TMI Tax Updates - e-Newsletter
April 26, 2024
Case Laws in this Newsletter:
GST
Income Tax
Customs
Insolvency & Bankruptcy
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
Highlights / Catch Notes
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GST:
Validity Of Order passed u/s 73 - cryptic order - The High Court found merit in the petitioner's arguments regarding the inadequacy of the impugned order. It observed that the proper officer had failed to consider the detailed replies furnished by the petitioner, instead issuing a generic finding of no proper reply/explanation. The Court emphasized that the proper officer's duty was to assess the replies on their merit before forming an opinion. By neglecting to do so, the officer had not fulfilled this obligation and had not applied their mind to the petitioner's submissions. The matter was remitted to the proper officer for re-adjudication.
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GST:
Validity Of Order passed u/s 73 - Denial of ITC with respect to the suppliers whose GST registration has been cancelled retrospectively - The petitioner sought the right of cross-examination of witnesses and documents but was denied due to time constraints. Additionally, the petitioner raised the issue of a coercive deposit of Rs. 20 Lakhs during a search and survey, which was not addressed in the impugned order. The High Court acknowledged the potential prejudice caused by the denial of cross-examination and directed the proper officer to reconsider both the ITC denial and the refund of the coercive deposit. The Court left all rights and contentions open and allowed the petition with a limited order of remit to the proper officer.
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GST:
Demand of late fee u/s 47(1) of the CGST / SGST Act - delay in filing of returns - Amnesty Scheme - GST portal does not support payment of late fee for late filing GSTR-9C - The High court ruled that late fees are leviable up to the late filing of the GSTR-9 return and not the GSTR-9C reconciliation statement. - The court noted the introduction of an amnesty scheme by the Central Government, which waived late fees in excess of Rs. 10,000 for non-filers of returns for certain financial years. The petitioner had filed their annual return before the commencement of this scheme, and thus argued for the benefit of the notifications. The court agreed with this contention and found the notices for non-payment of late fees unjust and unsustainable.
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GST:
Transitional credit - Unutilized amount of Advanced VAT paid - The court found that if the amount of advance tax paid under the VAT regime remained unutilized, it should be allowed to transition to the GST regime u/s 140 of the TNGST Act, 2017. This section clearly allows the transitioning of unutilized VAT and Entry Tax. Citing decisions from the Telangana and Madras High Courts, the judge supported a purposive interpretation of Section 140, which should extend to advance tax paid and unutilized under the previous tax regime.
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Income Tax:
Validity of Reassessment notices issued unsigned - maintainability of writ petition against this issue in HC - The Court noted the petitioner's failure to file objections or comply with the procedure outlined in the aforementioned Supreme Court judgment. It emphasized that the petitioner should have first filed a return of income, sought reasons for the notice, and then filed objections. The Court criticized the petitioner for not following the prescribed procedure before approaching the Court directly. It suggested that the petitioner should have raised the issue of the unsigned notice in its earlier communications with the Department.
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Income Tax:
Unexplained cash credit u/s 68 - The Court highlighted that transactions appeared to be staged to mask the reintroduction of the same funds as fresh capital, which is a common practice in round-tripping schemes. The court criticized the Tribunal for overlooking this critical aspect, emphasizing that the investments were made at an unjustifiably high premium without any real financial rationale, and followed a pattern typical of shell companies. - The High Court set aside the Tribunal’s ruling and restored the decision of the CIT(A), which recognized the transactions as a means of round-tripping funds.
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Income Tax:
LTCG - Receipt of additional amount towards TDR - treatment to receipt of consideration the appellant ceased to be the owner of the property - compensation received for settlement of dispute in respect of allotment of Flat - The amount paid to the appellant for TDR should be considered as payment for the developmental rights, thus qualifying as Long Term Capital Gain (LTCG). The High Court dismisses the Revenue's argument that the appellant ceased to be the owner of the property after receiving consideration. It rules that the appellant's ownership remained intact, and the amount received for additional TDR should be treated as LTCG.
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Income Tax:
Validity of Assessment order u/s 147 r.w.s. 144B - Procedural Irregularities - The Court agreed with the petitioner that the show cause notice appeared to be a draft assessment order under Section 144C. Lack of adherence to procedures under Section 144C rendered the proceedings invalid. The matter was remitted back to the authority concerned for a fresh decision, with a directive to strictly adhere to the law and provide the petitioner with a fair opportunity. The Court acknowledged the petitioner's argument regarding the insufficient time provided for response. Consequently, the impugned order was set aside/quashed, and the matter was remitted back to the authority concerned for a fresh decision in accordance with the law.
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Income Tax:
Condonation of delay - substantial delay of 166 days before ITAT - The appellant argued that the delay in filing the appeal before the ITAT was due to the absence of real-time alerts for notices and orders on the e-filing portal. However, the High Court found no sufficient cause to condone the delay, considering the appellant's history of non-compliance and lack of participation in the assessment proceedings. The Court emphasized the importance of timely and active participation in legal proceedings, dismissing the appeal due to the appellant's lackadaisical approach and habitual defiance of law.
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Income Tax:
Income deemed to accrue or arise in India - Attribution of Profit to permanent establishment (PE) in India - The Tribunal observed that while the Assessing Officer attributed 25% of the profit to the PE in India, only one contract was thoroughly examined, neglecting others. The Tribunal found this attribution to be arbitrary and lacking proper analysis. The estimation of profit rate at 10% was deemed unjustified, especially considering the Assessee's evidence of a lower global profit rate. The Tribunal, therefore, directed a de novo adjudication by the Assessing Officer after considering all relevant factors and providing a reasonable opportunity to the Assessee.
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Income Tax:
Condonation of delay - Delay in filling of an appeal before ITAT - The ITAT observed taht the appeal was delayed by 17 days. The assessee claimed the delay was due to illness, but failed to provide sufficient evidence to support this claim. The lack of participation and cooperation by the assessee throughout the assessment process further weakened their case for condonation of the delay. Considering the lack of a convincing explanation for the delay and the assessee's history of non-cooperation, the ITAT upheld the dismissal of the appeal by the Commissioner of Income-Tax (Appeals) due to non-prosecution.
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Income Tax:
LTCG - Determination of Fair Market Value (FMV) - The Assessing Officer and the Commissioner of Income Tax (Appeals) accepted the fair market value of the property as on April 1, 1981, as calculated by the registered valuer. However, they failed to apply indexation benefits to the cost of acquisition while determining long-term capital gain. The Tribunal observed that the indexed cost of acquisition should have been considered, which would have resulted in long-term capital loss, as it exceeded the sale consideration.
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Income Tax:
Rejection of application for registration u/s 12AA(1)(ac)(iii) r.w.s 80G(5) - The Appellate Tribunal observed that the appellant was granted provisional registration under section 12AB of the Act, valid until a specific assessment year. It was determined that the application for final registration could be made at least six months prior to the expiry of provisional registration or within six months of activity commencement, whichever is earlier. The Tribunal held that there was no bar on the appellant applying before the six-month period from the expiry of provisional registration. The Tribunal set aside the rejection and directed reconsideration of the application for final registration.
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Income Tax:
Estimation of income - bogus purchases - The Tribunal recognized the appellant's unique case, where only alleged bogus purchases of diamonds were evident. Referring to past assessments, the Tribunal deemed it reasonable to restrict the addition to 3% of the alleged bogus purchases, in line with previous decisions.
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Income Tax:
Penalty u/s 270A - allegation of misreporting as per section 270A(9) - Penalty @200% in respect of excess claim of depreciation - The tribunal found that the depreciation claims, although excessive, were based on a bona fide belief stemming from previous practices. Therefore, it did not constitute a deliberate misreporting. The tribunal agreed that the issue was debatable and thus, did not automatically translate to misreporting or underreporting of income. Ultimately, the tribunal decided to quash the penalties, ruling in favor of the assessee in both appeals based on the merits of the arguments presented and the procedural flaws highlighted during the appeal process.
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Income Tax:
Delay in filling appeal before ITAT - delay of 105 days - The Tribunal exercised its discretion in condoning the delay, emphasizing the importance of accepting explanations for delays to advance substantial justice. Considering the appellant's circumstances, including their remote location and irregular email checking habits, the Tribunal accepted the explanation provided for the delay.
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Income Tax:
Retraction of statement given during survey - evidentiary value of statement recorded u/s 131 - Despite the retraction, the initial findings of the CIT(A) were largely upheld, as the tribunal found no concrete evidence supporting the assessee's claims of coercion, aside from the letter of retraction and an affidavit. The assessee was found to have unexplained excess cash and stock discrepancies. The Tribunal noted the lack of complete physical verification of stock during the survey but ultimately confirmed the addition, adjusting the gross profit rate applied from 10% to 8.02%, acknowledging some merit in the assessee's submissions regarding the survey’s conduct.
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Income Tax:
Additions on the basis of material seized during the search in case of third party without adhering to the provisions of section 153C - The tribunal found that the AO had improperly used documents seized from third parties to make additions to the assessee's income. This was ruled inappropriate and beyond the scope of the authority provided under the Income Tax Act, as the procedures laid out under Section 153C (dealing with income or assets discovered in the course of search operations that belong to persons other than the searched party) were not followed.
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Customs:
Refund of EDD - Period of limitation - Appellant unaware of finalisation of bills of entry - The Appellate Tribunal notes that neither the original authority nor subsequent communications mentioned the actual date of finalization of the bills of entry. This absence of crucial information places the burden on the revenue to prove the date of communication of the Order in Original. Due to the lack of evidence from the revenue establishing the actual date of communication of the Order in Original, the Tribunal finds no grounds to support the claim that the appellant's application for refund was time-barred.
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Customs:
Enhancement of value - old and used worn clothing, completely fumigated - Confiscation - The Tribunal referred to a previous case where it was observed that Section 111(m) should not be invoked if proceedings initiated against imports commenced before the filing of bills of entry. Confiscation under Section 111(d) was deemed appropriate for the import of restricted goods without the necessary import license. Considering various issues and submissions, and the failure to comply with certain directions in a remand, the Tribunal upheld the confiscation but reduced the redemption fine and penalty.
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Customs:
Classification of imported goods - Optical Transceiver - Benefit exemption/ duty concession - The tribunal noted that similar goods had been classified in past judgments under a different tariff heading that would allow for the claimed exemptions. Ultimately, the tribunal determined that the goods were eligible for the duty concession under the different tariff heading as they were parts of larger optical transport equipment, not complete equipment themselves.
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Customs:
Valuation of imported Goods - Allowance of discount of 25% to appellant by foreign supplier - related party transaction - remittances made higher than the invoice price or not - The Tribunal criticized the department for disregarding crucial evidence, such as email communications and an amended agreement explicitly stating the 25% discount. The Tribunal found the department's dismissal of the email as an afterthought unjustified, especially considering the continuous litigation and the subsequent production of the amended agreement. Ultimately, the Tribunal ruled in favor of the appellant, acknowledging the validity of the 25% discount.
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Indian Laws:
Food Safety and Standards - Selling sugar boiled confectionery with inadequate labeling - Misbranding - The courts upheld the conviction based on evidence that the appellants' products were misbranded, as they did not comply with labeling requirements specified under Rule 32 of the Act. - The Supreme Court modified the sentence for one of the appellants, considering factors such as age and the passage of time since the offense. The imprisonment term was converted to a fine, aligning with precedents where reduced punishments were applied retrospectively.
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Indian Laws:
Dishonour of cheque - vicarious liability - liability of group companies - liability common Directors of the group, namely, Right Choice Group of Companies - Lifting of the corporate veil - The High court highlighted that for vicarious liability to apply, specific allegations and evidence pointing to the role and control of the individuals over the company’s operations are necessary. The judgment delved into the principle of the corporate veil, stating that mere affiliation of companies under the same group does not suffice to establish liability unless it is shown that they function as one economic entity. The court declined to lift the corporate veil merely based on group association and common branding in marketing materials.
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IBC:
Initiation of CIRP - Maintainability of application filed u/s 9 of the Code - Respondent being a government company (PSU) is out of purview of the Code or not - The tribunal did not accept the argument that being a government entity exempted the respondent from insolvency proceedings, especially since operational engagements like the ones in question fell within the ambit of the Code. - Further, the tribunal noted that the arbitration proceedings under the MSME Act initiated by the appellant after the CIRP application did not constitute a pre-existing dispute that would affect the insolvency proceedings.
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IBC:
CIRP - Validity of deed of assignment of lease - Authority of RP to Issue Inspection Notice - The Tribunal found that there was a significant dispute regarding the assignment of the lease to the corporate debtor. The absence of written intimation to the appellant about the assignment was a critical point, leading to the conclusion that the appellant was not adequately informed and that the alleged assignment was therefore disputed. - The Appellate Tribunal noted that while the RP has broad powers to manage and preserve the assets of the corporate debtor, these powers do not extend to properties over which the debtor has no legitimate claim or possession. Since the lease had expired and there was no valid assignment, the property did not constitute a part of the corporate debtor’s estate. - The NCLAT set aside the lower court’s decision, directing the RP to withdraw the notice for inspection and cease any dealings with the property.
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IBC:
Rejection of Section 7 Application - NPA - Corporate Debtor unable to de-risk the live BGs within the time allowed - A settlement was reached between the parties, where the Corporate Debtor agreed to pay a certain amount and de-risk live Performance Bank Guarantees (PBGs) within specified timelines. - The Appellate Tribunal observed that the entire settlement amount had been paid by the Corporate Debtor within the specified timeline. The NCLAT acknowledged the Corporate Debtor's efforts to de-risk BGs, attributing any shortcomings to the Financial Creditor's refusal to accept CBGs or counter-guarantees. Since the BGs were not invoked, the Tribunal ruled that no debt had become due, and failure to de-risk BGs did not constitute default under the IBC. - In light of the above findings, the Appellate Tribunal directed the Corporate Debtor to deposit a specified amount with the Financial Creditor to clear any outstanding liabilities related to live PBGs.
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Service Tax:
Extended period of Limitation - suppression of facts or not - The Tribunal observes that the dispute revolves around the classification of taxable services, which involves the interpretation of statutory provisions. It finds that there was no suppression of facts by the appellant, as they regularly filed returns and cooperated with the authorities. - The Tribunal holds that the demand for service tax beyond the normal period of limitation is not sustainable. Thus, it sets aside the demand under the category of 'supply of tangible goods service'.
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Service Tax:
Refund of CENVAT Credit - Discretion Power of the refund sanctioning authority - Considering Rule 9 of the CENVAT Credit Rules, 2004, the Tribunal emphasized the importance of accurately reflecting the description of goods or taxable services in the duty paying document. It highlighted that the discretion to allow CENVAT Credit lies with the refund sanctioning authority, subject to satisfaction regarding receipt and accounting. The Tribunal found that the Assistant Commissioner had exercised discretion judiciously in denying the refund, as evidenced by the analysis provided in the order. It concluded that there was no irregularity in the decision to reject the refund, which was confirmed by the Commissioner (Appeals).
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Central Excise:
CENVAT Credit - Input service distribution (ISD) - Distribution of credit by the M/s. Parle Biscuit Private Ltd. i.e. ISD to the appellant, a contractual manufacturer/job worker - The Tribunal concluded that the distribution of credit to job workers was indeed permissible even before 01.04.2016. It based its decision on the interpretation of Rule 7, noting that the term "its manufacturing units" could encompass outside manufacturing units or job workers, supported by the Registration Exemption Notification of 2001.
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Central Excise:
SSI Exemption - clubbing of clearances of four units - dummy unit created for the purpose of claiming benefit of SSI exemption - The Tribunal found that each unit had its own separate existence with distinct proprietors, locations, registrations, and financial accounts. Despite common management and workers, there was no evidence of financial flowback or mutual interest. Therefore, clubbing the clearances of the units was deemed unjustified, and the benefit of SSI exemption was upheld.
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VAT:
Classification of Nylon Chips - After detailed consideration of various definitions of "Plastics," including references from technical sources and international organizations, the High court concluded that Nylon Chips fell under the category of "Plastic Granules" as per Entry 83 of Schedule II(B) of the Act. Therefore, the tax liability on Nylon Chips was determined to be in accordance with this classification and not under the unclassified category.
Articles
Notifications
Circulars / Instructions / Orders
News
Case Laws:
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GST
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2024 (4) TMI 1005
Cancellation of GST Registration retrospectively - closure of business - Defective Show Cause Notice - HELD THAT:- We notice that Show Cause Notice and the impugned order are also bereft of any details. Accordingly, the same cannot be sustained. Neither the Show Cause Notice, nor the order spell out the reasons for retrospective cancellation. It is important to note that, according to the respondent, one of the consequences for cancelling a taxpayer s registration with retrospective effect is that the taxpayer s customers are denied the input tax credit availed in respect of the supplies made by the tax payer during such period. Although, we do not consider it apposite to examine this aspect but assuming that the respondent s contention in required to consider this aspect while passing any order for cancellation of GST registration with retrospective effect. Thus, a taxpayer's registration can be cancelled with retrospective effect only where such consequences are intended and are warrant. In view of the above that Petitioner does not seek to carry on business or continue the registration and an application for cancellation of registration appears to be filed, the impugned order dated 01.01.2021 modified to the limited extent that registration shall now be treated cancelled with effect from 30.04.2019 i.e., the date from which petitioner sought cancellation of GST registration. Petition is accordingly disposed of in the above terms.
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2024 (4) TMI 1004
Validity of Order passed Ex-Parte - No opportunity of personal hearing - typographical error the on date of hearing - Violation of principles of natural justice - HELD THAT:- In the instant case, respondents decided to give petitioner an opportunity of hearing and accordingly, as per the respondents, fixed a date of 18.12.2023 for a personal appearance. Admittedly no notice for the said date was either sent or delivered to the petitioner. Consequently, petitioner was prejudiced, inasmuch as, petitioner could not be present at the time of personal hearing and the case was decided in his absence adversely. Consequently, we are of the view that the impugned order dated 28.12.2023 cannot be sustained and is liable to be set aside and the show cause notice restored on the file of the Adjudicating Authority. Thus, the impugned order dated 28.12.2023 is set aside. The matter is remitted to the proper Officer to re-adjudicate the show cause notice in accordance with law. Petition is disposed of in the above terms.
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2024 (4) TMI 1003
Rejection of refund application - unutilised input tax credit - Without following the mandate of circular Circular No.135/05/2020 - GSTR 1, GSTR 3B and GSTR 2A returns does not match with GSTR Returns - HELD THAT:- The petitioner asserts that all relevant documents, including invoices raised by the supplier and invoices issued by the petitioner in respect of outward supplies were submitted. The respondent should have examined the application in accordance with Section 54 of applicable GST enactments, the rules framed thereunder and the Circular referred to above. Since such exercise has not been undertaken properly, the matter requires reconsideration. Thus, the impugned order is set aside and the matter is remanded to the respondent for reconsideration. The petitioner is permitted to submit additional documents within a period of three weeks from the date of receipt of a copy of this order. Upon receipt thereof, the respondent is directed to provide a reasonable opportunity to the petitioner, including a personal hearing, and thereafter issue a fresh order within two months from the date of receipt of additional documents from the petitioner. The Writ Petition is disposed of on the above terms. There shall be no order as to costs.
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2024 (4) TMI 1002
Validity Of Order passed u/s 73 - Proper Officer not applied his mind - excess claim Input Tax Credit [ ITC ] - demand - Penalty - HELD THAT:- Perusal of the Show Cause Notice dated 24.09.2023 shows that the Department has given separate headings i.e., excess claim Input Tax Credit [ ITC ]; scrutiny of ITC availed on reverse charge; ITC to be reversed on non-business transactions exempt supplies; and under declaration of ineligible ITC. To the said Show Cause Notice, a detailed reply was furnished by the petitioner giving disclosures under each of the heads. The observation in the impugned order dated 30.12.2023 is not sustainable for the reasons that the reply dated 17.10.2023 filed by the Petitioner is a detailed reply with supporting documents. Proper Officer had to at least consider the reply on merits and then form an opinion. He merely held that the reply is unsatisfactory, which ex-facie shows that Proper Officer has not applied his mind to the reply submitted by the petitioner. Further, if the Proper Officer was of the view that any further details were required, the same could have been specifically sought from the Petitioner. However, the record does not reflect that any such opportunity was given to the Petitioner to clarify its reply or furnish further documents/details. Thus, the impugned order dated 30.12.2023 cannot be sustained, and the matter is liable to be remitted to the Proper Officer for re-adjudication. Petition is disposed of in the above terms.
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2024 (4) TMI 1001
Validity Of Order passed u/s 73 - cryptic order - input tax credit wrongly availed - demand - Penalty - No opportunity to clarify reply or furnish further documents/details - HELD THAT:- Perusal of the Show Cause Notice dated 30.09.2023 shows that the Department has given reasons under separate headings i.e., taxpayer has availed the more ITC as mentioned above in GSTR-3B in compression to the ITC available in GSTR-2A; short payment of tax in compression GSTR-1; and input tax credit has been wrongly availed and utilized by the taxpayer. To the said Show Cause Notice, detailed replies were furnished by the petitioner giving disclosures under each of the heads. The observation in the impugned order dated 30.12.2023 is not sustainable for the reasons that the replies dated 26.10.2023 and 06.11.2023 filed by the Petitioner are detailed replies along with supporting documents. Proper Officer had to at least consider the replies on merit and then form an opinion. He merely held that that no proper reply/explanation has been received from the taxpayer, without dealing with the same, which ex-facie shows that Proper Officer has not applied his mind to the replies submitted by the petitioner. the impugned order dated 30.12.2023 cannot be sustained, and the matter is liable to be remitted to the Proper Officer for re-adjudication. Accordingly, the impugned order dated 30.12.2023 is set aside and the matter is remitted to the Proper Officer for re-adjudication. Petitioner may file a further reply to the Show Cause Notice within a period of 30 days from today. Thereafter, the Proper Officer shall re-adjudicate the Show Cause Notice after giving an opportunity of personal hearing and shall pass a fresh speaking order in accordance with law within the period prescribed u/s 75 (3) of the Act. Petition is disposed of in the above terms.
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2024 (4) TMI 1000
Cancellation of GST registration retrospectively - limitation - Defective Show Cause Notice - No opportunity provided to object - HELD THAT:- We notice that the Show Cause Notice and the impugned order are bereft of any details. Accordingly, the same cannot be sustained. Neither the Show Cause Notice, nor the order spell out the reasons for retrospective cancellation. It is important to note that, according to the respondent, one of the consequences for cancelling a taxpayer s registration with retrospective effect is that the taxpayer s customers are denied the input tax credit availed in respect of the supplies made by the tax payer during such period. Although, we do not consider it apposite to examine this aspect but assuming that the respondent s contention in required to consider this aspect while passing any order for cancellation of GST registration with retrospective effect. Thus, a taxpayer's registration can be cancelled with retrospective effect only where such consequences are intended and are warranted. In view of the facts that Petitioner does not seek to carry on business or continue with the registration, the impugned order dated 02.12.2022 is modified to the limited extent that registration shall now be treated as cancelled with effect from 16.10.2020 i.e., the date when Sh. Mohinder Mohan Singh passed away. Petitioner shall make the necessary compliances as required by Section 29 of the Central Goods and Services Tax Act, 2017. Petition is accordingly disposed of in the above terms.
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2024 (4) TMI 999
Validity of an order u/s 83 - Seizure of the outward movement of funds from the bank account - Bank not permitting the operation - HELD THAT:- In view of Section 83 (2) of the Act, the life of an order of provisional attachment is only one year. In the instant case, the impugned communication is dated 14.08.2019 and a period of one year has elapsed from the issuance of the said communication. Consequently, the impugned order dated 14.08.2019 has ceased to be effective and cannot be any more implemented either by the respondents No. 1 and 2 or the HDFC Bank i.e., respondent No. 3. Accordingly, it is declared that order dated 14.08.2019 ceases to have effect. Consequently, respondent No. 3, HDFC Bank henceforth cannot restrain operation of the bank account of the petitioner based solely on the basis of order dated 14.08.2019. Petition is accordingly disposed of in the above terms. It is, however, clarified that this order would be without prejudice to any other order of provisional attachment issued by either respondents No. 1 and 2 or any other authority communicated to the HDFC Bank. In case any such order is communicated to the HDFC Bank, the Bank shall give due credence to the same irrespective of this order. Learned counsel for petitioner submits that petitioner has till date not been communicated any other order of attachment issued either by respondents No. 1 and 2 or any other authority and reserves the right of the petitioner to take appropriate proceedings against any order, if so communicated. Dasti under signature of the Court Master.
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2024 (4) TMI 998
Validity Of Order-in-original - application seeking refund of tax - Period of limitation - Not fulfilled the mandate issued under circular - Payment of tax under the wrong head - HELD THAT:- In terms of the clarification issued by circular dated 25.09.2021, petitioner could have filed an application before expiry of two years from the date of payment of tax under the correct head i.e. before expiry of two years from 19.08.2019. However, the circular further clarifies that in cases where payment was made under the correct head prior to issuance of the circular, a further period of two years would be available from the date of circular, which implies that any application seeking refund filed on or before 23.09.2023 in respect of taxes paid under the correct head prior to 24.09.2021 would be considered within time. In the subject case, petitioner filed the first application seeking refund on 11.05.2020, which was rejected on 29.06.2020 and the appeal against the said order was also dismissed on 30.06.2021 i.e. prior to the issuance of the clarification by the circular dated 25.09.2021. After the issuance of the circular, petitioner filed a second application on 14.07.2022, which has been rejected by the order-in-original impugned before the Appellate Authority whose order is impugned before us. Clearly, both the refund applications filed by the petitioner (one on 11.05.2020 and other on 14.07.2022) are covered by the circular dated 25.09.2021 and were within limitation. Consequently, the Appellate Authority has committed an error in not noticing the said circular and rejecting the appeal holding that the application was beyond time. Accordingly, said order is not sustainable and is set aside. The appeal is restored to its original number on the record of the Appellate Authority. The Appellate Authority is directed to consider and dispose of the appeal on merits in accordance with law. Petition is allowed in the above terms.
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2024 (4) TMI 997
Validity of adjudication order - without any application of mind - Rejection of application seeking refund - Show Cause Notice issued by an incompetent officer - HELD THAT:- We are of the view that the course adopted by the Appellate Authority is not sustainable for the reason that once the Appellate Authority comes to the conclusion that the Show Cause Notice was issued by an officer who was not competent; reply was also considered by an incompetent authority and the Competent Authority had not applied its independent mind, the Appellate Authority could not have assumed original jurisdiction and proceeded further with the matter. The Appellate Authority could have only quashed the Show Cause Notice and the proceedings emanating therefrom while reserving the right of the Proper Officer to initiate appropriate proceedings in accordance with law. In view of the above and particularly in view of the fact that the course adopted by the Appellate Authority is not acceptable in law, the impugned order dated 17.04.2023 is set aside to the extent that it decides the claim of the petitioner on merits. The finding returned by the Appellate Authority that the Show Cause Notice has been issued by an incompetent authority and the adjudication order has been passed without any application of mind are not interfered with. The sequitur to that is that the Show Cause Notice dated 25.11.2021 adjudication order dated 14.12.2021 are not sustainable in law and are consequently set aside. Petition is allowed in the above terms. The appropriate authority shall consider the application of the petitioner seeking refund for the period April, 2022 to June, 2022 expeditiously in accordance with law.
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2024 (4) TMI 996
Cancellation of GST Registration retrospectively - Defective Show Cause Notice - No opportunity for personal hearing - HELD THAT:- We notice that Show Cause Notice and the impugned order are also bereft of any details. Accordingly, the same cannot be sustained. Neither the Show Cause Notice, nor the order spell out the reasons for retrospective cancellation. It is important to note that, according to the respondent, one of the consequences for cancelling a taxpayer s registration with retrospective effect is that the taxpayer s customers are denied the input tax credit availed in respect of the supplies made by the taxpayer during such period. Although, we do not consider it apposite to examine this aspect but assuming that the respondent s contention in required to consider this aspect while passing any order for cancellation of GST registration with retrospective effect. Thus, a taxpayer's registration can be cancelled with retrospective effect only where such consequences are intended and are warrant. In view of the fact that the Petitioner does not seek to carry on business or continue the registration and since no application for cancellation of registration appears to have been filed, the impugned order dated 27.12.2021 is modified to the limited extent that registration shall now be treated cancelled with effect from 02.09.2021 i.e., the date of the issue of the Show Cause Notice. Petition is accordingly disposed of in the above terms.
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2024 (4) TMI 995
Validity Of Order passed u/s 73 - demand in respect of denial of ITC to the petitioner with respect to the suppliers whose GST registration has been cancelled retrospectively - Denial of the right of cross-examination - Refund of coercive deposit of Rs 20 Lakhs during search and survey proceedings - HELD THAT:- Denial of the right of cross-examination can cause grave and serious prejudice to an entity. In the instant case, the proper officer has himself noticed that the proper officer has intended to summon the said person, however on account of paucity of time declined to do so. Such a course cannot be countenance for the same caused grave prejudice to the person against whom the said statement or document is sought to be relied upon. Accordingly, in view of the fact that the proper officer himself intended to summon the said witnesses, however did not do so on account of paucity of time, the impugned order to the limited extent, of the denial of input credit tax in respect of cancelled dealers, cannot be sustained and is accordingly set aside. The Show Cause Notice is remitted to the proper officer for re-adjudication on the said aspect after summoning the said dealers/suppliers for the purpose of cross examination and giving an opportunity of hearing to the petitioner. Since the contention of the petitioner is that the deposit was not voluntary and was under coercion and a request for refund was made to the proper officer, the proper office should have considered the same in accordance with law. Accordingly, while reconsidering the issue with regard to denial of input tax credit for cancelled dealer, the proper officer shall also consider the request of the petitioner for refund of the said amount of Rs. 20 lacs in accordance with law keeping in view the various pronouncements rendered by this Court with regard to involuntary deposit. It is clarified that this Court has neither considered nor commented upon the nature of deposit made by the petitioner i.e. as to whether the same was voluntary or involuntary and also with regard to the contention of the respondent that even if the amount is held to be an involuntary deposit, the same is liable to be adjusted against a demand that is liable to be created against the petitioner. All rights and contentions of the parties are left open. Petition is accordingly petition is allowed in the above terms with a limited order of remit to the proper officer as noticed hereinabove.
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2024 (4) TMI 994
Cancellation of the GST registration retrospectively - Defective Show Cause Notice, not specify any cogent reason - No opportunity of personal hearing - HELD THAT:- It may be noticed that the Show Cause Notice dated 01.02.2023 and the impugned order dated 10.02.2023 are also bereft of any details. On the same identical ground a showcase notice was issued on 19.02.2020 and registration cancelled on 16.03.2020. Thereafter the same was revoked by order dated 30.01.2023 and immediately thereafter another notice has been issued within two days on the same ground. There is no reference to the earlier proceedings or any change in circumstances. Accordingly, the Show Cause Notice dated 01.02.2023 and the impugned order dated 10.02.2023 cannot be sustained and they also do not spell out the reasons for retrospective cancellation. It is important to note that, according to the respondent, one of the consequences for cancelling a taxpayer s registration with retrospective effect is that the taxpayer s customers are denied the input tax credit availed in respect of the supplies made by the tax payer during such period. Although, we do not consider it apposite to examine this aspect but assuming that the respondent s contention in required to consider this aspect while passing any order for cancellation of GST registration with retrospective effect. Thus, a taxpayer's registration can be cancelled with retrospective effect only where such consequences are intended and are warranted. In view of the fact that Petitioner does not seek to carry on business or continue under the said registration, the impugned order dated 10.02.2023 is modified to the limited extent that registration shall now be treated as cancelled with effect from 19.02.2020 i.e., the date of issuance of the first Show Cause Notice. Petitioner shall make the necessary compliances as required by Section 29 of the Central Goods and Services Tax Act, 2017. It is clarified that Respondents are also not precluded from taking any steps for recovery of any tax, penalty or interest that may be due in respect of the subject firm in accordance with law including retrospective cancellation of the GST registration after giving a proper show cause notice and an opportunity of hearing. Petition is accordingly disposed of in the above terms.
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2024 (4) TMI 993
Demand of late fee u/s 47(1) of the CGST / SGST Act - delay in filing of returns - Amnesty Scheme - GST portal does not support payment of late fee for late filing GSTR-9C - date of filing of the GSTR-9C - HELD THAT:- From the reading of the amended Section 44, it would be relevant to note that two key changes have been made by the Finance Act, 2021 with effect from 01.08.2021 i.e Section 35(5) CGST / SGST Act stands omitted, Section 44 of the CGST / SGST stands substituted. Form GSTR-9C becomes applicable to taxpayers with an annual aggregate turnover of more than Rs. Five Crores. CA/ CMA certification stands removed from financial years 2020-2021. With effect from 01.08.2021, taxpayers are now required to self-certify a voluntary reconciliation statement and file it with the tax authorities on or before 31st December of the year following the relevant financial year. The format of Form GSTR-9C has been modified to support self-certification. It is evident from amended Section 44 which provides that the taxpayer shall furnish an annual return which may include a self-certified reconciliation statement, with the audited annual financial statement. It is not in dispute that the GST portal does not support payment of late fee for late filing GSTR-9C. The GST portal enables to charge late fee for GSTR-9 only. The other returns for which the late fee is collected are GST 3B (monthly return) GSTR 4 (annual return of composition levy) GSTR-5 (return for non-resident taxable person), GSTR-5A (summary return reporting OIDAR service from outside India made to non-taxable persons in India), GSTR-6 (monthly return by input service distributor), GSTR-7 (returns for persons deducting TDS), and GSTR-8 (monthly returns for e-commerce operators). Annual return GSTR-9 filed without 9C may be deficient attracting general penalty. However, late fee cannot be made applicable for regularising the GSTR-9 by filing GSTR-9C. The Government itself has waived late fee under the two notifications Nos. 7/2023 dated 31.03.2023 and 25/2023 dated 17.07.2023 in excess of Rs. 10,000/-, in case of non-filers there appears to be no justification in continuing with the notices for non-payment of late fee for belated GSTR-9C, that too filed by the taxpayers before 01.04.2023, the date on which one time amnesty commences. Thus, the notices are unjust and unsustainable to the extent it sought to collect late fee for delay in filing GSTR-9C. However, it is made clear that the petitioners will not be entitled to claim refund of the late fee which has already paid by them over and above Rs. 10,000/- With aforesaid directions, all these writ petitions stand allowed.
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2024 (4) TMI 992
Input tax credit - transitional credit - Unutilized amount of Advanced VAT paid - transitional arrangements for input tax credit - Section 140 of the CGST / Telangana GST Act, 2017 - HELD THAT:- If the amount of advance tax had remained un-utilised under the VAT or under the TNVAT Act, 2006, it has to be allowed to be transitioned u/s 140 of the TNGST Act 2017. The language of Section 140 (1) of the TNGST Act, 2017 makes it clear that any amount of Value Added Tax and Entry Tax remaining un-utilized in the return shall be allowed to be transitioned and such a registered person is entitled to take credit of such amount in his electronic credit ledger. Therefore, there is no scope for denying such amount which was transited u/s 140 of the TNGST Act, 2017. Thus, no reasons to sustain the impugned order. Therefore, the impugned order passed by the respondent in GSTIN stands quashed. Accordingly, the Writ Petition stands allowed. No costs. Consequently, the connected miscellaneous petition is closed.
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2024 (4) TMI 952
Validity Of Order passed by Joint Commissioner of State Tax - No opportunity of hearing - directed to pay / reverse the alleged ITC claimed - HELD THAT:- Admittedly, the impugned order has been passed after scrutiny of returns u/s 61 of the Act, 2017 and it has been passed u/s 73 of the Act, 2017. Under the Act, 2017, there is specific provision for filing appeal before the appellate authority, if there is any grievance to the assessee from the impugned order, but without preferring appeal, the petitioner has directly approached before this Court invoking extraordinary jurisdiction of this Court. Since there is already alternative efficacious remedy is available to the petitioner to file appeal against the impugned order, hence, I do not feel inclined to entertain this petition. Accordingly, the writ petition is hereby dismissed reserving liberty in favour of the petitioner to challenge the impugned order before the appropriate authority in accordance with law.
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Income Tax
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2024 (4) TMI 991
Reopening of assessment u/s 147 - new notice issued rather than orders to be passed u/s 148A(d) - validity of the AO s action in issuing the notice dated 23rd June 2022 - Whether contents of notice dated 23rd June, 2022 is distinct from the reasons to believe dated 27th March, 2021? - As decided by HC [ 2022 (9) TMI 105 - DELHI HIGH COURT] a perusal of the notice dated 23rdJune, 2022 and impugned order dated 22nd July, 2022 shows that as per the AO the details of the transaction which form the basis of the notices dated 19th April, 2021 and 23rd June, 2021 are same. Pertinently, the petitioner has not offered any explanation for the transaction(s) entered with M/s Subhshree Financial Management Pvt. Ltd. Limited in the relevant financial year in her reply dated 27th June, 2022. In the absence of any explanation offered in her reply, we do not find any error in the impugned order issued by the AO. HELD THAT:- The learned counsel for the petitioner submits that the prayer in the petition is not pressed at this stage since relief has already been obtained by the petitioner. The question of law, if any, is however left open for consideration. The special leave petition and applications, if any, are accordingly disposed of as infructuous.
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2024 (4) TMI 990
Validity of Reassessment notices issued unsigned - maintainability of writ petition against this issue in HC - According to petitioner, absence of a signature on the impugned notice is a substantial defect and afflicts the impugned notice with manifest illegality and this defect is incurable - HELD THAT:- It is true that without the reasons to believe escapement of income, petitioner would not be able to file its objections to the notice issued under Section 148 of the Act. It is also true that this stand of illegality of the notice has been taken for the first time in the petition. In the two communications sent by petitioners' Chartered Accountant this stand has not been taken. We would hasten to add we are not giving any decision on waiver or estoppel. We are only saying that against the notice petitioner has straight away approached this Court without even complying with the requirements stated by the Hon ble Apex Court in GKN Driveshafts (India) Ltd. [ 2002 (11) TMI 7 - SUPREME COURT] . In our view, petitioner should have, on the basis of the ratio laid down by the Hon ble Apex Court in GKN Driveshafts (India) Ltd. (Supra), filed return of income and then sought reasons for issuing the notice. In response, the Assessing Officer was bound to provide the reasons within a reasonable time. On receipt of reasons, petitioner was entitled to file objections and the Assessing Officer was bound to dispose the same by passing a speaking order. Therefore, in our view, this is not a fit case to exercise our jurisdiction under Article 226 of the Constitution of India in view of petitioner not complying with the ratio laid down by the Hon ble Apex Court in GKN Driveshafts (India) Ltd. (Supra). Petitioner may file objections to the impugned notice dated 26th March 2012 together with the return of income within four weeks from today. In the objections to be filed, petitioner may raise all defences including those raised in this petition. The Assessing Officer shall dispose the objections but before disposing the same, shall give a personal hearing to petitioners, notice whereof shall be communicated atleast five working days in advance. The order disposing objections shall be a reasoned order dealing with all objections and if the Assessing Officer intends to rely on any judgments/orders of any Court or Tribunal, a list thereof shall be made available with the notice for personal hearing so that petitioner will be able to deal with/distinguish the same. Thus without expressing any view on the merits of the matter, petition dismissed.
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2024 (4) TMI 989
Unexplained cash credit u/s 68 - non-establishment to prove the creditworthiness or the genuineness of a transaction - all investor companies are group companies - ITAT deleted the additions - HELD THAT:- CIT(A) has made an elaborate exercise to assess the creditworthiness of the investor companies as well as the genuineness. All the investor companies are group companies and the directors are closely related to the director of the assessee company and the director Mr. Agarwala himself is one of the directors in one of the investor companies, therefore, on a deeper scrutiny of the factual position would show that the investor company did not have a genuine creditworthiness and consequently the transaction has to be held to be not genuine. - As held earlier certificate of incorporation of the companies, payment by banking channel etc. cannot tantamount to satisfactory discharge of onus and the facts of the case on hand speaks for itself as it is obvious. Thus, the principle of Preponderance of Probabilities applies with full force to the case on hand which leads to the irresistible conclusion that the finding rendered by the CIT(A) is legal and valid. The assessee in their submission contended that their business activity has increased considerably and for the purpose of expansion funds were required and therefore the assessee raised funds from various means, increment in share capital from associates being one of them. The fact clearly demonstrates that the source of the funds which have flown into the account of the assessee have substantially come from one company namely Gainwell Textrade Private Limited and the said company had contributed to the other companies and the funds transferred to those companies were transferred to the assessee company invariably on the same day leaving a bank balance which was almost negligible and the bank statements reveal that the prior to the inflow of the funds into those investing companies, the bank balance was negligible and after the transfer it was also negligible. The assessee had contended before the tribunal that the amount was credited through proper banking channels and the investing companies are body corporate registered with the Registrar of Companies and individually assessed to income tax and therefore the genuineness of the parties is beyond doubt. However, this is not the litmus test to discharge the burden on the assessee to establish creditworthiness of the investing companies as well as the genuineness of the transaction. Thus, we have no hesitation to hold that the explanation offered by the assessee is neither proper, reasonable or acceptable. In Swati Bajaj [ 2022 (6) TMI 670 - CALCUTTA HIGH COURT] the court held that based on the foundational facts the department has adopted the concept of working backward leading to the assessee. The department would be well justified in considering the surrounding circumstances, the normal human conduct of a prudent investor, the probabilities that may spill over and then arrive at a decision. Thus the CIT(A) was right in adopting a logical process of reasoning considering the totality of the facts and circumstances surrounding the allegations made against the assessee taking note of the minimum and proximate facts and circumstances surrounding the events on which charges are founded so as to reach a reasonable conclusion and rightly applied the test that a reasonable/prudent man would apply to arrive at a conclusion. On facts we are convinced to hold that the assessee has not established the capacity of the investors to advance moneys for purchase of above shares at a high premium. The credit worthiness of those investors companies is questionable and the explanation offered by the assessee, at any stretch of imagination cannot be construed to be a satisfactory explanation of the nature of the source. The assessee has miserably failed to establish genuineness of the transaction by cogent and credible evidence and that the investments made in its share capital were genuine. As noted above merely proving the identity of the investors does not discharge the onus on the assessee if the capacity or the credit worthiness has not been established. Thus we hold that the assessee has failed to discharge legal obligation to prove the genuineness of the transaction and the credit worthiness of the investor which has shown to be so by a round tripping of funds. For all the above reasons, the revenue succeeds.
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2024 (4) TMI 988
LTCG - Receipt of additional amount towards Transferable Development Rights (TDR) - treatment to receipt of consideration the appellant ceased to be the owner of the property - compensation received for settlement of dispute in respect of allotment of Flat - HELD THAT:- If the Revenue had serious doubts on the genuineness of the letter or the understanding as reflected in the letter or the intention of the parties, it should have summoned the developer to confirm the same. It does not appear that the Revenue had summoned the developer or tried to find the veracity of the letter. We should also note that admittedly the letter is signed by the developer. The genuineness of the letter is also confirmed by the fact that a substantial amount has also been paid to assessee . As per the letter, the developer committed to assessee that if in future the developer was able to obtain additional TDR and load it on the property being developed, an extra compensation at Rs. 1000/- per sq. ft. of the TDR utilised for additional construction of floors will be paid to assessee. In our view, the development agreement dated 29th September 1992 and the commitment letter also dated 29th September 1992 should be read as one agreement. The amount paid should be considered as payment under the development agreement itself. Assessee s arguments that even the Government records showed assessee to be the owner of the property and there has been no transfer of the capital asset has been dismissed by the ITAT by saying that it takes time to get names changed due to which owner continued in such official records or simply the name of assessee might have continued. The agreement reflects the intention of the parties to the agreement. Neither the developer has come forward and told the Assessing Officer nor was he called to come and depose that the intentions of the parties were different from what assessee informed the Income Tax Department. Therefore, in our view, the ITAT was not correct in confirming the view of the Assessing Officer that this amount of should be treated as income from other sources. This amount should also be treated as consideration being paid for the developmental rights entered into on 29th September 1992 and treated as LTCG to be assessed in the year the amount was received. Assessee, we are informed, has paid LTCG on this amount in Assessment Year 1997-1998.
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2024 (4) TMI 987
Validity of Assessment order u/s 147 r.w.s. 144B - Assessment challenged being in violative of the principles of natural justice - HELD THAT:- Admittedly the petitioner was initially served with a notice on 12.11.2021 asking for the books of accounts and other documents mentioned in the annexure to the said notice. Another notice was served in this regard on 20.12.2021 giving reasons for re-opening of the assessment in the case of the petitioner for the year 2014-2015 u/s 147 - However, there has not been much of the developments till 17.03.2022 when the show cause notice was abruptly issued and the entire proceedings stood concluded within a period of less than fifteen (15) days time. From the pleadings and documents and also the submissions made by Standing Counsel for the Income Tax Department, what also is not very clear is, whether after the reply which the petitioner had submitted on 19.03.2022, the respondent authorities did they ever issue any show cause notice to the assessee for any further proceedings drawn beyond the reply to the show cause notice which the petitioner had already filed. There is no proof of any notice of personal hearing or any other hearing calling upon the petitioner to personally make his submissions. The presumption drawn by the petitioner for it to be a notice u/s 144C cannot be doubted. Another aspect which needs to be considered is that for the assessment year 2014-2015, the show cause notice was issued on 17.03.2022 and the time limit for response was up till 20.03.2022. This duration was too short a period, particularly, when the explanation and details have been sought of an assessment year about seven to eight years old. Thereafter, vide notice dated 21.03.2022 the authority concerned extended the period by another two days. Now there is no proof when these notices issued on 21.03.2022 extending the period from 21.03.2022 to 23.03.2022 have been effectively served upon the petitioner or not. Meanwhile, the petitioner did gave his reply on 19.03.2022 before the authority concerned. No hesitation in reaching to the conclusion that the proceedings drawn by the respondent authorities apparently seems to be in a hasty manner without a reasonable opportunity being given to the petitioner. Thus, the impugned order therefore to the aforesaid extent is set aside/quashed. Since the impugned order is being quashed on the technical ground of fair opportunity not being provided, the matter stands remitted back to the authority concerned who in turn after hearing the petitioner may proceed and decide strictly in accordance with law without any further delay. WP stands allowed.
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2024 (4) TMI 986
Condonation of delay - substantial delay of 166 days before ITAT - as argued the assessment order was passed by the A.O on 16.12.2018 and was issued on 29.12.2018 without any reasons for keeping the same with him, reasons recorded under Section 148(2) of the Act were not supplied to the assessee by the A.O and appeal of the assessee was dismissed by the CIT(Appeals) vide an ex-parte order dated 29.03.2023 etc. HELD THAT:-. Under section 69A of the Act, what is provided is that if an assessee is found to be the owner of any money, jewellery or any other valuable articles and such money is not recorded in the books of account and fails to offer any explanation about the nature and source thereof or in case any such explanation, if offered, is not satisfactory in the opinion of the AO, then it may be deemed to be the income of the assessee for such financial year. Ultimately, therefore, it would be dependent on the nature of the explanation submitted by the assessee and the satisfaction of the AO about the acceptability thereof, which is the sine qua non for invoking the provisions contained in section 69A of the Act. In the present case, the assessee has failed to file his return of income but had also evaded his participation in the proceedings. In absence of any plausible explanation of the assessee as regards the delay in filing of the appeal, his request for condonation of the same, when read in the backdrop of his conduct before the authorities below cannot be summarily accepted on the very face of it. There is no substance in the claim of the assessee that the delay involved in filing of the appeal was due to bonafide reasons, as the same clearly smacks of the lackadaisical conduct on his part. In the totality of the facts leading to the delay in filing of the appeal read with the conduct of the assessee appellant before the AO and the CIT(Appeals), the request of the assessee for condoning the delay involved in filing of the appeal does not merit acceptance. As rightly relied on by the ITAT that in the case of State of West Bengal Vs. Administrator, Howrah [ 1971 (12) TMI 106 - SUPREME COURT] had held that the expression sufficient cause should receive a liberal construction so as to advance substantial justice, particularly when there is no motive behind the delay. The expression sufficient cause will always have relevancy to reasonableness. The action which can be condoned by the Court should fall within the realm of normal human conduct or normal conduct of a litigant. However, as the assessee appellant in the present case is habitually acting in defiance of law, where he had not only delayed in filing of the present appeal but also had adopted a lackadaisical approach and not participated in the course of the proceedings before the CIT(A), therefore, there can be no reason to allow his application and condone the substantial delay of 166 days involved in preferring of the captioned appeal. Now, when in the present appeal the appellant / assessee had failed to come forth with any good and sufficient reason that would justify condonation of the substantial delay involved in preferring of the captioned appeal, we hereby dismiss the present appeal upholding the reasons assigned by the learned ITAT. Assessee appeal dismissed.
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2024 (4) TMI 985
Income deemed to accrue or arise in India - Taxability of income earned from offshore supplies and attribution of profit to the permanent establishment (PE) in India - AO attributing 25% profits to the PE in India - HELD THAT:- The end to end activity covers design, supply, erection, commissioning, performance run of the entire paper mill. Thus, the assessee has to complete a single integrated project in terms of the contract. The agreement further reveals that assessee s obligation under the contract does not end with the supply of goods and equipments, but would only end with the satisfactory commissioning and performance run of the paper mill. Only after the satisfactory performance run, the assessee can receive full payment qua the supply of goods and equipments. Thus, supply of goods and equipment from outside India cannot be treated as a standalone activity. On the contrary, as per the scope of work under the agreement, the assessee has to deliver the project of the Security Paper Mill and hand over to the contractee at deliverable stage as a complete package. The contract between the assessee and the contractee is not for purchase of plant and equipments simpliciter, but a complete paper mill to be installed and commissioned at deliverable stage. That being the factual position emerging on record, assessee s contention that the income received from supply of plants and equipments is not chargeable to tax in India, as the supplies were made from outside India, in our view, is not acceptable. Not only the assessee has entered into a single contract providing for purchase, installation, commissioning, performance-run of a single unit of 6000 MTs Security Paper Mill, but the assessee is required to ensure proper functioning of the paper mill after commissioning through start-up and test-run. Thus, these facts clearly indicate that the contract is a composite indivisible contract of setting up the paper mill in India. That being the case, it cannot be said that the receipts from offshore supplies of plant and equipments etc. are not taxable in India. On a careful scrutiny of assessment order and first appellate order, we observe that receipts from offshore supplies are in relation to four projects in India. The departmental authorities have referred only to terms of agreement between the assessee and SPMCIL, Hoshangabad. Whereas, the terms of the agreement with other three parties, viz., J.K. Paper Ltd., Bank Note Paper Mill India Pvt. Ltd., Mysore and Tamil Nadu Newsprint and Papers Ltd., Tamilnadu, to whom the assessee has supplied plant and equipments, have not at all been examined. From the submissions of the assessee, prima facie, it appears that the terms of the contracts in different projects are not identical. In fact, in case of project at Tamil Nadu, the assessee has entered into two separate contracts, one for supply of material and other for onshore services. Therefore, if offshore supplies of plant and material do not have any relation to onshore services, they cannot be brought to tax in India. These facts have not been verified by going into the terms of the contract by the departmental authorities. Even, to what extent the PE of the assessee, if at all there is one in India, is involved in manufacture and supply of plant and equipments, has not been properly gone into by the departmental authorities. Thus, without properly analysing the role of PE in offshore activities, 25% of the receipts arising out of offshore supplies cannot be attributed to PE, as it is purely on adhoc basis. AO has attributed profit rate of 10% to the receipts/income of the PE, which has been reduced to 5% by Commissioner (Appeals) - In our view, the estimation of profit is purely on adhoc basis without any rationale. When the assessee has furnished evidence to show that the global profit rate in the paper division is at 3%, there is no justification for adopting the rate at 10% or 5%. The reasoning of departmental authorities in adopting the estimated profit rate is based on conjectures and surmises. If learned Commissioner (Appeals) was of the view that the activities and obligations of different contracts for different supplies would be different, he should have examined each of the contracts and accordingly decided the profit rate. The departmental authorities have examined only one of the contracts. Whereas, they have not gone through the terms of other contracts. We cannot accept the estimation of profit at 5% by Commissioner (Appeals). It is further to be noted that assessee s contention regarding existence or otherwise of PE in terms of paragraph 7, 1(a) and (b) of Protocol to India-Germany DTAA has not at all been considered by learned first appellate authority. Since, various claims and contentions of the assessee have not been considered by the departmental authorities, while attributing part of the receipts from offshore supplies as income of the PE, we are inclined to restore the issue to the AO for de novo adjudication after providing reasonable opportunity of being heard to the assessee. Grounds are allowed for statistical purposes.
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2024 (4) TMI 984
Condonation of delay - Delay in filling of an appeal before ITAT - appeal is delayed by 17 days - sufficient and reasonable cause for delay or not? - absence of a bonafide explanation - though the assessee had deposited the fees for filing the appeal before the Tribunal on 27.01.2024 but had kept the filing of the subject appeal in abeyance till 20.02.2024. The assessee has filed an affidavit wherein he had stated that as he was taken unwell on 30.01.2024, therefore, he could file the appeal only on 20.02.2024. HELD THAT:- Though the delay in filing the appeal may not be inordinate, it is the absence of a bonafide explanation of the assessee regarding the reasons that had resulted to delay in filing the appeal; read in the backdrop of his conduct before both the lower authorities, i.e the A.O and CIT(Appeals), who due to non-prosecution of the matter by the assessee before them were constrained to pass ex-parte orders, that we are of firm conviction that the delay in the filing of the present appeal by the assessee does not merit to be condoned. In case, if the delay is condoned based on an unsubstantiated claim in the case of the present assessee who had not even participated in the proceedings before the A.O. and the CIT(Appeals), then, it would send a wrong message and would lay down a wrong precedent for others to follow. Thus we are unable to persuade myself to condone the delay involved in the filing of the present appeal by the assessee appellant, who as observed by me hereinabove had consistently as a matter of habit evaded his participation in the proceedings before both the lower authorities and also delayed the filing of the present appeal without any justifiable reason. Thus we decline to condone the delay involved in filing of the appeal before ITAT. Appeal filed by the assessee is dismissed.
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2024 (4) TMI 983
LTCG - Correctness of long-term capital gain /loss from sale of immovable property - FMV determination - assessee is an individual and on the basis of information about sale of immovable property, case of the assessee was reopened u/s 147 after obtaining necessary approval from the Competent Authority - assessee is 50% owner of the immovable property - HELD THAT:- For calculating the long-term capital gain, indexed cost of acquisition is reduced from the sale consideration. AO has merely reduced the cost as on 01.04.1981 and has calculated the impugned addition. AO has not made any efforts to get the information about the Circle rate of the immovable property as on 01.04.1981. Under these given facts and circumstances, where fair market value of the property as on 01.04.1981 as calculated by the Registered Valuer has been accepted by the AO and there being no other evidence of the fair market value of property as on 01.04.1981, we are inclined to hold in favour of the assessee observing that considering the cost of acquisition as on 01.04.1981 at Rs. 5,00,370/- (adopted by AO), the indexed cost of acquisition would be Rs. 54,09,000/-, and since it is higher than the sale consideration, it would result into a long-term capital loss. Therefore, we set aside the finding of CIT(Appeals) and delete the impugned addition made in the hands of assessee. Grounds of appeal of the assessee are allowed.
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2024 (4) TMI 982
Rejection of application for registration u/s 12AA(1)(ac)(iii) and application of the assessee for final approval as per the provisions of section 80G(5)(iii) - CIT(E) observed that the assessee earlier was granted provisional registration in Form 10AC which was valid till A.Y 2026-27, he, therefore, held that the present application of the assessee being premature was not maintainable and rejected the same HELD THAT:- The assessee-trust has been granted registration u/s 12AB(1)(a) of the Act for five years vide order dated 31.05.2021 which is valid from A.Y 2022-23 to A.Y 2026-27. As per the provisions of section 12A(1)(ac)(iii) of the Act, the assessee-institution is supposed to apply for final registration after grant of provisional registration u/s 12AB of the Act. A perusal of the aforesaid provisions of section 12A(1)(ac)(iii) of the Act would reveal that where the trust or the institution was provisionally registered u/s 12AB of the Act, the application for final registration can be made at least six months prior to the expiry of the period of provisional registration or within six months of the commencement of its activity, whichever is earlier, which means that the application for final registration has to be made at the earliest possible event i.e. either within six months of the commencement of the activities or at least six months prior to the expiry of the provisional registration. The aforesaid provision does not mean that there is any bar on the applicant to move an application before the period of six months from the expiry of the provisional registration. What has been provided is that the application must be made before the expiry of six months from the date of expiry of final registration. There is no bar in moving the application at the earliest possible event, rather, it is expected from the assessee-trust to do so. The impugned order of the CIT(E) is set aside and the matter is restored to the ld. CIT(E) to consider the application of the assessee for final registration and grant the same if the same is otherwise so admissible to the assessee. Approval u/s 80G(5) - CIT (Exemption) rejected the application of the assessee observing that the time limit prescribed for making an application for final approval u/s 80G of the Act was at least six months prior to the expiry of the period of the provisional approval or within six months of the commencement of its activities, whichever is earlier and fresh application by the assessee was filed on 02.07.2023 which was after the extended date of 30.09.2022. - HELD THAT:- The issue is squarely covered by the decision of the Coordinate Kolkata Bench of the Tribunal in the case of Tomorrow s Foundation vs. CIT(Exemption) [ 2024 (3) TMI 941 - ITAT KOLKATA] wherein as held after grant of provisional approval, the application cannot be rejected on the ground that the institution had already commenced its activities even prior to grant of provisional registration. Under such circumstances, the date of commencement of activity will be counted when an activity is undertaken after the grant of provisional registration either under Clause (i) or Clause (iv) to First Proviso to section 80G(5) of the Act. We grant provisional approval to the assessee under Clause (iii) to First Proviso to section 80G(5) of the Act, if the assessee is otherwise found eligible. It is directed that the ld. CIT(E) will decide the application of the assessee for final approval as expeditiously as possible but not later than two months from the receipt of this order. It is further directed that, if the assessee is granted final approval by the ld. CIT(E) then, the benefit of approval u/s 80G of the Act, available to the assessee prior to the Amendment brought vide Amending Act of 2020, will be deemed to be continued without any break. The assessee will not be deprived of the benefit during the time period falling between 31/03/2021 and the date of grant of provisional approval under clause (iv) i.e., 28/05/2021, due to technical errors occurred in making the application under the relevant provisions of the Act because of the confusion and misunderstanding on part of the assessee as well as on part of the ld. CIT(E) in properly interpreting the relevant provisions. Both the appeals of the assessee are treated as allowed for statistical purposes.
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2024 (4) TMI 981
Estimation of income - bogus purchases - CIT-A made the addition differently by considering the rate of the carrots purchased from one bogus supplier with the rates of another bogus supplier and the difference amount is confirmed and addition on account of bogus purchases HELD THAT:- We do not agree with the approach of the CIT- A because when both the suppliers are allegedly bogus, rates paid to one party cannot be compared with rates paid to another bogus party for the reason that both are tainted transactions. We find that in the present case the decision of Mohd haji Adam [ 2019 (2) TMI 1632 - BOMBAY HIGH COURT] also does not apply for the reason that honourable High Court held that where there was no discrepancy between purchases shown by assessee and sales declared, no question of law or on form Tribunals order restricting addition made by AO on account of bogus purchase by bringing gross profit rate on purchases at same rate as applied in other genuine purchases. In this case there are no genuine purchases. The other judicial precedents relied upon by the assessee are also considered where varying rates of additions are confirmed depending on the facts and circumstances of the case of each of the assessee in the range of 1%- 12.5 % . Therefore, in absence of similar facts, those cannot be applied blindly. As stated above the facts in the case of the assessee are unique where only alleged bogus purchases of diamonds are exported in the same quantity and there are no other genuine purchase transactions. Therefore, only the facts in the case of the assessee in earlier years could be a guiding factor. In the case of the assessee in earlier years assessment year 2008 09 and 2007 08 CIT A has restricted the addition to the extent of 3% of the bogus purchases which is not disputed by the revenue, therefore, we also find it reasonable to retain the addition to the extent of 3% of the bogus purchases. Accordingly, appeal of the assessee is partly allowed.
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2024 (4) TMI 980
Addition u/s 68 - unexplained cash deposit - as per assessee, he has duly explained the source of cash deposit as cash in hand as built up from cash withdrawals from the bank account of the assessee and also submitted evidences such as copy of cash book, copy of bank statements, copy of response filed on Income Tax Portal in response to cash transaction queries and information related to cash transaction, but the same has not considered/believed by the AO - CIT(A) deleted addition - HELD THAT:- It is seen from the record that during the course of assessment proceedings, in order to explain the source of cash deposit as cash in hand the assessee produced evidences such as copy of cash books, copy of bank statement, copy of response filed on income tax portal in response to the cash transaction queries and information related to cash transaction in the format prescribed by the AO. Assessee has also explained the source as well as the reason of withdrawing cash along with the supporting evidence. Further in response to the show cause notice, the assessee has also explained that in the impounded documents contains cash balance as on 08.11.2016 of certain sites only and cash balance as on 08.11.2016 of New Imprest - Real Estate MCB, Imprest Bhogal Godown and Imprest Sandeep Mangla were not mentioned and in support of said contention the assessee submitted summary of all the cash books which shown the cash balance as on 08.11.2016. Also the books of the assessee are audited, AO has not pointed any defect in the cash book of the assessee nor he rejected its book of account and only on the basis of assumption that the cash withdrawal have been utilized without corroborating the same. CIT(A) has considered all the documents produced by the assessee and proceeded to delete the addition after countering each and every allegation made by the A.O. by appreciating material available on record. In the case of group companies involving identical issue arising out of same impounded documents and survey of same flagship company, the Co-ordinate Bench of the Tribunal decided the issue in the favor of the Assessee. CIT(A) has committed no error in deleting the additions made by the A.O. We find no merit in the Grounds of appeal of the Revenue, accordingly, we dismiss the Grounds of Appeal of the Revenue.
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2024 (4) TMI 979
Penalty u/s 270A - allegation of misreporting as per section 270A(9) - Penalty@ 200% in respect of excess claim of depreciation - HELD THAT:- During the course of assessment proceedings, AO accepted the claim related to depreciation, however, as regards quantum of depreciation is concerned, he was of the view that depreciation should be charged on WDV as computed in accordance with explanation to section 43(1). AO thus partly disallowed the claim of depreciation, against which appeal was preferred by the assessee. Based on that pretext the return of income for A.Y. 2017-18 was filed by the assessee by claiming depreciation as was done in earlier years in normal course on 29.10.2017 before the due date of 31.10.2017 as till then the assessee was not advised and was able to decide the course of action in relation to the issue raised for A.Y. 2013-14 in respect of depreciation disallowed. In the scrutiny assessment proceedings for A.Y. 2017-18 i.e. the year under consideration, the revised calculation of depreciation was submitted before ld. AO as per the CIT(A) s order as by that time it was already finalized for not to agitate the matter of depreciation before the income tax tribunal against the order of CIT(A) of A.Y. 2013-14. Thus, with that back ground as argued by assessee has disclosed all the facts in return of income and also revised the depreciation claimed at the very first opportunity i.e. during assessment proceedings and therefore this act cannot be treated as misreporting by any stretch of imagination, more particularly when the issue on which disallowance has been made was debatable. For disallowance of interest paid on TDS amounting it is submitted that interest on TDS is paid for the duration for which payment of TDS is delayed and is thus basically compensatory in nature and not penal in nature and therefore same is allowable u/s 37(1) - It was also submitted by the AR that there is no allegation about suppression of some facts or misrepresentation of some facts by the assessee and moreover this claim was also based on certain judicial pronouncements in favour of assessee at the time of making the claim. Thus, the claim of depreciation and interest on TDS was made accordingly. It is also submitted that it is not the case that the claimed any bogus or excessive or unrelated expenses or has misrepresented the facts. On this issue our attention was invited to the decision of the apex court in the case of CIT Vs. Reliance Petroproducts Pvt. Ltd. [ 2010 (3) TMI 80 - SUPREME COURT] and M/s Price Waterhouse Coopers Pvt. Ltd [ 2012 (9) TMI 775 - SUPREME COURT] which are though decided in respect of penalty u/s 271(1)(c), but the ratio related to furnishing of inaccurate particulars of income is pari materia with provisions of section 270A dealing with misreporting of income. In addition asseseee also invited our attention to the the latest case laws related to penalty u/s 270A namely Chambal Fertilizers Chemicals Ltd. [ 2024 (1) TMI 316 - RAJASTHAN HIGH COURT] wherein Hon ble Court has confirmed the requirement of clearly specifying the sub-clause of section 270A(9) prior to concluding that assessee has misreported the particulars of income. Similarly, in the case of GR Infraproject Ltd. [ 2024 (1) TMI 163 - RAJASTHAN HIGH COURT] as observed that neither in the assessment order nor in the subsequent show cause notice, the AO has specified that the assessee is covered by section 270A(9) of the Act. Even in the order imposing penalty, it is not specified which part of sub-section (9) of section 270A is attracted in this case. The bench noted from the evidence placed on record that the assessee neither in the show cause notice nor in penalty order, it was specified as to under which particular clause of section 270A(9), the case of assessee is covered. Thus, the levy of penalty for misreporting of income is not justified on the facts as mentioned and discussed herein above and respectfully following the binding judicial decision. Depreciation on certain house property was claimed by assessee first time in A.Y. 2013-14 on showing the rental income under the head Business Income which was hitherto shown under the head Income from House Property - In the case of Schneider Electric South East Asia (HQ) PTE Ltd., [ 2022 (3) TMI 1295 - DELHI HIGH COURT] considering that in the penalty order there was no mention about which limb of section 270A is attracted and how ingredients of section 270A(9) are satisfied and in absence of such particulars the mere reference to the word misreporting makes the impugned penalty order manifestly arbitrary. Considering the facts of the case under consideration and the various case laws as discussed as above, we are of the considered view that penalty so imposed by ld. AO does not stand on merits and is therefore directed to be quashed. Decided in favour of assessee.
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2024 (4) TMI 978
Delay in filling an appeal before ITAT - delay of 105 days - as a fact NFAC has delivered the order through online system and that appellant Society is working in remote area and its office bearers are not in the habit of checking their mails on regular basis - HELD THAT:- In view of N Balakrishnan vs. M. Krishnamurthy [ 1998 (9) TMI 602 - SUPREME COURT] we find that the intention of the assessee is not malafide and the circumstances stated appears to be bonafide which cannot be ignored in order to impart justice. In view of the above facts, circumstances of the case and the judgment of Hon ble Supreme Court (supra), the delay in filing appeal by the appellant Society is condoned and appeal is admitted for the decision on merits. Deduction u/s 80P on income earned from providing credit facilities to its members and profit from trading activity of fertilizers sale and income from other related activities - assessee is a Society registered under the West Bengal Co-Operative Societies Act, 2006 and is a Primary Agricultural Credit Society ( PACS in short) and engaged in providing financial assistance to its members for agricultural activities - HELD THAT:- Section 80P(2)(i) of the Act, provides that where co-operative Society is engaged in providing credit facilities to its members, the whole of the amount is entitled for the deduction u/s 80P. In the present case though the assessee has provided the list of persons to whom the credit facilities were provided but failed to establish to the satisfaction of the ld. AO that all such persons are its members. Further from the perusal of the financial statements also it appears that appellant Society has income from trading activity and some other income also. In view of the facts of the case also by respectfully following the judgement of Mavilayi Services Coperative bank ltd. [ 2021 (1) TMI 488 - SUPREME COURT] where the hon ble court opined that even if the credit facilities were provided for non-agricultural purposes to its members, the Society is entitled for the benefit us/ 80P(2)(i) of the Act. Accordingly, we are of the view that the appellant Society is eligible for deduction u/s 80P(2)(i) of the Act but to the extent of the income which has been earned from the facilities extended to its members only. As the appellant Society has failed to satisfy the lower authorities whether those credit facilities were provided to its members only and not to non-members, therefore, assessee is directed to file the necessary details to the AO and the AO is directed to allow deduction u/s 80P(2)(i) to the assessee for the income earned through/from its members as per the directions given hereinabove but needless to mention that assessee should be provided reasonable and proper opportunity of being heard. Assessee appeal is allowed for statistical purposes.
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2024 (4) TMI 977
Survey operations u/s 133A - evidentiary value of statement recorded u/s 131 - retraction letter given for statement made in survey proceedings - retraction to be made on an immediate basis - HELD THAT:- Firstly the retraction letter has been filed within a short span of two weeks from conclusion of the survey proceedings duly supported by an affidavit of the assessee which has been filed before the AO as well as copy thereof has been filed before the senior authority i.e; Addl. CIT, Sangrur. As far as the intervening period is concerned, the assessee duly explained that being a senior citizen, he was under great shock and mental agony and once he was able to recover from the shock of the survey proceedings, he has written the letter to the AO retracting from the surrender so made. Therefore as far as period within which the retraction has been made, we find that the same has been made within a reasonable period of two weeks of close of the survey proceedings and therefore it is not a case where the assessee has filed the return of income retracting from the surrender so made and/or waited for issuance of the show cause by the AO and thereafter, he has retracted from the surrender so made. We are therefore unable to subscribe to the view of the ld CIT(A) where he says that where the retraction is not made on an immediate basis, the same loose relevance after a course of time and appear to be an afterthought to evade the due taxes . The decision of the Hon ble Delhi High Court in case of Avinash Satia [ 2017 (5) TMI 172 - DELHI HIGH COURT] doesn t support the case of the Revenue as in that case, the retraction was made after a gap of two years. Similarly, the decision of MAC Public Charitable Trust [ 2022 (11) TMI 137 - MADRAS HIGH COURT] doesn t support the case of the Revenue as in that case, the retraction was made after a period of eight months. In our considered view, given the fact that the retraction has been made within a short period of two weeks of conclusion of the survey proceedings and even for intervening period of two weeks, the assessee has provided the necessary explanation which we find reasonable given the facts and circumstances of the present case, the retraction so made doesn t loses its significance and clearly cannot be held as an afterthought. Basis of retraction of the surrender so made by the assessee , we find that the surrender was originally made in respect of alleged excess stock, alleged excess cash and alleged unexplained advances. Regarding excess stock, we find that the assessee has duly demonstrated before the AO as well as during the appellate proceedings that the surrender towards excess stock has been wrongly taken by the survey team and the same is evident from the findings of the Ld. CIT(A). Therefore, where the AO during the assessment proceedings has accepted that as against the value of stock as per books of account taken at the time of survey amounting to Rs. 1,05,94,990/-, the actual stock as per the books of account was Rs. 65,74,354/- the same supports the contention advanced by the assessee that the surrender has been wrongly taken by survey team based on the incorrect facts. Both the value of stock as per books of account and stock physically found, the survey team has completely faltered in determining and seeking surrender and therefore where the assessee in the retraction letter claims that there was no excess stock found during the course of survey and surrender taken under coercion and threat, we have no hesitation in accepting the said contention advanced by the assessee. Therefore, the retraction towards excess stock is concerned, the assessee has duly demonstrated that the statement initially recorded during the course of survey was factually incorrect and was therefore recorded under coercion and threat by the survey team. Alleged advances - As gone through the seven pages of the diary marked as Prince seized during the course of survey and find that there are certain names and the amounts which have been written against these names. There are no dates, no description in terms of whether the amount written against the respective names are received by the assessee or paid by the assessee and the date of receipts / payments and falling under which financial year. No other documentary material has been found during the course of survey which corroborates such entries /contains complete identity details of these persons so found mention in the said diary and the nature of transaction so referred therein - no hesitation in accepting the contention advanced by the assessee that such notings have no link or connection with the business of the assessee and even the identity of those alleged persons was not verified and therefore there was no material in possession of the survey team to seek surrender and the surrender so taken was therefore a surrender under coercion and threat and which cannot be sustained in the eyes of law. Therefore, the retraction as far as alleged advances is concerned, we again find that the assessee has duly demonstrated that the statement initially recorded in this regard during the course of survey was factually incorrect and was therefore recorded under coercion and threat by the survey team. Excess cash - We find that there was cash physically found at the time of survey and cash inventory was duly prepared by the survey team. As per copy of the cash inventory available at page 77 of APB, there was cash amounting to Rs 982,579/- which was found, counted in presence of the assessee and subsequently handed over to him. It is also not in dispute that cash as per books of accounts as on the date of survey was Rs 57,579/-. Therefore, as far as retraction regarding differential cash over and above recorded in the books of accounts of Rs 9,25,000/- is concerned, we find that the retraction so made by the assessee is not factually correct and the same therefore cannot be accepted. The action of the AO in bringing to tax excess cash of Rs 925,000/- so found during the course of survey and upheld by ld CIT(A) is hereby confirmed and the contentions advanced in this regard on behalf of the assessee are rejected. As far as excess stock and alleged advances there is no basis to make the addition solely basis the statement so made by the assessee as the assessee has duly demonstrated that the surrender so made was factually incorrect and taken under coercion and threat and the same deserve to be set-aside. GP estimation - Coming back to the findings of the CIT(A), we find that the ld CIT(A) while deleting the addition towards the excess stock had recorded a finding that there was in fact shortage of stock - We have no hesitation in confirming the same as the same has been arrived at basis material provided by the assessee during the assessment and appellate proceedings, duly verified by the AO during the remand proceedings and thus basis material available on record and therefore, cannot be in dispute. Therefore, the various contentions so raised by the assessee which are more in the context of survey proceedings cannot be accepted. The ld CIT(A) has considered the shortage of stock as out of books sales and directed to apply gross profit rate of 10% which is hereby restricted to 8.02% as per accepted gross profit rate for the year under consideration and to this limited extent, the alternate contention of the assessee is accepted.
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2024 (4) TMI 976
Validity of the assessment framed u/s 153A - validity of statement recorded of the assessee u/s 132(4) - whether authorized officer could not go beyond the seized papers u/s 132 in the case of an assessee for recording statement u/s 132(4)? - HELD THAT:- In the case in hand, the assessee was not found in possession or control of any books of account or other document or any assets as mentioned under the provisions of section 132(4) of the Act. Even no incriminating material was found during the search action at the residential premises of the assessee. Even the statement of the assessee has not been recorded during the search action carried out in his case in individual capacity at his residential premises. As per the record, the statement of his wife, namely Chitra Badalia, who was also covered in the search action, was recorded, but nothing adverse was found recorded in her statement. The statement of assessee Ravi Badalia was recorded u/s 132(4) during the search action at the business premises of Badalia Gems Pvt. Ltd., however, even there, he was not found in possession or control of any books of account, other documents or assets relevant to the assessment of his income. Even no incriminating material either in the shape of books of accounts/ other documents or in the form of assets representing his any undisclosed income was found during the course of search. Such a statement of his, having recorded in contravention of the statutory provisions and without the mandate of the law, would not have any evidentiary value and cannot be made basis for the impugned additions. Even the admission, if any, made during such an statement, which is recorded against the mandate of the statute, cannot be relied upon. The impugned additions are liable to be set aside on this score. Whether the loose sheet recovered in an unconnected earlier search action from the premises of third party can be brought in and used to confront the assessee during the course of search action? - We find force in the above submissions of assessee. The search party has not been empowered either under the Act or under the Rules to bring any document, article, or any other thing along with them to the premises to be searched under the warrant of authorization. Rather a right has been given to the person whose premises has to be searched to have personal search of all the members of the search party before the start of the search and even after the conclusion of the search. Even in the Performa warrant of authorisation in Form 45, no such powers have been given to the search party to bring the outside material to the searched premises. In our view, the search party was not justified, rather, has acted in defilement of their jurisdiction to bring the seized material in the case of Kasera Group lying in their office record, to the premises of M/s Badalia Gems Pvt. Ltd in separate and subsequent search action carried out u/s 132 of the Act and confront the assessee on the said material especially when no incriminating material was found in relating to the search action in the case of the assessee carried out his residential premises and even no incriminating material was found during the search action carried out in the case of M/s Badalia Gems Pvt. Ltd. at their business premises. Thus the search conducted by the search party is vitiated and no reliance can be placed on the search and seizure reported or even statement recorded of any person during such a vitiated search action, as it fails the mandate of law. Reliance upon the material seized during the search in case of third party without adhering to the provisions of section 153C - As per the special provisions u/s 153C of the Act, in case of any incriminating material is found during the course of a search action which is relating to a person other than the searched person, then the procedure as laid down u/s 153C of the Act is to be followed for making assessment/reassessment of such other person. In that case, if the AO of the searched person is satisfied that the assets/material found during the search action relates to other person, then the AO of the searched person is supposed to handover/send that material to the AO having jurisdiction over such other person and further that the jurisdictional AO of the said other person will have to record a satisfaction that such material has a bearing on the determination of income of such other person and the six assessment years preceding the date of receipt of such material/books of account gets reopened and the AO of such other person is required to make assessment in accordance with the provisions of section 153C of the Act. It is not open to the Assessing Officer of such other person to use that material in a subsequent assessment carried out u/s 153A of the Act in case of such other person unless the proceedings u/s 153C are pending against such other person on the date of search. Time limit for completion of assessment u/s 153A - The special provisions of sections 153A, 153C and 153D of the Act prevail over the general provisions and if the AO/Income Tax Authorities have failed to proceed upon an assessee under such provisions in respect of search cases and the limitation to proceed in such cases against an assessee has expired, then the search material, in our view, cannot be used in any other assessment proceedings as holding to the contrary will make the provisions of section 153C r.w.s. 153B as otiose and redundant. As no incriminating material whatsoever was found during the course of search action in the case of the assessee. The alleged incriminating material found in the case of a past search action in the case of third party i.e. Kasera Group was not acted upon and no proceedings u/s 153C of the Act were initiated or even contemplated and then, in our view, the AO cannot make basis of such dead material in the subsequent assessment proceedings carried out in the case of the assessee u/s 153A of the Act to make the impugned additions, when the limitation to proceed u/s 153C on the basis of said looses sheets/incriminating material has already expired in terms of the provisions of section 153B of the Act. Moreover, no incriminating material was found during the search action in the case of the assessee. The assessee was not found in possession or control of any incriminating material or books of accounts. Under the circumstances, as per the provisions of section 132 of the Act read with provisions of section 153B of the Act, firstly the search party exceeded its jurisdiction in recording of statement of the assessee u/s 132(4) secondly by bringing the documents from its record and thereby confronting the assessee in respect of the said document during the recording of the statement would not infuse life in such dead documents. The assessee succeeds on this legal ground. Abated vs Non-abated Assessment - whether the proposition that no addition can be made in case no incriminating material is found during the course of search action in case of unabated (not pending) assessments for the relevant assessment year would be applicable in this case? - Only those assessments or reassessments shall abate which are pending on the date of initiation of search u/s 132. The term pending means something/some action which has commenced but not concluded. Different interpretation of the term pending cannot be given in relation to assessment and reassessment . Since, the word pending has been used in context to both assessment and reassessment , therefore, it has to be read in the same context for assessment and reassessment . Under the circumstances, in our view, the word pending would mean those assessments or reassessments, which have been initiated but not concluded on the date of search. If no assessment or reassessment has been initiated by issuing the notice u/s 143(2) or u/s 148 of the Act, as the case may be, then the same cannot be said to be pending on the date of search. In the case in hand, neither any assessment proceedings u/s 153C were initiated nor pending on the date of search. Even no other assessment proceedings were initiated, hence not pending on the date of search. Since, no assessment was pending on the date of search, therefore, no assessment stood abated on the date of the said search. Since, no assessment stood abated, hence the assessment year under consideration would fall within the scope of unabated assessment year. Therefore, as per law laid down in the case of PCIT vs. Abhisar Buildwell (P.) Ltd. [ 2023 (4) TMI 1056 - SUPREME COURT] AO was not justified to make the impugned additions in the absence of any incriminating material found during the course of the search action. Decided against revenue.
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Customs
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2024 (4) TMI 975
Review application - Maintainability of application before Supreme Court - Classification of goods - it was held by the High Court that Admittedly, in the instant case, the stand of the department is that the goods dealt with by the respondent/assessee are not covered by the exemption notification. If that be so, the appeal is maintainable before the Hon ble Supreme Court - HELD THAT:- It is not required to interfere in the matter. The Special Leave Petitions are dismissed.
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2024 (4) TMI 974
Refund of EDD - Period of limitation - Appellant unaware of finalisation of bills of entry - request for finalisation of their provisional bills of entry and cancellation of pre-deposit - HELD THAT:- It is found from the order in original dated 10.03.2021 that nowhere has the original authority mentioned the date of finalisation of the bills of entry, although he has only mentioned that the finalisation was made before July 2019. Further, in the communication dated 27.01.2020 again, the deputy commissioner while intimating about the finalisation of the bills of entry, has asked the appellant to approach refund section insofar as refund of EDD was concerned - In this communication also there is no mention about the date of finalisation of the bills of entry; the lower authority has only talked about the finalisation in the above manner without mentioning about the date of finalisation of assessment, which is very conspicuously absent. Moreover, even the date of dispatch, if made, is also not whispered anywhere, to avoid controversies. None of the communications to the appellant indicates date of actual communication of the order in original dated 29.04.2015. Hence, the prima facie burden on the revenue to adduce proper evidence to show the actual date of communication of the Order in Original, not to speak of the date of dispatch, remains un-discharged - It is thus not only the order appears to have passed in strict conformity with the established principles of law, but even the communication of the same is not at all proved anywhere. Same also appears to be irregular as authorities have quite conspicuously omitted to bring on record the actual date dispatch and the date of communication of the said order, with supporting documentary evidences. The case of the appellant accepted since even up to the date of its request made in the year 2018 for finalisation, apparently, the appellant was not served with the copy of the said Order in Original - the impugned order is set aside as Revenue has failed to prove or bring on record any of evidence in support of its claim that Order in Original was communicated on such and such a date and therefore, the application dated 04.08.2020 filed by the claimant was clearly hit by limitation within the meaning of section 27(1) ibid. - appeal allowed.
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2024 (4) TMI 973
Reduction in the quantum of redemption fine and penalty - enhancement of value - old and used worn clothing, completely fumigated - Confiscation - HELD THAT:- This issue came up before this Tribunal in the case of VENUS TRADERS, RAINBOW INTERNATIONAL, AL-YASEEN ENTERPRISES, GLOBE INTERNATIONAL, KRISHNA EXPORT CORPORATION, PRECISION IMPEX, BMC SPINNERS PVT. LTD., SHIVAM TRADERS, LEELA WOOLEN MILLS, M.U. TEXTILES VERSUS COMMISSIONER OF CUSTOMS (IMPORTS) MUMBAI [ 2018 (11) TMI 625 - CESTAT MUMBAI ], wherein this Tribunal has observed the failure of the original authority to comply with the direction in remand to disclose the margin of profit that prompted the fine and penalty, the matter would normally have to be remitted back by another remand order. However, the paucity of evidence and the negligible scope for ascertainment at this stage deters us from doing so. Following the above cited decision of this Tribunal, it is held that the redemption fine and penalty imposed on the respondent to the tune of 10% 5% respectively on the assessed value is sufficient. Therefore, the redemption fine and penalty confirmed by the ld.Commissioner (Appeals) are sufficient to meet the end of justice. There are no infirmity in the impugned order and the same is upheld - appeal filed by Revenue dismissed.
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2024 (4) TMI 972
Classification of imported goods - Small Form-factor Pluggable (SFP)-25G-SR Optical Transceiver - SFP-10G-SRL Optical Transceiver - QSFP-10G-UNIV Optical Transceiver, etc. - classifiable under Customs Tariff Item (CTI) 8517 6290 or not - exemption/ duty concession under Notification No.57/2017-Customs dated 30.06.2017 (Sl. No.20), as amended - HELD THAT:- It is found that imported goods under dispute have been declared with complete description as Small Form-factor Pluggable (SFP) - Optical Transceiver of various models and notification benefit under Sl. No.20 of Notification No.57/2017-Customs dated 30.06.2017 was claimed for concessional Basic Customs Duty (BCD) of 10%. However, as the proper officer was not convinced with the justification given by the appellants, the impugned goods were re-assessed at merit rate of 20% BCD by denying the notification benefit and the same were appealed against before the Commissioner of Customs (Appeals). On careful reading of the impugned order passed by the learned Commissioner of Customs (Appeals), it transpires that he has given a specific finding that the impugned goods fall under the category of Optical transport equipment . In coming to such conclusion, he had referred to the description of the imported item Transceiver incorporates transmitter and receiver and thus it is an equipment for optical transportation. Accordingly, he has concluded that since these are optical transport equipment, the benefit of customs duty exemption in the exemption entry at Sr. No.20 of the Notification No. 57/2017-Customs dated 30.06.2017 is not applicable to the impugned goods. Since the impugned goods are neither telephone sets under (i) above, nor an apparatus/independent machine for transmission or reception of voice, images or other data, under second group of items mentioned in (ii) above, and are also not covered as specified part under CTI 8517 7010 viz., Populated, loaded or stuffed printed circuit boards , these are specifically covered under the CTI 8517 7090 as other parts . The product under consideration i.e., Small Form-factor Pluggable Optical Transceiver of various models are classifiable under Customs Tariff Item (CTI) 8517 7090, and not under CTH 8517 62 90, as claimed by Revenue. Accordingly, the impugned goods are eligible for exemption/duty concession under Serial No. 5(a) of Notification No. 57/2017-Customs dated 30.06.2017, as amended. Therefore, the impugned order passed by the learned Commissioner (Appeals) in confirmation of the adjudged demands in the original order cannot be sustained on merits. The appeal is allowed in favour of the appellants.
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2024 (4) TMI 971
Valuation of imported Goods - Allowance of discount of 25% to appellant by foreign supplier - related party transaction - remittances made higher than the invoice price or not - HELD THAT:- In the agreement dated 16.06.2001 executed by the appellant and the foreign supplier, the amount of discount was mentioned as 17% only - The invoices raised by foreign supplier showed 25% discount and the remittance by the appellant was made accordingly. The department does not have a case that the remittances do not match with invoice value. In para 8 of the denovo order the adjudicating authority has noted that the appellant has furnished all the particulars of imports made from the year 2001 to 2008 as well as copies of corroborated bank statement. There is no evidence adduced by department to establish that the appellant has made remittances higher than the invoice price. So also the appellant has produced the CA certificate substantiating the payments made to the supplier for the relevant period. The AA has held that the e-mail communication is a mere afterthought. The appellant has been continuously litigating contending that they had been given 25% discount by the foreign supplier. So also, they have later produced the amended agreement in which it has been expressly stated that the 25% discount is applicable retrospectively from the date of earlier agreement. Taking note of all these documents we are of the considered opinion that the appellant has succeeded in establishing that they have been given 25% discount by the foreign supplier. The impugned order is set aside - Appeal allowed.
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Insolvency & Bankruptcy
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2024 (4) TMI 970
Initiation of CIRP - Maintainability of application filed u/s 9 of the Code - additional work got done, with the approval of MD of the Respondent, was not approved by the competent committee - Appellant has taken recourse to Arbitration under MSME Act - Respondent being a government company (PSU) is out of purview of the Code or not - debt of default was not correctly mentioned in the original petition - HELD THAT:- The Impugned Order records that the Respondent doubted existence of letter dated 02.12.2016 and 05.12.2016 as these were not available in the files of the Respondent. It is strange to note that the same Impugned Order, observed in Para 3(vii) of the Impugned Order, where it has been mentioned that the Respondent has stated that a letter dated 11.01.2017 was issued to the claimant intimating that vide earlier letter dated 02.12.2016 and 05.12.2016 the representative of claimant has already been informed that revised BOQ for Kopaganj Project and Ghosi Project has been approved along with terms and conditions as per agreement - Clearly, both the statement recorded in the Impugned Order as submitted by the Respondent are contradictory. The fact is that the Respondent has accepted and communicated to the Appellant regarding acceptance of the revised BOQ and the same should have been dealt with by the Adjudicating Authority suitably. We feel that it will be travesty of justice, if the claims of the Operational Creditor like the Appellant herein are refuted and denied by Public Sector Undertakings like Respondent herein in such casual, catastrophic and unfortunate manner. Afterall it is the faith on such PSUs, Operational Creditors like the Appellant here in start the execution of the work immediately, sometimes even without for formal contract, based on LOI. Hence, the ground of alleged lack of proper approval by the committee of the Respondent and therefore, the Respondent is not bound to make the payment is just not acceptable and stand rejected in the strongest terms. Pre-existing dispute - HELD THAT:- Without going into controversy of Arbitration Award under MSME Act, 2006 V/s the application filed under Section 9 of the Code, it is suffice to note that at the time of filing the application by the Appellant under Section 9 of the Code i.e., on 16.11.2019, there was no petition by the Appellant regarding any arbitration nor any award came in favour of the Appellant which was wrongly presumed to be pre-existing dispute by the Adjudicating Authority in the Impugned Order. On face of it, the assumptions and rational taken by the Adjudicating Authority in this regard on the aspect of pre-existing dispute it patently illegal and required to be treated accordingly. The Adjudicating Authority has jurisdiction to reject the application being incomplete but is also obligated that before such rejection has to give a notice to the Applicant to rectify the defects in his application within seven days of the date of receipt of such notice from the Adjudicating Authority - no notice seems to have been issued by the Adjudicating Authority to the Appellant. Once the date of the original application filed under Section 9 of the Code is treated as 26.11.2019, there is no question of any pre-existing dispute - the demand notice under Section 8 of the Code was issued on 03.09.2019 to the Respondent and no dispute was ever raised by the Respondent prior to issue of such demand notice. In fact, the Respondent chose not to reply to such demand notice. The impugned order is set aside - appeal allowed.
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2024 (4) TMI 969
CIRP - Validity of deed of assignment of lease - Seeking to set aside of the notice served upon them by the Respondent - Resolution Professional wanting to inspect and access certain premises belonging to the Appellant - whether the Deed of Assignment was disputed or not by the Appellant? - whether the Lease Deed in respect of the subject property, consequent on its expiry on 14.11.2021, was further extended? - whether the Corporate Debtor was in clear possession of the same at time of commencement of CIRP? HELD THAT:- Clause 2.1 of the Deed of Lease as placed at para 9 states that the Lease deed clearly stipulated that any extension of the lease after expiry of the lease period shall be through a Lease deed executed between the parties herein and that if no terms are agreed upon, the lease period shall stand automatically expired at the end of the lease period. It is pertinent to point out that the RP had sent a letter to the erstwhile management on 03.08.2023 seeking information on the arrangement under which the Lease Deed had been extended to the Corporate Debtor and whether the store in the subject property was in the possession of the Corporate Debtor as maybe seen at page 156 of Appeal Paper Book (APB). However, no response was admittedly received from the erstwhile management. Neither have any proof of rental payments to the Appellant by the Corporate Debtor after the expiry of the lease has been placed on record to substantiate that the lease continued to subsist - there are no documentation available on record which reliably establishes the extension of lease term beyond the original period. On looking at the legal notice of vacant possession which was served upon the FSWL by the Appellant on 24.05.2022, the same was undisputedly addressed by them to FSWL and not to the Corporate Debtor. Thus, when this legal notice for vacating the subject property was addressed by the Appellant to the FSWL and not to the Corporate Debtor, it is clear that in the Appellant s mind the Corporate Debtor had no role or interface qua the subject property - There is nothing on record to substantiate that there is any evidence of renewal/extension of lease. The Adjudicating Authority has only held that there is no evidence to establish handing over of the subject property to the Appellant. In terms of Section 18(1)(f) of the IBC, undoubtedly the RP is required to take control and custody of any asset belonging to the Corporate Debtor. However, it is significant to note that this provision is subject to the exclusion of assets owned by a third party as provided for under the Explanation Clause. Further, Section 25(2)(a) of the IBC also mandates the RP to take immediate custody and control of all assets of the Corporate Debtor so as to determine the valuation of all the assets of Corporate Debtor - The legislative intent of IBC is that there should be a temporary freeze and prohibition of all actions against the Corporate Debtor to preserve the status quo as it exists on the date of initiation of CIRP so as to enable the Corporate Debtor to resolve its insolvency and bring it back from the throes of corporate death. The present is a case where CIRP was initiated on 27.02.2022. By virtue of the CIRP order, the IRP/RP was appointed and moratorium had kicked in w.e.f. 27.02.2022. The lease deed in respect of the subject property had been entered into by the Appellant with FSWL on 19.07.2018 for a duration of 3 years and 5 months. The lease deed of the subject property had been allegedly assigned by FWSL to FRL by a purported Deed of Assignment dated 06.08.2018 which is clearly disputed. The lease period between FWSL and the Appellant had ended on 14.11.2021 and documents regarding extension of lease period are not available. The right of the Corporate Debtor not to be dispossessed as contemplated in Section 14(1)(d) of IBC will have no bearing on the present facts of the case given that the subject property was not under the possession of the Corporate Debtor at the time of admission of the Corporate Debtor into CIRP. Additionally, neither any factual analysis has been done either by the RP or any application of mind shown by the Adjudicating Authority on how the assets located on the subject property was central for the success of the CIRP and Corporate Debtor's survival as a going concern. Assets owned by a third party in possession of the Corporate Debtor is excluded from the scope of CIRP and moratorium in view of Explanation (a) to Section 18 of the IBC. As the Appellant is a third party and undisputedly the subject property is owned by the Appellant and there is nothing foolproof to show that the Corporate Debtor was in occupation of the same, the subject property clearly fell outside the scope of CIRP and consequently the moratorium - no compelling reasons have been made out before the Adjudicating Authority by the RP to allow access into the subject property and inspection of stock/assets lying therein failing which the CIRP would have been jeopardised. The impugned order is set aside - appeal allowed.
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2024 (4) TMI 968
Rejection of Section 7 Application - NPA - live guarantee constitute debt or not - existence of default or not - Corporate Debtor unable to de-risk the live BGs within the time allowed - A settlement was reached between the parties, where the Corporate Debtor agreed to pay a certain amount and de-risk live Performance Bank Guarantees (PBGs) within specified timelines. - HELD THAT:- It is clear that settlement amount having been paid, the Adjudicating Authority did not commit any error in rejecting Section 7 Application, which was only based on Corporate Debtor not being able to de-risk the live BGs within the time allowed. The present is not a case that BGs were invoked and the Corporate Debtor was asked to deposit the amount for invoked BGs. The BG were given by the Bank with regard to various contracts, which were undertaken by the Corporate Debtor and Corporate Debtor was always ready to deposit the amount by 100% cash margin or by giving CBGs. The learned Senior Counsel for the Corporate Debtor has further submitted that after filing of the Appeal the Corporate Debtor has deposited amount of Rs.3.38 crores, which was required by the Bank for extension of two BGs, which were expiring and the amount of Rs.3.38 crores was deposited by the Corporate Debtor, reducing the amount of live BGs to the extent of Rs.4.27 crores only. In the facts of the present case, the ends of justice will be served in directing the Corporate Debtor to deposit the amount of Rs.3.68 crores with the Appellant, which will be kept in no lien account, to be utilized for clearing the liabilities pertaining to outstanding PBGs, if any. The SBI after adjusting all its liabilities towards live PBGs, may refund the balance amount to the Corporate Debtor. On deposit of the amount of Rs.3.68 crores by the Corporate Debtor, the SBI to release all securities over subject facilities. The impugned order of the Adjudicating Authority dated 18.07.2023 dismissing Section 7 Application filed by the Appellant, is upheld - The Corporate Debtor to deposit the amount of Rs.3.68 crores with the Appellant within thirty days from today, which shall be kept in no lien account, to be utilized for clearing the liabilities of existing live PBGs, if any. After satisfaction of all live PBGs, the SBI to refund the balance amount to the Corporate Debtor - On deposit of amount of Rs.3.68 crores, the Appellant shall release securities over subject properties and handover the relevant documents to the Corporate Debtor. Appeal disposed off.
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Service Tax
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2024 (4) TMI 967
Extended period of limitation - Suppression of facts or not - Levy of Service Tax - health and fitness service - providing education to patients regarding Yoga - donation received in respect of yoga camp / residential Yoga camp - Donation is related to Education or Health and fitness service or not? - penalty - benefit of Section 80 of FA - it was held by CESTAT that it is observed that demand for the period 01.10.2006 to 31.03.2007 needs to be recomputed after reconciling the amounts received by the appellant during that period with the accounts of appellant and the certificate dated 21.01.2012 of the Chartered Accountant (Anil Ashok Associates). HELD THAT:- There are no reason to interfere with the impugned judgment and order. The appeal is accordingly dismissed.
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2024 (4) TMI 966
Extended period of Limitation - suppression of facts or not - Classification of services - supply of tangible goods service or not - deemed sale or not - outward liability towards non-scheduled air transport services under section 73(2) of Finance Act, 1994 - import of aircraft from Non-resident entity on payment of Lease rental, under section 73(2) of Finance Act, 1994 - Interest and Penalty - HELD THAT:- The Department has initiated investigation against the appellant for the first time in June 2010, on the ground that the appellant should discharge its tax liability under the category of supply of tangible goods for use services . However, no Show Cause Notice was issued at that point of time. Investigation was initiated against the appellant again in the year 2012. After expiry of a period of three years from the initiation of first investigation in month of June 2010, the appellant has been served with the impugned Show Cause Notice invoking extended period and alleging wilful evasion of Service Tax - the appellant has been filing the returns regularly and they have not suppressed any information from the Department. Accordingly, the demand of service tax confirmed in the impugned order by invoking extended period of limitation is not sustainable. This view has been held by Tribunal in the case of EIH LIMITED VERSUS C.C.E., DELHI-I [ 2018 (9) TMI 921 - CESTAT NEW DELHI] , wherein the Tribunal has held The alleged suppression must be wilful and it is for the Department to prove the same as already observed above, that the Department has failed to prove the wilful intention. As a result, we are of the opinion that the Department was not entitled to invoke the extended period of limitation. Accordingly, the demand falling beyond one year period preceding show cause notice dated 21-12-2010 is not sustainable and accordingly is set aside. In terms of Section 73 of the Finance Act, 1994, a period of 1 (one) year from the relevant date has been prescribed to serve the Notice on the person chargeable with the service tax which has not been levied or paid or short levied or short paid. This period of one year has been increased to 18 months w.e.f. 28.05.2012. In the present case, the demand of service tax has been raised for the period 2008-09 to 2011-12 vide the impugned Show Caise Notice dated 18.10.2013 - the appellant is liable to pay service tax along with interest for the normal period of limitation, under the category of 'supply of tangible goods service'. As no suppression of fact with intention to evade the tax is established in this case, no penalty is imposable. Lease rental paid by the appellant to Non-resident entity under reverse charge - supply of tangible goods service - HELD THAT:- The demand has been raised on the Lease rental paid by the appellant to Non-resident entity under reverse charge. The appellant submits that there is no service involved in this transaction of leasing of the aircraft. A perusal of the Terms and Conditions of the Lease/rental agreement reveals that the operation of the aircrafts has been done by the appellant by appointing their own aircraft crew, maintenance staff, by undertaking maintenance and services activities. Thus, in terms of the conditions of lease rental agreement, both possession and control of aircraft has been transferred in favour of the appellant - As possession and effective control has been transferred to the appellant, the demand of service tax under the category of 'supply of tangible goods' is not sustainable. Interest and penalty - HELD THAT:- The demand confirmed in the impugned order on this count is not sustainable and hence, the same is set aside - As the demand of service tax is not sustainable, the demand of interest and penalty is also not sustainable. Appeal disposed off.
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2024 (4) TMI 965
Refund of CENVAT Credit - Discretion Power of the refund sanctioning authority - denial on the ground that improper description of the input services noted in the invoices of the Appellant/exporter of services - HELD THAT:- On account of legal services availed as input services, no invoices were raised showing the services as legal services and on the other hand copy of G.A.R.-7 Challan evidencing payment of Service Tax clearly indicates that the said payments were made under Business Auxiliary Services , Cab Operators Services , Sponsorship Services , etc. This being the ground for refusal, it is not to understood as to why the question of re-assessment is to come into play when such refusal is permissible well under Rule, 9 of the CENVAT Credit Rules, 2004. If particulars of description of goods or taxable service is not properly reflected in the duty paying document and that to the satisfaction of the Dy. Commissioner/Assistant Commissioner of Central Excise about its receipt and accounting for, then the discretion lies with the refund sanctioning Authority namely the Deputy Commissioner or Assistant Commissioner of Central Excise to allow the CENVAT Credit or not and such discretion having been exercised judicially, there are no irregularity on the part of Assistant Commissioner (Refunds-II) CGST, Mumbai East in not allowing the same refund that got confirmed by the order of the Commissioner (Appeals). The order passed by the Commissioner of GST CX (Appeals-III), Mumbai in rejecting grant of refund to the Appellant on legal expenses is hereby confirmed - Appeal dismissed.
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2024 (4) TMI 964
Non-payment of service tax - CHA Service - Business Auxiliary Services - reimbursement expenses received - failure to discharge service tax on the incentives / brokerage received by them from steamer agents / shipping lines - demand of differential duty with interest and penalty. Differential service tax demand raised by the Department under CHA Services - HELD THAT:- The issue as to whether the reimbursable expenses has to be included in the taxable value is settled by the decision of the Hon'ble Apex Court in the case of UNION OF INDIA AND ANR. VERSUS M/S. INTERCONTINENTAL CONSULTANTS AND TECHNOCRATS PVT. LTD. [ 2018 (3) TMI 357 - SUPREME COURT] . Following the same, the said demand cannot sustain and requires to be set aside. Demand under Business Auxiliary Services - It is the case of the Department that the appellant received incentives / brokerage from the steamer agents / shipping lines for promoting and marketing the business of steamer agent and shipping lines - HELD THAT:- It is to be noted that the appellant has not been engaged by the steamer agents / shipping lines to provide any service to them. They act as agent for the importer or the exporter. Merely because the steamer agent has paid some incentive to the appellant when they facilitate the export consignment of the importers / exporters it cannot be said that the same would become consideration for providing services. Every flow of money from a person to another cannot be said to be a consideration for providing services. The relationship of service provider and service recipient has to be looked into which is absent in this situation - the demand under Business Auxiliary Services cannot sustain. The impugned order is set aside - The appeal is allowed.
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2024 (4) TMI 963
Levy of Service tax - renting of immovable property service - religious body or not - assessee has paid the service tax along with interest under VCES - period from 01.10.2008 to 30.06.2012 - penalty - HELD THAT:- The assessee fits in to the category of religious body . As per the definition of Renting of immovable property service, such service rendered by a religious body or to a religious body is excluded from the levy of service tax. The assessee herein is not liable to pay service tax under the category of renting of immovable property services up to 30.06.2012. Therefore, the demand for the period prior 30.06.2012 cannot be sustained and require to be set aside. For the period after 30.06.2012 the assessee discharged the service tax up to 31.12.2012 under VCES. As per the said scheme assessee is not required to pay interest or penalty. In the present case the assessee inadvertently paid the interest also. On being pointed out the adjudicating authority has appropriated the said amount towards the interest payable for the period prior to 01.07.2012. Penalty for the period after 30.06.2012 - HELD THAT:- The assessee being a religious body was not liable to pay service tax prior to 01.07.2012. after the amendment w.e.f. 01.07.2012 the assessee is liable to pay service tax and has discharged the same before passing the order. The issue being interpretational and the period being transitional when the new service tax regime become applicable, we do not find any grounds to impose penalty for the period 31.12.2012 to 30.09.2013. the view of the adjudicating authority in not imposing penalty is upheld. The department appeal is dismissed. Appeal allowed.
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Central Excise
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2024 (4) TMI 962
CENVAT Credit - mentioning of wrong address in the invoice - HELD THAT:- The orders dated 22.08.2019 and 20.08.2020 are hereby quashed and set aside. The matter is remanded back to the adjudicating authority-Additional Commissioner of CGST and Central Excise who shall decide the proceedings on remand, after giving fullest opportunity to the petitioner, without in any way being influenced by this order and on merits. None of the findings and observations recorded in this order would in any manner influence or prejudice either side. Application disposed off.
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2024 (4) TMI 961
CENVAT Credit - Input service distribution - credit distributed by M/s. Parle Biscuit Private Ltd. i.e. inputs service distributor to the appellant, a contractual manufacturer/job worker, for the period prior to 01.04.2016 is in accordance with Rule 7 of CENVAT Credit Rules, 2004 as prevailing at the relevant time or not - HELD THAT:- Prior to 01.04.2016 also, Rule 7 allows distribution of credit to its manufacturing units. Here the words used are its manufacturing units which, in absence of anything contrary, cannot be said to be limited to manufacturing unit owned by Parle Biscuits only. The first principle of interpretation is that the words used in any statute have to be interpreted without adding any words. The term its manufacturing unit has certainly a wider term to include an outside manufacturing unit or the job worker. Another thing which supports my aforesaid view is the Registration Exemption Notification issued in the year 2001 under Rule 9(2) of Central Excise Rules, 2001 which provides for exemption from registration of the authorised person to manufacture goods on behalf of principal manufacturer - As per the agreement between appellant and Parle Biscuits, they were receiving the raw materials from them and finished goods were processed at their factory with their won labour but Trademarks of Parle Biscuits were cleared on payment of duty to the depot of Parle Biscuits. Number of decisions have been placed on record by the learned Counsel in support of her submission that even prior to 01.04.2016 Rule 7 ibid permitted distribution of credit by the Input Service Distributor even to contract manufacturer or the job worker. I have gone through all the decisions. In my view the issue involved herein is no more res integra in view of those decisions and in particular the reference answered by the Larger Bench of the Tribunal on the very same issue in the matter of the M/S. KRISHNA FOOD PRODUCTS, MS. MARIAMMA R. IYER AND M/S. PARLE BISCUITS PVT LTD. VERSUS THE ADDITIONAL COMMISSIONER OF CGST C. EX [ 2021 (7) TMI 296 - CESTAT NEW DELHI] in which it has been held even in terms of the provisions of rule 2(m) and rule 7 of the CENVAT Rules, as they stood prior to 01.04.2016, the appellant could distribute CENVAT credit in respect of the service tax paid on inputs services to its manufacturing units, including a job workers. M/s Parle Biscuits Pvt Ltd. i.e., the input service distributor has rightly distributed the Credit to the appellant and the appellant is justified in availing the same - the impugned order is set aside - appeal allowed.
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2024 (4) TMI 960
MODVAT Credit - proper duty paying documents or not - challans-cum-invoices issued by M/s. SAIL, do not contain the duty payment details - HELD THAT:- N/N. 15/1994-C.E.(N.T.) dated 30.03.1994 provides relaxation to avail MODVAT Credit on the basis of challans-cum-invoices issued by stockyards of manufacturers subject to the condition that such challans-cum-invoices shall contain all the duty payment particulars. In the present case, it is alleged that the challans-cum-invoices based on which the appellant availed credit did not contain the details of payment of duty and accordingly, the MODVAT Credit has been disallowed. There is no allegation in the Show Cause Notice or the impugned Order-in-Original that the appellant had not received the goods in the premises of the factory. There is no allegation that the supplier viz. M/s. SAIL has not made payment of duty. If there was any doubt regarding payment of duty by M/s. SAIL, then the Department should have demanded the duty from M/s. SAIL and not from the appellant. As far as the appellant is concerned, they have received the goods into the factory on payment of appropriate duty and utilized the same in the manufacture of their finished products based on the challans-cum-invoices issued by the depots of M/s. SAIL. Thus, we observe that there is no dispute regarding the duty-paid nature of the goods. The substantive benefit of MODVAT Credit cannot be denied due to procedural lapses. Thus, the substantive benefit of MODVAT Credit cannot be denied on the ground of procedural lapses. Accordingly, the appellant is eligible for the MODVAT Credit on the basis of the challans-cum-invoices issued by the depots of M/s. SAIL - the impugned order is set aside. Appeal allowed.
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2024 (4) TMI 959
Non-payment of duty fixed for the month of March 2000 - Compounded Levy Scheme - invoking the proviso to Section 11A of the Central Excise Act, 1944 alleging suppression of fact - extended period of limitation - HELD THAT:- It is observed from the Show Cause Notice that the demand has been raised by invoking the provisions of Section 11A of the Act and penalty has been imposed for contravention of the provisions of Section 11A on the ground that the appellant had mala fide intention to evade the payment of duty. The appellant has declared the non-payment of duty for the month of March 2000 in the return filed by them. They have not suppressed any information from the Department. The Show Cause Notice was issued by invoking the proviso under Section 11A on the ground that the appellant had deliberately not paid Central Excise Duty. No suppression of fact with intention to evade payment of duty exists in this case. The appellant has declared all the information in their RT-12 return and the Notice has also been issued upon scrutiny of the RT-12 return filed by the appellant for the month of March 2000. Accordingly, the extended period of limitation as provided under proviso to Section 11A is not invokable in the present case. The demand has been raised by invoking the proviso to Section 11A of the Act. As the ingredients for invoking proviso to Section 11A does not exist in this case, the demand confirmed in the impugned order is not sustainable on the ground of limitation. The demand confirmed in the impugned order set aside on the ground of limitation - appeal allowed.
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2024 (4) TMI 958
SSI Exemption - clubbing of clearances of four units - dummy unit created for the purpose of claiming benefit of SSI exemption - Confiscation of the goods and imposition of redemption fine - HELD THAT:- Though the units were jointly managed by way of common employee, common workers, common marketing set-up etc., the benefit of SSI exemption notification was claimed individually by each of one of them. M/s Precision Equipment Co. was started in the year 1991 as proprietary firm under the proprietorship of Shri Rajubhai Jaisinghani. Later on, one by one other firms were created. Another allegation of the Revenue is that all the units were so much interdependent on each other that production and marketing were commonly managed by Proprietors and Directors of the firm and there is financial flow back between them. It is found that all the units have their own separate and independent existence. M/s Precision Equipment Co. was a proprietorship firm of Shri Rajubhai Jaisinghani, M/s Pratik Enterprises was a proprietorship firm of Shri Bhagubhai Prajapati, M/s Precision Industries was a proprietorship firm of Shri Prembhai Manuskhani and M/s Precision Rotogravure pvt. Ltd. had three directors viz. (i) Rajubhai Jaisinghani, Shri Bhagubhai Prajapati and Shri Prembhai Mansukhani. Separate Locations, Central Sale Tax Registration Certificate, Gujarat Commercial Tax Registration Certificate, separate Electricity Meters and separate Bank Accounts. Appellants also produced before us their separate profit loss accounts, balance sheets, Audit reports, VAT return filed by them, sample bank account statements, purchase accounts and sales accounts. In the present matter it is admitted fact by the revenue itself that M/s Precision Industries had bought raw materials and got finished goods manufactured on Job Work Basis. The Job Workers had also accepted that they had done job work of M/s Precision Industries also. The officers had also visited the premises of all units and found that all the units have separate existence and have separate premises and independent electricity connection etc. Some processes were being done outside the premises on job work basis by the said units, which were also confirmed by the job workers. In the present case the individual manufacturing appellants have independent identities since the Revenue could not establish that their books of accounts are common, that their bank accounts are common, that their registration with Income Tax, Sales Tax are common and that there is common funding and that there is mutuality of interest and that there is financial flowback. In the absence of any such evidence, it is held that the manufacturer units are independent units and therefore, their clearances could not be clubbed together. Therefore, the issue of clubbing the clearances is not sustainable in the absence of concrete and corroborative evidences. Confiscation of the goods and imposition of redemption fine - HELD THAT:- Confiscation of the goods which were not available is not legal and correct, therefore consequently redemption fine was not warranted as held in the Larger Bench s judgment in the case of SHIV KRIPA ISPAT PVT. LTD. VERSUS COMMISSIONER OF C. EX. CUS., NASIK [ 2009 (1) TMI 124 - CESTAT MUMBAI] . The impugned order is set aside - appeal allowed.
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2024 (4) TMI 951
Violation of principles of natural justice - opportunity of personal hearing, not provided to petitioner - exemption for the services provided to the Government - attachment of Bank Accounts of petitioner - HELD THAT:- This issue has already been decided by the Division Bench of the Principal Seat of this Court in W.P.No.24996 of 2019, dated 30.11.2022, wherein, similar contractors are directed to approach the appellate authority and it was held that wherever the Orders-in-Original have been passed, the respective petitioners are given liberty to file statutory appeal before the Appellate Authority subject to the compliance of the other requirements of pre-deposit the amount as is contemplated under Section 35F of the Central Excise Act, 1944 as made applicable to the Finance Act, 1994, within a period of thirty (30) days from the date of receipt of a copy of this order. This writ petition is disposed of with a liberty to the petitioner to file a statutory appeal before the Appellate Authority concerned within a period of four weeks from the date of receipt of a copy of this order.
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CST, VAT & Sales Tax
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2024 (4) TMI 957
Validity of assessment order - Levy of penalty u/s 53(1)(ii) of the AP VAT Act - wilful evasion of tax or not - SCN also do not categorically mention that it was a case of wilful evasion of tax - SCN barred by time limitation - Section 21(4) of AP VAT Act, 2005 - HELD THAT:- As seen from the show cause notice dated 24.06.2021 there is a mention of under declaration of 14.5% purchases during the year 2016-17. It is also mentioned that penalty proceedings would also be issued separately as the dealer was found to have committed offence under the provision of AP VAT Act. In the revised show cause notice also it is mentioned that the petitioner consumed lot of time and avoided production of records in-time. Provisions of Section 21(5) of the Act were made applicable to the facts of the case. Now coming to the applicability of the extension of period of limitation by the Hon ble Supreme Court in view of the then prevailing Covid situation. The Hon ble Supreme Court in IN RE: COGNIZANCE FOR EXTENSION OF LIMITATION [ 2021 (3) TMI 497 - SC ORDER ] has considered the difficulties that may be faced by the litigants across the country in filing their petitions/applications/suits/appeals/all other proceedings and extended the period of limitation in all such proceedings irrespective of limitation prescribed under the general law or special laws whether condonable or not. The period of limitation has to be extended to all proceedings including the issuance of show cause notice or passing of assessment orders or filing of appeals before the Appellate Tribunals against the orders which arise out of the show cause notices and the assessment orders - That apart, Section 21(5) of the AP VAT Act would entitle the authorities to conduct the assessment within a period of six years of the date of filing of the return or the first return relating to such offence. It is explicitly mentioned in the show cause notice dated 24.06.2021 that it was the case of under declaration of purchases during the year 2016-17. In our considered opinion this would suffice for proceeding with the assessment within a period of six years from the date of filing of the return or first return relating to such offence. That apart on these grounds the writ petitions deserves to be dismissed. There is an efficacious, alternate and statutory remedy available for the petitioner. Petition dismissed.
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2024 (4) TMI 956
Interest on delayed refund - relevant period for calculation of refund - Section 42(1) of the DVAT ACT, 2004 - HELD THAT:- Reference may be had to Article 25 of the Schedule to the Limitation Act, which stipulates that the period of limitation for money payable for interest upon money due from defendant to the plaintiff is 3 years and the time from which the period begins is when the interest becomes due. The petitioner would be entitled to interest for a period of three years immediately preceding the filing of the subject petition till the date payment was made of the petitioner. The rate of interest applicable would be @ 6 % per annum in terms of Notification No. F.3(59)/Fin.(T E)/2005-06/903 Dated 30th November, 2005 whereby the annual rate notified by Central Government is 6% per annum. This petition is disposed of directing the respondents to pay interest @6% on Rs. 37,99,453/- refunded on 28.07.2022 for the period of three years immediately preceding the filing of the petition till the date of disbursal of refund to the petitioner.
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2024 (4) TMI 955
Time limitation for passing assessment order - Classification of goods - Polymer Nylon Chips - classifiable under Entry 83 Schedule-II(B) of the Uttarakhand Value Added Tax Act, as Plastic Granules or not - whether re-assessment, under Section 29(4) of the Act could be made on the change of opinion, especially keeping in view that the same records had already been scrutinized by the Assessing Authority? Time limitation for passing assessment order - HELD THAT:- As per Section 29(7) of the U.P. Commercial Tax Act, reassessment can be made within a period of 8 years after expiry of the Assessment Year. In the present case, as per the Uttarakhand Value Added Tax Act, Section 29(4) deals with the procedure for doing reassessment - In the present case, the Assessment Year is 2011-12, and before the end of six years, the reassessment order can be passed. The reassessment order has been passed on 27.03.2017, which is before the end of six years of the Assessment Year 2011-12, and hence the reassessment order passed under Section 29(4) of the Act was done within limitation, and this aspect has been affirmed by the Tribunal, and the Appeals, qua this ground, has been rightly dismissed. Whether Nylon Chips manufactured by the appellant are covered by Entry 83 of Schedule-(II)(B) of the Act? - HELD THAT:- The appellant-department have themselves accepted that, with respect to the Plastic Granules, when they are put into procedure by adding fillers and additives, the strength of the plastic becomes better. Further, as per the opinion given by the British Plastics Federation, and Central Institute of Plastics Engineering Technology (CIPET), Nylon refers to a group of Plastics known as Polyamide, and there is no change in the original material (raw material) in this manufacturing process of Nylon-6. Hence, the use of raw material, i.e. Plastic Granules to produce Nylon Chips will not alter the character of Nylon Chips, being a Plastic, and under the British Plastics Federation, Nylon is considered under the Plastics group - There is no substantial question of law, which requires to be considered in the present Revision. The Nylon Chips have been rightly held to be falling in Entry 83 of Schedule II(B) of the Act by the Tribunal. There is no merit in the present Revision, and the same is, accordingly, dismissed.
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Indian Laws
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2024 (4) TMI 954
Food Safety and Standards - Inadequate labeling - Misbranding - Adulteration of foods or not - sugar boiled confectionaries - packets did not show the prescribed particulars such as complete address of the manufacturer and the date of manufacturing - violation of Rule 32(c) and (f) of the Prevention of Food Adulteration Rules, 1955. Appellants would argue that the entire case of the prosecution is liable to be dismissed for the simple reason that the Appellants were charged Under Rule 32(c) and (f) of the Rules but these provisions were not related to misbranding and were regarding something else. HELD THAT:- The Prevention of Food Adulteration Act, 1954 was repealed by the introduction of the Food Safety and Standards Act, 2006 where Section 52 provides a maximum penalty of Rs. 3,00,000/- for misbranded food. There is no provision for imprisonment. Whether the Appellant can be granted the benefit of the new legislation and be awarded a lesser punishment as is presently prescribed under the new law? This Court in T. Barai v. Henry Ah Hoe [ 1982 (12) TMI 186 - SUPREME COURT] , had held that when an amendment is beneficial to the Accused it can be applied even to cases pending in Courts where such a provision did not exist at the time of the commission of offence. The present Appellant No. 2, at this stage, is about 60 years of age and the crime itself is of the year 2000, and twenty- four years have elapsed since the commission of the crime. Vide Order dated 06.08.2018, this Court had granted exemption from surrendering to Appellant No. 2. Considering all aspects, more particularly the nature of offence, though the findings of the Courts below regarding the offence is upheld, but the sentence of Appellant No. 2 from three months of simple imprisonment along with fine of Rs. 1,000/- is convertred to a fine of Rs. 50,000/-. The sentence of Appellant No. 1 which is for a fine of Rs. 2000/- is upheld. The appeal is partly allowed.
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2024 (4) TMI 953
Dishonour of cheque - insufficient funds - vicarious liability - liability of group companies - liability common Directors of the group, namely, Right Choice Group of Companies - Lifting of the corporate veil - HELD THAT:- Section 141 of the NI Act is neither intended nor extends the vicarious liability on the group companies. It is intended to create vicarious liability only on the persons and officers who are either in-charge of the company, which is the main accused, or have connived or are negligent, resulting in the accused company committing the offence under Section 138 of the NI Act. Section 141 of the NI Act, therefore, cannot extend to the group companies - Section 138 of the NI Act, in fact, creates liability only on the drawer of the cheque . As it creates a criminal liability, there is no scope of lifting of the corporate veil. It is only because of the application of Section 141 of the NI Act, that the liability, in case the offence under Section 138 of the NI Act is committed by a company, has been extended by a deeming fiction on the person in-charge of or holding an office, making them equally liable for the offence. The said provision, however, cannot extend to other corporate entities or group of companies. This Court in Yashovardhan Birla v. CECIL Webber Engineering Ltd., [ 2023 (4) TMI 706 - DELHI HIGH COURT ], has reiterated that large business conglomerates may have a number of companies under them, which may be ultimately managed by a particular family or group of investors, but to run the day-to-day affairs, officers and professionals are appointed in such companies. In such cases, the head of the Company cannot be made liable and taken into the purview of Section 141 of the NI Act, doing so would unfairly and unnecessarily expand the provisions of vicarious liability under the NI Act. Thus, the respondent no. 3 could not have been proceeded against only on the allegation that it is a group company of the accused no. 1, which is the drawer of the cheque in question. Liability of common Directors of the group, namely, Right Choice Group of Companies - HELD THAT:- The petitioner has placed no document on record to show that the respondent nos. 1 and 2 were the Directors of the accused no. 1, which is the drawer of the cheque. There is no averment in the complaint that the respondent nos. 1 and 2 were persons in-charge of or responsible to the accused no. 1 for the conduct of its business. Apart from stating that the respondent nos. 1 and 2 have acted in connivance with accused nos. 1 and 3 or that the accused no. 3 has acted on their express instructions, there is no material placed on record by the petitioner for the said averment - The only reliance of the petitioner even in the present petition is on the alleged LinkedIn profile of respondent no. 1, which inter alia claims respondent no. 1 to be the Director of the Right Choice Group. However, accused no. 1 is not the Right Choice Group but Right Choice Marketing Solutions JLT. There are no merit in the challenge made by the petitioner in the present petition - petition dismissed.
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