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Showing 401 to 420 of 1570 Records
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2024 (5) TMI 1170
Validity of reassessment proceedings u/s 147/148/148A OR u/s 153C/153A - material/ information is collected during search from other/ third party - whether the basis for reopening the assessment was the information and material collected during the search conducted in the premises of another assessee or the same was based on any information and material collected after the search? - HELD THAT:- Reassessment has to be done only by taking recourse to the provisions contained in Section 153C r.w.s. 153A of the Act of 1961 and not under Section 148A/Section 148 of the Act of 1961. The legal position in this regard is well settled in view of the decision of Abhisar Buildwell P. Ltd. [2023 (4) TMI 1056 - SUPREME COURT]
Basis for reopening the assessment - The entire basis for reopening the assessment is nothing but the material and information collected during search conducted in the premises of another assessee. Collection of details relating to search would not mean collection of new incriminating material and information, independent of the incriminating material and information collected during search proceedings.
Petitioner is correct in submitting that in fact, search was carried out in the year 2016 and the respondents had the authority to reopen the assessment by invoking the powers u/s 153C and draw reassessment proceedings u/s 153A - That was not done within the period of limitation prescribed under Section 153B of the Act of 1961. The respondent-authority was fully aware of the fact that proceedings under Section 153C of the Act of 1961 would be barred by limitation, therefore, recourse was taken to the provisions contained in Section 148 and Section 148A of the Act of 1961 which has no application in the present cases.
Thus legal position is that where the basis for reassessment is incriminating material and information collected during search, the only legally permissible course of action is the one provided under Section 153C and not under Section 148 - Decided in favour of assessee.
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2024 (5) TMI 1169
TP adjustment under Specified Domestic Transactions after Omission of Clause (i) of Section 92BA: - HELD THAT:- As per ratio of judgment of Texport overseas (P) Ltd.’s case [2019 (12) TMI 1312 - KARNATAKA HIGH COURT] it is well settled principle of law that once this section is omitted w.e.f. 1.4.2017 the resultant effect is that it had never been passed to be considered as a law and never been existed.
The request/submission of learned departmental representative for reference to the President, ITAT to constitute Special Bench because ITAT Mumbai and Delhi Benches of equal strength have given conflicting judgments has been considered and not granted. Therefore the request of Learned departmental representative for reference to the President, ITAT is declined.
Thus no transfer pricing adjustment can be made on account of domestic transaction which has been referred by the AO, after omission of Clause (i) of section 92BA of the Act by Finance Act 2017. Therefore, the impugned order is not legal and deserves to be set aside. Decided in favour of assessee.
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2024 (5) TMI 1168
Penalty proceedings u/s 270A - misreporting of income/ under reported income - proof of misrepresentation or suppression of facts - Bonafide belief that no tax liability since TDS was deducted - misrepresentation or suppression of facts - Assessee argued that since the assessment was based on the return filed in response to the notice u/s 148, there was no underreporting or misreporting - as per assessee purchaser of property had deducted taxes at the time of purchase and the entire transaction was duly reflecting in Form No. 26AS on the portal of the Department.
HELD THAT:- Section 270A provides for penalty for “under-reporting of income” [penalty at fifty per cent, of tax payable on such under-reported income, under sub Section (7)] and “misreporting of income” [under sub Section (8) and (9), penalty at two hundred per cent, of tax payable on such income]. Penalty under sub Section (8) is independent of levy of penalty under sub Section (7) even if there is no under reported income. Under sub Section (1), the AO, Commissioner, Principal Commissioner or the Appellate Commissioner may direct that any person who has under-reported his income to pay penalty on such under-reported income. In our view, the mere fact that there is a provision for automatic levy of penalty does not mean that penalty has to be imposed.
The Supreme Court in the case of Hindustan Steel Ltd. [1969 (8) TMI 31 - SUPREME COURT] held that a penalty should not be imposed merely because it is lawful to do so. Even if a minimum penalty is prescribed, the authority will be justified in not imposing penalty where the breach is merely technical or is based upon the bona fide belief that a particular provision has been complied with. The Supreme Court stressed the importance of not levying penalty where the assessee acts with “honest and genuine belief”.
The word “misrepresentation” denotes not just written or spoken words but also any other conduct that amounts to a false assertion. The assertion so made, an assertion that does not accord with the facts is also termed false representation.
The case of the assessee does not fall under any of the specific provision content in Section 270A(2) of the Act which deals with various circumstances relating to “under reporting of income”. Therefore, since the assessee’s case does not fall under sub-Section (2) of Section 270A, then the benefit of sub-Section (6) to Section 270A is also not available to the assessee.
In the instant facts, certain facts are noteworthy. The first fact is that the purchaser, at the time of sale of property, property taxes had been effectively deducted at source at approximately 50% of the amount of taxes payable on such sale consideration. Secondly, the assessee was, in the instant facts, under a bona fide believe that she was not liable to pay taxes on sale of property, when taxes had been withheld at source at the time of purchase by the purchaser of such property. Thirdly, the assessee was under the genuine belief that there is no misrepresentation or suppression of facts, since the purchaser of property had deducted taxes at the time of purchase and the entire transaction was duly reflecting in Form No. 26AS on the portal of the Department, which was within the knowledge of the Income Tax Department, therefore, there is no question as regards to any misrepresentation or suppression of facts, since the Department has not disputed the actual amount of sale consideration, which has been reported in Form No. 26AS.
It would be a different matter if the Department would have alleged that there was a difference / mismatch between the sale consideration as reflecting in Form No. 26AS on which TDS has been deducted under Section 194-IA of the Act and the actual sale consideration which had been received by the assessee on such sale of land. That, in our view, it would have been a case of misrepresentation or suppression of facts. However, once the sale consideration is reported in Form No. 26AS on the Government website and the amount of sale consideration has not been challenged / disputed by the Department and taxes has been withheld on such sale consideration by the purchaser of property under Section 194-IA of the Act, then, in our view, this is not case of misrepresentation or suppression of facts.
In the instant case, the assessee was under a bona fide believe that once the correct income flowing from sale of property is duly reflecting in Form No. 26AS on the Government website and taxes have been deducted at source by the purchaser of such property u/s 194-IA of the Act, the assessee was under no further obligation to file return of income disclosing sale of aforesaid property and pay any further taxes thereon.
This is not a fit case for levy of penalty u/s 270A of the Act. Appeal of the assessee is allowed.
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2024 (5) TMI 1167
Unexplained cash deposits - CIT(A) Reducing the addition by applying the provision of section 44AD - Whether CIT(A) grossly erred in presuming the cash deposits as business receipt of the assessee? - HELD THAT:- From the finding ofNCIT(A), it is clear that he treated the entire deposits in the bank account as business receipts and applied net profit @ 8% invoking the provisions of section 44AD of the Act. The assessee had prayed for peak credits be taken as income of the assessee since there were both deposits and withdrawals from bank accounts during the year.
CIT DR urged for treating the entire cash deposits in the bank account as undisclosed income of the assessee without giving set off of cash withdrawal made during the year. We are unable to accept this submission of Ld.CIT DR.
Law is well-settled that if there are both credit and debit entries in the bank account of the assessee, in that event peak credit may be taken as undisclosed income considering the facts of each case. But for making addition of entire cash deposits when the debit entries are also there, in our considered view such action by AO would not be justified. The assessee is not in appeal before us, nor any representation is made on his behalf.
CIT DR could not controvert the finding of Ld.CIT(A) that the Investigation Wing had reported about the business activity carried out by the assessee. It is not the case where the Ld.CIT(A) had returned finding without having supporting material. The contention of DR that there was no business activity by the assessee is contrary to records. We therefore, do not see any reason for disturbing and/or reversing the finding of Ld.CIT(A). The grounds raised by the Revenue lacks merit hence, dismissed.
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2024 (5) TMI 1166
Additional income surrendered on account of excess stock - GP Estimation - Treatment of additional income from excess stock - difference in gross profit margin disclosed by the assessee for the year under consideration - additional income offered by the assessee on account of excess stock surrendered by the assessee during the course of survey was not shown by the assessee in the trading account by including it in the closing stock and that same was offered to income tax only as other income.
HELD THAT:- Though the assessee had stated that there was heavy competition prevailing in the last quarter of the financial year which led the assessee to sell the products at a much lesser rate when compared to other quarters which had evidently contributed to the reduction of gross profit during the last quarter, we find that the same is not supported with any documentary evidence by the assessee. It is pertinent to note that there was excess stock was found during the survey which was accepted by the assessee by way of a declaration.
The same also stood offered by the assessee as income in the return of income which was never retracted by the assessee. Obviously the addition on account of excess stock could be made only as unexplained investment taxable u/s 69 of the Act which could never be business income of the assessee. Hence, the income of Rs. 1,75,98,542/- needs to be taxed separately as unexplained investment and accordingly same could not be included in the gross profit computation of the assessee.
Hence, the action of the lower authorities in determining the gross profit @8.53% without considering the value of surrendered stock is correct. It is fact that gross profit for the year had declined by 1.39% when compared to that of the immediately preceding year.
AO had made extensive verification and found that the gross profit was drastically varying as some of the items were sold at a margin of 10% and some of the items were sold with more than 11%, some on the profit less than 6.9%. It is further, pertinent to note that the assessee having additionally offered 5.18 crores during the survey on 21.01.2010 had ultimately resorted to disclose only 4.36 crores as the returned income. None of the deficiencies pointed out by the ld AO by rejecting the books of account were met by the assessee before us with cogent evidence by giving contrary material.
Hence, we uphold the action of the lower authorities for rejecting the books of account u/s 145(3) of the Act and calculating the differential gross profit. In the instant case, the ld AO had not resorted to estimation of the gross profit rather he had retained the gross profit earned by the assessee in the immediately preceding year and made addition for the difference amount in the sum of Rs. 1,08,51,505/-.
The behavior of the assessee, deficiencies in the gross profit margins by having varying percentages as explained supra, we hold that addition has been rightly made by the AO in the sum of Rs. 1,08,51,505/- and the same has been rightly confirmed by the CIT(A) and hence the same does not require any interference. Accordingly, grounds raised by the assessee are dismissed.
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2024 (5) TMI 1165
Disallowance u/s. 143(1)(a)(iv) - Disallowance of gratuity payment u/s 43B r.w.s 36(1)(v) - HELD THAT:- The section 143(1)(a)(iv) allows the AO to consider the Disallowance of any Expenditure indicated in the Audit Report but not considered in the computation of Income. Thus, the relevant provision specifically allows AO to consider only that expenditure which has been indicated in the Audit Report for disallowance, but not actually disallowed in computation of Income.
In this case, the expenditure for gratuity on payment basis was not indicated in the Audit Report for disallowance. This fact has not been rebutted by the Revenue. Once, the impugned expenditure was not indicated in the Audit report for disallowance, the said amount is outside the preview of Section 143(1)(a)(iv) of the Act. Therefore, ADIT(CPC) had no jurisdiction to make any disallowance u/s. 143(1)(a)(iv) of the Act.
In this case the ADIT had made disallowance u/s. 143(1)(a)(iv) therefore, the disallowance is outside the scope of section 143(1)(a)(iv) - Appeal raised by the assessee is allowed.
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2024 (5) TMI 1164
Addition u/s 68 - Bogus LTCG - unexplained cash credit - rejecting the claim of the appellant for exemption u/s 10(38) in relation to surplus earned on sale of shares held for long term - HELD THAT:- Assessee made sale of shares through BSE and paid security transaction tax and there is no allegation against the share broker through whom assessee has made sales that they were indulging any price manipulation. Therefore, no justification in treating the LTCG as unexplained cash credit in absence of any cogent evidence. Decided in favour of assessee.
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2024 (5) TMI 1163
Disallowance u/s. 14A r.w.r. 8D - interest expenditure and administrative expenditure - as argued assessee had sufficient self owned funds, therefore, no disallowance of any part of the interest expenditure was warranted - HELD THAT:- The Hon’ble High Court of Bombay in the case of CIT vs. HDFC Bank Ltd. [2014 (8) TMI 119 - BOMBAY HIGH COURT] had observed that no disallowance for interest could be made based on the reasoning that if the assessee has more interest free funds than the tax-free investments, then a presumption would arise that tax free investments would be out of the interest-free funds.
In fact, the aforesaid view is further supported by the judgment of South Indian Bank Ltd.[2021 (9) TMI 566 - SUPREME COURT] wherein as held that if investment in exempt income yielding shares is made out of common funds and the assessee had available non-interest bearing funds larger than the investments made in tax-free securities then in such cases, no disallowance u/s. 14A would be called for.
Thus considering the fact that he had sufficient self owned funds available with him to source the investment in the exempt income yielding investment in his “capital account” with M/s. Anoop Road Carriers, no disallowance of any part of the expenditure was called for in his case u/s. 14A of the Act.
Disallowance of the administrative expenditure made by the A.O u/s. 14A r.w.r. 8D(2)(iii), as the Ld. AR had failed to come forth with any plausible explanation as to on what basis the same could not be sustained, therefore, we uphold the same to the said extent. Thus, the Ground of appeal No.1 raised by the assessee is partly allowed in terms of the aforesaid observations.
Addition u/s. 41(1) - cessation of liability - outstanding liability had not been discharged till date, the A.O held the same as a liability that had ceased to exist - HELD THAT:- Mere fact that the liability is outstanding for the last many years in the books of account of the assessee and had been brought forward from the preceding years cannot on such standalone basis justify the addition u/s. 41(1) of the Act. Also, there is nothing available on record which would reveal that the same was in the nature of a “trading liability” which the assessee had claimed as deduction. Ostensibly, Section 41(1) of the Act, inter alia, contemplates where any deduction has been made in the assessment for any year in respect of the trading liability incurred by the assessee and subsequently during any previous year the assessee has obtained some benefit in respect of trading liability by way of remission or cessation thereof, then the amount of benefit accruing to him shall be deemed to be profits and gains of business or professions, which, accordingly, would be chargeable to income tax as his income of that previous year.
As the A.O had failed to place on record any material which would justify the addition of the aforesaid amount of Rs. 10,00,000/- u/s. 41(1) of the Act, therefore, a strong conviction that the matter in all fairness requires to be revisited by him - we thus restore the matter to the file of the A.O with a direction to re-adjudicate the same after affording a reasonable opportunity of being heard to the assessee who shall remain at a liberty to substantiate his claim on the basis of fresh documentary evidence, if any. Thus, the Ground of appeal No.2 raised by the assessee is allowed for statistical purposes in terms of the aforesaid observations.
Decline of credit of TCS - year of transaction of purchase of coal - Although the assessee had claimed the credit of the amount of TCS in his return of income, but as the coal was purchased in the immediately succeeding year, therefore, the A.O had declined to allow the credit of the aforesaid amount - HELD THAT:- Schedule of TDS/TCS in the income tax return provides column to fill in information of deductions for the previous year but credit for the same has to be claimed in the future year. As in a case where the assessee cannot claim for TDS pertaining to the income which is taxable in the succeeding year has to carry forward the credit of TDS to the subsequent year and claim the same in the later year in which the income is offered to tax, therefore, A.O had rightly observed that as the transactions of purchase/sale of coal had materialized in the succeeding year, therefore, the claim for credit of TCS ought to have been raised by the assessee in the next financial year and not during the year under consideration. Direct the A.O to allow the assessee’s claim of credit of TCS in the next year i.e. A.Y. 2017-18, in which, transaction of purchase of coal had materialized.
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2024 (5) TMI 1162
Revision u/s 263 - Disallowance u/s 14A r.w.r. 8D - disallowance of expenses incurred on earning tax-exempt income - change in method of calculation - suo-moto disallowance made by assessee - HELD THAT:- Section 14A would be applicable on the dividend income, earned by the assessee which is exempted u/s 10(38) of the Act. The assessee supplied the list of expenses for calculating the expenses related u/s 14A of the Act.
The assessee itself had calculated amount and offered for tax during filing of return. The ld. AO is not expected to raise more queries, if the ld. AO is satisfied about the admissibility of claim on the basis of the material and the details supplied. So, assessment order cannot be called erroneous and the application of Section 263 is not justified.
The respectful reliance is placed Moil Ltd (2017 (5) TMI 258 - BOMBAY HIGH COURT] - PCIT has calculated the amount of Rs. 67,12,410/- u/s 14A. The assessee had declared the amount of Rs. 14,85,815/-. So, balance amount of Rs. 52,26,505/- is escaped income which is caused the assessment order erroneous and prejudicial to the interest of the revenue.
When the ld. AO adopted one of the possible views, his order does not suffer from any error. Therefore, in view of the aforestated essence of precedents on the issue of revision under s. 263, the twin conditions - the order is erroneous and prejudicial to the interest of Revenue, do not co-exist in this case.The same view was taken by the Coordinate Bench at Jodhpur in the case of Chhita Singh Shekhawat [2015 (10) TMI 305 - ITAT JODHPUR] - PCIT has not rejected the method of calculation of 14A of assessee which is accepted by the ld. AO. Mere change in method of calculation the Section 263 cannot be invoked. We dismiss the impugned revisional order passed u/s 263 of the Act. The ground of the assessee is succeeded.
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2024 (5) TMI 1161
Benami Transaction - provisional attachment - beneficial owner of the Benami properties - SCN issued by Initiating Officer u/s 24 (1) of the Prohibition of Benami Property Transactions Act - The allegation is that there has been routing of funds from unknown sources through various companies and layering in this regard which have ultimately found a channel to the petitioners-companies through M/s Siddhi Vinayak Infra Zone.
HELD THAT:- As per statement of the concerned Directors/Partners/other Officials recorded and mentioned in the show cause notice, the original sale-deeds were not found in the office of these companies who in fact had common addresses, mostly so, nor the Director/Partners had any inkling as to the activities and source of funds of these companies of which they were Directors/Partners and they had mentioned the names of certain persons who have been mentioned as interested persons in the show cause notice who have links with other companies and LLPs. Based on the aforesaid material, the Initiating Officer has recorded his reasons to believe that the properties are result of benami transactions.
At the stage of consideration of admission and interim relief application looking into the facts and material on record, and that which we have perused, it is difficult to hold at this stage that none of the material was relevant or that it did not have a rationale connection with the transactions which are being referred as benami, however, again we do not record any conclusive opinion in this regard, as, all these issues need to be thrashed out finally.
No doubt, the argument of learned counsel for the petitioners that the transactions are based on legal documents and are permissible in law is very attractive, but, the stand of the Revenue is that these are all colourable transactions and, therefore, the opinion formed by the Initiating Officer at the stage of Section 24(1) is an opinion formed on the basis of material and it has rationale nexus with the object sought to be achieved which does not require any interference. It is trite that merely because some legal documents have been prepared and agreements have been entered into that may lead to an initial presumption about the validity of such transactions, but, then this is rebuttable and the Revenue is entitled to inquire, if there are grounds for it, as are being claimed, as to whether transactions are colourable and benami in terms of the Act 1988.
How far the transactions at hand based on material in possession of the Initiating Officer at the stage of Section 24 (1) would bring the transactions within the meaning of Section 2(9)(A) and (B) is also required to be considered, as, the jurisdictional facts envisaged in Section 24(1) have to be preexist and are prerequisites on the satisfaction of which alone the Initiating Officer has the jurisdiction to proceed in the matter.
On a perusal of records which have been produced separately before us in sealed cover, we find that the reasons and materials contained therein have been substantially discussed in the show cause notice and prima facie it is not as if the reasons and materials discussed in the impugned show cause notice and those available in these records are absolutely unrelated or alien to each other. This aspect, however, is also open for consideration at the time of final hearing as to whether the records contain relevant reason or material which is not mentioned in the show cause notice thereby rendering it defective and prejudicial.
Order of provisional attachment - Taking into consideration these facts, especially regarding sale of some of the lands/flats by Tilicho Ventures LLP which is part of the same consortium but, intriguingly has not challenged the notices before us, and, in spite of sufficient opportunities, the counsel for the petitioners did not deny this fact even orally during argument, although Mr. Parihar, learned Senior Counsel along with Ms. Radhika Singh, etc. appeared for all the seven petitioners-companies and Jitendera Prasad Verma is a Director in Tilocho Infra Developers Private Limited and also a partner in Tilocho Ventures Private LLP., whereas, Satish Kumar who has filed the affidavits in two of the petitions on behalf of the other companies is also a Director in the Tilicho Infradevelopers Private Limited, therefore, we are not inclined to stay the order of provisional attachment.
In our opinion, the following orders would serve the ends of justice at this stage:-
(I) Subject to final disposal of writ petitions and without prejudice to the rights of the petitioners herein, the proceedings under the Act 1988 may go on and the Initiating Officer shall take a considered decision under Section 24 (4) of the Act 1988 in accordance with law, accordingly.
(II) In the event the Initiating Officer revokes the provisional attachment of the property with the prior approval of the Approving Authority, then, of course, the matter would end and no further adjudication would be required before the Adjudicating Authority.
(III) However, if the Initiating Officer passes an order continuing the provisional attachment of the property with prior approval of the Approving Authority and refers the matter to the Adjudicating Authority under Section 24(5), the Adjudicating Authority may go ahead with the proceedings however, he shall not pass any final order under Section 26(3) of the Act 1988 till disposal of these writ petitions.
(IV) In the event the opposite parties herein want to withdraw the impugned show cause notices and issue them afresh in accordance with law providing the noticees with the material in the possession of the Initiating Officer, then, the pendency of these proceedings shall not come in their way. We make it clear that this is not a direction which we have issued, but, only a liberty which we have granted to the opposite parties in case they are of the opinion that this would be a better course of action, unless, of course, this is impermissible in law.
The opposite parties shall file their counter affidavit within four weeks. Two weeks thereafter shall be available to the petitioners for filing rejoinder affidavit. Considering the important issues involved herein, all these petitions shall come up for hearing in the 3rd week of July, 2024.
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2024 (5) TMI 1160
Seeking to grant Bail u/s 135(1)(a) & 135(1)(b) - possession of foreign origin gold without paying custom duty - HELD THAT:- Considering the material on record, the punishment under the said Act, the period applicants remained in jail and without expressing any opinion on the merits of the case, the Court is of the view that the applicants have made out a case for bail. The bail application is allowed.
In case of breach of any of the any bail conditions, the prosecution shall be at liberty to move bail cancellation application before this Court.
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2024 (5) TMI 1159
Seeking restoration of appeal dismissed for want of prosecution due to failure to consider written request for adjournment - HELD THAT:- From the present application, it has come on record that prior the date of impugned final order, the appellant had already moved an application seeking an adjournment on 1st September, 2023, The said application is mentioned to have been received in the registry on 24th August, 2023 itself. As already quoted, the final order has no mention of such application making it clear that the said application was not placed before the Bench on 1st September, 2023. To get verified the actual facts that the inquiry was marked to Registrar, CESTAT in this respect.
From Persual of the report, it is clear that there is no satisfactory explanation in the verification report about as to why the adjournment application was not placed on record. Hence, we hold that there is no irregularity or the error in the final order dated 01.09.2023. However, since there is no denial on part of the concerned section of the registry for having received the application seeking adjournment on 24th August, 2023 i.e. prior the date of final order, we hold it to be a fit circumstance to allow appellant-applicant an opportunity to make his submissions on the merits of the case. The interest of justice otherwise requires that lis preferably shall/be decided on merits instead being disposed of on account of technicalities or mere procedural lapses.
Accordingly, we hereby allow the said application and order restoration of the present appeal to its original number. Registry is directed to list the appeal on July 02, 2024 for final hearing. It is clarified that no further opportunity shall be given for the purpose.
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2024 (5) TMI 1158
Illegal exports - Export of non-basmati rice to Nepal - Penalty - lack of evidence for illegal export - HELD THAT:- In the present case we do not find any evidence which has been adduced in the course of proceedings before any Authority which shows that the goods sold/ cleared by the Appellant 1 have been exported or any preparation for the export of the said non-basmati rice has been made by any of the appellant by taking the goods to the border/port. In fact no evidence in the form of any shipping bill or any document required for exportation has been produced at any time. The entire case is based upon certain Bill of Entries which have been noted by the Enforcement Directorate during the course of investigation which have been filed with Nepal Customs. None of these Bill of Entries refer to any documents issued by any of the appellant. Further how can it be that goods were being illegally exported through unidentified routes be subject matter of the Bill of Entries filed with Nepal Customs. We are at loss to understand how the Bill of Entries could have been filed without any export documents from the exporter from India.
As there is no evidence to establish that even a single gram of the goods allegedly to be exported illegally have been recovered/ seized/ confiscated or any document to that effect found we do not find that the appellants could have been proceeded against under the provisions of Section 114 of the Customs Act.
The entire case made against the appellants for imposing penalty u/s 114 cannot be upheld even on merits. Appeals are allowed.
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2024 (5) TMI 1157
Refund claim - benefit of Notification under Indo-Srilanka Free Trade Agreement (ISFTA) - Whether the benefit of the Notification No.26/2000-Cus, which was not claimed earlier was eligible to the appellant when claimed at a later date after payment of duty - HELD THAT:- There is no dispute that the goods have been imported from Srilanka and the appellant has placed on record the country-of-origin certificate and since the above imported goods are eligible for the benefit of the Notification, the denial of the benefit of the Notification only because they have not claimed at the time of filing the Bill of Entry cannot be a ground for denying the benefit as long as the conditions of the Notification are satisfied. The goods were cleared on 15.4.2009 and the claim for reassessment / refund was filed on 24.04.2009 well within the stipulated time as per the Board’s Circular for amendment or reassessment. The learned counsel has rightly relied upon the decision of Hon’ble High Court of Bombay in Hero Cycles vs. UOI [2009 (6) TMI 4 - BOMBAY HIGH COURT].
Thus, we do not find any reason to deny the benefit of the Notification No.26/2000-Cus. dated 01.03.2000. Accordingly, the appeal is allowed with consequential relief, if any, as per law.
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2024 (5) TMI 1156
Imports product as "I-MAS POs-Nickel Compound (Compound of Nickel Hydroxide)" - Misdeclaration of foods - Demand - Confiscation - interest - Penalty - benefits of Customs Notification No. 50/2017 - Applicability of Advance Rulings - Non-compliance to the Pre-notice Consultation Regulations before issuance of the Show Cause Notice -
What is the appropriate classification of the imported goods declared as “I-MAS Pos-Nickel Compound (Compound of Nickel Hydroxide)” whether under CTH 28254000 as declared by the appellant or under CTH 38249900 as classified by the Revenue?
Classification - HELD THAT:- The product that is imported I-MAS POs-Nickel Compound (Compound of Nickel Hydroxide) is predominantly consisting of Nickel Hydroxide which is a separate chemically defined compound, but also containing Cobalt Hydroxide which is also a separate compound and also Graphite an element / metal. It has been admitted that these were added to enhance the conductivity of the Nickel Hydroxide Compound which is meant to be used for manufacture of Nickel Cadmium batteries. Cobalt Hydroxide Compound is neither a solvent nor a stabiliser or anti-dusting agent or colouring substance and is not introduced for any safety or transport or as permissible additive in terms of the relevant Chapter Notes 1 to Chapter 28. The aim of addition of Graphite which is a separate chemical / element / metal to the Nickel Hydroxide is said to be for flowability and also to enhance the conductivity of the compound. The appellant has submitted that Graphite is used as an anti-caking agent in the imported goods. In these facts of the case, it appears that the addition of these two substances make the Nickel Hydroxide Compound so obtained more suitable for Nickel Cadmium battery manufacture. Thus, these are added to make the imported product more suitable for Nickel Cadmium cells and thus the general use of Nickel Hydroxide compound is restricted or the product imported is made more suitable for Nickel Cadmium battery manufacturing.
Thus, we are of the considered opinion that appropriate classification of the imported product is not under CTH 28254000 as classified by the appellant.
After going through the provisions of the Customs Tariff Act and after considering the nature and composition of imported product I-MAS POs-Nickel Compound (Compound of Nickel Hydroxide) we hold that it is more appropriately classifiable under CTH 38249900 and not under CTH 28254000 as adopted by the appellant.
Since the imported item contains other natural materials such as Graphite and Cobalt. The Customs Notification has to be interpreted in a plain and simple manner and the technical literature available in public domain is to be taken into account for determining the eligibility of exemption and on application of the above analogy, the appeal fails on two counts that neither the description of the product imported matches with the description of the product as notified in the Notification nor the CTH as mentioned in Column (2) of the Notification matches. As such, the appellant is not eligible for the benefit of Notification No. 50/2017- Customs dated 30.06.2017.
Applicability of Advance Rulings - HELD THAT:- Any Advance Ruling is mandatorily applicable to the applicant and the concerned field formation and will have only persuasive value in respect of third parties. The provisions of the Customs Tariff Act and the correct interpretation of applicable GIRs, Section and Chapter Notes as applicable to the facts of the case are essential requirements for determination of any classification of any imported product under the Customs law.
Non-compliance to the Pre-notice Consultation Regulations - We have gone through the provisions of the Customs Act, 1962 and Pre-notice Consultation Regulations, 2018. The Department has incorporated alternative dispute resolution mechanism by way of Pre-consultation process to reduce the litigation. Such pre-consultation facilitates resolution of disputes obviating the necessity of issuance of the Show Cause Notice and for speedy settlement of the dispute between the Department and the tax-payer. The Adjudicating Authority should have scrupulously followed the administrative directions in the Board’s Circular and also the provisions of the Pre-notice Consultation Regulations, 2018.
It is noticed that the appellant has been continuously contesting the classification of the imported product all along leading to issuance of the Show Cause Notice and its adjudication. As such, we are of the opinion that no prejudice is caused to the appellant due to omission on the part of the Adjudicating Authority in not complying with the Pre-notice consultation process. Had the appellant accepted the classification adopted by the Revenue, he would have opted to pay the differential duty along with interest for settling the issue. Imposition of fine and penalties could be avoided. However, as even now the appellant is contesting the classification of the imported product, we are of the considered view that there is no justification for setting aside the adjudication proceedings already completed as strict observance of the principle of natural justice have been complied with by according an opportunity of personal hearing and by considering the submissions made by the appellant before passing the impugned order dated 31.03.2022 by the Commissioner of Customs.
Confiscation - fine and penalty - Considering the facts that the appellant is a regular importer of the product which is used in the manufacture of Nickel Cadmium batteries and also considering that the supplier is reportedly adopting the above classification globally, we are of the opinion that attributing any malafide intention or motive for adopting such classification or claiming exemption benefit of the Notification is not justified in the facts of this case. Further, appreciating the ratio decidendi in the Hon’ble Supreme Court’s decision of Northern Plastic Ltd. Vs. Collector of Customs & Central Excise [1998 (7) TMI 91 - SUPREME COURT], we hold that the imposition of fine and penalty is not justified and so ordered to be set aside.
Consequently, the appellant is not eligible for the benefit of the Notification No. 50/2017-Cus. and demand of duty along with interest is confirmed. However, the fine and penalties imposed are set aside.
Classification is rejected but in respect of confiscability of the goods and imposition of fine and penalty is set aside. Thus, the appeal is partly allowed on the above terms.
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2024 (5) TMI 1155
Classification of Iron Ore fines as Iron Ore lumps - Export - Valuations - Levy of export duty - Whether on reclassification of small quantity of Iron Ore fines as Iron Ore lumps on the ground that the export consignments contained certain Iron Ore particles of size 10 mm and above to the extent of 16.29% and more than 5%, would attract a different rate of duty as Iron Ore fines or otherwise - HELD THAT:- In this case, going by the evidence on record, it is obvious that the consignment exported is for Iron Ore fines and in fact, there is penal clause for having any Iron Ore lump in the mixture. Therefore, it is not a case where the Iron Ore lump has been deliberately exported rather it is part of the Iron Ore fines due to certain involuntary processes undertaken in which such particles size also are shipped in. It is not the case of deliberate mixing of Iron Ore fines and Iron Ore lumps. In fact, if one considers BIS Standard there is already a tolerance limit provided for Iron Ore lump up to 5%, meaning that there could be inevitable Iron Ore lumps present even if the consignment is of Iron Ore fines.
Therefore, the entire consignment of mixture having certain percentage of Iron Ore lumps has to be treated as Iron Ore fines only and cannot be artificially segregated into Iron Ore fines and lumps for the purpose of levying of export duty. Therefore, the demand confirmed and upheld by the Commissioner (Appeals) is not sustainable on this ground.
Value Determination Issue - It is an admitted position that the price negotiated is based on certain parameters like moisture content, Fe content, etc., at the end of buyer’s port and therefore, the final invoice may be higher or lower as compared to the provisional invoice. Based on the confirmed parameter verified at the receiver’s port, final invoice has been raised for the consignments in question and the same amount has been realized as confirmed by BRC and accordingly, the transaction value has to be accepted in the instant case. Therefore, on this count also, there is no ground for rejecting the transaction value as also for demanding additional duty on this account.
Therefore, on both counts, appeals are allowed.
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2024 (5) TMI 1154
Rejection of drant of statutory interest in accordance with Rule 156 of the Companies (Court) Rules, 1959 in favour of the workmen - workmen and the secured creditor have been treated to be pari passu, in view of the provision of Section 529 of the Companies Act - Interpretation of Rule 156 of the Companies (Court) Rules, 1959.
Effect of Section 529 of the Act 1956 - HELD THAT:- The effect of Sections 529 and 529-A is that the workmen of the company become secured creditors by operation of law to the extent of the workmen's dues provided there exists secured creditor by contract. If there is no secured creditor then the workmen of the company become unsecured preferential creditors under Section 529-A to the extent of the workmen's dues - The purpose of Section 529-A is to ensure that the workmen should not be deprived of their legitimate claims in the event of the liquidation of the company and the assets of the company would remain charged for the payment of the workers' dues and such charge will be pari passu with the charge of the secured creditors.
Further, there is no other statutory provision overriding the claim of the secured creditors except Section 529-A. This section overrides preferential claims under Section 530 also. Under Section 529-A, the dues of the workers and debts due to the secured creditors are to be treated pari passu and have to be treated as prior to all other dues - it appears that the arrears of amount have been paid in favour of the workmen. But, the amount has been paid in favour of the workmen only with respect to the arrears of salary. After the subsequent time having been elapsed, one interlocutory application being I.A. No.7469 of 2016 has been filed seeking therein the statutory interest which is to be paid in favour of the workmen also on the ground that the secured creditor and the workmen are to be treated as pari passu.
Whether the workmen claim parity with respect to the payment of interest on the basis of principle of pari passu, will be said to be acceptable? - HELD THAT:- In the light of the definition of the “vested right”, it is evident that right accrues to person or persons attached to an institution or building or anything whatsoever, meaning thereby, if an incumbent is claiming a vested right, he is to substantiate before the court of law that the right has been created in his favour by an order passed by the competent authority in accordance with law.
It is evident that in the instant case, the workmen never raised the claim of interest and no such claim of interest was ever adjudicated upon. The payments have been made to the workmen in priority against sale proceeds of unsecured assets of the company in compliance of the order dated 12th August 2016. It has been accepted by the parties and has attained finality - Moreover, at the time of making claim before the Company Court for arrear of the salary, there was no claim for making payment of the interest upon the said arrear which also suggests that the workmen are well aware with the fact that they are not entitled for the interest, otherwise, the issue of interest would have been raised at the very inception by raising the said issue in the interlocutory application which has been filed for arrears of the salary.
Further, it is evident that the section 483 of the Act 1956, confers power of the widest amplitude on the appellate court so as to do complete justice between the parties and such power is unfettered by consideration of facts like who has filed the appeal and whether the appeal is being dismissed, allowed or disposed of by modifying the judgment appealed against. The object sought to be achieved by conferment of such power on the appellate court is to avoid inconsistency, inequity, inequality in reliefs granted to the parties concern.
The instant Company appeals are hereby dismissed.
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2024 (5) TMI 1153
Debt or Equity - Compulsorily Convertible Debentures which do not carry any obligation to repay - to be treated as debt or as equity, while admitting the claim under IBC - Waterfall mechanism.
Whether the Compulsorily Convertible Debentures which do not carry any obligation to repay should be treated as debt or as equity, while admitting the claim under IBC? - HELD THAT:- he Hon’ble Supreme Court in the said judgment of IFCI [2023 (12) TMI 129 - SUPREME COURT], upheld the decision of NCLT and NCLAT for treatment of CCD as equity - The Hon’ble Supreme Court noted that the very substratum of the submissions of the Appellant is that it has been left high and dry. If it’s investment is to be treated as equity, under the waterfall principle nothing will come its way. Thus, while other creditors benefit, the Appellant will not get anything.
The salient clauses of the DSA have been reproduced earlier. An examination of the DSA shows that the debentures issued to the Appellant were compulsorily convertible into equity and the only option to the Appellant was to get it converted to shares even prior to the stipulated period of 10 years, failing which the CCDs were to automatically convert into equity shares at the end of 10 years. There was no liability or obligation to repay the debt.
A convertible debenture can be regarded as “debt” or “equity” based on the test of liability for repayment. If the terms of convertible debentures provide for repayment of borrower’s principal amount at any time, it can be treated as a debt instrument but if it does not contemplate repayment of the principal amount at any time, that is, if it compulsorily leads to conversion into equity shares, it is nothing but an equity instrument. Respectfully following the judgment of the Hon’ble Supreme Court in the case of M/s IFCI Limited vs. Sutanu Sinha & Ors., [2023 (12) TMI 129 - SUPREME COURT], it is held that the compulsorily convertible debentures held by the Appellant are equity instrument and accordingly, we do not find any reason or justification to interfere in the impugned order of the Adjudicating Authority.
Appeal dismissed.
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2024 (5) TMI 1152
CIRP - Validity of admission of section 7 application - Violation of principle of natural justice - Denial of opportunity of the corporate debtor to file reply - error in misinterpreting the scope of Rule 49(2)
Denial of opportunity of the corporate debtor to file reply - HELD THAT:- Present is not a case where it can be said that the corporate debtor was prevented by any sufficient cause from appearing. Notice has been issued which was duly served. No cause is being showed by the appellant that they were prevented from appearing. Counsel appearing before the Adjudicating Authority and saying that he has recently engaged and has not filed the vakalatnama cannot be said that the corporate debtor was prevented by any sufficient cause from appearing. Corporate debtor has to blame himself for not appointing an Advocate to appear and make appropriate pleading before the Court. It is not a case advocate who appeared submitted that he shall file vakalatnama during the course of the day.
Interpretation and Application of Rule 49(2) of the NCLT Rules, 2016 - HELD THAT:- Rule 49 gives ample jurisdiction to the Adjudicating Authority to proceed for ex parte as corporate debtor does not appear. “Appearance” as contemplated under Rule 49(1) is appearance by the corporate debtor or by an authorised representative.
The financial creditor has also submitted that present is a case where debt and default is not even questioned since there is a consent decree passed by the DRT against the corporate debtor, hence, the appellant in this appeal is not making any submission on merits of the appeal although time was taken by the appellant on 31.01.2024 to file an additional affidavit so as to address the appeal on merits. It is noticed that during the oral submissions challenging the order rejecting the application under Rule 49(2), no submission has been advanced by the appellant on debt and default. In the facts of the present case and submission of the counsel for the parties, the present is not a case where this Tribunal may interfere with the impugned order in exercise of our appellate jurisdiction.
There is no merit in the appeal. The appeal is dismissed.
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2024 (5) TMI 1151
CIRP - VAT / Sales Tax dues - Treatment of claims as Secured claims vis-a -vis Unsecured claims - Rejection of application of appellant to treat its claim as Secured Creditor during the liquidation under waterfall arrangement as stipulated in Section 53 of IBC - HELD THAT:- The Appellant during the moratorium period could determine the tax, interest, fine or any penalty which is due, however, the Appellant could not enforce his claims for recovery or levy of interest on the tax due during the period of Moratorium. It has been brought out that the Claims of Assessment Orders passed during the moratorium under Section 14 & 33(5) of the Code, have been rightly considered and admitted as 'Unsecured' Operational Debt. It is significate to take into consideration that the Appellant vide its own letter dated 23.06.2023 acknowledged the fact that for A.Y. 2014-15, 2015-16 & 2016-17, the assessments were carried on during moratorium.
It has been brought to notice that the Appellant passed attachment orders on the property of the Corporate Debtor i.e., 16.10.2018 in alleged and contravention of Section 14 of the Code & Regulation therein, even after order dated 15.06.2023 passed by Adjudicating Authority whereby, the Appellant was directed to lift the attachment within ten days of receipt of such intimation from the Respondent, however, till date, the Appellant continues illegally and unlawfully attachment on the subject property of the Corporate Debtor.
The time period of 330 days prescribed in the Code is indicative and directory in nature and not mandatory. In fact, large number of cases, due is several reasons, are not able to be resolved within such stipulated period and if the contentions of the Appellant is accepted then the Resolution Process of the Corporate Debtor, in most of the cases, may not take off at all. Thus, the pleadings of the Appellant on this grand, stand rejected.
The Rainbow Paper [2022 (9) TMI 317 - SUPREME COURT] held that tax dues covered under section 48 of the VAT Act which clearly stipulate the Appellant’s right over the assets of the Corporate Debtor as first charge. This similar provisions, however, was not available in Gujarat Sales Tax Act and therefore, the tax claims were not treated as Secured Creditors. To the credit of the Appellant, he fairly concluded that this period was not covered in the ratio of Rainbow Paper.
Hence the Respondent classified remaining admissible outstanding dues as Unsecured debts. The Adjudicating Authority, therefore, also passed the Impugned Order accordingly based on Resolution Plan put up for approval by CoC through the Respondent - there are no infirmity in the Impugned Order on this account.
Appeal dismissed.
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