TMI Tax Updates - e-Newsletter
March 4, 2023
Case Laws in this Newsletter:
GST
Income Tax
Customs
Insolvency & Bankruptcy
PMLA
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
Highlights / Catch Notes
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GST:
Seeking refund of reversal of the Input Tax Credit (ITC) reversed under threat, coercion and without the Will of the petitioner - Assuming that the directions contained in the Bhumi Associates at the interim stage, no authority should forget that its own Board had followed it subsequently by issuing the instructions on the basis thereof and same had also received the scrutiny at the end of Delhi High Court. - the respondent-revenue is required to reverse the ITC along with 6% interest - HC
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GST:
Rejection of request of the petitioner for registration of the Sale Certificate - rejection for registration on the sole ground that property was provisionally attached under Sec.83 of the G.S.T. Act - It is relevant to note that the petitioner was a prior mortgagee in the year 2017, whereas the provisional attachment was passed by the G.S.T. authorities on 18.12.2021. This order has already lapsed by operation of law. - As this Court has held that the first proviso to Rule 55-A has been found to be invalid and ultra vires, the respondent cannot refuse to register the document - HC
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Income Tax:
Refund/adjustment of the amount deposited - The Income Declaration Scheme, 2016 - the respondent Income Tax Department cannot be said to act contrary to its action after accepting the return filed for the assessment year 2015-16 and 2016-17, meaning thereby, that the liability of the writ petitioner of filing return for the aforesaid assessment year is no more and once it is no more, there is no authority of the Income Tax Department to retain the amount and retaining the said amount will be said to be in the teeth of provision of Article 265 of the Constitution of India. - HC
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Income Tax:
Accrual of income - interest income earned on the fixed deposit - effect of overriding title - the Assessee never becomes the owner of money and as such the addition made by the AO was not sustainable in both the assessment years. - HC
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Income Tax:
Penalty u/s 271(1)(c) - violation of principles of natural justice - Shorter period notice given - less than 24 hours given to the petitioner to appear - This shorter period of less than 24 hours can be termed as a pure and simple breach of principles of natural justice. It appears that on 28.11.2022, request was made for adjournment and the same is also reflected from the portal of the Tribunal and that such a request had been made to adjourn the hearing by few days. Without paying any heed to the same, when the order impugned has been passed, the Court requires to interfere. - HC
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Income Tax:
Income deemed to accrue or arise in India - salary received by the assessee in India for the services rendered in USA - though the provision under section 5(2)(a) of the Act fastens tax liability on the assessee, but, because of the overriding effect of section 90 of the Act, article 16 of the DTAA would prevail over the 5(2)(a) of the Act and consequently, the salary received by the assessee in India for the services rendered in USA are not liable to tax in India. - AT
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Income Tax:
Non grant of Foreign Tax Credit ('FTC') - Even in a case belated filing of Form 67, the AO should consider tax paid by the assessee in other countries when income pertains to said tax credit has been offered to tax in India as per domestic tax laws. - AT
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Income Tax:
Disallowance of the expenses claimed on ad hoc basis - If the AO was of the view that some of the vouchers are missing, the amount of addition should have been made of the same amount. Merely due to smallness of amount cannot result into any disallowance. We do not find any infirmity in the order of the CIT (A) in deleting the disallowance out of the expenses. - AT
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Income Tax:
Rectification of mistake u/s 154 - withdrawing the interest granted to the assessee u/s. 244A - as it is noticed that the AO is not the authority who could attribute the delay in the issuance of the refund u/s 244A(2) as also on the ground that the issue is highly debatable issue, we are of the view that the order passed u/s. 154 is unsustainable - AT
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Customs:
Adjudication of SCN - Period of Limitation - SCN was issued to the petitioner in the year 2009 and a personal hearing was granted to them in the very same year but the impugned order came to be passed only in the year 2020 after a lapse of more than eleven years - The impugned SCN and the Order-in-Original are hereby quashed - HC
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Customs:
Customs Broker - The licensing authority has not taken recourse to the extreme penalty of revocation of licence but has limited himself to forfeiture of security deposit. Thus, even if one of the charges held as breached does not sustain, the gravity of the two that are sustained does not detract from the proportionality of the penalty finally imposed. There are no mitigating circumstances either to commend further leniency. - AT
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Indian Laws:
Transfer of the case to CBI - Illegal detention of petitioner - When the issue raised is only a matter of evidence to be considered in the judicial proceedings to arrive at a conclusion, we are not convinced that in a case of the present nature, a direction to the CBI to hold an investigation would be justified nor is it required at this juncture when the trial in the judicial proceedings has progressed unhindered. - SC
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Service Tax:
CENVAT Credit - input services used for taxable as well as exempt services - Since the service provided to the state of J&K are not liable to service tax, as Section 64 of Chapter V of Finance Act, 1994 excludes the applicability of service tax to the state of Jammu and Kashmir, these services are neither taxable nor exempted. The services provided to non-taxable territory cannot be considered as exempted service. - AT
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Central Excise:
CENVAT Credit - after sale service provided during warranty period of the sale of the goods manufactured by the respondent - the respondent are entitle for the cenvat credit on the service of Repair & Maintenance during warranty period - AT
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Central Excise:
Revocation of registration under Central Excise - Revocation of registration, not provided for in Central Excise Rules, 2002 and only in exercise of power of Central Board of Excise & Customs (CBEC) to specify conditions, safeguards and procedure in rule 9(3) of Central Excise Rules, 2002, can be triggered only within the rigour therein and with discharge of duty liability certainly not being breach of Act or Rules, the revocation upheld by the first appellate authority is not valid in law. - AT
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VAT:
Doctrine of promissory estoppel - remission of sales tax - the petitioners have failed to demonstrate that the investment of Rs. 23 crores made by the unit was pursuant to any promise made by the government to allow remission of sales tax on such investment. Therefore, the question of reversing the promise by the State does not arise in the case on hand. - HC
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VAT:
Recovery of tax dues - Attachment of property (secured asset) - The petitioner has no concern with the dues of the State Authorities - now it is well settled legal position that the mortgagor bank has priority to recover the dues against any charges of the State Government or Central Government, more particularly the mortgage is created prior to the registration of such charge by the Authority. - HC
Articles
Notifications
Central Excise-
01/2023 - dated
2-3-2023
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CE (NT)
Appointment of Central Excise Officers and Officers of Directorate General of Audit - Seeks to amendment in Notification Nos. 38/2001-Central Excise (N.T.), dated the 26th June, 2001 and 28/2008- Central Excise (N.T.) dated 5th June, 2008
Customs-
12/2023 - dated
2-3-2023
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Cus (NT)
Rate of exchange of one unit of foreign currency equivalent to Indian rupees - Supersession Notification No. 10/2023-Customs(N.T.), dated 16th February, 2023
GST - States-
04/2023- State Tax (Rate) - dated
28-2-2023
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Bihar SGST
Amendment in Notification No. 2/2017-State Tax (Rate), dated the 29th June, 2017
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03/2023- State Tax (Rate) - dated
28-2-2023
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Bihar SGST
Amendment in Notification No. 1/2017-State Tax (Rate), dated the 29th June, 2017
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02/2023- State Tax (Rate) - dated
28-2-2023
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Bihar SGST
Amendment in Notification No. 13/2017-State Tax (Rate), dated the 29th June, 2017
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01/2023- State Tax (Rate) - dated
28-2-2023
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Bihar SGST
Amendment in Notification No. 12/2017-State Tax (Rate), dated the 29th June, 2017
Service Tax-
01/2023 - dated
2-3-2023
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ST
Appointment of Officers in the Directorate General of Audit, Directorate General of Central Excise Intelligence and Directorate General of Service Tax - Seeks to amend Notification No. 22/2014- SERVICE TAX dated 16th September, 2014
Circulars / Instructions / Orders
News
Case Laws:
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GST
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2023 (3) TMI 163
Cancellation of registration of petitioner - cancellation on the ground of non-submission of reply to SCN - case of the petitioner is that he has not been able to get the show cause notice issued by the respondent and, therefore, he could not submit the reply within the stipulated time and, thus, an order came to be passed whereby registration of the petitioner was cancelled - HELD THAT:- The present petitioner is also entitled for the benefit of the order passed by this Court in Technosum India Pvt. Ltd. Lucknow Vs. Union of India and others [ 2022 (9) TMI 1412 - ALLAHABAD HIGH COURT ]. In the said judgment, the Court has held that the impugned order does not assign any reason whatsoever for cancelling registration of the petitioner and is passed only on the ground that reply to the show cause notice is not given. The non-submission of reply to the show cause cannot be a ground for cancellation of the registration. The present petitioner is also entitled for the same relief. The benefit of the order dated 26.9.2022 passed in Writ Tax No.145 of 2022, shall also be made available to the present petitioner. The order as well as the appellate order is set aside and the petitioner is permitted to appear before the respondent along with the reply to show cause notice - Petition allowed.
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2023 (3) TMI 162
Cancellation of GST registration of petitioner - non-submission of reply to SCN - case of the petitioner is that he has not been able to get the show cause notice issued by the respondent and, therefore, he could not submit the reply within the stipulated time - HELD THAT:- The present petitioner is entitled for the benefit of the order passed by this Court in TECHNOSUN INDIA PVT. LTD. LUCKNOW THRU. ITS DIRECTOR AMIT KUMAR GAUTAM VERSUS UNION OF INDIA THRU. PRIN. COMMISSIONER, CENTRAL G.S.T., LKO. U.P. AND 2 OTHERS [ 2022 (9) TMI 1412 - ALLAHABAD HIGH COURT ]. In the said judgment, the Court has held that the impugned order does not assign any reason whatsoever for cancelling registration of the petitioner and is passed only on the ground that reply to the show cause notice is not given. The non-submission of reply to the show cause cannot be a ground for cancellation of the registration. In view thereof, the present petitioner is also entitled for the same relief - the order dated 23.01.2021 as well as the appellate order dated 06.02.2023, is set aside and the petitioner is permitted to appear before the respondent along with the reply to show cause notice and the certified copy - petition allowed.
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2023 (3) TMI 161
Rejection of petitioner's application seeking for amendment under the Tamil Nadu Goods and Services Tax Act, 2017 to reconstitute the partnership firm - liability of N.Azeem Basha, being partner of Azeem Transport Company - HELD THAT:- N.Azeem Basha seems to have retired from the petitioner's partnership business as early as on 18.04.2019 itself. Unless and until the aforementioned documents are considered by the respondent, the respondent cannot come to the conclusion that N.Azeem Basha is also involved in the petitioner's partnership business as well as in the other businesses viz., M/s.Azeem Packaging and M/s.Nawas Garments. Having not considered the documents that too when the petitioner has categorically stated that N.Azeem Basha is no longer involved in the petitioner's partnership business, this Court is of the considered view that by total non application of mind to the aforementioned documents, the impugned order has been passed by the respondent, rejecting the petitioners' application seeking for amendment as required under the TNGST Act. Hence, the impugned order has to be necessarily quashed and the matter has to be remanded back to the respondent for fresh consideration on merits and in accordance with law, after affording a fair hearing to the petitioner including granting them the right of personal hearing. The matter is remanded back to the respondent for fresh consideration on merits and in accordance with law - Petition allowed by way of remand.
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2023 (3) TMI 160
Cancellation of GST registration of petitioner - non-filing of GST returns for a continuous period of six months - non-constitution of GST Tribunal - time limitation for filing appeal - HELD THAT:- This is an order passed by the first appellate authority under Section 107(1) of the CGST Act. As per subsection (1) of Section 107 of the CGST Act, limitation for filing appeal is three months from the date of communication of the order appealed against. Under sub-section (4) of Section 107 of the CGST Act, the appellate authority may allow the appeal to be presented within a further period of one month, provided sufficient cause is shown by the appellant - Though the lower appellate authority may be right in holding that while it may allow filing of an appeal beyond the limitation of three months for a further period of one month, therefore, by extension of limitation beyond the extended period of one month delay beyond the extended period of one month cannot be condoned, such a stand taken by respondent No.1 may adversely affect the petitioner. This is more so because respondent No.2 had suo motu cancelled the GST registration of the petitioner on the ground of non-filing of returns and as GST Tribunal has not been constituted under Section 109 of the CGST Act, petitioner would be left without any remedy. Matter remanded back to respondent No.3 for a fresh decision in accordance with law - petition allowed by way of remand.
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2023 (3) TMI 159
Rejection of request of the petitioner for registration of the Sale Certificate - rejection for registration on the sole ground that property was provisionally attached under Sec.83 of the G.S.T. Act - petitioner was a prior mortgagee in the year 2017, whereas the provisional attachment was passed by the G.S.T. authorities on 18.12.2021 - petitioner would mainly contend that even applying Rule 55-A of the Registration Rules, the socalled provisional attachment has lapsed by operation of law itself - constitutional validity of Rule 55-A of the Registration Rules - subordinate Legislation is ex facie found to be in conflict with the provision of the Parent Act and Transfer of Property act as well as constitutional rights. HELD THAT:- This Court has encountered with several Writ Petitions challenging the orders of the Registering authority refusing to register the documents or transaction permitted under law. Though the rule 55(A) has not been directly challenged this Court is of the view that when a subordinate Legislation is ex facie found to be in conflict with the provision of the Parent Act and Transfer of Property act as well as constitutional rights, the sub ordinate legislation will have to yield to substantive law governing the field and constitution as pointed out by the Supreme Court in Government of Andra Pradesh vs Lakhsmi Devi [ 2008 (2) TMI 850 - SUPREME COURT ] wherein it is held that The Constitution is the highest law of the land, and no law which is in conflict with it can survive. Since the law made by the legislature is in the second layer of the hierarchy, obviously it will be invalid if it is in conflict with a provision in the Constitution (except the directive principles which, by Article 37, have been expressly made non-enforceable). Prior to the insertion of Rule 55-A the Registrar could refuse to register a document if it fell within any of the categories in Section 22-A B of the Act or under Section 34 or if the case fell within any of the circumstances set out in Rule 162 of the Registration Rules. However, it has become a practice for Sub-Registrar s to refuse registration of documents citing internal circulars requiring them to produce title deeds to scrutinize title etc. Several writ petitions have come up before this Court challenging such refusals. In one such case, the issue was whether once a sale agreement is registered by the vendor, the subsequent documents in respect of the same immovable property could be refused to be registered by the Registrar. In other words, once an agreement for sale is registered under the Registration Act, whether the vendor is debarred from effecting any agreement or transfer in respect of the same immovable property. As there were conflicting decisions of single judges the matter was directed to be placed before a Division Bench - The reference was eventually answered by the Division Bench in N. RAMAYEE VERSUS THE SUB-REGISTRAR, REGISTRATION DEPARTMENT AND ORS. [ 2020 (11) TMI 1100 - MADRAS HIGH COURT] , where it was held that it cannot be said that merely because agreement for sale is registered without obtaining decree of declaration that such agreement is void, subsequent transfer is prohibited and cannot be registered. We hold that as discussed in our judgment, Registrar has no right to refuse to register the subsequent document on the basis that agreement of sale was already registered in respect of same property. In VANNARAKKAL KALLALATHIL SREEDHARAN VERSUS CHANDRAMAATH BALAKRISHNAN AND ANR. [ 1990 (3) TMI 371 - DELHI HIGH COURT ] , the Supreme Court made it clear that an agreement of sale entered before the order of attachment can be taken to its logical conclusion and a sale deed can be executed even after the order of attachment. The issues have been thoroughly deliberated and elaborately discussed in Ramayee s case, which has also been affirmed by the Supreme Court, this Court is of the view that the effect of the first proviso is to set at naught to the above declaration of law by the Supreme Court and the Division Bench and it nullifies the several provisions of the Transfer of Property Act, as stated above. The authorities under the Registration Act have no jurisdiction to make rules which have the direct and immediate effect of restraining transactions which are permitted under the Transfer of Property Act. Such a restriction would be clearly illegal and violative of a citizen s right to deal with his property and would clearly infringe Article 300-A of the Constitution. It does not bear repetition that Article 300-A has now been recognised as a human right. It is also well settled by the decision of the Supreme Court in J.K. Industries Ltd. v. Union of India, [ 2007 (11) TMI 401 - SUPREME COURT ] that a subordinate legislation may be struck down as arbitrary or contrary to statute if it fails to take into account vital facts which expressly or by necessary implication are required to be taken into account by the statute or the Constitution. Furthermore, Rule 55-A is a delegated legislation which cannot go beyond the scope of the Parent Act viz., the Registration Act as well the Transfer of Property Act which is the substantive law governing the transfer of immovable properties. Hence, the first proviso is clearly ultra vires and unconstitutional. In the case at hand, provisional attachment was passed by the G.S.T. authorities. The registration of the Sale Certificate was rejected for this reason. It is relevant to note that the petitioner was a prior mortgagee in the year 2017, whereas the provisional attachment was passed by the G.S.T. authorities on 18.12.2021. This order has already lapsed by operation of law. Sec.83(2)of G.S.T.Rule makes it clear that every such provisional attachment shall cease to have effect after the expiry of a period of one year from the date of the order made under sub-section (1). Therefore, provisional attachment made by the second respondent vide order dated18.12.2021 has ceased to have effect, after expiry of a period of one year. There is no material to show any final order of attachment, or any subsequent order passed by the second respondent pursuant to the aforesaid order. As this Court has held that the first proviso to Rule 55-A has been found to be invalid and ultra vires, the respondent cannot refuse to register the document - The respondent cannot refuse to register the Sale Certificate as sought for by the petitioner - Petition allowed.
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2023 (3) TMI 158
Rejection of refund request - educational institution - sanction of refund for the tax period April, 2020 to August, 2020, along with interest computed from the date of filing of the original application for refund - applicability of circular dated 17.06.2021 (Circular No. 151/07/2021-GST) as ultra vires to the provisions of entry at Serial No. 66(a) read with Para 2(y) of the Notification No. 12/2017-CTR - fee charge for FMGE Screening Test as a fee for accreditation. HELD THAT:- Issue notice. List on 22.03.2023.
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2023 (3) TMI 157
Seeking refund of reversal of the Input Tax Credit (ITC) reversed under threat, coercion and without the Will of the petitioner - It is case of the petitioner that no assessment has been framed so far nor any demand has been raised in absence of any assessment, the quantum of demand cannot be determined hence, the action of coercive recovery by reversing the ITC in electronic credit ledger is bad in law. HELD THAT:- It appears that the officer concerned was to remain present before the Court. There is no reference of his remaining present. However it has been conveyed to that Court that the officer had remained present. Be that it may today the officer is also present. The fact remains that there is categorical directions issued by this Court in [ 2021 (2) TMI 701 - GUJARAT HIGH COURT ] and allied matters. That, order itself was the reason for publishing the instructions which received the attention of Delhi High Court which also frowned upon the action of the authority by questioning its non-fulfillment of one of the directions, (direction No.2) contained in Bhumi Associates. as the instructions had permitted making of voluntarily payments of filing DRC 03 on the basis of ascertainment of their liability on non payment/short payment of taxes before or at any stage of proceedings. The only safeguard is of the tax officers to inform the tax payers regarding the provisions of voluntary tax payments through DRC-03. These instructions surely are not keeping in pace with the directions issued in toto. They being binding in nature even though issued at an interim stage everywhere in sur-rejoinder, the officer concerned has referred to them as the observations. This is an apparent case where scant regard is shown to the interim directions of this Court which have so far not been challenged. Having issued the instructions with regard to the same by No.01/2022-23 on 25th May, 2022, this disregard on the part of the officer concerned is required to be viewed with little seriousness, what has been offered thereafter, is of filling up of the form for reversal of ITC, instead of an end that to by saying that there is some amount of difficulty with the portal and due to those limitations the filling up the Form will be necessary - Assuming that the directions contained in the Bhumi Associates at the interim stage, no authority should forget that its own Board had followed it subsequently by issuing the instructions on the basis thereof and same had also received the scrutiny at the end of Delhi High Court. This Court requires to hold that the respondent-revenue is required to reverse the ITC to the tune of Rs. 37,68,300/- along with 6% interest - Petition disposed off.
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Income Tax
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2023 (3) TMI 156
Refund/adjustment of the amount deposited in pursuance to the declaration made under Section 183 of the Finance Act, 2016 The Income Declaration Scheme, 2016 against his tax liabilities under the Income Tax Act, 1961 - Whether in a fact where the amount so assessed for the assessment years 2015-16 and 2016-17 has been paid by the petitioner after taking recourse of the Income Tax Department under Section 132 and 153A of the Income Tax Act, 1961 even then retention of the amount so deposited by virtue of the provision of Section 183 of the Finance Act, 2016 can be allowed to be retained? - HELD THAT:- This Court, after going through the Income Declaration Scheme, 2016 and the Voluntary Disclosure of Income Scheme, 1997, has found therefrom that the provision of Section 67(2) of the Voluntary Disclosure of Income Scheme, 1997 is pari materia to Section 187(3) of the Income Declaration Scheme, 2016 and the provision as contained under Section 70 of the Voluntary Disclosure of Income Scheme, 1997 is pari materia to Section 191 of the Income Declaration Scheme, 2016. This Court, on consideration of the judgment rendered by Hon ble Apex Court in the case of Hemalatha Gargya [ 2002 (11) TMI 6 - SUPREME COURT] where the consideration has been given on the issue of refund on the basis of the amount having not been deposited in entirety by way of declaration made under Section 67 and even when the specific bar is there not to refund in view of provision of Section 70, the direction has been passed for refund of the amount in favour of the assessee. The ground which has been taken that the amount since has been deposited by way of declaration made under Section 183 contained in the Finance Act, 2016, which contains a provision under Section 191 for not refunding the amount so deposited in any circumstances will be applicable over and above the return filed and accepted by the respondent Income Tax Department. But the said argument is not acceptable to this Court for two reasons, first, on the similar provision as was contained in Section 70 of the Scheme 1997 when the Hon ble Apex Court has been pleased to direct for refund of amount then it is not available for the Income Tax Department to take this ground negating the claim of assessee/writ petitioner merely on the ground that the provision of Section 191 debars from making refund of the amount. The second reason that the respondent Income Tax Department cannot be said to act contrary to its action after accepting the return filed for the assessment year 2015-16 and 2016-17, meaning thereby, that the liability of the writ petitioner of filing return for the aforesaid assessment year is no more and once it is no more, there is no authority of the Income Tax Department to retain the amount and retaining the said amount will be said to be in the teeth of provision of Article 265 of the Constitution of India. Accordingly and in the facts and circumstances of the case, this Court is of the view that the writ petition deserves to be allowed. The amount so deposited by the writ petitioner under the Scheme, 2016 is directed to be adjusted in the future assessment. Entitlement for interest over the amount retained - Refund of tax along with interest in favour of the assessee will be only in a case if the tax paid either as advance tax or on self-assessment, in order to discharge the obligation under the Act. Not complying the obligation under the Act, gives consequences to an assessee just as non-compliance or an order passed by the authority under the Act. Thus, if there is no voluntary payment of tax on self-assessment and in that circumstances, there is no question of making payment of interest to the assessee. As in the given facts of the case, it is not the case of the petitioner that he has paid the tax at source or paid the tax advance tax. However, the case of the petitioner is that he has paid the tax on self-assessment i.e., under the provision of Section 183 but his conduct of giving declaration itself suggest and shows that the self-assessment shown by the petitioner is not found to be in accordance with law and that is the reason the declaration to that effect has been given and that ultimately led to assessing the assessee by taking recourse of the provision of Section 153A of the Act, 1961. This Court, in view of the facts of the given case, is of the view that the conduct of the petitioner cannot be considered to be proper for issuance of a direction for payment of interest in favour of the writ petitioner even if this Court has directed for adjustment of the amount so deposited.
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2023 (3) TMI 155
Accrual of income - interest income earned on the fixed deposit - effect of overriding title - Assessee is a government undertaking working under the instruction of the Government who on the directions of the Government keeps a portion of unutilized funds in short term bank deposits and interest earned from these deposits is transferred to the respective fund accounts of the Government - whether said interest income being covered under the Income from Other Sources as defined in the Income Tax Act, 1961? - Tribunal justification in holding that an executive guideline (guideline issued by the Ministry of Tourism in the case) can override the statutory provisions of the Income Tax Act, 1961 - HELD THAT:- As a matter of fact, an office memorandum issued by the Joint Secretary, Ministry of Tourism, Govt. of India had directed to the Assessee that funds released as installments of Central Financial Assistance (CFA) from the Ministry of Tourism were to be deposited in saving accounts or fixed deposits in banks and as a result a substantial amount accrues as interest on deposits made out of CFA. It was also directed to ensure utilization of earned interest on deposits for the execution and completion of concerned projects without deviation to any other head of expenditure. In case there is no scope to utilize the amount of interest for execution of the concerned project, such amount may be returned to the Ministry of Tourism. Thus, the income never reached the Assessee and was diverted at source by an overriding title. The law is well settled by a long catena of cases to the effect that in event of there being a diversion of income by overriding title, question of income being assessed in the hands of Assessee does not and cannot arise. Reference in this regard may be made to the case of Shri Sitaldas Tirathdas, Bombay [ 1960 (11) TMI 17 - SUPREME COURT] . Thus it is clear that the Assessee never becomes the owner of money and as such the addition made by the AO was not sustainable in both the assessment years. CIT (A) as well as the ITAT who has sustained the order of CIT (A) did not commit any error in holding that the petitioner never became the owner of the money which came from interest and deleted the addition. We are of the considered view that no error ahs been committed by both the forums. - Decided against revenue.
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2023 (3) TMI 154
Reopening of assessment u/s 147 - validity of notice u/s 148A - serious allegations of breach of principle of natural justice and issuance of notice u/s 148 - HELD THAT:- Since the order has been disposed off in complete disregard to the details which have been furnished, in our opinion, it is in breach of principles of natural justice and the matter shall need to be sent back to the officer concerned from the stage where he has committed serious error in not complying with the statutory requirements. The least that could have been done is to follow the principles of natural justice and also adhere to the provisions prescribed under the statute. We appreciate the fairness on the part of the learned counsel for the other side. The order u/s 148A(d) as well as notice u/s 148A of the I.T. Act need to be quashed.
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2023 (3) TMI 153
Penalty u/s 271(1)(c) - violation of principles of natural justice - Shorter period notice given - less than 24 hours given to the petitioner to appear - whether `short notice is `no notice ? - HELD THAT:- We notice that there has been a serious flaw in affording the opportunity of hearing to the parties, which has resulted into imposition of huge amount of penalty on 28.11.2022. Notice u/s 274 read with section 271(1) (c) of the Act had been issued and the petitioner was asked to appear in person or through a duly authorised representative at 11:00 a.m. on 29.11.2022. This show cause notice as to why the order imposing penalty be not made under section 271(1)(c) of the Act gives less than 24 hours to the petitioner, whereby it had asked the petitioner to appear in person or through a duly authorised representative. This shorter period of less than 24 hours can be termed as a pure and simple breach of principles of natural justice. It appears that on 28.11.2022, request was made for adjournment and the same is also reflected from the portal of the Tribunal and that such a request had been made to adjourn the hearing by few days. Without paying any heed to the same, when the order impugned has been passed, the Court requires to interfere. Resultantly, the petition is allowed. The impugned order of penalty dated 30.11.2022 is quashed and set aside.
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2023 (3) TMI 152
Revision u/s 263 - deduction u/s 54 - assessee had failed to deposit the unutilized capital gain proceeds in the capital gain account scheme, 1988, on or before the date of furnishing his return of income u/s 139(1) - assessee made investment in the name of his wife and mandatory condition to deposit the capital gains in prescribed manner was not fulfilled by the assessee - HELD THAT:- From the assessee s submissions as made before CIT(A), it could be seen that the assessee has fairly demonstrated start of construction activities during the year. Substantial payment of Rs. 7 Lacs was made during the year towards construction activities and therefore, there would be no requirement to deposit the same in capital gains account scheme. Another undisputed fact is that the amount of capital gains earned by the assessee has been utilized towards construction of house property though the new house property has been acquired in the name of the assessee s wife. In our considered opinion, would not jeopardise the claim of the assessee considering the fact that the utilisation of sale proceeds towards construction of house property has not been disputed by AO. We do not find any reason to interfere in the impugned order. Appeal stand dismissed.
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2023 (3) TMI 151
Income deemed to accrue or arise in India - salary received by the assessee in India for the services rendered in USA - overriding effect of section 90 of the Act - INDO-UK DTAA - doubt taxable in India under the provisions of section 5(2)(a) - scope of resident of contracting state - Whether article 16 of the DTAA would prevail over the 5(2)(a) of the Act ? - HELD THAT:- Respectfully following the decision of the Hon ble AAR in British Gas India (P) Ltd., In re [ 2006 (11) TMI 139 - AUTHORITY FOR ADVANCE RULINGS ] we hold that though the provision under section 5(2)(a) of the Act fastens tax liability on the assessee, but, because of the overriding effect of section 90 of the Act, article 16 of the DTAA would prevail over the 5(2)(a) of the Act and consequently, the salary received by the assessee in India for the services rendered in USA are not liable to tax in India. Consequently, we direct the learned Assessing Officer to delete the addition made. Assessee appeal allowed.
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2023 (3) TMI 150
Deduction of weighted deduction u/s 35(1)(iii) and u/s 35AC denied - denial of natural justice - recorded statements of certain persons for denying deduction - not allowing the assessee to cross-examine and providing the material on the basis of which adverse view has been take - allegation of mandatory and statutory procedural requirement before completing the assessment not adhered - HELD THAT:- It is noted that evidence filed before the ld. Assessing Officer have not been rebutted by ld. Assessing Officer who had not conducted any examination or enquiry in this regard before arriving at the conclusion. It is noted that ld. Assessing Officer chose to remain silent on these documentary evidence furnished by the assessee and has not found any discrepancy in the details filed by the assessee. It is noted that ld. Assessing Officer is completely guided by the report of the investigation wing and has not made any independent enquiry in this regard by applying his independent mind. AO has relied on the report of investigation wing who had recorded statements of certain persons which have been claimed by the assessee as having no relation with assessee or trust. From the perusal of answers to certain questions noted by the ld. Assessing Officer in the assessment order, we note that the persons mentioned in the answers have no connection with the assessee as claimed by the assessee. Such an aversion in the statements relied upon, leads us to understand that heavy reliance placed by the ld. Assessing Officer on these statements, is misplaced. From the perusal of documentary evidence placed in the paper book, it is evident that the three trusts/societies are eligible entities duly notified by the Central Government/CBDT u/s 35(1)(iii) and u/s 35AC of the Act. It is also noted that approval is granted to an organization u/s 35(1)(iii) and u/s 35AC by the Central Government/CBDT only after strict compliance of law. The approval is granted for after various levels of scrutiny and checks and to the concerns of evident track record and doing research activity. It is also a fact that the three trusts/societies were eligible to receive the contributions from assessee as duly notified by CBDT. Further, assessee had made submission before the Bench which is taken on record as a statement at the Bar that in case of all the three trusts/societies, their registrations have not been cancelled by the Department. We take note of the statement of the ld. Counsel that once assessee has made payments to these trusts/societies, it was neither authorized nor required to check the end use of the funds by these organizations that are independent in their own accord. Thus, if any irregularities have happened, those have happened at the end of the said trusts/societies and the assessee is in no way connected to the scheme of arrangement, if any, alleged to be bogus by the authorities below; more particularly, is absence of any positive material or evidence to prove that cash in lieu of the bank payments made by the assessee was given back either to the assessee or to any of its representatives. As in any assessment, principles of natural justice plays an important role and no addition or disallowance can be made without following such principles. Natural justice is the essence of fair adjudication, deeply rooted in tradition and conscience, to be ranked as fundamental. Further, provisions of Section 142(3) makes it incumbent on AO to give an opportunity of being heard to the assessee in respect of any material gathered on the basis of any enquiry which is proposed to be utilized for the purpose of assessment. This is a mandatory and statutory procedural requirement before completing the assessment in which ld. AO has failed. Thus considering answers to specific questions in the statements recorded referred to in assessment order and the submission made along with corroborative documentary evidence placed on record and the judicial precedence stated above, we find favor with the claim of the assessee to allow the claim of deduction u/s 35(1)(iii) and 35AC of the Act, details of which are already tabulated above. Thus, grounds taken by the assessee in this respect are allowed.
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2023 (3) TMI 149
Capital gain computation - Addition invoking provisions of Section 50C - issue of valuation to DVO was rejected by taking view that it is a time barring matter - HELD THAT:- Assessee right from the beginning is claiming that the assessee and his co-owner agreed that the purchaser shall bear the levy of charges for conversion of land use from Navi sharat to Juni sharat and the payment of Rs. 1.61 Crore was paid by the purchaser on behalf of assessee as the assessee and his brothers were not having such means. No investigation of facts about the payment of said premium paid by purchaser, in a consequence acquisition of asset, was carried out by the assessing officer or by ld CIT(A). Considering the confirmation filed by the purchaser that land premium of Rs. 1.61 Crore paid by the purchaser was integral part of the sale consideration it was paid by the purchaser, in furtherance of oral contract. No doubt such premium was paid by purchaser directly to the state revenue authorities. In making such payment apart from showing in sale deed, there was no financial loss to the State Government on payment of stamp duty as the stamp duty was collected as per jantri rate, which was much more than the sale consideration shown on the sale deed. The Hon ble jurisdictional High Court in PCIT Vs Ravjibhai Naginbhai Thesia [ 2016 (9) TMI 645 - GUJARAT HIGH COURT] held that once reference made to the DVO under section 50C, even though it is lesser than value adopted by stamp valuation authority, the assessing officer is to compute capital gain by taking valuation given by DVO. Similar view was taken by Allahabad High Court in CIT Vs Dr Indira Swaroop Bhatnagar ( 2013 (2) TMI 456 - ALLAHABAD HIGH COURT] - We find that that actual difference in the sale consideration claimed by the assessee at Rs. 3.41 Crore and the value determined by DVO at Rs. 3.56 Crore, is only 6.66%, therefore, the assessee is entitled for the benefit of third proviso to section 50C(1), which has been held as retrospective in series of decision by Tribunal. We direct the assessing officer to compute the capital gain by consideration the cost of entire asset at Rs. 3.41 Crore and grant benefit of third proviso to section 50C(1). In the result, the appeal of the assessee is allowed in the above terms.
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2023 (3) TMI 148
Exemption u/s 11 and 12 - delay for filing form 10B - exemption denied on non-furnishing the audit report in Form-10 alongwith return of income or before filing of return of income - HELD THAT:- As decided in Trust for Reaching The Unreached Through Trustee [ 2021 (2) TMI 185 - GUJARAT HIGH COURT] held that when the assessee trust substantially satisfied the condition for availing benefit of exemption as trust, exemption cannot be denied merely on bar of limitation in furnishing audit report in Form-10. Assessee has substantially satisfied all the conditions for availing the benefit of exemption under Section 11/12 of the Act and except for filing audit report in Form 10B, which was filed belatedly, thus respectfully following the decision of Hon'ble Jurisdictional High Court, the grounds of appeal raised by assessee are restored back to the file of Assessing officer to verify the contents of Form 10 for all the assessment years and grant necessary exemptions by passing the order in accordance with law. Appeal of the assessee is allowed for statistical purposes.
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2023 (3) TMI 147
Revision u/s 263 by CIT - Addition u/s.56(2)(viia) - FMV of the share - As per CIT AO during the course of assessment proceedings has not examined the issue of applicability of provisions of Section 56(2)(viia) of the Act on account of investment in unlisted equity shares during the year - benchmark to be adopted whilst dealing with the issue as to whether or not an AO has carried out enquiry or verification - HELD THAT:- PCIT has failed to appreciate that a due inquiry and application of mind was in fact exercised by the AO to arrive at its conclusion that no income had escaped assessment. It is crucial to note that the PCIT in its impugned order, contrary to the above stated facts, made the observation that even when the assessee had submitted details of FMV of the shares in question, showing that there was no income arising there from. The AO had examined and accepted the same, there was no error in the Assessment Order to that extant. We find that the ld. PCIT has failed to consider that Section 263 of the Act vests revisionary power in a superior officer and, therefore by the very inherent nature of such power, it does not allow for substitution of the view taken by the AO. The appreciation of the material placed on record before the AO is exclusively within the four corners of its domain and it cannot overlap with exercising revisionary powers u/s 263 on the ground that the AO should have arrived at a different conclusion basis the material on record. Case of the Assessee is squarely covered by the coordinate bench decision in the case of Pawansut Media Services vs. PCIT [ 2021 (11) TMI 924 - ITAT DELHI] wherein on near identical facts, the Tribunal quashed the revisionary order u/s 263. Thus in the present case after examining the Explanation 2 to Section 263, submission of the ld. DR, ratio given by the ld. PCIT to treat the Assessment Order as erroneous so far it is prejudicial to the interest of the Revenue in the present case is concerned, we are of the view that the revisionary powers so conferred cannot be exercised to invalidate the action of AO and the Ld. PCIT was not justified in invoking the provisions of Section 263 of the Act to set aside the assessment order passed by AO u/s 143(3) of the Act. Ergo, the order of ld. PCIT passed u/s 263 is hereby quashed. Assessee appeal allowed.
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2023 (3) TMI 146
Non grant of Foreign Tax Credit ('FTC') - adjustment in the Intimation under Section 143(1) - Form 67 filed by the assessee - claim allowable as per Section 90 of the Act read with Article 24(4) of the India-Philippines Double Taxation Avoidance Agreement ((DTAA') and Article 23(4) of India Netherlands DTAA read with CBDT circular No. 333 dated 02 April 1982 - HELD THAT:- As we find that this issue is squarely covered in favour of the assessee by the decision of ITAT, Chennai in the case of Shri. Govindarajan Roopkumar [ 2022 (9) TMI 557 - ITAT CHENNAI] where under identical circumstances, the Tribunal by following the decision of ITAT Bangalore in the case of Ms. Brinda Ramakrishna [ 2022 (2) TMI 752 - ITAT BANGALORE] held that when the assessee has filed Form 67 on or before due date for filing return of income u/s. 139(4) of the Act, the AO ought to have considered said Form and allow credit for tax paid in other countries. We, further noted that CBDT has issued a notification on 18.08.2022 and explained the position of law as per Rule 128(9) of I.T. Rules, 1962 and clarified that Form 67 in prescribed form is required to be filed under Rule 128(9) of IT Rules, 1962 can be filed on or before extended due date for filing return of income u/s. 139(4) of the Act and said clarification has been made applicable from assessment year 2022-23 - it is very clear that even in a case belated filing of Form 67, the AO should consider tax paid by the assessee in other countries when income pertains to said tax credit has been offered to tax in India as per domestic tax laws. Therefore, we are of the considered view that, the AO is completely erred in denying credit for foreign tax for non-filing of Form 67 within the due date specified u/s. 139(1) of the Act. CIT(A), without appreciating facts simply sustained additions made by the AO and thus, we direct the AO to allow credit for foreign tax paid in other countries as per Form 67 filed by the assessee. Appeal filed by the assessee is allowed.
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2023 (3) TMI 145
Exemption u/s 54/54F - property comprising land and building at Chennai has been acquired by Chennai metro Rail Ltd u/s. 194LA - said property has been acquired by the assessee in the year 1987 and further made a construction in the year 1997 and assessee had also purchased new residential house property - HELD THAT:- As it is very clear that property transferred by the assessee by way of compulsory acquisition by Chennai Metro Rail Ltd is a long term capital asset, which is eligible for the benefit of exemption u/s. 54 of the Act. Although, there is a dispute with regard to the nature of property, whether it is commercial or residential, the assessee has filed relevant evidences to prove that said property was a residential house property and income from which is assessable under the head income from house property. Therefore, we are of the considered view that the assessee is entitled for exemption u/s. 54 of the Act towards capital gains derived from transfer of capital asset. Amount of exemption claimed by the assessee and further whether the assessee has satisfied the conditions prescribed u/s. 54 - In this case, there is no dispute with regard to the fact that the house property purchased by the assessee on 30.08.2012 is having a multiple units, which is one a residential house property. Therefore, we are of the considered view that, the assessee is entitled for exemption u/s. 54 - In so for as the observations of the AO with regard to the purchase of another residential house property on 12.12.2013 in light of provisions of section 54F we find that the observations of the AO is devoid of merits, because the assessee never claimed exemption u/s. 54F of the Act, but has claimed exemption u/s. 54 of the Act. Therefore, we reject the observations of the AO. We are of the considered view that exemption claimed u/s. 54 of the Act, in respect of purchase of new residential house property on 30.08.2012 is in accordance with law and the assessee has rightly claimed exemption after satisfying conditions prescribed therein. Therefore, we direct the AO to allow exemption claimed u/s. 54 of the Act, in respect of purchase of new residential house property and construction thereon. Exemption claimed u/s. 54EC - As we find that the assessee has made a normal fixed deposit of Rs. 25 lakhs each in two nationalized banks. Although, the assessee has made fixed deposits on or before due date for filing return of income u/s. 139(1) of the Act, but fact remains that in order to get the benefit u/s. 54EC of the Act, the assessee should invest the amount of capital gain in eligible bonds. In this case, the assessee has made investment in normal fixed deposits. In our considered view, said investment does not quality for exemption u/s. 54EC of the Act. Thus, we upheld the findings given by the ld. CIT(A) in rejection of exemption claimed u/s. 54EC of the Act. Appeal filed by the assessee is partly allowed.
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2023 (3) TMI 144
Revision u/s 263 - AO allowed exemption under section 54F instead of section 54 - assessee has filed appeal against the same issues before Ld. CIT(Appeals) u/s 250 of the Act and the same are pending adjudication - HELD THAT:- Assessee filed an appeal against said order, since larger issue was pending before Commissioner (Appeals), Commissioner could not invoke jurisdiction under section 263 against said order of Assessing Officer on account of statutory bar. In the case of CIT v. Vam Resorts Hotels (P.) Ltd [ 2019 (8) TMI 1418 - ALLAHABAD HIGH COURT] when an appeal is pending before Commissioner (Appeals), exercise of jurisdiction under section 263 by Commissioner would be barred. The ITAT Rajkot in the case of Parin Furniture Ltd.[ 2022 (7) TMI 957 - ITAT RAJKOT] held that when an appeal is preferred by the assessee under section 250 of the Act before CIT Appeals is pending against order passed by the learned AO under section 147 of the Act, the same cannot be revised under section 263 of the Act. Since the issues in respect of which 263 proceedings were initiated are pending adjudication before Ld. CIT(Appeals) in appeal filed by the assessee under section 250 of the Act, the Principal CIT cannot proceed to simultaneously assume jurisdiction with respect to those very same issues which are under consideration before CIT(Appeals). Accordingly, in view of the above observations and in light of judicial precedents highlighted above, we are of the considered view that the order passed by Principal CIT is unsustainable and is therefore set aside. Appeal of the assessee is allowed.
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2023 (3) TMI 143
Addition u/s 41(1) - cessation of liability in view of continuing operations with the party - HELD THAT:- The provision of Section 41(1) provides that where assessee has obtained any benefit in respect of trading liability by way of remission or cessation same is taxable in the hands of the assessee in the year of cessation. The above liabilities are outstanding in the balance sheet of the assessee. They have not been written back by the assessee nor there is any evidence that these liabilities have been waived by the creditors. These liabilities are existing in the books of the assessee as payable. CIT (A) has categorically held that there is no evidence of cessation of this liability and therefore, addition u/s 41(1) is not sustainable. We also find that there is no evidence that the liability for payment of the above sum has ceased. This is also so because the assessee being assessed u/s 143(3) of the Act in earlier years, no such addition on account of current balances of Sundry Creditors was made. It is also not shown that any of the liability is non existing. In Principal Commissioner of Income Tax-6 V New World Synthetics Ltd [ 2018 (9) TMI 230 - DELHI HIGH COURT] it is held that Non-payment of outstanding liability which is admitted and acknowledged as due and payable by an assessee does not indicate remission or cessation of liability - We do not find any infirmity in the order of the CIT (A) in deleting the addition u/s 41(1). Ground no 1 of appeal is dismissed. Disallowance of the expenses claimed on ad hoc basis - CIT (A) has categorically held that there is no reason to uphold the addition because it was merely an estimate and that too without any basis - HELD THAT:- We find that in the earlier years this was the only dispute and same was not challenged before any appellate authority. In the present year, CIT (A) held that all the details of expenses were provided to the AO. If the AO was of the view that some of the vouchers are missing, the amount of addition should have been made of the same amount. Merely due to smallness of amount cannot result into any disallowance. We do not find any infirmity in the order of the CIT (A) in deleting the disallowance out of the expenses. The order of the learned CIT (A) is confirmed. Appeal of AO dismissed.
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2023 (3) TMI 142
Rectification of mistake u/s 154 - withdrawing the interest granted to the assessee u/s. 244A - delay in the issuance of the refund u/s 244A(2) - debatable issue - HELD THAT:- Whether the issue of responsibility for the delay can be attributed under section 244A(2) of the Act is concerned, restoring the issue to the file of the AO in the present case would be an act of futility. This is because we are faced with an order under section 154 - If at all the direction u/s. 244A(2) was to be granted by the appropriate authority, who admittedly is not the AO, then such direction could have been issued before the issuance of show cause notice u/s. 154 of the Act. Now when the issue is before the Tribunal and much water has flowed under the bridge, by restoring the issue to the file of the AO, no purpose would be served insofar as such a direction cannot be obtained from the appropriate authority for a fresh issuance of a show cause notice u/s. 154 as the same would be substantially time barred - as it is noticed that the AO is not the authority who could attribute the delay in the issuance of the refund u/s 244A(2) as also on the ground that the issue is highly debatable issue, we are of the view that the order passed u/s. 154 is unsustainable and consequently, the order of the Assessing Officer and that of the Ld. CIT(A) stands quashed. Appeal of the assessee stands allowed.
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2023 (3) TMI 141
Unexplained cash credit u/s 68 - difference in the opening capital account - CIT (A) deleted the addition made by the AO by observing that credit in the capital account is reflecting mainly on account of the merging of the books of accounts - HELD THAT:- All the personal assets and liabilities shown in the personal financial statement as on 31 March 2010 have been transferred to the financial statements of the proprietary concern which has certainly resulted in the addition of the capital account in the year under consideration. In simple words, capital account of the proprietary concern was credited in the year under consideration but with respect to those transactions, belonging to the personal capacity, pertaining to the earlier years. As such, it is only the accounting adjustment which has been made by the assessee in the proprietary concern for the transactions which were carried out by him in the earlier years. Thus, the question arises whether the provisions of section 68 of the Act can be attracted on account of cash credit shown by the assessee in the year under consideration. In the given case, the answer stands in negative. It is for the reason that there is a single assessee maintaining two sets of financial statements. Transactions shown by the assessee in the personal capacity can only be disturbed in the year to which it pertains. As far as, the year in dispute is concern, there is no addition in the capital account of the assessee to be verified in pursuance to the provisions of section 68 - Hence on this score only, the finding of the learned CIT (A) is not required to be interfered. Addition in the capital account of the assessee - we note that it was representing the duplicate entry made in the books of accounts inadvertently. As such the amount of ₹1.96 gross was already part of the personal assets shown by the assessee in the personal capacity. This error was rectified by the assessee subsequently in the financial year 2014-15. This fact has not been doubted by the AO. Accordingly we hold that, such addition of ₹1.96 crores is not sustainable and the finding on this issue of the learned CIT (A) does not required to be disturbed. Difference in the opening capital of the assessee - we note that there was no addition in the capital account of the assessee, rather the difference in the opening capital account of the assessee for Rs. 10,48,002/- was representing the debit entry. Therefore, the same cannot be subject matter of addition under the provisions of section 68 of the Act. Hence, we do not find any reason to interfere in the finding of the learned CIT (A). We uphold the finding of the learned CIT (A). Hence the ground of appeal of the revenue is held by dismissed. Addition after rejecting the books of accounts u/s 145(3) - profit was not determined as per accounting standard 7 i.e. construction contract issued by the ICAI - HELD THAT:- We note that the assessee has already recognized the gross revenue taking into consideration the 30% completion of the project and 45% of the booking amount which is as per the accounting standard 7 issued by the ICAI. Besides the above the assessee has already offered income in different assessment years almost at the same rate in the assessment year 2012-13 and 13-14 which was duly accepted in the assessment framed under section 143(3) - As such in all the years beginning from assessment year 2010-11 to 2016-17, the income declared by the assessee was duly accepted by the revenue except for the year under consideration. The assessee against the total project cost of ₹11.78 crores has offered total income over the project life at ₹1.43 crores i.e. during A.Y. 2010-11 to 2016-17. Assessee has declared the profit shown by him against the cost of project in the different assessment years and the overall profit from the entire project comes to 12.37% which is reasonable in the real estate activities. At the time of hearing, the learned AR has not brought anything contrary to the finding of the CIT (A). Thus, keeping in view the principles of consistency, we do not find any reason to disturb the finding of the CIT (A). Hence the ground of appeal of the revenue is hereby dismissed. Estimating the profit only on WIP - AO held that the assessee was liable to offer profit on such WIP in the year under consideration and accordingly estimated the profit at the rate of 15% on such WIPs and added the same to the total income of the assessee - CIT(A) deleted the addition made by the AO by observing that no income has accrued to the assessee as per accounting standard 7 issued by the ICAI - HELD THAT:- WIP-Heights we note that such WIP was transferred to the company namely Classic Build Project Pvt. Ltd which was shown as loan by the assessee in his books of accounts. Thus in such a situation we are of the view that no profit can be estimated on such WIP. WIP Kankariya we note that such WIP consist amount incurred for purchase, expenses for demolition of old structure on land and certain initial expenses. The total cost incurred till the year under consideration was less than 10 % of estimated project cost (2.5 crore). Therefore, considering the fact that project was in early stage the question of estimating any income from such WIP does not arise. WIP - Marathas Society we note that such WIP was representing the cost of the land with minor expense such as security and electricity. With respect to such WIP no project was approved yet. In other words, no activity of whatsoever was carried out on such land shown as WIP by the assessee. Accordingly, we are of the view that there is no question of estimating the profit with respect to such WIP shown by the assessee. In view of the above and after considering the facts in entirety, we do not find any infirmity in the order of learned CIT(A). Hence the ground of appeal of the revenue is hereby dismissed. Unexplained cash credit under section 68 - As per CIT-A amount received by the assessee represents the business receipts which is outside the purview of the provisions of section 68 - HELD THAT:- On perusal of the details of the parties/customers/members who have acquired the property in the scheme developed by the society, we note that the amount was received by the assessee for the purpose of the construction. The assessee against such money has shown work-in-progress as evident from the financial statement which are placed - it is also important to note that the assessee following the project completion method has also offered the income on the amount of money received by him and therefore we are of the view that no separate addition under the provisions of section 68 is warranted. DR has not brought any iota of evidence contrary to the finding of the learned CIT(A). Hence, the ground of appeal of the revenue is hereby dismissed. Disallowance of labor expenses - determine the genuineness of the Labour expenses in the absence of supporting documents - CIT(A) restricted the disallowance to the tune of ₹1 lakh only - HELD THAT:- AO in the absence of necessary supporting vouchers should have made reference to the earlier year and subsequent year labour expenses in order to find out whether the assessee has claimed excessive Labour expenses. But no such comparison was made by the AO. Likewise, the AO has also not made any comparison with the comparable cases qua the Labour expenses. Furthermore, there is no provision under the Act to make the disallowance of the expenses on ad hoc basis. If, sufficient supporting vouchers are not available, the AO cannot make the disallowance on ad hoc basis without comparing the reasonableness of expenses in comparison to the earlier and later years and after taking into account the comparable cases. In view of the above and after considering the facts in totality , we do not find any infirmity in the order of the learned CIT ( A ) . Hence the ground of appeal of the revenue is hereby dismissed.
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2023 (3) TMI 140
Capital gain u/s 50B - slump sale - disallowances made towards sundry debtors not collectible, bank guarantee, provision towards warranties, advance license liability and adjustment to net worth toward assets acquired - whether expenses and deductions claimed by the assessee as a deduction / adjustment to the purchase price is allowable? - HELD THAT:- As noticed that the assessee has sold capacitor business and component business on slump sale basis. As per section 2(42C) slump sale means the transfer of one or more undertakings as a result of the sale for a lump sum consideration without values being assigned to the individual assets and liabilities in such sales. We will therefore first look at the provisions of section 50B of the Act which contain the special provision for computation of capital gains in case of slump sale. Net worth is defined in Explanation 1 to section 50B as the difference between the aggregate value of total assets of the undertaking or division and the value of its liabilities as appearing in books of account . The aggregate value of total assets of the undertaking or division is the sum total of: WDV as determined u/s.43(6)(c)(i)(C) in case of depreciable assets, The book value in case of other assets. Net worth is deemed to be the cost of acquisition and cost of improvement for section 48 and section 49 of the Act. As per section 50B, no indexation benefit is available on cost of acquisition, i.e., net worth. Lower authorities have not examined the evidences submitted and have not verified the terms of the agreement. Assessee also has not given before the lower authorities which would help the CIT(A)/AO to understand the facts, with regard to the clear breakup of the various adjustments made and how the same is relatable to the completion accounts to substantiate that it is an adjustment to purchase price - issue of various adjustments disallowed by the CIT(A)/AO with regard to the computation of capitals gains should be remitted to the AO for a de novo verification of facts. AO is directed to consider the adjustments made based on completion accounts, objections filed by the purchaser, the details of bank guarantee invoked etc., before deciding the case. AO is also directed to keep in mind the decision of the coordinate bench in the case of Bhoruka Aluminium Ltd [ 2022 (8) TMI 1348 - ITAT BANGALORE] while deciding the allowability of the various adjustments claimed by the assessee against the provisional purchase price. The assessee is directed to submit all the relevant details and cooperate with the proceedings. It is ordered accordingly. Non deduction of TDS - disallowance towards payments to sales executives is also done on the basis that the assessee failed to furnish any credible evidence or details relating to the payments before the lower authorities - We therefore remit both these issues back to the AO to verify the details of tax deducted, evidences of sales promotion activity and the explanations the assessee would provide in this regard. The assessee is directed to submit the relevant evidences and documents in this regard and cooperate with the proceedings. Appeal filed by the assessee is allowed for statistical purposes.
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2023 (3) TMI 139
Stay of demand - Direction to the assessee to pay the requisite taxed, as per Board s instruction 1914, being 20% of outstanding demand as per notice under section 156 - HELD THAT:- We are of the considered view that once the Assessing Officer takes a view that in terms of the CBDT instructions, 20% of demand is to be paid by the assessee and the balance demand can, by implication, be stayed during the pendency of the first appeal, such a computation of 20% has to be with respect to total disputed demand, and not with respect to the outstanding demand specified under section 156. We, therefore, deem it fit and proper to remit the matter to the file of the Assessing Officer, for the limited purposes of verification whether 20% of the disputed demand is paid, and if so, pass an appropriate order granting the stay to the assessee on such conditions as deemed appropriate. However, if for whatever reasons, the Assessing Officer passes an order, on the stay petition, which is adverse to the assessee, AO shall not take any coercive action against the assessee for two weeks from the service of such order, so as not to pre-empt the remedial measures that the assessee may seek to pursue against the same. In the meantime, with the consent of the parties, the related appeal is fixed for hearing on 16th November 2022. The parties are directed to ensure that the necessary paper books etc. are filed in time so as to ensure expeditious disposal of this appeal on the scheduled date of hearing. Stay application is allowed for statistical purposes.
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2023 (3) TMI 116
Reopening of assessment u/s 147 - Addition on account of Long Term Capital Gain - HELD THAT:- Re-opening of the assessment in assessee s case was justifiable as the independent satisfaction was given. Besides that, the assessee in the details filed in Income Tax Return did not consider the Jantri Value in computation of gain which is the disputed fact by the Revenue. Therefore, ground no.1 is dismissed. LTCG Computation - As from the perusal of the records it can be seen that in the return of income in respect of land and the value as determined by the DVO is approximately 8.95% higher but less than 10%. This was never disputed or controverted by the Revenue at any point of time. As per third proviso to Section 50C brought on statute w.e.f. 01.04.2019, the Tribunal on various occasions has applied the said proviso retrospectively as the difference is less than 10% in the actual value taken than the DVO s value. Therefore, ground no.2 is allowed.
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2023 (3) TMI 115
Re-argue case - abuse of the process of the court - Appeal against order wherein tribunal dismissed the appeal of the assessee as withdrawn - appeal was filed before this Tribunal against the order of the ld. CIT(A) wherein, the Tribunal dismissed the appeal as withdrawn - appellant moved petition u/s 154 before the ld. CIT(A) against the impugned order, who allowed the petition u/s 154, consequent to which the claim for deduction u/s 80IB(10) came to be allowed in favour of the assessee but order of the ld. CIT(A) allowing the petition u/s 154 was allowed in favour of the Revenue - HELD THAT:- It is obvious that such a litigative adventure by the present appellant is clearly against the principles of Res Judicata as well as principles of Constructive Res Judicata and principles analogous thereto Res Judicata is common to all civilized system of jurisprudence to the extent that a judgment after a proper trial by a Court of competent jurisdiction should be regarded as final and conclusive determination of the questions litigated and should forever set the controversy at rest. any proceeding which has been initiated in breach of the principle of Res Judicata is prima-facie a proceeding which has been initiated in abuse of the process of Court. the principles of Constructive Res Judicata, as explained in explanation IV to Section 11 of the CPC, are also applicable to the appellant. Thus, the attempt to re-argue the case which has been finally decided by the Court of competent jurisdiction is a clear abuse of process of the Court, regardless of the principles of Res Judicata, as has been held by Hon'ble Supreme Court in K.K. Modi v. K.N. Modi [ 1998 (2) TMI 566 - SUPREME COURT] Thus, the adventure made by the appellant in filing the present appeal, is nothing but abuse of process of Court, deserves to be deprecated in all possible terms.
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2023 (3) TMI 114
Addition u/s. 68 towards Loan - identity, creditworthiness and genuineness of transactions - HELD THAT:- From the details placed on record before us, we observe that so far as the first creditor, Shri Prakashbhai Shivbhai is concerned, the assessee has placed on record confirmation from such creditor. Further, we also observe that the creditor is having PAN and had filed return of income of approximately Rs. 2,50,000/- for assessment years 2016-17 2017-18, he is a mechanical engineer by profession and has been working for M/s. Ajanta India Ltd. for past many years, copy of his bank passbook was also furnished. We also observe that the aforesaid loan was also repaid back by the company to Shri Shivlal Manjibhai and copy of account statement reflecting the repayment to Shri Prakashbhai Shivbhai has also been produced before us. Accordingly, assessee has been able to substantiate identity, creditworthiness and genuineness of transactions in respect of unsecured loan taken from Shri Prakashbhai Shivbhai. Second creditor Shri Shivlal Manjibhai, we observe that the assessee has filed various details like copy of confirmation from Shri Shivlal Manjibhai before ld. CIT(A), copy of agricultural forms Shri Shivlal Manjibhai, copy of confirmation from Smt. Laxmiben Manjibhai dated 10- 06-2021 to the effect that he had advanced a sum of Rs. 97,000/- to Shri Shivlal Manjibhai, copy of agricultural forms of Shri Shivlal Manjibhai were also furnished before ld. CIT(A) during the course of appellate proceedings. Assessee has also produced extracts of the bank statement reflecting repayment of the above amount back to Shri Laxmiben Manjibhai which was repaid through banking channel. Assessee has been able to establish identity, creditworthiness and genuineness of the transaction in respect of both the unsecured loans. Appeal of the assessee is allowed.
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Customs
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2023 (3) TMI 138
Adjudication of SCN - Period of Limitation - SCN was issued to the petitioner in the year 2009 and a personal hearing was granted to them in the very same year but the impugned order came to be passed only in the year 2020 after a lapse of more than eleven years - contentions of the petitioner in this writ petition is that even though Section 75 of the Customs Act, 1962 does not prescribe a period of limitation for recovering the duty drawback amount, any recovery can be made only within a reasonable period. HELD THAT:- In the instant case, admittedly the show cause notice which culminated in the passing of the impugned Order-in-Original was issued on 12.03.2009, whereas the Order-in-Original was passed after a lapse of more than eleven years i.e., only on 25.09.2020. Pursuant to the show cause notice dated 12.03.2009, the petitioner has sent a reply on 09.09.2009 and a personal hearing was also afforded to the petitioner on 10.09.2009 itself. However, the Order-in-Original which is challenged in this writ petition was passed only on 25.09.2020 after a lapse of more than eleven years. The Hon'ble Supreme Court in the case of STATE OF PUNJAB VERSUS BHATINDA DISTRICT CO-OP. MILK P. UNION LTD. [ 2007 (10) TMI 300 - SUPREME COURT] , though dealing with a case involving reopening of an assessment under the Punjab General Sales Tax Act, 1948 has held that though limitation is not prescribed under Section 21 of the said Act, the statutory authority must exercise jurisdiction, within a reasonable period - Having passed the Order-in-Original on 25.09.2020 even though the show cause notice was issued by the 2nd respondent as early as on 12.03.2009 which was also replied by the petitioner on 09.09.2009 and a personal hearing was afforded to the petitioner on 10.09.2009 itself, the 2nd respondent did not pass the final order immediately thereafter or within a reasonable time but has chosen to pass the impugned Order-in-Original only on 25.09.2020 after a lapse of more than eleven years. The petitioner claims that the said amount was paid under protest, though there is no documentary evidence produced by the petitioner before this Court to show that the same was paid under protest. Even assuming that the petitioner's statement that the said amount was paid under protest is to be accepted by this Court, even otherwise, the petitioner is not entitled for refund, as any refund claim will also be barred by limitation. When the petitioner has pleaded before this Court that on the ground of limitation the Order-in-Original ought not to have been passed, the same yardstick applies to the petitioner as well. The petitioner cannot blow hot and cold - this Court makes it clear that the petitioner is also not entitled for refund of the amount, which they had already paid in the year 2007 itself, which is the subject matter of the Order-in-Original which is challenged in this writ petition. The impugned show cause notice dated 12.03.2009 and the Order-in-Original, dated 25.09.2020 are hereby quashed and the writ petition is allowed.
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2023 (3) TMI 137
Valuation of imported goods - prime cold rolled sheets (non-alloy) - enhancement of assessable value - rejection of declared value, by recourse to rule 12 of Customs Valuation (Determination of Value of Imported Goods) Rules, 2007 - HELD THAT:- The impugned goods are cold rolled coils of non-alloy steel and cold rolled sheets of non-alloy steel from Ukraine backed with documentation for value of US$ 530 and US$ 517 per MT (CF). For coils, the price indicated in the Metal Bulletin of 10th September 2012 was adopted as the base on the finding that these, on FOB terms, is common across CIS countries; no evidence is at hand for concluding that these are not local market prices in Ukraine - The allowance for quantity at 4.5% is equally cryptic, as also the further abatement for not being coil, assigned to sheets. The addition of US$ 50 per MT towards freight is not compatible with the corresponding provision in Customs Valuation (Determination of Value of Imported Goods) Rules, 2007 especially as actual freight was easily ascertainable. The arbitrariness of the computation is sufficient to discredit the confirmation of enhancement by resort to rule 9 of Customs Valuation (Determination of Value of Imported Goods) Rules, 2007 in the impugned order. That assessable values of contemporaneous imports are said to be available and, indeed, claimed to be basis of rejection by empowerment in rule 12 of Customs Valuation (Determination of Value of Imported Goods) Rules, 2007 renders resort to a later option to be travesty of the valuation mechanism prescribed by law. The original authority should have placed the importer on notice of those very contemporaneous imports that were invoked as prelude to enhancement of assessable value. The impugned order is set aside and matter remanded back to the original authority for a fresh decision hearing.
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2023 (3) TMI 136
Customs Broker - Levy of penalty - Breach of obligation to discharge duties - principal allegation against the appellant of not having rendered proper advice to the importer has been countered in the grounds of appeal with nothing other than mere denial and not warranting interference with the order. HELD THAT:- The claim of having been led to satisfaction about the bona fides of the import from compliance of several regulatory stipulations does not appear to be acceptable as the appellant was bound to be no less than rigid in appreciating the purpose of restricting such imports. It has been pointed out in the impugned order that the failure on the part of the customs broker to infer infirmity in the import does not sit well with the expectations of a normal customs broker in, at least, enlightening their customers about the few exceptions in a trade regime that is characterized by open general licence (OGL) as a norm - there are no reason to interfere with the finding that regulation 13(d) of Customs House Agents Licencing Regulations, 2004 had been breached by the appellant. Non-compliance with the obligation of exercising due diligence in ascertaining correctness of the information imparted to client in the course of clearance of cargo has been held against the customs broker on inference from failure to keep customers informed of the restrictions in import of refrigerant gas of certain specifications - Though the finding on this charge by the licensing authority is bereft of detail, separate and distinct from that leading to confirmation of the first charge, we do not find that to be substantive lack as the two are mutually linked. It is, therefore, not inappropriate to conclude that the appellant had been in breach of regulation 13(e) of the Customs House Agents Licensing Regulations, 2004. Breach of obligation to discharge duties with utmost speed and efficiency and without avoidable delay - HELD THAT:- The cavalier dismissal of the counter of the customs broker in response to this charge, and in the absence of evidence demonstrating lack of speed and efficiency on the part of the appellant as also of any avoidable delay having occurred, cannot but lead to the conclusion of not being in agreement with the licensing authority on the finding that appellant had breached regulation 13(n) of the Customs House Agents Licensing Regulations, 2004 - this obligation, intended to ensure best interests of the customer and, obviously, to be invoked in circumstances of grievance aired by customers, appears to have been alleged to have been breached without any thought to the manner in which it would be established in enquiry. The licensing authority has not taken recourse to the extreme penalty of revocation of licence but has limited himself to forfeiture of security deposit. Thus, even if one of the charges held as breached does not sustain, the gravity of the two that are sustained does not detract from the proportionality of the penalty finally imposed. There are no mitigating circumstances either to commend further leniency. There are no reason to interfere with the order directing forfeiture of security deposit - appeal dismissed.
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Insolvency & Bankruptcy
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2023 (3) TMI 135
Condonation of 493 days delay in filing the appeal - period of moratorium during which the Appellant was under moratorium has to be excluded giving the benefit of under Section 60(6) of the Insolvency and Bankruptcy Code, 2016 or not - HELD THAT:- The case before the Hon ble Supreme Court in NEW DELHI MUNICIPAL COUNCIL VERSUS MINOSHA INDIA LIMITED [ 2022 (5) TMI 1123 - SUPREME COURT ] was a case where a benefit of Section 60(6) was extended to the Corporate Debtor and the Resolution Applicant in respect to the proceedings under the Arbitration and Conciliation Act, 1996. The case before the Hon ble Supreme Court was not a case for limitation for filing an appeal under Section 61 of the Code and the Court was concerned with the benefit of Section 60(6) of the Code in proceedings under 1996 Act - The Supreme Court held that Section 60(6) of the IBC does contemplate exclusion of the entire period during which the moratorium was in force in respect of corporate debtor in regard to a proceeding as contemplated therein at the hands of the corporate debtor. The present appeal is filed under section 61(1) of the Code with delay of 493 days. Our jurisdiction to condone the delay under Section 61(2) of the Code proviso is only 15 days. The delay of 493 days in filing the appeal cannot be condoned - Application for condonation of delay is dismissed.
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PMLA
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2023 (3) TMI 134
Rejection of an application filed by the Petitioner seeking transfer of the proceedings to a bench in terms of Section 6(7) of the PMLA - territorial jurisdiction - HELD THAT:- The judgment in J Sekar [[ 2018 (1) TMI 535 - DELHI HIGH COURT] ] clearly covers the issue. The Adjudicating Authority is located in Delhi and in terms of the ratio in J Sekar, this Court has the jurisdiction to entertain the present petition. Alternate remedy before the Appellate Tribunal constituted under the PMLA - HELD THAT:- The power of the Appellate Tribunal as held in Sanjay Jain [[ 2023 (1) TMI 298 - DELHI HIGH COURT] ] and U. S. Awasthi [[ 2023 (1) TMI 595 - DELHI HIGH COURT] ] is wide. The Tribunal adjudicates appeals arising out of orders passed by the Adjudicating Authority on a daily basis. In the present case, the Petitioner seeks the constitution of a Bench under Section 6(7), consisting of two members at the Adjudicating Authority level for the purpose of deciding the confirmation of the impugned Provisional Attachment order. A perusal of the provision of Section 6(7) of the PMLA, would show that it is only at the time of hearing in any matter, if the Chairperson or a member feels that the matter or case is such a nature that it ought to be heard by a Bench of two members, then the Chairperson may assign a two-member Bench for hearing of the said order - In the present case, there has been no opinion expressed by the Adjudicating Authority to the effect that the matter is so complex so as to require a two-member Bench. The Petitioner in this case has moved an application seeking constitution of two-member Bench, the maintainability of which itself could be suspect inasmuch as there has been no opinion expressed by any member of the A that such a Bench is required. The Adjudicating Authority has rejected the application filed by the Petitioner and the matter is now stated to be for final hearing before the Adjudicating Authority. In such a situation, this Court is of the view that an application under Section 6 and 7 would not even be maintainable - In any event, even if the said order of the Adjudicating Authority is to be challenged, an appeal under Section 26 would be the appropriate remedy and not a writ petition. There are no grounds that have been raised in this case for exercise of the extraordinary writ jurisdiction under Article 226. Petition disposed off.
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2023 (3) TMI 133
Seeking grant of bail - money laundering - commission of the scheduled/predicate offence - proceeds of crime - foreign funds have been remitted to India through hawala/ underground channels and through remittance sent to the accounts of members/ activists/office bearers of PFI/CFI and other related organizations - Applicability of Section 45 of the PMLA - HELD THAT:- It is clear that a person may not be involved in original criminal activity that had resulted in generation of proceed of crime but he can join the main accused either as abettor or conspirator for committing the offence of money laundering by helping him in laundering the proceed of crime. Therefore, just because the applicant was not named or not prosecuted for the predicate offence, his prosecution for money laundering cannot be said to be illegal. The Apex Court in re; Vijay Madanlal Choudhary [ 2022 (7) TMI 1316 - SUPREME COURT ] has held that provision in the form of Section 45 of PMLA, as applicable post amendment of 2018, is reasonable and has direct nexus with the purposes and objects sought to be achieved by the PMLA to combat the menace of money laundering having transnational consequences including impacting the financial systems and sovereignty and integrity of the country. While granting bail of an accused person, twin conditions of Section 45 of the PMLA will have to be adhered to. Considering the facts and circumstances of the issue in question, the bail application of the present applicant does not qualify the twin conditions of Section 45 of the PMLA inasmuch as at this stage it cannot be observed that the present applicant has not committed the offence for which the complaint has been filed against him. The proceed of crime is also in crores. The applicant is based at Abu Dhabi. The factum of guilt can be proved or disproved before the learned trial court. Learned counsel for the E.D. has informed that the trial in the present case is going on with good pace and the same may likely be concluded very soon, therefore, bail cannot be granted to the present applicant, rather direction issued to the learned trial court to conclude the trial with expedition. The bail application is rejected.
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2023 (3) TMI 132
Money Laundering - provisional attachment of property on the ground of being proceeds of crime - seeking extension of time granted by the learned Single Judge, to file effective reply to the show cause notices since a large number of properties have been provisionally attached - HELD THAT:- From a conjoint reading of relevant provisions of Sections 5 and 8 of PMLA, it is seen that there is no such time limit statutorily prescribed for submission of reply to the show cause notice issued under Sub-Section (1) of Section 8 of PMLA though it has to be borne in mind that under Sub- Section (3) of Section 5 every order of attachment made under Sub-Section (1) of Section 5 which is the subject matter of proceedings under Section 8 shall cease to have effect after expiry of 180 days or on the date of an order made under Sub-Section (3) of Section 8, whichever is earlier. Insofar the concern of the Enforcement Directorate pertaining to the overall limitation of 180 days is concerned, the 3rd proviso to Sub-Section (1) of Section 5 clearly protects the interest of the Enforcement Directorate. While computing the period of 180 days, the period during which proceedings under Section 5 is stayed by the High Court shall be excluded and thereafter a further period not exceeding 30 days shall be counted to arrive at the figure of 180 days. The direction of the learned Single Judge granting two months of further time to respondent Nos.1 to 29 to file reply to the show cause notice is in the nature of a stay order passed by the Court and therefore, the 3rd proviso to Sub-Section (1) of Section 5 will come into play - the period extended by the learned Single Judge would expire on 22.02.2023. If by that time respondent Nos.1 to 29 do not file their reply, it would be open to the appellant to proceed in accordance with law. Appeal dismissed.
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Service Tax
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2023 (3) TMI 131
Short/non payment of service tax - taxability of Service provided to SEZ - CENVAT Credit - input services used for taxable as well as exempt services - Cenvat credit on the inputs and input services used in or in relation to rendering of output services to a unit in SEZ or to a SEZ developer - suppression of facts or not - extended period of limitation. Short/non-payment of service tax - HELD THAT:- As per revenue, appellant has utilized 100% of credit taken instead only 20% as was prevalent during the relevant period in terms of Rule6(3)(c) of CCR, 2004. It is true that during the relevant period only 20% of credit could be utilized but there are force in the argument of the appellant that they were not barred from taking credit but were only barred from utilizing it - The excess utilized credit cannot be demanded, as Rule6(3)(c) is silent with regard to the period during which the 20% credit shall be utilized and in this regard Tribunal in case of VIJAYANAND ROADLINES LTD. VERSUS COMMISSIONER OF C. EX., BELGAUM [ 2006 (12) TMI 56 - CESTAT,BANGALORE] , with reference to Rule 3(5) of the Service Tax Credit Rules, 2002, which is pari materia with Rule6(3)(c) of the Cenvat Credit Rules, 2004, has held that the utilization is not restricted to monthly or quarterly basis and that it can be utilized at any time - in the present matter the demand of service tax on this ground does not sustain. As several years have passed, the appellant would have been entitled to utilize the credit subsequent to the period in question and therefore the demand on this ground is not sustainable. Reversal of CENVAT Credit - Appellant has provided taxable services to their clients in the State of Jammu Kashmir, without maintaining separate account of receipts, consumption use of Cenvat Credit - HELD THAT:- The provisions of Rule 6 of Cenvat Credit Rules comes into application when the manufacturer/service provider avails credit on inputs/input services used for manufacture of final products or providing output service which are chargeable to duty/tax as well as exempted goods/exempted services. The proviso to sub-clause (2) of Rule 1 of Cenvat Credit Rules states that nothing contained in these rules relating to availment and utilization of credit of service tax shall apply to the State of Jammu and Kashmir . Again, as per Section 64 of the Finance Act, 1994, the Act extends to the whole of India except the State of Jammu Kashmir. Thus, there is no levy of service tax on the services provided in Jammu Kashmir. The Department has construed the services rendered in Jammu Kashmir to be exempted service - Since the service provided to the state of J K are not liable to service tax, as Section 64 of Chapter V of Finance Act, 1994 excludes the applicability of service tax to the state of Jammu and Kashmir, these services are neither taxable nor exempted. The services provided to non-taxable territory cannot be considered as exempted service. Services provide by the Appellant to the SEZ units - HELD THAT:- There is no dispute as to the fact that the appellant had provided services to SEZ units. However on perusal of the retrospective amendment as has been brought in by Finance Act, 2012 by Section 144, it is found that the Central Government has categorically stated that if any services are rendered to a unit situated in SEZ, the said services cannot be termed as exempted services - Section 144 of the Finance Act, 2012, the amendment was given retrospective effect from 10-2-2006 to 20-2-2011. In other words, during the impugned period, there was no need for the assessee to reverse any credit taken on the inputs/input services in respect of which credit was availed for rendering of output services to SEZ units/SEZ developer - the demand of service tax confirmed by the impugned order is not sustainable in law. Cenvat credit on the inputs and input services used in or in relation to rendering of output services to a unit in SEZ or to a SEZ developer - HELD THAT:- The appellant is rightly entitled to Cenvat credit on the inputs and input services used in or in relation to rendering of output services to a unit in SEZ or to a SEZ developer. It is to be noticed that when the supply of service to SEZ is treated as export, it is necessarily in the context of supply by the DTA units and to extend all the benefits available in respect of export. In other words, the units supplying service from DTA are the exporters and the service supplied by the DTA units are the export service . Therefore, the definition of export in the SEZ Act should be applicable in respect of supplies made by DTA units to the SEZ units. Otherwise the said definition becomes redundant - in view of the overriding effect of Section 51 of the SEZ Act, the service supplies made by DTA units to SEZ units will amount to export for the purpose of all export benefits. The benefit shall include benefits available in respect of exports provided by exception to Rule 6 of Cenvat Credit Rules. Time limitation - no suppression of facts - HELD THAT:- There is no findings during investigation that the appellant was intentionally availing and utilizing Cenvat credit with mala fide intention. Based upon interpretation of the provisions of the Finance Act, 1994 and Cenvat Credit Rules, 2004 they bonafidely believed that they are entitled for the Cenvat credit and they correctly utilized the cenvat credit. In order to invoke the extended period, there should be suppression or willful misstatement with intention to evade payments of tax. The issue involved is of interpretation wherein the department is of the view that the appellant is not eligible for credit and they were liable to maintain separate accounts in order to avail credit when input services were common or non-entitlement when the services were exclusively used in exempted service. Whereas, the appellant were under the belief that the activities not being covered under exempted service, the credit is eligible even if service provided to SEZ units and clients of Jammu Kashmir. It is on record that appellant are regularly paying the service tax. On such ground also there is nothing to establish suppression or willful misstatement with intention to evade payment of duty on the part of appellant - demands raised against the appellant by invoking extended period is not sustainable and is time barred. Appeal allowed.
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2023 (3) TMI 130
Rejection of refund claim of accumulated CENVAT Credits - non-compliance of conditions enumerated in Notification No. 05/2006-CE(NT) dated 14.03.2006 and Notification No. 27/2012- CE(NT) dated 18.06.2012 read with Rule 5 of the CENVAT Credit Rules, 2004 - non- production of invoices and non-availability of Appellant s name in the invoices - denial also on the ground of nexus with the output service and invoice not raised in the Appellant address - period January, 2012 to March 2015. Rejection of refund on the ground of inadmissible credits for want of nexus between the inputs and outputs - HELD THAT:- Concerning mismatch of FIRC number that resulted in denial of credit to the tune of Rs.3,22,02,524/- and in respect of claim of refund of Service Tax paid under Reverse Charge Mechanism post the period of service taken, Appellant submits that both the issues are now settled through various decisions of this Tribunal which were not considered by the Commissioner (Appeals). Needless to mention here that FIRC receipt date is held to be taken for the purpose of comparison and slight mismatch in numericals could be due to various factors including typographical error, in which case name of the party issuing and receiving the service, exact amount etc. can be accepted as relevant factors for consideration of refund. On Service Tax paid under Reverse Charge Mechanism on the very next month of the quarter in which service was taken, there are force in the submission of learned Counsel that the decision of Tribunal in GUJARAT PIPAVAV PORT LTD. VERSUS COMMISSIONER OF C. EX., BHAVNAGAR [ 2008 (2) TMI 376 - CESTAT, AHMEDABAD] and M/S INDIA CEMENT LTD., VERSUS COMMISSIONER OF CENTRAL EXCISE, CUSTOMS AND SERVICE TAX, TIRUPATI [ 2018 (5) TMI 603 - CESTAT HYDERABAD] could have been taken into consideration by the Commissioner (Appeals) in deciding the issue. Rejection of refund solely on the ground that original documents were unavailable, which Appellant claims to have submitted before the Deputy Commissioner refund at Gurgaon and even had gone to extent of approaching Hon'ble Bombay High Court against rejection of their refund claim for want of original documents, which was allegedly misplaced at the Deputy Commissioner level at their Gurgaon office - HELD THAT:- The relevant provision of Section 65 could have been invoked by the Commissioner (Appeals) in deciding the issue of refund and as a matter of caution, he could have taken an undertaking from the Appellant against any future claim on the same invoices, if found out subsequently. Appeal allowed by way of remand.
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2023 (3) TMI 129
Levy of penalty u/s 76 and 77 of FA - taxability under the category of rent-a-cab-operator services or not - deemed sale or not - the first submission advanced by the learned chartered accountant for the respondent that the appeal filed by the Department has been rendered infructuous since the impugned order had merged with the order of the Tribunal cannot be accepted - HELD THAT:- The Tribunal was considering the submissions advanced by the appellant in the appeal filed by the respondent and the present appeal has been filed by the Department to assail the quantification of the penalty that has been imposed under section 76 of the Finance Act. The Tribunal had not examined this issue and so the respondent cannot be permitted to urge that this issue cannot be raised by the Department in this appeal. Levy of penalty imposed under section 76 of the Finance Act - HELD THAT:- The matter has to be remitted to the Commissioner to take a decision after the demand is re-quantified pursuant to the earlier decision dated 22.12.2016 of the Tribunal. The penalty imposed under section 76 of the Finance Act in regard to the first show cause notice is set aside. With regard to the penalty imposed under section 76 of the Finance Act for the second and third show cause notices, the matter is remitted to the Commissioner for a fresh determination in the light of the provisions of section 76 of the Finance Act - Appeal disposed off.
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2023 (3) TMI 128
CENVAT Credit - input services - lack of nexus with output service - disallowance of credit for having been availed, and long after service had been received for 2004-05 to 2010-11, in June 2012 - principles of natural justice. Denial for the lack of nexus - HELD THAT:- The bland finding is not responsible disposal of allegation in show cause notice through adjudication order and, certainly, warrants appropriate handling. Time Limitation - HELD THAT:- Doubtlessly, rule 3 of CENVAT Credit Rules 2004 is devoid of any time limit for availment of credit. There is also, no doubt, that credit availed, and unutilised, continues in the account for all time to come. Eligibility for credit of tax, included in the invoices raised by M/s Tata Sons Ltd on the appellant, is not in dispute. It also does not require to be stated that it is only with the advent of Point of Taxation Rules, 2011 that significance was attached to time for eligibility to take credit and that, prior to its notification, service was deemed to have been rendered only upon payment - Surprisingly, too, the assessee has also merely cited legal precedent without offering any justification for the delay in availing credit that, notwithstanding the position in law, devolves upon the assessee. In the absence of justification for rendering a finding of liability that does not take into account provisions of law or judicial determination, we are unable to come to conclusion on upholding of the impugned order, rejection thereof or any modifications therein. To enable disposal of the show cause notice in a manner that could be subjected to the test of law, as enacted and judiciary determined, the impugned order is set aside and matter remanded to the original authority for a fresh disposal ensuring that the principles of natural justice are adhered to. Appeal allowed by way of remand.
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2023 (3) TMI 127
CENVAT Credit - invoices not raised as per the address mentioned in the registration certificate of the Appellant - HELD THAT:- It can be said that judicial precedent relied upon by the Appellant, including the one referred by the Commissioner (Appeals) in the case of MPORTAL INDIA WIRELESS SOLUTIONS (P.) LTD. VERSUS COMMISSIONER OF SERVICE TAX [ 2011 (9) TMI 450 - KARNATAKA HIGH COURT] are in favour of the Appellant. Since it has been distinctly analysed in all those judgements that there was no such requirement of having premises registered so as to make credits eligible for the purpose of its availment against inputs taken for providing output services. In respect to the non-adherence of the judicial precedent set on the issue, as found in the relied upon decisions noted above, the ground cited by the Commissioner (Appeals) is that in all such cases the premises were sought to be registered subsequently. This is also untrue for the reason that in the leading case of mPortal India Wireless Solutions P. Ltd. itself, referred by the Commissioner (Appeals), it was held that registration with the department is not a pre-requisite for claiming the credit as no provision is in existence in the CENVAT Credit Rules, 2004 to impose such restriction. Moreover, going by the judgments relied upon, it is not noticeable that only because premises were subsequently registered credit for the previous period was allowed since in some of the cases credits were also allowed in respect of other unregistered premises. Appeal allowed.
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Central Excise
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2023 (3) TMI 126
CENVAT Credit - after sale service provided during warranty period of the sale of the goods manufactured by the respondent - service provided during warranty period is after removal of the goods from the factory is provided in or in relation to the manufacture of excisable goods or not - HELD THAT:- The service on which the respondent have taken the cenvat credit is provided in the nature of Repair Maintenance of the excisable goods i.e. pumps sold by the respondent during the warranty period. It is also observed that the policy of free servicing during warranty period is not under dispute. The respondent is not collecting the service charges from the customer which is the service during the warranty period is provided free of cost therefore, the cost of such service stand included in the transaction value of the excisable goods sold by the respondent. Rule 2(l) particularly in the inclusion clause covers the activities relating to business therefore, the said service during warranty period also clearly falls under the category of activities relating to business . This identical issue has been considered by this tribunal in the case of Leroy Somer India Pvt. Ltd [ 2015 (10) TMI 1025 - CESTAT NEW DELHI ] wherein, the tribunal has held that appellant is entitled to take Cenvat credit on repairs and maintenance provided by services provider during the period of warranty on behalf of the appellant. Thus, the respondent are entitle for the cenvat credit on the service of Repair Maintenance during warranty period accordingly, the impugned order is upheld - Revenue s appeal is dismissed.
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2023 (3) TMI 125
Revocation of registration under Central Excise - allegation of on-existent manufacturing facility to operate as a central excise assessee and claim benefits arising therefrom. - Import of goods against the Entitlement for Duty free entitlement credit certificate (DFECC) - absence of factory address in the bills of entry - N/N. 53/2003-Cus dated 1st April 2003 - HELD THAT:- We may, at the outset, decline to have anything to do with propriety of import, or adherence to obligations devolving, under duty free entitlement credit certificate (DFECC) scheme in the Foreign Trade Policy (FTP), operationalized through notification no. 53/2003-Cus dated 1st April 2003, as the lack of jurisdiction with the lower authorities precludes our jurisdictional competence too. There is no evidence of proceedings having been initiated under Customs Act, 1962 It is no less surprising that the exercise of revocation has been undertaken by the tax authorities for recovery of credit, taken under CENVAT Credit Rules, 2004, of duty discharged by the appellant at the time of import and utilised towards partial discharge of duty liability arising on clearance of goods; it does not appear to us that there is sound logic in appellant choosing to discharge duty liabilities, at different stages, on goods that were ultimately to be exported and to be unduly benefited from the exchequer when all that was sought to be reimbursed were the very same duties that were eligible to be neutralised upon exports. Revocation of registration, not provided for in Central Excise Rules, 2002 and only in exercise of power of Central Board of Excise Customs (CBEC) to specify conditions, safeguards and procedure in rule 9(3) of Central Excise Rules, 2002, can be triggered only within the rigour therein and with discharge of duty liability certainly not being breach of Act or Rules, the revocation upheld by the first appellate authority is not valid in law. Duty on final product having been discharged by the appellant, and not excluded, by any stretch, from the definition of manufacture applied to the taxable event in section 3 of Central Excise Act, 1944, denial of CENVAT credit by the original authority in the order impugned here, as held in COMMISSIONER VERSUS CREATIVE ENTERPRISES [ 2009 (7) TMI 1206 - SC ORDER] , does not have sanction of law. Appeal allowed.
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CST, VAT & Sales Tax
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2023 (3) TMI 124
Doctrine of promissory estoppel - Prayer for a writ of mandamus (To compel a court or judicial tribunal to exercise its jurisdiction when it has refused to exercise it), commanding the respondents to allow remission of sales tax - HELD THAT:- In the case on hand the petitioners have failed to prove that there exists a legal right which is to be enforced against the State and that the State has failed to perform its legal or statutory duty. No mandamus can, therefore, be issued commanding the State to exercise the power of relaxation in a manner so as to fulfill the desire of the unit to avail remission of sales tax - This Court has already observed that the petitioners have failed to demonstrate that the investment of Rs. 23 crores made by the unit was pursuant to any promise made by the government to allow remission of sales tax on such investment. Therefore, the question of reversing the promise by the State does not arise in the case on hand. Under such circumstances, the necessity to assign reasons for not allowing the remission as argued by the learned Senior Counsel for the petitioner does not arise as it is not a case of claiming exemption from liability. This Court is of the considered view that the State action in the case on hand cannot be said to be arbitrary. The learned Tribunal rightly observed that no right accrued in favour of the petitioners to claim remission of tax. The Tribunal was also right in observing that the unit was granted benefit as a special case. This Court accordingly holds that the impugned order passed by the learned Tribunal do not suffer from any infirmity. Therefore, no interference with the said order is called for. The issue that fell for consideration in K.M. Refineries [[ 2019 (9) TMI 522 - BOMBAY HIGH COURT] ] was whether the Commissioner of Sales Tax had the power to curtail the validity period for enjoyment of incentives and other benefits under the relevant Incentive Scheme and also whether such reduction could have been made in the name of the policy of GST. On such facts it was held that no authority was given to the Commissioner to modify, enlarge or curtail the validity period and also that the benefits under the Incentive Scheme cannot be curtailed in the name of the new GST policy - In the case on hand it cannot be said that the validity period for enjoyment of the Incentive Scheme has been curtailed or that the unit was deprived from enjoying the benefits of remission of tax for the investments made on Fixed Capital Assets within 31.03.2004. Thus, the reported decision in K.M. Refineries, being distinguishable on facts, do not have any manner of application to the case on hand. In Brahmputra Metallics [[ 2020 (12) TMI 1241 - SUPREME COURT] ], the curtailment of the validity period as promised by the State was in issue. It was found on facts that though the State made a representation in the relevant Industrial Policy that a rebate/ deduction in electricity duty would be offered for a specified period, the units were deprived from enjoying such benefit for such specified period due to unexplained delay in issuance of notification as contemplated under the scheme. On such factual background, the Hon ble Supreme Court held that the State action is arbitrary and violative of Article 14 - In the case on hand, this Court has already observed that State action is not arbitrary and therefore, the said reported decision is not applicable. This Court, holds that the writ petition is devoid of any merit and the same is liable to be dismissed - Petition dismissed.
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2023 (3) TMI 123
Recovery of dues - Attachment of Bank Account of petitioner - attachment on the ground that a Statutory Appellate Authority has quashed the assessment order and remanded the matter for fresh consideration - non-application of mind - violation of principles of natural justice - HELD THAT:- Admittedly, in respect of the assessment year 2016-17, the assessment order was in entirety quashed and remanded back to the first respondent for fresh consideration, on merits and in accordance with law and in respect of the assessment year 2015-16, some of the operative portion of the assessment order was quashed and without giving any notice to the petitioner, prior to the attachment and the dues of the recovery notice, the first respondent has attached the back account, lying in the bank account of the petitioner and maintained with the fourth respondent Bank, which in the considered view of this Court, is arbitrary and has been passed by total non application of mind. Insofar as the second submission made by the learned counsel for the petitioner with regard to the refund of the money, lying in the petitioner's bank account, maintained with the fourth respondent Bank, is concerned, the petitioner will have to give a representation for the same to the respondents - No prejudice would be caused to the respondents if the said representation is directed to be considered by the first respondent, on merits and in accordance with law within a time frame to be fixed by this Court. The impugned recovery notice as well as the consequential bank attachment in Form U in respect of the bank account of the petitioner, maintained with the fourth respondent are hereby quashed - Petition allowed.
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2023 (3) TMI 122
Validity of assessment orders - no personal hearing was afforded to the petitioner prior to the passing of the respective impugned assessment orders - impugned assessment orders are dated 29.10.2019, the petitioner has received the same only on 30.01.2023 - violation of principles of natural justice - HELD THAT:- The date of dispatch of the impugned assessment orders by the respondent is disclosed as 27.01.2023, though the assessment order is dated 29.10.2019. Therefore, the statement of the petitioner that they had received the assessment orders all dated 29.10.2019 only on 30.01.2023 has to be believed - Further as seen from the impugned assessment orders, no personal hearing was afforded to the petitioner. Learned Government Advocate appearing for the respondents has produced the written instructions received by the learned Special Government Pleader (Taxes) from the Assistant Commissioner, (ST), Anna Salai Assessment Circle, Chennai - 6 dated 15.02.2023, wherein they have stated that they are prepared to re-do the assessment. The said instructions received by the learned Special Government Pleader (Taxes) from the respondents is recorded. The matters have to be remanded back to the first respondent for fresh consideration on merits and in accordance with law - the impugned assessment orders are quashed - petition allowed by way of remand.
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2023 (3) TMI 121
Recovery of dues - Attachment of property (secured asset) - absolute owner of the property - legal and valid title or not? (as once purchased under the public auction) - HELD THAT:- It is a settled position of law that the debts due to any secured creditor shall be paid in priority over all other debits and all revenues, taxes, cesses and other rates payable to the Central Government or state Government or local authority. Reference made to the case of KALUPUR COMMERCIAL CO-OPERATIVE BANK LTD. VERSUS STATE OF GUJARAT [ 2019 (9) TMI 1018 - GUJARAT HIGH COURT ] where it was held that We have no hesitation in coming to the conclusion that the first priority over the secured assets shall be of the Bank and not of the State Government by virtue of Section 48 of the VAT Act, 2003. In the instant case, it is an undisputed fact that respondent No.2 Bank of Baroda is a secured creditor. Therefore, the Bank has valid first charge over the property in question by way of mortgage and has first right to sell the same in view of priority under Section 31B of the RDDBI Act, so also Section 26E of the SARFAESI Act and recovered its dues from it. The petitioner is a bona fide purchaser, purchased the property in question from the public e-auction held by the Recovery Officer and paid full and total sale consideration and the Recovery Officer has issued sale certificate in favour of the petitioner. The debts due to Bank a secured creditor shall be paid in priority over other debts/taxes payable to the State Government. The petitioner has no concern with the dues of the State Authorities - now it is well settled legal position that the mortgagor bank has priority to recover the dues against any charges of the State Government or Central Government, more particularly the mortgage is created prior to the registration of such charge by the Authority. Thus, it is held that the RDDBI Act is meant for enforcement of security interest which is created in favour of the secured creditor financial institution, and provides specific mechanism / provision for the financial assets and security interest. Petition allowed.
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2023 (3) TMI 120
Validity of reassessment order - demand of pre-deposit - non-availment of any opportunity of hearing because of the Pandemic due to COVID-19 virus - Whether The Gujarat Value Added Tax Tribunal is justified in demanding pre-deposit without assigning any reasons or by overlooking the prima facie case of the appellant? HELD THAT:- This Court in case of KAVYA MARKETING VERSUS STATE OF GUJARAT [ 2022 (4) TMI 1202 - GUJARAT HIGH COURT] has also needed to deal with the order where the Tribunal had directed to pre-deposit and hearing of the matter was prolonged on the aspect of pre-deposit. It had chosen not to address the prima facie case of the writ applicant at the stage when the directions had been issued for pre-deposit. This Court had frowned upon such approach on the part of the Tribunal by holding that This Court has time and again in identical cases has held that Tribunal is obliged to consider a prima facie case, which the appellant may be in position to highlight. It a strong prima facie case is made out, then in such circumstances, there should not be any difficulty in entertaining the appeal even without insisting for payment of tax penalty or even smaller amount. In the instant case, as can be noticed from the chronology of events, the original reassessment order which was passed after the provisional attachment order and the audit assessment was placed upon the provisional assessment order and also considering the very material which was taken into consideration during the audit assessment - It is not the final reassessment order and the amount quantified is necessary to be looked into. It is essentially the chronology of events, coupled with the fact that there is complete absence of the any opportunity at the time of reassessment which shall need to be regarded. The matter is remanded back to the original authority for passing reassessment order on quashing and setting aside that order - the reference of carried forward input tax credit of Rs.5,86,000/- to the credit of the appellant shall continue to act as as pre-deposit - petition allowed.
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Indian Laws
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2023 (3) TMI 119
Dishonour of Cheque - acquittal of the accused - appellant submitted that the learned Magistrate while dismissing the complaints for nonprosecution lost sight of the proviso to sub-section (1) of Section 256 of the Code - HELD THAT:- A plain reading of the proviso to sub-section (1) of Section 256 would indicate that where the Magistrate is satisfied that the personal attendance of the complainant is not necessary, he can dispense with the attendance of the complainant and proceed with the case. Such a situation may arise where complainant s/prosecution s evidence has been recorded and to decide the case on merits, complainant s presence is not necessary. In ASSOCIATED CEMENT CO. LTD. VERSUS KESHVANAND [ 1997 (12) TMI 629 - SUPREME COURT ] , the purpose of inserting a provision like Section 256 of the Code was discussed and it was held that where the complainant had already been examined as a witness in the case, it would not be appropriate for the Court to pass an order of acquittal merely on non-appearance of the complainant. Thus, the order of acquittal was set-aside and it was directed that the prosecution would proceed from the stage where it reached before the order of acquittal was passed. In the instant case, it is noticed that there is a specific averment in the Special Leave Petition(s) that the appellant had led its evidence in the case and thereafter had moved an application under Section 311 of the Code to summon and examine further witnesses - neither the High Court nor the learned Magistrate has taken notice of the aforesaid position. Both the courts below thus failed to consider whether in the facts of the case under the proviso to sub-section (1) of Section 256, the court could proceed with the matter after dispensing with the attendance of the complainant. Further, if the complainant had not appeared to press the application under Section 311 of the Code, the learned Magistrate could have rejected the application under Section 311 of the Code and proceeded with the case on basis of the available evidence. The learned Magistrate was not justified in straight away dismissing the complaint(s) and ordering acquittal of the accused on mere non-appearance of the complainant. The High Court too failed to take notice of the aforesaid aspects. Thus, the orders impugned are liable to be set aside. The order(s) of the High Court as well as of the learned Magistrate are set-aside - Appeal allowed.
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2023 (3) TMI 118
Failure to give possession of flats to homebuyers - HELD THAT:- The undisputed facts which have come on record are that the initiation of proceedings in the first instance in BIKRAM CHATTERJI ORS. VERSUS UNION OF INDIA ORS. [ 2019 (7) TMI 1233 - SUPREME COURT] was only confined to consider how to secure the interests of homebuyers of Amrapali Group of Companies and at a later stage, interim application was filed by the Ace Group of Companies and later few other group of companies also intervened in the proceedings, but admittedly either of the group of companies in no manner was related to the functioning of the Amrapali Group of Companies of which reference has been made in para 156 of the judgment. It is, however, true that at one stage this Court stepped into the interim application filed by Ace Group of Companies and by the other group of companies as well and passed certain interim orders protecting them in reference to revised rate of interest chargeable from the builders/developers with a further direction of restructuring of the payment schedule payable to Noida/Greater Noida authorities. The interim applications which have now been filed by various group of companies for recalling of the order dated 7th November, 2022, pursuant to which we consciously recalled our orders dated 10th June, 2020, 19th August, 2020 and 25th August, 2020 and in the present facts and circumstances, we find no reason/justification to recall our order dated 7th November, 2022. Consequently, the interim applications are without substance and deserve to be dismissed. Application dismissed.
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2023 (3) TMI 117
Transfer of the case to CBI - Illegal detention of petitioner - Smuggling - sale of psychotropic NDPS substance - framing of charges - illegal abduction - HELD THAT:- Though there is no inflexible guideline or a straightjacket formula laid down, the power to transfer the investigation is an extraordinary power. It is to be used very sparingly and in an exceptional circumstance where the Court on appreciating the facts and circumstance arrives at the conclusion that there is no other option of securing a fair trial without the intervention and investigation by the CBI or such other specialized investigating agency which has the expertise. Even if the rival contentions are taken note, there exists no issue of public importance which requires to be unearthed by an investigation to be conducted by the CBI. Even from the facts noted and the allegations made against the police, though we are sensitive to the sentiment of the appellants herein, the contention ultimately is that the offence alleged against him to have been committed on 21.10.2020 could not have been committed by him inasmuch as he had been abducted from a different State and was already in the illegal detention of the police on 20.10.2020 itself. This essentially would be the defence in the criminal trial. As already noted, the charges have been framed and the evidence is being tendered. Even though it is contended that the CCTV footage would be relevant to establish the presence of the said four persons in the hotel at Odisha and the same has not been seized by the police, the fact remains that even from the same what is sought to be established is that the said four persons had abducted the appellant No.1. In the course of trial the five persons specified by the appellants would now be available to be crossexamined and any other orders in that regard can be sought in the pending proceedings. That apart, on the other aspects also since the trial is under progress, the appellant No.1 would be entitled to put forth his case when the statement under Section 313 of CrPC is recorded and also he would be entitled to tender evidence if necessary. The case of the appellant is clear as to the reason why he contends that the appellant No.1 cannot be held to have committed the offence as registered in FIR No.232/2020 based on which his name has also been included in an earlier FIR No.255/2020. When the issue raised is only a matter of evidence to be considered in the judicial proceedings to arrive at a conclusion, we are not convinced that in a case of the present nature, a direction to the CBI to hold an investigation would be justified nor is it required at this juncture when the trial in the judicial proceedings has progressed unhindered. Hence to that extent, all contentions of the appellants are kept open. For the very reason, at this stage either quashing or discharge would also not arise. All contentions are left open to be urged before the trial court. There are no reason to interfere with orders impugned in these appeals - appeal dismissed.
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