TMI Tax Updates - e-Newsletter
January 30, 2020
Case Laws in this Newsletter:
GST
Income Tax
Corporate Laws
Insolvency & Bankruptcy
PMLA
Central Excise
Indian Laws
Highlights / Catch Notes
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GST:
Supply of goods or supply of services - supply of food items at GMUs (General Minor Units) at Railway Platforms which include only counter sale of packed food items, drinks and cooked item - it is evident that the activity carried out by the applicant is "supply of services". - the activity carried out by the applicant is "supply of services". - the services will be taxed @ 5% without ITC.
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GST:
Detention of goods alongwith vehicle - e-way bill had expired/lapsed - As for penalty, the petitioner enjoys the benefit of Circular no.10 of 2019 dated 31.05.2019 where at para 10, the Commissioner reduces the penalty payable in certain circumstances to ₹ 5000/-. - the case on hand would be covered by this beneficial provision.
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GST:
Release of confiscated goods alongwith vehicle - Part-B of the E-way Bill was not available - The petition is disposed of with the direction that as and when the petitioner files reply to the notice, under Section 129(3) of the Act, the respondent- Authority may consider the same, after giving an opportunity of hearing to the petitioner
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GST:
Maintainability of appeal - aggrieved person - when the order was served on the driver, it cannot be said that the order was served on a person who was aggrieved by the order and, therefore, the order dated 3.10.2019 cannot be sustained and is thus quashed.
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Income Tax:
Exemption u/s 11 - Deduction u/s. 24 against income from house property - treatment of capital expenditure as application of income - Extrapolation made by learned CIT(A) that the Trust shall not be entitled for deduction u/s. 24 of the Act in computation of income from house property is totally unsustainable in law.
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Income Tax:
Addition u/s 68 - source of cash found deposited in the bank account of the - unexplained cash credit - Genuineness of retention of money /cash after sale of agricultural land for 8 months in the hands of father - the basis given by the CIT(A) for rejecting the explanation of the assessee vis-a-vis the source of cash deposited, does not stand the test of reasoning
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Income Tax:
Penalty u/s 271D - Cash loan taken from the Partner of the Partnership Firm -Assessee with a bona fide belief that the provisions of section 269SS are not applicable has availed the cash loan from the partner - No penalty.
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Income Tax:
Addition on account of interest paid u/s 36(1)(iii) - Once, the genuineness is proved and interest is paid on the borrowings, no interest can be disallowed on the grounds that the assessee has not correctly used the amounts borrowed.
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Income Tax:
Compounding of offence u/s 276C(1) - for compounding of offence u/s 276C(1) of the Act, 1961 would be permissible on payment of 100% of the tax sought to be evaded and not 100% of the amount sought to be evaded by the assessee.
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Income Tax:
Exemption u/s 11 - merely because the assessee-trust/company has been formed by another company for complying with the corporate social responsibility requirements, it cannot be denied registration under section 12AA unless the genuineness of the activities of assessee-trust or its charitable objects is doubtful.
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Income Tax:
Penalty u/s.272A(2)(k) - no reasonable explanation for huge delay in filing the TDS Returns i.e. 24Q and 26Q statements by assessee - The assessee cannot escape himself for non-filing quarterly TDS merely stating that the PAN of the employees are not available.
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Income Tax:
Application for AAR (Authority for Advance Ruling) - application rejected on the ground that the Assessee failed to produce the basic documents viz., basic contract entered between the consortium and the Assessee with Sri Lanka Telecom - no exception could be taken - Petition rejected.
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Income Tax:
Deduction u/s 80IA(2)(iv)(c) - we do not agree with the view taken by the Honb’le High Court of Rajasthan insofar as it takes a view that once the area declared as backward area under Section 80HH(2) of the Act, the same has to be taken as Industrially Backward Area for the purposes of the Act, as Section 80HH(2) and 80-IA(2)(iv)(c) are separate and independent provisions.
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Income Tax:
Reopening of assessment u/s 147 - unpaid loan liability - AO has not shown any rational for involving Section 56 to the transaction of loan. The reasons are completely and wholly silent as to how the provisions of Section 56 are attracted in respect of outstanding liability of loan. Moreover, the reasons also do not spell out as to how there has been escapement of income by the assessee.
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Income Tax:
Liability of directors of private company in liquidation u/s 179 - Notice is totally silent as regards the satisfaction of the condition precedent for taking action u/s 179 - we would like to give one chance to the department to undertake a fresh exercise so far as Section 179 is concerned.
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Income Tax:
Exemption u/s 11 - Merely because the objects of the trust are for the advancement of the business of TPA, it would not ipso facto render the trust to be non-charitable. The objects of the trust are not exclusively for the promotion of the interests of the TPA members. The objects are to provide benefit to general public in the field of insurance and health facilities.
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Corporate Law:
Lifting of corporate veil - recovery of debt - Personal liability of ex-director - Unless there is a separate contract, the Directors cannot be held personally liable, as has been done in the present case.
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Indian Laws:
Dishonor of Cheque - The statutory notice is given by the respondent on 26.7.2018 and it was received by the petitioner on 27.7.2018. The petitioner was to pay the amount as per the notice on or before 11.8.2018. Till 11.8.2018 it cannot be said that the offence is completed. The offence will be completed only after 11.8.2018. Thus, the offence is committed on 11.8.2018.
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IBC:
Permission to Liquidator to cause sale of assets of the Corporate Debtor - As to relief under section 52 of the Code, when debt is secured, the creditor is always at liberty to proceed u/s 52 of the Code under liquidation. That right cannot be whittled down by the RP by filing an application to enable him to treat it as an asset falling under section 53 of the Code.
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PMLA:
Money Laundering - offence punishable u/s 3 - The said definition given in Section 3 of the PMLA, 2002 was later on clarified by adding explanation and as such it does not change the basic ingredients which were required to be alleged against a person for committing an offence under Section 3 of the PMLA, 2002. The clarification which has been added in fact was for removal of doubts, may be due to somewhat ambiguous definition inserted in the main provision of Section 3 of the PMLA, 2002.
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Central Excise:
CENVAT credit - goods cleared to SEZ unit - Rule 6(6) of CENVAT Credit Rules, 2004 - the amendment carried out in Rule 6(6) by way of Notification No.50/2008 was retrospective.
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Central Excise:
Pre-deposit by making reversal of CENVAT credit with interest -The mandatory pre-deposit made by the appellant in terms of Section 35F of the Central Excise Act was required to be refunded by the Department to the appellant and the said amount was not refunded. - The impugned order rejecting the refund claim under Section 11B on limitation is not sustainable in law
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Central Excise:
Maintainability of appeal - the order of the learned Tribunal had acquired finality at the hands of the Hon’ble Supreme Court. - it leads no scope open to the Assessee to maintain any Appeal before the High Court resorting to appeal under Section 35G of the Central Excise Act or Section 130 of the Customs Act before the High Court.
Articles
Notifications
Circulars / Instructions / Orders
Case Laws:
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GST
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2020 (1) TMI 1093
Exemption from GST - applicant provides services to help U.P. Housing Ministry to implement their policies plan and to help Government to provide affordable housing for all income groups - whether Awas Bandhu Uttar Pradesh can be exempt from GST regime? - HELD THAT:- In the absence of any information about the specific activities provided by the applicant it would be premature to opine whether the applicant can be exempt from GST. Application for Advance Ruling rejected.
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2020 (1) TMI 1092
Classification of supply - supply of goods or supply of services - supply of food items at GMUs (General Minor Units) at Railway Platforms which include only counter sale of packed food items, drinks and cooked item - input tax credit - Serial No. 7(ia) of Notification No. 11/2017-C.T. (Rate), dated 28-6-2017 - GST paid on license fees to Indian Railway or IRCTC. Whether supply of food items at GMUs (General Minor Units) at Railway Platforms which include only counter sale of packed food items, drinks and cooked item shall be treated as Sale of Goods or Sale of Services ? - HELD THAT:- It is evident that the supply made/to be made by the taxpayer as detailed in their application for advance ruling, falls under Chapter Heading 9963 (Accommodation, Food and Beverage Services) with the description of Service mentioned at Sl. No. 7(ia) of the table, Supply, of goods, being food or any other article for human consumption or any drink, by the Indian Railways or Indian Railways Catering and Tourism Corporation Ltd., or their licensees, whether in trains or at platforms. as a service. From the above notifications it is evident that the activity carried out by the applicant is supply of services . If it is sale of services, whether the whole revenue shall be taxed @ 5% without ITC under Serial No. 7(ia) of Notification No. 11/2017-C.T. (Rate), dated 28-6-2017 or assessee can opt to pay tax @ 18% with ITC under Serial No. 7(ix) of that Notification? - HELD THAT:- Letter F. No. 354/03/2018-TRU, dated 31-3-2018 of the OSD (TRU), Ministry of Finance, Department of Revenue (Central Board of Excise and Customs) (Tax Research Unit) needs to be taken into consideration which clarifies the issue holding that with the approval of GST Implementation Committee, that the GST rate on supply of food and/or drinks by the Indian Railways or Indian Railways Catering and Tourism Corporation Ltd. or their licensees, whether in trains or at platforms (static units), will be 5% without ITC - thus, it is clear that the services will be taxed @ 5% without ITC. If the assessee pays the taxes @ 5% under Serial No. 7(ia), whether assessee can claim the Input Tax Credit (ITC) of GST paid on license fees to Indian Railway or IRCTC? - HELD THAT:- Input Tax Credit of tax paid or deemed to have been paid appears not to be admissible. Consequences for wrong availing of ITC - HELD THAT:- This part of the question is out of the purview of the mandate of the Advance Ruling u/ s 95 (a) which provides that : advance ruling means a decision provided by the Authority or the Appellate Authority to an applicant on matters or on questions specified in sub-section (2) of Section 97 or sub-section (1) of Section 100, in relation to the supply of goods or services or both being undertaken or proposed to be undertaken by the applicant.
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2020 (1) TMI 1091
Detention of goods alongwith vehicle - e-way bill had expired/lapsed - section 129 of CGST Act - HELD THAT:- Section 129 is a complete code for the purpose of addressing all violations committed in transit leading to detention, seizure and release of goods and brings within its sweep all such contraventions, irrespective of the gravity of the violation itself. This observation is made in response to the submission of the petitioner that the offence in this case is only the lapsing of e-way bill, and that too for bonafide reasons, and this offence may not be viewed very harshly. Chapter 16 of the Central CST Rules 2017, setting out the E-way Rules in Rule 138. The second proviso under Rule 138(10) permits a transporter to extend the validity of the expired e-way after updating the details in the relevant Form and this benefit would be available in a case such as the present - In fine, the amount to be remitted would, in terms of Section 129(1)(b), be ₹ 86,700/- each towards CGST and SGST. As for penalty, the petitioner enjoys the benefit of Circular no.10 of 2019 dated 31.05.2019 where at para 10, the Commissioner reduces the penalty payable in certain circumstances to ₹ 5000/-. Mr.Shafiq agrees that the case on hand would be covered by this beneficial provision. Thus upon remittance of the taxes of a sum of ₹ 86,700/- each towards Central and State Taxes and penalty of ₹ 5000/-, the consignment shall be released forthwith. Petition disposed off.
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2020 (1) TMI 1090
Refund of IGST - section 54 of the CGST Act - respondents submits that requisite application has not been made before the concerned officer - HELD THAT:- The petitioner is directed to make a representation before the Assistant Commissioner(Preventive), Dinhata, and also serve a copy of this writ petition upon the concerned authority within a period of ten days from date. Upon receipt of the representation and copy of the writ petition, the authority concerned is directed to grant opportunity of hearing to the petitioner and thereafter pass a reasoned order within a period of four weeks from date of receipt of the representation and communicate the same to the petitioner within a period of one week from date of passing such order. Petition disposed off.
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2020 (1) TMI 1089
Imposition of late fee, interest and penalty - delayed filing of GSTR-3B and GSTR-1 - HELD THAT:- It is pointed out by Mr. Contractor that till this date, no proceedings have been initiated as apprehended. It is just an apprehension on the basis of which the writ-applicant is praying for in terms of Paragraph 14(d). - In such circumstances, no further adjudication is required. Petition disposed off.
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2020 (1) TMI 1088
Constitutional validity of para 2 of the Schedule II to the Central Goods and Services Tax Act, 2017 and the Goa Goods and Services Tax Act, 2017 read with Sections 7 and 9 thereof - HELD THAT:- Petition is dismissed. Permission for withdrawal of petition - HELD THAT:- There is no dispute that such application has in fact been filed by the respondent no.5 and the same is pending adjudication - if the respondent no.5 secures any favourable orders in the proceedings under Section 102 of the Act, then, perhaps, no occasion will arise for the present petitioner to institute a petition of the present nature. However, if the respondent no.5 fails, we grant the petitioner liberty to institute a fresh petition. Petition disposed off.
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2020 (1) TMI 1087
Service of SCN - aggrieved person - order served with the driver - Seizure of goods alongwith vehicle - section 129 of the Uttar Pradesh Goods and Service Tax Act, 2017 - commencement of time limitation for filing of appeal - HELD THAT:- The order was served on the driver and, therefore, was definitely not served on a person who would have been aggrieved by the order and, therefore, the service on the driver was no service at all. Petition allowed.
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2020 (1) TMI 1086
Detention of goods alongwith the vehicle - Section 29(1) of the CGST Act and 129(3) of the Act - HELD THAT:- List for final hearing on 19.02.2020 before the appropriate Court. In the meantime, if the petitioner complies with the provisions of Rule 140 (1) of GST and CGST Rules, 2017, his seized goods and vehicle shall be released.
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2020 (1) TMI 1085
Release of confiscated goods alongwith vehicle - Part-B of the E-way Bill was not available - HELD THAT:- As it emerges from the record, after issuance of notice, under Section 129 of the Central Goods Services Tax Act, 2017, the petitioner has not filed any reply and therefore, no order is passed by the Authority, under Section 129(3) of the Act. The petition is disposed of with the direction that as and when the petitioner files reply to the notice, under Section 129(3) of the Act, the respondent- Authority may consider the same, after giving an opportunity of hearing to the petitioner, in consonance with Sub-Section 4 of Section 129 of the Act and pass an appropriate order, under the provisions of the Act.
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2020 (1) TMI 1084
Maintainability of appeal - aggrieved person - service of notice and order on the Driver - the order which was being appealled against was served on one Narendra Singh who admittedly was the driver of the transport agency - HELD THAT:- Reliance can be placed in the case of S/S PATEL HARDWARE VERSUS COMMISSIONER, STATE G.S.T. AND 2 OTHERS [ 2018 (12) TMI 1005 - ALLAHABAD HIGH COURT] where it was held that the intention of the Statute was that the order which was required to be appealled against under section 107(4) of the Goods and Service Tax Act, 2017 ought to have been communicated to such a person who was aggrieved by the order and, therefore, when the order was served on the driver, it cannot be said that the order was served on a person who was aggrieved by the order and, therefore, the order dated 3.10.2019 cannot be sustained and is thus quashed. The appeal shall now be treated to have been filed within the limitation provided under section 107 of the Act and shall be decided in accordance with law. Petition allowed.
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Income Tax
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2020 (1) TMI 1083
Exemption u/s 11 - Deduction u/s. 24 against income from house property - treatment of capital expenditure as application of income - HELD THAT:- Extrapolation made by learned CIT(A) that the Trust shall not be entitled for deduction u/s. 24 of the Act in computation of income from house property is totally unsustainable in law. As a matter of fact, the proposition that income has to be computed as per provisions of the Act even in the case of Trust was approved in the case of CIT v. Institute of Banking Personnel Selection (IBPS) [ 2003 (7) TMI 52 - BOMBAY HIGH COURT] wherein capital expenditure for acquiring asset which was already shown as application of income was held to be eligible for depreciation which was denied by the Revenue. In this view of the matter in our considered opinion the assessee is entitled to deduction u/s. 24. Following the precedent as above, we direct accordingly. Since we are deciding the issue following the Hon'ble Bombay High Court decision as above, other decisions relied upon by the Revenue are not applicable. Disallowance of claim of accumulation of unutilized funds - We find that the issue in dispute on this issue is unutilized portion of fund of ₹ 18,50,000/- for A.Y. 2008-09. The same has been held to be taxable by the Assessing Officer u/s. 11(3) of the Act. This aspect has been upheld by learned CIT(A) on the ground that any specified unavoidable circumstances is not on record. This he held so by observing that if any specified period expires then it is the option to assessee to revise the purposes cannot be exercised. He held that while perusing the document filed by the assessee, he did not find anything contrary to the observation of the AO Therefore in the absence of any specified unavoidable circumstances on record to modify purpose, he declined to interfere with the finding of the Assessing Officer. In our considered opinion it is nowhere emanating as to whether the learned CIT(A) has confronted this aspect or not. In our considered opinion interest of justice demands this issue may be remitted to the file of the Assessing Officer. The Assessing Officer is directed to consider the issue afresh after giving the assessee opportunity of being heard.
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2020 (1) TMI 1082
Addition u/s 68 - source of cash found deposited in the bank account of the - unexplained cash credit - Genuineness of retention of money /cash after sale of agricultural land for 8 months in the hands of father - HELD THAT:- There is nothing extraordinarily unusual or abnormal in the fact of retaining money for sometime before gifting it even if to the son, since there are various considerations which are involved in making a gift and it is up to the donor to decide when and to whom to make the gift. In the present case the period of retention of the amount for eight months, we find, is not unusually large so as to doubt the genuineness of the same - Considering the fact that the source of the amount with the donor has not been doubted, nor has the Revenue pointed out or brought on record any fact showing the usage of the said amount by the donor prior to gifting, we do not see any reason to hold the said explanation improbable and we find the same acceptable. As far the savings made from agricultural income, the ld. CIT(A) we find had rejected the explanation stating that no cash flow statement was filed by the assessee. We do not find any merit in the same also. It is a fact on record that the father of the assessee was an agriculturists who had sold the agricultural land measuring 47 kanal 10 marla during the impugned year and 32 kanal in the preceding year, which is evidenced by the copy of sale deed filed. Therefore, the father of the assessee, till the preceding year was in possession of at least approximately 82 kanal of land. The amount of ₹ 4,65,000/- representing savings from his agricultural income from the said lands does not appear to be abnormally large amount. The insistence of the CIT(A) on the cash flow statement we find is unwarranted and may not be feasible also considering that the father of the assessee was illiterate agriculturist and the CIT(A) could very well have verified the correctness of the statement on the basis of the quantum of land in the possession of the father and the average agricultural produce therefrom. We, therefore, find that the basis given by the CIT(A) for rejecting the explanation of the assessee vis-a-vis the source of cash deposited to the extent of ₹ 19,17,000/- does not stand the test of reasoning and the same is, therefore, rejected. - Decided in favour of assessee. 10. We, therefore, hold that the source of cash deposited to the extent of ₹ 19,17,000/- stands explained. The order of the ld. CIT(A) is, therefore, set aside and the addition of ₹ 19,17,000/- is directed to be deleted.
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2020 (1) TMI 1073
TPA - comparable selection - ALP - substantial question of law or fact - permission to withdraw this Special Leave Petition along with pending applications therein due to low tax effect -HELD THAT:- Permission granted, subject to just exceptions. The special leave petition and pending applications are dismissed as withdrawn, leaving question of law open.
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2020 (1) TMI 1072
Exemption u/s 11 - eligibility to get registration as a charitable organization u/s 12AA - whether the proposed activities of the assessee can be considered charitable within the meaning of Section 2 (15) ? - HELD THAT:- The primary or dominant object of the trust satisfies the conditions laid down under Section 2 (15) of the Act. Even if some ancillary or incidental objects are not charitable in nature, the institution would still be considered as a charitable organisation. As held by the Supreme Court in the case of DIT v. Bharat Diamond Bourse [ 2002 (12) TMI 8 - SUPREME COURT] merely because some facilities were beyond its main object, that by itself would not deprive the institution of the benefits of a charitable organisation. Reiterating its earlier view in CIT v. Andhra Chambers of Commerce [ 1964 (10) TMI 19 - SUPREME COURT] , the Constitution Bench of the Supreme Court in Surat Art Silk Cloth Manufacturers Association [ 1979 (11) TMI 1 - SUPREME COURT] held that if the primary purpose of advancement of objects is for general public utility, the institution would remain charitable, even if there are incidental non-charitable objects for achieving the said purpose. Having given our thoughtful consideration to this issue, we are not persuaded by the submissions advanced by Mr. Maratha, learned Senior Standing Counsel. Merely because the objects of the trust are for the advancement of the business of TPA, it would not ipso facto render the trust to be non-charitable. The objects of the trust are not exclusively for the promotion of the interests of the TPA members. The objects are to provide benefit to general public in the field of insurance and health facilities. In the course of carrying out the main activities of the trust, the benefits accruing to the TPA members cannot, by itself, deny the institution the benefit of being a charitable organisation. No substantial question of law arising for our consideration.
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2020 (1) TMI 1071
Liability of directors of private company in liquidation u/s 179 - satisfaction of the condition precedent for taking action under Section 179 - condition precedent for the purpose of invoking Section 179 that it is only in the event the Department fails to recover the dues from the company that it can proceed against the Director jointly or severally - HELD THAT:- As decided in MAGANBHAI HANSRAJBHAI PATEL [ 2012 (11) TMI 189 - GUJARAT HIGH COURT] before recovery in respect of the dues from a private company can be initiated against the directors, to make them jointly and severally liable for such dues, it is necessary for the Revenue to establish that such recovery cannot be made against the company and then alone it can reach to the directors who were responsible for the conduct of the business during the previous year in relation to which liability exists. There is no escape from the fact that the perusal of the Notice under Section 179 of the Act, 1961, reveals that the same is totally silent as regards the satisfaction of the condition precedent for taking action under Section 179 of the Act, 1961, viz. that the tax dues cannot be recovered from the Company. In the show -cause notice, there is no whisper of any steps having been taken against the Company for recovery of the outstanding amount. Additional affidavit- in- reply as regards the steps taken against the company for the recovery of the dues, we would like to give one chance to the department to undertake a fresh exercise so far as Section 179 is concerned. If the show -cause notice is silent including the impugned order, the void left behind in the two documents cannot be filled by way of an affidavit- in- reply. Ultimately, it is the subjective satisfaction of the authority concerned that is important and it should be reflected from the order itself based on some cogent materials. However, with a view to protect the interest of both, the writ applicant as well as Revenue, we are inclined to quash the impugned order and give one opportunity to the Revenue to initiate the proceedings afresh by issuance of fresh show-cause notice with all necessary details so that the writ- applicant can meet with the case of the Revenue. We are inclined to adopt such measure keeping in mind the statement made by the learned counsel Mr.Soparkar that till the fresh proceedings are not completed, his client will not operate the bank account. Writ -application is partly allowed. The impugned notice as well as the order is hereby quashed and set aside. It shall be open for the respondent to issue fresh show -cause notice for the purpose of proceeding against the writ- applicant under Section 179 - We would like to give a time bound program so that the proceedings may not go on for an indefinite period. We are also issuing such direction because of the statement being made that the writ- applicant will not operate the bank account till the fresh proceedings are initiated and completed. In such circumstances, we grant two months time from the date of receipt of the writ of this order to the Department to initiate fresh proceedings and pass appropriate orders in accordance with law. Till the final order is passed, the writ- applicant shall not operate the bank account concerned. Two notices under Section 226(3) of the Act, 1961, i.e. one, to the Kalupur Commercial Cooperative Bank Limited, and another, to the HDFC Bank Limited, are also quashed and set aside.
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2020 (1) TMI 1070
Reopening of assessment u/s 147 - assumption of jurisdiction by the AO under Section 147 - unpaid loan liability - HELD THAT:- AO has accepted genuineness of the loan transaction. The reasons are completely silent as to how, and on what basis, material or evidence, the AO has come to the conclusion that the loan transaction was an amount received without consideration, so as to bring the same within the ambit of Section 56 of the Act. The nature of the transaction depends solely on the intention of the parties. Both the parties have admitted that the same is an interest bearing loan, a fact accepted by the AO. AO has, thus, not shown any rational for involving Section 56 to the transaction of loan. The reasons are completely and wholly silent as to how the provisions of Section 56 are attracted in respect of outstanding liability of loan. Moreover, the reasons also do not spell out as to how there has been escapement of income by the assessee. The approach of the AO is fundamentally flawed, as he has assumed that just because certain loan amount is outstanding, the same was liable to be added to the income of the petitioner-assessee. Applying the test of prima facie evaluation of reasons for determining whether the commencement of reassessment proceedings is valid or not, we have no hesitation to say that there is nothing on record to justify the reopening. We are also not impressed by the contention of the Revenue that reopening of assessment is justified and necessary as there are discrepancies in the return originally filed, and the return filed in response to the notice under Section 148 of the Act by the assessee. At this stage we are only concerned with the fact whether the reasons as recorded by the AO showcase due application of mind. The reasoning does not indicate the basis for coming to the conclusion that the petitioner s taxable income has escaped assessment and the reasons formulated by the AO are based on a fundamentally flawed approach. We do not find any such material or basis to justify the reopening of the assessment. Resultantly, the writ petition is allowed. The notice under Section 148 of the Act and the proceedings emanating therefrom are hereby quashed. - Decided in favour of assessee.
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2020 (1) TMI 1069
Addition of demurrages for delay in execution of the project - appellant maintaining books of account under merchantile system of accounting - CIT-A allowed the claim of the appellant in respect of demurrages for delay in execution of the project - Tribunal reversed the order of CIT (Appeals) and restored the order passed by the Assessing Officer - HELD THAT:- From perusal of the order passed by the Tribunal, it is evident that the order passed by the Tribunal is based on opinion given by Mr. S. Janardhan, advocate as well as the fact that the appellant has not been able to produce the original deed of arbitration. The Tribunal therefore, has doubted the genuineness of the entry made in the books of accounts by the appellant to the tune of ₹ 54,00,000/-. Ordinarily, we would have dealt with the issue in this appeal itself. Since the revenue has disputed the genuineness of the entry made in the books of accounts, therefore, we are not inclined to decide the issue whether the Tribunal was justified in confirming the addition of ₹ 54,00,000/- in respect of demurrages for delay in execution of the project. The Tribunal has failed to take into account the remand report of the Additional Commissioner of Income Tax and joint venture agreement dated 19.09.1992. We deem it appropriate to set aside the order passed by the Income Tax Appellate Tribunal. Needless to state that it would be open to the Tribunal to pass such order as it may deem fit in accordance with law. The Tribunal, after affording an opportunity of hearing to the parties, shall decide the appeal preferably within a period of three months from the date of receipt of the certified copy of the order passed today. It is also clarified that this Court has not expressed any opinion on the merits of the case and all the contentions which are available to the parties in law are kept open. Accordingly, the substantial questions of law are answered.
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2020 (1) TMI 1068
Deduction u/s 80IA(2)(iv)(c) - Industrially Backward Area or not - entitled to claim deduction relying upon the notification bearing No.714E dated 07.10.1997 - HELD THAT:- In order to avail benefit of deduction, twin conditions have to be satisfied, namely, that industry should be located in Industrial Backward District as prescribed by the Central Government vide Notification in the Official Gazette and the aforesaid Industry has to commence the production during the period beginning from 1st October 1994 and ending on 31st March 1999. Admittedly in the instant case, the industrial undertaking of the appellant-assessee is not located in the Industrial Backward District, which has been mentioned in the Notification issued by the Central Government. It is pertinent to note here that the first Notification was issued by the State Government on 03rd September 1997, whereas the second Notification was issued on 07th October 1997. In both the aforesaid Notifications, the District in which the industry of the assessee is located has not been mentioned as Industrially Backward District. It is also not in dispute that the assessee had set up the industry before coming into force of the Industry Notification. Therefore, the condition mentioned in Section 80-IA(2)(iv)(c) of the Act that an industrial undertaking should be located within such Industrial Backward District as the Central Government vide Notification prescribed has not admittedly been fulfilled by the assessee. In order to claim the deduction, the assessee has to satisfy the requirements mentioned under the provision, which admittedly the assessee does not fulfill. Therefore, the assessee is not entitled to claim deduction under Section 80-IA(2)(iv)(c) is concerned the same is sans substance. Section 80HH and Section 80-IA(2)(iv)(c) are two different and independent provisions. The decision of TRINITY HOSPITAL. [ 2003 (1) TMI 29 - RAJASTHAN HIGH COURT] relied upon by respondent is of no assistance to the assessee in the fact situation of the case as the aforesaid decision was based on the concession that once an area is declared to be Industrially Backward Area under Section 80HH (2) of the Act, the same has to be taken under Industrial Backward Area for the purposes of this Act. In other words, the aforesaid decision is based on the concession and there has been no deduction on the issue. Therefore, we do not agree with the view taken by the Honb le High Court of Rajasthan insofar as it takes a view that once the area declared as backward area under Section 80HH(2) of the Act, the same has to be taken as Industrially Backward Area for the purposes of the Act, as Section 80HH(2) and 80-IA(2)(iv)(c) are separate and independent provisions. Appeal allowed.
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2020 (1) TMI 1066
Valuation for the purpose of capital gain - When once the revenue accepts the valuation for the purpose of capital gains in the returns filed over a period of years, subsequently can they refuse to accept the said valuation as the basis, for the subsequent years? - HELD THAT:- It is evident that the issue whether, when the valuation for the purpose of capital gains in the returns filed over a period of years, is accepted by the authorities, they cannot refuse to accept the same for the consequent years, has not been adverted to by the authorities under the Act. For the aforementioned reasons, the substantial question of law framed is answered in favour of the assessee subject to the condition that the valuation report has been accepted in scrutiny assessment at the instance of the assessee - matter is remitted to the Assessing Officer to decide the issue with regard to valuation for the purpose of capital gains in the light of the observations made in this order supra.
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2020 (1) TMI 1065
Application for AAR (Authority for Advance Ruling) - application rejected on the ground that the Assessee failed to produce the basic documents viz., basic contract dated 27 March 2004 entered between the consortium and the Assessee with Sri Lanka Telecom - HELD THAT:- We are satisfied that no interference is called for in the impugned order passed by the learned Authority for Advance Rulings. Despite grant of several opportunities, the Assessee admittedly failed either to adduce the basic contract before the said authority nor could satisfy the said authority that it was impossible for the Assessee to produce the said basic documents. We fail to understand any cogent reason for the Assessee not to produce the same. The party to the said contract was admittedly in another contract with the present petitioner and therefore, the present Assessee could have definitely requested the party viz., Sri Lanka Telecom to supply a copy of the said agreement to provide and background and context to the Authority for Advance Rulings to decide the question on which such advance ruling was sought by the Assessee. Without making any such efforts to satisfy the Authority that it was not possible for the Assessee to obtain such agreement, the Assessee cannot seek any interference, invoking the extraordinary jurisdiction under Article 226/227 of the Constitution of India for upsetting the said order. Assessee admittedly failed to satisfy the conditions and the requirements raised by the said authority concerned for deciding the question and therefore, no exception could be taken.
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2020 (1) TMI 1064
Compounding of offence u/s 276C(1) - Compounding of offence - offence pertains to willful attempt to evade tax, etc. - whether 100% of the amount sought to evaded or 100% of tax sought to be evaded is to be paid for compounding of offence - HELD THAT:- As decided in Supernova System (P.) Ltd. [ 2018 (9) TMI 1322 - GUJARAT HIGH COURT ] for compounding of offence under Section 276C(1) of the Act, 1961 would be permissible on payment of 100% of the tax sought to be evaded and not 100% of the amount sought to be evaded by the assessee. The petitions succeed and are accordingly allowed. The petitioner is therefore required to pay 100% of the tax sought to be evaded for compounding of offence under Section 276C(1) of the Income Tax Act, 1961. Rule is made absolute to the aforesaid extent.
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2020 (1) TMI 1063
Low sales turnover - addition of 2% gross profit by the assessing officer during the course of assessment proceedings - HELD THAT:- Tribunal has rightly observed when there is no allegation by the assessee that assessing officer had pressurized for addition, nor there being any contention that as per profit and loss account no such addition of 2% came to be made, held that appeal was bereft of merit and accordingly rejected the same. Gross profit declared by the assessee at 5.33% on the sales turnover, which was found by the assessing officer to be considerably low on comparison basis namely in comparison with other traders, who are in the same line of business and as such addition of 2% was made by the assessing officer as it would be reasonable for which the assessee himself had accepted. As such contentions raised by learned counsel appearing for appellant does not merit consideration. Consequently, appeal deserves to be rejected. Accordingly, it stands rejected.
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2020 (1) TMI 1062
Waiver of interest u/s 234B - application u/s 119 (2) (b) filled - HELD THAT:- The Central Board of Direct Taxes has issued the circular in the exercise of powers vested under Section 119 (2) (a) of the Income Tax Act, 1961. The circular has to be read strictly. Normally, these cannot be any addition or substitution by the authority concerned while entertaining the application for waiver of interest under Section 234 A, B or C of the Income Tax Act, 1961. Since, during the Assessment Years 1992-93 to 1994-95 there were no decisions of this court, the respondent was justified in not granting waiver of interest as per the above circular. Petitioner can legitimately state that it was entitled to take a bonafide view that it was eligible for exemption from payment of tax and/or claim deductions under Section 80HHC of the Income Tax Act, 1961 provided there were decisions of Tribunal though not of the jurisdictional Tribunal or the High Court as the case may be to entertain such a view. The Central Board of Direct Taxes perhaps could to have considered these factors and such eventualities while issuing the said circular. However, it has restricted to specified instances for grant of waiver. Since, the respondent is bound by the circular, I find no fault in the impugned orders of the respondent in refusing to grant waiver to the petitioner in terms of the said circular. Waiver of interest under Section 234B of the Income Tax Act, 1962 for the assessment years 1992-93, 1993-94, 1994-95, 2002-03 and 2004-05 can be directed to be given to the petitioner if there were decisions of the Tribunal or High Court though not of the jurisdictional Tribunal/High Court which would have allowed the petitioner to entertain such belief. The impugned orders are liable to be set aside and the cases be remitted back to the respondent to re-examine the issue afresh. In case the petitioner is able to show existence of any judgment of the Tribunal/High Court though not necessarily of the jurisdictional Tribunal/High Court at the time of filing of return, respondent can grant waiver/exemption to the petitioner by liberally construing the Circular. Accordingly, the impugned orders are set aside and the cases are remitted back to the respondent to pass a fresh order.
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2020 (1) TMI 1061
Reopening of assessment u/s 147 - mere change of opinion - HELD THAT:- Petitioner has raised several contentions touching upon the merits of the notice issued u/s 148 including the limitation and also by contending that it is based on change of opinion, but these contentions cannot be considered at this stage now, since the petitioner is bound to give objections to the reasons for reopening and thereafter, AO has to pass a reasoned order, as observed by the Apex Court in GKN Driveshafts (India) Ltd. case [ 2002 (11) TMI 7 - SUPREME COURT] . When such course of action is yet to be completed, these writ petitions at this stage can be maintained any further. Therefore, without expressing any view on the merits of the contentions raised by the petitioner against the impugned notice, these writ petitions are disposed of, by granting liberty to the petitioner to give objections to the reasons for reopening, within a period of four weeks from the date of receipt of a copy of this order. On receipt of such objections, the Assessing Officer shall consider the same and pass a reasoned order, within a period of four weeks thereafter.
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2020 (1) TMI 1059
Condonation of delay of 268 days - Sufficient cause of delay - Addition u/s 69A - unexplained investment - HELD THAT:- In the present case the assessee herself is an uneducated lady staying in a rural village of Kalaburagi. She was not assisted by legal advisor. She cannot read or write and also cannot sign. This can be seen from the thump impression in the appeal papers. She was also not in a position to get timely legal assistance from a Chartered Accountant or Advocate. It was explained that she came to know about the pending appeal only on receipt of notice of outstanding demand issued by the AO, proposing levy of penalty. In my opinion, the delay is not deliberate and intentional nor due to negligence. There is a reasonable cause in filing the appeal belatedly by the assessee before this Tribunal. When substantial justice and technical consideration are pitted against each other, the cause of substantial justice deserves to be preferred, for the other side cannot claim to have vested right in injustice being done because of a non-deliberate delay. Addition u/s 69A - Appellant has not substantiated explanation as to the source of investment - HELD THAT:- Before sustaining the addition, it is incumbent upon the authorities concerned to examine the contentions of the affidavit by examining the concerned parties, which the authorities failed to do. Further, the AR pleaded that the assessee sold a property of 9 acres 37 guntas in Hagarga village and he is ready to produce the relevant documents. Thus, pleaded that the assessee may be granted an opportunity to furnish the same before the lower authorities. In the interest of justice I grant the assessee an opportunity to produce the relevant sale documents before the Assessing Officer, regarding the receipt of ₹ 5 lakh from the sale of the said property. Further, the assessee has taken a plea that she has saved ₹ 20 lakh from several years and sales proceeds of agricultural land sold earlier. Thus, the assessee is directed to produce the relevant details also before the lower authorities. Accordingly, we remit the entire issue to the file of the Assessing Officer for fresh consideration. The assessee is directed to co-operative with the Department with necessary details and documents. Appeal filed by the assessee is partly allowed for statistical purposes.
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2020 (1) TMI 1058
Eligibility for deduction u/s 54 - denial of claim as assessee had not complied with the requirement of section 54 by depositing the amount into the specific bank account as notified in the Act, in terms of section 54(2) - HELD THAT:- The assessee should be given the benefit of deduction u/s 54 of the Act on the sum invested by the assessee in the construction of new residential house within the time allowed u/s 139(4) of the Act. My this view is fortified by the decision of the Co-ordinate Bench of the Kolkata Tribunal in the case of Sunayana Devi v. ITO [ 2017 (9) TMI 961 - ITAT KOLKATA] wherein held that Assessee should be given the benefit of deduction under section 54F and cannot be denied the benefit for the reason that he had not complied with the requirements of section 54(2). Assessee could make investment in construction of new building within three years from the date of transfer of the asset for claiming deduction u/s 54 of the Act. Section 54 of the Act are beneficiary and are to be considered liberally. In view of the above discussion, I am inclined the remit the issue to the file of the Assessing Officer to quantify the amount of exemption u/s 54 of the Act. The assessee is directed to prove the investment in residential building as prescribed u/s 54 of the Act before the due date of filing of the return u/s 139(4). Accordingly, this issue is remitted for the limited purpose of quantifying the amount of deduction to the file of the A.O. after affording a reasonable opportunity of being heard to the assessee. - Decided in favour of assessee for statistical purposes.
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2020 (1) TMI 1055
Assessment u/s 153A - Undisclosed consultancy fee - addition based on invoice found in survey - HELD THAT:- As during the course of survey in the office premises of the U.K. Paints (Overseas) Ltd. suggested that the services were rendered only by U. K. Paints Overseas Ltd. and not by the assessee herein. He had also stated that this invoice had already been accounted in the books of U.K. Paints (Overseas) Ltd. much prior to the date of search and survey. Hence this document cannot be said to be of incriminating nature to be used in the search assessment framed u/s 153A of the Act. We find that the Ld. CIT(A) had categorically stated that no services were rendered by the assessee to M/s ERA Construction Ltd. in order to earn consultancy income. These two crucial findings of the Ld. CIT(A) were not controverted by the Revenue before us. We find that said sum of ₹ 2,27,51,586/- had already been offered as consultancy income in the books of U.K. Paints (Overseas) Ltd. and there cannot be double taxation of the same in the hands of the assessee. We do not find any infirmity in the order of the Ld. CIT(A) and accordingly deem it fit not to interfere in the same. Accordingly, grounds raised by the Revenue are dismissed.
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2020 (1) TMI 1054
Assessment u/s 153A - Bogus purchases - proof of incriminating material has been found during the course of search - HELD THAT:- Admittedly and from the bare perusal of the assessment order, it is seen that addition on account of bogus purchases is not based on any evidence or incriminating material found during the course of search and seizure action albeit same has been made on the basis of information already on record in the form of audited balance sheet and books of account. It is also an admitted position that at the time of search, i.e., on 30.10.2013, the assessment for the Assessment Year 2012-13 has attained finality and was not pending assessment. Therefore, in terms of second proviso to Section 153A it cannot be reckoned as abated assessment. Now it is a well settled principle under the jurisdiction of Hon ble Delhi High Court that in the case of unabated assessment, addition over and above the earlier assessment can only be made if any incriminating material or document is found during the course of search. This principle has been upheld and reiterated in the case of Kabul Chawla [ 2015 (9) TMI 80 - DELHI HIGH COURT] and Meeta Gutgutia [ 2017 (5) TMI 1224 - DELHI HIGH COURT] . Accordingly, additions made by the Assessing Officer are held to be beyond the scope of Section 153A and same are deleted - Decided in favour of assessee
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2020 (1) TMI 1053
Enhancement order of CIT(A) - not allowing set off of unabsorbed depreciation against the income earned by the assessee - whether unabsorbed depreciation available in the hands of the assessee, where the business of the assessee has been temporarily closed and the assets leased for a short period in order to tide over the losses of business, then can the unabsorbed depreciation be adjusted against the income from property earned from leasing of the said assets? - HELD THAT:- Similar issue arose before the Tribunal in assessee s own case in Assessment Year 2011-12 [ 2019 (8) TMI 1414 - ITAT DELHI] similar disallowance was made in the hands of the assessee and the set off of unabsorbed depreciation against income from house property and income from other sources was not allowed by the CIT(A)/Assessing Officer. The Tribunal relied on the ratio laid down in M/s. Suresh Industries Pvt. Ltd. relating to Assessment Year 2007-08 in [ 2012 (11) TMI 674 - ITAT MUMBAI] which in turn relied on the decision of Jaipuria China Clay Mines Pvt.Ltd. [ 1965 (11) TMI 32 - SUPREME COURT] , Rajapalayam Mills [ 1978 (10) TMI 4 - SUPREME COURT] and Virmani Industries Pvt.Ltd. [ 1995 (10) TMI 1 - SUPREME COURT] and applied the said propositions vide paras 14 15 at pages 05 to 12 and allowed the claim of the assessee, by holding that brought forward depreciation had to be treated as current year depreciation under the provisions of section 32(2) of the Act. The Tribunal (supra) also noted that in Assessment Year 2007-08, the CIT(A) allowed the claim of set off in assessee s own case and in Assessment Year 2013-14, the Assessing Officer himself had allowed the said claim of set off of unabsorbed deprecation against the income from house property and other sources. Assessing Officer is directed to set off brought forward unabsorbed depreciation as part of current depreciation against the income from house property and income from other source, since the brought forward unabsorbed depreciation was the depreciation of the current year. - Appeal of the assessee is allowed.
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2020 (1) TMI 1051
Penalty u/s.272A(2)(k) - no reasonable explanation for huge delay in filing the TDS Returns i.e. 24Q and 26Q statements by assessee - HELD THAT:- The assessee is paying salary to his employees and he should have asked to the deductee for furnishing PAN before making salary payments. Assessee could not demonstrate that the assessee has furnished any reasonable cause for non-furnishing of PAN by the deductee so as to enable him to get the benefit of Section 273B and he has deducted TDS and deposited to the Government within the time with the prescribed authority. We understand that the MCL is a big company wherein tax experts are also working and this also not the first time scheme for filing return. TDS has been deducted and paid to the Government but in case of refund the exchequer suffers loss by way of interest on refund which has paid by the Income Tax Department to the deductee. The assessee could have asked to his employees to furnish their PAN by way of in writing so that it can be considered that there was a reasonable cause for not filing of PAN by the deductee, however, no such instance has been provided by the ld. AR of the assessee before us. The assessee was also not prevented by any reasonable cause for delay in filing the 24Q 26Q statements as required by the Act for all the quarters in a financial year. Quarterly filing TDS return has been introduced by the Government since 2003 which requires the quarterly submission of the TDS return with NSDL or other approved agencies by the Income Tax Departemnt. The assessee cannot escape himself for non-filing quarterly TDS merely stating that the PAN of the employees are not available . The penalty is provided in the Income Tax provisions u/s.272A(2)(k) is mandatory in nature except in case of reasonable cause proved by the assessee, which is lack in this case. Lower authorities are justified to impose the penalty as per the provisions of Section 272A(2)(k) - there is huge delay for filing the quarterly TDS return. - Decided against assessee.
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2020 (1) TMI 1049
Addition on account of interest paid u/s 36(1)(iii) - interest bearing funds to group company without charging interest - CIT-A deleted the addition - HELD THAT:- The assessee is in the business of real estate, entertainment power generation and the loans advances include investments in the property business of the assessee. Hence, it can be said that the advances recoverable included the advances which are business advances on which no interest is disallowable. It was also part of the record that another advances interest has been charged by the assessee as found out by the ld. CIT (A) on going through the Schedule 17 of the balance sheet. Since, the loans advances have been given on account of commercial expediency and notional interest can be charged on such advances or interest can be disallowed u/s 36(1)(iii). In the case of Taparia Tools [ 2015 (3) TMI 853 - SUPREME COURT] observed that while examining the allowability of deduction, the Assessing Officer is to consider the genuineness of the business borrowings and that the borrowings was further purpose of business and genuine. Once, the genuineness is proved and interest is paid on the borrowings, no interest can be disallowed on the grounds that the assessee has not correctly used the amounts borrowed. Also in the case of SA Builders [ 2006 (12) TMI 82 - SUPREME COURT] held that in case of interest bearing loans taken and interest free advances given, what is to be looked into is the measure of commercial expediency and for the purpose of the business . Hence, keeping in view the facts of the case and legal prepositions laid down on this aspect of allowability of interest u/s 36(1)(iii), we hereby decline to interfere with the order of the ld. CIT (A). The appeal of the revenue on this ground is dismissed. Disallowance u/s 14A - suo-moto disallowance by assessee - CIT (A) deleted the addition owing to non-adherence in accordance with the provisions of Section 14A(2) - DR argued that to invoke Rule 8D(2), no satisfaction is required as it is an automatic provision for determining the disallowance - HELD THAT:- While a lot of emphasis is placed by the counsel on wordings of section 14A(2) which refer to the need of Assessing Officer's satisfaction to the effect that the claim made by the assessee is incorrect, it simply overlooks the provisions of section 14A(3) which state that a disallowance u/s 14A(2) can also be made in a case in which assessee claims that no expenditure has been incurred for earning the tax exempt income. A plain reading of the statutory provisions of section 14A(2) and (3) shows that when assessee offers a disallowance u/s 14A,the provisions of section 14A(2) read with Rule 8D cannot be invoked unless the Assessing Officer is satisfied about incorrectness of the disallowance so offered, but when assessee does not offer any disallowance u/s 14A on his own, the provisions of section 14A(2) read with Rule 8D can be invoked without there being any need to express satisfaction about the incorrectness of such a claim. In the instant case, the assessee had made a suo-moto disallowance and the Assessing Officer has not recorded the dissatisfaction about the disallowance suo-moto made by the appellant and has not identified any expenditure which can be considered to be expended in connection with the investment activity. The appellant has own funds which are far more than the investments. The plain reading of the statutory provisions of section 14A(2) and 14A(3) shows that when the assessee offered the disallowance u/s 14A, the provisions of Section 14A(2) read with Rule 8D cannot be invoked unless the Assessing Officer is dissatisfied about the correctness of the disallowance so offered. Suo-moto disallowance made by the assessee, the further disallowance made by the Assessing Officer under Rule 8D(2)(ii) (iii) read with Section 14A, is hereby deleted. - Decided in favour of assessee.
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2020 (1) TMI 1048
Penalty u/s 271D - Cash loan taken from the Partner of the Partnership Firm - Violation of provisions of section 269SS - HELD THAT:- Loan transaction between the firm and partner does come within the purview of section 269SS of the Act, as they cannot be treated as different entities. Secondly, it is submitted that due to business exigencies arising out of immediate payment to be made to a creditor, the assessee was compelled to avail the cash loan from one of the partners. Availing of cash loan from one of the partners was for making payment to creditors. The ledger account copies of two creditors placed in the paper book support assessee's claim. Judicial precedents cited before us have also laid down the ratio that cash loan received from partner would not attract the provisions of section 269SS and section 271D of the Act since a Firm and Partner are not to be considered as different entities. Assessee with a bona fide belief that the provisions of section 269SS are not applicable has availed the cash loan from the partner. Further, Section 273B which also covers section 271D makes it clear that if the failure to comply to the relevant provision is due to reasonable cause, no penalty should be imposed. We are of the considered opinion that the assessee has made out a case of reasonable cause for availing cash loan from the partner, therefore, the assessee would be protected by the provisions of section 273B of the Act. Thus, we do not find any justifiable reason to sustain the imposition of penalty under section 271D - Penalty imposed is hereby deleted - Decided in favour of assessee.
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2020 (1) TMI 1047
Unexplained cash credit u/s.68 - HELD THAT:- We find the all is not well with the transactions involved in these three cases under consideration. We find that neither the creditors are substantially creditworthy nor the transactions are satisfactorily genuine. The issue is now settled by the legal proposition of law as per the decision of the Hon'ble Delhi High Court in the case of CIT Vs. N.R.Portfolio (P) Ltd. [ 2013 (11) TMI 1381 - DELHI HIGH COURT] in the matters of this kind. Mere bank transactions are coupled with existence of well structured documents is not adequate when there is cash deposits into the bank account few days before the date of issue of the cheque to the assessee. These questions are not answered even before us. Therefore, there is a failure on the part of the assessee to demonstrate the genuineness of the transaction and creditworthiness of the subscribers to the share capital. Considering the same, we are of the view that the decision of the CIT(A) in this regard is fair and reasonable and does not call for any interference. Accordingly, we sustain the addition made by the AO and confirmed by the CIT(A). The Grounds raised by assessee in this regard are dismissed.
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2020 (1) TMI 1046
Validity of the reassessment proceedings u/s 147 - non-issuance of notice u/s 143(2) - HELD THAT:- Hon'ble Delhi High Court in the case of PCIT vs. Jai Shiv Shankar Traders Pvt. Ltd. [ 2015 (10) TMI 1765 - DELHI HIGH COURT] has held that failure of the Assessing Officer to issue notice u/s 143(2) in reassessment proceedings, prior to finalizing reassessment order cannot be condoned by referring to section 292BB and is fatal to the order of reassessment. Various other decisions relied on by the assessee in the case law compilation also support his case that in absence of issue of notice u/s 143(2) even in reassessment proceedings, the order becomes invalid and has to be quashed. Since, in the instant case, the assessee filed the letter stating that the return filed originally may be treated as return filed in response to notice u/s 148 and since the notice u/s 143(2) was not issued within the statutory period and since the assessment was not completed u/s 144 nor any interest u/s 234A has been charged which indirectly proves that the assessee, in fact, has filed the letter stating that the return filed originally may be treated as return filed in response to notice u/s 148, therefore, we hold that the assessment order passed by the Assessing Officer is not in accordance with law and has to be quashed. The legal ground raised by the assessee challenging the validity of the assessment order is accordingly allowed. Decided in favour of assessee.
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2020 (1) TMI 1045
Exemption u/s 11 - denial of registration to the assessee-trust u/s 12A - main plea taken by CIT (Exemptions) is that the said company is an arm of another company for the purpose of carrying out their corporate social responsibility liability - HELD THAT:- There is no allegation or observation by the learned Commissioner of Income-tax (Exemptions) about the charitable nature of its objects and activities thereof. So far as the grant of registration to a company who is deemed to be under the control of another company and who has formed such company for complying their corporate social responsibility required under the Companies Act, the issue has been settled in NANAK CHAND JAIN CHARITABLE TRUST VERSUS CIT (E) , CHANDIGARH [ 2018 (2) TMI 874 - ITAT DELHI] wherein, it has been held that merely because the assessee-trust/company has been formed by another company for complying with the corporate social responsibility requirements, it cannot be denied registration under section 12AA unless the genuineness of the activities of assessee-trust or its charitable objects is doubtful. Direction to grant exemption under section 12A of the Act to the assessee-company. - Decided in favour of assessee.
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Corporate Laws
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2020 (1) TMI 1081
Lifting of corporate veil - recovery of debt - Personal liability of ex-director for the debt determined in favour of the first respondent, bank - the existence of a corporate borrower and the independent existence of its Directors, completely ignored - HELD THAT:- It is well settled that a Limited Company incorporated under the provisions of the Companies Act, 1956 has a separate and independent character and it is a juristic person in its own capacity - The Directors are entrusted with the responsibility of looking after the affairs of the Company as entrusted to them by the shareholders by adopting due procedure prescribed in the Articles of Association. Unless there is a separate contract, the Directors cannot be held personally liable, as has been done in the present case. We do not find any merit in the arguments advanced by the learned counsel for the first respondent Bank in this regard and, therefore, the learned Tribunals have failed to appreciate such legal distinction in the facts before them. The matter remanded back to the learned Debts Recovery Tribunal-I, Chennai, for deciding the Original Application of the first respondent Bank afresh in accordance with law - petition allowed by way of remand.
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Insolvency & Bankruptcy
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2020 (1) TMI 1080
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its debt - pre-existing dispute or not - suit filed three months after issuance of the demand notice - HELD THAT:- This adjudicating authority is of the considered view that operational debt is due to the Applicant. That, service is complete and no dispute has been raised by the respondent. That, Applicant is an Operational Creditor within the meaning of sub-section (5) of Section 20 of the Code. From the aforesaid material on record, petitioner is able to establish that there exists debt as well as occurrence of default - That, the Application filed by the Applicant on 02nd July, 2018 is complete in all respects. Thus, it is a fit case to initiate Insolvency Resolution Process by admitting the Application under Section 9(5)(1) of the Code - petition admitted - moratorium declared.
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2020 (1) TMI 1079
Permission to Liquidator to cause sale of assets of the Corporate Debtor under Regulation 32 of IBBI (Liquidation Process) Regulations - charge of hypothecation - pari passu nature of charge - liquidator only argument is that the charge of hypothecation is pari passu in nature, therefore, liberty shall be granted to the Liquidator to sell the asset of the Corporate Debtor so as to distribute it among the Secured Creditors of the Corporate Debtor - HELD THAT:- To say that charge is pari passu in nature, the Liquidator has to establish that the character of charge of lien created in favour of BHEL over the machinery entailed in this issue, and the character of hypothecation are of the same character. But, in the case of lien, it is deemed that the asset is lying with the lien holder, whereas in the case of hypothecation, it is construed that asset is lying with the borrower. In the case of hypothecation, the creditor has to seek possession and realisation, whereas in the case of lien, the creditor can straight away realise from the asset and can put restraint upon the asset not to deal with it unless debt is cleared. Whenever any lien is created, the person having right of lien has a right to enforce the same against the asset in preference to charge of hypothecation. As to relief under section 52 of the Code, when debt is secured, the creditor is always at liberty to proceed u/s 52 of the Code under liquidation. That right cannot be whittled down by the RP by filing an application to enable him to treat it as an asset falling under section 53 of the Code. This Bench having considered that BHEL is a secured creditor entitled to proceed under section 52 to realise its security interest over the asset, the Applicant/Liquidator cannot cause the sale of the asset falling under section 52 in the manner specified under section 53 of the Code unless charge holder relinquishes the security interest - application dismissed.
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2020 (1) TMI 1078
Maintainability of application - initiation of CIRP - Corporate debtor failed to make repayment of its debt - existence of debt and default or not - HELD THAT:- There is no doubt that there was supply of services by the Operational Creditor in favour of the Corporate Debtor and also that a sum of ₹ 14,73,005/- is due and payable in this regard - The application made by the Operational Creditor is complete in all respects as required by law. It clearly shows that the Corporate Debtor is in default of a debt due and payable, and the default is in excess of minimum amount of one lakh rupees stipulated under section 4(1) of the IBC. Therefore, the default stands established and there is no reason to deny the admission of the Petition - In view of this, this Adjudicating Authority admits this Petition and orders initiation of CIRP against the Corporate Debtor. Petition admitted - moratorium declared.
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2020 (1) TMI 1077
Maintainability of application - initiation of CIRP - Corporate Debtor failed to repay its debt - pre-existing dispute or not - Time Limitation. Whether the present partition is time-barred or not? - HELD THAT:- It is observed that the Operational Creditor at all times maintained the books of account and ledger showing the balance payment of ₹ 12,02,527/- as due and payable at the end of each financial year. That subsequent to the payment of ₹ 100000/- received on 12.2.2018, the balance due was reduced to ₹ 11,02,527/- which is the amount presently due, along with the interest. Further Corporate Debtor specifically admits in para 3 that the project and the works remain incomplete but not denied or raised any demure regarding the factum of the payment made on 12.2.2018. Is there any pre-existing dispute? - HELD THAT:- It is observed that Corporate Debtor nowhere in its reply ever mentioned about the defect in quality of goods or any other dispute regarding the same to the Operational Creditor. Application admitted - moratorium declared.
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PMLA
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2020 (1) TMI 1076
Money Laundering - proceeds of crime - offence punishable under Sections 3 4 of the Prevention of Money Laundering Act, 2002 - main allegation in the FIR was with regard to misuse of official position of the accused and to hatch criminal conspiracy to cause loss of revenue to the State Exchequer - criminal breach of trust - HELD THAT:- This court finds that in the present facts of the case, the trial court has taken into account the complaint which was filed against the accused persons and after going through the various statements and documents produced by the prosecution, the Sessions Judge found that there are sufficient grounds for taking cognizance against the accused persons and as such after considering contents of the complaint and material, the order of cognizance has been passed - This court finds that in exercise of revisional power, High Court should not interfere only because it forms a different opinion on the same material. The High Court, unless finds that the order impugned is perverse on face of it and the court below did not exercise its jurisdiction or there is an illegality or irregularity on the face of order impugned, should not interfere with the order passed by the court below while exercising powers under Sections 397 and 401 Cr.P.C. The satisfaction of the court taking cognizance, if based on the material placed before it, discloses that cognizance of an offence is required to be taken, the said order will not be termed as a perverse order. This court finds that the Legislature has enacted the PMLA, 2002 with object to prevent money-laundering and connected activities, as it posed a serious threat not only to the financial systems but also to the integrity and sovereignty of the Country - This court finds that if offence of money laundering, as defined in Section 3 of the PMLA, 2002, is to be alleged against the accused persons, the Investigating Agency is required to look into the basic ingredients for commission of such offence. The very purpose of the PMLA, 2002 is to nab the activities, which ultimately result into money laundering. This court finds that reading of Section 3 of the PMLA, 2002 reveals that the offence of money laundering is an offence regarding indulging in any process or activity connected with proceeds of crime including its concealment, possession, acquisition or use and further projecting and claiming the same to be untainted property. The said definition given in Section 3 of the PMLA, 2002 was later on clarified by adding explanation and as such it does not change the basic ingredients which were required to be alleged against a person for committing an offence under Section 3 of the PMLA, 2002. The clarification which has been added in fact was for removal of doubts, may be due to somewhat ambiguous definition inserted in the main provision of Section 3 of the PMLA, 2002. This court finds that position of law which emerges is that offence of money laundering under Section 3 of the PMLA, 2002 is an independent offence and money laundering is a stand alone offence under the PMLA, 2002 - this court finds that the order passed by the court below of taking cognizance dated 21.01.2019 does not require any interference by this court. Revision petitions dismissed.
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Central Excise
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2020 (1) TMI 1067
Maintainability of appeal - Section 35G of the Central Excise Act - appeal wrongly labelled as Section 130 of the Customs Act, 1962 - HELD THAT:- Since the provisions of the Central Excise Act, 1944 and the Customs Act, 1962 are in pari materia in this regard, the question relating to the rate of Duty or valuation can be appealed before the Hon ble Supreme Court under the provisions of Section 35L under the Excise Law and under Section 130E(b) of the Customs Act, whereas in respect of other questions of law, Appeals can be maintained before the High Court under Section 35G of the Central Excise Act or under Section 130 of the Customs Act, 1962 - once the Appeals have been preferred against the same order of the learned CESTAT before the Hon ble Supreme Court, presumably, being fully aware that the question of rate of Excise Duty and valuation of the goods are involved in the matter and those Appeals having been dismissed by the Hon ble Supreme Court and the Review Petitions also having been dismissed, it leads no scope open to the Assessee to maintain any Appeal before the High Court resorting to appeal under Section 35G of the Central Excise Act or Section 130 of the Customs Act before the High Court. The Customs Act, 1962 is not at all involved in the present case and therefore, the wrong quoting of the provisions, whether it is bona fide or inadvertent mistake, cannot be appreciated. It is more so because Section 35L, under which an Appeal to the Hon ble Supreme Court is provided for on the question of rate of duty or valuation, sub-section (2) of Section 35L provides for the determination of any question having relation to the question of Duty, and therefore, the Hon ble Supreme Court may consider the question of any other issue for the purpose of assessment and therefore, the issues other than the rate of Duty or valuation can also be determined by the Hon ble Supreme Court in the Appeal filed under Section 35L of the Central Excise Act and therefore, with the dismissal of Appeal by the Hon ble Supreme Court in the present case, the order of the learned Tribunal had acquired finality at the hands of the Hon ble Supreme Court. No issue could be permitted to be raised before this court just by labeling the Appeal now under Section 35G of the Central Excise Act, as if the same order of CESTAT can be again assailed by an Appeal under the provisions of Section 35G of the Central Excise Act raising certain questions. The Appellant is estopped from doing so by the principles of res judicata as well as constructive res judicata - appeal not maintainable and is dismissed.
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2020 (1) TMI 1060
Refund of pre-deposit - pre-deposit by making reversal of CENVAT credit with interest - time limitation - Section 11B of the Central Excise Act - Appellant submitted that any amount deposited at any time after adjudication should be treated as pre-deposit and consequently the period of limitation prescribed under Section 11B of the Central Excise Act has no application at all. - HELD THAT:- In the present case, instead of seeking waiver, the appellant paid the duty, interest and 25% penalty in terms of Section 35F and filed the appeal before the Commissioner (A) who finally allowed the appeal vide its Order dated 22.10.2013. Consequent to the allowing of the appeal of the Appellate Authority, the mandatory pre-deposit made by the appellant in terms of Section 35F of the Central Excise Act was required to be refunded by the Department to the appellant and the said amount was not refunded. Thereafter, the appellant wrote a letter dated 13.07.2017 claiming the amount paid by him at the time of filing the appeal before the Appellate Authority i.e. Commissioner (A). The Department instead of refunding the pre-deposit made by the appellant issued a SCN proposing to deny the refund under Section 11B of the Central Excise Act, 1944 on the point of limitation and consequently rejected the refund under Section 11B being barred by limitation. The impugned order rejecting the refund claim under Section 11B on limitation is not sustainable in law and the same is set aside by allowing the appeal of the appellant - the appellants are entitled to interest on the delayed refund immediately after the expiry of three months from the date of passing of the Order-in-Appeal - Appeal allowed - decided in favor of appellant.
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2020 (1) TMI 1057
Demand of interest and penalty - excess availment of CENVAT Credit - non-utilization of such credit - appellant reversed the credit before issuance of SCN - extended period of limitation - HELD THAT:- Since the excess cenvat credit was available to the appellant in the next financial year and further the appellant had not utilized the excess cenvat credit, the appellant is not liable to pay interest on the excess credit of ₹ 72,100/- - With regard to excess availment of other credit, It is found that the appellant has reversed the credit on being pointed out by the audit much before the issuance of the show-cause notice which was issued on 31/01/2018 - Further, the appellant during the disputed period had sufficient balance in their cenvat credit account and they have not utilized the same. Thus, in view of the decision of the Karnataka High Court in the case of COMMISSIONER OF CENTRAL EXCISE SERVICE TAX LARGE TAXPAYER UNIT, BANGALORE VERSUS M/S BILL FORGE PVT LTD, BANGALORE [ 2011 (4) TMI 969 - KARNATAKA HIGH COURT] and Larger Bench decision of this Tribunal in the case of J.K. TYRE INDUSTRIES LTD. VERSUS ASST. COMMR. OF C. EX., MYSORE [ 2016 (11) TMI 911 - CESTAT BANGALORE] , the appellant is not liable to pay the interest. Demand set aside - appeal allowed - decided in favor of appellant.
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2020 (1) TMI 1056
Refund claim - refund rejected on the ground of Jurisdiction - Appellant exited from LTU - territorial jurisdiction - HELD THAT:- It is pertinent to note that appellant filed seven (7) refund claimed on 28.1.2013 with the Deputy Commissioner, LTU, Bangalore because at that time LTU Bangalore had the jurisdiction to settle all the refund claims of the appellant and when the SCN was issued proposing to deny the refund claim, lack of jurisdiction was not raised in any of the show-cause notices. It is a fact that appellant exited from LTU after filing reply to the show-cause notice - Once the appellant has exited from LTU, it was incumbent on the part of the department to direct the appellant to file the refund claims to various concerned Divisions for claiming the refund. But the department has issued only corrigendum in only 2-3 cases and even in those cases, the respective jurisdictional authorities did not entertain the refund claims filed by the appellant. The refund claim has been rejected on account of lack of jurisdiction and in respect of few refunds, corrigendum has been issued and in respect of few refunds, no corrigendum has been issued. With respect to refund claims where corrigendum is issued, I direct the concerned authorities to accept the copies of refund applications as filed before the LTU and decide the claim of the appellant after following the due process of law including the principles of natural justice - with respect to refund claims where no corrigendum is issued, it is directed that the GST South Commissionerate Bangalore to accept the copies of refund applications as filed before the LTU and dispose of the refund claims after following the due process including the principles of natural justice. Appeal disposed off by way of remand.
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2020 (1) TMI 1052
CENVAT credit - goods cleared to SEZ unit - Rule 6(6) of CENVAT Credit Rules, 2004 - recovery in terms of the provisions of Rule 14 of the CENVAT Credit Rules, 2004 read with proviso to Section 11A of the Central Excise Act, 1944 - period from 04/12/2007 to 31/03/2008 and August, 2008, September 2008 respectively - HELD THAT:- The appellant have made supplies to SEZ developer and not a unit in SEZ but his contention is that supplies made to SEZ developer is also considered as export because the appellant has cleared the goods to the SEZ developer under Rule 19 of CCR 2002 by filing ARE1 form and necessary proof of exports were being filed with the Department. Further, prior to the amendment in Rule 6(6)(i) by way of N/N. 50/2008, it is only the SEZ unit which was mentioned in the Rule 6(6) for exclusion and not SEZ developer. Subsequently vide the said N/N. 50/2008, the said notification has amended the Rule 6(6)(i) of CCR by substituting the word cleared to unit in a Special Economic Zone or a developer in SEZ for their authorized operations. As per the appellant, this amendment within the Rule 6(6)(i) is applicable retrospectively whereas as per the Department, it is applicable prospectively. This issue is now no more res integra in view of the decision of the Karnataka High Court in the case of THE COMMISSIONER OF CENTRAL EXCISE AND SERVICE TAX AND THE COMMISSIONER OF CENTRAL EXCISE VERSUS M/S FOSROC CHEMICALS (INDIA) PVT LTD AND OTHERS [ 2014 (9) TMI 633 - KARNATAKA HIGH COURT] wherein it has been held that the amendment carried out in Rule 6(6) by way of Notification No.50/2008 was retrospective. The impugned order is not sustainable in law - appeal allowed - decided in favor of appellant.
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2020 (1) TMI 1050
Imposition of redemption fine and penalty - Refund claim - duty paid under protest - benefit of N/N. 52/2003-Cus. dt. 31/03/2003 - stay order against arrears - HELD THAT:- This issue is no more res integra and has been settled by the Tribunal in appellant own case, INTEL TECHNOLOGY INDIA PVT. LTD. VERSUS COMMISSIONER OF CUSTOMS BANGALORE [ 2018 (5) TMI 1623 - CESTAT BANGALORE] wherein it has been consistently held that Section 142 of the Customs Act, 1962 is attracted only when the confirmation of demand has attained finality and in the present case, the demand has not attained finality rather the pending cases on the basis of which the original authority has adjusted the refund claim has also been decided by the Tribunal. The impugned order is not sustainable in law and therefore the same is set aside - appeal allowed - decided in favor of appellant.
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Indian Laws
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2020 (1) TMI 1075
Grant of Bail - Smuggling - contraband item - admissibility of evidences - allegation against the appellant is that he was part of the conspiracy to smuggle the huge quantity of contraband into India and therefore he should not be granted bail - HELD THAT:- The case of the appellant herein is totally different from the other accused. Reasonable possibility is there that he may be acquitted. He has been behind bars since his arrest on 04.08.2017 i.e. for more than 2 years and he is a young man aged about 25 years. He is a B.Tech Graduate. Therefore, under facts and circumstances of this case we feel that this is a fit case where the appellant is entitled to bail because there is a possibility that he was unaware of the illegal activities of his brother and the other crew members. The case of the appellant is different from that of all the other accused, whether it be the Master of the ship, the crew members or the persons who introduced the Master to the prospective buyers and the prospective buyers. Some stringent conditions will have to be imposed upon the appellant - the appellant Sujit Tiwari are directed to be released on bail upon furnishing a bail bond in the sum of ₹ 10,00,000/-, with two sureties of the like amount to the 8 satisfaction of the Special Judge, NDPS Court at Porbandar on the conditions imposed - appeal disposed off.
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2020 (1) TMI 1074
Dishonor of Cheque - when the offence is complete- offence punishable under section 138 of NI Act - scope of Section 143A of the N.I. Act - retrospective or prospective amendment - HELD THAT:- Section 143A of the N.I. Act came in the statute book on 01.9.2018. Admittedly, the cheques in question were issued on different dates ranging from 27.4.2018 to 12.6.2018 i.e. prior to amendment. Even the return memo given by the banker of the petitioner intimating that the cheques issued by the petitioner cannot be honoured, is dated 06.7.2018. The statutory notice is given by the respondent on 26.7.2018 and it was received by the petitioner on 27.7.2018. The petitioner was to pay the amount as per the notice on or before 11.8.2018. Till 11.8.2018 it cannot be said that the offence is completed. The offence will be completed only after 11.8.2018. Thus, the offence is committed on 11.8.2018. The amendment is brought in the Statute book on 01.9.2019 i.e. subsequent to commitment of the offence. In view of this factual position, the learned Magistrate has committed a mistake in law in allowing the application. Therefore, the writ petition deserves to be allowed. Petition allowed.
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