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TMI - e-Newsletter TaxTMI Reopening of assessment u/s 147 - second... TaxTMI Validity Of order passed without signed by the... TaxTMI Seeking renewal of registration of Goods Service... TaxTMI Detention Order under COFEPOSA - legal heirs of... TaxTMI Rectification u/s 154 - The Assessee argued that... TaxTMI Seeking rectification in Form GSTR-1 - limitation... TaxTMI Validity of Orders passed u/s 73 - excess claim of... TaxTMI Penalty for Non-filing of monthly return - Seeking... TaxTMI Detention of the goods and vehicle - stock transfer... TaxTMI Refund of EDD - Period of limitation - Appellant... TaxTMI Additions on the basis of material seized during... TaxTMI Rejection of application for registration u/s... TaxTMI Demand of late fee u/s 47(1) of the CGST / SGST Act... TaxTMI Validity Of Order passed u/s 73 - Denial of ITC... TaxTMI Validity Of Order passed u/s 73 - cryptic order -... TaxTMI Latest Case-Laws TaxTMI Latest Notifications + Circulars TaxTMI GST Council Decisions TaxTMI

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TMI Tax Updates - e-Newsletter January 3, 2024 Case Laws in this Newsletter: GST Income Tax Customs Corporate Laws Insolvency & Bankruptcy Service Tax Central Excise CST, VAT & Sales Tax Highlights / Catch Notes GST: Validity of provisional attachment order - on perusal of the provisional attachment order issued under Form GST DRC 22 r/w Rule 159(1), it does not contain any reasons except mentioning that in order to protect the interest of the revenue and in exercise of the powers conferred U/s 83 of the Act the said order was issued. Needles to emphasize that reasons are live-nerve of any order of the public authority, without which the effected party cannot effectively oppose and submit his stand. - Attachment proceedings set aside - HC Visit to Get Source GST: Seeking permission to petitioner to amend the GSTR-1 Form - since the petitioner is not an individual and it is a company and it must have been availing services of the legal professionals and tax consultants, such mistake cannot be condoned unconditionally and as such it shall pay the cost of Rs. 25,000/- to the High Court Legal Services Committee, Calcutta, within ten days from date and shall file proof of payment of the same along with the corrected GSTR-1 Form. - HC Visit to Get Source GST: Detention of goods on incorrect grounds - when the show-cause notice was issued, there is no whisper of any invalid document whatsoever. In fact, the stand was completely changed by the Revenue and this volte face cannot be countenanced by this Court. The detention of goods causes serious prejudice to an assessee and the same can only be done on the basis of specific, valid and reasonable grounds - In the present case, it is quite obvious that at the time of detention, the ground that was stated by the Revenue was incorrect - The detention order and the subsequent SCN were bad in law - HC Visit to Get Source Income Tax: Stay of all the recovery proceedings - addition of dividend as per section 2(22) as consideration paid by the appellant for purchase of its own shares from the shareholders - Scheme was approved by this Court - interim relief granted partly - HC Visit to Get Source Income Tax: Condonation of delay u/s 119(2)(b) - delay in filing the income tax return was 26 days - With the admission of the application, the petitioner is permitted to file the return by waiving the time limit and the same shall have to be scrutinized in accordance with the provisions of the Income Tax Act, 1961. - HC Visit to Get Source Income Tax: Additions against loss claimed due to goods being damaged/destroyed by fire - since the findings of fact have been returned by the Tribunal that what was destroyed in the fire were goods in which the respondent/assessee was trading, the loss suffered was a revenue loss and hence deductible. - HC Visit to Get Source Income Tax: Validity of Faceless Assessment order - AO has proceeded in a hurried manner to some extent, which is in violation of the principles of natural justice. - the impugned order is set aside and the respondents are directed to open the window for uploading objection to the show cause notice - Matter restored back for fresh assessment - HC Visit to Get Source Income Tax: Penalty u/s 271D - cash received of sales of immovable property - allegation of violation of provisions of Sec.269SS - cash payment was made at one go before the subregistrar at the time of registration of sale deeds of plots - This provision will not apply to the transaction that happens at the time of final payment at the time of registration of sale deed and payment is made before sub-registrar at the time of registration of property. - AT Visit to Get Source Income Tax: Reopening of assessment u/s 147 after 4 years - Validity of Sanction for issue of notice u/s 151 - respectfully following the aforesaid decision provisions of section 151, as it stood during the assessment year 2017-18, i.e. the year in which reasons were recorded by the AO for reopening the assessment and notice u/s 148 was issued, will be applicable and thus, we find no infirmity in the sanction granted by PCIT u/s 151 in the present case. - AT Visit to Get Source Income Tax: Penalty u/s 271D - period of limitation - CIT(A) took the date on which the one year period from the end of the financial year in which the notice was issued as 31/03/2022. - We are unable to understand where from this date has come. Expiry of one year is not relatable to this date either from the date of the assessment order for the assessment year 2017-18 or from the date of issuance of notice u/s 271D of the Act, initiating the proceedings. - AT Visit to Get Source Income Tax: Bad debts - Disallowance of advance/balance written off claimed as deduction - the amount advanced by the assessee company to commission agent, for the purchase of certain agricultural land as stock-in-trade of its business in its normal course of business as a real estate developer, i.e., for purchase of stock-in-trade - Claim as business loss allowed - AT Visit to Get Source Income Tax: Disallowance of the provisions made for leave encashment - Post 01.04.2001, deduction of any sum on account of payment towards employees leave encashment would be allowed only in the previous year when assessee makes actual payment - AT Visit to Get Source Income Tax: Assessment u/s 153A - Undisputedly, the document on the basis of which addition has been made was not recovered from the search upon assessee but from the premises of M/s. Zoom Developers Pvt. Ltd. In such circumstances, assessment should have been framed u/s 153C of the Act following the proper procedure as per section 153C of the Act. - Assessment u/s 153A is invalid - AT Visit to Get Source Income Tax: Adjustments / additions u/s 143(1) - CPC made disallowed without considering the objections / reply filed by the assessee - Empty formality - Ld. NFAC ought to have considered the above additional documents and adjudicated the case in accordance with law. Since it is only a proceeding u/s. 143(1) and not a scrutiny assessment where assessee is expected to file all necessary documents along with the Return of Income. - Matter restored back to re-adjudicate the issue - AT Visit to Get Source Income Tax: Addition u/s 68 - assessee has received share application money from 16 companies - Accommodation entries or not? - AO has observed that these subscribers are either showing loss or meager profits and such meager profits are not commensurate with the investments made by them. However, there is no bar under the law that a person could not make investments out of borrowed funds. - Additions deleted - AT Visit to Get Source Customs: Classification of imported goods - Stainless Steel tube fitting – Tees, Crosses - The goods in question imported by the appellants are fittingly fall under the CTI 7307 2200 inasmuch as the description of the product submitted by the appellants clearly demonstrate that the same are treaded elbows, bends etc. - The contention of the revenue that another importer has claimed different classification, rejected - AT Visit to Get Source Corporate Law: Procedure for filing an appeal - failure to submit certified copy of order of NCLT - Once an appeal is filed, it is expected that immediately thereafter certified copy will be filed - However, in the present case till date certified copy of the impugned order has not been brought on record. - The present appeal not entertained due to the latches on the part of the appellant - AT Visit to Get Source IBC: CIRP - Jurisdiction of Adjudicating Authority - imposition of cost / fine and intent of Section 70 of IBC - There are no hesitation in holding that the word “fine”, used consciously by the Adjudicating Authority in the Impugned Order, is covered in penalty which is required to be dealt under Section 70 and 236 of the Code and which further is not within jurisdiction of the Adjudicating Authority. - AT Visit to Get Source IBC: CIRP - Jurisdiction and constitution of single member bench of NCLT - Approval of resolution plan - Until and unless a notification is issued under the first proviso to Section 419(3) of the Code the single judicial member cannot take upon itself the jurisdiction to entertain an application such like the one in hand and decide the same, therefore, the impugned order has been passed by an authority having no jurisdiction. - AT Visit to Get Source IBC: CIRP - Right of Operational Creditor to seek a copy of the information memorandum - the Operational Creditor being a participant in the meeting of the CoC has no right to seek a copy of the information memorandum. - AT Visit to Get Source IBC: CIRP - Disapproval of Resolution Plan - Liquidation of the Corporate Debtor ordered - ineligible under Section 29 (A) (g) of the Code - It is evident that once the Resolution Applicant become ineligible under Section 29 (A) (g) of the Code, the Adjudicating Authority is bound to reject the Resolution Plan and consequently order for Liquidation of the Corporate Debtor - AT Visit to Get Source IBC: CIRP - Seeking not to treated as a related party of the Corporate Debtor - the Adjudicating Authority has erred in making specific observation that no material has been brought on record except general observations given by the RP on the basis of the order of SAT whereas the Appellant has produced on record a detailed summary which has been prepared on the basis of MCA Data which though has been reproduced in the impugned order from pages 89 to 111 but it has not been referred to in the discussion part - Matter restored back for fresh consideration - AT Visit to Get Source Service Tax: Power of Commissioner (Appeals) to condone delay - Condonation of delay of more than 43 months - Whether the Tribunal is empowered to go into the condonation power of the Commissioner (Appeals) and can it direct him to condone the same by way of any power vested in the Tribunal? - Held No - AT Visit to Get Source Central Excise: Valuation/calculation of Excise duty - the sales tax concession retained by the assesses is required to be added in the assessable value for the purpose of levy of Central Excise duty. - However, the same is to be included in the transaction value but not in the MRP based value - Demand confirmed for the normal period of limitation only - AT Visit to Get Source Articles ISSUANCE OF ORDER UNDER SECTION 73 OF CGST IMMUNITY FROM IMPOSITION OF PENALTY FOR MISREPORTING OF INCOME Document Identification Number (DIN) up dates for brain storming and gaining further knowledge and experience from learned other authors and readers . The Punjab Accountants Association is suing the government to rectify the inaccurate GST notice. Notifications Central Excise 02/2024 - dated 1-1-2024 - CE Effective rates of Special Additional Excise Duty on petrol and diesel - Amendment in Notification No. 04/2022-Central Excise, dated the 30th June, 2022 01/2024 - dated 1-1-2024 - CE Seeks to further amend notification No. 18/2022 - Central Excise in order to revise the SAED rate on petroleum crude DGFT 56/2023 - dated 1-1-2024 - FTP Amendment in Para 2.31 of the Foreign Trade Policy, 2023 - Used IT Assets (laptops, desktops, monitors, printers) - Import from Special Economic Zone (SEZ) to Domestic Tariff Area (DTA) GST - States 70/GST-2 - dated 29-12-2023 - Haryana SGST Amendment of Notification No. 52/GST-2, dated 23.08.2022 (Notification under section 168A to extend dates of specified compliances under the HGST Act, 2017) 29/2023 - State Tax - dated 12-12-2023 - Jharkhand SGST Special procedure to be followed by a registered person or an officer u/s 107(2) of JGST Act who intends to file an appeal against the order passed by the proper officer 52/2023-State Tax - dated 24-11-2023 - Mizoram SGST Mizoram Goods and Services Tax (Third Amendment) Rules, 2023. F.12 (1) FD/Tax/2024-68 - dated 1-1-2024 - Rajasthan SGST Seeks to extend dates of specified compliance in exercise of powers under section 168A of RGST Act, 2017 News RBI releases draft circular on declaration of dividend by banks and remittance of profits to Head Office by foreign bank branches in India Chief Minister of Haryana Sh. Manohar Lal launched the One Time Settlement-2023 (OTS) Scheme through the Excise and Taxation Department. A record of over 8.18 crore Income Tax Returns (ITRs) filed for A.Y. 2023-2024 upto 31.12.2023; Y-o-Y increase of 9% Case Laws: GST 2024 (1) TMI 76 Validity of provisional attachment order - issue under Chapter XV of APGST Act, 2017 - It is contended that Section 83 authorizes the provisional attachment not only during the pendency of any proceedings U/s 62 or 63 or 64 or 67 or 73 or Section 74 but after initiation of any proceeding under Chapter XII, Chapter XIV or Chapter XV . HELD THAT:- Even after filing of the counter by the respondents, there is no scope to reverse the opinion expressed by this Court in the interim order. No doubt in the counter it is claimed by the respondents that order DRC-22 under Section 83 was issued giving specified reasons. However, on perusal of the provisional attachment order dated 01.04.2022 issued by the 4th respondent under Form GST DRC 22 r/w Rule 159(1), it does not contain any reasons except mentioning that in order to protect the interest of the revenue and in exercise of the powers conferred U/s 83 of the Act the said order was issued. Needles to emphasize that reasons are live-nerve of any order of the public authority, without which the effected party cannot effectively oppose and submit his stand. Thus, in essence the reason given by this Court for passing interim order holds good even in the main writ petition also. The averments in the counter and passing of the assessment order will not improve the case of respondents in the main writ petition to uphold the provisional attachment order passed by the 4th respondent. Therefore, the writ petition deserves to be allowed. The impugned proceedings issued by the 4th respondent are hereby set aside - Petition allowed. 2024 (1) TMI 75 Seeking permission to petitioner to amend the GSTR-1 Form either manually or online as per Section 38(5) of the GST Act, 2017 - mistake in filing the aforesaid Form was genuine and bonafide - HELD THAT:- In the interest of justice and considering the aforesaid Division Bench judgement this writ petition being WPA 27326 of 2023 is disposed of by directing both the State and Central GST authority concerned to allow the petitioner to file corrected GSTR-1 Form manually and shall take all necessary steps after receipt of such corrected Forms to be filed by the petitioner, by observing the guidelines laid down by the Division Bench of this Court in the order dated 31st October, 2023. However, since the petitioner is not an individual and it is a company and it must have been availing services of the legal professionals and tax consultants, such mistake cannot be condoned unconditionally and as such it shall pay the cost of Rs. 25,000/- to the High Court Legal Services Committee, Calcutta, within ten days from date and shall file proof of payment of the same along with the corrected GSTR-1 Form. This order has been passed allowing the petitioner to file corrected GSTR-1 Form in view of exceptional facts and circumstances. 2024 (1) TMI 74 Seeking waiver of interest and penalty - wrongful availment of SGST - petitioner had filed revised Tran 01 claiming CGST transitional credit - HELD THAT:- The petitioner himself has admitted that he had wrongly availed SGST Tran credit for an amount of Rs. 7,89,384/-. As per the learned Counsel for the petitioner, the petitioner had also filed revised Tran 01 and the CGST for the said amount has been sanctioned. Therefore, there are no substance in this writ petition for directing the Department to adjust the amount of Rs. 7,89,384/-. The SGST utilised by the petitioner against the due CGST credit for the said amount is sanctioned by the Central GST Department. Thus, the present writ petition is hereby dismissed. 2024 (1) TMI 73 Detention of goods on incorrect grounds - detention on the ground that the goods were not accompanied by the valid documents - HELD THAT:- It is trite law, settled by a catena of Supreme Court judgments, that the Revenue cannot beat around the bush and keep changing the goal post at each stage. Once the Revenue had taken a particular stand, the same cannot be completely changed and/or supplemented by a different reason or ground. In the present case, it is clear that the detention was made on the ground that the goods were not accompanied by valid documents. However, when the show-cause notice was issued, there is no whisper of any invalid document whatsoever. In fact, the stand was completely changed by the Revenue and this volte face cannot be countenanced by this Court. The detention of goods causes serious prejudice to an assessee and the same can only be done on the basis of specific, valid and reasonable grounds - In the present case, it is quite obvious that at the time of detention, the ground that was stated by the Revenue was incorrect. More so, there was no reason for the Revenue to have detained the goods and the consequential actions that followed, were obviously vitiated. The detention order and the subsequent show-cause notice were bad in law, and accordingly, both are quashed and set-aside - the Revenue is directed to release the goods and the vehicle of the petitioner within a period of 7 days from date - petition allowed. Income Tax 2024 (1) TMI 72 Addition u/s 14A r.w.r. 8D - expenditure incurred on earning exempt income - sufficiency of own funds - HELD THAT:- The ratio of the judgment of this court in Joint Investments (P.) Ltd. [ 2015 (3) TMI 155 - DELHI HIGH COURT] is simply that the disallowance under Section 14A cannot exceed the exempt income. Net off the interest income (income from other sources) which had no nexus with interest expenditure incurred for earning exempt income - Tribunal has, in our view, rightly deleted the addition by holding that the actual interest expenditure had to be adjusted against the income earned by way of interest. In our view, this is the correct approach. Thus, no question of law arises. 2024 (1) TMI 71 Stay of all the recovery proceedings - addition of dividend as per section 2(22) as consideration paid by the appellant for purchase of its own shares from the shareholders - Assessee contented consideration paid by the appellant for purchase of its own shares in accordance with the Scheme, which is approved by this Court, is taxable only as capital gains in the hands of the shareholders under section 46A - subsequent amendment in section 115QA with effect from 01.06.2016 clearly indicates the legislative intent and taxation framework that purchase of its own shares under the Scheme by the appellant, was covered u/s 46A of the Act. Without properly appreciating the same, the Tribunal erred in treating the consideration paid by the appellant for purchase of its own shares from the shareholders as dividend as per section 2(22) of the Act and thus, held that the appellant is liable to pay u/s 115-O HELD THAT:- As in the interest of both the parties, is inclined to grant an order of interim stay, in the following terms: (i)The assessee shall make a payment of Rs. 1500 crores in cash or give a letter to the Bank to remit Rs. 1500 crores (Rupees One Thousand and Five Hundred Crores) to the credit of the respondent from the fixed deposits available, and furnish property security for the balance tax liability with interest and penalty, to the respondent, within a period of four weeks from the date of receipt of a copy of this order. (ii)On such payment and deposit of title deeds pertaining to the property, the respondent shall release the lien on the remaining fixed deposits lying in the Banks. (iii)In the event of default on the part of the appellant in complying with the aforesaid conditions, this order shall stand vacated automatically, without any further reference to this court; and it is also open to the Revenue to recover the tax liability from the appellant in the manner known to law. (iv)The substantial questions of law raised herein shall be considered at the time of final hearing of the appeal. (v)The memos filed by the respective parties, are taken on record. 2024 (1) TMI 70 Stay of demand - petitioner neither filed ITR nor furnished report of audit in prescribed Form before the due date as prescribed under the provisions of Section 44AB - assessment order would disclose that though the petitioner was granted several opportunities to file return and give response to the notices, but the petitioner failed to do so. In view thereof, best judgment assessment was carried out and total assessed income was determined on which tax has been demanded and order has been passed for proceeding for penalty under Section 271B HELD THAT:- The petitioner has approached this Court in the present writ petition as this Court is exercising the parallel jurisdiction with the appellate authority. But, no such jurisdiction can be exercised under Article 226 of the Constitution of India. However, it is incumbent upon the appellate authority to decide the stay application of the petitioner, at the earliest. Present writ petition is disposed of with direction to the 2nd respondent to consider and pass appropriate orders on the stay application, Ext. P17, pending before it, in accordance with law, preferably within a period of two months. 2024 (1) TMI 69 Condonation of delay u/s 119(2)(b) - delay in filing the income tax return was 26 days - permission to file income tax return for the A.Y. 2020-21, the due date for which had expired on 31.05.2021 - genuineness and genuine hardship claimed by the petitioner in submitting return with the delay of 26 days - HELD THAT:- In the instant case, the petitioner had claimed for refund of TDS and submitted a draft profit and loss statement for A.Y. 2020-21 along with the application seeking condonation of delay of 26 days in filing the return. While refusing to condone the delay on the ground that no genuine hardship could be said to have been caused to the petitioner, the respondent No. 2 had also held that the claim for refund was not correct and the statement made in the table extracted in the order shows very strange circumstances as the claim of the petitioner that due to decrease in the number of patients in Cathlab Department, its revenue had negatively impacted and correspondingly in gross profit for A.Y. 2020-21 was unbelievable as also the applicant had not submitted any documents such as IPD register etc. to substantiate the same. Having noted the ratio of the decisions relied uponm by the petitioner as also the statutory scheme and the guidelines prescribed by CBDT, we are of the considered view that the first ground for rejection of the application seeking condonation of delay in submitting the return that no genuine hardship can be said to have been caused to the petitioner is a result of is an arbitrary approach of respondent No. 2. Delay was merely 26 days and judicial notice can be taken to the fact that the country was facing overwhelming situation of second wave of Covid-19, which turned out to be fatal between the last week of March, 2021 till June, 2021, the entire set up of the whole country was paralyzed. Hospitals were flooded with patients and lot of death had occurred during the said period. The petitioner being a hospital establishment, having been declared a dedicated Covid facility by the District Administration, demonstrably was dealing with unprecedented adverse circumstances. The claim of the applicant that the delay of 26 days had occurred because of the absence of account staff or the staff being pre-occupied with other Covid duties and also dealing with the hospital administration due to flooding of patients, the claim of the petitioner that it was a genuine hardship, is found to be correct. Claim of the petitioner is for refund of the TDS deducted by calculation of the advance tax paid, without going into the merit of the profit and loss account of the petitioner in detail, it was not permitted for respondent No. 2 to hold that applicant has failed to establish the correctness of the claim in a cursory manner at the stage of admission of the application. As observed by the Division Bench of this Court in Shailesh Vitthalbhai Patel [ 2022 (8) TMI 1031 - GUJARAT HIGH COURT] the dominant purpose of Section 119(2)(b) of the Income-Tax Act, 1961 is to condone the delay and the power conferred on the statutory authorities is to be exercised with caution and proper application of mind, we are of the considered opinion that even the second ground for rejection of the application seeking condonation of delay for filing of return and claim for refund for A.Y. 2020-21, cannot be sustained. The order dated 04.10.2023 passed by the respondent No. 2 namely Additional / Joint Commissioner of Income Tax (HQ) (ADMN) CCIT, Aayakar Bhawan, Near Majura Gate, Opposite New Civil Hospital, Surat-395001, is hereby set aside. We further provide that the application seeking condonation of delay u/s 119(2)(b) for filing income tax return for A.Y. 2020-21 is liable to be admitted by condonation of delay of 26 days in submitting the return for A.Y. 2020-21. With the admission of the application, the petitioner is permitted to file the return by waiving the time limit and the same shall have to be scrutinized in accordance with the provisions of the Income Tax Act, 1961. 2024 (1) TMI 68 Disallowance of management fees paid to ATS as being excessive and unreasonable - management fees paid by the respondent/assessee to ATS should have been added back to the income of assessee - HELD THAT:- We are of the view that the onus laid on the respondent/assessee was indeed discharged. We have also queried revenue as to whether the AO found fault with the documents furnished by the respondent/assessee in support of the plea that ATS did furnish services to the respondent/assessee, but he was not able to answer this question. Notwithstanding the above, there is no doubt that, given the material placed on record, the onus cast on the respondent/assessee was, in fact, discharged. Thus no substantial question of law arises for our consideration. 2024 (1) TMI 67 Reopening of assessment u/s 147 - notice under Section 148A(b) - period of limitation - petitioner has filed reply to such notices contending that she is a permanent resident of Canada and that she and her husband have purchased an immovable property in Bengaluru way back in the year 1996 under the Sale Deed - HELD THAT:- As per the terms of Section 149 notice u/s 148 cannot be issued, after three years have elapsed from the end of the relevant assessment year, unless income chargeable to tax which has escaped assessment is likely to amount to Rupees Fifty Lakh or more, and as such, Sri. E. I. Sanmathi, the learned standing counsel for the respondents, does not contest the third limb of the petitioner s case as canvassed by Sri. A Shankar. Further, Sri. E.I. Sanmathi, given the details of the payment of the sale consideration as set forth in the Sale Deed dated 13.04.2015, cannot dispute that the entire consideration is received by the petitioner s husband and because he did not have PAN, the TDS could be uploaded to the petitioner s PAN. It would be reasonable to opine that the petitioner could only have received 50% of the sale consideration [Income]. The petitioner must succeed, and the petition must be allowed quashing the impugned notices as well as the order. Hence, petition is allowed, and the impugned the Notices issued u/s 148A(b). 2024 (1) TMI 66 Additions against loss claimed due to goods being damaged/destroyed by fire - whether the loss incurred by assessee due to fire was an ascertained liability? - whether the respondent/assessee was entitled to claim the entire amount although the claim was not settled by the concerned insurance company and therefore, the amount received would be taxable u/s 41(1)? HELD THAT:- None of the proposed questions were directed towards the fire incident or to that issue had not been decided. A perusal of the impugned order passed by the Tribunal discloses that the departmental representative did not make any submission in that regard. Given this position, we are of the view that since the findings of fact have been returned by the Tribunal that what was destroyed in the fire were goods in which the respondent/assessee was trading, the loss suffered was a revenue loss and hence deductible. Tribunal, therefore, came to a correct conclusion that the addition made by the AO was not sustainable. No substantial question of law arises for our consideration. 2024 (1) TMI 65 Validity of Faceless Assessment order - Principles of natural justice denied - denial of extension of seven days time sought for and the issuance of the impugned assessment order without passing any orders on the request of the petitioner, are in violation of the constitutional rights guaranteed under Article 14 of the Constitution of India - HELD THAT:- The liability of the tax is a civil liability. Principles of natural justice ought to be adhered to, while finalizing the assessment proceedings in respect of tax. It is not in dispute that the petitioner is issued with Exhibit P15 show cause notice dated 10.05.2023. In fact, it is admitted that the petitioner has not submitted any reply to the same. The petitioner sought one week s time till 22.05.2023 for filing reply and no decision was taken on the petitioner s request for extension of time and the window was closed and finally assessment order was passed in the absence of any reply from the petitioner. Thus AO has proceeded in a hurried manner to some extent, which is in violation of the principles of natural justice. Therefore, the impugned Exhibit P21 order is set aside and the respondents are directed to open the window for uploading Exhibit P17 objection to the show cause notice. No further time will be granted to the petitioner for the purpose. The assessment proceedings should be finalised and a fresh assessment order be passed in accordance with law. The petitioner should be intimated a fresh date for filing reply to the show cause notice. WP allowed. 2024 (1) TMI 64 Assessment u/s 153A - addition made being unexplained amount of gift received from his mother - HELD THAT:- Before us, assessee submitted that he is ready to file evidences to prove the genuineness of the gift and also will file assessment record for assessment year 2012-2013 wherein the donor late mother had admitted her income and will also file the nexus of this amount with the gift amount. After considering the submissions of the assessee counsel and the rival submissions of ld. CIT(DR), we note that assessee be given one more opportunity to file these details before the Assessing Officer to prove his claim of genuineness of the gift received from his mother late Smt. Radha Narayanan. Assessee will file all the details to prove that the amount received during the financial year 2011-12 with that of money received in the financial year 2014-15 relevant to the assessment year 2015-2016. Hence, this issue is set aside and remitted back to the file of the AO who will adjudicate the issue with proper reasoning after hearing to the assessee. Disallowance of expenditure claimed or incurred on account of movie Aranmanai - AO noted that assessee has failed to produce sufficient evidence in support of his claim and hence he added this amount to the total income of the assessee - CIT deleted the addition simpliciter on the reasoning that major portion of expenditure had suffered TDS and hence genuineness of the same is far from doubting - HELD THAT:- CIT(A) has simpliciter deleted the addition on the basis that the expenditure had suffered TDS and copies of ledger folio of the corresponding expenditure is available in the assessment records . As the findings is incomplete and unreasonable, there may be documents available in the assessment records and the seized material relating to these expenses, the should have been examined and then this issue could have been decided. Hence in the interest of justice, the matter is set aside and remit back to the file of the Assessing Officer who will re adjudicate the issue after examining the seized material in the possession of department. The AO will find out the seized material and confront the same with the assessee while deciding the issue. The assessee is also free to submit any evidence in this regard as per law. With the above directions, the matter is remitted back to the file of the Assessing Officer for fresh adjudication. Addition of attributable expenses such as boarding and lodging, commission paid, office building maintenance and travelling - AO restricted the disallowance of expenditure at 25% - CIT(A) deleted addition - HELD THAT:- We noted that this expenditure is neither denied by the AO nor the CIT(A). Even now before us, the Revenue has pointed out that this expenditure is only normal expenditure but in the absence of any bills and vouchers, the AO has rightly estimated at 25% which is not very high. In the absence of evidence, we restrict the disallowance at 10% and direct the AO accordingly. This ground of the Revenue is partly allowed. Carry forward loss claimed in the return of income filed u/s. 153A - assessee did not file the return within the time allowed in response to notice under section 153A - time limit for filing the return of income under Section 153A(1)(a) - HELD THAT:- Admittedly, in the present case, before us, a notice u/s. 153A of the Act was issued on 24.01.2017 and return is to be filed within thirty days as per the notice. But the assessee filed belated return or return filed after expiry of time limit fixed by the Department i.e. 05.09.2017. It means assessee filed return almost after seven months from the expiry of the time limit fixed by the Revenue. We noted that in this case before Calcutta High Court the return of income was filed within the time allowed by revenue and not belatedly much after issuing notice u/s. 153A of the Act. But in the present case before us, the return of income in response to notice u/s. 153A of the Act was filed after seven months on 05.09.2017 as against notice issued on 24.01.2017. It means that the case law of Shrikant Mohta [ 2018 (8) TMI 200 - CALCUTTA HIGH COURT ] is factualy distinguishable and not applicable to the present case. Hence, the CIT(A) has erred in allowing set off of loss. In view of the above, we allow this issue raised by the Revenue. 2024 (1) TMI 63 Addition u/s 68 - amount of preference share capital as unexplained cash credit - AO found that allotment of preference shares were utilized for making investment in or extending loans to subsidiary group companies and the investing company was showing very meager income in the last three assessment years and the profit declared was also very low as compared to gross revenue declared - as amount credited from the investor company was immediately debited to other companies, AO was of the view that the genuineness of transaction was also not established HELD THAT:- AO in assessment order has nowhere referred to any independent inquiry whatsoever made to disprove the primary evidence provided by the assessee and not pointed out any infirmity in the evidence produced before him. As such, the AO merely after referring that the investor company has declared low net taxable income and the fund received were immediately transferred to other parties held that the assessee failed to properly explain the nature and sources of credit of share capital. In our considered opinion, the approach taken by the AO is not justified. AO failed to appreciate the facts/ materials provided by the assessee company. It is pertinent to mentioned that the assessee company is mainly engaged in making strategic investment in subsidiary or group companies and this fact was also explained that the amount collected from allotment of preference share has been utilized for making investment in/extending loans to subsidiary or group companies. Thus, in our considered opinion the assessee has provided necessary detail and the onus shifted on the revenue to carry out independent inquiry/investigation and bring contrary material, but the AO failed to do so. DR before us has contended that transaction of preference share capital is circular in nature - If we see the transaction on a particular day i.e. 22-09-2017 then it seems like the transaction is circular in nature. But if we look at the transaction as whole from the beginning of the year to the end, then we find that there were regular transactions of loans advances between CLPL and TSPL. As such the CLPL had extended loans advances to the TSPL on earlier occasion out of which it received back amount of Rs. 14 crores for the purpose of investment in the preference share of assessee company and thereafter further extend fresh loans to the TSPL. Therefore, in our considered opinion, no inference can be drawn against the assessee in the given facts and circumstances. Decided against revenue. Addition u/s 115BBE - As addition made by the AO under section 68 of the Act has been deleted, the question of calculating the tax under section 115BBE of the Act does not arise. 2024 (1) TMI 62 Deduction u/s 35-AC - donation made to Navjeevan Charitable Trust was denied - HELD THAT:- It is the claim of the Revenue that Navjeevan Charitable Trust has been involved in a bogus transaction of accommodation entry and has returned the donation to the donors in cash after deducting the commission. The Revenue has also relied on the statement of the trustee recorded during the course of search action under section 132 of the Act at the premises of Navjeevan Charitable Trust. We find that a similar issue came up for consideration before the Co-ordinate Bench of the Tribunal in assessee s own case in Ravindra K. Reshamwala v/s DCIT [ 2023 (6) TMI 108 - ITAT MUMBAI ] for the assessment year 2009-10, wherein assessee claimed deduction u/s 35-AC in respect of donation made to Navjeevan Charitable Trust. From the perusal of the aforesaid order, we find that the deduction claimed u/s 35AC of the Act in respect of the donation made to Navjeevan Charitable Trust was denied on a similar basis as in the present case. Therefore, AO is directed to allow the claim of deduction under section 35-AC of the Act. Appeal by the assessee is allowed. 2024 (1) TMI 61 Penalty u/s. 271D - cash received of sales transaction of immovable property - allegation of violation of provisions of Sec.269SS in relation to acceptance of specified sum of money in relation to transfer of immovable properties - CIT(A) had deleted the penalty on two counts namely on the non-applicability of the provisions of Section 269SS of the Act to the facts of the present case and on the ground of reasonable cause within the scope of Section 273B - HELD THAT:- The intention of the amendment is very clear right from the Budget speech of the Finance Minister that the said amendment is brought into the statute in Section 269SS of the Act would get attracted to sum received in cash as an advance in an immovable property transaction and not to the completed transaction namely cash received as a sale consideration at the time of execution of the registered sale deed. In fact, the statute brought in another amendment in Section 269ST of the Act from the assessment year 2017-18 with a view to cover all situations of cash transaction Rs. 2 Lakhs or over other than the situation captured in Section 269SS of the Act. This provision has been explained with more clarity by the CBDT Circular No.19 of 2015, dated 27.11.2015 Memorandum explaining the intention of amendment by Finance Bill, 2015 including the definition of sum specified brought in the Explanation to Section 269SS of the Act, it is clear that the intention for brining this provision was to curb the generation of black money in real estate prohibiting acceptance or repayment of advance in cash of Rs. 20,000/- or more for any transaction in immovable property. This was explained by Hon ble Finance Minister while placing the Finance Bill, 2015 in her budget speech highlighting the intention of the amendment that the amendment in Explanation to Section 269SS i.e., sum specified means only applicable for advance receivable, whether as advance or otherwise means advance can be in any manner. Hence, this provision will not apply to the transaction that happens at the time of final payment at the time of registration of sale deed and payment is made before sub-registrar at the time of registration of property. In the present case before us, it is an admitted fact that all sale deeds were registered and cash payment was made at one go before the subregistrar at the time of registration of sale deeds of plots. Hence, in our view, there is no violation of provisions of section 269SS of the Act in the present case hence, penalty is not exigible - Appeal of the Revenue is dismissed. 2024 (1) TMI 60 Revision u/s 263 - assessment order was for limited scrutiny assessment and the PCIT now want to enlarge the scope of limited scrutiny by setting aside assessment order - deduction from income from other sources u/s 57 - maintenance charges collected by the assessee are assessed as income from other sources whether the expenses claimed by the assessee are allowable u/s 57? - HELD THAT:-Assessee drew our attention to all the replies filed by the assessee before the Assessing Officer. Further, assessee drew our attention to notice issued u/s. 142(1) wherein the Assessing Officer had required the assessee to explain only the large deduction claimed u/s. 57 of the Act. Even the assessee has replied complete queries regarding the claim of deduction u/s. 57 of the Act and specifically it is a simplicater case of limited scrutiny assessment. As urged by the ld. Counsel that this issue is now squarely covered by the decision of Hon ble Madras High Court in the case of CIT vs. Smt. Padmavathi, [ 2020 (10) TMI 425 - MADRAS HIGH COURT] .On this short premise, the revision order will go. Accordingly, we quash the revision order passed by PCIT and allow the appeal of assessee. 2024 (1) TMI 59 Assessment u/s 153A - whether the addition made by the AO is sustainable in the absence of any incriminating material when the assessments are unabated? - HELD THAT:- It is the finding of the CIT(A) that no incriminating material was unearthed during search/survey and in view of the proposition laid down in the case of Kabul Chawla [ 2015 (9) TMI 80 - DELHI HIGH COURT] the addition made by the AO was held to be bad in law as no incriminating material was found or seized which relating to the assessment year under consideration. We observe that the decision of Kabul Chawla (supra) has been affirmed in the case of PCIT Vs. Abhisar Buildwell Pvt. Ltd. [ 2023 (4) TMI 1056 - SUPREME COURT] - The Revenue could not place on record any seized material based on which the additions were made in the assessment order. In the circumstances, we do not see any infirmity in the order passed by the Ld.CIT(A) in deleting the addition made by the AO in the absence of any incriminating material seized in the course of search - no incriminating materials were seized leading to the additions in dispute. Decided in favour of assessee. 2024 (1) TMI 58 Reopening of assessment u/s 147 - Sanction for issue of notice u/s 151 - notice issued after four years - HELD THAT:- From the perusal of the provisions of section 151 of the Act, as existed during the assessment year 2011-12, we find that in cases where an assessment has not been made u/s 143(3) or section 147, no notice under section 148 of the Act can be issued by an AO below the rank of Joint Commissioner, after the expiry of four years from the end of the relevant assessment year, unless the Joint Commissioner is satisfied on the reasons recorded by the AO that it is a fit case for the issue of such notice under section 148 of the Act. We find that section 151, as it stood during the relevant assessment year, continues in the Act till its amendment vide Finance Act, 2015, with effect from 01/06/2015, except small amendment vide Finance (No.2) Act, 2014 whereby Principal Chief Commissioner and Chief Commissioner of Income Tax were included in provisos to sub-section (1) and (2) of section 151. Sanctioning authority for issuance of notice under section 151(2) of the Act continues to be the Joint Commissioner of Income Tax. Vide Finance Act, 2015, with effect from 01/06/2015, section 151 of the Act was amended and Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner of Income Tax was empowered to grant the sanction for issuance of notice under section 148 of the Act after the expiry of four years from the end of the relevant assessment year. As per Circular No. 19 of 2015 issued by the CBDT on 27/11/2015, the said amendment was made in order to provide simplicity, as prior to the amendment section 151 of the Act specified different sanctioning authorities based on various scenarios. Whether the manner of granting sanction under section 151 of the Act is in the nature of procedural law? - We find that similar issue came up for consideration in Navketan Enterprises v/s CIT, [ 2001 (5) TMI 46 - JHARKHAND HIGH COURT] wherein as held that section 151 of the Act is in the nature of procedural law and therefore for the purpose of obtaining the approval, the Assessing Officer has to apply the law as it stands on the day when he decides, by recording his reasons, to invoke section 147 and thus, decides to issue notice under section 148 of the Act. Therefore, respectfully following the aforesaid decision provisions of section 151 of the Act, as it stood during the assessment year 2017-18, i.e. the year in which reasons were recorded by the AO for reopening the assessment and notice under section 148 of the Act was issued, will be applicable and thus, we find no infirmity in the sanction granted by PCIT under section 151 of the Act in the present case. Before concluding, we may note that from the perusal of the decisions relied upon by the learned AR, we find that the sanction granted under section 151 of the Act was found to be improper as the sanction was not granted by the appropriate authority under the provisions of the Act, which is not so in the present case since PCIT had the authority under section 151 to grant the sanction for issuance of notice under section 148 of the Act after the expiry of four years from the end of the relevant assessment year. Hence, the decisions relied upon by the learned AR are factually distinguishable. Accordingly, revised ground no. 1 raised by the assessee is dismissed. No independent application of mind by the AO while recording the reasons for reopening the assessment and the same is formed based on the information received from the office of DGIT (Investigation), Mumbai - In the present case, it is pertinent to note that no scrutiny assessment was conducted in the case of the assessee and therefore the only data available with the AO was the data provided along with the income tax return and the information received subsequently from the office of DGIT (Investigation), Mumbai. The said information constitutes new and tangible material for initiating the reassessment proceedings in the case of the assessee. It is also to be noted that the AO in the reasons recorded has categorically mentioned that the assessee has obtained bogus purchase bills amounting to Rs. 10,29,788 from International Trade Agency during the financial year. Though this information was received from DGIT (Investigation), Mumbai but the AO applying his mind extracted the relevant details pertaining to the assessee. In the second paragraph of the reasons, information of bogus transaction was noted. Based on this in second paragraph, relevant details about the alleged bogus transaction of the assessee were identified. In the last paragraph, the AO has clearly identified the escapement of income, and the satisfaction of the AO is recorded. Thus, there was a tangible material on the basis of which the AO applied his mind independently. Hence, it is not correct to state that reopening has been made without independent application of mind by the AO. Thus, when new and tangible material in the form of a report from the DGIT (Investigation), Mumbai was received, we are of the view that the reassessment proceedings were validly initiated. Accordingly, revised ground no. 2 raised by the assessee is dismissed. Addition u/s 69C - bogus purchases made - From the material available on record it is evident that the assessee has failed to prove the genuineness of the purchases made from the supplier. However, at the same time, the Revenue has not doubted the sales declared by the assessee. Further, it cannot be doubted that without the purchase of material, the assessee cannot carry out the sales. Therefore, it appears to be a case of bogus bills arranged from the aforesaid entity and material purchased from somewhere else at a lower cost. Thus, we are of the considered view that entire bogus purchases cannot be added in such a case. We are of the considered view that a reasonable disallowance of the purchases would meet the possibility of revenue leakage. Therefore, in view of the above findings, we deem it appropriate to restrict the disallowance to 10% of the disputed purchases. Ground is partly allowed. 2024 (1) TMI 57 TP Adjustment - comparable selection - HELD THAT:- Respectfully following the view taken by this Tribunal, in case of Exxonmobil Services and Technology Pvt. Ltd. [ 2023 (7) TMI 1337 - ITAT BANGALORE] we direct the Ld.AO/TPO to exclude Infosys BPM Ltd., SPI Technologies India Pvt. Ltd., Manipal Digital Systems Pvt. Ltd., CES Ltd. and Datamatics Financial Services Ltd. Inteq BPO Services Pvt. Ltd. company is involved in business process management services and cannot be considered as a comparable to a company as of assessee. We therefore do not find any reason to interfere with the above observations. Respectfully following the view taken in Mindteck (India) Ltd. [ 2022 (11) TMI 1367 - ITAT BANGALORE ] we direct exclusion of this comparable from the final list. R Systems International Ltd. (seg) - Admittedly, we agree with the argument advanced by the Ld.DR. However, the reason for it have excluded by the authorities below are not as per the principles of transfer pricing procedure. In the interest of justice, we remit this comparable to the Ld.AO/TPO to consider the FAR of assessee with that of this comparable and to consider the inclusion in accordance with law. Interglobe Technologies Pvt. Ltd. - AR submitted that this comparable was rejected by the Ld.TPO as it fails employee cost filter. On an objection being raised before the DRP, it was held that this company is not reflecting in the search matrix of the TPO - AR referred to the annual report and submitted that this company has an employee cost ratio of less than 25% and the objection of the TPO is therefore without any basis. In the interest of justice, we remand this comparable back to the Ld.AO/TPO to consider its inclusion in accordance with law. Needless to say that proper opportunity of being heard must be granted to assessee. Working capital adjustment denied - HELD THAT:- We are of the opinion that this issue is no longer resintegra as this issue is covered by the decision of Coordinate Bench of this Tribunal in case of Huawei Technologies India (P.) Ltd. v. Jt. CIT [ 2018 (10) TMI 1796 - ITAT BANGALORE ] in keeping with the OECD guidelines, endeavor should be made to bring in comparable companies for the purpose of broad comparison. Therefore the working capital adjustment as claimed by the assessee should be allowed. We inclined to remit the issue to the file of AO/TPO to determine the correct working capital adjustment. Disallowance u/s. 14A - Sufficiency of own funds - HELD THAT:- It is noted that admittedly there is no exempt income earned by assessee during the year under consideration. As in case of Cheminvest Ltd. [ 2015 (9) TMI 238 - DELHI HIGH COURT ] has held that in such circumstances, no disallowance u/s. 14A could be made. The disallowance therefore cannot be made in the hands of the assessee based on the above decision and the same is directed to be deleted. 2024 (1) TMI 56 Addition u/s 68 - Bogus LTCG - genuineness of source of source of share application money/premium was not proved - receipt of share capital from shell / brief case companies by the assessee company and therefore the same should be considered as bogus income - HELD THAT:- Since it is explicitly proved that the amount so received by the assessee company from M/s TEVPL was already taxed in the hands of investor company, the same has an explained source, thus, it can be safely held that the impugned amount is duly explained, thus, out of the scope of provisions of section 68. Amount of share capital received by the assessee from TEVPL are tax paid funds thus in the nature of explained sources, the same can t be taxed again by bringing the same in the sweep of provisions section 68 - Thus, on account of declaration by the investor company under VSVS and payment of taxes on the disputed addition, the funds raised under the head share capital and premium by it in AY 2012-13 are explained in the hands of TEVPL, consequently, we find it appropriate to affirm the decision of Ld CIT(A) to vacate the addition received as share capital from M/s TEVPL. Share applicants money received from the second share applicant, M/s Moon Shine Mercantile Pvt. Ltd. AR furnished all the necessary documents Qua the source and also pertaining to source of source to establish that the funds received by the assessee company are duly explained, but, the same were not found satisfactory for the reason that the financials of the Share subscriber i.e., M/s Moon shine Mercantile Pvt. Ltd. and its source company i.e., M/s Rudra Mukhi Financials Pvt. Ltd. have shown merger / negative income in their ITR also audited financials of the source of source M/s Rule Mukhi Financials Pvt. Ltd. are not found furnished before us. From the records available it is evident that such information was not furnished before the revenue authorities too, thus the onus cast upon the assessee in terms of 1st proviso to section 68 was not satisfied at any stage of assessment proceedings or appellate proceedings. Thus, it can be concluded that, the Ld. AO has justifiably invoked the provisions of Section 68 and accordingly, the addition of Rs. 23 Lacs made by the AO found to be on right footing, thus, the same qualifies to be confirmed. We, Accordingly, set aside the order of Ld. CIT(A) to the extent of Rs. 23/- Lacs received from M/s Moon Shine Mercantile Pvt. Ltd. and restore the addition made by the Ld AO to that extent. Decided partly in favour of assessee. 2024 (1) TMI 55 Penalty u/s 271D - period of limitation - receipt of sale consideration in cash exceeding Rs. 20,000/- - HELD THAT:- Under section 275(1)(c) no order imposing penalty under Chapter-XXI, in which section 271D of the Act falls, shall be passed after the expiry of financial year in which the proceedings, in the course of which action for the imposition of penalty has been initiated, are completed, or six months from the end of the month, in which action for imposition of penalty is initiated, whichever period expires later. It is, therefore, clear that under section 275(1)(c) two dates are relevant. First one is that the last date of the financial year in which proceedings, in the course of which action for imposition of penalty has been initiated. Second one is the date on which six months from the end of the month in which action for imposition of penalty was initiated. As there is no assessment for the assessment year 2016-17. It is only during the assessment proceedings for the assessment year 2017-18 the violation of section 269SS of the Act noticed. The date of assessment order for the assessment year 2017-18 is 04/12/2019. The date of notice under section 271D of the Act was issued by the Additional/Joint CIT is 16/03/2020. The financial year in which the notice was issued is 31/03/2020. At the same time, six months from the end of the month in which the proceedings u/s 271D of the Act expires by 31/06/2020. However, order under section 271D of the Act levying penalty was passed on 15/03/2022. It clearly shows that the order levying penalty under section 271D of the Act was passed after more than two years from the date of disposal of the assessment proceedings for the assessment year 2017-18, and far beyond the expiry of the financial year, namely, more than two years from the date of initiation of penalty proceedings under section 271D of the Act. CIT(A) took the date on which the one year period from the end of the financial year in which the notice was issued as 31/03/2022. We are unable to understand where from this date has come. Expiry of one year is not relatable to this date either from the date of the assessment order for the assessment year 2017-18 or from the date of issuance of notice u/s 271D of the Act, initiating the proceedings. It seems to be a factual mistake. Appeal of the assessee is allowed. 2024 (1) TMI 54 Bad debts - Disallowance of advance/balance written off claimed as deduction - amount as advanced by the assessee company towards the purchase of property, i.e., stock-in- trade but was written off on becoming irrecoverable - HELD THAT:- As in the present case before us, it is an admitted fact that the amount advanced by the assessee company to commission agent, for the purchase of certain agricultural land as stock-in-trade of its business in its normal course of business as a real estate developer, i.e., for purchase of stock-in-trade, i.e., agricultural lands at had thereafter become irrecoverable; therefore, the same, in our considered view, as per the principle laid down in the aforesaid judgment of Mysore Sugar Co. Ltd.[ 1962 (5) TMI 3 - SUPREME COURT ] was rightly claimed by the assessee company as a business loss that was deductible while computing its income for the year under consideration. We, thus, not being able to persuade ourselves to subscribe to the view taken by the lower authorities who had declined the assessee s claim for the deduction, set aside the order of the CIT(Appeals) and vacate the disallowance - Decided in favour of assessee. 2024 (1) TMI 53 Disallowance of the provisions made for leave encashment - such provision was made on the basis of actuarial valuation carried out by the assessee and that leave encasement was not a statutory liability for the assessee - HELD THAT:- The assessee is entitled to deduction of any such on this account subject to payment. Section 43B of the Act as noted is an overriding provision which allows deduction for the purpose of computing income u/s 28 of the Act only if actual payment has been made. The Parliament has inserted clause (f) after the judgment of the Hon ble Supreme Court in Bharat Earth Movers. [ 2000 (8) TMI 4 - SUPREME COURT] to eschew the mischief of claim of deduction (leave salary) without making actual payment. Mischief Rule/Heydon s Rule is really a sub-rule of Purposive Construction Rule . It is well accepted cannon of statutory construction that it is the duty of the court to further Parliament s aim of providing a remedy for the mischief against which the enactment is directed and the court should prefer a construction which advances this object rather than one which attempts to find some way of circumventing it. (Refer RBI Vs. Peerless General Finance [ 1996 (1) TMI 332 - SUPREME COURT] ). Even if we apply the purposive construction and look at the purpose of introducing clause (f) in section 43B of the Act with effect from 01.04.2002 (by Finance Act, 2001) after the Hon ble Supreme Court decision in Bharat Earth Movers Ltd [ supra] the Legislative intent is clear that in computing the income of an assessee in a previous year u/s 28 of the Act, the assessee be allowed deduction of any sum which is actually paid; and clause (f) read with Explanation 3B makes it clear that Post 01.04.2001, deduction of any sum on account of payment towards employees leave encashment would be allowed only in the previous year when assessee makes actual payment. A literal interpretation of relevant section 43B of the Act also supports the view of CIT(A), therefore, the action of Ld. CIT(A) is legally sustainable and so it is upheld. Appeal of assessee stands dismissed. 2024 (1) TMI 52 Assessment u/s 153A - sufficiency of documents found in search from assessee or not? - HELD THAT:- Undisputedly, the document on the basis of which addition has been made was not recovered from the search upon assessee but from the premises of M/s. Zoom Developers Pvt. Ltd. In such circumstances, assessment should have been framed u/s 153C of the Act following the proper procedure as per section 153C of the Act. Having not followed the mandate of section 153C of the Act, Revenue has committed fatal error and on this account assessment is liable to be quashed. As also the plea of the assessee that the amount has been already added in the assessment of M/s. Zoom Developers Pvt. Ltd. In such circumstances, the same amount cannot be again added in hands of the assessee. For this proposition, we refer to the decision of Surya Agrotech Infrastructure Ltd. order [ 2023 (9) TMI 391 - DELHI HIGH COURT] where it was held that when undisclosed income already having been taxed in hands of Flagship Company the same could not be again subjected to tax in the hands of assessee company. This case law is applicable in this case and the sum which has been taxed in the hands of Zoom Developers Pvt. Ltd. cannot again be taxed in the hands of assessee. Thus, the addition needs to be deleted on this count also. 2024 (1) TMI 51 Disallowance of late payment of PF ESIC made u/s. 143(1) - HELD THAT:- Issue decided following Checkmate Services (P.) Ltd. [ 2022 (10) TMI 617 - SUPREME COURT] held that non obstante clause under section 43B could not apply in case of employee's contribution which were deducted from their income and was not part of assessee-employer's income and, thus, said clause would not absolve assessee-employer from its liability to deposit employee's contribution on or before due date as a condition for deduction. Decided against assessee. Argument of the assessee namely due date for payment of employees contribution to PF/ESI has to be reckoned from the month of actual payment of salary and not from the month of salary in which becomes payable - t his issue is also considered by the Hon ble High Court of Gujarat in M/s. Checkmate Facility And Electronic Solutions Pvt. Ltd. Vs. DCIT [ 2018 (10) TMI 994 - GUJARAT HIGH COURT] as provision thus requires an employer before paying the employee his wages to deduct employee's contribution along with the employer's own contribution as fixed by the Government. It is further required that he shall within fifteen days of the close of every month pay the same to the fund such contribution and administrative charges. In terms of this provision thus, after deducting the employee's contribution towards the funds, the same has to be deposited with the Government within fifteen days of the close of every month. Reference to fifteen days of the close of the month must be in relation to the month during which the payment of wages is to be made and corresponding liability to deduct employee's contribution to the fund arises. The expression within fifteen days of the close of every month therefore must be interpreted as having reference to the close of the month, for which, the wages are required to be paid with corresponding duty to deduct employee's contribution and to deposit the same in the fund. Appellant is therefore not correct in contending that if such wages are paid in the following month, the liability to deposit the employee's contribution to the fund gets differed by another month. Adjustments / additions u/s 143(1) - CPC made disallowed without considering the objections / reply filed by the assessee - Empty formality - HELD THAT:- It is highly expected the CPC on receipt of the objection filed by the assessee, consider the same in accordance with law and then proceed with as per the provisions u/s. 143(1) or to proceed with regular scrutiny assessment u/s. 143(3) by issuing notice u/s. 143(2) of the Act. Further it is noted that the assessee filed additional documents invoking Rule 46A of the I.T. Rules, by filing Form 26A before NFAC, the same was also not adjudicated by any NFAC in its order. In our considered view, Ld. NFAC ought to have considered the above additional documents and adjudicated the case in accordance with law. Since it is only a proceeding u/s. 143(1) and not a scrutiny assessment where assessee is expected to file all necessary documents along with the Return of Income. Thus in our considered opinion, Ld. NFAC failed to entertain the additional documents filed by the assessee, we therefore set aside the issue to file of JAO and the Ground No.2 raised by the assessee is partly allowed. 2024 (1) TMI 50 Assessment u/s 153A - additions for suppression of making charges and wastage claim in manufacturing of jewellery and also made addition on account of profit from alleged unrecorded sales and addition u/s 14A - HELD THAT:- We notice that the co-ordinate bench has accepted the contentions of the assessee that the Excel Sheets cannot be considered as parallel books of account and they are merely controlling sheets maintained by employees for computation of jewellery after giving credit or deduction for standard quota of wastage (paragraph 3.11). Since the facts and circumstances relating to both these additions are same in these cases also, following the above said decision of the co-ordinate bench in assessee s group concern named M/s Saurav Jewellers Pvt Ltd [ 2022 (11) TMI 124 - ITAT MUMBAI] we modify the orders passed by Ld CIT(A) and direct the assessing officer to delete the additions relating to Making Charges and Wastage claims in all the years under consideration. Addition on account of profit on unrecorded sales - quantity of gold shown in the Excel sheet was found to be lower than the quantity of gold disclosed in the books of accounts of the assessee. The AO treated the shortage in the gold stock as sale outside the books of accounts and accordingly estimated the profit on unrecorded sales @ 2% and added the same - HELD THAT:- In the case of Saurav Jewellers Private Limited (supra), the co-ordinate bench has accepted the contentions of the assessee that the Excel Sheets cannot be considered as parallel books of account and they are merely controlling sheets maintained by employees for computation of jewellery after giving credit or deduction for standard quota of wastage (paragraph 3.11). We notice that the Ld CIT(A) has also noticed many discrepancies in the Excel Sheet. One of the main discrepancies is that the manufacture and sale of medallions and coins were not recorded in the Excel Sheets, which would make huge difference. Besides the above, the search officials did not find any discrepancy between book stock and physical stock. Accordingly, we are of the view that the order passed by ld CIT(A) in deleting this addition is a well reasoned order and the same does not call for any interference. Accordingly, we uphold the order passed by Ld CIT(A) on this issue. Addition u/s 68 - assessee has received share application money from 16 companies - Accommodation entries or not? - HELD THAT:- As noticed that it is not the case of the AO that the assessee did not discharge the initial burden placed upon it with regard to the share capital/share premium money received by it. The assessee has furnished all the details relating to the investors/loan in order to discharge the burden placed upon it u/s 68 of the Act. From details submitted it can be seen that the identities of share subscribers stand proved. Since they have made payments from their bank accounts through account payee cheques, these transactions cannot be treated as bogus. Since the payments have been made from of funds available with them, the credit worthiness would also stand proved. We notice that the AO has observed that these subscribers are either showing loss or meager profits and such meager profits are not commensurate with the investments made by them. However, there is no bar under the law that a person could not make investments out of borrowed funds. In the instant case, it is not the case of the AO that the applicants did not have funds available with them for making investments in the assessee company. In fact, the said investments have been routed through the bank accounts of the assessee as well as the subscribers. Further, these investments are duly reflected in their books of account. We notice that the AO has mainly relied upon the report of investigation wing to come to the conclusion that the assessee has availed only accommodation entries. He has also referred to the non-reply of the notices issued by them and non-furnishing of details called for. But the fact would remain that the assessee has furnished the relevant details before the AO and all those details were earlier filed with either Income tax department or with Registrar of Companies, i.e., with Government authorities. Hence the authenticity of those documents could not be doubted with. When all the relevant details are available with the AO, it is the requirement that the AO should examine those documents and could reject them, only if he finds fault with those documents. We notice that the AO did not find any deficiency or fault with the evidences produced by the assessee. With furnishing of all these documents, in our view, the assessee has discharged initial burden placed upon it under section 68 of the Act by furnishing above said documents. Hence the source as well as the source of source also stands proved by the subscribers. Thus we hold that the additions made by the Assessing Officer under section 68 of the Act in all the years, in the facts and circumstances of the case, were not justified. Disallowance u/s 14A - Hon ble Madras High Court has held in the case of M/s Marg Limited [ 2020 (10) TMI 102 - MADRAS HIGH COURT] has held that the disallowance u/s 14A cannot exceed exempt income. We notice the decision rendered by Ld CIT(A) finds support from the above said decision of Hon ble Madras High Court. Accordingly, we do not find any infirmity in the decision so rendered by Ld CIT(A) on this issue. Assessee appeal allowed. Customs 2024 (1) TMI 49 Classification of imported goods - Stainless Steel tube fitting Tees, Crosses - to be classified under the Customs Tariff Item (CTI) 7307 2200 which attract Basic Customs duty (BCD) @10% in terms of Serial No.377 of Notification No.050/2017-Customs dated 30.06.2017 or under CTI 7307 2900, attracting BCD @25% in terms of Serial No.377A of Notification dated 30.06.2017? HELD THAT:- The Order-in-Appeal referred to in the impugned order, has been appealed against by the appellants before this Tribunal, which was disposed of by the Tribunal in BOMBAY FLUID SYSTEMS COMPONENTS PVT LTD VERSUS COMMISSIONER OF CUSTOMS (AIR CARGO IMPORT), MUMBAI [ 2023 (7) TMI 666 - CESTAT MUMBAI] in setting aside the said order and allowing the appeal in favour of the appellants. While allowing the appeal, the Tribunal has held that for change in classification of threaded elbows and sleeves , the department had not examined the goods or scrutinized any documents pertaining to the imported goods. Further, it has also been held that HSN Explanatory Notes alone cannot be relied upon for classification of the goods differently. The said order was passed by the Tribunal by placing reliance on the judgements of the Hon ble Supreme Court, delivered in the case of HPL CHEMICALS LTD. VERSUS CCE, CHANDIGARH [ 2006 (4) TMI 1 - SUPREME COURT] and HINDUSTAN FERODO LTD. VERSUS COLLECTOR OF CENTRAL EXCISE, BOMBAY [ 1996 (12) TMI 49 - SUPREME COURT] . The ratio arrived at in the said relied upon judgements is to the effect that in case of change in classification of goods, the department has to produce proper evidence and discharge the burden of proof. The goods in question imported by the appellants are fittingly fall under the CTI 7307 2200 inasmuch as the description of the product submitted by the appellants clearly demonstrate that the same are treaded elbows, bends etc. The department has adopted conflicting stands insofar as the classification of the impugned goods are concerned inasmuch as in the case of another importer namely, M/s Bangalore Fluid System Components Pvt. Ltd., who had imported the identical goods from the very same supplier and classified the same under CTI 7307 2200, the same has not been objected to by the department at the time of assessing the B/Es. Therefore, it is evident that different Commissionerates have adopted conflicting stand in change of classification of the goods in question, which is not proper and justified in absence of proper substantiation on the basis of visual examination of the goods and/or verification of import documents, which admittedly has not been done in the present cases. There are no merits in the impugned orders, insofar as the classification of the goods in dispute was changed from CTI 7307 2200 to CTI 7307 2900 - the impugned order set aside - appeal allowed in favour of the appellants. Corporate Laws 2024 (1) TMI 48 Procedure for filing an appeal - failure to submit certified copy of order of NCLT - Seeking permission to argue on the merit of the appeal - Appellant argued on interlocutory application which was filed for condonation of delay in re-filing - HELD THAT:- The order impugned was passed on 13.06.2023 and thereafter the appeal was preferred on 26.07.2023. In normal course it was expected that the appellant would have obtained the certified copy of the order and filed the same without any further delay. An application for exemption in filing certified copy is to be filed where there is no time in filing appeal. Once an appeal is filed, it is expected that immediately thereafter certified copy will be filed - However, in the present case till date certified copy of the impugned order has not been brought on record. The fact remains that appeal has been preferred under Section 421 of the Companies Act, 2013 against an order dated 13.06.2023 passed by National Company Law Tribunal, New Delhi (herein after referred to as NCLT) whereby an application filed by the Appellant on the point of maintainability was rejected. The order further reflects that company petition was ripe up for hearing and in the case reply was also filed however belatedly maintainability point was raised by filing an application which has been rejected by the order impugned. The present appeal not entertained due to the latches on the part of the appellant, particularly in view of the fact that even after expiry of several months the appellant has not brought on record the certified copy of the order and also the fact that on instruction of the appellant on last date, i.e. on 18.09.2023 an advocate got the appeal adjourned for filing fresh Vakalatnama, whereas today it was intimated that the Counsel who had filed Vakalatnama along with Memo of Appeal has been again asked to appear - appeal dismissed. Insolvency & Bankruptcy 2024 (1) TMI 47 Admission of application u/s 9 of IBC - non-service of notice - Adjudicating Authority did not issue any notice to the Appellant and without issuance of any notice to the Appellant, direction to proceed ex-parte was passed - violation of principles of natural justice - HELD THAT:- Service of notice prior to filing of the Application is requirement of the NCLT Rules and even if the advance notice was served by the Operational Creditor the requirement of rule 37 is not dispensed with unless the party itself appears before the Adjudicating Authority and in event the corporate debtor itself appears there is no requirement of any notice under Rule 37 but when a party does not appear notice has to be issued to show cause and fix the date for appearance in NCLT Form 5. The present is a case where no notice was issued by the Adjudicating Authority and only on the statement of Learned Counsel for the Operational Creditor that Corporate Debtor has not appeared despite service, the Adjudicating Authority proceeded to direct ex-parte hearing. When notice required under Section 37 which was not issued and the Adjudicating Authority proceeded against the Corporate Debtor, it is opined that the Order admitting section 9 Application suffers from error and need to be interfered with - the Order impugned is set aside - appeal allowed. 2024 (1) TMI 46 CIRP - Jurisdiction of Adjudicating Authority - imposition of cost / fine and intent of Section 70 of IBC - Allegation that, appellants (suspended director) were not co-operating with the Liquidator - HELD THAT:- There are no hesitation in holding that the word fine , used consciously by the Adjudicating Authority in the Impugned Order, is covered in penalty which is required to be dealt under Section 70 and 236 of the Code and which further is not within jurisdiction of the Adjudicating Authority. It is concluded that clearly the Adjudicating Authority erred in passing the Impugned Order overlooking the law of the land through the Code and also ignoring the precedent cases settled by this Appellate Tribunal earlier. The Impugned Order is set aside - matter remanded back to the National Company Law Tribunal, New Delhi Bench to have a fresh look and decide in accordance with the law. 2024 (1) TMI 45 Approval of Resolution Plan - resolution plan approved by the CoC of the Corporate Debtor with 77.54% - impugned order having been passed by a single member, is contrary to the provision of Section 419(3) of the Companies Act, 2013 or not - non-speaking order - violation of principles of natural justice. Whether as per Section 419(3) of the Act, the order has to be passed by two members or a single member until and unless there is a notification specifically issued in this regard? - HELD THAT:- It is clear from the bare reading of Section 419(3) of the Act that the powers of the Tribunal shall be exercisable by Benches consisting of two Members out of whom one shall be a Judicial Member and the other shall be a Technical Member but still a single Judicial Member can exercise the powers of the Tribunal in respect of such class of cases or such matters pertaining to such class of cases, as the President may, by general or special order, specify - In the present case which is pending since 2020, nothing has been brought on record by the Respondents that there has been a notification in this regard much less in terms of first proviso to Section 419 (3) of the Act authorising the solitary judicial member (Acting President at that time) to entertain unnumbered applications filed by RP and Resolution Applicant to decide the same in such a summary manner, therefore, the answer to this question is that until and unless a notification is issued under the first proviso to Section 419(3) of the Code the single judicial member cannot take upon itself the jurisdiction to entertain an application such like the one in hand and decide the same, therefore, the impugned order has been passed by an authority having no jurisdiction. Administrative order issued on 22.03.2020 by none else than the NCLT - HELD THAT:- This administrative order was issued in the wake of Covid-19. It was specifically mentioned in the said instructions that because the whole country is fighting against Covid-19, therefore, during this period the serious matter like extension of time, approval of resolution plan and liquidation shall not be entertained as urgent matters - It is needless to mention that on the one hand the Adjudicating Authority itself is issuing instructions that the issue regarding the extension of time, approval of the resolution plan and liquidation should not be treated as urgent matter and on the other hand the Acting President heard the unnumbered applications treating them most urgent and then approved the resolution plan only on the basis that the CoC has already approved the same without recording his satisfaction about Section 30(2) of the Code. The impugned order is patently illegal as it is without any reason which is the heart and soul of a judicial order because the Adjudicating Authority has passed the order though referring to Section 31 of the Code but it has not recorded its satisfaction about the provisions of Section 30(2) of the Code - the impugned order is not only illegal, but also unreasonable and non-speaking. The matter has to be remanded back to the Adjudicating Authority to decide the issues again after recording its findings in accordance with law - Appeal allowed by way of remand. 2024 (1) TMI 44 CIRP - Interpretation of statute - right of Operational Creditor to seek a copy of the information memorandum - Operational Creditor is merely a participant in the CoC and not a member. HELD THAT:- The Respondent has admitted that he is only a participant. It is also an admitted fact that there is no definition of member provided in the Code or the Regulations which has been repeatedly used in the Code as well as Regulations. Section 21 deals with the composition of CoC and Section 21(2) provides that member shall be the financial creditors of the Corporate Debtor. Section 25 is in regard to the preparation of information memorandum. Section 29(2) says that the information memorandum has to be provided to the resolution applicant whereas Regulation 36 provides that it has to be given to each of the member of the committee and Regulation 36(4) provides that it shall be given to the resolution applicant. From the aforesaid two provisions and the fact that the Code and Regulations are totally silent about the supply of the information memorandum to the participant, it has to be inferred that the legislature has made a provision for providing a copy of the information memorandum to the member of the CoC and the Resolution Applicant but not to the participant of the meeting of the CoC such like the present Respondent. Therefore, the finding recorded by the Adjudicating Authority that since there is no prohibition in the Code or the Regulations for providing the information memorandum to the Operational Creditor as a participant is totally erroneous and unsustainable. In so far as, the decision of the Hon ble Supreme Court in Vijay Kumar Jain [ 2019 (2) TMI 97 - SUPREME COURT] is concerned, reference firstly is made to the facts of the said case. In that case, the Appellant was the member of the suspended board of director. He was aggrieved because he was not given the copy of the resolution plan and was denied even participation in the meeting of the CoC. In this background, the Hon ble Supreme Court has held, in Para 9 of the Judgment, that in view of Section 30(2)(b) of the Code since repayment of debts is an important part, therefore, the resolution plan has to be given to the participant of the CoC - As far as Para 12 of the said judgment is concerned, it talks about the information memorandum which is to be given to the resolution applicant so that he may submit the resolution plan in terms of Section 30 of the Code and the CoC get the information memorandum so that they can assess the financial position of the Corporate Debtor before the meeting. There is no reasonable nexus attached with the supply of information memorandum to the participant such like the Operational Creditor - In such circumstances, the judgment in the case of Vijay Kumar Jain which is on its own facts has wrongly been relied upon by the Adjudicating Authority while passing the impugned order. The question framed in the beginning is hereby answered to the effect that the Operational Creditor being a participant in the meeting of the CoC has no right to seek a copy of the information memorandum. There are merit in the appeal, the same is hereby allowed and the impugned order is set aside. 2024 (1) TMI 43 Rejection of Resolution Plan - Liquidation ordered - Application under Section 66 of IBC - reliability of Forensic Audit Report, an independent expert agency - ineligibility of the Appellants under Section 29 (A) (g) of the Code - HELD THAT:- It is seen CoC approved the resolution plan and accordingly the application for the liquidation of the Corporate Debtor was withdrawn by the Respondent/Resolution Professional. However, since the CoC at a later stage authorised the Respondent to file the application under section 66 of the Code, therefore the Respondent filed the said application after forming her independent opinion. Therefore, it is incorrect submissions made by Appellant that the Resolution Professional want to send the Corporate Debtor into liquidation. It is the contention of the Appellants that the Statutory Auditor did not find any fraudulent transactions contrary to the Forensic Audit Report submitted by M/s VMRS Associates, Chartered Accountants and therefore Forensic Audit Report was not correct. In this regard, it is observed that the role of Forensic Audit becomes relevant only when such situation occurs about alleged preferential, undervalued, fraudulent and extortionate type of transaction takes place and on most occasions the process of Forensic Audit is required to be undertaken after the annual financial statement of the Corporate Debtor are duly compiled and audited - the contention of the Appellant cannot be accepted that in absence of pointing out fraudulent transactions by the Statutory Auditors, the alleged fraudulent transactions should not have been taken into consideration by the Respondent or by the Adjudicating Authority. There are no error in the Impugned Order dated 12.11.2021 and there are no merit in the Appeal. Disapproval of Resolution Plan - Liquidation of the Corporate Debtor ordered - ineligible under Section 29 (A) (g) of the Code - HELD THAT:- The Adjudicating Authority has power under Section 33(1) of the Code to reject plan and direct liquidation of Corporate Debtor, if any of the requirement of not fulfilled by Resolution Applicant - In the present case the Appellant/Resolution Applicant was declared ineligible under Section 29A(g) of the Code after determination of fraudulent transactions of Rs. 29,75,73,550/- by him along with related parties/ his family members vide order dated 12.11.2021 in I.A. 102/2021 - It is seen that the Adjudicating Authority has exercised its power in the light of Section 33(1) (a) for Initiation of Liquidation, where the Adjudicating Authority has to consider the maximum period permitted for completion of the CIRP under section 12 i.e., 330 days and in this case, around 1,469 days already been lapsed (25.07.2019 CIRP to 02.08.2023 date of liquidation order). It is evident that once the Resolution Applicant become ineligible under Section 29 (A) (g) of the Code, the Adjudicating Authority is bound to reject the Resolution Plan and consequently order for Liquidation of the Corporate Debtor - Section 29A(c) of the Code is provision which and has been added with clear intention to ensure that people who were at the helm of the affairs of the Corporate Debtor, do not come back in some other guise to get back the management/ control/ ownership of the Corporate Debtor without clearing its outstanding debts - the persons who are not covered under clause 29 A(g), will remain eligible to submit resolution plans under clause (c) of Section 29A, else will become ineligible as in the present Appeal. There are no error in the Impugned Order - appeal dismissed. 2024 (1) TMI 42 Maintainability of application for restoration of the petition before the Adjudicating Authority - failure to cross the threshold limit - appeal dismissed also on the ground of threshold limit and not only on the ground of non-appearance of the appellant. HELD THAT:- In the ordinary course, had an order been passed by the Adjudicating Authority dismissing the petition filed under Section 9 of the Code only on the ground of non-appearance of the appellant then the application for recalling of the order dated 20.09.2022 could have been maintainable but the facts are otherwise because the order dated 20.09.2022 was passed on merits by the Adjudicating Authority holding that the petition under Section 9 is not maintainable as it has failed to cross the threshold limit as per Notification dated 24.03.2020 issued by the MCA. This order could have been challenged by way of an appeal by the Appellant before the Appellate Authority but the Appellant did not choose to file the appeal rather filed a frivolous application for restoration of the petition, may be under wrong belief, that the petition has been dismissed for non-appearance of the appellant only - Thus, no error is committed by the Adjudicating Authority in dismissing the application for restoration vide impugned order dated 23.03.2023 because it has been observed that the order dated 20.09.2022 has been passed on merits much less on the ground that the Appellant has failed to cross the threshold limit as provided because the amount which has been sought to be resolved was Rs. 75 Lakh whereas after the amendment the threshold has been increased to Rs. 1 Crore. There are no merit in this appeal and the same is hereby dismissed. 2024 (1) TMI 41 Admission of application filed under Section 7 of IBC - proceeding ex-parte ignoring the reply of the Corporate Debtor - HELD THAT:- The reply having been filed which was noticed by this Appellate Tribunal in order dated 27.05.2022, the Adjudicating Authority ought to have looked into the reply and even it was not on the e-portal opportunity ought to have been given to bring it on e-portal or physical copy of the reply ought to have been taken from the Corporate debtor. The Adjudicating Authority committed error in proceeding ex-parte ignoring the reply and admitting section 7 application. In result, the impugned order set aside, Section 7 application revived again before the Adjudicating Authority. The Adjudicating Authority shall fix a date after two weeks and after hearing the parties pass afresh order in accordance with law. 2024 (1) TMI 40 Seeking direction to the IRP to admit their claim in full - Seeking not to treated as a related party of the Corporate Debtor - assignment of voting rights in respect of Corporate Insolvency Resolution Process - HELD THAT:- The Adjudicating Authority has committed a patent error in holding that a related party has a right to join the meeting of the CoC - Adjudicating Authority has further erred in observing that the Appellant did not refer to a specific sub clause of Section 5(24) of the Code whereas it has in fact referred to Clause 5(24)(m) and also gave the detail of the name of the directors by way of a chart which also forms part of Para 11 of the impugned order but still there has been no finding in this regard. Further, the Adjudicating Authority has erred in making specific observation that no material has been brought on record except general observations given by the RP on the basis of the order of SAT whereas the Appellant has produced on record a detailed summary which has been prepared on the basis of MCA Data which though has been reproduced in the impugned order from pages 89 to 111 but it has not been referred to in the discussion part where it has been rather held that no material has been produced except for the order of the SAT - The argument raised by the Respondent that every provision of Section 5(24) has its own effect and impact which has to be assessed on the basis of the evidence may be attractive but even that part has not been seen by the Adjudicating Authority while passing the impugned order. This is a fit case for allowing the appeal for the purpose of its remand to the Adjudicating Authority to decide it afresh after take into consideration the entire evidence brought on record by the Appellant and Respondent and then passing a speaking order - matter is remanded back to the Adjudicating Authority to decide it again by recording specific findings on the basis of material which has been brought on record - appeal allowed by way of remand. 2024 (1) TMI 33 Constitutional validity of Sections 95 to 100 of the Insolvency and Bankruptcy Code 2016 - time bound resolution of insolvency - comparison between the stages of Part II and Part III of the IBC - role of the resolution professional in corporate as opposed to individual insolvency - impact of a moratorium under Section 14 of Part II, on one hand, and an interim-moratorium under Section 96 of Chapter III of Part III - role of the adjudicating authority in applications under Part II, on one hand, and Part III, on the other. HELD THAT:- The conclusion of this judgment is summarised below: (i) No judicial adjudication is involved at the stages envisaged in Sections 95 to Section 99 of the IBC; (ii) The resolution professional appointed under Section 97 serves a facilitative role of collating all the facts relevant to the examination of the application for the commencement of the insolvency resolution process which has been preferred under Section 94 or Section 95. The report to be submitted to the adjudicatory authority is recommendatory in nature on whether to accept or reject the application; (iii) The submission that a hearing should be conducted by the adjudicatory authority for the purpose of determining jurisdictional facts at the stage when it appoints a resolution professional under Section 97(5) of the IBC is rejected. No such adjudicatory function is contemplated at that stage. To read in such a requirement at that stage would be to rewrite the statute which is impermissible in the exercise of judicial review; (iv) The resolution professional may exercise the powers vested under Section 99(4) of the IBC for the purpose of examining the application for insolvency resolution and to seek information on matters relevant to the application in order to facilitate the submission of the report recommending the acceptance or rejection of the application; (v) There is no violation of natural justice under Section 95 to Section 100 of the IBC as the debtor is not deprived of an opportunity to participate in the process of the examination of the application by the resolution professional; (vi) No judicial determination takes place until the adjudicating authority decides under Section 100 whether to accept or reject the application. The report of the resolution professional is only recommendatory in nature and hence does not bind the adjudicatory authority when it exercises its jurisdiction under Section 100; (vii) The adjudicatory authority must observe the principles of natural justice when it exercises jurisdiction under Section 100 for the purpose of determining whether to accept or reject the application; (viii) The purpose of the interim-moratorium under Section 96 is to protect the debtor from further legal proceedings; and (ix) The provisions of Section 95 to Section 100 of the IBC are not unconstitutional as they do not violate Article 14 and Article 21 of the Constitution. Petition dismissed. Service Tax 2024 (1) TMI 39 Condonation of delay of more than 43 months, 40 months and 37 months in filing appeal - time limitation - power of Commissioner (Appeals) to condone delay - HELD THAT:- The Section 85 (3) and Section 86 clearly bring out the Legislative intent of allowing restricted power to the Commissioner (Appeals) and unrestricted power to the Tribunal. Further the amendment carried out to Section 85 by way of 85(3A), vide the Finance Bill 2012 wherein the power to condone has been reduced from 3 months to 1 month, once again shows that it is a considered, deliberated, specific intent of the Legislature to prescribe the specific time limit to condone the delay by the Commissioner (Appeals). Coming to the facts of the present Appeals, there is absolutely no dispute and also clearly admitted by the Appellant that they have filed the Appeals before the Commissioner (Appeals), after more than 43 months, 40 months and 37 months, way beyond the condonable period of Three Months by the Commissioner (Appeals) as prescribed under Section 85 (3) - when admittedly the Appeals have been filed beyond 3 months + 3 months, we do not find that any infirmity has crept in, in the OIAs passed by the Commissioner (Appeals). We hold that he was correct in dismissing the Appeals on this count. Whether the Tribunal is empowered to go into the condonation power of the Commissioner (Appeals) and can it direct him to condone the same by way of any power vested in the Tribunal? - HELD THAT:- Under this Section 35, the Appeal is required to be filed within 60 days and condonation can be granted if it is filed within the next 30 days. This Section 35 of CEA 1944, which is applicable for Central Excise cases, is para materia with Section 85 of the Finance Act 1994, which is applicable for Service Tax cases. While the condonable period was 30 days in case of Central Excise Appeals, the same is for Three (3) months for the Service Tax matters during the period under dispute - The Hon ble Apex Court has unequivocally held that once the condonable period of 30 days is exceeded, the Commissioner (Appeals) has no power to condone the same. It has also gone on to hold that even Section 5 of the Limitation Act, is fully excluded since the statute itself prescribes the specific period upto which the condonation can be granted. It further holds that, even Supreme Court cannot be vested with the power to condone this delay before the Commissioner (Appeals), since any such action would render the specific provision otiose. There is no power vested with this Tribunal to set aside the Appeals already dismissed by the Commissioner (Appeals), particularly when there are no infirmity in his doing so after finding that the Appeals were filed with a delay of 43 months, 40 months and 37 months respectively. In the present case, when the explanation for the COD was not found to be acceptable and the Appeals were dismissed both by the Tribunal and the Single Judge of the High Court, the appellant weaved a set of lie, by taking the example of another Final Order of this Tribunal, wherein the dismissal of the Appeal by the Commissioner (Appeals) was on a totally different ground. They concealed the fact that in the case of the present Appeals they were dismissed initially by the Commissioner (Appeals) in terms of Section 85 (3). With such concealment and lies, they were able to get a reprieve from the Hon ble High Court time and again, for the delay of over 5 years before the Tribunal in the present Appeals. Appeal dismissed. 2024 (1) TMI 38 Refund of un-utilized cenvat credit - part claim denied for various reasons. Credit denied on the ground that the input services for which the refund is filed are not input services in terms of Rule 2 (l) of the Cenvat Credit Rules, 2004 - HELD THAT:- It is found that at the time of availing cenvat credit, it was not objected for availment of cenvat credit. Therefore, at the time of filing of refund claim, the cenvat credit issued cannot be raised. Accordingly, the appellant is entitled for refund claim. Credit denied due to discrepancies holding by the adjudicating authority that the address of the appellant is not proper - HELD THAT:- As the registration is matching with the invoices issued by the supplier. In that circumstances, it cannot be alleged that the address of the service provider of the service recipient is not correct, the said discrepancy can be rectified. On this ground, the refund claim cannot be rejected. Credit denied on the ground that that no building number was mentioned in the invoices issued by the supplier of service - HELD THAT:- There is registration number of service provider and service recipient on the invoice, in that circumstances, the cenvat credit cannot be denied. Consequently, the appellant is entitled for refund claim. Credit denied on the ground that the invoices are in name of the employees along with the appellant - HELD THAT:- Admittedly, the appellant s name has been mentioned in the invoices issued by the service provider. In that circumstances, the appellant qualifies for entitlement of cenvat credit. Consequently, the appellant is entitled for refund claim for an amount of Rs.10,07,201/-. Denial of credit - Insurance Policy issued post the claim period, payment was made within claim period - HELD THAT:- The appellant has paid service tax within claim period, in that circumstances, it cannot be held that the appellant is not entitled to take cenvat credit. Consequently, the appellant is entitled for refund claim for an amount of Rs.18,30,077/-. Appeal disposed off. 2024 (1) TMI 37 Waiver of demand under Commercial and Industrial Construction Service for the period prior to 01.06.2007 - works contract service - HELD THAT:- This issue is no more res integra and has been settled by the Hon ble Apex Court in the case of COMMISSIONER, CENTRAL EXCISE CUSTOMS VERSUS M/S LARSEN TOUBRO LTD. AND OTHERS [ 2015 (8) TMI 749 - SUPREME COURT] wherein, the Hon ble Apex Court has held that the composite indivisible works contracts involving goods and services is liable to service tax under Works Contract Service only with effect from 01.06.2007. The decision of the Hon ble Apex Court in the case of M/s Larsen Toubro Ltd. cited has been upheld by the Hon ble Apex court in the case of Total Environment Building System Pvt. Ltd. cited cited [ 2022 (8) TMI 168 - SUPREME COURT] wherein the Honble Apex Court has clearly held that the service tax cannot be levied on composite works Contracts prior to introduction of Finance Act, 2007 - It is not in dispute that the services rendered by the respondent to I.O.C.L falls under the category of Works Contract Service but the Revenue has sought to tax them under the category of Commercial or Industrial Construction Service as defined under Section 65(25b) of the Finance Act, 1994, even for the period prior to 01.06.2007 which cannot be done, in view of the law laid down by the Apex Court. There is no infirmity in the impugned order passed by the Ld. Commissioner and the appeal of the revenue has no force - Appeal of Revenue dismissed. Central Excise 2024 (1) TMI 36 Demand of interest from the date of deposit during the investigation till its realization. The appellant insisted the decision of this Tribunal in the case of M/s Green Valley Industries Limited [ 2022 (4) TMI 560 - CESTAT KOLKATA ] pressing that this Tribunal itself has given the interest from the date of deposit till its realization in similar set of facts - Revenue relied on the decision of the Hon ble Apex Court in the case of Willowood Chemicals Private Limited [ 2022 (4) TMI 980 - SUPREME COURT] , submits that the interest is entitled after three months from the date of filing of refund claim till its realization. HELD THAT:- Tthe said decision was not available before this Tribunal while dealing with the case of M/s Green Valley Industries Limited - The order of the case of M/s Green Valley Industries Limited [ 2022 (4) TMI 560 - CESTAT KOLKATA ] was passed on 11.04.2022 whereas the decision of the Hon ble Apex Court in the case of Willowood Chemicals Private Limited is dated on 19.04.2022. It is required to follow the decision of the Hon ble Apex Court in the case of Willowood Chemicals Private Limited - the interest is allowed to the appellant after three months from the date of filing of refund i.e. 25.10.2013 till its realization i.e. 04.11.2015 - appeal disposed off. 2024 (1) TMI 35 Valuation/calculation of Excise duty - includability of the sales tax concession retained by the Appellant in the assessable value - inclusion of value of goods cleared under Section 4A for computing the duty payable for the normal period of limitation, or not - extended period of limitation - penalty. Valuation/calculation of Excise duty - includability of the sales tax concession retained by the Appellant in the assessable value - HELD THAT:- The issue is no more res integra as the Hon ble Supreme Court in the case of COMMISSIONER OF CENTRAL EXCISE, JAIPUR-II VERSUS M/S. SUPER SYNOTEX (INDIA) LTD. AND OTHERS [ 2014 (3) TMI 42 - SUPREME COURT ], has held that the sales tax concession retained by the assesses is required to be added in the assessable value for the purpose of levy of Central Excise duty. By relying on the above decision of the Hon ble Supreme Court, the sales tax concession retained by the Appellant is required to be added in the assessable value for the purpose of levy of Central Excise duty. Invocation of extended period of limitation - It is also contended that the value of goods cleared under Section 4A should not be included for computing the duty payable for the normal period of limitation - HELD THAT:- There are merit in the argument of the Appellant. The VAT incentive scheme is applicable only in respect of the goods cleared under Transaction Value as provided under Section 4 of the CEA, 1944. It is not applicable to the goods cleared under Section 4A. Hence, the contention of the Appellant is agreed upon that value of goods cleared under Section 4A should not be included for computing the duty payable for the normal period of limitation. Levy of penalty - HELD THAT:- The adjudicating authority has not given any proper finding for imposing penalty under Section 11AC. Accordingly, the penalty imposed under Section 11AC not tenable. Appeal allowed in part. CST, VAT & Sales Tax 2024 (1) TMI 34 Validity of intimation dated 30.04.2021 issued for the assessment years 2011-12, 2012-13 and 2013-14 - rejection of the petitioner s application under Section 84 of TNVAT Act primarily on the ground that it is not a speaking order - violation of principles of natural justice - HELD THAT:- The impugned order does suffer from the vice of being a non-speaking order inasmuch as it only contains the conclusion viz., that the request for rectification being rejected without assigning any reasons. When a request is made for rectification of an order, it is not for the authority concerned to refuse to exercise this power without giving any reason or without adverting to the representation made by the aggrieved person. When the circumstances exist for the exercise of this power, it is mandatory to have recourse to it in public interest and to avoid injustice in taxation. Keeping in view, the nature of the power to rectify errors apparent on the face of the record, it appears to me that it is incumbent on the Assessing Authority while dealing with the rectification petition to pass order assigning reason, in other words, pass speaking order. It is now well recognised as one of the norms of natural justice that reasons be recorded and conveyed in an order quasi-judicial in nature - What the assessing authority is expected by the rules of fundamental fairplay is not a mere empty formality but what the assessing authority is duty bound to do is to give reasoned finding so that an aggrieved party may be able to canvass the correctness of the same. The impugned orders are non-speaking and thus liable to be set-aside. The respondent is directed to pass a speaking order within a period of 8 weeks from the date of receipt of a copy of this order after providing the petitioner a reasonable opportunity of hearing - Petition allowed.
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