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Showing 101 to 120 of 1594 Records

2022 (9) TMI 1495 - ITAT RAJKOT

Exemption u/s 11 - Assessment of trust - rejecting application for registration u/s.12A - CIT (E) has rejected the application on the ground that none appeared before the CIT(Exemptions) - HELD THAT:- It is pertinent to note that the CIT(Exemptions) has categorically quoted the details required on behalf of the assessee Trust but the assessee within the stipulated time could not produce the same. After going through the appeal records, it is found that there is a delay of filing the appeal before us of 568 days which was not explained by the assessee at any point of time.

But, since the assessee has not been given any opportunity of hearing for placing the documents called for by the CIT (Exemptions), we are condoning the delay and direct the CIT(Exemptions) to consider the application of the assessee filed under Section 12AA after taking cognisance of the details filed before the CIT(Exemptions). Needless to say the assessee be given opportunity of hearing by following the principles of natural justice. We further direct the assessee to co-operate with the proceedings and file the relevant details within the stipulated time given by the CIT(Exemptions) otherwise the CIT(Exemptions) can decide the case according to the law. Assessee appeal is partly allowed for statistical purpose.
2022 (9) TMI 1494 - CALCUTTA HIGH COURT

Proceeding with an ex parte hearing - application made by the Appellant for adjournment of the hearing - HELD THAT:- We find that the assessee did not appear before the tribunal and the tribunal records that a request for adjournment was made. However, the tribunal was not convinced with the reasons cited for seeking an adjournment. Before us the learned advocate appearing for the applicant would submit that the appellant had prayed for adjournment of the hearing fixed by the tribunal on January 31, 2022 because of ill health of the appellant and this aspect ought to have been considered by the tribunal and a more liberal approach could have been adopted. Further, the learned advocate appearing for the appellant sought to canvas various grounds on the merits of the matter.

In our considered view, the appeal being of the year 2021 and it appears that on the first hearing date, that is, 31st January, 2022 adjournment was sought for on the ground of ill health of the appellant. However, there is no medical certificate produced before us to justify such a stand. We are of the view that since the alternative remedy available to the assessee before the learned tribunal is an effective and efficacious remedy more particularly because the learned tribunal is the last fact finding forum in the hierarchy of the authorities, therefore, we are of the view that one more opportunity should be granted to the assessee to contest the appeal on merits.

Appeal is allowed and the order passed by the learned tribunal is set aside and the appeals are restored to the file of the learned tribunal to be heard and decided on merits in accordance with law.
2022 (9) TMI 1493 - ITAT DELHI

Unexplained cash deposits in the bank account - unexplained money u/s 69A - rejecting the explanation and evidences filed by the assessee - addition made invoking provisions of Section 115BBE - HELD THAT:- As decided in Shri Mathew Philip case [2019 (11) TMI 1404 - ITAT COCHIN] cash withdrawals from bank account continues remains as cash balance with the assessee even for many month and for sometimes cash withdrawn is utilized on the same day. All these probable aspect of the matter cannot be simply ignored or brushed aside but the facts remains that the factum of cash withdrawn from bank is not at all disputed.

It is not a case of the AO that the amount withdrawn from bank account was utilized or deposited somewhere else, it was CIT(A) who improvised the stand of revenue by taking into consideration. The amounts contemplated by the assessee to the family to meet routine expenses. As explained by the assessee before ld. CIT(A) that the family size of assessee’s is 10 comprising assessee, his wife, two sons and two daughters-in-law and four grandchildren.

In this situation when the son of assessee is doing construction business and other sons and both the daughters-in-law are also earning then the contribution of assessee Rs.20,000/- per month for household expenses and other expenses cannot be held as in sufficient and the ld. CIT(A) cannot allowed to make a new case as an appellate stage.

Unless and until, revenue authorities bring on record positive or adverse material to establish that the amount withdrawn by the assessee from his bank account was utilized or deposited somewhere else and the impugned amount of cash deposited was not the same which was withdrawn by the assessee from his bank account. The addition u/s 69A of the Act would not survive and thus, cannot be held as sustainable on the touch stone of principles of tax jurisprudence.

The main allegation leveled by the ld. CIT(A) that it is a highly, unlikely someone huge cash for so long is not tenable and sustainable - Decided in favour of assessee.
2022 (9) TMI 1492 - MADRAS HIGH COURT

Money Laundering - the Settlement Commissioner completed the work that was assigned to him and submitted a report to this court, based on which, the prosecution in C.C. No. 3876 of 2009 was quashed by this Court - HELD THAT:- Reliance placed in the case of [2022 (7) TMI 1316 - SUPREME COURT], where it was held that The offence under Section 3 of the 2002 Act is dependent on illegal gain of property as a result of criminal activity relating to a scheduled offence. It is concerning the process or activity connected with such property, which constitutes the offence of money-laundering. The Authorities under the 2002 Act cannot prosecute any person on notional basis or on the assumption that a scheduled offence has been committed, unless it is so registered with the jurisdictional police and/or pending enquiry/trial including by way of criminal complaint before the competent forum. If the person is finally discharged/acquitted of the scheduled offence or the criminal case against him is quashed by the Court of competent jurisdiction, there can be no offence of money-laundering against him or any one claiming such property being the property linked to stated scheduled offence through him.

In view of the aforesaid categorical pronouncement of the Supreme Court, the quash petition deserves to be allowed since the prosecution of the accused in the predicate offence has already been quashed by this court - petition allowed.
2022 (9) TMI 1491 - CALCUTTA HIGH COURT

Detention of goods along with the vehicle which was transporting footwear - validity of e-way bill had expired - HELD THAT:- No useful purpose will be served in keeping the writ petition pending since the entire tax has been recovered when the goods were imported from Nepal and crossed the customs barrier into India. If at all the respondent authorities for alleged violation of the provisions of CGST Act are to initiate action the question of imposition of penalty could arise.

The writ petition and the appeal can be disposed of by issuing certain directions, which can not only safeguard the interest of the appellant but also that of the revenue.
2022 (9) TMI 1490 - SUPREME COURT

Corruption - acquiring assets disproportionate to the known source of income - Investigating Officer wrongly declined to consider the explanation offered by the Respondent No. 1 as regards the allegations and also failed to take into consideration the lawful assets of the Respondents - Accused persons had disclosed their income to the income tax authorities in accordance with the provisions of the Income Tax Act - principle of preponderance of probability - discharge (by High Court) from the prosecution in exercise of revisional powers meant for doing substantial justice - Scope of exercise of Revisional power at the stage of charge.

Whether the High Court committed any error in discharging both the Accused from the charges levelled against them?

HELD THAT:- The reason why the impugned orders passed by the High Court are utterly incomprehensible is because the High Court has not been able to comprehend the true scope and ambit of Section 239 of the Code of Criminal Procedure. The High Court has also not been able to comprehend in what set of circumstances the revisional powers Under Section 397 read with Section 401 of the Code of Criminal Procedure are to be exercised - the High Court seems to be labouring under a serious mis-conception of law as is evident from the two impugned orders and such erroneous mis-conceptions need to be eradicated.

The learned Counsel appearing for the State rightly submitted that at the stage of consideration of discharge Under Section 239 of the Code of Criminal Procedure only a prima facie case is to be seen and the Special Court having recorded a satisfaction with regard to the existence of a prima facie case there cannot be said to be any material error or illegality in the orders assailed before the High Court.

The primary consideration at the stage of framing of charge is the test of existence of a prima facie case, and at this stage, the probative value of materials on record is not to be gone into - The provisions which deal with the question of framing of charge or discharge, relatable to: (i) a sessions trial or, (ii) a trial of warrant case, or (iii) a summons case, are contained in three pairs of Sections under the Code of Criminal Procedure. These are Sections 227 and 228 reply in so far as, the sessions trial is concerned; Sections 239 and 240 reply relatable to the trial of warrant cases; and Sections 245(1) and 245(2) reply in respect of summons case.

The Sections (mentioned in above para) indicate that the Code of Criminal Procedure contemplates discharge of the Accused by the Court of Sessions Under Section 227 in a case triable by it, cases instituted upon a police report are covered by Section 239 and cases instituted otherwise than on a police report are dealt with in Section 245. The three Sections contain somewhat different provisions in regard to discharge of the Accused. As per Section 227, the trial judge is required to discharge the Accused if "the Judge considers that there is not sufficient ground for proceeding against the Accused". The obligation to discharge the Accused Under Section 239 arises when "the Magistrate considers the charge against the Accused to be groundless". The power to discharge Under Section 245(1) is exercisable when "the Magistrate considers, for reasons to be recorded, that no case against the Accused has been made out which, if unrebutted would warrant his conviction". Sections 227 and 239 reply provide for discharge being made before the recording of evidence and the consideration as to whether the charge has to be framed or not is required to be made on the basis of the record of the case, including the documents and oral hearing of the Accused and the prosecution or the police report, the documents sent along with it and examination of the Accused and after affording an opportunity to the parties to be heard. On the other hand, the stage for discharge Under Section 245 is reached only after the evidence referred to in Section 244 has been taken.

Despite the slight variation in the provisions with regard to discharge under the three pairs of Sections referred to above, the settled legal position is that the stage of framing of charge under either of these three situations, is a preliminary one and the test of "prima facie" case has to be applied -- if the trial court is satisfied that a prima facie case is made out, charge has to be framed.

In the case of Som Nath Thapa [1996 (4) TMI 515 - SUPREME COURT], a three-Judge Bench of this Court, after noting the three pairs of Sections i.e. (i) Sections 227 and 228 reply in so far as the sessions trial is concerned; (ii) Sections 239 and 240 reply relatable to the trial of warrant cases; and (iii) Sections 245(1) and (2) qua the trial of summons cases, which dealt with the question of framing of charge or discharge, stated thus if the court were to think that the Accused might have committed the offence it can frame the charge, though for conviction the conclusion is required to be that the Accused has committed the offence. It is apparent that at the stage of framing of a charge, probative value of the materials on record cannot be gone into; the materials brought on record by the prosecution has to be accepted as true at that stage.

In the context of trial of a warrant case, instituted on a police report, the provisions for discharge are to be governed as per the terms of Section 239 which provide that a direction for discharge can be made only for reasons to be recorded by the court where it considers the charge against the Accused to be groundless. It would, therefore, follow that as per the provisions Under Section 239 what needs to be considered is whether there is a ground for presuming that the offence has been committed and not that a ground for convicting the Accused has been made out - The suspicion referred to by this Court must be founded upon the materials placed before the Magistrate which leads him to form a presumptive opinion as to the existence of the factual ingredients constituting the offence alleged. Therefore, the words "a very strong suspicion" used by this Court must not be a strong suspicion of a vacillating mind of a Judge. That suspicion must be founded upon the materials placed before the Magistrate which leads him to form a presumptive opinion about the existence of the factual ingredients constituting the offence alleged.

The provisions of discharge Under Section 239 of the Code of Criminal Procedure fell for consideration of this Court in K. Ramakrishna and Ors. v. State of Bihar and Anr. [2000 (9) TMI 1089 - SUPREME COURT], and it was held that the questions regarding the sufficiency or reliability of the evidence to proceed further are not required to be considered by the trial court Under Section 239 and the High Court Under Section 482.

Scope of exercise of Revisional power at the stage of charge - HELD THAT:- The revisional power cannot be exercised in a casual or mechanical manner. It can only be exercised to correct manifest error of law or procedure which would occasion injustice, if it is not corrected. The revisional power cannot be equated with appellate power. A revisional court cannot undertake meticulous examination of the material on record as it is undertaken by the trial court or the appellate court. This power can only be exercised if there is any legal bar to the continuance of the proceedings or if the facts as stated in the charge-sheet are taken to be true on their face value and accepted in their entirety do not constitute the offence for which the Accused has been charged. It is conferred to check grave error of law or procedure - This Court in Asian Resurfacing of Road Agency Pvt. Ltd. v. Central Bureau of Investigation [2018 (4) TMI 3 - SUPREME COURT], has held that interference in the order framing charges or refusing to discharge is called for in the rarest of rare case only to correct the patent error of jurisdiction.

The High Court has acted completely beyond the settled parameters, as discussed above, which govern the power to discharge the Accused from the prosecution. The High Court could be said to have donned the role of a chartered accountant - The High Court has completely ignored that it was not at the stage of trial or considering an appeal against a verdict in a trial.

Section 13(1)(e) of the Act 1988 makes a departure from the principle of criminal jurisprudence that the burden will always lie on the prosecution to prove the ingredients of the offences charged and never shifts on the Accused to disprove the charge framed against him. The legal effect of Section 13(1)(e) is that it is for the prosecution to establish that the Accused was in possession of properties disproportionate to his known sources of income but the term "known sources of income" would mean the sources known to the prosecution and not the sources known to the Accused and within the knowledge of the Accused - The Accused cannot make an attempt to discharge this onus upon him at the stage of Section 239 of the Code of Criminal Procedure. At the stage of Section 239 of the Code of Criminal Procedure, the Court has to only look into the prima facie case and decide whether the case put up by the prosecution is groundless.

The impugned orders passed by the High Court discharging the Accused persons from the prosecution are hereby set aside. The Special Court shall now proceed to frame charge against the Accused persons in accordance with law and put them to trial - Appeal allowed.
2022 (9) TMI 1489 - TELANGANA HIGH COURT

Benami Property Transactions - Retrospective application of law enacted in the year 2016 - HELD THAT:- As submitted that the present writ petitions are covered by the common judgment delivered in M/s. Neopride Pharmaceuticals Limited v. The Adjudicating Authority [2022 (9) TMI 1356 - TELANGANA HIGH COURT] wherein held provisional attachment orders as well as the adjudicating orders passed by the various authorities under the Benami Property Act as amended by the Amendment Act of 2016 impugned in the batch of writ petitions cannot be sustained.

Accordingly, the present writ petitions are also allowed in terms of the aforesaid judgment. Miscellaneous applications pending, if any, shall stand closed.
2022 (9) TMI 1488 - GUJARAT HIGH COURT

Depreciation on oil wells - @10% OR 80% - what constitutes and what is included in "Plant" for the purposes of Section 32 ? - Tribunal confirmed CIT (A) order to hold that oil well was Plant & Machinery as eligible for depreciation as Plant & Machinery Depreciation, @80% as claimed by the assessee - HELD THAT:- All such things and tools which become plant, if they are part and parcel of the plant, functioning would aid an assessee's business activity.

In Niko Resources [2016 (7) TMI 1328 - GUJARAT HIGH COURT] it was accordingly held reversing the decision of the Tribunal that the Tribunal was not right in law in treating mineral oil wells as Buildings for the purpose of applying rate of depreciation under Section 32 of the Act. It was held that mineral oil wells constitute "Plant" for the purpose of Section 32 of the Act.

ITAT did not erred in law and on facts in allowing the depreciation on oil wells treating the same as Plant and Machinery - No substantial question of law.
2022 (9) TMI 1487 - MADRAS HIGH COURT

Proceedings u/s 276CC - not filing the returns for the accounting year 2013-14 - petitioner contends as before launching the criminal prosecution, the respondent ought to have conducted enquiry based on the material available and ought to have heard the Assessee - HELD THAT:- This Court on perusing the records, finds that the petitioner, who is an income tax Assessee and had taxable income, ought to have submitted his returns for the income in the year 2013-14 soon after completion of the financial year on or before 30th September 2013, as per Section 139(1) of the Income Tax Act.

Admittedly, in his reply notice, the petitioner had sought time to file his returns by 30th September, 2016. Even after 30th September 2016, he has not filed his return. Therefore, provision under Section 276CC of Income Tax Act squarely attracts for prosecuting the petitioner. Only after waiting till 30th September, 2016, the prosecution has been launched in the month of December, 2016.

This Court finds no legal error or infirmity in the complaint, which is taken on file by the learned Additional CMM II - Accordingly, this Criminal Original Petition for quash is dismissed.
2022 (9) TMI 1486 - ITAT MUMBAI

Assessment u/s 153A - Unexplained credit u/s 68 - undisclosed income of the assessee - HELD THAT:- To move into motion section 153C of the Act something belonging to the assessee must be found in the premises of searched person and at the same time “incriminating material” should be qua the each assessment year.

Hon’ble Supreme Court while deciding the scope of section 153C in case of Sinhgad Technical Education Society (2017 (8) TMI 1298 - SUPREME COURT) held that incriminating material which was seized had to be pertained to the assessment year in question and this is the basic requirement u/s 153C which is essential for the assessment under that provision which becomes a jurisdictional issue. In the instant case also no “incriminating material” is there qua the years under consideration. Even in the bank statement available name of the assessee is not there and as such very initiation of the assessment proceedings u/s 153C of the Act is not sustainable in the eyes of law.

Thus as very initiation of assessment made under section 143(3) read with section 153C of the Act has not withstood the judicial scrutiny on account of jurisdictional defect there is no need to go into the merits qua the addition/deletion made by AO/ Ld. CIT(A). Decided in favour of assessee.
2022 (9) TMI 1485 - DELHI HIGH COURT

Maintainability of the writ petition against SEBI - efficacious alternative remedy of preferring an appeal in terms of Section 15T - Recovery proceedings against past director - HELD THAT:- It would be open to the Recovery Officer to examine all issues and contentions including that of the petitioner not being liable in terms of the original order passed. Judge had further observed that in case the Recovery Officer find merit in the challenge so raised, it would not continue the proceedings as initiated against the petitioner.

It was further observed that in case it reached a contrary conclusion, it would be open for the Board to continue to hold the monies and utilise the same in accordance with law. Learned counsel seeks to draw sustenance from the fact that subsequently and pursuant to the directions issued by this Court on the earlier writ petition, the Recovery Officer had in fact by an order of 22 March 2018 withdrawn all proceedings which had been initiated against the petitioner. It is in aforesaid backdrop that learned counsel contended that the petitioner is not liable to be relegated to the alternative remedy.

The Court finds itself unable to sustain the aforesaid submission for the reason that the order of the Recovery Officer does not record any categorical findings on whether the petitioner was or was not liable in terms of the original order which had been made by the Board.

The issues which were canvassed before this Court in the earlier writ petition thus do not appear to have been decided or ruled upon on merits. In any case, the present proceedings which flow from the power of the respondents to levy penalties under the Act stand on a completely distinct footing.

In that view of the matter, it would be appropriate for the petitioner to raise all objections and contentions before the Appellate Tribunal.
2022 (9) TMI 1484 - ITAT DELHI

Disallow 10% of the expenses excluding the commission expenses - HELD THAT:- CIT(A) is of the opinion that no disallowance out of commission expenses on ad-hoc basis is called for. Further, in so far as, other expenses concerned, which are incurred partly in cash, therefore, the same are not fully verifiable. Accordingly, the Ld.CIT(A) has directed to disallow 10% of the expenses excluding the commission expenses.

Neither the A.O nor the CIT(A) have discussed the details of the expenses and how the assessee has failed to prove the genuineness of the expenses, but proceeded to disallow the expenses without pointing out the defects in the accounts of the assessee. Therefore, in our opinion, the entire approaches of the Lower Authorities are erroneous.

Accordingly, the disallowance sustained by the CIT(A) is hereby deleted. Decided in favour of assessee.
2022 (9) TMI 1483 - SC ORDER

Smuggling - Gold Biscuits - Foreign Origin Goods - increase from 1166g to 1283g - confiscation - penalty - HELD THAT:- The SLP is dismissed.
2022 (9) TMI 1482 - MADRAS HIGH COURT

Validity of Sl.No.9 (ii) of Notification No.8/2017-Integrated Tax (Rate), dated 28.06.2017, and Sl.No.10 of Notification No.10/2017-Integrated Tax (Rate), dated 28.06.2017 - recipient as per Reverse charge mechanism - HELD THAT:- The issue is no longer res integra and is covered in favour of the petitioners in terms of the decision of the Hon'ble Supreme Court in UNION OF INDIA & ANR. VERSUS M/S MOHIT MINERALS PVT. LTD. THROUGH DIRECTOR [2022 (5) TMI 968 - SUPREME COURT] where it was held that The IGST Act and the CGST Act define reverse charge and prescribe the entity that is to be taxed for these purposes. The specification of the recipient – in this case the importer – by Notification 10/2017 is only clarificatory. The Government by notification did not specify a taxable person different from the recipient prescribed in section 5 (3) of the IGST Act for the purposes of reverse charge.

These Writ Petitions stand allowed.
2022 (9) TMI 1481 - NATIONAL FINANCIAL REPORTING AUTHORITY

Professional Misconduct - Failure to Report Lapses in Accounting of Interest Costs pertaining to Borrowings classified as NPAs - Other Lapses in conduct of Audit - overstatement of profits by the company.

Non-compliance with the Standards - HELD THAT:- On the issue of non-compliance with the SAs and professional misconduct, the EPs replies are listed at paras 8.2 and 8.8. The reply at Para 8.8 is particularly interesting where he states that the job of an auditor must be judged on the basis of outputs and not on the quality of notings made. He goes on to say that civil servants and judiciary are given appropriate immunity under the law where decisions are made in good faith - The analogy made by the EP in his reply at para 8.8 is misplaced and out of context. The output of his work is the moot point in question. The output required of an auditor of a Public Interest Entity (PIE), is absent and the same has been pointed out in the context of SAs. But the attitude of the EP is to vehemently deny all the charges on the plea of him having taken audit decisions based on discussions which are neither recorded nor evidenced.

Non-recognition of interest costs on Borrowings classified as NPAs - HELD THAT:- The EP has overlooked this important lapse in the accounts of the company, which has resulted not merely in understating the costs, but also overstating the profits of the company and thereby misstating financial statements of the company, which do not reflect true and fair view of financial statement as required by Section 129 of CA-13. But attitude of the EP is not that of accepting this mistake, but of flatly denying all charges on grounds which show that he has no understanding of the Ind AS or the SAs, which is fundamental for any auditor specially those auditing PIE.

Lapses in Audit Documentation - HELD THAT:- The EP believes that there was no reason to maintain audit evidence and documentation on material issues and therefore based his opinion merely on discussions with the management. This cavalier and irresponsible attitude is alarming and shows the EP's lack of knowledge of the Standards and Procedures. This approach and attitude of EP militates against the fundamental objectives of SA 230, para 10 of which requires an auditor to document discussions of significant matters with management, those charged with governance, and others, including the nature of the significant matters discussed and when and with whom the discussions took place.

Non-appointment of EQCR - HELD THAT:- VWL is a listed entity and thus it was mandatory for the auditor of VWL to engage an EQCR partner for review of the audit work.

Penalty - HELD THAT:- Section 132(4) of the Companies Act, 2013 provides for penalties in a case where professional misconduct is proved. The seriousness with which the Companies Act views proved cases of professional misconduct is evident from the fact that a minimum punishment is laid down by the law. While determining the penalty in this case, several factors have been considered.

In light of the proved professional misconduct by CA Som Prakash Aggarwal, the aggravating circumstances of such conduct, the nature of violations and applying the principles of proportionality, the following sanctions under Section 132(4)(c) of the Companies Act, 2013 issued:

(i) Imposition of a monetary penalty of Rs. 3,00,000 (Three Lakhs only) upon CA Som Prakash Aggarwal.

(ii) CA Som Prakash Aggarwal is debarred for three years from being appointed as an auditor or internal auditor or undertaking any audit in respect of financial statements or internal audit of the functions and activities of any company or body corporate.
2022 (9) TMI 1480 - ITAT BANGALORE

Inflation of labour charges - According to the learned A.O., these labour charges are prepared by one or two persons and signatures of the receiving parties were not found in few of the vouchers and all payments are made in cash - HELD THAT:- When the self-made vouchers are prepared in-housely, it must be prepared by inhouse persons only and as such, it has common pattern and that cannot be reason to doubt the genuineness of the payment. The assessee cannot carry on this business without incurring the expenditure. The allegation of the AO is that the vouchers are prepared at a stretch on one or two days during the financial year. There is no basis for this kind of allegation made by the AO and he has not brought anything on record to establish this contention of him. Being so, we have to reject this plea of the revenue authorities. In our opinion, considering the nature of the business of the assessee, we can take the judicial notice of the fact that if the AO had any doubt with regard to genuineness of any one of the voucher produced by the assessee, he could have drawn sample vouchers and called upon the assessee to produce the concerned recipient to establish the genuineness. Without doing so, making any adhoc disallowance is not legally sustainable.

In our opinion, the impugned expenditure in fact claimed to have been incurred by the assessee wholly and exclusively for the purpose of its business and it cannot be said that this expenditure is bogus or fictitious and cannot be said that it has not been incurred by the assessee for the purpose of business. We do not see remotely there is any mention of rationale in arriving at the percentage of disallowance in the present case, and secondly, we find force in the claim of assessee that devoid of any specific infirmity in the books of accounts of the assessee, disallowance of labour charges expenditure by the lower authority is not proper and the adhoc disallowance made by authorities in most ordinary manner. In our opinion, to estimate any disallowance the first and foremost thing is that the A.O. has to reject the books of accounts by observing that books of accounts are not reliable and not verifiable. Then he has to specify the each entry which are to be considered as bogus or unverifiable and only to that extent he can make disallowance. In the present case, in a wholesome manner the A.O. made disallowance on estimate basis without rejecting the books of accounts. However, Ld. CIT(A) sustained this addition to the tune of 10% in A.Y. 2007-08 to 2011-12 and 2.5% in A.Y. 2012- 13 & 2013-14. This is having no legal sanction - Thus, we delete the addition and allow the ground taken by the assessee.

Speed money payment - AO considered seized material marked as 1/Dock/3 & 4 which has been placed at assessee’s paper book Nos. 219 to 223, which contains details of the payment made by the Supervisors unloading cargo on 29.4.2010 from a ship known as M.V. ALEX “D”. On that basis, AO was of the opinion that the speed money payment was between Rs. 23 to 26 per M.T. - HELD THAT:- A.O. cannot put himself in the chair of businessman and assume the role to decide how much is reasonable expenditure having regard to the circumstances of the case. No businessman can be compelled to maximize his profit. The A.O. must put himself in the shoes of the assessee and see how a prudent businessman would act. The A.O. must not look at the matter from their own view point but that of a prudent businessman. A businessman’s sole intention is to run the business and earn profit. In the course of carrying such business, he has to incur expenditure and in the present case, the business is such a nature that loading and unloading has to be done on priority. Otherwise, the shipping person has to incur huge loss in the form of demurrage or damages. In order to avoid such heavy charges, in different times of day & night the assessee has to hire the labourers to do the loading and unloading of ship even by paying extra charges due to urgent need of the same. In such situation, the assessee may be forced to pay extra amount in the interest of the business and in that act of the assessee, AO cannot find fault and observe that he should reduce the expenditure so as to pay the maximum income-tax to the government.

In our opinion, in view of above discussion, the disallowance made by AO is only on conjectures and surmises basis, which cannot be applied. Accordingly, adhoc disallowance made by AO is deleted.

Payments made to sub-contractors - AO notes that the amounts paid to the employee sub-contractors are immediately drawn through bearer cheques - A.O. has disallowed the expenditure stating that the assessee exercises control over the employee sub-contractors and that the payments made by them are infact the expenses of the assessee itself, which ought to have been incurred by it directly - HELD THAT:- In our opinion, hiring assessee’s employees as a sub-contractors and making payment to them cannot be reason to disallow this expenditure. There is no provision under any provisions of the Act to hire assessee’s own employees as a sub- contractors and there is no allegation that these expenditure not incurred by the assessee for the purpose of business. In such circumstances, when the assessee paid the amount to its sub- contractors though they were the employees of the assessee that expenditure cannot be disallowed unless there is a material is brought on record to suggest that this is a fictitious expenditure. More so, when the income was offered by the sub-contractors has been accepted by the department as their income and subject to the assessment thereafter, they cannot deny the payment of that expenditure in the hands of assessee. On this count also, this expenditure to be allowed in the hands of the assessee and that cannot be partial or adhoc disallowance in the hands of the assessee. Accordingly, we dismiss this ground of revenue in all the above appeals.

Illegal payment - speed money paid consisted of illegal gratification to government servants - HELD THAT:- As discussion with regard to speed money in earlier para, the addition is deleted on similar line as expenditure incurred wholly and exclusively for the purpose of business and it cannot be considered as payment by assessee is towards any illegal gratification as the AO has not brought on record iota of material for making such allegation. Accordingly, addition is deleted on this count. This ground of revenue is dismissed in all the revenue’s appeals.

Disallowance of bad debts was not made in the original return of income filed - HELD THAT:- The assessee claimed bad debt in the revised return. In our opinion, reassessment is for the benefit of revenue and originally, the assessee has not claimed the bad debt in the original return of income. Being so, assessee cannot claim bad debt in the reassessment proceedings. Accordingly, this ground of assessee is dismissed.

Assessment u/s 153A - incriminating material found in search or not? - HELD THAT:- As completed assessment cannot be tinkered without the support of any incriminating material found during the course of search. Therefore, the assessment framed for assessment 2006-07 without any incriminating material, the AO was not justified in framing assessment u/s 153A r.w.s. 143(3) of the Act as there was no seized material relating to AY 2006-07 was found during search action. It is not the case of AO that the seized material, if any suggested the inflation of expenditure. Hence, the framing of assessment for the assessment year 2006-07 cannot be upheld.
2022 (9) TMI 1479 - NATIONAL FINANCIAL REPORTING AUTHORITY

Professional misconduct - Non-compliance with the auditing standards by the Statutory Auditor - material misstatements of various figures and disclosures - False reporting by Auditor in Independent Auditor's Report - Failure to comply with Standards on Auditing - Failure to report non compliances with Accounting Standards and provisions of the Companies Act 2013.

False reporting by Auditor in Independent Auditor's Report - HELD THAT:- The EP has accepted that the disclosure about SBN was not part of Financial Statements. In fact, once the company has not made a disclosure on SBN, the Auditor was duty bound to question the same and make a mention of the same in the audit report. On the contrary the EP has tried to mislead us by stating that he sent an unsigned disclosure to the company which was ultimately not placed in the Financial Statements. This reply is an attempt to cover up and mislead thereby reflecting a reckless and unprofessional behavior on the part of the EP.

Failure to comply with Standards on Auditing (SAs) - HELD THAT:- The EP was charged with non-compliance to SA 200, SA 210, SA 220, SA 260, SA 265, SA 300, SA 315, SA 320, SA 330, SA 500, SA 505, SA 520, SA 580, SA 700, SA 710 and SA 720 - on examining the reply of the EP regarding non communication with the company and Systems breakdown in the paragraphs and found them not acceptable. Therefore, the EP has not complied with the aforementioned SAs.

Non compliances with Accounting Standards (AS) and Provisions of the Companies Act 2013 - HELD THAT:- The EP has made a series of serious departures from the Standards and the Law, in conduct of the audit of TDML for FY 2016-17. Based on discussion, it is proved that EP had issued unmodified opinion on the Financial Statements without any basis. The poor quality of Audit followed by the cover up in terms of Cash Flow Statement that did not exist at the time of Audit, incomplete documentation and attempt to mislead through evasive replies further compounds the professional misconduct on the part of the EP.

The charge is proved since the EP failed to conduct the audit in accordance with the SAs but falsely reported in his audit report that the audit was conducted as per SAs - all the charges of professional misconduct in the SCN stand proved based on the evidence in the Audit File, the Audit Report dated 30th May 2017 issued by the EP, the submissions made by the CA, and the Annual Report of TDML for the FY 2016-17.

Penalty - HELD THAT:- Section 132(4) of the Companies Act, 2013 provides for penalties in a case where professional misconduct is proved. The seriousness with which proved cases of professional misconduct are viewed, is evident from the fact that a minimum punishment is laid down by the law - The EP in the present case was required to ensure compliance with SAs to achieve the necessary audit quality and lend credibility to Financial Statements to facilitate its users. As detailed in this order, substantial deficiencies in Audit, abdication of responsibility and inappropriate conclusions on the part of CA Rajiv Bengali establish his professional misconduct. Despite being a qualified professional, CA Rajiv Bengali has not adhered to the Standards and has thus not discharged the duty cast upon him.

Considering the fact that professional misconducts have been proved and considering the nature of violations and principles of proportionality, in exercise of powers under Section 132(4)(c) of the Companies Act, 2013, order:

(i) Imposition of a monetary penalty of Rs. Five Lakhs upon CA Rajiv Bengali.

(ii) In addition, CA Rajiv Bengali is debarred for Five years from being appointed as an auditor or internal auditor or from undertaking any audit in respect of financial statements or internal audit of the functions and activities of any company or body corporate.
2022 (9) TMI 1478 - MADRAS HIGH COURT

Money Laundering - scheduled offence - illicit money or not - inclusion of Sections 467, 468 and 471 of IPC subsequently in the FIR, can be a cause of action for the Enforcement Directorate to maintain the complaint or not - HELD THAT:- It may be relevant to state that the an officer of the Enforcement Directorate is not a police officer within the meaning of Section 25 of The Evidence Act. As observed by the Supreme Court in a catena of decisions including Ramesh Chandra Mehta vs State of West Bengal [1968 (10) TMI 50 - SUPREME COURT], a person becomes an accused in an economic offence investigated by non-police officials so as to avail of the protection under Article 22(1) of the Constitution of India only when there is a formal accusation laid against him. In this case, the Enforcement Directorate registered the case on 19.03.2012 and Nagarajan (A1) was only considered as a suspect. No formal accusation was laid against him as the enquiry had only then begun.

Applicability of Section 420 IPC, in the absence of any person complaining that he was cheated - HELD THAT:- On a scrutiny of the facts alleged in the police case, it is seen that this group appears to have printed the lottery tickets of other States and sold to public in Tamil Nadu. Are not the ingredients of cheating and dishonestly inducing delivery of property inbuilt in this allegation? True, that those who had purchased the lottery tickets from this group have not been identified by the police. But, that cannot be a reason to hold that there is no material in the police case to prosecute the offenders under Section 420 IPC.

The impugned complaint is bereft of prima facie materials for quashing the same - this Criminal Original Petition is dismissed.
2022 (9) TMI 1477 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, NEW DELHI

Maintainability of review application - HELD THAT:- It is now well settled that an application for review against the order of the Tribunal can only be maintained if the remedy of review is provided in I&B Code.

Thus, no review application is maintainable before this Tribunal as there is no provision for review in the Code. However, the Appellant, if so advised, may take recourse to its other remedy in accordance with law in case it is still aggrieved against the order dated 27.01.2022 or a part of it.
2022 (9) TMI 1476 - ITAT KOLKATA

TDS u/s 195 - payment made to non- resident - payment for royalty and fee for technical services - HELD THAT:- The issue in the instant appeal is similar to one as decided in the sister concern namely DCIT vs. M/s Forum Homes Pvt. Ltd. [2021 (10) TMI 356 - ITAT MUMBAI] wherein the Co-ordinate Benches held that the conditions under Article 12(4)(a) of the Tax Treaty are not fulfilled and the services are not provided under technical knowledge, skill etc. by utilizing them for future independently nor any drawing, design have been provided to the assessee which can be applied by the assessee independently.

We set aside the order of CIT(A) by holding that the payment made to non- resident recipient not having any permanent establishment in India and also that the services provided are not in the nature of royalty and fee for technical services. Accordingly we direct the AO to delete the demand. The appeal of the assessee is allowed.