TMI Tax Updates - e-Newsletter
March 24, 2021
Case Laws in this Newsletter:
GST
Income Tax
Customs
Insolvency & Bankruptcy
PMLA
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
Highlights / Catch Notes
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GST:
Classification of goods - rate of GST - erecting and commissioning of lifts installed for domestic use - the rate of GST on the services covered under 995466 is stipulated at 18% - Further the said GST rate is irrespective of the place of installation i.e. at the residence or at the mall or shopping complex and also irrespective of the intended usage of the lifts/escalators either for domestic use or commercial use. - AAR
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GST:
Levy of GST - Services of Membership Association - amounts collected from its members for setting up the 'Sinking Fund'/ Corpus Fund - supply of goods or services or both - There are certain distinguishable features of both advance and deposit and advances defer from the deposits. The amounts that are not returnable can be termed as advances. Also the bye laws of the applicant association are silent on this issue and hence the amounts collected are indubitably advances but not the deposits. - Liable to GST - AAR
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GST:
Classification of goods - PP Non-Woven Bags - the goods/articles covered under Chapter 39 cannot be classified under any of the Chapters falling under Section XI. Consequently it is clear that articles of plastics specified under Chapter 39, even if woven, are not to be classified under any of the Chapters including Chapter 63 falling under Section XI. - AAR
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GST:
Exemption from GST - services such as loading, unloading, packing, storage or warehousing of imported agricultural products including wheat, to any importer or trader - services in respect of the 'wheat' which is procured from the farmers from the foreign country and after getting imported into India at Karaikal Port is destined to importer's factory for further processing - Not eligible for exemption from GST - AAR
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Income Tax:
Reopening of assessment u/s 147 - The writ-applicant has claimed deduction under Section 35(1)(ii) of the Act and not under Section 80GGA of the Act. This fact is also disclosed by the assessee in the revised return. - When there is no failure on the part of the petitioner-assessee to disclose, truly and fully, material facts, the Assessing Officer cannot reopen the assessment on the basis of “mere change of opinion”, as there is no tangible material to come to the conclusion that there is escapement of income from assessment. - HC
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Income Tax:
Reopening of assessment u/s 147 - validity of reasons to believe - undisclosed profit - No approval sought from the Additional Commissioner/Commissioner of Incometax for issuance of notice u/s 148 - The impugned order rejecting the objections, the Assessing Officer has recorded that the mistake has happened in mostly all the cases reopened during the year because the cases were reopened on the information based and also of nonfilers which depicts that the Assessing Officer has mechanically recorded the reasons without properly appreciating the facts of the case. - HC
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Income Tax:
Reopening of assessment u/s 147 - For mere verification or for a fishing inquiry re-opening of the assessment is not permissible. However, such is not the case on hand. It cannot be said to be a fishing inquiry. There is some tangible material as on date in the hands of the Assessing Officer, and the Assessing Officer, after due application of mind, has recorded a satisfaction of his own that the income has escaped the assessment. - HC
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Income Tax:
Notice u/s 153C against deceased person - liability of legal heir of late assessee - The only proposition of law that is applicable in the present litigation is that a notice, be it under Section 148 of the Act or Section 153C of the Act, issued to a dead person, is unenforceable in law. If such is the legal position, the Revenue cannot contend that as they had no knowledge about the death of the assessee, they are entitled to plead that the notice is not defective. - HC
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Income Tax:
Reopening of assessment u/s 147 - When the A.O. admits in the notice under section 142(1) Dated 20.10.2014 that assessee filed return of income under section 148 of the I.T. Act, it would strengthen the findings of the Ld. CIT(A) that assessee made a request before A.O. that original return filed may be treated as return filed in response to notice under section 148 of the I.T. Act, 1961. Since no notice under section 143(2) have been issued by the A.O. before completion of the assessment within the period of limitation, therefore, the Ld. CIT(A) was justified in quashing the re-assessment proceedings. - AT
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Income Tax:
Reopening of assessment u/s 147 - Pr.CIT has recorded his satisfaction for reopening of the assessment in a most mechanical manner without considering even the assessment records or the return of income filed by assessee and his satisfaction appears to be in a ritualistic and formal rather than meaningful. - Therefore, such approval under section 151 of the I.T. Act, 1961, is totally without application of mind and as such the satisfaction cannot be said to be valid in the eyes of Law. - AT
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Income Tax:
Assessment u/s 153A - excess jewellery found in the residence of the assessee during the search - all the family members are income tax payee and are filing their respective income tax returns. Therefore, the addition so made in the hands of assessee needs to be reduced on this score. Hence, we direct the A.O. to make addition in respect of unexplained jewellery on pro-rata basis and restrict the additions in the hands of assessee of his share alone. - AT
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Income Tax:
Addition u/s 68 - AO doubted the credit worthiness - It is not a case where the ld. CIT(A) has not given an opportunity to the AO to rebut the submissions made before him. In this view of the matter and in view of the detailed discussion made by the ld. CIT(A) while deleting the addition on account of share application money and unsecured loan in respect of different investors as mentioned earlier, the same, in our opinion, does not call for any interference and, accordingly, the same is upheld. - AT
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Income Tax:
Revision u/s 263 - Addition u/s 69A of the Act read with section 115BBE - the findings and directions of the ld Pr CIT contained are not borne out of material available on record and secondly, the such findings have been recorded without providing any opportunity of being heard to the assessee, therefore, such findings are hereby set-aside and to that extent, the order of the Pr CIT stands modified. - AT
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Customs:
Constitutional validity of notification issued / authenticated by the DGFT - In view of the provisions of the Customs Act and Foreign Trade Act, notification issued by the DGFT is to be considered as notification issued by the Central Government which is binding upon the petitioners as the same is issued in exercise of powers vested in the Central Government under section 3(2) of the Foreign Trade Act - the contentions raised by the petitioners with regard to the validity of the notification fails. - HC
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Indian Laws:
Dishonor of Cheque - legally enforceable debt or not - Here it has come out in clear terms that the cheques were handed over two years prior to the date of presentation. In other words, it was not presented to the bank within a period of six months from the date on which it was drawn or within the period of its validity, whichever is earlier. This aspect cuts the very root of the case of the appellant - HC
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Indian Laws:
Dishonor of Cheque - Service of notice regarding cheque bouncing - the contention of the learned counsel for the petitioner that the notice was served upon the son of the petitioner and not upon the petitioner is devoid of any merit - the accused could not discharge his onus against the presumption of cheque having been drawn in discharge of liability. - HC
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PMLA:
Grant of Anticipatory Bail - accumulation of huge wealth disproportionate to known sources of income - Arrest of accused may be required for effective investigation of crime, but the same cannot be a substitute of post trial punishment. After all, an accused is presumed to be innocent until proven guilty. The golden principle is part of criminal jurisprudence of all civilized nations including India. Stringent conditions of bail under Section 45 of the Act have already been declared ultra vires. - HC
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Central Excise:
Refund of Unutilised Credit in cash - section 142(6) of CGST Act, 2017 - the appellant has an arguable case for refund under Central Excise Act, but since the claim is clearly under CGST Act, 2017 the jurisdiction over which is not vested with CESTAT, the present appeal is dismissed for want of jurisdiction. - AT
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Central Excise:
Refund claim - amount paid during the investigation - When a specific provision is available in the statute covering the specific cases, it is the duty to examine whether a claim falls under such specific provision and if so, then such claims should necessarily comply with the conditions prescribed thereunder. - AT
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VAT:
Exemption in terms of Entry 65/Schedule A of TNVAT Act - The feature of input tax credit is what gives value added taxes their main economic characteristic, that of neutrality. The full right to deduction of input tax through the supply chain, with the exception of the final consumer, ensures neutrality of the tax, whatever be the nature of the product, the structure of the distribution chain and the technical means used for its delivery, either via brick and mortar establishments, physical delivery or the Internet. This is a measure of avoiding the ills of cascading taxes. To deny the petitioner the benefit of ITC by thrusting an exemption not claimed by it, upon it, will be contrary to the scheme of the enactment. - HC
Articles
Circulars / Instructions / Orders
News
Case Laws:
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GST
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2021 (3) TMI 916
Classification of goods - rate of GST - erecting and commissioning of lifts installed for domestic use - HELD THAT:- Explanatory Notes to the Scheme of Classification of Services stipulates that the SAC 995466 deals with Lift and escalator installation services and includes installation services of lifts, escalators, travelators (moving sidewalks) etc. Thus the impugned service is clearly covered under SAC 995466. Applicable rate of GST - HELD THAT:- Notification 11/2017-Central Tax (Rate) dated 28.06.2017, as amended, stipulates the rate of GST on the services covered under 995466 at 18%, in terms of Sl. No.3(xii). Further the said GST rate is irrespective of the place of installation i.e. at the residence or at the mall or shopping complex and also irrespective of the intended usage of the lifts/escalators either for domestic use or commercial use.
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2021 (3) TMI 915
Classification of goods - PP Non-Woven Bags - whether PP Non-woven bags (made Raw materials - PP granules (HSN 39021000) which are used for manufacture of Non-woven fabrics (HSN 5603) which are further used for manufacture of PP Non-woven bags by stitching) classifiable under HSN 63059000 or HSN 39232990? - HELD THAT:- In the subject case, the applicant is manufacturing PP Non-woven bags, made from non-woven fabrics of HSN 5603 and is classifying the same as bags made of technical textiles under HS code 63053900 /63059000 and paying GST @ 5% and the raw materials used are PP Granule of HS code 39021000 - the goods/articles covered under Chapter 39 cannot be classified under any of the Chapters falling under Section XI. Consequently it is clear that articles of plastics specified under Chapter 39, even if woven, are not to be classified under any of the Chapters including Chapter 63 falling under Section XI. The item Polypropylene Non-woven Bags has to be classified under HSN code 39232990 and not to be classified under HSN code 63059000 and to be taxed at 18% not at 5%.
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2021 (3) TMI 914
Exemption provided in SI.No.54(e) under Heading 9986 of GST Notification No.12/2017-Central Tax (Rate) dated 28.06.2017 - services such as loading, unloading, packing, storage or warehousing of imported agricultural products including wheat, to any importer or trader - HELD THAT:- On perusal of the Notification 12/2017 Central Tax (Rate) dated 28.06.2017, it is clear that for getting eligibility for exemption under SI.No.54 (e) covered under Heading 9986 the services of loading, unloading, storage or warehousing have to fulfil the conditions mentioned therein i.e. the Services need to be relating to cultivation of plants and rearing of all life forms of animals, except the rearing of horses, for food, fibre, fuel raw material or other similar products or agricultural produce - the said services of loading, unloading, packing, storage or warehousing rendered by a taxpayer can be eligible for exemption only if they are rendered for the above purposes as clearly defined in the Notification i.e. only if the services are extended till the products are taken to primary market for disposal and as a corollary any services extended beyond the stage of primary market are not eligible for classification under the Service Accounting Code 9986 and hence cannot be considered for exemption under the said Notification. The applicant is providing the services of loading, unloading, packing, storage or warehousing in respect of the 'wheat' which is procured from the farmers from the foreign country and after getting imported into India at Karaikal Port is destined to importer's factory for further processing and it is not destined to the primary market as required for the services to be classified under sl. No. 54 (e) of Heading 9986 of the said exemption Notification. Therefore, the said services rendered by the applicant in the instant case are not eligible for the exemption under the said Notification - Application disposed off.
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2021 (3) TMI 898
Grant of regular bail - Tobacco - evasion of GST - HELD THAT:- Only serious allegation against the petitioner would be that there is an evasion of payment of GST on a truck seized, which was carrying goods manufactured by the petitioner, however, ownership of the same is being disputed. Be that as it may, keeping in view that the GST minus penalty has already been paid and the investigation is complete and challan stands presented, custody of the petitioner would no longer be required and therefore, no useful purpose would be served by keeping the petitioner behind bars. The instant petition is allowed and the petitioner is directed to be released on regular bail on execution of personal/surety bond in the sum of ₹ 10 lakh each to the satisfaction of concerned trial Court/Duty Magistrate.
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2021 (3) TMI 895
Levy of GST - amounts collected from its members for setting up the 'Sinking Fund'/ Corpus Fund - supply of goods or services or both - HELD THAT:- The applicant making specific reference to the bye law at Sl.No.23, which deals with sources of funds and accounting and sub entry 3 of the said entry deals with sinking fund, claims that the fund shall be utilized exclusively for replacing plant, machinery or equipment as and when such items become unserviceable; they collect the amount towards corpus / sinking fund for future supply of services meant for its members; the corpus fund or sinking fund is mandatory under the Bye-laws of the Co-operative Societies / Resident Welfare Associations and is in the nature of deposit towards unforeseen events or planned events. Further, the applicant relies upon the ruling of this authority in the case of M/s. Prestige South Ridge Apartment Owners' Association, Bengaluru. Whether the amounts collected by the applicant towards sinking fund form part of consideration towards the services being provided by them? - HELD THAT:- There are certain distinguishable features of both advance and deposit and advances defer from the deposits. The amounts that are not returnable can be termed as advances. Also the bye laws of the applicant association are silent on this issue and hence the amounts collected are indubitably advances but not the deposits. Classification of the service to be provided by the applicant as the taxability of the amounts collected towards sinking fund - HELD THAT:- SAC 9995 covers the services provided / to be provided by the applicant to its members under Services of Membership Association . The said services are taxable to GST @ 18% in terms of Sl.No.33 of Notification No.11/2017-Central Tax (Rate) dated 28.06.2017, as amended.
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2021 (3) TMI 862
Grant of Regular Bail - Availment of fraudulent ITC through various bogus firms - HELD THAT:- No apprehension of tampering with evidence is shown, evidence primarily are documentary. In these circumstances, when other co-accused already been enlarged on bail and accused has already joined the investigation, he already remained in custody for a period of around one month and keeping in view the recent surge in the Covid-19 cases, no purpose would be served to send the accused behind bar. In these circumstances, accused is admittedly on bail on furnishing personal bond in the sum of ₹ 2 lacs alongwith one surety in the like amount to the satisfaction of Ld.MM/Duty MM concerned subject to the conditions imposed. Application allowed.
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Income Tax
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2021 (3) TMI 912
Reopening of assessment u/s 147 - AO did not add any income as deemed income while allowing deduction under section 35(1)(ii) - HELD THAT:- We are of the view that the impugned notice for reopening could be said to have been issued without there being any tangible material to come to the conclusion that there is escapement of income. There is no live link to form a belief, more particularly, when the Assessing Officer during the course of the original assessment had raised queries with regard to both the issues by issuing notices under section 142(1) of the Act, 1961 which were duly replied by the petitioner. AO during the course of the regular assessment proceedings, had passed the assessement order, under Section 143(3) of the Act after due consideration of the replies filed by the writ-applicant, wherein, the details of donation given by the petitioner to the Gujarat Cancer Society Limited has been disclosed together with the photographs of the receipts dated 30th March, 2013, to claim the allowance under Section 35 read with Section 80GGA of the Act. Writ-applicant claimed the deduction under Section 35(1)(ii) of the Act in the revised return dated 26.02.2014, and the assessment order, under Section 143(3) of the Act was passed on 15.10.2012 considering the revised return. Therefore, it cannot be said that the writ-applicant had failed to disclose, truly and fully, all the material facts so as to claim the deduction of 175% by showing the income as the business income. On perusal of the reasons recorded, it appears that the Assessing Officer has changed his opinion with regard to the claim of assessee without considering the provisions of Section 80GGA read with Section 35(1)(ii) which provides deduction in respect of certain donation for the scientific research or rural development to any research association or institution, approved for the purpose of clause (ii) of Sub-section (1) of Section 35 of the Act. The writ-applicant has claimed deduction under Section 35(1)(ii) of the Act and not under Section 80GGA of the Act. This fact is also disclosed by the assessee in the revised return. When there is no failure on the part of the petitioner-assessee to disclose, truly and fully, material facts, the Assessing Officer cannot reopen the assessment on the basis of mere change of opinion , as there is no tangible material to come to the conclusion that there is escapement of income from assessment. We have reached to the conclusion that the impugned notice under Section 148 of the Act for reopening of the assessment is not sustainable in law. - Decided in favour of assessee.
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2021 (3) TMI 911
Proceedings under Sections 201(1) and 201(1a) - whether proceedings could have been initiated without the concerned officer determining the jurisdictional issue as to whether the remittances made were chargeable to tax? - As submitted only a show-cause notice has been issued and therefore, this Court ought not to interfere at this stage in exercise of powers under Article 226 of the Constitution - HELD THAT:- According to us, if the statutory authority exercises its powers without determining whether or not it has jurisdiction in the matter, that itself, may, in certain cases, call for interference. As pointed out by Mr. Vohra (something which has not been refuted by Mr. Aggarwal), 85 to 90% of the remittances have been made to the BT Plc, a non-resident company, which approached the Authority for Advance Rulings [in short AAR ] as far back in 2015. Record shows that the application of AAR was admitted as far back on 07.08.2015. Therefore, a large part of problem, to say, has its genesis in the AAR not acting with due alacrity. Captioned writ petitions can be disposed of with the following directions: (i) The concerned authority will adjudicate the impugned show cause notices qua which we are told that the petitioners have filed their replies. (ii) While carrying out the adjudication, the concerned authority will in the first instance determine as to whether or not the jurisdictional facts obtain in the matter i.e. whether the remittances in issue are chargeable to tax. (iii) The concerned authority will, therefore, in the first instance pass an order on this aspect of the matter. (iv) The concerned authority in this behalf will give personal hearing to the authorized representative of the petitioner, which will include the advocate engaged by the petitioner. (v) A speaking order will be passed and a copy of the same will be furnished to the petitioner. (vi) The petitioner will have liberty to assail the same as per law by taking recourse to an appropriate remedy. (vii) In case, the order passed is adverse to the interests of the petitioner, the same will not be given effect to for four weeks, commencing from the date the said order is served on the petitioner. (viii) In case, the concerned authority feels it is necessary to await the decision of the AAR in the matter concerning BT Plc, it will be free to take this aspect into account as well.
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2021 (3) TMI 909
Reopening of assessment u/s 147 - validity of reasons to believe - undisclosed profit - No approval sought from the Additional Commissioner/Commissioner of Income tax for issuance of notice under section 148 - HELD THAT:- There is no live link between the information received and reasons recorded so as to enable the Assessing Officer to form a reason to believe that income has escaped assessment for AY 2011- 12. On perusal of the material on record, it also appears that the Assessing Officer has nowhere found that how amount earned as profit by the petitioner and the same was not offered to tax for A.Y.2011 12. Therefore, the reasons recorded are only based upon the assumption and presumption. The petitioner is engaged in trading/broking of shares/ securities/ commodities including derivatives transactions and has carried out number of transactions and earned profit as well as losses with respect to them and as per Income Tax Act, loss is computed and reflected in the statement of income and after considering the materials on record, return was processed under section 143(1). On perusal of the report at Annexure R/1, it pertains to contrived losses claimed by the beneficiaries on the alleged modus operandi adopted by manipulative practices done at the NMCE. AO has failed to form his own opinion with regard to the petitioner for alleged escapement of income by merely stating that such amount pertains to profit earned for A.Y. 2011 12 though in the reasons recorded, it is mentioned for A.Y. 2010 11. No reference to approval sought from the Additional Commissioner/Commissioner of Income tax for issuance of notice under section 148 as provided in section 153 of the Act, 1961. Inspite of the fact that the petitioner raised the objections against the reopening of the assessment on the issue of approval from Additional Commissioner/ Commissioner of Income tax, the same is brushed aside in the impugned order rejecting the objections on the ground that such discrepancy is in nature of human error while typing. The impugned order rejecting the objections, the Assessing Officer has recorded that the mistake has happened in mostly all the cases reopened during the year because the cases were reopened on the information based and also of non filers which depicts that the Assessing Officer has mechanically recorded the reasons without properly appreciating the facts of the case. Taking into consideration the reasons recorded, the Assessing Officer cannot be said to have formed the reason to believe that the income has escaped assessment. - Decided in favour of assessee.
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2021 (3) TMI 905
Rectification u/s 254 - mistake apparent from the record or not? - specific ground raised in the appeal has not been taken into consideration by the Appellate Tribunal - HELD THAT:- While disposing of the application, the Tribunal took the view that the scope of sub section (2) of Section 254 of the Act is restricted to rectify any mistake in the order apparent on the face of it and would not extend to review the order. We find it difficult to take the view that the ground No.3, which the writ applicant is talking about, has not been dealt with at all by the Appellate Tribunal. The Appellate Tribunal, in its own way, has discussed the said issue and recorded a particular finding. If the writ applicant is dissatisfied, then it is always open for him to prefer an appeal under Section 260A of the Act before this High Court and in the course of the appeal, it can be pointed out to the Court as regards the ground No.3 and if the Court is convinced, then it may remit the matter to the Tribunal for fresh consideration of the ground No.3, which the writ applicant is talking about. The power to rectify an order under Section 254(2) of the Act is extremely limited, as observed by the Delhi High Court in the case of Maruti Insurance[ 2012 (9) TMI 266 - DELHI HIGH COURT] . It does not extend to correcting the errors of law or re appreciating the factual findings. Those properly fall within the appellate review of an order of Court of first instance. What legitimately falls for consideration are errors (mistakes) apparent from the record. We are of the view that we should not interfere with the impugned order passed by the Appellate Tribunal. Writ application fails and is hereby rejected.
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2021 (3) TMI 902
Reopening of assessment u/s 147 - reopening for the Assessment Year 2012-13 beyond the period of 04 years and that too, in a case of scrutiny assessment under Section 143(3) - As argued none of the objections raised by the assessee could be said to have been dully considered by AO - HELD THAT:- As noticed something which in our opinion should not be overlooked. It is a settled position of law that if the Assessing Officer intends to reopen the assessment, he is obliged to assign reasons for the same. Once such reasons are assigned, the assessee has a right to lodge his objections to the same. Once the objections are lodged, it is obligatory for the AO to take such objections into consideration and pass a speaking order. When we say speaking order, it means a meaningful order dealing with the objections raised by the assessee. The exercise which the Assessing Officer is supposed to undertake while dealing with the objections raised by the assessee is not an empty formality. The order disposing of the objections should reflect application of mind. In the case on hand, none of the objections raised by the assessee could be said to have been dully considered by the Assessing Officer in a meaningful manner. We are of the view that we should quash and set aside the order disposing of the objections and remit the matter to the Assessing Officer for fresh consideration of the objections at his end. Writ-application succeeds in part. The order disposing of the objections filed by the assessee dated 5th October, 2018, Annexure-N to this petition Page-93 is hereby quashed and set aside and the matter is remitted to the Assessing Officer. The Assessing Officer shall take into consideration the objections raised by the assessee and pass a fresh speaking order in accordance with law.
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2021 (3) TMI 901
Reopening of assessment u/s 147 - reopening of the assessment beyond the period of four years and that of a scrutiny assessment undertaken under Section 143(3) - HELD THAT:- It appears to be a case of change of opinion. The objections raised by the assessee are quite exhaustive going to the root of the issue. Ms. Raval, the learned senior standing counsel appearing for the Revenue vehemently opposed this writ application submitting that it is not a case of mere change of opinion. According to her, something tangible has come to the notice of the AO of which cognizance at the relevant point of time was not taken and, therefore, the reopening though beyond the period of four years in a case of scrutiny assessment. We are not convinced with the case put up by the Revenue for the purpose of opposing this writ application. There is one another good ground to allow this writ application. It is evident on plain reading of the order dated 17th August, 2018, disposing of the objections, that the same is not a speaking order. Not a single objection raised by the Assessee has been even prima facie dealt with. We are convinced that the impugned notice for reopening is not sustainable in law.
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2021 (3) TMI 900
Reopening of assessment u/s 147 - assessee has received shareholders' funds from the Kolkata based shell companies - proof of proper application of mind in according sanction under Section 151 of the Act for the purpose of issue of notice under Section 148 - whether the notice of re-opening issued under Section 148 of the Act should be quashed and set-aside? - HELD THAT:- The return filed by the assessee was accepted without scrutiny. Since there was no scrutiny assessment, AO had no occasion to form any opinion on any of the issues arising out of the return filed by assessee. The concept of change of opinion would, therefore, have no application. It is equally well settled that at the stage of reopening of the assessment, the court would not minutely examine the possible additions which the AO wishes to make. The scrutiny at that stage would be limited to examine whether the AO had formed a valid belief, on the basis of the materials available with him, that the income chargeable to tax had escaped assessment. AO has considered the materials on record which would, prima facie, suggest that during the year under consideration there was a huge hike in the amount of the share capital and share premium of the assessee company. The assessee received the amount of share capital and share premium from the Kolkata based shell companies, namely, Prime Vyapaar Pvt. Ltd. and Asha Apartments Pvt. Ltd. respectively. The Assessing Officer, prima facie found, based on the materials on record and the information received, that total share capital of ₹ 40 lakh was received during the year under consideration. On verification of the details of the investors companies, it was found, prima facie, that the same was controlled by one Kolkata based accommodation entry provider, namely Manoharlal Nangalia. In a statement recorded by the department, Manoharlal Nangalia is said to have admitted to the fact that his main business is to provide accommodation entries through shell companies to various beneficiaries in lieu of commission. For mere verification or for a fishing inquiry re-opening of the assessment is not permissible. However, such is not the case on hand. It cannot be said to be a fishing inquiry. There is some tangible material as on date in the hands of the Assessing Officer, and the Assessing Officer, after due application of mind, has recorded a satisfaction of his own that the income has escaped the assessment. It is not a case of mere change of opinion or drawing of a different inference from the same facts as were earlier available but acting on fresh information. Since the belief is that of the Income Tax Officer, the sufficiency of reasons for forming the belief is not for the Court to judge but it is open to an assessee to establish that there, in fact, existed no belief or that the belief was not at all a bona fide one or was based on vague, irrelevant and non-specific information. To that limited extent, the Court may look the conclusion arrived at by the Income Tax Officer and examine whether there was any material available on the record from which the requisite belief could be formed by him and further whether that material had any rational connection or a live link with the formation of the requisite belief. - Decided against assessee.
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2021 (3) TMI 892
Notice under Section 153C against deceased person - liability of legal heir of late assessee - HELD THAT:- It is not in dispute that the legal heir of late Bhupendrabhai Desai had not participated in the proceedings. All that the legal heir of late Bhupendrabhai Desai did was to inform the Assessing Officer about the death of his father and requested to drop the proceedings. It is true that although the father passed away in the year 2017, yet the legal heir did not inform the department upto October 2019. However, at the same time, we should not overlook the fact that even after coming to know about the demise of late Bhupendrabhai, the department could have issued a valid notice to the legal heir as the period of limitation of 21 months had not expired. We fail to understand what prevented the department from issuing a valid notice to the legal heir within the prescribed time period. We may refer to a recent pronouncement of the Supreme Court in the case of Principal Commissioner of Income Tax, New Delhi vs. Maruti Suzuki India Limited , [ 2019 (7) TMI 1449 - SUPREME COURT] as held during the pendency of the assessment proceedings if the assessee company gets amalgamated with another company, it would lose its existence and the assessment order passed subsequently in the name of the said non-existing entity would be without jurisdiction and liable to be set-aside. In the facts of the case before the Supreme Court, although the Assessing Officer was informed of the amalgamated company having ceased to exist as a result of the approved scheme of amalgamation, yet the jurisdictional notice was issued only in its name. The Supreme Court took the view that the basis on which the jurisdiction was invoked was fundamentally at odds with the legal principle that the amalgamating entity ceases to exist upon the approved scheme of amalgamation. The only proposition of law that is applicable in the present litigation is that a notice, be it under Section 148 of the Act or Section 153C of the Act, issued to a dead person, is unenforceable in law. If such is the legal position, the Revenue cannot contend that as they had no knowledge about the death of the assessee, they are entitled to plead that the notice is not defective. The Supreme Court, in a plethora of judgments, has taken the view that if the person sought to be taxed comes within the letter of the law, he must be taxed, however great the hardship may appear to the judicial mind to be. On the other hand, if the State, seeking to recover the tax, cannot bring the citizen within the letter of the law, the citizen is free, however, apparently within the spirit of law the case might otherwise appear to be. We are left with no other option but to allow the present writ-application and hold that the impugned notice being invalid, the further proceedings pursuant thereto are not tenable in law.
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2021 (3) TMI 889
Reopening of assessment u/s 147 - claim of deduction under Section 80IA in respect of various power generation units - assessee argued the proceedings initiated is mere a change of opinion on the part of the Assessing Office as the issue already decided in the previous assessment order and no case can be reopened on account of the reasons recorded by the Assessing Officer which are subject matter of any appeal, reference or revision - HELD THAT:- A bare perusal of the reasons recorded for reopening reveals that the Assessing Officer upon perusal of the records found that the assessee Company has concealed its income. AO while recording the reasons, has verified the profit and loss account and case records and he has noticed deduction under Section 80IA towards profit of business of the company from generation of power and during the A.Y. 2011-12, the assessee company claimed deduction under Section 80IA in respect of profits derived from a generation of power from its 5 units and after considering the unit wise details, provided by the company along with IOCCD, he further noticed that the assessee company had claimed deduction on profit on sale of electricity and steam in respect of some of the units as referred in the reasons. While framing the assessment order under Section 143(3), had raised the issue of deduction and in response to issue No. (37), the assessee company had furnished all the details / information along with the complete working of profit and gains eligible for the claim and after considering all the primary materials, disclosed by the assessee company, the erstwhile Assessing Officer assigned cogent reasons and discussed the issue at length and disallowed the claim of deduction to the extent of ₹ 3,65,25,860/- out of total claim of ₹ 23,37,65,504/- stating that deduction is available only in relation to profits and gain derived from the generation of powers. Now on the same set of facts and materials, the Assessing Officer formed the belief about the escapement of assessment which is nothing but mere a change of opinion on the facts which were already before the Assessing Officer while making the first assessment on which conscious application of mind is reflected from the proceedings. Therefore, on the issue of steam power, the relevant material was available on record, however, the then Assessing Officer failed to apply his mind to that material in making the assessment order, now in the present proceedings, again the Assessing Officer cannot take recourse to the provisions of Section 147 for the failure of the Assessing Officer to apply his mind to the material which according to him is relevant. As examined all the material facts as well as reasons recorded for reopening of the assessment for the year under consideration. We are of the opinion that the impugned action on the part of the respondent to issue Notice is without authority of law mainly on the ground of change of opinion and the claim under Section 80IA in respect of time usage charge component is still pending for disposal before the Second Appellate Authority. Therefore, we are of the firm view that the impugned notice as well as the proceeding are required to be quashed and set aside. - Decided in favour of assessee.
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2021 (3) TMI 887
Rectification u/s 254 - decision of the honourable jurisdictional High Court was not considered - HELD THAT:- The answer has been already rendered by the Honourable Supreme Court in Asst Commissioner of Income Tax versus Saurashtra Kutch stock exchange Ltd [ 2008 (9) TMI 11 - SUPREME COURT ] wherein the coordinate bench passed an order u/s 254 (2) where a decision of the honourable Gujarat High Court, though not cited before the coordinate bench, was ignored. The coordinate bench recalled that order holding that a binding decision has not been considered by ITAT. Such order of the ITAT was challenged before the The honourable Supreme Court has dealt with this issue and held that the non-consideration of a decision of jurisdictional High Court or of the Supreme Court can be said to be a mistake apparent from the record. Therefore in the present case the decision of the honourable Delhi High Court in case of Principal Commissioner of income tax versus silver line [ 2015 (11) TMI 809 - DELHI HIGH COURT ] was not at all considered and therefore the order passed by the coordinate bench in dismissing the cross objection of the assessee suffers from a mistake apparent from record. Hence the cross objection of the assessee is recalled, registry is directed to fix the same for hearing in due course.
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2021 (3) TMI 886
Reopening of assessment u/s 147 - CIT(A) challenging the assumption of jurisdiction under section 147/151 of the I.T. Act and that the re-assessment order have been framed without serving mandatory notice under section 148, 143(2) and 142(1) - HELD THAT:- Revenue has not raised any ground of appeal in the present appeal to challenge these findings of the Ld. CIT(A). The Revenue merely contended in the grounds of appeal that since no return was filed in response to notice under section 148 of the I.T. Act, 1961, therefore, there is no question of issuing of notice under section 143(2) of the I.T. Act and that Ld. CIT(A) has ignored the provisions of Section 282BB - Revenue, therefore, did not challenge the Order of the Ld. CIT(A) in quashing the initiation of re-assessment proceedings on both counts i.e., initiation of re-assessment proceedings is without fresh tangible material and that sanction under section 151 is invalid. Therefore, once the Order of the Ld. CIT(A) on this question is not challenged by the Revenue Department, it became final and any result of Departmental appeal cannot change the fate of Departmental appeal, the appeal of Revenue would not be maintainable and is liable to be dismissed on this ground alone. From the date of such letter it would be deemed that assessee filed the return of income under section 148 and as such the A.O. shall have to issue notice under section 143(2) for completion of the assessment accordingly and limitation would be counted from the date of filing of the letter before A.O. in this regard. CIT(A) on verification of the record also found that no notice under section 143(2) is found on record maintained by the A.O. which proves that A.O. has not issued any statutory notice under section 143(2). Therefore, assumption of jurisdiction by the A.O. was totally invalid and bad in Law and as such the same was correctly quashed by the Ld. CIT(A). Reference to provisions of Section 282BB - CIT(A) after examining the record, correctly found the contention of assessee to be correct which fact is further strengthened by the notice of the A.O. under section 142(1) of the I.T. Act Dated 20.10.2014 which is also referred to by the A.O. in the re-assessment order in which the A.O. has called for the explanation of assessee on certain queries in which A.O. has specifically mentioned that assessee has filed return of income for the assessment year under appeal. This notice under section 142(1) Dated 20.10.2014 is issued after issue of notice under section 148 Dated 16.05.2013. Therefore, it is relevant to the re-assessment proceedings. When the A.O. admits in the notice under section 142(1) Dated 20.10.2014 that assessee filed return of income under section 148 of the I.T. Act, it would strengthen the findings of the Ld. CIT(A) that assessee made a request before A.O. that original return filed may be treated as return filed in response to notice under section 148 of the I.T. Act, 1961. Since no notice under section 143(2) have been issued by the A.O. before completion of the assessment within the period of limitation, therefore, the Ld. CIT(A) was justified in quashing the re-assessment proceedings. We, therefore, do not find any infirmity in the Order of the Ld. CIT(A) in quashing the re-assessment proceedings. Departmental appeal is dismissed.
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2021 (3) TMI 883
TP adjustment - Adjustment made on recovery of third party expenses - HELD THAT:- D.R.P. was right in observing that in an uncontrolled transaction when the assessee is transferring the benefit of ground work done by it on acquisition project to an uncontrolled party, it would have charged a mark up in the normal course since its resources, infrastructure, skills, time, etc. were invested in the said activities. Hence we are unable to accept the contentions of Ld A.R that this transaction itself would fall outside the scope of transfer pricing provisions in the absence of any income element. Accordingly, we are of the view that the Ld. DRP was justified in holding that the transfer pricing adjustment by way of a markup on the amount spent by the assessee and claimed back from CHL is required to be made. As noticed earlier that the Ld. DRP has determined the markup rate at 10% on the basis of financial results of the assessee company. It is well settled proposition that the bench marking of international transactions have to be made under any one of the recognized methods prescribed in the I.T. Rules. Apparently, the Ld. DRP has adopted CUP method for bench marking the international transactions. However, it has not brought on record any external supporting material to substantiate the mark-up rate of 10%. We have noticed earlier that the Ld DRP has arrived at the rate of 10% on the basis of the internal profits declared by the assessee. What is required to be shown is that under same set of facts, what would have been the mark-up if the transactions were between unrelated parties. Accordingly, we are of the view that the determination of rate of markup requires fresh examination. Accordingly, we modify the order passed by Ld. DRP on the issue determination of percentage of markup and restore the same to the file of the A.O./TPO for examining it afresh. After affording adequate opportunity of being heard to the assessee, the AO/TPO may take appropriate decision in accordance with law. Disallowance of Research Development expenses incurred by the assessee - HELD THAT:- From the details of expenditure furnished by the assessee, we notice that the assessee has claimed salary wages expenses, repairs expenses, etc. under the head R D expenses . From the annual report furnished by the assessee, we notice that the assessee has duly capitalized the capital expenditure incurred by it. We also noticed that the A.O. has observed that these expenses have resulted in creation of copy right in the hands of the assessee. - A.O. has not brought any material on record to show that these expenses has resulted in creation copy right , meaning thereby, the A.O. has made his observations on surmises and conjectures. We also agree with the contentions of Ld A.R that it is a business necessity to maintain R D department in order to meet the competition and changing business circumstances. Unless it is established that the R D department has undertaken a mission to invent something new which would give a copy right to the assessee, in our view, routine expenses cannot be considered as capital in nature. Accordingly, we are of the view that the A.O. was not justified in treating the above expenses as capital in nature. Accordingly, we direct the A.O. to delete the addition. Disallowance u/s 14A - assessee voluntarily disallowed u/s 14A - HELD THAT:- We notice that the issue of disallowance under rule 8D(2)(ii) out of interest expenses have been restored to the file of the A.O. by the coordinate bench in the assessee s own case for assessment years 2006-07 to 2008-09. It is the submission of the Ld. A.R. that the investments have been made by the assessee in the past out of surplus funds and these aspects have been verified by the A.O. in the restored the said proceedings. Accordingly, the A.O. did not make any disallowance out of interest expenditure in the above said year. In view of the above said facts, we are of the view that, consistent with the decision taken by the coordinate bench in the assessee s own case, the issue of disallowance of interest expenditure under rule 8D(2)(ii) requires fresh examination at the end of the A.O. Accordingly, we set aside the order passed by the A.O. on the above said issue and restore the same to the file of the A.O. for examining it afresh. The disallowance made under rule 8D(2)(iii) was out of administrative expenses shall stand sustained. While giving effect, the AO shall give set off of the disallowance voluntarily made by the assessee. Non-granting of full credit of foreign tax credit - HELD THAT:- A.O. has not given any reasons as to why he has restricted the foreign tax credit to ₹ 3.89 crores as against ₹ 5.43 crores claimed by the assessee. The Ld. A.R. has submitted that issue relating to foreign tax credit has been explained well in the case of Ittiam Systems Pvt. Ltd. by the Bangalore bench of Tribunal. Accordingly, we are of the view that the claim of the assessee requires fresh examination at the end of the A.O. Accordingly, we restore this issue to the file of the A.O. with the direction to follow the principles laid down by the Bangalore bench in the case of Ittiam Systems Pvt. Ltd. and accordingly, allow credit of foreign tax credit. Short credit of TDS - HELD THAT:- It is the claim of the assessee that the A.O. has not granted credit of TDS . Since this matter requires factual verification, we restore this issue to the file of the A.O. Direction given by the Ld. DRP to the A.O. to consider FMV as on 1.4.1981 for computing capital gain - HELD THAT:- As find that the facts regarding treatment of shade trees as capital assets is squarely covered by the decision of the Hon'ble jurisdictional High Court in the tax payer's own case apart from the Hon'ble ITAT's order cited. The computation of capital gains and the fair market value of the asset as on 01.04.1981 will be considered by the AO in this regard
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2021 (3) TMI 881
Reopening of assessment u/s 147 - addition u/s 68 - validity of reason to believe - approval under section 151 given by CIT - HELD THAT:- A.O. has recorded wrong, incorrect and non-existing reasons while reopening of the assessment and was not having any tangible material with him to form a belief that income chargeable to tax has escaped assessment. There is no live link established between the so-called material or the escapement of income so as to validly initiate reassessment proceedings against the assessee. Thus, there is a total non-application of mind on the part of the A.O. to refer the reasons for reopening of assessment. Thus, such reopening of the assessment is invalid and bad in Law and is liable to be quashed. We, accordingly, set aside the orders of the authorities below and quash the reopening of assessment in the matter. Resultantly, all additions stands deleted. A.O. after recording the reasons for reopening of the assessment has referred the matter to the Addl. CIT for approval of the Pr. CIT under section 151 - Addl. CIT has referred the matter to Pr. CIT who has approved the reopening of the assessment in which the Pr. CIT has mentioned approved as per proforma . However, no such proforma is also placed on record. It would show that the Pr. CIT has not gone into the assessment record of the assessee or the return of income before approving the reasons recorded for reopening of assessment because the assessee has already disclosed ₹ 95 lacs received from the Investor company in 04 transactions in assessment year under appeal, but, the A.O. in the reasons recorded has mentioned that assessee has received an amount of ₹ 50 lacs only in 02 transactions from the Investor Company. Pr. CIT merely approved the reasons without saying anything. Pr.CIT has recorded his satisfaction for reopening of the assessment in a most mechanical manner without considering even the assessment records or the return of income filed by assessee and his satisfaction appears to be in a ritualistic and formal rather than meaningful. Therefore, such approval under section 151 of the I.T. Act, 1961, is totally without application of mind and as such the satisfaction cannot be said to be valid in the eyes of Law. The reassessment order, thus, passed is also invalid and bad in Law - Decided in favour of assessee.
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2021 (3) TMI 880
Disallowance of advertisement expenditure - HELD THAT:- It is not in dispute that the assessee has prima-facie discharged its onus of filing on record all the documentary evidence regarding the impugned advertisement expenditure in the regular course of business. The fact also remains that the two of its payees have been found to be included in the list of shell entities thereby providing mere accommodation entries. Hon'ble apex courts landmark decisions Sumati Dayal Vs. CIT [ 1995 (3) TMI 3 - SUPREME COURT] and CIT Vs. Durga Prasad More[ 1971 (8) TMI 17 - SUPREME COURT] hold that the relevant explanation in income tax proceedings has to be examined in the light of human probabilities by removing all blinkers. We adopt the very methodology herein as well and find that the assessee s recipients status as shell companies has indeed cost doubts on its advertisements claim. The fact also remains that the role of day-to-day advertisements in assessee s line of publication business cannot be altogether ruled out. This taxpayer has further filed supportive relevant details of the advertisement spots as well as photographs thereof in the paper book. It can be sufficiently presumed that this assessee has carried out some advertisements in regular course of business but it could not be proved since the recipients have been treated as accommodation entry providers. Faced with this situation, we deem it appropriate in larger interest of justice that the impugned disallowance deserves to be confirmed @40% only. More so to avoid abnormally high rate of profits in publication business. The remaining 60% of the impugned disallowance thereof stands deleted. - Decided partly in favour of assessee.
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2021 (3) TMI 879
Capital gain computation - applicability of proviso to Section 50C - Admissibility of deductio u/s 54F - residential house property purchased in the name of his wife - HELD THAT:- Proviso to Section 50C of the Act is applicable in the case of assessee as the entire sale consideration was received by the assessee through cheque before execution of the registration of the sale deed, therefore, the amount received by the assessee at the time of entered into an agreement has to be taken for the purpose of computing full value of consideration for such transfer. From perusal of the record, we also observed that the assessee as placed on record a chart which is at page No. 75 of the paper book which contains that similar situated properties were registered and the DLC value was taken at ₹ 1500 per sq.mt. which was registered up to 11/04/2011 and office order from the office of Sr. Regional Manager, RIICO Ltd. Kota dated 09/02/2011 has also been placed on record which shows that the rates of Indraprastha Industrial Area, Kota were revised from ₹ 1500 per sq.mt to ₹ 2000/- per sq. mt. vide office order dated 09/02/2011 and since admittedly, the agreement to sell was entered into between the parties with regard to sale of the property on 15/11/2010 and the entire sale consideration was paid in two installments on 16/11/2010 and 08/12/2010, however, the registered sale deed could be got executed on 20/04/2011 at that time, revised rates had come into operation but because of our detailed reasoning above by applying proviso to Section 50C of the Act, the rates prevalent at the time of agreement i.e. 15/11/2010 could be applicable in the present case for the purpose of computing full value of consideration for such transfer. A.O. has also made disallowance of improvement cost and making investment of the entire consideration in the new residential house as a new residential house was purchased by the assessee in the name of his wife. In the present case, the assessee had purchased house in the name of his wife, therefore, the Coordinate Bench in SMT. SUNITA SHARMA [ 2013 (1) TMI 1011 - ITAT CHANDIGARH] held that the assessee is not disentitled for exemption U/s 54F of the Act and the said proposition has further been upheld by the coordinate bench of this Tribunal in the case of Shri Vivek Jain [ 2017 (12) TMI 1769 - ITAT JAIPUR] wherein the assessee was found eligible for deduction U/s 54F of the Act in respect of residential house property purchased in the name of his wife. Since the factual position in this case is not in dispute, therefore, while applying the principles laid down by the Coordinate Benches as above and also respectfully following the decision of Hon ble Rajasthan High Court in the case of Sh. Mahadev Balai Vs ITO [ 2017 (1) TMI 183 - ITAT JAIPUR] we also hold that the assessee is eligible for deduction U/s 54F of the Act in respect of residential house property purchased in the name of his wife. Considering the totality of facts and circumstances of the case, we direct to delete the addition so made and confirmed qua this issue. - Decided in favour of assessee.
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2021 (3) TMI 878
Assessment u/s 153A - addition made was on account of excess jewellery found in the residence of the assessee during the search - HELD THAT:- The entire addition in respect of excess jewellery were added exclusively in the hands of the assessee without giving any cogent reason as to why the addition has been made only in the hands of the assessee when it was established on the file that jewellery found from the premises belongs to all family members of the assessee. It is an admitted fact that the assessee had only salary income and income from interest in his hands. As per the records, the assessee is a CEO of M/s Integral Urban Co-operative Bank Ltd. and is getting salary. He also had income from interest on his past savings. The assessee is not getting any remuneration of being an honorary Secretary of St. Wilfred Educational Society. Thus, he does not have any ostensible source of income which could generate unaccounted income. As found from the records that no incriminating document was found during search of his residence to show or demonstrate that the assessee had unaccounted income of any sort from any source. No corroborative evidence has been placed on record by the revenue to show that the said excess jewellery found during search exclusively belonged to, or was purchased out of unaccounted income of the assessee - jewellery is something which primarily belongs to the ladies of the House. Moreover, in the present case, once it is accepted that these jewellery items belong to other members of the family and the assesse has given specific details regarding such items identified to other family members, therefore, in our view, the entire addition could not have been made in the hands of assessee alone and it should have been added on pro-rata basis in the hands of all the family members and not the assessee alone. It has already been brought on record that all the family members are income tax payee and are filing their respective income tax returns. Therefore, the addition so made in the hands of assessee needs to be reduced on this score. Hence, we direct the A.O. to make addition in respect of unexplained jewellery on pro-rata basis and restrict the additions in the hands of assessee of his share alone. Appeal of the assessee is allowed partly.
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2021 (3) TMI 877
TP Adjustment - comparable selection - HELD THAT:- Assessee stated to be having following functions under software development service segment: Arriba supplies network, platform/infrastructure, Arriba sourcing, Arriba buyer, technical solution centres. Under ITES segment assessee provides technical support services, Data enrichment services, strategic sales and delivery support shared services. Law laid doen in GENISYS INTEGRATING SYSTEMS (INDIA) (P.) LTD. VERSUS DEPUTY COMMISSIONER OF INCOME-TAX [ 2011 (8) TMI 952 - ITAT BANGALORE] has to be followed. We uphold exclusion of Infosys Technologies Ltd., Kals Information Systems Ltd. and Tata Elxsi Ltd., from the final list of comparable under software development service segment. Under ITES segment exclusion of Eclerx services Ltd. and Infosys BPO Ltd. are upheld. Accordingly these grounds raised by revenue stands dismissed. Deduction u/s 10A - HELD THAT:- CIT(A) directed Ld. AO to compute the deduction under section 10A in accordance with the decision of Hon'ble Karnataka High Court in case of Tata Elxsi Ltd.[ 2011 (8) TMI 782 - KARNATAKA HIGH COURT] . We do not find any infirmity in such view taken by Ld. CIT(A) and the same is upheld.
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2021 (3) TMI 876
Jurisdiction of ACIT at principal place of business of assessee - Transfer of case u/s 127 - Addition u/s 68 - unsecured loans - main contention of the ld. AR is that all the necessary evidences regarding the assessment are in the Administrative Office situated at Margao, Goa and no details were available in the Mumbai registered office and that is why the assessee could not file any details before the AO at Mumbai - HELD THAT:- Assessee filed its return of income on-line giving jurisdiction to ACIT, Circle-1, Margao, Goa and received first notice u/s. 142(1) of the Act at registered office situated at in Mumbai. Immediately, the assessee made petition to the concerned AO to transfer the file to the ACIT, Circle-1, Margao, Goa as the principal place of business falls within the jurisdiction of ACIT, Cirlce-1, Margao, Goa but however the AO rejected the same. The assessee filed evidences in the form of confirmations loans, copy of Income Tax returns of two Directors by way of paper book before us and on examination of the same, we note that the said evidences are crucial and necessary to decide the issue involved in the present appeal and also goes to the root of assessee as rightly contended by the ld. AR. In this regard an affidavit of General Manager of assessee filed before us stating the loan confirmations of two Directors Shri Mahendra Singh Gujaral and Miss Anjali Pathak received initially and were not in prescribed format and did not contain requisite details. The said details could not be filed before the CIT(A) in time as it were not in proper format - as stated the error/lapse in non-submissions of the confirmation loans in time before the CIT(A) is unintentional and is due to genuine reason of receiving the same late. We find that the addition made on account of other loans requires verification of details but however no details were filed before the AO and CIT(A) as it is evident from the assessment order as well as impugned order. We note that the details filed before this Tribunal by way of paper book are necessary for the fair adjudication of the issue involved and in the interest of justice taking into consideration the facts and circumstances of the case as rightly conceded by the ld. DR, we deem it proper to remand the matter to the file of CIT(A) for its fresh adjudication. Appeal of assessee is allowed for statistical purpose.
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2021 (3) TMI 875
Addition u/s 68 - AO doubted the credit worthiness of the above companies and asked the assessee to substantiate source of source of the funds - assessee submitted that it has already submitted the bank statements and income-tax return copies and argued that the entire amount was received through banking channels - admission of additional evidence by CIT-A in deleting the addition - HELD THAT:- In the instant case, the assessee has filed the bank statement before the CIT(A) with a request to admit the same as an additional evidence giving reasons for non-submission of the same before the AO and since the ld. CIT(A) has called for a remand report from the AO before deleting the addition, therefore, in our opinion, the order of the CIT(A) deleting the addition in the instant case does not call for any interference. It is not a case where the ld. CIT(A) has not given an opportunity to the AO to rebut the submissions made before him. In this view of the matter and in view of the detailed discussion made by the ld. CIT(A) while deleting the addition on account of share application money and unsecured loan in respect of different investors as mentioned earlier, the same, in our opinion, does not call for any interference and, accordingly, the same is upheld. The grounds raised by the Revenue are accordingly dismissed.
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2021 (3) TMI 874
Penalty levied u/s. 271(1)(c) - Estimation of income on bogus purchases - HELD THAT:- . It is a settled position of law that penalty cannot be levied when an ad hoc estimation is made. In both the cases an ad hoc estimation was made by the Assessing Officer restricting the profit element in the purchases @12.5%. Similar view has been taken by the Hon'ble Delhi High Court in the case of CIT v. Aero Traders Pvt. Ltd.[ 2010 (1) TMI 32 - DELHI HIGH COURT ] wherein the Hon'ble High Court affirmed the order of the Tribunal in holding that estimated rate of profit applied on the turnover of the assessee does not amount to concealment or furnishing inaccurate particulars. In both these appeals on hand the Assessing Officer has only estimated the Gross Profit on the alleged non-genuine purchases without there being any conclusive proof of concealment of income or furnishing inaccurate particulars of such income. Thus, we do not observe any infirmity in the order passed by the Ld. CIT(A) in deleting the penalty u/s. 271(1)(c) of the Act levied by the Assessing Officer - Decided in favour of assessee.
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2021 (3) TMI 868
Disallowance towards foreign exchange fluctuation loss - CIT (Appeal) upholding the 50% of disallowance - HELD THAT:- As gone through the order of the Co-ordinate bench of the Tribunal for the earlier years[ 2020 (5) TMI 674 - ITAT DELHI] and [ 2018 (2) TMI 2027 - ITAT DELHI] wherein the matter has been referred to the file of the Assessing Officer for verification of the utilization of the loan for business purpose by taking into account the amount of the loan raised, the quantum of the own capital and the reserves surplus, utilization of the amount for day-to-day running of the business and utilization off the amount for investment in the equity shares of the subsidiary company or the amount invested for infusion of the capital in any other company. AO may then take a considered decision in tune with the directions given earlier with regard to disallowance of interest on loan and bank charges in accordance with the provisions of the Income Tax Act. Appeal of the assessee allowed for statistical purpose.
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2021 (3) TMI 866
Revision u/s 263 - Addition u/s 69A of the Act read with section 115BBE - HELD THAT:- As documents and statement so recorded talks about clandestine removal of manufactured goods without issue of invoice and payment of duty and in other words, unaccounted and out of books sales and not about any stock of goods which is not entered in the books of accounts which was found and can be brought to tax under section 69A - Though one may argue that unaccounted sales and undisclosed investment in stock which has ultimately been sold are related to each other and a presumption can be drawn that where unaccounted sales are found during the course of excise search, it is likely that there is undisclosed investment in stock (which has ultimately been sold by the assessee) and thus, the same needs to be brought to tax. A presumption howsoever strong cannot substitute and take the role of credible and verifiable material/evidence which forms the basis and foundation of fastening the tax liability in hands of the assessee more so where each of these transactions carry different tax liability. Thus, in absence of any material available on record that there was undisclosed investment in stock, the very invocation of provisions of section 69A and section 115BBE by the ld Pr. CIT is not borne out of records and thus, there is no legal and justifiable basis to hold that the order so passed by the AO is erroneous. The show cause notice dated 29.11.2018 talks about the bringing to tax the unaccounted sales and it doesn t talk about any undisclosed investment in stock which has been found during the course of search. Further, we find that during the course of revisionary proceedings, no further show-cause or query has been raised by the ld Pr CIT or for that matter, any discussions/deliberations with the assessee as to the applicability of provisions of section 69A and section 115BBE. The directions of the impugned order are clearly without providing an opportunity of being heard to the assessee and where such findings are recorded by the ld Pr CIT, it renders such findings legally unsustainable due to violation of principal of natural justice. We are of the considered view that the findings and directions of the ld Pr CIT contained are not borne out of material available on record and secondly, the such findings have been recorded without providing any opportunity of being heard to the assessee, therefore, such findings are hereby set-aside and to that extent, the order of the Pr CIT stands modified. Unaccounted turnover - There is no dispute regarding the quantum of unaccounted turnover of ₹ 1,77,95,859. The assessee has declared the same in its return of income and which has been accepted by the AO as well as by ld Pr CIT as there is neither any material on record nor any adverse finding recorded by ld Pr CIT disputing the same. Therefore, as far as the quantum of unaccounted turnover is concerned, the order so passed by the AO cannot be held as erroneous and prejudicial to the interest of Revenue. Therefore, the limited issue that remains to be examined is the rate of profit so declared by the assessee on such unaccounted turnover which has not examined by the AO which renders the assessment order as erroneous and prejudicial to the interest of the Revenue and therefore, to this limited extent, the directions of the ld Pr CIT are sustained and the matter is set-aside to the file of the AO to examine the rate of gross profit so declared by the assessee on such unaccounted turnover and decide as per law.
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2021 (3) TMI 865
Short term capital gain - execution of two sale deeds by the assessee i.e. dated 19/05/2008 and another dated 16/03/2009 - Admission of additional evidence - HELD THAT:- We found that the assessee had placed on record Rajinama dated 30/06/2009 which was consequently followed by registered cancellation deed dated 05/11/2009. Since the assessee has already placed on record Rajinama dated 30/06/2009 but could not place on record registered cancellation deed dated 05/11/2009 because of the reasons mentioned above, in our view, the cancellation deed dated 05/11/2009 is a registered document and cancellation deed was followed by Rajinama dated 30/06/2009 which have already been placed on record by the assessee. Since according to the assessee, the said Rajinama dated 30/06/2009 was already filed before the A.O. and the cancellation deed was not available at that time with the assessee and after assessment, the assessee obtained a certified true copy of the cancellation deed from the Sub-Registrar, therefore, the case of the assessee is covered by Clause (c) of Rule 46A of the Rules. We are of the considered view that since the veracity of the registered cancellation deed dated 05/11/2009 has not been disputed by the revenue in any manner, therefore, the ld. CIT(A) ought to have admitted the said documents as additional evidence. Since ld. CIT(A) has not admitted the Registered Cancellation deed dated 05/11/2009, therefore, keeping in view our above discussion, we direct the ld. CIT(A) to admit the Registered Cancellation deed dated 05/11/2009 as additional evidence. Since, we have allowed the additional evidence of the assessee, therefore, in the interest of justice, we restore the matter back to the ld. CIT(A) for deciding the issue of short term capital gain afresh by taking into consideration the fact of registered cancellation deed dated 05/11/2009.
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2021 (3) TMI 864
Rectification of mistake u/s 254 - non maintainability of appeal on low tax effect - Department is seeking recalling of the said order in view of the subsequent circular dated 6th September, 2019 and Special Order of CBDT dated 16th September, 2019 - HELD THAT:- It is pertinent to note that the subsequent Circular No. 23 of 2019 dated 6th September, 2019 as well as the Special Order dated 16th September, 2019 are the subsequent developments and not in existence at the time of passing the impugned order. Therefore, these subsequent Circular and Special Order of the CBDT cannot be applied to the impugned order dated 21.08.2019. Thus the Tribunal has taken a view that the CBDT Circular No. 23 dated 6th September, 2019 as well as the CBDT Special Order dated 16th September, 2019 do not apply in the instant case as the same were not in existence at the relevant point of time of passing the impugned order. Accordingly in view of the earlier order of this Tribunal and to maintain the rule of consistency, we hold that the non-consideration of subsequent circular issued by the CBDT as well as Special Order of the CBDT would not constitute an apparent mistake on record of the impugned order dated 21.08.2019 which can be rectified under section 254(2) of the Act. Hence the Miscellaneous Application filed by the revenue is not maintainable.
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Customs
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2021 (3) TMI 910
Constitutional validity of notification issued / authenticated by the DGFT - Prescribing Minimum Import Price (for short the MIP ) for Cashew Kernels Broken and Cashew Kernel whole - whether the notification no. 53 dated 2.12.2013 can be held ultra vires to the provisions of the Customs Act and the Foreign Trade Act as well as to the Article 14 of the Constitution of India or not? HELD THAT:- On perusal of the above notification, it is clear that the same is issued under section 5 of the Foreign Trade Act read with paragraph no. 2.1 of the Foreign Trade Policy, 2009-2014, as amended from time to time by prescribing the minimum CIF value of cashew kernels under Chapter 8 of ITC (HS) 2012, Schedule 1 (Import Policy) per kilogram being ₹ 288/- for cashew kernel (broken) for HS Code 0801 32 10 and ₹ 400/- for cashew kernel (whole) for HS Code 0801 32 20. Since 2013, the MIP for two different categories of cashew kernels broken and whole are in existence. Madras High Court in case of S. MIRA COMMODITIES PVT. LTD. VERSUS UNION OF INDIA [ 2008 (9) TMI 213 - MADRAS HIGH COURT] , considering the similar notification dated 4.6.2008 issued by the DGFT with regard to restricting the import of betel nuts valued at ₹ 35/- or more per kg., held that the DGFT has no power to issue the notification under section 5 read with section 6(3) of the Foreign Trade Act on artificial basis. Thus, it is clear that DGFT has not exercised powers under section 3 of the Foreign Trade Act but has merely authenticated an order which relates to the DGFT in accordance with the authentication rules. Therefore, the contention raised by the petitioners that DGFT has no authority to issue such notification is not sustainable in view of above dictum of law. In view of the provisions of the Customs Act and Foreign Trade Act, notification issued by the DGFT is to be considered as notification issued by the Central Government which is binding upon the petitioners as the same is issued in exercise of powers vested in the Central Government under section 3(2) of the Foreign Trade Act - the contentions raised by the petitioners with regard to the validity of the notification fails. The impugned notification cannot be held to be ultra vires to the provisions of the Customs Act or the provisions of the Foreign Trade Act, or Article 14 of the Constitution of India as the same is issued by the Central Government under the powers conferred by the provisions of section 3(2) and section 5 of the Foreign Trade Act. Petition dismissed.
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2021 (3) TMI 897
Duty Drawback - duty drawback qua the Central Excise has not been availed of by the petitioners - HELD THAT:- Thus, what requires to be examined, now, by respondent no.2, is only one aspect, which is, whether petitioners have availed duty drawback qua Service Tax. At the request of Mr. Singh, list the matter on 26.03.2021 - In the meanwhile, Mr. Singh will file an affidavit, as directed, via the order dated 05.03.2021.
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2021 (3) TMI 893
Permission to travel abroad - On behalf of the DRI, it is submitted that there is an apprehension that the applicant would not return to India - HELD THAT:- It becomes apparent that the requested party in terms of the treaty of extradition between the Republic of India and Republic of Korea dated 05.10.2004 would be bound to extradite the person who has allegedly committed the offences qua taxation, custom duty, foreign exchange, control or other revenue matters except for in accordance with the provision of Articles 3 4 of the said treaty. It becomes apparent thus in terms of the Extradition Treaty even if a Korean citizen is permitted to travel abroad, he can be extradited back to this country with it also having been observed vide order dated 20.11.2020 that the in the circumstances, the apprehension that had been expressed on behalf of the DRI could not be said to be well founded. In as much as, a submission had been made on behalf of the respondent that he has a valid VISA to return to this country even if the impugned order was upheld, and that the respondent would get his VISA renewed with it having been submitted that the Passport of the respondent was with the DRI, in the circumstances, the DRI was directed to ensure that a personnel of DRI accompanies the respondent for the renewal of the respondent s VISA and that the renewal of the VISA was made in accordance with law. Taking into account the old age of the parents of the respondent, it is held that there is no infirmity in the impugned order dated 29.10.2020 of the learned Metropolitan Magistrate-04, Patiala House Courts, New Delhi in relation to the case titled as DRI V. Kim Dong Yeol. Petition disposed off.
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Insolvency & Bankruptcy
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2021 (3) TMI 906
Role of an Asset Reconstruction Company under the Insolvency and Bankruptcy Code - resolution plan submitted by the Petitioner is stated to have already been approved by the NCLT - HELD THAT:- The issues raised in this petition are of importance inasmuch as they would involve the reconciliation of the provisions of the SARFAESI Act and the IBC. Considering that the role of Asset Reconstruction Companies in resolution/liquidation processes under the IBC, has arisen for determination, it is deemed appropriate to direct that the officials of the Respondent No. 1 - Department of Financial Services, Ministry of Finance and the Ministry of Corporate Affairs shall arrive at a consensus and file a common affidavit after consulting with the officials of the Reserve Bank of India, on the said issue. List on 19th May, 2021. Interim orders to continue in the meantime.
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2021 (3) TMI 873
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - application filed by two Operational Creditors filed jointly - existence of debt and dispute or not - HELD THAT:- The date of default is 21.10.2018 which is the date of the last invoice issued which was unpaid, and the present application is filed on 18.12.2018. Hence, the application is not time barred and filed within the period of limitation. The registered office of corporate debtor is situated in Delhi and therefore this Tribunal has jurisdiction to entertain and try this application. It has been observed by the this Adjudicating Authority that Section 8 Demand Notice issued and the application under Section 9 has been filed by both the Operational Creditors jointly. The amount in default is arising out of the claims of a person and a company which is a separate legal entity - in the present matter the Demand notice under Section 8 should have been issued by an Operational Creditors individually and further the application under Section 9 has to be filed by Operational Creditors individually and not jointly. Joint application under Section 9 by one or more Operational Creditor is not maintainable - prayer for initiating Corporate Insolvency Resolution process against the Corporate Debtor is not sustainable - Application dismissed.
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2021 (3) TMI 872
Liquidation of Corporate Debtor - applicant is guilty of suggestion falsi and supressio very - HELD THAT:- It is observed from the minutes of the 4nd CoC meeting that the CoC has, with 100% majority, decided to liquidate the Corporate Debtor. The suspended director of the Corporate Debtor has raised objections for allowing this application on the ground that the manner in which the CIRP of the Corporate Debtor has been conducted is erroneous, illegal, flawed and deserves to be set aside. He has also asked for exclusion of a period of 270 days from computing it in the total CIRP period. For this, an application bearing MA No. 2739/2019 was also filed by them which was dismissed in default by this Tribunal vide an order dated 25.01.2021 as nobody has pursued it. Also, the Corporate Debtor is non-operational for last two years and the only asset left with it is a shop at Borivali. The promoter of the Corporate Debtor had also given proposal for One Time Settlement through Asset Purchase by Asset Reconstruction Company which is not acceptable to the CoC - it is a settled principle of law regarding the Commercial Wisdom of the CoC to liquidate the Corporate Debtor and it need not be interfered with. Application allowed.
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2021 (3) TMI 871
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - existence of debt and dispute or not - HELD THAT:- It is understood that the Corporate Debtor has defaulted in repayment of debt. The Corporate Debtor has acknowledged the disbursement of credit facilities and its liability to repay the same. However, the Corporate Debtor failed to pay. Hence, owing to the inability of the Corporate Debtor to pay its dues, this is a fit case to be moved u/s 7 of the I B Code. The Bench notes that the Petitioner is the Assignee of the financial debt which was originally disbursed on 20.11.2016 by ECL Finance Ltd. against a sanction letter dated 14.10.2016. The Bench notes that even though a further sanction of ₹ 30,00,00,000/- was proposed to the Corporate Debtor, however, because of noncompliance, this additional sanction was never disbursed and the total amount actually disbursed and in default is ₹ 55,00,00,000/- - This Bench further notes that money was given on secured nonconvertible debentures of an aggregate amount of ₹ 55,00,00,000/- by the Corporate Debtor. The Debenture Trustee has been placed on record by the Petitioner. Also the list of secured documents by way of which the credit facility was secured is placed on the record. The nature of Debt is a Financial Debt as defined under section 5 (8) of the Code. It has also been established that there is a Default as defined under section 3 (12) of the Code on the part of the Debtor. The two essential qualifications, i.e. existence of debt and default , for admission of a petition under section 7 of the I B Code, have been met in this case - it is found that the Petitioner has not received the outstanding Debt from the Respondent and that the formalities as prescribed under the Code have been completed by the Petitioner, we are of the conscientious view that this Petition deserves Admission . Petition admitted - moratorium declared.
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2021 (3) TMI 870
Maintainability of application - initiation of CIRP - Corporate Debtor failed to pay its dues - debt due and payable or not - time limitation - HELD THAT:- This Bench is inclined to admit this Application as the Applicant has made out a case and also satisfied this Adjudicating Authority for admitting this Application. It is also proved that there is a debt due and payable by the Corporate Debtor and they have defaulted in making a payment as per the agreement dated 26.04.2019. The Corporate Debtor prayed to this Tribunal to keep this application in abeyance for a period 6 months, this is not valid ground for keeping in abeyance this Application for long period. Application admitted - moratorium declared.
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2021 (3) TMI 869
Maintainability of application - initiation of CIRP - alleged default on the part of the Corporate Debtor in settling the dues - existence of debt and dispute or not - Financial creditors - time limitation - HELD THAT:- The claim of the applicant is not admitted by the respondent. In fact there are certain issues which should be adjudicated before ascertaining the claim of the applicant. At this stage it is immaterial to consider who will succeed. Besides this forum, in the present proceeding, is not supposed to examine the merit of the disputed claims made by the parties. Respondent has also filed criminal complaint in respect of the disputed acknowledgment. Without the said acknowledgement of account, the claim of applicant will be barred by limitation as the invoices were raised between April 2016 to August 2016 and the present petition was filed in November 2019. A person can file complaint of fraud or forgery only after knowing about the said fraudulent act. In the present matter the complaint has been filed after receiving the disputed acknowledgment of accounts. Therefore, till the outcome of the pending complaint, the claim of applicant remains disputed. A financial/operational creditor will have to be vigilant while initiating proceedings under the Code and ensure that application is within 3 years from the date of default. The creditor will be unable to take the benefit of the provisions of the Limitation Act, which provide for a fresh period of limitation to run/exclusion of time in computing limitation. The same rule shall apply for the operational creditor as well - That apart the respondent has placed copies of invoices for re-supply of materials in place of defective materials. The said invoices have been disputed by the applicant in its rejoinder. Therefore, there exist various questions which require a proper adjudication in order to ascertain the claim of applicant. The application fails and therefore the same is dismissed as barred by limitation.
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2021 (3) TMI 867
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its debt - Operational Debt - existence of debt and dispute or not - HELD THAT:- The Corporate Debtor has committed default in payment of the operational debt which is due and payable by the Corporate Debtor to the Operational Creditor. Further, in the present case it is seen from the records that the Corporate Debtor has not preferred to reply to the Demand Notice issued by the Operational Creditor in spite of receiving the same. Further in relation to the Pecuniary Jurisdiction even though the Threshold Limit has been raised to ₹ 1 Crore as and from 24.03.2020 by virtue of a Notification issued under Section 4 of IBC, 2016, as regards the present Application, it is seen that the default has arisen well before the Notification effected in increasing the threshold limit from ₹ 1 lakh to ₹ 1 crore as on and from 24.03.2020 and the claim made thereof in the Petition filed on 30.01.2020, which exceeds a sum of ₹ 1 lakh, this Tribunal has got the Pecuniary Jurisdiction to entertain this Petition, as filed by the Operational Creditor. The Petition as filed by the Operational Creditor is required to be admitted under Section 9(5) of the IBC, 2016 - Application admitted - moratorium declared.
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2021 (3) TMI 863
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial Creditors - existence of debt and dispute or not - HELD THAT:- It is clear that on the request of the Corporate Debtor, the Financial Creditor had sanctioned the loan, which was duly disbursed to the Corporate Debtor in its Bank Account and was duly acknowledged. It is also not denied that the default has not occurred resulting in triggering the process of insolvency. Section 7(1) of the Code expressly envisages a default is in respect of financial debt, that is owed to any financial creditor by the Corporate Debtor. The Financial Creditor has made this application in the prescribed form and manner. This Adjudicating Authority has to simply satisfy itself that the default has actually occurred. Even, though the Corporate Debtor has the right to point out that the default has not occurred, but there is no such plea in its affidavit in opposition, which tantamounts to a clear cut admission that the default had occurred. The application of the Financial Creditor being complete in all respects and there being no denial of the default having taken place in repayment of the debt due to the Financial Creditor - Application admitted - moratorium declared.
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PMLA
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2021 (3) TMI 894
Grant of Anticipatory Bail - accumulation of huge wealth disproportionate to known sources of income - proceeds of crime - HELD THAT:- Though the respondents have made grievance that they have not been able to get desired cooperation from the petitioners, yet it is on record that they have attended the investigation as and when required by respondent No.2. The grievance of respondent No.2, is however, that though the petitioners are complying with the directions and attending the investigation, yet they are not disclosing the information with regard to various documents and the properties. Be that as it may, ECIR in the case was registered on 21.02.2020 and it was with respect to the proceeds of crime unearthed by ACB after thorough investigation. More than one year has passed and the investigation in the offences under PMLA is going on. Arrest of accused may be required for effective investigation of crime, but the same cannot be a substitute of post trial punishment. After all, an accused is presumed to be innocent until proven guilty. The golden principle is part of criminal jurisprudence of all civilized nations including India. Stringent conditions of bail under Section 45 of the Act have already been declared ultra vires. The instant petition is allowed and the petitioners are granted pre-arrest bail subject to the conditions: imposed.
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Service Tax
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2021 (3) TMI 913
Principles of natural justice - no hearing was granted before passing the impugned order - entire matter was regarding the reconciliation between the books of accounts and returns of the writ applicants - HELD THAT:- One opportunity should be provided to the writ applicants to make oral submissions and offer appropriate explanation to the various queries raised in the show cause notice. The impugned order dated 11th November 2019 is hereby quashed and set aside and the entire matter is remitted to the adjudicating authority (respondent No.2) for fresh adjudication after giving an opportunity of hearing to the writ applicants on the condition that the writ applicants shall make a pre-deposit of the sum of ₹ 9,21,490/, which is 7.5% of the net tax demand as per the impugned order - application allowed by way of remand.
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Central Excise
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2021 (3) TMI 885
Refund of Unutilised Credit in cash - section 142(6) of CGST Act, 2017 - applicability of Section 11B of CEA or Rule 5 of the CCR, 2004 - HELD THAT:- In the case on hand, the submissions of the Learned Advocate, both verbal as also in the synopsis filed on 05.03.2021 (paragraph 10), coupled with the refund claimed through various letters, only indicate that the appellant is essentially claiming refund under Section 142(6) of the C.G.S.T. Act, per se - To decide the issue of refund under said section, CESTAT is not having jurisdiction since it pertains to examination and interpretation of a claim under the C.G.S.T. Act and to decide the eligibility or otherwise of the claimant under the C.G.S.T. Act. It, however, appears that the appellant has an arguable case for refund under Central Excise Act, but since the claim is clearly under CGST Act, 2017 the jurisdiction over which is not vested with CESTAT, the present appeal is dismissed for want of jurisdiction.
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2021 (3) TMI 884
Refund claim - amount paid during the investigation - whether tantamounts to deposit under protest? - applicability of Section 11B of the Central Excise Act, 1944 - HELD THAT:- The undisputed fact that remains is that the refund is claimed as a consequence of CESTAT s Final Order in AAR AAR METAL REFINERY VERSUS COMMISSIONER OF CENTRAL EXCISE, CHENNAI [ 2017 (8) TMI 1047 - CESTAT CHENNAI] and hence, it is not a normal refund claim. The legislature in its wisdom has inserted (ec) under Explanation (B) to Section 11B with effect from 11.05.2007 with a purpose, thereby carving out an exception from a normal refund claim. This according to me is in the nature of a special provision and hence, any claims made as a consequence of Appellate Order/(s) will have to pass through the rigours of (ec) ibid. When a specific provision is available in the statute covering the specific cases, it is the duty to examine whether a claim falls under such specific provision and if so, then such claims should necessarily comply with the conditions prescribed thereunder. The factual matrix here in the case on hand which is undisputed, is that the refund application was filed with a delay of more than four months in consequence of an Order of this Bench (Appellate Order) and hence, the same is not satisfying the specific provision under (ec) ibid - appeal dismissed.
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2021 (3) TMI 882
CENVAT Credit - inputs/capital goods - structural items - welding electrodes - period of dispute is from December 2011 to March 2013 and from January 2014 to March 2016 - HELD THAT:- The issue relating to availment of credit by appellant herein on the subject steel items has always been the subject matter of dispute inasmuch notices have been periodically issued for denying the credit. The Credit has been sought to be denied on subject steel items on presumption that ordinarily used for civil construction or construction of factory shed . The submissions made by the appellant is agreed with, that credit has been admittedly allowed by the Lower Adjudicating Authorities, as also upheld by the First Appellate Authority, the denial of credit in the instant case by the same appellate authority would lead to uncertainty and cause serious prejudice to the interest of the assessee, if they are deprived of the beneficial scheme of Cenvat Credit. Appeal allowed - decided in favor of appellant.
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CST, VAT & Sales Tax
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2021 (3) TMI 896
Exemption in terms of Entry 65/Schedule A of TNVAT Act - turnover from sale of rice bran oil less than ₹ 5.00 crores - forfeiture of tax in terms of Section 40(2)(ii) - reversal of input tax credit - HELD THAT:- The Central Excise Act 1944 permits the issuance of Notifications in terms of Section 37B of that enactment. There is not, in my view, any discernible distinction between an exemption offered under Notification (as is the case under Central Excise law) or under the Schedule to the Act (as in the case before me. The crux of the matter remains that the assessee must have freedom to choose whether or not it wishes to avail of the benefit offered The exemption available under Entry 65/Schedule A is an option that has not been availed by the present petitioner and I see no legal flaw in the choice made. The petitioner will have to sink or sail on the basis of the decision taken by it, qua exemption. In this case, the petitioner has, while eschewing exemption, claimed ITC on purchases. The respondent, while rejecting the claim for ITC has fortified the tax collected in terms of Section 41 of the TNVAT - The grant of credit is conditional upon the status of a dealer as taxable , and hence a dealer falling outside the ambit of taxability was not extended the benefit of ITC, which is a concession under the statute, as seen from a reading of the charging section, Section 3, read with Section 19, dealing with Input tax credit. The feature of input tax credit is what gives value added taxes their main economic characteristic, that of neutrality. The full right to deduction of input tax through the supply chain, with the exception of the final consumer, ensures neutrality of the tax, whatever be the nature of the product, the structure of the distribution chain and the technical means used for its delivery, either via brick and mortar establishments, physical delivery or the Internet. This is a measure of avoiding the ills of cascading taxes. To deny the petitioner the benefit of ITC by thrusting an exemption not claimed by it, upon it, will be contrary to the scheme of the enactment. Petition allowed.
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2021 (3) TMI 891
Assessment of turnover - Slabs of tax - petitioner claimed that they had to be taxed at 3.6%, the Assessing Officer, the First Appellate Authority and the Tribunal rejected the stand taken by the assessee on the ground that the local rate of tax on the goods dealt with by the petitioner was 3% and after adding surcharge and additional sales tax, the rate of tax would come to 5.1% and since this rate of tax was more than 4%, the turnover had to be assessed at 10% - HELD THAT:- In terms of the circular dated 29.4.1993, if the local rate of tax is 3% and the company is a small company with inter-state sales turnover less than ₹ 10 lakhs, the additional sales tax is '0'. The Tribunal was of the view that the turnover could not be split up, which appears to be not correct in the light of the said circular, which makes it clear that the initial ₹ 10 lakhs turnover of the dealer could not be subjected to tax. Hence, we are of opinion that such benefit should accrue to the petitioner dealer. The orders passed by (i) the Assessing Officer; (ii) the First Appellate Authority and (iii) the Tribunal are set aside and the matter is remanded to the Assessing Officer with a direction to give the benefit of the amendment by the Act 23 of 1993 by not levying additional sales tax on the first ₹ 10 lakhs of the petitioner's turnover for the subject assessment year namely 1994-95 - Petition allowed in part.
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2021 (3) TMI 890
Restoration of penalty levied under Section 27(3) of the TNVAT Act - no finding rendered by the Assessing Officer in the assessment order that the petitioner willfully failed to disclose the assessable turnover - HELD THAT:- The Tribunal, exceeded its jurisdiction in adjudicating upon an issue which was never adjudicated by the Assessing Officer at the first instance, more particularly, there was no prima facie finding recorded by the Assessing Officer while proposing to impose penalty in the prerevision notice dated 18.04.2016. Yet the dealer objected to the levy of penalty stating that there is no allegation of willful suppression made by the assessee. In the assessment order dated 02.12.2016, there is no finding rendered by the Assessing Officer as to why penalty is being levied. Therefore, the Tribunal need not have embarked upon such exercise and converted itself into a fact finding body of the first instance without noting the fact that they are an Appellate Tribunal examining the correctness of the finding recorded by the First Appellate Authority. Thus, the Tribunal committed a serious error in reversing the order passed by the First Appellate Authority. The tax case revision is allowed.
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Indian Laws
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2021 (3) TMI 908
Requirement of issuance of SCN - grant of personal hearing to the petitioners before passing the impugned order of supersession of the Board of Directors - discretionary power not to follow the directives issued by the RBI or in case of any directives to supersede or suspend the Board of Directors of the Co-operative Bank, the Registrar could only suspend the Board of Directors of the co-operative bank - amendment to Section 110A(1)(iii) of the Maharashtra Co-operative Societies Act, 1960 substituting the period of 5 years by one year - supercession of Board of Directors of the Cooperative Bank and to appoint Board of Administrators under the provisions of the Banking Regulation Act, 1949 read with Section 110A of the MCS Act. Whether the Registrar, Cooperative Societies was required to issue any show cause notice and grant any personal hearing to the petitioners before passing an order of superseding the Board of Directors of the respondent no.4 bank and appointing an administrator? - HELD THAT:- A conjoint reading of the unamended Section 110A(1)(iii) with the amended Section 110A(1)(iii) referred to aforesaid would clearly indicate that the period of five years originally prescribed under the said provision was substituted by a period of not exceeding one year in conformity with the period of one year period under Article 243 ZL of the Constitution of India. The constitutional validity of the said amendment carried out in the year 2013 in Section 110A(1)(iii) of the MCS Act has been admittedly not challenged by the petitioners on any ground in this petition. There is no substance in the submission of the learned senior counsel for the petitioners that in view of the amendment to Section 110A(1)(iii) of the MCS Act brought into the effect w.e.f. 14th February, 2013. The Registrar, Co-operative Societies was required to issue a show-cause notice followed by personal hearing to the petitioners before passing order of suspension of the Board of the Directors and before appointing the sole administrator in respect of the affairs of respondent no.4 bank - the order passed by the Registrar, Co-operative Societies is an executive and administrator order, which was passed so as to comply with the mandatory directives issued by the RBI and was thus not a quasi-judicial order. The Registrar, Co-operative Societies was thus neither required to issue any show-cause notice nor to grant any personal hearing to the petitioners before passing the impugned order. There is no merit in the contention raised by the learned senior counsel for the petitioners that the Registrar, Co-operative Societies had discretionary power to suspend the Board of Directors of the respondent no.4 bank even if the RBI had directed to supersede the Board of Directors of the respondent no.4 bank, in view of the words as the case may be in Section 110A(1)(iii) of the MCS - the submission made by the learned senior counsel is ex-facie contrary to the plain reading of the said provision i.e. Section 110A(1)(iii) of the MCS Act. There is no merit in the submission of the learned senior counsel for the petitioners that the Registrar, Co-operative Societies was bound to follow the procedure prescribed under Section 102 of the MCS Act while superseding the Board of Directors of the respondent no.4 bank or while appointing a Board of Administrators - under Section 110(A)(1)(iii) of the MCS Act the Registrar, Co-operative Societies is bound to comply with the directives issued by the RBI under the said provisions and has no discretion. The order passed by the Registrar, Co-operative Societies to supersede or suspend the Board of Directors in compliance with the directives issued by the RBI is an administrative or executive order. Since order passed by the Registrar, Co-operative Societies is in mandatory compliance with the directives issued by the RBI to supersede or suspend the Board of Directors of the respondent no.4 bank by the Co-operative Societies, this Court cannot interfere with such order passed by the Registrar, Co-operative Societies. The Registrar, Co-operative Societies has not acted as a rubber stamp of the RBI. Be that as it may, the petitioners have not made out any case for warranting interference with the order passed by the Registrar, Cooperative Societies. Petition dismissed.
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2021 (3) TMI 907
Dishonor of Cheque - legally enforceable debt or not - cheques were obtained two years prior to the date of presentation - HELD THAT:- The three ingredients to attract the offence under Section 138 of the Negotiable Instruments Act are that there was a legally enforceable debt, that the cheque was drawn from the account of the banker for discharge, in whole or part of any debt or liability which presupposes a legally enforceable debt and that the cheques so issued had been returned due to insufficiency of funds. In order to draw the presumption available in favour of the appellant under Section 118 and 139 of the Negotiable Instruments Act, it must be admitted or proved that the cheques were issued by the first respondent in discharge of a legally enforceable debt or liability. Here, the first respondent has not admitted the allegations. Whether the appellant could prove that Ext.P1 series were issued in discharge of a duly enforceable debt or liability? - HELD THAT:- The materials brought out in evidence are sufficient to give an answer in the negative. As noticed earlier, the appellant has admitted that the cheques were issued two years before the date of presentation - Secondly, through the Ext.D1 judgment in S.T.No. 288/2007, the learned Magistrate could very much expose the hollowness of the claims of the appellant. That case related to issuance of cheque Nos. 428897 dated 23.08.2006 and 428896 dated 20.08.2006, both for ₹ 44,200/-. Those cheques were shown dishonored on 12.09.2006. Thus the learned Magistrate has rightly noticed that it is improbable that after dishonoring two such cheques on 12.09.2006, the appellant had accepted, at least two cheques dated 14.09.2006 and 22.09.2006 in Ext. P1 series. Here it has come out in clear terms that the cheques were handed over two years prior to the date of presentation. In other words, it was not presented to the bank within a period of six months from the date on which it was drawn or within the period of its validity, whichever is earlier. This aspect cuts the very root of the case of the appellant - Though the learned counsel made a faint prayer for making a remand, in the circumstances that would be an idle exercise. The appellant could not prove that the subject cheques were issued in discharge of a duly enforceable debt or liability. There is no reason to interfere with the finding in question. This appeal is only to be dismissed. Appeal dismissed.
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2021 (3) TMI 904
Dishonor of Cheque - Whether the Appellate Court has erred in appreciating the evidence, allowing the appeal and acquitting the respondent - accused? - HELD THAT:- The answer is in affirmative. A mandatory presumption is required to be raised in respect of Negotiable Instrument in terms of Section 118 (b) of the Act. Section 139 of the Act merely raises a presumption that the cheque has been issued for discharge of any debt or other liability. The proceeding under Section 138 of N.I. Act is quasi criminal in nature. In these proceedings, proof beyond reasonable doubt is subject to presumptions envisaged under Sections 118, 139 and 146 of N.I. Act - An offence under Section 138 of N.I. Act is committed not on dishonor of cheque, but on failure of drawer of the cheque to make payment within 15 days from the date of receipt of notice of dishonor. An essential ingredient of Section 138 of N.I. Act is that the cheque in question must have been issued towards a legally enforceable debt. Sections 118 and 139 of the Act envisage certain presumptions. Under Section 118 of the Act, a presumption shall be raised regarding consideration, date, transfer, endorsement and regarding holder in the case of Negotiable Instruments. Even under Section 139, a rebuttable presumption shall be raised that the cheque in question was issued towards discharge of legally enforceable debt. The accused has not at all denied his signature on Ex.P.1. The accused has contended that other writings on Ex.P.1 do not belong to him. PW.1 admitted hand writing on Ex.P.1 is not of accused. It is not objectionable or illegal in law to receive an inchoate negotiable instrument duly signed by the maker despite the material particulars are kept blank if done with an understanding and giving full authority to the payee to fill up the material contents as agreed upon. Such a course of action in law cannot vitiate the transaction nor can invalidate the negotiable instrument issued and such transaction fully binds the maker of instruments to the extent it purports to declare. The Trial Court on appreciating the evidence on record has rightly held that the complainant has established that the cheque in question was issued for discharge of debt and accused has failed in all the attempts to make a probable defense which would falsify the case of prosecution. Therefore, the Trial Court has rightly convicted the respondent - accused for the offence punishable under Section 138 of N.I. Act. The Appellate Court without appreciating the evidence in proper perspective and on assumption has held that the complainant has not proved that Ex.P.1 - Cheque issued towards payment of legally enforceable debt. The said finding of the Appellate Court is erroneous. Appeal allowed - decided in favor of appellant.
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2021 (3) TMI 903
Maintainability of enforcement petition - Emergency Arbitrator - Arbitrator within the meaning of Section 2(1)(d) of the Arbitration and Conciliation Act, or not - interim order dated 25th October, 2020 an order under Section 17(1) of Arbitration and Conciliation Act, or not - Misapplication of concept of Group of Companies doctrine to implead respondent - arbitration agreement between the petitioner and respondent No.2 and combining/ treating all the agreements as a Single Integrated Transaction - HELD THAT:- The Emergency Arbitrator is an Arbitrator for all intents and purposes; order of the Emergency Arbitrator is an order under Section 17(1) and enforceable as an order of this Court under Section 17(2) of the Arbitration and Conciliation Act. The respondents have raised a vague plea of Nullity without substantiating the same. The interim order of the Emergency Arbitrator is not a Nullity as alleged by respondent No.2 - Combining/treating all the agreements as a single integrated transaction does not amount to control of the petitioner over FRL and therefore, the petitioner s investment does not violate any law. All the objections raised by the respondents are hereby rejected with cost of ₹ 20,00,000/- to be deposited by the respondents with the Prime Minister Relief Fund for being used for providing COVID vaccination to the Below Poverty Line (BPL) category - senior citizens of Delhi. The cost be deposited within a period of two weeks and the receipt be placed on record within one week of the deposit. The respondents have deliberately and willfully violated the interim order dated 25th October, 2020 and are liable for the consequences enumerated in Order XXXIX Rule 2A of the Code of Civil Procedure - In exercise of power under Order XXXIX Rule 2A(1) of the Code of Civil Procedure, the assets of respondents No.1 to 13 are hereby attached. Respondents No.1 to 13 are directed to file an affidavit of their assets as on today in Form 16A, Appendix E under Order XXI Rule 41(2) of the Code of Civil Procedure within 30 days. Respondent No.1, 2, 12 and 13 are directed to file an additional affidavit in the format of Annexure B-1 and respondents No.3 to 11 are directed to file an additional affidavit in the format of Annexure A-1. Show cause notice is hereby issued to respondents No.3 to 13 to show cause why they be not detained in civil prison for a term not exceeding three months under Order XXXIX Rule 2A(1) of the Code of Civil Procedure for violation of the order dated 25th October, 2020. Reply to the show cause notice be filed within two weeks. Rejoinder within two weeks thereafter - respondents are directed not to take any further action in violation of the interim order dated 25th October, 2020. List for reporting compliance as a part-heard matter on 28th April, 2021.
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2021 (3) TMI 899
Dishonor of Cheque - Service of notice regarding cheque bouncing - discharge of onus against presumption of cheque - specific case of the accused before the learned lower appellate court was that the learned trial court failed to consider that the cheque was issued in a matter of investment in the business of the accused and was not in discharge of any debt - applicability of Sections 138 to 142 of the Negotiable Instruments Act - HELD THAT:- The legal notice regarding bouncing of cheque was sent through registered post as well as through courier service and the learned trial court at para-8 of its judgment has considered the service of legal notice through registered post i.e. through post office as well as the notice sent through courier service. In fact, the learned trial court has recorded that the post office has given in writing that notice i.e. Exhibit-5 and registered letter No. A-976 dated 17.08.2004 was delivered to the payee on 19.08.2004 for which a certificate of the post office was also exhibited and marked as Exhibit-6 and it is only in connection with the notice sent through courier service that it has been recorded that the same was served upon Umesh Kumar, who is the son of the petitioner. Thus, this Court finds that notice was sent through two modes; once through registered post and another through courier service and so far as the registered post is concerned, the same was served upon the petitioner for which the certificate of the post office i.e. Exhibit-6 was exhibited and so far as the courier service is concerned, it is only this courier notice which was served upon the son of the petitioner. This Court finds that there is consistent finding of the learned courts below in connection with service of the registered notice regarding cheque bouncing upon the petitioner after due appreciation of the materials on record particularly Exhibit-5 and Exhibit-6 - the contention of the learned counsel for the petitioner that the notice was served upon the son of the petitioner and not upon the petitioner is devoid of any merit. Discharge of onus regarding presumption of cheque - HELD THAT:- In the instant case, the specific case of the complainant was that he was to invest in the business of the accused and in lieu of that it was agreed he would be entitled to get 40% of the profit and subsequently the accused inter alia issued the aforesaid two cheques. Admittedly, in the present case, the accused has not led any defence evidence. This Court is of the considered view that considering the nature of transactions between the parties and read with the presumption under Section 139 of the Negotiable Instruments Act that the cheque was issued against discharge of existing debt or other liability, the argument of the petitioner that the same was issued by way of security has no legal basis and accordingly, this Court finds that the accused could not discharge his onus against the presumption of cheque having been drawn in discharge of liability. This Court finds that the learned courts below have not committed any error, illegality or perversity in convicting the petitioner for bouncing of the two cheques - Revision petition dismissed.
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2021 (3) TMI 888
Dishonor of Cheque - documents sought for handwriting expert so as to identify the admitted writings - rejection of application u/s 45 of the Indian Evidence Act - HELD THAT:- In view of the ratio laid down in Bir Singh s case [ 2019 (2) TMI 547 - SUPREME COURT ], the contention that the other documents are in the handwriting of the different persons, is not a ground. Hence, in the case on hand, I do not find any error committed by the learned Magistrate in rejecting the application filed under Section 45 of the Indian Evidence Act. In view of allowing the application filed under 65B of the Indian Evidence Act, the witness DW.1 is to be recalled and he shall be permitted to lead his further evidence by placing the certificate under Section 65B of Indian Evidence Act while marking the document. In order to prove his defence, an opportunity is to be given to the accused, who has been examined as DW.1. Petition allowed.
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