TMI Tax Updates - e-Newsletter
February 14, 2023
Case Laws in this Newsletter:
GST
Income Tax
Customs
Insolvency & Bankruptcy
PMLA
Highlights / Catch Notes
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GST:
Seeking road permit for transporting goods/forest products after obtaining e-way bills - This Court is of the opinion that the petitioner is made out a case for interference and it is directed that if the petitioner is in possession of valid e-way bills, road permit should not be insisted upon it, however the petitioner is required to fulfill the other formalities in case, if the situation arises. - HC
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GST:
Refund of CGST u/s 54 - it was found that the vehicles mentioned in two invoices were not registered on the e-vahan portal. - Having established that the foundation of the Revenue’s appeal is flawed, the petitioner was not required to do anything more. The Appellate Authority did not find any flaw in the details as furnished by the petitioner. - HC
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Income Tax:
Correctness/validity of an order under Section 127 - power of transfer of case - The natural corollary which has to follow is that the income tax department was required to assign reasons for proposing the transfer. These reasons were set out in the show-cause notice dated 11.01.2022. The assessee is thus precluded from stating that the show-cause notice is coloured on facts. This being a result of the order obtained by the assessee in the earlier writ petition, the assessee is barred from raising such a contention. - HC
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Income Tax:
Revision u/s 263 - block assessment - As per CIT AO failed to include the reserves and surplus for quantification of deemed dividend income - AO has taken a plausible view and there are several decisions of the Hon’ble Supreme Court wherein it has been held that if two views are plausible and the assessing officer takes one of the two views and assigns reasons, such order cannot be construed to be erroneous nor prejudicial to the interest of the revenue - HC
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Income Tax:
Penalty u/s 270A - imposition of penalty for under-reporting and misreporting of income - an addition made on the basis of estimation cannot provide foundation for under-reported income for the purpose of imposition of penalty u/s 270A of the Act.- AT
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Income Tax:
Levy of penalty - Reasonable cause - non filing of ITR - failure to comply with notice u/s 142(1) - it is seen that the explanation offered by the assessee have been ignored by the A.O. as well as the Ld. CIT(A)-NFAC but confirmed the levy of penalties u/s. 271(1)(b) and u/s. 271F of the Act without considering u/s. 273B - Applying the provisions of Section 273B we have no hesitation in deleting the penalties levied u/s. 271(1)(b) and u/s. 271F of the Act since “reasonable cause” is clearly demonstrated by the assessee. - AT
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Income Tax:
Addition being expense for valuation certification u/s 37(1) - Professional fee paid for share valuation certificate - the expenses claimed by the assessee have been incurred during the regular course of business and cannot be treated as capital expenses. - AT
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Income Tax:
Penalty u/s 271D - additions were confirmed towards share application money as a colorable device - AO considered the same as deemed deposits and considered it as violation of section 2695S - AO has presumably failed to construe the transaction as well as meaning of section 269SS read with section 271D. The more surprising factor is that ld. Principal CIT (Admin.), who has given permission to file the appeal, failed to appreciate the order of the ld. CIT(Appeals) before authorizing the revenue to file the appeal before the Tribunal. - AT
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Income Tax:
Revision u/s 263 - Invoking revisionary power u/s 263 of the Act is merely on suspicions is untenable. Further, the Ld. PCIT has not made any discussion on the issues pointed out by him and exercised the power conferred u/s 263 of the Act on the ground that the “explanation of the assessee seems to be plausible and it is not conclusive” which is not permissible u/s 263. - AT
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Income Tax:
Computation of interest u/s 234B - assessed tax versus tax on returned income - interest for default in payment of advance tax u/s 234B of the Act in the case of regular assessment needs to be computed on the assessed tax as provided in Explanation 1 to Section 234B(1) - AT
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Income Tax:
Validity of Rectification of mistake u/s 154 - There was no appeal by assessee against the rectification order passed u/s 154 of the Act dated 11.10.2017. Even if the assessee raised the ground in his appeal with regard to addition/deletion made in rectification order passed u/s 154 of the Act before the ld. CIT(A), the ld. CIT(A) must have called for the remand report from the AO, which he failed to do so. - Matter restored back for reconsideration - AT
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Income Tax:
Penalty levied u/s 271(1)(b) and / or 272A(1)(d) - assessee failed to comply notice under Section 142(1) - The assessment order was passed u/s 143(3) and not under Section 144, that meant that subsequent compliance in the assessment proceedings was considered as a good compliance and defaults committed earlier were ignored by Assessing Officer and, therefore, penalty under Section 271(1)(b) was not justified - AT
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Income Tax:
CIRP - Extinguishment of tax dues including the statutory dues owed to the Central Government, any State Government or any local authority post Application u/s 7 of the Insolvency and Bankruptcy Code, 2016 and moratorium under section 14 of the Code was declared - At any rate, for the time being, this appeal cannot be proceeded with during the continuance of the proceedings under the Code. Parties have to work out their remedies before the Adjudicating Authority under the Code. - AT
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Customs:
Seeking release of goods - he option to redeem the confiscated goods had not been exercised within the maximum period of 120 days - Commissioner of Customs (appeal) set aside to the extent of rejection of petitioner’s request on the ground of delay in seeking redemption beyond the prescribed period - unless there is adherence to the principle of judicial discipline, there would be chaos in administration of the tax laws. Such a situation cannot be permitted. - HC
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Customs:
Simultaneous availment of Status Holder Incentive Scheme (SHIS) and 0% Export Promotion Capital Goods (EPCG) Scheme - Surrender of EPCG Scheme in terms of para 5.14 of Hand Book of Procedure (HBP) prior to the issuance of SHIS Scrips - Once an advance licence was issued and not questioned by the licensing authority, the Customs Authorities cannot refuse exemption on an allegation that there was misrepresentation. If there was any misrepresentation, it was for the licensing authority to take steps in that behalf. - HC
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Customs:
Evasion of custom duty - whether the Customs Act prohibits the criminal prosecution under the IPC - The investigating agency or the police would have jurisdiction to investigate the offence committed under the IPC. There may be some overlapping of two statues regarding the offence committed under IPC as well as under the Customs Act, but that would not preclude the registration of the FIR, investigating the offence and taking cognizance and summoning an accused, if after investigation it has been found that such an accused has committed the offence under the IPC besides the Customs Act. - HC
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IBC:
Seeking approval of Resolution Plan - The CoC being satisfied that financial offer given by the Applicant is satisfactory, exercise their commercial wisdom, even CoC cannot be allowed to change its view, since it is bound by its own decision taken in approving the Resolution Plan. - The Corporate Debtor has to be revived with speed and in timelines, which has been prescribed in the CIRP. Once, the said object is achieved, the same shall not be allowed to frustrate on the grounds, which have been raised before the Adjudicating Authority in the present case- AT
Articles
Circulars / Instructions / Orders
News
Case Laws:
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GST
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2023 (2) TMI 432
Seeking grant of anticipatory bail - availment of illegal input tax credit - It is alleged that on the basis of forged documents, the firm has been registered and these firms have availed input tax credit on the basis of bogus invoice(s) - HELD THAT:- On perusal of the record, the fact that proceedings under section 74 of the U.P. G.S.T. Act are going on, as also the judgment in SUSHILA AGGARWAL AND OTHERS VERSUS STATE (NCT OF DELHI) AND ANOTHER [ 2020 (1) TMI 1193 - SUPREME COURT] and without entering into the merit of the case, it would be appropriate to grant protection to the applicants under Section 438 Cr.P.C. Till filing of the police report, it is provided that in the event of arrest, the applicants shall be released on bail on their furnishing a personal bond and two sureties of the like amount to the satisfaction of the arresting officer/I.O./S.H.O. concerned - The applicants shall cooperate in the investigation and they will not influence the witnesses. The accused-applicants will remain present as and when the arresting officer /I.O./ S.H.O. concerned call (s) for investigation/interrogation. The applicants shall not leave India without previous permission of the Court. Application allowed.
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2023 (2) TMI 431
Seeking road permit for transporting goods/forest products after obtaining e-way bills - petitioner contends that in spite of having e-way bills, the respondents were demanding road permit which, according to the petitioner, is wholly illegal and unsustainable in law - HELD THAT:- This Court had granted opportunity to the learned Standing Counsel to obtain instructions. Shri Pathak, learned Standing Counsel, Forest Department has submitted that the issue regarding requirement of road permit even after obtaining the e-way bill is yet to be decided by the Government. He submits that presently, there is no insistence on road permit, if e-way bill is available. This Court is of the opinion that the petitioner is made out a case for interference and it is directed that if the petitioner is in possession of valid e-way bills, road permit should not be insisted upon it, however the petitioner is required to fulfill the other formalities in case, if the situation arises. Petition disposed off.
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2023 (2) TMI 430
Refund of CGST under Section 54 of the Central Goods and Services Tax Act, 2017 read with Rule 89(1) of the Central Goods and Services Tax Rules, 2017 - case of revenue is that the petitioner had not established that the goods had been received by providing details of other vehicles in respect of the remaining 124 invoices - HELD THAT:- In the present case, there is no dispute that the petitioner had filed its return disclosing all necessary details for claiming the refund. It was, accordingly, also sanctioned in terms of the Order-in-Original dated 12.09.2019 - It appears from the review order dated 15.03.2020 that a few invoices were picked up for scrutiny. Out of the said invoices, it was found that the vehicles mentioned in two invoices were not registered on the e-vahan portal. It is on the basis of this finding that the decision to file an appeal was taken by the Commissioner of Tax. He assumed that the refund claims made by the petitioner were dubious solely on the basis of the aforesaid finding. However, the Appellate Authority had found the said finding to be incorrect - thus, the review order dated 15.03.2020 to file an appeal against the Order-in-Original is founded on an erroneous finding. Having accepted the same, the Appellate Authority was required to reject the Revenue s appeal outrightly. Having established that the foundation of the Revenue s appeal is flawed, the petitioner was not required to do anything more. The Appellate Authority did not find any flaw in the details as furnished by the petitioner. There is neither any tangible reason to doubt the particulars, as stated in the invoices, nor any finding that the same are untrue - petition allowed.
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Income Tax
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2023 (2) TMI 429
Reopening of assessment u/s 147 - non-disclosure of certain transactions, which have been mentioned in the reasons recorded by the Assessing Officer during the original assessment proceedings - Basis is the information derived from the Insight Portal of the department as certain transactions pertaining to purchase and sale of equity as also trading in derivatives on the recognised stock exchanges - HELD THAT:- In the present case, it is not the stand of the revenue that the Assessing Officer had not sought for the copies of all the demat account of the assessee for the relevant financial year 2012-13, or that even when it was called, it was not furnished by the assessee. Neither is it the case of the revenue that the reconciliation statement sought by the AO and other details contained in various notices issued by the Assessing Officer were not provided during the course of the proceedings. If that be so, we find it difficult to accept the argument that the petitioner had failed to disclose all material facts fully and truly. Petitioner took pains to explain to us each and every transaction which otherwise forms a part of the reasons recorded, with the transaction statements placed on record as also the reconciliation statement prepared by the petitioner in the present case - AO upon receipt of the information regarding the transactions made by the petitioner, proceeded to presume that the same were not disclosed by the petitioner during the course of the earlier proceedings under section 143(3) of the Act, which presumption in our opinion was not only erroneous but contrary to the record. There was no basis to hold that there was any failure on the part of the assessee to disclose any material facts fully and truly during the regular assessment proceedings and further that reassessment proceedings are nothing but a change of opinion. In our opinion, the impugned notice also the order of reassessment are without jurisdiction, and are, therefore, quashed and set aside. - Decided in favour of assessee.
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2023 (2) TMI 428
Reopening of assessment u/s 147 - Reasons to belive - LTCG - Transfer of a capital asset within the meaning of Section 2(47) - whether granting a license to the developer, who entered into the assessee s land for the purpose of development did not amount to allowing the possession of the land as contemplated under Section 53A of the Transfer of Property Act, 1882, and, therefore, Section 2(47)(v) would not apply? - HELD THAT:- The Apex Court in Seshasayee Steels (P.) Ltd. [ 2019 (12) TMI 702 - SUPREME COURT ] held that Section 53A of the Transfer of Property Act, 1882 would not be attracted in a case where a license was given to another for purposes of development of the flats and selling the same and that granting such a license could not be said to be granting possession within the meaning of Section 53A. Thus it can be seen that the development agreement permitted construction on the land in question only as a licensee which did not have the effect of transmitting possession in favour of the licensee within the meaning and spirit of Section 53A of T.P. Act. If that is so, then there would be neither any tangible material nor any reason for the assessing officer to believe that any income chargeable to tax had escaped assessment and the action of the assessing officer, therefore, would be without jurisdiction. Reopening of assessment u/s 147 quasshed - Decided in favour of assessee.
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2023 (2) TMI 427
Reopening of assessment u/s 147 - Petitioner had issued premium which was not valued correctly in terms of Rule 11UA r/w Section 56(2)(viib) - HELD THAT:- Supreme Court in Commissioner of Income-tax, Delhi Vs. Kelvinator of India Ltd.[ 2010 (1) TMI 11 - SUPREME COURT ] held that there was a difference between power to review and power to reassess under section 147 and that the AO had no power to review and that, if the concept of change of opinion was removed, then, in the garb of reopening of the assessment, a review would take place. There was no failure on the part of the assessee to disclose fully and truly the material facts, nor there was any tangible material with the A.O. which would have otherwise justified the reopening of the assessment by issuing the notice impugned. Petition is allowed.
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2023 (2) TMI 426
Reopening of assessmnet u/s 147 - reason to believe OR reason to suspect - transaction made by the assessee with M/s Magnum Tradex Pvt. Ltd, which is a shell company foated for the purpose of providing accommodation entries - HELD THAT:- In the reasoning recorded, it is not clear as to how M/s Magnum Tradex Pvt. Ltd. is sought to be connected with Rajeev Khushwaha. It has not been alleged in the reasons that M/s Magnum Tradex Pvt. Ltd., with whom the Petitioner made an alleged sale was being run by Rajeev Khushwaha, although, in the reply affidavit, it is stated by the revenue that M/s Magnum Tradex Pvt Ltd, was one of the entities which was foated by Rajeev Khushwaha for the purpose of providing accommodation entries. It is settled law that the issue of reopening of assessment has to be tested only on the basis of the reasons recorded, which reasons can neither be improved upon nor substituted by an affidavit or oral submissions (See First Source Solution Ltd case[ 2021 (9) TMI 248 - BOMBAY HIGH COURT ] Therefore, the action of the assessing Officer for the purpose of reopening of reassessment has to be tested on the basis of reasons recorded by the said Officer and cannot, therefore, be improved upon the reply affidavit. Reasons also do not furnish any explanation as to on what basis and material the assessing Officer came to a conclusion that M/s Magnum Tradex Pvt. Ltd., was indeed a shell entity. The verification of the VAT returns referred to in the reasons recorded suggest only transaction between the Petitioner and M/s Magnum Tradex Pvt. Ltd., in regard to goods sold - There was, thus, no material or basis for the assessing Officer to hold the transaction between the Petitioner and M/s Magnum Tradex Pvt. Ltd., as not a genuine transaction of sale or for that reason to hold that M/s Magnum Tradex Pvt. Ltd. was a shell entity. Reasons recorded do not suggest at all whether pursuant to receipt of information, the assessing Officer had independently applied its mind to the information received or conducted its own inquiry into the matter for the purpose of coming to a conclusion that indeed income assessable to tax had escaped assessment or that the transaction in question with the alleged shell entity was only a paper transaction. - Decided in favour of assessee.
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2023 (2) TMI 425
Correctness/validity of an order under Section 127 - power of transfer of case - case transferred from Kolkata to New Delhi - Validity of order passed by the Principal Commissioner of Income Tax, Kolkata- 9 (PCIT) - HELD THAT:- Having noted the legal position that exercise of power under Section 127 of the Act is an administrative exercise with the ultimate object of assessments and collection of taxes, an assessee cannot be heard to say that it would adversely affect its interest. If reasons exist for transfer, the scope of interference of the Writ Court against such an administrative exercise is narrow and limited and the courts will exercise utmost restrain in stepping into the realm of administrative matters which are best to be left to the decision of the authorities. The learned single bench had elaborately taken note of the factual position and upheld the order of transfer. It is the submission of the learned senior counsel for the appellant that all the findings rendered by the learned single bench makes deep in-road into the merits of the matter and thereby grossly prejudicing the interest of the assessee. While examining the correctness of the administrative action, we cannot be called upon to do and hair-splitting exercise or else we would be converted to doing the role of an assessing officer which is not permissible in a writ proceeding. Several other factual details have been elaborately set out by the learned single bench. These factual details which were set out by the learned single bench are to justify the order of dismissal of the writ petition can at best be construed to be reasons for refusing to exercise jurisdiction to interfere with the order of transfer and nothing more, the findings rendered by the learned writ court are only prima facie findings and they can never cause any dent upon the ultimate decision which the assessing officer in the transferred place would take after taking note of the relevant facts and documents placed before it. The natural corollary which has to follow is that the income tax department was required to assign reasons for proposing the transfer. These reasons were set out in the show-cause notice dated 11.01.2022. The assessee is thus precluded from stating that the show-cause notice is coloured on facts. This being a result of the order obtained by the assessee in the earlier writ petition, the assessee is barred from raising such a contention. Argument was made that the income tax department is expanding the scope by submitting additional information, bringing on record new facts. This again is on account of the facts that the assessee in the writ petition has sought to justify his stand on the reasons recorded, this has necessitated that income tax department to bring facts on record, thus the assessee having invited such a response cannot be heard to raise any complaint in this regard. All that is required by the Writ Court is to consider as to whether there are grounds for transfer as emanating from the reasons recorded. We are satisfied there are adequate reasons. We refrain from commenting upon the reasons as it would impinge upon the rights of the assessee during the assessment proceedings at Delhi as a part of the centralization done by the income tax department in the cases of thirty four other assessees. The plea of mala fide exercise of power has not been pleaded (as required), and from the facts placed by the learned Additional Solicitor General it is clear that such a plea of assessee is specious. Once again it is reiterated that when the assessee himself complained that no reasons were recorded in the show-cause notice dated 05.09.2019 and the order of transfer (quashed in the earlier writ proceedings), the income tax department was duty bound to follow the directions in [ 2021 (10) TMI 46 - CALCUTTA HIGH COURT] Therefore, to state the show-cause notice, and order of transfer were coloured on facts is unacceptable. Assessee, before the learned Writ Court has embarked on facts, as was done before us, this has resulted in the learned Writ Court to consider the same and render a finding. In any event in this litigation adjudication of the merits is out of bounds, hence any argument as advanced on behalf of the appellant in that regard has to necessarily fail. If the assessee states that he claims no right to be assessed at a particular place while exercising the power under Section 127 of the Act, our task becomes easier. Assessee had been provided with adequate opportunity to put further his submissions on the proposal for transfer, opportunity of personal hearing was granted and availed of, reasons have been recorded by the department. There is no challenge to the decision making process. The plea of mala fide has not been pleaded or proved. The plea of inconvenience has been found to be not tenable. In the net result, we have to necessarily uphold the order of transfer. The appellant has not been able to make out any case for interference with the order of transfer on anyone of the settled principles for interference of an administrative order. The learned single bench had made an elaborate exercise and upheld the order of transfer and we find no good grounds to interfere with the same.
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2023 (2) TMI 424
Revision u/s 263 - As per CIT block assessment was erroneous and prejudicial to the interest of revenue post amalgamation - As per CIT AO failed to include the reserves and surplus for quantification of deemed dividend income consequent to amalgamation - CIT was not convinced with the explanation and held that the quantification of deemed dividend income in the case of assessee, the decision of this Court ordering amalgamation with retrospective effect cannot be ignored - calculation of accumulated profits for the purpose of computation of deemed dividend income has to be taken into account the reserves and surplus of both the companies - Tribunal cancelled CIT order of revision - HELD THAT:- Tribunal called for the assessment records and found that a note not for assessee prepared by the assessing officer regarding various issues involved in the block assessment proceedings. The said note not for assessee has been extracted in full wherein there is also a specific observation stating that the matter was discussed with the Additional CIT, Range-III(C), Kolkata along with the submission of the assessee dated 25.03.2004 and in view of the specific methodology of calculating deemed dividend at the time of advancing the loan by the company to the assessee, reference was made to the decision of K. K. Sen [ 1964 (10) TMI 16 - SUPREME COURT] wherein it was held that the subsequent event of amalgamation, though with retrospective effect, is not significant. Therefore, the assessing officer concluded that the assessee s stand of reckoning the reserve and surplus for the purpose of deemed dividend under Section 2(22)(e) of the Act is acceptable and no adverse inference was drawn. This factual aspect was taken into consideration by the Tribunal and it was held, in our view rightly, that the assessing officer was very well aware of the issue and has taken a consistent decision after examining the issue on hand and also after taking note of various decisions of the Hon ble Supreme Court. Tribunal rightly referred to the decision G.M. Mittal Stainless Steel Pvt. Ltd. [ 2002 (12) TMI 13 - SUPREME COURT] . AO has taken a plausible view and there are several decisions of the Hon ble Supreme Court wherein it has been held that if two views are plausible and the assessing officer takes one of the two views and assigns reasons, such order cannot be construed to be erroneous nor prejudicial to the interest of the revenue - twin-test which are required to be simultaneously fulfilled for assuming jurisdiction under Section 263 of the Act are conspicuously absent. Decided in favour of assessee.
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2023 (2) TMI 423
Reopening of assessment u/s 147 - Section 148 notices were not served on the petitioner - As contended the proceedings are time barred - HELD THAT:- Assessing Officer, in any event, has not able to crystallize, what according to him is the exact amount of income, which was chargeable to tax, and had escaped assessment. In these circumstances, the best way forward, in our view, would be to give an opportunity to the petitioner to file objections to the notices issued under Section 148 [i.e., under the old regime] in line with the decision of the Supreme Court in GKN Driveshafts (India) Ltd. v. Income Tax Officer [ 2002 (11) TMI 7 - SUPREME COURT ] The assessment orders, as well as the penalty orders, are set aside. The petitioner will file objections to the notices dated 30.03.2021 issued under Section 148 of the Act [i.e., under the old regime] within the next six weeks.Assessing Officer will accord personal hearing to the authorized representative of the petitioner, whereupon he/she will pass a speaking order.
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2023 (2) TMI 422
Addition u/s 68 - During course of investigation the DGCEI came across certain bank accounts operated by shroffs in which huge cash was deposited - CIT-A deleted the addition - HELD THAT:- CIT(A) has assumed the business of the assessee as shroffs business and from the various documents and evidences presented before us the assessee could not establish that the investment in respect of cash was related to the business of the assessee. The assessee has not appeared before the Assessing Officer and has not filed any details. AR at the time of hearing filed application under Rule 27 thereby supporting the order of the CIT(A) but the CIT(A) has not given detailed finding as to why the said unexplained cash credit should be taken into account when the evidences before the Assessing Officer as well as before the CIT(A) lacks the genuineness creditworthiness of the transactions. Therefore, the CIT(A) was not right in deleting the addition - Decided in favour of revenue.
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2023 (2) TMI 421
Penalty u/s 270A - addition u/s 43CA on the strength of report of the DVO - assessee had sold certain land on various dates at a price less than the stamp value - AO proposed to make addition on the basis of stamp value - assessee made a request for making a reference to the DVO - HELD THAT:- We have gone through the report of the DVO as apparent the value determined by the DVO is again an estimate, inasmuch as he considered certain other properties at different rates and then averaged such rates to find out the value which the property ought to have realized on the transfer. It is vivid that the difference between the value declared by the assessee and the value determined by the DVO is minimal and further the value of the DVO is on the basis of value of certain other nearby properties. Section 270A of the Act provides for imposition of penalty for under-reporting and misreporting of income.It is ostensible from the language of sub-section (6) that an addition made on the basis of estimation cannot provide foundation for under-reported income for the purpose of imposition of penalty u/s 270A of the Act. As the only basis of the addition is the estimate made by the DVO, we hold that the penalty cannot be sustained. We, therefore, order to delete the same. Appeal of assessee allowed.
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2023 (2) TMI 420
Levy of penalty u/s 271(1)(c) - Disallowance made by the AO u/s. 35E - HELD THAT:- materials available on record including the Paper Book filed by the Assessee and the judgment passed by the Hon ble High Court of Gujarat 2013 (11) TMI 574 - GUJARAT HIGH COURT] and consequential decision of the Co-ordinate Bench in the quantum appeal, filed by the Revenue, which was also dismissed. Since the quantum appeal of the Revenue having been dismissed and additions are deleted consequently the question of levy of penalty cannot survive. Therefore the Revenue appeal liable to be dismissed.
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2023 (2) TMI 419
Revision u/s 263 - assessment framed u/s 143(3) as erroneous insofar prejudicial to the interest of the Revenue - Addition u/s 68 - assessee during the year received unsecured loan and identity, credit worthiness and genuineness was not fully established - HELD THAT:- All the details were available or in the knowledge of the learned PCIT with respect to the loan transaction. Despite that the PCIT has restored the issue to the AO for further verification which is not desirable under the provisions of law. Once the AO after considering the materials available on record has taken one of the plausible view, then there is no reason to set aside the same issue to the file of the AO for fresh verification. We hold that there is no error in the assessment framed by the AO under section 143(3) causing prejudice to the interest of revenue. Thus, the revisional order passed by the learned PCIT is not sustainable and therefore we quash the same. Hence, the ground of appeal of the assessee is allowed.
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2023 (2) TMI 418
Levy of penalty u/s 271(1)(b) - non-compliance of the notices issued u/s. 142(1) - Penalty u/s 271F - non-filing of the Return of Income - HELD THAT:- Parliament has used the words may and not shall , thereby making their intention clear in as much as that levy of Penalty is discretionary and not automatic. The said conclusion is further justified by Section 273B of the Act namely Penalty not to be imposed in certain cases . A careful reading of Section 273B encompasses that certain penalties shall not be imposed in cases where reasonable cause is successfully pleaded. In the facts of the present case, it is seen that the explanation offered by the assessee have been ignored by the A.O. as well as the Ld. CIT(A)-NFAC but confirmed the levy of penalties u/s. 271(1)(b) and u/s. 271F of the Act without considering u/s. 273B - Applying the provisions of Section 273B we have no hesitation in deleting the penalties levied u/s. 271(1)(b) and u/s. 271F of the Act since reasonable cause is clearly demonstrated by the assessee. Therefore the penalties levied u/s. 271(1)(b) and u/s. 271F are deleted. - Appeal of assessee allowed.
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2023 (2) TMI 417
Income from other sources taxable u/s 56(2)(viib) - Issue of shares at a premium - Addition on account of share premium valuation - HELD THAT:- CIT(A) after considering the submissions made by assessee has given a finding that the investor is a Venture Capital Fund (VCF) and assessee is a Venture Capital Undertaking. The aforesaid finding of CIT(A) has not been demonstrated by Revenue to incorrect or not in accordance with the provisions of the Act. Assessee has also demonstrated that the business of the assessee does not fall under the negative business list as specified by the Central Government. Revenue has not pointed to any fallacy in the findings of CIT(A) nor has demonstrated that the assessee s case does not fall under proviso to Section 56(2)(viib) of the Act. No reason to interfere with the order of CIT(A) on this issue and thus the ground of Revenue is dismissed. Addition being expense for valuation certification u/s 37(1) - Professional fee paid for share valuation certificate - CIT-A deleted the addition - submission of the assessee that the payment is towards the professional fee, which include monthly retainership fees for the professional services - HELD THAT:- It is an undisputed fact that the aggregate amount has been paid to Vineet K. Gupta Co. Chartered Accountant. We find that CIT(A) after considering the submissions made by assessee has given a finding that the expenses claimed by the assessee have been incurred during the regular course of business and cannot be treated as capital expenses. Before us, Revenue has not pointed to any fallacy in the findings of CIT(A).No reason to interfere with the order of CIT(A) and thus the ground of Revenue is dismissed.
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2023 (2) TMI 416
Addition u/s 69A - addition on account of peak cash shortage - cash deposits made during the year under consideration - benefit of amount received from family members and opening cash in hand - HELD THAT:- Where the assessee being a regular income tax assessee in the earlier years has disclosed sources of income and where there are savings from the earlier years and which are available at the beginning of the year, we find merit in the contention of assessee be allowed an opportunity to demonstrate the availability of savings in form of cash and bank deposits at the beginning of the year through appropriate documentation in support of cash deposits made during the year under consideration. Such availability of cash in hand at the beginning of the year should be from assessee s own past income and savings and should not include any transactions with the relatives and family members. Where there are deposits in her bank account, the onus is on the assessee to provide explanation and substantiate the same through appropriate documentation. Where the assessee claims that the deposits during the year are out of opening cash in hand from her past savings and income, the assessee cannot be denied an opportunity to put forth her explanation. It is only the real income in the hands of the assessee which can be brought to tax and it is incumbent on part of the Revenue to allow such an opportunity to the assessee and let s the explanation so submitted and documentation in support so furnished be tested and examined and basis such examination, the AO can take an appropriate view in the matter as per law. In light of aforesaid, the contention of the ld DR regarding concession made by Assessee during the appellate proceedings cannot be accepted and the prayer of the assessee is allowed. The matter is accordingly set-aside to the file of the AO for the limited purposes of examination the quantum and availability of opening cash-in-hand in the assessee and to consider the same for the purposes of drawing the cash flow statement and determining the peak cash balance in the hands of the assessee and decide the matter as per law after providing reasonable opportunity to the assessee. In the result, ground no. 1 and 2 are allowed for statistical purposes.
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2023 (2) TMI 415
Reopening of assessment u/s 147 - reason to believe - HELD THAT:- Assessee has escaped from assessment and the AO on the specific information received from the Investigation Wings of the Department and information was not vague but was a specific information pertaining to the transaction made by the appellant by stating details of accommodation entry received by the assessee. Sanction has been granted in the background of facts and information which was part of the approval of the folder from the findings of the ld. CIT(A) s order. We also gainful to state to the fact that the AO did not provide the assessee, the copy of reasons to believe recorded by him before furnishing notice u/s 148 of the Act to the assessee was not correct as the CIT(A) in his findings stated that as per order-sheet of AO Copy of the reasons recorded has been provided to the ld. AR. Therefore, ground taken by the assessee are not sustainable accordingly we dismiss the ground taken by the assessee. Addition u/s 68 - accommodation entry to deposit various cash/cheques from the parties - During the assessment proceedings, the ld. AO had given ample opportunity to the assessee but the assessee in his reply stated that now about 8 years have lapsed and he was not in touch with the beneficiaries, therefore, he could not provide the exact address of the parties. All the facts narrated above and the ld. CIT(A) categorically stated while passing his order by which he confirmed the addition made by the ld. AO. He after considering the facts of the case in our hand, we are of the considered view that the order passed by the ld. CIT(A) need not required to be interfered any more by this Tribunal and accordingly, we affirm the order passed by the ld. CIT(A) and set aside the grounds taken by the assessee.
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2023 (2) TMI 414
Penalty u/s 271D - additions were confirmed towards share application money as a colorable device - AO considered the same as deemed deposits and considered it as violation of section 269SS - HELD THAT:- Assessee has accepted the share application money and not any loan or deposit. The share capital money is an irreversible entry. It is not to be repaid by the assessee. Similarly the first part is relating to expenditure incurred by the Group. For intra-group services, this is also not loan or deposit. AO has presumably failed to construe the transaction as well as meaning of section 269SS read with section 271D. The more surprising factor is that ld. Principal CIT (Admin.), who has given permission to file the appeal, failed to appreciate the order of the ld. CIT(Appeals) before authorizing the revenue to file the appeal before the Tribunal. It is unnecessarily wastage of resources. Appeal of the Revenue is dismissed.
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2023 (2) TMI 413
Admission of additional grounds - HELD THAT:- There is no reason to restrict the power of Tribunal u/s 254 only to decide the grounds which arise from the order of the Commissioner of Income Tax (Appeals) and that both the assessee and department have a right to file an appeal/cross objections before the tribunal and the Tribunal should not be prevented from considering questions of law arising in assessment proceedings although not raised earlier. It has further held that the view that tribunal is confined only to issues arising out of the appeal before CIT(A) is too narrow a view to take of the powers of the tribunal. We further find that the case laws relied upon by DR are not applicable to the present facts of the case. Thus as per decision rendered in the case of National Thermal Power Co. Ltd. [ 1996 (12) TMI 7 - SUPREME COURT] admit the additional ground and proceed to dispose of the appeal. Validity of assessment u/s 153C - period of limitation - assessee is challenging the assessment framed under Section 153C/143(3) of the Act being barred by limitation and therefore without jurisdiction - HELD THAT:- Since the date of receipt of assessment/ documents by the AO of the assessee was on 24th / 28th June 2013, the date of search in the case of the assessee in terms of proviso to Section 153C will be F.Y. 2013-14 and the relevant assessment year would be A.Y. 2014-15. Accordingly, the six assessment year for which notice could have been issued under Section 153C of the Act will be for A.Y. 2008-09 to A.Y. 2013-14. The impugned A.Y. 2006-07 being beyond the period of six years, according to us, is barred by limitation. See case of RRJ Securities Ltd [ 2015 (11) TMI 19 - DELHI HIGH COURT] Revenue has not placed any contrary binding decision in its support nor has placed on record any material to demonstrate that the aforesaid decision rendered by Hon ble Delhi High Court in the case of RRJ Securities Ltd. (supra) has been set aside/stayed or overruled by higher judicial forum - Decided in favour of assessee.
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2023 (2) TMI 412
Revision u/s 263 - Difference between sales as per books of accounts and as per 26AS, Identity, creditworthiness and genuineness of certain purchase parties not proved and Salary paid to related parties - HELD THAT:- In so far as difference in sales as per books of assessee and as per 26AS concerned, the assessee had furnished copy of the purchase bills confirmation from purchase parties and also explained the nature of the transaction with Ms. Babita and Ms. Seema. It is found that the PCIT even after providing the said reply by the assessee, set aside the assessment order dated 21/12/2017 and directed to re-examine the same issue. The only reason assigned by the Ld. PCIT was that the explanation of the assessee seems to be plausible and it is not conclusive It is undisputed fact that all the three issues pointed out by the Ld. PCIT in the show cause notice dated 02/02/2017 have been replied by the assessee and the Ld. A.O. has satisfied on verifying the reply and passed the assessment order. Thus, in our opinion, invoking revisionary power u/s 263 of the Act is merely on suspicions is untenable. Further, the Ld. PCIT has not made any discussion on the issues pointed out by him and exercised the power conferred u/s 263 of the Act on the ground that the explanation of the assessee seems to be plausible and it is not conclusive which is not permissible u/s 263. Thus the impugned order passed by the Ld. PCIT liable to be quashed. Accordingly, the Grounds of appeal of the assessee are allowed.
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2023 (2) TMI 411
Income from salaries - Perquisite - Superannuation fund in excess - Adjustment on account of employer s contribution towards approved superannuation fund - as submitted that such employer contribution towards approved superannuation fund could not be treated as perquisites so as to tax it under the head income from salaries - HELD THAT:- CPC while processing the return of assessee made adjustment (disallowance) of Rs. 85, 318/-, out of employer contribution for superannuation fund, which was in excess of Rs. 1.50 Lakhs. CIT(A) upheld the adjustment by taking view that a total sum of Rs. 2,35,318/-was an aggregate contribution to the assessees account for FY 2016-17 for contribution to approved superannuation fund. As per section 17(2)(vii) the amount of any contribution to an approved superannuation fund by the employer in respect of the employee, to the extent it exceeds Rs. 1,50,000/-, shall be treated perquisite to be chargeable under head salaries . Before us assessee vehemently submitted that the amount contributed by the employer to the superannuation fund is not vested in the hand of employee till the event his superannuation or becoming incapable of services and unless right of the employee is vested in the said amount, it cannot be treated amount of perquisite. The submissions of assessee, though seems to be convincing but against the statutory provisions of section 17(2)(vii). None of the case laws relied by the ld AR for the assessee has considered the provisions of section 17(2)(vii). Therefore, no reason to interfere with the finding of the ld. CIT(A). Addition on account of conveyance maintenance reimbursement expenses (CMRE) - assessee submits that the assessee disallowed (offered) 20% of CMRE to tax and remaining amount was offered to tax - assessee restricted his claim to the extent of 80%, only which is spent and remaining was disallowed by assessee voluntarily - CPC while processing return disallowed the same - HELD THAT:- As assessee vehemently submitted that the assessee restricted the claim to the extent of actually spent and the XCPC taxed the entire claim without seeking any details, we find merit in the submissions of assessee that the disallowance was made without giving opportunity of explanation or seeking details of the actual expenditure. On considering the facts and the wage structure of assessee, we are convinced that the assessee has reasonably disallowed 20% of CMRE payment while filing return of income. Therefore, direct the assessing officer to delete the addition/ disallowance of CMRE.
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2023 (2) TMI 410
Estimation of net profit - CIT(A) has adopted 6% net profit rate as against 0.25% disclosed by the assessee - As submitted that this Tribunal in assessee s own case for AY 2012-13 [ 2021 (12) TMI 353 - ITAT RANCHI] has applied net profit rate of 1% and therefore, for the year under appeal, similar rate may be applied - HELD THAT:- Considering the fact that the assessee has himself prayed for the application net profit rate of 6% placing reliance on various judgments including that of Hon'ble Patna High Court in the case of Shyam Bihari [ 2012 (8) TMI 420 - PATNA HIGH COURT] we fail to find any merit in the ground raised by the assessee for applying net profit rate @ 1%. Thus, no interference is called for in the finding of ld. CIT(A). We accordingly dismiss ground nos. 1 2 raised by the assessee. Computation of interest u/s 234B - As contented same should be applied only on the returned income - HELD THAT:- As per provision of Section 234B(1) of the Act and Explanation 1 has a direct bearing on this issue we observe that it refers to assessed tax which in case of regular assessment is a tax on total income determined under such regular assessment. Nowhere in this provision, it is stated that Section 234B of the Act, in the case of regular assessment, is to be computed on the returned income and not on the assessed income. Though the assessee has referred to the judgment in the case of Ajay Prakash Verma [ 2013 (1) TMI 140 - JHARKHAND HIGH COURT] however he failed to convince us that the said judgment is applicable in the instant case pertaining to AY 2010-11, for which the position of law is very clear as provided u/s 234B of the Act. Therefore, we are inclined to hold that interest for default in payment of advance tax u/s 234B of the Act in the case of regular assessment needs to be computed on the assessed tax as provided in Explanation 1 to Section 234B(1) of the Act. Thus, ground no. 3 raised by the assessee is dismissed.
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2023 (2) TMI 409
Valdity of Rectification of mistake u/s 154 - assessment of the assessee was completed u/s 143(3) - CIT(A) adjudicating upon the matter involved in order passed u/s 154 which was neither contested as a separate appeal nor was taken as an additional ground of appeal before Ld.CIT(A) by the assessee - Whether CIT(A) is right in law in admitting additional evidence without recording any reasons thus violating the provisions of Rule 46A(2) and Rule 46 A(3)? - AO disallowed the exemption u/s 54 resulting in an additional tax payable - HELD THAT:- Similar issue came for consideration in the case of Navodaya Foundation Trust [ 2021 (7) TMI 769 - ITAT BANGALORE ] wherein held held by the CIT(A), as issue is not emanating from the order passed u/s 154 of the Act. The assessee cannot use proceedings u/s 154 to file appeal against the order passed u/s 143(1) of the Act. In the present case also, the assessee filed appeal against the order passed by AO u/s 143(3) of the Act dated 14.12.2016. There was no appeal by assessee against the rectification order passed u/s 154 of the Act dated 11.10.2017. Even if the assessee raised the ground in his appeal with regard to addition/deletion made in rectification order passed u/s 154 of the Act before the ld. CIT(A), the ld. CIT(A) must have called for the remand report from the AO, which he failed to do so. Being so, in the interest of justice, we remit the entire issue in dispute to the file of CIT(A) to consider afresh and decide the issue after giving fair opportunity of hearing to both the parties. Appeal of the assessee is partly allowed for statistical purposes.
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2023 (2) TMI 408
Revision u/s 263 by CIT - bifurcation of cash deposits of SBNs in two periods and accepting the explanation of the assessee for the period from 09/11/2016 to 16/11/2016 without inquiring into the merits of the claim - HELD THAT:- It is trite law that in order to invoke section 263, the assessment order must be erroneous and also prejudicial to revenue and if one of them is absent, i.e., if the order of the Income-tax Officer is erroneous but is not prejudicial to Revenue or if it is not erroneous but is prejudicial to Revenue, recourse cannot be had to section 263 - Therefore, as one of the limbs is absent in respect of the addition made by the AO under section 69A of the Act, the impugned revision order passed under section 263 of the Act is set aside to this extent. As regards the amount deposited in cash in SBN from 09/11/2016 to 16/11/2016, which has been allowed by the AO without making enquiries or examinations/verification of the source of cash deposit, we are of the considered view that the assessment order to this extent is erroneous insofar as it is prejudicial to the interest of Revenue in view of the Explanation 2 to section 263 of the Act. Accordingly, the impugned order passed by the learned CIT to this extent is upheld. As a result, ground no.2 raised in assessee s appeal is partly allowed. Allowance of deduction under section 11(1)(d) - Even after rejecting the claim of exemption under section 11 of the Act, the AO allowed assessee s claim of corpus donation under section 11(1)(d) - HELD THAT:- As is evident from the record, the AO on the basis that Form No. 10B was not filed before the due date under section 139(1) rejected the claim of exemption under section 11 - on the contrary, while computing the total income of the assessee, the AO allowed the exemption under section 11(1)(d), and therefore, on this issue, the learned CIT, inter-alia, invoked the provisions of section 263 of the Act. Thus CIT has rightly invoked the provisions of section 263 of the Act on this issue, as once the AO has held the assessee to be not eligible for exemption under section 11 of the Act, the allowance of exemption under section 11(1)(d) of the Act is contradictory to its own finding in the order, which is not only erroneous but is also prejudicial to the interest of the Revenue. It is the plea of the assessee that the amount allowed under section 11(1)(d) vide assessment order passed under section 143(3) was disallowed vide rectification order passed under section 154 of the Act and thus no prejudice is caused to the Revenue. In view of the above, we deem it appropriate to direct the AO to examine the aforesaid plea of the assessee while passing the consequential order and if the disallowance has already been made then there should be no double disallowance. The direction of the learned CIT vide impugned order on this issue is accordingly modified. Appeal of assessee partly allowed.
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2023 (2) TMI 407
Penalty levied u/s 271(1)(b) and / or 272A(1)(d) - assessee failed to comply notice under Section 142(1) - HELD THAT:- The penalty could be imposed for first default and not for each and every notices which remained noncomplied. Before us assessee vehemently submitted that in February, 2021, it was a nationwide severe pandemic of Covid and everyone was taking proper care and caution, due to which the assessee could not make compliance of notice dated 03/02/2021. We find convincing force in the submission of ld. AR of the assessee that corresponding period during which the assessee could not make compliance of notice, issued by AO was a severe Covid-19 pandemic period. However, thereafter the assessee made full compliance of various notices issued by AO and ultimately the explanation or submission furnished by assessee was accepted and passed assessment order. As decided in Akhil Bhartiya Prathmik Shmshak Sangh Bhawan Trust [ 2007 (8) TMI 386 - ITAT DELHI-G ] held that where assessee had not complied with notice under Section 142(1) but assessment order was passed under Section 143(3) and not under Section 144, that meant that subsequent compliance in the assessment proceedings was considered as a good compliance and defaults committed earlier were ignored by Assessing Officer and, therefore, penalty under Section 271(1)(b) was not justified - thus direct the Assessing Officer to delete the impugned penalty. In the result, ground of appeal raised by assessee is allowed.
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2023 (2) TMI 406
Disallowance u/s 40 (a) (ia) - TDS on reimubusement of expenses - payment of car hire charges which is reimbursed to the directors of the company - HELD THAT:- Assessee has submitted that it is a reimbursement of expenditure to the director of the company who is undergoing frequent travel. These payments have been made by the director of the company to various taxi owners. The instances of four persons are mentioned wherein the payment made by the director to those persons - As the above payment is in the nature of reimbursement and paid to Mr. Pankaj Dalal, we find that no tax is required to be deducted at source on amount reimbursement to Mr. Pankaj Dalal. The addition therefore requires to be deleted. Software consultancy charges paid to Orbit Software - As pointed out that assessee has deducted tax at source on the above sum. This fact has also been recorded in the order of CIT (A) that assessee has already deducted tax at source on sum paid to Orbit Software. As the ld CIT (A) has also recorded the factum of payment on which tax is deducted, there is no reason to sustain the disallowance. Accordingly, disallowance is not correct. It is also deleted. Software consultancy charges paid to M/s Springfield Organics - Software is goods therefore, in the given instance; it cannot be subjected to tax deduction at source - this fact needs to be verified by the learned assessing officer. In view of this, we set-aside this ground of appeal to the file of the learned assessing officer for verification. If the purchases of software is traded goods and supplied to another client and not for the use of the assessee, no tax is required to be deducted at source. Appeal of assessee allowed.
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2023 (2) TMI 405
TP Adjustment - selection of MAM [Most Appropriate Method] - RPM v/s TNMM - assessee adopted resale price method, but the transactional net margin method adopted by the TPO - assessee manufacturers and sale products and also provision of designing and technical support in that field engaging itself in providing customized products and services tailored to meet the specific need of customers in different market - HELD THAT:- We find that co-ordinate bench in [ 2022 (12) TMI 670 - ITAT MUMBAI] as per order dated 22.07.2022 relying on the decision of the Hon ble Bombay High Court [ 2015 (2) TMI 407 - BOMBAY HIGH COURT] held that in assessee s case the Resale Price Method is the most appropriate method for benchmarking international transaction in trading segment of import of finished good - Decided in favour of assessee.
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2023 (2) TMI 404
CIRP - Extinguishment of tax dues including the statutory dues owed to the Central Government, any State Government or any local authority post Application u/s 7 of the Insolvency and Bankruptcy Code, 2016 and moratorium under section 14 of the Code was declared - Applicability of Resolution Plan - liability of creditor including the Central Government, State Government or any local authority - dues for the period prior to the date on which the Adjudicating Authority grants its approval under Section 31 - HELD THAT:- A reading of the provisions under section 13 and 14 of the Code along with the decision in Ghanashyam Mishra And Sons [ 2021 (4) TMI 613 - SUPREME COURT ] clearly shows that once the proceedings have commenced by institution of application under section 7 or 9 or 10 of the Code, the continuance of the pending proceedings is prohibited and when once they reach the logical conclusion with due approval of the resolution plan by the Adjudicating Authority under sub section (1) of Section 31, the claims as provided in the resolution plan shall stand frozen and will be binding on the Corporate Debtor and its employees, members, creditors, including the Central Government, any State Government or any local authority, guarantors and other stakeholders. At any rate, for the time being, this appeal cannot be proceeded with during the continuance of the proceedings under the Code. Parties have to work out their remedies before the Adjudicating Authority under the Code. However, depending upon the result of such proceedings before the adjudicating authority in respect of the corporate debtor, appropriate steps if any, may be taken by the appellant(s)/respondent(s).
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Customs
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2023 (2) TMI 403
Seeking release of goods - goods imported by the petitioner constitute bona fide baggage or not - the option to redeem the confiscated goods had not been exercised within the maximum period of 120 days from the date of the adjudication order - Commissioner of Customs (appeal) set aside to the extent of rejection of petitioner s request on the ground of delay in seeking redemption beyond the prescribed period - Revenue has went into appeal before Tribunal - HELD THAT:- Once the appellate authority has passed the order-in-appeal and directed release of the goods on payment of redemption fine, it is not open to respondent No.5 to decline release of such goods despite payment of redemption fine by the petitioner. Respondent No.5, being an officer lower in hierarchy than the Commissioner of Appeals, is bound to comply with the order of the higher appellate authority, unless the order of the higher appellate authority is stayed by a still higher forum. As has been observed by the Supreme Court, unless there is adherence to the principle of judicial discipline, there would be chaos in administration of the tax laws. Such a situation cannot be permitted. The respondents are directed to release the goods declared by the petitioner on 13.08.2021 forthwith upon due verification of payment of redemption fine - petition allowed.
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2023 (2) TMI 402
Simultaneous availment of Status Holder Incentive Scheme (SHIS) and 0% Export Promotion Capital Goods (EPCG) Scheme - Surrender of EPCG Scheme in terms of para 5.14 of Hand Book of Procedure (HBP) prior to the issuance of SHIS Scrips - HELD THAT:- The Supreme Court in Titan Medical Systems Pvt. Ltd. vs. Collector of Customs New Delhi [ 2002 (11) TMI 108 - SUPREME COURT ] has held Once an advance licence was issued and not questioned by the licensing authority, the Customs Authorities cannot refuse exemption on an allegation that there was misrepresentation. If there was any misrepresentation, it was for the licensing authority to take steps in that behalf. Keeping in view the judgment as well as the revised instructions dated 06th February, 2023 issued by the Directorate of Revenue Intelligence, present writ petition is allowed.
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2023 (2) TMI 401
Evasion of custom duty - whether the Customs Act prohibits the criminal prosecution under the IPC - Forging the shipping bills and submitting bogus sipping bills with criminal conspiracy - involvement of certain racketeers in misuse of Duty Exemption Pass Book (DEPB) and Duty Exemption Entitlement Certificate (DEEC) Scheme by using forged shipping bills in the name of fictitious as well as existing firms for obtaining DEPBs or for fulfilling export obligation against DEEC Licenses - Offence under Sections 132, 133, 134, 135 and 135A of the Customs Act - HELD THAT:- The primary allegation is of forging the shipping bills and causing loss to the tune of Rs.17 Crores of custom duty to the Government of India. Forging of document and cheating etc. are not the offences which are defined under the Customs Act. The judgement relied upon by the learned counsel for the petitioner in Union of India Vs. Ashok Kumar Sharma and others [ 2020 (8) TMI 827 - SUPREME COURT ] has no relevance to the facts of the present case as in that case the offence is squarely covered within the ambit of the special statute such as Drugs and Cosmetics Act. The investigating agency or the police would have jurisdiction to investigate the offence committed under the IPC. There may be some overlapping of two statues regarding the offence committed under IPC as well as under the Customs Act, but that would not preclude the registration of the FIR, investigating the offence and taking cognizance and summoning an accused, if after investigation it has been found that such an accused has committed the offence under the IPC besides the Customs Act. There are no merit in the present petition - petition dismissed.
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Insolvency & Bankruptcy
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2023 (2) TMI 400
Seeking approval of Resolution Plan - HELD THAT:- When we look into the reasons given by the Adjudicating Authority for passing the impugned order, it is clear that the Adjudicating Authority has relied on the pleas taken up by several Applicants and the CoC that due to pandemic (COVID-19) large number of Applicants could not come forward to give a good offer and after pandemic, now large number of Applicants have now approached the Adjudicating Authority, showing their willingness to submit a Plan for higher value. The CoC has also expressed its no objection for receiving and entertaining the Applicants. The question whether the CIRP which was finalized during the Covid-19, is liable to be discarded on the spacious ground that Plan was approved during the Covid-19 period, has to be answered in negative. Before the Hon ble Supreme Court in Ebix Singapore [[ 2021 (9) TMI 672 - SUPREME COURT] ], the Successful Resolution Applicant under the Resolution Plan wanted to withdraw from the Plan and has also raised the plea on the basis of Covid-19. The Hon ble Supreme Court noted the aforesaid submission, but held that although Covid-19 had significant impact on the business of the Corporate Debtor, but the legislative intent of the statute cannot be overridden by the Court. The present is not a case where in the process, which was completed by approval of the Resolution Plan by the CoC any breach has been committed. When after following the provisions of the Code and Regulations, the Resolution Plan has been approved by the Adjudicating Authority, the said approval by the CoC has to be respected and cannot be interfered with in exercise of judicial review by the Adjudicating Authority. More so, when there is no such ground that the Plan approved, violates any of the provisions of Section 30, sub-section (2). The object of IBC is to revive the Corporate Debtor and put it again on the track. When a Resolution Plan, has been approved after due deliberations, in exercise of commercial wisdom of the CoC, it has to be accepted that Corporate Debtor was decided to be revived by the Resolution Plan. The CoC being satisfied that financial offer given by the Applicant is satisfactory, exercise their commercial wisdom, even CoC cannot be allowed to change its view, since it is bound by its own decision taken in approving the Resolution Plan. Present is not a case where the CoC is pointing out any breach of procedure or manifest error in their approval of the Resolution Plan, which may be a ground to be pressed before the Adjudicating Authority. The CoC after full consideration has approved the Plan and the financial offer made by the Applicant in the Plan - The Corporate Debtor has to be revived with speed and in timelines, which has been prescribed in the CIRP. Once, the said object is achieved, the same shall not be allowed to frustrate on the grounds, which have been raised before the Adjudicating Authority in the present case. We may notice that in this Appeal, an interim order was passed on 21.09.2022, staying the further process in pursuance of the impugned order dated 06.09.2022, which order is still continued. The impugned order is set aside. The matter is remitted to the Adjudicating Authority to pass fresh order filed by the RP for the approval of the Resolution Plan - Appeal allowed.
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PMLA
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2023 (2) TMI 399
Money Laundering - proceeds of crime - more than 200 accounts were opened in various Banks, to collect the scam money and further route the same, to utilize it for the personal gains, of the scamster/accused - grievance of the petitioner/Enforcement Directorate were to the manner in which the production warrant which was issued on 18.01.2023 by the Learned Special Court was recalled and the accused persons were directed to be set at liberty - HELD THAT:- The interpretation of the learned Senior advocate appearing for the opposite parties that ECIR can be registered only after finality is attained in a criminal proceeding is not acceptable to this Court. Taking into account the provisions of Section 19(3), Section 45 (Explanation), Section 46, Section 65 and Section 71 of the PMLA Act, 2002 read with paragraph 324 of the judgment of Vijay Madanlal Choudhary [ 2022 (7) TMI 1316 - SUPREME COURT ], it is held that the foundation, finding and conclusion of the order dated 21.01.2023 passed by the Learned Special Judge is bad in law and the same as such is set aside. Application allowed.
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2023 (2) TMI 398
Seeking grant of regular bail - scheduled offences or not - illegal tapping of phone calls of NSE employees was conducted under the guise of an agreement between NSE and M/s ISEC Services Private Limited - HELD THAT:- As regards section 72 of the IT Act is concerned, the elements of the said offence are not made out in the present case as neither the Applicant nor the NSE was conferred with any powers under the said Act. Moreover, the Applicant or the NSE was not acting in pursuance of the powers conferred under the IT Act or the rules or regulations made therein. As per the documents placed, it is observed that NSE was recording conversations since 1997 through other vendors and the transactions with ISEC occurred from 2009 to 2017. The Applicant was DMD of NSE till 2010 and JMD till 2013 and MD till 2016. As call recording was done by NSE prior to ISEC s involvement, it is wrong to allege that the Applicant conspired with ISEC to illegally tap and record calls. Thus, the ingredients of section 120B IPC are not made out in the present case - In the present case, there was no complaint from NSE or any employee of the NSE that the Applicant cheated NSE or its employees. Furthermore, there is no allegation that the Applicant deceived or fraudulently induced NSE to deliver any property to any person. The documents titled Periodic Study of Cyber Vulnerabilities clearly records that M/s ISEC proposes to continue its services in the area of electronic monitoring services at NSE . Since NSE was at all times aware that the scope of Periodic Study of Cyber Vulnerabilities includes electronic monitoring, there is no deception, fraud or dishonest inducement on the part of the Applicant - Pertinently, no victim has been identified by the ED who has suffered a wrongful loss on account of deception or cheating by the Applicant. Except for a vague and bald averment that customers have been cheated, there is no mention of the names of the persons who have been cheated. Thus, the ingredients of section 420 IPC are not made out in the present case - prima facie the ingredients of the scheduled offences under IPC viz., Section 120B read with section 420 IPC are not made out against the Applicant. There is no evidence placed on record to prove corruption or abuse of position by the Applicant. The consideration received by M/s ISEC is pursuant to a contract entered into with NSE and work orders issued with the approval of Mr. Ravi Narain, the Managing Director. Thus, the ingredients of section 13(1)(d) r/w 13(2) PC Act are not made out against the Applicant. Hence, scheduled offence under section 13 PC Act is not established against the Applicant - prima facie no scheduled offences against the Applicant are established, the provisions of PMLA cannot be attracted to the present case. In the case of Vijay Madanlal Choudhary [ 2022 (7) TMI 1316 - SUPREME COURT ] the Hon ble Supreme Court has opined that provisions of PMLA would apply when a person has derived or obtained property as a result of a scheduled offence, and then indulged in any process or activity connected with such property - In the present case there is no allegation that the Applicant has derived or obtained any property or proceeds of crime. Additionally, there is no allegation or evidence produced before me to suggest that the Applicant has concealed, possessed, used, projected or claimed any proceeds of crime as untainted property. Prima facie there are reasonable grounds to believe that the Applicant is not guilty of the offence and she is not likely to commit any offence while on bail. Opportunity provided to the ED to oppose the bail application thereby satisfying the twin conditions enumerated under 45 PMLA. The application is allowed and the applicant is granted bail subject to the conditions imposed.
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