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2021 (12) TMI 1469
Violation of principles of natural justice - Rejection of the petitioner’s application for revision - application passed ex parte - HELD THAT:- On perusal of record it appears that the petitioner is habitual defaulter in appearance both before the Appellate Authority as well as Revisional Authority as appears from record and which is reflected from the recording of the Revisional Authority.
On perusal of the contents of the impugned order of the Revisional Authority, it is not that type of case where it can be called there is violation of principle of natural justice.
Petition dismissed.
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2021 (12) TMI 1468
Revision u/s 264 after eight years - eligible reasons for delay - HELD THAT:- As Petitioner submits that due to mistake he had filed an appeal before the Tribunal against the assessment order in question and it appears from record that the said appeal was dismissed on 25th September, 2014 as it appears from Annexure P-5 to the writ petition and even if the explanation of the petitioner is accepted the time was consumed by him in the appeal in that case also from the order of the Tribunal it is after almost seven years in approaching the writ court and this inordinate delay itself is sufficient ground for refusal to entertain the writ petition.
In justification of delay of this seven years, petitioner wants to rely on Paragraphs 7 and 8 of this writ petition but we are not convinced with the same since the writ court is a court of equity and it is for those who are vigilant and diligent to their rights and not for those who sleep over their rights. The impugned order being passed by giving opportunity of hearing to the petitioner but he did not avail that opportunity and he asked further adjournment.
Considering these facts, this writ petition dismissed.
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2021 (12) TMI 1467
Nature of expenses - Product Registration Charges - Revenue or capital expenditure - mercantile method of accounting followed as in the business of manufacturing of pharmaceutical products - whether product registration expenses have been charged off in the accounts constitutes as an expenditure allowable u/s 37(1) and hence disallowance is ought to be deleted? - HELD THAT:- On perusal of ledger accounts revels that payments have been made to statutory bodies either for approval or as statutory maintenance in foreign nations. Assessee has also made payments being annual fees to the Medical agencies in foreign nations. All these are recurring in nature. These payments are inextricably linked to the business of the assessee.
In respect of Patent expenditure, it is submitted that assessee has to get the patent registered in various regions in order to safeguard its product from any infringement. Further nothing has been placed on record to establish that the patent expenditure has been incurred by assessee on a new product. One aspect cannot be ignored that assessee incurs these expenses every year.
Coming to the expensed incurred by assessee in respect of the drug called ‘Dolenio’, we note that it is sold by assessee in many countries. The expenses incurred by assessee towards Mutual recognition process variation is necessary based on any change in the packing of the drug like change in color etc., or shape of the drug, or even the change of supplier.
The expenses incurred by assessee in respect of Dolenio during the years under consideration towards Mutual recognition process variation, Patent and Trade mark and other registration expenses, are be considered as revenue expenditure, allowable under section 37(1) of the Act.
Annual fee/license fees paid the ledger account revels that these are recurring in nature, and hence cannot be treated to be one time payment. These are in respect of renewal of licence with the drug authorities in respective countries to continue to hold the licence to export and sell the products developed by assessee. Accordingly we do not find any infirmity in the observation of CIT(A) to treat the payments to be revenue expenditure allowable u/s 37(1)
Disallowance u/s 14A r.w.s. D(2) (ii) - Assessee suo moto disallowed u/r 8 D(2)(iii) - AR submitted that the nature of dividend, was from investment in Mutual Funds (MFs) and that the investment was made out of surplus funds and funds from other sources and that no part of the borrowed funds was utilised for making the investment in MFs - HELD HAT:- If there be interest-free funds available to an assessee sufficient to meet its investments and at the same time the assessee had raised a loan it can be presumed that the investments were from the interest-free funds available. However this needs verification as on the date of investment. The cash flow statement would disclose as on the date of making investments, which had given rise to the exempted income, that the assessee had interest free funds available with it. In the interest of justice and equity, we deed it fit to remand the case to the Assessing Officer for fresh consideration. AO shall afford reasonable opportunity of being heard to the assessee. The assessee shall prove its case that it is having interest free funds for making investments, by furnishing cash flow state for the respective assessment years.
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2021 (12) TMI 1466
Transition of tax deducted at source under Section 140 of the TNGST Act, 2017 - HELD THAT:- Since the issue dealt by the learned single Judge in M/s DMR Constructions Vs. The Assistant Commissioner. The Government Advocate (Taxes) [2021 (4) TMI 261 - MADRAS HIGH COURT] and in the present case are one and the same that is whether the tax deducted at source under Section 5 read with Section 13 of TNVAT ACT, 2006 could be transited under Section 140 of the TNGST Act, 2017 and since the learned Government Advocate (Taxes) concedes the case and states that the respondent/Commercial Tax Department has accepted and since no contra order has been cited - the same present writ petition is followed.
Petition allowed.
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2021 (12) TMI 1465
Fraud/cheating - Impleadment as a party - Generation of funds through forgery and criminal offences - Locus standi to be heard - HELD THAT:- The applicants who have moved applications for impleadment were heard. However, it is a settled law that such persons cannot be made a party in misc. petition where the complainant seeks invoking of inherent powers of this court for directing firm investigation and for seeking supervision of a proper investigation in a case relating to fraud and cheating. The applicants although may not be necessary party but they have a right to be heard and recognizing their locus standi the counsels have been heard.
In the case of MADHU LIMAYE VERSUS STATE OF MAHARASHTRA [1977 (10) TMI 111 - SUPREME COURT] and in the case of SIMRANJIT SINGH MANN VERSUS UNION OF INDIA (UOI) AND ORS. [1992 (9) TMI 381 - SUPREME COURT], the principle has been recognized that even if a person may not be directly connected in a criminal case and any order passed in a criminal case affects his rights, he has a liberty to move appropriate applications for questioning the legality and validity or correctness of the order which has affected his rights.
Keeping the said principle in mind, this court finds that essentially all the applicants who have been named above are those who have purchased share/shares from BSE and NSE relating to the companies which have been mentioned by the complainant in his complaint to the Investigating Officer. The shares were purchased earlier they are liable to be unfreezed. However, if the same were purchased in between and if it is found that such shares were originally purchased by way of proceeds of crime, they would be liable to be confiscated.
The petitioner as well as the applicants before this court can always submit their stand before the concerned SFIO who shall look into the entire case and reach to its own independent conclusion. If it is found that the shares as purchased by the applicants are in no manner connected, the SFIO shall be free to unfreeze the shares - petition disposed off.
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2021 (12) TMI 1464
Levy of penalty - differential tax of duty - HELD THAT:- So far as imposing the penalty is concerned, the learned Single Judge set aside the same also on quashing and setting aside the levy of differential tax. However, so far as the Division Bench is concerned, the Division Bench has not at all addressed anything on the levy of penalty. From the impugned judgment and order passed by the Division Bench, it appears that there is no discussion by the Division Bench on the levy of penalty.
Therefore, so far as the levy of penalty is concerned, the liberty reserved in favour of the petitioner to approach the Division Bench of the High Court by way of Review Petition(s) and as and when such Revision Petition(s) is/are filed within a period of four weeks from today, the same may be considered in accordance with law and on merits.
The present Special Leave Petitions stand disposed of.
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2021 (12) TMI 1463
Assessment u/s 153C - usurpation of jurisdiction u/s 153C by the AO without first satisfying the essential condition precedent in the fourth proviso to Section 153A read with Explanation 2 of the Act - assessee had specifically objected to the AO’s action of reopening the unabated assessment for AY 2011-12 u/s 153C of the Act and had requested the AO to give details of the purported ‘assets’ (undisclosed/unaccounted assets unearthed during search qua the assessee qua the AY 2011-12) - HELD THAT:- Perusal of the assessment order impugned before us, shows that that AO did not make any addition/s in respect of escaped/undisclosed asset in the relevant AY 2011-12. Neither was the investments held in shares by the assessee found to be unaccounted/undisclosed nor was its source of acquisition disputed or held to be unexplained by the AO. We therefore find ourselves in agreement with Shri Dudhwewala that, unless the AO made addition/s of Rs. 50 Lakhs or more in relation to escaped/undisclosed asset, he could not assume jurisdiction to make addition/s on other items (viz. credit entries in bank account etc.) The reason is simple, because in such a scenario, it bellies the claim of the AO in issuing notice u/s 153C of the Act, that he is in possession of the jurisdictional fact i.e. undisclosed asset valued Rs. 50 lakhs or more has escaped assessment, for which he seeks to re-assess the income of the assessee for the 7th to 10th AY.
When the AO fails to make any addition for the ‘undisclosed asset’, then it tantamounts to admission that there was no jurisdictional fact present before the AO in the first place, and the necessary corollary is that he has wrongly assumed jurisdiction u/s. 153C for AY 2011-12 and therefore AO cannot proceed further to make other items of additions/disallowances. In such a scenario, the AO has no other option but to drop the assessment proceedings.
For this conclusion of ours, we rely on the ratio laid down in the judgments of CIT Vs Jet Airways [2010 (4) TMI 431 - HIGH COURT OF BOMBAY] & Ranbaxy Laboratories Ltd. [2011 (6) TMI 4 - DELHI HIGH COURT] Though these judgments were rendered in the context of reopening u/s. 147 of the Act, however the ratio decidendi will apply in the present case, because, like Section 147/148 of the Act, the AO gets the authority to assess/reassess the income of a searched person or other person u/s 153A/153C for the extended assessment years (7th to 10th AYs) only if he has in his possession the jurisdictional fact, as discussed.
If the AO is found to have assumed jurisdiction erroneously on mistaken belief about the existence of jurisdictional fact or ultimately drops it (after making enquiries in the course of assessment) while framing the reassessment order; then the AO cannot legally proceed further with the assessment/reassessment and/or make any other items of additions/disallowances, for the reason that the jurisdictional fact is absent or not in existence at the first place when he usurped the jurisdiction. In the light of the aforesaid discussion, and in our considered opinion, this submission of Shri Dudhwewala is well founded and deserves to be accepted.
In view of the above and on perusal of the impugned re-assessment order, we note that the only addition made by the AO in AY 2011-12 was on account of unexplained cash credit represented by sale proceeds u/s 68 of the Act. As noted earlier, the additions on account of unexplained ‘cash credit’, could not have been made by the AO, unless he first made an addition of undisclosed ‘asset’ valued at Rs. 50 Lakhs or more.
So in this case, as there was no addition made by AO on account of undisclosed asset, we can safely infer that there was no jurisdictional fact in the AO’s hand or in his possession when he assumed jurisdiction u/s 153C for AY 2011-12 in the first place itself. As, the very usurpation of jurisdiction u/s. 153C of the Act is found to be bad in law for want of jurisdiction, the AO was precluded from making any other addition in the assessment for AY 2011-12. Hence, the AO’s action of making addition u/s 68 of the Act in the relevant AY 2011-12 is held to be unsustainable for want of jurisdiction and is therefore is quashed. The assessee thus succeeds on the first legal challenge raised in the cross objections. Hence, Ground No. 2 of the cross objections stands allowed.
Determining the abated/unabated assessment u/s 153C - date of search as ascertained - HELD THAT:- As we hold that in the case of unabated assessments of an assessee, no addition is permissible in the order u/s 153C of the Act unless it is based on any incriminating material found during the course of search.
The nature of the evidence or information gathered during the search should be of such nature that it should not merely raise doubt or suspicion, but should be of such nature which would prima facie indicate that real and true nature of transaction between the parties is something different from the one recorded in the books or documents maintained in ordinary course of business. In some instances, the information, document or evidence gathered in the course of search, may raise serious doubts or suspicion in relation to the transactions reflected in regular books or documents maintained in the ordinary course of business, but in such case the AO is not permitted to straightaway treat such material to be ‘incriminating’ in nature unless the AO thereafter brings on record further corroborative material or evidence to substantiate his suspicion and conclude that the transaction reflected in regular books or documents did not represent the true state of affairs. Until these conditions are satisfied, it cannot be held that every seized material or document is incriminating in nature, justifying the additions in unabated assessments.
We thus hold that the assertion of the AO in the 'Satisfaction Note' that having a bearing on the ‘total income’ of the assessee is perverse and erroneous. The alleged documents relied upon by the AO to usurp jurisdiction u/s 153C of the Act and justify the impugned addition did not constitute ‘incriminating material’ found in the course of search, from which any undisclosed/unexplained income could be inferred in the hands of the assessee. Hence, as there was no incriminating material against the assessee which was unearthed/seized during the search conducted on 22-12-2017 from the premises of Sagar Group, the satisfaction note prepared by the AO did not meet the condition precedent stipulated u/s. 153C of the Act, as the ‘document’ referred to, did not have any bearing on the total income of the assessee for AY 2011-12. In that view of the matter, the very assumption of the jurisdiction for AY 2011-12 is held to be bad in the eyes of law as held by the Hon'ble Supreme Court in the case of Sinhgad Technical Education Society [2017 (8) TMI 1298 - SUPREME COURT] and, accordingly the consequent order dated 3112-2019 is quashed.
We are of the view that based on the sole statement of Shri Agarwal, the AO could not have usurped the jurisdiction u/s 153C of the Act. Even otherwise, based on the discrepancy as discussed about ‘Annexure -1’ it is not safe to rely on it and above all, as discussed it did not contain anything which incriminated the assessee. Hence, such statement could not be the basis for drawing adverse inference against the assessee and therefore, no addition could have been made on the basis of such unreliable statement. We thus find that the contentions raised by the Ld. CIT DR are devoid of merits and is therefore rejected
AO had invalidly usurped jurisdiction u/s 153C of the Act as there was no incriminating material pertaining to the assessee seized in the course of search. Even the addition made in the unabated assessment for AY 2011-12 was unsustainable since it was not based on any incriminating material found in the course of search. In that view of the matter, the order dated 31-12-2019 passed by the AO is held to be a nullity and is accordingly quashed. Hence, Ground No. 1 of the cross objections also stands allowed.
CIT(A)’s action of holding the assessment order passed u/s 153C/143(3) to be ab initio void, for the AO’s failure to issue notice u/s 143(2) of the Act prior to completion of assessment - We find merit in the submission of the Ld. DR that issuance of notice under section 143(2) is not mandatory for finalization of assessment under section 153A/153C of the Act. We note that the Ld. CIT(A)’s had wrongly relied on the decisions of Hotel Blue Moon [2010 (2) TMI 1 - SUPREME COURT] & Laxman Das Khandelwal [2019 (8) TMI 660 - SUPREME COURT] which were distinguishable in as much as it were rendered in the context of assessments framed u/s 143(3)/158BC, where issuance of notice u/s 143(2) of the Act to assume jurisdiction over the assessee is mandatory. However, Section 153A/153C of the Act is a special provision and we find that there is no specific provision in the Act requiring the assessment to be made under section 153A/153C after issue of notice under section 143(2) of the Act.
As decided in Ashok Chaddha [2011 (7) TMI 252 - DELHI HIGH COURT]. There is no specific provision in the Act requiring the assessment made under s. 153A to be after issue of notice under s. 143(2) of the Act. Clause (b) of s. 158BC expressly provides that "the AO shall proceed to determine the undisclosed income of the block period in the manner laid down in s. 158BB and the provisions of s. 142, sub-ss (2) and (3) of s. 143, s. 144 and s. 145 shall, so far as may be, apply. This is not the position under s. 153A. The law laid down in Hotel Blue Moon, is thus not applicable to the facts of the present case.
Impugned order passed u/s 153C of the Act to be a nullity on the premise that it was passed consequent to the return of income filed by the assessee in response to earlier notice issued u/s 153A - We note that the Ld. DR has rightly pointed out that, the Ld. CIT(A) had erroneously observed that the AO had first issued notice u/s 153A of the Act for AY 2011-12 and thereafter without consigning/dropping the earlier notice, he had initiated fresh proceedings u/s 153C of the Act. Upon examination of the records, we note that, unlike for AYs 2012-13 to 2017-18, the AO for AY 2011-12 had issued only one notice u/s 153C of the Act dated 05-12-2019 and the assessee had also filed the return of income in response thereto, pursuant to which the assessment dated 31-12-2019 was framed u/s 153C/143(3) of the Act. We thus find merit in the Revenue’s case that this finding of the Ld. CIT(A) was erroneous. Before us, the Ld. AR was unable to controvert this fact.
Thus as the very usurpation of jurisdiction by the AO u/s 153C has been held to be bad in law and, even the seized documents referred by the AO for justifying the addition/s made u/s 68 of the Act, in the unabated assessment for the AY 2011-12, did not constitute ‘incriminating material’; the order passed u/s 153C/143(3) and the AO’s action of making addition u/s 68 of the Act therein, is held to be a nullity and is unsustainable for want of jurisdiction and is therefore is quashed.
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2021 (12) TMI 1462
Exercise of right of redemption of mortgage - Till what time or date can the right of redemption of the mortgage be exercised by the mortgagors/borrowers in the light of the amendment to Section 13(8) of the SARFAESI Act? - HELD THAT:- Admittedly, what is stated in page-13 was passed in the Lok Sabha and the Rajya Sabha and then it became the Act 44 of 2016 and came into effect on 01.09.2016 - But the important thing to note is that this Report does not indicate that the Committee had even considered Section 60 of the Transfer of Property Act, 1882, which provides the general law of right to redeem a mortgaged asset of a mortgager vis-a-vis the provisions of the SARFAESI Act.
It no where says that there was an intention to bring about a change with regard to the time before which a mortgagor can exercise his right to redeem the mortgage.
It is clear that the legislature did not have any intention to deal with the right of mortgagor to redeem the mortgage when they amended Sec. 13(8) or to modify it in any manner; and amendment cannot be said to have intended to modify the existing law which continued even when the un-amended Section 13(8) of the SARFAESI Act was in force. The amended Sec. 13(8) was intended to only deal with the date when the secured creditor's right to transfer the secured asset should stop and nothing more.
The amended Section 13(8) of the SARFAESI Act merely prohibits asecured creditor from proceeding further with the transfer of the secured asset by way of lease, assignment or sale; a restriction on the right of the mortgagee to deal with the property is not exactly the same as the equity of redemption available to the mortgagor; the payment of the amount mentioned in Section 13(8) of the SARFAESI Act ties the hands of the mortgagee (secured creditor) from exercising any of the powers conferred under the Act; that redemption comes later; extinction of the right of redemption comes much later than the sale notice; and the right of redemption is not lost immediately upon the highest bid made by a purchaser in an auction being accepted - It is held that such a right would continue till the execution of a conveyance i.e. issuance of sale certificate in favour of the mortgagee.
Whether the petitioners are entitled to any relief? - If so, to what relief? - HELD THAT:- In the instant case since the right of redemption of the petitioners has not got extinguished till date because of non-confirmation of sale and non-issuance of sale certificate to the respondents 2 and 3, and since thepetitioners have made substantial payments amounting to ₹ 80 Lacs out of the total dues of ₹ 2,28,81,882.00 as on 29.03.2019, and have shown a bona fide intention to pay the rest of the dues within a short time, the relief granted to the petitioners subject to what is mentioned below.
Subject to the petitioners paying the entire balance outstanding dues with applicable interest to the 1st respondent-Bank within four weeks from today, the 1st respondent-Bank shall close the loan account of the petitioners and restore possession of their residential property to them - If not, this Writ Petition shall stand dismissed with costs of ₹ 25,000/- without reference to this Court - petition allowed.
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2021 (12) TMI 1461
Offence u/s 277 - evasion on account of misstatement or a wrong statement - non- payment of any tax before uploading of the returns - petitioners did not have money to make payment of the income tax - prosecution against all the directors of the company - reverse burden of proof - proof of willful evasion of tax or not? - HELD THAT:- We are not inclined to interfere with the impugned order and hence the special leave petition is dismissed. The dismissal of the special leave petition would not be construed as approval of the observations made in the impugned judgment - Section 202 of the Code of Criminal Procedure, 1973. Neither the dismissal nor the findings recorded in the impugned order reflect on other proceedings under the Income Tax Act, 1961.
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2021 (12) TMI 1460
Scrutiny assessment - non issuance of notice u/s 143(2) was ever issued by the Department - whether curable defect u/s 292BB? - HELD THAT:- Admittedly, no notice u/s. 143(2) was issued by the AO having jurisdiction over assessee either prior to the assessment proceedings or during the assessment proceedings. We place reliance on the decision of NITTUR VASANTH KUMAR MAHESH [2019 (5) TMI 1557 - KARNATAKA HIGH COURT] wherein Hon'ble Court took similar view. Hon'ble Court also held that provisions of section 292BB cannot cure such defect.
Based on the above discussions, we allow raised by the assessee and the order passed by the Assessing Officer u/s. 143(3) for year under consideration is held to be not legally sustainable. The assessment order dated 30.12.2016 is held to be Null in the eyes of law due to non-issuance of notice u/s. 143(2) by the Ld. AO who had jurisdiction over present assessee.
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2021 (12) TMI 1459
Assessment u/s 153A - Addition u/s 68 - Whether the AO had validly assumed jurisdiction to issue notice u/s 153A of the Act upon the assessee for AY 2011-12 in terms of fourth proviso to Section 153A of the Act read with Explanation 2 of the Act ? - HELD THAT:- Only upon valid assumption of jurisdiction, the AO ought to have proceeded against the assessee to assess the escaped asset of the assessee and thereafter other undisclosed income if any as per law. And when he does that, he first has to make addition in respect of the escaped asset [based on which AO initiated section 153A proceedings] and then only based upon the incriminating documents unearthed in the course of search, that he can make additions/disallowances in respect of other items of escaped income/credit/expense etc., if any (for unabated assessment years); in the event if no addition could be made by AO in respect of undisclosed asset [based on which AO initiated section 153A proceedings] then the AO has to drop the section 153A proceedings because, he has assumed jurisdiction on a wrong/non-existing undisclosed asset and can resume only u/s 153A only on satisfaction of new/fresh undisclosed asset/jurisdictional fact, which principle will discuss separately.
Pre-requisite condition to issuance of notice u/s 153A for the 7th – 10th AY - The extended jurisdiction to invoke/assess 7th – 10th AY is conferred on the AO by authority of law and the AO cannot confer to himself the jurisdiction in a casual manner by stating/substituting the specific jurisdictional fact to encompass all seized material. It is common knowledge that, seized material may contain both disclosed & undisclosed assets, liabilities, expenses & income. So, it is imperative that before issuance of notice u/s 153A [for the extended period], the AO sets out his objective satisfaction from the seized material, the details of the specified/undisclosed assets in his possession qua the assessee for AY 2011-12 valued Rs. 50 lakhs or more. If this essential requirement of law is not satisfied, the AO does not get the authority of law to invoke the jurisdiction u/s 153A for 7th to 10th AY.
For this, we rely upon the dictum of the Privy Council in Nazir Ahmed Vs. King Emperor [1936 (6) TMI 11 - PRIVY COUNCIL] that when a statute requires a thing to be done in a particular manner, it must be done in that manner or not at all. As discussed the language of the fourth proviso to section 153A of the Act show that issuance of notice can be resorted to by the AO only after he is in possession of the jurisdictional fact, which is found to be absent in the present case. Therefore according to us, the AO only after having in his possession the jurisdictional fact could have assumed jurisdiction and issued notice u/s. 153A of the Act or else he could not have issued notice, as done in this case. For the reasons elaborately discussed by us in the foregoing, we thus hold that the notice u/s. 153A dated 11.09.2019 was issued by the AO without authority of law and without satisfying the essential jurisdictional fact, and hence the issuance of notice u/s. 153A is held to be bad in law.
Thus according to us, the pre-requisite condition for conferment of jurisdiction under section 153A for the assessment of AY’s falling from seventh (7th) to tenth (10th) assessment years preceding the searched assessment year being the jurisdictional fact in this case is absent and the AO without fulfilling this essential jurisdictional fact erroneously invoked jurisdiction u/s 153A of the Act for AY 2011-12, which is a serious flaw and a jurisdictional defect, that cannot be cured.
Additions on account of unexplained cash credit and that too share capital, which is in the nature of ‘liability’ could not have been made by AO, unless he first made an addition of undisclosed ‘asset’ valued at Rs. 50 Lakhs or more. So in this case, as there was no addition made by AO on account of undisclosed asset, we can safely infer that there was no jurisdictional fact in the AO’s hand or in his possession when he assumed jurisdiction u/s 153A for AY 2011-12 in the first place itself. As, the very usurpation of jurisdiction u/s. 153A of the Act is found to be bad in law for want of jurisdiction, the AO was precluded from making any other addition in the assessment for AY 2011-12. Hence, the AO’s action of making addition u/s 68 of the Act in the relevant AY 2011-12 is held to be unsustainable for want of jurisdiction and is therefore is quashed.
Whether in absence of any incriminating material found in the course of search at the premises of the assessee, the additions/disallowances made in the assessments of the assessee, which were unabated/ non-pending on the date of search, could be held to be sustainable on facts and in law? - We find ourselves in agreement with the above findings of the Ld. CIT(A) that this document was a share-holding pattern document prepared by way of secretarial compliance report, which as the assessee has shown, was filed along with the company’s annual return in Form MGT-7 on 28-11-2017 with the Registrar of Companies and was therefore available in the public domain (much prior to the date of search). It is found to contain the details of the name of shareholders, their amount and percentage of shareholdings.
In our considered view, this document was a regular business document having no incriminating content whatsoever. Nothing whatsoever has been brought on record by the Revenue to correlate or link as to how the contents of this statement led to unearthing of unexplained cash credit by the AO and therefore the aforesaid factual finding of the Ld. CIT(A) remains uncontroverted. Hence, we do not see any reason to interfere with the order of the Ld. CIT(A) on this aspect and hold that the seized document GCL-HD-1 did not constitute incriminating material or evidence.
For the reasons discussed we hold that the seized document GCL-HD-1 referred by the AO for justifying the addition/s made u/s 68 of the Act in the orders impugned before us, did not constitute ‘incriminating material’ and therefore no addition/s was legally permissible in the assessments framed u/s 153A for the AYs 2011-12 to 2015-16 for which the assessment did not abate, when the search was conducted on 22-12-2017. The assessee thus succeeds on Question (B) as well.
Whether the Joint Commissioner of Income-tax, Guwahati had validly granted approval u/s 153D of the Act and therefore whether the consequent order passed u/s 153A/143(3) was sustainable in law or not ? - As noted that the relevant copies of the letters addressed by the AO to the Jt.CIT and the letters of approval issued by the latter are not available on record, which are necessary to adjudicate this particular issue. Moreover, since we have already held the orders passed u/s 153A/143(3) of the Act and the additions made therein to be unsustainable in law for the reasons set out above, we are not inclined to return our findings with regard to this legal issue raised in the cross objections as the same has now become academic in nature.
Whether the assessee had discharged its onus of establishing the identity and creditworthiness of the share subscribers and substantiating genuineness of the transactions and therefore whether the additions made u/s 68 on account of share application monies received by the appellant was tenable on facts and in law ? - AO’s failure to personally examine the witness and his denial to allow the assessee opportunity to cross examine the Departmental witness on whose statements he was relying upon was a serious & fundamental flaw which resulted in the additions made u/s 68 of the Act to be a nullity as held by the Hon’ble Supreme Court in Andaman Timber [2015 (10) TMI 442 - SUPREME COURT]
Whether the AO had rightly computed interest u/s 234A - We find that the AO had wrongly taken the due date of filing of return in response to the notices issued under Section 153A of the Act dated 11.09.2019 to be the original due date u/s 139 of the Act i.e. 30.09.2011 for AY 2011-12, 30.09.2012 for AY 2012-13 and so on, rather than the day following the expiry of the time limit prescribed in notice u/s 153A of the Act, resulting in erroneous and excessive levy of interest u/s 234A of the Act. The AO is accordingly directed to re-compute the levy of interest u/s 234A of the Act in terms of sub-section (3) of Section 234A of the Act i.e. from the date on which the time limit for filing of return of income in response to notices u/s 153A of the Act dated 11.09.2019 had expired. This ground therefore stands allowed for statistical purposes.
Adjustment of seized cash by way of self-assessment tax in the hands of the assessee in AY 2017-18 - HELD THAT:- AR as brought to our notice that the assessee had filed a petition dated 28-02-2020 before the AO requesting him to adjust this seized cash against their tax liability for AY 2017-18. Having regard to the provisions of Section 132B(iii) of the Act, the AO is accordingly directed to grant the credit of seized cash by way of self-assessment tax in accordance with law.
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2021 (12) TMI 1458
Irregularity in the e-auction process in terms of Regulation 33 and Schedule 1 of the IBBI (Liquidation Process) Regulations, 2016 or not - existence of whiff of any short of collusion between the highest bidder and other bidders - validity of cancellation of present auction - HELD THAT:- It is submitted that the Appeal may be disposed of with this liberty that in case, any occasion arises, the Appellant will be at liberty to agitate the grounds before the Appropriate forum or may file an Application for revival of this Appeal.
It is thought proper to dispose of this Appeal in the light of the aforesaid submissions - appeal disposed off.
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2021 (12) TMI 1457
Grant of ad-interim reliefs - applicant/plaintiff stated that since they are now not challenging the rejection of ad-interim reliefs, by filing any appeal, this Court need not give any reasons for the same - HELD THAT:- In view of the statements made by applicant/plaintiff, no reasons are recorded for rejecting the prayer for ad-interim reliefs. If any of the Defendants want to file any Affidavit-in-Reply to the above Interim Application, they may do so on or before 13th January, 2022 and serve a copy of the same on the advocates for the Plaintiff. If the Plaintiff wants to file any Affidavit-in-Rejoinder, it may do so on or before 27th January, 2022 and serve a copy of the same on the advocates for the Defendants.
Place the above Interim Application for hearing on 3rd February, 2022.
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2021 (12) TMI 1456
Revision u/s 263 - validity of scrutiny assessment u/s 143(3) - AO while passing the assessment order u/s 143(3) did not enquire about “discrepancy in turnover shown in ITR and cash deposit in bank A/c” - HELD THAT:- As in the present case we note that the Ld. PCIT has alleged lack of enquiry on the part of the AO in respect of scrutiny of the CASS item “discrepancy in turnover shown in ITR and cash deposit in bank A/c”. We note that the assessee is running petrol pump business.
From the perusal of the assessment order, we note that the AO had called for the documents/records from the assessee and has made the specific finding of fact that pursuant to his notices, the assessee had furnished the same as well as the reconciliation in respect of the discrepancy in turnover shown in ITR and cash deposit in bank account.
AO has made a finding after calling for relevant documents to scrutinize the CASS issue that the assessee has been able to explain the discrepancy by filing the reconciliation. Since the AO has made a categorical finding on the issue on which the Ld. PCIT found fault with and when this fact has been brought to the notice of the PCIT during the revisional proceedings, PCIT after taking note that A.O has made enquiry on the issue, then if he is still not satisfied with the enquiry conducted by the AO on that issue, then according to us the Ld PCIT ought to have conducted enquiry himself and demonstrated how the AO erred in accepting the reconciliation/explanation given by the assessee while explaining/reconciling the discrepancy.
According to us, without doing such an exercise in the light of the AO’s finding that the assessee has explained/reconciled the discrepancy in turnover shown in ITR and cash deposit in bank a/c, the action of Ld PCIT to find fault with the AO’s action as erroneous for lack of enquiry cannot be countenenced. Therefore, we cannot agree with the Ld. PCIT that AO’s scrutiny assessment u/s 143(3) is erroneous for non-enquiry. Therefore, the Ld. PCIT erred in assuming jurisdiction u/s 263 - Appeal of the assessee is allowed.
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2021 (12) TMI 1455
Validity of assessment u/s 144B - short period that had been given on service of the final notice and the Draft Assessment Order - whether the request for adjournment made has been responded as required under the law and whether the assessment framed can therefore be permitted to be sustained? - HELD THAT:- Once the statute provides that there is an opportunity to be availed to the assessee when there is a variation prejudicial to its interest is proposed, his request for adjournment as well as for the hearing also needs to be responded to. It is a completely unacceptable and unpalatable proposition that once a request come from the assessee, the respondent chooses not to respond to the same and go ahead with the framing of the assessment, that too when the time period was not expiring.
Even if the time period expires, it is for the respondent to workout a schedule in the manner as expected particularly when there is no human agency and when the assessee also has no one to turn to but to send a request through the e-portal.
Therefore, in the instant case when there was already a second surge of infection due to COVID-19 virus, the entire country was grappled with that second waive. If there is a categorical request that was made on account of such infection of the partner of the petitioner company and time was sought on 10.04.2021 when the time period for finalizing the assessment was getting over on 30.04.2021 as was known to the respondent from February, 2021, as extension had already come by virtue of the Circular, the framing of the assessment in clear defiance and in violation of this provision shall need to be interfered with.
Resultantly, we allow the present petition and quash and set aside the Assessment Order rendered u/s 143 (3) r.w.s. 143(3A) and 143(3B) which has been framed by the authority. The penalty proceedings and the demand notice are also quashed and set aside. AO shall be availing an opportunity to the petitioner including the opportunity of personal hearing, if requested for and decide the matter in accordance with law.
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2021 (12) TMI 1454
Provisional release of seized imported goods - HELD THAT:- Purposes of this petition shall be served if this petition is treated as an application made under Section 110 A of the Customs Act, 1962 and decided appropriately.
The petition is partly allowed.
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2021 (12) TMI 1453
Seeking amendment of shipping bills and to issue MEIS benefit on the basis of the amended shipping bills - it is the say of the petitioner that the Company was eligible for reward due to capturing of ”N” through an oversight in all the invoices except one, therefore, the Company was unable to claim MEIS benefits - HELD THAT:- Noticing the fact that in the instant case, the petitioner has already in the several shipping bills that he has presented explicitly expressed its intent of availing the benefits of the reward made under MEIS, the subsequent capturing of the same as “NO” instead of “Y” for the reward scheme once the shipping bills were electronically filed for export made by the petitioner Company during the period from 10.04.2019 to 27.07.2014 would have no bearing.
The decision of this Court in case of M/S. RAJ AND COMPANY VERSUS UNION OF INDIA [2021 (2) TMI 1101 - GUJARAT HIGH COURT] would squarely cover the issue so far ticking of these EDI shipping bills are concerned. Moreover, the Court cannot be oblivious of the fact that it was a time when software for online filing was merely introduced after converting port into EDI port and therefore, not only there is possibility of the technical glitch, but, the person in whose benefits this had been done also, may not be aware of the procedure and the manner of operation, which may have resulted into depending on some other agencies for committing mistake. And that, by no means can take away the right of the parties, more particularly, when in the manual shipping bills, they had categorically requested for grant of benefits of scheme and that leaves no room of doubt about the intent. Authority once can make out from manner shipping bills, they must not carry the mindset even with reiterative requests from the exporters to avail benefit of Scheme to deny such benefits on sheer technicality.
The respondent Authority concerned while passing the order has been oblivious of this initial hiccups and also has overlooked the clear intent expressed in Manual shipping bills insisted by the petitioner. Every time the petitioner indicated from transaction to avail benefits, the same shall need to be looked at and to be dealt with a pragmatic approach and here is a case where otherwise the incident of export is not being questioned or doubted.
There will be need for indulgence of this Court by quashing and setting aside the order passed on16.07.2021. The respondent No.2 shall allow the amendment of those bills which had been uploaded online and if not feasible due to technical reasons, on accepting the original shipping bill, let the same be compared and avail the benefits on the strength thereof - the respondent are directed to issue MEIS benefit on the amended bill if otherwise is found in accordance with law.
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2021 (12) TMI 1452
Murder - Acquitting two young men Accused of murdering a police officer, overturned by the High Court convicting them for life - HELD THAT:- On considering the evidence of PW-7, a shoe shop owner, it gives its cogent reasoning for its non-acceptance. The previous bill and the relevant bill had a difference of about 8 months in between and this witness has not seen who has purchased the chappals marked as M.O. 8 from his shop. Similarly, PW-20 who was running an STD booth could not convince the trial court as he could not say that the Accused had made calls from his booth. On motive, it was correctly analysed that there was nothing to implicate the Accused with motive to murder the deceased.
PW-1 was the sterling witness of the prosecution. Certainly, he had an axe to grind against the Accused who had given a complaint against him. He was facing a departmental enquiry and suspension. It is too strange that he could be a chance witness. His evidence was thoroughly analysed by the trial court including the distance between his place of work and his residence. He did not use his wireless which was not in operation and went to the police station to give an oral complaint the first time but the same was not registered. PW-25 was known to him and it is surprising as to why no attempt was made to save the deceased immediately by taking him to the nursing home which was 50 meters away as a normal human conduct. There are many contradictions between the statements made by PW-1 and PW-2.
PW-2 was also seen along with PW-1. He was another eye witness. He was a duty constable. The trial court rightly doubted his presence as well. Once again, even this witness has not given any complaint. We are dealing with the deposition of a police officer who is expected to know his duty. While PW-2 did not make a complaint but went on to do his duty, PW-1 did not attend to his duty thereafter or informed the police station in which he was posted. Though, PW-2 has stated that Accused made an attempt to attack him by throwing one of the material objects, even the High Court has disbelieved that. The said material object was recovered from some other place as could be seen from the recovery memo, despite the fact that it was nobody's case that the Accused retrieved the same and kept it with them while being chased.
PW-25 is the doctor who is well known to PW-1. While PW-1 deposed that he did not actually accompany the deceased, PW-25 did make a statement that both the police and public admitted the deceased - On a reading of the evidence of PW-25, there was not found existence of dying declaration in it.
The defence also examined one witness. This witness is a Government doctor being an expert in the field of surgery. He had clearly deposed that it would be impossible for the deceased to be conscious after suffering injuries as mentioned in Exhibit P-38, which is intestines coming out. The trial court correctly considered this evidence.
Reasoning of the High Court - HELD THAT:- The dying declaration was put forth by the prosecution through the mouth of said three witnesses. As we find, that the evidence let in by them was found to not be trustworthy, there cannot be any dying declaration either in fact or in law. The High Court also did not consider the basis upon which the evidence of PWs 1, 2 and 25 could be accepted and as to how the various reasons given by the trial court are not acceptable especially when it did not consider the evidence of the other witnesses. It rendered a conviction on mere surmise, even though an inference can never be the basis of a conviction when the testimony of a witness is not believed on cogent reasoning - the alleged occurrence was said to have happened at about 5 p.m. on a busy road with heavy traffic and even the evidence of PW-1 and PW-2 suggests that there were about 1000 persons. Except the evidence of PW-1 and PW-2, there was no other evidence relied upon by the prosecution.
The High Court did not undertake the exercise as mandated Under Section 378 read with Section 384 Code of Criminal Procedure in reversing the reasoned decision rendered by the trial court. Thus, the appeals are accordingly allowed.
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2021 (12) TMI 1451
Validity of Arbitral Award - disputes on the supplies made by the 3rd Respondent, the bill amount due was not paid immediately - It is submitted that only on the ground that the Appellant has not responded in the conciliation proceedings, straightaway the order was passed by the Council without giving proper opportunity - HELD THAT:- From a reading of Section 18(2) and 18(3) of the MSMED Act it is clear that the Council is obliged to conduct conciliation for which the provisions of Sections 65 to 81 of the Arbitration and Conciliation Act, 1996 would apply, as if the conciliation was initiated under Part III of the said Act. Under Section 18(3), when conciliation fails and stands terminated, the dispute between the parties can be resolved by arbitration. The Council is empowered either to take up arbitration on its own or to refer the arbitration proceedings to any institution as specified in the said Section. It is open to the Council to arbitrate and pass an award, after following the procedure under the relevant provisions of the Arbitration and Conciliation Act, 1996, particularly Sections 20, 23, 24, 25.
There is a fundamental difference between conciliation and arbitration. In conciliation the conciliator assists the parties to arrive at an amicable settlement, in an impartial and independent manner. In arbitration, the Arbitral Tribunal/arbitrator adjudicates the disputes between the parties. The claim has to be proved before the arbitrator, if necessary, by adducing evidence, even though the Rules of the Code of Civil Procedure or the Indian Evidence Act may not apply. Unless otherwise agreed, oral hearings are to be held.
The order dated 06.08.2012 is a nullity and runs contrary not only to the provisions of MSMED Act but contrary to various mandatory provisions of Arbitration and Conciliation Act, 1996. The order dated 06.08.2012 is patently illegal. There is no arbitral award in the eye of law. It is true that under the scheme of the Arbitration and Conciliation Act, 1996 an arbitral award can only be questioned by way of application Under Section 34 of the Arbitration and Conciliation Act, 1996. At the same time when an order is passed without recourse to arbitration and in utter disregard to the provisions of Arbitration and Conciliation Act, 1996, Section 34 of the said Act will not apply.
The impugned judgment and order is set aside - this civil appeal is allowed.
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2021 (12) TMI 1450
Principles of natural justice - no opportunity of hearing was granted after the issuance of Show Cause Notice - appealable order - HELD THAT:- It is not deemed appropriate to non- suit the petitioner on the ground that there is an efficacious remedy of appeal, more so since, the order on merits are not set aside, but it is only directed that the Assessing Officer should pass a fresh order after affording an opportunity of hearing to the petitioner.
The Assessing Officer is directed to pass a fresh speaking order after hearing the petitioner in accordance with law. For this purpose, parties through counsel are directed to appear before the Assessing Officer on 30.12.2021 or on any other date when the Assessing Officer may require their presence - the petition is allowed and impugned order is set aside.
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