TMI Tax Updates - e-Newsletter
January 4, 2024
Case Laws in this Newsletter:
GST
Income Tax
Customs
Corporate Laws
Insolvency & Bankruptcy
PMLA
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
Highlights / Catch Notes
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GST:
Overlapping of SCN - Jurisdiction - the summary notice was issued by one officer and the detailed notice was issued by another officer - it would be appropriate for the petitioner to approach and raise all their grievances before the respondent. - HC
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GST:
Extension of time period for issuance of the show-cause-notice (SCN) u/s 73(10) of CGST Act - no final order shall be passed by the respondent authority pursuant to the show-cause-notice issued during the period extended by the impugned notification without permission of the Court till the next date of hearing. - HC
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GST:
Review petition - search and seizure - What weight is required to be given to those materials would be a matter to be considered in various proceedings drawn by the Department and in other criminal proceedings. This Court only examined the material on record to find out whether the search carried out in the premises of the company could be said to be vexatious. - The writ petition has been dismissed. - HC
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GST:
Seeking cancellation of the bail granted to the respondent/accused - Any Judgment passed would be on the basis of the records available / materials produced and those materials would primarily be the complaint, the oral and documentary evidence, produced during the course of trial. An order granting or denying bail can never be looked upon as sufficient material for passing a Judgment of either conviction or acquittal. - HC
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GST:
State Government or not - Jaipur Development Authority - it is found from records that JDA is constituted by State Government under Jaipur Development Authority Act 1982 (Act No. 25 of 1982) and fully controlled by state government, Thus its amply clear for us that JDA is Governmental Authority under GST Act. - DA is not "State Government" - AAR
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GST:
Maintainability of application for advance ruling - Classification of supply - It is not clear whether the process of mixing of guar slurry with mineral oil is simply a mixture or it emerges as new product. The applicant has not submitted the required details before AAR. - The ruling can not be pronounced unless the proper chemical composition and nature of product is not submitted. - AAR
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Income Tax:
Benefit of the scheme under Direct Tax Vivad Se Vishwas Act, 2020 denied - delayed payment of just 25% of the amount - prima facie, we are of the considered opinion that the petitioner had not tried to evade payment of tax at any point of time and if at all there is any delay, the delay is only to the extent of 25% of the total tax payable which too he has paid in its entirety within sixty (60) days beyond the date of 31.10.2021. - Relief granted - HC
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Income Tax:
Validity of faceless assessment - authorities have failed to comply with the mandatory procedure laid down u/s 144B - The compliance of mandatory procedure as envisaged in the aforesaid provision ie. of issuance of show cause notice, the draft assessment order, the final assessment order and the consequential demand notice is no more res integra. - HC
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Income Tax:
Validity of assessment order passed u/s 147 - Petitioner cannot go on asking for time one after another in response to the show cause notice issued one after another. - Petitioner directed to avail the appellate remedy - HC
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Income Tax:
Addition u/s 68 r.w.s.115BBE - unexplained cash deposits into bank account during demonetization period - Assessee has furnished name and address of the customers from whom it has received cash for sale of jewellery. The assessee need not obtain confirmation and submit to the AO, because, the law does not mandate colleting PAN details of the persons, if sale value of jewellery does not exceed Rs. 2 lakhs as per Rule 114B of Income Tax Rules, 1962. - AT
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Income Tax:
Conversion of limited scrutiny into complete scrutiny assessment u/s 143 without obtaining necessary approval from the competent authority - such action of AO is against the spirit of CBDT mandate which is binding on the AO. Therefore, the conversion of limited scrutiny into complete scrutiny being not valid, the consequential additions made by the AO on adhoc basis and further confirmed by the CIT(A) are not sustainable in the eyes of law. - AT
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Income Tax:
Disallowance of interest expenses - sufficiency of own interest free funds - A.O. only considered that amount invested is to be disallowed. CIT(A) held that the funds given to JPL were as per the requirement of lending banks to infuse funds by promoters in the JPL which is business expediency to give the funds to JPL without interest. - CIT(A) rightly deleted the addition - AT
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Income Tax:
Interest paid on late payment of TDS - allowable deduction u/s 37(1) or not? - Interest on delayed payment of TDS cannot be allowed as deduction. - The interest u/s.201(1A) can be equated to the levy of interest u/s.234. Interest u/s.234 is a levy on delay in the payment of income tax and the TDS is nothing but the income tax paid on behalf of the payee and therefore the interest on the same u/s.201(1A) is also in the nature of interest levied on the income tax. On that count also interest on delayed payment of TDS cannot be claimed as a deduction. - AT
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Income Tax:
Revision u/s 263 - PCIT partially looking into the assessment records and initiated the Revision proceedings on the ground that the assessee failed to submit evidences in support of the expenses, which is factually incorrect. Unless both the ingredients i.e order must be erroneous in nature; and the error must be such that it is prejudicial to the interest of Revenue are present in a given case, it is not legally permissible for a Commissioner to initiate suo motu proceeding u/s 263 - AT
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Customs:
Transhipment bond is no longer mandatory for transhipment of goods directly between two sea ports. through the sea route.
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Customs:
Revocation of Customs Broker License - forfeiture of entire security deposit - levy of penalty - the appellants CB besides obtaining the requisite documents should have been more careful as a prudent Customs Broker to have conducted cross verification to ascertain the genuine nature of such documents, to avoid any illegality. Thus, the appellants CB has failed to fulfill the obligations under Regulation 10(n) ibid to a limited extent - to this limited extent, the appellants CB are liable for penal action under CBLR, 2018. - Order modified - AT
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Customs:
Debonding of 100% EOU - Demand of differential duty - Scope of conditions of the LOP and LTU - In terms of the aforesaid condition, payment of an amount equal to duty leviable on the goods and applicable interest would arise, only if the imported duty free raw material/inputs have not been used either for export or for DTA home consumption. This is not the case of the appellants. - AT
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Customs:
Request for cross-examination denied - the same was refused by the respondent for a reason that they are not going to rely upon the statements of the said officers and they are going to initiate the proceedings afresh - there is no necessity to consider the request made by the petitioner for cross-examination. - HC
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Customs:
Request for denotification of the petitioner's Inland Container Depots (ICD) - This Court is of the view that the claim of the respondents in respect of Cost Recovery Charges for deployment of the additional Customs Officials to the petitioner's Input Containers Depots for the period during which the services of the Customs officials have not been utilised by the petitioner is not justified and on that ground, they are not supposed to deny the request of the petitioner to denotify their Inland Container Depots. - HC
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Customs:
Period of limitation - recovery proceedings of drawback for alleged non-realization of export proceeds - The period of 12 years taken for passing the impugned order for recovery of drawback allegedly sanctioned erroneously does not stand the scrutiny of reasonableness and is thus liable to be set aside. - HC
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DGFT:
Procedures for registration of import of Yellow Peas (ITC(HS) Code 07131010) under the Import Monitoring System(YP-IMS)
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DGFT:
Import from Special Economic Zone (SEZ) to Domestic Tariff Area (DTA) - Import policy is "Restricted" - However, import is permitted as free subject to the fulfillment of certain conditions.
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Corporate Law:
Condonation of delay in filing appeal - Normally if delay is occurred in filing an appeal it is expected that the appellant may explain the delay on day to day basis. However, in the present case neither specific reason has been assigned nor correct statement has been made - Application for condonation of delay as well as appeal dismissed. - AT
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Indian Laws:
Cheating - syphoning of money - It is surprising that none of the banks while sanctioning or disbursing the funds have ever checked the background of the petitioner-company. The petitioner-company was already defaulting and was NPA in the other banks but still the other banks went ahead with sanctioning huge amount of loan to the petitioner without any proper collateral security or documentation. - This is a case, which shocks conscience of the Court as to how few of the bank officers in connivance of the petitioner had advanced almost Rs.900 crores, of public money and had allowed the petitioner to syphon away the funds and did nothing - HC
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IBC:
Disciplinary enquiry / proceedings against Resolution Professional (RP) - when the petitioner ceases to be a Resolution Professional, and starts wearing the cap of a liquidator, the role of IIIP of ICAI vis-a-vis its member ceases. Hence, this Court considers, that at the best the decision of the IIIP of ICAI can be a piece of evidence in the proposed disciplinary proceedings but may not be adequate to affect the jurisdiction of the IBBI to initiate a disciplinary action against the petitioner. - HC
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IBC:
Initiation of CIRP - existence of pre-existing dispute or not - The e-mail dated 10.05.2021 sent by the Respondent to the Appellant under title of “Intimation of breach of contract” much prior to issue of demand notice under Section 8 of the Code, is nothing but pre-existing disputes - AT
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Service Tax:
Demand of service tax - reimbursement expenses - The appellant had agreed to pay a fixed monthly amount to HLL as a consideration for management services - The appellant, which was the service recipient under the Agreement, paid the expenses for the employees of HLL and HLL, as a service provider, reimbursed such expenses. There is no payment of any consideration, which is an essential requirement for a service to attract the levy of service tax under the Finance Act. - The reimbursable expenses have not been incurred by the appellant in exchange of the taxable service provided by it. - AT
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Service Tax:
Burden/onus to prove that the service was provided - Demand of service tax - Both the lower authorities have erred in concluding that the appellant had provided Cargo Handling Agency Services during the relevant period without establishing it. Instead, they wrongly confirmed the demand on the ground that the appellant could not establish that it had not provided this service. The onus of proving that a taxable service has been rendered when issuing a SCN rests on the Revenue and not on the assessee. - AT
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Central Excise:
Clandestine Removal - In the present case, the computer hard disk seized from the appellant’s factory is the basis for the investigation. The evidences placed on record cannot be relied or admitted in evidence due to non-compliance of mandatory provisions of law. In such circumstances, it is held that the confirmation of duty demand and the penalties imposed require to be set aside.- AT
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Central Excise:
100% EOU - the goods supplied by the appellant against the CT-3 certificates are ducts customized for the Air Conditioning System, hence, they can be considered as part of an air conditioning system and are eligible for the benefit of Notification No. 22/2003-CE - AT
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Central Excise:
Clandestine removal - The Principal Commissioner has observed that the allegation of clandestine removal has not been corroborated by clinching evidence and no linkages were investigated to establish such a finding. This finding does not call for any interference as no specific error could be pointed out by the department. - Revenue appeal dismissed - AT
Notifications
Circulars / Instructions / Orders
News
Case Laws:
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GST
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2024 (1) TMI 130
Principles of natural justice - overlapping of SCN - Jurisdiction - the summary notice was issued by one officer and the detailed notice was issued by another officer - HELD THAT:- This Court is not inclined to interfere with the show cause notice issued by the respondent. Hence, this Court is of the view that it would be appropriate for the petitioner to approach and raise all their grievances before the respondent. Accordingly, all the grievances raised by the petitioner shall be considered by the respondent in accordance with law.
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2024 (1) TMI 129
Best Judgement assessment - validity of assessment made under Section 62 of the Act, 2017 - failure to file the requisite return, which led to issuance of notice under Section 46 of the Act, 2017 - failure to respond to the said notice/file return - HELD THAT:- Merely because the said assessment in the estimation of petitioner is excessive, though according to petitioner s own submission, in terms of GSTR-1 he was liable to pay the GST of Rs. 35,17,065/- i.e. much higher than the average monthly tax of Rs. 7,78,808/- and Rs. 3,49,189/- for the month of March, 2022 and the same has been assessed based on best judgment at a higher amount by itself cannot be a reason for this Court to interfere. Submissions made pertaining to violation of provisions of Section 75(4) of the Act, 2017 also cannot be countenanced in the circumstances of the case inasmuch as the procedure as prescribed under Section 62 of the Act, 2017 has been meticulously followed by the respondents, which pertain to best judgment assessment and despite notice issued under Section 46 of the Act, 2017, the petitioner chose not to appear. Thus, no case for interference in the order impugned in extra ordinary jurisdiction of this Court is made out. The petition is, therefore, dismissed.
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2024 (1) TMI 128
Extension of time period for issuance of the show-cause-notice (SCN) u/s 73(10) of CGST Act, 2017 - applicability of N/N. 9 of 2023 dated 31.03.2023 - HELD THAT:- Issue Notice returnable on 8th February, 2024. By way of ad-interim relief, no final order shall be passed by the respondent authority pursuant to the show-cause-notice issued during the period extended by the impugned notification without permission of the Court till the next date of hearing.
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2024 (1) TMI 127
Review petition - search and seizure - indulging in vexatious search in the premises of the petitioner-company - seeking to restrain the respondents from disposing of or tinkering with the documents taken away from the petitioner-company during search - HELD THAT:- Recovery of certain materials during the course of search carried out in different premises, have also been taken into consideration. The material, prima facie, disclosing involvement of the present review petitioner has also been taken note of. All the materials which have been collected by the respondents during the course of search and other proceedings were noticed by the Court and only thereafter certain observations have been made. It is not a case where this Court has written any finding of guilt against the present review petitioner Natwar Lal Sharda. However, existence of material on record prima facie indicating involvement of the present review petitioner along with other Directors of the company and other persons have been considered while examining the allegations that the search carried out in the business premises of the company and its Director and family members was vexatious, malicious and without any material whatsoever. What weight is required to be given to those materials would be a matter to be considered in various proceedings drawn by the Department and in other criminal proceedings. This Court only examined the material on record to find out whether the search carried out in the premises of the company could be said to be vexatious. The writ petition has been dismissed.
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2024 (1) TMI 126
Seeking cancellation of the bail granted to the respondent/accused - suppression of value of taxable supplies and non issuance of invoices with intention to evade payment of GST - HELD THAT:- When the arrest memo does not contain the reasons why the individual has to be arrested which would also be the grounds for the arrest then, at this stage, it may not be appropriate on the part of this Court to go on a hunting spree trying to cull out the reasons for arrest. They may be available in the file and it is always be to the respondent to examine them but as observed by the learned Principal Sessions Judge, the accused was not furnished with a copy of any reason to believe that it is imperative that he must be arrested. On the side of the petitioner, a grievance is expressed that the learned Sessions Judge had given findings which might play upon the mind of trial Judge during the course of recording of evidence and while deciding the finality of the case - Any Judgment passed would be on the basis of the records available / materials produced and those materials would primarily be the complaint, the oral and documentary evidence, produced during the course of trial. An order granting or denying bail can never be looked upon as sufficient material for passing a Judgment of either conviction or acquittal. This Criminal Original Petition stands dismissed.
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2024 (1) TMI 125
Seeking grant of bail - offence alleged is triable by magistrate, as per Section 134 of CGST/RGST Act and charge-sheet already filed - power of Commissioner (GST) to compound the offence under Section 137 of CGST/RGST Act - HELD THAT:- Considering that matter is triable by magistrate; that applicant has no criminal antecedents; that charge-sheet has been filed; that offence alleged is compoundable in nature; that co-accused is enlarged on bail, and looking to the overall facts and circumstances of the case and material on record, but without commenting on merits/demerits of the case, this Court is inclined to allow the present bail application. It is ordered that accused-applicant Sandeep Singhal S/o Shri Shiv Shankar shall be enlarged on bail provided he furnishes a personal bond of Rs. 50,000/- with two sureties of Rs. 25,000/- each to the satisfaction of learned trial Judge for his appearance before the court concerned on all the dates of hearing as and when called upon to do so - the bail application under Section 439 Cr.P.C. is allowed.
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2024 (1) TMI 124
Maintainability of writ petition - Attachment order - HELD THAT:- In the present case, the petitioner is well aware of the fact that the impugned order is going to be passed. However, instead of filing the appeal, he had not taken any steps to challenge the said impugned order till date. Now, he had filed this writ petition only because of the attachment order dated 06.10.2023 passed by the first respondent. This Court is not inclined to entertain this writ petition. However, liberty is granted to the petitioner to file a Statutory appeal before the Appellate Authority within a period of 30 days from today (20.10.2023). This writ petition is disposed of.
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2024 (1) TMI 123
Non-admission of appeal preferred by the petitioner - contravention to sub-sections (1) (4) of Section 107 of the GST Act - HELD THAT:- Since the petitioner wants to avail the remedy under the provisions of law by approaching 2nd appellate tribunal, which has not yet been constituted, as an interim measure subject to the Petitioner depositing entire tax demand within a period of fifteen days from today, the rest of the demand shall remain stayed during the pendency of the writ petition. Application disposed off.
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2024 (1) TMI 122
Maintainability of petition seeking multifarious reliefs - non-constitution of the Tribunal - HELD THAT:- Due to non-constitution of the Tribunal, the petitioner is deprived of his statutory remedy under Sub-Section (8) and Sub-Section (9) of Section 112 of the B.G.S.T. Act - the petitioner is also prevented from availing the benefit of stay of recovery of balance amount of tax in terms of Section 112 (8) and (9) of the B.G.S.T Act upon deposit of the amounts as contemplated under Sub-section (8) of Section 112. Subject to deposit of a sum equal to 20 percent of the remaining amount of tax in dispute, if not already deposited, in addition to the amount deposited earlier under Sub-Section (6) of Section 107 of the B.G.S.T. Act, the petitioner must be extended the statutory benefit of stay under Sub-Section (9) of Section 112 of the B.G.S.T. Act. The petitioner cannot be deprived of the benefit, due to non- constitution of the Tribunal by the respondents themselves - The statutory relief of stay, on deposit of the statutory amount, however in the opinion of this Court, cannot be open ended. For balancing the equities, therefore, the Court is of the opinion that since order is being passed due to non-constitution of the Tribunal by the respondent- Authorities, the petitioner would be required to present/file his appeal under Section 112 of the B.G.S.T. Act, once the Tribunal is constituted and made functional and the President or the State President may enter office. Petition disposed off.
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2024 (1) TMI 121
State Government or not - Jaipur Development Authority - entry 3A of Notification No. - 12/2017 - CT (Rate) dated 28.06.2017 - HELD THAT:- JDA is not a Municipality as municipal corporation already exists in Jaipur City thus JDA cannot, therefore, be entrusted with the control or management of a municipal fund. The question put before Authority is Whether the Jaipur Development Authority can be considered as State Government in regards of entry 3A of Notification No. - 12/2017 - CT (Rate) dated 28.06.2017, however however it is out of preview of authority - it is found from records that JDA is constituted by State Government under Jaipur Development Authority Act 1982 (Act No. 25 of 1982) and fully controlled by state government, Thus its amply clear for us that JDA is Governmental Authority under GST Act. Thus, JDA is not State Government in reference of entry 3A of Notification No. -12/2017 - CT (Rate) dated 28.06.2017.
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2024 (1) TMI 120
Maintainability of application for advance ruling - proper chemical composition and nature of product is not submitted - Classification of supply - rate of tax - supply of liquid suspension of guar gum powder (suspended in mineral oil), which is commonly known as guar gum slurry manufactured by the applicant - N/N. 1/2017-CT dated 28.06.2017 as amended - HELD THAT:- Without a proper composition report of product, it is not to be ascertain that product will fall under CHAPTER 13 as this chapter denotes about the Lac; gums, resins and other vegetable saps and extracts and Guar Gum Slurry is not predominating the product as applicant claimed that mineral oil is used more than 50%. The authority has asked the report of composition of product from certified laboratory from applicant during the P.H., as the product is new in nature and without any old ruling or proper verification it is not possible to identify any product and decide HSN code. It is not clear whether the process of mixing of guar slurry with mineral oil is simply a mixture or it emerges as new product. The applicant has not submitted the required details before AAR. The ruling can not be pronounced unless the proper chemical composition and nature of product is not submitted. The subject application for advance ruling made by the applicant is not maintainable and hereby rejected under the provisions of the GST Act, 2017.
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Income Tax
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2024 (1) TMI 119
Benefit of the scheme under Direct Tax Vivad Se Vishwas Act, 2020 denied - delayed payment of just 25% of the amount by the petitioner and that too of a period which is around two (2) months - COVID period delays - HELD THAT:- High Court of Rajasthan in the case of Agroha Electronics Vs. Union Of India and Ors. [ 2021 (3) TMI 1319 - RAJASTHAN HIGH COURT] under similar circumstances particularly in respect of the fact that the transaction therein was also under the COVID period had while allowing the writ petition in favour of the petitioner held as this Court deems it fit that in the given facts and circumstances that the petitioner is a of the High Court of Rajasthan bona fide businessman and is prepared to pay the amount in question in accordance with the scheme along with interest for the period which he has defaulted in scheme and looking into the extreme pandemic conditions of COVID and the death of petitioner's father, this is a fit case for invocation of the powers under Article 226 of the Constitution of India. If we look into the facts of the present case, where there appears to be certain payment of tax which was due on the part of the petitioner herein petitioner had paid about 75% of the amount payable by him. We cannot brush aside the fact that it was admittedly COVID pandemic period and there were compelling circumstances faced by every person including the business entities. Nonetheless, the petitioner herein had cleared the balance of 25% as well within a further period of sixty (60) days i.e. 31.12.2021 clearing the entire amount payable by him i.e. balance amount of Rs. 31,38,874/- which was the total amount payable by him by 31.10.2021. Thus, prima facie, we are of the considered opinion that the petitioner had not tried to evade payment of tax at any point of time and if at all there is any delay, the delay is only to the extent of 25% of the total tax payable which too he has paid in its entirety within sixty (60) days beyond the date of 31.10.2021. We are inclined to endorse the views taken by the High Court of Rajasthan as also by the High Court of DelhiI.IA. Housing Solution Private Limited [ 2022 (11) TMI 1308 - DELHI HIGH COURT] And as a consequence, we are inclined to allow the writ petition with a direction to the respondent to immediately take necessary steps for issuance of Form 5 under the Direct Tax Vivad Se Vishwas Act, 2020. However, the petitioner would be liable to make payment of extra payment of interest for the period 31.10.2021 to 31.12.2021 for the amount which was paid belatedly on 31.12.2021 within a period of thirty (30) days from today. Immediately upon the petitioner making payment, the respondent shall issue Form 5 to the petitioner forthwith.
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2024 (1) TMI 118
Rectification u/s 254 - Violation of Rule 46A of the Rules - HELD THAT:- The position is the assessee had relied on certain documents before the CIT(A) whereas the CIT(A) did not follow the procedure prescribed under Rule 46A of the Rules and call for a remand report. In our view, instead of making the parties to go back and forth or devoting precious judicial time including in the appeals that have been filed by petitioner against the order dated 29th April 2022 passed by the ITAT, interest of justice would be meet if we remand the matter to the CIT(A) for denovo consideration. CIT(A) shall follow the procedure as prescribed under Rule 46A of the Rules and may also exercise all powers that he has under the Act to summon third parties to appear before him and record their statements. After hearing the parties, the CIT(A) may pass such orders, as he deems fit, in accordance with law. We hereby quash and set aside the order passed by the ITAT.
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2024 (1) TMI 117
Validity of faceless assessment - authorities have failed to comply with the mandatory procedure laid down u/s 144B - as alleged final assessment order u/s 147 r.w.s. 144B has been passed without providing a copy of draft assessment order as required u/s 144B(xxi) - HELD THAT:- Indisputably, the aspect of non-service of draft assessment order, which was otherwise required to be sent along with show cause notice as per the procedure prescribed under Section 144B(1), clause (xvi)(b) of the Income Tax Act has been confirmed. The compliance of mandatory procedure as envisaged in the aforesaid provision ie. of issuance of show cause notice, the draft assessment order, the final assessment order and the consequential demand notice is no more res integra. The plain reading of the provisions of Section 144B of the Act, which provides for Faceless Assessment for determination to be carried out u/s143(3) and 144 envisages the procedure to be followed by the Authority. The plain reading of Sub-section (9) of Section 144B further provides that notwithstanding anything contained in any order provision of the Act, assessment made under Section 144(3) or Section 144 of the Act, shall be treated non-est, if such assessment is not made in accordance with the procedure laid down u/s 144B of the Act. Strict adherence of the aforesaid provision has been examined by this Court in the case of Sardar Co.Op. Credit Society Ltd. [ 2022 (4) TMI 1184 - GUJARAT HIGH COURT] as held that final assessment order is not made in accordance with the procedure envisaged u/s 144 (xvi) (b) of the act as inspite of the variation being prejudicial to the assessee, no opportunity has been given to the assessee by serving show cause notice along with draft assessment order calling upon him to show cause as to why the proposed variation should not be made. Thus, we have no doubt in holding that the impugned order of assessment is invalid and nonest, passed in gross violation of principles of natural justice as well as mandatory provision in the form of section 144B. Thus impugned final assessment order issued by the respondent authorities is hereby declared as non-est and is quashed and set aside - demand notice issued by the respondent authorities u/s 144 of the Act against the writ applicant is also quashed and set aside.
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2024 (1) TMI 116
Validity of assessment order passed u/s 147 - Allegation of denial of natural justice - petitioner was issued against a notice on 17.05.2023 and the petitioner asked for further time to 07.06.2023. In the meantime, the impugned assessment order has been passed on 24.05.2023 - addition u/s 69A - demand notice for payment of tax was also annexed with the assessment order and direction was issued to initiate penalty proceedings - HELD THAT:- The petitioner admittedly did not filed reply even up to the extended time asked by him up to 20.05.2023. Though the second Show Cause Notice was issued again the petitioner asked time and did not filed reply. It is relevant to take note of the fact that in respect of the first show cause notice the petitioner had asked time up to 20.05.2023 and it was granted to him, which is evident from Exhibit P-8. The petitioner did not file reply and therefore, the Authority was well within its power not to grant further time for the petitioner. Therefore, we find no much substance in the submission that there is violation of the principles of natural justice. Petitioner cannot go on asking for time one after another in response to the show cause notice issued one after another. We do not find any ground to interfere with the impugned order or notice.
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2024 (1) TMI 115
Doctrine of constitutional priority - Certain transfers to be void u/s 281 - Supremecy of attachment passed by the Tax Recovery Officer / Income Tax Department or to the mortgage created in favour of the secured creditors Dues of the Income Tax Department precedence over the dues of the secured creditor - HELD THAT:- As submitted by the learned counsel for the petitioner that the issues that arise for consideration stands covered by the decision of the Division Bench of this Court in the case of State Bank of India vs. Tax Recovery Officer-I [ 2022 (12) TMI 557 - MADRAS HIGH COURT] which is admitted to by the learned counsel for the respondent, however submitted by Government Advocate for the 1st Respondent that the above judgment has been challenged before the Hon'ble Supreme Court. To a pointed question as to whether there is any interim order or stay, it was informed that there is no stay. In the absence of any stay of the orders of the Division Bench of this Court by the Apex Court, this Court is bound to decide the matters on the basis of the Division Bench Order which is the law governing as on date. It may be useful to extract the relevant portion of the judgment of the Hon'ble Supreme Court in the case of Union Territory of Ladakh and others v. Jammu and Kashmir National [ 2023 (9) TMI 1407 - SUPREME COURT] wherein held as absolutely clear that the High Courts will proceed to decide matters on the basis of the law as it stands. It is not open, unless specifically directed by this Court, to await an outcome of a reference or a review petition, as the case may be. - WP disposed of.
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2024 (1) TMI 114
Validity of final assessment order passed u/s 144C(13) - DRP orders/directions after final assessment order passed - HELD THAT:- DRP can give directions only in pending assessment proceedings, and once the assessment order is passed, the learned DRP would have no power to pass any directions as contemplated under section 144C(5) of the Act. See Undercarriage and Tractor Parts Pvt. Ltd [ 2023 (9) TMI 759 - BOMBAY HIGH COURT] Accordingly, since in the present case, the A.O. had already passed the final assessment order under section 143(3) r/w section 144C(3) of the Act on 15/04/2021, the directions issued by the learned DRP on 29/11/2021 and the consequent final impugned assessment order dated 27/12/2021, are void ab initio.
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2024 (1) TMI 113
TDS u/s 194A - assessee in default u/s 201(1) - non deduction of tax at source on payment of external development charges (EDC) to Haryana Urban Development Authority (HUDA) - HELD THAT:- We find that the ld. CIT(A) had granted relief by placing reliance on the decisions of the co-ordinate bench of this tribunal [ 2019 (9) TMI 39 - ITAT DELHI] wherein it was held that the EDC paid to HUDA would not be liable for deduction of tax at source and accordingly the assessee cannot be treated as assessee in default in terms of section 201(1) of the Act and no tax could be recovered from it for non-deduction of tax at source. Consequentially the assessee could not be made liable to pay interest u/s 201(1A) of the Act. Accordingly, the grounds raised by the revenue are dismissed.
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2024 (1) TMI 112
Addition u/s 68 r.w.s.115BBE - unexplained cash deposits into bank account during demonetization period - additions towards cash receipts pertains to sale of jewellery on the ground that the assessee could not prove the identity of the creditors, genuineness of transactions, and creditworthiness of the parties - persons from whom assessee claims to have been received advance are not responded to summons issued u/s. 131(1) of the Act, and in few cases, they have denied any kind of transactions with the assessee HELD THAT:- We find that there is a distinction between cash credits and cash receipts towards sales. If assessee claims certain cash credits in his books of accounts and not able to explain credits to the satisfaction of the AO, then, such cash credits need to be examined in light of provisions of Sec.68. In case, the assessee claims that it has received trade advances in cash and the same has been subsequently converted into sales by issuing sale bills, then, said trade advance cannot be examined in light of provisions of Sec.68 of the Act, because, trade advances have been subsequently converted into sales and sales has been accounted in the books of accounts of the assessee. Therefore, in our considered view, the AO has committed a fundamental mistake in examining the cash receipts claimed to have been received by the assessee towards sale of jewellery in light of provisions of Sec.68 of the Act. Assessee has furnished name and address of the customers from whom it has received cash for sale of jewellery. The assessee need not obtain confirmation and submit to the AO, because, the law does not mandate colleting PAN details of the persons, if sale value of jewellery does not exceed Rs. 2 lakhs as per Rule 114B of Income Tax Rules, 1962. In so far as compliance of KYC norms, it is mandatory under Prevention of Money Laundering Act, 2002, w.e.f. 04.05.2023 onwards and not applicable for the impugned assessment year. Therefore, in our considered view, when the assessee has furnished name and address of the persons from whom it has received trade advances for sale of jewellery, the assessee has satisfactorily discharged onus cast upon to furnish name and address of the persons. Therefore, the observation of the AO in light of provisions of Sec.68 of the Act, that the assessee has not satisfactorily explained cash receipts is unwarranted and devoid of merits. Whether the assessee could able to explain source for cash deposits made during demonetization period or not? - It is not a case of the AO that the assessee has declared sales without purchases. In fact, a sale declared by the assessee is backed by corresponding purchases, and is supported by necessary purchase bills. The AO could not point out any discrepancy in stock register maintained by the assessee nor made out a case that the assessee has declared sales without there being any stock in hand. Therefore, in absence of any contrary findings to the effect that the sales declared by the assessee is not backed by any corresponding purchase or supported by stock in hand, in our considered view, simply sales cannot be rejected on the ground that sale for the particular month or period is higher when compared to corresponding previous period. In our considered view, there cannot be any reason for uniform sales in all days or month or year. There may be various reasons for increase or decrease in sales which depends upon various factors, including festival sales, clearing sales, yearend sales, etc. Therefore, in our considered view, the explanation of the assessee that it has received cash from various customers towards sale of jewellery and subsequently the advances have been converted into sales, appears to be bona fide and reasonable. AO in rejecting explanation of the assessee with regard to source for cash deposits - As per the details furnished by the assessee like bank statements, cash book, it is undoubtedly clear that assessee was having sufficient withdrawals from very same bank accounts before the date of demonetization which was recorded in the books of accounts of the assessee. Further, the cash balance maintained by the assessee as per books of accounts as on 08.11.2016 was much higher than the amount of cash deposited to bank account during demonetization period. Therefore, in our considered view, when the assessee is able to file necessary evidences to prove that there was sufficient cash withdrawal from very same bank account which is further backed by bank statements, where it has been clearly evident that there are sufficient cash withdrawals, in our considered view, there is no reason for the AO to reject explanation of the assessee that cash deposits are out of cash withdrawals from very same bank account. AO is erred in making additions towards cash receipts received for sale of jewellery, which has been subsequently converted into sales, for the impugned assessment year as unexplained cash credits taxable u/s. 68 - Decided in favour of assessee.
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2024 (1) TMI 111
Condonation of delay filling appeal before ITAT - inordinate delay of 690 days - delay as occasioned for the reason that accountant of the assessee firm had failed to bring to the notice of the partners of the assessee firm the order of the CIT(Appeals) - HELD THAT:- As examined the reasons that had led to the inordinate delay of 690 days, and, as the same cannot be held to have occasioned due to bonafide reasons, therefore, there appears to be no reason to adopt a liberal view and condone the delay therein involved. Also, the fact that the assessee firm was duly assisted by a chartered accountant; therein further fortifies my conviction that the claim of the assessee that it had remained oblivion of the order of the CIT(Appeals) is further disproved. Also, we may observe at this juncture that the law of limitation has to be construed strictly as it has an effect of vesting on one and taking away the right from the other party. The delay in filing of an appeal cannot be condoned in a mechanical or a routine manner since that would undoubtedly jeopardize the legislative intent behind Section 5 of the Limitation Act. The expression sufficient cause will always have relevancy to reasonableness. The action which can be condoned by the court should fall within the realm of normal human conduct or normal conduct of a litigant. However, as observed by me hereinabove, as the assessee appellant in the present case is acting in defiance of law, therefore, there can be no reason to allow its application and condone the substantial delay of 690 days involved in preferring of the captioned appeal. In the present case, the delay of 690 days cannot be simply condoned on the basis of the unsubstantiated claim of the assessee that the same had occasioned on account of failure on the part of assessee before the Tribunal.
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2024 (1) TMI 110
Addition on account of cash deposit - HELD THAT:- The return of income for the assessment year 2016-17 was filed by the assessee on 27.03.2017 declaring total income of Rs. 7,09,329/- under the head income from other sources which included other income offered in the sum of Rs. 6,78,529/-. Admittedly this other income of Rs. 6,78,529/- was earned by the assessee only in cash and that the same was not credited in the bank account of the assessee. The assessee during the year made cash deposits on the following dates in IDBI Bank Assessee also made cash withdrawals on 24.11.2016 from the same bank account amounting to Rs. 50,000/- which sum is definitely available as a source for explaining cash deposits. Hence, to this extent the assessee would be automatically eligible for credit. With regard to the remaining sum of Rs. 45,000/- of cash deposits, as stated earlier, we find that assessee had duly offered the other income of Rs. 6.78 lakhs earned in cash, which itself explains the source for making cash deposit of Rs. 45,000/-. Hence, we hold that the entire cash deposits of Rs. 95,000/- stands duly explained by the assessee and the there is no scope for making any addition. Interest u/s 234B which is consequential in nature and does not require any specific adjudication. Interest u/s 234C of the Act, the law is very well settled that the same shall be charged only on the returned income and not on the assessed income.
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2024 (1) TMI 109
Validity of assessment order passed u/s 143(3) - scope of limited scrutiny - conversion of limited scrutiny into complete scrutiny - addition u/s 69A on unsecured loan - HELD THAT:- The case of the assessee was selected for limited scrutiny for the specific purpose as specifically stated in the assessment order itself. AO had made enquiry on the point of notices issued and in this respect assessee also had furnished necessary submission as asked for. AO without converting the limited scrutiny into complete scrutiny issued notice to the assessee on 22.11.2018 raising new issues which is beyond the purview of the limited scrutiny and without obtaining necessary approval from the competent authority. Therefore, the order is bad in law. The assessee has challenged the issue before the ld. CIT(A). However, the ld. CIT(A) did not consider the same and sustained the order passed by the AO. A perusal of the above instruction of the CBDT shows that to convert the limited scrutiny into complete scrutiny, the Assessing Officer shall be required to form a reasonable view that there is a possibility of under statement of income and that view should be based on credible material or information available on record and such a view should not be based on mere suspicion, conjecture or unreliable resources and there should be a direct nexus between available material and formation of view. However, the above conditions are not fulfilled in this case. AO has not referred to any credible or reliable material or information to form the view that there was a possibility of under assessment of income in this case. AO has merely made certain disallowance on adhoc basis without pointing out any information or material available to him which has a direct nexus to show that there was possibility of under assessment of income. In view of this, conversion of limited scrutiny into complete scrutiny is against the spirit of CBDT mandate which is binding on the AO. Therefore, the conversion of limited scrutiny into complete scrutiny being not valid, the consequential additions made by the AO on adhoc basis and further confirmed by the CIT(A) are not sustainable in the eyes of law. Unsecured loan addition - Assessee filed complete details including the Pan No of the persons who provided funds to the assessee. In the instant case once the appellant had produced all documents in order to establishing the identity and capacity of the creditors as well as genuineness of the transaction, the initial onus cast upon the assessee was discharged and the onus shifted to the AO to bring material on record to the effect that in spite of identity and creditworthiness of the creditor being proved, the transaction was still not genuine. AO has not made any further inquiries and has not brought any material on record to controvert the documentary evidences submitted by the assessee. In this case assessee gave the names and address of the creditors. It was in the knowledge of the revenue that the creditors were income-tax assessees. The revenue apart from issuing notices under section 131 did not pursue the matter further. It did not examine the source of income of the alleged creditors to find out whether they were creditworthy. Therefore, it was held that in these circumstances, assessee could not do any further and it had discharged the burden laid on it. Identity, creditworthiness and genuineness of the transaction cannot be doubted as all the transactions were made through banking channels and the assessee produced all the necessary supported documents before the authorities below by providing name and PAN no. of the assessee and therefore hardly remains any reason to doubt the genuineness, identity and creditworthiness of the transaction by the authorities below. Thus we after considering the above find that the addition made by the authorities below are not correct - Decided in favour of assessee.
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2024 (1) TMI 108
Disallowance of interest expenses - sufficiency of own interest free funds - HELD THAT:- Assessee had interest free funds of Rs. 28,40,84,158/- against which it has advanced money to the extent of Rs. 26,15,95,884/- which is less than the interest free funds available with the assessee. A.O. has ignored the fact that the amount given as advances to Jaihind Projects Ltd. (JPL) in the nature of share investment and not in the nature of loans and advances. The assessee company has made strategic investment in JPL and as per the terms of lenders and the Corporate Debt Restructuring Package approved by the CDR cell which is governed by Reserve Bank of India, the assessee made further share investment. A.O. only considered that amount invested is to be disallowed. CIT(A) held that the funds given to JPL were as per the requirement of lending banks to infuse funds by promoters in the JPL which is business expediency to give the funds to JPL without interest. The above investments were converted into equity shares, in view of the same, the disallowance made u/s. 36(1)(iii) of the Act is not justified relying upon case of Gujarat Narmada Valley Fertilizers Co. Ltd. [ 2013 (5) TMI 759 - GUJARAT HIGH COURT] and S.A. Builders [ 2004 (5) TMI 50 - PUNJAB AND HARYANA HIGH COURT] However the Ld. CIT(A) has agreed with the remaining interest payments are for non-business purposes and thereby confirmed the disallowance made u/s. 36(1)(iii) - No infirmity in the above finding of the Ld. CIT(A) and the Revenue could not place any material on record in substantiating its ground before us. Therefore Ground No. 1 raised by the Revenue is hereby dismissed. Disallowance u/s 14A - As admitted fact that the assessee has not received any dividend income against the investments made by it. Therefore the Ld. CIT(A) following judgment in the case of CIT vs. Corrtech Energy Pvt. Ltd. [ 2014 (3) TMI 856 - GUJARAT HIGH COURT] held that no disallowance u/s. 14A should be made and deleted the addition made by the A.O. It is further seen that the Ld. CIT(A) has followed Co-ordinate Bench of this Tribunal following Gujarat High Court Judgment of Corrtech Energy Pvt. Ltd. as well as other High Court judgments on this issue. We do not find any infirmity in the order passed by the Ld. CIT(A). Thus this Ground No. 2 raised by the Revenue is devoid of merits and the same is rejected.
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2024 (1) TMI 107
Interest paid on late payment of TDS - allowable deduction u/s 37(1) or not? - whether is not being in the nature of penalty and hence disallowance of same is unwarranted and uncalled for ? - HELD THAT:- We are of the opinion that similar issue came for consideration before this Tribunal in assessee s own case in [ 2022 (8) TMI 349 - ITAT BANGALORE] held that interest on delayed payment of TDS cannot be allowed as deduction. As it is clear that the basis why tax or interest is not allowed as deduction u/s.37(1) of the Act is on the reasoning that it cannot be regarded as an expense incurred wholly or exclusively for the purpose of Assessee s business. Therefore the allowability of interest on taxes paid should not be looked out from the definition of tax as given in Sec.2(43) of the Act. The submissions made by the learned counsel for the Assessee are based on a misconception that the definition of interest u/s.2(43) of the Act is relevant and that the disallowance in question has to be judged in the parameters of Sec.40(a)(iib) In our considered view this contention of the ld AR is completely out of context as we have already held that Sec.40(a)(ii) is not relevant to the present issue before us at all. Interest on late payment of TDS paid u/ s 201/ 201(1A) - whether an allowable expenses? - Levy of interest on delayed payment of TDS u/s.201(1A) though held to compensatory in nature, the allowability of the same cannot be decided simply based on that. The levy of 201(1A) is a levy for delay in the remittance of tax that is deducted and not paid into the government account and is levied towards the use of funds belonging to the exchequer. The interest u/s.201(1A) can be equated to the levy of interest u/s.234. Interest u/s.234 is a levy on delay in the payment of income tax and the TDS is nothing but the income tax paid on behalf of the payee and therefore the interest on the same u/s.201(1A) is also in the nature of interest levied on the income tax. On that count also interest on delayed payment of TDS cannot be claimed as a deduction. Non-giving of full TDS credit u/s 199 of the Act read with Rule 37 of the I.T. Rules - grievance of assessee herein is that the ld. AO has not given full TDS credit which is displayed in Form 26AS. He has given TDS credit proportionately on pro rata basis to the extent of income declared by the assessee - HELD THAT:- As contention of the assessee is that the TDS has been made not only on the sales receipts made in these assessment years but it also includes mobilization advances and running bills raised by the assessee which is not subject matter of the taxation in the assessment year under consideration that income was offered for taxation in subsequent assessment years. In our opinion, these facts are to be examined by the ld. AO after assessee furnishing and reconciling the offering of these receipts to taxation in different assessment years and the assessee shall not claim the TDS credit in more than one assessment year in respect of the TDS deducted and reflect in form No.26AS. Accordingly, this issue is remitted to the file of ld. AO for fresh consideration to carry out necessary enquiry on this regard. Addition of income admitted during the course of survey proceedings - As it is admitted fact that assessee has overstated the expenditure in the P L account by showing the capital expenditure as revenue expenditure with regard to legal and professional charges by charging the same to the P L account. By this action assessee overstated the expenditure and understated the income. This fact has been detected in the course of survey u/s 133A of the Act and Chairman and Managing Director of the assessee company has accepted to offer it for taxation. As such, once the Managing Director of assessee company has acknowledged that capital expenditure has been treated as a revenue expenditure and charged to P L account and stopped further enquiry at the end of department and agreed to offer the same for taxation in these assessment years and never being retracted the same at any assessment stage or first appellate stage, now by way of additional ground before us assessee challenges the same. In our opinion, the expenditure has been wrongly accounted in the books of accounts and the same has been accepted by the assessee as wrong and offered it for taxation, which was not open to the assessee to take a reverse stand so as to take benefit of its own mistake. In our opinion, the argument looks contradictive on the face of it. On a careful scrutiny of the facts of the case, the ld. AO in this case has given cogent reasons that it has been taxed by disallowing that expenditure in the assessment year under consideration. It is an admitted fact that the assessee has wrongly claimed the expenditure on legal and professional charges and later when it was detected, the same was offered for taxation. When the evidence and records disclose that the assessee has wrongly claimed the expenditure in its profit loss account and accepted the same and when the department has detected it during the course of survey, now assessee is precluded from denying the tax liability on this count. Accordingly, we do not find any merit on this issue, this ground of appeal is rejected. A.R. alternatively made a plea before us that if it is considered as income in this assessment year under consideration, the same amount is to be considered as a work in progress in subsequent assessment years and corresponding deduction to be given - Tribunal after giving opportunity of hearing to both the parties to the appeal or pass such order thereon as it thinks fit, the power confines to pass orders on the subject matter of appeal before us and the Tribunal cannot go beyond the scope of appeal and pass an order or give direction, which does not fall within the subject matter of appeal and also the powers restricted to the assessment year under appeal, wherein the appeal relates to assessment year 2014-15, the finding and direction must necessarily be limited to this particular assessment year and we have no jurisdiction to give direction with regard to the proceedings of the earlier assessment year or subsequent assessment year. Being so, we are not in a position to give direction on this issue in subsequent assessment year, which is uncalled for at this stage. Accordingly, all the additional grounds in ground Nos.1, 1(i), 1(ii), 1(iii) 1(iv) are dismissed.
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2024 (1) TMI 106
Disallowance of interest expenditure u/s. 36(1)(iii) - Investment made in subsidiary company - HELD THAT:- The assessee had owned rigs required for carrying out its business activity in the name of subsidiary company in Singapore, for the sole purpose of getting financial advantage by arranging funds required for acquiring rigs. The assessee has filed necessary evidences to prove that the investment made in subsidiary company is facilitated the subsidiary company to raise further capital from the Banks and Financial Institutions, to have a better debt equity ratio. We further noted that the assessee and the subsidiary company are in common business, having some business advantage in growing business in international market. Therefore, assessee, as a businessman, has taken a prudent decision to make investments in subsidiary company to derive commercial advantage and thus, we are of the considered view that the AO as well as the DRP are erred in disallowing interest expenses u/s. 36(1)(iii) of the Act, on loans and advances given to subsidiary company and also investment in equity share capital of subsidiary company. Thus we set aside the issue to the file of the AO and direct the AO to verify the issue in accordance with the directions given by the Tribunal for the AY 2012-13 and decide the issue for the impugned assessment year. TDS u/s 195 - disallowance of professional and consultancy fee paid to non-residents u/s. 40(a)(i) for non deduction of TDS - payment made to non-residents are in the nature of fee for technical services as per the provisions of Sec.9(1)(vii) of the Act. HELD THAT:- As in assessee s own case for the AY 2015-16 [ 2021 (4) TMI 768 - ITAT CHENNAI] wherein, the Tribunal by following its earlier order for the AY 2012-13, held that in order to bring the impugned payments under the definition of fee for technical services in light of the explanation inserted by the Finance Act with retrospective effect from 01.06.1976, the twin conditions of rendering services in India and utilization of such services in India, are necessary for deducting TDS on such payments. Since, the impugned payments are made outside India for rendering services is also outside India, the question of taxability of said payments in India in the hands of the service provider does not arise and consequently, the assessee is not required to deduct TDS on said payments. We find that an identical issue had been considered by the Tribunal, in the assessee s own case for the AY 2015-16, wherein, the Tribunal by following its earlier decision for the AYs 2007-08 2012-13, held that the payment made by Branch Office of the assessee at Dubai to non-resident service provider does not come under the definition of fee for technical services and thus, remitted the matter back to the file of the AO to examine the issue afresh in light of our discussions and Article-7 of DTAA between India and UAE. we set aside the issue to the file of the AO and direct the AO to follow the directions of the Tribunal given in the assessee s own case for the earlier assessment years and decide the issue for the impugned assessment year in accordance with law. Disallowance u/s. 14A r.w.r. 8D - assessee has common expenses for taxable and exempt income - HELD THAT:- As decided in assessee own case 2016- 17 it is logical to conclude that when the assessee has common expenses for taxable and exempt income, then the possibility of certain expenses attributable towards exempt income, cannot be ruled out. Therefore, we are of the considered view that there is no error in the reasons given by the AO to determine the disallowanceu/s.14A r.w.r.8D of Income Tax Rules. Further, the AO has considered only those investments, which yielded exempt income for the impugned assessment years. Therefore, we are of the considered view that there is no error in the findings given by the AO to make addition towards disallowance u/s. 14A of the Act. Hence, we are inclined to uphold the findings of the lower authorities and reject the ground taken by the assessee Denial of tax credit u/s. 90 - assessee, submitted that although the assessee has disclosed income earned from M/s. Aban Holdings Pvt Ltd., and paid tax, AO has not allowed credit for foreign tax paid u/s. 90 of the Act, even though Article 25 of DTAA between India and Singapore allows claim for credit for tax paid in Singapore - HELD THAT:- We find that a similar issue has been considered by the Tribunal in assessee s own case for assessment year 2016-17 [ 2022 (4) TMI 1582 - ITAT CHENNAI] where the issue has been set aside to the file of the Assessing Officer to verify and allow credit for tax paid in Singapore in terms of Article 25 of the DTAA between India and Singapore and also provisions of section 90 of the Act. In the impugned year also, the assessee claims that it had offered income to tax in India in respect of foreign tax paid in Singapore. Therefore, we direct the Assessing Officer to verify the claim of the assessee in light of necessary evidences, if any that may be filed by the assessee including certificate for tax paid in Singapore and allow credit in accordance with law. Incorrect credit for TDS - assessee, submitted that although, the assessee has claimed for TDS credit of Rs. 16,39,92,186/-, but the Assessing Officer has allowed TDS credit for Rs. 16,37,64,684/- only - HELD THAT:- We find that if assessee claims for TDS and same is supported by necessary certificates, and appeared in Form no. 26AS, then same needs to be allowed as deduction. Therefore, AO is directed to verify the claim of the assessee with reference to Form no. 26AS and other details if any that may be filed by the assessee and allow credit for TDS in accordance with law. TP Adjustment - towards corporate guarantee fee @ 1% on total corporate guarantee outstanding at the end of the year, on the ground that corporate guarantee given by the assessee to their AEs, is an international transaction, which needs to be bench marked to determine the ALP of the transaction - HELD THAT:- An identical issue has been considered by the tribunal in assessee s own case for earlier assessment year and by, considering relevant facts and also by following the decision of Hon ble Bombay High Court in the case of CIT vs Everest Kento Cylinders Ltd [ 2015 (5) TMI 395 - BOMBAY HIGH COURT] directed the TPO to compute corporate guarantee commission @ 0.5% to total corporate guarantee given by the assessee to their AE. Not allowing credit for Dividend Distribution Tax (DDT) - It was the argument of the assessee that the Assessing Officer has wrongly adjusted DDT paid for assessment year 2014-15 to DDT payable for assessment year 2013-14 - HELD THAT:- The assessee has filed necessary Form no. 26AS and challans for payment of DDT for assessment year 2013-14 and argued that facts may be verified by the Assessing Officer and allow credit as per the law. Since, the assessee has filed relevant evidences to prove payment of DDT, in our considered view, the Assessing Officer needs to verify the claim of the assessee and allow as per law. Thus, we set aside the issue to the file of the Assessing Officer and direct the Assessing Officer to verify the claim of the assessee and allow credit for DDT for relevant assessment years as per law.
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2024 (1) TMI 105
Undisclosed income - difference of income worked out during the course of survey and the amount of income declared in the return of income - HELD THAT:- The details produced by the assessee before AO were not found to be in any way false. Thus there is no reference of professional fees paid during survey. The debit of professional fees which was reduced from the gross receipts, was already accounted for at the time of survey and therefore, that reduction should have been granted to the assessee, this also because of the reason that sum of Rs. 30 lakhs reduced contained only the discount and repetitive bills. Further, as per paragraph No.10 of the order of the Learned CIT-A, the finding was given that the difference of Rs. 56,666/- only remains unexplained. With respect to paragraph No.13 of the order of the Learned CIT-A, he has found the error in the duplicate bills, amounting to Rs. 4,22,595/- out of the claim of Rs. 11,07,238/-. In view of the above facts, out of the addition of Rs. 11,07,238/- of the duplicate bills, the relief could not have been granted only to the extent of Rs. 4,22,595/-. Therefore, the assessee should have been granted the reduction of Rs. 6,84,643/- out of repetitive bills over and above Rs. 30 lakhs. As per the information available on record, the assessee should be granted reduction of the professional fees paid of Rs7,62,730/- and repetitive bills of Rs. 6,84,643/-. Therefore, the assessee deserves the benefit of Rs. 14,47,343/- out of the total addition made of Rs. 19,26,634/-. Therefore, we direct the Learned Assessing Officer to retain the addition of Rs. 4,79,261/- out of the total addition of Rs. 19,26,634/-. Appeal of the assessee is partly allowed.
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2024 (1) TMI 104
Revision u/s 263 - as alleged assessee failed to produce evidences for the Land levelling, Fencing, Consultation charges, and Land development expenses claimed in the computation of Long Term Capital Gain - HELD THAT:- PCIT failed to consider the other replies filed by the assessee which clearly spelt about the Long Term Capital Gain and Non-production of the alleged expenses which incurred in the year 2007. However such expenditure was not disallowed by the Assessing Officer while framing the assessment for that particular assessment year. As rightly pointed out by assessee, as per clause (b) of section 142(1) of the Act, the A.O. cannot call for the details pertaining to period more than three years to the previous year and as per Rule 6F of the Income Tax Rules, the assessee was expected to keep the records, books of accounts for the last six assessment years. Now by this Revision proceedings, the Ld. PCIT holds that the assessee failed to produce evidences for the Land levelling, Fencing, Consultation charges, and Land development expenses of Rs. 49,08,263/- claimed in the computation of Long Term Capital Gain. It is well settled principle of law that where two views are possible and one view has been adopted by the AO then existence of other possible view alone would not be sufficient to exercise powers under section 263. Assessee claimed carry forward loss for the present Assessment Year 2018-19 which is not yet been fully set off as against the Assessment Year 2022-23. Thus there is no Revenue loss to the department by invoking this Revision proceedings. PCIT partially looking into the assessment records and initiated the Revision proceedings on the ground that the assessee failed to submit evidences in support of the expenses, which is factually incorrect. Unless both the ingredients i.e order must be erroneous in nature; and the error must be such that it is prejudicial to the interest of Revenue are present in a given case, it is not legally permissible for a Commissioner to initiate suo motu proceeding under section 263 of the Act, the same has been upheld in case of Malabar Industrial Co. Ltd [ 2000 (2) TMI 10 - SUPREME COURT] However, an assessment cannot be revised if there is no jurisdictional error in the order or if it has been passed after due application of mind or in case where PCIT has a view different from that taken by A.O. Therefore we have no hesitation in quashing the Revision order passed by the Ld. PCIT. Assessee appeal allowed.
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2024 (1) TMI 103
Addition of interest income appearing in the bank account but not included under the head income from other sources - contention of the assessee are that said interest amount was already included by the assessee in the return of income filed for immediately proceedings assessment year i.e. assessment year 2014-15 following the mercantile system of accounting as the said interest was credited by the bank in relevant assessment year and accordingly deducted the TDS and said amount was appearing in the 26AS statement for the assessment year 2014-15 - HELD THAT:- In view of the above submission, we feel it appropriate to restore this matter back to the file for the AO for verification of the claim of the assessee and if same is found to be correct, then no addition is required to be made in the hands of the assessee for the assessment year under consideration. The ground Nos. 1 2 of the appeal are accordingly allowed for statistical purpose. Capital gain of redemption of mutual funds - LTCG OR STCG - claim of the assessee that said mutual funds were sold by the assessee between the period of 01.04.2014 to 10.07.2014 and therefore, same should be subjected to long term capital gain being held for more than 12 months as provided u/s 2(42A) - HELD THAT:- In view of the highlighted portion of provision prescribing holding period of 12 months for treating sale of shares/mutual fund for Long Term Capital during the period of 1/04/2014 to 10/07/2014, we feel it appropriate to restore this issue back to the file of the Ld. Assessing Officer for verification of the date of the sale and then decide in accordance with law. The ground of appeal of the assessee is accordingly allowed for statistical purposes. Long-Term Capital Gain without providing the information collected directly by the AO to the assessee, when it is specifically requested by the assessee and instructed by the DRP also that all the information collected by the AO should be provided to the assessee - As addition was not part of the draft assessment order and no direction has been given by the Ld. DRP and therefore, while giving effect to the direction of the Ld. DRP the Assessing Officer is not justified in making addition, which being ultra vires , liable to be deleted. Unexplained investment in Franklin Templeton MF - Before us, the assessee has filed additional evidence in support of investment in Franklin Templeton MF of Rs. 30,00,000/- as well as statement of investment in Aditya Birla Sun Life MF. In view of the additional evidence filed by the assessee, we restore the issue back to the file of the Assessing Officer for deciding afresh after verification of the source of investment in those mutual funds. Insurance premium paid assessee has expressed inability in getting copy the detail of the insurance premium allegedly paid by the assessee to ICICI Prudential Fund. In the facts and circumstances, we direct the Assessing Officer to gather the said details of the insurance premium paid by the assessee from ICICI Prudential Fund invoking authority u/s 133(6) or 131 of the Act and thereafter provide said information to the assessee to explain the source of investment therein. Payment of purchases of property - We note that the assessee has already explained amount of Rs. 28,47,493/- out of Rs. 33,39,100/- but could not explain source of Rs. 4,58,117/-. AO is directed to collect the detail of the payments made by the assessee from builder M/s PAX Homes LLP invoking authority u/s 133(6) or 131 of the Act and provide copy of the said payment details of Rs. 33,39,100/- to the assessee. Accordingly, the Assessing Officer shall provide the details which will be collected from the builders and thereafter may examine the source of investment and decide the issue in accordance with law. The ground No. 5 of the appeal of the assessee is accordingly allowed for statistical purposes.
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Customs
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2024 (1) TMI 102
Violation of principles of natural justice - request for cross-examination denied - the same was refused by the respondent for a reason that they are not going to rely upon the statements of the said officers and they are going to initiate the proceedings afresh - the said statements were against the petitioners or not - HELD THAT:- In the present case, it appears that the petitioner had requested to cross-examine the officers. However, the said request made by the petitioner was rejected by the respondent, since they are not going to rely upon the statement of the said officers and they are intend to initiate the proceedings afresh. In such view of the matter, the question of cross-examination would not arise. Further, the cross-examination of the said officers is necessary only when their statements are against the petitioner. In the present case, the statements of the said officers are said to have in favour of the petitioner and hence, there is no necessity of cross-examination those officers. That apart, it is up to the respondent to rely on the statements of the said officers or not. In such case, since the respondent is not at all going to rely upon the statements of the said officers, there is no need for cross-examination of those officers. A perusal of the judgement in AYAAUBKHAN NOORKHAN PATHAN VERSUS THE STATE OF MAHARASHTRA OTHERS [ 2013 (8) TMI 563 - SUPREME COURT] makes it clear that if the statements of the said officers are relied upon by the respondent, the cross-examination has to be permitted necessarily. However, in the present case, the respondent is not bound to rely upon the statements of the said officers. That apart, the statements of the said officers are in favour of the petitioner. Hence, there is no necessity to consider the request made by the petitioner for cross-examination. In such view of the matter, this Court does not find any illegality in the impugned communication dated 30.09.2023 issued by the respondent. This writ petition is dismissed.
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2024 (1) TMI 101
Seeking a direction to the second respondent to denotify the petitioner's Inland Container Depots with effect from 01.04.2023 - denotification sought on the ground that they are intending to lease out their property for some other purpose - HELD THAT:- Admittedly, the Customs officials have been sanctioned to the petitioner Company only on additional charges and not on regular basis. However, the Department is claiming charges from the petitioner for the period during which the officials have not been deployed. Though the charges appeared to have been adjusted towards subsequent years, an opinion has also been sought for from the Legal Advisor and an opinion was given to the effect that for the period when the deployments have not been made, the Department is not supposed to collect the amount. This Court is of the view that the claim of the respondents in respect of Cost Recovery Charges for deployment of the additional Customs Officials to the petitioner's Input Containers Depots for the period during which the services of the Customs officials have not been utilised by the petitioner is not justified and on that ground, they are not supposed to deny the request of the petitioner to denotify their Inland Container Depots. Therefore, the respondents shall denotify the petitioner's Inland Container Depots within a period of two weeks from the date of receipt of a copy of this order. Petition disposed off.
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2024 (1) TMI 100
Period of limitation - recovery proceedings of drawback for alleged non-realization of export proceeds - whether the proceedings can be sustained having been made after close to 12 years since the subject export? - HELD THAT:- In the present case, what is now sought to be recovered relates to drawback in respect of shipping bills for the period 2004-09, after almost 12 years, cannot be considered to be reasonable. The period of 12 years taken for passing the impugned order for recovery of drawback allegedly sanctioned erroneously does not stand the scrutiny of reasonableness and is thus liable to be set aside. The writ petition stands disposed of.
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2024 (1) TMI 99
Suspension of petitioner's IE Code - illegal import made by the petitioner with the connivance of the Customs Authority - HELD THAT:- Given the fact the petitioner spends more time in courts in the last four years than doing its business, it is only appropriate that it works out its remedy before the first respondent. The petitioner is directed to file its appeal within a period of two weeks, and once the same is filed, the first respondent is required to entertain the same without reference to any period of limitation provided therefor and dispose the matter after giving an opportunity of proper and effective hearing to the petitioner on all aspects, for which it prefers an appeal. The writ petition is disposed of.
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2024 (1) TMI 98
Revocation of Customs Broker License - forfeiture of entire security deposit - levy of penalty - mis-declaration of imported goods - the physical examination of imported goods showed that mostly these were electronic toys attracting higher IGST - undeclared cosmetics were also found in the imported goods - Violation of Regulations 10(d), 10(e) and 10(n) ibid - HELD THAT:- The appellants have not been involved as a customs broker in the violation of mis-declaration of description and non-declaration of details on the packages of imported goods in the aforesaid import transaction in B/E No.8090119 and No.8090120 both dated 21.02.2022. Thus, there cannot be a case for taking action against violations of CBLR, for the mis-declaration caused by the importers. Hence, the impugned order does not sustain on grounds of factual matrix of the case as detailed therein. Violation of Regulations 10(d) and 10(e) ibid - HELD THAT:- The modus operandi identified in this case brings out clearly the role of importer, and Shri Jamail Ahmed Shaikh, Proprietor of M/s Pemex Enterprises and Shri Nagesh Shyamsundar Malik, proprietor of M/s Nagresh Overseas, as the key players in such mis-declaration; further the appellants CB were not aware of the fraud committed by the importers or other persons. In view of the aforesaid factual position, there are no force found in the legality of the conclusion arrived at the impugned order holding that the appellants have violated the Regulations 10(d) and 10(e) ibid. The views are also concurred in the order of the Hon ble High Court of Delhi in the case of KUNAL TRAVELS (CARGO) VERSUS COMMISSIONER OF CUSTOMS (IMPORT GENERAL) NEW CUSTOMS HOUSE, IGI AIRPORT, NEW DELHI [ 2017 (3) TMI 1494 - DELHI HIGH COURT ] holding that the appellants CB is not an officer of Customs who would have an expertise to identify mis-declaration in respect of imported/export goods. Violation of Regulation 10(n) of CBLR, 2018 - HELD THAT:- In the present case, the appellants CB had obtained the KYC documents and submitted the same to the Customs Department - the appellants CB besides obtaining the requisite documents should have been more careful as a prudent Customs Broker to have conducted cross verification to ascertain the genuine nature of such documents, to avoid any illegality. Thus, the appellants CB has failed to fulfill the obligations under Regulation 10(n) ibid to a limited extent - to this limited extent, the appellants CB are liable for penal action under CBLR, 2018. The impugned order is modified by setting aside the same in respect of revocation of CB license of the appellants and for forfeiture of security deposit as there was no violation of Regulations 10(d), 10(e) and 10(n) of CBLR, 2018. Further, by modifying the order of penalty, a penalty of Rs.20,000/- imposed on the appellants under Regulation 18 ibid. - appeal allowed in part.
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2024 (1) TMI 97
Debonding of 100% EOU - Demand of differential duty - Scope of conditions of the LOP and LTU - raw materials/inputs, consumed in the finished goods which have not been exported by an EOU in terms of notification No. No.52/2003-Customs dated 31.03.2003 - Confiscation - levy of penalty - HELD THAT:- From the perusal of the conditions specified in paragraph 1(3)(d)(ii) of the Notification No. 52/2003-Customs dated 31.03.2003 as amended, it transpires that there are two category of the goods for which these conditions are specified. One, in respect of capital goods and the second one, in respect of all other goods, other than the capital goods. The condition to be fulfilled in respect of capital goods is that these shall be installed within the EOU unit within specified time limit or such extended time limit, as may be allowed. Similarly, in respect of all other goods, which are mainly in the nature of inputs or raw materials, the condition is that they shall be used in connection with or in relation to the production or packaging of finished goods with in the specified time period or such extended period, as may be allowed; such finished goods may either be used in accordance with Standard Input Output Norms (SION) for export out of India or cleared for home consumption, as may be permitted by the JDC, SEEPZ in terms of extant provisions of EOU Scheme under the Foreign Trade Policy. In the present case, the facts of the case indicate that out of the imported duty free raw material/inputs for a total value of Rs.73.85 lakhs, part of it were used in the manufacture of finished goods at the EOU unit and remaining part of the raw materials/inputs which were lying in stock, at the time of de-bonding of the EOU unit of the appellants. In terms of the aforesaid condition, payment of an amount equal to duty leviable on the goods and applicable interest would arise, only if the imported duty free raw material/inputs have not been used either for export or for DTA home consumption. This is not the case of the appellants. The appellants have not violated the condition specified in paragraph 1(3)(d)(ii) of the Notification No. 52/2003-Customs dated 31.03.2003 as amended. The appellants have duly provided all the details necessary for debonding of the raw material/inputs, capital goods and paid the applicable duties in the present case. Thus, the alleged violation of 111(o) ibid, as concluded in the impugned order is not sustainable - the conclusion arrived by the learned Commissioner of Customs (Appeal) in the impugned order that the condition 1(3)(d)(ii) has been violated is not supported by any legal basis as per the text of the relevant condition in the notification; rather such an assertion is contrary to the legal provisions of the said notification. There are no merits in the impugned order passed by the learned Commissioner (Appeal), Pune in confiscation of goods, inasmuch as there is no violation of Section 111(o) ibid, and the demand of differential duty and imposition of penalty is not legally sustainable - the impugned order set aside - appeal allowed in favor of appellants.
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2024 (1) TMI 96
Confiscation - Violation of legal requirements of Electrical Capacitor (Quality Control) Order, 2017 - import of CRE Film Capacitor AKMJ-MC 200UF and 400UF - impugned goods carries BIS standard compliance certification or not - HELD THAT:- The legal requirements which have been not complied with by the appellants have arisen from the compliance requirements under Electrical Capacitor (Quality Control) Order, 2017 which have been issued by the Government of India, in exercise of the powers vested under Section 14 of the Bureau of Indian Standards Act, 1986. The imported goods have been clearly described by the appellants in the B/E No. 7500016 dated 15.02.2022 as CRE Film Capacitor AKMJ-MC 200UF +/- 5% 330VAC - 90 nos. and CRE Film Capacitor AKMJ-MC 400UF +/- 5% 330VAC 231 nos. providing other relevant details of import such as name of the supplier as Wuxi Cre New Energy Technology Co. Ltd., Jiangsu, China and the invoice no. CREPP 220106 dated 06.01.2022 , classifying the goods under CTI 8532 2990 etc. - It cannot be appreciated on how and on what basis, the learned Commissioner (Appeals) had come to the conclusion that there was mis-declaration in respect of the description of the goods. In fact such an assertion in the impugned order is contrary to the facts of the case on record. The imported CRE film capacitors are meant for use as components in the power supply equipment manufactured by M/s Fuji Electric Consul Neowatt Pvt. Ltd. Thus, in terms of paragraph 1.2 (k) of the IS 13340 : 1993, the imported goods are excluded from the scope of coverage as well as compliance with the requirements of IS 13340, as the same are specifically kept out of the items for which of such standards would apply. The appellants have duly filed the B/E in respect of the imported goods and paid the applicable customs duties. It is not the case of the Department, that there was any issue of misdeclaration other than those with respect to the compliance of IS 13340 : 1993. Inasmuch as, the imported goods are specifically excluded from the scope of IS 13340 : 1993, it is found that the requirements under Electrical Capacitor (Quality Control) Order, 2017 is also not applicable in the present case - the alleged violation of 111(d) ibid, as concluded in the impugned order is not sustainable - the conclusion arrived by the learned Commissioner of Customs (Appeal) in the impugned order is not supported by any evidence or factual detail, to fasten the liability on the part of the appellants for confiscation of the imported goods or for imposition of penalty on the appellants. There are no merits in the impugned order passed by the learned Commissioner of Customs (Appeal), in confirming the absolute confiscation of goods and imposition of penalty, inasmuch as there is no violation of Section 111(d) ibid, and the findings in the impugned order is contrary to the facts on record - the impugned order set aside - appeal allowed in favour of the appellants.
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Corporate Laws
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2024 (1) TMI 95
Requirement of prior permission before filing of the joint application under Section 213, 241 and 242 of the Companies Act, 2013 - HELD THAT:- The impugned order is required to be affirmed. Moreover on bare examination of Section 244 of the Companies Act, 2013, it is found that there is no error in the impugned order. Accordingly the objection raised by the appellants appears to be misconceived and as such there is no reason to interfere with the impugned order. Appeals dismissed.
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2024 (1) TMI 94
Maintainability of appeal - Condonation of delay in filing appeal - sufficient reasons for filing appeal not given - making incorrect statement in the condonation of delay application. HELD THAT:- The appeal was not ripe for hearing in view of the fact that the main appeal was filed after the expiry of 45 days of limitation and in the appeal an Interlocutory Application was filed for condonation of delay In para 3 the appellant has stated that the certified copy of the impugned order was applied for on 31.10.2022 and thereafter the certified copy of the impugned order was made available on 2.11.2022. The reasons for delay in filing the appeal has been explained as if the appellant was travelling and was out of station from 24th October, 2022 to 18.11.2022, whereas the impugned order reflects that the certified copy was applied for on 02.11.2022 and it was made available to the appellant on 03.11.2022. Meaning thereby that the facts disclosed in condonation of delay application is erroneous and contrary to the record. Moreover the reason assigned that the appellant was travelling and was out of station is also not a sufficient reason to persuades to act upon such reason in condoning the delay in filing the appeal. Normally if delay is occurred in filing an appeal it is expected that the appellant may explain the delay on day to day basis. However, in the present case neither specific reason has been assigned nor correct statement has been made. In such situation as well as in the absence of showing any plausible reason which prevented the appellant to file appeal within time, there are no option but to reject the application for condonation of delay. The condonation of delay application stands dismissed not only on the ground of delay in filing the appeal but also for making incorrect statement in the condonation of delay application. Application for condonation of delay as well as appeal dismissed.
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Insolvency & Bankruptcy
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2024 (1) TMI 93
Disciplinary enquiry / proceedings against Resolution Professional (RP) - Automatic suspension of Authorization For Assignment (AFA) of the Resolution Professional - Regulation 23A of the Model Bye-Laws and Governing Board of Insolvency Professional Agencies Regulations, 2016 - liquidator-petitioner shared the details of the valuation report of the assets of the company with all the scheme proponents, as a result of which all of them quoted the same price. The petitioner does not deny that he shared the valuation report, but defends it on the ground that he was under an order of the NCLT to try for a compromise under Sec.230 of the Companies Act and backs it up with the ratio of the Hon'ble Supreme Court in Vijay Kumar Vs Standard Chartered Bank [ 2019 (2) TMI 97 - SUPREME COURT ] and that of the NCLT in Hemant Shantilal Shah another Vs Care Office Lt., [ 2022 (4) TMI 522 - NATIONAL COMPANY LAW TRIBUNAL , AHMEDABAD BENCH ]. Whether the show cause notice which the IBBI has served on the petitioner is legally sustainable? Whether this petition is entertainable when only a show cause notice of a statutory body is in challenge? HELD THAT:- Inasmuch as the petitioner has admitted that he had shared the valuation report of the CD, this Court considers that a prima facie ground is available for the IBBI to issue the show cause notice. The prima facie view of this Court is that when the petitioner ceases to be a Resolution Professional, and starts wearing the cap of a liquidator, the role of IIIP of ICAI vis-a-vis its member ceases. Hence, this Court considers, that at the best the decision of the IIIP of ICAI can be a piece of evidence in the proposed disciplinary proceedings but may not be adequate to affect the jurisdiction of the IBBI to initiate a disciplinary action against the petitioner. Turning to suspension of the petitioner is concerned, this is an automatic process on commencement of a disciplinary proceedings under Regulation 23A of the IBBI (Model Bye-laws and Governing Board of Insolvency Professional Agencies) Regulations, 2016. This cannot be interfered with since this Court finds that the IBBI has the jurisdiction to initiate a disciplinary proceedings, and in the instant case it is not established to be a malafide exercise of statutory power. The petitioner will have all the liberty to put forth his entire line of defence disciplinary enquiry, which needless to say includes all that the grounds on the basis of which he has now challenged the show cause notice - Petition dismissed.
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2024 (1) TMI 92
Maintainability of Letters Patent Appeal - CIRP - Seeking RBI to take action against HSBC Bank - Independent right of appellant to approach the court in capacity as a Member of the erstwhile Board of Directors - approval of resolution plan was also granted - HELD THAT:- Once approval of the Resolution Plan was granted by the NCLT on 27.4.2023 and the Resolution Applicants have taken control of the respondent no.4 Company, and the existing equity share capital of the 4th respondent stood written off in view of the Clean Slate Principle envisaged under the IBC, the said order is binding on the appellant as well (see para 40 of the order dt.27.4.2023 of the NCLT) - Consequently, the appellant-writ petitioner ceased to be not only a share holder but also a Member of the Board of Directors of the 4th respondent. The appellant has no locus either as a Share Holder or as a Director or as a Former Director of the 4th respondent to continue this Letters Patent Appeal, particularly when no leave of the NCLT had been obtained to pursue this Letters patent Appeal by him. Also, when the Management of the 4th respondent already stood transferred by reason of approval of the Resolution Plan by the NCLT, it s new Management should pursue the grievance which is now being pursued by the appellant. There are no merit in the appeal - appeal dismissed.
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2024 (1) TMI 91
Approval of the resolution plan - whether the amount which has been assessed by the Appellant at a later date i.e. on 10.07.2019 and was not an assessed amount, being part of Form B as on 18.02.2019 has rightly been rejected by the RP and the Adjudicating Authority? HELD THAT:- In the present case, it is found that CIRP was initiated on 12.06.2018, public announcement was made on 15.06.2018, the time period provided of 90 days expired on 15.09.2018 but still keeping in view the fact that it is a matter qua the amount of EPF, Form B was as on 18.02.2019 was entertained but in so far as the amount of interest and penalty is concerned, there was an inordinate delay as it has been assessed on 10.07.2019. Before parting with this order, Counsel for the Appellant has drawn our attention to an observation made by the Adjudicating Authority in the first appeal in Para 15 of the impugned order where it has been said that statutory dues of the CD are also settled at 10% of the admitted claims . In this regard, it is submitted that in view of the judgment of this Tribunal rendered in the case of JET AIRCRAFT MAINTENANCE ENGINEERS WELFARE ASSOCIATION VERSUS SHRI ASHISH CHHAWCHHARIA RESOLUTION PROFESSIONAL FOR JET AIRWAYS (INDIA) LTD., COMMITTEE OF CREDITORS OF JET AIRWAYS (INDIA) LTD., HDFC BANK, M/S. VRIHIS PROPERTIES PRIVATE LIMITED [ 2022 (2) TMI 627 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , PRINCIPAL BENCH , NEW DELHI] the admitted claim has to be released. Counsel for the Respondent has submitted that there is no quarrel with the law laid down by this Court in this regard which has further been affirmed by the Hon ble Supreme Court in appeal. The first appeal is partly allowed only to the extent that the amount of Rs. 15,62,128/-, being statutory dues of the provident fund shall be paid by the Resolution Applicant. The rest of the contention raised in this appeal are hereby rejected.
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2024 (1) TMI 90
Refund of home buyers who had obtained a decree from the RERA - to be treated as separate class or not - HELD THAT:- On perusal of the very fact that the Appellants have obtained a decree from UP RERA and the issue decided in the case of Vishal Chelani Ors. [ 2023 (10) TMI 949 - SUPREME COURT ] was whether they form a separate class has been decided that they are also to be treated as such alongwith other home buyers/financial creditors for the purpose of resolution plan and the argument raised by the Respondent that a provision has already been made in the resolution plan for the purpose of refund in Clause (B3)(c), there are no error in the impugned order and thus the present appeal is hereby dismissed though without any order as to costs. Appeal dismissed.
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2024 (1) TMI 89
Maintainability of application - initiation of CIRP - existence of pre-existing dispute or not - Respondent stated that there were clear pre-existing disputes with the Appellant and he sent e-mail dated 10.05.2021 much prior to demand notice sent by the Appellant under section 8 of the Code. HELD THAT:- The fact that Air India being one of the largest airlines operating large number of flights on Domestic routes was one of the significant revenue contributor and Air India not allowing players in the airline business using the Amadeus Software under the GDS might have impacted the business of the Respondent. Attention has been drawn by the Respondent that the Appellant never replied to the e-mail of the Respondent dated 10.05.2021 and the Appellant never addressed the issue of termination of its software by Air India and Jet Airways. The e-mail dated 10.05.2021 sent by the Respondent to the Appellant under title of Intimation of breach of contract much prior to issue of demand notice under Section 8 of the Code, is nothing but pre-existing disputes and thus the dispute is squarely covered by the judgement of the Apex Court in Mobilox Innovations [ 2017 (9) TMI 1270 - SUPREME COURT ]. The Adjudicating Authority after considering all documents and facts correctly held that there was a pre-existing dispute and the appeal raises no valid grounds to controvert the said finding - there are no error in the Impugned Order under challenge - appeal dismissed.
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PMLA
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2024 (1) TMI 88
Seeking grant of Regular Bail - Money Laundering - misappropriation of the credit facilities extended to the Companies and siphoning them off for personal gains causing loss - HELD THAT:- Section 309 of Cr.P.C., does not indicate anywhere that remand cannot be extended unless reasons are recorded. If it is the case of the petitioner that he is in custody for an indefinite period as the trial is not proceeding on a day-to-day basis, his rights can certainly be protected to ensure speedy trial. That may also be a ground for seeking regular bail. However, it is added that the Court considering the bail application, of course, would consider all other factors including the magnitude of the economic offences committed by the petitioner. But, it is far-fetched to say that extending the remand must contain reasons every time the trial is postponed for hearing. The violation of the rights, has to be adjudicated only in a bail application which is subject to twin conditions mentioned in Section 45 of PMLA. Therefore, the orders passed by the Trial Court are in accordance with law and there is no reason to interfere with the same - application dismissed. Whether the petitioner is entitled to statutory bail on the ground that the respondent has not completed the investigation? - HELD THAT:- Given the specific stand taken by the respondent, that the complaint and the materials filed disclose the offences and that they would proceed with the trial on that basis, it cannot be held that the investigation is incomplete and therefore, the petitioner is entitled to statutory bail. The respondent had already identified a portion of the proceeds of crime which is sufficient to prove the charge against the petitioner herein. The further investigation is conducted qua the remaining proceeds of crime. In the judgment of the Delhi High Court relied upon by the learned counsel for the petitioner in the case of Chitra Ramakrishna [ 2022 (10) TMI 49 - DELHI HIGH COURT ], the Court was dealing with the Final Report filed by the CBI for the offence under Section 13[1][d] of the Prevention of Corruption Act - In that case, the Delhi High Court found that the Final Report was incomplete and it was filed only to deny statutory bail to the petitioner therein. As stated earlier, an incomplete Final Report is different from a Final Report which states that further investigation is necessary to identify more proceeds of crime. In the present case, the complaints filed by the respondents are not incomplete and the trial can be proceeded with independent of further investigation - the observations made in the judgment of the Delhi High Court, would not apply to the facts of the instant case. There are no merit in the three Criminal Revision cases and they are liable to be dismissed.
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Service Tax
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2024 (1) TMI 87
Levy of Service Tax - Business Support Services or not - amount paid by the appellant to the overseas joint-venture companies in delivering the consignments of consignors in India to consignees situated outside India - reverse charge mechanism. The principal argument of the appellant is that the joint-venture companies also render the service, which is in the nature of Courier Agency Service and they are to be considered as co-loaders ; accordingly, the amount paid by them to the co-loaders, which already suffered service tax, cannot be levied to service tax under Business Support Service . HELD THAT:- The issue has been considered by this Tribunal in a series of cases referred to by the learned advocate for the appellant and this Tribunal has consistently held that the service received by the appellant from the overseas companies in delivery of the couriers/ parcels of the customers of India at various international destinations fall under Courier Agency Service , and the services so rendered is in the nature of co-loaders service; accordingly held to be outside the purview of Business Support Service. Also, it is held that since the service is performance based service and provided outside India; hence not taxable. In view of the consistent stand of different Benches of the Tribunal including Bangalore Bench in the case of M/S TNT INDIA LTD VERSUS COMMISSIONER OF CENTRAL EXCISE, CUSTOMS AND SERVICE TAX BANGALORE-LTU [ 2020 (3) TMI 845 - CESTAT BANGALORE] , there are no reason not to follow the said judgment - it was held in the said case that issue decided in the case of FIRST FLIGHT COURIERS LTD. VERSUS COMMISSIONER OF SERVICE TAX, MUMBAI-II [ 2016 (8) TMI 145 - CESTAT MUMBAI] where it was held that the services received by the courier agency from the co-loader is not liable to Service Tax, and further where such service is provide by a co-loader situated outside India, the said activity is beyond the territorial jurisdiction of Service Tax Law and on this account also not taxable. It is found that following the said principle, demand notices for different periods issued to the appellants for different periods have been set aside by the Department and no appeals have been filed by the Revenue accepting the said principle of law. The impugned orders against which appeals filed by the appellant are set aside and their appeals are allowed.
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2024 (1) TMI 86
Burden/onus to prove that the service was provided - Demand of service tax - appellant provided Cargo Handling Agency Services or not - burden/onus to prove on Revenue - Revenue failed to discharge its burden to prove - appellant is an individual business and not an agency - HELD THAT:- If Revenue is alleging that the appellant had provided Cargo Handling Agency Services during the relevant period, it is for the Revenue to establish that the appellant had indeed provided that services. All that is established by the Revenue is that the appellant had received certain sum from M/s. Bajrang Metallics Pvt. Ltd., which fact the appellant does not dispute. Both the lower authorities have erred in concluding that the appellant had provided Cargo Handling Agency Services during the relevant period without establishing it. Instead, they wrongly confirmed the demand on the ground that the appellant could not establish that it had not provided this service. The onus of proving that a taxable service has been rendered when issuing a SCN rests on the Revenue and not on the assessee. No evidence has been adduced by the Revenue that this service was rendered. The appellant is an individual and not an agency and hence was squarely covered by the CBEC s letter No. B11/1/2002-TRU dated 1.8.2002. Unless it is established by the Revenue that the appellant is an agency and that it had provided Cargo Handling Agency Service, no demand can be confirmed. There is no evidence to the effect in the impugned order. The impugned order is set aside - Appeal allowed.
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2024 (1) TMI 85
Imposition of penalty of an amount equal to the amount of the demand confirmed - tax paid on being pointed out, much prior the issuance of the impugned show cause notice - HELD THAT:- On perusal of proviso to Section 76(1) and 80 of the Finance Act, 1994, it is clear that where the payment of tax liability as demanded stands deposited by the assessee within 30 days of issuance of show cause notice, no penalty has to be imposed on such assessee. In the present case, the appellant -assessee deposited the amount no service did it was pointed out. Even show cause notice was not yet served, hence we hold that penalty should not have been imposed upon the appellant. It is also observed that plea of it to be an inadvertent error is taken by the appellant. Department also has not produced any evidence proving any positive act on part of appellant which may prove the intentional evasion of duty by the appellant. Hence while invoking Section 80, the penalty is not imposable. Resultantly, the order imposing penalty upon the appellant is set aside. Appeal allowed in part.
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2024 (1) TMI 84
Recovery of service tax alongwith interest and penalty - hotel services - reimbursement expenses - period commencing from October, 2014 to June, 2017 - invocation of extended period of limitation - HELD THAT:- From the terms of the Agreement and the documents on record it is more than apparent that the appellant was providing business support service to PI and the finding to the contrary recorded by the Commissioner in the impugned order that the service provided is hotel service and had been wrongly classified as business support services by the appellant is not justified. The Commissioner was also not justified in holding that the appellant was liable to pay service tax on reimbursement of expenditure in terms of rule 5(1) of the Service Tax (Determination of Value) Rules, 2006. The appellant had entered into an Agreement dated 01.02.2015 with HLL under which HLL was required to provide managerial and consultancy services with respect to the management of the hotel. The appellant had agreed to pay a fixed monthly amount to HLL as a consideration for management services - The appellant, which was the service recipient under the Agreement, paid the expenses for the employees of HLL and HLL, as a service provider, reimbursed such expenses. There is no payment of any consideration, which is an essential requirement for a service to attract the levy of service tax under the Finance Act. The Supreme Court in COMMISSIONER OF SERVICE TAX ETC. VERSUS M/S. BHAYANA BUILDERS (P) LTD. ETC. [ 2018 (2) TMI 1325 - SUPREME COURT] clearly held that consideration should be for taxable services provided or to be provided and there should be a nexus between the consideration and the services provider. The Supreme Court in UNION OF INDIA AND ANR. VERSUS M/S. INTERCONTINENTAL CONSULTANTS AND TECHNOCRATS PVT. LTD. [ 2018 (3) TMI 357 - SUPREME COURT] also held that the value of taxable services should be the gross amount charged by the service provider for such service and the valuation cannot be anything more or less than the consideration to be paid for quid pro quo for running such service. The reimbursable expenses have not been incurred by the appellant in exchange of the taxable service provided by it. The same cannot, therefore, be treated as a consideration for the taxable services - The Commissioner was, therefore, not justified in confirming the demand on reimbursements received from HLL. Extended period of Limitation - HELD THAT:- As both the demands cannot be confirmed and have to be set aside, it would not be necessary to examine the contentions advanced by the learned counsel for the appellant that the extended period of limitation could not have been invoked in the facts and circumstances of the case or that mere sharing of revenue cannot be said to have been made towards a provision of service. The impugned order dated 04.04.2022 passed by the Commissioner is, accordingly, set aside - Appeal allowed.
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2024 (1) TMI 83
Violation of principles of natural justice - appellant was not provided adequate opportunity to submit a reply to the show cause notice nor was the appellant heard by the Commissioner - HELD THAT:- It is not in dispute that the appellant did not reply to the show cause notice nor any person appeared on behalf of the appellant when the matter was heard by the Commissioner. The appellant has stated that because of a serious dispute in the Executive Committee of the appellant neither the reply could be filed nor any representative could appear and it is only when the Rajasthan High Court made an interim arrangement on 17.10.2014 that the affairs of the appellant could be managed. The appellant has also stated that at one point of time the offices of the appellant had been ordered to be locked and sealed by the High Court. Thus, it would be appropriate that an opportunity is now granted to the appellant to file a reply to the show cause notice and also appear before the Commissioner. The order dated 24.04.2015 passed by the Commissioner is, accordingly, set aside - appeal allowed.
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Central Excise
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2024 (1) TMI 82
Clandestine Removal - complete violation of principles of natural justice - Admissibility of evidences - complete relied upon documents not supplied to appellants - cross-examination of witnesses not carried upon - levy of penalty on appellant - HELD THAT:- The fact that department has failed to establish that Section 36B was complied while taking the printouts from the hard disk attains significance. It is brought out from evidence that the department has seized the hard disk and taken the print outs by themselves. These print outs were filed as Made-up file with 293 pages. These print outs are the foundation for initiating the investigation. Only after taking the printouts the hard disk has been sent to the DGCEI. In the case of M/S U.P. BONE MILLS (P) LTD., SHRI AAY AGARWAL AND SHRI JAVED RANA VERSUS COMMISSIONER, CENTRAL GST, DEHRADUN [ 2022 (9) TMI 1210 - CESTAT NEW DELHI ] it was held that on failure to follow the mandatory procedure prescribed under Section 36B of Central Excise Act, 1944, the electronic evidence cannot be accepted in evidence. Besides, the evidence of the printouts from the hard disk, the other evidence relied by department are the documents seized from Third parties like the Buyers of finished products, Transporters of goods, Suppliers of raw materials etc. Some of these documents are again, pen driver and computer printouts. The department has recorded statements from persons who are running these establishments. But none of them have been examined by the adjudicating authority as required under Section 9D of Central Excise Act, 1944. The appellant has requested for cross examination and the same has not been complied - without examining these persons / witnesses in evidence under summons, third party statements or third party documents cannot be admitted in evidence. In the case of REYNOLDS PETRO CHEM LTD VERSUS C.C.E. S.T. -SURAT-I [ 2022 (7) TMI 656 - CESTAT AHMEDABAD ] similar issue was considered and the Tribunal held that the burden of proof to establish the allegations in the SCN is on the department. The seized from the premises of third parties cannot be used without corroboration, and that the presumption under Section 36A would not be applicable unless these persons from whose custody the documents have been seized are made parties to the proceedings. In the present case, the computer hard disk seized from the appellant s factory is the basis for the investigation. The evidences placed on record cannot be relied or admitted in evidence due to non-compliance of mandatory provisions of law. In such circumstances, it is held that the confirmation of duty demand and the penalties imposed require to be set aside. Levy of huge penalty of Rs.50 lakhs on appellant - HELD THAT:- The department has not produced any evidence to show that Shri P. Ganesh has made any personal gain from the alleged clandestine clearances. He was a salaried person. Again, there is no proposal in the SCN to confiscate the goods - There are no evidence led by the department, to hold that the appellant has connived or actively involved in any of the allegations raised in the SCN - the penalty imposed on the appellant is not justified. The same requires to be set aside. The impugned order is set aside. The appeals are allowed.
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2024 (1) TMI 81
100% EOU - goods cleared by the appellant under CT-3 certificates - eligible for the benefit of the Notification No. 22/2003-CE dated 31.03.2003 or not - extended period of limitation - HELD THAT:- On perusal of the copies of the CT-3 certificate issued by jurisdictional Central Excise officer of the user industry, wherein the CT-3 certificate specifies the items as (a) accessories for air-conditioning equipment (b) air-conditioning accessories (c) parts of air-conditioner (d) parts of air-conditioning system - it is found that the benefit of Notification is denied on the grounds that the items supplied against the CT-3 certificates are not the items allowed under the CT-3 certificate. The appellant has supplied ducting for an airconditioning system to the user industry (100% EOU), which is essential for the Air Conditioning System. Hence, the items supplied are a part of the air-conditioning system. The ducting system is customized as per the building layout of the user industry. Revenue has contended that the goods are classified under Chapter sub heading 7304.10 and 7304.90 and not as parts of air conditioner, and also that the appellant does not know where the goods will be used - the goods supplied by the appellant against the CT-3 certificates are ducts customized for the Air Conditioning System, hence, they can be considered as part of an air conditioning system and are eligible for the benefit of Notification No. 22/2003-CE dated 31.03.2003. Thus, the goods cleared under the impugned CT-3 certificates are used as ducting for an Air Conditioning system, hence they are covered by entry at Sl. No.3 to the Notification No. 22/2003-CE dated 31.03.2003, therefore the demand is not sustainable. Since the demand is not sustainable, the demand of interest and imposition of penalty also do not survive. Appeal allowed.
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2024 (1) TMI 80
Clandestine removal - removal of the excisable goods by the Noticee M/s. Modi Agro Products (MAP) to M/s. MARKFED MP Agro - Proper verification has taken place or not - HELD THAT:- The Principal Commissioner had very meticulously examined all the records that were filed and after examining the audited figures of sales and excise duty, and the sales considered in computation by the department, recorded categorical findings which have been reproduced above. The Principal Commissioner also noted that to establish a case of clandestine removal, it was imperative for the department to substantiate the allegations, which it completely failed to. On the other hand, the respondent produced documents which established that no clandestine removal had taken place. The Principal Commissioner also recorded a categorical finding, based on reconciliation of the figures. It was not necessary for the Principal Commissioner to refer to each and every invoice, as has been contended by the learned authorized representative. In fact, the figures recorded by the Principal Commissioner have not been disputed in this appeal - It is, therefore, not possible to interfere with the findings recorded by the Principal Commissioner on this issue. Clandestine Removal - removal of the excisable goods by the Noticee M/s. Modi Agro Products (MAP) to M/s. Aviral Biotech and Fertilizers Pvt. Ltd. (ABFPL) - accounts of ABFPL can be relied upon to prove the clandestine removal or not - HELD THAT:- No specific error has been pointed out in the grounds of appeal or by the learned authorized representative appearing for the department - the Principal Commissioner has recorded a finding that the raw material receipts matches with the quantity of the finished goods sold from the factory which have been cleared on payment of appropriate central excise duty. The Principal Commissioner also noticed that the charge of clandestine removal is a serious charge which cannot be made only on the basis of presumptions and assumptions and that the department failed to establish clandestine removal by corroborative evidence. There is no error in this finding and indeed none has been pointed out. Clandestine removal - Removal of the excisable goods by the Noticee M/s. Modi Agro Products (MAP) to M/s. Sumitra Agrotech (SA) - Allegation on the basis of third party records - HELD THAT:- The Principal Commissioner has recorded that the department failed to produce clinching evidence for establishing clandestine removal and in fact no investigation had been carried out at the premises or the books of accounts of raw material suppliers. The department has not been able to point out any error in this finding recorded by the Principal Commissioner. Clandestine removal - removal of the excisable goods by the Noticee M/s. Modi Agro Products (MAP) to private parties/Dealers - Clearance to dealers under cover of delivery challans which were not recorded in the accounts of MAP for the purpose of payment of Central Excise duty and other taxes by violating statutory provisions/norms - corroborative evidences or not - HELD THAT:- The Principal Commissioner has observed that the allegation of clandestine removal has not been corroborated by clinching evidence and no linkages were investigated to establish such a finding. This finding does not call for any interference as no specific error could be pointed out by the department. The appeal filed by the department deserves to be dismissed as there is no perversity in any of the findings recorded in all the issues - application disposed off.
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2024 (1) TMI 79
CENVAT Credit - credit availed based on supplementary invoices - valid documents to take Cenvat credit as per Rule 9(1) (b) of the Cenvat Credit Rules, 2004 or not - wilful mis-statement or suppression of facts or not. The logic in the SCN is that since the short paid duty was paid when the officers pointed out, it means the Silicon had not paid duty by reason of wilful mis-statement or suppression of facts or violation of the Act or Rules with an intent to evade. HELD THAT:- Clearly, there can be no legal presumption of wilful misstatement or suppression of facts or violation of Act or Rules with an intent to evade if the assessee, on being pointed out by the officers, pays the differential duty. We fail to understand how the Additional Commissioner made such a presumption and further, based on that presumption, issued the SCN to deny Cenvat credit to the appellant. He also had no jurisdiction to decide if Silicon, which is an assessee of the Vishakapatnam Commissionerate, had willfully misstated or suppressed facts or violated Act or Rules with an intent to evade. His jurisdiction in Jaipur is thousands of miles away from Silicon and he erred in arrogating to himself the jurisdiction over the assessee in Vishakapatnam. Both the lower authorities have clearly erred in upholding the demand, interest and penalties proposed in the SCN. The impugned order is based on the presumption of wilful misstatement or suppression of facts and further, such presumption is regarding an assessee (Silicon) over which they had no jurisdiction at all. The impugned order is set aside with consequential relief to the appellant - Appeal allowed.
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CST, VAT & Sales Tax
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2024 (1) TMI 78
Compounding scheme - it is submitted that the assessment order in Exhibit P-2 treating the petitioner s return under the compounding scheme is unsustainable - HELD THAT:- The assessee has been filing his return under the compounding provision and it is not the first time that he has filed the returns under the compounding provision for the financial year 2020-21. This Court therefore, cannot believe the petitioner was not aware of the difference of filing of normal return and return under the compounding provision. In fact, the petitioner has remitted the tax as per the compounding scheme provided under the Act. Since the rate of tax has been reduced for certain period during which the Bar Attached Hotels were entitled for parcel sale of Indian made Foreign Liquor, the petitioner found that the his returns filed under the compounding scheme should be treated as normal return and the Assessing Authority should proceed to complete the regular return. There are no illegality in the impugned orders - petition dismissed.
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Indian Laws
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2024 (1) TMI 77
Cheating - petitioner company had not only syphoned the money from the banks but have also not paid the cane dues to the farmers, who had supplied the sugar cane to the petitioner-Company - Validity of impugned communication - direction to respondent no.1, State Bank of India to convene a meeting of the Joint Lenders Forum forthwith, in order to finalize the Settlement Proceedings, in accordance with the provisions of the RBI Circular dated 07.06.2019. HELD THAT:- The RBI guidelines are absolutely clear that, if a fraud is committed by the unscrupulous borrower by removal of stocks/hypothecating and disposing of the stocks, inflating the value in the stock statement and drawing excess bank finance, diversion of funds outside the borrowing unit and also due to managerial failure leading to the unit becoming sick and due to laxity in effective supervision, the banks have to report to the CBI. The instant case clearly falls under the ambit of Clause 3.2.1 and 3.2.4 where the unscrupulous borrower enjoy credit facilities under valuable banking arrangement after defrauding one of the financial banks continue to enjoy facilities of other financial banks and in some cases availed even higher limit at those banks. As per the RBI Guidelines it is mandatory for the banks before approval of the loan to carry out a proper due diligence, credit appraisal, to consider the risk report and follow all the norms laid down. It is clearly apparent from the way the loans were sanctioned and disbursed that the banks have failed to carry out regulatory compliances. Even adequate security was not taken before disbursing the loans. A number of loans were given on the personal guarantee of two promoters, whose net-worth was far less than the loans taken by them from the banks. It is surprising that none of the banks while sanctioning or disbursing the funds have ever checked the background of the petitioner-company. The petitioner-company was already defaulting and was NPA in the other banks but still the other banks went ahead with sanctioning huge amount of loan to the petitioner without any proper collateral security or documentation. This is a case, which shocks conscience of the Court as to how few of the bank officers in connivance of the petitioner had advanced almost Rs.900 crores, of public money and had allowed the petitioner to syphon away the funds and did nothing but were the mute spectators when the entire fund was syphoned off. Even after the entire amount was syphoned off, the banks did not take any effective steps to recover the said amount - The RBI Circular dated 01.07.2009 mandates all the banks for classification and reporting of fraud. The said Circular does not provide any exemption or relaxation to the banks not to report regarding fraud committed by unscrupulous borrowers. Even, Clause-6 of the Circular also mandates all the Public Sector Banks to report to the Fraud Cell of CBI in cases of fraud involving more than Rs.5 crores. In case, the CBI finds that there is a case of money laundering as per the provisions of Prevention of Money Laundering Act, 2002 they may also refer the matter to the Enforcement Directorate and take help to recover the said amount - It is further directed that the petitioner will join the investigation and cooperate with the investigation team and if they do not do so, it is open for the investigation agency to proceed against the petitioner in accordance with law. The authorities should endeavour to find out the money trail, where it has been syphoned off and parked. Petition disposed off.
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