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2023 (11) TMI 1167 - SC ORDER
Maintainability of appeal - Monetary limit involved in the appeal - low tax effect - HELD THAT:- The Civil Appeals are dismissed owing to low tax effect.
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2023 (11) TMI 1166 - SC ORDER
Restoration of appeal which was dismissed earlier as withdrawn - appeals involving tax incidence of more than Rs.5 crore - Condonation application - Classification of goods - blanks for components out of CR/HR sheets/coils of iron and steel - HELD THAT:- An application for recall of the order has been moved with the delay of 326 days and it is contended that the tax incidence is actually more than Rs. 5 crores and, therefore, the appeal was got dismissed as withdrawn under some misconception.
In view of the facts and circumstances and the averments made in the delay condonation application as well as the restoration application, it is satisfying that the delay is sufficiently explained and the order dated 02.08.2019 deserves to be recalled.
Appeal is restored to its original number.
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2023 (11) TMI 1165 - CESTAT HYDERABAD
Valuation of goods - CNG - Administered Price Mechanism - calculation of transaction value falling under the provisions of Sec 4(1)(a) of Central Excise Act - HELD THAT:- The Court below has erred in drawing adverse inferences as the word ‘commission’ has been used instead of the word ‘profit-margin’. Further, no adverse inferences can be drawn as the RSP is fixed by the Appellant, which is a PSU and CNG being a sensitive product touching the life of common man, in various aspects.
The impugned order set aside - appeal allowed.
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2023 (11) TMI 1164 - CESTAT CHANDIGARH
CENVAT Credit - input services - construction of setting up of plant - period involved in the present case was from 2006 to 2010 - HELD THAT:- This issue is no more res-integra and various benches of the Tribunal has considered this issue and has consistently held that during the relevant period, the construction activity was very much covered under the definition of ‘Input Service’ as provided under Rule 2(l) of CCR, 2004.
The Hon’ble Punjab and Haryana High Court in the case of COMMISSIONER CENTRAL EXCISE COMMISSIONERATE, DELHI-III VERSUS M/S BELLSONICA AUTO COMPONENTS INDIA P. LTD. [2015 (7) TMI 930 - PUNJAB & HARYANA HIGH COURT] have upheld the eligibility of the construction service for setting up the factory.
This issue of eligibility of cenvat credit of construction service during the relevant period was held in favour of the assessee and by following the said decisions, the impugned order is not sustainable in law, and therefore, the same is set-aside by allowing the appeal of the appellant with consequential relief, if any, as per law.
Appeal allowed.
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2023 (11) TMI 1163 - CESTAT NEW DELHI
Area Based Exemption - N/N. 50/2003-CE dated 10.6.2003 - denial of CENVAT Credit - denatured alcohol and CO2 manufactured by the distillery - sugar factory and the distillery unit - single or separate unit - alleged short reversal of CENVAT Credit under Rule 6(3A) for December 2014 - Time Limitation.
Whether the sugar factory and the distillery unit were two units or one unit? - HELD THAT:- Various facilities of the company are treated as separate units under some laws and as one by some other laws and the concerned agencies deal with them accordingly. Merely because a separate licence was issued by the State Excise, Pollution Control, etc. for the distillery does not make it a different unit under the Central Excise. In this case, the appellant had obtained a single Central Excise Registration for the sugar factory and set up the distillery plant within its premises. Further, it also filed single returns with the excise department covering both the sugar plant and the distillery - it is thus found that the sugar factory and the distillery are one unit as far as the Central Excise is concerned. Central Excise Act, Rules and notifications should be applied accordingly.
It has already been held by this Tribunal while remanding the matter that it is not tenable to hold that some products can avail area-based exemption and others need not avail area-based exemption. Once the appellant had opted for the area-based exemption notification, it is not open for it to say that it will not avail the benefit for some goods manufactured and will avail the benefit for other goods - As the exemption notification is not confined to only such products as were mentioned in the declaration but was available to all the goods manufactured in the unit including the new products manufactured after the declaration and those manufactured using newer plants and machinery installed in the unit, the exemption was available to the denatured alcohol and CO2.
All assessees are required to self-assess and pay duty. If duty is paid in excess of what is due or paid when it is not due, the assessee can claim refund. There is no mechanism to refund suo moto the duty paid under the Central Excise law. There is also a mechanism of issuing a Show Cause Notice under section 11A to recover duty not levied, not paid, short levied, short paid or erroneously refunded. There is no provision to issue a notice under section 11A for any other purpose. For instance, if duty is paid where one is not to be paid, there is no provision to issue a show cause notice calling upon the assessee as to why the excess duty paid should not be refunded. If duty is short paid, a show cause notice can be issued by the officers and if it is paid in excess, the assessee has to file a refund claim.
The denatured alcohol and CO2 manufactured by the distillery were fully exempted from duty and therefore, no CENVAT credit of capital goods used in setting up the plant could be availed by the appellant.
CENVAT Credit - input services - denial as per notification no. 21/2014-CE (NT) which restricted availment of CENVAT credit to six months from the date of invoice - HELD THAT:- This notification came into force only from September, 01 2014. According to the appellant the invoices were issued prior to this date but it availed the CENVAT credit thereafter. If it be so, as per the settled legal position the appellant is entitled to CENVAT credit on all such of these invoices which were issued prior to September, 01 2014.
Alleged short reversal of CENVAT Credit under Rule 6(3A) for December 2014 - HELD THAT:- It is held that the appellant is entitled to the benefit of CENVAT credit of Rs. 32, 82,816/- on all such invoices which were issued prior to 1 September, 2014 and according to the appellant all the invoices were issued prior to this date, there cannot be any duplication. The demand of Rs. 4,57,436/- needs to be upheld.
Time Limitation - HELD THAT:- The show cause notice was issued on 4.01.2016 during which period the normal period of limitation was one year from the relevant date, i.e., the date on which the return is filed and if no return is filed, the last date on which the return has to be filed. Extended period of limitation was not invoked in the show cause notice or in the impugned order. Even the penalty under section 11AC was imposed as applicable to cases other than fraud, collusion, wilful misstatement or suppression of facts. The appellant received capital goods between 26.03.2013 and 2.11.2014 but availed CENVAT credit in December, 2014. The return for December, 2014 would have been filed in January, 2015 and the show cause notice was issued on January 04, 2016 within one year - there are no force in the submission of the learned counsel that the show cause notice was time barred.
The impugned order needs to be modified to the extent of setting aside the denial of CENVAT credit on input services to the extent of Rs. 32,82,816/- for taking credit after six months from the invoice as there is no violation of notification no. 21/2004-CE (NT) consequent interest and reducing penalty under section 11AC to this extent - rest of the demand upheld - appeal allowed in part.
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2023 (11) TMI 1162 - SC ORDER
Levy of purchase tax and the related component of interest - benefit of notification - HELD THAT:- On perusal of the impugned order, it is noted that the impugned order has been passed on the basis of the submissions made by appellant’s counsel herein as well as the learned counsel for the respondent, before the High Court inasmuch as the High Court has recorded that the controversy involved in the present case was squarely covered by the decision rendered in COMMERCIAL TAXES OFFICER, CIRCLE 'D', JODHPUR VERSUS BHAWANI EXPORTS, AND M/S. BHAWANI EMPORIUM [2008 (10) TMI 617 - RAJASTHAN HIGH COURT] where it was held that For whatever reason the tax was not charged or collected, the operation of the said notification dated March 7, 1994 is plain and clear; and in view thereof, there would arise no question of the Revenue suggesting levy of purchase tax in the present cases. The said notification dated March 7, 1994 appears to be taking in its sweep the transactions of the present nature too and existing such notification, demand of purchase tax does not appear to be justified.
The appeal is disposed off, reserving liberty to the appellant herein to avail the remedies available in law, before the High Court vis-a-vis the impugned judgment - If an endeavour is made by the appellant to avail of the remedies available in law before the High Court within a period of four weeks from today, the issue of limitation may not be raised by the High Court.
Appeal disposed off.
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2023 (11) TMI 1161 - SC ORDER
Recovery of the amount refunded to the respondent assessee - respondent submitted that the impugned order has been complied with by the State Government inasmuch as the amount to be refunded to the respondent has in fact been refunded and therefore, the correctness or otherwise of the impugned order would not call for further consideration in this appeal - HELD THAT:- Having regard to the compliance of the directions issued by the Division Bench of the High Court made by the appellants herein the correctness or otherwise of the impugned order would not call for any further consideration. However, since the dispute between the parties is still at large and in the event the appellants herein are successful, liberty is reserved to the appellants to seek recovery of the amount refunded to the respondent-assessee in accordance with law.
Appeal disposed off.
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2023 (11) TMI 1160 - MADRAS HIGH COURT
Validity of notices issued under Section 12 (2) of TNGST Act - SCN issued beyond Period of limitation - limitation prescribed under TNGST Act to assess the income of the petitioner under Best Judgment Assessment - HELD THAT:- It appears that the present notices have been issued under Section 27 under the Best Judgment Assessment for the Assessment Years 2002-03, 2003-04 , 2004 – 05 and 2006-07 on 12.03.2015. The Assessment Years 2002-03, 2003-04, 2004-05 which would fall under TNGST Act, notices were issued under Section 12 (2) of the Act and for the Assessment Year 2006-07, notice was issued under Section 22 (4) of the VAT Act which came into effect on 01.01.2007. Therefore, notices were issued under TNGST Act and VAT Act by referring to Section 12 (2) after a period of nine months and under Section 22 (4) under VAT Act after a period of three months. In all these cases, no proceedings have been initiated within the maximum time limit provided in the Act, for the escaped turnover. Since no time limit has been fixed under the Best Judgement Assessment, the Court has taken into consideration with regard to the reasonable time limit, that is the maximum time limit provided under any other assessment proceedings which can be taken only if there is no time limit prescribed under any other provision.
In the present case, for the escaped turnover, the assessment under TNGST Act, the maximum time limit under Section 16 is five years and under the VAT Act, under Section 27, it is six years. No doubt, in the present case, Show Cause Notices were issued beyond the period of five years and six years against the respective assessment years. As this Court has taken a view that the time limit for passing an order under Section 22 (4) and 27 co-exist and no order under Section 22 (4) can be passed beyond the period of limitation, as prescribed under Section 27 of the Act.
This Court is of the view that the present notices came to be issued beyond the period of limitation, this Court is inclined to quash the impugned Show Cause Notices issued by the respondent - Petition allowed.
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2023 (11) TMI 1159 - MADRAS HIGH COURT
Violation of principles of natural justice - no notice was issued to the petitioner and no opportunity of personal hearing was afforded before passing impugned orders - Attachment of petitioner’s bank account - HELD THAT:- Had it been the real intention of the respondent-Department to provide an fair opportunity of personal hearing to the petitioner, then, the respondent- Department would obviously, granted sufficient time to the petitioner to hear them in person and waited for the petitioner's reply/objections. Whereas, the respondent-Department proceeded to confirm the proposals contained in the show cause notice, without waiting for reply to be filed by the petitioner.
Even the show cause notice, dated 04.03.2023 was not served upon the petitioner directly by means of post or any other communication, whereas, the same was uploaded in the online Portal. All these would go to show that the opportunities, alleged to have been granted to the petitioner are not the real ones, but were the opportunities provided at nominal level and the same cannot be construed as fair opportunities - as rightly pointed out by the learned counsel for the petitioner, the impugned order is in gross violation of principles of natural justice and liable to be set aside.
The matter is remanded to the first respondent/State Tax Officer for re-consideration - petition allowed by way of remand.
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2023 (11) TMI 1158 - DELHI HIGH COURT
Refund of stamp duty - Stamp papers purchased for registration of immovable property but the same could not be executed - Retention of 10% of the stamp duty - Constitutional Validity of Section 54 of the Indian Stamp Act, 1899 - ultra vires of Articles 265 and 300A of the Constitution of India or not - challenge to Section 54(c) of the Act as being ultra vires of Articles 14, 265 and 300A of the Constitution of India.
The refund claim rejected on the ground that the said application was filed beyond the period of six months from the date of purchase of the E-stamp Certificate.
HELD THAT:- It is settled law that stamp duty is chargeable on the instruments as stipulated in the said Schedule and not the transactions in respect of which the instrument is executed - It is apparent that, the duties in respect of which instruments are chargeable are to be reflected by stamps on those instruments. In terms of Section 11 of the Act, certain instruments may be stamped with adhesive stamps. Section 12 of the Act mandates that adhesive stamps be cancelled once used so that the same cannot be used again.
It is well settled that the right to refund the tax collected is governed by the statute governing the said tax. An assessee who has paid tax does not have any inherent right for refund of tax paid. In view of the above, the petitioner’s contention that the provisions of Section 50(2) of the Act, which provides for retention of 10% of the allowance for stamps is ultra vires to Article 265 of the Constitution of India or falls foul of Article 300A of the Constitution of India, is unmerited.
Section 49 of the Act provides for allowance for spoiled stamps. In terms of Clause (a) of Section 49 of the Act, a Collector can make an allowance in respect of a stamp inadvertently and undesignedly spoiled, obliterated or by error in writing or any other means rendered unfit for the purpose intended, prior to the instrument being executed. Further, an application for allowance is required to be made within the period as prescribed under Section 50 of the Act - Although, a Collector can make an allowance for the stamp paper only if an application is made within the period as prescribed. The life of the stamp paper is not circumscribed by Section 54(c) of the Act.
In the present case, the petitioner has been denied the refund as the condition under Section 54(c) of the Act has not been satisfied. However, if the stamp papers available with the petitioner are inadvertently obliterated or spoiled, the petitioner would have two months thereafter to apply for a refund of the stamp paper due. In our view, if the provisions of Section 54 of the Act are read in the aforesaid manner, the same are clearly arbitrary and unreasonable and are liable to be declared as ultra vires Article 14 of the Constitution of India - It is a well settled that a legislative enactment is presumed to be constitutionally valid unless it is found to be contrary. Additionally, it is also a well settled principle that the courts will, in so far as possible, construe a statute in a manner so that it does not fall foul of the constitution.
The denial of refund of the stamp duty collected even though no duty is payable because the charging event has not occurred and the cause of action for claiming the refund has not arisen, militates against the scheme of providing for allowance of stamps. Clearly, if the provisions of the Act are construed in a manner so as to permit collection and retention of stamp duty, which is not chargeable without any recourse for refund whatsoever, it would run contrary to the scheme of the Act. If Section 54 of the Act is read as restricting the right for seeking refund in a case such as the present one, it would suffer from the vice of arbitrariness and fall foul of Article 14 of the Constitution of India.
The present petition is disposed off by directing the Collector to process the petitioner’s claim for the refund of stamp paper (to the extent of 90% of the E-stamp paper) within a period two weeks from date.
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2023 (11) TMI 1157 - ALLAHABAD HIGH COURT
Rejection of appeal of the petitioner - Correctness of proceedings u/s 74 of the GST Act - petitioner failed to discharge its onus to prove and establish beyond doubt the actual transaction as well as the genuineness of the transactions - HELD THAT:- It is admitted fact between the parties that the goods have been shown to be purchased from M/s Krishna Trading Company, Mathura. In support thereof, tax invoice, e-way bill, weighment receipt before & after loading, bilty, etc. were filed and on the basis of the said documents, ITC was availed by the petitioner. Thereafter, on scrutiny, neither M/s Krishna Trading Company was found to be in existent, nor the persons, who issued the bilty and weighment slip, was found in existent. Once the very basis to show that the movement of goods has taken place was doubted, the petitioner, apparently, failed to prove actual physical movement of goods.
From the perusal of the record shows that the petitioner failed to discharge its onus to prove and establish beyond doubt the actual transaction, actual physical movement of goods as well as the genuineness of the transactions and as such, the proceedings have rightly been initiated against the petitioner under section 74 of the GST Act.
Thus, no interference is called for in the impugned order - petition dismissed.
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2023 (11) TMI 1156 - ORISSA HIGH COURT
Rejection of bail - fake entities created to pass on and avail Input Tax Credit under the GST regimen (ITC) to defraud government exchequer - exports declared are all bogus and fake - HELD THAT:- In RATNAMBAR KAUSHIK VERSUS UNION OF INDIA [2022 (12) TMI 263 - SUPREME COURT], the Hon’ble Supreme Court granted bail to the petitioner therein, the facts of the case being somewhat similar to the present case.
It is true that the allegation made against the petitioner is that he received the benefit of the amount that was granted to different entities to the tune of Rs. 7,79,52,045/-, obtaining refund of Rs. 7,79,52,045/- and it is contended by the prosecution/complainant that there is likelihood of the discovery of more such transaction, but it is also not disputed that the final prosecution report has been filed in the case. The petitioner was arrested on 11.07.2023, incarcerated for more than four months and the punishment provided is imprisonment which may extend to five years and fine and completion of trial in any event would take some time.
Since the alleged offence constitutes the act of crediting amount of ITC through the departmental Online system, to the account of the certain entities which have been alleged to be non-existent and the money has been subsequently received by the petitioner, the evidence tendered by the opposite party/complainant would essentially be documentary and electronic. The ocular evidence will be through official witnesses of the department due to which there can be no apprehension of tampering, intimidating or influencing.
This Court is inclined to grant the prayer for bail made by the petitioner subject to such stringent terms and conditions imposed - bail application allowed.
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2023 (11) TMI 1155 - ALLAHABAD HIGH COURT
Validity of seizure order as well as penalty order - variation in the description of good actually found with that mentioned in the documents - requirement to examine the documents accompanying the goods at the time of seizure - HELD THAT:- The finding that the parties had under valued the goods or there was any intention to avoid payment of correct amount as tax may justify seizure and penalty but cannot be made ground to not treat the petitioner as owner of the goods. The respondents ought to have examined the documents accompanying the goods at the time of seizure in terms of their own Circular dated 31.12.2018 in determining the said issue.
The order to the extent it seeks to reject the prayer for release of goods in favour of the petitioner, cannot be sustained. It is accordingly quashed to the said extent only. The second respondent is directed to reconsider the issue relating to release of goods in favour of the petitioner keeping in mind the Circular dated 31.12.2018 and the fact that invoice and e-way bill were found accompanying, the consignment of seized goods - Petition disposed off.
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2023 (11) TMI 1154 - KERALA HIGH COURT
Transitional credit - Condonation of delay in obtaining permission from commissioner u/s 140(5) - application filed belatedly after five years from the prescribed date - HELD THAT:- Section 140 of the CGST Act enables a registered person to take in its electronic credit ledger, the amount of CENVAT credit/input tax credit carried forward in the return for the period up to 30/6/2017. Sub-section (5) of Section 140 prescribed a condition for taking transitional credit. The condition is that the invoice or any other duty or tax paying document pertaining to the transitional credit has to be recorded in the books of account of the registered person within thirty days from the appointed day. i.e., within 30th July, 2017. Proviso to the said Section permits such entry of invoice in the books of account beyond the thirty days period by a further period of thirty days upon permission to be obtained from the Commissioner concerned.
The appellant has entered the invoices within the said extended period of sixty days. But admittedly, it did not obtain any order from the Commissioner extending the limitation period beyond thirty days. From a perusal of Sub-section (5) of Section 140 of the CGST Act, it is evident that beyond the period of thirty days, an assessee can claim the transitional credit of input tax within another thirty days only on production of an order passed by the Commissioner.
The Commissioner, therefore, rightly rejected the application. As the Commissioner did not extend the limitation period, the appellant cannot claim the benefit of transitional credit regarding input tax.
There are no no illegality or impropriety in the impugned judgment of the learned Single Judge - appeal dismissed.
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2023 (11) TMI 1153 - KERALA HIGH COURT
Input Tax Credit (ITC) - Failure of the supplier to deposit the Tax / GST amount - Failure to produce the Tax Invoice - constitutional validity of provisions of Section 16(2)(c) of the CGST Act and Rule 36(4) of the Central Goods and Services Tax Rules - HELD THAT:- It is settled that input tax credit is in the nature of a benefit/concession and not a right extended to the dealer under the statutory scheme. The said benefit can accrue to the assessee only as per the scheme of the statute - It is equally settled that the rule-making authority can provide restrictions in extending the concession. The benefit of an input tax credit can be availed by a purchasing dealer who sells or manufactures goods using raw materials on which tax has been paid only on satisfaction of the conditions for such availment enumerated in the statute.
One of the preconditions for the purchasing dealer to claim input tax credit under section 16 of the CGST Act is that he must produce the tax invoice issued by the supplying dealer. Coming to the facts of the cases, the appellants failed to produce the tax invoices despite sufficient opportunities extended. The appellants were issued a show cause notice under section 73(1) of the CGST/SGST Act. The appellants were called for a personal hearing. They did not appear for personal hearing either - The appellants did not discharge the said burden. They failed to produce any evidence to prove that they are entitled to the benefit of input tax credit. That apart, the appellants rushed to the writ court without exhausting the alternative appellate remedy.
Constitutional validity of Section 16(2)(c) of the CGST Act and Rule 36(4) of the CGST Rules - HELD THAT:- It is now well settled that any tax legislation may not be easily interfered with. The court must show judicial restraint to interfere with tax legislation unless it is shown and proved that such taxing statute is manifestly unjust or glaringly unconstitutional. Taxing statutes cannot be placed, tested or viewed on the same principles as laws affecting civil rights such as freedom of speech, religion, etc. The test of taxing statutes would be viewed on more stringent tests - Nothing in the impugned provisions indicates that they discriminate between the purchasing and selling dealers. As stated already, the input tax credit is in the nature of a benefit or concession conferred under the statute.
The impugned provisions prescribe certain conditions for the purchasing dealers to avail of the benefit. It is up to the purchasing dealer to avail of the said benefit/concession following those conditions. The prescription of the conditions cannot be considered discriminatory to contravene Article 14 - Nothing indicates that the impugned provisions satisfy the said test and thus manifestly arbitrary and glaringly unconstitutional. Under these circumstances, the challenge to the constitutional validity of the impugned provisions must fail.
There are no illegality or impropriety in the impugned judgments - appeal dismissed.
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2023 (11) TMI 1152 - KERALA HIGH COURT
Denial of claim for transitional credit in respect of inward supplies made before 01.07.2017 - petitioner’s application for extending the limitation for claiming the transitional credit within the extended period of limitation of sixty days rejected - HELD THAT:- From perusal of Sub-section (5) of Section 140 of the GST Act, it is evident that beyond the period of thirty days an assessee can claim the transitional credit of input tax within another thirty days on an order passed by the Commissioner. Unless the order is passed by the Commissioner extending the period of limitation up to sixty days or less than, an assessee cannot claim the input tax credit in respect of the inward supply taken before 01.07.2017 - In the present case, the petitioner claimed input tax credit in his return after the initial period of thirty days expired, but without any order from the Commissioner extending the period of limitation beyond thirty days.
It is not found that the Commissioner has committed any error of law or jurisdiction in rejecting the application which has been filed belatedly after five years from the prescribed date. As the limitation period was not extended, the petitioner has been denied the benefit of transitional credit in respect of input tax vide Exhibit P-5 order in original dated 13.03.2023.
There are no substance in the writ petition - petition dismissed.
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2023 (11) TMI 1151 - GUJARAT HIGH COURT
Estimation of income - bogus purchases - CIT(A) restricted the disallowance to the extent of 12.5% impugned purchase / disputed purchase - ITAT taking the consistent the disallowance of purchase in the present case restricted to 6% of the disputed purchases - HELD THAT:- On an identical question of law [2023 (1) TMI 835 - GUJARAT HIGH COURT] and held with the case of Shri Bhanwarlal Jain and others involved therein, if addition directed of 6% of the disputed purchases by noting that the profit margin in the said industry is 5% to 7% without even going by the estimation of the possible profit margin in the industry, suffice to note that in all cases relating to Shri Bhanwarlal Jain, both, the Assessing Officer and the CIT (Appeals), Mumbai, have chosen to make addition @ 3% to 5% of the bogus purchases. That view of the matter, no purpose is going to be served in interference. There are concurrent findings with sound reasons.
Also decided in Mayank Diamonds Pvt. Ltd. [2014 (11) TMI 812 - GUJARAT HIGH COURT] Court allowed the gross profit rate of 5% holding that 12.5% is drastically higher. In N.K. Industries Pvt. Ltd. [2016 (6) TMI 1139 - GUJARAT HIGH COURT] where the Court had considered the addition of entire amount on the ground that the fictitious purchases is a factually different than what was already held at M/s. Mayank Diamonds Pvt. Ltd., (supra). In the other cases of Shri Bhanwarlal Jain also, addition rates are 3% to 5% where no further challenge possibly is there or it has not been processed further.
Thus no substantial question of law arises for consideration of this court.
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2023 (11) TMI 1150 - ITAT MUMBAI
Addition u/s 68 - Having Two PAN and using differnt names - Validity of claim of the Assessee that he is running Hotel Management Business - assessee has made huge cash deposits in the bank account with Axis Bank operated in the name of Shri Rajiv Rama Pattanayak - assessee is filing two separate returns of income on two different names and PANs. - A.Y. 2010–11 - HELD THAT:- As no details are available on record as to whether TDS was deducted from the Hotel Management Charges. There are also no details regarding the purchase of raw materials for running the catering business during the year under consideration.
There is no breakup of various expenses charged to the profit and loss account against the income of Rs. 14,15,620 from Hotel Management Charges. Thus, we agree with the findings of the AO that the balance sheet does not show any fixed asset that can be used as a hotel, and the profit and loss account does not show payment of rent against the use of rented premises. It is evident from the record that sufficient opportunity was granted to the assessee during the reassessment proceedings to produce the documentary evidence in support of the submission that the income is earned from the Hotel Management Business.
Assessee neither before the lower authorities nor before us produced any evidence to substantiate its claim beyond doubt. Therefore, in the absence of satisfactory documentary evidence, we do not find any merit in the plea of the assessee that the income is on account of Hotel Management Business.
Assessee pleaded that the entire turnover cannot be brought to tax and only the real income embedded therein would be held as suppressed income - As assessee has not discharged its onus to satisfactorily prove the incurring of expenditure for running the alleged Hotel Management Business. Ledger account of the Hotel Management receipts and salary paid to the staff is also not furnished by the assessee in the year under consideration. Therefore, in the absence of satisfactory documentary evidence, the plea of the assessee is rejected and the addition made by the AO under section 68. - Decided against assessee.
Addition u/s 68 in receipts of agricultural activity - differences in address, non-mentioning of invoice no., the difference in the design of invoice, rate of paddy, and variation in the signature of the proprietor - reply to the notice issued under section 133(6) of the Act was not received from the genuine trader of the paddy - HELD THAT:- Assessee has managed to get the letter to his associates and prepared reply to it himself with forged signatures. In view of the facts and circumstances, we are of the considered view that if the Revenue doubts the genuineness of the documents submitted by the assessee then it is either required to direct the assessee to produce the person who has executed such document or issue summons to such person in this regard. The documents cannot be doubted without completing the enquiry in all respects. During the hearing, the learned AR placed on record the copy of the order passed by the learned CIT(A) for the assessment year 2013-14, wherein it was accepted that the assessee was involved in agricultural activity. However, from the record, it is evident that in the present case, the Revenue has doubted this aspect. Therefore, we deem it appropriate to restore this issue to the file of the AO for de novo adjudication after examination of all the details filed by the assessee. Assessee appeal allowed for statistical purposes.
Addition of the gift received from assessee’s mother - HELD THAT:- We are of the view that the AO is not an expert in handwriting and if there was any doubt regarding the mismatching of the handwriting of assessee’s mother then the opinion of the expert in this field could have been taken. Once the AO has chosen not to do so, rejecting the plea of the assessee on this basis appears to be merely a pretext.
As undisputed that the amount was given as a gift to the assessee in cash, and assessee’s mother has already furnished documents in terms of a registered sale deed along with the reply to the notice issued under section 133(6) of the Act which was not disputed by the Revenue.
Accordingly, we find no merits in placing reliance on the bank statement of the assessee’s mother particularly when aforesaid evidence is not doubted by the Revenue. Revenue has also not doubted the genuineness of the 7/12 extract furnished by assessee’s mother in respect of agricultural land owned by her and the certificate issued by the Gram Panchayat confirming the fact that she is a farmer. Therefore, when sufficient source i.e. receipt pursuant to the Memorandum of Understanding dated 30/01/2009, was furnished by assessee’s mother, we find no basis in doubting the payment in cash as a gift to the assessee. Accordingly, the addition made by the AO on this aspect is deleted. Assessee appeal allowed.
Addition in respect of gifts received from the mother, wife, and relatives.- A.Y. 2011–12 - HELD THAT:- As assessee did not furnish the bank statement of Mr. Bikash Chandra Shee or any other document to substantiate the creditworthiness of the donor. The ITR acknowledgement and gift deeds may prove the genuineness of the transaction and the identity of the donor, however, the creditworthiness of the donor is still not satisfactorily proved by the assessee. Accordingly, we find no infirmity in the findings of the learned CIT(A) in upholding the addition.
Cash received from mother - Since the relief of Rs. 1,65,000 has already been granted in the year 2010-11, the balance amount of Rs. 5,35,000 can be said to have been paid by the assessee’s mother from the aforesaid sum of Rs. 7,00,000 in the year under consideration. Accordingly, the addition to an extent of Rs. 5,35,000 received as a gift in cash from the mother is deleted. Regarding the balance amount of the gift received by the assessee in cash from his mother, we deem it appropriate to grant one more opportunity to the assessee, in the interest of justice, to substantiate its claim before the AO.
Gift in cash received from assessee’s uncle - As assessee has not submitted any bank account statement for the year under consideration to prove the genuineness of the transaction and the capacity of the donor. Accordingly, the learned CIT(A) dismissed the ground raised by the assessee on this issue. We find that even before us the documents as sought by the lower authorities have not been furnished by the assessee. Accordingly, we find no infirmity in the findings of the learned CIT(A) in upholding the addition.
Gift in cash from assessee’s father-in-law - As pertinent to note that the date of retirement is after the relevant financial year and thus any amount received on the retirement cannot be considered to be the source of gifting cash to the assessee. Further, apart from the aforesaid documents no other document has been placed on record which could prove the creditworthiness of the donor. The assessee has also not brought any evidence on record to controvert the detailed factual findings of the AO which have been upheld by the learned CIT(A). Accordingly, we find no infirmity in the findings of the learned CIT(A) in upholding the addition u/s 68 of the Act in respect of gift in cash received from Mr. Suresh Chandra Shee.
Gift in cash from assessee’s wife - Assessee filed a copy of ITR acknowledgement of the assessee for the assessment year 2011-12 wherein a gross total income of Rs. 2,79,038 has been disclosed - assessee has placed on record invoices of purchase of jewellery by his wife, however the same also does not prove the availability of funds with the assessee’s wife at the time of the gift of Rs. 11,95,000 in cash. Apart from the above, the assessee has not placed on record any other document to controvert the findings of the AO and the learned CIT(A). Accordingly, we find no infirmity in the findings of the learned CIT(A) in upholding the addition of Rs. 11,95,000 under section 68 of the Act in respect of gift in cash received from assessee’s wife.
Assessee submitted that the gifts are received from the mother, wife, and other relatives which are covered under Explanation (e) to section 56(2)(vii) of the Act, and thus the same is not taxable - As per section 68 of the Act the assessee is required to offer an explanation about the nature and source of any sum credited to his books to the satisfaction of the AO, and in this regard, the assessee is not only required to prove the identity of the creditor and genuineness of the transaction but also the creditworthiness of the creditor, which the assessee has failed to prove in case of certain transactions as noted above. Accordingly, mere reliance on Explanation (e) to section 56(2)(vii) of the Act would not absolve the assessee from the onus cast on him u/s 68.
Addition u/s 68 of the Act on the sale of ornaments - HELD THAT:- From the record, it is evident that apart from M/s Motaba & Sons Jewellers, Colaba, Mumbai the assessee has claimed that it has sold the jewellery to Mahavir Jewellers. However, as evident from the record, neither notice under section 133(6) of the Act nor summons u/s 131 were issued to Mahavir Jewellers. Further, the assessee claimed that the aforesaid statement of the proprietor of M/s Motaba & Sons Jewellers has been recorded at his back and no opportunity of cross-examination was granted to the assessee. Therefore, in view of the facts and circumstances as noted above, we deem it appropriate to restore this issue to the file of the AO for de novo adjudication. The AO is directed to grant the opportunity to cross-examine the proprietor of M/s Motaba & Sons Jewellers, Colaba, Mumbai to the assessee. Further, the AO is directed to verify the claim of the assessee in respect of the sale made to Mahavir Jewellers and if required to also issue necessary summons/notice under the Act for complete verification.
Appeal by the assessee is partly allowed for statistical purposes.
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2023 (11) TMI 1149 - ITAT RAIPUR
Validity of assessment u/s. 143(3) by change in incumbent but without issuance of order u/s. 127 - Violation of mandatory procedural provision - Assumption of jurisdiction by AO in competing the assessment proceedings u/s. 143(3) - assumption of jurisdiction by the ITO ward 1(4) without issuing any valid notice u/s. 143(2) - whether an order u/s. 127 was issued by the Ld. PCIT in the present case or not to effect the change of incumbent? - HELD THAT:- Admittedly, in the present case a notice u/s. 143(2) were issued by ITO ward 1(1) who is not having a valid jurisdiction in the case of assessee, however, subsequently the case was transferred to ITO ward 1(4), who is the jurisdictional AO for the assessee.
For change of incumbent no order u/s. 127 was issued by the Ld. PCIT having jurisdiction over such officers and the assessee’s case. From the report of the ITO ward 1(1) regarding issuance of order u/s. 127, mentioning that “it is not necessary an order u/s. 127 should be passed. Thus, does not mean that the Assessing Officer whether the return of income were earlier filed seized to have jurisdiction, provided the assessee has residence in his area place of business, class, income etc. residence can mean permanent residence as well as current or temporary residence of some permanence”, such explanations by the Ld. AO itself proves that no order u/s. 127 was issued by Ld. Principal Commissioner of Income Tax (PCIT).
In a case where the assessment proceedings are initiated by an Assessing Officer and the same are later on transferred to another AO then according to section 127(4) an order u/s. 127(1) & (2), irrespective of with or without concurrent jurisdiction, has to be issued at any stage of the proceedings, and shall not render necessary the reissue of any notice already issued by the Assessing Officers from whom the case is transferred.
Identical issue as been dealt in the case of Shri Bangalore Narayan [2023 (3) TMI 1403 - ITAT BANGALORE] as decided the issue of validity of assessment u/s. 143(3) by change in incumbent but without issuance of order u/s. 127, following the guiding principle of law laid down in the case of CIT vs Hotel Blue Moon [2010 (2) TMI 1 - SUPREME COURT] wherein it is held that, issue of a legally valid notice u/s. 143(2) is mandatory for usurping jurisdiction to frame scrutiny assessment u/s.143(3) of the Act and absence of a valid notice u/s. 143(2) is not a curable defect. The view taken in the case of Hotel Blue Moon (supra) was reiterated by Hon'ble Supreme Court in another case of CIT vs Laxman Das Khandelwal [2019 (8) TMI 660 - SUPREME COURT]
Issuance of notice u/s. 143(2) by the non-jurisdictional AO - Also issuance of a notice u/s. 143(2)(a) of the Act by the jurisdictional AO within the prescribed time limit is mandatory, without which the assessment order passed following such proceedings in violation of provisions of section 143(2)(a) is liable to be set aside. See S.K. industries [2017 (5) TMI 1800 - DELHI HIGH COURT]
Thus assessment proceedings in absence of an order u/s. 127 for change of incumbent embedded with no notice issued u/s. 143(2) by jurisdictional AO, cannot be validated merely because the notice was issued earlier by an AO not having valid jurisdiction over the case of assessee. Violating mandatory procedural provision of the Act, which is prerequisite for framing an assessment u/s. 143(3) rendered the entire assessment proceedings and the assessment order passed u/s. 143(3) of the Act without jurisdiction - Decided in favour of assessee.
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2023 (11) TMI 1148 - ITAT MUMBAI
Permanent Establishment in India - Dependent Agent (DAPE) - advertisement revenue - India-Mauritius DTAA - assessee is a foreign company, registered under the laws of Mauritius engaged in the business of telecasting its sports channel - “Ten Sports” - assessee appointed Taj India as advertising sales agent to sell commercial advertising time to prospective advertisers and other parties in India, in connection with business of programming and telecasting on “Ten Sports” / “Ten HD” / “Ten Golf” channels and to collect advertisement charges from Indian exporters and advertisers on behalf of the assessee - HELD THAT:- As in respect of Advertisement revenue no material has been brought on record by the Revenue that Taj India has habitually exercised the authority to conclude the contract on behalf of the assessee.
Therefore, with respect to Advertisement income, the Revenue failed to discharge the burden cast on it to prove that the twin conditions as laid down in Article 5(4)(i) of the India Mauritius DTAA are satisfied in the facts of the present case. Thus the conclusion of the coordinate bench of the Tribunal in the preceding year (cited supra) is equally applicable with respect to the Advertisement revenue and Taj India cannot be held to be a DAPE of the assessee in India under Article 5(4)(i) of the India-Mauritius DTAA in respect of the same. Accordingly, the conclusion of the learned CIT(A) on this issue is set aside and the ground raised by the assessee is allowed.
P.E. with respect to its Distribution function - As per the assessee, despite the grant of authority to the Taj India to enter into agreements with third parties on behalf of the assessee, no such agreement was entered, and therefore, the twin conditions as laid down in Article 5(4)(i) of the India-Mauritius DTAA are not satisfied in the present case - HELD THAT:- It is evident from the record that no material has been brought on record by the Revenue, in the present case, to show that Taj India has habitually exercised authority to conclude the contract on behalf of the assessee. In the absence of any allegation of any change in facts or law, we find no reason to deviate from the conclusion so reached by the coordinate bench in the aforesaid decision in assessee’s own case in the preceding assessment year. Accordingly, we find no infirmity in the findings of the learned CIT(A) in holding that the assessee does not have a P.E. with respect to its Distribution function.
As recently the coordinate bench of the Tribunal in assessee’s own case in Taj TV Ltd v/s DCIT [2023 (4) TMI 568 - ITAT MUMBAI] held that advertising and subscription income received by the assessee is not taxable in India as the assessee does not have any P.E. in India.
TDS u/s 195 - Non deduction of TDS on disallowance of programming cost, transponder fees, and uplinking charges - addition u/s 40(a)(ia) - HELD THAT:- We find that the coordinate bench of the Tribunal in assessee’s own case in ADIT v/s Taj TV Ltd. [2016 (8) TMI 504 - ITAT MUMBAI] while deciding the similar issue in favour of the assessee the programming cost is paid to the assessee to various non-resident outside India for acquiring right brought on sports events taking place outside India. Thus, such programming cost cannot be deemed to arise in India as liability to pay programming cost as assumed by the assessee company outside India and it cannot be held to be borne by any PE in India.
As in the aforesaid decision, the coordinate bench of the Tribunal after taking into consideration the decision of the Hon’ble Delhi High Court in CIT v/s New Skies Satellite BV [2016 (2) TMI 415 - DELHI HIGH COURT] held that the definition of the term “Royalty” as enlarged by the Finance Act, 2012 will not have any effect on Article 12 of the DTAA. We further find that in another decision rendered in assessee’s own case for the assessment year 2017-18 [2023 (4) TMI 568 - ITAT MUMBAI] the coordinate bench of the Tribunal deleted the disallowance made in respect of payment of programming costs, transponder fees, and uplinking charges.
Thus we find no infirmity in the impugned order deleting the disallowance of programming cost, transponder fees, and uplinking charges made under section 40(a)(i) - Decided in favour of assessee.
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