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2022 (1) TMI 1428
Maintainability of petition under Section 482 Cr.P.C. - Money Laundering - scheduled offence - scope of judicial review - registration of an ECIR by the officers of the Enforcement Directorate - HELD THAT:- The registration of an ECIR is an administrative act that is done by the officers of the Enforcement Directorate, for initiation of an investigation under the PML Act, which is a special statute and therefore, the same cannot be quashed, in exercise of the powers under Section 482 Cr.P.C., because, the registration of the ECIR is not under the Code.
The scope of Section 482 Cr.P.C. has been succinctly laid down by a Division Bench of this Court in K. RAJAMANICKAM AND ORS. VERSUS STATE OF TAMIL NADU AND ORS. [1991 (1) TMI 466 - MADRAS HIGH COURT] which says that The first part or the first clause, understood as above, conveys that the inherent power of the High Court can come into play when it is necessary to give effect to any order under the Code, if there is no express bar and if there is no other provision of the Act to ensure the implementation of the order. The second part or the clause will be available if in any proceeding of a Court, whether the High Court or a Court subordinate to it, any abuse of process is found or otherwise it is felt that to secure the ends of justice certain order of the High Court is necessary; it may act thus to prevent the abuse of process of any Court or otherwise to secure the ends of justice.
Thus, viewed from any angle, the registration of an ECIR by the officers of the Enforcement Directorate, cannot be a subject matter of judicial review under Section 482 Cr.P.C.
The objection raised by the Registry is upheld and this petition stands dismissed as not maintainable at the SR stage itself.
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2022 (1) TMI 1427
Seeking grant of bail - Money Laundering - embezzlement of more than Rs.18 crores and also of money laundering - misuse of liberty of jail in other cases or not - HELD THAT:- Keeping in view the gravity of the offence and the offence alleged is economic offence, which ultimately damages the national economy, the bail application of the applicant is deserved to be rejected.
The prayer for bail of the applicant is hereby rejected.
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2022 (1) TMI 1426
Refund of amounts collected from the petitioners as stamp duty on Bills of Entry filed for the goods imported - HELD THAT:- There is no escape for the State from the fact that it could not have insisted or compelled the writ-applicants to deposit an amount of Rs. 2,48,45,110/- towards the stamp duty - It appears from the materials on record, more particularly, from page-71 onward that all the delivery orders are in the nature of bill of entry.
The respondents nos. 1, 2 and 3 respectively are directed to refund the amount of Rs. 2,48,45,110=00 collected by way of stamp duty from the writ-applicants with 9% interest per annum for the period when the amount was collected till the actual refund of the same.
Application allowed.
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2022 (1) TMI 1425
Maintainability of appeal against Revision order u/s 263 - DR objected to the assessee’s filing the appeal directly to the Tribunal against the AO’s action giving effect to the 263 order passed by the Ld. Pr. CIT - according to Ld. CIT DR, the appeal of the assessee is invalid and the Tribunal does not have the jurisdiction to hear the appeal of the assessee even though revised Form No 36 has been filed by the assessee - HELD THAT:- We note that the assessee was the same who appeared on behalf of the appellant in the case of M/s. Good point Stockist Pvt. Ltd. (2021 (8) TMI 1411 - ITAT KOLKATA] and the facts of the present case are similar/identical in nature as that of M/s. Good point Stockist Pvt. Ltd. (supra) where the Tribunal was pleased to allow the assessee to withdraw the appeal and had given liberty to file fresh appeal against the action of the Ld. PCIT-4, Kolkata. The Tribunal was also pleased to condone the time consumed in prosecuting the appeal i.e. from the date of filing of the present appeal till receiving the copy of the Tribunal order and the period not to be taken into consideration for the purpose of calculating the limitation period. With the aforesaid same observation we allow the assessee to withdraw the appeal. Appeal of the assessee is allowed.
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2022 (1) TMI 1424
Addition under the head "capital gains" from sale of equity shares held by the assessee - FMV determination - value of leasehold interest in land - residual ownership rights were transferred in favour of person (who was the state subject i.e. resident of Jammu & Kashmir) - whether the value of leasehold interest in the land is to be included to determine the fair market value of each share on 1.4.1981? HELD THAT:- Assessee‟s were shareholders of M/s Jyoti (P) Ltd., who undisputedly owned the hotel building which stood on the land owned by Shri Vikramaditya Singh one of the shareholder, who had become the owner of the land by virtue of the partition of the family properties and the land falling to his share had in fact been leased out by him to the company, M/s Jyoti (P)Ltd.
We find force in the arguments of assessee that since in the state of Jammu and Kashmir no person other than the resident of the state can own the land, the title to the land stood in the name of Shri Vikramditya Singh and even the Hotel Building would have no independent value, if the land on which the building stood is not considered.
We find from deed of lease dt. 21.3.1973 that at the time when M/s Jyoti P. Ltd., had purchased the building by another deed of relinquishment on 21.3.1973, the Hotel Building was already existing on the land so leased and as such virtually it was a case where M/s Jyoti P. Ltd., had an absolute interest despite the fact it was only where the title of the land remained in the name of Shri Vikramaditya Singh. We find even the residual ownership rights were transferred in favour of Sh. Narendra Batra (who was the state subject i.e. resident of Jammu & Kashmir), who was a nominee of Bharat Hotels Ltd. on 16.1.1998 for a nominal value of Rs. 10 lacs when Perpetual Lease Deed was granted in favour of M/s Jyoti (P) Ltd.
We, therefore, find merit in the arguments of assessee that virtually Shri Vikramditya Singh had divested his rights title and interest in respect of the aforesaid land as early as from 21.3.1973 and for all practical purposes the land was considered to be the property of the company. Since under the state laws of Jammu and Kashmir any immovable property could not be owned by a person who is not a resident, only title of the property remained in the name of Shri Vikramaditya Singh. It is true that, lessee had only disclosed the value of the building in its Balance Sheet, despite the fact that it had also acquired and held lease hold rights. We find as on 1.4.1981 un-expired period of lease was 32 years as the lease granted was to expire only on 20.3.2013.
In order to determine the fair market value of each share as on 01.04.1981, it is necessary to adopt the aggregate of fair market value of the assets which would obviously include the value of leasehold interest in the land. In CWT vs. PN Sikand reported in [1977 (4) TMI 1 - SUPREME COURT] had held that an asset also consists of leasehold interest in a land and should be included in the valuation of such leasehold interest in the land. Similar view has also been taken in the decisions relied on by Ld. Sr. Counsel for the assessee in the case law compilation.
Thus we hold that while adopting the fair market value as on 01.04.1981, the value of leasehold interest in the land be also held to be included in the value of asset of M/s Jyoti Private Limited, so as to determine the fair market value of shares held by the sharesholders. The lease hold interest in the land is an asset of company and is capable of valuation. That the assessee had made no capital gain and the method of valuation adopted under the Wealth Tax Act is not applicable, while arriving at the fair market value of shares as on 01.04.1981 for the purpose of section 55(2)(b)(ii) of the Act. The various decision relied on by Ld. Special Counsel for the Revenue are distinguishable and not applicable to the present case. Accordingly, the order of the Ld. CIT(A) on this issue is upheld and the grounds raised by the Revenue on this issue of Capital Gain are dismissed.
Characterization of income - correct head of income - agricultural income or income from other sources - assessee could not substantiate its agricultural income and the assessee was not showing any agricultural income in the past years - CIT(A) deleted addition - HELD THAT:- The assessee before the Assessing Officer as well as the Ld. CIT(A) had filed the details of agriculture produce and the details of sale etc. It is also submitted before the Ld. CIT(A) that the apple and Cherry trees which were planted before three four years earlier had started giving fruits during the year and therefore the assessee has shown agricultural income from this year. Merely because the assessee had not shown agricultural income in the past, in our opinion, cannot be a ground for rejecting the claim of agricultural income during the impugned year especially when the assessee had filed the details of agricultural land and the receipts of the buyers who had purchased the apple and cherry. We, therefore, uphold the order of the ld. CIT(A) on this issue and the ground raised by the Revenue on this issue is dismissed.
Validity of reassessment proceedings - income declared by the assessee in the invalid return has escaped assessment in terms of section 147 - HELD THAT:- Since, such income has already been offered to tax and due taxes have already been paid, therefore, pre-requisite before the issuance of notice of escapement of income on 10.01.2001 being not satisfied, assumption of jurisdiction u/s 148 of the Act and consequent assessment order passed in our opinion is unsustainable in law especially when there was time available with the AO to complete the assessment u/s 143(3)/144 upto 31.03.2001. Further, the Assessing Officer in the order passed u/s 143/147 of the Act has brought to tax a sum by way of capital gain which was not the ground of reopening of the assessment. Therefore, we agree with the contention of the ld. Sr. Counsel for the assessee that such addition made in the assessment order is unsustainable in law in view of the decision of Ranbaxy Laboratories Ltd. [2011 (6) TMI 4 - DELHI HIGH COURT] and Jet Airways (I) Ltd. [2010 (4) TMI 431 - HIGH COURT OF BOMBAY]
Reopening of the assessment in the case of Dr. Karan Singh and other two assessees - We find the proceedings u/s 148 of the Act was initiated after a period of four years from the end of the relevant assessment year. The entire basis on which the proceedings had been initiated u/s 147 of the Act in the case of the three assessees was on the basis of the findings recorded by the A.O. in the order of assessment dated 26.03.2002 in the case of Mr. M.K. Ajat Shatru Singh, such findings had ceased to remain valid findings when the learned CIT(A) had held that no gain had accrued to the assessees. Therefore, such reopening of assessment after the order of the Ld. CIT(A) holding that no gain had accrued to the assessees in our opinion makes the reassessment proceedings unsustainable in law since the foundation on which the structure was proposed did not exist.
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2022 (1) TMI 1423
Revisional jurisdiction Under Section 401 Code of Criminal Procedure - setting aside the order of acquittal - conviction of the Accused - non-availment of remedy of right of appeal against the order of acquittal - exercise of powers Under Sub-section (5) of Section 401 Code of Criminal Procedure treating the revision application as petition of appeal.
Whether the High Court in exercise of the revisional jurisdiction Under Section 401 Code of Criminal Procedure is justified in setting aside the order of acquittal and convicting the Accused by converting the finding of acquittal into one of conviction? - HELD THAT:- On a plain reading of Sub-section (3) of Section 401 Code of Criminal Procedure, it has to be held that Sub-section (3) of Section 401 Code of Criminal Procedure prohibits/bars the High Court to convert a finding of acquittal into one of conviction. Though and as observed hereinabove, the High Court has revisional power to examine whether there is manifest error of law or procedure etc., however, after giving its own findings on the findings recorded by the court acquitting the Accused and after setting aside the order of acquittal, the High Court has to remit the matter to the trial Court and/or the first appellate Court, as the case may be - in the present case, the High Court has erred in quashing and setting aside the order of acquittal and reversing and/or converting a finding of acquittal into one of conviction and consequently convicted the Accused, while exercising the powers Under Section 401 Code of Criminal Procedure. The order of conviction by the High Court, while exercising the revisional jurisdiction Under Section 401 Code of Criminal Procedure, is therefore unsustainable, beyond the scope and ambit of Section 401 Code of Criminal Procedure, more particularly Sub-section (3) of Section 401 Code of Criminal Procedure.
In a case where the victim has a right of appeal against the order of acquittal, now as provided Under Section 372 Code of Criminal Procedure and the victim has not availed such a remedy and has not preferred the appeal, whether the revision application is required to be entertained at the instance of a party/victim instead of preferring an appeal? - HELD THAT:- It cannot be disputed that now after the amendment in Section 372 Code of Criminal Procedure after 2009 and insertion of proviso to Section 372 Code of Criminal Procedure, a victim has a statutory right of appeal against the order of acquittal. Therefore, no revision shall be entertained at the instance of the victim against the order of acquittal in a case where no appeal is preferred and the victim is to be relegated to file an appeal. Even the same would be in the interest of the victim himself/herself as while exercising the revisional jurisdiction, the scope would be very limited, however, while exercising the appellate jurisdiction, the appellate Court would have a wider jurisdiction than the revisional jurisdiction - in a case where the victim and/or the complainant, as the case may be, has not preferred and/or availed the remedy of appeal against the order of acquittal as provided Under Section 372 Code of Criminal Procedure or Section 378(4), as the case may be, the revision application against the order of acquittal at the instance of the victim or the complainant, as the case may be, shall not be entertained and the victim or the complainant, as the case may be, shall be relegated to prefer the appeal as provided Under Section 372 or Section 378(4), as the case may be.
While exercising the powers Under Sub-section (5) of Section 401 Code of Criminal Procedure treating the revision application as petition of appeal and deal with the same accordingly, the High Court is required to pass a judicial order? - HELD THAT:- While treating with the application for revision as petition of appeal and deal with the same accordingly, the High Court has to record the satisfaction as provided Under Sub-section (5) of Section 401 Code of Criminal Procedure. Therefore, where under the Code of Criminal Procedure an appeal lies, but an application for revision has been made to the High Court by any person, the High Court has jurisdiction to treat the application for revision as a petition of appeal and deal with the same accordingly as per Sub-section (5) of Section 401 Code of Criminal Procedure, however, subject to the High Court being satisfied that such an application was made under the erroneous belief that no appeal lies thereto and that it is necessary in the interests of justice so to do and for that purpose the High Court has to pass a judicial order, may be a formal order, to treat the application for revision as a petition of appeal and deal with the same accordingly.
While exercising the powers Under Sub-section (5) to Section 401 Code of Criminal Procedure to treat the revision application as a petition of appeal, the High Court is required to pass a judicial order. However, considering the fact that even otherwise being victims they are having the statutory right of appeal as per proviso to Section 372 Code of Criminal Procedure, we deem it fit and proper to remit the matter to the High Court to treat the revision applications as petition of appeals Under Section 372 Code of Criminal Procedure and to decide the same in accordance with law and on their own merits. The same would be in the interests of all, namely, the victims as well as the Accused, as the appellate Court would have a wider scope and jurisdiction as an appellate Court, rather than the revisional court.
The impugned common judgment and order passed by the High Court reversing the acquittal and convicting the Accused is hereby quashed and set aside. The matters are remitted to the High Court. The High Court is directed to treat the revision applications as appeals Under Section 372 Code of Criminal Procedure and thereafter to decide and dispose of the same in accordance with law.
Appeal allowed.
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2022 (1) TMI 1422
Owner of property in question - restraint from selling the property - HELD THAT:- From the perusal of the record it appears that the main Application that Company Petition No. 743/ 2017 is still pending before the Hon’ble National Company aw Tribunal, Mumbai Bench and we have been informed by the parties that the next date of the hearing in this case is 27.02.2022.
As the main Petition i.e. Company Petition No. 743/ 2017 is listed before the NCLT, Mumbai Bench is to be decided on merits, this Appeal is disposed off with the direction to the Hon’ble NCLT, Mumbai Bench to expedite the disposal of the Company Petition No. 743/ 2017 at an early date. As this an old matter and the Tribunal while hearing the main appeal i.e. Company Petition No. 743/ 2017 we will not prejudiced by any observation made in the Impugned Order passed by Learned Adjudicating Authority.
Appeal disposed off.
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2022 (1) TMI 1421
Maintainability of petition - petition filed through S.P.A. holder - admissible evidences or not - HELD THAT:- In the instant case as well the petition has been filed through SPA holder which is per se not maintainable. Therefore no permission can be granted to the petitioner to file the present petition bearing No. CRL.M.C. 1571/2021 under article 227 of the Constitution of India read with section 482 of the Code of Criminal Procedure seeking quashing of FIR No. 258/2010 and the charge-sheet and all the proceedings arising therefrom including the proceedings initiated against the petitioner u/s 82/83 of the Code of Criminal Procedure through his SPA holder.
There are no ground to accept the prayer made in the present application the same is dismissed.
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2022 (1) TMI 1420
Disapproval of technical disqualification and consequential rejection of the technical bid of writ petitioner in respect of a tender floated by the appellant - whether the High Court has been justified in interfering with the view taken by the tender inviting authority, i.e., NVS, in rejection of the technical bid of writ petitioner for want of fulfilment of ‘Past Performance’ criterion about supply of ‘same or similar Category Products’ of 60% of bid quantity in at least one of the last three financial years?
HELD THAT:- The interference by the High Court in this matter does not appear justified, particularly when no case of mala fide or bias is alleged. Every decision of the administrative authority which may not appear plausible to the Court cannot, for that reason alone, be called arbitrary or whimsical. The High Court, in the present matter has obviously proceeded with an assumption that the view as being taken by it, in acceptance of the case of the writ petitioner, was required to be substituted in place of the views of the tender inviting authority. That has been an error of law and cannot sustain itself in view of the consistent binding decisions of this Court, including the 3-Judge Bench decision in M/S GALAXY TRANSPORT AGENCIES, CONTRACTORS, TRADERS, TRANSPORTS AND SUPPLIERS VERSUS M/S NEW J.K. ROADWAYS, FLEET OWNERS AND TRANSPORT CONTRACTORS & ORS. [2020 (12) TMI 1390 - SUPREME COURT].
The High Court, while supporting its process of reasoning, has referred to such principles which, with respect, we find entirely inapposite and beyond the periphery of the question involved in the present case. As noticed, in such matter of contracts, the process of interpretation of terms and conditions is essentially left to the author of the tender document and the occasion for interference by the Court would arise only if the questioned decision fails on the salutary tests laid down and settled by this Court in consistent decisions, namely, irrationality or unreasonableness or bias or procedural impropriety.
In the case of Nabha Power Limited [2017 (10) TMI 1549 - SUPREME COURT], as referred by the High Court, this Court, while referring to the concept of ‘Penta test’ for ‘business efficacy’, made it clear that such a test and thereby reading an “implied term”, would come in play only when the five conditions are satisfied. Even in that case, the Court, while dealing with the question of reimbursement of cost incurred by the successful bidder/power supplier towards washing of coal in a power procurement project, analysed as to what charges would be payable by interpretation of all the terms of the contract and held the appellant entitled to certain charges as the formula for energy charges was clear - In the present case too, neither the High Court was reading any “implied term” in the past performance criterion nor NVS had done so.
The terms of tender in the present case had been clear, and they were ascertainable with specificity available on the very portal on which NIT was issued. It had not been a case of post facto interpretations by the tender inviting authority-NVS. Certain suggestions made on behalf of the writ petitioner about the tender inviting authority changing the terms to suit a particular bidder remain baseless. No such case of mala fide has been made out; rather, as pointed out on behalf of the appellant, all the other tenderers clearly understood the meaning and requirement of the past performance criterion and stated the particulars of tablets supplied by them in the past. Such contentions of the writ petitioner have only been noted to be rejected.
Similarly, the submission made on behalf of the writ petitioner, that it had been awarded another contract for supply of 3,00,000 tablets, carries no meaning at all. Such a supply contract had not been a matter of evaluation in the tender process in question, where the quantity in the last three financial years before the bid opening date was to be considered. Any subsequent event could neither invest the writ petitioner with any right in the present matter nor the impugned order could be sustained on that basis.
The petition filed by the writ petitioner was required to be dismissed. The High Court having allowed the writ petition on rather irrelevant considerations, the impugned order is required to be set aside - appeal allowed.
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2022 (1) TMI 1419
Cancellation of bail granted - Murder - It is submitted that what is weighed with the High Court seems to be a parity as one other co-accused Shashi Bhushan Bhagat has been allowed bail - HELD THAT:- From the impugned judgment and order passed by the High Court, it can be seen that no reasons whatsoever have been assigned by the High Court while releasing the respondent No.2 on bail. After recording the submissions made by the learned counsel appearing on behalf of the accused and the State thereafter the High Court has only observed that “considering the rival submissions as also the facts and circumstances of the case, this Court for the purposes of grant of bail is inclined to accept the submissions advanced by the petitioner’s counsel. Prayer for the bail of the petitioner is allowed.” There is no further reasoning given at all. Neither the High Court has considered the gravity, nature and seriousness of the offences alleged against the accused.
A similar view has been expressed by this Court in the recent decision in the case of RAMESH BHAVAN RATHOD VERSUS VISHANBHAI HIRABHAI MAKWANA MAKWANA (KOLI) AND ORS. [2021 (4) TMI 1276 - SUPREME COURT]. Emphasizing on giving brief reasons while granting bail, it is observed by this Court in the above case that though it is a well settled principle that in determining as to whether bail should be granted, the High Court, or for that matter, the Sessions Court deciding an application under Section 439 Cr.P.C. would not launch upon a detailed evaluation of the facts on merits since a criminal trial is still to take place. It is further observed that however the Court granting bail cannot obviate its duty to apply a judicial mind and to record reasons, brief as they may be, for the purpose of deciding whether or not to grant bail.
Considering the fact that respondent No.2 is a history sheeter and is having a criminal antecedent and is involved in the double murder of having killed the father and brother of the informant and the trial of these cases is at the crucial stage of recording evidence and there are allegations of pressurizing the informant and the witnesses, the impugned judgment and order passed by the High Court releasing the respondent No.2 on bail is absolutely unsustainable and the same cannot stand. The High Court has not at all considered the gravity, nature and seriousness of the offences alleged.
The impugned judgment and order passed by the High Court releasing the respondent No.2 on bail is hereby quashed and set aside - Petition allowed.
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2022 (1) TMI 1418
Rejection of Application filed by the Appellant/Operational Creditor under Section 9 of the Insolvency and Bankruptcy Code, 2016 - existence of disputes or not - HELD THAT:- From the perusal of the record and argument advanced on behalf of the Respondent and the emails corresponded between the parties are much prior to receipt of the statutory notice issued under Section 8 of the IBC which is evident from Reply Affidavit filed by the Respondent - The Respondent have raised disputes much prior to sending of the notice under Section 8 of the IBC.
The Appellant neither denied these facts nor doubted these emails corresponded between the parties. These facts show that there was preexisting dispute between the parties - The Ld. Adjudicating Authority has rightly taken note of these emails and come to the conclusion that there is pre-existing dispute between the parties and rejected the Application under Section 9 of the IBC filed by the Appellant herein.
The impugned order is set aside - appeal dismissed.
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2022 (1) TMI 1417
Addition u/s 43CA - difference between the agreement value and market value as per registered agreement - assessee stated that payment & allotment letters for the impugned items were received much earlier - CIT(A) has held that he was of the opinion that invariably the stamp value date on registration has to be adopted and hence, he was upholding the order of the AO
HELD THAT:- CIT(A) conclusion is quiet contrary to what the AO has held. AO has clearly accepted the assessee’s contentions that he is in agreement that ready recokner value on the date of allotment is being considered. Hence, the reason for CIT(A) in upholding the addition is not as per the facts on record.
In any case, we note that this is assessees plea that section 43CA was introduced w.e.f. 01.04.2013 and the agreement under consideration were entered into prior to 31.03.2013.This is assessees plea that difference is only 5% between the ready recokner rate and sale consideration.
Hence, this is assessees plea that the same has to be ignored on the touchstone of Krishna Enterprises vs ACIT[2016 (12) TMI 52 - ITAT MUMBAI] - Thus issue decided in favour of the assessee.
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2022 (1) TMI 1416
Reopening of assessment u/s 147 - Bogus LTCG - Penny stock transactions - reason to believe - information received from the intelligence being of Kolkata is only information relied upon - independent application of mind v/s borrowed satisfaction - Tribunal allowed the appeal of the assessee by holding that the Assessing Officer’s reasons recorded fall in the zone of “reasons to suspect” and not “reasons to believe”
HELD THAT:- Undoubtedly, there exists a material on record that after the original assessment was concluded, the information had been received from the Investigating Wing, Kolkata, which carried on the survey and search operations, where it was established that the large number of penny stock companies share prices were artificially manipulated on the stock exchanges in order to book bogus claims of LTCG/Loss.
The statement had also been recorded of Shri Sanjay Vora u/s 131 of the Act, which does not contain the name of the assessee and it also does not relate to the broker of assessee, since the sale is not through M/s.Anand Rathi Shares and Stock Brokers Ltd., but through Arcadia Share and Brokers Pvt.Ltd. Thus, on obtaining this information, there shall need to be a reason for formation of belief that there is a rational connection having live link between the material coming to the income tax officer and his formation of belief that the income chargeable to tax has escaped the assessment of the particular year.
Even when the Court is not required to go into the sufficiency or adequacy of the material, it is a must for the AO to establish the rational connection of direct nexus or live link between the material coming to the notice of the officer and formation of his belief. There does not appear to be any material connecting the present assessee, where information in relation to the third party has been used by the AO. There is nothing to indicate as to how in absence of any explicit connection of the assessee with the information received from the another agency, the reassessment proceedings have been initiated. The statement recorded of Shri Sanjay Vora also does not name the assessee nor has there been any link of the broker through whom the assessee has sold the shares.
Of course, the company whose share has been purchased by the assessee is alleged to be one of the penny stock companies. Therefore, the reasons recorded were drawn from survey and search operation in relation to the other assessees and therefore, the requirements of the statute does not appear to be satisfied. Even if, there is a needle of suspicion towards the assessee, the Assessing Officer shall need to act upon his own belief that the twin conditions required under the statute are satisfied before he initiates the proceedings of reassessment.
this Court cannot be oblivious of the requirement of satisfying these conditions before the reassessment proceedings are initiated, there appears to be a borrowed satisfaction. It has chosen to merely considered the information/material received from other source without forming any independent opinion on the basis of the material on record that income has escaped the assessment. His suspicion of the assessee dealing with the shares and claiming of LTCG would not provide the sufficient grounds for reopening.
The exercise which is based on suspicion is not permissible for reopening and any notice for reassessment in such circumstances would need to be termed as a fishing inquiry only.
The Apex Court interpreted the word “reason to believe” in case of Central Prominces Mangnese Ore Company ltd. (1991 (8) TMI 4 - SUPREME COURT] it held that, the word “reason” in the phrase “reason to believe” in Section 147, would mean cause or justification to know that income had escaped the assessment he can be said to have reason to believe. This expression does not mean that the Assessing Officer should have finally ascertained the fact by legal evidence or conclusion.
AO to form the opinion there shall need to be some link with the material and as discussed above, the same is missing, the challenge needs to fail. Though no rigid format is a must to express application of mind or for formation of belief that income chargeable to tax has escaped assessment and yet, when reliance on the information is mechanical without reassessment for the verification, independent opinion needs to be held to be absent. Decided against revenue.
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2022 (1) TMI 1415
Reconsideration of approved Resolution Plan - the ‘Assenting Financial Creditors’ (AFC) constituting 94.98%, who have approved the Resolution Plan submitted by the SRA has filed an affidavit stating that they feel duty bound to reconsider their decision in larger public interest resulting from unprecedent haircut of 95% & observations of the Adjudicating Authority as also this Appellate Tribunal.
HELD THAT:- Power to reconsider any decision is within the domain of CoC and even Hon’ble Apex Court in Catena of judgment held that the commercial wisdom of the CoCs is non justifiable and hence, it is in the domain of CoC, particularly, if at a later stage, it finds in public interest and the amount of loss which the public exchequer is to bear with such unprecedented haircut in such a large fund employment, it is in the fitness of thing that the proposal can be remanded back to the CoC, particularly, in view of their own affidavit to review their decision. The CoC is not functus –officio on the approval of the Resolution plan and accordingly, the judicial precedents clearly established that the Adjudicating Authority and this Tribunal is competent to send back the Resolution plan to the CoC for reconsideration.
The Hon’ble Supreme Court decision in Committee of Creditors of Essar Steel India Ltd, Through authorized signatory Vs. Satish Kumar Gupta & Ors. [2019 (11) TMI 731 - SUPREME COURT] had referred and affirmed this power to remand back.
In the present case, the resolution plan is not complying with Section 30(2)(b) of the Code r/w Section 31 of the Code. Hence, it can be remanded back to the CoC.
Vide para 4 of the Resolution Plan on overview of the implementing entity / resolution applicant, it reveals that the resolution applicants group turnover is Rs. 84,447 crore in the year 2019-2020 (para 4.2.2 of the Resolution Plan- page 253 of CA(AT) (Ins) No. 503 of 2021). Vide para 7.1.2 of the Resolution Plan, the Resolution Applicant has accepted the requirement of approval / permission of CCI in accordance with the Code prior to the approval of CoC. In the 19th CoC meeting held on 11.11.2020, the CoC were apprised of acknowledgment copy of the applications filed with the CCI seeking CCI approval of the resolution under the present case.
It is very much clear that prior approval of the CCI has not been obtained as per proviso to section 31(4) of the Code. This reflects that the approved Resolution Plan requires review and reconsideration for the legal compliances. Statutory compliances does not fall under the commercial wisdom of the CoC. Hence, the statutory compliances as mandated by proviso to Section 31 (4), have to be ensured before the Resolution Plan is approved by CoC.
Section 30 (2)(b) of the Code has not been complied with and hence, the approval of the Resolution Plan is not in accordance with Section 31 of the Code. Accordingly, the approval of Resolution Plan by the CoC as well as Adjudicating Authority is set aside and the matter is remitted back to CoC for completion of the process relating to CIRP in accordance with the provisions of the Code.
Appeal dismissed.
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2022 (1) TMI 1414
Denial of credit of TDS - HELD THAT:- A perusal of the impugned orders of the ld. CIT(A) reveals that the ld. CIT(A) after considering the submissions of the assessee has directed the AO to verify the claim of the assessee and allow the necessary credit of the taxes paid/deducted at source as per law. Since the CIT(A) has already granted relief to the assessee by directing the AO to verify the claim of the assessee, therefore do not find any reason to interfere in the order of the ld. CIT(A). The appeals of the assessee are, therefore dismissed.
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2022 (1) TMI 1413
Power of SEBI statutory initiating action against statutory auditor / chartered accountant - Misutilization of IPO proceeds - funds diverted to different entities in the guise of making payments towards the objects stated in the prospectus - role of the appellant as the statutory auditor with regard to due diligence done by it by certifying the expenditure incurred by the company towards the IPO expenses out of the IPO proceeds - HELD THAT:- We find that the A.O. has only found that due diligence was not carried out by the appellant. There is no finding that the appellants were instrumental in preparing false and fabricated accounts or have connived in preparation or falsification of the books of account. There is no finding that the appellants had manipulated the books of accounts with knowledge and intention, in the absence of which, there is no deceit or inducement by the appellants. In the absence of any inducement, the question of fraud committed by the appellants does not arise. This Tribunal in Price Waterhouse [2019 (9) TMI 592 - SECURITIES APPELLATE TRIBUNAL, MUMBAI] has categorically held that a C.A. can be proceeded against them if they are instrumental in preparing false and fabricated accounts otherwise SEBI has no power to proceed against them.
29G Section 12A(a) & (b) of the SEBI Act is obviously not applicable to the appellant as they are not dealing in the securities. Similarly, Section 12(c) cannot be made applicable because no fraud has been carried out by the appellant. Further, in the absence of connivane, deceit, or manipulation Regulation 3 &4 of the PFUTP Regulations cannot be made applicable.
The appeal is hereby allowed with no order as to costs.
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2022 (1) TMI 1412
Violation of principles of natural justice - non-speaking order - Validity of Resolution Plan as approved by the CoC - extinguishing claim to the Fixed Deposit Holders without discharging their payments in full - NHB Act or RBI Act, as the case may be, mandate the full payment to the Fixed Deposit Holders even though the corporate Debtor is undergoing CIRP or not? - Section 238 of the Insolvency and Bankruptcy Code, 2016, overrides the RBI Act and NHB Act? - transactions involving repayment to Fixed Deposits Upon maturity of their deposit would fall within the ordinary course of business for Respondent No. 1 or not - authority for disbursing loans and investments despite its failure to repay Fixed Deposit holders as per the terms of their deposits - payment made against the F.D.'s in terms of their deposits during CIRP would be categorised as a preferential transaction or not.
The impugned order is non-speaking, and it violates the Principles of Natural Justice - HELD THAT:- The impugned order approving the Resolution Plan is passed with a non-speaking order without any discussion on the objections raised by the Appellants
The obligation of the Administrator and the successor-in-interest of DHFL to ensure full repayment of deposit to FD holders under the RBI and NHB Act - HELD THAT:- The relationship between the customer and the Bank is the creditor and debtor and not a trustee. The Bank is not a trustee of money deposited by customers. In this case, the Corporate Debtor, i.e. DHFL, took fixed deposits from their customers on the agreed interest on the amount invested in the fixed deposits. Therefore, the relationship of the DHFL with the fixed deposit holders is that of a creditor and debtor and not of a trustee. The money so deposited becomes a part of the DHFL's funds which is under a contractual obligation to pay the sum deposited by a customer to him and on maturity or as per the terms of the contract they were getting agreed rate of interest. Such a relationship between the DHFL & the fixed deposit holders is one of the creditor and debtor and not of a trustee.
No Locus to maintain the Appeal - HELD THAT:- Based on the orders of the Hon'ble Supreme Court in the case of VINAY KUMAR MITTAL & OTHERS VERSUS DEWAN HOUSING FINANCE CORPORATION LTD. & OTHERS [2020 (2) TMI 33 - SUPREME COURT], wherein right is given to the Appellants to raise the issue before NCLT/NCLAT the appellants have filed the appeal. Therefore contention of the respondent COC that the appellant had no locus to file the present appeal is not sustainable.
Resolution Plan is discriminatory as it creates class within a class of similarly situated creditors - HELD THAT:- The legislative intent is clear that F.D. Holders are entitled to the same rights and protections as per the terms of the Code as every other Financial Creditors of DHFL - Based on the observations of the Hon'ble Supreme Court in CHITRA SHARMA AND ORS VERSUS UNION OF INDIA AND ORS [2018 (8) TMI 661 - SUPREME COURT], it is clear that during the pendency of the CIRP, it is impermissible for the Court to direct a preferential payment being given to a particular class of financial creditors, whether secured or unsecured. Therefore, Fixed Deposit Holders as a class cannot claim a separate treatment during CIRP. If payment is made during CIRP to a particular type of deposit holder, it will amount to a preferential disbursement to a class of creditors - thus, no payment can be made during CIRP. If any payment is made to the F.D. Holders during CIRP then it will amount to preferential treatment to a particular class of creditors, which dehors the provision of the Code, which is impermissible under the Code.
The I & B Code, a subsequent enactment, overrides the provisions of the NHB Act, NHB Directions and RBI Act - HELD THAT:- Section 45-MBA of the RBI Act does not contain a non-obstante clause but rather a 'without prejudice clause'. Section 45-MBA in fact, preserve the rights of the RBI to act under all other provisions of the law and provide flexibility. Had it been the intention of the legislation to require RBI only to pursue insolvency resolution of NBFC under the IBC prescribed under the RBI Act, then the same would have been expressly provided by the legislature by including a non-obstante clause in Section 45-MBA. The said section retains discretion with the RBI to resolve the insolvency of an NBFC under the RBI Act or any other provision of law, including IBC. Further, the FSP rules were enacted after Section 45-MBA. Hence, the provisions of the FSP Rules are also significant in this regard - it is the commercial wisdom of the requisite majority of the Committee of Creditors which is to negotiate and accept the Resolution Plan, which may involve differential payment in different classes of creditors, together with negotiating with the prospective Resolution Applicant for better or different terms which may also involve differences in the distribution of amounts between the different classes of creditors - no special dispensation ought to be granted outside the mechanism/process envisaged under the IBC, which provides for the commercial wisdom of the COC to reign supreme for the distribution of funds.
Recoveries from avoidance Application - HELD THAT:- It is pertinent to mention that the Appellant's/Fixed Deposit Holders had filed different Miscellaneous Applications after approval of the Resolution Plan challenging the same on the ground that Resolution Plan extending the recoveries made under Applications filed under Sections 43-51 and Section 66 of the Code shall be whatsoever may be for the benefit of the Resolution Applicant is contrary to law and void ab initio and non-est in law.
Decision on this issue about recoveries of avoidance application is also treated as a decision in the instant Appeals - HELD THAT:- The NCLT/NCLT has been endowed with limited jurisdiction as specified in the I & B Code and not to act as a court of equity or exercise plenary powers - The judicial review of the Adjudicating Authority that the Resolution Plan as approved by the Committee of Creditors has met the requirements referred to in Section 30 would include a judicial review that is mentioned in Section 30 (2) (e), of the Code and is also in compliance with the provisions of the law for the time being in force.
The F D holders are Financial Creditors of the DHFL and have been treated accordingly as per the provisions of the Code. It is also found that section 45Q of the RBI Act has no applicability in the facts of the present case. The decision about payments to the creditors falls within the commercial wisdom of the COC, subject to fair and equitable play, i.e. payment of minimum liquidation value to creditors. The commercial wisdom of COC is not amenable to judicial review of any kind - The I & B Code being a subsequent enactment, overwrites the provisions of the NHB Act, NHB directions and RBI Act. No right of full payment exists under the NHB Act or the RBI Act or under any other subordinate legislation. Even if it exists, any such right would be wholly repugnant to the provisions of the Code, which provide for a specific manner in priority of payment and sets out the right. The minimum amount a creditor is mandatorily required to be paid in the Resolution Plan, i.e. the liquidation value.
The issue raised about the outcome of avoidance application has not been decided here.
Appeal disposed off.
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2022 (1) TMI 1411
Rejection of rectification application filed by the assessee u/s 154 - submission filed by the assessee on the online portal - AR submitted that both the Revenue Authorities have not given any opportunity to the assessee for proper hearing and principles of natural justice were violated - HELD THAT:- We have heard both the parties and perused all the relevant materials available on record. It is pertinent to note that at any stage of the assessment proceedings as well as appellate proceedings, i.e. before the CIT(A), no opportunity was granted to the assessee for personal hearing to comment on the merit of the case.
Therefore, it will be appropriate to remand back the entire issue to the file of the AO for proper adjudication of the issues on merit and thereafter pass appropriate order as per due process of law. Needless to say the assessee be given opportunity of hearing by following principles of natural justice. Appeal of the assessee is partly allowed for statistical purposes.
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2022 (1) TMI 1410
Addition u/s. 68 - unexplained partners investment in the assessee-firm - source for the amount introduced in the firm as capital and loan was not properly explained - since the interest credited to the partners account was in violation of the provisions of section 40(b) AO disallowed the claim of expenditure towards such interest and added the same in the hands of the assessee - HELD THAT:- With respect to unexplained cash brought into the firm as partner’s capital and loan from partners, neither the Ld. AR nor the assessee has established that the amount was accounted in the books of the respective partners of the firm. The amount is credited in the books of the assessee firm during the relevant assessment year without any corresponding entries in the books of the respective partners of the firm and there is no evidence to establish that the source of those funds are genuine and accounted. It is also obvious that the entire amount is appropriated and utilized by the assessee firm and not by the partners of the assessee firm.
From the above provisions of section 68 and the facts of the relevant case before us it is crystal clear that the assessee firm is directly hit by the provisions of section 68 of the Act.
Needless to mention that if the partners of the assessee-firm had introduced the cash in their respective books and thereafter transferred the same to the books of the assessee firm then probably the onus may be on the partners of the assessee firm to establish the source of the cash brought into their respective books and therefore addition may not be made in the hands of the assessee firm depending on the facts and circumstance of the case.
In the case of the assessee it is apparent that the cash was never introduced in the books of the partners of the assessee firm, but it was merely introduced in the books of the assessee firm. Therefore, the onus is on the assessee firm to establish the genuineness of the cash introduced in its books.
Since the assessee firm has failed to establish the genuineness of the cash introduced in its books obviously the addition has to be made in the hands of the assessee firm as held by the Ld. AO. Therefore, we hereby set aside the order of the Ld. CIT (A) and confirm the order of the ld. AO on this issue.
Further, neither the Ld. AR nor the assessee could establish that the amount debited in the P & L Account of the assessee firm as interest payable / paid to the partners of the assessee firm are not in violation of the provisions of section 40(b) of the Act.
CIT (A) has deleted the addition without making a clear finding on the issue. No merit in the order of the Ld. CIT (A) on this issue also. Accordingly, we hereby set-aside the order of theCIT (A) on this issue and the order of the Ld. AO is hereby confirmed. Decided in favour of revenue.
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2022 (1) TMI 1409
Request to put on hold the re-export of gold of the applicant - HELD THAT:- After the matter was reserved for orders on 07.12.2021 and the said letter was filed by the learned Counsel for the appellant, the Departmental Representative also sent a letter dated 13.12.2021 including additional submissions received from Air Cargo (Export), New Delhi vide their letters dated 12.12.2021 and 13.12.2021. A perusal of those documents shows that the ownership of subject goods were a matter of dispute before the Dept Recovery Appellate Tribunal according to which the goods do not belong to the appellant at all and they belong to M/s Vee ESS Jewellers (to whom the appellant had exported the goods but who has not cleared them from customs) and that M/s Vee Ess Jewellers have hypothecated them to State Bank of India. Along with these documents vide the aforesaid letter Authorised Representative has also submitted that “allowing the re-export will frustrate the claims of the contending parties on the title of the goods”.
It is deemed appropriate that before for pronouncing the orders with respect to the compliance of the above mentioned final order and the miscellaneous order, the aforesaid two letters submitted by Departmental Representative, and the letter given in the record cases should be shared with the other side - learned Authorised Representative and learned counsel are directed to provide the aforesaid letters to the opposite side - matter thereafter be re-heard and compliance matter on 4th April, 2022.
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