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Showing 361 to 380 of 1571 Records
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2023 (7) TMI 1211
Reopening of assessment u/s 147 - Ext.P7 order rejecting the objections raised by the petitioner and finding that the reassessment proceedings should continue against the petitioner - HELD THAT:- There is considerable merit in the contentions taken by the learned counsel appearing for the respondent Department. Ext.P7 order cannot be held to be in violation of principles of natural justice as the said order was preceded by a show cause notice and the petitioner was given an opportunity to reply to the same. It is also clear that the petitioner was heard before Ext.P7 order was issued.
The contention of the petitioner that the matters set out in the reply to the show cause notice have not been properly considered cannot be stated to be a violation of principles of natural justice. The judgments relied on by the learned counsel for the petitioner indicate that they were rendered in completely different fact circumstances.
Ext.P7 order has considered the submission made by the petitioner and has found that the contentions taken have to be examined in the reassessment proceedings which, will follow. The officer holds that the nature of transactions mentioned in the show cause notice which have been explained in the reply of the assessee dated 03.06.2022 require detailed examinations with necessary evidence in support of assessee's claim during the reassessment proceedings. No ground on which Ext.P7 order can be interfered with in exercise of jurisdiction under Article 226 of the Constitution of India. The writ petition fails and it is accordingly dismissed.
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2023 (7) TMI 1210
Penalty u/s 271(1)(c) - Reopening of assessment initiated u/s 147 - Information u/A 28 of the India-France DTAA was received regarding the four undisclosed foreign bank accounts held with HSBC Bank, Geneva, Switzerland - HELD THAT:- Appeal by the Revenue against the order passed by the learned CIT(A) in quantum appeal, the coordinate bench of the Tribunal 2023 (3) TMI 1105 - ITAT MUMBAI] allowed the petition filed by the assessee under Rule 27 of ITAT Rules and held that the AO had no jurisdiction to make the addition under section 147 of the Act. Accordingly, the appeal filed by the Revenue in quantum proceedings was rendered academic and therefore, was dismissed.
Since the addition made by the AO while completing the assessment under section 147 of the Act was held to be beyond the jurisdiction by the coordinate bench of the Tribunal vide aforesaid order, we find no basis in the penalty levied under section 271(1)(c) of the Act based on the very same addition. Grounds raised by the Revenue are dismissed.
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2023 (7) TMI 1209
Book profit u/s 115JB resorting to computation u/s 14A r.w.r. 8D - HELD THAT:- We find that the Special Bench of Tribunal in Vireet Investment (P) Ltd.[2017 (6) TMI 1124 - ITAT DELHI] held that computation under clause (f) of Explanation 1 to section 115JB(2) is to be made without resorting to the computation as contemplated under section 14A read with Rule 8D of the Income-tax Rules, 1962.
Thus, we direct the AO to compute the book profit under section 115JB of the Act, without resorting to computation under section 14A read with Rule 8D.
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2023 (7) TMI 1208
Penalty u/s 271(1)(c) - Defective notice - non specification of clear charge - non striking of irrelevant part - HELD THAT:- AO did not strike–off any of the twin charges i.e., concealment of particulars of income or furnishing of inaccurate particulars of income.
The case of the assessee is squarely covered by the decision of Mohd. Farhan A. Shaikh [2021 (3) TMI 608 - BOMBAY HIGH COURT] wherein held that the defect in notice by not striking off the irrelevant matter would vitiate the penalty proceedings. Accordingly, penalty order passed u/s 271(1)(c) of the Act is quashed. Decided in favour of assessee.
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2023 (7) TMI 1207
Rejection of books of accounts - Presumption to the books of accounts u/s 132(4A) - Estimation of income - bogus purchases - estimations of profits at higher percentage of 10% of contract receipts - violation of Section 40A(3) and verified employee expense - estimation of taxable income and manner and extent of estimations - HELD THAT:- We find that the CIT(A) has given a rather objective consideration to the factual matrix and has analyzed the fact situation, usage of the trade and the common practices adopted in the contract business and has approached the issue in a quite reasonable and fair manner.
CIT(A) has given due weight to the nature of business carried out by the assessee. We concur with the findings of the CIT(A) that while the assessee has attempted to correlate and collate the factual matrix to justify the books results, there are visible fill-in gaps which has not been filled, warranting estimates of profits in a fair and nonpartisan manner. Except for making reference to some hand bills remaining unpaid and lack of evidences towards transportation, unsupported statement of low rung employee etc, the AO has also not brought out specific defects in the books despite drastic action of search.
CIT(A) to our mind, has rightly rejected the books of account and set aside book results for fair and benign estimations of profits and to shun absurdity in the income assessed. While, the assessee has provided justifications towards large creditors arising year after year, such justifications are largely circumstantial and abstract. The outstanding creditors of such significant amounts in the context do invoke disquiet. It is indeed difficult to appreciate the correctness of book results in an objective manner. The AO has made wide ranging observations against the assessee. - Action the CIT(A) sustained.
Presumption to the books of accounts u/s 132(4A) - The Hon’ble Kerala High Court in the case of CIT (central), Kochi vs. Damac Holdings (P) Ltd. [2017 (12) TMI 1170 - KERALA HIGH COURT] observed that in the case seizure of documents in the course of search, the presumption under 132(4A) would be equally available to the assessee as well. The contents of books and documents found in possession and control of searched person thus shall be deemed to be true and the presumption would apply to both sides and such presumption thus, in effect, a double edged sword. The presumption of correctness of entries found in the books at the time of search has not been rebutted by the revenue.
Excessive estimation of net profit ratio - assessee has challenged the net profit ratio estimated by the CIT(A) @ 10% instead of 8% adopted under presumptive scheme of taxation provided u/s 44AD - HELD THAT:- We do not see merit in the plea of the assessee for such indulgence. The issue is highly factual and varies from case to case. The income estimated at 8% in the case of Subodh Gupta (supra) is based on its own set of facts. The judgment in Subodh Gupta [2014 (12) TMI 479 - DELHI HIGH COURT] cannot be read to mean that net profit ratio of 8% is sacrosanct percentage in all circumstances. The CIT(A), in his wisdom, has estimated profit at 10% after considering host of circumstances such a quality of evidence made available to support ‘other sundry creditors’, large cash expenses incurred, the net profit ratio declared and net profit ratio determined by the Assessing Officer etc.
The law has not invented any straight jacket formula to judge such estimations precisely. Such estimations are in the realm of probabilities. There is nothing conclusive about it. The estimations carried out by the CIT(A) cannot be said to be marred by any kind of perversity. The estimates of profits by the CIT(A) are not fanciful or whimsical but appears to be guided by the principles of objectivity, fairness and considerations of justice and maintains some sort of equilibrium. We thus are not inclined to interfere and re-estimate the estimations made by the CIT(A) in the absence of any palpable overreach on this score.
Treatment of interest on fixed deposits as integral part of business activity - It is common knowledge that the large scale guarantees and securities are required in contract businesses. The factual matrix also underscores the proposition that the fixed deposits have not been placed to enjoy interest income simplicitor out of any surplus money. Circumstantially, large scale outstanding liabilities suggests otherwise. Coupled with this, the assessee has also incurred interest and finance costs.
The contention of the assessee accepted, that such FDRs are nothing but integral part of working capital of the assessee kept and expanded for commercial reasons. Hence, the interest income deserves to be treated alike with business contract receipts for the purposes of estimations. The interest income cannot be treated differently from contract receipts merely because such income flows from a different source. - Order of CIT(A) modified to this extent.
The interest income and similarly discount credits shall thus form integral part of the business receipts and shall be subjected to estimation at same rate of 10% as made applicable to contract receipts. However, the interest income on IT refunds and NSC deposits will not get the benefit of estimations but will be chargeable as other income in accordance with law.
Exclusion of exempted income - Assessee has claimed that share of profit arising from joint venture in some assessment years are fully exempted from taxation u/s 10(2A) of the Act. Needless to say, where the income is exempt from the ambit of taxation under the provisions of the Income Tax Act, same has to be excluded from the taxability at the threshold. Thus, the AO is directed to do so by determining the taxable income.
Appeal of the assessee is partly allowed while the appeal of the Revenue is dismissed on all counts.
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2023 (7) TMI 1206
Maintainability of appeal before tribunal u/s 253 against Penalty orders u/s 271FA - HELD THAT:- Section 253 of the Act provides an exhaustive inventory of appeals that can be preferred before the Tribunal
Sub-section (1) sets out the orders passed under the relevant sections that an assessee can challenge before the Tribunal. Similarly, sub-section (2) provides a list of sections, the orders passed where under, can be challenged by the Revenue. There is no provision u/s 253(1) entitling an assessee to file a direct appeal to the Tribunal against the penalty order passed by the AO u/s 271FA. Hence, such orders having been appealed before the Tribunal without jurisdiction, cannot be lawfully prosecuted.
Similar issue came up for consideration before the Pune Tribunal in several cases including Nanded District Central Co-op. Bank Ltd. vs. Director of Income Tax (Intelligence & Criminal Investigation [2022 (1) TMI 887 - ITAT PUNE] Tribunal dismissed the appeal preferred by the assessee against penalty order passed by the AO u/s 271FA of the Act.
Considering the judgment of Ravi Vijay & Anr.[2012 (9) TMI 652 - RAJASTHAN HIGH COURT] Tribunal also gave liberty to the assessee for taking recourse to the alternative remedy as suggested in the judgment, if so desired. Appeal dismissed.
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2023 (7) TMI 1205
Unexplained cash deposits u/s. 69A - assessee claims to have received loans from his friends to commence business and the same has been deposited into his bank account - HELD THAT:- Although, the assessee claims to have received loans from friends and relatives, but could not justify his arguments with credible evidences. AO had also not given any conclusive reasons to come to the conclusion that the cash deposits found with bank account of assessee is unexplained income. Therefore, the only possible option left with us is to estimate income from cash deposits found with savings bank account of the assessee maintained with Karur Vysya Bank.
Therefore we are of the considered view that the entire cash deposits cannot be treated as unexplained money of the assessee and thus, we direct the AO to allow relief to the tune of Rs. 8 lakhs, because the source for cash deposits to that extent may be loans received from friends and relatives of the assessee. For balance amount assessee could not file any evidence to prove source for cash deposits. Therefore, we direct the Assessing Officer to sustain additions to the extent u/s. 69A of the Act - Appeal filed by the assessee is partly allowed.
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2023 (7) TMI 1204
GP estimation - quantum of contract receipts taxable in the hands of the assessee company - application of net profit rate - CIT(A) to uphold the action of the AO in applying 13% net profit rate on part of the contract receipts in the hands of assessee - contract receipts which were not part of the books of accounts but very much offered to tax as part of the revised return of income - HELD THAT:- There is no dispute that the assessee can be allowed the benefit of indirect expenses only once while working out its taxable income. However, when the same principle is applied to the facts of the present case, we find that the net profit rate of 3.45% has been determined as a percentage of the total contract receipts which includes both types of contract receipts which are reflected in the books of account which are not reflected in the books of accounts.
Where the net profit rate is determined as a percentage of the contract receipts it will shown net profit rate of 0.69% after allowing indirect expenses and net profit rate of 13% as a percentage of contract receipt without allowing any double deduction for indirect expenses.
We therefore find that there is no double deduction of indirect expenses while determining net profit rate of 3.45% and given that the assessee has already offered net profit rate of 10% on total contract receipts, no further addition is required to be made in the hands of the assessee. Thus, the addition so sustained by the ld CIT(A) is hereby directed to be deleted. Assessee appeal allowed.
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2023 (7) TMI 1203
Disallowance u/s 68 - Bogus share capital and Share Premium received - HELD THAT:- As against the share application money received from five investors - As investors were found to be existing in their given addresses and the respective persons of those companies appeared before DDIT Investigation and confirmed the fact of depositing share application money with the assessee company. Assessee further submitted copies of the audited accounts and bank statements of these investors before the A.O. CIT(A) correctly deleted the additions.
Share application money invested by M/s. Balram Vinimay Pvt. Ltd. - As after verification of the same and copies of the audited accounts and bank statements and the share application money has been transferred to the assessee company through banking channels. CIT(A) deleted the additions made by the Assessing officer and also following Supreme Court judgment in the case of Lovely Exports (P.) Ltd. [2008 (1) TMI 575 - SC ORDER].
Unsecured loan received from M/s. Jeenma Business Pvt. Ltd. - CIT(A) deleted the addition by holding that the assessee proved the genuineness of the transaction. Before us, the Ld. Sr. D.R. could not produce any contra evidences, which warrant confirming the addition made by the A.O. In the absence of the same, we have no hesitation in confirming the order of Ld. CIT(A) who deleted the additions u/s. 68.
Decided against revenue.
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2023 (7) TMI 1202
Addition u/s 68 - accommodation entry taken - initial Burden to prove - HELD THAT:- The initial burden is on the assessee. We find that to discharge the initial burden the assessee has submitted copies of ITR, bank statements, confirmations and affidavits acknowledging receipt of share certificates from the 10 investors companies.
We find that the AO has failed to probe / conduct scrutiny of the documents so furnished and could not point out any fault in the documentary evidences so furnished.
No material was brought on record by the AO to show that the affidavits filed by the directors of the investors companies were not genuine. No enquiries were conducted about the contents of the affidavits even during the remand proceedings the AO did not make any attempt to discredit the affidavit. The result is that the contents of the affidavits have not been disputed.
Applicants were present at the given addresses against whom action could have been taken. In our considered opinion there is no material whatsoever on record for doubting the veracity of the statements made in the affidavits and if the deponents have also not been subjected to cross-examination for bringing out the validity of their statements then authorities would not be justified in doubting the correctness of the statement made by the deponents in the affidavits.
Entire addition is based upon the statement of alleged entry operator Himsanshu Verma but he was never produced for cross-examination. The onus of ensuring his presence was on the AO but even the AO showed his inability to produce Himsanshu Verma for cross-examination. Thus assessee has successfully discharged the onus cast upon it by the provisions of section 68 - Decided in favour of assessee.
Estimation of profit - deemed profit computed @ 8% of gross revenue from finishing work - HELD THAT:- As without rejecting the books of account the AO has grossly erred in estimating the profit which is against the ratio laid down in the case of National Industrial Corporation Limited [2002 (8) TMI 93 - DELHI HIGH COURT]. Since the addition is solely based on estimation without rejecting the books of accounts, we do not find any merit in the impugned addition the AO is directed to delete the same. Ground No.3 is allowed.
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2023 (7) TMI 1201
Penalty levied u/s. 271D - assessee has received cash on sale of immovable property which was held to be in contravention of Section 269SS - AR submitted that applying the rule of Ejusdem generis to the expression advance or otherwise, the phrase otherwise would not cover sale consideration and such sale transactions are excluded from the purview of Sec. 269SS - HELD THAT:- The Explanatory Notes to the Finance Act, 2015, enlarging the scope of Sec. 269SS, clearly provide that in order to curb generation of black money by way of dealings in cash in immovable property transactions, Section 269SS of the Income tax Act has been amended to provide that no person shall accept from any person any loan or deposit or any sum of money, whether as advance or otherwise, in relation to transfer of an immovable property (specified sum) otherwise than by an account payee cheque or account payee bank draft or by electronic clearing system through a bank account, if the amount of such loan or deposit or such specified sum is twenty thousand rupees or more. Very clearly, the intention of the amendment is to include sale consideration also arising out of immovable property within the ambit of Sec. 269SS. This argument raised by Ld. AR stand rejected.
Digital signatures on the penalty order could not be verified - DR produced copy of penalty order wherein digital signatures have clearly been affixed on the penalty order. DR submitted that there is no further requirement that the digital signatures should be verified by the web browser. We concur with Sr. DR's plea since the only requirement is that the order should be signed digitally and nothing more. This argument also stands rejected.
But facts as emerges that the assessee has sold property for sale consideration of Rs. 50 lacs out of which substantial sale consideration to the extent of Rs. 45 Lacs has been received in Cheques whereas only a small sale consideration of Rs. 5 Lacs has been received in cash. The sale transaction is duly evidenced by the registered agreement / deed. Considering the fact that the provisions of Sec. 269SS are mainly to curb generation of black money by way of dealings in cash in immovable property transactions which is absence in the present case, we would hold that it is not a fit case for levy of impugned penalty - Decided in favour of assessee.
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2023 (7) TMI 1200
Bogus purchases/sundry creditors - assessee failed to produce supporting bills/vouchers for the purchases made from the parties and also not filed bank details and proof of payments - CIT(A) deleted the addition - HELD THAT:- As perusal of the HDFC Bank account makes it very clear regular cheque payments were made by the assessee through the continuation of the business with Kingston Peptech P. Ltd. as well as the Om Enterprise and various other suppliers.
CIT(A) deleted the addition made on account of bogus sundry creditors which is in our considered opinion does not require any interference. Purchasers are supported by bills entries in books of account and made payment by cheques. AO did not find any inflation in purchase price, but the addition made only on the ground that the assessee failed to furnish the details during the ex parte assessment proceedings. See M/S NANGALIA FABRICS PRIVATE LIMITED [2013 (8) TMI 80 - GUJARAT HIGH COURT] - Decided in favour of assessee.
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2023 (7) TMI 1199
Addition on the basis of dumb/rough documents seized - Unsecured advances obtained - search and seizure operation u/s 132 - HELD THAT:- Addition has been made on the basis of presumptions and assumptions that Shri Mahendra Sethia is engaged in the business of providing accommodation entries of share capital or sale of investment without bringing any corroborative material on record - since the document found during the course of search is not signed by anyone from the assessee company, it is nothing less than a dumb documents which can not be basis of addition alone.
The case of the assessee finds support from the several decisions as stated hereinabove. Accordingly on this account the addition cannot be sustained and deserve to be deleted.
Addition has been made on the basis of statement of Gopal Agarwal who nowhere named the assessee to be beneficiaries of accommodation entries and also no cross examination was ever provided to the assessee of Mr Gopal Agarwal and therefore as has been held in the case of Andaman Timber Industries [2015 (10) TMI 442 - SUPREME COURT] and in case of H R Mehta [2016 (7) TMI 273 - BOMBAY HIGH COURT] the addition made with opportunity of cross examination is bad in law. We have also perused the annual audited accounts of the assessee during the year and observe that there has not been any issue of equity share capital or raising of fresh loans.
We observe that that whatever little unsecured loans were raised were from the relatives. We direct the AO to delete the addition. Appeal of the assessee is allowed.
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2023 (7) TMI 1198
TDS u/s 194C - Default u/s 201(1) and 201(1A) - Non deduction of tds on payment towards EDC charges to DGTCP Haryana through HUDA without deduction of TDS - HELD THAT:- There is no TDS liability on statutory payments made to Government of Haryana, Town and Country Planning Department is part of Government of Haryana. HUDA is only authorized to accept payment on behalf of Town and Country Planning Department. Furthermore, EDC is a charge levied by Government for carrying out External Development Work to be executed in the periphery of or outside colony/area for the benefit of colony/area. EDC charge is deposited in the receipt head of ‘TCP Department’ being Government. The assessee is not liable to deduct TDS at the time of payment of EDC as the same was not out of any statutory or contractual liability towards HUDA per se.
The issue is no longer res integra. The identical issue has came up for adjudication before the Co-ordinate Bench of Tribunal in the case of Spaze Tower Pvt. Ltd. [2022 (5) TMI 1344 - ITAT DELHI]
Thus we hold that imposition of demand computed u/s 201(1) and consequential interest u/s 201(1A) is not justified in view of the finding of the Co-ordinate Bench that the assessee has not committed any violation of provision of Chapter XVII B of the Act by making payment towards EDC charges to DGTCP Haryana through HUDA without deduction of TDS.
Also decided in UNION BANK OF INDIA VERSUS ADDITIONAL COMMISSIONER OF INCOME TAX (TDS) KANPUR [2022 (3) TMI 623 - SC ORDER] TDS provisions for payments made to such Authority are not applicable. Appeal of assessee allowed.
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2023 (7) TMI 1197
Addition on account of commission expenses u/s 37 - selection for scrutiny u/s 143(2) - HELD THAT:- As complete details of the respective parties to whom the commission was paid and the rate at which commission was paid and the details of service rendered by those parties for which commission was paid was not filed and therefore, the addition made by the AO was found to be justifiable by the CIT(A).
The same is found to be without any ambiguity, particularly in the absence of any assistance rendered by the assessee before us. The same is hereby upheld. Thus, the appeal preferred by the assessee is found to be devoid of any merit and hence, dismissed.
Unexplained investment - no cogent document was filed by assessee - HELD THAT:- As order passed by the Ld. AO, confirmed by the First Appellate Authority, the Ld. AO noted that the appellant failed to submit monetary trail of earlier years closing balance of investments to substantiate its claim that it had invested in three companies as mentioned hereinabove The status whereof remained unchanged before the First Appellate Authority. Needless to mention that source of such investment made by the assessee was not demonstrated neither proved by the assessee. Hence, in the absence of any assistance rendered by the assessee, the order passed by the authorities below, is found to be just and proper so as to warrant interference - Decided against assessee.
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2023 (7) TMI 1196
Capital gain on sale of land - transfer of capital asset u/s 2(47) - year of assessment - AO held that the land was to be taxed to capital gains in the A.Y: 2004-2005 and not inA.Y:1995-1996 - HELD THAT:- Case of the assessee for transfer of immovable property through the oral agreement do not fall in any of the limb of section 2(47) of the Act. The present case is neither a case of sale nor exchange nor relinquishment or extinguishment of any right in the year 1994 or 1995. Infact, the registered sale deed document was executed by the assessee in favour of the purchaser on 29.08.2003 and therefore, the transfer had taken place in the A.Y. 2003-04.
Therefore, the view taken by the lower authority cannot be faulted with.
In the remand proceedings before the Assessing Officer no evidence of transfer of the land had been filed by the assessee except the letter issued by M/s. Janapriya Projects. Even the said letter does not bear the date of taking over the possession of the subject matter of land and this letter also undated. In the said letter, it was mentioned that the possession was taken over through the Irrevocable General Power of Attorney in the year 1994, however, no such Power of Attorney in respect to the survey no.671 was produced before the lower authority or before us by the assessee. In the said letter of Janapriya Engineers before the Court of law, however, no such evidence was filed before us showing that the land falling in survey no. 671 was subject matter of legal litigation before any Court of Law.
Assessee had neither brought on record the evidences of land dispute before us nor before the lower authorities evidencing that the land falling under survey no. 671 was the capital asset in the records of Janapriya Engineers Syndicate w.e.f. 1994. Considering the case from any point of view, we do not find any reasons to interfere with the order of the ld.CIT(A). - Decided against assessee.
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2023 (7) TMI 1195
Refund of SAD - introduction of new Circular No. 18/2013-Cus dated 29.04.2013 directing the importer to make an initial payment of 4% SAD in cash instead of scrips - petitioner was unaware of the new Circular - HELD THAT:- Admittedly, when the petitioner has not paid the 4% SAD in cash but in scrips despite Circular No. 18/2013-Cus. dated 29.04.2013, he was not entitled to refund of 4% of SAD - there are no substance in the submission of the learned Counsel for the petitioner that the public notice was not issued regarding Circular No. 18/2013-Cus. dated 29.04.2013. If the said Circular was published on the official website of the DGFT, it amounts that the public notice was given about the Circular.
There are no merit and substance in the present writ petition - petition dismissed.
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2023 (7) TMI 1194
Maintainability of petition - availability of alternative remedy of appeal - no order directing modification of assessment - HELD THAT:- The respondent is to be directed to reassess Ext P2 bill of entry, in accordance with law, which will not cause any prejudice to the respondent and in turn do complete justice to both sides. Thus, notwithstanding the plea of alternative remedy, the writ petition is allowed by directing the respondent to reconsider the matter afresh in view of Ext P4 circular.
Ext P2 bill of entry is recalled - respondent is directed to reassess Ext P2 bill of entry, in accordance with law, after affording the petitioner an opportunity of being heard - petition allowed.
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2023 (7) TMI 1193
Valuation of imported goods - Petrol Car (unused) - used split air conditioner compressors without gas - rejection of declared value - redetermination of the value - Confiscation - redemption fine - penalty - HELD THAT:- The appellant was not put to notice with regard to the issue of enhancing the declared value of the car. Thus, without having an opportunity to defend the enhancement of the value of the car, as decided by the original authority, the Commissioner (Appeals) has revised the value of the car to demand differential duty.
It is brought out from the records that the original authority had accepted the value declared for the car, being a second-hand car and not a popular branded car. The declared value of the air conditioner compressors was rejected and re-determined as USD 300 (C&F). Though the Department has not filed any appeal against such order, the Commissioner (Appeals) has, without giving any notice to the appellant, enhanced the value of the car so as to demand differential duty. In the absence of an appeal filed by the Department, the Commissioner (Appeals) ought not to have interfered with the findings with regard to the valuation - the order passed by the Commissioner (Appeals) revising the value of the car requires to be set aside.
The Commissioner (Appeals) has reduced the penalty to Rs.25,000/- - the redemption fine of Rs.25,000/- or the reduced penalty of Rs.25,000/-, not disturbed - impugned order is modified to the extent of setting aside the enhancement of the value of the imported car - appeal allowed in part.
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2023 (7) TMI 1192
Absolute Confiscation of imported goods - Arecanut - prohibited goods or not - option to be given to the importer to redeem the goods on payment of fine in lieu of confiscation or not - HELD THAT:- Admittedly, in terms of extant Trade Policy and related notifications referred in the show cause notice and Orderin- Original, the goods covered by both the bill of entries were not meeting the criteria of MIP and therefore were in the nature of prohibited goods. However, there were certain exemptions available from the applicability of the policy restrictions in the case of imports by, interalia, 100% EOU. The appellants are EOU is not disputed. It is also not disputed that good was not meant for sale in DTA. It is, however, obvious that while there was a clear revised policy notification for pepper, the Government, however, had not issued any such notification in respect of Arecanut. The notification issued in 2023 has now exempted the applicability of MIP for Arecanut also, if the imports are for EOU. However, there is no indication contained in notification that the said policy change would be having any retrospective effect.
The Adjudicating Authority has rightly held that on the date on which the imports were made, the goods were clearly in the “prohibited” category for having not met the MIP criteria and hence liable for confiscation. It is well settled law that the goods can be confiscated under Section 111(d) of the Customs Act if it is prohibited under Customs Act or any other law for the time being in force - in view of clear position stated in the EXIM policy, as pointed out by the Learned DR, any policy change has to be given prospective effect only and therefore the exemption from MIP criteria for 100% EOU in respect of Arecanut cannot be extended till the time the revised notification was issued on 14.02.2023. There is no ambiguity in the wordings of notification and therefore there is no need to look for intent or interprete the notification.
Absolute confiscation of their goods - HELD THAT:- The power of Adjudicating Authority to confiscate the goods liable for confiscation is governed by Section 125 of Customs Act. It also gives a discretionary power to give importer an option to redeem the goods on payment of fine in lieu of confiscation. While this option is mandatory for “other goods”, there is a discretion for giving this option in the case of goods deemed to be prohibited under this Act or under any other law for the time being in force. Therefore, though the authority has a right to refuse this option, it has to be exercised having regard to facts and circumstances and is not an absolute power for not giving the option. There are catena of judgments in support that even in respect of prohibited goods, the options to pay fine in lieu of confiscation, can be given by the Adjudicating Authority.
Power for giving option to importers to pay fine in lieu of confiscation or otherwise - HELD THAT:- The issue relating to power for giving option to importers to pay fine in lieu of confiscation or otherwise came up before Hon’ble Supreme Court in the case of UNION OF INDIA (UOI) AND ORS. VERSUS RAJ GROW IMPEX LLP AND ORS. [2021 (6) TMI 778 - SUPREME COURT] has held that an authority acting under the Customs Act, when exercising discretion conferred by Section 125 thereof, has to ensure that such exercise is in furtherance of accomplishment of the purpose underlying conferment of such power. The purpose behind leaving such discretion with the Adjudicating Authority in relation to prohibited goods is, obviously, to ensure that all the pros and cons shall be weighed before taking a final decision for release or absolute confiscation of goods.
Therefore, it is apparent Hon’ble Supreme Court while upholding the decision of the Appellate Authority for not giving the option for redemption in the given set of facts, also observed that this discretion is not an absolute discretion and the Adjudicating Authority has to taken into consideration various pros and cons and other relevant factors to arrive at his decision.
Whether in the given facts of the case, the goods were liable for absolute confiscation or the Adjudicating Authority should have given an option to the importer to redeem the goods on payment of fine in lieu of confiscation, as provided in the Section 125 of the Customs Act? - HELD THAT:- There are several mitigating factors which prove that under the given facts, the Adjudicating Authority should have given the option. Firstly, this is an import by 100% EOU for conversion and re-export back to the principal from where the Arecanut was received. Secondly, Commissioner has himself held in para 68 of his order that this is not a case of mis-declaration or misclassification and it is also not a case of deliberate attempt on the part of importer to circumvent the policy provisions. Thirdly, the importer had a bona fied belief that MIP conditions were not applicable to them in view of similar goods having the same exemptions. The fact that they approached the Ministry of Commerce, who agreed with their submissions and requested the DGFT to issue clarification also relevant. It is a different matter altogether that the DGFT did not issue any clarification/notification till 14.03.2023, which has however been held to have prospective effect only.
While the tariff value is fixed in terms of Section 2(40) and Section 14(2) of the Customs Act by way of notification in the Official Gazette and such tariff value becomes the basis for charging duty, whereas the MIP is value which is determined by the DGFT for the purpose of imposing certain provision/restriction on import of goods. Therefore, these two cannot be used interchangeably. In this case, admittedly the goods were for job work by EOU on a “free of cost” basis and therefore a notional value was indicated. Thus, in view of relevant fats discussed, the penalty imposed appears to be excessive. The penalty therefore, is reduced to Rs. 2,00,000/- from Rs. 10,00,000/-.
The Original Authority is directed to give an option to appellant to redeem the goods on payment of fine in lieu of confiscation. The amount of fine shall be reasonable and appropriate, having regards to mitigating factors discussed and to be determined as per provisions under Section 125 of Customs Act - the order of the Commissioner is modified to the extent and the order is remanded back to the Original Adjudicating Authority for giving the option to the appellants for redemption of goods on payment of fine for re-export purpose only, subject to stipulated conditions, if any, indicated in the order.
Appeal allowed in part.
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