TMI Tax Updates - e-Newsletter
April 27, 2022

Case Laws in this Newsletter:

GST Income Tax Customs Corporate Laws Insolvency & Bankruptcy Service Tax Central Excise CST, VAT & Sales Tax Indian Laws

News

1. Clarification related to the misleading reports of purported feedback sought on raising GST Rates on 143 items

2. ICD Patparganj & Other ICDs Commissionerate take initiative under Project SAJAL to provide safe drinking water facility in 20 government schools identified in different districts of Sonepat, Panipat, Faridabad, Palwal and Gurugram

3. Secretary, DPIIT urges National Startup Awardees to adopt one district individually and contribute to its holistic development

4. Secretary DPIIT to inaugurate One-day Conference on IP ecosystem and youth

5. Auction for Sale (Re-issue) of (i) ‘4.56 % GS 2023’, (ii) ‘7.10% GS 2029’, (iii) ‘6.54% GS 2032’ and (iv) ‘6.95% GS 2061’

Notifications

GST - States

1. 4/2022-State Tax - dated 22-4-2022 - Himachal Pradesh SGST

Amendment in Notification No. 14/2019-State Tax, dated the 28th March 2019

2. 3/2022-State Tax - dated 22-4-2022 - Himachal Pradesh SGST

Amendment in Notification No. 10/2019-State Tax, dated the 28th March 2019

3. 2/2022-State Tax (Rate) - dated 22-4-2022 - Himachal Pradesh SGST

Seeks to provide for a concessional rate on intra state supply of bricks conditional to not availing the ITC

4. 1/2022-State Tax (Rate) - dated 22-4-2022 - Himachal Pradesh SGST

Amendment in Notification No. 1/2017-State Tax (Rate), dated the 30th June 2017

Income Tax

5. 45/2022 - dated 25-4-2022 - IT

Corrigendum - Notification No. 37/2022 in the Hindi version, dated 21.04.2022

SEBI

6. SEBI/LAD-NRO/GN/2022/81 - dated 25-4-2022 - SEBI

Securities and Exchange Board of India (Custodian) (Amendment) Regulations, 2022

7. SEBI/LAD-NRO/GN/2022/80 - dated 25-4-2022 - SEBI

Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) (Fourth Amendment) Regulations, 2022

Circulars / Instructions / Orders

GST - States

1. F.17(131-Pt.-II) ACCT/GST/2017/7739 - dated 7-4-2022

Functioning of Central Registration Unit for GST registrations

2. F.17(131-Pt.-II) ACCT/GST/2017/7627 - dated 31-1-2022

Delegating power under section 30 of RGST Act 2017

DGFT

3. Trade Notice No. 03/2022-23 - dated 26-4-2022

Application for recognition as Pre-Shipment Inspection Agency (PSIA) and issuance and electronic Verification of Pre-Shipment Inspection Certificate (PSIC)

Highlights / Catch Notes

GST

• Audit Department's Jurisdiction Challenged; Calls for Finalizing Proceedings and Personal Hearings for Appellants.

  Case-Laws - HC : Service of SCN - jurisdiction for the audit department to issue a notice called spot memo - it is not clear as to why different wings of the very same department have been issuing notices and summons to the appellants without taking any of the earlier proceedings to the logical end. - it is appropriate for the concerned authority to take the proceedings to the logical end after affording an opportunity of personal hearing to the appellants. - HC
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• High Court Upholds Single Judge's Decision on Provisional Attachment Expiry Under GST Section 83(1) After One Year.

  Case-Laws - HC : Provisional attachment of property - Compliance of the necessary ingredients/conditions is sine qua non and it has to be done in letter and spirit not in a cryptic and cavalier manner - It is significant to note that every such provisional attachment shall ceased to have effect after the expiry period of one year from the date of the order under Sub-section (1) of Section 83 - There are no reasons to interfere with the well-reasoned order of the learned Single Judge - HC
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• Court Rules in Favor of Refund for IGST on Zero-Rated Supplies, Rejects Restriction to SEZ Suppliers u/r 89(1.

  Case-Laws - HC : Refund of accumulated Integrated Goods and Service - Zero Rated Supply - The impugned order proceeds on the assumption that application for refund in respect of supplies to a Special Economic Zone or a Special Economic Zone Developer, can be filed only by a supplier of the goods or services in terms of second proviso to Rule 89 (1) of Central Goods and Service Tax Rules, 2017 - there is no merit in the impugned order passed by the respondent denying the benefit of refund of unutilized input tax credit of zero rated supplies effected by the petitioner. - HC
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Income Tax

• Charitable Trusts Gain New Investment Options Under Income-tax 10th Amendment Rules 2022, Section 11(5)(xii).

  Notifications : Income-tax (10th Amendment) Rules, 2022 - Forms or modes of investment or deposits by a charitable or religious trust or institution u/s 11(5)(xii) - Additional facility for investment of accumulated money
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• Court Upholds Reopening of Assessment u/s 148 Based on New Information; Writ Petition Dismissed.

  Case-Laws - HC : Validity of Reopening of assessment u/s 148 - the opinion formed by the assessing officer being based on the new information available to the assessing officer after passing of the original assessment order alleging large scale transactions carried out by the assessee thereby adjusting the loss shown out of such derivative transactions with a view to adjust such loss with other business income, but also on the personal belief based on the enquiry made by the assessing officer. This Court is not thus required to enter into the arena of merit or correctness of such reasonable belief of the assessing officer for the purpose of reopening of the assessment. - WP dismissed. - HC
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• Court Quashes Reopening of Assessment for Deceased; Notice u/s 142(1) Improperly Issued, Lacks Legal Standing.

  Case-Laws - HC : Validity of Reopening of assessment u/s 147 - notice u/s 142(1) upon the deceased assessee - the writ applicant has not surrendered to the jurisdiction of the Assessing Officer by submitting return in response to the impugned notices neither the jurisdictional Assessing Officer has issued notice upon writ applicant as legal representative representing estate of deceased assessee. - the proceedings initiated by the AO against the deceased assessee are not tenable in the eye of law and are required to be quashed and set aside. - HC
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• Faceless Assessment u/s 144B Invalidated for Procedural Lapses; Order Quashed and Remanded for Reconsideration.

  Case-Laws - HC : Validity of faceless assessment u/s 144B - there are variations from the return filed by the writ applicant as regards disallowance. The final assessment order is not made in accordance with the procedure envisaged under section 144 (xvi) (b) of the act as inspite of the variation being prejudicial to the assessee, no opportunity has been given to the assessee by serving show cause notice along with draft assessment order calling upon him to show cause as to why the proposed variation should not be made. - Order quashed - matter restored back - HC
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• Assessee's Claim u/s 89 Approved: Lump Sum Compensation Treated as Salary, Not Termination Compensation.

  Case-Laws - AT : Claim of the assessee u/s. 89 r.w. Rule 21A of I.T. Rules - The basis of compensation calculated by the company and the company also treated the one-time compensation as a salary paid in advance and deducted the TDS on the same, clearly indicates that the compensation received by the assessee is only salary received in advance not as termination compensation even though this was paid in lumpsum as ex-gratia in one go. - AO directed to allow the claim of the assessee u/s. 89 - AT
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• Slump Sale to Subsidiary Exempt from Transfer Tax u/s 47(iv); CIT Revision u/s 263 Challenged.

  Case-Laws - AT : Revision u/s 263 by CIT - slum sale - The assessee has transferred the whole business under slump sale basis and it is fact on record that it is transferred the business on going concern basis to its own subsidiary company. The transaction is covered u/s 47(iv) of the Act and accordingly it is not transfer within the provisions of the Act. - when the receipt or profit earned by the assessee are in the nature of capital receipt or capital profit, these profit has to excluded from the book profit for the purpose of section 115JB also - AT
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• Trust Denied Section 11 Exemption; Income Taxed at Maximum Marginal Rate u/s 164 Due to Unknown Beneficiaries.

  Case-Laws - AT : Assessment of trust after denial of exemption u/s 11 - section 164 - the beneficiaries of the trust are unknown - The income of the trust shall be assessed at maximum marginal rate of tax. - AT
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• Income Tax Act Section 132(4) Statements Hold Validity Despite Retractions; Original Statements Presumed Accurate with Independent Witnesses.

  Case-Laws - AT : Validity of statement - retraction of statement - the statement recorded u/s. 132(4) cannot be discarded merely because the retractment statements were filed. The statements u/s. 132(4) are true and correct and brings out the correct picture as at that time the maker of the statement is uninfluenced by external agencies and it is the statements are recorded in the presence of the independent witnesses. Therefore, in our considered opinion, the so-called retraction statements are simple a self-serving statements without any material and cannot override the statements recorded u/s. 132(4) of the Income Tax Act. - AT
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• Reopening of Assessment u/s 147 Invalid: CIT(A) Cannot Direct AO to Reopen; Reasons Legally Flawed.

  Case-Laws - AT : Reopening of assessment u/s 147 - the ld. CIT(A) has no power under the provision of law to give direction to the AO for reopening of assessment. Thus the reasons recorded for reopening of assessments is bad in law. - AT
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• Section 153A Assessment Finds No Evidence Linking Foreign Receipts to Services in India; Income Assumed Without Proof.

  Case-Laws - AT : Assessment u/s 153A - there is nothing which can lead to any inference or the conclusion that the receipts from foreign companies were in relation to services rendered by the assessee to Fedrigoni in India. Thus, even the FTTR reference cannot be considered as material on record to support the case made out by the Assessing Officer, which goes to prove that his assessment of income was purely based on surmises and presumptions - AT
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Customs

• Court Orders Release of Goods from Lots 2 and 5; Authorities' Objections Deemed Frivolous Post-Auction.

  Case-Laws - HC : Seeking direction to release of the balance items of two lots of the delivery order - From the procedures laid down in the Circular issued by the customs it is evident that after holding auction, it is now too late for the authorities to contend that such items require either BIS certificate or are liable for destruction. Thus, this Court is of the considered view that objections raised as a ground for withholding release of the goods are frivolous and flimsy and thus, liable to be set aside and quashed. - the authorities are obliged to release/ deliver the balance items of lot no. 2 and 5 of the first delivery order dated June 11, 2021 - HC
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State GST

• E-Invoicing Mandatory for Businesses Over Rs. 20 Crores Turnover from April 1, 2022; Other Invoices Invalid.

  Circulars : Important advisory for e-Invoice for Taxpayers having annual turnover exceeding ₹ 20 Crores - invoices issued by in any other manner other than e-Invoicing after 1st of April 2022, shall not be treated as an invoice
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• Excise and Taxation Department outlines SGST reimbursement process for films, enhancing efficiency and compliance in the industry.

  Circulars : Standard Operating Procedure for processing Reimbursement of SGST on films by the Excise and Taxation Department - SGST
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Indian Laws

• NCLT Moratorium Shields Corporate Debtor in CIRP from Section 138 Prosecution for Cheque Dishonor; No Individuals Accused.

  Case-Laws - SC : Dishonor of Cheque - Company under CIRP - moratorium was issued by NCLT - none of the natural persons who were stated to be the in-charge of and responsible for the affairs of the corporate entity were arrayed as accused - It must therefore be held that the corporate debtor, namely, the appellant herein cannot now be proceeded against under Section 138 of the Act. - SC
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• High Court Dismisses Petition: No Handwriting Expert Needed in Cheque Tampering Case Due to Lack of Merit.

  Case-Laws - HC : Dishonor of Cheque - tampering with the cheque - In the wake of the specific plea of the petitioners that the blank signed cheque had been handed over to the respondent-complainant and in the absence of any claim by the respondent-complainant that a duly filled cheque, complete in all particulars, had been handed over by the accused, a mere examination of a handwriting expert to prove a fact not pleaded or claimed by the complainant is not likely to advance any interest of justice. The same is only likely to delay the final adjudication of the trial. - The petitions being devoid of any merit, are accordingly dismissed - HC
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• Court Rules Imprisonment for Cheque Dishonor Unjustified; Monetary Loss Not Addressed by Jail Time.

  Case-Laws - HC : Dishonor of cheque - it is evident that the sentence of imprisonment awarded by the trial court and confirmed by the first appellate court is not justified - In the case on hand, it is a monetary loss to the complainant/respondent. Therefore imposing the sentence of imprisonment will not serve any purpose. - HC
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IBC

• Insolvency Professionals: Temporary Membership Surrender Discontinued by IBBI, Impacting Regulatory Framework and Professional Practices.

  Circulars : Clarifications with respect to Temporary Surrender of Professional Membership - the process of ‘Temporary Surrender of Professional Membership,’ ceases to exist - IBBI
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Service Tax

• CENVAT Credit can be claimed with various documents, not just invoices, u/r 4(2)A and Rule 9.

  Case-Laws - AT : CENVAT Credit - duty paying invoices - performa invoices - the documents required under the Rule 9 are not confined to merely invoices but these may be any documents, like bill or challan as issued in terms of Rule 4 (2) A of the Service Tax Rules etc. This particular Rule specifies the amount of information as is required in a particular documents for availment of Cenvat Credit. Thus any documents as required under Rule 4(2)A can be the documents under Rule 9 of Cenvat Credit Rules for entitlement of availing Cenvat Credit - it is held that denial of availment of Cenvat Credit on performa invoices was absolutely wrong. - AT
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Central Excise

• Module Mounting Structures Not Exempt from Central Excise Duty, Exemption Limited to Specific Solar System Parts Under List 8.

  Case-Laws - AT : Exemption from Central Excise Duty - module mounting structures - The Principal Commissioner has rightly concluded that the serial number 10 of List 8 refers to ‘solar power generating system’ and not to ‘module mounting structures’ manufactured by the appellant and only parts consumed within the factory of production of such parts for the manufacture of goods specified at serial numbers 1 to 20 of List 8 are exempted from payment of central excise duty. - AT
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Case Laws:

• GST

• 2022 (4) TMI 1198
  Service of SCN - jurisdiction for the audit department to issue a notice called spot memo - earlier proceedings by different wing were pending on the same issue - HELD THAT:- It is found that none of the proceedings initiated by the department has been shown to have been taken to the logical end. If, according to the respondents department, there is an irregularity in the availment of credit, then appropriate proceedings under the Act should be initiated and after due opportunity to the appellants, the matter should be taken to the logical end. Such a procedure had not been adopted in the instant case and the appellants appears to have been dealt with in a most unfair manner in the sense that from the year 2018 for the very same TRAN 1 issue the appellants have repeatedly been summoned, issued notices etc. The spot memos, which have been communicated to the appellants along with the communications dated 22nd March, 2021 is also for the very same purpose - it is not clear as to why different wings of the very same department have been issuing notices and summons to the appellants without taking any of the earlier proceedings to the logical end. The spot memos, which have been furnished along with the communications dated 22nd March, 2021 cannot be enforced - it is appropriate for the concerned authority to take the proceedings to the logical end after affording an opportunity of personal hearing to the appellants. The spot memos enclosed with the communications dated 22nd March, 2021 are quashed and there will be a direction to the 5th respondent, namely, Additional Assistant Director, DGGI, Kolkata, Zonal Unit to consider the reply submitted by the appellants dated 14th January, 2020 along with the earlier reply given by the appellants dated 15th June, 2018 and 24th July, 2018 - Appeal allowed.

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• 2022 (4) TMI 1197
  Levy of GST - Royalty - case of petitioner is that the royalty is separate and distinct from the land revenue and it is not related to the land as a unit, as such, no tax is to be paid upon the royalty - HELD THAT:- Issue notice. Issue notice of stay application also, returnable on 5.7.2022.

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• 2022 (4) TMI 1196
  Seeking to allow or permit to file revised TRAN-I Form - prayer to file upload GST TRAN-I since in the original TRAN-I which was filed within time there was some mistake due to inadvertence - non-speaking order - HELD THAT:- It appears on perusal that against the aforesaid representations it has been rejected by one line order, dated 10th April, 2019, as appears at page 97 of the writ petition which is totally a non-speaking order and it does not deal with the contentions raised by the petitioner in the representations. Considering the submission of the parties, this writ petition is disposed of by directing the Assistant Commissioner, Nodal Officer IT Glitch/respondent concerned GST and Central Excise to consider and dispose of the representations of the petitioner in accordance with law and by passing a reasoned and speaking order by dealing with the contentions raised by the petitioner in the representations and after taking into consideration the reported decisions by giving opportunity of hearing to the petitioner or its authorised representatives within eight weeks from the date of communication of this order.

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• 2022 (4) TMI 1195
  Provisional attachment of property - proceedings under Section 62 or Section 63 or Section 64 or Section 73 or Section 74 of the Act were pending at the time of issuance of the notice or not - Section 83 of the Central and Service Tax Act, 2017 - HELD THAT:- It has been held by the Writ Court that no documentary evidence has been placed on record by the Revenue to show that the proceedings were initiated under Section 74 of the Act so as to pass the order under Section 83 of the Act. It is trite that when the Act specifically provides the requirements for invoking Section 83, it has to be strictly adhered to. Merely referring to the letter which indeed does not refer to section 74, it cannot be presumed that such proceedings under Section 74 of the Act were pending to initiate proceedings under Section 83 of the Act. Inference that could be drawn from the material available on record cannot be stretched to consider any letter issued requesting the assessee to pay the bills to be the compliance of Section 83 of the Act. In other words, compliance of the necessary ingredients/conditions is sine qua non and it has to be done in letter and spirit not in a cryptic and cavalier manner - It is significant to note that every such provisional attachment shall ceased to have effect after the expiry period of one year from the date of the order under Sub-section (1) of Section 83 In the circumstances, learned Single Judge ought to have quashed Annexure-L the provisional attachment notice dated 30.03.2019 not Annexures- D and E the same is clarified. Annexure-L dated 30.03.2019 is set aside. There are no reasons to interfere with the well-reasoned order of the learned Single Judge. Resultantly, writ appeal stands dismissed.

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• 2022 (4) TMI 1194
  Refund of accumulated Integrated Goods and Service - Zero Rated Supply - It is submitted that petitioner s Head Office in Mumbai has distributed proportionate input tax on the services, which were commonly used for the petitioner s Head Office, petitioner s SEZ unit and the EOU unit - recipient of service - HELD THAT:- On the supply of common service to the petitioner s Head office, the supplier of such common services could not have claimed any refund either under 16(3)(b) of the IGST Act, 2017 as such a supply did not qualify as a zero rated supply within the meaning of Section 2(23) of the IGST Act, 2017 - there is no question of the supplier claiming refund under Section 16(3)(a) or (b) of the IGST Act, 2017. The suppliers of these input service also could not have availed refund under Section 54 (3) of the Central Goods and Service Tax Act, 2017 r/w Rule 89 of Central Goods and Service Tax Rules, 2017. To avail such refund to the supplier should also have filed a declaration to that effect, incident of tax has not been passed on to the SEZ. The supplier also could not have claimed any exemption as the supply was for a common service and the invoice was raised on the petitioner s Head Office at Mumbai - the purpose of granting refund on zero rated supply is to ensure that the exports are competitive in the international market and such transactions are not burdened with taxes. Section 54 of the Central Goods and Service Tax, 2017 allows the refund of tax and includes refund in case of zero rated supply made without payment of tax. Proviso to Section 54 (3) of the Central Goods and Service Tax Act, 2017 allows refund of unutilized input tax credit of zero-rated supplies made without payment of tax - No refund of input tax credit is allowed only if the supplier of goods or services or both avails of drawback in respect of central tax or claims refund of the integrated tax paid on such supplies. This is admittedly not the case here. The impugned order proceeds on the assumption that application for refund in respect of supplies to a Special Economic Zone or a Special Economic Zone Developer, can be filed only by a supplier of the goods or services in terms of second proviso to Rule 89 (1) of Central Goods and Service Tax Rules, 2017 - there is no merit in the impugned order passed by the respondent denying the benefit of refund of unutilized input tax credit of zero rated supplies effected by the petitioner. Petition allowed.

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• 2022 (4) TMI 1193
  Seeking permission for withdrawal of appeal - Exemption from GST or not - activity of manufacture and supply of Fortified Rice Kernels to the Tamil Nadu Civil Supplies Corporation pursuant to the Pilot Scheme on Fortification of Rice its Distribution under the Public Distribution System project launched by the Central Government - benefit of Notification No. 39/2017-Central Tax (Rate) dated 18.10.2017 read with G.O.Ms.No.140 dated 17.10.2017 - HELD THAT:- In the case at hand, when an opportunity of being heard was extended to the appellant, they sought withdrawal of appeal. The appellant, in this regard, has relied on the decisions of the Hon ble Supreme Court in the case of RAJENDRA PRASAD GUPTA VERSUS PRAKASH CHANDRA MISHRA ORS. [ 2011 (1) TMI 175 - SUPREME COURT] , wherein the Hon ble Supreme Court held that Every procedure is to be understood as permissible in law till it is shown to be prohibited in law and as a matter of general principle, prohibition cannot be presumed . Considering that there is no explicit prohibition for withdrawal in the current legal provisions, the appeal is permitted to be withdrawn and no ruling is extended - Application allowed.

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• 2022 (4) TMI 1192
  Input Tax Credit of GST paid - goods and services for laying of transfer pipeline and the foundation and structural support for such pipeline which is intended for Unloading propane/Butane from the vessel/Jetty to the Terminal - goods and services used for setting up refrigerated storage tank and input credit of goods and services used for foundation and structural support foundation tanks - goods and services for setting up of Fire Water reservoir (tank and input credit on goods and services used for foundation and structural support for such reservoir - difference of opinion. Whether the applicant is eligible for availment of input tax credit of GST paid on goods and services for laying of transfer pipeline and the foundation and structural support for such pipeline which is intended for Unloading propane/Butane from the vessel/Jetty to the Terminal? - HELD THAT:- It is crystal clear that the pipelines laid outside the factory premises is specifically excluded for the purpose of expression plant and machinery particularly for chapter V and Chapter VI. The intention of the Legislature in framing this expression, is to limit the vast definition of plant and machinery for the exclusive purpose of availability of Input Tax Credit on such plant and machinery and thereby the Parliament consciously prohibits the availability of the Input Tax Credit on pipelines laid outside the factory premises. The said exclusion applies to all such pipelines laid outside the factory be it small distance of 4 KM as contended by the Authorized Representative or long distance. When the exclusion has been explicitly provided in the Act, there is no need to borrow the definition from other acts including the subsumed Acts and accordingly the definition of factory as per Central. Excise Act or Factories Act, does not apply to this issue. As the transfer pipelines would not fall under Plant and Machinery, the appellant is not eligible to avail input tax credit on the goods and services used for transfer pipelines, the foundations and structural support related to pipelines would also not eligible for ITC on the goods and services used for foundations and structural support related to pipelines. With regard to lease deed for Right of Way, the same is for the purpose of utilization of land that are required under the relevant Act which has nothing to do with this Act. In fact, the tax element if any involved for the said agreement also not eligible for input tax credit - the Advance ruling authority of Tamil Nadu has rightly ruled that the input tax credit is not eligible for the pipeline laid outside the factory premises and the foundations and structural support for such pipelines. Input Tax Credit - goods and services used for foundation and structural support for the tanks - goods and services used for foundation and structural support for such reservoir - difference of opinion - HELD THAT:- On the eligibility of ITC paid on the works contract service for Pile foundation to the project site also claimed as foundation for the storage tanks and water tanks , as there is difference of opinion between the Members, no ruling is offered as per Section 101(3) of the CGST/TNGST Act 2017.

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• 2022 (4) TMI 1144
  Cancellation of GST registration of petitioner - validity of SCN - SCN lacks material information - HELD THAT:- The show cause notice is bereft on any material particulars or information. In the absence of any material particulars and the details, it is difficult for any individual to respond to such a vague show cause notice. Probably what the Authority is trying to convey is that earlier VAT/CST registration in case of writ applicant has been cancelled ab initio and therefore, the registration is not valid and not recognized in law. If such are the allegations, it is expected of the Authority to furnish some details in this regard. The impugned show cause notice has to be quashed and set aside and the same is accordingly quashed and set aside. If the Assistant Commissioner, Ghatak 1 (Ahmedabad), Range 1, Division 1, Gujarat, is of the view that the registration of the writ applicant herein is not valid and not recognized as per the provisions of the Act, it shall be open for him to issue a fresh show cause notice in a physical form and such fresh show cause shall contain all necessary information and details for the purpose of effectively responding to the same. Application disposed off.

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• Income Tax

• 2022 (4) TMI 1191
  Validity of Reopening of assessment u/s 148 - Proof of genuine reasonable belief that income had escaped - large scale transactions carried out by the assessee thereby adjusting the loss shown out of such derivative transactions with a view to adjust such loss with other business income - whether assessing officer had any fresh information for the purpose of issuing notice U/Sec. 148 of the I. T. Act for re-opening of the assessment order for the assessment year 2016-2017 in support of the case of the assessing officer that the income of the petitioner had escapped in the assessment order or not ? - HELD THAT:- The issue under consideration of the office had not been examined by the assessing officer while passing the assessment order. The transactions entered into by the assessee were non genuine and were carried out with a view to avoid paying tax. The assessee had set off the loss incurred from F O Trading against profit booked from normal business activity. This is a text book case of tax avoidance. In the said communication it was further stated that, the information was being forwarded to the Pr. commissioner of Income Tax-1, Aurangabad as per the minutes of the Annual Conference of DIT and as proved by the Chairman DBDT, New Delhi, with a request to direct the jurisdictional assessing officer to take necessary remedial action in the case of the assessee for the assessment year 2015-2016 and for the assessment year 20162017. The said office had verified only two transactions of trading in script on test check basis. The jurisdictional assessing officer to be requested to verify all the transactions entered into by the assessee for determining the total tax liability of the assessee. A perusal of the record indicates that, based on the said information received from the Income Tax Officer (I C), Aurangabad giving details, assessing officer issued notice U/Sec. 148 of the I. T. Act and for the reasons recorded by the assessing officer, a reference was made to the information received from Income Tax Officer (I C), Aurangabad from insight portal. Based on the said information and after application of mind, the assessing officer recorded the reasons that as the case was selected for limited scrutiny issue, initially no additions were made. It appears that on the information available on record, assessing officer is of reasonable belief that the petitioner had entered into a sham transaction to obtain loss for the purpose of set off of his taxable income. In our view, there is no substance in the submissions made by Mr. Chandak, the learned counsel for the petitioner that, there was no application of mind on the part of the assessing officer while issuing notice U/Sec. 148 of the I. T. Act. A perusal of the reasons recorded by the assessing officer, which were disclosed to the petitioner and were brought to the notice of the Joint Commissioner of Income Tax for seeking approval U/Sec 151 of the I. T. Act demonstrates that various reasons were recorded by the assessing officer based on the information received from the Income Tax Officer (I CI) Aurangabad through insight portal after passing of the original assessment order dated 23rd December, 2018. Assessing officer has not issued notice U/Sec. 148 of the I. T. Act only based on the information received from the Income Tax Officer (I CI), Aurangabad, but had applied his mind and formed his opinion that there was reason to believe that the income had escapped assessment. In our view the opinion formed by the assessing officer being based on the new information available to the assessing officer after passing of the original assessment order alleging large scale transactions carried out by the assessee thereby adjusting the loss shown out of such derivative transactions with a view to adjust such loss with other business income, but also on the personal belief based on the enquiry made by the assessing officer. This Court is not thus required to enter into the arena of merit or correctness of such reasonable belief of the assessing officer for the purpose of reopening of the assessment. The petitioner will have full opportunity before the assessing officer to prove his case and to disprove that the belief of assessing officer for the purpose of reopening of the assessment was not just and proper. WP dismissed.

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• 2022 (4) TMI 1190
  Validity of national faceless assessment u/s 144B - Petitioner states that the entire proceeding is based on the report of the Resolution Professional filed in NCLT, wherein it is wrongfully alleged that the Petitioner had received from 636 investors in M/s Aurochem Buildprop Private Limited and Petitioner never worked in the company i.e. M/s Aurochem BuildProp Private Limited and therefore the alleged finding that Petitioner had received huge amount from the investors of the said company, which is a group company of M/s Earth Infrastructure Limited, is frivolous fabricated - HELD THAT:- Having perused the paper book, this Court finds that the Master Data Record of the company filed by the Petitioner itself shows that the Petitioner has been an authorized signatory of the company since 25th July, 2016 and continues to be so. The Petitioner in his reply dated 30th December, 2021 has taken a defence that he was appointed as a fake manager on 25th July, 2016. Keeping in view the aforesaid, this Court is of the view that the present petition involves disputed questions of fact as well as allegations of fraud and forgery which cannot be decided in writ jurisdiction. In any event, the Petitioner has not been able to show to this Court that the Petitioner had, at any stage, asked for a report filed by the Resolution Professional before the NCLT.

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• 2022 (4) TMI 1189
  Validity of Faceless assessment u/s 144B - denial of natural justice - No prior show cause notice as well as draft assessment order issued - HELD THAT:- In the present case, as no prior show cause notice as well as draft assessment order had been issued, there is a violation of principle of natural justice as well as mandatory procedure prescribed under Faceless Assessment Scheme and as stipulated in Section 144B of the Act. It is settled law that when there is a violation of principle of natural justice, the availability of an appellate remedy does not operate as a bar to the maintainability of the writ petition. Keeping in view the aforesaid, the impugned assessment order issued under Section 147 read with Sections 144/144B, demand notice under Section 156 and penalty proceedings initiated under Section 271(1)(c) are set aside and the matter is remanded back to the Assessing Officer, who shall issue a show cause notice as well as draft assessment order to the petitioner and thereafter pass a reasoned order in accordance with law.

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• 2022 (4) TMI 1188
  Deduction u/s 80IA(4)(iii) - scope of Industrial Park Scheme, 2002 framed by the Central Government - HELD THAT:- It is ex-facie apparent that the Co-ordinate bench of this Court while disposing [ 2020 (11) TMI 922 - KARNATAKA HIGH COURT] has observed that no finding has been recorded by the Tribunal whether or not the assessee has fulfilled the conditions laid down in the scheme. Tribunal being final fact finding authority is required to record the reasons for its conclusion. It has been categorically observed that the Tribunal shall decide the matter afresh and shall after affording an opportunity of hearing to the parties, shall record a finding whether the assessee has complied with the conditions laid down in the Industrial Park Scheme, 2002 and whether the assessee is eligible to claim deduction under Section 80IA(4)(iii) - This specific direction of this Court ought to have been complied with, in stricto sensu, by the Tribunal being the last fact finding authority. The Tribunal in second round of litigation instead of analyzing the material facts available on record has remanded the matter to the Assessing Officer which cannot be approved by this Court. When a direction is issued by the jurisdictional High Court, the Tribunal is expected to comply with the same in letter and spirit. Even assuming that no factual finding is recorded either by the Ao or the CIT (Appeals), that exercise ought to have been done by the Tribunal as the final fact finding authority which has got a co-extensive power with that of the Assessing Officer and CIT (Appeals). Accordingly, remanding the matter to the Assessing Officer is not the solution to the litigation which would open a third round of litigation making the assessee to suffer and the same is nothing but harassment to both the parties, unnecessarily delaying the entire process of adjudication. Hence, without answering the substantial questions of law, we deem it appropriate to set aside the order impugned and remand the matter back to the Tribunal to consider the directions issued by this Court in letter and spirit and comply the same in an expedite manner in accordance with law.

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• 2022 (4) TMI 1187
  Rectification u/s 154 - book profit in terms of Explanation 1(f) to Section 115JB (2) is not being done with regard to the provisions of Section 14A - HELD THAT:- Section 115JB of the Act is a complete code in itself. The controversy relating to disallowance u/s 14A of the Act for determining book profit under Section 115JB was dealt with, in extenso in the case of Vireet Investment Private Ltd.[ 2017 (6) TMI 1124 - ITAT DELHI] As in the case of Karnataka State Industrial and Infrastructure Development Corporation Ltd. [ 2021 (1) TMI 413 - KARNATAKA HIGH COURT] wherein the computation of book profit with reference to Sections 14A and 115JB has been considered and it is held that Explanation 1 in Section 115JB(2) has been inserted so as to provide that if any provision for diminution in the value of any asset has been debited to the profit and loss account, it shall be added to the net profit as shown in the profit and loss account for the purpose of computation of book profit. Any disallowance computed under Section 14A pertains to computation of income under the normal provisions of the Act and cannot be read into the provisions of Section 115JB of the Act pertaining to computation of book profits for levy of minimum alternate tax. Amounts disallowed under section 14A cannot be added to the book profits computed under Section 115JB. Thus the finding given by the Tribunal on the points inasmuch as invoking of Section 154 and Explanation 1 (f) to Section 115JB being squarely covered, the same cannot be found fault with. We are of the considered view that the Miscellaneous Petition filed by the revenue under Section 254(2) of the Act was wholly misconstrued. - Decided in favour of assessee.

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• 2022 (4) TMI 1186
  Denial of deduction claimed u/s 80P(2)(a)(i) - Senior Standing Counsel appearing for the appellant contended that once the order of assessment is passed, the assessee ought to have filed statutory appeal before the appellate authority, whereas in this case, the respondent/ co-operative society, instead of filing statutory appeal, preferred the writ petition under Article 226 of the Constitution of India and hence, the learned Judge ought not to have entertained the writ petition - HELD THAT:- As submissions made on the side of the appellant, the learned counsel appearing for the respondent / co-operative society sought leave of this court to file statutory appeal before the appellate authority, as against the order of assessment passed by the assessing officer. The learned counsel also brought to the notice of this Court the judgment of the Honourable Supreme Court in the case of Mavilayi Service Co-operative Bank Ltd. [ 2021 (1) TMI 488 - SUPREME COURT ] Relying upon the above decision of the Honourable Supreme Court, the learned counsel for the respondent / co-operative society submitted that appropriate direction may be issued to the Appellate Authority to take note of the aforesaid decision of the Honourable Supreme Court as well, at the time of disposal of the statutory appeal to be filed by the respondent herein. Having regard to the submissions made by the learned counsel on either side, this court grants four weeks time from the date of receipt of a copy of this judgment, to the respondent herein to file statutory appeal before the appellate authority. On such filing, the appellate authority shall entertain the same, without raising any issue relating to limitation aspect, consider the claims of the respondent /co-operative society including their eligibility under section 80P of the Act and pass orders, on merits and in accordance with law and also in the light of the decision rendered by the Honourable Supreme Court, mentioned supra. Accordingly, the order impugned herein, shall stand modified.

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• 2022 (4) TMI 1185
  Validity of Reopening of assessment u/s 147 - notice u/s 142(1) upon the deceased assessee - HELD THAT:- As the legal position as settled by this Court in the case of Chandreshbhai Jayantibhai Patel [ 2019 (1) TMI 353 - GUJARAT HIGH COURT] is that this Court has drawn distinction between as to clause (a) of sub-section 2 of Section 159 and clause (b) of sub-section 2 of Section 159 of the Act. Clause (b) of sub-section 2 of Section 159 permits initiation of any proceedings, which could have been taken against the deceased through legal representative. However, in the case on hand, the impugned notice dated 31.03.2021 under Section 148 of the Act has been issued upon the deceased assessee, who had expired prior to the issuance of such notice. The case on hand does not fall under Clause (a) of sub-section 2 of Section 159 of the Act and in such circumstances, even the proceedings pursuant to such notices as sought to be initiated by the Assessing Officer cannot be continued upon the deceased assessee, more particularly, in light of legal dictum laid down in the case of Chandrashbhai Jayantibhai Patel (Supra) is followed in the case of Bipinbhai Bachuji [ 2019 (7) TMI 754 - GUJARAT HIGH COURT] More particularly upon perusal of the contents of the objections cum reply filed by the writ applicant it transpires that the writ applicant has not surrendered to the jurisdiction of the Assessing Officer by submitting return in response to the impugned notices neither the jurisdictional Assessing Officer has issued notice upon writ applicant as legal representative representing estate of deceased assessee. Thus, we are of the view that the proceedings initiated by the Assessing Officer against the deceased assessee are not tenable in the eye of law and are required to be quashed and set aside. - Decided in favour of assessee.

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• 2022 (4) TMI 1184
  Validity of faceless assessment u/s 144B - Denial of natural justice - breach of mandatory statutory provision - argument of non-compliance of provisions, more particularly, Section 144B(xiv), Section 144B(xvi)(b) and Section 144B(xxii) as the assessment order impugned is passed without issuing notice cum draft assessment order upon the writ applicant - HELD THAT:- Faceless Scheme, 2019 was modified by Notification No.60/2020 dated 13.08.2020 wherein it had prescribed procedure for making Faceless Assessment. In fact, the intention of Legislation as regards principle of natural justice is embodied in section itself. Thus, after 1st April, 2021, mandatory procedure in the form of aforesaid provision has to be strictly adhered while doing assessment In the facts of the present case, nothing has been brought on record by the respondent to suggest that the show cause notice along with draft assessment order was served upon the writ applicant. We find from the impugned assessment order that there are variations from the return filed by the writ applicant as regards disallowance. The final assessment order is not made in accordance with the procedure envisaged under section 144 (xvi) (b) of the act as inspite of the variation being prejudicial to the assessee, no opportunity has been given to the assessee by serving show cause notice along with draft assessment order calling upon him to show cause as to why the proposed variation should not be made. Thus, we have no doubt in holding that the impugned order of assessment dated 07.04.2021 is invalid and nonest, passed in gross violation of principles of natural justice as well as mandatory provision in the form of section 144B of the act. In such circumstances referred to above, we are left with no other option but to quash the assessment order and remit the matter to the Assessing Officer. In the result, the impugned assessment order dated 07.04.2021 is hereby quashed and set aside. We further quashed and set aside the consequential action including demand notice and remit the matter to the Assessing officer from the stage of issuance of draft assessment order along with show cause notice - Decided in favour of assessee.

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• 2022 (4) TMI 1183
  Reopening of assessment u/s 147 - findings of fact made on the basis of fresh materials - investment was made with unrelated and independent people and does not fall for the inclusion of number of residential house property for the deduction u/s. 54 - HELD THAT:- AO who completed the regular assessment u/s. 143(3) during the course of assessment has in fact called for details relating to properties and has verified the details before passing the order and hence ought to have applied his mind while passing the order - AO had called for details pertaining to various sources of income declared by the assessee i.e. details pertaining to professional income, income from house property etc. and has concluded the assessment after thorough verification of these details. Hence it would not be prudent to say that there has not been an application of mind on the part of the AO while completing the original assessment u/s.143(3) even if one wants to take cannot take shelter under clause (c) to explanation 2 to section 147 for the purpose of reopening the assessment. There is no new material has been brought on record where the AO has a reason to believe that the income has escaped assessment when all the relevant materials have already been made available at the time of original assessment. The decision relied on by the revenue of Ess There is no new material has been brought on record where the AO has a reason to believe that the income has escaped assessment when all the relevant materials have already been made available at the time of original assessment. The decision relied on by the revenue of Ess Ess Kay Engineering Co. P. Ltd [ 1997 (7) TMI 114 - SC ORDER ] is distinguishable as the Hon ble Supreme Court in that case held that the AO may reopen the assessment of an earlier year on the basis of his findings of fact made on the basis of fresh materials in the course of assessment of the next assessment year. In the case under consideration no fresh materials are found and the reopening is done basis of the materials which were already with AO during the course of regular assessment u/s.143(3). Co. P. Ltd (supra) is distinguishable as the Hon ble Supreme Court in that case held that the AO may reopen the assessment of an earlier year on the basis of his findings of fact made on the basis of fresh materials in the course of assessment of the next assessment year. In the case under consideration no fresh materials are found and the reopening is done basis of the materials which were already with AO during the course of regular assessment u/s.143(3). Appeal of assessee allowed.

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• 2022 (4) TMI 1182
  Depreciation on software ERP SAP - @ 60% OR 25% - AO held that deprecation at the rate of 60% is allowable only on computers and software embedded in such computers which are part and parcel and are inseparable, therefore, according to the AO assessee has acquired only the license and hence, it is eligible for depreciation at the rate of 25% applicable to intangible assets - HELD THAT:- The issue is squarely covered in favour of the assessee by the decision of Computer Age Management Services (P.) Ltd [ 2019 (7) TMI 1153 - MADRAS HIGH COURT ] wherein depreciation held that software lincense acquired by the assessee was in nature of application software and is eligible for deprecation at the rate of 60%. As concluded if a particular article would fall within the description by the force of the words used, it is impermissible to ignore the word description and going by the usage of the equipment purchased by the assessee, a decision has to be arrived at. We find that there is no error in the decision arrived at by the Tribunal by taking note of the specific entry in contra distinction with the general entry. Therefore, the first substantial question of law has to be necessarily answered against the Revenue.

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• 2022 (4) TMI 1181
  Addition based on seized documents - cheque transactions of lCD and debenture application money recorded in the seized paper - whether at documents seized from the premises of Dalmias of Delhi is not conclusive evidence? - Dalmia Group has approached the Income-tax Settlement Commission wherein the cash transactions arising out of the seized documents have been admitted by them - whether the documents found from the premises of third party can be relied upon for making the addition in the hands of the assessee? - HELD THAT:- Assessing Officer has made the addition by merely relying on the documents found during the course of search conducted in third party premises i.e. Dalmia Group. The assessee has denied any transactions with Dalmia Group. The department has not brought any other corroborate evidence on record to suggest that the assessee has entered into any cash transactions. It is important to note that the Seized documents contained details of investment in shares (of listed companies), dividend income etc. (which admittedly could not be in cash). The Assessing Officer should have corroborated the said transactions with the books of accounts of the assessee. But no such evidences were collected by the Assessing Officer to corroborate the seized material before completing the assessment of the assessee. Coming to the nature of seized material found during search, we observe that the seized data was maintained by Shri Joydeep Basu but he is stated to be only recording the entries. He is stated to be doing as per the inputs provided by Shri Neel Kamal Berry. Shri Neel Kamal Berry is stated to be receiving instructions from Sanjay Mitra and Puneet Dalmia. It is evident from the above that, even as per Department, the person carrying out the transactions, person recording the transactions and person giving instructions are different. This is to be seen in the light of the fact that Dalmia Group have disown the seized data while filing the application before Settlement Commission. We observe that the amount of addition admitted before the Settlement Commission by the Dalmias is way too small than the addition made in the case of the assessee. Although the Department has strongly objected this before the Settlement Commission the application has been accepted and nothing has been brought on record to show that the order of the Settlement Commission has been reversed or even challenged. In any case, even if the person from whom the documents have been found out have accepted the Correctness of transaction before the Settlement Commission, in our considered view, the same is not binding on the assessee. Further, it is brought to our notice that the seized MOUs relied upon by the Department are undated, unsigned (by either party) and titled as draft . It is the duty of the AO to bring on record that the same was acted upon, at the same time, the Dalmia Group has gone to ITSC to settle the issue, this itself does not prove that unsigned MOUs were actually acted upon and how it is linked to the assessee. AO has not conducted any independent enquiry or made any efforts to corroborate the seized pages or link it to assessee. The entire assessment has been made without bringing on record any evidence but merely relying on statements made by persons from Dalmia Group and AO s perceptions/presumptions - Decided in favour of assessee.

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• 2022 (4) TMI 1180
  Assessment u/s 153A - Whether disallowance was made without any incriminating material found during the search proceedings? - as per assessee AO has issued improper notice u/s 153A of the Act to initiate the unabated assessment year under consideration - HELD THAT:- We noticed from the submissions of the Ld AR that the notice issued u/s 153A by the Assessing Officer does not contain any details of incriminating material found during the search. In absence of such crucial details, whether the assessment made under section 143(3) r.w.s 153A is bad in law. As indicated earlier the notice issued u/s 153A does not contain any details of incriminating material or any reasons for which the assessment is reassessed u/s 153A of the Act, we observe that in the similar situation, the Hon ble Bombay High Court in the case of Underwater Services Company Limited [ 2021 (10) TMI 1158 - BOMBAY HIGH COURT] held that issuance of notice is the preliminary step which enables the assessee to effectively deal with the case made out by the revenue. Section 153A provides that an assessment has to be made under the said section only on the basis of seized material u/s 132 or 132A, in the absence of such details in the notice issued under the said section, the assessee is not in a position to appreciate which return of income should be filed in response to the notice issued u/s 153A, whether the original return of income filed or revised return of income. As held that the Hon ble Court held that nothing prevented the revenue from mentioning in the notice the basis for issuing the notice u/s 153A so that the assessee could comply with the same as prescribed. Thus the notice issued u/s 153A is bad in law and the assessment made by issue of improper notice is also bad in law - Decided in favour of assessee. Whether basis of reassessment is statement recorded of labour contractors and the statement recorded are prima facie not the incriminating materials? - As relying on LATE SH. RAJ PAL BHATIA OTHERS [ 2010 (11) TMI 1010 - DELHI HIGH COURT] we are inclined to allow the ground raised by the assessee. The assessee has also made other propositions and we already deliberated two propositions i.e., additional ground and first proposition decided in favour of the assessee, the deliberation on the other propositions will lead to academic interest hence not adjudicated. Allowability of Labour contract expenses - HELD THAT:- Assessing Officer proceeded to make the addition merely relying on the statements, a perusal of the statement reveals that the four parties have admitted doing labour contract work for the assessee, however in the subsequent statements they have displayed ignorance of the activities are undertaken. In the statement they have disclosed that their spouses and their family members were involved in the running of the business, they clearly indicated that their family members or husband were in a position to explain the entire activities. Nowhere, they admitted that there is no business or they have received or provided accommodation entries. They have admitted that they provide labour and filed their returns of income but further details of the business were stated to be in the knowledge of their spouse/son who run their business, the assessee has provided the documentary evidences like payments, ledger copies financial statements etc. Ld CIT(A) observed that the undisputed facts are that the assessee is in the business of manufacturing and processing of fabrics and dealing in all kinds furbishing, maintaining the garden, engaging labour to do the mending works in embroidery are a part of the business activities for which the assessee had taken the services of the above mentioned four parties. The above parties have confirmed to have provided the services. However, AO has alleged that they have withdrawn the cash immediately depositing the cheques but there is no suspicious about this as the above said parties had to make the payments to the labour by cash Ld CIT(A) as well as submissions made by both parties that the Assessing Officer has made the addition merely on the basis of presumptions and surmises without there is any concrete evidence against the assessee. Objections raised by the Assessing Officer that there are no written contracts, the proprietors never visited the factory premises - We observe that Ld.CIT(A) has clearly addressed these concerns in his order that the absence of the written contracts will not make the transactions bogus and the ladies did not visit the factories because their spouses/son were carrying out the business and the respective spouse/son have already confirmed the same by filing proper affidavits. By considering the findings of the Ld.CIT(A) and facts on record, we have no hesitation to confirm the decision reached by the Ld.CIT(A). Therefore, we do not see any reason to interfere with the above findings and accordingly ground raised by the revenue is dismissed. Credit card payments - We observe that Assessing Officer has made the disallowance on the basis of adhoc without their being any basis, merely because the assessee incurred such huge expenses, it does not mean that it is not for the business. The Assessing Officer should have verified the same in detail before making any such disallowances. The courts have held that the adhoc disallowances cannot be made without their being any basis. The credit cards facilities are given to the Directors and other employees only facilitating payments of expenses to be made on behalf of the company. Therefore, we direct AO to allow the total expenses claimed by the assessee. Sale of Loom and commission expenditure - As we observe that the basis for making such addition is the findings of Investigation wing in the case of D d cor Home Fabrics Pvt. Ltd, which is owned and managed by Shri Ajay Arora. The findings is based on the statement of one of the employee of the above said company. However, the findings in the above case can only be applied in their group cases. The statement of the said employee cannot be applied the assessee since this company is owned and managed by Shri Sanjay Arora, even though they are brothers. Therefore, we are inclined to accept the findings of Ld.CIT(A) in deleting the additions including the alleged commission payments. Accordingly, grounds raised by the revenue in this regard are also dismissed.

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• 2022 (4) TMI 1179
  Claim of the assessee u/s. 89 r.w. Rule 21A of I.T. Rules - compensation received by the assessee as only salary received in advance - payments made to the employees are in the nature of the lumpsum ex-gratia payments - why the amount received should not be treated as compensation on termination of employment? - HELD THAT:- As observed from the record that assessee is one of the employee who did not agree for the voluntary retirement scheme offered by the company and subsequently company has pledged a piece of land for the benefit of 275 employees who are not agreed for the voluntary retirement scheme compensation. Subsequently owing to the order of the Labour Commissioner and Municipal Corporation of the Greater Mumbai which imposed certain conditions on the company to safeguard the interest of the 275 workers who had not opted for voluntary retirement scheme. Subsequently individual employees and the company entered into supplementary agreement and the company agreed to compute the total compensation payable by the company till they attain 63 years of age and accordingly in the case of the assessee it was determined. The company after considering that these are one time lumpsum ex-gratia amount payable to the employee and settled the same after deducting the TDS as per the provision u/s.192. We observe from the record that company in the supplementary agreement has explained that the one time lumpsum ex-gratia amount is salary paid to the ex-employee in advance and accordingly, it has deducted tax at source in accordance with the provisions of the I.T. Act. In this regard the company also issued Form 16 to the assessee for the relevant year 2016-17. On careful consideration of the facts on record we observe that even though the textile unit was closed on 2008 and assessee has refused to agree the voluntary retirement scheme offered by the company and under protest assessee and similar employees managed to get compensation through Labour Commissioner and as per the directions of the Labour Commissioner, as agreed by the company, the assessee was awarded the compensation for the remaining period of service till the age of 63 years. The basis of compensation calculated by the company and the company also treated the one-time compensation as a salary paid in advance and deducted the TDS on the same, clearly indicates that the compensation received by the assessee is only salary received in advance not as termination compensation even though this was paid in lumpsum as ex-gratia in one go. Respectfully following the above said decision and the ratio laid down in V.D. Talwar [ 1963 (3) TMI 48 - SUPREME COURT ] we are inclined to treat the compensation received by the assessee as only salary received in advance. Therefore, we direct the AO to allow the claim of the assessee u/s. 89 r.w. Rule 21A of I.T. Rules. Accordingly, the appeal filed by the assessee is allowed.

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• 2022 (4) TMI 1178
  Reopening of assessment u/s 147 - Whether case being reopened as being without jurisdiction? - receipt of information from AIR that assessee had received cash deposits in saving bank account maintained with Corporation Bank - HELD THAT:- The assessee had not filed return of income for the captioned year. Not only this, the subsequent conduct of the assessee during the assessment also points to total non-cooperation on his part and in absence of any explanation forthcoming from the assessee, Assessing Officer was forced to pass ex-parte assessment order treating the above sum as undisclosed income of the assessee. In our view, since the assessee had not filed return of income for the captioned year and there was a huge cash deposit in his saving bank account, and further, when the assessee was called upon to provide an explanation in respect of this deposit, he did not comply, this itself leads to an reasonable doubt regarding the source of such deposits especially when return of income has not been filed. As in the case of Smt. Uma Mandal [ 2021 (4) TMI 904 - ITAT JAIPUR] ITAT held that where Assessing Officer issued a reopening notice against assessee on ground that an information was received that assessee had deposited certain amount in cash in her bank account but did not file return of income, since Assessing Officer reopened assessment after recording due reasons and after following due process and such information available before Assessing Officer was relevant and afforded a nexus to formation of prima facie belief that income chargeable to tax had escaped assessment in hands of assessee, impugned reopening notice was justified. Therefore, in our considered view, looking into the totality of facts in the case, the Ld. Assessing Officer is justified in re-opening the assessment in the instant set of facts. The process of re-opening was initiated after affording due opportunity to the assessee to give explanation regarding source of deposit. It is only when the assessee failed to comply / co-operate that case was re-opened u/s 148 of the Act, after following due process of law. - Decided against assessee. Addition as cash credit in the hands of the assessee - As the assessee has been able to establish the source of cash deposit. The Revenue has not brought anything on record that the lenders were not in existence (the Aadhar cards of lenders have been placed on record) or that they did not have agricultural land capable of earning agricultural income and neither the confirmations filed by lenders were challenged as being fallacious. The assessee has thus discharged the initial burden cast upon him u/s 68 of the Act. It is a well settled that under the law the assessee can be asked to prove source of credit but not the source of the source as held by various Courts including the jurisdictional High Court in the case of Rohini Builders [ 2001 (3) TMI 9 - GUJARAT HIGH COURT] - In view of the above discussion and the facts of the present case, in our view, the Ld. CIT(Appeals) has erred in facts and in law in sustaining addition u/s 68 of the Act in respect of cash deposits in the hands of the assessee. - Decided in favour of assessee. Addition u/s 56 for income from other sources - Once having held that when source of deposits has been duly explained by the assessee (refer Ground No. 3 above), the additions cannot be taxed as Income from Other Sources in the hands of the assessee. Addition of Interest income - The assessee has been maintaining account with Corporation Bank. Once, the source of deposits in the bank has been duly explained and held as not taxable in the hands of the assessee, the interest amount of Rs. 2,052/-, since it falls below the taxable limit on standalone basis, is not liable for tax in the hands of the assessee. Assessee appeal allowed partly.

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• 2022 (4) TMI 1177
  Gain on surplus realised on surrender of rights to acquire the flats - Short term capital gains OR Long term capital gains shown by the Appellant - flats were surrendered after a period of 36 months - whether the documents, which denote that the names used by the builder as a representation for the assessee or it may be booked by these people on behalf of the assessee since all these individuals are related parties? - HELD THAT:- Merely because the builder recognize this transaction on the representation basis, the ownership will not devolve on the individuals who are not party to the agreement. We observe that the agreement entered by the assessee even before the search took place. What is relevant is the existence of agreement and relevant payments made by the assessee, we observe that the substantial payments were made by assessee. It clearly indicate that the actual beneficiary is the assessee and the persons have acted in a representative capacity. We observe that atleast Mrs Sonia made certain payment, whereas Mrs Manju has not contributed in this transaction except her name was recorded by the builder, this does not give ownership right to Mrs Manju. In our considered view, the same Assessing Officer would not have accepted the genuineness of the ownership in case Mrs Manju claim without making any payment or contributing to anything in this transaction. There is ample evidence to show that the assessee has entered into agreement for the purchase of flats and made the substantial payment, therefore, we are in agreement with the claim made by the assessee that the compensation received by the assessee is long term considering the fact that the agreement was entered by the assessee in the year 1997. Accordingly, the ground raised by the assessee is allowed.

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• 2022 (4) TMI 1176
  Revision u/s 263 by CIT - slum sale - section 50B is applicable in the case of the assessee and order passed by the Assessing Officer is erroneous - As per CIT assessee has transferred all the assets to its wholly owned subsidiary TMFSPL as a going concern on a slump sale basis, while computing its business income, it has reduced the profit earned in the above said slump sales and considered the same under the head Capital Gains at the same time claimed exemption u/s 47(iv) - HELD THAT:- PCIT raised objections on treating the slump sales under the head Capital gains as well as treatment given by the assessee to compute the book profit u/s 115JB of the Act. After careful consideration, we observe that the assessee has transferred the whole business under slump sale basis and it is fact on record that it is transferred the business on going concern basis to its own subsidiary company. The transaction is covered u/s 47(iv) of the Act and accordingly it is not transfer within the provisions of the Act. Therefore, we are not incline to agree with the findings of Ld PCIT in this regard. Therefore, we are inclined to accept the submissions made by the assessee in this regard. Adjustment of the above said profit in the book profit and the assessee has treated the same as capital profit without routing the transaction thru profit and loss account - On careful consideration, we observe that the assessee has to prepare the annual account by following the Accounting Policies, Accounting Standards as provided in the Act and prepare the accounts as per the Schedule III to the Companies Act, 2013 to determine the book profit. The provisions of section 115JB allows certain adjustments as given Explanation 1 in section 115JB(2) of the Act. We observe that the assessee has treated the above income as capital as the same is between the subsidiary company, which will not be part of book profit. However, we are in agreement with Ld.PCIT that the above adjustment made by the assessee is not the adjustment mentioned in the Explanation 1 to section 115JB. However, we observe that the courts have held that when the receipt or profit earned by the assessee are in the nature of capital receipt or capital profit, these profit has to excluded from the book profit for the purpose of section 115JB also - see M/S SHIVALIK VENTURE PVT. LTD. VERSUS DY. COMMISSIONER OF INCOME TAX-8 (3) , MUMBAI [ 2015 (8) TMI 979 - ITAT MUMBAI] - thus we are incline to accept the submissions of the assessee on merit. Disallowance on section 14A - We observe that the assessee has made the investments at the end of the year i.e., 26.03.2015 and Ld PCIT of the view that irrespective of the earning of any exempt income, the AO was duty bound to make inquiries in view of CBDT Circular no 5/2014. After considering the detailed submissions of both the parties, it is fact on record that the assessee has made the investment at the fag end of the year and there is no chance of earning any exempt income out of the above said investment, hence the courts have held that where there is no exempt income, Assessing Officer cannot make any disallowance, the disallowance has to be relating to the earning of exempt income. Therefore, in the given case, there is no exempt income earned by the assessee out of the fresh investments, in our considered view, the assessee has a valid case on merit. Thus the assessee has placed all the above facts before Assessing Officer and Assessing Officer has accepted the view and which is one of the possible view under this circumstances, the Ld PCIT cannot impose other possible view and moreover, the issues involved under consideration is in favour of the assessee on merit. Therefore, there is no prejudice caused to the interest of the revenue, therefore, the twin condition is not fulfilled to invoke the provisions of section 263 of the Act. Appeal of assessee allowed.

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• 2022 (4) TMI 1175
  Revision u/s 263 - no proof of identity, creditworthiness or genuineness has been furnished from the loan taken - CIT observed that the AO has accepted the return of income of the assessee without calling for and verifying the bank statements and the payments made to Karvy Comtrade ltd., towards loss incurred was also not verified and the genuineness of loan was also not verified - HELD THAT:- From the copies of notice u/s. 142(1) of the Act, clearly reveals that the AO has made enquiries and called upon bank statement including Fixed Deposits from the assessee and the assessee complied first notice by way of filing reply dated 18.10.2018. We also observe that since the assessee undertook high volume of trading in commodity future of MCX Platform, the source of finance stated in the audited account placed were also placed before the AO, in our considered view, it is not a case of inadequate enquiry. After observing above factual position of the present case. We are also of considered view that in a case of no enquiry, pr. CIT is empowered to direct the AO to make enquiries and pass reassessment orders but in a case where the AO has made enquiry by issuing notice, taking on record compliance of notice and then took a plausible view, and the Pr. CIT is not agreeing with the view taken by the AO, then he has to conduct enquiry himself. He cannot direct the AO to redo the assessment. From the copy of confirmation of account available clearly reveals that the creditor Shri Mundra sent confirmation to the assessee showing opening balance as on 1.4.2015 at Rs. 14,50,000/- and same amount shown as on 31.3.2016, therefore, there was no new transaction during the relevant financial period with these creditors, copy of pass book of Brij Mohan Mundra with PNB Account No. 45852 clearly reveals that the assessee received loan during the financial year 2014-15, which was remained unpaid at the end of that financial year and brought forward to the present financial year 2015-16 and again carry forward to the next financial year. Therefore, copy of this statement clearly reveals that the amount received from this creditor has been credited to the account of the assessee and immediately refunded and, therefore, there was no cash transaction or cash deposit. Thus inquiries were certainly conducted by the Assessing Officer. It is not a case of no inquiry. The order under Section 263 itself records that the Pr. CIT felt that the inquiries were not sufficient and further inquiries or details should have been called. Therefore, we set aside the order of the ld. Pr. CIT and quash the same. - Appeal of assessee allowed.

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• 2022 (4) TMI 1174
  Addition being the difference arising from VAT return in the computation of taxable total income as disclosed in the return of income - Assessee before us pleaded that the assessee has collected some evidences in regard to the difference in purchases and VAT credit claimed on the same and the same may kindly be remitted back - HELD THAT:- We noted that the plea of the assessee is reasonable and hence, we direct the AO to allow one more opportunity to reconcile the difference - Accordingly, this issue is remitted back to the file of the AO. Disallowance of job work charges for non-deduction of TDS by invoking the provisions of section 40(a)(ia) - HELD THAT:- We noted that now the ld.counsel for the assessee made only submission that the second proviso to section 40(a)(ia) of the Act, which is retrospective, the assessee should be allowed to take the benefit of the same - assessee stated that the requisites as noted in the CBDT circular and rules relating to second proviso to section 40(a)(ia) is ready to fulfill as he has gathered information that the recipient parties has already declared the job work charges in their respective returns of income. The ld. Counsel stated before us that the job work payments were made only to one party i.e., VRV Zips Process. The ld. Senior DR has no serious objection in setting aside the matter. As the assessee claimed that the recipient party has disclosed the income in their return of income, in view of second proviso to section 40(a)(ia) of the Act, we remit this issue back to the file of the AO. This issue of assessee s appeal is allowed for statistical purpose.

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• 2022 (4) TMI 1173
  Exemption u/s 11 - appellant society had undisclosed income - appellant had been indulging in collection of the capitation fees - Reliance on statement recorded from the students and their parents u/s. 131 or 133(6) - As per assessee statement recorded u/s. 132(4) cannot be discarded merely because the retractment statements were filed - CIT(A) confirmed the findings of the Assessing Officer that the appellant society had been accepting the cash donations or capitation fees outside the books of accounts towards admission of the students under the management quota in the various institutions run by the appellant society - as course of search and seizure operations, the Investigation Wing of the Department unearthed certain loose sheets - HELD THAT:- It is settled position of law that the admission is an extremely important piece of evidence but it cannot be said that it is conclusive. It is open to the assessee who made the admission to show that it is incorrect as held by the Hon ble Supreme Court in the case of Pullangode Rubber Produce Company Ltd. vs. State of Kerala Another [ 1971 (9) TMI 64 - SUPREME COURT] An admission, if clearly and unequivocally made, is the best evidence against the party making it and though not conclusive, shifts the onus on the maker on the principle that what a party himself admits to be true may reasonably be presumed to be so and until the presumption was rebutted the fact admitted must be taken to be established [Thiru John v. Returning Officer [ 1977 (4) TMI 173 - SUPREME COURT] ]. In the light of this above legal position, the statement voluntarily made by the assessee could form the basis of assessment. As retraction statements can be said to be self-serving and no credence can be given and the retraction statements looses significance and an afterthought. Therefore, the statement recorded u/s. 132(4) cannot be discarded merely because the retractment statements were filed. The statements u/s. 132(4) are true and correct and brings out the correct picture as at that time the maker of the statement is uninfluenced by external agencies and it is the statements are recorded in the presence of the independent witnesses. Therefore, in our considered opinion, the so-called retraction statements are simple a self-serving statements without any material and cannot override the statements recorded u/s. 132(4) of the Income Tax Act. The reliance placed by the ld. Counsel on the decision of the Hon ble Delhi High Court in the case of CIT vs. Sunil Agarwal,[ 2015 (11) TMI 286 - DELHI HIGH COURT] cannot come to the rescue of the appellant herein for the reason that in the said case the assessee apart retracting the statement also discharged the onus of proving the statement is incorrect through cogent material We have no hesitation to hold that the so called retraction statements cannot be given any credence, on the other hand, the statements given by three persons named above u/s. 132(4) of the I.T. Act carries more evidentiary value and cannot be discarded. Assessing Officer also brought corroborative evidence in the form of the evidence showing refund of capitation fees, recommendation letters given by VIPs of the locality seeking waiver/reduction in the capitation fees/donations, exchange the SMS messages between Shri Arvind Deshpande and Shri Sharad Bhosale and Dr. Janardan Garde and admission agent, Shri Surendra Nagar. This corroborative evidence remains uncontroverted by the appellant society. Thus, there is a conclusive evidence brought on record by the Assessing Officer to hold that the appellant had been indulging in collection of capitation fees from the students at the time of admission in various courses under the management quota. The contention raised on behalf of the appellant that the addition on account of capitation fees cannot be sustained for the reason of the failure of the Assessing Officer to consider the statement recorded from the students and their parents u/s. 131 or 133(6), even assuming for a moment that the students and their parents have denied having paid any capitation fees, no credence can be given to their testimony as the students and their parents are complementary and supplementary to the appellant society as they are undergoing studies in the institution run by the appellant society and any adverse testimony against the appellant society would also result in adverse consequences to them under the provisions of the Income Tax Act. Thus, the testimony by students and their parents is only self-serving, hence no credence can be given. It is settled position of law that the amount of capitation fees received over and above the prescribed under the provisions of the Maharashtra Educational Institution (Prohibition of Capitation Fees) Act, 1987 is not eligible for exemption u/s. 11 as the practice of collection of capitation fees is contrary to the law laid down by the Hon ble Apex Court in the case of Islamic Academy Of Education And Another vs. State Of Karnataka And Others,[ 2003 (8) TMI 469 - SUPREME COURT] and also against public policy and the contrary to the provisions Maharashtra Educational Institution (Prohibition of Capitation Fees) Act, 1987. Thus, the appellant is not eligible for exemption of income of capitation fees received outside books of accounts u/s. 11 and the Assessing Officer had rightly brought to tax. Accordingly, the ground appeal no. 1 to 7 stands dismissed. Denying the exemption u/s. 11 of the entire income for violation of provisions of section 13(1)(c) on receipt of the capitation fees - Hon ble Supreme Court in the case of Director of Income-tax vs. Bharat Diamond Bourse [ 2002 (12) TMI 8 - SUPREME COURT] wherein, the Hon ble Apex Court held that when specified person in the present case, President of the appellant society because of the position as a trustee, misuses his powers by lending himself or taking away the income or the funds of the trust, then it tantamount to breach of the trust indicating that the trust was formed for a personal gain and, therefore, it cannot be said that the objects of the appellant society are charitable and, therefore, the income of the appellant trust does not qualify for exemption u/s. 11 of the Act. Therefore, we uphold the action of the Assessing Officer in denying the exemption on the whole of income derived by the appellant society. We must clarify here that though the AO denied the exemption of entire income u/s. 11 for the reason of alleged violation of provisions section 13(1)(c) of the Income Tax Act, though the action of the AO denying the exemption on entire income is untenable under law for violation of provisions of section 13(1)(c), the action of the AO is upheld by us in view of our findings that the appellant society was formed with for the purpose of private gains. Thus, we do not find any merit in the ground of appeal raised by the appellant society and stands dismissed. Disallowance of prior period expenses - AO disallowed as sum by holding that the expenditure is pertaining to the prior period - HELD THAT:- No evidence is filed before us demonstrating that the liability for this expenditure was crystallized for the previous year relevant to the assessment year under consideration when the income of the appellant society has been assessed to tax. The action of the Assessing Officer on this issue is totally justified. Hence, we do not find any merit in the ground of appeal no. 10 and the same stands dismissed. Income of the appellant society not attributable to the violation of provisions of section 13(1)(c) shall be taxed at normal rate of tax - HELD THAT:- This finding of the ld. CIT(A) contrary to the plain provisions of section 164 of the Act, according to which, the beneficiaries of the trust are unknown. The income of the trust shall be assessed at maximum marginal rate of tax. Therefore, the findings of ld. CIT(A) are hereby reversed, the grounds of appeal filed by the Revenue stands allowed

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• 2022 (4) TMI 1172
  Reopening of assessment u/s 147 - Nature of land sold - Long-Term Capital Gains in respect of the lands sold by the Appellant at Varadharajapuram Village, Sriperumbudur Taluk - CIT(A) rejected the claim of the assessee since there was no agricultural activity on the land - whether CIT(A) went wrong in holding the nature of lands sold is non-agricultural ? - HELD THAT:- As rightly pointed out by Ld. AR, the issue of nature of land has already been dealt with by Tribunal in the case of co-owner titled as ITO V/s Late T.Bhavani Devi [ 2022 (4) TMI 1099 - ITAT CHENNAI] Thus, in the case of co-owner, the land has been held to be agricultural land. This being so, we see no reason to take a different view in the case of assessee before us. Respectfully following the same, we would hold that the land was an agricultural land and the resultant gains were exempt from tax. All the other grounds have been rendered infructuous. The impugned additions stand deleted.

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• 2022 (4) TMI 1171
  Computation of capital gains - whether Ld. CIT(A) was correct in granting the benefit of proviso to Sec.50C(1) to the assessee during this year? - HELD THAT:- This proviso has been inserted by Finance Act, 2016 w.e.f. 01.04.2017. We find that the proviso has been held to be retrospective in nature by Hon ble Madras High Court in CIT V/s Vummudi Amarendran [ 2020 (10) TMI 517 - MADRAS HIGH COURT] In the present case, the genuineness of sale agreement is not in doubt and the earlier payments have been received through cheques. Therefore, respectfully following the binding judicial precedent, we confirm the impugned order and dismiss the appeal of the revenue.

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• 2022 (4) TMI 1170
  Reopening of assessment u/s 147 - Notice beyond four years from the end of the relevant assessment years - year of taxability of the interest income asl ong back there was some civil dispute of the assessee on account of that it had received an arbitration award, who directed payment of interest also - HELD THAT:- As decided in assessee own case [ 2021 (6) TMI 892 - ITAT KOLKATA] we hold that the ld. CIT(A) has no power to give directions to the AO to reopen the assessments for the assessment years which are not before him. We also do not find any direction given by the ld. CIT(A) in his order for AY 2009-10. The ld. CIT(A) applied the ratio of the judgement of the Hon ble Supreme Court in the case of Rama Bai [ 1983 (9) TMI 323 - SUPREME COURT] and deleted the interest added in the AY 2009-10. The other assessment years were not before him i.e. AY 2005-06 and 2006-07. The proposition of law laid down in the case law referred above is that the ld. CIT(A) has no power under the provision of law to give direction to the AO for reopening of assessment. Thus the reasons recorded for reopening of assessments is bad in law. Appeal of assessee allowed.

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• 2022 (4) TMI 1169
  Assessment u/s 153A - proof of incriminating material found in search - estimation of profit - enhancement made by the ld. CIT (A) - HELD THAT:- It is an undisputed fact that assessee had become NRI w.e.f. 01.04.2015 and nowhere it is found that assessee carried out any business operation or had any business connection in India once he became NRI. - therefore, no addition could have been made. The allegations made by the AO and the interpretation on which he has drawn his presumption after referring to certain foreign entities, has been duly explained by the ld. counsel as stated above which has not been rebutted before us nor has been found favour by the CIT (A). CIT (A) has given a very categorical finding that no evidence has been found in the form of seized material or statement to prove that agreement of 2006 between CMF and assessee was extended beyond 31.12.2012 and beyond this period, CMF was under any obligation to share the profits with the assessee. Even in various information received through FTTR, not single information has been received that either Fedrigoni or CMF has given any money for their India operation for supply of currency notes to Assessee. This finding of ld. CIT (A) without any rebuttal or material information on record cannot be tinkered with. Accordingly, the finding of the ld. CIT (A) that after the assessee had become NRI, no income has arisen or accrued in India, i.e. after 01.04.2015 and, therefore, even in terms of section 9(1)(i) no income is taxable in the hands of the assessee is upheld. CIT (A) has held that post 31.12.2012, the assumption made by the AO after the period 01.01.2013 is purely based on presumption that there might be continuation of terms and conditions of this agreement which was without any basis or evidences albeit on conjectures and surmises. The alleged money received by the assessee through various dubious entities during FYs 2015-16 2016-17 as alleged by the AO that assessee might have received money on account of share of profit from CMF in connection of its Indian activities is wholly erroneous and none of these informations or material found which he has been referred to by the ld. CIT DR or by the AO even remotely point out that through these dubious entities, assessee had carried out any activities in India and accordingly, independently also, we find that no income has been taxed in India from AYs 2013-14 to 2017-18. Now, coming to the additions sustained or enhanced by the ld.CIT (A) in AY 2012-13, first of all, even though ld. CIT (A) had admitted that there is no incriminating material or document or any evidence either found during the course of search or even after the post search in the year that post 2012, any payment received by the assessee from CMF or any of its entities. Once it is an admitted fact then in the case of unabated assessment where the assessment has attained finality at the time of search, no addition can be made on presumption or estimate basis without any reference to any seized material. Therefore, entire addition/ enhancement made by the ld. CIT (A) has no legs to stand and the same is directed to be deleted in view of the judgment of Hon ble jurisdictional High Court in the cases of Kabul Chawla [ 2015 (9) TMI 80 - DELHI HIGH COURT] and Meeta Gutgutia [ 2017 (5) TMI 1224 - DELHI HIGH COURT] In fact, this proposition that no addition can be made without any incriminating material would be applicable for AYs 2013-14, 2014- 15 2015-16 also, therefore, on legal ground also, no addition can be made for these years. Insofar as additions made in AYs 2016-17 and 2017-18 are concerned which are abated assessment and assessment of year of search, there is no evidence indicating that assessee had carried out any operation in India or has received any payment from any entity for business carried out in India. In so far as strong reliance made by the CIT DR to FTTR information as incorporated above, we find that, none of these informations even remotely suggest that assessee has earned or received any payment in any account for supply of currency paper notes from CMF or Fedrigoni entity for Indian supply. The observation and the information as supplied by the CIT DR has been rebutted by the ld. counsel for the assessee as incorporated above and from the perusal of the same, we find that there is nothing which can lead to any inference or the conclusion that the receipts from foreign companies were in relation to services rendered by the assessee to Fedrigoni in India. Thus, even the FTTR reference cannot be considered as material on record to support the case made out by the Assessing Officer, which goes to prove that his assessment of income was purely based on surmises and presumptions as noted above. Thus, not only the finding of the ld. CIT (A) is confirmed but the information supplied by the CIT DR has no correlation or effect so as to reverse the finding of the ld. CIT (A). Accordingly, the submissions of the ld. CIT DR are rejected and the order of the ld. CIT (A) is affirmed. - Decided in favour of assessee.

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• Customs

• 2022 (4) TMI 1168
  Seeking direction to release of the balance items of two lots of the delivery order - whether the respondent authority can refuse to release the goods to the successful bidder on the ground that BIS certificate is necessary or that the items are liable for destruction? - HELD THAT:- Section 48 of the Customs Act, 1962 deals with the uncleared cargo. Central Board of Indirect Taxes and Customs, Department of Revenue published the Manual containing several circulars wherein procedure for storage and disposal of goods that are seized/ confiscated/unclaimed/uncleared and covered by time expired bonds have been prescribed. Chapter 5 of the said Manual contains the special provisions for unclaimed/ uncleared cargo, mishandled baggage and time expired bonded goods. The procedure for disposal of unclaimed/ uncleared cargo lying with the custodians is laid down in Circular no. 49/ 2018 Customs dated 03.12.2018. From the procedures laid down in the said circular it is evident that in case of shipments which do not require any regulatory clearances or do not need any chemical analysis they can be straight away be taken up for auction. In cases where regulatory clearances from various agencies are necessary, No Objection Certificate for such consignments are issued only after receipt of the required clearances/ result of chemical analysis. The goods can be put to auction sale only after issuance of No Objection Certificate from the customs. Thus, once the consignments are taken up for auction it shall be deemed that such consignments either do not require any regulatory clearances /chemical analysis test or such regulatory clearances/ report of chemical analysis have been obtained. In the case on hand, after closure of e-auction the petitioner deposited the amounts as directed by the authorities and the delivery order was also issued in favour of the petitioner. Thus, the sale can be said to be concluded for all practical purposes as the petitioner duly complied with all the formalities on his part after closure of the auction. From the procedures laid down in the Circular issued by the customs it is evident that after holding auction, it is now too late for the authorities to contend that such items require either BIS certificate or are liable for destruction. Thus, this Court is of the considered view that objections raised as a ground for withholding release of the goods are frivolous and flimsy and thus, liable to be set aside and quashed. No other objection has been raised by the respondent authorities for withholding the release of the goods. Since the petitioner has complied with all formalities, the respondent authorities are obliged to release the goods in question to the petitioner - this court holds that the authorities are obliged to release/ deliver the balance items of lot no. 2 and 5 of the first delivery order dated June 11, 2021 - the respondents are directed to release the balance items of lot no. 2 and 5 of the first delivery order dated June 11, 2021 to the petitioner positively within a period of two weeks after an approach is made by the petitioner - petition allowed.

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• 2022 (4) TMI 1167
  Refund of Special Additional Customs Duty - applicability of time limitation - HELD THAT:- The issue is covered in the case of SONY INDIA PVT. LTD. [ 2014 (4) TMI 870 - DELHI HIGH COURT] and WILHELM TEXTILES INDIA PVT. LTD. [ 2016 (9) TMI 1370 - DELHI HIGH COURT] - The appeal is dismissed, and the impugned order dated 08.12.2020 passed by the Customs, Excise and Service Tax Appellate Tribunal [CESTAT] is sustained.

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• Corporate Laws

• 2022 (4) TMI 1166
  Dissolution of Company - Section 497(6) of the Companies Act, 1956 - HELD THAT:- All necessary compliances have been carried out - The Company in liquidation is ordered to be dissolved in terms of Section 497(6) of the Companies Act, 1956, from the date of submission of this report this Court and the Voluntary Liquidator is directed to preserve the Books of Accounts of the Company (In members Vol. Liqn.) for the period of 5 years from the date of dissolution of the Company in terms of resolution passed at the meeting held on 31.07.2020. The Voluntary Liquidator of M/s. Machinery Equipment Manufacturers Private Limited to pay Rs. 7,500/- towards cost for submitting this report to the office of Official Liquidator. Report is disposed off.

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• Insolvency & Bankruptcy

• 2022 (4) TMI 1165
  Dissolution of the corporate debtor - Section 54(1) of the Insolvency and Bankruptcy Code, 2016, read with Regulation 45(3) of insolvency and Bankruptcy Board of India (Liquidation Process) Regulations, 2016 - HELD THAT:- It is noticed that the Corporate Debtor does not have assets to be liquidated, hence an application is moved for the Dissolution of the Corporate Debtor . This Section is to be read along with Regulation 14 of IBBI (Liquidation Process) Regulations 2016, which says that any time after the preparation of a Preliminary Report, if it appears to the Liquidator that the realizable properties of the Corporate Debtor are insufficient to cover the cost of Liquidation process, and the affairs of the Debtor do not require further investigation, he may apply to NCLT for early dissolution of the Corporate Debtor. Further it is noted that Stakeholders committee could not be constituted. Therefore, it is just and equitable that the corporate debtor be dissolved from the date of this order. Accordingly, the corporate debtor stands Dissolved from the date of this Order. Directions to be issued to IBBI for payment of fees has been sought, as there is no specific provision under law to issue such directions to IBBI. Hence, the said prayer stands declined - application moved by liquidator for dissolution of the Corporate Debtor stands admitted.

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• 2022 (4) TMI 1164
  Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial Creditors - existence of debt and dispute or not - HELD THAT:- There is no reason to deny the Petition under section 7 filed by the Financial Creditor to initiate the CIRP against the Corporate Debtor as the Corporate Debtor himself has admitted its liability. On perusal of the documents submitted by the Applicant, it is clear that financial debt amounting to more than Rs. 1,00,000/- is due and payable by the Corporate Debtor to the Applicant. There is default by the Corporate Debtor in payment of debt amount. Therefore, there are no objection on record against the application filed for initiation of CIRP against the corporate debtor. Hence, the Application filed by the Financial Creditor is liable to be admitted. The application is complete and has been filed under the proper form. The debt amount is more than Rupees One Lakh and default of the Corporate Debtor has been established - application admitted - moratorium declared.

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• 2022 (4) TMI 1163
  Maintainability of petition - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial Creditors - existence of debt and dispute or not - HELD THAT:- It is concluded that the FC has established that the Credit facilities were sanctioned and duly disbursed to the CD and there has been default in payment of Debt on the part of the CD - the nature of Debt is a Financial Debt as defined under section 5 (8) of the Code. It has also been established that there is a Default as defined under section 3 (12) of the Code on the part of the Debtor. The two essential qualifications, i.e. existence of debt and default , for admission of a petition under section 7 of the I B Code, have been met in this case. It is found that the Petitioner has not received the outstanding amount from the Respondent and that the formalities as prescribed under the Code have been completed by the Petitioner, we are of the conscientious view that this Petition deserves Admission - Petition admitted - moratorium declared.

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• 2022 (4) TMI 1162
  Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - existence of debt and dispute or not - HELD THAT:- It is apparent that the remittance of the amount was to be made by Shri Vaibhavi Logistics only on behalf of Panoli Products Private Limited. Although, a copy of ledger containing account of Shri Vaibhavi Logistics has been placed on record, but that is qua running account from July 2014 to March 2015, where some freight charges etc. also shown to be paid. From the said ledger record, it is not established whether the said amount was paid on behalf of Panoli Product Private Limited for the purpose of making the payment to the Operational Creditor. Although, one payment appears to have been made by Shri Vaibhavi Logistics to Operational Creditor, but subsequent two payments of amounting U.S.D 3441.00 and U.S.D 3330.00, were made by the Corporate Debtor to Operational Creditor, which proves that the payments were to be made by the Corporate Debtor to the Operational Creditor. Even otherwise, in such like circumstances, the principle of estoppel comes into play as above said two payments made by the Corporate Debtor to the Operational Creditor directly. Therefore, the Corporate Debtor is hereby estopped to allege that the payment were to be made by Shri Vaibhavi Logistics. Moreover, as per addendum, the payment were even otherwise to be made on behalf of Corporate Debtor itself. The word on behalf of clearly indicates that the ultimate responsibility to pay the same was that of the Corporate Debtor as there is nothing on the record to prove that the Corporate Debtor was absolutely discharged from its liability. The Corporate Debtor failed to prove on record that all such payments as shown in the ledger were actually made by it only for the purpose of making the payment to the Operational Creditor. In fact, those payments appeared to be made with respect of some freight charges apart from other credits debits. Therefore, in the absence of any convincing evidence on record that the said payment was exclusively to be made by Shri Vaibhavi Logistics to the Operational Creditor, it could not be presumed that the responsibility to make the payment was only of that of Shri Vaibhavi Logistics. This Tribunals of affirm view that the Corporate Debtor failed to make the payment to the Operational Creditor with respect to the invoices raised. Accordingly, the present petition stands admitted - petition admitted - moratorium declared.

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• 2022 (4) TMI 1161
  Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - existence of debt and dispute or not - validity of demand notice - copies of the invoices, not attached with demand notice - HELD THAT:- The corporate debtor has raised objection that the Demand Notice sent by the applicant is defective as copies of invoices were not attached with the Demand Notice. In this regard it is seen that the invoices were duly received by the respondent which is evident from sign and seal of the company on the copies of the invoices. Since, the respondent had already knowledge about the invoices, the objection is not tenable. Maintainability of application on behalf of sole proprietorship - HELD THAT:- The present application has been filed by Shri Rajesh Gupta being sole proprietorship of M/s. Ujjwal Packaging. Apparently, the petition has not been filed on behalf of M/s. Ujjwal Packaging rather the same has been filed by Shri Rajesh Gupta. Hence, the same is maintainable. Existence of debt and dispute or not - HELD THAT:- Apparently, the goods were being received till 26th February 2019 and the respondent made part payment on 10th May 2019. The amount due does not pertains to the year 2018, rather the same was due qua subsequent invoices. In this regard reliance can be placed on citation Mobilox Innovative Private Limited Vs. Kirusa Software Private Limited [ 2017 (9) TMI 1270 - SUPREME COURT ] where it was held that It is clear, therefore that once the Operational creditor has filed an application, which is otherwise complete, the adjudicating authority must reject the application under Section 9(5)(2(d) if notice of dispute has been received by the operational creditor or there is a record of dispute in the information utility. It is clear that such notice must bring to the notice of operational creditor the existence of a dispute or the fact that a suit or arbitration proceeding relating to a dispute is pending between the parties. Hence, the dispute must be genuine and vague allegations would not serve the purpose as levelled in the present matter. Although, one consignment was defective, but the same was prior to 26th February 2019 and the intimation qua defective articles was sent on December 2018. The said issue was already stand resolved between the parties. Accordingly after that, the respondent kept on placing orders and also received the goods. Even, part payment was made on 10th May 2019. Therefore, it could not be said that there was any pre-existing dispute between the parties. This Tribunal is of affirm view that the payment with respect to invoices raised on behalf of petitioner were not made by the respondent, accordingly, the present petition stands admitted - Petition admitted - moratorium declared.

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• 2022 (4) TMI 1160
  Extension of time for completion of corporate insolvency resolution process - Section 25(2) and Section 60(5) of Insolvency and Bankruptcy Code, 2016 read with 40C of the IBBI (Insolvency Resolution Process for corporate persons) Regulation 2016 - HELD THAT:- From the bare perusal of the above said resolution, it is apparent that no concrete Resolution Plan was submitted and still the CoC was in dilemma, whether it should be approved or not, as the authorized office of the banks has to take approval from the Higher Authorities. In the application itself, it is mentioned that the CoC had a various query regarding the said Resolution Plan. Vide 08th CoC meeting held on 10th March 2022, there was discussion and voting on the Resolution Plan, but the Resolution Applicant itself suggested that in order to avoid any confusion and also to avoid any potential litigation going forward, it was requested to consider the other variant of the plan, which related to assets of the Corporate Debtor alone and no reference to any assignment. In the present matter, there is no concrete Resolution Plan and CoC is not in position to take any specific decision thereon. Further, it is also to be mentioned herein the context that already vide order dated 07th September 2021, the extension of 90 days was granted to the applicant. Apart that, the applicant has also sought exclusion of 49 days, which was also granted vide order dated 29th November 2021, but the CIRP proceedings could not be completed in that particular period despite extension exclusion of period as stated above. Moreover, the resolution was passed on 14th March 2022, whereas 330 days expired on 15th March 2022. Further, the Resolution Plan was only received few days prior to 14.03.2022, that too on behalf of single Resolution Applicant, which also serious suspicion about the conduct of the proceedings. Even, on that day, no such definitely decision could be taken by the CoC. This Tribunal is of the view that further extension of 30 days would not serve the purpose, accordingly, the request for extension of 30 days stands declined - Application dismissed.

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• 2022 (4) TMI 1159
  Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - existence of debt and dispute or not - HELD THAT:- The Last date of invoice is 13.10.2016 and the date of filing of CP is well within the Limitation. This Bench has jurisdiction to deal with this Company Petition. The date of default as per the mode of payment in the last invoice is 20.10.2016 - The total debt due and payable to the Operational Creditor is Rs. 42,28,463/-. The Petition made by the Operational Creditor is complete in all respects as required by law. It clearly shows that the Corporate Debtor is in default of a debt due and payable, and the default is in excess of minimum amount of rupees one lakh stipulated under section 4(1) of the IBC. Therefore, the debt and default stands established and there is no reason to deny the admission of the Petition. In view of this, this Adjudicating Authority admits this Petition and orders initiation of CIRP against the Corporate Debtor. Petition admitted - moratorium declared.

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• 2022 (4) TMI 1158
  Maintainability of application - initiation of CIRP - Corporate Debtor failed to maker repayment of its dues - Operational Creditors - existence of debt and dispute or not - Corporate Debtor has raised objection that the applicant being an unregistered partnership firm is not entitled to file present application in terms of Section 69 of the Indian Partnership Act, 1932 - HELD THAT:- From the bare perusal of the Section 69 of Indian Partnership Act, it is apparent that the effect of non-registration of the firm would adversely effect to the suit and not to the applications alike that of under Section 9 of the Code. The application under Section 9 of the Code does not come under the purview of the suits . The proceedings before the NCLT under Section 9 are concerned, that are not in the nature of the suit or miscellaneous proceeding rather that is application moved by the party against the defaulting Corporate debtor for initiation of CIR proceedings. It is settled principle of law that NCLT is not entitled to go into the depth of the matter and law does not permit Tribunal to decide the matter on contentious issues, which are to be decided by Civil Courts. A reference can also be made to B.K. Educational Services Pvt. Ltd. Vs. Parag Gupta Associates [ 2018 (10) TMI 777 - SUPREME COURT] , wherein it is held that CIR proceedings does not constitute a suit . Similarly, the Hon ble Supreme Court of India further in the matter of Sagar Sharma Vs. Phoenix Arc Pvt. Ltd., [ 2019 (10) TMI 224 - SUPREME COURT] endorsed that the application under the IBC are petitions. Thus, the proceedings under IBC Code are not of the nature of suits and are summary in nature, therefore, the bar under Section 69(2) of the Indian Partnership Act, 1932 is not applicable with respect to the applications filed under the Code. Thus, it is established that applicant had raised the invoices from 17th May 2018 to 15th December 2018 and there was vague dispute regarding the quality of one consignment only, which was also stand resolved, hence, a sum of Rs. 22,066,872/- were still outstanding against the Corporate Debtor pertains to the above said invoices. In view of the facts and circumstances, the present petition stands admitted. Petition admitted - moratorium declared.

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• Service Tax

• 2022 (4) TMI 1157
  Rejection of application under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 - applicability of Circular No. 1071/4/2019-CX.8 dated 27.08.2019 - power of Designated Committee constituted to adjudicate upon the admissibility of the declaration made, beyond the parameters stipulated under Sections 122 and 125 of the Finance Act, 2019 - HELD THAT:- At this juncture, the writ petition has been rendered infructuous, as, according to Mr. Bhushan, the petitioner has succeeded in its appeal preferred before the Tribunal - In case the revenue were to carry the matter further, and if the order passed in favour of the petitioner by the Tribunal is reversed, the petitioner will have the liberty to revive the instant writ petition. Petition disposed off.

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• 2022 (4) TMI 1156
  CENVAT Credit - duty paying invoices - performa invoices - Invoices issued in the name of Head Office instead of factory unit - Invoices issued by Rampal Sahu in contravention of Rule 9(1) of the Cenvat Credit Rules, 2004 - Excess availment of Cenvat Credit on the invoice issued by Sandvik Asia - Rule 9 of CCR - extended period of limitation - penalty. CENVAT Credit - performa invoices - HELD THAT:- The manufacturer or producer of final product or the provider of output service is eligible to take CENVAT Credit of the duty/ tax paid by him in terms of Rule 3 of Cenvat Credit Rules, 2004. Rule 9 thereof requires certain documents and accounts to be the basis for taking the Cenvat Credit. The said Rule of 9 of Cenvat Credit Rules, 2004 clarifies that Cenvat Credit on the documents as mentioned in Sub Rule (1) of Rule (9) shall be available if and only if all the particulars as prescribed under the respective statute are contained in the said documents - the documents required under the Rule 9 are not confined to merely invoices but these may be any documents, like bill or challan as issued in terms of Rule 4 (2) A of the Service Tax Rules etc. This particular Rule specifies the amount of information as is required in a particular documents for availment of Cenvat Credit. Thus any documents as required under Rule 4(2)A can be the documents under Rule 9 of Cenvat Credit Rules for entitlement of availing Cenvat Credit - it is held that denial of availment of Cenvat Credit on performa invoices was absolutely wrong. CENVAT Credit - Invoices issued in the name of Head Office instead of factory unit - HELD THAT:- The availment of income tax credit is the creature of statute and the amounts to a substantial benefit which can not be denied based upon the some procedural irregularity - Hon ble High Court of Punjab and Haryana in the case of COMMISSIONER OF CENTRAL EXCISE, CHD. VERSUS M/S STELKO STRIPS LTD. AND OTHERSS [ 2010 (3) TMI 68 - PUNJAB HARYANA HIGH COURT] while relying upon the earlier decision in the case of COMMISSIONER OF CENTRAL EXCISE, LUDHIANA VERSUS RALSON INDIA LTD. [ 2005 (12) TMI 37 - PUNJAB HARYANA HIGH COURT] - The COMMISSIONER OF C. EX., DELHI-III, GURGAON VERSUS MYRON ELECTRICALS PVT. LTD. [ 2006 (11) TMI 134 - HIGH COURT OF PUNJAB AND HARYANA] has held that the credit cannot be denied on the ground that the documents did not contain all the particulars. It was clarified that once difference was disputed and it was found that documents were genuine and not fraudulent then the manufacturer would be entitled to take Cenvat Credit on duty paid invoices. Issuance of invoices in the name of head office is merely procedural compliance - Credit allowed. CENVAT Credit - Invoices issued by Rampal Sahu in contravention of Rule 9(1) of the Cenvat Credit Rules, 2004 - HELD THAT:- The appellant has mentioned that there had occurred the typographical error on the invoice in question, that too only of one letter i.e. S instead of H (PAN No. of Rampal Sahu BYYPS 8713 H). Copy of PAN is placed on record by the adjudicating authority. Accordingly, non consideration of the said submission despite the documents being on record is held to be highly irrational and unjustified on the part of the adjudicating authority. It is held that the credit on this ground has also wrongly been denied - credit cannot be denied. Excess availment of Cenvat Credit on the invoice issued by Sandvik Asia - HELD THAT:- It is clear that a substantial benefit of credit on the admittedly paid duty / tax has been denied by the Adjudicating Authority below on irrational and illogical ground despite having sufficient and relevant documents reflecting entitlement of the appellant to the said benefits. It is held that even on this ground the credit has wrongly been denied. Extended period of limitation - Penalty - HELD THAT:- It becomes clear that the appellant was entitled for claiming the income tax credit and the credit proposes to have been recovered vide the impugned show cause notice is held to have been rightly availed by the appellant. The appellant had disclosed the total credit of amount availed by them in its ER I returns. There is no denial of the said fact also. No malafide intention or alleged suppression is at all apparent on part of the appellant. It is accordingly held that extended period of limitation in terms of proviso to 73 of Finance Act has wrongly been invoked - penalty is also held to be wrongly imposed. Appeal allowed - decided in favor of appellant.

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• Central Excise

• 2022 (4) TMI 1155
  Exemption from Central Excise Duty - module mounting structures - supplied to suppliers of solar power water pumping systems for irrigating agriculture fields - eligibility for benefit of notification dated 17.03.2012 - HELD THAT:- The Principal Commissioner has rightly concluded that the serial number 10 of List 8 refers to solar power generating system and not to module mounting structures manufactured by the appellant and only parts consumed within the factory of production of such parts for the manufacture of goods specified at serial numbers 1 to 20 of List 8 are exempted from payment of central excise duty. The Principal Commissioner has also correctly appreciated the effect of the amendment made on 11.07.2014 to the aforesaid notification dated 17.03.2012. According to the Principal Commissioner, prior to the amendment only parts consumed within the factory of production of such parts for the manufacture of goods specified at serial numbers 1 to 20 of List 8 were exempted, but after the said amendment the exemption is also available to parts of goods specified at serial numbers 1 to 20 of List 8 in a situation where it is consumed not only within the factory of production for the manufacture of goods specified in List 8 but also when used elsewhere than in the factory of production, subject of course to the condition that the procedure laid down in the relevant rules has been followed - It is, therefore, not possible to accept the contention of learned counsel for the appellant that the module mounting structures should be granted exemption from payment of excise duty in terms of the notification dated 17.03.2012 and not the solar power generating system . An exemption notification has to be strictly construed, as was observed by the Supreme Court in COMMNR. OF CUSTOMS (IMPORT) , MUMBAI VERSUS M/S. DILIP KUMAR AND ORS [ 2016 (5) TMI 185 - SUPREME COURT] and in M/S LARSEN TOUBRO LTD. ANOTHER, ECC CONSTRUCTION GROUP VERSUS COMMISSIONER OF CENTRAL EXCISE, HYDERABAD [ 2015 (10) TMI 612 - SUPREME COURT] - The distinction sought to be drawn by the learned counsel for the appellant between devices and systems is not of relevance to the present case because both non-conventional energy devices or systems specified in List 8 are covered by the description of excisable goods. There is, therefore, no infirmity in the impugned order passed by the Principal Commissioner - Appeal dismissed.

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• CST, VAT & Sales Tax

• 2022 (4) TMI 1154
  Validity of assessment order - maintainability of appeal - requirement of pre-deposit - HELD THAT:- Both the appellate authority as well as the revisional authority were not justified in out-rightly rejecting the prayer for stay of the petitioner. Power to entertain prayer for stay is incidental and ancillary to the power to hear appeal and revision. It is a discretionary power, which is required to be exercised in a fair and judicious manner balancing the interest of both the sides. Since petitioner has already deposited 12 % of the disputed tax for the purpose of admission of the appeal, it is concluded that if the petitioner deposits a further amount of 12 % of the disputed tax, respondents shall not take coercive steps for recovery of the entire outstanding dues in terms of the order of assessment. It is directed that if the petitioner deposits further 12 % of the disputed tax within a period of 30 days from today, the demand in terms of the assessment order dated 26.03.2021 shall remain stayed till disposal of the appeal pending before respondent No.2 - petition disposed off.

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• Indian Laws

• 2022 (4) TMI 1153
  Dishonor of Cheque - Company under CIRP - moratorium was issued by NCLT - none of the natural persons who were stated to be the in-charge of and responsible for the affairs of the corporate entity were arrayed as accused - whether debt in question was not enforceable and was only in the nature of a security? - Section 138 of the Negotiable Instruments Act, 1881 - HELD THAT:- In the instant case, the complaint was filed only against the corporate entity and none of the natural persons who were stated to be the in-charge of and responsible for the affairs of the corporate entity were arrayed as accused. It must therefore be held that the corporate debtor, namely, the appellant herein cannot now be proceeded against under Section 138 of the Act. Consequently, the proceedings initiated against the appellant deserve to be quashed - Appeal allowed.

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• 2022 (4) TMI 1152
  Dishonor of Cheque - applicability of maxim sublato fundamento cadit opus - violation of the mandate of Section 143 of the Negotiable Instruments Act - HELD THAT:- The incorporation of Section 143 Negotiable Instruments Act was within an object of speedy disposal of cases resulting in recommendation of simplified procedure of trial of the offence under the Negotiable Instruments Act i.e. summary trial. The incorporation of Section 143 to 147 was aimed at early disposal of cases in simplified procedure and more particularly to do away the stages and process in a regular criminal trial that normally cause inordinate delay in its conclusion and to make a trial procedure as expeditious and possible without in any way compromising with the right of the accused for a fair trial. There is no straitjacket formula classifying a case to be tried as a summary trial or as a summons case in offences falling under the Negotiable Instruments Act. The law provided therefore is so flexible that it is up to the prudent judicial mind to try the case summarily or otherwise. Examining the case from another perspective, Section 461 CrPC deals with irregularities which vitiate proceedings. The order of the Magistrate to try the case as a summons case is not an irregularity that would vitiate the proceedings. Hence, even though the proviso to Section 143 contemplates affording of hearing to the parties before directing a case to be tried as summons case, however, non-compliance thereof does not vitiate the proceedings. Apparently the said proviso contemplates a situation where the order to try the case as summons case is passed by the Magistrate after commencement of the trial and where certain witnesses have been recorded - The delay on the part of the petitioner in approaching the Court has not been satisfactorily explained. Besides, apart from the apprehension that petitioner is likely to be sentenced for an imprisonment beyond one year, the same cannot be said to be a prejudice caused to an accused. The said discretion is yet to be exercised by judicial prudence and is not a judgment as regards conclusion of guilt of an accused. It does not thus amount to determination of any right of an individual or to have occasioned a prejudice to him. A prejudice has to be established and an apprehension of higher sentence is not a prejudice since sentencing or conviction are to be awarded after following the procedure prescribed in law and after affording opportunity of hearing to the respective parties. The inherent power vested in a High Court under Section 482 CrPC are to be exercised to prevent the abuse of the process of law and to secure the ends of justice. Such a power is to be exercised sparingly, with circumspection and in the rarest of rare cases. The very fact that statement under Section 313 CrPC had been recorded in the month of December 2015 would be sufficient to dismiss the present petition. It would rather be expedient that the trial in question is concluded at the earliest. The instant petition is accordingly dismissed being without any merit and being an attempt to delay the proceedings at a highly belated stage when the trial was at its fag end and statement under Section 313 CrPC had already been recorded - Petition dismissed.

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• 2022 (4) TMI 1151
  Dishonor of Cheque - funds insufficient - tampering with the cheque - petitioners has argued that the blank signed cheques of the petitioners have been misused by the respondent-complainant by filling in denomination in the body of the cheque in his own writing and at the hands of his own agents - fraudulent transaction - Section 20 of the Negotiable Instruments Act, 1881 - HELD THAT:- A perusal of Section 20 of the Negotiable Instruments Act, 1881 clearly shows that when a wholly blank or incomplete negotiable instrument is handed over to a person, the drawer thereby gives a prima facie authority to the holder thereof to make or complete a negotiable instrument for any amount specified therein. It is thus evident from a perusal of Section 20 of the Negotiable Instruments Act, 1881 that an instrument, signature whereupon is not denied, does not become void merely because of the same having been filled-up by a different ink or different handwriting. Whether the case of the petitioners shall be severely prejudiced on account of failure on the part of the petitioners to lead evidence of a handwriting expert? - HELD THAT:- The defence set up by the petitioners is that he had not filled in the cheque, however, assuming it to be so, the same would not in any manner impact the case projected by the complainant. It is evident from a perusal of the complaint that it is not the case set up by the respondent-complaint that the cheque in question had been filled in by the petitioners-accused and then handed over - the petitioner No.2 himself claims to have not filled in the body of the cheque and it was blank and signed. The said fact is not denied by the respondent-complainant and it is not the affirmative case of the complainant that the petitioner No.2 had given duly filled cheque, in his own handwriting, which may require any evidence to contradict. In the wake of the specific plea of the petitioners that the blank signed cheque had been handed over to the respondent-complainant and in the absence of any claim by the respondent-complainant that a duly filled cheque, complete in all particulars, had been handed over by the accused, a mere examination of a handwriting expert to prove a fact not pleaded or claimed by the complainant is not likely to advance any interest of justice. The same is only likely to delay the final adjudication of the trial. Further, the trial Court has duly discussed the said aspects and also the contentions raised by the petitioners. There is no illegality or perversity or miscarriage of justice occasioned by the said order - Petition dismissed.

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• 2022 (4) TMI 1150
  Dishonor of Cheque - insufficiency of funds - Supply of material or not - fake and bogus documents - HELD THAT:- It is to be seen from the material placed on record and the pleading of the parties whether the plaintiff has supplied the material, despite supply of material no payment has been made. It is well settled legal position, that the genuineness of the document has to be proved by the plaintiff who relies upon the document and thereafter it is for the defendants to dislodge the credibility of the document as fake, sham and bogus document - In the present case, the plaintiff has failed to establish that the work order was issued in his favour and genuineness of the challan has also not been proved. It is incumbent upon the plaintiff to examine the witnesses who has delivered the goods and thereafter the concerning officer has put his signature on the challan, no witnesses was examined by the plaintiff in his support. From bare perusal of receipt from Ex.P-8 to Ex.P-28, it is clear that the plaintiff has not put signature of any employee of concerned department who has received the material and even no cross-examination was done with regard to supply of material through Ex P-8 to Ex.P-28. Even from examining the evidence of the plaintiff it is not clear to whom the plaintiff has supplied the material and who has signed the receipt - It was incumbent upon the plaintiff to prove the signature of person who has signed the challan by adopting the course by the person who signed or wrote a document; by calling a person in whose presence the documents are signed or written; by calling handwriting expert; by calling a person acquainted with the handwriting of the person by whom the document is supposed to be signed or written; by comparing in Court, the disputed signature or handwriting with some admitted signatures or writing; by proof of an admission by the person who is alleged to have signed or written the document that he signed or wrote it. These steps have not been taken by the plaintiff to prove the challan, therefore, it cannot be held that material was supplied by the plaintiff as per the challan. It is well settled legal position is that initial onus is always upon the plaintiff to prove the fact and if he discharges that onus and makes out a case which entitles him to a relief, then onus shifts to the defendant to prove those circumstances, if any, which would disentitle the plaintiff to the same. In this case nothing has been discharged by the plaintiff. The plaintiff has not proved by adducing cogent evidence on record that he has supplied the material and thereafter payment was not made. Considering the fact that the plaintiff has failed to prove that he has supplied the material despite this, the learned trial Court has held that plaintiff has supplied material to the defendants and he is entitled to receive Rs. 60,000/- along with interest @ 6% per annum from 2004 till the payment is actual made is perverse, contrary to record and deserves to be set aside by this Court - Appeal allowed.

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• 2022 (4) TMI 1149
  Dishonor of cheque - discharge of legally enforceable debt or not - rebuttal of presumption - security cheque has been misused by the complainant or not - HELD THAT:- In the present case, it is not in dispute that the cheque in question bears the signatures of the petitioner. The factum of there being a relationship between the parties is also proved beyond doubt on the record. The fact that the complainant had a financial standing to advance the friendly loan to the petitioner is also prima facie proved from the evidence on record to the effect that he owns 10.5 acres of land and had also sold his buffalo in the month of March, 2016, which facts have not been rebutted either before the Courts below or before this Court. The Hon ble Supreme Court of India, in case titled as Bir Singh vs. Mukesh Kumar [ 2019 (2) TMI 547 - SUPREME COURT] , had held that the Court shall presume the liability of the drawer of the cheques for the amount for which the cheques are drawn. The Hon ble Supreme Court in the said case had also held that the revisional Court should not interfere in the absence of jurisdictional error - A perusal of the judgment would show that it has been observed that even if a cheque is a security cheque, the same is an integral part of the commercial process and the same acts as a deterrent for the drawer against dishonouring his financial commitment and can also be used towards discharging the liability of the drawer. It had been further held that to state otherwise, would defeat the whole purpose of a security cheque. There is no illegality or infirmity in the judgments passed by both the Courts below and accordingly, the present Criminal Revision being sans merit is thus, dismissed.

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• 2022 (4) TMI 1148
  Dishonor of Cheque - conversion of fine into compensation under Section 357(3) of Cr.P.C. - HELD THAT:- In Negotiable Instruments Act, 1881, there is no separate provision for compensation and for compensation in criminal cases provisions of Section 357 of Cr.P.C. will be attracted. As far as conversion of that fine into compensation under Section 357(3) of Cr.P.C. is concerned, it is illegal because provision of Section 357(3) of Cr.P.C. will come into force only when Court imposes a sentence of which fine does not form a part, but learned Magistrate has not convicted the petitioner for any sentence - In Negotiable Instruments Act, as per provision of Section 138, a Magistrate can punish the accused with imprisonment for a term which may extend to two years or with fine which may extend to twice the amount of the cheque or with both. It is true that as per provisions of Section 29 of Cr.P.C. Judicial Magistrate First Class cannot impose fine of more than Rs. 10,000/-, but in this context amendment of Section 143 dated 6.2.2003 is pertinent by which a provision has been made that in case of any conviction in a summary trial, it shall be lawful for the Magistrate to pass a sentence of imprisonment for a term not exceeding one year and an amount of fine exceeding five thousand rupees. In cases under Section 138 of the Negotiable Instruments Act, compensation can be granted only under Section 357 (1)(b) of Cr.P.C. and not under Section 357(3) of Cr.P.C. In view of Section 143 of the Negotiable Instruments Act, conversion of fine into compensation under Section 357(3) of Cr.P.C. is illegal and beyond jurisdiction - revision disposed off.

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• 2022 (4) TMI 1147
  Dishonor of Cheque - acquittal of accused - settlement of matter between the parties - compounding of offences - Section 147 of the Negotiable Instruments Act - HELD THAT:- The issue regarding compounding under the Negotiable Instruments Act at the stage of appeal as well as revision has come before this court as well as before the Hon ble Supreme Court and they have upheld that the powers under Section 147 of the Negotiable Instruments Act can be invoked at any stage of the proceedings i.e. at the stage of trial, appeal or at the revisional jurisdiction and that the courts should be liberal in exercising such powers. It was also held in the matter of DAMODAR S. PRABHU VERSUS SAYED BABALAL H. [ 2010 (5) TMI 380 - SUPREME COURT] and KAUSHALYA DEVI MASSAND VERSUS ROOPKISHORE KHORE [ 2011 (3) TMI 1491 - SUPREME COURT] , to the effect that compromise in question would definitely go a long way to strengthen the mutual relationship between the parties and would serve as an ever-lasting tool in their favour. Such an exercise would be in consonance with the spirit of Section 147 of the Negotiable Instruments Act, 1881. In view of the parties having settled the matter and the amount having been deposited by the petitioner with the respondent-complainant and in the light of consent of the parties, it is deemed appropriate to invoke the power vested by virtue of Section 147 of the Negotiable Instruments Act and allow the compounding of the offence under Section 138 of the Negotiable Instruments Act and set aside the judgment of the Courts below and acquit the petitioner of the charges against him. The petitioner, if confined to jail in the present case shall be released forthwith, in accordance with law. Petition allowed.

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• 2022 (4) TMI 1146
  Dishonor of Cheque - appreciation of evidence is based on sound principles regarding appreciation of evidence in the offence under the provisions of Negotiable Instruments Act, 1881 - cheque bounce case or not - HELD THAT:- It is evident that it is the defence of the accused that he was going along with one Narayansa Raibagi to some village in the year 2006 and he kept signed cheque in his bag. When they were taking tea in a hotel, there was theft of his bag. According to accused, the said Narayansa has filed a civil suit against him and he has given one of the cheque to this complainant and got filed the case - There is no iota of evidence placed before the Court to show that Narayansa accompanying him in the year 2006 and he lost the cheque and the said Narayansa has misused the cheque after nearly four years of theft of cheque and got lodged the complaint. If the defence of the accused is considered, then this defence rests with his reply notice only. If at all he has lost the cheque, as stated in his explanation in the statement recorded under section 313 of Cr.P.C., he could have lodged the complaint with the police. One carbon copy of the letter stated to be addressed to the SSK bank dated 5.6.2006 is produced along with written statement. But no evidence is adduced calling upon any officials of the bank to prove his contention and to show that he has intimated the bank about theft of cheques. To whom he was giving signed blank cheques at Bhagyanagar, why they asked him blank cheques, what happened to his other cheques, mentioned in reply? No explanation is forthcoming. No bank statement is produced to show that he had any move in his bank on the date he lost the cheque, no persons were examined to prove it. If at all he has lost the cheque in the year 2006 itself, then how one cheque came in possession of this said Narayansa is also not forthcoming; why he has misused only one cheque if there are six cheques is also not forthcoming. The Hon ble Supreme Court in a decision in TRIYAMBAK S. HEGDE VERSUS SRIPAD [ 2021 (9) TMI 1159 - SUPREME COURT] has referred the decision of KAUSHALYA DEVI MASSAND VERSUS ROOPKISHORE KHORE [ 2011 (3) TMI 1491 - SUPREME COURT] and has held that it is not like IPC cases wherein the sentence of imprisonment is called. On the other hand they are like a regulatory offences for recovery of the amount paid. The order of sentence of imprisonment for six months needs to be set aside by modifying it to fine of Rs. 5,000/- only and the order of payment of Rs. 5,00,000/- as compensation is to be upheld - The revision petition is allowed in part.

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• 2022 (4) TMI 1145
  Dishonor of cheque - Funds Insufficient - rebuttal of presumption - preponderance of probabilities - HELD THAT:- Both the Courts after hearing the evidence have rightly come to the conclusion that ingredients of section 138 of the Negotiable Instruments Act, 1881 is proved by the complainant. There is also oral and documentary evidence produced by the petitioner at Ex.P.1 to P.11. There is a presumption in favour of petitioner under section 139 of the Negotiable Instruments Act, 1881 and that presumption can be rebutted by the accused either by cross-examining the complainant and witnesses of the complainant, if any, and show before the Court by preponderance of probabilities by leading defence evidence and show before the Court that case of complainant is not probable. But herein in this case the petitioner by both oral and documentary evidence coupled with the presumption, has discharged the burden and shifted the onus upon the accused but the accused failed to rebut the presumption by leading legally admissible evidence. The Hon ble Supreme Court in the case of DAMODAR S. PRABHU VERSUS SAYED BABALAL H. [ 2010 (5) TMI 380 - SUPREME COURT] elaborated the object of bringing Section 138 of N.I. Act into statute and insertion of Section 138 to 142 of the N.I. Act by Banking, Public Financial Institutions and Negotiable Instruments Laws (Amendment) Act, 1988 (66 of 1988). The Hon ble Supreme Court held that in respect of offence of dishonor of cheques, it is the compensatory aspect of the remedy which should be given priority over the punitive aspect. If the punishment awarded in this case is tested with touch stone of the principles stated by the Hon ble Supreme Court in the above referred decisions, it is evident that the sentence of imprisonment awarded by the trial court and confirmed by the first appellate court is not justified - In the case on hand, it is a monetary loss to the complainant/respondent. Therefore imposing the sentence of imprisonment will not serve any purpose. Keeping in mind the object and purpose for which the N.I. Act was amended, period of pendency of case, nature of transaction, the relationship of complainant and accused and in view of the discussions made above, in my considered view, the sentence of fine of Rs. 3,00,000/- appears to be exorbitant and excessive - keeping in mind the object and purpose for which the Negotiable Instruments Act is amended, the period of pendency of the case, nature of allegation and the relationship of the parties and also in view of the discussion made, the sentence of fine of Rs. 3,00,000/- needs to be modified to the extent imposing sentence of fine only to the tune of Rs. 2,05,000/-. The ends of justice would be met by modifying order of sentence passed by the trial Court as well as setting aside imposing cost by the First Appellate Court - revision petition allowed in part.

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