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2004 (2) TMI 708
The Supreme Court dismissed the appeals due to an unexplained delay of 602 days in filing and 71 days in refiling. Applications for condonation of delay were also dismissed, and the question of law was left open.
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2004 (2) TMI 707
Oppression and mismanagement - challenged the order of the Company Law Board - Abandonment of the claim to arbitration and the acquiescence to the jurisdiction of the Company Law Board - violations made by it in the Shareholders Agreement - Whether Group A had by word or conduct abandoned its claim - Applicability of Provisions of Sections 397 and 398 read with Sections 402 and 403 - Printing and publishing of newspapers, journals, magazines.
HELD THAT:- We find from a perusal of Section 8 that it rigidly fixes the time by which the party claiming arbitration must raise the issue before the Judicial Authority. It is in this background that we have examined the four documents filed by Group A, which are on record. The first is the reply dated 13.9.1999 to the application for interim relief. We observe that the substance of the dispute has been clearly set out in the course of a long and lengthy pleading. Likewise we have perused the application for appointment of an Administrator filed under Section 402 of the Companies Act (C.A. No. 294 of 1999 dated 15.12.1999) by Group A wherein it has been alleged that Group B had been violating the Shareholders Agreement and Articles of Association and also narrating the steps taken to settle outstanding issues. The second application is C.A. No. 7 of 2000 dated 13.1.2000 filed under Section 403 of the Companies Act making a prayer for interim relief on the plea that after the filing of the Company Petition, Group B had been indulging in oppression and mismanagement and violating the Shareholders Agreement which was prejudicial to the affairs of the Company. Details have accordingly been set out as to how by its conduct, the company was being adversely affected. The third is C.A. No. 440 of 2000 dated 3.3.2000 wherein full details with regard to the oppression and mismanagement at the hands of Group B has been brought out and it has been prayed that the Board.
We have also perused the application filed on 16.5.2000. It is the case of Group A that it is this application which contained the substance of the dispute. We find that this application is exclusively a repetition of what had already been said in the four documents referred to herein above. The application under Section 8 of the Act is also significant for yet another reason.
There is yet another angle to this agreement. Sub-section (2) of Section 8 of the Act is couched in the negative but is imperative in terms when it says that the application referred to in Sub-section (1) "Shall not be entertained unless it is accompanied by the original arbitration agreement, or a duly certified copy thereof." It is conceded position that no copy of the arbitration agreement has ever been filed by Group A.
We are, therefore, clearly of the opinion that Group A not only abandoned its claim to seek arbitration but had even otherwise forfeited this right as it had submitted to arbitration before it had filed the first substance of its claim before the Company Law Board.
Applicability of Provisions of Sections 397 and 398 read with Sections 402 and 403 - It is true that the Company Law Board following its precedents, has given a finding that a dispute under Sections 397 and 398 of the Companies Act could be a subject matter for arbitration. We agree with Mr. Aggarwal when he says that though the decision of the Company Law Board can not be said to be binding on this Court but it would still have great persuasive value and must be given due consideration. We, however, find that Mr. Aggarwal's argument that as this issue had not been seriously debated before the learned Single Judge, this Court should stay its hands in this Letters Patent Appeal, is clearly unwarranted. It has to be borne in mind that the matter in the writ petition before the learned Single Judge was in the nature of a first appeal and the present proceedings are in the nature of a second appeal. Moreover, we find that this I technical consideration cannot shackle the writ jurisdiction of this Court in what is I purely a question of law.
It is true that as per the documents on record the shares of the two contesting groups come to 97.6% but the fact remains that the balance 2.4% is in the hands of other persons. As held by the Hon'ble Supreme Court in Cosmosteels Pvt. Ltd. and Ors. v. Jairam Das Gupta and Ors.[1977 (12) TMI 92 - SUPREME COURT], Company Cases 312, the Scheme of Sections 397, 398 and 402 appear to constitute a Code by itself for granting relief to oppressed minority shareholders. It is also clear that the interest of the 2.4% minority shareholders and the Company could be, prejudicially affected if the matters were put to Arbitration and finally decided by the arbitrator, whereas an order made by the Company Law Board under Sections 397, 398, 402 and 403 would be appealable u/s 10F of the companies Act. These aspects become relevant in the light of the observations in Chiranjilal Shriial Goenka's case [1993 (3) TMI 354 - SUPREME COURT]. In this matter, the question of the probate of a will was referred by the consent of the parties for arbitration to retired Chief Justice of the Bombay High Court. As some proceedings with regard to the probate were also pending in Court, the question arose as to whether the Arbitrator could decide on the validity of the Will.
We find that the aforesaid observations would clearly apply in the present case as well for the reasons already set out above.
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2004 (2) TMI 706
Issues Involved:
1. Validity of the exclusion of Barisha from the kerosene distribution agreement.
2. Equitable distribution of kerosene oil among agents.
3. Adherence to principles of natural justice.
Detailed Analysis:
1. Validity of the exclusion of Barisha from the kerosene distribution agreement:
- The appellant, Indian Oil Corporation Limited, had initially appointed the respondent, a partnership firm, as an agent for distributing kerosene oil in the district of 24-Parganas (South) and Kolkata. The original agreement in 1966 included Barisha. However, subsequent agreements in 1994 and 2000 did not mention Barisha.
- The respondent moved the court in 2000, arguing that Barisha should be included in the agreement. The court disposed of the petition based on an inter-office memo stating that Barisha was part of Behala, and thus, not separately mentioned.
- The oil company continued supplying kerosene to Barisha until a vigilance enquiry revealed the absence of an agreement for Barisha, leading to the cessation of supply.
- The respondent filed another writ petition in 2001, arguing that the discontinuation of supply without notice was illegal and violated natural justice principles. The learned Single Judge ruled in favor of the respondent, stating that the stoppage of supply without notice could not be sustained.
2. Equitable distribution of kerosene oil among agents:
- The court had previously directed the Director of Consumer Goods to convene a meeting to establish a uniform formula for kerosene distribution. The meeting resulted in several resolutions, including the principle that no agent should receive more than 250 KL per month and that distribution should be equitable.
- The oil company reviewed the distribution process and found discrepancies, including the unauthorized supply to Barisha. They rectified this by withdrawing the Barisha quota and redistributing it among other agents, maintaining the 250 KL benchmark.
- The respondent's quota for other units was also adjusted accordingly.
3. Adherence to principles of natural justice:
- The respondent argued that the cessation of supply to Barisha without notice violated natural justice principles, citing the Supreme Court's decision in Mahabir Auto Stores and Ors. v. Indian Oil Corporation and Ors., which emphasized the need for reasonableness and notice before discontinuing supplies.
- The court noted that the respondent had not raised the issue of Barisha during the meeting convened by the Director of Consumer Goods, where the 250 KL limit was established. The court found that the oil company's rectification of the mistake was justified and did not violate natural justice principles.
- The court emphasized that the respondent could not claim a right to an independent quota for Barisha, as the 2000 agreement did not include it. The oil company was entitled to rectify the mistake to ensure equitable distribution among all agents.
Conclusion:
- The appeal was allowed, and the judgment and order of the learned Single Judge dated April 1, 2003, were set aside. The writ petition of the respondent was dismissed.
- The court found no mala fide intention on the part of the oil company in rectifying the distribution mistake and emphasized the importance of adhering to the terms of the agreement and ensuring equitable distribution among all agents.
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2004 (2) TMI 705
Issues Involved:
1. Conviction of Devender Kumar Singla under Section 420 IPC.
2. Acquittal of Mala Singla under Section 420 IPC.
3. Determination of wrongful gain and wrongful loss.
4. Validity of the transaction date.
5. Evidentiary value of the receipt and delivery of shares.
6. Stoppage of payment and its implications.
7. Custodial sentence imposed on Devender Kumar Singla.
Detailed Analysis:
1. Conviction of Devender Kumar Singla under Section 420 IPC:
The High Court found Devender Kumar Singla guilty of cheating under Section 420 IPC. The court noted that Devender had assured the complainant of payment via a cheque, which was later dishonored. The receipt executed by Devender indicated that he had received the shares. The High Court concluded that the essential ingredients of Section 420 IPC, including cheating and dishonest inducement, were established. The Supreme Court upheld this conviction, noting that the receipt and the circumstances indicated that Devender had indeed received the shares.
2. Acquittal of Mala Singla under Section 420 IPC:
The High Court acquitted Mala Singla, noting discrepancies in the accounts given by her and Devender. Mala claimed she had signed blank cheques and later stopped payment when she found the cheque book missing. The High Court observed that her involvement in the transaction was not sufficiently established. The Supreme Court agreed, noting that Mala's presence at the transaction was not proven and that the cheque was handed over by Devender, not her.
3. Determination of wrongful gain and wrongful loss:
The defense argued that wrongful gain and wrongful loss, essential elements of Section 420 IPC, were not established. However, the High Court found that the dishonored cheque and the receipt indicating share delivery evidenced wrongful loss to the complainant and wrongful gain to Devender. The Supreme Court concurred, emphasizing that the receipt and the circumstances supported the conclusion of wrongful gain and loss.
4. Validity of the transaction date:
The trial court had doubted the transaction date, stating it occurred on 27th July 1992, not 7th August 1992 as claimed by the complainant. The High Court, however, noted there was no suggestion during cross-examination to support the earlier date. The Supreme Court upheld this view, stating that the absence of such a suggestion during cross-examination could not be rectified by the accused's statement under Section 313 Cr.P.C.
5. Evidentiary value of the receipt and delivery of shares:
The High Court placed significant weight on the receipt executed by Devender, which stated that the shares had been delivered. The defense's argument that the receipt was an advance receipt was not raised during the trial. The Supreme Court noted that the complainant's inability to recall the number of shares did not undermine the receipt's evidentiary value. The receipt was deemed credible evidence of share delivery.
6. Stoppage of payment and its implications:
The High Court found the stoppage of payment on 1st August 1992, before the alleged transaction date, suspicious. Devender's explanation that shares were to be delivered by 5th August 1992 did not justify the early stoppage. The Supreme Court agreed, noting that varying explanations for the stoppage further weakened the defense's case.
7. Custodial sentence imposed on Devender Kumar Singla:
The High Court sentenced Devender to one year of imprisonment and a fine of Rs. 10,000. The Supreme Court found the custodial sentence slightly excessive given the case's peculiar circumstances and reduced it to three months, maintaining the conviction.
Conclusion:
The Supreme Court upheld the High Court's judgment, convicting Devender Kumar Singla under Section 420 IPC but reducing his sentence to three months. The acquittal of Mala Singla was also upheld, as her involvement in the fraudulent transaction was not sufficiently proven.
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2004 (2) TMI 704
The Karnataka High Court dismissed the appeal against the order of the Income Tax Appellate Tribunal related to legal expenses being considered as revenue expenditure for the assessment year 1984-85. The Tribunal found that the expenses were incurred to defend the right to carry on a business serving pork and wine, making them revenue in nature. The appeal was dismissed as no substantial question of law was involved.
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2004 (2) TMI 703
Issues:
Denial of bail to appellants under NDPS Act, Violation of Section 42 of NDPS Act, Consideration of special circumstances for bail, Directions for release on bail with conditions.
Analysis:
The judgment revolves around an appeal against the denial of bail to the appellants who were accused in a criminal case under the NDPS Act. The prosecution's case involved the recovery of drugs and cash from the appellants during a police interception based on prior information. The appellants, lacking licenses for narcotic drugs, were arrested and subsequently denied bail by the Sessions Court and the High Court.
During the appeal, the appellants argued that the case against them was falsely fabricated. They presented evidence of a telegram alleging their illegal detention, which raised concerns about their safety. The Court acknowledged the seriousness of the allegations and the lack of investigation into the matter by the police. Despite the stringent provisions of the NDPS Act and the framing of charges against the appellants, the Court considered the special circumstances surrounding the case.
A crucial point raised was the alleged violation of Section 42 of the NDPS Act, which mandates certain procedures during the search and seizure of drugs. The Court noted the absence of any mention of this violation in the impugned order, emphasizing the mandatory nature of compliance with Section 42. The Court directed the release of the appellants on bail, imposing specific conditions to ensure their presence and cooperation during the trial.
The conditions for bail included executing a bail bond, surrendering passports if not already seized, and reporting to the authorities at specified intervals. The Court also instructed the Special Judge to expedite the trial process and emphasized that any statements made regarding the case's merits should not influence the final decision.
Ultimately, the appeal was disposed of, and the appellants were granted bail with the specified conditions. Additionally, a Transfer Petition related to the case was dismissed as withdrawn, concluding the legal proceedings in this matter.
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2004 (2) TMI 702
Issues:
1. Rectification of assessment orders under the Karnataka Sales Tax Act, 1957.
2. Levying of tax on the turnover relating to processing of goods by the assessing authority.
3. Challenge to rectification orders and demand notices issued under Section 25-A of the Act.
4. Interpretation of the decision of the Supreme Court in ACC Limited vs. The Commissioner of Customs.
5. Validity of circular No. 17/2002-03 dated 27-9-2002 issued by the Commissioner of Commercial Taxes.
6. Availability of alternative remedy in filing appeals against orders passed under Section 25A.
7. Principles of natural justice in rectification orders.
8. Consequential relief sought in quashing orders of rectification.
Analysis:
The judgment pertains to a case involving the rectification of assessment orders under the Karnataka Sales Tax Act, 1957. The petitioner, a registered dealer running a Photo Studio, challenged the levy of tax on the turnover related to processing of goods by the assessing authority for the assessment years 1990-91 to 1998-99. The petitioner sought rectification and refund based on legal precedents such as the decision in Rainbow Colour Lab vs. State of Madhya Pradesh. The assessing authority initially rectified the assessment orders in favor of the petitioner but subsequently issued rectification orders and demand notices based on a Supreme Court decision and a circular dated 27-9-2002.
The petitioner filed petitions seeking to quash the circular and the rectification orders, which were initially rejected by the single judge. The petitioner then filed appeals contending that the rectification orders were against natural justice and misinterpreted the Supreme Court decision in ACC Limited. The High Court, considering similar cases, allowed the appeals, setting aside the rejection of the petitions seeking consequential relief. The Court held that despite the availability of alternative remedies, petitions challenging statutory provisions or circulars could be entertained.
The Court referred to the decision in GOLDEN COLOR LAB & STUDIO where it was held that tax cannot be levied on the transfer of property in goods involved in processing photographs. Consequently, the circular dated 27-9-2002 was quashed, and it was declared that the decision in KESHORAM SURINDRANATH PHOTOMAG (P) LTD. vs. ASSISTANT COMMISSIONER OF COMMERCIAL TAXES remains binding. The Court directed the Authorities under the Act to proceed on the basis that Entry 25 is not restored to the Sixth Schedule of the Act. As a result, the rectification orders and demand notices were quashed for the assessment years 1990-91 to 1998-99.
In conclusion, the Court allowed the appeals and the petitions, directing the parties to bear respective costs. Sri B Anand, the Learned G. A., was permitted to file a memo of appearance within six weeks. The judgment provides a detailed analysis of the legal issues involved, the application of legal precedents, and the reasoning behind the decision to quash the rectification orders and demand notices.
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2004 (2) TMI 701
Offence of homicidal death - Guilty of offences punishable under Section 302 IPC and Sections 25 and 27 of the Arms Act - credibility of the prosecution version - Scope and ambit of Section 27 of the Evidence Act - Whether evidence relating to recovery is acceptable when nonofficial witnesses did not support the recovery and made departure from the statements made during investigation - HELD THAT:- There was no evidence led as to when the bullets were handed over to the police by the doctor or where they were kept and in what condition. Though recovery from an open space may not always render it vulnerable, it would depend upon factual situation in a given case and the truthfulness or otherwise of such claim. In the case at hand the recovery was made from an open space visible from the place where the dead body was lying and at a close proximity. It is not clear from evidence that it was hidden in such a way so as making it difficult to be noticed. The evidence tendered is totally silent as to in whose custody were the bullets, empty cartridges and the pistol. The effect of such nonexplanation was considered by this Court in Santa Singh v. State of Punjab [1956 (2) TMI 84 - SUPREME COURT (LB)].
Although the interpretation and scope of Section 27 has been the subject of several authoritative pronouncements, its application to concrete cases in the background events proved therein is not always free from difficulty. It will, therefore, be worthwhile at the outset, to have a short and swift glance at Section 27 and be reminded of its requirements. The Section says : "Provided that, when any fact is deposed to as discovered in consequence of information received from a person accused of any offence, in the custody of a police officer, so much of such information, whether it amounts to a confession or not, as relates distinctly to the fact thereby discovered may be proved."
At one time it was held that the expression "fact discovered" in the section is restricted to a physical or material fact which can be perceived by the senses, and that it does not include a mental fact, now it is fairly settled that the expression "fact discovered" includes not only the physical object produced, but also the place from which it is produced and the knowledge of the accused.
The several discrepancies and shortcomings in evidence as noticed supra considerably corrode credibility of the prosecution version. That being so, the inevitable conclusion is that the prosecution has not established the accusations against the accused-appellant beyond reasonable doubt and consequently he is entitled to be acquitted. Since he is on bail, the bail bonds be discharged. The appeal is allowed.
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2004 (2) TMI 700
Issues:
1. Legality of judgment by Division Bench of Guwahati High Court quashing transfer order.
2. Violation of Rule 37 of Posts and Telegraphs Manual and Rule 15 of Fundamental Rules.
3. Transfer as a measure of penalty.
4. Interpretation of FR 15 and FR 14-B.
5. Use of the term 'undesirable' in transfer order.
6. Impact on seniority and promotional prospects.
7. Authority to enforce discipline through transfer.
8. Necessity of holding an inquiry before transfer.
9. Prima facie satisfaction for transfer.
Analysis:
1. Legality of judgment by Division Bench of Guwahati High Court quashing transfer order:
The Union of India challenged the judgment of the Guwahati High Court quashing a transfer order of four employees from Agartala Division to Meghalaya Division. The High Court allowed the writ petitions filed by the employees, leading to the Union of India questioning the legality of this decision before the Supreme Court.
2. Violation of Rule 37 of Posts and Telegraphs Manual and Rule 15 of Fundamental Rules:
The writ petitions were based on alleged violations of Rule 37 of the Posts and Telegraphs Manual and Rule 15 of the Fundamental Rules. The High Court held that the transfer was impermissible under Rule 37 and violated Rule 15. The Union of India argued that the transfer was done in public interest and to enforce discipline, not as a penalty.
3. Transfer as a measure of penalty:
The Union of India contended that the transfer was not punitive but a measure to enforce discipline and address administrative exigencies. The High Court, however, viewed the transfer as a penalty affecting seniority and promotional prospects of the employees.
4. Interpretation of FR 15 and FR 14-B:
The Fundamental Rules, specifically FR 15 and FR 14-B, were crucial in determining the legality of the transfer. The Court analyzed these rules to establish the conditions under which a government servant can be transferred, emphasizing the protection of pay and the exceptions for transfers due to inefficiency or misbehavior.
5. Use of the term 'undesirable' in transfer order:
The term 'undesirable' in the transfer order raised questions about the need for an inquiry before effecting the transfer. The Court clarified that not all cases involving the term 'undesirable' require a formal inquiry, especially when the transfer is aimed at maintaining discipline and decorum in public service.
6. Impact on seniority and promotional prospects:
The High Court's concern about the transfer affecting seniority and promotional prospects was addressed by highlighting that the transfer was within the same circle, minimizing any adverse impact on seniority. The Court emphasized that such issues could be addressed separately if necessary.
7. Authority to enforce discipline through transfer:
The Court reiterated that the authority to transfer employees in public interest or administrative exigencies lies with the employer to maintain discipline and efficiency in public service. Interference by courts should be limited unless there are mala fide intentions or statutory violations.
8. Necessity of holding an inquiry before transfer:
The Court clarified that for transfers aimed at enforcing discipline or addressing administrative needs, an elaborate inquiry into employee behavior may not be necessary. Prima facie satisfaction of the authority based on contemporaneous reports suffices for such transfers.
9. Prima facie satisfaction for transfer:
The Court emphasized that the decision to transfer employees should be based on prima facie satisfaction of the authority regarding the need for transfer in public interest or administrative exigencies. The judgment of the High Court was set aside, and the writ petitions were dismissed.
Overall, the Supreme Court allowed the appeals, highlighting the importance of maintaining discipline and decorum in public service through transfers while upholding the authority of the employer to make such decisions in the interest of public service.
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2004 (2) TMI 699
Issues: Petitioner seeking installment fixation by High Court under Article 226 of the Constitution.
Analysis:
The judgment by the Allahabad High Court, delivered by Justices M. Katju and R. Tripathi, addresses the issue of whether the High Court has the power to fix installments for a loan under Article 226 of the Constitution. The petitioner had taken a loan and requested the Court to fix installments. The Court noted that the power to fix installments or grant one-time settlement lies with the Bank or Financial Institution that granted the loan, not with the High Court. Fixing installments is considered as rescheduling the loan, a contractual matter beyond the High Court's writ jurisdiction. The Court emphasized that the High Court cannot interfere with contractual matters and should exercise judicial restraint in such cases.
Furthermore, the judgment highlights the limitations on the power of the High Court to issue writs under Article 226 of the Constitution. While Article 226 seemingly grants wide powers to issue writs for any purpose, the Court clarified that there are well-established limitations. The Court cited examples such as not issuing writs for granting divorces or enforcing contracts between private parties. The interpretation of Article 226 is based on traditional principles followed by British Courts, where writs were issued for specific purposes like correcting errors of law or enforcing legal rights or duties.
Moreover, the judgment explains that Article 226 allows writs to be issued to specific entities and for particular purposes based on judicial interpretation. Writs, except habeas corpus, are generally issued to the State or its instrumentalities, not to private individuals. The Court referred to previous cases to support this interpretation. The judgment emphasizes the importance of adhering to established principles when issuing writs and maintaining a restricted interpretation of Article 226.
In conclusion, the Allahabad High Court dismissed the petitioner's request to fix installments, stating that the High Court lacks the authority to do so under Article 226. However, if the petitioner had deposited any amount with the Bank, it should be adjusted accordingly. The judgment underscores the need for the High Court to respect the boundaries of its jurisdiction and refrain from intervening in contractual matters that fall outside its purview.
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2004 (2) TMI 698
Issues Involved:
1. Deletion of addition on account of low withdrawals for household expenses.
2. Deletion of addition on account of unexplained investment in purchase of agricultural land.
3. Deletion of addition on account of unexplained investment in money lending.
4. Deletion of addition on account of unexplained investment in purchase of plots.
5. Relief on account of marriage expenses.
6. Deletion of addition on account of unexplained investment in purchase of land.
7. Deletion of addition on account of unexplained investment in purchase of agricultural land.
8. Deletion of addition on account of unexplained investment in purchase of land from various individuals.
9. Deletion of addition on account of unexplained cash found during search.
10. Deletion of addition on account of gold ornaments found during search.
11. Deletion of addition on account of valuation of ornaments.
12. Deletion of addition on account of estimated profit on sale of gold ornaments and job charges.
13. Deletion of addition on account of gold ornaments and Chandra Haar based on slips found during search.
14. Deletion of addition on account of investment in proprietary business.
15. Deletion of addition on account of investment in money lending business.
16. Deletion of addition on account of investment in purchase of land from Sh. Tara Chand.
17. Deletion of addition on account of alleged investment in properties based on statement u/s 132(4).
18. Non-allowing of set off/credit of various amounts.
Summary of Judgment:
1. Deletion of Addition on Account of Low Withdrawals for Household Expenses:
The Tribunal upheld the deletion of the addition of Rs. 2,00,391 made by the Assessing Officer on account of low withdrawals for household expenses. It was noted that no incriminating evidence suggesting higher household expenses was found during the search.
2. Deletion of Addition on Account of Unexplained Investment in Purchase of Agricultural Land:
The Tribunal upheld the deletion of additions totaling Rs. 1,14,000 (Rs. 69,000 + Rs. 30,000 + Rs. 15,000) made by the Assessing Officer on account of unexplained investment in agricultural land. The documents on which the additions were based were only Xerox copies, and no original sale deeds were found during the search.
3. Deletion of Addition on Account of Unexplained Investment in Money Lending:
The Tribunal upheld the deletion of the addition of Rs. 68,000 made by the Assessing Officer on account of unexplained investment in money lending. It was noted that the document in question showed that the assessee received Rs. 68,000 from Shri Chattar Singh and delivered gold ornaments worth Rs. 34,500, with a balance of Rs. 33,500 remaining due.
4. Deletion of Addition on Account of Unexplained Investment in Purchase of Plots:
The Tribunal upheld the deletion of the addition of Rs. 50,000 made by the Assessing Officer on account of unexplained investment in purchase of plots in the names of Smt. Uma and Shri Shiv Prakash Soni. The documents found were only Xerox copies, and no original sale deeds were found during the search.
5. Relief on Account of Marriage Expenses:
The Tribunal upheld the relief of Rs. 1,00,000 granted by the CIT(A) out of the addition of Rs. 3,00,000 made by the Assessing Officer on account of marriage expenses. The Tribunal also upheld the sustenance of the addition of Rs. 57,872 over and above Rs. 1,92,128 shown by the assessee.
6. Deletion of Addition on Account of Unexplained Investment in Purchase of Land:
The Tribunal upheld the deletion of the addition of Rs. 50,000 made by the Assessing Officer on account of unexplained investment in purchase of land based on Annex. A-6/pages 10 to 12.
7. Deletion of Addition on Account of Unexplained Investment in Purchase of Agricultural Land:
The Tribunal upheld the deletion of the addition of Rs. 18,58,000 made by the Assessing Officer on account of unexplained investment in purchase of agricultural land measuring 45 Bighas.
8. Deletion of Addition on Account of Unexplained Investment in Purchase of Land from Various Individuals:
The Tribunal upheld the deletion of the addition of Rs. 25,25,000 made by the Assessing Officer on account of investment in land due to payment made to six individuals.
9. Deletion of Addition on Account of Unexplained Cash Found During Search:
The Tribunal upheld the deletion of the addition of Rs. 80,000 made by the Assessing Officer on account of unexplained cash found at the time of search. The cash balance as per seized books was Rs. 82,250, which matched the cash found.
**10. Deletion of Addition on Account of Gold Ornaments Found During Search:
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2004 (2) TMI 697
Issues:
1. Validity of cross-objections filed by the legal representative of the assessee.
2. Compliance with the provisions of Sec. 253(4) regarding the filing of cross-objections.
3. Notice requirements and service on the appellant.
4. Consideration of cross-objections even if the appeals are withdrawn.
Analysis:
Issue 1: Validity of Cross-objections
The legal representative of the assessee filed cross-objections against the order of the Commissioner of Income Tax (Appeals), which were later dismissed by the Tribunal as barred by limitation. The appellant contended that the cross-objections were filed in time as she only became aware of the pending appeals after her counsel noticed her name being called out during a Tribunal hearing. The Tribunal held that the cross-objections were time-barred as they were filed in October 2001, while they should have been filed in July 1993 based on the date of receipt of Form No. 36 and grounds of appeal. The High Court found the Tribunal's decision unsustainable and allowed the appeals, setting aside the order of the Tribunal regarding the dismissal of cross-objections.
Issue 2: Compliance with Sec. 253(4)
The Tribunal based its decision on Sec. 253(4) of the Act, stating that cross-objections should have been filed within 30 days from the date of receipt of Form No. 36 and grounds of appeal. The appellant argued that the limitation for filing cross-objections starts upon the receipt of notice. The High Court agreed with the appellant, emphasizing that no notice was issued or served on the appellant until October 2001, which was after her counsel took notice during a Tribunal hearing in February 2001. The Court concluded that the cross-objections were filed in time and criticized the Tribunal for overlooking this crucial aspect.
Issue 3: Notice Requirements and Service
The High Court scrutinized the records of the appeals and found discrepancies in the issuance and service of notices to the appellant. Despite dispatching a notice in 1993 to the deceased assessee, the appellant, as the legal representative, did not receive any notice until October 2001. The Court highlighted that the notice requirements under Sec. 253(4) were not fulfilled, as no notice was issued or served on the appellant in a timely manner. The Court deemed the dismissal of cross-objections by the Tribunal as unjustified due to the lack of proper notice and service.
Issue 4: Consideration of Cross-objections
The High Court emphasized the principle behind Order 41 Rule 22 of the CPC, which allows the continuation of cross-objections even if the appeals are withdrawn. In this case, the Revenue withdrew its appeals, but the legal representative of the assessee sought to continue the cross-objections. The Court acknowledged the applicability of this principle and allowed the appeals, remitting the matters to the Tribunal for the hearing and disposal of the cross-objections filed by the appellant in accordance with the law.
In conclusion, the High Court ruled in favor of the legal representative of the assessee, highlighting the importance of proper notice, compliance with statutory provisions, and the continuation of cross-objections even in the event of appeal withdrawals.
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2004 (2) TMI 696
... ...
... ... ..... nnected papers. We do not find any merit in the Review Petitions. The Review Petitions are dismissed accordingly.
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2004 (2) TMI 695
Issues:
Challenge to imposition of personal penalty under Sections 76 and 77 of the Finance Act, 1994.
Analysis:
The appellant challenged the imposition of personal penalty under Sections 76 and 77 of the Finance Act, 1994. The advocate for the appellant argued that although the service tax was paid voluntarily, recent Tribunal judgments suggested it was not payable. However, it was acknowledged that the issue of whether consulting engineering services are subject to service tax was not raised before the lower authorities. The Tribunal had previously ruled in cases like Daelim Industrial Co. and Larsen & Toubro Ltd. that certain engineering services should not be taxed. The matter was remanded to the original adjudicating authority to re-examine the contracts in light of these decisions and make a fresh decision. The impugned order was set aside, and the appeals were allowed on these grounds.
This judgment highlights the importance of legal precedents in tax matters and the need for a thorough examination of the facts and applicable law before imposing penalties. It also emphasizes the role of the adjudicating authority in re-evaluating decisions based on new legal interpretations provided by higher courts or tribunals.
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2004 (2) TMI 694
Issues:
1. Whether the provision for bad and doubtful debts is deductible from book profits under section 115J of the Income Tax Act?
2. Whether the provision for bad and doubtful debts was towards specific debts and not a contingent liability?
3. Whether the addition of the provision for bad and doubtful debts was a prima facie error rectifiable under section 154 of the Income Tax Act?
Analysis:
1. The assessee initially filed a return showing an income of Rs. 16,33,760, which was accepted by the Revenue under section 143(1)(a) of the Income Tax Act. Subsequently, the Assessing Officer (AO) rectified the intimation by adding a provision for bad and doubtful debts of Rs. 5,93,514 to the taxable income. The Commissioner of Income Tax (Appeals) directed the AO to delete this addition, but the Department appealed to the Tribunal, which allowed the appeal.
2. The Tribunal considered whether the provision for bad and doubtful debts was deductible from book profits while computing the deduction under section 115J of the Income Tax Act. It was argued that if the amount was an ascertained liability, it could not be added to the net profit as per section 115J(1A). Since this aspect was not examined by the AO, the Tribunal remitted the matter back to the AO to consider it, allowing the assessee to present necessary materials.
3. The Tribunal also deliberated on whether the provision for bad and doubtful debts was specific to certain debts and not a contingent liability. The Tribunal set aside the orders and directed the AO to reevaluate the nature of the provision, emphasizing the importance of determining whether the provision was towards specific debts or a contingent liability in the computation of book profits under section 115J.
4. Lastly, the Tribunal addressed the issue of whether the addition of the provision for bad and doubtful debts was a prima facie error rectifiable under section 154 of the Income Tax Act. The Tribunal concluded that further examination by the AO was necessary to determine the nature of the provision and its impact on the computation of taxable income, highlighting the need for a detailed assessment before making any adjustments to the returned income.
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2004 (2) TMI 693
Issues involved:
1. Modvat credit on inputs used in the manufacture of exempted products.
2. Recognition of ghee and husk as by-products.
3. Recovery mechanism under Rule 57CC(1).
Detailed Analysis:
Issue 1: Modvat credit on inputs used in the manufacture of exempted products.
The case involved M/s. GlaxoSmithKline Consumer Healthcare Limited appealing against an Order-in-Original passed by the Commissioner of Central Excise, Visakhapatnam. The appellants were availing Modvat credit on inputs like Hydrochloric Acid, caustic Soda Lye, and Malted barley, which were common inputs for the manufacture of dutiable products like Horlicks and exempted products like ghee and husk. The dispute arose as the appellants did not maintain separate accounts for the inputs used in exempted products. The Commissioner demanded an amount under Rule 57CC(1) for failure to maintain separate records, and a penalty was imposed under Rule 173Q(1)(bb) for non-compliance.
Issue 2: Recognition of ghee and husk as by-products.
The appellants argued that ghee and husk were by-products in the manufacturing process of Horlicks and should be treated similarly. They contended that ghee, recognized as a by-product by the Government of India, should not be subject to Rule 57CC. They cited previous Tribunal decisions supporting their stance and emphasized that once the Modvat credit on inputs was reversed, Rule 57CC should not apply.
Issue 3: Recovery mechanism under Rule 57CC(1).
The appellants argued that there was no specific provision for recovery under the Central Excise Act or Rules for the amount demanded under Rule 57CC(1). They relied on judicial precedents and circulars to support their claim that in the absence of a recovery mechanism, the demand raised could not be enforced. The appellants also highlighted that they had reversed the Modvat credit on the disputed inputs before the issuance of the Show Cause Notice, which, according to them, negated the applicability of Rule 57CC.
The Tribunal, after considering the submissions, found that the appellants had debited the Modvat credit on the inputs in question before the issuance of the Show Cause Notice. Citing relevant case law and the absence of a recovery mechanism, the Tribunal set aside the Commissioner's order and allowed the appeal, stating that the demand for 8% duty on ghee was not applicable in this case.
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2004 (2) TMI 692
Issues:
1. Condonation of delay in filing appeal before the Customs, Excise and Gold (Control) Appellate Tribunal.
2. Application of principles of natural justice in considering sufficient cause for delay.
3. Finality of an order and re-agitation of issues based on subsequent decisions.
4. Jurisdiction of the High Court in matters of condonation of delay and appeal decisions.
Analysis:
1. The petitioner filed a writ petition under Articles 226 and 227 of the Constitution to challenge the rejection of their appeal and condonation of delay application by the Customs, Excise and Gold (Control) Appellate Tribunal. The Tribunal held that the applicant failed to show sufficient cause for not filing the appeal within the limitation period under the Central Excise Act, 1944. The Tribunal's satisfaction regarding the delay is crucial, and the High Court cannot substitute its satisfaction for that of the Tribunal.
2. The petitioner did not challenge the initial order of the Commissioner (Appeals) dated 14-3-2000, which led to a demand for duty payment. Subsequently, a Larger Bench decision favored the petitioner's position, prompting a refund application. However, the refund claim was rejected, and subsequent appeals were dismissed, leading to a demand notice for interest. The High Court observed that the Tribunal must consider the circumstances surrounding the delay in filing the appeal and cannot issue directions to the Tribunal in such matters.
3. The Tribunal's decision to reject the appeal was based on the petitioner's failure to demonstrate sufficient cause for the delay. The High Court emphasized that it does not sit as a Court of appeal and cannot substitute its views for those of the Tribunal unless there is perversity or jurisdictional error in the Tribunal's decision. The finality of the order dated 14-3-2000 was highlighted, indicating that the petitioner cannot re-agitate the issue based on subsequent decisions.
4. The High Court concluded that the petition challenging the Tribunal's order was not maintainable, and interference was not warranted unless there was perversity or jurisdictional error in the Tribunal's decision. As the order dated 14-3-2000 had attained finality due to the petitioner's conscious decision not to appeal, the High Court dismissed the petition, affirming the Tribunal's decision. The judgment underscores the importance of respecting the finality of orders and the jurisdictional boundaries of the High Court in such matters.
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2004 (2) TMI 691
Deduction u/s 80-IA - Income from the industrial undertakings - allowance of depreciation - Whether in the case of an assessee who has claimed deduction under Chapter VI-A of the IT Act, depreciation can be thrust upon him by the Assessing Officer even through not claimed by the assessee.
HELD THAT:- From the record, it is clear that if the assessee has not claimed depreciation, the same cannot be allowed while computing the gross total income. The principles of interpretation for computing gross total income cannot be different while computing the gross total income in a case where deduction under Chapter VI-A is claimed. As mentioned, the depreciation is not allowable and cannot be thrust upon the assessee u/s 32 if no claim has been put by the assessee. The same rule shall apply while computing gross total income for the purpose of section 80- IA. This view is further strengthened by the fact that Explanation 5 has been inserted u/s 32 by the Finance Act, 2001 w.e.f. 1-4-2002. This Explanation provides that section 32 shall apply whether or not the assessee has claimed the deduction in respect of depreciation, in computing his total income. It has been held by the Courts that Explanation 5 is prospective in operation and will therefore apply for the assessment year 2002-03 and subsequent years.
Thus, we hold that the ld. CIT(A) was not justified in confirming the Assessing Officer’s action in allowing depreciation which has not been claimed by the assessee. The Assessing Officer is, therefore, directed not to allow depreciation.
In the result, the assessee’s appeal stands partly allowed.
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2004 (2) TMI 690
Revocation of special leave granted in the civil appeal on the ground of res judicata - Review petition - mistakes apparent on the face of the record - maintainability of the appeal - Enhancement of compensation for land acquisition - Government land and tea estate's land - whether the High Court's judgment dismissing the review petition is sustainable - HELD THAT:- The review petition in the instant case was filed on 29.7.1998, while the special leave petition against the main judgment of the High Court was itself filed on 16.10.1998. It was in these circumstances that this Court was persuaded to grant leave in the matter. We see no substance in the contention urged as to the non-maintainability of the appeal.
It would be seen that even according to the State Government, if the land was unfit for cultivation and comprised only rocky areas, sandy areas or jaldube areas, the amount of compensation payable was at the rate of ₹ 40,000/- per bigha . As against this, the Collector was directed to fix the compensation at the rate of ₹ 7,000/- per bigha and the District Judge enhanced it to ₹ 22,000/- per bigha . Surely, the tea estate land was much more valuable than "land unfit for cultivation". It is nobody's case that the tea estate's land was uncultivated or that there were no tea bushes growing thereupon.
Unfortunately, the High court while considering the question of initial compensation amount fixed by the State Government as ₹ 55,000/- per bigha , has treated it as an issue of promissory estoppel and has held against the appellant. Irrespective of whether it is a situation of promissory estoppel or not, the fact that the State Government itself had accepted ₹ 55,000/- per bigha of tea class land as appropriate compensation ought to have been a factor which would have influenced the fixing the compensation for the land. The letter written by the Deputy Commissioner referring to an earlier order dated 20th June 1990, fixing category-wise valuation of different categories of land was just brushed aside on the ground that it did not amount to evidence under Section 3 of the Indian Evidence Act, 1872. Having lost sight of the material on record, the High Court concluded, "there is no material available on record to hold that the land in question falls within a rural area with paddy field and tea cultivation area", which is directly contrary to the Jamabandhi report, which classified the land as 'tea class land'.
The cumulative effect of all this evidence is that, we are satisfied that the High Court in fairness and in the interest of justice, ought to have given a second look to its own judgment dated 24.6.1998.
In the result, we allow the appeal, set aside the judgment of the High Court under appeal and remit the Review Application to the High Court for hearing and disposal, in accordance with law.
I.A. is dismissed.
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2004 (2) TMI 689
Whether the judgment of the High Court holding that the revisional power as vested in the state government under rule 13 of the U.P. Rules of 1999 shall be available in respect of the employees of the Corporation is erroneous and not sustainable?
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