Forgery - criminal conspiracy - cheating and use of forged documents - embezzlement of public money - respondent wants the proceedings to be quashed on account of settlement with the bank - HELD THAT:- The development in means of communication, science & technology etc. have led to an enormous increase in economic crimes viz. phishing, ATM frauds etc. which are being committed by intelligent but devious individuals involving huge sums of public or government money. These are actually public wrongs or crimes committed against society and the gravity and magnitude attached to these offences is concentrated at public at large.
The inherent power of the High Court under Section 482 Cr.P.C. should be sparingly used. Only when the Court comes to the conclusion that there would be manifest injustice or there would be abuse of the process of the Court if such power is not exercised, Court would quash the proceedings. In economic offences Court must not only keep in view that money has been paid to the bank which has been defrauded but also the society at large - If the prosecution against the economic offenders are not allowed to continue, the entire community is aggrieved.
The High Court while exercising its inherent power ignored all the facts viz. the impact of the offence, the use of the State machinery to keep the matter pending for so many years coupled with the fraudulent conduct of the respondent - the order passed by the High Court is set aside and the trial court is directed to proceed with the matter expeditiously in accordance with law - Appeal allowed - decided in favor of appellant.
Disallowance being the contribution made to employees’ superannuation fund - whether the contribution made by the assessee is allowable u/s 37? - HELD THAT:- In the case before the Madras High Court, Kattabomman Transport Corporation paid to the Government in order to enable the Government to credit the amount so paid to the Provident Fund Account of the Government employees who were at the point of time working in the Transport Corporation. The Government, after receipt of the amount from the Transport Corporation, credited to the Provident Fund Account of the concerned employees.
In those circumstances, the Madras High Court found that the payment is not in any way affected by sec. 36 of the Act. The payment so made is deductible under sec. 37 of the Act, being part of the business expenditure. In this case also, by virtue of operation of section 20 of Tamilnadu Maritime Board Act, the erstwhile Government employees of Tamilnadu Port Department became the employees of Tamilnadu Maritime Board. The Government clarified in the letter dated 21.11.1996 that the employees so allotted to the Tamilnadu Maritime Board will have the same tenure, remuneration, rights and privileges - if the claim could not be allowed u/s 36 of the Act, the same has to be allowed u/s 37.
Payment made by the assessee to the extent has to be treated as business expenditure in the hands of the assessee in view of the judgment of the Madras High Court in Kattabomman Transport Corporation Ltd.[1998 (9) TMI 2 - MADRAS HIGH COURT] - AO is directed to allow the claim of the assessee u/s 37. Appeal of the assessee stands allowed.
Conspiracy - Furnishing of false Search Report/NEC/legal opinion by panel advocates - intent to cheat the bank - facilitate obtaining of loan by the concerned persons - HELD THAT:- Taking into account the contents of the FIR, we are left with the impression that the said allegations are bald and omnibus and do not make any specific reference to the role of the appellants in any alleged conspiracy. In Central Bureau of Investigation versus K. Narayana Rao [2013 (7) TMI 588 - SUPREME COURT] to which one of us (Ranjan Gogoi, J.) was a party, it has been held by this Court that a criminal prosecution on the basis of such bald and omnibus statement/allegations against the panel advocates of the Bank ought not to be allowed to proceed as the same constitute an abuse of the process of the Court and such prosecution may in all likelihood be abortive and futile.
The High Court was plainly wrong in refusing to interdict the proceedings against the appellants - Appeal allowed.
Seeking direction for considering the proposal of the petitioner No.1 for rescheduling the loan - HELD THAT:- When the matter was heard on the earlier date, this Court was of the opinion that any consideration by the respondents would arise only if the petitioner makes a firm commitment to pay the substantial sum to the respondents towards the amount due and thereafter seek an opportunity for rescheduling the loan. In that light, if the amount is paid, all other considerations with regard to the examination by the respondents to provide accommodation for payment of the remaining amount under any one of its settlement schemes or any other rescheduling would arise.
The petitioner has filed an affidavit sworn to by the Managing Director of the first petitioner. Among the other statements made in the affidavit, in paragraph No.9 the Managing Director on behalf of the first petitioner has undertaken to pay a sum of ₹ 5 crores so as to enable consideration of their case for accommodation/ rescheduling by the respondents in accordance with law. The said amount is undertaken to be paid in two instalments.
Taking note of the affidavit that has been filed before this Court, an opportunity requires to be granted to the petitioner to comply with the undertaking and then seek for rescheduling of the loan from the respondents by also indicating the consequence of non-compliance. In this regard, it is made clear that if the first instalment is deposited as undertaken, the respondent would thereafter wait for the deposit of the second instalment and on the second instalment being deposited, the request to be made by the petitioner for rescheduling would be considered in accordance with law - the communication dated 26.10.2010 which is assailed in this petition and was kept in abeyance by this Court is directed to be kept in abeyance till the expiry of the dates as indicated above for payment.
Proceeding for forfeiture of property - restrictions on import of steel or steel utensils from Nepal - Smugglers and Foreign Exchange Manipulators (Forfeiture of Property) Act, 1976 - HELD THAT:- It is not very necessary to hold this question, because, the notice that Bharat Prasad and Shyam Babu have been detained in COFEPOSA for indulging in several schemes, that itself gives them jurisdiction. Further, in the notice under Section 6 of the “SAFEMA” itself, it is noticed that report in terms of Section 6 of the Act, having been received from the Income Tax Authorities, there was “reason to believe” that conditions existed for forfeiture of properties.
It is well established that existence of materials is a condition precedent for forming a “reason to believe”, but, it is not open for the court to go into the question of sufficiency of materials - In the present case, if we see the notice, which gives the fact for “reason to believe”, that Bharat Prasad and Shyam Babu had been detained under COFEPOSA and that a report about unexplained stocks of steel utensils had been received from the Income Tax Department. There was neither any inquiry nor any report nor any material suggested that the properties which were sought to be forfeited were illegally acquired properties.
The substantive restrictions on import of steel utensils was brought about in 19th May, 1969, and these purchases of properties, partition in the family in the year 1962, were all much much prior to that. In our view, applying the Wednesbury principle the decision of the Competent Authority and the Appellate Authority as well as the learned Single Judge, who has not gone into the question of denial at all, cannot be sustained.
Bogus Payment of commission - HELD THAT:- As observed that the assessee has failed to discharge its burden cast upon it with regard to payment of commission as a genuine payment. Therefore, the order passed by the ld. CIT(A) was confirmed and the appeal filed by the assessee was dismissed. Further, the assessee has not pointed out any apparent mistake in the order passed by the Tribunal. Accordingly, the miscellaneous petition filed by the assessee stands dismissed.
Dishonor of Cheque - it was held by High Court that The documents which are produced does not either support the stand that they are not involved in day today business of the first accused and that their resignation was much prior to the cheques were dishonoured - HELD THAT:- The special leave petitions are dismissed.
However, the petitioners are at liberty to apply for discharge and that will be considered by the trial court on its own merits.
Maintainability of appeal - question of facts - appropriate forum - HELD THAT:- The matter pertains purely to a question of fact and no question of law is involved - the appeal cannot be entertained.
Duty demand - Suppression of facts - Place of removal - Creation of dummy unit to evade duty - Under valuation of goods - Invocation of extended period of limitation - Penalty u/s 11AC - Burden of proof - SSI Exemption - It was held by Tribunal that There was no suppression or misstatement of facts with an intention to evade payment of duty nor there was any evidence either documentary or otherwise comingforth to support the case of Revenue - HELD THAT:- There are no reason to interfere with the order passed by the CESTAT - appeal dismissed.
Waiver of pre deposit - Valuation of goods - dealers of Maruti Suzuki are charging price over and above the ex-showroom price from the ultimate customers of the vehicles - HELD THAT:- Four weeks’ time granted from today to comply with the orders and directions issued by the High Court.
The Tribunal is required to dispose of the appeals as early as possible.
Recovery of dues of deficit stamp duty - Section 54(1A) of the Gujarat Stamp Act, 1958 - HELD THAT:- It is manifest that the instrument of mortgage came into existence only after separate loan agreements were executed by the borrower with the lenders with regard to separate loan advanced by those lenders to the Respondent borrower. The mortgage deed which recites at length as to how and under what circumstances property was mortgaged with the security trustee for and on behalf of lender bank.
It is clear that Section 4 deals with single transaction completed in several instruments, whereas Section 5 deals only with the instrument which comprises more than one transaction and it is immaterial for the purpose whether those transactions are of the same category or of different categories - It appears from the trustee document that altogether 13 banks lent money to the mortgagor, details of which have been described in the schedule and for the repayment of money, the borrower entered into separate loan agreements with 13 financial institutions. Had this borrower entered into a separate mortgage deed with these financial institutions in order to secure the loan there would have been a separate document for distinct transactions. On proper construction of this indenture of mortgage it can safely be regarded as 13 distinct transactions which falls Under Section 5 of the Act.
It is held that the Respondent is liable to pay deficit stamp duty together with interest as directed by the revenue authorities - Appeal allowed.
Revocation of CHA License - forfeiture of security deposit - HELD THAT:- The licence has been inoperative for more than 4 years. More than 2 years have passed since the revocation was set aside by the Tribunal. In such cases, where the question of livelihood is involved, in the interest of justice it would be only fair to restore the operation of the licence till the final verdict - The restoration of operation of licence will not prejudice the interest of Revenue, till final verdict of the Hon’ble High Court. We observe that in cases of Excise evasion, the factory of assessee is not shut down. Therefore in terms of equity, it is only fair and just that the licence is allowed to be operative in terms of the Tribunal’s Order.
The Commissioner, under Rule 41 of the Customs, Excise and Service Tax Appellate Tribunal (Procedure) Rules, 1982 is directed to give effect to our Order dated 18-3-2013 to secure the ends of justice.
Dishonor of Cheque - repayment of friendly loan advanced by the complainant - loan in contravention of the provisions of Bombay Money Lenders Act - legally enforceable debt or not - section 138 of the Negotiable Instruments Act - HELD THAT:- The view taken by the Magistrate was a reasonable one and based on the evidence adduced before him. There were a number of suspicious features about the case of the complainant which have been reflected in the judgments delivered by the learned Magistrate. On considering the facts of the case, even this Court feels that the possibility of the complainant having taken blank signed cheques from the accused, is apparent, and in any case, cannot be ruled out. Moreover, since the complainant has advanced a similar loan to a number of persons, the transactions in the present two cases are quite likely to be of the type which the provisions of the Bombay Money Lenders Act prohibit. The conclusion arrived at by the learned Magistrate that the cheques in question could not be said to have been issued for the discharge of a legally enforceable debt or other liability, does not appear to be suffering from any infirmity or illegality.
On a careful consideration on the facts of the case, it appears that in reality, there was no genuine transaction on the basis of any bill of exchange. The complainant simply had advanced some amounts to the accused No. 1 on interest, and had in all probability, taken the blank hundies and blank signed cheques at that time itself. There is a reason to believe that the complainant was advancing money as and by way of a business of money lending without having a valid licence. This conclusion that was arrived at by the learned Magistrate cannot be said to be suffering from any infirmity or illegality.
It is well settled that while dealing with Appeal from the order of acquittal, this Court would not interfere with the view taken by the trial Court, if the same would be a possible view. It is well settled that when two views of the matter are possible on the basis of the evidence adduced before the trial court, and the trial court has taken one of them leading to acquittal, then the appellate Court would not interfere with the order of acquittal.
Offence under Section 420 IPC and Section 5 of the Tamil Nadu Protection of Interests of Depositors (In Financial Establishments) Act, 1997 - It is the specific case of the prosecution that, Helios and Viswapriya had collected deposits from public and on maturity, they failed to repay them, pursuant to which, on the complaint lodged by depositors, the cases were registered against them for the offence under the TNPID Act along with IPC offences - HELD THAT:- In Section 45-I(f), the expression "which has as its principal business the receiving of deposits, under any scheme or arrangement or in any other manner" is somewhat similar to the definition of the word "Financial Establishment" in TNPID Act. One difference is, the word "principal" is not there before the word "business" in Section 2(3) of TNPID Act. From an analysis of these two Sections, it is clear that, the Legislature wanted to bring into the net of TNPID both Non-Banking Financial Companies and incorporated Companies which are into the business of receiving deposits within the purview of TNPID Act. It is not necessary that an incorporated Company should be a Non-Banking Financial Company for being in the business of receiving deposits. - Though it is clear to me that the definition of the word "Financial Establishment' in TNPID Act does not admit into its fold all Companies irrespective of their nature of business, and only Companies which are into the business of receiving deposits, yet I would also like to address this issue from the perspective of the Philosophy of Penal Law.
In Democratic Republican form of Governments, the entire edifice of Penal Law is built upon the Rousseauean Philosophy "that man is naturally good and anything that is not natural has corrupted us from this natural State." When Rousseau propounded this theory, as usual cynics ridiculed it as merely a romantic hypothesis. He has been proved right by later commentators.
Definitions in Penal Law are not intended for semantic debates by trained legal minds, but it is intended for the lay and the laity to understand and act. If an ordinary person reads the definition of the word "Financial Establishment", he will have no doubt in his mind that if he carries on the business of receiving deposits and fails to repay the amount, he will have to face penal consequences. For a man who is not into the business of receiving deposits, but into the business of ordinary manufacturing, this definition will not and should not instill fear, for that would be deleterious and counter productive to the progress of the Society - an ordinary manufacturer or a Trading Company, say in jaggery, cannot be prosecuted under the TNPID Act for default in paying its depositor. They can be prosecuted under the Companies Act. It would never have been the intention of the Legislature to give unbridled power to the police to destroy legitimate business in this Country and reduce our countrymen to penury.
Harassement and Threats - received frivolous caveats repeatedly from the petitioner - amicable settlement reached but later denied - HELD THAT:- The word 'offence' has been defined in Section 40 of the IPC and an offence under Section 203 has been classified with other classes of offences in Chapter XI of the IPC - the Explanation to Section 203 IPC covers the category of offences which, if committed at any place out of the country would be punishable by treating such offence to have been committed inside the country. Therefore, the categories of offences in the Explanation to Section 203 IPC by the use of the words "offence includes" creates an exclusive category of offences which will be punishable under Sections 201, 202 and 203 IPC by treating them to be punishable in India although they may have been committed at any place outside India.
The only conclusion this Court can draw is that the Explanation has created a separate class of offences committed outside the country without impinging on the defining Section, being Section 40 IPC read with the parent Section 203 IPC. Therefore to exclude Section 354 IPC from the ambit of Section 203 IPC once the act is allegedly committed inside the country would be putting a premium to the Explanation overriding the intention of the controlling section - This Court cannot also lose sight of the fact that the bitter personal relationship between the parties has time and again forced several courts to examine the crux of the dispute and sift the chaff from the grain. This Court is of the considered view that in order to do so both the Ld. Trial Court and the Revisionist Court can apply any tool legally under their command to arrive at a just finding. Such tools cannot exclude calling for a police report to assist the Court in its enquiry.
When the Ld. Courts are sincerely ardent to direct the gathering of facts in this incessant battle between the parties, the search for the truth by the Ld. Courts cannot be interfered with at this stage by this Court exercising its jurisdiction under Section 482 CrPC. - Finally, this Court finds substance in the legal position that since the petitioner has already entered plea in C-8509/2013, which is evident from the order of the Ld. 10th JM dated 6th June, 2014, this Court is required to refuse the prayer of the petitioner to quash the impugned proceedings.
Suppressed production - unaccounted sales - erratic consumption of electricity - goods clandestinely removed - GP rate determination - HELD THAT:- We find identical issue had come up before the Tribunal in the case of Bhagyalaxmi Steel Alloys Pvt. Ltd. Vs. Addl.CIT [2015 (11) TMI 14 - ITAT PUNE] where both of us are parties. We find the Tribunal considering the arguments advanced by both the sides deleted the addition made on account of erratic consumption of electricity and the alleged investment in the purchase for effecting such unaccounted sales. The appeal filed by the Revenue challenging the application of GP rate and allowance of expenses are also dismissed by the Tribunal.
Thus we hold that no addition can be made on account of erratic consumption of electricity and there is no alleged investment in the purchase for effecting such sales which goods have been clandestinely removed. In view of our deleting the addition in the hands of the assessee, the grounds of appeal raised by the Revenue, i.e. against application of GP rate and allowance of expenses are also dismissed. However, the AO is directed to include additional income in the hands of the assessee on account of clandestine removal of goods without payment of excise duty as admitted by the assessee before the DGCEI, Aurangabad. - Decided against revenue.
Principles of Res-Judicata - Decree of specific performance of agreement to sell - Fraud and collusion - it is also claimed that appellant was not a party to the earlier suit - HELD THAT:- The cause of action for filing the suit is different. The grounds urged in the suit, as we find, are also quite different. Even if the plaint is read keeping in mind the cleverness and deftness in drafting, yet it is not prima facie discernible from the plaint that it lacks any cause of action or is barred by any law. On a perusal of the plaint alone it cannot be said that the suit is barred by the principle of resjudicata.
The allegations in the plaint are absolutely different. There is an asseveration of fraud and collusion. There is an assertion that in the earlier suit a decree came to be passed because of fraud and collusion. In such a fact situation, the High Court has fallen into error by expressing the view that the plea of resjudicata was obvious from the plaint. In fact, a finding has been recorded by the High Court accepting the plea taken in the written statement. Thus, in the obtaining factual matrix there should have been a trial with regard to all the issues framed.
The trial court is directed to proceed with the suit and dispose of the same within a period of six months hence - appeal allowed.
Levy of penalty u/s 271(1)(c) - Failure to prove opening capital - The assessee has offered this income during the course of assessment proceedings to buy mental peace and non-imposition of penalty. The assessee was given sufficient opportunity to explain the opening capital. Assessee has voluntarily admitted the income of undisclosed sources. - HELD THAT:- As per the provisions 2 to Explanation 1(B) now the entire onus is on the assessee to not only offer an explanation but also to substantiate it and to prove that the presumption was bona fide. At the same time the presumption so raised by the Explanation 1 is rebuttable. The effect is that unless and until rebuts the presumption, he would be liable to penalty u/s 271(1)(c) of the Income-tax Act, 1961. It is now established law that presumption would not stand rebutted merely by furnishing any general or fantastic or fanciful or unreasonable explanation by the assessee, the explanation should be based on cogent and relevant material and should be accepted to the authorities.
We find from the explanation of the assessee that the assessee has tried to explain the facts, but the assessee could not prove this amount before the AO. WE find that similar issue had come up before the Hon'ble A.P. High Court in the case of Chennupatti Tyres & Rubber Products [2014 (11) TMI 510 - ANDHRA PRADESH HIGH COURT], wherein the penalty was deleted.
The Hon'ble Andhra Pradesh High Court has discussed the decision of Mak Data Mak Data Private Limited vs. CIT, [2013 (11) TMI 14 - SUPREME COURT] and after considering the decision of Mak Data, deleted the penalty.
Disallowance u/s 14A read with Rule 8D - Suo moto disallowance made by assessee of PMS expenses - HELD THAT:- There is no dispute before me regarding Rule 8D(2)(ii). CIT(A), however while adjudicating the issue has held that the credit of PMS expenditure has been given under Rule 8D(2)(i) by the AO. His finding to this effect has already been quoted earlier in this order. In principle he has accepted the proposition of the assessee that credit of PMS expenses suomoto disallowed by the assessee should be given to him out of the disallowance computed under Rule 8D. It is a fact that for making investments, continuing with Portfolio Management, selecting portfolio manager and deciding about the amount of investments and period of investments involve decision making process at managerial level and therefore involve administrative costs. These all a part of overhead expenses which an assessee ought to incur for earning tax free income. A part of these activities are being taken care of by the Portfolio Manager, who take their fee inturn. In such circumstances, it cannot be denied that these are the expenses which have been perceived while drafting clause (iii) of Rule 8D. In such circumstances, the part of the expenses being in the nature of PMS expenses, which the assessee itself has disallowed, it is pertinent to give credit of the same to the assessee under the same clause.
Credit of suomoto disallowance made by assessee on account of PMS expenditure incurred by it is to be allowed to it. AO is directed to reduce the amount of PMS expenses from the disallowance computed by him under Rule 8D(2)(iii).
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