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Showing 281 to 300 of 1664 Records
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2022 (9) TMI 1386
Rejection of refund claim - zero rated supply - whether the petitioner has supplied Electrical Energy across the border? - entitlement for refund of Input Tax Credit - whether amended Rule 89(2) of CGST Rules, 2022 is clarificatory or declaratory? - HELD THAT:- Circular No.175/07/2022-GST dated 06.07.2022 issued by Ministry of Finance, Government of India clearly establishes that amendment to Rule 89 of CGST (Amendment) Rules, 2022 was carried out to cure the defect in Rule 89 of CGST Rules, 2017, because of the problem faced by power generating units in filing refund claims of unutilised Input Tax Credit on export of electricity.
Further, a perusal of the amendment to Rule 89(2) of CGST Rules, would inter-alia show that the said Rule came to be amended only to clarify the anomaly that was existing with regard to production of material evidencing export of a thing which is intangible in nature. This clarification came to be made since the situation namely transmission of energy could not have been visualized when Rule 89(2) was incorporated in the Statute book. Production of shipping bills will not prove or establish by any means the quantity of energy transmitted. Hence, by no stretch of imagination, the amendment can be said to be declaratory in nature, but it can only be a one, which would be curing the defect by issuing necessary clarification as to how transmission of electrical energy can be proved - Rule 89 of CGST (Amendment) Rules, 2022 is only clarificatory in nature.
When amendment/notification dated 05.07.2022 issued by Government of India is held to be curative or clarificatory in nature, the question now would be whether the said clarification is retrospective in nature? - HELD THAT:- A proviso, which is inserted to remedy unintended consequences and to make the provision workable, a proviso which supplies an obvious omission in the section and is required to be read into the section to give the section a reasonable interpretation, requires to be treated as retrospective in operation so that a reasonable interpretation can be given to the section as a whole - The Constitutional Bench of Hon’ble Supreme Court in COMMISSIONER OF INCOME TAX (CENTRAL) -I, NEW DELHI VERSUS VATIKA TOWNSHIP PRIVATE LIMITED [2014 (9) TMI 576 - SUPREME COURT] while deciding the question as to whether the insertion of proviso to Section 113 by Finance Act, 2002 is retrospective, discussed the general principles concerning retrospectivity and it was held that where a benefit is conferred by a legislation, the rule against a retrospective construction is different. If a legislation confers a benefit on some persons but without inflicting a corresponding detriment on some other person or on the public generally, and where to confer such benefit appears to have been the legislators' object, then the presumption would be that such a legislation, giving it a purposive construction, would warrant it to be given a retrospective effect. This exactly is the justification to treat procedural provisions as retrospective.
It is well settled law that no statute shall be construed to have a retrospective operation until its language is such that would require such conclusion. The exception to this rule is enactments dealing with procedure. This court held that the law of limitation, being a procedural law, is retrospective in operation in the sense that it will also apply to the proceedings pending at the time of enactment as also to the proceedings commenced thereafter, notwithstanding that the cause of action may have arisen before the new provisions came into force - it is clear that any benefit that gets accrued by way of legislation cannot be denied/curtailed, more so, when it is clarificatory in nature like the present one and as such it has to be made retrospective in operation.
Petition allowed - remanded back to the Deputy Commissioner of Central Tax to deal with the claim of refund in terms of this common order.
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2022 (9) TMI 1385
Reopening of portal for filing of form TRAN-1 - carry forward of CENVAT Credit - Section 140(3) of the CGST Act, 2017 - violation of principles of natural justice - HELD THAT:- It is very clear that the assesses are given two months’ time for filing concerned forms for availing Transitional Credit through TRAN-1 and TRAN-2 i.e, w.e.f. 01.09.2022 to 31.10.2022. Further, the authorities were also directed to see that there would be no technical glitches during the said period. A reading of the said order does not anywhere indicate that the same pertains to a particular assessment year. It appears that any assessee, who intends to file concerned forms for availing Transitional Credit through TRAN-1 and TRAN-2 and was denied earlier because of some technical problem, is always at liberty to make use of the said order and upload the relevant forms during the relevant period.
Petition allowed.
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2022 (9) TMI 1384
Reopening of assessment u/s 147 - date of the issuance of the Notices - validity of the Notices issued u/s 148 as it stood prior to its amendment on 01st April, 2021, by the Finance Act, 2021 - Whether the JAO’s act of generating Notice in the ITBA portal on 31st March, 2021, without despatching the Notice meets the test of the expression ‘shall be issued’ in Section 149 and saves the Notices from being time barred? - HELD THAT:- There is no dispute in the present cases and it has been conceded during rejoinder arguments that the Notices have been despatched on or after 1st April, 2021, unlike in the case of Rajesh Sunderdas Vaswani [2016 (6) TMI 701 - GUJARAT HIGH COURT] where the date of despatch was seriously disputed. This Court has only been called upon to determine the legal effect of the despatch of 1st April 2021 and thereafter, on the validity of the notices dated 31st March, 2021.
It would be useful to note that, the impugned Notice was classified in category ‘C’. However, during the pendency of the proceedings, the JAO on 30th July 2022 determined that the said Notice though generated and signed on 31st March 2021 was issued through e-mail by the ITBA servers on 6th April, 2021. It has been brought to this Court’s attention that the JAO has now self-determined that the same shall be governed by the judgment of the Supreme Court in Ashish Agarwal [2022 (5) TMI 240 - SUPREME COURT] and JAO has accordingly proceeded to treat the Notice dated 31st March 2021 as notice under Section 148A(b).
The aforesaid acts of the JAO belie the submissions of the counsel for the Department that the generation of the Notice on the ITBA screen constitutes issuance. It further substantiates the contention of the petitioners that the date and time of issue of the emails by the ITBA servers are readily available with the Department and therefore there is no disputed issue of facts.
We therefore answer question no. (I) in negative against the Department and hold that the impugned Notices dated 31st March, 2021, which were despatched on 1st April, 2021, or thereafter, would not meet the test of ‘issued’ under Section 149 of the Act of 1961 and would be time barred, unless saved by the judgment of the Supreme Court in Ashish Aggarwal (Supra).
Determination of the time of despatch of the impugned Notices issued through e-mail - Whether “despatch” as per Section 13 of the Act of 2000 is sine qua non for issuance of Notice through electronic mail for the purpose of Section 149 of the Act of 1961? - It would also be relevant to note that the time taken by the ITBA e-mail software system on 31st March, 2021, to despatch the emails was not due to any software glitch. The time taken by the software system was as per the programming of the system, as admitted in the Compliance Affidavit. The programming to despatch the Notices in a controlled manner and batch mode was a pre-existing fact and to the knowledge of the Department. The time taken in despatch of the e-mail on 31st March, 2021, was therefore as per the controls set in the ITBA system.
We are in respectful agreement with the law laid down by the various High Courts in Daujee Abhushan [2022 (3) TMI 784 - ALLAHABAD HIGH COURT], Santosh Krishna HUF [2022 (5) TMI 420 - ALLAHABAD HIGH COURT], Mohan Lal Santwani [2022 (5) TMI 421 - ALLAHABAD HIGH COURT], Advance Infradevelopers (P) Ltd. [2021 (6) TMI 6 - MADRAS HIGH COURT] and Yuvraj v. Income Tax Officer [2022 (3) TMI 536 - MADHYA PRADESH HIGH COURT], that for determining when Notices were issued, the date and time of when the ITBA e-mail software system is triggered and the Notices leave the last ITBA server would be considered.
We therefore answer question no. (II) in affirmative and hold that despatch as per Section 13 of the Act of 2000, is a sine qua non and happens when the electronic mail message leaves the ITBA’s servers.
Whether the time taken by the ITBA’s e-mail software system on 31st March, 2021, in despatching the e-mails to the assessee is not attributable to the JAOs and the notices will be deemed to have been issued on 31st March, 2021? - We answer question no. (III) against the Department and hold that the time taken by the ITBA’s e-mail software system in triggering the e-mail and transmitting the said e-mails from the ITBA servers is attributable to the Department and therefore for the e-mails despatched on 1st April 2021 or thereafter, the Notices are held not to have been issued on 31st March 2021.
Department from May, 2022, for Notices issued on or after 1st April 2021, has considered the date and time of despatch of the notices as recorded by the ITBA portal as the date of issuance and disregarded the date of generation of notice i.e. 31.03.2021. For notices despatched on or after 1st April 2021, the Department, following the Supreme Court’s order in Ashish Agarwal (Supra) considered the notices as issued under Section 148A of the Act of 1961. This shows that the Department itself acknowledges and admits that the date of generation is distinct from date of issuance and the Department considers the despatch by ITBA Portal as the date of issue for the purpose of Section 149 of the Act of 1961.
Authentication of notices and other documents - Whether the Section 148 Notices sent as an attachment through e-mails, from the designated e-mail addresses of the JAOs, which do not bear the respective JAO’s digital signature are valid under Section 282A the Act of 1961 read with Rule 127A of the IT Rules? - As per the Compliance Affidavit, the ITBA portal was itself developed for the Department in such a way that it makes the affixation of DSC optional. The notice upon generation may or may not be affixed with DSC, it would, regardless of whether DSC is attached or not, be sent through the ITBA e-mail system once it has been generated. From a combined reading of the relevant provisions, the explanation to the Finance Bill, 2016 and the abovementioned note, it becomes evident that the affixation of DSC in notices issued under Section 148 of the Act of 1961 has not been made mandatory. As long as the requirements of Section 282A of the Act of 1961 and Rule 127A of the IT Rules, are followed the notices would be considered to be authenticated.
In the present case, the Notices were sent from the designated e-mail ID of the respective JAOs, fulfilling all requirements of authentication as per the relevant provisions. There was no doubt in the mind of the assessees that the Notices were sent by the Department. Therefore, the Notices falling under category ‘B’ would not be invalid simply because DSCs were not appended to the Notices. JAO is therefore directed to determine time of despatch as recorded by the ITBA portal for each of these Notices and the date and time of despatch as determined by the JAO will be considered to be the date of issuance.
Notice dated 31st March 2021, which was not digitally signed and was received on 16th April 2021, the JAO is directed to determine the date and time of despatch as recorded by ITBA portal and consider the same as the date of issuance.
Whether upload of the Section 148 Notice on the “My Account” of the assessee on the E-filing portal is valid transmission under the Act of 1961? - We hold that, in order for this mode of transmission i.e. uploading of the Notices in the E-filing portal of the assessees, to be considered valid service, the Department should have issued a real time alert as provisioned in the aforementioned Section 144(B)(6)(ii)(a) of the Act of 1961. Since, the prescribed mode of service is not followed it is akin to no due despatch of Notices, therefore it cannot be said that the Notices were validly issued.
However, since the assessees in the present case did become aware of the Notices later and the assessment proceedings in their cases are still pending, we are not inclined to quash these Notices.It has come on record that the ITBA records the time and date when the E-filing portal is accessed by the assessee, so the first date on which the Notices were accessed by the assessees is duly available. This date will be considered by the JAOs as the date of issuance of Notices by the JAOs.
Illustratively, in W.P the Notice was never served on the assessee, instead the assessee claims that he became aware of the same on 23rd November, 2021 while checking his E-filing portal, the JAO is directed to verify the date on which the Notice was first viewed by the assessee, and consider the same as the date of issuance.
Disposal of these Writ Petitions with the following directions:
Category ‘A’: The Notices falling under category ‘A’, which were digitally signed on or after 1st of April, 2021, are held to bear the date on which the said Notices were digitally signed and not 31st March 2021. The said petitions are disposed of with the direction that the said Notices are to be considered as show-cause-notices under Section 148A (b) of the Act as per the directions of the apex Court in the Ashish Agarwal (Supra) judgment.
Category ‘B’: The Notices falling under category ‘B’ which were sent through the registered e-mail ID of the respective JAOs, though not digitally signed are held to be valid. The said petitions are disposed of with the direction to the JAOs to verify and determine the date and time of its despatch as recorded in the ITBA portal in accordance with the law laid down in this judgment as the date of issuance. If the date and time of despatch recorded is on or after 1st of April, 2021, the Notices are to be considered as show-cause-notices under Section 148A (b) as per the directions of the apex Court in the Ashish Agarwal (Supra) judgment.
Category ‘C’: The petitions challenging Notices falling under category ‘C’ which were digitally signed on 31st of March 2021, are disposed of with the direction to the JAOs to verify and determine the date and time of despatch as recorded in the ITBA portal in accordance with the law laid down in this judgment as the date of issuance. If the date and time of despatch recorded is on or after 1st of April, 2021, the Notices are to be considered as show-cause-notices under Section 148A (b) as per the directions of the apex Court in the Ashish Agarwal (Supra) judgment.
Category ‘D’: The petitions challenging Notices falling under category ‘D’ which were only uploaded in the E-filing portal of the assessees without any real time alert, are disposed of with the direction to the JAOs to determine the date and time when the assessees viewed the Notices in the E-filing portal, as recorded in the ITBA portal and conclude such date as the date of issuance in accordance with the law laid down in this judgment. If such date of issuance is determined to be on or after 1st of April 2021, the Notices will be construed as issued under Section 148A (b) of the Act of 1961 as per the Ashish Agarwal (Supra) judgment.
Category ‘E’: The petitions challenging Notices falling under category ‘E’ which were manually despatched, are disposed of with the direction to the JAOs to determine in accordance with the law laid down in this judgment, the date and time when the Notices were delivered to the post office for despatch and consider the same as date of issuance. If the date and time of despatch recorded is on or after 1st of April, 2021, the Notices are to be construed as show-cause-notices under Section 148A (b) as per the directions of the apex Court in the Ashish Agarwal (Supra) judgment.
Notices sent to unrelated e-mail addresses: The petitions challenging Notices which were sent to unrelated e-mail addresses are disposed of with the direction the JAOs to verify the date on which the Notice was first viewed by the assessee on the E-filing portal and consider the same as the date of issuance. If such date of issuance is determined to be on or after 01st April, 2021, the Notices will be construed as issued under Section 148A (b) of the Act of 1961 as per judgment in Ashish Agarwal (Supra).
The Notices which in accordance with the law laid down in this judgment has been verified by the JAOs to have been issued on or after 01st April 2021 and until 30th June, 2021 shall be deemed to have been issued under Section 148A of the Act of 1961 as substituted by the Finance Act, 2021 and construed to be show-cause notices in terms of Section 148A(b) as per the judgment of the apex Court in Ashish Agarwal (Supra) and the JAOs shall thereafter follow the procedure set down by the Supreme Court in the said judgment.
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2022 (9) TMI 1383
Deduction u/s 80(I) - scope of the word ‘derived’ and the word ‘industrial undertaking’ - applicability of the words “derived from an industrial undertaking” as mentioned u/s 80(I) - whether the interest paid on delayed payments form part of profits and gains derived from an industrial undertaking? - HELD THAT:- Section 80HH of the I.T. Act, which deals with deductions in respect of the profits and gains from newly established industrial undertakings or Hotel business in backward areas also contains the phrase “profits and gains derived from an industrial undertaking.” The word ‘derived’ has been construed by the Privy Council in CIT vs. Raja Bahadur Kamakhaya Narayan Singh [1948 (7) TMI 1 - PRIVY COUNCIL]
Hon’ble Supreme Court in Pandian Chemicals Ltd. [2003 (4) TMI 3 - SUPREME COURT] observed that the word “derived from” in Section 80-HH must be understood as something which has direct or immediate nexus with the appellant’s industrial undertaking.
The fact situation in the case on hand also relates to payment of interest on delayed payments of sale proceeds to the assessee. As observed in the Gujarat High Court that there are two methods of realizing sale consideration, the object being to realise sale proceeds at the earliest and without delay. To avoid any loss to the assessee on account of the delayed payments, for the goods supplied, two contingencies can be stipulated (1) charging little higher rate or (2) collecting interest on delayed payments. By this, the transaction would not be incidental or different. In our view, it forms part of the same transaction as the amount due for the goods sold is being paid with some delay for which an interest is being collected.
Applying the ratio laid down in the above judgments to the case on hand, it is clear that there is direct nexus between the interest received, goods sold and the payments made including interest for the goods sold. Hence, it can be said that the profits and gains derived was from the business of the assessee and accordingly the interest received on delayed payments for the goods supplied/sold would be entitled to relief of exemption u/s 80(I) of the I.T. Act. Appeal allowed.
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2022 (9) TMI 1382
Reopening of assessment u/s 147 - Eligibility of reasons to believe - Period of limitation - HELD THAT:- Seeing as the assessment framed originally was under scrutiny, the Assessing Authority could proceed to re-assess the income u/s 147, only if he is in a position to, and does, establish that the alleged escapement is on account of the petitioner having failed to make a full and true disclosure at the first instance.
A perusal of the reasons would indicate that there is no tangible material that has been found by the Assessing Authority, post assessment, to lead to a conclusion that the original disclosure made by the petitioner was either incomplete or untrue. In fact, the only material referred to in the reasons, is the assessment order itself in which the depreciation schedule, the rates of depreciation and the claim of the petitioner in regard to depreciation have been discussed in detail.
As transpires that all materials referred to in the reasons flow from the materials on record and in such circumstances, it is more than apparently clear that there has been no compliance of the statutory precondition as set out in the proviso to Section 147, in this case. The impugned proceedings of assessment having been initiated beyond the period of four (4) years from the end of the relevant assessment year are clearly barred by limitation.
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2022 (9) TMI 1381
Revision u/s 264 - Period of limitation - challenging the proceedings issued for the assessment year 2017-18, the petitioner preferred an appeal before the second respondent. Pending appeal, an application for revision, intimation under Section 143(3) of the I.T. Act came to be made under Section 264 - Whether an application under Section 264 of the I.T. Act cannot be entertained pending appeal, an order came to be passed rejecting the request for revision of intimation? - HELD THAT:- Commissioner cannot revise an order under Section 264(4) where an appeal is filed against an order to the Deputy Commissioner (Appeals) or to the Commissioner (Appeals) or to the Appellate Tribunal or where the order is pending on an appeal before the Deputy Commissioner (Appeals) or where the order has been made subject, of an appeal to the Commissioner (Appeals) or to the Appellate Tribunal. Having regard to the above, the question of Commissioner (Appeals) considering the request of the petitioner would not arise.
Petitioner would submit that a direction may be given to the first respondent to consider the revision of the petitioner under Section 263 on merits, by treating the appeal filed by the petitioner as withdrawn. It is to be noted here that an order under Section 264 is required to be passed within a period of one year from the end of Financial Year, in which, the application is made by the petitioner for revision. In the instant case, last date of passing of order was 31.03.2022. That being the position, the question of giving a direction to the Commissioner for passing of an order under Section 264 of the I.T. Act beyond the said period would not arise. Hence, we are of the view that such a request cannot be granted.
Having regard to the provision of law referred to above, an order cannot be passed by treating something which is not in existence. Hence, the first relief sought for by the petitioner in the writ petition cannot be granted.
Direction to the second respondent to decide the appeal filed by the petitioner by considering the application for withdrawal of petitioner and to dispose of the appeal expeditiously - At first blush, the request made by the petitioner appeared to be quite probable, but a close perusal of the provisions of the Act and the counter filed would show that even if the request of the petitioner for withdrawal of the appeal is accepted, a direction to the Commissioner (Appeals) to pass an order under Section 264 cannot be granted for the reasons stated supra. However, the relief sought for by the petitioner for expeditious disposal of the appeal can be considered, and accordingly a direction is given to the appellate authority to disposal of the appeal in accordance with law, as early as possible.
We feel that it would be just and proper for the petitioner to get the Appeal adjudicated on merits before the Appellate Authority.
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2022 (9) TMI 1380
Reopening of assessment u/s 147 - order under Clause (d) of Section 148A - As argued procedure as required for issuance of notices and order under Section 148A(d) of I.T. Act are not in accordance with law - HELD THAT:- Ascertaining the e-mail of the assessee, the order under Clause (d) of Section 148A a notice under Section 148 of the I.T. Act was also sent to the e-mail address of the assessee on 12.04.2022 and the same has been received, which is admitted by the petitioner.
From the above averments in the counter, coupled with the provisions of the Act, it is very clear that the petitioner is having an opportunity of explaining his stand, in the proceeding initiated pursuant to the notice under Section 148 of the I.T. Act. In fact no prejudice is caused to the petitioner by the acts of the respondents, if any.
Having regard to the above, the petitioner can explain his stand to the authorities by making an application, if not already made, within a period of four (4) weeks from today, more particularly, with regard to the substantial amount lying in the account, with the PAN number AACFV4149H. Accordingly, the writ petition is disposed of. There shall be no order as to costs.
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2022 (9) TMI 1379
Reopening of assessment u/s 147 - as no assessment orders are passed under sub clause (4) to section 144C - Assessee case was referred to the TPO u/s 92CA and the TPO inturn, passed an order under section 92CA (3) - whether the Assessing Officer can issue notice under section 148 of the Act when the Assessing Officer has not passed an assessment order under section 144C(4)? - HELD THAT:- The basic requirement for invocation of section 147 is that the assessing officer has the reason to believe that income chargeable to tax, had escaped assessment; and after recording the reasons for reopening the assessment, the assessing officer has to issue notice under section 148 to the assessee. In the present case, the return of income filed by the assessee, was subjected to scrutiny. As there were international transactions involved, the case was referred to TPO, for determining the Arm's Length Price, who in turn filed his report, and based on the report of the TPO, the respondent passed the draft assessment order. Thereafter, the assessing officer, after having found that certain income had escaped assessment, reopened the assessment.
Admittedly, the notice under section 148 was issued to the appellant within the period of limitation and the same was also not put to challenge by the appellant / assessee. But, what was challenged in the writ proceedings by the appellant is the rejection of their objections to the said notice by the respondent. While so, it cannot be said that the reassessment proceedings initiated by the assessing officer under section 147 of the Act, without completing the original assessment, is not proper. Further, there is no embargo under section 147 of the Act, to issue notice under section 148, where assessment order has not been passed, after starting scrutiny proceedings; and section 144C(4) only states that the assessing officer has to pass an assessment order in accordance with the provisions of the Act and it nowhere states that section 148 notice can be issued only after passing an assessment order. Therefore, the learned Judge has rightly concluded that the assessing officer is empowered to invoke section 147 of the Act, if he has reason to believe that the income chargeable to tax escaped assessment, in the cases, where no assessment orders are passed under sub clause (4) to section 144C.
As rightly contended by the learned senior standing counsel appearing for the respondent, as per Explanation 2 of section 147, the Assessing Officer is free to reexamine correctness of a regular assessment and decide whether the tax assessed, rate applied, relief and allowances granted, etc., are in terms of the provisions of the Act and if not to revise the assessment in terms of section 147 of the Act. In the light of the same, the assessing officer, who has reason to believe that certain income chargeable to tax, has escaped assessment, reopened the assessment by issuing notice under section 148 of the Act to the appellant. As such, it cannot be stated that the Assessing Officer initiated the reassessment proceedings by issuing notice under section 148 to the assessee for rectifying the lapses of not passing the final assessment order under section 144C(4) of the Act.
This court is of the opinion that the order in justifying the reassessment proceedings initiated by the assessing officer under section 147 of the Act, after following the mandatory requirements of the Act, is perfectly correct and the same does not call for any interference by this court. - Decided against assessee.
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2022 (9) TMI 1378
Recovery proceedings along with further interest on the principal amount - money was advanced to the defendant through the banking channels on the various dates - HELD THAT:- In the case at hand, the balance-sheets for the Financial Year 2015 – 2016, 2016 – 2017 and 2017 – 2018 clearly record the amount due and payable to the plaintiff in the respective financial years. The audited reports appear to have been filed in compliance with the statutory requirement contained in Section 44AB - It would be contextually relevant to note that in the balance confirmation letter dated 1st April, 2019 (P1/6) the defendant has clearly acknowledged the outstanding balance as of 1st April, 2019. The entries therein are supported by the Ledger Account (Exhibit-P1/8) maintained by the plaintiff. Institution of the suit on 29th March, 2022 thus appears to be within the statutory period of limitation.
To conclude, the documents on record namely the Tax Deduction Certificate (TDS), the audited balance-sheet, balance confirmation letter, if read cumulatively, lead to a legitimate inference that the plaintiff has succeeded in establishing that the plaintiff had advanced the amount to the defendant and the latter had agreed to pay interest at the rate of 12% p.a. thereon. After repayment of a part of principal sum i.e. Rs.50,00,000/-, and the payment of interest, as evidenced by the TDS Certificates, as of 1st April, 2019, a sum of Rs.2,47,69,000/- remained due and payable. As the plaintiff’s claim and documents have gone unimpeached, there is no other go but to pass a decree.
Order - Suit stands decreed.The defendant do pay a sum of Rs.3,31,05,384/- along with further interest on the amount of Rs.2,35,00,000/- at the rate of 12% p.a. from the date of the institution of the suit till realization.
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2022 (9) TMI 1377
Validity of assessment order - denial of natural justice - petitioner submitted reply to the show cause notice making several objections/submissions mentioned therein, but the authority without giving due opportunity of hearing and without considering the objections/submissions made in the reply, passed the impugned order - HELD THAT:- From bare perusal of record it is apparent that the show cause notice was issued on 26.03.2022 and in pursuance to which reply was filed by the petitioner on 27.03.2022. As the petitioner had already filed reply and the impugned order was passed after consideration of the reply, therefore, it cannot be said that no opportunity of hearing was given to the petitioner. As such the petition cannot be entertained on the ground of non-affording an opportunity of hearing and violation of principles of natural justice.
As regards the other contention of the petitioner that the authority has not considered the grounds taken in the reply, also cannot be a tenable ground because it is well settled that if the order has been passed ignoring one or more grounds taken in the reply, the same cannot be a ground for invoking extraordinary jurisdiction of this court under Article 226/227 of the Constitution of India and such order can be assailed by way of alternative remedy of appeal provided under the relevant provision of the Income Tax Act, 1961.
As the present petition was filed on 20.04.2022, i.e. within 20 days from the date of passing the assessment order dated 30.03.2022, therefore, if the petitioner files the statutory appeal within a further period of 30 days, the same shall be decided by the authority on merits, ignoring the question of delay in filing the appeal.
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2022 (9) TMI 1375
Deduction u/s 80P(2) - Claim denied as assessee made a claim in the income tax return but for not filling up certain Schedules in the return correctly - Denial of natural justice as opportunity to substantiate its claim with necessary documentary evidences not given - HELD THAT:- As before denying such claim no opportunity has been given to the assessee as provided in the provisions of Section 143(1)(a) of the Act where the proviso states that “No such adjustments shall be made unless any intimation is given to the assessee of such adjustments either in writing or in electronic mode and further provided that the response received by the assessee, if any, shall be considered before making any adjustment, and in a case where no response is received within thirty days of the issue of such intimation, such adjustments shall be made.” I find that the assessee was never given an opportunity to substantiate its claim with necessary documentary evidences. Even ld. CIT(A) did not entertain the claim of the assessee by giving a general finding.
If the assessee has made a rightful claim it should not be denied without giving any opportunity of hearing to it to file necessary documents in support of its claim and if rightful claim has been made then denying of such claim merely on the basis of not filling up of certain Schedules in the income tax return will not be in the interest of justice.
Restore all the issues raised in the instant appeal including that of claim of deduction u/s 80P(2) to the file of AO having jurisdiction over the assessee and direct him to examine/verify the claim of the assessee made for deduction u/s 80P(2) of the Act - Appeal of the assessee is allowed for statistical purposes.
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2022 (9) TMI 1374
Addition u/s 68 - Unexplained cash credit - HELD THAT:- Pattern of deposits in bank account shows that there are certain cheque deposits, deposits in cash and regular withdrawal of amount. The frequent deposit and withdrawal shows that the bank account in dispute was used for unreported business transactions. As recorded above assessee before us claimed that the assessee was doing a business of plastic items, thus, considering the submissions of assessee, we find merit in his submission that the assessee was doing some business activity, though it was not disclosed to the department. Taxing the entire credit is not justified, thus, it would be justified if only profit element in such business activities from where the assessee generated the credit found in the bank account. The lower authorities have confirmed the entire aggregate of deposits and have not considered the withdrawal.
The Hon’ble Gujarat High Court in CIT Vs Pradeep Shantilal Patel [2013 (11) TMI 1646 - GUJARAT HIGH COURT] held that where assessee admitted that cash deposit pertains to his retail business but details and nature of business were not forthcoming from record, considering the total turnover of assessee, net income had to be determined under Section 44AF.
The Coordinate Bench of this Tribunal in Smt. Krushangi Keyur Bhagat [2018 (9) TMI 2093 - ITAT SURAT] almost on similar set of facts wherein cash credit was found credited in the bank account of that assessee, the assessee took plea before lower authorities that transaction in bank account pertained to her textile business.
The assessee claimed that only peak credit appearing in the bank account should be considered which was not accepted and the amount after reducing the cheque deposits, remaining was treated as unexplained. On appeal before Tribunal, the plea of assessee that amount credited in the bank was a part of textile business and only profit element @ 5% of total deposit including of credit by way of cheque was considered as a profit element on the total deposits.
Entire amount of deposits cannot be considered for addition, when the assessee is specifically contended before ld CIT(A) that the credit in the bank account if his unreported income. Therefore, 8% of total addition is considered as profit from such business activities. Accordingly, the Assessing Officer is directed to consider 8% of total deposit - In the result, ground raised by assessee is party allowed.
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2022 (9) TMI 1373
Rectification u/s 154 - income to be revised under the rectification petition - assessee that while e-filing the original Return of Income by mistake the gross total income is typed as Rs. 55,40,001/- and after paying taxes of Rs. 30,629/-. - Revised Return Filled for rectification - rectification petition was dismissed by the assessing officer on the ground that Revised Return ought to have been filed within time limit prescribed under the Act - HELD THAT:- In the present case at hand, the assessee has not made any new claim or deduction which require to file Revised Return. The grievance of the assessee is that the typographical error which has happened while filing the e-return. Thus, this is a clear case of mistake apparent on record which is very well curable/rectifiable u/s. 154 - Thus both the assessing officer and the Ld. CIT(A) has not properly appreciated the provisions of law and acted arbitrarily against the simple and genuine case of typographical mistake.
Lower Authorities ought to have considered the Form No. 16 issued by the School Authorities as well as the bank statements provided by the assessee, to show her salary income from the teaching profession. However none of the above records have been considered by the lower authorities and arbitrarily derived the assessee to come for the second stage of appeal before us. This kind of arbitrariness should be avoided in such a simple genuine case, where the assesse proved establishing the typographical mistake in the efiling return. Therefore the rejection of 154 petition is hereby set aside and we direct to delete the additions made in the hands of the assessee. - Appeal of assessee allowed.
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2022 (9) TMI 1372
Bogus Short Term Capital Gain on sale of land - HELD THAT:- Remand Report received from the AO simply confirmed about the payments made by the assessee to the land owners as well as third parties by the assessee. AO has not taken any steps to verify the above details either from the 5 land owners or the remaining 10 third parties it is being suffered taxed in the respective hands. AO attempted to tax the entire consideration in the hands of the assessee, which is negativated by the CIT(A) after considering the facts in detail.
Therefore we do not find any infirmity in the findings of the ld. CIT(A) that the assessee is an entry provider only and was involved in accommodation entry business and has been rightly taxed at 0.5% for commission income on the deposits in the bank account which includes the sale consideration and directed to delete the above addition on account of business income. Thus the Grounds raised by the Revenue devoid of merits and the same is hereby rejected. Appeal filed by the Revenue is hereby dismissed.
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2022 (9) TMI 1371
Disallowance of deduction u/s 54/54F - since the assessee had claimed deduction on account of investment in property purchased during the year but had failed to follow the terms and conditions in law therefore the deduction claimed by the assessee needed to be taxed in the impugned year - Assessee not depositing the capital gain earned in the capital gain account scheme of the Bank as required by law before the due date of filing return of income of A.Y 2011-12 ,in which the deduction was claimed - HELD THAT:- For the violation the claim of deduction in the said year itself, i.e A.Y 2011-12, should have been denied. Merely because the assessee files his return for that year belatedly, i.e during the impugned year, does not mean that the deduction claimed will be added to the income of the assessee for the impugned year. The violation of conditions having taken place in A.Y 2011-12 itself, the deduction should have been rightfully denied in that year alone.
Even otherwise we find that the assessee in any case has been denied the claim of deduction in A.Y 2011-12, wherein the AO has treated the long term capital gain returned by the assessee on sale of asset as short term capital gain and denied benefit of deduction u/s 54 against the same. Copy of the assessment order for A.Y 2011-12 dated 11/12/2018 was placed before us. The same deduction cannot be denied and added to the income of the assessee in two years.
In view of the above therefore the addition on account of denial of deduction u/s 54 is directed to be deleted. Appeal of the assessee is allowed.
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2022 (9) TMI 1370
Rectification of mistake u/s 154 - Credit of TDS - HELD THAT:- As submitted that the appeal filed by the assessee before the learned CIT(A) and the impugned order passed by the CIT(A) disposing of the said appeal has become infructuous and urged that the same may be cancelled. After having perused the copy of the order passed by the Assessing Officer under Section 154 of the Act - copy of which is placed on record before us, we are inclined to accept the contention of the learned Counsel for the assessee. Even the DR has not raised any objection in this regard. We accordingly set aside the impugned order passed by the learned CIT(A) and allow this appeal of the assessee.
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2022 (9) TMI 1369
Penalty levied u/s. 271(1)(c) - Disallowance of deduction u/s 35E as none of the income was proved by the assessee was earned from the business of prospecting for or extraction/production of mineral eligible to claim - HELD THAT:- It is seen from record that the assessee was granted mining lease for “lignite” for a period of 30 years in Bhavnagar District. There is also report from Gujarat Electricity Board and Mining Department, Government of Gujarat evidencing that the assessee is engaged in the prospecting activities for the minerals during the assessment year 2003-04. The assessee incurred necessary expenditures for this preliminary activities for the mining works and claimed u/s. 35E - assessee could not start commercial production within 5 years.
The Co-ordinate Bench of this Tribunal has confirmed the disallowance u/s. 35E only on the ground that the assessee does not meet the parameters of eligibility prescribed within section 35E of the Act and the assessee also failed to commence the commercial production during the assessment year 2003-04.
Lower Authorities failed to appreciate that the assessee has obtained mining rights from Government of Gujarat and the assessee also signed a letter of intent with Reliance Industries Ltd. for Development and sale of net electrical output generated to GEB. Thus it cannot be construed that inaccurate particulars have been furnished by the assessee to make a wrong claim u/s. 35E of the Act, thus does not warrant levy of penalty u/s. 271(1)(c) - It is undisputed fact that the lese of sale and leased back of LP Rotor Machines to GEB by the Assessing Officer but denied the benefit on the ground that no change of possession was taken place.
Lower Authorities failed to consider that leasing activity is one of the objects of the assesse company and lease rent received has been treated as its “business income” and assessed to taxes. Consequently the assessee is entitled to claim depreciation on the leased machineries. The sale and leased back transaction entered into by the assessee with GEB which is nothing but an extension of financial assistance to GEB between two Public Sector Undertakings.
In order to invoke the penalty proceedings under section 271(1)(c) of the Act, the Revenue should prove that the claim made was not sustainable in law and also the assessee had made a concealment of the particular income. In order to expose the assessee to penalty, the Revenue should show that there was contumacious conduct on the part of the assessee in suppressing the income in the return. The rejection of such a claim by the Appellate Tribunal does not amount to furnishing inaccurate particulars of income, thereby levying penalty u/s. 271(1)(c) of the Act as held by the Hon’ble Supreme Court in the case of Reliance Petroproducts (P.) Pvt. [2010 (3) TMI 80 - SUPREME COURT]
Hon’ble Madras High Court in the case of CIT vs. Cholamandalam Investment & Finance Co. Ltd. [2014 (3) TMI 774 - MADRAS HIGH COURT] held that where the A.O. failed to give independent finding that there was a deliberate design on the part of the assessee to inflate cost of acquisition so as to claim higher depreciation, penalty could not be imposed - thus penalty levied u/s. 271(1)(c) for furnishing inaccurate particulars of income is hereby deleted. - Decided in favour of assessee.
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2022 (9) TMI 1368
Reopening of assessment u/s 147 - Unexplained gift receipt - “reason to suspect” or “reasons to believe” - assessee declared the gift received from his real brother in the statement - HELD THAT:- With respectful observation of the apex court that the vague reason should not be accepted. But the reason recorded by the ld. AO is not factually incorrect. The recent judgment of LaljibhaiKanjibhaiMandalia [2022 (7) TMI 639 - SUPREME COURT] held that formation of opinion and the reasons to believe recorded is not a judicial or quasi-judicial function but administrative in character.The information must be in possession of the authorised official on the basis of the material and that the formation of opinion must be honest and bona fide. It cannot be merely pretence. Consideration of any extraneous or irrelevant material would vitiate the belief/satisfaction.
The authority must have information in its possession on the basis of which a reasonable belief can be founded that the person concerned has omitted or failed to produce books of accounts or other documents for production of which summons or notice had been issued, or such person will not produce such books of account or other documents even if summons or notice is issued to him - Reasons forming part of the satisfaction note are to satisfy the judicial consciousness of the Court and any part of such satisfaction note is not to be made part of the order.
The question as to whether such reasons are adequate or not is not a matter for the Court to review in a writ petition. The sufficiency of the grounds which induced the competent authority to act is not a justiciable issue.
The relevance of the reasons for the formation of the belief is to be tested by the judicial restraint as in administrative action as the Court does not sit as a Court of appeal but merely reviews the manner in which the decision was made. The Court shall not examine the sufficiency or adequacy thereof.
Thus we find that no infirmity in the processing of reopening u/s 148 and in the order of the ld. AO u/s 147 of the Act. The issue was properly discussed by the ld. CIT(A) in his order. We find no infirmity in the order of the ld. CIT(A). The Ground No.1, of the assessee rejected.
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2022 (9) TMI 1367
Assessment u/s 153A - Addition u/s 68 - unexplained credits of LTCG - Addition of amount of commission paid for acquiring such alleged bogus long term capital gain was also added u/s 69C - CIT(A) accepted the contentions of the assessee and held that no addition could be made as no incriminating material was found with respect to the Long Term Capital Gain by alleging the same as non-genuine - HELD THAT:- We have gone through the grounds of appeal raised by the revenue and it appears that the revenue has not challenged the findings of the ld. CIT(A) on the very legal ground decided by ld. CIT(A) against the revenue. Thus, it is clear that this legal aspect of the decision is not challenged by the revenue before us. Thus, it is undisputed that when there is no incriminating material no addition could be made in the order passed u/s. 153A of the r.w.s. 143(3) of the Act.
Thus no addition can be made in the proceedings under section 153A in respect of the assessments which were completed prior to the date of search except based on some incriminating material unearthed during the search which was not already available to the AO.
CIT(A) has after considering the detailed arguments of both the parties clearly taken a view that there is no incrementing material, no addition can be made for the assessment years which are already completed after making the proper enquiries by the AO, and those assessment cannot be allowed to again reframed merely based on the search and that too without any fresh evidence or any fresh material unearthed during search no fresh addition can be made on the issue which are already settled. Even, the ld. CIT(A) has based on the arguments of the assessee followed the jurisdictional High Court decision and Tribunals orders and even this coordinate bench decision is also binding on us in the absence of any contrary judgement.
Whether section 153A mandates the existence of incriminating material in respect of the assessments that have concluded/are not pending on the date of search in order to assess or re-assess them? - In our considered view the said issue is no longer res integra as the same has already been decided by a Division Bench of the Hon'ble Supreme Court in the case of CIT v. Sinhgad Technical Education [2017 (8) TMI 1298 - SUPREME COURT]
After having recorded the satisfaction, as per the requirement of section 153C(1) of the Act, the books of account or documents or assets seized shall be handed over to the Assessing Officer having jurisdiction over the other person and the said officer shall issue notice and assess or re-assess the income of the other person in accordance with the provisions of section 153A of the Act. It will thus be seen that once the requirement of satisfaction wherein the Assessing Officer of the searched person records that documents belong to the other person is met, the assessment or reassessment of the income of the other person shall have to take place in accordance with section 153A of the Act. Assessment of concluded/ not pending assessment on the date of search to be based on incriminating material. Section 153A of the Act was the subject matter of interpretation by the Hon'ble Delhi High Court in the case of Kabul Chawla [2015 (9) TMI 80 - DELHI HIGH COURT] and several other High Courts across the country which uniformly held that the existence of incriminating material, in respect of the assessment years whose assessments stood concluded on the date of search, is a mandatory requirement to assess or reassess those years.
The requirement that the incriminating material to have the corelation to the particular addition sought to be made is a logic that will hold good not only for Section 153 C of the Act but in relation to Section 153A of the Act as well. Consequently, in our considered view we do not find any error having been committed by the ld. CIT(A) in accepting the plea of the Assessee that there is no incriminating document which was seized in the course of search relating to the addition sought to be made on account of the long term capital gain reflected in the return of income filed by the assessee. Therefore, the jurisdictional requirement of Section 153 A of the Act was not satisfied. - Decided against revenue.
Protective addition based on Pen drive found in search - As submitted that it is respective parties who were demanding, further interest @ 2.4% in addition to what has been recorded in the books. The additional interest which the assessee or its group concern never paid and there is no evidence of any such further sums paid and found as paid in the course of search - HELD THAT:- Similar issue we have decided [2022 (9) TMI 1334 - ITAT JAIPUR]where in the arguments, facts are similar in group search case and the bench noticed that interest which is actually paid is duly recorded in the books of accounts and there is no other material which is found even the person under whom possession the PAN Drive is found his statement is not recorded. This action itself shows that department find this evidence as dump documents and is not evidence relied upon. The statement of the person from whom the evidence his found is also not checked on its correctness and veracity. Therefore, based on the finding that the revenue has not made any substantive addition in the persons in whose name the interest as alleged addition income is not added and the ld. AR of the assessee categorically proved that there is no incriminating other document found recording the payment of the additional interest. Based on these observations we vacate the disallowance made for an amount made on protective basis. - Decided against revenue.
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2022 (9) TMI 1366
Deduction u/s 80IB - Disallowance of Deduction as project was not completed as work-in-progress was reflected in the profit and loss account - CIT-A deleted the addition - Whether provisions of clause (e) & (f) of section 80IB(10) are not applicable to the flats booked prior to 01.04.2010, even if the sale of the said flats was made after 01.04.2010 (date of insertion of clause e & f)? - AO observed that as per l0CCB report the housing project was completed on 30.06.2010 but in the profit & loss account work-in-progress was appearing and thus wrong information was submitted by the assessee with regard to completion of project - HELD THAT:- There are two phases where the assessee company is engaged both the projects are of residential units, where the 1st Phase is consisted 450 units and 6 shops. This phase-1 was eligible for deduction u/s 80IB(10) of the Act where the project is completed as on 30.06.20210 and the 2nd phase of the project is not eligible for deduction where the phase is under construction during the relevant period of A.Y 2013-14. - CIT(A) has deleted the disallowance taking into consideration the proceeding to assessment year that the claim of the assessee company u/s 80IB(10) was duly examined at the assessment stage and deduction was accordingly allowed except in respect of small proportionate amount for sale of multiple units to the same individual in alleged violation of the condition contained in section 80IB (10) (e)& (f) introduced by the Finance Act 2009 w.e.f 01.04.2010. Observing the facts and circumstances of the case that the legal issue of clause (e) & (f) is prospective in nature. Taking into consideration, the A.Y 2011-12, applicability of section 80IB(10) and clause (e) & (f) held that the amendment introduced clauses (e) & (f) and u/s 80IB(10) were prospective in nature.
CIT(A) has placed judicial precedence concerning to different two places introduced from time to time in section 80IB(10), wherein the computing the tax for the A.Y 2013-14 did not consider the met credit available to the assessee and that in any addition is sustained and in respect of which further deduction u/s 80IB(10) of the Act is not allowed and based on the identical issue has already been examined by the ld. CIT(A) for the A.Y 2012-13 wherein the issue has also been decided in favour of the assessee. Considering the legal issues, the ld. AR for the assessee has placed reliance on various Supreme Court, High Courts and Co-ordinate Benches which specifically held that clause (e) & (f) of the Act introduced in section 80IB(10) of the Act by Finance Act w.e.f 01.04.2010 were prospective in application.
Completion of project whether belongs to Phase-01 and Phase-02 from the records available - The statements is showing the details of all flats sold in the project during the different years. It is to be noted that the similar disallowances were made for the assessment year 2011-12 and the assessee has not challenged these additions in this year and has accepted the disallowances.
DR argued that the similar circumstances is required to be checked whether that exceed or not and since the issue has not been seen in that light and the ld. CIT(A) as merely followed the order without going into the merits of the facts that the assessee herself accepted the disallowances in past. Therefore, in light of the argument advanced by the ld. DR, we are of the view that looking to the facts before us that the assessee has incurred expenditure after the project is completed whether the terms and conditions as required U/s 80IB is property fulfilled by the assessee or not is required to be checked.
AO in the light of the facts and circumstances of the advanced by the ld. DR before us and looking to the interest of justice. The ld. AO is required to check afresh about the admisibilty of the deduction claimed by the assessee u/s 80IB of the Act. We do not give any direction as to the availability of the claim the AO is directed to apply afresh his mind looking to the various aspect argued by the ld. DR with that direction the appeal of the Revenue is partly allowed.
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