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Showing 241 to 260 of 1574 Records
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2024 (12) TMI 1334
Addition u/s 68 r.w.s. 115BBE - addition of 900 US dollars and 2600 Singapore dollars being credits in the bank account of the assessee of an equivalent Indian currency of Rs. 1,79,639/- considering the credits in the bank accounts as unexplained credits - HELD THAT:-Question as to whether the passbook/bank statement constitute books of account so as to treat the credits in such passbook/bank statement as unexplained credit u/s 68 has been decided in the case of M/s Mayawati [2007 (11) TMI 328 - ITAT DELHI-A] wherein held that the cash credit appearing in assessee’s passbook relevant to a particular previous year in a case where the assessee does not maintain books of account does not attract the provisions of section 68 of the Act.
Following this decision in the case of Smt. Babbal Bhatia [2018 (6) TMI 1030 - ITAT DELHI] held that no addition u/s 68 of the Act based on the credits appearing in the passbook/bank statement when no books of account are maintained in the ordinary course of the business of the assessee.
Addition u/s 68 of the Act in the case of the assessee is not sustainable - Decided in favour of assessee.
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2024 (12) TMI 1333
Denial of deduction u/s 80IB(10) - assessee has not obtained the completion certificate from the Collector, Pune in respect of three projects, thus assessee has not completed the project before the specified date and certain flats in the projects were sold to the same buyers in violation of the provisions of section 80IB(10)(e) - HELD THAT:- If the competent authority gives the completion certificate / occupancy certificate on the basis of the applications made by the assessee before the specified date without any deviation, then the assessee in our opinion, is said to have fulfilled the conditions of section 80IB(10) in light of the various decisions relied on by the Ld. Counsel for the assessee - It has to be seen as to whether the assessee has made the applications to the competent authority before the specified date or not which in the instant case is 31.03.2013.
In the instant case, admittedly, such applications made to the competent authority before the specified date were filed in the shape of additional evidences only and the same were not produced before the Assessing Officer during the course of assessment proceedings. Although it was stated before the Ld. CIT(A), however, there was no occasion on the part of the Ld. CIT(A) also to verify the same.
We deem it proper to restore the issue to the file of the AO with a direction to call for information from the office of the Collector, Pune i.e. the competent authority to find out as to whether the assessee has applied for completion certificate / occupancy certificate before the specified date or not and if so, whether there is any variation in the application filed earlier and subsequently on 30.08.2014.
AO may also find out the reasons for the delay in issue of completion certificate i.e. as to whether there was any lapse on the part of the assessee in fulfilling the conditions prescribed for making the application for occupancy certificate. AO shall also decide the prorata deduction and the violation of provisions of section 80IB(10)(e) of the Act afresh - Assessee ground allowed for statistical purposes.
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2024 (12) TMI 1332
Assessment u/s 153A - Addition in respect of undisclosed sales - HELD THAT:- The incriminating materials found during search undisputedly revealed that there were unrecorded sales by the assessee and therefore once it is established that there are recorded sales, then only profit rate can be applied to assess the income embedded therein.
In the present case the assessee suo-motto disclosed the profit on the said unrecorded sales in the return of income filed in compliance to section 153A of the Act. Therefore, respectfully following the ratios as laid down in the above decisions, we uphold the order of Ld. CIT(A) by dismissing the appeal of the revenue. The appeal of the revenue is dismissed.
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2024 (12) TMI 1331
TDS u/s 194H - Disallowance u/s. 40(a)(ia) - Failure of the assessee to deduct TDS on commission payments made to e-commerce platforms - HELD THAT:- Once the payment was made by the customer, it was received and credited to the account of the assessee. In the process, a small fee was deducted by the e-commerce platform, whose platform was used. Relationship between e-commerce platform and the assessee was not of an agency but that of two independent parties on principal to principal basis.
\The amount retained by the e-commerce a fee charged by them for having rendered the e-commerce services and cannot be treated as a commission or brokerage paid in course of use of any services by a person acting on behalf of another for buying or selling of goods.
The intention of the legislature is to include and treat commission or brokerage paid when a third person interacts between the seller and the buyer as an agent and thereby renders services in the course of buying and/or selling of goods.
The requirement of an agent and principal relationship. This is the exact purport and the rationale behind the provision. The e-commerce platform in question is not concerned with buying or selling of goods. It is not bothered or concerned with the quality, price, nature, quantum, etc. of the goods bought/sold. The aforesaid principles and interpretations can apply to taxing statutes. In the present case, the said principle should be applied as ecommerce platform would necessarily have acted as per law and it is not the case of the revenue that the e-commerce platform had not paid taxes on their income. It is not a case of loss of revenue as such or a case where the recipient did not pay their taxes.
Considering the additional evidence furnished by the assessee in compliance with section 201 of the Act, we allow the ground raised by the assessee.
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2024 (12) TMI 1330
Power of CIT(A) for enhancement granted u/s 251(1) - Addition on account of personal withdrawals - HELD THAT:- The power of enhancement available with the learned CIT(A) is restricted to the subject matter of the assessment or the source of income which has been considered expressly or impliedly by the AO.
In the present case, AO computed the total income of the assessee after making additions under section 68 of the Act on account of capital balance and disallowance of interest expenditure. Thus, the addition on account of personal withdrawals was neither the subject matter of assessment nor the source of income which was considered expressly or impliedly by the AO. Accordingly, we are of the considered view that the learned CIT(A), in the present case, has transgressed its power of enhancement granted under section 251(1) of the Act while making the addition on account of personal withdrawals, and therefore the impugned addition is void ab initio. Accordingly, on this short point, the addition on account of personal withdrawals made by the learned CIT(A) is deleted. As a result, the impugned order on this issue is set aside and grounds no.2-3 raised in assessee’s appeal are allowed.
Addition on account of drawings - We find that the amount shown as drawings in the ledger account for the financial year 2010-11 appears in Schedule A of the balance sheet of the year under consideration and thereby the capital account is reduced to that extent. Since the drawings in the books of the assessee for the year under consideration is nothing but the drawings of the financial year 2010-11, it appears that the same was reduced erroneously by the assessee from the capital account of this year and thus the direction of the learned CIT(A) to exclude the same, which resulted in the impugned addition, on the basis that same is not appropriately reflected is correct and we upheld the same. Accordingly, the impugned order on this issue is upheld and ground no.4 raised in assessee’s appeal is dismissed.
Deduction of interest expenditure - CIT(A) dismissed the ground raised by the assessee on this issue and upheld the disallowance made by the AO u/s 57(iii) - HELD THAT:- In the present case, it is undisputed that the assessee has claimed interest expenditure amounting against the income under the head “income from other sources”. We find that for similar reasons as noted in the foregoing paragraph, similar disallowance was made in the case of assessee’s family member and while deleting the disallowance, the coordinate bench of the Tribunal in Pratima Hitesh Mehta [2023 (10) TMI 1474 - ITAT MUMBAI] held that the assessee is entitled to claim a deduction of interest expenditure u/s 57 of the Act since receipt of dividend is merely due to the shareholding of the assessee and the interest expenditure has nexus with the income under the head “income from other sources” including dividend income even though not direct. Accordingly, the AO is directed to allow the interest expenditure claimed by the assessee u/s 57.
Calculation of interest u/s 234B - We find that a similar issue came up for consideration before the coordinate bench of the Tribunal in assessee’s own case for the assessment years 2011-12, 2012-13 and 2013-14 [2017 (12) TMI 1668 - ITAT MUMBAI] direct the AO to recompute the interest under section 234B of the Act in accordance with the directions therein.
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2024 (12) TMI 1329
Notice u/s 148 as issued on a non-existent entity - whether curable defect u/s 292B - HELD THAT:- Hon’ble Jurisdictional High Court in Uber India Systems Pvt. Ltd. [2024 (10) TMI 1001 - BOMBAY HIGH COURT] decided the writ petition, challenging the issuance of notice u/s 148A(b), order passed u/s 148A(d) and subsequent notice issued u/s 148, in favour of the taxpayer on the basis that there was neither a legal basis nor jurisdiction with the Revenue to issue such notices and order on non-existing entity. Accordingly, the Hon’ble Jurisdictional High Court held such notices to be illegal, invalid and non-est.
The present case, it is discernible from the record that the Revenue has not disputed the fact that the notice under section 148 of the Act was issued on a non-existing entity, even after the intimation by the assessee regarding the fact of the merger.
Revenue has emphasized on the fact that such an error is a curable defect u/s 292B of the Act and since the assessment order has been passed in the correct name, therefore, the assessment has rightly been made in the present case. Decided in favour of assessee.
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2024 (12) TMI 1328
Disallowance u/s 14A - Assessee had mixed pool funds and the available funds, which were more than the investments made in mutual funds - HELD THAT:- As no dispute regarding the fact that the Assessee had mixed pool funds and the available funds were more than investments made in the mutual funds and the investment made out of mixed pool funds with the presumption that it had been made out the tax funds available, by following the ratio laid down in South India Bank [2021 (9) TMI 566 - SUPREME COURT] and Reliance Industries Ltd. [2019 (1) TMI 757 - SUPREME COURT] we are of the opinion that the CIT(A) has committed error in sustaining the addition u/s 14A of the Act by incorrectly applying Rule 8D of the IT Rules - Decided in favour of assessee.
Disallowance of interest u/s 36(1) (iii) - HELD THAT:- It is not in dispute that the claim of the Assessee have been accepted by the Department right from Assessment Year 2010-11 to 2012- 13, no disallowances have been made by the A.O. which can be corroborated by the Assessment Orders for Assessment Year 2010-11 to 2012-13 which were passed u/s 143(3) of the Act. By following the Rule of consistency as reiterated in the case of M/s Excel Industries Ltd. [2013 (10) TMI 324 - SUPREME COURT] and M/s Radhasoami Satsang [1991 (11) TMI 2 - SUPREME COURT] and finding merit in the contention of the Ld. Assessee's Representative, disallowance made by the A.O. u/s 36(1) (iii) deleted. - Decided in favour of assessee.
Disallowance under the head of repair and Maintenance - HELD THAT:- By respectfully following the order of the Tribunal for Assessment Year 2012-13 in Assessee’s own case [2019 (10) TMI 1600 - ITAT DELHI] and considering the nature of the business of the Assessee which involve preservation and maintenance of already existing assets and also considering the fact that such expenditures have been allowed for Assessment Year 2012-13, 2001-02 and 1997-98, we find no reason to sustain the disallowance made by the Ld. CIT(A). - Decided in favour of assessee.
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2024 (12) TMI 1327
Addition u/s 68 - unexplained cash credit - HELD THAT:- Cash deposit in the bank account represents legitimate fee collections from students, supported by detailed documentation submitted by the assessee. The addition made u/s 68 is, therefore, unsustainable.
The reliance placed by CIT(A) on judicial precedents is misplaced, as the facts and circumstances of the present case are distinguishable, and the assessee has satisfactorily discharged its onus of proving the source of the cash deposits. Accordingly, the addition made u/s 68 of the Act is directed to be deleted, and the ground of appeal of the assessee is allowed.
Application of Section 115BBE and initiation of penalty u/s 271AAC are consequential in nature. Since the addition u/s 68 has been deleted, these grounds are also allowed in favour of the assessee.
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2024 (12) TMI 1326
Bogus unsecured loans - HELD THAT:- The monies have been received in regular banking channels and duly reflected in the balance sheet of the lender company.
The lender company had also furnished confirmation before the AO directly in response to notice u/s 133(6) along with other requisite details that were called for by the AO.
Even the statement of Director of lender company appeared before the AO and a statement on oath was recorded from him wherein he had duly confirmed all the loan transactions with the assessee company. Hence the genuineness of transactions could not be doubted at all.
The notice issued u/s 133(6) of the Act behind the back of the assessee stood directly served on the lender company and the same was also duly responded by the lender company directly before the ld AO by furnishing the requisite details. Hence the identity of the lender company cannot be doubted at all.
Assessee was also subjected to search u/s 132 of the Act and nothing incriminating was found during the course of search to support the allegations of the ld AO. Hence nothing was found to substantiate the allegations of the AO to allege that the unsecured loan received by the assessee was in the nature of accommodation entry from the lender company.
It is not in dispute that the assessee company is having running account with the lender company which is evident from the ledger account for the period 1.4.2015 to 31.3.2021 containing loans received in various years (which stood accepted by the revenue u/s 143(3) of the Act except AY 2017-18 as detailed supra) and loans being repaid in various years by the assessee company. Source of source of funds of the lender company is also proved by the assessee in the instant case. Hence there is absolutely no case for the revenue to justify an addition u/s 68 - Decided in favour of assessee.
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2024 (12) TMI 1325
Addition u/s 68 - bogus LTCG - Addition made to the income of the assessee of share capital and premium received during the year finding the same to be mere accommodation entries - CIT(A) deleted addition - HELD THAT:- AO treated transaction as bogus accommodation entry based on information available with him that these entities were bogus paper companies managed and controlled by Shri Shirish Chandrakant Shah. Information was based on evidences gathered during search and survey action conducted on Shirish Shah which revealed him to be involved in providing accommodation entries through several dummy companies.
CIT(A), however, deleted the addition made finding the evidences and statements relied upon by the AO for treating the share capital and premium received by the assessee during the year as bogus accommodation entries to be not sufficient or having no evidentiary value.
CIT(A) has picked up each piece of evidence to discard it as having no evidentiary value when the AO had considered all of them together to make a case against the assessee.
The approach of the CIT(A) in singularly dismissing each piece of evidence, we find, is totally incorrect, and we are of the view that the matter needs to be reconsidered by the CIT(A) after giving a holistic consideration to all the evidences and statements relied upon by the Assessing Officer for holding the share application and share premium received by the assessee during the year to be bogus accommodation entry. Decided in favour of revenue for statistical purposes.
Assessment u/s 153C v/s 147 - HELD THAT:- There is no merit on facts itself, in the ground raised by the assessee before us in the impugned CO that the assessment in the present case ought to have been framed in terms provisions of section 153C of the Act as opposed to having been framed u/s 147 of the Act, thus, rendering it invalid. Assessee, has been unable to demonstrate how the provisions of section 153C were applicable in the facts of the case. As per the admission of Assessee himself before us, no material pertaining to the assessee having been found during the search on Shri Shrish C Shah, there was no occasion, we hold, for assessment to be framed in terms of section 153C of the Act.
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2024 (12) TMI 1324
Cancellation of bail application - smuggling of high value goods such as precious metal, restricted items or prohibited items or goods notified under Section 123 of the Customs Act, 1962 - It is contended that the Court below misconstrued the circular No.13/2022 dated 16.08.2022 and enlarged the respondents on bail - HELD THAT:- This fact is not denied that complaint has yet not been filed against the respondents for prosecuting them under Section 135 (2) (a) (b) of the Customs Act.
It is not desirable to express anything on the merits of the case. The respondents have not breached any conditions incorporated in the bail order, the maximum punishment awarded under the Customs Act 7 years. Therefore, considering the above aspects, this Court is not inclined to entertain the application filed by the Union of India.
These instant bail cancellation applications are hereby dismissed.
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2024 (12) TMI 1323
Authority and procedure for confiscation and re-export under the Customs Act - Imposition of redemption fine and penalty - compliance with standards for Cocoa Beans under the FSS Act or not - goods were unsafe/substandard or not - HELD THAT:- The goods "Fermented and dried processed Sumatra Cocoa Beans (dead beans)' were imported vide 4(four) bills of entry and on test by the FSSAI and thereafter by Indian Bureau of Standards as per the directions of the Hon'ble High Court of Kerala the analysis report states that, " the sample cocoa beans does not conforms the requirement as laid down in "IS 8865:2003 for the above listed parameters". Consequently, the goods were recalled and at the request of the appellant, the Adjudicating Authority has allowed re-export of the goods covered by the 4(four) Bills of Entry on payment of redemption fine of Rs. 15 Lakhs and penalty of Rs. 5 Lakhs.
The appellant contended that the goods were tested by BIS after a lapse of 11(eleven) months, therefore the goods being agriculture produce would certainly deteriorate with passage of time, therefore the test results after 11(eleven) months would be different, if they are tested immediately after import. In this case the imports were made in the month of May 2014 and September 2014, therefore the contention of the appellant in that the goods where tested after 11(eleven) is not correct, since 2(two) consignments have come in the month of September 2014. Further, it is found that on import and on examination and testing by FASSI they have found that the goods are not as per the approved standards. The appellant has also contended that they obtained the import permit for import of the impugned goods as per the requirement of Plants, Fruits and Seeds (Regulation of Import into India) Order, 1989, Cocoa Beans being agricultural seed must be imported with a valid permit under the Regulation 3 (1), since they have the import permit from the concerned authority their import is valid and there is no violation of the import policy.
The appellant contended that according to foreign supplier's test report, the cocoa beans have fully complied with BIS standards prescribed under IS 8865:2003. On recall of the goods by the Authorised Officer and after the issue of the show cause notice, the Adjudicating Authority as per the request of the appellant permitted re-export of the impugned goods on payment of redemption fine and penalty.
The appellant has filed this appeal for waiver of fine and penalty imposed by the Adjudicating Authority, while allowing the re-export the impugned goods - in the facts and circumstances of the case, the redemption fine and penalty imposed by the Adjudicating Authority could be considered for reduction - redemption fine is reduced to Rs. 5,00,000/- and penalty to Rs. 2,00,000/- - appeal allowed.
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2024 (12) TMI 1322
Imposition of redemption fine and penalty on re-export of goods - perishable goods or not - violation of import policies - HELD THAT:- The Larger Bench relied upon by the Revenue in the case of Hemant Bhai R. Patel Vs Commissioner of Customs, Ahmedabad [2003 (2) TMI 87 - CEGAT, NEW DELHI] observed that 'it is open to the adjudicating authority to impose redemption fine as well as penalty even when permission is granted for re-exporting the goods’. Thus, the Bench was only answering the question whether redemption fine and penalty can be imposed while ordering for re-export of goods.'
In the case of Commissioner of Customs Vs Elephanta Oil and Inds. [2003 (1) TMI 108 - SUPREME COURT], the Hon’ble Supreme Court observed that 'In this view of the matter, it is apparent that respondent knowing fully well the import policy imported prohibited goods i.e. import of canalised item namely beef tallow and, therefore, the Collector was fully justified in imposing the penalty under Section 112 of the Customs Act.'
In the present case, the products imported are perishable and have to meet the standards specified by the Animal Quarantine Authority. The order of the original authority clearly held that the Animal Quarantine authority vide letter dated 05.01.2023 on testing the consignment was found to be positive for OIE pathogen, hence, could not be released. It is a fact that at the time of import, the appellant had produced Veterinary Health Certificate from the country of import, which stated that the product is free from all relevant OIE listed pathogens for fin fishes - The Board Circular No.100/2003-Cus dated 28.11.2003 (reproduced below) clearly states that depending upon the facts and circumstances of the case, the Commissioner has the discretion to impose redemption fine and penalty, thus, implying that it is not necessary that in all cases redemption fine and penalties needs to be imposed.
Conclusion - In cases where goods are allowed to be re-exported due to testing failures or other reasons beyond the importer's control, the imposition of redemption fine and penalty may not be justified.
The impugned order is set aside - Consequently, the Appeal is allowed.
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2024 (12) TMI 1321
Refund of SAD under N/N. 102/2007 dated 14.09.2007 against Bill of Entry No. 2935961 dated 10.03.2011 - rejection on the ground that no endorsement on the sales invoices by affixing seal or stamp has been made indicating that CENVAT credit has not been availed and also the invoices did not reflect in the VAT Returns filed and, also they were not attested by the Chartered Accountant or receipt of the same have not been acknowledged by the Tax Department.
Denial of refund on the ground that no endorsement on the sales invoices by affixing seal or stamp has been made indicating that CENVAT credit has not been availed - HELD THAT:- The Larger Bench of the Tribunal in the case of CHOWGULE & COMPANY PVT LTD VERSUS COMMISSIONER OF CUSTOMS & CENTRAL EXCISE [2014 (8) TMI 214 - CESTAT MUMBAI (LB)] had held that appellant is entitled to SAD refund even if no endorsements are made on the commercial invoices.
Whether refund of SAD is admissible under Notification No.102-/2007-Cus. dated 14.9.2007 when VAT was exempted on imported goods? - HELD THAT:- The issue is squarely covered by the decision rendered in appellant’s own case on similar set of facts by the Chennai Bench of this Tribunal in M/S. HONDA SIEL PRODUCTS LTD. VERSUS CC, CHENNAI-IV [2018 (2) TMI 1135 - CESTAT CHENNAI] referring to their earlier cases in M/S. KUBOTA AGRICULTURALL MACHINERY INDIA PVT. LTD. AND M/S. ACER INDIA PVT. LTD. VERSUS COMMISSIONER OF CUSTOMS, CHENNAI-IV [2017 (6) TMI 565 - CESTAT CHENNAI] and M/S GAZAL OVERSEAS, M/S MAYANK ENTERPRISES, M/S ANAND ASSOCIATES VERSUS COMMISSIONER OF CUSTOMS, NEW DELHI [2015 (12) TMI 427 - CESTAT NEW DELHI] where it was held that 'what is required in terms of the said notification is payment of appropriate sales tax/VAT regardless of the rate thereof. It logically follows that if the appropriate rate of sales tax/VAT was NIL then the appropriate sales tax/VAT paid will also be NIL.'
Conclusion - The appellants are entitled to SAD refund and the refund cannot be denied.
Appeal allowed.
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2024 (12) TMI 1320
100% EOU - Eligibility to claim the benefit of Notification No. 52/2003-Cus dated 31.03.2003 - reimport of goods being food items - time limit of three years under S.No.14 of the said Notification No. 52/2003-Cus dated 31.03.2003 cannot be extended to the impugned reimported goods - goods were reimported beyond one year from the date of original exportation - HELD THAT:- On a plain reading of the S. No. 14 of the Notification No.52/2003-Cus dated 31.03.2003 the meaning of 'Repair and Reconditioning' is extensive and inclusive, the said term would include reprocessing or re-making or restoring or reusable etc. On a plain reading of clause (i) of S.No. 14 it is unambiguosly clear that any goods other than the goods specified in Annexure-VII to the Notification are permitted to be re-imported within 3(three) years from the date of exportation for 'Repair or Reconditioning'. The finding given by the Adjudication authority limiting such exemption to machinery and equipments, spare parts accessories, etc., is not tenable.
As far as food products are re-imported, and if they are subjected to reprocessing, clause (i) of S.No. 14 to Notification No. 52/2003-Cus dated 31.03.2003 will apply, if the goods are not covered in Annexure-VII, even as per the communication relied on by the appellant dated 25.01.2021 and the endorsement of the respondent shows that at the time of re-import, the appellant was permitted to clear the goods by executing a bond with an undertaking to re-export the goods within 1(one) year and it was allowed by proper officer in accordance with law. Moreover, at the time of re-import, the appellant had furnished the details of export and there is no suppression of facts by the appellant. The goods were also exported after reprocessing within the stipulated period. Facts being so there is no reason to justify the demand of duty from the appellant and is not tenable.
Conclusion - The proceedings being barred by time limitation, the demand of duty cannot be sustained.
Appeal allowed.
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2024 (12) TMI 1319
Classification of imported spectrometers - to be classified under Customs Tariff Heading (CTH) under 90273010 or under Customs Tariff Heading (CTH) 90221900? - benefit of exemption N/N. 24/2005 dated 01.03.20005 - Time limitation.
Time limitation - suppression of facts or not - HELD THAT:- There is no allegation of suppression of facts in the impugned orders. Appellant had made declaration as per the invoice/details provided by overseas supplier and there is no allegation of any fraud, collusion or willful misstatement or suppression of facts to invoke the extended period of limitation. Thus, the demand made against the goods imported against two Bills of Entries Nos. 684781 dated 29.02.2008 and 748868 dated 09.05.2008 by issuing a Show Cause Notice after 3(three) years and 9(nine) months is barred by limitation and impugned orders are unsustainable.
Further, the issue of classification of the impugned imported goods is not decided as the issue considered on limitation, and it is found that the impugned order is unsustainable on limitation.
Conclusion - The demand is barred by time limitation. The demand for differential duty unsustainable. The classification issue was not substantively addressed due to this finding.
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2024 (12) TMI 1318
Revocation of the Customs Broker License - forfeiture of security deposit - Levy of penalty - attempt to export Red Sanders, illegally - failure to exercise due diligence in verifying KYC of the exporter and the correctness of the goods to be exported has required under regulation 10(e) and 10(n) of CBLR, 2018.
Violation of Regulation 10 (e) of CBLR 2018 - HELD THAT:- It is an admitted fact that the exporter had produced the KYC documents, and the appellant verified the documents, online. Thus, the allegation regarding violation of Regulation 10 (e) of CBLR 2018 is unsustainable.
Violation of Regulation 10 (n) of CBLR 2018 - HELD THAT:- There was an act of negligence on the part of appellant to accept the documents through the representative of the exporters without considering the authorization of such representative. Since the appellant verified the documents through online and filed the shipping bill in good faith, it cannot be construed that they have actively involved themselves in the illegal attempt to export prohibited goods.
Conclusion - The revocation of license and forfeiture of the security deposit set aside as the allegation regarding violation of Regulation 10 (e) of CBLR 2018 is unsustainable. However, considering the violation of Regulation 10 (n) of CBLR 2018, it is found that the penalty of Rs.50,000/- imposed on the Appellant under CBLR, 2018 is reasonable and tenable.
The impugned order is modified - Appeal allowed in part.
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2024 (12) TMI 1317
Entitlement to 1/3rd of all the family assets and properties including business, assets and property - Challenge to an order whereby, while deciding an application of the defendant/respondent no. 25 under Order VII Rule 11 of the Code of Civil Procedure, the learned Trial Judge treated the same to be one under Order VII Rule 10 of the Code and directed return of the plaint to be presented before the appropriate forum - Principles of res judicata - Partial rejection/return of plaint - Jurisdiction of the NCLT - Concept of quasi-partnership - Applicability of the Benami Transactions Act.
Principles of res judicata - HELD THAT:- It is well-settled that the principle of res judicata operates at different stages of the same suit. Since both the applications have been filed under Order VII Rule 11 of the Code, no distinction can be drawn between the powers of the court or the competence of the court to decide the issues involved, which were similar in the present case as that on the earlier occasion, when a similar prayer was rejected by the order dated July 15, 2017. The said order has attained finality, having not been assailed successfully. Hence, the present application of respondent no. 25 is barred by the principle of res judicata.
Partial rejection/return of plaint - HELD THAT:- It is found from the reliefs sought in the plaint that the argument as to the NCLT having jurisdiction applies only to certain consequential reliefs sought in the suit in respect of alleged mismanagement of the funds of the defendant-Companies. Even if the said reliefs are held to be barred at the final hearing of the suit, the primary relief of declaration and partition cannot be held to fall within the domain of the NCLT’s jurisdiction. As held in Ammonia Supplies [1998 (9) TMI 427 - SUPREME COURT] and Sangramsinh P. Gaekwad [2005 (1) TMI 409 - SUPREME COURT], disputed questions which are pure questions of title cannot be adjudicated under the Companies Act. As held in Dwarka Prasad Agarwal (D) by LRS. [2003 (7) TMI 481 - SUPREME COURT], the jurisdiction of the Civil Court is not completely ousted by the Companies Act, 1956.
Importantly, the reliefs pertaining to the management of the affairs of the Companies are only consequential to the primary reliefs of declaration of the shares of the parties in respect of the subject-matter of the suit, flowing from the claim that those can be traced back to the joint family nucleus, and partition of such joint assets. The said primary reliefs cannot be granted by the NCLT but comes squarely within the purview of the Civil Court. Even as per the judgments cited by the respondents, if the disputes pertain to questions of title and squarely fall within the domain of the Civil Court, the exclusion of the jurisdiction of the Civil Court under Section 9 of the Code of Civil Procedure is not readily inferred. Thus, if at all, the plaint would have to be rejected/returned partially. Such split being not permissible in law, the impugned order returning the plaint as a whole is bad on such count as well.
Jurisdiction of the NCLT - HELD THAT:- The reliefs do not confine themselves to mismanagement of the affairs of the Company standing on an independent footing. The plaintiffs claim over the entire subject-matter of the suit, including in the assets of the Company and the shares of the Companies, apart from certain other immovable properties which do not belong to the Companies. Such claim of title by inheritance to the shareholding and other assets is entirely beyond the jurisdiction of the NCLT to adjudicate upon under Sections 241 and 242 of the 2013 Act - The bar in Section 430 of the 2013 Act is only applicable in respect of reliefs which come within the exclusive jurisdiction of the NCLT and cannot be stretched beyond the same. Reliefs which can be granted exclusively by the Civil Court, thus, cannot be covered by Section 430 of the 2013 Act. Hence, the NCLT does not have jurisdiction to grant the primary reliefs claimed in the suit.
Concept of quasi-partnership - HELD THAT:- The cross-holdings in the shares of the different Companies as pleaded in the plaint indicate pervasive control over the Companies by the descendants and family-members of Late Sukhdeo Prasad. The Directorship in most of the Companies is substantially held between the family-members and the plaint case is that the Companies were formed from the joint funds of the family. The cross-shareholdings averred in the plaint clearly show that control over all the assets of the defendants-Companies vests in the joint family. Hence, the concept of quasi-partnership can definitely by borrowed in the backdrop of the plaint case.
It is to be noted that the decisions in Ammonia Supplies [1998 (9) TMI 427 - SUPREME COURT] and Shashi Prakash Khemka (Dead) by LRS [2019 (2) TMI 971 - SUPREME COURT] highlight the fact that the NCLT has jurisdiction only in cases covered by the Companies Act, 2013. In the said judgment, the Supreme Court also noted that Section 430 of the 2013 Act bars the jurisdiction of the Civil Courts only in matters in respect of which exclusive power has been conferred on the NCLT and not otherwise. Unless the remedy of a Civil Suit is completely barred, Section 430 is not attracted at all.
Thus, in the present case, the primary reliefs sought are declaration of title and partition. In view of the cross-shareholdings and pervasive control over the defendants-Companies by the joint family-members, it is opined that the concept of quasi-partnership can be applied to the present case in view of the plaint averments.
Applicability of the Benami Transactions Act - HELD THAT:- Section 2 (9) (A) (b) of the Benami Act, in sub-clauses (i) and (iv) thereof, incorporates certain exceptions to the bar of benami. Sub-clause (i) contemplates, as one of such exceptions, a scenario when the property is held by a Karta or a member of a Hindu Undivided Family (HUF), if the property is held for his benefit or for the benefit of the other members in the family and the consideration for such property has been provided or paid out of the known sources of the HUF. In the present case, the said exception is very much applicable at a glance, since the entire title to the suit properties and the shares of the parties in the suit properties are claimed on the premise of the joint family nucleus which allegedly forms the basis of acquisition of the properties - the bar under the Benami Act is, to say the least, an arguable issue and required to be decided upon adduction of detailed evidence on facts. Hence, no occasion arises at this premature stage for the court to return the plaint or reject the plaint on the ground of benami.
Conclusion - The learned Trial Judge committed a patent error of law and fact in entertaining and deciding the application under Order VII Rule 11 of the Code at the behest of the respondent no. 25 and ultimately moulding the relief to return the plaint to be presented before the appropriate forum - Appeal allowed.
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2024 (12) TMI 1316
Challenge Process conducted by the Resolution Professional - Negotiation Process initiated by the CoC/Resolution Professional after the Challenge Process - eligibility to submit a Resolution Plan as per Clause 3 of the Invitation for Expression of interest and the net worth and the turnover of the promoter - material irregularities committed by the Resolution Professional within the meaning of Section 61(3)(ii) of the IBC.
Whether the Challenge Process conducted by the Resolution Professional on 27.10.2023 was not in accordance with the CIRP Regulations, 2016 as well as Process Note dated 12.10.2023? - HELD THAT:- After receipt of the Resolution Plans, the CoC decided to hold a Challenge Process. The Resolution Professional issued a Challenge Process Document on 12.10.2023 containing Rules of the Challenge Process. Resolution Professional also asked by email dated 12.10.2023 to the Resolution Applicants asking them to submit undertaking before commencement of the Challenge Process. As per Annexure 1, the details pertain to financial bid in Challenge Process, base price, increment and other relevant clauses were mentioned. Clause 5(h) provided that value submitted by highest bidder of each round will be disclosed at the end of each round during the meeting to all the participating Resolution Applicants.
There are no error in the Challenge Process insofar as consortium was exited after 2nd round. In the 3rd round, SRA has given a bid of Rs.251 Crores which was with increment of Rs.10 Crores to its earlier bid which was Rs.241 Crores. In the 3rd round, highest bid was Rs.251 Crores and there are no other Resolution Applicants. The Challenge Process was rightly closed - the Challenge Process was conducted by the Resolution Professional in accordance with Process Note. Counsel for the Appellant has also contended that the Challenge Process adopted by the Resolution Professional is in violation of Regulation 39(1A) of the CIRP Regulations - there are no violation of Regulation 39(1A) of the CIRP Regulations in the Challenge Process conducted by the Resolution Professional.
Whether Negotiation Process initiated by the CoC/Resolution Professional after the Challenge Process was in accordance with the CIRP Regulations and RFRP/ Process Note? - HELD THAT:- The Consortium as well as SRA gave their enhanced financial offers by submitting a plan on 04.11.2023. The SRA has given proposal for Rs.261 Crores and Consortium has given proposal for Rs.248 Crores, thus, both the SRA and the Consortium have increased their last financial proposal which was given in the challenge process. Creative also gave proposal of Rs.240 Crores although did not participate in the Challenge Process. In the 12th CoC meeting held on 06.11.2023, the revised proposals received from the Resolution Applicants were opened. One of the CoC members even asked the Consortium if they are satisfied with the Challenge Process and further negotiations by the CoC. In the minutes of 12th CoC meeting, representative of the Consortium stated that they are satisfied with the negotiation process which is recorded in the minutes. Resolution Professional has filed the minutes of 12th CoC meeting.
The Consortium participated in the negotiation process and also gave increased bid. Negotiation process was conducted by the CoC for the value maximisation as is permitted by the RFRP - there are no error in the negotiation process conducted by the Resolution Professional under the decision of the CoC. From the above discussions, it is opined that there is no error in the Challenge Process conducted by the Resolution Professional on 27.10.2023 as well as negotiation process which was undertaken by the CoC after challenge process.
Whether the SRA was ineligible to submit a Resolution Plan as per Clause 3 of the Invitation for Expression of interest and the net worth and the turnover of the promoter Mr. Sahil Mangla could not be included for purpose of net worth of a group it being not a ‘entity’ within the meaning of Clause 3 of Invitation for Expression of Interest? - HELD THAT:- It is true that when no objection was raised to inclusion of Resolution Applicants in the provisional list and the final list, the Resolution Applicants are to be treated eligible to participate in the process and in the process, no objection can be taken regarding eligibility. However, when the Resolution Plan came for approval before the Adjudicating Authority, in a case where it is found that Resolution Applicant is not eligible and does not fulfil any requirement of eligibility, the Adjudicating Authority in no manner is deprived from considering the said question regarding eligibility. The objection regarding eligibility of Resolution Applicant, thus, can very well be considered by the Adjudicating Authority while considering the approval of the Resolution Plan - regarding eligibility of the Resolution Applicant, the same can very well be considered and examined by the Adjudicating Authority when the application to approve the Resolution Plan comes for consideration.
The CoC which consists of financial institutions is well versed with the financials of all Resolution Applicants. The CoC under whose direction the Resolution Professional has issued Invitation for Expression of Interest is well aware of the clauses and eligibility provided. As noted above, the Resolution Plan has placed before the CoC, while computing the net worth and turnover of the SRA, net worth and turnover of the promoter has been included. The definition of ‘entity’ as occurring in Note 5 ‘group’ also includes an individual - the SRA was fully eligible to submit Resolution Plan it having complied with the eligibility as prescribed in Clause 3.
The SRA was eligible to submit a Resolution Plan as per Clause 3 of Invitation for Expression of Interest and the net worth and turnover of the promoter Mr. Sahil Mangla could be included for purposes of net worth of a group it being entity within the meaning of Clause 3 of Invitation for Expression of Interest.
Whether there are any material irregularities committed by the Resolution Professional within the meaning of Section 61(3)(ii) of the IBC so as to interfere with the order of the Adjudicating Authority approving the Resolution Plan dated 06.05.2024? - HELD THAT:- It is already found that the challenge mechanism as well as negotiation conducted by the Resolution Professional is in accordance with the CIRP Regulations and Process Note. In evaluation of eligibility of the SRA also there is no irregularity committed by the Resolution Professional. There are no tenable ground raised within the meaning of Section 61(3)(ii) of the IBC, to interfere with the order approving the Resolution Plan.
Conclusion - The processes and decisions made during the CIRP upheld, emphasizing adherence to regulations and the commercial judgment of the CoC - there are no ground to interfere in the impugned order - appeal dismissed.
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2024 (12) TMI 1315
Admission of Application u/s 7 of the Insolvency and Bankruptcy Code, 2016 - non-fulfillment of the threshold requirement of 100 allottees - Existence of debt and default on the part of the Corporate Debtors in delivering the units within 36 months with grace period of 12 months or not - Existence of privity of contract between the land owning Company and the allottees or not.
Non-fulfillment of the threshold requirement of 100 allottees - HELD THAT:- The effect and consequence of the order, rejecting the Application to initiate criminal proceedings against the Financial Creditors in a class, cannot be bypassed by the Appellant(s) by filing First Information Report or complaints against Financial Creditors. Any Status Report submitted in such criminal proceedings can have no bearing on proceedings, which was taken by Financial Creditors in a class under Section 7. Reliance on Status Report submitted by Appellant(s) in a criminal proceeding can have no bearing while deciding Section 7 Application. The said Status Report is not an evidence on which it can be pronounced that threshold of 100 allottees was not complete in filing of Section 7 Application. Thus, the submission raised by the Appellant(s) that threshold of 100 is not complete has no legs to stand and has to be rejected.
Existence of debt and default on the part of the Corporate Debtors in delivering the units within 36 months with grace period of 12 months or not - HELD THAT:- The unit holders have been waiting for their units for last more than a decade and the amount, was paid in the year 2012 by the allottees, the Appellant cannot be absolved by permitting them to deposit the amount with meagre interest, which was received in the year 2012. The findings recorded by the Adjudicating Authority regarding debt and default and Application filed by the Corporate Debtors itself being IA Nos. 293 and 2497 of 2024 proves beyond doubt that debt and default is admitted on the part of the Corporate Debtor.
Civil Suit has been filed before the District Court Gautam Budh Nagar in the year 2017 and the Writ Petition No.1553/2019 has been filed before the Allahabad high Court in the year 2019. Other Writ Petitions filed by Sammiti were in the year 2019 and 2020. The Project was launched in the year 2012, in which year the amounts were collected from the allottees. Litigation which commenced in the year 2019 and 2020, cannot be a ground to absolve the Corporate Debtor from its responsibility and obligation to complete the Project within the time as contemplated in the Builder Buyers Agreement with the allottees. The fact that litigations are pending with regard to two of the Khasras, which is also included in the Project land, cannot be a ground to absolve the Corporate Debtor from its obligation, nor that can be a reason for not completing the Project - thus, on the ground that litigations filed by the Corporate Debtor for resolution of the issue with respect to title of land are pending, cannot be a ground to reject Section 7 Application, which was filed by the Financial Creditors in a class for initiating CIRP against the Corporate Debtor.
Existence of privity of contract between the land owning Company and the allottees or not - HELD THAT:- All the three Corporate Debtors had joined hands to develop the Project. The Corporate Debtors being closely connected with the construction and implementation of the Project, it is not open for the land owning Company to say that there is no financial debt. There are no substance in submission of the learned Counsel for the Appellant that there being no privity of contract between the land owning Company and the allottees, there is no liability on the land owning Company towards the Project - This Tribunal in Gp. Capt Atul Jain (Retd.) vs. Tripathi Hospital Pvt. Ltd. & Ors. [2023 (7) TMI 1242 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , PRINCIPAL BENCH , NEW DELHI] also came to the conclusion that there was no evidence of any direct transaction to have taken place between the Appellant and the Corporate Debtor and the insolvency resolution can be triggered where there is a financial debt owed to a person. It was held that Appellant was not able to prove that he is a Financial Creditors. This Tribunal affirmed the judgment of the Adjudicating Authority rejecting Section 7 Application. The above judgment does not in any manner help the Appellant in the facts of the present case.
Conclusion - The present is a case of clear default of Appellant in not completing the Project and handing over the units within the time - The challenge in the Appeal is order of the Adjudicating Authority passed in Section 7 Application, which was initiated by allottees of the Corporate Debtors, there are no sufficient ground to interfere with the order passed by Adjudicating Authority under Section 7. It is not for this Tribunal to consider the mode and manner for completion of the Project at this stage. The steps shall be taken by Resolution Professional for completion of the Project in accordance with insolvency resolution process as per the IBC and Regulations.
There are no good ground to interfere with the impugned order - In result, the Appeal is dismissed.
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