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2024 (5) TMI 1489
Direction to Trial Court to conduct a de novo trial, while making certain observations against the Special Judge - disapproval of approach in the conduct of the trial - procedural Violations in Conducting the Trial - Imposition of a sentence by way of a legislation - existence of a prima facie case or not - HELD THAT:- The High Court, while passing both the impugned judgments, has not only called for the records and rendered findings of fact, but has also considered them in detail. At every stage, the accused was denied due opportunity to defend himself. The appellant judicial officer was obviously acting in utmost haste. Every trial is a journey towards the truth and a Presiding Officer is expected to create a balanced atmosphere in the mind of the prosecution and the defence. It seems that the decision was rendered in utmost haste.
It would be humanly impossible to deliver the judgment within half an hour’s time running into 27 pages consisting of 59 paragraphs in the first case and similarly in the other. The lawyer for the defence cannot fight against the court. It is the court which has to follow a balanced approach. At every stage, including framing of charges, there was a constant denial of due opportunity and hearing. The accused was not able to consult his lawyer. He was not even served with the copies, though his lawyer received the same before framing of the charges. Receiving of documents by his lawyer would not be sufficient compliance, unless there was sufficient time given for him to peruse them and thereafter have a consultation.
Admittedly, neither the provisions of the Witness Protection Scheme, 2018 have been invoked nor the Rules for Video Conferencing for Courts, 2020 were followed. The accused was merely shown the court’s proceedings and the writing was on the wall for him. It is not possible to say anything on the merits of the case.
On facts, even in Criminal Appeal No. 3925 of 2023, the trial had commenced and concluded in a single day. Additionally, no lawyer could be engaged by the accused and, therefore, as per the recommendations of the prosecutor, another one was engaged. Otherwise, the facts are more or less similar in both the cases and, therefore, we are not inclined to go into it in detail. When the charges are very serious, Courts should be more circumspect in discharging their solemn duty.
The decisions relied upon by the learned senior counsel for the appellant have no bearing on the present case. The appellant judicial officer is fortunate that no action was taken against him. Nothing more can be said on this, except by stating that in the absence of any proposed action, there is no question of hearing the appellant. Thus, it is not required to interfere on the merits of the case with respect to non-compliance of the mandatory provisions, as the accused is still under incarceration.
On the application filed seeking intervention over the action taken on the administrative side, it is for the appellant to approach the High Court. It is an administrative action taken and, therefore, the same does not require any interference on the judicial side, especially in light of the discussion made above. Suffice it is to state that liberty is given to the appellant to approach the High Court on the administrative side.
The trial court shall keep in mind the mandate of POCSO Act, 2012 while recording the evidence of the victim - the trial court shall conduct and complete the trial expeditiously in view of Section 35 of the POCSO Act, 2012 - the Government of India represented by the Secretary for the Ministry of Law and Justice shall file an affidavit on the feasibility of introducing a comprehensive sentencing policy and a report thereon, within a period of six months from today.
Appeal dismissed.
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2024 (5) TMI 1488
Jurisdiction of tribunal to entertain appeal related to duty drawback - Validity of Notice U/S 128A(3) of the Customs Act, 1962 - recovery of Duty Drawback erroneously sanctioned and paid to the Firm alongwith interest - As decided by HC [2023 (12) TMI 695 - DELHI HIGH COURT] there is merit in the contention that the Revenue’s appeal is grossly delayed. However, the principal controversy sought to be raised is regarding the jurisdiction of the learned CESTAT to entertain the Firm’s appeal. Although, Revenue had not filed an appeal against the order dated 02.11.2018 within the stipulated time, the concerned authority has taken the steps for reviewing the consequential steps taken pursuant to the said order which is impugned in the said appeal. The issue whether the said order is valid is also sought to be raised in defence to the relief sought by the Firm in the present writ petition. In view of above, this Court considers it apposite to condone the delay in filing the appeal.
In the peculiar facts of this case where the Revenue originally had not taken any objection on the appeal being heard by the learned CESTAT, and had also, following the order of the learned CESTAT, sanctioned refund of the Drawback, the Firm should not be left remediless - opportunity granted to the Firm to prefer a revision, under Section 129DD of the Customs Act, against the order dated 14.05.2018 passed by the Commissioner (Appeals)
HELD THAT:- Issue notice on the applications seeking condonation of delay as well as on the Special Leave Petition / Civil Appeal.
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2024 (5) TMI 1487
Demanding Service Tax - undervaluation of taxable service of washing of coal by not including the sale value of coal rejects as well as the rebate granted towards coal rejects in the taxable value - non-inclusion of amount received from sale of coal rejects and rebate granted in lieu of coal rejects in the value of service of beneficiation of coal and demand of service tax thereon - whether the value of coal rejects is includable in the value of taxable services provided by the appellant for washing of coal or not?
HELD THAT:- As per clause 8 of the agreement between the appellant and service recipient, the coal rejects shall be the property of the appellant and he is entitled to dispose of the said coal rejects and the value of the said coal rejects has been added in the taxable charges for the beneficiation of the raw coal. In these circumstances, when the value of coal rejects has already been included in the taxable value, on which the appellant has already discharged service tax, therefore, Service Tax cannot be demanded from the appellant twice. The sale of coal rejects is an independent activity and has no nexus with the service of the beneficiation of coal.
We also take note of the fact that the appellant has raised invoice at the rate of 182.36 per metric tonne as ‘coal beneficiation charges’, which includes the rebate on coal rejects at the rate of 9.8 per metric tonne of raw coal, which clearly indicates that the appellant has paid Service Tax on the value of coal rejects on which a rebate has been given to the appellant.
Therefore, allegation of undervaluation of taxable value of service provided by the appellant on the ground that a rebate of coal rejects is not added, is misplaced. In fact, the appellant has paid Service Tax on the value of coal rejects and the same has been retained by the appellant, which has become the property of the appellant in terms of the agreement of service provided by the appellant.
As during the process of beneficiation of coal, certain coal rejects are generated which are required to be disposed of in an environment-friendly way and the responsibility of such disposal is on appellant as per the agreement. Therefore, transaction of sale of coal rejects either ‘as-is’ or upon mixing the same with good quality of coal is an independent transaction. It is a transaction of sale on which no Service Tax is payable and this transaction has no nexus with the activity of coal washing service provided by the appellant.
Disposal of coal rejects is a condition of the agreement and the agreement only provides for disposal of coal rejects and not the methodology or process of such disposal. Therefore, disposal of coal rejects is merely a condition of agreement and does not constitute consideration for the service of beneficiation of coal. As appellant has suffered / discharged VAT on sale of coal rejects, no Service Tax is payable by the appellant.
We hold that appellant has rightly paid the Service Tax as per agreement on the activity of beneficiation of coal and the value of coal rejects is already included in the taxable value of service provided by the appellant. Therefore, the coal rejects is the property of the appellant on which no Service Tax is payable by the appellant.
No merit in the impugned order and the same is set aside.
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2024 (5) TMI 1486
Lapse of acquisition proceedings in terms of Section 24(2) of the Right to Fair Compensation and Transparency in Land Acquisition Rehabilitation and Resettlement Act, 2013 - condonation of delay in filing appeals - Suppression of facts by the landowners - Change of law - Leeway to be granted to government entities - COVID-19 Pandemic - Supreme Court frowning upon the filing of fresh SLPs - Public interest and justice.
Condonation of delay in filing appeals - HELD THAT:- As is clear from a plain reading of Section 5 of the Limitation Act, there are exceptions to this general rule. The statute allows for admitting an action provided “sufficient cause” is shown. This vests courts with the discretion to extend the period of limitation if the applicant can show that he had sufficient cause for not preferring an appeal or application within the prescribed period. Section 5 requires analysis of two ingredients: first, an examination of whether “sufficient cause” has been made out; and second, whether such cause has been shown for not filing the appeal/application “within the prescribed period”.
While there is no arithmetical formula, through decades of judicial application, certain yardsticks for judging the sufficiency of cause for condonation of delay have evolved. Mere good cause is not sufficient enough to turn back the clock and allow resuscitation of a claim otherwise barred by delay. The court ought to be cautious while undertaking such an exercise, being circumspect against condoning delay which is attributable to the applicant - Causes arising after the culmination of the limitation period, despite being sufficient in substance, would not suffice for condonation given this second prong of Section 5 of the Limitation Act. However, the applicant shall not be required to prove each day’s delay till the date of filing such appeal/application.
Suppression of facts by the landowners - HELD THAT:- The respondent-landowners have not been called upon to refute or admit the allegations of concealment of facts attributed to some of them. Similarly, it is not asked the appellants to produce original records and documents to substantiate their allegation of concealment and suppression of material facts. It is conscious that entering into an arena of factual controversy at such an advanced stage of litigation, and that too without giving adequate opportunities to the parties can be a potential threat to the cause of justice. Simultaneously, the appellants’ contention in this regard cannot be brushed aside lightly.
The appellants have discharged a prima facie burden for the limited purpose of making out a case for condonation of delay in the cases mentioned in the appended ‘List-A’, which shall be read as a part of this judgment. We believe that a fact-finding exercise is necessary in these cases, and hence, there exist sufficient grounds for the condonation of delay. The nature of relief to be eventually granted after condoning the delay, will be separately dealt with in Part E of this order.
Change of law - HELD THAT:- The subsequent change of law will not be attracted unless a case is pending before the competent court awaiting its final adjudication. To say it differently, if a case has already been decided, it cannot be re-opened and re-decided solely on the basis of a new interpretation given to that law.
Leeway to be granted to government entities - HELD THAT:- If delay were to be condoned merely on the basis of a broad general assertion of bureaucratic indifference, without requiring demonstration of bona fide or an act of mala fide on the part of specific individuals, it would create an artificial distinction between the private parties and the government entities vis-à-vis the law of limitation. This would not be in conformity with the spirit of equality before law as guaranteed under our Constitution. Allowing such latitude would further distort incentives for the government and encourage more laxity by the bureaucracy in its general functioning, thereby undermining quality governance.
COVID-19 Pandemic - HELD THAT:- The benefit of IN RE: COGNIZANCE FOR EXTENSION OF LIMITATION [2022 (1) TMI 385 - SC ORDER] can be availed by the appellants only in a case where the period of limitation expired between 15.03.2020 and 28.02.2022.
Supreme Court frowning upon the filing of fresh SLPs - HELD THAT:- Even if the appellants’ contention is believed to be true that some of the SLPs were dismissed on the strength of the then governing law as laid down in PUNE MUNICIPAL CORPORATION & ANR. VERSUS HARAKCHAND MISIRIMAL SOLANKI & ORS. [2014 (1) TMI 1643 - SUPREME COURT], this could not be an impediment for filing SLPs on time. Had it been so, this Court would not have had the opportunity to reconsider Pune Municipal Corporation and SREE BALAJI NAGAR RESIDENTIAL ASSOCIATION VERSUS STATE OF TAMIL NADU & ORS [2014 (9) TMI 941 - SUPREME COURT]. That apart, some of the cases which are part of this batch belies the appellants’ stance. Instead, it is likely that the appellants took a careful, considered and conscious call of not agitating their claims as they perceived their chances of success to be bleak.
Public interest and justice - HELD THAT:- The impact of not condoning the delay would thus be three-fold, which taken altogether make a compelling case for condonation of delay: one, there will be significant harm to the public at large by way of delayed infrastructure, in addition to financial loss to the public exchequer; second, the comparative benefit to landowners would not be substantial given that no indefeasible rights have been vested with them as the lis has not yet acquired quietus in most cases; and third, the matter would still not attain finality as the State is likely to invoke its power of eminent domain and reinitiate acquisition proceedings given the criticality of the infrastructure being built - the larger interest of justice mandates us to condone the delay in the present batch of cases.
The impugned judgment of the High Court in each case is set aside, and the acquisition of the respondents’ lands under 1894 Act is consequently upheld - Appeal allowed.
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2024 (5) TMI 1485
Shortfall in pre-deposit amount - HELD THAT:- The receipt of Rs. 1,60,600/- towards the Service Tax payment cannot be treated as payment for the purpose of pre— deposit. The receipt for the amount of Rs. 4750/- which is under the CGST payment cannot also be considered. However, the payment of Rs. 54,800/- is under the Central Excise and Service tax payment. It can be considered towards the pre-deposit.
Thus, there is short fall of pre-deposit. Let a fresh notice be issued to the appellant with a copy of this order mentioning therein that the appellant may make the deposit within a period of 6 weeks. In case the deposit is not made, an appropriate order may be passed for non-compliance of statutory requirement.
List on July 15, 2024.
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2024 (5) TMI 1484
Imposition of personal penalty 26 of Central Excise Rules, 2002 on co-appellant - abating the evasion of duty by M/s. Atlas Plastics - main case of duty evasion is settled under SVLDRS 2019 - HELD THAT:- Since, the appellant has been penalized under Rule 26 in connection with the duty evasion made by M/s. Atlas Plastics and their case has been settled under SVLDRS and the appeal was disposed by this Tribunal vide order dated 07.11.2023, the personal penalty of the appellant is not sustainable in view of the decisions of SHRI V.K. AGGARWAL AND SHRI J.K. AGGARWAL VERSUS COMMISSIONER OF CENTRAL TAX, CGST AND CENTRAL EXCISE, NEW DELHI [2023 (9) TMI 178 - CESTAT NEW DELHI] and SHRI SASTHI CHARAN BANERJEE VERSUS COMMR. OF CGST & CX, BOLPUR COMMISSIONERATE [2022 (12) TMI 1437 - CESTAT KOLKATA].
In view of the above judgments, it is settled that once the main case of duty evasion is settled under SVLDRS 2019 the penalty on the Co-appellant shall not survive.
The penalty is set aside - The Appeal is allowed.
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2024 (5) TMI 1483
Corrigendum assessment order passed by the AO - order passed by the AO is incomplete consists of only three pages as subsequently rectified - HELD THAT:- AO had passed the original assessment order dated 20/12/2019 with the incomplete information along with demand notice, computation of tax and penalty notices. Subsequently, he noticed that he has uploaded wrong assessment order in ITBA Portal and the above said mistake could not be rectified through the system, he has passed the corrigendum order within the limitation period and passed the same on 24/12/2019 and all other demand and notices, computation sheet etc. are not modified or changed.
Considering the fact that only the assessment order was uploaded by mistake and all other information relating to tax demand etc. are correct. Therefore, only the assessment order was modified not the demand, therefore, in our considered view that case law relied on by the assessee are not relevant for the facts on records, therefore, we are inclined to adjudicate the issue in favour of the Revenue and we hold that the corrigendum assessment order passed by the Assessing Officer is proper.
Addition made u/s 68 - unexplained cash deposits - assessment failed to provide any justification for maintaining high level of cash - case was selected for scrutiny under CASS to examine the issue ‘Cash deposit during demonetization period’ - HELD THAT:- As long as assessee explains the source of sales, submits the details of receipts particularly cash sales and demonstrates the availability of cash and sufficient stock in the business to support the cash deposit in the bank and at the same time, AO has not brought anything on record to substantiate his finding, merely interprets the data rather than indulging in making proper enquiry.
In our considered view merely comparing the sales in cash deposits with the earlier assessment years without bringing on record anything against the assessee for making cash sales and cash deposits, in our considered view, the assessee has explained the source of cash deposits and rightly offered to tax in its books of accounts, therefore, it does not call for separate disallowance. Further, considering the detailed findings of the Ld. CIT(A), we do not see any reason to disturb the same. Accordingly, ground raised by the Revenue is dismissed.
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2024 (5) TMI 1482
Cancellation of registration of petitioner - time limittaion - order for cancellation of registration has been passed without any application of mind - violation of principles of natural justice - HELD THAT:- In the present case, the facts are similar to one in Surendra Bahadur Singh's case [2023 (8) TMI 1262 - ALLAHABAD HIGH COURT], wherein the appeal was barred by time under Section 107 of the Act. However, the Division Bench in Surendra Bahadur Singh's case took into consideration the original order and set aside the same being non-reasoned and allowed the petitioner therein to file reply to the show cause notice.
The orders impugned herein are liable to be set aside. Accordingly, the order in original dated March 27, 2023 and the appellate order dated March 27, 2024 are quashed and set aside - petition allowed.
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2024 (5) TMI 1481
Rejection of application for registration u/s 12AB - no Charitable activity u/s 2(15) - HELD THAT:- According to the financials of the assessee placed nothing is transpired to doubt the genuineness of the activities carried out by the assessee society, further there was no negative remark by the revenue toward such financials apart from incomplete information about the doners.
Since the genuineness of activities and conduct of the assessee society towards its objects is not dislodged by the revenue with any plausible reason or reasonable explanation to doubt the same, we are of the considered opinion that the assessee society cannot be deprived of from their eligibility to obtain registration as a charitable institution under the provisions of section 12AB, only for the reason that the certain details of donation received could not be furnished by them.
Since, in order to check the genuineness of donations received further details are furnished by the society u/r 29 as additional evidence before us which could not be furnished before the Ld. CIT(E), therefore, we find it appropriate to restore the issue to the files of Ld. CIT(E), with directions to re-visit the application of the assessee and grant them registration u/s 12AB according to the provisions of the law. Reasonable opportunity of being heard and liberty to furnish necessary information / explanations / documents / evidence shall be afforded to the assessee in the set aside proceedings.Appeal of the assessee is partly allowed.
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2024 (5) TMI 1480
Validity of assessment order passed u/s 143(3) r.w.s. 144B - Rejection of books of accounts - disallowance u/s 40(a)(ia) - as argued petitioner had not been placed on notice of an intent of the AO to reject the books of account and to make additions referable to section 40(a)(ia)
HELD THAT:- As is evident from the extract of the show-cause notice, AO had in clear and unequivocal terms placed the petitioner- assessee on notice with respect to the doubts harboured by it relating to the correctness and completeness of the accounts of the assessee.
AO had further observed that since the expenditure claimed is not verifiable, income was proposed to be assessed at 12 per cent. of the total disclosed revenue after rejecting the books of account. The submission, therefore, that the petitioner had not been apprised of the proposed rejection of the books and variation in income would clearly not sustain.
Disallowance u/s 40(a)(ia) no specific disallowance has been made nor have any additions consequentially factored in. All that the AO has observed is that the dis allowance is not being made at this stage subject to the view that any appellate authority may take with respect to rejection of books of account. No merits in the challenge which stands raised. WP dismissed.
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2024 (5) TMI 1479
Validity of reopening proceedings - improper sanction having been obtained - sanction should have been given u/s 151(ii) and not u/s 151(i) - HELD THAT:- As Counsels state that the issue of improper sanction has been decided by this court in the case of Siemens Financial Services Private Limited [2023 (9) TMI 552 - BOMBAY HIGH COURT] wherein the court has held that for AY 2016-2017, the sanction should have been given under Section 151(ii) and not under Section 151(i) and consequently the sanction is invalid. The Court has stated that in view of the invalid sanction, the notice issued itself will be invalid and has to be quashed. We would also add, if the notice has to be quashed, if there is an assessment order passed subsequently, that assessment order having been passed relying on an incorrect sanction, will also have to be quashed.
The findings in Siemens Financial Services Private Limited (supra) will squarely apply to this petition. Therefore, all notices and orders impugned in this petition are quashed and set aside. All consequential notices, assessment order and the consequential orders, if any, are also hereby quashed and set aside.
Petition disposed. We clarify that all other grounds could be raised by the parties at appropriate stage in any other proceeding.
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2024 (5) TMI 1478
Seeking grant of bail - offences punishable under Sections 8/22(c)/23/29 of the Narcotic Drugs and Psychotropic Substances Act, 1985 - HELD THAT:- Considering the fact that the petitioner is also an accused in another matter which is registered against him under the NDPS Act, there are absolutely no reason to grant bail to the petitioner.
The Special Leave Petition is dismissed accordingly.
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2024 (5) TMI 1477
Seeking grant of bail - seizure of narcotic substance from the co-accused - non-compliance of the mandate contained in section 50 of the NDPS Act, 1985 - appraisal memo does not specifically inform the applicant that he has a legal right to be searched 'only' before the nearest Magistrate or Gazetted officer - despite the applicant not availing the right to be searched before the Magistrate or Gazetted officer, it was incumbent upon the NCB officials to conduct the search before the Gazetted officer - HELD THAT:- In the case at hand, the seizure was effected on 3rd October, 2021. The investigating officer, it appears, made an application before the jurisdictional Magistrate on 18th November, 2021. The proceedings before the learned Magistrate were conducted on 4th December, 2021. There is element of delay on the part of investigating officer, in seeking the certification of the inventory of the contraband and drawing of samples thereof.
In the case at hand, this interval of time between the seizure and inventory assumes significance in the context of the fact that the examination report issued by CFSL dated 21st February, 2022, indicates, inter alia, that the Exhibit M1, a transparent zip lock bag containing brown colour powder, stated to be 5 gm MD, was received for analysis, though the sample which was drawn from the contraband allegedly recovered from the person of the applicant was allegedly a white colour powder substance as recorded in the seizure panchanama. Prima facie, there is discrepancy in the description of the contraband which was allegedly seized from the applicant and sample collected therefrom, and the sample which was received for analysis by the CFSL.
As the identity of the sample is in the corridor of uncertainty, and the complicity of the applicant is primarily based on the seizure of the contraband from the applicant, a prima facie case to hold that eventually the applicant may not be found guilty of the offences can be said to have been made out.
In any event, the applicant has been in custody since 4th October, 2021. The applicant has been incarcerated for 2 and half years. There are substance in the submission of appellant that having regard to the number of accused arraigned in the crime, and the evidence which the prosecution may be required to be adduce to bring home the charge against the accused, it is extremely unlikely that the trial can be concluded within a reasonable period.
The Court is not informed that the applicant has antecedents. Thus, the Court may be justified in drawing an inference that the applicant may not indulge in identical activities if enlarged on bail - the applicant deserves to be enlarged on bail.
Bail application allowed.
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2024 (5) TMI 1476
Disallowance of bogus purchases - information collected from the back of the assessee from a third party relied upon - both the Hon’ble Members have given dissenting judgments and even they did not agree on the questions of difference - Reference of matter to third member - HELD THAT:- Disallowance based on third party information gathered by the Investigation Wing of the Department without independent verification of the ld. Assessing Officer cannot be made. Information transmitted by the DIT (Investigation) was a material to ignite assessment machinery in motion but it cannot be treated as gospel truth for disallowing the claim of the assessee without independent cross verification of those information by the ld. Assessing Officer.
Information of the DIT, Investigation Wing is based upon the statements of two persons who are managing the affairs of assessee’s suppliers - Both these witnesses were not subject to cross examination. Hon’ble Supreme Court in the case of Andaman Timber Industries [2015 (10) TMI 442 - SUPREME COURT] has considered this issue as held that if the statement was recorded from the back of the assessee and assessee was not allowed to cross examine the witness by the authorities, then such statement is to be excluded from the evidence.
When an explanation or defence of an assessee based on number of facts supported by evidence and circumstances required consideration, whether it is sound or not must be determined not by considering the evidence attached to each single facts in isolation, but by assessing the cumulative effects of all the facts in their setting as a whole.
If we weigh both the sets of evidences discussed then, certainly scale will tilt in favour of the assessee, because when assessee made the purchases at that point of time, all the three concerns were having PAN with the Department/TIN/VAT/CST nos. It has made payments through account payee cheques. It has accounted the materials in the stocks and made sales out of that. It has produced the stock register. The purchase shown from these concerns is less than 2.86%/2.76% of the total purchase made by the assessee in respective years. How it can be anticipated that such purchases would be treated as a bogus only on admission of a third party, who might have many reasons for making such statements and such witnesses were not subject to cross examination. Therefore, we are of view that Brother Judicial Member has rightly deleted the disallowance and concur with his order.
Right to cross-examine third-party witnesses - If third party statement recorded from the back of an assessee is being used as an evidence, then, the witness is to be subjected to cross examination and failure on that point would lead to exclusion of that statement from consideration. There is no dispute qua this proposition because it is a proposition laid down by the Hon’ble Apex Court in Andaman Timber Industries [2015 (10) TMI 442 - SUPREME COURT] the dispute is how to apply the proposition on the given facts.
Thus Hon’ble Judicial Member has taken the correct view that these additions are not sustainable in both the years.
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2024 (5) TMI 1475
Conditional stay order directing payment of 20% of total tax demand for multiple assessment years under the Income Tax Act, 1961 - also given the appellant a facility of payment of that 20% in seven equal instalments
HELD THAT:- We take note of the submission of the learned counsel for the appellant that the appellant is facing financial difficulties, more so when the company has ceased to function with effect from 01.04.2018. Taking note of the said submission of appellant, we feel that in the interests of justice, the appellant can be granted some time to discharge the liability of 20% of the total tax demand for the various assessment years as directed by the 1st respondent in Ext.P5 order that was impugned in the writ petition.
Accordingly, the impugned judgment of Single Judge, as also the direction in Ext.P5 order that was impugned in the writ petition, are modified to the limited extent of permitting the appellant herein to discharge the liability of payment of 20% of the total tax demand as directed by the 1st respondent in Ext.P5 order, in seven equal successive monthly instalments commencing from 15.06.2024. It is made clear that if the appellant commits default in any single instalment, he will lose the benefit of this judgment, as also the benefit of the stay order granted by the 1st respondent-Appellate Authority, and the entire amount of tax and interest confirmed against the appellant by the assessment orders in question will then become immediately payable.
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2024 (5) TMI 1474
Addition of cash deposit u/s 68 - Ownership of bank accounts and cash deposits - substantial question of law or fact - principal argument which was sought to be addressed on this appeal was that various transactions which fell for scrutiny were not undertaken in the accounts of the assessee.
HELD THAT:- This argument essentially requires us to delve into facts and which do not even appear to have been either raised or urged before the ITAT. In any case, such a course would not be merited bearing in mind the limited scope of this appeal and which stands confined to the consideration of a substantial question of law. We find no merit in the appeal. Consequently, the appeal fails and shall stand dismissed.
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2024 (5) TMI 1473
Validity of the assessment order on account of not mentioning the DIN No. on the body of the assessment order - HELD THAT:- When the assessee was confronted with the fact that when impugned order was communicated to the assessee on the e-portal along with attachment of intimation letter duly containing the DIN No. , how can the impugned order can be held to be bad in law for not mentioning the DIN in the body of the order.
Though reliance was placed on various judgments, but when the assessee was confronted with the CBDT Circular, referring to the body of such communication and in the instant case, communication of the intimation letter which had attachment of the impugned order, the AO has duly complied to the directions given under the CBDT Circular to which no satisfactory reply could be filed and at this juncture, the ld. Sr. Counsel requested for not pressing this legal ground challenging the sanctity of the impugned order for non-mentioning of DIN.
Disallowance of depreciation claimed of goodwill - Claim of the assessee that residual paid to Siemens Ltd. over and above the value attributable to the net asset is in the nature of goodwill only and is supported by the ratio laid down by the judgment of CIT vs Smifs Securities Ltd. [2012 (8) TMI 713 - SUPREME COURT] wherein the assessee, being the amalgamated company, claimed depreciation on goodwill acquired pursuant to/ as a result of amalgamation of a company, viz., YSN Shares and Securities Private Limited. The assessee claimed depreciation on the extra consideration paid over the value of net assets, by treating such excess consideration to be in the nature of goodwill, being paid towards reputation that the amalgamating company was enjoying in order to retain its existing clientele.
Similar view was taken by the Hon’ble Delhi High Court in the case of Triune Energy Services Private Limited [2015 (11) TMI 1218 - DELHI HIGH COURT] wherein the assessee purchased business of another company as going concern by way of slump sale. The amount paid over and above net value of assets was capitalized as goodwill. The assessing officer treated the transaction in nature of succession and did not admit the assessee’s claim for depreciation. On appeal before the Hon’ble High Court, it was held that goodwill is an intangible asset providing a competitive advantage to an entity which includes a strong brand, reputation, a cohesive human resource, dealer network, customer base, etc.; the expression ‘goodwill’ subsumes within it a variety of intangible benefits that are acquired when a person acquires business of another as going concern.
13.4. The Hon’ble High Court observed that from an accounting perspective, it is well established that ‘goodwill’ is an intangible asset, which is required to be accounted for when a purchaser acquires business as a going concern by paying more than the fair market value of the net tangible assets, i.e., assets less liabilities; the difference in the purchase consideration and the net value of assets and liabilities is attributable to the commercial benefit that is acquired by the purchaser.
Relying on the decision in the case of Smifs Securities [2012 (8) TMI 713 - SUPREME COURT] it was held that the amount of lump sum consideration ascribed to goodwill was eligible for depreciation under section 32.
We are of the considered view that the assessee paid total consideration of Rs. 1022.40 Crores to Siemens Ltd. for acquiring the Metals Technologies Business as a going concern business and since the value attributed to the assets appearing in the books of Siemens Ltd., for the metal technology unit was approximately Rs. 300 Crores, the remaining consideration has to be treated as intangible asset including goodwill and that the assessee had rightly claimed depreciation in AY 2015-16 and 2016-17 at the prescribed rates and that the impugned depreciation allowance on the said goodwill has been rightly claimed in the written down value of the goodwill as on 01/04/2017 and as on 01/04/2018 and the said claim of the assessee is also allowable on the basis of rule of consistency since the revenue authorities have accepted the said claim of the depreciation of the goodwill in the preceding years.
TP Adjustment - adjustment in respect of intra-group services - HELD THAT:-Assessee has not made any reference to the mark-up on the third party cost, however, reference has been made to Section 92C(2) of the Act, which provides that if the variation between the arm's length price so determined and price at which the international transaction or specified domestic transaction has actually been undertaken does not exceed such percentage not exceeding three per cent of the latter, as may be notified by the Central Government in the Official Gazette in this behalf, the price at which the international transaction or specified domestic transaction has actually been undertaken shall be deemed to be the arm's length price.
We find merit in the contention of assessee and since the adjustment falls within the 3% range of the value of international transaction, no adjustment on account of international transaction of availing intra-group services undertaken by the assessee is warranted. The TP adjustment and for AY 2017-18 and 2018-19, respectively, are hereby deleted. Accordingly, raised by the assessee are allowed.
Downward adjustments towards purchase of raw material and finished goods and TP adjustment for export of finished goods for the transaction undertaken with AE - Since the additions have been made on the basis of mean PLI of the comparables, we will first deal with the main grounds/additional grounds relating to exclusion/inclusion of comparables and fate of the remaining grounds shall be decided accordingly by the ld. AO as the matter would be restored to the file of the ld. AO for necessary calculation of the mean PLI as per our decision infra. We will first take up the additional grounds of appeal for AY 2017-18.
Comparable selection - Exclusion of Power Mech Projects Ltd.- It is an admitted fact that the profit margins in the operations and maintenance segment are generally higher than the EPC segment and therefore, a company deriving revenue and profitability from operations and maintenance activity cannot be considered as an appropriate comparable for the purpose of benchmarking the international transactions undertaken by the assessee, a company solely engaged in provision of EPC services. Thus, considering the factual aspect of the area in which Power Mech Projects Ltd., is working and the working area of the assessee company, we are inclined to hold that Power Mech Projects Ltd., cannot be considered as an appropriate comparable for the purpose of benchmarking the international transactions undertaken by the assessee company. Therefore, we direct the ld. AO to exclude Power Mech Projects Ltd., as a comparable for the purpose of calculating the mean PLI.
Including Engineers India Ltd. and BGR Energy System Ltd. as comparables - It is an admitted fact that Government owned and controlled companies have a separate style of working because the public interest is of foremost concern. Further such companies enjoy the support of the Government in relation to flow of business and funds and have different business model.
The Hon’ble Delhi High Court in the case of International SOS India P. Ltd. [2017 (5) TMI 1588 - DELHI HIGH COURT] held that Public Sector Companies cannot be regarded as an appropriate comparable for the purpose of undertaking benchmarking analysis. Similar view was taken by the Hon’ble Bombay High Court in the case of Thyssen Krupp Industries India Pvt. Ltd. [2016 (4) TMI 88 - BOMBAY HIGH COURT] upheld the rejection of Engineers India Ltd. as a comparable on the basis that it is a Govt. owned company.
Respectfully following the same, we are inclined to accept the contentions of the ld. Counsel for the assessee and hold that Engineers India Ltd., should not be included as a comparable for calculating the profit level indicator i.e., the Average OP/OC and Average OP/OR.
BGR Energy System Ltd. - It prima facie indicate that the specific characteristic of services and products sold by BGR Energy System Ltd. and the assessee company are significantly different. Hon’ble Delhi High Court in the case of Rampgreen Solutions Pvt. Ltd. [2015 (8) TMI 931 - DELHI HIGH COURT] held that comparability analysis should be undertaken on the basis of functional profile and characteristics of services provided. Respectfully following the same, we hold that as the functional profile of BGR Energy System Ltd. is significantly different from the assessee company, the ld. AO erred in including the same as comparable for calculating the mean PLI of the assessee company.
Thus, to conclude, for AY 2017-18, we direct the ld. AO to exclude Engineers India Ltd. and BGR Energy System Ltd. from the list of comparables for calculating the mean PLI and accordingly direct him to re-calculate the average OP/OC and average OP/OR and then decide in accordance with the law the adjustments, if any, to be made in the hands of the assessee. Thus, the additional ground raised by the assessee for Assessment Year 2017-18 are allowed and consequentially the respective grounds raised for TP adjustment for purchase of raw material and finished goods are allowed for statistical purposes.
Rejecting High Quality Steels Ltd., without considering the functions carried out by High Quality Steels Ltd. and the nature of its business activities - Had there been a difference of turnover ranging between 10%- 20% then also, it might have been considered but here the turnover of the assessee company is almost 66 times of High Quality Steels Ltd. and, therefore, level of business dealing with the buyers and vendors, geographical location of businesses, strategy of fixing the price for sales as well as the commanding of purchase price since the same varies on the basis of assessee’s belief would certainly be different for both the concerns i.e., the assessee having huge turnover and that of High Quality Steels Ltd. with a very less turnover and which, therefore, makes them unfit for the purpose of comparison for determination of PLI. Thus, we fail to find any infirmity in the finding of the ld. Assessing Officer in not including it as a comparable. Thus, this additional ground no. 3 for Assessment Year 2017-18 raised by the assessee is dismissed.
Excluding Engineers India Ltd., from the list of comparables - We have already adjudicated this issue while dealing with additional grounds for Assessment Year 2017-18 and held that Engineers India Ltd., being a Government Company, shall not be considered as a comparable. Consistent with our view taken, we direct the ld. Assessing Officer to exclude Engineers India Ltd. as a comparable and re-compute the mean PLI and calculate the adjustments accordingly. Accordingly, the additional ground no. 1 for Assessment Year 2018-19 is allowed.
Rejecting High Quality Steels Ltd. as a comparable - AO has rightly rejected High Quality Steels Ltd. as a comparable on account of turnover filter.
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2024 (5) TMI 1472
Deduction u/s 80P(2)(a)(i)/80P(2)(d) - interest from cooperative bank(s) and other nationalized bank(s) - HELD THAT:- This issue is no more res integra in light of this tribunal’s recent case of The Rena Sahakari Sakhar Karkhana Ltd. vs. PCIT’s [2022 (1) TMI 419 - ITAT PUNE] as rejected the Revenue’s identical arguments and held AO while framing the assessment had taken a possible view, and allowed the assessee’s claim for deduction under Sec. 80P(2)(d) on the interest income earned on its investments/deposits with co-operative banks, therefore, the Pr. CIT was in error in exercising his revisional jurisdiction u/s 263 of the Act for dislodging the same. Decided in favour of assessee.
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2024 (5) TMI 1471
Detention of a vehicle and the penalty imposed - time limitation - HELD THAT:- Section 129(3), as found in Annexure-P-9, provides for a notice within seven days of detention and an order within a further period of seven days from the date of service of such notice. Sub-section (4) only speaks of an opportunity of being heard which has to be necessarily within the seven days period and if the owner of the goods do not turn up within the time provided, nothing prevents the detaining officer from passing an order of penalty. In the present case, we see that it is squarely covered by the declaration as stated in Annexure-P-9.
The writ petition is allowed by setting aside Annexure-P-7 order on the ground of limitation. The vehicle and the goods will be released forthwith.
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2024 (5) TMI 1470
Levy of excise duty - scrap / waste which is generated during the job work, which was cleared by the job worker without payment of duty - HELD THAT:- The issue stands settled by the various orders of this very Bench in respect of the very same appellant for various earlier years - reliance can be placed in M/S. GREAVES COTTON LTD. VERSUS THE COMMISSIONER OF G.S.T. & CENTRAL EXCISE [2019 (3) TMI 1785 - CESTAT CHENNAI] where it was held that 'the appellant is not the manufacturer of the waste and scrap and therefore, there is no liability on the appellant to pay the duty on the waste and scrap manufactured at the job worker’s end. Further, the provision of Rule 4(5)(a) of the CENVAT Credit Rules, 2004 nowhere states that the waste and scrap generated at the job worker’s end makes the principal manufacturer liable to payment of duty on such waste and scrap.'
There are no merit in the impugned orders and resultantly same is set aside - appeal allowed.
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