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2024 (5) TMI 1110
Approval of Resolution Plan - validity of proceeding of CIRP against the Corporate Debtor - Corporate Debtor having struck off from the Register maintained by Registrar of Companies - revival of struck off company - Impact of settlement agreements on the liability of the Corporate Debtor.
Validity of CIRP against a struck-off company - HELD THAT:- The company is now active in the Master Data of the Corporate Debtor in the records of the MCA, which has also been brought on record as Annexure-8 to the Additional Affidavit filed by the Resolution Professional. There are no substance in the submission of learned counsel on behalf of the Ex-Director of the Corporate Debtor that company having been struck off on 29.10.2019 the entire proceedings of the IBC need to be set aside. Company owed financial liability to the Financial Creditor and on default committed by the Corporate Debtor, Section 7 application was filed.
The liabilities of the company cannot be simply washed out by action of company of non-compliance of the provisions of Companies Act, non-filing of the relevant financial documents and other filings. If the submission is accepted of the Appellant that proceeding could not have been proceeded, the easiest thing for a company would be to get struck off to wash of its all liabilities, which submission cannot be accepted.
Non-acceptance of claims filed post-approval of the Resolution Plan - claims were filed after the Committee of Creditors (CoC) had already approved the Resolution Plan - HELD THAT:- The Tribunal upheld the Resolution Professional's decision not to accept these late claims and noted that an application seeking admission of the claim was dismissed on 16.08.2023, which was not further challenged.
Impact of settlement agreements on the liability of the Corporate Debtor - HELD THAT:- The submission of the Appellant that under the settlement agreement dated 18.06.2018 and 21.06.2018 it was Super Cassettes Industries Private Limited who has to make payment of Corporate Debtor is no more available to the Appellant since one of the parties i.e. the Financial Creditor has already nullified all the understanding in writing within four days from the said settlement. Thus, liability of the Corporate Debtor to discharge its financial debt continues. More so, admission of Section 7 application on the basis of debt and default has become final and in the proceeding regarding plan approval it is not open for the Ex-Director of the Corporate Debtor to contend that there is no debt owed by the Corporate Debtor. The submission of the Appellant that debt is to be paid by Super Cassettes Industries Private Limited is fallacious and cannot be accepted.
Thus, no grounds raised by the Appellant to interfere in the order dated 12.10.2023 approving the Resolution Plan.
Appeal dismissed.
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2024 (5) TMI 1109
Recovery of short-paid excise duty along with interest and penalty - admissibility of electronic evidences recovered by the investigating officers during earlier proceedings for another company - reliable evidence or not - compliance with the provision of Section 36B of the Central Excise Act, 1944 or not - quantification of demand as arrived in the Show Cause Notice vide para 7.1 to 7.17 adopting percentage of cash to invoice value is correct or not - suppression of facts or not.
Electronic evidences have complied with the provision of Section 36B of the Central Excise Act, 1944 or not - demand adopting percentage of cash to invoice value is correct or the same needs to be arrived at only based on the evidences available on record - demand of Central Excise Duty on CGC on the amounts collected in cash over & above the value - HELD THAT:- The data in the pen drive seized from M/s SVPNSN Balasivaji & Co., was retrieved at some point of time in earlier proceedings. As per SCN, Sl. No. 12 of RUD are printouts of ledgers contained in pendrive and laptop bound into 5 books. As per SCN, Sl. No. 13 is the extract of ledgers recovered from M/s. SvPNSN Balasivaji & Co. Sl.No.38 is the print out of ledger taken from laptop of Shri B.Saravanan seized in 2017. The other proint outs are the whatsapp messages, SMS, contact details obtained from several mobile phones. While recording statements during this investigation, the officers have asked the partners/directors of CGC and B. Saravanan to affix their signatures in these bound books - it is not understood how such affixing of signature on bound books would make the data retrieved from electronic item to be admissible in evidence in para 13.4 of impugned order the excerpts from statement of Shri B. Saravanan would show how the department got his signature on these bound books - The affixing of signatures on the bound volume of books would not suffice compliance of Section 36B.
Compliance of requirement of Section 36B of Central Excise Act - HELD THAT:- Without complying Section 36B it is not possible to hold that the data retrieved from pen-drive and laptop (seized in 2017) is admissible in evidence. This is more important as this pen-drive and laptop are the only documents relied by AA for confirmation of demand of the duty - Though some kind of certificate is produced for retrieval of data from mobile phones, there is no certificate at all for compliance of Section 36B for retrieval of data from the pen drive and laptop seized in 2017.
Section 36B of Central Excise Act, 1944 is similarly worded as Section 65B of Indian Evidence Act 1872. The Hon’ble High Court of Delhi in the case of CCE Vs Jindal Nickel Alloys Ltd., [2019 (11) TMI 122 - DELHI HIGH COURT] considered the admissibly of electronic evidence where the allegation was suppression of production of finished products and clearance of goods. The Hon’ble High Court held that the provisions of Section 36B are mandatory.
The evidence tendered by the key witness from whom the pen drive and lap top were recovered shows that he has denied the allegations. The original authority has disregarded his retraction of statement as an afterthought - A mere retraction may not make a statement irrelevant or inadmissible. In the present case, the witnesses were already subject to cross examination in 2019 as per Section 9 D of the Central Excise Act, 1944. After such cross-examination and filing of SVLDRS application, he is again summoned to give statement under Section 14 on the very same set of facts. It is deposed by him that on 09.03.2021 and 10.03.2021 he has given statements before the officers only because he was assured that he would not be implicated in the proceedings.
Undervaluation on the basis of both suppressing the actual value in the invoices and also supply of goods without invoices - HELD THAT:- In the search conducted in the present proceedings, though CPU, laptop, mobile phones were seized these have not been the basis for allegation of undervaluation or demand of duty. Other than the electronic evidence of 2017 and the retracted statements there is no evidence to establish undervaluation. It is therefore concluded that department has miserably failed to establish the allegation of undervaluation.
On the basis of the data retrieved from the pendrive /laptop the price of the goods sold by dealers at Gujarat and Maharastra has been adopted to quantify duty on the goods cleared by the appellant. The price of such goods which have seasonal demand (festival seasons) would vary when sold by dealers, at different places. The quantification of duty on the basis of dealer price at Maharastra and Gujarat appears to be too extra ordinary method for quantification of duty and in appropriate too.
The demand of duty, interest, penalties cannot sustain. The impugned order is set aside - Appeal allowed.
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2024 (5) TMI 1108
TP Adjustment - corporate guarantees extended to its foreign AEs - AO captured the Corporate Guarantee fee at 1.8% at the outstanding loan amount - as per AR corporate guarantees extended to its foreign AEs are in the nature of shareholder activities and the assessee did not incur any expenditure, therefore, benchmarking of an activity of shareholder without any consideration is not in accordance with provisions of the Act and well accepted principle that no service fee is required to be paid for rendering shareholder services by an enterprise to its associated enterprise as a shareholder
HELD THAT:- As relying upon the decision of Aurobinda Pharma [2023 (4) TMI 1254 - ITAT HYDERABAD] we uphold the computation of Corporate Guarantee Commission at 0.53%. Undoubtedly, in the facts of the case of Aurobinda Pharma (surpa), we had determined the amount guaranteed as corporate guarantee commission @ 0.5%. However, considering the facts of the present case, we are of the opinion that the computation of the amount guaranteed as corporate guarantee commission @ 0.53% would be appropriate. Furthermore, the Revenue cannot be worsen of thereby reducing the corporate guarantee commission from 0.53% to 0.50% in its appeal. Accordingly, the appeal of the Revenue on this aspect is without any basis.
Other aspect on which the CIT(A) has granted relief is that the assessee has only provided the corporate guarantee to its AE to the extent of 30.50% on the outstanding loan balance of US $ 10 million advance to its AE. In our view, the pro rata corporate guarantee is required to be calculated as directed by the Ld.CIT(A) on the amount for which the assessee has sought which would be 30.50% of the total amount of US $ 10 million advanced to its AE. Therefore, the corresponding corporate guarantee commission @ 0.53% is required to be computed on the amount of 30.50% of assessee’s share on the outstanding loan balance of US $ 93,05,376. Accordingly, grounds 2 to 4 of the Revenue appeal are dismissed.
Whether the corporate guarantee given by the assessee to its AE would constitute the international transactions or not ? - CIT(A) after relying upon the Explanation to 22A had decided the issue and has held that the grant of corporate guarantee to its AE would constitute international transactions. After holding the grant of corporate guarantee as international transaction, CIT(A) has adjudicated and determined the corporate guarantee @0.53% instead of @1.90% on the outstanding amount of the corporate guarantee. Hence, we do not find any reasons to interfere with the findings given by the CIT(A) and accordingly, the grounds 2(a) to 2(c) and 3 raised by the assessee for A.Y. 2017-18 are dismissed.
Interest on outstanding Trade Receivables - As consistently held that the interest on delayed outstanding trade receivables is an international transaction and after holding so, we have benchmarked the international transactions at 6% SBI rate.
Computation of interest on delayed receivables - We had consistently followed and granted the credit period of 60 days which we have also done in the case of M/s Aurobindo Pharma Ltd [2023 (4) TMI 1254 - ITAT HYDERABAD] wherein we have also granted the credit period of 60 days, which is also in the same of line of business. No special treatment can be given to the assessee. Furthermore, once the assessee failed to justify and substantiate the credit period of 90 days before the lower authorities, it is preposterous to claim 180 days credit period before the Tribunal.
Hence, we do not agree with the contention of the assessee. With respect to the submission that assessee has not charged any interest from the non-AE and therefore, the non-AE should be considered as an internal comparable. This contention of the assessee is without any basis and the assessee failed to establish that the assessee has not charged any interest from its non-AE before the lower authorities and further, the assessee failed to prove that the non-AE were operating in the same segment, product, region and with the same terms and conditions of sale and purchase of Pharmaceutical products.
Comparable selection - scope of Related Party Transaction (RPT) filter - As both the parties have agreed for exclusion of these two companies namely, M/s. Sun Pharma Laboratories and M/s. Macleods Pharmaceuticals Ltd and therefore, we direct the TPO / Assessing Officer to exclude these two comparables. Accordingly, we allow the grounds of Revenue.
R & D Expenses, Head Office & Marketing Office Expenses while computing the PLI of the comparable companies - Grievance of the Revenue before us is that the ld.CIT(A) while excluding R & D expenses, Head Office and Marketing Office Expenses had not given the opportunity to the AO while computing the margins of the comparables after excluding the R & D expenditure, Head Office and Marketing Office Expenses - In our view, the law requires the CIT(A) to grant the opportunity to the Assessing Officer/TPO before making any adjustment on account of excluding R & D expenses, Head Office and Marketing Office Expenses in the financials of the comparable. The ld.CIT(A), has not done the same and has thus violated the principle of natural justice under 46A of I.T. Rules.
We deem it appropriate to remand back the entire issue of TP adjustment with respect to both the eligible specified domestic transaction to the file of the Assessing Officer/TPO for passing a fresh order after affording the opportunity of hearing to the assessee. We further direct the assessee to provide the segmental accounts of the non-exempt units, more particularly, the assessee's transaction with its eligible undertaking and with the other non-related parties so that the ld TPO can benchmark the specified domestic transactions accurately. AO/TPO shall consider any other documents as may be filed by the assessee in accordance with law. In the light of the above, the ground of the Revenue appeal are allowed for statistical purposes.
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2024 (5) TMI 1107
Penalty u/s 271(1)(c) - allegation of defective notice on non specification of clear charge - concealment of particulars of income or furnishing of incorrect particulars of such income - test of prejudice - non strike off any one of the twin charges against the assessee - whether assessee has been prejudiced by the non striking of the one of twin limbs on which penalty can be levied?
HELD THAT:- Facts clearly shows that issue of non striking of any of twin charges were not raised before ld AO or CIT (A) for both the years. It is argued before us for the first time. It is also a fact that assessee was fully aware why penalty proceedings are initiated. It is also not shown before us that what prejudiced is caused to the assessee by not striking off one of the twin charges in a notice issued u/s 274 r.w.s. 271 (1) (c) of the Act. Thus, It is apparent that notwithstanding the defective notice, the assessee was fully aware of the reason as to why the Assessing Officer sought to impose penalty. Thus, significant features of the case in hand are that penalty proceedings were initiated during the assessment proceedings. The Assessing Officer had although issued a notice without a tick mark, it appears that both the limbs under section 271(1)(c) namely "concealment of particulars of income" and "furnishing inaccurate particulars of such income" were attracted in the facts of the case. Further At no point of time, the assessee had a grievance in regard to the section 271(1) (c) notice being in any manner vague, ambiguous and not being understood by the assessee in regard to the limbs under section 271(1)(c) being attracted.
Assessee had wholeheartedly participated at the hearing before the Assessing Officer and The notice was in fact, responded by the assessee on both the counts as falling under section 271(1)(c) of the IT Act.
As per binding decision of Veena Textiles [2024 (1) TMI 701 - BOMBAY HIGH COURT] we hold that non striking of any limb in notice u/s 274 rws 271 (1) (c) of the Act does not come to rescue of the assessee where the assessee never having raised any objection from very inception on account of defect in notice, the assessee was prevented from raising such grounds, without showing prejudice caused to him. Hence, Ground No 1 is dismissed.
Penalty imposed on Estimation of income on bogus purchases - HELD THAT:- When the addition is sustained based on estimates penalty u/s 271 (1) c) is not sustainable. See M/S ETCO PROFILES PVT. LTD. [2015 (6) TMI 1214 - ITAT, MUMBAI]
In the present case AO made addition of 12.5 % of the Bogus purchases which was confirmed by the ld CIT (A), on appeal before ITAT it was reduced to 5 % - Once, the source of payment of purchases have been made through books of accounts and through account payee cheques and there is corresponding sales, then merely because some adhoc GP rate has been applied on such alleged bogus purchases to factor in suppression of alleged gross profit, no penalty can be levied. Thus, it was held that on such estimates penalty cannot be levied. Decided in favour of assessee.
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2024 (5) TMI 1106
Exemption u/s 11 - Application for registration u/s 12AB rejected - charitable activity u/s 2(15) - conclusion of CIT(E) that the commercial receipts for assessee are more than 20% of the total receipt - HELD THAT:- The entire thrust of the CIT(E) is regarding services provided by the assessee against charges without even considering the fact whether the charges are nominal or reasonable mark up over cost that too is also applied for charitable purpose or achieving charitable objects of the assessee.
The conclusion of CIT(E) that the commercial receipts for assessee are more than 20% of the total receipt is contrary to the fact that the assessee is not doing any trade or business but is providing the services for achievement of charitable objects and in that process nominal fee is charged which is also not more than 20% of the total receipts of the assessee as manifest from the details given in the forgoing part of this order.
The Co-ordinate Bench of this Tribunal in case of Crisp Society [2021 (12) TMI 1499 - ITAT INDORE] has considered this aspect of nature of the activities of the assessee rust or education institute is running with a nominal fee to cover cost on account of its activities that cannot be held to be a commercial activity. Sometime trust or the other institution does not get complete donations either from public or from the government. In that case, if those trusts or education institutes charging nominal amount of fee in order to carrying out its activities in a smoother way, this cannot be called a part of commercial activities. Therefore, respectfully following the aforesaid judgments and as assessee is imparting education and training to students and public, its activities have not been doubted by the lower authorities. Therefore, in such circumstances, benefit of Section 11 of the Act cannot be denied.
We set aside the impugned order of the CIT(E) and direct the CIT(E) to grant registration u/s 12AB of the Act to the assessee. Assessee appeal allowed.
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2024 (5) TMI 1105
Monetary Limit - Filing of Appeal by the Revenue / Department - threshold limit for filing appeals as per Central Board of Indirect Customs (CBIC) circulars - Instruction are binding effect Or not - Valuation - Validity of enhanced value assessment - HELD THAT:- In the present cases, we are concerned with the CBIC’s latest circular dated 02.11.2023, wherein it has been specifically prescribed that no appeal shall be filed before the CESTAT below the monetary limit of Rs.50 lakhs and if already filed, will have to be withdrawn. These instructions have been issued in exercise of its power u/s 131BA of the Customs Act, 1962. The perusal of the circular cited supra shows that the same prescribes monetary limit below which the department shall not file appeal before the CESTAT, the High Courts and the Supreme Court. In so far as, the CESTAT is concerned the monetary limit prescribed is Rs.50 lakhs. Para 3 of the said circular prescribes that in respect of the pending cases before the CESTAT, the High Courts and the Supreme Court which are below the monetary limits, process of withdrawal of the appeal would be undertaken by the department.
It is pertinent to mention here that the amount of duty involved in each of the appeal is below of the threshold limit prescribed in circular dated 02.11.2023 issued by the CBIC wherein it is provided that if the duty amount involved is less than Rs.50 lakhs, then no appeal shall be filed before the CESTAT, and if already filed, the same will be withdrawn by the department.
Thus, we are of the considered opinion that the present appeals filed by the department are not maintainable in view of the instructions issued by the Board and consequently we dismiss all these 13 appeals leaving the question of law, if any, open.
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2024 (5) TMI 1104
Legility of arrest of petitioner - inherent difference between the provisions contained in Section 19 of the PMLA and Section 43A and 43B of the UAPA - HELD THAT:- There is no significant difference in the language employed in Section 19 (1) of the PMLA and Section 43B (1) of the UAPA which can persuade to take a view that the interpretation of the phrase ‘inform him of the grounds for such arrest’ made by this Court in the case of Pankaj Bansal [2023 (10) TMI 175 - SUPREME COURT] should not be applied to an accused arrested under the provisions of the UAPA.
The provision regarding the communication of the grounds of arrest to a person arrested contained in Section 43B (1) of the UAPA is verbatim the same as that in Section 19 (1) of the PMLA - As a matter of fact, both the provisions find their source in the constitutional safeguard provided under Article 22 (1) of the Constitution of India. Hence, applying the golden rules of interpretation, the provisions which lay down a very important constitutional safeguard to a person arrested on charges of committing an offence either under the PMLA or under the UAPA, have to be uniformly construed and applied.
There is no doubt in the mind of the Court that any person arrested for allegation of commission of offences under the provisions of UAPA or for that matter any other offence(s) has a fundamental and a statutory right to be informed about the grounds of arrest in writing and a copy of such written grounds of arrest have to be furnished to the arrested person as a matter of course and without exception at the earliest. The purpose of informing to the arrested person the grounds of arrest is salutary and sacrosanct inasmuch as, this information would be the only effective means for the arrested person to consult his Advocate; oppose the police custody remand and to seek bail. Any other interpretation would tantamount to diluting the sanctity of the fundamental right guaranteed under Article 22 (1) of the Constitution of India.
The remand order dated 4th October, 2023 records that the copy of the remand application had been sent to the learned Advocate engaged by the accused appellant through shri App. A bare perusal of the remand order is enough to satisfy us that these two lines were subsequently inserted in the order because the script in which these two lines were written is much finer as compared to the remaining part of the order and moreover, these two lines give a clear indication of subsequent insertion.
Once this Court has interpreted the provisions of the statute in context to the constitutional scheme and has laid down that the grounds of arrest have to be conveyed to the accused in writing expeditiously, the said ratio becomes the law of the land binding on all the Courts in the country by virtue of Article 141 of the Constitution of India.
There is no hesitation in the mind of the Court to reach to a conclusion that the copy of the remand application in the purported exercise of communication of the grounds of arrest in writing was not provided to the accused appellant or his counsel before passing of the order of remand dated 4th October, 2023 which vitiates the arrest and subsequent remand of the appellant - the appellant is entitled to a direction for release from custody by applying the ratio of the judgment rendered by this Court in the case of Pankaj Bansal.
The arrest of the appellant followed by remand order dated 4th October, 2023 and so also the impugned order passed by the High Court of Delhi dated 13th October, 2023 are hereby declared to be invalid in the eyes of law and are quashed and set aside.
Appeal allowed.
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2024 (5) TMI 1103
Dishonour of Cheque - insufficient funds - legally enforceable debt or not - aquittal of accused - complaint did not produce any document to show that he has money lending authority - failure to rebut the presumption under Section 139 of the Negotiable Instruments Act - HELD THAT:- In the present case, the Complainant has sent a demand Notice on the Cheque being dishonoured. And the presumption as per Section 139 N.I. Act is in favour of the Complainant. The accused did not rebut the presumption in any manner whatsoever.
The findings of the Learned Magistrate is clearly against the provisions of Section 139 of the N.I. Act and thus not in accordance with law.
In Oriental Bank of Commerce vs Prabodh Kumar Tewari, [2022 (9) TMI 264 - SUPREME COURT], the Supreme Court held that 'Even a blank cheque leaf, voluntarily signed and handed over by the accused, which is towards some payment, would attract presumption under Section 139 of the Negotiable Instruments Act, in the absence of any cogent evidence to show that the cheque was not issued in discharge of a debt.'
The Respondent No. 2/accused, Raja Dutta is hereby convicted of the offence punishable under Section 138 of the Negotiable Instruments Act and is hereby directed to pay a fine of Rs. 8 lakhs within a period of two months from the date of this order in default to suffer imprisonment for six months and in default, the trial Court shall proceed in accordance with law.
Application disposed off.
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2024 (5) TMI 1102
Assessment order u/s 147 - assessment having framed by the incorrect AO - assessee submitted before us that the assessment has been framed by the AO without any jurisdiction as notice u/s 148 of the Act as well as notice 143(2) of the Act were issued by ITO, Ward-61(4), Kolkata whereas the assessment was framed by ITO, Ward-6(1), Kolkata.
HELD THAT:- We find that the assessee has filed the return of income with AC, Range-24, Kolkata whereas the notice u/s 148 of the Act dated 31.03.2017 and 143(2) of the Act dated 6.7.2017 were issued by ITO, Ward-61(4), Kolkata. We note that the assessee objected to the jurisdiction of the AO who issued the said notices vide letter dated 1.4.2017 and considering the assessee’s request, the case was transferred to ITO, Ward-6(1), Kolkata and the assessment was framed accordingly. Now the question before us whether the assessment so framed by ITO, Ward-6(1), Kolkata is invalid. In view of the fact that notice u/s 148 as well as 143(2) of the Act were issued by ITO, Ward 61(4), Kolkata.
We are inclined to hold that the order framed by ITO, Ward-6(1), Kolkata without issuing any notices u/s 148 of the Act as well as u/s 143(2) of the Act when the officers have sufficient time to issue the notices when the assessee raised objections of jurisdiction is apparently without jurisdiction and is accordingly quashed. Appeals of the assessee are allowed.
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2024 (5) TMI 1101
Jurisdiction - power of Collector (Stamp) to recall or review an order by him under Section 47 of the Indian Stamp Act, 1899 - orgery of certain documents - whether the Collector (Stamp) who acts as a quasi-judicial authority possesses any power, inherent or statutory, to recall/review an order passed under Section 47-A of the Act? - HELD THAT:- Upon a perusal of the Act, it is apparent that no such power seems to be made available to the Collector. The Division Bench of this Court in Milap Chandra Jain’s case 1988 (7) TMI 420 - ALLAHABAD HIGH COURT] examined this particular issue and held that 'The submission cannot be accepted as sub-section (4) comes into play only if the matter had not already been referred to the Collector under sub-section (1) or sub-section (2) of Section 47-A. In the present case, the dispute had already been specifically referred to and answered by the Collector under Section 47-A of the Stamp Act.'
The Collector (Stamp) cannot recall and/or review his own order as no such power has been conferred under Section 47-A of the Act. A quasi-judicial authority is limited in its functionality in as much as it has to act within the four corners of the statute from which it derives its authority. If the statute does not provide for a particular act, the same cannot be undertaken by that authority. Any such action taken de hors the legislative intent would amount to an overreach and beyond the power of the said authority.
The rationale behind limiting the review powers of quasi-judicial authorities lies in ensuring adherence to the principle of separation of powers and preserving the integrity of the legislative scheme. Quasi-judicial authorities, being creatures of statute, must operate within the boundaries set forth by the legislature and therefore they cannot exceed their statutory mandate - The legislature, in its wisdom, may choose to grant limited review powers to certain quasi-judicial authorities based on the nature of the disputes they adjudicate and the need for effective administration of justice.
In the instant case, it is clear that no such power was present with the Collector (Stamp), and therefore, the exercise of review carried out by the Collector (Stamp) is bad in law.
In light of the same, the impugned order dated February 3, 2023 is quashed and set-aside - the writ petition is allowed.
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2024 (5) TMI 1100
Undisclosed investment made to acquire the rights of his sister-in-law in the family property - undisclosed income for the block period - receipt was found by the revenue authorities during search which reflected that sister-in-law has stated that she has received the amount and no further payment is due from the appellant assessee.
HELD THAT:- Income Tax Appellate Authority has reached to the conclusion that such certificate could not be relied upon as it was apparent that she was trying to support the case of the assessee, who was her brother-in-law. The contention of appellant that she should have been called and her statement should have been recorded is found to be without any basis.
Once there is no denial to the receipt, which was found during search and the same is genuine, it would be assumed that the property was handed over after the entire payment was made. There is a demand draft receipt and the remaining amount has been presumed to be paid by the appellant. Such a course adopted by the ITAT cannot be in any manner to be perverse.
We are not impressed by appellant for his placing documents to show that subsequently the assessee has also paid to sister-in-law the amount of Rs. 5,00,000/- in different installments from 2003 to 2006, as there is no mention that the amount is being paid in lieu of the remaining amount due i.e. Rs. 5,00,000/-. We also find that the said course adopted is subsequent to the search and findings of the AO.
The appeal fails and is dismissed. The order passed by the ITAT is upheld.
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2024 (5) TMI 1099
Validity of reassessment Order - difference in grounds pointed out by CIT(A) and grounds raised by assessee - copy-paste order passed by CIT(A) - Non independent application of mind - as per AO CIT (A) has captioned one order but has stated something in order which is absolutely irrelevant to the matter
HELD THAT:- In this case CIT (A) has decided altogether different grounds of appeal which were not there in the appeal memo in Form no 35 before him, but has taken grounds of appeal which are not at all issues in appeal and allowed the appeal of the assessee
a) Reference of assessment order in caption of the order of ld CIT (A) is correct but the reference of the assessment order in the body of the appellate order is different.
b) Facts stated in assessment order are not at all facts mentioned by the ld CIT (A). Both are strangely different.
c) Statement of facts reproduced by the ld CIT (A) in appellate order is not the statement of facts submitted before us by the ld. AO.
d) Grounds of appeal of the assessee before ld CIT (A) are different then grounds of appeal reproduced by the ld CIT (A)in body of appellate order is different
Reading of each of the grounds of appeal raised by the ld AO, we are of the view that those are emphatic, clear and forthright. All the grounds of appeal are appropriate and are submitting in guarded words to set aside the appellate order passed by National Faceless Appellate Authority in most casual manner.
Thus, we are constrained to state that this is the perfect case of 'cut & paste' that too without application of mind. Without mincing many words, we find that order of the ld CIT (A) is passed without application of mind, devoid of any merit, unsustainable and perverse.
Thus, for the reasons stated above we allow all the grounds of appeal, direct the ld CIT (A) to look in to the facts and pass the order on the merits of the case, after giving proper opportunity of hearing to the assessee/appellant. Appeal of AO allowed.
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2024 (5) TMI 1098
LTCG - denying exemption u/s 54F - absence of any corroborative evidence establishing the investment in the new house property by the assessee - Admission of additional evidence by assessee
HELD THAT:- Though the assessee fails to produce bills / vouchers of construction activity, the claim of deduction u/s 54F cannot be denied without considering the relevant documents which are furnish before us as additional evidence u/r 29 of the ITAT Rules. Since, such additional evidence is not before the CIT(A), there is no occasion for him to decide the issue, considering the information emanating from such documents.
Thus in the interest of principle of natural justice, the matter should be restored back to the file of Ld. CIT(A) for fresh adjudication. Assessee appeal is partly allowed for statistical purpose.
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2024 (5) TMI 1097
Addition invoking the provisions of section 50C - Reference to DVO - market/fair value of the property was less than the value adopted by stamp duty authority and that the matter may be referred to the DVO as per the provisions of section 50C - HELD THAT:- AR has duly demonstrated from the assessment order as well as from the appellate order of the CIT(A) that the assessee right from the very beginning claimed that the fair market value of the property was less than the stamp duty value adopted by the stamp duty authority/collector rate and that the matter may be referred to Departmental Valuation Officer to ascertain the correct and fair value of the property at the time of transaction.
The said contention of the assessee has been rejected by both the lower authorities without assigning any reason. Both the lower authorities, therefore, have failed to act according to the statutory provisions of section 50C(2) of the Act and summarily rejected the plea of the assessee to get fair value of the property from the Departmental Valuation Officer without assigning any reason.
The addition made by the Assessing Officer under the circumstances is not sustainable in the eyes of law.
The issue is squarely covered by the decision of Hari Om Garg [2019 (5) TMI 1834 - ITAT AGRA] while referring to the various decisions of the Hon’ble High Court including that of “Sunil Kumar Agarwal Vs. CIT” [2014 (6) TMI 13 - CALCUTTA HIGH COURT] has held that the additions made by the Assessing Officer under such facts and circumstances are not sustainable and the same are liable to be set aside.
Addition made by the lower authorities is not sustainable and the same is accordingly ordered to be deleted. Appeal of the assessee stands allowed.
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2024 (5) TMI 1096
TP Adjustment - clubbing the segments into one for the purpose of benchmarking - HELD THAT:- We find that the assessee provided the CMA certified segmental information derived from the audited segment reporting disclosures of the annual financial statements and such details could be found in the Paper Book.
In the case of TPSC (India) Private Limited [2024 (4) TMI 132 - ITAT HYDERABAD] followed the decision of Tara Jewels Exports (P.) Ltd [2015 (12) TMI 1130 - BOMBAY HIGH COURT] wherein also a similar question of restricting the benchmarking to the international transactions entered into by the assessee with AEs was in question, and held that when the details as to the international transactions with AEs and non-AEs are available, the margins relating to the AE segment alone should be considered. The Bench restored the issue to the file of the learned Assessing Officer/learned TPO to consider the same.
Adjustment has to be done to arrive at ALP by considering the transactions with AEs only. For undertaking such an exercise, we restore the issue to the file of the learned Assessing Officer/learned TPO. Grounds are allowed accordingly.
MAM Selection - Non-consideration of TNMM for manufacturing segment - We accept the contention of the assessee and restore this issue to the file of the learned Assessing Officer/learned TPO with a direction to consider only the operating profit/operating cost of AEs segment only and to consider the internal TNMM where the services are rendered by the assessee to AEs and non-AEs are similar. This ground is treated as allowed for statistical purposes.
Non-consideration of RPM for trading segment - We find that the ledger copies and segmental financials at gross level were submitted before the Revenue authorities in support of the contention of the assessee that it did not involve any value addition activity and merely, they were selling goods as they were purchased in the same. Since it is a verifiable fact, we restore the issue to the file of the learned AO/TPO to verify whether the assessee is not making any value addition to the goods purchased from the AEs before they are sold and if segmental financials are available, to the extent of such sales without making any value addition, to accept the RPM as the MAM.
Classification of the assessee as manufacturing segment and benchmarking the same accordingly - There is no contradiction to the fact pleaded by the assessee that AE transactions of the assessee are very low at 5.2% when compared to the third party transactions in manufacturing segments. If that is true, it would be unreasonable to classify the operations of the assessee under manufacturing segment. Hence, this issue is restored to the file of the learned Assessing Officer/learned TPO to verify the fact as to the volumes of the operations of the assessee and if the majority of the transactions of the assessee with AEs relate to the trading segment, it would be reasonable to classify the assessee for the purpose of economic analysis for aggregation under trading segment. This ground is accordingly treated as allowed for statistical purposes.
Whether the TP adjustment should be restricted to the AE transactions only? - DRP was of the opinion that having adopted the TNMM as the MAM, comparison is possible only with such entities, whose P&L Account is available at entity level and, therefore, the profit of the tested party at entity level could be compared with the average of profit levels of the comparables irrespective of its PLI - We are of the considered opinion that to the facts of the case, the view taken in the case of TPSC (India) Private Limited [2024 (4) TMI 132 - ITAT HYDERABAD] is applicable on all fours and following the same, we direct the learned Assessing Officer/learned TPO to consider the margin analysis to AE segment alone. This ground is allowed.
Appeal of the assessee is treated as allowed for statistical purposes.
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2024 (5) TMI 1095
Deduction u/s 80G - donation made in excess of 10% of gross total income -assessee is a charitable trust - Assessee has already surrendered his registration u/s 12A and is now assessable as an Association of Person (AOP) - as per CIT(A) on perusal of Section 80G(4) it does not restrict the donation given to such entity by restricting it to the 10% of the total income - HELD THAT:- The deduction under Section 80G of the Act was made by the assessee as it donated ₹1,42,33,000/- to Tata Institute of Social Sciences, Deonar, Bombay which is approved university or educational Institution by prescribed authority as per notification dated 15th December, 1993.
Thus deduction u/s 80G was not restricted to 10% of the gross total income as deduction granted to the specified entities and therefore, 50% of the above amount was allowed.
CIT (A) has restored the matter back to the file of the learned Assessing Officer to grant deduction to the assessee under Section 80G of the Act to the entities registered u/s 80G(3)(a)(iiif) of the Act after verification. Thus, according to him on perusal of Section 80G(4) of the Act, it does not restrict the donation given to such entity by restricting it to the 10% of the total income.
Provision of section 80 G (4) are as under :- [(4) Where the aggregate of the sums referred to in sub-clauses (iv), (v), (vi) [, (via)] and (vii) of clause (a) and in 2[clauses (b) and (c)] of sub-section (2) exceeds ten per cent of the gross total income (as reduced by any portion thereof on which income-tax is not payable under any provision of this Act and by any amount in respect of which the assessee is entitled to a deduction under any other provision of this Chapter), then the amount in excess of ten per cent of the gross total income shall be ignored for the purpose of computing the aggregate of the sums in respect of which deduction is to be allowed under sub-section (1)].
Indeed donation u/s 80 G (2) (iiif) is not mentioned u/s 80 G (4) of the Act. Thus, ld CIT (A) is correct and hence we confirm his order. Accordingly, we do not find any merit in ground no.1 of the appeal, hence, dismissed.
Deduction u/s 80GGA - claim not made in the return of income but shown separately in the computation of total income - HELD THAT:- We find that it cannot be said that assessee has not claimed such deduction in the return of income filed in ITR 5 as same was clubbed with deduction u/s 80G of the Act. Assessee claimed it in the return of income albeit clubbed it with the different section. The deduction is claimed under Chapter VIA of the Act. It is not the claim of the Revenue that in ITR filed by the assessee such functionality was available at that time. In view of this, we do not find any infirmity in the order of the learned CIT (A) in directing the learned Assessing Officer to verify the same and grant in order giving effect to the appellate order if available to the assessee. Therefore, the ground no.2 of the appeal is dismissed.
Disallowance of carry forward of excess expenditure - HELD THAT:- This ground is infructuous, as assessee has not claimed benefit of section 11 and 12 of the Act. Therefore, there is no question of granting the benefit of deficit of this year to the assessee to be carried forward in the next year.
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2024 (5) TMI 1094
LTCG - denial of exemption claimed u/s 54 - construction of the project had not started till the completion of a period of three years - HELD THAT:- The plight of the house buyer is not hidden from anyone, and in the recent past, due to one or the other reason various housing projects by well-known builders across the country were delayed for no fault of the purchaser, who continues to await the delivery and possession of his/her flat.
Even in these circumstances, the house buyer, who intends to take the benefit of section 54 of the Act, cannot be blamed if the construction of the flat is not completed within the period of three years from the sale of the original asset.
Since in the present case it is undisputed that out of Long Term Capital Gain of Rs. 99,35,840/- earned by the assessee, she has only utilised Rs. 50,86,472 in the new residential house, therefore, in view of the provisions of the proviso to section 54(2) of the Act the balance amount should be charged to tax u/s 45 of the Act in the year under consideration, being the year in which the period of three years from the date of transfer of the original asset expires.
AO though considered to tax the part of the capital gain amount which had not been utilised by the assessee for the purchase of a new residential house within the prescribed period, however, proceeded to make the addition of the entire Long Term Capital Gain of Rs. 99,35,840 earned by the assessee. Accordingly, we direct the AO to restrict the addition on account of Long Term Capital Gain only in respect of the balance amount not utilised by the assessee for the purchase or construction of a new residential house. AO is directed to allow the exemption to the extent of Rs. 50,86,472 being the amount paid for the new residential flat by the assessee. As a result, grounds no. 3 raised in assessee’s appeal is partly allowed,
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2024 (5) TMI 1093
Addition u/s 68 - assessee does not maintain books of accounts - whether assessee had proved identity, creditworthiness of lender and genuineness of transaction? - HELD THAT:- As assessee does not maintain books of accounts, hence Section 68 of Income Tax Act perse is not applicable. Appellant / assessee got interest free loans from Shri Anil Kumar Singh through normal banking transactions.
The assessee filed documents showing creditworthiness of Shri Anil Kumar Singh as observed by the CIT(A). Shri Anil Kumar Singh, lender is an income tax assessee. Assessee filed balance sheets and tax audit reports of lender. Tax audit balance sheets for year ending 31.3.2017 and 31.3.2018 under head loan and advances mentions Smt. Alka Singh Rs. 25,00,000/-.
Tax audit balance sheet for year ending 31.3.2019 mentions Smt. Alka Singh Rs. 20,00,000/- and tax audit balance sheet for year ending on 31.3.2020 does not mention name of Smt. Alka Singh as the amount reflected was refunded back. Source of source need not be proved for unsecured loan for the year under consideration. Further the lender had made cash deposits out of available cash balances. No adverse comments were given by Tax Auditor of the lender in the tax audit report in this regard.
The loan given to assessee is duly reflected in audited balance sheet of the lender. In view of the above, genuineness of transaction and credit worthiness of the lender stands established. Therefore the appellant / assessee had proved identity, creditworthiness of lender and genuineness of transaction to show that the case comes within the purview of provisions of section 68 of the Income Tax Act, 1961. Assessee appeal allowed.
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2024 (5) TMI 1092
Disallowance u/s 14A r.w.r. 8D - expenses incurred on exempt income - HELD THAT:- CIT(A) observed that if the appellant does not have any exempt income no disallowance can be made. Therefore, it is proved that the assessee did not earn any exempt income during the year under consideration. We observe that the assessee has succeeded in convincing the CIT(A) that no exempt income was earned during the year under consideration.
As no exempt income was earned by the assessee, full relief has to be given to the assessee instead of partial relief. Accordingly, we decide the issue of disallowance made u/s 14A r.w.r 8D in favour of the assessee fully and set aside the order of the ld. CIT(A) dated 25.10.2018 as well as the order of the ld. AO dated 31-03-2015 to that extent as related to disallowance and direct the ld. AO to delete the addition from the total income of the assessee.
TDS u/s 195 - Listing charges paid to Bank of New York - assessee paid charges to the Bank of New York, and no TDS was deducted - HELD THAT:- We observe that the provisions of Section 9(1)(vii) of the Act was examined by the ld. CIT(A), but examination of the provisions of DTAA on the issue was not done. Therefore, this issue of addition on account of technical services provided to the assessee should be re-examined by the AO by taking into consideration of the DTAA provisions also.
We direct the ld. AO to re-examine the issue in the light of the provisions of DTAA after giving a reasonable opportunity of being heard to the assessee.
Disallowance of prior period expenditure - claim of the assessee is that due to dispute on the bill amount, the same could not be paid during the relevant period - HELD THAT:- After carefully observing the issue, we find that the observation of the ld. CIT(A) is correct. The prior period expenditure cannot be allowed in assessing the income of a particular year. We upheld the observations of the ld. CIT(A) on this issue of prior period expenditure. Thus, this ground of the assessee on prior period expenses is dismissed.
Writing off of Carbon Income - Recognizing income from expected sale of carbon credits based on the generation of electricity from the 18 MW wind farm project at Karnataka in the earlier years - HELD THAT:- We observe that, the assessee from the year of 2007-08 to 2011-12 had offered income from carbon credit and the Department had accepted it as other income.
Now the assessee write off this amount due to non-recognition of the project. It is therefore, our considered opinion is that the treatment which was given by the Department to the income of the assessee on carbon credit during the last five years i.e. from the year 2007-08 to 2011-12, the same treatment has to be given by the Department.
Accordingly, we remand this issue to the file of the AO to re-examine this issue of disallowance on carbon credit afresh. Accordingly, we set-aside the order of the ld. CIT(A) on this issue. Thus, we decide this issue in favour of the assessee for statistical purposes only.
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2024 (5) TMI 1091
Direction to release/ provide the original copy of documents seized by the Respondent from the premises of the Petitioner during various searches conducted - cross-examination of witnesses whose evidence has been relied upon in the SCN - opportunity to provide personal hearing to the Petitioner - violation of principles of natural justice - HELD THAT:- It is apparent from bare perusal of Section 67 (3) of the CGST Act and Rule 27 of the Central Excise Rules 2017 that it is the duty of Respondent to release the non-relied upon documents within a period of 30 (thirty) days from the issuance of the show cause notice - Provided that the Principal Commissioner of Central Excise or Commissioner of Central Excise, as the case may be, may order for the retention of such books of accounts or documents, for reasons to be recorded in writing and the Central Excise Officer shall intimate to the assessee or such person about such retention.”
This court is of the considered opinion that, besides the certified copies of relied documents which goes without saying are necessary for filing reply and preparing defence, the petitioner is entitled to receive original copies of non-relied documents so as to enable him to prepare his defence/reply as fair hearing requires that petitioner is given due opportunity to raise all defences which are available to him under the law on the basis of the documents, facts, circumstances and the legal provisions as the petitioner deems appropriate.
Right of petitioner to conduct cross-examination of witnesses whose evidence has been relied upon in the SCNs during adjudication proceedings - HELD THAT:- This court is of the considered opinion that right of fair hearing and personal hearing requires that the petitioner be given right to cross examine witnesses whose evidence has been relied upon in the show cause notices dated 08.06.2022 and 03.08.2022 and it is expected from the adjudicating authority that the said right to cross-examine would be afforded to the petitioner at appropriate stage of proceedings, as principles of natural justice are required to be adhered to while conducting adjudication proceedings.
It is deemed appropriate to direct the Respondents to handover all the original documents to petitioner which have been seized by them and not relied on by Respondents while issuing Show Cause notices dated 08.06.2022 and 03.08.2022, so that the petitioner is enabled in submitting his reply - petition allowed.
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