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Showing 461 to 480 of 18020 Records
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2023 (12) TMI 979
Disallowance of deduction u/s 80-GGA - donation made by the assessee to Navjeevan Charitable Trust - claim of the assessee that at the time of making of aforesaid donation Navjeevan Charitable Trust was duly approved u/s 35-AC - HELD THAT:- As under section 80-GGA assessee is entitled to claim a deduction in respect of any sum paid in the previous year to a public sector company, local authority, association, or institution approved by the National Committee for carrying out any eligible project or scheme under section 35-AC. Further, Explanation-1 to section 80-GGA(2)(bb) further provides that the deduction to which the assessee is entitled of any sum paid to the aforesaid authority shall not be denied merely on the ground that subsequent to the payment of such sum by the assessee the approval granted has been withdrawn or the notification notifying the eligible project or scheme referred to in section 35-AC has been withdrawn.
Section 35-AC of the Act provides that expenditure incurred by an assessee by way of payment of any sum to a public sector company or a local authority or to an association or institution approved by the National Committee for carrying out any eligible project or scheme be allowed as a deduction.
Since the relevant provisions of the Act, applicable to the present case, specifically debars denial of deduction claimed by the assessee merely on the ground of subsequent withdrawal of approval or notification under section 35-AC of the Act, therefore we find no merits in denial of deduction under section 80-GGA of the Act in the present case. Further, even though the Revenue has claimed that Navjeevan Charitable Trust has been involved in a bogus transaction of accommodation entry and the learned CIT(A) has also made various allegations against the assessee in the impugned order, however in the present case the impugned addition is based on the denial of deduction under section 80-GGA of the Act merely on the basis of subsequent withdrawal of notification u/s 35-AC of the Act and there is no material available on record to support the findings of the learned CIT(A). Accordingly, the impugned order upholding the denial of deduction claimed under section 80-GGA of the Act is set aside. As a result, grounds raised in assessee’s appeal are allowed.
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2023 (12) TMI 978
Levy of penalty u/s 271AAB - assessee has inflated his agricultural income, which would have been otherwise offered under any other head of income - Whether additional income declared in the return of income cannot be termed as “undisclosed income”? - difference between “undisclosed income” or “concealed income” - assessee replied that the addition was made on account of estimation of yield of cotton crops grown during that period, which by no means can be termed as undisclosed income as there is no nexus between additional income declared by the assessee and seized materials by the department - HELD THAT:- A plain reading of the explanation and definition of “undisclosed income” clearly shows that the undisclosed income could be represented money, bullion, jewellery or other valuable articles or things or any unrecorded entry as per documents found or any false entry recorded in the books of accounts, etc.
There is no such reference of money, bullion, jewellery or any other items mentioned in the above definition of “undisclosed income” were mentioned either in the assessment order or in the penalty order by the A.O. The assessee’s offer of additional income, which does not amount to undisclosed income as per the above definition. The A.O. has not brought on record any material which points to the “undisclosed income” as defined u/s. 271AAB. Whereas CIT(A) in his order refers to the questions stated in the statements recorded u/s. 132(4) of the Act, namely assessee’s son marriage expenses.
In our considered view, any disclosures made in the course of search and statement recorded u/s.132(4) itself cannot be construed as “undisclosed income” as per the definition provided in the Act. There is no incriminating material found by the Revenue on the alleged additional income offered by the assessee. Thus the levy of penalty u/s. 271AAB is against the provisions and inbuilt definition in the Act. Therefore the same is not sustainable in law. We hereby delete the levy of penalty levied u/s. 271AAB(1)(b) - Decided in favour of assessee.
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2023 (12) TMI 977
Legality of second revision notice of 263 order passed by Ld. PCIT - subsequent revision of original assessment order on another issues - Scope of the first notice for revision u/s 263 of the Act cannot be enhanced by way of issuance of subsequent notice by Principal CIT - Whether once the assessee has satisfied the Ld. PCIT that the assessment order is not erroneous and prejudicial to the interest of the Revenue with respect to reasons recorded in the first notice, then whether the PCIT is permitted to revise the original assessment order on another issue, not forming part of the initial notice, on the basis of which 263 proceedings were initiated?
HELD THAT:- We agree with the contention of the Ld. D.R. that there is no specific prohibition under Section 263 of the Act which prohibits the Ld. PCIT to give a finding with respect to any other aspect of the assessment order, if from the records it is find that the assessment has over-looked this issue. Admittedly in this case, the Assessing Officer had no plausible reason to explain the lack of inquiries with respect to non-deduction of TDS under Section 194C of the Act and there was no reason why disallowance under Section 40(a)(ia) of the Act was not made while framing the impugned assessment year. Further, in absence of any specific restriction on the powers of Ld. PCIT during the course of 263 proceedings itself, which were admittedly not barred by jurisdiction i.e. the second notice dated 04.02.2022 was not barred by period of limitation of two years as prescribed under Section 263 of the Act, we find no infirmity in the order of Ld. PCIT under Section 263 of the Act, so as to call for any interference. Appeal of the assessee dismissed.
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2023 (12) TMI 976
Revision u/s 263 - as per CIT AO had not conducted any inquiries or verification in respect of cash deposit after 11.11.2016 in HDFC bank account at the time of finalization of assessment, which is against the Explanation 2 of Section 263(1) - HELD THAT:- It is clearly seen from the SFT returns filed by the assessee u/s. 285BA of the Act, every cash transaction is reflected with the name of the person, with full postal address, nature of transaction and the amount of transaction, the same are placed before us by both Banks.
As further seen from notices issued u/s. 142(1) that various details called for by the A.O. in above notices were duly complied with by the assessee by furnishing the details and also clarified with further details as requested by the AO. Thus in our considered opinion, the AO has made necessary enquiries before passing the assessment order.
The other contention of the Ld. PCIT that the A.O. failed to verify the cash deposits in HDFC Account - The assessee also produced the bank statement of the above account, during the demonetization period. Perusal of the same clearly shows that there were no cash transaction in the above current account as alleged by the Ld. PCIT, whereas the entire transactions were done through either cheque or NEFT mode. So the very basis of invoking 263 on the ground that the cash deposits in HDFC Bank itself, is baseless. AO has made detailed enquiry before passing the assessment order on the cash transaction during the demonetization period.
PCIT partially looking into the assessment records and initiated the Revision proceedings on the ground that the assessee failed to submit evidences in support of the cash deposits, which is factually incorrect.
PCIT failed to consider the other reply letters filed by the assessee. Unless both the ingredients i.e order must be erroneous in nature; and the error must be such that it is prejudicial to the interest of Revenue are present in a given case, it is not legally permissible for a Commissioner to initiate suo motu proceeding under section 263 of the Act, the same has been upheld by Hon'ble Supreme Court in case of Malabar Industrial Co. Ltd[2000 (2) TMI 10 - SUPREME COURT]
An assessment cannot be revised if there is no jurisdictional error in the order or if it has been passed after due application of mind or in case, where PCIT has a view different from that taken by A.O. Therefore we have no hesitation in quashing the Revision order passed by the Ld. PCIT. Thus the Grounds raised by the assessee are hereby allowed.
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2023 (12) TMI 975
DRP direction without quoting Mandatory DIN - whether the subsequent generation of DIN will suffice as the requirement of the CBDT Circular which mandates quoting of DIN in the body of communication/order? - HELD THAT:- On perusal of the directions of the DRP it is very much clear that there is no mention of DIN generated for the said directions. In the letter dated 13.09.2023 the DRP stated that directions were up-loaded on system on 7.06.2022 for which a DIN was generated by the system but whereas no such DIN which was generated on 7.06.2022 was mentioned in the body of the directions. Generation of DIN for the directions of the DRP was separately communicated through letter dated 17.06.2022.
Whether the subsequent generation of DIN will suffice as the requirement of the CBDT Circular which mandates quoting of DIN in the body of communication/order came up for consideration before the jurisdictional High Court in Brandix Mauritius Holdings Ltd. [2023 (4) TMI 579 - DELHI HIGH COURT]
Communication/order passed in violation of the Circular of the CBDT without mentioning the DIN in the body of the order or without taking prior approval from the Chief Commissioner/Director General of Income Tax when there are exceptional circumstances in not quoting the DIN in the body of the order such communication/order was held to be invalid and shall be deemed to have never been issued. See ASHOK COMMERCIAL ENTERPRISES VERSUS ASSISTANT COMMISSIONER OF INCOME TAXATION CENTRAL CIRCLE – 2 (4) MUMBAI [2023 (9) TMI 335 - BOMBAY HIGH COURT]
As the Revenue could not show us any exceptional circumstances for not quoting the DIN number in the DRP order, we hold that the DRP order is invalid and consequently the final assessment order passed by the AO u/s 143(3) r.w.s.144C(13) of the Act pursuant to such invalid directions is deemed to have never been issued and thus bad in law.
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2023 (12) TMI 974
Royalty receipts - amount received from Indian entity - characterizing payment received by the assessee during the relevant previous year as royalty and taxing at 10% of gross receipts - submissions of the assessee is that amount is received by the assessee towards providing facilities to Volvo Indian entities and by such arrangement they (Indian entities) do not use or obtain a right to use the copy right in any of the software/business software/ application owned and executed by the assessee - HELD THAT:- The Hon’ble Delhi High Court in the case of EY Global Services Ltd. [2021 (12) TMI 571 - DELHI HIGH COURT] following the judgment of Engineering Analysis Centre of Excellence (P) Ltd. [2021 (3) TMI 138 - SUPREME COURT] held that payment received for providing access to computer software to its member firms located in India, does not amount to “royalty” liable to be taxed in India under the provisions of the Income Tax Act, 1961 and the India-UK DTAA.
Thus the authorities below committed an error in taxing the impugned receipts as “royalty”. Grounds raised by the assessee are allowed.
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2023 (12) TMI 973
Validity of final assessment order based on draft assessment order - Draft assessment order passed coupled with the Notice of demand u/s 156 and followed by notice u/s 274 rws 271(1)(c) - HELD THAT:- According to the provisions of Section 144C (1) AO is required to pass draft of the assessment order in case of impugned assessee. But here draft assessment order is accompanies with Notice of demand u/s 156 and followed with a show cause notice for levy of penalty u/s 274 r.w.s. 271 (1) (c) of the Act. Both Notice of demand and penalty proceedings are further followed by subsequent communication. Therefore, it is merely not an error but for all practical purposes, the AO passed the final assessment order instead of Draft Assessment order. In penultimate paragraph also AO mentions section 144 (13) of the Act.
Both the draft assessment order and the demand notice are dated 30-11-2018. Now the issue is squarely covered against the revenue in case of Cisco Systems Services B.V [2023 (3) TMI 416 - KARNATAKA HIGH COURT] held that it is settled that demand notice stems out of an order of assessment and it is enforceable. It meets the assessee with civil consequences. The argument on behalf of the Revenue that the demand notice was not enforced is fallacious and noted only to be rejected. Mistake which the ACIT has done in passing the final order at the stage of draft order is not curable u/s 292B.
Thus draft assessment order passed coupled with the Notice of demand u/s 156 of the Act and followed by notice u/s 274 rws 271(1)(c) of the Act makes the draft order as final. Thus, the draft assessment order dated 30-11-12018 passed by ld AO is invalid and further as the final assessment order is based on an invalid order, same is also quashed.
Adjustment of international transaction of payment of royalty for use of trade marks to AES - As assessee has already withdrawn grounds No 10 to 13 of the appeal, respectfully following decision of coordinate bench in [2019 (8) TMI 1011 - ITAT PUNE] A.Y. 2008-09, we hold that total income of the assessee shall be the amount of returned income and added thereto amount of income agreed by the assessee in MAP proceedings.
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2023 (12) TMI 972
Income surrendered during survey - excess stock u/s 69B r.w.s. provisions of section 115BBE - nature and source of such unrecorded transactions and the necessary nexus with assessee’s business - HELD THAT:- No doubt, these transactions were not recorded at the time of survey thus qualify as unrecorded transactions satisfying one of the essential conditions, at the same time, the assessee has provided the necessary explanation about the nature and source of such unrecorded transactions and the necessary nexus with assessee’s business has been established, thus, it cannot be said that these are unexplained transactions thus, doesn’t satisfy the second condition for invoking the deeming provisions of section 69B of the Act.
There is no physical distinction between the accounted stock and unaccounted stock. No such physical distinction was found by the Revenue either. We therefore find that the difference in stock so found out by the authorities has no independent identity and is in terms of value terms only and thus part and parcel of entire stock, therefore, it cannot be said that there is an undisclosed asset which existed independently and thus, what is not declared to the department is receipt from business and not any investment as it cannot be co-related with any specific asset and the difference should thus be treated as business income.
In light of aforesaid discussion and in the entirety of facts and circumstances of the case, the income of Rs 50 lacs surrendered during the course of survey cannot be brought to tax under the deeming provisions of section 69B and the same has to be assessed to tax under the head “business income”. In absence of deeming provisions, the question of application of section 115BBE doesn’t arise and normal tax rate shall apply. The AO is thus directed to assess the income of Rs 50 lacs under the head “Income from Business/profession” and apply the normal rate of tax. Assessee appeal allowed.
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2023 (12) TMI 971
Deduction u/s 80IA (4) - Contractor v/s Developer - assessee, a public limited company, is engaged in the business of development of infrastructure and other projects i.e., irrigation canal, road construction, water sewerage system etc. - AO held that the assessee, in the development of infrastructure project worked as work contractor and not as developer for which it received time to time payment from Government authorities for the work executed and invoice were accordingly issued, thus disallowed the claim of the assessee - HELD THAT:- Admittedly, the assessee has claimed deduction u/s 80IA(4) on 13 different projects of infrastructure facilities which has been disallowed by AO. On appeal by the assessee, CIT(A) allowed the claim of deduction by following the order of the predecessor CIT(A) in own case of the assessee from A.Y. 2004-05 to 2011-12 and 2013-14.
CIT(A) also given categorical finding that there were no new projects. As such, the deduction on all the 13 projects were claimed in earlier years (in between 2004-05 to 2011-12). At the outset, we note that the revenue was in appeal before this tribunal in own case of the assessee on the same issue in A.Ys. 2008-09 to 2011- 12 [2023 (7) TMI 1081 - ITAT AHMEDABAD] The coordinate bench of this tribunal vide order dated decided the issue of deduction under section 80IA(4) of the Act in favour of the assessee stating if the literal meaning is drawn from the word of the developer and accordingly the deduction of the benefit given under section 80 IA of the Act is denied, then the object for which the provisions of section were brought under the statute will be defeated. Therefore, the provisions of section 80IA (4) of the Act should be read in such a way that the object of the statute should not be defeated.
As assessee has undertaken the projects of infrastructure facility as envisaged under the provisions of section 80 IA(4A) of the Act in the capacity of the developer, we are inclined to hold that the assessee who is only engaged in the activity of development of infrastructure facility is eligible to claim the deduction u/s 80IA(4). Decided against revenue.
Additional income offered in the survey proceedings - CIT(A) held that additional income was agreed to be offered on account of unverifiable business expenses therefore the business income will stand increase by such amount on which the assessee will be eligible to claim deduction u/s 80IA - HELD THAT:- We find that the addition of ₹18 crores was made on account of unverifiable expenses which were recorded in the books of accounts. As such, the expenses recorded in the books of accounts to the tune of ₹18 crores were not supported by the proper documentary evidence. Therefore, the assessee agreed to disclose such income in the income tax return. Admittedly, the addition made on account of unverifiable expenses is going to enhance the income of the assessee.
Admittedly, the assessee has two categories of the project being eligible and non-eligible for deduction for deduction under section 80 IA(4) of the Act. Undeniably, the income of both the category of the project being eligible and non-eligible will enhance but the deduction under section 80 IA(4) of the Act on account of enhancement of income will be limited to the eligible projects as also observed by the ld. CIT-A in his order. Thus, we do not find any reason to interfere in the finding of the learned CIT-A. Hence, the ground of appeal of the revenue is hereby dismissed.
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2023 (12) TMI 970
Eligibility for deduction u/s 80P(2)(a)(i)/80P(2)(d) - interest income received - income of cooperative society engaged in carrying on the business of banking and providing credit facilities to its members - assessee is primary agricultural cooperative society - CIT(A) allowed deduction u/s 80P(2)(a)(i) and no deduction has been allowed u/s 80P(2)(d) on the interest/dividend income earned by the assessee on the investments made with the cooperative banks/scheduled banks - HELD THAT:- Assessee has received interest/dividend from cooperative societies and interest and dividend from cooperative banks - As per sec. 80P(2)(d) if the assessee has received interest/dividends from the cooperative society from its investments with any other cooperative society, the assessee is eligible for deduction, since, in this case the assessee had submitted statement of facts before the CIT(A) but the interest/dividend from cooperative society received by the assessee was not considered and examined.
During the course of assessment proceedings, the assessee has also not brought into notice of the AO, therefore, for the limited purpose for determining the source issue is remitted back to the AO and if it is found that these income satisfies the requirement of sec. 80P(2)(d) of the Act, then it has to be allowed. Accordingly, this issue is remitted back for the verification to the AO and the assessee has to show the necessary proof of evidence for substantiating its case. We further note from the statement of facts that the assessee has received interest and dividend, from the cooperative banks.
If the AO finds otherwise, the AO shall follow the judgment of Totgars Co-operative Sales Society[2017 (7) TMI 1049 - KARNATAKA HIGH COURT] accordingly the assessee will not be eligible for deduction u/s 80P(2)(d) on such interest income received after giving necessary cost for earning interest income. The AO is directed to give reasonable opportunity of being heard to the assessee. The assessee is also directed to produce necessary documents for sustaining its case and avoid to unnecessary adjournments for early disposal of the case.
Deduction u/s 80P(2)(a)(i) - deposits in the bank account in view of the interest received on deposits - As assessee has submitted detailed written submissions vide letter dated 25/11/2019, which has been incorporated by the AO at para No.7.4, in which it has been stated that as per Karnataka Cooperative Society Rules 1960 and the orders passed by the Registrar of Co-operative Society it is mandatory for cooperative societies to maintain as specified percentage of deposits received from the members in savings bank account and also to maintain specified percentage of such deposits as investments/deposits in banks and he has also relied on other rules, therefore, the amount has been deposited in the bank account in view of the interest received on such deposits should be treated as attributable to the business income of the assessee and allowed deduction on such interest u/s 80P(2)(a)(i). This argument of the ld. AR of the assessee is not acceptable because the interest income received by the assessee is not from the activity of carrying on the business of banking or providing credit facilities to its members as per section 80P(2)(a)(i)
Disallowance under various heads towards provisions made in the profit and loss account - Since, we have noted that the assessee has been allowed deduction by the CIT(A) u/s 80P(2)(a)(i) of the Act on the profits earned from the business of the assessee. The ld.AR of the assessee relied on Circular/notification No.37/2016 dated 02/11/2016 for any disallowance made under the profit and loss account of business or profession and if the assessee is eligible for deduction under Chapter IVA, then the deduction should be allowable as per the eligibility of the Chapter VIA of the I. T. Act. However, the ld.AR of the assessee could not establish before us that these provisions made were out of the business profit earned by the assessee during the year, therefore, this issue is also remitted back to the AO for verification that the provisions made by the assessee are part of the business profit of the current year or not. If it is found in order then the assessee is to be given benefit of the Circular cited supra. Accordingly this issue is allowed for statistical purpose.
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2023 (12) TMI 969
Computation of deduction u/s 80IB/80IC - allocation of advertisement expenses to the eligible units in the ratio of turnover of eligible units to the total turnover of the assessee - HELD THAT:- The assessee has relied on the word ‘derived from’ as per the provision which according to the assessee relates to the expenses which have direct nexus pertaining to the eligible units for claiming deduction u/s. 80IB/80IC of the Act. The Revenue, on the other hand, has contradicted the same by stating that this interpretation of the assessee is not to be considered and only the allocation in proportion to the turnover of the eligible units to the proportion of the total turnover of the assessee company should be allocated for determining the profit eligible for deduction u/s. 80IB/80IC - Assessee has relied on the decision of the coordinate bench for A.Y. 2001-02 which has held that the assessee has itself allocated 50% corporate expenses including advertisement expenses of head office as per the rate of turnover of the eligible unit to the turnover of the assessee company which was duly certified by a Chartered Accountant. The co-ordinate bench has accepted the allocation made by the assessee and directed the ld. A.O. not to make any further allocation for computation of deduction u/s. 80IB of the Act. Decided in favour of assessee.
Nature of expenses - advertisement expenses incurred on brand building - revenue or capital expenditure - HELD THAT:- As decided in Asian Pains (India) Ltd. [2016 (11) TMI 258 - BOMBAY HIGH COURT] wherein it was held that the expenditure incurred for advertisement in respect of a brand is to be seen whether the same was for a business which is to be commenced or which is for an ongoing business. Further, it held that the expenditure for advertisement of a brand of an existing ongoing business is in the nature of maintaining the brand and not for creation of a brand
We hold that the expenditure incurred towards Brand Building is for the maintenance of the existing business and not for commencement of a new business and the same is held to be revenue expenditure in nature. Hence, ground raised by the assessee is allowed.
Addition offered by the assessee in respect of impact of section 145A of the Act on inventories - assessee has offered tax as per the tax audit report clause 12B which is the difference between cenvat credit on closing inventories and cenvat credit on opening credit - assessee has contended that the tax auditor has inadvertently failed to consider the fact that while computing adjustment u/s. 145A the purchase and sales which also have to be adjusted as it was recorded in the note and mere adjustment in the value of opening and closing stock in isolation is contrary to the provision of section 145A of the Act as per the revised guidance note - HELD THAT:- As this additional ground raised by the assessee requires factual verification, we deem it fit to remand this issue back to the file of the ld. A.O. for verification of the facts. Hence, the additional ground raised by the assessee is allowed for statistical purpose.
Accrual of income - exclusion of the amount of retention money included in sales, since the same has not accrued during the year, in computing total income under the normal provisions of the Act - HELD THAT:- We direct the ld. A.O. to decide this ground after verification of the facts as when the retention money has accured based on the decision of the Hon'ble Bombay High Court in the case of CIT vs. Associated Cables Pvt. Ltd. [2006 (8) TMI 135 - BOMBAY HIGH COURT]. The ground raised by the assessee is allowed for statistical purpose.
Disallowance u/s. 14A read with Rule 8D - HELD THAT:- It is admitted fact that the assessee has offered the dividend income received out of the investment made in foreign company and the interest income out of the investment in Unit Trust of India and Krishna Bhagya Jala Nigam Ltd. The ld. CIT(A) has rightly directed the ld. A.O. to recompute the disallowance u/s. 14A of the Act on the basis of the decision of Godrej Boyce and Manufacturing Co.Ltd. [2010 (8) TMI 77 - BOMBAY HIGH COURT] where the assessee has mixed fund consisting of own fund and borrowed funds. We do not find any infirmity in the order of the ld. CIT(A) in directing the ld. A.O. to recompute the disallowance u/s. 14A of the Act. We, therefore, dismiss ground raised by the Revenue.
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2023 (12) TMI 968
Applicability of Section 115JB on the assessee Govt. company - scope of amendment brought in Section 115JB of the Act by Finance Act, 2012 effective from 01.04.2013 - HELD THAT:- We observe that the assessee company is a Government undertaking owned by Central Government and the State of Bihar & West Bengal and the activities are governed by Damodar Valley Corporation Act, 1948, Central Legislation. Section 115JB(1) of the Act which provides special provisions for payment of tax by certain companies.
We notice that prior to the amendment brought in by 01.04.2013 Section 115JB(2) of the Act read as “Every assessee being a company, shall, for the purposes of this section, prepare its profit and loss account for the relevant previous year in accordance with the provisions of Part 2nd & 3rd of Schedule VI to the Companies Act, 1956 (1 of 1956)”.
Considering amendments and the provisions existing prior to 01.04.2013, we notice that prior to 01.04.2013 the type of companies other than those which are required to prepare their financial statements in accordance with provisions of Part ‘2’ & ‘3’ of Schedule VI of Companies Act were not brought into the ambit and there was no clarification in the said provision. However, subsequent to the amendment by 01.04.2013 onwards, the remaining companies have also been brought into the ambit of Section 115JB of the Act.
Hon'ble Jurisdictional High Court while dealing similar question of law in the case of the assessee for AY 2010-11 [2021 (12) TMI 1475 - CALCUTTA HIGH COURT] held that prior to the amendment brought in Section 115JB of the Act by Finance Act, 2012 effective from 01.04.2013 Section 115JB of the Act was not applicable on the categories of companies like that of the assessee but post-amendment it is applicable by virtue of the amendment effective from 01.04.2013 providing that certain companies such as Insurance, Banking, Electricity which are allowed to prepare the profit and loss account in accordance with the Sections specified in their regulatory Acts, post 01.04.2013, are required to prepare profit and loss account in accordance with Schedule VI of the Companies Act for the purpose of computation of book profit under Section 115JB of the Act. Hon'ble Court has further, held that the said amendment effective from 01.04.2013 in Section 115JB of the Act is neither declaratory nor classificatory but are substantive and significant legislative changes applicable prospectively.
As the years under consideration are AY 2012-13, AY 2016-17, AY 2017-18 & AY 2018-19 and therefore, we are of the considered view that post-amendment with effect from 01.04.2013, the assessee company falls under the provisions of Section 115JB of the Act. Thus, the Revenue fails to succeed in its appeal for AY 2012-13 but for the remaining appeals for assessment years AY 2016-17, AY 2017-18 & AY 2018-19, finding of ld. CIT(A) is set aside and the issue is decided in favour of the Revenue.
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2023 (12) TMI 967
Seizure of petitioners’ gold jewellery and its disposal - Violation of Customs Act and the rights guaranteed to the petitioners under Article 300A read with Article 14 of the Constitution of India - legality of action of the respondents to sell / dispose of the gold jewellery of the ownership of the petitioners, as seized from them, without notice to the petitioners, and before an order of confiscation under Section 111 of the Customs Act, 1962 - HELD THAT:- It is not in dispute that on 14 January 2018 the petitioners arrived in India and were apprehended at the Mumbai Airport. The jewellery belonging to the petitioners which were gold bangles came to be seized by the Customs officials - The power of the Customs Authorities to seize the goods is conferred by Section 110 of the Customs Act and its application was subject matter of debate in the present proceedings - On a plain reading of Section 110 of the Customs Act, it is quite clear that it is a provision in relation to seizure of goods, documents and things. It provides that if the proper officer has a reason to believe that any goods are liable to confiscation under the Customs Act, he may seize such goods.
What manner Section 110 of the Customs Act would be applicable to the seizure of the petitioners’ gold jewellery as seized on 14 January 2018? - HELD THAT:- There is something more fundamental in the present proceedings inasmuch as on 14 January, 2018 the gold jewellery in question was seized from the petitioners. Sub-section (2) of Section 110 provides that where any goods are seized under sub-section (1) and no notice in respect thereof is issued under clause (a) of section 124 within six months of the seizure of the goods, the goods shall be returned to the person from whose possession they were seized. Thus, the seizure having taken place on 14 January, 2018, six months period was to end on 14 July, 2018, however, what is significant is that a show cause notice for confiscation of such gold came to be issued to the petitioners on 6 July, 2018, however, the same was never served on the petitioners in a manner known to law - On a plain reading of Section 124 what would be implicit is that an order confiscating any goods or imposing any penalty can be passed only after the owner of the goods is issued a notice in terms of the said provisions interalia informing him of the grounds on which it is proposed to confiscate the goods or to impose a penalty and an opportunity of making a representation in writing is given to him within such reasonable time as may be specified in the notice against the grounds of confiscation or imposition of penalty and a reaonsable opportunity of being heard.
Sub-section (1A) of Section 110 cannot be read as absolute entitlement or authority with the proper officer to dispose of the items like gold in the absence of any cogent reasons, which would attract the ingredients of sub-section (1A) of Section 110. Such reasons as falling under sub-section (1A) are required to be intimated to the owner of the goods for the reason that ultimately the disposal of the goods would entail serious consequences of affecting the constitutional rights of the owner of the goods guaranteed under Article 300A of the Constitution, as the owner would be deprived of his property. This would be the basic requirement of law the proper officer dealing with any goods, which are merely seized and not confiscated would be required to be followed.
It is well settled that the provisions of Article 300A of the Constitution are available to any person including a juristic person and not confine to only citizen and that the illegal seizure would amount to the owner being deprived of his right of property as contained under Article 300A of the Constitution of India.
In the present case the gold jewellery belonging to the petitioners has been dealt, disposed of and sold in patent disregard to the basic principles of law as Articles 14 and 300A of the Constitution would ordain. This apart, even the provisions of the Customs Act stand violated not only in taking away the substantial statutory rights as the law would guarantee to the petitioners, on seizure of the petitioners gold jewellery but also in the manner in which the gold jewellery has been disposed of.
In the present case, it is difficult to imagine as to what could be the reason for the Customs Officers to dispose of the goods hurriedly and with such lightening speed and by throwing to the wind the norms of fairness and reasonableness. This is not acceptable even from the reading of the provisions of Section 110. Any reading of Section 110 otherwise than what has been discussed, would amount to foisting draconian, reckless and/or unfettered authority on the Customs Officers conferring a licence to commit illegality - such substantive provisions of the Customs Act cannot be rendered nugatory, by recognizing unguided and unfettered powers being conferred under Section 110 on the Customs Officers, to dispose of the seized property, till the orders of any confiscation attains finality, unless there are strong reasons which would justify any such action when tested on such constitutional and legal parameters, and that too on the satisfaction of the officers to be reached only after hearing the owner of the property.
There are no manner of doubt that the petition needs to succeed. The question, however, is as to what can be the relief which can be granted to the petitioners in these circumstances, when there is no iota of doubt, in regard to illegality which has been committed by the respondents in depriving the petitioners of their valuable rights to property - the principles of law which would be required to be applied, is that once the action of the respondents is held to be void, ab initio, illegal and unconstitutional, there can be no second opinion that the rights of the petitioners in regard to illegal seizure would be required to be restituted.
It is declared that the action on the part of the Assistant Commissioner of Customs in disposing of / selling the gold jewellery belonging to the petitioners subject matter of the present proceedings, is illegal and unconstitutional - The respondents are directed, to restore to the petitioners, equivalent amount of gold namely 1028 gms. and / or to compensate the petitioners by making payment of amounts equivalent to the market value of the said gold, as on date.
Petition disposed off.
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2023 (12) TMI 966
Contempt of court - Continuous, repeated, deliberate and wilful disobedience by the respondents (DRI officials) - violation of stay order granted by this Court against launching of any kind of civil as well criminal prosecution with respect to the subject matter - possession of unsold gold jewellery brought back from a Trade Exhibition in a foreign country weighing about 51172 grams - prohibited goods or not - HELD THAT:-The manner in which the proceedings after proceedings are being foisted upon the petitioner and others besides the company in question, leave a lasting impression that there is a repeated, deliberate and contumacious attempt by the respondents officers to corner them from all angles, evidently to harass and prosecute the petitioner by whatever means in terms of purported action by intentionally over-reaching the directions of this Court.
It goes without saying that the sanction accorded under Section 137 of the Act appears to be hit by the dictum propounded by the Supreme Court in the case of Canon India Pvt. Ltd. v. Commissioner of Customs [2021 (3) TMI 384 - SUPREME COURT] in which it was held that “the DRI officers are not customs officers, and therefore, not proper authority in law to initiate proceedings under the Act.” In the process, evidently again, the respondents appear to have been instrumental in the initiation of proceedings against the petitioner and others connected with the company besides the company itself by other agencies including the DGFT as well as the Central Bureau of Investigation [CBI].
There was a categorical direction by this Court vide order dated 12.04.2021 that no coercive process shall be initiated pursuant to SCN and the main file in question bearing No. F.No. DRI/HQ-G/338/VI/ENG-2/INT-NIL/2019 dated 26.09.2019. The filing of the complaint before the Court of learned CMM for initiating action under different provisions of the Act is based on sanction accorded by respondent No.1 arising from the same main file and by deliberately suppressing the directions and orders passed in favour of the petitioner. Evidently, the SCN arising out of the main file is under a cloud and once the very foundation is on a sticky wicket, the purported prosecution is not fathomable. The purported prosecution entails a heavy burden on the entire justice delivery system at a huge cost, time and efforts on the part of the Court after Court.
This Court finds the respondents guilty of committing patent breach of the directions passed by this Court and holds them guilty for committing a civil contempt under Section 2(b) read with Section 11 and 12 of the CC Act.
Let notice be issued to the respondent officials for the next date of hearing i.e., 14.02.2024 to show cause as to why they should not be punished under Section 2 (b) read with Section 11 and 12 of the CC Act for being in gross violation of the directions of this Court dated 12.04.2021.
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2023 (12) TMI 965
Levy of penalties under section 112 of the Customs Act, 1962 - possession of contraband or not - HELD THAT:- On going through the statements of the appellants which were recorded during the course of investigation, the appellants themselves have admitted that one Ayub Bhai has told them that the vehicle is carrying 120 pieces of gold which were kept in fuel chamber secretly concealed in the said vehicle. The said fact was in the knowledge of the appellants and at the time of interception of the vehicle, the appellants have made statement that they were not carrying any contraband goods with them, which shows that the mala fides of the appellants, in that circumstances, the penalty is rightly imposed by the adjudicating authority to meet the ends of justice and to teach a lesson to the appellants not to involve in such activities in future.
There are no infirmity in the impugned order for imposing penalty on the appellants.
The impugned order qua imposing penalties on the appellants of Rs.10.00 Lakhs and Rs.1.00 Lakh respectively, is upheld - Appeal dismissed.
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2023 (12) TMI 964
Recovery of amount refunded erroneously - export of goods - IGST paid at the time of export and the goods have been exported on payment of Customs duty - applicability of CBEC Circular F.No.390/Misc./30/2023-JC dated 02.11.2023 - HELD THAT:- It is not disputed by both sides that it is a case of refund of IGST and the appeal is filed under the Customs Act,1962 for erroneously refund of duty paid to the respondent. Admittedly, there is no refund of Customs duty involved in this case, it is a refund of IGST, which is not governed by the Customs Act, 1962. Therefore, this appeal is not maintainable under the Customs Act, 1962.
The Revenue has filed this appeal in terms of Section 54 (3) of the CGST Act, 2017. Section 54 (3) of the CGST Act, 2017 is not applicable to the facts and circumstances of the case as it is a case of refund of input tax credit. Further, there is no other case is pending with regard to the respondent in litigation, therefore, on litigation seeking also, the respondent succeeds.
There are no merit in the appeal filed by the Revenue, accordingly, the same is dismissed.
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2023 (12) TMI 963
Valuation of iron ore fines - ‘Fe’ content - Value of iron ore fines was to be determined on the basis of Certificate of Inspection and Quality (CIQ) analysis - ‘Fe’ content in iron ore fines exported - consequent determination of value for purposes of levy of export duty - whether the CRCL report can be accepted and the assessment of the export goods carried out based thereon? - HELD THAT:- In the present case, it nowhere comes on record that the sample of Customs House Laboratory were drawn in strict adherence to the BIS Standards, as also contained in the Board’s Circular. Moreover, the sample is alleged to be drawn by the Customs Officer at the back of the appellant and without the knowledge of the exporter, which is against the statutory mandates provided under Section 144 of the Customs Act, 1962 - Since the report of the Customs Lab is cryptic and incomplete without showing the BIS Standard and protocol and method of testing, it is noticed that the appellant sought to cross examine the Customs Officer who had drawn the sample and the Chemical Examiner who had tested the sample.
It is thus evident that the CRCL test report is not only cryptic, but it is also not clear whether the same was in accordance with the prescribed standards. The fact that the sample was tested nearly two months after its drawal and had not been stored in accordance with the prescribed conditions, the reliability of the test result, therefore is not only doubtful but also unreliable - It is also noted that the Board’s Circular- 12/2014-Cus clearly states that the sample is to be drawn in accordance with the BIS standards.
The coordinate bench of the Tribunal in M/s. Vedanta Ltd. Vs. Commissioner of Customs (Preventive) Bhubeneshwar [2023 (8) TMI 947 - CESTAT KOLKATA] had held in that case that the samples were required to be tested as early as possible and had held the inordinate delay of over a hundred days as unforgivable.
There are no legal substance in the order of the learned Commissioner (Appeals), and are of the view that the learned Commissioner was in error of law in passing the impugned judgement - appeal allowed.
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2023 (12) TMI 962
Revocation of licensed courier - no documents pertaining to KYCs (Know Your Customers) and POD (proof of delivery) were found - violation of Rule 12 (iv) of Regulation of CIER, 2010 - Adherence to the provisions laid in the Notification No.07/98-Customs (NT) dated 9.11.1998 or not - HELD THAT:- The respondent has failed to verify the correctness of IEC code and even identity of its clients. The respondent was aware of the use of same Aadhaar Number for all BOEs still the Authorized Courier nor to verify the said Aadhaar Number or did not verify the antecedent, correctness of Import Export Code (IEC) number, identity of its client. Further, the respondent during the time of uploading of the Bill of Entry failed to take note that the data entered was not correct - The respondent did not even bother to inform the said mistake to the Customs department, despite that KYC details filed by him in the Bills of Entry was not the same as was reflected in those Bills of Entry. Accordingly, the respondent has contravened the provisions of Regulation 12(1) (v) of CIER.2010.
It is also observed that to ascertain as to whether the imported goods indeed reached the declared importers, a verification of genuineness of the PODs (Proof of Deliveries), submitted by the authorized courier and KYC was carried out by the Commissioner of Customs, ACC (Export), New Delhi through the jurisdictional Commissionerate(s) - Failure of delivery of the consignment to the consignee or denial of receipt of the consignment by the consignee that the addresses were found bogus during verification of genuineness of the PODs, proves that the imported goods were never destined to the consignees named in the BOEs and have been intentionally diverted.
Respondent gave no information about the said mistake to the department nor ever took the plea that it was happening due to software error. From said statements above, it becomes clear that software was so designed under the instructions of respondent. GSTIN field showing Aadhaar number was directed by the respondent himself to be kept constant while software was developed. The edit option was with the respondent. He has failed to upload the correct edited information. Thus respondent cannot be allowed to take shelter of plea of “software error”. Thus, the alleged/impugned act was not merely lack of due diligence but was intentional misconduct.
The verification report sufficiently established the fact that the respondent has imported consignments in the name of consignees who were not even aware of the fact that their identity has been misused by the respondent i.e. courier company for import purpose. The report is held cogent evidence to show that authorized courier has failed to verify the correctness of IEC code and even identity of its clients. As observed above, it was done intentionally by the respondent, hence is wrongly held to be the mere act of negligence.
There is sufficient evidence on record to hold that the above said Regulations have been violated by the respondent. The violation invite revocation of courier licence as per Regulation 11. But the original adjudicating authority despite acknowledging the alleged violations has merely imposed penalty. Since the alleged act is proved to be intentional act of the respondent, mere imposition of penalty of Rs.50,000/- (fifty thousand) is disproportionate punishment - the prayer made by the appellant-department is accepted for revocation of courier registration of the respondent for committing intentional fraud while importing several goods in the name of those being gifts from Non Resident Indian (NRI) to their family member residing in India, which otherwise were not imported by them nor were meant for them.
The findings under challenge are hereby set aside and the appeal of Department is hereby allowed.
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2023 (12) TMI 961
Auction sale under the SARFAESI Act, 2002 - legitimacy of the transaction resulting from sale of the subject property through auction - Sale concluded while commencing the resolution process - HELD THAT:- The Liquidator (now representing the Corporate Debtor in liquidation), the erstwhile Director/Promoter of the Corporate Debtor as also the Bank does not dispute the factual position that the sale stood concluded before declaration of moratorium. No reason was cited to demonstrate as to why the sale certificate would be held illegal. No case has been made out on behalf of the respondents about any defect or default in forwarding the sale certificate in terms of Section 89(4) of the Registration Act, 1908. On the other hand, all the three respondents have concurred at the time of hearing on the point that the sale stood concluded.
The present appeal shall stand allowed to the extent the properties in question are concerned. These properties cannot be treated to be liquidation assets of the Corporate Debtor for the purpose of further steps to be taken in the liquidation proceeding. The impugned order is set aside.
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2023 (12) TMI 960
Validity of Direction to the Resolution Professional to immediately handover the management of the Corporate Debtor to the CEO/Management of the Corporate Debtor - Power of NCLT where CIRP has been stayed - HELD THAT:- It is noticed that the Appeal filed by Mr. Navin Kumar Upadhyay- Respondent No.1 before the Hon’ble Supreme Court challenging the order dated 16.12.2021 of this Tribunal is already pending. It is open for the Respondent No.1 herein who is Appellant before the Hon’ble Supreme Court to pray such order as may be advised - it is also noticed that after the order of the Hon’ble Supreme Court dated 25.02.2022 staying the CIRP, Resolution Professional has also filed an application before the Hon’ble Supreme Court seeking certain directions and clarifications which application was directed by the Hon’ble Supreme Court to be heard along with the hearing of the appeal which application is still pending and no order has been passed by the Hon’ble Supreme Court. When the Appeal before the Hon’ble Supreme Court filed by the Respondent No.1 is still pending, the Adjudicating Authority ought to have stayed his hands to issue any direction to hand over the management of the Corporate Debtor to the ex-management and the Adjudicating Authority ought to have relegated to parties to approach the Hon’ble Supreme Court for any further order or direction.
It is for the Resolution Professional to take decision in its wisdom as to how the Corporate Debtor should be allowed to continue as a going concern without taking any steps in the CIRP, in view of the interim order passed by the Hon’ble Supreme Court dated 25.02.2022. Respondent No.1 virtually seeks his reinstatement of the post which is clear from the prayer made in IA No.4138-4139 of 2023 which has not been entertained in this Appeal and the Adjudicating Authority also ought to have stayed his hands from passing any order on the application filed by the parties which relates to CIRP of the Corporate Debtor.
The Adjudicating Authority committed error in passing the order dated 30.05.2023. Application IA No.2403 of 2023 filed by Respondent No.1 as well as Application IA No.964 of 2023 filed by Resolution Professional before the Adjudicating Authority ought not to have entertained due to pendency of the Civil Appeal No.2662 of 2022 filed by the Respondent No.1 before the Hon’ble Supreme Court.
The order dated 30.05.2023 passed in IA No.2403 of 2023 and IA No.964 of 2023 set aside - appeal allowed.
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