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TMI Tax Updates - e-Newsletter March 4, 2022 Case Laws in this Newsletter: GST Income Tax Customs Corporate Laws Insolvency & Bankruptcy PMLA Service Tax Central Excise CST, VAT & Sales Tax Indian Laws Highlights / Catch Notes GST: Jurisdiction of Proper Officer to invoke section 74 of the CGST/OGST Act - input tax credit - During the course of hearing, the Petitioner admitted that though he had adjusted its tax liability against input tax credit available in the electronic credit ledger, he has not paid interest against such delayed adjustment/payment - the disputed facts arising in the matter are required to be adjudicated by the Proper Officer. The Petitioner is at liberty to file his Show Cause reply and raise objections including jurisdictional issue. - HC Visit to Get Source GST: Seeking grant of Bail - issuing invoices only without actual supply of goods with the motive to earn benefits by fraudulent means - The respondent has already made necessary recoveries and seizures of documents, including electronic records from the petitioners. It is not the case of the respondent that some more recoveries are to be affected from the petitioners. - Petitioners are ordered to be released on bail - HC Visit to Get Source Income Tax: Power to transfer cases u/s 127 - transfer from Bhopal to Hyderabad - the ground of ostensible variance between the reason assigned for transfer in the show-cause notice and the impugned order of transfer does not actually exist in substance and essentiality. The simple reason being that petitioner knew that the case is being transferred for consolidating the records of the principal contractors and the sub-contractor (petitioner) at one place (Hyderabad). The principle of audi alteram partem thus stands complied with by implication. - The principles of natural justice cannot be applied mechanically. - HC Visit to Get Source Income Tax: Tax recovery proceedings - Right over property mortgaged - It has come to the knowledge of the Tax Recovery Officer that the defaulter has mortgaged the subject property with the petitioner-Bank and the same was registered on 04.04.2013. Thus, the first respondent-Tax Recovery Officer formed an opinion that the attachment date precedes the mortgage date and hence the mortgage of the subject property and transfer of the subject property is void under the provisions of the Income Tax Act. - the petitioner-Bank in the present case, is at liberty to approach the first respondent-Tax Recovery Officer by filing an appropriate application under Schedule II, Rule 11 of the Income Tax Act. - HC Visit to Get Source Income Tax: Levy of penalty u/s. 271D - violation of the provisions of Section 269SS - The entire case of the Revenue rests on interpreting the entries in a diary found during search as relating to cash receipts from customers, on the basis of one of the entry having CHQ mentioned against it matching with a bank entry the same day. Treating this entry to be representative of the rest of the entries, the Revenue held that the entries related to business receipts in lacs and in the absence of CHQ mentioned against the entry it was presumed to be receipts in cash. - the same is not sufficient to strictly establish the violation of section 269SS of the Act, of the assessee having received amounts in cash exceeding ₹ 20,000/- from a person on account of sale of flats, so as to attract levy of penalty u/s 271D of the Act. - AT Visit to Get Source Income Tax: Disallowance u/s 40A(3) - Payment of expenditure in Cash exceeding ₹ 20,000 - whether payment would fall under Rule 6DD(k) of I.T. Rules? - we find force in the contention of the assessee that the alleged amount was not paid in cash by the assessee but was paid by the driver acting as an agent of the assessee. - the disallowance made by the AO is not sustainable - AT Visit to Get Source Income Tax: Income accrued or deemend to accrue in India - Fees for technical services' under Article 12(5)(a) of the India-Netherlands tax treaty - as providing of access to CRS, Property Management Services and Other services could neither be held to be technical services, nor the same in terms of our aforesaid observations could have been characterised as "ancillary and subsidiary" services under Article 12(5)(a), hence the consideration received by the assessee for rendering the said services/facility could not be held as FTS in its hands. - AT Visit to Get Source Income Tax: Addition u/s 94A - transactions with persons located in notified jurisdictional area - We note with the able assistance of both the parties that the CIT(A) has nowhere dealt with the Assessing Officer’s detailed discussion holding the impugned “CCDs” to be a sham transaction whilst deleting the additions in issue made u/s 94A of the Act. - The assessee’s plea before us is that this entire “sham transactions” issue has become redundant once the CIT(A) holds section 94A itself as not applicable. Be that as it may, we deem it appropriate that the CIT(A) needs to examine and adjudicate the above stated “sham transactions” issue. - AT Visit to Get Source Income Tax: Interest u/s244A - refund of “any amount” arises to the appellant out of advance/TDS/tax paid - the assessee is not entitled for interest on interest, in case there is delay in refund payable to the assessee. - AT Visit to Get Source Income Tax: Reassessment order u/s 147 - the AO does not enjoy the power of review. Therefore in the present case it is clear that the action of the present AO tantamount to review the action of the earlier AO who has accepted the valuation of stock in his scrutiny assessment u/s 143(3) of the Act. Therefore, the present AO lacks jurisdiction u/s 147 of the Act to reopen the completed assessment u/s 143(3) of the Act merely on “change of opinion”. - AT Visit to Get Source Income Tax: Addition u/s 40(a)(ia) - Non deduction of TDS - amount paid to NPCI as charges towards using of ATM of other banks - the assessee is not liable for TDS, and hence, the provisions of section 40(a)(ia) of the Act does not have application in respect of payments made to NPCI - AT Visit to Get Source Income Tax: Non considering the revised return filed by the assessee for rectifying the mistake in claim of depreciation - In this case, the original return was not filed under Sub-Sec.(1) or Sub-Sec.(4) and thus, the belated return filed by the assessee is an invalid return. Therefore, the AO is not bound to consider invalid return. Hence, we are of the considered view that there is no error in the reasons given by the AO in not considering the revised return filed by the assessee for rectifying the mistake in claim of depreciation. - AT Visit to Get Source Income Tax: Disallowance on account of payment of commission for obtaining supply order from government agencies - The assessee has submitted complete details including PANs of the agents to whom the commission was paid, the supporting vouchers and account confirmations to the Ld. AO and also filed the copies of the same in the Paper-Book. The assessee has also deducted TDS wherever applicable. The assessee has also submitted a detailed note on various tasks done by the commission agents and those tasks are clearly narrated by Ld. CIT(A) also in his order. - Claim allowed - AT Visit to Get Source Income Tax: Addition u/s 69A - large cash deposit on the bank account during the year - if a house wife deposited up to ₹ 2.50 lacs in her bank account (and in case of senior citizens aged above 70 years the upper limit of ₹ 5 lacs) during demonetization period then the same should not be scrutinized and has to be accepted. - AT Visit to Get Source Income Tax: Disallowance of deduction u/s 80P in respect of storage income derived from CAP storage - There is no specific definition of “godown” and “warehouse” prescribed in Income-tax Act, 1961. - At this stage, we also note that the section 80P is a beneficial provision and the purpose is to incentivize the warehousing activity of co-operative societies. Therefore, the interpretation of section 80P must be liberal so as to advance the avowed objective. Taking into account all these aspects, we are persuaded to conclude that the income from letting of CAP storage derived by the assessee is eligible for deduction u/s 80P and there is no justification in denying the same to the assessee. Therefore, we delete the disallowance made by lower authorities. - AT Visit to Get Source Income Tax: Penalty levied u/s 271(1)(c) - deduction of LTCG u/s 54F - The assessee acted in bona fide belief and made the claim is not acceptable due to any reason and was disallowed the same cannot be subject to levy of penalty under section 271(1)(c) . - AT Visit to Get Source Customs: Jurisdiction - proper officers - power of DRI officers to issue SCN or not - If the Finance Bill becomes the Act, DRI officers will be at par with Customs officers under the Customs Act by virtue of the substitution of section 3 and their various actions such as searches, seizures, arrests may not become void because of non-entrustment of those functions by the Government under Section 6. However, there is no proposal to amend section 28 and hence SCNs can be issued even after this Bill becomes the Act only by ‘the proper officer’, i.e., the officer who has done the assessment in the first place. In fact, this specific legal position as held by the Supreme Court in Canon India is likely to be reaffirmed by insertion of section 110AA in the Act. - AT Visit to Get Source Corporate Law: Territorial Jurisdiction of Delhi High Court - LLP is registered in Hyderabad - It is evident from the facts of the present case that there is no principal or subordinate office of the LLP in the State of Delhi and neither are the books of accounts kept in Delhi, therefore, there is no cause of action in respect of the present suit, which is arising within the territorial limits of the Courts in Delhi. Furthermore, the parties by agreement cannot give jurisdiction to a Court, which otherwise does not have such jurisdiction - the Courts in Delhi lack the territorial jurisdiction to try and entertain the present suit. - HC Visit to Get Source Indian Laws: Reduction of compliances and end-to-end automation of procedure relating to import of certain goods at concessional rate of duty - News Visit to Get Source Indian Laws: Bribery - illegal gratification - evidence on record/document to show that the applicant was aware of the source of the money or not - The present applicant, a Chartered Accountant, is stated to be a resident of Delhi, having deep roots in society. Besides, it was submitted by the learned Senior Counsel appearing for the applicant that the applicant is ready and willing to surrender his Passport. The same, in the opinion of this Court, alongwith appropriate conditions, can secure the applicant’s presence during the trial and allay any apprehension regarding him being a flight risk - this Court is inclined to release the present applicant on bail during the pendency of the trial. - HC Visit to Get Source IBC: Initiation of CIRP - fraudulent or malicious initiation of proceedings - Since, some collusion seems to be apparently existing to thwart the claim of the Corporate Debtor and other related issues. Impugned order dated 04th June, 2020 has not dealt with this IA and has dismissed on the ground that BMW India Pvt. Ltd/R2 in the IA No.300 of 2018 is not a party in the main petition no.167 of 2017. Although IBC is a summary proceeding but if large business houses with multiple business arms are allowed to disrupt on its whims & fancies small business firm then how IBC can promote entrepreneurship which is also its objective. - AT Visit to Get Source IBC: CIRP - discrimination of Related Party Financial or Operational Creditor - IBC treats related parties as a separate category for specified purposes, excluding from the CoC under Section 21 and disqualifying them from being Resolution Applicants under Section 29A. However, the IBC does not treat Related Party as a separate class for any other purpose. Therefore, a rationale nexus must exist for any classification between the object sought to achieve the classification and sub-classification - the Related Party financial or operational creditor cannot be discriminated against under the Resolution Plan, denying their right to get payments under the resolution Plan only on being a Related Party. It is also made clear that by getting only payment under the Resolution Plan, related party creditors could in no way sabotage the CIRP. - AT Visit to Get Source PMLA: Money Laundering - Fraud by Additional Director of the company with the help of forged documents - commission of scheduled offence - The case of VMT Mills can be better explained with the following illustration. 'A' is an honest public servant. 'B', a dishonest public servant, opens a bank account in the name of 'A' and parks the bribe monies received by him in that account. Can 'A' be prosecuted along with 'B' under the Prevention of Corruption Act, 1988 ? The answer is an obvious 'No'. - HC Visit to Get Source Service Tax: Sabkas Vishwas (Legacy Dispute Resolution) Scheme, 2019 - amnesty scheme - The prayers made in this writ petition cannot be granted for consideration of the case of the petitioner for paying the service tax under the Scheme as the Court cannot make operational the SVLDRS, 2019, especially when the petitioner has approached this Court belatedly after 1 year and 3 months from the last date of payment of determined amount of tax under the SVLDRS, 2019. - HC Visit to Get Source Service Tax: Condonation of delay of 4-5 years in filing appeal - There are no justification for a delay of 4-5 years in filing this appeal after it has been issued and served. However, in order not to deprive the appellant of an opportunity of appeal, we condone the delay on payment of a cost of ₹ 1,00,000/- which must be paid by the appellant to the PM CARE Fund within a period of one month from the date of this order - AT Visit to Get Source Service Tax: Refund of service tax paid - unjust enrichment - Commissioner (Appeals) has upheld the order of original authority rejecting the refund claim on the ground of unjust enrichment stating that it is an admitted position that the refund amount due was not reflected in the books of account of HPCL as claims receivable. This implies that the duty paid was shown as current expenditure and formed part of the Profit and Loss account of the assessee. Thus if the claimant himself has treated the refund amount due as expenditure and not as "claims receivable", the claimant cannot said to have passed the test of unjust enrichment. - Appeal of the assesee dismissed - AT Visit to Get Source Central Excise: CENVAT Credit - issue of only invoices without supply of any excisable goods - manufacturing capacity in place or not - The tribunal has not given any reasons as to why the decision dated 25th October, 2019 would apply to the case on hand. Therefore, if we are called upon the adjudicate the correctness of the order, we would have to examine as to whether the Commissioner of Central Excise has rendered a proper finding in the order in original - Matter restored before CESTAT - HC Visit to Get Source Central Excise: Refund of amount deposited during Audit - The payment made by the appellant at the time of audit, in absence of any SCN for the same, cannot be held to be the payment against the demand raised by the Department without even going into the merits of the nature of demand - In light of the above discussed mandate of section 11A of CEA and the absence of the requisite SCN the amount got deposited at the instance of audit team is liable to be refunded to the appellant. Whenever an amount is to be refunded in terms of section 11AA, 11BB, 11DD and 11AB of the Excise Act, an interest at the rate which varies from 6% to 18% has to be granted. - AT Visit to Get Source Central Excise: Levy of penalty on Director u/r 26 of CER - involvement of the director of the appellants in clandestine activities or not - here are not much reasoning has been assigned by the said order, to show that Director was having mens rea or direct involvement for invocation of Rule 26 - Since the impugned order fails to establish the ingredient of “mens rea” on the part of the Appellant 2 who was otherwise performing their duties as employee of the company, the penalties imposed on the Director, cannot be upheld. - AT Visit to Get Source Central Excise: CENVAT Credit - bogus transaction - fake invoices - The only reasonable step which he can take is to ensure that the supplier is trustworthy, the inputs are in fact received and that the documents, prima facie, appear to be genuine. The fact that the assessee made payment by cheque was held to be a proof of his bona fides - Credit cannot be denied - AT Visit to Get Source Articles NO SERVICE TAX ON LIQUOR LICENSE FEE-TAX PAID REFUNDABLE LANDLINE PHONE NUMBER SHOULD NOT BE MANDATORY IN FORMS News Auto-population of e-invoice details into GSTR-1 Income Tax Department conducts searches in a major Telecom Group Income Tax Department conducts searches in Mumbai India’s merchandise export in February 2022 increases by 22.36% to USD 33.81 billion over USD 27.63 billion in February 2021 Invitation for public comments on draft ‘IFSCA Guidance framework on Sustainable and Sustainability linked lending by financial institutions in IFSCs’ Reduction of compliances and end-to-end automation of procedure relating to import of certain goods at concessional rate of duty Case Laws: GST 2022 (3) TMI 166 Maintainability of petition - Jurisdiction of Proper Officer to invoke section 74 of the CGST/OGST Act - input tax credit - HELD THAT:- Since the Petitioner has come up before this Court without raising any objection or filing any reply to the said Show Cause Notice, we are not inclined to entertain the writ petition at this stage. The contentions of the Petitioner are in the nature of disputed fact which requires adjudication of fact on the basis of documents available in record and evidence to be adduced by the Petitioner during the course of adjudication process before the Proper Officer. It may be pertinent to have reference to the judgment by the Hon ble Supreme Court in India in the case of UNION OF INDIA OTHERS VERSUS COASTAL CONTAINER TRANSPORTERS ASSOCIATION OTHERS [ 2019 (2) TMI 1497 - SUPREME COURT] . In the said case, the case of Respondents was that Show Cause Notice issued was contrary to circular issued by the CBEC. Hon ble Court observed that entertaining writ petition is not proper when alternative remedy under statute is available. The Hon ble Court in the said judgment therefore observed that the Respondents therein ought to have responded to the Show Cause Notice by placing material in support of their stand but at the same time, there was no reason to approach the High Court questioning the very Show Cause Notices. During the course of hearing, the Petitioner admitted that though he had adjusted its tax liability against input tax credit available in the electronic credit ledger, he has not paid interest against such delayed adjustment/payment - the disputed facts arising in the matter are required to be adjudicated by the Proper Officer. The Petitioner is at liberty to file his Show Cause reply and raise objections including jurisdictional issue. Petition disposed off. 2022 (3) TMI 165 Condonation of delay in filing the revocation application - Revocation of cancellation of registration of petitioner - petitioner had not furnished returns for a continuous period of six months - HELD THAT:- Having conceded by both the parties, the delay in invocation of proviso to sub-rule (1) of Rule 23 of the OGST Rules is condoned. The Petitioner is directed to deposit all the taxes, interest, penalty and late fee as may be due and comply with formalities. Upon such compliance, the Petitioner s application for revocation will be considered in accordance with law. Subject to the Petitioner complying with the above conditions, the department will open the portal to enable the Petitioner to file the GST returns. The writ petition is disposed of. 2022 (3) TMI 164 Seeking grant of Bail - issuing invoices only without actual supply of goods with the motive to earn benefits by fraudulent means - offences under Section 132(1)(b)(i) of CGST Act and Section 20 (xv) of the IGST Act - HELD THAT:- Though, there are serious allegations against the petitioners, but the same are required to be proved against them, in accordance with law, in order to secure their conviction, which is likely to take sometime. The offences, for which the complaint has been filed against the petitioners, attract punishment of imprisonment for a term which may extend to five years with fine. Petitioners are in custody since 21.7.2021. The investigation qua the petitioners has already been completed and, therefore, the complaint stands filed against them on 19.9.2021. Pretrial prolonged incarceration cannot be allowed as a matter of rule. No presumption of guilt can be attached against the petitioners as cardinal principle of criminal jurisprudence in our legal system is to presume innocence of accused till proved otherwise. The respondent has already made necessary recoveries and seizures of documents, including electronic records from the petitioners. It is not the case of the respondent that some more recoveries are to be affected from the petitioners. It is also not the case of the respondent, that petitioners had not cooperated with the investigation agency during investigation. The only apprehension of the respondent that in case of release of petitioners on bail the investigation underway in respect of the other persons may be hampered, can be taken care of by imposing appropriate and suitable conditions against the petitioners. Petitioners are ordered to be released on bail - Petition allowed. Income Tax 2022 (3) TMI 163 Reopening of assessment u/s 147 - whether the jurisdictional conditions to reopen the assessment were fulfilled? - Whether the assessee had incorrectly claimed the deduction under section 36(1)(viia)? - HELD THAT:- It would be inconceivable to assert that the assessee had not made a full disclosure of all the material facts, so far as the claim for deduction under section 36(1)(viia) of the Act, 1961. Through this prism, the reasonability of the belief formed by the AO is required to be appreciated. The trigger for entertaining the belief about the escapement of income is apparently withdrawal by the assessee of the claim for deduction under section 36(1)(viia) for the assessment year 2010-11. This stand of the assessee, it seems, made the revenue to entertain doubt as regards the classification of the branches by the assessee as rural branches for the purpose of deduction under section 36(1)(viia) for the preceding years as well. When the revenue voiced its concern, the petitioner, as the record indicates, revived the claim for deduction under section 36(1)(viia). We have delved into the matter in a greater detail to satisfy ourselves that the assessee has not had unjustified deduction. In the affidavit-in-reply, an endeavour was made to demonstrate that the random verification of the branches revealed that the assessee had incorrectly claimed as many as eight non-rural branches as rural branches (Paragraph No. 16 of the affidavit-in-reply). We have compared the said information with the list of branches furnished by the assessee along with the letter dated 26th November 2007, during the course of the original assessment. Except the branch at Palakkad, District Palakkad, Kerala, none of the rest seven branches was claimed by the assessee as rural branch for the assessment year 2006-07. We also notice that along with the annexure to the said letter, the assessee had furnished copies of the license issued by the RBI to open a branch at the rural centre, Chandranagar, in Palakkad District, Kerala. It seems that the respondents have considered the branch at the Palakkad District Headquarters in support of their claim that there was misclassification of the branch though, in fact, a rural branch was opened at Chandranagar in Palakkad District, Kerala. The last submission on behalf of the revenue that the petitioner had not assailed the reopening of the assessment for the assessment years 2007-08, 2008-09 and 2009-10 on the same ground and, eventually, orders were by the ITAT in the context of the final assessment orders post reopening of the assessment in respect of those assessment years, though appears alluring at the first blush, yet does not advance the cause of the revenue. Once, it is held that the jurisdictional condition for invoking the power under section 147 is not satisfied for a particular assessment year, the notice for reopening cannot be sustained. Then, it does not matter that the assessee did not assailed the notice for reopening in respect of preceding or succeeding years. The conspectus of the aforesaid consideration is that the impugned notice of reopening and the order on objections deserve to be quashed and set aside. - Decided in favour of assessee. 2022 (3) TMI 162 Disallowance towards purchase of land u/s 40A(3) - Cash payment exceeding permissible limit - submission made by the counsel for the appellant is that ₹ 20,00,000/- had to be paid in cash as the transaction had to be closed and the money was required to be paid on a Sunday, when the Bank was closed - HELD THAT:- Tribunal, having regard to the totality of facts, has, in fact, remanded the matter to the AO for enabling the appellant to satisfy the AO as to why the payments in cash had to be made on a Sunday, and why the provisions of Section 40A(3) of the Act would not apply in the appellant s case, when the land is reflected as a non current investment in the audited financial statements and is, consequently, not claimed as an expenditure in the Profit and Loss Account. We had asked the learned counsel for the appellant as to whether any agreement to sell was executed between the parties prior to the sale.However, counsel for the appellant was unable to answer our query. We had also asked the learned counsel for the appellant as to whether any copy of the sale deed has been placed on record. Learned counsel for the appellant says that the copy of three [3] sale deeds, which are in issue, have not been placed on record. The interest of the appellant is still intact as the Tribunal has remitted the matter to the AO. The appellant, in our view, as correctly held by the Tribunal, needs to satisfy the AO as to whether in the facts and circumstances of the case, the provisions of Section 40A(3) of the Act would apply. The aspect of immediacy of making payment on a Sunday [i.e., a Bank holiday] may also have to be addressed. No interference is called for with the order of the Tribunal. - Appeal dismissed. 2022 (3) TMI 154 Levy of penalty u/s. 271D - violation of the provisions of Section 269SS - taking or accepting loans/ deposits in cash beyond a specified limit - HELD THAT:- The entries are in hundreds with date and signatures of the partner of the assessee firm against each of them. It is not established that the amount represented specified sums,nor that the amount mentioned in hundreds in the entries was actually in lacs as interpreted by the Revenue. The presumption of receipts in lacs, though on the basis of an entry against which CHQ was mentioned and which matched with a bank entry the same day in lacs, is not corroborated by way of any evidence, be it in the form of asset or any other document found with the assessee representing its alleged business receipts. Further in the absence of any name against each entry it is not established that each entry related to receipts from a person. Also that each entry represented cash receipt has no basis. The entire case of the Revenue rests on interpreting the entries in a diary found during search as relating to cash receipts from customers, on the basis of one of the entry having CHQ mentioned against it matching with a bank entry the same day. Treating this entry to be representative of the rest of the entries, the Revenue held that the entries related to business receipts in lacs and in the absence of CHQ mentioned against the entry it was presumed to be receipts in cash. Though it does create a preponderance of probability of the entries being of the same color as the CHQ entry and which may be sufficient for making addition in quantum proceedings, but the same is not sufficient to strictly establish the violation of section 269SS of the Act, of the assessee having received amounts in cash exceeding ₹ 20,000/- from a person on account of sale of flats, so as to attract levy of penalty u/s 271D of the Act. Revenue having not clearly established the violation of provisions of section 269SS of the Act by the assessee ,its entire case resting on interpretation of entry in a diary found during search,it is not a fit case for levy of penalty u/s 271D - Decided in favour of assessee. 2022 (3) TMI 153 Correct head of income - interest income qualifies as Income from Other Sources or 'Income from Business or Profession - The assessee is a society registered under the under the Society Registration Act, 1960 with the object to augment and promote sports in the State of Gujarat - HELD THAT:- As relying on cases GUJARAT CRICKET ASSOCIATION [ 2019 (11) TMI 35 - GUJARAT HIGH COURT] ,THE BOMBAY PRESIDENCY GOLF CLUB [ 2016 (5) TMI 1179 - ITAT MUMBAI] ,THE INSTITUTE OF CHARTERED ACCOUNTANTS OF INDIA [ 2013 (7) TMI 205 - DELHI HIGH COURT] and case of ICAI [ 2011 (9) TMI 77 - DELHI HIGH COURT] it cannot be inferred that the interest income earned on deposit of surplus funds kept with GSFC Limited would qualify as income from business or profession . The assessee is admittedly not engaged in any business activity. The dominant/ sole object of the assessee is promotion of sports in the State of Gujarat. The Ld. AR of the assessee has not brought forth any argument or material to support his contention that he is engaged in any activity, the income from which may qualify as business income. The earning of interest on surplus funds kept with GSFC Limited is incidental to its dominant objective i.e. to encourage sports in the State of Gujarat, which we have concluded itself cannot qualify as a business activity. Therefore, in our considered view, interest income earned from surplus fund cannot qualify as income from business and profession . - Decided against assessee. Claim of depreciation against Interest Income - HELD THAT:- As noted above, the assessee in the present set of facts is not earning any business income and has earned only interest income which is assessable as income from other sources . Accordingly, in our view, depreciation as claimed by the assessee cannot be allowed. We accordingly uphold the order of Ld. CIT(A) and dismiss the appeal of the assessee in respect of ground no. 3. 2022 (3) TMI 152 Deduction u/s.54 - sale consideration received in installments has been re-invested in new property by the assessee, and also claimed deduction under section 54/54F - AO held that the assessee has made certain payments with respect to purchase of new flat after the due date of filing of return of income u/s.139 - HELD THAT:- Sub-section (4) of section 54/54F is attracted only to a case where the sale consideration is NOT utilized by the assessee either for purchase or for construction of a residential house. This sub-section 4 has NO application to a case, where the assessee invests the sale consideration derived from the transfer either in purchasing the property within one year or constructing the residential house within three years period as stipulated in Section 54F(1). In the present case the assessee though registered the old property as per Sale Deed dated 02-12-2014 but received the sale considerations only on 07-07-2015 and 12-10- 2015 respectively. The assessee also reinvested the sale considerations immediate on the receipt of the same which is well within 3 years period in case of construction of a residential house/flat. Thus the question of deposit in Capital Gains account does not arise in this case. Therefore, we set aside the orders of both the lower authorities and direct the AO to delete the disallowance made and allow the entire claim of deduction to the assessee. Thus, the ground of assessee appeal is allowed. 2022 (3) TMI 151 Assessment u/s 153A - Addition of undisclosed income on sales made to one party - estimation of undisclosed income on sales made to M/s. Hari Iron India Limited - entire premise of the AO is based on a statement of Sri Amit Gupta who was Chief Operating Officer of M/s. Hari Iron India Limited, who was distributor of various companies dealing with iron and steel bars including the assessee company - HELD THAT:- From the reading of entire assessment order as well as appellate order, it is an uncontroverted fact that during the course of search, no incriminating material or evidence was found in the course of search in the case of the assessee relating to any of the AYs i.e. 2009-10 to 2013-14. The assessment of these years had attained finality on the date of search on 20.01.2015. Thus, in terms of Second Proviso to section 153A, they cannot be reckoned as abated assessments. Now, it is well established law that especially the law laid down by Hon ble jurisdictional High Court in catena of judgments, no addition can be made over and above the assessee s income which had completed prior to the date of search without any incriminating material or documents found during the course of search. This has been categorically held so by the Hon ble jurisdictional High Court in the case of CIT vs. Kabul Chawla AND [ 2015 (9) TMI 80 - DELHI HIGH COURT] AND Meeta Gutgutia Prop. M/s. Ferns N Petals [ 2017 (5) TMI 1224 - DELHI HIGH COURT] - Thus additions which have been made by the AO right from AYs 2009-10 to 2013-14 are beyond the scope of assessment u/s 153A and, therefore, the same are directed to be deleted. Statement of third party - Inference drawn on the basis of the statement of a third party in a different search, the same cannot be considered to be an incriminating material found during the course of search in the case of assessee. It is not a case here that any incriminating statement of any of the Director or any of the employee of the assessee company was recorded u/s 132(4) based on which any adverse inference has been drawn, albeit it is a statement of different person unrelated to the assessee during the course of another search of a third party, M/s. Hari Iron India Limited. Thus, his statement solely cannot be the basis for any addition in the case of the assessee. Here in this case admittedly the assessee has been maintaining regular books of account and all statutory records under the sales-tax and excise laws and each and every entry of steel and iron has been recorded as well as the corresponding sales. AO was in possession of all the records including the books of account wherein he has neither found any defect or has rejected the books of account which can at least empower him to make any estimation of any profit. The entire manufacturing and trading account including the sales have not been rejected or commented upon. Therefore, in these circumstances, the sales cannot be estimated and consequently any GP or NP rate. Accordingly, all the additions made by the AO on account of undisclosed income on sales to M/s. Hari Iron India Limited in case of both the assessee companies are directed to be deleted. Addition on account of difference in stock found during the course of search - We are of the opinion that ld. CIT (A) should decide this issue clearly and assessee may substantiate this issue before the ld. CIT (A). Accordingly, this ground relating is remanded back to the file of the ld. CIT (A). Addition on undisclosed income on the sales made out of books on the information received from Excise Department for AY 2012-13 - First of all, it is an admitted fact that the assessment in AY 2012- 13 was not abated and this addition is not based on any incriminating document or seized material albeit it is information received from Excise Department during the course of assessment proceedings. Therefore, such an addition is beyond the scope of statement u/s 153A and is directed to be deleted. Disallowance of brought forward depreciation - We direct the AO to verify the claim of brought forward depreciation and allow the same in accordance with law after giving an opportunity of being heard to the assessee to substantiate the figures of brought forward depreciation. 2022 (3) TMI 161 Validity of order passed u/s 144A - Power of Joint Commissioner to issue directions in certain cases - whether the first respondent was bound to necessarily give direction to the second respondent under Section 144A - addition u/s 69 - cash recovered from the premises of Mr.Damodaran and Mrs.Vimala treated as undisclosed income of the petitioner - HELD THAT:- As ₹ 11.49 crores in cash was recovered on 01.04.2019 from the house of Mr.Damodaran and Mrs.Vimala Damodaran in packet with markings such as Alangayam, aPallikonda etc. with the marking of the Municipal Wards, falling under the Vellore Parliamentary Constituency from where the petitioner was contesting. The brother of Mrs.Vimala Damodaran namely, Mr.S.Srinivasan came forward and gave a voluntary statement dated 01.04.2019 and stated that the cash belonged to him for distribution to the Voters in the Vellore Parliamentary constituency to secure victory of the petitioner in the parliamentary election and that the amount was earned by him in his real estate business suggesting corrupt practice in the parliamentary election either by the petitioner or his party. The record indicate that Mr.S.Srinivasan has no documents to substantiate that he was a man of sufficient means and that the money was either earned by him from his real estate business or was given to him by the party sponsoring the petitioner to contest the election and that the former had given cash to him to corrupt the voters and indulge in corrupt electoral practice. The presumption under Section 132(4A)(i) and Section 292C of the IT Act, 1961 that the books of account, the documents, money, bullion or other valuable article or thing are or is found in the possession or control any person is a rebuttable presumption. Such a presumption under Section 132 (4A)(i) and Section 292C of the IT Act, 1961 can be drawn against Mr.Damodaran and Mrs.Vimala Damodaran from whose premises seizure of the cash was effected. Since preponderance of probability indicate that the seized cash was an undisclosed income of the petitioner and was kept at the residence of Mr.Damodaran and Mrs.Vimala Damodaran by the petitioner. These facts suggest that Mr.S.Srinivasan, Mr.Damodaran and Mrs.Vimala Damodaran are trusted person of the petitioner. Merely, because Mr.S.Srinivasan came forward and gave a sworn statement claiming ownership over seized money does not mean that the liability which can be fastened on the petitioner under the IT Act, 1961 can to be shifted on Mr.S.Srinivasan. Merely, because Mr.S.Srinivasan has filed application to settle case before the the Settlement Commission, by declaring the seized cash to his cash is of no relevance. The subsequent engineering of an application of settling the dispute before the settlement commission by Mr.S.Srinivasan appears to be a mere ploy, ruse to divert attention. It was filed to detract the assessment proceedings. The application under Section 144A of the IT Act itself appears to be an afterthought. Instead of giving attention to the show cause notice and participating in the adjudication, the petitioner appears to have been illadvised to venture out in filing the above application. Cash was not found under the control and the possession of the said Mr.S.Srinivasan. It was found in the residence of Mr.Damodaran and Mrs.Vimala Damodaran with packet markings as Alangayam, Pallikonda etc. with the marking of the Municipal Wards, falling under the Vellore Parliamentary Constituency from where the petitioner was contesting. The presumption under Sections 132(4A) and 292C of the IT Act though a rebuttable presumption, is to be presumed against the petitioner. Mere voluntary sworn statement on the same day by Mr.S.Srinivasan claiming that the seized cash were his, is not sufficient. Mr.S.Srinivasan has not shown himself to be a man of substantial means. On the other hand, the fact that the documents pertaining to the College/Trust of the Petitioner were found along with the seized cash as indicated above show that cash belonged to the petitioner which was not disclosed by the petitioner in his regular return. The power under Section 144A of the IT Act is to be exercised when such an Officer deems it expedient so to enable the assessing officer to complete assessment. In this case, the rejection was based on the report of the jurisdiction assessing officer which is quite damaging. Therefore, I do not find any reasons to interfere with the order rejecting the request of the petitioner under Section 144A of the IT Act as non speaking or suffering from non application of mind. Instead of defending himself in the Show Cause Notice proceedings, the petitioner attempted to divert the attention to prolong the longevity of the litigation both before the respondents and now before this Court. It was unwarranted. Considering the fact that the petitioner has enjoyed a temporary repreive during the pendency of these writ petitions, the recovery proceedings shall be kept in abeyance for a period of 60 days from the date of receipt of a copy of this order, provided the petitioner files such statutory appeal against the impugned assessment order dated 27.09.2021, within the time stipulated herein and an application under Section 220(6) of the Income Tax Act, 1961 before the second respondent herein. The second respondent shall endeavour to dispose the same preferably within 60 days from the date of receipt of a copy of this order. 2022 (3) TMI 150 Disallowance u/s 14A - HELD THAT:- In the present case, the assessee has made disallowance u/s 14A r.r.8D even though the assessee has not received any exempt income. We are of the view that it is also settled principle that the assessee is required to pay tax on true and correct income. The main contention of the Ld.Counsel for the assessee is that due to oversight the assessee made disallowance. The disallowance itself is contrary to law in the absence of exempt income. We found force in the argument of the assessee that in the absence of exempt income, the provisions of 14A r.w.r 8D is not applicable. It is settled issue that if the assessee has not received dividend income, section 14A r.w.r.8D of the Act cannot be made applicable in the absence of exempt income. Therefore, we do not find any infirmity in the order passed by the Ld.CIT(A). Disallowance of expenditure which is preliminary and capital in nature - as per CIT-A AO is not justified in disallowing the expenditure - HELD THAT:- As assessee has submitted that majority of the expenses are for pre-bid studies of road projects and investment maintenance charges was already disallowed by the assessee in its computation of income. CIT(A) considered all these aspects and rightly allowed the ground raised by the assessee. We are of the view that the Ld.CIT(A) rightly considered the nature of expenditure, therefore needs no interference. Accordingly, the ground raised by the revenue is dismissed. 2022 (3) TMI 149 Nature of receipt - Amount received towards carbon credit by excluding from the total income, as being in the nature of capital receipt - HELD THAT:- We noted that during the course of assessment proceedings before the AO, the assessee claimed that it had received a sum during the year towards carbon credit under Clean Development Mechanism (CDM) and incurred expenditure by way of registration fee. The assessee claimed that the amount should be excluded from the total business proceeds as the receipt is in the nature of capital and not revenue. The AO assessed the same as business income. Aggrieved, assessee preferred appeal before CIT(A) and the CIT(A) also confirmed the action of the AO. Aggrieved, assessee is in appeal before the Tribunal. We noted that this issue is covered in the favour of the assessee by the decision of Hon ble High Court of Madras in the casea of S.P. Spinning Mills Pvt. Ltd.[ 2021 (1) TMI 1081 - MADRAS HIGH COURT] CIT vs. Ambika Cotton Mills Ltd. [ 2021 (3) TMI 442 - MADRAS HIGH COURT] and by the decision of Co-ordinate Bench of this Tribunal in assessee s own case for the assessment year 2013-14. As the issue is squarely covered in assessee s own case we consistently following the same allow this appeal of the assessee. 2022 (3) TMI 148 Allowability of employees contribution towards PF and ESI and depositing the same in the government account before the due date of filing of return of income U/s 139(1) - whether the amendment brought to Section 36(1)(va) as well as 43B of the Act is applicable retrospective or from assessment year 2021-22 as it is specifically stated in the memorandum of Finance Bill, 2021? - HELD THAT:- As decided in M/S KOGTA FINANCIAL (INDIA) LTD. VERSUS CPC, BENGALURU. [ 2022 (1) TMI 250 - ITAT JAIPUR] there are express wordings in the said memorandum which says these amendments will take effect from 1st April, 2021 and will accordingly apply to assessment year 2021-22 and subsequent assessment years . In the instant case, the impugned assessment year is assessment year 2018-19 and therefore, the said amended provisions cannot be applied in the instant case. The addition by way of adjustment while processing the return of income u/s 143(1) so made by the CPC towards the deposit of the employees s contribution towards ESI and PF though paid before the due date of filing of return of income u/s 139(1) of the Act is hereby directed to be deleted - Appeal of the assessee is allowed. 2022 (3) TMI 147 Validity of jurisdiction framed by Addl. CIT, Range-7, Kolkata - proof of order passed u/s 127(1) of the Act transferring jurisdiction to Addl. CIT - HELD THAT:- The department to perform various functions, we observe that the Add. CIT is not an AO within the meaning as defined by reason of fact u/s 2(7A) of the Act. From the perusal of the definition of AO, we note that the Add. CIT can be an AO and can exercise power as the Assessing Officer under an order of the Central Board of Direct Taxes and subject to such conditions and restrictions as may be specified therein empowering Principal Chief Commissioner or Chief Commissioner or commissioner to issue orders in writing - We note that the revenue has failed to place before us any such order passed u/s 120(4)(b) and order u/s 127 of the Act post restricting of jurisdiction vide notification no. 2752(E) w.e.f. 15.11.2014 for transferring jurisdiction to Add. CIT Range 7 as the earlier notification has been superseded by the above notification. We find merit in the contentions of the ld. AR with regard to invalid jurisdiction being exercised by Add. CIT who passed the order without there being an order u/s 127 of the Act pursuant to order u/s 120(4)(b). The case of the assessee is squarely covered by the decision of the coordinate bench in DCIT vs M/s. Ganesh Realty Mall Development Pvt. Ltd.[ 2019 (1) TMI 1686 - ITAT KOLKATA] in which identical issue has been decided in favour of the assessee. 2022 (3) TMI 146 Disallowance u/s 40A(3) - whether payment would fall under Rule 6DD(k) of I.T. Rules? - HELD THAT:- Cash exceeding twenty thousand rupees on account of repairs and maintenance which includes payment on 12.10.2012 towards body making charges and towards altinator repairing works on 08.01.2013. However, going through the material facts and circumstances of the case, we find force in the contention of the assessee that the alleged amount was not paid in cash by the assessee but was paid by the driver acting as an agent of the assessee. Keeping in view all the facts and circumstances of the case as well as the exception provided under Rule 6DD(k) of the IT Rules and Relying on the decision of the coordinate bench in the case of M/s. Pramod Kumar Singh [ 2012 (6) TMI 914 - ITAT KOLKATA] , we are of the view that the disallowance made by the AO is not sustainable and, therefore, we set aside the orders of the Ld. CIT(A) and allow the ground raised by assessee challenging the disallowance u/s 40A(3) - Decided in favour of assessee. 2022 (3) TMI 145 Unexplained cash deposit - assessee is a senior citizen and is a widow - HELD THAT:- The cumulative cash withdrawal upto 08.11.2016 is of ₹ 53,76,500/- and the corresponding cash deposits upto 08.11.2016 is of ₹ 10,61,000/-. This means that as on 08.11.2016, the assessee had cash in hand of ₹ 43,15,500/- from the cash withdrawals made during the period 01.04.2016 to 08.11.2016. This fact is well proved with the copies of bank statements filed by the assessee and the same remains uncontroverted by the ld. D/R. Under these given facts the Revenue hardly has any case because immediately prior to deposit of the alleged cash sum of ₹ 16,00,500/- the assessee had cash in hand of ₹ 43,15,500/- which is sufficient enough to explain the source of alleged cash deposit. We, therefore, find merit in the contention of the ld. Counsel for the assessee and fail to find any merit in the finding of the CIT(A) and thus, hold that the assessee has duly explained the alleged cash deposit of ₹ 16,00,500/- and therefore, no addition is called for u/s 68 - We accordingly delete the addition and allow the grounds raised by the assessee challenging the addition for unexplained cash deposit - Decided in favour of assessee. 2022 (3) TMI 144 Disallowance of employee s and employer s contribution towards PF ESI being deposited after the due date as prescribed under the governing Act of PF ESI - HELD THAT:- Under these given facts where the alleged sum has been deposited before the due date of filing return of income u/s 139(1) of the Act whether disallow once u/s 36(1)(va) is called for and secondly whether the amendment brought in by Finance Act, 2021 by way of insertion of Explanation- 2 to Clause- va of Section 36(1) whether retrospective or prospective in nature, we find that this Tribunal in the case of Lumino Industries Ors.[ 2021 (11) TMI 926 - ITAT KOLKATA ] has elaborately dealt with this issue in light of the settled judicial precedence holding that no disallowance was called for u/s 36(1)(va) of the Act under the given facts and circumstances. - Decided in favour of the assessee. 2022 (3) TMI 143 Rectification of mistake u/s 154 - CIT(A) not allowing of deduction u/s 11 of the Act which are claimed to have been incurred for charitable purpose - HELD THAT:- We find that the assessee is a charitable Trust registered u/s 12AA of the Act since 06.07.1979 and the same is in force. There is no iota of evidence on record to dispute the fact that the assessee Trust is regularly carrying out charitable activities as per its objects for which it has been granted registration u/s 12AA of the Act. Against the gross income earned during the year at ₹ 11,60,122/-, the said Trust incurred an expenditure of ₹ 6,02,569/- for charitable purpose, it also set apart an amount of ₹ 1,71,463/- u/s 11(1)(a) of the Act for application to charitable or religious purposes in subsequent year and for doing the same, Form No. 10B has been filed. The deduction has also been claimed for ₹ 3,86,090/- u/s 11(1)(2) of the Act, for which Form No. 9A has been filed. The reason for denial of this deduction by the Revenue authorities was only on account of a mistake made by the assessee in filing the income tax return in ITR Form No. 7 by not filling the deduction amount in the prescribed column which resulted in denying the deduction by the Central Processing Centre (CPC). The said mistake has already been rectified by the assessee by filing the rectification on the income tax portal and submitting the corrected XML file on the income tax portal. The hard copy of the revised return/rectified return is placed on record in paper book at page 35-65 and after perusal of the same we find that the assessee has shown the respective amount of deduction claimed in the correct prescribed column. But even after filling the correct details, Central Processing Centre (CPC) has again rejected the claim without assigning any reason. In our view, the ld. CIT(A) erred in not deciding the issue on merit and exceeded its jurisdiction by directing the AO to examine the issue afresh. Thus we are of the considered view that the assessee being a charitable Trust registered u/s 12AA of the Act deserves to be allowed the deduction claimed u/s 11 - Decided in favour of assessee. 2022 (3) TMI 142 Disallowance of trading/business loss claimed on account of advance forfeited - HELD THAT:- The assessee used to purchase low silica high grade limestone from M/s. Ridhi Siddhi in the past. The assessee also entered into a sale and purchase contract on 14.12.2016 and certain terms and conditions were finalized. A copy of agreement is placed - In Clause 6.0 of this agreement a condition is mentioned as per which in the event of the buyer not purchasing the material, an amount of USD9772 (Indian ₹ 6,61,299/-) will be deducted out of the advance amount as commitment/incidental charges. We notice that the assessee gave certain orders for purchase of material but could not reach to a consensus for the discount on the purchases and the seller did not accept the proposal. Due to this reason, the assessee cancelled the contract and for doing this act the advance amount was forfeited. All these series of facts and looking to the gross turnover of the assessee company, we find merit in the contention of the ld. Counsel for the assessee that the alleged amount is purely a business loss which is incurred in the regular course of doing the business of purchase and sale. We are also satisfied that the alleged amount cannot be treated as capital advance as it was paid for purchasing raw material used by the cement industries. Under these given facts and circumstances, we are of the considered view that the ld. CIT(A) erred in denying the claim of advance forfeited as an expenditure. We direct the AO to allow this claim of the assessee. 2022 (3) TMI 141 Revision u/s 263 by CIT - delay in the depositing of employees contribution towards provident fund and ESIC - HELD THAT:- Hon ble Supreme Court in the case of Malabar Industries [ 2000 (2) TMI 10 - SUPREME COURT] held that this phrase i.e. prejudicial to the interest of the revenue has to be read in conjunction with an erroneous order passed by the AO. Their Lordships held that every loss of revenue as a consequence of an order of AO cannot be treated as prejudicial to the interest of the revenue. When the AO adopted one of the courses permissible in law and it has resulted in loss to the revenue, or where two views are possible and the AO has taken one view with which the CIT does not agree, it cannot be treated as an erroneous order prejudicial to the interest of the revenue unless the view taken by the Assessing Officer is unsustainable in law. Considering the uncontroverted factual details relating to deposit of employee contributions towards provident fund and ESIC before the due date of filing of return u/s 139(1) for the impugned year and the decision of Hon ble jurisdictional High Court in the case of Vijay Shree Ltd [ 2011 (9) TMI 30 - CALCUTTA HIGH COURT] fortifying the claim of the assessee, at the outset, we find that without going into the legal aspect of assessment order of the Ld. AO being erroneous in so far as it is prejudicial to the interest of the revenue, no prejudice is caused to the interest of the Revenue even if it is assumed that the order is erroneous. Presuming that the impugned order u/s 263 is upheld, the decision of Hon ble jurisdictional High Court in the case of Vijay Shree Ltd (supra) governs the assessment order arising from giving its effect on the treatment of allowability of claim for deposit of employee contributions towards provident fund and ESIC before the due date of filing of return u/s 139(1). We observe that where there is a delay in deposit of employees contribution to PF/ESIC as per the due date prescribed under the provisions of PF/ESIC Acts but the contribution is deposited before the due date of filing of return of income, no disallowance is called for u/s 36(1)(va) - Decided in favour of assessee. 2022 (3) TMI 140 Income accrued or deemend to accrue in India - Fees for technical services' under Article 12(5)(a) of the India-Netherlands tax treaty - amounts received by the Appellant under the Training and Computer Systems Agreement ('TCSA') on account of conducting core managerial training programs for managerial employees of the Indian hotels - assessee is a company incorporated in Netherlands and is a tax resident of Netherlands. The assessee is part of Marriott group engaged in conducting training programmes and providing access to various computers systems such as centralized reservation systems, property management systems and other systems to Marriott chain of hotels located worldwide - HELD THAT:- As decided in own case [ 2018 (6) TMI 605 - ITAT MUMBAI] CIT(A) loosing sight of the fact that as the assessee had neither granted any right of enjoyment of the brand Marriott to the Indian Hotels and thus was not in receipt of any royalty as provided in Article 12(4) of the India-Netherland tax treaty, thus the consideration received by it from the Indian Hotels for providing access to CRS, Property Management System and Other Systems, could not have been brought within the sweep of ancillary and subsidiary services under Article 12(5)(a). We thus, in terms of our aforesaid observations are of the considered view that as providing of access to CRS, Property Management Services and Other services could neither be held to be technical services, nor the same in terms of our aforesaid observations could have been characterised as ancillary and subsidiary services under Article 12(5)(a), hence the consideration received by the assessee for rendering the said services/facility could not be held as FTS in its hands. We thus, set aside the order of the CIT(A) holding that the consideration received by the assessee for providing of access to CRS, Property Management Services and Other Systems was chargeable as FTS in the hands of the assessee It is not in dispute that the facts prevailing in A.Yrs. 2009-10 [ 2018 (6) TMI 605 - ITAT MUMBAI] , 2011-12 and 2012-13 [ 2019 (8) TMI 1797 - ITAT MUMBAI ] are identical with the facts prevailing in A.Y. 2010-11 [ 2018 (6) TMI 605 - ITAT MUMBAI] as they form part of the same agreement and same nature of activities carried out by the assessee. Hence, we hold that the decision rendered by this Tribunal for A.Yrs. 2009-10 [ 2018 (6) TMI 605 - ITAT MUMBAI] , 2011-12 and 2012-13 as detailed shall apply mutatis mutandis to A.Y.2010-11 also. Accordingly, the ground Nos. 1-3 raised by the assessee are allowed. Seeking direction to the ld. AO for granting correct TDS credit to the assesse e - HELD THAT:- The facts relevant for this adjudication of this additional ground are already on record before the lower authorities and hence, this additional ground raised by the assessee is hereby admitted and the ld. AO is hereby directed to grant correct TDS credit in accordance with law. Accordingly, the ground No.10 raised by the assessee is allowed for statistical purposes. Seeking deduction for primary, secondary and higher education cess when tax is charged as per the Indo-Netherlands treaty - HELD THAT:- The facts relevant for this adjudication of this additional ground are already on record before the lower authorities and hence, this additional ground raised by the assessee is hereby admitted. We find that ultimately tax liability is determined by the ld. AO only as per the Indo-Netherlands Treaty @10%. Hence, there cannot be any levy of education cess on such tax when tax is determined under treaty provisions. This issue is no longer res integra in view of the decision of this Tribunal in assessee s own case for A.Y.2009-10 [ 2018 (6) TMI 605 - ITAT MUMBAI] wherein this Tribunal by placing reliance on the Co-ordinate Bench decision of the Mumbai Tribunal in the case of Capgemini SA vs. Dy. CIT (International Taxation) [ 2016 (7) TMI 712 - ITAT MUMBAI] had held that rate of tax provided in the tax treaty cannot be enhanced by including surcharge and education cess separately. Accordingly, the ground No.11 raised by the assessee vide additional ground is hereby allowed. 2022 (3) TMI 139 Addition u/s 94A - transactions with persons located in notified jurisdictional area - scope and ambit of section 94A of the Act inserted by the Finance Act 2011 w.e.f. 01.06.2011 - addition on account of removal of Cyprus as a notified jurisdictional area u/s 94A - As per AO not only the assessee had failed to prove creditworthiness of the cypriot entity but also he noticed that the said tax jurisdiction was covered as a notified jurisdictional area under the provisions of section 94A of the Act vide notification dt.01.11.2013 - HELD THAT:- The legislature has incorporated non-obstante clause(s) in section 94A both sub-sections (2) and (4) thereof to be applicable in case(s) of the specified transactions in former and receipt or credit of any sum from any person; respectfully. Hon ble apex court s landmark decision in Central Board of India Vs. State of Kerala [ 2009 (2) TMI 451 - SUPREME COURT] holds that a non-obstante clause is generally incorporated in a statute to give overriding effect to a particular section of the statute as a whole. Meaning thereby that section 68 of the Act requiring an assessee to discharge its onus of identity, genuineness and creditworthiness, could no more be invoked when the specified transactions in question pertain to a person (defined in sub-section 6 (i)) located in the notified jurisdictional area. We wish to make it clear that Cyprus had been included in the notified list w.e.f. 01.11.2014 but removed on 21.04.2017 with retrospective effect from the former date which is nowhere an issue at all. Whether the assessee s compulsorily convertible debentures fall under non-obstante clauses in sub-sections (2) to (4) of section 94A? - We notice with the able assistance of both the parties that such transactions are in the nature of borrowals only which have been duly covered under section 94A(2) wherein provisions of Chapter X are applicable than subs-section (4) exigible in case of receipt or credit of any sum from any person located in the notified jurisdictional area. We wish to observe here that even if the Revenue s stand is accepted that the assessee had failed to prove creditworthiness, it could at best invoke Chapter X of the Act wherein such a transaction is treated to have been executed between associated enterprise within the meaning of section 92A only and not under sub-section (4) of 94A in foregoing terms. We thus uphold the learned CIT(A) s directions deleting the impugned addition on account of removal of Cyprus as a notified jurisdictional area u/s 94A Now comes the equally important aspect in the Revenue s arguments that we ought to direct the assessee to prove the creditworthiness of the cypriot entity qua the impugned compulsorily convertible debentures sums in tune with the assessment findings. We note with the able assistance of both the parties that the CIT(A) has nowhere dealt with the Assessing Officer s detailed discussion holding the impugned CCDs to be a sham transaction whilst deleting the additions in issue made u/s 94A of the Act. The assessee s plea before us is that this entire sham transactions issue has become redundant once the CIT(A) holds section 94A itself as not applicable. Be that as it may, we deem it appropriate that the CIT(A) needs to examine and adjudicate the above stated sham transactions issue in light of all the relevant facts on record on account of his foregoing failure in the impugned first round.It is made clear that the assessee shall be very much at liberty to file additional evidence and raise all factual / legal plea(s) including exigibility of section 68, in consequential proceedings. 2022 (3) TMI 138 Legality of assessment u/s 147 - reopening the assessment merely on the basis of information from Investigation Wing - HELD THAT:- Since the Ld. CIT(A) has ignored or failed to adjudicate the legal issue of reopening of assessment; in the interest of justice and fair play we set aside the impugned order and restore the appeal back to the file of CIT(A) directing him to adjudicate the legal issue raised by way of additional grounds and to decide the same by passing a reasoned order in accordance with law. Needless to say that reasonable opportunity of being heard be provided to the appellant for representing its case; and the appellant is directed to be diligent and make its submissions so that the Ld. CIT(A) is able to expeditiously adjudicate the legal issue. Accordingly, the appeal of the assessee is allowed for statistical purposes. 2022 (3) TMI 137 Interest under section 244A - refund of any amount arises to the appellant out of advance/TDS/tax paid - HELD THAT:- As per section 244A of the Act, the assessee is entitled for interest on refund due from a particular period and except this, the assessee is not entitled for interest on interest, in case there is delay in refund payable to the assessee. This provision has been explained by the Hon'ble Supreme Court in the case of CIT Vs. Gujarat Flouro Chemicals [ 2013 (10) TMI 117 - SUPREME COURT] after considering its earlier judgement in the case of M/s.Sandwik Asia Ltd. vs. CIT [ 2006 (1) TMI 55 - SUPREME COURT] has very categorically held that the assessee is entitled only for interest provided under the Act for specified period, but not interest on interest while granting refund to the assessee u/s.244A.. Therefore, we are of the considered view that there is no merit in arguments taken by the counsel for the assessee that assessee is entitled for interest on interest while granting refund due to the assessee. Thus we are of the considered view that the assessee is not entitled for interest on interest u/s.244A of the Act, while granting refund due. The learned CIT(A), after considering relevant facts has rightly held that the assessee is not entitled for interest on interest u/s.244A of the Act. Hence, we are inclined to uphold findings of the learned CIT(A) and dismiss appeal filed by the assessee. 2022 (3) TMI 136 Reassessment order u/s 147 - Eligible reasons for reopen the assessment - distinction between the reason to suspect and the reason to believe - default in valuation of stock - HELD THAT:- It is important here to note that though the main reason for reopening was in respect of purported accommodation benefit assessee received, (details not discussed because it is evident from a perusal of the reasons recorded supra). It is noted from the reassessment order pursuant to reopen that the AO has not made any addition on this score. In other words no adverse view has been taken by the AO in respect of allegation of accommodation benefit as alleged in the reasons recorded to re-open. Therefore, it is seen that AO dropped this issue while framing reassessment after being satisfied with the explanation given by the assessee and after verifications. So this issue loses its significance and need to be ignored for further adjudication of the legal issue as if it was not part of the reasons recorded by the AO to justify re-opening the assessment of the assessee. The issue regarding valuation of stock was duly enquired into by the earlier AO in the original assessment proceedings which culminated in the assessment order u/s 143(3) Since the AO has reopened this issue (valuation of stock) merely on perusal of the assessment records and not on the basis of any fresh materials, the Ld. CIT(A) has rightly opined that action of the AO to examine this issue again by resorting to re-opening, can at best to be termed as change of opinion . And it is settled position of law that change of opinion cannot confer jurisdiction on the AO to reopen the duly completed assessment u/s 143(3) of the Act. The reason is that the AO does not enjoy the power of review. Therefore in the present case it is clear that the action of the present AO tantamount to review the action of the earlier AO who has accepted the valuation of stock in his scrutiny assessment u/s 143(3) of the Act dated 16.03.2015. Therefore, the present AO lacks jurisdiction u/s 147 of the Act to reopen the completed assessment u/s 143(3) of the Act dated 16.03.2015 merely on change of opinion . In the light of the aforesaid discussion, we hold that the Ld. CIT(A) has rightly appreciated the contentions raised by the assessee regarding the legal ground raised by the assessee against the validity of the reopening and has rightly held the action of the AO to be bad in law - Decided in favour of assessee. 2022 (3) TMI 135 Addition of depreciation - assessee has not filed any appeal against the order passed u/s 143(1) as well as against the assessment framed u/s 143(3) and thus the right of the assessee got forfeited - CIT-A deleted the addition - HELD THAT:- We find that the Ld. CIT(A) has correctly allowed the appeal of the assessee by directing the AO to rectify the mistake which has resulted from denial of depreciation to the assessee. We also note that the AO while passing the original assessment as well as assessment in the set aside proceedings has taken wrong figure of total income declared as per return of income filed on 25.09.2010 i.e. ₹ 18,51,900/- as against the correct figure of ₹ 3,96,310/-. In view of this, we do not find any infirmity in the order of CIT and accordingly same is hereby upheld by dismissing ground no. 1 of the revenue s appeal. Unexplained revenue receipts - assessee has introduced cash out of undisclosed source of income in the guise of business income - CIT-A deleted the addition - HELD THAT:-We find that the Ld. CIT(A) has duly considered all the facts on record including correspondences from various parties who have made payments to the assessee on account of works carried out during the year. In the case of HCC Ltd., the said company has given contradictory replies which cannot be treated as reliable. Ld. CIT(A) also noted that the payment has been received from HCC Ltd. By referring to the payment memo of HCC Ltd. which demonstrates the payment by HCC in excess payment than reported by HCC Ltd. In response to reply filed to notice issued u/s 133(6) of the Act. Therefore, the revenue reported by the assessee cannot be treated as unexplained revenue on the basis incorrect and contradictory evidences filed by HCC Ltd. CIT(A) noted that the assessee has accounted for the revenue which inter alia included security deposit also. Similarly the assessee has received payments which have been duly accounted for and a finding of facts has been given by the ld CIT(A) to thus effect. Besides the assessee has reported a receipts as revenue arising from small works contracts which were not liable for deduction of tax at source u/s 194C of the Act and therefore not reportable in form 26AS. The Ld. CIT(A) also noted that there is no cash deposits in the bank account and, therefore, no adverse information can be drawn - CIT-A estimated the profit @ 8% on small contracts of ₹ 15,96,701/- as suppression of profit cannot be ruled out and thus sustained the addition to the tune of ₹ 1,27,736/-. Taking all these facts into consideration in totality, we do not find any infirmity in the order of the Ld. CIT(A) - Decided against revenue. Undisclosed bills receivable during the year - HELD THAT:- CIT(A) allowed the appeal of the assessee by giving a finding of facts that that ₹ 1,22,73,108/- as calculated by the AO is in fact is part of opening debtors which have also considered while framing the assessment for A.Y. 2009-10 and there is no closing debtors for the current years. The Ld. CIT(A) also referred to the replies received from various parties namely HCC, Coal Mines and OCC Ltd. and recorded a finding that all these balances were already considered in the opening debtors which have also been duly shown in the books of accounts of the assessee. We find that the AO has factually committed a mistake as making the addition on account of receivables which have in fact been recorded by the assessee in his books of accounts in A.Y. 2009-10. We also not that the ld CIT(A) has recorded a finding to this effect while allowing the appeal of the assessee on this ground. Decided against revenue. 2022 (3) TMI 134 Deduction u/s 36(1)(viia) - assessee calculated deduction based on Aggregate Average Rural Advances (AAA) computed as per Rule 6ABA of the Income-tax Rules, 1962 - AO held that the deduction should be restricted to actual provision made in the books - A.O. disallowed the entire deduction u/s 36(1)(viia) by holding that the sum is debited to the profit and loss account and for income tax computation, the same is added back as it is only a provision which is not an allowable deduction - HELD THAT:- It has been fairly admitted by the learned AR that the issue in question is covered against the assessee by the order of the Tribunal in assessee s own case for assessment year 2009-2010 [ 2014 (6) TMI 1052 - ITAT BANGALORE] Deduction u/s 36(1)(vii) - assessee-bank had written off bad debts out of which debts written off by rural branches was adjusted against the provision claimed u/s 36(1 )(viia) and balance was claimed as deduction u/s 36(1 )(vii) - HELD THAT:- We notice that the CIT(A) had expressed the view that provision allowed u/s 36(1)(viia) of the Act would apply to non-rural advances also. An identical issue has been examined by the Hyderabad Bench of the ITAT in the case of State Bank of Hyderabad [ 2015 (8) TMI 836 - ITAT HYDERABAD] wherein the Tribunal had not accepted the above said view expressed by the CIT(A). The Bangalore Bench of the Tribunal in assessee s own case for assessment year 2013-2014 [ 2022 (1) TMI 124 - ITAT BANGALORE] by following the Hyderabad Bench order of the Tribunal in the case of State Bank of Hyderabad (supra), had set aside the view expressed by the CIT(A) that proviso to section 36(1)(vii) which requires adjustment of bad debts against the provisions allowed u/s 36(1)(viia) would apply to non-rural advances also.nce, we direct the A.O. to delete the disallowance made by the CIT(A). It is ordered accordingly. Applicability of provisions of Section 115JB to assessee bank - HELD THAT:- The Tribunal in assessee s own case for assessment year 2013-2014 [ 2022 (1) TMI 124 - ITAT BANGALORE] had restored the issue to the files of the CIT(A). The CIT(A) was directed to examine whether the assessee being a banking company would be liable for book profits u/s 115JB - Thus we restore this issue to the files of the CIT(A). Disallowance u/s 14A r.w.r. 8D - HELD THAT:- A perusal of the assessment order, it is clear that the A.O. has recorded the satisfaction and has rejected the assessee s disallowance u/s 14A of the Act while filing the return of income (the satisfaction can be inferred indirectly). The learned AR also fairly admitted that the matter can be restored to the files of the CIT(A) for de novo consideration. The Tribunal in assessee s own case for assessment year 2013-2014 had restored the issue of disallowance u/s 14A of the Act to the files of the CIT(A). By following the co-ordinate Bench order of the Tribunal in assessee s own case, we restore the issue to the files of the CIT(A). Addition u/s 40(a)(ia) - Non deduction of TDS - amount paid to NPCI as charges towards using of ATM of other banks - HELD THAT:- The Tribunal on identical facts in assessee s own case for assessment year 2013-2014 had held that the assessee is not liable for TDS, and hence, the provisions of section 40(a)(ia) of the Act does not have application in respect of payments made to NPCI - we confirm the CIT(A) s order and delete the disallowance made by the A.O. by invoking the provisions of section 40(a)(ia) of the Act. 2022 (3) TMI 133 Disallowance of 20% of depreciation on car on the ground that the possibility of usage of car for personal purpose - Non considering the revised return filed by the assessee for rectifying the mistake in claim of depreciation - HELD THAT:- Admittedly, original return filed on 30.03.2013 was belated and as per Sec.139(5) of the Act, if any person having furnished a return under Sub-Sec. (1) or Sub- Sec.(4) discovers any omission or any wrong statement therein, he may furnish revised return at any time before the end of the relevant AY or before completion of the assessment, whichever is earlier. In this case, the original return was not filed under Sub-Sec.(1) or Sub-Sec.(4) and thus, the belated return filed by the assessee is an invalid return. Therefore, the AO is not bound to consider invalid return. Hence, we are of the considered view that there is no error in the reasons given by the AO in not considering the revised return filed by the assessee for rectifying the mistake in claim of depreciation. Accordingly, we reject the ground taken by the assessee. Computation of long term capital gains derived from transfer of property in pursuant to JDA - ownership of property by three co-owners and their respective share in right and interest in the property - HELD THAT:- Since, the assessee has 42.5% share in the property, the AO is right in considering 42.5% of consideration in the hands of the assessee for the purpose of computation of long term capital gains as a result of transfer of property in pursuant to JDA. The arguments of the assessee that, he had received consideration separately, as specified in the JDA, we find that receipt of entire non-refundable deposit by the assessee s father and one flat each by the assessee and his wife is an internal arrangement and which is nothing to do with computation of capital gains by adopting respective share of full value of consideration. As per law, when a property transferred, consideration received or accrued as a result of transfer should be taken into account according to their share in the property, but not as per the internal arrangement between the parties. Hence, the arguments of the assessee is rejected. Computation of capital gain - Admittedly, the assessee has transferred 50% of UDS in the property in favour of the developer and the remaining 50% of the UDS is with the land owners. Therefore, when 50% UDS only has been transferred in favour of the developer, then the cost of acquisition in respect of 50% UDS should be considered for the purpose of determining the cost of acquisition in the hands of the assessee. Therefore, 50% of the FMV of the property comes to ₹ 2 lakhs. Out of which, the assessee s share at 42.5%, works out to ₹ 85,000/-. Therefore, the AO should adopt ₹ 85,000/- cost of acquisition in the hands of the assessee and further, should allow the benefit of indexation from the year 01.04.1981, because as per the provisions of Sec.49(1) read with Explanation (iii) below sec.48 of the Act, when a property is owned by the assessee by anyone of the modes specified therein, then the benefit of indexation should be allowed from the date when the previous owner held the asset. In this case, the assessee has inherited property from his grandfather by one of the mode specified u/s.49(1) of the Act and thus, he is entitled benefit of indexation from the date his grandfather held the property i.e. from the year 1962. Since, base year is 1981-82 for computing the benefit of cost of acquisition, the AO is directed to adopt the cost of acquisition as arrived at herein above and allow the benefit of indexation from the year 1981-82. Benefit of deduction u/s.54 - We ourselves do not subscribe to the reasons given by the AO to allow exemption u/s.54 of the Act to the extent of 42.5% of cost of construction of two flats, because what was invested by the assessee in new asset is cost of one flat, which is at ₹ 1,76,60,525/-. Although, the AO is correct in principle to allow the benefit of exemption u/s.54 of the Act to the extent of 42.5% share of the assessee, because one flat is registered in the name of the assessee, the benefit of exemption should be allowed to the extent of cost of one flat which is at ₹ 1,76,60,525/-. Therefore, we direct the AO to allow deduction u/s.54 of the Act to the extent of cost of one flat which is at ₹ 1,76,60,525/-. To sum up, the AO is directed to re-compute the long term capital gains derived from transfer of property in pursuant to JDA in terms of our observation given herein above. 2022 (3) TMI 160 Power to transfer cases u/s 127 - transfer from Bhopal to Hyderabad - Revenue filed preliminary submission on behalf of respondents along with certain correspondences between the transferring and the transferee authority in support of his contention that there was agreement between both the authorities before passing of impugned order of transfer - As in the show cause notice that the PAN of the petitioner which is presently at Bhopal is proposed to be centralized by the Pr. CIT (Central), Hyderabad and, therefore, if petitioner has any objection then he may say so - HELD THAT:- As day light that petitioner was though afforded an opportunity of being heard by issuance of the aforesaid show cause notice dated 16.07.2021 (Annexure P/3) but the reason assigned in the show-cause notice for transfer was not the same as assigned in the impugned order of transfer. Thus, this Court has to consider as to whether the variance in the reason assigned in the show-cause notice and the impugned order of transfer can be of any assistance to the petitioner or not. The clause of reasonable opportunity engrafted in any statutory provision is intended to afford opportunity of being heard to a person against whom an adverse decision is likely to be taken. Meaning thereby that the reasons for proposed transfer of a case are to be informed to the affected person or the affected person should be in the knowledge of the actual reason of the intended transfer. In the instant case, the variance of reasons assigned by the Revenue in the show cause notice and the impugned order of transfer ostensibly reveals breach of the reasonable opportunity clause. However, if things are scrutinized minutely, especially contents of para-2 of the reply of petitioner to the show cause notice, it is vivid that petitioner knew about the search being conducted against the principal contractors i.e. M/s HES Infra Pvt. Ltd. and M/s Mantena Constructions Pvt. Ltd. with whom petitioner's firm had close business sub-contracts. Thus, the petitioner was well aware of the fact that the transfer of his case is taking place in public interest to ensure smooth and uninterrupted search operation being conducted by the Revenue which is only possible when records of the principal contractors and the sub-contractor (petitioner) are at the same place. Consequently, as a necessary fallout of the aforesaid discussion, the ground of ostensible variance between the reason assigned for transfer in the show-cause notice and the impugned order of transfer does not actually exist in substance and essentiality. The simple reason being that petitioner knew that the case is being transferred for consolidating the records of the principal contractors and the sub-contractor (petitioner) at one place (Hyderabad). The principle of audi alteram partem thus stands complied with by implication. The principles of natural justice cannot be applied mechanically. It is trite law that the principle of natural justice (audi alteram partem) is to be applied in each case depending upon the facts and circumstances and the compelling situations. Public interest is one of those compelling factors which can absolve following of audi alteram partem principle as is the case herein where consolidation of records of principal contractors and subcontractor at Hyderabad was necessary and in public interest for a proper and lawful search operation. This case is an example of the paramount public interest of facilitating smooth and effective search operation being conducted in larger public interest of ensuring increase in revenue by striking at tax evasion.From the aforesaid discussion, this Court is not impressed with any of the grounds raised by petitioner. 2022 (3) TMI 132 Delayed deposit of employees contribution to PF and ESI u/s 36(1)(va) read with Section 2(24)(x) - HELD THAT:- We find that the issue is covered in favour of the assessee as the assessment year involved is AY 2017-18 and the Explanation-5 inserted by Finance Act, 2021 to section 43B w.e.f. 01.04.2021 is not applicable to the assessment year under consideration. We do not accept the Ld. CIT(A) s stand denying the claim of assessee since assessee delayed the employees contribution of EPF ESI fund and as per the binding decision of the Hon ble High Court in Vijayshree Ltd. [ 2011 (9) TMI 30 - CALCUTTA HIGH COURT ] u/s 36(1)(va) of the Act since assessee had deposited the employees contribution before filing of Return of Income. Therefore, the assessee succeeds and we allow the appeal of the assessee. 2022 (3) TMI 131 Assessment u/s 153A - Addition u/s. 68 - share application money introduced during the year - HELD THAT:- As the impugned addition is devoid of any incriminating material found at the time of search respectfully following the findings of the case KABUL CHAWLA [ 2015 (9) TMI 80 - DELHI HIGH COURT] , MEETA GUTGUTIA PROP. M/S. FERNS N PETALS [ 2017 (5) TMI 1224 - DELHI HIGH COURT] and SINHGAD TECHNICAL EDUCATION SOCIETY [ 2017 (8) TMI 1298 - SUPREME COURT] - Decided in favour of assessee. 2022 (3) TMI 130 Disallowance on account of payment of commission for obtaining supply order from government agencies - assessee had shown commission expenditure to only increase expenditure for reducing the actual profit of the assessee it is not allowable as per Income-tax Act - CIT-A deleted the addition - HELD THAT:- AO has disallowed the deduction with the reasoning that there cannot be any middleman for procurement of orders for Govt. supply. But the Ld. AO has not considered the factual submissions made by assessee. The assessee has submitted complete details including PANs of the agents to whom the commission was paid, the supporting vouchers and account confirmations to the Ld. AO and also filed the copies of the same in the Paper-Book. The assessee has also deducted TDS wherever applicable. The assessee has also submitted a detailed note on various tasks done by the commission agents and those tasks are clearly narrated by Ld. CIT(A) also in his order. CIT(A) has considered all facts in detail and being satisfied, deleted the disallowance made by Ld. AO. We do not find any infirmity in the order of Ld. CIT(A). - Decided in favour of assessee. 2022 (3) TMI 129 TDS u/s 194C - reimbursement of customs duty charges and other charges which are incurred by agents on behalf of the assessee - As argued assessee had incurred the transportation/freight charges and the assessee had only reimbursed the same i.e. freight/transport charges incurred by them was given back to the agents - HELD THAT:- As the assessee pursuant to the AO s query has categorically stated that the payment was in fact reimbursement since the same was paid by the agents on behalf of the assessee, and the assessee had in turn reimbursed the same to the agents and booked the same as expenses in its book. It is noted that the AO failed to contradict the explanation given by the assessee that the payments (freight charges) were paid by the agents on behalf of the assessee and that the assessee has only reimbursed the same to the agents. Since this fact could not be contradicted even during the hearing also we are inclined to allow this ground of appeal of the assessee by relying on the ratio of the decision given by the Tribunal in Satyendra Jhunjhunwala [ 2011 (11) TMI 703 - ITAT KOLKATA] . Estimation of profits - method of estimating/computing the profits - profits arising out of sale and purchase of tea, profits arising out of tea manufacture out of bought leave and profit arising out tea manufacture out of home grown leaves - HELD THAT:- In the light of the aforesaid decision of the Hon ble Supreme Court in Radhasoami Satsang [ 1991 (11) TMI 2 - SUPREME COURT] find force in the submission of the Ld. AR that since for decades assessee has been computing its profits from the aforesaid three sources which has been accepted even in several scrutiny proceedings and according to the Ld. AR, there is no change in facts and law and that the department had accepted the estimated income of the assessee from the three sources. In such a scenario, according to him, the AO ought not to have disturbed the estimation of income made by the assessee without the AO pointing out the deviation or changes if any in the facts or law. According to this Tribunal if the facts permeating in the earlier years are identical/same and the department has accepted the same in the earlier years even in scrutiny proceedings, then the AO ought not to have disturbed the estimation made in this assessment year without pointing out changes/deviation in the facts or law while computing the income of the assessee from all the three sources - we set aside the order of the Ld. CIT(A) and remand the issue back to the file of AO to de novo pass the order on this issue based on the observation (supra) and as per the Hon ble Supreme Court in Radhasoami Satsang (supra). 2022 (3) TMI 128 Exemption u/s 11 denied - Registration u/s. 12A - According to assessee since it was having registration u/s. 12A of the Act from 16.11.2015, so according to it, it should get the benefit of section 11 HELD THAT:- It is undisputed that due to late receipt of the order from Ld. CIT(E) granting Section 12A registration the assessee could not mention the same in its return of Income. Therefore that omission of fact cannot be the reason for not giving the benefit u/s. 11/12/13 of the Act. Since the assessee has been granted registration u/s. 12A of the Act with effect from 16.11.2015 i.e. much before the return of income was in fact filed, according to me the assessee is entitled to the benefit u/s. 11/12/13 of the Act unless the AO during scrutiny is able to find out that there is misrepresentation in respect of its claim of voluntary donation/application of its income etc. It has to be borne in mind that once section 12A registration has been granted to an assessee, then income has to be computed under Chapter III of the Act. With this caveat/observation, we find that there was a mistake apparent on the face of the record and, therefore, we allow the appeal of the assessee and direct the AO to grant benefits u/s. 11/12/13 2022 (3) TMI 127 Addition u/s 69A - large cash deposit on the bank account during the year - Hon ble Prime Minister/Finance Minister in the Parliament has given assurance that during the demonetization period, that if a housewife deposits up to an amount of ₹ 2.50 Lacs, then the same should not be scrutinized - HELD THAT:- This Tribunal (Agra) in the case of Smt. Uma Agrawal vs. ITO. [ 2021 (6) TMI 712 - ITAT AGRA] has held that as per of the CBDT Circular instruction no. 03/2017 dated 21.12.2017 and the assurance given by the Hon ble PM in the floor of the Parliament which has been discussed at para 12 of this decision (Smt. Uma Agrawal supra) has held that if a house wife deposited up to ₹ 2.50 lacs in her bank account (and in case of senior citizens aged above 70 years the upper limit of ₹ 5 lacs) during demonetization period then the same should not be scrutinized and has to be accepted. - Decided in favour of assessee. 2022 (3) TMI 126 Disallowance of deduction u/s 80P in respect of storage income derived from CAP storage - HELD THAT:- There is no specific definition of godown and warehouse prescribed in Income-tax Act, 1961. We also observe that section 80P does not state in specific terms that there must be a structure of permanent nature. What section 80P requires is only godown or warehouse . As noted earlier, the Ld. A/R has made a considerable submission on the definition of warehouse prescribed in the laws governing the development and regulation of warehousing, namely, Section 2(s) of The Warehousing (Development and Regulation) Act, 2007 and Section 2(d) of The Madhya Pradesh Agricultural Warehouse Act, 1947. We have carefully considered these definitions and observe that even a protected place or protected enclosure used for the purpose of storage of commodities, is also a warehouse CAP storage is a protected place for storage of commodities approved by the statutory Orders. In view of these factual submissions and legal position, we feel that the CAP storage must be held to be a warehouse for the purpose of section 80P and we hold so. At this stage, we also note that the section 80P is a beneficial provision and the purpose is to incentivize the warehousing activity of co-operative societies. Therefore, the interpretation of section 80P must be liberal so as to advance the avowed objective. Taking into account all these aspects, we are persuaded to conclude that the income from letting of CAP storage derived by the assessee is eligible for deduction u/s 80P and there is no justification in denying the same to the assessee. Therefore, we delete the disallowance made by lower authorities. This ground is, therefore, allowed. Disallowance of claim of deduction u/s 80P on account of depreciation (protective) - HELD THAT:- We observe that the depreciation disallowance of ₹ 1,63,23,529/- has been fully deleted by the Ld. CIT(A) and this deletion has already attained finality as there is no appeal or cross-objection from Revenue contesting this. Regarding the disallowance out of deduction u/s 80P, we have already deleted the same in preceding paras. Thus both of the disputes, namely the disallowance of depreciation u/s 32 and disallowance of deduction u/s 80P made by Ld. AO stand fully settled in favour of the assessee at this stage. Being so we feel that the issue of protective disallowance of deduction u/s 80P on account of consequential effect of depreciation-disallowance, does not survive further. Appeal of assessee is partly allowed. 2022 (3) TMI 159 Exemption u/s 11 - cancellation of registration under Section 12AA(3) based on money laundering activities carried out by the assessee trust - Tribunal quashing the order for cancellation of registration AND holding that there is no allegations in the order of the Commissioner of Income Tax (Exemption), that the activities of the trust are not genuine or that activities are not carried out in accordance with the object of the trust - HELD THAT:- Tribunal found that there is no evidence on record to show any connection between the assessee and the brokers and in the absence of any evidence it is not possible to come to any conclusion that the assessee indulged in money laundering and the donation as received by them was a bogus donation. The tribunal also noted that the facts of the assessee s case were identical to that of the case in Sri Mayapur Dham Pilgrim and Visitors Trust - tribunal noted that the CIT(E) did not dispute the fact that the assessee was running an educational institution in the State of Haryana imparting education to 2993 students and during the year 2013-14 they have received donation of ₹ 7,71,02,000/- from 172 parties which were placed in the form of paper book before the tribunal. Further, the tribunal held that CIT(E) has not doubted the genuineness of the other donations except for two parties. With regard to the genuineness of the activities of the assessee, the tribunal noted that the assessee was catering to the need for high quality English medium school for around 100 villages at Bahal and they have ventured into the field technical education for establishing an engineering college apart from running fully free school since 2010 where under privileged students of the society are imparted free education. That apart, the tribunal also noted that the CIT(E) has not doubted the charitable activities done by the assessee trust either to be not genuine or not being carried on in accordance with the objects for which the trust was formed. - Decided against revenue. 2022 (3) TMI 125 Penalty levied u/s 271(1)(c) - deduction of LTCG u/s 54F - HELD THAT:- LTCG was disallowed by Assessing Officer by taking view that in the balance-sheet of assessee, the assessee owned more than one residential flat. It is further matter of recorded that disallowance of capital gains was upheld by CIT(A) and on further appeal again upheld by Hon'ble Tribunal. Before us, the assessee, besides the other submissions, submits before us that assessee computed LTCG after due deliberation and on legal advice and the same is not accepted by the Revenue authorities, the assessee cannot subject to levy of penalty under section 271(1)(c), we find merit in the submission of Ld. AR of the assessee. The assessee acted in bona fide belief and made the claim is not acceptable due to any reason and was disallowed the same cannot be subject to levy of penalty under section 271(1)(c) . We are of the constrained view that if the claim of assessee for deduction of LTCG was not found admissible for deduction under section 54F, the assessee cannot be subject to levy of penalty under section 271(1)(c). Thus, we direct the AO to delete the entire penalty. - Decided in favour of assessee. 2022 (3) TMI 158 Proceedings under Section 132 - Unaccounted income not been reported to tax - permit the petitioner to seek custody of the seized assets ie., cash of ₹ 76,02,010/- - person entitled to seize and to have custody of the property in the shape of undisclosed income - complainant submitted that though the seized amount was not disclosed to the Income Tax Authority and when the Income Tax Authorities initiated proceedings under Section 132 of the Act, they are entitled for the cash only after completion of the assessment proceedings - HELD THAT:- Admittedly, the Income Tax Authority initiated proceedings under Section 132 of the Act and issued summons under Section 131(1A) of the Act and in response, he appeared for enquiry and his statement was recorded under Section 131 of the Act on 19.04.2021. In the statement, the complainant admitted that the cash belonged to him and it is his unaccounted income which has not been reported to tax. As rightly pointed out by the learned counsel for the complainant, the Income Tax Authority initiated proceedings under Section 132 of the Act as against the complainant for non-disclosure of the income to the tune of ₹ 76,02,010/- and the said proceeding is pending. Once the assessment procedure have become final and concluded, the Income Tax Authority is entitled to get the portion of the amount due and recoverable from the complainant. In the judgment relied upon by the Income Tax Authority reported in Babu Rao Vs. the Inspector of Police [ 1990 (11) TMI 82 - MADRAS HIGH COURT ] already the learned Judicial Magistrate released the cash in favour of the Income Tax Authority and the same was challenged by the owner of the cash and the same was dismissed saying that the Income Tax Authorities, in the eye of law, can be construed as the person entitled to seize and to have custody of the property in the shape of undisclosed income. Whereas in the case on hand, the Income Tax Authority did not file any petition under Section 451 of Cr.P.C for return of cash. The complainant filed a petition for return of cash and the same was allowed and imposed conditions. The complainant challenging the conditions imposed by the learned Judicial Magistrate No.1, Padmanabhapuram, filed Crl.M.P.No.9990 of 2021 in Crl.M.P.No. 1494 of 2021. Therefore, the above Judgment cited by the learned counsel for the Income Tax Authority is not helpful to the case on hand. Further, the complainant is not entitled to have custody of the cash, since the Income Tax Authority already initiated proceedings under Section 132 of the Act as against the complainant. The order passed on the file of the learned Judicial Magistrate No.1, Padmanabhapuram is set aside. The property, namely, the cash of ₹ 76,02,010/- deposited in R.P.No.18 of 2021 in Crime on the file of the second respondent police will have to be remained in the custody of the learned Judicial Magistrate No.1, Padmanabhapuram, pending finalization of the assessment proceedings raised by the Income Tax Authority. The learned Judicial Magistrate No.1, Padmanabhapuram, is directed to deposit the cash property in any one of the Nationalized Bank in the form of fixed deposit. After completing the assessment proceedings, the Income Tax Authority is at liberty to approach the learned Judicial Magistrate No.1, Padmanabhapuram to release the portion of the amount due recoverable from the complainant. 2022 (3) TMI 124 Disallowance of employees' contribution made to the respective funds of the Government under PF ESI Act - assessee has not remitted the employees' contribution on the due date as prescribed by the PF ESI Act, the contribution made belatedly cannot be allowed - HELD THAT:- As relying on LUMINO INDUSTRIES LTD [ 2021 (11) TMI 926 - ITAT KOLKATA] we direct the AO to allow the claim of deduction in respect of employees contribution shares towards ESI, PF, by the assessee before the due date of filing of return u/s. 139(1) we are inclined to allow the appeal of the assessee and direct the A.O. to delete the addition and hold that the Amendment brought in Finance Act 2021 w.e.f. 01.04.2021 by inserting an Explanation to section 36(1)(va) and section 43B of the Act is prospective in nature in nature and would apply from AY 2021-22 onwards and, therefore, the amendment is not applicable to this assessment year (Assessment Year 2018-19) under consideration. - Decided in favour of assessee. 2022 (3) TMI 123 Deduction u/s 80P - assessee is a Primary Agricultural Co-operative Society duly registered under the Karnataka Co-operative Societies Act,1959 established with the main object of providing credit facilities to its members by collecting funds from its members, marketing agricultural produce and agricultural implements, sale of fertilizers / pesticides etc. and purchase sale of domestic requisites and grocery etc.- AO denied entire deduction of Section 80P to the assessee thereby making an addition merely because of the fact that the assessee had admitted Nominal Members - HELD THAT:- The Hon'ble Supreme Court has settled many issues in the decision rendered by it in the case of Mavilayi Service Co-operative Bank Ltd. [ 2021 (1) TMI 488 - SUPREME COURT] and since the facts prevailing in the instant case needs to be examined afresh in the light of the principles enunciated by Hon'ble Supreme Court in the above said case, we are of the view that the issue of deduction u/s 80P(2)(a)(i) of the Act requires fresh examination at the end of the A.O. We set aside the order passed by Ld. CIT(A) for the year under consideration and restore them to the file of the A.O. for examining it afresh based on the principles laid down by Hon ble Supreme Court in case of Mavilayi Service Co-operative Bank Ltd. (supra). Eligibility of the assessee to claim deduction u/s 80P(2)(d) - As relying on KARKALA CO-OP S. BANK LTD. VERSUS ITO WARD-3 UDUPI [ 2021 (2) TMI 854 - ITAT BANGALORE] we set aside the order passed by Ld CIT(A) on this issue and restore the same to the file of the AO with the direction to allow deduction of proportionate cost, administrative and other expenses, if the A.O. proposes to assess the interest income earned from bank deposits as income under the head -other sources. 2022 (3) TMI 157 Tax recovery proceedings - Right over property mortgaged - Whether subject property belongs to the third respondent was already attached by the Income Tax Authorities and therefore, any subsequent mortgagee with the Bank is void under the provisions of the Income Tax Act? - dispute arose between the State Bank of India and the first respondent-Tax Recovery Officer, when the second respondent refused to register the Sale Certificate issued under the SARFAESI Act, on the ground that the subject property being vacant plot , is attached by the first respondent-Tax Recovery Officer for the alleged tax dues of the third respondent and the said attachment is recorded in the Books of the second respondent - HELD THAT:- In the event of establishing that the mortgage was prior to the initiation of action by the Income Tax Department, prior to the default of the Assessee under the Income Tax Department, then the Bank may claim right over such mortgages. However, in order to ascertain the clear facts and circumstances, an enquiry is to be conducted by the Tax Recovery Officer. Therefore under Rule 11 of Schedule II of the Income Tax Act, the petitioner-Bank has to approach the Tax Recovery Officer for adjudication of the facts, so as to form an opinion whether the petitioner-Bank is entitled to enforce their rights or not. It is not as if in every case, Bank can enforce their rights only under the SARFAESI Act, without reference to the provisions of the Income Tax Act. When such conflict arises, the priority to be considered has been elaborately considered by this Court and detailed findings are provided in the judgment dated 19.07.2021 in WP No.15437 of 2014. The right of priority and adjudication of facts, which all are required and the issues involved are elaborately discussed and the parties were given an opportunity to approach the Tax Recovery Officer by filing an appropriate application under Schedule II of Rule 11 of the Income Tax Act. Therefore, the said principle, which is being followed by this Court, is to be adopted in the present case, as the first respondent-Tax Recovery Officer made a finding in the impugned order itself that the attachment of immovable property made on 10.12.2015 would relate back to 01.03.2013. It has come to the knowledge of the Tax Recovery Officer that the defaulter has mortgaged the subject property with the petitioner-Bank and the same was registered on 04.04.2013. Thus, the first respondent-Tax Recovery Officer formed an opinion that the attachment date precedes the mortgage date and hence the mortgage of the subject property and transfer of the subject property is void under the provisions of the Income Tax Act. As relying on JANATA SAHAKARI BANK LTD. case [ 2021 (8) TMI 1233 - MADRAS HIGH COURT] the petitioner-Bank in the present case, is at liberty to approach the first respondent-Tax Recovery Officer by filing an appropriate application under Schedule II, Rule 11 of the Income Tax Act. In the event of filing any such application, the Tax Recovery Officer is directed to investigate the same with reference to the original documents and evidences and pass appropriate orders as expeditiously as possible. 2022 (3) TMI 156 Reopening of assessment u/s 147 - addition u/s 14A - re-opening is after the expiry of four years from the relevant assessment year - HELD THAT:- As per proviso to Section 147 of the Act, as it was then in force, there is bar on re-opening of assessment after a period of four years where assessment under Section 143(3) of the Act has been completed unless the respondents are able to show that the escapement of income was due to failure on the part of the assessee to truly and fully disclose material facts required for assessment. Having considered the reasons, we do not find that there was any material fact which was not disclosed while the assessment proceedings were on. As noted earlier, this point has been discussed in the assessment order and the Assessing Officer had allowed petitioner s claim for interest expenditure except a sum of ₹ 98,753/-. Simply using the expression because of failure on the part of the assessee to fully and truly disclosed all material fact etc., would not help respondents because it is quite obvious that these expressions have been used only to overcome the restrictions in the proviso to Section 147 of the Act. WP allowed. 2022 (3) TMI 155 TDS credit - Rectification Application granting the consequential TDS credit due to the petitioner and deleting the incorrect demand which only arises due to non-grant of the said TDS credit - HELD THAT:- Petitioner relies on the decision of this Court in LS Cable and System Ltd[ 2021 (8) TMI 1278 - DELHI HIGH COURT] wherein in similar facts, this Court directed the AO to dispose of the assessee's rectification application u/s 154 within six weeks from the date of the Court s Order. Issue notice. Mr. Zoheb Hossain, learned counsel for Revenue accepts notice. On instructions, he undertakes to this Court that Petitioner s rectification application dated 14th May, 2020 shall definitely by disposed of within six weeks. The undertaking given by Mr. Zoheb Hossain, learned counsel for Revenue is accepted by this Court and respondents are held bound by the same. 2022 (3) TMI 122 Validity of reopening the assessment u/s 147 r.w.s 148 - scope of borrowed satisfaction - non independent application of mind -Addition u/s 69 on account of cash deposits in bank account - assessee an NRI is residing in Surrey, Canada - Information available with the department cash was deposited in the bank account of the assessee and the assessee had not filed the return of income - HELD THAT:- A.O. without applying his mind proceeded on assumption that the total bank deposit of the assessee constitutes unexplained income of the assessee and overlooked this fact that source of deposit need not necessarily be the income of the assessee. See SH. AMRIK SINGH, S/O SH. SURINDER SINGH [ 2016 (5) TMI 768 - ITAT AMRITSAR] A.O. in the reasons recorded clearly stated that on the basis of information that the assessee deposited cash in the bank account formed the opinion that the said deposit was the income of the assessee which escaped the assessment, while doing so he did not apply his own mind and initiated the reassessment proceedings. Thus the A.O. acted only on the basis of suspicion, so it cannot be said that it was based on belief that the income chargeable to tax had escaped assessment - Thus reassessment proceedings, initiated by the A.O. on the basis of suspicion were not valid - Decided in favour of assessee. Customs 2022 (3) TMI 121 Jurisdiction - competence of ADG DRI to issue the SCN - Valuation of imported goods - 4-colour and 5-colour offset printers - rejection of the declared value of the imported goods - demand of differential duty along with interest - levy of penalties and personal penalties - HELD THAT:- Learned Counsel was correct in pointing out that in Canon India [ 2021 (3) TMI 384 - SUPREME COURT ] Hon ble Supreme Court had held that officers of DRI are not proper officers to issue the SCN demanding duty under section 28 as per section 2(34). Learned departmental representative was correct in pointing out that under consideration in Canon India was the question whether DRI officers were proper officers under section 2(34) and not whether they were proper officers under section 28(11). As per section 28(11), all persons appointed as Customs officers under section 4(1) prior to 6th July 2011 were proper officers for assessment under section 17 and proper officers under section 28. This provision was not in question in Canon India but it was upheld in Mangali Impex (prospectively) [ 2016 (5) TMI 225 - DELHI HIGH COURT ] and Sunil Gupta [ 2014 (12) TMI 151 - BOMBAY HIGH COURT ]. We are not aware of any other judgment of any High Court or Supreme Court setting aside the validity of Section 28(11). Thus, section 28(11) is valid and is on the statute book. Undisputedly, in this case, since the assessment was done by the assessing officers in the Custom House, such officer who did the assessment or his successor in office is the proper officer and ADG DRI cannot be the proper officer and has no jurisdiction to issue the SCN demanding duty under section 28. Other person appointed as Customs officers under section 4(1) may be a proper officer by virtue of Section 28(11) but he/she must also be the proper officer , i.e., he/she must have had done the original assessment under section 17 in that case to be competent to issue an SCN under section 28 - as far as DRI officers is concerned, since the Government has not entrusted any functions under section 6 of the Customs Act, they could not have performed such functions. Therefore, all the functions of the officers of DRI under the Customs Act in this case which culminated in the issue of the SCN viz., searches, summons, recording of statements under the Customs Act are also vitiated. Therefore, neither those activities of officers of DRI under the Customs Act nor the SCN into which they culminated can be upheld. The impugned order cannot be sustained because it is issued adjudicating the SCN dated 22.5.2014 issued by ADG, DRI who is not competent to issue the SCN as per Canon India. Further, the SCN itself was the culmination of investigations including searches, seizures, and recording of statements under the Customs Act by the DRI officers and DRI officers have no jurisdiction to perform any functions under the Customs Act Canon India. Appeal allowed - decided in favor of appellant. 2022 (3) TMI 120 Jurisdiction - proper officers - power of DRI officers to issue SCN or not - HELD THAT:- Learned counsel for the appellant was correct in his assertion that DRI officers were held to be NOT proper officers under in M/S CANON INDIA PRIVATE LIMITED VERSUS COMMISSIONER OF CUSTOMS [ 2021 (3) TMI 384 - SUPREME COURT] and hence the order issued in pursuance of an SCN issued by DRI demanding duty was set aside. The ratio of CANON INDIA was followed in various cases and the orders confirming demands in pursuance of SCN issued by DRI were set aside. A perusal of some other enactments also shows that DRI and Customs officers were treated as separate by legislature. As per the Narcotic Drugs and Psychotropic Substances Act, 1985 [NDPS Act] the government can empower officers of various departments to conduct search, seizures and make arrests. It clearly mentions Customs officers and officers of Revenue Intelligence separately - If officers of Revenue Intelligence were also Customs officers, there would have been no need to mention them separately in section 42 of the NDPS Act. It is evident from the RTI Act that DRI was treated by the legislature as an intelligence and security organization created by the Government and hence was granted immunity under section 24. Such immunity was not given to the Customs officers. Like Customs Act and NDPS Act, RTI Act also treats officers of DRI as separate and distinct from the Customs officers. Even if there are more than one proper officer by virtue of section 28(11), the demand can be raised only by the proper officer i.e., one who assessed the Bills of Entry in the first place or his successor in office and not by any other proper officer. In this case, since the Bills of Entry were not assessed by the officers of DRI, the SCN issued under Section 28 is without authority even if section 28(11) is considered. Thus section 28(11) does not carry the case of Revenue any further - any other functions under the Act (for example, searches, seizures, arrests, recording of statements) by the officers of DRI also get vitiated because no functions have been entrusted to them under Section 6 by the Government. Evidently, in this case, the SCN itself is the culmination of investigation which involved several functions by the DRI under the Customs Act. Even on this ground, the impugned order cannot be sustained. If the Finance Bill becomes the Act, DRI officers will be at par with Customs officers under the Customs Act by virtue of the substitution of section 3 and their various actions such as searches, seizures, arrests may not become void because of non-entrustment of those functions by the Government under Section 6. However, there is no proposal to amend section 28 and hence SCNs can be issued even after this Bill becomes the Act only by the proper officer , i.e., the officer who has done the assessment in the first place. In fact, this specific legal position as held by the Supreme Court in Canon India is likely to be reaffirmed by insertion of section 110AA in the Act. The settled legal position is that when the legislature uses the definite article the it refers to a particular thing or particular person. This brings certitude as to who can issue a Show Cause Notice to demand duty or tax not levied short levied, not paid, short paid, etc. in all these three Acts viz., Customs Act, Central Excise Act, and the Finance Act, 1994 - In the Central Goods and Services Tax Act, 2017 (CGST Act) section 73 deals with demands other than cases of fraud, willful mis-statement or suppression of facts while section 74 deals with cases where these elements are present. In both sections, the notice can be issued by the proper officer . These provisions of CGST Act, 2017 are also made applicable to Inter-state Goods and Services Tax Act. Similar provisions are also there in the State Goods and Services Tax Acts of various states. Section 156 of the Income Tax Act, 1961 also gives the power of issuing notice of demand on the assessing officer. What is common in these provisions of various enactments is that the power to issue notice demanding tax or duty is always conferred on a particular officer which legislative intent is clarified by using definite article the instead of a or any or any of the . The proposed Section 110AA in the Finance Bill 2022 is also consistent with the legislature conferring the powers of raising a demand on only one officer. To sum up, section 28(11) of the Customs Act cannot sustain the SCN issued in this case by DRI officers because: a) DRI officers have not been entrusted the functions under the Customs Act by the Government under section 6 and hence cannot perform such functions. b) The SCN in this case was not issued by the proper officer , i.e., the officer who had assessed the Bills of Entry in the first place. The impugned order emanating from an SCN issued by DRI demanding duty under section 28 cannot be sustained - Appeal allowed - decided in favor of appellant. 2022 (3) TMI 94 Jurisdiction - power of Directorate of Revenue Intelligence to issue SCN - HELD THAT:- In the present case, the notice to show cause dated 30 October 2013 raising demands under the Customs Act 1962 was issued by the Additional Director General of the Directorate of Revenue Intelligence (Zonal Unit, Ahmedabad). In view of the decision of the three- Judge Bench in M/S CANON INDIA PRIVATE LIMITED VERSUS COMMISSIONER OF CUSTOMS [ 2021 (3) TMI 384 - SUPREME COURT] , the appeal which has been filed by the Commissioner of Customs in the present case will have to be and is accordingly dismissed. Appeal dismissed. Corporate Laws 2022 (3) TMI 119 Territorial Jurisdiction of Delhi High Court - LLP is registered in Hyderabad - Access to the business accounts in possession of the respondent no.3/defendant no.3 - grievance of the respondent/plaintiff is that he has been denied access to the business accounts of the respondent no.3/defendant no.3 - entire basis of the respondent/plaintiff for filing the suit in Delhi is on account of the fact that the LLP carried out business in Delhi and that the products of the LLP are regularly sold in Delhi by means of online sales as well as through physical stores such as Nature s Soul, which is in Delhi - HELD THAT:- Taking into account the nature of the disputes raised in the plaint being inter-se disputes of partners, the fact that business of the LLP is being carried out in Delhi would not vest the Courts of Delhi with jurisdiction to try and entertain the present suit. An LLP or any other business entity can carry out business in different parts of the country. But that would not mean that a suit, with regard to disputes between the partners, could be filed in any place where the business of the firm/LLP is carried out. What has been raised in the plaint is a dispute with regard to the business accounts of the LLP - Section 13 of the LLP Act provides that every LLP shall have a registered office, where all communications and notices may be addressed and shall be received. In terms of Sections 11 and 36 of the LLP Act, documents in respect of the LLP, including the incorporation document, the statement of account, annual return, etc., shall also be available for inspection with the Registrar of the concerned State in which the LLP is registered. In terms of Section 34(1) of the LLP Act, the books of account in respect of an LLP shall be maintained at the registered office. It is not the case of the respondent/plaintiff that any consent was taken to remove the books of account from the registered office to Delhi. Therefore, it would have to be taken that the books of accounts of the LLP are kept at its registered office in Hyderabad - The present suit impugns the denial of access to the business accounts of the petitioner no.3/defendant no.3 to the respondent/plaintiff. It has not been averred by the respondent/plaintiff that the books of account of the petitioner no.3/defendant no.3 are kept in Delhi. On such an emergence of facts from a reading of the plaint, in the opinion of this Court, the jurisdiction to entertain the present suit shall vest with the Courts in Hyderabad. It is evident from the facts of the present case that there is no principal or subordinate office of the LLP in the State of Delhi and neither are the books of accounts kept in Delhi, therefore, there is no cause of action in respect of the present suit, which is arising within the territorial limits of the Courts in Delhi. Furthermore, the parties by agreement cannot give jurisdiction to a Court, which otherwise does not have such jurisdiction - the Courts in Delhi lack the territorial jurisdiction to try and entertain the present suit. The petitioners/defendants have made out a case fit for interference by this Court under Article 227 of the Constitution of India as the Commercial Court has failed to appreciate that on a reading of the plaint, the Courts in Delhi lack the territorial jurisdiction to try and entertain the present suit - Petition allowed. 2022 (3) TMI 118 Review application - bonafide error or not - Oppression and Mismanagement by the then Managing Director - company is incorporated for charitable purpose - HELD THAT:- What is an error apparent on the face of record cannot be defined precisely or exhaustively, there being an element of indefiniteness inherent in its very nature and it must be left to be decided judiciously, on the facts of each case. It is to be remembered that the Companies Act, 2013 does not clothe the Tribunal to Review its own order and Judgment. But Section 420(2) of the Companies Act, 2013 is empowering the Tribunal to act any time within two years from the date of the order in order to rectify any mistake apparent from the record, amend any order passed by it and to make such amendment, if a mistake is brought to its notice by the Litigants/Stakeholder. Undoubtedly, a Tribunal has no inherent power of review as per Civil Procedure Code. However, the Tribunal has the requisite power to set right/rectify any mistake apparent from record and to amend an order accordingly - The power of Review is not an Inherent Power and Rule 11 of the National Company Law Rule, 2016 cannot be pressed into service. Furthermore, there is no express provision that showers Power of Review upon the National Company Law Tribunal either in an express fashion or by means of necessary implications, as the case made be. As far as the present case is concerned, even though the Appellant has preferred the instant Company Appeal (AT)(CH) 11 of 2022 before this Tribunal, as against the impugned order dated 11.03.2020 in IA No. 29/KOB/2020 in TCP/21/KOB/2019, under Section 421 of the Companies Act, 2013, since the Central Government has established the Serious Fraud Investigation Office to investigate fraud relating to a Company and that the Central Government is to assign the investigation into affairs of a Company by Serious Fraud Investigation Office and its Director may designate such numbers of Inspectors, as he may consider necessary, for the purpose of such investigation vide Section 212 of the Companies Act, 2013 by following the procedure under Section 213 of the Companies Act, 2013, in stricto sense of the term. When the Prime Grievance of the Appellant is that the impugned Order dated 11.03.2020 in IA No. 29/KOB/2020 in TCP 21/KOB/2019 on the file of the National Company Law Tribunal, Kochi Bench that the said Order was passed without hearing the Central Government being the Primary Competent Authority then, the Central Government/Union of India (through Serious Fraud Investigation Office) ought to have preferred the Appeal against the impugned order dated 11.03.2020. However, such recourse has not been resorted to. Viewed in that perspective, this Tribunal unresistingly comes to a consequent conclusion that the Appellant/Registrar of Companies, Kerala is not the proper and competent person to prefer the instant Company Appeal. Appeal dismissed. Insolvency & Bankruptcy 2022 (3) TMI 117 Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - time limitation - whether Section 7 application, filed by the Respondent No. 1 purporting to be financial creditor, is not maintainable since he is not an investor but a partner of the corporate debtor? - HELD THAT:- It is clear that the mention of Without Prejudice in the two letters dated 3.7.2018 and 11.8.2018 do not imply denial/rebuttal of the debt. The admission of the debt which is explicitly contained in the letter dated 11.8.2018 is quite clear, wherein the corporate debtor has not only admitted the debt, but has also undertaken to pay the amount as decided by DRT-III in its judgment dated 29.4.2016 - the Adjudicating Authority has correctly considered the relevant documents and judgments presented for the purpose of extending limitation and inferred that the Section 7 application submitted by ARCIL is within limitation for the purposes of the IBC. It is admitted fact that Bank of Baroda is a financial creditor and by a valid and legal deed of assignment Bank of Baroda assigns the debt to ARCIL. Hence, ARCIL is without doubt a financial creditor which is entitled to submit an application under section 7 of the IBC for relief - the Adjudicating Authority has committed no error in passing the Impugned Order. There are no reason to interfere with the Impugned Order - appeal dismissed. 2022 (3) TMI 116 Maintainability of application - initiation of CIRP - fraudulent or malicious initiation of proceedings - existence of debt and default or not - Section 65 of I B Code - HELD THAT:- It is not in dispute that there is no debt and default which is the basic requirement of the Section 7 of the Code. However, the Adjudicating Authority has the inherent power to restrict the perpetuation of applications motivated by fraud or malice under section 65 of the code - The Hon ble Apex Court has also observed in Embassy property development Pvt. Ltd [ 2019 (12) TMI 188 - SUPREME COURT ] has held that if the CIRP had been initiated by one and the same person taking different avatars not for the genuine purpose of Resolution Insolvency or Liquidation but for the collateral purpose of cornering the mine and mining lease the same would fall squarely within the mischief by Section 65(1) of the Code. The Adjudicating Authority has jurisdiction to enquire into the allegation of fraud and so also with this Appellate Tribunal. There are several issues (violation of dealership agreement, vis a vis invocation of code for default concurrently happening under floorplan financing agreement of dealership agreement provided by same BMW Group Company) raised by the Appellant on Respondent No.2- BMW India Pvt. Ltd discreetly covering Respondent No.3- BMW India Financial Services Pvt. Ltd. Since, some collusion seems to be apparently existing to thwart the claim of the Corporate Debtor and other related issues. Impugned order dated 04th June, 2020 has not dealt with this IA and has dismissed on the ground that BMW India Pvt. Ltd/R2 in the IA No.300 of 2018 is not a party in the main petition no.167 of 2017. Although IBC is a summary proceeding but if large business houses with multiple business arms are allowed to disrupt on its whims fancies small business firm then how IBC can promote entrepreneurship which is also its objective. Matter remanded back in respect of IA 300 of 2018 to the Adjudicating Authority to go into the details of the allegations decide either way by giving reasonable proper opportunity to all the parties involved - application disposed off. 2022 (3) TMI 115 Financial Creditor or Operational Creditor - Resolution Applicants are already before the CoC with their Resolution Plan - converting and considering the applicant/GNIDA as Operational Creditor and not informing for participating in a meeting of committee of Creditors - HELD THAT:- The issue whether the Applicant can be considered as a Financial Creditor instead of Operational Creditor, in case when the Resolution Plan provides for the claim in proportion to other Financial Creditors, does not arise at this stage as the claim of the Applicant has already been considered by the Resolution Applicant viz., M/s. Statcon Electronics India Limited (Resolution Applicant), in addition to this, the Resolution Applicant issued a letter dated 05.02.2021, through which the Resolution Applicant gave an undertaking affidavit to pay the Applicant as per the proportionate ratio given to other financial creditors' in the Resolution Plan. The said letter further stated that such payments had been taken under contingencies fund therefore, no prejudice will be caused to the Applicant in case the claim is admitted as either Operational Creditor or Financial Debt, as the amounts that would be paid to it under the Resolution Plan will be as per the proportion ratio given to other Financial Creditors. Application dismissed. 2022 (3) TMI 114 Approval of Resolution Plan for the revival of the Corporate Debtor - discrimination of Related Party Financial or Operational Creditor - HELD THAT:- In the instant case, the approved plan does not conform to the order of priority provided u/s 53 (1) of the Code. It provides nil value to related party Financial and Operational Creditors. It is pertinent to mention that Hon'ble Supreme Court in Phoenix Arc v Spade Fin Services, [ 2021 (2) TMI 91 - SUPREME COURT ], held that those entities in the CoC, who are related parties, can often negatively affect the insolvency process. It further went on to hold that the objects and purposes of the Code are best served when external creditors drive the CIRP to ensure that related parties of the Corporate Debtor do not sabotage the CoC - It is important to mention that related parties are barred from participating in the COC to avoid sabotaging the COC. Per contra, the claim filed by the related party, based on their admitted claims, would have influenced the CIRP if they had been permitted to participate in the COC. After completion of the CIRP and after approval of the Resolution Plan, if any amount is allotted to related party financial or operational creditors, it would not impact the CIRP. Thus, it is clear that IBC treats related parties as a separate category for specified purposes, excluding from the CoC under Section 21 and disqualifying them from being Resolution Applicants under section 29A. However, the IBC does not treat Related Party as a separate class for any other purpose. Therefore, a rationale nexus must exist for any classification between the object sought to achieve the classification and sub-classification. Therefore, the Related Party financial or operational creditor cannot be discriminated against under the Resolution Plan, denying their right to get payments under the Resolution Plan only on being a Related Party. It is also made clear that by getting only payment under the Resolution Plan, related party creditors could in no way sabotage the CIRP. The increase in RP fees with retrospective effect can not be considered as CoC's prudent decision. The possibility of an impact on the decision of RP for the submission of the Resolution Plan before the Adjudicating Authority for approval, even without the approval of CoC, cannot be ruled out. Submission of the Resolution Plan for Approval before the Adjudicating Authority violates the statutory provision of Section 30(2) (3) of the Code and has vitiated the entire CIRP and made the Resolution Plan Void ab initio - A valuation consisting of mere naked values without a detailed report is not valid. It is a settled proposition that the Valuation exercise is conducted to facilitate the CoC's decision-making process. Therefore, the existence of a valid and accurate valuation report is a sine qua non for the COC to exercise its commercial wisdom. A natural sequitur to those above would be that a detailed valuation report is necessary for the CoC to exercise its commercial wisdom objectively. Regulation 36(2) of CIRP Regulations provides the mandatory condition for publication of Form-G on the Corporate Debtor's website and the website designated by the Board for the purpose. Non-publication of notices of Form G is a material irregularity in exercise of the powers by Resolution Professional during the Corporate Insolvency Resolution period. In the instant case, there has been a material irregularity in exercising the powers by Resolution Professional during the Corporate Insolvency Resolution Process - Since the said Trust (Prospective Resolution Applicant) 'Sri Balaji Vidyapeeth' has already been declared as ineligible, the 2nd Respondent (SRA) cannot be permitted to act as its alter ego in implementing the Resolution Plan and attain any financial advantage or gain, which is barred by Section 88 of the Indian Trusts Act. The Resolution Professional made an incorrect statement that the revised Resolution Plan was approved at the 9th COC meeting. The revised Resolution Plan was not approved on 22 January 2021. After 22nd January 2021, based on the COC Resolution Dt.22.1.2021, the Resolution Plan was further modified, and the final Revised Resolution Plan dated 25 January 2021 was never laid before the CoC for approval. Thus the approval of the Resolution Plan by the Adjudicating Authority can not be treated as valid under Sec. 31(1) of the I B Code, 2016 - However, the IBC does not treat Related Party as a separate class for any other purpose. Therefore, a rationale nexus must exist for any classification between the object sought to achieve the classification and sub-classification. Therefore, Related Party Financial or Operational Creditor cannot be discriminated under the Resolution Plan only on being a Related Party. Thus, it is clear that IBC treats related parties as a separate category for specified purposes, excluding from the CoC under Section 21 and disqualifying them from being Resolution Applicants under Section 29A. However, the IBC does not treat Related Party as a separate class for any other purpose. Therefore, a rationale nexus must exist for any classification between the object sought to achieve the classification and sub-classification - the Related Party financial or operational creditor cannot be discriminated against under the Resolution Plan, denying their right to get payments under the resolution Plan only on being a Related Party. It is also made clear that by getting only payment under the Resolution Plan, related party creditors could in no way sabotage the CIRP. Thus, the approved Resolution Plan is in contravention of Section 30 (2) of the Insolvency and Bankruptcy Code 2016, which contravenes the provision of law - appeal allowed. 2022 (3) TMI 113 Floutation with the orders of Adjudicating Authority with impunity - Respondents/the Members of the suspended Board of Directors have been successfully avoiding the compliance of the orders directly or indirectly - handing over of possession of requisite information and documents - HELD THAT:- Since, there is no registered office of the Corporate Debtor, these respondents/Directors shall hand over all the 'Books of Accounts' which shall include but are not limited to sales register, purchase register, Journal, ledgers, cash book as defined in section 2(13) of the Companies Act, 2013, need to be handed over, stored and delivered at the factory premises. The 'Books of Accounts' in Tally format may be specifically directed to be made available at the factory premises. It is further ordered that for ensuring that the Corporate Debtor runs as a going concern, the designated person who has been mentioned as a responsible person under the Pharmacy Act, 1948 or the Drugs and Cosmetics Rule, 1945 or any other relevant Act, for running this pharmaceutical company needs to be identified. The said person may also be directed to cooperate with the liquidator to maintain the continuing operation of the Corporate Debtor. The Deputy Commissioner, Parnashree Police Station, Kolkata, West Bengal to provide necessary police assistance to the liquidator, who is an officer of the court and is performing his statutory duties under section 35(1)(b) of I B Code, 2016, as per the orders of National Company Law Tribunal, Kolkata. The Police Officer/official deputed for the purpose, shall not allow any hindrance or obstruction to be caused in the working of the liquidator - List the matter on 19/04/2022 for filing of Progress Report. PMLA 2022 (3) TMI 112 Money laundering - Recovery of foreign currencies - petitioner submits that it can be safely said that ECIR is certainly akin to FIR as it sets the investigation in motion in PMLA - HELD THAT:- It is clear from the documents that the investigation under the PMLA is initiated against the petitioner and impugned summons are issued under Section 50 of the PMLA. From bare reading of Section 50 of the PMLA it can be said that the respondent/authorities have ample power to summon any person during the investigation and to record their statement, give evidence or produce documents as sought by the respondent/authorities. Section 50(4) of the PMLA stated that every proceeding under sub-sections (2) an (3) shall be deemed to be a judicial proceeding within the meaning of Section1 93 and Section 228 of the Indian Penal Code, 1860 - Section 50(2) gives sufficient power to the authority to summon any person whose attendance is considered necessary. The main challenge of the petitioners is that the respondent/Agency is proceeding with the issuance of summons under Section 50 of the PMLA to the petitioners without supplying copy of the aforesaid ECIR to them which is against the law. The provisions of the PMLA indicate that it is a special act and is a complete code in itself, which does not come into the preview of other criminal law statute. No one can take benefit of the ground that there is a possibility of him getting prosecuted in future and under Section 50 of the PMLA, it is not mandatory that before appearing in front of the authority, a copy of ECIR is to be supplied therefore the petitioners cannot claim copy of ECIR as a right. It is clear from the documents filed by both the parties that the petitioner was not acquitted in the FERA case but was imposed with fine after which the authorities started investigation under PMLA. The impugned summons were issued under Section 50 PMLA and there is nothing on record by which it can be inferred that the issuance of summons by the respondents for investigation has caused or has the effect of causing any prejudice to any of the petitioners. Petition dismissed. 2022 (3) TMI 111 Money Laundering - Fraud by Additional Director of the company with the help of forged documents - commission of scheduled offence - provisional attachment of Bank Accounts - HELD THAT:- Even according to the Enforcement Directorate, Srinivasan, to whom the affairs of Ari Fabrics Ltd. and VMT Mills were entrusted in good faith by their respective owners, had opened bank accounts in the name of those companies in the Bank of Baroda, Udumalpet Branch, with the connivance of Balan, Branch Manager and has parked the funds that were generated by him by indulging in cheating. One such amount is, the sum of ₹ 17,05,277/-, which was parked by Srinivasan in the fake account of VMT Mills that was opened by him in the Bank of Baroda, Udumalpet Branch, without the knowledge of the true owners of the mill. The case of VMT Mills can be better explained with the following illustration. 'A' is an honest public servant. 'B', a dishonest public servant, opens a bank account in the name of 'A' and parks the bribe monies received by him in that account. Can 'A' be prosecuted along with 'B' under the Prevention of Corruption Act, 1988 ? The answer is an obvious 'No'. So too, VMT Mills, in whose name, Srinivasan had opened a fake bank account in Bank of Baroda, Udumalpet Branch and had parked ₹ 17,05,277/-, cannot be prosecuted for money laundering. The prosecution of VMT Mills under Sections 3 and 4 of the PML Act is an abuse of process of law and accordingly, this criminal original petition is allowed. Service Tax 2022 (3) TMI 107 Condonation of delay of 4-5 years in filing appeal - seeking out of turn hearing of the appeal - appellant s assertion is that the impugned order dated 29.03.2014 has not been served upon it, as it was not sent by registered post - HELD THAT:- Since the letter could not be delivered by the postal authorities and was returned, there is no receipt. The remarks of the postal authorities on the letter are consistent the report of Sepoy who had gone to serve the letters of personal hearing upon the appellant. Therefore, the impugned order could not be served through registered post. Section 153 (b) states if the order, decision, summons or notice cannot be served in the manner provided in clause (a), by affixing it on the notice board of the customs house . As applicable to the Service Tax Proceedings in the present case, the service was completed by affixing it on the notice board of the office - there was no delay in serving the impugned order. There are no justification for a delay of 4-5 years in filing this appeal after it has been issued and served. However, in order not to deprive the appellant of an opportunity of appeal, we condone the delay on payment of a cost of ₹ 1,00,000/- which must be paid by the appellant to the PM CARE Fund within a period of one month from the date of this order - application disposed off. 2022 (3) TMI 106 Refund of service tax paid - unjust enrichment - rejection on the ground of time limitation - Section 11B of Central Excise Act - HELD THAT:- From the grounds as stated it appears that appellant has challenged the order of Commissioner (Appeal) on the ground of limitation. However as per impugned order para 31, after examining the provisions of Section 11B of Central Excise Commissioner (Appeals) has observed that In view of the provision (ec) above, it is clear that the period of one year shall start from the date of the order of the Appellate Tribunal which is 20.08.2015, in this case. The refund has been filed on 28.06.2016, which is within the time period. Therefore, observations of the lower authority are set aside setting aside the rejection on the basis of limitation. Commissioner (Appeals) has upheld the order of original authority rejecting the refund claim on the ground of unjust enrichment stating that it is an admitted position that the refund amount due was not reflected in the books of account of HPCL as claims receivable. This implies that the duty paid was shown as current expenditure and formed part of the Profit and Loss account of the assessee. Thus if the claimant himself has treated the refund amount due as expenditure and not as claims receivable , the claimant cannot said to have passed the test of unjust enrichment. Nothing contrary to the findings recorded by the Commissioner (Appeal) has been stated by the appellant in his appeal - appeal dismissed - decided against appellant. 2022 (3) TMI 105 Nature of activity - manufacture or service - services received from various contractors engaged in packaging of its finished goods to whom payments were made on the basis of quantity of biscuits packed during the month - Supply of Manpower Services or is a process amounting to manufacture leading to an exempt service under section 66D of the Finance Act, 1994? - HELD THAT:- The amount being paid to the contractors are for the activity of packaging of biscuits into carton boxes which makes them marketable to be sold to the distributors and further to the market for consumers. By a combined reading of the meaning of the term manufacture read with the notes to chapter 19, it is amply clear that the process carried on for the packaging of biscuits into carton boxes is a process which amounts to manufacture and thus the activity carried on by the contractors in regard to the same at the premises of the Respondent has to qualify as a manufacturing process. The activity of packaging of biscuits as carried by the contractors is one amounting to manufacture and the same finds a place in negative list of services under section 66D of the Finance Act, 1994 thus making the same an exempted service from levy of service tax - CBIC Circular 190/9/2015-Service Tax dated 15.12.2015 has also explained the conditions when one service can be interpreted as manpower supply or job work. In the given case since the contractors are being paid on the basis of quantity packed and not on the basis of number of persons deployed, the same cannot partake the nature of Manpower Supply Service . Reliance is also placed on the Tribunal s decision in the case of DHANASHREE ENTERPRISES, JAI MAHARASHTRA ENTERPRISES VERSUS CCE, PUNE-I [ 2017 (7) TMI 762 - CESTAT MUMBAI] , wherein it was held that the department could not establish that the service provided by the Appellant are of supply of manpower - In the instant case also, it is found that the department has not brought any evidence in contrary to prove that the services provided by the contractors to the Respondent are in the nature of Manpower Supply. There are no reasons to interfere with the impugned order - appeal dismissed - decided against Revenue. 2022 (3) TMI 110 Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 - petitioner did not deposit the amount under the Scheme within the time limit provided under the Scheme, i.e., within 30 days - HELD THAT:- The High Court has rightly refused to grant relief to the petitioner for extension of the period to make the deposit under the Scheme. It is a settled proposition of law that a person, who wants to avail the benefit of a particular Scheme has to abide by the terms and conditions of the Scheme scrupulously. If the time is extended not provided under the Scheme, it will tantamount to modifying the Scheme which is the the prerogative of the Government. Special Leave Petition stands dismissed. 2022 (3) TMI 109 Sabkas Vishwas (Legacy Dispute Resolution) Scheme, 2019 - amnesty scheme - extension of time allowed or not - whether the SVLDRS, 2019 can be made operational by the Court beyond the period for which it was formulated? - HELD THAT:- The overwhelming view taken by the various High Courts is that time for availing of the benefit of the Scheme cannot be extended as a matter of course, especially beyond the period it was promulgated. Division Bench judgment rendered by the Allahabad High Court in SHEKHAR RESORTS LTD. VERSUS UNION OF INDIA [2021 (11) TMI 245 - ALLAHABAD HIGH COURT] wherein the Hon ble High Court clearly opined that the Scheme cannot be made operational by the Court going beyond the period for which it was formulated only for one person or to relax any of the conditions enumerated in the Scheme. The prayers made in this writ petition cannot be granted for consideration of the case of the petitioner for paying the service tax under the Scheme as the Court cannot make operational the SVLDRS, 2019, especially when the petitioner has approached this Court belatedly after 1 year and 3 months from the last date of payment of determined amount of tax under the SVLDRS, 2019. Petition dismissed. 2022 (3) TMI 108 Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 - petitioner has not deposited the amount within time granted - HELD THAT:- In the present case, the petitioner applied for the benefit of that scheme on 31st December, 2019, the last date for making the application. Upon that application being pressed, the Designated Committee issued form SVLDRS-2 on 06.02.2020 requiring the petitioner to deposit ₹ 9,94,040/-. SVLDRS-3 was also issued by the Designated Committee. The time period to make the deposit provided under Section 127 of the SVLDRS was of 30 days. Clearly, the petitioner has not deposited the amount within time granted to the petitioner. In absence of any provision to extend that time, prayer may never be granted to the petitioner. Petition dismissed. Central Excise 2022 (3) TMI 101 und of amount deposited during Audit - CENVAT Credit - outward freight - whether appellant had rightly claimed the Cenvat credit of the service tax paid by him on the transportation charges, the sales by him being on FOR basis? - entitlement of interest - HELD THAT:- It is an admitted fact that the amount for which refund has been claimed by the appellant was got deposited by the Department at the time of conducting audit of appellants record. Hence it is an admitted fact that a SCN as required in law for demand of the duty found at the time of audit/ investigation, to not to have been paid has been issued to the appellant. Though the contention of Revenue in this regard is that since the necessary information required to be given in the SCN was made available to the appellants in the form of various letters and orders and that the appellant agreed to the objections raised by the audit party and thereafter voluntarily paid the observed short amount of duty. But to my opinion this contention of Department is not accedable because the issuance of SCN in a particular format is a mandatory requirement of law. The law requires the said SCNs to be issued under a specific provision of law and not as a correspondence or part of an order. Nor even the communication at the time of conducting audit of the assessees record. The sub-rule (1) of this rule mandates that such Cenvat Credit shall be recovered from the assessee in accordance of provisions of section 11A of the Excise Act or section 73 of the Finance Act. Sub-section (a) of section 11 (A) of the Act which is parimateria to section 73 of Finance Act requires the Central Excise Officer to serve a notice on the per chargeable with the duty which either has not been levied or paid or which has been short levied or short paid, that too, within a specific period from the relevant date. The use of word shall is sufficient to hold mandatory compliance of the said provision. CBEC Circular No.423/56/98-CX dated 22.09.1998 also stresses the need for concerned Departments to issue timely demands through SCN. The Hon ble High Court of Madras in the case of THE COMMISSIONER OF CENTRAL EXCISE, COIMBATORE VERSUS M/S. PRICOL LTD., THE CUSTOMS, EXCISE SERVICE TAX APPELLATE TRIBUNAL [ 2015 (3) TMI 735 - MADRAS HIGH COURT] has held that the SCN , as provided under section 11A of CEA, is mandatory in nature and the same has to be adhered to before proceeding further in the matter. The Circular is binding on the Departmental authorities. Hence, the Hon ble Court held that in absence of any such SCN, Department cannot seek recovery of the amount. The payment made by the appellant at the time of audit, in absence of any SCN for the same, cannot be held to be the payment against the demand raised by the Department without even going into the merits of the nature of demand - In light of the above discussed mandate of section 11A of CEA and the absence of the requisite SCN the amount got deposited at the instance of audit team is liable to be refunded to the appellant. Whenever an amount is to be refunded in terms of section 11AA, 11BB, 11DD and 11AB of the Excise Act, an interest at the rate which varies from 6% to 18% has to be granted. Appeal allowed - decided in favor of appellant. 2022 (3) TMI 100 Levy of penalty on Director u/r 26 of CER - involvement of the director of the appellants in clandestine activities or not - wrong availment of CENVAT Credit - HELD THAT:- Shri Niten Maru, Director of Appellant 1 in his statement dated 09.03.2010 inter alia stated that he did his chartered accountancy in 2004. When he was asked to confirm the receipt of imported scrap under the said Bills of Entry, by way of any independent documents such as copy of any octroi receipt of any Municipal corporation, he stated that he did not have any such evidence but would produce if available by 12/3/2010. He did not appear thereafter and informed that Appellant 2 would represent them - Appellant 2 could not give any independent evidence of receipt of the goods corresponding to the said two B.E., no weighment slip was produced no details such as ledgers for freight payments, CHA and Octroi payments were produce, LRs pertaining to the above consignments were not produced. When he was asked to comment on the admission of the transporter of having diverted the consignments of aluminum scrap to Ahmednagar he replied that he did not know. Appellant 1 has admitted to non receipt of the goods in their premises and have reversed the credit. Nothing contrary to establish the receipt of the said goods imported by these two bill of entries have been produced by the appellant with their appeal or during the course of hearing before me, hence there are no reason to differ with the impugned order to the extent it pertains the Appellant 1. Penalty imposed on Appellant 2 - HELD THAT:- There are not much reasoning has been assigned by the said order, to show that Appellant 2 was having mens rea or direct involvement for invocation of Rule 26 - Since the impugned order fails to establish the ingredient of mens rea on the part of the Appellant 2 who was otherwise performing their duties as employee of the company, the penalties imposed on the appellant 2, cannot be upheld. The appeal filed by the Appellant 1 is dismissed - appeal filed by the Appellant 2 is allowed. 2022 (3) TMI 104 CENVAT Credit - issue of only invoices without supply of any excisable goods - manufacturing capacity in place or not - Rule 4(2)(a) of the Cenvat Credit Rules, 2004 - non-consideration of report of the Registered Chartered Engineer - to provide proper reasoning and/or independent findings while disagreeing with the findings of the adjudicating authority - violation of principles of natural justice or not - availment of credit on the invoices issued by M/s. AESPL, when M/s. AESPL is not authorised to issue Central Excise Invoices under Rule 11 of the Central Excise Rules, 2002 - non-consideration of provisions of Rule 3, 4 and 7 of the Cenvat Credit Rules, 2002/Rules 3, 4 and 9 of the Cenvat Credit Rules, 2004? HELD THAT:- The tribunal has not specifically recorded as to how and in what circumstances the decision of the tribunal in M/S JAI BALAJI INDUSTRIES LTD. VERSUS CCEX., BOLPUR [ 2019 (10) TMI 1353 - CESTAT KOLKATA] in respect of another unit of the assessee covers the issue on hand. To be noted that the appeal was filed by the respondent/assessee on 6th April, 2010 and, obviously, on the said date the assessee could not have referred to the decision of the tribunal in respect of the assessee s another unit because the said decision was rendered by the tribunal almost nine years after the appeal was presented i.e., on 25th October, 2019. Thus, it is evidently clear that for the first time when the matter was heard before the tribunal, submission of the assessee was that the issue is covered by the order of the tribunal in Jai Balaji case. The duty cast upon the Court is to examine as to in what manner the decision covers the case before the concerned Court. The Court will be justified in following the earlier decision if the contesting respondent agrees to the same. However, in the impugned order we find that the revenue has not acceded or accepted that the decision dated 25th October, 2019 of the tribunal covers the present case. In such circumstances, it goes without saying that the tribunal has to record reasons as to how the decision would cover the case before it - the assessee prima facie focussed on factual issues as to how they have bona fide effected the purchase and utilised those products for manufacture of finished goods. Whether any substantial question of law arises for consideration? - HELD THAT:- The tribunal has not given any reasons as to why the decision dated 25th October, 2019 would apply to the case on hand. Therefore, if we are called upon the adjudicate the correctness of the order, we would have to examine as to whether the Commissioner of Central Excise has rendered a proper finding in the order in original. This is not the scope of the appeal under Section 35G of the Act. This is one more reason as to why the order impugned has to be set aside and the matter to be remanded for fresh consideration. The matter is remanded to the tribunal for fresh consideration on merits and in accordance with law - Appeal allowed by way of remand. 2022 (3) TMI 99 CENVAT Credit - bogus transaction - fake invoices - entire transaction were based upon fake invoices, which were merely on paper - burden/onus to prove - HELD THAT:- Ld. Commissioner has nowhere observed that the Appellant had actually received the said capital goods from other alternate source. Therefore, the whole case of the department that the transactions with M/s. Saha Industries were fake transactions and the Appellant took credit without receipt of the capital goods or non receipt of the goods clearly falls down - Even in the show cause notice it was alleged that the Appellant had utterly failed to verify the antecedents of the supplier-manufacturer for the purpose of availing of Cenvat credit. This would also mean that the goods were actually received by the Appellant without verifying the antecedents of the supplier- manufacturer. It is well settled law that onus of proof that the Appellant received the capital goods from some other source was squarely on the department which it failed to prove. On the contrary in the show cause notice sweeping allegations were made that the Appellant had taken Cenvat credit without receipt of the capital goods - reliance can be placed in the case of Uniworth Textiles Ltd Vs. CCE, Raipur [ 2013 (1) TMI 616 - SUPREME COURT ] and Kishanch and Chellaram Vs. Commissioner of Income Tax [ 1980 (9) TMI 3 - SUPREME COURT ] wherein it has been held that the burden of proof is on the person who makes the allegation and not vice versa - the present case is on a higher pedestal as the capital goods received from M/s. Saha Industries were duly installed in the factory of the Appellant and were being used in the manufacture of finished goods. The Department failed to bring on record any contrary evidence. The Hon ble Allahabad High Court in Juhi Alloys Ltd [ 2014 (1) TMI 1475 - ALLAHABAD HIGH COURT ] relied upon the findings of the Tribunal as well as Commissioner (Appeals) wherein it was held that the transaction on the part of the assessee was bona fide and a buyer can take only those steps which are within his control and would not be expected to verify the records of the supplier to check whether in fact he had paid duty on the goods supplied by him. The only reasonable step which he can take is to ensure that the supplier is trustworthy, the inputs are in fact received and that the documents, prima facie, appear to be genuine. The fact that the assessee made payment by cheque was held to be a proof of his bona fides - In the present case the above findings rendered by the Hon ble Allahabad High Court are applicable on all fours to the facts of the present case. Time limitation - the period involved is from Sept- Oct 2006 to Feb-March, 2007 and the show cause notice was issued on 01-07-2009 under extended period of limitation - HELD THAT:- There is no evidence that even if the goods were not actually manufactured by M/s.Saha Industries the fact remained that the same were duly received by the Appellant and M/s.Saha Industries have duly discharged the central excise duty on the same. In such a case following the law laid down by the Hon ble Gujarat High Court extended period of limitation could not be invoked against the Appellant. The Ld. Commissioner has therefore erred in confirming the duty demand under extended period of limitation. The impugned Order cannot be sustained both on merits and on the point of limitation - Appeal allowed - decided in favor of appellant. 2022 (3) TMI 103 Maintainability of appeal - Quantum of penalty - monetary amount involved in the appeal as per litigation policy - HELD THAT:- Admittedly, the quantum of penalty which was imposed by the original authority is far below the threshold limit fixed by the CBEC in their circular instruction. Therefore, the appellant cannot pursue this appeal. The revenue has preferred appeal before the Hon ble Supreme Court and an order of stay has been granted. Therefore, it is submitted that the revenue should be permitted to pursue this appeal regardless of the fact that this is far below the monetary limit prescribed in the circular - such a course need not be adopted for more than one reasons: firstly, as pointed out that there is no dispute to the fact that the circular instruction issued by the CBEC would prevent the department from pursuing the appeal as the penalty imposed was ₹ 86,461/-. The subject-matter of challenge before the authority as well as the tribunal was only with regard to the imposition of penalty. It may be true that certain observations have been made by the first appellate authority as regards the validity of Rule 8(3)A and also quoted certain decisions of the various High Courts which have struck down the rule - if the legal issue with regard to the validity of Rule 8(3)A is left open, then the interest of the revenue will stand protected and at the same time if it is held that the appeal cannot be pursued by the revenue on account of the low tax effect, the interest of the assessee would also be safeguarded. The appeal filed by the revenue is dismissed on the ground that the amount of penalty imposed is lesser than the threshold limit fixed in the circular instruction by CBEC as part of the national litigation policy - Application dismissed. 2022 (3) TMI 102 CENVAT Credit - removal of relevant goods from its manufacturing unit - Rule 3(5) of the then CENVAT Credit Rules, 2004 - HELD THAT:- What is of paramount importance is that it is possible for the capital goods, on which CENVAT credit has been taken, to be removed after one day of use in the manufacturing process or after years of use altogether. Indeed, Rule 5A of the said Rules, introduced in the year 2005, throws some light on this aspect as the capital goods which are rendered waste or scrap attract only a payment by the manufacturer or an amount equal to the duty leviable on the transaction value. In the instant case, there is no doubt that the capital goods were used for some time and the assessee no longer desired to use such goods and, accordingly, sought permission to remove the same; whereupon, pursuant to the department s advice by the department s reply of October 12, 2006, the assessee paid the amount of CENVAT credit availed for acquiring the Arc furnace in cash since it had no CENVAT credit in its balance. According to the assessee, Rule 3(5) of the said Rules of 2004 came to be amended in November, 2007 by the incorporation of a proviso which, in effect, provided that the amount of CENVAT credit availed of at the time of acquisition of any capital goods for the use thereof by the manufacturer for producing any excisable products would have to be refunded, but the quantum of refund would stand reduced to 2.5 percent for every quarter that the capital goods had been used by the manufacturer - if a clever manufacturer wanted to hoodwink the department by obtaining the capital goods on CENVAT credit and after a short use thereof wanted to dispose of the same, he would have to refund a larger part of the CENVAT credit he availed of. According to the assessee, the Tribunals all over the country have always applied the proviso to Rule 3(5) with retrospective effect as the omission of the proviso would operate harshly on a manufacturer who wanted to replace the capital goods several years after its acquisition - This is the only area that requires attention. In the event the department is willing to give the present assessee the benefit under the proviso on the basis of the practice that may have evolved or by giving the proviso retrospective effect, the matter may end there. List on March 3, 2022. CST, VAT & Sales Tax 2022 (3) TMI 98 Maintainability of petition - availability of alternative remedy - assessment order has been passed by the Assessing Officer/Deputy Commissioner in compliance of the order passed by this Court - HELD THAT:- This Court merely directed the said authority to expedite and take up the matter, if possible, on day-to-day basis and complete the proceedings within a period of two weeks thereafter. In the selfsame order, it was made clear that the order to be passed by the said authority will always be subject to further appeals or revisions, as is provided under law. The apprehension of the petitioner is more illusory than real, that the Appellate Authority would not decide the matter on merits. Since the appeal against the order sought to be filed only within 60 days as per Section 45(4) of the Himachal Pradesh Value Added Tax Act, 2005 or such longer period as the appellate authority may allow, for the reasons to be recorded in writing, the present petition is disposed off by requiring the petitioner to file appeal within 30 days from today. 2022 (3) TMI 97 Cancellation of petitioner's petition - appeal filed within time limitation or not - Section 107 of the TNGST Act - HELD THAT:- It is a settled proposition of law that, when there is a limitation prescribed under the Statute and the Statute itself restricts the condonable period of limitation beyond which no judicial authority can extend the condonable period by way of a judicial order for any reason - Here in the case in hand, the Statute prescribes the limitation of three months and thereafter it also fixed the condonable period of 30 days. Both this period was over as early as on 21.12.2019, whereas admittedly the appeal was filed only on 25.08.2021. Now the reason stated by the petitioner is that, due to COVID-19 pandemic he could not file an appeal and his belated filing of appeal is saved by the order passed by the Hon'ble Supreme Court in the suo-motu proceedings by an order dated 15.03.2020 [ 2021 (11) TMI 387 - SC ORDER ] extending the period of limitation by three months and the same was extended from time to time. In this case, absolutely no reason is available for this Court to venture into such an attempt because, admittedly the condonable period was over by 21.12.2019 and admittedly the appeal was filed only on 25.08.2021. The Supreme Court order has come only on 15.03.2020. Therefore, before 15.03.2020 within the condonable period, admittedly the petitioner has not chosen to file the appeal, nor the petitioner has filed any writ petition before this Court during that period and the same has not been kept pending before this Court. When that being so, the proposition projected in the said case as cited by the learned counsel for the petitioner would not be in any way helpful to the petitioner to advance his case. Therefore, for that reason also, the present plea made by the petitioner cannot be entertained. This Court has no hesitation to hold that the petitioner cannot have any successful challenge against the impugned order, where the appeal filed by the petitioner, for the said reason of want of limitation and also beyond the condonable period of delay was dismissed, of course rightly - Petition dismissed. Indian Laws 2022 (3) TMI 96 Dishonor of Cheque - rebuttal of presumption - cheque amount is large than the debt due - cheque issued towards the debt incurred by the petitioner, or not - debt due and default or not - HELD THAT:- The purpose of inserting Chapter XVII in the Negotiable Instrument Act, 1881 was to bring out sanctity in commercial transactions. It is admitted that the petitioner had issued a cheque for a sum of ₹ 15,00,000/-. Section 139 of the Negotiable Instrument Act, 1881, creates a presumption that unless contrary is proved, the holder of a cheque has received the cheque for discharge in whole or in part of any debt or other liability. The contention of the petitioner is that out of the loan amount, a sum of ₹ 2,69,000/- has been paid and, therefore, the cheque, which has been deposited by the complainant, was for an amount greater than the amount due and payable. The bank transfers have been admittedly made by the nephew of the petitioner in the bank account of the wife of the complainant. Whether the amounts given by the nephew of the petitioner was at the behest of the complainant or it was deposited in the bank account of the wife of the complainant in lieu of the debt incurred by the petitioner or not, are pure questions of fact which can be established only by leading evidence by the petitioner - It is well settled that the Courts should primarily proceed on the averments in the complaint, and the defence of the accused cannot be looked at the stage of issuing summons unless it can be shown on admitted documents which the Apex Court describe as unimpeachable in nature and sterling in quality to substantiate that there was no debt due and payable by the person who has issued the cheque or that the cheque amount is large than the debt due. It is well settled that the inherent powers should be exercised sparingly, with circumspection and in the rarest of rare cases when the Court is convinced, on the basis of material on record, that allowing the proceedings to continue would be an abuse of the process of law or if the ends of justice is required that the proceedings ought not to be quashed - it cannot be accepted that the amounts deposited by the nephew of the petitioner in the bank account of the wife of the complainant was towards the debt incurred by the petitioner. This Court finds that, no case of quashing the complaint is made out - Petition disposed off. 2022 (3) TMI 95 Seeking grant of Regular Bail - Bribery - illegal gratification - evidence on record/document to show that the applicant was aware of the source of the money or not - HELD THAT:- On a specific query from the learned SPP for CBI as to whether there exists any call or transcript of any conversation between the applicant and the accused/Akil Ahmad, apart from the calls exchanged during the trap proceedings, the answer was given in the negative. Concededly, even in the recovered WhatsApp messages, no mention of any bribe or bribe amount was found. It has been alleged in the FIR that accused/Akil Ahmad was in the habit of asking for illegal gratification, however learned SPP, on instructions, informed that apart from the present case, no other case has been registered against him or the present applicant - It has also come on record that the mobile phone and laptop of the applicant have been seized and he has also given his voice samples. Reportedly, different amounts have been recovered from the accused persons. The CBI is stated to have recovered an amount of ₹ 3.71 crores during the investigation from co-accused/Mahim Pratap Singh Tomar, who has already been released on bail. An intimation regarding the same is stated to have been given to the Income tax authorities. The co-accused persons, namely Retnakaran Sajilal, Sunil Kumar Verma and Uma Soni have also been granted bail. Except the order dated 07.01.2022, whereby co-accused/Devendra Jain was admitted to regular bail, no other order granting bail to co-accused persons has been challenged till date. The present applicant, a Chartered Accountant, is stated to be a resident of Delhi, having deep roots in society. Besides, it was submitted by the learned Senior Counsel appearing for the applicant that the applicant is ready and willing to surrender his Passport. The same, in the opinion of this Court, alongwith appropriate conditions, can secure the applicant s presence during the trial and allay any apprehension regarding him being a flight risk - this Court is inclined to release the present applicant on bail during the pendency of the trial. Accordingly, it is directed that the applicant be released on regular bail, subject to fulfilment of conditions imposed. Bail application allowed.
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