TMI Tax Updates - e-Newsletter
March 14, 2022
Case Laws in this Newsletter:
GST
Income Tax
Customs
Corporate Laws
Insolvency & Bankruptcy
PMLA
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
Highlights / Catch Notes
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GST:
Seeking grant of bail - wrongful availment and utilization of Input Tax Credit (ITC) - For grant of bail it is necessary to take into account the apprehension of the respondent that the petitioner who has floated fictitious companies and create records, if let out on bail will tamper the evidence. Since the investigation has entered the crucial stage, the release of the petitioner at this stage will lead to tampering of evidence. - Petition dismissed - HC
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GST:
Seeking grant of bail - irregular availment of Input Tax Credit - fake firms - The object of keeping the person in custody is to ensure his availability to face the trial and to receive the sentence that may be passed. The detention is not supposed to be punitive or preventive; thus this court is of the considered view that since the accused is languishing in judicial custody, his further incarceration would not serve any fruitful purpose. Thus, this court deems it appropriate to enlarge the petitioner on bail - HC
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GST:
Refund of CENVAT Credit by way of cash - transitional credit - Doctrine of Necessity - Payment of service tax on reverse charge on 30.12.2017 which was otherwise eligible for Cenvat Credit - This Court feels that, in these kind of special situations, for which, the provision if not Section 142(3), no other eligible provision is available. Therefore, this Court feels that, since it is a dire necessity, as these kind of situation necessarily to be met with by the Legislation, for which, these transitional provision has been brought in in the Statute Book, there can be no impediment for invoking Section 142(3) of the Act by invoking the “Doctrine of Necessity”. - The matters are remitted back to the respondents for reconsideration - HC
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GST:
Rectification application - Period of limitation u/s 161 - Extended period of limitation due to Covid in view of decision of Supreme Court - In view of the saving of the limitation, since the application for rectification has been filed by the petitioner, the same shall be independently considered notwithstanding anything contained in any other provisions of the Act. - HC
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GST:
Classification of services - rate of tax - Job work or not - activity is coating on the goods supplied by the customers - The activity of the Applicant fits the definition of Job work under the present law. - Rate of GST is 12% - AAR
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Income Tax:
Deduction u/s 80-IA - Nature of Interest income - the interest received on advances and loans given to its employees are receipts in normal course of carrying its business and should be considered as income derived from its essential business activities. Likewise, the late payment by GRIDCO for the electricity supplied, is sought to be made up by GRIDCO by issuing bonds on which the Assessee earns interest. This also therefore, has a direct nexus with the essential business activity of the Assessee. - HC
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Income Tax:
Disallowing entire claim for leave encashment and post retirement medical benefit - the Assessee’s treatment of the liability in respect of the post retirement medical benefits as reflected in its P&L account should be accepted by the Department and cannot be questioned. - the ITAT was not justified in not allowing the entire claim for leave encashment and post retirement medical benefit determined as an accrued liability and computed on the basis of actuarial valuation. - HC
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Income Tax:
Revision u/s 264 - Petitioners after dismissal of the earlier petition by this Court against the same assessment order without filing any statutory Appeal before the CIT (Appeals) with sole intention of avoiding the payment of huge amount of tax determined in assessment order have deliberately chosen the forum of revision under Section 264 of the Act with a view to make out a case to come up before this Court again under Article 226 of the Constitution of India tactfully indirectly to get interference in assessment order which the Commissioner in exercising the power under Section 264 of the Act has refused and this Court has also refused in the first round of litigation. - Petition dismissed - HC
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Income Tax:
Assessment u/s 144B - Addition u/s 68 - Once a request is made by the assessee before the Assessing Officer to give him an opportunity of hearing having regard to the fact that the assessment is high-pitch assessment, then ordinarily such an opportunity should be given so that the assessee may not get a chance to redress the grievance before the higher forum that he was not given adequate opportunity of hearing. It would all depend on the nature of the issues involved in the matter. It is not necessary that in each and every case, the Assessing Officer has to provide personal hearing. Ultimately, it is the discretion of the Assessing Officer that should be exercised judiciously. - Matter restored back - HC
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Income Tax:
Entitlement to benefits u/s 115BAA - Tax on income of certain domestic companies - We dispose of this writ application reserving the liberty for the writ applicant to file an appropriate application addressed to the Chief Commissioner Income Tax under Section 119(2) (b) of the Act referred to above with a request to permit him to file the Form 10 IC electronically. If any such application is filed then the Chief Commissioner shall look into it expeditiously and may exercise his discretion in accordance with law more particularly keeping in mind the object behind Section 119(2)(b) of the Act. - HC
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Income Tax:
Allowable expense u/s 37(1) - provisions for claim Incurred but Not Reported (IBNR) and claim Incurred But Not Enough Reported (IBNER) - whether such provisions are in the nature of contingent liability? - assessee has incurred an expenditure, which is incurred during the year with respect to the provisions made for the IBNER and IBNR claims, on scientific basis and also certified by the valuer with respect to the methodology adopted in making such provisions. Thus, it satisfies the entire ingredient for its allowance u/s 37 (1) of the act. - AT
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Income Tax:
Assessment u/s 153A - While recording the statement during the course of search and seizure and survey operations, no attempt should be made to obtain confession as to the undisclosed income. The Board has again issued a Circular dated 18th December, 2014 and advised the Taxing Authorities to avoid obtaining admission of undisclosed income under coercion/undue influences. Thus in the absence of any incriminating material found during the course of search and seizure action, the confession as recorded during the course of search and seizure action has no evidentiary value. - AT
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Income Tax:
Disallowance of prior period expenses - Deduction of TDS in the current year - it is settled law that deduction can be permitted in respect of only those expenses which are incurred in the relevant accounting year for the purpose of computing yearly profits and gains. We find that the claim of the assessee on the above two heads of expenses pertaining to earlier period cannot be accepted as it has crystallised in the year and the bills were raised in the earlier assessment year. Being so, the said expenditure cannot be allowed as deduction in this assessment year, which is prior period expenses and first proviso to section 40(a)(ia) has no application in the present case. - AT
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Customs:
Seizure of goods - Authority for initiating proceeding against the Petitioner - Power of DRI - Merely because one of the Officers in the search and seizure proceeding belongs to the Customs Department does not mean that the proceeding has been drawn by the Customs Department. All the proceedings in the instant case have been from the office of the DRI. It was never the case of the Respondents that the proceeding not being from the Department of DRI or for that matter the proceedings being drawn by the Customs Department - the plea and the defence taken by learned Assistant Solicitor General or for that matter the Department of DRI are not sustainable nor do it have any substantial force. - HC
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Customs:
Availability of alternative remedy - Rejection of request for cancellation/withdrawal of ex-bond Bills of Entry - reducing the basic customs duty and the agricultural infrastructure and development cess on crude palm oil - the opportunity granted to the appellant is held to be thoroughly inadequate. - the appellant need not be relegated to avail the alternative remedy. We are satisfied that the order dated 21.1.2022 impugned in the writ petition is unsustainable in law and in violation of principles of natural justice apart from having passed by misinterpreting the order passed in the earlier writ petition. Therefore, the order dated 21.1.2022 is liable to be set aside. - HC
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Customs:
Levy of penalty on Customs Broker under Section 132 read with Section 117 of the Customs Act, 1962 - a Customs House Agent or a Customs Broker cannot be fastened with the penalty if the Revenue finds any wrong quoting, etc., in the presented shipping bill. - The Customs Broker, who is the appellant before this forum, cannot be penalized for the alleged contravention - AT
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IBC:
Initiation of CIRP - Validity of order admitting the application by the NCLT - If the ‘Adjudicating Authority’ is subjectively satisfied that there was Debt due and payable in law and in fact, by the Corporate Debtor to in favour of the 1st Respondent/Bank/Financial Creditor then, in law, the ‘Adjudicating Authority’ is left with no other alternative but to admit the application under the I&B Code, 2016. - AT
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Service Tax:
Recovery of short paid service tax - Construction of Complex Service - adjustment of the excess service tax paid - Service Tax when introduced followed the receipt based accounting system for levy and collection of tax. The assessee was obliged to pay the taxes on the basis of the gross amounts received during the taxing period. - the entire issue is because of the change in the manner of accounting of the transaction for the purpose of computation of service tax liability from the accrual basis to the receipt basis. - The issue needs to be adjudged in the favour of appellant - AT
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Service Tax:
Quantification of demand - Business Support Service - whether the services provided by the Theatre Owner to the Distributors/sub distributors by way of providing cinema hall and other infrastructure for the exhibition of the movies in the theatre fall under the definition of Business Support Services? - Matter referred to Larger Bench - AT
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Central Excise:
Clandestine Removal - copper wire - assumption and presumption - no inquiries have been conducted from the persons whose names are appearing in the loose papers/kacchi parchies/ private records, raw material suppliers, transporter or the buyers to establish clandestine manufacture and sale by the Appellants - It has been consistent view of the Tribunal that allegation of clandestine removal cannot sustain merely on the basis of uncorroborated entries in the private record. - AT
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Central Excise:
CENVAT Credit - inputs were sent to job worker under Rule 4(5)(a) of CCR,2004 without reversing the Cenvat credit - job worker instead of following the N/N. 214/86-CE, chose to pay the duty on the job worked goods - the issue is not res integra and appellant are entitled for the Cenvat Credit of duty paid by the job worker. - AT
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VAT:
Seeking to release the raw materials, goods, stock and finished goods seized and detained by the official respondents - A mere lock and seal of the premises is not sufficient to conclude a valid seizure if there is no Seizure Mahazar. The officer themselves can allow the release of the goods lying in the distillery of the fourth respondent. Either way, raw materials of the petitioner cannot be retained - the petitioner has made out a case for release of the raw materials - HC
Articles
Notifications
News
Case Laws:
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GST
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2022 (3) TMI 548
Seeking grant of bail - wrongful availment and utilization of Input Tax Credit (ITC) - issuance of invoices without supply of goods - evasion of input tax credit - bailable offence as per Section 132 of the TNGST Act 2017 or not - Custodial interrogation - HELD THAT:- The reading of Sections 132 (1) (a), (b) and (c), 132(5) of Tamil Nadu Goods and Services Tax Act and the explanation thereof made amply clear that in the instant case the tax evasion exceeds ₹ 500 Lakhs i.e., ₹ 5 lakhs. It is correct to say the arrest memo and remand report does not reflect the same figure. However, the material placed along with the remand report would show that the tax evasion on different heads had exceeding more than ₹ 500 Lakhs. From the material placed by the prosecution show a continuous offence committed by the petitioner herein since 2018-2019 and the figure of ₹ 4,78,47,505/- was only till July 2021. Whereas, the remand application is on 10.01.2022 which reflects the loss of revenue under three different heads with exceeds more than ₹ 5 crores. Custodial interrogation - HELD THAT:- For grant of bail it is necessary to take into account the apprehension of the respondent that the petitioner who has floated fictitious companies and create records, if let out on bail will tamper the evidence. Since the investigation has entered the crucial stage, the release of the petitioner at this stage will lead to tampering of evidence. Petition is dismissed.
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2022 (3) TMI 547
Identification of transport vehicles, which are accompanied along with E-way Bill - clandestine transportation of liquor in the State of Bihar - HELD THAT:- Considering the measures which are suggested to be undertaken by the Prohibition and Excise Department and the Commercial Taxes Department a procedure is required to be evolved to stop import of the illicit liquor inside the State of Bihar by the organized traders in view of the fact that the complicity of the registered dealer inside the State of Bihar under the provision of GST in such cases cannot be ruled out to have illegally imported in garb of schedule goods as liquor has been left outside the purview of GST, as well as, the commercial vehicles entering with liquor without any documents. This Court is of the opinion that a combined effort is required to be taken by the three departments i.e. Commercial Taxes Department, the Department of Prohibition and Excise and the Transport Department to inform this Court about the measures taken by the Government to stop the trade of illicit liquor - the matter will be heard on the point of bail after receiving the report with regard to general procedure to be adopted and particularly with respect to the allegations made in the F.I.R. against the petitioner in the present bail application. List this case on 10.03.2022 under the appropriate heading.
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2022 (3) TMI 546
Seeking grant of bail - irregular availment of Input Tax Credit - purchases from the fake firms - offences under Sections 132 (1)(b), (C )(h), (L) read with Section (5) of CGST Act, 2017 - HELD THAT:- It is well-nigh settled that the provisions of bail are neither punitive nor preventive in nature. The gravity of the offence and the severity of punishment alone is not a factor to be considered while adjudicating the bail plea. There are several other aspects which are required to be considered simultaneously with the gravity of nature i.e. if there is any apprehension that if the accused will be released on bail, he would hamper the prosecution evidence or would flee from justice or would not be readily available for the trial or otherwise hamper the course of smooth trial. Neither any apprehension has been shown by the counsel for the respondent nor any material has been made available from which an inference can be drawn regarding the aforesaid apprehension. The seriousness of the allegations or the availability of the material in respect thereof are not the only considerations for declining the bail. The case in which the petitioner is seeking bail is exclusively triable by the court of Magistrate. The case pertains to economic offence. The duped amount or tax evasion is fixed and calculated. It is well settled that the pre-conviction detention is not warranted by law. The petitioner is behind the bars in this matter since 19.11.2021. It is also well settled that at pre-conviction stage, there is presumption of innocence. The object of keeping the person in custody is to ensure his availability to face the trial and to receive the sentence that may be passed. The detention is not supposed to be punitive or preventive; thus this court is of the considered view that since the accused is languishing in judicial custody, his further incarceration would not serve any fruitful purpose. Thus, this court deems it appropriate to enlarge the petitioner on bail. Bail application allowed.
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2022 (3) TMI 545
Violation of principles of natural justice - impugned orders have been passed without compliance of the mandatory requirements of Section 75(4) of the respective Goods and Service Tax enactments, 2017 - impugned orders proceeds as if the petitioner has not replied to the respective show cause notices which preceded the impugned orders - HELD THAT:- The petitioner has made a first attempt to reply to the show cause notice, after the impugned orders have been passed on 09.11.2021. The petitioner has an alternate remedy before the Appellate Commissioner under Section 107 of the respective Goods and Service Tax enactments. Considering the fact that the petitioner would be required to deposit only 10% of the amount as a condition for pre-deposit, the impugned order is quashed in turn, subject to the petitioner paying a sum of ₹ 7.5 lakhs within a period of 30 days from the date of receipt of copy of this order. If such deposit is made by the petitioner within such period, the respondents shall pass a fresh order after calling the petitioner for a hearing within a period of 60 days thereafter - the writ petition stands disposed off.
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2022 (3) TMI 544
Refund of CENVAT Credit by way of cash - transitional credit - Doctrine of Necessity - Payment of service tax on reverse charge on 30.12.2017 which was otherwise eligible for Cenvat Credit - HELD THAT:- When the GST regime has come into effect from 01.07.2017, under which, the erstwhile tax legislation governing the field hitherto since has been repealed or extinguished, necessarily the Legislature had to bring transitional provisions which they have done so. Accordingly, Sections 140 to 142 have been brought under GST Act wherein Section 140 has been provided as 'Transitional arrangements for input tax credit'. For the purpose of claiming the input tax credit under the GST regime also which otherwise accrued under the erstwhile regime on 30.06.2017 mainly this transitional provision under Section 140 has been made, where, as has been quoted herein above, the registered person is entitled to take Cenvat credit in his electronic credit ledger carried forward in the return relating to the period ending with the day immediately preceding the appointed day. Though there was a balance in the credit insofar as the petitioners' case is concerned, as on 30.06.2017, for which the petitioners respectively made applications invoking Section 140(1) of the Act and such a credit has been carried forward under that Section. However, insofar the present claim made in these three cases are concerned, these credits were not available as on 30.06.2017, because, admittedly, these payments had been made only in the respective dates mentioned above in December 2017 and May 2018 - Once that payment has been made after the cut off date for making TRAN-1 application whether those amount/credit can be sought for to carry forward to the GST regime by making an application once again under Section 140(1) is the question. Merely because, the transitional provision has come into effect from 01.07.2017 and under Section 140(1) of the Act, the persons like the petitioners can make a claim only in respect of the credit which is already accrued as on 30.06.2017 and these credit had come into the account of the petitioners only subsequently, for which, claim under Section 140(1) could not have been made, the chance of making such an application to seek the refund or otherwise of such a credit which has subsequently accrued in the account of the petitioners, cannot be denied - this Court feels that, in these kind of special situations, for which, the provision if not Section 142(3), no other eligible provision is available. Therefore, this Court feels that, since it is a dire necessity, as these kind of situation necessarily to be met with by the Legislation, for which, these transitional provision has been brought in in the Statute Book, there can be no impediment for invoking Section 142(3) of the Act by invoking the Doctrine of Necessity . Since the language used in Section 142(3) of the Act is refund claim, the petitioner has made application for refund claim. However, under the erstwhile law, since the petitioners are not entitled to get any refund claim and their eligibility is confined only by taking the credit under Cenvat Credit Rules, beyond which, the relief cannot be stretched upon. The petitioners application atleast could have been considered by the respondents under Section 142(3) of the Act for the purpose of taking the credit and such credit could have been considered and allowed for carrying forward in the electronic credit ledger of the GST regime which is nothing but a different route than Section 140 and that is the only possibility for dealing with these kind of applications. Hence, this Court has no hesitation to hold that, the reasons stated by the respondents in these cases in passing the orders impugned to reject the claim made by the petitioners are not tenable or these reasons would not stand in the legal scrutiny. The matters are remitted back to the respondents for reconsideration - Petition allowed by way of remand.
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2022 (3) TMI 543
Validity of assessment and reassessment order - Seeking release of attached property - HELD THAT:- It appears that after the assessment order came to be passed, a rectification assessment order came to be passed reducing the liability. We do not intend to look into the legality and validity of the assessment order as well as the rectified assessment order. An assessment order being an appealable order, this Court in exercise of its writ-jurisdiction should not interfere. It appears that the writ-applicant is also aggrieved by the action on the part of the concerned authority in passing an order of provisional attachment of his immovable property in exercise of powers under Section-45 of the Act - The order of provisional assessment is dated 30.07.2020. The order of provisional assessment has outlived its statutory time period. As on date, it can be said to no longer in operation. This writ-application stands disposed of.
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2022 (3) TMI 542
Rectification application - Period of limitation u/s 161 - Extended period of limitation due to Covid in view of decision of Supreme Court - opportunity of personal hearing provided or not - principles of natural justice - HELD THAT:- It is brought to the notice of this Court by the learned counsel for the petitioner in respect of the limitation, there could be no much quarrel from respondent side also as these all are the materials on records. Therefore, the limitation insofar as the petitioner is concerned, is saved by the orders of the Hon'ble Supreme Court of India, hence, on that ground mainly if the rectification application is rejected through the impugned order, the same shall not stand in the legal scrutiny. Insofar as the other reasons given of course on merits according to the respondent is concerned, the language used in Section 161 of the Act is that without prejudice to the provisions of Section 160 of the Act and notwithstanding anything contained in any other provisions of this Act . The words notwithstanding anything contained in any other provisions of this Act covers the entire provisions of the Act with the said non-abstante clause thereby all other issues or all other mandates under various provisions of the Act stand excluded when rectification proceedings initiated either suo motu or at the instance of any officer of the respondent/revenue or at the instance of an application filed in this regard by the affected party within three months period. In view of the saving of the limitation, since the application for rectification has been filed by the petitioner, the same shall be independently considered notwithstanding anything contained in any other provisions of the Act. The earlier show cause notices or notices for personal hearing issued to the petitioner, for which, the petitioner has not responded etc., cannot be cited as a reason for rejecting the rectification application as has been done in the impugned order. This Court has no hesitation to hold that the impugned order is liable to be set aside - the matter is remitted back to the respondent for reconsideration.
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2022 (3) TMI 541
Seizure of goods alongwith the conveyance - intention on the part of the writ applicant to evade tax or not - HELD THAT:- Let Notice be issued to the respondents, returnable on 23 rd February 2022. Mr. Sharma, the learned A.G.P. waives service of notice for and on behalf of the respondents. Since the writ applicant has already deposited an amount of ₹ 3,60,352/- towards tax and penalty, we order provisional release of the goods and conveyance pending the confiscation proceedings. The writ applicant shall file an undertaking on oath with the concerned authority that in the event if the goods and vehicle is confiscated by way of a final order that may be passed under Section 130 of the Act, then he shall pay the redemption fine with interest subject to his right to challenge such order by way of an appeal before the appellate authority under Section 107 of the Act. The two issues raised by the learned counsel appearing for the writ applicant on merits shall be considered on the returnable date.
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2022 (3) TMI 540
Classification of services - rate of tax - Job work or not - activity is coating on the goods supplied by the customers - section 2(68) of the CGST Act, 2017 - whether GST rate of 12% or 18% would be applicable in view of Sr. No. 26 (id) and (iv) of the Notification No. 11/2017 CT-Rate dated 28 June 2017 as amended vide Notification No. 20/2019 CT- Rate dated 30 Sep 2019 - HELD THAT:- After the applicant have undertaken process on the goods supplied by their GST registered principal, the new product that emerges does not have a distinct name, character and use and therefore the applicant cannot be considered as a manufacturer of the impugned products. Further, the title to the goods on which the impugned coating treatments are effected, are with the principals and received by the applicant under the cover of a challan issued by the principal and the goods after process are sent back to the principal, as stated by the applicant during the course of the online hearing. Since no new product comes into existence after the process conducted by the applicant on the goods supplied by its principals, therefore the process undertaken will come under the purview of jobworker as defined under Section 2 (68) of the GST Act, 2017. Thus, it is found that, the applicant is only a job worker and as a job worker, carries out processes on goods supplied by its principals. The services provided by the applicant does not fall under (i), (ia), (ib), (ic) of the above mentioned notification. We have already found that the impugned services supplied by the applicant are in the nature of jobwork - the said services do not fall under entries at items (i), (ia), (ib) and (ic) above. Therefore we find that the subject supply of services will be covered by the residuary entry at item (id) of the said notification, namely, Services by way of job work other than (i), (ia), (ib) and (ic). The activity of the Applicant fits the definition of Job work under the present law. Further, in terms of the Apex court's ruling also, activity of coating is only a process undertaken on goods. Therefore, the activity undertaken by the applicant is covered under the definition of Job work' - the impugned services supplied by the applicant are in the nature of job work services, covered under Entry at item (id) under heading 9988 of Notification No.11/2017-Central Tax Rate dated 28.06.2017 as amended by Notification No. 20/2019- Central Tax (Rate) dt. 30.09.2019 attracting 12% GST.
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Income Tax
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2022 (3) TMI 539
Deduction u/s 80-IA - Nature of Interest income - Advances extended to Employees - interest on the bonds issued by GRIDCO in lieu of unpaid energy bills - Nexus with business activity - Disallowing deduction towards power profit under Section 80-IA (4)(iv) - HELD THAT:- The Assessee offered an explanation regarding interest income earned by it, from advances given to its employees as well as provision of electricity and water charges collected from water through its employees and contractors for facilities in the township, receipt from transit hostel, sale of scrap, insurance claim etc. The facilities were given to its employees for better conditions of employment. This was to improve the overall efficiency of the undertaking which is devoted to the single purpose of generation of power. The Court, therefore, has no difficulty in accepting the submission of the Assessee that the interest received on advances and loans given to its employees are receipts in normal course of carrying its business and should be considered as income derived from its essential business activities. Likewise, the late payment by GRIDCO for the electricity supplied, is sought to be made up by GRIDCO by issuing bonds on which the Assessee earns interest. This also therefore, has a direct nexus with the essential business activity of the Assessee. In CIT v. Meghalaya Steels Ltd [ 2016 (3) TMI 375 - SUPREME COURT ] held that subsidies were reimbursement for either the entire or partial costs incurred towards transporting raw materials to the Assessee s factory or finished products to its dealers, who then sell the finished products. Further, power subsidy, interest subsidy and insurance subsidy were also reimbursed, either wholly or partially, power being a necessary element of the cost of manufacture of the Respondent s products. Extending the same analogy and reasoning to the interpretation of Section 80-IA, this Court is satisfied that on the netting principle, since there is no other activity of the Assessee except power generation, the AO, the CIT(A) and the ITAT, were in error in disallowing the aforementioned sum as deduction under 80-IA of the IT Act. There is merit in the contention of the Assessee that the interest received from the bonds issued by GRIDCO have a direct nexus with its essential business activity and therefore, was income derived from it, thus, making it eligible for such deduction. The question framed by this Court is, therefore, answered in the negative i.e. in favour of the Assessee and against the Department. The impugned orders of the ITAT and the corresponding orders of the AO and the CIT (A) to the above extent for the AYs 2002-03, 2003-04, 2007-08 and 2008-09 are hereby set aside. Disallowing the expenditure incurred by the Assessee on development of periphery of the industry claimed by the Assessee to be wholly and exclusively for the purposes of business - HELD THAT:- Following the rule of consistency, the Court answers the sole question framed in the negative i.e. in favour of the Department and against the Assessee.
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2022 (3) TMI 538
Determining the MAT payable for the purpose of Section 115JA - Profit computation on the basis of the realizable value of such power which has been utilized by the Smelter unit for the manufacture of aluminum - excluding the book profit derived by the assessee from the generation of power under clause (iv) of Explanation to Section 115JA(2) - whether power profits are to be determined on the basis of the realizable price i.e. the price at which the power is sold to GRIDCO? - HELD THAT:- Delhi High Court referred to the decision of the Supreme Court of India in Tata Iron Steel Ltd. v. State of Bihar [ 1962 (9) TMI 49 - SUPREME COURT] and concluded that in arriving at an amount that is to be deducted from book profits - which is really to the benefit of the assessee as it reduces the amount of tax which it is liable to pay under the provisions of Section 115JA of the Act, the principle of apportionment of profits resting on disintegration of ultimate profits realized by the assessee by sale of the final product by the assessee has to be applied. The interpretation placed on the expression business used in Section 2(b) of the Act and holds that the Assessee here is entitled to reduce from its book profits, the profits derived from its CPPs, in determining the MAT payable for the purpose of Section 115JA of the Act. Question (i) is therefore answered in favour of the Assessee and against the Department by holding that the AO, the CIT(A) as well as the ITAT erred in law in not allowing the claim of the Assessee as deduction under Section 115JA(2)(iv) of the Act relating to power profits . Disallowing entire claim for leave encashment and post retirement medical benefit which has been determined as an accrued liability and computed on the basis of actuarial valuation - AO has treated the liability on the above ground as a contingent liability and added it to the book profits. This has been upheld by the CIT(A) and ITAT - HELD THAT:- The Court is of the view that the reasoning of the Supreme Court in HCL Comnet Systems Services Ltd. [ 2008 (9) TMI 18 - SUPREME COURT] should prevail. The Supreme Court there was considering, for the purposes of Section 115JA (common explanation (c)), whether the provisions for bad and doubtful debts as claimed by the Assessee should be treated as ascertained or unascertained liability. Adopting the same reasoning, as far as the present case is concerned, the Assessee s treatment of the liability in respect of the post retirement medical benefits as reflected in its P L account should be accepted by the Department and cannot be questioned. Consequently, question (ii) is answered in the negative by holding that the ITAT was not justified in not allowing the entire claim for leave encashment and post retirement medical benefit determined as an accrued liability and computed on the basis of actuarial valuation.
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2022 (3) TMI 537
Assessment u/s. 153C - time-limit for passing assessment - period of limitation - Scope of amendment made in section 153B of the Income-tax Act, 1961 by Finance Act, 2016, w.e.f. 01.06.2016 - HELD THAT:- The case of the assessee thus was covered under clause (ii) of further proviso to Section 153B(1)(b). The Commissioner, therefore, correctly examined the factual position in the background of such legal proviso and noted that the documents relating to the assessee were sent to the assessing officer and were received by him on 30.09.2014. As per the second proviso, the time-limit for passing assessment would be nine months from the end of financial year of 2014-15 i.e. 31.12.2015 or twenty-one months from the end of financial year in which last of the authorisation and search were made, whichever is later. In this case, these two relevant dates were 31.12.2015 and 31.12.2014 respectively. The assessing officer had to pass the order of assessment latest by 31.02.2015. He completed the assessment on 31.03.2016, which was clearly time-barred. No question of law arises.
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2022 (3) TMI 536
Re-assessment proceedings notice u/s 148 - scope of newly inserted section 148-A - according to the petitioner no notice directly under section 148 of the Act, 1961 could have been issued on 16/04/2021 when the old section 148 stood omitted upon insertion of new section 148-A which came into force with effect from 1/04/2021 - HELD THAT:- As newly inserted section 148-A now specifically provides for issuance of a notice if the Assessing Officer takes a decision to initiate re-assessment and therefore, a procedure has been laid down under section 148-A which is required to be adhered to by the AO after 1/04/2021 i.e. the date on which the Finance Act, 2021 came into force. The parties were heard and during the course of hearing, the counsel for respondent/revenue Shri Sanjay Lal produced a letter dated 24/02/2022 bearing no. 1002 issued by Income Tax Officer - 3 (1) of Bhopal which was addressed to the counsel for the revenue and in the said letter it was stated that though in the notice which was issued to the petitioner herein, the date was mentioned as 31/03/2021 but, the system of the office of the respondents revealed that the Email to the petitioner was infact sent on 16/04/2021. Thus, the counsel for respondent does not dispute that the notice which is impugned in the petition contained in Annexure P/1 infact was issued on 16/04/2021 though the date on the same was mentioned as 31/03/2021 but was issued later on 6/04/2021. In view of the aforesaid letter so produced before us dated 24/02/2022 and in view of the admission by the counsel for respondents, we have no hesitation to hold that the impugned notice is bad in the eye of law, contained in Annexure P/1 dated 31/03/2021 (received by the petitioner on 16/04/2021 through Email) inasmuch as after 1/04/2021, it is mandatory requirement that prior to re-assessment proceedings notice under section 148-A of Income Tax Act, 1961 should be issued to assessee. Since now in view of the admission by the respondents the other reliefs as sought for by the petitioner in the relief clause have become redundant inasmuch as now there is no dispute about the date of issuance of the impugned notice. Accordingly, the impugned notice dated 31/03/2021 (served through Email to the petitioner on 16/04/2021) stands quashed. However, it is left open for the respondents to take recourse to the procedure laid down in newly enacted section 148-A of the Income Tax Act, 1961 if it is required under the law.
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2022 (3) TMI 535
Revision u/s 264 - CIT refused to admit the application - Huge tax demand is pending - subsequent order under Section 154 Arising out of the assessment order passed under Section 143 (3) relating to assessment year 2018-19 wherein taxable amount was determined and it is admitted position that till date petitioner has not paid a single penny in respect of the aforesaid demand - second round of litigation initiated by the petitioners before this Court - HELD THAT:- It is a well-settled principle of law that power of Appellate Authority is much wider than the Revisional Authority and the Commissioner in exercise of his discretionary power of revision u/s 264 of the Act cannot act as an Appellate Authority and go into the merits of the assessment by re-appreciating the facts and evidence and all materials - in view of Explanation I below Section 264 (7) clearly says that any order of the Commissioner u/s 264 of the Act declining to interfere will be deemed not to be an order prejudicial to the assessee. Petitioners after dismissal of the earlier petition by this Court against the same assessment order without filing any statutory Appeal before the CIT (Appeals) with sole intention of avoiding the payment of huge amount of tax determined in assessment order have deliberately chosen the forum of revision under Section 264 of the Act with a view to make out a case to come up before this Court again under Article 226 of the Constitution of India tactfully indirectly to get interference in assessment order which the Commissioner in exercising the power under Section 264 of the Act has refused and this Court has also refused in the first round of litigation.
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2022 (3) TMI 534
Reopening of assessment u/s 147 - Rejection of its objections to a notice for income escaping assessment - HELD THAT:- As the respondents states that he does not even have a copy of the petition and moreover, it is trite law that a writ petition would not be maintainable in such circumstances. In our opinion, the nature of order that we propose to pass would not be an infraction of the law laid down by the Supreme Court. We have considered the issue and set aside the impugned orders (Annexures P-5 to P-8) with a direction to the respondent No.1 to redecide the objections filed by the petitioner after considering all the points raised therein. For this purpose, parties through counsel are directed to appear before respondent No.1 on 2.3.2022 and on any other date when he requires their presence. He is directed to decide the issue on or before 31.03.2022 and till then the further proceedings on the notice shall remain stayed.
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2022 (3) TMI 533
Deduction u/s 801B (10) - housing project is approved, with or without commercial user to the extent permissible under the Rules/Regulations - as per revenue deduction under Section 801B(10) is allowable only for a housing project and when the appellant had constructed a commercial cum residential blocks, they are not entitled for deduction - Whether Tribunal is right in law in holding that the appellant was not entitled to deduction under Section 80 IB of the Income Tax Act in respect of the housing project undertaken and constructed by it? - HELD THAT:- Appellant submitted that the questions of law raised in these appeals were already decided in favour of the appellant by case CIT Vs. Sarkar Builders [ 2015 (5) TMI 555 - SUPREME COURT ]as held that when a housing project is approved, with or without commercial user to the extent permissible under the Rules/Regulations, then, deduction under Section 801B (10) would be allowed - if a project could be approved as a housing project having residential units with permissible commercial user, then it is not open to the income tax authorities to contend that the expression 'housing project' in Section 801B(10) is applicable to projects having only residential units. Also in Umakant Leasing and Financing Company vs. Deputy Commissioner of Income Tax [ 2012 (12) TMI 867 - GUJARAT HIGH COURT ] wherein it was observed, the assessee withdrew the appeal filed before Tribunal on the ground that they have already obtained relief by way of rectification order passed by the Commissioner of Appeal. Subsequently, the Tribunal allowed the appeal filed by the Department and set aside the rectification order The impugned orders passed by the Tribunal are set aside. The matters are remanded to the Tribunal for passing appropriate orders on merits and also in the light of the decisions referred hereinabove. Such exercise shall be completed by the Tribunal as expeditiously as possible, after providing opportunity of hearing to the appellant.
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2022 (3) TMI 532
Assessment u/s 144B - Addition u/s 68 - whether the Assessing Officer committed any error in passing the impugned assessment order? - HELD THAT:- The assessee in his own way has disclosed the source of this particular amount. He is said to have borrowed the amount from the various individuals over a period of time. The source includes the HUF of the assessee's father, loan from his mother, loan from his wife, loan from his friends and relatives, loan from his company etc. In the impugned assessment order also, the Assessing Officer has observed that the assessees seems to have taken unsecured loan from various persons. We do not find anything in the assessment order as to on what basis the Assessing Officer has doubted all such transactions of loan. We are saying so because prima facie, it appears that no inquiry has been undertaken by the Assessing Officer to verify the genuineness of the source. If an inquiry would have been undertaken and if the lenders would have been confronted about such loan transactions, then probably the picture would have been more clear. Over and above the aforesaid infirmity in the impugned assessment order, there is one another good ground on which we are inclined to quash the impugned assessment order. Once a request is made by the assessee before the Assessing Officer to give him an opportunity of hearing having regard to the fact that the assessment is high-pitch assessment, then ordinarily such an opportunity should be given so that the assessee may not get a chance to redress the grievance before the higher forum that he was not given adequate opportunity of hearing. It would all depend on the nature of the issues involved in the matter. It is not necessary that in each and every case, the Assessing Officer has to provide personal hearing. Ultimately, it is the discretion of the Assessing Officer that should be exercised judiciously. In the over all view of the matter, we have reached to the conclusion that we should quash the impugned assessment order so as to give one opportunity to the writ applicant to put forward his case before the authority concerned in a proper manner and to his satisfaction.
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2022 (3) TMI 531
Entitlement to benefits u/s 115BAA - Tax on income of certain domestic companies - absence of the Form 10-IC, the return was assessed in a regular form and a intimation u/s 143(1) of the Act came to be served upon the writ applicant raising a demand - HELD THAT:- We are of the view that the writ-applicants should at the earliest file an appropriate application in writing addressed to the Principal Chief Commissioner/Chief Commissioner making a request to permit him to file the Form 10 IC electronically after condoning the delay in that regard so that the return of the writ-applicant can be re-processed or regular assessment can also be framed accordingly and the liability can be determined. We dispose of this writ application reserving the liberty for the writ applicant to file an appropriate application addressed to the Chief Commissioner Income Tax under Section 119(2) (b) of the Act referred to above with a request to permit him to file the Form 10 IC electronically. If any such application is filed then the Chief Commissioner shall look into it expeditiously and may exercise his discretion in accordance with law more particularly keeping in mind the object behind Section 119(2)(b) of the Act. The Chief Commissioner/Commissioner shall also consider the hardships that the writ-applicant may have to face in the event if he is not permitted to file the Form 10 IC electronically.
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2022 (3) TMI 530
Reopening of assessment u/s 147 - Addition u/s 68 - Whether assessee had proved the identity, credit-worthiness and genuineness of share capital/premium received from disputed shareholders? - HELD THAT:- We observe that Assessing Officer completed the assessment based on the reasons recorded for reopening that assessee has received share application money from Mr. Shirish C. Shah, who provides accommodation entries. Subsequently when the remand report filed before Ld.CIT(A) in which Assessing Officer has agreed that share applicants do not belong to Shri Shirish C. Shah group. Accordingly, Ld.CIT(A) has held that Assessing Officer issued 148 notice with the incorrect reasons. Therefore Ld.CIT(A) allowed the appeal of the assessee for reopening the assessment with incorrect reasons which is bad in law. In light of the above facts on record, we do not see any reasons to interfere with the above findings of the Ld.CIT(A). Accordingly, appeal filed by the Revenue is dismissed.
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2022 (3) TMI 529
Disallowance of claim of depreciation, interest expenditure and administrative expenditure in respect of Block-C - claim disallowed by the AO on the ground that the asset was not put to use - HELD THAT:- We find that in assessment year 2013-14 the Assessing Officer had accepted the contention of assessee that Block-C is complete and allowed assessee s claim of depreciation, administrative and interest expenditure qua Block-C. In respect of the remaining project the administrative and interest expenditure was allowed to be capitalized. The CIT(A) in the impugned assessment year allowed assessee s claim in respect of depreciation, interest and administrative expenditure pertaining to Block-C on the ground that Department has accepted in assessment year 2013-14 that Block-C has been put to use . Once having accepted this position, the AO cannot change his opinion in immediate next assessment year without there being any change in facts and circumstances. We find no infirmity in the impugned order, hence, the same is upheld. - Decided against revenue.
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2022 (3) TMI 528
Allowable expense u/s 37(1) - provisions for claim Incurred but Not Reported (IBNR) and claim Incurred But Not Enough Reported (IBNER) - whether such provisions are in the nature of contingent liability? - HELD THAT:- CIT(A) while deciding the issue has relied upon the decision National Insurance Company Limited [ 2016 (8) TMI 326 - ITAT KOLKATA] has held that the provisions made available the above claim are based on scientific calculation with a proper and rational and therefore, it could only be termed as ascertain liability. Though the above decision was rendered with respect to the computation of book profit under section 115JB of the Act, however, the learned CIT (A) applied it and allowed the claim of assessee for deduction under section 37(1) for the reason that the claim of the assessee is ascertained claim, supported by Actuarial valuation and also made on a scientific basis. To reach at this calculation, the learned CIT (A) obtained information for 6 different assessment years and found that the actual claim settled is always higher than the provisions made by the assessee. This it shows that the provisions made are not excessive - this claim is allowed to the assessee from year to year. In view of this, we find that assessee has incurred an expenditure, which is incurred during the year with respect to the provisions made for the IBNER and IBNR claims, on scientific basis and also certified by the valuer with respect to the methodology adopted in making such provisions. Thus, it satisfies the entire ingredient for its allowance u/s 37 (1) of the act. Thus, there is no infirmity in the order of the learned CIT (A) in allowing the claim under section 37(1) - Decided against revenue. TDS u/s 194H - TDS on co-insurance fee u/s 40(a)(ia) - whether the assessee is not required to deduct tax at source on such payments? - HELD THAT:- In the decision of the coordinate bench [ 2009 (2) TMI 234 - ITAT BOMBAY-G] we find that there is no discussion with respect to any of the agreements between the insurance company and the reinsurance Co, no such agreements were also available before us. Therefore it is very difficult for us to say without looking at the evidence that the provisions of Section 194H do not apply The honourable High Court [ 2019 (8) TMI 1803 - BOMBAY HIGH COURT] has already held that the provisions of Section 194D do not apply to such commission. Therefore it is pertinent to examine whether the provisions of Section 194H applies to it or not. Before us, the assessee has relied merely on the decisions. There are neither the copies of agreement of Reinsurance/coinsurance between the parties - we did not find any guidance that how the above payments were held to be on principal to principal basis and are not covered u/s 194 H of the Act , because para no 31 of the order merely says that it agrees with arguments of the assessee. Thus, these facts are not coming from the order of the lower authorities also. Therefore, in absence of any evidence placed before us, we are not in position to decide whether the above payments are covered u/s 194 H or not. We set-aside the whole issue back to the file of the learned assessing officer with a direction to assessee to produce the relevant agreements and arrangements before the assessing officer to show that the above payment does not fall within the purview of Section 194H of the act. The learned assessing officer may examine the same and then decide whether on such payment the provisions of Section 194H applies or not based on the various arguments raised before him by the assessee - ground no. 2 of the appeal of the Assessing Officer is allowed subject to above direction. Nature of expenditure - expenditure incurred towards the purchase of pen drives, laptop adaptors etc. - whether such expenditure incurred by the assessee creates enduring benefit and was a capital asset eligible for depreciation u/s 32 - HELD THAT:- We find that identical issue arose in case of the assessee for Assessment Year 2006-07 to 2008-09 [ 2015 (11) TMI 1858 - ITAT MUMBAI] relying on the decision of Southern Roadways Ltd. [ 2006 (10) TMI 82 - MADRAS HIGH COURT] held that purchase of hard disk, battery, etc. is revenue expenditure and not capital. Further identical issue in case of the assessee honourable Bombay High Court [ 2019 (8) TMI 1800 - BOMBAY HIGH COURT] as already decided this issue in favour of the assessee. Therefore, this issue is squarely covered in favour of the assessee. Hence, we confirm the order of the learned CIT (A) in deleting the above disallowance. In the result, ground No. 3 of the appeal is dismissed.
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2022 (3) TMI 527
Unaccounted purchases of jewellery - search u/s 132 - Entitlement to claim back the seized articles i.e. the gold jewellery - HELD THAT:- CIT(A) recorded a finding that the writ applicant herein had purchased gold from M/s. Parv Kundan and Diamonds Private Limited vide the bill dated 26th October 2017 and had also made payment through the banking channels. There is a finding of fact recorded by the CIT(A) which has attained finality as the Revenue not thought fit to challenge the order passed by the CIT(A) before the appellate Tribunal that the purchases were duly accounted in the books of account of the assessee i.e. the writ applicant herein. CIT(A) further recorded that even if the version of M/s. Parv Kundan and Diamonds Private Limited as regards the transaction with the writ applicant herein before the DDIT (Investigation), Delhi was to be accepted as true, still it would not make any difference because the purchase has been recorded in the books of account of the writ applicant and payment has been made by the writ applicant through banking channel. CIT(A) came to the conclusion that the said purchase cannot be termed as unaccounted. In view of the aforesaid findings recorded by the CIT(A) and such findings having attained finality as the order of CIT(A) has not been challenged further by the Revenue before the appellate Tribunal, we are left with no other option, but to accept the case put up by the writ applicant that he had purchased the gold in question from M/s. Parv Kundan and Diamonds Private Limited and had also accounted for the same in his books of account. In such circumstances, the Revenue cannot withhold the seized gold jewellery weighing 524.500 grams. It has got to be released in favour of the writ applicant.
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2022 (3) TMI 526
Unexplained cash transactions - reliance on information from seized pages - During Search operation, revenue officials came across certain loose sheets which contained the details of settlement between the groups - HELD THAT:- There was a family settlement between the Ashok Ruia Group and Bharat Ruia Group and it is fact on record that both parties agreed to exchange the shares of companies in which cross holding of shares held between the groups. Accordingly, the Ashok Ruia Group agreed to acquire the share of Phoenix Mills Limited, Galaxy Entertainment Limited, RR Private Limited and Senior Holding Private Limited. CIT(A) has elaborately discussed the various issues in his order and in summary, he came to conclusion that no definite information from seized pages, no inquiry by Investigation wing or the Assessing Officer, no confessional statement available with the department, inconsistent approach of the AO i.e., some other transactions with # has not been treated as cash transactions, no corroboration of evidence to support the theory of # equals cash and no unaccounted cash or undisclosed income which was found. On the basis of the above factual finding by the Ld.CIT(A), we can say that the addition was based on the 'rough working and estimates which is prepared by the staff of the brother of the assessee. The presumption made by the Assessing Officer is not self-sufficient and is contradictory to the other seized papers. Thus, the addition made by the Assessing Officer on account of alleged cash payment on family settlement is factually incorrect and we do not see any reason to interfere with the findings of Ld.CIT(A). Accordingly, we dismiss the ground no.1 raised by the revenue. Undisclosed income - HELD THAT:- Addition of ₹.332,415/- based on the cash found during search ie., ₹.18,32,415 and Assessing Officer accepted ₹.15 lakhs, which is out of funds from Scrap Deposit Account, the difference as undisclosed income in the hands of the assessee, observing that assessee could not produce any evidence to substantiate the difference amount. Ld.CIT(A) considered the overall situation and gave relief to the assessee on the basis of his social status and income declared by the assessee over the years. We are incline to agree with the above findings and do not see any reason to interfere with the above. Therefore, the ground no 2 raised by revenue is accordingly dismissed.
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2022 (3) TMI 525
Condonation of delay - there is huge delay in filing these three appeals i.e. 859 days, 669 days and 755 days - whether the assessee had sufficient cause for not presenting the appeals within time allowed u/s. 249(2) of the Act - As submitted that non filing of the appeal was due to ill health of the accountant - HELD THAT:- It is admitted fact that the assessee is a firm and not an individual. The assessee is having many employees and it is binding duty of the assessee to verify whether the appeals were filed before the appropriate forum or not. As observed by the Hon'ble Apex Court, in many cases, the law assist those who are vigilant and not those who sleep over their rights. In this case, the assessee is not at all vigilant and is also negligent in pursuing of filing of appeals As the period of limitation should not come as a hindrance to do substantial justice. In this case, the assessee has not given any sufficient and reasonable cause to explain the huge delay in filing of the appeals - we are of the firm view that there is no other alternative for the Ld. CIT(A) to reject all the appeals at the threshold. We feel that the delay has not been properly explained by the assessee and it has not brought any material on record to show sufficient cause for such delay. Therefore, there is no merit in considering the grounds of appeals raised by the assessee and accordingly dismissed.
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2022 (3) TMI 524
Revision u/s 263 by CIT - assessment was sought to be reopened by the ld. AO u/s. 147 on the ground that assessee had not offered profit earned to tax on surrender of purchase of pension policy from Bajaj Alliance Insurance Company - HELD THAT:- The issue which is sought to be revised by the ld. PCIT in Section 263 proceedings was already considered and decided by the ld. CIT(A) in the hands of the assessee for A.Y. 2011-12. As per the provisions of Clause (c) of Explanation to Section 263(1) of the Act, the matter which has already been considered and decided by the ld. CIT(A) cannot be the subject matter of revision by the ld. PCIT u/s. 263 of the Act. Even though no addition was made by the ld. AO in Section 147 assessment dated 12/12/2018 in line with order of ld. CIT(A), still in our considered opinion, there would be no prejudice that would be caused to the Revenue as the additional disallowance contemplated by the ld. CIT(A) u/s. 14A of the Act would be made in either case by the ld. AO in the order giving effect proceedings to the ld. CIT(A). Hence, there is absolutely no prejudice that would be caused to the interest of the Revenue. Hence, one of the pre-requisite of invoking Section 263 of the Act fails. PCIT herein is only seeking to revise the order passed by the ld. AO u/s. 143(3) r.w.s. 147 of the Act dated 12/12/2018. In the said re-assessment proceedings, the ld. AO had not even made any addition despite the fact that he had reason to believe that income of ₹ 11,55,330/- had escaped assessment in the hands of the assessee which was sought to be taxed u/s. 56 of the Act as per the reasons recorded. Hence, when the very basis of reasons recorded by the ld. AO was ultimately not added by the ld. AO in the re-assessment proceedings, then the primary reason to believe that income of the assessee had escaped assessment fails and such re-assessment cannot be treated as a valid order in the eyes of law. The same is to be declared as void ab initio. Reliance in this regard was rightly placed on the decision of Jet Airways [ 2010 (4) TMI 431 - HIGH COURT OF BOMBAY ] When an assessment framed by the ld. AO is unsustainable in the eyes of law, the said invalid and illegal order cannot be subject matter of section 263 proceedings. On this count also, the revision order passed by the ld. PCIT u/s. 263 of the Act deserves to be quashed. - Decided in favour of assessee.
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2022 (3) TMI 523
Late payment of employee's contribution of PF and ES I - HELD THAT:- As decided in case of PCIT vs Pro Interactive Service (India) Pvt. Ltd [ 2018 (9) TMI 2009 - DELHI HIGH COURT] in view of the judgement of the Division Bench of Delhi High Court in Commissioner of Income Tax versus AIMIL Limited, [ 2009 (12) TMI 38 - DELHI HIGH COURT] legislative intent was/is to ensure that the amount paid is allowed as an expenditure only when payment is actually made. We do not think that the legislative intent and objective is to treat belated payment of Employee's Provident Fund (EPD) and Employee's State Insurance Scheme (ESI) as deemed income of the employer under section 2(23)(x) - Decided in favour of assessee.
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2022 (3) TMI 522
Delay in deposit of employees contribution related to EPF ESI - HELD THAT:- As decided in case of PCIT vs Pro Interactive Service (India) Pvt. Ltd [ 2018 (9) TMI 2009 - DELHI HIGH COURT] in view of the judgement of the Division Bench of Delhi High Court in Commissioner of Income Tax versus AIMIL Limited, [ 2009 (12) TMI 38 - DELHI HIGH COURT] legislative intent was/is to ensure that the amount paid is allowed as an expenditure only when payment is actually made. We do not think that the legislative intent and objective is to treat belated payment of Employee's Provident Fund (EPD) and Employee's State Insurance Scheme (ESI) as deemed income of the employer under section 2(23)(x) - Decided in favour of assessee.
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2022 (3) TMI 521
Assessment u/s 153A - incriminating material found during the course of search and seizure action or not? - Addition of capital gain u/s 68 - whether AO has grossly erred in law in completing assessment u/s 153A r.w.s. 143 (3) even when no incriminating material whatsoever found in course of search which could suggest any undisclosed income so as to initiate proceedings u/s 153A? - HELD THAT:- Neither in the assessment order nor in the order of the ld. CIT (A) there is any mention or finding that the additions have been made by the AO on the basis of any incriminating material found during the course of search and seizure in the case of the assessee. AO has solely relied upon the report of the Investigation Wing and statement of one Shri Anuj Agarwal recorded by the Investigation Wing during the survey under section 133A of the Act. Therefore, even if the information/report of the Investigation Wing Kolkata is considered as a relevant evidence, the same cannot be regarded as incriminating material unearthed during the course of search and seizure u/s 132 in case of the assessee. The requirement for making the addition under section 153A in the assessment years where the assessment was not pending on the date of search and the proceedings are in the nature of reassessment is essentially the incriminating material disclosing undisclosed income which was not disclosed by the assessee. In the case in hand, the AO himself has not claimed any incriminating material found during the search and seizure in the case of the assessee. Accordingly, the additions made by the AO while passing the assessment order under section 153A for the assessment year 2010-11 are not sustainable and accordingly the same are liable to be deleted. Addition u/s 68 - The assessee brought on record the evidence in the shape of bills, allotment of shares, payment through banking channel, dematerializing of the shares in the Demat account of the assessee and sale of the shares through Stock Exchange from the Demat account of the assessee. The documentary evidence which can be independently verified and the correctness of the same cannot be questioned being the payment made by the assessee through banking channel reflected in the bank account statement as well as dematerializing of the shares in the Demat account proving the fact of holding of the shares by the assessee in the Demat account. The evidence produced by the assessee has established at least two facts that the assessee was holding the shares in his Demat account and the payment for purchase consideration was made through banking channel which is also not disputed by the AO. AO has not brought on record any material to controvert or disprove these evidences of payment through banking channel, holding of the shares in the Demat account of the assessee, sale of shares from the Demat account through Stock Exchange at the prevailing price in the Stock Exchange on the date of sale. Thus the conclusion of the AO is based on suspicion and surmises without any tangible material to show that the assessee s own unaccounted income has routed back to the assessee in the shape of Long Term Capital Gain. While recording the statement during the course of search and seizure and survey operations, no attempt should be made to obtain confession as to the undisclosed income. The Board has again issued a Circular dated 18th December, 2014 and advised the Taxing Authorities to avoid obtaining admission of undisclosed income under coercion/undue influences. Thus in the absence of any incriminating material found during the course of search and seizure action, the confession as recorded during the course of search and seizure action has no evidentiary value. It is also pertinent to note that if a confession revealing certain information or disclosing certain transactions which are not disclosed by the assessee in the books of account, the same has a good evidentiary value and a simplicitor retraction of such statement cannot be accepted until and unless the assessee at the time of retraction explains the mistakes and circumstances under which such mistakes were committed while making the confession. In the case in hand, the confession of the assessee is not revealing any transaction which is not already disclosed or recorded in the books of account. Therefore, any confession of undisclosed income which is already part of books of account as well as already disclosed in the return of income filed under section 139(1), in the absence of any supporting documentary evidence cannot be regarded as a good evidence for addition. Hence, we do not find any error or illegality in the impugned order of the ld. CIT (A) qua this issue. This covers the Ground Nos. 1 to 7 of the Revenue s appeal.
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2022 (3) TMI 520
Rejection of books of accounts - Estimation of total income - addition at 25% of the gross receipt of the assessee by AO - CIT(A) restricting the addition by estimating the net profit @ 1% of the total turnover - HELD THAT:- CIT(A) has noted that the assessee has at an average returned profit of 0.03% in the preceding two years which is verifiable from the Tax Audit Report placed on record and which was not disputed by the A.O. in remand proceedings. CIT(A) has also taken note of the submissions of the counsel of the assessee before him that in the line of business in which the assessee indulged in the wholesale trading business of white paper and craft paper used for packaging, the net profit varies from 1% to 3%. CIT(A) also took note of the fact that in the impugned year, the assessee had claimed bad debts written off to the tune of ₹ 1,85,52,149/- which further reduced its net profit. He noted that the A.O. had accepted the allowability of this claim to the extent of ₹ 1,19,95,434/- subject to the condition that the income with respect to the same was offered by the assessee in previous year which the A.O. noted that the fact on record. Therefore considering the exceptional item of bad debts written off and the submissions of the assessee, he held a net profit rate of 1% of gross sales to be reasonable and justified. D.R. has been unable to controvert any of the facts found by the ld. CIT(A) as above vis- -vis the net profits returned by the assessee in its line of business as also the claim of bad debts written off. Moreover he was unable to justify 25% net profit rate, in the backdrop of the aforesaid facts. We find the estimation of net profit by the Ld. CIT(A) @ 1% of the gross turnover to be justified and reasonable and see no reason to interfere in the same. We therefore uphold the order of the Ld. CIT(A) estimating the income of the assessee by applying the net profit rate of 1% to be gross turnover of the assessee. - Decided against revenue.
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2022 (3) TMI 519
Disallowance of prior period expenses - Deduction of TDS in the current year - Application of first proviso to section 40(a)(ia) - scope of amendment to section 40(a)(ia) - whether assessee is entitled for claiming deduction in the assessment year under consideration? - contention of the ld. AR before us is that these two expenditure were actually incurred by the assessee in the assessment year under consideration as this expenditure crystallised in the year under consideration and the same has to be allowed in view of the proviso to section 40(a)(ia) - HELD THAT:- The amendments to section 40(a)(ia) are made to alleviate the genuine hardships and unnecessary financial liabilities imposed on the taxpayers by refusing to give deductions of bona fide expenditure only for the reason of technical non-compliance of TDS provisions. Such an attempt was earlier also made by making the amendments to the provisions of section 40(a)(ia) by the Finance Act, 2008 and the said amendments were consciously made with retrospective effect from 1-4-2005 keeping in view that the same were made with a view to mitigating the hardships caused to the assessee. The amendments made again to the provisions of section 40(a)(ia) by the Finance Act, 2010 to tone down the rigour of law with the same intention, however, are made with effect from 1-4-2010. This proviso will come to the rescue of the assessee, only when the expenditure was claimed by the assessee as a deduction in the earlier assessment year which was disallowed by the AO by invoking the provisions of section 40(a)(ia) of the Act on the reason of non-deduction of tax at source or remitting the same to the Government after deduction. But in this case, the assessee has not claimed this expenditure as deduction in the earlier assessment year on account of nondeduction of tax by invoking the provisions of section 40(a)(ia) of the Act. Being so, when it was not allowed disallowed by the AO in the earlier assessment year by invoking the provisions of section 40(a)(ia), the assessee in the subsequent assessment year cannot claim it as a deduction on payment basis by resorting to first proviso to section 40(a)(ia) of the Act. More so, it is settled law that deduction can be permitted in respect of only those expenses which are incurred in the relevant accounting year for the purpose of computing yearly profits and gains. We find that the claim of the assessee on the above two heads of expenses pertaining to earlier period cannot be accepted as it has crystallised in the year and the bills were raised in the earlier assessment year. Being so, the said expenditure cannot be allowed as deduction in this assessment year, which is prior period expenses and first proviso to section 40(a)(ia) has no application in the present case.
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Customs
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2022 (3) TMI 518
Seizure of goods - Gold and Silver were seized from the office and residential premises of the Petitioner - whether the respondents i.e. the Directorate of Revenue Intelligence (DRI), are not authorized for initiating proceeding against the Petitioner under the provisions of the Customs Act, 1962 - HELD THAT:- Chapter XIII of the Customs Act deals with Searches, Seizure and Arrest . Chapter XIII starts from Section 100 and ends to Section 110A. The Sections referred under Chapter XIII prescribe the proper Officer to initiate steps or an Officer of the Customs empowered in this behalf by general and special order to take appropriate recourse under the provisions of Chapter XIII - After the proceeding under Chapter XIII is carried out, comes the question of Confiscation of improperly imported goods, etc. and which has been prescribed in Section 111 under Chapter XIV which deals with the Confiscation of goods and conveyances and imposition of penalties . Plain reading of the contents of the Notification dated 2.5.2012 makes it evident that the said Notification is only a Notification under Section 2(34) of the Customs Act. This would also make clear that the Respondents have not been able to produce any Notification issued by the Central Government published in the Official Gazette under Section 6 of the Customs Act empowering the DRI also to exercise the functions of the Board or any Officer of the Board or any Officer of the Customs under the Customs Act - infact in the instant case there is no Notification issued under Section 6 of the Customs Act entrusting the functions under the Customs Act also upon the Officers of the DRI. The Division Bench of the Bombay High Court also had an occasion of dealing with a similar issue in KITCHEN ESSENTIALS ORS. VERSUS THE UNION OF INDIA ORS. [ 2021 (10) TMI 1267 - BOMBAY HIGH COURT ] wherein the challenge was to the proceeding initiated by the DRI asking the Petitioners therein to provide the details of the imports made by them and other information. Coming to the facts of the present case, admittedly, the proceeding initiated against the Petitioner is by the DRI. From the documents enclosed also, there is no dispute to the fact that the proceeding is not by the Customs Department or the officials of the Customs Department. Merely because one of the Officers in the search and seizure proceeding belongs to the Customs Department does not mean that the proceeding has been drawn by the Customs Department. All the proceedings in the instant case have been from the office of the DRI. It was never the case of the Respondents that the proceeding not being from the Department of DRI or for that matter the proceedings being drawn by the Customs Department - the plea and the defence taken by learned Assistant Solicitor General or for that matter the Department of DRI are not sustainable nor do it have any substantial force. This Court is inclined to allow the present Writ Petition and to hold that the issuance of Notice dated 29.10.2021 (Annexure P-3) issued under Section 110(2) of the Customs Act, 1962 and the subsequent Notices/Summons issued to the Petitioner are all without any authority of law and are therefore not sustainable - the Writ Petition is allowed.
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2022 (3) TMI 517
Availability of alternative remedy - Rejection of request for cancellation/withdrawal of ex-bond Bills of Entry - reducing the basic customs duty and the agricultural infrastructure and development cess on crude palm oil - whether the appellant should be directed to avail the alternative remedy or whether the writ Court can exercise jurisdiction despite availability of alternative remedy under the statute? - non-application of mind - violation of principles of natural justice - HELD THAT:- The Hon ble Supreme Court in several decisions have culled out certain exceptions to the restriction in refusing to entertain a writ petition when alternate remedy has been provided for. Some of the exceptions being that when an order was passed in violation of principles of natural justice; when the order has been passed without application of mind; or where the order suffers from the vice of total lack of jurisdiction etc. If the appellant s case falls within any one of the exceptional circumstances they need not be relegated to the statutory remedy. In any event the direction issued by the learned writ Court in the earlier writ petition was by directing the fifth respondent to give an opportunity of hearing and pass a speaking order. Opportunity of hearing should be an effective opportunity of hearing and not illusory. There may be several cases where under the pretext of being infected by Covid-19 virus several employees had not reported for duty. There is every likelihood that the Customs Department would also have such cases. That apart, all establishments were functioning with less than 30% staff, public transport system was withdrawn. There was also restriction on plying of private vehicles on road. Therefore, the opportunity granted to the appellant is held to be thoroughly inadequate. Further, it is reiterated that the direction for release of the goods upon compliance of certain conditions can have no impact on the direction issued on the fifth respondent to pass a final order after granting opportunity of hearing to the appellant. The appellant need not be relegated to avail the alternative remedy - the order dated 21.1.2022 impugned in the writ petition is unsustainable in law and in violation of principles of natural justice apart from having passed by misinterpreting the order passed in the earlier writ petition. Therefore, the order dated 21.1.2022 is liable to be set aside. Petition allowed - decided in favor of petitioner.
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2022 (3) TMI 516
Seeking directions to respondents for the issuance of License to petitioner to act as a Custom Broker under Customs Brokers Licensing Regulations, 2013 - consideration of petitioner as par with other selected candidates for the issuance of License to petitioner to act as a Custom Broker - the petitioners are seeking directions be given to the respondents to issue license of Custom Broker under the Custom Broker Licensing Regulation, 2013 - HELD THAT:- There is no dispute that the call letters were issued to the petitioners on April 30, 2019 asking them to appear in the oral examination (on May 23, 2018/May 25, 2018) before the communication dated May 03, 2019 was sent to the Principal Director General, NACIN. On the date of April 30, 2019 when such communication was sent there was no decision that the cut of marks for oral examination was 60 and not 50. It cannot be disputed the selection process with regard to the petitioner had started under CBLR, 2013 and it is also conceded by Mr. Harpreet Singh that under the CBLR, 2013, a candidate is entitled to appear in oral examination, on two occasions within a span of two years. The petitioners herein did appear in the oral examination, once but had not qualified. The second chance of oral examination in which the petitioners were eligible / entitled to appear, cannot be on different parameters. Otherwise, there would be anomaly, inasmuch as for written examination they were assessed at 50 marks, but for oral examination at 60 marks. Further, the right of consideration on same parameters could not have been taken away. That apart, it is not the case of the respondents that before the petitioners appeared in the oral examination held on May 23/25, 2019 the petitioners were put to notice that their consideration for oral examination would be on the basis of 60 marks. In the absence of such a notice to the petitioners the criteria could not have been changed. Further, it is not the case of the respondents that petitioners have not achieved 50 marks in the oral examination held on May 23, 2019/May 25, 2019, hence, the petitioners having qualified the written examination on the basis of 50 marks, they have to be assessed at 50 marks in the oral examination, otherwise, it shall have the effect of changing the criteria midway, which is impermissible. The writ petitions are allowed and disposed of.
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2022 (3) TMI 515
Exemption from additional duty of Customs - entire case is based on the allegation that the assessees have claimed exemption from additional duty of customs under Notification No.21/2012-Cus wrongly in their bills of entry therefore, they were made themselves liable for penalty, confiscation, redemption fine, etc. - HELD THAT:- Even as admitted by the assessees, there is no dispute that the sugar imported by the assessees attracts additional duty of Customs as there was no exemption from the same in terms of Notification No.21/2012-Cus dated 17.03.2012 during the relevant period. However, the revenue apart from denial of exemption also confiscated the goods, imposed redemption fine and also imposed consequential penalty. From the entire proceeding, it is not found whether the goods were seized and provisionally released on execution of bond for provisional release of goods. It prima facie appears that there is no seizure of goods. The adjudicating authority also in his finding stated that since the goods were provisionally assessed and cleared, the said goods can be confiscated and redemption fine was imposed. However, since fact about the seizure of goods and provisional release of goods is not clearly coming out from the proceedings, the matter needs to be re-considered on the aspect of confiscation and redemption fine. Moreover, it is found that in most of the bills of entry, the assessees have paid the additional duty of Customs without claiming the exemption therefore, in such cases the assessees have made strong prima facie case in their favour. The entire matter needs to be re-considered for the reason that even the confiscation and redemption fine has bearing on penalties imposed by the adjudicating authority - Appeal allowed by way of remand.
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2022 (3) TMI 514
Levy of penalty on Customs Broker under Section 132 read with Section 117 of the Customs Act, 1962 - Alleged contravention of Section 50(3)(a) of Customs Act - HELD THAT:- From Section 50(3)(a) of the Customs Act, 1962, it is seen that the same applies to an exporter who presents a shipping bill or bill of export under this Section and hence, a Customs House Agent or a Customs Broker cannot be fastened with the penalty if the Revenue finds any wrong quoting, etc., in the presented shipping bill. The Customs Broker, who is the appellant before this forum, cannot be penalized for the alleged contravention - Appeal allowed - decided in favor of appellant.
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Corporate Laws
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2022 (3) TMI 513
Maintainability of instant suit - abatement - restraint from carrying out the valuation and sale of the concerned goods - HELD THAT:- Upon a plain reading of Order 22 Rule 8 it is patently clear that in case of a company that goes into liquidation, the suit shall not abate unless the liquidator declines to pursue the said suit. The other conditions prescribed in Rule 1 with regard to security for costs and the procedure enumerated in Rule 8 Clause 2 are in my view not relevant for the present lis. What is to be noted in the present case is that the liquidator was appearing before the Receiver with regard to the sale of ten thousand metric tons of Met Coke and had also appeared before the Court, that is, the Single Bench Division Bench of Hon ble Calcutta High Court, with regard to the sale of the coke. Undoubtedly, the liquidator even after having assured the High Court that steps would be taken for impleading himself into the litigation failed to do so. Such failure may amount to a lackadaisical approach of the liquidator but cannot under any circumstances be seen as a positive assertion to decline to continue the suit. Rule 9 under Order 22, clearly allows the liquidator and/or the company to apply for setting aside of the abatement or the dismissal of the suit under conditions provided in the said rule. In the present case there has been no order of the Court seeking an explanation from the liquidator or any order of Court seeking a security for the costs incurred by the defendants. Furthermore, it is very apparent that the liquidator has been acting in the suit with reference to the movable suit property in question and has taken all necessary steps therein - it is crystal clear that the liquidator is fighting tooth and nail with regard to this litigation and a mere delay in making an application for substituting his name in the records of the suit would not in any manner lead to an abatement of the suit. Application seeking abatement of the suit is dismissed.
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Insolvency & Bankruptcy
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2022 (3) TMI 512
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial Creditors - existence of debt and dispute or not - service of demand notice - HELD THAT:- In the present case, the Corporate Debtor had not paid any instalment and pursuant to the terms of the One-time Settlement and in fact, the One time Settlement which was sanctioned earlier, got annulled. In fact, the 1st Respondent/Financial Creditor/Bank projected the MA/61/2020 before the Debt Recovery Tribunal , bringing to its notice in spite of the fact that the Debtor had failed to adhere to the terms of One-time Settlement and Joint Compromise Memo and hence relief was sought from the Debt Recovery Tribunal to pass an order for the same claimed in Original Application . In the present case, it cannot be brushed aside that the balance amount standing as on date 31.03.2020 was at ₹ 197.96 Crores and in view of the fact that the One Time Settlement was cancelled through the Letter of the Bank and because of the fact that in the Audited Balance Sheet in respect of the Financial Year 2019-20, the Corporate Debtor himself had proceeded to make a relevant mention among other things that the Company has entered into One Time Settlement dated 01.08.2019 with the State Bank of India to settle the outstanding SBI Loan (NPA) and interest due with One Time Payment of 112.00 Crores + cash margin of BG Outstanding to 2.7 Crores to be paid before 31st January 2020. If the Adjudicating Authority is subjectively satisfied that there was Debt due and payable in law and in fact, by the Corporate Debtor to in favour of the 1st Respondent/Bank/Financial Creditor then, in law, the Adjudicating Authority is left with no other alternative but to admit the application under the I B Code, 2016. On going through the Impugned Order passed by the Adjudicating Authority (National Company Law Tribunal, Hyderabad Bench, Hyderabad) is of the earnest opinion that the Adjudicating Authority was right in admitting the Application under Section 7 of the Code filed by the 1st Respondent/Bank and the said order is free from any legal infirmities - Appeal dismissed.
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PMLA
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2022 (3) TMI 497
Violation of principles of natural justice - provisional attachment of bank accounts - provisional attachment order served on the petitioner did not disclose proper reason - HELD THAT:- The satisfaction to be recorded by the authorised officer in terms of Section 5 of the PMLA is in two respects. The first is that the property in question had been acquired through proceeds of crime and involved in an offence of money laundering; and the second satisfaction specific in terms of Section 5(1) of the Act is that the owner/occupant of the property, who is in possession, is likely to conceal, transfer or deal with the same in any manner. This satisfaction is recorded for the purpose of interim arrangement during the pendency of the adjudication proceedings for securing the property in question. The adjudication on the other hand, gets triggered after the complaint under Section 5(5) is filed before the adjudicating authority or on an application under Section 17(4) and also 18(10) of the Act. As a matter of fact, the power to provisionally attach tainted property is only of the authorised officer upon being satisfied about the existence of circumstances referred to in Section 5(1). The adjudication under Section 8 entails finally in confiscation of the tainted property or release thereof - the fact that the petitioner has succeeded in persuading the High Court to quash the provisional attachment order passed by the appropriate authority under Section 5(1) of the Act, will in no way impact the adjudication process initiated before the adjudicating authority, which must proceed on its own merits in accordance with law. The challenge to the order as passed by the High Court to send back the matter to the appropriate authority to pass a fresh order, if so advised, is unexceptionable - SLP dismissed.
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Service Tax
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2022 (3) TMI 511
Classification of services - Site formation and Clearance, Excavation and Earthmoving and Demolition Service or Mining service - service of removal of overburden in relation to mining of lignite - HELD THAT:- From the certificate issued by the Gujarat Minerals Development Corporation Ltd., who is the recipient of service in this case, makes it clear that the work of overburden/interburden removal is a part of mining during the course of mining therefore. The service is pre-dominantly related to mining. It is found that even if, the contention of the revenue that the activities of the appellant taken independently is of Site Formation and Clearance, Excavation and Earth Moving and Demolition but at the same time, all these activities undertaken by the appellant is for the purpose of mining only. In this position, it is found that if at all, there is a doubt about the particular service to be classified under one or more category the principle laid down for classification of taxable service under Section 65A need to be applied. From the provision for classification of taxable service, it is provided that if taxable service is prima facie classified under two or more sub-clauses of clauses under Section 65, classification shall be effected on the basis of sub-clauses which provides the most specific description as compared to sub-clauses providing more general description - In the facts of the present case, it is undoubtedly clear that between appellant and the service recipient M/s. GMDC even though the nature of activity independently is of excavation and removal of soil but the objective of this activity is for mining only. In case of any mining activity, the activity of removal of over burden is inevitable. It is also pertinent to note that the appellant, on the same service, paid service tax under the category of Mining Service with effect from 1.6.2007 and it is admitted fact that the revenue had accepted the classification of the same service under Mining Service . It also strengthens the case of the appellant that the service provided by them is of Mining Service and does not fall under the category of Site Formation and Clearance, Excavation and Earth Moving and Demolition Services - the service per-se is a Mining Service. The appellant have provided the Mining Service which was not liable to service tax during the relevant period in this case. Therefore, the impugned order is not sustainable hence the same is set aside - Appeal allowed - decided in favor of appellant.
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2022 (3) TMI 510
Recovery of short paid service tax - Construction of Complex Service - adjustment of the excess service tax paid during period October 2010 to September 2011, during the period October 2011 to March 2012 - period from October 2011 to March 2012 - recovery of interest - extended period of limitation - demand of penalty - HELD THAT:- Admittedly the service tax on the activities undertaken by the appellants was introduced with effect from 22.06.2010. Initially appellants discharged the tax liability on the transactions undertaken by them on the accrual basis. Financial Accounting in India is mostly on the accrual basis. All the direct and indirect taxes are also based following the principal of Financial accounting on the accrual basis. In the accrual basis of Financial Accounting a transaction gets accounted for all the purposes in the books of account on the date when the document relating to the transaction are prepared - Service Tax when introduced followed the receipt based accounting system for levy and collection of tax. The assessee was obliged to pay the taxes on the basis of the gross amounts received during the taxing period. Service Tax when introduced followed the receipt based accounting system for levy and collection of tax. The assessee was obliged to pay the taxes on the basis of the gross amounts received during the taxing period. - the entire issue is because of the change in the manner of accounting of the transaction for the purpose of computation of service tax liability from the accrual basis to the receipt basis. The issue needs to be adjudged in the favour of appellant - appeal allowed - decided in favor of appellant.
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2022 (3) TMI 509
Quantification of demand - Business Support Service - whether the services provided by the Theatre Owner to the Distributors/sub distributors by way of providing cinema hall and other infrastructure for the exhibition of the movies in the theatre fall under the definition of Business Support Services? - HELD THAT:- Though in our view the impugned order needs to be upheld, but in view of the decision of the CESTAT, in the case of AB Motion Pictures, [ 2019 (4) TMI 2043 - CESTAT CHANDIGARH] and several other decisions on the issue referred in this decision we would refer this matter to Hon ble President for resolving the difference in the view taken by us and that taken in earlier decisions, as per the law laid down in the varius cases: The issue is referred to the Hon ble President for constituting a larger bench, to resolve the following questions of law:- a) Whether the view expressed by the CESTAT in case of M/S PVS MULTIPLEX INDIA PVT. LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, MEERUT-I [ 2017 (11) TMI 156 - CESTAT ALLAHABAD] , and subsequently followed in the case of AB MOTIONS PVT LTD. VERSUS COMMISSIONER OF C.E. S.T., LUDHIANA [ 2019 (4) TMI 2043 - CESTAT CHANDIGARH] , can be sustained in view of the decision of Hon ble Madras High Court in case of MEDIAONE GLOBAL ENTERTAINMENT LTD. VERSUS THE CHIEF COMMISSIONER OF CENTRAL EXCISE AND OTHERS [ 2013 (7) TMI 22 - MADRAS HIGH COURT] . b) Whether the circular which has been upheld by the Hon ble Madras High Court, can be ignored by the CESTAT, while deciding the concerned issues squarely covered by the said circular. c) Whether the decisions rendered by the tribunal in case of PVS Multiplex and AB Motion Pictures are correct exposition of the law on the subject.
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Central Excise
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2022 (3) TMI 507
100% EOU - Refund of CENVAT Credit - input services used for the manufacture of final products, which were cleared for export under bond - N/N. 27/2012-CE(NT) dt. 18/06/2012 - period April 2015 to June 2015 - HELD THAT:- Though the appellate authority has taken note of the claim of the appellant as regards the inadvertent/clerical error, but has not accepted on the ground that the same was not brought to the notice of the adjudicating authority. It is not the case therefore that the error was not inadvertent, the rejection is for different reason and hence it is clear that the inadvertent error is bona fide and on this, the First Appellate Authority should have called a report from the adjudicating authority and then passed appropriate order as per law. The ends of justice would be met if the matter is sent back to the file of the adjudicating authority who shall verify the inadvertent error which is not disbelieved by the First Appellate Authority, who shall also verify the closing balance in the cenvat credit as on the date of appellant s claim, as appearing in the appellant s books - appeal is allowed by way of remand.
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2022 (3) TMI 506
CENVAT Credit - input services - Supply of Manpower for Outdoor Catering Services - Gardening Services - Rent-a-Cab Services for transportation of its employees and customers - period from August 2008 to October 2010 and from November 2010 to August 2011 - demand for the period prior to 01.04.2011 - time limitation - HELD THAT:- In various decisions of the Tribunal as well as several High Courts, it has been held that the said definition has a very wide ambit and it would include almost all services used for the activities of business. For this reason, the impugned services are eligible for credit for the period prior to 01.04.2011. The definition of input service was amended with effect from 01.04.2011 which has been reproduced in paragraph 5.1 above. The definition contains an exclusion clause wherein the credit availed on Rent-a-Cab Services as well as Outdoor Catering Services has been specifically excluded - in the present case, the appellant has not furnished any evidence to show that the vehicles are capital goods for the service provider - the appellant is not eligible for credit on Rent-a-Cab Services after 01.04.2011. Supply of Manpower for Outdoor Catering Services - period after 01.04.2011 - HELD THAT:- The Hon ble Supreme Court in the case of TOYOTA KIRLOSKAR MOTOR PRIVATE LIMITED VERSUS THE COMMISSIONER OF CENTRAL TAX [ 2021 (12) TMI 420 - SC ORDER] has held that the said credit is not eligible post 01.04.2011 - the credit availed on Supply of Manpower for Outdoor Catering Services for the period after 01.04.2011 has been rightly disallowed. Supply of Manpower for Gardening Services after 01.04.2011 - HELD THAT:- The service of gardening does not fall under any specific exclusion clause of the definition of input service . The appellant has availed the said services to comply with the requirements of the Pollution Control Board. For this reason, the credit availed on Manpower Supply for Gardening Services to maintain a garden / green belt within the factory premises is eligible for credit. Time Limitation - HELD THAT:- It is seen that the extended period has been invoked only for the period involved in the first Show Cause Notice. The said period being prior to 01.04.2011, the argument of the Learned Counsel for the appellant is irrelevant for consideration. Appeal allowed in part.
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2022 (3) TMI 505
Classification of goods - Subscriber Call Recorder and Controller Attachment (popularly called STD-PCO) - to be classifiable under CETH No. 8517.00 and EPROMs was separately classified under 8524.90 or not - suppression of fact or not - Time Limitation - HELD THAT:- The issue on merits on the classification of goods is no longer under dispute for the reason that in the appellant own case the Hon ble Supreme Court in ANJALEEM ENTERPRISES PVT. LTD. VERSUS COMMISSIONER OF C. EX., AHMEDABAD [ 2006 (1) TMI 271 - SUPREME COURT] decided the matter against the appellant. Time Limitation - the commissioner (Appeals) rejected the claim on time bar submitted by the appellant before him on the ground that the issue of time bar was raised first time before the Commissioner (Appeals) - HELD THAT:- It is a settled law that issue of limitation can be raised at any stage, being a mixed question of law and facts. Therefore, the Commissioner (Appeals) order on limitation is incorrect and illegal. Now, the issue on limitation is examined from the facts of this case. The appellant under bona fide belief have been claiming that STD-PCO and EPROMs are classifiable separately and EPROMs is under Exemption Notification No. 84/1989-CE dated 01.03.1989. The appellant have been filling the classification list wherein they have separately classified both the items and claim the exemption notification. Therefore, the entire facts were very much before the department - in the appellants own case though the matter was decided against them on merit by this tribunal in the case ANJALEEM ENTERPRISES PVT. LTD. VERSUS COMMISSIONER OF C. EX., AHMEDABAD [ 2006 (1) TMI 271 - SUPREME COURT] but the tribunal considering the similar facts extended the benefit of time bar where it was held that where classification list has been approved, demand for duty based upon the revision in the classification could only be made from the date of the proposed change in the classification, the demand for the period within six months also cannot be sustained. As per above decision of the tribunal, the fact of the same is identical to the present case even on limitation also. Therefore, the entire demand which is beyond the normal period is not sustainable on time bar. The appeal is allowed with consequential relief on the ground of time bar only.
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2022 (3) TMI 504
CENVAT Credit not utilised under the provisions of Rule 8(3A) of the Central Excise Rules, 2002 - recovery of excise duty through Account Current under provisions of Section 11A of the Central Excise Act, 1944 read with provisions of Rule 8(4) of the Central Excise Rules, 2002 - HELD THAT:- Rule 8(3A) of the Central Excise Rules, 2002, in terms of which the demand has been made, was considered by Hon ble Gujarat High Court in the case of INDSUR GLOBAL LTD. VERSUS UNION OF INDIA 2 [ 2014 (12) TMI 585 - GUJARAT HIGH COURT] and the said rule has been held to be ultra vires - this judgment has been subsequently followed by various High Courts and Tribunal, including the jurisdictional High Court i.e. Hon ble Bombay High Court in the case of THE COMMISSIONER OF CENTRAL EXCISE CUSTOMS NASHIK II COMMISSIONERATE VERSUS M/S. NASHIK FORGE PVT. LTD. [ 2018 (9) TMI 1582 - BOMBAY HIGH COURT] where it was held that The impugned order of the Tribunal has noted that Rule 8(3A) of the Central Excise Rules, 2002 has been struck down as unconstitutional by the High Courts of Gujarat, Madras and Punjab Haryana by various judgements. Appeal allowed - decided in favor of appellant.
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2022 (3) TMI 503
Clandestine Removal - copper wire - denial of cross-examination of panchas/ witnesses and the officials - sufficient evidences or not - cross-examination of witnesses - penalty - HELD THAT:- On perusal of the allegations made in the show cause notice and the findings recoded by the respondent-Commissioner in the Order and observed that the entire case of the revenue is based on the resumed documents/kacchi parchies, seized from the factory premises and residential premises of the partner/proprietor of Jindal Cables and Jindal Metal and also on the statements of various persons recorded during investigation. M/s Jindal Cables - HELD THAT:- There is no evidence on record brought by the Revenue to prove the flow back of money consideration in respect of the goods alleged to be clandestinely removed. There is no evidence as to how the alleged 92683 kgs of copper wire have been transported as no statement of any transporter has been recorded and placed on record. It is settled proposition that that the demand of duty on goods alleged to be clandestinely removed have to be supported with evidence of procurement of inputs, employment of labour, freight, receipt of consideration, etc. i.e. evidence to corroborate, which is lacking in the present case. Therefore, the duty is levied only on assumption and presumption, as such is fit to be set-aside. Whether the confiscation of goods/raw material etc seized amounting to ₹ 25,41,050/- was proper and legal? - HELD THAT:- The entire seizure was made at the factory premises of the Appellant - Jindal Cables and was seized since no documentary evidence for proper accountal of raw material, semi-finished goods, finished goods and scrap was provided, and thus under a reasonable belief that the said goods were procured and manufactured in the clandestine manner for illegal clearances, said goods were seized and confiscated. In this regard, Ld. Counsel for the Appellant - Jindal Cables stated that is admitted that one more manufacturing unit M/s NN Lite was also functioning from the said premises, and the officers should differentiate them - From the perusal of the show cause notice dated 02.05.2012, it is noticed that while making allegations for confiscation, specific ground of allegation is absent. Rule 25(1) contains four clauses i.e., (a) to (d), containing altogether different clauses/grounds but none of them were invoked by the Revenue, it has merely stated as to why the goods be not confiscated under Rule 25 of the Rules. Therefore, confiscation of goods is bad and therefore liable to be set-aside. Currency amounting to ₹ 4,65,000/- seized from the factory premises of the Appellant-Jindal Cables - HELD THAT:- It is apparent from the reply filed by the Appellant that out of the total amount ₹ 1,45,283/- belong to the Appellant-Jindal Cables and ₹ 1,78,844/- belonged to M/s NN Lite, ₹ 63,786/- belonged to M/s G.N. Marketing and the balance amount of ₹ 77,087/- could only be explained by Sh. Desh Bhushan Jain from whose custody the currency was seized. The Appellant also provided relevant extract of its cash books and that of M/s NN Lite and M/s GN Marketing. From the perusal of the Order, we find, the cogent explanation given, is not found untrue. Ld. Commissioner should have taken into account the relevant documentary evidence on record and expected to give finding on it - the confiscation of Indian currency in violation of principles of natural justice and also against the evidence on record. Thus, the confiscation is set aside. M/s Jindal Metal - HELD THAT:- The ld. Commissioner has not carried out corroboration of the seized private records/kacchi pachies. He should have further summoned the persons whose names were appearing on the private records such as Rajeev, Gupta POT, Nishant, Raju Sagar, Mayank, Ravinder, Vipin, Manoj etc. It is found that the contents of the documents have remain uncorroborated and the law is well settled that the demand cannot be confirmed on the basis of uncorroborated private records. Allegation of clandestine removal of copper ingots is for period from July, 2011 to 4.11.2011. Ld. Counsel for the appellant-Jindal Metal states that for manufacturing copper ingots, the appellant was using the blow furnace which used to work on furnace oil/diesel only. On 5.11.2011, when the factory premises of the appellant was visited, the officers had recorded statement of one Mr. Krishan Kumar driver of the tanker number HR 37 B-8247, who was unloading quantity of diesel on the premises of the appellant - Allegation against the appellant is that he has procured 650591 kgs of copper scrap clandestinely, out of this he had cleared copper ingots and copper rod, collectively weighing 3,99,122 kgs. This entire allegation is based on the recovery of some documents (slips etc.) from the premises. It is also found that no investigation from filling station etc., was made in order to corroborate the receipt of fuel and other raw materials, required or consumed in the manufacture of said huge quantity of copper ingots. The Hon ble High Court of Madhya Pradesh has held in the case of UNION OF INDIA VERSUS MSS FOODS PRODUCTS LTD. [ 2010 (11) TMI 275 - MADHYA PRADESH HIGH COURT] that under the Central Excise Act, 1944, excise duty is leviable on manufacture and production of excisable goods and the same is payable at the time of removal. Therefore, to establish the charge of clandestine removal of excisable goods, it is necessary to establish that the excisable goods were produced or manufactured by the assessee concerned and for attracting Section 11A of the Act, it is necessary to establish that the excisable goods were clandestinely removed without payment of duty. In the present cases, there is lack of sufficient evidence for establishing the above factors, as no sufficient evidence been brought on record by the Revenue. There is no evidence regarding the capacity of Jindal Cables as well as of Jindal Metal to manufacture the quantities as alleged. Further, no inquiries have been conducted from the persons whose names are appearing in the loose papers/kacchi parchies/ private records, raw material suppliers, transporter or the buyers to establish clandestine manufacture and sale by the Appellants - It has been consistent view of the Tribunal that allegation of clandestine removal cannot sustain merely on the basis of uncorroborated entries in the private record. The allegation of clandestine manufacture and removal of finished goods by the Appellants, made in the show cause notice, is merely on assumption and presumption, without sufficient material evidence corroborating the said allegations - the penalty imposed, under Rule 26 of the Central Excise Rules, 2002 on other Appellants i.e., i) Deepak Kumar Gupta - Partner of Jindal Cables; ii) Prop./Director/Partner of M/s Chandra Rolling Mills Pvt. Ltd., and M/s Tirupati Industries, iii) Mr. Rakesh Jain and iv) Mr. D. B. Jain is set aside. Appeal allowed - decided in favor of appellant.
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2022 (3) TMI 502
CENVAT Credit - inputs were sent to job worker under Rule 4(5)(a) of CCR,2004 without reversing the Cenvat credit - job worker instead of following the N/N. 214/86-CE, chose to pay the duty on the job worked goods - case of the department is that since the appellant have cleared the cenvatable input under Rule 4(5)(a) of CCR,2004, job worker was not supposed to pay the duty, instead, he was supposed to avail exemption N/N. 214/86-CE - HELD THAT:- As per the Cenvat Credit Rules, 2004, an assessee is entitled for the Cenvat Credit in respect of inputs used in relation to the manufacture of final product - In the present case when the appellant have received the input it was duty paid, hence they have were rightly taken the Cenvat Rule 4(5)(a) provides for movement of the input on which Cenvat Credit was availed . Accordingly such input was sent to the job worker in terms of Rule 4(5)(a) - As regard the Notification No. 214/86-CE being a conditional Notification, it is optional for the job worker whether to avail the exemption or to pay the excise duty. The job worker undisputedly being a manufacturer has option either to avail exemption to avail by duty. In the present case job worker chose to pay the duty without availing the Notification No. 204-CE which cannot be objected, as there is no provision for compulsory availment of Notification No. 214/86-CE. As regard the duty paid by the job worker it is very much in relation to the job work goods, which was undisputedly used by the manufacturer of the final product. The appellant had cleared the final product on which duty was paid by the appellant. This tribunal has taken consistent view that in case of payment of duty by the job worker the same is available as a Cenvat Credit to the principal manufacturer - Reliance can be placed in the case of COMMISSIONERS OF CENTRAL EXCISE, CUSTOMS AND SERVICE TAX-VADODARA-I VERSUS M/S SARABHAI CHEMICALS [ 2015 (10) TMI 1057 - CESTAT AHMEDABAD] . Therefore, the issue is not res integra and appellant are entitled for the Cenvat Credit of duty paid by the job worker. Appeal allowed - decided in favor of appellant.
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2022 (3) TMI 501
CENVAT Credit - input services - services availed by the appellant in the course of their business of manufacturing of excisable goods - period April 2004 to September 2009 and April 2010 to November 2010 - extended period of limitation - HELD THAT:- Considering the fact that the periodical show-cause notices have been issued to the appellant and during the impugned period there was a issue of availment of cenvat credit on the services was under judicial scrutiny, in that circumstances extended period of limitation is not invokable. Therefore, for the show-cause notice dated 03/09/2010 issued by invoking extended period of limitation, it is held that the demand of extended period of limitation is not sustainable on limitation itself. The services as explained by the learned counsel during the course of arguments have been used by them for their business operations of manufacturing of excisable goods. In that circumstances, relying on the decision in the appellant s own case ITC LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, SERVICE TAX AND CUSTOMS BANGALORE-IV BANGALORE [ 2017 (3) TMI 1542 - CESTAT BANGALORE] and in the decision of ULTRA TECH CEMENT LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, KOLHAPUR [ 2017 (11) TMI 297 - CESTAT MUMBAI] , it is held that the appellant is entitled to avail cenvat credit on the above said services as the same has been used by the appellant in the course of their business of manufacturing of excisable goods. There are no merit in the impugned orders and the same are set aside - appeal allowed - decided in favor of appellant.
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2022 (3) TMI 500
Refund of CENVAT Credit - input services - outward GTA - the amount of CENVAT amount has been reversed - HELD THAT:- This Tribunal in M/S SANGHI INDUSTRIES LTD. VERSUS C.C.E. KUTCH (GANDHIDHAM) [ 2019 (2) TMI 1488 - CESTAT AHMEDABAD] held that in a case where the sale is on FOR basis, freight is borne by the supplier of goods and the freight is inclusive in assessable value on which excise duty is paid, CENVAT credit is admissible. Therefore, if the above facts are satisfied then the appellant s are entitled for the CENVAT credit on outward GTA. As regard the facts of the case, Adjudicating Authority should verify the fact that the price is inclusive of freight and the same was not charged separately. If the Adjudicating Authority is satisfied on the above condition, then the appellant shall be eligible for CENVAT credit and consequential refund. The appeals are allowed by way of remand to Adjudicating Authority for passing a fresh order.
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CST, VAT & Sales Tax
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2022 (3) TMI 508
Seeking to release the raw materials, goods, stock and finished goods seized and detained by the official respondents - removal of alcoholic beverages and violation of provisions of the Pondicherry Excise Act, 1970 - HELD THAT:- Provisions of Section 102 of Code of Criminal Procedure even if made applicable to the provisions of the Puducherry Excise Act, 1970, is not attracted to the raw materials of the petitioner, as the said provision applicable only in the context of stolen goods - Section 457 of the Code of Criminal Procedure pre-supposes a seizure of property and where such property is not produced before a criminal for during an enquiry or trial, the Magistrate may make such order as he thinks fit respecting the disposal of such property or deliver such property to the person entitled to the possession thereof, or if such person cannot be ascertained, respecting the custody and production of such property. Further, the Magistrate can order delivery of seized goods to such person during enquiry or trial, if the identity of the person so entitled is known. If seizure has been effected, the official respondents were required to give details of seizure in a report and filed before the Magistrate, in which case, the Magistrate would have issued an appropriate order for delivery of such goods - the petitioner cannot be made to run from pillar to post for no fault of theirs merely because they had engaged the services of the fourth respondent as a contract manufacturer/ job worker to manufacture Indian Made Foreign Liquor by supplying the required raw materials. A mere lock and seal of the premises is not sufficient to conclude a valid seizure if there is no Seizure Mahazar. The officer themselves can allow the release of the goods lying in the distillery of the fourth respondent. Either way, raw materials of the petitioner cannot be retained - the petitioner has made out a case for release of the raw materials - the official respondents are therefore directed to take steps for release of the raw materials of the petitioner immediately, preferably within 15 days from the date of a copy of this order. It is made clear that all the procedural requirements that are required to be observed shall be without prejudice to the rights of the petitioner. The fourth respondent is directed to coordinate with the respondents for the release of the raw materials of the petitioner. The official respondents shall prepare proper delivery note evidencing the release of the raw materials and file a report before the concerned Magistrate - the petition is allowed.
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2022 (3) TMI 499
Reopening of original assessment - addition of 15% of the book turnover and propose to assess the turnover on the ground that after adding 15% of the addition to the book turnover, it exceeds ₹ 5 crores - opportunity of personal hearing not provided - penalty under Section 27 (3) of the TNVAT Act - principles of natural justice - HELD THAT:- It is a fact that on 13.08.2021, personal hearing was given not only to the petitioner, but also to the two other cases in respect of the sister concern of the petitioners' - it can be safely concluded that on 13.08.2021, definitely the petitioner's representative did appear before the respondent. Whether the very same representative made any request to the same officer to defer the date of personal hearing in respect of the petitioner's case? - HELD THAT:- It is not the definite case of the officer concerned that on the date i.e., on 13.08.2021, the petitioner's representative did not appear or it is also not the case of the said officer that the petitioner's representative did not make any such request as claimed now by the petitioner. This Court is of the view that the said plea raised by the petitioner that on 13.08.2021 when request was made, of course orally, by the representative of the petitioner to give a deferred date, the said plea having been accepted, was not executed by the respondent by giving any further date for personal hearing, has got some substance. Therefore, without giving any such personal hearing in the deferred date as claimed by the petitioner's representative on 13.08.2021 since the impugned order has been passed, on that ground, this Court feel that, the said impugned order can be interfered with and accordingly, the matter can be remitted back to the respondent for reconsideration. Petition allowed by way of remand.
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Indian Laws
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2022 (3) TMI 498
Seeking refund of part of looted amount on interim custody from the trial Court - Power to requisition books of accounts, etc - From the allegations of the Income Tax Department and in the fact situation, no document has been produced by the petitioner to demonstrate that Income Tax Return discloses his income of such magnitude at any point of time to the Income Tax Authority - HELD THAT:- Perusal of Section 132 A reveals that Income Tax Authority under the Act 1961 has power to make requisition for taking over possession or control of such assets (cash amount in present case) from any officer or authority under any other law for the time being in force, if the said income or property has not been disclosed for the purposes of the Income Tax Act. Understandably so, when it is evident that amount in question was seized from the possession of accused persons allegedly belonging to petitioner but never disclosed by petitioner to Income Tax Authority, therefore, department has the remedy available u/s 132 A (1) (c). This procedure is followed by Section 132B which elaborates the manner of dealing after requisitioned under Section 132 A - The power under Section 132 A appears to be distinct vis-a-vis Section 132 (Search and seizure). Here also, it appears that if the amount is not handed over to the Income Tax Department and is released to the petitioner, then it may hamper effective implementation of relevant provision of Income Tax Act and therefore, in the fact situation it is apposite that amount be deposited with the Income Tax authority and proceedings before the competent authority of the Income Tax Department be concluded within the time stipulated as per the relevant provisions of the Income Tax Act. Time is running fast against the department for assessment. Therefore, it is expected that the Income Tax Department shall complete the assessment proceedings within the time stipulated. Resultantly, the petition preferred by the petitioner fails. The trial Court is directed to immediately release the amount in favour of the Director, Income Tax (Investigation) Ayakar Bhawan, Hoshangabad Road, Bhopal. The details of the same are already find place in the application filed by the Income Tax Department. In addition, if any information is required, then the Income Tax Department is at liberty to furnish so. Necessary procedure be carried out at the earliest. Resultantly, the petition stands dismissed.
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