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Showing 401 to 420 of 1456 Records
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2024 (1) TMI 1056
Disallowance of Cenvat credit - residential telephones provided to employees - HELD THAT:- This issue is no longer res integra as the tribunal, Kolkata in the case of M/S INDIAN BANK VERSUS COMMISSIONER OF SERVICE TAX, KOLKATA [2023 (9) TMI 569 - CESTAT KOLKATA] has allowed the Cenvat Credit on telephone bills in respect of the telephones which were installed at the residence of employees - As per the definition of 'input services' during the material period, all activities relating to business should qualify as ‘input service’ within its ambit. Thus, by relying on the definition of 'input services' and the decision of the Tribunal Kolkata, it is held that the appellant is eligible for the Cenvat Credit of service tax paid on telephone bills in respect of the telephones installed at the residence of employees. Accordingly, we set aside the demand of Rs. 15,95,552/- confirmed in the impugned order.
Demand pertaining to services rendered to mutual fund operators, which has already paid by the Appellant - HELD THAT:- The Appellant could not produce any evidence regarding the payment of interest for the delay in payment of this amount. Accordingly, out of the demand of Rs.21,65,286/-, the demand of Rs.15,95,552/- is set aside and the confirmation of the demand of Rs.5,69,734/- is upheld. The matter is remanded back to the adjudicating authority for the limited purpose of payment of interest for the delay in payment of this amount of service tax of Rs.5,69,734/.
Demand of service tax (including Education Cess and Secondary and Higher Education Cess) of Rs. 9,60,92,082/- under Banking and other Financial Services - HELD THAT:- As a part of its normal banking activities, the Appellant invests in various government securities. Such investments in government securities are undertaken to comply with the requirements of maintaining the CRR and SLR as per the directives of Reserve Bank of India (RBI) issued from time to time. On several occasions, the Appellant purchases and sells these securities at cum-interest price. Thus, it is found that the Appellant pays and receives interest at the time of purchase and sale of securities respectively. It is observed that there is no element of service involved in purchases and sales of Govt. securities which is purely an investment activity - no service tax can be levied on interest income pertaining to investment made in Govt. securities and the demand confirmed in the impugned order on this count is liable to be set aside.
Appropriation of Rs. 4,67,42,500/- against the aforesaid demand of Rs. 9,60,92,082/- - HELD THAT:- The demand itself has been held as not sustainable. Hence, the question of appropriation, if any, does not arise. Accordingly, the Appellant would be eligible for the consequential benefit of appropriation made against the said demand.
Penalty imposed under Section 76 of the Finance Act, 1994 - HELD THAT:- As the delay in payments were unintentional and the Appellant always paid the service tax voluntarily with interest acting with bonafide belief, it is held that penalty imposed under Section 76 on this count is not justified. Thus, this is a fit case for invoking Section 80 of the Finance Act 1994 to waive the penalty. Therefore, the penalty imposed under Section 76 in the impugned order is set aside by invoking the provisions of Section 80 of the Finance Act, 1994.
Penalty imposed under section 78 of the Finance Act, 1994 - HELD THAT:- It is observed that penalty under this Section can be imposed only under exceptional circumstances marked by fraud, collusion, willful misstatement, suppression of facts, contravention of any of the provisions of the Act or Rules, made there under with the intent to evade payment of service tax. As none of the said conditions justifying the imposition of penalty under Section 78 exists in the instant case, the penalty imposed under section 78 of the Finance Act, 1994 is not sustainable and the same is set aside.
Appeal disposed off.
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2024 (1) TMI 1055
Demanded of interest for the delayed payment of education cess, but refrained from vacating the protest for payment of differential duty. - third time cess payable on clearance of imported goods from 100% EOU to DTA - Principles of natural justice - HELD THAT:- It is very clear that the appellant has deposited the money primarily to buy peace with the department. Hence the amount has been paid ‘under protest’ so that his disagreement on the issue is registered with the department and the amount remains protected from being hit by time bar at a later stage while seeking a refund. In such a situation it was incumbent on the part of the department to vacate the protest through a speaking order at the earliest, after following the procedure as prescribed and following the principles of natural justice. This is because the amount deposited by the Appellant in good faith gets blocked until a decision is rendered in the matter which is a heavy cost for him. Its only after an order is passed vacating the protest that he can move forward by filing a refund claim, if the order is in his favour, or if held against him the Appellant can take up the matter in further appeal.
The Hon'ble Apex Court in THE STATE OF JHARKHAND AND ORS. VERSUS BRAHMPUTRA METALLICS LTD. AND ORS. [2020 (12) TMI 1241 - SUPREME COURT] held that a decision taken in an arbitrary manner contradicts the principle of legitimate expectation. An authority is under a legal obligation to exercise the power reasonably and in good faith to effectuate the purpose for which power stood conferred.
The issue whether educational cess and secondary and higher education cess are chargeable on DTA clearance made by 100% EOU even if such cess were added while calculating the aggregate duties of customs payable under the Customs Act, 1962 or under any other law in force, has been answered by the Larger Bench of the Tribunal in KUMAR ARCH TECH PVT LTD VERSUS COMMISSIONER OF CENTRAL EXCISE, JAIPUR-II [2013 (4) TMI 482 - CESTAT NEW DELHI - LB] where it was held that the education cess and S&H cess would be chargeable only once under Section 93 of Finance Act, 2004 and Section 138 of Finance Act, 2007 on the sum of basic customs duty and Additional customs duty.
The impugned order set aside - appeal allowed.
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2024 (1) TMI 1054
Non-compliance of the mandatory provisions laid down under Rule 63(5) of the U.P. V.A.T. Rules, 2008 read with Section 57(8) of the U.P. V.A.T. Act, 2008 - manner and procedure of appeal / summary disposal - whether principle of best judgement assessment can be resorted to on the basis of presumption and surmises, without any material on record or not? - HELD THAT:- From perusal of Section 57 of the Act, 2008 it emerges that the same pertains to Commercial Tax Tribunal. Section 57(5) of the Act 2008 provides that the manner and procedure of summary disposal of appeal shall be as may be prescribed. Section 57(8) of the Act, 2008 provides that the Tribunal after calling for and examining the relevant records and after giving the parties reasonable opportunity of being heard or as the case may be after following the procedure prescribed in Section 57(8)(a) of the Act, 2008 may confirm, cancel or vary such order or (b) set aside the order and direct the assessing or appellate or revising authority or the Commissioner to pass a fresh order or (c) order such amount of tax, fee etc realized in excess to be refunded - the provisions of Order 41 Rule 31 Code of Civil Procedure are akin to Rule 63(5) of the Rules 2008.
From perusal of the judgement of this Court in the case of Ved Ram [2004 (7) TMI 704 - ALLAHABAD HIGH COURT] it emerges that this Court has held the provisions of Order 41 Rule 31 Code of Civil Procedure to be mandatory and that the first appellate court while delivering the judgement is required to set out the points for determination, record the decision thereon and give its own reason for the said decision.
This Court has further held that failure to comply with these provisions would not be a mere irregularity but would render the judgement nugatory.
Accordingly, when the impugned judgement of learned Tribunal is seen in the context of the law laid down by this Court in the case of Ved Ram vis a vis the provisions of Section 57(8) and Section 57(5) of the Act, 2008 read with Rule 63(5) of the Rules, 2008 it clearly emerges that learned Tribunal has patently erred in neither noting the points for determination nor giving the reason for such decision thereon.
The order impugned dated 19.03.2008 is set aside - the revision is allowed.
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2024 (1) TMI 1053
Jurisdiction - Power of DRI to issue Show Cause Notice (SCN) - HELD THAT:- It is not in dispute that the issue involved in the present petition would also stand covered by the decision of the Supreme Court in the case of M/S CANON INDIA PRIVATE LIMITED VERSUS COMMISSIONER OF CUSTOMS [2021 (3) TMI 384 - SUPREME COURT], which is the subject matter of pending review proceedings in the Supreme Court. It is enough say that the proceedings are pending in the Supreme Court.
As and by way of ad-interim relief, the impugned order is stayed, with liberty to the Respondents to make an application for vacating of the said order in the event the Respondents are of the opinion that the same ought not to be continued and / or after the decision of the Supreme Court in the pending Review / Writ Petition in the case of Canon India Pvt. Ltd.
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2024 (1) TMI 1052
Refund in respect of unutilised Input Tax Credit (ITC) - time limitation - HELD THAT:- The refund claim of the petitioner was made within the period of limitation prescribed by statute. As regards the entitlement of the petitioner to refund, such entitlement has to be determined not only with reference to Section 54 of the CGST Act read with Rule 89 thereof, but also by examining relevant documents relating to untilised ITC and exports. This exercise cannot be undertaken in exercise of discretionary jurisdiction under Article 226 of the Constitution of India.
The appellate authority concluded that the refund claim can only be made with regard to a specific calendar month. This conclusion is contrary both to statutory prescription and Circular No.37. Therefore, the order impugned is unsustainable and is hereby quashed - it does not follow from the conclusion that the refund claim is within the time limit specified by statute that the petitioner is entitled to refund. Such entitlement should be established by the petitioner with reference to relevant documents and applicable provisions. For such purpose, the matter is remanded to the 2nd respondent.
Petition disposed off way of remand.
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2024 (1) TMI 1051
Validity of assessment order - difference in outward taxable turnover between GSTR-3B, GSTR- 1 and e-way bills - petitioner is unable to produce documentary evidence in support of movement of goods and payment details - HELD THAT:- When reply dated 07.01.2023 and 03.07.2023 are considered cumulatively, it follows that the petitioner informed the respondent that he is unable to reply to defect no.2 and the circular trading defect on account of non availability of relevant documents. The impugned order also records that the petitioner could not respond to these defects as a result of non availability of documents - In exercise of discretionary jurisdiction, interference is warranted in this case because the non availability of documents, for reasons outlined above, impacted two out of the three defects in respect of which an order adverse to the petitioner was issued. Therefore, solely with a view to provide an opportunity to the petitioner to respond to these defects, the impugned order calls for interference.
The impugned orders are quashed and the matter is remanded for re-consideration. The petitioner shall submit all relevant documents within a maximum period of three weeks from the date of receipt of a copy of this order.
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2024 (1) TMI 1050
Levy of GST - payment of performance linked incentives to two persons who held office as whole time directors of the company - discrepancies relating to E-way bills - Suppression of purchases by not availing of available Input Tax Credit (ITC) - HELD THAT:- The expenditure incurred by the petitioner towards remuneration and performance based incentives would have been reflected in the profit and loss account of the petitioner for the relevant financial years. The petitioner asserts that TDS was deducted under Section 192 and not Section 194-J of the Income Tax Act. The deduction of tax under Section 192 is a material fact, but is not conclusive. Ultimately, the test is whether such remuneration was paid towards services provided as an employee of the company or whether services were provided under a contract for service for fees or other consideration.
Suppression of purchases by not availing of available Input Tax Credit (ITC) - Held That: - the petitioner contended that ITC was not claimed on account of ineligibility. By referring to discrepancies as between the different returns, the proposed liability was partly confirmed and partly dropped.
The orders impugned herein were not issued after taking the relevant aspects into consideration. It is also possible that the petitioner did not place on record all relevant documents. In these circumstances, the impugned orders are not sustainable and are hereby quashed.
These matters are remanded for reconsideration by the assessing officer. The petitioner is granted leave to place on record any additional documents with regard to all issues dealt with in the impugned orders - Petition disposed off.
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2024 (1) TMI 1049
Blocking of Input Tax Credit - Input Tax Credit (ITC) - Goods purchased from the supplier whose gst registration was cancelled with retrospective effect - the supplier was found to be non-existent and not conducting business. - The petitioner contested this, providing invoices, e-way bills, and bank statements as proof of genuine transactions. - HELD THAT:- In view of the production of invoices, e-way bills and proof of payment of invoices in the form of the relevant bank statements, the above conclusion cannot be sustained. Therefore, the impugned order warrants interference. The impugned order also calls for interference because the petitioner was not put on notice that the goods dealt with by the petitioner are different from those dealt with by its supplier, but a finding was recorded on this issue in the impugned order.
The impugned order is liable to be quashed for not duly considering the documentary evidence placed on record by the petitioner to establish that the purchases were genuine. Hence, the impugned order is quashed. As a corollary, the matter is remanded for reconsideration by the assessing officer. The petitioner is granted leave to submit any additional documents within ten days from the date of receipt of a copy of this order.
Petition disposed off.
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2024 (1) TMI 1048
Refund claim - Transaction for export of services or not - Zero rated supply - opportunity of hearing not provided - violation of principles of natural justice - HELD THAT:- The principles of natural justice would require that Respondent No. 4, which is the Appellate Authority which has to decide the said Appeals and pass orders therein, must give a personal hearing to the Petitioner in the said Appeals. In these circumstances, since the Petitioner has not been given a personal hearing in the said Appeals by Respondent No. 4, it is necessary that Respondent No. 4 should be directed to give a personal hearing to the Petitioner before passing any Order in the said Appeals.
Further, even if a statute does not prescribe the time within which the Order is required to be passed by the Appellate Authority, such an Order must be passed within a reasonable period of time. In the present case, the said Appeals have been filed by the Petitioner in 2019, 2020 and 2021. Even considering the disruption caused by the COVID-19 Pandemic, Respondent No. 4 ought to have passed Orders in the said Appeals by now. Failure of the Respondent No. 4 to pass orders in the said Appeals within a reasonable period of time would cause prejudice to the Petitioner - as sought by the Petitioner, Respondent No. 4 will have to be directed to decide the said Appeals within a fixed period of time.
Respondent No. 4 is ordered and directed to pass orders in the said Appeals within a period of six weeks from the date this Order is intimated to Respondent No. 4 after giving the Petitioner an opportunity of personal hearing in each of the said Appeals - Petition disposed off.
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2024 (1) TMI 1047
Cancellation of GST registration of the petitioner with retrospective effect - vague SCN - no opportunity to even object to the retrospective cancellation - violation of principles of natural justice - HELD THAT:- There is no material on record to show as to why the registration is sought to be cancelled retrospectively - Further, the Show Cause Notice also does not put the petitioner to notice that the registration is liable to be cancelled retrospectively. Accordingly, the petitioner had no opportunity to even object to the retrospective cancellation of the registration.
Therefore, both the show cause notices and the impugned order are bereft of any reasoning and particulars and are accordingly not sustainable.
Registration cannot be cancelled with retrospective effect mechanically. It can be cancelled only if the proper officer deems it fit to do so. Such satisfaction cannot be subjective but must be based on some objective criteria. Merely, because a taxpayer has not filed the returns for some period does not mean that the taxpayer’s registration is required to be cancelled with retrospective date also covering the period when the returns were filed and the taxpayer was compliant.
The Show Cause Notice as well as the Impugned Order are set aside and the registration is restored. Petitioner shall file the requisite returns upto date.
Petition disposed off.
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2024 (1) TMI 1046
Cancellation of GST registration of the petitioner with retrospective effect - vague SCN - no opportunity to even object to the retrospective cancellation - violation of principles of natural justice - HELD THAT:- There is no material on record to show as to why the registration is sought to be cancelled retrospectively - Further, the Show Cause Notice also does not put the petitioner to notice that the registration is liable to be cancelled retrospectively. Accordingly, the petitioner had no opportunity to even object to the retrospective cancellation of the registration.
Therefore, both the show cause notices and the impugned order are bereft of any reasoning and particulars and are accordingly not sustainable.
Registration cannot be cancelled with retrospective effect mechanically. It can be cancelled only if the proper officer deems it fit to do so. Such satisfaction cannot be subjective but must be based on some objective criteria. Merely, because a taxpayer has not filed the returns for some period does not mean that the taxpayer’s registration is required to be cancelled with retrospective date also covering the period when the returns were filed and the taxpayer was compliant.
The Show Cause Notice as well as the Impugned Order are set aside and the registration is restored. Petitioner shall file the requisite returns upto date.
Petition disposed off.
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2024 (1) TMI 1045
Cancellation of GST registration of the petitioner with retrospective effect - vague SCN - no opportunity to even object to the retrospective cancellation - violation of principles of natural justice - HELD THAT:- There is no material on record to show as to why the registration is sought to be cancelled retrospectively - Further, the Show Cause Notice also does not put the petitioner to notice that the registration is liable to be cancelled retrospectively. Accordingly, the petitioner had no opportunity to even object to the retrospective cancellation of the registration.
Therefore, both the show cause notices and the impugned order are bereft of any reasoning and particulars and are accordingly not sustainable.
Registration cannot be cancelled with retrospective effect mechanically. It can be cancelled only if the proper officer deems it fit to do so. Such satisfaction cannot be subjective but must be based on some objective criteria. Merely, because a taxpayer has not filed the returns for some period does not mean that the taxpayer’s registration is required to be cancelled with retrospective date also covering the period when the returns were filed and the taxpayer was compliant.
The Show Cause Notice as well as the Impugned Order are set aside and the registration is restored. Petitioner shall file the requisite returns upto date.
Petition disposed off.
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2024 (1) TMI 1044
Maintainability of appeal - appeal rejected solely on the ground of limitation - non-service of order-in original - violation of principles of natural justice - HELD THAT:- Since the admitted position is that petitioner was not served with the Order-in-Original till 07.03.2023, the limitation for filing the appeal would commence from the date of service i.e. 07.03.2023. Limitation for filing an appeal is 90 days and the Order-in-Appeal shows that the appeal was filed on 22.05.2023. The appeal was accordingly within the period of limitation computed from 07.03.2023.
The impugned Order-in-Appeal dated 14.07.2023 is set aside. The appeal is restored to its original number on the records of the Commissioner (Appeals) - Petition disposed off.
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2024 (1) TMI 1043
Validity of caution notice - calling upon to pay interest in respect of four assessment years - HELD THAT:- This writ petition is disposed of by directing the petitioner to pay the amounts demanded in the caution notice in three equal monthly installments. The first installment shall be paid on or before 31.01.2024, the second installment shall be paid on or before 29.02.2024 and the last installment shall be paid on or before 28.03.2024. It is clarified that it will be open to the respondent to take action in accordance with law in the event of default by the petitioner in making payments as per the above schedule.
Petition closed.
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2024 (1) TMI 1042
Validity of reopening of assessment - reopening beyond period of four years - reason to believe - significant increase in the current and capital accounts of the partners of the assessee - whether reopening of a concluded assessment i.e. reassessment under Section 147 following issuance of notice u/s 148 of the Act is legally sustainable or is bad in law? - High Court of Kerala in appeals filed by the revenue u/s 260A of the Act has reversed the findings of the Tribunal by deciding the appeals preferred by the revenue in its favour.
HELD THAT:- As prior to 01.04.1989, the income tax officer was required to have reason to believe that by reason of the omission or failure on the part of an assessee to make a return u/s 139 for any assessment year or to disclose fully and truly all material facts necessary for such assessment, income chargeable to tax had escaped assessment for that assessment year or the income tax officer had in consequence of information in his possession reason to believe that income chargeable to tax had escaped assessment for any assessment year, the income tax officer could reopen an assessment. But with effect from 01.04.1989, the requirement of law underwent a change.
Section 147 as it stood at the relevant point of time provides that if the assessing officer has reason to believe that any income chargeable to tax has escaped assessment for any assessment year, he may assess or re-assess such income and such other income which has escaped assessment and which comes to his notice subsequently in the course of proceedings u/s 147.
Section 148 says that before making an assessment, re- assessment etc. under Section 147, the assessing officer is required to issue and serve a notice on the assessee calling upon the assessee to file a return of his income in the prescribed form etc., setting forth such particulars as may be called upon.
Such a notice is subject to the time limit prescribed u/s 149. Under sub-Section (1)(b), no notice under Section 148 shall be issued in a case where an assessment under sub-section (3) of Section 143 or Section 147 has been made for such assessment year if seven years but not more than 10 years have elapsed from the end of the relevant assessment year unless the income chargeable to tax which has escaped assessment amounts to or is likely to amount to Rs. 50,000 or more for that year.
Meaning of term 'disclosure' - As per the P. Ramanatha Aiyar, Advanced Law Lexicon, Volume 2, Edition 6, ‘to disclose’ is to expose to view or knowledge, anything which before was secret, hidden or concealed. The word ‘disclosure’ means to disclose, reveal, unravel or bring to notice vide CIT Vs. Bimal Kumar Damani [2003 (2) TMI 49 - CALCUTTA HIGH COURT] The word ‘true’ qualifies a fact or averment as correct, exact, actual, genuine or honest. The word ‘full’ means complete. True disclosure of concealed income must relate to the assessee concerned. Full disclosure, in the context of financial documents, means that all material or significant information should be disclosed. Therefore, the meaning of ‘full and true disclosure’ is the voluntary filing of a return of income that the assessee earnestly believes to be true. Production of books of accounts or other material evidence that could ordinarily be discovered by the assessing officer does not amount to a true and full disclosure.
As decided in Calcutta Discount Company Limited [1960 (11) TMI 8 - SUPREME COURT] the words used in the expression “omission or failure to disclose fully and truly all material facts necessary for his assessment for that year” would postulate a duty on every assessee to disclose fully and truly all material facts necessary for his assessment though what facts are material and necessary for assessment would differ from case to case. On the above basis, this Court came to the conclusion that while the duty of the assessee is to disclose fully and truly all primary facts, it does not extend beyond this. This position has been reiterated in subsequent decisions by this Court including in Income Tax Officer Vs. Lakhmani Mewal Das [1976 (3) TMI 1 - SUPREME COURT] - The expression “reason to believe” has also been explained to mean reasons deducible from the materials on record and which have a live link to the formation of the belief that income chargeable to tax has escaped assessment. Such reasons must be based on material and specific information obtained subsequently and not on the basis of surmises, conjectures or gossip. The reasons formed must be bona fide.
Balance sheet of the assessee for the assessment year 1989-90 obtained from the South Indian Bank for obtaining credit relied upon - What the assessing officer did was to cull out the figures discernible from the balance sheet for the assessment year 1989-90 obtained from the South Indian Bank and compared the same with the balance sheet submitted by the assessee before the assessing officer for the assessment year 1993-94 and thereafter arrived at the aforesaid conclusion.
Assessee had filed its regular balance sheet as on 31.12.1985 while filing the return of income for the assessment year 1986-87. The next balance sheet filed was as on 31.03.1993 for the assessment year 1993-94. No balance sheet was filed in the interregnum as according to the assessee, it could not maintain proper books of account as the relevant materials were seized by the department in the course of a search and seizure operation and not yet returned. It was not possible for it to obtain ledger balances to be brought down for the succeeding accounting years.
As regards the balance sheet as on 31.03.1989 filed by the assessee before the South Indian Bank and which was construed by the assessing officer to be the balance sheet of the assessee for the assessment year 1989-90, the explanation of the assessee was that it was prepared on provisional and estimate basis and was submitted before the South Indian Bank for obtaining credit and therefore could not be relied upon in assessment proceedings. It appears that this balance sheet was also relied upon by the assessing officer in the re-assessment proceedings of the assessee for the assessment year 1989-90. In the first appellate proceedings, CIT(A) in its appellate order dated 26.03.2002 held that such profit and loss account and the balance sheet furnished to the South Indian Bank were not reliable and had discarded the same.
That being the position, the assessing officer could not have placed reliance on such balance sheet submitted by the assessee allegedly for the assessment year 1989-90 to the South Indian Bank for obtaining credit. Dehors such balance sheet, there were no other material in the possession of the assessing officer to come to the conclusion that income of the assessee for the three assessment years had escaped assessment.
Once the primary facts are disclosed by the assessee, the burden shifts onto the assessing officer. It is not the case of the revenue that the assessee had made a false declaration. On the basis of the “balance sheet” submitted by the assessee before the South Indian Bank for obtaining credit which was discarded by the CIT(A) in an earlier appellate proceeding of the assessee itself, the assessing officer upon a comparison of the same with a subsequent balance sheet of the assessee for the assessment year 1993-94 which was filed by the assessee and was on record, erroneously concluded that there was escapement of income and initiated reassessment proceedings.
Change of opinion - While framing the initial assessment orders of the assessee for the three assessment years in question, the assessing officer had made an independent analysis of the incomings and outgoings of the assessee for the relevant previous years and thereafter had passed the assessment orders under Section 143(3) of the Act. We have already taken note of the fact that an assessment order under Section 143(3) is preceded by notice, enquiry and hearing under Section 142(1), (2) and (3) as well as under Section 143(2). If that be the position and when the assessee had not made any false declaration, it was nothing but a subsequent subjective analysis of the assessing officer that income of the assessee for the three assessment years was much higher than what was assessed and therefore, had escaped assessment. This is nothing but a mere change of opinion which cannot be a ground for reopening of assessment.
Defective return filed - A return filed without the regular balance sheet and profit and loss account may be a defective one but certainly not invalid. A defective return cannot be regarded as an invalid return. The assessing officer has the discretion to intimate the assessee about the defect(s) and it is only when the defect(s) are not rectified within the specified period that the assessing officer may treat the return as an invalid return. Ascertaining the defects and intimating the same to the assessee for rectification, are within the realm of discretion of the assessing officer. It is for him to exercise the discretion. The burden is on the assessing officer. If he does not exercise the discretion, the return of income cannot be construed as a defective return. As a matter of fact, in none of the three assessment years, the assessing officer had issued any declaration that the returns were defective.
Assessee has asserted both in the pleadings and in the oral hearing that though it could not file regular books of account along with the returns for the three assessment years under consideration because of seizure by the department, nonetheless the returns of income were accompanied by tentative profit and loss account and other details of income like cash flow statements, statements showing the source and application of funds reflecting the increase in the capital and current accounts of the partners of the assessee etc., which were duly enquired into by the assessing officer in the assessment proceedings.
Thus, we are therefore of the view that the Tribunal was justified in coming to the conclusion that the reassessments for the three assessment years under consideration were not justified. The High Court has erred in reversing such findings of the Tribunal. Consequently, we set aside the common order of the High Court [2009 (10) TMI 230 - KERALA HIGH COURT] and restore the common order of the Tribunal - Decided in favour of assessee.
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2024 (1) TMI 1041
Right to Information (RTI) relating to assessee relating to income tax - supremacy of RTI or IT Act - information seeked regarding approval relating to PM CARES Fund was denied to the Respondent by the CPIO and the Appellate Authority on the ground that the information sought is exempted from disclosure u/s 8(1)(j) of the Right to Information Act, 2005 - as contented any information relating to any assessee relating to income tax can be sought for only in the manner prescribed u/s 138 of the Income Tax Act and not under the Right to Information Act, 2005 - also argument raised by the Petitioner is that the information sought for by the Respondent is exempted u/s 8(1)(j) of the RTI Act and in any event since the matter relates to PM CARES Fund, it could not have been disclosed without hearing the PM CARES Fund.
HELD THAT:- A reading of both the Acts shows that there is an inconsistency between the provisions of the RTI Act and the IT Act. Therefore, the question which arises for consideration is which Act will prevail.
Ordinarily, if there are two non-obstante clauses then the latter one prevails over the former. At the same time, the applicability and overriding effect of an Act over other statutes cannot be decided merely by when the concerned Act comes into force and it is for the Courts to discern and interpret as to which Act will prevail over the other. In the present case, in the opinion of this Court, the IT Act, which is a special Act governing all the provisions and laws relating to income tax and super-tax in the country will prevail over the RTI Act which is in the nature of a General Act.
Section 138 (1)(b) and Section 138 (2) of the IT Act which lays down a specific procedure relating to disclosure of information relating to a third party under the IT Act would override Section 22 of the RTI Act. The information sought for by the Respondent herein is clearly covered by Section 138(1)(b) of the IT Act. The satisfaction of Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner is, therefore, necessary before such information can be divulged. That satisfaction cannot be abrogated to any other authority under a general Act for divulging the information sought for. See SHRI RAKESH KUMAR GUPTA VERSUS INCOME TAX APPELLATE TRIBUNAL (ITAT) [2007 (12) TMI 547 - CENTRAL INFORMATION COMMISSION]
Thus Section 138(1)(b) of the IT Act which specifically states that information relating to an assessee can only be supplied subject to the satisfaction of Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner, as the case may be, would prevail over Section 22 of the RTI Act.
The information, as sought for by the Respondent herein, has been sought from the CPIO of Income Tax Department and not from the PM CARES Fund. The Petitioner herein does not treat PM CARES Fund as an authority. Since the information sought for by the Respondent relates to a third party, PM CARES Fund ought to have been heard. Section 11 of the RTI Act prescribes that any information related to a third party can only be divulged after giving notice to the said third party. In view of the above, the CIC ought to have followed the procedure specified under Section 11 of the RTI Act before ordering for grant of information as sought for by the Respondent herein.
Thus, this Court is of the view, that the CIC does not have the jurisdiction to direct furnishing of information, provided for in Section 138 of the IT Act. In any case, even if they had the jurisdiction, the failure to give PM CARES, notice of hearing, would in itself have vitiated the impugned. WP allowed.
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2024 (1) TMI 1040
Reopening of assessment u/s 147 - exemption u/s 11 - claim of depreciation - HELD THAT:- It is not disputed that the benefit of Section 11 of the Act was not granted in the original assessment order dated 23rd December 2011 which was carried in appeal before the CIT(A). CIT(A) vide an order dated 9th July 2012 allowed the appeal and granted exemption under Section 11 of the Act, deleted disallowed expenses and allowed claim of set off/carry forward of unabsorbed depreciation and excess of expenditure over income. The CIT(A) had also relied upon a judgment of this court in the case of CIT vs. Institute of Banking Personnel [2003 (7) TMI 52 - BOMBAY HIGH COURT]
Therefore, as stated in the third proviso to Section 147 of the Act, the A.O. has no jurisdiction to assess or reassess any income which was the subject matter of an appeal. Since the grant of benefit of Section 11 of the Act was the subject matter of appeal and has been held in favour of assessee, the matter cannot be reopened. As regards the issue of disallowance of depreciation claim, the Hon’ble Apex Court in Rajasthan and Gujarati Charitable Foundation, Poona [2017 (12) TMI 1067 - SUPREME COURT] has held that a Charitable Trust is eligible for claiming depreciation.
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2024 (1) TMI 1039
Condonation of delay filling Revision u/s 264 - refund of the FBT return - HELD THAT:- On the issue of condonation of delay in an application filed under Section 264 of the Act, this court and many other courts have held that authorities should not take a pedantic approach but should be liberal. The courts have held that the words ‘sufficient cause' should be given a liberal construction so as to advance substantial justice when no negligence nor inaction nor want of bonafide is imputable to assessee. The courts have held that the principle of advancing substantial justice is of prime importance and while considering the question of condonation, the revisional authority is not all together excluded from considering the merits of the revision petition.
It is also note worthy to mention that under Section 264 of the Act, the Commissioner is empowered either on his own motion or on an application made by assessee to call for the record of any proceedings under the Act and pass such order thereon not being an order prejudicial to assessee and this power has been conferred upon the Commissioner in order to enable him to give relief to the assessee in cases of overassessment.
As observed by the Hon’ble Gujarat High Court in Digvijay Cement Co. Ltd. [1993 (9) TMI 23 - GUJARAT HIGH COURT] the power conferred on commissioner is wider in terms. The revisional power is coupled with a duty to exercise it in the interests of justice of the parties and the revisional authority must act according to the rules of reason and justice.
Therefore, the commissioner having been conferred the power to condone the delay to do substantial justice to parties by disposing the matter on merits should have, considering the facts and circumstances of the case, in particular that it took a long time for the CIT(A) to dispose petitioner’s appeal, ought to have condoned the delay.
Whether intimation under Section 143(1) of the Act is not an assessment order? - As decided in Smita Rohit Gupta [2023 (9) TMI 220 - BOMBAY HIGH COURT] provisions of Section 264 and the power available to the Commissioner to exercise under Section 264 wherein as pleased to observe that exercise of power under Section 264 was not subject to the power of the Assessing Officer to make adjustment under Section 143(1) of the Act. The Court held that power of the Commissioner under Section 264 is rather wide and even the errors committed could be rectified.
Powers conferred under Section 264 of the Act are very wide. Commissioner is bound to apply his mind to the question whether Petitioner's income was taxable and to what extent. Admittedly, amount payable under the IDS has been paid. Section 188 of the IDS provides that the amount of undisclosed income declared in accordance with 183 shall not be included in total income of the declarant for any assessment year for the Income-tax Act, if the declarant makes the payment of tax and surcharge referred to in Section 184 and the penalty referred to in Section 185, by the date specified under Sub-section 1 of Section 187. Petitioner having paid the tax and surcharge and the penalty with interest, amount of undisclosed income cannot be included in the income of the declarant/petitioner. Therefore, in our view, Commissioner should have exercised his power under Section 264 of the Act and decide the matter on merits.
Thus Respondent no. 2 is directed to consider petitioner’s application under Section 264 of the Act on merits and pass order in accordance with law.
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2024 (1) TMI 1038
Attachment orders on immovable properties - As argued order of attachment was passed after the assessment orders had originally finalised by the assessing authority which have been now set aside - HELD THAT:- Once there is no tax liability on the petitioner for which the petitioner’s properties could be attached, there is no justification for keeping the attachment on the properties after the fresh assessment order always had been passed and refund has been found to be adjusted against the existing demands.
In the statement filed on behalf of the respondents it is stated that the provisional attachment on the properties of the petitioner was valid only for a period of six months from the date of the order as per the provisions under Section 222(2)(b) of the Income Tax Act and the said provisional attachment could be extended up to two years or sixty days from the date of the order of assessment whichever is later. It is further stated that after expiry of period of six months or further period as the case may be, the order of attachment automatically comes to an end. In the case of the petitioner, the last attachment was on 30.12.2019 which was valid for a period of six months from 30.12.2019 and thereafter the order of attachment had become void ab initio and there is no provisional attachment on the properties of the petitioner as of today.
Considering the said stand of the respondents that there is no order of attachment prevailing on the properties of the petitioner, the petitioner is free to deal with his properties in the manner it likes. In view of the specific stand taken by the respondents in their statement, nothing survives in this writ petition. Thus, it is made clear that there is no attachment on the properties of the petitioner.
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2024 (1) TMI 1037
Capital gain computation - Fair Market Value as on 01.04.1981 u/s 55(2)(b)(i) - HELD THAT:- Since, the assessee has provided a certificate of valuation from government approved valuer wherein the value of said land has been valued at Rs. 1,20,000/-, we, therefore, can accept the assessee contention based a supporting evidence in the form of report of the Government approved valuer to the extent of value of land, however, site development cost including borewell, residential unit and boundary wall for which no consideration was received by the assessee and in absence of non-existence of such items in the impugned immovable property, valuation assessed by the registering authority was also confined to the items transferred under the registered sale deed, thereby the transaction is revenue neutral as not consideration was added in the assessed value in absence of existence of such items/ assets and no cost benefit would thus be allowed in computation of the Capital Gain, accordingly the claim of the assessee to allow benefit of cost incurred on construction and improvement of impugned items/assets which are not forming part of the impugned immovable property at the point of time when the same was sold, which is a fact discernible from the registered sale/transfer deed dated 06.12.2015 is extraneous, against the mandate of law, thus not sustainable.
Further, from the registered sale deed, it is evident that when the property was sold, it consists only one watchman (chowkidar) room of 8 ft. x 7 ft. i.e., 56 Sq. ft. in existence on the said land, for which the consideration was adopted by the assessee at Rs. 45,000/- in the registered sale/transfer deed, which is not disputed by either party. Copy of the sale/transfer deed is furnished before us in Assessee's PB page no. 25-46.
Thus we are of the considered view that the fair market value of the impugned immovable property should be adopted at Rs. 1,20,000/- as on 01.04.1981, which is backed by a corroborative document, as valued by the government approved valuer in absence of any valuation by DVO which should have been proposed by the AO, and also the value of watchman room shall be added at Rs. 45,000/- as declared by the assessee in registered sale deed.
We, therefore, direct to modify the order of Ld. CIT(A) to the extent to adopt the fair market value of the subject property at Rs. 1,20,000/- as on 01.04.1981(indexation benefit applicable) towards land and Rs. 45,000/- (without indexation benefit) instead of Rs. 50,000/- in aggregate as estimated by the Ld. CIT(A) without support of any corroborative evidence. In result, Ground No. 1 of the assessee is partly allowed for statistical purposes.
Index value of renovation expenses claimed - HELD THAT:- As evident from the sale/transfer deed that so far as building is concerned there was only one room for watchman (chowkidar) consisting of 8x7 Sq. Ft. i.e., 56 Sq. Ft. for which the consideration was declared at Rs. 45,000/-. Accordingly, we are of the view that on account of construction to be included in the cost of the immovable property sold should be only Rs. 45,000/-, It is the cost of chowkidar room declared by assessee himself in the registered sale/transfer deed.
Under such facts and circumstances the amount towards cost of building is to be allowed to the extent of Rs. 45,000/- only, which we have already considered and included while deciding cost of acquisition and development as per our observations while deliberating upon ground no. 1 of the present appeal, therefore, the order of Ld. CIT(A) disallowing the entire expenses incurred on renovation of such non-existent building is sustained. Accordingly, the ground no. 2 of the assessee stands disallowed.
Restricting amount of investment in residential house property - Allowance of improvement expenditure/investment in the new residential house - HELD THAT:- As specific inquiry was conducted by the AO and categorical observations of the inspector were recorded in the assessment order, that 2 flats are let out to two parties with specific name and contact details of the tenants which establishes that the flats are used by external parties and not by the assessee for his family, also on perusal of the floor lay out map of the flats furnished before us, nothing is emanating that the four flats are converted into one residential unit. It is, thus, incomprehensible to concur with the contentions raised by Ld. AR without any cogent supporting evidence that all the 4 flats are converted into one residential unit and are in use or to be used by the family of the assessee.
We observe that the expenditure incurred w.r.t. flat no. 502 and 503 which are admittedly recognized as converted to single unit for the residence by the assessee should be allowed as expenditure eligible for the calculation of deduction u/s 54 but the expenditure incurred on flat no. 501 and 504 for which no convincing facts or evidence could be brought on record by the assessee that the same are also converted and connected as single unit for the use of assessee and his family as residence, accordingly such expenditure on flat no. 501 & 504 are liable to be disallowed.
Consequently, the total expenditure incurred for Rs. 65,00,000/-, quantum of which was not disputed by the revenue, but in absence of specific details of separate expenses incurred on the said flats individually, we find it appropriate to allow 50% of total expenditure of Rs. 65/- Lac. We, therefore, direct to modify the order of Ld. CIT(A) by allowing the improvement expenditure/investment in the new residential house to the extent of Rs. 32.5/- Lacs on account of portion used by the assessee and his family for their residence and sustained the addition of remaining Rs. 32.5/- Lacs for which use as residence by the assessee or family could not be substantiated. Resultantly, ground no. 3 of the assessee is partly allowed for statistical purposed.
Deduction u/s 54 shall be computed in terms of our observations in the aforesaid grounds.
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