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2024 (4) TMI 950
Validity Of order passed by the competent authority in purported exercise of powers u/s 129 (3) - detention of the goods and vehicle - stock transfer - Penalty - Demand of applicable tax - HELD THAT:- The short contention is that the detained goods were being transported as part of a stock transfer. The goods were not being moved in pursuance to any sale or purchase. The goods were not liable to tax. The detention of the goods and imposition of tax and penalty were unlawful. According to the learned counsel for the petitioner, the aforesaid ground has not been considered by the appellate authority while rejecting the appeal of the petitioner.
Thus, the ground raised by the petitioner merits consideration by the appellate authority in the first instance. Clearly, the appellate authority has failed to do so. Failure of the appellate authority to advert to the said objections of the petitioner, reflects non application of mind to germane issues and vitiates the impugned order passed by the appellate authority.
The impugned order dated 28.12.2020 passed by the appellate authority is consequently set aside. The writ petition is allowed to the extent indicated above.
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2024 (4) TMI 949
Penalty for Non-filing of monthly return - Seeking permission to file GSTR 3B Return - Seeking refund of amount illegally debited from the Electronic Cash Ledger towards interest and penalty - HELD THAT:- Whatever be the true facts, this much is clear that the petitioner had initiated the payment of tax for the month of April, 2023 within time, in the manner prescribed. The amount was debited from its account, within prescribed time. To that extent, "failure" may never be attributed to the petitioner- in timely payment of the tax amount. The levy of late fee (Section 47) and interest (Section 50) under U.P. GST Act, 2017 may arise only in the event of "failure" on the part of an assessee to file a return and/ or payment of due tax within time.
Insofar as the delay may be attributed exclusively to the respondent-bank after such payment was made by the petitioner within time, on that statement itself the levy of penalty remains unwarranted. What errors may have been committed by the bank/ or GSTN may not involve the petitioner.
Thus, leaving it open to the GSTN and the Bank to device a better mechanism to ensure prompt credit and debit entries to arise in real time as may not create any doubts or disputes in future, the present writ petition stands disposed of as below.
The amount of penalty Rs. 1,07,710.51/- and interest Rs. 100/- deposited by the petitioner under protest may be adjusted against the tax liability for the month of April, 2024 onwards without incurring any liability as to interest on that amount.
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2024 (4) TMI 948
Validity Of Order passed u/s 73 - Show Cause Notice issued proposing a demand - Penalty - excess claim Input Tax Credit [“ITC”] - No opportunity granted to file reply - HELD THAT:- Perusal of the Show Cause Notice dated 24.09.2023 shows that the Department has given separate headings i.e., under declaration of output tax; the tax on outward supplies under declared on reconciliation of data in GSTR-09; excess claim Input Tax Credit [“ITC”]; Scrutiny of ITC availed and ITC claimed from cancelled dealers, return defaulters & tax non payers. To the said Show Cause Notice, a detailed reply was furnished by the petitioner giving disclosures under each of the heads.
The observation in the impugned order dated 28.12.2023 is not sustainable for the reasons that the reply dated 11.10.2023 (uploaded on portal on 24.10.2023) filed by the Petitioner is a detailed reply. Proper Officer had to at least consider the reply on merits and then form an opinion. He merely held that the reply is unsatisfactory, which ex-facie shows that Proper Officer has not applied his mind to the reply submitted by the petitioner.
Thus, the impugned order dated 28.12.2023 cannot be sustained, and the matter is liable to be remitted to the Proper Officer for re-adjudication. Accordingly, the impugned order dated 28.12.2023 is set aside and the matter is remitted to the Proper Officer for re-adjudication.
It is clarified that this Court has neither considered nor commented upon the merits of the contentions of either party.
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2024 (4) TMI 947
Cancellation of the GST registration retrospectively - Validity Of Order passed and Show cause notice - barred by limitation - Petitioner unable to conduct business because of the owner’s ill health resulting in default of filing returns and obeying notices - HELD THAT:-Pursuant to the said impugned order, Petitioner filed an application dated 02.11.2019 seeking revocation of cancellation of GST registration. On the said application, Petitioner was issued Show Cause Notice dated 24.05.2022 for rejection of application for revocation of cancellation of registration. It merely stated “Any Supporting Document - Others (Please specify) - GSTIN is neither Aadhaar Authenticated nor e-KYC verified.
We notice that the Show Cause Notice and the impugned order are bereft of any details. Accordingly, the same cannot be sustained. Neither the Show Cause Notice, nor the order spell out the reasons for retrospective cancellation.
It is important to note that, according to the respondent, one of the consequences for cancelling a taxpayer’s registration with retrospective effect is that the taxpayer’s customers are denied the input tax credit availed in respect of the supplies made by the taxpayer during such period. Although, we do not consider it apposite to examine this aspect but assuming that the respondent’s contention in this regard is correct, it would follow that the proper officer is also required to consider this aspect while passing any order for cancellation of GST registration with retrospective effect. Thus, a taxpayer’s registration can be cancelled with retrospective effect only where such consequences are intended and are warranted.
Thus, order dated 24.09.2019 cannot be sustained and is accordingly set aside. The GST registration of the petitioner is restored. Petitioner shall, however, make all necessary compliances and file the requisite returns and information inter alia in terms of Rule 23 of the Central Goods and Services Tax Rules, 2017.
The petition is accordingly disposed of in the above terms.
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2024 (4) TMI 946
Validity of Orders passed u/s 73 - excess claim of Input Tax Credit [ITC] - Inadequate Consideration of Replies - Levy of penalty - No opportunity of Personal Hearing - HELD THAT:- Perusal of the Show Cause Notices dated 05.09.2023 and 29.09.2023 shows that the Department has issued both the notices on similar grounds and headings i.e., excess claim Input Tax Credit [“ITC”]; Scrutiny of ITC availed and scrutiny of ITC reversals, to the said Show Cause Notices, detailed replies were furnished by the petitioner giving disclosures under each of the heads. Pursuant to the said Show Cause Notices, Petitioner was issued reminders dated 21.12.2023 thereafter Petitioner filed replies dated 26.12.2023 to the said reminders.
The observation in the impugned orders dated 31.12.2023 is not sustainable for the reasons that the replies dated 14.12.2023 and 03.10.2023 filed by the Petitioner are detailed replies with supporting documents. Proper Officer had to at least consider the reply on merits and then form an opinion. He merely held that the reply dated 03.10.2023 is unsatisfactory and reply dated 14.12.2023 is not supported with proper calculations/reconciliation and relevant documents, which ex-facie shows that the Proper Officer has not applied his mind to the replies submitted by the petitioner.
Further, if the Proper Officer was of the view that any further details were required, the same could have been specifically sought from the Petitioner. However, the record does not reflect that any such opportunity was given to the Petitioner to clarify its reply or furnish further documents/details.
Thus, impugned orders dated 31.12.2023 cannot be sustained, and the matter is liable to be remitted to the Proper Officer for re-adjudication. Accordingly, impugned orders dated 31.12.2023 are set aside and the matter is remitted to the Proper Officer for re-adjudication.
Petition is disposed of in the above terms.
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2024 (4) TMI 945
Validity Of Show Cause Notice issued defective - cancellation GST registration - HELD THAT:- This Court does not interdict a Show Cause Notice and delegates the authorities to adjudicate the Show Cause Notice, however, we note that the subject Show Cause Notice itself is defective and does not give any details or particulars. The Show Cause Notice in the reasons column has merely extracted the provisions of law. It states that the petitioner has issued invoices or bills without supply of goods or services, however, no details of invoices, bills or non-supply of goods or services has been mentioned in the Show Cause Notice.
In view of the fact that the Show Cause Notice is bereft of any details and suffers from infirmities that go to the root of the cause, we are not exercising the power of remit and directing the proper officer to re-adjudicate the Show Cause Notice.
Thus, we quash the same. The impugned Show Cause Notice dated 12.10.2022 is accordingly set aside. Petition is disposed of in the above terms.
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2024 (4) TMI 944
Alternate appellate remedy - Validity Of order-in-original - Recovery of demand of service tax - CIRP Proceedings under IBC - The effect of the approved resolution plan on the liabilities of the appellant - HELD THAT:- In the instant case, the proceedings before the NCLT, Kolkata Bench for approval of a corporate resolution plan was initiated in the year 2018, to be precise, on 08.01.2018 and the show cause notice was said to have been issued on the erstwhile company dated 05.11.2019. The resolution plan was approved by the NCLT, Kolkata Bench on 04.09.2019 and affirmed by the NCLT, New Delhi on 04.03.2021 and a special leave petition filed against the said order before the Hon'ble Supreme Court was dismissed on 04.05.2021.
Thus, it is seen that the process under the Insolvency and Bankruptcy Code, 2016 had commenced much prior to the issuance of the show cause notice. Therefore, the above points of law are required to be considered, more particularly, the law laid down by the Hon'ble Supreme Court in several decisions of which we may refer to the decisions in the case of Ruchi Soya Industries Ltd. & Ors. vs. Union of India & ors. [2022 (3) TMI 60 - SUPREME COURT] wherein the Hon'ble Supreme Court held that the claim in respect of the demand having not lodged before the appropriate authority after public announcements were issued under Sections 13 and 15 of the I.B.C., as such, on the date on which the resolution plan was approved by the NCLT, all claims stood frozen and no claim, which is not part of the resolution plan, would survive.
We are satisfied that points of law are required to be decided in the writ petition and, therefore, the appellant need not be relegated to avail the alternate appellate remedy under the Act, more so, when the jurisdiction of the second respondent has been questioned.
Therefore, we are of the view that the writ petition should be heard after an affidavit-in-opposition is filed by the respondents and a decision should be taken on merits and in accordance with law.
In the result, the appeal and its connected application stand allowed and the order passed in the writ petition is set aside. The writ petition is admitted for hearing. The order-in original dated 21.11.2023 impugned in the writ petition shall remain stayed till the disposal of the writ petition.
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2024 (4) TMI 943
Seeking rectification in Form GSTR-1 - limitation period - Works contract services - Input Tax Credit (“ITC”) - non-uploading of the invoices in GSTR-1 as B2B invoice - non-payment on the ground of financial distress due to COVID-19 - failed to deposit the tax liability - HELD THAT:- The primary object behind the CGST Act is levy and collection of tax on intra State supply of goods or services and the matters connected therewith or incidental thereto. However, it is understood that the CGST Act, 2017 is a complete Code and the aggrieved party may loose certain benefits by operation of the provisions thereunder. Section 39 of the CGST Act provides that every registered person other than an input service distributor or a non-resident taxable person shall for every calendar month or part thereof furnish a return of inward and outward supply of goods and service.
There are other requirements/ stipulations u/s 39 which every registered person/Firm is required to comply. Sub-section (2) to Section 16 lays down the conditions for availing of the Input Tax Credit by every registered person, and one of the conditions is that the details of the invoice or debit note was furnished by supplier in the statement of outward supplies and such details have been communicated to the recipient of such invoice or debit note in the manner specified in Section 37. Under sub-section (1) to Section 37, the details of outward supplies of the goods and services or both affected during a tax period must be furnished on or before the tenth day of the month succeeding the tax period. Proviso to sub-section (3) provides that no rectification of error or omission in respect of the details furnished by the registered person of the outward supplies under sub-section (1) shall be allowed after the thirtieth day of November following the end of the financial year to which such details pertain.
We have come to a conclusion that no relief can be granted to the petitioner-Firm. As to the prayers made in the writ petition, there shall be issues regarding limitation and implied knowledge to the petitioner-Firm.
According to Mr. Ankit Kanodia, the learned Sr. counsel for the petitioner-Firm, a notification was issued under which the time for filing the return was extended up to 7th February 2020, but then, there are further periods of dispute starting from 2018-19, 2020-21 & 2021-2022. In “M/s Mahalaxmi Infra Contract Ltd.”[2022 (11) TMI 323 - JHARKHAND HIGH COURT], the mistake in the entries pertained to just one Tax Invoice and there was no dispute on facts. M/s Mahalaxmi Infra Contract Ltd. had made the entry in respect to the Tax Invoice dated 17th January 2019 in the GSTR-1 against the GSTIN of another entity which was not the recipient of the supply. Therefore, the GSTR-2A return of the said entity reflected the same but it did not avail the Input Tax Credit for that entry. However, the ECL which was the recipient of the supply against tax invoice dated 17th January 2019 availed the Input Tax Credit for such transaction but reversed the entry on realizing the mistake.
This was the background in which the writ Court permitted M/s Mahalaxmi Infra Contract Ltd. rectification in the return filed by it. Whereas, in the present case, even payment of the entire liability was not made by the petitioner-Firm. Mr. Ankit Kanodia, the learned Sr. counsel for the petitioner-Firm has made a statement in the Court that now the entire liability has since been paid, by the petitioner-Firm. May be that is the correct factual aspect but for that reason the powers under Article 226 of the Constitution of India cannot be exercised ignoring the statutory regime under the CGST.
The writ Court while exercising its jurisdiction and powers under Article 226 of the Constitution of India shall remain alive to the considerations whether the relief sought is barred by any law or the relief if granted shall be in the public interest. The writ Court shall also remain conscious that it has to adjudicate the prayer made in the main petition and should not travel beyond that merely because some statement of fact has been made or brought on record by filing supplementary affidavit. As we glance through the writ pleadings, the petitioner-Firm did not provide correct and sufficient information’s, and this is not correct to say that the petitioner-Firm could know about the mistake sometime in 2022.
Thus, we are not inclined to entertain this writ petition which is, accordingly, dismissed.
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2024 (4) TMI 942
TP Adjustment - selection of MAM [Most Appropriate Method] - Assessee had adopted Resale Price Method (“RPM”) for import of coal and Transactional Net Margin Method (“TNMM”) for import of pulses from its Associate Enterprise (“AE”) for determining Arms Length Price (“ALP”) - Assessee had also exported rice to its AE and followed TNMM to ascertain ALP - ITAT has held that choice of method is not an unfettered choice of the taxpayer, but has to be exercised on touchstone of principles governing Most Appropriate Method (“MAM”) as prescribed u/s 92C(1) of the Act and the TPO has overriding power of course correction as per Section 92C(3) of the Act.
HELD THAT:- Whenever both methods, i.e., CUP as well as TNMM can be applied, the traditional transaction methods are to be preferred over traditional profit methods. He thereafter proceeded to apply the CUP method and conducted a search on the Bloomberg database to find the sale price of rice. Without ascertaining or explaining in detail whether the rates were for products exported from India or from any other country or specifying whether the rates relate to controlled or uncontrolled transactions or whether it relates to retail or wholesale market, the TPO simply proceeded on the basis of Bloomberg database. In fact Assessee had even provided the rates accepted by the Indian Custom’s Department for export of rice and requested that the same be considered for CUP analysis as the same would be more reliable. Assessee also submitted that it realized more price on exports than the rates quoted by the Custom Authorities. The TPO without explaining as to why he wanted CUP method to be followed and not the TNMM followed by us as Assessee and without clarifying whether the rates applied were for products exported from India or any other country or whether it related to controlled or uncontrolled transactions or retail or wholesale or as to why the Custom’s rates are not acceptable, proceeded to fix the ALP purely relying on the Bloomberg database that was available with them.
DRP also did not accept Assessee’s objections in its entirety. The ITAT accepted that these were the mistakes in the order of TPO, inasmuch as the TPO without realizing the factual aspects, simply rejected the method adopted by Assessee. It is also recorded that Assessee’s contentions that Bloomberg database was not reliable or that Assessee’s export price was more than the Indian Custom’s quoted rate and accordingly, exports are at ALP even under CUP method has not been controverted by the Departmental Representative. No reason to find fault with the conclusion arrived at by the ITAT. No substantial questions of law, therefore, arise. Appeal dismissed.
ITAT justification in stating that CUP is most appropriate method for bench-marking the transaction of import of minerals - HELD THAT:- ITAT accepted the contentions of Assessee that it had compared its import rates of coal imported from a country against the indices published by the agencies of the same country. ITAT also accepted that the rates are generally declared for a particular quality available in that country and the same quality should have been imported by Assessee and hence, it cannot be presumed that the price quoted does not take into account ash & moisture content. The ITAT also rejected the reasons given by the TPO that Assessee has made arbitrary adjustment to the prices quoted by the indices with the intention to bring the same to the tolerance level of +/- 5%. It accepted the scientific calculation given by Assessee to arrive at the prices. The ITAT has arrived at its conclusion on factual basis with valid reasons. No substantial questions of law arise.
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2024 (4) TMI 941
Deemed income u/s 56(2)(x) - Defective Show cause notice - Addition of Unexplained investment u/s 69 - charged to tax u/s 115BBE - stamp duty value of the said flat unexplained - case was selected for scrutiny under CASS to examine “Capital Gains Deduction Claimed - SCN issued why the stamp duty value of the said flat should not be treated as deemed income of petitioner u/s 56(2)(x) and deduction u/s 54F of the Act be denied - order passed in which Respondent No. 3 proposed to treat the entire stamp duty value of the said flat as unexplained investment u/s 69 and charged to tax u/s 115BBE of the Act.
As submitted Development agreement was executed by and between the owner of the building owners of the building agreed to grant development rights in respect of the building and agreed to permit the developer to develop the property on terms and conditions mentioned therein, wherein the developer was required to provide permanent alternate accommodation to the tenants/occupants and as mandated by Maharashtra Housing and Area Development Authority (MHADA), the developer entered into permanent alternate accommodation agreement with the tenants/occupants.
HELD THAT:- Admittedly, no notice has been issued to assessee/petitioner calling upon assessee to show cause whether the entire stamp duty value be treated as unexplained investment under Section 69 of the Act. In the affidavit in reply, the answer given to this allegation of petitioner that no notice was given to show cause under Section 69 of the Act is that the assessment was getting barred by limitation and there was no time for further show cause notice and hence the Faceless Assessing Officer (FAO) has passed the assessment order after considering all the submissions and possible aspect of the case and agreement value of the new purchased property is treated as unexplained investment under Section 69 of the Act and added to the total income of assessee. In the assessment order though there is reference to Section 56(2) (x) of the Act and the reply/objections filed by petitioner in response to the show cause notice, in the operative part there is no reference to Section 56(2)(x) of the Act.
The courts have time and again held that issuance of show cause notice is not an empty formality. Its purpose is to give reasonable opportunity to the affected persons to effectively deal with the allegations in the show cause notice. In our view, even the show cause notice dated 23rd August 2022 is defective in as much as even though it had reference to Section 56(2)(x) of the Act, it did not mention whether the AO proposed to treat the stamp duty value as deemed income of assessee under clause (a) or clause (b) of Section 56(2)(x) of the Act.
This is because both are separate provisions and under either of these two clauses the stamp duty value could be treated as deemed income. By not specifying whether Section 56(2)(x)(a) or Section 56(2)(x)(b) of the Act was applicable, the A.O. first of all has not given reasonable opportunity of showing cause to the assessee. Assessee would be totally unaware of the grounds which had prompted the A.O. to arrive at a prima facie conclusion and issue show cause notice. The power that the A.O. had was required to be executed properly. Moreover in the assessment order that is impugned in the petition, the A.O. has chosen to give Section 56(2)(x), a go by and treat the stamp duty value of the flat as from unexplained source under Section 69 of the Act. There is no reference to Section 56(2)(x) of the Act in the operative part of the order.
Thus the impugned order cannot be sustained. The allegations in the affidavit in reply that assessee has claimed tenancy rights as colourable device in order to get an exemption under the provisions of the Act and evade the tax liability also cannot be accepted because if the A.O. had evidence to that effect the same should have been stated in the show cause notice.
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2024 (4) TMI 940
Obligation to pass a draft assessment order u/s 144C (1) - whether on remand the A.O. was obliged to pass a draft assessment order u/s 144C (1)? - HELD THAT:- The Division Bench of this court in Dimension Data Asia Pacific PTE Ltd. [2018 (7) TMI 1256 - BOMBAY HIGH COURT] has considered this issue. The court held that even in partial remand proceedings from the Tribunal, the A.O. is obliged to pass a draft assessment order u/s 144C (1) of the Act.
In our view this is a clear case of jurisdictional error. The assessment order passed by the A.O., i.e., impugned in this petition is vitiated on account of lack of jurisdiction and requires to be quashed and set aside as void ab initio.
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2024 (4) TMI 939
Rejection of application u/s 119(2)(b) for condoning the delay in filing the Form 10B - delay was about 1257 days - assessment of trust - Petitioner/trust explained the cause for delay on the Chartered Accountant/Auditor - According to Petitioner, when it sent Form No. 10B to the Department for submission after filing the return, the Departmental staff refused to acknowledge the manual submission and Petitioner was told to file the same online - HELD THAT:- Admittedly, Petitioner is a charitable trust. Admittedly, Petitioner has been filing its returns and Form 10B for AY 2015-16, for AY 2017-18 to AY 2021-22 within the due dates. On this ground alone, in our view, delay condonation application should have been allowed because the failure to file returns for AY 2016-17 could be only due to human error. Even in the impugned order, there is no allegation of mala fide.
As held in Sarvodaya Charitable Trust [2021 (1) TMI 214 - GUJARAT HIGH COURT] the approach in the cases of the present type should be equitious, balancing and judicious. Technically, strictly and liberally speaking, Respondent No. 1 might be justified in denying the exemption by rejecting such condonation application, but an assessee, a public charitable trust with almost over thirty years, which otherwise satisfies the condition for availing such exemption, should not be denied the same merely on the bar of limitation especially when the legislature has conferred wide discretionary powers to condone such delay on the authorities concerned.
Moreover, in our opinion, Petitioner does not appear to have been lethargic or lacking in bona fides in making the claim beyond the period of limitation which should have a relevance to the desirability and expedience for exercising such power. We are conscious that such routine exercise of powers would neither be expedient nor desirable, since the entire machinery of tax calculation, processing of assessment and further recoveries or refunds, would get thrown out of gear, if such powers are routinely exercised without considering its desirability and expedience to do so to avoid genuine hardship.
Thus delay was not intentional or deliberate. Petitioner cannot be prejudiced on account of an ignorance or error committed by professional engaged by Petitioner. In our view, Respondent No. 1 ought to have exercised the powers conferred. Thus we quash and set aside the impugned order passed under Section 119(2)(b) of the Act dated 25/10/2023 and condone the delay in filing form 10B.
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2024 (4) TMI 938
Validity of Reopening of assessment u/s 147 - reason to believe - Reply of the assessee through reproduced but the contents thereof are not even referred or analyzed prima facie - whether it is a fit case to issue notice u/s 148 of the Act or not - HELD THAT:- AO has reproduced the reply filed by the assessee and the contents thereof are not even referred or analyzed prima facie to come to the conclusion that it is a fit case to reopen the assessment.
Petitioner along with the reply has reproduced the following documentary evidence of purchase, delivery and payment to show the genuineness of the transactions entered into with M/s. S. K. Enterprises.
This Court, by order [2024 (4) TMI 891 - GUJARAT HIGH COURT] has directed the Respondent to place on record the original papers containing the documents which are supplied by the petitioner in reply to the notice u/s 148A(d) of the Act. Respondent as stated that the documents have been placed on record by the petitioner, as referred hereinabove.
Thus we are of the opinion that the impugned order and the notice are required to be quashed and set aside remanding the matter back to the Assessing Officer to pass a fresh order under Section 148A(d) of the Act within a period of four weeks from the date of receipt of the copy.
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2024 (4) TMI 937
Reassessment proceedings against company insolvent/dissolved - whether the demand raised pursuant to the assessment order passed after the resolution plan approved by the NCLT on 1st July, 2022 would extinguish or not? - HELD THAT:- The Hon’ble Apex Court in case of Ghanshyam Mishra & Sons (P) Ltd [2021 (4) TMI 613 - SUPREME COURT] has held that once a resolution plan is duly approved by the adjudicating authority under sub-section (1) of section 31 of IBC, the claims as provided in the resolution plan shall stand frozen and will be binding on the Corporate Debtor and its employees, members, creditors [including the Central Government, any State Government or any local authority, guarantors and other stake holders. On the date of approval of the resolution plan by the adjudicating authority all such claims which are not part of the resolution plan shall stand extinguished and no person is entitled to initiate or continue any proceeding in respect to a claim which is not part of the resolution plan.
In view of the above conclusion arrived at by the Apex Court after considering the entire Scheme of the IBC, the demand which was raised pursuant to the order by issuing the demand notice cannot be said to be in respect to a claim which is part of the resolution plan.
The proceedings which were continued under section 147 r.w.s. 144 by the respondent, was also not a proceeding in respect to a claim which is not part of the resolution plan. In such circumstances, the notices issued by the CIT (A) and reference for the hearing of the appeals filed by the petitioner challenging the assessment order would extinguish on 01.07.2022 as no demand would remain in existence in absence of any claim raised before the RP by the respondent authority - so far as the framing of the reassessment pertaining to the Assessment Year 2018-19 in absence of any demand pending as on 01.07.2022 and as such demand raised subsequently would not be a part of the claim to be made before the RP. As no demand to be claimed was in existence when the NLCT passed the order on 01.07.2022 and therefore, the demand which has arisen pursuant to the assessment order dated 13.03.2022 cannot be said to have been extinguished. Therefore, so far as notices issued by the CIT (Appeals) are accordingly quashed and set aside.
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2024 (4) TMI 936
Delay in filling of an appeal before ITAT - delay of eight years, eighty-eight days - HELD THAT:- Assessee does not have sufficient reason for such a huge delay of eight years eighty-eight days. In this case, assessee failed to file Return of Income for A.Y. 2015-16, therefore, Department issued notice u/s 148 on 30.03.2022. One of the issues in the re-assessment proceedings was non-availability of registration under section 12AA of the Act. Assessee in the affidavit had admitted that at that point of time, assessee realized about rejection of 12AA application in 2014.
Even after that assessee had filed appeal before this Tribunal on 09.03.2023 i.e. after a gap of one year. Thus, even after realizing the fact, assessee delayed filing of appeal by one year. The procedure for registration u/s 12AA was amended by Finance Act, 2020. Accordingly, assessee had applied for provisional registration and it was granted to assessee on 24.09.2021 for A.Y. 2022-23 to A.Y. 2024-25. Thus, even at the time of applying for provisional registration under the amended scheme, assessee failed to realize that assessee’s application for registration under 12AA was rejected on 11.11.2014. Chronology of these events explain that assessee was callous and not serious towards the registration.
As assessee’s application for condonation of delay is rejected. Accordingly, appeal is dismissed on the ground of delay.
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2024 (4) TMI 935
Exemption u/s 80P(2)(a)(i) or u/s 80P(2)(d) - appellant is a cooperative society engaged in the business of providing credit facilities - HELD THAT:- It is an admitted fact that the appellant is a cooperative society engaged in the business of providing credit facilities. It does not enjoy any license to carry on the business of banking from Reserve Bank of India. Therefore, as held in the case of PCIT vs. Annasaheb Patil Mathadi Kamgar Sahakari Pathpedi Ltd. [2023 (5) TMI 372 - SC ORDER] that the assessee is eligible for deduction u/s 80P(2)(a)(i) of the Act. Reliance in this regard can also be placed on the decision of Quepem Urban Co-operative Credit Society Ltd [2021 (5) TMI 406 - BOMBAY HIGH COURT].
Allowability of exemption under the provisions of section 80P(2)(a)(i) in respect of interest income earned by a cooperative society from the scheduled banks - The Coordinate Bench of Pune Benches in the case of M/s. Ratnatray Gramin Bigar Sheti Sah. Pat Sanstha Maryadit [2018 (12) TMI 1926 - ITAT PUNE] taken view in favour of the assessee following the judgment of Hon’ble Karnataka High Court in the case of Tumkur Merchants Souharda Credit Cooperative Ltd. [2015 (2) TMI 995 - KARNATAKA HIGH COURT]
The interest income earned on fixed deposits with cooperative bank/scheduled bank partakes character of the business income, which is eligible for deduction u/s 80P(2)(a)(i) of the Act. Therefore, direct the Assessing Officer to allow the exemption u/s. 80P(2)(a)(i) of the Act. Thus, the grounds of appeal filed by the assessee stand allowed.
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2024 (4) TMI 934
Penalty u/s 271(1)(c) - CIT(A) deleted addition made u/s 69C based on the Remand Report filed by the AO - as argued quantum proceedings were subjudiced and it was requested by the appellant to keep the penalty proceedings in abeyance till the disposal of quantum appeal - HELD THAT:- The present appeal is against penalty order under section 271(1)(c) of the Act levied on the basis addition made u/s 69C of the Act for A.Y. 2010-11 and A.Y. 2012-13. Since the ld.CIT(A) has deleted the addition under section 69C of the Act, the penalty does not have any limbs to stand. In these facts and circumstances of the case, we direct the AO to delete the penalty levied under section 271(1)(c) of the Act. Accordingly, grounds of appeal filed by the assessee are allowed.
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2024 (4) TMI 933
Assessment of trust - Rate of Tax - Maximum Marginal Rate (MMR) - Charging the assessee as per the provisions of section 164(1) or 164(2) - rate as applicable to Individual and AOP - issue raised by the assessee that the trust has not issued any exemption u/s 12A of the Act. Though the assessee’s income can be charged to tax at maximum marginal rate or as per the normal provisions of the Income Tax Act
Assessee argued that beneficiary are the general public so there is no share of beneficiaries whether known or unknown as the assessee is trust so charging the assessee as per the provisions of section 164(1) as held by the CIT(A) is incorrect and the relevant facts has not been appreciated - HELD THAT:- On going through the trust deed it is apparent that there is no share of beneficiary whether no one or unknown as the assessee trust is so charging the assessee as per provisions of Section 164(1) is incorrect and the relevant provisions of section 164(2) of the Act which is specific charging of section for a trust. Thus, when the specific provisions of charging tax, the general provisions cannot be made applicable in this case. The ld. AR of the assessee also submitted that similar issue has been dealt with by the Revenue for assessment years 2015-16, 2016-17 & 2018-19 as per provisions of Section 164(2) of the Act.
As decided in SHRI DIGAMBAR JAIN MANDIR TRUST CHARANWAS VERSUS AO, MAKRANA, ITO, WARD-1, MAKRANA [2024 (4) TMI 661 - ITAT JODHPUR] assessee trust shall be charged to tax u/s. 164(2) at the rate as applicable to Individual and AOP - decision of the ld. CIT(A) to charge the assessee u/s. 164(1) is not correct it should be charged based on the specific provision of the Act u/s. 164(2) of the Act and the tax rate as applicable to that 164(2) will apply to the rate of the AOP/Individual and the initial exemption is also available to such assessee.
Thus we direct the ld. Assessing Officer to charge the assessee as per provisions of Section 164(2). Appeal of the assessee is allowed.
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2024 (4) TMI 932
Addition u/s 69A - amount received in cash from persons for online fund transfer through novapay online portal and deposited in Bank - as per AO assessee has not produced / furnished the details showing from whom cash was collected and for which purpose - HELD THAT:- As during the two months of demonetization only the assessee carried both types of work viz. deposit of utility bills and Hotel and Ticket bookings. The assessee had executed an Agreement with Novapay which is a portal for money transfer mainly.
The assessee was working for this portal earlier also, but the quantum of commission was very low as is evident from the entries appearing in form 26AS. It is apparent from TDS made by above named Novapay that during the months of December 2016 to March 2017 the quantum of commission has recorded growth as compared to commissions in the months of April, 16 to November, 2016. The bank statements of the assessee evidences that the amount deposited by the assessee in the bank accounts during these two months of demonetization was transferred to other accounts as is apparent from the transactions appearing therein.
Thus, when the assessee has is not directly benefit for cash deposit by making any personal investment but has transferred the money for services he rendered to the party whose service are availed and the commission arising out of that activity was already taxed in the hands of the assessee. The bench also noted that the activities of the assessee are genuine based on the fact that during the period of two months of demonetization the assessee had deposited only Rs. 27,500 as SBN out of total deposit of more than 56 Lacs and there is no allegation against the assessee that the assessee had deposited amount in SBN. Based on the discussion so recorded and evidences in the form of form no. 26AS bank statement and TDS deducted on commission the cash deposited by the assessee cannot be taxed u/s. 69A of the Act. Appeal of the assessee is allowed.
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2024 (4) TMI 931
Disallowance of bonus paid to directors u/s 36(1)(ii) - assessee paid a bonus in addition to the remuneration to two of its directors - it is the plea of the assessee that both the directors are promoter directors of the company having a diploma in electronic engineering with 35 years of experience in the IT Industry and that both the directors are actively involved in the day-to-day affairs of the company and a bonus of Rs. 96 lakh each was paid for the services rendered by them and also because during the year under consideration, total turnover and sales turnover increased by 44% and 55%, respectively, as compared to the preceding year
HELD THAT:- As directors had declared a salary of Rs. 60 lakh and a bonus of Rs. 35 lakh received by them. Thus, it is not a case wherein the bonus was received by the directors only in one year. Accordingly, we are of the considered view that the decision of the Special Bench of the Tribunal in Dalal Broacha Stock Broking (P.) Ltd.[2011 (6) TMI 251 - ITAT, MUMBAI] has been rendered in its own set of facts, which are completely different from the facts of the present case.
Further from the financial statement of the assessee, we find that the turnover from the sale of products increased from Rs. 39.77 crore in the assessment year 2014-15 to Rs. 61.61 crore in the assessment year 2015-16. The aforesaid facts also distinguish the present case from the facts in Dalal Broacha Stock Broking (P.) Ltd. (supra), as in that case, it was noted by the Special Bench that the steady rise in performance was due to improved market conditions as the taxpayer was a stockbroker who was getting commission on sale/purchase of shares by the investor/traders.
However, in the line of business of the assessee, wherein it is engaged in dealing in computers, networking solutions, and providing maintenance and facility management services, it cannot be denied that without the dedicated efforts turnover from sales and services cannot increase. Thus, aforesaid factors also support the case of the assessee that the bonus was a reward for the work of the promoter directors, who were actively involved in the day-to-day affairs of the company, in addition to the salary paid to them. Accordingly, in view of the aforesaid facts and circumstances, we are of the considered view that the assessee is entitled to claim deduction u/s 36(1)(ii) of the Act in respect of payment of bonus to its directors. Therefore, the impugned disallowance u/s 36(1)(ii) of the Act is deleted. As a result, ground no.1 raised in assessee’s appeal is allowed.
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