TMI Tax Updates - e-Newsletter
December 1, 2021
Case Laws in this Newsletter:
GST
Income Tax
Customs
Insolvency & Bankruptcy
Service Tax
Indian Laws
Highlights / Catch Notes
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GST:
Sanction of GST refund claim in respect of goods exported - this Writ Petition is disposed by directing the respondent to pass appropriate in respect of GST refund claims and the drawback claims, within a period of thirty (30) days from the date of receipt of a copy of this order. - HC
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GST:
Refund of unutilized input tax credit (ITC) - It is seen that since the instruction dated 25th June 2021 stands withdrawn, clearly the earlier instruction dated 8th June 2021 which is in the same vein also does not survive. Therefore, one of the prayers of the previous petition as well as the present petition challenging the aforementioned circulars does not survive - Since the impugned SCN has been issued only as result of the circulars, it also does not survive and is accordingly set aside. - Refund directed to be processed - HC
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GST:
Request for transfer of files of enquiry to a place of petitioners' choice - The power to summon or produce a document is distinct from the nature of proceedings conducted. Merely because the source of power to summon witnesses and power to direct production of documents is referable to CPC, that does not alter the nature of investigation or inquiry being conducted. It remains to be an investigation or inquiry. Therefore, the contention raised by the petitioners on the basis of section 70 of the Act is rejected. - HC
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Income Tax:
Deduction u/s. 54F - If, the capital gain amount is utilized before the due date of filing of return of income u/s. 139 of the Act i.e. 31-03-2014 u/s. 139(4) of the Act. Therefore, it is clear that section 139 includes all sub-sections but not confined to sub-section (1) of section 139 of the Act alone. It is evident that the assessee invested amount of capital gains before the time available u/s. 139(4) of the Act and therefore, in our opinion the assessee is entitled to claim deduction u/s. 54F - AT
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Income Tax:
Validity of Assessment u/s 153C - recording satisfaction note - In the present case there is neither the recording of satisfaction by the AO of the searched person that the documents belong to the other person nor there is any finding that the documents so found were incriminating in nature. In our view a detailed scheme has been provided for initiation of Section 153C i.e. first there would be a satisfaction in the file of the AO of the searched person and thereafter transmission of the file along with the incriminating document to the AO of the other person and thereafter recording of satisfaction by the AO of the other person and issuance of notice u/s.153C of the Act and completion of proceedings. - AT
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Income Tax:
Addition u/sec. 69A - receipt of on-money - it is an admitted fact that no money was found at the time of survey conducted u/sec. 133A, however, certain information was found qua selling of flats at higher rate than the rate recorded in the sale deeds, however the AO without corroboration and fulfilling the ingredients of section 69A of the Act made the addition u/s. 69A of the Act - No additions - AT
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Income Tax:
Revision u/s 263 by CIT-A - The purported inadequacy in inquiry as alleged, cannot be stated to be 'erroneous' per se in so far as assessee is concerned, even if, such inaction of AO towards fuller enquiry is branded as 'prejudicial to the interest of Revenue'. Therefore, the mandatory twin conditions of Section 263 is also not found to be fulfilled when tested on the touchstone of taxability of share application money in the hands of assessee on the grounds of unproved source of source. - AT
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Income Tax:
Estimation of income - bogus purchases - Once, it is established beyond doubt that the assessee has not debited the purchases in the profit and loss account, the question of making any disallowance either treating them as bogus or against the violation of the provisions of section 40A(3) of the Act does not arise. - AT
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Income Tax:
Reopening of assessment u/s 147 - Disallowance u/s 14A - If at all he has considered, he has not even passed the assessment order by ignoring the provisions of law, i.e. Section 14A r.w.R.8D of the Income Tax Rules, 1962 - As in this case, tangible material is clearly available to the Assessing Officer and therefore the Assessing Officer validly reopened the assessment. In view of the above, we upheld the reopening made by the Assessing Officer u/s.147 - AT
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Income Tax:
Income tax liability of employees - Remission of income tax liability borne on behalf of the employees - it is also possible that earlier years the assessee has not opted for presumptive income scheme u/s 44 BB of the act but has offered income based on its accounts. In such circumstances, remission of income tax liability if it pertains to those year for which the assessee is claiming set-off of losses by offering its income based on its regular income and expenditure accounts, would definitely be chargeable to tax in this year u/s 41 (1) of the act. - AT
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Customs:
Levy of penalty u/s 114 (iii) and Section 114AA of the Customs Act, 1962 - To constitute a criminal offence of abetment as punishable as defined under Section 107 of Indian Penal Code, 1862, there has to be an intention to instigate, to conspire or to aid/facilitate a person to do or abstain from doing something, which is a defined penal offence and that the abettor is the part of the conspiracy with an intent to draw back benefit out of the alleged offence. - For imposition of penalty under Section 114AA the information should knowingly be false. - AT
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Indian Laws:
Dishonor of Cheque - insufficiency of funds - acquittal of the accused - The evidence on record would clearly show that the fact is not as presumed. Therefore, the presumption under Sections 118(a) and 138 of the NI Act is over. Thus, it can be safely concluded that having regard to the facts and circumstances of the case and preponderance of probabilities, the rebuttal evidence adduced by the accused is acceptable. - In the case of acquittal, there is double presumption in favour of the accused. - HC
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Indian Laws:
Dishonor of Cheque - insufficiency of funds - blank cheque misused by complainant - Leaving everything aside, factum with regard to issuance of cheque and signature thereupon stands duly admitted by the accused and as such, there is presumption in favour of the complainant that he had received cheque in question issued towards lawful liability. - HC
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Service Tax:
Non-payment of service tax - service of covering of shed/constructing a common auction platform - In view of the apparent and admitted facts irrespective that nature of impugned service is that of work contract service but there is no liability on the appellant to pay the service tax appellant being a statutory body and service provided is in negative list being meant for agriculture produce with no element of business or profit. - AT
Articles
Notifications
GST - States-
65/2020- State Tax - dated
29-11-2021
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Delhi SGST
Amendment in Notification No. 35/2020- State Tax, dated the 24th March, 2021
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07/2021- State Tax - dated
29-11-2021
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Delhi SGST
Delhi Goods and Services Tax (Second Amendment) Rules, 2021
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ERTS (T) 65/2017/Pt. I/403 - dated
30-9-2021
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Meghalaya SGST
Seeks to exempt CGST on specified medicines used in COVID-19, up to 31st December, 2021
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ERTS (T) 65/2017/Pt. I/402 - dated
30-9-2021
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Meghalaya SGST
Amendment in Notification No. ERTS(T)-65/2017/Pt.I/100, dated 9th November, 2017
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ERTS (T) 65/2017/Pt. I/401 - dated
30-9-2021
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Meghalaya SGST
Amendment in Notification No. ERTS (T) 65/2017/4, dated the 29th June, 2017
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ERTS (T) 65/2017/Pt. I/400 - dated
30-9-2021
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Meghalaya SGST
Amendment in Notification No. ERTS (T) 65/2017/2, dated the 29th June, 2017
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ERTS (T) 65/2017/Pt. I/399 - dated
30-9-2021
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Meghalaya SGST
Amendment in Notification No. ERTS (T) 65/2017/1, dated the 29th June, 2017
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ERTS (T) 65/2017/Pt. I/398 - dated
30-9-2021
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Meghalaya SGST
Amendment in Notification No. ERTS (T) 65/2017/12, dated the 29th June, 2017
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ERTS (T) 65/2017/Pt. I/397 - dated
30-9-2021
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Meghalaya SGST
Amendment in Notification No. ERTS (T) 65/2017/11, dated the 29th June, 2017
Circulars / Instructions / Orders
News
Case Laws:
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GST
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2021 (11) TMI 1015
Seizure of the goods and conveyance imposing tax and penalty - Section 129(3) of the Central Goods and Service Tax Act read with Section 20 of the Integrated Goods and Service Tax Act - HELD THAT:- Learned Standing Counsel has opposed the petition stating that Section 129 of the Act starts with a non-obstante clause, which has not been considered in the aforesaid judgements that have been cited by the learned counsel for the petitioner. The matter requires consideration - List this matter on 22.12.2021 alongwith record of Writ-Tax Nos. 1019 of 2021, 1020 of 2021 and 1021 of 2021.
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2021 (11) TMI 1014
Seizure of goods alongwith vehicle - in the e-way bill, the vehicle number was not mentioned - Section 109 of the U.P. Goods and Services Tax Act, 2017 - maintainability of second appeal provided for under the provisions of Section 112 of the Act - HELD THAT:- Shri Agrawal, learned counsel for the petitioner has pointed out the order passed under Section 129(3)(Form GST MOV-9) in which the amount of tax and penalty have been assessed by the authority concerned. It is contended that the entire amount of tax so assessed in the aforesaid order under Section 129(3) of the Act, has been paid in full. Evidence whereof has been enclosed by way of challan and corresponding statements have been made in paragraphs 10, 17 and 23 of the writ petition. Matter requires consideration.
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2021 (11) TMI 1013
Refund of unutilized input tax credit (ITC) - export of iron ore fines - export duty is nil as a result of an exemption notification - HELD THAT:- In earlier writ petition of the Petitioner i.e. W.P.(C) No.26685 of 2021, the challenge was to two instructions dated 8th June and 25th June 2021 issued by the Joint Commissioner of CT and GST (Law) at Cuttack instructing Circle Heads in Odisha to treat such export as duty paid and refusing the refund - This Court had in the said writ petition on 8th September 2021, while issuing notice directed that no further steps would be taken vis- -vis the Petitioner by the Opposite Parties pursuant to those impugned notices. The Petitioner in the said writ petition had also challenged the show cause notice (SCN) dated 21st July 2021 which was pertaining to the period April 2019 to March. 2020. A development that has taken place subsequent to the above order passed by this Court is that the GST Council at its 45th Meeting on 17th September 2021 decided inter alia to issue a clarification in respect of goods for which the export duty is in fact not paid. It was clarified that only those goods which are actually subjected to export duty i.e., on which some export duty has to be paid at the time of export, will be covered under the restriction imposed under section 54 (3) of the CGST Act, 2017 from availment of refund of accumulated ITC. - As a result of the above decision of the GST Council, a fresh circular dated 20th September 2021 has been issued by the Central Board of Indirect Taxes and Customs (CBITC), GST Policy Wing, Ministry of Finance, Government of India in which one of the questions addressed is, at serial No.3, whether the first proviso to section 54(3) of the CGST/SGST Act, prohibiting refund of unutilized ITC is applicable in case of exports of goods which are having NIL rate of export duty? It is seen that since the instruction dated 25th June 2021 stands withdrawn, clearly the earlier instruction dated 8th June 2021 which is in the same vein also does not survive. Therefore, one of the prayers of the previous petition as well as the present petition challenging the aforementioned circulars does not survive - Since the impugned SCN has been issued only as result of the circulars, it also does not survive and is accordingly set aside. A direction is now issued to the Opposite Party-authority to reprocess the refund application of the Petitioner in light of the fresh circular issued on 20th September 2021 (Annexure-14) and convey the decision to the Petitioner thereon not later than 7th February, 2022. It is made clear that whatever the technical issues for reprocessing the refund application should be resolved by the authority as expeditiously as possible and in a manner to ensure compliance with the timeline set by this Court in this order. The rejection of the refund application does not survive and is hereby set aside - Petition allowed.
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2021 (11) TMI 1012
Sanction of GST refund claim in respect of goods exported - seeking direction to third respondent to refrain from suspending or withholding the GST refund claims filed by the petitioner in respect of the future exports - HELD THAT:- Considering the refund claims and the drawbacks claims are pending for a long period even though the petitioner appears to have complied partially with the requirements called upon as far as the GST refund claim is concerned, this Writ Petition is disposed by directing the respondent to pass appropriate in respect of GST refund claims and the drawback claims, within a period of thirty (30) days from the date of receipt of a copy of this order. Petition disposed off.
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2021 (11) TMI 1011
Request for transfer of files of enquiry to a place of petitioners' choice - seeking grant of copy of statements recorded by respondents in the process of investigation into non-collection of tax for outward supply of rice - Section 67 of the CGST/KGST Act - request of petitioner not considered - principles of natural justice - HELD THAT:- While refusing to consider the request of the petitioners, the Proper Officer failed to state any reason. The officer had not mentioned that giving copy of the statements would cause prejudice to the investigation. The request of the petitioners for issuing copies of statements already recorded by the investigating officer, as mentioned earlier was refused to be considered. There is a marked distinction between refusing to consider and rejecting an application for reasons. The Proper Officer ought to have considered the request and either granted copies of the statements or rejected such requests for reasons to be recorded, rather than avoiding consideration of such request. Order XVI of the CPC deals with power to summon witnesses to give evidence or for production of documents. By conferring the power of summoning a witnesses to give evidence or to produce a document as provided in Order XVI of the CPC, the nature or character of the investigation or inquiry being conducted under Chapter XIV of the Act will not be changed. The power to summon or produce a document is distinct from the nature of proceedings conducted. Merely because the source of power to summon witnesses and power to direct production of documents is referable to CPC, that does not alter the nature of investigation or inquiry being conducted. It remains to be an investigation or inquiry. Therefore, the contention raised by the petitioners on the basis of section 70 of the Act is rejected. This Court is of the view that Ext.P10 order is liable to be set aside and the first respondent is directed to reconsider the application of the petitioners for giving a copy of the statements already obtained in the course of investigation and pass fresh orders - Petition allowed.
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2021 (11) TMI 1010
Revocation of Cancellation of registration passed by the proper officer - proper officer in terms of the provision of Section 29 of the CGST Act, 2017 r/w Rule 22 of CGST Rules, 2017 - HELD THAT:- The appellant in his appeal memo has referred the Order for Cancellation of registration dated 18.03.2021 against which the appeal is filed. During personal hearing the authorized representative defended the case for appeal against Order for Rejection of application for revocation of cancellation dated 23.05.2021 and requested to allow appeal by way of revocation of registration. On being out the appellant has agreed to the error on his part and submitted that while filing appeal date of order against which appeal is filed wrongly considered for REG-19 instead of Order of rejection of revocation application (REG-05) - on account of inadvertent mistake, particulars of disputed order dated 18.03.2021 (REG-19) were wrongly entered of Registration passed by the learned Superintendent. This was a genuine clerical mistake which has caused ab-initio incorrectness in appeal memo. That the appellant has deposited of interest and be considered as the requirement has been complied. The adjudicating authority/proper officer has rejected the application for revocation of cancellation of registration as the appellant has not complied with the provisions of Section 30 of the CGST Act, 2017 by not filing the revocation application within the prescribed time limit. In this context, the appellant submitted that due to corona pandemic and financial problem he could file GST returns and reply to the SCN issued by the proper officer - the adjudicating authority/proper officer has passed the order for rejection of Application for Revocation of Cancellation of registrations due to non-compliance of Section 30 of the CGST Act. In this context, the appellant submitted in their written submissions due to Covid-19 lock down and financial problem application of revocation of cancellation of registration within the prescribed period before the proper officer. The appellant has filed returns upto date of cancellation of registration hence, it is found that the appellant has substantially complied with the above said provisions of the CGST Act/Rules, 2017 in the instant case. Therefore, the registration of appellant may be considered for revocation by the proper officer. Appeal allowed - decided in favor of appellant.
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Income Tax
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2021 (11) TMI 1009
Deduction u/s. 54F - As per AO assessee has not appropriated the amount of long term capital gains for the purpose of purchase of residential house before the due date of filing of return of income u/s. 139(1) - main contention of the ld. DR is that the assessee did not utilize the amount of capital gains in purchasing a residential house nor deposited in any capital gain account - HELD THAT:- Admittedly, the assessee had not filed return of income u/s. 139 of the Act which is available up to 31-07-2012 but the assessee filed return of income on 02- 09-2013 which is well within the time available u/s. 139(4). The entire sale proceeds in acquisition of new residential house prior to filing of return of income u/s. 139(4) of the Act which was not disputed by the ld. DR. The ld. AR also placed on record various decisions in the case laws compilation and submitted that the benefit of section 54F of the Act is allowable when the assessee acquired the new asset before filing of return of income u/s. 139(4) of the Act. It is noted as per the case laws as submitted by the ld. AR, which held that the requirement of utilization of capital gain amounts before the date of furnishing of return of income u/s. 139 of the Act, which include all sub-section 139 of the Act including sub-section (4) If, the capital gain amount is utilized before the due date of filing of return of income u/s. 139 of the Act i.e. 31-03-2014 u/s. 139(4) of the Act. Therefore, it is clear that section 139 includes all sub-sections but not confined to sub-section (1) of section 139 of the Act alone. It is evident that the assessee invested amount of capital gains before the time available u/s. 139(4) of the Act and therefore, in our opinion the assessee is entitled to claim deduction u/s. 54F - Appeal of assessee is allowed.
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2021 (11) TMI 1008
Deduction u/s 80P(2)(a)(i) denied - interest from investment in Co-operative banks, nationalised banks - whether, interest income earned by assessee is eligible for deduction u/s 80P(2)(d) of the Act, whereas the deduction is one claimed u/s 80P(2)(a)(i) ? - HELD THAT:- As relying on M/S POTTERS COTTAGE INDUSTIRAL CO-OPERATIVE SOCIETY LTD. [ 2021 (9) TMI 137 - ITAT BANGALORE] we direct the Ld.AO to verify the interest earned on investment earned from co-operative societies and to consider the claim of assessee in accordance with law under section 80P(2)(d) Benefit of exemption u/s. 80P for transactions done with nominal or associate member - Whether transactions with nominal or associate members can not in anyway forbid the appellant from claiming the benefit of exemption u/s. 80P? - HELD THAT:- In respect of associate/nominal members, Hon ble Supreme Court in the case of Mavilayi Service Cooperative Bank Ltd. [ 2021 (1) TMI 488 - SUPREME COURT] has held that the expression Members is not defined in the Income-tax Act. Hence, it is necessary to construe the expression Members in section 80P(2)(a)(i) of the Act in the light of definition of that expression as contained in the concerned co-operative societies Act. In view of this, the facts are to be examined in the light of principles laid down by the Hon ble Supreme Court in Mavilayi Service Cooperative Bank Ltd. (supra). Accordingly, we remit this issue of deduction u/s.80P(2)(a)(i) of the Act to the file of Ld.AO to examine the same de novo in the light of the above judgment.
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2021 (11) TMI 1007
Validity of Assessment u/s 153A /153C - Mandation of recording satisfaction note for the purposes of initiating the proceedings u/s.153C - as contended by the ld. DR that the satisfaction was not only recorded in the file of the searched person but also in the file of the other person, namely, assessee before us - Deemed dividend addition u/s 2(22) - HELD THAT:- The procedure to be adopted for initiating proceedings under section 153A against a person who has not been searched, has been prescribed in the provisions of section 153C wherein a situation, the Assessing Officer having the jurisdiction over the other person is different from the Assessing Officer having jurisdiction over the person in respect of whom the search has been conducted. Before notice can be issued under section 153C, the Assessing Officer has to be satisfied that undisclosed income found during search operations belongs to the third person. A clear and plain reading of section 153C leaves no doubt that recording of satisfaction by the Assessing Officer of the person searched is mandatory and it has to precede the initiation of proceedings against the other person (not searched). If we look into the satisfaction note in the file of the searched person namely, Model Construction Pvt. Ltd. It is abundantly clear that there is no recording of satisfaction by the Assessing Officer that the document seized during the search at the premises of Model Construction Pvt. Ltd. Belongs to the assessee and were incriminating in nature. In our view, unless there is a recovery of the document belonging to the other person, section 153C of the Act cannot trigger. In the present case there is neither the recording of satisfaction by the AO of the searched person that the documents belong to the other person nor there is any finding that the documents so found were incriminating in nature. In our view a detailed scheme has been provided for initiation of Section 153C i.e. first there would be a satisfaction in the file of the AO of the searched person and thereafter transmission of the file along with the incriminating document to the AO of the other person and thereafter recording of satisfaction by the AO of the other person and issuance of notice u/s.153C of the Act and completion of proceedings. In the absence of the fundamental and foundational fact of recording satisfaction by the AO of the searched person no proceeding u/s.153C of the Act can be initiated by the other person. In the present case, there is no satisfaction in the file of AO of the searched person and accordingly, the issuance of proceedings u/s.153C of the Act were without of any basis. Assuming the proceeding can be initiated without there being any satisfaction in the file of the AO whether the satisfaction on record in the file of the assessee reproduced hereinabove can be said to be satisfaction in the eyes of law. It is fundamental that in the satisfaction note, it is not only essential to mention the PAN No. of the assessee, his address and other details by the Assessing Officer and invariably the satisfaction note should not be forming part of the order sheet and it should be separately recorded as is satisfaction note showing the application of mind by the Assessing Officer of the assessee before us. Admittedly, the application of mind is conspicuously missing in the order sheet (satisfaction) as neither the description of the document were mentioned nor how those document leads to evasion or concealment of non-disclosure of income by the assessee in all these years. None of the document belongs to the assessee before us, and, therefore, it cannot be said to be relevant or incriminating in nature. We may also like to point out that as confirmed by the ld. CIT-DR that none of the additions were made by the AO on the basis of the seized document and were only made u/s.2(22)(e) of the Act as is clear, from the grounds of appeal raised by the revenue before the ITAT, which were not pertaining to the seized document. In terms of the directions of the Hon ble High Court in SAVESH KUMAR AGARWAL [ 2013 (7) TMI 805 - ALLAHABAD HIGH COURT ] we hereby decide the verification of the jurisdictional parameter for initiation of proceedings u/s.153C of the Act in favour of the assessee and against the revenue.
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2021 (11) TMI 1006
Ex-parte orders passed by CIT-A - Belated payments of employee's contribution to PF and ESI - HELD THAT:- We find that the CIT(A) had given only one opportunity to the assessee in both the AYs 2018-19 and 2019-20. On the given date of hearing none appeared on behalf of the assessee before the Ld. CIT(A) but, filed written submissions through e-mail/ITBA Module and requested the Ld. Revenue Authorities to dispose off the appeals on the basis of the assessee's written submissions . CIT(A) adjudicated the appeals based on the material available on record. In this situation, considering the issues involved in the appeal as well as the prayer of the Ld. AR, in the interest of justice, We hereby remit the matter back to the file of Ld. CIT(A) in order to consider the issues involved in the appeals for the A.Y. 2018-19 and A.Y. 2019-20 afresh and decide the matter on merits by providing one more opportunity to the assessee of being heard. Appeals filed by the assessee are allowed for statistical purposes
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2021 (11) TMI 1005
Disallowance u/s 14A under rule 8D2(ii) in respect of interest expenditure - case of the assessee has been selected for scrutiny under CASS and statutory notices were duly issued and served upon the assessee - HELD THAT:- Three investments in growth funds, in foreign companies and in properties have to be excluded while calculating the average investments. Similar adjustment are required to be made in the figures of investments in the corresponding previous year ended on 31.03.02013 as stated hereinabove. We note that the average investments come to ₹ 135,63,19,992.50. Similarly, the average own funds the calculation whereof is extracted above are ₹ 136,10,03,859/-. It is apparent from the above calculation that assessee s average own funds are more than the average value of investments and in our considered opinion , no disallowance is called for under rule 8D2(ii). The case of the assessee is squarely covered by the decisions as referred to above by the Ld. A.R. in support of his arguments. In the case of CIT vs. HDFC Bank Ltd.[ 2014 (8) TMI 119 - BOMBAY HIGH COURT] and it has been held that where the interest free funds as well as own funds employed in the business are more than the investments in the shares and securities yielding exempt income, in that case no disallowance is to be made. Similar ratio has been laid in another decision in the subsequent decision in the case of HDFC Bank [ 2016 (3) TMI 755 - BOMBAY HIGH COURT] that where assessee s own funds are more than the investments made in shares and securities no disallowance is to be made under section 14A. In view of the facts of the instant case and the ratio laid down by the Jurisdictional High Court we are inclined to set aside the order of Ld. CIT(A) and direct the AO to delete the disallowance as made under rule 8D2(ii). - Decided in favour of assessee.
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2021 (11) TMI 1004
Adjustments while processing the return of income u/s. 143(1) - Disallowance of employees contribution to PF and ESI - HELD THAT:- In the instant case, there is no dispute that the return was processed u/s. 143(1) and there was no scrutiny assessment made u/s. 143(3) of the Act. It is settled issue that no debatable issues are permitted to be made adjustments u/s. 143(1) of the Act. In the instant case, what was added in the intimation u/s. 143(1) was the employees contribution to PF and ESI - employees contribution to PF and ESI is also allowable deduction, if, the same is paid before the due date for filing the return of income. This Tribunal in the case of Andhra Trade Development Corporation [ 2021 (5) TMI 263 - ITAT VISAKHAPATNAM] held that debatable issues are not permitted to be made adjustments while processing the return of income u/s. 143(1). Since, the facts are identical respectfully following the view taken by this Tribunal, we hold that the addition made by the CPC u/s. 143(1) is unsustainable, accordingly deleted. The appeal of the assessee is allowed. Employees contribution to PF and ESI is allowable deduction if the same is paid before the due date of filing the return of income. See M/S. EASTERN POWER DISTRIBUTION COMPANY OF A.P. LTD. AND VICA-VERSA [ 2016 (9) TMI 1040 - ITAT VISAKHAPATNAM] - thus we hold that on merits also, the assessee succeeds in appeal. Accordingly, appeal of the assessee is allowed.
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2021 (11) TMI 1003
Penalty u/s 271(1)(c) - Defective notice - allegation of non specification of charge - CIT-A deleted the penalty levy - HELD THAT:- As in the case of Manjunatha Cotton Ginning Factory [ 2013 (7) TMI 620 - KARNATAKA HIGH COURT] observed that the levy of penalty has to be clear as to the limb under which it is being levied. As per Hon'ble High Court, where the Assessing Officer proposed to invoke first limb being concealment, then the notice has to be appropriately marked. The Hon'ble High Court further held that the standard proforma of notice under section 274 of the Act without striking of the irrelevant clauses would lead to an inference of non-application of mind by the Assessing Officer. Coming to the instant case, as the mind of the AO while issuing notice u/s. 274 of the Act was not clear, under which limb the penalty supposed to be levied, and without specifying any charge under which the Assessee was to reply and to defend its case, the penalty is not leviable as held by the various Courts. Hence, we have no hesitation to uphold the impugned order. - Decided against revenue.
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2021 (11) TMI 1002
Addition u/sec. 69A - Assessee had received on-money over and above the consideration mentioned in the registered sale deeds - Commissioner held that the provisions of section 69A are not applicable in Assessee's case and the AO has erred in applying the provisions of this section - HELD THAT:- In the instant case, it is an admitted fact that no money was found at the time of survey conducted u/sec. 133A, however, certain information was found qua selling of flats at higher rate than the rate recorded in the sale deeds, however the AO without corroboration and fulfilling the ingredients of section 69A of the Act made the addition u/s. 69A of the Act, hence we are in concurrence with the finding of the Ld. Commissioner qua non-application of the provisions of section 69A to the issue in hand, consequently no interference is warranted qua conclusion drawn by the Ld. Commissioner. Department has also raised a grievance that the Ld. Commissioner erred in directing the AO to estimate the profit @ 15% on unaccounted sale receipts, when the provisions of section 69 of the Act clearly applicable to the facts of the present case - Commissioner while deciding non-applicability of the provisions of section 69A of the Act to the case of the Assessee, directed the AO to estimate profit @15% on unaccounted sale receipts. We are of the considered opinion that the ld. Commissioner though decided that section 69A of the act is not applicable to the facts of the case, however used his own wisdom by considering the peculiar facts and circumstances while following the decision in the case of Jay Builder [ 2012 (12) TMI 1194 - GUJARAT HIGH COURT] by estimating profit @15% on unaccounted sale receipts. The direction of the Ld. Commissioner is based on the judgement of Hon'ble High Court and even otherwise in favour of the Revenue Department and against the Assessee, therefore, on overall consideration, no interference is called for on this issue as well.
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2021 (11) TMI 1001
Disallowing the payment of commission paid by the assessee to three persons - HELD THAT:- These are undisputed fact that the assessee is engaged in the business of manufacturing of sprinklers which used in the agriculture and had maintained his targets from the previous years and had made payments to the respective persons on account of commission payment through account payee cheques and all those accounts are audited and required TDS had also been deducted. Since, engaging of these persons for enhancing of sales is specifically within the notice and knowledge of the assessee and the assessee has discharged his burden of proving the existence of circumstances for engaging the persons for enhancing the sales and had making payment towards commission @ 1.5% to the respective persons and apart from this nothing has been brought on record by the A.O. to controvert the said facts placed on record by the assessee alongwith supportive documents. Therefore, we see no reasons to disbelieve the specific averments and supportive documents made by the assessee to this effect. Therefore, we direct to delete the addition made qua this issue. Trading addition - HELD THAT:- We noticed that the assessee's proprietorship firm M/s. Jamna Industries is manufacturing of Sprinkler System and its Spare Parts and the assessee has maintained complete books of account including stock register. All the sales, purchases and expenses are fully vouched and verifiable. There is no change in the method of accounting as compared to preceding years. The books of account are duly audited. All the books of account and record of the unit were produced before the A.O.. All the details of purchases were furnished before the lower authorities and maintained stock register, production record and finished stock register of the unit. The assessee also filed complete stock chart of Raw Material, Finished Goods showing opening stock, purchase, manufacturing, sales and closing stock alongwith audit balance sheet before the Revenue authorities. Since the A.O. checked the books of account and also checked the manufacturing records and no any defect was pointed out then in that eventuality, sustaining of addition on account of trading addition is no legs to stand, therefore, we direct to delete this addition.
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2021 (11) TMI 1000
Addition of software usage charges received treated as royalty - use the copyrighted software - proof of parting with copyright as envisaged within the meaning of Section 14 of the Copyright Act - HELD THAT:- The assessee has merely transferred the right to use copyrighted software ANTIFOG and that it had not transferred the copyright itself to Trigo India. TRIGO India was authorized to have access to and make use of the copyrighted software ANTIFOG. In the Software License Agreement entered into, it is evident that the assessee i.e. Trigo SAS is Licensor and TRIGO Quality Production Services Pvt. Ltd. which is Indian Company as a Licensee . That the various clauses of this Software License Agreement verified the fact that copyright of the software ANTIFOG is very much with Trigo SAS (Licensor) and that the Trigo India (Licensee) has been authorized to use the software ANTIFOG as per various terms and conditions specified in this Software License Agreement. There is no difference in facts of the present case as compared to the facts of the judgment in the case of Engineering Analysis Centre of Excellence Pvt. Ltd. [ 2021 (3) TMI 138 - SUPREME COURT ] which was referred by the Tribunal in Ansys Inc. [ 2021 (6) TMI 513 - ITAT PUNE ] There has been no parting with copyright as envisaged within the meaning of Section 14 of the Copyright Act by the Licensor (assessee) to Licensee who is given access to only use the copyrighted software against which assessee s receipts cannot be taxed as royalty. Therefore, respectfully following the judicial precedents mentioned aforesaid on this issue - Grounds No.1 2 raised in appeal by the assessee are allowed. Addition of management service fees received by the assessee treating it as fees for technical services - HELD THAT:- Whatever services were provided by the assessee to Trigo India, no technical knowledge was made available by the assessee to the Indian Entity. Rather, it is a case of providing a service involving technical knowledge, which got consumed with its provision itself. Since such services simply involve use of technical knowledge and do not result into handing over some technical know-how to the recipient of the services. DR could not bring on record any materials/evidences to suggest that the facts and circumstances in the case of the present assessee was different from the case of the M/s. Faurecia Automotive Holding [ 2019 (7) TMI 402 - ITAT PUNE ] Moreover, on going through the services agreement, it is absolutely clear that whatever services were rendered by the assessee to the Trigo India was services of such nature which got immediately consumed on delivery. There is no part of technical know-how made available by which the Indian Entity could have used services later on its own - Also as relying on the case of CIT Vs. De Beers India Minerals Pvt.Ltd [ 2012 (5) TMI 191 - KARNATAKA HIGH COURT ] we allow Grounds No. 3 4 of the assessee. Levy of education cess on the tax liability computed under the provisions of the India France DTAA - HELD THAT:- . Having heard the parties herein and considering the decision of the Mumbai Bench of the Tribunal in the case of Sunil V Motiani [ 2013 (12) TMI 1105 - ITAT MUMBAI ] to hold that tax payable @ 12.5% under Article 11(2) of FTAA is inclusive of surcharge and education cess. - on the same parity of reasoning, we provide relief to the assessee. Thus, Ground No.5 raised in the appeal by the assessee is allowed.
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2021 (11) TMI 999
Revision u/s 263 by CIT-A - inadequacy in enquiry on share application money - Addition u/s 68 - HELD THAT:- The assessee has established not only the source of loan obtained but has also adequately demonstrated before the AO the source of money in the hands of the share applicants. A small portion of cash deposited by lender doesn't necessarily signify any collusion with assessee. The relevant facts were present before AO and were scrutinized. Thus, the burden of proof cast upon the assessee was broadly discharged. A presumption can be safely drawn that the AO was armed with reasonable evidences to draw satisfaction with the explanation offered by the assessee towards receipt of share application money from various parties and consequently it can be said that the statutory discretion was exercised in favour of the assessee based on tell-tale evidences furnished by the assessee in this regard. The action of the AO thus cannot be wholly disregarded as untenable or implausible more so, where share applicants attended the enquiry and deposed on oath for the subscription made. The share applicants are assessed to tax and confirmed the subscription. On these facts, a question would arise as to whether it was incumbent upon the AO to disregard such evidences and hold the explanation to be unsatisfactory in terms of Section 68 of the Act or not. Having regard to the prerogative vested with the AO towards the extent and manner of inquiry for drawing satisfaction, it is difficult to hold that the action of the AO is unintelligible. In our view, the AO has not committed any error in not chasing 'will o the wisp' in the absence of any brazen circumstances. In the light of aforesaid discussion, the basis of issuance of show cause notice under s. 263 of the Act does not appear to be tenable in law in the peculiar set of facts. Consequently, the assumption of jurisdiction under s. 263 of the Act will have to be regarded as without authority of law. As noted, the share applicants have unequivocally confirmed the share subscription. In such facts, it will be difficult to discredit the share application money received per se and make additions in the realm of s. 68 of the Act in the hands of the assessee in place of the share applicants where 'source of source' allegedly remains unproved in the opinion of the PCIT. Therefore purported inadequacy in inquiry as alleged, cannot be stated to be 'erroneous' per se in so far as assessee is concerned, even if, such inaction of AO towards fuller enquiry is branded as 'prejudicial to the interest of Revenue'. Therefore, the mandatory twin conditions of Section 263 is also not found to be fulfilled when tested on the touchstone of taxability of share application money in the hands of assessee on the grounds of unproved source of source.We thus concur with the plea on behalf of the assessee that S. 263 proceedings cannot be inflicted upon the assessee in these circumstances. - Decided in favour of assessee.
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2021 (11) TMI 998
Estimation of income - bogus purchases - CIT-A confirming addition being 25% of the bogus purchases - CIT (A) treated the balance amount of purchases in cash which is the violation of the provisions of section 40A(3) - HELD THAT:- There remains no ambiguity to the fact that the assessee has not debited any purchases in its profit and loss account. Admittedly, the audited financial statements were available before the AO during the assessment proceedings. Thus, the finding of the AO that the assessee has not furnished any supporting documents to justify it s (the assessee) contention, is contrary to the facts available on record. Once, it is established beyond doubt that the assessee has not debited the purchases in the profit and loss account, the question of making any disallowance either treating them as bogus or against the violation of the provisions of section 40A(3) of the Act does not arise. On this count only, the assessee succeeds in its appeal. At the time of hearing, there were various arguments which were advanced by both the sides being the learned AR and the DR. However, we do not find any reason to entertain the argument of both sides for the reason that the assessee has not made claim of expenditure on account of purchases in its audited financial statement. Thus the ground of appeal of the assessee is allowed. Estimation of income of Bogus purchases - A.Y. 2013-14 - HELD THAT:- The income which has been generated to the assessee out of such bogus transaction of purchase and sales. There is no standard jacket formula to work-out the income from the bogus activity carried out by the assessee. Some element of guesswork is required to determine the income of the assessee which is embedded in the bogus activities carried out by the assessee. It is also pertinent to note that the assessee has already disclosed the income in its income tax return for ₹ 77,07,990.00 which is inclusive of the income earned by the assessee with respect to its bogus purchases. Accordingly, in the interest of justice and fair play, we are inclined to estimate the gross profit at the rate of 8% of such bogus purchases as discussed above. Accordingly, we set aside the order of the learned CIT (A) and direct the AO to estimate the gross profit on the purchases at the rate of 8% of the purchases. Violation of the provisions of section 40A(3) - There in conclusive evidence that cash were paid in violation section 40A(3) i.e. cash payment above ₹ 20,000/- was made in a day to a particular supplier. Further the AO has doubted the genuineness of the purchase. In this scenario we are of the view that once the genuineness of transaction is doubted then only profit embedded under such transaction should be brought to tax - See VIJAY PROTEINS LTD. VERSUS COMMISSIONER OF INCOME TAX [ 2015 (1) TMI 828 - GUJARAT HIGH COURT] - we set aside the order of the learned CIT (A) with the direction to the AO to confirm the addition to the extent of 6% of the purchases as discussed above.
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2021 (11) TMI 997
Reopening of assessment u/s 147 - Disallowance u/s 14A - Mandation of recording satisfaction - HELD THAT:- Though the original assessment was completed u/s.143(3) of the Act, the AO has not examined application of Section 14A r.w.R.8D of the Income Tax Rules, 1962. Therefore, the change of opinion does not arise. Thus, the AO had rightly reopened the assessment. So far as tangible material is concerned, we find that the Assessing Officer after examining the entire file, has come to a conclusion that the suo-muto disallowance made by the Assessee is not correct and that the Assessee has not followed the formula prescribed in the Act to calculate the dividend income u/s.14A r.w.R.8D of the Income Tax Rules, 1962. Therefore, the reopening is based on the material available on record which is sufficient to reopen the assessment. The tangible material available to the Assessing Officer in this case is the balance-sheet on the basis of which the assessment is reopened. In our opinion, the balance-sheet which is the tangible material and supposed to have been considered by the Assessing Officer while passing the Assessment Order u/s.143(3) of the Act had totally ignored the balance-sheet. If at all he has considered, he has not even passed the assessment order by ignoring the provisions of law, i.e. Section 14A r.w.R.8D of the Income Tax Rules, 1962 - As in this case, tangible material is clearly available to the Assessing Officer and therefore the Assessing Officer validly reopened the assessment. In view of the above, we upheld the reopening made by the Assessing Officer u/s.147. - Decided against assessee. Addition u/s 14A r.w.r.8D - In the assessment order, the Assessing Officer has not discussed details of the own and borrowed funds. In the order of the Commissioner of Income Tax (Appeals), CIT(A) has categorically given a finding that the Assessee has not maintained separate books of account, year-wise to prove that only interest-free source has been utilized for investments. By considering the above findings Commissioner of Income Tax (Appeals) and by keeping in view the facts and circumstances of the case, we are of the opinion that one more opportunity should be given to the Assessee to substantiate his case before the Assessing Officer. In so far as the application of Section 14A of the Income Tax Act, 1961 r.w.R.8(2)(iii) of the Income Tax Rules, 1962 is concerned, this argument is neither placed before the Assessing Officer nor before Commissioner of Income Tax (Appeals). This argument is placed for the first-time before us. This issue is also to be examined by considering the relevant facts and materials. We set aside the order passed by the learned Commissioner of Income Tax (Appeals) and we remit back this issue to the Assessing Officer with a direction to re-compute the disallowance u/s.14A r.w.R.8D of the Income-Tax Rules, 1961, in the light of the decision of the Hon ble Bombay High Court in the case of Commissioner of Income Tax Vs. Reliance Utilities and Power Limited [ 2009 (1) TMI 4 - BOMBAY HIGH COURT] as held in respect of the interest disallowance that if there are funds available both, interest-free and overdraft and/or loans are taken, then a presumption would arise that investments would be out of the interest-free fund generated or available with the company, if the interest-free funds are sufficient to meet the investments . As regards, disallowance of other expenses, Section 14A r.w.R.8D(2)(iii), the Delhi Special Bench of this Tribunal in the case of ACIT Vs. Vireet Investment Private Limited [ 2017 (6) TMI 1124 - ITAT DELHI] wherein has held that only those investments are to be considered for computing the average value of investment which yielded exempt income during the year. Accordingly, the Assessing Officer is directed to consider only those investments which yield exempt income for the year under consideration is to be considered. - Decided partly in favour of assessee.
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2021 (11) TMI 996
Income tax liability of employees - Remission of income tax liability borne on behalf of the employees is to be added to the income under the head Income from business or profession u/s 41(1)(a) - assessee had computed its income in terms of Section 44BB - HELD THAT:-As established by the assessee that this liability of income tax born by the assessee on behalf of its employees was pertaining to which year and Whether the assessee has offered its income for that year applying the provisions of Section 44 BB of the act or not. If the liability pertains to the year for which the assessee has offered its income by applying the provisions of Section 44 BB of the act than once again this remission of liability cannot be taxed u/s 41 (1) of the act for the impugned assessment year i.e. assessment year 2011 12. It is also to be seen that assessee is setting of losses for previous year as evident from the assessment orders. Therefore, it is also possible that earlier years the assessee has not opted for presumptive income scheme u/s 44 BB of the act but has offered income based on its accounts. In such circumstances, remission of income tax liability if it pertains to those year for which the assessee is claiming set-off of losses by offering its income based on its regular income and expenditure accounts, would definitely be chargeable to tax in this year u/s 41 (1) of the act. These facts are not available on record; it is also not available with the assessee readily at the time of hearing. As it is not available before hand that for which assessment year, this remission of income tax liability pertains to and whether in that year how the income of the assessee has been offered i.e. whether u/s 44 BB of the act or at the actual income - we set aside this ground of appeal back to the file of the learned assessing officer with a direction to the assessee to show with evidence for which assessment year the income tax liability of employees was considered as an expenditure and how the income of the assessee was offered for that year. Chargeability of interest on income tax refund as business income and taxable at maximum marginal rate of tax by the AO and upheld by the learned CIT A - HELD THAT:- No reason to deviate from the orders of the lower authorities wherein the decision of BJ Services Company Middle East limited [ 2007 (3) TMI 311 - ITAT DELHI-H] is followed and the assessee has a permanent establishment in India is not denied. In the result ground number 2 of the appeal of the assessee is dismissed. Income accrued in India - interest u/s 244A received and computed the tax thereon at the rate of 40% as applicable to foreign companies as business income - whether assessee has a permanent establishment in India or not? - HELD THAT:- Merely having a project office in India cannot result into a permanent establishment of the assessee in India. Therefore, it is now apparent that assessee does not have a permanent establishment in India. The honourable High Court in Director Of Income Tax versus Pride Foramer [ 2013 (12) TMI 606 - UTTARAKHAND HIGH COURT] after reading article 12 in case of India France Double Taxation Avoidance Agreement held that plain reading of the provisions of the Double Taxation Avoidance Agreement makes it absolutely clear that some articles (1) and (2) will apply interalia when the recipient of interest does not have a permanent establishment in the country where he has received the interest. Therefore, in the present case the assessee is entitled to take the benefit of article 12 of the Double Taxation Avoidance Agreement, as there is no permanent establishment in India. Therefore the interest received on income tax refund of the assessee is subject to taxation as per article 12 (2) of the Double Taxation Avoidance Agreement at the rate of 15% of the gross amount of interest as income. Accordingly reversing the orders of the lower authorities, we allow ground number 1 and 2 of the appeal of the assessee.
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Customs
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2021 (11) TMI 995
Levy of penalty u/s 114 (iii) and Section 114AA of the Customs Act, 1962 - criminal offence of abetment - Availment of duty draw-back wrongly and fraudulently - allegations of aiding and abetting said Mr. Sajjan Kumar so as to make those fraudulent exports of hand woven carpets and to wrongly avail the corresponding duty draw back - retraction of statements - HELD THAT:- In the present case apparently and admittedly, the act / omission on part of the appellant in improperly conducting the Inquiry of the fraudulent export of hand-woven carpets is the act after the impugned fraudulent export got unearthed and after the mastermind behind those export, Shri Sajjan Kumar, had already availed the unreasonable, unjustified, illegal duty draw-back benefit. There is no evidence for the present appellant to at all be the beneficiary of the said illegal benefit being drawn by said Shri Sajjan Kumar. Irrespective the said statement has been retracted, but there is no iota of utterance in any of the statements of Shri Sajjan Kumar about the present appellant or the Co-Inspector Shri Subhash Chand to ever have facilitated him prior he exported those carpets. In absence thereof, the only lacuna on part of the present appellant is that they conducted inquiry about fair market rate of the hand-woven carpets from such firms which were later found to not at all to be involved in export of carpets and hence were not competent to provide any information to these Inspectors about the rate of the carpets. This act, to my opinion, is nothing more than an act of conducting investigation negligently in casual and improper manner. These Inspectors, in their statements have acknowledged them to be casual while conducting the impugned investigation. To constitute a criminal offence of abetment as punishable as defined under Section 107 of Indian Penal Code, 1862, there has to be an intention to instigate, to conspire or to aid/facilitate a person to do or abstain from doing something, which is a defined penal offence and that the abettor is the part of the conspiracy with an intent to draw back benefit out of the alleged offence. Apparently and admittedly, there is nothing on record produced by the Department to show the involvement of the appellant and the Co-Inspector for insighting or conspiring with or aiding or facilitating said Sajjan Kumar at the stage prior he made the exports. There is no evidence for the appellant and the Co-Inspector to be the beneficiary of the amount of duty draw-back illegally availed by said Sajjan Kumar - the act is not sufficient to constitute a penal offence as that of abetment for the impugned fraudulent exports. For imposition of penalty under Section 114AA the information should knowingly be false. There should have been an intention to give false or incorrect statement. But as already mentioned above that lapse in obtaining the correct information from improper source cannot be called as an intentional act of giving wrong information. Hence no question arises for imposition of penalty - appeal allowed - decided in favor of appellant.
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Insolvency & Bankruptcy
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2021 (11) TMI 994
Liquidation of the Corporate Debtor - Constitution of CoC by the Resolution Professional in accordance with IBC provisions - Whether the recommendation for liquidation of Respondent No. 1 was taken by the CoC in contravention of IBC provisions? - Section 61 of the Insolvency and Bankruptcy Code, 2016 - HELD THAT:- While the CoC took a decision for going for liquidation of the Corporate Debtor, the Appellants have challenged the very basis of constitution of CoC and fixing of voting rights by labeling it illegal, done to provide undue and unfair advantage to Respondent No. 4. Moreover, the Appellants have also claimed that the CoC took a decision for liquidation without following the procedure under CIRP stipulated in the IBC. The basic reason for seeking Resolution Plan under CIRP is to ensure that the Corporate Debtor can continue to function as a going concern, while taking care of interests of its creditors. Liquidation is the last resort which implies corporate death of the company. For the Corporate Insolvency Resolution Process to result in successful resolution of the corporate Debtor, preparation of a correct information memorandum is a must, which may result in work able resolution plans. In the present case, it is found that information memorandum was not prepared with full and correct details of assets and liabilities of the Corporate Debtor. The RP also did not pursue his application u/s 19(2). As a result the CoC decided to abandon the step of inviting of EOI for Resolution Plan. A duty has been cast on the RP under section 25 of IBC where he has to take immediate custody and control of assets of Corporate Debtor, including the business record of the Corporate Debtor; and furthermore a duty has been passed on the Resolution Professional under section 25(2)(g) to prepare an information memorandum in accordance with the provisions of IBC. Section 29 of the IBC requires the Resolution Professional to prepare an information memorandum in such form and manner contain such relevant information as may be specified in the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulation, 2016 for formulating a Resolution Plan. It is clear that the Resolution Professional has resorted to very novel and ingenious way of circumventing the duties imposed upon him in the IBC for preparation of information memorandum, exclusion of time to extend CIRP period and inviting Expression of Interest for Resolution Plan for the Corporate Debtor. He, with active support of Nitin Goel, representation of Respondent No. 4, managed to deal with these important issues in a very superficial and objectionable manner. Such action of RP betrays of prejudicial action reeking of favourtism for Respondent No. 4 - the CoC was not constituted in accordance with the provisions of IBC. In the matter, the CIRP was not pursued with fairness and due diligence by the Resolution Professional and the resolution for liquidation of the Corporate Debtor was taken in a meeting with an improper voting share ascribed to Respondent No. 4 and taken in unseemly haste. The CoC as constituted in the CIRP of the Corporate Debtor was not in accordance with provisions of IBC, therefore its constitution is quashed - claims of various financial creditors including home buyers should be appropriately fixed. Matter remanded to the Adjudicating Authority for taking action as directed, in accordance with the provisions of IBC and law - matter on remand.
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2021 (11) TMI 993
Liquidation of Corporate Debtor - Section 33 of the IBC - review power - Recall power - error apparent on the face of record or not - HELD THAT:- The term Error apparent on the face of the proceedings is held to be one based on clear ignorance or disregard of the provisions of Law as per decision of the Hon ble Supreme Court in LILY THOMAS, ETC. VERSUS UNION OF INDIA ORS. [ 2000 (5) TMI 1045 - SUPREME COURT] . Further, in the decision of the Hon ble Supreme Court in HARI VISHNU KAMATH VERSUS SYED AHMAD ISHAQUE AND OTHERS [ 1954 (12) TMI 22 - SUPREME COURT] it is held that it is essential that it should be something more than a mere error; it must be one which must be manifest on the face of the record . Review power - HELD THAT:- In the decision of Hon ble Supreme Court in Patel Narshi Thakershi V. Pradyumansinghji Arjunsinghji reported in (1971) 3 SCC Page 844, at spl page 847 it is observed and held that the power of review is not an inherent power. It must be conferred by Law either specifically or by necessary implication . No wonder, the Tribunal has no inherent power to review, as per Section 114 and Order 47 of the Civil Procedure Code. Tribunal's Power - HELD THAT:- Mere glance of Section 420(2) of the Companies Act, 2013 unerringly points out that the Tribunal has power to rectify its order, if there is any mistake apparent from the record, but it has no power of review of its own order. In this regard, this Tribunal pertinently points out that Rule 154 of the National Company Law Tribunal Rules, 2016 enjoins the Tribunal to rectify its order, if there is any clerical or arithmetical mistake in the order of the Tribunal or any error therein arising out of any accidental slip or omission of its own motion or an application of any party by means of rectification. Recall power - HELD THAT:- It is significantly pointed out by this Tribunal that Hon ble Supreme Court in the decision in SRI BUDHIA SWAIN ORS. VERSUS. GOPINATH DEB ORS. [ 1999 (5) TMI 596 - SUPREME COURT] has prescribed the conditions for recalling an order (i) the proceedings suffer from the inherent lack of jurisdiction and such lack of jurisdiction is patent (ii) There exists fraud or collusion in obtaining the judgement (iii) There has been a mistake of the Court prejudicing a party, or (iv) a judgement rendered in ignorance of the fact that a necessary party has not been served at all or had died and his estate was not represented. In the instant case, on going through the impugned order dated 11.06.2021 in IA No.2034/2021 in (IB) 702(ND)/2018 this Tribunal finds that the Adjudicating Authority at para 12 had observed that it has no power to review its own order but traversed beyond its purview and reviewed the order dated 04.07.2019 in CA No.827/2019 by concluding that once a liquidation order was passed there is no scope to recall, which is contrary to the order passed by it on 04.07.2019 where it observed that the pending application will be disposed and then liquidation be directed. The Adjudicating Authority (National Company Law Tribunal, New Delhi II) is directed to restore the application to its file and to pass fresh orders on merits, in accordance with law, of course, after providing adequate opportunity of hearing to both sides, by permitting them to raise all factual and legal pleas as expeditiously as possible - application allowed.
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2021 (11) TMI 992
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - default made against the Credit facilities extended by the Banks - Personal Guarantor - existence of debt and dispute or not - HELD THAT:- In view of the clauses of the Deed of personal Guarantee, it is stated that the demand of the Respondent Bank is invoked and the continuous Deed of personal Guarantee executed by the Applicant is well within limitation and not barred. It is further averred by the Applicant/Debtor that no Application under this Chapter has been admitted in respect of the Applicant/Debtor during the period of 12 months preceding the date of submission of this Application. The Application under consideration is in the prescribed Form and contains the required details. Thus, prima facie the requirements of Section 94 are fulfilled. The Applicant or his Counsel and the Registry/Court Officer are directed to serve the copy of this Order along with copy of the Application and documents immediately on the Resolution Professional so appointed by all modes for information and compliance - List the matter on 15.12.2021.
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Service Tax
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2021 (11) TMI 991
CENVAT Credit - common input services used for providing the taxable services and trading activities - non-maintenance of separate records - Rule 6 (3A) of the CENVAT Credit Rules, 2004 - HELD THAT:- Appellant clearly state that they have provided the records year wise in as per Annexure VII, to that letter to the adjudicating authority. Commissioner in the impugned order do not contradicts the same nor records any finding in respect of the Annexure VII. In fact in the reply submitted by the Appellant then claimed in respect of the calculation errors, in the show cause notice, if these calculation errors while computing the demand are taken into account then major chunk of demand itself cannot survive. However we find that these calculation errors themselves have not been considered and adjudicated by the impugned order. On the examination of the impugned order we can only observe that impugned order cannot be called a speaking order in any manner. Except for the brief discussion in para 6 and 7, in the Discussion and Findings recorded by the Commissioner we do not find anything anywhere in the entire order, considering the allegations made in the show cause notice and the submissions made by the appellants while contesting the same. The only reason for the rejection of the claims made by the appellants is that they have not furnished the relevant information. There are no merits in impugned order as it is devoid of any reasoning and is without consideration of the submissions made by the appellant - the matter is remanded back to the original authority for consideration - appeal allowed by way of remand.
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2021 (11) TMI 990
Non-payment of service tax - service of covering of shed/constructing a common auction platform to M/s. Rajasthan State Agriculture Marketing Board - Department after observing that the appellant has provided work contract service to RSAMB during the financial year 2012-2013 alleged that service tax has not been paid by the appellant - whether the construction of common auction platform for RSAMB is the taxable service or not? - HELD THAT:- Any service provided to an agriculture produce marketing committee or any service relating to agriculture or agricultural produce even that of construction for infrastructure for agriculture or agriculture produce specially when provided to a government / local authority acting under statute meant for such use is different from Commerce or Industry, tax is not leviable on such service - In the present case, there is no denial even by Commissioner (Appeals) that RSAMB is the Governmental body and the construction of platform is meant to be used for the agriculture produce. The only reason for which Commissioner (Appeals) has confirmed the demand is that RSAMB is the body corporate engaged in the business of sale and purchase of movable as well as immovable property, export of fruits and vegetables, renting of immovable property to commercial establishment and operating the e-private market/ private market, accordingly, concluded that the construction of platform and shops are not for the use other than the commerce or industries. The order-in-original has specifically recited that no service tax has been collected by the appellant from RSAMB which is governmental body which got platform constructed with objective to facilitate the farmers however without charging any consideration. Commissioner (Appeals) also in the impugned order has recited about the certificate of competent authority as being produced by the appellant certifying therein that the structure is used by the farmers free of charge for post harvest operation. The said certificate is sufficient to falsify the findings of the Commissioner (Appeals) that the platform was for the use as that of commerce and industry - The fact remains is that the service have been provided to a legal body existing under the statute under the mandate of article 243 (W) of Constitution of India. In view of the apparent and admitted facts irrespective that nature of impugned service is that of work contract service but there is no liability on the appellant to pay the service tax appellant being a statutory body and service provided is in negative list being meant for agriculture produce with no element of business or profit. Demand has therefore, wrongly been confirmed even for the period 1.4.2012 to 30.6.2012 - Appeal allowed - decided in favor of appellant.
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Indian Laws
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2021 (11) TMI 989
Dishonor of Cheque - legally enforceable debt or not - pure and simple civil dispute or not - proceedings challenged primarily on the ground that the cheque, alleged to have been dishonored, was not issued by the petitioner in favour of the respondent for any legally enforceable debt - HELD THAT:- It is true that if the dispute has the contours of dispute of civil nature and does not constitute a criminal offence, this Court may be justified to quash the complaint or the criminal proceedings as the case may be, in the exercise of inherent power under Section 482 Cr.P.C. The criminal proceedings ought not to be permitted to degenerate into weapon of harassment. It is trite law that that the offence under Section 138 of N.I. Act is always committed in the course of civil transactions and if a cheque is given by the accused to the complainant in the discharge of his civil liability, which, of course, must be the legally enforceable debt or liability and same, if presented before the Bank, is returned unpaid by the Bank for insufficiency of funds or that it exceeds the amount arranged to be paid, the complainant may serve a notice upon the accused to make the payment within thirty days from the receipt of the said notice - the complaint filed by the respondent, if viewed in this context, does not lack the ingredients of the offence under Section 138 N.I. Act. In view of the clear provisions of Sections 138 and 139 of N.I. Act and the legal position on the point explained by the Hon ble Supreme Court, there is hardly any reason to doubt the proposition that the probable defence of the accused in a complaint under Section 138 of N.I. Act, that the cheque issued by him which was later dishonored was not for any legally enforceable debt or liability, can be raised by the accused only at the stage of leading evidence and cannot be considered by the Magistrate at the threshold at the time of taking cognizance. It, however, remains to be seen that in a case where, from a plain reading of the complaint and the documents appended thereto, it clearly comes out that the cheque issued by the accused, as per own showings of the complainant, was not for discharge of any legally enforceable debt or other liability. Petition dismissed.
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2021 (11) TMI 988
Dishonor of Cheque - fine sufficient enough to meet the liability of the cheque issued, or not - what should be the approach of the trial Court while awarding punishment to an accused convicted for commission of offence under Section 138 of N.I. Act? - whether the trial Court should, with or without the punishment of imprisonment, impose fine which is sufficient enough to meet the liability of the accused towards the complainant as represented by the bounced cheque? HELD THAT:- From a reading of provisions of Section 138 of N. I. Act in the context of laudable object sought to be achieved by Chapter XVII of N.I Act, it is abundantly clear that the Criminal Court while convicting an accused for commission of offence under Section 138 of N.I. Act, cannot ignore the compensatory aspect of remedy and the compensatory aspect can only be given due regard if the sentence imposed is at least commensurate to the amount of cheque, if not more, so that this fine, once imposed, can be appropriated towards payment of compensation to the complainant by having resort to Section 357 of Cr.P.C. Before we proceed, it would be appropriate to set out the provisions of Section 357 as well. The law with regard to grant of compensation under Section 357 (3) of Cr.P.C in the cases arising under Section 138 of N.I. Act is now well settled. As observed above, the object of Section 138 of N.I. Act is not only punitive, but is compensatory as well. As the supreme Court says, the compensatory aspect must receive priority over the punitive aspect of Section 138 of N. I. Act - it cannot be contended that while imposing sentence under Section 138 of N.I.Act, the Court should exercise its discretion in imposing fine by having regard to Section 357 (3) of Cr.P.C. Rather, the Criminal Court should bear in mind the laudable object of engrafting Chapter XVII containing Section 138 to 142 of NI Act and give priority to the compensatory aspect of remedy. In the instant case, the trial Court has miserably failed to take all these aspects into consideration and has awarded ₹ 2.00 lac, to be paid as compensation to the complainant, when admittedly the cheque amount was to the tune of ₹ 10.00 lacs. The petitioner, who was complainant before the trial Court, has been deprived of a sum of ₹ 10.00 lac which amount had become payable to him on the date of issuance of cheque i.e 10.12.2018. The matter is remanded back to the trial Court for considering the imposition of sentence upon the respondent de novo - petition allowed by way of remand.
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2021 (11) TMI 987
Dishonor of Cheque - insufficiency of funds - acquittal of the accused - rebuttal of presumption - preponderance of probability - legally enforceable debt or not - defence case is that cheque was issued as a security to another transaction - HELD THAT:- It is settled that there may not be sufficient negative evidence which could be brought on record by the accused to discharge his burden. The accused need to substantiate his case based on preponderance of probabilities. The accused in this case was successful in discharging the burden by cross-examining PW1, by examining DW1 and producing Exts.D1 to D4 and also by proving probabilities in his favour and non-probabilities against the complainant. The evidence on record would clearly show that the fact is not as presumed. Therefore, the presumption under Sections 118(a) and 138 of the NI Act is over. Thus, it can be safely concluded that having regard to the facts and circumstances of the case and preponderance of probabilities, the rebuttal evidence adduced by the accused is acceptable. In the case of acquittal, there is double presumption in favour of the accused. An order of acquittal cannot be interfered with as matter of course. An order of acquittal can only be interfered with when there are compelling and substantial reasons for doing so. Only in exceptional cases where there are compelling circumstances and the judgment in appeal is found to be perverse, the appellate court can interfere with the order of acquittal. Appeal dismissed.
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2021 (11) TMI 986
Dishonor of Cheque - Signatory of cheque or not - sections 138 and 142 of Negotiable Instruments Act - HELD THAT:- Admittedly, the cheque has been issued in the joint account maintained by both A1 and A2. But, the cheque has been signed only by A1/husband and the petitioner/A2 is not a signatory to the cheque. In the said circumstances, the petitioner cannot made liable for the prosecution, and A1, who was the drawer of the cheque alone is liable to be prosecuted under Section 138 of Negotiable Instruments Act. As the petitioner is not a drawer of the cheque, no prosecution can be initiated against her. This Criminal Original Petition is allowed - the case against the petitioner/A2 in STC No. 5975 of 2014 on the file of the Judicial Magistrate, Sathyamangalam, is quashed. Since the case is pending from the year 2014, the trial Court is directed to proceed with the trial against A1 and dispose the same within a period of three months from the date of receipt of a copy of this order.
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2021 (11) TMI 985
Dishonor of Cheque - seeking exemption of compounding fee on the ground that due to poor financial condition, petitioner could not pay the amount well in time and now he is not in a position to pay the compounding fee - HELD THAT:- Instead of 15% of the cheque amount, petitioner/accused is directed to deposit ₹ 5,000/- as compounding fee with the H.P. State Legal Services Authority, Shimla within four weeks from today - After depositing compounding fee/cost, petitioner shall place a copy of receipt of deposit of compounding fee on record of this petition. In case of default in depositing compounding fee/cost with the H.P. State Legal Service Authority, Shimla within eight weeks from today, the judgments of conviction and sentence shall automatically revive. As an amount of ₹ 1,76,000/- has been deposited by petitioner in the Registry of this court, therefore, Registry of this Court is directed to release the said amount, along with interest, if any, to the respondent No. 1/complainant Birendra Bahadur Singh, by remitting the same in his bank account to be supplied by the respondent in person or through his counsel ₹ 44,000/- has been deposited by the petitioner in the Trial Court, therefore, the Trial Court is also directed to release the amount of compensation, deposited by the petitioner/accused in favour of respondent No. 1/complainant Birendra Bahadur Singh, along with interest, if any accrued thereon, without issuing notice to the accused-petitioner (Inderjeet Sedha) by remitting the same in his bank account, details whereof shall be furnished by him either in person or through counsel at the time of production of copy of this order in the trial Court. Petition disposed off.
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2021 (11) TMI 984
Dishonor of Cheque - accused failed to rebut the presumption available to the complainant - legally recoverable debt or not - denial of all incriminatory materials - Section 138 of the Negotiable Instruments Act - HELD THAT:- In the case on hand, issuance of cheque and the signature of the accused on the cheque stands proved by placing necessary oral and documentary evidence on record. Admittedly, there was a business transaction between the accused and the complainant in respect of purchase of a LGV Tata vehicle bearing No. KA-20/7567. Ex. P-8 is the Account statement produced by the complainant which shows that accused was due in a sum of ₹ 1,50,000/- and the cheque came to be issued towards the legally recoverable debt i.e., the amount due by the accused to the complainant as per Ex. P-8. The cheque on presentation, admittedly, was dishonoured and thereafter, legal notice came to be issued and there is no compliance of callings of notice. Therefore, all ingredients to attract offence under Section 138 of the Negotiable Instruments Act stands established by placing necessary oral and documentary evidence on record. No doubt, the accused got herself examined as DW-1, wherein she tried to rebut the presumption available to the complainant under the provisions of section 118 and 139 of the Negotiable Instruments Act, but the evidence adduced by the accused was not sufficient to rebut the said presumption and therefore, the learned Trial Magistrate recorded an order of conviction for the accused for the offence punishable under section 138 of the Negotiable Instruments Act, and the learned Judge in the first appellate court rightly re-appreciated the material evidence on record and confirmed the finding recorded by the learned Trial Magistrate. On perusal of the cross examination of PW1, it is seen that there is no proper proof of challenging the entries in Ex. P-8 which is the accounts statement. Admittedly, the defence taken by the accused is that the cheque is issued for the purpose of security was not at all established and accordingly, this court is of the considered opinion and both the courts have passed an order of conviction based on the sound and logical reasons and therefore, it does not suffer from any legal infirmity or perversity. Criminal Revision Petition is dismissed.
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2021 (11) TMI 983
Dishonor of Cheque - insufficiency of funds - blank cheque misused by complainant - Discharge of lawful liability - section 138 of NI Act - HELD THAT:- This Court finds no force in the submission of learned counsel representing the petitioner that Courts below have failed to appreciate the evidence in its right perspective, rather this Court is convinced and satisfied that complainant successfully proved on record that he advanced friendly loan of ₹ 6,00,000/- to the accused, who with a view to discharge her lawful liability, issued cheque Ex.CW1/B, amounting to ₹ 6,00,000/-, but same was dishonoured on account of insufficient funds in the bank account of the accused. Interestingly, in the case at hand, there is no denial, if any, on the part of the accused with regard to issuance of cheque, rather she has categorically stated that she had borrowed sum of ₹ 1,00,000/- only and in lieu thereof, had given blank cheque to the complainant, which was subsequently misused by the complainant. Accused in her statement recorded under Section 313 Cr.P.C., nowhere denied the factum with regard to issuance of cheque, but claimed that same was issued as a security. Since, there is no dispute with regard to issuance of cheque in question as well as signatures thereupon of the accused, there is presumption under Sections 118 and 139 of the Act that cheque was issued by the accused towards discharge of her lawful liability. No doubt, aforesaid presumption is rebuttal, but for that purpose, accused was under obligation to raise probable defence, which could be either raised by leading positive evidence or by referring to the material adduced on record by the complainant - in the instant case, accused has not been able to raise any probable defence, rather she has simply stated that she had handed over blank cheque. Once, she has admitted factum with regard to borrowing sum of ₹ 1,00,000/-, it is not understood that where was the occasion for her to issue blank cheque, as has been claimed by her. Entire evidence led on record by the respective parties, clearly indicates that accused had issued cheque Ex.CW1/B to the complainant towards discharge of her lawful liability. Though, accused claimed before the court below that she had repaid the amount and has no liability towards the complainant, but to that effect no cogent and convincing evidence ever came to be led on record - Leaving everything aside, factum with regard to issuance of cheque and signature thereupon stands duly admitted by the accused and as such, there is presumption in favour of the complainant that he had received cheque in question issued towards lawful liability. In the present case, this Court is unable to find any error of law as well as fact, if any, committed by the courts below while passing impugned judgments, and as such, there is no occasion, whatsoever, to exercise the revisional power. This Court sees no valid reason to interfere with the well reasoned finding recorded by the courts below, which otherwise, appear to be based upon proper appreciation of evidence available on record and as such, same are upheld - the present revision petition is dismissed.
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2021 (11) TMI 982
Dishonor of Cheque - insufficiency of funds - inconsistency as to the name of complainant in the documents of the complaint - HELD THAT:- In the case on hand, the learned Judicial Magistrate of First Class, Vikarabad, having considered the material available on record, taken cognizance for the offence punishable under Section 138 of the NI Act. Summons were issued to the accused and he is making appearance, prima facie case is made out disclosing the ingredients of the offence under Section 138 of the NI Act against the petitioner/accused. Hence, at this stage, this Court cannot quash the proceedings in C.C.No.403 of 2013. The criminal petition is dismissed as devoid of merit.
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