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TMI Tax Updates - e-Newsletter December 17, 2021 Case Laws in this Newsletter: GST Income Tax Customs Insolvency & Bankruptcy PMLA Service Tax Central Excise CST, VAT & Sales Tax Indian Laws Highlights / Catch Notes GST: Detention of goods alongwith the vehicle - used/expired e-way bills to evade tax - no useful purpose will be served by allowing the vehicles to be detained any longer as the vehicles will loose their intrinsic value. There is also no evidence to suggest that the respective petitioners conspired with the said consigner to facilitate evasion of tax. - There shall be an order for releasing the respective vehicles subject to the respective petitioners paying the amounts determined in the impugned orders - HC Visit to Get Source GST: Validity of assessment orders - Violation of principles of natural justice - use of common portal though intended to facilitate faster service notice of orders and decisions, it is noticed that there are teething problems in the communication of notice system derived under Section 169(1)(d) of the TNGST Act, 2017. Thus, the orders have been passed without a reply from the petitioner. Therefore, to meet the ends of justice, a fresh opportunity can be given to the petitioner to file a reply to the notices. - HC Visit to Get Source GST: Validity of SCN - SCN challenged on the ground that there is predetermination - Section 129(3) of the Central Goods and Services Tax Act, 2017 - no useful purpose will be served by quashing the show cause notices by directing the respondents to issue a fresh show cause notices. It would only further delay the clearance of the imported consignments. - petitioner to file additional representations and reply to the impugned show cause notices immediately. - HC Visit to Get Source GST: Detention of goods alongwith vehicle - The respondent have only issued a notice proposing to impose penalty and tax. It is open to the petitioner to explain the same before the respondents, considering the fact that, the petitioner has also got the vehicle released on payment of the amount on 01.02.2019, there is no merits in the present writ petition. - HC Visit to Get Source Income Tax: Reopening of assessment u/s 147 - scope of mandatory procedure prescribed u/s 148A - relation between Relaxation Act, 2020 and Finance Act, 2021 - enhanced/reduced time limit specified in Section 149 - Relaxation Act, 2020 and Notifications issued thereunder can only change the time-lines applicable to the issuance of a Section 148 notice, but they cannot change the statutory provisions applicable thereto which are required to be strictly complied with. Further, just as the Executive cannot legislate, it cannot impede the implementation of law made by the Legislature. - HC Visit to Get Source Income Tax: Advantage of Kar Vivad Samadhan Scheme, 1998 (KVSS) - The Apex Court and this Court have, on many occasions, stated that if a party comes to the Court with unclean hands, which in this case petitioner have, the party should be dealt with very strongly and substantial costs also should be imposed on the party. The conduct of petitioner in suppressing a material fact intends to impede and prejudice the administration of justice. Judiciary is the bedrock and handmaid of orderly life and civilized society - HC Visit to Get Source Income Tax: Penalty u/s 271(1)(c) - Making an incorrect claim in law cannot tantamount to furnishing inaccurate particulars under Section 271(1)(c) of the Act. Mere making of a claim which is not sustainable in law, by itself, will not tantamount to furnishing inaccurate particulars regarding income of the assessee. Merely because, the assessee had claimed an expenditure, which claim was not accepted or was not acceptable to the Revenue, that by itself would not attract the penalty under Section 271(1)(c) of the Act. - HC Visit to Get Source Income Tax: Nature of expenditure - Revenue expenditure or capital expenditure - expenditure incurred by the Appellant for raising floor height of Godown - The expenditure so incurred is related to the carrying on or conducting of ware-house business of Appellant and hence, it should be regarded as an integral part of the profit earning process. The expenditure, therefore, cannot be treated as capital expenditure but should be treated as revenue expenditure. - HC Visit to Get Source Income Tax: Carry forward of losses - ITR-V filed belated - Though the contention of the assessee in the said proceedings was that ITR-V was submitted by ordinary post well within the period prescribed under the Scheme, that would not make any major distinction if such ITR-V Form is submitted belatedly under the Scheme since the data available in the e-filed return of income is not disputed by the Department inasmuch as the claim of carry forward of losses claimed by the assessee for future years. The significance of filing an e- filed return cannot be effaced and the claim of the assessee cannot be denied on hyper-technicalities. - HC Visit to Get Source Income Tax: Cessation of liability u/s 41(1) - Incomplete project - Assessee has received trade advance for sale of certain flats to prospective buyers which were ultimately not construed by it and incomplete project was sold under the head “work-in-progress”. It has not returned money to these customers in the last fifteen years. It has not created an arrangement with buyer of the WIP that these customers would get flats at reduced price by the amount received by the assessee as advance. It has simply retained these amounts under the garb of liability without paying any taxes. - Additions confirmed - AT Visit to Get Source Income Tax: Royalty income - distributing its products the Indian market - there is no transfer of legal title in the copyrighted article as the same rests with the assessee. All rights, title and interest in the licensed software which is being claimed to be copyrighted article are the exclusive property of the assessee. DJCIPL has no authority to reproduce the date in any material form to make any translation in the date or to make adaptation in the data. - the payments received cannot be said to be ‘Royalty’ in nature. - AT Visit to Get Source Income Tax: Denial of exemption u/s 10(25)(ii) - filling of return in the abbreviated name - We are of the considered view that ld. CIT (A) has erred in dismissing the rectification application filed by the assessee u/s 154 of the Act by denying a relief otherwise available to the assessee u/s 10(25)(ii) - we direct the AO to allow relief to the assessee by allowing exemption u/s 10(25)(ii) of the Act after due verification qua the abbreviated name mentioned by the assessee in its return in the light of the order for according exemption to the assessee. - AT Visit to Get Source Customs: Revocation of customs broker's license - Validity of SCN - time limitation - Offence Report - The delay in inter-departmental communications or furnishing of Relied Upon Documents (RUDs) are of no consequences as the impugned show cause notice has been admittedly issued beyond the period of 90 days. It is noticed that the office of the second respondent and the office of the first respondent is located in the same Custom House in Parrys and therefore, there is no excuse for condoning the delay. - HC Visit to Get Source Customs: Classification of imported goods - Reformate - from a plain language of the expression “preparations not elsewhere specified or included, containing by weight of 70% or more of petroleum oils, these oils being the basic constituents of the preparations’, it is evident that even if it is assumed that Reformate is a preparation, still it will not be classifiable under CTH 2710 as the said Heading specifically excludes preparations which are elsewhere specified or included. - Reformate would merit classification under CTH 2707 50 00 - AT Visit to Get Source Customs: Suspension of Customs Broker License - A statement which is retracted or otherwise, and more so not being substantiated by documentary or other proof, cannot be appreciated as evidence - Revenue has not brought out any evidence, whatsoever as to the benefit that customs Broker got by indulging in such activity. There could however, be a gain for the importer. - The Respondents are directed to restore the CB licence of the Appellant - AT Visit to Get Source Indian Laws: Validity of Arbitral Award - it is alleged that award is in excess of claim - Arbitrator exceeded the scope of reference or not - Arbitrator has rewritten the contract with respect to the amount payable which was specified in the contract or not - the Arbitrator was justified in awarding the amount beyond the aforesaid periods and till the additional traffic was diverted due to the closure of Palwal Aligarh Road - the Arbitrator was justified in awarding the amount beyond the aforesaid periods and till the additional traffic was diverted due to the closure of Palwal Aligarh Road. - SC Visit to Get Source Indian Laws: Seeking grant of bail - Smuggling - psychotropic substances - admissibility of confessional statement recorded under Section 67 of the NDPS Act - In the absence of any psychotropic substance found in the conscious possession of A-4, mere reliance on the statement made by A-1 to A-3 under Section 67 of the NDPS Act is too tenuous a ground to sustain the impugned order - SC Visit to Get Source IBC: Initiation of CIRP - Period of limitation - It cannot be gainsaid that the Respondent/Financial Creditor, after considering the proposal of the Appellant for ‘One Time Settlement’ through its letter dated 19.02.2018 granted said settlement in and by which the ‘Corporate Debtor’ was required to pay ₹ 2 Crores as against its liability of ₹ 17.12 Crores as on 01.12.2015. As such it is crystalline clear that the new contract had come into play on 19.02.2018 and further that the Application was filed by the Respondent/Applicant (under Section 7 of IBC) on 25.10.2018 which is within period of limitation. - AT Visit to Get Source PMLA: Jurisdiction under PMLA vs IBC - power or authority to proceed against the properties of a corporate debtor once a liquidation measure has come to be approved in accordance with the provisions made in the Insolvency and Bankruptcy Code, 2016 - The issue of reconciliation between the IBC and the PMLA, in so far as the present cause is concerned, needs to be answered solely on the anvil of Section 32A. Once the Legislature has chosen to step in and introduce a specific provision for cessation of liabilities and prosecution, it is that alone which must govern, resolve and determine the extent to which powers under the PMLA can be permitted in law to be exercised while a resolution or liquidation process is ongoing. - HC Visit to Get Source Service Tax: Condonation of delay in filing appeal - sufficient cause for delay is given or not - the appeal was admittedly filed after expiry of total period of three months and therefore, it was well beyond the limitation period, including extended limitation period as prescribed under Section 85 and therefore, the Appellate Authority has no jurisdiction to entertain the appeal. - HC Visit to Get Source Service Tax: Levy of penalty u/s 78 of the Finance Act, 1994 - appellant had collected ocean freight charges from their clients at a marked up value - The Revenue has erred in levying penalty under Section 78 of the Finance Act, 1994 when there is neither deliberate evasion of duty nor is there any evasion per se - AT Visit to Get Source Service Tax: Reversal of CENVAT Credit - reversal in the Books of Accounts instead of transfer of the said amount to the electronic ledger is a valid reversal or not - Since the GST regime has done away with the ST 3 return, there remain no provision in GST system to reflect the refund claim in the CENVAT credit balance. The only option was to show its reversal in the Books of accounts. Such reversal still amounts to non availment of Credit and refund whereof remains eligible. - AT Visit to Get Source Service Tax: Condonation of delay in filing appeal - appeal has been rejected as being filed beyond the stipulated period without any genuine reason - Catena of decisions have already held that there cannot be straight jacket formula to define the word ‘sufficient cause’ or which can be applied to all cases without reference to the peculiar facts and facts and circumstances of a given case. - In the present matter since there is no substantial delay nor it was beyond such period as was not condonable by Commissioner (Appeals). - Commissioner (Appeals) has failed to observe proviso to section 85 (3) A of the Finance Act, 1994. - AT Visit to Get Source Central Excise: CENVAT Credit - input services - Maintenance of Computer Hardware on shop floor, AMC charges for Desktops, printers, Scanners, Laptop and FM service for resident engineers - Merely because the engineers are resident it was wrongly presumed that all these services are for their personal use. When all the services were used within the premises of the factory it is clear that the said services are used in relation to the manufacture of final product, therefore, the credit is admissible. - AT Visit to Get Source Articles Authorised officer conducting the search & seizure cannot retain the documents/ assets beyond 15 days and encash IVPs for adjustment against tax liability Notifications Customs 97/2021 - dated 15-12-2021 - Cus (NT) Fixation of Tariff Value of Edible Oils, Brass Scrap, Areca Nut, Gold and Silver GST - States AE-I/DT&T/2021-22/11 - dated 13-12-2021 - Delhi SGST Commissioner, State Tax confer powers under section 69, section 70, section 71, section 73 & section 74 of the DGST Act 2017, Jurisdictional Officer AE-I/DT&T/2021-22/10 - dated 13-12-2021 - Delhi SGST Commissioner, State Tax confer powers under section 69, section 70, section 71, section 73 & section 74 of the DGST Act 2017, Jurisdictional Officer AE-I/DT&T/2021-22/09 - dated 13-12-2021 - Delhi SGST Commissioner, State Tax confer powers under section 69, section 70, section 71, section 73 & section 74 of the DGST Act 2017, Jurisdictional Officer S.O. 393 - dated 17-11-2021 - Jammu & Kashmir SGST Amendment in Notification No. SRO-GST-21 (Rate) Dated 23/10/2017 S.O. 392 - dated 17-11-2021 - Jammu & Kashmir SGST Amendment in Notification No. SRO - GST-4 dated 08.07.2017 S.O. 391 - dated 17-11-2021 - Jammu & Kashmir SGST Amendment in Notification No. SRO-GST-1, dated the 8th of July, 2017 Circulars / Instructions / Orders SEBI - SEBI/HO/DDHS/DDHS_Div3/P/CIR/2021/690 - dated 16-12-2021 Publishing Investor Charter and Disclosure of Investor Complaints by Merchant Bankers on their Websites for private placement of units by InvITs proposed to be listed SEBI - SEBI/HO/CDMRD/CDMRD_DRM/P/CIR/2021/689 - dated 16-12-2021 Cut-off Time for generation of last Risk Parameter File (RPF) for client’s margin collection purpose and modification in framework to enable verification of upfront collection of margins from clients in commodity derivatives segment GST - States - 11/2021 - dated 14-12-2021 Clarification on doubts related to scope of “Intermediary”– News Ownership & Governance – Building the Edifice for Digital Innovations (Remarks delivered by Shri M. Rajeshwar Rao, Deputy Governor, Reserve Bank of India – December 15, 2021 - in the Mint Annual Conclave at Mumbai) New Hub/Industrial Parks for MSMEs Case Laws: GST 2021 (12) TMI 661 Detention of goods alongwith the vehicle - used/expired e-way bills to evade tax - Section 129 of the Tamil Nadu Goods and Services Tax Act, 2017 - HELD THAT:- The petitioners are in the business of transportation of goods. They have to be careful and cautious while transporting goods. They cannot allow the employer who employs them for transportation of the goods to evade tax. If the goods are being removed in the clandestine manner on the strength either expired e-way bills or forged/fabricated invoice, the petitioners are not expected to transport the goods. At the same time, no useful purpose will be served by allowing the vehicles to be detained any longer as the vehicles will loose their intrinsic value. There is also no evidence to suggest that the respective petitioners conspired with the said M/s.Prime Gold International Private Limited to facilitate evasion of tax. There shall be an order for releasing the respective vehicles subject to the respective petitioners paying the amounts determined in the impugned orders - Petition disposed off. 2021 (12) TMI 660 Violation of principles of natural justice - total non-application of mind by the respondent officer - also it is claimed that petitioner could not give reply to the show cause notice before the date of passing of impugned adjudication order - HELD THAT:- The impugned adjudication order are self- contradictory and in this case there was clear violation of principles of natural justice and the fact that the petitioner could not give reply to the show cause notice before the date of passing of impugned adjudication order, the interest of justice will be served if the impugned order dated 9th July, 2021 under Section 73 of the West Bengal GST Act is set aside and the matter is remanded to the respondent concerned to pass fresh adjudication order on the reply to be filed by the petitioner within two weeks from date against the impugned show cause notice dated 22nd July, 2021. It is recorded that this Court has not gone into the merits of the impugned adjudication order and it has been set aside solely on the ground of violation of principles of natural justice and officer concerned will consider the case of the petitioner on its own merit and strictly in accordance with law. Petition disposed off. 2021 (12) TMI 659 Detention of vehicles - violation of relevant provision of State GST Act - petitioner submits that the impugned order of the Appellate Authority is further appealable under the statute but now the said forum of Tribunal is not available - HELD THAT:- Since no further Appellate forum is available at present against the impugned order of the Appellate Authority, this writ petition should be admitted and the issues involve in this writ petition require affidavit from the respondents for final adjudication. So far as the release of the detained vehicle with the goods is concerned, that shall be released by the respondents concerned on condition of making deposit of further amount of tax of ₹ 3,38,400/- determined, within two weeks from the date, and if such amount is deposited with the authority concerned, the vehicle in question along with goods shall be released by the respondent within three days from the date of receipt of such deposit and subject to compliance of other formalities. List this matter for final hearing after five weeks after vacation. 2021 (12) TMI 658 Violation of principles of natural justice - case of the petitioner is that the respondents have not communicated the respective Assessment orders to the petitioner - HELD THAT:- The notice that has been sent to the petitioner in GST ASNT 14 appears to have been delivered to the petitioner on 05.05.2021. It is a period when the country was reeling under the second wave of Covid-19 a week thereafter, the second lockdown was imposed in Tamil Nadu and few other states - The over all facts and circumstances indicates that the petitioner would not have gained anything by not replying to either the notice in form GST ASMT 14 or by not filing an appeal barring to suffer an adverse order. Thus use of common portal though intended to facilitate faster service notice of orders and decisions, it is noticed that there are teething problems in the communication of notice system derived under Section 169(1)(d) of the TNGST Act, 2017. Thus, the orders have been passed without a reply from the petitioner. Therefore, to meet the ends of justice, a fresh opportunity can be given to the petitioner to file a reply to the notices. The cases are remitted back to the respondent to pass a speaking order within a period of forty five days from the date of receipt of a copy of this order - Petition allowed by way of remand. 2021 (12) TMI 657 Validity of SCN - SCN challenged on the ground that there is predetermination - Section 129(3) of the Central Goods and Services Tax Act, 2017 - HELD THAT:- The show cause notices details and articulates the case of the respondent. It is for the petitioner to reply to the show cause notices to have the goods cleared. If the goods were really meant to be sent to Karnataka for which the petitioner had allegedly paid IGST amounting to ₹ 38,79,019/- under the provisions of IGST Act, 2017, no useful purpose will be served by quashing the show cause notices by directing the respondents to issue a fresh show cause notices. It would only further delay the clearance of the imported consignments. These writ petitions are disposed of by giving liberty to the petitioner to file additional representations and reply to the impugned show cause notices immediately. 2021 (12) TMI 656 Tax or not - Royalty payment of tax or not - petitioner urged that the royalty payment is tax and not consideration in the context of the privilege parted by the State allowing the petitioner and others to mine sand - HELD THAT:- Reliance has been placed on a Constitution Bench decision of the Supreme Court in INDIA CEMENT LIMITED VERSUS STATE OF TAMIL NADU [ 1989 (10) TMI 53 - SUPREME COURT] , wherein, nature of royalty payment was considered and it was opined to be in the nature of tax. List after two months. 2021 (12) TMI 655 Detention of goods alongwith vehicle - impugned notice has been issued on the ground that the petitioner had admittedly transferred goods without the goods accompanying E-way Bill - HELD THAT:- The respondent have only issued a notice proposing to impose penalty and tax. It is open to the petitioner to explain the same before the respondents, considering the fact that, the petitioner has also got the vehicle released on payment of the amount on 01.02.2019, there is no merits in the present writ petition. This writ petition is dismissed with liberty to the petitioner to participate in the said proceeding by filing a reply to the impugned notice dated 24.01.2019 within a period of 30 days from the date of receipt of a copy of this order - Petition dismissed. Income Tax 2021 (12) TMI 664 Reopening of assessment u/s 147 - scope of mandatory procedure prescribed u/s 148A - relation between Relaxation Act, 2020 and Finance Act, 2021 - enhanced/reduced time limit specified in Section 149 - initiation of reassessment proceedings prior to coming into force of the Finance Act, 2021 - substitution made by the Finance Act, 2021 - legality and validity of only the Explanations to the two Notifications, being Notification No.20/2021 dated 31st March, 2021 and Notification No.38/2021 dated 27th April, 2021, issued by Central Government in exercise of powers vested under Section 3(1) of Relaxation Act, 2020 - reformative changes to Sections 147 to 151 - income escaping assessment - onset of Covid-19 pandemic followed by nationwide lockdown in March, 2020 - Relaxation of certain provision of specified Act - scope of declaration declaring Explanations A(a)(ii)/A(b) to the Notification No.20 [S.O.1432(E)] dated 31st March, 2021 and Notification No.38 [S.O.1703(E)] dated 27th April, 2021 to the extent that the same extend the a0pplicability of the provisions of Section 148, Section 149 and Section 151 of the Act, as the case may be, as they stood as on the 31st day of March, 2021, before the commencement of the Finance Act, 2021 to the period beyond 31st March, 2021 - whether the Government/Executive can make or change law of the land by way of Explanations to Notifications without specific Authority from the Legislature to do so and whether the Government/Executive can impede the implementation of law made by the Legislature - HELD THAT:- By virtue of Section 1(2)(a) of the Finance Act, 2021, the substituted Sections 147, 148, 149 and 151 of the Income Tax Act, 1961 pertaining to reopening of assessments came into force on 1st April, 2021. The significance of the expression shall in Section 1(2)(a) of the Finance Act, 2021 cannot be lost sight of. This is in contrast to the language under Section 1(2)(b) which states that Sections 108 to 123 of the Finance Act, 2021 shall come into force on such date, as the Central Government may, by Notification in the Official Gazette, appoint. The Memorandum to the Finance Bill, 2021, too, clarifies that its Sections 2 to 88 which included the substituted Sections 147 to 151 of the Income Tax Act, 1961 will take effect from 1st April, 2021. There is also no power with the Executive/Respondents/Revenue to defer/postpone the implementation of Sections 2 to 88 of the Finance Act, 2021 which includes the substituted Sections 147 to 151 of the Income Tax Act, 1961. Applicability of law as amended - It is settled law that the law prevailing on the date of issuance of the notice under Section 148 has to be applied. This Court is of the view that had the intention of the Legislature been to keep the erstwhile provisions alive, it would have introduced the new provisions with effect from 1st July, 2021, which has not been done. Accordingly, the notices relating to any assessment year issued under Section 148 on or after 1st April, 2021 have to comply with the provisions of Sections 147, 148, 148A, 149 and 151 of the Income Tax Act, 1961 as specifically substituted by the Finance Act, 2021 with effect from 1st April, 2021. Consequently, this Court is of the opinion that as the Legislature has permitted re-assessment to be made in this manner only, it can be done in this manner, or not at all. Relaxation Act, 2020 and Notifications issued thereunder can only change the time-lines applicable to the issuance of a Section 148 notice, but they cannot change the statutory provisions applicable thereto which are required to be strictly complied with. Further, just as the Executive cannot legislate, it cannot impede the implementation of law made by the Legislature. Explanations A(a)(ii)/A(b) to the Notifications dated 31st March, 2021 and 27th April, 2021 are ultra vires the Relaxation Act, 2020 and are therefore, bad in law and null and void - As the impugned Explanation is not only beyond the power delegated to the Government, but also in conflict with the provisions of the Income Tax Act, 1961 which had specifically made the new reassessment scheme applicable from 1st April, 2021. It is settled law that the delegation of authority must be express. There is no scope for any implied delegation of authority. The delegated authority must act strictly within the parameters of the authority delegated to it. The delegated authority cannot override the Act either by exceeding the authority or by making provisions inconsistent with the Act. The distinction between conditional legislation or delegated legislation is irrelevant to the controversy at hand, as the person to whom the power is entrusted in either situation can do nothing beyond the limits which circumscribe the power. Subordinate legislation cannot be contrary to the parent statute. With the coming into force of the Finance Act, 2021 w.e.f. 1st April, 2021, there has been no curtailing or taking away the power of the Revenue. It has merely changed the procedure of issuing notice. Consequently, the power as per Hohfeld s theory that existed prior to 31st March, 2021 continues to exist even thereafter. Ignorance of legislative intent of Finance Act - It is pertinent to mention that the Legislature had even prior to Finance Act, 2021 enhanced/reduced time limit specified in Section 149 of the Income Tax Act, 1961, by way of Finance Acts, 1961, 1989, 2001, 2012 and pertinently such enhancement/reduction to the time limit was made effective from different dates of the relevant financial year - In the present cases to ignore the legislative intent of Finance Act, 2021 would neither be legal nor reasonable. Retrospective operation - It is a cardinal principle of construction that every statute is prima facie prospective, unless it is expressly or by necessary implication made to have retrospective operation - In contrast to statutes dealing with substantive rights, statutes dealing with merely matters of procedure are presumed to be retrospective, unless such a construction is textually inadmissible Determining whether Amendment is procedural or substantive - This Court is of the view that the Finance Act, 2021 introduces a new regime regarding the procedure to be complied with in respect of the re-opening of an Income-tax assessment and accordingly, the benefit of the new provisions must necessarily be made available even in respect of proceedings relating to past Assessment Years provided, of course, Section 148 notice has been issued on or after 1st April, 2021. Concept of vested rights - Admittedly, time limit to issue notices for re-assessment under the Income Tax Act, 1961 stood expired long time ago. The Legislature by virtue of the Relaxation Act, 2020 had extended the time limit till 31 st December, 2020 and had given discretion to the executive to issue Notification to extend the timeline alone. However, extending the time limit or giving power to issue Notification to extend the time cannot be taken to be a vested right of the respondents. Consequently, this Court is of the view that vested right in favour of the Revenue stood exhausted/expired long ago and no vested right of the respondents has been infringed leave alone violated. Substitution made as applicable to past assessment - On the one hand, the Respondents are contending that the amendment made by the Finance Act, 2021 shall not be applicable to past assessment years, while on the other hand, they are contending that from 1st July, 2021, the amendments made by the Finance Act, 2021 will be applicable. This is contradictory inasmuch as for three months starting on or after 1st April, 2021, the amendment made by the Finance Act, 2021 shall be considered as substantive in nature and hence applicable prospectively, while from 1st July, 2021, the amendment made by the Finance Act, 2021 will be considered as procedural and hence will be applicable retrospectively for any assessment year including earlier years. Keeping in view its own submission and past precedent to treat Sections 147 to 152 of the Income Tax Act, 1961 as procedural, the respondents are estopped from contending to the contrary. Explanation in Notification No. 20 dated 31st March, 2021 extended the applicability of old procedure of reassessment beyond 31st March, 2021 - As per Sections 153A and 153C, the provisions of these two sections will not apply where search/survey is done after 1st April, 2021. Department contends that the erstwhile law continues to apply from 1st April, 2021 to 30th June, 2021. The erstwhile law on reopening did not cover search/survey cases. Consequently, for the search/survey done from 1st April to 30th June, there can neither be an assessment under sections 153A/153C or under 147, which cannot be the case. Further, Sections 148, 148A and 149 specifically cover cases where search/survey is done after 1st April, 2021. If department s interpretation is accepted, this specific date in all three Sections will have to be changed and read as 1st July, 2021, which cannot be done. Moreover, as the new provisions seek to bring uniformity between regular reassessments and search/survey cases, it follows that the cut off date for initiation of reassessment proceedings even for regular reassessment is 1st April, 2021. Covid -19 effect - When Finance Minister moved the Finance Bill, 2021 in Parliament on 1st February, 2021 and the Finance Act, 2021 was enacted in March, 2021, COVID-19 was widely prevalent and Parliament was fully aware of the same. Nevertheless, with the objective of promoting ease of doing business and reducing litigation, Parliament specifically enacted that the new reassessment provisions would come into operation on 1st April, 2021. The Revenue cannot, therefore, rely on COVID-19 for contending that the new provisions should not operate during the period 1st April, 2021 to 30th June, 2021 or that Relaxation Act, 2020 deals with the situation arising out of Covid-19 and the Finance Act, 2021 was passed being oblivious of the Covid-19 Pandemic. Non - obstante clause in Section 3(1) of Relaxation Act, 2020 - To get over this inherent conflict between Section 3 of Relaxation Act, 2020 and various timelines provided in provisions prescribed in the specified Acts, the legislature has carefully incorporated the non-obstante clause in the said Section. Consequently, this non-obstante provision only operates to prevail over the time lines laid down in the specified Act. Apart from these timelines, no other provision of any specified Act is suspended or overridden. This non-obstante clause cannot, therefore, possibly be relied upon by the Revenue to contend that a Notification issued under Section 3 of Relaxation Act, 2020 overrides any provision of the Income-tax Act, 1961 other than the applicable time-lines. Any Notification issued under Relaxation Act, 2020 cannot possibly have a reach and ambit wider than the Relaxation Act, 2020 itself for that would be contrary to the settled canons of construction of statutes. Relaxation Act, 2020 was enacted long before the Finance Act, 2021. Consequently, it cannot possibly be contended that any provision of Relaxation Act, much less of any Notification issued thereunder, can be so construed as amending or modifying or excluding the applicability of the yet to be enacted Finance Act, 2021. Further, as the Petitioners are not questioning any of the time extensions made by or under Relaxation Act, 2020, the said non-obstante clause is totally irrelevant to controversy at hand. Selectively chosen and picked up two terms viz. such action stand extended - To substantiate its stand that the impugned notices are not barred by limitation, the Revenue without even considering the pre-condition prescribed by Section 3 of Relaxation Act, 2020 has selectively chosen and picked up two terms viz. such action stand extended to put forward an interpretation which could not have been contemplated by the Legislature at the time of enactment of the said provision, namely, that notices under Section 148 will relate back and be governed by old law. In the opinion of this Court, the submission of the Revenue is completely flawed, as the same is contrary to basic principles of interpretations, which prohibits selectively choosing/ignoring words from the statutory language. It is settled law that when the words of a statute are clear and unambiguous, it is not permissible for the Court to read words into the statute. Relaxation Act, 2020 received the President s assent on 29th September, 2020, whereas the Finance Act, 2021 received the assent on 31st March, 2021. Consequently, it cannot be contended that any provision of the Relaxation Act, 2020, much less of any Notification issued thereunder, should be so construed as amending or modifying or excluding the applicability of the yet to be enacted Finance Act, 2021. Not mentioning substituted section 147 in impugned explanation - Even if it is assumed that the impugned Explanations in the two Notifications are valid, still the impugned notices are bad in law, as the impugned Explanations only seek to effectuate the erstwhile Sections 148, 149 and 151 and they do not cover Section 147. However, the conditions provided for in the substituted Section 147 were not considered while issuing notices by the Assessing Officer. In fact, the said Section 147 is itself subject to Sections 148 to 153, which would include Section 148A. Legal fiction argument is without any foundation. A statute can be said to enact a legal fiction when it assumes the existence of something which is known not to exist. The extension of time for completing an assessment or issuing a Section 148 notice has no element of legal fiction in it. The only effect and consequence of this extension of the time limit is that if the act in question is performed within the extended time limit, it will be considered to be legally compliant. However, there is no assumption that the act in question is deemed to have been performed within the original time limit, as wrongly contended by the learned counsel for the Respondents. For achieving that result, clear and unequivocal language was required in the Relaxation Act, 2020 which is missing. Provision to be termed as a Stop the clock provision - Section 3 of the Relaxation Act, 2020 is not a stop the clock provision, as it only relaxes the time limit, so as to facilitate the cases in which the Revenue/assessee has not been able to take the specified action within the statutory timelines. The essential condition for a provision to be termed as stop the clock provision is that the time during which such clock is stopped, such period has to be excluded. In the present instance, time limit is extended, not excluded or stopped. Fiction created only for reassessment and not for faceless penalty scheme - Wherever the Legislature intended that the old procedure is to be followed in respect of any assessment year as against the new procedure post the amendment, then it has specifically provided so. For instance, the Direct Laws (Amendment) Act, 1987 had introduced a new scheme for best judgment assessment (ex parte) under Section 144 w.e.f. 1st April 1989. However, in order to ensure that the assessments for years before coming into force of the new law is done under the old law, a specific sub-Section (2) was inserted in Section 144 to provide that the provisions of this Section as they stood immediately before their amendment by the Direct Tax Laws (Amendment) Act, 1987, shall apply to and in relation to any assessment for the assessment year commencing on the 1st day of April, 1988, or any earlier assessment year. Overriding of special Act - It is equally well-settled law that a special Act overrides a general Act. But this principle has no application whatsoever in the present case because Relaxation Act, 2021 and the Finance Act, 2021 operate in their distinct and separate spheres. Consequently, the question whether one prevails over and supersedes the other does not arise at all. Equality principles under Article 14 of the Constitution - The argument of the Respondents that Relaxation Act, 2020, promotes the equality principles under Article 14 of the Constitution and that if Petitioner s arguments are accepted, it would lead to unreasonable classification with those assessees who could not be issued notices earlier is untenable in law. If this is taken to the logical end, then any amendment in the procedural law will create inequality since procedural law will be applicable for all pending assessments as on that date. Substitution has to be distinguished from suppression or a mere repeal of an existing provision. Substitution of a provision results in repeal of the earlier provision and its replacement by the new provision. Consequently, the submission of the revenue that Section 6 of the General Clauses Act saves notices issued under Section 148 of the Income Tax Act, 1961 is untenable in law, as in the present case, the repeal is followed by a fresh legislation on the same subject and the new Act manifests an intention to destroy the old procedure. Conclusion - As the Legislature has introduced the new provisions, Sections 147 to 151 of the Income Tax Act, 1961 by way of the Finance Act, 2021 with effect from 1st April, 2021 and as the said Section 147 is not even mentioned in the impugned Explanations, the reassessment notices relating to any Assessment Year issued under Section 148 after 31st March, 2021 had to comply with the substituted Sections. As clarified that the power of reassessment that existed prior to 31st March, 2021 continued to exist till the extended period i.e. till 30th June, 2021; however, the Finance Act, 2021 has merely changed the procedure to be followed prior to issuance of notice with effect from 1st April, 2021. This Court is of the opinion that Section 3(1) of Relaxation Act empowers the Government/Executive to extend only the time limits and it does not delegate the power to legislate on provisions to be followed for initiation of reassessment proceedings. In fact, the Relaxation Act does not give power to Government to extend the erstwhile Sections 147 to 151 beyond 31st March, 2021 and/or defer the operation of substituted provisions enacted by the Finance Act, 2021. Consequently, the impugned Explanations in the Notifications dated 31st March, 2021 and 27th April, 2021 are not conditional legislation and are beyond the power delegated to the Government as well as ultra vires the parent statute i.e. the Relaxation Act. Accordingly, this Court is respectfully not in agreement with the view of the Chhattisgarh High Court in Palak Khatuja [ 2021 (9) TMI 199 - CHHATTISGARH HIGH COURT] but with the views of Ashok Kumar Agarwal [ 2021 (10) TMI 517 - ALLAHABAD HIGH COURT] and Bpip Infra Private Limited. [ 2021 (12) TMI 207 - RAJASTHAN HIGH COURT] The argument of the respondents that the substitution made by the Finance Act, 2021 is not applicable to past Assessment Years, as it is substantial in nature is contradicted by Respondents own Circular 549 of 1989 and its own submission that from 1st July, 2021, the substitution made by the Finance Act, 2021 will be applicable. Revenue cannot rely on Covid-19 for contending that the new provisions Sections 147 to 151 of the Income Tax Act, 1961 should not operate during the period 1st April, 2021 to 30th June, 2021 as Parliament was fully aware of Covid-19 Pandemic when it passed the Finance Act, 2021. Also, the arguments of the respondents qua non-obstante clause in Section 3(1) of the Relaxation Act, legal fiction and stop the clock provision are contrary to facts and untenable in law. Consequently, this Court is of the view that the Executive/Respondents/Revenue cannot use the administrative power to issue Notifications under Section 3(1) of the Relaxation Act, 2020 to undermine the expression of Parliamentary supremacy in the form of an Act of Parliament, namely, the Finance Act, 2021. This Court is also of the opinion that the Executive/Respondents/Revenue cannot frustrate the purpose of substituted statutory provisions, like Sections 147 to 151 of Income Tax Act, 1961 in the present instance, by emptying it of content or impeding or postponing their effectual operation. Relief - Explanations A(a)(ii)/A(b) to the Notifications dated 31st March, 2021 and 27th April, 2021 are declared to be ultra vires the Relaxation Act, 2020 and are therefore bad in law and null and void.Consequently, the impugned reassessment notices issued under Section 148 of the Income Tax Act, 1961 are quashed and the present writ petitions are allowed. 2021 (12) TMI 663 Advantage of Kar Vivad Samadhan Scheme, 1998 (KVSS) - Petitioners case as submitted that Respondent No.2 concluded that amount payable would be covered under Clause (iv) of Section 88 (A) of the said Act because the tax payable by Petitioner had already been adjusted against refund to be given by the Revenue to one of the partners of Petitioner No.1 firm - HELD THAT:- The reason why we are not going into details is because Respondents, in its reply opposing the Petition, have averred that Petitioners Chartered Accountant, by a letter dated 5th August, 1998, has informed the Revenue that refund of ₹ 2,21,995/- that was due to a partner of the Firm late Shri Kanhaiyalal Jain be adjusted against demand for Assessment Year 1987-88 against M/s. Anand Nagar Company, i.e., Petitioner No.1. A copy of the said letter is also annexed at Ex. C to the affidavit in reply. In the rejoinder, there is no denial of addressing this letter. Even in the Petition, Petitioner is totally silent about having addressed the said communication dated 5th August, 1998. Petitioner No.2 is a partner of Petitioner No.1-Firm and he ought to have disclosed to the Court and been truthful to the Court and not suppressed that such a communication was so addressed and the adjustment was made at the request of Petitioner No.1 firm. That was a material fact that has been suppressed. Courts have consistently deprecated parties or litigants who are economical with truth and who resort to falsehood and unethical means for achieving their goals. If clever drafting has created the illusion of a cause of action, the Court must nip it in the bud at the first hearing by examining the party searchingly In Dalip Singh V/s. State of Uttar Pradesh [ 2009 (12) TMI 847 - SUPREME COURT] the Court bemoaned that a new creed of litigants has cropped up who do not have any respect for truth and they shamelessly resort to falsehood and unethical means for achieving their goals. Such a litigant who attempts to pollute the stream of justice or who touches the pure fountain of justice with tainted hands, is not entitled to any relief. The Apex Court and this Court have, on many occasions, stated that if a party comes to the Court with unclean hands, which in this case petitioner have, the party should be dealt with very strongly and substantial costs also should be imposed on the party. The conduct of petitioner in suppressing a material fact intends to impede and prejudice the administration of justice. Judiciary is the bedrock and handmaid of orderly life and civilized society - In the circumstances, we are not inclined to entertain the Petition. 2021 (12) TMI 662 Acquiring Unn Sugar Complex - Determination of cost of asset - AO satisfied that the main purpose of transfer of such assets was for reducing the tax liability by the assessee by claiming depreciation with reference to enhanced cost - Submissions of the Ld. AR that for determination of cost of each asset separately, freehold land was valued as per circle rate prescribed by the UP Government, while the building and plant as well as machinery were valued as per report submitted by registered-valuer - HELD THAT:- As from the records, it can be seen that the leasehold land valued as per market value prescribed by UP Government was substantially lower than the value assigned by stamp authority. There is no basis for adopting this value. The CIT(A) has categorically observed that the assessee adopted this value as balancing figure by allocating higher value to building. The total sale consideration as per the sale deed and as recorded in the books of accounts of the assessee are appears to be similar. The assessee allocated higher value to building and lower value to leasehold land. But there is no justification for the same given by the assessee The CIT(A) has given a detailed finding and there is no need to interfere with the findings of the CIT(A). Addition on account of provision of expenses - Assessee has paid State Advised Price (SAP) of ₹ 18.64 crores as per the Court order. The CIT(A) has rightly held that the same has to be allowed as a deduction during the assessment year under consideration. Therefore, the CIT(A) rightly directed the AO to verify whether this amount has been claimed during the assessment year 2013-14 and if not AO was directed to allow its deduction in the present assessment year. There is no need to interfere with the findings of the CIT(A) Addition made u/s 43B on account of interest on levy of sugar price for the season 1982-83 - HELD THAT:- Since the Supreme Court order came in 2012, the claim is admissible in the Assessment Year under consideration as the same was a liability in A.Y. 2008-09. Therefore, there is no need to interfere with the findings of the CIT(A). Ground No. 2 of Revenue s appeal is dismissed CIT-A allowing the depreciation on boilers (a 80% rather than the allowed depreciation @ 15% by AO - HELD THAT:- CIT(A) has given categorical finding based on the evidences produced before the CIT(A) as well as Assessing Officer. Ground No. 3 and additional ground are dismissed. 2021 (12) TMI 654 Reopening of assessment u/s 147 - Notice after expiry of 4 years from the end of the relevant assessment year - transactions of two clients of petitioner Parth and Devki - retraction by Parth and Devki and before passing a block assessment order in the case of petitioner for the period 1st April 1991 to 23rd March 2001 on 26th September 2003 - HELD THAT:- In the case of assessment of Parth and Devki, the Assessing Officer has recorded their retraction and dismissed those retractions as after thought because the transactions were recorded by Parth and Devki in their own books of account but they did not book the same into account while computing the profit. Where on consideration of material on record, one view conclusively is taken by the Assessing Officer, it would not be open to re-open the assessment based on very same material with a view to take another view. In our view, this is a case where the assessment is sought to be re-opened on account of change of opinion of the Assessing Officer. There is no new material to which reference is to be found and the entire basis for re-opening the assessment is the material which was available before the Assessing Officer in the course of assessment proceedings of petitioner, Parth and Devki and respondent no.1 is the common Assessing Officer. In this case, it cannot be postulated that the condition precedent to the re-opening of the assessment beyond a period of 4 years has been fulfilled.- Decided in favour of assessee. 2021 (12) TMI 653 Penalty u/s 271(1)(c) - Issue of use of single-year data - whether multiple-year data can be used or only current-year data ? - ITAT in its impugned order has recorded that prior to 2007, there was a legal debate as to whether multiple-year data can be used or only current-year data is to be used under Rule 10B(4) of the Rules - ITAT further records that the other reason for making the adjustments in the relevant AY was the denial of the capacity utilization claimed by the respondent and difference in the level of capacity utilization is an accepted principle, though denied in the relevant AY to the respondent and same cannot tantamount to filing without good faith and due diligence - HELD THAT:- We do not find any infirmity in the above observation of the learned ITAT. As held by the Supreme Court in Commissioner of Income Tax, Ahmedabad vs. Reliance Petroproducts Pvt. Ltd., [ 2010 (3) TMI 80 - SUPREME COURT] for the purpose of invoking Section 271(1)(c) of the Act, there has to be a concealment of particulars in the income of the assessee and the assessee must have furnished inaccurate particulars of his income. Making an incorrect claim in law cannot tantamount to furnishing inaccurate particulars under Section 271(1)(c) of the Act. Mere making of a claim which is not sustainable in law, by itself, will not tantamount to furnishing inaccurate particulars regarding income of the assessee. Merely because, the assessee had claimed an expenditure, which claim was not accepted or was not acceptable to the Revenue, that by itself would not attract the penalty under Section 271(1)(c) of the Act. 2021 (12) TMI 652 Nature of expenditure - Revenue expenditure or capital expenditure - expenditure incurred by the Appellant for raising floor height of Godown - as submitted submitted that as the expenditure was incurred only at the instance of the Customer to meet specific requirement of the Customer and the purpose and object of incurring this expenditure was to ensure continuity of business with the Customer and that to at enhanced rates - HELD THAT:- Appellant by spending the amount did not bring into existing any new asset. The expenditure was incurred wholly and solely to ensure that the existing business with the Customer, which was offering attractive returns to Appellant, was continued uninterrupted. The expenditure incurred by Appellant had direct relation to the business with the customer because Appellant also received corresponding increased compensation from the customer. Appellant also incurred the expenditure, notwithstanding that the volume of the space available in the ware-house would get reduced, for the business with the Customer would survive. There was a benefit by way of continuing business with the Customer or increase in compensation from the Customer. Appellant achieved both these objectives by incurring the expenditure. We are satisfied with the explanation given by Appellant that it was for the purpose of conducting its business and increase in profit. The expenditure so incurred is related to the carrying on or conducting of ware-house business of Appellant and hence, it should be regarded as an integral part of the profit earning process. The expenditure, therefore, cannot be treated as capital expenditure but should be treated as revenue expenditure. The substantial question of law is answered accordingly. 2021 (12) TMI 651 Reopening of assessment u/s 147 - Reopening beyond period of four years - eligibility of reasons to believe - HELD THAT:- The criteria for reopening of assessment after a period of four years are no longer res Integra in view of the judgment of ANANTA LANDMARK PVT. LTD. [ 2021 (10) TMI 71 - BOMBAY HIGH COURT] held that where assessment was not sought to be reopened on the reasonable belief that income had escaped assessment on account of failure of assessee to disclose truly and fully all material facts that were necessary for computation of income but was a case wherein assessment was sought to be reopened on account of change of opinion of Assessing Officer, the reopening was not justified. It is also held that where primary facts necessary for assessment are fully and truly disclosed, the Assessing Officer is not entitled to reopen the assessment on a change of opinion. It is held that while considering the material on a record, one view is conclusively taken by Assessing Officer, it would not be open for the Assessing Officer to reopen the assessment based on the very same material and take another view. Perusal of the reasons recorded by Respondent No.1 indicates that Respondent No.1 has relied upon facts and figures available from the audited account and undisputed TAR filed along with the return of income in the original assessment. Since the impugned notice was issued four years from the end of the relevant Assessment year, there has to be tangible material to conclude that income had escaped assessment. From the reasons recorded by Respondent No.1 in the reassessment notice, it appears that there was no tangible material available on record to conclude that income had escaped assessment. Assessing Officer has acted in excess of the limit of his jurisdiction to reopen the assessment in the exercise of powers under Section 147 read with Section 148 of the Act. Accordingly, Petitioner would be entitled to succeed in this proceeding - Decided in favour of assessee. 2021 (12) TMI 650 Reopening of assessment u/s 147 - depreciation that was applied on cylinders and the second is a gift petitioner had received from one Fazle Rehaman - HELD THAT:- Depreciation on cylinders, petitioner had claimed @ 80% whereas according to the AO, who wanted to reopen, the correct rate of depreciation was only @60%. In the assessment order originally passed on 9th March 2015, it says the case is selected under CASS on the issue of depreciation at higher rate - assessee has claimed higher rate of depreciation @ 80% and it is verified and allowed. Therefore, even if the correct rate of depreciation was only @ 60%, still there was no failure on the part of the assessee to fully and truly disclose the rate of depreciation claimed. On this point, there cannot be re-opening. Gift from Fazle Rehaman in the reasons of re-opening itself it is stated as per material available on record . The assessee has received the gift amounting to ₹ 42,25,000/- but no details of gift deed is available on record. It is true that the original assessment order does not discuss this item of gift but the indisputable fact is in the balance sheet as on 31st March 2012 filed by petitioner, petitioner has disclosed in his capital account a sum of ₹ 42,25,000/- received from Fazle Rehaman. AO, who passed the earlier assessment order after selecting the case under Computer Aided Scrutiny Selection (CASS) would have certainly considered right on the face of the balance sheet this disclosure by petitioner. In the circumstances, as the reasons do not disclose any material that has not been fully and truly disclose by petitioner, in our view, respondents could not have validly reopened petitioner's case for A.Y.-2012-2013. 2021 (12) TMI 649 Carry forward of losses - ITR-V filed belated - CBDT Circulars issued relaxing the time of fifteen days for filing the ITR-V Form at CPC pursuant to filing of the E-return of income - HELD THAT:- The comprehensive reading of Section 80 and Section 139[3] of the Act read with Notification dated 27.07.2007 issued by the CBDT would make it clear that the e-Return i.e., electronically transmitted return furnished under the Scheme has to be supported by a duly verified Form ITR-V by the eligible person which is required to be furnished under Section 139 of the Act for the assessment year 2007-08 or any subsequent assessment years to a e-Return Intermediary who shall digitize the data of such return and transmit the same electronically to a server designated for this purpose by the e-Return Administrator on or before the due date. It is true that this Circular No.13/2016 relates to the assessment years 2009-10 to 2014-15 and Circular No.3/2020 relates to the assessment years 2015-16 to 2019-20 wherein it refers to filing of tax returns electronically without digital signature and ITR- V Form to be send to the CPC, Bengaluru whereas for the assessment year under consideration i.e., 2008-09, duly verified ITR-V Form was required to be sent by the eligible person to the AO. No discrimination could be made between the asessee, if such ITR-V Form are required to be submitted by the Assessing Officer or before the CPC in relaxing the time prescribed in sub-paragraph[2] of the paragraph 3 of the Notification dated 27.07.2007. The view of the Department is hyper-technical for the reason that the e-filed return data indeed was transmitted on the date of such return filed electronically to the server designated by the e-Return Administrator which necessarily contains the data of the claim made by the assessee for carry forward of losses. ITR-V is verification Form which would be construed as Annexure of statement to be made to the e-filed return of income. Time relaxation is permitted by the CBDT for verification of such returns either by sending a duly signed physical copy of ITR-V to CPC, Bengaluru through speed post. Merely for the reason that ITR-V Forms are required to be sent to Assessing Officer, the relaxation extended for the subsequent Assessment Years cannot be denied. In our considered view, the delay caused in submitting the ITR-V does not make the return submitted on 30.09.2008 [e-filed return] invalid for denying the carry forward of losses in future years. The Hon ble High Court of Bombay in the case of Crawford Bayley Co [ 2011 (12) TMI 64 - BOMBAY HIGH COURT] while considering the issue of non-receipt of Form ITR-V by the Department, though the department has made the provision of electronic filing of returns, Form ITR-V containing the due verification was required to be remitted by an ordinary post, held that treating e-return filed by the assessee well within the period of limitation cannot be treated as a invalid return and the same has serious consequences. Reference has been made to sub- Section [9] of 139 wherein adequate provisions for the Assessing Officer has been made to furnish in the first instance a notice granting a period of fifteen days to rectify the defect in the return, a provision made for extension of the period within which the defects are to be rectified has also been considered. Though the contention of the assessee in the said proceedings was that ITR-V was submitted by ordinary post well within the period prescribed under the Scheme, that would not make any major distinction if such ITR-V Form is submitted belatedly under the Scheme since the data available in the e-filed return of income is not disputed by the Department inasmuch as the claim of carry forward of losses claimed by the assessee for future years. The significance of filing an e- filed return cannot be effaced and the claim of the assessee cannot be denied on hyper-technicalities. Moreover, system of e-filing of tax returns was in the initial stages for the assessment year in question and if the delay in filing the ITR-V, if is relaxable for the subsequent assessment years, the same cannot be restricted in stricto sense for the initial years of the Scheme - Substantial question of law in favour of the assessee. 2021 (12) TMI 648 Cessation of liability u/s 41(1) - Incomplete project - advances from various persons against the Tower D E of Bhadralok Project - possession of concerned properties not given not even advances received - HELD THAT:- The section 41(1) applies where a trading liability was allowed as a deduction in an earlier year in computing the business income of the assessee and the assessee has obtained a benefit in respect of such trading liability in a later year by way of remission or cessation of the liability. The assessee has submitted that it has launched a scheme i.e. Towers D and E at Bhadralok Project. It has received advances from prospective buyers. However, when residential flats in Tower D E were under construction and possession of the same were not handed over to the respective buyers, the assessee has shown these advances as liability, because there prevailed contingency as to finalization of sale. Assessee has received trade advance for sale of certain flats to prospective buyers which were ultimately not construed by it and incomplete project was sold under the head work-in-progress . It has not returned money to these customers in the last fifteen years. It has not created an arrangement with buyer of the WIP that these customers would get flats at reduced price by the amount received by the assessee as advance. It has simply retained these amounts under the garb of liability without paying any taxes. The judgment Hon ble Supreme Court in the case of Sundaram Iyengar Son Ltd. [ 1996 (9) TMI 1 - SUPREME COURT] is fully applicable on the facts of the present case. Therefore, we allow appeal of the Revenue. 2021 (12) TMI 647 Royalty income - appellant company appointed Dow Jones Consulting India Pvt Ltd [DJCIPL] on a principal to principal basis for distributing its products in the Indian market - AO was of the firm belief that the receipts from DJCIPL should be taxed in India as Royalty Income under the provisions of the Act as well as India-USA DTA - HELD THAT:- We have to state that basis the provisions of section 92 of the Act, the assessee is entitled to invoke the provisions of India - USA DTAA to the extent it is more beneficial. Our view is fortified by the decision of the Hon'ble Supreme Court in the case of Union of India Vs. Azadi Bachao Andalon [ 2003 (10) TMI 5 - SUPREME COURT] . Accordingly, we will consider the beneficial provisions of the tax treaty to see whether the contention of the assessee that the alleged payment from DJCIPL is not royalty income. The payments made for acquiring right to use product itself, without allowing any right to use the copy right in the product are not covered with the scope of Royalty which may get covered under the term under Royalty as per the Act. The facts of the case in hand show that there is no transfer of legal title in the copyrighted article as the same rests with the assessee. All rights, title and interest in the licensed software which is being claimed to be copyrighted article are the exclusive property of the assessee. DJCIPL has no authority to reproduce the date in any material form to make any translation in the date or to make adaptation in the data. The end user cannot be said to have acquired a copy right or right to use the copy right in data. A perusal of the agreement with DJCIPL shows that DJCIPL does not acquire any right in relation to the products. In our considered view, in determining whether or not a payment is for use of copyright, it is important to distinguish between a payment for right to use the copy right in a program and right to use the program itself . The revenue derived by the assessee from granting limited access to its data base is akin to sale of book, wherein purchaser does not acquire any right to exploit the underlying copyright. In the case of a book, the publisher of the book grants the purchaser certain rights to use the content of the book, which is copyrighted. The purchaser of the book does not acquire the right to exploit the underlying copyright. When the purchaser reads the book, he only enjoys the contents. Similarly, the user of the database does not receive the right to exploit the copyright in the database he only enjoys the product in the normal course of his business. Appellant is only granting access to its database to DJCIPL. In our considered opinion, the payments received cannot be said to be Royalty in nature. The transaction under consideration is for provision of accessing database of the assessee. Hence the same cannot be considered as Royalty under Article 12 of the India-US DTAA. We, therefore, set aside the findings of the Assessing Officer and direct the Assessing Officer to delete the impugned addition. - Decided in favour of assessee. 2021 (12) TMI 646 Revision u/s 263 by CIT - Whether Assessment order passed under section 143(3) is without jurisdiction and deserves to be dismissed? - HELD THAT:- It is also a fact that the notice under section 143(2) was issued by the Dy. Commissioner of Income Tax, Range-VI, Lucknow. However, as available from Income Tax Return acknowledgement, bearing acknowledgement no.507789481300912 for the assessment year 2012-13 it is evident that the address provided by the assessee is of the State of Maharashtra. Moreover, the copy of notice issued by the AO u/s 143(2) dated 30.9.2013 reveals that the same was issued on the address of the assessee at Kalyan, Maharashtra. Therefore, it is evident from record that the jurisdiction of the assessee lay with an ITO of Kalyan, Maharashtra and not with the Dy. Commissioner of Income Tax, Range-VI, Lucknow. It is the Income-tax authorities specified in section 124 of the Income Tax Act, who have jurisdiction in respect of any person carrying on a business or profession, if the place at which he carries on his business or profession is situated within the area, or where his business or profession is carried on. It is an undisputed fact that the business of the assessee is in the State of Maharashtra and not in Uttar Pradesh. Therefore, the notice was issued by an Assessing Officer not holding jurisdiction over the assessee. That being so, the notice is null and void and it is held to be so. In ITO vs. M/s Arti Securities Services Ltd. [ 2020 (11) TMI 310 - ITAT LUCKNOW] it was held by the Lucknow Bench of the Tribunal that where notice under section 143(2) of the I.T. Act had not been issued by an Officer having jurisdiction over the assessee, the assessment order as well as the order passed by the ld. CIT(A), were bad in law. Finding the grievance of the assessee, calling in question the jurisdiction of the Assessing Officer, to be justified, we accept the same. Accordingly, Ground no.1 and the Additional Ground nos.10,11 and 12 are accepted. The notice issued under section 143(2) of the Act is, therefore, quashed as null and void - all the proceedings consequent thereupon, including the assessment order as well as the order under appeal, are quashed - Decided is favour of assessee. 2021 (12) TMI 645 Validity of initiation of proceeding u/s 153C - Additions on account of unexplained investment in land, unexplained cash credits and unexplained investment on account of loans and advances - Admission of additional evidence - HELD THAT:- Once the assessee sought to file the additional evidence then the proper procedure is to first admit the additional evidences and then seek remand report from the AO on the correctness of the additional evidence. This exercise is necessary to verify the correctness of the additional evidence first time filed by the assessee at appellate stage as well as granting the opportunity to the AO to consider such evidences. CIT(A) has proceeded on its own without giving the opportunity to the AO to verify and examine the additional evidence and further to respond and make comments on merits of the issue - when the additional evidence was not subjected to examination and verification by the AO and the order of the CIT(A) is also non-speaking order so far as deletion of additions are concerned, therefore, in the facts and circumstances of the case we set aside the impugned order and remand the issue to the record of CIT(A) to decide the appeal afresh by passing a speaking order after getting the additional evidences to be verified from the AO - assessee be given an opportunity of hearing before passing fresh order. Though the assessee has supported the order of CIT(A) under Rule 27 of IT rules on the issue of validity of initiation of proceeding under section 153C of the Act which has been decided by CIT(A) against the assessee however, as we have remanded the matter to the record of the CIT(A) for fresh adjudication including the maintainability of the belated appeal therefore, this issue is kept open to be raised as per the outcome of the fresh order of CIT(A) - Appeals of the revenue are allowed for statistical purposes. 2021 (12) TMI 644 Disallowing the claim of the assessee u/s 54F - As per assessee he owned only one residential house property and accordingly she is eligible for deduction u/s 54F - HELD THAT:- Admittedly, the details of the ownership of the Madiwala property was submitted to ld.CIT(A) along with the copies of Wealth-tax Returns for the first time. These details and the contentions of the assessee in this regard were not available before the AO. We noticed that the ld.CIT(A) has also not confronted these materials with the AO in order to elicit his opinion with regard to the claim of the assessee. This issue requires to be remitted to the file of AO for examining it afresh by duly considering the claim of the assessee with regards to the ownership of the residential building located at Madiwala. We earlier noticed that the assessee had claimed deduction u/s 54 of the Act and it is the AO who has stated that the assessee is eligible for deduction u/s 54F of the Act and the said view of the AO has been accepted by the assessee. We also notice that the manner of computation of deduction u/s 54 and 54F are different. However, there was no occasion for the AO to compute the eligible amount of deduction, since he had held that the assessee is not eligible for deduction u/s 54F of the Act. Hence, the manner of computation of deduction also requires to be examined, if the AO is convinced on the claim of the assessee with regard to residential building located in Madivala. We set the order passed by the ld.CIT(A) on this issue and restore the same to the file of the AO for examining it afresh by duly considering the claim of the assessee with regard to the ownership of residential building located at Madiwala. The assessee is also directed to furnish all the relevant materials to prove that the residential building located in Madiwala is not owned by her and she was only a name lender. After hearing the assessee, the AO may take appropriate decision on this issue in accordance with law. Not adjudicating the ground relating to disallowance of interest expenditure - disallowance of interest expenditure claimed by the assessee against income from other sources - HELD THAT:- We noticed earlier that the CIT(A) did not adjudicate this issue even though contentions were raised by the assessee on this issue. Before us, the Revenue has raised a ground stating that the ld.CIT(A) has not adjudicated this issue. In fact, the Revenue cannot be said to be aggrieved by the action of the CIT(A) in not adjudicating this issue. It is the assessee who is aggrieved in this matter, but the assessee is not in appeal before us - revenue has only pointed out in its ground that Ld CIT(A) has not adjudicated this issue. Accordingly, we are of the opinion that this ground of the revenue does not require adjudication. Appeal filed by the Revenue is treated as allowed for statistical purposes. 2021 (12) TMI 643 Disallowance on account of bad debt written off - addition made by AO as assessee has not made sufficient efforts to recover the outstanding due - CIT-A deleted the addition - HELD THAT:- The aforesaid reasoning of the AO is unsustainable - assessee was a sub-contractor under M/s Naftogaz India Pvt. Ltd., who was awarded a contract by ONGC. The assessee was assigned the specific work of physical survey, positioning support for diving etc. Subsequently, ONGC cancelled the contract with M/s Naftogaz India Pvt. Ltd. As a result of which the amount due to be received by the assessee from M/s Naftogaz India Pvt. Ltd. could not be recovered - Rreasoning of the AO that the assessee has not made sufficient effort to recover the outstanding due is contrary to the materials on record, considering the fact that the assessee has issued legal notice for recovery of the dues. In any case of the matter, after the amendment to section 36(1)(vii) w.e.f. 01.04.1989, it is not necessary for the assessee to prove that the amount has become irrecoverable despite best efforts. The only requirement is, the amount must have been written off having become irrecoverable. This is the view expressed by the Hon'ble Supreme Court in case of TRF Ltd. [ 2010 (2) TMI 211 - SUPREME COURT] - Decided against revenue. 2021 (12) TMI 642 Rectification of mistake u/s 154 - Addition u/s 36(1)(iii) towards interest on loans to subsidiary - HELD THAT:- We note that there were transfer of funds from both sides i.e. from the assessee to the subsidiary and from the subsidiary to the assessee however at the financial year end, net payable to the assessee was ₹ 1,36,23,329/-.We have also examined the overall calculation of interest and find that if the cross transactions are taken into consideration for the whole year, then instead of interest receivable, there comes out to be interest payable by the assessee. So certainly the rectification application moved by the assessee was maintainable which was summarily rejected by the AO and so by the ld CIT(A). Therefore considering the facts of the case we are unable to agree to the conclusion drawn by the ld CIT(A) on this issue. Accordingly we set aside the order of ld CIT(A) direct the AO to delete the disallowance of Interest - The appeal of the assessee is allowed. Rectification application qua allowing the credit of TDS - Assessee has returned the income received from M/S M/S Tamilnadu Petroproducts Ltd on which TDS of ₹ 10,04,793/- was deducted and similarly income received from Karvy Stock Broking Ltd as also returned on which TDS of ₹ 55,150/- was deducted by Karvy Stock Broking Ltd. However the deductors deposited the TDS in the nest year and thus it was appearing in the form 26AS of AY 2012-13. In our opinion the assessee should be allowed the benefit of TDS in the current year in which income is offered to tax irrespective of the year in which it was deposited by the deductor. Even this treatment is in accordance with the provisions of section 199 of the Act. Accordingly the we direct the AO to allow the credit of TDS of ₹ 10,59,943/- in the current year. Appeal of assessee allowed. 2021 (12) TMI 641 Disallowance of interest paid on loan u/s 36(1) (iii) - Diversion of interest bearing funds during the period under consideration - assessee advanced loan to Shri Babu Lal Natani on interest @ 15% and derived income there form as interest and declared in the income from other sources , the rate of interest charged 15% is more than interest on borrowed funds - whether the directorship in the Companies is profession or not? - HELD THAT:- The assessee is director in Natani Rolling Mills (Pvt,) Ltd and Neelkanth Industries (Pvt.) Ltd since long back and purchased shares of Neelkanth Industries (Pvt.) Ltd. prior to the assessment year 2009-10 of ₹ 47,65,000/- and there was no any further investment in the shares and the share in another Company Natani Rolling Mills (Pvt.) Ltd. were also purchased before the assessment year 2009-10 of ₹ 7,32,000/-, thus, the total share were purchased of ₹ 54,97,000/-, thus, we are view of that the assessee has the same shares only and there in no any direct nexus of investment out of the loan during the period under consideration because no any shares were purchased during the period under consideration.. Assessee took loan for business purposes from the financial institutions namely Bajaj Finance and thereafter from the HDFC Bank Ltd. The assessee has been doing business as working partner in the partnership firms as well as profession/vocation as Director in three Companies. From perusal of Section 2(36) Profession includes Vocation definition of the profession the assessee is entitled for deductions of interest on loans took for business/profession. Thus, it is crystal clear that the interest was paid in the business and commercial expediency apart from that there was no any direct nexus between the investment in shares and loans taken thereafter - as the assessee borrowed the funds from the bank as well as other, the borrowing was for the business purposes only and interest thereon was paid to the Bank as well as to others also.See SA BUILDERS LTD. VERSUS COMMISSIONER OF INCOME-TAX [ 2006 (12) TMI 82 - SUPREME COURT] We found merit in the contentions raised by the assessee and the ld. DR has not brought on record any new material to rebut or controvert the submissions and documents placed before us, therefore, we direct to delete the disallowances confirmed by the ld. CIT(A) - Decided in favour of assessee. Disallowance with regard to excess interest paid on borrowings to the Bank who given the loan, because the assessee could not utilize the whole amount in his own business - As per the deed of partnership, it is crystal clear that the assessee could not took interest on advances as working capital to it s partnership firm i.e. Oliya Import Export exceeding 12% which was advanced as working capital. It is important to mention here that in the course of business, it is not necessary to have profit only and there should not be any loss therein. As far as advances to Giriraj Buildcon is concerned, we noticed that the Giriraj Buildcon is a sister concern of the assessee as proprietor of the Giriraj Buildcon was also a director in the Natani Rolling Mills Pvt. Ltd. and had dealing in purchasing from the company during the period under consideration and in subsequent year also. Hence, looking to the commercial expediency given some advance for his business. Considering the totality of facts and circumstances of the case, material placed on record as well as the relevant provisions of the Act, we found merit in the contentions raised by the assessee and the ld. DR has not brought on record any new material to rebut or controvert the submissions and documents placed before us, therefore, we direct to delete the disallowance. - Decided in favour of assessee. 2021 (12) TMI 640 Net profit estimation - Rejection of books of accounts - HELD THAT:- Only Reasons for rejection of books of accounts being fact that no reply was received from certain creditors in response to notice u/s 133(6) of the Act could not have resulted into the rejection of books of accounts. Assessee has produced confirmations of those parties and no additions were made on account of creditors. Even otherwise, if a sundry creditor does not provide a confirmation u/s 133(6) of the Act, we do not find any reason to uphold the rejection of the books of accounts on that basis. The assessee has also produced the comparative chart of the gross profit for a block of 5 years starting from assessment year 2012-13 onwards. The assessee has produced assessment orders of other parties and shown a chart wherein the net profit has been accepted in the case of the other assessee in same line of business @ 0.43%. We find that the rejection of the books of accounts by the ld. AO is not proper without finding any latent, patent and glaring defects in the books of accounts of the assessee. Accordingly, we direct the ld. AO to delete the addition made of 8% of the net profit and to accept the book results shown by the assessee. Accordingly, grounds Nos. 1 3 of the appeal of the assessee are allowed. 2021 (12) TMI 639 Denial of exemption u/s 10(25)(ii) - filling of return in the abbreviated name - Addition of interest income solely on the ground of not filing return in the complete name of the assessee i.e. Indo Euro Chemical Services Limited Employees Provident Fund covered under FPS rather filed the return in the abbreviated name as IECS Ltd. Employees P.F. Covered under FPS - HELD THAT:- Adjustment made by the Revenue Department by denying the exemption claimed by the assessee u/s 10(25)(ii) of the Act cannot be and shall not be subject matter of section 143(1) of the Act. This can only be done u/s 143(3) of the Act. Because u/s 143(1) returned filed by the assessee should be accepted. So, we are of the considered view that when undisputedly assessee has been accorded registration under Rule 3(1) Part A of the Fourth Schedule of the Act vide order dated 03.03.1979 (supra), there is no scope for the Revenue to deny the exemption claimed u/s 10(25)(ii) of the Act on hyper technical grounds. As decided in EASTER INDUSTRIES LTD VERSUS UNION OF INDIA [ 2012 (5) TMI 397 - DELHI HIGH COURT] proof in support of the claim is not furnished by the assessee, then, for the lack of proof, no disallowance or an adjustment can be made. The only option which is open to the Income-tax Officer in such a case is that he can require the assessee to furnish proof in which case he will presumably have to issue notice u/s 143(2) In the instant case, it is also undisputed fact that no notice u/s 143(2) of the Act was ever issued to the assessee rather arbitrarily declined to accept the exempt income of ₹ 60,88,057/- which was claimed as exempt u/s 10(25)(ii) of the Act by the assessee and the same has been adjusted against the income of the assessee and assessment has been framed at ₹ 60,88,057/- as against nil income claimed by the assessee in its return. We are of the considered view that ld. CIT (A) has erred in dismissing the rectification application filed by the assessee u/s 154 of the Act by denying a relief otherwise available to the assessee u/s 10(25)(ii) - we direct the AO to allow relief to the assessee by allowing exemption u/s 10(25)(ii) of the Act after due verification qua the abbreviated name mentioned by the assessee in its return in the light of the order for according exemption to the assessee. - Decided in favour of assessee. 2021 (12) TMI 638 Penalty u/s 271(1)(c) - Argument on defective notice - non strike off any of the twin limbs of the penalty - HELD THAT:- As penalty notice obviously the ld AO has not cancelled any of twin limbs on which penalty u/s 271(1)(c) of the Act can be levied. The above issue is squarely covered by the decision of Sahara India Life Insurance Corporation [ 2019 (8) TMI 409 - DELHI HIGH COURT] wherein, held that in notice issued by the ld AO would be bad in law if it did not specify which limb of section 271(1)(c) of the Act the penalty proceedings had been initiated i.e. whether for concealment of income or for furnishing of inaccurate particulars of income. As the above decision covers the issue in favour of the assessee, we reverse the orders of the lower authorities and hold that penalty order issued by the ld AO based on such invalid notice is not sustainable in law - Decided in favour of assessee. 2021 (12) TMI 637 Reopening of assessment u/s 147 - genuinety of claim of the assessee that income can not be taxed twice as has been done in the present case - Profit of the project offered to tax in the earlier year on the basis percentage completion method followed by the assessee - HELD THAT:- As the order of Ld. CIT(A) suffers from serious infirmities as he has not considered the issue of double taxation and also the fact that return filed in response to notice under section 148 of the Act has been acknowledged by the AO in the assessment order and only the reassessment proceeding has to be done on the basis of return filed in response to notice under section 148 of the act. In our opinion, the department should not be allowed to take the advantage of any mistake committed by the assessee which may result prejudice to the assessee in double taxation of the same income. In the present case, ₹ 1,74,76,000/- has been assessed from A.Y. 2009-10 to A.Y. 2012-13 and therefore to tax the income again on the plea that assessee has wrongly returned the income on the original return of income and not giving effect to the rectification filed by the assessee is totally wrong and against the principle of natural justice. In our opinion, this income needs to be reduced from the return of income of the assessee as there is no provision in the income tax law to assess the same income twice. Even otherwise, the stand of the AO is not acceptable as in the reopened proceedings the issue which was subject matter of reopening i.e. non deduction of tax on certain expenses amounting to ₹ 38,00,500/- has not been added in the reassessment order and once the item proposed in the reasons recorded under section 148(2) did not find place in the assessment order, no other addition can be made and income returned as per return in response to notice under section 148 of ₹ 3,22,254/- has to be accepted. The case of the assessee finds support from the decision of the jurisdictional High Court in the case of CIT vs. Jet Airways (India) Ltd. 2014 (5) TMI 1215 - BOMBAY HIGH COURT] - direct the AO to reduce ₹ 1,74,76,000/- from the income of the assessee. Accordingly, the appeal of the assessee is allowed. 2021 (12) TMI 636 Addition made on account of employees contribution to PF ESI - delay in deposits - HELD THAT:- Employees contributions qua ESI PF involved in the present appeal is squarely covered by the decision of coordinate bench of the Tribunal delivered in the case of Vinko Auto Industries Limited, . [ 2021 (12) TMI 574 - ITAT AMRITSAR] wherein the Tribunal has deleted the disallowances made by the AO on account of delay in depositing the employees contribution towards ESI PF as the same were deposited later than the prescribed time in the relevant acts but prior to the filling of the Return u/s.139(1) - respectfully following the aforesaid order of the Coordinate Bench of the Tribunal, the disallowance qua employees contribution towards PF and ESI, sustained by the Ld. CIT(A) stands deleted. Thus, grounds No.1 to 3 are allowed. Disallowance of claim u/s.80C - HELD THAT:- Assessee has filed relevant documents in support of its claim u/s.80C of the Act in CPC, however, the same remained un-considered by the AO as well as by the CIT(A), therefore, without going into controversy, in the interest of justice and for the just decision of the case, this issue is remanded back to the file of AO to decide afresh the claim of the assessee while considering the documents already filed by the assessee. Needless to say, sufficient opportunity of hearing shall be provided to the assessee. Thus, ground No.4 raised by the assessee stands allowed for statistical purposes. 2021 (12) TMI 635 Revision u/s 263 by CIT - Reopening of assessment u/s 147 initiated - Deduction of interest income claimed u/s 80P(2)(d) - HELD THAT:- Here being the assessment u/s 147/148 PT.CIT could not be said to be justified in holding that the assessment order was passed without examining the issue of deduction u/s 80P(2)(d). PT.CIT has no where concluded that as to how any prejudice in fact has been caused to the revenue and in case, if no loss to the revenue is caused then in that eventuality the provision of Section 263 of the Act could not have been invoked. It was incumbent upon the ld. PT.CIT to have shown as to how the order of assessment was prejudicial to the interest of revenue. Pr. CIT did not prove or bring any material or circumstantial evidence on record that the claims of the assessee on these issues are not genuine, bogus, not verifiable and not correct. Pr. CIT has not decided the merits of the case as to whether any addition or disallowance was called for or not despite all the details, facts position of law available before him. He was only of the view that the AO has not examined the issue of deduction u/s 80P(2)(d). When he has issued the notice u/s 263 on 25.03.2021 and sought the reply on the very next day i.e on dt.26.03.2021, despite being very short span of time assessee filed the detailed reply and after receiving reply the ld. Pr. CIT has passed the order on 31.03.2021 straight way without confronting the issue or asking any query, question explanation on the issue. PT.CIT failed to do so and summarily reach to the conclusion that the order was prejudicial to the interest of revenue. Such a view taken by the PT.CIT is not well founded in the law or by various Hon'ble courts. Pr.CIT can assume jurisdiction if there has been lack of enquiry. In the instant case, the enquiry has been made admittedly on the issue of reopening, though the enquiry may not be sufficient in the opinion of the ld Pr. CIT. A.O. has made enquiry on the issue of reopening and not supposed to examination of the issue which is not the subject matter of reasons recorded, however sufficiency of enquiry can be depending upon from person to person. The AO cannot remain passive in the face of a return which is apparently in order but calls for further enquiry. It is the duty of the AO to ascertain the truth of the facts stated in the return, when the circumstances of the case are such as to provoke an enquiry. The word 'erroneous' includes the failure to make enquiry. Considering all the documents' replies and submissions made by the assessee before the Id. Pr.CIT and also before us, we are of the view that the assessee has duly satisfied all the queries raised by the ld. Pr. CIT in his order passed U/s 263 of the Act, therefore, in such circumstances and keeping in view our above observations that the A'O' had made all the detailed enquiries and Verifications, therefore, no action U/s 263 of the Act was warranted' Accordingly' we quash the proceedings U/s 263 of the Act and allow the grounds raised by the assessee. Customs 2021 (12) TMI 634 Revocation of customs broker's license - Validity of SCN - time limitation - Offence Report - SCN challenged on the ground that the impugned show cause notice dated 01.06.2021 is time barred in terms of Regulation 17(1) of the the regulation - HELD THAT:- As per Regulation 17(1) of the 2017 Regulation, a notice has to be issued within 90 days from the date of receipt of offence report to a custom broker. The scheme of Regulation in the year 2018, as also in the year 2013 and also in the year 2004 is similar. The proceedings have to be initiated within a period of 90 days from the date of receipt of the offence report. Delay, if any is on the part of the office of the second respondent in forwarding the Relied Upon Documents (RUDs) which has been referred to in the impugned show cause notice. The said delay is not curable. Further, show cause notice is to be issued based on the offence report which is a mere summary of investigation and prima facie framing of charges into the allegation of acts of commission or omission of a Customs Broker or a F card holder or a G card holder under the regulation which would render such a broker unfit to transact business under these regulations. The investigation report/offence report has been filed in detail and therefore, there is no excuse for delay in issuing the show cause notice. The delay in inter-departmental communications or furnishing of Relied Upon Documents (RUDs) are of no consequences as the impugned show cause notice has been admittedly issued beyond the period of 90 days. It is noticed that the office of the second respondent and the office of the first respondent is located in the same Custom House in Parrys and therefore, there is no excuse for condoning the delay. Petition allowed. 2021 (12) TMI 633 Classification of imported goods - Reformate - classification was rejected and goods classified under CTH 2710 12 19 - whether the goods to be classified under CTH 2710 12 19 or under CTH 2707 50 00? - HELD THAT:- The Adjudicating Authority dealt with this issue and accepted the contention of the appellant that the term similar products used in chapter Heading 2707 also includes products obtained by processing of petroleum as the said Explanatory Notes explain the classification of similar products obtained from distillation of coal tar and includes processing of petroleum. This part of the finding recorded by the Adjudicating Authority has not been assailed by the Department - if the product Reformate is classifiable under the four digit Heading CTH 2707, it would not be really material to determine as to under which eight digit Sub-Heading it can be classified because the duty rate structure is the same for all the Sub-Heads. The Adjudicating Authority, therefore, committed an error in thereafter holding that the product Reformate would be classifiable under CTH 2710 12 19. Whether the product Reformate merits classification under CTH 2707 50 00? - HELD THAT:- The Notification dated 11.07.2014 was issued and it is the position emerging from the issuance of this Notification that has been clarified by the TRU Circular. Merely because the Circular states that the Annexure only provide a summary of the changes made and should not be used in any quasi- judicial or judicial proceedings would not in any manner dilute the position emerging from the Notification that has been explained in the Circular. Whether the product Reformate would merit classification under CTH 2710? - HELD THAT:- Reformate is a highly rich aromatic product containing 80% or more aromatic content. It cannot, therefore, be covered under category (C) and accordingly, from the purview of CTH 2710 as well. This is for the reason that all the products covered by category (C) must contain, in addition to the substances added, at least 70% of petroleum oils covered by categories (A) and (B). Thus, even if the substances added for making the preparations are considered to be all aromatic in nature, the preparations, by virtue of at least having 70% of categories (A) and (B) oils therein must have 35% non-aromatic constituents (70% of 50%). Thus, the aromatic content at best would be 65% in the preparation of the kind covered under category (C). Reformate, however has 80% aromatic contents and, therefore, cannot be considered under category (C) - from a plain language of the expression preparations not elsewhere specified or included, containing by weight of 70% or more of petroleum oils, these oils being the basic constituents of the preparations , it is evident that even if it is assumed that Reformate is a preparation, still it will not be classifiable under CTH 2710 as the said Heading specifically excludes preparations which are elsewhere specified or included. It needs to be remembered that Reformate is specifically covered under CTH 2707 and at 8-digit level under CTH 2707 50 00. Whether Reformate can be classified under CTH 2710 12 19 as other motor spirit ? - HELD THAT:- What needs to be noted is that the Adjudicating Authority has observed that it would not like to place reliance on the classification practice followed in other countries, apart from USA and, therefore, reference to the Customs Tariff of UAE and Singapore would be beyond the scope of the impugned order. Learned special counsel for the Department also contended that the appellant has not adduced any evidence to prove that the flash point of Reformate is not below 25 C - this contention is also not only beyond the scope of the impugned order, but even otherwise, it was for the Revenue to substantiate that the flash point of Reformate was below 25 C. Reformate would merit classification under CTH 2707 50 00 and not under CTH 2710 12 19 - appeal allowed - decided in favor of appellant. 2021 (12) TMI 632 Smuggling - Gold - confiscation u/s 111(a) and 111(d) read with Section 120 of the Customs Act, 1962 - confiscation of the goods of no commercial value under Section 119 - penalties - burden of proof - HELD THAT:- There are no hesitation in concluding that the seized gold is of foreign origin and the DRI officers had a reasonable belief that it was smuggled and has correctly been seized. Neither the person from whom the gold was seized, i.e. that Shri Sathyanarayana nor the alleged owner of the gold Shri Manda Ramu, could discharge the onus of showing that it is not smuggled gold. Much emphasis has been laid in all appeals on the fact that the pieces of gold which have been seized had no foreign markings. Be that as it may, lack of foreign markings does not change the status of the goods under Section 123. The reasonable belief has to be examined in the factual matrix of each case. In this case, the purity of the gold, the lack of invoice, the payment for the gold in cash concealed in a jacket and in which the gold was also being carried all add up to give reasonable belief to the officer. The original and duplicate copies of the invoice, unsigned, prepared by Shri Balaji in favour of Shri Manda Ramu do not inspire any confidence because if it was an invoice issued for sale it should have been sent with the goods after signature which is not the case. In fact, the initial statement Shri Balaji clarified that he prepared the invoice after receiving the same information about the seizure of gold. This is nothing but an attempt to cover up. The other invoice showing purchase of 2000 gm of gold also does not support the appellant s case because the purity of the gold was different. Appeal disposed off with following order:- (a) Confiscation of 3.158 kg. of gold valued at ₹ 94,61,368/- under Section 111(a) and (d) read with Section 120 of the Customs Act is upheld. (b) Confiscation of the goods of no commercial value used for concealment the above gold is upheld under Section 119. (c) Confiscation of 173.400 gm of pieces of gold bars is set aside. (d) Confiscation of 70.300 gm. of foreign marked coins under Section 111(a) 111(d) is upheld. (e) Confiscation of Rupees Ninety lakhs under Section 121 of the Customs Act is upheld. (f) Penalty upon Shri V. Sathyanarayana under Section 112(b) of the Customs Act is reduced to Rupees One lakh. (g) Penalty of Rupees Twenty lakhs under Section 112(b) of the Customs Act Shri Manda Ramu is upheld. (h) Imposition of penalty under Section 112(b) of Rupees Twenty lakhs upon Shri P. Balaji is upheld. (i) Imposition of penalty of Rupees Five lakhs on Shri K. Srinivasulu is set aside. 2021 (12) TMI 631 Suspension of Customs Broker License - allegation of forgery and manipulation of documents committed by the Appellant - regulation 16(1) r.w. 16(2) of the CBLR 2018 - HELD THAT:- The mismatch of date of shipment as per internet tracking system of the impugned consignment, and the Bill of lading date, brought the conflict before the Customs Authorities. The statements of other witnesses also corroborated the same including the shipment tracking record, which proved beyond doubt that even the empty containers were not handed over to the Exporter by 26.04.2021, i.e. the date of Notification restricting watermelon seeds, which was in the knowledge of the CB - emails dated 01.06.2021 sent by CB to the importer states that we requested everyone to ensure that the tracking of the shipping line is before 26.04.2021. Also, the reply to the shipping line for the e mail dated 01.06.2021 was forwarded on 10.07.2021, well after the seizure was made. Thus, even when the situation was doubtful, the appellant CB chose to file the BOE not as per the Revised Notification, referring the said goods under restricted category. The revenue has relied heavily on the content or the information available on website of shipping lines, which may be erroneous and needs investigation. However, the documents like proforma invoice, bill of lading and the documents like certificates of origin etc., fact of payment before shipment indicates that the submissions of the appellant cannot be brushed aside. It s not proved that such documents are fabricated or manipulated. It is very difficult to deny the authenticity of the certificates issued by a sovereign Government in the absence of evidence. No such allegation of fabrication of such documents is made. Learned authorised representative for the revenue avers that the investigation is still on. One more evidence that the revenue relies upon is the initial statement of the importer, wherein he is alleged to have stated that he has fabricated documents on the advice of the Custom Broker/appellant. The statement has been retracted. A statement which is retracted or otherwise, and more so not being substantiated by documentary or other proof, cannot be appreciated as evidence - Revenue has not brought out any evidence, whatsoever as to the benefit that customs Broker got by indulging in such activity. There could however, be a gain for the importer. As per the averment of Authorised Representative for the Revenue, further investigations are in progress. The Respondents are directed to restore the CB licence of the Appellant within 10 days from the receipt or service of this order - appeal allowed - decided in favor of appellant. Insolvency & Bankruptcy 2021 (12) TMI 630 Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - existence of debt and dispute or not - HELD THAT:- The Appellant has filed the I.A. No. 2685 of 2020 seeking leave of this Appellate Tribunal to place on record certain additional documents, in para 3 it has been stated that the form of email correspondences ranging from 03.11.2017 till 11.01.2019 exchanged between the Appellant and the Respondent with respect to the settlement of the outstanding amount due and payable to the Appellant - The order dated 06.10.2020 dismissing the Application under Section 9 of the IBC by the Ld. Adjudicating Authority, the Appellant checked its internal records and it transpired that the aforesaid emails correspondences were available in its data-based. It is quite evident from the said emails correspondences that the Respondent was engaging in settlement discussions with the Appellant towards the outstanding dues owed to it which were otherwise agreed by the Respondent. It transpires that the Respondent had admitted his liability and ready to make payments and revised settlement offer to the tune of USD 99,786.41/- was offered by the Respondent to the Appellant - the Application under Section 9 of the IBC filed by the Appellant before the Ld. Adjudicating Authority is hereby allowed. 2021 (12) TMI 629 Rejection of claim in respect of Corporate Guarantee - Corporate Guarantee was made available to the Respondent No.1 and also before the Adjudicating Authority or not - non-reflection of Corporate Guarantee in Books of Accounts - non-revocation of Corporate Guarantee and not crystalizing into debt in the Books of Corporate Debtor - reason for rejecting the claim of the Appellant by the Adjudicating Authority is that the Appellant has not produced the documents namely the Agreement evidencing the furnishing of the Corporate Guarantee issued by the Corporate Debtor in relation to the debt availed by M/s. Vasan Dental Health Pvt. Ltd. HELD THAT:- The Appellant has provided all the information with the IRP/RP prior to rejection of claim. Further, after rejection of the claim the Appellant addressed a detailed reply to the objections raised by the IRP. It appears that the IRP has not considered the documents produced before it and without going into detail rejected the claim of the Appellant. Even the Adjudicating Authority merely affirmed the stand taken by the IRP/RP, without verifying the documents placed before it. Whether the Corporate Guarantee was made available to the Respondent No.1 and before the Adjudicating Authority? - HELD THAT:- It is a fact that the Corporate Guarantee was shared with the 1st Respondent vide E-mail dated 22.01.2020 and the said Corporate Guarantee was also filed before the Adjudicating Authority along with convenience volume. Further it is also evident that before passing the rejection of the claim by the 1st Respondent vide order dated 06.02.2020 the Appellant submitted the Corporate Guarantee to the 1st Respondent therefore the 1st Respondent ought to have meticulously considered the Corporate Guarantee and other documents made available before him - the observation made by the Learned Adjudicating Authority that the Corporate Guarantee was not produced before it is without any basis. Whether not reflecting Corporate Guarantee in the Books of Accounts invalidates the claim? - HELD THAT:- It is an admitted fact that the Corporate Guarantee having been executed cannot be denied and cannot unanimously decide by the 1st Respondent to the contrary and cannot be adjudicated upon - This Tribunal accepting the submissions as made by the Learned Counsel and this Tribunal is also of the view that the existence of Corporate Guarantee is not in question either by fact or in law. Therefore, the claim cannot be invalidated on the above ground. Not invoking Corporate Guarantee and not crystalizing into debt, whether it invalidates the claim? - HELD THAT:- The Resolution Professional is required to maintain an updated list of all claims. The maturity of a claim or default of debt, are not the guiding factors to be noticed for collating or updating the claims. This Tribunal comes to a resultant conclusion that the Corporate Guarantee was made available with IRP and Adjudicating Authority - Application disposed off. 2021 (12) TMI 628 Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Application was filed beyond three years from the date on which the Account was classified as Non Performing Assets - demand made under Section 13(2) of SARFAESI Act, 2002 - time limitation - acknowledgment of liability - HELD THAT:- The object of Section 18(2) of the Limitation Act, 1963 is to ascertain the real date written and signed acknowledgment for the purpose of saving limitation and to exclude fraudulent testimony. Apart from that, unconditional acknowledgment is an implied promise to pay the debt, that is the logical inference, if nothing is uttered to the contrary, as opined by this Tribunal. It is by now well settled that the pendency of the proceeding under SARFAESI Act, 2002 is not a bar in initiating CIRP under I B Code, 2016. It is to be borne in mind that the Respondent/Financial Creditor/ Applicant had given a Reply on 30.03.2016 for the proposed One Time Settlement made by Corporate Debtor . Continuing further, it is to be remembered that the Respondent/Financial Creditor had addressed Reply letter to the Corporate Debtor dated 19.02.2018 for One Time Settlement of the loan amount which was accepted by the Respondent based on Terms and Conditions specified in the Sanction Letter dated 28.02.2018 - It cannot be gainsaid that the Respondent/Financial Creditor, after considering the proposal of the Appellant for One Time Settlement through its letter dated 19.02.2018 granted said settlement in and by which the Corporate Debtor was required to pay ₹ 2 Crores as against its liability of ₹ 17.12 Crores as on 01.12.2015. As such it is crystalline clear that the new contract had come into play on 19.02.2018 and further that the Application was filed by the Respondent/Applicant (under Section 7 of IBC) on 25.10.2018 which is within period of limitation. The OTS proposal of the Corporate Debtor dated 28.02.2018 was accepted by the authorised signatory of the Corporate Debtor to the Terms and Conditions and it is brought to the fore that through a letter dated 07.06.2018 of the Respondent/Financial Creditor/Applicant addressed to the Corporate Debtor , the OTS Letter was revoked because of the non-payment of settlement sum by the Corporate Debtor in spite of there being loss of time. Suffice to it, to the Tribunal to point out that in the present case, as per new contract, the Corporate Debtor , apart from the fact that it paid ₹ 1 crore, committed a default in regard to the upfront payment of sum of ₹ 9 Crores in response to the settlement of loan amount and in any event, in law, the new promise had given new cause of action enabling the Respondent/ Corporate Debtor /Applicant to initiate CIRP under IBC resulting in filing of Application under Section 7 of IBC against the Corporate Debtor , which is well within period of limitation. Appeal dismissed. PMLA 2021 (12) TMI 627 Jurisdiction under PMLA vs IBC - power or authority to proceed against the properties of a corporate debtor once a liquidation measure has come to be approved in accordance with the provisions made in the Insolvency and Bankruptcy Code, 2016 - HELD THAT:- The resolution plan essentially must make provision for the payment of debts of the corporate debtor owed to financial and operational creditors, workmen and others specified in Section 53 of the IBC. The resolution plans which may be received by the RP are then placed before the Committee of Creditors for their consideration. In terms of Sub-Section (4) of Section 30, a resolution plan may be approved if it is passed by a vote of not less than sixty percent of the voting share of the financial creditors in a meeting of the Committee of Creditors. The resolution plan as approved by the Committee of the Creditors is then placed before the Adjudicating Authority who upon being satisfied that the same meets the requirements as placed by Section 30(2) of the IBC, approve the same. By virtue of Amending Act 26 of 2019, a significant amendment came to be introduced in sub-Section (1) of Section 31 and in terms thereof, it now stands clarified that the plan as approved by the Adjudicating Authority, would also bind the Central and State Governments or any local authority to whom a debt is owed. The provisions as introduced and incorporated in terms of Act 26 of 2019 have been upheld and judicially recognised to be declaratory. Section 32A and the legislative intent - HELD THAT:- Maximization of value would be clearly impacted if a resolution applicant were asked to submit an offer in the face of various imponderables or unspecified liabilities. The amendment to sub-Section (1) of Section 31 and the introduction of Section 32A undoubtedly seek to allay such apprehensions and extend an assurance of the resolution applicant being entitled to take over the corporate debtor on a fresh slate. Section 32A assures the resolution applicant that it shall not be held liable for any offense that may have been committed by the corporate debtor prior to the initiation of the CIRP. It similarly extends that warranty in respect of the properties of the corporate debtor once a resolution plan stands approved or in case of a sale of liquidation assets. The Legislature in its wisdom has recognised a pressing and imperative need to insulate the implementation of measures for restructuring, revival or liquidation of a corporate debtor from the vagaries of litigation or prosecution once the process of resolution or liquidation reaches the stage of the adjudicating authority approving the course of action to be finally adopted in relation to the corporate debtor. Liquidation under IBC - HELD THAT:- The Liquidator in terms of the provisions engrafted in Section 36 is obliged to form a corpus comprising of various assets of the corporate debtor which constitutes the liquidation estate . The Liquidator is then by law mandated to collect and consolidate all claims of creditors that may be received pursuant to the public announcement of its liquidation. The functions of the Liquidator and the various steps that he is obliged to take are more elaborately spelt out in the Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations, 2016. Statutory provisions under PMLA - HELD THAT:- As is manifest from a reading of the long title of the PMLA, it has essentially been promulgated to prevent money laundering and to provide for confiscation of property derived from or involved in the crime of money laundering. The expression proceeds of crime has been defined in Section 2(u) of the PMLA to mean any property derived or obtained whether directly or indirectly by a person as a result of criminal activity relating to a scheduled offence or the value of any such property and where such property is taken or held outside the country, then property equivalent in value thereto - The word property has been defined to mean assets of every description whether corporeal or incorporeal, tangible or intangible, movable or immovable and includes deeds and instruments evidencing title to or interest in such property or assets wherever located. The scheduled offences stand enumerated in parts A and B of the Schedule appended to the enactment. All orders passed by the adjudicating authority can be assailed in appeal in terms of Section 25 which prescribes that the Appellate Tribunal constituted under SAFEMA shall also act as the Appellate Tribunal for the purposes of the PMLA. Any person aggrieved by a decision or order of the Appellate Tribunal has the right to appeal to the High Court in accordance with the provisions of Section 42. Offences committed under the PMLA are triable by Special Courts which may be constituted in accordance with the provisions made in Chapter VII. Section 71 engrafts a non-obstante clause by providing that the provisions of the PMLA shall have effect notwithstanding anything inconsistent therewith contained in any other law for the time being in force. Issue of primacy - HELD THAT:- It is evident that the two statutes essentially operate over distinct subjects and subserve separate legislative aims and policies. While the authorities under the IBC are concerned with timely resolution of debts of a corporate debtor, those under the PMLA are concerned with the criminality attached to the offense of money laundering and to move towards confiscation of properties that may be acquired by commission of offenses specified therein. The authorities under the aforementioned two statutes consequently must be accorded adequate and sufficient leeway to discharge their obligations and duties within the demarcated spheres of the two statutes - this Court is of the firm view that the issue of reconciliation between the IBC and the PMLA insofar as the present petition is concerned, needs to be answered solely on the anvil of Section 32A. Once the Legislature has chosen to step in and introduce a specific provision for cessation of liabilities and prosecution, it is that alone which must govern, resolve and determine the extent to which powers under the PMLA can be permitted in law to be exercised while a resolution or liquidation process is ongoing. The Resolution and Liquidation roadways - HELD THAT:- It is only once that resolution plan stands approved that the question of further steps for implementation of the mode adopted would logically arise. This is further buttressed from the provisions contained in Section 31(4) which makes provision for a situation where the mode of resolution accepted and approved may require approval under an independent statute. It is while factoring in that eventuality that sub section (4) proceeds to prescribe the outer timeline of one year from the date of approval of the resolution plan for obtaining all requisite approvals. A similar situation would obtain where a corporate debtor while in liquidation is sold as a going concern. Here also Regulation 44 of the Liquidation Regulations, 2016 provides for the completion of the liquidation process within one year from the date of its commencement or within further extended time as contemplated under the Proviso thereto and additionally under Regulation 44(2). The Court thus finds itself unable to accept the submission of Mr. Hossain that the on the date of approval of a resolution plan under Chapter II, the corporate debtor undergoes a transformational change or metamorphoses. In any case, it cannot be viewed as ceasing to exist in the eyes of law merely upon a resolution plan coming to be approved. Identically, where a corporate debtor undergoing liquidation under Chapter III, it continues to exist as an entity till such time as it is fundamentally rearranged or altered consequent to the implementation of the procedure of settlement of its affairs as contemplated under the plan approved by the Adjudicating Authority. Section 32A and the defining moment - HELD THAT:- This Court is of the opinion that the answer to determining when the bar under Section 32A would come into play must be answered bearing in mind the ethos of Section 32A and upon an interpretation of the provisions of the IBC and the Regulations framed thereunder. As is evident from a careful reading of Section 32A(2), the Legislature in its wisdom has provided that no action shall be taken against the properties of the corporate debtor in respect of an offense committed prior to the commencement of the CIRP and once either a resolution plan comes to be approved or when a sale of liquidation assets takes place - Section 32A in unambiguous terms specifies the approval of the resolution plan in accordance with the procedure laid down in Chapter II as the seminal event for the bar created therein coming into effect. Drawing sustenance from the same, this Court comes to the conclusion that the approval of the measure to be implemented in the liquidation process by the Adjudicating Authority must be held to constitute the trigger event for the statutory bar enshrined in Section 32A coming into effect. Petition allowed. Service Tax 2021 (12) TMI 626 Benefit under Sabka Vikas (Legacy Dispute Resolution) Scheme, 2019 - seeking direction to Respondents 2 to accept the SVLDRS Form 3 as generated for the Petitioner on 31-12- 19 and accept their balance payment and clear their case accordingly - HELD THAT:- Noticing the chronology of events and, the need of SVLDRS coupled with the fact that time and again the petitioner has been reminded of the availability of the scheme and the possibility of his taking recourse to the same and when he has chosen not to do so, attachment had been started, pursuant to the order passed in the order in original. This Court sees no reason for any indulgence in order in original dated 01.02.2019 passed by the respondent authority against the petitioner. There is no case of any breach of principles of natural justice, nor any violation on the part of the authority concerned. Petition dismissed. 2021 (12) TMI 625 Condonation of delay in filing appeal - sufficient cause for delay is given or not - HELD THAT:- It is clear from Section 85 of the Finance Act, 1994 that the prescribed period of limitation for filing an appeal is of two months and if there is any delay caused in filing of the appeal, the Commissioner (Appeals) Central Excise and GST has the power to condone the delay, if the delay is not beyond the period of further one month from the expiry of the earlier period of two months, provided the Commissioner is satisfied that there is sufficient cause shown by the appellant. In the present case, the appeal was admittedly filed after expiry of total period of three months and therefore, it was well beyond the limitation period, including extended limitation period as prescribed under Section 85 and therefore, the Appellate Authority has no jurisdiction to entertain the appeal. Petition dismissed. 2021 (12) TMI 624 Levy of penalty u/s 78 of the Finance Act, 1994 - appellant had collected ocean freight charges from their clients at a marked up value - violation of Section 67 of the Finance Act, 1994 read with Rule 5 of the Valuation Rules, 2006 - extended period of limitation - HELD THAT:- It is found from the documents placed on record that apart from merits, the appellant has also questioned the penalty, even on the ground of extended period of limitation. Further, it is also noticed that for the earlier period covering 2003-04 to 2007-08, a similar Show Cause Notice dated 24.04.2009 was issued proposing demand of Service Tax on the differential amount. The Show Cause Notice in the case on hand covering the period 2009-10 and 2010-11 was issued on 15.09.2014, which is clearly after invoking the larger period, alleging that the appellant had suppressed facts in its ST-3 returns to justify the invocation of extended period of limitation. The appellant has mainly pleaded that it was an interpretational issue and therefore, no penalty was exigible. The Hon ble Supreme Court in the case of UNION OF INDIA AND ANR. VERSUS M/S. INTERCONTINENTAL CONSULTANTS AND TECHNOCRATS PVT. LTD. [ 2018 (3) TMI 357 - SUPREME COURT] had dismissed the Revenue s appeal against the decision of the Hon ble Delhi High Court, wherein it was held that Rule 5 ibid. was ultra vires to Section 67 ibid. The Revenue has erred in levying penalty under Section 78 of the Finance Act, 1994 when there is neither deliberate evasion of duty nor is there any evasion per se - Appeal allowed - decided in favor of appellant. 2021 (12) TMI 623 Utilization of CENVAT Credit - availment/utilization of credit disputed by the department on the ground that as a recipient of service, cenvat credit cannot be used for payment of service tax on the output service - HELD THAT:- The period of dispute involved in this case is from April 2015 to March 2017. It is an undisputed fact that in the capacity of recipient of service, the appellant had paid the service tax on the disputed input services under the reverse charge mechanism and that such service tax paid by them was availed and utilized for payment of service tax on the output services. The manner of availment and utilization of cenvat credit is contained in sub-rule (1) and (4) of Rule 3 ibid respectively. Clause (e) in sub-rule (4) ibid provides for utilization of cenvat credit for payment of service tax on any output service. However, an explanation clause was appended in the said sub-rule vide Notification No. 28/2012- C.E. (N.T.), dated 20.06.2012, w.e.f. 01.07.2012, providing the restrictions that cenvat credit cannot be used for payment of service tax in respect of services where the person liable to pay tax is the service recipient. Since, as a recipient of taxable service, the appellant had utilized the cenvat credit; such utilization was disputed by the department. Since, the period of utilization of cenvat credit is after the amendment of sub-rule (4) ibid, the case of the appellant squarely falls under such amended provisions and the other provisions of the statute cannot be relied upon or referred to for taking a contrary view in favour of the appellant that as a recipient of taxable service, they were eligible to utilize the cenvat credit for payment of service tax on the output services. Appeal dismissed - decided against appellant. 2021 (12) TMI 622 Refund of service tax - refund rejected on the ground of time limitation - HELD THAT:- The decision of the Hon ble jurisdictional High Court of Judicature at Madras in the case of M/S. 3E INFOTECH VERSUS CUSTOMS, EXCISE SERVICE TAX APPELLATE TRIBUNAL, COMMISSIONER OF CENTRAL EXCISE (APPEALS-I) [ 2018 (7) TMI 276 - MADRAS HIGH COURT] is binding, wherein it was held that when service tax is paid by mistake a claim for refund cannot be barred by limitation, merely because the period of limitation under Section 11B had expired. The rejection of refund is unsustainable - Appeal allowed - decided in favor of appellant. 2021 (12) TMI 621 Reversal of CENVAT Credit - reversal in the Books of Accounts instead of transfer of the said amount to the electronic ledger is a valid reversal or not - whether the Books of accounts of the appellants / private record can be considered as record admissible into evidence or as to whether it is statutory document? - HELD THAT:- Hon ble Madras in the case of BNP PARIBAS GLOBAL SECURITIES OPERATIONS PRIVATE LIMITED VERSUS THE ASSISTANT COMMISSIONER OF GST CENTRAL EXCISE [ 2021 (4) TMI 783 - MADRAS HIGH COURT] has held that for the transaction pertaining to the period prior to 30.6.2017, the assessee since could not file the ST 3 return post July, 2017, any reversal/ credit shown in his private accounts/ the Books of accounts become the statutory documents as admissible in evidence. Further perusal of this decision shows that the facts of the said case were identical to that of present one in the terms that the appellants in both the cases are exporter of the services. Hon ble High Court had held that refund of Cenvat Credit to such an exporter of services in terms of Rule 5 of Cenvat Credit Rules, 2004 read with Notification No. 27/2012 date 18.6.2012 is the denial of legitimate export incentive coming to the exporter of services. Same cannot be denied merely because of intervening changes. The perusal of this provisions makes it abundantly clear that refund of any duty or tax which was paid for the period prior to coming into force of the GST law can be claimed even after the appointed date of 01.07.2017. The provision itself makes it clear that such claim is to be dealt with in terms of earlier existing law - Apparently and admittedly, there is no reason showing that the refund was otherwise not available to the appellant. Second proviso of this provision is abundantly clear that the amount which stand entered otherwise on the appointed date, refund thereof shall not be allowed. These observations about section 142 of the GST Act, are sufficient to hold that Commissioner (Appeals) has failed to appreciate the provisions as a whole and has wrongly held that in terms of section 142 the impugned refund was not allowed. The Commissioner (Appeals) has miserably failed to observe that with the introduction of the GST Act filing of ST-3 return was absolutely done away due to which there was no other possible way with the appellant to debit and to reflect the existing credit in its ST-3 return. The Notification No. 27/2012 dated 18.6.2012 with its condition No 2(h), was applicable only during the period prior to GST regime. Since the GST regime has done away with the ST 3 return, there remain no provision in GST system to reflect the refund claim in the CENVAT credit balance. The only option was to show its reversal in the Books of accounts. Such reversal still amounts to non availment of Credit and refund whereof remains eligible. In the present case, the reversal was shown in the Books of Accounts prior to filing of refund claim, there seems no reason, in my opinion, for rejection of such a claim - Tribunal, Bangalore in another case of M/S INGUEST TECHNOLOGIES SOFTWARE PVT LTD VERSUS COMMISSIONER OF CENTRAL TAX, BANGALORE NORTH [ 2019 (6) TMI 565 - CESTAT BANGALORE] has allowed the refund clam of such transitional period when the reversal from Books of accounts was shown even after filing of refund. The rejection of two refund claims for the period January, 2017 to March 2017 and April, 2017 are held to have wrongly been rejected - Appeal allowed - decided in favor of appellant. 2021 (12) TMI 620 Condonation of delay in filing appeal - appeal has been rejected as being filed beyond the stipulated period without any genuine reason - Section 123 of the Finance ( No.2) Act, 2019 - HELD THAT:- It is observed that the appeal has not been filed within a period of 2 months /60 days as has been stipulated statutorily in terms of section 85 (3)A of the Finance Act. Apparently and admittedly, it has been filed within a period of 90 days i.e. within the permissible time limit in terms of proviso to the provisions. Perusal of section 123 for the said scheme under Finance Act shows that since the impugned order in original was announced just two days prior the locking date of the scheme i.e. 30.06.2018, hence to avail the benefit of said scheme, appellant should fall under said clause (e) of section 123 of the Finance Act. The appellant otherwise could not fall under any of the categories in clause (a) to (d) of section 123 - Perusal of these provisions makes it clear that to challenge the Order-in-Original of 28.6.2019, the appellant should not have filed the appeal before Commissioner (Appeals). This particular perusal makes it clear that till the scheme was announced same could not have been opted for. Hence till 01.09.2019, the time taken has genuinely been taken by the appellant. Catena of decisions have already held that there cannot be straight jacket formula to define the word sufficient cause or which can be applied to all cases without reference to the peculiar facts and facts and circumstances of a given case. Further, a liberal interpretation of the provisions has already been appreciated to be taken while deciding the case to condone delay for a sufficient cause. In the present matter since there is no substantial delay nor it was beyond such period as was not condonable by Commissioner (Appeals). Also department has brought nothing on record to falsify the submissions of the appellant as far as the sufficient cause shown is concerned. No deliberate delay nor any malafide intent is apparent on part of the appellant - Commissioner (Appeals) has failed to observe proviso to section 85 (3) A of the Finance Act, 1994. Commissioner (Appeals) is directed to decide the matter on merits after condoning the delay of 28 days - the appeal is hereby allowed by way of remand. 2021 (12) TMI 619 Abatement of appeal after the death of the sole proprietor of sued sole proprietorship concern - Rule 22 of Customs, Excise and Service Tax Appellate Tribunal (Procedure Rules), 1982 - HELD THAT:- Section 4 (3) (a) of Central Excise Act where the definition of person is there in accordance to said definition sole proprietorship is the sole person and with his death the appeal even of Revenue has to abate. Further is observed that Rule 22 prescribes for a period of limitation of 60 days from the date of the death. The sole Proprietor of respondent assessee expired on 15.10.2020. The impugned request of abatement for the first time was raised on 11.11.2021. However, Hon ble Apex Court vide in IN RE: COGNIZANCE FOR EXTENSION OF LIMITATION [ 2021 (11) TMI 387 - SC ORDER] has ordered for exclusion of period w.e.f. 15 March, 2020 till 2nd October, 2021. After excluding the said period as directed by Hon ble Apex Court, the present application falls within the period of limitation prescribed under Rule 22 of CESTAT Procedure Rules. The appeal, accordingly, is hereby ordered to stands abated. Central Excise 2021 (12) TMI 618 Sabka Vishwas Legacy Disputes Resolution Scheme, 2019 - petitioner submits that the writ petitioner comes under the category 'Litigation' as appeals were pending as on 30.06.2019 - HELD THAT:- It is deemed appropriate to place on record appreciation of this Court for the fair approach taken by the learned Revenue counsel and the respondents. The first respondent shall issue a discharge certificate as sought for in the prayer in the writ petition either manually or electronically within eight weeks from today i.e., on or before 21.01.2022 - Petition allowed. 2021 (12) TMI 617 CENVAT Credit - input services - nexus of input services used in the factory, to the manufacturing process or not - Electrical Maintenance - Maintenance of 66 KVA Power line supplying power to plant - underground water used in utility and used by workmen - Maintenance of computer hardware on shop- floor, AMC charges for desktops, laptops, scanners, etc, used in the factory - AMC charges for datamax (barcode) Printers. Electrical Maintenance Service - credit denied on the ground that the service is a work contract which is excluded within the ambit of definition of input service - HELD THAT:- This was not the charge either in the show cause notice or finding in the Order-In-Original. From this ground the Learned Commissioner (Appeals) clearly erred in denying the credit. Moreover, this service was used for Electrical Maintenance which is directly related to the manufacturing activity of the appellant, therefore, the credit is admissible. Maintenance of 66KV power line supplying power to plant - HELD THAT:- The maintenance of 66KV power line supplying power to plant has also direct use in the manufacturing activity of the appellant s factory hence, the credit is admissible. Analysis of underground water used in utility and used by workman - HELD THAT:- This activity is to make the underground water usable by the human being. It is obligatory on the part of the manufacturer to provide treated water to their employee, therefore, it is in relation to the manufacture of final product hence, the credit is clearly admissible on this service. Maintenance of Computer Hardware on shop floor, AMC charges for Desktops, printers, Scanners, Laptop and FM service for resident engineers - HELD THAT:- The service of Maintenance of Computer Hardware on shop floor and AMC charges of various equipments such Desktops, printers and Scanners are for the purpose of manufacturing activity of the appellant and not for the personal use of the resident engineers. Merely because the engineers are resident it was wrongly presumed that all these services are for their personal use. When all the services were used within the premises of the factory it is clear that the said services are used in relation to the manufacture of final product, therefore, the credit is admissible. Appeal allowed - decided in favor of appellant. 2021 (12) TMI 616 Maintainability of appeal - proof of service of adjudication order delivered or not - HELD THAT:- To file appeal before the Commissioner (Appeals), the adjudication order is required to be delivered to the assessee and on receipt of the adjudication order, the assessee has to file appeal within 60 days of receipt of said order, the said period can be extended for another 30 days if the reasons explained by the assessee are found satisfactory. Admittedly, in this case, there is no proof of service of adjudication order on the appellant. In that circumstance, the date on which the appellant has received the adjudication order is the date of receipt of adjudication order i.e. 10.12.2020 and thereafter they filed appeal before the Commissioner (Appeals) on 15.2.2021. In that circumstance, the appellant has filed appeal before the Commissioner (Appeals) in time, the impugned order deserves no merit and accordingly the same is set aside. The Commissioner (Appeals) has not dealt with merits of the case, therefore, the matter is remanded back to the Commissioner (Appeals) to decide the issue on merits within 60 days of receipt of this order after affording a reasonable opportunity of hearing to the appellant - Appeal allowed by way of remand. CST, VAT & Sales Tax 2021 (12) TMI 615 Input tax credit - purchases made by the petitioner only after the date of cancellation of the registration - alternative remedy of appeal as per Section 51 of the Tamil Nadu Value Added Tax Act, 2006 - HELD THAT:- The facts on records indicate that the purchases were made by the petitioner long after the cancellation of the registration of Front Line Polymers on 04.01.2017 and one day after the cancellation of registration of Sri Kannan Chemicals on 22.07.2016. Therefore, there is no merits in this writ petition and it is liable to be dismissed. The petitioner is allowed to exercise the alternate remedy by filing a statutory appeal before the Appellate Commissioner within a period of 30 days from the date of receipt of copy of this order, subject to the petitioner depositing 25% of the disputed tax along with the appeal. Indian Laws 2021 (12) TMI 614 Validity of Arbitral Award - it is alleged that award is in excess of claim - Arbitrator exceeded the scope of reference or not - Arbitrator has rewritten the contract with respect to the amount payable which was specified in the contract or not - HELD THAT:- That the contractor was awarded the contract for maintenance, etc. The contract amount was for ₹ 5,26,59,688/. The rate of maintenance of the road as accepted was ₹ 12,000/per km per annum or ₹ 1,000/per km per month. The maintenance contract was valid up to 31.07.2010. When the contract was entered into, the contract was meant for only 3364 PCUS per day. However, due to diversion of traffic from Palwal Aligarh Road to the present road, the contractor was required to incur additional expenditure on the maintenance due to increase in the traffic and plying the additional commercial vehicles. When the statement of claim submitted by the contractor is seen, it is specifically stated by the claimant that the amount of ₹ 1,03,50,263/has been worked out up to May, 2007 and the details of expenditure beyond May, 2007 will be submitted during the course of hearing. It is specifically stated that expenditure incurred up to May, 2007 works out to ₹ 1,03,50,263/. Therefore, the amount awarded by the Arbitrator cannot be said to be in excess of the claim - the Arbitrator was justified in awarding the amount beyond the aforesaid periods and till the additional traffic was diverted due to the closure of Palwal Aligarh Road - the Arbitrator was justified in awarding the amount beyond the aforesaid periods and till the additional traffic was diverted due to the closure of Palwal Aligarh Road. The contractor was entitled to the loss on account of the additional expenditure incurred for maintenance of the road due to increase in the traffic because of the closure of the Palwal Aligarh Road and diversion of the traffic to the present road. Therefore, by no stretch of imagination it can be said that there was rewriting the terms of the contract as submitted on behalf of the appellant. The award passed by the Arbitrator awarding the amount/compensation at ₹ 45,000/per km per month up to January, 2008 under claim Nos.1 and 8 is hereby confirmed - Appeal allowed in part. 2021 (12) TMI 613 Seeking grant of bail - Smuggling - psychotropic substances - admissibility of confessional statement recorded under Section 67 of the NDPS Act - HELD THAT:- The impugned order cancelling the bail granted in favour of Bharat Chaudhary [A-4], is not sustanabile in view of the fact that the records sought to be relied upon by the prosecution show that one test report dated 6th December, 2019, two test reports dated 17th December, 2019 and one test report dated 21st December, 2019 in respect of the sample pills/tablets drawn and sent for testing by the prosecuting agency conclude with a note appended by the Assistant Commercial Examiner at the foot of the reports stating that quantitative analysis of the samples could not be carried out for want of facilities . In the absence of any clarity so far on the quantitative analysis of the samples, the prosecution cannot be heard to state at this preliminary stage that the petitioners have been found to be in possession of commercial quantity of psychotropic subtances as contemplated under the NDPS Act. In the absence of any psychotropic substance found in the conscious possession of A-4, mere reliance on the statement made by A-1 to A-3 under Section 67 of the NDPS Act is too tenuous a ground to sustain the impugned order dated 15th July, 2021 - SLP disposed off.
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F: Refund of IGST Charged and collected from Foreign Customer on Export o...

F: sales Against 0.1% GST- if export not done within 90 Days

F: PAYMENT TO CINE OR TV ARTISTS. LIABILITY UNDER RCM

A: Collection of Entry Fee from visitors for Temple Hall Exempt under GST

A: State-wise Professional Tax Payment Deadlines in India: A Comprehensiv...

A: Low tax effect in pending appeals- The administrative role to withdraw...

C: Clarification on the applicability of 3% amount on account of non-achi...

C: Suspension of inoperative SIONs

N: Amendment in the Export policy of Onions

N: Seeks to amend specified customs tariff notifications to exempt applic...

A: How to become a crorepati via SIP

C: Master Direction – Risk Management and Inter-Bank Dealings: Amendments

A: Roving Judgements!