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Showing 81 to 100 of 1577 Records

2023 (7) TMI 1500

Disallowance of Bad debts written off u/s. 36(1)(vii) - assessee has failed to establish that debts that have been written off had in fact become bad - assessee purportedly has written off bad debts of nearly 9740 entities including companies, firms, individuals, etc. This includes bad debts of erstwhile Anagram Finance Ltd. (AFL), merged with the assessee - HELD THAT:- The requirement to establish that the debts have become bad was done away vide amendment effective from 1st April, 1989. Under the old provisions of section 36(1)(vii) of the Act as were applicable prior to 1st April, 1989, it was mandatory to establish before writing off that the debts have become bad. After amendment (effective from 1st April, 1989) the requirement of section 36(1)(vii) as explained by Hon'ble Apex Court in the case of TRF Ltd [2010 (2) TMI 211 - SUPREME COURT] is, it is sufficient if the bad debt is written off as irrecoverable in accounts of the assessee. The Act does not require the assessee to establish that the debts have in fact become bad before writing off. The CBDT vide Circular dated 30/05/2016 in an unambiguous manner explained the mandate of section and the law as explained by Hon'ble Apex Court in the case of TRF Ltd.(supra). Decided against revenue.

Disallowance to business/capital loss - DR submits that during assessment proceedings the assessee failed to produce relevant documents in support of its claim - HELD THAT:- A perusal of documents on record reveals that the assessee had furnished audit report in Form No. 64 before the Assessing Officer. CIT(A) has given a categoric finding that the Assessing Officer has selectively considered Form-64 furnished by the assessee for respective funds. AO has ignored various losses under respective heads of income and has taken only short-term capital gain of Rs. 32.00 lacs from ICICI Technology Incubator Fund. There is no justification for adopting such selective approach by the Ao - CIT(A) after examining the documents on record allowed assessee’s claim on the basis of Form-64. We see no infirmity in findings of the CIT(A) on this issue. The ground No. 2 raised by the Revenue is devoid of any merit, hence, dismissed.

Addition in respect of non-cash right back - assessee submits that the assessee has actually received the amounts, hence, the amounts are not taxable u/s. 41(4) - HELD THAT:- Co-ordinate Bench vide order [2017 (11) TMI 1839 - ITAT MUMBAI] dated 03/11/2017, common for the Assessment Year 2004-05 and 2005-06 placing reliance on the earlier orders of the Tribunal in the case of ICICI Ltd [2017 (11) TMI 1839 - ITAT MUMBAI] restored the issue back to the file of Assessing Officer.

Disallowance of expenditure u/s. 14A for earning income exempt from tax - HELD THAT:- As in assessee’s own case in appeal by the Revenue for Assessment Year 2004-05 [2017 (11) TMI 1839 - ITAT MUMBAI] if the investment made in exempt income yielding assets are made out of interest free funds available with the assessee, there cannot be any disallowance of interest expenditure. Therefore, what is required to be seen is whether sufficient interest free funds are available with the assessee to make investment in exempt income yielding assets.

As per facts and material on record, surplus interest free funds available with the assessee far exceeds the investment made in tax free interest income yielding assets, therefore, no disallowance of interest expenditure can be made in view of the decision of Reliance Utilities and Power Ltd., [2009 (1) TMI 4 - BOMBAY HIGH COURT] and CIT v/s HDFC Bank Ltd., [2014 (8) TMI 119 - BOMBAY HIGH COURT] As far as disallowance of administrative expenses is concerned, it is the contention of the assessee that in the preceding assessment year, it has voluntarily disallowed 1% of the administrative expenditure attributable to earning of exempt income. However, we have noted, in assessment year 2001–02, the Tribunal while deciding the issue in Revenue’s appeal [2016 (4) TMI 648 - ITAT MUMBAI] has restored the issue to the Assessing Officer for considering afresh. The grounds allowed for statistical purposes in similar terms.

Addition of depreciation on lease assets - HELD THAT:- As for Assessment Year 2004-05 in assessee own case [2017 (11) TMI 1839 - ITAT MUMBAI] allowed assessee’s claim of depreciation as in the impugned assessment year, there is no new lease transaction. The assessee has claimed depreciation on its own fixed assets and depreciation claimed on leased assets were continuing from past lease transactions.

Notional interest for the purpose of determining annual value u/s. 23(1)(a) - As submitted that the assessee has received deposit against let out property - notional interest on account of deposit has been considered by the Assessing Officer for arriving at the annual value under section 23(1)(a) of the Act - HELD THAT:- We find that in assessee’s own case for Assessment Year 2004-05, the Assessing Officer had made addition on account of notional rent on deposit while determining annual value u/s. 23(1)(a) - CIT(A) deleted the addition. The Revenue carried the issue in appeal before the Tribunal. The Co-ordinate Bench following its own order on identical issue in the case of ICICI Ltd for Assessment Year 2002-03 upheld the findings of CIT(A) in deleting the addition. Facts being identical in the impugned assessment year, we see no reason to take a different view. Thus, ground of appeal by Revenue is dismissed.

Disallowance of deduction u/s. 36(1)(viia) - HELD THAT:- We find that the CIT(A) has deleted the addition by following the order of CIT(A) in Assessment Year 2003-04 and 2004-05. Against the order of CIT(A) for Assessment Year 2004-05 the Revenue carried the issue in appeal before the Tribunal [2017 (11) TMI 1839 - ITAT MUMBAI] as upheld the findings of CIT(A) wherein held ssessee is a Scheduled Bank and its accounts are maintained in conformity with the Generally Accepted Accounting Principle (GAAP) in India and the guidelines issued by the RBI from time to time. Further, it is evident from the annual report of the assessee that acquisition of assets including performing and non–performing asset are as per the prescribed guidelines of RBI. That being the case, there is no reason for the Assessing Officer to presume that the assessee is not qualified to exercise option under the first proviso. Further, as per the second proviso to section 36(1)(viia) of the Act for the assessment year commencing on/or after 1st April 2003 and ending before 1st April 2005, the deduction allowable in terms of proviso 1 to section 36(1)(viia) of the Act is 10% instead of 5%. In view of the above, we do not find any infirmity in the order of the learned Commissioner (Appeals) on this issued.
2023 (7) TMI 1499

Refusing to grant registration u/s.12AA - no proof of charitable activities - non grant registration mainly on the ground that funds of the assessee were diverted for personal benefits of the executives of the society, in violation of provisions of section 13 (1)(c) - HELD THAT:- This day we have dealt with impugned common order by our judgment in Orissa Cricket Association [2023 (7) TMI 459 - ORISSA HIGH COURT] wherein held objects of the assessee society are charitable in nature and in absence of pointing out any specific activities of the assessee society which were not genuine, in our considered view, rejection of application for registration u/s.12AA of the Act on the ground of diversion of funds for the benefit of executives of the association in violation of provisions of Section 13(1)(c) of the Act is not justified. The violation of provisions of Section 13(1)(c) of the Act is a matter which is to be looked into by the Assessing Officer while making assessment after grant of registration u/s.12AA of the Act and the Assessing Officer has to act as per the provisions of law. We, therefore, set aside the order of the CIT(E) and direct him to grant registration to the assessee society u/s.12AA

This appeal stands covered by the judgment above. In the circumstances, the substantial question of law framed is deemed to have been framed herein and answered accordingly.
2023 (7) TMI 1498

Applicability of provisions of section 115BBE - income declared during the course of survey proceedings and offered to tax in the return of income - AO assessed the said income under the head “Income from business”

HELD THAT:- Admittedly, the income offered during the course of survey proceedings was credited to Profit & Loss Account and the additional income offered on account of deficit in the physical stock was credited to Trading Account.

The income offered on account of alleged expenditure incurred on construction of the commercial building was offered to tax by crediting the same amount to the Profit & Loss Account. Thus, the income was offered to tax under the head “Income from business”, the AO also assessed the same under the head “Income from business”. Therefore, the presumption is to be drawn that the additional income was derived from the business.

Thus, it cannot be said that the source for the additional income remain unexplained and, therefore, the provisions of section 115BBE have no application to the present case. The ratio of the decision of Bajargan Traders [2017 (11) TMI 388 - RAJASTHAN HIGH COURT] is squarely applicable to the facts of the present case.

The reliance placed by the ld. CIT (A) on the decision of M/s. SVS Oils Mills [2019 (5) TMI 1392 - MADRAS HIGH COURT] have no application to the facts of the present case, inasmuch as, in the said case, no explanation as to the source of excess stock was offered, whereas, in the present case, it is undisputed fact that the additional income was derived from business. Therefore, the orders of the AO as well as the ld. CIT (A) are reversed and direct the AO not to tax the additional income under the provisions of section 115BBE of the Act. AO shall tax the additional income under the normal rate of income tax. Accordingly, the grounds of appeal filed by the assessee stand allowed.
2023 (7) TMI 1497

Tenability of the application - Nomination of an arbitrator on behalf of the Respondent in terms of the Transaction Documents - HELD THAT:- There are no merit in the submission of Respondent that the document is not adequately stamped and therefore, an arbitration clause contained in the said agreement cannot be acted upon. Apart from this, it would be sufficient to note that the stamp duty will have to be determined on the basis of the transaction and its value indicated in the instrument and not on the prospective value as Section 21 of the Maharashtra Stamp Act, clearly prescribe that when an instrument is chargeable with ad-valorem duty in respect of any stock, or of any marketable or other security, such duty shall be calculated on the value of such stock or security according to the average price or value thereof, on the day of execution of the instrument.

The instrument/ document in question dated 12/04/2018, which is the basis for invoking arbitration is affixed with adequate stamp duty and suffers from no legal infirmity.

In the wake of the existing arbitration clause in the agreement dated 18/04/2018 and since arbitration has been invoked by the applicant by appointing his nominee and the respondents having been called upon to appoint theirs, the applicant seek appointment of the nominee arbitrator on behalf of the respondent so that the two arbitrators so appointed shall nominate the third arbitrator.

At this stage, learned counsel for the respondent seek stay of the judgment pronounced today, which must be necessarily declined, since the matter is considered on merits and found the preliminary objection to be untenable and found the circumstances involved justifying the appointment of the nominee arbitrator on behalf of the respondents.

The prayer for stay is rejected.
2023 (7) TMI 1496

Maintainability of petitioner’s challenge against the impugned Order of Trial Court allowing reference to arbitration u/s 115 of the CPC - Revisional jurisdiction of the High Court.

HELD THAT:- This Court has limited powers which can be exercised under Section 115 of the CPC. Not every order of the Trial Court can be regarded as an order that can be put under the ambit of revisional jurisdiction of the High Court.

In view of the instant matter, Trial Court has referred the dispute of the petitioner for arbitration u/s 8 of the Act, 1996. Considering the facts of the instant case, there is a reference to arbitration as per the AOF executed between the petitioner and respondent no. 2.

This Court is of the view that any agreement that contains an arbitration clause must be referred to arbitration in an application under Section 8 of the Act, 1996. The same must be done because the parties have already consented to arbitration. Since the AOF in the instant case contains the arbitration clause, it has to be referred to arbitration for the necessary adjudication. The Court in this scenario cannot adjudicate upon whether the disputes which are arbitrable under the agreed terms between the parties.

Hon’ble Supreme Court in Magma Leasing & Finance Ltd. v. Potluri Madhavilata, [2009 (9) TMI 592 - SUPREME COURT] has strictly narrated its view with regard to the cases wherein reference to the arbitration has not been allowed by the Court despite existence of an arbitration clause in the agreement.

The application filed before the learned Trial Court has been properly accompanied by the AOF, which outlines the petitioner’s rights and obligations and acknowledgment of the same by the petitioner therein. It evidently specifies that any dispute between the “client and stock broker‟ should be referred to arbitration. In addition, Chapter-11 of the National Stock Exchange of India Byelaws provides for arbitration between trading members and constituents deriving from or relating to dealings, contracts, and transactions made subject to the byelaws, rules, and regulations of the Exchange.

On bare perusal of the reliefs sought by the petitioner before the learned Trial Court, it is ex facie apparent that the petitioner’s primary concern is against respondent no. 2. The reference to arbitration is mandatory for adjudication of the dispute in the present petition. The petitioner's contention that the current dispute is a tripartite dispute and not a bipartite dispute is not sustainable.

Conclusion - This Court is of the view that the learned Trial Court has not committed any error of law that can be the subject matter to be exercised by this Court exercising its revisional powers u/s 115 of the CPC. Section 8 of the Act, 1996 refers to a clause that limits Court's interference in the arbitration procedure. This Court has serious objections to the extent of interference on the grounds of the arbitrability of the subject matter, and the competence of the arbitral tribunal to deal with it. Section 8 of the Act, 1996 continues to serve as a hope for arbitration, forming the basis for mandating the parties to follow the model of arbitration where an arbitration agreement exists.

With regards to the maintainability of the revision petition, the learned Trial Court has rightly determined that its jurisdiction to hear the suit does not exist due to the presence of an arbitration clause. After relying upon the aforementioned judgments, it is concluded that the observations made therein apply to the facts of the case in hand.

Therefore, it is held that the learned Trial Court did not have the jurisdiction to hear a dispute after an application for arbitration under Section 8 of the Act, 1996 was filed. As a result, the learned Trial Court has correctly allowed the said application under Section 8 of the Act, 1996. In such a case, refusing to refer the matter to arbitration would be a failure of justice, causing irreparable harm to the parties and violating the settled principles of law.

This Court is of the view that no case of revision as defined under Section 115 of CPC has been made out by the petitioner as no such cause exists wherein the learned Trial Court has failed to exercise its jurisdiction as per law. The learned Trial Court has neither acted illegally in the exercise of its jurisdiction nor has there been any material irregularity. Accordingly, the issue framed above has been decided.

This Court finds no infirmity in the impugned Order in Civil Suit passed by the learned Senior Civil Judge, Patiala House Court, New Delhi.
2023 (7) TMI 1495

Seeking dissolution of the Company Remedy Finance Private Limited (in members voluntary liquidation) - HELD THAT:- The Official Liquidator sent a letter dated 10.02.2021 to Income Tax Department regarding their no objection/objection, if any. The said department vide their letter bearing No.58 dated 05.03.2021, had requested the official liquidator to furnish the PAN of the Company and the same was informed to the Income Tax Department vide letter dated 12.03.2021. However despite reminders, no response was received. The Official Liquidator verified the e-filing portal of the Income Tax Department, w.r.t. the said company, which shows that w.r.t. Remedy Finance Private Limited – ‘No Pending Action Found’ as on 06.02.2021.

The Official Liquidator is also satisfied that the necessary compliance of Section 497 and other relevant provisions of the Act have been made and the affairs of the said company have not been conducted in a manner prejudicial to the interest of its members or to the public interest and the said company may be dissolved.

In view of the satisfaction accorded by the OL by way of the present petition, the Court is convinced that the relief sought for deserves to be granted. Accordingly, the Remedy Finance Private Ltd. is hereby wound up and shall be deemed to be dissolved with effect from the date of the filing of the present petition i.e. 26.05.2023.

Petition disposed off.
2023 (7) TMI 1494

Addition u/s 68 - unexplained cash credit - HELD THAT:- It is not in controversy that the Assessee had taken the said loans in the financial year 2010-11 (AY: 2011-12) which continued in the assessment year under consideration as well. During the course of assessment proceedings, Assessee also submitted the following documents in order to substantiate its claim, i.e., confirmation of loans, Acknowledgment of returns of income of loan parties, Copies of relevant pages of bank statements of loan parties and Copies of bank statements of the Assessee, in which interest payments have been debited.

AO doubted and rejected the same while relying upon the statement of Mr. Vipul Vidur Bhatt, without providing copy of the his statement to the Assessee and even without affording any opportunity of cross examination of Mr. Bhat.

Assessee in this case, has not only discharged its primary onus by establishing the identity of the parties etc. , providing confirmation of loans, acknowledgment of return of income filed by the parties who have duly shown the amount of loan in their returns of income and banks statement of loan parties and the Assessee showing the transactions held, but also shown to have deducted TDS on the interest payment made to the parties, which also strengthen the genuineness of the claim of the Assessee. Thus, on the basis of the general statement made by any 3rd party, without demolishing the case/claim of the Assessee, making of an addition is not logical.

Also the loan was taken by the Assessee from the said entities in 2010-11 (AY:2011-12) and during the year consideration, no such amount was found credited in the books of an Assessee maintained, if any and even otherwise the Assessee has claimed the he is not maintaining any books of account. As a settled law that mere suspicion cannot takes place for the purpose of passing an order, in fact there must be something more than suspicion in support of an assessment.

As neither the Assessee has received any cash nor paid any cash and there was no real cash credit during the year under consideration, therefore the amount in question as unexplained expenditure could not arise - Assessee appeal allowed.
2023 (7) TMI 1493

Final dissolution of a company by the Official Liquidator - Rule 9 of the Companies (Court) Rules, 1959 - HELD THAT:- In the opinion of the Court, the liquidation proceedings deserve to be brought to an end. Consequently, M/s GENESIS WELLNESS CLINIC PRIVATE LIMITED is dissolved. The amount of Rs. 23,749/- be also transferred to the Common Pool Fund.

The petition along with all pending applications is disposed of, and the Official Liquidator is discharged.
2023 (7) TMI 1492

Transfer of winding-up petition to NCLT - whether Resolution ought to be explored by it first or the company should straightaway be taken to liquidation? - Section 434 of the Companies Act, 2013 - HELD THAT:- It is found that in Forech India Ltd. v. Edelweiss Assets Reconstruction Co. Ltd. [2019 (1) TMI 1442 - SUPREME COURT], the Hon’ble Supreme Court held that once an application for transfer is filed, the High Court must transfer such proceedings to NCLT which will then deal with the same as an application for initiation of corporate insolvency resolution process.

From a perusal of the second proviso to Section 434(1)(c) as also the aforesaid judgement it is clear that any matter, which is transferred, is to be dealt with by the NCLT as an application for initiation of Corporate Insolvency Resolution Process (CIRP) process under the IBC, 2016.

Thus, it is clarified that the NCLT would have to strictly proceed in accordance with the said provision and treat the petition as an initiation of CIRP process.

Application disposed off.
2023 (7) TMI 1491

Scope of settlement proceedings - discretion vested in SEBI with an obligation - SEBI (Settlement Proceedings) Regulations, 2018 (“Regulations”) - HELD THAT:- Viewed from any perspective, these Petitions, like the Settlement Application, are entirely without substance. We understand quite clearly now that the only purpose of the Settlement Application and indeed these Writ Petitions was to prolong and delay the adjudication of the show cause notice. If there was any doubt about this, it is surely put to rest by one look at the prayers in the Binny Petition, and in particular prayer clause (b) which is really the prayer that is being sought, for a stay of the adjudication on the show cause notice. Interestingly, although prayer clause (a) ought to be really for a certiorari not a mandamus, there is not even a prayer for a direction to SEBI to reconsider the Settlement Application. An order on this Writ Petition would effectively put an end to all SEBI action as a regulator. That is simply unthinkable.

These Petitions have taken an inordinate amount of time when our dockets are already overcrowded. We believe these Petitions are now fit cases for orders of costs.
2023 (7) TMI 1490

Depreciation @ 50% on a building claiming it to be a temporary structure -Nature of expenditure - AO found that the impugned structure has been standing for 20 years and that it was renovated and beautified for use as a conference hall. The asset was found to be a building existing for more than an year, thus, limiting the claim of depreciation to 10% as against the returned claim of 50% - HELD THAT:- Madras Auto Service P. Ltd. [1998 (8) TMI 1 - SUPREME COURT] was a case in which the Assessee had obtained lease of premises over a period of 39 years in which there was a old building which was demolished and a new building constructed, to suit the business of the Assessee.The Hon’ble Supreme Court held that an expenditure has to be looked at from a commercial point of view. The advantage obtained by the Assessee by constructing a building, the ownership of which was on somebody else, for the purpose of obtaining a long lease of a new building, suitable to it’s business needs, that too at a concessional rate, was found to be a revenue expenditure. In fact, the saving in expenditure by reason of the low rent made also a revenue expenditure and not a capital expenditure.

Ayesha Hospitals [2006 (10) TMI 117 - MADRAS HIGH COURT] held that though the building belonged to the Directors, the owners were separate entities returning the rental income and also paying tax on the profits arising out of the hospital. Following Madras Auto Service (P) Ltd., it was held that expenditure incurred on construction of a leased premises by the Assessee was deductible as revenue expenditure.

Assessee had claimed depreciation at the rate of 50% on the ground that the building was a temporary structure. In fact, as per Rule 5 read with appendix 1 of the Income Tax Rules, 1962. Purely temporary erections such as wooden structures are entitled to 100% depreciation and as has been found in the aforesaid judgment, if it is a temporary structure, there could even be a claim raised as a revenue expenditure, however, in the present case the claim was of 50% depreciation, which cannot be allowed. In fact, appendix 1 provides for only 10% depreciation for buildings other than used for residential purpose and not covered by subitems 1 and 3. In the above circumstances, there is absolutely no valid claim for the assessee to obtain a 50% depreciation.

We find absolutely no reason to interfere with the order of the Assessing Officer especially in a petition under Article 226.
2023 (7) TMI 1489

Challenge to summons - HELD THAT:- The aforesaid summons has lost its force since time to respond to the same has already been expired and as such, at present, no cause of action survives against the said summons.

This writ petition being WPA 15714 of 2023 is dismissed.
2023 (7) TMI 1488

Validity of Final assessment order u/s 143(3) r.w.s. 144C(3) - non-framing of a draft assessment order u/s 144C(1) is not a curable defect u/s 292B - HELD THAT:- There is no dispute between the parties in so far as factual aspects relating to the issue in dispute are concerned. The chronology of events discussed herein before clearly indicate that the AO had originally passed an assessment order under section 143(3) r.w.s. 144C(3).

Thereafter, realizing the fact that the assessee, being an eligible assessee in terms of section 144C(15) and no variation in the income returned could be made, which is prejudicial to the interests of the assessee, without proposing a draft assessment order at the first instance in terms of section 144C(1) Assessing Officer issued a communication dated 09.11.2016 to the assessee indicating therein that the assessment order dated 31.10.2016 passed earlier was wrongly passed, hence, should be treated as null and void.

On the very same date, the Assessing Officer passed a draft assessment order, purportedly, under section 143(3) r.w.s. 144C(1) of the Act and subsequently, passed the final assessment order on 19.01.2017, purportedly, under section 143(3) read with section 144C(3) of the Act.

Once the Assessing Officer has passed an assessment order, whether rightly or wrongly, does he has the power to cancel / recall / withdraw the assessment order or declare it as null and void ? - On carefully scanning through the provisions of the Act, we were unable to locate any such power vested with the Assessing Officer to declare an assessment order passed by him earlier as null and void. However, in the facts of the present case, the Assessing Officer has not only declared the assessment order passed by him earlier as null and void, but has passed a fresh assessment order when earlier assessment order was under challenge before the first appellate authority. Once, an assessment order is passed by AO and communicated to the assessee, he becomes functus officio in respect of that assessment and cannot tinker with the assessment order passed. Of course, the Assessing Officer is empowered under the Act to reopen the assessment in case there is escapement of income or rectify the assessment order.

However, such exercise of power by the AO has to be in strict compliance with the conditions of section 147 and 154, respectively. An assessment order passed by the AO can only be interfered with either by higher appellate authorities in terms of section 250 and 254 of the Act or by the revisionary authority under section 263 of the Act.

AO himself cannot assume the role of either the appellate authority or the revisionary authority to revise / modify / cancel or withdraw the assessment order. The statute does not confer any power on the Assessing Officer to either withdraw or modify or substitute one assessment order passed by him earlier with another assessment order subsequently.

If the AO is permitted to do so, it will lead to undesirable consequences and will give a free hand to the AO to pass an assessment order and subsequently withdraw/modify/cancel it according to his own whims and caprices. This will not only be against the scheme of the Act, but against all legal principles. In view of the aforesaid, we hold that the AO had no jurisdiction to declare the assessment order passed earlier by him as null and void and substitute it with another assessment order. In view of the aforesaid, we uphold the decision of Commissioner (Appeals) in declaring the assessment order as invalid, though, based on our own reasoning. Grounds are dismissed.

Appeal is dismissed.
2023 (7) TMI 1487

Validity of reopening of assessment - notice after four years of the end of relevant assessment year - reasons to believe - independent application of mind or borrowed satisfaction - HELD THAT:- We find force in the contention raised by the ld. counsel for the assessee. We find that the AO has reopened the assessment merely based on the information received from investigation wing without verifying the veracity and truthfulness of such information.

The information was wrong and the AO reopened the assessment on the basis of borrowed satisfaction without correlating the same with the facts of the case. Even there is no allegation that the income of the assessee has escaped assessment due to non-disclosure of the facts necessary for the assessment and since the assessment has been reopened after four years of the end of relevant assessment year, hence, the exception provided under 1st Proviso to section 147 is attracted. In view of this, the reopening of the assessment is held as bad in law. Assessee appeal allowed.
2023 (7) TMI 1486

Seeking grant of bail - seizure of Ganja, contraband item - non-compliance of the provisions of the Section 50 of the Narcotic Drugs and Psychotropic Substances Act - right of the accused to be searched - HELD THAT:- Only one argument that is impressive is about not sending samples taken before Learned Magistrate to the Chemical Analyzer. The argument about “not taking samples at the spot but in the office, non- compliance of the provisions of Section 50 (so as to say not having appropriate words in the notice and Mr. Bhoite, Superintendent of Customs acted as Gazetted officer)” does not appeal to my conscience. Page no. 13 – is the details about the search and seizure.

No doubt, it is true that the Court of the JMFC was moved by making an application on 07/05/2021 at page no. 118. It also shows that learned Magistrate has taken the inventory and drawn few of the samples as mentioned in the para no. 14 of certificate on page no. 128 but fact remains that these samples were not sent to the Chemical Analyzer.

Ultimately when the evidence will be adduced during the trial, there will not be Chemical Analyzer report available on the basis of the analysis done about samples taken before learned Magistrate what will be available is Chemical Analyzer report about samples taken at the spot/office. In case of Simarnjit Singh s. State of Punjab [2023 (5) TMI 1389 - SUPREME COURT], the Hon’ble Supreme Court has refused to accept analysis done on the basis of the samples taken at the spot and set aside the conviction.

Be that it may ultimately the trial will be conducted only on the basis of the evidence collected during investigation. So, this contention can not be accepted - the Applicant has made out the case for bail. The contraband seized is commercial quantity. Bar under Section 37 is lifted. Hence, the Applicant is deserves to release on bail.

Bail application allowed.
2023 (7) TMI 1485

Validity of Reopening of assessment - order passed u/s 148A(d) - petitioner’s objection/response to the notice u/s 148A(b) was not properly considered - HELD THAT:- There is a difference between non-consideration at all and improper consideration of a response. It is not a case where objection of the petitioner has not been considered at all though AO has come to a different conclusion.

Ground of challenge of the aforesaid impugned order as appears from the argument and submission of petitioner that it revolves around the merit of the impugned order which is based on facts and material evidence and this Writ Court cannot act as an assessing officer or as an appellate authority to scrutinize or re-appreciate those evidence on the basis of which the assessing officer has come to such conclusion.

Any findings and conclusion in an order u/s 148A(d) is not a final findings and conclusion and the same will be again subject to final outcome of the order u/s 147 which has not yet been passed and assessing officer while taking the final view and before conclusion in passing the order u/s 147 will have to follow all the procedures like a regular assessment proceeding by issuing notice u/s 142(1), 143(2) of the Act and service of draft assessment order to the petitioner.

Thus, not inclined to interfere with the aforesaid impugned order u/s 148A(d) - Petitioner will be at liberty to take all the points raised in this writ petition in course of the proceedings subsequent to the order u/s 148A(d).

Ground of the petitioner challenging the notice under Section 148 that after the order u/s 148A(d) which was issued by the jurisdictional assessing officer in case the same should be issued faceless - This is a hyper-technical ground since mode and manner of service of a notice does not affect contents, substance and merit of a notice unless petitioner makes out a case that notice was not served at all or he has not received the notice. It is not a case that no notice has been issued at all and in all proceedings subsequent to the impugned order u/s 148A(d) of the Act department will have to follow the procedure laid down for faceless assessment.
2023 (7) TMI 1484

Seeking admission of this petition - initiation of Corporate Insolvency Resolution Process (CIRP) - Operation Creditor - debt of a sum over rupees one crore due and payable by the respondent exits or not - existence of dispute between the parties or record of pendency of suit or arbitration proceedings filed before the receipt of the Demand Notice of the unpaid operational debt in relation such dispute - Corporate Debtor is a profit making company having turnover of Rs. 300 crore for the last five financial years - default of mere Rs. 1.31 crores can be a ground to initiate CIRP?

Whether the documentary evidence furnished with the application shows that the operational debt of a sum over rupees one crore due and payable by the respondent exists? If so, whether the respondent defaulted in payment of the same? - HELD THAT:- Indisputably, in respect of the invoices under which payment has been claimed by the petitioner/operational creditor, the receipt of which has been acknowledged by the respondent, GST has been paid by the petitioner on all these invoices. That apart, part payment in respect of some of these invoices has even been made by the respondent through pre-arrangement of LCs, post claim of audit of the records by the respondent. The Petitioner also enclosed e way bills in respect the goods supplied under the said invoices. The contention of the Petitioner that the respondent had claimed credit input pursuant to filing GST R1 by the Petitioner/operational creditor, is not disputed by the respondent.

It is strange that, when it is the case of the Petitioner that the supplies under the invoices were genuinely made after making paying GST, accompanied by e-way bills and the delivery challans, the least that is expected from the respondent which is disputing these invoices is to exercise its statutory right of raising a dispute before the Authorities under the GST, Act stating that the said invoices are fake by submitting GST R-3, so that, the genuineness or otherwise of the subject invoices would have been decided.

The Petitioner has established clearly the existence of an operational debt of a sum over rupees one crore due and payable by the respondent and that the same is not paid.

Whether there is existence of dispute between the parties or record of pendency of suit or arbitration proceedings filed before the receipt of the Demand Notice of the unpaid operational debt in relation such dispute? - HELD THAT:- There is no bar under the law that merely because the Corporate Debtor failed to raise the dispute before the receipt of the demand notice, he shall not raise such dispute in the reply/ counter.

It is pertinent to note that when it is the case of the petitioner that the supplies under the invoices were genuinely made after making GST payments accompanied by e-way bills and delivery challans the least that is expected from the Corporate Debtor which is vehemently disputing the invoices is raising a dispute before GST Authorities by submitting GST R-3 to the authorities, so that the genuineness or otherwise of the subject invoices would have been decided by the competent authority under the GST Act. Instead, the respondent lodged an FIR post receipt of Demand Notice, and by placing reliance on the FIR as well as the investigation officer’s report, has been contending that there is a pre-existing dispute, which cannot be accepted in preference to the record submitted by the Petitioner, which record has not been disputed until the reply to the demand notice.

The plea of pre-existing dispute is spurious, hypothetical, illusory, non-existing and an assertion of fact unsupported by any evidence, the same is rejected.

Petition allowed.
2023 (7) TMI 1483

Admission of Corporate Debtor into Corporate Insolvency Resolution Process - imposition of moratorium - HELD THAT:- In the event the claim is settled between the parties or the order therein is set aside, the Operational Creditor, is at liberty to approach this court for revival of its claim as per the provisions of the code.

With these observations this CP is disposed of.
2023 (7) TMI 1482

Conviction under Section 8(b) read with Section 15(c) of the Narcotic Drugs and Psychotropic Substances Act, 1985 - Seizure and disposal of narcotic substances - Compliance with procedural requirements under Section 52A of the NDPS Act - HELD THAT:- The memorandum of informer’s information dated 20.05.2010 exhibited under P-3 indicates signature of two witnesses, P.W.2 and P.W.6, both of them turned hostile. Though they admitted their signature it was clearly deposed that they were not present at the scene of occurrence. The Court below have wrongly construed the evidence, in fact these two witnesses were party to most of the exhibits running upto 13. Search warrant under Exhibit P-4 acknowledge the fact that procedure contemplated under the NDPS Act has not been followed. As noted, one of the witnesses to the seizure memo has not been examined while the other turned hostile. Both the witnesses to the arrest memo have not been examined.

The record would also indicate that an order was passed by the trial Judge permitting the prosecution to keep the seized materials within the police station, to be produced at a later point of time. This itself is a sufficient indication that the mandate of Section 52A has not been followed. There is no explanation either for non-production of the seized materials or the manner in which they are disposed of. No order passed by the Magistrate allowing the application, if any, filed under Section 52A of the NDPS Act. P.W.10, Executive Magistrate has deposed to the fact that he did not pass any order for the disposal of the narcotics substance allegedly seized. Similarly, P.W.12 who is Incharge of Malkhana also did not remember any such order having been passed.

Both the Courts have mechanically placed reliance on the FSL Report while taking the statement of P.W.11 as the gospel truth. The views expressed by him can at best be taken as opinion at least on certain aspects. There are too many material irregularities which create a serious doubt on the very case of the prosecution. On a proper analysis there are no hesitation in holding that the impugned judgments are liable to be set aside and the appellant is to be acquitted by rendering the benefit of doubt.

The conviction and sentence rendered by the Additional Sessions Judge, Special Court NDPS, Jaora, District Ratlam, Madhya Pradesh as confirmed by the High Court of Madhya Pradesh, stands set aside - appellant is acquitted of all the charges - application allowed.
2023 (7) TMI 1481

Denial of DFIA benefit due to the original license holder fraudulently obtaining the licenses - fraudulent exports of betel nut power - mis-declaration of description, quantity and value of goods attempted to be exported and exported in the past - violation of provisions of Section 50 of the Customs Act, 1962 - Confiscation - penalty - extended period of limitation - HELD THAT:- It revealed that at the time of importation by the appellants, these licenses were valid in law until and unless the same are cancelled by the Licensing Authority. The appellants being transferees of the licenses, are bonafide purchaser of the licenses in question and imported the goods and cleared thereof. Therefore, subsequent suspension or cancellation of the license cannot affect the imports made prior to such suspension and cancellation.

In the case of Friends Trading Company [2011 (2) TMI 382 - PUNJAB & HARYANA HIGH COURT], the scrips obtained by the appellants, were held to be void ab-initio. There is a big difference between the forged scrip which is ab-initio void at the time of import whereas the DEPB obtained on the basis of fraudulently by the exporter and sold to the appellants and transferrable to DGFT, may be voidable unless the same has been cancelled by the issuing authority. Accordingly, the same cannot be equated altogether.

Further, the case of Tata Iron & Steel Company Limited [2015 (8) TMI 290 - SC ORDER] relied upon by the ld.A.R. for the Revenue, has no relevance in the facts and circumstances of this case as in that case the license holder has deliberately suppressed the fact of having availed movat credit and made willfully wrong declaration to the licensing authority to obtain the endorsement of transferability of the same while transferring the licenses to the appellants and the issue before the Hon’ble Supreme Court was that in such cases the extended period of limitation was invokable or not.

The Revenue has relied on the decision in the case of Munjal Showa Ltd. [2022 (9) TMI 1076 - SUPREME COURT], which is distinguishable on facts as in that case, during verification, it was found that the DEPB licenses on the basis of which TRAs were issued were forged and it was also found that these DEPB Scrips were forged. But in the case in hand, the DFIA License was genuine and the same were made transferrable by the DGFT and were valid at the time of import effected by the appellants. Therefore, the decision of the case Munjal Showa Ltd. cannot be equated in this case.

It is found that the facts in this case, are similar to the case of M/s Neev Trading Company [2022 (3) TMI 1005 - CESTAT NEW DELHI] as at the time of importation, the DFIA license against which the appellants have affected the duty free import of betel nut (split) were valid and made transferrable by DGFT, therefore, relying on the decision in the case of M/s Neev Trading Company, it is found that the subsequent suspension cannot affect the duty free import made by the appellants as on the date of import license was valid and made transferable by DGFT.

As the licenses in question were valid against which, the appellant has imported duty free goods, the duty cannot be demanded from the appellants being bonafide purchasers of DFIA licenses - whole of the demands against the appellants are set aside. Consequently, no penalties were imposable on the appellants.

The appeals filed by the appellants are allowed.