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2022 (9) TMI 1506
Profiteering - purchase of a Flat No. F-3/401 in the Respondent's project "Kritika & Swati Apartment" situated at Chak, Gajaria, Lucknow - Respondent had not passed on the benefit of ITC to him by way of commensurate reduction in the price - contravention of section 171 of GST Act - HELD THAT:- It is clear from the plain reading of section 171(1) that it deals with two situations: - one relating to the passing on the benefit of reduction in the rate of tax and the second pertaining to the passing on the benefit of the ITC. On the issue of reduction in the tax rate, it is apparent from the DGAP's Report that there has been no reduction in the rate of tax in the post-GST period; hence the only issue to be examined is whether there was any net benefit of ITC with the introduction of GST. It is observed from the DGAP's report that there was no sale of flats in pre-GST regime. However, the Authority finds that Respondent had invited applications for the allotment of flats in his new housing scheme 2016 named as "LDA Swati Apartment". Besides, this scheme, the Respondent was also offering flats in "Kritika Apartment". In the scheme, flats were available for registration from 15-7-2016 to 16-8-2016 which was offered by the Respondent. The Respondent had finally announced the lottery draw on 15-6-2017 for the project "Kritika & Swati Apartment".
It was clear that the base price of the flats was already fixed before the introduction of GST at the time of advertisement only and hence the benefit of additional ITC accrued to the Respondent post-GST could not have been factored in base prices determined prior to introduction of GST. The Respondent has not produced any evidence or document to prove that the prospective buyers were aware of the fact that the benefit of the ITC arising out of implementation of GST is already factored in the price or cost of the flat, bookings of which were made during the pre-GST period. The first allotment made by the Respondent in the said project was on 4-7-2017. Though the flats were available for registration from 15-7-2016 to 16-8-2016 - it is observed from the report of the DGAP that the Respondent had received Rs. 898.28 lacs of ITC for the project "Kritika & Swati Apartment" after introduction of GST. The Respondent, on his own. has taken cognizance of Anti-Profiteering provision of section 171 of the CGST Act, 2017 and suo motu calculated the amount to be passed on as benefit of addition of ITC to all homebuyers.
Since the Respondent has profiteered in the instant project, there is every likelihood that he has profiteered in other projects also under GST No. 09AAALL0016F1ZK. The Authority has reason to believe that the Respondent may have resorted to profiteering in the other projects also and hence, directs the DGAP under rule 133(5) to investigate all the other projects of the Respondent under the same GST registration which have not yet been investigated from the perspective of section 171 of the CGST Act, 2017 and submit the complete investigation report for all the Projects under this single GST Registration.
The Authority finds that this case needs to be investigated by the DGAP based on the above findings in the paras 9 and 10 supra of this Authority. Thus the Authority directs the DGAP to investigate the matter as per the provisions of rule 133(4) and rule 133(5) of the CGST Rules 2017 for the period 1-7-2017 to 30-9-2020 or till the date of Completion Certificate of the Project.
A copy of this order be sent to both the Applicant No. 1, the Respondent, Commissioners CGST/SGST Lucknow, the Principal Secretary (Town and Country Planning) free of cost for necessary action.
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2022 (9) TMI 1505
TP Adjustment - comparable selection - HELD THAT:- Metro Shoes Ltd. wherein trading income as a percentage of the total revenue is more than 25% - TPO has applied trade filter of 75% while selecting fresh comparable companies and according to the above working the company fails the trade filter of more than 75%. We further notice from the financials of Metro Shoes Ltd., that the company has paid customs duty. We do not see any merit in the contention of the DRP that Metro Shoes is also primarily engaged in trading of footwear similar to the business of the assessee while rejecting the plea of the assessee on the application of trade filters. In view of this discussion we hold that Metro Shoes fails the trade filter of more than 75% and therefore should be excluded from the comparable companies.
Sreeleather Ltd is engaged in both wholesale and retail trading of footwear and leather articles - We notice that Rule 10B(2)(d) of the Act, the relevant extract is reproduced below provide that the company is in the wholesale trading and retail trading have to be considered separately for the purpose of comparison and for the purpose of comparability with an uncontrolled transaction, whether the market in which the companies are operating is wholesale or retail needs to be considered - In view of the above and considering the provisions contained in Rule 10B (2)(d) we are of the considered view that Sreeleather Ltd. should be excluded as comparable.
VF Brands Pvt. Ltd. and Tommy Hilfiger Arvind Fashion Pvt. Ltd. - As per the working submitted by the learned A.R. during the course of hearing the margin of VF Brands Pvt. Ltd. is at 12.07% while the TPO has considered it at 14.56%. Similarly the margin as per computation submitted for Tommy Hilfiger Arvind Fashion Pvt. Ltd. is at 3.23%. The TPO has considered the percentage at 8.24%. We therefore remit this issue back to the TPO to look at the financials of these two companies and arrive at the margins afresh in accordance with law. This issue is allowed for statistical purposes.
TPO is directed to re-compute the ALP based on the directions given in this order.
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2022 (9) TMI 1504
Refund of excess stamp duty and registration charges - Rule 9(6) of the Security Interest (Enforcement) Rules 2002 - HELD THAT:- If a direct question is to be posed, as to whether, a certificate of sale issued by a Court or a Revenue Officer, if evidence of a sale conducted by public auction requires registration or not, the answer has to be a firm 'no'. This would be the natural inference from a reading of the provisions.
The other question that may arise is who is a Civil or a Revenue Officer, the term Civil or a Revenue Officer has not been defined either under the Stamp Act or under the Registration Act - It is pointed out that the bar that this question is no longer res integra. The earliest decision of the Hon'ble Supreme Court on this issue could be found in SMT. SHANTI DEVI L. SINGH AND ANOTHER VERSUS TAX RECOVERY OFFICER AND OTHERS [1990 (4) TMI 53 - SUPREME COURT], wherein the Hon'ble Supreme Court pointed out the procedure for filing of a certificate of sale issued by a Tax Recovery Officer and the Court after considering the provisions of Section 89(4) held that a Tax Recovery Officer under the Income Tax Act would be a Revenue Officer and the certificate of sale issued by him is not compulsorily registrable.
In B. ARVIND KUMAR VERSUS GOVERNMENT OF INDIA AND ORS. [2007 (5) TMI 657 - SUPREME COURT], the scope of Section 17(2)(xii) of the Registration Act was considered and the Hon'ble Supreme Court held that a sale certificate is merely an evidence of title and it does not convey title - The very same question arose before another Division Bench of this Court in THE INSPECTOR GENERAL OF REGISTRATION AND ORS. VERSUS KANAGALAKSHMI GANAGURU [2017 (8) TMI 1708 - MADRAS HIGH COURT]. This court had held that the authorised officer appointed by the Bank under the provisions of the SARFAESI Act, cannot be called a Civil or Revenue Court or Collector or Revenue Officer.
In view of the pronouncement of the Hon'ble Supreme Court in ESJAYPEE IMPEX PVT. LTD. VERSUS ASST. GENERAL MANAGER AND AUTHORIZED OFFICER, CANARA BANK [2021 (1) TMI 1308 - SUPREME COURT], the law as it stands today is that an Authorised Officer, who conducts a sale under the provisions of the SARFAESI Act, would be a Revenue Officer and the certificate issued by him in evidence of such sale, would be a document which is not compulsorily registrable under Section 17(2)(xii) of the Registration Act.
Amount of stamp duty and registration charges payable, if such certificate is presented for registration - HELD THAT:- Article 18 of the Stamp Act, provides for Stamp Duty payable on a certificate of sale granted by a Civil or Revenue Court or Collector or other Revenue Officer. Clause (c) of Article 18 makes the duty payable for a conveyance would apply to a sale certificate also. Under Article 23 of the Stamp Act, the Stamp Duty payable on a sale is 5% as per G.O. Ms. No. 46-CT and All Department dated 27.03.2012.
The Writ Petition has to be necessarily allowed and the excess fee and the stamp duty collected will have to be refunded by the respondents. The Writ Petition stands allowed.
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2022 (9) TMI 1503
Suspension of License of Customs Broker - concealment of red sanders, (prohibited for export), in a cargo of oil tankers exported using the services of the petitioner - HELD THAT:- Having heard the learned counsel appearing for the petitioner and the learned counsel appearing for the respondent- Department, this writ petition is disposed of, directing that the show cause notice issued to the petitioner on 13.09.2022 shall be adjudicated in accordance with law, within a period of three months from the date of receipt of a certified copy of this judgment. The interim order dated 29.08.2022 will continue till the final orders are passed (in the adjudication).
Learned counsel appearing for the petitioner undertakes that the petitioner will co-operate with the adjudication proceedings and will adhere to the timelines for submission of reply etc., and no unnecessary adjournments will be sought in the matter. This is recorded. It is also clarified that the observations in the interim order dated 29.08.2022 are only for the purpose of considering the entitlement of the petitioner for interim relief and shall not be treated as a finding by this Court on any point.
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2022 (9) TMI 1502
Maintainability of SLP - filing of fresh IA (Interim Application), when no relief granted on previous IA - HELD THAT:- The filing of successive IAs before the High Court, after no relief had been granted in a previous IA, was manifestly an abuse of the process. On these grounds, we see no reason to entertain the Special Leave Petition.
However, it needs to be clarified that the observations in the impugned order of the High Court are confined to the issue as to whether the Single Judge was justified in declining to exercise the discretion in an application for the grant of ad interim relief.
SLP dismissed.
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2022 (9) TMI 1501
Exemption u/s 11 - claim of the assessee for deduction u/s 11 has been rejected by AO holding that the assessee’s activities were not for ‘charitable purposes’ within the meaning of 2(15) - HELD THAT:- We have perused the orders passed by the authorities below including the order passed by the Co-ordinate Bench [2019 (1) TMI 289 - ITAT INDORE] by allowing the issue in favour of the assessee, assessee society was constituted by the State Govt. for the benefit of General Public to provide them information regarding employments, education institutions and other information of the govt. schemes.
The objectives of the assessee society are publication of weekly newspaper namely "Rozgar Aur Nirman" to supply the material related to advertisement of public welfare schemes of Government of Madhya Pradesh and its undertaking and do such all other acts that are necessary for achievement of the objectives of the society. Therefore, the Revenue Authorities are not justified in holding that the assessee was involved in carrying on the activity in the nature of trade, commerce or business.
The main object of the assessee is for the benefit of General Public to provide them information regarding employments, education institutions and other information of the govt. schemes, therefore, we find force in the contention of the assessee that profit making is not the driving force or objective of the assessee and income generated by the assessee does not find its way into the pockets of any individuals or entities. It is to be utilized fully for the purposes of the objects of the assessee.
We are of the view that since the object of promoting employments/educational institutions/govt. schemes for the general public is a charitable purpose, the expression 'charitable purpose', as defined in section 2(15) cannot be construed literally and in absolute terms. It has to take colour and be considered in the context of section 10(23C)(iv) as also held in the above judicial pronouncements. We are of the view that the authorities below are not justified in disallowing the entire exemption. We, therefore, direct the AO to delete the disallowances. - Decided in favour of assessee.
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2022 (9) TMI 1500
Maintainability of Section 9 application - application rejected on the ground that for breach of settlement agreement, application - dues arising out of settlement may not be an ‘operational debt’ - HELD THAT:- Present is a case where the Appellant was awarded the contract to carry on construction and structural work and the dues claimed by the Appellant are operational debt. The Memorandum of Understanding entered between the parties was only with regard to mode and manner of payment, that too after final bill certificate which was duly signed by both the parties - Adjudicating Authority did not consider the nature of transaction between the parties and has erroneously come to the conclusion that section 9 application was not maintainable. The judgement of Adjudicating Authority cannot be sustained.
The appeal is allowed by setting aside the order of Adjudicating Authority directing the Adjudicating Authority to pass an order of admission and other consequential order within a period of four weeks from the date of receipt of this order.
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2022 (9) TMI 1499
Penalty u/s. 271(1)(c) - Defective notice - non striking of irrelevant portion - HELD THAT:- As not only for the failure on the part of the AO to validly put the assessee bank to notice as regards the specific default for which penalty was sought to be imposed on it under Sec. 271(1)(c) of the Act reveals beyond doubt the invalid assumption of jurisdiction on his part; but also the fact that he had while culminating the assessment initiated the penalty proceedings for the reason that the assessee had concealed its income OR furnished inaccurate particulars of such income, but thereafter imposed the same vide his order passed u/s. 271(1)(c) of the Act, dated nil for both the defaults i.e. concealment of income and furnishing of inaccurate particulars of income, therefore, on the said count too the impugned penalty could not be sustained and is liable to be struck down. We, thus, for the aforesaid reasons not being able to persuade ourselves to subscribe to the imposition of penalty by the A.O, therefore, set-aside the order of the CIT(A) who had not only upheld but in fact enhanced the same. Accordingly, the penalty imposed under Sec. 271(1)(c) - Decided in favour of assessee.
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2022 (9) TMI 1498
Money Laundering - proceeds or crime - stand-alone offences or not - preceding the trial under scheduled offence - Seeking a correction in the appropriate procedure to be followed while conducting enquiry and trial of offences classified as "scheduled offences" under the Prevention of Money Laundering Act, 2002 - HELD THAT:- The proceeds of crime means any property derived or obtained, directly or indirectly, by any person as a result of criminal activity relating to a scheduled offence or the value of any such property or where such property is taken or held outside the country, then the property equivalent in value held within the country or abroad. The Explanation clarifies that proceeds of crime would include property not only derived or obtained from the scheduled offence but also any property which may directly or indirectly be derived or obtained as a result of any criminal activity relatable to the scheduled offence - Scheduled offence is defined in Section 2(1)(y) to mean offences specified under Part A of the Schedule; or offences under Part B of the Schedule if the total value involved in such offences is one crore rupees or more; or offences specified under Part C of the Schedule. Schedule means the Schedule to the PMLA (Section 2(1)(x)).
In Vijay Madanlal Choudhary [2022 (7) TMI 1316 - SUPREME COURT], Supreme Court was called upon to deal with the pleas concerning validity and interpretation of certain provisions of PMLA and the procedure followed by the Enforcement Directorate while inquiring into/investigating offences under PMLA. Following the decision of the Supreme Court in NIKESH TARACHAND SHAH VERSUS UNION OF INDIA AND ANR [2017 (11) TMI 1336 - SUPREME COURT], Parliament amended Section 45 of PMLA vide Act 13 of 2018 so as to remove the defect noted in the said decision and to revive the effect of the twin conditions specified in Section 45 to offences under PMLA.
Thus, Supreme Court has expressed the view that expression proceeds of crime which is the very essence of the offence of money laundering needs to be construed strictly. Only such property which is derived or obtained, directly or indirectly, as a result of criminal activity relating to a scheduled offence can be regarded as proceeds of crime. On the above basis, Supreme Court has held that in the event the person named in the criminal activity relating to a scheduled offence is finally absolved by a Court of competent jurisdiction either on account of discharge or acquittal or quashing of the criminal case (scheduled offence), there can be no action for money laundering against such a person or a person claiming through him in relation to the property linked to the stated scheduled offence. No other view is possible.
The Supreme Court posed the question as to whether the offence under Section 3 is a standalone offence? - Supreme Court has rendered a clear and categorical finding that offence under Section 3 of PMLA is dependent on illegal gain of property as a result of criminal activity relating to a scheduled offence. If the person is finally discharged/acquitted of the scheduled offence or criminal case against him is quashed by a Court of competent jurisdiction, there can be no offence of money laundering against him or anyone claiming such property being the property linked to stated scheduled offence through him.
Section 44 of PMLA clarifies that notwithstanding anything in Cr.P.C., any scheduled offence and an offence punishable under Section 4 of PMLA are to be tried by the Special Court having territorial jurisdiction. However, if the Court which had taken cognizance of the scheduled offence is other than the Special Court which has taken cognizance of the complaint of the offence of money laundering, the authority authorized under the PMLA to file complaint shall file an application before the Special Court trying the scheduled offence and on such application being filed, the Special Court shall commit the case relating to the scheduled offence to the Special Court, which shall thereafter proceed with the case from the stage at which it is committed. The purpose behind this provision is to ensure that the scheduled offence and the offence of money laundering under PMLA are not tried by two different Courts which may lead to contrary/conflicting verdicts - The investigation, enquiry or trial under PMLA would not be dependent upon any "order" in respect of the scheduled offence. An "order" as is understood in Cr.P.C. is not a conclusive pronouncement at the end of the trial. Section 235 of Cr.P.C. says that after hearing arguments and point of law, the judge shall give a judgment in the case, which may either be of acquittal or of conviction. It is on this basis, Supreme Court has observed that conviction under Section 4 of PMLA for committing offence under Section 3 is dependent upon conviction for a scheduled offence; if there is no crime there cannot be any proceeds of crime. And if there are no proceeds of crime, the offence of money laundering cannot be sustained. It is on this logic, Supreme Court has held as above in Vijay Madanlal Choudhary.
Thus, the position which emerges is that existence of scheduled offence and proceeds of crime being the property derived or obtained as a result of criminal activity relating to the scheduled offence are sine qua non for not only initiating prosecution under PMLA, but also for continuation thereof. In the absence of these two conditions, the Special Court dealing with the offence under PMLA would not be competent to pronounce on the guilt or otherwise of the person concerned accused of money laundering.
Petition allowed.
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2022 (9) TMI 1497
Money Laundering - proceeds or crime - stand-alone offences or not - preceding the trial under scheduled offence - Seeking a correction in the appropriate procedure to be followed while conducting enquiry and trial of offences classified as "scheduled offences" under the Prevention of Money Laundering Act, 2002 - HELD THAT:- The proceeds of crime means any property derived or obtained, directly or indirectly, by any person as a result of criminal activity relating to a scheduled offence or the value of any such property or where such property is taken or held outside the country, then the property equivalent in value held within the country or abroad. The Explanation clarifies that proceeds of crime would include property not only derived or obtained from the scheduled offence but also any property which may directly or indirectly be derived or obtained as a result of any criminal activity relatable to the scheduled offence - Scheduled offence is defined in Section 2(1)(y) to mean offences specified under Part A of the Schedule; or offences under Part B of the Schedule if the total value involved in such offences is one crore rupees or more; or offences specified under Part C of the Schedule. Schedule means the Schedule to the PMLA (Section 2(1)(x)).
In Vijay Madanlal Choudhary [2022 (7) TMI 1316 - SUPREME COURT], Supreme Court was called upon to deal with the pleas concerning validity and interpretation of certain provisions of PMLA and the procedure followed by the Enforcement Directorate while inquiring into/investigating offences under PMLA. Following the decision of the Supreme Court in NIKESH TARACHAND SHAH VERSUS UNION OF INDIA AND ANR [2017 (11) TMI 1336 - SUPREME COURT], Parliament amended Section 45 of PMLA vide Act 13 of 2018 so as to remove the defect noted in the said decision and to revive the effect of the twin conditions specified in Section 45 to offences under PMLA.
Thus, Supreme Court has expressed the view that expression proceeds of crime which is the very essence of the offence of money laundering needs to be construed strictly. Only such property which is derived or obtained, directly or indirectly, as a result of criminal activity relating to a scheduled offence can be regarded as proceeds of crime. On the above basis, Supreme Court has held that in the event the person named in the criminal activity relating to a scheduled offence is finally absolved by a Court of competent jurisdiction either on account of discharge or acquittal or quashing of the criminal case (scheduled offence), there can be no action for money laundering against such a person or a person claiming through him in relation to the property linked to the stated scheduled offence. No other view is possible.
The Supreme Court posed the question as to whether the offence under Section 3 is a standalone offence? - Supreme Court has rendered a clear and categorical finding that offence under Section 3 of PMLA is dependent on illegal gain of property as a result of criminal activity relating to a scheduled offence. If the person is finally discharged/acquitted of the scheduled offence or criminal case against him is quashed by a Court of competent jurisdiction, there can be no offence of money laundering against him or anyone claiming such property being the property linked to stated scheduled offence through him.
Section 44 of PMLA clarifies that notwithstanding anything in Cr.P.C., any scheduled offence and an offence punishable under Section 4 of PMLA are to be tried by the Special Court having territorial jurisdiction. However, if the Court which had taken cognizance of the scheduled offence is other than the Special Court which has taken cognizance of the complaint of the offence of money laundering, the authority authorized under the PMLA to file complaint shall file an application before the Special Court trying the scheduled offence and on such application being filed, the Special Court shall commit the case relating to the scheduled offence to the Special Court, which shall thereafter proceed with the case from the stage at which it is committed. The purpose behind this provision is to ensure that the scheduled offence and the offence of money laundering under PMLA are not tried by two different Courts which may lead to contrary/conflicting verdicts - The investigation, enquiry or trial under PMLA would not be dependent upon any "order" in respect of the scheduled offence. An "order" as is understood in Cr.P.C. is not a conclusive pronouncement at the end of the trial. Section 235 of Cr.P.C. says that after hearing arguments and point of law, the judge shall give a judgment in the case, which may either be of acquittal or of conviction. It is on this basis, Supreme Court has observed that conviction under Section 4 of PMLA for committing offence under Section 3 is dependent upon conviction for a scheduled offence; if there is no crime there cannot be any proceeds of crime. And if there are no proceeds of crime, the offence of money laundering cannot be sustained. It is on this logic, Supreme Court has held as above in Vijay Madanlal Choudhary.
Thus, the position which emerges is that existence of scheduled offence and proceeds of crime being the property derived or obtained as a result of criminal activity relating to the scheduled offence are sine qua non for not only initiating prosecution under PMLA, but also for continuation thereof. In the absence of these two conditions, the Special Court dealing with the offence under PMLA would not be competent to pronounce on the guilt or otherwise of the person concerned accused of money laundering.
Petition allowed.
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2022 (9) TMI 1496
Money Laundering - proceeds or crime - stand-alone offences or not - preceding the trial under scheduled offence - Seeking a correction in the appropriate procedure to be followed while conducting enquiry and trial of offences classified as "scheduled offences" under the Prevention of Money Laundering Act, 2002 - HELD THAT:- The proceeds of crime means any property derived or obtained, directly or indirectly, by any person as a result of criminal activity relating to a scheduled offence or the value of any such property or where such property is taken or held outside the country, then the property equivalent in value held within the country or abroad. The Explanation clarifies that proceeds of crime would include property not only derived or obtained from the scheduled offence but also any property which may directly or indirectly be derived or obtained as a result of any criminal activity relatable to the scheduled offence - Scheduled offence is defined in Section 2(1)(y) to mean offences specified under Part A of the Schedule; or offences under Part B of the Schedule if the total value involved in such offences is one crore rupees or more; or offences specified under Part C of the Schedule. Schedule means the Schedule to the PMLA (Section 2(1)(x)).
In Vijay Madanlal Choudhary [2022 (7) TMI 1316 - SUPREME COURT], Supreme Court was called upon to deal with the pleas concerning validity and interpretation of certain provisions of PMLA and the procedure followed by the Enforcement Directorate while inquiring into/investigating offences under PMLA. Following the decision of the Supreme Court in NIKESH TARACHAND SHAH VERSUS UNION OF INDIA AND ANR [2017 (11) TMI 1336 - SUPREME COURT], Parliament amended Section 45 of PMLA vide Act 13 of 2018 so as to remove the defect noted in the said decision and to revive the effect of the twin conditions specified in Section 45 to offences under PMLA.
Thus, Supreme Court has expressed the view that expression proceeds of crime which is the very essence of the offence of money laundering needs to be construed strictly. Only such property which is derived or obtained, directly or indirectly, as a result of criminal activity relating to a scheduled offence can be regarded as proceeds of crime. On the above basis, Supreme Court has held that in the event the person named in the criminal activity relating to a scheduled offence is finally absolved by a Court of competent jurisdiction either on account of discharge or acquittal or quashing of the criminal case (scheduled offence), there can be no action for money laundering against such a person or a person claiming through him in relation to the property linked to the stated scheduled offence. No other view is possible.
The Supreme Court posed the question as to whether the offence under Section 3 is a standalone offence? - Supreme Court has rendered a clear and categorical finding that offence under Section 3 of PMLA is dependent on illegal gain of property as a result of criminal activity relating to a scheduled offence. If the person is finally discharged/acquitted of the scheduled offence or criminal case against him is quashed by a Court of competent jurisdiction, there can be no offence of money laundering against him or anyone claiming such property being the property linked to stated scheduled offence through him.
Section 44 of PMLA clarifies that notwithstanding anything in Cr.P.C., any scheduled offence and an offence punishable under Section 4 of PMLA are to be tried by the Special Court having territorial jurisdiction. However, if the Court which had taken cognizance of the scheduled offence is other than the Special Court which has taken cognizance of the complaint of the offence of money laundering, the authority authorized under the PMLA to file complaint shall file an application before the Special Court trying the scheduled offence and on such application being filed, the Special Court shall commit the case relating to the scheduled offence to the Special Court, which shall thereafter proceed with the case from the stage at which it is committed. The purpose behind this provision is to ensure that the scheduled offence and the offence of money laundering under PMLA are not tried by two different Courts which may lead to contrary/conflicting verdicts - The investigation, enquiry or trial under PMLA would not be dependent upon any "order" in respect of the scheduled offence. An "order" as is understood in Cr.P.C. is not a conclusive pronouncement at the end of the trial. Section 235 of Cr.P.C. says that after hearing arguments and point of law, the judge shall give a judgment in the case, which may either be of acquittal or of conviction. It is on this basis, Supreme Court has observed that conviction under Section 4 of PMLA for committing offence under Section 3 is dependent upon conviction for a scheduled offence; if there is no crime there cannot be any proceeds of crime. And if there are no proceeds of crime, the offence of money laundering cannot be sustained. It is on this logic, Supreme Court has held as above in Vijay Madanlal Choudhary.
Thus, the position which emerges is that existence of scheduled offence and proceeds of crime being the property derived or obtained as a result of criminal activity relating to the scheduled offence are sine qua non for not only initiating prosecution under PMLA, but also for continuation thereof. In the absence of these two conditions, the Special Court dealing with the offence under PMLA would not be competent to pronounce on the guilt or otherwise of the person concerned accused of money laundering.
Petition allowed.
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2022 (9) TMI 1495
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.
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2022 (9) TMI 1494
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.
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2022 (9) TMI 1493
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.
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2022 (9) TMI 1492
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.
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2022 (9) TMI 1491
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.
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2022 (9) TMI 1490
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.
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2022 (9) TMI 1489
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.
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2022 (9) TMI 1488
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.
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2022 (9) TMI 1487
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.
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