TMI Tax Updates - e-Newsletter
April 27, 2023

Case Laws in this Newsletter:

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

Articles

1. Difference between GSTR-1 and GSTR-3B

   By: Ishita Ramani

2. Filing of Form no 10 of income tax act

   By: GEETANJALI PANDEY

3. RECENT DEVELOPMENTS IN GST

   By: Dr. Sanjiv Agarwal

News

1. India jumps 6 places to Rank 38 in World Bank’s Logistics Performance Index 2023

Notifications

GST - States

1. 08/2023-State Tax - dated 10-4-2023 - Himachal Pradesh SGST

Waives the amount of late fee referred to in section 47 of the HPGST Act

2. 06/2023-State Tax - dated 10-4-2023 - Himachal Pradesh SGST

State Government recommendations of the Council, notifies the registered persons who failed to furnish a valid return within a period of thirty days from the service of the assessment order issued on or before the 28th day of February, 2023

3. 03/2023-State Tax - dated 10-4-2023 - Himachal Pradesh SGST

Revocation of cancellation of registration where registration has been cancelled on or before the 31st day of December, 2022

4. 02/2023-State Tax - dated 10-4-2023 - Himachal Pradesh SGST

Amendment in Notification No. 73/2017- State Tax, dated the 16th January, 2018

Circulars / Instructions / Orders

SEBI

1. SEBI/HO/MIRSD/MIRSD-SEC-5/P/CIR/2023/062 - dated 26-4-2023

Procedure for implementation of Section 12A of the Weapons of Mass Destruction and their Delivery Systems (Prohibition of Unlawful Activities) Act, 2005 – Directions to stock exchanges and registered intermediaries

FEMA

2. 03 - dated 26-4-2023

Remittances to International Financial Services Centres (IFSCs) under the Liberalised Remittance Scheme (LRS)

Highlights / Catch Notes

GST

• Court Allows Reconsideration of GST Refund for Residential Flat Purchase Under New Policy Guidelines.

  Case-Laws - HC : Refund of GST - Purchaser of flat (residential property) - application for refund by unregistered person - the policy now has been evolved governing the application for refund by unregistered person subsequent to passing of the impugned order rejecting the refund, we are of the opinion that an opportunity needs to be given to the Petitioners for reconsideration of their claim for refund. - HC
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• Court Upholds Tax Demand Validity; Notice u/s 61 Not Required for Section 74 Action; Appeal Permitted.

  Case-Laws - HC : Validity of demand u/s 61 on the basis of GSTR return - Non-service of notice u/s 74 - Merely because no notices were issued under Section 61 of the Act would mean that issues of classification or short payment of tax cannot be dealt with under Section 74 as exercise of such power is not dependent upon issuance of notice under Section 61. The argument is misconceived is thus, repelled - However, Petitioner is permitted to prefer such appeal within two weeks - HC
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• High Court denies direct challenge via writ; petitioner can appeal order on seized goods and vehicle due to document error.

  Case-Laws - HC : Seizure of goods alongwith vehicle - vehicle's number was wrongly recorded in the transit document, inadvertently - The petitioner would be at liberty to challenge the order impugned by way of an appeal. In such view of the matter, a challenge to the order impugned directly in the writ petition, not entertained - HC
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Income Tax

• Income Tax Act: Section 115BBE Clarifies Disallowance of Illegal Expenses u/s 37(1) for Unexplained Income.

  Case-Laws - SC : Disallowance of illegal expenses - A little bit of interplay between Section 115BBE and Section 37(1) of the Act might throw more light on both the provisions. If a loss in pursuance to an offence or prohibited business cannot be brought under Section 115BBE of the Act for income assessed under 68, 69 and 69A to 69D of the Act, which deals with unexplained income, expenditure etc., it can never be said that the same would be brought under Section 37(1) of the Act, despite the fact that the objective behind both the provisions are overlapping with some connection. Section 115BBE being a subsequent legislation, the true meaning of Section 37(1) can be understood on that basis. - SC
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• Supreme Court: Silver bar confiscation not deductible u/s 37(1) of Income Tax Act as business expense.

  Case-Laws - SC : Loss of confiscation of silver bars by DRI officials - Whether allowable business expenditure u/s 37(1) - A penalty or a confiscation is a proceeding in rem, and therefore, a loss in pursuance to the same is not available for deduction regardless of the nature of business, as a penalty or confiscation cannot be said to be incidental to any business - SC
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• Supreme Court Confirms Assessing Officer's Broad Reassessment Powers u/s 153A of Income Tax Act.

  Case-Laws - SC : Scope of Assessment u/s 153A - competency of AO to consider all the material that is available on record - the impugned judgment(s) and order(s) passed by the High Court taking the view that the AO has the power to reassess the return of the assessee not only for the undisclosed income, which was found during the search operation but also with regard to material that was available at the time of original assessment does not require any interference. - SC
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• Satisfaction Note Required by Assessing Officer Before Transferring Records u/s 158-BD for Section 153C Compliance.

  Case-Laws - HC : Assessment u/s 153C - For the purpose of Section 158-BD of the Act, a satisfaction note is a sine qua non and must be prepared by the Assessing Officer before he transmits the records to the other Assessing Officer who has jurisdiction over such other person - HC
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• Section 263 Review: AO's Acceptance of Forward Contract Receivables as Short-Term Loans Deemed Erroneous, Revenue Impacted.

  Case-Laws - AT : Revision u/s 263 - forward contract receivable shown under short term loans and advances - AO, without examining, simply accepted the explanation of the assessee, which is erroneous and prejudicial to the interest of the Revenue. - AT
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• Unjust Orders on Interest and Advances Criticized for Ignoring Pleadings and Natural Justice Principles.

  Case-Laws - AT : Addition of interest paid on fund advanced - Genuineness of business advance without interest - Thus both the authorities below having passed orders in a very casual manner, totally ignoring the pleadings of the assessee and in complete disregard to the principles of natural justice. The orders are highly unjustified and are not sustainable in law - AT
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• Date of Allotment Letter Determines Acquisition Date for Capital Gains Deduction on Residential Flats.

  Case-Laws - AT : Long term capital gain - deduction claimed on account of indexed cost of acquisition - the allotment letter issued by the developer/builder is final, as, it is in respect of a specifically identifiable property and has ultimately culminated in execution of apartment buyer’s agreement in financial year 2010-11 - thus the date of acquisition of the residential flat has to be reckoned from the date of the allotment letter. - AT
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• Court Overturns Tax Assessment of Rs.54.22 Crores Attributed to Permanent Establishment Due to Factual Inconsistencies and Oversight.

  Case-Laws - AT : Taxability of receipts from offshore supplies and onshore services - Though, the global accounts of the assessee are very much available with the Assessing Officer, however, while finalizing the assessment in pursuance to the directions of learned DRP, the Assessing Officer has not consider the global profit and straightway attributed 25% of Rs.54.22 crores to the PE. Thus due to factual inconsistencies and non-consideration of facts on record by learned DRP, the impugned assessment order deserves to be set aside. - AT
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Customs

• Court Declines to Release Seized Goods Amid Origin Dispute; Petitioner to Address Show Cause Notice in Court.

  Case-Laws - HC : Seeking release of seized imported goods - Country of Origin of Goods - petitioner claims the goods to be imported from Afghanistan whereas respondents claims that the examination of the goods would show that the goods are marked as “Made in Pakistan” - Since various disputed facts would arise for adjudication, we are not inclined to interfere in writ jurisdiction. The Petitioner would have opportunity to reply to the show cause notice and put forth its case as sought to be urged before us - HC
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• Revenue Department Must Prove Correct Classification for Imported Papad (Tapioca) from China Under Different Heading.

  Case-Laws - AT : Classification of imported goods - Papad (Topioca) (imported from China) - It is a settle principal of law that classification of goods is a matter relating to chargeability and the burden to prove is squarely on the revenue. If the department intends to classify the goods under a particular heading or sub-heading different from that claimed by the assessee, the department is required to adduce proper evidence and thereby discharge the burden of proof. - AT
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• Customs Broker License Revocation Overturned; Actions Deemed Non-Violative and Initial Goods Prohibition Later Lifted.

  Case-Laws - AT : Revocation of Customs Broker License - The commissions or omissions, if any, by the appellant, have not resulted in any contraventions of the Law or evasion of Duty, as the very same authorities, who have placed the prohibition on the impugned goods, have permitted the same at a later date. As such, it is found that harsh an action, such as revocation of license is neither justified nor substantiated. The punitive action to the extent of revocation of license is very harsh and certainly on higher side. - AT
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Corporate Law

• Court Denies Request to Restore Company to Register Due to Lack of Business Operations by Directors.

  Case-Laws - AT : Seeking restoration of (struck off) name of company in the Register of Companies - Considering the fact that the company was having two directors with 50% shareholding which has not been disputed and one of the director who is Respondent No.3 has come forward with a stand that the company in question was not either doing business or operating, in such situation there is no reason in passing an order for restoring the appellant company. - AT
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Indian Laws

• High Court Quashes Criminal Proceedings: Petitioners Not Liable for Cheque Dishonor, Not Directors or Signatories at Issue Time.

  Case-Laws - HC : Dishonour of Cheque - vicarious liability of Director - The petitioners were not directors of the company on the date when the cheques were issued. It is not the case of the opposite party No. 2/complainant that they were the signatories of the cheques. - The criminal proceedings against the present petitioners quashed - HC
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• Court Rejects Complainant's Claim on Cheque Dishonor Date Due to Lack of Evidence Linking to Presentment Date.

  Case-Laws - HC : Dishonour of Cheque - date of dishonor of cheque not known - If the Complainant wants the Court to believe the date of 24/01/1995 as knowledge of the dishnour, he was bound to lay a foundation in the evidence, so as to connect this cheque return memo to the actual date of presentment. This has not been done. - HC
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Service Tax

• Insufficient Evidence of Mala Fides Invalidates Extended Limitation for Sub-Contractor in Valuation Case; Revenue Lacks Justification.

  Case-Laws - AT : Extended period of limitation - Valuation - sub-contractor - This is a sufficient reason and other than this, there are no documents being brought out on record by the Revenue to prove mala fides on the part of this appellant, so as to justify invoking the larger period of limitation in this case. It is also a fact borne on record that the main contractor has not denied the fact of having collected full consideration including Service Tax from the clients. - AT
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• Appellant adjusts excess service tax payments against next month's liability, avoiding additional payment demand. Evidence supports claim.

  Case-Laws - AT : Short payment of Service tax or not - provisional payment of service tax - It is an admitted fact that when the payment is made on provisional basis the amount sometime is paid in excess and sometime it may be less. The appellant has submitted the copy of the chart showing the payment made in excess during the relevant period which clearly shows that the appellant had adjusted the excess amount paid in a particular month against the liability of the subsequent month. - No demand - AT
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Central Excise

• Commissioner Can Issue Show Cause Notice for Irregular CENVAT Credit by Input Service Distributors u/r 14 CCR.

  Case-Laws - AT : Territorial Jurisdiction of the Commissioner to issue the SCN - Input service Distributor (ISD) - These units (availing credit passed by ISD) file returns which show, among other things, the CENVAT credit availed. The jurisdictional officers have to scrutinize and assess them and if any CENVAT credit is irregularly availed on the strength of invoices (including ISD invoices), it can be recovered under Rule 14 of CCR from them. - The SCN was issued correctly by the Commissioner and the impugned order was issued as per his jurisdiction. - AT
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VAT

• State Government Must Release Funds for Sales Tax Tribunal Website to Comply with 2017 Court Order.

  Case-Laws - HC : Functioning of state tax tribunal - The State Government, if the requisition is received from the Registry of the Sales Tax Tribunal, is directed to release funds for the creation of a dedicated website and for uploading the case status, etc., the same shall be released at the earliest to avoid any action flowing from the breach order of this Court of the order dated 28 and 29 September 2017 - HC
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• Court Rules Tax Demand Invalid Due to Contradictory Audit Report; Writ Petition Deemed Maintainable.

  Case-Laws - HC : Validity of demand - incorrect audit report - Maintainability of writ petition - The finding recorded in the order impugned that the assessee has accepted the liability clearly militates against plain and unambiguous disagreement recorded in the audit report. We have not come across any other material warranting any other view. - The demand impugned is without jurisdiction - HC
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Case Laws:

• GST

• 2023 (4) TMI 1064
  Grant of Bail - imposition of condition for deposit of bank guarantee, as a pre-deposit for a bail - amount of bank guarantee reduced - HELD THAT:- Such pre-condition of deposit of an amount or furnishing a bank guarantee has been the subject matter of consideration by this Court in a number of cases, where condition of pre-deposit has been held to be bad - Reference may be made to an identical matter in SUBHASH CHOUHAN VERSUS UNION OF INDIA ANR. [ 2023 (1) TMI 1168 - SC ORDER ] , this Court set aside the order passed by the High Court imposing a condition of deposit while granting bail to the appellant therein - It is also pertinent to note that in the said case, the learned Additional Solicitor General appearing for the Union of India/State had fairly stated that such a condition cannot be imposed while granting bail. The same view has been reaffirmed by this Court in another similar case, ANATBHAI ASHOKBHAI SHAH VERSUS STATE OF GUJARAT ANR. [ 2023 (3) TMI 684 - SC ORDER ]. Facts of the present case being identical to the facts of the aforesaid two Criminal appeals, there exists no reason to deviate from the view taken in the aforesaid two cases. The pre-condition of furnishing bank guarantee imposed by the High Court is not liable to be sustained and is hereby set aside - rest of the conditions imposed for grant of bail by the Chief Judicial Magistrate and upheld by the High Court are hereby sustained. It is directed let the applicant be released on bail. The appeal, accordingly, stands allowed.

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• 2023 (4) TMI 1063
  Refund of GST - Purchaser of flat (residential property) - application for refund by unregistered person - section 54 of the Goods and Services Tax (GST) Act, 2017 - HELD THAT:- The learned Special Counsel for Respondent No. 1 points out that there have been substantial changes in the procedure governing the application for refund by unregistered persons such as the Petitioners. The learned Special Counsel for Respondent No. 1 states that this position was not in existence when the impugned order was passed. If the Petitioners succeed in demonstrating that there has been breach of principles of natural justice, the consequence will be to remand the proceedings to the authority for reconsideration. Considering the fact that the Petitioners are flat purchasers and unregistered persons and that the policy now has been evolved governing the application for refund by unregistered person subsequent to passing of the impugned order rejecting the refund, we are of the opinion that an opportunity needs to be given to the Petitioners for reconsideration of their claim for refund. The application of the Petitioners dated 4 September 2020 is restored to the file of Respondent No. 1- Deputy Commissioner of State Tax. Subject to earlier time bound commitment, the application be decided within twelve weeks from the date order is uploaded - Petition disposed off.

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• 2023 (4) TMI 1062
  Validity of demand u/s 61 on the basis of GSTR return - Non-service of notice u/s 74 - department to point out deficiency in the returns (which was not done) - classification or short payment of tax - whether the department is enjoined to issue a notice under subsection 3 of Section 61 of Central Goods and Service Tax Act, 2017 once returns have been submitted by the assessee before initiating action under Section 74 of the Act or not? - HELD THAT:- Section 61 regulates scrutiny of returns. In the process of scrutiny of such returns the proper officer has been vested the jurisdiction to examine the return and in case any discrepancies are notice therein the proper officer can intimate such discrepancy to the assessee with the object of conferring an opportunity upon the assessee to rectify such discrepancy. The discrepancy may be of different kinds. In the present case it does not appear that any discrepancy was noticed by the department in the returns of the petitioner nor any such deficiency was pointed out to the assessee for it to be rectified by it. The returns, therefore, remain intact. It is later at the stage of consideration of the return that the department has found that proper tax has not been deposited and consequently proceedings under Section 74 has been initiated and concluded against the petitioner. In the statutory scheme the course followed by the department would clearly be permissible in law - The argument that unless deficiency in return is pointed out to the assesee, and an opportunity is given to rectify such deficiency, that the department can proceed under Section 74 is not borne out from the statutory scheme and the argument in that regard therefore, must fail. The scrutiny proceedings of return as well as proceeding under Section 74 are two separate and distinct exigencies and issuance of notice under Section 61(3), therefore, cannot be construed as a condition precedent for initiation of action under Section 74 of the Act. Merely because no notices were issued under Section 61 of the Act would mean that issues of classification or short payment of tax cannot be dealt with under Section 74 as exercise of such power is not dependent upon issuance of notice under Section 61. The argument is misconceived is thus, repelled - the petitioner has a remedy of preferring appeal which has not been availed. Various facts are asserted during the course of hearing to highlight the incapacity of the petitioner due to which the appeal could not be filed earlier. Petitioner is permitted to prefer such appeal within two weeks from today and in the event such an appeal is filed, the same shall be entertained without raising any objection with regard to limitation. Petition dismissed.

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• 2023 (4) TMI 1061
  Maintainability of petition - availability of alternative remedy - petition entertained only because the Second Appellate Tribunal has not yet been constituted - HELD THAT:- Since the petitioner wants to avail the remedy under the provisions of law by approaching 2nd appellate tribunal, which has not yet been constituted, as an interim measure subject to the Petitioner depositing entire tax demand within a period of four weeks from today, the rest of the demand shall remain stayed during the pendency of the writ petition. Application disposed off.

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• 2023 (4) TMI 1060
  Seizure of goods alongwith vehicle - vehicle s number was wrongly recorded in the transit document, inadvertently - Section 129(3) of GST Act - HELD THAT:- There are substance in the objections raised by the respondents inasmuch as the cosigner or the consignee would always be at liberty to challenge the confiscation of goods along with the supporting documents evidencing their ownership and merely because the order has been addressed to the driver of the vehicle would not be to the prejudice of the rights and contentions of the cosigner or the consignee. The petitioner would be at liberty to challenge the order impugned by way of an appeal. In such view of the matter, a challenge to the order impugned directly in the writ petition, not entertained - petition dismissed.

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• 2023 (4) TMI 1059
  Non-service of SCN, mandatorily required by section 74 (1) of the GST Act - violation of principles of natural justice - HELD THAT:- There are substance in the petitioner s contention that appropriate notice under Section 74(1) of the Act has not been served upon it. The order impugned dated 3rd March, 2022 stands quashed - petition allowed.

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• 2023 (4) TMI 1058
  Cancellation of GST registration of petitioner - cancellation on the premise that the Petitioner has failed to file Goods and Services Tax monthly returns for a continuous period of six months - Section 29 of the Central Goods and Services Tax Act - HELD THAT:- In identical circumstances, this Court, in the case of Tvl. Suguna Cutpiece Vs Appellate Deputy Commissioner (ST) (GST) and others [ 2022 (2) TMI 933 - MADRAS HIGH COURT ] held that The respondents shall take suitable steps by instructing GST Network, New Delhi to make suitable changes in the architecture of the GST Web portal to allow these petitioners to file their returns and to pay the tax/penalty/fine. This Court feels that the benefit extended by this Court in the earlier orders referred to in Suguna Cutpiece Centre s case, may be extended to the Petitioner. Petition disposed off.

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• Income Tax

• 2023 (4) TMI 1057
  Loss of confiscation of silver bars by DRI officials - distinction between a claim for deduction of a loss incurred in an illegal business, as against a claim of a loss qua a legitimate business - Whether allowable business expenditure u/s 37(1)? - Addition u/s 69A as Assessee unable to explain the nature and source of acquisition of silver of which he is held to be the owner - investment in this regard was not found recorded in the books of accounts of the assessee that were produced before the then Assessing Officer - whether the High Court has erred in law in allowing the respondent assessee the loss of confiscation of silver bars by DRI officials as a business loss, relying upon the decision of this Court in the case of CIT Patiala vs. Piara Singh [ 1980 (5) TMI 2 - SUPREME COURT] ? - HELD THAT:- M. R. Shah, J. Judgment: - As in the present case the ownership of the confiscated silver bars of the assessee now cannot be disputed and even the assessee is not disputing the same. Even on that also there are concurrent findings by all the authorities below and including the customs authorities. Whether the assessee can claim the business loss of the value of the silver bar confiscated and whether the decision of this Court in the case of Piara Singh ( [ 1980 (5) TMI 2 - SUPREME COURT] ) would be applicable? - Looking to the business of the assessee namely silver business and was not in the business of smuggling silver, the decision of this Court in the case of Piara Singh (supra) shall not be applicable and therefore the impugned judgment and order passed by the High Court quashing and setting aside the order passed by the Assessing Officer, CIT(A) and the ITAT rejecting the claim of the Assessee to treat the silver bars confiscated by the customs authorities as business loss and consequently value allowing the same as business loss is unsustainable and the same deserves to be quashed and set side. The impugned judgment and order passed by the High Court is hereby quashed and set aside and the order passed by the assessing officer, CIT(A) and the ITAT are hereby restored. M. M. Sundresh, J Judgment: - Disallowance of illegal expenses - Whether a business, as defined under Section 2(13) of the Act, and as dealt with under Section 37 of the Act, would include a deduction when the said expenditure is incurred for any purpose which is an offence or prohibited by law? - HELD THAT:- A little bit of interplay between Section 115BBE and Section 37(1) of the Act might throw more light on both the provisions. If a loss in pursuance to an offence or prohibited business cannot be brought under Section 115BBE of the Act for income assessed under 68, 69 and 69A to 69D of the Act, which deals with unexplained income, expenditure etc., it can never be said that the same would be brought under Section 37(1) of the Act, despite the fact that the objective behind both the provisions are overlapping with some connection. Section 115BBE being a subsequent legislation, the true meaning of Section 37(1) can be understood on that basis. There cannot be a situation where an assessee carrying on an illegal business can claim deduction of expenses or losses incurred in the course of that business, while another assessee carrying on a legitimate one cannot seek deduction for loss incurred on account of either a confiscation or penalty. The interpretation of Section 37 of the Act given by the Court in Dr. T.A. Quereshi [ 2006 (12) TMI 91 - SUPREME COURT ] leads to a situation where the expenditure incurred in manufacturing something illegal may not be allowable as a deduction in view of the Explanation 1, however, if upon seizure, the manufactured goods are confiscated, in that case deduction will be allowable on commercial principles. This classification being artificial not borne out by statute, which mischief is sought to be clarified by the explanation, has no legal basis. Conclusion(s) I. The word any expenditure mentioned in Section 37 of the Act takes in its sweep loss occasioned in the course of business, being incidental to it. II. As a consequence, any loss incurred by way of an expenditure by an assessee for any purpose which is an offence or which is prohibited by law is not deductible in terms of Explanation 1 to Section 37 of the Act. III. Such an expenditure/loss incurred for any purpose which is an offence shall not be deemed to have been incurred for the purpose of business or profession or incidental to it, and hence, no deduction can be made. IV. A penalty or a confiscation is a proceeding in rem, and therefore, a loss in pursuance to the same is not available for deduction regardless of the nature of business, as a penalty or confiscation cannot be said to be incidental to any business. V. The decisions of this Court in Piara Singh (supra) and Dr. T.A. Quereshi (supra) do not lay down correct law in light of the decision of this Court in Haji Aziz (supra) and the insertion of Explanation 1 to Section 37. Thus we are inclined to hold that the appeal of the Revenue deserves to be allowed, though conscious of the fact that Section 115BBE of the Act may not have an application to the case on hand being prospective in nature.

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• 2023 (4) TMI 1056
  Scope of Assessment u/s 153A - competency of AO to consider all the material that is available on record, including that found during the search, and make an assessment of total income - assessment of completed assessments/unabated assessment - Whether in case any incriminating material is found during search then even completed assessments can be assessed or reassessed taking into consideration the incriminating material and other material in possession of the Assessing Officer? - HELD THAT:- We are in complete agreement with the view taken in the case of Kabul Chawla [ 2015 (9) TMI 80 - DELHI HIGH COURT ] and Saumya Construction [ 2016 (7) TMI 911 - GUJARAT HIGH COURT ] taking the view that no addition can be made in respect of completed assessment in absence of any incriminating material. When there shall be a block assessment under Section 153A?- On a plain reading of Section 153A of the Act, 1961, it is evident that once search or requisition is made, a mandate is cast upon the AO to issue notice under Section 153 of the Act to the person, requiring him to furnish the return of income in respect of each assessment year falling within six assessment years immediately preceding the assessment year relevant to the previous year in which such search is conducted or requisition is made and assess or reassess the same. In case during the search no incriminating material is found, in case of completed/unabated assessment, the only remedy available to the Revenue would be to initiate the reassessment proceedings under sections 147/48 of the Act, subject to fulfilment of the conditions mentioned in sections 147/148, as in such a situation, the Revenue cannot be left with no remedy. Therefore, even in case of block assessment under section 153A and in case of unabated/completed assessment and in case no incriminating material is found during the search, the power of the Revenue to have the reassessment under sections 147/148 of the Act has to be saved, otherwise the Revenue would be left without remedy. Conclusion: i) that in case of search under Section 132 or requisition under Section 132A, the AO assumes the jurisdiction for block assessment under section 153A; ii) all pending assessments/reassessments shall stand abated; iii) in case any incriminating material is found/unearthed, even, in case of unabated/completed assessments, the AO would assume the jurisdiction to assess or reassess the total income taking into consideration the incriminating material unearthed during the search and the other material available with the AO including the income declared in the returns; and iv) in case no incriminating material is unearthed during the search, the AO cannot assess or reassess taking into consideration the other material in respect of completed assessments/unabated assessments. Meaning thereby, in respect of completed/unabated assessments, no addition can be made by the AO in absence of any incriminating material found during the course of search under Section 132 or requisition under Section 132A of the Act, 1961. However, the completed/unabated assessments can be re-opened by the AO in exercise of powers under Sections 147/148 of the Act, subject to fulfilment of the conditions as envisaged/mentioned under sections 147/148 of the Act and those powers are saved. Whether in case of completed/unabated assessments, the AO would have jurisdiction to re-open the assessments made under Section 143(1)(a) or 143(3) of the Act, 1961 and to reassess the total income taking notice of undisclosed income even found during the search and seizure operation ? - As once during search undisclosed income is found on unearthing the incriminating material during the search, the AO would assume jurisdiction to assess or reassess the total income even in case of completed/unabated assessments. Therefore, the impugned judgment(s) and order(s) passed by the High Court taking the view that the AO has the power to reassess the return of the assessee not only for the undisclosed income, which was found during the search operation but also with regard to material that was available at the time of original assessment does not require any interference. Under the circumstances, the aforesaid appeals preferred by the assessee M/s Kesarwani Zarda Bhandar, Sahson, Allahabad deserve to be dismissed and are accordingly dismissed.

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• 2023 (4) TMI 1055
  Assessment u/s 153C - Whether no satisfaction was recorded by the AO of the searched person? - HELD THAT:- As it is an admitted position that the satisfaction note was not recorded by the Assessing Officer of the searched person and thus, the Income Tax Appellate Tribunal passed an order quashing the assessment on account of lack of jurisdiction to proceed against the respondent / assessee under Section 153-C of the Act. The said order does not suffer from any infirmities but the Tribunal has rightly quashed the assessment on account of lack of jurisdiction. These are the contentions that have been made by the learned counsel for the respondent / assessee. Therefore, the learned counsel for the respondent / assessee prays for dismissal of this appeal preferred by the appellant / Revenue. For the purpose of Section 158-BD of the Act, a satisfaction note is a sine qua non and must be prepared by the Assessing Officer before he transmits the records to the other Assessing Officer who has jurisdiction over such other person - See Commissioner of Income Tax-III vs. Calcutta Knitwares, Ludhiana [ 2014 (4) TMI 33 - SUPREME COURT] Thus notice issued by the AO u/s 153-C of the IT Act deserves to be quashed and accordingly had proceeded to quash the assessment orders framed by the Assessing Officer under Section 153-C read with Section 143(3) of the Income Tax Act. Accordingly, the additional ground was allowed in all the seven years. Decided in favour of assessee.

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• 2023 (4) TMI 1054
  Addition of secondment cost borne by assessee - cost incurred by the respondent/assessee towards personnel who were seconded from another entity could be allowed as deduction or not? - As submitted AO had rightly disallowed 50% of the cost, since services were rendered not only to GPI but also other group companies - HELD THAT:- As not disputed that the respondent/assessee has utilized the services of the personnel which were deployed by it on secondment for according professional services to GPI as well as other group companies. No dispute raised before us that the income earned by the respondent/assessee on account of professional services rendered by the employees who were deployed on secondment basis, has been offered to tax. Therefore, to our minds, for the appellant/revenue to raise this issue when the arrangement has been in place for a substantially long period of time lent s uncertainty to an established business arrangement. Although we are conscious of the fact that the principles of res judicata do not apply to income tax proceedings, there is another principle which is equally well-entrenched, which is, the principle of consistency. [See Radhasoami Satsang v. Commissioner of Income Tax 1991 (11) TMI 2 - SUPREME COURT ]. No substantial question of law arises for our consideration.

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• 2023 (4) TMI 1053
  Provision for warranty in excess of 2.14 percent of sales - whether Tribunal is right in allowing the provision for warranty even thought the assessee had not made the provision on a scientific basis as laid down by the Apex Court in the case of Rotark Controls India Pvt. Ltd [ 2009 (5) TMI 16 - SUPREME COURT] ? - HELD THAT:- In assessee s own case [ 2009 (1) TMI 926 - KARNATAKA HIGH COURT] this court has answered the question of law in assessee s favour. In the said appeal, Revenue had challenged the Tribunal s order for A.Y. 2003-04 which had held that the warranty estimated at 2.14% was arrived based on assessee s past experience in the Indian International market and the post sales support rendered based on the technical evaluation. In Rotork Case [ 2009 (5) TMI 16 - SUPREME COURT] it is held that a provision is a liability, which can be measured only by using a substantial degree of estimation and it is recognized when an enterprise has a present obligation as a result of past event - it is probable and an outflow of resources will be required to settle the obligation; and a reliable estimate can be made of the amount of obligation. Also carefully perused the tabular column furnished by Shri. Pardiwala extracted above showing the provisions made between A.Y. 2007-08 and 2017-18. He is right in his submission that the total utilization for the corresponding A.Y.s 2008-09 to 2017-18 is 95.5% of the total provision. Therefore, as held in Rotork Case, the estimate made by assessee is reliable and robust. The orders passed by the AO and confirmed by CIT(A) and the Tribunal are unsustainable in law and these appeals by the assessee merit consideration.

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• 2023 (4) TMI 1052
  Unexplained cash - HELD THAT:- CIT(A) has recorded the cash balance as per cash books as on 17.12.2014 in both the companies were more the cash found which is against the cash balance as on 17.12.2014 which stood explained as per the books of accounts. Therefore the addition surely required to be deleted. When the Assessing Officer doubted the cash books of the assessee and its sister concern the addition made by the A.O. is not sustainable in law. revenue could not bring on record any contra statements as observed by the Ld. CIT(A). Decided against revenue. Disallowance made u/s. 14A r.w. Rule 8D - Suo moto disallowance made by assessee - CIT-A held that the disallowance u/s. 14A to the extent of exempt income received by the assessee by way of dividend income- HELD THAT:- It is now settled principle of law the disallowance made u/s. 14A is restricted to the exempt (dividend) income received by the assessee - no hesitation in sustaining the order passed by the Ld. CIT(A), restricting the disallowance to the exempt income received by the assessee during the financial year. Thus the grounds raised by the Revenue is devoid of merits and liable to be dismissed. Losses booked under penny stocks on sale of shares - HELD THAT:- A.O. made the disallowance without documentary proof whereas the assessee proved the genuineness of the transactions and established on online trading platforms and it had no control whatsoever on share prices and thus incurred losses in shares The assessee is a retaining Kappac Pharma shares as stock-in-trade and the closing stock is valued at the market rate. Since the market rate is lower it has incurred a business loss though the shares are not sold. The difference is only because of valuation of shares which is as per the Accounting Standard and the share of Kappac Pharma are still forming part of closing stock of the assessee company as on 31.03.2019. Thus, we have no hesitation in deleting the disallowance made by the A.O. which was correctly deleted by the Ld. CIT(A). Thus the grounds raised by the Revenue is without any basis and the same is liable to be rejected. Appeal filed by the Revenue is hereby dismissed.

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• 2023 (4) TMI 1051
  Application of provisions of specified domestic transfer pricing as laid down in section 92BA determining the price for transfer of power between eligible units and non-eligible units as assessee has not claimed any deduction u/s 80IA - Determination of price of transfer of power between the eligible units and non-eligible units - assessee has adopted the rate at which the Chhattisgarh State Electricity Board is charging for supply of electricity to the industrial consumers - HELD THAT:- Respectfully following the judgment in assessee s own case [ 2013 (10) TMI 5 - CHHATTISGARH HIGH COURT] we are persuaded to accept the contention of the assessee regarding the method adopted by the assessee as upheld by the Hon ble Jurisdictional High Court, for transfer of captive power from eligible units to non-eligible units.. Thus, ground Nos.1 to 6 in the present appeal of the assessee are allowed.

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• 2023 (4) TMI 1050
  Disallowance of payment made towards drawing and designing charges outside India - matching concept of account - DR submitted that the drawing and designing expenses claimed by the assessee was part of the contract agreement and therefore separate claim of the same which is in contradiction to the terms and conditions of the contract agreement, cannot be accepted - HELD THAT:- Whether the drawing and designing services for which the payments are made are related to the agreement with the Mckeown or not, cannot be verified. AR was unable to substantiate this aspect during the hearing before us. We, therefore, are of the view that this issue needs to be restored back to the file of AO to examine the additional evidence produced before us and also to examine the nexus of payments for drawing and designing charges to the foreign entities that the same was made in terms of agreement with Mckeown for the successful performance of the terms of agreement, AO is directed to examine and verify the information and evidences and after satisfaction that the payment of drawing and design charges were paid in terms of agreement with McKeown international Inc, USA dated 01.02.2012 for sell / purchase of coal charging car under the obligations cast upon the assessee, the same shall be allowed in the year of completion of project under matching concept of accounting. Our view on matching concept of account has support of the view taken in the case of CIT Vs Taparia Tools Ltd [ 2003 (1) TMI 83 - BOMBAY HIGH COURT] - We are persuaded to restore this matter back to the file of AO for readjudication - Ground allowed for statistical purposes. Disallowance u/s.14A - Suo moto addition made by assessee rejected - HELD THAT:- Admittedly, in the present case there were certain expenditure incurred by the assessee to earn the exempted income which have suo moto disallowed by the assess, A.O. has rejected the contentions and explanations of the assessee without assigning any specific reasons for his dissatisfaction regarding rejecting the suo moto disallowance by the assessee and the disallowance was made by applying rule 8D. We hold that the disallowance made u/s 14A read with rule 8D of the income tax act is uncalled-for and is liable to be deleted - Decided in favour of assessee.

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• 2023 (4) TMI 1049
  Exemption u/s 11 - Registration u/s 12A denied - HELD THAT:- As relying on Ahmedabad Urban Development Authority and Others case [ 2022 (10) TMI 948 - SUPREME COURT] we are of the considered view that the assessee is entitled for approval/exemption u/s. 10(23C)(vi) and accordingly, we direct the Ld. Revenue Authorities to allow the assessee s claim of exemption U/s. 11 of the IT Act, 1961. Appeal filed by the assessee is allowed.

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• 2023 (4) TMI 1048
  Revision u/s 263 - forward contract receivable shown under short term loans and advances - HELD THAT:- As the assessment order passed u/s 143(3) r.w.s. 92CA is not correct. The issue is such a complicated and it needs detailed verification with regard to the accounting standard followed by the assessee, the law applicable to the subject matter, etc. By considering the decision of Woodward Governor India P. Ltd. [ 2009 (4) TMI 4 - SUPREME COURT] PCIT was of the opinion that the method followed by the assessee was inconsistence, any difference, loss or gain arising on conversion of the liability at the closing rate, should be recognised in P L account for the reporting period. AO, without examining, simply accepted the explanation of the assessee, which is erroneous and prejudicial to the interest of the Revenue. That apart, the ld. PCIT, directed the AO to verify and pass the assessment order afresh in accordance with law after affording an opportunity to the assessee. Thus, we find no reason to interfere with the order passed by the ld. PCIT. Decided against assessee.

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• 2023 (4) TMI 1047
  Gain on sale of land - nature of land sold - Eligibility of exemption u/s 2(14)(iii) - HELD THAT:- In the present case, in the land sold by the assessee, already mango trees and coconut trees are in existence. The assessee has not reported any agricultural income and simply because income was not reported, the agricultural land cannot be held as non-agricultural land. We hold that the land sold by the assessee is an agricultural land and the income is eligible for claiming exemption under section 2(14)(iii) of the Act. Thus, the ground raised by the assessee is allowed.

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• 2023 (4) TMI 1046
  Assessment u/s 153A - additions as based on incriminating material or not? - HELD THAT:- Various incriminating material in the form of loose sheets and electronic data has been unearthed by the search team and the additions are based on incriminating material. AO has extensively referred to these documents while making the impugned additions. These transactions have also been confirmed by the Managing Director of the assessee company in statement recorded u/s 132(4). There is nothing on record to support the legal grounds urged by the assessee. No interference is called for in the impugned order on legal grounds. Unaccounted Receipts from GHPL - Amount so received by the assessee from GHPL represent advance for development of project - part of the amount has been received in cheque whereas part of the payment has been received in cash. If the project had not materialized and the advances have been repaid in cash, the same would not constitute the income of the assessee. In such a case, the assessee would have refunded the cheque amounts also. AO is directed to verify the same. If the cheque amount has also been refunded and no income has accrued to the assessee from this transaction then this addition would not be sustainable in the hands of the assessee. Grounds stand allowed for statistical purposes. Unexplained Cash Receipts out of Jewel Loans - As assessee has received certain loans by pledging the jewellery of its various employees. The assessee could not explain the difference of receipts and payments and accordingly, additions for differential amount has been made in all the years. Before us also, the assessee is unable to substantiate / explain the difference. Therefore, the impugned additions stand confirmed in all the years. Unaccounted cash receipts - certain payment is stated to be made directly by STN to landowners which are not found recorded in the books of accounts. The assessee has submitted that these transactions have been recorded in the excel sheets to keep track of the commission payment. However, the assessee could not substantiate the same during assessment proceedings. Considering the principal of natural justice, we deem it fit to provide another opportunity to the assessee to substantiate its case. Unexplained Cash Receipts - The assessee has also kept record of the payments made by purchaser directly. The same has been added as the income of the assessee since the assessee could not explain the source of such receipts. Considering the facts of the case, we deem it fit to provide another opportunity to the assessee to substantiate the fact that the impugned receipts do not constitute assessee s income. Addition of unaccounted receipts from sale of land for AY 2014-15 - assessee failed to produce the sale deeds and stated that the said transaction was normal business transaction and admitted in the return of income. The sale deeds were stated to be executed by the assessee as power holders only. However, in the absence of any documentary evidences forthcoming from the assessee, the same was added to the income of the assessee. The position remained the same during appellate proceedings which resulted into confirmation of this addition. Ld. AR has reiterated that the said transaction has already been accounted for in the books of accounts and therefore, the same could not be added separately - we restore this issue back to the file of Ld. AO for de-novo adjudication. All the appeals stand partly allowed for statistical purposes.

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• 2023 (4) TMI 1045
  TDS u/s 194IA - default u/s 201(1) and 201(1A) - assessee alongwith 3 other persons purchased an immovable property for a consideration - HELD THAT:- The assessee paid 1/4th share of sale consideration i.e. Rs. 31.50 lacs. We notice that the provisions of Section 194IA are applicable where consideration for transfer of an immovable property is more than Rs.50 lacs. Since in the instant case, the consideration paid by the assessee is Rs.31.50 lacs, therefore, the provisions of Section 194IA of the Act cannot be invoked. Thus, we fail to find any merit in the findings of the ld CIT(A) and the same is set aside and the demand raised by the AO u/s 201(1) for non-deduction of Tax and interest levied u/s 201(1A) is deleted. The effective issued in Ground No 1 as raised by the assessee is allowed.

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• 2023 (4) TMI 1044
  Disallowance of interest u/s 40A(2)(b) - HELD THAT:- Assessment order reveals that the assessee had furnished explanation for the same pointing out that the advance to Shailesh Patel was in the course of selling and purchase of goods, and it was not a commercial advance, whereas in the case of Brijesh Chauhan, the assessee has explained that the unsecured loans had been taken without any security, and hence interest at the rate of 18% was charged on the same. AO, has simply rejected both these contentions and explanation of the assessee by stating that they were not acceptable, and in case of Brijesh Chauhan, by merely mentioning that he falls in the category of person specified under section 40A(2)(b) of the Act and in other cases the assessee had paid interest at the rate of 12%. There is no further reasoning by the AO for rejecting the explanation of the assessee. The order of the ld.CIT(A) is nothing but cryptic who merely mentioned that the AO had given full justification for the disallowance and his order is logical and specific. Interest paid to partners disallowed - Addition made by the AO on the withdrawals made by one of the partners of the firm noting that as per the partnership deed, 12% interest was to be charged on the withdrawals, but the assessee had not charged the same - AO simply notes that the assessee furnished reply, but it was not satisfactory. What exactly was the reply, finds no mention in his assessment order. The AO straight-away arrives at a finding and conclusion that the reply was not satisfactory, without even giving any reasons and basis for rejecting the same. The ld.CIT(A) has nothing to say in the matter except that the assessment order is justified, and proper show cause notice has been given to the assessee. Addition of interest paid on fund advanced - The assessee had explained that the advances related to business transactions with Ashok Sales Corporation, which were rejected by the AO outrightly by stating that no prudent businessman would give advance without interest. The AO has not even cared to consider the assessee s statement of facts that the advance was in relation to business transactions carried out by the assessee and was purely commercial advance. On the contrary, the AO has gone to hold that no business transaction has been shown by the assessee, and it was only financial transaction. The ld.CIT(A) has again upheld order of the AO finding it to be totally justified. The assessee had given detailed explanation to the ld.CIT(A) in appellate proceedings. Thus both the authorities below having passed orders in a very casual manner, totally ignoring the pleadings of the assessee and in complete disregard to the principles of natural justice. The orders are highly unjustified and are not sustainable in law - thus set aside the order passed by the ld.CIT(A) being a cryptic and non-speaking order. Accordingly, the grounds raised by the assessee are allowed.

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• 2023 (4) TMI 1043
  Rectification of mistake u/s 154 - AO enhanced interest chargeable u/s 234A - HELD THAT:- It is noted from the submission of assessee wherein he referred in the case of Priti Pithawala [ 2003 (3) TMI 743 - ITAT MUMBAI] wherein it is observed that a belated return cannot be submitted after the expiry of one year from the end of the assessment year. If any assessment is made for the first time u/s 147 then the assessee cannot be made to pay interest for the period during which it was not possible on the part of the assessee to file return i.e. after one year from the end of the assessment year till issuance of notice u/s 148 of the Act. Hence,order passed by the AO u/s 154 is not in accordance with law and we do not concur with the findings of the ld. CIT(A). Thus the appeal of the assessee is allowed.

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• 2023 (4) TMI 1042
  Long term capital gain - deduction claimed on account of indexed cost of acquisition - assessee is a non-resident individual - in which financial year the assessee can be said to have acquired the property for the purpose of granting indexation benefit of cost of acquisition? - HELD THAT:- As in the allotment letter not only a specifically identifiable residential flat was allotted to the assessee but the assessee had made payments in accordance with the terms and conditions of the allotment letter. In Circular No. 471, dated 15.10.1996, the Central Board of Direct Taxes (CBDT) has clarified that in respect of flats allotted under the self-financing scheme of the Delhi Development Authority (DDA), the date of issuance of allotment letter would be considered to be the date of acquisition of the property. This is so because, the allotment is final unless it is cancelled or the allottee withdraws from the scheme. In case of assessee before us, as well, the allotment letter issued by the developer/builder is final, as, it is in respect of a specifically identifiable property and has ultimately culminated in execution of apartment buyer s agreement in financial year 2010-11 - thus the date of acquisition of the residential flat has to be reckoned from the date of the allotment letter. Thus benefit of indexed cost of acquisition should be available to the assessee based on the payments made beginning from financial year 2005-06 and not from the execution of the apartment buyers agreement, as directed by learned DRP. We direct the Assessing Officer to factually verify the computation of indexed cost of acquisition made by the assessee, basis payments made from financial year 2005-06, and allow the deduction. Assessee appeal allowed.

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• 2023 (4) TMI 1041
  Upward transfer pricing adjustment - TPO did not accept the approach adopted by the Appellant in respect of payment towards Distribution Rights, Marketing Consultancy Fee for Marketing Consultancy Support Services, and payment towards IT Consulting Support Services - According to the TPO, no reply was received from the Appellant, thus he determined the ALP of the aforesaid three transactions as Nil holding that the Appellant has failed to satisfy the need/benefit of the intra-group services, and rendition thereof - TPO has rejected the method adopted by the Appellant without assigning any reason and without granting sufficient opportunity to the Appellant - HELD THAT:- We find merit in the contentions advanced by Appellant that neither the Assessing Officer nor the DRP has provided any reasoning for rejecting the TNMM which has been followed by the Appellant consistently and has been accepted for earlier years. No reasoning is given by the TPO and/or DRP while rejecting TNMM method and concluding that CUP Method is the most appropriate method. While rejecting objection raised by the Appellant, the DRP had concluded that the Appellant has failed to establish, both, the rendition of all the intra-group services the as well as the benefit derived by the Appellant from the same. Thus, there is disconnect in the reason given by the TPO for determining ALP of Intra-Group Services at Nil and the reasons given by the DRP for rejecting the objections. TPO opposed admission of the additional evidence filed by the Appellant before DRP - While rejecting objection raised by the Appellant, the DRP had concluded that the Appellant has failed to establish, both, the rendition of all the intra-group services the as well as the benefit derived by the Appellant from the same. Thus, there is disconnect in the reason given by the TPO for determining ALP of Intra-Group Services at Nil and the reasons given by the DRP for rejecting the objections As regards, the payment towards distribution rights, the Appellant has place on record the Agreement for Grant of Distribution Rights. The aforesaid agreement entitled the Appellant to receive commission from AEs in respect direct sales made by such AEs in India. Appellant had also placed on record details of commission income earned in respect of products sold by third parties in India which has been offered to tax by the Appellant. The Commission received by the Appellant has also been accepted to be at arm s length by the TPO. These aspects have not been considered by the TPO/DRP. DRP has also observed that the Appellant had failed to provide the details of cost incurred in relation to the service and allocation of the same to the Appellant. DRP has failed to consider the certificate from statutory auditors submitted along with the Note on IT Consulting Support Services as well as the summary of actual cost incurred filed along with the Note on Marketing Consultancy and Support Services. We hold that the DRP has failed to consider and/or appreciate the material on record. In the facts and circumstances of the present case, we deem it appropriate and in the interest of justice to remand the issue back to Assessing Officer/TPO for determination of ALP afresh. Ground No. 1 raised by the Appellant is allowed for statistical purposes

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• 2023 (4) TMI 1040
  Taxability of receipts from offshore supplies and onshore services - Apportionment of 60% receipt from offshore supply contract towards supply of equipments and balance amount towards FTS - attribution of profit as global accounts - DRP has directed the Assessing Officer to apportion 50% of the said amount to the assessee and which shall be attributed to the PE of the assessee - HELD THAT:- DRP has completely misconceived the facts, accordingly, decided the objections of the assessee with improper application of mind to the facts and materials on record. One more factor which needs deliberation is, while disposing of the objections of the assessee, learned DRP had specifically directed the AO to consider the global gross profit figure and attribute 25% of such profit to the PE in India. Though, the global accounts of the assessee are very much available with the Assessing Officer, however, while finalizing the assessment in pursuance to the directions of learned DRP, the Assessing Officer has not consider the global profit and straightway attributed 25% of Rs.54.22 crores to the PE. Thus due to factual inconsistencies and non-consideration of facts on record by learned DRP, the impugned assessment order deserves to be set aside. Restore the matter back to the Assessing Officer for deciding the issues relating to taxability of receipts from offshore supplies and onshore services afresh by properly considering the facts brought on record. We further direct the Assessing Officer to decide the issue of attribution of profit to PE by taking note of the profit rate as per the global accounts, keeping in view the ratio laid down in the decisions referred to earlier in the order - Appeal is allowed for statistical purposes.

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• 2023 (4) TMI 1039
  TP adjustment on account of working capital - assessee had sought adjustment for working capital to account for difference in the working capital position of the assessee and the comparable companies - HELD THAT:- We find that the Co-ordinate Bench of Tribunal in the case of Sony Mobile Communication International SB [ 2016 (5) TMI 198 - ITAT DELHI] has held that working capital adjustment cannot be denied to the assessee if it is a service industry. It has further observed that in order to neutralize the differences on account of carrying high or low inventory, trade payables and trade receivables, as the case may be, it becomes eminent to allow working capital adjustment so as to bring the case of the assessee at par with other functionally comparable entities. It has further, by relying on the decision of.Navisite India Pvt. Ltd [ 2013 (5) TMI 844 - ITAT DELHI] has held that the component of working capital deployed should be considered on annual basis with the average of opening and closing figures. As Revenue has not pointed to any distinguishing feature in the facts of the case in the year under consideration and that of the earlier year. Revenue has also not placed any material on record to demonstrate that the decision relied upon by the CIT(A) has been stayed/set aside/overruled by higher judicial forum. In such a situation, we find no reason to interfere with the order of CIT(A) and thus the ground of Revenue is dismissed. Exclusion of comparables - principle of res judicata - TPO study has selected certain comparable companies - TPO had rejected some of the comparables selected by the assessee and had included fresh comparables for the purpose of determination of Arm s Length Price (ALP) - HELD THAT:- We find that CIT(A) after considering the material on record has decided the issue in favour of the assessee the comparables which were rejected in all the 4 subsequent years was not be adopted for arriving at Arm s Length Margin in the current year. Further, as pointed out above out of the 4 comparables adopted by the appellant in the TP study, the TPO had objected to only 3 of the comparables and regarding Tata Elxsi Ltd. the TPO had mentioned that it was a good comparable but had not adopted the same in the final list of comparables. As such, the TPO is directed to adopt the named comparables for the purpose of arriving at Arm s Length Margin of the segment. Principle of res judicata is not applicable to Income-tax cases, we have no hesitation in accepting the aforesaid principle but at the same time, various courts have held that even if the principle of resjudicata does not apply to tax matter but in the absence of any material change justifying the revenue to take a different view of the matter, the position of fact accepted by Revenue over a period of time should not be allowed to be reopened unless revenue is able to establish compelling reasons for a departure from the settled position. Before us, no distinguishing feature in the facts of the case in the year under consideration and that of the earlier year has been pointed out by Revenue. In such a situation, we find no reason to interfere with the order of CIT(A) and thus the ground of Revenue is dismissed. TDS u/s 194C - non-deduction of TDS on the printing material consumed by the assessee - HELD THAT:- Hon ble Delhi High Court in the case of Dabur India Ltd [ 2005 (8) TMI 65 - DELHI HIGH COURT] held printing of the labels on the corrugated boxes did not require any special skill or involve any confidence or secrecy and therefore, the Tribunal was justified in holding that the predominant object underlying the contract was one for sale of goods which took the contract out of the purview of Section 194C - ground of Revenue is dismissed.

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• Benami Property

• 2023 (4) TMI 1038
  Prohibition of the right to recover property held benami - fiduciary relationship - real owner - As pleaded plaintiff had accepted before the survey Officer that although the land was purchased in her name but the same was purchased by her husband Rameshwar and had accordingly requested the authorities to record the name of her son i.e. Chandrashekhar (the deceased husband of the petitioner no.1 and the father of the petitioner nos.2 to 6) - trial Court by the impugned order had rejected the said pleadings on the ground that they have been taken after the commencement of the trial and they are based on the pre-existing facts - scope of sub section (3) of section 4 of the Prohibition of Benami Property Transactions Act - HELD THAT:- As the proposed amendment was that the plaintiff had made statement before the survey authorities that although the property was purchased in her name but in fact it was purchased by her husband Rameshwar Chawda In view of section 4 of the Act, it is clear that such defence is not permissible. The remaining proposed amendment is based upon the so called statement made by the plaintiff that she is not the owner but her husband is the owner although the property was purchased in her name. Any pleading which is barred by any law cannot be allowed to be incorporated by amendment. Accordingly, this Court is of the considered opinion that the trial Court did not commit any mistake by rejecting the proposed amendment. As no jurisdictional error was committed by the trial Court, accordingly, the petition fails and is hereby dismissed although on different grounds.

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• Customs

• 2023 (4) TMI 1037
  Seeking direction to defreeze / unblock the petitioner s savings account (first holder of account was petitioner s wife) - Section 142(1)(d) of the Customs Act, 1962 - recovery of dues - HELD THAT:- In the present case, the petitioner is the first holder of the bank account and his wife has been added as a joint holder. Although, the petitioner s wife may be able to operate the bank account, there is no material to substantiate that the funds in the said bank account belong to her. Considering that there is no dispute that proceeds of the petitioner s life insurance policy amounting to Rs.10,73,343.51 were deposited in the said bank account, this Court considers it apposite to direct the respondent to unblock the account to the said extent - The UCO Bank shall, on the strength of the present order, make a payment of the said amount of Rs.10,73,343.51 to the petitioner. Insofar as the petitioner s prayer for unblocking the said bank account is concerned, this Court considers it apposite to permit the petitioner to make a representation enclosing therewith evidence to the effect that although the petitioner s wife was included as a joint holder; the funds in the said bank account belong to the petitioner and the transactions in the said account are reflected in his income tax returns and not that of his wife. Petition disposed off.

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• 2023 (4) TMI 1036
  Seeking release of seized imported goods - petitioner claims the goods to be imported from Afghanistan whereas respondents claims that the examination of the goods would show that the goods are marked as Made in Pakistan - HELD THAT:- Since various disputed facts would arise for adjudication, we are not inclined to interfere in writ jurisdiction. The Petitioner would have opportunity to reply to the show cause notice and put forth its case as sought to be urged before us - Learned counsel for the Petitioner states that at least some part of the goods be released and, for that purpose, the Petitioner is ready to deposit 7.5% of the value of the goods. We leave it open for the concerned authority to consider this request of the Petitioner as per law, which the Petitioner is free to make. As regards, the expeditious disposal of the proceedings pursuant to the show cause notice is concerned, we accede to the prayer of the Petitioner for early disposal - Petition disposed off.

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• 2023 (4) TMI 1035
  Seeking grant of bail - Smuggling - 8 gold bars - burden to prove foreign origin Gold Bar - HELD THAT:- The applicant is first-time offender of the Offence which is triable by the Magistrate and the maximum sentence is up to 7 years. The offence is compoundable also. He is in jail since 03.09.2022. The trial has not begun so far. Only on the basis of marks in the gold bars, the expert gave an opinion that they are foreign-origin gold bars. However, it is a matter of evidence. No further custodial interrogation is required as a complaint has been filed. This application is allowed and the applicant is directed to be released on bail upon his furnishing a personal bond in the sum of Rs.5,00,000/- (Rupees Five Lakhs Only) with one solvent surety in the like amount to the satisfaction of the trial Court for his regular appearance before the trial Court during the trial with a condition that he shall remain present before the Court concerned during the trial and shall also abide by the conditions imposed.

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• 2023 (4) TMI 1034
  Fraudulent availment of benefit of Duty Drawback - export of sub-standard readymade garments (RMG) at highly overvalued price - basis to arrive at the conclusion of overvaluation exists or not - relied upon documents not provided to appellant - opportunity of cross-examination also not provided - violation of principles of natural justice - value determined only on visual examination - levy of penalty u/s 114 and 114AA of the Customs Act, 1962. HELD THAT:- In fact from the Order-in-Original it appears that the appellant had not appeared during the personal hearing on 23.05.2018 and on 19.06.2018 also requested for next date of hearing, whereby he was granted another opportunity of personal hearing on 18.07.2018 but even on that date none appeared on behalf of the appellant. It also appears from the record that the appellant had not submitted any reply to the show cause notice. However, learned Authorised Representative and also the Counsel for the appellant agreed that the matter could be remanded back to the adjudicating authority for denovo proceedings, so that the appellant gets an opportunity to cross-examine Sh. Rohit Gupta, and also submit the documents as called for by the Department. The present appeal is allowed by way of remand to the adjudicating authority to decide the issue afresh by granting an opportunity to both sides to submit the documents and cross-examine Mr. Rohit Gupta.

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• 2023 (4) TMI 1033
  Classification of imported goods - Papad (Topioca) (imported from China) - to be classified under CTH 19030000 or under the heading 19059040? - demand of differential duty with interest - extended period of limitation - penalties - HELD THAT:- The settled principle for considering the issue of classification as laid down in catena of judgments is principle of common parlance, how the product is known in the commercial world. The term Tapioca in Hindi is commonly known as Sabudana and is available in the market in granulated form by the name of Sabudana. If a common man asks for Sabudana (Tapioca) he will not be given Papad (Tapioca) or vice-a-versa. So the basic test to determine the classification is how the product is known in the market. After referring to series of judgements, i.e Ramavatar Budhaiprasad Vs. Asstt. Sales Tax Officer [ 1961 (3) TMI 55 - SUPREME COURT ] and Commissioner of Sales Tax, MP, Indore Vs. M/s Jaswant Singh Charan Singh [ 1967 (2) TMI 65 - SUPREME COURT] , on the principle that while interpreting items in the taxing statues resort should be not to the scientific or technical meaning of such terms but to their popular meaning, attached to them in their commercial sense, the Apex Court in DUNLOP INDIA LTD. MADRAS RUBBER FACTORY LTD. VERSUS UNION OF INDIA AND OTHERS [ 1975 (10) TMI 94 - SUPREME COURT ] has observed that It is clear that meanings given to articles in a fiscal statute must be as people in trade and commerce, conversant with the subject, generally treat and understand them in the usual course. But once an article is classified and put under a distinct entry, the basis of the classification is not open to question. Technical and scientific tests offer guidance only within limits. Once the articles are in circulation and come to be described and known in common parlance, we then see no difficulty for statutory classification under a particular entry. Similarly, the Apex Court in COLLECTOR OF CENTRAL EXCISE, KANPUR VERSUS KRISHNA CARBON PAPER CO. [ 1988 (9) TMI 50 - SUPREME COURT ] emphasized that when no definition is provided in the statute the correct guide is the trade meaning and when trade meaning is not available ordinary meaning is to be preferred over the scientific or technical meaning unless contrary intention is clearly expressed by the Legislature. The authorised representative for the revenue has relied on Rule 3(a) of General Rules of Interpretation to say that heading which provides most specific description shall be preferred to heading providing a more general description. There is no doubt about the provisions of Rule 3(a), however the applicability of the same needs to be examined in the facts of the present case. Section 2 of the Central Excise Tariff Act,1985 provides the rates at which duties of Excise shall be levied under the Central Excise Act 1944 are specified in the First Schedule and the Second Schedule - recourse can be taken to Rule 3(c), i.e. when goods cannot be classified by reference to (a) or (b), they shall be classified under the heading which occurs last in numerical order among those which equally merit consideration. In the present case, in terms of Rule 3(a) the goods in question cannot be classified under CTH 1903 and Rule 3(b) has no application and so on the principle of Rule 3(c), the term Papad under CTH 19059040 occurs last in numerical order and it equally merits consideration therein. It is a settle principal of law that classification of goods is a matter relating to chargeability and the burden to prove is squarely on the revenue. If the department intends to classify the goods under a particular heading or sub-heading different from that claimed by the assessee, the department is required to adduce proper evidence and thereby discharge the burden of proof. In the present case the said burden has not been discharge at all by the revenue. Extended period of limitation - penalties - HELD THAT:- Since the issue of classification of the product Papad (Tapioca) is decided in favour of the assessee, the question of extended period of limitation or of penalties do not survive. Appeal allowed.

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• 2023 (4) TMI 1032
  Revocation of Customs Broker License - levy of penalty - import of old and used medical equipments i.e. ventilators - prohibited goods as per Regulation 12(6) of Hazardous and Other Wastes (Management and Transboundary Movement) Rules, 2016, or not - wrongful information given to client/importer or not - HELD THAT:- The revocation of license has been done on the basis of alleged violation of Regulation 10 (d) (e) of CBLR, 2018, wherein the customs brokers were required to adhere to the provisions of Customs Act, allied acts and Rule Regulations made thereunder and to advice their client accordingly and to bring out any such non-compliance to the notice of the Deputy or Assistant Commissioner of Customs and that the customs broker should exercise due diligence to ascertain to correct information on his part to the clients. No case is made for alleged violation of Regulation 10 (d) (e) ibid, in as much as, no evidence to prove that he has given a wrongful information to the clients/importers; at the most, there can be an alleged violation of Regulation 10 (d) as much as at the time of import of impugned goods, there is a prohibition under law for such imports. However, for the same reason, proceedings have been initiated against the importers and have been dropped - the omissions and commissions of the Customs Broker have been mitigated; in this background, continuation of proceedings against the customs brokers is unwarranted as the goods which were prohibited at the time of import were permitted to be cleared at a later stage due to an emergency situation prevailing due to Covid-19 pandemic. The commissions or omissions, if any, by the appellant, have not resulted in any contraventions of the Law or evasion of Duty, as the very same authorities, who have placed the prohibition on the impugned goods, have permitted the same at a later date. As such, it is found that harsh an action, such as revocation of license is neither justified nor substantiated. The punitive action to the extent of revocation of license is very harsh and certainly on higher side. Any punishment should be commensurate with omission or commission to meet the ends of justice. The revocation needs to be set aside and a suitable penalty can be imposed on them so that they will be careful in future. The impugned order is modified by setting aside the revocation of customs broker license and by reducing the penalty imposed to Rs. 10,000/- - Appeal allowed in part.

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• 2023 (4) TMI 1031
  Interest on delayed refund - the order of Ld. Commissioner (Appeals) has not been implemented at all till date and parties have not been refunded the principle amount of Rs. 1,00,423/- - HELD THAT:- There are no merit in the appeal filed by the department and hence the same is rejected by upholding the impugned order. The refund sanctioning authority is further directed to finalize the refund claim of the assessee as directed by the Ld. Commissioner (Appeals) within a period of two months from the date of receipt of certified copy of this order.

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• Corporate Laws

• 2023 (4) TMI 1030
  Seeking grant of Regular Bail - Money Laundering - creation of fictitious proprietorship firm in the name of Kewal International by using the documents of the applicant - twin conditions and bar under Section 212(6) of Companies Act - HELD THAT:- As per Section 212(7), the limitation or bar to grant of bail under Section 212(6) is in addition to the limitations under the Code of Criminal Procedure, 1973 or any other law for grant of bail. The aforesaid principles were held to be mandatory in nature by the Hon ble Apex Court in SERIOUS FRAUD INVESTIGATION OFFICE VERSUS NITTIN JOHARI ANOTHER [ 2019 (9) TMI 570 - SUPREME COURT ] . The issue at hand was also considered by a Co-ordinate Bench of this Court in Rana Kapoor v. Directorate of Enforcement [ 2022 (11) TMI 1232 - DELHI HIGH COURT ], where under similar circumstances, the accused therein was never arrested during the period of investigation and at a later stage, after the concerned Court took cognizance, he was taken into custody in a case under Prevention of Money Laundering Act, 2002. As held by the Hon ble Apex Court in Satender Kumar Antil [ 2022 (8) TMI 152 - SUPREME COURT ], when an accused, who has not been arrested during investigation, and investigating agency does not require his/her custody, and the accused appears pursuant to summoning order before Trial Court, there is no need to file any bail application since there is no need to arrest the said accused. It has also been clarified by the Hon ble Apex Court that if the Court taking cognizance is of the opinion that remand of accused is necessary, an opportunity to be heard has to be given to the accused. It is an admitted position, that even at the stage when the applicant appeared before the learned Trial Court upon being summoned, the Investigating Officer never sought his remand to judicial custody. It is not the case of prosecution that applicant did not join or did not co-operate in the investigation. The Director of accused company Komal Chadha has already been granted bail by this Court, and present applicant is allegedly an employee of accused company. There is no allegation that applicant can either intimidate any witnesses or tamper with the evidence - A perusal of complaint also shows that accused no. 2 i.e. Suman Chadha had created several entities in the name of his employees, including the present applicant. In fact, the driver of the said accused is named as proprietor in one such entity namely S.K. Enterprises. Considering the fact that petitioner is in judicial custody since 25.05.2022, this Court is inclined to grant bail to accused/applicant on furnishing a personal bond in the sum of Rs.50,000/- with one surety of like amount to the satisfaction of Trial Court/ Successor Court/ Link M.M/ Duty M.M concerned on the terms and conditions imposed - bail application disposed off.

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• 2023 (4) TMI 1029
  Seeking restoration of (struck off) name of company in the Register of Companies - section 252 of Companies Act - HELD THAT:- So far as striking off name of the company in question under the provisions of Section 248 of the Companies Act is concerned the appellant has not raised any dispute that procedure under the said provisions was not followed. In the written submission of the ROC also detail has been mentioned regarding following the procedure prescribed under Section 248 of the Companies Act which has not been disputed by the appellant otherwise the appellant would have preferred the appeal under Section 252(1) of the Companies Act. The appellant has filed application/appeal under Section 252(3) of the Companies Act which empowers the NCLT to pass an order of restoration of a striking off company if the NCLT is satisfied on the basis of plausible material that struck off company was carrying on business or in operation or even otherwise it was just that the company may be restored. Considering the fact that the company was having two directors with 50% shareholding which has not been disputed and one of the director who is Respondent No.3 has come forward with a stand that the company in question was not either doing business or operating, in such situation there is no reason in passing an order for restoring the appellant company. Another reason for not interfering with the impugned order is that out of two directors one director has taken a stand that the company is completely inoperative doing no business whereas the appellant who is also a director is taking the plea on the strength of balance sheet prepared by the CA that too without approval of the Board of Directors that company was in operation. If for the time being any direction is issued for restoration, certainly it will amount to generating further dispute/litigation. The appellant was not in a position to satisfy the NCLT that the company in question was doing business or was operational during the period for which the name of the company was struck off - Appeal dismissed.

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• Insolvency & Bankruptcy

• 2023 (4) TMI 1028
  Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - notice under Section 8 of IBC - pre-existing disputes or not - HELD THAT:- The fact which is not disputed that there was a meeting between the parties on 12.11.2019 and the meeting itself indicated that there was some issues to be sorted out and on the same date the Appellant shot the email on 12th November, 2019 sending Section 8 Notice and the Corporate Debtor has also initiated suit by filing the same on 14th November, 2019. The filing of the suit can not be relevant to find out pre-existing dispute because Section 8 Notice was issued on 12th November, 2019 but the attending facts and circumstances including meeting between the parties to settle the issue and the email dated 23.10.2019 sent by the Appellant itself indicate that there was issue regarding the rates and the corporate debtor was complaining about the rates as well as there was pre-existing dispute and the Adjudicating Authority did not commit any error in rejecting the Application. There is no ground to interfere with the Impugned Order - the Appeal is dismissed.

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• 2023 (4) TMI 1027
  Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial Creditors - existence of default - time limitation to ascertain the existence of default - whether Appellant has made out any cause to grant one more opportunity to file its reply before the Adjudicating Authority? - HELD THAT:- The Corporate Debtor does not deny that it had appeared with his counsel on 02.12.2022 before the Adjudicating Authority and prayed for time for filing reply. Appellant has also stated in Additional Affidavit dated 06.04.2023 filed in this Tribunal that counsel was given instructions to file reply, however, same could not be prepared and filed on 03.01.2023. This Tribunal in Ashok Tiwari s Case [[ 2022 (7) TMI 1371 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, NEW DELHI.] ] has laid down that the Adjudicating Authority is fully empowered to proceed and pass appropriate order if it is satisfied that the Corporate Debtor is delaying the proceeding. The loan was taken by the Corporate Debtor from DHFL against which insolvency resolution process was initiated and under the Resolution Plan the DHFL was taken over by the Piramal Capital Housing Finance Limited. In CIRP proceedings of DHFL, an I.A. was filed by the Corporate Debtor bringing subsequent facts after disbursement of Rs.10 Crores by DHFL. The Corporate Debtor s case and grievances regarding non-disbursement of balance amount and its adverse effect on the Corporate Debtor was highlighted in the application filed in the CIRP process of DHFL, which application is also part of the record in the present case. Admittedly, order passed by the Adjudicating Authority is exparte and Appellant could not get an opportunity to place its say and the facts and subsequent event after disbursement of loan of Rs.10 Crores could not be brought before the Adjudicating Authority for consideration. The ends of justice be served in allowing three days time to the Corporate Debtor to file reply before the Adjudicating Authority subject to payment of cost of Rs.1,00,000/- to the Financial Creditor - application disposed off.

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• PMLA

• 2023 (4) TMI 1026
  Sanction or a consent? - impugned order passed by the State dated 25.09.2019 under Section 6 of the Delhi Special Police Establishment Act, 1946 - Applicability of principles of res judicata - judgement in rem or personam? - HELD THAT:- The impugned order dated 25.09.2019 passed by the State was nothing but a consent given by the State under Section 6 of the DSPE Act and it is not a sanction as required under either Sections 19 or 17 of the Prevention of Corruption Act. Though in the impugned order it was mentioned as sanction was accorded but literally it is only a consent and it is not a sanction and it is only a simple executive order by giving consent to the CBI for investigating the matter as against the petitioner. It is also revealed by the opinion given by the Advocate General that the Advocate General has categorically stated that no sanction is required under Section 17(A) or 19 of the P.C. Act. It is also brought to the notice of the Court by the learned Senior counsel for the petitioner that the Co-ordinate Bench while passing the order in the Writ Petition, though it was stated that it was an administrative order in its order, but it is not an administrative order but it is only a simple executive order and it need not require any detailed order for application of mind and even otherwise, the authority i.e., Under Secretary has considered the letter sent by the Directorate of Enforcement Department and passed the order - Such being the case, the contention of the learned counsel for the petitioner cannot be acceptable that there is no application of mind while passing the impugned order. Therefore, on that ground, the impugned order cannot be quashed. Whether the order passed by the Co-ordinate Bench is the Judgment in Rem which is binding on all the persons including this Court and principles of res judicata applies? - HELD THAT:- The Co-ordinate Bench dealt with the matter in detail by raising three points for consideration and finally dismissed the petition filed by the one SHASHI KUMAR SHIVANNA VERSUS THE GOVERNMENT OF KARNATAKA AND ORS. [ 2020 (7) TMI 827 - KARNATAKA HIGH COURT] - The Co-ordinate Bench finally has taken the view that there is no requirement of application of mind while granting the consent. Ultimately, the petition was dismissed. The same was challenged before the Division Bench in W.A. 444/2020 which came to be dismissed on 05.02.2021. Admittedly, the said order of the Co-ordinate Bench attained finality and no appeal was filed by the said Shashi Kumar Shivanna. Of course, the present petitioner was not a party to the said proceedings in [ 2020 (7) TMI 827 - KARNATAKA HIGH COURT] and the Co-ordinate Bench also stated that the said Shashi Kumar Shivanna has no locus standi to challenge the order. However, the Co-ordinate Bench while dealing with the matter where the said Shashi Kumar Shivanna challenged the very order dated 25.09.2019 for referring the matter to the CBI, but the Co-ordinate Bench has categorically held and given finding on the reference to the CBI in the impugned order where the application of mind is not required while giving consent under Section 6 of the DSPE Act. Therefore, it cannot be said that the finding of the Co-ordinate Bench is only on the petition filed by the Shashi Kumar Shivanna, but it was on the issue of reference of the case to the CBI for investigation against this petitioner for the provisions of P.C. Act. The judgment of the Co-ordinate Bench was Judgment In Rem , it was binding on this petitioner and also other persons as the issue of reference under the impugned order has been upheld by the Co-ordinate Bench. Therefore, the contention of the petitioner counsel cannot be acceptable that the judgment should be between the same parties, but it was an identical dispute on the same subject matter which was dealt with by the Co-ordinate Bench. Therefore, the doctrine of the res judicata applies to this case and also the order of the Co-ordinate Bench is binding on this petitioner. Therefore, the judgments relied by the counsel for the petitioner is not applicable to the case on hand. The impugned order passed by the State under Section 6 of the DSPE Act is only a formal consent and it is not a sanction which requires a detailed order and as stated by the Hon ble Supreme Court, there is no prescribed form to accord consent under Section 6 of the DSPE Act and the Co-ordinate Bench has already decided the issue of referring the case to CBI which was upheld by the Division Bench. Such being the case, there is no reason for this Court to distinguish or take divergent opinion in respect of the order passed by the Co-ordinate Bench - Petition dismissed.

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• Service Tax

• 2023 (4) TMI 1025
  Sabka Vishwas Legacy Dispute Resolution Scheme (SVDLR Scheme) - extension of time limit prescribed under the SVLDR Scheme - HELD THAT:- The High Court has, relying upon the decision of this Court, in the case of M/S. YASHI CONSTRUCTIONS VERSUS UNION OF INDIA ORS. [ 2022 (3) TMI 110 - SC ORDER] has rightly dismissed the writ petitions. The Special Leave Petitions stand dismissed.

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• 2023 (4) TMI 1024
  Exemption from Service tax - petitioner claims that as a Cantonment Board and being a Municipality they are exempted from paying Service Tax - writ petitions disposed off on the ground that at the stage of Show cause notice, writ petitions cannot be entertained - HELD THAT:- Admittedly, the Cuddalore Municipality case rendered by a learned Single Judge of this Court, has not been considered by the respondents in the impugned order and therefore, necessarily the impugned order has to be quashed and the matter will have to be remanded back to the respondent for fresh consideration on merits and in accordance with law within a time frame to be fixed by this Court. The matter is remanded back to the respondent for fresh consideration on merits and in accordance with law, within a time frame to be fixed by this Court - Petition disposed off.

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• 2023 (4) TMI 1023
  Levy of Service Tax - sub-contractor - non-inclusion of value of services rendered by their sub-contractors - Board Circular in F. No. B/11/1/2002-TRU dated 01.08.2002 - suppression of facts or not - Extended period of limitation - HELD THAT:- Though the appellant, as a sub-contractor, was duty bound to discharge the tax liability, perhaps the communication dated 12.07.07 issued by the main contractor i.e., M/s. Aspinwall Co., prompted them to believe that the tax had indeed been remitted. The villain appears to be M/s. Aspinwall Co. who misled the appellant or made the appellant believe that it had remitted tax and in turn, made the appellant rely on the letter dated 12.07.07 issued by it in response to Show Cause Notice issued by the Department. This is a sufficient reason and other than this, there are no documents being brought out on record by the Revenue to prove mala fides on the part of this appellant, so as to justify invoking the larger period of limitation in this case. It is also a fact borne on record that the main contractor has not denied the fact of having collected full consideration including Service Tax from the clients. On a similar set of facts, in the case of another sub-contractor viz. M/s. Vinoth Shipping Services [ 2021 (8) TMI 1117 - CESTAT CHENNAI ], it is found that the Chennai Bench of the CESTAT has given a finding that there was no factual basis for invoking the extended period, though declining to entertain the appeal on merits, but allowing the assessee s contention on invoking of the extended period of limitation - the fact of suppression, etc., has not been established by the Revenue to justify invoking the extended period of limitation and therefore, in view of our discussions in the above paragraphs, the ratio of the order of this Bench in the case of M/s. Vinoth Shipping Services, wherein the order of the Larger Bench in M/s. Melange Developers Pvt. Ltd. [ 2019 (6) TMI 518 - CESTAT NEW DELHI ] was followed, squarely applies here too. For these reasons, the impugned order, to this extent, cannot sustain. The appeal fails on merits, but however, the demand pertaining to the larger period, if any, cannot sustain and consequently, the impugned order, to this extent, is set aside - Appeal allowed on limitation.

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• 2023 (4) TMI 1022
  Classification of services - cargo handling service for the period 2007-2008 to 2012-2013 - mining service for the period post 01.06.2007 - HELD THAT:- The issue that arose for consideration before the Supreme Court in Singh Transporters [ 2012 (7) TMI 566 - CESTAT, NEW DELHI ] was whether coal transported from pitheads of the mines to the railway sidings would fall within the taxable service defined under section 65 (105) (zzzy) of the Finance Act. The Supreme Court held that the activity would appropriately be classified under the head transport of goods by road service and the activity does not involve any service in relation to mining of mineral as contemplated under section 65(105) (zzzy) of the Finance Act. The Supreme Court also held that the definition of mines has no apparent nexus with the activity undertaken under the service rendered. It would be seen that the Supreme Court categorically held that the activity undertaken by the appellant would fall under the head transportation of goods by road service . The Commissioner (Appeals) was, therefore, justified in holding that the appellant had not undertaken the activity of mining service w.e.f. 01.06.2007. The Commissioner (Appeal) is also justified in holding that these activities undertaken by the appellant prior to 01.06.2007 would not fall under the category of cargo handling service . This is for the reason that the Supreme Court categorically held that the activity undertaken by the appellant would fall under the heading transport of goods by road service - The appellant had, therefore, not provided cargo handling service prior to 01.06.2007 under section 65(23) of the Finance Act. Appeal dismissed.

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• 2023 (4) TMI 1021
  Short payment of Service tax or not - provisional payment of service tax - BSNL had already registered for centralized billing and accounting system - demand of short paid service tax alongwith interest and penalty - HELD THAT:- The appellant has centralized billing and accounting system even prior to the introduction of the service tax in 1994 and they were registered with the department. Further, the appellant have taken permission from the department for provisional payment of service tax which was granted by the department upto the month of March 2007. It is an admitted fact that when the payment is made on provisional basis the amount sometime is paid in excess and sometime it may be less. The appellant has submitted the copy of the chart showing the payment made in excess during the relevant period which clearly shows that the appellant had adjusted the excess amount paid in a particular month against the liability of the subsequent month. The revenue has neither objected over the adjustment made from time to time nor advised the appellant any requirement of the rules. The department itself advised to the appellant that there is no need of having centralized registration when they already have centralized billing and accounting of payment system. Further, in the appellant s own case for the subsequent period, the Commissioner (appeals) has allowed the appeal of the appellant by setting aside the order passed by the lower authorities on the same facts and the department has not filed any appeal against the same and the orders of the Commissioner in the appellant s own case has attainted finality. Besides this, the Tribunal has also consistently held in favour of the assessee in the orders relied upon by the appellant. Demand of interest and penalty - HELD THAT:- When the demand of tax itself is not sustainable, the demand of interest and imposition of penalty does not survive. Appeal allowed.

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• 2023 (4) TMI 1019
  Valuation - Business auxiliary services - inclusion of reimbursable expenses for arising at the gross taxable value, or not - applicability of provisions of Section 67 of the Finance Act, 1994 - HELD THAT:- That reimbursable expenses have been made includible in the taxable income with effect from May 14, 2015 whereby a clause (a) was amended to include the reimbursable expenditure to the taxable value. The perusal of the provision shows that it has no express retrospective effect. Law is settled that unless expressly provided, the statue has always to be prospective in nature. Prior the aforesaid amendment all reimbursable expenses were not used to be the part of the taxable income. The position stands duly clarified and settled by the Hon ble Apex Court in Intercontinental Consultancy [ 2018 (3) TMI 357 - SUPREME COURT ] where it was held that Though, it was not argued by the learned counsel for the Department that Section 67 is a declaratory provision, nor could it be argued so, as we find that this is a substantive change brought about with the amendment to Section 67 and, therefore, has to be prospective in nature. In the case of Harinder Goyal, [ 2015 (12) TMI 1107 - CESTAT NEW DELHI ] as relied upon by the Department, it is observed that there also it was specifically held that reimbursement towards shortage fuel/ diesel consumed in generator, electricity bills, telephone bills etc.,(reimbursable expense) are not to be included in the taxable value. Still the appeal in said case was dismissed but for the reason that there was no evidence produced as to what was the actual amount of the reimbursements and that the as the appellant was found to not to be in a position to claim such deduction for want of evidence. Hence the outcome of this decision is also found to be same as has been discussed above that prior the year 2015 the reimbursable expenses could not included in the taxable income. The demand pertains to the period prior the impugned amendment in section 67 Finance Act, 1944 hence has wrongly been applied retrospectively that the order under challenge is hereby set aside - Appeal allowed.

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• 2023 (4) TMI 1018
  Utilization of the Cenvat credit for payment of a part amount out of the total due amount of Service tax to be paid - Department alleged that since the appellant has availed Cenvat Credit, as such they were not eligible for claiming 75% abatement of value of service under Notification No.01/2006-ST dated 01.03.2006, as amended - credit subsequently reversed and was paid in cash subsequently and filed revised return was also within prescribed time period - intent to give an opportunity to any assessee to correct a mistake or omission - Rule 7B of Service Tax Rules, 1994 - demand of service tax alongwith interest and penalty. HELD THAT:- In the present case there is no dispute about the fact that the appellant though had availed the CENVAT credit while filing the ST- 3 return on 24.04.2011. However, subsequently vide a revised return of 14.06.2011, the credit availed was reversed. The only condition for availing the amount under the Notification No. 1/2006 was the non-availment of CENVAT Credit. There has been a catena of decisions wherein it has been held that reversal is the sufficient compliance of the aforesaid condition of the said Notification. In M/S. PUNJ LLOYD LTD. VERSUS C.C.E. S. T., ROHTAK [ 2015 (10) TMI 2294 - CESTAT NEW DELHI ] where it was held that Benefit of Notification No.1/2006-ST granted on final product since reversal of credit on input was done at Tribunals stage. Demand under CICS is untenable as Notification No.25/2007-ST nowhere implies that CICS for construction of public port only is eligible for exemption and private port is not. Appellant received payment for service rendered to joint venture thus contention that services rendered were effect to self is untenable. In Hon ble Allahabad High Court in matter of HELLO MINERALS WATER (P) LTD. VERSUS UNION OF INDIA [ 2004 (7) TMI 98 - ALLAHABAD HIGH COURT ] where it was held that petitioner is thus entitled to the benefit of the said Notification No. 15/1994-CE, dated 1-3-2004 and reversal of Modvat credit on the inputs namely PVC granules used in the manufacture of PVC/PP bottles, which have been admittedly reversed by the petitioner, even though after clearance of the final product. The adjudicating authority below has failed to observe the settled proposition of law despite that the decision of Hon ble Apex Court in case of CHANDRAPUR MAGNET WIRES (P) LTD. VERSUS COLLECTOR OF C. EXCISE, NAGPUR [ 1995 (12) TMI 72 - SUPREME COURT ] was being cited by the original adjudicating authority - Appeal allowed.

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• 2023 (4) TMI 1017
  Demand of service tax under different head (which was not proposed in SCN) - case of appellant is that it was not open to the Commissioner (Appeals) to confirm the demand under a head that was not even proposed in the show cause notice - HELD THAT:- It is not disputed that the demand has been confirmed under categories not proposed in the show cause notice. This issue was also examined at length by a Division Bench of the Tribunal in INDIA GUNITING CORPORATION VERSUS COMMISSIONER OF CENTRAL TAX [ 2021 (2) TMI 400 - CESTAT NEW DELHI] where it was held that Commissioner was not justified in confirming the demand of service tax under the category of works contract for the period post-June 1, 2007 even if the levy of service tax was not exempted under Notifications, since, the show cause notice that demand it service tax under the three categories namely (i) commercial or industrial construction, (ii) construction of complex, and (iii) management, maintenance or repair. Once a show cause notice has proposed a demand under a particular category, the Commissioner (Appeals) could not have confirmed the demand under a category not specified in the show cause notice. In view of the aforesaid decision of the Tribunal passed by the Commissioner (Appeals), cannot be sustained and is, accordingly, set aside - Appeal allowed.

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• 2023 (4) TMI 1016
  Refund of service tax paid on input services - Rejection of refund on the ground that invoices issued by Mohali unit are not covered within the period of one year to file a refund claim in terms of Notification No. 14/2016 dated 01.03.2016 - HELD THAT:- As per Para 2 of Notification No. 27/12 dated 18.06.2012 the manufacturer or the service provider is required to submit one refund claim under Rule 5 of Cenvat Credit Rules, 2004 for every quarter and the relevant date for filing the refund claim will be considered from the end of the quarter. This issue has been considered by the Tribunal in the case of M/S SYNGENTA SERVICES PVT. LTD. VERSUS COMMISSIONER OF CENTRAL TAX, PUNE-II [ 2020 (1) TMI 1350 - CESTAT MUMBAI] wherein it has been held by the Tribunal that the time limit to file the refund claim would expire at the end of the quarter and this condition remains unaltered even after the amendment vide Notification No. 14/16 dated 01.03.2016. The last date to file the refund claim for invoices number 7 and 8 issued by the Mohali unit is to be calculated from the last date of the quarter i.e. 31.12.2016 and hence the refund application filed on 15.12.2017 is within the time limit as prescribed by the notification. Appeal allowed.

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• 2023 (4) TMI 1015
  Interest on refund amount - relevant date - from which date the appellant is entitled to claim interest on delay payment of refund? - section 11BB of Central Excise Act, 1944 - HELD THAT:- Union Budget, 2016 exempted services provided to Government under notification no.09/2016 dated 1.3.2016 under exemption entry S.No.12A. It is also found that the appellant filed application for the refund of service tax paid amounting to Rs.80,20,869/- on the said services on 14.9.2016 and later on restricted his claim of refund to Rs.31,71,754/-, which was further reduced by the Assistant Commissioner to Rs.30,20,628/- and the same was finally received by the appellant on 17.12.2020 but without any interest. This issue is no more res-intera as the same has been settled by Hon ble Supreme Court in the case of RANBAXY LABORATORIES LTD. VERSUS UNION OF INDIA AND ORS. [ 2011 (10) TMI 16 - SUPREME COURT] wherein Supreme Court after considering relevant provisions of section 11B and 11BB of Central Excise Act, 1944 held that the liability of the revenue to pay interest under Section 11BB of the Act commences from the date of expiry of three months from the date of receipt of application for refund under Section 11B(1) of the Act and not on the expiry of the said period from the date on which order of refund is made. The assessee is entitled to claim interest after 3 months from the date of application for refund claim till its realization. The appeal is allowed.

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• Central Excise

• 2023 (4) TMI 1020
  Maintainability of appeal - offence committed was non-cognizable offence - appeal filed by the respondent against the judgment of acquittal passed by the learned Magistrate in a complaint case - maintainable before the Sessions Court under Section 378(2) of Cr.PC or not? - HELD THAT:- Section 378(4) of Cr.PC provides for an appeal as against an order of acquittal passed in any case instituted upon a complaint and such an appeal would lie only to the High Court and if only the High Court grants special leave to appeal, the complainant can maintain an appeal against the order of acquittal. The question regarding filing of an appeal against the order of acquittal passed in a complaint case by a Magistrate was considered in detail in the SUBHASH CHAND VERSUS STATE (DELHI ADMINISTRATION) [ 2013 (1) TMI 943 - SUPREME COURT ] where the Hon ble Supreme Court held that once a case is instituted on a complaint and an order of acquittal is passed, whether the offence is bailable or nonbailable, cognizable or non-cognizable, the complainant can file an application under Section 378(4) of Cr.PC for special leave to appeal against it in the High Court and no appeal could be maintained before the Court of Sessions. The Hon ble Supreme Court also held that it is immaterial whether the complainant is a private person or a public servant or the State or State Authority. The only point that is required to be considered is whether a case is a case instituted on a complaint. The coordinate bench of this Court in C. SHEKAR VERSUS K. SARASWATHI [ 2019 (2) TMI 2077 - KARNATAKA HIGH COURT] has held that as against the order of acquittal passed in a complaint case, the appeal would only lie to the High Court under Section 378(4) of Cr.PC and if the District Court/Sessions Court has entertained an appeal preferred against the order of acquittal passed in a complaint case by the Magistrate, the order passed in such an appeal is a nullity and the same is not sustainable in the eye of law. The Hon ble Supreme Court in Subhash Chand s case supra has clearly held that as against the order of acquittal passed by the Magistrate in a complaint case, the only remedy available to the complainant irrespective of the fact that it is a private person or a public servant or the State or State Authority, is to file an appeal under Section 378(4) of Cr.PC to the High Court - the appeal filed by the respondent before the Sessions Court under Section 378(2) of Cr.PC as against the judgment of acquittal passed by the Trial Court was not maintainable and the judgment of conviction and order of sentence passed by the Sessions Court being without jurisdiction, is a nullity in the eye of law, and therefore, the same is liable to be set aside. The judgment and order of conviction and sentence dated 01.10.2014 passed by the Sessions Court, in Crl.A.No.410/2008, is set aside, and the judgment of acquittal dated 05.09.2005 passed by the Trial Court in C.C.No.35/1997, is restored - revision petition is allowed.

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• 2023 (4) TMI 1014
  CENVAT Credit - rejection of credit on the ground that the Challans are not the proper documents for availment of CENVAT Credit under Rule 9 of the CENVAT Credit Rules - HELD THAT:- Rule 9 of the CENVAT Credit Rules prescribes certain documents based on which CENVAT Credit can be availed by a manufacturer. Rule 9 (2) of the CENVAT Credit Rules clearly states that CENVAT Credit cannot be denied on the ground that the document submitted for availment of credit does not contain certain details. In the present case also the challans issued by the Appellant can be eligible documents for the purpose of allowing the credit, provided the duty paid nature of the raw materials supplied by M/s. B.S Enterprise is established. The Appellant claimed that they have the duty paid documents received from their suppliers. For allowing the credit, the duty paid nature of the raw material received by them from M/s B.S. Enterprise needs to be verified - matter remanded back to the original Adjudicating authority.

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• 2023 (4) TMI 1013
  Classification of goods - Di-calcium phosphate - to be classified under 23099010 or not? - demand alongwith interest and penalty - it is submitted that N/N. 4/2016 CE(NT) dated 12.02.2016 has been issued in terms of Section 11C clarifying that for the period 01.02.2008 to 01.02.2014, the goods need not be classified under CET 2835 - HELD THAT:- Based on Notification No 4/2016, Appeals have been allowed, in the present case, the period under consideration is April 2008 to December 2011, Which is covered by the provisions of this Notification. Reliance can be placed in the case on KPR FERTILISERS LTD., KPR AGROCHEM LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, SERVICE TAX CUSTOMS, VISAKHAPATNAM II, COMMISSIONER OF CENTRAL EXCISE CUSTOMS, VISAKHAPATNAM - I [ 2018 (10) TMI 526 - CESTAT HYDERABAD ] and M/S. SHREE ANNAM CHEMICALS (P) LTD. VERSUS COMMISSIONER OF GST CENTRAL EXCISE, TRICHY [ 2021 (9) TMI 687 - CESTAT CHENNAI ] where it was held that It is seen that as per the N/N. 4/2016-CE(NT) dated 12.2.2016, levy of duty of excise on di-calcium phosphate (animal feed grade) of rock phosphate origin falling under Heading 2835 of the First Schedule to CETA, 1985 is not required to be paid under the said Notification issued under section 11C of the Act. Appeal allowed.

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• 2023 (4) TMI 1012
  Territorial Jurisdiction of the Commissioner to issue the SCN - Input service Distributor (ISD) - Recovery of CENVAT Credit alongwith interest and penalty - Advertising services (Credit allowed) - Business Auxiliary Services, services of hotels and restaurants, event management services, mandap keeper services and tour operator Services (credit denied) - extended period of limitation. Territorial Jurisdiction - It is submitted that, Commissioner had jurisdiction over Rajasthan where the appellant is located and had no jurisdiction over Gujarat where its head office is located - HELD THAT:- We do not find any provision under which the ISD which does not avail or utilize the CENVAT credit but merely passes the credit through ISD invoices to its units can be issued a notice and any wrongly passed CENVAT credit can be recovered from it. On a specific query from the bench, learned counsel for the assessee agrees that there is no provision under which CENVAT credit wrongly passed can be recovered from the ISD These units (availing credit passed by ISD) file returns which show, among other things, the CENVAT credit availed. The jurisdictional officers have to scrutinize and assess them and if any CENVAT credit is irregularly availed on the strength of invoices (including ISD invoices), it can be recovered under Rule 14 of CCR from them. The case laws relied upon by the learned counsel deal with situations where the jurisdictional officer of the assessee who used the CENVAT credit wanted to reassess the duty paid by the manufacturer of the goods - reliance can be placed in the case of COMMISSIONER OF CENTRAL EXCISE CUSTOMS VERSUS MDS SWITCHGEAR LTD. [ 2008 (8) TMI 37 - SUPREME COURT] and CST, AHMEDABAD VERSUS GODFREY PHILIPS INDIA LTD. [ 2008 (12) TMI 90 - CESTAT, AHMEDABAD] . The SCN was issued correctly by the Commissioner and the impugned order was issued as per his jurisdiction. The question of jurisdiction is answered in favour of the Revenue. Advertising services - Case of Revenue is that at the time the services were availed, Coromandel brand did not belong to the appellant - HELD THAT:- A plain reading of Rule 2(l) of CCR allows credit of advertising expenses and it does not place on any restrictions on what type of advertising qualifies for CENVAT credit. So long as the advertisement is for the excisable goods sold or the taxable services rendered, there can be no restriction on availing the CENVAT credit. In particular, there is no condition that the brand which has been advertised should have been owned by the assessee availing CENVAT credit. If company A manufactures goods under the brand name belonging to company B under licence, it is natural for A to advertise its goods with that brand name and such advertising expenses get squarely covered under Rule 2(l) of CCR - the assessee was entitled to CENVAT credit on advertising services and the Commissioner has correctly allowed CENVAT credit - Revenue s appeal deserves to be dismissed. Business Auxiliary Services and Services of hotels and restaurants - HELD THAT:- CENVAT credit has to be allowed only if the excise duty paid on the inputs and service tax paid on the input services used in or in relation to the manufacture of the final products. The law does not permit CENVAT credit of any service tax paid on any bill for any service availed in the course of business. If such was the intention of the law, there would have been no need to restrict credit to inputs and input services and further clearly defining these two terms. The term input service has a means clause and an inclusion clause which further enlarges the scope of the term and an exclusion clause which reduces its scope - Since the appellant is claiming the benefit of CENVAT credit, it is for the appellant to show how the services fall within the definition of input service . It is not convincing that celebrating marriage anniversaries, family visits, melas, and buying chocolates and pens, etc. fall within the definition of the input services of the appellant. The detailed reasoning given by the Commissioner in the impugned order for denying CENVAT credit of Rs. 31,96,936/- on business auxiliary services, agreed upon. Event management services - HELD THAT:- These services were availed, as recorded in the impugned order, to arrange annual award and other functions/ programmes for the dealers. However, the Commissioner denied CENVAT credit that the invoices did not mention what event was being organized - When one hires a service provider, he may not always indicate in detail the programme which is being organized. Instead, he indicates the services which he provided and the name of the client - the services rendered towards the annual awards or other programmes for the dealers have a direct nexus to sales promotion and CENVAT credit is admissible on such services. Accordingly, we allow CENVAT credit of Rs. 34,800/- availed by the appellant on these services. Mandap keeper services - HELD THAT:- If the invoice was issued to the appellant and it was for food for 1100 persons and the appellant claims that it was for their business function, there is no reason to doubt and say that it was for a private function in the absence of any evidence that the invoice meant for a personal function was shown as an invoice for official meeting and billed to the appellant - thus, the appellant was entitled to CENVAT credit of this amount. Tour operator Services - HELD THAT:- Given the nature of the invoice in question, it does appear to be an invoice for holiday of a large number of persons. There appears nothing to show that this expense was on account of any business trip. In view of the specific exclusion of the services meant for personal consumption or use of any employee in the definition of input service , thus, no CENVAT credit will be admissible on this account. Assessee s appeal is partly allowed to the extent of allowing CENVAT credit on Event Management services and Mandap Keeper Services and the impugned order stands modified to this extent.

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• CST, VAT & Sales Tax

• 2023 (4) TMI 1011
  Functioning of state tax tribunal - Principles of natural justice - petition pending - Hearing was not taking place before the Sales Tax Tribunal - Petitioner had pleaded in the petition that no daily orders are uploaded, there is no case status available online where the litigant can check the status of the cases, next date, stage of appeal, etc. - HELD THAT:- Considering that the Sales Tax Appellate Tribunal is an independent adjudicator manned by judicial officers, the Division Bench of this Court has already stressed the need for a dedicated website. Uploading information on the GST department website can only be a stop-gap arrangement. The Registrar states that he has taken note of the situation with seriousness and assures the Court that all necessary steps will be taken to comply with the order passed by this Court on 28 and 29 September 2017. He states that steps would be initiated for creating a separate dedicated website and uploading the case status, and daily orders on the dedicated website. The State Government, if the requisition is received from the Registry of the Sales Tax Tribunal, is directed to release funds for the creation of a dedicated website and for uploading the case status, etc., the same shall be released at the earliest to avoid any action flowing from the breach order of this Court of the order dated 28 and 29 September 2017 - the Registrar of the Sales Tax Tribunal is directed to hold a meeting with the Central Project Coordinator of the High Court to understand how the High Court website is structured so that the broad features of the website can be replicated when the dedicated website of the Tribunal is created. To monitor further compliance, stand over to 6 June 2023 to be listed under the caption For Directions .

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• 2023 (4) TMI 1010
  Validity of demand - incorrect audit report - Maintainability of writ petition in lieu of statutory appeal against an order rendered in exercise of power under Section 32A of the Maharashtra Value Added Tax Act, 2002 - HELD THAT:- The sine qua non for invoking the jurisdiction under Section 32A of the VAT Act is that the assessee shall have agreed with, and accepted, the recommendations made by his Accountant. It is the acceptance by the assessee, which in a sense is an admission of the liability, that clothes the authority with the jurisdiction to proceed under Section 32A of the VAT Act and obviates the need to take recourse to the adjudicatory and adversarial regime statutorily provided. The finding recorded in the order impugned that the assessee has accepted the liability clearly militates against plain and unambiguous disagreement recorded in the audit report. We have not come across any other material warranting any other view. The provision of sub-section(2) of Section 32A of the VAT Act only provides that as regards the liability which is deemed to have been admitted in view of the provisions of sub-section (1) of Section 32A, the interest regime of Section 30 shall come into play mutatis mutandis. There are no other or further significance of sub-section (2). The demand impugned is without jurisdiction - Petition allowed.

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• Indian Laws

• 2023 (4) TMI 1009
  Dishonour of Cheque - directors on the date when cheque was issued or not - vicarious liability of Director - section 141 of NI Act - HELD THAT:- Diamond Shipping Limited has not come forward seeking encashment of the criminal proceeding instituted against it. The petitioners were erstwhile directors of the company who retired from the post of directors of the said company with effect from 10th June, 2014. Therefore, the factual circumstance is similar to the facts and circumstance of HARSHENDRA KUMAR D. VERSUS REBATILATA KOLEY [ 2011 (2) TMI 1278 - SUPREME COURT] wherein the Hon ble Supreme Court was pleased to hold that on the date the offence was committed under Section 138 of the N.I Act by the company the appellant was not the director; he had nothing to do with the affairs of the company. Thus, it was held by the Hon ble Supreme Court that in such view of the matter, if the criminal complaints are alleged to proceed against the appellant, it would result in gross injustice to the appellant and tantamount to an abuse of the process of the court. In the instant case similar is the situation. The petitioners were not directors of the company on the date when the cheques were issued. It is not the case of the opposite party No. 2/complainant that they were the signatories of the cheques. The criminal proceedings against the present petitioners quashed - revision allowed.

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• 2023 (4) TMI 1008
  Dishonour of Cheque - date of dishonor of cheque not known - statutory notice prior to lodging of prosecution under Section 138 of the Negotiable Instruments Act was given in time or not - whether trial magistrate was correct in observing that statutory notice was not given in time from the date of information as to dishonour? - HELD THAT:- It is true that the Complainant has not filed any document to show on which date he has deposited the cheque in Cosmos Bank. Generally, it is accompanied by pay-in-slip and its counter file remained with the payee. If we consider the 24/01/1995 as the relevant date, the notice given at Exh. 25 on 03/02/1995 is within the period of 15 days from the 24/01/1995. That date is reflected in account statement. It is deposed by the bank witness. The bank witness was also cross-examined on behalf of the Complainant. He admits that the customers need to be informed about dishonour of the cheque immediately. If there is debit entry on 14/11/1994, certainly it can be said that there is enormous delay in informing the complainant on 24/01/1995. The accused tried to bring on record about relationship of the Complainant and the bank witness. There is nothing wrong if they are knowing each other because Complainant is their customer. It has furthermore testified during cross-examination that the both are resident of the same village. Learned Advocate for the Respondent relied upon the judgment in the case of Kamlesh Kumar Vs. State of Bihar and Anr. [[ 2014 (1) TMI 736 - SUPREME COURT] ]. Learned Advocate Shri Kharkar for the Appellant tried to differentiate facts of that case and the present facts. In that case cheque was presented on two occasions and notice was issued from the date of knowledge of the dishonour and it was issued in pursuance of the second presentment. On 10/11/2008, when cheque was presented, the Complainant got knowledge of dishonour on account of un-availability of the sufficient balance. Whereas notice was issued on 17/12/2008 that is after the period of 30 days. (at that time the period is about 30 days) and hence it was held beyond the prescribed period. Complainant also filed an affidavit thereby stating that bank has issued memo and it was received on 17/11/2008. He wants to plead that from 17/11/2008, the notice was given in time. (para no. 13). However it was not accepted by the Hon ble Supreme Court and the knowledge received on 10/11/2008 was considered as starting point for the calculating the prescribed period. If the Complainant wants the Court to believe the date of 24/01/1995 as knowledge of the dishnour, he was bound to lay a foundation in the evidence, so as to connect this cheque return memo to the actual date of presentment. This has not been done. Even though, bank witness has said about cheque return memo dated 24/01/1995, it does not relieve the complainant about proving necessary facts about deposit and receipt of memo. One does not know whether complainant has received that memo. Court cannot accept the arguments just on the basis of certain piece of the evidence, unless Complainant in his evidence has deposed accordingly. It is not found that findings given by the trial court can be faulted - appeal dismissed.

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