TMI Tax Updates - e-Newsletter
March 9, 2022

Case Laws in this Newsletter:

GST Income Tax Customs Corporate Laws Insolvency & Bankruptcy PMLA Service Tax Central Excise Indian Laws

Highlights / Catch Notes

• GST:

  Release of goods alongwith vehicle - seizure on the ground that driver of the vehicle did not carry valid document - The respondents shall release the goods on (i) the petitioner either depositing under protest or furnishing a bank guarantee to the tune of ₹ 3.75 lacs before the respondent No.2 and (ii) also furnishes a bond for the full value of the goods - HC
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• Income Tax:

  Failure to take any action by the department after the Tribunal set aside the order of the DRP and also the assessment order The matter was restored to the file of the Assessing Officer with a direction to pass a fresh assessment order in accordance with law - It is very unfortunate to note that although the writ applicant has been knocking the doors of the Deputy Commissioner of the Income Tax, Vadodara, past almost two years, yet the Deputy Commissioner has not even bothered to give any formal reply to even one of the representations. - HC
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• Income Tax:

  Fee levied u/s 234E - fee was leviable u/s 200A for filing of returns - delay in filing of quarterly TDS statement - the impugned order passed by the First Appellate Authorities confirming the late fee levied by the AO u/s 200A read with section 234E in all the cases wherein the defaults were prior to 01 .06.2015 is not sustainable in the eyes of law. - AT
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• Income Tax:

  Assessment u/s 153A - Addition based on jottings in rough sheets found in search - When the jottings in rough sheets are not in themselves capable of expressing or describing the essence of the transaction the way AO has deciphered them especially without corroborative evidence of parties attributed to the transaction, and when there is no material to show nexus between the assessee herein and the alleged transactions, no addition to the income can be justifiably made - AT
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• Income Tax:

  Inflation in expenses or bogus/inflated purchases - Since, the printouts of the hard disc clearly mentioned that "forecast" and since, the Assessing Officer in the two preceding assessment years has accepted the reply of the assessee and no addition has been made in the order passed under section 143(3) of the Act, therefore, following the rule of consistency, no addition can be made for the impugned assessment year, especially when no other corroborative evidence such as bogus purchases bills/bogus expenses or unexplained investment, etc., were found during the course of search. - AT
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• Income Tax:

  Addition on account of undervaluation of closing stock - difference in the stock statement given by the assessee to State Bank of India and as recorded in the books of accounts - the addition made by the A.O. only on this basis that valuation of stock in the statement given to bank was different from the stock mentioned in the books of account was rightly deleted by the Ld. CIT(A). - AT
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• Customs:

  Refund of Customs Duty - duty paid under protest - The appellant themselves has lodged a protest during the pendency of the appeal which is also taken on record - No such protest was lodged by the appellant before to the said period. Therefore, as it is a fact on record that no evidence is available with regard to protest made by the appellant, therefore, the refund claim has been rightly rejected by the authorities below. - AT
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• DGFT:

  Extension of last date for submission of applications under certain Scrip based Schemes - Notification
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• Corporate Law:

  Transfer of applications - Sanction of a scheme of compromise - the Scheme was sanctioned by this Court and several applications were dealt with thereafter under Section 392 of CA 1956. Indeed, it bears repetition that the cut-off, as regards schemes of arrangement, is fixed at the advanced stage of reserving orders in the proceedings. Consequently, there is no provision analogous to the last proviso to Section 434(1) of CA 2013 to seek transfer of retained matters. In fine, these applications are completely misconceived and premised on the mistaken notion that CA 2013 provides for transfer of applications. - HC
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• Indian Laws:

  Prayer for specific performance of Clause 12 of the Sale Deed - If it is found that the writ petitioner is guilty of delay and latches, the High Court should dismiss it at the threshold and ought not to dispose of the writ petition by relegating the writ petitioner to file a representation and/or directing the authority to decide the representation, once it is found that the original writ petitioner is guilty of delay and latches. Such order shall not give an opportunity to the petitioner to thereafter contend that rejection of the representation subsequently has given a fresh cause of action. - SC
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• Indian Laws:

  Dishonor of cheque - fund insufficient - vicarious liability of Managing Director - the petitioners have not issued the cheques and they have tendered their resignation much before issuance of the said cheques. These are un-controvertible facts. Only a bald averment is made in the complaint against them that they were responsible for day to day affairs of the company. There is no specific averment against them to show, as to how and in what manner the petitioners are responsible for the conduct of the business of the Company. Moreover, they were not the Managing Director of the Company. - HC
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• Indian Laws:

  Dishonor of Cheque - Different cheques, may be issued for discharging the liability, arising out of one and same transaction, are separate entities and dishonour of each and every cheque gives a right to complainant to issue notice to drawer in terms of Section 138 of NI Act and on failure to make payment within period prescribed in Section 138 of NI Act entitles the complainant to file a complaint with respect to such dishonour of cheque - Dishonour of different cheques and non-payment of that amount after receipt of notice constitutes a different offence. Therefore, complainant has right to file and maintain separate complaint for dishonour of each and every cheque on failure to make payment by payer after receipt of notice under Section 138 of NI Act. - HC
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• Indian Laws:

  Applicability of time limitation - The Learned Single Judge has rightly noted that though seemingly, it is an innocuous prayer but clearly it is an attempt on the part of the Appellant to create a fresh cause of action in order to overcome the delay and laches and cannot be countenanced. It is a settled law that repeated representation does not extend limitation nor can be a ground to plead a fresh cause of action so as to overcome delay and laches which in this case is 46 years from the date the shop was demolished and over 11 years from the rejection of representation, with not an iota of explanation enabling this Court to condone the delay - HC
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• LLP:

  Limited Liability Partnership (Second Amendment) Rules, 2022 - Notification
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• Service Tax:

  Refund or adjustment against pre-deposit - interest on pre-deposit - it is not open for the subordinate authority to interpret the judgment of the superior Tribunal and bestow unto himself the powers to adjust the pre-deposit amount by coming to the conclusion that the order setting aside the order in original must be given limited effect. - HC
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• Service Tax:

  Nature of activity - sale or service - packed food which is sold as take away - the food in packed form is sold either on the counter or through delivery boys to the customers’ place. Therefore, the activity is clearly of sale of food and no service is involved - AT
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• Service Tax:

  Levy of service tax - Security Agency Service or not - police personnel supplied to public departments, private companies and persons etc. - the appellants are not liable to pay service tax being appellants are discharging sovereign functions in terms of Kerala State Police Act. Therefore, demand of service tax is not sustainable against the appellant - AT
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• Central Excise:

  Refund of Excise Duty in cash - What the assessee suggests is that the Cenvat credit given for acquisition of capital goods to a manufacturer, who is otherwise exempted from paying excise duty on its manufactured products, is revenue neutral. There is considerable force in such contention that when a manufacturer is entitled to refund of the entire excise duty, the refund to the Department of any adjusted Cenvat credit availed of would again have to be refunded by the Department by virtue of the exemption to which the assessee is entitled to. - The Department, fairly, accepts that the matter may require fresh consideration. - HC
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• Central Excise:

  SVLDRS - If such is the scheme of the Act and the Rules and if the authority has to take a decision based on the records produced by the appellant / assessee, it goes without saying that an order with reasons is required to be passed. Probably, the electronic Form SVLDRS 3 does not specifically provide a column but however, we find from the said statutory form, there is a column indicated as "remarks”. If for some reason the Designated committee was of the opinion that the pre-deposit amount of ₹ 20 lakhs cannot be reckoned (which cannot be done by the Designated Committee as the statute provides for the same), the Designated Committee was bound to give reasons in the remarks column while issuing Form SVLDRS 3 - the decision of the Designated Committee has to be held to be devoid of reasons and outcome of total non-application of mind. - HC
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• Central Excise:

  Period of limitation - Filing of appeal - apparently there was no proper service of the impugned order dated 31-01-2018 passed by the Original Authority/Assessing Authority upon the petitioner, so as to enable him to prefer an appeal before the Commissioner of Central Excise (Appeals) in accordance with Section 85 of the Act 1994. - The Hon’ble Supreme Court in catena of decisions has categorically held, that the rules of limitation are not meant to destroy the rights of the parties. The Courts are only required to ensure that, a litigant has not to take resort to dilatory tactics and has approached the Court bonafidely. - HC
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• Central Excise:

  CENVAT Credit - duty paying documents - The entire case of the Revenue is based on invocation of Rule 9(1)(bb) of the Cenvat Credit Rules and since the said Rule is not applicable in respect of the service tax paid by the recipient of service under Reverse Charge Mechanism, the demand of reversal of cenvat credit cannot be upheld - AT
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• Central Excise:

  Clandestine manufacture and removal - relevancy of statements u/s 9D in the Central Excise Act, 1944 - Both sides agreed that the procedure under section 9D has not been followed with respect to the statements. The Commissioner should be given an opportunity to follow the procedure under section 9D and come to the conclusion as to which of the statements relied upon in the show cause notice should be admitted in evidence and thereafter decided the matter. - AT
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Articles

• S. 147 : Reassessment-Revenue directed to guidelines for reassessment- CBDT to issue guidelines to its officerrs based on the Order with clear instructions which are to be strictly followed. [S. 148, 149, 150, 151, Art. 226]

Notifications

• DGFT

• 58/2015-2020 - dated 7-3-2022 - FTP
  Extension of last date for submission of applications under certain Scrip based Schemes

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• GST - States

• G.O. Ms. No.31 - dated 25-2-2022 - Tamil Nadu SGST
  Amendment in Notification No. II(2)/CTR/232(h-5)/2020, dated 13th April, 2020

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• G.O. Ms. No. 23 - dated 17-2-2022 - Tamil Nadu SGST
  Amendment in Notification No. II(2)/CTR/532(d-14)/2017 dated 29th June, 2017

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• G.O. Ms. No. 22 - dated 17-2-2022 - Tamil Nadu SGST
  Amendment in Notification No. II(2)/CTR/532(d-4)/2017, dated 29th June, 2017

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• G.O. Ms. No. 21 - dated 17-2-2022 - Tamil Nadu SGST
  Amendment in Notification No. II(2)/CTR/532(d-20)/2017 dated 29th June, 2017

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• G.O. Ms. No. 20 - dated 17-2-2022 - Tamil Nadu SGST
  Amendment in Notification No. II(2)/CTR/532(d-15)/2017, dated 29th June, 2017

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• G.O.Ms.No.181 - dated 29-12-2021 - Tamil Nadu SGST
  Amendment in Notification No. II(2)/CTR/532(d-4)/2017 dated 29th June, 2017

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• G.O. Ms. No.182 - dated 29-12-2021 - Tamil Nadu SGST
  Amendment in Notification No. II(2)/CTR/532(d-5)/2017 dated 29th June, 2017

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• G.O. Ms .No.183 - dated 29-12-2021 - Tamil Nadu SGST
  Amendment in Notification No. II(2)/CTR/662(a-9)/2018 dated 26th July, 2018

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• G.O. Ms. No. 176 - dated 22-12-2021 - Tamil Nadu SGST
  Seeks to bring in force provisions of sections 3 and 7 to 14 of the Tamil Nadu Goods and Services Tax (Second Amendment) Act, 2021

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• G.O. Ms. No. 175 - dated 22-12-2021 - Tamil Nadu SGST
  Seeks to bring in force provisions of sub-rule (2), sub-rule (3), clause (i) of sub-rule (6) and sub-rule (7) of rule 2 of the Tamil Nadu Goods and Services Tax (Seventh Amendment) Rules, 2021

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• LLP

• G.S.R. 173(E) - dated 4-3-2022 - LLP
  Limited Liability Partnership (Second Amendment) Rules, 2022

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• SEZ

• S.O. 1013 (E) - dated 3-3-2022 - SEZ
  Seeks to rescinds Notification No. S.O. 882(E) dated 24th March, 2014 - de-notification of entire area of 25.69 Hectares of the SEZ - Proposed SEZ for Agro and Food Processing Products (formerly Engineering Sector) at Villages Bhigan and Kurar Ibrahimpur, Near Murthal, District Sonepat in the State of Haryana;

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Circulars / Instructions / Orders

• SEBI - SEBI/HO/DDHS/P/CIR/2022/0028 - dated 8-3-2022
  Revision to Operational Circular for issue and listing of Non-convertible Securities, Securitised Debt Instruments, Security Receipts, Municipal Debt Securities and Commercial Paper
• SEBI - SEBI/HO/CFD/DCR-3/P/CIR/2022/27 - dated 7-3-2022
  Automation of disclosure requirements under SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011-System Driven Disclosures - Ease of doing business

News

• Webinar on Smart Search HSN- An Enhanced search HSN functionality for taxpayers.

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• Atal Innovation Mission, NITI Aayog joins hands with Snap Inc to drive AR skilling amongst Indian youth

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• On International Women’s Day, GeM adds “Stitching and Tailoring Services”

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• DIPAM, in collaboration with NITI Aayog, to organise apex level consultative Post Budget Webinar tomorrow

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• Union budget 2022-23 encourages power of youth: Smt. Nirmala Sitharaman

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• As India aspires for a $5 Trillion economy, our exports share in GDP should rise to at least 20%, says Shri Piyush Goyal

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Case Laws:

• GST

• 2022 (3) TMI 351
  Validity of SCN - monetary amount involved - Challenge on the ground that the SCN was issued without issuing pre-show-cause notice consultation as per Circular No.1076/02/2020 CX dated 19th November, 2020 issued by the Central Board of Indirect Taxes and Customs - high pitch assessment involving due above ₹ 50 lakhs - HELD THAT:- Admittedly in this case the demand involved is about 50 lakhs - On perusal of Circular of the Board dated 11 th November, 2021, it is found that though the said pre-show-cause notice consultation to the noticee is not mandatory but it does not wholly exclude issuance of notice of pre-show-cause notice consultation, which means at least it is directory and discretionary and discretion has to be exercised by the authority in a judicious and reasonable manner and the respondent authority concerned cannot exercise his power of discretion in a discriminatory or arbitrary manner or without giving any reason for not exercising his power of discretion in favour of the noticee. The petitioner has been able to make out a prima facie case for an interim order and matter requires hearing since questions of law are involved in the matter. Respondents are directed to file affidavit-in-opposition within three weeks. Petitioner to file reply thereto, if any, within two weeks thereafter - List this matter for final hearing after six weeks.

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• 2022 (3) TMI 350
  Release of goods alongwith vehicle - seizure on the ground that driver of the vehicle did not carry valid document - HELD THAT:- Subject to the assessment, the vehicle and the goods should be released on certain conditions which power in any case the respondents have under the State GST Act. At the very best the expectation of the department could be to tax the goods and impose maximum possible penalty. As long as these amounts are secured, no purpose would be served in taxing the goods in the vehicle. The goods are perishable and the transport vehicle has been stranded. The value of goods is approximately ₹ 24.84 lacs on which applicable tax would come to approximately ₹ 1.24 lacs. Considering 200% maximum imposable penalty on such basic tax amount, the round figure that would come to inclusive of possible tax and highest penalty is ₹ 3.75 lacs. The respondents shall release the goods on (i) the petitioner either depositing under protest or furnishing a bank guarantee to the tune of ₹ 3.75 lacs before the respondent No.2 and (ii) also furnishes a bond for the full value of the goods. As soon as these conditions are fulfilled the vehicle and the goods shall be released forthwith. The GST authorities may carry out assessment after issuing notice to the petitioner. The liability of the petitioner shall be judged on the basis of such assessment subject to right of appeal - the petition is disposed of.

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• 2022 (3) TMI 349
  Seeking grant of regular bail - wrongly passing input tax credit to other firms/taxable persons and issuing invoices with the dishonest intention to evade payment of taxes - HELD THAT:- The petitioner has been falsely implicated in the case subsequently on statement of co-accused. Alleged recovery of the photocopies of identity proofs was planted on him. The same also does not show his involvement in commission of the alleged offences. The petitioner is neither the proprietor nor partner of the firm. The petitioner is also not the beneficiary of the defrauded amounts. The petitioner was not aware about the fraudulent evasion of the taxes. The petitioner has not committed any offence and has no concern with the alleged offences. The petitioner was nominated as accused in two other cases of similar nature but the petitioner has been granted regular bail in both the cases by this Court vide order dated 26.08.2020 and 23.07.2020 passed by CRM-M-52922-2019 and CRMM- 53063-2019 respectively - The offences alleged to have been committed by the petitioner are triable by the Judicial Magistrate First Class. The petitioner is in custody for more than two years. The trial is likely to take long time and no useful purpose will be served by further detention of the petitioner in custody. Therefore, the petitioner may be granted regular bail. In view of the facts and circumstances of the case, nature of accusation and evidence against the petitioner, the period of his custody, the fact that all the offences are triable by the Judicial Magistrate First Class and also the fact that the trial is likely to take long time due to restrictions imposed to prevent spread of infection of Covid-19, but without commenting on the merits of the case, regular bail is granted to the petitioner - petition allowed.

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• Income Tax

• 2022 (3) TMI 348
  Faceless Assessment Scheme - Validity of assessment order in terms of Sections 143 (3) read with 263 read with 144B - violation of principles of natural justice - HELD THAT:- This court is of the view that the 2nd respondent passed the impugned assessment order in terms of Sections 143 (3) read with 263 read with 144B of the Income Tax, without affording an opportunity of hearing through video conferencing to the petitioner, though a specific request was made by the petitioner for personal hearing through video conferencing in terms of Section 144B (7) (vii) (ix), which is not only in violation of principles of natural justice, but also in violation of the mandatory provisions as contemplated under Section 144B (7) (vii) (ix) of the Act. Hence, the impugned assessment order is not sustainable in law and the same is liable to be set aside. Writ petition is allowed setting aside the Assessment Order passed by the 2nd respondent and the matter is remitted back to the Assessing Officer for a fresh assessment after duly affording a reasonable opportunity of hearing the petitioner and then pass appropriate orders in accordance with law as expeditiously as possible.

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• 2022 (3) TMI 347
  Failure to take any action by the department after the Tribunal set aside the order of the DRP and also the assessment order The matter was restored to the file of the Assessing Officer with a direction to pass a fresh assessment order in accordance with law - Validity of order of TPO passed u/s 143(3) read with Section 92CA read with Section 144C(13) - Time limit for completion of assessments and reassessments - submission of the revenue is that Section 144C is a complete code by itself, not governed by the time lines set out in Section 153 - Tribunal set aside the order of the DRP and also the assessment order and matter was restored to the file of the Assessing Officer with a direction to pass a fresh assessment order in accordance with law after receiving fresh appropriate directions from the DRP - HELD THAT:- The issue raised by the writ applicant in the present writ application appears to be prima facie covered by a direct decision of the Madras High Court in the case of Roca Bathroom Products (P.) Ltd. [ 2021 (4) TMI 355 - MADRAS HIGH COURT] wherein the case of the assessee was that the proceedings before the DRP are definitely circumscribed by the limits of time imposed by Section 153 of the Act whereas the revenue took the stance that the proceedings before the DRP are unfettered by time. The Madras High Court ultimately took the view as aforesaid that the proceedings before the DRP do get circumscribed by the limits of time imposed by Section 153 of the Act. Our attention was also drawn to one decision of the Bombay High Court in the case of Principal Commissioner of Income-tax-15 Vs. Lionbridge Technologies (P.) Ltd. [ 2018 (12) TMI 764 - BOMBAY HIGH COURT] wherein the Assessing Officer had passed the final assessment order, which was sought to be corrected by issue of a corrigendum. The High Court took the view that as the time limit to pass the draft assessment order had expired, the order of the Assessing Officer was without jurisdiction. In NOKIA INDIA PRIVATE LIMITED VERSUS DEPUTY COMMISSIONER OF INCOME TAX [ 2017 (9) TMI 1298 - DELHI HIGH COURT] observed that the period of limitation prescribed under Section 153(2A) of the Act would apply. In short, the Delhi High Court addressed itself on the question as posed in para 25 of the said judgment, whether remand is to the TPO or the DRP would not make any difference so long as the ultimate result of the remand is a fresh assessment of the issue. In such circumstances, the time limit for completing that exercise would be governed by Section 153(2A) of the Act. It is very unfortunate to note that although the writ applicant has been knocking the doors of the Deputy Commissioner of the Income Tax, Vadodara, past almost two years, yet the Deputy Commissioner has not even bothered to give any formal reply to even one of the representations. We dispose of this writ application with a direction to the respondent No.1 herein to take up the entire matter of the writ applicant for consideration at the earliest and take an appropriate decision in accordance with law, more particularly, the law which has been discussed in this order, within a period of four weeks from the date of the receipt of the writ of this order and pass an appropriate order in writing.

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• 2022 (3) TMI 346
  TP Adjustment - selection of MAM - TPO has rejected RPM for the reason that the details and information necessary for computing margins of comparable companies was not available - HELD THAT:- The absence of details and information can be no ground to reject RPM as the MAM, as the TPO has powers to call for the necessary details from the comparable companies to ascertain the Gross Profit margin that has to be compared under RPM. Accordingly, we are of the view that RPM is the most appropriate method in the facts and circumstances of the case. Accordingly, we direct the AO/TPO to adopt Resale Price Method as most appropriate method and determine the ALP of the transactions accordingly. We are of the view that the facts and circumstances, we set aside the order of the CIT(A) and direct the AO/TPO to adopt RPM as the MAM and determine the ALP of the transactions accordingly after affording assessee opportunity of being heard. Adding back the provision for bonus by treating the same as unascertained liability, while computing the 'book profits' under section 115JB - HELD THAT:- We are of the view that the provision for bonus as well as provision for long term service are both ascertained liability and cannot be added to book profit under section 115JB of the Act. We hold and direct accordingly.

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• 2022 (3) TMI 345
  Rejection of books of accounts - as per AO gross profit rate declared by the assessee is very low and the books are not reliable - CIT-A deleted the addition - HELD THAT:- Assessee in the instant case has maintained its books of accounts and such books of accounts were duly audited and the auditors have not pointed out any mistakes in the books of accounts. Such audited books of account along with bills and vouchers were produced before the AO and no specific defects were pointed out by the AO in the books of accounts. The submission of the ld. Counsel for the assessee that out of 199 retail outlets, the company has closed down 84 outlets could not be controverted by the ld. DR. The submission of the ld. Counsel for the assessee that the turnover of the assessee consists of the three streams i.e. retail sale of garments, trading of fabric and wholesale trading of garments, also could not be controverted by the Ld. DR. Under these circumstances, we are of the considered opinion that merely because there is a fall in the gross profit rate cannot be a ground for rejection of the book results in absence of any specific defects being pointed out by the AO. Even in his remand report also, as mentioned by the Ld. CIT(A), the AO has not found any discrepancy in the data furnished by the assessee and no adverse remarks have been made by the AO except objecting to the submission of the data on the ground that during the course of assessment proceedings such explanation was not furnished by the assessee. Although, the ld. CIT(A) has called for a remand report from the AO and has given an opportunity to the AO to make his submission, however, the AO has not pointed out any defects or mistakes in the various details furnished by the assessee. See WINNER CONSTRUCTIONS PVT LTD [ 2012 (5) TMI 394 - DELHI HIGH COURT] , M/S PARADISE HOLIDAYS [ 2010 (4) TMI 111 - DELHI HIGH COURT] and JACKSON HOUSE [ 2010 (8) TMI 1156 - DELHI HIGH COURT] Thus book results cannot be rejected or addition of gross profit cannot be made on the sole or mere fact that the gross profits are very low - Decided in favour of assessee.

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• 2022 (3) TMI 344
  Penalty levied u/s 271(1)(c) - Defective notice u/s 274 - non strike of irrelevant portion in notice - additional ground was raised contending that penalty order is bad in law as the penalty proceedings were initiated and penalty was levied without specifying the exact limb of Section 271(1)(c) - HELD THAT:- On perusal of the notice issued u/s 274 read with section 271(1)(c) of the Act we observe that the notice issued was stereotyped and the Assessing officer has not specified any limb or charge for which the notice was issued i.e., either for concealment of particulars of income or furnishing of inaccurate particulars of such income. It can be seen from the notice issued u/s 274 read with section 271(1)(c) of the Act, Assessing Officer did not strike off irrelevant limb in the notice specifying the charge for which notice was issued. As decided in MR. MOHD. FARHAN A. SHAIKH .[ 2021 (3) TMI 608 - BOMBAY HIGH COURT] while dealing with the issue of non-strike off of the irrelevant part in the notice issued u/s.271(l)(c) of the Act, held that assessee must be informed of the grounds of the penalty proceedings only through statutory notice and an omnibus notice suffers from the vice of vagueness. Thus notice u/s. 274 r.w.s. 271(1)(c) of the Act were issued without striking off the irrelevant portion of the limb and failed to intimate the assessee the relevant limb and charge for which the notices were issued. Thus we hold that the penalty order passed u/s. 271(l)(c) of the Act by the Assessing Officer is bad in law and accordingly the penalty order passed u/s. 271(l)(c) of the Act for Assessment Year 2003-04 is quashed - Decided in favour of assessee.

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• 2022 (3) TMI 343
  Fee levied u/s 234E - fee was leviable u/s 200A for filing of returns - delay in filing of quarterly TDS statement - HELD THAT:- In the absence of any machinery provisions to charge the late fee u/s 200A, the issue of levy of fee u/s 234E which was introduced w.e.f. 01.06.2015 has been examined in the context of its applicability whether retrospective or prospective. In case of Fatehraj Singhvi Ors. vs. UOI Ors. [ 2016 (9) TMI 964 - KARNATAKA HIGH COURT] is in favour of the assessee holding that the amendments brought in statute w.e.f. 01.06 .2015 are prospective in nature and as such, notices issued u/s 200 A of the Act for computation and intimation of payment of late filing fee u/s 234E of the Act relating to the period of tax deduction prior to 01.06.2015 was not maintainable. At the same time, in case of Rajesh Kourani [ 2017 (7) TMI 458 - GUJARAT HIGH COURT] has decided the issue against the assessee. Under these circumstances, we are of the considered view that the decision rendered by Hon ble Supreme Court in the case of Vegetable products Limited [ 1973 (1) TMI 1 - SUPREME COURT] pronouncing that, when there are conflicting decisions the view taken in favour of the assessee should be followed is relevant to adjudication of the matter before us. Hence, the impugned order passed by the First Appellate Authorities confirming the late fee levied by the AO u/s 200A read with section 234E in all the cases wherein the defaults were prior to 01 .06.2015 is not sustainable in the eyes of law. Thus the fee levied u/ s 234E is hereby ordered to be deleted - Decided in favour of assessee.

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• 2022 (3) TMI 342
  Assessment u/s 153A - Addition based on jottings in rough sheets found in search - unaccounted payment of brokerage for Goregaon Property, investment in cash for Pune Property, unaccounted interest paid in cash to various parties, unaccounted interest paid in cash by Shivalik ventures Pvt. Ltd. and unaccounted payment in cash towards Ladiwala Chawl - HELD THAT:- In the present case although Late Jitendra Mehta has made disclosure in his statement dated 26/27th July 2011 recorded u/s 132(4) on being questioned about the various allegations but from the record we do not find any evidence that the Late Jitendra Mehta had entered into a transaction for sale of Bhoslewadi property. No material on record in support of the allegation that the investment towards the property in Goregaon, Pune and Ladiwala Chawl were made by the assessee Late Jitendra Mehta. It is brought to our notice that at the time of filing the return of income in response to notices issued u/s 153A the assessee / legal heir realized that assessee is not associated with any of the projects viz. Bhoslewadi, Goregaon, Pune and Ladiwala Chawl in his individual capacity. Even during the course of recording of the Statement the assessee clarified that no cash interest was paid to the lenders who had advanced loans to various concerns of Rohan Group. When the jottings in rough sheets are not in themselves capable of expressing or describing the essence of the transaction the way AO has deciphered them especially without corroborative evidence of parties attributed to the transaction, and when there is no material to show nexus between the assessee herein and the alleged transactions, no addition to the income can be justifiably made. In other words, it is held that no addition can be made when there is nothing to establish that such payments as alleged have been received or expended. No enquiry in this direction is seen made by the Assessing Officer. We accordingly hold that the impugned addition of on-money payment and receipts made in assessee s case is on the basis of a mere dumb document and not corroborated by any other evidence and thus, not sustainable. The additions made on the basis of uncorroborated noting and scribbling on loose sheets is accordingly unsustainable and is therefore directed to be deleted. On the basis of the above considered findings, the addition made in respect of each year is dealt accordingly in the ensuing paragraphs. Unaccounted cash expenses - We find that assessee was a director in the company engaged in the business of construction activity and he lived with his family in South Mumbai. Considering the number of family members viz., 7-8 and considering the standard of living of the assessee, the expenses of ₹.65,000/- can be considered as reasonable expenditure for meeting the household expenses and thus, in our view the noting found on the seized material pertaining to cash expenses are duly explained by the assessee and thus, the addition made by the Assessing Officer is not sustainable and is directed to be deleted. Accordingly, ground no. 2 is allowed. Addition made on account of negative peak undisclosed income - The said negative peak was arrived at by the assessee after considering the impact of various seized materials as discussed above. The assessee in its statement recorded u/s 132(4) made such disclosure on account of negative peak and undisclosed income. However, while filing its return of income u/s 153A, the said amount was not offered for taxation. Hence, Assessing Officer made this addition on account of negative peak and undisclosed income. The said addition is directed to be deleted. Addition on account of alleged cash interest. Shri Samir Shah, finance broker of Rohan Group was also searched along with the Rohan group - The statement of the person who is creator of the document is crucial to understand the nature of transaction emanating from the said document. In the present case, Samir Shah has himself admitted that the amounts appearing in the said seized material are merely rough workings of interest prepared by him in order to present before his clients. Further, it has been brought to our notice that the Assessing Officer of Samir Shah, in his remand report, has also admitted the amounts mentioned in the seized page as rough workings. It is also observed that none of the lenders have admitted that any cash interest has been received by them. All these documents/statements support the contention of the assessee that the entries mentioned on the seized pages are merely tentative workings of additional interest and there is nothing on record to hold that such workings had materialized and cash payment of interest was actually made. Under the circumstances we are unable to sustain the addition as made. We accordingly direct that the addition made by the Assessing Officer in respect of alleged cash payment of interest be deleted.

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• 2022 (3) TMI 341
  Assessment u/s 153A - Addition of unaccounted investment - purchase of flats had denied that they have paid cash for the flats bought by them through the assessee - statement recorded by the assessee was voluntary u/s. 132(4) of the Act during search - whether AO as well as CIT(A) erred in making addition in the order u/s 153A of the Income Tax Act, 1961 on the basis of statements recorded and document found in third party premises? - HELD THAT:- We observe that during the search along with other key personal, assessee also was covered not just merely as a person who has booked the flat but also as a person who was claimed to have referred client to the M/s.Nish Developers Pvt. Ltd. Since the assessee was directly connected with the collection of funds on behalf of M/s.Nish Developers Pvt. Ltd., accordingly, assessee was covered as one of the party in the search proceedings. Merely because assessee has retracted from the statement and also the assessee has accepted that assessee has collected funds from clients on behalf of the M/s.Nish Developers Pvt. Ltd., it clearly indicates that the statement recorded on oath from Shri Praveen Mishra cannot be set aside and it can only be considered for making assessment u/s. 153A not u/s.153C of the Act. Accordingly, additional ground raised by the assessee is dismissed. Addition made by AO purely based on the statement recorded u/s. 132 - Onus is on the revenue to prove the contents of the pendrive and other lose sheets by bringing on record corroborating evidences. They noticed that the revenue has not bothered even to make further enquiry from the flat buyers to ascertain the amount of on-money. Therefore, in view of the facts and circumstances, we held that the pendrive cannot be relied on to make on-money addition in the hands of the assessee. Addition of benefit @2% of the cash component - We consider the cash deposited by the assessee is belongs to the assessee itself for the purchase of two flats allotted in the name of the assessee and the other family members, the price of the flat per square feet will astronomical to the extent of ₹.1,10,230/- whereas the purchase rate recorded in the document is only ₹.22,126/- and ₹.21,839/- per square feet. It clearly indicates that assessee has collected the money from other parties and based on the statement recorded by the assessee during search, this on-money received through the assessee are from other flat owners who has booked the flats. Since it is recorded in the name of the assessee it clearly shows that assessee is involved in soliciting client for the M/s.Nish Developers Pvt. Ltd. The Ld.CIT(A) came to the conclusion that assessee himself has involved in introducing clients and must have solicited commission @2%. Since assessee was allotted two flats on concessional rates and with the above said services to the M/s.Nish Developers Pvt. Ltd., assessee might have enjoyed the benefits of getting concessional rate. We do not have any data on the different rates of flats sold to other parties to determine how much benefit assessee has received in this transaction. Considering the fact that assessee has solicited clients for the M/s.Nish Developers Pvt. Ltd., and got the flats at the concessional rate it clearly indicate that there is quid pro quo in this transaction and we are in agreement with Ld.CIT(A), who has estimated the benefit @2% of the cash component. Therefore, we do not see any reason to interfere with the finding of the Ld.CIT(A)

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• 2022 (3) TMI 340
  TP Adjustment - corporate guarantee covered under the limb of international transaction or not? - HELD THAT:- The provisions of section 92B of the Act defines the parameters of what constitutes an international transaction. Although the ambit of international transaction was wide enough, yet due to judicial interpretation, certain classes of transactions were being left out of the transfer pricing net. To tackle the same, by the Finance Act of 2012 an Explanation to Section 92B[2] of the Act was brought on the statute with retrospective effect from 1st April 2002. The explanation is clarificatory in nature and added certain categories of transactions, inter alia, the transaction as specified under clause (c) of explanation (i) to section 92B of the Act within the ambit of international transactions We find that the Hon ble Madras High Court in the case of PCIT vs. Redington (India) Ltd. 2020 (12) TMI 516 - MADRAS HIGH COURT] has held that corporate guarantee is covered under the limb of international and having bearing on profit and loss account. Scope of amendment brought by finance Act 2012 - We hold that the amendment as discussed was brought by the finance Act 2012 but the same is applicable retrospectively i.e. 1-4-2002. Thus the amendment is applicable to the year under consideration. Determination of the benchmarked for working out the ALP of the impugned international transaction - Bombay high court in case of CIT vs. Everest Kento Cylinders Ltd [ 2015 (5) TMI 395 - BOMBAY HIGH COURT] held that while determining the ALP the rate charge by the bank or financial institution cannot be taken as comparable. ALP rate of the commission on corporate guarantee - 0.5% of commission on the value of corporate guarantee will serve the justice to both the assessee and the Revenue. Hence, the contention of the assessee is partly allowed. Adjustment by the TPO/AO on account of interest on Loan given to AEs - As decided in own case [ 2019 (5) TMI 1932 - ITAT AHMEDABAD] we note that the assessee is charging margin at 37.50 bps from the AE which appears quite low as even the bank charges from the company having high net worth a margin of .50%. Therefore we are inclined to uphold the finding of the TPO for charging the margin at .50% over and above the 6 month average labor rate. In effect, the rate of interest charged by the assessee from the AE shall increase by 12.5 bps. Thus the ground of appeal of the assessee is partly allowed. Delay depositing employees contribution to ESI on the ground that the same was not paid within the time limit prescribed under ESI Act - HELD THAT:- We find that the ld. CIT(A) while deciding the issue considered section 2(24)(x) read with section 36(1)(va) of the Act and observed that the assessee shall be entitled to deduction of such amount while computing the income referred to in section 28, if said sum has been credited by the assessee to employees account in the relevant fund/(s) on or before due date i.e. date by which the assessee is required as employer to credit the same to the employees account in the relevant fund. It is admitted position that the assessee has not credited the same amount within the prescribed time limit of the relevant Act, and hence following ratio laid down by the Hon ble jurisdictional High Court in the case of Gujarat State Road Transport Corporation [ 2014 (1) TMI 502 - GUJARAT HIGH COURT] the ld. CIT(A) upheld the order passed by the ld. AO in disalowing the said sum of ₹ 3,33,489/- and added the same to the total income of the assessee, which in our considered opinion is without any ambiguity so as to warrant our interference. Non-allocation of R D cost relating to discovery and research expenditure while computing profit eligible for deduction under section 80-IC of the Act in respect of Baddi Unit - HELD THAT:- R D expenditure is need not to be allocated to Baddi Unit as the case made out by the assessee are to be viewed this particular fact of not extending any research work by the said unit, and no benefit thereof was being rendered by it. In view of the matter, we delete the impugned addition disallowed by the ld.AO. Hence the ground of appeal of the assessee is allowed. Quantum of eligible income by reallocating administration expenses to Baddi Unit - HELD THAT:- Since turnover of any undertaking is volatile depending on varied situations, as has been indicated hereinabove. On the other hand, human resources work in any particular undertaking do not frequently change as the market forces do not regulate the same, unlike sales, and therefore, it is nothing but the human resources engaged in different undertaking of the assessee, that should be the consideration for allocation of administrative expenses, as held by the Coordinate Bench [ 2019 (5) TMI 1932 - ITAT AHMEDABAD] from which we are not inclined to deviate, and hence respectfully following the decision, we delete the addition made by the Revenue in reducing deduction under section 80IC Deduction admissible under section 80IC is to be restricted to the extent of income from business and profession, as against gross total income of the assessee - HELD THAT:- As relying on RELIANCE ENERGY LTD. (FORMERLY BSES LTD.) THROUGH ITS M.D. [ 2021 (4) TMI 1237 - SUPREME COURT] we find no justification in restricting the deduction under section 80IC of the Act to the extent of income from business and profession, rather to be extended against the gross total income of the assessee. Thus, we find merit and considerable substance in the case made out by the assessee, and therefore, we direct the ld.AO to work out the deduction available to the assessee keeping in view of the above observation made by us hereinabove, based on the judgment of Hon ble Supreme Court cited (supra). We allow this ground of appeal of the assessee, and set aside the orders of the Revenue authorities on this issue. Disallowance on account of garden expenses - explanation of the assessee was that the said expenditure was required to be incurred regularly for gardening inside the factory premise as per the requirement of Gujarat Pollution Control Board, in order to minimize the effect of pollution arising out of chemical process, and therefore, the same is an allowable deduction - CIT(A) deleted the disallowance made by the AO by observing that in the assessee s own case from the Assessment Year 2003-2004 to 2008-09, the impugned claim allowed consistently right up-to the Tribunal - HELD THAT:- We find no disparity on the facts of the present case with that of earlier years. In other words, the fact is same and issue is identical. The Revenue has not disputed factum of allowance of similar claim being allowed consistently in the earlier years. Therefore, following the principle of consistency, we uphold order of the ld. CIT(A) on this issue, and reject the ground no.1 of appeal of the Revenue. Depreciation at the rate of 50% in place of 15% on the basis of notification of the CBDT dated 19.1.2009 - claim of the assessee for higher depreciation was based on the notification of the CBDT circular No. 10/2009 dated 19.01.2009, according to which, new commercial vehicles which were acquired on or after the 1st day of January 2009, but before the 1st day of April, 2009 and put to use 1st day of April, 2009 for the purpose of business or profession, would get 50% depreciation - HELD THAT:- We find that the ld. AO has not appreciated whole facts of the case while deciding the applicability of Notification cited (supra). On the contrary, the ld. CIT-A observed that parameters provided in the Notification clearly applicable to the case of the assessee, and therefore, assessee is entitled for higher depreciation. To support his finding, the ld.CIT(A) has also relied upon decision of the ITAT, Ahmedabad Bench in the case of Voltamp transformer 2013 (3) TMI 804 - ITAT AHMEDABAD] . The ld. CIT(A) allowed depreciation at 50% on sound footing, based on the above notification. This view of the matter, we do not find any infirmity in the order of the ld. CIT(A) on this issue, which we confirm, and the ground no. 2 of the Revenue s appeal stands rejected. Addition on account of deduction claimed under section 35(2AB) - HELD THAT:- Assessee is eligible for weighted deduction on expenditure incurred in connection with rates and taxes and salary to Dr. C. Dutt. Deduction with respect to expenses incurred on account of clinical trial and patient registration - We note this issue also covered in favour of the assessee by the order of special bench of the Tribunal in case of Cadila Healthcare Ltd.[ 2013 (3) TMI 539 - GUJARAT HIGH COURT] - we hold that the assessee is eligible for weighted deduction on expenses incurred on clinical trial and patent registration. Accordingly, we do not find any infirmity in the order of learned CIT(A) and directed the AO to allow weighted deduction. Depreciation @ 60% on computer software instead of at 25% on the value of the assets - whether the software purchased by the assessee is part of computer for purpose of depreciation or the same can be treated as intangible assets? - HELD THAT:- Software is part of computer. Hence, the depreciation on the same is allowable at the rate applicable for computer. In this regard we also find support and guidance from the judgment of Hon ble Madras High Court in case of CIT vs. Computer Age Management Services. [ 2019 (7) TMI 1153 - MADRAS HIGH COURT] . Unutilized MODVAT/CENVAT credit under section 145A - HELD THAT:- It is not in dispute that the assessee is following exclusive method of accounting for the past several years. In other words, valuing purchase price minus MODVAT credit is permissible method of accounting. The ld. CIT(A) has rightly relied upon the judgment of Hon ble Apex Court in the case of Indo Nippon Chemical Co. Ltd. [ 2003 (1) TMI 8 - SUPREME COURT] wherein it was observed that merely because MODVAT credit was irreversible credit offered to manufacturers upon purchase of duty paid on raw-material, that would not amount to income which was liable to be taxed under the Act. It has further held that whichever method of accounting is adopted, the net result would be same. Considering the proposition of law laid down by the Hon ble Apex Court on this issue, we do not find any justification for the AO to add unutilized MODVAT credit to the closing stock. Disallowance made on account of capital investment subsidy - revenue or capital receipts - whether the WDV of block assets can be reduced by the amount of subsidy or not? - HELD THAT:- We find that the WDV is to be actual cost of the assets at which the assessee acquired the same. There is no provision for reducing the value of WDV by any amount of incentive or subsidy. In this regard we also find support and guidance from the judgment of Hon ble supreme court in case of CIT vs. PJ Chemicals [ 1994 (9) TMI 1 - SUPREME COURT] - Decided against revenue. Disallowance u/s 80IC on account of allocation of R D expenses, notice pay and sale of scrap - HELD THAT:- As decided in own case direct the AO grant the deduction under section 80-IA of the Act on the items of income as discussed above. Hence, we hereby dismiss the ground of appeal of the Revenue. Disallowance under section 80G - HELD THAT:- The assessee is entitled to claim money spent under section 80G while computing Total Taxable Income in accordance with the parameters provided therein. Therefore, since the order of ld.CIT(A) is based on the decision of the Tribunal on similar issue, we do not find any infirmity in his order allowing deduction under section 80G of the Act. We uphold his order, and this ground of Revenue s appeal stands rejected. Disallowance of doctor sponsorship expense/medical expenses - Medical Council of India jurisdiction to pass any order or regulation against any hospital or any health care sector under its 2002 regulation - HELD THAT:- Circular issued by the CBDT as under Indian Medical Council Professional Conduct, Etiquette and Ethics) Regulations, 2002 is not applicable for the year under consideration and consequently the disallowance cannot be made in the year under consideration on account of freebies given to the medical practitioners being the AY 2009- 10. Hence, the ground of appeal of the assessee is allowed. Claim of the assessee that while computing deduction under section 80IC that the eligible income ought to be reduced by reallocating administrative expenses allowed Deduction under the provision of MAT while calculating the book profit - whether the assessee is entitled the benefit of reducing the profit of the business eligible for deduction under section 80HHC of the Act while computing the book profit under the provisions of section 115JB? - HELD THAT:- Parliament is empowered to bring amendments under the statute that too retrospectively provided it is not detrimental to the assessee. In other words any amendment denying the benefit to the assessee cannot be brought under the statute with retrospective effect. There will be certain classes of assessee who must have claimed the benefit of clause (iv) of explanation 1 to section 115 JB of the Act prior to the amendment by the Finance Act as discussed above. But, assuming their case have not been selected under scrutiny, then such benefit cannot be denied to them. On the contrary the assessees who were subject to scrutiny assessment, if they are denied the benefit, there will be discrimination to them. It is for the reason that there will not be allowed the benefit granted under the statute but withdrawn by way of retrospective amendment. Thus, the impugned amendment will create disharmony among different taxpayers. In view of the above and after considering the facts in totality, we are of the view that the assessee cannot be deprived for the benefit granted to it under the statute by way of retrospective amendment in the given facts and circumstances. Hence, the ground of appeal of the assessee is allowed. Disallowance on account loan given to AE which was written off during the year under consideration - whether the assessee is entitled for the deduction of the working capital loan written off in the books of accounts on the reasoning that the same was not recoverable? - HELD THAT:-There are other multiple factors which are strongly suggesting that the amount of loan was not recoverable, particularly, in the situations where the subsidiary company was incurring losses from the operations. At the time of hearing, it was also explained by the learned counsel for the assessee that the purpose of writing off the loan due from the subsidiary company was to make the net-worth of the subsidiary company positive. According to the learned counsel for the assessee, it was not possible to infuse the fund in the subsidiary company without making its net-worth positive as per the Russian Laws.the subsidiary company of the assessee is one of the extended arm of the assessee and the existence of the same depends upon the existence of the assessee company. Admittedly, the assessee has earned huge profit from the subsidiary company over a period of time which was brought to tax and therefore on the same reasoning if any loss is arising to the assessee relating to the same subsidiary company, a different treatment by denying the loss cannot be adopted by the revenue. In the light of the above stated discussion, we hold that the loss claimed by the assessee is an allowable deduction. Thus, we set aside the finding of the learned CIT-A and direct the AO to delete the addition made by him. Hence the ground of appeal of the assessee is allowed. Deduction with respect to provision for leave encashment - HELD THAT:- There are certain expenses which are allowed on payment basis in pursuance to the provisions of section 43B of the Act irrespective of the year of incurrence. One of such expenditure is leave encashment. Admittedly, the assessee has not made the payment of the leave encashment and therefore the same can t be allowed as deduction. However, the assessee is at liberty to claim the deduction of such expense in the year of payment. Thus the ground of appeal of the assessee is dismissed in terms of the above. Upward adjustment of TP on account of capital infusion, corporate guarantee and loan and advances provided to AE - HELD THAT:- No dispute to the fact that the assessee has advanced money to its AE for acquiring the shares which is a capital account transaction. Therefore, there cannot be any adjustment under the provisions of transfer pricing on account of capital account transaction being the acquisition of shares. Merely, there was a delay in the allotment of shares by the AE to the assessee, such delay cannot change the character of the transaction as loan. No TP adjustment required. Assessee is entitled to weighted deduction in respect of the entire expenditure incurred for the development of in-house R D facility in terms of Section 35(2AB) . Deduction u/s 80IC - Amount of income by way of cash discount cannot be denied for the benefit of the deduction under section 80IC merely on account of the different presentation shown by the assessee. The amount of net income should only be considered while excluding from the amount of deduction available under section 80IC of the Act. Thus the contention of the assessee with respect to income under the head cash discount is allowed. Income shown by the assessee on account of penalty and amount recovered on account of material mishandling under the head miscellaneous income against the purchase orders - We note that it is at Par with the cash discount which we have elaborately discussed in the preceding paragraph. Thus we hold that such income are eligible for deduction under section 80IC. Income shown on account of transfer of goods to other units - We find that it does not contain any element of profit. As such the assessee on one hand claimed an expense and the other hand it has shown income by way of transfer to the other units. This is an internal transaction, having no element of income. Therefore, if we see such transaction on net basis, there will not be any impact as far as deduction under section 80IC is concerned. Accordingly, we hold that such income are eligible for deduction under section 80IC of the Act. Recovery of the cost from the employee - We direct the AO take net income embedded in the impugned transaction. Thus the ground of appeal of the revenue to this extent is dismissed Gain on Foreign Exchange to be allowed. Additional Depreciation on trolley, mobile racket and pallets - whether the assets being Trolleys, Mobile Rackets and pallets used in manufacturing plant for movement and safe storage of goods can be described as plant and machinery or furniture? - HELD THAT:- We note that the coordinate of bench Pune Tribunal in case of Serum Institute of India (supra) in similar facts and circumstances observed that nature of the assets used in the business is to be decided on the basis of functional test of the assets and accordingly held that tables, stools, rackets etc. used in laboratories are part and parcel of plant and machinery. We also find that the learned CIT(A) in his order followed the order cited above i.e. order of the Pune Tribunal i.e. Serum Institute of India [ 2012 (4) TMI 373 - ITAT PUNE] The relevant extract of the order has already been reproduced in the order of the ld. CIT-A. Respectfully, following the same, 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. Upward adjustment on account of dossier licensing fee - HELD THAT:- We note that the profit sharing ratio has already been accepted by the revenue in the earlier years. There is no change in the facts and circumstances for the year under consideration viz a viz the earlier years. It is the same agreement based on which the income has been shared between the assessee and the AE in the year under consideration. As such the agreement was entered dated 18-02-2003 which was still in force in the year under consideration without any modification. Therefore we are of the view that, the principles of consistency should be adopted. At the time of hearing, the learned DR has also not brought anything on record contrary to the finding of the learned CIT-A. Thus the order of the learned CIT(A) is well reasoned and does not require any interference. Hence the ground of appeal of the revenue to the extent of TP adjustment on account of Dossier licensing fee is hereby dismissed. Disallowance made under section 14A r.w.r. 8D cannot be resorted while determining the book profit as mentioned under clause (f) to explanation 1 to section 115JB Disallowance as per the clause (f) to Explanation-1 of Sec. 115JB of the Act independently - There is no mechanism provided under the clause (f) to Explanation-1 of Sec. 115JB of the Act to make the disallowance independently. Therefore our action for restoring back the issue to the file of AO would unnecessarily cause further litigation. Thus we limit the disallowance on an ad-hoc basis @ 1 % of the exempted income as per the clause (f) to Explanation-1 of Sec. 115JB of the Act subject to the maximum adjustment made by the AO. Thus the ground of appeal of the Revenue is partly allowed.

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• 2022 (3) TMI 339
  Inflation in expenses or bogus/inflated purchases - Difference between the cost mentioned in the document vis-avis the expenditure claimed as per the books of account - Search proceedings - rejection of books of accounts - HELD THAT:- Although, it is a case of search but no other incriminating or corroborative documents were found to establish that expenditure mentioned in seized document is true and correct. We find no purchase bills or bills of expenditure recovered to be said to be bogus or inflated. No cash, investment or any other asset has been found to be belonging to the assessee to show as outcome of such inflation of expenditure or generation of unaccounted income. We find merit in the finding of the learned Commissioner of Income-tax (Appeals) that had there been inflation in expenses or bogus/inflated purchases, then it should have been found during the search proceedings. Further, although, search action took place on February 4, 2010 however, the AO has only taken the figure up to September, 2009 and nothing has been mentioned regarding the period between October 1, 2009 to February 3, 2010. We find that the assessee is subjected to sales tax and excise duty and no adverse inference is on record to show that there is any difference between the sales and production figures in the audited accounts of the company. We further find on the basis of identical printout for the assessment years 2008-09 to 2010-11, the AO had raised identical queries for the assessment years 2008-09, 2009-10 and 2010-11. Although, no addition has been made in the assessment years 2008-09 and 2009-10 under identical facts and circumstances, however, we find the Assessing Officer deviated from his earlier stand and made huge addition for the impugned assessment year by rejecting the book results and extrapolating the profit which in our opinion is not justified. Since, the printouts of the hard disc clearly mentioned that forecast and since, the Assessing Officer in the two preceding assessment years has accepted the reply of the assessee and no addition has been made in the order passed under section 143(3) of the Act, therefore, following the rule of consistency, no addition can be made for the impugned assessment year, especially when no other corroborative evidence such as bogus purchases bills/bogus expenses or unexplained investment, etc., were found during the course of search. In this view of the matter and in view of the detailed reasoning given by the learned Commissioner of Income-tax (Appeals) while deleting the addition, we do not find any infirmity in his order. Accordingly, the same is upheld and the grounds raised by the Revenue are dismissed.

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• 2022 (3) TMI 338
  TP Adjustment - comparability - exclude the Infobeans Systems Private Limited from the final set of comparable companies - HELD THAT:- As no segmental details were available and the said company was earning foreign exchange from export of goods on FOB basis which is clear from paper book. In our opinion, when there is no information the proper comparability cannot be examined in view of absence of segmental details. As demerger of business of Seed Enterprises Private Limited was taken place wherein the said concern had filed revised accounts which clearly shows the financial statements of the said concern included the financial statements of software business of demerged company which in our opinion is an extraordinary event which has taken place making the said concern has not comparable to the company. Thus we direct the AO/TPO to exclude Infobeans Systems Private Limited from the final set of comparables. Thirdware Solutions Limited cannot be included in the final list of comparables - As we note that this Tribunal directed the AO/TPO for detailed factual verification based on annual report and other relevant documents in order to verify nature and scope of functions of Thirdware Solutions Limited. The ld. DR agreed for remand the said issue to the file of AO/TPO for its fresh verification in terms of direction rendered by this Tribunal in assessee s own case in A.Y. 2012-13. Accordingly, we direct the AO/TPO follow the same direction as contained in order [ 2021 (5) TMI 481 - ITAT PUNE] for A.Y. 2012-13. Thus, the additional ground raised by the assessee is allowed for statistical purpose. Seeking deduction paid towards Education Cess under Finance Act while computing the taxable income - HELD THAT:- We note that the assessee paid Education Cess while computing the taxable income. The Hon ble High Court of Bombay in the case of Sesa Goa Ltd [ 2020 (3) TMI 347 - BOMBAY HIGH COURT ] was pleased to hold that the Education Cess is an allowable expenditure as per the provision of the I.T. Act - We direct the AO to allow deduction in respect of Education Cess paid by the assessee. Accordingly, the additional ground No. 14 raised by the assessee is allowed. Include the M/s. Lucid Software Limited as comparable in the final list of comparable companies as engaged in rendering software development services and 95% of operating revenues were derived from software services. Evoke Technologies Private Limited should be considered as comparable in view of the finding of TPO in earlier order concerning A.Y. 2012-13. Harbinger Software Limited is a comparable company. Saven Technologies Limited be excluded from the final list of comparable companies as it was engaged in 100% Related Party Transaction (RPT) sales to the total revenue and accordingly held the same as not comparable.

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• 2022 (3) TMI 337
  Addition of bogus purchase of rice husk - AO treated the said purchases as bogus on the basis of statement of one Shri Ajay Malik who claimed to have given the bills only to the said parties - HELD THAT:- No opportunity to cross examine the said persons was given to the assessee the similar purchase made from the said parties in the preceding years had been accepted. The assessee furnished sworn affidavit of the proprietors of the said parties from whom rice husk was purchased and also furnished documentary evidence in the form of purchase bills, Sales Tax Return, Income Tax Returns of the said parties, the payments were made through banking channel and it is not the case of the A.O. that the consumption of rice husk was excessive in comparison to the earlier years. CIT(A) after appreciating the documentary evidences furnished by the assessee, deleted the addition. We do not see any valid ground to interfere with the findings of the Ld. CIT(A) while deleting the addition. Addition made by the A.O. for the reasons that the assessee failed to produce any person from M/s Sarthi Commission Agent, from whom the rice husk was purchased by the assessee to prove the genuineness of the purchase made from the said party - Assessee furnished VAT number issued by the Punjab VAT Department to prove the existence of the said party and all the payments were made through banking channel. The assessee also furnished Sales Tax Record which confirmed that the sales were made to the assessee by M/s Sarthi Commission Agent therefore the Ld. CIT(A) rightly held that the mere fact that during the F.Y. 2014-15 it was found that the said party M/s Sarthi Commission Agent closed its business at that time was not enough to draw any adverse inference for the F.Y. 2010-11 relevant to the A.Y.2011-12 under consideration. In the present case, when the identity of the party was established purchases / sales were vouched and payments were made through banking channel by the account payee cheque, we are of the view that the impugned addition made by the A.O. was rightly deleted by the Ld. CIT(A). Bogus rice husk purchased from M/s Abhishek Enterprises - A.O. made the said addition only on this basis that notice issued under section 131 of the Act to the supplier was received back unserved with remarks Incomplete Address and Not known . It appears that the A.O. without verifying the complete address of the said party assumed that the party was not available at the said address. On the contrary the assessee furnished documentary evidence, like copy of account, VAT number of the party, Sales Tax Return etc and the payments were made through banking channel to prove the genuineness and identity of the said party. Moreover the books of the assessee were not rejected, therefore, the said addition was rightly deleted by the Ld. CIT(A). Addition @5% of the remaining purchases - A.O. himself accepted that 95% of the purchase were genuine but considered only 5% as bogus that too on adhoc basis and even without rejecting the books of account. It is well settled that no adhoc addition can be made without rejecting the books of accounts. Moreover the A.O. did not point out any specific defect or discrepancy in the books of account maintained by the assessee in regular course of business and even consumption of the rice husk purchased by the assessee for its business purposes was not doubted. We therefore do not see valid ground to interfere with the findings of the Ld. CIT(A) on this issue. Addition on account of undervaluation of closing stock - difference in the stock statement as on 31/03/2011 given by the assessee to State Bank of India and as recorded in the books of accounts - HELD THAT:- In the present case, it is an admitted fact that there was no difference in the quantitative details of the stock furnished to the bank and maintained in the books of account, the difference in the valuation was explained by the assessee which was due to the valuation in stock statement furnished to the bank on estimate basis while in the books of account the assessee valued the raw material consumables on the cost price basis while the semi finished finished goods were valued on the cost of production basis. The A.O. did not point out any defect in the said valuation. It is also not the case of the A.O. that the valuation in the books of account was not in accordance with the provisions contained in section 145A of the Act. the stock hypothecated to the bank was valued on estimate basis while stock was valued in accordance with the provisions of Section 145A of the Act in the books of account i.e; raw material and consumables on the basis of cost price, furnished goods and semi finished goods on the basis of cost of production. It is also not the case of the A.O. that there was any variation in the method of valuation of stock in the books of account from the earlier years. Therefore the addition made by the A.O. only on this basis that valuation of stock in the statement given to bank was different from the stock mentioned in the books of account was rightly deleted by the Ld. CIT(A). We, do not see any valid ground to interfere with the findings of the Ld. CIT(A) on this issue.- Decided against revenue.

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• Customs

• 2022 (3) TMI 336
  Violation of principle natural justice - cross-examination of witnesses upon whose statements the respondent-adjudicating authority has relied against the petitioner. is denied upon - HELD THAT:- In this case, admitted position is that, which appears from the impugned order of adjudicated dated December 7, 2021, the adjudicating authority has relied on the statements of the witnesses in question and that the petitioner was denied to cross-examine those witnesses. Relying upon the decision of the Supreme Court in ANDAMAN TIMBER INDUSTRIES VERSUS COMMISSIONER OF CENTRAL EXCISE, KOLKATA-II [ 2015 (10) TMI 442 - SUPREME COURT] , this writ petition is disposed of by setting aside the impugned order dated December 7, 2021 to the extent of relying on the statements of the witnesses in question wherein the petitioner was denied to cross-examine those witnesses, and the adjudicating authority shall pass a fresh order in accordance with law as a consequence of this order. It is clarified that if the respondent-adjudicating authority wants to rely on the statements of the witnesses in question, in that event he will have to afford an opportunity to the petitioner to cross-examine those witnesses.

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• 2022 (3) TMI 335
  Refund of Customs Duty - duty paid under protest - some of refund claims were rejected for want of evidence of lodging protest - HELD THAT:- There is no evidence on record to show that appellant has lodged any protest for the Bills of Entry for which refund claim has been rejected - Nowhere in the affidavit, it is mentioned on which date, the protest was lodged and before which authority. The affidavit is totally vague and since it cannot be said to be a supportive evidence. The appellant themselves has lodged a protest during the pendency of the appeal which is also taken on record - No such protest was lodged by the appellant before to the said period. Therefore, as it is a fact on record that no evidence is available with regard to protest made by the appellant, therefore, the refund claim has been rightly rejected by the authorities below. The appellant has not challenged the assessment of Bills of Entry by way of appeal before the learned Commissioner(Appeals). In that circumstance also, the appeal is not maintainable in the light of the decision of the Hon ble Supreme Court in the case of ITC LIMITED VERSUS COMMISSIONER OF CENTRAL EXCISE, KOLKATA -IV [ 2019 (9) TMI 802 - SUPREME COURT] . There are no merits in the appeal - appeal dismissed.

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• 2022 (3) TMI 334
  Jurisdiction - power of Additional Director General, DRI to issue SCN - Confiscation of goods - rejection of declared value - HELD THAT:- This precise issue was examined by the Supreme Court in Canon India [ 2021 (3) TMI 384 - SUPREME COURT ]. The Supreme Court observed that the nature of the power to recover the duty, not paid or short paid after the goods have been assessed and cleared for import is a power that has been conferred to review the earlier decision for assessment. This power which has been conferred under section 28 of the Customs Act on the proper officer, must necessarily mean the proper officer who, in the first instance, assessed and cleared the goods. Thus, the Additional Director General, DRI did not have the jurisdiction to issue the show cause notice. In view of the aforesaid and respectfully following the decisions of the Apex Court, the Hon ble High Courts and the Coordinate Benches of the Tribunal, it is held that the show cause notices issued by the Additional Director General, DRI, are without jurisdiction and therefore all proceedings undertaken by the Department on the basis of or pursuant to the said show cause notices, including the impugned orders dated 31.01.2018, 16.07.2019 and 16.04.2019 respectively are without jurisdiction. Thus, Supreme Court in Canon India held that the entire proceedings initiated by the Additional Director General, DRI by issuance of a show cause notice was without any authority of law and was, therefore, liable to be set aside. The Punjab and Haryana High Court in M/S STEELMAN INDUSTRIES VERSUS UNION OF INDIA AND OTHERS, [ 2021 (8) TMI 1236 - PUNJAB AND HARYANA HIGH COURT ], in view of the decision of the Supreme Court in Canon India, allowed the Writ Petition and set aside the entire proceedings arising from the show cause notice, as the Additional Director General, DRI was not the proper officer. Therefore the proper officer to whom the power is conferred under Section 28 of the Act and other related provisions would necessarily mean the proper officer who in the first instance assessed and cleared the goods, i.e., Appraising Officer in the Customs port or Air Cargo Complex. Therefore the Additional Director General of DRI cannot be the proper officer in the facts and circumstances of each of the instant cases where assessments were undisputedly done originally by the respective assessing officers of the Kolkata Customs. The said impugned orders passed by the Commissioner of Customs (Port), Kolkata and the Commissioner of Customs (Airport Administration), Kolkata respectively therefore cannot be sustained and are set aside - appeal allowed.

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• Corporate Laws

• 2022 (3) TMI 333
  Transfer of applications - Sanction of a scheme of compromise - Is it either obligatory or even appropriate, in exercise of discretion, for this Court to transfer the applications, as per Analog's request, to the NCLT? - principles of res-judicata - HELD THAT:- Both Section 434 of CA 2013 and the Transfer Rules throw light on this issue. At the outset, it should be noticed that Section 434(1)(c) of CA 2013 deals with all proceedings under CA 1956, collectively, including proceedings for winding up or schemes of arrangement. To put it differently, only the provisos deal separately with winding up proceedings and other proceedings, and not the principal clause. Secondly, it should be noticed that the above provision deals with proceedings and not applications or even petitions - From Rule 3 of the Transfer Rules, it is evident that except proceedings reserved for orders, all other proceedings pending before the Companies Court are liable to be transferred. On the basis of this Rule, both Mr.Goklaney and Mr.Subramanian contended that since none of the pending applications are reserved for orders, they are liable to be transferred. Pursuant to the amendment to Section 434 by the introduction of the last proviso thereto, a party to the proceedings is entitled to file an application for transfer in retained matters. Applications for transfer were filed in those cases by resorting to such proviso. In contrast, in the present case, as indicated above, the Scheme was sanctioned by this Court and several applications were dealt with thereafter under Section 392 of CA 1956. Indeed, it bears repetition that the cut-off, as regards schemes of arrangement, is fixed at the advanced stage of reserving orders in the proceedings. Consequently, there is no provision analogous to the last proviso to Section 434(1) of CA 2013 to seek transfer of retained matters. In fine, these applications are completely misconceived and premised on the mistaken notion that CA 2013 provides for transfer of applications. The order dated 05.01.2017 does qualify as res judicata and is not erroneous in any respect - Application disposed off.

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• Insolvency & Bankruptcy

• 2022 (3) TMI 332
  Publication of public announcement in newspaper where the principal and registered office of the Company is situated - Filing of several applications objecting to the approval of Resolution Plan - whether it is open for the Applicant to file IA making serious allegations with regard to Public Announcement and Publication of Form G, more so at the stage when the Interim Application for approval of Resolution Plan was reserved for orders and in the light of the fact that the applicant has already filed IA filed objecting the approval of the Resolution Plan and the same was also reserved for orders? HELD THAT:- This Application questioned the publication of Public Notice and Form-G by the RP during the CIRP period post admission of CIRP. The Applicant has admitted that the public announcement was made in two publication in Mumbai i.e. Free Press Journal and Navashakti on 22nd April, 2021. This Bench notes that publication or public announcement was carried out in Mumbai and that original copies of regional paper of newspaper was submitted to the Court. The Bench had the privilege of examining the original newspapers published in Prathakal in Hindi of 23rd April, 2021 at Udaipur, which contained the Public Announcement and Prathakal dated 30th May, 2021 which contained the publication of Form G. The said documents were filed by the Respondent-RP as a part of additional documents filed in IA No. 1850 of 2021. It was also pointed out that there are different edition of e-newspaper and physical publication. Further, there is no English paper in publication in Udaipur. This Bench concludes that the allegations put for by the Applicant are untenable and filing of several applications objecting to the approval of Resolution Plan at this stage cannot be entertained. Application dismissed.

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• PMLA

• 2022 (3) TMI 331
  Remand Application for the purpose of investigation under the provisions of the Prevention of Money Laundering Act, 2002 - designated as a Global Terrorist by United Nations under United Nations Security Resolution 1267 and also listed under the Fourth Schedule of the UAPA Act, 1967 - accused alleged to be running international terrorist network, which is involved in various terrorist/criminal syndicate, money laundering, circulation of FICN, unauthorized possession/acquisition of key assets for raising terror funds and is working in active collaboration with international terrorist organization. HELD THAT:- As per section 3, the offence of money laundering is continuing in nature and it continues till such time a person enjoying the proceeds of crime by its concealment or possession or acquisition or use of untainted property or use or projecting the same as untainted property. Prima facie, there is material to indicate that the accused is in possession of the said property. Therefore, the submission advanced by the ld. Senior Counsel for the accused that no offence is made out against the accused under section 3 of the PMLA, cannot be accepted. Prima facie, an Assistant Director, on the basis of material in his possession, has reason to believe that the accused has committed an offence under section 3 of the PMLA. Arrest order indicates that grounds of arrest are communicated to the accused. It seems that there is substantial compliance under section 19 of the PMLA. Therefore, I am not inclined to accept the submissions advanced on behalf of the ld. Counsel for the accused that accused is illegally arrested. It appears from the report that accused has not cooperated with the investigation on the crucial aspect. Prima facie, there are reasonable grounds to believe that the accusations are well-founded under PMLA. The investigation is at the nascent stage - the custodial interrogation of the accused is necessary to unearth all the ramifications involved in the crime. It is imperative to note that custodial interrogation of the accused is necessary to collect seized, recovered documents at the instance of the accused. The proceeds of crime has traversed since last 20 years and more. Therefore, sufficient time is required to be granted for the investigation of the offence. Accused Mohammed Nawab Mohammed Islam Malik @ Nawab Malik is remanded in the custody of Enforcement Directorate till 03.03.2022.

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• Service Tax

• 2022 (3) TMI 330
  Refund or adjustment against pre-deposit - interest on pre-deposit - assessee had not filed grounds opposing these demands in the reply to all the show-cause notice - HELD THAT:- In the show-cause notice there were three different independent tax demands. One was for a sum of ₹ 12,62,95,889/- for providing services to use towers by the petitioner. Second one was ₹ 38,57,094/- on account of discrepancy in the taxable value shown in the ST-3 return vis-a-vis financial records and third was of ₹ 3,96,954/- under reverse charge mechanism in respect of goods contract services from 01.07.2012 onwards. The petitioner had filed a detailed reply to the show-cause notice however in the entire reply only opposition was made to the proposed recovery of ₹ 12,62,95,889/-. In other words with respect to the other two heads of ₹ 38,57,094/- and ₹ 3,96,954/- there was no ground to oppose such demands. This reply to the show-cause notice is quite elaborate which is perused with the assistance of learned counsel for the parties and thereby come to this conclusion. The Deputy Commissioner Service Tax could not have on his own interpreted the judgment of the Tribunal as being limited to striking down the demand of ₹ 12,62,95,889/-. Learned counsel for the revenue however vehemently contended that when there was no opposition to other demands in the reply filed to the show-cause notice and when the appeal of the assessee was also confined only to the tax demand of ₹ 12,62,95,889/-, the judgment of the Tribunal must be seen in light of such facts. He may be right in pointing out that the assessee had not filed any grounds opposing these demands in the reply to the show-cause notice and the prayer in the appeal memo is also limited to challenging the principal demand of ₹ 12,62,95,889/-. However it is not open for the subordinate authority to interpret the judgment of the superior Tribunal and bestow unto himself the powers to adjust the pre-deposit amount by coming to the conclusion that the order setting aside the order in original must be given limited effect. The adjustment of the pre-deposit amounts of the petitioner made by the Deputy Commissioner is quashed. The department shall refund the said sum within a period of four months from today - Petition allowed.

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• 2022 (3) TMI 329
  Nature of activity - sale or service - packed food which is sold as take away either on the counter of the restaurant or through delivery boys to the customer s place, and not served in the restaurant - HELD THAT:- The appellant have been discharging the service tax in respect of food served in the restaurant to their customers. However, they are not paying service tax in respect of packed food which is sold as take away either on the counter of the restaurant or through delivery boys to the customer s place. In this undisputed fact, the food is not served in the hotel whereas the same is sold in the packed form therefore, as per the nature of this activity, it is clearly a sale of food, no service is involved. This issue is no longer res-integra as the same has been considered by the Hon ble Madras High Court in ANJAPPAR CHETTINAD A/C RESTAURANT, M/S RSM FOODS (P) LTD, M/S. THALAPAKATTI HOTELS PVT. LTD, M/S PRASANAM FOODS (P) LTD. VERSUS JOINT COMMISSIONER, THE COMMISSIONER OF GST AND CENTRAL EXCISE, THE ADDITIONAL COMMISIONER OF GST AND CENTRAL EXCISE [ 2021 (6) TMI 226 - MADRAS HIGH COURT] where it was held that the provision of food and drink to be taken-away in parcels by restaurants tantamount to the sale of food and drink and does not attract service tax under the Act. Thus, it is observed that the fact of the above case is absolutely identical to the facts of the present case inasmuch as the food in packed form is sold either on the counter or through delivery boys to the customers place. Therefore, the activity is clearly of sale of food and no service is involved - appeal allowed - decided in favor of appellant.

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• 2022 (3) TMI 328
  Levy of service tax - Security Agency Service or not - police personnel supplied to public departments, private companies and persons etc. - statutory fee or levy or otherwise? - HELD THAT:- In this case, the appellant is a Police Department governed by the State of Kerala. The appellant is discharging the function of security of property and person. Apart from that, appellant is providing certain security personnel to certain Government agencies, Central/State, public sector undertakings and other private persons and charging the amount as provided under Section 8 of the Kerala State Police Act. The amounts so recovered have been deposited into Government treasury under different heads. Whether providing armed security guards to public sector undertakings, State/Central Government Departments or other persons is covered under Security Agency Service or not? - HELD THAT:- The issue is decided in the case of THE SUPERINTENDENT OF POLICE VERSUS C.C.E,S.T. - BHAVNAGAR [ 2018 (8) TMI 1103 - CESTAT AHMEDABAD] where it was held that police department, which is an agency of the State Govt., cannot be considered to be a person engaged in the business of running security services. Thus, the appellants are not liable to pay service tax being appellants are discharging sovereign functions in terms of Kerala State Police Act. Therefore, demand of service tax is not sustainable against the appellant - appeal allowed - decided in favor of appellant.

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• 2022 (3) TMI 327
  Reconsideration of Tribunal s earlier remand order - Revenue filed an appeal on the ground that this verification report was not considered by the adjudicating authority as the same was received after the adjudication order was passed - HELD THAT:- The appellant is mainly aggrieved by the Letter dated 05.03.2018 which was issued post de novo adjudication, however, this Tribunal in the earlier round of appeal remanded the matter to the adjudicating authority for passing a fresh order after verifying the fact about the payment of Service Tax. In compliance of the Tribunal s order the adjudicating authority had conducted the verification through the field officer, however, the report was received by the adjudicating authority post adjudication order passed by the adjudicating authority. The verification report given by the Field Officer, during the subsequent passing of the order needs to be considered, therefore, the Learned Commissioner (Appeals) in the Revenue s appeals rightly remanded the matter to the adjudicating authority for passing afresh order after considering the report dated 05.03.2018, therefore, there are no infirmity in the order of the Commissioner (Appeals) whereby the matter was remanded to the adjudicating authority. Appeal is dismissed.

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• 2022 (3) TMI 326
  Rejection of interest on the amount of pre-deposit - Section 35FF of the Central Excise Act - HELD THAT:- The issue herein is squarely covered by the precedent decision of this Tribunal in M/S. PARLE AGRO PVT. LTD. VERSUS COMMISSIONER, CENTRAL GOODS SERVICE TAX, NOIDA (VICE-VERSA) [ 2021 (5) TMI 870 - CESTAT ALLAHABAD] , wherein interest on pre-deposit (made during investigation) have been enhanced from 6% to 12%, following the ruling of the Apex Court in SANDVIK ASIA LIMITED VERSUS COMMISSIONER OF INCOME-TAX AND OTHERS [ 2006 (1) TMI 55 - SUPREME COURT] . The Adjudicating Authority is further directed to grant interest @ 12% per annum from the date of deposit till the date of refund. Such interest should be granted within a period of two months from the date of receipt or service of the copy of this order. The Appeal is allowed - decided in favor of appellant.

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• Central Excise

• 2022 (3) TMI 325
  Refund of Excise Duty in cash - CENVAT credit for acquisition of capital goods used in its process of manufacture - Rule 3(5) of the Cenvat Credit Rules, 2004 - HELD THAT:- In the present case, upon the assessee using the Arc Furnace for a considerable period of time, it desired to replace the same or, at any rate, to sell or transfer the same; whereupon the assessee was required to refund in cash the entire quantum of Cenvat credit that it had obtained at the time of the acquisition of the Arc Furnace. There is no dispute that such refund was made in cash - assessee contends that since the expression for any reason did not find any place in Section 11A of the Act that ought to have been applied to the present case, it is evident that the Tribunal took irrelevant considerations into account and the decision-making process itself was awry. Refund of the Cenvat credit on account of capital goods having been raised on the assessee earlier - Rule 3(5) of CCR - HELD THAT:- The Tribunal at various places and some High Courts have taken a view that the benefit given under amended Rule 3(5) of the said Rules for depreciation of the capital goods would, in effect, have retrospective operation. Rule 3(5) of the said Rules of 2004 could have been seen to have been arbitrary in not making a distinction between the quantum of Cenvat credit that ought to be refunded by an assessee who intended to sell any capital goods for which Cenvat credit which had been obtained, within a short time of the acquisition of capital goods or after long years of use thereof. The distinction was brought about and the remission, so to say, was provided in the amended Rule 3(5) of the said Rules in 2007 - it is correct in interpreting the benefit conferred by the amendment to Rule 3(5) to have retrospective operation even if the demand for the refund of the Cenvat credit obtained for the capital goods had been raised prior to the amendment of 2007. Exemption that the appellant is entitled to by reason of the location of its manufacturing facility - HELD THAT:- What the assessee says is that if it was liable in a month to pay ₹ 100 on account of the excise duty it would be entitled to get refund of such amount of ₹ 100 the next month and so on. However, if the assessee had adjusted the Cenvat credit obtained for the capital goods against a part of the excise duty payable for its manufactured goods, then the appellant would have paid only the amount by which the duty exceeded the Cenvat credit in cash to be entitled to receive the refund of such cash only. In this case, when the appellant had used the Cenvat credit for acquiring the Arc Furnace and had adjusted the same against excise duty payable for its manufactured goods and paid the balance amount in cash after adjusting the credit, the quantum of credit which the assessee had obtained is lost forever to the assessee - What the assessee suggests is that the Cenvat credit given for acquisition of capital goods to a manufacturer, who is otherwise exempted from paying excise duty on its manufactured products, is revenue neutral. There is considerable force in such contention that when a manufacturer is entitled to refund of the entire excise duty, the refund to the Department of any adjusted Cenvat credit availed of would again have to be refunded by the Department by virtue of the exemption to which the assessee is entitled to. The Department, fairly, accepts that the matter may require fresh consideration. Accordingly, the judgment and order of the Tribunal is set aside. The order of the adjudicating authority that was carried to the Tribunal is also set aside - it is deemed fit and proper to remand the matter to the previous level, the adjudicating authority, for the entire gamut of the matter to be considered afresh in accordance with law - Appeal allowed by way of remand.

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• 2022 (3) TMI 324
  Area based exemption - principles of primary estoppel - benefit of exemption to the petitioner s existing unit and directing the petitioner to deposit Central Excise duty - seeking to reinstate Khasra Nos. 148D, 176B, 173B 176A in village Chandrabani Khalsa, Mohobewala industrial area, Dehradun in Annexure II to the Notification 50/2003 CE dated 10.06.2003 with retrospective effect - HELD THAT:- The present case and earlier decided case of M/S SANT STEEL AND ALLOYS PVT. LTD. VERSUS GOVT. OF INDIA AND OTHERS [2010 (12) TMI 1251 - UTTARAKHAND HIGH COURT] are distinguishable in view of the fact that Khasra Nos. 148D, 176B, 173B 176A belonging to the petitioner were included in the exempted list mentioned in Notification No 50 / 2003. It is also apparent from the record that as per communication issued to M/s Titan Industries Ltd., Mohabewala Industrial Area, Dehradun dated 22.12.2004 they are entitled to get concession - thus, it is apparent from the record that case is distinguishable from the earlier case, in view of the fact that three Khasra nos. in respect whereof prayer has been made in this case were in fact included in Annexure No. II to grant of tax benefits. Thereafter, the subsequent notification came, which excluded three Khasra Nos. included in Annexure II 2003 Notification. In the meantime, as per the notification dated 28.06.2004, the Income Tax Department of the Government of India has extended the tax holidays benefit under Section 80IC (2) (a) of the Income Tax Act, 1961 to these particular Khasra Nos. After the publication of 2005 Notification, the Income Tax Department had also published another Notification dated 26.04.2006, though which is not a part of the writ petition but copy whereof is supplied today in the Court, whereby the Income Tax Department had not changed the tax holiday benefit extended to the aforesaid khasra numbers meaning thereby tax holiday benefit remained unaltered and untouched for the aforesaid four Khasra Nos. The Hon ble High Court of Himachal Pradesh has quoted the case of MRF LTD. VERSUS ASSISTANT COMMISSIONER (ASSESSMENT) , SALES TAX AND OTHERS [ 2006 (9) TMI 278 - SUPREME COURT ], wherein it has been held by Hon ble Supreme Court that where a right has already accrued, for instance, the right to exemption of tax for a fixed period and the conditions for that exemptions have been fulfilled then the withdrawal of exemption during that fixed period cannot affect the already accrued right. It was also held that in those cases, the principle of promissory estoppel does not apply if it is shown that there is overriding public interest. In that case the overriding public interest would prevail. In this case, no rationale has been put forth by any of the respondents for including the four Khasras in the exemption list at annexure II and later on, for withdrawing 03 Khasra out of the 04 in another list - Annexure III vide 2005 Notification. There is no pleading of any superior public interest by the respondents. They have not also established the same. In fact, the learned counsel appearing for all the respondents never raised the question of superior public interest. So, this Court is of the opinion that principle of promissory estoppel is applicable to the present case and the State shall be stopped from taking away the benefits that were given to the petitioner by insertion of the four Khasras referred to above by including three of them in another Annexure 3 - 2005 Notification. In this case, an order has been made, under the Central Excise Act, unless a different intention appears, such amendment shall not affect any right, privilege, obligation or liability accrued or incurred under any rule notification or order so amended repealed or superseded or rescinded. Therefore, the subsequent notification, which superseded the earlier notification, in fact, took away the benefit granted to the petitioner by operation of law shall have no effect. By virtue of subsequent notification, the concession granted under Central Excise Act as well as Income Tax holidays scheme, cannot be taken away. In that view of the matter, we are inclined to allow the writ petition. Petition allowed - decided in favor of petitioner.

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• 2022 (3) TMI 323
  Area Based exemption - new unit setup in a non-industrial area, but notified the Khasra No. in General Exemption No.51 - benefit of the New Industrial Policy of remission of the Central Excise, or only an existing unit doing 25% of development in a non-industrial area is only entitled to such remission to be exclusion of the new units? - benefit of N/N. 50/2003 - HELD THAT:- Tthe controversy involved in this case has already set at rest by the Full Bench of this Court in OM ISPAT, JITENDRA KUMAR AND KUCHHAL CAMPUS IQBALPUR SUGAR MILLS VERSUS GOVERNMENT OF UTTARAKAND AND ORS. [ 2011 (8) TMI 795 - UTTARAKHAND HIGH COURT] , and it has, vide its aforesaid judgment, categorically come to the conclusion that remission of Central Excise is also available to a new industrial unit setup in a non-industrial area, but where the Khasra No. is specified in General Exemption No.51 - the judgment of the Full Bench is also agreed upon that the petitioner is entitled to exemption under Notification No.50/2003, dated 10.06.2003. Also, there is neither plausible rationale, nor it is an intelligible differentia to uphold the contention that only existing units with substantial development are eligible to get the tax/duty remission and holiday. The very purpose of devising the industrial policy, i.e. Notification No.50/2003 is to give incentive to growth of industry in the two States. It should also apply to new units in non-industrial areas. The writ petition is a meritorious one, and should be allowed - the opinion of the respondent No.3 in expression to the respondent No.2 his opinion on extension of benefit of exemption to new industrial units established in the category industrial activities in non-industrial areas are, hereby, quashed - petition allowed.

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• 2022 (3) TMI 322
  Issuance of a writ of declaration to confirm the correctness of the Form SVLDRS 1 dated December 12, 2019 - impugned order dismissed the writ petition solely on the ground that the appellant had approached the Court after expiry of the scheme, which expired on 30th June, 2020 - non-application of mind - HELD THAT:- The appellant had exercised the opportunity provided under Rule 6 (4) of the said Rules. Sub Rule (4) of Rule 6 provides for making a written submission, which was exercised by the appellant. The proviso to Rule 6(4) provides that if no such agreement or disagreement is indicated till the date of personal hearing and the declarant does not appear before the Designated Committee for personal hearing, the Committee shall decide the matter based on available records. Thus, even in cases where an ex parte decision is taken, the Committee shall decide the matter based on available records. In the instant case, the appellant had filed electronically Form SVLDRS 2A indicating the disagreement and requesting for rectification of the defect. The appellant also sought for permission to file written submission, which was granted. In the written submission, the appellant had pointed out that opportunity of personal hearing was granted on 20th January, 2020. Further, the appellant had mentioned that the Tribunal had directed deposit of ₹ 20 lakhs within a period of eight weeks from the date of the order, and the direction was complied with. The copy of the order passed by the Tribunal was enclosed as exhibit 1. Further, the appellant enclosed the copies of the challan evidencing payment of pre-deposit of ₹ 20 lakhs, which was enclosed as exhibit 2 - the appellant submitted that it had paid pre-deposit amount of ₹ 20 lakhs and produced the copy of the challans evidencing payment of the pre-deposit, requested to issue Form SVLDRS 3 by reckoning the said predeposit amount. The Form SVLDRS 2A indicates that all the exhibits were uploaded along with the said Form. If such is the scheme of the Act and the Rules and if the authority has to take a decision based on the records produced by the appellant / assessee, it goes without saying that an order with reasons is required to be passed. Probably, the electronic Form SVLDRS 3 does not specifically provide a column but however, we find from the said statutory form, there is a column indicated as remarks . If for some reason the Designated committee was of the opinion that the pre-deposit amount of ₹ 20 lakhs cannot be reckoned (which cannot be done by the Designated Committee as the statute provides for the same), the Designated Committee was bound to give reasons in the remarks column while issuing Form SVLDRS 3 - the decision of the Designated Committee has to be held to be devoid of reasons and outcome of total non-application of mind. The order passed in the writ petition is set aside. Consequently, the writ petition is allowed - Form SVLDRS 3 is set aside and the Designated Committee is directed to reckon the pre-deposit of ₹ 20 lakhs made by the appellant pursuant to the directions issued by the Tribunal and issue fresh Form SVLDRS 3 - appeal allowed.

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• 2022 (3) TMI 321
  Maintainability of appeal - applicability of time limitation for preferring an appeal - proper service of the impugned order or not - HELD THAT:- From a bare perusal of Sub-section (3A) of Section 85 of the Act 1994, it is luminescent, that an appeal shall be presented within two months from the date of receipt of the decision or order of such adjudicating authority, made on and after the Finance Bill, 2012 relating to service tax, interest or penalty under this Chapter. The proviso attached to sub-section (3A) provides, that if the Commissioner of Central Excise (Appeals) is satisfied that the appeal was presented by sufficient cause from presenting the appeal within the aforesaid period of two months, allow it to be presented within a further period of one month. Thus, the total period, including the extended period to prefer an appeal under Section 85 of the Act 1994, is three months. The provisions of Section 85 nowhere states that limitation shall commence from the date when the order is served upon the person concerned or his authorized agent. There is no dispute to the fact that the order passed by the Original Authority/Assessing Authority was issued against the petitioner and accordingly, description of the petitioner was styled as name of the parties in the order itself. Secondly, the order was required to be served upon the petitioner in terms of Clauses (1) and (3) of the instructions contained in the order dated 31- 01-2018 - Apparently, the respondent does not dispute that the order of the Original Authority/Assessing Authority was not served upon the petitioner and there is no material on record to show that the impugned order dated 31-01- 2018 was ever served upon the petitioner. On the contrary, on the strength of the endorsement made at the bottom of the order dated 31-01-2018, it is stated that the same was received by Manoj Kumar Shrivastava on 11-4-2018, who was the legal representative of the petitioner. Thus, apparently there was no proper service of the impugned order dated 31-01-2018 passed by the Original Authority/Assessing Authority upon the petitioner, so as to enable him to prefer an appeal before the Commissioner of Central Excise (Appeals) in accordance with Section 85 of the Act 1994. The Hon ble Supreme Court in catena of decisions has categorically held, that the rules of limitation are not meant to destroy the rights of the parties. The Courts are only required to ensure that, a litigant has not to take resort to dilatory tactics and has approached the Court bonafidely. The matter is remitted back to the Commissioner (Appeals) CGST, Customs Central Excise, Bhopal to decide the appeals on merits in accordance with law, by affording proper opportunity of hearing to the petitioners - Petition allowed.

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• 2022 (3) TMI 320
  Area based exemption - seeking directions to adjudicate the applications filed by it for fixing special rate of valued addition in terms of notification dated 14.11.2002 as amended vide notifications dated 27.03.2008 and 10.06.2008 - units located in specified areas from the duty equivalent to the amounts of duty paid by the manufacturer - HELD THAT:- The court in allowing the writ petition held that the ground for rejecting such application for the reason it was not submitted within 30th September of the given financial year would perhaps be not available to the respondent authorities for rejecting the applications. This petition is disposed off with the direction to the respondent No.2, Commissioner Central Excise Goods and Services Tax Commissionerate, Jammu to consider the above applications of the petitioner for fixation of a special rate in terms of the notifications referred to above in accordance with law most expeditiously without insisting for the time of filing of the applications in the light of the judgment of the Guahati High Court if possible within a period of one month from the date a copy of this order is produced before him.

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• 2022 (3) TMI 319
  CENVAT Credit - duty paying documents - distribution of credit to various manufacturing plants by issuing ISD invoices - Reverse Charge Mechanism availing the benefit of VCES Scheme - Rule 9 of Cenvat Credit Rules - HELD THAT:- Rule 9(1)(bb) applies only to supplementary invoice, bill or challan issued by provider of output Service . In the instant case, it is an undisputed fact that service tax has been paid by the appellant under Reverse Charge Mechanism in the capacity of recipient of service and not as provider of service . In these circumstances, the case of the appellant would be covered under Rule 9(1)(e) of the Cenvat Credit Rules, 2004. This view is also supported by the decision of Tribunal in the case of NISSAN MOTOR INDIA PRIVATE LTD. VERSUS COMMISSIONER OF SERVICE TAX, CHENNAI [ 2019 (2) TMI 1299 - CESTAT CHENNAI] and POLYGENTA TECHNOLOGIES LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, NASIK-I [ 2018 (2) TMI 804 - CESTAT, MUMBAI] . The entire case of the Revenue is based on invocation of Rule 9(1)(bb) of the Cenvat Credit Rules and since the said Rule is not applicable in respect of the service tax paid by the recipient of service under Reverse Charge Mechanism, the demand of reversal of cenvat credit cannot be upheld - Appeal allowed - decided in favor of appellant.

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• 2022 (3) TMI 318
  Clandestine manufacture and removal - Pan Masala - illegal pan masala pouch packing machine found in the premises - reliance placed on the statements recorded by the Central Excise Officers - relevancy of statements u/s 9D in the Central Excise Act, 1944 - HELD THAT:- The truth of the facts contained in any statement, recorded before a Gazetted Central Excise Officer, has to be proved by evidence other than the statement itself. The evidentiary value of the statement, insofar as proving the truth of the contents thereof is concerned, is, therefore, completely lost, unless and until the case falls within the parameters of Section 9D. Both sides agreed that the procedure under section 9D has not been followed with respect to the statements. The Commissioner should be given an opportunity to follow the procedure under section 9D and come to the conclusion as to which of the statements relied upon in the show cause notice should be admitted in evidence and thereafter decided the matter. Needless to say that if any person is examined as a witness under section 9D and if any of the noticees wishes to cross-examine such a person an opportunity of cross-examination should also be provided. Matter remanded to the Original authority to follow the procedure under section 9D in respect of all the statements that have been relied upon and pass reasoned order after following principles of natural justice - appeal allowed by way of remand.

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• Indian Laws

• 2022 (3) TMI 317
  Prayer for specific performance of Clause 12 of the Sale Deed - plot of 10% area (to be calculated of the total land sold) shall be allotted to the petitioner on payment of 10% of the amount as being paid under the Sale Deed - Original Farmer shall also be entitled to Rehabilitation Bonus or not - HELD THAT:- As observed by this Court in catena of decisions, mere representation does not extend the period of limitation and the aggrieved person has to approach the Court expeditiously and within reasonable time. If it is found that the writ petitioner is guilty of delay and latches, the High Court should dismiss it at the threshold and ought not to dispose of the writ petition by relegating the writ petitioner to file a representation and/or directing the authority to decide the representation, once it is found that the original writ petitioner is guilty of delay and latches. Such order shall not give an opportunity to the petitioner to thereafter contend that rejection of the representation subsequently has given a fresh cause of action. The High Court has rightly refused to grant any relief which as such was in the form of specific performance of the contract. No writ under Article 226 of the Constitution of India shall be maintainable and/or entertainable for specific performance of the contract and that too after a period of 10 years by which time even the suit for specific performance would have been barred by limitation. There is no substance in the present special leave petition and the same deserves to be dismissed - Petition dismissed.

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• 2022 (3) TMI 316
  Dishonor of Cheque - petitioner declared as proclaimed person in the proceedings under Section 138 of the Negotiable Instruments Act, 1881 - continuation of proceedings, where main case was dismissed for want of prosecution - HELD THAT:- A perusal of the relevant extract of the judgment in the case of ASHOK MADAN VERSUS STATE OF HARYANA AND ORS. [ 2019 (5) TMI 1918 - PUNJAB AND HARYANA HIGH COURT ] would show that where the main case was dismissed for want of prosecution, it was observed that the continuation of proceedings under Section 174-A of the IPC shall be abuse of the process of court. In the present case, the complaint had been filed by Fincruise Credit Services Private Limited against the present petitioner for dishonour of cheque dated 30.01.2015 amounting to ₹ 11,000/-. A perusal of the zimni orders moreso, the orders dated 20.08.2018 and 16.08.2019 would show that the petitioner was never served in the said proceedings. Order dated 20.12.2019 vide which, the petitioner was declared as proclaimed person was thus, passed without due service of the present petitioner. FIR No.483 under Section 174-A of the IPC was registered on account of the petitioner having been declared as proclaimed person in the proceedings under Section 138 of the Act of 1881. The petitioner has already joined the proceedings under Section 138 of the Act of 1881 and has been granted bail as is apparent from order dated 02.08.2021 (Annexure P-11). The case under Section 138 of the Act of 1881 has already been compromised and the cheque amount has already been paid to the complainant and the complainant has 5 of 7 withdrawn the complaint filed under Section 138 of the Act of 1881 as is apparent from order dated 08.09.2021 (Annexure P-12). It is apparent that the petitioner was not duly served in proceedings under Section 138 of the Act of 1881, the petitioner has also joined the proceedings under Section 138 of the Act of 1881 and the complaint filed under Section 138 of the Act of 1881 has been withdrawn by the complainant on account of the compromise effected between the parties. In the said facts and circumstances, the continuation of proceedings in FIR registered under Section 174-A of the IPC would be an abuse of process of Court. Present petition allowed.

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• 2022 (3) TMI 315
  Dishonor of Cheque - insufficiency of funds - acquittal of the accused - discharge of legal/debt liability or not - default on account of non appearance of the complainant - HELD THAT:- In view of provisions of Section 378(4) Cr.P.C., it has become clear that in case of acquittal in a complaint case, the remedy before the complainant to file an appeal was only before the High Court. The said Section makes provision for appeal against an order of acquittal passed in case instituted upon complaint. Further, in view of Section 378(1)(a) and (b) of the Code, an appeal against an order of acquittal passed by the Magistrate can only be filed before the Sessions Court in respect of cognizable and non-bailable offence and all other cases where orders of acquittal have been passed, appeal can only be filed to the High Court. In the present case, the complaint case filed under Section 138 of the N.I. Act against the petitioner was dismissed in default on account of non appearance of the complainant - It is well settled principle of law that dismissal of a complaint in default of appearance of the complainant amounts to acquittal of the accused and the remedy to the complainant for filing an appeal against the said order of acquittal would lie before the High Court by filing leave to appeal and not before the Sessions Court. Petition allowed.

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• 2022 (3) TMI 314
  Dishonor of cheque - fund insufficient - vicarious liability of Managing Director - Sections 138/141 read with Section 142 of Negotiable Instruments Act, 1881 - HELD THAT:- It appears that the complaint case was filed on 14.05.2018 under Sections 138/141 read with Section 142 of the NI Act by the complainant firm, M/s. M. M. Enterprise, against the accused No. 1 M/s. Sanwaria Infra Space Pvt. Ltd., accused No. 2- Shri Mukharjee Bijit, accused No. 3 Sabari Bijit Mukharjee, both are Directors of M/s. Sanwaria Infra Space Pvt. Ltd., and the present petitioners Shri Girish Mulshankar Chaudhary and Smti. Kusum Choudhary, arraying them as accused No. 4 and accused No. 5, who were also the Directors of M/s. Sanwaria Infra Space Pvt. Ltd., for dishonour of the two cheques issued by the company, accused No. 1, on 27.03.2018, in discharge of their liability to the complainant firm. It also appears that while the cheques were issued on 27.03.2018, the present petitioners, Nos. 1 2, who were the Directors of the accused company No. 1, tendered their resignation on 01.02.2018 and 03.01.2018 respectively, much before issuance of cheques on 27.03.2018. Admittedly, they were not the signatories of both the cheques, which returned dishonoured from the bank. The petitioner nos. 1 2 had sent their resignation letters to the Registrar of the companies in the Form No. DIR-12 and DIR-11 and the same are uploaded in the website of Registrar of the Companies. It also appears that no specific role is assigned to the petitioners in the complaint except one omnibus statement to the effect that all the accused Directors are liable for issuing the cheques in question despite knowing well that the said cheques would be dishonoured due to insufficient fund and that none of the Directors had exercised any due diligence to prevent the commission of offence. Now the question before this Court is whether the aforesaid averment made in the complaint against the petitioner Nos. 1 2 are sufficient to fasten vicarious liability upon them - In the case in hand admittedly, the petitioners have not issued the cheques and they have tendered their resignation much before issuance of the said cheques, moreover, they were not the Managing Director of the Company. Time and again, it has been asserted by this Court that only those person who were in charge of and responsible for the conduct of the business of the Company at the time of commission of an offence will be liable for criminal action. A Director, who was not in charge of and was not responsible for the conduct of the business of the Company at the relevant time, will not be liable for an offence under Section 141 of the NI Act. In the case in hand, having considered the statements made in the complaint and also having considered the submissions advanced by the learned counsels of both the sides, this Court is left unimpressed that the aforementioned requirement is fulfilled here in this case. And as such further proceeding against the petitioners, in the learned court below, to the considered opinion of this court, is nothing but an abuse of the process of the court - In SABITHA RAMAMURTHY ANR. VERSUS RBS. CHANNABASAVARADHYA [ 2006 (9) TMI 490 - SUPREME COURT] , it has been held by the Hon'ble Supreme Court that by verbatim reproducing the wording of the section without a clear statement of fact supported by proper evidence, so as to make the accused vicariously liable is a good ground for quashing proceedings initiated against such person under section 141 of the N.I. Act. Here in this case, the petitioners have not issued the cheques and they have tendered their resignation much before issuance of the said cheques. These are un-controvertible facts. Only a bald averment is made in the complaint against them that they were responsible for day to day affairs of the company. There is no specific averment against them to show, as to how and in what manner the petitioners are responsible for the conduct of the business of the Company. Moreover, they were not the Managing Director of the Company. There are no merit in the petition - petition dismissed.

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• 2022 (3) TMI 313
  Dishonor of Cheque - discharge of legally enforceable debt or not - dishonour of different cheques and non-payment of that amount after receipt of notice - separate liability for different cheques - HELD THAT:- For language of Sections 219 and 220 Cr.PC, it is apparent that these Sections, as exceptions to general principle propounded in Section 218 of Cr.PC, are enabling provisions whereby two or more different offences may be tried together subject to confirming the ingredients required for that as provided in these Sections, but charging with and trying together by Court in these Sections is not mandatory and these previsions do not prohibit separate trial for different offences committed by an accused. The Court is at liberty to charge with and try the accused under Sections 219 and 220 Cr.P.C. in a single trial or in different trials, as normal Rule is separate trial for different and distinct offences committed by accused. In a case under NI Act, cause of action to file a complaint arises when the accused fails to make the payment of amount of money to payee/holder in due course of cheque within 15 days of receipt of notice issued within 30 days of dishonour of cheque. Prior to aforesaid period, there is no cause of action to complainant to prefer a complaint under Section 138 of NI Act. Different cheques, may be issued for discharging the liability, arising out of one and same transaction, are separate entities and dishonour of each and every cheque gives a right to complainant to issue notice to drawer in terms of Section 138 of NI Act and on failure to make payment within period prescribed in Section 138 of NI Act entitles the complainant to file a complaint with respect to such dishonour of cheque - Dishonour of different cheques and non-payment of that amount after receipt of notice constitutes a different offence. Therefore, complainant has right to file and maintain separate complaint for dishonour of each and every cheque on failure to make payment by payer after receipt of notice under Section 138 of NI Act. In present case, Notice of Accusation has already been put to accused in both complaints and complainant has already combined three cheques in one case and two cheques in another case and has filed only two complaints with respect to five cheques and liability of accused in both cases is different in nature as in one case cheques are stated to have been issued to discharge the debt of financial assistance provided by an individual, whereas, in another case cheques are stated to have been issued for discharging the liability towards the purchase of goods from sole proprietorship concern. There are no merits in petition and no illegality, irregularity or perversity in the impugned order - petition dismissed.

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• 2022 (3) TMI 312
  Exemption from Compounding fee or not - petitioner has offered to compromise the matter against payment of entire compensation amount, which was agreed upon - HELD THAT:- The petitioner has prayed for exempting or imposing lesser amount of compounding fee instead of 15% of cheque amount. It is also submitted by him that considering the ratio of law laid down by the Apex Court in DAMODAR S. PRABHU VERSUS SAYED BABALAL H. [ 2010 (5) TMI 380 - SUPREME COURT ], as clarified by the Apex Court in MADHYA PRADESH STATE LEGAL SERVICES AUTHORITY VERSUS PRATEEK JAIN ANOTHER [ 2014 (10) TMI 528 - SUPREME COURT ], wherein it has been held that Court may reduce compounding fee for given facts and circumstances of a particular case, present case is a fit case of exemption of compounding fee. It is an appropriate case to impose lesser compounding fee. Therefore, petitioner is directed to deposit compounding fee of ₹ 5,000/- instead of 15% of cheque amount, with the H.P. State Legal Services Authority, Shimla within six weeks from today - petition disposed off.

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• 2022 (3) TMI 311
  Maintainability of petition - applicability of time limitation - It was the case of the Appellant before the Learned Single Judge that Respondents never responded to his representations over the years and therefore, the petition was not barred by delay - HELD THAT:- There is no explanation forthcoming in the writ petition or before this Court as to why the Appellant waited for nearly 5 decades to approach the Court except for a bald assertion that his several representations were pending with the DDA and his matter for allotment of alternative shop/site was under consideration. The writ petition was thus, clearly barred by delay and laches. The Learned Single Judge has rightly noted that though seemingly, it is an innocuous prayer but clearly it is an attempt on the part of the Appellant to create a fresh cause of action in order to overcome the delay and laches and cannot be countenanced. It is a settled law that repeated representation does not extend limitation nor can be a ground to plead a fresh cause of action so as to overcome delay and laches which in this case is 46 years from the date the shop was demolished and over 11 years from the rejection of representation, with not an iota of explanation enabling this Court to condone the delay. There are no infirmity in the impugned order and the findings of the Learned Single Judge is agreed upon - petition dismissed.

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