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Showing 421 to 440 of 1529 Records
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2022 (6) TMI 1109
Income accrued in India - interest income on loans in the form of suppliers credit given to Indian parties - interest is paid is effectively connected with the Permanent Establishment of the assessee in India and the interest income thereon was taxable as per Article 11(6) read with Article 7 of the DTAA - whether taxable at special rates as per Article 11(2) of the India-Japan? - CIT(A) held that the interest income on loans in the form of suppliers credit given to Indian parties is taxable at special rates as per Article 11(2) of the India-Japan DTAA specially because the assessee had a permanent Establishment in India during the said time - HELD THAT:- As decided in MARUBENI CORPORATION, JAPAN CARE OF MARUBENI INDIA PVT LTD [2022 (6) TMI 953 - ITAT MUMBAI] no part of interest income, by any stretch of logic, can be said to be directly or indirectly attributable to the Indian permanent establishment of the assessee company.
As alleged that the Indian parties from whom the assessee has received interest income are also the clients of the assessee in India with whom contracts were executed through the Permanent Establishment in India and the assessee has received fees for technical services in a previous year from them, but then the performance of contracts through the PE or receipt of fees for technical services from such clients is irrelevant as long as the interest income is not demonstrated to be attributable to the permanent establishment. Such an attribution cannot be inferred or assumed; there has to be cogent material to establish the fact that the income in question, i.e. interest income in this case, is attributable to the permanent establishment. There is not even a whisper of a suggestion to that effect.
For interplay of Article 11(6) and Article 7(1), in our considered view, the expression “effectively connected with such permanent establishment” must mean a situation in which the interest income in question can be said to be “directly or indirectly attributable to the permanent establishment” and can be brought to tax under article 7(1) as such. That is not even the case of the Assessing Officer before us. - Decided in favour of assessee.
Levying surcharge and health and education cess on FTS income - HELD THAT:- We find that in the last paragraph of the assessment order, the Assessing Officer has specifically mentioned that the FTS “income of Rs. 30,92,20,199 is to be taxed @10% as per the DTAA” whereas the income said to be attributable to the PE “is to be taxed at the rates applicable to foreign companies, i.e. 40% plus surcharge and cess as per the Income Tax Act.” Yet, in the computation of tax liability, the surcharge as also health and education is also levied. That is certainly incorrect. In any event, this issue is covered, in favour of the assessee, by co-ordinate bench decisions, including in the case of DIC Asia Pacific Pte Ltd [2012 (6) TMI 686 - ITAT, KOLKATA] as held expression ‘tax’ is defined in Article 2(1) to include ‘income tax’ and is stated to include ‘surcharge’ thereon, so far as India is concerned. Article 2(2) further extends the scope of the ‘tax’ by laying down that it shall also cover “any identical or substantially similar taxes which are imposed by either Contracting State after the date of signature of the present Agreement in addition to, or in place of, the taxes referred to in paragraph 1”. "Education cess, introduced by the Finance Act, 2004, described in Section 2(11) of the Finance Act 2004, is nothing but in the nature of an additional surcharge. Accordingly, the “education cess” being in the nature of an “additional surcharge” is covered by Article 2. Accordingly, education cess cannot indeed be levied in respect of tax liability of the appellant company - Decided in favour of assessee.
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2022 (6) TMI 1108
Disallowance of labour expenses - disallowance on account of cash payments towards land development agreement - HELD THAT:- As discrepancies pointed out by the AO while disallowing the claim of the assessee for labour charges paid to the said two contractors were also explained and clarified by the assessee during the course of remand proceedings and the same was apparently accepted even by the learned AO - The details of work executed by the said contractors for the assessee were also duly supported by the copies of bills and certificates issued by Engineer Geometric Consultant.
CIT(A) found that the onus that lay on the assessee was satisfactorily discharged by him by filing all possible details including confirmations/affidavits and TDS; and, the business expediency as well as genuineness of the labour expenses was successfully established by the assessee. At the time of hearing before us, the learned DR has not been able to dispute this finding of fact specifically recorded by the learned CIT(A) on the basis of details and documents furnished by the assessee to give relief to the assessee by deleting the disallowance made by the AO on account of labour expenses. We, therefore, find no justifiable reason to interfere with the impugned order of CIT(A) giving relief to the assessee on this issue and upholding the same, we dismiss Ground No. 1 of the Revenue’s appeal.
Liability accrued under development agreement was not provided for by the assessee in the books of account - HELD THAT:- As noted by the CIT(A) in his impugned order on the basis of the relevant clause 3.4 of the Development Agreement, there was an understanding between both the parties that the land would finally be transferred to the prospective buyers of the bungalows in the scheme directly and because of this understanding the liability was not provided for in the books of accounts of the assessee. In any case, as rightly observed by the CIT(A) in his impugned order, there was no question of any loss to the Revenue by this accounting treatment given by the assessee because had the liability been provided in the books of accounts of the assessee, the profit declared by the assessee would have decreased to that extent.
As rightly concluded by the learned CIT(A), it was thus not a case of any postponement of tax liability by the assessee but was a case of preponement of tax liability. Keeping in view all these facts of the case, we are of the view that the addition made by the Assessing Officer on this issue was rightly deleted by the learned CIT(A) vide his impugned order and upholding the same, we dismiss Ground No.2 of the Revenue’s appeal.
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2022 (6) TMI 1107
Revision u/s 263 by CIT - assessment proceedings were reopened on “limited scrutiny basis” to analyse (a) Interest income mismatch and (b) deduction from income from other sources - HELD THAT:- As in our considered view, Pr. CIT has erred in facts in observing that the assessing officer did not verify the nexus between interest-bearing borrowed funds obtained and the interest-bearing loans and advances given by the assessee. In fact, it is observed that while setting aside the assessment order, the Pr. CIT has asked the AO to also examine the issue of disproportionate credit of dividend income with reference to investments in shares and also directed the AO to work out the disallowance u/s 14A in respect of dividend income, though the same did not form part of either the show cause notice issued u/s 263 and also it was beyond the scope of original assessment proceedings which were opened on “limited scrutiny basis” to examine issues specified above.
During the course of assessment proceedings, we note that the Ld. AO made detailed enquiries on these issues and after consideration of time-to-time written submissions filed by the assessee and documents / evidence placed on record, the Ld. AO accepted the return of income filed by the assessee.
The Gujarat High Court in the case of CIT v. Nirma Chemical Works [2008 (2) TMI 373 - GUJARAT HIGH COURT] held that when the assessing officer after making due enquiries had adopted one view and granted partial relief, merely because the Commissioner took a different view of the matter, it would not be sufficient to permit Commissioner to exercise powers under section 263 of the Act. The Gujarat High Court in the case of CIT v. Kamal Galani [2018 (6) TMI 1052 - GUJARAT HIGH COURT] has held that once assessing officer carried out detailed enquiries, it was not open for the Commissioner to reopen issues on mere apprehensions and surmises.
In the instant case, detailed enquiries were made during the course of assessment proceedings by the Ld. Assessing Officer to enquire about the claim of expenses u/s 57 of the Act, to which the assessee filed time to time replies. Hence, in the instant facts, we are of the considered view that the assessment order was not erroneous or prejudicial to the interest of the revenue. In the result, the appeal of the assessee is allowed.
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2022 (6) TMI 1106
Undisclosed stock found during the course of survey - HELD THAT:- As alleged excess stock is part of business income of the assessee and the same has been confirmed by the CIT(A) and the Revenue is not before us challenging the said finding. Now once it is confirmed that excess stock is part of business income, it is judicially settled that only profit element in such excess stock should be brought to tax.
Keeping in to consideration the gross profit rate and net profit rate disclosed by the assessee in the audited financial statements and also the submissions of assessee that the assessee is ready to offer 12% profit on the excess stock, we with a view to end of dispute sustain the addition on account of undisclosed closing stock i.e. 12% of undisclosed stock
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2022 (6) TMI 1105
Assessment u/s 153A - assessee has not accounted for 2/3 of its sales in its books of account as appearing in the seized documents - unaccounted sales found recorded in the hard disk - As found assessee has incurred expenses outside the books of account and if the same are taken into consideration, the resultant figures in all the three assessment years is net loss - HELD THAT:- As once drawn presumption that the contents of the documents of the assessee taken into possession during the search were true, then the same holds good for the entire entries found in those documents which means that the Assessing Officer cannot ignore the unaccounted expenses resulting into net losses in the captioned Assessment Years.
Coming to the facts of the case in hand, we find that the additions made by the Assessing Officer are based upon the unaccounted sales found recorded in the hard disk. CIT(A) has restricted the additions to the extent of entries found to be not recorded in the books based upon the decision of Kabul Chawla [2015 (9) TMI 80 - DELHI HIGH COURT] - Since the additions sustained by the ld. CIT(A) are based upon the facts found at the time of search, we do not find any error or infirmity in the findings of the ld. CIT(A).
Additions on account of undisclosed investment in stock is totally presumptuous and is based upon surmises and presumptions and is not even remotely connected with the facts unearthed at the time of search. We, therefore, do not find any reason to interfere with the findings of the ld. CIT(A). The impugned additions are deleted. - Decided in favour of assessee.
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2022 (6) TMI 1104
Ad-hoc disallowance of the expenses - addition on the ground of non-availability of vouchers etc. in support of expenses claimed in books of account - HELD THAT:- As the finding is based on the premise that the assessee failed to substantiate the expenditure however the contention of the assessee is that due to flood material evidences was washed away and FIR was duly registered, further it is stated that the accounts of the assessee was duly audited and no adverse observation has been recorded by the auditors.
Looking to the facts of the present case and more particularly the contention of the assessee that the record was washed away due to flood and coupled with the fact that there is no adverse inference by the auditors. I am of the considered view that it is a liberal view ought to have been adopted by the authorities below. Moreover the authorities below have not pointed out any specific absence of the vouchers hence. Therefore, considering totality of facts I hereby direct the AO to delete the addition. Decided in favour of assessee.
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2022 (6) TMI 1103
Reopening of assessment u/s 147 - assessment was reopened on the basis of having some information regarding the cash deposit in the bank a/c of the assessee - HELD THAT:- The assessee has not rebutted the finding of the AO that he had written various letters to the assessee seeking explanation regarding cash deposits in the impugned assessment order - AO has recorded that verification letters were issued to the assessee on 24.02.2012, 19.12.2014, 07.08.2015 and 09.09.2015 seeking explanation regarding the source of the cash deposit, however despite the letters were duly served on the assessee no explanation was given to him. Assessee could not point out that before the Assessing Authority, the assessee had offered explanation regarding cash deposits. No reason to interfere into the decision of the Assessing Officer for reopening of the assessment. Ground No. 1 of the assessee's appeal is dismissed.
Unexplained cash receipts - There is no dispute with regard to the fact that there was no representation on behalf of the assessee before the Assessing Officer. Therefore, the Assessing Officer made addition of the entire cash deposits. Hence, the subject matter of the assessment was the cash deposit.
In the remand report before the Ld. CIT(A), AO accepted the explanation of the source of the cash deposit to the extent of the gift received from his father of Rs. 5,00,000/- and 1/3rd share of Rs. 6,44,300/- found to be explained. Thus, out of addition of Rs. 27,34,000/-, this amount of Rs. 11,44,300/- ought to have been reduced.
Now coming to the rest of the addition the source of deposit was stated to be the lease amount received from one Sh. Shravan Singh. The evidences regarding receipt of lease amount was not believed by the authorities below on the basis that the lease deed as furnished did not disclose the name and address of the witnesses. This approach of the authorities below is erroneous in law and fact when the assessee has furnished certain evidences of ownership of land also the affidavits of person who had tilled the land.
Revenue has not brought any material to suggest that the land remained uncultivated. In the absence of such evidence, the evidence filed by the assessee should have been enquired into and verified by the authorities below. Therefore, we restore the issue related to the balance addition to the Assessing Officer for decision afresh after verifying the evidence filed by the assessee. Needless to say that AO would afford adequate opportunity to the assessee. The grounds raised by the assessee are partly allowed.
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2022 (6) TMI 1102
Delayed deposit of employees contribution towards PF and ESI - Addition invoking the provisions of section 36(1) when the same was paid within the due date of filing the return of income - intimation u/s. 143(1) when adjustment on debatable issue - HELD THAT:- In the instant appeal regarding disallowance of employees' contribution towards Provident Fund and ESI belatedly payment without following the provisions of section 2(24)(x) read with section 36(1)(va) of the Act is squarely covered in favour of the assessee by the judgment of the Hon'ble Jurisdictional High Court, Kolkata in the case of Vijay Shree Ltd.[2011 (9) TMI 30 - CALCUTTA HIGH COURT] - Decided in favour of assessee.
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2022 (6) TMI 1101
Disallowance of expenditure u/s 37 - HELD THAT:- AO has purely made addition by making ad-hoc disallowance out of the expenditure @ of 10%. AO has not been specified at what vouchers were not available and what was the amount of such vouchers, therefore, the finding of the AO is purely ad-hoc and based on conjectures and surmises. Such findings of the Assessing Officer cannot be sustained. Hence, the Assessing Officer is hereby directed to delete the disallowance. Appeal of assessee allowed.
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2022 (6) TMI 1100
Entertainment tax subsidy - capital or revenue receipt - disallowance u/s. 37 - HELD THAT:- In the assessment order the AO has observed that since the entertainment subsidy has been claimed as capital receipt by the assessee, the assessee must have incurred certain administrative & Operational expenditure for the said capital receipt. Therefore, AO made ad hoc disallowance u/s. 37 @ 10% of expenditure. However, the said disallowance was not added by AO in the assessment order because the AO has added entire entertainment subsidy as capital receipt. This is an ad hoc disallowance. AO has not pointed out any specific expenditure which was in the nature of revenue expenditure. AO cannot presume it. Therefore, the AO is directed to delete the said disallowance. Accordingly, the assessee's Ground No. 1, 2 and 3 are allowed.
Disallowance of 10% of expenditure out of Travelling, Conveyance, repairs and maintenance - Addition on the ground that these expenditures were in cash, no evidence filed to prove it - HELD THAT:- It is important to understand here that the ld. CIT(A) has given a finding that many of these expenditures were not supported by bills. Before us also the Assessee has not claimed that all the expenditures were supported by bills. The onus is on the assessee to prove the genuineness of the expenditure and to prove that the expenditure were incurred wholly and exclusively for the purpose of business of the assessee, In this case the assessee has not filed any documents to prove that the expenditure were wholly and exclusively for the business and has also not filed bills. Therefore, we uphold the disallowance made by the AO.
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2022 (6) TMI 1099
Revision u/s 263 - Reassessment proceedings - What is the material before the AO which led him to believe escapement of income from tax due to non-returning of capital gain on the sale of land by the assessee/s during the relevant year in the instant case? - HELD THAT:- As the instant are revision proceedings, separate and distinct from the reassessment proceedings, which can be said to have attained finality, and which cannot be lightly, if at all, disturbed.
The present case would be covered by the principle of law enshrined in the legal maxim “sublato fundamento cadit opus”, i.e., when the cause (foundation) is removed, the effect (consequent action) ceases. As explained by the Apex Court in Kiran Singh vs. Chaman Paswan [1954 (4) TMI 48 - SUPREME COURT] an order passed by an authority without jurisdiction is a nullity, and its invalidity can be challenged whenever and wherever it is sought to be enforced or relied upon. It is this principle, it may be noted, that prevailed with the Tribunal in the cases cited by the assessee, as indeed with the Hon'ble High Court in Keshab Narayanan Banerjee vs. CIT [1998 (8) TMI 55 - CALCUTTA HIGH COURT]. It is to be noted that in the present case there was no occasion for the assessees to challenge the assessment proceedings inasmuch as there was acceptance of the returned income. The assessee’s challenge to the reassessment proceedings in the instant, collateral proceedings is thus valid.
We, in view of the foregoing, uphold the challenge to the revision of the assessments under reference and, further, hold the impugned revision/s as bad in law. The assessee/s succeeds.
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2022 (6) TMI 1098
Assessment of trust - Intimation of the CPC by applying the maximum marginal rate of tax on the income which was below the taxable limit - HELD THAT:- This tribunal in the case of Jain Sangh Parabdi Khayu Trustee [2022 (6) TMI 1027 - ITAT AHMEDABAD] involving the identical facts and circumstances held that It is the admitted position that the members of the trustees are not entitled to any share in the income of the Association of persons. Accordingly, we are of the view that the circular issued by the CBDT as discussed above is squarely applicable in the given facts and circumstances. Thus we hold that the rate applicable as to an individual for charging the income tax after a lowing the basic exemption limit, shall be applicable to the assessee on hand. Hence the ground of appeal of the assessee is allowed - Decided in favour of the assessee
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2022 (6) TMI 1097
Exemption u/s 11 - intimation u/s 143(1) from CPC Bengaluru making certain adjustment as regards deduction claimed under section 11(2) which according to the assessee have been incorrectly disallowed since assessee’s case - HELD THAT:- As relying in own case [2022 (6) TMI 1079 - ITAT AHMEDABAD] disallowances were being made under section 143(1) of the Act, and similar disallowance is also made for the present year viz. Asst.Year 2016-17, we hold that debatable issue should not be done in an intimation under section 143(1)(a) of the Act. Therefore, we allow the appeal of the assessee and delete both the disallowances. Assessee appeal allowed.
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2022 (6) TMI 1096
Source of Cash deposited into the Bank Account - Agricultural income - advances received from customers in land transactions - assessee is an individual engaged in the business of trading in land on very small scale, helping his father and mother who running a tea shop at Adgaon as conducting agricultural activity on land taken on rent - HELD THAT:- The net agricultural income is not possible in view of possession of agricultural land in 52R which is not sufficient. It is also noted the sale bills of agricultural produce were furnished before the AO but however the AO held the bills obtained from merchant who is non-existent. There is no dispute with regard to possession of agricultural land whether it is own or on rent by the assessee and the balance amount out of the addition made by the AO u/s. 68 are out of gross agricultural income or turnover on account of land transactions activity.
The assessee also furnished bills substantiating production of agricultural produce.
CIT(A) ought to have considered the agricultural activity. It is also noted it was claimed by the assessee that the advances received from customers were refunded before year end but we find no such verification done by both the authorities below to confirm whether such advances were refunded or not.
AR also did not bring on record anything to show that the advances from customers refunded before year end either before the CIT(A) nor before us. We deem it proper to restrict the addition to an extent of Rs.12,90,000/- being 50% of Rs.25,80,000/- on account of non furnishing of requisite details regarding the refund made to customers on account of advances received on land transactions. Thus, the order of CIT(A) is modified as indicated above accordingly and grounds raised by the assessee are partly allowed.
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2022 (6) TMI 1095
Deduction in respect of interest paid u/s 57(iii) - Interest expenditure on borrowings utilized for advancing loan to the partners not allowable u/s. 57(iii) - HELD THAT:- As relying on own case [2019 (2) TMI 2034 - ITAT MUMBAI] there exists nexus between borrowings of money from the partner M/S Godrej Properties Ltd and lending out of that to two partners.
Therefore, in our opinion, while assessing interest income received on loans from two partners namely M/s. Repton landmarks LLP and Mr. Ramesh P. Bhatia as income from other sources, deduction has to be allowed in respect of interest payment on loan to M/s. Godrej Properties Ltd. to equal extent. In our opinion decision cited by CIT(A) in the case of Dr. V.P. Gopinathan [2001 (2) TMI 10 - SUPREME COURT] is clearly distinguishable on fact and not applicable in the present case - the assessee has proved direct nexus between borrowings and lending. Therefore we are not in agreement with the conclusion of learned CIT(A). Accordingly we set aside the order of learned CIT(A) and direct the Assessing Officer to allow deduction in respect of interest paid u/s 57(iii) of the Act while assessing interest income as income from other sources. Assessee appeal allowed.
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2022 (6) TMI 1094
Seeking release of seized goods - Jurisdiction - violation of principles of natural justice - violation of articles 14 and 19(1)(g) of the Constitution of India and provisions of Customs Act, 1962, notifications thereof, and provisions of Foreign Trade Policy and allow the goods to be further exported - conduct of investigation against the petitioner - seeking defreezing of bank account of the petitioner - Section 110 of the Customs Act - HELD THAT:- It is evident that if the proper officer has reason to believe that any goods are liable to confiscation under the Customs Act, he may seize such goods - Section 113 of the Customs Act mentions the instances when exportable goods can be confiscated.
In the instant case, the seizure memo are not on record. However, the panchnama which has been placed on record along with the counteraffidavit says that officers of the Customs Department had informed that the exportable goods of the petitioner "appear to be liable for confiscation" and, therefore, they intended to seize the said goods. The expression "appear to be liable for confiscation" is clearly distinguishable from the expression "reason to believe" which are briefly analysed.
Courts have held that section 110A provides a pragmatic mechanism to facilitate provisional release of seized goods, etc., to the owner, pending adjudication, but at the same time, protecting the interest of the Revenue - Insofar the present case is concerned, the petitioner had already made an application on January 18, 2022 before the respondent No. 1 for provisional release of the goods. At the time of making the application, the exportable goods of the petitioner were yet to be seized. Though initially the goods were detained by respondent No. 1, it is now stated that the goods were subsequently seized on February 9, 2022 by the Hyderabad Customs Commissionerate.
Thus, a prima facie case is made out for provisional release of the goods under section 110A of the Customs Act, more particularly, considering the fact that the goods are not included in the prohibited list - provisional release of the exportable goods of the petitioner covered by the seven bills of export dated December 31, 2021, ordered, subject to the petitioner complying with the conditions imposed - let the petitioner furnish a bond for the total value of the export able goods - lhe petitioner shall also furnish bank guarantee to the extent of 20 per cent. of the duty drawbacks relatable to the exportable value of the goods - application disposed off.
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2022 (6) TMI 1093
Confiscation - Imposition of redemption fine and penalty - valuation of goods which are not requiring BIS certifications - Confiscation and allowing of redemption of goods to which BIS specifications are applicable, for the purposes of export.
Valuation of goods which are not requiring BIS certifications and confiscation of the same and allowing to be redeemed - HELD THAT:- Valuation of the goods was made in arbitrary manner without giving any cogent reasons whatsoever. The lower authorities have also not adhered to the principles of natural justice. The revaluation of goods was done at the back of the importer. Though the original authority cursorily states that he has gone through the various the sequential Customs Rules for valuation, there is no evidence to that effect to indicate such diligent application of rules by the lower authorities. The reason for rejection of the declared value is also not brought out clearly. The value adopted was arbitrary on the basis of report claimed to have been submitted by SIIB. Thus, it is found that revaluation of goods by the lower authorities do not show any application of own mind.
The careless manner in which duty is confirmed on the appellants is evident from the fact that valuation of shoes and sandals was made at Rs.85 per pair and the Notification No.1/2017 prescribes a rate of 2.5% for the shoes and sandals which are priced below Rs.500/- or the Notification No.18/2018 which prescribes a rate of 2.5% for shoes and sandals which are priced less than Rs.1000/- was not followed - For these reasons and for the reason of non-adherence to the principles of natural justice, the impugned order to the extent of revaluation of goods which are not subjected to BIS specifications cannot be sustained.
Request for issuance of a detention certificate - HELD THAT:- The impugned order does not show if the appellants have made any such request to the department and the Department has disallowed the same. In the absence of any order either permitting or rejecting the issuance of detention certificate, this Tribunal cannot entertain the request of the appellants. However, from the facts and circumstances of the case, it is evident that the detention of the goods was because at the instance of the Department and subsequent proceedings initiated by the Department. Therefore, the appellants are within their right to seek detention certificate from the Department. However, this Tribunal not be a writ court cannot suo motu direct the authorities to issue a detention certificate in respect of impugned goods.
It is directed that the goods shall be assessed at the value declared by the appellants and the rate of duty shall be as applicable to such goods - order is modified to the extent that after the imposition of redemption fine, the department cannot put any conditions for re-export or whatsoever else. The condition is thus set aside - Appeal allowed in part.
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2022 (6) TMI 1092
Seeking release of seized goods - section 110A of Customs Act, 1962 - memory cards of different specifications - 1826 nos. iPhone 13 Pro of different specifications - prohibited/restricted goods or not - failure to disclose these phones was the bone of contention in the investigation as well as in the show cause notice issued thereafter - HELD THAT:- Both confiscation and provisional release arise in the aftermath of seizure under section 110 of Customs Act, 1962. The scope for, and limits on, confiscation under section 111 of Customs Act, 1962, and, thereby, of redemption fine, stands settled by the decision of the Hon’ble Supreme Court in WESTON COMPONENTS LTD. VERSUS COMMISSIONER OF CUSTOMS, NEW DELHI [2000 (1) TMI 45 - SC ORDER] and of the Hon’ble High Court of Bombay in COMMISSIONER OF CUSTOMS (IMPORT) , MUMBAI VERSUS FINESSE CREATION INC. [2009 (8) TMI 115 - BOMBAY HIGH COURT]. Provisional release under section 110A of Customs Act, 1962 does not, in any way, impede completion of adjudication proceedings commenced under section 124 of Customs Act, 1962 and is to be invoked upon seizure with due acknowledgement of legislative intent to which we may now bring our attention to bear.
Disposal by the empowered officer under the authority of section 110(1A) of Customs Act, 1962 is not restricted to sale and it is trite that such sale does not erase the taint of prohibition that attaches to seized goods; therefore, it is abundantly clear that the impugned goods are not prohibited, or even restricted, for import and that it is compliance with section 47 of Customs Act, 1962 that is in dispute here. The power to seize goods, and, that too, only in the reasonable belief of liability to confiscation under section 111 of Customs Act, 1962, is accorded by section 110 of Customs Act, 1962 - The denial of provisional release appears not to have considered the legal framework for exercise of authority laid down in section 110 to section 126 of Customs Act, 1962 and, instead, has been sought to be justified in terms of section 150 of Customs Act, 1962. A perusal of this provision leaves no room for doubt that section 150 of Customs Act, 1962 is a procedural enablement for distribution of sale proceeds of goods that are permitted by law to be sold; in any case, section 150 of Customs Act, 1962 does not empower sale or disposal and justification for denial of provisional release is acceptable only if in accord with the legislative intent of section 110A of Customs Act, 1962.
It is on record that section 110(1A) of Customs Act, 1962 has been invoked for undertaking disposal of seized goods before even being vested, under the authority of section 126 of Customs Act, 1962, in the Central Government by confiscation. The substitution of the merchant-importer by the Central Government cannot legalize a beach of restrictions imposed for the security of the State or the safety of those who reside within its territorial confines; the commencement of ‘pre-trial’ disposal by sale admits that breach by the importer of the impugned goods has only commercial implications. There is no suggestion that any policy has been contravened in the import. The sum and substance of the alleged breach is the failure to declare the goods with intent to evade duty for which restitution lies in section 28 of Customs Act, 1962 - Before section 110A was incorporated in Customs Act, 1962, seized goods offered for repossession, by operation of ‘common practice’, could be saddled with fine in lieu thereof by retention of confiscatory interest. Over the years, the quantification of fine has been placed within the practical framework of offsetting the potential for windfall deriving from the breach for which the goods are confiscated. Rarely would it be the value of goods; some proportion thereof suffices. There can be no golden formula for it and it is here that the discretion of the authority is called for.
The goods have been seized under section 110 of Customs Act, 1962 and the seizure itself is not in dispute. Therefore, it does not lie in the jurisdiction to set aside the seizure. However, appellant has claimed that the goods were wrongly despatched to the importers and must, therefore, be returned to the owners. It is on record that the goods are not configured for use in India. In any case, no harm would be caused to the interests of Revenue by export of goods that have not been cleared for home consumption or even after such clearance. Provisional release under section 110A of Customs Act, 1962, by adjudicatory determination or on appellate intervention, does not stand in the way of disposition as the owner deems fit. Shipping bills, filed for declaration of intent to export, is to be dealt in accordance with section 51 of Customs Act, 1962 for which responsibility vests with the supervisory establishment of the customs administration. This advisory is enunciated as a reminder that legislative intent must be adhered to at all times.
The impugned order declining provisional release is modified to allow provisional release upon execution of bond for value of impugned goods and furnishing revenue deposit of ₹ 5,00,00,000 not later than seven days of service of this order. Entry for export under section 50 of Customs Act, 1962, as and when filed, shall be disposed off expeditiously in accordance with section 51 of Customs Act, 1962 - Appeal disposed off.
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2022 (6) TMI 1091
Refusal of SAD - rejection of refund pertaining to 6 bills of entry on the sole ground that Audit objected those 6 Bills of entry as allegedly not tallying with the sale invoices - HELD THAT:- The goods imported and goods sold, though are of different brand names are one and same which is verifiable from the item code and item description and such infraction of procedural technically cannot defeat the very object and purpose of exemption Notification [reliance was placed on the judgment of Hon'ble Supreme Court in MANGALORE CHEMICALS & FERTILIZERS LTD. VERSUS DEPUTY COMMISSIONER [1991 (8) TMI 83 - SUPREME COURT]. Further, he had asked the adjudicating authority to verify the claim of refund with reference to requisite documents and pass an appropriate order.
With this limited purpose matter went back to the adjudicating authority once again, whose primary duty was to verify if through documentary proof concerning import and sale of imported goods in the local market could be established and then sanction the refund as per Notification No. 102/2007. However, he had exceeded his jurisdiction in starting a de novo proceeding - Though Appellant claims that even there is no change of description of the goods imported and goods sold in the local market, which it has substantiated demonstratively during hearing of this case through documents annexed to the appeal memo from page 80 to page 95 and beyond. Further, as could be noticed from the adjudicating authority’s order that unless imported goods are sold in the same condition, benefit of exemption Notification would be denied to the importer and change in the nature of goods would disentitle the importer from seeking SAD refund. On perusal of Notification No. 102/2007 no such conditionality is noticeable.
Refund of SAD is primarily governed by Notification No. 102/2007 and guided by its clarificatory Circular issued from time to time. Learned Commissioner (Appeals) in the first round of litigation had already given a finding that claim of refund of applicant survives and thereafter review of the said order by the adjudicating authority in the limited remand for verification of documents so as to ascertain that the same is in conformity to law, is beyond the power of the adjudicating authority, as it can only be exercised by the appellate authority.
Judicial president has been set by the Hon'ble Madras High Court in the case of JOHNSON LIFTS PVT. LTD. VERSUS ASSTT. COMMR. OF CUS. (REFUNDS) , CHENNAI [2021 (2) TMI 401 - MADRAS HIGH COURT] in which it was clearly stipulated that the respondent-department is bound to accept the description of goods in the import documents as well as sale invoice to be one and the same, on the strength of the certificate/correlation statement issued by the Statutory Auditor (Chartered Accountant).
Appeal allowed.
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2022 (6) TMI 1090
Delay in filing of appeal before Commissioner (Appeal) - Period of limitation for date of assessment of Bill of entry - to tbe counted from the date of communication of order or from the date of upload on the website - rejection of appeal on the ground that the same is hit by period of limitation prescribed under Section 128 of the Customs Act - HELD THAT:- The provisions of Section 128 of the Customs Act, would clearly indicate that limitation would be counted from the date of communication to him (person aggrieved) of such decision or order. Secondly, the ratio of the referred judgment also indicates that order of assessment/re-assessment is an appealable order - Reliance can be placed in the case of ITC LIMITED VERSUS COMMISSIONER OF CENTRAL EXCISE, KOLKATA -IV [2019 (9) TMI 802 - SUPREME COURT] - This being the facts on record and the provision of law, the service of copy of the order on dated 12.01.2018 is supposed to be taken as the date of communication of the order, in which event the delay was only of 18 days concerning which satisfactory explanation in the delay condonation petition was afford by the Appellant as has been noted by the Commissioner (Appeals) in para 7 of his order i.e. Order-in-Appeal under challenge.
Additionally the order passed by the First Appellate Authority under RTI Act, 2005 on dated 22.10.2021, being taken as additional piece of evidence since in the nature of public documents, clearly reveal that date of communication of order was 12.01.2018 and the Respondent- Department had never been in the practice of issuing copy of finally/provisionally assessed bill of entry to anyone, as the same has been uploaded in their website link (para 4 of the order of the appellate authority).
This being the facts on record, it is opined that communication of the decision/order was made on 12.01.2018 and the date of uploading in the link provided by the Respondent- Department, cannot be taken as date of communication of the order besides the fact that dispute concerning non-availability of the order in the said link is also noticeable in the RTI order dated 22.10.2021. Moreover, no Court would presume such a document uploaded in the website as genuine unless it is a public document containing seal and signature of the public authority or its certified copy that would meet the requirement of Section 79 of the Indian Evidence Act.
It is considered appropriate to allow the appeal and the matter remanded back to the Commissioner of Customs (Appeals), Mumbai-I to pass an order in conformity to the dictate of Section 128A(4) of the Customs Act - appeal allowed by way of remand.
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