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.
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issued by this Court on the earlier writ petition, the Recovery Officer had in fact by an order of 22 March 2018 withdrawn all proceedings which had been initiated against the petitioner.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.
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.
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.
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.
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.
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.
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.
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.
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.
Disallowance of unabsorbed brought forward depreciation which is beyond eight Assessment Years - HELD THAT:- This issue is squarely covered by Jurisdictional High Court which has considered the amendments made in the Finance Act, 2001 and CBDT Circular No. 14 of 2002, which clarified that the restriction of 8 years for carry forward and set off of unabsorbed depreciation had been dispensed with, the unabsorbed depreciation from AY 1997-98 to 2001- 02 got carried forward to the assessment year 2002-03 and became part thereof. Thus the assessee is eligible to carry forward and the set off against the profits and gains of subsequent years, without any limit whatsoever.
Recording the above submission of the D.R. and CIT(A) who has followed the jurisdictional High Court judgment in the case of General Motors (India) Pvt. Ltd. [2012 (8) TMI 714 - GUJARAT HIGH COURT] - Appeal filed by the Revenue is hereby dismissed.
Review petition - it was mentioned and submitted that this Court had overlooked the judgment of this Court in ES KRISHNAMURTHY & ORS. VERSUS M/S BHARATH HI TECH BUILDERS PVT. LTD. [2021 (12) TMI 683 - SUPREME COURT], to which the attention of this Court had not been drawn - Revenue submits that certain observations made by us in the judgment and order under review could be interpreted in a manner that might be contrary to the aims and objects of the IBC and render the law infructuous.
HELD THAT:- It is well settled that judgments and observations in judgments are not to be read as provisions of statute. Judicial utterances and/or pronouncements are in the setting of the facts of a particular case.
To interpret words and provisions of a statute, it may become necessary for the Judges to embark upon lengthy discussions. The words of Judges interpreting statutes a re not to be interpreted as statutes.
There are no grounds for review of the judgment and order. The Review Petition is, accordingly, disposed of.
TP Adjustment - determination of Arm's Length Price (ALP) in respect of an international transaction of rendering of Software Development Services (SWD services) by the assessee to its Associated Enterprise (AE) - comparable selection - HELD THAT:- Rejection of comparables as functionally dissimilar with that of assessee. Infosys Ltd., Larsen and Toubro Infotech Ltd. , Persistent Systems Ltd. and Thirdware Solutions Ltd. need to be deselected accordingly.
Akshay Software Technologies ltd. and Maverie Systems Ltd. ("Maverie") - As relying on decision of this Tribunal rendered in the case of EMC Software and Services (India) Pvt. Ltd., (2019 (12) TMI 1279 - ITAT BANGALORE] the comparability of this company should be remanded to the AO/TPO for fresh consideration.
12T2 India Limited - This issue with regard to the comparability of this company has to be remanded to TPO/AO for fresh consideration as the submissions made above were neither considered by the TPO nor by the DRP. We hold and direct accordingly.
Adding Notional interest on outstanding receivables - HELD THAT:- The fact remains that the transaction with Non-AE is non-realization of receivables beyond the credit period and not charging interest on such delayed receivables becomes a comparable uncontrolled transaction.
Hon'ble Delhi High Court in the case of MC. Kinley Knowledge Centre (I) Pvt. Ltd.[2021 (10) TMI 751 - DELHI HIGH COURT] took the view that wherever payments are received in advance that cannot be ignored. By the same analogy, the outstanding payable that was paid beyond the due date should also be considered when determining ALP of extended / delayed realization of outstanding receivable.
Without going into the question whether the delay in realization of outstanding receivables would be an international transaction or not, on which there are conflicting decisions prior to amendment of section 92B of the Act, we are of the view that the calculation of ALP has to be remanded to the AO/TPO to compute ALP, after considering (i) outstanding payable to AE which was paid belated by the assessee and (ii) delay in realization of outstanding receivables beyond the credit period as transactions with Non-AE. We hold and direct accordingly.
Depreciation on computer servers, software and networking equipment - @ 15% by considering it as "plant and machinery" OR "computers" at 60% - HELD THAT:- We find that the issue raised herein is no longer res-integra and has been decided in the case of Mphasis Ltd.[2021 (3) TMI 1072 - KARNATAKA HIGH COURT] wherein held that computer accessories such as switches and routers form part of peripherals of computer system and hence entitled to depreciation at 60%. Ground raised by the assessee.
Short credit of TDS - as submitted that the AO erred in not granting appropriate credit of tax deducted at sourc-HELD THAT:- AO will verify the claim of the assessee and allow relief, if found correct.
Non-grant of advance tax credit - as submitted that the AO erred in not granting the advance tax credit amounting paid by Teleca Software Solutions India Pvt. Ltd. which was merged with the assessee w.e.f. 01 April 2013 - HELD THAT:- We are of the view that a direction to the AO to verify the claim of the assessee and allow relief if found correct, would be sufficient. We hold and direct accordingly.
Non-grant of MAT credit - as submitted that the AO erred in not granting relief of MAT credit to the extent of difference between assessed tax computed under normal provisions of the Act and MAT computed even after having sufficient MAT credit - HELD THAT:- We direct the AO to verify the claim of the assessee and allow relief in accordance with law.
Charging of Interest u/s 234A - as submitted that the AO erred in levying interest without considering that the assessee has filed return of income within the due date prescribed u/s 139 - HELD THAT:- We are of the view that a direction to the A0 to verify the claim of the assessee and allow relief as per law, would be sufficient. We direct accordingly.
Constitutional validity of Rule 8(3A) of the Central Excise Rules, 2002, pending consideration before the Hon’ble Supreme Court - HELD THAT:- The appeal was admitted for the purpose of scrutinising the effect of the order passed by the Hon’ble Supreme Court in UNION OF INDIA VERSUS INDSUR GLOBAL LTD. [2014 (11) TMI 1101 - SC ORDER], which had granted an order of stay and the decision of the High Court of Gujarat in the case of INDSUR GLOBAL LTD. VERSUS UNION OF INDIA & 2 [2014 (12) TMI 585 - GUJARAT HIGH COURT].
Identical matters came up before this Court on earlier occasion and the Court upon perusal of the material papers found the tax effect in these cases were less than the threshold limit fixed in the Circular issued by the Central Board for pursuing appeals before the High Court. Therefore, the appeals filed by the Revenue were disposed of by observing that the tax effect is less than the threshold limit.
However, the legal issue as regards validity of the Rule 8(3A) of the Central Excise Rules, 2002, which was struck down by the Gujarat High Court in the case of Indsur Global Ltd. and which judgment has been stayed by the Hon’ble Supreme Court, had been left over - In the instant case from the order-in-original dated January 5, 2016, the demand of Central Excise duty was Rs. 1,57,553/-. If that be so, the Revenue cannot pursue this appeal on the ground of low tax effect subject of course with regard to the legal issue regarding the validity of Rule 8(3A) of 2002 Rules.
The finding rendered by the Tribunal with regard to the validity of Rule 8(3A) of the Rule is set aside - the appeal filed by the Revenue has been disposed of on the ground of low tax effect and consequently no recovery can be effected from the respondent/assessee.
Rejection of application for restoration of registration - reason for rejection of application was on the ground that it has been filed beyond the stipulated period under statute - HELD THAT:- The order rejecting the application for revocation of cancellation dated 03.03.2021 is a single line order thereby stating that the assessee has not replied to the show cause notice dated 13.01.2021. However, the fact remains that before the said notice dated 09.12.2020, the assessee had filed GSTR-3B returns upto November 2019 and this was filed prior to the application for revocation of cancellation which was filed on 16.12.2020.
In the considered view of this Court, the Assessing Authority, being the Assistant Commissioner, Asansol should take into consideration this fact and examine as to whether the registration of the appellant could be restored or not. Since the Appellate Authority has solely proceeded on the ground of limitation without touching the above mentioned facts, the matter should be remanded back to the original authority for fresh consideration.
Seeking recall of Order - victims have compromised their claims with the accused - locus standi of the appellants - effect of the compromise entered into between the de facto complainant and 13 named victims on the one hand and the four accused on the other hand - non-inclusion in the chargesheet of the offences under the P.C. Act.
Locus standi - HELD THAT:- Even according to the Investigating Officer, persons who claim to have paid money, but did not receive orders of appointment, were not the only victims. Persons who were more meritorious, but who did not get selected, on account of being edged out by candidates who paid money and got selected, are also victims of the alleged corrupt practices, if those allegations are eventually proved. Shri P. Dharamaraj, who is the appellant in one of these appeals, claims to be a candidate who participated in the selection, but could not make it - Even the learned senior counsel appearing on behalf of the respondents could not contest the position that a victim is entitled to file an appeal against the impugned order of the High Court. If persons who participated in the selection process but who could not make it to the final list of selected candidates on account of the alleged corrupt practices adopted by those in power are not victims, we do not know who else could be a victim.
We cannot shy away from the fact that candidates, who are selected and appointed to posts in the Government/public corporations by adopting corrupt practices, are eventually called upon to render public service. It is needless to say that the quality of public service rendered by such persons will be inversely proportionate to the corrupt practices adopted by them. Therefore, the public, who are recipients of these services, also become victims, though indirectly, because the consequences of such appointments get reflected sooner or later in the work performed by the appointees. Hence, to say that the appellants have no locus standi, is to deny the existence of what is obvious.
Effect of the compromise and the noninclusion of the offences under the P.C. Act - HELD THAT:- It is clear from the march of law that the Court has to go slow even while exercising jurisdiction under Section 482 Cr.PC or Article 226 of the Constitution in the matter of quashing of criminal proceedings on the basis of a settlement reached between the parties, when the offences are capable of having an impact not merely on the complainant and the accused but also on others - As seen from the final report filed in this case and the counter affidavit filed by the I.O., persons who have adopted corrupt practices to secure employment in the Transport Corporation fall under two categories namely, (i) those who paid money and got orders of appointment; and (ii) those who paid money but failed to secure employment. If persons belonging to the 2nd category are allowed to settle their dispute by taking refund of money, the same would affix a seal of approval on the appointment of persons belonging to the 1st category. Therefore, the High Court ought not to have quashed the criminal proceedings on the basis of the compromise.
It is needless to point out that corruption by a public servant is an offence against the State and the society at large. The Court cannot deal with cases involving abuse of official position and adoption of corrupt practices, like suits for specific performance, where the refund of the money paid may also satisfy the agreement holder. Therefore we hold that the High Court was completely in error in quashing the criminal complaint.
Non-inclusion in the final report, of the offences under the P.C. Act - HELD THAT:- We have provided a gist of the contents of such counter affidavit elsewhere in this judgment. We are constrained to say that even a novice in criminal law would not have left the offences under the P.C. Act, out of the final report. The attempt of the I.O. appears to be of one, “willing to strike but afraid to wound” - As a matter of fact, the State ought to have undertaken a comprehensive investigation into the entire scam, without allowing the accused to fish out one case as if it was a private money dispute.
The appeals are allowed and the impugned order of the High Court is set aside. The criminal complaint is restored to file.
Delayed employer and employee contribution to PF - assessment u/s 143(1) - contribution paid after due date prescribed under relevant Provident Fund Ac but before due date of filing of return of income - HELD THAT:- We find that issue-in-dispute is covered in favour of the assessee as relying on case of DCIT v. M/s Maharashtra Tourism Development Corporation Ltd[2021 (7) TMI 1389 - ITAT MUMBAI] disallowance is not sustainable in view of all these latest developments as the legislative amendments incorporated in section 36(1)(va) and 43B of the Act by the Finance Act, 2021 by inserting explanation 2 and explanation 5 to the respective provisions, are prospective in application with effect from 01.04.2021.
No disallowance for delayed payment of PF could be made in the case of the assessee u/s 143(1) of the Act being debatable issue. Decided in favour of assessee.
Addition u/s 14A r.w.r 8D - absence of any exempt income - HELD THAT:- The undisputed fact is that there is no exempt income earned by the assessee during the year under consideration. On such facts, the dispute is well settled in favour of the assessee and against the revenue by the decision of the Hon'ble Supreme Court in the case of Oil Industry Development Board [2019 (3) TMI 1571 - SC ORDER] by which the Hon'ble Supreme Court dismissed the Special Leave Petition preferred by the revenue against the order of the Hon'ble High Court of Delhi [2018 (2) TMI 1861 - DELHI HIGH COURT] in which case the Tribunal had held that in the absence of any exempt income, disallowance u/s 14A of any amount was not permissible. The Hon'ble High Court of Delhi upheld the order passed by the Tribunal [2019 (6) TMI 666 - ITAT DELHI] and the Hon'ble Supreme Court dismissed the SLP preferred by the Revenue.
Also in the case of Caraf Builders & Constructions [P] Ltd [2018 (12) TMI 410 - DELHI HIGH COURT] has held that when no taxable income is earned, corresponding expenditure could not be worked out for disallowance.
Similar view was taken in the case of Cheminvest Ltd Vs. CIT [2015 (9) TMI 238 - DELHI HIGH COURT] Respectfully following the judicial decisions cited hereinabove, we decline to interfere with the findings of the CIT(A). Accordingly, Ground of appeal raised by the Revenue is dismissed.
Seeking appointment of an arbitrator - adjudication upon the disputes related to the sale, implementation and installation by the petitioner of certain hardware and multi-media system accessories along with software for the purpose of setting-up 24 Smart Learn Classes at several schools run by the respondents - time limitation.
HELD THAT:- The petitioner's claim against the respondents as raised in invocation notice dated 28.07.2021 is only one: viz. for payment of arrears of licence fee/other dues amounting to Rs. 29,28,100/-, which is founded upon the termination of the contract by the petitioner vide notice dated 04.01.2017. To be sure, the petitioner's invocation notice does not contain any reference to any claim for recovery of hardware, supposedly lying with the respondents upto the year 2019 - Regardless of any correspondence exchanged between the parties thereafter, it is clear that the petitioner's cause of action first arose when the respondents failed to pay the monies due under the contract in addition to damages, as claimed by the petitioner vide its notice dated 04.01.2017.
The claim in money is the only claim that was raised in invocation notice dated 28.07.2021; and the argument that the petitioner was also entitled to get back the hardware and other equipments lying with the respondents, is to be considered only to be rejected, since reply dated 31.08.2021 issued by the respondents records that such hardware was picked-up by the petitioner, which the petitioner does not dispute. Even more importantly, the law is clear that an invocation notice must set-out clearly the claims that a party wants referred to arbitration; and in the present case, no claim for recovery of hardware was at all contained in invocation notice dated 28.07.2021.
The period of limitation applicable to the petitioner's claim is as follows: having terminated the contract with the respondents vide notice dated 04.01.2017, and the respondents having failed to pay the amounts claimed to be due, the petitioner ought to have issued the notice invoking arbitration within 03 years of that date, viz. by or before 03.01.2020. However, the petitioner issued the notice invoking arbitration only on 28.07.2021, which was evidently beyond the limitation prescribed in law.
The limitation bars a legal remedy and not a legal right, the legal policy being to ensure that legal remedies are not available endlessly but only up-to a certain point in time. Needless to add however, that if the respondents are conceding the petitioner's claim itself, and are ready and willing to pay-up, such payment would not be illegal and there could not be any legal impediment in doing so. A party may concede a claim at any time; but cannot concede availability of a legal remedy beyond the prescribed period of limitation.
This court is of the opinion that the petitioner's claim against the respondent is ex-facie time barred and is accordingly 'deadwood'; and does not require to be referred to arbitration - Petition dismissed.
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