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TMI Tax Updates - e-Newsletter November 22, 2021 Case Laws in this Newsletter: GST Income Tax Customs Service Tax CST, VAT & Sales Tax Indian Laws Highlights / Catch Notes GST: Prosecution, u/s 132(1)(c) of the Central Act - parallel proceedings u/s 74 - There is no principle in law as may warrant any interference in the present petition to either grant injunction against the pending proceedings under Section 74 of the Central Act or to quash the same, merely because the criminal proceedings is pending against the petitioner arising from the same transaction under Section 132(1)(c) of the Central Act - Both proceedings may continue simultaneously - HC Visit to Get Source GST: Inter-state transportation of goods - U.P. E-way bill - The goods were being transported alongwith the taxinvoice etc., therefore, it was not a fraudulent transaction and there is nothing on record to show otherwise. Moreover, as already stated vide Annexure-2 I.G.S.T. at the rate of 18% had already been paid. - admittedly till 31.3.2018 it was not mandatory to download e-way bill from the official portal. The court further observed that it found substance in the submission of the learned counsel for the petitioner that only with effect from 1.4.2018 the requirement of downloading of e-way bill was compulsory. - The writ petition is allowed - HC Visit to Get Source GST: Transfer of credit by permitting the petitioner to resubmit form GST TRAN-2 electronically or manually - stock valuation - Section 140 (3) of the CGST Act read with Rules framed - On the same day on 14.06.2018 itself the petitioner raised an objection to the Department regarding non-reflection of input tax credit for the month of July, 2017. - The petitioner cannot be deprived of its rightful tax credit if otherwise available in law. The respondents shall ensure that such declaration of the petitioner is accepted - HC Visit to Get Source GST: Seeking grant of Anticipatory Bail - registration certificate was not surrendered and no returns were being filed - sole proprietor of said firm expired - Keeping in view entire facts of the matter brought on record, quantum of evasion of tax involved in the matter, period of custody of applicant and all attending facts and circumstances of the case, the Court is of the view that a case for bail is made out. - HC Visit to Get Source GST: Seeking grant of Bail - availment of irregular input tax credit - there was neither any purchase nor sale of goods and that the transactions were made only on paper with a view to illegally avail ITC - the petitioner has been successful in making out a good case for his release on bail. On the other hand, the prosecution has failed to satisfy the court as to how it would be prejudiced by grant of bail to the petitioner - HC Visit to Get Source GST: Violation of the principles of natural justice - Validity of GST assessment order - no opportunity of filing an objection and personal hearing provided - Section 74 (1) of the CGST/SGST Act, 2017 - It cannot be said that petitioner had been granted sufficient opportunity to reply to the notice - The order is liable to be set aside - Matter restored back - HC Visit to Get Source Income Tax: Rejecting the method of accounting adopted by the Appellant-Assessee for the AYs - In the present case, with the Revenue having accepted the Assessee’s method of accounting for AYs 1990-91 and 1991-92, there is no reason for it to reject it for the earlier three AYs particularly considering that it is the same contract spread over the five AYs. - HC Visit to Get Source Income Tax: Reopening of assessment u/s 147 - notice issued without approval of competent authority - In the order dated 21/09/2021 rejecting this objection, the AO does not deny that the approval was dated 26/06/2019 whereas the notice was dated 25/06/2019 but simply states that the reason of escapement of income was sent for approval to Additional CIT on 14/06/2019 much before the notice under Section 148 was issued. - Re-assessment proceedings quashed - HC Visit to Get Source Income Tax: Revision u/s 263 by CIT-A - AO’s order is not erroneous and prejudicial to the interest of revenue since mark to market loss incurred by Company on revaluation of forward contracts is an allowable deduction as the loss claimed by the assessee co. was in accordance with a recognized method of accounting, the loss claimed by the assessee co. was not a notional/contingent loss, but is an actual loss and the mark-to-market loss on forward contracts has not been treated as a contingent liability in the audited financial statements. Thus, the mark-to-market loss on forward contracts cannot be said as contingent in nature. - Revision order u/s 263 set aside - AT Visit to Get Source Income Tax: Revision u/s 263 by CIT-A - Jurisdiction of AO - invalid notice u/s 143(2) - The issuance of notice u/s 143(2) is governed by statutorily prescribed procedures. On a combined reading of Sections 120(1), 120 (2), 124(1), Rule 12E of the IT Rules, 1962 and transfer order passed by CIT under Section 127 of the Act, we have no hesitation to hold that there was no valid jurisdiction available whatsoever with the Assessing Officer, Kolkata in the instant case. The notice issued under Section 143(2) of the Act by such officer is thus wholly without jurisdiction and thus a non-est notice. - AT Visit to Get Source Income Tax: Addition made by the AO on account of receipts on which commission was paid by the assessee - The addition now being made of the same by estimation on the basis of documents revealing commission paid to doctors ,is as rightly stated by the Ld.CIT(A), nothing but adopting a different method for calculating the same, unless it is clearly and specifically demonstrated otherwise, which, we find, is not the case before us. - this being double addition in the preceding and succeeding year in the case of the assessee, which order has been accepted by the Revenue - No additions - AT Visit to Get Source Income Tax: Disallowance by relying on CBDT Circular No. 5/2012 r.w explanation 1 to Sec. 37(1) - scope of regulations issued by Medical Counsel of India - claim of marketing & promotional activity - we follow the judicial precedence and set aside the order of the CIT(A) to the extent of disallowance of sale promotion expenses incurred by way of gifts, freebies, travel allowance and monetary grants and direct the Assessing Officer to delete the addition and allow the ground of the appeal of assessee. - AT Visit to Get Source Income Tax: Addition u/s 68 unexplained cash credit - We deem it just and proper and reasonable to cover all possible leakage of revenue, to tax only profit element embedded in the sale proceeds received and deposited by the assessee in the bank account. In view of facts stated above, thus direct the AO to tax 10% of the total impugned amount as profit/income of the assessee from sale of paddy and to delete the remaining amount. - AT Visit to Get Source Customs: Refund of Customs Duty paid - denial on the ground that the appellant had not filed any appeal - The appellant is directed to make an application under section 154 of the Customs Act, 1962 for Re- assessment of Bills of Entry. The Proper officer shall consider the application to be made under section 154 of the Customs Act, 1962 in accordance with law - AT Visit to Get Source Customs: Revocation of CHA License - Forfeiture of security deposit - levy of penalty - The absence of seals and the discrepancy in weight pertained to containers delivered at the designated place of export before the shipping bill was filed; these occurred prior to the statutory responsibility thrust upon the customs house agent could be said to have commenced. Furthermore, the licensing authority failed in ascertaining the extent of responsibility as it is evident that the custodian had been derelict in accepting such consignments or that such deliveries were conventionally accepted in the said jurisdiction. - Appeal allowed - AT Visit to Get Source Service Tax: Valuation - Works contract service - Composition scheme - Where the value has already been split as per the state law and VAT has been paid on the goods component of the composite works contract, no service tax can be levied on such component again taking recourse to Rule 2A(ii) of Service Tax (Determination of Value) Rules, 2006. - AT Visit to Get Source VAT: Valuation - addition of transportation charges to the sale price of the goods - nexus to sustain enhancement of turnover - With there being no evidence placed on record to show that the transportation charges were in fact collected by the Petitioner, it is not possible to sustain the above conclusion of the Tribunal - the question is answered in the negative, in other words, in favour of the dealer and against the Department. - HC Visit to Get Source VAT: Validity of re-assessment order - enlargement of time limitation with prospective effect or not - Section 39(1) of KVAT Act - The amendment made to Section 40 of the Act, cannot be construed so as to open up a liability which had become barred. Therefore, even by retrospective operation of law, the aforesaid vested right accrued to the petitioner cannot be taken away. - HC Visit to Get Source Articles ABOUT NIDHI COMPANY Notifications GST - States 61/2021-State Tax - dated 18-11-2021 - Delhi SGST Amendment in Notification No. 13/2020 – State Tax, dated the 31st March, 2021 22/2021– State Tax - dated 18-11-2021 - Delhi SGST Seeks to rationalize late fee for delay in filing of return in FORM GSTR-7 04/2021-State Tax (Rate) - dated 18-11-2021 - Delhi SGST Amendment in Notification No. 11/2017- State Tax (Rate), dated the 30th June, 2017 (17/2021) FD 55 CSL 2021 - dated 18-11-2021 - Karnataka SGST Amendment in Notification (17/2017) No. FD 48 CSL 2017, dated the 29th June, 2017 (16/2021) FD 55 CSL 2021 - dated 18-11-2021 - Karnataka SGST Amendment in Notification (12/2017) No. FD 48 CSL 2017, dated the 29th June, 2017 (15/2021) FD 55 CSL 2021 - dated 18-11-2021 - Karnataka SGST Amendment in Notification (11/2017) No. FD 48 CSL 2017, dated the 29th June, 2017 (14/2021) FD 55 CSL 2021 - dated 18-11-2021 - Karnataka SGST Amendment in Notification No. (01/2017) No. FD 48 CSL 2017, dated the 29th June, 2017 Case Laws: GST 2021 (11) TMI 722 Prosecution, under Section 132(1)(c) of the Central Act - parallel proceedings under Section 74 of the Central Goods and Services Tax Act, 2017 - HELD THAT:- It appears, arising from investigation carried out on the basis of certain information received from the petitioner's bank, two proceedings have arisen - one under Section 74 of the Central Act and another seeking prosecution, under Section 132(1)(c) of the Central Act. In the first place, the proceedings under Section 74 of the Central Act have been initiated against the petitioner vide show cause notice dated 04.06.2021 requiring it to show cause - criminal prosecution has been initiated before the court of competent jurisdiction namely the Chief Judicial Magistrate, Meerut. There is no difficulty in recognizing the principle that the single transaction may give rise to both criminal and civil consequences. In the instant case, the same appears to have been caused. There is no principle in law as may warrant any interference in the present petition to either grant injunction against the pending proceedings under Section 74 of the Central Act or to quash the same, merely because the criminal proceedings is pending against the petitioner arising from the same transaction under Section 132(1)(c) of the Central Act - Both proceedings may continue simultaneously such that the rule of evidence applicable to each may be applied independently. Petition dismissed. 2021 (11) TMI 721 Validity of proceedings initiated under Section 74 of the UPGST Act - mandatory opportunity contemplated by the Rule has been denied to the writ petitioner - Rule 142 (1A) and Rule 142 (2A) of UPGST Rules - HELD THAT:- Though the order is appealable, there is a patent error has crept in the impugned order inasmuch as no adjudication notice appears to have been issued to the petitioner before passing the order dated 18.02.2021. That being an undisputed fact, no useful purpose would be served in relegating the petitioner to avail statutory alternative remedy, at this stage. The order dated 18.02.2021 is set aside. It is provided that that the petitioner may treat the order dated 18.02.2021 as the final notice issued to it under Section 74(1) of the Act and submit its reply within four weeks from today - Petition disposed off. 2021 (11) TMI 720 Maintainability of appeal - non-constitution of the G.S.T. Tribunal - appeal is prescribed under the U.P.G.S.T. Act 2017 before the G.S.T. Tribunal under section 112 of the said Act, but the petition was entertained - inter-state transportation of goods - HELD THAT:- Considering the fact that it was a inter-State transportation of goods, the U.P.G.S.T. Act 2017 did not apply and it is the I.G.S.T. Act 2017 and by virtue of section 20(15) of the said I.G.S.T. Act 2017 it was the C.G.S.T. Act 2017 which would apply in respect of matters covered by the I.G.S.T. Act 2017 on the subject of inspection, search, seizure and arrest. It being an inter-State transfer of goods there was no requirement of carrying the U.P. State e-way bill. For all these reasons the insistence by the State authorities that the petitioner's vehicle was not carrying the U.P. E-way bill is without any factual and legal basis. The goods were being transported alongwith the taxinvoice etc., therefore, it was not a fraudulent transaction and there is nothing on record to show otherwise. Moreover, as already stated vide Annexure-2 I.G.S.T. at the rate of 18% had already been paid. In the instant case goods being transported were interceipted on 19.2.2018, when there was no system of e-way bill in place under C.G.S.T. Act 2017 and U.P.G.S.T. was not applicable - In the judgment in M/S. SHAURYA ENTERPRISES VERSUS STATE OF U.P. AND 02 OTHERS [ 2018 (10) TMI 1237 - ALLAHABAD HIGH COURT] the Division Bench has categorically held that admittedly till 31.3.2018 it was not mandatory to download e-way bill from the official portal. The court further observed that it found substance in the submission of the learned counsel for the petitioner that only with effect from 1.4.2018 the requirement of downloading of e-way bill was compulsory. Petition allowed. 2021 (11) TMI 719 Transfer of credit by permitting the petitioner to resubmit form GST TRAN-2 electronically or manually - stock valuation - Section 140 (3) of the CGST Act read with Rules framed - HELD THAT:- In the present petition we are impressed by the petitioner s argument of no fault on the part of the petitioner in properly uploading the petitioner s input tax credit for the month of July, 2017. The Department does not dispute that the petitioner had made monthly declaration in Tran 2 form for all three months of July, August and September, 2017. This was done on a single date i.e. 14.06.2018. 2. For the months of August and September, 2017, the system showed the input tax credit as declared by the petitioner in the respective Tran-2 forms. 3. On the same day on 14.06.2018 itself the petitioner raised an objection to the Department regarding non-reflection of input tax credit for the month of July, 2017. The petitioner cannot be deprived of its rightful tax credit if otherwise available in law. The respondents shall ensure that such declaration of the petitioner is accepted - Petition disposed off. 2021 (11) TMI 718 Seeking grant of Anticipatory Bail - registration certificate was not surrendered and no returns were being filed - sole proprietor of said firm expired - HELD THAT:- In the instant matter, perusal of record shows that Smt. Sushma Devi, who is mother of applicant, was sole proprietor of alleged M/s Vikas Company and she expired on 28.04.2021. As per prosecution version, applicant-accused, being her eldest son, was looking after and co-operating of manufacturing and supplies of activities in the name of M/s Vikas Company and as per documents, applicant and his brothers are actual beneficiaries and that tabulation conducted so far has reveled evasion of GST of ₹ 1,01,76,022/- and Central Excise duty of ₹ 31,90,909/-. It is apparent that so far evasion of GST of ₹ 1,01,76,022/- and Central Excise duty of ₹ 31,90,909/- has been revealed, however, it has been stated that investigation is still going on and that on the basis of assumption, total GST evasion is more than ₹ 5 crores. It is not disputed that an amount of ₹ 1,23,61,000/- was seized from premises of said firm, which was taken into possession by the DGGI officials. This legal proposition could also not be disputed that as per provisions of Section 132(1)(iii) of Central Goods and Services Tax Act 2017, the evasion of tax of ₹ 1,01,76,022/- is a bailable offence and that in this case, amount of ₹ 1,23,61,000/- has already been seized from the premises of applicant. Keeping in view entire facts of the matter brought on record, quantum of evasion of tax involved in the matter, period of custody of applicant and all attending facts and circumstances of the case, the Court is of the view that a case for bail is made out. The bail application is hereby allowed . 2021 (11) TMI 717 Seeking grant of Bail - availment of irregular input tax credit - there was neither any purchase nor sale of goods and that the transactions were made only on paper with a view to illegally avail ITC - offence punishable under Section 132(1)(i) of Odisha Goods and Services Tax Act, 2017 - HELD THAT:- Investigation ought to be completed within 60 days as per Section 167 Cr.P.C. Of course, Section 173(8) Cr.P.C. permits the investigating agency to keep the investigation open. But the same, if not concluded for an indefinite period, cannot obviously be cited as a ground to detain the accused in custody. As is seen, the initial prosecution report was filed way back on 09.10.2020 and till date further investigation is said to be in progress. Thus, more than a year has elapsed from the date of submission of initial P.R.. This cannot be a ground to detain the accused in custody indefinitely. Without expressing any opinion on this point, this Court is of the considered view that since the transactions in question were basically one and the same involving the present petitioner and the co-accused Atul Bansal, there is hardly any justification to treat the petitioner differently than him. Coming to the apprehension of the prosecution that the present petitioner may tamper with the evidence, this Court is unable to accept the same for the reason that a bare perusal of the prosecution report would suggest that the same was submitted after thorough investigation during which several documents and records were verified and statements collected from different persons. The report of further investigation also suggests that the same has been/is being conducted in different States whereby, several incriminating materials have supposedly been discovered - the apprehension expressed by the prosecution does not appear to be reasonable for being considered as a ground to refuse bail to the petitioner. This Court finds that the petitioner has been successful in making out a good case for his release on bail. On the other hand, the prosecution has failed to satisfy the court as to how it would be prejudiced by grant of bail to the petitioner - It is directed that the petitioner shall be released on bail by the court in seisin over the matter on such terms and conditions as may be imposed by it. The application for bail is allowed. 2021 (11) TMI 716 Seeking permission to correct the cause title of the petition - Rule 23 of the Central Goods and Service Tax Rules (CGST Rules) or Rule 23 of the Odisha Goods and Service Tax Rules (OGST Rules) - HELD THAT:- The Petitioner is permitted to correct the cause title of the writ petition or file consolidated cause title forthwith. In the existing cause title portion, the provision mentioned Odisha Goods and Services Tax Act, 2017 and the Odisha Goods and Services Rules, 2017 be also corrected as Central Goods and Services Tax Act, 2017 and the Central Goods and Services Rules, 2017 . Accordingly, in the cause title of the order sheet The Commissioner, CT and GST Odisha be read as The Commissioner, CGST, Central Excise and Customs and Others . Though no averment is made in this application with regard to para 2 of the order dated 8th September, 2021 regarding Rule 23 of the Odisha Goods and Service Tax Rules (OGST Rules), according to learned counsel for the Petitioner, the relevant provision is Rule 23 of the Central Goods and Service Tax Rules (CGST Rules). Application for recalling of the order is allowed. 2021 (11) TMI 715 Levy of Interest - Section 50 of the Jharkhand Goods and Services Tax Act, 2017 - HELD THAT:- The issue relating to levy of interest on net tax liability under Sect ion 50 of the JGST Act, 2017 shall stand governed by the decision in the case of [ 2021 (3) TMI 645 - JHARKHAND HIGH COURT ] where it was held that Petition disposed off. 2021 (11) TMI 714 Violation of the principles of natural justice - Validity of GST assessment order - no opportunity of filing an objection and personal hearing provided - Section 74 (1) of the CGST/SGST Act, 2017 - HELD THAT:- A perusal of Ext.P8 order shows that the same had been issued without giving a breathing time to petitioner. An assessment order being the commencement point of various rights and or obligations that accrue to assessees, it is necessary that a reasonable time is granted to the assessees to file their objections. In this context, it is relevant to bear in mind that the Hon'ble Supreme Court had extended all periods of limitation till 02.10.2021 taking into consideration, the specific issues relating to Covid. It cannot be said that petitioner had been granted sufficient opportunity to reply to the notice - Ext.P8 is liable to be set aside - Petition allowed. Income Tax 2021 (11) TMI 713 Rejecting the method of accounting adopted by the Appellant-Assessee for the AYs - Assessee s method of accounting for the immediate two succeeding AYs i.e. 1990-91 and 1991-92 was accepted - Assessee adopted the completed contract method - HELD THAT:- In the present case, with the Revenue having accepted the Assessee s method of accounting for AYs 1990-91 and 1991-92, there is no reason for it to reject it for the earlier three AYs particularly considering that it is the same contract spread over the five AYs. The impugned order of the ITAT on the above issue is unsustainable in law and is hereby set aside. The corresponding orders of the CIT (A) and the AO on the same issue are set aside as well. The question framed is answered in favour of the Assessee and against the Department by holding that the Department is not right in rejecting the accounting method followed by the Assessee for the AYs in question. 2021 (11) TMI 712 Reopening of assessment u/s 147 - reassessment proceeding after 4 years - whether no failure on the part of assessee to disclose all material facts when it is apparent from records that it was never disclosed as to how the interest received from GOI Tax Free Bonds in the hands of the Estate of EF Dinshaw, will also be tax free on distribution to assessee by virtue of the said immunity of the scheme? - HELD THAT:- ITAT has given a finding of fact that the computation of income for AY 2005-06 filed along with original income tax returns u/s 139(1) of the Act, personal balance-sheet and income and expenditure account filed along with returns u/s 139(1) of the Act contain entries relating to this amount received as interest on Tax Free Bonds. AO had also raised a query in this regard and the Assessee has given proper explanation before the AO and after considering the explanation, the earlier assessment order was passed u/s 143(3) - ITAT has concluded and it is quite evident by considering the order passed by the AO and CIT(A) that there was no new material in the hands of the assessing authority or there was any lapse on the part of the Assessee to disclose material facts before the assessing authority. CIT(A), in his order, states that the Appellant has failed to disclose fully and truly as to how the interest income is not exempt in the hands of the investor and as to how the exemption of interest has been granted by the legislature in the hands of transferee, i.e., the Respondent. According to CIT(A), Respondent has not placed any authority to establish the exemption of interest credited by Respondent in his books of accounts on such interest being earned on the corresponding Government of India Bonds. Therefore, we do not find anything wrong in the conclusion arrived at by the ITAT that there was no lapse on the part of the Assessee to disclose material facts. ITAT has not committed any perversity of 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, then, we do not think that questions as pressed raise any substantial questions of law. 2021 (11) TMI 711 Revision u/s 263 by CIT - claim of capital gain on transfer of land - HELD THAT:- When it is not disputed that the land concerned would not fall under the definition of capital asset, the question of any capital gains arising also will not arise - We also find that the ITAT has come to a factual finding that the AO has raised queries with regard to the claim of capital gain on transfer of land, Respondent vide its reply dated 31/01/2014 furnished the details in respect of distance of agricultural land from municipal limits, record of population as per last census and the AO after considering the reply of Respondent, accepted the claim of Respondent. ITAT has given a finding that the claim of capital gain was accepted by AO after necessary inquiry and the order under Section 143(3) of the Act was passed. It is true that the AO has not passed any written detailed order while accepting the explanation of capital gains of Respondent but the fact is AO had raised queries and Respondent has given detailed reply means the AO has passed this order after making necessary inquiries. We agree with the view of the ITAT that the order of the AO cannot be branded as erroneous merely because the order does not contain the details which Principal Commissioner feels should have been included. Principal Commissioner cannot decide how elaborate an order of the AO should be. Where the AO, during the scrutiny assessment proceedings, has raised a query which was answered by the Assessee to the satisfaction of the AO but the same was not reflected in the AO by him, the Commissioner cannot conclude that no proper inquiry with respect to the issue was made by the AO and enable him to assume jurisdiction under Section 263. ITAT 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, then, we do not think that questions as pressed raise any substantial questions of law. 2021 (11) TMI 710 Reopening of assessment u/s 147 - notice issued without approval of competent authority - HELD THAT:- There was non-application of mind while granting the approval. Moreover, in the order dated 21/09/2021 passed by Respondent dealing with the objections filed by Petitioner, the stand of the AO is not what Mr. Suresh Kumar stated in Court today. In the objection dated 17/09/2021, Petitioner has brought to the notice of the AO that notice issued u/s 148 dated 25/06/2019 was illegal and was issued without approval of competent authority and approval dated 26/06/2019 was an afterthought to cover up the action of the learned Deputy CIT. In the order dated 21/09/2021 rejecting this objection, the AO does not deny that the approval was dated 26/06/2019 whereas the notice was dated 25/06/2019 but simply states that the reason of escapement of income was sent for approval to Additional CIT on 14/06/2019 much before the notice under Section 148 was issued. Petitioner s submission that the notice dated 25/06/2019 issued u/s 148 of the Act was illegal since there was no prior approval as required under Section 151(2) of the Act has to be accepted. Notice itself has to be quashed and set aside. In such a case, the consequential orders also have to be set aside. Therefore, prayers (a) and (a1) which read as under, are granted. (a) a writ in the nature of mandamus, prohibition, certiorari, or any other appropriate writ, direction or order quashing the notice dated 25.06.2019 issued by the Respondent No.1 under section 148 and consequent proceedings initiated pursuant thereto under section 147 of the Act; (a1) issue a writ of Certiorari or any other appropriate writ, direction, or order thereby quashing and setting aside the impugned order dated 21.09.2021 (Exhibit G) and impugned assessment order dated 28.09.2021 (Exhibit N) passed by the Respondents. 2021 (11) TMI 709 Revision u/s 263 by CIT-A - allowability of mark-to-market loss on forward contracts - HELD THAT:- AO scrutinized the expenses debited to the Profit and Loss account for the subject year in detail and cannot have said to missed mark-to-market loss on forward contracts which is apparent in the other expenses note of Financial statements. This clearly shows that the documents and submissions/ details filed were duly verified and considered by the Ld. AO while passing the Assessment order. AO duly examined the issue and with due application of mind, the ld. AO did not invoke any disallowance on account of mark-to-market on forward contracts. This view is supported by the order of Jurisdictional bench of ITAT in the case of Vidisha Tractors [ 1995 (5) TMI 73 - ITAT INDORE] Assessee co. meets all the requirements viz. it has been consistently following the mercantile system of accounting, it has been consistently recognising the mark to market gains/losses as per the accounting standards and it has been giving the same treatment to mark to market gains as given to mark to market losses i.e. the mark to market gains credited to the Profit and Loss Account are duly offered to tax, then the Ld. AO was justified in allowing the mark to market loss of ₹ 30,31,69,199 on forward contracts. We find that the identical issue of mark to market loss on forward contracts (that are not entered for trading/speculation purposes) has also been held to be an allowable deduction by the ratio laid down in the case of HEG Limited [ 2018 (10) TMI 59 - ITAT INDORE] AO s order is not erroneous and prejudicial to the interest of revenue since mark to market loss incurred by Company on revaluation of forward contracts is an allowable deduction as the loss claimed by the assessee co. was in accordance with a recognized method of accounting, the loss claimed by the assessee co. was not a notional/contingent loss, but is an actual loss and the mark-to-market loss on forward contracts has not been treated as a contingent liability in the audited financial statements. Thus, the mark-to-market loss on forward contracts cannot be said as contingent in nature. Therefore, the Ld. PCIT has erred in invoking powers under section 263 of the Act. Accordingly, we set aside the order of the ld. PCIT holding it invalid and restore the order of the Assessing Officer. Consequently, grounds raised in the appeal of the assessee for the assessment year 2014-15 stand allowed. 2021 (11) TMI 708 Assessment u/s 153A - Addition u/s 68 - HELD THAT:- As the amount so received for proposed share subscription from the group co. i.e. EFPL was also repaid in the subsequent assessment years and thus amount kept in custody temporarily in a fiduciary capacity could not have been added in the hands of assessee by resorting to Section 68 - A reference was made to the judicial precedents, namely, CIT vs. Karaj Singh [ 2011 (3) TMI 951 - PUNJAB AND HARYANA HIGH COURT] ); Smt. Panna Devi Chowdhary [ 1994 (3) TMI 80 - BOMBAY HIGH COURT] many more decisions for the proposition that the factum of repayment transgresses all other considerations and the question of bonafides of receipts of share application money fades into insignificance where the amount so received stands repaid and returned. The facts in the instance are speaking for itself. We are fully convinced with the process of reasoning and the objective analysis by the CIT(A) and conclusion derived therefrom. We do not intend to repeat each and every observations. The action of CIT(A) is in consonance with the binding precedents of Jurisdictional High Court. Hence, we see no reason to depart from the rationale of the decision of the CIT(A) on reversal of additions under s.68 of the Act pertaining to A.Y. 2012-13 in question. Addition on account of low yield declared - HELD THAT:- AO has made discussions on mathematical calculations pertaining rolling material division, the additions have been made towards low yield in SMS Division. CIT(A) observed that assessee has furnished explanation on all the documents seized during the course of search and the explanation of the assessee were test checked with reference to seized material, books of accounts, bills/invoices and other evidences and found to be satisfactory. It was further noted that the AO has not pointed out any infirmity in the explanation of the Assessee. CIT(A) in our mind has analysed the factual matrix threadbare. Without repeating all the observations of the CIT(A), we find ourselves in complete agreement with the conclusion drawn by the CIT(A) - CIT(A) has objectively analyzed the factual situation and found complete absence of any adverse material against the assessee which can support the allegation of the AO towards unaccounted production presumed on the basis of alleged low yield declared by the assessee. On facts, the CIT(A) has found that the yield declared by the assessee is neither low nor the book results could be impeached by some tangible material to indulge in rejection of books of accounts. We see no discernible error whatsoever in the process of reasoning adopted by the CIT(A) while reversing the totally untenable action of the AO based on extraneous considerations. It is also pertinent here to note that identical issue cropped in the case of a group co. ( Mahamaya Steel Industries Ltd.) in the same search and engaged in the same business. The standard yield of 89% adopted in that case was set aside by the CIT(A) and book results were accepted in the identical factual matrix. The Revenue challenged the reversal of additions on account of lower yield. Co-ordinate bench in DCIT vs. Mahamaya Steel Industries Ltd. [ 2019 (11) TMI 922 - ITAT RAIPUR] in strikingly similar factual matrix involving same issue and arising from same search, endorsed the order of CIT(A) in relation to AY 2009-10-2013 and struck down the additions made by AO. Hence, the issue, in any case, is not res integra any more in the light of decision of the co-ordinate bench. Whatever way we see, case of the revenue has little merit and thus unsustainable. We, thus, decline to interfere with the order of the CIT(A) on this score. Additions on account of excess stock of finished goods/ raw material stated to be discovered during the search - HELD THAT:- CIT(A) took cognizance of certificate from registered valuer furnished by the assessee to support its stance. We notice that the CIT(A) has adjudicated the issue in favour of the assessee after recording tell-tale facts, such as, DRV having admitted that no scientific or mechanical equipment was used by him for the purposes of valuation; no physical verification was carried out at all etc.. The whole quantification is made on a wrong foundation of length of channels etc. After having analyzed the facts and circumstances of the case, the CIT(A) has objectively concluded that addition to the total income on account of unexplained investment towards excess stock on account of structures and channels is without any sound basis is patently unjustified. We find that the CIT(A) has arrived at his findings with very logical analysis in sync with factual matrix. Such finding of fact does not call for any interference for any reason. With reference to excess stock on account of billets and slab cuttings and sponge iron, the CIT(A) has observed that the dispute revolves around the rate adopted by the AO and there is no dispute regarding the total quantity. It was noticed by the CIT(A) that the assessee has offered the income for taxation based on average rate for billets / slab cutting/ sponge iron as against uniform rate adopted by AO. The basis of rate adopted by AO was not assigned. Thus, having regard to the declarations already made by the assessee and in the absence of any definite basis in the action of AO, no further additions were found sustainable in the absence of any evidence of adversial nature. In summation, we see no error in the process of reasoning adopted by the CIT(A) and conclusion thereon. The revenue could not rebut the factual findings of the CIT(A). The order of the CIT(A) is self-explanatory and does not require any reiteration. We thus decline to interfere. 2021 (11) TMI 707 Validity of proceedings u/s.153A - addition u/s 68 - HELD THAT:- As the credit for share application money was accepted in the regular assessment under 143(3) prior to search after making enquiries. The subscriber co. namely Antariksh Commerce Pvt. Ltd. and Escort Finvest Pvt. Ltd. were found to be group cos. The assessments of the subscriber companies carried out under S. 143(3) / 143(3) r.w.s. 147 were noted. It was further noted the same AO in the case of other group concern accepted the creditworthiness of these cos. for subscription of Pref. share capital. The adverse inference drawn by the AO was found to be unsubstantiated and in the realm of suspicion, surmises and conjectures. On legal position, the CIT(A) has referred to large number of judicial pronouncements. Without reiterating the different facets analyzed by the CIT(A), Complete force in his view. After detailed examination, the CIT(A) eventually set aside the additions made by the AO under s. 68 in the unabated search assessment without any iota of incriminating material to support the allegation of accommodation entries. We completely endorse his action on merits without demur. The objection of the Revenue is found to be unsubstantiated and dehors the tell-tale evidences and hence not sustainable. Additions on low yield - Whether incriminating material were found in the course of search operations showing any unaccounted production or unaccounted sales resulting from alleged low yield on production shown in the books? - HELD THAT:- CIT(A) observed that assessee has furnished explanation on all the documents seized during the course of search and the explanation of the assessee were test checked with reference to seized material, books of accounts, bills/invoices and other evidences and found to be satisfactory. It was further noted that the AO has not pointed out any infirmity in the explanation of the Assessee. CIT(A) in our mind has analysed the factual matrix threadbare. Without repeating all the observations of the CIT(A), we find ourselves in complete agreement with the conclusion drawn by the CIT(A). CIT(A) has objectively analyzed the factual situation and found complete absence of any adverse material against the assessee which can support the allegation of the AO towards unaccounted production presumed on the basis of alleged low yield declared by the assessee. On facts, the CIT(A) has found that the yield declared by the assessee is neither low nor the book results could be impeached by some tangible material to indulge in rejection of books of accounts. We see no error whatsoever in the process of reasoning adopted by the CIT(A) while reversing the totally untenable action of the AO. We, thus, decline to interfere with the order of the CIT(A) on this score. Addition of excess stock of finished goods/ raw material stated to be discovered during the search - HELD THAT:- CIT(A) took cognizance of certificate from registered valuer furnished by the assessee showing the density of broken coal which was found to be at par with what has been used by the assessee. We notice that the CIT(A) has adjudicated the issue in favour of the assessee after recording tell-tale facts, such as, DRV having admitted that no scientific or mechanical equipment was used by him for the purposes of valuation; no physical verification was carried out at all etc.. After having analyzed the facts and circumstances of the case, the CIT(A) has objectively concluded that addition to the total income on account of unexplained investment towards excess stock on account of coal is without any sound basis is patently unjustified. We find that the CIT(A) has arrived at his findings with very logical analysis in sync with factual matrix. Such finding of fact does not call for any interference for any reason. With reference to excess stock on account of iron ore or fines, the CIT(A) has observed that the dispute revolves around the rate adopted by the AO and there is no dispute regarding the total quantity - As noticed by the CIT(A) that the assessee has offered the income for taxation based on actual sales realization as iron ore fines are not purchased by the assessee. The sales register of the assessee was examined and the method was found satisfactory. Thus, having regard to the declarations already made by the assessee, no further additions were found sustainable in the absence of any evidence of adversial nature. In summation, we see no error in the conclusion drawn by the CIT(A) both on account of stock of coal and iron ore, in the absence of any concrete rebuttal thereof. We thus decline to interfere. 2021 (11) TMI 706 Revision u/s 263 by CIT-A - Jurisdiction of AO - invalid notice u/s 143(2) - valid jurisdiction available whatsoever with the AO, Kolkata in the instant case -Transfer of case u/s 127 - HELD THAT:- Assessee has taken a plea that where the assessment order has been framed on the basis of an invalid notice u/s 143(2) of the Act, the very premise of the assessment framed is without any legal basis - assessment order in itself is illegal and bad in law owing to substantial defect of lack of jurisdiction. The action of the PCIT to revise such illegal order is a complete non-starter and is wholly unsustainable in law. We notice a few facts. An order under Section 127(2)(a) dated 13.09.2013 was passed by the CIT, Kolkata II, Kolkata whereby the jurisdiction over the assessee was transferred from the ITO, Ward (4)(2), Kolkata to ACIT, Central Circle, Raipur. It was further noted at the bottom of the aforesaid transfer order that the order shall take immediate effect. Hence, in view of the aforesaid transfer order, the AO at Kolkata was ousted of its jurisdiction and consequently had no locus over the assessee from the date of aforesaid transfer order. AO at Kolkata was fully aware of this fact, as can be seen from his action, in respect of assessment year 2014-15. As pointed out on behalf of assessee, the proceedings under Section 143(2) were dropped by AO, Kolkata for AY 2014-15 when he was apprised of the fact of transfer of jurisdiction. The facts, in the instant case, are thus speaking for itself. It is not in dispute that the AO, Kolkata at the relevant time of issuance of notice u/s 143(2) dated 09.08.2018 completely lacked jurisdiction over assessee to do so. The issuance of notice u/s 143(2) is governed by statutorily prescribed procedures. On a combined reading of Sections 120(1), 120 (2), 124(1), Rule 12E of the IT Rules, 1962 and transfer order passed by CIT under Section 127 of the Act, we have no hesitation to hold that there was no valid jurisdiction available whatsoever with the Assessing Officer, Kolkata in the instant case. The notice issued under Section 143(2) of the Act by such officer is thus wholly without jurisdiction and thus a non-est notice. The assessment has been admittedly framed based on such non-est notice without taking any corrective step in this direction. Assessing Officer at Raipur has not issued any separate notice u/s 143(2) to assume power to assess the income of the assessee. He has merely continued his action based on a non-est notice issued by the AO of a different jurisdiction. The assessment order passed on the basis of an invalid and non-est notice thus cannot be countenanced in law. Consequently, the revisional action under Section 263 is not permissible in law in parity with the decision of the co-ordinate Bench of the Tribunal in Supersonic Technologies (P) Ltd [ 2018 (12) TMI 912 - ITAT DELHI] In the legal ground of lack of jurisdiction raised on behalf of the assessee. The impugned revisional order is thus required to be quashed on this ground alone. Hence we do not consider it expedient to go into the aspect of the merit of issues raised in the show-cause notice arising from an invalid and non-est order.The revisional order under Section 263 is thus quashed and set aside. Appeal of the assessee is allowed. 2021 (11) TMI 705 Disallowance u/s 14A in respect of expenditure attributable to earning exempt income - whether or not the A.O had validly assumed jurisdiction for dislodging the disallowance that was on a suo-motto basis offered by the assessee u/s 14A and therein substituting the same by that as was computed by him by triggering the mechanism provided in Rule 8D? - HELD THAT:- AO had though observed that he was not satisfied with the correctness of the claim of the assessee that no expenditure was incurred in relation to the income which did not form part of its total income, however, he except for making general observations in context of the expenditure claimed by the assessee, viz. general administrative expenses, legal fees, employee salary, general expenses etc. had before rejecting the disallowance that was offered by the assessee on a suo-motto deemed basis, failed to give a clear finding with reference to the assessee s accounts as to how the other expenditure that were claimed by the assessee in respect of its non-exempt income was related to its exempt income. Failure on the part of the A.O to record his satisfaction that having regard to the accounts of the assessee, as placed before him, it was not possible to generate the requisite satisfaction with regard to the correctness of the claim of the assessee, therein, divests him of the jurisdiction for dislodging the claim of the assessee and substituting the same by an amount arrived at by triggering the mechanism provided in Rule 8D. Accordingly, backed by our aforesaid observations, we are unable to persuade ourselves to subscribe to the view taken by the CIT(A) who had upheld the disallowance made by the A.O u/s 14A of the Act. We, thus, set-aside the order of the CIT(A) and vacate the additional disallowance made by the A.O u/s 14A . Education cess as not allowable as a deduction u/s 40(a)(ii) - HELD THAT:- As relying on SESA GOA LIMITED [ 2020 (3) TMI 347 - BOMBAY HIGH COURT] Education Cess is not disallowable as a deduction u/s 40(a)(ii) of the Act. We, thus, direct the A.O that the education cess paid by the assessee during the year be allowed as a deduction under Sec. 40(a)(ii). 2021 (11) TMI 704 Addition made on account of unaccounted professional receipts - assessee had filed an application before the Hon'ble Income Tax Settlement Commission (ITSC) for the preceding years - AO found that the professional receipts were not fully recorded in the final accounts of the assessee and the difference between the extrapolated receipts and that shown in the books as added to the income of the assessee - addition on basis accepted by the ITSC in the preceding and succeeding years - sole grievance of the Revenue before us is that the principle of res-judicata did not apply to income tax proceedings and, therefore, there was no reason to follow the order of the Hon'ble ITSC while calculating the undisclosed income on account of unaccounted receipts of the impugned year - HELD THAT:- We do not find any reason to interfere in the order of the Ld.CIT(A) who has ,we hold, rightly calculated the unaccounted receipts in the impugned year following the basis accepted by the ITSC in the preceding and succeeding years. CIT(A) has noted that the assessee had submitted its calculation to the ITSC of unaccounted receipts basis documents found relating to A.Y. 2014-15 since they represented unaccounted receipts for 10 months. The percentage so worked out was applied to the rest of the years irrespective of the fact that documents relating to the whole of the said years was impounded or not. ITSC found the said declaration of the assessee, as correct and in order for all the years and in fact found it to be more than the figures as worked out by the Department. Settlement Commission has also accepted the assessee s claim of expenses @ 29% of the receipts for all the years. The Department, it has been stated at bar, has accepted the order of the ITSC estimating unaccounted receipts for the preceding and succeeding years . ITSC, accordingly, passed its order on the issue adopting and accepting the best possible method of estimating the unaccounted income, based on the documents found during survey revealing the unaccounted receipts. The same set of documents pertaining to the impugned year, form the basis of addition made in the impugned year. The facts and circumstances leading to the addition of unaccounted receipts in the impugned year therefore, we agree with the Ld.CIT(A), are identical to the years before the ITSC. The Revenue admittedly has accepted the basis adopted by the ITSC. There is no reason therefore why a different basis needs to be adopted for estimating unaccounted receipts for the impugned year. Addition made by the AO on account of receipts on which commission was paid by the assessee - during the survey, documents were impounded which contained details of payments made to doctors as commission - CIT(A) deleted the addition holding that the issue of addition on account of unaccounted receipts had already been made on the basis of impounded papers and same addition on the issue of unaccounted receipts by adopting a different method only tantamounted to double addition - HELD THAT:- .It is not disputed that the addition on account of unaccounted receipts already stands made on the basis of cash receipts recorded in daily cash registers which were impounded during survey. The addition now being made of the same by estimation on the basis of documents revealing commission paid to doctors ,is as rightly stated by the Ld.CIT(A), nothing but adopting a different method for calculating the same, unless it is clearly and specifically demonstrated otherwise, which, we find, is not the case before us. Even the Settlement Commission we find, has, on identical issue, taken the same view of this being double addition in the preceding and succeeding year in the case of the assessee, which order has been accepted by the Revenue. We see no reason therefore to interfere in the order of the Ld.CIT(A) deleting the addition. Addition of difference in receipts under the head ESIC - CIT-A deleted the adition - HELD THAT:- Revenue has not pointed to us any infirmity in the data as summarized by the Ld.CIT(A).The conclusion therefore drawn from the same by the Ld.CIT(A) that the two documents contained overlapping data is evident since A-16 document contained ESIC data for the period April 12 to Feb 13 while document A-20 contained ESIC data for the period April12 to mARCH13 ,the data relating to April 12 to Feb 13 therefore overlapping .The entire data relates to Baddi except for a meager amount of ₹ 5198 which relates to Ramdarbar. The Ld.CIT(A), by adopting a conservative approach, has taken the greater of the overlapping figures and found the same as duly reflected in the books of the assessee, thus holding that no addition is called for on the basis of these two documents. We do not find any merit in the plea of the Revenue that the two documents were different since the facts as we have noted above do not demonstrate anything to arrive at this finding and the difference referred to by the Revenue relating to an entry related to Ramdarbar is too inconsequential to adversely effect the otherwise logical inference that the two documents contained overlapping data - We uphold the order of the Ld.CIT(A) deleting the addition made on account of unaccounted ESIC receipts - Decided against revenue. Unaccounted receipts as per documents showing income received from KUC read as Kidney and Uro Centre a known hospital in Chandigarh sector-46 - CIT(A) deleted the same finding merit in the contention of the assessee that all receipts as reflected in the said documents stood duly accounted for in its books and further considering the order of the ITSC on identical issue in the preceding and succeeding year - HELD THAT:- We find that the assessee had demonstrated from its books of accounts that all the amounts noted in the documents stood recorded in her books. CIT(A) confronted the same to the AO who was unable to point any infirmity. Even before us the Revenue has been unable bring any material before us to controvert the aforesaid contention of the assessee. In view of the same, we hold, that there is no infirmity in the order of the CIT(A) holding no addition being called for on this account. Moreover we find that before the ITSC also the assessee had contended that the department had not been able to prove any cash receipts by the assessee outside its books from KUC and to give quietus to the issue had surrendered a sum of ₹ 6,00,000/- in three years, which was accepted as such by the ITSC. - CIT(A) has rightly deleted the addition made of unaccounted receipts from KUC. Unaccounted receipts from Mukut Hospital made on the basis of documents found in search - CIT-A deleted the addition - HELD THAT:- CIT-A deleted the addition after examining and finding merit in the assessee s contention that all amounts reflected in the documents stood accounted for in the books of the assessee. He also noted that the ITSC had accepted assessee s lumpsum surrender on this account of ₹ 6lacs made in three years to buy quietus to the issue on being pointed out that the department had been unable to point out cash receipts outside the books on this account in the years before the ITSC. The Revenue has brought nothing before us to controvert the factual contention of the assessee that all amounts recorded in the documents stood disclosed in the books of the assessee. As considering the order of the ITSC on similar issue in the preceding and succeeding ears wherein also the department was unable to point out any cash receipts outside the books on this account, we see no reason to interfere in the order of the Ld.CIT(A) deleting the addition made. - Decided in favour of assessee. 2021 (11) TMI 703 Disallowance u/s 14A - proof of no exempt income - HELD THAT:- On going through the financial statements of the assessee, we find that the assessment had mad investments and interest was debited to P L Account, but, suo-moto, the assessee has not disallowed any expenditure u/s 14A of the Act. Further, it was observed that there is no exempt income received by the assessee during the impugned AY - disallowance made by the AO u/s 14A r.w.r. 8D is not correct. It is a settled law that if there is no exempt income, no disallowance can be made as there are Catena of judgements of Hon ble Tribunal that if there is no exempt income, no disallowance can be made u/s 14A of the Act. Therefore, we uphold the order of CIT(A) in deleting the disallowance made u/s 14A rwr 8D of the Act. Thus, the ground raised by the revenue on this issue is dismissed. Disallowance of expenditure in respect of bogus sub-contracts - AO observed that a survey u/s 133A was conducted by the ADIT, Unit I, in which certain bogus sub-contract expenses came to light - HELD THAT:- CIT(A) accepted that the payments made by way of cheques and the TDS made on the payments made to sub-contractors. However, the CIT(A) has not examined the genuineness of the works undertaken by the sub-contractors and he did not examine any other related documents for substantiating sub-contract works done by the sub-contractors. Merely considering that the TDS was deducted on the payments made to sub-contractors is not sufficient reason to delete the addition. We also find that the CIT(A) brushed aside the objections raised by the AO in his order. Therefore, keeping in view the findings recorded by the AO and in the interest of justice, we remit this issue back to the file of the AO with a direction to examine the additional evidences filed by the assessee before the CIT(A) and decide the issue in accordance with law after providing reasonable opportunity of being heard to the assessee in the matter. Thus, this ground is treated as allowed for statistical purposes. Addition towards excess debit - AO observed that the total purchases on which TCS made is less that the purchase of liquor debited in the P L Account and excess which was added back to the total income - CIT-A delete the addition - HELD THAT:- While deleting the addition made by the AO, the categorical finding of the CIT(A) is that The AO was not justified in not considering the Form 26AS of the appellant company wherein the purchase of liquor by the appellant from A.P. Beverages Corporation Limited (APBCL) is evident. Therefore, we do not find any reason to interfere with the order of the CIT(A) and upholding the same, we dismiss the ground raised by the revenue on this issue. 2021 (11) TMI 702 Scope of Deposit Credit Guarantee Corporation of India Act [DICGCI] - Overriding title on income in favour of DICGCI - accrual of income - Assessee is a cooperative bank and under liquidation - assessee has received the amount of interest income net of expenses in the year under consideration post liquidation - liability of the appellant assessee for repayment to the depositors and DICGC from the recovery made by it from the borrowers against the interest received from the fixed deposit, which has accrued on the amount recovered pending the payment to the depositors. - HELD THAT:- As decided in The Visnagar Nagrik Shahakari Bank Ltd. Ors. [ 2015 (7) TMI 1390 - GUJARAT HIGH COURT] whatever amount will be received by the assessee has to be paid firstly to DICGCI after making necessary provision for expenses in relation to liquidation and declaration of dividend. Thus, there remains no ambiguity to the fact that the assessee has no right in the impugned amount of interest income as the same has been diverted to DICGCI as discussed above. Accordingly, the amount of interest though received by the assessee but does not belong to it. The amount of interest in dispute is not an income of the assessee and therefore the same cannot be made subject matter of tax in the hands of the assessee - Decided in favour of assessee. 2021 (11) TMI 701 Disallowance by relying on CBDT Circular No. 5/2012 r.w explanation 1 to Sec. 37(1) - scope of regulations issued by Medical Counsel of India - claim of marketing promotional activity under the selling and distribution expenses u/sec. 37(1) - HELD THAT:- We find that the facts of the present case are similar and identical to the above decision in respect of sales promotional expenses claimed in the profit and loss account. The Hon ble Tribunal in the ARISTO PHARMACEUTICALS P LTD. [ 2019 (7) TMI 862 - ITAT MUMBAI] has considered the provisions of law, facts and circumstances, CBDT circular, MCI guidelines and granted the relief to the assessee. Accordingly, we follow the judicial precedence and set aside the order of the CIT(A) to the extent of disallowance of sale promotion expenses incurred by way of gifts, freebies, travel allowance and monetary grants and direct the Assessing Officer to delete the addition and allow the ground of the appeal of assessee. 2021 (11) TMI 700 Addition u/s 68 unexplained cash credit - profit/income of the assessee from sale of paddy - HELD THAT:- Section 68 of the Act is attracted (a) when the assessee fails to prove the genuineness of the transaction that has entered into his book of accounts; (b) when there is no satisfactory explanation provided on the part of the assessee to the AO with respect to the amount credited into the accounts; (c) when there are documentary evidences required to support the validity of the amount credited but there are no such documents furnished by the assessee. The assessee has provided the confirmation letter of the purchaser of paddy M/s. Rameswar Agro Industries Pvt. Ltd., alongwith its ledger account to support that the purchaser had purchased paddy and paid the amount. It is not in dispute that the assessee has not maintained any books of account and whatever credit entries are found by the AO, it was from the bank accounts of the assessee in which deposits were made at different point of time. Even passbook issued by the bank cannot be termed to be the books of account of the assessee in the case of Bhai Chand N. Gandhi [ 1982 (2) TMI 28 - BOMBAY HIGH COURT] - Therefore, provisions of section 68 of the Act cannot be invoked on various deposits/credit found recorded in the bank account of the assessee in absence of books of the assessee maintained for that previous year. The assessee submitted confirmation from the purchaser of paddy before the authorities below and this was the best possible evidence under his command to establish that the impugned amount was actually sale proceeds of paddy, which was purchased from open market/farmers and sold the same without maintaining any books of account to M/s. Rameswar Agro Industries Pvt. Ltd. Even as a man of ordinary prudent, one cannot disagree with the contention of the assessee that even if he is a director in the purchase company i.e. M/s. Rameswar Agro Industries Pvt. Ltd., he cannot be refrained from making sale of paddy to the company in which he is a director. Cautious about the provisions of section 40A(2) (3) of the Act, wherein, the department has right to examine the expenses and payments made to related parties by the related parties but it is not the allegation of the AO in the present case. We not in agreement with the contention of Ld. DR that if sale has not been shown by the assessee in the return of income, then entire amount has to be taxed in the hands of the assessee as his income because if purchase and sale, both transactions have been undertaken without maintaining books of account then only profit element received by the assessee inclusive of sale proceeds can be taxed as income of the assessee because the assessee has to be given credit of the amount incurred for purchase of goods which was sold by him against receipt of sale consideration. A.R. relied on the decision of case of CIT vs. P. Sathyanarayan P. Rathi, [ 2013 (6) TMI 257 - GUJARAT HIGH COURT] wherein, it has been held that only the profit element and not the entire amount of the purchases can be added to the income of the assessee. We deem it just and proper and reasonable to cover all possible leakage of revenue, to tax only profit element embedded in the sale proceeds received and deposited by the assessee in the bank account. In view of facts stated above, thus direct the AO to tax 10% of the total impugned amount as profit/income of the assessee from sale of paddy and to delete the remaining amount. Appeal of the assessee is partly allowed Customs 2021 (11) TMI 699 Condonation of delay in filing appeal - delay of 779 days in filing the appeal - no cause, much less sufficient cause, shown by the appellant to explain the inordinate delay in filing the appeal - HELD THAT:- The Tribunal after taking note of the statutory provisions took note of the decisions of the Tribunal, CESTAT West Zonal Bench, Mumbai in the case of COMMR. OF C. EX. CUS., AURANGABAD VERSUS COSMO FILMS LTD. [ 2014 (12) TMI 315 - CESTAT MUMBAI] and allowed the assessee s case. The said decision was in respect of another assessee who are engaged in the same process of manufacture namely manufacture of BOPP Films. The Tribunal took note of the decision. The Tribunal followed the case of MRF LTD. VERSUS COLLECTOR OF CENTRAL EXCISE, GOA [ 1998 (11) TMI 233 - CEGAT, NEW DELHI] and SUPREME INDUSTRIES LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, MUMBAI-III [ 1997 (3) TMI 529 - CEGAT, MUMBAI] , which was upheld by the Hon ble Supreme Court in COMMISSIONER VERSUS SUPREME INDUSTRIES LTD. [ 1998 (3) TMI 676 - SC ORDER] wherein it was held that by taking credit the inputs do not become non-duty paid. There is nothing on record to indicate that those decisions of the Tribunal have been reversed or modified by the High Court or by the Hon ble Supreme Court. That apart, we find that the conclusion arrived at by the Tribunal examining the nature of manufacturing activity done by the respondent assessee and the fact that the Polypropylene Granules which were procured being admittedly duty paid items, the bye-product which is generated during the course of manufacture can never be treated as a non-duty paid item. Therefore, the conclusion arrived at by the Tribunal does not call for any interference. The substantial questions of law are answered against the Revenue - Appeal dismissed. 2021 (11) TMI 698 Finalisation of provisional assessment - time limitation - It is contended that the time limit for finalisation of the provisional assessment is stipulated as two months under the Regulations and already more than six months have elapsed without such finalisation - HELD THAT:- There will be a direction to the competent amongst the respondent to consider and pass appropriate orders finalising the provisional assessments, pursuant to bills of entry listed in Ext.P1, within a period of 30 days from the date of production of documents by the petitioner and after hearing the petitioner. Petition allowed. 2021 (11) TMI 697 Refund of Customs Duty paid - denial on the ground that the appellant had not filed any appeal against the 26 orders of final assessment order for finalizing provisional assessment - HELD THAT:- The learned counsel has made reference of Section 154 of Customs Act, 1962 whereby the assessment can be amended by Reassessment of Bill of Entry. However, on query from the bench learned counsel fairly submits that they have not filed any application under section 154 of the Customs Act, 1962. In this position, in the interest of the justice the appellant should be given an opportunity to pursue their case in terms of section 154 of Customs Act, 1962. The appellant is directed to make an application under section 154 of the Customs Act, 1962 for Re- assessment of Bills of Entry. The Proper officer shall consider the application to be made under section 154 of the Customs Act, 1962 in accordance with law - the appeal is disposed of by way of remand to the Original Authority. 2021 (11) TMI 696 Revocation of CHA License - Forfeiture of security deposit - levy of penalty - it is the contention of Learned Counsel that the proceedings were conducted behind the back of the licensee, that there are no findings recorded by the inquiry authority - principles of natural justice - HELD THAT:- The procedure prescribed under regulation no. 22 of Customs House Agents Licensing Regulations, 2004 envisages a specific role for the Inquiry Authority in the process elaborated therein. This, doubtlessly, presumes the participation of the customs house agent. It is on record that these procedures were not followed and the conclusion had been arrived at on presumed admission as reported by the Presenting Officer. The ostensible reason for such summary conclusion was the non-availability of the licensee at the licensed address - Without examining the legality of continuance of proceedings after the nominated official ceased to be Deputy/Assistant Commissioner of Customs, the absence of any record evincing that licensee had been placed on notice about acquiescence of the Commissioner of Customs with the re-designated official carrying out the entrusted task may well have been the reason for non-acceptance of communication emanating from an address that could, conceivably, alarm the appellant herein. It is on record that the alleged breach of obligations were grounded in the proceedings initiated under Customs Act, 1962 at Faridabad and the closure thereof erases the foundation on which the customs house agent was issued with the charge-sheet. Furthermore, a customs house agent is licensed under the authority of section 146 of Customs Act, 1962 in terms of which the agency function should commence with declarations filed under section 46 or section 50, as the case may be, of Customs Act, 1962 - The absence of seals and the discrepancy in weight pertained to containers delivered at the designated place of export before the shipping bill was filed; these occurred prior to the statutory responsibility thrust upon the customs house agent could be said to have commenced. Furthermore, the licensing authority failed in ascertaining the extent of responsibility as it is evident that the custodian had been derelict in accepting such consignments or that such deliveries were conventionally accepted in the said jurisdiction. The incident which gave rise to the proceedings occurred in January 2011 and the proceedings took one full year thereafter to commence. The role of the customs house agent in the alleged breach of procedure was also found to be condonable in adjudication proceeding - Appeal allowed - decided in favor of appellant. Service Tax 2021 (11) TMI 695 Valuation - Works contract service - Composition scheme - case of the Revenue is that since the appellant could not ascertain the actual value of goods transferred, it should have paid service tax under composition scheme - where the value of the works contract is split notionally into value of goods and value of services as per the State Act and Rules and VAT has been paid on the goods component on which and there is no break-up of the actual value of the goods which are transferred or deemed to have transferred in execution of the contracts, can service tax also be charged on the same amount? HELD THAT:- In this case in view of the Tamil Nadu VAT Act and Tamil Nadu VAT Rules (which were also in existence prior to 01.07.2012 also) the appellant is bound to pay VAT on 70% of the value of the indivisible works contract deeming it to be the value of the goods transferred. It is undisputed that the appellant paid VAT accordingly and paid service tax on the remaining 30% - Since the works in this case were not original works, it falls under category B of clause (ii) of this Rule and service tax should be paid on 70% of the value of the works contract. In other words, if the Revenue s argument is accepted, the appellant will have to pay service tax on 70% of the gross amount charged for the works contract and the appellant has already paid VAT on 70% of the gross amount charged as per the Tamil Nadu VAT Act. This will lead to an anomalous situation where the appellant has to pay VAT as well as service tax on 40% of the total value of the works contract. Where the value has already been split as per the state law and VAT has been paid on the goods component of the composite works contract, no service tax can be levied on such component again taking recourse to Rule 2A(ii) of Service Tax (Determination of Value) Rules, 2006. The demand for the period post 01.07.2012 also needs to be set aside on this ground. Since the demand of service tax does not sustain, the demand of interest under Section 75 and imposition of penalty under Section 76, 77 and 78 do not also survive. The impugned order is set aside - Appeal allowed - decided in favor of appellant. 2021 (11) TMI 694 Valuation - tenancy agreement - doctrine of merger - inclusion of notional interest received on the security deposit taken - contravention to the Explanation (a) to Section 67 of FA - HELD THAT:- The issue decided in appellant own case M/S VIKHROLI CORPORATE PARK VERSUS COMMISSIONER OF SERVICE TAX, MUMBAI [ 2016 (12) TMI 484 - CESTAT MUMBAI] where it was held that an agreement between the appellant and his customer provides for interest free security deposit, which is nothing but advance, Revenue cannot state that such security deposit will earn interest, and notional interest needs to be taxed. Since the Civil Appeal filed by the Revenue challenging the order of the Tribunal has been dismissed by the Hon ble Apex Court stating that there are no grounds to entertain this appeal, the doctrine of merger applies the order of the Tribunal and gets merged in that of the Hon ble Apex Court. There are no merit in the impugned order - appeal allowed - decided in favor of appellant. 2021 (11) TMI 693 Refund of unutilised cenvat credit - disallowance for want of nexus - N/N. 27/2012-CE(NT) dt. 18/06/2012 - HELD THAT:- It is settled that with effect from 01/04/2011, the Board has itself done away with the nexus test vide its Notification No.27/2012-CE(NT) dt. 18/06/2012, and hence the disallowance for want of nexus cannot sustain. This view has been expressed in many orders of CESTAT benches, the latest one being of this very bench in the case of SAMSUNG R AND D INSTITUTE INDIA BANGALORE PVT. LTD. VERSUS COMMISSIONER OF CENTRAL TAX, BENGALURU EAST [ 2021 (3) TMI 1002 - CESTAT BANGALORE] . To this extent therefore, the impugned order is set aside. It is now required to examine whether the reduction of utilised credit for domestic clearances has been done twice, or not. It is not in dispute that the appellant s claim for refund was after reducing the utilised cenvat credit which appears to have again been reduced by the sanctioning authority in the de novo Order-in-Original. The Commissioner(Appeals) in the impugned order observed that the appellant s claim for refund of unutilised cenvat credit was not supported by documentary evidences, which would only mean that the appellant perhaps did not properly explain the same with supporting documents as well as computations. Matter remanded back to the file of the adjudicating authority before whom the appellant shall furnish all such evidences as well as computations to establish that it has already reduced voluntarily the utilised cenvat credit and if satisfied, the adjudicating authority shall work out the refund in accordance with law - appeal allowed by way of remand. CST, VAT & Sales Tax 2021 (11) TMI 692 Valuation - addition of transportation charges to the sale price of the goods - nexus to sustain enhancement of turnover made by the Tribunal - HELD THAT:- In the present case also from the order of the ACST, it is plain that there was no evidence to show that the dealer had separately charged and collected the transportation charges. The impugned order of the Tribunal proceeds on surmises. Particularly the conclusion of the Tribunal that the payment of transportation charges must be deemed to have been borne by the dealer is unacceptable in the absence of any documentation to support such an assumption. With there being no evidence placed on record to show that the transportation charges were in fact collected by the Petitioner, it is not possible to sustain the above conclusion of the Tribunal - the question is answered in the negative, in other words, in favour of the dealer and against the Department. It is held that the Tribunal was not justified in directing addition of the transportation charges to the sale price of the goods under the OST Act - the order of the ACST is restored. The revision petition is disposed off. 2021 (11) TMI 691 Validity of re-assessment order - enlargement of time limitation with prospective effect or not - Section 39(1) of KVAT Act - HELD THAT:- The order of re-assessment which was passed on 27.03.2013 for the Assessment Year 2005-06 is barred by limitation. It is pertinent to note that under the unamended provision, a vested right had accrued in favour of the petitioner. The amendment made to Section 40 of the Act, cannot be construed so as to open up a liability which had become barred . Therefore, even by retrospective operation of law, the aforesaid vested right accrued to the petitioner cannot be taken away. The impugned notice dated 17.03.2013 issued by the respondent No.3 namely the Additional Commissioner of Commercial Taxes is hereby quashed - Appeal allowed. Indian Laws 2021 (11) TMI 690 Seeking permission to travel abroad for the purpose of renewing his passport - divorce petition was filed on the ground of cruelty - offences under Sections 498 and 406 IPC r/w 4 of Dowry Prohibition Act - HELD THAT:- If the presence of the petitioner is required by the trial Court, he would appear and submit to the trial Court orders. Whenever his presence is absolutely necessary, he shall appear. On the other dates, his counsel would continue with the proceedings and will not seek any adjournments or defer the cross examination for the reason that instruction is to be received from the petitioner and the presence of the petitioner is required. The petitioner is directed to file an undertaking affidavit to that effect before the Court below. This Court directs the Regional Passport Office, Trichy to renew the passport bearing No.J4490193 and also to permit the petitioner to undertake his travel to USA - Petition disposed off.
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