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2011 (9) TMI 1242
Issues Involved:
1. Deletion of addition made by the Assessing Officer (AO) on account of undisclosed income under Section 68 of the Income-tax Act, 1961.
2. Deletion of addition made by the AO on account of low gross profit.
Detailed Analysis:
Issue 1: Deletion of Addition on Account of Undisclosed Income under Section 68
The Revenue contended that the CIT(A) erred in deleting the addition of Rs.5,68,000/- made by the AO on account of undisclosed income under Section 68 of the Income-tax Act. The AO made this addition after the assessee failed to provide satisfactory documentary evidence for the share application money received in cash from various individuals. Despite being given 13 opportunities, the assessee only provided partial confirmations, leading the AO to treat the share application money as income from undisclosed sources.
The CIT(A) deleted the addition based on the assessee's reliance on several judicial precedents, including CIT v. Lovely Exports (P) Ltd. and CIT v. Steller Investment Ltd. The CIT(A) noted that confirmations and identity proofs were provided, and the AO did not dispute these in the remand report. The CIT(A) concluded that the identity of the shareholders and the genuineness of the transactions were established, thus deleting the addition.
In the appellate proceedings, the Revenue argued that the confirmations were inadequate as they did not include evidence of income tax returns filed by the shareholders. The Revenue also highlighted that the share capital contributions were made in cash, and some confirmations listed the assessee's address as that of the shareholders.
The Tribunal noted that the primary onus lies on the assessee to prove that the share application money does not represent its income. The Tribunal emphasized that the assessee failed to provide adequate evidence despite multiple opportunities. The Tribunal also referenced the decision of the jurisdictional High Court in M/s Power Drugs Ltd., which supported the Revenue's stance that the assessee did not discharge its burden under Section 68.
The Tribunal concluded that the CIT(A) relied on incorrect evidence, as the assessee never demonstrated that the shareholders were assessed to income tax. The Tribunal found the CIT(A)'s findings to be based on surmises and conjectures. Consequently, the Tribunal upheld the addition made by the AO, deciding the issue in favor of the Revenue.
Issue 2: Deletion of Addition on Account of Low Gross Profit
The Revenue contended that the CIT(A) erred in deleting the addition of Rs.5,08,822/- made by the AO on account of low gross profit. The AO made this addition by comparing the gross profit rate of the current year with the previous year without rejecting the books of account as required under Section 145(3) of the Act.
The CIT(A) deleted the addition, noting that the assessee's sales had substantially increased, and all transactions were duly vouched. The CIT(A) accepted the assessee's explanation that the decrease in gross profit was due to lower sales rates and higher purchase costs. The CIT(A) also noted that the gross profit rate for the subsequent year was accepted by the department.
The Tribunal agreed with the CIT(A), stating that the AO substituted his version without rejecting the books of account and failed to bring credible material to justify the addition. The Tribunal upheld the CIT(A)'s findings as well-reasoned and based on a proper appreciation of the facts and legal position. Thus, the Tribunal dismissed this ground of appeal by the Revenue.
Conclusion
The Tribunal partly allowed the Revenue's appeal, upholding the addition on account of undisclosed income under Section 68 but dismissing the addition on account of low gross profit. The order was pronounced in the Open Court on 19th Sept., 2011.
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2011 (9) TMI 1241
The Bombay High Court ruled that the amount received on the sale of Transfer of Development Right (TDR) should be assessed in the year the project was completed, not when the amount was received. The court dismissed the appeal and upheld the deletion of the addition of the amount received by the assessee on the transfer of TDR in the year 2002-03.
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2011 (9) TMI 1240
The Delhi High Court dismissed the appeals regarding the addition made by the Assessing Officer on account of provisions for warranties. The Court held that the warranty provision made by the assessee was allowable as a deduction, citing previous judgments. The Court noted that the claim had been allowed by the Revenue for subsequent years, and on the ground of consistency, the claim was deemed allowable.
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2011 (9) TMI 1239
Issues Involved:1. Legality of the General Court Martial proceedings. 2. Specificity and sufficiency of charges under Section 52(f) of the Army Act. 3. Interpretation of "intent to defraud" under Section 52(f) of the Army Act. 4. Procedural fairness and opportunity for defense. Summary:1. Legality of the General Court Martial proceedings:The appeal by Union of India challenges the judgment of the Division Bench of the Punjab and Haryana High Court, which set aside the General Court Martial's proceedings, findings, and sentence against the first Respondent. The General Court Martial had awarded Rigorous Imprisonment (R.I.) for one year and cashiering to the first Respondent for fraudulent activities during his tenure as Commanding Officer of the 6 Armoured Regiment. 2. Specificity and sufficiency of charges under Section 52(f) of the Army Act:The Respondent was charged under Section 52(f) of the Army Act for countersigning contingent bills to claim unauthorized modification grants for vehicles. The Division Bench held that the charges did not include wrongful gain to the Respondent and corresponding loss to the army, thus not proving the intent to defraud. However, the Supreme Court noted that the charges clearly mentioned the unauthorized claims and countersigning of bills, leading to the withdrawal of Rs. 77,692/-, which was not used for the intended purpose. 3. Interpretation of "intent to defraud" under Section 52(f) of the Army Act:The Supreme Court emphasized that Section 52(f) is disjunctive, containing two parts: (i) doing something with intent to defraud, and (ii) causing wrongful gain or loss. The Respondent was charged with the first part, and it was not necessary to prove wrongful gain or loss. The Court referred to the definitions of "dishonestly" and "fraudulently" from the Indian Penal Code, noting that "fraudulent" includes non-economic harm. The evidence showed deceit and injury, satisfying the requirement of intent to defraud. 4. Procedural fairness and opportunity for defense:The Supreme Court found that the Respondent had full opportunity to defend himself, and all procedural steps were followed as required by the Army Act. The Respondent participated in the proceedings, and there was no violation of procedural provisions causing prejudice. The Court highlighted the importance of integrity in the armed forces and upheld the General Court Martial's decision, noting that the Respondent's actions affected the Army's reputation. Conclusion:The Supreme Court allowed the appeal, set aside the Division Bench's order, and confirmed the Single Judge's decision, thereby dismissing the Respondent's Writ Petition. The Court did not order any cost against the Respondent.
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2011 (9) TMI 1238
Issues involved: Acceptance of recommendations of the Central Empowered Committee, clarification on specific points in the report, extension of previous order to additional districts, modification of the period for submitting a report, funding for macro level EIA study.
Acceptance of recommendations: The Supreme Court accepted the recommendations of the Central Empowered Committee as per its report dated 1st September, 2011. However, certain clarifications were provided: (a) Exclusion of Paragraph (5) of the Report for leases exclusively for Manganese ore, (b) Amendment in clause (ix) of Paragraph (2) to replace "to the Government" with "to the State of Karnataka", and (c) Mandating periodic audit of sale proceeds accounts by the Accountant General of the State of Karnataka.
Extension of previous order: Paragraph (v) of the Order dated 26th August, 2011, was extended to include the Districts of Tumkur and Chitradurga, in addition to Bellary. The Court directed the ICFRE to conduct a macro level EIA study and submit a reclamation and rehabilitation plan for these districts. The period for this study and plan submission was extended by three months from the date of the Order.
Funding for EIA study: Due to the high expenses associated with the macro level EIA study, the Court directed that the costs should be covered under the ad-hoc CAMPA Scheme, in accordance with the decision of the ad-hoc CAMPA Committee.
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2011 (9) TMI 1237
Issues Involved:
1. Whether the High Court was justified in quashing the order forfeiting the pension.
2. Whether the General Court Martial (GCM) proceedings violated any rules.
3. Whether the findings of guilt in regard to charges 1, 4, and 5(c) require interference.
4. Whether the punishment of dismissal was excessively disproportionate to the gravity of the charges proved.
Issue-wise Detailed Analysis:
1. Whether the High Court was justified in quashing the order forfeiting the pension:
The High Court quashed the pension forfeiture order, reasoning that the General Court Martial (GCM) did not deem it necessary to forfeit the pension and pensionary benefits, implying that the GCM found the punishment of dismissal sufficient. The High Court relied on the Delhi High Court decision in Brig. A.K. Malhotra, which was later reversed by the Supreme Court in Union of India v. P.D. Yadav. The Supreme Court clarified that the President of India has the power to direct forfeiture of pension under Pension Regulation 16(a) independent of the GCM's punishment. The High Court's interference with the President's discretion under Regulation 16(a) was deemed erroneous. Therefore, the appeal by the Appellants (Criminal Appeal No. 876 of 2003) succeeded, subject to the outcome of the first Respondent's appeal.
2. Whether the General Court Martial (GCM) proceedings violated any rules:
The first Respondent contended procedural irregularity in the GCM, particularly the participation of Brig. S.K. Kaushal as the Presiding Officer, who had previously summarily tried two prosecution witnesses. The Supreme Court found that the Presiding Officer did not suffer from any disqualifications under Rule 39 of the Army Rules 1954. The High Court also found no merit in other procedural challenges, including allegations of bias against the Judge Advocate and Dy. JAG. The Supreme Court upheld the High Court's finding that there was no infirmity in the constitution of the GCM and the procedure followed.
3. Whether the findings of guilt in regard to charges 1, 4, and 5(c) require interference:
The Supreme Court emphasized that judicial review of court martial proceedings is limited to jurisdictional errors or procedural violations and does not extend to re-assessing evidence. The High Court found the trial was conducted according to rules, with due opportunity for defense. The Supreme Court agreed, noting that the GCM had jurisdiction, followed prescribed procedures, and the findings were based on sufficient evidence. Thus, there was no reason to interfere with the findings of guilt regarding charges 1, 4, and 5(c).
4. Whether the punishment of dismissal was excessively disproportionate to the gravity of the charges proved:
The Supreme Court assessed whether the punishment of dismissal was shockingly disproportionate to the gravity of the charges. The charges involved a technical interpretation of contractual terms and supervisory lapses. The Supreme Court found the punishment of dismissal to be excessively harsh and substituted it with forfeiture of eight years of service for pension purposes and a severe reprimand. Consequently, the order forfeiting the pension was set aside, as pension can only be denied to officers who are cashiered, dismissed, or removed from service. The first Respondent was not entitled to back wages from the date of dismissal to the date of superannuation.
Conclusion:
- Criminal Appeal No. 876 of 2003 was allowed, setting aside the High Court's quashing of the pension forfeiture order.
- Criminal Appeal No. 877 of 2003 was allowed, substituting the punishment of dismissal with forfeiture of eight years of service for pension purposes and a severe reprimand.
- The order dated 22.12.1995 forfeiting the pension was set aside, and the Respondents were directed to process and settle the pension claim within six months, without back wages from the date of dismissal to superannuation.
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2011 (9) TMI 1236
Issues involved: Appeal by Revenue against ITAT order for assessment year 2006-07 regarding deletion of sums u/s 68 and u/s 40(a)(ia) of the Income Tax Act.
Issue I - Deletion of sum u/s 68:
The assessee submitted various documents to support the claim of Rs. 36 lakh, including share application forms, balance sheets, and IT returns of share applicants. The assessing officer found no discrepancies in the documents. The Revenue alleged that the share application was sourced to a non-existent entity, M/s. Satyam Traders, who deposited a large sum in their bank account. However, the Tribunal found that the share application money was received by the assessee before the deposit in M/s. Satyam Traders' account. The Tribunal concluded that the assessee proved the identity, genuineness, and creditworthiness of the share applicants, and the addition of Rs. 36 lakh u/s 68 was not justified based on subsequent events. The High Court upheld the Tribunal's decision, stating that the Tribunal correctly ignored the subsequent transaction and found no error in its findings.
Issue II - Deletion of sums u/s 40(a)(ia):
The Tribunal noted that payments of Rs. 24,000 and Rs. 1,75,702 were made to individuals without TDS deductions under Sections 194C and 194J. The Tribunal found no need for TDS deduction as the payments were made for specific services and not subject to TDS. The High Court agreed with the Tribunal's findings, stating that no substantial question of law arose from the materials submitted. Consequently, the High Court summarily dismissed the appeal.
In summary, the High Court upheld the ITAT's decision to delete the sums u/s 68 and u/s 40(a)(ia) of the Income Tax Act for the assessment year 2006-07, finding that the assessee had provided sufficient evidence to support the claims and that no errors were made in the Tribunal's findings.
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2011 (9) TMI 1235
Issues Involved:
1. Validity of the agreement for sale.
2. Whether the service charges paid by the assessee are deductible in computing capital gains.
3. Whether the payment of service charges amounts to diversion of income by overriding title.
Issue-wise Detailed Analysis:
1. Validity of the Agreement for Sale:
The primary issue was whether the agreement for sale between the assessee's mother and Mr. Suresh H. Mansukhani & Others was valid. The assessee's mother had entered into an agreement on 7.8.1993 to sell her rights in a plot of land at Worli for Rs. 2.75 crores, with specific terms regarding the Indian Navy's occupation of the land. The Assessing Officer (A.O.) doubted the validity of this agreement, arguing that it was not executed as the property was never released by the Indian Navy, and no deed of transfer was completed. The Commissioner of Income Tax (Appeals) [CIT(A)] found the agreement valid, noting that the agreement had two parts: one for the sale of the land and the other for representing the vendor in acquisition proceedings if the land was acquired by the Indian Navy. The CIT(A) concluded that the agreement's second part was acted upon, making the agreement valid despite the non-completion of the sale.
2. Deductibility of Service Charges in Computing Capital Gains:
The A.O. disallowed the deduction of service charges paid by the assessee to Mr. Suresh H. Mansukhani & Others, claiming the payment was bogus and an attempt to divert taxable income. The CIT(A) accepted the assessee's claim, stating that the service charges were a valid contractual obligation inherited by the assessee along with the property. The CIT(A) noted that the agreement required the purchasers to represent the vendor in acquisition proceedings and ensure the compensation was commensurate with the market value, justifying the payment of 1/3rd of the total consideration as service charges. The CIT(A) found that the services were indeed rendered, supported by a letter from the Commissioner, Konkan Division, and the fact that the payees had incurred litigation expenses and filed returns showing the receipt of the money.
3. Diversion of Income by Overriding Title:
The assessee contended that the payment of service charges constituted a diversion of income by overriding title, as the obligation to pay was inherited along with the property. The Tribunal rejected this contention, stating that for the rule of diversion of income by overriding title to apply, the obligation must be a charge on the source of income itself. In this case, the compensation was received by the assessee directly and the service charges were paid separately to discharge a contractual liability, making it an application of income rather than a diversion by overriding title.
Conclusion:
The Tribunal upheld the CIT(A)'s decision, affirming that the agreement for sale was valid and the service charges paid by the assessee were deductible in computing capital gains as they were expenses incurred in connection with the transfer of the property. The Tribunal dismissed the revenue's appeal, concluding that the payment of service charges did not amount to diversion of income by overriding title.
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2011 (9) TMI 1234
Issues involved: The issues involved in the judgment are:
1. Whether the Tribunal was right in allowing the deduction u/s 80IB(10) despite the construction of a residential-cum-commercial complex, violating a precondition under the Income Tax Act, 1961?
2. Whether the Tribunal was correct in allowing the deduction u/s 80IB(10) for a project where the commencement certificate was issued before the specified date?
Issue 1:
The Revenue raised a question regarding the deduction u/s 80IB(10) for a project involving a residential-cum-commercial complex, which was in violation of the Act. The court referred to a previous decision and held that the question was already answered against the Revenue, citing the case of CIT vs. M/s Brahma Associates.
Issue 2:
The Assessee claimed deduction u/s 80IB(10) for a project purchased from a third party, which commenced in March 2001. The Assessing Officer disallowed the claim as the project was originally sanctioned before the specified date of 1st October 1998. However, the ITAT found that the project actually commenced after the specified date, based on revised plans sanctioned in 2002, despite the original plans being approved earlier. The court upheld the ITAT's decision as a factual finding, dismissing the appeal with no costs.
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2011 (9) TMI 1233
Issues Involved:
1. Validity of the family settlement and compromise dated 26th December, 1984.
2. Legality of the mutation order dated 9th June, 1995.
3. Applicability and interpretation of Section 55 of the Delhi Land Reforms Act, 1954.
4. Relevance of Sections 33 and 57 of the Delhi Land Reforms Act, 1954.
5. Impact of judicial precedents on family settlements and partition.
Detailed Analysis:
1. Validity of the Family Settlement and Compromise:
The judgment acknowledges that the four brothers, who were joint bhumidhars of the land after the death of their father Siri Lal, entered into a family settlement on 26th December, 1984, dividing the land among themselves. This was followed by an amicable settlement before Panchas, resulting in an award dated 14th May, 1989. The civil suit filed by two of the brothers was dismissed as compromised based on this settlement. The court noted that the application under Order 23 Rule 3 of the Code of Civil Procedure was an admission of the settlement by the appellants, who did not dispute the partition but raised a legal contention under Section 55 of the Reforms Act.
2. Legality of the Mutation Order:
The Tehsildar's order dated 9th June, 1995, allowing the mutation based on the compromise application, was challenged. The court found merit in the appellant's contention that the Tehsildar's reasoning was unsustainable because the civil suit was dismissed on the basis of compromise, and the Tehsildar did not examine the effect of Section 85 of the Reforms Act and the Supreme Court judgment in Hatti v. Sunder Singh. However, the court did not find this a sufficient ground to remit the matter, as the family settlement and subsequent actions were not disputed.
3. Applicability and Interpretation of Section 55 of the Delhi Land Reforms Act, 1954:
The appellants argued that the family settlement and admissions were illegal under Section 55, which they claimed prescribed the only mode of partition. The court disagreed, stating that Section 55 prescribes one way of partition through legal proceedings but does not bar joint bhumidhars from entering into a settlement or compromise. The court emphasized that the word "may" in Section 55 indicates discretion and is not mandatory, supporting this interpretation with judicial precedents that distinguish between "may" and "shall."
4. Relevance of Sections 33 and 57 of the Delhi Land Reforms Act, 1954:
The court addressed the appellants' reference to Sections 33 and 57(1)(b), which concern the fragmentation of holdings and conditions for partition. It was noted that Section 33 does not apply to partitions as there is no transferor or transferee in such cases. Section 57(1)(b) allows for partition even if it results in holdings of less than eight standard acres, provided certain conditions are met. The court concluded that these sections do not prohibit family settlements or mutual agreements for partition.
5. Impact of Judicial Precedents on Family Settlements and Partition:
The judgment extensively cited Supreme Court precedents emphasizing the importance and validity of family settlements. It highlighted that family settlements are recognized as a legitimate method of partition, promoting peace and harmony among family members. The court referenced cases such as Hari Shankar Singhania v. Gaur Hari Singhania and Kale v. Dy. Director of Consolidation, which support the enforcement of family settlements to avoid litigation and maintain family unity.
Conclusion:
The court concluded that the provisions of the Reforms Act do not prohibit joint bhumidhars from entering into a family settlement to partition their holdings. It dismissed the appeal, affirming the validity of the family settlement and the subsequent mutation order, with no orders as to costs.
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2011 (9) TMI 1232
Issues involved:
The judgment addresses various questions of law raised by the revenue in the appeal, including the justification of allowing certain claims, expenses, and deductions under different sections of the Income Tax Act.
Question (a):
The Tribunal was justified in allowing the assessee's claim for enhancing actual cost of plant & machinery due to increase in foreign exchange liability resulting from exchange rate fluctuations in subsequent years and allowing the investment allowance on such enhanced cost. The revenue's question was answered against them by the decision of the Apex Court in CIT V/s. Woodward Governor India P. Ltd.
Question (b):
The Tribunal was justified in holding that certain expenses did not constitute entertainment expenses within the meaning of Sec. 37(2) of the I.T. Act, 1961. The revenue did not press this question as similar decisions in earlier assessment years have been accepted.
Question (c):
The Tribunal was justified in allowing certain expenditures incurred on account of fabric show, meeting, sales conference, and opening ceremony of a retail showroom as business expenditure. The revenue did not press this question as similar decisions in earlier assessment years have been accepted.
Question (d):
The Tribunal was justified in allowing foreign travel expenses of employees as revenue expenditure, contrary to the assessing officer's treatment as capital expenditure. The revenue did not press this question as similar decisions in earlier assessment years have been accepted.
Question (e):
The Tribunal was justified in deleting the disallowance of certain interest amounts made under Sec.43B of the I.T. Act. The revenue did not press this question as similar decisions in earlier assessment years have been accepted.
Question (f):
The Tribunal was justified in allowing a sum incurred on contribution to a local organization as business expenditure. The revenue did not press this question as similar decisions in earlier assessment years have been accepted.
Question (g):
The Tribunal was justified in allowing certain expenditure on providing tea, snacks, etc. to shareholders at the time of Annual General Meeting, holding that the same are not entertainment expenses. The revenue did not press this question as similar decisions in earlier assessment years have been accepted.
Question (h) & (l):
The Tribunal was justified in allowing certain claims regarding exclusion of inter-divisional transfer from total turnover and depreciation on non-business assets. The revenue could not challenge these decisions as the ITAT's order for AY 1990-91 had attained finality.
Question (i):
The Tribunal was justified in holding that interest accrued but not due on securities should not be taxed as income for the year. The revenue did not press this question as the ITAT followed the decision of the Madras High Court.
Question (j):
The Tribunal was justified in allowing proportionate premium payable on the redemption of bonds during the year as expenditure. The revenue did not press this question as similar decisions in earlier assessment years have been accepted.
Question (k):
The Tribunal was justified in allowing depreciation on certain assets at the applicable rate. The revenue did not press this question as similar decisions in earlier assessment years have been accepted.
Question (m):
The Tribunal was justified in allowing certain expenditure as admissible business expenditure, despite the absence of the assessee's logo on the distributed articles. The revenue could not challenge this decision as it was answered against them by the decision of the Bombay High Court.
Question (n):
The Tribunal was justified in deleting the disallowance on account of expenses on the issue of debenture. The revenue could not challenge this decision as it was answered against them by the Apex Court.
The appeal was disposed of with no order as to costs.
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2011 (9) TMI 1231
Issues involved: Disallowance of set off of loss for the assessment year 2003-04 of a merged company in the hands of the assessee u/s 143(3) of the Income-tax Act, 1961.
Summary:
Issue 1: Disallowance of set off of loss for the assessment year 2003-04
The appeal was filed by the assessee against the order of the Commissioner of Income-tax(Appeals) disallowing the set off of loss amounting to &8377; 4,45,09,700/- pertaining to the assessment year 2003-04 of a merged company, M/s. Jeetstex Engineering Ltd. The assessing authority held that since the return for the said year was filed beyond the due date, the loss could not be allowed to be set off. The Commissioner of Income-tax(Appeals) upheld this decision, leading to the second appeal before the Tribunal.
The grounds raised by the assessee argued that the provisions of the Sick Industrial Companies (Special Provisions) Act, 1985 (SICA) should prevail over the Income-tax Act, and that the BIFR's scheme should exempt them from certain provisions. However, the Tribunal found that the loss for the assessment year 2003-04 was not determined in lawful proceedings due to the belated filing of the return, rendering it ineligible for carry forward under the Income-tax law. Consequently, the Tribunal dismissed the appeal, upholding the disallowance of the set off for the said amount.
In conclusion, the Tribunal dismissed the appeal filed by the assessee, upholding the disallowance of the set off of loss amounting to &8377; 4,45,09,700/- for the assessment year 2003-04 due to the belated filing of the return, as per the provisions of the Income-tax Act, 1961.
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2011 (9) TMI 1230
Issues Involved:
1. Legality of the bail granted to Respondent No. 2.
2. Consideration of fresh grounds for bail.
3. Examination of the FSL report and its implications.
4. Allegations of threat and their impact on bail.
Summary:
1. Legality of the Bail Granted to Respondent No. 2:
The Petitioner challenged the order dated 21.04.2011 by the Additional Sessions Judge admitting Respondent No. 2 to bail. Initially, the bail application u/s 439 CrPC was dismissed on 07.03.2011 due to serious allegations of cruelty and the likelihood of tampering with evidence. However, the same judge later granted bail on 21.04.2011 after Respondent No. 2 spent 45 days in custody, citing no new threats and the accused's cooperation during the investigation.
2. Consideration of Fresh Grounds for Bail:
The court noted that while an accused has the right to successive bail applications, the court must consider the reasons for earlier rejections and any fresh grounds. The Petitioner argued that there were no new circumstances to justify the bail granted on 21.04.2011. The court referenced Kalyan Chandra Sarkar v. Rajesh Ranjan and Prakash Kadam v. Ramprasad Vishwanath Gupta, emphasizing that the gravity of the offense and the potential for evidence tampering are critical considerations.
3. Examination of the FSL Report and Its Implications:
The initial bail rejection was partly based on the FSL report confirming the handwriting of the deceased in the suicide note. However, the subsequent bail order noted that the FSL report dated 09.11.2010 could not attribute the handwriting in the suicide note to the deceased. The court highlighted that the suicide note was in Hindi, while the signatures were in English, and the FSL report only verified the signatures.
4. Allegations of Threat and Their Impact on Bail:
The Petitioner alleged that Respondent No. 2's brother had threatened the deceased's family, but the court found no substantial evidence of such threats in the investigation records. The court also noted that the accused had cooperated with the investigation and there was no apprehension of absconding, given his employment as a Section Officer at Ramjas College.
Conclusion:
The court concluded that the order granting bail was well-reasoned, considering the accused's cooperation, lack of new threats, and the FSL report's findings. The petition to cancel the bail was dismissed, affirming the trial court's decision.
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2011 (9) TMI 1229
Issues Involved:
1. Overriding effect of the Securitisation Act over the Kerala Buildings (Lease and Rent Control) Act.
2. Summary eviction of tenants under the Securitisation Act despite protections under the Rent Control Act.
Issue-wise Detailed Analysis:
1. Overriding Effect of the Securitisation Act over the Kerala Buildings (Lease and Rent Control) Act:
The core issue was whether the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (Securitisation Act) overrides the Kerala Buildings (Lease and Rent Control) Act, 1965 (Rent Control Act). The court noted that the Securitisation Act and the Rent Control Act operate in different fields, with the former enacted under Entry 45 of List I (Union List) and the latter under Entry Nos. 6, 7, and 13 of the Concurrent List. It was emphasized that Article 254 of the Constitution, which addresses repugnancy between State and Central laws, applies only when both legislations occupy the same field within the Concurrent List. The court concluded that there is no conflict between the Securitisation Act and the Rent Control Act, and hence, the former does not override the latter. The court held, "The Securitisation Act has no overriding effect over the provisions of the Kerala Buildings (Lease and Rent Control) Act, 1965."
2. Summary Eviction of Tenants under the Securitisation Act:
The court examined whether tenants could be summarily evicted under Sections 13(4) and 14 of the Securitisation Act, despite protections under the Rent Control Act. It was noted that the Securitisation Act allows secured creditors to take possession of secured assets, but this does not automatically annul pre-existing tenancy rights. The court observed that Section 13(1) of the Securitisation Act specifically mentions Sections 69 and 69A of the Transfer of Property Act, indicating that other provisions of the Transfer of Property Act, which protect tenants' rights, continue to apply. The court stated, "The secured creditor is entitled to realise the amounts due to him/it. For that purpose, different modes are provided in the Securitisation Act. The overriding effect as provided under Section 35 of the Securitisation Act would empower the secured creditor to take recourse to one or more of the measures provided in sub-section (4) of Section 13 of the Act, notwithstanding anything inconsistent therewith contained in any other law for the time being in force."
The court also referenced Section 109 of the Transfer of Property Act, which ensures that the rights of tenants continue despite the transfer of property. It was concluded that a tenant inducted before the creation of the security interest cannot be summarily evicted, and their rights under the Rent Control Act remain intact. The court held, "A tenant inducted in the premises before creation of the security interest cannot be summarily evicted under Sections 13(4) and 14 of the Securitisation Act."
Conclusion:
The court disposed of the Writ Petition, permitting the petitioners to file an application under Section 17 of the Securitisation Act within a month, which the Debts Recovery Tribunal should treat as filed within the period of limitation. The final holding was, "The Securitisation Act has no overriding effect over the provisions of the Kerala Buildings (Lease and Rent Control) Act, 1965. A tenant inducted in the premises before creation of the security interest cannot be summarily evicted under Sections 13(4) and 14 of the Securitisation Act."
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2011 (9) TMI 1228
Issues Involved:
1. Deletion of addition on account of inflated purchases.
2. Deletion of additions on account of suppression of sale of scrap and under valuation of closing stock of scrap.
3. Deletion of disallowance of commission expenses.
4. Deletion of disallowance of reimbursement of freight expenses.
5. Validity of reopening the assessment under section 148.
Detailed Analysis:
1. Deletion of Addition on Account of Inflated Purchases:
The department contested the deletion of an addition of Rs. 16,97,475/- made by the Assessing Officer (AO) for inflated purchases. The AO's reasons included discrepancies in purchase bills from various suppliers. However, the CIT (A) found that the AO did not verify the bills or issue summons to the parties involved. The CIT (A) noted that all purchases were made through account payee cheques and were properly recorded in the stock register. The Tribunal upheld the CIT (A)'s decision, noting that similar additions for the assessment year 1999-2000 were also deleted by the Tribunal.
2. Deletion of Additions on Account of Suppression of Sale of Scrap and Under Valuation of Closing Stock of Scrap:
The department challenged the deletion of additions totaling Rs. 1,12,82,308/- and Rs. 5,61,198/- for suppression of sale of scrap and under valuation of closing stock of scrap, respectively. The AO based these additions on the assumption that the assessee sold scrap at a higher rate than recorded and received the difference in cash. The CIT (A) found no evidence to support the AO's assumption of a higher sale rate. The Tribunal affirmed the CIT (A)'s decision, citing a similar case for the assessment year 1999-2000 where the Tribunal had deleted similar additions.
3. Deletion of Disallowance of Commission Expenses:
The AO disallowed commission expenses of Rs. 4,60,502/- on the grounds that the assessee could not provide satisfactory explanations. The CIT (A) deleted the disallowance, noting that the assessee had provided copies of account and bank statements proving the payments. The Tribunal upheld the CIT (A)'s decision, referencing a similar case for the assessment year 1999-2000 where the Tribunal had confirmed the deletion of similar disallowances.
4. Deletion of Disallowance of Reimbursement of Freight Expenses:
The AO disallowed Rs. 6,94,186/- claimed as reimbursement of freight expenses, arguing that the assessee did not deliver scrap on an FOR basis. The CIT (A) deleted the disallowance, noting that the assessee had provided supporting documents for the freight charges. The Tribunal upheld the CIT (A)'s decision, citing a similar case for the assessment year 1999-2000 where the Tribunal had deleted similar disallowances.
5. Validity of Reopening the Assessment under Section 148:
The assessee contested the reopening of the assessment under section 148, arguing that it was done after four years without any failure on their part to disclose material facts. The Tribunal found that the AO did not mention any failure by the assessee to disclose material facts in the reasons recorded for reopening. Citing various judgments, the Tribunal held that reopening the assessment after four years was not permissible without such a failure. Consequently, the Tribunal quashed the assessment, deeming it bad in law.
Conclusion:
The Tribunal dismissed the department's appeal and allowed the assessee's cross objection, quashing the reopening of the assessment and confirming the deletions of the additions and disallowances made by the AO.
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2011 (9) TMI 1227
Issues involved: Revision petition u/s 397 read with 401 CrPC against conviction and sentence under Section 138 of the Negotiable Instruments Act, 1881.
Summary:
The accused petitioner filed a revision petition against the order of the First Appellate Court upholding his conviction and sentence for an offence u/s 138 of the Negotiable Instruments Act. The petitioner did not surrender before the Appellate Court, which was noted in the certificate filed. The complaint alleged that the accused issued a cheque that was dishonoured due to insufficient funds. The accused denied the charge and claimed false implication. Both parties presented evidence, with the accused claiming the amount borrowed was repaid, supported by documentary evidence. The trial court convicted the petitioner, and his appeal was dismissed by the Additional Sessions Judge. The High Court noted that the accused did not surrender before the Appellate Court, rendering the revision petition not maintainable. With concurrent findings by lower courts, the High Court dismissed the revision petition and the application seeking suspension of sentence.
In conclusion, the High Court dismissed the revision petition as the accused did not surrender before the Appellate Court, making the petition not maintainable. The court found no grounds for interference in the concurrent findings of the lower courts.
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2011 (9) TMI 1226
Issues involved: Revision petition u/s 397 read with 401 CrPC against order of conviction and sentence for offence u/s 138 of Negotiable Instruments Act, 1881. Maintainability of revision petition due to non-surrender of accused before Appellate Court.
Details of the judgment:
Issue 1: Conviction and sentence under Section 138 of Negotiable Instruments Act, 1881
The accused petitioner filed a revision petition against the order of conviction and sentence passed by the First Appellate Court. The complaint alleged that the accused issued a cheque which bounced due to insufficient funds. The non-petitioner filed a criminal complaint under the Negotiable Instruments Act, and the Court took cognizance. The non-petitioner provided evidence, and the petitioner denied issuing the cheque but did not present any defense. The Trial Court convicted the petitioner and sentenced him to 6 months' simple imprisonment and a fine of Rs. 5000. The appeal filed by the petitioner was dismissed by the Additional Sessions Judge.
Issue 2: Maintainability of revision petition
The petitioner did not surrender before the Appellate Court at the time of judgment pronouncement, as required by law. The Trial Court has the power to suspend the sentence for one month under Section 389(3) CrPC if the convicted person intends to appeal. However, the Appellate Court does not have the discretion to suspend the sentence during the pendency of appeal. In this case, since the accused did not surrender and the revision petition was filed without the required certificate of custody, it was held that the revision petition was not maintainable. The High Court ruled that the revision petition deserves to be dismissed due to the non-surrender of the accused and the absence of the required certificate of custody.
Therefore, the High Court dismissed the revision petition and the stay application was also disposed of accordingly.
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2011 (9) TMI 1225
Issues Involved:
1. Deletion of addition made under Section 68 of the Income Tax Act.
2. Condonation of delay in filing the appeal by the Revenue.
3. Admissibility and reliability of statements recorded under Section 132(4) of the Income Tax Act.
4. Principles of natural justice and the right to cross-examine witnesses.
5. Evaluation of evidence and corroborative material.
Issue-wise Detailed Analysis:
1. Deletion of Addition Made Under Section 68 of the Income Tax Act:
The primary issue in this case revolves around the deletion of an addition of Rs. 10,00,000 made under Section 68 of the Income Tax Act by the Assessing Officer (A.O.). The A.O. had added this amount to the assessee's income, alleging it was unaccounted money introduced as an unsecured loan from M/s. Globe Stocks & Securities Ltd. The A.O.'s decision was based on statements made by Sri Arun Kr. Khemka, who claimed the loan transactions were accommodation entries. However, the assessee contested this addition before the Commissioner of Income Tax (Appeals) [CIT(A)], arguing that the A.O. had not adhered to the principles of natural justice and had relied on statements recorded without giving the assessee an opportunity to cross-examine the witnesses or examine the evidence.
2. Condonation of Delay in Filing the Appeal by the Revenue:
The appeal by the Revenue was filed one day late. The Assistant Commissioner of Income Tax (A.C.I.T.), C.C.-XXIV, Kolkata, provided reasons for this delay and requested its condonation. The Tribunal, after considering the reasons and hearing the parties, found that the department was prevented by sufficient and reasonable cause in filing the appeal belatedly and condoned the delay, admitting the appeal for disposal on merit.
3. Admissibility and Reliability of Statements Recorded Under Section 132(4) of the Income Tax Act:
The A.O. relied heavily on the statements made by Sri Arun Kr. Khemka under Section 132(4) of the Act, where he admitted that the loan transactions were accommodation entries. However, Sri Khemka later retracted his statement, claiming it was made under coercion and threat by the search team. The CIT(A) noted that the A.O. did not accept the retraction and relied on the Supreme Court decision in Surjit Singh Chabra vs. Union of India to justify the addition. The CIT(A) found that the A.O. did not provide the assessee with copies of the statements or allow cross-examination, thereby violating the principles of natural justice.
4. Principles of Natural Justice and the Right to Cross-Examine Witnesses:
The CIT(A) emphasized that the principles of natural justice were not followed by the A.O. The assessee was not provided with copies of the statements or given an opportunity to cross-examine Sri Khemka or the Director of the lender company. The CIT(A) sought a remand report from the A.O., who justified the addition but admitted that no new evidence was provided by the assessee. The CIT(A) concluded that the A.O. should have allowed the assessee to cross-examine the witnesses and provided copies of the statements to ensure a fair hearing.
5. Evaluation of Evidence and Corroborative Material:
The CIT(A) found that the A.O. had ignored the documentary evidence provided by the assessee, including loan confirmations, bank statements, and audited accounts of M/s. Globe Stocks & Securities Ltd. The CIT(A) noted that the loan transactions were recorded in the books of both the assessee and the lender company, and there was no evidence of cash deposits in the lender's bank account prior to the loan. The CIT(A) also pointed out that the A.O. failed to examine Sri Khemka or the lender company under Section 131 of the Act to verify the statements. The CIT(A) concluded that the assessee had established the identity, creditworthiness, and genuineness of the loan transaction, and the addition made by the A.O. was not justified.
Conclusion:
The Tribunal upheld the order of the CIT(A), finding that the A.O. had not followed the principles of natural justice and had ignored the documentary evidence provided by the assessee. The Tribunal dismissed the appeal of the department, confirming the deletion of the addition made under Section 68 of the Income Tax Act.
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2011 (9) TMI 1224
Misuse of an arrest warrant - Offence punishable u/s 324 IPC - non-bailable warrant issued on failure to attend the court proceedings - urgency or promptness in execution of warrant led to undesirable interference with the liberty of the Appellant - Whether the Appellant is entitled to any compensation for the humiliation and harassment suffered by him on account of the wrong perpetrated by Respondent No. 2, in addition to what has been awarded by the High Court - complaint related to the year 2000, At the relevant time, the offence punishable u/s 324 was a bailable offence - warrant was executed at the behest of the complainant in order to denigrate and humiliate the Appellant at a public place, in public view, during the course of Independence day celebrations at Radio Club - HC held that, It is a clear case of unnecessary interference with the liberty of a citizen.
HELD THAT:- Viewed in this perspective, we regret to note that in the present case, having regard to nature of the complaint against the Appellant and his stature in the community and the fact that admittedly the Appellant was regularly attending the court proceedings, it was not a fit case where non-bailable warrant should have been issued by the Additional Chief Metropolitan Magistrate. In our opinion, the attendance of the Appellant could have been secured by issuing summons or at best by a bailable warrant. We are, therefore, in complete agreement with the High Court that in the facts and circumstances of the case, issuance of non-bailable warrant was manifestly unjustified.
It is trite principle of law that in matters involving infringement or deprivation of a fundamental right; abuse of process of law, harassment etc., the courts have ample power to award adequate compensation to an aggrieved person not only to remedy the wrong done to him but also to serve as a deterrent for the wrong doer.
Monetary compensation to victim whose fundamental rights under Article 21 are violated - Having considered the case, we are of the opinion that the Appellant does not deserve further monetary compensation.
Whether the Courts can at all issue a warrant, called a "non-bailable" warrant - Nevertheless, we feel that the endorsement of the expression "non-bailable" on a warrant is to facilitate the executing authority as well as the person against whom the warrant is sought to be executed to make them aware as to the nature of the warrant that has been issued.
In our view, merely because Form No. 2, issued u/s 476 of the Code, and set forth in the Second schedule, nowhere uses the expression bailable or non-bailable warrant, that does not prohibit the Courts from using the said word or expression while issuing the warrant or even to make endorsement to that effect on the warrant so issued. Any endorsement/variation, which is made on such warrant for the benefit of the person against whom the warrant is issued or the persons who are required to execute the warrant, would not render the warrant to be bad in law.
What is material is that there is a power vested in the Court to issue a warrant and that power is to be exercised judiciously depending upon the facts and circumstances of each case. Being so, merely because the warrant uses the expression like "non-bailable" and that such terminology is not to be found in either Section 70 or Section 71 of the Code that by itself cannot render the warrant bad in law. The argument is devoid of substance and is rejected accordingly.
In view of the aforegoing discussion, No. ground is made out warranting our interference with the impugned judgment of the High Court. We confirm the judgment and dismiss the appeal accordingly, but with No.
Guidelines while issuing non-bailable warrants - We feel that in order to prevent such a paradoxical situation, we are faced with in the instant case, and to check or obviate the possibility of misuse of an arrest warrant, in addition to the statutory and constitutional requirements to which reference has been made above, it would be appropriate to issue the following guidelines to be adopted in all cases where non-bailable warrants are issued by the Courts:
(a) All the High Court shall ensure that the Subordinate Courts use printed and machine numbered Form No. 2 for issuing warrant of arrest and each such form is duly accounted for;
(b) Before authenticating, the court must ensure that complete particulars of the case are mentioned on the warrant;
(c) The presiding Judge of the court (or responsible officer specially authorized for the purpose in case of High Courts) issuing the warrant should put his full and legible signatures on the process, also ensuring that Court seal bearing complete particulars of the Court is prominently endorsed thereon;
(d) The Court must ensure that warrant is directed to a particular police officer (or authority) and, unless intended to be open-ended, it must be returnable whether executed or unexecuted, on or before the date specified therein;
(e) Every Court must maintain a register (in the format given below), in which each warrant of arrest issued must be entered chronologically and the serial number of such entry reflected on the top right hand of the process;
(f) No. warrant of arrest shall be issued without being entered in the register mentioned above and the concerned court shall periodically check/monitor the same to confirm that every such process is always returned to the court with due report and placed on the record of the concerned case;
(g) A register similar to the one in Clause (e) supra shall be maintained at the concerned police station. The Station House Officer of the concerned Police Station shall ensure that each warrant of arrest issued by the Court, when received is duly entered in the said register and is formally entrusted to a responsible officer for execution;
(h) Ordinarily, the Courts should not give a long time for return or execution of warrants, as experience has shown that warrants are prone to misuse if they remain in control of executing agencies for long;
(i) On the date fixed for the return of the warrant, the Court must insist upon a compliance report on the action taken thereon by the Station House Officer of the concerned Police Station or the Officer In-charge of the concerned agency;
(j) The report on such warrants must be clear, cogent and legible and duly forwarded by a superior police officer, so as to facilitate fixing of responsibility in case of misuse;
(k) In the event of warrant for execution beyond jurisdiction of the Court issuing it, procedure laid down in Sections 78 and 79 of the Code must be strictly and scrupulously followed; and
(l) In the event of cancellation of the arrest warrant by the Court, the order cancelling warrant shall be recorded in the case file and the register maintained. A copy thereof shall be sent to the concerned authority, requiring the process to be returned unexecuted forthwith. The date of receipt of the unexecuted warrant will be entered in the aforesaid registers. A copy of such order shall also be supplied to the accused.
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2011 (9) TMI 1223
Issues Involved:
1. Disallowance of prior period expenses.
2. Disallowance of compensation paid to the Managing Director.
3. Recalculation of deduction under section 80HHC.
4. Disallowance of delayed payments of contributions to Provident Fund, ESIC, and DLIF.
Issue-wise Detailed Analysis:
1. Disallowance of Prior Period Expenses:
The assessee disputed the confirmation of disallowance of Rs. 69,93,000/- as prior period expenses. The AO disallowed this amount, stating that under the mercantile system of accounting, expenses must be incurred in the relevant previous year. The CIT(A) upheld this decision, emphasizing that the appellant failed to demonstrate that these expenses were crystallized during the year. The Tribunal, however, accepted the assessee's contention that the liability was crystallized in the assessment year under consideration due to disputes being settled in that year. Citing the Bombay High Court decision in CIT Vs Phalton Sugar Works Ltd., the Tribunal allowed the deduction of Rs. 69,93,000/-.
2. Disallowance of Compensation Paid to Managing Director:
The assessee claimed Rs. 76,15,000/- as compensation paid to its Managing Director upon resignation. The AO disallowed the claim, treating it as capital expenditure and noting the absence of a contract agreement. The CIT(A) upheld this disallowance, rejecting additional evidence presented by the assessee. The Tribunal restored the issue to the AO for fresh consideration, directing the assessee to furnish requisite details to justify the compensation payment, emphasizing the need for the AO to decide the issue in accordance with the law after providing due opportunity to the assessee.
3. Recalculation of Deduction Under Section 80HHC:
The assessee argued that the deduction under section 80HHC should be recomputed based on the profit after considering the disallowances made. The Tribunal directed the AO to recompute the deduction under section 80HHC if ground No. 2 is decided in favor of the assessee. If ground No. 2 is decided against the assessee, the AO is to recompute the allowable deduction by considering the addition.
4. Disallowance of Delayed Payments of Contributions to Provident Fund, ESIC, and DLIF:
The AO disallowed Rs. 47,563/- towards Provident Fund, Rs. 5,764/- towards ESIC, and Rs. 1,490/- towards DLIF contributions, citing delayed payments. The CIT(A) confirmed the disallowance, relying on the decision in CIT Vs South India Corporation Ltd. The Tribunal, following the decision in CIT Vs Alom Extrusion Ltd., allowed the deduction for DLIF contributions but upheld the disallowance for Provident Fund and ESIC contributions, emphasizing that section 43B does not apply to employees' contributions if not paid within the due date specified in section 36(1)(va).
Conclusion:
The appeal was allowed in part, with the Tribunal providing relief on certain issues while upholding disallowances on others. The Tribunal directed the AO to recompute the deduction under section 80HHC based on the outcome of the fresh consideration of the compensation payment to the Managing Director.
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