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2011 (1) TMI 1581
Issues involved: Seizure and confiscation of betel nuts, auction sale of seized articles, refund of amount to petitioner, entitlement to full payment as per valuation, legality of auction sale without notice.
The writ petition was filed to direct the authorities to release 297 bags of betel nuts seized from the petitioner, which were assumed to be contraband and were confiscated under Section 111(d) of the Customs Act, 1962. The petitioner's appeal against the confiscation order was allowed by the Appellate Tribunal and further affirmed by the High Court, attaining finality.
The petitioner claimed entitlement to the release of the betel nuts or the assessed value of Rs. 21,68,100, as the auction sale of the seized articles for Rs. 7,04,416 had taken place without his knowledge. The petitioner relied on legal precedents to argue for the full payment of the valuation amount, citing a decision requiring payment of the difference between the value of the article and the amount already paid, with interest.
The petitioner contended that the auction sale was illegal as it was conducted without notice, contrary to the provisions of Section 150 of the Act. Referring to a court decision, the petitioner argued that the auction price was arbitrarily low compared to the value fixed at the time of confiscation, making it legally unreliable.
In light of the circumstances where the auction sale was deemed illegal due to lack of notice and undervaluation, the writ petition was allowed. The respondents were directed to pay Rs. 14,63,684 to the petitioner within four months, representing the difference between the assessed value and the amount already refunded, along with interest at 12% per annum from the date of seizure. Any loss to the Department of Revenue was to be compensated by deducting from the responsible authorities' pockets.
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2011 (1) TMI 1579
Ascertain the difference in the inks utilised for different handwritings in a disputed (pro-note) document - Suit on a pro-note for recovery of sum alongwith interest and costs - whether there are differences between the inks used for signatures in the suit pro-note and other printed form?
HELD THAT:- Since various scientific avenues are available for finding out the age of the ink in a document, it must be subjected to tests as suggested by various scientists. Hence, following the ratio in the decisions in Kalyani Baskar's case [2006 (12) TMI 545 - SUPREME COURT] and T. Nagappa's case [2008 (4) TMI 789 - SUPREME COURT], and direct to refer the disputed document to such examination in order to provide an opportunity when a good material is available, to rebut the presumption as per law, by non-destructive method in this regard.
If the expert concerned considers that such examination would destruct a part of the document or the document itself, they may report the fact before the Court and the Court thereafter shall pass further orders for the proof of the facts on the basis of pleadings and other evidence. Latching the opportunity to the accused in the attempt at the stage of rebutting the presumption u/s 118(a) and 139 of the Negotiable Instruments Act is not at all "fair trial". As per the settled law, every opportunity shall be extended to the party to a case to establish his defence.
In this situation, it is also regarded that it is the view of the Supreme Court that some delay in taking steps for referring the document to the wisdom of the expert cannot be a legal embargo for entertaining the plea.
Therefore, the disputed document has to be referred to the expert for ascertaining the age of the ink and practical hardships, if any, sustained by the expert shall be brought to the notice of the Court and the Court shall thereafter act according to the settled principles and procedures, in affording appropriate opportunity to the Petitioner/Defendant to prove his case.
Hence, interference with the order challenged before this Court has become inevitable, which is set aside. The revision deserves to be allowed.
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2011 (1) TMI 1578
Issues involved: Appeal against deletion of addition made by Assessing Officer on account of survey disclosure.
Summary:
The Revenue's appeal was against the deletion of an addition made by the Assessing Officer on account of survey disclosure. The Assessing Officer treated the business income representing disclosure of undisclosed stock-in-trade, cash-in-hand, and investment in renovation of shop found during the survey as income from other sources u/s 69B of the Income-tax Act, 1961. The assessee claimed this declaration and disclosure as income from trading receipts in the audited accounts. The Assessing Officer reworked the allowable interest and remuneration to the partners u/s 40(b)(v) of the Act by excluding the additional income offered during the survey. The CIT(A) allowed the claim of the assessee, stating that the excess stock, excess cash found, and renovation expenses represented business income of the current year and were part of the book profit included under the business head. The CIT(A) found no material to dispute the appellant's contention that the source of the firm's income was from business activities. The Tribunal dismissed the Revenue's appeal, stating that the income declared during the survey was considered as business income, and consequential deduction u/s 40(b) was available.
The Assessing Officer's addition was based on the disclosure made during a survey, treating it as income from other sources. The CIT(A) allowed the claim of the assessee, stating that the disclosed amounts represented business income and were part of the book profit included under the business head. The Tribunal upheld the CIT(A)'s decision, emphasizing that the income declared during the survey was considered as business income, entitling the assessee to claim deductions u/s 40(b) of the Act.
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2011 (1) TMI 1577
Issues Involved:
1. Challenge to the order rejecting the application for sending disputed cheques to the handwriting expert.
2. Challenge to the order rejecting the application for recalling the witness for cross-examination.
Summary:
Issue 1: Challenge to the order rejecting the application for sending disputed cheques to the handwriting expert.
The applicant challenged the order dated 21/04/2010 by the learned Magistrate, which rejected the application for sending disputed cheques to the handwriting expert. The applicant argued that there were material alterations in the cheques, making them void u/s 20 and 87 of the Negotiable Instruments Act. The applicant contended that the cheques were given as security and not filled by him, despite his undisputed signatures. The applicant cited Supreme Court judgments in Someshwar Rao vs. Samineni Nageshwar Rao, Mrs. Kalyani Baskar vs. Mrs. M.S. Sampoornam, and T. Nagappa vs. Y.R. Muralidhar to support his claim for a fair trial and the right to present evidence.
The respondent argued that the application was intended to protract the trial and noted that the accused had not disputed the cheques' signatures earlier. The court observed that u/s 243(2) Cr.P.C., the Magistrate has the discretion to reject applications made to delay the trial. The court referred to the legal position and relevant judgments, noting that the accused's right to a fair trial must be balanced against the potential misuse of procedural provisions to delay justice.
The court concluded that the ratio of the cited judgments did not apply to the present case, as the applicant did not dispute his signature but only the handwriting filling the cheques. The Magistrate's decision to reject the application was upheld, considering it an attempt to protract the trial. The court emphasized that the applicant's defense regarding the blank cheque given as security could be decided based on evidence without needing a handwriting expert's opinion.
Issue 2: Challenge to the order rejecting the application for recalling the witness for cross-examination.
The applicant also challenged the order dated 15/06/2010, which rejected the application for recalling the witness for cross-examination. However, during the hearing, the applicant's counsel stated that he did not wish to press this application.
Conclusion:
The court dismissed the criminal application, upholding the Magistrate's orders rejecting the applications for sending the cheques to the handwriting expert and recalling the witness for cross-examination. The court found the applications to be attempts to delay the trial and emphasized the need for a balanced approach to ensure a fair trial while preventing procedural abuse.
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2011 (1) TMI 1576
Issues Involved:
1. Admissibility of an unprobated Will in evidence.
2. Delay in filing documents.
3. Marking of documents in evidence.
Summary:
1. Admissibility of an unprobated Will in evidence:
The primary issue was whether an unprobated Will is admissible in evidence to prove the cancellation of an earlier Will upon which letters of administration are sought. The appellants sought letters of administration based on a registered Will dated 22.06.1990. The respondents contended that this Will was canceled by a subsequent registered Will dated 13.12.1993. The appellants opposed the marking of the unprobated Will dated 13.12.1993, citing Section 213 of the Indian Succession Act, 1925, which bars the establishment of any right as an executor or legatee unless the Will is probated. The court concluded that the unprobated Will is sought to be proved not for any collateral purpose but for the main purpose of proving that it is the last Will canceling the earlier registered Will. Therefore, unless the said Will is probated, it cannot be admitted in evidence.
2. Delay in filing documents:
The respondents filed I.A.No.4244 of 2009 seeking to condone 475 days of delay in filing certain documents. The appellants did not press their challenge against the order condoning the delay. The court found that the respondents had satisfactorily explained the delay, and thus, there was no reason to interfere with the order condoning the delay.
3. Marking of documents in evidence:
The respondents sought to mark five documents, including the unprobated Will dated 13.12.1993. The appellants did not press their challenge against the marking of the other four documents, subject to proof in the manner known to law. The court allowed the marking of these four documents. However, regarding the unprobated Will dated 13.12.1993, the court held that it could only be marked in evidence if it is probated in accordance with law. The court also directed that if the respondents file an application seeking probate of the Will dated 13.12.1993, the probate case should be tried along with T.O.S.No.38 of 2004.
Conclusion:
The court dismissed O.S.A.No.398 of 2010 and allowed O.S.A.No.397 of 2010 in part, setting aside the impugned order to the extent it allowed marking of the unregistered Will dated 13.12.1993, unless probated. The order allowing the marking of the other four documents was confirmed.
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2011 (1) TMI 1575
Issues involved: Rejection of application for registration u/s 12A of the Income Tax Act, 1961 and rejection of application for grant of approval u/s 80G of the Income Tax Act, 1961.
Issue 1: Rejection of application for registration u/s 12A:
The assessee's application for registration u/s 12A was rejected by the CIT, Faizabad, due to lack of sufficient evidence supporting the genuineness of charitable activities. The CIT pointed out deficiencies in the documentation provided by the assessee, including unsupported expenses and insufficient proof of charitable activities beyond land ownership and construction agreements. The CIT emphasized the need for verifiable details of donors, expenses, and charitable activities to establish eligibility for registration u/s 12A. The assessee contended that its activities, particularly in education, were charitable, and expenses were nominal. The ITAT observed that while some expenses lacked cash memos, they were relatively small and did not justify rejection. The ITAT also noted the CIT's failure to adequately consider the charitable nature of the assessee's main objectives. Consequently, the ITAT set aside the rejection and remanded the issue to the CIT for reevaluation with proper hearing for the assessee.
Issue 2: Rejection of application for grant of approval u/s 80G:
The rejection of the application for registration u/s 12A led to the rejection of the application for approval u/s 80G by the CIT. As the issue of registration u/s 12A was set aside for reassessment, the ITAT also directed the CIT to reconsider the approval u/s 80G after providing a fair opportunity for the assessee to present its case. Ultimately, the appeals were allowed for statistical purposes.
(The order was pronounced in the open court on 12/01/2011)
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2011 (1) TMI 1574
Issues involved: Claim of interest on refund u/s.244A of the Income Tax Act, 1961.
The appellant claimed a refund on tax by filing a delayed return of income for the assessment year 1997-98. The Hon'ble High Court condoned the delay and directed the Income-tax authorities to process the refund claim. The real dispute arose regarding the interest u/s.244A, which was denied by the Department citing the return as invalid. The matter was appealed before the CIT(Appeals) and subsequently brought before the Tribunal by the assessee.
The argument put forth by the appellant's counsel was that once the delay in filing the return had been condoned, the return could not be deemed invalid, and interest u/s.244A should be paid on the refund amount. On the other hand, the Department's representative contended that if the return itself was not valid, no interest was payable u/s.244A, quoting Explanation (2) to section 244A to support this stance.
After considering the submissions and relevant precedents, the Tribunal noted that the quantum of refund was undisputed, with the only point of contention being the interest on the refund. Referring to the Supreme Court's decision in the case of CIT vs. Narendra Doshi, it was established that interest upon interest is to be paid. The Tribunal emphasized the importance of determining whether the interest was consequential to the refund or attributable to delays by the parties. The Hon'ble High Court's decision to condone the delay due to genuine hardship faced by the assessee was highlighted. The Tribunal set aside the lower authorities' order and remitted the issue back to the Assessing Officer to decide in accordance with Explanation (2) to section 244A(b) and relevant Supreme Court decisions, affording the assessee an opportunity to be heard. The assessee was also granted the liberty to seek a decision from the Chief Commissioner or Commissioner for the calculation of interest related to the refund.
In conclusion, the Tribunal treated the appeal of the assessee as allowed for statistical purposes.
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2011 (1) TMI 1573
Issues Involved: Appeal against deletion of addition of expenses claimed for business purposes from rental income u/s 24(a) for assessment year 2005-06.
Summary:
1. Grounds of Appeal: Revenue appealed against deletion of Rs.23,27,741/- expenses claimed for business purposes from rental income, despite no business activities carried out during the year.
2. Assessee's Claimed Income and Expenses: Assessee, a property developer and share trader, claimed income from rent and other sources, while also claiming various expenses including legal expenses and property maintenance expenses.
3. AO's Findings: AO noted no business activity during the year, leading to disallowance of claimed expenses as work in progress, based on the company's financial statements and lack of business transactions.
4. Appeal to CIT(A): Assessee argued that expenses were ordinary business expenses necessary to maintain business operations, citing similar treatment in subsequent years and legal precedents supporting deduction of such expenses.
5. CIT(A)'s Decision: CIT(A) allowed the claimed expenses as legitimate business expenses, emphasizing the necessity of certain expenses to keep a company operational, regardless of business transactions during the year.
6. Tribunal's Decision: Tribunal found lack of detailed evidence and exercise by lower authorities, remanding the matter back to the AO for a fresh decision after providing the assessee with a fair opportunity to present their case.
7. Conclusion: The appeal of the revenue was allowed for statistical purposes, with the matter being remitted back to the AO for a fresh decision in accordance with the law.
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2011 (1) TMI 1572
Issues involved:
1. Disallowance under section 14A for non-taxable income from profit on sale/redemption of investments.
2. Computation of disallowance under section 14A against profit from sale/redemption of investments.
3. Levy of interest under sections 234B and 234C in respect of difference in returned income due to an order issued by Insurance Regulatory and Development Authority of India (IRDA).
Issue 1 - Disallowance under section 14A:
The appeal was filed against the CIT(A)'s order concluding that disallowance under section 14A is applicable to non-taxable income earned from investments. The Tribunal referred to a previous decision in the assessee's own case and directed the CIT(A) to verify certain figures of expenses for accurate computation. The Tribunal upheld the assessee's contention regarding the applicability of section 14A.
Issue 2 - Computation of disallowance under section 14A:
The dispute centered on the method of computing disallowance under section 14A compared to non-taxable income from investment profits. However, since the first issue was decided in favor of the assessee, this issue became academic and was not further discussed.
Issue 3 - Levy of interest under sections 234B and 234C:
The matter of interest under sections 234B and 234C arose due to a difference in returned income following an order by IRDA. The Tribunal decided to restore this issue to the Assessing Officer (AO) pending the outcome of a writ petition before the High Court. The Tribunal refrained from commenting on the merits of the case due to the ongoing legal proceedings.
Additional Ground:
An additional ground was raised challenging the levy of interest under section 234D of the Act. The Tribunal admitted this ground for adjudication, citing legal precedents that indicated section 234D had no retrospective applicability. Consequently, the interest under section 234D was deemed unjustified and directed to be deleted.
In conclusion, the Tribunal partly allowed the appeal, addressing the issues of disallowance under section 14A, levy of interest under sections 234B and 234C, and the challenge against interest under section 234D. The decision was pronounced on 31st January 2011.
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2011 (1) TMI 1571
Issues involved:
The judgment involves a challenge to an order passed under Section 263 of the Income Tax Act, 1961 for the assessment year 2005-2006, regarding the deduction under Section 80P(2)(a)(vi) and the treatment of interest income.
Deduction under Section 80P(2)(a)(vi):
The Commissioner found the assessment order to be erroneous and prejudicial to the interest of the Revenue as the Assessing Officer (AO) allowed deduction under Section 80P(2)(a)(vi) without verifying relevant details. The Commissioner noted that the AO should not have allowed the deduction for a cooperative society in the status of AOP. The assessee argued that the AO correctly allowed the claim based on previous Tribunal decisions and that the income was exempt. The Tribunal held that the AO's decision was not erroneous, as it was based on permissible views and previous Tribunal decisions, thus allowing the appeal.
Treatment of interest income:
Regarding the treatment of interest income as income from other sources, the assessee appealed before the CIT(A) and the Tribunal, both of which ruled in favor of the assessee. The Tribunal concluded that the AO's decision to allow relief to the assessee under Section 80P(2)(a)(vi) was correct, and the Commissioner should not have substituted the AO's view without showing its unsustainability in law. The Tribunal set aside the impugned order under Section 263, restoring the assessment order dated 19-12-2007.
Conclusion:
The Tribunal allowed the assessee's appeal, emphasizing that the AO's decision was not erroneous and prejudicial to the Revenue's interest. The Tribunal found that the AO's actions were based on permissible views and previous Tribunal decisions, ultimately setting aside the Commissioner's order under Section 263 and restoring the assessment order.
Order pronounced in Open Court on 21st January, 2011
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2011 (1) TMI 1570
Issues Involved:
1. Legality of IFCI's action of selling/assigning its financial assets/debts concerning HRML.
2. HRML's right to match the highest bid received by IFCI.
3. Alleged breach of duty by IFCI as Operating Agency (OA) under SICA.
4. Allegations of mala fides against KMBL.
5. Contempt of court by IFCI and KMBL for violating the status quo order.
Detailed Analysis:
1. Legality of IFCI's Action of Selling/Assigning Financial Assets/Debts:
The court examined whether IFCI's action of selling/assigning its financial assets concerning HRML was lawful. HRML challenged IFCI's decision to sell its debts to KMBL, arguing that it violated the principles of natural justice and hindered the revival of HRML under SICA. However, the court found that IFCI acted within its rights under the Reserve Bank of India (RBI) guidelines, which permit the sale of non-performing assets (NPAs) to financial institutions. The court referenced the precedent set in *Haryana Steel & Alloys Ltd. v. IFCI Ltd.*, which upheld the legality of such sales, emphasizing that the assets sold belonged to IFCI, not the borrower, and IFCI was entitled to deal with them to resolve its NPAs.
2. HRML's Right to Match the Highest Bid:
HRML claimed it had offered to pay 5% more than the highest bid received by IFCI and should have been given an opportunity to match the bid. The court noted that HRML's offer was made at the last minute and did not provide sufficient assurance of payment. IFCI's decision to proceed with KMBL's bid, which was already in process, was deemed commercially prudent. The court highlighted that HRML had a history of default and had not demonstrated its ability to honor its proposal, making IFCI's decision reasonable.
3. Alleged Breach of Duty by IFCI as Operating Agency (OA) under SICA:
HRML argued that IFCI, as the OA appointed by BIFR, breached its duty by selling the financial assets instead of focusing on HRML's revival. The court found that the role of IFCI as a lender was distinct from its role as an OA. The court emphasized that any grievances regarding IFCI's conduct as an OA should be addressed before BIFR, which had appointed IFCI. The court held that the appointment of IFCI as OA did not preclude it from exercising its rights to sell NPAs under RBI guidelines.
4. Allegations of Mala Fides Against KMBL:
HRML alleged that KMBL acted in bad faith by bidding for IFCI's financial assets concerning HRML while simultaneously negotiating with HRML for funding its rehabilitation proposal. The court found no basis for these allegations in the pleadings. The court noted that HRML was aware of KMBL's participation in the auction process and had not provided any evidence of confidential information being misused by KMBL. The court dismissed the allegations of mala fides as unfounded.
5. Contempt of Court by IFCI and KMBL for Violating the Status Quo Order:
HRML filed a contempt case against IFCI and KMBL, alleging that they violated the court's status quo order by completing the payment for the bid. The court found that HRML had not sought any interim relief to restrain IFCI from receiving payments from the highest bidder. The court concluded that the payment made by KMBL did not violate the status quo order, as it was placed in a "No Lien Account" subject to refund if the petition was allowed. The court dismissed the contempt case, finding no contempt committed by IFCI or KMBL.
Conclusion:
The court dismissed HRML's petition, finding no merit in its claims against IFCI and KMBL. The court upheld the legality of IFCI's sale of financial assets to KMBL, rejected HRML's right to match the highest bid, and found no breach of duty by IFCI as OA. The allegations of mala fides against KMBL were dismissed, and the contempt case was found to be without basis. The court ordered HRML to pay costs to IFCI and KMBL.
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2011 (1) TMI 1569
Issues Involved:
1. Legality of the bail condition requiring the accused to deposit Rs. 4 crore as a difference of Custom Duty.
2. Interpretation of Sections 437(3) and 438(2) of the Code of Criminal Procedure regarding bail conditions.
3. Applicability of precedents in imposing bail conditions.
Issue-wise Detailed Analysis:
1. Legality of the bail condition requiring the accused to deposit Rs. 4 crore as a difference of Custom Duty:
The accused-revisionist challenged the condition imposed by the Sessions Judge, which required him to deposit Rs. 4 crore as a difference of Custom Duty while granting bail. The court examined whether such a condition could be imposed and concluded that it was excessively onerous and amounted to a denial of bail. The court noted that the goods in question were already under seizure by the Directorate of Revenue Intelligence (DRI) and that the custom duty could be realized through separate proceedings under the Customs Act. Therefore, the condition was deemed harsh and illegal.
2. Interpretation of Sections 437(3) and 438(2) of the Code of Criminal Procedure regarding bail conditions:
The court analyzed Sections 437(3) and 438(2) of the Code of Criminal Procedure, which allow the imposition of certain conditions while granting bail. These sections specify that conditions should ensure the accused's attendance, prevent the commission of similar offenses, and avoid tampering with evidence. The court emphasized that conditions should not be unreasonable, unjust, arbitrary, or onerous. The court concluded that the condition imposed by the Sessions Judge fell outside the permissible scope of these sections and was therefore invalid.
3. Applicability of precedents in imposing bail conditions:
The court referred to several precedents, including Moti Ram vs. State of Madhya Pradesh, Keshab Narayan Banerjee vs. State of Bihar, Olga Kozireva vs. Department of Customs, and Munish Bhasin vs. State (Govt. of NCT of Delhi). These cases established that bail conditions should not be excessively onerous and should not frustrate the purpose of granting bail. The court reiterated that conditions beyond those enumerated in Sections 437(3) and 438(2) are beyond the court's powers. The court found that the condition imposed by the Sessions Judge was inconsistent with these precedents and thus invalid.
Conclusion:
The court allowed the criminal revision, modifying the impugned order by deleting the condition requiring the deposit of Rs. 4 crore. The decision underscored that bail conditions must align with statutory provisions and established legal principles, ensuring they are not excessively burdensome or unjust.
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2011 (1) TMI 1568
Issues Involved:
1. Applicability of sec.40A(2)(b) of the Income-tax Act, 1961.
2. Justification of purchase price of land from directors.
3. Validity of disallowance of Rs. 25,000/- per cent by the Commissioner of Income-tax (Appeals).
Summary:
1. Applicability of sec.40A(2)(b) of the Income-tax Act, 1961:
The Assessing Officer invoked sec.40A(2)(b) of the Income-tax Act, 1961, adding Rs. 5,42,99,307/- to the income of the assessee-company, on the grounds that the expenditure incurred for purchasing land from its directors was excessive and unreasonable. The Commissioner of Income-tax (Appeals) found that the initial sales at a loss were part of a long-term business strategy to increase future land value, which was justified by subsequent sales at higher prices. The Tribunal upheld this view, stating the loss was convincingly explained and aligned with commercial expediency principles as per the Supreme Court's judgment in S.A. Builders Ltd. v. CIT (288 ITR 1).
2. Justification of purchase price of land from directors:
The Commissioner of Income-tax (Appeals) accepted the assessee's explanation that the land was purchased at Rs. 3 lakhs per cent as part of a long-term business plan, which was validated by subsequent sales at higher prices. However, the Commissioner reduced the purchase price to Rs. 2,75,000/- per cent. The Tribunal found no justification for this reduction, stating that the full consideration of Rs. 3 lakhs per cent paid to the directors was reasonable and should be accepted.
3. Validity of disallowance of Rs. 25,000/- per cent by the Commissioner of Income-tax (Appeals):
The Tribunal found the disallowance of Rs. 25,000/- per cent by the Commissioner of Income-tax (Appeals) to be unjustified and somewhat contradictory to his own findings. The Tribunal set aside this disallowance, directing that the purchase value of the land be accepted at Rs. 3 lakhs per cent as claimed by the assessee.
Conclusion:
The Tribunal dismissed the appeal filed by the Revenue and allowed the appeal filed by the assessee, thereby accepting the purchase price of the land at Rs. 3 lakhs per cent and rejecting the disallowance of Rs. 25,000/- per cent. The order was pronounced on January 20, 2011.
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2011 (1) TMI 1567
Issues involved: Revenue challenging deletion of addition in sale price of shares and disallowance of depreciation and other expenses on car registered in the name of the director.
Deletion of addition in sale price of shares: Revenue challenged the deletion of addition of Rs. 15,10,000 in respect of sale price of shares. The assessee claimed that shares were sold at purchase price without making any profit, as they were of closely held private limited companies. The AO made the addition without any justification, applying 25% as additional sale price. The learned CIT(A) accepted the contention of the assessee, noting that shares were purchased as stock-in-trade and complete details were filed. The addition was deleted as no material was brought to show higher profit earned on sales.
Disallowance of depreciation on car: Revenue challenged the deletion of disallowance of Rs. 1,11,369 in respect of depreciation and other expenses on a car registered in the name of the director. The AO disallowed depreciation on the motor car purchased in the director's name, despite being used for business purposes. The learned CIT(A) accepted that the car was purchased from the funds of the assessee-company and used for its business, thus deleting the disallowance.
Conclusion: The Tribunal dismissed the Revenue's appeal, upholding the deletion of addition in sale price of shares and disallowance of depreciation on the car registered in the director's name. The Tribunal found no merit in the Revenue's grounds and affirmed the decisions of the learned CIT(A) in both issues.
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2011 (1) TMI 1566
Issues Involved:
1. The petitioner was already in custody under the NDPS Act when the detention order was passed.
2. Some documents relied upon by the detaining authority were not supplied to the petitioner.
3. Despite a specific request in the representation dated 17.06.2010, the documents were not supplied.
4. There was inordinate and unexplained delay in passing the detention order.
5. The grounds of detention did not indicate any prejudicial activities after the petitioner returned to India on 24.05.2009.
Issue-wise Detailed Analysis:
Re: Maintainability
The court examined whether the detention order under COFEPOSA merges with the Advisory Board's opinion and the confirmatory order under section 8(f). It was concluded that the detention order does not merge with the Advisory Board's opinion or the confirmatory order. The Advisory Board provides a constitutional safeguard and does not function as an appellate body. The court cited various precedents, including Vijay Kumar v. Union of India and State of Madras v. Madurai Mills Co. Ltd., to explain that the doctrine of merger is not applicable here. The court affirmed that the detention order could be challenged under Article 226 of the Constitution.
Point No.1: The petitioner was already in custody under the NDPS Act when the impugned detention order was passed
The court acknowledged that a detention order can be validly passed against a person already in custody if the detaining authority is aware of the custody and there are compelling reasons justifying the detention. The court cited Dharmendra Suganchand Chelawat v. Union of India and Kamarunnissa v. Union of India to outline the requirements for such detention orders. It was found that the detaining authority was aware of the petitioner's custody and the imminent possibility of his release on bail. Therefore, the detention order was justified.
Point No.2: Some documents which had allegedly been relied upon by the detaining authority had not been supplied to the petitioner
The court observed that non-supply of documents relied upon by the detaining authority impairs the detenu's right to make an effective representation. The court referred to M. Ahamedkutty v. Union of India, which emphasized that failure to furnish such documents is a denial of the right to make an effective representation. It was found that the documents mentioned in paragraph 52 of the grounds of detention were not supplied to the petitioner, which was fatal to the continued detention.
Point No.3: Despite a specific request having been made in the representation dated 17.06.2010, the documents had not been supplied
The court noted that the petitioner's representation specifically requested the documents, but they were not supplied. This non-supply of requested documents further impaired the petitioner's right to make an effective representation. The court concluded that this was another ground making the continued detention illegal.
Point No.4: There was inordinate and unexplained delay in the passing of the detention order
The court examined the steps taken by the respondents and found that the processing of the detention order involved several rounds of meetings and discussions, which were reasonable given the complexity of the case. The court cited Rajendrakumar Natvarlal Shah v. State of Gujarat and Ahamedkutty to explain that some delay in passing a detention order is permissible if it is justified. The court concluded that there was no inordinate or unexplained delay in this case.
Point No.5: The grounds of detention did not indicate any prejudicial activities after the petitioner returned to India on 24.05.2009
The court found that the grounds of detention did indicate prejudicial activities of the petitioner after his return to India. The first paragraph of the grounds of detention clearly mentioned that the petitioner continued his illegal activities post-May 2009. Therefore, this plea was found to be untenable.
Conclusion:
The court concluded that the continued detention of the petitioner was illegal due to the non-supply of relied-upon documents and the failure to provide requested documents. The petition was allowed to this extent, and the respondents were directed to set the petitioner at liberty forthwith unless he was required to be in custody in some other case.
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2011 (1) TMI 1565
Issues involved: Lack of opportunity of hearing, passing a single order for multiple assessment years.
Lack of opportunity of hearing:
The petitioner's counsel argued that the respondent had passed the impugned order without giving an opportunity of hearing to the petitioner. It was contended that this violated the principles of natural justice. The respondent did not refute these submissions made by the petitioner's counsel.
Passing a single order for multiple assessment years:
The petitioner's counsel also raised the issue that a single order had been passed for four different assessment years, which was deemed impermissible in law. The court acknowledged this contention and set aside the impugned order dated 14.9.2010. The court directed the respondent to issue separate notices for the four different assessment years and to pass appropriate orders after giving the petitioner an opportunity of hearing and considering the relevant records.
In conclusion, the court set aside the impugned order and directed the respondent to issue separate notices for each assessment year, ensuring that the petitioner is given a fair opportunity of hearing and that the orders passed are in accordance with the law. The writ petition was ordered accordingly with no costs, and the connected miscellaneous petition was closed.
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2011 (1) TMI 1564
Issues Involved: Dismissal of appeals for non-prosecution u/s Rule 19(2) of ITAT Rules.
Summary:
The judgment pertains to four appeals filed by different assessees where none appeared on behalf of the assessees during the scheduled hearing date despite proper notice. The Tribunal noted the noncompliant attitude of the assessees towards prosecuting the appeals. Citing Rule 19(2) of the ITAT Rules and referring to precedents, the Tribunal treated the appeals as unadmitted and dismissed them for non-prosecution. The assessees were given the option to provide reasons for non-compliance and request a recall of the order if deemed necessary by the Bench. Ultimately, the appeals were dismissed, and the order was pronounced in open court on the same day of the hearing.
Details for Each Issue:
1. The assessees did not appear during the hearing despite proper notice displayed in advance, indicating a lack of serious interest in prosecuting the appeals.
2. The Tribunal invoked Rule 19(2) of the ITAT Rules and referred to precedents such as the case of C.I.T. vs. Multiplan (India) Limited and Estate of Late Tukojirao Holker vs. CWT to justify the dismissal of the appeals for non-prosecution.
3. The assessees were granted the opportunity to explain the reasons for non-compliance and request a recall of the order if the Bench found it justified, emphasizing the procedural fairness in the decision-making process.
4. Ultimately, the appeals were dismissed due to non-prosecution, highlighting the importance of compliance and active participation in legal proceedings to ensure a fair and just resolution of the case.
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2011 (1) TMI 1563
Issues involved: Application filed by the Appellant- Operational Creditor u/s 9 of the Insolvency and Bankruptcy Code, 2016 was dismissed due to invalid demand notice issuance.
Summary:
The National Company Law Appellate Tribunal, New Delhi, heard the appeal where the Respondent failed to appear. The Appellant, an Operational Creditor, had filed an application u/s 9 of the Insolvency and Bankruptcy Code, 2016, which was dismissed by the Adjudicating Authority for issuing a demand notice without authority.
Upon review, it was established that a valid demand notice is essential for initiating Corporate Insolvency Resolution Process (CIRP) u/s 9 of the I&B Code. The demand notice must be in the prescribed Form-3 and issued by the Operational Creditor or an authorized person. In this case, the notice was issued by an Advocate on behalf of the Operational Creditor, which was deemed valid as per legal precedents.
The Appellant cited a previous case where it was held that an Advocate can issue a demand notice on behalf of the operational creditor. The Tribunal agreed that the notice issued through an Advocate was valid, and the Adjudicating Authority's decision was inconsistent with legal principles.
Consequently, the Tribunal set aside the impugned order, remitted the matter back to the Adjudicating Authority for further consideration, and directed the Corporate Debtor to settle the claim. The appeal was allowed, and the Appellant was instructed to appear before the Adjudicating Authority on a specified date.
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2011 (1) TMI 1562
Issues Involved:
1. Validity of notice u/s 13 of the SERFAESI Act.
2. Impact of compromise settlement on guarantor's liability.
3. Applicability of Sections 133 to 135 of the Indian Contract Act.
4. Right of the bank to initiate fresh proceedings under the SERFAESI Act after a compromise decree.
Summary:
1. Validity of notice u/s 13 of the SERFAESI Act:
The Petitioner challenged the notice dated 15.9.2009 issued by the 2nd Respondent u/s 13 of the SERFAESI Act seeking to recover a sum of Rs. 72,00,571/- from the Petitioner and Respondent No. 3. The notice was issued following a loan transaction between the 3rd Respondent and the 1st Respondent.
2. Impact of compromise settlement on guarantor's liability:
The Petitioner stood as guarantor for a loan availed by the 3rd Respondent from the 1st Respondent. A compromise was reached in 2004 between the principal borrower and the creditor bank, wherein the principal borrower agreed to pay Rs. 20,00,000/- in full settlement. The Petitioner argued that this compromise amounted to a novation of the contract, which was done without his consent, thereby discharging him from liability.
3. Applicability of Sections 133 to 135 of the Indian Contract Act:
The Petitioner contended that any variance in the terms of the contract between the borrower and creditor without reference to the surety discharges the surety from liability, as per Sections 133 to 135 of the Indian Contract Act. The Petitioner cited several judgments, including *Amrit Lal Goverdhan Lalan v. State Bank of Travancore* and *Maharashtra Apex Corporation Ltd. v. Poovappa*, to support his claim that the surety is discharged if the creditor gives time to the principal debtor without the surety's consent.
4. Right of the bank to initiate fresh proceedings under the SERFAESI Act after a compromise decree:
The Petitioner argued that once the proceedings under the DRT Act reached finality with a compromise, the bank could not initiate fresh proceedings under the SERFAESI Act. The Petitioner cited the judgment in *Kanhaiya Lal v. State Bank of India* to argue that the bank is estopped from ignoring the final order and starting new proceedings under the SERFAESI Act.
Judgment:
The Court held that the liability of the guarantor ended with the compromise between the principal borrower and the creditor bank in OA. No. 67/2000. The Petitioner, as guarantor, was absolved of liability, and the bank could not initiate proceedings against the Petitioner under Section 13 of the SERFAESI Act. The notice dated 15.9.2009 was quashed. The Court also noted that the ratio laid down in *Satyawati Tandon's* case did not apply to the facts of this case. The petition was allowed, and parties were directed to bear their own costs.
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2011 (1) TMI 1561
Issues Involved:
Assessee's appeals against levy of interest u/s 201(1) and 201(1)(A) of the IT Act for multiple assessment years.
Summary:
Issue 1: Levy of interest u/s 201(1) and 201(1)(A) of the IT Act
The assessee, a Government of Karnataka undertaking, entered into agreements with foreign entities for consultancy services and project implementation. The AO observed that the assessee failed to deduct tax at source at the required rate, resulting in short remittance of tax. Consequently, the AO declared the assessee as assessee in default u/s 201(1) and levied interest u/s 201(1A). The CIT(A) upheld the AO's orders.
Issue 2: Additional Grounds of Appeal
The assessee raised additional grounds of appeal related to limitation and tax treatment of income. The Tribunal considered these grounds, including the argument that the orders for certain financial years were time-barred and the nature of income should be taxed at specific rates under the Act or DTAA provisions.
Issue 3: Limitation Period for Initiating Proceedings u/s 201(1) and 201(1A)
The assessee argued that the proceedings u/s 201(1) and 201(1A) were barred by limitation. The Special Bench's decision in the case of M/s Mahindra & Mahindra Ltd. was cited, which prescribed a 6-year limitation period for initiating proceedings if the income exceeded a certain threshold. The Tribunal followed this decision and directed the AO to verify the limitation period in each case.
In conclusion, the assessee's appeals were allowed for statistical purposes, with proceedings quashed if found to be initiated after the prescribed limitation period. The issue on merits was remitted to the CIT(A) for further consideration.
Separate Judgment by Judges:
No separate judgment was delivered by the judges in this case.
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