TMI Tax Updates - e-Newsletter
October 20, 2021
Case Laws in this Newsletter:
GST
Income Tax
Benami Property
Customs
Corporate Laws
Insolvency & Bankruptcy
Service Tax
CST, VAT & Sales Tax
Indian Laws
Highlights / Catch Notes
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GST:
Seeking grant of anticipatory bail - wrongful availment of Input Tax Credit - fake bills - There are provisions in the GGST Act that the registration of the firm can be cancelled with retrospective effect. In the present case, during the course of investigation, it has been revealed that at the time of registration of the firm, the concerned persons have provided necessary documents for the purpose of registration, however as per the case of the prosecution, subsequently it was found that without there being any actual movement of the goods, false invoices were raised and after the arrest of four persons and during the course of investigation, it is revealed that those 36 firms were dummy firms. Thus in the facts of the present case, the custodial interrogation of the applicants is necessary. - HC
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GST:
Validity of assessment order - The respondent had scrupulously followed Section 75(4) of the GST Act and it was only the appellant who chose not to avail the opportunities granted by the respondent for the personal hearing as mandated u/s75(4) of the Tamil Nadu GST Act. Further, it is also clear that absolutely there is no violation of principles of natural justice, as contended by the learned counsel for the appellant. - HC
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GST:
Maintainability of appeal - filing of TRAN-1 credit denied - permission to file revised Form GST TRAN-1 manually or otherwise to carry forward credit - Like cases should be decided alike, being the operational norm, there is no reason for this court to deny the relief to the petitioner who is similarly circumstanced qua the respondent in the subject Writ Appeal - HC
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Income Tax:
Reopening of assessment u/s 147 - Non speaking order disposing of objections against reopening - Disposal of this matter is needed as dealing with the objections to the reasons recorded is not a static formality to be undergone to rush to the forming of assessment. Even while accepting the requirements of a focus on substantive justice in the process, it is a vital step towards that and hence mandate in GKN Driveshafts (INDIA) Ltd. (supra) must not be undermined, nor can that be diluted. - Without setting aside the notice, assessment order quashed - HC
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Income Tax:
Reopening of assessment u/s 147 - reasons to believe - no income under the head income from House Property has been offered by the assessee during the year under consideration. This reason is not mentioned in the reasons to believe that the income has escaped assessment by reason of failure on the part of the assessee to disclose fully and truly all material facts. Thus, this reason too cannot be considering as fulfilling the condition precedent to the reopening of assessment beyond the period of four years as per the applicable proviso to Section 147 of the Act - HC
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Income Tax:
Expenditure on account of freebies to medical professionals - deduction u/s 37(1) - It is an open secret, secret if it is, that all these freebies extended by the pharmaceutical companies to the medical professionals, more often than not, come with strings attached, and that is what makes the expenditure in question for a purpose which is, as discussed earlier, “prohibited by law”. - Matter referred to Larger Bench since there is opposed schools of thought - AT
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Income Tax:
Bogus LTCG - Violation of principles of natural justice - before making addition in the hands of assessee proper opportunity of cross examining and opportunity to reply to such material gathered behind the assessee is mandatory before taking any adverse view or making any addition in the hands of assessee - additions for the alleged bogus LTCG and unexplained expenditure are unjustified and liable to be deleted. - AT
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Income Tax:
Losses written off - ‘business loss’ or ‘capital loss - The present facts of the assessee’s case shows that the investment was made not for the purpose of expansion of business activity but it was made with a view to creating capital asset in the form of holding shares - the claim of assessee cannot be held as ‘business loss’ rather it is a ‘capital loss’. - AT
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Income Tax:
Revision u/s 263 by CIT - lack of inquiry v/s inadequate inquiry - apparently from the records and as per the observations of the Ld. PR. CIT, coupled with the failure of the assessee to establish with evidence that the AO had inquired and considered and, thereafter, adjudicated the issue, we are constrained to hold that this is a clear case of lack of inquiry by the AO. Even the assessment order is very cryptic in as much as it does not even mention as to what issues were before the AO. - Revision order sustained - AT
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Income Tax:
Penalty levied u/s. 271(1)(c) - undisclosed income surrendered during the course of survey - Assessee cannot be held to have concealed or furnished the particulars of income since the income declared during the course of survey has been offered to tax in the return of income filed before the due date of filing the return of income. - No penalty - AT
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Income Tax:
Revision u/s 263 by CIT - unexplained cash credit under section 68 - AO has verified the information submitted by the assessee based on the directions from co-ordinate Bench of this Tribunal and as such, the learned PCIT has not found anything to prove that assessment order is erroneous or prejudicial to the interest of the Revenue except expressing his doubt on the proceedings. - AT
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Income Tax:
Addition u/s 68 - unsecured loan - unexplained cash credit - the assessee has discharged the primary onus by proving the identity of the creditor, genuineness of the transaction as well as the creditworthiness of the creditors. The loan so obtained was not only reflected in the respective books of account and also bank statements - We are of the view that Commissioner (Appeals) was justified in deleting the addition made by the AO. - AT
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Income Tax:
Penalty levied u/s 271 CA - violation of provisions of section 206C - tax collected at source is deposited, interest levied thereon have also been deposited and form 27BA of the IT Rules certified by Chartered Accountant containing all the details as required in the proviso to section 206C(6A) of the Act have been fulfilled - no justification in the action taken by the Ld. AO of levying penalty u/s 271CA of the Act by treating the assessee in default. - AT
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Customs:
Illegal clearance of consignment - consignment was cleared manually without making any entry by the Customs Department - Taking note of the tardy, casual and irresponsible attitude of both the departments, this is deemed to be a fit case where the matter needs to be referred to the Central Bureau of Investigation (CBI) for conducting further investigation of the case and fix liability of the erring official(s) - HC
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Customs:
Applicability of precedent judgements - Refund of SAD - rejection on the ground of time limitation - Doctrine of precedence only mandates that it is the ratio in the decision of higher courts to be followed, and not conclusions - when there is a reasonable interpretation of a legal and factual situation, which is favourable to the assessee, such an interpretation is to be adopted. - AT
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Indian Laws:
Dishonor of Cheque - locus standi to file the complaint under Section 138 of NI Act - Since complainant specifically pleaded in the complaint that he is proprietor of firm concerned i.e. M/s. Roshan Lal & Sons, it cannot be said that he had no locus standi to file the complaint under Section 138 of the Act. Moreover, cheque in question has been not issued in favour of Individual, rather same was issued in favour of the proprietorship firm - HC
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Service Tax:
Rejection of declaration for Tax Relief under the provisions of Sabka Vikas [Legacy Dispute Resolution) Scheme, 2019 - mistake apparent on record or sufficient reasons for review - It is undeniable that the attention of the Court is not drawn to material statutory provisions and the material circumstances. Thus, obvious sufficient reasons are established for review as envisaged under Order XLVII Rule 1 of CPC without calling for much probing. Therefore, this Court, answering the question for consideration in favour of the petitioner, opines that the order must be reviewed - Order recalled - HC
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VAT:
Levy of entertainment tax - charges collected from students by the petitioner for utilizing facilites of MARENA - In the present case also we are dealing with an educational institution, which has been set up by a Trust, wherein the students and the faculty members are provided facilities in relation to sports, health and fitness. It is certainly true that the parents who visit the students and other persons who visit the University are permitted to use the sports facilities - this Court is of the opinion that the order passed by the Assessing Authority, the order passed by the First Appellate Court and the order passed by the Karnataka Appellate Tribunal are bad in law. - HC
Articles
Notifications
News
Case Laws:
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GST
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2021 (10) TMI 803
Seeking grant of anticipatory bail - wrongful availment of Input Tax Credit - fake bills - compliance with the mandatory procedure under Chapter XII of the Code of Criminal Procedure, 1973 including Section 154, 157,167,172 etc. for valid commencement and continuation of the investigation into any offence qua the petitioners in respect of investigation - vires of section 69 of the Central Goods and Service Tax Act, 2017 - HELD THAT:- Section 69 of the GGST Act empowers the Commissioner to arrest a person, who has committed any offence stipulated in the said section if the Commissioner has reason to believe that the said person has committed any offence as stated in the said provision - it is revealed that the Commissioner can delegate his powers to his subordinate officer. It is contended by learned advocate for the applicants that even assuming that the Commissioner is empowered to delegate his powers to his subordinate, as per Section 69 of the GGST Act, reasonable belief should be that of the Commissioner.
The Commissioner can delegate his powers to his subordinate. A very same reasonable belief will be that of the authority upon whom the power is delegated. Thus, the power under Section 69 of the GGST Act can be exercised by the authority upon whom the power is delegated provided the delegatee has reasons to believe that the assessee has committed offence under Section 132 of the GGST Act. Thus, the condition precedent, i.e. 'reasonable belief', for the purpose of exercise of power under Section 69 of the Act remains the same. Thus, this Court is of the view that the submissions canvassed by learned advocate for the applicants on this aspect is misconceived.
It is alleged by the prosecution that the present applicants in connivance with other persons, entered into transaction with 36 dummy firms and false invoices and sales were raised and in pursuance thereto, the Company has issued cheques to 36 dummy firms including four person, who are now arrested by the respondent – department. There were receipts of more than ₹ 737.00 Crores and amount has been withdrawn by bearer cheque or transferred to other Company or by RTGS to dummy firms and during the course of investigation from one Mr. Afzal, certain material is collected - It is the specific case of the department that the transaction worth of ₹ 737.00 Crores were entered into with 36 dummy firms and there would be liability of more than ₹ 137.00 Crores. Thus this Court is of the view that in the facts of the present case, the custodial interrogation of the applicants would be required.
There are provisions in the GGST Act that the registration of the firm can be cancelled with retrospective effect. In the present case, during the course of investigation, it has been revealed that at the time of registration of the firm, the concerned persons have provided necessary documents for the purpose of registration, however as per the case of the prosecution, subsequently it was found that without there being any actual movement of the goods, false invoices were raised and after the arrest of four persons and during the course of investigation, it is revealed that those 36 firms were dummy firms. Thus in the facts of the present case, the custodial interrogation of the applicants is necessary.
The present applications are dismissed.
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2021 (10) TMI 799
Scope of Advance Ruling Application - Classification of supply - supply of goods or supply or services - Activity of transfer of registered trademarks by Novartis AG - applicability of reverse charge mechanism in terms of entry no. 1 of Notification No. 10/2017-Integrated Tax (Rate) dated 28.06.2017 or entry no. 17 (i) of Notification No. 8/2017-lntegrated Tax (Rate) dated 28.06.2017 (as amended)? - HELD THAT:- As per section 95 (a) there are two conditions to be fulfilled for making an advance ruling application: firstly, the question asked should be in relation to supply undertaken by the applicant and secondly the question should be in relation to the supply of goods or services or both being undertaken or proposed to be undertaken by the applicant.
In the subject case, the first condition mentioned above is not satisfied in as much as it is NAG, Switzerland which is undertaking the supply and not the applicant - with respect to the second condition for the supply ‘to be undertaken or proposed to be undertaken’ we observe that the Deed of Assignment is dated 30th November, 2019, and the ‘Effective Date’ as stated in the Deed is 10th December 2019. The application has been filed on 16th January 2020.
Thus, on the date on the filing of the subject application the subject supply was already completed and was neither being undertaken, nor was proposed to be undertaken.
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2021 (10) TMI 802
Violation of principles of natural justice - validity of assessment order - contention of the appellant is that they were not given an opportunity of personal hearing - Section 75(4) of the Tamil Nadu Goods and Services Tax Act, 2017 - HELD THAT:- Under Section 75(4) of the Act, it has been mandated that an opportunity of hearing shall be granted on the request made by the assessee or where any adverse decision is contemplated against such person - In the case on hand, it cannot be disputed that a notice of personal hearing was given to the appellant, fixing the personal hearing on 04.12.2020. However, on 04.12.2020, neither objections had been filed nor the appellant appeared in person for the personal hearing, therefore, subsequent notice was issued on 05.12.2020, where, again the appellant was invited by the office of the respondent to file their objection and also requested them to appear before the respondent office for personal hearing on 14.12.2020.
The respondent had scrupulously followed Section 75(4) of the Act and it was only the appellant who chose not to avail the opportunities granted by the respondent for the personal hearing as mandated under Section 75(4) of the Act. Further, it is also clear that absolutely there is no violation of principles of natural justice, as contended by the learned counsel for the appellant. The learned Single Judge, taking into consideration all these aspects, rightly dismissed the Writ Petitions.
There are no ground to interfere with the orders passed by the learned Single Judge - appeal dismissed.
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2021 (10) TMI 801
Grant of regular bail - Fraudulent availment of ITC - fake transactions - no show cause notice was issued to the petitioner before arresting him - HELD THAT:- Notice of motion.
List again on 28.10.2021 - In the meantime, considering the fact that the petitioner is in custody since 03.08.2021; offences are triable by the Court of Magistrate and he is no more required for custodial investigation, he is directed to be released on interim bail subject to furnishing his bail/surety bonds to the satisfaction of the trial Court/Illaqa Magistrate.
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2021 (10) TMI 800
Maintainability of appeal - filing of TRAN-1 credit denied - permission to file revised Form GST TRAN-1 manually or otherwise to carry forward credit - HELD THAT:- The subject matter of this Writ Petition is substantially similar to the one treated by a Division Bench of this Court in UNION OF INDIA MINISTRY OF FINANCE DEPARTMENT OF REVENUE, THE IT GRIEVANCE REDRESS COMMITTEE THE GST COUNCIL, THE PRINCIPAL COMMISSIONER OF CENTRAL GST AND CENTRAL EXCISE, MYSORE, THE ADDITIONAL COMMISSIONER OF CENTRAL TAX MYSORE, THE ASSISTANT COMMISSIONER OF CENTRAL TAX VERSUS M/S. AT AND S INDIA PVT. LTD., STATE OF KARNATAKA [2021 (5) TMI 363 - KARNATAKA HIGH COURT] where it was held that while dismissing the present writ appeal, 30 days time is granted to the assessees to submit their GST TRAN-1 from today.
Like cases should be decided alike, being the operational norm, there is no reason for this court to deny the relief to the petitioner who is similarly circumstanced qua the respondent in the subject Writ Appeal - petition allowed in part.
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Income Tax
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2021 (10) TMI 795
Addition u/s 36(1)(iii) - interest expenses should be disallowed to the extent of interest free loans and advances given - HELD THAT:- Since, the assessee, in the instant case, is in the business of finance and investment and the interest paid is exclusively for earning interest income and such interest income has been included in the total taxable income and further considering the fact that own capital and free reserves of ₹ 5.05 crores is much more than the total investment in shares of ₹ 4.71 crores, therefore, respectfully following the decision of Hon’ble Delhi High Court in the case of EKL Appliances Ltd. [2012 (4) TMI 346 - DELHI HIGH COURT] hold that no disallowance of interest in the instant case is called for - Therefore, set aside the order of the CIT(A) and direct the AO to delete the addition. The ground raised by the assessee is accordingly allowed.
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2021 (10) TMI 794
Expenditure on account of freebies to medical professionals - deduction u/s 37(1) - opposed schools of thought - Scope of Indian Medical Council (Professional Conduct, Etiquette and Ethics) Regulations, 2002- as amended from time to time, read with section 20A of the Indian Medical Council Act 1956 - whether it can be allowed as a deduction under section 37(1) in the hands of the pharmaceutical companies?
HELD THAT:- In any case, the coordinate bench decision relied upon by the learned CIT(A) did not take into account another coordinate bench decision in the case of Liva Healthcare [2016 (9) TMI 856 - ITAT MUMBAI] and Hon”ble HP High Court”s judgment in the case of Confederation of Indian Pharmaceutical Industry [2013 (7) TMI 387 - HIMACHAL PRADESH HIGH COURT], which were rendered prior to that date but not taken into account by the coordinate bench. As to what should be precedence value of such a coordinate bench decision, we find guidance from Hon”ble AP High Court”s full bench decision in the case of CIT Vs B R Constructions [1992 (6) TMI 13 - ANDHRA PRADESH HIGH COURT] wherein Their Lordships has observed that a “precedent ceases to be a binding precedent … (iii) when it is inconsistent with the earlier decisions of the same rank; and (iv) when it is rendered per incuriam”. Clearly, therefore, the decisions which disregard earlier binding decisions on the same issue, “cease to be a binding judicial precedent”, and the coordinate bench decision in assessee”s own case thus ceases to be a binding precedent.
As the regulations prohibiting the acceptance of freebies by the medical professionals provide, under section 20A of the Indian Medical Council Act 1956 read with rule 6.8 of Indian Medical Council (Professional conduct, Etiquette and Ethics) Regulations, 2002, as amended from time to time, that such freebies cannot be lawfully accepted by medical professionals, and, therefore, any expenditure incurred for extending these freebies to the medical professionals is for a “purpose which is prohibited by law”. On these facts, therefore, Explanation to Section 37(1) is clearly attracted.
It is an open secret, secret if it is, that all these freebies extended by the pharmaceutical companies to the medical professionals, more often than not, come with strings attached, and that is what makes the expenditure in question for a purpose which is, as discussed earlier, “prohibited by law”. The plea of the learned counsel that these regulations do not bind pharmaceutical companies, and, therefore, extending these freebies to medical professionals canot be treated as “prohibited by law” is thus wholly irrelevant in the present context. What is material is that the expenditure in question is incurred for the purposes which are prohibited in law, and that is what disqualifies the expenditure in question from deduction under section 37(1) by virtue of Explanation thereto. The freebies from pharmaceutical companies cannot, under section 20A of the Indian Medical Council Act 1956 read with rule 6.8 of Indian Medical Council (Professional conduct, Etiquette and Ethics) Regulations, 2002, as amended from time to time, be lawfully accepted by medical professionals and, therefore, an extension of such freebies is for a purpose “prohibited by law”. The stand of the Assessing Officer cannot, therefore, be faulted.
The more we ponder about the rationale of PHL Pharma decision [2017 (1) TMI 771 - ITAT MUMBAI] the more convinced we are that this decision calls for reconsideration by a larger bench. In our humble understanding, conclusions arrived in the said decision do not reflect the correct legal position, and the same is the position with respect to a large number of other coordinate bench decisions following the said decision or following the line of reasoning in the said decision- as discussed above.
There is, thus, no meeting ground between these two diametrically opposed schools of thought- one followed by PHL Pharma (supra), and the other followed by Liva Healthcare [2016 (9) TMI 856 - ITAT MUMBAI]. As a coordinate bench of equal strength, it is not for us to disregard the decisions in the case of PHL Pharma [2017 (1) TMI 771 - ITAT MUMBAI] but, with due respect though without the slightest hesitation, we do indeed have our considered reservations on its correctness.
Taking a cue from the path so guided by Hon”ble Supreme Court in the case of Paras Laminates [1990 (8) TMI 140 - SUPREME COURT] we recommend constitution of a bench of three or more Members to consider the question as to whether or not an item of expenditure on account of freebies to medical professionals, which is hit by rule 6.8.1 of Indian Medical Council (Professional Conduct, Etiquette and Ethics) Regulations, 2002- as amended from time to time, read with section 20A of the Indian Medical Council Act 1956, can be allowed as a deduction under section 37(1) of the Income Tax Act, 1961 read with Explanation thereto, in the hands of the pharmaceutical companies.
Matter referred to larger bench.
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2021 (10) TMI 793
Exemption u/s 11 - charitable activity u/s 2(15) - HELD THAT:- As decided in own case [2021 (10) TMI 728 - ITAT BANGALORE] assessee is a charitable society and is not primarily driven by profit motive, therefore, the proviso to section 2(15) of the I.T.Act does not have application to the assessee. Thus we hold that the assessee is not hit by proviso to section 2(15) of the I.T.Act. Accordingly, the A.O. is directed to grant benefit of exemption u/s 11 of the I.T.Act for the relevant assessment year.
Disallowance of depreciation - cost of assets as claimed as application of income - double deduction - HELD THAT:- Identical issue was decided in favour of the assessee by the order of the Tribunal in the case of Bangalore Metropolitan Transport Corporation [2019 (8) TMI 1125 - ITAT BANGALORE] - In the instant case, the concerned assessment year being 2009-2010, the amendment to section 11(6) of the I.T.Act by the Finance (No.2) Act, 2014 will not have application. Accordingly, we direct the A.O. to grant depreciation on the assets irrespective of the fact that the cost of assets is claimed as application of income. It is ordered accordingly.
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2021 (10) TMI 792
Bogus LTCG - Violation of principles of natural justice - assessee was subjected to search u/s 132 - addition in the hands of assessee were not supplied to the assessee nor any opportunity was provided to cross verify the persons whose statement were utilized against the assessee - HELD THAT:- Nowhere in the assessment order any detail of alleged report of the Investigation wing is available nor copy of the same has been filed before us. It is also not proved that in which statement the name of assessee was taken by so-called brokers engaged in providing accommodation entry. There is also no whisper that whether the assessee was provided an opportunity to go through material gathered by the revenue authorities. Nor any opportunity seems to have been provided to cross examine those persons whose statements were used to make addition in the hands of assessee. There seems to be a clear violation of principles of natural justices and it is judicially settled that in case any addition is made in the hands of assessee on the basis of any material gathered behind the assessee in the form of documentary material or statement of any 3rd party then before making addition in the hands of assessee proper opportunity of cross examining and opportunity to reply to such material gathered behind the assessee is mandatory before taking any adverse view or making any addition in the hands of assessee - additions for the alleged bogus LTCG and unexplained expenditure are unjustified and liable to be deleted.
Bogus LTCG - Whether no incriminating material pertaining to these additions were found during the course of search and the additions are based purely on the statement given during the course of search which was subsequently retracted? - HELD THAT:- No merit in the contention of ssessee that the alleged addition is purely based on the statement recorded during the course of search. Ld. AO has extensively dealt with the issue by referring to various material gathered before the search, though not specifically related to the assessee but related to such type of transaction carried out in some other cases and in the statement during the course of search assessee has clearly spelt out to have accepted the accommodation entry and further ld. AO made enquiries about the purchasers of the equity shares, their bank accounts and other details as mentioned in the assessment order. Therefore, since addition is not based purely on the statement recorded during the course of search, this legal issue raised in ground stands dismissed.
Whether earning Long Term Capital Gain is genuine and condition of section 10(38) of the Act are fulfilled and the addition for commission payment is not based on any evidences? - From perusal of the above finding of the Coordinate Bench of Mumbai in the case of Amit Mafatlal Shah [2020 (4) TMI 894 - ITAT MUMBAI]we find that this decision is squarely applicable on the facts of the instant appeal and we thus have no hesitation to hold that the assessee has rightly claimed the exemption u/s 10(38) of the Act from sale of equity shares of PCSL and also addition for unexplained expenditure is uncalled for.
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2021 (10) TMI 798
Revision u/s 263 by CIT - respondent committed a default of not computing the book profit u/s 115JB - non furnishing of particulars of MAT calculation u/s 115JB in the return of income - ITAT deleted the penalty - HELD THAT:- The question of law as proposed states “for non furnishing of particulars of MAT calculation u/s 115JB in the return of income ”. The fact is the particulars have infact been furnished. Otherwise how could, in the order passed under Section 263 of the Act, the Commissioner of Income Tax state “ - After going through the above mentioned assessment order and the records of the assessee, it was observed that prima-facie the assessment order suffered, inter alia, from the following errors i.e., the total income was assessed under the normal provisions and the book profit of ₹ 14,44,95,320/- was not assessed as income under Section 115JB of the Income Tax Act, 1961”. If he has to assess the book profit of ₹ 14,44,95,320/-, certainly the particulars of MAT calculation must have been available before the concerned officer.
In any event, if such particulars, which according to Mr. Suresh Kumar are mandatorily to be furnished by the assessee, which is a company, before the original assessment order was passed, the Assessing Officer would have certainly called for those particulars from the assessee. In any event, even assuming for a moment that such particulars were not furnished but only the return of income was filed showing the income tax payable on the total income as computed under the said Act, that cannot amount to concealment of particulars of income or furnish inaccurate particulars of income. Even the attempt, if any as alleged, to reduce tax liability by claiming wrong deduction cannot amount to concealing the particulars of income or furnishing inaccurate particulars of such income.
Tribunal has not committed any perversity or applied incorrect principles to the given facts and when the facts and circumstances are properly analysed and correct test is applied to decide the issue at hand - No substantial question of law.
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2021 (10) TMI 791
TP Adjustment in respect of Specified Domestic Transactions - Reference to the TPO in respect of specified domestic transactions - claim of the expenditure in accordance with provisions of section 40A(2) - HELD THAT:- As consistent with the view taken by the Tribunal in AY 2015- 16 [2021 (2) TMI 793 - ITAT BANGALORE], we hold that the reference to the TPO in respect of specified domestic transaction mentioned in section 92BA(i) of the Act is not valid as the said provision has been omitted. Accordingly, we restore the matter to the file of the A.O. with a direction to examine the claim of the expenditure in accordance with the provisions of section 40A(2) of the Act. Appeal filed by the assessee is treated as allowed for statistical purposes.
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2021 (10) TMI 790
Losses written off - ‘business loss’ or ‘capital loss - allowability of sum advanced to Blue Ocean Cruises Lines Pvt. Ltd., for the purpose of getting 30% shareholding in a joint venture to be set up between assessee-company and Mr.Oneil Raina for investing into M/s Blue Ocean Crusies Lines Pvt. Ltd.- HELD THAT:- As in the present case, the facts shows that assessee made investment of ₹ 5 crore by the shares of M/s Blue Ocean Cruises Lines Pvt. Ltd. and written off the claim as loss. The present facts of the assessee’s case shows that the investment was made not for the purpose of expansion of business activity but it was made with a view to creating capital asset in the form of holding shares. As relying on United Breweries Ltd.[2010 (1) TMI 86 - KARNATAKA HIGH COURT] we are of the opinion that the claim of assessee cannot be held as ‘business loss’ rather it is a ‘capital loss’. Accordingly, this ground of the assessee is dismissed.
Additional ground with the petition - Disallowing the business loss u/s 37(1) - whether advances made were in the nature of trade and not for earning dividend, and since the same was done in the course of business, it would result in a business loss and the same would be allowable as a Business Loss u/s 37(1) - HELD THAT:- In our opinion, there is a good and sufficient reason in not raising this ground on earlier occasion. Accordingly relying on the judgment of NTPC [1996 (12) TMI 7 - SUPREME COURT], we admit the additional grounds, as there is no question of investigation of fresh facts on this issue. Accordingly additional ground is admitted.
Treatment of investment in shares, lee deposits – MDLR airlines and miscellaneous deposits as ‘business loss’ - With regard to investment in shares as ‘business loss’, we have already held in earlier paragraph that it is a ‘capital loss’ and hence there is no question of adjudicating this ground on this issue by way of additional ground. Accordingly, with regard to the treatment of loss of investment is a ‘capital loss’, therefore, additional ground related to this issue is dismissed.
MDLR airlines and miscellaneous deposits - Before the lower authorities, the assessee claimed bad debt u/s 36(2) of the Act which was disallowed on the reason it has not satisfied on decisions laid down in sec. 36(2) of the Act. However, before us, the assessee claimed it as deduction u/s 37 of the Act and which was not examined by the lower authorities. Hence, in the interest of justice, we remit the issue to the files of AO for fresh consideration. The assessee has to place necessary evidences viz., name and address of the parties concerned. With these observations, these two issues are remitted to the files of AO for fresh consideration.
Addition u/s 41(1) - HELD THAT:- The assessee has shown the above amount as outstanding from 5 parties and no confirmation was filed by the assessee from those 5 parties. Hence, the above amount was considered as cessation of liability u/s 41(1) of the Act. Before us also assessee was not able to produce any evidence to suggest that the said amount was actually outstanding on the date of balance sheet. Hence, lower authorities justified in treating it as a cessational liability by invoking the provisions of sec. 41(1) of the Act.
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2021 (10) TMI 789
Revision u/s 263 by CIT - lack of inquiry v/s inadequate inquiry - CIT revising the assessment passed u/s 143(3) read with section 153A - failure of the assessee to establish with evidence that the AO had inquired and considered - As per CIT assessment which was completed u/s 143(3) read with section 153A was completed accepting the returned income of Rs. NIL without the report of the TPO - CIT observed that the assessment had been completed hurriedly and without waiting for the report of the TPO which was subsequently received by the AO vide order dated 28.10.2016 wherein an adjustment was proposed by him on account of adjustment to ALP of the international transaction - HELD THAT:- A reference had been made to the TPO to ascertain the arms length price of the international transaction entered into by the assessee during the course of earlier assessment proceedings as early as in July 2013 whereas the search and seizure operation was carried out in September, 2013. AO, subsequently, completed the assessment u/s 143 (3) read with section 153A of the Act at the returned income without waiting for the report of the Transfer Pricing Officer. Although, it is the assessee’s contention that the AO was aware of the reference so made, however it is undisputed that the AO did not deem it necessary to wait for the said report while passing the Assessment Order.
This Bench, during the course of hearing, specifically asked the Ld. AR, to demonstrate with the evidence if the AO had required the assessee to establish that the international transaction was at arms length before reaching the conclusion that no reference to the TPO was required - AR expressed his inability to file any documents. AR was repeatedly asked by this Bench if he could substantiate the stand of the assessse that the AO had initiated inquiry into this aspect of the case and had, thereafter, accepted the return of the assessee only after going through the submissions and documents submitted by the assessee and after being duly satisfied that the returned income of the assessee was to be accepted.
The assessee has also not bothered to file a paper book in this regard which could enable us to consider the entire factual matrix of the case on the line of argument of the Ld. AR. Thus, apparently from the records and as per the observations of the Ld. PR. CIT, coupled with the failure of the assessee to establish with evidence that the AO had inquired and considered and, thereafter, adjudicated the issue, we are constrained to hold that this is a clear case of lack of inquiry by the AO. Even the assessment order is very cryptic in as much as it does not even mention as to what issues were before the AO. In such circumstances, we hold that the order passed by the Ld. Pr. CIT revising the assessment passed u/s 143(3) read with section 153A is completely in order and we uphold the same. - Decided against assessee.
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2021 (10) TMI 797
Reopening of assessment u/s 147 - Non speaking order disposing of objections against reopening - information received from ADIT, Kolkata is about one M/s.Shubhshree Barter Pvt. Ltd. where high value transactions have been noticed as assessee as one of the beneficiary - main emphasis is about the order of disposing of the objections - According to the petitioner, it is not a speaking order - HELD THAT:- At Annexure-F what all the respondent Assessing Officer has opined that the case is reopened on the basis of tangible information and the conclusive evidence has been gathered that the assessee has escaped the income chargeable to tax during the Financial Year 2012-13 and the Assessment Year 2013-14. According to him, genuineness of the transaction will be found out only during the assessment or after the assessment is completed. There is a sufficient reason to believe that the income has escaped assessment and the reasons for reopening the assessment are correctly recorded.
We could notice that this order lacks any reason, although there is no requirement for elaborate reasons, but a speaking order needs to really speak the mind of the officer exercising the quasi judicial function, this not being an empty formality even if he has a reason to believe that the income has escaped the assessment and, therefore, the objections are not to be accepted. It becomes the bounden duty to exercise this satisfaction in clear and specific words so as to also convey to the party concerned that in his exercise of discharge of his duty as a quasi judicial authority, he has arrived at a conclusion, so far as objections are reassessed.
There may not be requirement of exhaustive elaborate essay, while discussing the reasons, but the same has to be clear in conclusion, satisfying the need of the same being a speaking order.
Material, which has been placed before us is the inquiry report in the case of M/s. Shubhshree Barter Pvt. Ltd. to satisfy this Court as to why the scrutiny assessment for the Assessment Year 2013-14 has been necessitated. They are presently not to be entered into because of the absence of any reason and non-compliance of the directions in GKN Driveshafts (INDIA) Ltd. [2002 (11) TMI 7 - SUPREME COURT].
Disposal of this matter is needed as dealing with the objections to the reasons recorded is not a static formality to be undergone to rush to the forming of assessment. Even while accepting the requirements of a focus on substantive justice in the process, it is a vital step towards that and hence mandate in GKN Driveshafts (INDIA) Ltd. (supra) must not be undermined, nor can that be diluted.
Therefore, on quashing the order of assessment and without quashing the notice, we deem it appropriate to direct the Assessing Officer to pass a speaking order taking into consideration the objections raised by the petitioner. It is not the length of the order, which is the reason of our remand, it is the cryptic manner of dealing without any semblance of reasons which necessitated such remand. Let the said task be completed at the earliest. We have ascertained from the learned counsel that there is nothing further that needs to be added to the written objections to the reasons recorded.
Order passed by the Assessing Officer disposes of objections of the petitioner dated 27th July, 2021 and the order of assessment dated 28th September, 2021 are quashed and set aside.
On the strength of the objections raised by the petitioner, the respondent shall decide these objections in accordance with law as discussed hereinabove within two weeks.
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2021 (10) TMI 788
Assessment u/s 153A - assessment framed on the basis of audit report u/s. 142(2A) - HELD THAT:- Since undisputedly the issue raised before us, of the assessment order passed being barred by limitation on account of an invalid reference made for special audit, arises in the background of facts which are identical to that in the case of M/s. Sunder Mal Satpal [2018 (6) TMI 963 - ITAT CHANDIGARH] it stands covered by the decision of the ITAT in the said case, following which we hold that the reference for special audit in the present cases, u/s. 142(A) of the Act, is invalid and the assessment orders so passed in the extended time are held to be barred by limitation. - Decided in favour of assessee.
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2021 (10) TMI 787
Revision u/s 263 by CIT - delay caused by the assessee in depositing employees contribution to PF and ESI within the due date - AO has not made any disallowance u/s. 36(1)(va) read with section 2(24)(x) of the Act when there was the delay on the part of the assessee while depositing the employees contribution to Provident Fund and Employees State Insurance in the relevant funds - Scope of amendment - HELD THAT:- We note that assessee has deposited the employees contribution towards PF & ESI before filing of return u/s. 139(1) of the Act - Having taken note of this fact and also the fact that this Tribunal already taken a view that the amendment brought in by Finance Act, 2021 on this issue has been held to be prospective in nature in the case of Shri Harendra Nath Biswas [2021 (7) TMI 942 - ITAT KOLKATA] wherein it was held that the amendment/explanation brought in by Finance Act, 2021 is prospective in nature and is not applicable to the earlier years - amendment/explanation brought in by Finance Act, 2021 with effect from 01.04.2021 on this issue is prospective and taking note that the relevant assessment year is 2015-16, we are of the opinion that the amendment/explanation brought in by Finance Act, 2021 cannot be used to unsettle the settled position of law passed by the Hon'ble jurisdictional High Court in the case of Vijayshree Ltd.[2011 (9) TMI 30 - CALCUTTA HIGH COURT]since there is no retrospective legislative over-ruling.
So therefore it is a plausible view, therefore, the Ld. PCIT could not have disturbed the action of the A.O. without holding it unsustainable in law as held by the Hon'ble Supreme Court in the case of Malabar Industrial Co. Ltd. v. CIT [2000 (2) TMI 10 - SUPREME COURT] - Therefore, we hold that the Ld. PCIT did not have jurisdiction in invoking section 263 of the Act since the A.O's view was a plausible view - Decided in favour of assessee.
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2021 (10) TMI 796
Reopening of assessment u/s 147 - reasons to believe - whether no failure to truly and fully disclose material facts and in any case, it was a mere case of change of opinion and there was no fresh tangible material for initiating reassessment proceedings? - HELD THAT:- In the present case there is no failure on the part of the assessee to truly and fully, disclose all primary facts necessary for the purpose of assessment. It cannot be stated that the condition precedent to the reopening of the assessment beyond the period of four years has been fulfilled.
As only as an attempt to take the case out of the restrictions imposed by the proviso to Section 147 of the Act. The other reason given in the reason for reopening of the assessment is that the assessee had shown 35 constructed units valuing as on 31.03.2012. However, no income under the head income from House Property has been offered by the assessee during the year under consideration. This reason is not mentioned in the reasons to believe that the income has escaped assessment by reason of failure on the part of the assessee to disclose fully and truly all material facts. Thus, this reason too cannot be considering as fulfilling the condition precedent to the reopening of assessment beyond the period of four years as per the applicable proviso to Section 147 of the Act. - Decided in favour of assessee.
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2021 (10) TMI 786
Disallowance of exemption u/s 54F - villa was registered on 21.02.2015 i.e. prior to transfer of original asset i.e. 13.11.2015 - Also assessee has not paid for purchase of new residential house but it is for registration charges stamp duty charges and interior works - HELD THAT:- There is no strict requirement regarding completion of construction u/s 54F(1) to be entitled for availing exemption. The passport to derive benefit under sec. 54F(1) is investment in construction of property within the period required u/s. 54F(1) or to invest in residential property within the stipulated time for enabling deduction u/s 54F of the Act.
Hon'ble Karnataka High Court in decision of CIT vs. Sambandam Udaykumar [2012 (3) TMI 80 - KARNATAKA HIGH COURT] took the view that, under provisions of section 54F of the Act, the condition preceded is that, capital gains realised from sale of capital asset should have been parted by assessee and invested or constructed a residential house, as the case may be. Hon'ble court also observed that, the essence of the purpose of section 54F, is whether, the assessee who received the capital gain has invested in a house. Once it is demonstrated that the consideration received on transfer of capital asset has been invested in or construction of residential house, even though the construction is not complete in all respect as required under law, assessee cannot be denied benefit u/s 54F.
Respectfully applying ration of Hon'ble Karnataka High Court in case of CIT Vs. Sambandam [2012 (3) TMI 80 - KARNATAKA HIGH COURT] we hold that assessee is eligible during the year under consideration. However, the amount said to have been spent on interior decoration can't be granted since it is not for the purpose of making the house into habitats condition. see ALEEM FAZELBHOY. VERSUS DEPUTY COMMISSIONER OF INCOME-TAX, CIRCLE-6 (1), MUMBAI. [2006 (6) TMI 139 - ITAT BOMBAY-G] - AO is directed to compute the proportionate deduction - Decided in favour of assessee partly.
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2021 (10) TMI 785
Penalty levied u/s. 271(1)(c) - undisclosed income surrendered during the course of survey - HELD THAT:- We find that it is a judiciary settled proposition that where the income declared during the course of survey is offered to tax in the return of income filed within the due date prescribed u/s. 139(1) of the Act and the assessing officer accepts the income declared in the return, the assessee cannot be held to have concealed the particulars of income nor or has furnishing inaccurate particulars of income because the due date of filing return of income did not expire and the particulars furnished in the return of income have not found to be untrue.
Assessee cannot be held to have concealed or furnished the particulars of income since the income declared during the course of survey has been offered to tax in the return of income filed before the due date of filing the return of income. We, thus, find no reason to interfere in the finding of Ld. CIT(A) and the same stands confirm. Grounds raised by the revenue are dismissed.
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2021 (10) TMI 784
Estimation of income due to non–availability of the information at the time of assessment - addition of 8% of the total turnover as the business income of the appellant - case was selected for scrutiny under CASS - HELD THAT:- In the given case, the assessee has dealt with the trading only through banking channel. It is not proved anything against the assessee that it has involved any bogus transaction or any other activities involving suppression of profit. Merely because the profit declared is less, the authorities cannot resort to estimation.
We direct the Assessing Officer to estimate the profit based on the previous assessment year’s actual profit, which was accepted by the Revenue. The assessee has declared 0.62% in assessment year 2010– 11 and 0.42% in assessment year 2011–12. The average profit declared by the assessee in the above assessment year is 0.52%. The Assessing Officer can estimate 0.52% as the profit for this assessment year since the assessee has already declared 0.08%, the balance 0.44% can be added to the profit for this assessment year. We direct the Assessing Officer to estimate the income as per above direction considering the fact that the profit has to be assessed based on the actual and in case, it is forced to estimate, it has to be based on past declared profit, which the Revenue has accepted. Therefore, the grounds no.1 and 2 raised by the assessee are partly allowed.
Penalty u/s 271(1)(c) - HELD THAT:- In the given case, we noticed that the AO himself estimated the income @ 8% and the same was sustained by the Ld. CIT(A). The assessee filed quantum appeal and in that we have directed the AO to restrict the profit earned by the assessee which was declared and accepted by the Revenue based on earlier assessment years, thus penalty levied by the AO estimating the income is not sustainable. Accordingly, we direct the AO to delete the penalty levied by the AO.
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2021 (10) TMI 783
Penalty levied u/s. 271(1)(c) - addition made on account of disallowance under the normal provision of the Income Tax Act - HELD THAT:- We have also gone through the judicial pronouncement of Price Waterhouse Coopers (P) Ltd. [2012 (9) TMI 775 - SUPREME COURT] wherein held that assessee firm filed its return of income. It was a bonafide and inadvertent error. Assessee was not guilty of either furnishing inaccurate particulars or attempting to conceal its income, imposition of penalty was unjustified - assessee had accounted the provision for interest twice by mistake on which the Assessing Officer has levied penalty for furnishing inaccurate particulars of income.
As noticed that assessee itself shown the said expenditure as income in the subsequent assessment year 2009-10 and demonstrated from the copy of return that the same was filed on 30th Sep, 2008 before detecting the discrepancy under scrutiny assessment. Therefore, necessary correction has already been done by the assessee before detecting the mistake pointed out by the Assessing Officer in the assessment proceedings for the year under consideration - We consider that decision of ld. CIT(A) in sustaining the impugned penalty is not justified. Therefore, we direct the Assessing Officer to delete the impugned penalty. Accordingly, this appeal of the assessee is allowed.
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2021 (10) TMI 782
TP Adjustment - upward adjustment on account of brand promotion expenditure (AMP) - international transaction or not? - HELD THAT:- As relying on Tribunal in the assessee’s own case for the AY 2011-12. [2017 (3) TMI 1162 - ITAT CHENNAI] and in the case of M/s.Maruti Suzuki India Ltd., [2015 (12) TMI 634 - DELHI HIGH COURT] the Ld.CIT(A) directed the AO to delete the Transfer Pricing upward adjustment - DR could not controverted to the above findings of the Tribunal by filing the High Court decision having modified or reversed or altered that AMP spent of the assessee is not an international transaction and the addition is deleted - We, therefore, find no infirmity in the order passed by the Ld.CIT(A). Accordingly, the ground raised by the Revenue is dismissed.
Addition u/s.36(1)(va) r.w.s.2(24)(x) - remittance pertaining to employee’s contribution to PF & ESI beyond the due dates - Assessee has submitted that since the entire amount has been remitted before the due date for filing of return of income, the same should be allowed as deduction under section 43B - HELD THAT:- By following the decision of Hon'ble High Court of Madras in the case of CIT v. Industrial Security & Intelligence India Pvt. Ltd. [2015 (7) TMI 1063 - MADRAS HIGH COURT] and the Ld.CIT(A) directed the AO to allow the deduction. Just because, the Revenue has preferred the Review Petition before the Hon’ble High Court of Madras, the decision already rendered by the Hon’ble Madras High Court cannot be held as invalid until and unless the said order is modified or altered. Thus, we are of the view that the Ld.CIT(A) has rightly followed the decision of the Hon’ble Madras High Court and we find no infirmity in the Appellate Order passed by the Ld.CIT(A) on this issue. Accordingly, the ground raised by the Revenue stands dismissed.
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2021 (10) TMI 781
Revision u/s 263 by CIT - unexplained cash credit under section 68 - according to PCIT, the Assessing Officer has not applied his mind on settlement made by the assessee - HELD THAT:- The present assessment order passed by the Assessing Officer under section 143(3) read with section 254 on the directions of co-ordinate Bench of this Tribunal in order to verify the claim of the assessee that assessee has settled liabilities. AO duly verified the same based on the information submitted by the assessee - assessee has settled the liabilities based on the various rights given to the parties of the picture TRISHAKTI and assessee has submitted the copies of the document/ pro note before the Assessing Officer and Assessing Officer has duly verified and accepted the settlement made by the assessee.
Now, the learned PCIT verified the same and verified the various submissions made by the assessee in his 263 proceedings and he once again given a direction to the Assessing Officer to verify the settlement made by the assessee whether such settlement is proper as per law and according to PCIT, the Assessing Officer has not applied his mind and duly verified the above said settlement. In our considered view we noticed that Assessing Officer has verified the information submitted by the assessee based on the directions from co-ordinate Bench of this Tribunal and as such, the learned PCIT has not found anything to prove that assessment order is erroneous or prejudicial to the interest of the Revenue except expressing his doubt on the proceedings. - Decided in favour of assessee.
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2021 (10) TMI 780
Deduction u/s 10A - income eligible undertaking by ignoring the CBDT’s Circular no.7/DV/2013, dated 16th July 2013 - CIT(A) directed the AO to allow the deduction claimed u/s 10A of the Act by the assessee to the extent of income of eligible undertaking - HELD THAT:- On a careful perusal of the order of the learned CIT(A) we do not find any valid reason much less a cogent reason to reverse the findings of the learned CIT(A). The above direction is, in our view, just and proper hence does not call for any interference. We have also gone through the decision in Yokogawa India Ltd. [2011 (8) TMI 845 - KARNATAKA HIGH COURT] relied upon by the learned CIT(A) and found that the issue for our adjudication is squarely covered by the aforesaid decision of the Hon'ble Supreme Court. Revenue has also not brought any material contrary to the stand taken by the learned CIT(A) which force us to take a decision other than the decision taken by the learned CIT(A). Consequently, we uphold the order of the learned CIT(A) by dismissing the ground raised by the Revenue.
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2021 (10) TMI 779
Addition u/s 68 - unsecured loan - unexplained cash credit - addition made as no proof to identity, creditworthiness and genuineness of the transactions - HELD THAT:- The said loans have been received by the assessee by way of either account payee cheque or RTGS and the assessee has also paid interest to the creditor as well. The assessee has also cleared off by making repayment of the loans and advances received from the aforesaid four parties in the subsequent assessment year hence, in our view, the AO was indeed not justified in making the addition on account of unsecured loan as unexplained under section 68 - notice from the aforesaid which becomes clear that the assessee has discharged the primary onus by proving the identity of the creditor, genuineness of the transaction as well as the creditworthiness of the creditors. The loan so obtained was not only reflected in the respective books of account and also bank statements - We are of the view that Commissioner (Appeals) was justified in deleting the addition made by the AO. Consequently, we uphold the order of the learned CIT(A) by dismissing the grounds of appeal raised by the Revenue.
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2021 (10) TMI 778
Deduction u/s 80P(2)(d) - interest income received from co-operative bank - HELD THAT:- This issue is covered by the decision of ITAT, Mumbai in the case Sea Grean Co-operative Housing Society Ltd. [2017 (3) TMI 1728 - ITAT MUMBAI], thus we direct the AO to allow the claim of deduction under section 80P(2)(d) of the Act with respect to interest income earned on deposits made with co-operative Bank. - Decided in favour of assessee.
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2021 (10) TMI 754
TP Adjustment - arm’s length price adjustment in respect of the corporate guarantee issued by the assessee in respect of its associated enterprise - international transaction or not? - HELD THAT:- As in the light of the above judicial development, the ratio of a series of decisions of this Tribunal, including in the cases of assesse’s own case [2016 (5) TMI 633 - ITAT MUMBAI] and in the case of Micro Ink Ltd [2015 (12) TMI 143 - ITAT AHMEDABAD] and Bharati Airtel Ltd Vs ACIT [2014 (11) TMI 10 - ITAT HYDERABAD] holding that issuance of corporate guarantees does not constitute ‘international transaction’ under section 92B does not hold good in law any longer. The fact that these words are of non-jurisdictional High Court, in view of anything contrary thereto having been expressed by Hon’ble jurisdictional High Court and for the detailed reasons set out in our analysis earlier, does not make any material difference. Many of these decisions are authored by one of us (i.e. the Vice President) but that does not make any difference either. Once a higher judicial forum has expressed it’s views on an issue, our views have to make way for the same. We, therefore, hold that the issuance of corporate guarantee by the assessee did constitute an international transaction, and, to that extent, reject the plea of the assessee.
Whether determination of arm’s length price at 3% is sustainable in law? - As held by Hon’ble jurisdictional High Court in the case of CIT Vs Everest Kento Cylinders Ltd [2015 (5) TMI 395 - BOMBAY HIGH COURT] rejected similar comparison of corporate guarantees with bank guarantees and upheld determination of arm’s length price at 0.5% - We, therefore, reject the determination of 3% arm’s length price by the authorities below and direct the Assessing Officer to adopt 0.5% as an arm’s length consideration for the corporate guarantee issued by the assessee in favour of its AE. To this limited extent, we uphold the plea of the assessee.
TP Adjustment on account of clinical trial services provided by the Appellant to its AE - Whether entity level margins are required to be compared, or whether margins on the basis of split profit and loss account are required to be compared with the margins on transactions with AEs? - TPO has taken the entity level margins and when the objection was raised before the DRP, the DRP also confirmed the said action - HELD THAT:- We find that it is a well settled legal position that when relevant segmental results are available, and the segment computations are not in dispute, the entity level results have to make way for the segmental profit computations. We have also noted that in a subsequent year, i.e. assessment year 2013-14, the TPO himself has accepted this approach of the assessee- as evident from the TPO’s order placed , and the transfer pricing study report. There is thus no justification for disregarding segmental results for the present assessment year. In this view of the matter, we uphold the plea of the assessee in principle, and remit the matter to the file to the assessment stage for reconsideration in the above light.
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2021 (10) TMI 753
Delayed payment of employees’ contribution towards PF & ESI - whether assessee in depositing employees contribution to PF and ESI within the due date? - Scope of amendment - HELD THAT:- It is an admitted fact which has not been disputed by either by the AO or the Ld. CIT(A) that the assessee has remitted the employees’ contribution towards PF & ESI before filing of return u/s. 139(1) of the Act. Having taken note of this fact and also the fact that this Tribunal has already taken a view that the amendment brought in by Finance Act, 2021 on this issue has been held to be prospective in nature in the case of Shri Harendra Nath Biswas [2021 (7) TMI 942 - ITAT KOLKATA], therefore, we reiterate the same view that the amendment/explanation brought in by Finance Act, 2021 with effect from 01.04.2021 on this issue is prospective; and taking note that the relevant assessment years are 2019-20 and 2017-18, the ibid explanation brought in by Finance Act, 2021, cannot be used/applied to unsettle the settled position of law since there is no retrospective legislative over-ruling.
In the light of the aforesaid decision of the coordinate Bench of this Tribunal, we respectfully follow the same which is in consonance with the decision of the Hon’ble Calcutta High Court in Vijayshree Ltd.[2011 (9) TMI 30 - CALCUTTA HIGH COURT] and allow the appeals of the assessee and direct the AO to delete the addition made in this regard in all the above three appeals.
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2021 (10) TMI 777
Exemption u/s 54F - Denial of deduction as assessee was the owner of two houses - assessee on the date of transfer of the original asset owned more than one residential house and that the assessee could not substantiate his claim of having invested in a new residential house on the basis of supporting documentary evidence - HELD THAT:- It is a matter of fact borne from the record that both the lower authorities had adjudicated the issue in hand considering the fact that the property in question, viz. Indiabulls Greens, Panvel was an under construction property on the date of transfer of the original asset. In our considered view, the department on the basis of certain facts which are not borne from the record is trying to change the entire complexion of the case and is seeking to improve upon the assessment, which we are afraid is not permissible under Sec. 254 of the Act
We find that the D.R had neither placed on record any material in support of the aforesaid claim of the revenue nor raised any contention to the said effect before us. In our considered view, the department on the basis of its totally unsubstantiated claim is trying to build up a fresh case on the basis of certain facts which are not available on record.
It was in the backdrop of the aforesaid admitted facts i.e the property in question, viz. Indiabulls Greens, Panvel was an under construction property on the date of transfer of the original asset that the CIT(A) had thereafter adjudicated the issue under consideration. Backed by our aforesaid deliberations, we are of the considered view that the revenue by now raising the aforesaid claim is trying to change the entire complexion of the case by making a complete volte face and improving upon the assessment by canvassing facts which are not borne from the records.
Aforesaid claim raised by the revenue before us, which as observed by us hereinabove clearly militates against the factual position that was admitted by the A.O in the course of the assessment proceedings and formed the very basis of framing the assessment order cannot be accepted, specifically when neither any material in support thereof is available on record or filed in the course of the proceedings before us, nor any contention to the said effect had been raised by the ld. D.R. The Grounds of appeal No. 1 & 2 are dismissed in terms of our aforesaid observations.
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2021 (10) TMI 776
Penalty levied u/s 271 CA - violation of provisions of section 206C - HELD THAT:- As details in form 27BA certified by Chartered Accountant stating that the buyer or licensee or lessee has furnished the return of income u/s 139 of the Act, after taking into account such amount for computing income in such return of income and has paid the tax due on income declared by him in such return of income and once assessee fulfills this condition it will not be treated as the assessee is in default and thus would be precluded from the levy of penalty u/s 271CA of the Act.
Though in the instant case the assessee has deposited TCS and interest thereon subsequently but even in cases where tax is not collected but the assessee furnishes the form 27BA of the Income Tax Rules, then also assessee is not held liable to have violated the provisions of section 206C.
We find that the case of the assessee is on a much better footing as tax collected at source is deposited, interest levied thereon have also been deposited and form 27BA of the IT Rules certified by Chartered Accountant containing all the details as required in the proviso to section 206C(6A) of the Act have been fulfilled. We therefore find no justification in the action taken by the Ld. AO of levying penalty u/s 271CA of the Act by treating the assessee in default. Accordingly, the penalty levied are deleted. Effective grounds raised by the assessee on the issue of levy of penalty u/s 271CA of the Act are allowed.
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Benami Property
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2021 (10) TMI 775
Benami purchase - real owner - onus to prove - property was the joint family property - Hindu Succession Act - right of daughters in property in partition - whether the title is presumed to vest with the person, in whose name the sale deed stands, and the burden of proof lies heavily on the person who sets up benami plea? - HELD THAT:- The appellants have not filed partition suit or issued notice till the demise of their father. Only after the demise of their father, the partition suit was instituted. The plaintiffs never claimed that the entire property was their absolute property. Their only contention was that the property was the joint family property and they are entitled to a particular share.
The Courts below have completely glossed over the material evidence in this case. When Ex.A.1 stands in the name of the late wife, the burden to show that it was purchased benami was only on the person who asserted that it was a benami transaction. The Courts below failed to take note of the fact that the defendants have failed to discharge the burden cast on them. The Courts below glossed over the fact that Ex.A.2 and Ex.A.3 were executed jointly by Sabapathy Iyer and his sons. Recitals in Ex.A.3 that the suit property is a joint family property has also been overlooked. If material evidence is ignored, that vitiates the findings. The Courts below have also failed to apply statutory presumption set out in Section 3(2) of the Benami Transactions (Prohibition) Act, 1988 - no hesitation to set aside the impugned judgment and decree and answer the substantial question of law in favour of the appellants.
Certain subsequent developments will have to be taken note of. Even according to the plaintiffs, the property in question was a joint family property. They concede that Sabapathy Iyer had a share in the suit property. When the suit was instituted, only sons could have been a part of the co-parcenery. In view of the amendment to Section 6 of the Hindu Succession Act vide Central Act 39 of 2005, as interpreted by the Hon'ble Supreme Court in Vineeta Sharma Vs. Rakesh Sharma [2020 (8) TMI 571 - SUPREME COURT] the daughters also will be entitled to equal share in the property. In that event, the share of Sabapathy Iyer was reduced to 1/7th share in the suit property. There is no dispute that Sabapathy Iyer had executed a Will in favour of defendants 2 to 4. The said Will had also been duly proved by the defendants in the manner known to law. No serious argument was advanced before me impeaching the said finding.
Thus confirm the finding of the Courts below that Ex.B.21 had been duly proved. 1/7th share of Sabapathy Iyer would devolve on defendants 2 to 4. Thus the plaintiffs as well as the fifth defendant Chandra Bai will be entitled to 6/63rd share each. Defendants 6 and 7 also will be entitled to 6/63rd share each. Defendants 2 to 4 will be entitled to 6/63rd share each and also will be entitled to Sabapathy Iyer's 1/7th share.
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Customs
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2021 (10) TMI 772
Applicability of precedent judgements - Refund of SAD - rejection on the ground of time limitation - N/N. 102/2007-Cus dt. 14/09/2007 - HELD THAT:- Learned Representatives fairly agree that the issue in appeal is subject-matter of difference of opinion by Hon'ble non-jurisdictional High Courts and that we do not have the benefit of guidance by Hon'ble jurisdictional High Court. There can be no dispute on the proposition that irrespective of whether or not the judgments of Hon'ble non-jurisdictional High Courts are binding on me, these judgments deserve utmost respect which implies that, at the minimum, these judgments are to be considered reasonable interpretations of the related legal and factual situation.
Doctrine of precedence only mandates that it is the ratio in the decision of higher courts to be followed, and not conclusions - when there is a reasonable interpretation of a legal and factual situation, which is favourable to the assessee, such an interpretation is to be adopted.
The denial of refund is bad in law and hence not sustainable - Appeal allowed - decided in favor of appellant.
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2021 (10) TMI 774
Application for extension of interim bail granted to the petitioner - Extension sought on the ground of excessive illness of wife, who is on one's deathbed - HELD THAT:- At this stage without going into rival contentions of the parties, the prima facie look at the photograph can be made wherein, the wife of the petitioner is almost lying in unconscious condition at home.
At this stage without embarking upon the merits of the case, it would be just and appropriate to extend the interim bail till the next date of hearing i.e. 16.11.2021.
Appeal disposed off.
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2021 (10) TMI 773
Grant of anticipatory bail - 39,60,000 Cigarettes - illegal clearance of consignment - consignment was cleared manually without making any entry by the Customs Department - HELD THAT:- This Court finds that it is very strange and surprising that 02 Departments i.e. Department of Customs, Customs Commissionerate, Ludhiana – respondent No.1 and Anti-Evasion Unit, Central Goods & Service Tax, Commissionerate, Ludhiana – respondent No.2, are fighting tooth and nail regarding fixing the liability as to how the consignment was cleared manually without making any entry by the Customs Department and as per stand of the Customs Department, there is a collusion of the official of the CGST Department with the petitioner and the other accused and in that process, the CGST Department is posing the petitioner as a Secret Informer/Source and has even filed a Secret Note under the signatures of Joint Commissioner, Central GST Commissionerate, Ludhiana, giving a clean chit to the petitioner – Sunil Dutt.
Taking note of the tardy, casual and irresponsible attitude of both the departments, this is deemed to be a fit case where the matter needs to be referred to the Central Bureau of Investigation (CBI) for conducting further investigation of the case and fix liability of the erring official(s) - appeal allowed by way of remand.
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2021 (10) TMI 771
Jurisdiction - power of DRI to issue SCN - section 28 of Customs Act - HELD THAT:- Since both sides agree that the case is covered by Cannon India, and that the SCN was issued by DRI, the impugned order arising out of the SCN cannot be sustained as per M/S CANON INDIA PRIVATE LIMITED VERSUS COMMISSIONER OF CUSTOMS [2021 (3) TMI 384 - SUPREME COURT], judgments of the Hon’ble Supreme Court in COMMISSIONER OF CUSTOMS, KANDLA VERSUS M/S. AGARWAL METALS AND ALLOYS [2021 (9) TMI 316 - SUPREME COURT], judgment of the Hon’ble High Court of Karnataka in SHRI MOHAN C. SUVARNA DIRECTOR (FINANCE AND ADMIN) M/S. GIVAUDAN INDIA PVT. LTD. VERSUS THE PRINCIPAL COMMISSIONER OF CUSTOMS, ADDITIONAL DIRECTOR GENERAL DIRECTORATE OF REVENUE INTELLIGENCE, BANGALORE [2021 (8) TMI 178 - KARNATAKA HIGH COURT]and judgment of the Hon’ble High Court of Madras (Madurai bench) in QUANTUM COAL ENERGY (P) LTD. VERSUS THE COMMISSIONER, OFFICE OF THE COMMISSIONER OF CUSTOMS, CUSTOM HOUSE, TUTICORIN [2021 (3) TMI 1034 - MADRAS HIGH COURT], we do not find it necessary to examine the merits of the case.
Appeal dismissed - decided against Revenue.
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Corporate Laws
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2021 (10) TMI 770
Composite Scheme of Amalgamation - seeking admission, fixing a date for hearing and final disposal of the Application as well as for a direction for publication to be effected and issuance of notices to the concerned authorities for objections, if any, to the Composite Scheme of Amalgamation contemplated between the Applicants - Section 230 to 232 of Companies Act, 2013 read with Rule 16 of the Companies (Compromise, Arrangements and Amalgamation) Rules, 2016 - condonation of delay of 72 days in filing the present petition - death of both the Counsels (being brothers) of the Applicant Companies due to Covid-19.
HELD THAT:- The delay is condoned - the Petition stands Admitted - the date of hearing of the Petition filed by the Petitioner Companies for approval of the Scheme is fixed for 28.09.2021.
Notice of the hearing shall be published in the newspapers namely, "Business Standard" in English and "Business Standard" in Hindi (Delhi edition) in not less than 40 days before the aforesaid date fixed for hearing.
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Insolvency & Bankruptcy
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2021 (10) TMI 769
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - existence of debt and dispute or not - HELD THAT:- It was informed that the 2nd motion was pending wherein there are objections filed. The matter is listed in mid October. We were of the view that under the scheme the debt is also admitted. This bench if passes order of admission, it will not be prejudicial to any party. On the contrary all the Creditors will be taken care of. Even during CIRP and/or Liquidation, provision of arrangement and compromise of scheme can be invoked. Passing of this order will bring early resolution of the Corporate Debtor.
As per Section 9(5)(i) of the Code. The Adjudicating Authority by an order admit the application if (a) the application made under sub-section (2) is complete: (b) there has been no payment of the unpaid operational debt, (c) the invoice or notice for payment to the corporate debtor has been delivered by the operational creditor, (d) no notice of dispute has been received by the operational creditor or there is no record of dispute in the information utility; or (e) there is no disciplinary proceeding is pending against any proposed resolution professional. The Applicant has satisfied the bench that there is a debt which is in default and no payment has been received with respect to the same - since there is a clear cut admission on the part of the Corporate Debtor, this Adjudicating Authority initiates CIRP of the Corporate Debtor.
Application allowed - moratorium declared.
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2021 (10) TMI 768
Issuance of directions to the NOIDA authority for granting the Occupation and Completion Certificate to the project "Victory Crossroads" developed by the CD - HELD THAT:- On perusal of the affidavit filed by the Vice President of RWO, it is observed that water and electricity are being availed by the persons who are residing and who have occupied the flats and society has opened a separate maintenance amount for the purpose of electricity and maintenance purposes.
Further, no specific averment has been made by the Vice President of RWA, on the point of payment of water bills. Since, it is admitted facts that out of 291 flats, about 250 home buyers have occupied their flats and have been using the electricity and other facilities/including water facilities.
Application disposed off.
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2021 (10) TMI 767
Liquidation of the corporate debtor - Section 33(1) of Insolvency and Bankruptcy Code, 2016 - HELD THAT:- The bench vide order dated 26.04.2021 observed that IRP/RP has a duty to complete the process of CIRP within 330 days for which no directions or orders are required. Hence, the application was dismissed with the cost of ₹ 5,000/- to RP for filing such frivolous application. The only option left with CoC to resolve for liquidation of corporate debtor. It was submitted while hearing of this application, by RP that due to second wave of Covid-19 pandemic lockdown from April 2021 to June 2021, the CoC could not meet to decide liquidation and only after unlock in June 2021, the lenders in their meeting held on 16.06.2021 decided and passed resolution and approached Adjudicating Authority for order of liquidation. Because no resolution plan was forthcoming, as per the provisions of IBC, 2016 it is to seek the liquidation as provided under the provisions of section 33 of IBC, 2016 of which the relevant sub-section 1 of section 33.
Taking into consideration the provisions of law as well as the facts on record, the liquidation of the corporate debtor is ordered and in the circumstances the corporate debtor stands liquidated and the incidence of liquidation to follow, on and from the date of this order in terms of the provisions of IBC, 2016 and more particularly as given in Chapter - III of IBC, 2016 and also in terms of Insolvency and Bankruptcy (Liquidation Process) Regulations, 2017.
Application allowed.
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2021 (10) TMI 766
Liquidation of Corporate Debtor - Section 33 of the Insolvency and Bankruptcy Code, 2016 read with Rule 11 of the National Company Law Tribunal Rules 2016 - HELD THAT:- It would appear that despite all possible steps as required under the Code taken during the CIRP, the CoC did not receive any viable resolution plan/proposal for revival of the Company. The CoC in its wisdom has resolved with 99.78% voting share in favour of the liquidation of the Company. The Applicant RP has not given his consent to act as Liquidator. The CoC members recommends Ms. Vaishali Arun Patrikar to act as Liquidator of the Corporate Debtor. This Authority has no reason before it to take a contrary view in terms of Section 33(1)(a) of the Code. Therefore, it has no option than to pass an order for liquidation of the Company in the manner laid down in Chapter III of the Code.
Corporate Debtor is ordered to be liquidated - application allowed.
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2021 (10) TMI 765
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial Creditors - existence of debt and dispute or not - HELD THAT:- The corporate debtor did not chose to file any reply since January 2020. Thus, there is no dispute with regard to the existence of debt and default and the debt is also within limitation. The claim of the petitioner remained unchallenged. Since the company petition satisfies all the legal requirements, this bench did not find any grounds warranting the rejection of the above company petition.
Petition admitted - moratorium declared.
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2021 (10) TMI 764
Liquidation of the Corporate Debtor - section 33(2) of the I & B Code, 2016 - HELD THAT:- Since this Adjudicating Authority did not receive any Resolution Plan under Sub-Section (6) of Section 30 of the I & B Code, 2016, this Adjudicating Authority deems it proper to allow the Application as prayed for. Accordingly, in exercise of powers conferred under Sub-Clauses (i), (ii) and (iii) of Clause (b) of Sub-Section (1) of Section 33 of the I & B Code, 2016, the Corporate Debtor is ordered to be liquidated.
Application allowed.
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Service Tax
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2021 (10) TMI 763
Rejection of declaration for Tax Relief under the provisions of Sabka Vikas [Legacy Dispute Resolution) Scheme, 2019 - mistake apparent on record or sufficient reasons for review - misconception of fact or not - Whether this Court, in exercise of the jurisdiction under section 114 and Order XLVII Rule 1 of CPC, must review the order on the ground that the learned counsel for the petitioner in not arguing the grounds (now urged) has made a mistake apparent on record in misconstruing the facts, or such circumstances would constitute sufficient reasons for review?
HELD THAT:- The provisions of Section 73(1B) of the Finance Act, 2019 or Section 121(r) of the Scheme substantiate the petitioner’s case that it’s liability was ‘quantified’ for the purposes of Tax Relief under Section 124(c) of the Scheme. Even otherwise, the learned counsel, again because of a misconception of fact, did not urge the petitioner’s case that it would be entitled for Tax Relief under the arrears category as envisaged under Section 124 (1)(c) of the Scheme.
If the material provisions of a statute are not drawn to the Court’s attention, there would be sufficient reason for review as mentioned in Order XLVII Rule 1 of CPC. Further, while the grounds urged as sufficient reasons for review must be analogous to the grounds specifically mentioned therein, the Courts must examine whether the grounds urged could be called analogous in the facts and circumstances of the case bearing in mind the restrictions contemplated therein i.e., due diligence and reasons beyond control are established. As such, an applicant to succeed on the ground of ‘sufficient reason’ must establish reasons analgous to a mistake or error apparent on the record as also due diligence and best efforts and satisfy other conditions required under order XLVII Rule 1 of CPC. It is recognized that the difficulty is not in stating the proposition, but in applying the same.
The material was available on record is not articulated as a ground for review even in the pleadings. It is argued that the learned counsel made a mistake in not putting out such ground for consideration, and because of such mistake the learned counsel also did not argue the significance of the provisions of the Finance Act, 2019 and Scheme on the question of quantification of the petitioner’s liability upon filing of belated Form ST-3 Return for the purposes of the Scheme.
It is undeniable that the attention of the Court is not drawn to material statutory provisions and the material circumstances. Thus, obvious sufficient reasons are established for review as envisaged under Order XLVII Rule 1 of CPC without calling for much probing. Therefore, this Court, answering the question for consideration in favour of the petitioner, opines that the order must be reviewed.
Revision petition allowed.
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CST, VAT & Sales Tax
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2021 (10) TMI 762
Levy of entertainment tax - charges collected from students by the petitioner for utilizing facilites of MARENA - transversal beyond the allegations made in the Entertainment Tax Notice, which proposed to levy tax on collections from MARENA treating the same as a 'recreation parlour' - MARENA qualifies as a place of entertainment and the petitioner is a 'proprietor', for the purposes of levying entertainment tax or not - levy of interest and penalty under Sections 9 and 12 of KET Act - HELD THAT:- It is evident that the Tribunal has dismissed the petitioner-University appeals upholding the orders of the First Appellate Authority and the Assessing Authority by holding that the facilities provided at MARENA qualify as 'entertainment' under Section 2(e)(iii) of the KET Act and fall under the definition of 'amusement' as well. In the considered opinion of this Court, the Tribunal has failed to appreciate the fact involved in the matter i.e., notice issued in the first instance to the appellant/ present petitioner wherein it has proposed to levy tax collections from MARENA treating the same as recreation parlour and a demand was made under section 4F of the KET Act. The Tribunal has gone beyond the notice issued to the petitioner in the matter by confirming the payment on a new ground for levy solely based on the definition of 'entertainment' as per Section 2(e)(iii) of the KET Act and meaning of the word 'amusement' meaning thereby the Tribunal has travelled beyond the entertainment tax notice.
In the present case, the petitioner is an Educational Institution and not a 'recreation parlour'. The provision of amenities and facilities, such as MARENA are being provided with an intention to improve the personality of the students. Another important aspect of the case is that the Entertainment Tax can be levied in respect of charges collected for admissions or participation to a "recreation parlour" as defined under Section 2(1) of the KET Act. "Recreation Parlour" means any place where a game such as bowling, billiards, snooker or the like by whatever name called is provided for which persons are required to make payment for admission or participation. The petitioner is neither a "recreation parlour" nor the petitioner has set up the MARENA with an intention to provide recreation or amusement - in the considered opinion of this Court, by no stretch of imagination the Entertainment Tax could have been imposed upon the educational institution.
In the present case also we are dealing with an educational institution, which has been set up by a Trust, wherein the students and the faculty members are provided facilities in relation to sports, health and fitness. It is certainly true that the parents who visit the students and other persons who visit the University are permitted to use the sports facilities - this Court is of the opinion that the order passed by the Assessing Authority, the order passed by the First Appellate Court and the order passed by the Karnataka Appellate Tribunal are bad in law.
Scope of SCN - HELD THAT:- The question is answered in favour of the assessee as the Tribunal has travelled beyond the allegations made in the entertainment tax notices which proposed levy of tax by treating MARENA as a recreational parlour and a demand was made under Section 4F of the KET Act.
Whether the Karnataka Appellate Tribunal is correct in holding that MARENA qualifies as a place of entertainment and the petitioner is a 'proprietor', for the purposes of levying entertainment tax? - HELD THAT:- The Tribunal has erred in law and in facts in holding that the MARENA is a sports complex which provides recreational facilities to the students which amounts to entertainment and the petitioner is a proprietor for the purposes of levying the entertainment tax, the question is again answered in favour of the assessee and against the revenue.
Whether, in the facts and circumstances of the case, the Karnataka Appellate Tribunal is right in upholding the orders of the First Appellate Authority and the Assessing Authority, insofar as the confirmation of levy of interest and penalty under Sections 9 and 12 of KET Act, respectively? - HELD THAT:- The Tribunal has erred in law and in facts upholding the order of the First Appellate Court and the Assessing Authority in so far as the confirmation of tax under Sections 9 and 12 of the KET Act. The issue is again answered in favour of the assessee and against the revenue.
The petitions are allowed.
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Indian Laws
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2021 (10) TMI 761
Dishonor of Cheque - insufficiency of funds - existence of debt or not - onus to prove - rebuttal of presumption of innocence - HELD THAT:- It is clear that Sita Ram Verma was not authorized as per the resolution of the Board of Directors' of the Company nor he was a Principal Officer of the Company and his title to maintain the present complaint was to be considered vis-à-vis. his capacity to depose in the Court of law. Though, this Court may proceed with the presumption that he was having authority to proceed with the complaint as he was working with the Company.
Whether the onus which shifted on the complainant that the cheque was not issued for consideration and it was only a security amount has been discharged? - HELD THAT:- The answer is that onus was not discharged as the Company which is supposed to maintain the accounts of which are to be maintained in the regular course of business for all intents and purposes should have shown the sale and those documents should have been produced by the complainant company in the Court, as the sale would have been the consideration for the cheque. Failure of the same shows that the cheque was only issued as a security. The witnesses of the complainant nowhere able to prove that the cheque was for the supplies made and it was for consideration - this Court holds that after applying the law that the findings as recorded by the learned court below call for no interference even after re-appreciating the evidence.
It has been held in K PRAKASHAN VERSUS PK SURENDERAN [2007 (10) TMI 551 - SUPREME COURT], that when two views are possible, appellate Court should not reverse the judgment of acquittal merely because the other view was possible. When judgment of trial Court was neither perverse, nor suffered from any legal infirmity or non consideration/mis-appreciation of evidence on record, reversal thereof by High Court was not justified.
Thus, the appellant/complainant-Company has failed to prove the guilt of the accused conclusively and beyond reasonable doubt. There is no illegality and infirmity in the findings, so recorded by the learned trial Court - appeal dismissed.
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2021 (10) TMI 760
Dishonor of Cheque - insufficiency of funds - condition precedent for constituting an offence under Section 138 of N.I. Act has been satisfied or not - service of legal notice - HELD THAT:- From the case records, it appears that the prosecution had exhibited the cheques and also proved the postal receipt and successfully proved that the cheques were issued by the petitioner, which had bounced due to insufficient funds.
Service of legal notice - HELD THAT:- Neither any date of dispatch of the legal notice has been mentioned in the evidence, nor the legal notice has been exhibited, much less, any evidence or finding regarding service of legal notice/deemed service of legal notice is on record.
This court is of the considered view that mere bouncing of the cheque coupled with a further statement that legal notice was issued but in-spite of its service the amount was not paid are not enough to constitute an offence under section 138 of N.I. Act. The time lines as prescribed under the N.I. Act which has been fully explained by the Hon'ble Supreme Court are essential ingredients to be proved for convicting the accused under section 138 of N.I. Act. Further, in absence of the legal notice brought on record by way of exhibit, it certainly cannot be assumed that the document which was sent through registered post was the legal notice pursuant to bouncing of the cheques - Mere bouncing of cheque signed by the accused does not constitute an offence unless other ingredients of the offence under section 138 of N.I. Act are also proved. In the aforesaid facts and such circumstances of this case, the basic ingredient to constitute an offence under Section 138 of N.I. Act have not been proved by the prosecution.
There is no doubt that there is presumption in connection with a cheque in favour of the holder of the cheque under Section 139 of N.I. Act, but that presumption by itself is not sufficient to constitute an offence under Section 138 of N.I. Act, unless the other ingredients have been proved - this court is of the considered view that the conviction of the petitioner for offence under section 138 of N.I. Act is perverse and suffers from material irregularity which calls for interference in revisional jurisdiction to meet the ends of justice.
Revision application is allowed.
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2021 (10) TMI 759
Dishonor of Cheque - discharge of existing liability - sufficient averments present or not - Section 138 of the Negotiable Instruments Act, 1881 - HELD THAT:- In the present case, both A2 and A3 are partners of A1/Firm. When a cheque is issued for a particular transaction on behalf of the Partnership Firm, then both have a co-existing liability with respect to ensuring that the cheque is honoured. If the cheque is dishonoured and the prosecution is launched, then both have a co-existing liability to face such prosecution unless the Partnership Deed specifically excludes a particular partner or includes a partner as a sleeping partner or a minor partner only for the benefit of the Partnership Firm. In all other circumstances, both partners sink together or survive together.
With respect to the averments made, the respondent had specifically stated that the petitioner herein is also responsible for the day-t0-day activities of the Firm. It had been very specifically stated that the cheques were signed in her presence. Those are facts to be established and trial is the answer.
If the petitioner herein/A2 is able to establish during the course of trial that she never had any direct role in the transactions of A1/Partnership Firm or that she would not gain if the Partnership Firm gets a profit or that she would not suffer a loss if the Partnership Firm ends up in loss over any particular transaction, then, evidence adduced in that regard would certainly be properly appreciated by the learned Magistrate.
Inciting the parties to adduce evidence would be the proper course to be adopted to examine the points put forth by the petitioners herein, who is A3 in both the Calendar Cases - Petition dismissed.
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2021 (10) TMI 758
Dishonor of Cheque - direct contractual or business relationship or transaction necessitating issuance of a cheque or not - Section 138 of Negotiable Instruments Act - HELD THAT:- In the instant case, the petitioner had not issued the cheque from an account in her name. She had issued the cheque from the account in the name of V.N. Krishnaswamy Naidu College of Arts and Science for Women, Mettupalayam. That institution has not been made as a party. The constitution of said institution is not known, but, still the cheque had been instituted by the petitioner in her capacity as Correspondent/Secretary of that institution. She had not issued the cheque in her personal capacity.
The petitioner had not issued the cheque. She had signed the cheque only in her capacity as Correspondent/Secretary of a named college. The cheque had, obviously, been issued from the bank account of the said college. The said college had no transaction with the respondent - Instituting a criminal complaint against the petitioner herein does, indeed, reflect a mala fide intention on the part of the respondent. The complaint had been lodged by naming the petitioner as accused in her personal capacity, when she had not issued any cheque in her personal capacity. It is an arm twisting move to ensure that the amount mentioned in the cheque issued by V.N.K. Textiles and Paper Mills Limited is repaid to the respondent.
The complaint does not withstand judicial scrutiny viewed from any angle. The respondent can pursue his complaint against V.N.K. Textiles and Paper Mills Limited in manner known to law. But, the complaint alleged against the present petitioner will necessarily have to be interfered and quashed for the simple reason that the petitioner had not issued the cheque from her bank account for any loan which she had with the respondent. Moreover, the cheque had only been issued in her capacity as Correspondent/Secretary of the college from the bank account of the college and said institution had not been shown as accused.
The present petition is allowed.
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2021 (10) TMI 757
Dishonor of Cheque - insufficiency of funds - failure to lead any evidence despite of opportunity provided - locus standi to file the complaint under Section 138 of NI Act - offence punishable under Section 138 of NI Act - HELD THAT:- This Court is convinced and satisfied that complainant successfully proved on record that cheque in question was issued by the accused for discharge of his lawful liability and such cheque on its presentation was dishonoured on account of insufficient funds. Evidence led on record clearly reveals that complainant after having received memo from the bank concerned advised accused by way of legal notice to make the payment good within the stipulated period, but since he failed to do so, complainant had no option, but to file/institute complaint under Section 138 of the Act.
In the case at hand bare perusal of complaint filed by the complainant Anil Bansal itself reveals that he is the proprietor of Karyana Shop namely M/s. Roshan Lal & Sons, which is proprietorship concerned. Complainant has categorically stated that accused used to purchase grocery items in wholesale from his shop, as detailed hereinabove, which fact is otherwise evident from bill Ex. CW1/A, perusal whereof reveals that on 15.11.2016, accused herein purchased 120 bags of sugar and 100 kg. Chickpea from the shop of the complainant. Since complainant specifically pleaded in the complaint that he is proprietor of firm concerned i.e. M/s. Roshan Lal & Sons, it cannot be said that he had no locus standi to file the complaint under Section 138 of the Act. Moreover, cheque in question has been not issued in favour of Anil Bansal, rather same was issued in favour of firm i.e. M/s. Roshan Lal & Sons.
This Court has a very limited jurisdiction under Section 397 of the Cr.P.C., to re-appreciate the evidence, especially, in view of the concurrent findings of fact and law recorded by the courts below - this Court sees no valid reason to interfere with the well reasoned finding recorded by the courts below, which otherwise, appear to be based upon proper appreciation of evidence available on record and as such, same are upheld.
Petition dismissed.
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2021 (10) TMI 756
Dishonor of Cheque - amicable settlement arrived or not - seeking exemption of compounding fee on the ground that due to poor financial condition, petitioner could not pay the amount well in time - HELD THAT:- After depositing compounding fee/cost, petitioner shall place a copy of receipt of deposit of compounding fee on record of this petition. In case of default in depositing compounding fee/cost with the H.P. State Legal Service Authority, Shimla within eight weeks from today, the judgments of conviction and sentence shall automatically revive.
As an amount of ₹ 70,000/- has been deposited by the petitioner in the Registry of this High Court, therefore, Registry is directed to release the aforesaid amount in favour of complainant Subhadra Devi, along with interest, if any accrued thereon, without issuing notice to the accused-petitioner (Balwant), by remitting the same in her bank account, details whereof shall be furnished by her either in person or through counsel at the time of production of copy of this order.
Petition disposed off.
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2021 (10) TMI 755
Murder or death by falling in the well under the influence of liquor - giving threats for the offences under Sections 504 & 506 IPC - presumption of innocence - HELD THAT:- The order granting bail to the accused pending appeal lacks total clarity on which part of the judgment and order can be said to be submissions and which part can be said to be the findings/reasonings. It does not even reflect the submissions on behalf of the Public Prosecutor opposing the bail pending appeal. A detailed counter affidavit was filed on behalf of the State opposing the bail pending appeal which has not been even referred to by the High Court. The manner in which the High Court has disposed of the application under Section 389 Cr.P.C. and has disposed of the application for bail pending appeal cannot be approved. It is very unfortunate that by this judgment, we are required to observe the importance of judgment; purpose of judgment and what should be contained in the judgment.
It is not adequate that a decision is accurate, it must also be reasonable, logical and easily comprehensible. The judicial opinion is to be written in such a way that it elucidates in a convincing manner and proves the fact that the verdict is righteous and judicious. What the court says, and how it says it, is equally important as what the court decides - there is a total lack of clarity on the submissions, which part of the order is submission, which part of the order is the finding and/or reasoning.
Even, the High Court has also not considered the seriousness of the offence and the gravity of the accusation against the accused and their antecedents and conduct by giving threats to the witnesses during trial and even thereafter. The High Court ought to have noted that when the High Court released the accused on bail pending appeal, they have undergone only 8 months sentence against the life sentence imposed by the learned trial Court.
Even on merits also, the High Court has committed a grave error in releasing the accused on bail pending appeals against the judgment and order of conviction for the offences under Sections 302/149, 201 r/w 120B IPC - Appeal allowed.
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