹ 10 per share to ICICI Asset Management Company Ltd. at a premium of ₹ 24,140/- per share and received share premium of ₹ 2,70,36,800/- and report of valuation of shares given by the Chartered Accountant was also furnished. In these circumstances, we do not agree with the ld. CIT-DR that no enquiry was made into the issue of receipt of share premium and the very fact that the Assessing Officer had called for report of valuation of shares given by Chartered Accountant goes to show that Assessing Officer had enquired and had gone into issues of applicability of provisions of section 56(2)(viib) .
In the present case, from the observation made by the ld. PCIT in 263 order, it is clear that had the ld. PCIT appraised the report of valuation of shares placed before the Assessing Officer, he would not have accepted the valuation report. This observation, in our considered opinion, cannot be accepted in view of the fact that the power of revision u/s 263 does not allow for supplanting or substituting the view of the Assessing Officer. The appreciation of material placed before the Assessing Officer is exclusively within his domain which cannot be interdicted by a superior officer while exercising powers u/s 263 of the Act on the ground that if he had appraised the said material, he would have come to a different conclusion in view of the law laid down by the Hon’ble Supreme Court in the case of Parashuram Pottery Works Co. Ltd.[1976 (11) TMI 1 - SUPREME COURT].
valuation of shares is a technical, complex problem, which should be left to the consideration of expert in the field and is surrounded by a number of myths and is not an exact science and is driven, inter-alia, by the purpose of valuation, statutory requirements, business factors, etc.. Valuation, in practice, is guided by a number of approaches as suitably adjusted for subjective circumstances. The report of an expert can be found fault by another expert in the field. Neither the Assessing Officer nor the Commissioner is competent to examine the veracity or the completeness of the valuation report given by an expert. The ld. PCIT cannot come to the conclusion that the report of valuation of shares is unacceptable in the absence of report from another expert. The material on record does not suggest any error in the methodology adopted in the report.
The power of revision cannot be exercised to set-aside the assessment order to enable Assessing Officer to conduct another fruitless enquiry to reach the same result which was arrived at earlier, even if the enquiries held that it would be empty formatting as the shares were also issued to unrelated parties i.e. 1120 equity shares of face value of ₹ 10 per share to ICICI Asset Management Company Ltd. at a premium of ₹ 24,140/- as held in the case of CIT vs. Sakthi Charities [2000 (2) TMI 75 - MADRAS HIGH COURT] - Assessee appeal allowed.
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2021 (12) TMI 1132
Delayed employee's contribution to provident fund - assessee argued contribution been paid before filing of the return.paid before filing of the return - Scope of amendment - HELD THAT:- We find that the issue is covered in favour of the assessee as the assessment year involved is AY 2017-18 and the Explanation-5 inserted by Finance Act, 2021 to section 43B w.e.f. 01.04.2021 is not applicable to the assessment year under consideration.
See HARENDRA NATH BISWAS VERSUS DCIT, CIRCLE-29 KOLKATA [2021 (7) TMI 942 - ITAT KOLKATA] wherein held that we do not accept the Ld. CIT(A)'s stand denying the claim of assessee since assessee delayed the employees contribution of EPF & ESI fund and as per the binding decision of the Hon'ble High Court in Vijayshree Ltd. [2011 (9) TMI 30 - CALCUTTA HIGH COURT] of the Act since assessee had deposited the employees contribution before filing of Return of Income. Therefore, the assessee succeeds and we allow the appeal of the assessee.
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2021 (12) TMI 1131
Late deposit of employees share of PF & ESI which were deposited after the due date but before the due date of filing of return of income - AO made the additions of the impugned amounts for the reasons that the assessee did not deposit the amounts of employees contribution as per the provisions of section 36(1)(va) - HELD THAT:- As decided in RAJA RAM VERSUS THE ITO, WARD 3 AND SANCHI MANAGEMENT SERVICES PRIVATE LIMITED VERSUS THE ITO, WARD 5 (2) , CHANDIGARH [2021 (11) TMI 370 - ITAT CHANDIGARH] assessee deposited the contribution of PF & ESI belated in terms of section 36(1)(va) of the Act, however, the said deposits were made prior to filing of return of income u/s 139(1).
Impugned additions made by the Assessing Officer and sustained by the Ld. CIT(A) on account of deposits of employees contribution of ESI & PF prior to filing of the return of income u/s 139(1) of the Act, in both the years under consideration prior to the amendment made by the Finance Act, 2021 w.e.f. 1.4.2021 vide Explanation 5, are deleted. - Decided in favour of assessee
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2021 (12) TMI 1130
Claim of balance additional depreciation on the assets which were put to use in earlier year - Number of days asset put to use - whether machinery is put to use for less than 180 days ? - Scope of amended provision of section 32(1) - HELD THAT:- As decided in M/S RITTAL INDIA PVT. LTD. (NO. 1) [2016 (1) TMI 81 - KARNATAKA HIGH COURT] only 50% of the allowable depreciation i.e. sum equal to 10% of the actual cost of the plant and machinery is allowed because of the fact that the machinery is put to use for less than 180 days in that financial year, this would necessarily mean that the balance 10% additional depreciation can be availed in the subsequent assessment year, otherwise the very purpose of insertion of Clause (iia) would be defeated - beneficial legislation should be given liberal interpretation and that since the additional depreciation is a one-time benefit to encourage industrialization and therefore, the beneficial provision has to be construed reasonably, liberally and purposively to make it meaningful while granting additional allowance.
Even in the Explanatory Notes to the Provisions of the Finance Act 2 issued by the CBDT, in Para 13.2 of the said Notes, it has been mentioned that the aforesaid amendment of providing balance of additional depreciation in the immediately succeeding year has been brought to remove discrimination in the manner of allowing additional depreciation on plant or machinery used for less than 180 days in the preceding year. The very objective of insertion of a new proviso to section 32(1) is that to remove discrimination and therefore it can be safely said that the same is just a curative amendment. Even there is no provision u/s. 32(1) prohibiting the balance additional depreciation in the succeeding year. - Decided against revenue.
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