TMI Tax Updates - e-Newsletter
January 18, 2022
Case Laws in this Newsletter:
GST
Income Tax
Customs
Corporate Laws
Insolvency & Bankruptcy
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
Highlights / Catch Notes
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GST:
Input tax credit on common services - Eligibility of Head Office to avail ITC - in the instant case, it is observed that the common input services received by the Appellant's Head Office are being used or consumed by the Branch Office/Units in the course or furtherance of their business, and not by the Head Office, as the Head Office receives these common input services on behalf of the Branch Offices/Units. - Head Office is not entitled to avail and utilize the credit of tax paid to the third-party service vendors for the common input services received by it on behalf of the Branch Offices/Units - AAAR
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GST:
Levy of GST on services provided by Head Office to its Branch Offices/Units - it is adequately evident that the impugned activities of providing facilitation services to their branch offices/units by way of availment of the common input services by the Appellant' Head office on behalf of its Branch Offices/Units would be covered under services, and hence, supply in terms of section 7(1) (a) of the CGST Act. 2017 as the said services are provided by the Appellant Head Office to its branch offices/units for a consideration in the course of its business. - AAAR
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GST:
Classification of supply - supply of goods or supply of services - sale of plots - As per entry 5 of Schedule III of SGST Act, sale of land and, subject to clause(b) of paragraph 5 of Schedule II, Sale of building, is the activity or transaction which shall be treated neither as a supply of goods nor a supply of services. Here it will be important to note that, the sale of building has conditions for the qualification to be covered in clause (b)of paragraph 5 of Schedule II. However, for sale of land, there is no such condition. Thus, land is excluded in entirety and in all circumstances whereas building is includable within the scope of supply only upon meeting certain specific criteria. - AAR
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Income Tax:
Violation of the scheme of faceless assessment u/s 144B - The argument of the respondent/Revenue that personal hearing would be allowed only in such cases which involve disputed questions of fact is untenable as cases involving issues of law would also require a personal hearing. This Court is of the view that the classification made by the respondents/Revenue by way of the Circular dated 23rd November, 2020 is not legally sustainable as the classification between fact and law is not founded on intelligible differentia and the said differentia has no rational relation to the object sought to be achieved by Section 144B of the Act. - HC
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Income Tax:
Computation of capital gain - determination of full value of consideration - section 50C/50D applicability - Having regard to the facts and circumstances of the case, the Tribunal having exercised its discretionary power adopted the guidance value of the land as the mode for determination of full value of consideration, the same being not perverse or arbitrary, we are not inclined to interfere with the impugned order - no substantial question of law arises for our consideration. - HC
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Income Tax:
Characterization of income - unutilized funds of the project - government funds are deployed for an ultimate use in setting up of an infrastructure project - capital or revenue receipt - income generated out of earlier release - there is no profit motive as the entire fund entrusted and the interest accrued therefrom has to be utilized only for the purpose of scheme. Thus, it has to be capitalized and cannot be considered as revenue receipts. - HC
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Income Tax:
Bogus purchases - Disallowance in respect of provision of batteries - Whenever any estimation is required to be made guess-work would always be there. But such guess-work should be in consonance with overall profit shown by the assessee. It has achieved a turnover of more than ₹ 102 crores, and returned income of ₹ 4.13 crores. These factors are also to be kept in mind. Taking into consideration all these facts, we estimate disallowance out of these bogus purchase at 7%. - AT
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Income Tax:
Addition u/s 68 - unexplained share subscription from various parties - onus to proof - From the above facts it is obvious that the Ld.AO of the shareholders have examined the sources of income of these shareholders U/S 143(3) of the Act and have not drawn any adverse inferences. The income-tax assessment orders passed U/S 143 (3) of the Act in the matters of these shareholders show that the Ld.AOs of the shareholders did not doubt their bona fide existence or the genuineness of their transaction with the assessee. Hence, in our considered view, all the three ingredients set out in Section 68 of the Act had been met by the assessee. - Additions deleted - AT
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Income Tax:
Accumulation of income - Disallowance of claim made u/s 11(2) - AO disallowed the claim of accumulation u/s 11(2) of the Act on the ground that in the resolution passed for making such accumulation, no definite or concrete purpose has been mentioned - Revenue was not justified in denying the claim of accumulation merely on the ground that the reasons or object of the accumulation has not been specified and it is fact on record that the assessee has actually applied said funds to specific charitable purpose as resolved. - AT
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Income Tax:
Deduction u/s 54F - flat purchased “within a period of one year before” as contemplated under section 54F - For the purpose of section 54F of the Act, the date of sale is the date of agreement to sell and not when the full and final consideration is received by the seller. - Revenue appeal dismissed - AT
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Income Tax:
Revision u/s 263 by CIT- underassessment of income - CIT doubted the expense claimed u/s. 57(iii) - Claim of general expenses against interest income - No doubt, assessee has filed some details during the assessment proceedings, but the AO did not raise query to dig the truth. The assessing officer should examine the details filed by the assessee and must reach on right conclusion, which the AO has failed to do so in the assessee's case under consideration. - Revision order sustained - AT
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Income Tax:
Revision u/s 263 by CIT - Unexplained investments in foreign financial - First and foremost this was not the purpose for the limited scrutiny assessment, which only required the AO to inquire whether the investment were duly disclosed. The AO having examined the same, he was not required to go beyond the stated purpose. The assessment order cannot be said to be erroneous therefore for not having examined an issue which it was not required to. - AT
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Income Tax:
Rental income - Deduction for interest on borrowed funds u/s 24(b) - the assessee may have purchased the property out of borrowed funds, but the onus is upon the assessee to demonstrate that the said borrowed funds have been fully utilized for purchase of the said property and further demonstrate that the payment of interest is in respect of the said borrowed funds. No documentary evidences were furnished before the lower authorities nor before us. - AT
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Income Tax:
Computation of closing stock - Merely because the assessee agreed even after the retrieval stock included in the closing stock and considered for computation income in this Assessment year, then the department has no jurisdiction to tax that income in this assessment year, since legally such income do not gone out of income declared by the assessee. Therefore, the same income cannot be taxed twice by the Department. There cannot be any estoppel against statute. Article 265 of the Constitution of India in unmistakable terms provides that no tax shall be levied or collected except by the authority of law. Acquiescence cannot take away from a party relief the that he is entitled to where the tax, levied or collected without authority of law. - AT
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Income Tax:
Assessment u/s 153C Or 148 - it cannot be said that the Assessing officer has to necessarily exercise jurisdiction u/s 153C of the Act as the same is subject to satisfaction of various conditions as we have discussed supra and which have not been fulfilled in the instant case. We are therefore of the considered view that in the peculiar facts and circumstances of the present case, there is no infirmity in action of the Assessing officer in not initiating the proceedings u/s 153C. - AT
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Customs:
Classification of imported goods - The following four devices, namely Echo Auto, Echo Flex, Echo Link and Echo Link Amp are classifiable under sub-heading 8517 62 90; and The other seven devices are not classifiable under sub-heading 8517 62 90 - The benefit of exemption is available to two devices, namely Echo Auto and Echo Flex only - AAR
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Customs:
Classification of import goods - It is concluded that all the six goods placed before me for consideration, i.e. API supari, chikni supari, unflavoured supari, flavoured supari, boiled supari, boiled & cut supari merit classification under Chapter 8 of the First Schedule to the Customs Tariff Act, and more precisely, under the Heading 0802 - the said six goods are not classifiable under sub-heading 2106 90 30, as contended by the applicant, since they have not attained the character of “preparations” of betel nut, which is sine qua non for a goods to be so considered. - AAR
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Indian Laws:
Dishonor of Cheque - insufficiency of funds - The offences under Section 138 of the Act, in fact, though is criminal in nature, but, it has an element of enforcing negotiable instruments to ensure free and fair transactions. It has an element of civil liability, as well. Admittedly, both the parties had their business dealings. It is also admitted that, in fact, in the past, the respondent had paid certain amounts to the appellant - As stated, in the instant case, parties were in business dealing. They were dealing in the property. They have transactions in the past, as well. Therefore, this Court is of the view that the interest of justice would be served, if a fine of ₹ 6 Lacs is imposed on the respondent. Out of the fine, ₹ 4 Lacs should be paid to the appellant as compensation. - HC
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Service Tax:
Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 - All the transactions, which are reflected in the statement of account of the petitioner show that,. the petitioner did make attempt to make the payment as per the scheme, and because of the technical glitches, if the said payment made by the petitioner has not been accepted by the account/website or whatever the E-Governance platform or web portal of the revenue, the blame cannot be put against the petitioner.- HC
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Central Excise:
Refund of education cess and higher education cess - whether the education cess and higher education cess which were paid along with the excise duty was also liable to be refunded along with the central excise duty in terms of exemption notifications? - this application is required to be heard by a Bench of three Judges - SC
Articles
Notifications
Circulars / Instructions / Orders
News
Case Laws:
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GST
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2022 (1) TMI 661
Maintainability of petition - availability of alternative remedy - ex-parte order - sufficient opportunity of hearing provided or not - violation of principles of natural justice - HELD THAT:- This Court, notwithstanding the statutory remedy, is not precluded from interfering where, ex facie, an opinion is formed that the order is bad in law. This we say so, for two reasons- (a) violation of principles of natural justice, i.e. Fair opportunity of hearing. No sufficient time was afforded to the petitioner to represent his case; (b) order passed ex parte in nature, does not assign any sufficient reasons even decipherable from the record, as to how the officer could determine the amount due and payable by the assessee. The order, ex parte in nature, passed in violation of the principles of natural justice, entails civil consequences. The impugned order is set aside - petition allowed.
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2022 (1) TMI 660
Levy of GST on services provided by Head Office to its Branch Offices/Units - Valuation - input tax credit - common input supplies on behalf of other unit/units registered as distinct person, and further allocation of the cost incurred for same to such other units - necessity of obtaining registration as an ISD - determination of assessable value for facilitation of common input services - HELD THAT:- The GST Law has provided a very wide connotation for services, which will cover any activity other than those, which involves goods, money and securities. In view of this wide scope and coverage of the term services , it is adequately evident that the impugned activities of providing facilitation services to their branch offices/units by way of availment of the common input services by the Appellant' Head office on behalf of its Branch Offices/Units would be covered under services, and hence, supply in terms of section 7(1) (a) of the CGST Act. 2017 as the said services are provided by the Appellant Head Office to its branch offices/units for a consideration in the course of its business. Whether the Appellant's Head Office is eligible to utilize the credit of the tax paid for the common input services received on behalf of its branch offices/units? - HELD THAT:- On bare perusal of Section 16 of the CGST Act, 2017, it is revealed that any registered person is entitled to take credit of input tax charged on any supply of goods or services or both, subject to the condition that the goods or services or both received by the registered person should be used or intended to be used in the course or furtherance of business - However, in the instant case, it is observed that the common input services received by the Appellant's Head Office are being used or consumed by the Branch Office/Units in the course or furtherance of their business, and not by the Head Office, as the Head Office receives these common input services on behalf of the Branch Offices/Units. - Head Office is not entitled to avail and utilize the credit of tax paid to the third-party service vendors for the common input services received by it on behalf of the Branch Offices/Units Whether they have to be compulsorily registered as an ISD in accordance with Section 24(viii) of the CGST Act, 2017? - HELD THAT:- On perusal of sub-section (1) of section 22 of CGST Act, it is revealed that all the Input Service Distributors, whether separately registered under this act or not, are to be registered compulsorily as ISD. Thus, the law is very clear in this regard that any Input Service Distributors, which intends to distribute the credit of the tax paid on the common input services received by it on behalf of its branches/units, has to mandatorily register itself as an ISD, and is bound to comply with the provisions and rules made in relation thereto - In the instant case, there is no doubt regarding the Appellant's Head Office as being in the nature of the Input Service Distributor as per the stipulations prescribed in the definition of the Input Service Distributor provided in the Section 2(61) of the CGST Act, 2017. On account of the provisions laid under Section 24(viii) of the CGST Act. 2017, it is conclusively inferred that any persons, which fulfills the condition of the ISD as provided under 2(61) of the CGST Act. 2017. and intends to distribute the credit of tax paid on account of the receipt of the common input services for its branches/units, will have to compulsorily register itself as an ISD. and it is immaterial whether the person is already holding other separate registrations under GST Act, or not - it is imperative that the Appellant's Head Office, if it intends to distribute the credit of tax paid on account of the availment of common input services on behalf of the Branch Offices/Units, register themselves as an ISD apart from the normal supplier's registration. What will be the valuation of the services provided by the Head Office to its Branch Offices/Units? - Whether the allocation of the cost of the employees salary by the Head Office/Corporate Office to the branch offices would attract levy of GST? - HELD THAT:- It is evident that the employees of the Appellant's Head Office are working at behest of the Head Office, and not at behest of the Branch Offices/Units. Further, since the Head Office is using all its human resources to facilitate the operational requirements of the Branch Offices/Units by way of procuring common input services on behalf of the Branch Offices/Units. thereby, providing the impugned facilitation services, therefore, allocation and recovery of any amount including its employees salary cost from the Branch Offices/Units will be subject to GST - the impugned transaction of facilitation services are not effected between the employees and the employer, but between the Head Office and Branch Offices/Units. which are distinct units in terms of Section 25(4) of the CGST Act, 2017, and the same is clearly taxable under GST in terms of Section 7 of the CGST Act, 2017. Hence the allocation and recovery of the salary of the employees of the Head Office from the Branch Office/Units will be subject to GST.
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2022 (1) TMI 659
Classification of supply - supply of goods or supply of services - sale of plots - valuation of supply - rate of tax - whether mere value addition done to land will change the nature of land from immovable property and to goods taxable under the cover of supply? - HELD THAT:- Firstly, that the roads, poles or drainages constructed by seller of land are at no time transferred to the purchaser of sub divided developed plot. These amenities will be available for use to every plot holder without any title to it. Further, these amenities in turn will be gifted to the local authority as mentioned by applicant and thereafter, the local authority will be the owner of such road and/ or electricity poles - Secondly, the sub divided plots sold will be merely on the basis of rate per sq. mts. of land being the actual land area of the plot and not on built up or super built-up area. Thirdly, the findings further indicate that no structure is being erected nor construction of facilities such as gyms, clubhouse etc. in the nature of complex, building, civil structure or part thereof are being undertaken. Thus,, it can be concluded that the object for sale is land. Scope of Supply - HELD THAT:- As per entry 5 (b) of Schedule II of SGST Act, construction of a complex, building, civil structure or part thereof, including a complex or building intended for sale to a buyer, wholly or partly, except where the entire consideration has been received after issuance of completion certificate, where required, by the competent authority or after its first occupation whichever is earlier. Thus, if some conditions are satisfied, construction of a complex, building, civil structure or part thereof, including a complex or building intended for sale to a buyer takes on the character of supply - In the instant case, the entry 5(b) of Schedule II, cannot be applied as these roads, poles or drainages are not for sale to probable buyers of plot. Neither their ownership nor their exclusive possession shall be passed on the probably buyers of plots, rather these are intended to be eventually vested with local authorities. The principal transaction is the sale of land and these amenities are a natural part of the sale of the plot of land and these do not, in anyway, change the nature of the land or of the transaction or activity being that of sale of land. As per entry 5 of Schedule III of SGST Act, sale of land and, subject to clause(b) of paragraph 5 of Schedule II, Sale of building, is the activity or transaction which shall be treated neither as a supply of goods nor a supply of services. Here it will be important to note that, the sale of building has conditions for the qualification to be covered in clause (b)of paragraph 5 of Schedule II. However, for sale of land, there is no such condition. Thus, land is excluded in entirety and in all circumstances whereas building is includable within the scope of supply only upon meeting certain specific criteria.
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Income Tax
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2022 (1) TMI 658
Violation of the scheme of faceless assessment u/s 144B - requirement of giving an assessee a reasonable opportunity of personal hearing - HELD THAT:- A quasi judicial body must normally grant a personal hearing as no assessee or litigant should get a feeling that he never got an opportunity or was deprived of an opportunity to clarify the doubts of the assessing officer/decision maker. After all confidence and faith of the public in the justness of the decision making process which has serious civil consequences is very important and that too in an authority/forum that is the first point of contact between the assessee and the Income Tax Department. The identity of the assessing officer can be hidden/protected while granting personal hearing by either creating a blank screen or by decreasing the pixel/density/resolution. Consequently, this Court is of the view that the word may in Section 144B(viii) should be read as must or shall and requirement of giving an assessee a reasonable opportunity of personal hearing is mandatory The argument of the respondent/Revenue that personal hearing would be allowed only in such cases which involve disputed questions of fact is untenable as cases involving issues of law would also require a personal hearing. This Court is of the view that the classification made by the respondents/Revenue by way of the Circular dated 23rd November, 2020 is not legally sustainable as the classification between fact and law is not founded on intelligible differentia and the said differentia has no rational relation to the object sought to be achieved by Section 144B of the Act. Also, if the argument of the respondent/Revenue is accepted, then this Court while hearing an appeal under Section 260A (which only involves a substantial question of law) would not be obliged in law to grant a personal hearing to the counsel for the Revenue. This Court is of the opinion that an assessee has a vested right to personal hearing and the same has to be given, if an assessee asks for it. The right to personal hearing cannot depend upon the facts of each case. Impugned final assessment order and impugned notice issued by respondent No.3 to the petitioner are set aside and the matter is remanded back to the Assessing Officer who shall issue a Show Cause Notice and a draft assessment order and thereafter pass a reasoned order in accordance with law.
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2022 (1) TMI 657
Entitlement to have the amount released u/s 451 of the Cr.PC - claim was made by the petitioner by relying upon Section 132-A(i)(c) of the Income Tax Act - interim custody of the article or asset produced before the learned Magistrate during the course of investigation in a crime - petitioner as sent a notice to the Sub Inspector of Police, Thirunelly in this regard, but by the time the notice was served upon the Sub Inspector of Police, who has seized the amount from the 2nd respondent, the amount was already deposited before the Judicial First Class Magistrate Court, Mananthavady - who is the proper person with whom the amount can be entrusted? - HELD THAT:- Even if the amount which is the subject matter of the dispute in this case is released to the petitioner herein, there is a specific procedure contemplated for getting the amount released in favour of the 2nd respondent, from whose custody the amounts were seized. The only stipulation is that, for getting the aforesaid amount released in favour of the 2nd respondent, he has to convince the authorities as to the source of income and to pay the amount of taxes which is assessed on the said income in accordance with the provisions of the Income Tax Act. On the other hand, if the amount is released to the 2nd respondent herein, it is likely to cause difficulties in initiating proceedings under Section 132-A and the further proceedings thereon. Therefore, the balance of convenience is in favour of the petitioner herein which was not taken into consideration by the learned Magistrate. The question of balance of convenience arises because, as far as the proceedings under Section 451 of the Cr.PC is concerned, it is relating to the interim custody of the asset alone and it is not intended for taking a decision on the question of the title/right of the parties over the articles. Therefore, the relevant consideration is as to who is the proper person with whom the amount can be entrusted. Since the petitioner herein is a statutory authority armed with various powers including those under Sections 132-A, 132-B and 153A of Income Tax Act, preference should have been given to the petitioner in the facts and circumstances of the case. Thus the learned Magistrate committed a mistake in this regard. Even while dismissing the application submitted by the petitioner herein, the learned Magistrate ordered to retain 30% of the amount for securing the interest of the Income Tax Department. Apparently, an amount of 30% was fixed under the impression that the same would take care of the amount likely to be payable by the 2nd respondent towards tax element. However, such an exercise is beyond the scope of the jurisdiction under Section 451 of the Cr.PC and was unwarranted. The liability of tax is to be determined by the authorities concerned under the Income Tax Act after completing the proceedings contemplated therein It is evident from the facts that, the petitioner was having in his possession, huge amount of cash, which by itself is a violation of the provisions of Income Tax Act. Apart from the above, so far, he failed to explain the source of the said income to the satisfaction of the competent authorities viz. the income tax authorities. In such circumstances, the proper course which should have been adopted by the learned Magistrate is to order the release the said amount to the petitioner herein so as to enable the parties to undergo the procedure contemplated under Sections 132-A, 132-B or 153A of the Income Tax Act as the case may be. It is true that the amount was seized from the 2nd respondent, but by virtue of the provisions of the Income Tax Act, he was bound to disclose the source of the same before the authorities and to pay the tax, as per the rates applicable. Apparently no such exercise is done in this case, at the instance of the 2nd respondent and hence proceedings under section 132-A or 153A are necessitated. Even if the said amount is released to the petitioner herein, it is possible for the 2nd respondent to make a claim of the amount, by following the procedure prescribed in the Income Tax Act. But if the amount is released to the 2nd respondent, it may cause difficulties in implementing the provisions of the Income Tax Act. Petition allowed and the amounts shall be released to the Income Tax Department for completing the proceedings under Sections 132-B or 153A or any other proceeding under the Income Tax Act, as the case may be, upon the competent officer of the petitioner executing a bond undertaking to complete such proceedings within a period of six months from the date of such release. In case of failure on the part of the petitioner in completing the proceedings as mentioned above, within the stipulated time, the amount shall be deposited by the petitioner, with the Judicial First Class Magistrate-II, Mananthavady, thereupon the 2nd respondent shall be entitled to move the Learned Magistrate for getting the same released in his favour, and the same can be released in his favour, subject to such conditions, which the Learned Magistrate may deem fit.
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2022 (1) TMI 656
Unexplained income - petitioner was asked instructions as to whether the petitioner was willing to deposit any amount as a condition for setting aside the impugned order and to remit the case back to the respondents to pass a fresh de novo order - respondents submits that the petitioner has been negligent in not responding to any of the notices and the information sought for and that repeated notices remained unanswered - HELD THAT:- The petitioner has made out a case for interference as the impugned order has been passed based on the assumption that the amount urging in the petitioner's account during the period were an unexplained income of the petitioner. The fact remains that the two officers had left the petitioner and thus the petitioner could not reply to notice. The fact that the petitioner will have to be wound up if the impugned order remains. Therefore, the impugned order is quashed, subject to the petitioner depositing a sum of ₹ 5 Crores in two equal instalments within a period of two months from the date of receipt of a copy of this order. The first instalment shall be paid before the end of first month, i.e on or before 31.01.2022 and the second instalment by 14.02.2022. On payment of the aforesaid amount, the impugned order shall stands quashed. As and when the petitioner deposits the aforesaid amount, the attachment order issued pursuant to the impugned assessment order dated 29.09.2021 shall also automatically stand vacated. The official respondents shall pass an order on merits within a period of ninety (90) days from the date of receipt of a copy of this order on such payment. The impugned order which stands quashed by this order subject to compliance of the conditions stipulated herein, shall be treated as a Show Cause Notice in addition to the Show Cause Notice already issued to the petitioner.
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2022 (1) TMI 655
Computation of capital gain - determination of full value of consideration - guidance value to be adopted as consideration for computing capital gain - Value of consideration to be received in the form of constructed area at 26% - section 50C/50D applicability - HELD THAT:- In the present case AO has adopted the rate of ₹ 1250/- per square feet merely based on the letter given by the developer which is not supported with any particulars. It cannot be ruled out the possibility of the developer giving an inflated figure to suit his requirements in order to gain minimum tax on his profits by inflating his costs. As such, the basis for determination of full value of consideration by the Assessing Officer based on the letter of the developer cannot be appropriate. No doubt at the relevant period, no provision was available in cases where the consideration received or accruing as a result of transfer of a capital asset by an assessee is not ascertainable. Section 50D inserted by Finance Act, 2012 with effect from 01.04.2013 would throw some light on the said issue. As per the memorandum to Finance Bill, 2012, the reasoning for inserting Section 50D cost of construction would not be the appropriate method to arrive at the full market value of consideration When the scheme of the Act does not contemplate the method of computation, no capital gains could be computed - As to overcome this aspect, a machinery provision has been introduced by way of Section 50D of the Act. Though the said provision has come into effect from 1.4.2013, it certainly throws some light on the mode of computation under Section 48 of the Act. In the circumstances, we are of the considered opinion that the guidance value of the land or the guidance value of the building would be appropriate mode to determine the full value of consideration in the case of a transfer where consideration for the transfer of a capital asset is not attributable or determinable. Hence, guidance value adopted by the Tribunal cannot be faulted with. Having regard to the facts and circumstances of the case, the Tribunal having exercised its discretionary power adopted the guidance value of the land as the mode for determination of full value of consideration, the same being not perverse or arbitrary, we are not inclined to interfere with the impugned order - no substantial question of law arises for our consideration.
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2022 (1) TMI 654
Reopening of assessment u/s 147 - absence of registration u/s 12A - whether Tribunal s order can be said as perverse in law in quashing reassessment order by merely relied upon proviso to Section 12A(2) of the Act and Circular No.1 of 2015 to quash the re- assessment order ignoring materials on record and factual matrix of the case? - HELD THAT:- On combined reading of the aforesaid provisions with the Circular vis- -vis the material facts of the case, it cannot be gainsaid that the case on hand would not fall under any of the exceptions carved out in the provisos as contemplated under Section 12A(2) of the Act. Moreover, the interpretation given by the authorities to the Circular issued by the CBDT not being justifiable, the Tribunal has rightly held that the provisos to Section 12A(2) of the Act are applicable to the case on hand. Reasons would indicate that the only reason for reopening of assessment is the absence of registration under Section 12A of the Act. Further, the assessee has not filed return of income for the assessment year in question. A finding has been recorded on the facts of the case by the Tribunal on this aspect and the allegation that the assessee was claiming deductions under Sections 11 and 12 of the Act is held to be against the facts available on record. Having regard to these factual aspects and the provisos to Section 12A(2) of the Act, we are of the considered view that the findings recorded by the Tribunal cannot be held to be perverse or arbitrary. We find no substantial questions of law arising for our consideration.
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2022 (1) TMI 653
Characterization of income - unutilized funds of the project - government funds are deployed for an ultimate use in setting up of an infrastructure project - capital or revenue receipt - income generated out of earlier release of State Government to BMRCL before the commencement of BMRCL project - release as equity would be made to BMRCL only after adjusting this income - HELD THAT:- As income generated out of earlier release of State Government for its project would have to be converted into State s equity towards the project and the same cannot be counted as income of BMRCL. Thus, there is no profit motive as the entire fund entrusted and the interest accrued therefrom has to be utilized only for the purpose of scheme. Thus, it has to be capitalized and cannot be considered as revenue receipts. We confirm the order impugned passed by the Tribunal answering the substantial questions of law in favour of the assessee
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2022 (1) TMI 652
Validity of Reopening of assessment u/s 147 - Entitlement to exemption u/s 80P(2) - change of opinion - appellant/assessee is a Co-operative Society governed by the Karnataka Cooperative Societies Act, 1959 and is engaged in the business of banking providing loans and advances to its needy members and similarly collects deposits only from its members and pays interest only to its members - HELD THAT:- What could be gathered is that the assessing officer had no independent reason to believe that the deduction claimed by the assessee under Section 80P(2) being the profit on sale of securities was not allowable, as the same has to be charged under the head Capital Gain and is not a gain from the banking business. This would clearly establish that there was no independent application of mind by the Assessing Officer. Indeed the assessing officer objected to the audit objection in giving a reply to the same. On the other hand, the assessing officer was of the firm opinion that the assessment concluded under Section 143(3) of the Act was passed in consonance with various judicial pronouncements and there is no escapement of income. In the case of P.C.Patel Co. v. Dy.CIT [ 2015 (8) TMI 722 - GUJARAT HIGH COURT] as held that any reassessment proceedings initiated at the instance of audit party objection, without the assessing officer himself has reason to believe that the income chargeable to tax having escaped the assessment, must fail. This is the view expressed by the Coordinate Bench of this Court in the case of Commissioner of Income-tax v. GMR Holdings (P) Ltd., [ 2018 (9) TMI 353 - HIGH COURT OF KARNATAKA AT BANGLORE] . Thus on the ground of change of opinion the substantial question of law raised herein require to be answered in favour of the assessee and against the revenue.
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2022 (1) TMI 651
Disallowance u/s. 40A(3) - assessee purchased certain lands/plots and made cash payments - contention of the ld. AR is that the assessee did not claim the deduction and the provisions u/s. 40A(3) cannot be held to be invoked against such payments exceeding the limit ₹ 20,000/- - HELD THAT:- The sellers from whom the assessee purchased lands were identified the transaction and also acknowledged the cash payments, thereby, it shows the transaction is genuine, as discussed in the foregoing paragraphs that the assessee treated the said lands as stock-in-trade and no deduction claimed. The ratio laid down in the case of Madhav Govind Dulshete [ 2018 (10) TMI 869 - BOMBAY HIGH COURT] as to whether the disallowance is maintainable even the transaction is genuine, in our opinion, is not applicable to the facts on hand. However, we find merit in the alternative contention of the assessee that the expenditure incurred in cash forming part of the closing stock which means this has not been claimed as deduction while computing the income under the business head, therefore, the question of disallowance u/s. 40A(3) does not arise. Thus, the grounds raised by the assessee in this regard are allowed.
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2022 (1) TMI 650
Assessment u/s 153A - additions made under Section 80IB - revenue right to interfere in already concluded (and not abated) assessment - HELD THAT:- It is a matter of record that the assessment concerning Assessment Years 2009-10 and 2010-11 stood concluded and were not pending at the time of search. Hence, the CIT(A) has rightly applied the position of law governing the field that while making the assessment under Section 153A of the Act, the Revenue is not entitled to interfere with already concluded (and not abated) assessment passed either under Section 143(1) or under Section 143(3) of the Act and not pending at the time of search, in the absence of any incriminating documents unearth, as a result of search. This legal position is affirmed and answered in favour of the assessee by large number of judicial precedents of different jurisdiction - See MEETA GUTGUTIA [ 2018 (7) TMI 569 - SC ORDER] , KABUL CHAWLA [ 2015 (9) TMI 80 - DELHI HIGH COURT] . Thus plea raised on behalf of the Revenue appears to be without merit in the case of concluded assessment concerning Assessment Years 2009-10 and 2010-11 - Decided in favour of assessee.
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2022 (1) TMI 649
Bogus purchases - Disallowance in respect of provision of batteries - Assessee made provision for replacement of batteries qua the computers sold by it - CIT-A deleted part addition - HELD THAT:- Here, in this case, the assessee has purchased batteries and replaced. Quantity was not in dispute. In the past, whatever provisions remained unutilized was offered as income by the assessee. Therefore, we are of the view that there is nothing with the ld.CIT(A) to estimate the profit at 17% of the alleged bogus purchase. CIT(A) has made reference to the GP percentage shown by the assessee in the different assessment years. But while working out 17%, he has nowhere referred wither it is net profit of ₹ 3.48 crores or GP out of this. GP has been shown by the assessee at 14.35% in this assessment year. But net profit is only 2.38%. The assessee has not disputed if 2.38% is being estimated as undue profit earned by it from purchase of these batteries amounting to ₹ 1.56 crores. Calculation by the ld.CIT(A) are not based on any scientific formula or any evidence. There is no reference that in purchase and sale of computer batteries there could be profit margin is of 17%. Whenever any estimation is required to be made guess-work would always be there. But such guess-work should be in consonance with overall profit shown by the assessee. It has achieved a turnover of more than ₹ 102 crores, and returned income of ₹ 4.13 crores. These factors are also to be kept in mind. Taking into consideration all these facts, we estimate disallowance out of these bogus purchase at 7%. In other words, 7% of the alleged bogus purchase of ₹ 1,56,78,802/- will be disallowed. This ground taken by the Revenue is rejected; whereas the ground of appeal taken by the assessee is partly allowed. Determination of the amounts require to be disallowed out of sale promotion expenses - CIT-A partly confirming the disallowance - HELD THAT:- The assessee is a well organized business house, who has achieved turnover of more than ₹ 102 crores; meaning thereby, its affairs must have been managed in professional manner, where complete details might have been maintained. The assessee has given no details to whom such gift items were given. It is case of the assessee that in order to maintain secrecy of its line of business, it is not incumbent upon him to disclose personal details of recipients. It has shown bills and vouchers for the purchases. All the details have been maintained scientifically. An estimation of disallowance could only be made, if there are some lapses in the detailed maintained by the assessee. The reasoning given by the AO is altogether different which did not meet approval of the CIT(A). Thereafter, the ld.CIT(A) ought to have not made adhoc disallowance. The ld.CIT(A) was not justified in partially confirming the disallowance. After perusal of the finding of the ld.CIT(A), we do not find any error in it to the extent the ld.CIT(A) has deleted the disallowance. There is no justification to interfere in his order. We are of the view that there is no reason to disallow expenditure to the extent of ₹ 9.50 lakhs on an adhoc basis. We delete this disallowance also. Thus, we allow the grounds of appeal raised by the assessee, and reject ground of appeal raised by the Revenue. For 2014-15 - Considering nature of the assessee s business, and expenses incurred in earlier years, it, but natural that this must have been recurring expenditure in this year also there may be some irregularities crept in on the source of purchase of gifts items, but that is not sufficient to ignore claim of the assessee. The sales promotion expenses are one of necessary components for doing business smoothly and the returned income in this year has been enhanced. It has shown total income of ₹ 6.15 crores against ₹ 4.13 crores in the Asstt.Year 2012-13. In Asstt.Year 2012-13, we have accepted the sales promotion expenses to the extent of ₹ 1.29 crores, wherein this year it has also incurred ₹ 85 lakhs. Considering nature of business, the consistency in incurring such expenditure which is essential components, we are of the view that there is no justification to disallow the sales promotion expenditure. Addition of donation to political parties under section 80GGC - denial of deduction under Chapter VIA in respect of donation given to political party and charitable institutions - HELD THAT:- We are of the view that whole angle of inquiry at the end of the AO is misdirected. It is for the AO to verify whether these charitable institutions have utilized funds for charitable objects or not, in their own cases, and if they failed to utilize funds for their objects, then their charitable status could be cancelled. Registration under section 12AA could be cancelled as per the procedure contemplated in section 12AA(3) of the Act. The funds which were not used for objects of the Trust, that can be brought to tax under section 13(3) of the Act. A perusal of the scheme of Income Tax Act, it would reveal that once the donation has been made, the donee is not under obligation to keep a track of the donation, and nothing left in his hand which can ask for return of these amounts. There is no such provision provided in the Act. If a duly recognized institution, for the purpose of receiving donation, somebody makes donation and then how the donation would be bogus, if the donee failed to use it for the object which has been made eligible to receive the donation. How the donor could dictate terms after donations are made ? No donee will be under influence of the donor for arranging its affairs. Therefore, there is fallacy in the approach of the ld.AO as well as the ld.CIT(A) for disallowing the donations made by the assessee - CIT(A) has rightly deleted the disallowance. Disallowance of travelling expenditure - HELD THAT:- We find that the assessee failed to demonstrate that rest of the expenditure disallowed by the AO was also incurred for the purpose of business. No doubt the total expenditure claimed by the assessee is only 0.85% of the total revenue earned by it. It has demonstrated a turnover of ₹ 91.40 crores, and it has claimed travelling expenses of only ₹ 77.33 lakhs; but still if it is unearthed by the AO that in certain expenditure element of personal nature is involved, then such expenditure cannot be allowed to the assessee. Therefore, this ground of appeal is partly allowed. Addition of understatement of closing stock - method adopted by the AO in determining the value of understated closing stock in respect of computer chair/tables - HELD THAT:- if a particular computer table/chair has been valued in the closing stock on net realizable basis, then its value should be disturbed by the AO by pointing out specific defects in determination of such value, and how he will determine the value which could be realized on sale of such table/chairs. This exercise will be meaningless because accounting year involved herein is 2013-14 and the assessment order was examined this aspect in the year 2016. By that time the available of tables/chairs might not be in the stock. This fact has to be appreciated with different angle also that it is a tax neutral. Whatever value AO would add and tax in this year, would become opening stock in the next year and would reduce taxable income in the coming year. The assessee has been consistently offering the income of more than ₹ 4 to 5 crores, hence no effect will be there on this type of assessee by making addition in the value of closing stock. It is pertinent to observe that in this year also the assessee has returned income of more than ₹ 6.15 crores. In the Asstt.Year 2012-13 its income was ₹ 4.13 crores. In such type of situation, small variation on account of closing stock would hardly affect the taxability. Therefore, to our mind the AO should desist from making such addition without conducting a proper exercise. We allow this ground of appeal and delete disallowance.
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2022 (1) TMI 648
Nature of expenditure - fee paid to ROC - revenue or capital expenditure - HELD THAT:- In the present case, the assessee incurred by way of expenditure towards payment of fee to Registrar of the companies in expansion of authorized share capital which incidentally would help in the business of the company resulting into profit-making, in our opinion is in the character of a capital expenditure. Expenditure incurred towards ROC is disallowed and to this effect the order of CIT(A) is justified. Appeal of assessee dismissed.
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2022 (1) TMI 647
Penalty proceedings under section 271(1)(c) - TP Adjustment - comparable selection - HELD THAT:- We hold that the comparable doesn't pass the functional analysis and turnover filter and hence is liable to be excluded from the list of comparables We find that the reply of the assessee is only with regard to the adjudication of the ld. DRP on the comparables, hence doesn't amount to any admission or appraisal of new evidences before us. The assessee did not appear before the TPO but appeared before the ld. DRP. Before us, the order of the ld. DRP is being contested. Hence, the objections of the ld. DR as mentioned above is not pertaining to the order before the ld. DRP. We also were made aware that penalty proceedings for non-compliance have already been initiated by the revenue and hence the issue of non-compliance would be dealt separately based on the outcome of the penalty proceedings. Hence, the submission of the ld. AR is not relevant to the issue that is being adjudicated before us. Appeal of the assessee is allowed.
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2022 (1) TMI 646
Penalty u/s. 271(1)(c) - addition of the assessee's agricultural income and addition of the sundry creditors u/s. 69-A - HELD THAT:- As addition of sundry creditors u/s. 69-A and addition of the assessee's agricultural income by treating the same as his income from other sources which had formed the very basis for saddling the assessee with penalty u/s. 271(1)(c) of the Act, had been vacated by the Tribunal while disposing off the assessee's quantum appeal [ 2018 (11) TMI 1888 - ITAT PUNE] In the backdrop of the aforesaid fact, now when the abovementioned additions which formed the very basis for levy of penalty u/s. 271(1)(c) of the Act had been vacated, therefore, the penalty imposed by the A.O. u/s. 271(1)(c) cannot survive on a standalone basis and has to meet the same fate. - Decided in favour of assessee.
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2022 (1) TMI 645
Penalty u/s 271(1)(c) - Validity of notice u/s 274 - as argued non deleting the appropriate clause under which the penalty is proposed to be imposed is either for filling of inaccurate particular of income or concealment of particulars of income - HELD THAT:- We are inclined to accept the plea of the assessee that the notice issued for the purposes of imposition of penalty, which suffers from the vice of vagueness, does not provide sound legal basis for imposition of penalty. Consequently, we set aside the order of the CIT(A) and quash the impugned penalty order. - Decided in favour of assessee.
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2022 (1) TMI 644
Validity Reopening of assessment u/s 147 - new tangible material before the assessing officer to reopen the concluded proceedings - Notice beyond period of four years - HELD THAT:- It is evidently clear that in original assessment u/s. 143(3) r.w.s. 153A of the Act, for assessment year 2007-08, dated 24/12/2010, the assessing officer had examined the issue relating to M/s. AZ Jewels. Hence, in the reassessment proceedings, there was no any new tangible material before the assessing officer to reopen the concluded proceedings. We note that in reassessment proceedings, the assessing officer targeted the transaction relating to M/s. AZ Jewels, which had already been examined by the assessing officer in the original assessment proceedings. On appeal by the department to the Supreme Court in M/S. KELVINATOR OF INDIA LIMITED [ 2010 (1) TMI 11 - SUPREME COURT] ) it was held that though the power to reopen under the amended section 147 is much wider, one needs to give a schematic interpretation to the words reason to believe failing which section 147 would give arbitrary powers to the AO to re-open assessments on the basis of mere change of opinion , which cannot be per se reason to re-open. One must also keep in mind the conceptual difference between power to review and power to re-assess. The AO has no power to review; he has the power to re-assess. But re-assessment has to be based on fulfilment of certain pre-condition and if the concept of change of opinion is removed, as contended on behalf of the Department, then, in the garb of re-opening the assessment, review would take place. Thus, based on these facts we note that reassessment proceedings initiated by the assessing officer are not in accordance with the provisions of section 147. Reassessment proceedings were initiated after the expiry of four years. We note that scrutiny assessment has been completed in the case of the assessee for the assessment year 2007-08, vide order u/s. 143(3) r.w.s. 153A dated 24-12-2010 accepting the returned income and therefore, the impugned notice issued u/s. 148 of the Act on 27-03-2014, is beyond the statutory period of 4 years, from the end of the relevant assessment year ending on 31-03-2012, which is ab-initio void; since there is no failure on the part of the assessee to disclose fully and truly all the material facts necessary to complete the original assessment. Thus, reassessment proceedings are bad in law. No failure on the part of the assessee to disclose fully and truly all the material facts necessary to complete the original assessment, hence reassessment proceedings needs to be quashed. - Decided in favour of assessee.
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2022 (1) TMI 643
Adhoc disallowance of travelling and conveyance; and miscellaneous expenses - HELD THAT:- For booking of the tickets the relevant evidences have also been filed which were there before the AO and the ld. CIT (Appeals). These expenses were claimed for specific business purposes wherein the assessee had made investment in Great Eastern Energy Corporation Ltd. to off-load the assessee s investment. The observations and the findings of AO while making the disallowance, is purely based on surmises. If the assessee has stated that it had undertaken travelling for getting consultations with solicitors for litigation connected with the business of the assessee and has produced the booking of tickets and other details to substantiate, we do not find why ad-hoc disallowance should have been made. Similarly with regard to miscellaneous expenses also, as noted above, these are petty expenses and mostly relating to telephone expenses, advertisement expenses etc. Such expenses could not be disallowed on ad-hoc basis especially in the case of a corporate entity. The adhoc disallowance made by the Assessing Officer and the ld. CIT (Appeals) are deleted. - Decided in favour of assessee.
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2022 (1) TMI 642
Revision u/s 263 by CIT - AO had accepted these taxpayer identical section 80P(aa) deduction claims pertaining to the interest income derived from nationalized banks - Pr. CIT holds that the hon'ble apex court's decision in Totgars Co-operative Society Ltd. [ 2010 (2) TMI 3 - SUPREME COURT ] as well as CIT vs. Nawanshahar Central Co-op Bank Ltd. [ 2005 (8) TMI 28 - SC ORDER ] have already held that such deduction isn't available to a society like the assessee but banks only and also referred to the CBDT Circular No. 18/2015 to the very fact - HELD THAT:- Issue of as to whether a cooperative society is eligible for section 80P(aa) deduction qua, the interest income derived from deposits made in the nationalized banks is no more res integra as the Tribunal coordinate bench decision in [ 2021 (9) TMI 1327 - ITAT HYDERABAD] takes note of the hon'ble jurisdictional High Court decision in Vavveru Coop. Rural Bank [ 2017 (4) TMI 663 - ANDHRA PRADESH HIGH COURT ] hold that both the Assessing Officers therein had not committed any error in not disallowing the assessees' section 80P(2)(d) deduction claims in issue qua the respective interest income derived form fixed deposit in nationalised banks. The PCITs' revision direction under challenge herein forming subject matter of these two appeals stand reversed on the very analogy therefore. We adopt the foregoing detailed discussion mutatis mutandis to hold that the Pr. CIT's revision direction therein under challenge are not sustainable in law. The same stand reversed in all the instant three cases therefore. - Decided in favour of assessee.
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2022 (1) TMI 641
Addition u/s 68 - unexplained share subscription from various parties - onus to proof - assessee did not respond to the several notices issued calling for information - income-tax assessment orders passed u/s 143 - HELD THAT:- All the entities were assessed to tax and additions were made on substantive basis with respect to certain entities. It is also apparent that all the entities had sufficient funds within their means to make investment in the assessee company. All the entities have filed their returns of income. It is also apparent that all the entities had sufficient funds within their means to make investment in the assessee company. All the entities have filed their returns of income. The accounts of all the entities were also audited. It is also not in dispute that the entire money were infused into the assessee company towards share application money through banking channels. Therefore, from the factual matrix of the issue it is crystal clear that identity, creditworthiness and genuineness of the entities who had infused money into the assessee company are established and the evidence of the same filed by the assessee company which were also before the Ld. Revenue Authorities. The submission of the ld. AR that the above five entities had also infused funds in the assessee company during the preceding assessment year 2009-10 could not be controverted by the Ld. DR. Further, the Ld. AO in his remand report dated 8/11/2006 had stated that the concerned Directors of the group were in judicial custody and for such reason the summons and notices issued upon them were returned unserved itself justifies the reason that the entities could not cooperate during the assessment proceedings. It also establishes the fact that the relevant individuals managing the affairs of the assessee company were not in receipt of the notices sent by the Revenue Authorities during the course of assessment proceedings. Further, before us the Ld. DR could not state any reason as to why the first remand report of the Ld. AO was rejected. Assessee has established the genuineness of the transaction with cogent evidence which are forming part of the paper book. The Ld. Revenue Authorities could not draw any adverse inference from the documents filed by the assessee company in its paper book. Hence the assessee has satisfied the initial onus cast upon it to establish the identity of the investors, the creditworthiness of the investors and the genuineness of the transactions. All the transactions are also duly reflected in the balance sheets of the share applicants, so creditworthiness is proved. Now if still the Ld.AO had any doubt regarding the creditworthiness of the shareholders, then the only course available with the Ld.AO was to have proceeded against the shareholders as held in the several judgments cited above, but no adverse view could have been drawn against the assessee. The third ingredient is genuineness of the transactions, for which we note that all the shares were allotted within the group entities/ promoter-individuals. It is therefore not a case that the shares privately placed by the assessee were to unknown or complete strangers. The assessee has demonstrated that it was in need of funds for its business and accordingly it had sought equity investment from its group entities/holding company/promoter-individuals. From the above facts it is obvious that the Ld.AO of the shareholders have examined the sources of income of these shareholders U/S 143(3) of the Act and have not drawn any adverse inferences. The income-tax assessment orders passed U/S 143 (3) of the Act in the matters of these shareholders show that the Ld.AOs of the shareholders did not doubt their bona fide existence or the genuineness of their transaction with the assessee. Hence, in our considered view, all the three ingredients set out in Section 68 of the Act had been met by the assessee. - Decided in favour of assessee. Addition on the notional gain arising out of the foreign exchange fluctuation - HELD THAT:- As per the provisions of the Act, notional gain or profit cannot be tax unless it has crystalized. Further, fluctuation in foreign exchange will vary from year to year and if there is a loss as per the accounting standards, it has to be casted in the statement of affairs of the entity by providing due provision for the loss. This aspect in case of loss arising out of foreign exchange fluctuation has been upheld by M/S WOODWARD GOVERNOR INDIA P. LTD. M/S HONDA SIEL POWER PRODUCTS LTD. [ 2009 (4) TMI 4 - SUPREME COURT] and the same ratio cannot be applied when there is a notional gain. Therefore, the addition made and sustained by the Ld. Revenue Authorities is erroneous. Hence, we direct the Ld. AO to delete the addition made on this count. Accordingly, concise Ground No.2 mentioned herein above in the assessee s appeal is decided in favour of the assessee. Levy of interest U/s. 234A, B C of the Act are mandatory.
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2022 (1) TMI 640
Accumulation of income - Disallowance of claim made u/s 11(2) - AO disallowed the claim of accumulation u/s 11(2) of the Act on the ground that in the resolution passed for making such accumulation, no definite or concrete purpose has been mentioned - CIT(A) confirmed the Assessing Officer s action and held that the assessee is not entitled to claim benefit u/s 11(2) as from a reading of the objects of the assessee Trust it is seen that the assessee has numerous objects, some are charitable, some are not - HELD THAT:- During the course of hearing, Ld AR brought to our notice the financials for the year ended 31.03.2016, as per the financial assessee utilised the accumulated sum for medical purpose in the 5th year i.e., in the year ending 31.03.2016. On the contrary the Revenue could not bring anything on record to show that the assessee has not utilized the accumulated sum within 5 years or has utilised the same for objects other than the avowed objects of the Trust. It cannot be denied that the assessee has proved and demonstrated that the funds were utilised for the objects of the trust within the time frame of 5 years. On a considered view of the matter, we have no hesitation in holding that the Revenue was not justified in denying the claim of accumulation merely on the ground that the reasons or object of the accumulation has not been specified and it is fact on record that the assessee has actually applied said funds to specific charitable purpose as resolved. The Revenue itself had accepted in the preceding assessment years the claim of accumulation under similar circumstances in assessment orders passed u/s 143(3) of the Act. Also, all other requirements like filing of Form 10 within due date and application of accumulated sum for the purpose of object of trust within the time limit of 5 years are fulfilled by the assessee. We accordingly direct the Assessing Officer to allow the claim of accumulation u/s.11(2) of the Act. Accordingly, grounds raised by the assessee are allowed.
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2022 (1) TMI 639
Deduction u/s 54F - flat purchased within a period of one year before as contemplated under section 54F - sale of the whole of the under-construction immovable property (i.e. duplex flat comprising of both flat no. 601 and 701) - According to the AO gain resulting from sale of second flat No. 701 could not be allowed to be off-set against the investment in flat no. 4801 as the flat was transferred on 24.11.2014 being the date when the last and final instalment of the full consideration was received, which obviously falls beyond the period of one year - whether the date of sale/transfer is 22.70.2014 or the date when the final installment of sale consideration was received on 24.11.2014 and whether amount of ₹ 9,37,94,130/- paid by the assessee on 31- 10-2013 under agreement dated 19-09-2013 for acquisition of immovable property at Lodha Bellisimo can be off set against the gains earned by him on the sale of under construction immovable property (a duplex flat bearing no. 601 701) at Bhagtani Krishang on 22-07-2014 under a decree of the Hon'ble Bombay High Court u/s 54F? - HELD THAT:- For the purpose of section 54F of the Act, the date of sale is the date of agreement to sell and not when the full and final consideration is received by the seller. In the present case the Hon ble High Court passed consent decree providing for sale of both flats i.e. flat nos. 601 and 701 on 22.07.2014 which is, in our considered opinion the date of sale of flat and not 24.11.2014 when ₹ 4,50,00,000/- was received. Therefore, we are inclined to uphold the order of CIT(A) 0by dismissing the appeal of the Revenue.
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2022 (1) TMI 638
Curable defect or not - As per CIT(A) AO could not have passed the final assessment order u/s. 143(3) of the Act without passing the draft assessment order u/s. 144(1) of the Act pursuant to the TPO's order - HELD THAT:- We hold that the AO's omission to frame draft assessment order breached the Rule of Law and consequently, his non-action to frame draft assessment order before passing the final assessment order was in contravention of mandatory provision of law as stipulated in section 144C of the Act. Consequently his action is arbitrary whimsical and such exercise of power by the AO offends Article 14 21 of the Constitution of India and therefore framing of final assessment order without framing draft assessment order is held to be an action without jurisdiction and ergo the assessment order dated 23.12.2018 is null in the eyes of law and, therefore, the impugned action of Ld. CIT(A) in holding that the AO could not have passed the final assessment order without first passing a draft assessment order is in violation of section 144(1) of the Act and is not a curable defect and would vitiate the entire assessment order is upheld. Therefore, we uphold the impugned action of Ld. CIT(A) on the reasons aforestated by us and, therefore, we hold that the order of the AO dated 23.12.2018 is null in the eyes of law and so unenforceable. Therefore, the appeal of the revenue stands dismissed. Assessment u/s. 143(3) of the Act has been held to be void/non est - Since the subject matter of the appeal of the assessee was before the Ld. CIT(A) and the Ld. CIT(A) has held the AO's assessment order to be void vide order dated 09.09.2020 the question of Ld. Pr. CIT later revising the same by order dated 24.03.2021 does not arise.
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2022 (1) TMI 637
Assessment u/s 153A - Addition u/s 68 - bogus share capital and premium received - whether the investigation made by the investigation wing subsequent to the post search operation amounts to incriminating material? - HELD THAT:- No materials or income found during search but AO relied completely on the information forwarded by the investigation wing post search and he refers to few slips of papers being alleged seized materials where the capital fund transfers are written and which are to be split and distributed into group companies. These alleged seized papers were not referred to anywhere in the assessment order and further we enquired with the Ld. DR, whether the above said seized papers exist in the assessment records. He, after verification submitted before us that no such papers exist. Considering the above facts on record, we do not see any No reason to treat the assessment valid for the AY 2009-10 to 2012-13 since these were not abated at the time of search. By respectfully relying on the various decisions of the various courts on the subject of incriminating material, we hold that the assessment made by the assessing officer under section 143(3) r.w.s 153A without any incriminating material is bad in law and accordingly no addition could be made thereon for the receipt of share capital and share premium. AYs 2013-14 and 2014-15 the assessee had submitted sufficient information before tax authorities that the sister companies have sufficient funds to make investments. The sister concerns having less or meagre income is of no relevance for the purpose of making investment in the assessee company. What is relevant is the availability of cash flow with the sister concerns to make investments in the assessee company. There is no requirement in the statute to make investment in another concern only out of income earned during the year. From the perusal of the audited financials of M/s. Patni Holdings Pvt. Ltd., it is found that the net owned funds as on 31.3.2013 and 31.3.2012 was ₹ 9.15 crores which is very much sufficient to make investment of ₹ 3.50 crores in assessee company in A.Y. 2013-14. Similarly from the perusal of the audited financials of M/s. SMDS Trading Pvt. Ltd., it is found that the net owned funds as on 31.3.2013 and 31.3.2012 was ₹ 15 crores which is very much sufficient to make investment of ₹ 1.36 crores in assessee company in A.Y. 2013-14 and ₹ 25 lakhs in A.Y. 2014-15. Therefore, in our considered view, the assessee has also proved the credit worthiness. Genuineness of the transaction - There is no involvement of cash anywhere in this transaction and all the transactions are routed only through bank. The tax authorities have not brought on record any evidence to prove otherwise. We observe from the record that the AO merely relied on the inspector report as per which all the companies are in one address and return of income are filed in different places than the registered office. It is brought to our notice that the companies are operated from 71, Canning Street and 3, Mango Lane, Kolkata are address of whole complex which consist of several floors where several offices are situated. Merely because the returns are filed from a different location other than the registered office, as alleged by the AO, the same cannot be the reason to draw adverse inference on the genuineness of the transactions. Therefore, in our considered view, the assessee has complied and proved the onus rest on them. The oral report of the inspector also cannot be relied on for deciding the genuineness unless there is proper evidence on record. Therefore, in our considered view, the additions made by the AO is on the basis of unsubstantiated facts. Therefore, we direct AO to delete the additions made u/s. 68 of the Act. Addition with respect to cash estimate on account of scrap sale - We noticed that AO applied presumption and assumptions to bring cash components in the scrap sale of all the units even though nothing was found during search in other units, which are part of search operation. In our considered view, the AO and CIT(A) has sustained the addition merely on assumptions without their any evidence to show that assessee has not declared the cash sales in all the units. Therefore, we are directing AO to sustain the addition made only on the scrap sales recorded in the Abu Road unit only for the AYs 2014-15 and 2015-16. Accordingly, the grounds raised by the assessee are partly allowed.
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2022 (1) TMI 636
Penalty imposed u/s. 271AAB(c) - undisclosed income - as per AO assessee has itself disclosed additional income during the course of search - CIT-A deleted the penalty levy - HELD THAT:- CIT(A) has quashed the penalty order on account of the fact that the addition stood deleted by the ITAT and this very specific appeal effect order passed by the AO was taken cognizance of by him. We have already extracted the relevant portion from the penalty order and seen that the specific penalty was levied on account of the alleged disclosure. Accordingly, we are of the view that the prayer of the assessee has to be allowed and ground raised by the Revenue has no merit. The departmental grounds stand dismissed.
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2022 (1) TMI 635
Addition u/s 69A - Unexplained cash deposit in his bank account as well as agriculture income earned during the year - HELD THAT:- Assessee has adequate land holding to prove the cash deposit in the bank account. The Ld. Counsel submits before us the land records and the land holding papers - We note that considering the land holding and the fact that some cash was deposited out of past savings, the addition should not be made especially when assessee does not have other income except agricultural income. We note that assessee is doing agricultural activities and her income is only from agricultural activities. If a person has only agricultural income and no other income, then no addition can be made to the total income, unless and until the assessing officer proves that the assessee has any other source of income which is taxable under the Income-tax Act. AO has not brought on record any material or evidence to show that assessee was having any other source of income except agricultural income, which is not taxable. That is why, the assessee has chosen not to file the income tax return, as the agricultural income is exempt from tax. We note that assessee (senior citizen) does not have any other income except from agricultural activities, hence taking into account the principal of natural justice, the addition should not be made, as the assessing officer did not prove other income of the assessee, except agricultural income. That is, assessing officer has failed to point out any other income of assessee - See famous golden words in WISEMAN AND ANOTHER VERSUS BORNEMAN AND OTHERS. [ 1969 (7) TMI 120 - THE HOUSE OF LORDS] as held principles and procedures are to be applied which, in any particular situation or set of circumstances, are right and just and fair. Natural justice, it has been said, is only fair play in action . Nor do we wait for directions from Parliament. - Decided in favour of assessee.
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2022 (1) TMI 634
Revision u/s 263 by CIT- underassessment of income - CIT doubted the expense claimed u/s. 57(iii) - Expenses claimed under the head 'income from other sources' was not justified as the same was not incurred/utilized for earning the income under 'other sources' - as per CIT there was nothing on record to show that the said expenses were incurred wholly and exclusively for the purpose of making or earning such income - HELD THAT:- Issue of interest income, assessed under the head 'income from other sources', has not been discussed/examined in the assessment order passed by Assessing Officer under section 143(3) dated 23.11.2016. Besides, the amount claimed as deduction on account of expenses has not been discussed/examined by Assessing Officer in his order. There is no opinion expressed by the Assessing Officer on expenses claimed under the head income from other sources. In the assessment order, only issue relating to section 14A has been brought on record and examined by the assessing officer. Therefore, we note that there is no whisper in the assessment order that assessing officer has examined the issues raised by the ld PCIT. Thus, the order passed by the Assessing Officer is erroneous and prejudicial to the interest of revenue. Counsel did not submit the details of interest with reference to under the head 'income from other sources' nor expenses details which were mentioned with reference to section 57 - there is no any working submitted by the assessee in respect of general expenses that against which interest income such general expenses were incurred by the assessee. That is, nexus is absent. To earn the interest income the assessee has claimed to have incurred general expenses which is not believable. To collect the interest income from customers only some collection charges to be incurred, such as transportation charges, postal charges if interest cheques were received by post etc, thus, some small expenses may be incurred. Thus, to claim the general expenses against the interest income is not justifiable, particularly when assessee has not demonstrated that on which activities the assessee has spent ₹ 37,04,113/- to earn such interest income. Thus, it is clear that Assessing Officer did not make enquiry to examine expenditure incurred to earn such interest income. Hence, order passed by the assessing officer is erroneous as well as prejudicial to the interest of Revenue. No doubt, assessee has filed some details during the assessment proceedings, but the AO did not raise query to dig the truth. The assessing officer should examine the details filed by the assessee and must reach on right conclusion, which the AO has failed to do so in the assessee's case under consideration. Therefore, order passed by the assessing officer is erroneous as well as prejudicial to the interest of Revenue, hence, the jurisdiction exercised by ld PCIT under section 263 of the Act is upheld. - Decided against assessee.
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2022 (1) TMI 633
Revision u/s 263 by CIT - order Barred by limitation - HELD THAT:- We are of the considered view that revision order passed by the learned PCIT dated 23.03.2020 is barred by limitation in terms of section 263(2) of the Act, because, said order was passed after expiry of two years from the end of financial year in which order sought to be revised was passed. Hence, we quash revision order passed by the learned PCIT u/s.263 of the Income Tax Act, 1961. Appeal filed by the assessee is allowed.
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2022 (1) TMI 632
Delay in remittance of provident fund [ PF ] and Employees State Insurance [ ESI ] - As argued Appellant had remitted the same before the due date for filing of return of income under section 139(1) - Scope of amendment in both sec.36(va) as well as 43B - HELD THAT:- We find no merit in the argument of the ld.DR since the explanation as provided in Finance Act 2021 prescribes that the amendment in both sec.36(va) as well as 43B by inserting corresponding explanation that although impugned PF comes in the form of provision and the same is applicable from 1/4/2021 onwards only. In the present case we are concerned with the asst. year 2017-18 and the amended provision could not be applied retrospectively as it is only applicable w.e.f 1/4/2021. Being so no disallowance could be made by the AO in respect of PF/ESI paid within the due date of filing return of income. Though, it was beyond the date mentioned in the respective Act. This view of ours is supported by various judgment relied on by the ld.AR. Accordingly the appeal of the assessee is allowed.
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2022 (1) TMI 631
Nature of receipt - Ex gratia payment voluntarily made by the BCCI - capital receipt not of the nature of income, as such, voluntary receipts are treated as capital in character - sole reason for bringing to tax a sum by the AO was that BCCI was not having registration u/s 12AA - HELD THAT:- We direct the A.O. to examine whether BCCI was having registration u/s 12AA of the I.T.Act for the relevant assessment year. If the A.O. is satisfied that BCCI was having registration for the relevant assessment year, necessarily the amount of ₹ 60 lakh cannot be taxed u/s 56(2)(vii) of the I.T.Act in view of 2nd proviso (g) to the said section. CIT(A) alternatively held that the amount is also taxable u/s 28(iv) - In the instant case, prima facie, the CIT(A) has not undertaken such an exercise. Moreover, it is settled position of law that for section 28(iv) to attract, the business or profession must have been carried on by the assessee at any time during the previous year (emphasis supplied). CIT(A) in the impugned order has stated that assessee was rendering services to BCCI during the year under consideration, however, he has not elaborated how assessee was rendering services to BCCI during the relevant assessment year. The assessee was paid ₹ 60 lakh as an ex gratia amount for having played cricket for his country - The assessee being a retired cricketer, prima facie, section 28(iv) of the I.T.Act will not have application. Therefore, in the interest of justice and equity, we are of the view that the case needs to be considered afresh by the A.O. Accordingly, all the issues raised in this appeal are restored to the files of the A.O. The A.O. is directed to examine afresh whether a sum of ₹ 60 lakh received by the assessee is taxable or not. Appeal filed by the assessee is allowed for statistical purposes.
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2022 (1) TMI 630
Disallowance of Cost of Improvement of cost of assets sold - as per AO there was no evidence in respect of improvements carried out and the year of construction of the same - AO has referred the matter to the DVO u/s 55A - HELD THAT:- The Income Tax Authorities has not taken into consideration the DVO s report, wherein it is clearly mentioned the probable cost of improvement undertaken during the financial year 1998-1999 as per Annexure-II - in the case of CIT v. Dr.Indra Swaroop Bhatnagar[ 2013 (2) TMI 456 - ALLAHABAD HIGH COURT] had held that DVO s report is binding on the Income Tax Authorities. In the instant case, the DVO s report has been received subsequent to the order of the A.O. The A.O. did not have an occasion to consider the same. In the facts and circumstances of the case, it is necessary the same needs to be considered. Therefore, we restore the issue to cost of improvement of assets sold (with reference to cost of improvement made in the financial year 1998-1999) to the files of the A.O. The A.O. shall take into consideration the DVO s report and accordingly make the computation for long term capital gains. Ground allowed for statistical purposes. Disallowance of Brokerage in respect of transfer of his old asset - HELD THAT:- Admittedly, the brokerage paid for sale of old asset was not claimed by the assessee neither in the original return of income nor in the revised return of income. The payment has been made in cash. The assessee has only produced receipt of Sri.S.T.Yogesh, Neetha Real Estate, Bangalore stating that towards brokerage charges for arranging residential premises. Since the payment has been made in cash and the claim has not been made in the original nor in the revised return, we confirm the orders of the Income Tax Authorities on this issue. Unexplained cash credit u/s 69A - HELD THAT:- As the amount was received through banking channel from the purchaser of the old asset. Therefore, the source of amount was never in dispute. The agreement for sale with regard to amenities and movables dated 16.03.2014 narrate the details of the furniture and fixture that are transferred to the buyer of the old asset. The said sum is nothing but linked with the sale of capital asset. Therefore, the sum received over and above amount mentioned in sale deed needs to be assessed under the head income from capital gains . It is ordered accordingly. Alternate plea that the entire amount is exempt from tax since the same represents sale of personal effect, which are outside the definition of capital asset within the meaning of section 2(14) - Since in the foregoing paragraphs we have held that ₹ 15 lakh is linked to the sale of capital asset, is to be brought to tax as income from long term capital gains. Therefore, the ground 5 raised by the assessee is rejected. Cost of improvement of assets purchased - For the new asset purchased, the assessee claims that he had paid an amount to the seller by bank channel for making some renovation at his instance and said amount paid was claimed as part of cost of the new asset for claiming deduction u/s 54 - HELD THAT:- Assessee claims that ₹ 14.50 lakh has been paid to the seller of flat to make certain modifications for making it habitable. The assessee has produced copy of agreement entered by the assessee and the seller, whereby a sum of ₹ 14.50 lakh is paid for making necessary modification to make the flat habitable. The A.O. has also referred the new property for valuation as point 8(d) of the reference u/s 55A of the Act. However, the DVO has not made valuation of the new property. In the interest of justice and equity, we are of the view that this matter requires reexamination by the A.O. and if required the reference may be made to DVO u/s 55A of the Act for valuation of the new asset. It is ordered accordingly. Brokerage on purchase of new asset - HELD THAT:- The assessee has filed copy of the receipt from broker, Sri.Saadiq Ahmed. However, the said receipt does not contain the address of the broker. The amount originally written was ₹ 69,000 and was struck off and ₹ 50,000 is written in hand. Admittedly, there is no cheque payment insofar as ₹ 50,000 to the broker. In such facts and circumstances of the case, we hold that the Income Tax Authorities are justified in disbelieving the payment of ₹ 50,000 to the broker for purchase of the residential flat. Modification made to the new asset - AO disallowed the claim of the assessee for the benefit of deduction u/s 54 - HELD THAT:- The invoices for the cost of improvement of the asset purchased are placed from 43 to 48 of the paper book. The A.O. has also referred the new asset for valuation as per point 8(d) of the reference u/s 55A of the I.T.Act. However, the DVO has not done the same. Therefore, we restore the issue raised in ground 8 to the A.O. The AO is directed to afford a reasonable opportunity of hearing to the assessee and shall take a decision in accordance with law.
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2022 (1) TMI 629
Revision u/s 263 by CIT - Unexplained investments in foreign financial - as per CIT AO had failed to make due inquiries relating to the investments made by the assessee in the shares of a company of United Kingdom, M/s Crownstar Ltd., during the year - Contention of the assessee is that the assessment in the impugned case was a limited scrutiny assessment solely for the purpose of examining whether the investment and income relating to foreign financial interest were duly disclosed and during assessment proceedings the assessee had filed reply to the same duly substantiated with evidences stating that the investment made in M/s Crownstar Ltd was duly reflected in the Balance Sheet of the assessee and also in the income tax return filed and it had also been explained to the AO that the investment had been sourced from the return of loan given by the assessee to one M/s Abhilash Growth Pvt. Ltd - HELD THAT:- Assessee disclosed the source of investment made in the said company as being from loan given by it to M/s Abhilash Growth Pvt. Ltd. returned to it during the year and has evidenced/substantiated the same with copy of ledger account of M/s Abhilash Pvt. Ltd. and also the bank statement of the assessee reflecting the transaction. There is no iota of doubt, therefore, that the issue which was required to be examined during assessment proceedings was duly replied to by the assessee and substantiated with evidence and the AO, it can be unhesitatingly said, was rightly satisfied with the reply of the assessee. No anomaly in the replies filed by the assessee has been pointed out, by the Ld. Pr.CIT.to cast any doubt on the nature of the transaction Only grievance is that the AO had not inquired into the nature of the business activities carried out by M/s Crownstar Ltd. This error pointed out by the Ld. Pr.CIT, we find, is totally misplaced. First and foremost this was not the purpose for the limited scrutiny assessment, which only required the AO to inquire whether the investment were duly disclosed. The AO having examined the same, he was not required to go beyond the stated purpose. The assessment order cannot be said to be erroneous therefore for not having examined an issue which it was not required to. Even otherwise, we find that the nature of the business activities carried out by M/s Crownstar Ltd. had been stated by the assessee in the assessment proceedings relating to assessment year 201718 and was very much part of the record of the assessee. For this reason also, the finding of error by the Ld. Pr.CIT of not having inquired into the nature of business activities of M/s Crownstar Ltd. is totally misplaced. As for the income earned by the assessee from the said investment not being inquired into by the Ld. Pr.CIT, the assessee, we find, had stated to the Ld.Pr.CIT that no income had been earned and had also substantiated the same with his financial statements disclosing so. Nothing has been pointed out by the Ld. Pr.CIT to doubt this explanation of the assessee calling for further investigation into it - Pr.CIT has failed to point out any error in the order of the AO and the revisionary power exercised by him, therefore, u/s 263 of the Act is not sustainable in law. There has to be a specific finding that non- inquiry had resulted in a prejudice being caused to the Revenue and section 263 of the Act itself empowers the Pr. CIT to conduct inquiries and arrive at this findings. He cannot exercise his revisionary power to restore the matter to the AO for arrive at this finding of error. In view of the above, we set aside the order of the Ld.Pr.CIT finding no error pointed out by him in the order passed by the AO. - Decided in favour of assessee.
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2022 (1) TMI 628
Rectification u/s 154 - computation of fringe benefits and tax thereon - assessee filed the return disclosing income of ₹ 3,24,970/- by showing the value of fringe benefits of ₹ 2,28,160/- - HELD THAT:- We are of the considered view that if any error has been tracked in filing the details of fringe benefits the same deserve rectification after due verification. Merely because the return was filed online would not allow the revenue to take the benefit of any factual error in the return so filed. In the interest of justice and fair play we restore the issue to the files of the AO. AO is directed to verify the details and rectify the mistake, if any, as per provisions of the law. In the result, the appeal filed by the assessee is allowed for statistical purpose.
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2022 (1) TMI 627
Deduction for interest on borrowed funds u/s 24(b) - assessee stated that the said property is a let out property which was purchased out of borrowed funds from M/s Perfect Turner and, therefore, interest paid by the assessee should be allowed as deduction - HELD THAT:- The assessee may have purchased the property out of borrowed funds, but the onus is upon the assessee to demonstrate that the said borrowed funds have been fully utilized for purchase of the said property and further demonstrate that the payment of interest is in respect of the said borrowed funds. No documentary evidences were furnished before the lower authorities nor before us. Therefore, we do not find any reason to interfere with the findings of the ld. CIT(A). Unexplained Cash withdrawals from bank - introduction of cash entries in its books of account - assessee explained that the said amounts were withdrawals from the bank - HELD THAT:- We find force in the contention of the ld. counsel for the assessee. The entries have been made in the cash book on the date on which the cheque was issued but the same was presented in the bank at subsequent date and therefore, the withdrawal date from the bank is different from the entry date in the cashbook. But at the same time, we do not find do not know whether on entry date in cashbook any benefit has been taken by the assessee in respect of cash in hand. We, therefore, remit this issue to the file of the Assessing Officer. The Assessing Officer is directed to verify whether on the date of entry the assessee has utilized the alleged withdrawal of cash for making the payment/investment or for any other purpose and if the AO does not find any utilization of cash, then the addition should be deleted. Disallowance of depreciation claimed - AO was of the opinion that the assessee is claiming deduction on lease rent as expenditure and is also claiming depreciation on the said building, accordingly, disallowed the claim of depreciation - HELD THAT:- Assessee vehemently stated that on the leased property in the assessment year 2008 09, the assessee has made substantial addition which was capitalized by it and on such capitalized expenditure, the assessee has claimed depreciation as per provisions of law. We are of the considered view that the assessee is eligible for claim of depreciation as per Explanation 1 Proviso 6 to Section 32 of the Act but, at the same time, it needs to be verified whether in the year of expenditure, the same was claimed as revenue expenditure or was capitalized by the assessee. The Assessing Officer is directed to verify the same and if he finds that the amount of addition was capitalized, the depreciation should be allowed. Ground No. 6 is allowed for statistical purposes. TDS u/s 194C - Disallowance on account of building maintenance - HELD THAT:- It Is true that on payment of pest control expenses, the assessee has deducted tax at source and has fulfilled the conditions laid down in section 194C of the Act. To this extent no disallowance should be made. In respect of balance, no details of day to day expenditure have been furnished before us. We, therefore, set aside the issue to the file of the Assessing Officer. The Assessing Officer is directed to furnish details of day to day expenditure on account of building maintenance and the AO is directed to verify the same in light of provisions of section 194C of the Act and decide the issue afresh as per the provisions of law. The assessee gets relief of ₹ 3,01,510/-. Ground No. 7 is partly allowed. Depreciation on account of building - assessee stated that the assessee is an hotelier and he is running a resort which has seasonal business but the resort is used for the entire year, and, therefore, the claim of depreciation cannot be restricted to 50% - HELD THAT:- There is no dispute that the assessee is running a resort at Raj Niwas Palace, Dholpur. It Is also not In dispute that being a tourist place, the occupancy is not throughout the year but only in seasons favourable to the tourists. Therefore, basis the revenue of some months, it cannot be construed that the asset was used only for less than 180 days. We, therefore, direct the Assessing Officer to allow depreciation for entire year. Addition is directed to be deleted. Ground No. 8 is allowed for statistical purposes.
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2022 (1) TMI 626
Revision u/s 263 by CIT - bogus share capital, share application money and unsecured loan introduced in the assessee company - As per CIT AO failed to make independent inquiry with regard to the same - HELD THAT:- We are unable to concur with the Ld. Pr. CIT and we find that in the guise of exercising revisionary powers the Ld. Pr. CIT is taking a different view on the matter and in fact dictating the extent of inquiry which ought to have been conducted by the AO, without pointing out as to how the AO s view accepting the claim and explanation of the assessee, vis a vis source of bogus capital introduced, was flawed or suffered from any infirmity considering the facts and circumstances of the case. Admittedly the assessee during survey had surrendered bogus capital introduced. It was incumbent on the assessing officer therefore, during assessment proceedings, to have sought an explanation and inquire into the source of the same also. The assessee we find therefore had not only admitted to and surrendered on account of its own money introduced by way of bogus share capital/share application/ unsecured loan , but had explained the manner of introducing the same by way of booking bogus expenditure and rerouting the payment made on account of the same in the form of share capital etc giving all details of the modus operandi ,including the name of parties involved in the same and the dates of the entire money trail. Thus a full and complete disclosure was made by the assessee, who had come completely clean with regard to the bogus transactions undertaken, revealing all possible details of the same. Nothing has been pointed out by the Ld. Pr. CIT in the above explanation and the details filed by the assessee, so as to raise any suspicion regarding the same. With the disclosure being so complete in all aspects and there being nothing to doubt the same, the acceptance of the explanation by the AO, we find ,in the present circumstances cannot be said to be out of place or unreasonable. Even Explanation 2 to section 263, listing various instances where orders of AO are to be treated as erroneous causing prejudice to the Revenue, states orders passed without making inquiries or verification which should have been made(italics provided by us), as one of the instances. Meaning thereby that lack of inquiry by itself is not sufficient for exercising revisionary jurisdiction but it is lack of inquiry which should have been made . The finding of error in the order of the AO by the Ld. Pr.CIT, on account of alleged lack of inquiry, without pointing out the necessity for conducting the same, we find is nothing but having a different opinion on the matter, and therefore, we do not agree that the lack of inquiry resulted in the order passed being erroneous so as to cause prejudice to the Revenue. - Decided in favour of assessee.
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2022 (1) TMI 625
Computation of closing stock - retrieval of stock - addition was made by the AO on the reason that the retrieval stock is not shown in the trade as well as in the profit and loss account - Whether the stock of 14990MT retrieved is included in the closing stock, and if already included, whether it is permissible to tax it again invoking section 41(1)? - HELD THAT:- As seen from the above table, if we do not consider retrieval stock in closing stock, the quantity of closing stock will be 109419 MT. If we consider retrieval stock in the closing stock figure, then quantity of closing stock is 1,24,409 MT. Thus, there was difference of 14,990 MT whereby, closing stock has been increased to this extent. Being so, the contention of the ld.DR is that this retrieval stock is not included in the closing stock is not correct. In our opinion, unless the AO is able to point out that this closing stock has been left to be entered in the books of accounts, the books of account cannot be rejected without ascertaining the specific reasons. Closing stock as on 31/3/2012 has been arrived at after adding retrieval stock of 14,998 MT to the opening stock. Thus, the closing stock has been increased by this amount of quantity of retrieval stock. AO is not justified in observing that retrieval stock has given into manufacturing and P L account. Therefore there is no justification in recalling the claim of the assessee that retrieval stock has already gone into computation of income. We find no infirmity in the claim of the assessee. As the above statement produced by the tax auditor report u/s 44AB of the Act clearly demonstrate that retrieval stock has been gone into computation of closing stock and it has been included in the closing stock. The closing stock would only be 109419 MT instead of 124409 MT if it is not included in the closing stock arrived on 31.03.2012. As noticed from the G.P rate in the A.Y under consideration is it at 32.61% as against G.P rate at 16.62% in A.Y 2013-14. The Grosss profit rate in this A.Y 2012-13 has been increased due to retrieved stock gone in to computation of income. On this count also addition made by AO on this count to be deleted. Merely because the assessee agreed even after the retrieval stock included in the closing stock and considered for computation income in this Assessment year, then the department has no jurisdiction to tax that income in this assessment year, since legally such income do not gone out of income declared by the assessee. Therefore, the same income cannot be taxed twice by the Department. There cannot be any estoppel against statute. Article 265 of the Constitution of India in unmistakable terms provides that no tax shall be levied or collected except by the authority of law. Acquiescence cannot take away from a party relief the that he is entitled to where the tax, levied or collected without authority of law. The assessee cannot be disentitled to file appeal against the addition made by the AO on account of retrieval stock. Accordingly, this ground of appeal of the assessee is allowed. Addition towards net valuation of closing stock - Assessee wants to consider closing stock as on 31/3/2012 as opening stock as on 1/4/2012 - HELD THAT:- Once the AO included a sum of ₹ 46,25,232 in the closing stock as on 31.03.212, the figures to be taken as opening stock as 01.04.2012 . This is the fair proposition for which the Revenue cannot have any grievance. Order accordingly. This ground of appeal is allowed. Treatment of amount due to SRMT Logistics, Bellary, as income on account of cessation of liability - HELD THAT:- CIT(A) has given categorical findings and directed the AO to verify whether said credit was written off in the book of account in A.Y 2013-14 and treated as income for the asst. year 2013-14 and if so delete the addition. In view of this findings of the CIT(A), we do not find any infirmity in the order of CIT(A) and same is confirmed and this ground of appeal of the assessee is dismissed.
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2022 (1) TMI 624
Exemption u/s 11 - Addition made for non utilization of funds - addition for penal interest on FDR loan treating it as mis-utilization of funds and hence not allowable as utilization u/s 11 - HELD THAT:- Assessee should not suffer on account of the mistake of a counsel/accountant/auditor etc. stands well addressed legally. The assessee has relied upon the proposition of law as laid down in the case of CIT Vs Siddhartha Enterprises [ 2009 (7) TMI 22 - PUNJAB AND HARYANA HIGH COURT] ; CIT Vs S. Dhanbal [ 2008 (8) TMI 15 - DELHI HIGH COURT] and the oft quoted decision in the case of Price Waterhouse Coopers Pvt. Ltd.[ 2012 (9) TMI 775 - SUPREME COURT] Before considering the position of law, it is necessary to first address the facts since there is no finding on the nature of this penal interest. Accordingly, we set aside this issue back to the file of the AO with a direction to give a specific finding on the nature of interest disallowed. In case it is a case of mis-utilization of funds, then of course the rigors of law will apply. However, if it is an issue of interest on over draft or loan facility for the purposes of the Board, then disallowance cannot be maintained. - Decided in favour of assessee.
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2022 (1) TMI 623
Assessment u/s 153C Or 148 - Unexplained cash loans - search and seizure operations were carried out u/s 132A - addition based on transactions found in the pen drive - HELD THAT:- It is a matter of record that the information which has been received by the Assessing officer from the DCIT Central Circle- 3, Jaipur has been collected during the course of search action u/s 132 in case of Ramesh Manihar Group. The question that has been raised for our consideration is what precluded the Assessing Officer from taking action u/s 153C of the Act instead of section 148 where the Assessing Officer was of the belief that the enquiries made by the Investigation wing and the information so collected during the course of search action in case of Ramesh Manihar Group shows that certain transactions of cash loans have been found which are pertaining to the assessee company. In the instant case, the fact that the Assessing officer has not invoked the provisions of section 153C, it shows that there was no satisfaction which has been recorded by the Assessing officer having jurisdiction over Ramesh Maniar Group that any books of account or documents etc, seized during the course of search pertains or pertain to, or any information contained therein, relates to the assessee company and in absence of satisfaction so recorded, the books of account or documents seized during the course of search were not handed over to the Assessing Officer having jurisdiction over the assessee company. In absence of satisfaction so recorded and handing over of the seized material by the Assessing officer of the searched person, the Assessing officer could not by himself have invoked the provisions of section 153C of the Act. Therefore, the mere fact that proceedings have been initiated basis receipt of information from DCIT Central Circle -3 Jaipur and the incriminating documents/material found during the course of search from a third party, Ramesh Manihar Group, it cannot be said that the Assessing officer has to necessarily exercise jurisdiction under section 153C of the Act as the same is subject to satisfaction of various conditions as we have discussed supra and which have not been fulfilled in the instant case. We are therefore of the considered view that in the peculiar facts and circumstances of the present case, there is no infirmity in action of the Assessing officer in not initiating the proceedings u/s 153C. Unaccounted income u/s 69 - Onus to prove - assessee company had advanced a sum by way of cash loans, through Ramesh Manihar Group to various persons, which is not recorded in its books of accounts - Reliance on statement of Shri Ramesh Chand Maheshwari recorded under Section 131 - whether it is Revenue or the assessee company who has to discharge the initial onus that such unaccounted money belongs to the assessee company? - HELD THAT:- We are unable to understand as to how the Assessing officer has reached to a conclusion that basis such statement recorded u/s 132(4) that Shri Ramesh Chand Maheshwari and his partner Shri Manmohan Bagla were involved in cash loan transactions where the amounts were taken in cash from the lenders and the same was advanced to the borrowers in cash and have earned commission income on these transactions, and has recorded a consequential finding that since name of HMD is found in the excel sheets, it represent the assessee company through its director, Shri Hari Mohan Dangayach (HMD) and the assessee company has made the transactions of lending unaccounted money through the Ramesh Manihar group and earned interest income thereon. We therefore find that there is a clear disconnect between the findings of the AO and the statement of Ramesh Chand Maheshwari recorded on oath u/s 132(4) of the Act, and data so found in the pen drives which is claimed by the AO as relating to cash loan financing by the assessee company through Ramesh Manihar cannot thus be held to be corroborated by the statement of Shri Ramesh Chand Maheshwari recorded under Section 132(4) of the Act. There has been a change in stand of Shri Ramesh Chand Maheshwari where even in respect of cash loan financing, he has stated that he acts as a mediator and facilitator between the lenders and borrowers and thus earns commission income instead of interest income on amount advanced in their personal capacity as stated earlier. Basis such statement and filing of petition before the Settlement Commission where these cash loan financing transactions have been claimed and shown as transactions undertaken by Shri Ramesh Chand Maheshwari on commission basis, the AO has taken cognizance of the same and held that since name of HMD is found in the excel sheets, it represent the assessee company through its director Shri Hari Mohan Dangayach (HMD) and the assessee company also made his transactions of lending unaccounted money through the said group and earned interest income thereon. We therefore find that there is a total disconnect and variance between the two statements and change of stand of Shri Ramesh Chand Maheshwari in his statement recorded u/s 132(4) and the statement subsequently recorded u/s 131 of the Act after a gap of almost 21 months and the Assessing officer in the instant case has effectively placed reliance on the subsequent statement recorded u/s 131 ignoring the earlier statement recorded u/s 132(4) of the Act. In the facts of the present case, where there is shifting stand of Shri Ramesh Chand Maheshwari in his two statements and there is heavy reliance placed by the Revenue on the latter statement recorded u/s 131, it is imperative that the assessee company be allowed an opportunity to seek a copy of the said statement and file its objections and secondly and equally important, be allowed an opportunity to cross examine Shri Ramesh Chand Maheshwari which has been recognized time and time by the Courts as an important facet through which the principle of natural justice can be implemented and is duly supported by various authorities quoted at the Bar. In absence of such an opportunity, no reliance can be placed on such statement more so where in his statement, Shri Ramesh Chand Maheshwari did not categorically referred the name of the assessee company or that the assessee company provided cash loans through his Group to different persons. Therefore, the finding of the AO that data so found in the pen drives relates to cash loan financing by the assessee company through Ramesh Chand Maheshwari stand corroborated by the statement of Shri Ramesh Chand Maheshwari recorded under Section 131 of the Act cannot be accepted. There is no basis for making the addition in the hands of the assessee company on account of cash loans advanced through Ramesh Manihar Group and consequent interest charged thereon - We affirm the findings of the ld CIT(A) deleting the said additions as we do not find any justifiable basis to interfere with the same. - Decided against revenue.
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2022 (1) TMI 610
Exemption u/s 54F - Refusal to issue No Objection Certificate for enabling the petitioner / assessee to withdraw amount from Capital Gains Accounts - Petitioner has already paid the advance tax which is more than the amount of Capital Gain tax that may be required to pay - HELD THAT:- As petitioner as drawn our attention to the indemnity bond, the petitioner has furnished in favour of the Assistant Commissioner of Income Tax on 23.10.2021 - tax which the petitioner is required to pay on a regular basis is not more than ₹ 58 lakhs and the payment of the said amount towards Capital Gain Tax should not be doubted and there is nothing under the law to preclude the Assessing Officer to allow the remaining amount , which has remained with the Department, as the petitioner is no longer going to claim the benefit under the provisions of Capital Gain Scheme Accounts - as relying on the decision of Padma Swaminathan [ 2017 (3) TMI 1878 - MADRAS HIGH COURT] Notice for final disposal returnable on 30.11.2021.
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2022 (1) TMI 609
Interest u/s 234A and 234B - late fees under Section 234F and penalty under Section 271B - HELD THAT:- We once again impress upon the respondent to attend to the technical glitches, which are being experienced in the Portal at the earliest. The Portal is something which is within the control of the respondent and if there are any technical problems in the same, it is only the respondents, who can take care of such problems. At this stage, Mr. Devang Vyas, the learned Additional Solicitor General of India received information that CBDT has issued a Circular No.01/2022 dated 11.01.2022 extending the timeline for filing the income tax return and various reports of audit for the A.Y. 2021-22. The due date of furnishing of Report of Audit under any provision of the Act for the Previous Year 2020-21, which was 30th September, 2021, in the case of assessees referred in clause (a) of Explanation 2 to subsection (1) of Section 139 of the Act, as extended to 31st October, 2021 and 15th January, 2022 by Circular No.9/2021 dated 20.05.2021 and Circular No.17/2021 dated 09.09.2021 respectively, is hereby further extended to 15th February, 20222. The due date of furnishing of Report of audit under any provision of the Act for the Previous Year 2020-21 which was 31st October, 2021, in the case of assessees referred in clause (aa) of Explanation 2 to sub-section (1) of Section 139 of the Act, is hereby extended to 15th February, 2022. Post this matter on 08.02.2022 to enable the respondents to file their counter. One copy of the counter shall be furnished to the learned counsel appearing for the writ applicants well in advance. The further progress in the matter with regard to the technical glitches shall be reported to us on the next date of hearing. One copy each of this order shall be furnished at the earliest to Mr. M.R. Bhatt, the learned senior counsel and Mr. Devang Vyas, the learned Additional Solicitor General of India for its onwards communication.
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Customs
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2022 (1) TMI 622
Classification of imported goods - Echo 4th Generation - Echo Dot 4th Generation - Echo Dot 4th Generation with Clock - Echo Show 5 - Echo Show 8 -Echo Show 10 - Echo Flex - Echo Studio - Echo Auto - Echo Link) - Echo Link Amp - classifiable under Customs Tariff Item 8517 62 90 or not - effective rate of duty - benefit of Serial Number 20 of Notification No. 57/2017-Cus., dated 30-6-2017, as amended by Notification No. 3/2021-Cus., dated 1-2-2021 on import of Echo Show 5, Echo Auto, Echo Flex, Echo Dot 4th Generation and Echo Dot 4th Generation with Clock. Echo 4th Generation - Echo Dot 4th Generation - Echo Dot 4th Generation with Clock - HELD THAT:- The principal function of the three devices, namely, Echo 4th Generation, Echo Dot 4th Generation and Echo Dot 4th Generation with Clock is to reproduce sound and act as speaker. Admittedly, for these devices to function as speaker, they accept voice commands and with wifi capability manage to get the input sound for reproduction from various web channels. These devices are essentially required to have internet connectivity and the same is made feasible by virtue of wifi capability of such devices. These features make the devices as smart speakers, retaining nonetheless the principal function as speaker. Therefore, guided by GIR 1 and Note 3 of section XVI of the Import Tariff, it is found that the said three devices, being treated as smart speakers, merit classification under Heading 8518; and more specifically sub-heading 8518 22 00. Echo Show 5 - Echo Show 8 - Echo Show 10 - HELD THAT:- The principal function performed by these is to act as display or monitor other than those capable of connecting to ADP machine. These devices are principally meant for, playing video from web channels or displaying video during video calling or to reproduce motion pictures as video with the help of camera installed in it - The devices named Echo Show, though neither being television reception apparatus, nor apparatus for the reception of television signals without display capabilities, are nonetheless monitors/display, not incorporating television reception apparatus. Therefore, in the light of GI Rule 3(b) and Note 3 of Section XVI of the Import Tariff, these three devices, namely Echo Show 5, Echo Show 8 and Echo Show 10 merit classification under Heading 8528; and more specifically sub-heading 8528 59 00 as other monitors. Echo Flex - HELD THAT:- Echo Flex is a blue tooth enabled device, taking voice command which are converted into radio frequency waves, this device enabling the smart home device to function without physical contact. It has been described by the applicant as plug-in device for smart home control which lets you use your voice to control compatible smart home devices and get help from Alexa in more places in your home - the website informs that this plug-in Echo device lets you use your voice to control compatible smart home devices and get help from Alexa in more places in your home. Therefore, Echo Flex is a communication device, akin to apparatus covered under Heading 8517 of the Import Tariff. It is therefore classifiable under Heading 8517; and more specifically under sub-heading 8517 62 90 covering other machines for the reception, conversion and transmission of voice, images or other data. Echo Studio - HELD THAT:- Echo Studio is also smart speaker, like Echo 4th Generation, Echo Dot 4th Generation, albeit of superior quality. Therefore, Echo Studio merits classification under Heading 8518; and more specifically sub-heading 8518 22 00. Echo Auto - HELD THAT:- The device Echo Auto is a blue tooth enabled device, taking voice command which are converted into radio frequency waves, this device enabling the user to do variety of things by simple voice command like voice call, listening to music, knowing location etc., making it convenient to operate various devices, while driving - Echo Auto is a smart communication device. It merits classification under Heading 8517 of the Import Tariff; and more specifically under sub-heading 8517 62 90 as other machines for the reception, conversion and transmission of voice, images or other data. Echo Link - HELD THAT:- It is seen that this device does not have full-fledged speaker for rendering high quality audio, rather it is an accessory to a (high quality) speaker. Therefore, its principal function is of reception, conversion and transmission or regeneration of voice or other data. Echo Link accordingly merits classification under Heading 8517 of the Import Tariff; and more specifically under sub-heading 8517 62 90 as other machines for the reception, conversion and transmission of voice, images or other data. Echo Link Amp - HELD THAT:- For determining the classification of this device, the question that needs to be answered is role/significance of the built-in amplifier, since audio-frequency electric amplifiers merit classification under sub-heading 8518 40 00 - the built-in amplifier is an additional feature of the device, not the principal determining feature, with the device having relevance even without the use of amplification feature. Therefore, holding that the principal function of Echo Link Amp is also of reception, conversion and transmission or regeneration of voice or other data, it is found that the device merits classification under Heading 8517 of the Import Tariff; and more specifically under sub-heading 8517 62 90 as other machines for the reception, conversion and transmission of voice, images or other data. Eligibility of the applicant to claim benefit of Serial Number 20 of Notification No. 57/2017-Cus., dated 30-6-2017, as amended by Notification No. 3/2021-Cus., dated 1-2-2021 - import of Echo Show 5, Echo Auto, Echo Flex, Echo Dot 4th Generation and Echo Dot 4th Generation with Clock - HELD THAT:- The common and distinguishing feature of these five devices, as distinct from the other seven devices covered by this application, is that these devices are not MIMO enabled. It is seen that the benefit of Serial No. 20 of the said Notification No. 57/2017-Cus. is available only to goods falling under sub-heading 8517 62 90 and 8517 69 90; with certain goods, including MIMO products, etc. being excluded even if they were classifiable under the said two sub-heading. Put simply, for a good to be eligible for the benefit, it would need to meet twin criteria - (a) being classifiable under sub-heading 8517 62 90 or 8517 69 90, and (b) not be covered by the excluded items mentioned under the S. No. 20 of the said notification (MIMO products are mentioned in the list of excluded items). Therefore, benefit of concessional rates of duty is available only to two devices, namely Echo Auto and Echo Flex, classifiable under sub-heading 8517 62 90 and not being MIMO enabled - The other three devices, namely Echo Show 5, Echo Dot 4th Generation and Echo Dot 4th Generation with Clock are not classifiable under sub-heading 8517 62 90 or 8517 69 90; and therefore, not eligible for the benefit of concessional rate of duty under the said notification. Application disposed off.
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2022 (1) TMI 621
Classification of import goods - preparation of betel nut commonly known as Supari - API supari, Chikni supari, unflavoured supari, boiled supari and boiled cut supari together - whether or not containing added ingredients such as food starch spices, mulethi. menthol (flavours), perfume etc. - not containing lime or katha (catechu) or tobacco - goods classifiable under Chapter/Heading 2106 90 30 as Food Preparation or not - HELD THAT:- It is admitted that boiling is an irreversible process, a boiled betel nut would be distinct from unboiled betel nut, and a boiled betel nut cannot be unboiled in reverse. However, it is equally obvious that boiling per se does not result in obtaining a preparation of betel nut. Speaking more generally, in view of the design of the Schedule to the CTA, HSN and plethora of judgments, besides common understanding and parlance, every irreversible process does not result in obtaining a new product with a distinct classification even at the eight or ten-digit level; and every irreversible process does not result in coming into being of a preparation of the raw material . The processes to which raw betel nuts have been subjected to obtain API supari, Chikni supari, unflavoured supari, boiled supari and boiled cut supari are squarely in the nature of processes referred to in the Chapter Note 3 to Chapter 8 and HSN Note. Therefore, at the end of the said processes, the betel nuts retain the character of betel nut and do not qualify to be considered as preparations of betel nut, which is sine qua non for a goods to be classifiable under Chapter 21. Flavoured supari - whether the addition of special flavouring agents would render the betel nuts into preparations of betel nuts, classifiable under Chapter 21? - HELD THAT:- In a recent judgment of the CESTAT, Chennai, in the case of S.T. Enterprises [ 2021 (3) TMI 27 - CESTAT CHENNAI ], the Hon ble Tribunal has noticed that the question is whether by mere boiling and drying whole betel nut it would merit classification under 2106 90 30 and observed that it is needless to say that the earlier decision of the Authority of Advance Rulings are binding and applicable to the parties to the litigation only. The Hon ble Tribunal has also observed that since the imported goods are betel nuts whole, these would merit classification under Chapter 8. It is concluded that all the six goods placed before me for consideration, i.e. API supari, chikni supari, unflavoured supari, flavoured supari, boiled supari, boiled cut supari merit classification under Chapter 8 of the First Schedule to the Customs Tariff Act, and more precisely, under the Heading 0802 - the said six goods are not classifiable under sub-heading 2106 90 30, as contended by the applicant, since they have not attained the character of preparations of betel nut, which is sine qua non for a goods to be so considered.
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Corporate Laws
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2022 (1) TMI 620
Alleged removal/resignation of the 1st petitioner - validity of resolutions passed at the Board Meetings/General Meetings which have been manipulated by the respondents with respect to shareholding/directorship/vesting themselves with authority - alleged amendment to the Articles of Association - discontinuation of as Director of the first Respondent Company on account of the gross breach of fiduciary duty - validity of appointment of Respondents second, four to nine as Directors - seeking permanent injunction restraining respondent 2 to 9 from functioning or acting as directors of the first respondent company or holding themselves out as directors of the first respondent company - validity of manipulation in the shareholding of the first respondent - shifting of Registered Office from Sanghinagar to the Corporate office at Hyderabad. HELD THAT:- The dispute in this case arose in the year 2008. The company in this case is an established corporate entity and this dispute will seriously affect its working in the long run. Matter referred for resolution of the dispute in terms of section 89 of the Code of Civil Procedure, 1908 to the new International Arbitration and Mediation Centre (IAMC), Nanakramguda, Hyderabad. List the matter on 28.02.2022.
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2022 (1) TMI 619
Sanction of scheme of arrangement and amalgamation - section 230-232 of Companies Act - HELD THAT:- In view of the fact that all the unsecured creditors of all the applicant- companies have given their consent affidavits, the meetings of the unsecured creditors of all the applicant-companies are hereby dispensed with. Various directions with regard to holding and convening of various meetings issued - directions with regard to issuance of various notices issued. The scheme is approved - application allowed.
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Insolvency & Bankruptcy
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2022 (1) TMI 618
Dissolution of the Corporate Debtor - Section 54 of the Insolvency and Bankruptcy Code, 2016 (1 B Code'), r/w Regulations 44 and 45 of IBBI (Liquidation Process) Regulations, 2016 - HELD THAT:- The Applicant states that no distribution has been made to the stakeholders in the absence of assets available for sale. Further, no unsold property has been distributed to any stakeholder of the CD - the Applicant further states that on 12.05.2020, the applicant has submitted the Second Progress report of liquidation process of the CD, along with the asset memorandum of CD, copy of preliminary report and receipt of submission of preliminary report, copy of public announcement made in the newspapers and copy of progress report. In compliance with the applicable provisions of the Code, final report under Regulation 45 of the IBBI (Liquidation Process) Regulation, 2016 has been annexed along with the present application. It is submitted that no litigations are pending with or threatened against the CD and no other material disputes are lying against the company. All the assets of the CD have been completely liquidated, this Authority in exercise of the powers conferred under Sub-section (2) of Section 54 of the I B Code, 2016, hereby orders the dissolution of the Corporate Debtor - Application allowed.
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2022 (1) TMI 617
Revival of Corporate Debtor - Seeking direction to allow the Applicants a fair opportunity to submit their Resolution Plan and participate in the CIRP - registration as MSME was obtained by the employee - HELD THAT:- It is admitted that MSME Certification was obtained behind the back of the RP and the person who applied for the said registration was never authorised either of board of directors or by the RP. Nowhere in the response, the RP has questioned the basic criteria based on which an enterprise can be registered as an MSME unit and whether the Company is eligible to be registered as MSME Unit at all. Admittedly it is not in dispute that the CIRP in relation to the Corporate Debtor was ordered by this Tribunal vide order dated 13.11.2020 and the Applicant through its employees have obtained the MSME Certificate on 02.12.2020 i.e. much after initiation of the CIRP by this Adjudicating Authority. Once the CIRP has been ordered, the Board of Corporate Debtor stands suspended and the entire management of the Corporate Debtor vest with the RP and hence the act of the Employee acting under the instructions of the suspended Board is viewed seriously by this Tribunal and such practice is required to be deprecated. It is required to be noted that the eligibility of the Corporate Debtor under Section 29A of IBC, 2016 is required to be determined at the time of submission of the Resolution Plan and in the present case it is the case of the Applicant that at the date of submission of the Resolution Plan, they were MSME and as such the ineligibility clause under Section 29A(c) and (h) of IBC, 2016 would not apply to them. This Tribunal feels that the act of an Employee of the Corporate Debtor should not adversely affect the Resolution Process of the Corporate Debtor and in such a circumstances, the RP is directed to ratify the action taken by the person who has applied for the registration under the MSME Act - application disposed off.
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Service Tax
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2022 (1) TMI 616
Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 - Seeking to call for the records and directing the respondents to quash the impugned order - seeking issuance of discharge certificate in form SVLDRS-4 in respect of the arrears payable by the petitioner within a specified time frame - HELD THAT:- In the case in hand, if the attempt made by the petitioner to make the payment on 30.06.2020, being the last date of making the payment has become successful, certainly, the petitioner would have been in a position to get the declaration under the scheme, but in that attempt, the petitioner has failed, even though genuinely that attempt was made by the petitioner. In order to show the bonafide, the next day also, such attempt had been made to make the payment and in fact, the payment has been debited from the account, only after 24 hours, that is, on 02.07.2021, it has been re-credited in the account of the petitioner. All the transactions, which are reflected in the statement of account of the petitioner show that,. the petitioner did make attempt to make the payment as per the scheme, and because of the technical glitches, if the said payment made by the petitioner has not been accepted by the account/website or whatever the E-Governance platform or web portal of the revenue, the blame cannot be put against the petitioner. Therefore, this Court feel that, the request of the petitioner can be reconsidered and hence, the present impugned order, reiterating the reasons stated in this regard once again, despite the direction given by this Court in the earlier round of litigation, cannot be justifiable. The matter is remitted back to the respondent for reconsideration - Petition allowed by way of remand.
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Central Excise
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2022 (1) TMI 615
Refund of education cess and higher education cess - whether the education cess and higher education cess which were paid along with the excise duty was also liable to be refunded along with the central excise duty in terms of exemption notifications? - HELD THAT:- Whereas it is the case of the applicant that issue is covered in view of the earlier judgment of this Court in the case of Modi Rubber Ltd. [ 1986 (8) TMI 60 - SUPREME COURT ] which is rendered by three-Judge Bench of this Court, which is followed in the case of M/s. Unicorn Industries [ 2019 (12) TMI 286 - SUPREME COURT ] by this Court, on the very same issue in this batch of appeals this Court has held that when the duty is exempted the cess which is notified by subsequent Finance Act which is leviable on excise duty also stands exempted. In view of the fact that the earlier judgment in the case of M/s. Unicorn Industries (supra) is rendered by three-Judge Bench of this Court, relying on earlier judgment of this Court in the case of Modi Rubber Ltd. which is also rendered by three-Judge Bench of this Court we are of the view that the present application is required to be considered by a three-Judge Bench. It is also to be noted that notice in the application is also issued by three-Judge Bench of this Court. This application is required to be heard by a Bench of three Judges. Registry to place the papers before the Hon ble Chief Justice and to list this application before three-Judge Bench, after obtaining appropriate directions from the Hon ble Chief Justice.
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CST, VAT & Sales Tax
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2022 (1) TMI 614
Validity of assessment order - copies of documents relied upon by the respondent/Appellate Authority was not furnished despite a specific request, by the appellant - violation of principles of natural justice - HELD THAT:- The grievance of the appellant that failure to furnish the documents relied upon would result in violation of natural justice is well-founded. It has been consistently held that whenever an assessment is made on the basis of certain documents and if a request is made by the assessee, it is incumbent on the Assessing Officer to furnish such copies to enable the assessee to respond to the allegations. The order of assessment dated 28.08.2014 is set aside and the respondent is directed to communicate to the appellant the list of documents available and furnish the copies of such documents which form the basis / relied upon in the order of assessment, at the cost of the appellant - appeal disposed off.
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2022 (1) TMI 613
Validity of Assessment order - Non-furnishing of necessary documents as sought by petitioner - HELD THAT:- By seeking certain documents, without ascertaining the availability or non-availability of such documents, an assessee cannot be permitted to prolong and protract the issues with reference to the Assessment Orders. In this regard, seeking certain clarifications of documents in a calculated manner, there is a possibility of collusion. In such circumstances, all these aspects cannot be gone into by this Court in writ proceedings. However, the fact remains that the petitioner has received four documents, pursuant to the orders of this Court and the said facts are admitted by the petitioner. Thus, certain documents were already furnished and the petitioner is of an opinion that some other documents are also required for the purpose of submitting their objections. By citing these reasons, the petitioner states that unless the documents are furnished, the respondents shall not be allowed to proceed with the assessment. Such a contention deserves no merit consideration. The availability or the nonavailability of the documents with the Department or the facts which all are to be adjudicated before the Appellate Authorities, the Appellate Authority is empowered to call for the records relied on by the Assessment Officer. In the event of availability of documents, the Appellate Authority is within his powers to permit the assessee to peruse the documents or furnish the copy of the same as the case may be. Such an opportunity may be available to the petitioner, to peruse the documents or receive the copies, by filing an appeal before the Appellate Authority. The High Court need not entertain a writ proceedings with reference to such disputed facts between the parties. The petitioner is expected to exhaust the appeal remedy. The appeals are not filed and the practice of filing writ petitions in order to avoid pre-deposit cannot be encouraged. The statutory remedy is to be exhausted by the aggrieved person - Petition disposed off.
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Indian Laws
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2022 (1) TMI 612
Dishonor of Cheque - existence of legally enforceable debt or not - service of statutory legal notice - allegation is that the impugned cheque was stolen by the respondent when he was working as Supervisor under the petitioner - HELD THAT:- Admittedly, no action has been taken by the petitioner on the allegation that the respondent had stolen any of his cheques. Such an action has not been taken even after the filing of his complaint. Though it is correct that the rebuttal proof can be through preponderance of probability, the probability cannot be presumed from mere suggestion put by the accused during his cross examination, PW1. Even if the accused does not subject himself for examination, the improbabilities can also be explored from the evidence and materials of the complainant. The simple contention of the complainant is that he had lent the sum of ₹ 4,00,000/- to the petitioner for his business needs and he managed to arrange the money from the sale proceeds kept in the hands of his father. The complainant produced the copy of the sale deed dated 07.11.2002 and that would show that the property was sold on the said date for a valuable consideration. Prima facie proof is shown by the respondent/complainant to show that he had the background to lend a sum of ₹ 4,00,000/- to the petitioner/accused. The initial presumption coupled with the supporting evidence will strengthen the case of the complainant and make the initial presumption culminated into the conclusive proof, in the absence of any contrary proof. But the petitioner/accused had not produced any materials to demolish the above proof offered by the petitioner. In the said circumstances, it has to be concluded that the petitioner had not rebutted the evidence of the respondent/complainant or falsified it. Whether the respondent has not sent the statutory legal notice in the manner known to law and complied with the mandatory requirements before filing the complaint? - HELD THAT:- Once the cheque is dishonoured for insufficient funds, the complainant has to necessarily send a legal notice in compliance of Section 138(b). The complainant has chosen to send the notice to the address known to him in which the accused was residing and the same address was shown as his address in this Criminal Revision Case also and that proves that the petitioner continues to live there but some how evaded to receive notice. The notice returned for the reason that addressee not found cannot be held against the respondent - the contentions of the learned counsel for the petitioner/accused that the respondent has not complied the mandatory requirement contemplated under Section 138(b) of the Negotiable Instruments Act, cannot be agreed upon. The learned Trial Judge and the learned First Appellate Judge have correctly appreciated the materials on record in a right perspective and arrived at the conclusion that the accused is guilty for the offence under Section 138 of Negotiable Instruments Act - Criminal Revision Case is dismissed.
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2022 (1) TMI 611
Dishonor of Cheque - insufficiency of funds - legally enforceable debt or not - acquittal of the accused - sufficiency of service of notice or not - rebuttal of presumption u/s 139 of NI Act - HELD THAT:- In the instant case, the postal receipt has been filed by the appellant and information received under the Right to Information Act, 2005 has also been filed by the appellant relating to postal receipts, by which the Postal Department had informed that the item had been delivered on the respondent. In his affidavit given in the examination-in-chief, the appellant has deposed about these facts. It categorically establishes that, in fact, service had been sufficient on the respondent. There is no doubt about it. While referring to the complaint and the statement of the appellant, learned counsel for the respondent submits that nowhere, the appellant had revealed the date, time when the loan was taken by the respondent and place, where the loan was taken by him. Based on it, it is submitted that non-disclosure of date, time and place where the loan taken infers that there was no legally enforceable debt or other liability - This Court is of the view that this argument does not merit acceptance. The explanation to Section 138 of the Act, clarifies the words debts or other liability as used in Section 138 of the Act and according to it, the debts and other liability means legally enforceable debts or other liability. Even if particular date, time and place is not mentioned in the complaint or at any place, it does not mean that the respondent was not under any debt or legally enforceable liability. The offences under Section 138 of the Act, in fact, though is criminal in nature, but, it has an element of enforcing negotiable instruments to ensure free and fair transactions. It has an element of civil liability, as well. Admittedly, both the parties had their business dealings. It is also admitted that, in fact, in the past, the respondent had paid certain amounts to the appellant - As stated, in the instant case, parties were in business dealing. They were dealing in the property. They have transactions in the past, as well. Therefore, this Court is of the view that the interest of justice would be served, if a fine of ₹ 6 Lacs is imposed on the respondent. Out of the fine, ₹ 4 Lacs should be paid to the appellant as compensation. In default of payment of fine, the respondent shall undergo simple imprisonment for a period of six months. The respondent Sohan Lal Kala is convicted under Section 138 of the Act. A fine of ₹ 6 Lacs is imposed on the respondent Sohan Lal Kala under Section 138 of the Act. In default of payment of fine, the respondent shall undergo simple imprisonment for a period of six months. Out of the fine deposited by or recovered from the respondent, ₹ 4 Lacs shall be paid to the appellant as compensation - appeal allowed - decided in favor of appellant.
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