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Showing 201 to 220 of 1570 Records
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2024 (5) TMI 1370
Challenge to adjudication order passed u/s 73 of TN-GST Act - HELD THAT:- It is noticed that the petitioner has filed a detailed reply to the notice preceded the impugned order. Despite the same, the impugned order has been passed without adverting to the same. Hence, the impugned order is unsustainable and therefore liable to be set aside and the case is remitted back to the respondents to pass fresh order on merits and in accordance with law within a period of 8 weeks from the date of receipt of a copy of this order. The impugned order which stands quashed shall be treated as corrigendum to show cause notice in DRC-01 dated 30.09.2023.
Writ Petition is disposed of.
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2024 (5) TMI 1369
Levy of GST on ocean freight - ITC for inward supplies - possession of the tax invoices - details of supplies not reflected in corresponding GSTR-2A - levy of penalty u/s 122(2)(a) of the CGST Act, read with Section 73(9) ibid.
Non-possession of invoices - HELD THAT:- The basic condition of eligibility to avail ITC is that the taxpayer should be in possession of a tax invoice or debit note issued by the supplier under the CGST Act or such other tax paying documents as may be prescribed. In this case, the taxpayer was not able to produce the impugned tax invoices to the audit officers for verification, during audit. Even along with their reply to the show cause notice, they enclosed only highly illegible copies of the invoices, with which their genuineness could not be ascertained - it is clear that the taxpayer was not in possession of the five invoices pointed out by the audit officers. The taxpayer's argument in this regard in their written reply and during the personal hearing was not relevant and does not hold good.
Three invoices in respect of which the taxpayer had availed ITC, were not reflected in GSTR-2A - HELD THAT:- The three invoices pointed out by audit were not reflected in GSTR-2A, during the time of audit. Even in their reply to the show cause notice, the taxpayer has not stated categorically that the invoices have populated in the GSTR-2A. During the personal bearing also, they were not able to prove that the concerned invoices had appeared in the GSTR-2A Hence, it is obvious that the concerned invoices have not been uploaded in their GSTR-1, by the respective suppliers, which means that GST has not been paid on the same. Therefore, as per Section 16(2) of the CGST Act, the taxpayer is not eligible for ITC in respect of the concerned three invoices.
The submission of the learned counsel for the petitioner that credit was auto-populated in GSTR-2A also, is incorrect in view - Insofar as the demand in paragraph 13(a) & (b) for a sum of Rs. 1,50,402/- towards IGST and interest thereon under Section 50(1) of the CGST Act, 2017 read with Section 73(1) of the CGST Act, 2017 and Section 20 of the IGST Act, 2017 is concerned, the issue is squarely covered in favour of the petitioner in terms of decision of the Hon'ble Supreme Court in UNION OF INDIA & ANR. VERSUS M/S MOHIT MINERALS PVT. LTD. THROUGH DIRECTOR [2022 (5) TMI 968 - SUPREME COURT].
This Writ Petition is partly allowed and partly dismissed.
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2024 (5) TMI 1368
Appeal before CIT(A) u/s 249 - Non admission of appeal for non-payment of advance tax as per provisions of section 249(4)(b) - obligation to make payment of advance tax u/s 208 or not? - determination of documentary evidences filed by the assessee
HELD THAT:- We find that the assessee has taken a stance from the very first stage itself , before the AO that he has no taxable income for the year under appeal and his income is only agricultural income which is exempted income under the Act 61 and the gift received from relative ( within the meaning of explanation (e) of clause (vii) of sec 56 of the Act ) is also non-taxable, and has filed documentary evidence of the same before the AO , as evident from the assessment order, and in the computation of income filed by the assessee before the Tribunal, he has declared NIL taxable income , thereby indicating that he is not liable to pay any advance tax as per provisions of section 207 of the Act 61 because he has no total income which would be chargeable to tax and computation of advance tax , as per sec 209 of the Act is NIL, and according to the assessee the payment of advance tax u/s 210 of the Act , of his own accord , does not arise in this case. We also note that the assessee has filed a reply before the first appellate authority to the deficiency letter, dated 03/01/2024, stating that he has no taxable income.
Thus we are of the opinion, that the assessee has presented a prima facie case, of no obligation, to make payment of advance tax u/s 208 of the Act 61, for the year under appeal, and we hold that the CIT(A) should have admitted the appeal for adjudication on merits, and the amount of advance tax payable by the assessee, for the purpose of presenting the appeal, as per provisions of section 249(4)(b), should be taken as NIL.
We set aside the order of the CIT(A) and restore the same to his file for adjudication on merits, after causing all necessary verification of all documentary evidences he deems fit and proper, as per procedure of law, (un influenced by any observation we might have made in the above paragraphs), and after allowing proper opportunity to the assessee of being heard. Appeals of the assessee is allowed for statistical purposes.
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2024 (5) TMI 1367
Delayed payment of PF & ESI before filing return of income as prescribed in law - Whether the Ld. ITAT is justified in law and fact and circumstances of the case in making disallowance of payment of ESI & PF before filing Return which was duly covered u/s 43B of the Income Tax Act?
HELD THAT:- Dealing with the impact of a delayed deposit and the ambit of Section 43B Supreme Court in Checkmate Services [2022 (10) TMI 617 - SUPREME COURT] held that non obstante clause has to be understood in the context of the entire provision of Section 43-B which is to ensure timely payment before the returns are filed, of certain liabilities which are to be borne by the assessee in the form of tax, interest payment and other statutory liability. In the case of these liabilities, what constitutes the due date is defined by the statute. Nevertheless, the assessees are given some leeway in that as long as deposits are made beyond the due date, but before the date of filing the return, the deduction is allowed. That, however, cannot apply in the case of amounts which are held in trust, as it is in the case of employees' contributions— which are deducted from their income. They are not part of the assessee employer's income, nor are they heads of deduction per se in the form of statutory payout. They are others' income, monies, only deemed to be income, with the object of ensuring that they are paid within the due date specified in the particular law. They have to be deposited in terms of such welfare enactments. It is upon deposit, in terms of those enactments and on or before the due dates mandated by such concerned law, that the amount which is otherwise retained, and deemed an income, is treated as a deduction.
Thus, it is an essential condition for the deduction that such amounts are deposited on or before the due date. If such interpretation were to be adopted, the non obstante clause under Section 43-B or anything contained in that provision would not absolve the assessee from its liability to deposit the employee's contribution on or before the due date as a condition for deduction.
Thus we find no justification to interfere with the view as expressed. Decided against assessee.
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2024 (5) TMI 1366
Method of valuation of closing stock - adoption of a uniform method of valuation of closing and opening stock - FIFO Method - valuation of inventories at lower of actual cost or net realisable value computed in accordance with the Income Computation and Disclosure Standards (ICDS) notified under sub-section (2) of Section 145 - arbitrariness in making it mandatory to value the stock by applying the FIFO or weighted average cost method - writ petition in challenging the amendment in Section 145A, making it mandatory for adoption of Clause 16 of ICDS (II) for applying FIFO or weighted average cost method across the Board for all assessee for valuing the closing and opening stock.
HELD THAT:- It is no matter of doubt that an assessee is entitled to adopt one or the other method of computation of its income if a particular method has not been made mandatory. The petitioner was applying the LIFO method of accounting as the standard for valuing the closing and opening stock up to 01.04.2017. Before 01.04.2017, there was no mandatory provision for adopting one or another method of Accounting Standards. The Statute also did not mandate only one method of valuing the closing and opening stock. The petitioners were free to adopt any one of the Accounting Standards as notified by the ICAI.
The Parliament, after a wide range of consultation from all stakeholders and based on the recommendations of the Committee to maintain uniformity in accounting the income and valuing the stock, has made Clause 16 of ICDS (II) mandatory for the adoption of FIFO or weighted average cost method. This mandatory provision applies to all assessees, and, therefore, find no substance in the submission of the learned Senior Counsel for the petitioners that making Clause 16 of ICDS (II) mandatory for adopting FIFO or weighted average cost method as the only method valuing the stock/inventory suffers from any vires of unreasonable classification or manifest arbitrariness as violative of Article 14 of the Constitution of India.
In the present case, the petitioners had been following the LIFO method to value its closing and opening stock and the same had been accepted by the Revenue up to 01.04.2017. It is also a well-settled law that the closing and opening stock are to be valued by applying the same method of valuation. In the case of Ramswarup Bengalimal (1953 (9) TMI 22 - ALLAHABAD HIGH COURT], K.G Khosla [1973 (11) TMI 37 - DELHI HIGH COURT], Doom Dooma India Ltd [1992 (12) TMI 41 - GAUHATI HIGH COURT], & Mahavir Aluminum Ltd . [2007 (11) TMI 41 - HIGH COURT OF DELHI] held that opening and closing of stock of a year have to be necessarily valued on the same basis. The opening stock cannot be valued in a manner different from the valuation of closing stock.
In Chainrup Sampathram [1953 (10) TMI 2 - SUPREME COURT], P.M Mohd. Meerakhan [1969 (2) TMI 4 - SUPREME COURT], Sanjeev Woolen Mills [2005 (11) TMI 26 - SUPREME COURT], ALA firm [1991 (2) TMI 1 - SUPREME COURT] it has been held that the valuation of closing and unsold stock is not the source of income in the hands of the assessee. However, by applying the method of FIFO with effect from 01.04.2017, the income of the petitioner has increased to the tune of Rs.51.07 Crores without any real income.
As substitution of Section 145A with retrospective effect from 01.04.2017 by the Finance Act, 2018 is to give relief to those assessees who had adopted the FIFO to value their stock in the Assessment Year 2017-18 and to save their returns from being declared as incorrect/invalid. This retrospective operation is with said purpose and objective. However, if an assessee did not apply the FIFO to value its opening and closing stock as it was not mandatory, requiring such an assesses to apply FIFO to value their stocks for the Assessment Year 2017-18 would result in an uncalled-for outcome. Therefore, retrospective amendment in substituting Section 145A would not apply to those assessees who had not applied FIFO for valuing their stock in the Assessment Year 2017-18, as these assesses have been following LIFO consistently and had filed their returns before the Finance Act 2018 was enacted.
Therefore, in the case of the petitioners, the stipulation under Clause 16 of the ICDS (II) for the adoption of FIFO or weighted average cost for valuation of the stock/inventory cannot be applied in the Assessment Year 2017-2018 for the valuation of the opening stock, as the opening and closing stock of the year is to be valued by applying the same methodology.
Thus all the writ petitions are partly allowed, and the impugned notices in all the writ petitions are quashed. The respondents are directed to either accept the valuation of both opening and closing stock, for the Assessment Year 2017-2018, based on the LIFO method or permit the petitioners to value their stocks by applying the FIFO or weighted average cost method.
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2024 (5) TMI 1365
Penalty u/s. 271D - receipt of cash in relation to transfer of immovable property by the assessee attracting the provisions of section 269SS - case was selected for scrutiny under CASS for the reason “whether the cash deposits have been made from disclosed sources”- HELD THAT:- The admitted facts are that the assessee has received cash for the sale of immovable property from the buyer to the extent of 15,41,000/-. Section 269SS of the Act as amended by Finance Act, 2015 w.e.f. 1/6/2015 stipulates that no person shall take or accept from any other person, any loan or deposit or any specified sum, otherwise than by an account payee cheque or account payee bank draft or use of electronic clearing system through a bank account.
From the plain reading of the above section, it is noted that any person is barred from receiving from any amount otherwise by cheque or through banking channels in relation to transfer of the immovable property. Section 269SS of the Act prohibits receipt of any amount by way of cash in relation to the transfer of any immovable property. On this aspect the Memorandum explaining the provisions of Finance Bill 2015 with respect to amendment proposed w.e.f 1/6/2015 in section 269SS.
The objective of the amendment proposed in 269SS of the Act is to curb generation of black money. In the instant case the fact is that cash received by the assessee has been deposited by the assessee into the bank account, hence does not attract the provisions of section 269SS of the Act since there is no suppression of cash receipts by the assessee.
The assessee has also offered the capital gains to tax. The explanation given by the assessee for receipt of sale consideration constitutes a “reasonable cause” as contemplated in section 273B of the Act and the assessee has accepted the cash under inevitably unavoidable circumstances as explained by the Ld. AR in his arguments and immediately on receipt of the cash, the assessee deposited the same in the bank account which contemplates the genuineness of the transaction and moreover the assessee has paid the tax on capital gains thereon.
We are of the considered view that the penalty levied by the Ld. AO-NFAC u/s. 271D and confirmed by Ld. CIT(A)-NFAC is unsustainable in law and accordingly the orders of the Ld. AO-NFAC and Ld. CIT(A)-NFAC are set aside and thereby we delete the penalty. Assessee appeal allowed.
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2024 (5) TMI 1364
Application of application u/s 80G - application u/s 80G(5) in form no. 10AB was rejected on the ground that the appellant selected a wrong section code (13-clause (ii) instead of 14 - clause (iii)) - HELD THAT:-During arguments the DR on behalf of the revenue did not oppose the application for withdrawal of the present appeal. We have considered the rival submissions and also gone through the contents of the withdrawal application.
It is evident that the said withdrawal application has been filed on the basis of circular dated 25.04.2024 issued by the CBDT bearing circular no. 7/2024 extending the due date for filing of Form 10A/10AB under Income Tax Act, 1961. Withdrawal application, the application for withdrawal of the appeal is allowed and the present appeal is accordingly dismissed as withdrawn. Appeal filed by the assessee is dismissed.
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2024 (5) TMI 1363
Disallowance u/s 14A r.w.r 8D - Expenditure incurred on earning exempt income - HELD THAT:- Undisputed fact shows that assessee has earned exempt income of ₹3 lacs during the year. Assessee did not offer any disallowance and stated that it has not incurred any expenditure which earned the exempt income.
AO invoked the provisions of Section Rule 8D of the Act and made disallowance to the extent of total expenditure incurred. Now it is a settled position of law that disallowance in excess of exempt income cannot be sustained u/s 14A of the Act.
Hon'ble Karnataka High Court in Pragathi Krishna Gramin Bank [2018 (6) TMI 1283 - KARNATAKA HIGH COURT] and in CIT vs. M/S. Corrtech Energy Ltd [2014 (3) TMI 856 - GUJARAT HIGH COURT] has clearly held so. In case of HSBC Invest Direct (India) Ltd [2019 (2) TMI 731 - BOMBAY HIGH COURT] has also held so that the disallowance u/s 14A of the Act cannot exceed the exempt income. In case of M/S Nirved Traders Pvt. Ltd. [2019 (4) TMI 1738 - BOMBAY HIGH COURT] has clearly held so - Appeal of the assessee is allowed.
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2024 (5) TMI 1362
Unexplained deposits in joint bank account being maintained by the assessee and his wife and daughter - it is the case of the assessee that all the three persons including the assessee were using the said bank account for banking purpose - Detailed explanation provided on cash sources, including agricultural income, professional income, and sale proceeds - HELD THAT:- Assessee submitted details of agriculture land held by each one and also affidavit from the buyer of the agriculture produce. The assessee has also produced registered sale deed as regard the sale of land registered on 15/10/2010, one more sale deed in respect of the other land was also filed before the A.O.
In so far as cash being kept with the assessee, the assessee submitted that since the wife of the assessee was suffered from dementia, for the purpose of medical treatment the cash was kept at home for the purpose of convenience. Further, the bank interest income added by the Assessing Officer is not the bank interest but the maturity of NSC.
CIT (A) has not considered the above evidence in the right spirit, thereby restricted the relief to the tune of Rs. 2,00,000/- only and confirmed the rest of the addition.
Though the Ld. CIT(A) has quoted the detailed submission made by the assesseeMwithout adjudicating and considering the explanations and without any basis, restricted the credit of Rs. 2,00,000/- only, though the assessee has provided proper explanation and the documentary evidence regarding agriculture income. Considering the land holdings of the assessee and his children, affidavit of the persons who have carried out the agriculture operation and the Affidavits of the persons purchased the agriculture produce, should have been considered and the CIT(A) and should have deleted the addition.
In our considered opinion, A.O. and the Ld. CIT(A) have committed error in making and confirming the addition in the hands of the assessee. Thus, we find merit in the Grounds of appeal of the assessee, accordingly, the additions made by the A.O. which was confirmed by the Ld. CIT(A) is hereby deleted and the Grounds of Appeal of the assessee are allowed.
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2024 (5) TMI 1361
Revision u/s 263 - Treatment of Sale of Residential Property as Short-Term or Long-Term Capital Asset - Appropriation Between Land and Building for Capital Gains Computation - determination of share of property under a JDA - CIT considered the order as erroneous and prejudicial to the interest of the Revenue since the Ld. AO has erred in treating the asset as long term capital asset - CIT considered the sale as short term capital gains and consequently concluded that deduction claimed u/s. 54EC of the Act is not allowable - HELD THAT:- We do not agree that the residential flat was in existence at that time, since the completion and possession was granted during Feb 2011. In flats/multi-storied apartments/commercial complexes, the ownership consists of owning undivided share of land and built-up area and these together is the property. It has two components and ownership of both components of undivided share of land and ownership of building is necessary to complete title to a flat. Generally, when a JDA is entered into the owner of the land offers it to a developer with an understanding that he will retain undivided share of land proportionate to his share of built-up area and the undivided share of land proportionate to the built-up area which falls to the share of the developer is agreed to be sold. Therefore, the owner of the property retains undivided share of land proportionate to his share of built-up area. When the built-up area is delivered to the owner of the land and when he sells his share, he again transfers not only the built-up area but also proportionate undivided share of land. In such transaction, there will be no bifurcation of cost of land and building.
AO has to call for details and arrive at the cost of undivided share of land and built-up area. When the owner sells his share of built-up area, the built-up area is acquired when the developer delivers possession of the built-up area to the owner but the undivided share of land is already owned by the owner. When an owner sells his share of property under a JDA he sells two components one is undivided share of land which he held for a longer period than the building and the building which he gets from the developer on completion of the building and the period of holding of the building is much shorter than the period of holding of the land. The concept of bifurcation of undivided share of land and built-up area is a well recognized concept.
In practice, a building and the land appurtenant thereto held by an assessee, could be transferred together to a transferee through a single conveyance deed against a lumpsum monetary consideration. In such cases, the question on the method of computing the long term capital gains arises (i.e.) whether the long term capital gain/short term capital gain could be computed for land and building separately? This question assumes paramount importance since the period of holding will decide whether the capital gain is long term or shorter and the indexed cost of acquisition and improvement thereto in respect of these assets will vary depending upon the period of holding.
Based on the holding period of these assets, the capital gain is long term or short term and the indexed cost of acquisition could be computed. Likewise in order to claim the indexed cost of improvement necessary documents in support of the improvements done and the expenditure incurred thereon have to be also maintained by the assessee.
How to appropriate the sale consideration for the transfer of land and building if a lump-sum monetary consideration is received by the transferor from the transferee when the transfer is effected through a single conveyance deed. As per section 50C as amended by the Finance Act 2009, where the consideration received or accruing as a result of transfer of land and/ or building is less than the value adopted or assessed or assessable by an authority of the State Government for the purpose of payment of stamp duty in respect of such transfer, the value so adopted or assessed or assessable shall be deemed to be the full value of consideration received or accruing as a result of such transfer for computing capital gains. The market value of the immovable property transferred as indicated in the sale deed will be equivalent to the actual sale consideration received by the transferor from the transferee. If this value exceeds the value adopted or assessable by the Registration Authority for stamp duty purposes, the said sale consideration as appropriated to land and building as per Annexure or other documents attached with the registered sale deed could be adopted for the purpose of computing the capital gains.
If the sale consideration is lesser than the value adopted or assessable by the Registration Authority for stamp duty purposes, then such value so adopted by the Registration Authority as appropriated between the land and building could be adopted as deemed sale consideration for the respective assets for the purpose of computing the capital gains.
Thus we are of the view that the Ld. CIT has erred while invoking the powers u/s. 263 of the Act without considering the appropriation between land and building, and hence the order u/s. 263 deserves to be quashed. It would be just and appropriate to direct the AO to examine the issue afresh in the light of the directions as given above. We therefore allow the ground raised by the assessee for statistical purposes.
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2024 (5) TMI 1360
Addition u/s 69 or 56(2)(vii)(b) - Difference between the guideline rate as prescribed by Stamp Valuation authority and actual purchase/registered during the year - HELD THAT:- We find on a perusal of the "1st proviso" to Section 56(2)(vii)(b) of the Act, that the same, therein, contemplates where the date of the agreement fixing the amount of consideration for the transfer of immovable property and the date of registration are not the same, the stamp duty value on the date of the agreement may be taken for the purpose of the aforesaid statutory provision. At the same time, the applicability of the "1st proviso" is subject to the satisfaction of a pre-condition that can be traced in the "2nd proviso". The “2nd proviso” to Section 56(2)(vii)(b) of the Act, contemplates that the "1st proviso" shall apply only in a case where the amount of consideration referred to therein, or a part thereof, has been paid by any mode other than cash on or before the date of the agreement for the transfer of such immovable property.
Now testing the facts of the present case in the touchstone of the pre-conditions contemplated in the "1st proviso" and "2nd proviso" to Section 56(2)(vii)(b) of the Act, we find that the same are found to be duly satisfied. As is discernible from the records, we find that the assessee had vide a registered purchase deed acquired the title of a plot admeasuring 4000 sq. ft. in “Danish Kunj Society” from Danish Grih Nirman Sahkari Sanstha Maryadit, Bhopal for a consideration of Rs. 1,05,332/- on 02.03.2017. Originally an “agreement to purchase” the aforesaid plot was executed between the father of the assessee, viz. Late Shri Sundar Lal Gupta and Danish Grih Nirman Sahkari Sanstha Maryadit, Bhopal in the year 1991 for a consideration of Rs. 92,000/-(including development charges). The assessee was a nominee of the aforesaid purchase transaction.
On a perusal of the purchase deed, it transpires that the same therein mentions that the subject plot No. DK-5/3 admeasuring 4000 sq. ft. (50 * 80) was allotted to a member having membership No.3128, which conforms with the details provided in the allotment certificate issued by the society to the assessee's father. Apart from that, the payment of the purchase consideration as stated in the aforesaid receipts dated 27.06.1991, 29.07.1992, and 12.09.1992 vide cheques/drafts are mentioned in the purchase deed. Also, payment of the balance development charges of Rs. 19,962/- that was paid by the assessee on 28.02.2017 is stated in the aforesaid purchase deed. Considering the aforesaid facts, we concur with the CIT(Appeals) that as the amount of purchase consideration for transferring the aforementioned immovable property, i.e. Plot No.DK-5/3 (admeasuring 4000 sq.ft) was fixed as per terms of the “agreement to purchase” executed between the assessee's father, viz. Late Shri Sundar Lal Gupta and Danish Grih Nirman Sanstha Maryadit, Bhopal in the year 1991 at Rs. 92,000/- (including development charges), which was paid vide cheques/drafts by the assessee's father over the period 27.06.1991 to 12.09.1992, therefore, the case of the assessee would fall within the exception carved out to the application of the aforesaid Section 56(2)(vii)(b) of the Act, i.e. as contemplated in the "1st proviso" and "2nd proviso" of the said statutory provision. We, thus, finding no infirmity in the view taken by the CIT(Appeals), uphold the same.
Although the Ld. AR has raised an alternative contention, that as Section 56(2)(vii)(b) of the Act has been made available on the statute only vide the Finance Act, 2010 with retrospective effect from 01.10.2009 and thus, was not available on the statute when the “agreement to purchase” the subject property was executed between the assessee's father and the aforementioned society, i.e. in the year 1991, therefore, the said statutory provision on the said count itself could not have been triggered, but we refrain from dealing with the same. We say so, for the reason that as it is the appeal of the revenue before us, therefore, the aforesaid claim of the Ld. AR does not emanate from the order of the lower authorities and cannot be adjudicated in the course of the present proceedings.
Addition made by the A.O u/s. 69 as unexplained investment, we concur with the CIT(Appeals) that as nothing is discernible from the record that would reveal any undisclosed investment made by the assessee towards the purchase of the subject property, therefore, no addition under the said statutory provision could have been validly made.
CIT(Appeals) had observed that there is no evidence with the A.O. which would reveal that the investment made towards the purchase of the aforesaid plot was over and above the actual consideration that was paid by the assessee's father. Also, it is rightly observed by the CIT(Appeals) that as the difference between the stamp value of the subject property and the actual purchase consideration is only the deemed/notional income, therefore, the same could not have been brought with the meaning of unexplained investment u/s. 69 of the Act. Thus, the Ground of appeal No.1 raised by the revenue is dismissed in terms of our aforesaid observations.
CIT(Appeals) had admitted additional evidence in violation of the procedure contemplated in Rule 46A(3) of the Appellate Tribunal Rules, 1963 - We are unable to find favor with the same. On a perusal of the order of the CIT(Appeals) read along with the documents that have been pressed into service by him for vacating the addition made by the A.O, we find that the said documents as had been stated by the assessee in his “paper book” filed before us, i.e. Sr. No.1 to 10 were filed before the A.O. Nothing to the contrary has been brought to our notice by the Ld. D.R. Thus, the Grounds of appeal No.2, 3 & 4 raised by the revenue are dismissed.
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2024 (5) TMI 1359
Validity of income tax proceedings against company dissolved/insolvent - claim or demand assessed/raised/ordered by Income-tax Department endeavoring to saddle the Company with a liability for a period prior to approval of the Resolution Plan - HELD THAT:- As decided in ‘Tata Steel Ltd. [2023 (11) TMI 202 - DELHI HIGH COURT] dues payable to creditors in a Corporate Insolvency Resolution Proceedings, under the Insolvency and Bankruptcy Code, 2016 including statutory creditors for periods prior to the date when the Resolution Plan is approved, can only be paid in accordance with the terms contained in the Resolution Plan; that where no provision is made for claims lodged on behalf of the creditors, or there is failure to lodge a claim with the Resolution Professional, all such claims stand extinguished; that this position in law obtains because of the provisions of Section 31 of the Code, which inter-alia, stipulates that once the Resolution Plan is approved, it shall be binding on the Corporate Debtor and, inter-alia, its creditors, which include, inter-alia, the Central Government under any law for the time being in force and also on authorities to whom statutory dues are owed; that the provision also stipulates that the Approved Plan shall be binding on guarantors and other stakeholders involved in forging; that a successful applicant whose Resolution Plan has been approved should not be put in a position where it is called upon to liquidate dues of creditors, including statutory creditors which are not imbedded in the Resolution Plan.
Section 238 of the Code squarely states that any ambiguity that the provisions of the Code “shall” have effect, not withstanding anything inconsistent contained in any other law for the time being enforce or any instrument having effect under any such law; that thus where matters covered by the Code are concerned, including Insolvency Resolution of Corporate persons, if the provisions contained therein are inconsistent with any other Statutes, including the Income Tax Act, 1961, they shall override such laws; and that if such an approach is not adopted, it will undermine the entire object and purpose of the enactment of the Code. See Ghanashyam Mishra & Sons Pvt. Ltd. Vs Edelweiss Asset Reconstruction Co. Ltd [2021 (4) TMI 613 - SUPREME COURT]
Also decided in Garden Silk Mills P. Ltd. [2023 (6) TMI 806 - ITAT SURAT] the provisions of the IBC would prevail over those of the Income Tax Act; that where the petition had been admitted by the NCLT u/s 7 of the Code and moratorium model u/s 14 of the IBC had been declared and the NCLT had already appointed an Interim Resolution Professional, but the IRP had not impleaded himself to represent the assessee company in the appeal before the Income Tax Appellate Tribunal. In view of the provisions of Section 14 of the IBC, there could not be any continuation of any pending proceedings before the Income Tax Appellate Tribunal.
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2024 (5) TMI 1358
Penalty u/s 271B - assessee committed default and failed in uploading the Audit Report in the manner prescribed - non-audit of accounts when books of accounts are not maintained - Contention of assessee as the assessee is not maintaining the books of accounts then the Department can only charge penalty for the said default u/s 271A and Department cannot invoke and impose penalty u/s 271B which is meant for getting the account audited.
HELD THAT:- By following the ratio laid down in the case of Bisauli Tractor [2007 (5) TMI 181 - ALLAHABAD HIGH COURT] we are of the considered opinion, that the Provisions of Section 271B of the Act is not attracted as the Assessee has not maintained books of account and the Assessee is liable to the recourse u/s 271A of the Act.
We allow the Grounds of Appeal of the assessee and delete the order of the penalty imposed u/s 271B of the Act in all the three Appeals.
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2024 (5) TMI 1357
Unexplained cash deposits - Onus to prove the source - Revenue contended that assessee has failed to explain as to why he has deposited money into bank account and why Ravi Bansal has not given by cheque and therefore, when the other money received by the cheque - HELD THAT:- Considering the evidences placed on record in the form 1/3 parties evidence and registered copy of power of attorney we are of the view that the assessee is not the real owner of cash deposit in the bank account. CIT(a) has merely not considered the plea of the assessee on account of the fact that in the said Mukhtiyar nama the amount transferred or agreed by between the parties have not been mentioned and merely on these correct reason the explanation of the assessee are rejected.
The contention of the CIT(A) has not correct when the assessee from the third party evidence proves that the money received in his bank account through RTGS and through deposit of cash has been given to Shir Vivik Oberoi and Shri Inder Pal Singh for which the power of attorney has been placed on record.
Thus looking into bank all facts present by the assessee, we are of the considered view that the Revenue may taken necessary action against Ravi Bansal if deem it fit in accordance with law but in the case of the assessee ultimately income i.e. to be chargeable to tax is only the brokerage income and the AO. Considering the rate of brokerage privilege in the market the excess income of the assessee considering that the finding of the fact that ground of the assessee are allowed.
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2024 (5) TMI 1356
Best Judgement Assessment - Validity of assessment completed without issuance of notice u/s. 143(2) - assessment was completed ex-parte u/s. 144 and AO treated the return filed by the assessee as ‘invalid’ because the assessee has not filed return of income within the time allowed in the notice u/s. 142(1) - HELD THAT:- The assessee has not filed any return of income u/s. 139(1) of the Act for the relevant assessment year 2017-18. Subsequently, the AO noticed that the assessee has deposited demonetized cash in its bank account and hence, to verify the genuineness of cash deposit, notice u/s. 142(1) of the Act dated 05.01.2018 calling the assessee to file return of income was issued. The time allowed vide this notice u/s. 142 of the Act by the Department was up to 31.03.2018 but assessee furnished the return of income on 15.02.2019 i.e., almost 10 months after the expiry of time allowed by the Department. Hence, the AO proceeded to frame the assessment u/s. 144 of the Act and finally assessment was framed as best judgment assessment u/s. 144 of the Act, as the assessee neither filed any reply nor furnished any details.
CPC, Bangalore has issued this intimation u/s. 143(1) and regularized the return of income - Processing of return u/s. 143(1) of the Act is just a formality and not regularization of return of income because AO while framing assessment u/s. 144 of the Act dated 28.10.2019 has specifically treated the return as invalid return and framed assessment u/s. 144 of the Act. Hence, non-issuance of notice u/s. 143(2) of the Act is not fatal to this assessment and assessment is valid as per law. Hence, this issue of assessee’s appeal is dismissed.
Cash deposit made in Specified Bank Notes (SBNs) during demonetization period - Even now before us, the assessee apart from making bald statement that the deposit in SBNs during demonetization period from 09.11.2016 to 30.12.2016 is out of the turnover of the assessee and assessee has already declared the turnover at Rs. 75,52,940/-, no other source was explained. Even it was not explained that how this cash deposit in specified notes is included in the turnover by the assessee in its return of income. In the absence of any explanation or evidence, have no alternative except to confirm the addition.
Determination of profit rate at the rate of 8% on the total business turnover taking the figure of total cash deposits (excluding the bank deposit in specified notes deposited during demonetization period) - The assessee has declared total turnover at Rs. 75,52,940/- whereas as per bank statement and admitted position, the total credit in assessee’s bank account, excluding the demonetized cash, is Rs. 1,36,60,970/-. In the absence of any evidence or any explanation, have no alternative except to confirm the orders of the lower authorities. Therefore, this issue of assessee’s appeal is dismissed.
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2024 (5) TMI 1355
Adjustment on account of allocation of Royalty earned - Scope of Mutual Agreement Procedure (MAP) application between Competent Authorities of India and the UK - HELD THAT:- As CBDT has conveyed to the assessee that in accordance to Rule 44G(6) of the Rules, the Competent Authorities of India and the UK have agreed to resolve the MAP application filed by assessee’s UK AE i.e. M/s. Unilever Plc regarding TPA made in India pertaining to the international transaction of provision of R & D services by India to the UK. Pursuant to the communication from CBDT, the assessee seeks withdrawal of the TP grounds i.e, Adjustment on account of allocation of Royalty earned by Unilever.
DR does not object to the withdrawal of TP ground, and, therefore, we allow the request of the assessee in the light of the MAP order dated 11.10.2023. Therefore, ground nos. 2 to 6 stands dismissed.
Disallowance u/s 14A read with Rule 8D - limited plea of the assessee is that the disallowance be restricted to the extent of exempt income earned by assessee - HELD THAT:- Hon’ble Bombay High Court in the case of M/s. Nirved Traders Pvt. Ltd. [2019 (4) TMI 1738 - BOMBAY HIGH COURT] held that the disallowance u/s 14A of the Act r.w.r. 8D of the Rules need not exceed assessee’s exempt income - we direct the AO to restrict the disallowance u/s 14A of the Act read with Rules 8D of the Rules. Thus, the assessee’s grounds of appeal is partly allowed.
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2024 (5) TMI 1354
Disallowance of of interest on GST/service tax u/s 37(1) - Allowable business expenditure or not? - as per DR interest was levied due to default on the part of the assessee in payment of the taxes under GST Act and Rules and therefore, in view of the explanation-1 to section 37(1) of the Act the deduction of such levy is not allowable - CIT(A) deleted addition - HELD THAT:- The interest on the outstanding GST is only compensatory in nature and is not a levy of penalty for infraction of law. The interest on delayed payment is otherwise does not fall in the ambit of any payment for offence and therefore, the said expenditure cannot be disallowed by invoking explanation-1 to section 37(1) of the Act. Hence, we do not find any error or illegality in the impugned order of the CIT(A) qua this issue of disallowance of interest on GST. Decided in favour of assessee.
Disallowance of interest on TDS - DR has submitted that the CIT(A) has committed an error in considering the interest on TDS similar to the interest on GST or sales tax - CIT(A) deleted addition - HELD THAT:- TDS is tax liability of the assessee and in case there is a default or delay in deposit of TDS the assessee would be liable to pay the tax being assessee in default. Therefore, the payment of interest on delayed deposit of TDS would become part and parcel of tax liability of the assessee similar to the interest u/s 234A, 234B, 234C, 234D. Accordingly interest on belated deposit of TDS or non-deposit of TDS by the assessee would not be an allowable claim of expenditure. Though the same may not fall in the ambit of explanation-1 to section 37(1) of the Act but the said expenditure cannot be regarded as expenditure incurred wholly and exclusively for the purpose of business of the assessee. The income tax liability as well as interest as income tax liability cannot be allowed as expenditure incurred for the business of the assessee.
As decided in M/s. Bhopal Dugdh Sangh Sahakari Maryadit, Bhopal 2022 (7) TMI 380 - ITAT INDORE] interest on late payment of TDS is not allowable as business deduction and the lower authorities have rightly disallowed the same. Decided in favour of revenue.
Adhoc disallowance of traveling expenses - AO on examination of the ledger account and invoice furnished by the assessee found that the assessee failed to substantiate the fact that expenditure under the head of traveling expenses are wholly and exclusively incurred for the purpose of the business - CIT(A) deleted addition - HELD THAT:- It is manifest from the impugned order of the AO that a general remark has been made by the AO about the personal nature of the expenditure as the AO has stated that element of personal nature in these expenses cannot be ruled out. The AO has not asked the assessee to produce any further supporting evidence but proceeded to make adhoc disallowance of 5%. The assessee is a company and therefore, the question of personal elements in the expenses incurred on traveling without specifically pointing out the fact that certain travels were undertaken by management personals of the assessee company for their personal trip and not for the business trip does not arise. In absence of any such defect or incident brought on record by the AO an adhoc disallowance is not permissible.
CIT(A) has deleted the disallowance made by the AO by considering the various binding legal precedence on this point. Accordingly in the facts and circumstances as discussed above we do not find any error or illegality in the impugned order of the CIT(A) qua this issue the same is upheld. Decided in favour of assessee.
Appeal of assessee partly allowed.
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2024 (5) TMI 1353
Seeking Grant of Anticipatory Bail u/s 438 CrPC - Smuggling - Seizure and Recovery of Gold of foreign origin and Cash - Non-cooperation and Summons by DRI - Applicant's Business and Legitimacy of Seized Items - Economic Offence and Quantum Involved - HELD THAT:- There is also no statement/documents brought on record to indicate that two other co-accused from whom the cash and jewellery/gold pieces were recovered are their regular employees. Mere random entries into the bank account statements does not prima-facie satisfy this Court. Under what circumstances, the goods were sold and cash has been received is also not mentioned except the bland submissions of the learned counsel for the applicant without any corresponding documents.
The applicant claimed ownership of M/s. Ram Laxman & Company, dealing in gold pieces and ornaments, and submitted GST invoices and stock reports. However, the Court found the documents insufficient to prove the legitimacy of the seized items and the applicant's proprietary rights over the firms.
Merely the submission that the seized items belong to the applicant and his firm and he is ready to pay the penalties and fee does not absolve the applicant from explaining with particularity regarding the huge quantum of cash, gold and ornaments record and from which firm and to whom the sales have been made and from whom the money has been received. There is apparently no explanation. Moreover, the summons issued by the DRI have not been responded by the applicant and he has not cooperated nor he appeared to get his statement recorded.
Offence is punishable with maximum sentence of seven years - It will be relevant to notice that this is an economic offence. Thus, in absence of any material brought on record by the applicant, the quantum involved is such that this Court is unable to persuade itself to grant the anticipatory bail.
Accordingly, the anticipatory bail application is rejected.
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2024 (5) TMI 1352
Export Incentives - Rejection of Export Incentive Scheme, under Focus Product Scheme ('the FPS Scheme') and new export incentive scheme called Merchandise Export from India Scheme ('the MEIS Scheme') - rewards to exporters to offset infrastructural insufficiencies and associated costs - HELD THAT:- Following the decisions in the case of Horizon Aerospace (India) Pvt Ltd. -vs- Union of India [2023 (2) TMI 1101 - DELHI HIGH COURT] Jindal Drugs [2021 (7) TMI 1034 - MADRAS HIGH COURT] and M/s Ashwini Ashish Dighe [2019 (8) TMI 1006 - BOMBAY HIGH COURT] the impugned order dated 18.02.2021 passed by the second respondent is hereby quashed. The third respondent is directed to allow the claim made by the petitioner under the FPS and MEIS Scheme and pass appropriate orders within a period of four weeks from the date of receipt of a copy of this order.
In the result, this Writ Petition is allowed.
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2024 (5) TMI 1351
Non imposition of Penalty u/s 114 on the Respondents - Smuggling - confiscation of the cigarettes - undeclared cigarettes found concealed behind gypsum plaster powder bags and also as the quantity of gypsum plaster was mis-declared - Import of “Gypsum Plaster in Powder Form”- Penalty imposed on Shri Anil Gupta - adjudicating authority imposed penalty on Shri. Yuvaraj Singh and on Shri D. Vignesh u/s 112 (a) of Customs Act.
HELD THAT:- The main person who was entrusted to import the goods is Shri Jaffer of Malaysia. The said person had contacted Shri Vignesh to file the bill of entry under the IEC code of M/s. Ganga Enterprises. However, Shri Jaffer was not traceable. The adjudicating authority has dropped the entire proceedings against Shri Jaffer.
The department has not able to establish that these Respondents made any document which is false or incorrect in any material particular. The exact nature of the document alleged to be fabricated by these Respondents is not brought out in the grounds of appeals filed by the department. In the absence of ingredients to attract Section 114 AA the penalty under the said Section cannot be imposed.
The Tribunal in the case of M/s. Artisan Welfare Society [2023 (7) TMI 841 - CESTAT CHENNAI] had occasion to consider a similar situation. The facts in the said case was attempt to export red sanders. The Tribunal observed that as the investigation could not prove that the exporter therein knowingly or intentionally made any false declaration or statement could not be punished by penalty u/s 114 AA.
Thus, we find that the order passed by the adjudicating authority in not imposing the penalty u/s 114 AA does not require any interference. The appeal filed by the department is devoid of merits. The appeals are dismissed.
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