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Showing 81 to 100 of 430091 Records
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2025 (4) TMI 1562
Validity of CIT(A) order dismissing the assessee's appeal ex parte without adjudicating the appeal on merits - Procedure in appeal u/s 250 - HELD THAT:- Reasons which weighed in the minds of the adjudicating authority while adjudicating appeal on merits of the issues are cardinal as the higher appellate authority can then adjudicate appeal on the issues arising in appeal before them, based on decision and reasoning of ld. CIT(A) in deciding the issues.
If the ld. CIT(A) simply dismiss the appeal merely because the assessee did not comply with the notices issued by ld. CIT(A) in limine without adjudicating issues arising in the appeal on merits, such order is not sustainable in the eyes of law keeping in view provisions of Section 250(6), and also higher appellate authorities will be deprived to see what weighed in the mind of the ld. CIT(A) while adjudicating appeal as it will be an order passed without reasoning on the issues on merits.
The appellate order of the CIT(A) is clearly in violation of section 250(6) of the Act and liable to be set aside. Merely stating that the assessment order passed by AO is upheld, and that the assessee has not submitted details/documents is not sufficient.
CIT(A) is not toothless as his powers are co-terminus with the powers of the AO, which even includes power of enhancement. It is equally true that the assessee also did not complied with the notices issued by ld. CIT(A), and did not file the requisite details/documents to support his contentions. Thus, the assessee is equally responsible for its woes.
Thus, appellate order of CIT(A) is set aside and the matter can go back to the file of CIT(A) for fresh adjudication of the appeal of the assessee on merit in accordance with law after giving opportunities to both the parties. Appeal of the assessee allowed for statistical purposes.
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2025 (4) TMI 1561
Income deemed to accrue or arise in India - taxability of background screening services - Royalty or FTS under the provision of Article 13 of India-USA DTAA - HELD THAT:- Hon’ble Tribunal in assessee’s own case for AY 2021-22 [2024 (6) TMI 1457 - ITAT DELHI], while relying on aforesaid orders held that the background screening services provided by the assessee does not quality as royalty
Thus, background screening services provided by an assessee does not qualify royalty and no additions can be made on account of royalty and decided the appeals in favour of the assessee.
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2025 (4) TMI 1560
Addition by applying G.P. Rate on unaccounted sales - CIT(A) restricting the addition by applying G.P. Rate - some software were found during the search and Ratnakala Group, wherein there were some unaccounted transactions which were cash transactions - HELD THAT:- First of all, it is now matter of record that out of these unaccounted sales which has been added by the ld. AO, substantial part was accounted in the books of the assessee which has been verified and finding of fact has been given by CIT (A). Thus, entire sales could not have been added as unaccounted sales.
Even if it is admitted that there are certain unaccounted sales of diamonds, then there were also purchases of diamond which has been sold in cash to Ratnakala Group. In such a scenario, the entire sales could not have been added, because purchases have not been doubted at all by the ld. AO. Without purchases, sales cannot be affected.
Assessee’s total turnover/sale to other parties is in hundreds of crores and sale to this party is very less and out of which most of the sales has been accounted for. Accordingly, in such a situation only the gross profit rate on alleged unaccounted sales can be applied. Here in this case most of the sales made to the same party have been accounted in the books on which assessee had disclosed certain GP rate which has not been disputed.
In such a scenario, applying same GP rate is reasonable which can be applied on the sales which are alleged to be unaccounted. Accordingly, the observation and the finding of the CIT (A) for applying GP rate of such sales is upheld. Accordingly, the appeal of the Revenue is dismissed.
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2025 (4) TMI 1559
Estimation of income - Bogus purchases - AO applied a gross profit rate of 1.31% on the said amount, resulting in an addition - CIT(A) held as quite rational to follow the spirit of the judgment given by Hon’ble ITAT in the appellant’s own case and hold that the quantum of profit attributable to total bogus purchases may be calculated @ 0.2% of the same
HELD THAT:- We have also duly considered the order of the Coordinate Bench of the Tribunal rendered in the assessee’s own case for Assessment Year 2011-12 [2018 (8) TMI 1626 - ITAT MUMBAI]. In view of the binding judicial precedent and consistent findings in earlier years, the grounds raised by the revenue are hereby rejected.
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2025 (4) TMI 1558
Validity of reopening of assessment u/s 147 - Notice has been issued beyond 3 years but not more than 10 years from the end of the relevant assessment year - AO has reopened the assessee’s case based on the information received from SRO office that the assessee has entered into a transaction for purchase of a property for a sale consideration of Rs. 80 lacs which according to the ld. AO was to be reckoned as Rs. 1,12,78,500/- to be the stamp duty value, thereby adding the difference - HELD THAT:- Where the threshold limit of income which has escaped assessment cannot be lesser than Rs. 50 lacs as contemplated u/s. 149(1) of the Act. It is also evident that the said provision speaks of issuance of notice u/s. 148 and not the finality of the amount determined after assessment as contended by the DR. There is no iota of doubt that the criteria for issuance of notice u/s. 148 ought to have been income escaping assessment amounting to Rs. 50 lacs or more in cases, where 3 years but not 10 years have elapsed from the end of the impugned year.
In the present case in hand, the assessee was in a better footing where the notice issued by the ld. AO u/s. 148 of the Act dated 15.06.2021, and the subsequent order dated 30.07.2022, passed u/s. 148A(d) of the Act was only for income which has escaped assessment amounting to Rs. 32,78,500/-. Therefore, the assessee’s case would squarely be covered by the decision of Naresh Balchandrarao Shinde [2022 (10) TMI 549 - BOMBAY HIGH COURT].
By respectfully following the same, we are inclined to hold that the notice u/s. 148 and the order passed u/s. 148A(d) are void ab initio and are therefore quashed. Decided in a favour of assessee.
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2025 (4) TMI 1557
Revision u/s 263 - allowability of legal and professional expenses, loan origination costs, and Direct Selling Agent (DSA) costs u/s 37, allowability of other expenses including year-end provisions, treatment of cost allocation charges, allowability of finance costs amounting to Rs. 40.35 crores, correctness of depreciation claimed and admissibility of employee benefit expenditure
HELD THAT:- When due enquiries have been made by the AO in the course of assessment proceedings, merely because the fact of making enquiries were not recorded by him in the assessment order, the order of the ld AO does not become erroneous. There is no need for the AO to state in his assessment order as to what enquiry he had made with regard to various issues in the assessment. He is expected to address only those issues where he is not in agreement with the claim of the assessee and he is not expected to write a thesis in the assessment order. Merely because a particular fact of enquiry is not reflected in the assessment order of the AO, it does not automatically tantamount to non-enquiry by the AO and assessment being framed with non application of mind by the ld AO.
Legal and Professional charges, loan origination cost and DSA cost - more than adequate enquires have been made by the ld AO with regard to legal and professional charges and loan origination cost in the assessment proceedings itself. Hence, it cannot be said by any stretch of imagination that adequate enquiries were not made by the AO. This is not the case of no enquiry by the ld AO qua the impugned issue.
PCIT had merely directed the ld AO to examine the allowability of the same u/s 37 of the Act in the light of the observation given by the auditors in the financial statements. PCIT had not even stated as to why the observations made in the financial statements by the auditors have any adverse impact on the computation of income of the assessee qua these issues. On the other hand, the assessee had furnished complete details and had also proved before the AO that this has been claimed by it on a consistent basis by clearly bringing on record the differential treatment given in the books of account and in the income tax computation. PCIT had merely directed the AO to make fishing and roving enquiries on the impugned issue, without bringing on record the error committed by the ld AO in the assessment order.
Other expenses which includes year-end provision - The assessee furnished the reply dated 07.04.2021 giving the details of various expenses in a tabular form explaining the nature and the amount incurred under the respective head. The assessee also submitted that the revenue had increased three fold during the year from its business operations whereas the expenditure had increased only less than 2 fold during the year. Accordingly, it justified the claim of expenses to be in consonance with the revenue earned during the year.
The assessee also gave the specific explanation with regard to year-end provision of Rs. 7.91 crores by drawing direct attention to Note No. 24 of the audited financial statements which is already reproduced supra as to how the year-end provision for expenses are accounted and reflected.
Even before us, the assessee explained that in the computation of income, the amount of Rs. 6.77 crores being year-end provision created, was suo moto disallowed by the assessee and the balance provision of Rs. 1.13 crores pertains to the provision for capital expenditure which has not been included in the capital work in progress and not all debited to profit and loss account. Hence, there is no question of disallowing year-end provision again for Rs. 7.91 cores as directed by the ld PCIT in his revision order.
No hesitation to hold that the ld PCIT grossly erred in assuming revision jurisdiction u/s 263 of the Act qua the issue of other expenses and year-end provision for expenses.
Cost Allocation charges - We find that the ld PCIT had not understood the basic fact that this cost allocation charges represent income of the assessee and not expenditure. Without understanding this preliminary fact, he had directed the ld AO to verify and examine the same. Either way, this is not even prejudicial to the interest of the revenue as it only represent income of the assessee. Hence, revision jurisdiction u/s 263 of the Act could not be exercised by the ld PCIT for the same.
Finance Cost - The assessee filed its reply dated 08.01.2021 giving the complete details of long term and short term borrowings obtained from various banks and financial institutions together with the details of interest paid thereon. Hence, it cannot be said that the ld AO had made any enquiry on the finance cost of Rs. 40.35 crores.
PCIT erred in assuming revision jurisdiction u/s 263 of the Act qua this issue. Further, we also find the ld PCIT absolutely without any basis had concluded that the finance cost is not allowable as deduction. As stated earlier, the finance cost is the raw material for a finance company. How the raw material (interest paid in this case) be not allowed as deduction. It is not even the case of the ld PCIT that the borrowed funds were not utilized by the assessee for its business. The assessee is engaged in the business of financing i.e. advanced loan to others and earning interest income. For this purpose, it had used own funds as well as borrowed funds. For the borrowed funds, it has to pay interest. That interest cost becomes an allowable deduction under the head business.
Depreciation - There is absolutely no reason for the ld AO to take a divergent view in this regard. Very strangely the ld PCIT goes to conclude that the depreciation has not been correctly claimed which is without any basis and the decision of the Hon'ble Supreme Court in the case of ICDS Ltd had to be rejected without adducing any reasons. The directions given by the ld PCIT to the ld AO are merely to make fishing and roving enquiry which, in our considered opinion, is not permissible in proceedings u/s 263. Hence, we have no hesitation to quash the assumption of revision jurisdiction u/s 263 of PCIT qua this issue.
Employee benefit expenditure - The employee benefit expenditure based on actual and based on actuarial valuation are reflected in the audited financial statements at pages 3 to 53 of the Paper Book vide Note No. 23 of the audited financial statement.
PCIT does not find any error in the said working. In fact the assessee had already made suo moto disallowance of amount debited to the profit and loss Account with regard to provisions made on account of employee benefit expenditure and had claimed the actual amount of payment of gratuity and earned leave encashment in accordance with provisions of Section 43B of the Act. This fact is also duly reflected in the tax audit report. Whatever is the unpaid portion, the assessee had voluntarily added back in the computation. We find that the ld PCIT does not point out any error in the action of the assessee or in the action of the ld AO in accepting to the contentions of the assessee.
We have no hesitation to quash the entire revision order u/s 263 of the Act by the ld PCIT by holding that revision jurisdiction have been invalidly assumed by PCIT and his action cannot be sustained in the eyes of law. Accordingly, grounds raised by the assessee are allowed.
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2025 (4) TMI 1556
Reference made to the Special Bench in the present case be withdrawn or not in the wake of the Hon’ble Jurisdictional High Court of Mumbai admitting an identical question - Disallowance u/s 14A -
Whether Special Bench can proceed with the hearing of the issue in view of the fact that the Division Bench had expressed its inability to concur with the view taken by the co-ordinate Bench in the case of Oman International Bank SAOG [2014 (1) TMI 537 - ITAT MUMBAI]? - HELD THAT:- The issue before this Bench has already been considered by the Special Bench of this Tribunal in Summit Securities Ltd. [2011 (8) TMI 657 - ITAT, MUMBAI] has also considered certain practical aspects which would eventually lead to incongruity if it is held that the Special Bench has to stay its hands and/or is liable to be disbanded in the event of a similar/substantial question of law being pending before the High Court. The Special Bench has noticed that such a course of action would lead to pendency of the issue before the Special Bench and eventually before the Division Bench also requiring the Division Bench to await decision of the Special Bench.
The Special Bench has clarified that this has no bearing on the powers of the President to constitute or de-constitute any Special Bench and/or withdrawing reference in the facts of each case.
It is not shown that the decision in the case of Summit Securities Ltd. (supra) was challenged any further. For all practical purposes, the said decision can be said to have attained finality.
Revenue has placed reliance on the order passed in the case of Tivoli Investment and Trading Co. (P.) Ltd. [2011 (4) TMI 876 - ITAT, MUMBAI] on the administrative side and the decision of Harsha Achyut Bhogle [2007 (10) TMI 640 - ITAT MUMBAI] in support of her submissions. We find that all these three orders have already been considered by the Special Bench. We find that the Special Bench has rightly found that these decisions have no bearing on the question involved.
We find that Section 253 of the Act confers statutory powers on the Tribunal to decide appeals challenging the orders of CIT(A) and other orders as are permissible under the said Section. Section 255(3) of the Act also confers statutory powers on the President to constitute Benches, including a Bench comprising of three or more Members to decide any particular issue.
From the submissions advanced at the Bar, it appears that Revenue has no objection for the Division Bench continuing the hearing and considering the issue. It is difficult to see as to how only the Special Bench would be precluded from hearing the matter if according to the Revenue the Division Bench can hear the same. There is one more aspect of the matter as pointed out by the learned Senior counsel for the assessee. It is pointed out that if the reference is withdrawn and the matter goes back to the Division Bench, it will be compelled to take a view and agree with the co-ordinate Bench in the case of HSBC Bank Oman S.A.O.G (supra), which would be contrary to the opinion earlier expressed by the learned Members of the Division Bench expressing their inability to concur with the view as expressed in the case of HSBC Bank Oman S.A.O.G (supra). We find that the contention is justified.
We also find that in the case of intervenor (appeals before the Delhi Benches, which appeals have since been disposed of on 03.09.2021) and in the case of Summit Securities Ltd. (supra), the Revenue had taken a contrary stand. We cannot appreciate the Revenue taking such contrary stand on the issue involved in this matter.
We find that there is no prohibition either in law or in practice which has been pointed to us which would require the Special Bench as a rule to stay its hands when a similar/identical issue is pending before the High Court. This is albeit subject to the considerations on the basis of propriety, which the Special Bench itself may consider depending on the facts and circumstances of each case.
In the present case, except that the appeal by another assessee, namely HSBC Bank Oman S.A.O.G (supra) has been admitted by the High Court, nothing has been brought on record to require the Special Bench to stay its hands. There is one more reason why we are inclined to hold that the Special Bench need not be deconstituted and the reference withdrawn. It is necessary to note that the dispute relates to assessment year 1998-99. The appeal itself is of the year 2004. Therefore, in our considered opinion, hearing before the Special Bench brooks no further delay. In our humble opinion, the Special Bench can proceed to hear and decide the appeal in accordance with law. Subject to this, we hold that it is not necessary to withdraw the reference and/or to deconstitute the Special Bench.
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2025 (4) TMI 1555
Revision u/s 263 - denial of exemption u/s 11 - consequential assessment order passed based on the order passed by the CIT(E) u/s. 263 which was set aside by the Tribunal - pendency of appeal taken a ground to attack the order of the CIT(A) - HELD THAT:- There is no dispute with regard to the fact that the assessment unit has made the assessment u/s. 143(3) on 01/03/2023 in which the exemption claimed u/s. 11 was disallowed by relying on the proviso to section 2(15) which was made based on the order passed by the CIT(E) u/s. 263 of the act. The appellate authority viz., the Tribunal, which heard the challenge made to the order passed u/s. 263, set aside the said order and therefore the consequential order passed is not a valid order. When the main order which authorises the AO to make the assessment was not there, the consequential order would not stand by itself.
DR raised the plea that the Tribunal order setting aside the order passed u/s. 263 is under challenge before the Hon’ble High Court of Kerala and therefore the Ld.DR requested the Tribunal to set aside the order of the Ld.CIT(A).
DR had not produced any stay orders of the Hon’ble High Court in support of his argument and only submitted that the matter is under sub-judice before the Hon’ble High Court and therefore find fault with the order of the Ld.CIT(A). We are not accepting the argument advanced by the Ld.DR for the simple reason that as on date, the order of the Tribunal was not set aside and a mere filing of the appeal would not be a reason for terming the order of the CIT(A) as illegal. We also found that the Ld.CIT(A) had explained the reasons in his order for allowing the appeal filed by the assessee which was not disputed by the Ld.DR and in that circumstances, we have no hesitation to dismiss the appeal filed by the revenue and we confirm the finding of the Ld.CIT(A) as a valid one. Appeal filed by the revenue is dismissed.
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2025 (4) TMI 1554
Assessment u/s 153C or 147 - Scope of the phrase "belongs or belong to" versus "pertains or pertain to" in section 153C - HELD THAT:- In the case of the assesse was centralized on 03.07.2012, whereas search was conducted on 02.09.2010 and in case of search conducted on 10.10.2013 in case of Shobha Group the notice was issued on 27.03.2015 after of 17 months. The period for issue of notice under section 153C was not expired. In this case prima-facie appears that the revenue officers have not properly followed the Instruction No, 1927 dated 21.07.1995 specifically in this point (vi) The seized material shall be handed over to the Assessing Officer at the earliest.
AO was the same person for the searched person and the assesse, he could have issue notice under section 153C after following the procedure laid down therein.
AO has choosing to issue notice under section 148 instead of 153C since there were incriminating materials were found and seized. The very basis of reason for reopening the case is on the basis of Seized materials unearthed during the course of searched person. On examination of the documents handed over by the Investigation Wing to the AO has a bearing for determination of total income of such other person for the relevant preceding years. In view of the above the case is covered u/s 153C of the Act but not under section 147/148 of the Act.
Now coming to the case of the assessee the search was conducted on 02/09/2010 & 10/10/2013 in the case of Davanam Jewellers and Sobha Developers and incriminating materials were found and seized and it was marked as A2/DJPL/4 Page No. 13 to 16 and AO has quantified which is clear from the AO's order at Para No. 4.2 to 4.4. noted supra. During the search it was found and seized by the Investigation Wing in respect of transactions carried out for purchase of the Madiwala Commercial Plaza and noted that huge premium have been paid by the assessee and it was not recorded by the assessee.
Consequently, the case of the assessee came to be centralized on 03/07/2012. The AO has received information and perused the seized documents thereafter the AO has issued a notice under section 148 after the date of centralisation. The time limit to initiate proceedings under section 153C for each of the assessment years from Assessment Year 2006-07 to Assessment Year 2010-11 had not expired as on the date on which notice under section 148 was issued for these respective assessment years. Thus, the AO was not precluded from initiating proceedings under section 153C of the Act, since, in the case of the assessee, there were incriminating materials unearthed during the course of search, therefore the AO has to follow the procedure as per sections 153A/153C of the Act.
That the case of the assessee does not fall under section 147 of the Act, since the materials were unearthed and seized during the course of search. In view of this the arguments of the learned Standing Council for the Revenue are not acceptable.
The decision of Tribunal in the case of M/s. Ickon Projects [2023 (10) TMI 1471 - ITAT BANGALORE] where the ITAT held that the decision of Vikram Sujitkumar Bhatia [2023 (4) TMI 296 - SUPREME COURT] clearly mandates that the amended in Section 153C is deemed to have been on the statute since the very inception of that section & thus, if any material which is seized in a search conducted under section 132 of the Act is to be used to assess a person who is not searched, the AO would have to necessarily initiate proceedings under section 153C of the Act, in order to do the same & proceeding initiated under section 147 of the Act to assess the same is bad in law.
To sum up, going through the arguments advanced by both the sides and considering the case laws noted supra. we find that the learned CIT (A) has done good reasoned order and there is no any infirmity. The AO should not have issued notice under section 148 of the Act. In the result the appeals filed by the Revenue are dismissed in above terms.
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2025 (4) TMI 1553
Rejection of registration u/s 12AA and also not granting approval u/s 80G(5) - ‘Trust do not conclusively prove the genuineness of the activities of the Trust in absence of such documents, it could not be determined whether the applicant is genuinely carrying out activities as per its objects’ - HELD THAT:- We find that the CIT(E) has rejected the application u/s 12AB of the Act cryptically and vaguely that ‘Trust do not conclusively prove the genuineness of the activities of the Trust. In absence of such documents, it could not be determined whether the applicant is genuinely carrying out activities as per its objects’ which is factually incorrect.
CIT(E) has not issued any show-cause notice before passing the order of rejection of assessee’s application which is in violation of the principles of natural justice as per settled law. Revenue could not controvert the factual position brought on record by the assessee’s learned counsel.
Thus, we deem it fit and proper to remand the matter back to the CIT(E) regarding grant of registration u/s 12AB of the Act to the file of the CIT(E) with the directions to examine the issues of genuineness of the activities of the trust in consonance to the objects of the assessee’s trust. CIT(E) is directed to grant reasonable opportunity of being heard to the assessee. Appeals of the assessee are allowed for statistical purpose.
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2025 (4) TMI 1552
Revision u/s 263 - exemption u/s 11 - charitable purposes u/s 2(15) or not? - HELD THAT:- CIT’s findings in the impugned revisional order passed u/s. 263 are highly whimsical and are not conclusive one way or the other. Each of the issue raised on merits are debatable and more than one view is possible in respect of each of the points raised by the CIT(E) to justify the revision of the order passed u/s. 143(3) of the Act. It is not open to the CIT(E) that further verification is needed on certain aspects when the records speak that thorough enquiry was done by the AO after issuing many notices and replies taken on record and it is not a case of no enquiry warranting such observation by the CIT(E).
AO had verified and convinced that, the activities carried out by the assessee is eligible exemption u/s.2(15) of the Act and also respectfully following the decision of the Hon’ble Madras High court [2020 (11) TMI 267 - MADRAS HIGH COURT] in allowing the appeal of the assessee against the cancellation of registration u/s.12AA of the Act, passed an order u/s.143(3) of the Act. This action of the AO, interfered by the Ld.CIT(E) exercising his jurisdiction U/s.263, which according to the ld. AR is wholly without jurisdiction and the issues that have been raked by the Ld.PCIT by treating the application of fund under three heads as not allowable.
According to the CIT(E) the following payments Investment made in M/s. Metronation Chennai Television Pvt Ltd., Corpus donation made to M/s. Aditnar Educational Institution and Advance tax payment as application of income are to be disallowed as fund not utilised for the objects of the assessee trust and taxed at MMR. In the present facts of the case, we do not agree with the assertion laid by the CIT(E), since the AO during the assessment proceedings has considered all the three impugned issues raised by the CIT(E) and concluded the assessment by taking a plausible view permitted under the Act.
The assertion of the CIT(E) that, the AO while scrutinizing the assessment has failed to verify the issue stated (supra) is contrary to the facts revealed from the records and found to be incorrect. From perusal of the SCN for draft assessment order and the assessment order, it reveals that the AO has conducted enquiry on all the impugned three issues and the assessee had furnished all the relevant material during the assessment proceedings (provided in the paper book filed by the assessee) and which have been duly considered and verified by the AO before framing the assessment by accepting the payments made by the assessee as application of funds towards objectives of the trust as claimed by the assessee.
Since, the AO has considered the issues according to the merits and also followed the decision of the hon’ble Madras high court in assessee’s own case wherein their lordship has considered all the impugned issues before reinstating the registration granted u/s.12AA of the Act, the assessment order of the AO cannot be treated as erroneous. Therefore, we do not countenance the impugned action of ld.CIT(E) on the facts and circumstances of the case. Decided in favour of assessee.
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2025 (4) TMI 1551
Territorial jurisdiction of High Court to entertain the writ petition challenging the SCN - petitioner was not given reasonable opportunity of hearing - Violation of principles of natural justice - HELD THAT:- It is true that Article 226 (2) of the Constitution of India allows a High Court to exercise its power, to issue writs, even if the authority or person against whom the writ is sought is outside its territorial jurisdiction, as long as the cause of action or part of it arises within its territorial jurisdiction. It is also equally well settled that a small portion of cause of action within the High Court’s jurisdiction is sufficient to trigger its power to issue writs - Cause of action is the bundle of facts that are necessary to be proved to obtain a relief or a judgment in favour of the petitioner, more particularly, the material facts which are essential. Material facts are those facts which are necessary to establish the right to relief.
The impugned order is challenged on the ground that the seizure statements were obtained in duress and the petitioner was not allowed to cross-examine the co-accused and seizure witness in derogation of section 138(b) of the Customs Act, 1962. Thus the impugned order in original dated 18.02.2025 lacks legal standing and was passed solely on unverified custodial statements of accused persons which were subsequently retracted - the material cause of action and bundle of facts which are necessary to be proved to obtain a relief at the hands of this court is relatable to the procedure followed by the authorities under the Directorate of Revenue Intelligence and also by the Customs Adjudicatory Authorities. The fundamental allegation is as regards violation of principles of natural justice by not allowing the petitioner to cross-examine the witnesses by the Customs authorities while adjudicating the matter. The other facts required to be proved by the petitioner to grant him relief at the hands of this court is the conduct of the seizing authorities in recording the statement of the co-accused.
This court is of the considered opinion that the fact that the petitioner is carrying out business at Karimganj, that the allegedly smuggled goods were transported from Karimganj etc have no connection, whatsoever, with the allegation made by the petitioner that the seizure was illegally done, that the cross-examination was not allowed, that the impugned orders are having no legal standing.
The case pleaded is alleged procedural lapse in the seizure as well as in passing the impugned order in original and not relatable in any way to the factum of residence of the petitioner in the state of Assam or to the fact that it was alleged that the gold was smuggled from the state of Assam - the facts in the opinion of this court, don’t give rise to any cause of action within the jurisdiction of this court to adjudicate the validity of the impugned order dated 18.02.2025 and show cause notice dated 04.08.2023.
Conclusion - The fact that the petitioner is carrying out business at Karimganj, that the allegedly smuggled goods were transported from Karimganj etc have no connection whatsoever with the allegation made by the petitioner that the seizure was illegally done, that the cross-examination was not allowed, that the impugned orders are having no legal standing. The facts don't give rise to any cause of action within the jurisdiction of this court to adjudicate the validity of the impugned order dated 18.02.2025 and show cause notice dated 04.08.2023.
The present writ petition stands closed for want of jurisdiction by this court.
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2025 (4) TMI 1550
Smuggling of gold - detention and confiscation of the Petitioner's personal gold jewellery by the Customs Department without issuance of a Show Cause Notice (SCN) or personal hearing - Respondent has also not produced any voluntary signed waiver declaration - violation of principles of natural justice - HELD THAT:- This Court has held in several matters that signing of waiver of SCN and waiver of personal hearing by a way of preprinted waiver form would be contrary to principles of natural justice and, in any case, cannot be recognized as legally followed procedure by this Court. In the cases of Mr Makhinder Chopra vs. Commissioner of Customs, New Delhi, [2025 (3) TMI 19 - DELHI HIGH COURT] and Amit Kumar v. The Commissioner of Customs, [2025 (2) TMI 385 - DELHI HIGH COURT] this Court has discussed various issues arising in several cases where the goods have been detained from a tourist by the Customs Department, including the issue of personal jewellery being part of personal effects under the Baggage Rules, 2016 and waiver of SCN and personal hearing by way of a preprinted waiver form.
Moreover, once the Commissioner of Customs (Appeals) has also allowed redemption, the decision to file revision cannot be a ground to withhold the release of the goods. Further, there is no stay which has been granted by the Commissioner of Customs (Appeals).
This Court is of the opinion that the items deserve to be released to the Petitioner in terms of the OIA dated 29th January, 2025 - no warehouse charges shall be collected from the Petitioner.
Petition disposed off.
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2025 (4) TMI 1549
Smuggling of gold - Detention of the one gold kada of the Petitioner - personal effect under the Baggage Rules, 2016 or not - HELD THAT:- Considering the fact that the gold kada seized is merely a personal effect of the Petitioner, in the opinion of this Court, the detention itself would be contrary to law - the detention of the gold kada is set aside.
Petition disposed off.
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2025 (4) TMI 1548
Seeking grant of regular bail - demand of bribe for release of shipment - HELD THAT:- The applicant is in jail for about two months. As the investigation is over, further detention of the applicant is not warranted. Considering the overall facts and circumstances of the case, the applicant is released on bail.
Criminal Bail Application is allowed.
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2025 (4) TMI 1547
Overvaluation of imported goods - deficiency in discharge of duties of customs - jurisdiction of adjudicating authorities and appellate bodies, to determine the value of imported goods outside the statutory framework of assessment, particularly for the purpose of confiscation under section 111(m) of the Customs Act, 1962, when no duty shortfall or prohibition exists - HELD THAT:- The scheme of valuation, as set out in the extant Rules, is for the price to be the transaction value and, thereby, the value for assessment where duties of customs are to be charged on the basis of value. The optimal description of acceptable price, in rule 3 of Customs Valuation (Determination of Value of Imported Goods Rules), 2007, is also considered to be the default, save for any additions pertaining to costs and services related to the imported goods warranted by rule 10 of Customs Valuation (Determination of Value of Imported Goods Rules), 2007, except in two specified and mutually exclusive circumstances, viz., transaction between related parties with the relationship having influenced price or upon discard by recourse to rule 12 of Customs Valuation (Determination of Value of Imported Goods) Rules, 2007, permitting substitution with ‘surrogate value’ by sequential application of rule 4 to rule 9 therein, as the ‘gold standard’ of ‘transaction value’, as the governing concept, had been elevated to the substance itself in, with amendment of 2007 to, section 14 of Customs Act, 1962.
The re-determination, by adoption of price, truncated to the extent of ‘unacceptable value addition’ in the ‘document chain’, is tantamount to freezing the ‘consideration chain’ at a stage prior to the last in the billing for the very goods under assessment; it is neither in accord with ‘surrogate value’ drawn from other legitimate transactions permitted to be appropriated for re-assessment by recourse to rule 4 to rule 9 of Customs Valuation (Determination of Value of Imported Goods) Rules, 2007 nor ‘depressed’/ ‘enhanced’ consideration for the goods under assessment permitted by rule 3 of Customs Valuation (Determination of Value of Imported Goods) Rules, 2007. The ‘transaction value’ in rule 4 therein is intended to be drawn from consignment of ‘identical goods’ which ‘goods under assessment’ is not and the ‘price’ of ‘goods under assessment’ is alterable only in the manner permitted in rule 3 of Customs Valuation (Determination of Value of Imported Goods) Rules, 2007. Synthesis of the two has neither approval in law nor precedent of judicial determination.
The grounds of appeal, to the extent concerned with justifying non-applicability of the leading judgements on disputes about overvaluation before the Tribunal, are not to be dignified by being even taken into consideration. To do so would be at the cost of judicial discipline and to the detriment of the responsibility assigned, especially on valuation and classification, to the Tribunal in the appellate hierarchy of national jurisdiction. The attempt by a subordinate executive authority to have the findings therein re-considered, after the Central Government withdrew its appeal in one and lost its appeal in the other, is not in keeping with the finality attributable to judicial determination.
Conclusion - The scheme of valuation does not stand in support of the manner in which the value has been sought to be substituted in the notice. The facts evinced are not sufficient to tear down the weave of commercial engagement and for recourse, thereby, to discard of declared value. The mark-up is not of such unreasonable magnitude as to suggest that transaction should be penalized for obfuscation. Even without pressing into service the law, as judicially determined, on jurisdictional competence and on evidentiary value of documents for visiting penalties on the respondents under Customs Act, 1962, and as found in the impugned order too, the facts alone suffice to erase the proposals in the notice.
Appeal dismissed.
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2025 (4) TMI 1546
Classification of appellant as an Unsecured Financial Creditor instead of a Secured Financial Creditor by the Liquidator and the Adjudicating Authority - absence of non-registration of charge in the register of the Registrar of Companies (ROC) - breach of statutory obligation under Section 77 of the Companies Act, 2013 besides violating contractual commitments - HELD THAT:- An investment was made by BEST-Appellant in the Corporate Debtor by way of an interest free deposit amounting to Rs.30 crores. The compensation for delay on account of non-commissioning of the project was provided for in the IA in terms of the charging of the units and the discounted rate thereof. When the IA did not provide for interest component in clear and precise terms, the Liquidator could not on his own have expanded the scope of the IA by way of his own interpretation of the clauses. The Liquidator after examining the IA and not having found any enabling clause which provided for interest on the deposit invested by the Appellant in the Corporate Debtor has rightly treated the security deposit to be interest-free - The Liquidator therefore did not commit any error in concluding that the deposits were interest free and that the Appellant could not have claimed interest on security deposits which was interest free. There are no error on the part of the Liquidator to have admitted only a claim of Rs 30 Cr. in respect of the principal amount and rejecting the claim made in respect of the interest amount of Rs 126.23 Cr.
The Adjudicating Authority in the exercise of its summary jurisdiction is not capacitated to determine the terms and conditions of the contractual agreement. The Adjudicating Authority is not expected to go into the commercial intent of the parties in trying to interpret the contractual provisions in the IA beyond a plain reading of the same - When the clauses of the IA did not specifically provide for interest on security deposit, the Adjudicating Authority had correctly taken the view that the Liquidator could not have interpreted the IA to the contrary.
The Liquidator did not receive any proof with regard to recording of the security having been created either with the information utility or proof of Certificate of Registration of Charge issued by the ROC or registration of charge with the Central Registry of Securitisation Asset Reconstruction and Security Interest of India. Even if the requirement of the registration of charge is side-stepped for the time being in deciding the status of the Appellant as a secured financial creditor, the need to possess documents of charge creating the interest cannot be waived as this requirement was clearly envisaged in the IA - In the absence of charge document, the Creditor could not have been treated as a Secured Financial Creditor of the Corporate Debtor. It is not for the Liquidator to look into whose fault it was for not creating the security charge. All that the Liquidator was expected to perform was whether the charge has been created. The Appellant on a pointed query made by this Bench also admitted that there was no charge document created in their favour by the Corporate Debtor. In such circumstances, when the Appellant has not controverted the fact that no charge was created on the deposit invested by them, there are no infirmity in the decision of the Liquidator in not treating the Appellant as a Secured Financial Creditor.
Conclusion - The Appellant was rightly classified as an Unsecured Financial Creditor due to absence of registered charge or proof of security interest.
There are no good reason to interfere with the impugned order. The Appeal not having any merits stands dismissed.
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2025 (4) TMI 1545
Initiation of SARFAESI proceedings was sufficient basis to hold that the Section 94 application has been resorted to by the Appellant for putting a spanner in the recovery proceedings initiated by the Respondent No.1 or not - violation of principles of natural justice - HELD THAT:- It is an admitted fact that the Corporate Debtor had failed to discharge their repayment obligations and their account was classified as a NPA way back in 30.06.2011. The Appellant as personal guarantor had also duly acknowledged the outstanding debt as early as on 13.08.2012 and had made part payment towards the loan in 2018. The debt liability is also acknowledged in the financial statements of the Corporate Debtor for the FY-2017-18. It is also an undisputed fact that a demand notice had been issued under the SARFAESI Act by the original Lender-Bank of India on 06.08.2012.
The applicant’s conduct aims to wilfully misuse and abuse easy access to the justice administration system. Complying with the court’s order and undertaking is fundamental to litigation to achieve fairness between the parties. The borrowers have failed the test of judicial scrutiny for repetitive breaches of the court’s order or multiple non-compliance with the undertakings.” The DRT also directed the Appellant to comply with the Court’s order and undertaking given by them from time to time.
Section 94 application was filed by the Appellant within weeks after the issue of a possession notice upon them on 11.11.2022 by the Respondent No.1. When after the 4th SA was disposed of, the Appellant realised that it had failed to secure any further relief from the DRT and that dispossession from the subject residential premises was imminent that the present Section 94 petition was filed on 03.12.2022 and a communication sent on 06.12.2022 to the Respondent No.1 to hold its hand from taking over possession of the residential premises on account of moratorium - Filing of the Section 94 application at this juncture leaves no room for doubt in our mind that these proceedings were not initiated with the intent of genuine insolvency resolution but as a tool to obstruct lawful recovery of enforcement with the manifest intent of the Appellant being to seek refuge under the moratorium provision under Section 96 of the IBC in an effort to prevent enforcement of possession of the secured residential premises.
This is a case clearly where the Appellant on one excuse the other has all along tried to delay the handing over of the security to the Respondent No.1. The steps under SARFAESI Act have been pending since 2012. The Appellant has consistently misused the benevolent indulgence afforded by various adjudicatory forums to the Appellant in the past to resolve the matter. Each time the Appellant got relief from the court it slept over its commitment to either handover the subject residential premises to the Respondent No.1 or to make payment by selling the said property to clear the outstanding debt - The present Section 94 application is clearly yet another salvo on the part of the Appellant to stall the recovery by taking advantage of moratorium. This clearly shows that the Appellant has been ceaselessly orchestrating litigative proceedings and embroiled the Respondent No.1 in these proceedings clearly to subvert the recovery proceedings initiated against them and not for the purpose of the insolvency resolution. In the given fact situation, it is inclined to agree with the findings returned by the Adjudicating Authority that the Appellant had approached the Adjudicating Authority by filing the Section 94 application with an intent other than insolvency resolution.
The questioning of the jurisdiction of the Adjudicating Authority by the Appellant to examine the maintainability and bonafide of an application under Section 94 at the stage of Section 100 lacks substance. Since the report under Section 99 of the IBC had already been filed by the RP, nothing prevented the Adjudicating Authority to hear the matter and pass orders under Section 100 of the IBC while also entertaining the Intervention Application of Respondent No.1 - the Adjudicating Authority by its order dated 27.03.2024 had allowed four weeks’ time to the Appellant to file their response. The matter was fixed for hearing on four dates viz. 08.05.2024, 25.06.2024, 03.09.2024 and 25.10.2024. However, no reply was filed by the Appellant.
Conclusion - i) The statutory right under Section 94 of the IBC to file a PIRP petition cannot be denied solely on the basis of prior SARFAESI proceedings, but the bona fides of the petition must be scrutinized. ii) Repeated and persistent abuse of judicial process to delay secured creditor's recovery rights can justify dismissal of Section 94 petitions as an abuse of process. iii) The Adjudicating Authority is empowered to dismiss Section 94 petitions at the pre-admission stage upon finding fraudulent intent or abuse of process.
There are no merit in the Appeal. The Appeal stands dismissed.
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2025 (4) TMI 1544
Tribunal exercising its discretion by reducing the pre-deposit of penalty only to 20% - Tribunal has exercised its discretion in the context of second proviso to Section 19(1) of the Act or not? - HELD THAT:- Once the legislature fixes the discretion to any authority, it is to the satisfaction of that authority it should exercise such discretion. Moreover, the words used in the second proviso to Section 19(1) also states that 'the appellate Tribunal is of the opinion'. It means, if the Tribunal forms an opinion that some discretion has to be exercised in a particular case, then only such a discretion has to be used.
Therefore, with regard the question of forming an opinion, it is fully left to the discretion of the Tribunal. Whether such opinion that the Tribunal had formed was based on the merits of case, cannot be gone into by sitting over on appeal by this Court and therefore, ultimately such kind of discretion if it is exercised by the original authority to whom such power of discretion is vested, it normally would not be touched upon by the appellate forums.
Here in the case in hand, in fact the Tribunal has exercised its discretion by reducing the pre-deposit of penalty only to 20%. Therefore, it is a case where the Tribunal, after having formed an opinion based on the facts and circumstances of the case, has reduced the pre-deposit of penalty to only 20%. Hence, it cannot be stated that the Tribunal has not exercised its discretion under Second proviso to Section 19(1) of the Act.
The imposition of penalty is also for the purpose of safeguarding the realization of penalty as, that also has to be taken into account. Therefore, by striking a balance between 'undue hardship' and 'safeguarding the realization of penalty', in between the two, the discretion of the Tribunal has to be exercised. Such a discretion cannot be exercised in the manner expected by the litigant in any lis. Since the discretionary power vested under the second proviso to Section 19(1) of the Act to the Tribunal has been exercised properly in this case, we do not find any reason to interfere with the same.
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2025 (4) TMI 1543
Applicability of provisions of FERA to the appellant, who is not a citizen of India u/s 1(3) of the Act - HELD THAT:- The bare reading of sub clause (III) covers the person other than citizen of India who come and stay in India for taking employment or carrying a business or vocation in India. It can be when he is staying with his or her spouse and spouse being a resident of India, etc.
The definition of “person resident of India” thus covers a person not citizen of India but would fall in the definition in a given circumstances narrated under clause (III).
We are unable to accept the first argument raised by the appellant because under section 1 (3), word “also” has been used to indicate that the act of 1973 would apply to the citizen of India outside India also and branches outside India etc. Section 1(3) does not indicate that it would apply to citizen of India only. The word „only‟ does not exist under the provisions referred to above.
Thus first argument raised by the appellant is summarily rejected.
Applicability of section 8(1) - The restriction on dealing in foreign exchange has been imposed without previous general or special permission of RBI on all the persons other than the authorized dealer in India. No “person resident in India” other than authorized dealer shall outside India purchase or otherwise acquire or borrow or sale the land with any person not being authorized dealer. In the instant case, the appellants are not falling in the definition of “person resident of India” for the reason that no evidence was led by the respondent to prove that during the relevant period involved in this case, the appellant came and stayed for the purpose given under clause (iii) of section 2(p) of the Act of 1973. Accordingly, the counsel for the respondent could not clarify as to how section 8 (1) of the Act of 1973 can apply to the appellant.
The issue aforesaid has not been dealt with by the Special Director, DOE though it has been recorded that on account of the transfer of money by the Standard Chartered Bank, there was a contravention of section 8 (1) of the Act of 1973 but in this case, it could not be proved that appellant was falling in the definition of “person resident of India”. Thus, how section 8 (1) would apply to him.
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