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Showing 241 to 260 of 1569 Records
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2023 (7) TMI 1329
Denial of Back wages - appellant failed to discharge the burden of proving that he was not gainfully employed from the date of removal from service - HELD THAT:- In the case of NATIONAL GANDHI MUSEUM VERSUS SUDHIR SHARMA [2021 (9) TMI 1523 - SUPREME COURT], this Court held that the fact whether an employee after dismissal from service was gainfully employed is something which is within his special knowledge. Considering the principle incorporated in Section 106 of the Indian Evidence Act, 1872, the initial burden is on the employee to come out with the case that he was not gainfully employed after the order of termination. It is a negative burden - Since, it is a negative burden, in a given case, an assertion on oath by the employee that he was unemployed, may be sufficient compliance in the absence of any positive material brought on record by the employer.
In the statement of claim filed thirteen months after termination, a specific assertion was made by the appellant that he was unemployed. Neither any material has been placed by the respondent on record to show that the appellant had a source of income nor anything material has been elicited by the respondent while cross-examining the respondent - The law is very well settled. Even if Court passes an order of reinstatement in service, an order of payment of back wages is not automatic. It all depends on the facts and circumstances of the case. It is true that affidavit filed by the appellant on 18th July 2008 before the Labour Court making a categorical statement on oath that he was not employed from the date of termination was withdrawn and in the fresh affidavit filed by way of evidence, such a specific contention was not raised. But there are two factors in favour of the appellant. In the statement of claim, it is specifically asserted that till August 1997 when the statement of claim was filed, the appellant found it difficult to get employment and in fact he was unemployed.
The respondent has not come out with the case that from the date of his removal from service, the appellant had another source of income. Thus, the appellant discharged the burden on him by establishing that he was unemployed at least till August 1997. From the chart submitted on record by the learned counsel appearing for the respondent, it is found that the gross salary of the appellant on the date of reinstatement was Rs.18,830/. On the date of removal, his salary was approximately Rs.4,000/ per month.
Thus, considering the facts of the case, it will be appropriate if a sum of Rs.3 lakhs is ordered to be paid to the appellant in lieu of back wages. To that extent, the appeal must succeed.
Accordingly, the award of the Labour Court dated 17th March 2009 and impugned judgments of the High Courts are modified - the respondent are directed to pay a sum of Rs.3 lakhs to the appellant as back wages within a period of two months from today - appeal allowed in part.
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2023 (7) TMI 1328
Leave encashment u/s. 10(10AA) - D.R. submitted that the organization that is BSNL is a Public Sector Unit and therefore, the same is not exempted in respect of leave encashment - HELD THAT:- The assessee was absorbed in the Department of Telecommunication in respect of BSNL vide Presidential Order dated 23.09.2019 which has given the permanent absorption effective from 01.10.2000. The assessee was initially appointed on 28.11.1983 in the Department of Indian Post and Telegraphs and therefore, he was initially appointed in the Central Government which was affirmed in the certificate from the Accounts Officer of BSNL on 18.01.2023 that the leave encashment for 300 earned leave was of Department of Telecommunication originally that of Indian Post and Telegraph Department and therefore, the same cannot be treated as a PSU and the assessee is entitled for exemption under Section 10(10AA).
CIT(A) as well as the Assessing Officer has not taken cognizance of these facts and wrongly denied the benefit of exemption of leave encashment under Section 10(10AA) of the Act. In fact, in Para 4.3 of the CIT-A’s order the decision of the Tribunal, Mumbai Bench in case of Babulal Patel [2019 (2) TMI 2069 - ITAT MUMBAI] has been quoted but the same was not at all considered. Therefore, the appeal of the assessee is allowed.
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2023 (7) TMI 1327
Levy of penalty - penalties imposed inspite of service tax was paid - taxability of service challenged for setting aside penalty - Market Survey fees - Export Promotional Expenses - Technical Fees and Consultant Fees - Legal and Professional Consultancy - revenue neutrality - HELD THAT:- It is found that without going into merit of taxability the issue of penalty or otherwise also can be decided on the submission of revenue neutral. The appellant being a manufacturer and exporter of the goods all the services received by the appellant are in relation to export of goods - all the services were used in relation to export of goods. Therefore, the appellants were eligible for availing the cenvat credit on the service tax payable on the aforesaid services on reverse charge mechanism.
In view of the decisions in COMMR. OF C. EX. & CUS., VADODARA-II VERSUS INDEOS ABS LIMITED [2010 (3) TMI 656 - GUJARAT HIGH COURT] and COMMISSIONER VERSUS INDEOS ABS LTD [2011 (3) TMI 1575 - SC ORDER] it is found that whenever there is a revenue neutral situation no malafide should be attributed to the assessee. Considering the aforesaid settled legal position in the present case the penalties imposed by the Adjudicating Authority are not sustainable. Hence, the same are set aside. However, the service tax paid by the appellant is maintained on conceding by the learned Chartered Accountant. Consequently, the interest on service tax demand is also sustained and the same is recoverable from the appellant.
The impugned order stands modified - Appeal allowed in part.
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2023 (7) TMI 1326
Re-assessment notice issued without quoting DIN - petitioner states that proper opportunity was not given and that the notice u/s 148 was issued manually instead of it being issued by applying the document identification number (DIN) - maintainability of the writ petition on the ground that petitioner has remedy of filing statutory appeal - HELD THAT:- We are not inclined to entertain the writ petition in view of the availability of statutory alternative remedy. The petitioner has otherwise participated in the proceedings. All questions of fact and law are otherwise left open for appropriate examination by the appellate authority.
The main argument is that the order is without jurisdiction since notices were not issued on DIN. This argument is noticed only to be rejected since no prejudice is shown to have been caused to the petitioner on account of issuance of manual notices. Admittedly, the petitioner has acknowledged receipt of such notice and has also submitted his objections, which have been duly adverted to. Non-issuance of notice on DIN would thus not be a ground to entertain the writ petition, notwithstanding the availability of alternative remedy.
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2023 (7) TMI 1325
Denial of Set off brought forward losses by applying provisions of section 79 - Change in share holding pattern between both the shareholders - i.e., the holding of FHL increased to 85%, while holding of FHHPL got reduced to 15% - AO said that said change in shareholding pattern between two shareholder would be hit by provisions of section 79 of the Act, which bars carry forward of losses - contention of the learned AR that the provisions of section 79 would be applicable only if the shares of the company carrying not less than 51% of the voting power beneficially held by “certain persons” were transferred to “other persons”
HELD THAT:- In the instant case, we noticed that there are only two shareholders, viz., FHL and FHHPL. Both the above said shareholders, as a group, has beneficially held 51% of the voting power in both the years, i.e., the year in which loss was incurred and the year in which the loss was sought to be set off, meaning thereby, there is no change in the shareholding pattern of the group. We further noticed that the FHHPL is holding company of FHL. Hence, the increase in shareholding of FHL in the assessee company, in any case, would not result in the change in the voting power of the shareholders. Accordingly, we find merit in the contentions of the learned AR that the provisions of section 79 will not be applicable in the facts of the present case. Hence, we are not able to agree with the view expressed by the tax authorities that the change in individual shareholding of the shareholders would also attract provision of section 79 - Accordingly, we set aside the order passed by the learned CIT(A) on this issue and direct the AO to allow set off brought forward losses.
Addition u/s 68 - assessee has not offered proper explanations with regard to nature and source of share premium received by it - HELD THAT:- The provisions of sec.68 would be attracted when the assessee fails to prove the identity of the creditor, credit worthiness of the creditor and genuineness of transactions. The examination u/s 68 of the Act has to be with reference to the creditor who has given money to the assessee. We notice that there is no doubt in the mind of tax authorities about the three ingredients mentioned above in respect of share premium amount of Rs.27 crores collected from FHL, i.e, the AO has seems to have accepted that the FHL has the capacity and credit worthiness to subscribe to the shares. The addition has been made only on the ground that the assessee has failed to substantiate the share premium @ Rs.90/- per share, i.e., the capacity of the assessee to charge high share premium is being questioned by the tax authorities. The above said question would not be covered by the provisions of sec.68 since we have noticed earlier the provisions of sec 68 would be directed towards the creditor only. Decided in favour of assessee.
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2023 (7) TMI 1324
Revision u/s 263 - violation of of principal of natural justice - shorter period to reply to SCN - HELD THAT:- The assessee was given only seven days to file the reply to the show cause notice. In compliance to the show cause notice the assessee filed reply and also requested the Pr. CIT to allow the assessee to produce the voluminous record in the physical form but due to paucity of time as the limitation was gone to expire on 31.03.2022 the Pr. CIT passed the impugned order without considering the explanation and replied filed by the assessee whereby the assessment order was set aside and matter was remanded for de novo assessment. Therefore, at the outset it appears to be a case of violation of principal of natural justice.
As per CIT AO has discussed only disallowance made u/s 14A of the Act and there is no discussion on other issues as pointed out by the Pr. CIT in the show cause notice - Lack of enquiry or inadequate enquiry - As on-going through the reply filed by the assessee it is manifest that the assessee has given all these details and explanation as sought by the AO in the show cause notice issued u/s 142(1) of the Act. The AO even issued a second show cause notice dated 22.12.2019 asking the details regarding unsecured loans along with explanation in respect of disallowance u/s 14A r.w. Rule 8D. Finally the AO has made disallowance only u/s 14A and no disallowance or addition was made in respect of the other issues as raised in the show cause notice issued u/s 142(1) of the Act.
Thus, it is clear that the AO has conducted an inquiry on these issues and was satisfied with the reply and explanation filed by the assessee along with supporting evidence. Hence it is not a case of complete lack of inquiry on the part of the AO while passing the assessment order and therefore, the assessment order cannot be held to be erroneous so far as the prejudicial to the interest of the revenue on the ground of lack of inquiry.
Though the commissioner has jurisdiction to invoke the provision of section 263 even when the AO has conducted inquiry and taken a view but the said jurisdiction and power of commissioner is restricted only in the case, where the view taken by the AO is absolutely wrong and against provision of law. No such allegation has been made by the Pr. CIT in the impugned order that the view taken by the AO in allowing the claims and accepting the explanation of the assessee is absolutely not permissible under the law. Even otherwise we find that the assessee has duly explained discrepancies in the total receipts declared by the assessee in comparison to the receipts appearing in form 26AS and explained the reasons with supporting evidence that the said difference is due to the time difference in recognizing the revenue by the assessee and booking of expenditure by the contractee. It is matter of record that the assessee filed the reconciliation before the AO as well as before the Pr. CIT. Therefore, it was incumbent upon the Pr. CIT to verify the details produced by the assessee as well as reconciliation of difference in the receipts and to give a finding about the correctness of the claim of the assessee.
The assessee has given the relevant details and explained difference of Rs. 1.97 cr being the income already declared by the assessee in the preceding year with the supporting bills and TDS which was deducted by the payee in the preceding year as well as for the year under consideration. Therefore, if the TDS details for two years are taken into consideration it goes to prove that only because of the difference of time in deducting the TDS by contractee the discrepancies appears in respect of the receipts as shown in the form 26AS and turnover declared by the assessee. All these details were produced by the AO and this is a recurring issue as already examined before the AO in the preceding assessment years. The AO did not feel any need to give an elaborate finding on this issue. Once it is a recurring issue and already examined in the preceding years and AO has duly conducted an inquiry by issuing show cause notice u/s 142(1) which was duly replied by the assessee with relevant record then the AO was not expected to give an elaborate finding on this issue.
Similarly on the other issues when the AO has issued show cause notice and the assessee produced relevant details and supporting evidence in respect of the expenses incurred which were subjected to TDS wherever applicable and the extra expenditure was incurred for the year was specifically explained by the assessee giving the specific reasons of consumption of electricity in development of site in the remote rural area as well as the expenditure incurred on acquiring equipment of machinery require for carrying out construction work. All these details were available with the AO as filed by the assessee, therefore, this case is certainly does not fall in the category of lack of inquiry on the part of the Assessing Officer.
Once AO has conducted an inquiry which may be inadequate inquiry but in that case it cannot be said that the order passed by the AO is erroneous due to complete lack of inquiry. Once the AO has conducted an inquiry and taken a view which is not found to be impermissible view then the Pr. CIT is not permitted to invoke the provision of section 263 of the Act merely because he does not agree with the view of the AO.
Therefore, once the AO was satisfied with the supporting evidence produced by the assessee in response to the show cause notice u/s 142(1) then it is not necessary for the AO to give an elaborate finding on the issue.
Accordingly, in the facts and circumstances of the case when the AO has conducted an inquiry then the Pr. CIT while passing the revision order cannot remand the matter back to the AO for passing afresh order simply because of the reason that the Pr. CIT himself was not sure about the correctness of the claim of the assessee. Therefore, once the order passed by the AO is not erroneous for want of inquiry then it is incumbent upon Pr. CIT to give conclusive finding that the order passed by the AO is not sustainable in law. Assessee appeal allowed.
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2023 (7) TMI 1323
Applicability of time period to claim refund of Special Additional Duty of Customs (SAD) on goods imported in terms of the Notification No. 102/2007-CUS. - It was held by Delhi High Court that This Court has, in a number of matters, dismissed the appeals filed by the Customs Authorities in view of the decision in Sony India Pvt. Ltd. v. Commissioner of Customs [2014 (4) TMI 870 - DELHI HIGH COURT].
HELD THAT:- There are no reason to interfere with the impugned order - SLP dismissed.
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2023 (7) TMI 1322
Disallowance u/s 40A(3) - assessee has made cash payment in respect of the purchase of land at Khajuri Khurd - assessee has submitted that the cash was paid only in compliance to the settlement of Court proceedings and therefore, no disallowance could be made u/s 40A(3) - HELD THAT:- Payment made by the assessee in cash to settled the dispute pending in the court was inhabitable to purchase the land in question. Thus, the payment was made for business expediency and specific circumstances to avoid abnormal delay of transactions of purchase of land which could have adversely affected the business of the assessee.
AO has not disputed the genuineness of the transaction and identity of the parties to whom the assessee has paid of Rs. 17,50,000/- in question. Though the payment was made under the mutual settlement but to bring to an end the litigation pending in the court of law and therefore, the settlement made by the assessee with plaintiff who filed the suit was on account of business expediency and rules out any scope or intention of tax evasion on the part of the assessee or other parties as the entire transaction was made part of the court order and decree. Therefore, the genuineness of the transactions and payment as well as identification of the payee were beyond the doubt.
As decided in case of Anupam Tele Services [2014 (2) TMI 30 - GUJARAT HIGH COURT] if section 40A(3) is read together with rule 6DD it will be clear that the provisions are not intended to restrict business activities. The payment by crossed cheque or crossed bank draft is insisted to enable the assessing authority to ascertain whether the payment was genuine or whether it was out of income from undisclosed sources. Considerations of business expediency and other relevant factors are not excluded. Genuine and bona fide transactions are not taken out of the sweep of the section.
Therefore, if the assessee has brought on record to establish genuineness of the transactions and payment as well as identity of the payee to the satisfaction of the AO then the benefit of Rule 6DD is available. As section 40A(3) was intended to penalize the tax evader and not honest transactions and that is why after framing Rule 6DD(j) the CBDT steps in by issuing the circular dated 31st May 1977.
Therefore, the disallowance u/s 40A(3) cannot be made without considering the business expediency and other relevant factors falling in the exceptions given in Rule 6DD of I.T. Rules. Thus we decide this issue in favour of the assessee and consequently disallowance made by the AO u/s 40A(3) is deleted.
Jurisdiction of the AO 154 for levying interest u/s 220(2) - HELD THAT:- As there were mistake in computing surcharge and education cess consequently the interest u/s 234A, 234B and 220(2) were levied incorrectly. The last correction proposed by the AO in the order u/s 154 in respect of the interest u/s 220(2) is nothing but consequential to the rectification in respect of the surcharge and education cess.
Even otherwise the interest u/s 220(2) is automatic once the AO issues demand notice after the assessee failed to make payment. Therefore, the issue raised by the assessee in this appeal is purely academic in nature which is not going to change the tax liability of the assessee. Even otherwise once the AO is required to give effect to the orders of the Ld. CIT(A) as well as this Tribunal then this issue of interest u/s 220(2) becomes infructuous.
Disallowance of interest on account of interest free loan given to related parties - AO noted that the assessee has given interest free loan to related party and as no business purpose is served by giving such interest free loan and advance to the related party, made the disallowance of interest @ 12% - HELD THAT:- It is settled proposition of law that even if the interest bearing fund and interest free funds are put in common pool, the investment or loan given by the assessee would be deemed to have been given from assessee’s own interest free fund. The assessees own fund is more than sufficient to advance this amount to the related party. Thus when the assessee’s own interest free fund are sufficient to advance to the related party the disallowance made by the AO on account of interest calculated @ 12% is not justified and the same is deleted.
Addition of agricultural income - HELD THAT:- Assessee has shown agricultural income in its return of income for this year as well as for the A.Y. 2014-15 and this fact has not been disputed by the Ld DR. Further when the assessee has produced evidence of owning agricultural income and revenue record showing the cultivation of the land and crop production then the claim of the assessee cannot be denied in toto. The AO has not disputed the claim of agricultural income of Rs. 21,52,089/-for A.Y. 2014-15. Accordingly in the facts and circumstances of the case when the AO has not disputed the claim of agricultural income for assessment year 2014-15 then the disallowance made for the year under consideration is not justified the same is deleted.
Disallowance of salary/remuneration paid to the directors - HELD THAT:- Assessee has explained the qualification and work experience as well as business knowledge of the directors who are responsible for overall business affairs of the assessee company. we further note that the AO has made disallowance of 40% of enhancement without doing any exercise to determine what should be the fair salary to the directors having regard to the services they have render to the assessee company.
It is matter of record that two of the directors are paying income tax at the maximum marginal rate and therefore, there is no revenue loss on this account. Accordingly we are of the considered view that an ad hoc disallowance made by the AO without doing the necessary exercise of determination of the fair remuneration of the salary payment to the directors is not justified. Accordingly the disallowance made by the AO is deleted.
Disallowance made u/s 40(a)(ia) in respect of provisions made on account of auditor fees - AO has noted that the assessee has claimed the auditor fees in the profit and loss account which was yet to be paid by the assessee as no bill or voucher was received during the year under consideration - HELD THAT:- Since it is only the provision for the auditor fees and assessee did not deduct tax at source on the said provisions therefore, in the facts and circumstances of the case we find it appropriate that the claim of auditors fees be allowed by the AO in the subsequent year when the assessee has actually deducted and paid TDS on this amount. Ld. AO is directed accordingly.
Disallowance of of telephone, traveling and fuel expenses on the ground of personal use - HELD THAT:- AO has just doubted the personal use and the disallowance is made purely on the basis of the assumption without bringing any record or fact to show that these facilities are being used for personal purpose of the directors. As relying on Sayaji Iron and Engineering Co[2001 (7) TMI 70 - GUJARAT HIGH COURT] the adhoc disallowance is not sustainable and liable to be deleted.
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2023 (7) TMI 1321
Depreciation Claim of trust - purchase of assets taken by the assessee as application of Income u/s 11 - claim disallowed by the AO observing that it would amount to double deduction - HELD THAT:- We note that the case of the assessee is prior to 01.04.2015, therefore, the assessee is eligible for claim as application of income on the depreciation charged on fixed assets, even if the assessee has already claimed application of income on the fixed assets in the year of purchase. This issue has been settled in the case of CIT v. Rajasthan & Gujarati Charitable Foundation, Poona [2017 (12) TMI 1067 - SUPREME COURT] as decided that the amendment made as prospective in nature. Respectfully following the above judgment, accordingly we allow ground No. 1 of the assessee.
Corpus fund - as per the assessee, it is towards building corpus fund and not part of the total income, whereas the authorities below considered it as a general receipt of the assessee trust. Since the assessee did not appear before the CIT(A) and substantiate its case, therefore we remit this issue to the CIT(A) for fresh consideration and decision as per law.
Loss on sale of asset - Lower authorities have held that the assessee has not incurred any actual expenditure, therefore, they have not allowed application of income. We note that it is not clear from the orders of revenue authorities, whether the loss suffered on the sale of fixed asset is claimed as application of income in the year of purchase of such assets and further whether depreciation is claimed on such assets and/or the depreciation has been claimed as application of income. If yes, then the assessee will not get benefit of application of income in the year of loss suffered on sale of such assets. Therefore, this issue is also remitted back to the file of CIT(A) for verification and fresh decision as per law.
Disallowance of claim as application of income towards refund of caution money to the students which was received by the assessee at the time of admission of students for want of proper details - assessee is directed to provide the necessary details for proof of payments which could not be produced before the AO. We remit this issue to the CIT(A) for fresh consideration and decision as per law.
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2023 (7) TMI 1320
Avoidance of preferential transactions - Right of claim over the amount available - conclusion of corporate insolvency resolution process - RP can continue to act beyond the approval of the Resolution Plan or not - HELD THAT:- Issue notice returnable in four weeks.
Dasti service, in addition, is permitted.
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2023 (7) TMI 1319
Applicability of time period to claim refund of Special Additional Duty of Customs (SAD) on goods imported in terms of the Notification No. 102/2007-CUS. - It was held by Delhi High Court that This Court has, in a number of matters, dismissed the appeals filed by the Customs Authorities in view of the decision in Sony India Pvt. Ltd. v. Commissioner of Customs [2014 (4) TMI 870 - DELHI HIGH COURT]
HELD THAT:- There are no reason to interfere with the impugned order - SLP dismissed.
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2023 (7) TMI 1318
TP Adjustment - MAM selection - CUP or TNMM - ALP for royalty @ 3% determined by the ld. DRP - HELD THAT:- We find that the turnover of finished goods is Rs.92 Cr. and export sales to AE was Rs.24 Cr. The import of raw material was Rs.28 Cr. Royalty has been paid on the total sales.
In the specific facts of this case and export of goods to AE, the TNMM is the MAM. The ld. DRP has determined royalty payment @ 3% instead of 8% considered by the assessee, taking into consideration, the royalty payment of Federal Mogul TPR India Ltd., Climate Systems India Ltd. and Eicher Motors Ltd. The moot argument of the ld. AR was that the FAR of these companies is different.
Having gone through the entire facts and circumstances of the case, we find that the arbitrary selection of royalty rate of 3% by the ld. DRP is without brining any correct comparables on record. With regard to payment of FTS in A.Y. 2012-13, the ld. DRP agreed that the TPO failed to apply CUP correctly and is determination of ALP at Nil is incorrect. The Hon’ble High Court of Delhi in Magneti Marelli [2016 (11) TMI 123 - DELHI HIGH COURT] held that if segregation approach is permissible, TNMM shall apply.
Owing to these facts, the appeal of the assessee is hereby allowed.
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2023 (7) TMI 1317
CENVAT Credit - input services - services related to treatment of effluent and waste arising during the manufacture of Agro Chemical Product - denial on the ground that the ETP service do not qualify as input service as the same were not used in or in relation of finished goods whether directly or indirectly - HELD THAT:- The activity of treatment of effluent/ waste arising during the course of manufacture of finished product of the appellant, the said effluent/ waste is required to be mandatorily treated as per the statutory provision of the Pollution Control Board as it is not an option for manufacturer not to treat the effluent/waste accordingly, the expenses incurred on account of effluent treatment is absolutely in the overall expenditure of the appellant’s activity of production. Therefore, the activity of treatment of effluent/ waste is part of the overall manufacturing activity. At the relevant time all the services are included in the inclusion clause of services related to business is also admissible input services.
Therefore, the activity of treatment of effluent/ waste is undoubtedly part of overall business activity of the appellant. In absence of this activity the business cannot be run as mandated under Pollution Control Law, therefore, the services of effluent/ waste is indeed an input services and cenvat credit is admissible.
As regard the issue that the treatment plant are located outside the appellant’s factory, we find that the location of provision of service is immaterial for allowing the credit on input services, the credit is admissible so long the service activity is in or in relation to the manufacture of finished product and the overall business activity.
The appellant is entitled for the cenvat credit on the services of effluent treatment - the impugned order is set aside - Appeal is allowed.
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2023 (7) TMI 1316
Disallowance u/s 14A - no income exempt from tax had been earned during the relevant period - ITAT sustaining the deletion of disallowance - HELD THAT:- The issue is covered by case Cheminvest Limited [2015 (9) TMI 238 - DELHI HIGH COURT], M/S. CHETTINAD LOGISTICS PVT. LTD [2017 (4) TMI 298 - MADRAS HIGH COURT] also confirmed by SC [2018 (7) TMI 567 - SC ORDER] and IL And FS Energy Development Co Ltd [2023 (5) TMI 1266 - DELHI HIGH COURT]
Thus held that the expression “does not form part of the total income” in Section 14A of the envisages that there should be an actual receipt of income, which is not includible in the total income, during the relevant previous year for the purpose of disallowing any expenditure incurred in relation to the said income. Section 14A will not apply if no exempt income is received or receivable during the relevant previous year. Decided in favour of assessee.
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2023 (7) TMI 1315
Assessment u/s 153A - Assessment set aside as prior approvals u/s. 153D had been granted without application of mind - Revenue had urged non-applicability of Serajuddin and Co. Kolkata [2023 (3) TMI 785 - ORISSA HIGH COURT] case - HELD THAT:- The appeal is covered by M/s. Dillip Construction [2023 (6) TMI 1328 - ORISSA HIGH COURT] as held approval does not even say the Joint Commissioner had perused the files. As such, the contention sought to be raised in the appeal is covered by Serajuddin and Co. Kolkata 2023 (3) TMI 785 - ORISSA HIGH COURT]. In the circumstances, no substantial question of law arises for admission of it.
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2023 (7) TMI 1314
Seeking grant of bail - Money Laundering - Conspiracy - proceeds of crime - predicate offence - irregularities in the framing of the Excise Policy - case of Revenue is that petitioner Benoy Babu had prior knowledge of liquor policy 2021 before it was made public which enabled Pernod Ricard to arrange finances even before the public announcement of the policy to create vehicle which was later on used for generating parking and use of proceeds of crime.
HELD THAT:- Section 45 of PMLA provides that notwithstanding anything contained in the Code of Criminal Procedure, 1973, no person accused of an offence under this Act shall be released on bail or on his own bond unless—(i) the Public Prosecutor has been given an opportunity to oppose the application for such release; and (ii) where the Public Prosecutor opposes the application, the court is satisfied that there are reasonable grounds for believing that he is not guilty of such offence and that he is not likely to commit any offence while on bail. It is also pertinent to mention here that Section 45 also provides that this condition is in addition to the limitations imposed under Section 439 of the Code of Criminal Procedure, 1973 or any other law for the time being in force on granting of bail. It is settled proposition Section 45 PMLA do not impose an absolute restraint on the grant of bail and the court at this stage is to prima facie consider whether applying the standard of broad probabilities the material against the applicant would result in conviction.
The bare reading of Section 3 of PMLA would make it clear if a person is involved in any process or activity connected with the proceeds of crime, including its concealment, possession, acquisition or use and projecting or claiming it as an untainted property shall be guilty of offence of money laundering. Therefore, it is not necessary to attribute section 3 of the PMLA that the alleged person must have acquired or in possession of the proceeds of the crime - The present case is very peculiar in nature and may not have any parallel factual matrix. In brief, the allegation in the predicate offence was that the conspiracy was hatched between the political head and certain persons which included an individual allegedly representing the government with the manufacturer, liquor wholesaler and retailer. The conspiracy allegedly was hatched to introduce a new excise policy to benefit certain individuals who had given advance kickbacks to the AAP.
Presently, this court is considering the bail application of the abovesaid accused person namely Mr.Benoy Babu, who was arrested for the offence under Section 3 of the PMLA. For the purpose of clarity Mr.Bonoy Babu was an employee of M/s Pernod Recard. Similarly, the allegations against Benoy Babu, an employee of M/s Pernod Recard is that he was also in a deep conspiracy from the stage of formulation of policy and extended corporate guarantee of 200 crores to enable the other stakeholders to generate the proceeds of crime.
It is correct that extending a corporate guarantee per se may not be a crime. However, if it is connected with any activity or process connected with the proceeds of crime, it would inevitably come within the purview of money laundering under section 3 of PMLA. In this regard, a reference can also be made to Vijay Madanlal Chaudhary [2022 (7) TMI 1316 - SUPREME COURT] wherein it has inter alia been held that while construing the expression “and” in Section 3 as “or”, to give full play to the said provision so as to include “every” process or activity indulged into by anyone, including projecting or claiming the property as untainted property to constitute an offence of money-laundering on its own.
Further, it was observed by the Ld. Special Judge that the applicant namely Benoy Baby was the signatory in the capacity of attorney of M/s Pernod Ricard to the documents pertaining to the grant of licenses to M/s Indospirit, and it was the applicant/accused who performed all the operations in respect to the appointment of wholesaler, furnishing corporate guarantees. Even though he was not the Director or major shareholder in the M/s Pernod Ricard, it was observed that in terms of the provisions contained under section 70 (2) of the PMLA he is equally liable for the offence of money laundering committed in the present case, apart from the company itself or any of its Directors, Secretaries or other Managers connected with the commission of the said offence, directly or indirectly - Allegedly applicant/accused is further being associated with some other amounts of proceeds of crime and the total proceeds being attributed to him are stated to be around Rs. 563 crores.
The accused persons in the present case acting in furtherance of the conspiracy circumvented the policy and got framed the policy in such a manner to continuously generate and channel illegal funds. The allegations are that deliberate loopholes were left to facilitate illegal and criminal activities.
There is sufficient material on the record that the petitioner was indulging or knowingly assisting in process or activity connected with the proceeds of crime and it cannot be said that there are reasonable grounds for believing that petitioner is not guilty of such offence and he is not likely to commit any offence well. It was allegedly a well spun conspiracy to generate P.O.C. In such cases every person who is connected with any process or activity relating to P.O.C. cannot avoid his/her responsibility. The allegations are very serious in nature.
Bail application dismissed.
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2023 (7) TMI 1313
Penalty u/s 271(1)(c) - defective notice u/s 274 - non specification of clear/specific charge - HELD THAT:- The notice issued to the assessee with regard to imposition of penalty did not specify the appropriate limb under which the penalty is sought to be imposed as to whether the penalty was being imposed for concealment of income or for furnishing inaccurate particulars.
As relying on MS. MINU BAKSHI [2022 (7) TMI 1307 - DELHI HIGH COURT] notice for imposition of penalty u/s 271(1) (c) of the Act, did not specify which limb of the said provision the penalty was sought to be levied, is covered in case M/S SSA'S EMERALD MEADOWS [2016 (8) TMI 1145 - SC ORDER], MANJUNATHA COTTON AND GINNING FACTORY [2013 (7) TMI 620 - KARNATAKA HIGH and M/S SSA’S EMERALD MEADOWS [2015 (11) TMI 1620 - KARNATAKA HIGH COURT] COURT] stating that clear specification of charge is mandatory before issuing penalty notice - Decided in favour of assessee.
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2023 (7) TMI 1312
Seeking grant of bail - Money Laundering - Conspiracy - proceeds of crime - irregularities in the framing of the Excise Policy (excise policy of GNCTD of Delhi for the year 2021-22) in a manner which permitted formation of cartels and windfall profits for certain preferred persons who had paid kickback/bribes in exchange thereof - connection with various branches of this entire liquor scam - HELD THAT:- Section 45 of PMLA provides that notwithstanding anything contained in the Code of Criminal Procedure, 1973, no person accused of an offence under this Act shall be released on bail or on his own bond unless—(i) the Public Prosecutor has been given an opportunity to oppose the application for such release; and (ii) where the Public Prosecutor opposes the application, the court is satisfied that there are reasonable grounds for believing that he is not guilty of such offence and that he is not likely to commit any offence while on bail. It is also pertinent to mention here that Section 45 also provides that this condition is in addition to the limitations imposed under Section 439 of the Code of Criminal Procedure, 1973 or any other law for the time being in force on granting of bail. It is settled proposition Section 45 PMLA do not impose an absolute restraint on the grant of bail and the court at this stage is to prima facie consider whether applying the standard of broad probabilities the material against the applicant would result in conviction.
The bare reading of Section 3 of PMLA would make it clear if a person is involved in any process or activity connected with the proceeds of crime, including its concealment, possession, acquisition or use and projecting or claiming it as an untainted property shall be guilty of offence of money laundering. Therefore, it is not necessary to attribute section 3 of the PMLA that the alleged person must have acquired or in possession of the proceeds of the crime - The present case is very peculiar in nature and may not have any parallel factual matrix. In brief, the allegation in the predicate offence was that the conspiracy was hatched between the political head and certain persons which included an individual allegedly representing the government with the manufacturer, liquor wholesaler and retailer. The conspiracy allegedly was hatched to introduce a new excise policy to benefit certain individuals who had given advance kickbacks to the AAP.
Presently, this court is considering the bail application of the accused person namely Mr.Vijay Nair who was arrested for the offence under Section 3 of the PMLA. The allegation against Vijay Nair is that though he did not hold any position in the government but he was representing the government and was interacting with all the stack holders including manufacturers, wholesalers and retailers - The allegation against Manish Sisodia and Vijay Nair was also that M/s Indospirit was created as a special purpose vehicle to generate the proceeds of crime.
The present case arises out of an alleged conspiracy wherein the government framed an excise policy with a mala fide intention to recoup the kickbacks received in advance from certain individuals and to further generate the ill money from the liquor trade - The analysis of provisions of PMLA has already been made herein before and has thus not been repeated herein for the sake of gravity. However, it may be reiterated that the Court at the stage of bail is required to confine itself to the settled principles as contained in Section 439 of Cr. PC and Section 45 of PMLA. It may also be stated that Section 3 of the PMLA has a wider reach and anybody who is actually involved in knowingly assisting directly or indirectly in any process or activity with the proceeds of crime including assisting in the generation of proceeds of crime would be guilty of offence of money laundering.
The accused person in the present case acting in furtherance of the conspiracy circumvented the policy and got framed the policy in such a manner to continuously generate and channel illegal funds. The allegations are that deliberate loopholes were left to facilitate illegal and criminal activities. It has also come on the record that accused Vijay Nair was a close associate of Chief Minister, GNCT of Delhi and Sh. Manish Sisodia, Deputy Chief Minister. The investigation has further revealed that Vijay Nair arranged a video call through face time between Chief Minister, Government of NCT of Delhi and Sameer Mahendru where Chief Minister said that Vijay Nair is his boy and they should trust him.
The allegations are extremely serious in nature. The alleged conspiracy has been well spun and there are prima facie credible materials on record. This Court also does not find any illegality or perversity in the order of learned Trial Court. Learned Special Judge has correctly gone through the entire material and has given an opinion which seems to be in accordance with law. There is no reason to interfere in the bail order.
Bail application dismissed.
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2023 (7) TMI 1311
Seeking grant of Bail - Money Laundering - existence of proof of identification of proceeds of crime or not - absence of transcripts to alleged transfer of Rs. 30 crores - Section 45 of PMLA - HELD THAT:- It is settled proposition Section 45 PMLA do not impose an absolute restraint on the grant of bail and the court at this stage is to prima facie consider whether applying the standard of broad probabilities the material against the applicant would result in conviction. It is also a settled proposition that at this stage the Court is only required to examine the matter to find out whether the accused was possessed of the requisite mens rea. It is also no longer res integra that the court is not required to record a positive finding that the accused had not committed the offence under the Act. It is also a settled proposition that the court at this stage is not required to weigh the evidence meticulously.
The bare reading of Section 3 of PMLA would make it clear if a person is involved in any process or activity connected with the proceeds of crime, including its concealment, possession, acquisition or use and projecting or claiming it as untainted property shall be guilty of offence of money laundering. Therefore, it is not necessary to attribute section 3 of the PMLA that the alleged person must have acquired or in possession of the proceeds of the crime. If a person has actually been involved in any process or activity connected with the proceeds of crime, it would be sufficient to prosecute him under Section 3 of PMLA.
The present case is very peculiar in nature and may not have any parallel factual matrix. In brief, the allegations in the predicate offence is that the conspiracy was hatched between the political head and certain persons which included an individual allegedly representing the government with the manufacturer, liquor wholesaler and retailer. The conspiracy allegedly was hatched to introduce a new excise policy to benefit certain individuals who had given advance kickbacks to the AAP.
The present case arises out of an alleged conspiracy wherein the government framed an excise policy with a malafide intention to recoup the kickbacks received in advance from certain individuals and to further generate the ill money from the liquor trade. There are witnesses and witnesses on record to show that certain outsiders were actively participating from the stage of drafting and formulation of the policy - The allegation regarding generating of the emails in support of the excise policy also raises the red flag that everything was being done in a transparent and bonafide manner.
It is correct that the case of ED is based on the statements under Section 50 PMLA cannot be taken as gospel truth but at the same, the court has to take into account the probabilities and the legislative intent behind enacting Section 50 PMLA. The bare perusal of Section 50 makes it clear that these are deemed to be judicial proceedings. There are consequences for making a false statement or not complying to the summons under Section 50 of PMLA as provided under Section 63 of the PMLA. Thus, statements under Section 50 PMLA cannot be brushed aside. This court at this stage cannot go into the probative value of the witnesses nor can it meticulously examine those facts.
It is settled position that the statement recorded under Section 50 of PMLA is admissible evidence though the evidentiary value of the same is to be seen after the trial. However, at this stage, the court cannot ignore the statements under Section 50 PMLA which the statue provides to have been recorded as part of the judicial proceedings. In such cases of conspiracy, the present case is of peculiar nature where Excise policy was formed with illobjective of illegal earning money through illegal means - the accused person in the present case acting in furtherance of the conspiracy circumvented the policy and got framed the policy in such a manner to continuously generate and channel illegal funds. The allegations are that deliberate loopholes were left to facilitate illegal and criminal activities. It is also pertinent to mention here that investigation has revealed that 65% stake was given to South Group in Indo Spirits to make it a mechanism for continuous generation and channelisation of Proceeds of Crime.
Taking into account the seriousness and gravity of the allegations and credible material on record, the bail application along with pending application stands dismissed.
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2023 (7) TMI 1310
Maintainability of appeal - Jurisdiction of Government of India - Smuggling - Gold Biscuits - baggage rules - HELD THAT:- The decision in the case of SHRI PRAKASH CHANDRA SHANTILAL VERSUS CC AHMEDABAD [2012 (9) TMI 824 - CESTAT, AHMEDABAD] perused where it was held that the appeal has to be rejected as not maintainable and is accordingly rejected and since the jurisdiction lies with Government of India, the Registry is directed to transfer the file to Government of India for necessary action.
Following the above Division Bench order this appeal is rejected as not maintainable. The matter may be transferred to the Government Revisionary Authority if permissible in law. The appellant is at liberty to file an appeal with the Revisionary Authority notified by the Government of India.
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