TMI Tax Updates - e-Newsletter
February 8, 2021

Case Laws in this Newsletter:

GST Income Tax Customs Insolvency & Bankruptcy Service Tax Central Excise CST, VAT & Sales Tax Indian Laws

Articles

1. All about GSTR-9 & GSTR-9C for FY 2019-20

   By: pratish goel

News

1. 1st India-EU High Level Dialogue on Trade and Investment held

2. Four more States complete ease of doing business reforms; Get additional borrowing permission of ₹ 5,034 crore

3. Union Budget 2021-2022 will further enhance the Investment Ecosystem in the country: DPIIT Secretary

4. Monetary Policy Statement, 2020-21 Resolution of the Monetary Policy Committee (MPC) February 3-5, 2021

Notifications

Customs

1. G.S.R. 104 (E) - dated 5-2-2021 - Cus

Corrigendum - Notification No. 11/2021-Customs, dated the 1st February, 2021

2. G.S.R. 101(E) - dated 5-2-2021 - Cus

Corrigendum - Notification No. 02/2021-Customs, dated the 1st February, 2021

3. 16/2021 - dated 5-2-2021 - Cus

Seeks to amend notification Nos. 96/2008-Customs, 57/2009-Customs, 101/2007-Customs and 50/2018-Customs consequential to imposition of Agriculture Infrastructure and Development Cess (AIDC).

SEZ

4. S.O. 519 (E) - dated 1-2-2021 - SEZ

Amendment in Notification No. S.O.2067(E) dated 28th June, 2017

Highlights / Catch Notes

GST

• Anticipatory Bail Granted in Fake Invoice Case; Default Bail Right After 60 Days Without Complaint Filing.

  Case-Laws - HC : Grant of Anticipatory Bail - fake invoices through various firms, floated/ managed either directly by them or by putting convenient people to manage their affairs - It is thus evident that the respondent does not propose to file a complaint within 60 days and after 4 days the petitioner would in any case be entitled to the default bail as a matter of right - Bail granted subject to conditions - HC
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• Writ-applicant must reply to contest goods confiscation, penalty under GST Act Section 130; can appeal u/s 107.

  Case-Laws - HC : Confiscation of goods or conveyance and levy of penalty u/s 130 - The writ-applicant shall file his reply and shall make his case good for the purpose of getting notice discharged in MOV-10. Ultimately, if the final order of confiscation is passed under Section130 of the Act, then the writ-applicant will have the remedy to file an appeal under Section 107 of the Act. - HC
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Income Tax

• High Court rules no TDS required u/s 194C for advertising agency payments due to principal-to-principal transactions.

  Case-Laws - HC : TDS u/s 194C - commission to the newspaper vendors and to advertisement agent - the dealings between the Assessee and the advertising agencies were on a principal-to- principal basis and, therefore, there was no element of commission involved. Since there was no element of commission involved or paid by the Assessee to such agencies there was no question of any deduction of tax at source on such amounts. - HC
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• High Court Rules ITAT Unjustified in Overturning Commissioner's Order u/s 263 for Non-Application of Mind.

  Case-Laws - HC : Revision u/s 263 - This is also not a case where the Commissioner failed to undertake inquiry in the course of the exercise of revisional jurisdiction. It is only in pursuance to such inquiry that the Commissioner recorded a categorical finding that the assessee had not even claimed any fees in respect of any alleged technical or management services rendered by it. This is not a case of some plausible view but this is a case where the decision was a result of non-application of mind to the materials on record. - ITAT was not justified in interfering with the CIT's order - HC
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• CIT's Revisionary Powers u/s 263 Deemed Inapplicable; Impugned Order Set Aside Due to Explanation 2 Misfit.

  Case-Laws - AT : Revision u/s 263 - Even though the ld. CIT was rightfully entitled to take recourse to the Explanation 2, but thereafter he needed to bring the case with in any one or more of the four clauses given therein. It is palpable that none of the four clauses of the Explanation 2 applies to the case under consideration. The sequitur is that the revisionary power, even under the enlarged scope of the Explanation 2, was not legally exercisable. Ex consequenti, we set aside the impugned order. - AT
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• Court Examines if Unrecovered Property Advances by Taxpayer are Capital or Revenue Loss for Tax Purposes.

  Case-Laws - AT : Capital or revenue loss - non-recovery of advances given by the assessee for acquiring immovable property - Classification of this expenditure as capital in nature in its books of accounts of the assessee for the purpose of Companies Act does not ipso facto make that expenditure as capital expenditure for the purpose of income tax. - AT
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• Discrepancy in Stock Records Validates Income Addition; Claims of Coercion in Statement Signing Rejected.

  Case-Laws - AT : Unexplained closing stock - discrepancy of the actual stock and the stock as recorded in the books of account - The survey was done in the presence of the assessee and hence, it cannot be alleged that the assessee was forced to sign the recorded statement - Additions confirmed - AT
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• Section 69: Assessee Proves Fund Sources for Land Purchase, Meets Burden of Proof Requirements Successfully.

  Case-Laws - AT : Additions made u/s 69 towards the source of purchase of land - On merits, we find that once the summons have been issued and these persons have appeared and given their statements before the AO wherein they have confirmed that they have advanced the amount to the assessee towards purchase of the agricultural land and has also disclosed the source of their earnings/savings, the assessee has discharged the necessary onus cast on her in terms of identity, creditworthiness and genuineness of the transactions - AT
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• Industrial land purchases taxed as income u/s 56(2)(vii)(b)(ii); agreement date sets stamp duty value.

  Case-Laws - AT : Purchase of two industrial plots of land - addition as Income from other sources u/s 56(2)(vii)(b)(ii) - the fact that the proviso is applicable in the instant case does not take the impugned transactions of purchase of industrial plot of lands out of the applicability of provisions of section 56(2)(vii)(b)(ii) of the Act as so contended by the ld. AR. All that it provides is that it shifts the determination of stamp duty value as on the date of agreement rather than the date of registration of the sale deed. - AT
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• Assessment Reopening u/s 147 Over Excess Deduction Claim Invalid; Order u/s 143(3) Annulled.

  Case-Laws - AT : Reopening of the assessment u/s 147 - excess claim of deduction u/s.80JJAA - reopening of assessment is not based on sound footing and hence the impugned assessment order framed u/s.143(3) r.w.s. 147 of the Act, is illegal and liable to be quashed - AT
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• Landowner's Deduction Claim Denied u/s 80IB(10) Due to Lack of Developmental Activities Evidence.

  Case-Laws - AT : Deduction u/s. 80IB(10) - housing projects - land owner - It has not established either before the lower authorities or before us that it had undertaken developmental activities either as a Owner or as a Developer or Jointly. As a owner of the land , there was no risk to the assessee and its interest was in the realisation of the potentialities by way of encashing the past investment made etc. - AT
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• Penalty u/s 272A(2)(k) of Income Tax Act unjustified due to lack of necessary details causing delays.

  Case-Laws - AT : Levy of penalty u/s. 272A(2)(k) - delay in preparation and delivery to the prescribed returns if the prescribed form is caused on account of non-availability of the details such as PAN, address further valid tee of challans paid, Generation of CSI file etc. - the levy of penalty u/s. 272A(2)(k) of the Act is not justified in the present facts of the case - AT
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Customs

• Petitioner entitled to refund of gold's value at seizure with 7.5% interest; market value claim denied.

  Case-Laws - HC : Refund claim of market value of gold - Here is the case where the departmental action of confiscation of seized goods came to be set aside by the CESTAT but by the time the Tribunal passed such an order the goods were already disposed of. The petitioner therefore can claim reasonable interest on such principal sum which must be refunded to him. - While not accepting the claim of the petitioner for granting him the market value of the gold on the date of application made by him to the department, it is provided that the value of the gold as estimated at the time of seizure will be paid to the petitioner along with simple interest @ 7.5% per annum - HC
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• Penalty Dropped Due to Lack of Allegations on Test Certificate; Appellant Acted as Bona Fide Facilitator.

  Case-Laws - AT : Levy of penalty - There is no allegation in the show cause notice in respect of the test certificate produced by the appellant. The mere allegation is that the appellant being an experienced person should know the difference between prime and secondary/defective material. The act of filing the test certificate shows that the appellant has no mens rea and filed the documents being a bonafide facilitator - No penalty - AT
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Case Laws:

• GST

• 2021 (2) TMI 243
  Grant of Anticipatory Bail - fake invoices through various firms, floated/ managed either directly by them or by putting convenient people to manage their affairs, without any corresponding supply of goods and services - offence punishable under Section 132 (1)(i) of the Central Goods and Services Tax Act, 2017 - HELD THAT:- The petitioner has been in custody now for 56 days. The maximum sentence provided for the offence alleged against the petitioner is imprisonment for a period of five years, therefore the learned Chief Metropolitan Magistrate is required to take congnizance on the complaint is required to be filed in 60 days. On a query put to the Senior Investigating Officer of the respondent Mr. Neeraj, as to whether the respondent is likely to file a complaint within four days, he very fairly states that since around 100 hard-drives have been recovered from the offices of the petitioner and his brother, the same are required to be analyzed and a detailed investigation is required to be carried out to find out the number of fake firms, the complete transactions carried out as also the number of beneficiaries of the fake bills and invoices generated by the petitioner and the co-accused. He further states that a comprehensive complaint cannot possibility be filed in four days - It is thus evident that the respondent does not propose to file a complaint within 60 days and after 4 days the petitioner would in any case be entitled to the default bail as a matter of right. The petitioner is directed to be released on bail on his furnishing a personal bond in the sum of Rs.1 lakh with one surety bond of the like amount subject to the satisfaction of the learned CMM/Duty Magistrate concerned, further subject to the condition that the petitioner will not leave the country without the prior permission of the Court concerned - Application allowed.

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• 2021 (2) TMI 242
  Profiteering - Section 171 of the Central Goods and Service Tax Act, 2017 - HELD THAT:- Issue notice. Mr. Manish Mohan, CGSC, accepts notice on behalf of Respondent No. 1. Mr. Ravi Prakash, Standing Counsel, accepts notice on behalf of Respondent No. 2 3. Ms. Sonu Bhatnagar, Sr. Standing Counsel with Ms. Venus Mehrotra, Advocate, accept notice on behalf of Respondent No. 4. They pray and are granted four weeks to file their respective counter affidavits. Rejoinders, if any be filed with two weeks thereafter. List on 20th May, 2021 for hearing.

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• 2021 (2) TMI 241
  Detention of goods alongwith the vehicle - no E-way bill with the driver for the transit of the goods from Zundal to Changodar - HELD THAT:- We should not interfere at the stage of investigation, which is in progress. We expect the writ applicant to participate and cooperate in the investigation initiated by the respondents. However, with a view to balance the equities, we intend to pass an interim order releasing the goods and the vehicle upon the writ applicant making deposit of the amount towards the tax and penalty i.e. Rs. 2,28,332/. Accordingly, we direct the respondent No.2 to release the goods and the vehicle upon deposit of Rs. 2,28,332/at the earliest. Post this matter on 10.03.2021.

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• 2021 (2) TMI 240
  Interest on the delayed payment - precise argument of the learned counsel therefore is that while the petitioner has already filed the appeals against the main orders of assessment before the appellate authority, which are still pending, the respondent No.2 could not have initiated the parallel proceedings for recovery of the interest on delayed payment of tax, as the proper officer under the State Act i.e. MPGST Act has already assumed the jurisdiction - Section 50 of the Madhya Pradesh Goods and Services Tax Act, 2017 - HELD THAT:- Be that as it may, if the petitioner has not already filed reply to the show cause notice, it would be open for the petitioner to file reply to the impugned show cause notice raising the aforesaid objection. We direct that the respondent No.2, before proceeding further on the impugned show cause notice, shall first deal with and decide the aforesaid objection of the petitioner in accordance with law. Petition disposed off.

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• 2021 (2) TMI 239
  Release of seized vehicle alongwith goods - Section 130 of the Central Goods and Services Act, 2017 - HELD THAT:- It shall be open for the writ applicant to point out the recent pronouncement of this Court in the case of SYNERGY FERTICHEM PVT. LTD VERSUS STATE OF GUJARAT [ 2020 (2) TMI 1159 - GUJARAT HIGH COURT] where it was held that The writ applicants availed the benefit of the interim order passed by this Court and got the vehicle, along with the goods released. The proceedings, as on date, are at the stage of show cause notice, under Section 130 of the Central Goods and Services Act, 2017. It is now for the applicant to make good his case that the show cause notice, issued in Form GSTMOV10, deserves to be discharged - application disposed off.

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• 2021 (2) TMI 238
  Confiscation of the goods and conveyance - section 129 of the CGST Act, 2017 - HELD THAT:- The writ-applicant has been served with a show-cause notice under Section130 of the Act calling upon him to show-cause as to why the goods and conveyance should not be confiscated for the alleged contravention. One of the grounds for the issue of notice in Form GST MOV-10 is that the very same invoice and E-way bills were used multiple times to transport the goods. The writ-applicant should now appear before the authority concerned and participate in the confiscation proceedings - this writ-application stands disposed of.

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• 2021 (2) TMI 237
  Confiscation of goods or conveyance and levy of penalty under Section 130 of the GST Act - Section 129(1) of the GST Act - HELD THAT:- It is expected that the writ-applicant now to participate in the proceedings initiated by the authority for the purpose of confiscation of the goods and the vehicles. The writ-applicant shall file his reply and shall make his case good for the purpose of getting notice discharged in MOV-10. Ultimately, if the final order of confiscation is passed under Section130 of the Act, then the writ-applicant will have the remedy to file an appeal under Section 107 of the Act. This writ-application stands disposed of.

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• Income Tax

• 2021 (2) TMI 235
  Exemption u/s 11 - application for registration under Section 12AA rejected - assessee is not involved in any charitable activity to qualify for registration under Section 12AA - HELD THAT:- Even if the assessee is engaged in the category of activity of object of general public utility , they are entitled for registration under Section 12A. Therefore, we are of the considered view that the assessee can claim registration under Section 12A by categorising the activity of the assessee as object of general public utility . In these circumstances, we do not find any error or irregularity in the order passed by the Income Tax Appellate Tribunal. We find no ground much less any substantial question of law to interfere with the order passed by the Income Tax Appellate Tribunal. The appeal is liable to be dismissed.

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• 2021 (2) TMI 234
  Denial of natural justice - Tribunal hearing the appeal exparte qua the assessee without affording reasonable opportunity of being heard - Representation through legal hier - as contended that the Tribunal ought to have afforded a reasonable opportunity for the appellant to ventilate his grievances - HELD THAT:- As on the date of hearing before the Income Tax Appellate Tribunal Sri Shivakumar Thanwardas Wadhwa was no more and his son who is the appellant had sent a request letter. Tribunal failed to note that Shivkumar Thanwardas Wadhwa had expired in the year 2013 and therefore, he could not have appear nor execute any power of attorney. The very fact that the letter which was signed by Harish Wadhwa, was not considered by the Tribunal on the pretext that there was no power of attorney executed by Shivakumar Thanwardas Wadhya shows that without application of mind by the Tribunal, the matter has been disposed of by the Tribunal and also without properly adverting to the relevant facts involved in the case. We are satisfied that the order passed by the Tribunal needs to be set aside and proper opportunity to be afforded to the appellant herein to ventilate his case before the Tribunal. Accordingly, following order is passed without expressing any opinion on the substantial questions of law raised in the appeal.

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• 2021 (2) TMI 233
  TDS u/s 194C - commission to the newspaper vendors and to advertisement agent - Addition u/s 40(a)(ia) - HELD THAT:- In the present case, the Commissioner (Appeals), as well as the ITAT, have recorded concurrent findings of fact that the transactions or the dealings between the Assessee and the newspaper vendors were on a principal-to-principal basis. There was no commission paid by the Assessee to the newspaper vendors, but the Assessee merely extended a trade discount to the newspaper vendors. The newspaper vendors were, thus, not agents of the Assessee in the facts and circumstances of the present case. The circumstance that the Assessee would repurchase the unsold papers, was not sufficient to conclude that there was no concluded sale in the favour of the newspaper vendors, in the first instance. The findings of fact on this aspect, as concurrently recorded, do not suffer from any perversity, to raise any substantial question of law and warrant interference with the same. This is yet another reason as to why the first substantial question of law cannot, in the facts and circumstance of the present case, be decided in favour of the Revenue and against the Assessee Addition towards payments of commission to Advertising Agents where TDS was not deducted under section 40(a)(ia) r.w. s.194C - whether when commission or brokerage is retained by the agents and not remitted to the principal, it amounts to constructive payments of the same to him by principal and TDS needs to be made from such amount? - HELD THAT:- CBDT Circular No.5/2016 dated 29/2/2016 takes express cognizance of the rulings of Allahabad High Court in Jagran Prakashan Ltd. [ 2012 (5) TMI 488 - ALLAHABAD HIGH COURT] and proceeds to clarify that no TDS is attracted on payments made by television channels/newspaper companies to the advertising agency for booking or procuring of or canvassing for advertisements. The CBDT circular further clarifies that commission referred to in question No.27 of the Board s Circular No.715 dated 8.8.95, does not refer to payments by media companies to advertising companies for booking of advertisements, but to payments for engagements of models, artists, photographers, sportsperson, etc. and therefore, is not relevant to the issue of TDS referred to in this Circular. The aforesaid means that the Circular No.715 dated 8.8.1995 cannot be interpreted in the manner suggested by Ms. Linhares, any longer. The CBDT itself has clarified the position in its subsequent Circular No.5/2016 dated 29/2/2016 and such clarification is binding upon the Revenue which cannot now take up some contrary position in the matter. Besides, both the Commissioner (Appeals), as well as the ITAT, have concurrently recorded findings of fact that the dealings between the Assessee and the advertising agencies were on a principal-to- principal basis and, therefore, there was no element of commission involved. Since there was no element of commission involved or paid by the Assessee to such agencies there was no question of any deduction of tax at source on such amounts. No perversity was pointed out in such concurrent findings of fact, to warrant any interference with the same in this appeal. Therefore, even the second substantial question of law is required to be answered against the Revenue and in favour of the Assessee

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• 2021 (2) TMI 232
  Revision u/s 263 - allowability of the expenditure and carry forward of the losses - ITAT quashed the order of CIT - HELD THAT:- According to us, this is not a case where the Commissioner has not concluded that the order of the AO in the aforesaid circumstance was not erroneous or that it was not prejudicial to the interest of the Revenue. The only reason the Commissioner has used the expression prima facie is that the Commissioner, intended to offer the assessee a reasonable opportunity of being heard by the AO, in the course of a detailed inquiry accompanied by due application of mind by the AO, in pursuance of a remand order. This is also not a case where the Commissioner failed to undertake inquiry in the course of the exercise of revisional jurisdiction. It is only in pursuance to such inquiry that the Commissioner recorded a categorical finding that the assessee had not even claimed any fees from M/s. Paradeep Phosphates Ltd. in respect of any alleged technical or management services rendered by it. This is not a case of some plausible view but this is a case where the decision was a result of non-application of mind to the materials on record. Taking into consideration the reasoning of the CIT, we feel that the ITAT was not justified in interfering with the CIT s order, since, the twin conditions prescribed under Section 263 of the said Act were fulfilled. Besides, the CIT, by the impugned order, had quite fairly, granted the assessee an opportunity of being heard whilst directing the AO to verify the claim of the assessee in respect of the allowability of the expenditure and carry forward of the loss in accordance with law. In similar circumstances in the case of Daniel Merchants P. Ltd. [ 2017 (12) TMI 476 - SUPREME COURT] upheld that order of the Commissioner which had directed the AO to carry a thorough and detailed inquiry. Decided in favour of the Revenue and against the assessee.

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• 2021 (2) TMI 231
  Treatment of gain arising on sale of shares - Business income or capital gain - period of holding of shares - HELD THAT:- It is not in dispute that the shares of M/s. Lee Edges were purchased by the assessee in the Financial Year 2003-04 and those of M/s. Shaw Wallace Breveries Ltd., were purchased in the Financial Year 2001-02 were unlisted shares. These shares were sold in Financial Year 2004-05. These shares were held for more than 12 months in both the cases. The admitted position with regard to treatment in the books of accounts is that the shares have been treated as investment and not as stock-in-trade. In the light of the CBDT s Circulars referred to above which are in modification of Circular No.4/2007 dated 15.06.2007, we are of the view that the CIT(A) was justified in coming to the conclusion that the gain on sale of shares has to be regarded as LTCG. As already observed, the only reason given by the AO for coming to the conclusion that income on sale of shares has to be regarded as business income is due to the fact that the cost of acquisition of the shares was less and the sale proceeds of those shares were very high and therefore the gain in question should be regarded as income from business. This approach of the AO is contrary to the tests laid down in the several Circulars in particular Circular No.4/2007. In the light of the subsequent Circulars pointed out above, we are of the view that the income on sale of shares has to be regarded as LTCG. We therefore uphold the order of CIT(A). In view of the above conclusion in the appeal of the Revenue, we are of the view that no adjudication is necessary in so far as the C.O. filed by the assessee is concerned. Accordingly, the same is dismissed.

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• 2021 (2) TMI 230
  Revision u/s 263 - Income taxable in India or not? - assessee is a foreign company incorporated under the laws of Delaware, United States of America (USA) - sum paid to the assessee towards Head Quarter service fee, which was claimed by the assessee to be not chargeable to tax in India because of it not having any Permanent Establishment (PE) in India - CIT opined that the service charges received by the assessee from NWIL were in the nature of Royalty/Fees for included services as per the DTAA - HELD THAT:- AO applied his mind to the fact situation obtaining before him and impliedly relying on the assessment order for the immediately preceding assessment year, accepted the assessee s claim for the current year too. We fail to comprehend as to how such an assessment order can be construed as erroneous as well as prejudicial to the interest of Revenue for not having included Rs. 9.14 crore in the total income, when the Department itself accepted the same as not chargeable to tax for the immediately preceding assessment year. CIT took support from the assessment order passed for the assessment year 2014-15, when it was for the first time that the AO disputed non taxability of the amount of Head Quarter service fees and included the same in the total income. Greatly enthused by such an assessment order, the ld. CIT swung into action and initiated revisionary proceedings for the assessment year under consideration overlooking the fact that the assessment order for the A.Y. 2014-15 was passed on 06-02-2017, that is, almost two years after the passing of the assessment order for the year under consideration. When the order for the immediately preceding assessment year passed u/s.143(3) treating the amount of Head Quarter fees as not chargeable to tax was available on record before the AO, in our considered opinion, he was well justified in adopting such a possible view on the non-taxability of the amount for the year under consideration as well An assessment order shall be deemed to be erroneous and prejudicial to the interests of the revenue, if, in the opinion of the Principal Commissioner or Commissioner, the assessment order is deficient on any one or more of the four counts. The words `if, in the opinion of the Principal Commissioner or Commissioner , used in the opening part of the Expl. 2 before referring to four situations as discussed in clauses (a) to (d), do not denote any arbitrary, subjective or unsubstantiated opinion of the CIT. Such an opinion as to the prevalence of one or more of such situations must be objective, logical and tenable in law. If albeit the Pr. CIT or CIT opines about the existence of one of the four clauses, but, on the facts and in the circumstances of the case, the same is non-existent, then the formation of such an opinion cannot be countenanced. To put it differently, the existence of one or more of the four situations discussed in the clauses (a) to (d) is a sine qua non for exercise of the jurisdiction under the Explanation 2. Even though the ld. CIT was rightfully entitled to take recourse to the Explanation 2, but thereafter he needed to bring the case with in any one or more of the four clauses given therein. It is palpable that none of the four clauses of the Explanation 2 applies to the case under consideration. The sequitur is that the revisionary power, even under the enlarged scope of the Explanation 2, was not legally exercisable. Ex consequenti, we set aside the impugned order. The revision in this case has been held to be not valid because the AO took a possible view. We clarify as not having expressed any opinion on the merits of the case as to whether or not the amount of Head Quarter service fees is chargeable to tax in the hands of assessee, which aspect will be considered and determined as and when it comes up for hearing - Decided in favour of assessee.

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• 2021 (2) TMI 229
  Addition u/s 68 - assessee has received share premium and share capital during the year from 18 parties - HELD THAT:- As far as the additions in the case of Sh. Sanjeevji, Sh. Ajay Singh, Sh. Hanumat Prasad Nautiyal, Sunil Shastri, Sh. Virender Arya, Sh. Sulekh Arya, Sh. Suresh Arya, Sh. Narendra Arya and Mahendra Arya are concerned, CIT(A) has inter alia noted that in all the aforesaid case, the amounts was received in cash and the other documents like the contention of income being from agricultural activities was not supportive of their contentions. As noted that the documents furnished did not prove the creditworthiness and genuineness of transactions which has not been found to be incorrect/ false, we find no reason to interfere with the order of CIT(A) to that extent. Addition of the amoun from Sh. Suman Arya we find that CIT(A) has given a finding that the amount was paid by cheque/ bank transfer, she was employed as a teacher and had total income of Rs. 3,26,334/-. In such a situation we find there was no justification for holding only Rs. 1 lakh to be explained and balance Rs. 2 lakh to be unexplained. We therefore, hold that the addition of Rs. 2 lakh was not warranted in this case. We therefore direct its deletion. As far as addition of amount received from Sh. Jasbir Singh is concerned, we find that CIT(A) has given a finding that his confirmation, bank statement evidencing bank transfer is on record but since he had not given source of the money, the conditions stipulated u/s 68 have not been complied. We do not agree with the reasoning of CIT(A). When the fact of confirmation, bank transfer and bank statement of the lender of the money has not been found to be incorrect, it cannot be concluded the genuineness of transaction to have not been established. In such a situation we are of the view that no addition was called for in his case

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• 2021 (2) TMI 228
  Disallowance u/s 14A r.w.r. 8D - assessee in the revised return of income has excluded 0.5% of average value of investments - HELD THAT:- Section 14A disallowance was rightly claimed by the assessee and the CIT(A) has properly made a partial allowance of the said claim. As per Section 14A read with Rule 8D(2), those investments which have actually yielded exempt income during the relevant year, shall alone be taken into consideration and thus was rightly excluded while determining average value of investments under Rule 8D(2). CIT(A) observed that the assessee claimed deduction on interest paid for taking IT equipment on Finance lease for period of 36 months. CIT(A) held that in view of decisions of ACB India Ltd. Vs. ACIT [ 2015 (4) TMI 224 - DELHI HIGH COURT] and CIT(A) vs. Holcim India [ 2014 (9) TMI 434 - DELHI HIGH COURT] claim of deduction under Rule 8D(2) (ii) was upheld. CIT(A) further observed that claim of deduction of Rs. 3,71,603/- u/s 37(1) on interest paid to HP Financial Services (India) Pvt. Ltd. for taking IT equipment on financial lease for period of 36 months being specific purpose borrowings as treated under Rule 14A read with Rule 8D(2)(ii). Thus, CIT(A) made total disallowance u/s 14A read with Rule 8D accordingly. Thus, Ground No. 1 of Revenue s appeal is dismissed. Addition u/s 37 - expenses in connection with new line of business - AR submitted that from the books of accounts and the balance-sheet it was clearly mentioned that from October 2011, the assessee has sought the transaction related to borrowing to the subsidiary companies and, therefore, the expenditure was rightly claimed u/s 37(1) - HELD THAT:- Fact remains undisputed that out of total lease rental expense of Rs. 52,79,02,826/-which was incurred during the present assessment year was recovered by the assessee company from the subsidiary company amounting to Rs. 47,59,99,859/- and balance amount was incurred by the assessee towards rendering support service to subsidiaries companies - assessee company also incurred rental expenses towards providing leased accommodation to its employees and the copies of agreements entered between the landlord and the assessee company was examined by the CIT(A) which was totally overlooked by the Assessing Officer. As regards electricity and water expenses along with repair and maintenance expenditure, the same were also demonstrated by the assessee company with the details before the CIT(A) and the Assessing Officer that these are allowable expenses under Section 37(1) of the Act. The CIT(A) has given a detailed finding. Thus, there is no interference of the finding of the CIT(A). - Decided against revenue.

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• 2021 (2) TMI 227
  Financial charges disallowance - allowable business expenses or not? - HELD THAT:- Case file suggests that the instant issue of the assessee being treated as mere name lender for its group concern is no more res integra. This tribunal s co-ordinate bench s decision [ 2017 (7) TMI 33 - ITAT HYDERABAD] has dealt the financial charges are utilised for the purpose of business only. We are prima-facie satisfied that the financial charges cannot be disallowed. However, AO has not given any finding whether the funds are really diverted to sister concerns, out of the funds availed due to discounting of bills. There is no distinction on facts forthcoming in the case file. We thus follow the judicial consistency in these facts and circumstances and uphold the CIT(A) s order deleting financial charges disallowance.Revenue s appeal is dismissed.

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• 2021 (2) TMI 226
  Capital or revenue loss - non-recovery of advances given by the assessee for acquiring immovable property in carrying out the business activities of the assessee - HELD THAT: In the present case, the loss has direct nexus with carrying on business and is incidental to the business activity of the assessee wherein immovable property is stock in trade to the assessee. The assessee s business activity is dealing in Real Estate. Since there is a direct and proximate nexus with the assessee and the loss is incidental to the business of the assessee. The deduction has to be granted to the assessee u/s. 37 - One more argument was advanced by the ld.DR that the assessee treated the amount as capital loss in its books of accounts and the same was reflected in the P L Account. The assessee might have treated this loss as capital expenditure in regular books of accounts maintained and for fairly disclosing financial status of the assessee, as required by law. Capitalization of this expenditure in the books of accounts alone was not the decisive factor for examining the expenditure for the purpose of income tax. The name given to an expenditure is a nomenclature in the books of accounts is not the final test to decide the exact nature of expenditure for the purpose of income tax. Classification of this expenditure as capital in nature in its books of accounts of the assessee for the purpose of Companies Act does not ipso facto make that expenditure as capital expenditure for the purpose of income tax. Hence we are of the view that the non-recovery of advances given by the assessee for acquiring immovable property in carrying out the business activities of the assessee had to be treated as business loss instead of capital loss and to be allowed u/s. 37 - Decided in favour of assessee.

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• 2021 (2) TMI 225
  Condone the delay in filing the appeal - order passed by the assessing officer under section 272A(1)(d) - HELD THAT:- Admittedly, the assessee s appeal has not been disposed of by adjudication on merits of the issues raised before the CIT(A). Further as mentioned hereinabove the assessee had gone in VSVA in regard to which were therefore on account of these peculiar facts we are condoning the delay in filing the appeal before the Commissioner appeal. In respect of the other appeals as mentioned during the course of argument by the assessee as well as by the revenue that the order under section 143 (3)was passed by the assessing officer. In view of the above, we are of the opinion that the delay in filing the appeal is before the Commissioner appeal is required to be condoned. We are of the considered opinion that the interest of substantial justice will be well served if the impugned order of the CIT(A) dated be set aside. We, therefore, set aside the aforesaid impugned order of the CIT(A) and restore the matter to his file for fresh hearings, examination and adjudication of the issues raised by the assessee in the appeal before him. Needless to add, the CIT(A) shall afford the assessee adequate opportunity of being heard and to file details/submissions required, which shall be duly considered before deciding the issues. The assessee is also directed to comply with and attend the hearings before the CIT(A). We will make it clear that we have passed the order in the present appeal on account of peculiar facts as mentioned hereinabove and the decision in these appeal shall not be treated as precedent in any other matters

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• 2021 (2) TMI 224
  Levying late fee u/s.234E - intimation u/s. 200A - AO empowerment to charge late fee u/s.234E for the period prior to 1.6.2015 - HELD THAT:- CIT(A) has followed various case law to hold that the impugned statutory provision, very much applies for the relevant previous year 2017-18. We thus find no reason to interfere in the impugned levy of late fee u/s.234E of the Act. - Decided against assessee.

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• 2021 (2) TMI 223
  Reopening of assessment u/s 147 - treating the donations received as anonymous donations and made the addition thereof u/s.115BBC which however was not forming a part of reasons recorded for issuance of notice u/s.147/148 - HELD THAT:- The Hon ble Jurisdictional High Court in the case of Commissioner of Income Tax-5, Mumbai Vs. Jet Airways (I) Ltd.[ 2010 (4) TMI 431 - HIGH COURT OF BOMBAY] has held that in such event, the Assessing Officer exceeds his jurisdiction and he has to assess or reassess in respect of that subject matter only which formed the subject matter to the reasons for which the notice u/s.147/148 was issued. It is definitely open to the Assessing Officer to assess or reassess any other income which he has reason to believe has escaped assessment but for that purpose, he has to issue separate notice to the assessee u/s.148 of the Act. In present scenario, when specific subject matter reasons recorded and notice issued u/s.147/148 of the Act was with respect to under utilization of income of the assessee for which there has been no addition made, but the Assessing Officer has made addition entirely on the different subject matter which was not comprising in that notice itself, in such scenario, the Assessing Officer has acted beyond his jurisdiction. Therefore, we do not find any reason to interfere with the findings of the Ld. CIT(Appeals) which is thereby upheld. - Decided against revenue.

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• 2021 (2) TMI 222
  Unexplained closing stock - discrepancy of the actual stock and the stock as recorded in the books of account of the assessee difference between the actual value of closing stock as on 23.3.2002 and the value of closing stock determined by the Department survey party - Contention of the assessee that the assessee makes the valuation of closing stock on the basis of purchase value of the materials and the department has determined the value of closing stock on the basis of sale value and has submitted copies of purchase and sale statement for the period from 1.4.2011 to 22.3.2012 and 1.4.2011 to 31.3.2012 and closing stock statements as on 22.3.2012 and 31.3.2012 - HELD THAT:- Nowhere, in the assessment order, it is reflected that the assessee has furnished the above documents before the Assessing Officer. It is not disputed that the assessee has agreed before the survey team that there was excess stock of 17,18,792/-, and advance tax was paid by the assessee. The contention of the assessee that subsequently the stock was found tallied with its books of account is an afterthought and no evidence in this regard was produced before the lower authorities immediately after the survey. The survey was done in the presence of the assessee and hence, it cannot be alleged that the assessee was forced to sign the recorded statement. Find no infirmity in the order of the ld CIT(A) in confirming the addition made by the Assessing Officer. Dismiss the grounds of appeal of the assessee.

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• 2021 (2) TMI 221
  Reopening of assessment u/s 147 - additions made u/s 69 towards the source of purchase of land - Addition u/s 68 - HELD THAT:- We find that in the instant case, there are two independent transactions of purchase and sale of land and where there are no additions made u/s 69 towards the source of purchase of land for which the AO issues notice u/s 148, the AO cannot bring to tax the other transaction to tax u/s 68 of the Act. On merits, we find that once the summons have been issued and these persons have appeared and given their statements before the AO wherein they have confirmed that they have advanced the amount to the assessee towards purchase of the agricultural land and has also disclosed the source of their earnings/savings, the assessee has discharged the necessary onus cast on her in terms of identity, creditworthiness and genuineness of the transactions in the facts and circumstances of the present case. Similar is the position regarding receipt of gifts from father and father-in-law which is duly supported by the respective gift deeds, the contents and authencity of which are not in dispute. - Decided in favour of assessee.

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• 2021 (2) TMI 220
  Exemption u/s 11 - Claim denied as activities of the assessee involve rendering of services in relation to carrying on of commerce or business - HELD THAT:- In A.Y. 2012-2013 own case the ITAT as well as Hon ble Delhi High Court has considered both the issues with regard to applicability of proviso to Section 2(15) in the case of the assessee-society and exemption claimed under Section 11 as well as the issue of principle of mutuality and the Hon ble Delhi High Court dismissed the Departmental appeal. These issues are covered by the aforesaid decisions of the Tribunal as well as Hon ble Delhi High Court in the case of the same assessee-society. The Revenue in its grounds of appeal has referred to the decision of Hon ble Supreme Court in the case of Bangalore Club vs.. [ 2013 (1) TMI 343 - SUPREME COURT] which is also considered by the Hon ble Delhi High Court. Thus, the issue is covered by the Order of the Tribunal as well as Hon ble Delhi High Court in favour of the assessee-society. The history of the assessee-society as noted in the submissions of Learned Counsel for the Assessee also clearly show that all the issues raised in the Departmental appeal have been considered and decided in earlier years, therefore, principle of consistency do apply to the same facts. No material is brought on record to distinguish the facts in the case of the assessee-society considered in earlier years as well as in assessment year under appeal. In A.Y. 2010-2011, the Order under section 263 of Income Tax Act, 1961 have been set aside by the Tribunal and Departmental appeal have been dismissed by the Hon ble Delhi High Court as well. The subsequent Order passed under section 143(3)/ 263 have become infructuous and vide separate Order the Departmental appeal have also been dismissed by the Tribunal in[ 2021 (2) TMI 173 - ITAT DELHI] Considering the above background and history of the assessee-society in the light of various Orders referred to by the Learned Counsel for the Assessee during the course of arguments and the recent Order of the ITAT and Hon ble Delhi High Court in A.Y. 2012-2013 we do not find any infinity in the Order of the Ld. CIT(A) in allowing the appeal of assessee-society.

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• 2021 (2) TMI 219
  Revision u/s 263 - purchase of two industrial plots of land - addition as Income from other sources u/s 56(2)(vii)(b)(ii) - Order passed u/s 143(3) has been rightly set aside by CIT with directions to properly examine the issue relating to applicability of provisions of section 56(2)(vii)(b)(ii)HELD THAT:- We find that the subject matter of examination by the Assessing Officer was limited to the expenses which have been incurred in relation to these industrial plots however as far as the applicability of provisions of section 56(2)(vii)(b)(ii) of the Act is concerned, there is no material available on record that the Assessing Officer has carried out any inquiry/examination and sought any explanation from the assessee. Where the matter relating to applicability of provisions of section 56(2)(vii)(b)(ii) of the Act has not been examined by the AO and not subject matter of assessment order, there is no question of application of theory of merger with that of the order of the ld CIT(A) as so contended by the ld AR. We therefore find that it is a clear case where the applicability of provisions of section 56(2)(vii)(b)(ii) of the Act which are applicable for the impugned assessment year i.e. A.Y 2015- 16 has escaped the attention of the Assessing Officer which renders the order so passed as erroneous and prejudicial to the interest of the Revenue Applicability of provisions of section 56(2)(vii)(b)(ii) - All that proviso talks about is that where there is an agreement to sell which has been executed prior to the date of registration, in such cases, the stamp duty value as on the date of agreement may be taken instead of date of registration of the property provided that whole of the consideration or a part thereof has been paid by any mode other than cash on or before date of agreement. Therefore, the fact that the proviso is applicable in the instant case does not take the impugned transactions of purchase of industrial plot of lands out of the applicability of provisions of section 56(2)(vii)(b)(ii) of the Act as so contended by the ld. AR. All that it provides is that it shifts the determination of stamp duty value as on the date of agreement rather than the date of registration of the sale deed. Therefore, the contention so advanced by the ld. AR cannot be accepted. We are therefore of the considered view that it is a case where the provisions of section 56(2)(vii)(b)(ii) of the Act read with proviso thereof has not been examined by the Assessing Officer and which undisputedly applies for the impugned assessment year. Therefore, we do not find any infirmity in the exercise of justification by the ld. Pr. CIT u/s 263 - Decided against assessee.

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• 2021 (2) TMI 218
  Addition u/s 69A - Seizure of cash in search - whether source of cash found and seized from the possession of the two persons which belongs to the assessee? - HELD THAT:- We find force in the contentions so advanced by the ld. AR. The cash so seized admittedly belongs to the assessee and through return of income, the statement of affairs, cash flow statement for the previous year and cash book for the year under consideration, the source of cash so seized has been duly explained in form of sales and opening cash balance duly recorded in the books of accounts. We therefore, find that there is no basis for making the impugned addition in the hands of the assessee and the same is hereby directed to be deleted. - Decided in favour of assessee.

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• 2021 (2) TMI 217
  Reopening of the assessment u/s 147 - Reopening beyond the period of four years from the end of the assessment year - excess claim of deduction u/s.80JJAA - HELD THAT:- In a case where assessment was reopened after 4 years, for invoking proper jurisdiction, the AO has to record the reason to believe that any income chargeable to tax had escaped by reason of the failure on the part of the assessee to disclose fully and truly all material facts necessary for assessment. In this case, on perusal of reasons recorded for reopening of assessment, we find that there is no allegation by the AO on failure on the part of the assessee to disclose fully and truly all material facts necessary for assessment. Therefore, we are of the considered view that reopening of assessment is not based on sound footing and hence the impugned assessment order framed u/s.143(3) r.w.s. 147 of the Act, is illegal and liable to be quashed. Further, the issue is fully covered in favour of the assessee by the decision of ITAT, Chennai Benches in assessee s own case for assessment year 2008-09 where the Tribunal after considering relevant facts had held that reopening of assessment without satisfying second condition is invalid and liable to be quashed. Thus we quash notice issued u/s.148 of the Act and consequent assessment framed u/s.143(3) r.w.s.147 - Decided in favour of assessee.

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• 2021 (2) TMI 216
  Deduction u/s. 80IB(10) - assessee is merely a land owner and it has not developed and built housing projects approved by the local authority , thus the primary condition for claiming the deduction u/s. 80IB(10) has not been fulfilled - As per DR CIT(A) without properly appreciating the facts of the assessee s case which is merely a land owner vis-a-vis M/s. Sanghvi Doshi Enterprises, which is clearly a developer , has wrongly allowed the appeal and hence pleaded to restore the order of the Ld. A O - HELD THAT:- Assessee is the owner of the land , as a owner of the land all that it was entitled to on the terms of the agreement between the parties was for the undivided share of the land measured in terms of the built-up area and it had no interest in the development or in the cost of construction, which the Developer alone had to bear. As is evidenced by its P L account also, the assessee has not incurred any cost towards any developmental activity. It has not established either before the lower authorities or before us that it had undertaken developmental activities either as a Owner or as a Developer or Jointly. As a owner of the land , there was no risk to the assessee and its interest was in the realisation of the potentialities by way of encashing the past investment made etc. Therefore , the assessee has not made out a case that it is entitled for the deduction claimed u/s 80-IB(10) and hence the Revenue s appeal is allowed.

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• 2021 (2) TMI 215
  Taxation of long term capital gains arising on transfer of the Site - AO Noticed that sale consideration was less than the guidance value and for the purpose of computation of capital gains, when the sale value is less than the guidance value calculated by stamp valuation authority, provisions of section 50C are attracted - HELD THAT:- In the present case, the enforceable agreement was entered into on 8.3.1993 by payment of major portion of the Sale Consideration and only formal Sale Deed was executed on 9.3.2007. The assessee has produced all the relevant documents for demonstrating the authenticity of the Sale Agreement with corroborative evidence in the form of Katha Certificate in the name of M/s. KPCBPPL dated 1.7.1997, the address of R.K. Sipani, Sipani Automobiles Ltd. in Form 32 before the Registrar of Companies on 17.12.1996 and the payment details through Cheques. The payment mentioned in the Sale Deed towards sale consideration clearly demonstrated that these payments have been passed between the parties vide Sale Agreement dated 8.3.1993 and possession of property has already been handed over on 24.10.1989. Therefore, transfer has taken place vide Sale Agreement dated 8.3.1993 and full value of consideration for the purpose of computing long term capital gain in the hands of the assessee has to be adopted on the basis of guidance value of this property as on the date of Sale Agreement only, not on the date of Sale Deed dated 9.3.2007. Accordingly we allow the grounds taken by the assessee as there was no applicability of section 50C in the year 2007-08.

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• 2021 (2) TMI 214
  Levy of penalty u/s. 272A(2)(k) - delay in preparation and delivery to the prescribed returns if the prescribed form is caused on account of non-availability of the details such as PAN, address further valid tee of challans paid, Generation of CSI file etc.- HELD THAT:- There is no delay in submission and filing of the prescribed returns from the date of TDS amount credited to the Central Government account. The approach of the lower authorities in computing the period of default from the date of deduction of tax at source instead of date of payment of TDS amount credited to the Central Government account is unreasonable and contrary to the plain provisions of the relevant Rules. In case where tax amount has not been remitted to the credit of the Central Government, the question of issuing certificate of tax deduction at source u/s. 200(3) of the Act or filing the return under the provisions of sub-section (3) of section 200 of the Act would not arise at all. That being the case the question of imposing penalty for violation of the above said provisions would also not arise - provisions of Income Tax Act prescribe different penalties for non-deduction as well as the delay in remittance of the amount to the Central Government. It is trite law that the two different penalties cannot be imposed by the Parliament for the same offence. We are of the considered opinion that the levy of penalty u/s. 272A(2)(k) of the Act is not justified in the present facts of the case. According we set-aside the impugned order and directed to delete the penalty. - Decided in favour of assessee.

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• 2021 (2) TMI 213
  Dismissal of assessee appeal for non prosecution - non speaking order of CIT-A - Reopening of assessment u/s 147 - Addition u/s 69A - HELD THAT:- A perusal of the order of the Ld. CIT(A) shows that two notices were sent through e-mail and the last notice was sent through speed post on 1st June 2017 fixing the date of hearing for 15th June, 2018. Since there was no compliance from the side of the assessee, Ld. CIT(A), following the decision of CIT vs. BN Bhattacharya [ 1979 (5) TMI 4 - SUPREME COURT] and CIT vs. Mulltiplan India Pvt. Ltd. [ 1991 (5) TMI 120 - ITAT DELHI-D] dismissed the appeal of the assessee for non prosecution. He , however, while deciding the appeal on merit has simply sustained the addition made by the AO in a cryptic order. We deem it appropriate to restore this issue to the file of the Ld. CIT(A) with a direction to grant one final opportunity to the assessee to substantiate his case and decide the appeal on the basis of facts and law by passing a speaking order. The assessee is also hereby directed to appear before the Ld. CIT(A) and explain the source of cash deposit in the bank account, failing which the Ld. CIT(A) is at liberty to pass appropriate order as per law . Appeal filed by the assessee is allowed for statistical purposes.

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• 2021 (2) TMI 212
  Rectification of mistake - Unaccounted receipts - unexplained cash receipts being amounts received by assessee from Runwal Developers Pvt. Ltd. - CIT(A) restricting the addition by applying gross profit rate of 16% on alleged unaccounted receipt as alleged unaccounted profit earned by the appellant - HELD THAT:- We find that the ld. AR placed on record the copy of the Tribunal order in the case of Runwal Developers Pvt. Ltd, for A.Y.2015-16 [ 2020 (11) TMI 448 - ITAT MUMBAI ]. Tribunal while disposing off the appeal in the case of Runwal Developers Pvt. Ltd. had ultimately remanded the issue to the file of the ld. AO for the purpose of quantification of undisclosed income on the basis of incriminating materials / evidences and examine the availability of cash in the group as a whole. Revenue had preferred this Miscellaneous Application on 20/08/2020, on which date the order of the Tribunal in the case of Runwal Developers Pvt. Ltd., had already been passed and the prayer of the revenue that, appeal in the case of Runwal Developers Pvt. Ltd., had not attained finality is found to be factually incorrect. Hence, we hold that the prayer of the revenue does not fall within the ambit of any mistake apparent from record within the meaning of Section 254(2).Miscellaneous Application of the Revenue is dismissed.

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• 2021 (2) TMI 211
  Rectification of mistake - revenue seeks to recall the order passed by this Tribunal on the ground that this Tribunal had dismissed the appeal of the Revenue stating that the tax effect involved in the said appeal is less than the prescribed monetary limits of CBDT Circular, whereas the assessment in the instant case has been reopened on the basis of Revenue Audit Objection which had been accepted by the department and hence, the same would fall within the exception provided in para 2(c ) of the said Circular - HELD THAT:- On a conjoint reading of Circular No.5/2017 dated 23/01/2017 and Circular No.21/2015 and 08/2016 issued by CBDT, we find that if the case falls in any of the exceptions provided in the said Circulars, the said monetary limits prescribed for preferring the appeal would not be applicable. A plain reading of the aforesaid Circulars would result in such understanding only, which, in our considered opinion, is unambiguous. There is absolutely no need to interpret the veracity or eligibility of the Revenue to prefer appeal before this Tribunal at the time of Miscellaneous Application proceedings u/s. 254(2) of the Act where the scope of the tribunal is very limited We find that the ld. AR before us was only trying to question / challenge the very basis of Revenue preferring the appeal before us on the ground that re-assessment was framed in the name of non-existent entity and that the Revenue ought not to have preferred any appeal per se on merits before this Tribunal. This, in our considered opinion, is certainly not an issue in dispute before us in the Miscellaneous Application preferred by the Revenue. Hence, we are not inclined to entertain the argument of the ld. AR in the Miscellaneous Application proceeding. At the cost of repetition, we would like to state that the Revenue Audit Objection has been accepted by the department which had ultimately triggered initiation of re-assessment proceedings, is already on record and hence, certainly falls under the exception provided in the CBDT Circular prescribing the monetary limits for preferring appeals before the Tribunal by the Revenue. In view of this, we hold that the Miscellaneous Application of the Revenue deserves to be allowed and is hereby allowed. The order passed by this Tribunal in the case of this assessee is hereby recalled - Miscellaneous Application of the Revenue is allowed.

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• Customs

• 2021 (2) TMI 210
  Refund claim of market value of gold - petitioner submitted that the department ought to have reimbursed the entire market value of the gold on the date of the application for release and could not have tendered only the original sum notionally realised by the department upon disposal of the gold in the year 2007 - HELD THAT:- The order of confiscation of seized gold bars passed by the competent authority as confirmed by the Appellate Commissioner was reversed by the CESTAT. However as per the department, the gold bars were already deposited with the Central Government Mint along with other quantity of gold seized and which had vested in the Government upon the confiscation orders becoming final. This happened on 20th November, 2007. Through such transfer, the Customs Department had realized the sum of Rs. 8,07,033/- which it offered to refund to the petitioner when the final judgment of the Tribunal was delivered. According to the Customs Department, when the gold was disposed of, the order passed by the Appellate Commissioner held the field and the department did not have any intimation of the petitioner s further appeal before the CESTAT. The petitioner has not disputed this averment of the department made in the order-in-original passed by the Assistant Commissioner on 08.09.2016 as well as in the affidavit-in-reply filed in the present petition. Thus, after having waited for the period of limitation for filing appeal against the order of the Appellate Commissioner, the department proceeded to dispose of the confiscated goods. No procedure for disposal of such confiscated goods has been brought to our notice by either side. When thus, upon expiry of the period of limitation for filing appeal against the order of Appellate Commissioner, the confiscation had achieved finality and in terms of Section 26 of the Customs Act the goods vested in the Central Government, in absence of any statutory provision requiring in prior notice to the petitioner before disposal of the goods, the action of the department cannot be faulted. However, when the order of the competent authority and the Appellate Commissioner were reversed by the Tribunal, the petitioner had to be restored to the original position, as closely as possible. The action of the department to offer to the petitioner the value of the gold as on 20th November, 2007 without any further interest nearly 9 (nine) years later, cannot be approved. The petitioner therefore, must receive the said principal sum of Rs. 8,07,033/- with interest - Here is the case where the departmental action of confiscation of seized goods came to be set aside by the CESTAT but by the time the Tribunal passed such an order the goods were already disposed of. The petitioner therefore can claim reasonable interest on such principal sum which must be refunded to him. While not accepting the claim of the petitioner for granting him the market value of the gold on the date of application made by him to the department, it is provided that the said principal sum of Rs. 8,07,033/- will be paid to the petitioner along with simple interest @ 7.5% per annum from 20th November, 2007 (i.e. the date on which the valuation of the gold for the purpose of refund is carried out) till actual payment of the principal sum by the department. This amount shall be released within a period of 3 (three) months from today - Petition disposed off.

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• 2021 (2) TMI 209
  Seeking direction to Respondents (No. 1-3) to refund the amount of INR.2,50,00,000/- illegally collected retained without the issuance of show cause notice - seeking direction to Respondents (No. 1-3) grant interest at the rate of 18% on refund of amount illegally collected and retained, from the date of collection till the date of payment - seeking restraint on Respondents from initiating any coercive action against the Petitioner till the disposal of the writ petition - HELD THAT:- The respondent No.3 are directed to treat this writ petition as a representation and decide the claim of the petitioner for refund of the amount as stated in the prayer clause, in accordance with law, Rules, Regulations and Government Policies applicable to the facts of the case and on the basis of evidence on record, after giving adequate opportunity of being heard to the concerned parties. Decision shall be taken by respondent No.3 as expeditiously as possible and practicable. Petition disposed off.

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• 2021 (2) TMI 208
  Fraudulent exports - export of goods against the shipping bills, provisionally, which were found to be sub-standard and highly overvalued for fraudulent availment of drawback at a higher rate - HELD THAT:- It is deemed fit to dispose of the present petition with a direction to the concerned respondent authorities to decide the claim of the petitioner with respect to the suspended drawback covered under the shipping bill numbers, mentioned in the prayer clause of the writ petition, in accordance with law, Rules, Regulations and Government Policies applicable to the facts of the case and on the basis of the evidence on record, after giving adequate opportunity of being heard to the concerned parties, as expeditiously as possible and practicable. Petition disposed off.

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• 2021 (2) TMI 207
  Provisional release of seized goods - condition of bank guarantee is exorbitant - seeking reduction in the amount of the bank guarantee - HELD THAT:- This tribunal considering all the common facts came to the conclusion that for provisional release of the goods bond of the total value of the goods and bank guarantee of the amount of 50% of the total duty is sufficient. The seized goods shall be released on furnishing bond of total value of the goods with bank guarantee of the amount of 50% of the total duty - Appeal allowed - decided in favor of appellant.

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• 2021 (2) TMI 206
  Violation of principles of natural justice - appellant s request for Cross- Examining three DRI Officers and One Mr. Bhaskar Bhatt, Chartered Engineer to be allowed or not? - HELD THAT:- As per the facts in the Show Cause Notice , the report given by Shri Bhaskar Bhatt, Chartered Engineer has been relied upon. Since this witness is 3rd Party as far as appellant is concerned the Cross- Examination of Shri Bhaskar Bhatt, Chartered Engineer must be allowed to the appellant as mandated under section 138B of the Customs Act, 1962 - From section 138B it is clear that the statement given by a person as a witness must be examined, then only the same can be admitted in evidences. In the present case the valuation report given by Chartered Engineer, Shri Bhaskar Bhatt has been relied upon in the Show Cause Notice and considered as one of the important witnesses. Therefore, it is mandatory on the part of the adjudicating authority to allow the Cross- Examination of Shri Bhaskar Bhatt, Chartered Engineer in terms of section 138B. Cross- Examination of three DRI Officers - HELD THAT:- As regard allegation of the appellant that the officer have recorded the statement under duress threat and pressure. It is up to the witnesses whose statements were recorded to dispute this charges, if anything exist. As regard the charge of inflation of the value multifold, the appellant has all the right to challenge it on the basis of the document and the same can be discarded if the valuation done by the DRI Officers is incorrect therefore, for this reason, in our considered view there is no need of Cross-examination of the DRI Officers. The DRI Officers have performed their duty as required in the law. The Adjudicating Authority shall allow the Cross- Examination of Shri Bhaskar Bhatt, Chartered Engineer. The request for Cross- Examination of DRI Officers is rejected - Appeal allowed in part.

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• 2021 (2) TMI 205
  Levy of penalty under Section 112 readwith Section 114AA of the Customs Act, 1962 - cold rolled coil (non-alloy) - mis-declaration of the goods to evade payment of duty - secondary and defective nature - the appellant being an experienced customs broker was expected to understand the difference between prime material and secondary defective material - HELD THAT:- Admittedly, no where it has been placed on record that the appellant was having prior knowledge of defective/secondary material. In fact, in the invoices, high-seas agreements, test certificates, it is mentioned that the material is of prime nature. Moreover, whatever documents have been supplied to the appellant by the importer, the appellant has filed bills of entry for clearance. On the basis of those documents merely being the appellant an experienced person it cannot be alleged that the appellant was having malafide intentions for clearance of the said goods by mis-declaring the same. The Revenue has failed to established against the appellant that he has omitted to do any act which act or omission would render the such goods liable to confiscation. The Revenue has further failed to establish the fact that the appellant abats the doing omission of the act which would render the goods liable for confiscation. There is no allegation in the show cause notice in respect of the test certificate produced by the appellant. The mere allegation is that the appellant being an experienced person should know the difference between prime and secondary/defective material. The act of filing the test certificate shows that the appellant has no mens rea and filed the documents being a bonafide facilitator. Thus, no penalty is imposable upon the appellant, therefore, the penalty imposed on the appellant under Section 112 alongwith 114AA of the Customs Act, 1962 is set-aside - appeal allowed - decided in favor of appellant.

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• Insolvency & Bankruptcy

• 2021 (2) TMI 204
  Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - existence of debt and dispute or not - service of notice - whether the Learned Adjudicating Authority was justified in dismissing the Company Petition, on the ground that the Appellant has not complied with the provisions of Section 8 of the Code read with Rule 5 of the Insolvency and Bankruptcy Rules, 2016? - HELD THAT:- There is no documentary evidence on record to establish that the email was sent as per the provisions mandated under Rule 5 of the Insolvency and Bankruptcy Rules, 2016. Hence, we concur with the findings given by the Learned Adjudicating Authority with respect to the fact that the Appellant herein had nowhere mentioned in the Application to whom the email was addressed to as it is clearly stipulated in Rule 5(1) of the Insolvency and Bankruptcy Rules 2016, that the notice shall be delivered by electronic mail service to a whole time Director or Designated Partner or Key Managerial Personnel, if any, of the Corporate Debtor. Thus, this Tribunal is of the opinion that the Learned Adjudicating Authority has rightly dismissed the Application by giving a liberty to file fresh case in accordance with the provisions of law after delivery of Demand Notice upon the Corporate Debtor as per Rule 5 of the Insolvency and Bankruptcy Rules 2016. However, having regard to the fact that this Application was dismissed way back on 18.06.2020, we request, that on issuing fresh notice to the Corporate Debtor and on filing of a fresh Application under Section 9 of the Code, the Learned Adjudicating Authority shall decide the admissibility or otherwise of the Application as expeditiously as practicable. It is to be noted that we have not expressed any view on the merits of the case. Appeal dismissed.

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• 2021 (2) TMI 203
  Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its debt - existence of debt and dispute or not - HELD THAT:- The Applicant has filed its bank statement stating that the amount claimed or any part thereof, has not been received by the applicant nor had any person, on its behalf had received in any manner the amount due to them as required u/s. 9(3)(c) of I B Code. The Applicant has filed an affidavit in compliance of section 9(3)(b) - present application is filed on the Performa prescribed under Rule 6 of the Insolvency and Bankruptcy Code, 2016 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016 r/w Section 9 of the code and is complete. Considering the documents on records and submissions made, it is clear that the default in payment of operation debt has occurred. However, a dispute with the regards the amount of debt has been raised - This leaves no doubt that the default has occurred for the payment of the operational debt for which the invoices were raised by the applicant and the so called dispute raised by the corporate debtor is merely a moonshine dispute. As per the judgment of Hon ble Supreme Court in the case of Mobilox Innovations Private Limited Vs. Kirusa Software Private Limited [ 2017 (9) TMI 1270 - SUPREME COURT ] it has been held that the dispute has to be genuine and not moonshine and the husk needs to be separated from the grain. The applicant is entitled to claim the dues which is still outstanding and has remained unpaid till date. Therefore, the applicant is admitted. Petition admitted - moratorium declared.

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• Service Tax

• 2021 (2) TMI 236
  SVLDRS - Eligibility of the petitioner or maintainability of its declaration to avail the benefits of the scheme under the category of investigation, enquiry or audit - quantification of the service tax dues of the petitioner for the related period was not quantified on or before 30th June, 2019 - HELD THAT:- The issue is no longer res-integra where it was held that Thought Blurb Vs. Union of India [ 2020 (10) TMI 1135 - BOMBAY HIGH COURT ] where it was held that petitioner was eligible to file the application (declaration) as per the scheme under the category of enquiry or investigation or audit whose tax dues stood quantified on or before 30th June, 2019. Thus, it is evident that all that would be required for being eligible under the above category is a written communication which will include a letter intimating duty demand or duty liability admitted by the person concerned during inquiry, investigation or audit. Matter remanded back to the designated authority to consider the declaration of the petitioner in terms of the scheme as a valid declaration under the category of investigation, enquiry and audit and thereafter, grant the consequential relief(s) to the petitioner.

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• Central Excise

• 2021 (2) TMI 202
  Recovery of erroneous rebate - argument of the appellant is that the original authority while confirming the demand failed to comply with the directions issued by the First Appellate Authority in as much as the relied upon documents which were directed to be given were not furnished - Violation of principles of Natural Justice - HELD THAT:- Considering the factual finding which has been rendered by the hierarchy of authorities as well as the learned Writ Court, it is found that absolutely no substance in the argument advanced before use on behalf of the appellant. The facts and circumstances clearly show that there has been no violation of principles of natural justice and the appellant has been harping upon certain documents which are of no impact on their case and in fact the founder, namely, M/s.ERTP themselves have accepted the suppression and have not challenged the action initiated by the Department against them. Thus, there is absolutely no ground to interfere with the order passed by the learned Single Bench. It was argued by the learned counsel for the appellant that in the show cause notice there was no proposal for levy of penalty under Section 11AC. This is an incorrect submission because relevant rules find place in the show cause notice as well as the order-in-original, probably non- mentioning of Section 11AC can in no manner vitiate the proceedings. In fact, the appellant appears to have not raised this contention in the year 2006 when proceedings were initiated against them and the present attempt is a belated attempt which cannot be a ground to interfere with the impugned order. Appeal dismissed.

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• 2021 (2) TMI 201
  Permission for withdrawal of appeal - monetary limit involved in the appeal - Waiver of penalty - Section 11AC of the Central Excise Act, 1944 - HELD THAT:- The Revenue seeks to withdraw the case on account of low tax effect in terms of the circular dated 22.8.2019 issued by the Central Board of Indirect Taxes and Customs. By the said Circular, the monetary limit for filing or pursuing any matter before the High Court has been increased to Rs. 1 Crore. It is further submitted that the tax effect in this case is less than the threshold limit. Appeal is dismissed on the ground of low tax effect and the substantial question of law raised is left open.

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• CST, VAT & Sales Tax

• 2021 (2) TMI 200
  Validity of initiation of reassessment proceedings - rate of tax on Multi Function Digital (MFD) - Change of opinion - reason to belief - Whether the Tribunal erred in law in upholding the validity of initiation of reassessment proceedings, when the same was based on belief which was totally irrelevant and also amounts to change of opinion? - HELD THAT:- The principle that has to ever remain clear is - the assessee may be subjected to reassessment proceeding only when the jurisdictional fact is first found to exist. That fact is the existence of a valid reason to believe that any turnover has escaped assessment to tax . In the facts of the present case, the submission advanced by Sri Mishra as to change of opinion cannot be accepted since the original assessment order dated 17.03.2010 is completely silent as to the reason why the assessing authority chose to tax on MFD @ 4%. No basis or other reason was recorded by the Assessing Officer to tax the commodity MFD @ 4%. In absence of any opinion being formed and expressed at that stage, no change of opinion may arise or be alleged when at a subsequent stage, the assessing authority forms any opinion. At the same time, merely because no opinion had been formed by the Assessing Officer at the stage of original assessment, it would not automatically lead to the conclusion, either that any turnover had escaped assessment or that the Assessing Officer had absolute discretion to initiate reassessment proceedings as has been suggested by the learned Standing Counsel relying on a decision of the Division Bench of this Court in KALPANA KALA KENDRA VERSUS SALES TAX OFFICER, CIRCLE-20, KANPUR [ 1988 (12) TMI 318 - ALLAHABAD HIGH COURT] . In that case also, the original assessment order was silent as to the enquiry, if any, to accept the returned turnover. However, at the stage of the initiation of the reassessment proceedings under Section 21 of the Uttar Pradesh Sales Tax Act, 1948, three factual basis existed on the record that gave rise to the reason to believe that tax had escaped assessment. These were (i) wide discrepancy noted with respect to value of purchases of the assessee, (ii) escapement of tax on the closing stock and (iii) also non-verification of the information received on assessment record. In the instant case, there is no recital in the reason to believe of any factual basis or of any information received or of material existing on record on the assessment file of the assessee as may have given rise to any reason to believe . The notice issued by the Additional Commissioner dated 15.05.2012, which is stated to contain the reason to believe only refers to the fact that MFD had been subjected to tax @ 4% in the original assessment order treating the same to be computer peripherals whereas that commodity was not computer peripheral and, therefore, liable to be taxed as an unclassified commodity. In the first place, the reason to believe suffers from a factual fallacy. There was no entry available under the Act to tax computer peripherals . That entry first appeared only by virtue of Entry no.22 of Part B of Schedule II of the VAT Act - there was no question of introducing that entry in the assessment proceedings under the Act or to examine that entry for the purpose of either making an assessment under the Act or to re-open any assessment under that Act. That fact was plainly or completely extraneous to the assessment made under the Act. The existence of a valid reason to believe must be established as a fact, by the revenue, before a valid reassessment proceeding may arise. Recording of a reason to believe is a conscious act by the assessing authority. It is the result of an application of mind made by the assessing officer to all relevant material before him. Unless he first initiates this exercise and consequently records his reason to believe that any part of turnover of an assessee has escaped assessment to tax, the consequential exercise of reassessment would remain without jurisdiction. The material and reasons arising therefrom create the objective skeleton on which the subjective flesh of belief may stand - even if the conclusion ultimately drawn by the Tribunal, may appear to be correct in the given facts that the commodity was taxable not as computer hardware but as other electronic goods, that reasoning would not validate and otherwise invalid reassessment proceeding. It is found that neither there exists any material nor any valid reason to believe was recorded by the assessing officer as to any part of the turnover of MFD having escaped assessment from tax - there was a jurisdictional error on part of the assessing officer in initiating the assessment proceeding. The question of law is answered in the negative i.e. in favour of the assessee and against the revenue - Revision allowed.

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• Indian Laws

• 2021 (2) TMI 199
  Dishonor of Cheque - acquittal of the accused - rebuttal of presumption - defence of the accused-respondent is that he had not borrowed any amount from the complainant-appellant and, therefore, he had no debt or liability to repay any amount to the appellant herein - whether the complainant-appellant has been able to discharge his liability to establish the presumption under Section 139 of the N.I. Act? - HELD THAT:- In the instant case, the specific case of the complainant is that he and the accused had worked jointly under the license of one Suman Bhattacharjee in executing a Government work which leads to the liability of the accused. According to complainant, he had an oral partnership agreement and the profit and loss was to be determined at 60:40 ratio and the investment of the complainant would be 40 % as it was decided by them that the complainant would supervise the works and also collect the materials from the market on credit. Naturally, the financial bills would be raised in the name of Suman Bhattacharjee and the payment would be received by Suman Bhattacharjee. Needless to say, it means that Suman Bhattacharjee is the person in whose name the work was executed and the bills also were raised in favour of Suman Bhattacharjee. The said Shri Bhattacharjee would naturally distribute the shares of the complainant and the accused as agreed as per the oral partnership agreement, if the facts as adverted by the complainant is believed. It is further surfaced from the examination-in-chief adduced by the complainant that though they entered into an agreement on 60:40 ratio but the complainant had stated that they deposited security money to the tune of Rs. 10,00,000/- out of which he paid Rs. 5,00,000/- against security deposit that is in equal share to that of the accused. The complainant did not anywhere mention about the total estimated cost of work which they executed in the name of Suman Bhattacharjee. That apart, it appears hard to digest for this Court that when the complainant had invested by way of depositing 50 % of the security deposit equal to that of the accused, then, why the complainant and the accused had decided to invest at 60:40 ratio. Ironically, Suman Bhattacharjee in whose name the work was executed was not cited as witness by the complainant to substantiate the statement of the complainant that the work was executed in the name of Suman Bhattacharjee and bills were raised in the name of Suman Bhattacharjee and to substantiate this important aspect that Suman Bhattacharjee had paid the entire amount out of the said bills to the complainant and the accused. Thus, failure of the complainant to produce any proof either oral or documentary relating to the joint work executed by him with the accused not only create a shadow of doubt regarding his case but also leads to an adverse inference against him under Section 114(g) of the Indian Evidence Act - there are no such materials wherefrom it can be garnered that the complainant was able to establish the source of his fund to invest his share of 50 % against the security deposit of Rs. 10 lakhs in total and further investment at the ratio of 40 % for the execution of the works. Thus, existence of legally enforceable/recoverable debt is not a subject of presumption under Section 139 of the N.I. Act. This provision only raises a presumption in favour of the holder of the cheque that the same has been issued in discharge of any debt or any other liability. The impugned judgment of the Trial Court acquitting the accused-respondent from the charge levelled against him is affirmed and upheld - appeal dismissed.

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