TMI Tax Updates - e-Newsletter
March 23, 2023
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 waiver of pre-deposit of 7.5% of duty for maintaining an appeal - it is considered apposite to direct that if the petitioner deposits an amount equivalent to 2.5% of its liability, the petitioner’s appeal against the order in original would not be rejected solely for want of the requisite pre-deposit. - HC
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GST:
Ex-parte order - The order, ex parte in nature, passed in violation of the principles of natural justice, entails civil consequences; (c) It is also found that the authorities not to have adjudicated the matter on the attending facts and circumstances. All issues of fact and law ought to have been dealt with, even if the proceedings were ex parte in nature. - Matter restored back - HC
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GST:
Validity of the ‘e-Way bills’ had expired during goods in transit - Heavy levy on duty with penalty - This Court is of the opinion that the ‘e-Way bills’ had expired during the transit and the petitioner was not in a position to ask for its renewal to the competent authority when the vehicle entered into the territory of the State of Tripura. - Order set aside - HC
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Income Tax:
Validity of reopening of assessment - proceedings against the dissolved entity - notice in the name of petitioner LLP stood dissolved - the impugned notices and order are set aside. - Liberty is, however, given to AO to issue to Ms Ragini Mohan, who is the Legal Representative (LR) of the deceased managing partner fresh notice u/s 148A(b) of the Act. - HC
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Income Tax:
Immunity u/s 270AA - Period of limitation for filing an application - Penalty proceedings u/s 270A - The proviso to Sub-section(4) of Section 270AA of the Act makes it amply clear that before an application is rejected, the applicant must be given an opportunity of being heard. In the present case, there is no dispute that the petitioner was not afforded the said opportunity. - AO directed to reconsider the application - HC
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Income Tax:
Offence u/s 276B r.w.s 278B - Whether the petitioner was actually residing in Netherland for Six years or not has to be decided at the time of trial of the complaint or at the appropriate stage which is permissible. At this stage, scope of inquiry is to ascertain as to whether the averments in the complaint are sufficient to constitute offences alleged against the petitioner or not. No interference is called for in order of issuance of process. - HC
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Income Tax:
Validity of Reopening of assessment u/s 147 - The order of learned Judge suggesting that the question of whether there was true and full disclosure is still open, again appears to us to be misdirected / misplaced since while setting out the reasons for reassessment, the respondent has not even remotely suggested that there was no full and true disclosure on the part of the appellant. Thus it appears the order of the learned Single Judge is an improvement of the assessment proceeding which is quasijudicial in nature and thus impermissible. - HC
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Income Tax:
Enhancement of interest u/s 234A - Rectification of order u/s 154 - Defective return - The Revenue could hardly dispute that sec.139(9) of the Act is a specific provision wherein an AO could held a return as a defective one after following the due procedure as per Explanation (c) (i) thereto which treats a return filed by an assessee to be defective only if there is self-assessment tax claimed to have been paid and not otherwise. - Demand set aside - AT
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Income Tax:
Exemption u/s 11 - Charitable activity u/s 2(15) - As in view of the narrow and restricted meaning given to the term “education” as used in Section 2(15) of the Act, the activities carried out by the assessee being primarily run as a science museum does not qualify as education. - AT
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Income Tax:
Addition regarding gift received from father - Father is not filing ITR having agriculture income - merely because a person, giving gift to his son, is not filing return of income, the transaction of gift cannot be doubted particularly when the person giving gift is owing 6.5 acres agricultural land which yielded agricultural produce to him. - AT
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Income Tax:
Upward adjustment on account of foreign exchange losses on ECB loan - in the light of fact that the conversion in foreign currency loans which led to impugned loss, were dictated by revenue considerations towards savings interest costs etc. we have no hesitation in coming to the conclusion that loss being on revenue account is an allowable expenditure under s. 37(1) of the Act. - AT
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Income Tax:
TP Adjustment - ‘receipt of counter guarantee commission - providing counter guarantee at the instance of its overseas AE - TPA made in the impugned assessment order towards counter guarantee commission is thus grossly at odds with the factual position enunciated by the co-ordinate benches and hence such adjustment is totally uncalled for. - AT
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Income Tax:
Addition u/s 69A - cash deposit during the period of demonetization in the bank account - Assessee has made a valid declaration under the PMGKY Scheme, 2016 and has duly paid taxes/penalty and has also deposited requisite amount under the PMGKY Scheme, 2016. By no stretch of imagination provisions of section 69A can be applied on the aforementioned facts. - AT
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Customs:
Classification of imported goods - import of Saccharomyces Boulardii - revenue classified the same as yeast under chapter 21 and not under CTH 29183090 - Merely because the appellant has been issued a License by the Drugs & Cosmetics Act, it cannot be said that the imported goods are known and understood as medicine. - AT
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Customs:
Mis-declaration of goods - import of PLC Splitter Module - Merely because the appellant sought for duty exemption on the belief that the goods imported by him fall within the scope of the exemption notification and the revenue took the view that the goods imported were not as per the specifications under the notification, it is not a case where goods have been improperly imported or mis-declared so as to confiscate the goods invoking section 111(m) of the Customs Act. - AT
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Customs:
Compounding of offence - restricted goods or prohibited goods - import of Gold - when ‘restricted goods’ in absence of proper authorization cannot be treated as ‘prohibited’ then the gold bars herein are on a much better footing as its freely importable. The only reason given by the learned Chief Commissioner for rejecting the application is that the goods involved herein becomes prohibited goods by importing in violation of the conditions imposed for their import, therefore the application is not maintainable which, is totally contrary to the legal position and the language of the statute. - AT
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Customs:
Warehoused goods - warehousing period expired - goods (wine) was rendered unfit for human consumption - relinquishment to the title to goods - The appellant is not liable to pay duty, as till the time of relinquishment, no duty or other charges had been demanded from them. However, in the circumstances, as the appellant have also allowed the goods to deteriorate by not taking action timely to relinquish the goods within a reasonable time, they are held liable to penalty - penalty under Section 117 is imposed instead of Section 112 - reduced penalty of Rs. 1 Lakh is confirmed. - AT
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Corporate Law:
Recovery of electricity dues of the Company - personal liability of the Directors of the Defaulter Company/Corporate debtor which went into insolvency - it is clear that approval of a resolution plan does not ipso facto absolve the surety/guarantor of his or her liability, which arises out of an independent contract of guarantee. To what extent, the liability of a guarantor can be pressed into service would depend on the terms of the guarantee/contract, itself - HC
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Indian Laws:
Dishonour of Cheque - rebuttal the presumption - existence of legally enforceable debt or not - Facts is of two kinds. One is positive fact and another is negative fact. It is difficult to prove negative fact. Similarly, it is difficult for the Respondent to prove that he has not received the plywood. As against this, it is easy to prove positive fact. So, it was the duty of the Appellant to prove that the plywood was in fact delivered. He has failed to do the same. - HC
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Service Tax:
Condonation of delay in filing appeal - it is well settled that once the period of limitation expired as prescribed u/s. 85(3) ibid neither the Tribunal nor the first appellate authority has power to condone the delay in filing the appeal beyond the statutory period. - AT
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Service Tax:
Refund claim - unjust-enrichment does not exist in the case where the assessee initially charged duty / service tax and subsequently issued the credit note for the same. - AT
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VAT:
Zero Rate Tax - Supply of goods to SEZ - TN-VAT - Section 18 of the TNVAT Act, confers two benefits viz., Zero Rate i.e., sale on which no tax is payable but on which Input Tax Credit is admissible and the second being refund in addition to the above benefit of Zero rate. The benefits are independent of each other. - Export of goods is not a condition precedent or sine qua non to qualify as a Zero Rate sale as long as the sale falls within clause(ii) of Section 18 (1) of the TNVATAct. - To claim refund in terms of the Section 18 (2) read with 18 (3) of the TNVAT Act, export of goods is an essential condition but not the benefit of Zero Rate. - HC
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VAT:
Recovery of arrears of tax - criminal liability of the guarantor - The undertaking or the guarantee executed by the second accused in favour of the 1st accused to the department can be at the best called as an agreement and for which the petitioner can be attached with contractual liability but not criminal liability. - HC
Articles
Notifications
Circulars / Instructions / Orders
News
Case Laws:
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GST
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2023 (3) TMI 937
Provisional attachment of bank accounts on the ground that proceedings have been initiated against petitioner No.1 under Section 74 of the CGST Act - refund order obtained fraudulently - HELD THAT:- The refund sanction amount, as noticed above, is Rs.27.54 crores. Petitioners shall make a deposit of Rs.28.00 crores in a nationalised bank by way of fixed deposit on or before 14.04.2023 and handover the fixed deposit receipt (FDR) to respondent No.3 within seven days thereafter - Petitioners shall cooperate with the summons that may be issued by the respondents or on behalf of the respondents in connection with the proceedings under Section 74 of the CGST Act - Respondents shall forthwith withdraw the provisional attachment of bank accounts of petitioner No.1 carried out on 08.03.2023. Petition disposed off.
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2023 (3) TMI 936
Refund of the GST paid - grievance of the Petitioners is that Respondent No.3-CIDCO has not applied for refund and hence has filed this petition - section 54 of the Central Goods and Services Tax Act, 2017 - HELD THAT:- Petitioners states that Petitioners would apply to the Respondents-Tax Authorities invoking section 54 of the Act claiming refund. The Respondents-Tax Authorities contend that Petitioners may not be entitled to apply under section 54 of the Act. However, it is for the Petitioners to make this application and it is for the authorities to deal with the same as per law. The writ petitions is disposed off since Petitioners intend to apply for refund as per section 54 of the Act to the Respondent-Tax Authorities - petition disposed off.
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2023 (3) TMI 935
Seeking waiver of pre-deposit of 7.5% of duty for maintaining an appeal - petitioner claims that the interest of the revenue is fully protected as the petitioner is entitled to the refund of CENVAT credit which has not been processed yet - HELD THAT:- This Court is unable to accept that the petitioner can set off its obligation to make a pre-deposit against its claim for the refund of CENVAT credit. However, there are merit in the contention that the petitioner s remedy of an appeal would be rendered illusory in the given circumstances where the petitioner does not have the liquid funds to make the said deposit. After some arguments, learned Counsel appearing for the petitioner states that the petitioner would make a deposit equal 2.5% of the liability instead of 7.5% to maintain the appeal against the order-in-original dated 26.11.2021 - it is considered apposite to direct that if the petitioner deposits an amount equivalent to 2.5% of its liability, the petitioner s appeal against the order in original would not be rejected solely for want of the requisite pre-deposit. Petition disposed off.
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2023 (3) TMI 934
Maintainability of appeal - appeal dismissed on the ground of the same being barred by limitation - ex-parte order - opportunity of hearing not provided - principles of natural justice - HELD THAT:- This Court, notwithstanding the statutory remedy, is not precluded from interfering where, ex facie , it is opined that the order is bad in law. This is for two reasons- (a) violation of principles of natural justice, i.e. Fair opportunity of hearing. No sufficient time was afforded to the petitioner to represent his case; (b) order passed ex parte in nature, does not assign any sufficient reasons even decipherable from the record, as to how the officer could determine the amount due and payable by the assessee. The order, ex parte in nature, passed in violation of the principles of natural justice, entails civil consequences; (c) It is also found that the authorities not to have adjudicated the matter on the attending facts and circumstances. All issues of fact and law ought to have been dealt with, even if the proceedings were ex parte in nature. The present writ petition is disposed off in the mutually agreeable terms.
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2023 (3) TMI 933
Heavy levy on duty with penalty - validity of the e-Way bills had expired - Case of Revenue is that the whole e-Way bills system has now gone online and the same could have been extended on time but was not extended - HELD THAT:- This Court is of the opinion that the e-Way bills had expired during the transit and the petitioner was not in a position to ask for its renewal to the competent authority when the vehicle entered into the territory of the State of Tripura. In view of the said fact, this Court is of the opinion that the order dated 06.04.2021 passed by the Appellate Authority is not just and proper and the same is liable to be set aside. Petition allowed.
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2023 (3) TMI 932
Cancellation of GST registration of petitioner - non-payment of interestRule-22(1)/Sub- Rule-(2A) of Rule-21A of CGST Rules - quashing of Show Cause Notice dated Nil on the ground that there is neither adjudication order nor proper Show Cause Notice - violation of principles of natural justice - HELD THAT:- Tpetitioner is ready and willing to deposit 25% of the impugned demand payable as interest, which offer is not accepted by the Revenue in view of the law laid down in M/s RSB Transmissions (India) Limited [ 2022 (11) TMI 483 - JHARKHAND HIGH COURT] . At this stage, learned counsel for the petitioner states that petitioner s request for adjudication is pending before the said authority may be directed to be decided expeditiously. The present petition is allowed on mutually agreeable terms.
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Income Tax
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2023 (3) TMI 931
Validity of reopening of assessment - proceedings against the dissolved entity - notice in the name of petitioner LLP stood dissolved - writ petition has been filed on behalf of the dissolved LLP by wife of the deceased - HELD THAT:- The more substantial point that Mr Gupta has raised is that proceedings taken out against the dissolved entity i.e., Lotus Law Partners LLP, cannot continue; a submission with which we cannot but agree. Given this position, the impugned notices and order are set aside. Liberty is, however, given to AO to issue to Ms Ragini Mohan, who is the Legal Representative (LR) of the deceased managing partner fresh notice u/s 148A(b) of the Act.
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2023 (3) TMI 930
Immunity u/s 270AA - Penalty proceedings u/s 270A - claim rejected on the ground that the same was beyond the stipulated period available for filing the said application - application was filed after the delay of 48 days and the delay was on account of some technical glitches in the portal which prevented the said application from being uploaded within time - procedural delay - HELD THAT:- The proviso to Sub-section(4) of Section 270AA of the Act makes it amply clear that before an application is rejected, the applicant must be given an opportunity of being heard. In the present case, there is no dispute that the petitioner was not afforded the said opportunity. This Court considers it apposite to set aside the impugned order as the same has been passed without following the procedure as set out in Section 270AA(4) of the Act. Impugned order is set aside. The matter is remanded to the concerned officer (Respondent no.2) to consider the petitioner s application u/s 270AA of the Act afresh.
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2023 (3) TMI 929
Offence u/s 276B read with Section 278B of the Income Tax Act - persons responsible for paying tax as per section 204 of the I.T. Act have committed a default under Section 200 of the I.T. Act, 1961 read with Rule 30 of the Income Tax Rules, 1962 - HELD THAT:- As in case of complaint under Section 138 of the Negotiable Instruments Act, 1881 there is no application of mind by the statutory authorities before initiation of the complaint. In the case of prosecution under Income Tax Act, sanction order and the order passed by learned Commissioner of Income Tax indicate prima facie application of mind by the statutory authorities before initiation of the complaint under Section 276B read with Section 278B of the Income Tax Act, 1961. Therefore respondent No.1 at this stage has made out a sufficient case for proceeding against the petitioner. Contention of the petitioner that he is not residing in India and is resident of Netherlands for Six years Respondent No.1 invited attention to the sanction order which contains address of the petitioner as being resident of Navi Mumbai, Maharashtra. Whether the petitioner was actually residing in Netherland for Six years or not has to be decided at the time of trial of the complaint or at the appropriate stage which is permissible. At this stage, scope of inquiry is to ascertain as to whether the averments in the complaint are sufficient to constitute offences alleged against the petitioner or not. No interference is called for in order of issuance of process.
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2023 (3) TMI 928
Best judgment u/s 144 - AO jurisdiction - whether assessing officer is not the jurisdictional officer vested with the authority to pass an order? - HELD THAT:- The order of assessment involves questions of fact and we also find that there is no finding rendered on the issue of jurisdiction which has been raised by the appellant. The above grounds need to be dealt with. Having said that, we are however not inclined to examine the above questions as they would require investigation into facts which is beyond the realm of jurisdiction under Article 226 of the Constitution of India. In this regard, it may be relevant to refer to the judgment of Hon'ble Supreme Court in the case of Authorized Officer, State Bank of Travancore and Another vs Mathew K.C [ 2018 (2) TMI 25 - SUPREME COURT] . It is open to the appellant to file an appeal within a period of 4 weeks from the date of receipt of a copy of this order.
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2023 (3) TMI 927
Claim of bad debts - substantial question of facts or law - claim found unacceptable by the Tribunal, inasmuch as explanation given by the appellant/assessee was vague and general in nature in respect of five entries, in respect of the remaining entries there was lack of clarity as to the nature of the transaction - HELD THAT:- Whether a debt is a bad debt is a question of fact, which would clear from the Judgment of Travancore Tea Estates Co. Ltd. v. CIT [ 1997 (12) TMI 10 - SC ORDER ] wherein it is held that whether a debt has become bad or the point of time when it became bad are pure questions of fact. Also see case of Bank of Bihar Ltd. [ 1962 (3) TMI 8 - SUPREME COURT ] Thus we find no reason to interfere with the concurrent findings of the Authorities below inasmuch as whether a debt is bad, being essentially a question of fact. As the appellant has not made out any question of law much less substantial question of law, this tax case appeal stands dismissed.
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2023 (3) TMI 926
Addition u/s 68 - bogus LTCG - sale proceeds of the shares as undisclosed income - HELD THAT:- As decided in [ 2021 (12) TMI 1127 - ITAT SURAT] CIT(A) was not justified in upholding the addition of sale proceeds of the shares as undisclosed income of the assessee u/s 68 - Decided against revenue.
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2023 (3) TMI 925
Maintainability of the present Writ Petitions - Assessment u//s 153A OR 153C - notice under Section 127 of the Act has not been issued to the petitioners - availability of an alternate /statutory appellate remedy u/s 246A - HELD THAT:- The Writ Petitions have been filed on the premise that the notice under Section 127 of the Act has not been issued to the petitioners, however in the Written Submissions the above submission has not been made. Section 127 of the Income Tax Act would apply only to those cases where there is transfer of a case from one jurisdiction to other and not a transfer of jurisdiction of the assesseee from one place to the other, as in the present case. Question whether notice ought to be issued under section 153A or 153C question as to whether the assessments are made on the basis of the search pursuant to a warrant issued in the name of the petitioner or on the basis of a search pursuant to a warrant issued in the name of any other entity is essentially a question of fact. Submission that the petitioner was not served with notices is misconceived inasmuch as the Writ Petitioner/Assessee is a company incorporated under the Companies Act and is just a juristic person and thus the averments which are completely personal and which are on the basis of alleged family disputes cannot have a bearing as to whether the petitioner have been properly served or otherwise This Court is not inclined to entertain this writ petitions as the question raised would require examination of disputed question of facts which is alien to the writ jurisdiction under Article 226 of the Constitution of India more so when there is an effective alternative remedy. The rule of alternate remedy no doubt is a self imposed restraint by Courts exercising writ jurisdiction. In other words, rule of alternate remedy is not a rule of compulsion, but it is a rule of discretion. See judgment of Hon'ble Supreme Court in Authorized Officer, State Bank of Travancore and Another vs Mathew K.C, [ 2018 (2) TMI 25 - SUPREME COURT] This Court has no hesitation in holding that alternate remedy though a rule of discretion and not a rule of compulsion, has to be applied with utmost rigour when it comes to fiscal law statutes and this Court is not inclined to entertain these writ petitions. Therefore these Writ Petitions stands dismissed.
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2023 (3) TMI 924
Validity of Reopening of assessment u/s 147 - 2nd respondent had reasons to believe that the income chargeable to tax has escaped assessment - correctness of the claim of deduction u/s 80JJAA - whether issue of the correctness / legality of the claim of deduction u/s 80JJAA was not dealt with nor can it be understood as expression of any opinion on the said issue while framing the assessment u/s 143(3)? - Single Judge has proceeded to dismiss the order of reassessment by relegating the appellant to participate in the reassessment proceedings while leaving it open to the assessing authority to drop the proceedings for reassessment, if the circumstances do not justify invocation of reassessment proceeding HELD THAT:- We find that the order of the learned Single Judge suffers from the following infirmities and misconceptions: a) The order of the learned Judge insofar as it proceeds to treat the notice u/s.148 as being independent and stand alone and unhindered/unfettered by the restrictions contained in Sec.147 is based on a misconception and may well distort the scheme of reassessment under the Income Tax Act. b) While the subtantive power of making a reassessment is traceable to Sec.147. The procedure for exercising the power of reassessment is set out under Sec.148 and Sec.149 prescribes the time limit within which the powers of reassessment ought to be exercised. c) Sections 147 to 153 of the Income Tax Act, 1961 must be understood as an integrated code which deals with various facets/aspects of reassessment and must be read harmoniously and in conjunction and not disjunctively as being independent of each other as interpreted and understood by the learned Judge. d) Judgment of the Supreme Court GKN Driveshafts (India) Ltd. [ 2002 (11) TMI 7 - SUPREME COURT ] which mandates furnishing of reasons for reassessment when sought for, with an opportunity to the assessee to question the assumption of jurisdiction and casting an obligation on the assessing authority to dispose of such objection was not meant to be an empty formality or ritual without a purpose, but, was directed to ensure that the assessees do not have to go through the rigmarole of the entire process of reassessment, if the very assumption of the jurisdiction is bad. e) Any proceeding which is lacking jurisdiction is a nullity and the discretion of judicial review would be exercised if it is shown that the proceedings are lacking jurisdiction. The learned Judge ought to have seen that the challenge to the proceedings dated 24.11.2017 was on the premise that the very assumption of jurisdiction was bad as it was on the basis of mere change of opinion which the Supreme Court has consistently held would not confer jurisdiction to exercise the powers of reassessment. f) The order of learned Judge suggesting that the question of whether there was true and full disclosure is still open, again appears to us to be misdirected / misplaced since while setting out the reasons for reassessment, the respondent has not even remotely suggested that there was no full and true disclosure on the part of the appellant. Thus it appears the order of the learned Single Judge is an improvement of the assessment proceeding which is quasijudicial in nature and thus impermissible. g) It is axiomatic that an authority cannot clutch at jurisdiction by assuming the existence of a non-existent jurisdictional fact or by deciding erroneously the existence of a jurisdictional fact. In the present case, if the case of the appellant that the reasons disclosed only indicated change of opinion is correct, then the very assumption of jurisdiction would be illegal and any orders passed would be bad for want of jurisdiction. The learned Judge has not examined or rendered any finding on the above aspect to the contrary directed the above question to be decided by the assessing authority in the course of exercise of power of reassessment. For all the above, we are of the considered opinion that the matter be remitted back to the learned Single Judge to examine as to whether the assumption to make reassessment of jurisdiction is bad for want of jurisdiction.
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2023 (3) TMI 923
Bogus purchases/expenses - Non rejection of books of accounts - CIT-A deleted the addition - HELD THAT:- AO made addition on account of bogus purchase and expenses, he did not reject the books of account u/s 145(3) - assessee has produced bank statements reflecting advance payments to seller of goods. Accounts of the assessee company are duly audited. Quantitative details have been maintained as reflected in tax audit report submitted under section 44AB of the Act. Export sales are reflected in audited balance sheet. The assessee is maintaining stock register and no payments were made in cash. It is worthy of note that no addition was made by the AO in preceding AY where the assessee has made similar transactions with the aforesaid parties. CIT(A) has cited many case laws wherein on similar facts no addition has been sustained. As adequate opportunity was granted by the CIT(A) to the Ld. AO and in his remand report submitted as per Rule 46A of the Rules, no material was brought on record warranting an adverse view against the assessee. Appeal of the Revenue is dismissed.
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2023 (3) TMI 922
Enhancement of interest u/s 234A - Rectification of order u/s 154 - Defective return - distinction between cases where an assessee claims payment of tax and otherwise - HELD THAT:- As assessee had filed her former return u/s. 139 (4) of the Act without payment of self-assessment tax qua the admitted income - The Revenue could hardly dispute that sec.139(9) of the Act is a specific provision wherein an AO could held a return as a defective one after following the due procedure as per Explanation (c) (i) thereto which treats a return filed by an assessee to be defective only if there is self-assessment tax claimed to have been paid and not otherwise. The assessee s above former return dated 08.02.2013 could not have been treated as a defective one so as to trigger applicability of sec.234A interest herein levied in sec.154 rectification proceedings in issue. Both the learned lower authorities action to this effect stands reversed therefore. The assessee s arguments stands accepted in very terms. Decided in favour of assessee.
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2023 (3) TMI 921
Rectification of mistake u/s 154 - mismatched contract receipts - HELD THAT:- As per settled legal proposition in T.S. Balram, ITO vs. Volkart Bros [ 1971 (8) TMI 3 - SUPREME COURT ] section 154 of the Act is attracted only in case of an apparent mistake than those requiring long drawn process of detailed enquiry(ies). Assessee s stand all along as per it s statement of facts filed before the NFAC is that the impugned sum involving S/Shri Dilip N Bharne proprietor of M/s. Trimurti Enterprises and Clincy Constructions Pvt. Ltd. is in the nature of service tax component which already stands assessed as the AO had framed the scrutiny assessment dated 26.10.2016 after carrying-out his detailed investigation qua the alleged excess turnover declared, ITS data and 26AS, as the case may be. All what the learned NFAC has done is to simply harp upon sec.154 jurisdiction exercised by the Assessing Officer than rebutting the said clinching averments. We conclude in this factual and legal backdrop that the impugned sec.154 rectification for the purpose of assessing the instant taxpayer s receipts @ 9% falls beyond the purview of sec.154 jurisdiction. Assessee appeal allowed.
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2023 (3) TMI 920
Exemption u/s 11 - Charitable activity u/s 2(15) - whether the assessee is carrying out activities qualifying as being charitable in terms of section 2(15) so as to entitle it to claim exemption of its income u/s 11/12 ? - as per AO assessee was carrying out activity of general public utility as defined under section 2(15) - as per CIT-A activity carried out by the assessee qualified as education , in terms of section 2(15) - HELD THAT:- As in terms of Section 2(15) of the Act, education means only imparting formal scholastic learning - See NEW NOBLE EDUCATIONAL SOCIETY [ 2022 (10) TMI 855 - SUPREME COURT] . As in view of the narrow and restricted meaning given to the term education as used in Section 2(15) of the Act, the activities carried out by the assessee being primarily run as a science museum does not qualify as education. The findings of the learned CIT(A), therefore, holding so are set aside. We hold that the assessee is not engaged in the charitable activity of imparting education as defined under Section 2(15) of the Act and the order of the learned CIT(A) holding so is, therefore, set aside. Alternate contention of the assessee that its activities, if not in the nature of imparting education, they qualify as general public utility activity as held by the Assessing Officer also; but to exclude it from the definition of charitable purpose as defined under Section 2(15) - The activities carried out by the assessee are not in the nature of imparting education, but are in the nature of general public utility activities in terms of Section 2(15) of the Act; and for the purpose of determining whether they are commercial in nature so as to disqualify them from being charitable activities in terms of first and second proviso to Section 2(15) of the Act, the matter needs reconsideration by the Assessing Officer in terms of the guidelines laid down by the Hon ble Apex Court in the case of AUDA ( 2022 (10) TMI 948 - SUPREME COURT] ) for determining the commercial nature of such activities. For the said purpose all the appeals are restored back to the AO. The AO is directed to determine the same and thereafter determine the income liable to tax in accordance with law. Appeals filed by the Revenue are allowed for statistical purposes
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2023 (3) TMI 919
Revision u/s 263 - capital gain arising from transfer of immovable property - Reopening of assessment u/s 147 - As per CIT AO committed error in considering the agreement to sell between Mrs. Sangita Gupta and assessee to determine cost of acquisition for purpose of section 48 - HELD THAT:- AO had made relevant and sufficient enquiries on the issue and was justified to take into consideration the agreement to sell. In fact Ld. PCIT has committed further error in expanding the scope of inquiry by questioning the source of payment to Smt. Sangita Goel by the wife of assessee. While the reasons to believe for purpose of Section 148(2) of the Act was merely alleged escapement of income under the head of capital gain arising from transfer of immovable property - Thus, the order of Ld. PCIT u/s 263 the Act cannot be sustained. Consequently, the appeal of assessee is allowed.
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2023 (3) TMI 918
Validity of reopening of assessment - Reasons to believe - independent application of mind by AO - AO mandation to preliminary enquiry and investigation and establishing the necessary nexus between material and formation of belief that income has escaped assessment - HELD THAT:- We find that the matter is squarely covered by the decision of Smt Sudesh Rani Others [ 2023 (1) TMI 716 - ITAT CHANDIGARH ] wherein it was held that the AO doesn t have the legal basis to acquire jurisdiction for reassessment u/s 147 as he has simply relied upon the report and conclusion drawn upon by Investigation Wing Kolkata without carrying out any preliminary enquiry and investigation and establishing the necessary nexus between material and formation of belief that income has escaped assessment and there was no independent application of mind by the AO as can be discernable from the reasons so recorded and in view of the same, the notice issued u/s 148 and consequent reassessment proceedings were set-aside. In the instant case as well, we find that the reasons have been recorded on identical lines by the Assessing officer simply relying upon the report and conclusion drawn upon by Investigation Wing Kolkata without carrying out any preliminary enquiry and investigation and establishing the necessary nexus between material and formation of belief that income has escaped assessment. There is clearly no independent application of mind by the AO as can be discernable from the reasons so recorded - Appeal of assessee allowed.
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2023 (3) TMI 917
Addition regarding gift received from father - assessee consistently submitting that the father of assessee Shri Krishna Dutta is a Pujari in Mandir, he also works as an astrologer and property dealer - HELD THAT:- Unable to see any findings that the father of assessee does not own 6.5 acres agricultural land. CIT(A) noted that the assessee has not been able to convinced the AO regarding income from agriculture and agriculture income calculated by the assessee are based on presumptions only. Appellant father should have filed his return of income if he was having taxable income - Unable to agree with the conclusion drawn by FAA that in absence of return of income by his father the factum of gift cannot be accepted - when he is earning small income from puja astrology and earning exempt agricultural income then the requirement of filing of return of income arose only in a situation when his income falls within the purview of taxable limits, merely because a person, giving gift to his son, is not filing return of income, the transaction of gift cannot be doubted particularly when the person giving gift is owing 6.5 acres agricultural land which yielded agricultural produce to him. As basis taken by the AO as well as CIT(A) for dismissing the explanation of assessee regarding gift from his father is not reasonable, justified and sustainable. Therefore, the same is dismissed.
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2023 (3) TMI 916
Deduction u/s 80IA(4)(iv) - income from eligible project - quantification of claim - claim was revised upward on the ground that, the assessee, in the original calculation of eligible profits, wrongly reduced the amount of depreciation under the Companies Act as against the required deduction under the Income-tax Act - HELD THAT:- CIT(A) allowed the claim without examining the veracity of the amount of depreciation under the Act as well under the Companies Act and further without calling for any remand report from the A.O. This shows that the figures of depreciation under the Companies Act at Rs. 95.43 lakhs and under the Act at Rs. 1,200/- in the fresh revised claim, have not passed out the verification test either by the ld. CIT(A) or the AO and further such figures are also not forthcoming from either the Computation of income or the Annual accounts for the year for verification at our end. Matter is remitted to the file of the A.O for examining the correctness of these two figures. We order accordingly. Deduction u/s 35(2AB) - A.O did not entertain such claim in absence of the assessee having furnished any revised return - HELD THAT:- Approval was granted after filing of the return by the assessee. Form No. 3CL indicates the amount of capital expenditure in respect of Dewas and Baner units at Rs. 14.31 lakhs and Rs.7.25 lakhs respectively and the amount of recurring expenditure for these two units at Rs. 108.62 lakh and Rs. 548.63 lakh respectively for the A.Y. 2014-15. The amount of further weighted deduction allowed in the first appeal to the tune of Rs. 7.00 crore is based on such amounts sanctioned by the Government of India, Ministry of Finance and Technology in respect of Dewas and Baner Units. Since the further claim is fully verifiable from the amount sanctioned by the Government of India, Ministry of Science and Technology, we are satisfied that no interference is warranted in the impugned order on this count in granting deduction on the basis of such certificates. We uphold the impugned order on this score. Appeal is partly allowed for statistical purposes.
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2023 (3) TMI 915
Exemption u/s 11 - denial of claim as assessee trust is not a registered trust u/s.12AA of the Act and treated the assessee as an AOP and taxed income at maximum marginal rate - assessee is a registered charitable trust running educational institution viz. Alpha Matriculation Higher Secondary School - whether the registration granted is to be read as prospective or retrospective in term of 2nd proviso to section 12A? - HELD THAT:- The insertion of 2nd proviso to section 12A of the Act has been explained by Explanatory Notes to provisions of Finance (No.2) Act, 2014, and it is provided that same is applicable to earlier assessment years which are pending before the AO as on date of such registration. As relying on case of SNDP Yogam [ 2016 (3) TMI 1110 - ITAT COCHIN] claim of the assessee u/s.11 of the Act granting exemption holding that registration granted to the assessee trust is retrospective and not prospective.
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2023 (3) TMI 914
Unexplained money adding u/s.69A - Cash received on Sale of ca r - source for cash unexplained - HELD THAT:- The assessee purchased this car only on 18.04.2012 and sold the car to one Mr.Vallinayagam on 07.01.2013, which was actually transferred by RTO on 18.02.2013. Hence, there is no dispute about facts and payment made by Mr.Vallinayagam on 07.01.2013 was repaid by the assessee against loan outstanding of M/s. Mahindra Mahindra Financial Services Pvt.Ltd.. Hence find no infirmity in the explanation of the assessee and I accept this amount as explained. Jewel gold loan proceeds availed by the assessee s wife - Assessee drew attention to account statement of assessee of IDBI bank, wherein there is credit entry on account of jewel loan - The assessee tried to explain this entry. But, apart from assessee s bank statement, he could not submit that this amount has been received against jewel loan. Hence, to that extent, confirm the addition. The appeal of the assessee is partly allowed.
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2023 (3) TMI 913
Addition on account of salary income - AO noted that the assessee has received a sum as compensation on resignation from the company and the same was not disclosed in the return of income - Also Amount received from company was on behalf of the mother-in-law cannot be accepted as the company have directly refunded the amount to assessee s mother-in-law to her bank account and there is no requirement to give the same to the assessee - HELD THAT:- This income has been explained by assessee and even otherwise it is not clear from the assessment order that how the AO is making addition because the salary income narrated by AO in his order is deleted by CIT(A) because the assessee has already declared this amount under the head salary. Hence, delete the addition and allow this issue of assessee s appeal. Unexplained investment - HELD THAT:- Even from the fund position as noted by the AO there is withdrawal from father s bank account maintained at SBI, Vadavalli, an amount of Rs.2,40,000/- and withdrawal of Rs.7,00,000/- on 05.03.2012, total comes to Rs.9,40,000/- whereas investment is only Rs.9,39,320/-. It means that the investment and withdrawal matches. Allow this issue in favour of assessee. Unexplained cash credit u/s 68 - HELD THAT:- As assessee could not produce any evidence as was the situation before AO, as was the situation before CIT(A). In absence of any documentary evidence or explanation, confirm the addition. Unexplained cash deposits - assessee filed confirmation from the depositor and lady, who claimed to have been the cousin of the assessee - HELD THAT:- CIT(A) noted that she was a school teacher earning Rs.23,000/- per month and hence, he has not accepted the cash deposit of Rs.59,000/- received from her. Even now before us assessee could not file any evidence or explanation to explain this credit entry - dismiss this ground.
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2023 (3) TMI 912
Income deemed to accrue or arise in India - benefit of India - UK DTAA to the assessee by the A.O. - Reference to incorporation, domicile or place of management or on other conditions - HELD THAT:- It is observed that the assessee s case for A.Y. 2011-12 [ 2017 (2) TMI 779 - ITAT MUMBAI ], the co-ordinate bench has held that the assessee is entitled to the benefits of India - UK DTAA by following the previous year s decision of the Tribunal in the case of Linklaters LLP [ 2017 (2) TMI 779 - ITAT MUMBAI ] Taxability of LLP or its partners - A.O. has held that as per UK laws, LLP is not a taxable entity and since the assessee is not liable to tax and only its partners are assessed to tax, the assessee cannot be given the benefit of the Tax Treaty - No doubt that the firm consists of Partners and the income of the firm are taxed in the hands of the partners, the assessee is also said to be incorporated and registered under the laws of UK. Other than the fact that the assessee has not paid tax, we have observed from the orders of the DRP and the A.O. that there is no detailed analysis as to why the said benefit is to be denied to the assessee. There has been no discussion neither in the DRP s order nor in the assessment order explaining why the income of the assessee is to be taxed in India. In the absence of such analysis, we are inclined to follow the decision of the Tribunal in assessee s case for earlier years which has held that the assessee was entitled to India - UK tax treaty benefits - we allow ground raised by the assessee. Income taxable in India - FTS - Whether the invoice raised by the assessee is in the nature of fees for technical services as defined under Article 13(4)(c) of India UK DTAA? - assessee contends that the A.O. has given a factually inaccurate finding that the co-ordinate bench in assessee s case has held the impugned amount to be taxable in India as per the DTAA - HELD THAT:- Tribunal in A.Y. 2013-14 and 2015-16 [ 2010 (7) TMI 535 - ITAT, MUMBAI ] held that the Revenue has failed to prove otherwise that the same pertain to fees for technical services - provisions of India-UK DTAA would override the provisions of the Act, thereby holding the remuneration received by the assessee for providing legal services as not amounting to fees for technical services , where the provisions of section 9(1)(vii) of the Act is not applicable - the revenue has failed to prove that the same would fall under the category of fee for technical services as envisaged in Article 13 of the India-UK DTAA and thereby holding that the same cannot be brought to tax as FTS as per section 90(2) of the Act. We are inclined to follow the said decisions, as the Revenue even during the impugned year has failed to controvert the contention of the assessee.- we allow ground raised by the assessee. Permanent establishment in India - period of stay in India - HELD THAT:- As assessee do not have a permanent establishment in India during the impugned year. As the period of stay of the employees of the assessee for rendering the services in India was only for 17 days and only when it amounts to 90 days or more, the assessee is said to have a permanent establishment in India as mandated by law. Liability to be taxed in India under Article 15 India-UK DTAA - whether only Article 7 was applicable in assessee s case and not Article 15? - HELD THAT:- As decided in in the assessee s case [ 2018 (9) TMI 1741 - ITAT MUMBAI ] impugned amount of fee received by the assessee would not be liable to be taxed under Article 15 of India-UK DTAA As this issue has already been dealt with by the Tribunal extensively in the previous years, the same is also applicable for the impugned year as there is no change in facts for this year. Tribunal has reiterated that Article 15 of India-UK DTAA is dealt with only for taxability of independent personnel services or independent activity of similar character and not for the assessee which is a partnership firm. Appeal filed by the assessee is allowed. Accrual of income - Reimbursement of expenses treated as income - India-Singapore tax treaty - HELD THAT:- As decided in case in Linklaters LLP [ 2017 (2) TMI 779 - ITAT MUMBAI ] reimbursements received by the assessee are in respect of specific and actual expenses incurred by the assessee and do not involve any mark up, there is reasonable control mechanism in place to ensure that these claims are not inflated, and the assessee has furnished sufficient evidence to demonstrate the incurring of expenses. 'There is thus no good reason to make any addition to income in respect of these reimbursements of expenses. The action of the CIT(A), as rightly contends, is on pure surmises and conjectures - delete the disallowance of expenses as sustained by, the CIT(A) and hold that no part of reimbursements of expenses received by the assessee on the facts of this case, be treated as income of the assessee. Decided in favour of assessee.
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2023 (3) TMI 911
Exemption u/s.54F - Claim denied as property purchased by assessee for a consideration from his wife was never registered as sale deed and even after expiry of more than three years the property was in the name of his wife because no pacca sale deed has been registered - HELD THAT:- Admittedly, it is a fact that the above property purchased by assessee on 22.12.2011 at Padikuppam is land only and not a house and hence, the same is not hit by the provisions of section 54F(1) proviso (a)(ii) of the Act. Secondly, the assessee entered into sale agreement with his wife towards purchase of this residential property situated at Kalashetra Colony, Chennai on 10.12.2011 and assessee has fulfilled all the conditions of section 53A of Transfer of Property Act although the sale deed is not registered but the transaction is completed. CIT(A) power to set aside or sending the issue back for examining the issue afresh - We agree with the contention of the Revenue but by going through the decision of CIT(A), we noted that the CIT(A) has only directed the AO to examine this supporting documents but he has actually allowed the claim of deduction u/s.54F of the Act on principle. According to us, this is not setting aside of the issue or remanding the matter back to the file of the AO for fresh consideration, simpliciter verification is not barred u/s.251(1)(a) of the Act. Hence, we find no infirmity in the order of CIT(A) and the same is confirmed. The appeal of Revenue is dismissed. Disallowing trading loss on sale of shares - primary onus to prove the sources in respect of trade transaction squarely lies on the assessee - HELD THAT:- We are of the view, let the assessee be given one more chance to produce Demat account and the details of banking transactions to prove that the assessee has actually suffered loss - assessee will also file details by quantifying the loss and will prove with reference to Demat account maintained for this purpose. Appeal of the assessee is allowed for statistical purposes. Addition u//s 69 - assessee could not submit the relevant supporting documents with regard to amount received from Shri K. Kesavan - HELD THAT:- We noted that the assessee could not submit the relevant supporting documents with regard to amount received from Shri K. Kesavan - Even the order of CIT(A) is non-speaking and how he reached to the conclusion that the AO has given sufficient opportunities. We could not make out how this amount was disallowed and added u/s.69 of the Act because the individual entry was not discussed by the AO. Hence, keeping in view of facts in mind, we remand this issue back to the file of the AO.
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2023 (3) TMI 910
Income deemed to accrue or arise in India - amount received by the assessee towards sale of software - royalty receipts under Article 12 of the India USA Double Taxation Avoidance Agreement (DTAA) - HELD THAT:- Materials on record clearly demonstrate that the assessee has sold copyrighted articles and has not transferred use or right to use of any copyright. Though, creation of software might have involved certain formula or process, but what the customers in India have purchased is the software and not the process. Thus, in sum and substance, the assessee has sold copyrighted articles and not the copyright in the software. The ratio laid down by the Hon ble Supreme Court in case of Engineering Analysis Centre of Excellence Pvt. Ltd. [ 2021 (3) TMI 138 - SUPREME COURT] would squarely apply to assessee s case. The amount received by the assessee from sale of software is not in the nature of royalty under Article 12(3) of India USA DTAA. Accordingly, we direct the Assessing Officer to delete the addition. Grounds are allowed.
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2023 (3) TMI 909
Upward adjustment on account of foreign exchange losses on ECB loan - upward adjustment on account of loss on derivative contracts - AO had rejected the claim on the ground that ECB loan was availed by the assessee from Canara bank to refinance the other capital expenditure loans which was obtained in rupees and the foreign exchange loss incurred on repayment was in the nature of capital loss which has to be capitalized to the cost of the same and hence was not allowable u/s. 37 - HELD THAT:- Section 42A of the Act is not applicable for the present case where the assessee is not said to have accrued any asset in foreign currency and the only object of refinancing the loan was to pay the earlier debts for the purpose of reducing the cost of interest. As in the case of Cooper Corporation (P.) Ltd. vs. Dy. CIT, Satara [ 2016 (5) TMI 809 - ITAT PUNE ] where similar issue has been dealt with extensively in favour of the assessee and the relevant extract of the said decision is cited hereunder for ease of reference For the aforesaid reasons, in the absence of applicability of section 43A of the Act to the facts of the case and in the absence of any other provision of the Income Tax Act dealing with the issue, claim of exchange fluctuation loss in revenue account by the assessee in accordance with generally accepted accounting practices and mandatory accounting standards notified by the ICAI and also in conformity with CBDT notification cannot be faulted. No inconsistency with any provision of Act or with any accounting practices been brought to our notice. Otherwise also, in the light of fact that the conversion in foreign currency loans which led to impugned loss, were dictated by revenue considerations towards savings interest costs etc. we have no hesitation in coming to the conclusion that loss being on revenue account is an allowable expenditure under s. 37(1) of the Act. The order of the CIT(A) sustaining the disallowance is not called for and is thus reversed. In the result, the ground no. 1 is allowed. Loss incurred by the assessee in foreign currency exchange is allowable as revenue expenditure and is a revenue loss for which the assessee is entitled to deduction as revenue expenditure . In the absence of any finding that the loan obtained by the assessee is utilized for the purpose of accruing assets, we hold that the said loan was availed for the purpose of reducing the cost of interest, which is an allowable expenditure u/s. 37(1). Adjustment on account of loss on derivative contracts - HELD THAT:- We would like to place our reliance on the decision of Reliance Industries Ltd. [ 2014 (2) TMI 836 - ITAT MUMBAI ] wherein it was held that the forex loss incurred during fluctuation in foreign currency exchange is not a notional loss and was allowable as deduction . 'Marked to market loss is not a notional loss and is, therefore, allowable expenditure. We also hold that the said transaction is not a speculative transaction as per section 43(5) of the act and is merely a hedging transaction and thereby the same would fall under the exception to section 43(5) of the Act. We hereby direct the A.O. to allow the said loss while computing the income of the assessee.
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2023 (3) TMI 908
Faceless Assessment - as stated draft assessment order on the ground that the same was passed without issuing the show cause notice along with the draft order as mandated in section 144B - HELD THAT:- Provision of section 144B(vi) mandates that in case of variation proposed in the transfer assessment order, a show cause notice is to be issued as to provide with an opportunity to the assessee for the reason that the assessee can request for personal hearing to make oral submissions or to present his case on the proposed variation, also provides for virtual hearing through video conferencing, video-telephone for the purpose of presenting the assessee s case. As decided in the case of Piramal Enterprises Ltd [ 2021 (8) TMI 48 - BOMBAY HIGH COURT ] in assessment order passed u/s. 143(3) r.w.s. 144(4) of the Act without adhering the procedure laid down u/s. 144B shall make the assessment non est in the eyes of law. Abacus Real Estate (P.) Ltd. [ 2021 (10) TMI 1213 - BOMBAY HIGH COURT ] in which the Hon'ble Jurisdictional High Court held that the mandatory procedure prescribed u/s. 144B of the Act if not followed the same would make the assessment order and the draft assessment order as non est. Assessment order passed in variation of the procedures prescribed u/s. 144B of the Act would render the assessment order as non est. Decided in favour of assessee.
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2023 (3) TMI 907
Addition u/s. 68 - addition of loan from two lenders reassessment orders in lender companies - CIT-A deleted the addition - HELD THAT:- CIT (A) has gave detailed reasoning for deleting the addition and further more clinching issue is reassessment of the lender companies where the monies received by them are accepted as genuine. When the source of money is accepted as compliant with provision of section 68 in absence of any further inquiry and findings the amount received by assessee form those companies cannot be held to be taxable in the hands of the assessee u/s 68. Thus, reassessment orders in lender companies accepting the money if at all received from companies operated by some unscrupulous persons, then money received by assessee cannot be held to non-genuine. In fact, that is the only allegation of AO, which is demolished by the reassessment orders of the lender companies. We therefore do not incline to interfere with the findings and reasoning of the ld. CIT(A) and uphold the order of ld. CIT(A). Disallowance of business loss - utilization of interest bearing funds for the purpose of business in order to claim the interest expenditure - AO held that assessee had not brought on record any evidence to show direct nexus of utilization of fund whereas in fact, he had used the funds for the purpose of investments in other concerns in which he is a partner and also for other assets - HELD THAT:- Since out of the overall interest bearing funds, certain funds were utilized for the purpose of business of the proprietorship concern of the assessee, to that extent, interest ought to be allowed u/s. 36(1)(iii) - We therefore do incline to interfere with the order of the ld. CIT(A) and the Corrigendum Order passed thereafter in granting relief to the assessee to the extent of Rs. 3,86,176/- on this issue u/s. 36(1)(iii) of the Act. Hence, the ground no. 3 of the revenue is dismissed. Assessment u/s 153C - additions made in the assessment order having any basis to incriminating material, if any - HELD THAT:- We find that the said issue is squarely covered by the decision of Sinhgad Technical Education Society Ltd. [ 2017 (8) TMI 1298 - SUPREME COURT ] wherein it is held that there has to be incriminating material pertaining to the assessment year in question in order to make any addition or disallowance in an assessment made u/s. 153C of the Act. In light of the above background of facts and settled judicial precedent, we are of the considered view that no additions or disallowances can be made devoid of any incriminating material found during the search on a third person. Accordingly, the Cross objection filed by the assessee is allowed.
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2023 (3) TMI 906
TP Adjustment - receipt of counter guarantee commission by the Assessee from Associated Enterprises (AE) for providing counter guarantee at the instance of its overseas AE - HELD THAT:- We find rationale in the plea of the assessee that the counter guarantee with negligible risks can not per se be compared with guarantee offered by independent parties/ banks shouldering very high risk parameters as also observed by the co-ordinate bench in other assessment years. TPA made in the impugned assessment order towards counter guarantee commission is thus grossly at odds with the factual position enunciated by the co-ordinate benches and hence such adjustment is totally uncalled for. The directions of the DRP in Assessment Years 2010-11 and 2011-12 acknowledges the position taken by the assessee. The directions given while restoring the matter to the AO are self evident and does not admit of any such assumption of agreeability of any sort with CUP method as canvassed on behalf of the revenue. The Assessee in any case, would not be in a position to defend its case for TNMM method as MAM unless data collected is provided for its examination and rebuttal. It is manifest that the observations made by the Co-ordinate Bench in the first round had kept the issue entirely open to be decided denovo. We are thus not impressed by such counter argument on behalf of the Revenue.
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2023 (3) TMI 905
Addition u/s 69A - cash deposit during the period of demonetization in the bank account maintained by the assessee - declaration made under Pradhan Mantri Garib Kalyan Yojna Scheme, 2016 [PMGKY] - as submitted once advance tax was duly paid on the sum deposited in the bank account, the said sum could not be taxed as income u/s 69A - HELD THAT:- We fail to understand how the amount declared under the PMGKY Scheme, 2016 becomes taxable u/s 69A of the Act as done by the Assessing Officer. Section 69A shows that this section is attracted when some unexplained money for which the assessee is found to be the owner and such money is not recorded in the books of accounts, if any, maintained by the assessee for any source of income for which the assessee does not offer any explanation or the explanation of the assessee is not satisfactory in the opinion of the AO. The facts explained clearly show that it is the assessee who came forward with the explanation that the amount deposited in the bank account on which advance taxes have been paid in November 2016 and subsequently, the same was offered under PMGKY Scheme, 2016 cannot become assessable u/s 69A of the Act. Considering the scope of the Scheme in light of the Explanatory Notes, there is no reference to the Certificate issued by designated PCIT but definitely there is a reference to valid declaration made under the Scheme. Assessee has made a valid declaration under the PMGKY Scheme, 2016 and has duly paid taxes/penalty and has also deposited requisite amount under the PMGKY Scheme, 2016. By no stretch of imagination provisions of section 69A can be applied on the aforementioned facts. Therefore, the entire addition made by the AO and confirmed by the ld. CIT(A) do not hold any water and deserve to be deleted. Direct the Assessing Officer to delete the impugned addition made u/s 69A of the Act in respect of cash deposit in the bank account. Decided in favour of assessee.
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2023 (3) TMI 904
Unexplained cash credits u/s. 68 - Discharge of onus - CIT-A deleted addition - HELD THAT:- We concur with the view taken by the CIT(Appeals) that now when the assessee had duly discharged the onus that was cast upon it as regards proving the nature and source of the credit appearing in its books of account, i.e. share application money that was received from the investor company by placing on record supporting documentary evidences, viz. name and address, PAN details, certificate of incorporation, memorandum of association, article of association, audited financial statement, income-tax return, bank statement (out of which share application money was paid), share application form and details of receipt of amount through banking channels, therefore, the A.O could not have drawn adverse inferences as regards the authenticity of the said transaction without dislodging the aforesaid claim of the assessee on the basis of any such material which would have irrefutably proved to the contrary. As regards the observation of the A.O that during the course of search proceeding the statutory records of the assessee company, viz. minutes of meeting register, shareholders register, counter foils of issued share certificates etc. were not found at the registered office of the assessee company, we find that the CIT(Appeal) had vacated the same on the ground that a perusal of the statements recorded u/s.132(4) of the Act, nowhere revealed that any official of the search team in the course of the said proceedings had visited the registered office of the assessee company. Nothing is discernible from the records before us which would reveal that the observations of the CIT(Appeals) are either perverse or contrary to the facts available on record. Also, the ld. D.R during the course of hearing of the appeal had failed to rebut the aforesaid observation of the CIT(Appeals). No infirmity in the view taken by the CIT(Appeals) as regards the genuineness and authenticity of the assessee s claim of receipt of share application money, therefore, uphold his order to the said extent. Thus, the Grounds of appeal No.1 2 raised by the revenue are dismissed in terms of our aforesaid observations. Suppressed yield of sponge iron in the hands of the assessee company - HELD THAT:- Not only both the lower authorities had failed to take cognizance of the aforesaid serious infirmity and had allowed it to perpetuate as such, but what is incomprehensible and rather strange is that even in the course of the proceedings before us neither the assessee nor DR had pointed out the same to us. Be that as it may, as the grievance of the revenue is based on misconceived facts which clearly militates against the facts discernible from the assessment order, which reveals that the yield of sponge iron of the assessee company during the year under consideration i.e A.Y 2010-11 was 60.02% i.e better than the yardstick of 60% that was adopted by the A.O. therefore, the very basis of the grievance of the revenue does not survive. Decided against revenue.
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Customs
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2023 (3) TMI 903
Seeking appointment of another officer having the same rank to hear the case of the respondents/writ petitioners relating to suspension of their license - principles of natural justice - HELD THAT:- There are two views, which are possible in the matter. The first view is that if both the officers are one and the same person, it may give an impression that the officer may be judging his own cause while considering the correctness of the submission made by the respondent/writ petitioner in the post-decisional hearing offered to them upon suspension of the customs broker license. The second view which is possible that if both the officers are one and same person and if he is discharging duties under two different and distinct capacity under two enactments whether it can be termed that he will be judging his own cause, this controversy need not be gone into for the simple reason that the post-decisional hearing should be an effective hearing and the principles of natural justice have to be followed and any iota of bias or prejudice should not surface in the decision making process. The learned writ Court has not laid down legal principles and in the light of the grounds raised by the Department, we are of the considered view to leave the legal issues open while affirming the penultimate direction issued by the learned Single Bench directing the some other authority to conduct the enquiry pursuant to the post-decisional notice issued to the respondent. The appeal stands dismissed and consequently the connected application also stands dismissed.
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2023 (3) TMI 902
Classification of imported goods - import of a consignment of 270 Kg Saccharomyces Boulardii in bulk, valued at Euro 80190 (CIF) - Department was of the view that the goods are rightly classifiable as yeast under chapter 21 and not under CTH 29183090 as Carboxylic acid - whether the imported goods merit classification under 29183090 as adopted by appellant or under 21021090 as determined by the Department? HELD THAT:- It is very much clear that the goods do not merit classification under Chapter 29. The appellant though classified the goods under Chapter 29, now contends that the classification determined by department is incorrect for the reason that Chapter 21 excludes yeast put up as medicament or other products of heading 3003 or 3004. From the Safety Data Sheet itself it is clear that lactose is added as auxiliary for lyophilization. It is not an ingredient added to make it a medicine. Lyophilization is nothing but freeze drying. It is just a stabilizing process to preserve a perishable product for the convenience of transport. On the samples placed before us it is mentioned as Saccharromyces Boulardii and does not mention the ingredient of lactose, so as to consider it as an ingredient added to make it a medicament - The appellant has furnished medical literature to argue that Saccharromyces Boulardii is used as medicine for diarrohea. However, there is no evidence to show that this product is known in the market in ordinary parlance as a medicament for gut related problems. Thus in fact though much medical literature has been placed to contend that Saccharromyces Boulardii can be used in the treatment of gut related problems there is no evidence to establish that it is known as a medicament. The appellant has failed to show that it is sold as a medicine for diarrhoea. Merely because the appellant has been issued a License by the Drugs Cosmetics Act, it cannot be said that the imported goods are known and understood as medicine. In the case of M/S. ZYMONUTRIENTS PVT. LTD. VERSUS COMMISSIONER OF CUSTOMS, CHENNAI [ 2019 (11) TMI 1287 - CESTAT CHENNAI ], the Tribunal followed the decision in the case of Kasturi Foods and Chemicals [ 1994 (12) TMI 208 - CEGAT, NEW DELHI ] to hold that the goods imported are to be classified under Chapter 21 as determined by the Department. The decisions passed by the Tribunal as to the classification in the case of Kasturi Foods and Products Ltd. as well as in the case of M/s. Zymonutrients Pvt. Ltd. would apply and the impugned goods are to be classified under Chapter 21 as determined by the Department. The issue is answered in favor of revenue and against the appellant. Appeal dismissed.
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2023 (3) TMI 901
Benefit of exemption - import of PLC Splitter Module - Denial of exemption based on expert opinion given in the test report by the IIT, Delhi - benefit denied on the ground that the goods imported by the appellant did not have lenses and therefore did not meet the criteria of the exemption under the said notification for the item namely, PLC Splitter Module - Mis-declaration of goods - Confiscation of goods. HELD THAT:- That from the notification it is clear that the goods, i.e. Microlens and Splitter are only entitled to the benefit of exemption. Though the sample was taken in the presence of the appellant from the consignment imported, however he raised doubts on the veracity of the test report. As per the settled principles of law, the competency of the expert opinion cannot be doubted. The opinion of expert in the field of trade, who deals in those goods cannot be ignored rather due importance has to be given, Commissioner of Customs (Import), Mumbai Vs. Konkan Synthetics Fibres [ 2012 (3) TMI 273 - SUPREME COURT ]. Therefore, the expert opinion given in the test report by the IIT, Delhi is not open to challenge. The High Court of Calcutta in Collector of Customs Vs. National insulated Cable Company Limited, [ 1993 (5) TMI 35 - CALCUTTA HIGH COURT ], took the view that the test report of IIT, Kharagpur merits more attention and credibility. As per the facts of the present case, goods imported by the appellant were examined 100% on first check basis and the goods were found as per the invoice and bill of entry. Merely because the appellant sought for duty exemption on the belief that the goods imported by him fall within the scope of the exemption notification and the revenue took the view that the goods imported were not as per the specifications under the notification, it is not a case where goods have been improperly imported or mis-declared so as to confiscate the goods invoking section 111(m) of the Customs Act. Consequently, the appellant was not granted duty exemption and the goods were provisionally released on payment of regular duty. There was no reason for confiscation of goods or redemption fine of Rs. 1,00,000/- or the penalty to be levied under the Customs Act. The justice will be done, if the penalty amount of Rs.9,44,601/- is set aside as no case is made out for penalty under section 112 and 114AA of the Customs Act. Also, there is no reason to confiscate the goods under Section 111(m) and consequently impose the redemption fine. The appeal is disposed of accordingly and the impugned order is modified by upholding the demand of differential duty but setting aside the confiscation, fine and penalty.
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2023 (3) TMI 900
Compounding of offence - restricted goods or prohibited goods - import of Gold - Application for Compounding of Offence in terms of Section 137(3) of the Customs Act, 1962 read with the Customs (Compounding of Offences) Rules, 2005, rejected - denial by resorting to the definition of prohibited goods as prescribed under Section 2(33) ibid - HELD THAT:- It is true that an application for compounding can be rejected but only due to the reasons mentioned under proviso to Section 137 ibid and for no other reason whatsoever. But the learned Chief Commissioner failed to appreciate that the expression used in the proviso to Section 137(3) is prohibited items whereas for rejecting the application he relied upon the definition of prohibited Goods as prescribed u/s. 2(33) ibid. Gold is freely importable and therefore can such a good will become prohibited merely because it was imported illegally without prior permission? In my view the answer is in negative. The learned Chief Commissioner has rejected the application merely on the ground that since the gold bars have been imported illegally therefore the definition of prohibited goods as per sec.2(33) gets attracted and the gold bars becomes prohibited goods for which no compounding application is maintainable. According to me, learned Chief Commissioner has misdirected himself by looking into the definition of prohibited goods as prescribed u/s. 2(33) of Customs Act, 1962 because Section 137(3)(ii) ibid only talks about prohibit items and specifically mentioned that it has no application if the goods involved are prohibited items for import and export in the ITC (HS) Classification of Export and Import Items of the Foreign Trade Policy - The definition of prohibited goods prescribed u/s. 2(33) by any stretch cannot be applied into the provision of Section 137 (3)(c)(ii) ibid. The learned Chief Commissioner failed to appreciate that Section 2 ibid itself begins with the words unless context otherwise requires . The Hon ble Supreme Court in the matter of Commr. of Customs vs. Atul Automations Pvt. Ltd.[ 2019 (1) TMI 1324 - SUPREME COURT ] rejected the submission raised by revenue that Multi-Function Devices although were a restricted and not prohibited item but absence of necessary authorization under the Foreign Trade Police would give it the character of a prohibited item and has laid down that there exists a fundamental distinction between what is prohibited and what is restricted. So when restricted goods in absence of proper authorization cannot be treated as prohibited then the gold bars herein are on a much better footing as its freely importable. The only reason given by the learned Chief Commissioner for rejecting the application is that the goods involved herein becomes prohibited goods by importing in violation of the conditions imposed for their import, therefore the application is not maintainable which, is totally contrary to the legal position and the language of the statute. The application is restored to the file of the learned Chief Commissioner for adjudication on merits after giving sufficient opportunity of hearing to both sides - Appeal allowed.
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2023 (3) TMI 899
Demand of duty along with interest as well as imposition of penalty under Section 112 of Customs Act - warehousing period extension not sought as well as no steps for taking delivery of the warehoused goods taken - in the meantime goods (wine) was rendered unfit for human consumption - relinquishment to the title to goods - HELD THAT:- In the facts and circumstances of this case, the appellant have exercised their right of relinquishment, as permissible under Section 68 (as amended). However, it seems that the appellant exercised the right of relinquishment when they realized that the goods are no longer fit for human consumption. It is further found that Revenue has also been sleeping over the matter and in spite of expiry of the warehousing period, as early as in June, 2004 and the last order of warehousing period expired on 16.08.2008. Revenue also kept sleeping over the period and never issued any notice for demanding the duty along with applicable interest etc., which clearly indicates the contributory negligence on the part of the Revenue. The provisions of warehousing, particularly Section 61(1) read with proviso provides, that where the goods are likely to deteriorate , the period referred to (one year) may be reduced by the authority to such shorter period as he may deem fit. Thus, there was obligation on the part of the customs authorities also to keep in mind the period of expiry of goods, which were meant for human consumption and to pass orders accordingly in the interest of Revenue. The appellant is not liable to pay duty, as till the time of relinquishment, no duty or other charges had been demanded from them. However, in the circumstances, as the appellant have also allowed the goods to deteriorate by not taking action timely to relinquish the goods within a reasonable time, they are held liable to penalty - penalty under Section 117 is imposed instead of Section 112 - reduced penalty of Rs. 1 Lakh is confirmed. Appeal allowed in part.
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Corporate Laws
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2023 (3) TMI 898
Recovery of electricity dues of the Company - personal liability of the Directors of the Defaulter Company/Corporate debtor which went into insolvency - Company under moratorium period (undergoing CIRP) - It was urged that once the Company went into insolvency, the outstanding electricity dues towards the defaulter company being Corporate debtor could not have been recovered from its Directors. Whether the Director of the Company who is claimed to be the personal guarantor in the matter of payment of electricity dues of the Company would be able to sustain the challenge to the demand of dues of electricity from the personal assets of the Directors, in view of the Insolvency Proceedings concluded in relation to the defaulter company namely the Corporate debtor? HELD THAT:- In STATE BANK OF INDIA VERSUS V. RAMAKRISHNAN AND ANR. [ 2018 (8) TMI 837 - SUPREME COURT ], the controversy revolved around Section 14 of the Insolvency and Bankruptcy Code, 2016 which provides for moratorium for the limited period mentioned in the Code. The issue before the Apex Court was as to whether on admission of insolvency petition, the moratorium under Section 14 of the Code would apply to a personal guarantor of a Corporate debtor. While answering the said question, the Apex Court had considered different provisions of the Code and the effect of enforcement of Section 2(e) w.e.f 23.11.2017 by the Amendment Act, 2018. It was noted that under Part II of the Code which deals with insolvency resolution and liquidation for Corporate persons, a financial creditor or a Corporate debtor may make an application to initiate the insolvency resolution process. Once initiated, the adjudicating authority, after admission of such application, shall by order declare a moratorium for the purposes referred to in Section 14 (as per Section 13 of the Code). It was, thus, held therein that the object of the Code is not to allow personal guarantors such as Directors who are in management of the companies to escape from an independent and co-existent liability to pay off the entire outstanding debt. The decision in Sanjeev Shriya vs S.B.I [[ 2017 (9) TMI 1638 - ALLAHABAD HIGH COURT] ] wherein moratorium was applied to enforcement of guarantee against personal guarantor to the debt, has been overruled. Thus, it is clear that approval of a resolution plan does not ipso facto absolve the surety/guarantor of his or her liability, which arises out of an independent contract of guarantee. To what extent, the liability of a guarantor can be pressed into service would depend on the terms of the guarantee/contract, itself - the main contention of the learned counsel for the petitioner to challenge the recovery on the ground that approval of the resolution plan in the insolvency proceeding in relation to the defaulter company namely M/s Trimurti Concast Pvt ltd (Corporate debtor) would ipso facto discharge both the Directors of the defaulter Company, one of whom is the petitioner, is liable to be turned down. As to the issue of applicability of Clause 4.3(f)(v) of the Electricity Supply Code, 2005, the arguments with regard to validity of the same or the said provision being ultra vires to the Electricity Act, 2003, made in rejoinder half-heartedly, cannot be entertained, in as much as, no foundation has been laid in that regard in the writ petition. Thus, it is clarified that the legal issue with regard to the liability of the personal guarantor of the Corporate debtor whose liability is co-extensive with the principal debtor, i.e the Corporate debtor has been answered by us taking into consideration the law laid down by the Apex Court - the challenge to the demand notice for dues of electricity, issued jointly in the name of the Directors of the Corporate debtor, the defaulter company which went into insolvency cannot be sustained on the ground that in view of the acceptance of the resolution plan under Section 31 of the Code, all liabilities of the Directors, who may be the guarantor, stood automatically discharged/extinguished. Petition dismissed.
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Insolvency & Bankruptcy
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2023 (3) TMI 897
Modification/alternation of the approved Resolution Plan by the CoC - Resolution Plan was approved with majority of 81.39% voting rights of CoC which is in compliance of Section 30(2) and 30(4) of the IBC - ownership of the Corporate Debtor declared over the trademark after the approval of the Resolution Plan by the CoC - is this action of modification of Resolution Plan is permissible or not? HELD THAT:- It may be relevant to note that the Resolution Plan and particularly Clause 11.12 which has been referred, it is confined to the perpetual exclusive right to use the brands i.e. Deccan Chronicle and Andhra Bhoomi , etc. by the Corporate Debtor without any financial implications for the purpose of running its business and it was approved by the adjudicating authority under its order dated 3rd June, 2019, but since it was made subject to the result of pending I.A. No.155 of 2018, the adjudicating authority had approved so far as the exclusive rights of the Corporate Debtor to use trademarks namely Deccan Chronicle and Andhra Bhoomi under its order dated 14th August, 2019, but at the same time, a further declaration was made in para 38 holding that trademarks Deccan Chronicle and Andhra Bhoomi belong to the Corporate Debtor, which indeed does not reconcile with the Resolution Plan approved by the CoC and later by the adjudicating authority under its order dated 3rd June, 2019. The NCLAT, after taking into consideration the material available on record and Clause 11.12 of the Resolution Plan, in para 16 of the order of the adjudicating authority (NCLT) returned a finding that the ownership of the Corporate Debtor declared over the trademark after the approval of the Resolution Plan by the CoC, would amount to modification/alteration of the approved Resolution Plan by CoC which is impermissible in law and is not in terms of Section 60(5) of IBC. It clearly indicates that what was approved by the CoC with 81.39% of its voting is to the effect that the Corporate Debtor has a perpetual exclusive right to use the brands, namely, Deccan Chronicle and Andhra Bhoomi and it nowhere indicates regarding the right of ownership over the trademarks/brands, Deccan Chronicle and Andhra Bhoomi of the Corporate Debtor. But the adjudicating authority while adjudicating application I.A. No.155 of 2018, apart from upholding the exclusive right to use the trademarks, Deccan Chronicle and Andhra Bhoomi , made a further declaration that trademarks belong to Corporate Debtor/DCHL under its order dated 14th August, 2019, which, was a modification/alteration in the approved Resolution Plan which indisputably is impermissible in law. In terms of the approved Resolution Plan, it was the perpetual exclusive right to use the brands, namely, Deccan Chronicle and Andhra Bhoomi , by the Corporate Debtor which were available to SRA i.e. the appellant herein and once it has been approved by the adjudicating authority, certainly the right to exclusive use of the trademarks belonging to the Corporate Debtor, on being approved by the adjudicating authority, is always available to the SRA i.e. the appellant, but not the ownership rights of the trademarks of the Corporate Debtor. Appeal dismissed.
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2023 (3) TMI 896
Seeking refund the sum received from the writ petitioner as transfer fee - impugned order has reached to the conclusion that the transfer fee was exempted under the resolution plan sanctioned by the National Company Law Tribunal and has found that the demand of the respondent No. 1 for transfer fee was unsustainable - HELD THAT:- In terms of the resolution plan, the company and resolution applicant were exempted for payment of transfer charges. Hon ble Supreme Court in the matter of GHANASHYAM MISHRA AND SONS PRIVATE LIMITED THROUGH THE AUTHORIZED SIGNATORY VERSUS EDELWEISS ASSET RECONSTRUCTION COMPANY LIMITED THROUGH THE DIRECTOR ORS. [ 2021 (4) TMI 613 - SUPREME COURT ] has held that on approval of the plan, it becomes binding on the corporate debtor, its employees, members, creditors, guarantors and other stakeholders involved in the resolution plan. The legislative intent behind this is to freeze all the claims so that the resolution applicant starts on a clean slate and is not flung with any surprise claims. In that judgment, it has also been held that 2019 Amendment in the Code was declaratory and clarificatory in nature and it has retrospective result. The writ petitioner is entitled to interest on the amount deposited in pursuance to the unsustainable demand letter dated 24.06.2019. Hence, considering the prevailing rate of interest, application is disposed off holding that writ petitioner is entitled to interest at the rate of 8% on the amount deposited towards the transfer charges in pursuance to the impugned demand letter from the date of deposit till the date of refund. Application dismissed.
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2023 (3) TMI 895
Seeking early dissolution of the Corporate Debtor - CD cannot be continued as going concern as it was not functional at the time of initiation of the CIRP process - no cooperation from the Directors of the Corporate Debtor since the books of accounts not furnished to the IRP - no cooperation from the Committee of Creditors who are not attending the CoC Meetings and not ready to contribute the cost of CIRP - no liquid assets with the Corporate Debtor to cover the cost of the CIRP and liquidation process. HELD THAT:- As the CIRP period is already over and no resolution plan is pending or approved for our consideration and as the maximum period prescribed under Section 12 of the Code is already over taking resort to Section 33(1)(a), it is necessary to order for liquidation of the Corporate Debtor. Application allowed.
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PMLA
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2023 (3) TMI 894
Misuse of bank accounts - It has been alleged that by using the Photographs documents submitted by the employee provided at the time of appointment, Raj Kumar Goenka and Ashok Kumar Goenka, fraudulently opened several Bank accounts in their name - HELD THAT:- This Court has gone through the facts and circumstance of the case as also the orders passed in case of the two accused persons namely Raj Kumar Goenka and Ratan Kumar Goenka and is of the belief that since both the aforesaid persons have been extended relief, although Raj Kumar Goenka had to take recourse to bail while Ratan Kumar Goenka succeeded before Hon ble Apex Court, the case will continue and ultimately the accused persons including the petitioner herein will have to face the music, this Court is inclined to grant him the same relief with conditions. Let the petitioner be released on bail, in the event of his arrest or surrender before the Sub-ordinate court within a period of four weeks from the receipt of this order, on furnishing bail bond of Rs.10,00,000/- each with two sureties of the like amount each in connection with Special Trial (PMLA) No.07 of 2020/PMLA SC No.07 of 2020 in ECIR No.PT20/01/2017 to the satisfaction of learned Sessions Judge/Special Judge, Patna, subject to the conditions as laid down under Section 438(2) of the Cr.P.C. - Application allowed.
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Service Tax
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2023 (3) TMI 893
Violation of principles of natural justice - It is contended by learned counsel for the petitioner that after 18.11.2021, petitioner did not receive any intimation from the 1st respondent including notice for personal hearing - non-payment of service tax by the petitioner on the taxable services provided for the period 2016-17 and 2017-18 (upto June, 2017) - HELD THAT:- Admittedly, insofar personal hearing is concerned, notice was not served upon the petitioner. Even if we accept the contention of learned counsel for respondent No.1, then also we fail to understand as to why the notice for personal hearing was sent by registered post when the show cause notice was sent through e-mail - Be that as it may, for failure of the 1st respondent to provide an opportunity of personal hearing to the petitioner, we are of the view that the impugned order stands vitiated. However, now that petitioner is aware of the allegations made by the 1st respondent, the impugned order may be treated as the show cause notice. Order-in-original dated 02.11.2022 passed by the 1st respondent is hereby set aside - Though the order-in-original dated 02.11.2022, is set aside, the same shall now be construed to be the show cause notice - petition disposed off.
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2023 (3) TMI 892
Sabka Vishwas (Legacy Dispute Resolution) i.e., SVLDR Scheme, 2019 - requirement to deposit 50% of the disputed amount - HELD THAT:- Undisputed facts of the case are, assessee had indeed deposited Rs.2,52,46,749/-. The show-cause notice demand is for Rs.1,77,06,985/-. 50% of the same comes to Rs.88,53,492/-. Admittedly, assessee's amount of Rs.92,00,000/- is already with the Revenue. It is the contention of Shri. Neeralgi that the Designated Committee could have taken note of only Rs.27,66,646/- which was in pre-deposit. It may be recorded that, whether the amount is paid as pre-deposit while filing the appeal or the amount is already deposited as tax, the same goes to the Treasury of the Central Government and must be accounted for. Once it is not denied that the assessee's amount of Rs.92,00,000/- was already in deposit with the Treasury of the Central Government, there are no reason to interfere with the order passed by the Hon'ble Single Judge in this intra-Court appeal. Appeal dismissed.
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2023 (3) TMI 891
Condonation of delay in filing appeal - appeal dismissed on the ground of limitation in terms of Section 85(3A) of the Finance Act, 1994 as the same has been filed beyond prescribed period - whether this Tribunal has power to condone the delay in filing Appeal before the 1st Appellate Authority beyond the period prescribed by Section 85(3A) of the Finance Act, 1994? - rejection of refund claim under Rule 5 of Cenvat Credit Rules, 2004 r/w Notification No. 27/2012-CE(NT) dated 18.6.2012. HELD THAT:- The provision of Section 85(3A) of the Finance Act, 1994 prescribes that an appeal before the Commissioner can be presented within two months from the date of receipt of the Order of the adjudicating authority. The proviso thereto unequivocally lays down that in case of delay in presenting the appeal, the discretion of the Commissioner (Appeals) in considering application for condonation of delay is restricted to one month only. If the Commissioner (Appeals) is satisfied that the appellant was prevented by sufficient cause from presenting the appeal within the aforesaid period of two months, he has the jurisdiction to allow it to be presented within a further period of one month. Thus, the total period, including the extended period to prefer an appeal under Section 85 of the Act, 1994, is three months. The provision of Section 35 of the Central Excise Act, 1944 which is parimateria with Section 85(3A) of the Finance Act, relating to appeals before Commissioner (Appeals) had come up for consideration before the Hon ble Supreme Court in the matter of SINGH ENTERPRISES VERSUS COMMISSIONER OF C. EX., JAMSHEDPUR [ 2007 (12) TMI 11 - SUPREME COURT ]. The said Section 35 of the Central Excise Act, 1944 provides that any person aggrieved by any decision or order passed under the Act, may appeal to the Commissioner (Appeals) within sixty days from the date of the communication to him of such decision or order provided that the Commissioner (Appeals) may, if he is satisfied that the appellant was prevented by sufficient cause from presenting the appeal within the aforesaid period of sixty days, allow it to be presented within a further period of thirty days. The appellate authority can entertain the appeal by condoning the delay only upto 30 days beyond the normal period for preferring the appeal, which is 60 days. The Commissioner (Appeals) herein was, therefore, justified in dismissing the appeal on the ground of limitation. In view of the aforesaid decision of the Hon ble Supreme Court in SINGH ENTERPRISES VERSUS COMMISSIONER OF C. EX., JAMSHEDPUR [ 2007 (12) TMI 11 - SUPREME COURT ] it is clear that the Commissioner has no power to condone the delay beyond the period prescribed by the statute and the appeal has been rightly dismissed by the learned Commissioner on the ground of limitation. In the matter of M/S. ALBERT COMPANY PVT. LTD. VERSUS THE COMMISSIONER OF SERVICE TAX [ 2014 (3) TMI 655 - MADRAS HIGH COURT ], as placed on record on behalf of Revenue, it has been specifically held by the Hon ble High Court, while interpreting Section 85(3) ibid, that the Tribunal has no power or authority to extend the period of limitation prescribed by the statute for entertaining the appeal. Thus, it is well settled that once the period of limitation expired as prescribed u/s. 85(3) ibid neither the Tribunal nor the first appellate authority has power to condone the delay in filing the appeal beyond the statutory period. Therefore the order of the Commissioner (Appeals) dated 26.11.2019 rejecting the appeal on the ground that the appeal has been filed belatedly beyond the period stipulated under Section 85 of the Act does not warrant any interference and the same is accordingly dismissed.
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2023 (3) TMI 890
Refund claim - hit by mischief of unjust-enrichment as per Section 11 B (1) of Central Excise Act, 1944 or not - appellant have initially charged service tax to the customer, the same was further passed on by the said customers to any other person or not - HELD THAT:- There is no dispute that the appellant have initially charged service tax to the customer. Subsequently, the same was reversed by issuing the credit note to the customers, therefore, the incidence of the service tax paid by the appellant was not passed on this issue has been considered in the various judgments:- Reliance can be placed in the case of Addison Co. Ltd. [ 2016 (8) TMI 1071 - SUPREME COURT ], where it was held that Except for a factual dispute about the genuineness of the certificate issued by the Chartered Accountant and the credit notes raised by the Assessee regarding the return of the excess duty paid by the Assessee, there is no dispute in this case of the duty being passed on to any other person by the buyer. As it is clear that the Assessee has borne the burden of duty, it cannot be said that it is not entitled for the refund of the excess duty paid. In the case of L T [ 2020 (4) TMI 384 - CESTAT AHMEDABAD ] also the identical issue has been considered wherein it was held that even though initially the amount of service tax was recovered but subsequently it was returned. The incidence primafacie was not passed on. However, this being the factual aspect, needs to be verified by the Adjudicating Authority. From the above judgments it can be seen that the facts and transaction involved in the present case are identical to the judgments, wherein it was held that unjust-enrichment does not exist in the case where the assessee initially charged duty / service tax and subsequently issued the credit note for the same. Following the above decisions and considering the facts of the present case, the appellant s refund claim does not fall under the clutch of unjust-enrichment. The appellant is entitled for the refund claim - Appeal allowed.
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2023 (3) TMI 889
Levy of penalty under Section 77 and 78 of the Act - audit has found that the service tax with respect to the six months period from April 2013 to October 2013, which was not paid on accrual basis - suppression of facts or not - HELD THAT:- There is no deliberate default in payment of tax liability by the appellant. The issue is wholly interpretational in nature. Admittedly, the appellant was paying taxes regularly but there is only technical or venial breach of law, as they should have paid the tax on monthly basis. It appears the appellant was not properly advised by their consultant in the matter. Accordingly, it is found that there is reasonable cause for not depositing the tax on month to month basis. The penalties under Section 77 and Section 78 of the Act are set aside - appeal allowed.
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Central Excise
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2023 (3) TMI 888
Refund of CENVAT duty paid - Section 114 read with Order XLVII Rule 1 of the CPC - collecting education cess and higher education cess on such goods which were exempt from payment of excise duty - HELD THAT:- The taxpayer having set up a manufacturing unit in the State of Tripura availed the benefit of duty exemption on the goods cleared from such manufacturing and pursuant to the Government of India policy to encourage industrial investment and growth in North Eastern region. The taxpayer contended that since the basic duty of excise was not payable, the additional charge of education cess and higher education cess also cannot be collected. Based on the decision of the Supreme Court in case of SRD Nutrients [ 2017 (11) TMI 655 - SUPREME COURT ], the petitioners made refund claims for refund of education and higher education cess. Such refund application was allowed by the Assistant Commissioner. However, soon thereafter, in the decision in case of Unicorn Industries [ 2019 (12) TMI 286 - SUPREME COURT ] the Supreme Court held and observed that the decision in case of SRD Nutrients was per incuriam. The review petitioners has submitted that department has already moved an application for modification of the judgment rendered in the case of SRD Nutrients Pvt. Ltd. According to him, the Hon ble Apex Court has issued notice and the Assessee has filed its counter. Bajaj Auto has also moved an intervener application. It is the endeavour of the Union to bring SRD in line with Unicorn, which is a larger Bench judgment delivered subsequently and holding both SRD Nutrients and Bajaj Auto to be Per Incuriam. Let the Hon ble Supreme Court allow the modification application, then the ration in SRD would also get modified. The matter shall be argued before Hon ble bench shortly. Hence, the present review petition have been filed against the judgment dated 12.01.2021 with a specific prayer that the matter may be adjourned sine dine till the modification application is decided by the Hon ble Apex Court. The ground as raised by the review petitioner is not satisfactory and hence, the prayer made in this review petition stands rejected - the present review petition stands dismissed.
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2023 (3) TMI 887
CENVAT Credit - capital goods or not - structural steel used for erection of poles for transmission of electricity from MSEB feeder to factory and vice versa and for supporting other capital goods - delay in issuance of SCN - time limitation - HELD THAT:- No justification has been provided by the department regarding the delay in issuing the show cause notice. Although the alleged irregularity has come to the notice of the department in the month of March, 2014 and the statement were also recorded during that month only, but still the show cause notice was issued much belatedly on 29.4.2016 without assigning any reasons for delay in issuance. In view of precedents by virtue of various decisions of this Tribunal the same ought to have issued within one year from the date of the knowledge about the alleged irregularity - no suppression can be alleged against the appellant and extended period cannot be invoked nor the penalty be imposed on that count. Since complete information was given in statutory returns the normal period of one year would be applicable whereas the proceedings are initiated at a later date and hence the demand is barred by limitation. Credit availed by the appellants on MS Angles, MS Beams, MS channels and poles for wire for transmission of electricity from MSEB feeder to the factory manufacturing sugar and vice versa - denied on the ground that it is outside factory premises and not eligible capital goods - HELD THAT:- It is not disputed that the poles etc. were used for supplying electricity in the factory for the purpose of manufacture sugar and it s by product molasses etc. For running the machinery electricity is essential without which there will be no production. The poles might be outside the factory but for the purpose of manufacturing activity inside the factory. The location is not of much relevance here but the purpose. Steel items - HELD THAT:- It is the case of the appellant that they have been used for supporting structure of the machinery and also for erection of poles for transmission of electric energy from MSEB feeder to factory and vice versa and since nothing contrary has been produced on record anywhere therefore in my view the same is treatable as accessories and would fall within the definition of capital goods as provide by Section 2(a) ibid being the components/ parts/accessories of the capital goods which are specifically covered within the definition irrespective of its classification. Therefore the credit of Rs.2,49,920/- availed on MS Beam, MS channels is also admissible. The demand is set aside on merits as well as on the ground of limitation - Appeal allowed.
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2023 (3) TMI 886
Levy of penalty u/r 26 (1) of Central Excise Rules, 2002 - clandestine removal - allegation mainly based on some diaries recovered from brokers and follow up action was taken upon various manufacturers mentioning in the said diaries of the brokers - HELD THAT:- The present appellants were also involved in the case of Shri Hari Steel Industries and also in the case of M/s. Pure Alloys Ltd. in the said cases the Tribunal has taken a view that the appellants are not liable for the penalty. The common investigation was carried out in the present case and cases of M/s. Pure Enterprises Pvt Ltd, [ 1999 (1) TMI 146 - CEGAT, MUMBAI ] M/s. Pure Alloys Ltd and Shri Hari Steel Industries [ 2022 (8) TMI 1251 - CESTAT AHMEDABAD ]. It is also observed that same statements, evidences such as broker s diaries etc were relied upon in all the cases, therefore, facts of all the three cases are absolutely identical. Since this Tribunal has already taken a view regarding penalty on the appellant in this Tribunal s orders, the penalty in the present case is also not sustainable. The decision of this Tribunal in the case of Himanshu Nandalal Jagani Ors [ 2022 (9) TMI 428 - CESTAT AHMEDABAD ], relied upon where it was held that It is seen from the said slips that there is no mention of the manufacturer s name and therefore there is no direct correlation with the main noticee in this case, namely Pure Alloys Limited. Moreover, it is seen that there was no examination in chief or cross examination done and therefore, the only link between these weighment slips and the alleged manufacturer namely Pure Alloys, is the statements of Juvansinh Jeshabhai Solanki and Nareshbhai Ramsang Rana which cannot be admitted as evidence in absence of Examination under Section 9D of Central Excise Act. In these circumstances, no penalties in respect of these weighment slips also can be imposed. From the above order of this Tribunal it can be seen that identical facts and issues were involved in the above cases of M/s. Pure Alloys Ltd, Shri Hari Steel Industries , Bansal Castings wherein all the present appellants were implicated as a common person. Therefore, following the aforesaid order the penalty in the present case is not sustainable. Penalties set aside - appeal allowed.
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2023 (3) TMI 885
CENVAT Credit availed on plant and machinery used in the manufacture of coke briquettes - capital goods have been used in the manufacture of exempted goods i.e. briquette classified under Tariff Item 2701 20, which attracts NIL rate of duty - eligibility under Rule 6 (4) of the Cenvat Credit Rules, 2004 - HELD THAT:- There is no dispute that even though plant and machinery on which credit was availed as capital goods though they were used in the manufacture of bricks which in turn used in the manufacture of final product i.e. soda ash and the same was cleared on payment of duty. In this fact, in the considered view it cannot be said that the capital goods were used exclusively for manufacture of exempted goods. This is for the reason the process of manufacture of soda ash is consist of various processes and the entire process is considered to be the process of manufacture of Soda ash which is indeed cleared on payment of duty. Therefore, the provision of Rule 6 (4) of CCR is not applicable in the present case. The said provision is applicable only when the final product in which the capital goods is used is exclusively, cleared under exemption. Reliance placed in the case of ISPAT METALLICS LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, RAIGAD [ 2005 (7) TMI 225 - CESTAT, MUMBAI ] where it was held that The word used can denote be intermittent and/or use sometime in future; we find that both sides agree that the appellants are a manufacturer of declared final products Iron and Steel and have the capacity or potential to use iron ore fines also. Therefore credit as over led cannot be denied. In view of the above judgment, an identical issue has been considered that only because the capital goods is used for exempted intermediate goods, the cenvat credit cannot be denied when the final product is cleared on payment of duty. The appellant is entitled for cenvat credit on capital goods in the given facts of the present case - Appeal allowed.
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CST, VAT & Sales Tax
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2023 (3) TMI 884
Zero Rate Sale against supply of SEZ versus Refund on Export - Sales of goods to a dealer located in a Special Economic Zone (SEZ) in the State - whether export is a condition precedent to constitute Zero Rate Sale or not - validity of Circular No.9/2013 dated 24.07.2013 - scope and ambit of Section 18 of the TNVAT Act. Whether for a sale to a dealer located in a SEZ in the State to qualify as a zero rate sale in terms of Section 2(44) read with Section 18(ii) of the TNVATAct, the goods so purchased must be exported as such or consumed or used in the manufacture of other goods that are exported, by the dealer located in Special Economic Zone? HELD THAT:- There is no uniformity in terms of the benefits /tax treatment extended with regard to sales to registered dealer in SEZ. The benefit of exemption being fairly uniform and the least of the benefit extended. Some States had granted the benefit of not just exemption but also the corresponding input tax credit which is otherwise not available to exempted goods/sales. Under the TNVAT Act, sales to SEZ is treated as a Zero Rate Sale'', which is distinct from exemption - Under the TNGST Act exemption was thus granted in respect of sales tax, surcharge, resale tax and additional sales tax payable by any dealer on the sale of any goods made by such dealer to a registered dealer in SEZ for the purposes set-out in the said notification. Apart from the notification in G.O.Ms.No.15 granting exemption in respect of tax payable under the said Act by any dealer on the sale of goods made by such dealer to a registered dealer for the purposes set out in the notification, sale of goods to any registered dealer located in Special Economic Zone was treated to be a Zero Rate Sale under Section 18 read with Section 2(44) of the TNVAT Act. Zero Rating was a concept introduced for the first time in relation to tax on sale of goods in Tamil Nadu under Section 18 of the TNVAT Act. Zero Rate Sale is defined under Section 2 (44) of the TNVAT Act, to mean a sale on which no tax is payable but credit for input tax related to that sale is admissible - On a plain reading of Section 18 of the TNVATAct the benefit of Zero Rate under Section 2(44) of the Act, viz., that no tax is payable but credit for the Input Tax related to that Sales being admissible, is available to all three categories of sales mentioned in Section 18(1) of the TNVATAct. The benefits extended /granted under Section 18 of the TNVAT Act viz., Zero Rating and refund are independent nor do they overlap. Refund is not part of the benefit of Zero rating as defined under Section 2 (44) of the TNVAT Act. It is not necessary that a Zero Rate must end up/culminate/ripen into a claim of a refund - Section 18(2) and 18(3) of the TNVAT Act would get attracted only when a dealer claims the benefit of refund which is an additional benefit independent and distinct from Zero Rate Sale. From analysis of Section 18 read with Section 2(44) of the TNVAT it is clear that the order of the learned Single Judge insofar as it finds export to be a pre-requisite to qualify as Zero Rate Sale even in respect of sales covered by Section 18(1)(ii) of the TNVAT Act is without basis and contrary to the plain language of Section 18(1) of the TNVAT Act. The order of the learned Single Judge insofar as it holds that export is a condition which ought to be satisfied for the purpose of claiming the benefit of Zero Rate in respect of sale to a dealer located in SEZ falling under Section 18 (1) (ii) of the TNVATAct i.e., a sale on which no tax is payable but Input Tax Credit in relation to such sale is admissible, is unsustainable. However, a dealer effecting zero rate sale to claim refund it may be necessary to demonstrate that the goods have been exported as such or consumed or used in the manufacture of other goods that are exported, subject to such restrictions and conditions as may be prescribed. The conclusions arrived are as under: a. Section 18 of the TNVAT Act, confers two benefits viz., Zero Rate i.e., sale on which no tax is payable but on which Input Tax Credit is admissible and the second being refund in addition to the above benefit of Zero rate. The benefits are independent of each other. b. Export of goods is not a condition precedent or sine qua non to qualify as a Zero Rate sale as long as the sale falls within clause(ii) of Section 18 (1) of the TNVATAct. c. To claim refund in terms of the Section 18 (2) read with 18 (3) of the TNVAT Act, export of goods is an essential condition but not the benefit of Zero Rate. d. Zero Rate is distinct from exemption and thus the provisions of Section 19 (5) of the TNVATAct would not get attracted. e. The impugned circular is set-aside to the extent it is contrary to the law declared by this Court. f. The provisions of Section 18 the TNVAT Act cannot be controlled by a notification under Section 30 of the TNVAT Act inasmuch as Section 18 of the TNVAT Act confers a larger benefit. It is open to an assessee to claim a larger/ greater benefit. g. The expression sale in Section 18 of the TNVAT Act must be understood keeping in view the definition of sale under Section 2(33) of the TNVAT Act. Thus, works contract or for that matter any of the categories of mutant sales which is deemed to be sale would fall within the meaning of the expression sale employed in Section 18 of the TNVATAct. Matter remanded back to the Assessing Authority, who shall re-do the assessment keeping in mind the law declared with regard to the scope of Section 18 of TNVAT Act - petition disposed off.
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2023 (3) TMI 883
Violation of principles of natural justice - Validity of assessment orders - case of petitioner is that the respondent(s) has levied the tax on the respective enhanced turnover without granting an opportunity of hearing to the petitioner - HELD THAT:- Admittedly, the proposals sent by the respondents through their notices dated 02.05.2017, 05.02.2019 and 19.11.2019, 22.11.2019 and 04.02.2020, they have proposed to levy tax only at the rate of 5% on the respective taxable turnover of the petitioner. But as seen from the impugned Assessment Orders, dated 11.12.2019, 09.12.2019 and 11.12.2019, the respondent(s) has levied tax on the respective enhanced turnover, which is in excess of the respective taxable turnover mentioned in the proposals dated 02.05.2019, 05.02.2019 and 19.11.2019, 22.11.2019 and 04.02.2020. As seen from the impugned Assessment Orders, a higher rate of tax at 14.5% on the respective turnover has been made without granting an opportunity of hearing to the petitioner. Excepting for the final notice dated 22.11.2019 issued by the respondent(s) to the petitioner which discloses that the petitioner will have to furnish correct details of the purchases made by the petitioner and also discloses that in case, the purchases were made by the petitioner from a registered dealer, the levy of tax will be at the rate of 5% and in case the purchases were made from an unregistered dealer, the levy of tax will be at the rate of 14.5%, the actual figures based on the best judgment assessment of the respondent which is proposed to be made on the petitioner has not been disclosed - The learned counsel for the petitioner would categorically contend that no personal hearing was afforded to the petitioner in the impugned Assessment Orders. Since in the impugned Assessment Orders, it is not seen as to whether personal hearing was afforded to the petitioner or not, the statement of the petitioner that no personal hearing was afforded to them in the impugned assessment proceedings has to be believed. In the instant case, admittedly as seen from the impugned Assessment Orders, the proposal notices sent to the petitioner on different dates were for different amounts, but in the impugned Assessment Orders, the tax liability of the petitioner is much more than the figure mentioned in the proposals sent to the petitioner - this Court is of the considered view that principles of natural justice has been violated by the respondent(s) before passing of the impugned Assessment order and by non application of mind the impugned Assessment Orders have been passed, since the proposal notices sent by the respondent(s) discloses a different figure than which is determined in the impugned Assessment Orders and the figure determined in the impugned Assessment Orders are much higher than the figure disclosed in the proposal notices sent by the respondent(s). The impugned Assessment Orders have to be quashed and the matter will have to be remanded back to the respondent(s) for fresh consideration on merits and in accordance with law - Petition disposed off by way of remand.
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2023 (3) TMI 882
Recovery of arrears of tax - criminal liability of the main accused and of the guarantor - returns filed by the first petitioner for the year 2013-14 was not complete and the returns did not tally with the actual sales reported by the first accused - HELD THAT:- Though it is true that the second accused had given an undertaking to pay taxes, if the first accused fails to pay the same that cannot be the sole reason to fix the second accused also for the default committed by the first accused. Though it might be true that the second accused also liable to pay the tax arrears in view of his undertaking or guarantee given in favour of the 1st accused to the commercial tax department. However that can be done by taking civil action for recovery. Unless the second petitioner is the assessee in the eyes of the Act he cannot be implicated as an accused for the default committed on the part of the first accused, who alone is the assessee. Since the complaint has been given against this petitioner by presuming culpability on his part for failing to pay the tax, there is no basis for this criminal case. The undertaking or the guarantee executed by the second accused in favour of the 1st accused to the department can be at the best called as an agreement and for which the petitioner can be attached with contractual liability but not criminal liability. In order to serve the ends of the justice and to prevent the abuse of the process of the Court, the proceedings against the second accused alone should be quashed - Petition allowed.
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Indian Laws
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2023 (3) TMI 881
Grant of anticipatory bail - Creation of bogus bills and fake lorry receipts - Company had connived and conspired with advocates and valuers hired by the consortium of banks; and that therefore the promoters/directors of the Company, the guarantors as well as those involved in the sanction of the loan were guilty of the offences complained - HELD THAT:- Admittedly, the CBI did not require the custodial interrogation of the appellants during the period of investigation from 29.06.2019 (date of filing of FIR) till 31.12.2021 (date of filing of the final report). Therefore, it is difficult to accept the contention that at this stage the custody of the appellants may be required - All transactions out of which the complaint had arisen, seem to have taken place during the period 2009-2010 to 2012-2013 and all are borne out by records. When the primary focus is on documentary evidence, we fail to understand as to why the appellants should now be arrested. More importantly, the appellants apprehend arrest, not at the behest of the CBI but at the behest of the Trial Court. This is for the reason that in some parts of the country, there seems to be a practice followed by Courts to remand the accused to custody, the moment they appear in response to the summoning order. The correctness of such a practice has to be tested in an appropriate case. Suffice for the present to note that it is not the CBI which is seeking their custody, but the appellants apprehend that they may be remanded to custody by the Trial Court and this is why they seek protection. The appellants are entitled to be released on bail, in the event of the Court choosing to remand them to custody, when they appear in response to the summoning order. Therefore, the appeals are allowed and the appellants are directed to be released on bail, in the event of their arrest, subject to such terms and conditions as may be imposed by the Special Court, including the condition for the surrender of the passport, if any. Appeal allowed.
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2023 (3) TMI 880
Dishonour of Cheque - existence of legally enforceable debt or not - judgment of acquittal is reversed - both the parties undertook the burden to prove on their shoulders - whether the Respondent is successful in rebutting the presumption and whether the Appellate Court was right in reversing the findings of the trial Court? HELD THAT:- The law on the point of drawing of presumption and rebuttal of presumption is well settled. The presumption under Sections 118 and 139 of the NI Act were incorporated in the Act so as to enhance the reliability of negotiable instrument. On the basis of negotiable instruments, parties transfer the amount. Parties trust negotiable instruments. So, in order to boost it, these presumptions are incorporated in negotiable instrument. On one hand, there is a presumption attached to negotiable instrument and on the other hand, the drawer of the cheque is given liberty to rebut it. It is always a subject matter of challenge whether that presumption is rebutted or not. How it can be rebutted and whether rebuttal of presumption is as onerous as that of complainant are settled by various interpretations. Only question remains on the basis of facts, can it be said that the presumption got rebutted. The presumption can be rebutted by adducing own evidence or it can be rebutted by challenging the complainant s evidence. In this case, the similar question has arisen. The trial Court held that the offence is proved, whereas, First Appellate Court concluded that Accused succeeded in rebutting the presumption. The correctness of these findings are the subject matter of challenge before this Court. It can very well be said that the Respondent has made out a probable defence. Facts is of two kinds. One is positive fact and another is negative fact. It is difficult to prove negative fact. Similarly, it is difficult for the Respondent to prove that he has not received the plywood. As against this, it is easy to prove positive fact. So, it was the duty of the Appellant to prove that the plywood was in fact delivered. He has failed to do the same. The facts of case of M/s. Prajapati Oil Industry [ 2003 (11) TMI 644 - GUJARAT HIGH COURT ] can be differentiated. The conviction under Section 138 of NI Act was confirmed upto High Court. Though accused pleaded no receipt of goods as a defence , he could not substantiate it. The accused has not protested for non receipt of goods. Herein, Accused has stopped payment of cheques and also made his stand clear in notice reply. There is no legally recoverable debt or liability which has accrued in his favour. The Appellate Court was right in concluding that the Respondent has rebutted the presumption. Hence, no case for interference is made out - Appeal dismissed.
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