TMI Tax Updates - e-Newsletter
November 14, 2018
Case Laws in this Newsletter:
GST
Income Tax
Customs
Insolvency & Bankruptcy
Service Tax
Central Excise
Indian Laws
TMI SMS
Highlights / Catch Notes
GST
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Principles of Natural Justice - non-service of SCN - Cancellation of registration of dealer - there is no material to support that SCN was served through email - petitioner was not served any SCN - the impugned order is not at all sustainable
Income Tax
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Deemed dividend addition u/s 2(22)(e) - assessee should have received loans or advances and pays the same subsequently. In the given case, no such things were noticed - we cannot cherry pick certain transactions and term them as ‘loans and advances’ - No additions.
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Deduction u/s 10(14) denied - assessee has received fixed conveyance allowance and conveyance expenses - it will not be necessary for the employees to submit accounts every month to the employer and along with return to the assessing authority.
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Treatment of business loss as speculation loss - while the assessee incurred losses in derivative segment (F&O business), it has earned profits in cash segment i.e. on account of ordinary action of purchase and sale of shares simplicitor. - Loss cannot be treated as speculative loss.
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Reopening of assessment u/s 147 - addition u/s 68 as unexplained cash credit - information received from DRI - AO is not empowered in law to carry out any enquiry, if no assessment proceeding are pending. The reassessment proceedings thus, empower the AO to verify correctness of the information - Reopening held as valid.
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Disallowance of assessee’s claim for depletion of closing stock - sales to related parties - there was no justifiable reason for the AO to reject the said evidence and as unreliable.
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Disallowing the interest on the notional / proportionate basis - As per the lower authorities, the borrowed fund has been utilized in the capital work-in-progress in view of the fact that the accumulated loss of the assessee exceeds the fund of the assessee.
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Addition as cessation of liability u/s 41(1) - There is no finding by the AO that the purchases were bogus and corresponding sales are also bogus - no corroborative evidence brought on record to make addition - No additions.
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Addition made towards unsecured loan u/s 68 - divergent facts - AO stated that the assessee did not file any evidence, whereas the CIT(A) stated that the assessee has filed confirmation from the party - the issue needs to be re-examined by the AO
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Unaccounted cash - telescoping benefit to the assessee - the cash found during the course of search represents part of such professional receipts have been accounted by the assessee and filed the return of income - No additions.
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Determination of Long term capital gains - addition by invoking Section 50C in proceedings u/s. 143(3) - Valuation - restriction on use of property - Application of section 50C to the trust already assessed under a special provision u/s. 11 - No additions.
Customs
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Absolute Confiscation - penalty - smuggling - gold bangle/kara - Baggage Rules - it is mandatory to give option to the owner of the goods to redeem the non-prohibited confiscated goods on payment of a fine
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Revocation of CHA License - forfeiture of security deposit - Any leniency, in the circumstances, would not only dent the administrative authority of the licensing authority but also may encourage a casual approach by other licensees.
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Revocation of CHA License - The operation and control of Customs House Agents are best left to the judgement of Commissioner of Customs and that no intervention in the magnitude of penalty is warranted.
FEMA
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Foreign Exchange Management (Deposit) (Amendment) Regulations, 2018
Service Tax
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Extended period of limitation - On perusal of SCN, it is seen that there is no allegation with regard to fraud, collusion, willful misstatement, suppression of fact nor contravention of any provisions or rules to evade payment of service tax - The ingredients of Section 73 of the Act are conspicuously absent in the SCN.
Central Excise
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Recovery of re-credited amount alongwith Interest and penalty - Consolidated reversal of the individual debit entries in the CENVAT credit account upon discharge of duty liability for the second time on clearance to customers - Recovery proceedings cannot sustain.
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Classification of goods - Aseptic Packaging Paper - scope of circular - the reliance for issue of show cause notice that the packaging material must contain plastic to qualify its description as aseptic packaging paper is not in accordance with above referred circular
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Waiver of pre-deposit - Vires of Section 35F of The Central Excise Act, 1944 - when the provisions of Section 35F of the Act gives no flexibility waiving off the pre-condition of a deposit, there would be little room to hold the order of the Tribunal as erroneous.
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Valuation - inclusion of investment subsidy - There is no justification for inclusion in the assessable value, the VAT amounts paid by the assessee using VAT 37B Challans
Articles
Notifications
Circulars / Instructions / Orders
News
Case Laws:
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GST
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2018 (11) TMI 557
Validity of attachment order - payment to be made in installments - writ petition was got dismissed as withdrawn on 12.10.2018 without liberty to file any fresh petition meaning thereby that the petitioner accepts the demand of dues - Held that:- The present attachment which is impugned in the writ petition is pursuant to the above demand notice and is of a consequential nature. The petitioner cannot be granted any relief unless the demand is successfully challenged which stage is already over - petition dismissed.
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2018 (11) TMI 556
Principles of Natural Justice - non-service of SCN - Cancellation of registration of dealer - UPGST Act - Held that:- In the present case, the Assistant Commissioner could not come to any conclusion that all previous modes as prescribed under Section 169 are not practicable for the service of notice and has directly resorted to service by affixation. In such a situation, service if any by affixation cannot be regarded as a proper service. Moreover, nothing on record has been brought to establish the time, date and place and the manner in which service by affixation was resorted to. Similarly, there is no averment as to through whom the notice was sent for service - it has been stated that the show-cause notice was sent at the e-mail address of the petitioner on 18.01.2018 but again there is no material to support the said contention and the sending and receiving of any such email has been categorically denied by the petitioner. Thus, petitioner was not served any SCN - the impugned order dated 27.01.2018 is not at all sustainable - Petition allowed.
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Income Tax
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2018 (11) TMI 555
Unexplained credit u/s 68 - amount transferred through bank transactions - Held that:- As the amount of ₹ 1,86,30,000/- was advanced by BMPL to the assessee company through bank transactions, thus the genuineness of the loan transaction under consideration also stands proved. We are persuaded to subscribe to the view taken by the CIT(A) that as the ‘nature’ and ‘source’ of the credit of ₹ 1,86,30,000/- appearing in the ‘books of accounts’ of the assessee company had been established by the assessee beyond doubt, thus the same could not have been held as an unexplained cash credit under Sec. 68. We thus finding no infirmity in the view taken by the CIT(A) that the loan of ₹ 1,86,30,000/- received by the assessee company from BMPL could not be held as an unexplained cash credit under Sec. 68 of the Act, uphold the same. - Decided against revenue.
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2018 (11) TMI 554
TPA - determining of the arms length price of the management services - Held that:- As perused the orders of the lower authorities and the APA, dated 07.05.2018. We find that the APA covers the year under consideration i.e previous year 2009-10 on the issue of determining of the arms length price of the management services availed by the assessee from its foreign AE during the year. As agreed upon amongst the authorised representatives of both the parties the present appeal of the revenue is treated as withdrawn, subject to verification of the facts on the part of the A.O. Depreciation on the market research expenses - Held that:- In the course of the proceedings before the DRP the assessee had sought depreciation on the written down value of the market research expenses. As submitted by the assessee before the DRP that in the immediately preceding year i.e A.Y 2009-10 depreciation was allowed on the amount of the market research expenses of ₹ 23,50,000/- by treating the same as a capital asset. We find that the DRP observed that the claim of the assessee that it was allowed depreciation on the market research expenses in A.Y 2009-10 was in order. As DRP had directed the A.O to grant depreciation to the assessee on the market research expenses, after making necessary verifications on facts. However, we find that the A.O while framing the assessment had omitted to give effect to the aforesaid direction of the DRP. We thus, in terms of our aforesaid observations restore the issue as regards grant of depreciation on the market research expenses to the file of the A.O, for giving effect to the direction of the DRP in the said context. - Decided in favour of assessee for statistical purposes.
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2018 (11) TMI 553
Deemed dividend addition u/s 2(22)(e) - AO noticed that the assessee has received loan/advance from M/s. Malpani Cottons Pvt. Ltd., Adilabad wherein assessee is having 12.42% of the share holding in Malpani Cottons Pvt. Ltd. and the company is not a company in which public are substantially interested - Held that:- To attract the deemed dividend provision, it should be otherwise around. Further, we noticed that the opening balance stood as on 01-04-2003 was ₹ 1,05,15,883/- as debit balance which means assessee owes to the company and at the end of the year, closing balance stood at ₹ 85,56,232/- debit balance which means still assessee owes to the company. while comparing opening and closing balances, it is noticed that about ₹ 20 Lakhs was reduced that means assessee has repaid ₹ 20 Lakhs to the company. It clearly shows that assessee has not taken any fresh loan from the company during the current assessment year. On the other hand, to invoke Section 2(22)(e) of the Act during this year, assessee should have received loans or advances and pays the same subsequently. In the given case, no such things were noticed. Therefore, in our considered view, assessee is having business connection and in that process, assessee may have received certain advances which can be treated as ‘trade advances’. Therefore, we cannot cherry pick certain transactions and term them as ‘loans and advances’ in order to invoke the provisions of Section 2(22)(e) of the Act. Therefore, the ground raised by assessee is allowed.
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2018 (11) TMI 552
Deduction u/s 10(14) denied - assessee has received fixed conveyance allowance and conveyance expenses - AO is of the opinion that the assessee is failed to prove the conditions laid down in section 10(14), therefore, the claim of the assessee is disallowed - Held that:- Unless a case has been initiated against an employee by an employer, the said presumption that the employee has incurred the expenditure for which it is granted, will apply and it will not be necessary for the employees to submit accounts every month to the employer and along with return to the assessing authority. If, in such matters, filing of the accounts and vouchers/receipts are insisted upon to claim exemption under section 10(14) of the Act by the Income-tax authorities, it will lead to voidable waste of time and expenditure and would serve no useful purpose but on the contrary it would be counter-productive. We are of the opinion that the exemption claimed by the assessee has to be allowed.
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2018 (11) TMI 551
Treatment of business loss as speculation loss - while the assessee incurred losses in derivative segment (F&O business), it has earned profits in cash segment i.e. on account of ordinary action of purchase and sale of shares simplicitor. - Held that:- Identical issue arose before the Hon’ble Calcutta High Court in the case of Asian Financial Services (2016 (3) TMI 685 - CALCUTTA HIGH COURT) as held that once it is deemed to be a normal business loss on the basis of proviso appended to Section 43(5) of the Act, a question of applying Section 73 or the Explanation thereto for the purposes of refusing loss to be set off against business income is wholly incorrect. The Hon’ble Calcutta High Court after taking note of the decision of Hon’ble Delhi High Court in DLF Commercial (2013 (7) TMI 334 - DELHI HIGH COURT) took a distinct stand that derivatives cannot be treated at par with shares for the purposes of Explanation to Section 73 because the legislature has treated it differently. Thus, in view of the aforesaid position enunciated by the Hon’ble High Court in Asian Financial Services (2016 (3) TMI 685 - CALCUTTA HIGH COURT), we find good deal of force in the case of assessee. The claim of the assessee thus requires to be allowed on this ground alone. Disallowance u/s 14A - AO has disallowed an estimated expenses pegged at ₹ 5,09,728/- as attributable to exempt income by invoking Section 14A - Held that:- We observe that against the total expense of ₹ 9.63 Lakhs, the turnover of the assessee in taxable stream stands at ₹ 406.59 Crores whereas the tax free income stands a meager amount of ₹ 6.13 Lakhs. The suo moto disallowance by the assessee is prima facie sufficient to cover the possible expense attributable to tax exempt income. Needless to say, the operation of Rule 8D is not automatic. It is hedged by Rules. Likewise, Section 14A of the Act inheres in it the concept of reasonableness. It is unconceivable to say that assessee has incurred ₹ 6.44 Lakhs out of total expense of ₹ 9.63 Lakhs to earn a paltry dividend income of ₹ 6.13 Lakhs while the remaining expenditure attributes for generation of substantial revenue of taxable nature noted above. The action of the Revenue is therefore prima-facie inexplicable. Consequently, we set aside and cancel the addition of ₹ 5,09,728/- made by the AO under s.14A of the Act.
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2018 (11) TMI 550
Deduction u/s. 80IB(10) - addition on account of reduction of sales - Held that:- The assessee at the time of refund of amount instead of debiting the amount to P L account reduce the same from the sales consideration. This fact has not been disputed by the Revenue. Only contention raised by the Department is that the refund of amount was in respect of sales made in assessment year 2009-10. We find that as per books of assessee, reverse entry has been passed by the assessee on 31- 03-2010 i.e. in the period relevant to the assessment year 2010-11. It is an undisputed fact that the amount of ₹ 1,10,00,000/- has been offered to tax in assessment year 2009-10. Now that the assessee has refunded the said amount, the assessee is entitled to claim the same on account of reduction of sale. We do not find any infirmity in the order of Commissioner of Income Tax (Appeals) in deleting the addition. Accordingly, ground No. 1 raised in the appeal is dismissed. Addition on account of receipts allegedly not eligible for deduction u/s. 80IB - Held that:- The assessee has developed a housing project Green Meadows and claimed deduction u/s. 80IB on the said project. During the course of assessment proceedings the Assessing Officer observed that certain receipts viz. amount received on account of area difference, electricity charges, extra amenities, extra work, legal charges, society charges and parking charges have no direct nexus with the profits of housing project. We do not find any infirmity in the order of Commissioner of Income Tax (Appeals) in allowing deduction u/s. 80IB(10) on the aforesaid receipts. The receipts are in-extricably linked to development of the housing project. Allowing of deduction u/s. 80IB(10) on pro-rata basis - Held that:- Despite the fact two residential units were having built up area exceeding 1500 sq. ft. Commissioner of Income Tax (Appeals) has disallowed proportionate deduction u/s. 80IB(10) on the said flats. Allowability of pro-rata deduction u/s. 80IB(10) on eligible residential units is no more res integra. No infirmity in the action of Commissioner of Income Tax (Appeals) in allowing proportionate deduction. Accordingly, ground No. 3 raised in the appeal by the Revenue is dismissed. Allowance of liquidated damages - delay in handing over the possession - Held that:- The final settlement between the parties took place on 10-01-2010 i.e. in the period relevant to the assessment year 2010-11. Since, the amount got crystallized in the period relevant to the assessment year under appeal, the assessee rightly claimed the same as expenditure in assessment year 2010-11. In the backdrop of these facts the Commissioner of Income Tax (Appeals) allowed assessee‟s claim of liquidated damages. The facts have not been disputed by the Revenue. There is no reason to interfere with the well reasoned findings of the Commissioner of Income Tax (Appeals).
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2018 (11) TMI 549
Denying the claim of deduction u/s 54F - investments in the purchase of flat at Mumbai - AO disallowed the claim of the assessee on the ground that assessee was required to deposit the entire sale consideration in the scheme of deposits in capital gains account on or before the due date of filing of return of income - assessee did not deposit the said amount and as such the provisions of sec. 54F are not applicable - whether the assessee would be entitled for benefit of section 54F of the Act even he does not deposit the sale consideration as contemplated u/s 54F(4)? - Held that:- In the present case, the assessee purchased new asset on and had transferred the original asset on 8/01/2008. As per Section 54F(1) the exemption would be available if the assessee purchased the residential house within two years after the date when transfer took place. As per the judgment of Hon'ble Karnataka High Court in K. RAMACHANDRA RAO [2015 (4) TMI 620 - KARNATAKA HIGH COURT] the provisions of section 54F(4) would not be attracted in the event if the assessee has purchased or constructed the residential house within the period prescribed under section 54(1) of the Act. In the case in hand, there is no dispute with regard to the fact that the assessee had purchased within two years [the period prescribed u/s.54(F(1)] a new asset on 05/10/2009 from the date of transfer of the original asset. The Revenue has not cited or placed on record any contrary judgment by the Hon'ble Jurisdictional High Court or Hon'ble Supreme Court. Therefore, we hereby set aside the impugned order and direct the AO to re-compute the assessed income after granting the benefit of section 54F of the Act to the assessee. Addition in respect of the payments made by cash credit card - A.O. disallowed expenditure on the ground that expenses incurred do not relate to business of company - Held that:- Director of the company incurs expenditure for and on behalf of the company but for allowance of such expenditure, it is incumbent upon the assessee to prove the nature of expenditure and purpose of the expenditure and correlate with the business of the company. In the present case, the assessee has merely made a bald statement. The ledger account belonging to the company so submitted speaks of cash credit which requires verification by the assessing officer, whether such expenditure had any link with the business of the company in which the assessee is a Director. We therefore, set aside this issue to the file of the A.O. for a limited purpose to verify the link between the expenses and the business of the company where the assessee is the Director. In the event if the A.O. finds that there is some relation with the business of the company and expenditure incurred by the assessee, he will allow such expenses and delete the addition to that extent - Assessee’s appeal are allowed for statistical purpose.
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2018 (11) TMI 548
Reopening of assessment u/s 147 - addition u/s 68 as unexplained cash credit - reasons to believe - information received from Revenue Intelligence Authority (DRI) - Held that:- In the instant case, the information is specific having detail of value of the amount of accommodation entry taken, the instrument and date through which entry was taken, name and account number of the entry provider were available before the AO and thus we cannot hold the information was vague. Further, in the case of PCIT Vs Paramount Communication Private Limited [2017 (7) TMI 621 - SUPREME COURT], after considering various decisions held that the information received from Revenue Intelligence Authority constitute a tangible material and, thus, assessment was reopened validly. In the instant case before us, the information has been received from the Director of Income Tax (Investigation) after carrying out detailed enquiries from the accommodation entry providers. As held in the case of Raymond Woollen Mills Ltd.[1997 (12) TMI 12 - SUPREME COURT] the sufficiency or correctness of the information is not to be seen at the stage of the reopening of the assessment. In our opinion, the reassessment proceeding is a kind of enquiry, where the assessee is granted opportunity to explain his stand on the correctness of reasons to believe escapement of income. Further, the Assessing Officer is not empowered in law to carry out any enquiry, if no assessment proceeding are pending. The reassessment proceedings thus, empower the Assessing Officer to verify correctness of the information. In the case of Ankit Financial Services Ltd.[2017 (1) TMI 1041 - GUJARAT HIGH COURT] material indicating that assessee has received bogus share application through accommodation entry is one of the beneficiary, was recovered in the search of another person. In such circumstances, the initiation of reopening was justified. CIT(A) is not justified in holding that reassessment proceeding are invalid. Accordingly, we set-aside the order of the Ld. CIT(A) to the extent of holding the proceedings under section 147 of the Act is invalid. - Decided in favour of revenue
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2018 (11) TMI 547
Disallowance under the head incentive paid to the players - eligible reasons for disallowance - Held that:- There is no reason or justification for the disallowance made by the learned assessing officer. He further noted that assessee has produced before the AO books of accounts, bills, and vouchers during proceedings. The above findings of the learned commissioner appeals were not disputed by the revenue. We also do not find any infirmity in the order of the learned commissioner appeals in deleting the disallowance. AO has not given any reasons for disallowance. It was also not pointed out before us by the revenue that what further documents were required to be produced by assessee before assessing officer to justify its claim for the allowance of this expenditure. - Decided against revenue Addition made of hospitality services - allowable busniss expenditure - Held that:- It is not the case of the learned assessing officer that the above expenditure is not incurred wholly and exclusively or the purposes of the business. The learned AO has merely disallowed the above expenditure holding that it is excessive. To prove anything excessive the learned assessing officer should have compared the expenditure with independent evidence of third parties, which has not been done. In the result, we do not find any infirmity in the order of the learned commissioner appeals in deleting the above disallowance, which is purely made, based on conjectures and surmises and on ad hoc basis. - Decided against revenue
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2018 (11) TMI 546
Disallowance of assessee’s claim for depletion of closing stock - sales to related parties - assessee in the present case is a company which is mainly engaged in the business of trading and manufacturing of silk fabrics - Held that:- As submitted on behalf of the assessee company before the authorities below as well as before us, the sale of these products was mainly made by the assessee company always to the related parties and therefore, there was no justifiable reason for the AO to reject the said evidence and as unreliable merely on the ground that the invoices were raised by the assessee company on the related parties. It is pertinent to note here that the said invoices raised by the assessee mainly on the related parties in the subsequent year were accepted by the AO himself and it therefore, constituted the relevant and reliable evidence to support and substantiate the net realizable value of closing stock as determined by the assessee company as on 31st March, 2011. We are of the view that the addition made by the AO by rejecting the claim of the assessee for depletion of closing stock was not sustainable and the Ld. CIT(A) was fully justified in deleting the same. CIT(A) giving relief to the assessee on this issue and dismiss ground no 1 of the revenue’s appeal. Disallowance u/s 40(a)(ia) as well as section 37 - expenses on service charges for computer installed in its Kolkata office and maintenance of flats - Held that:- The said expenditure thus was incurred by the assessee company wholly and exclusively for the purpose of its business and the same was not liable to be disallowed u/s 37 as rightly held by the CIT(A). As regards the disallowance of the said expenditure u/s 40(a)(ia), it is observed that the expenditure on account of maintenance of flats to the extent of ₹ 5,95,754/- was made by the assessee company on account of payment to Cooperative Housing Society for regular maintenance and for purchase of certain attempts and since no tax at source was deductable from the said payments, the same were outside the purview of section 40(a)(ia) as rightly held by the CIT(a) while restricting the disallowance of ₹ 8,96,169/- made by the AO to the extent of ₹ 2,10,415/- thereby allowing the relief of ₹ 6,85,754/-. We therefore, uphold the impugned order of the Ld. CIT(A) on this issue and dismiss ground no 2 of the revenue’s appeal. Disallowance on account of irrecoverable advances written off - Held that:- It is observed that both the amounts of ₹ 1,44,553/- and ₹ 2,61,230/- represented the advances given by the assessee company to its employees and the VAT receivable on input respectively and since the said amounts were pertaining to the ordinary course of the assessee’s business, the loss suffered due to non-recovery of the same was the business loss, which in our opinion, was liable to be allowed as deduction as rightly held by the Ld. CIT(A). We, therefore, uphold the impugned order of the Ld. CIT(A) on this issue and dismiss ground no 3 of revenue’s appeal.
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2018 (11) TMI 545
Disallowing the late payment made to employees provident fund - deposit beyond due date - Held that:- We note that the Tribunal on number occasions has decided the similar issue by following the judgment of jurisdictional High Court in the case of Gujarat State Road Transport Corporation Ltd. (2014 (1) TMI 502 - GUJARAT HIGH COURT) against the assessee. The jurisdictional High Court in the above case held that where assessee did not deposit employees' contribution in the relevant fund before the due date prescribed in Explanation to section 36(1)(va), no deduction would be admissible even though he deposits same before due date under section 43B. Hence we are not inclined to interfere in the order of the Revenue authorities on this issue. Thus the ground of appeal of the assessee is dismissed. Disallowing the interest on the notional basis - borrowed fund has been utilized in the capital work-in-progress - Held that:- The issue in the present case relates whether the borrowed fund has been utilized in the capital work-in-progress shown in the balance sheet as on 31st March 2011. As per the lower authorities, the borrowed fund has been utilized in the capital work-in-progress in view of the fact that the accumulated loss of the assessee exceeds the fund of the assessee. Assessee before us has not advanced any argument on this issue. Therefore, we have no alternative except to confirm the order of lower authorities. Hence, the ground of appeal of the assessee is dismissed. Nature of expenses - Purchase of stores - capital expenditure eligible for depreciation or revenue expenditure - Held that:- We conclude that the purchase of stores is representing revenue expenditure and no disallowance can be made treating them as capital expenditure. It is also pertinent to note that the AO will disallow the relief given to the assessee by way of providing depreciation on the purchase of stores and will allow the deduction on account of purchase of stores made by the assessee during the year. Hence, the ground of appeal of the assessee is allowed.
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2018 (11) TMI 544
Character of income - Addition u/s. 28(iv) - liability ceased to exist - Held that:- In the case of the assessee the loan was taken in the initial year of the company for capital expansion and the loan was written off as capital in nature and assessee had also not claimed any deduction on account of that loan from the income. After considering the above facts and the findings, we do not find any infirmity in the decision of the ld. CIT(A). Therefore, the appeal of the Revenue is dismissed. Disallowance on account of employee’s benefits - Held that:- On perusal of the detailed furnished by the assessee, we find that assessee had demonstrated that increase in salary and other related expenditure was because of the business requirement of the assessee during the year under consideration. The main factors connected to the increase in the impugned expenditure are briefly described that assessee has received new contract Idea Cellular which require more manpower as compared to earlier years. There is a change of management of the company which resulted in different business planning and business philosophy which resulted in providing more remuneration to the employees. The assessee has also provided comparative details of salary payment during the year under consideration compared to the preceding years. AO has not found any defect in the books of accounts and bills and vouchers furnished by the assessee in support of its claim. CIT(A), we observe that AO has disallowed these expenses on presumption basis without disproving the evidences and document/ material furnished by the assessee.- Decided against revenue
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2018 (11) TMI 543
Addition as cessation of liability u/s 41(1) - proof of cessation of liability - Held that:- There is no dispute that in furtherance of its business, the assessee had made purchases from various persons. There is no denying that one of the parties, namely, M/s Hoshiar Singh Suresh Chandra Sarees Pvt Ltd. could not be produced before the AO. At the same time, it is an undisputed fact that notice u/s 133(6) of the Act was served upon the said party. Nothing prevented the AO to issue summons u/s 131 of the Act to the said party. Be that as it may, fail to understand how the provisions of section 41(1) of the Act apply on the facts of the case in hand. There is no question of cessation of liability and, therefore, the CIT(A) grossly erred in confirming the addition under the said section. There is no finding by the Assessing Officer that the purchases were bogus and corresponding sales are also bogus - no corroborative evidence brought on record to make addition - decided in favour of assessee. Addition under various heads - Held that:- AO has made addition taking the g.p. rate as basis, the CIT(A) confirmed part disallowance on a different reasoning. The basis given by the first appellate authority is by comparing the turnover of immediately preceding assessment year with that of the year under consideration. The ratio so determined by the CIT(A) does not have any strong footing. Each assessment year is a separate unit and, therefore, the basis adopted by the CIT(A) is erroneous. However, even before me, the assessee fairly admitted that certain expenses are not properly supported by bills and vouchers. Therefore addition of ₹ 50,000/- should meet the ends of justice. Accordingly direct the Assessing Officer to restrict the disallowance to ₹ 50,000/-. Ground No. 2 is partly allowed.
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2018 (11) TMI 542
Addition towards unexplained unreconciled contract receipts - difference between turnover considered by the assessee in its books of account and turnover appeared in Form 26AS - Held that:- In the case of civil construction business it is quite possible that the assessee submit bills in one financial year and the principals will certify and make payment in another financial year and deduct TDS on such payments when the payments have been actually made. The assessee's account turnover in their books of account as and when bill is submitted by following mercantile system of accounting. Therefore, there will always be difference between turnover considered by the assessee in its books of account and turnover appeared in Form 26AS. But, in such situation it is for the assessee to explain such difference by filing reconciliation statement to the satisfaction of the AO with evidence. In this case, although assessee claims to have accounted related turnover in the previous financial year, on perusal of the orders of authorities below, the facts are not emanating from the orders - issue needs to be re-examined by the AO in the light of claim of the assessee that the said turnover has been accounted in the previous financial year and shown as receivable in books of account. If, the assessee proves his claim with necessary evidence, then the AO is directed to delete addition towards unreconciled contract receipts. Addition towards capital gain from sale of properties - eligibility for exemption u/s 54 - Held that:- Facts remain unchanged. The revenue fails to bring on record any contrary evidence to counter the findings of fact recorded by the Ld.CIT(A). The Ld.CIT(A) has recorded categorical finding that capital gain computed by the assessee from sale of two properties is a long term capital gain and the assessee is eligible for exemption u/s 54 of the Act. Hence, we are in agreement with the findings of the Ld.CIT(A) and reject ground raised by the revenue. Addition made towards unsecured loan u/s 68 - CIT(A) deleted addition made by the AO by holding that the AO has not conducted necessary enquiry before making additions - Held that:- We find that payment of interest and deduction of TDS from such interest is not sacrosanct. What is relevant is whether assessee has filed necessary evidence to prove identity, genuineness of transactions and creditworthiness of the parties. On perusal of orders of lower authorities, there is divergent facts emerge from the orders of AO and the CIT(A) on the issue of genuineness of transactions and creditworthiness of the creditors. AO stated that the assessee did not file any evidence, whereas the CIT(A) stated that the assessee has filed confirmation from the party - the issue needs to be re-examined by the AO in the light of the divergent facts emerging from the orders of lower authorities - Appeal filed by the revenue partly allowed for statistical purpose.
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2018 (11) TMI 541
Unaccounted cash - telescoping benefit to the assessee - Held that:- A.O. has not disputed this and there is no reference in the assessment order to indicate the contrary as the balance cash found during the search represents current year’s professional receipts and has been duly taken into account in the return filed. There is no scope for making the impugned addition under the provisions of the Act. A.O. is directed to delete the addition of ₹ 9,65,955/-. In the result, the addition to the tune of ₹40,000/- sustained against the impugned addition of ₹ 19,75,955/-. CIT(A) gave a categorical finding that the cash found during the course of search represents part of such professional receipts have been accounted by the assessee and filed the return of income. This fact is not disputed by the A.O. as found by the CIT(A). Once a part of income is already disclosed in the return of income, no separate addition can be made. Therefore, we find no infirmity in the order passed by the CIT(A) and this ground of appeal raised by the revenue is dismissed. Unexplained investment in gold jewellery - Held that:- CIT(A) has considered the entire facts of the case and he has rejected the additional claim of 200gms. made by the assessee before the A.O. In so far as telescoping of an amount of ₹ 8,84,371/-, which pertains to income offered for A.Y. 2010-11 and also an amount of ₹ 3,91,675/- with reference to addition made undisclosed income for A.Y. 2010-11 telescoping benefit was given by the CIT(A) on the ground that there is no evidence on record to show that the above amounts are utilized for any other investment or expenditure. Even before us, the department is not able to produce any evidence that the above amounts offered for taxation in the assessment year 2010-11, which are used for any other investment or expenditure. So under these facts and circumstances of the case, the telescoping benefit given by the CIT(A) to the extent of ₹ 8,84,371/- and also ₹ 3,91,675/- is justified and no interference is called for. Accordingly, this ground of appeal filed by the revenue is dismissed. Addition towards unaccounted outpatient receipts - Held that:- A.O. has not accepted the explanation given by the assessee on the ground that the assessee has only paid advance tax of ₹ 2 lakhs, therefore, the assessee will offer the professional receipts for taxation only ₹ 15 lakhs and he is of the opinion that the balance of {₹ 23,16,550 (-) 15 lakhs = ₹8,16,550/-} is treated as undisclosed income. When the assessee himself accepted that he will file a return of income and same will be considered for the taxation, the A.O. without considering the explanation given by the assessee on the ground that advance tax paid and addition was made in our opinion, which is baseless, unreasonable and unjustified. On the contrary, CIT(A) considered the explanation of the assessee and deleted the addition made by the A.O. by observing that the amount which is found during the course of search has taken into account by filing the return of income. No addition is warranted. We find no infirmity in the order passed by the CIT(A) and this ground of appeal raised by the revenue is dismissed. Unaccounted professional receipts - Held that:- A.O. has not accepted the explanation given by the assessee on the ground that neither the hospital has maintained the books of accounts nor assessee has maintained the books, therefore, addition is made. On appeal, the CIT(A) has gave a categorical finding that these amounts found during the course of search pertains to current year, though these receipts were not recorded in the regular books of accounts of the hospital or of the assessee they have included and considered as a part of current year’s receipts while filing the return of income. Subsequent to the search, the assessee has complied these receipts in his books of accounts and offered them for tax in the return of income filed. In view of the above specific finding of the Ld. CIT(A), when the amount is found during the course of search pertains to current year, the same is offered for taxation by filing the return of income, it cannot be said that it is undisclosed income, when the time is available for the assessee to file a return of income. Admission of income u/s 132(4) - declaration of income in the return - A.O. is of the view that the assessee had admitted the income of ₹ 24,72,629/- against the declaration of income of ₹ 50 lakhs in the statement recorded u/s 132(4) - Held that:- The above issue is neither emanated from the assessment order nor from the CIT(A)’s order and has no impact on assessment made u/s 143(3). D.R. during the appeal hearing could not relate to the addition made in the assessment order. However, on verification of the assessment order, it is noted that the assessee had admitted income of ₹ 89,92,920/- against the declared income of ₹ 50 lakhs u/s 132(4) of the Act and consequential order resulted in total income of ₹ 1,35,00,044/-.
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2018 (11) TMI 540
Determination of Long term capital gains - addition by invoking Section 50C in proceedings u/s. 143(3) - Valuation - restriction on use of property - Application of section 50C to the trust already assessed under a special provision u/s.11 - Held that:- The Revenue fails to dispute that the assessee Trust is bound by such an approval order passed by the statutory authority. We further find in Om Shri Jigar Association Vs. Union of India [1994 (5) TMI 24 - GUJARAT HIGH COURT] as followed in Virendra vs. Appropriate authority & Ors.[2008 (9) TMI 515 - BOMBAY HIGH COURT] holds that there is no inference of understatement of consideration in such a case involving an approval accorded by the Charity Commissioner under the Bombay Trusts Act. Mr. Kabra seeks to distinguish the same by pleading that the said case law pertains to the proceedings u/s.269UD instead of Section 50C of the Act. We observe that this distinction fails to rebut the fact that the above hon’ble high courts have considered the relevant provisions enshrined in Bombay Trust Law vis-à-vis understatement of sale considerations of the relevant capital assets therein. We conclude in this factual backdrop that whatever sale price Charity Commissioner had approved had to be followed in assessee’s impugned sale deed. Couple with this, the lower appellate authority has already observed that there are various restrictions on usage of the capital asset. All this findings have gone un-controverted from Revenue side.- decided against revenue
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2018 (11) TMI 519
Validity of reopening of assessment - addition u/s 68 - violation of the principles of natural justice in having passed the ex parte order qua the assessee without affording adequate opportunity of being heard to the assessee - Held that:- We note that though the AO has stated that he has issued summons u/s. 131 of the Act, no dates of issue of summons have been mentioned in the assessment order. We note that no other investigation was conducted by AO is discernable from the order. So, we find force in the submission of the AR that no proper opportunity before the AO during the reassessment proceedings because only one date was fixed for hearing on 16.12.2013 to Assessee Company. We note that since the directors of Assessee Company could not appear before the AO in pursuance of the summons u/s. 131 (this fact of summons issued is contested by assessee), the AO saddled the addition by drawing adverse inference is per-se without application of mind, which action of A.O. cannot be countenanced. So, we find force in the submission of AR that no proper opportunity was given to assessee by AO during the reassessment proceedings and so we are, therefore, of the opinion that assessee did not get proper opportunity before the AO during reassessment proceedings. In the light in Tin Box Company [2001 (2) TMI 13 - SUPREME COURT] DR accepted that assessee did not get proper opportunity before the AO during reassessment proceedings, we set aside the order of the Ld. CIT(A) and remand the matter back to the file of AO for de novo assessment and to decide the matter in accordance to law after giving opportunity of being heard to the assessee. Appeal of assessee is allowed for statistical purposes
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Customs
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2018 (11) TMI 539
Charge-sheet filed before the Central Administrative Tribunal by way of separate Original Applications - inaccurate physical verification of goods - Held that:- Appeal dismissed.
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2018 (11) TMI 538
Disposal of waste generated while processing the wheat imported - Held that:- There will be a direction to the respondents to permit the petitioner to utilise the waste generated by either putting it to use as raw material for manufacturing of cattle feed or by any other method permitted by law. The petitioner shall submit due proposal showing how he intends to utilise the wheat before the competent respondents who shall consider the request and pass orders on the proposal forthwith - petition disposed off.
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2018 (11) TMI 537
Jurisdiction - power of DRI to issue SCN - Held that:- The matter is remitted to the CESTAT which shall proceed to examine and decide the merits of the appeal without being influenced by the decision of this Court in Mangli Impex [2016 (5) TMI 225 - DELHI HIGH COURT] - appeal allowed in part.
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2018 (11) TMI 536
Amendment in shipping bills - export incentives - case of respondent is that there can be no amendment in the shipping bills, since the entire procedure is operated by the system - Held that:- It is stated that the 3rd respondent is ready to issue ‘No Objection Certificate’ to enable the petitioner to avail the benefits from the 4th respondent. In the above view of the matter, there will be a direction to the 3rd respondent to issue the necessary ‘No Objection Certificate’ to the petitioner. The petitioner shall produce the said NOC before the 4th respondent and seek the benefits from the 4th respondent. The 4th respondent shall consider such claim and pass orders thereon expeditiously, at any rate within a period of three months from the date of receipt of a copy of this judgment - petition disposed off.
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2018 (11) TMI 535
Absolute Confiscation - penalty - smuggling - gold bangle/kara - Baggage Rules - case of applicant is that the gold bangle/kara was not purchased from Bangkok, this was in his use when he left from India - Held that:- The applicant has not produced any evidence to establish that he had taken the Kara along with him from India itself and he has not been able to give a convincing reason as to why he had got the gold kara coated with silver colour if he had worn it as a religious symbol in India itself - Moreover, a steel kara is commonly used as a religious symbol and a gold kara is not generally considered as a religious symbol by the Sikhs. The Commissioner (Appeals)’s order is erroneous to the extent the gold has been confiscated absolutely as Under Section 125 of the Customs Act, 1962, it is mandatory to give option to the owner of the goods to redeem the non-prohibited confiscated goods on payment of a fine - the Government now allows the applicant to redeem the confiscated gold kara within 30 days of this order on payment of Customs duty, fine of ₹ 80,000/ and penalty of ₹ 22,000/- - revision application allowed in part.
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2018 (11) TMI 534
Revision application - absolute confiscation of Foreign currency - the revision application has been filed mainly on the ground that the Commissioner (Appeals) has erred by allowing the redemption of the absolutely confiscated foreign currency which are prohibited goods. Held that:- The Commissioner (Appeals) has noted in his order that the foreign currencies in this case had been arranged by the respondent by selling his two properties in Delhi. But this fact alone cannot attenuate the gravity of the offence committed by the respondent by not only procuring the foreign currencies from illegal resources in brazen violation of FEMA and various other laws in force but also by attempting to export the foreign currencies to a foreign country in contravention of Section 77 of the Customs Act, 1962. The Commissioner (Appeals) has overlooked these relevant facts while imposing redemption fine and reducing the penalty from ₹ 13 Lakhs to ₹ 2 Lakhs. The government considers that it would be just and proper if the confiscated foreign currencies are allowed to the respondent on payment of redemption fine of ₹ 7 Lakhs and personal penalty of ₹ 5 Lakhs - the revision application filed by the revenue is allowed.
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2018 (11) TMI 533
Revocation of CHA License - forfeiture of security deposit - breach of various provision of regulation 14 - absence of any statutory provision for limited revocation of a license - Held that:- It is the authority competent to issue the license that bears administrative responsibility for the jurisdiction in which the licensee is allowed to operate; the issue of a license, extension of such licences and revocation thereof are expressly provided for in the said Regulations. Whether there are any restrictions on receiving of a fresh licence is not apparent but the Regulations certainly do not provide for partial revocation and does not envisage a rollback except in circumstances of the original revocation being invalidated. The operation and control of Customs House Agents are best left to the judgement of Commissioner of Customs and that no intervention in the magnitude of penalty, save in obvious cases of being disproportionate or for violation of principles of natural justice and breach of procedure as prescribed in law is warranted - appeal dismissed.
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Insolvency & Bankruptcy
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2018 (11) TMI 559
Corporate insolvency resolution process - revival of a sick company - Held that:- In the present case, creditors of Corporate Debtor have initiated proceedings for winding up of the Company or the Corporate Debtor under Part VII of the Act of 1956 and not for a compromise and making arrangements for reconstruction of the company under Section 391 which is a part of Part VI, Chapter V of the Act of 1956. Although there can be no dispute about the proposition that during the pendency of the winding up proceeding, an application for compromise and making arrangements for rehabilitation of the Company can be filed under Section 391 of the Act of 1956. Leave is granted to continue with the Corporate Insolvency Resolution Process to the extent it is carried out under Chapter II, Part II of the Insolvency and Bankruptcy Code, 2016. All the creditors and also the operational creditors including the workers having preferential claims under Section 529A of the Companies Act, 1956 shall be allowed to submit their respective claims by the Resolution Professional by suitably extending the last date of submission of such claims in accordance with the provisions of the IBC, 2016 and relevant regulations and thereafter the Resolution Professional shall take necessary steps for completion of the resolution process in accordance with law. In case the forum under the IBC of 2016 which is National Company Law Tribunal, fails to revive or successfully implement the resolution plan, this Court seized of the winding up petitions would proceed to deal with these petitions in accordance with law and till then the effect of the order dated 21.3.2017 passed by this Court appointing provisional Official Liquidator is kept in abeyance. All the connected applications are disposed of accordingly. Company Application is also disposed of accordingly.
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2018 (11) TMI 558
Corporate Insolvency Resolution Process - default in repayment of loan advanced to the corporate debtor - winding up petition filed against the Corporate Debtor has been admitted - Held that:- If a winding up petition filed against the Corporate Debtor has been admitted by Hon'ble High Court and notice under rule 26 of the Companies (Court) Rules, 1959 was issued and such Company petition has not been transferred after the commencement of Insolvency and Bankruptcy Code, 2016 and winding up proceedings has been initiated and pending before the Hon'ble High court the remedy if any available to the creditors who has not joined in the said winding up proceedings is not to approach to the Tribunal under the provisions of the Code but to submit its claim before the Hon'ble high Court. Here in the case in hand, the Applicant Lakhotia transport Co. Pvt. Ltd. has moved the winding up petition long before the filing of this application by the Financial Creditor before this Tribunal. The winding up petition was filed before the Hon'ble High Court at Calcutta on 16-09-2014 and it was admitted on 17-08-2015 and notice was issued and advertisement of winding up petition was caused in the newspaper in terms of the winding up order on 14-09-2015. That order of admission of winding up proceedings is still in force. Truly the Financial Creditor has got an order referred to earlier from the Hon'ble High Court for reissuing publication of advertisement relating to winding up in the newspaper. It is incorrect to say that the order of admission was recalled as submitted by the Ld. Counsel for the Financial Creditor. In view of the above said discussion, it is considered view that applicable filed by the Financial Creditor (SBI) under section 7 of the I&B Code is not maintainable
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Service Tax
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2018 (11) TMI 530
Jurisdiction - exigibility to Service Tax - Retention amount - Held that:- This Court is of the clear and considered opinion that a Government Undertaking was clearly ill-advised to invoke the writ jurisdiction of this Court at the premature stage of show cause notice issued by the Service Tax Department and such premature writ petition deserves to be dismissed with costs for unnecessarily wasting the time of the Court - petition dismissed with cost.
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2018 (11) TMI 529
Time Limitation - Consignment agency commission - Service Tax demand is for the period from 16.07.1997 to 31.03.1998 against the respondent. SCN is issued on 13.06.2001 - Held that:- Section 73 of the Act stipulates that where any service tax has not been levied or paid or has been short-levied or short-paid, the demand could be made within eighteen months from the relevant date - In the case on hand, the service tax is demanded for the period ending 31.03.1998 whereas show-cause notice is issued on 13.06.2001, much beyond the statutory period. The contention that the proviso to Section 73 empowers extension of period upto five years and demand notice issued on 13.06.2001 is well within the proviso to Section 73 of the Act cannot be accepted on the facts of the present case - On perusal of SCN, it is seen that there is no allegation with regard to fraud, collusion, willful misstatement, suppression of fact nor contravention of any provisions or rules to evade payment of service tax - The ingredients of Section 73 of the Act are conspicuously absent in the SCN. Appeal dismissed.
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2018 (11) TMI 528
Cable Operator Service - demand for the period 1st April 2006 to 30th Sept. 2010 - short payment of Service Tax - Held that:- The appellant had evidently paid the substantial service tax and also paid the balance service tax along with interest, amounting to ₹ 18,06,665/- on or before 12th April 2007 for the period 2006-2007 and on 6th June 2011 for the period 2007-2008. We further find that the said amount have been adjudicated and appropriated in the impugned order. Period from 1st April 2008 to 30th Sept. 2010 - Held that:- The appellants have produced copy of their bank statement, which shows Nil credit during this period. Appeal allowed - decided in favor of appellant.
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2018 (11) TMI 527
Benefit of abatement denied - GTA Service under reverse charge mechanism - abatement denied on the ground that respondent did not submit documents establishing non-availment of Cenvat Credit by the service providers - Held that:- It could not emerge from the record of the appeal that during the relevant period, respondent had paid Service Tax of ₹ 13,76,166/- under Reverse Charge for GTA Service - during the relevant period covered by the appeal, Appellant paid Service Tax of ₹ 10,692/-. There is no basis for the demand of Service Tax of ₹ 38,90,241/ - appeal dismissed - decided against Revenue.
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2018 (11) TMI 526
Demand of Service Tax - the amount of consideration received by the appellant during the aforementioned period was computed on the basis of information received from the service recipient and the information received from complainant - principles of natural justice. Held that:- The computation of consideration received by the appellant was on the basis of certain figures which were adopted by revenue such as for the year 2008-09 which was not reflected in any of documents whereas the said amount has been adopted from the figures submitted by the complainant which was not accompanied by any documentary evidence. Further, the amount of service tax deposited was not taken into consideration against the tax due on the appellant. Matter remanded to the Original adjudicating authority after setting aside the impugned order for fresh adjudication preferably within a period of 3 months from today - appeal allowed by way of remand.
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Central Excise
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2018 (11) TMI 525
Competence of Officer who has drawn SCN - Time Limitation - Held that:- There is no reason to interfere with the impugned judgment - SLP dismissed.
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2018 (11) TMI 524
Recovery of re-credited amount alongwith Interest and penalty - Consolidated reversal of the individual debit entries in the CENVAT credit account upon discharge of duty liability for the second time on clearance to customers - Held that:- There is no dispute on the quantum of duty liability discharged thereby. It is the contention of Learned Authorised Representative that, notwithstanding the discharge of duty liability twice, assessee was not entitled to take credit on its own except in relation to inputs received in the factory of manufacture. The assessee was, thereby, held to be eligible for that quantum of credit from the date on which the goods were cleared to their customers on payment of appropriate duties of central excise. The proceedings for recovery of that amount cannot be sustained in consequence - With the entitlement of re-credit, effective from the date of payment of duties for the second time, there is no scope for recovery of interest. Appeal allowed - decided in favor of assessee.
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2018 (11) TMI 523
Classification of goods - Aseptic Packaging Paper - whether classified under CTH 481151/481159 or under CTH 481190? - Held that:- Circular dated 26.07.2010 has clarified that aseptic packaging paper covered with plastic is classifiable under Tariff Item No.48115100 or 48115900 - the reliance for issue of show cause notice that the packaging material must contain plastic to qualify its description as aseptic packaging paper is not in accordance with above referred circular - appeal allowed - decided in favor of appellant.
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2018 (11) TMI 522
Waiver of pre-deposit - Vires of Section 35F of The Central Excise Act, 1944 - requirement of pre-deposit for entertaining appeal - inherent power of Tribunal to waive off pre-deposit in exceptional cases - Held that:- There is a little doubt that the Tribunal which is a creation of statute is bound by the procedure of a statute - In this particular case, when the provisions of Section 35F of the Act gives no flexibility waiving off the pre-condition of a deposit, there would be little room to hold the order of the Tribunal as erroneous. There would be no escape from pre-deposit as the Tribunal lacks the power to entertain the appeal without it - If we have to lend any other interpretation, it would defeat the legislative intent which is so clearly visible from the provisions of Section 35-F of the Act and in fact, there would have been no necessity of amendment and Section 129(E) in its un-amended form need not have been tinkered with. Petition dismissed.
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2018 (11) TMI 521
Imposition of personal penalty - existence of trading activity or not? - Held that:- In respect of the goods on which demand of around 58 lakhs was confirmed, there is no evidence of manufacture produced by Revenue for leveling of charges of manufacture and duty liability. It is only because after lapse of time such person could not be produced, the said duty was confirmed. The burden of proof was on Revenue to establish that said goods were manufactured by the appellant and such burden was not discharged by Revenue. Appeal allowed - decided in favor of appellant.
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2018 (11) TMI 520
Valuation - inclusion of investment subsidy granted in Form 37B in assessable value - Held that:- Identical issue decided in the case of SHREE CEMENT LTD. SHREE JAIPUR CEMENT LTD. VERSUS CCE, ALWAR [2018 (1) TMI 915 - CESTAT NEW DELHI], where it was held that There is no justification for inclusion in the assessable value, the VAT amounts paid by the assessee using VAT 37B Challans - appeal allowed - decided in favor of appellant.
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Indian Laws
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2018 (11) TMI 532
Delay in filing Securitisation application - power of Debt Recovery Tribunal to condone delay - Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 - whether the Debt Recovery Tribunal has the power to condone the delay in filing the Securitisation application (SA) under Section 17 of the 2002 Act? Held that:- There is a specific provision under Section 17(7) of the 2002 Act stating that the Debts Recovery Tribunal, as far as may be, dispose of the application in accordance with the provisions of the 1993 Act and the rules made thereunder. Further, Section 24 of the 1993 Act states that the provisions of the Limitation Act, 1963 would apply to an application made to the Tribunal. Hence the intention of the legislature clearly shows that the provisions of the Limitation Act, 1963 are specifically applicable to the 2002 Act. The legislature has not specifically excluded the provisions of the Limitation Act, 1963. It is well settled that the Limitation Act, 1963 is procedural law. In Hitendra Vishnu Thakur vs. State of Maharashtra, [1994 (7) TMI 343 - SUPREME COURT OF INDIA], it has been held by the Supreme Court that law relating to forum and limitation is procedural in nature, whereas law relating to right of action and right of appeal even though remedial is substantive in nature. Section 17(1) of the 2002 Act is virtually a remedy in respect of a right of redemption. Hence the application of Section 5 of the Limitation Act, 1963 to proceedings under Section 17(1) of the 2002 Act would neither defeat the rights nor cause irreparable hardship to the secured creditor. The provisions of the Limitation Act, 1963 are applicable to the proceedings under Section 17 of 2002 Act before the DRT in view of Section 24 of the 1993 Act and therefore, the provisions of section 5 of the Limitation Act, 1963 are applicable to the provisions of the said Act. Further, 2002 Act does not expressly exclude the application of the provisions of the Limitation Act, 1963. The impugned orders passed by the DRT dismissing the application under section 17 of the 2002 Act on the ground that the Debt Recovery Tribunal does not have the power to condone the delay, are quashed - petition allowed.
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2018 (11) TMI 531
Illegal sale of banned products like gutkha and pan masala in the city - whether this Court should constitute a Special Investigation Team to investigate into the involvement of State and Central Government officials and public servants in the manufacture, sale and distribution of gutkha and pan masala containing tobacco and/or nicotine in the State of Tamil Nadu? Held that:- In exercise of power under Article 226 of the Constitution of India, the Court can entertain a petition in public interest whenever its attention is drawn to any injustice or patent illegality. In a public interest litigation, the common rule of locus standi is relaxed and any public spirited citizen can approach this Court to seek redress on behalf of the public in general or any specific group - The Court is constitutionally bound to protect the fundamental rights of the people. If issues of public importance and infringement of fundamental and other basic rights of a large number of people are raised, the Court would be duty bound to pass necessary orders. Whenever injustice is meted out, the Court would not hesitate to step in. The unabated sale of gutkha and other forms of chewable tobacco adversely affecting the health of the community is a matter which calls for interference of this Court. It is well settled that the endeavour of the Court should be to harmonize two Acts seemingly in conflict. Of course, in this case there does not appear to be any conflict between COTA and the Food Safety Act. COTA is in addition to and not in derogation of other laws relating to food products. There is no non obstante clause in COTA which excludes the operation of other Acts. Considering the harmful effects of consumption of chewable tobacco, such as gutkha, which leads to fatal ailments such as cancer, this court cannot shut its eyes to the malaise of illegal manufacture and sale of gutkha within the jurisdiction of this High Court, i.e., the State of Tamil Nadu and the Union territory of Puducherry - The illegal manufacture, distribution and sale of gutkha and other forms of chewable tobacco is an organized crime which has inter-State ramifications. It involves breach of Central Laws, including Central Excise Laws and the Income Tax Laws, apart from the Food Safety Act, which in itself is a Central Law, which the Central Government and the State Governments are obliged to enforce. The Prevention of Food Adulteration Act having repealed and replaced by the Food Safety Act, any reference in a statutory notification to the repealed Prevention of Food Adulteration Act would have to be construed as reference to the Food Safety Act by virtue of Section 8 of the General Clauses Act, 1897. There can, therefore, be no doubt that CBI has the power to investigate into the illegal manufacture, distribution and sale of gutkha and other forms of chewable tobacco. The handing over of investigation to CBI only ensures a co-ordinated investigation, particularly in specified categories of serious offences having ramifications in more than one State. It neither casts any aspersion on the mode and manner of investigation conducted by the State Police or the State Vigilance authorities nor does it necessarily reflect any finding even prima facie of interference of any constitutional authority or any high official of the State Government in such investigation - It is well-settled that justice should not only be done, but manifestly be seen to have been done. Justice is delivered not just by the Courts which adjudicate disputes and exercise powers of judicial review, but also by the Executive which administers the law. A fair and impartial investigation is an essential ingredient of delivery of justice and investigation should not only be fair and impartial, it should manifestly be seen to be fair and impartial. It appropriate to direct the CBI to investigate into all aspects of the offence of illegal manufacture, import, supply, distribution and sale of gutkha and other forms of chewable tobacco which are banned in the State of Tamil Nadu and the Union territory of Puducherry, including detection of and action against those involved in the offence as aforesaid, whether directly or indirectly, by aiding abetting the offence or interfering with attempts to curb the offence - This order is not only imperative to stop the menace of the surreptitious sale of gutkha and chewable forms of tobacco which pose a health hazard to people in general and in particular the youth and to punish the guilty, but also to instil faith of the people in the fairness and impartiality of the investigation. Petition disposed off.
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