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TMI Tax Updates - e-Newsletter April 2, 2022 Case Laws in this Newsletter: GST Income Tax Insolvency & Bankruptcy PMLA CST, VAT & Sales Tax Indian Laws Highlights / Catch Notes GST: Statutory interest to be paid on the delayed refund amount - The writ-applicant herein is entitled to interest on the delayed payment towards refund at the rate of 6% [six percent] as provided under Section 56 of the Act - HC Visit to Get Source GST: Seeking restoration of registration certificate of the Petitioners - non-filing of returns continuously for a period of six months - If the appellate authority would have put the firm to the notice, probably, the firm could have appropriately replied to the same. It appears that behind the back of the firm, the ground which is not at all in the show cause notice has been considered and ultimately, appeal came to be dismissed. - We permit the writ applicant to file his returns of an appropriate amount with penalty and interest in accordance with law. The GST registration will have to revived. - HC Visit to Get Source GST: Refund in the event of reversal of Input Tax Credit carried forward by filing Form TRAN-1 - Transitional scheme - it is not known as to what was the difficulty of the Revenue to decide such refund claim filed by the petitioner within the meaning of Section 142(3) of the GST Act read with the erstwhile provisions under the TNVAT Act. Without considering the application of the petitioner for refund, the present order of reversal of the alleged inadmissible input tax credit with penalty and interest was made. Therefore, the impugned order cannot be proceeded further. - HC Visit to Get Source GST: Recovery of Tax - Seeking a direction to permit payment of the tax due from the petitioner for the months of February 2021 and March 2021 in 20 equated monthly instalments - The petitioner is bound to pay the tax for the month of February 2021 onwards, within a period of one month from the date of receipt of a copy of the judgment and if the tax due till date is received within the time directed, respondents shall accept the same and permit the petitioner to continue his registration under the Act - HC Visit to Get Source GST: Exemption from GST or not - AAAR denined the benefit of exemption - services provided by the petitioner to school/educational organization in relation to ASSET examination - It is now well-settled that even in tax statutes, an exemption provision should be liberally construed in accordance with the object sought to be achieved if such provision is to grant incentive for promoting education or otherwise has some beneficial reason behind it. The exemption notification should be given a literal meaning - the exemption notification must be construed having regard to the purpose and object it seeks to achieve. The notification in the case on hand should be read as a whole. - HC Visit to Get Source GST: Levy of GST - parcels of Ashapura that are being transported by GSRTC - GSRTC is not a Courier Agency as it is not involved in door to door transportation of goods/articles/documents. - GSRTC supplies Business Support Service to its recipient - GST rate is 18% - AAR Visit to Get Source Income Tax: Reopening of assessment u/s 147 - scope and effect of the Income Declaration Scheme (IDS) - to hold- as the High Court did, in this case, that since the assessee may have a reasonable explanation, is not a ground for quashing a notice u/s 147. As long as there is objective tangible material (in the form of documents, relevant to the issue) the sufficiency of that material cannot dictate the validity of the notice. - the High Court fell into error, in holding that the sequitur to a declaration under the IDS can lead to immunity (from taxation) in the hands of a non-declarant. - SC Visit to Get Source Income Tax: Initiation of assessment proceedings u/s 148 - Scope of new Section 148A - validity of the assessment proceedings initiated against assessees after 1st April 2021 under the provisions of the Act, as it existed before 1st April 2021 - The explanations to the Notification No.20 of 2021 dated 31st March 2021 and Notification No.38 of 2021 dated 27th April 2021 are declared ultra vires and are, therefore, bad in law and null and void. all these writ petitions listed above are disposed by allowing the same. - HC Visit to Get Source Income Tax: Validity of Search u/s 132 - suppression of income as the profit declared is contrary to the actual profit received. - The power for re-assessment is no doubt a remedy available to the Authority but in light of the information as detailed in the note, grounds have been made out for exercise of power u/s 132(c) in the present case and it cannot be said that the said action is either malafide/ arbitrary/ capricious. - HC Visit to Get Source Income Tax: Revision u/s 263 by CIT - Regarding the claim of the revenue that, no deduction is allowable u/s 92C(4) of the Act - The claim under Section 10A is not enhanced on account of transfer pricing addition and since the Assessee is not claimed deduction u/s 10A on enhanced assessed income and therefore the proviso to Section 92C(4) shall not apply. - AT Visit to Get Source Income Tax: Recovery of Tax - Company under liquidation under the IBC - Once a company is dissolved it becomes a non-existent party and therefore no action can be brought in its name. Therefore, in view of overriding effect of IBC code to the Income Tax proceeding, we hold that Revenue is not entitled to recover the claim, if any arising from the present proceedings for Asst. year 2015-16, as the same is not part of the resolution plan. - AT Visit to Get Source Income Tax: Penalty u/s 272A(2)(k) - assessee failed to furnish the quarterly TDS statements within the time - When the appeal filed by the assessee is against the imposition of penalty under section 272A(k), we fail to understand what more clarification was required by Commissioner (Appeals) regarding the nature of relief sought by the assessee. - Penalty deleted - AT Visit to Get Source IBC: Initiation of CIRP - Period of limitation - NCLAT rejected the application - There was no discussion at all about the letter dated 28.09.2015. - The law as it has developed on the applicability of Section 18 of the Limitation Act and the circumstances in which it would apply, have also not been examined by NCLAT. Therefore, the order of NCLAT is liable to be set aside and the matter liable to be remanded back for a fresh consideration - SC Visit to Get Source IBC: Initiation of CIRP - Going Concern - Even when a going concern is unable to discharge its debt, the Operational Creditor is entitled to invoke Section 9, hence, the Application filed by Operational Creditor under Section 9 cannot be said to be non-maintainable on the ground that Corporate Debtor is a going concern - there are no substance in any of the submission of the learned Counsel for the Appellant - AT Visit to Get Source VAT: Restraint from selling or alienating the property - Priories of secured creditors over State against tax dues - In the present case, it is clear that the charge that would have a priority is that of the bank as it is prior in point of time and also in light of Section 26E of the SARFAESI Act - It must be noted that as on date, the State not having enforced its attachment under the provisions of KVAT Act, Section 26E would be applicable and accordingly, the rights of secured creditors would rank higher and would over-ride the charge of the State that has been created subsequently. - HC Visit to Get Source Articles THE CUSTOMS (ELECTRONIC CASH LEDGER) REGULATIONS, 2022 Notifications Companies Law G.S.R. 235 (E). - dated 31-3-2022 - Co. Law Companies (Accounts) Second Amendment Rules, 2022 Customs 11/2022 - dated 31-3-2022 - ADD Seeks to extend the levy of ADD on jute products originating in or exported from Nepal and Bangladesh 19/2020 - dated 31-3-2022 - Cus Seeks to extend the exemption from Integrated Tax and Compensation Cess upto 30.06.2022 on goods imported against AA/EPCG authorizations 18/2022 - dated 31-3-2022 - Cus Seeks to amend Notification No. 52/2003-Customs, dated the 31st March, 2003 17/2022 - dated 31-3-2022 - Cus Seeks to amend notification No. 25/2021-Customs, dated 31-03-2021 to give effect to 2nd tranche of tariff concessions as per India Mauritius CECPA 31/2022 - dated 31-3-2022 - Cus (NT) Fixation of Traiff Values - Edible Oils, Brass Scrap, Poppy Seeds, Areca Nut, Gold and Sliver etc, (including Crude Palm Oil, RBD Palm Oil, Others) 30/2022 - dated 31-3-2022 - Cus (NT) Notification for Limitation on 124 relating cases of confiscation where entry has been made . 29/2022 - dated 31-3-2022 - Cus (NT) Notification for assigning proper officer for pending cases. 28/2022 - dated 31-3-2022 - Cus (NT) Notification under 110AA for assigning proper officer for multiple Jurisdictions. 27/2022 - dated 31-3-2022 - Cus (NT) Notification to appoint officers for Faceless Assessment. 26/2022 - dated 31-3-2022 - Cus (NT) ‘Proper officer’ under the Customs Act, 1962 - assigning functions to officers and to officers in rank above to them as proper officers. 25/2022 - dated 31-3-2022 - Cus (NT) Notification to appoint officers of Revenue Intelligence. 24/2022 - dated 31-3-2022 - Cus (NT) Notification to appoint officers at the level of Chief Commissioner of Customs for the field formations except DRI 23/2022 - dated 31-3-2022 - Cus (NT) Notification for appointing Commissioner (Adjudication), Delhi and Mumbai. 22/2022 - dated 31-3-2022 - Cus (NT) Notification to appoint officers at the level of Commissioner of Customs and below till AC/DC for zones overseeing Audit. 21/2022 - dated 31-3-2022 - Cus (NT) Notification to appoint officers at the level of Commissioner of Customs and below till AC/DC for zones. DGFT 65/2015-20 - dated 1-4-2022 - FTP Amendment in import policy condition of Urea [Exim Code 31021000] in the ITC (HS) 2022, Schedule - I (Import Policy). GST 04/2022 - dated 31-3-2022 - CGST Seeks to amend Notification No. 14/2019-Central Tax, dated the 7th March, 2019 03/2022 - dated 31-3-2022 - CGST Seeks to amend Notification No. 10/2019-Central Tax, dated the 7th March, 2019 02/2022 - dated 31-3-2022 - CGST Rate Seeks to provide for a concessional rate on intra state supply of bricks conditional to not availing the ITC , as recommended by 45 GSTC 01/2022 - dated 31-3-2022 - CGST Rate Seeks to amend Notification No. 1/2017-Central Tax (Rate), dated the 28th June, 2017 02/2022 - dated 31-3-2022 - IGST Rate Seeks to provide for a concessional rate on inter state supply of bricks conditional to not availing the ITC , as recommended by 45 GSTC 01/2022-Integrated Tax (Rate) - dated 31-3-2022 - IGST Rate Seeks to amend Notification No. 1/2017-Integrated Tax (Rate), dated the 28th June, 2017 02/2022 - dated 31-3-2022 - UTGST Seeks to amend Notification No. 02/2017-Union Territory Tax, dated the 27th June, 2017 01/2022 - dated 31-3-2022 - UTGST Seeks to amend Notification No. 02/2019-Union Territory Tax, dated the 7th March, 2019 02/2022 - dated 31-3-2022 - UTGST Rate Seeks to provide for a concessional rate on intra state supply of bricks conditional to not availing the ITC , as recommended by 45 GSTC 01/2022 - dated 31-3-2022 - UTGST Rate Seeks to amend Notification No. 1/2017-Union Territory Tax (Rate), dated the 28th June, 2017 Income Tax 22/2022 - dated 31-3-2022 - IT U/s 10(46) of IT Act 1961 - Central Government notifies , ‘the Kotak Infrastructure Debt Fund Limited' 21/2022 - dated 30-3-2022 - IT Income-tax (fourth Amendment) Rules, 2022 Circulars / Instructions / Orders Income Tax - 08/2022 - dated 31-3-2022 Extension of time line for electronic filing of Form No.10AB for seeking registration or approval under Section 10(23C), 12A or 80G of the Income-tax Act,1961 (the Act) News All time high Gross GST collection in March’2022, breaching earlier record of ₹ 1,40,986 crore collected in the Month of January 2022 Issuance Calendar for Marketable Dated Securities for April 2022 - September 2022 Government’s Borrowing plan for First Half (H1) FY 2022-23 Calendar for Auction of Government of India Treasury Bills (For the Quarter ending June 2022) CBDT extends last date for filing of Form No.10AB for seeking registration or approval under Section 10(23C), 12A or 80G of the Income-tax Act, 1961 (the Act) Monthly Review of Accounts of Union Government of India upto the month of February 2022 for the Financial Year 2021-22 Case Laws: GST 2022 (4) TMI 57 Seeking grant of Bail - it is contended that statement of the applicant under Section 70 of the C.G.S.T Act, 2017 is self-implicatory which was extracted by coercion and made under duress - applicant contends that the applicant does not have any criminal history apart from this case - HELD THAT:- Without making any observations on the merits of the case, the bail application is allowed. Applicant is allowed to be released on bail subject to conditions imposed. 2022 (4) TMI 56 Detention of goods alongwith vehicle - E-Way Bill Part B has not been filled up - petitioner had given reply that the goods are transported for a distance of upto 50 Kms within the State from the place of business of the consignor to the place of business of the transporter for further transportation - HELD THAT:- This Court feels that, those issues can be canvassed before the Adjudicating Authority as to whether the benefit sought for by the petitioner that, the goods were transported only for the purpose of unloading and reloading into another place for the purpose of reaching the destination i.e., the factory or premises of the petitioner and therefore, the absence of the Entry in Part B in E-Way Bill is not intentional one and whether that can be condoned or not, is altogether a question to be gone into by the Adjudicating Authority, before whom, it is open to the petitioner to raise all these points which have been raised before this Court for consideration. If those points are raised before the Adjudicating Authority by giving necessary details and inputs in support of the same, that can very well be considered by the Adjudicating Authority objectively and thereafter an order to that effect can be passed. That the petitioner is relegated to go before the Adjudicating Authority, where, it is open to the petitioner to raise the points and grounds urged before this Court in support of the challenge made in these writ petitions. If such grounds are urged with supporting documents and input to be supplied in this regard by the petitioner, the same shall be considered objectively by giving an opportunity of being heard to the petitioner or his counsel and thereafter, decide the same by considering the circumstances of the case - Petition disposed off. 2022 (4) TMI 55 Refund of IGST paid on exports alongwith statutory interest - exports made for the month of September 2018 - refund was withheld on account of large difference between the FOB value and the IGST taxable value in the shipping bill - HELD THAT:- The writ-applicant offered satisfactory explanation to the authorities concerned pointing out that the Circular dated 17.06.2019, upon which, the Department was placing reliance, was not applicable having regard to the facts of the case - Ultimately, the refund amount was credited in the account of the writ-applicant on 17.01.2022 i.e. during the pendency of the present writ-application. Statutory interest to be paid on the delayed refund amount - Section 56 of the CGST Act, 2017 - HELD THAT:- The plain reading of Section 56 of the Act would indicate that if any tax, which is ordered to be refunded under Sub-section (5) of Section 54 to any applicant, is not refunded within sixty days from the date of receipt of the application under Sub-section (1) of that section, interest at the rate not exceeding 6% [six percent] shall be payable in respect of such refund from the date immediately after the expiry of sixty days from the date of receipt of application under Sub-section (5) of Section 54 of the Act. The writ-applicant herein is entitled to interest on the delayed payment towards refund at the rate of 6% [six percent] as provided under Section 56 of the Act - this writ-application is disposed off with a direction to the authorities concerned to calculate the amount towards interest towards the delayed refund amount in accordance with the provisions of Section 56 of the Act. 2022 (4) TMI 54 Cancellation of registration certificate of the Petitioners - error on the part of Chartered Accountant - Instead of inserting the registration number of the HUF, inadvertently, the CA inserted the registration number of the proprietorship - HELD THAT:- It was an inadvertent mistake committed by the Chartered Accountant which led to cancellation of the registration number of the proprietary ship. The respondent No.2 should immediately look into the matter and see to it that the order cancelling the registration is recalled and the original registration under the CGST is restored. For a mistake said to have been committed by the Chartered Accountant, the dealer under the Act should not be made to pay a very heavy price like cancellation of the registration itself - writ application stands disposed of accordingly. 2022 (4) TMI 53 Seeking restoration of registration certificate of the Petitioners - non-filing of returns continuously for a period of six months - non-speaking order - violation of principles of natural justice - HELD THAT:- The order passed by the respondent No.3 cancelling the registration is also presumed to be on the very same ground though, the order cancelling the registration is a non speaking order. However, we fail to understand how could the appellate authority behind the back of the firm could have taken into consideration the report of the spot visit undertaken by the respondent No.3 for the purpose of dismissing the appeal. Was the firm put to notice that the appellate authority intends to look into the spot visit report prepared by the respondent No.3. If the appellate authority would have put the firm to the notice, probably, the firm could have appropriately replied to the same. It appears that behind the back of the firm, the ground which is not at all in the show cause notice has been considered and ultimately, appeal came to be dismissed. The entire procedure undertaken not only by the respondent No.3 but even by the appellate authority is in absolute violation of the principles of natural justice. The impugned order passed by the Deputy Commissioner of State Tax, Appeal 6, Vadodara dated 17.11.2021 is hereby quashed and set aside - Application allowed. 2022 (4) TMI 52 Maintainability of petition - availability of alternative remedy of appeal - reversal of excess unutilised input tax credit - no opportunity of personal hearing was given - HELD THAT:- It has been repeatedly held by this Court that, whenever there is an appeal remedy under the tax statute, that appeal remedy shall be first exhausted, without which, if at all the assessee or dealer comes before this Court invoking Article 226 of the Constitution of India , that can be entertained only under three circumstances:- i. Violation of principles of natural justice, ii. Violation of statutory provisions, and iii. For want of jurisdiction. In the present case, none of the above three circumstances is available for invoking the extraordinary jurisdiction of this Court under Article 226 of the Constitution of India, as there has been a notice issued before passing the impugned order by the Revenue and an opportunity of personal hearing was also given. This chance since has not been utilised by the petitioner, he cannot make a cry over the passing of the impugned order and therefore, the impugned order can be assailed by the petitioner on merits before the appellate authority. This writ petition is liable to be dismissed and is accordingly dismissed. 2022 (4) TMI 51 Refund in the event of reversal of Input Tax Credit carried forward by filing Form TRAN-1 - Transitional scheme - Section 142(3) of the GST Act read with the erstwhile provisions under the TNVAT Act - HELD THAT:- As has been rightly pointed out by the learned counsel for the petitioner, that on 23.05.2016 a reply-cum-request has been made by way of an application requiring the erstwhile VAT authorities to consider the refund claimed by the petitioner, for which supporting documents have been annexed - the said request having been acknowledged by the concerned Assistant Commissioner on 23.05.2016 itself, followed by the reminder dated 30.12.2016, the same ought to have been considered and decided on merits and disposed of there itself. They waited till the TNVAT regime to come to an end on the introduction of the GST regime from 01.07.2017, before which no orders seems to have been passed by the Revenue for the refund claimed by the petitioner. Even in respect of the applications which were filed and pending before the appointed date ie., 01.07.2017, the same could have been disposed of under the existing law ie., the TNVAT Act, which is possible under the transitional provision viz., Section 142(3) of the GST Act, which in fact has been quoted by the very respondent in the impugned order - When that being so, it is not known as to what was the difficulty of the Revenue to decide such refund claim filed by the petitioner within the meaning of Section 142(3) of the GST Act read with the erstwhile provisions under the TNVAT Act. Without considering the application of the petitioner for refund, the present order of reversal of the alleged inadmissible input tax credit with penalty and interest was made. Therefore, the impugned order cannot be proceeded further. This Court is inclined to dispose of this writ petition - petition disposed off. 2022 (4) TMI 50 Recovery of Tax - Seeking a direction to permit payment of the tax due from the petitioner for the months of February 2021 and March 2021 in 20 equated monthly instalments - seeking direction to permit the submission of returns in the subsequent months without initiating any coercive steps - HELD THAT:- It can be noticed that petitioner has no dispute on his liability for payment of tax for the months of February 2021 and March 2021. The financial difficulties faced by the petitioner due to Covid-19 pandemic is claimed to be the reason for seeking the benefit of payment of tax in instalments. Though section 80 of the Act confers power upon the Commissioner to extend the time for payment, the said benefit is limited for payments other than those due under self assessed returns. It is true that as far as the power of the Commissioner is concerned, there is a restriction on the power to grant instalments for payment of tax due. In cases of self-assessed returns, the Commissioner of GST does not have the power to permit payment of tax in instalments. In the present case, petitioner has not paid the tax for the period from February 2021 till date and hence he has already got the benefit of almost 12 months - the petitioner has already got the benefit of almost 12 months and respondents have agreed to accept the entire tax, if paid in full, immediately. In view of the aforesaid, a further grant of instalment is not warranted and the petitioner is bound to clear the liability without fail, immediately. The petitioner is bound to pay the tax for the month of February 2021 onwards, within a period of one month from the date of receipt of a copy of the judgment and if the tax due till date is received within the time directed, respondents shall accept the same and permit the petitioner to continue his registration under the Act - the writ petition is disposed of. 2022 (4) TMI 49 Exemption from GST or not - AAAR denined the benefit of exemption - services provided by the petitioner to school/educational organization in relation to ASSET examination - educational institution relating to conduct of examination by such institution or not - Entry Serial No.66 of the Notification No.12/2017-Central Tax (Rate) dated 28.06.2017 as amended by the Notification No.02/2018- Central Tax (Rate) dated 25.01.2018 - HELD THAT:- The term education has not been defined. The Supreme Court, in the case of SOLE TRUSTEE, LOKA SHIKSHANA TRUST VERSUS COMMISSIONER OF INCOME-TAX, MYSORE [ 1975 (8) TMI 1 - SUPREME COURT] , has explained the term education as a process of training and developing knowledge, skill, mind and character of students by formal schooling. The word education cannot be given a natural meaning by restricting it to the actual imparting of education to the students but should be given a wider meaning which would take within its sweep all the matters relating to imparting and controlling education. Examination is an essential component of education as it is one of the major means to assess and evaluate the skills of a candidate and the knowledge, be it a school test, university examination, professional entrance examination or any other examination. When the appellate authority says that the schools are not conducting the ASSET, or rather, the schools are facilitating the writ-applicant to conduct the ASSET, for which the schools get some remuneration towards the administration cost, it is thereby trying to erroneously convey that instead of the writ-applicant providing services to the schools, the schools are providing services to the writ-applicant, for which the schools receive administration cost - Indisputably, the question papers are set by the writ-applicant and the answers given by the students are assessed by the writ-applicant and the result of the ASSET is also prepared by the writ-applicant. The basic nature of the ASSET service is an examination to be conducted by the Educational Institution (School) but outsourced to the Educational Initiatives (EI). The observations made by the AAR in para 21.1 of its order clinches the issue. It is now well-settled that even in tax statutes, an exemption provision should be liberally construed in accordance with the object sought to be achieved if such provision is to grant incentive for promoting education or otherwise has some beneficial reason behind it. The exemption notification should be given a literal meaning - the exemption notification must be construed having regard to the purpose and object it seeks to achieve. The notification in the case on hand should be read as a whole. There need not be any further debate on the question, whether the services provided by the writ-applicant to the schools, which are educational institutions, fall within the meaning of the aforesaid notifications. The services, definitely fall within the two notifications referred. Writ application allowed. 2022 (4) TMI 48 Cancellation of registration of GST certificate of the petitioner - the documents or records relied upon by the respondent concerned, were never provided to the petitioner to enable the petitioner to contradict the said report - violation of principles of natural justice - HELD THAT:- The writ petition is disposed off by setting aside the impugned order dated 4th September, 2020 being Annexure P-10 to the writ petition with the direction upon the Deputy Commissioner of State Tax, Shibpur/respondent No.1 to consider afresh and dispose of the petitioner s application for revocation of cancellation of its registration in accordance with law and by passing a reasoned and speaking order after giving opportunity of hearing to the petitioner or its authorized representative within four weeks from the date of communication of this order and also to provide the documents to the petitioner to be relied on by the respondent, for the purpose of the final adjudication of the said application. Application disposed off. 2022 (4) TMI 47 Levy of GST - parcels of Ashapura that are being transported by GSRTC - exemption in terms of Sr. No 18 of Notification No 12/2017-Central Tax (Rate) whereby GSRTC is transporting parcels of Ashapura, but is neither GTA nor courier agency - rate of GST - SAC code for the transportation of goods by Road other than courier and GTA provided by GSRTC - requirement of service recipient to make payment of tax instead of service provider - applicability of N/N. 13/2017-Central Tax (Rate) - HELD THAT:- GSRTC provides services to such firms/ agencies (its service recipients) carrying on the business of transportation of parcels, specific allied services. GSRTC is agreed that it itself is not a courier agency as it is not engaged in door to door transportation of goods/articles/documents. It is a fact on record that Ashapura is engaged in door to door transportation of its parcel goods but not GSRTC. It is found from the agreement is that GSRTC s services to Ashapura is supporting the business of Ashapura, by transporting the parcels of Ashapura from one destination to other, wherein Ashapura is both the consignor and consignee at the respective bus stations. Ashapura utilises the services of GSRTC for enabling it ( Ashapura) for door to door delivery of parcels - the specific activity of GSRTC supplying parcel office space/cabin/shed to Ashapura falls under the category of infrastructural support services which is a subset of Business Support Services. Thus, GSRTC is not a Courier Agency as it is not involved in door to door transportation of goods/articles/documents. It is noted from Notification 11/2017- CT (R), a goods transport agency means any person who provides service in relation to transport of goods by road and issues consignment note, by whatever name called. In present case, GSRTC is providing service in relation to transport of goods by road and GSRTC issues parcel receipt. Thus, GSRTC supplies Business Support Service to its recipient - SAC is 998599, covering Other Support Services n.e.c.; GST rate being 18% - GSRTC is neither a GTA nor a courier agency. Income Tax 2022 (4) TMI 46 Reopening of assessment u/s 147 - scope and effect of the Income Declaration Scheme (IDS) - voluntary disclosure of untaxed income and the assessee s acknowledging income tax liability - substantial amount of unaccounted income of promoters/directors was introduced in the closely held companies of the assessee group through Shirish Chandrakant Shah, alleged to be a Mumbai based accommodation entry provider- through Pradeep Birewar, another accommodation entry provider based at Ahmedabad - revenue was of opinion that Shirish Chandrakant Shah was providing accommodation entries, through various companies controlled and managed by him, and that the assessee was one of the beneficiaries of the business - Whether declaration under the IDS can lead to immunity (from taxation)? - HELD THAT:- The details of income declaration by Garg Logistics under the IDS scheme was submitted by Pravin. P. Agrawal (the assessee s chairman) in support of its claim of genuineness of receipt of share capital. However, as noticed earlier, the basis for reopening the assessment in this case was the information from the material seized during search in cases of Shrish Chandrakant Shah and correlation with return of income of the assessee. Further, there was no scrutiny assessment done at the original assessment stage. As a matter of fact, M/s Garg Logistics filed its IDS application with a different Commissionerate which did not share information with the AO in the present case; he did not also call for any such information. Pravin Chandra Agrawal, the chairman of the assessee (M.R. Shah group) was queried with regard to the capital raised with high premium during a search, and post search inquiry. He submitted details of the IDS declaration by Garg Logistics Pvt Ltd to say that the amounts received toward share applications were genuine transactions. Clearly, in the present case, the High Court went wrong in holding that the department had shared confidential IDS information of Garg Logistics Pvt Ltd. AO utilized the material submitted by Pravin. P. Agrawal (the assessee s chairman) and correlated it with the ROC data filed by the assessee. Further, it is also apparent, that the AO s reasons to believe do not disclose any inquiry made in relation to Garg Logistic Pvt Ltd s account or declaration. Information or tangible material which the assessing officer comes by enabling re-opening of an assessment, means that the entire assessment (for the concerned year) is at large; the revenue would then get to examine the returns for the previous year, on a clean slate as it were. Therefore, to hold- as the High Court did, in this case, that since the assessee may have a reasonable explanation, is not a ground for quashing a notice under Section 147. As long as there is objective tangible material (in the form of documents, relevant to the issue) the sufficiency of that material cannot dictate the validity of the notice. As noticed previously the declarant was Garg Logistic Pvt Ltd and not the assessee. Facially, Section 192 affords immunity to the declarant: nothing contained in any declaration made under section 183 shall be admissible in evidence against the declarant for the purpose of any proceeding relating to imposition of penalty Therefore, the protection given, is to the declarant, and for a limited purpose. However, the High Court proceeded on the footing that such protection would bar the revenue from scrutinizing the assessee s return, absolutely. Quite apart from the fact that the re-opening of assessment was not based on Garg Logistic s declaration, the fact that such an entity owned up and paid tax and penalty on amounts which it claimed, were invested by it as share applicant, (though the share applicants were other companies and entities) to the assessee in the present case, cannot by any rule or principle inure to the assessee s advantage This court is, therefore, of the opinion that the High Court fell into error, in holding that the sequitur to a declaration under the IDS can lead to immunity (from taxation) in the hands of a non-declarant. The impugned judgment is hereby set aside. The AO is at liberty to take steps to complete the re-assessment. 2022 (4) TMI 45 Constitutional validity of several provisions of the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015 - proceedings under section 10 of the 2015 Act, calling upon the petitioner to explain why the amountshould not be added as income of the petitioner under the relevant provisions of the Act - HELD THAT:- As petitioner requested the respondent no.1 to allow him a hearing on the preliminary objections as raised questioning the jurisdiction of the respondent no.1 to issue the impugned notice and to dispose of the same by passing a speaking order so as to allow the petitioner reasonable time to challenge such order before the appropriate forum including the High Court. This writ petition stands disposed of with a direction upon the respondent no.1 to hear the petitioner tomorrow at 3.00 p.m. and pass an appropriate reasoned order, in accordance with law, on the objections of the petitioner in relation to the jurisdiction of the respondent no.1 to issue the impugned notice. All contentions on the point of jurisdiction as well as on merits are left open. We make it clear that no separate notice is required to be served on the petitioner since this order is made in the presence of his advocate-on-record, who shall communicate the time when the respondent no.1 intends to hear the petitioner. We grant the petitioner a fortnight s time, as prayed for, to make further submissions on merits if at all the objections to the jurisdictional issue raised by him are spurned by the respondent no.1. 2022 (4) TMI 44 Initiation of assessment proceedings u/s 148 - Scope of new Section 148A - validity of the assessment proceedings initiated against assessees after 1st April 2021 under the provisions of the Act, as it existed before 1st April 2021, read with the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 (the Relaxation Act) and the notifications issued thereunder - HELD THAT:- On a plain reading of Relaxation Act it is clear that the only powers granted to the Central Government by Relaxation Act is the power to notify the period during which actions are required to be taken that can fall within the ambit of Relaxation Act, and the power to extend the time limit within which those actions are to be taken. A plain reading of the impugned Explanations in Notification Nos.20 of 2021 and 38 of 2021 shows that it purports to clarify that the unamended provisions of Sections 147 to 151 of the Act will apply for the purposes of issue of notices under Section 148 of the Act, which is clearly ultra vires Relaxation Act. Reopening notices issued after 1st April, 2021 are unsustainable and bad in law even if one was to apply the Explanations to the Notification Nos.20 of 2021 and 38 of 2021. The Explanation seeks to extend the applicability of erstwhile Sections 148, 149 and 151. The impugned Explanation does not cover Section 147, which (as amended) empowers the revenue to reopen an assessment subject to Sections 148 to 153, which includes Section 148A. Thus, even if Explanations are valid, the mandatory procedure laid down by Section 148A has not been followed and hence, without anything further, the notices u/s 148 of the Act are invalid and must be struck down for this reason as well. This proposition has also been upheld by the Delhi High Court. As regards Revenue s arguments that Relaxation Act being a beneficial legislation must be given purposive interpretation , the purpose of Section 3(1) of Relaxation Act is to extend limitation periods as provided in a specified Act (including the Income-tax Act). The purpose of Section 3(1) of Relaxation Act is not to postpone the applicability of amended provisions of a Specified Act. Though Relaxation Act was in existence when the Finance Act, 2021 was passed, the Parliament has specifically enacted the new, (amended) provisions of Section 147 to 151 of the Act and made them applicable with effect form 1st April, 2021. Therefore, it is clear that amendment is to be applied from 1st April, 2021. Further, when there is no ambiguity on the applicability of the provision, there is no question of resorting to purpose test. As regards liberty granted by the Allahabad High Court, certainly, if the law permits issuance of notices under Section 148 of the Act (as amended), afresh, then no liberty is required to be granted by the Court, and it would be within the Assessing Officer s powers to initiate proceedings as per the amended law. The Madras High Court has considered this very plea and granted liberty to initiate reassessment proceedings in accordance with the provisions of the amended Act, if limitation for it survives . Section 3 of Relaxation Act falls in Chapter II of the said Act, which is titled Relaxation of Certain Provisions of Specified Act . In contradistinction, Section 4 of Relaxation Act which does amend several provisions of the Act falls in Chapter III, which is titled Amendments to the Income Tax Act, 1961 . It will be apposite to notice that the amendments provided for in Section 4 were made by the Legislature itself in terms of the said Section and no such power to amend the Act was delegated to the Central Government. Therefore, we would agree with Mr. Pardiwalla that it is only Section 4 of Relaxation Act which amended the Act and no such amendments to the substantive provisions of the Act were envisaged under Section 3 of Relaxation Act, which was only a relaxation provision dealing with time limits under various enactments. The explanations to the Notification No.20 of 2021 dated 31st March 2021 and Notification No.38 of 2021 dated 27th April 2021 are declared ultra vires and are, therefore, bad in law and null and void. all these writ petitions listed above are disposed by allowing the same. 2022 (4) TMI 43 Reopening of assessment u/s 147 - Eligibility of reasons to believe - reasons to believe recorded by AO only mentions that information available with department is that petitioner is involved in obtaining bogus bills from a paper shell company of Kolkata, but name of company from whom petitioner has obtained bogus bills has not been specifically mentioned by AO - HELD THAT:- If reasons are recorded by Assessing Officer based on certain information, then such information should be concrete and specific name of paper shell company should have been mentioned by Assessing Officer in reasons to believe, which is lacking in present case. Approval/sanction granted under Section 151 of the Act of 1961 is also not proper because sanctioning/approving authority in approval has only written 'approved'. From the assessment order u/s 143 (3) and reasons recorded by AO, it is apparent that Assessing Officer has committed mistake, which vitiates the entire proceedings. Had the Approving / Sanctioning authority considered the record in proper manner, the mistake committed by Assessing Officer could have been detected by it and sanction/approval might have not been granted. In these circumstances, pending final decision of this petition, some interim protection may be granted to the petitioner. Taking into consideration facts and circumstances of case, particularly contents of assessment order u/s 143 (3) of the Act of 1961 where total income of petitioner assessee has been accepted by AO, as also contents of reasons to believe recorded by AO, determining total loss and further considering that name of paper shell company has not been specifically mentioned by Assessing Officer in the reasons recorded, we are inclined to grant interim relief to petitioner pending disposal of this petition. 2022 (4) TMI 42 Assessment u/s 153A/153C or 147 - reasons supplied by the respondent in respect of maintainability of the notice issued u/s 148 - HELD THAT:- A perusal of the impugned order clearly indicates that, in para No. 5 of the impugned order, the respondent No. 3 has simplicitor quoted Section 153C of the I. T. Act and has held that in view of the said section, it was clear that, assessing officer had reopened case of the petitioner correctly as per the provisions of Section 147 of the I. T. Act. In our view, there are no reasons recorded by the respondent No. 3 in the impugned order. Various objections raised by the petitioner are required to be answered by sufficient and cogent reasons. The respondent No. 3 has not given any reasons while dealing with the objection and passing the impugned order. This Court in a case of Tata Capital Financial Services Limited [ 2022 (2) TMI 1093 - BOMBAY HIGH COURT] after adverting to various judgments of various Courts including the judgment of the Hon ble Supreme Court in a case of Commissioner of Income Tax Vs. Vasisth Chay Vyapar Ltd. [ 2018 (3) TMI 56 - SUPREME COURT] has formulated guidelines to be followed by the revenue while dealing with the objection raised by the assessee to the reasons furnished by the Assessing Officer. It is held by this Court that, if the reasons make reference to any other document or a letter or a report, such document or letter or report should be enclosed to the reasons. The order disposing the objections should deal with each objections and give proper reasons for the conclusion. In our view, the impugned order is in total violation of the principles laid down by this Court in a case of Tata Capital Financial Services Limited Vs. Assistant Commissioner of Income Tax Circle 1(3)(1) and others (supra). The Assessing Officer has to deal with each and every objection raised by the petitioner by recording reasons. The proceedings are restored before the respondent No. 3 for deciding objections raised by the petitioner to the reasons supplied by the respondent No. 2 while deciding the matter afresh. 2022 (4) TMI 41 Validity of Search u/s 132 - suppression of income as the profit declared is contrary to the actual profit received. - assessee has been receiving unaccounted cash and making cash payment for the land being alienated/sold/purchased - satisfaction note records that the information has been gathered through telephone enquiry to the effect that the assessee is in possession of undisclosed properties. HELD THAT:- Assessee would be in possession of money/bullion/ jewellery/other valuable article or thing which represents partly or wholly the income of the assessee mentioned in Table-1 and accordingly, search and seizure action requires to be carried out. Though the use of the words 'reason to suspect' is found in the said Confidential Note produced before the Court, a perusal of the Note and taking note of the reference to particular transactions, the discrepancy between the income declared and the profits from the projects which is detailed in the material would clearly amount to material being available which would be sufficient for constituting 'reasons to believe' leading to exercise of power under Section 132. It cannot be stated that the exercise of power invoking Section 132 in the present case in light of the material produced before the Court is one that would call for interference in exercise of power under Article 226 of the Constitution of India. The power for re-assessment is no doubt a remedy available to the Authority but in light of the information as detailed in the note, grounds have been made out for exercise of power u/s 132(c) in the present case and it cannot be said that the said action is either malafide/arbitrary/capricious. Accordingly, the Court finds no reason for interfering with the action taken under Section 132. Liberty is however kept open for the petitioner to challenge the impugned orders in appropriate proceedings. Other contentions of the petitioner are kept open 2022 (4) TMI 40 Assessment proceedings u/s 148 - Scope of new Section 148A - validity of the assessment proceedings initiated against assessees after 1st April 2021 under the provisions of the Act, as it existed before 1st April 2021, read with the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 (the Relaxation Act) and the notifications issued thereunder - HELD THAT:- As relying on SUDESH TANEJA WIFE OF SHRI CP TANEJA [ 2022 (1) TMI 1212 - RAJASTHAN HIGH COURT] no notice under Section 148 would be issued for the past assessment years by resorting to the larger period of limitation prescribed in newly substituted clause (b) of Section 149(1). This would indicate that the notice that would be issued after 01.04.2021 would be in terms of the substituted Section 149(1) but without breaching the upper time limit provided in the original Section 149(1) which stood substituted. No indication of surviving the past provisions after the substitution and in fact an active indication to the contrary, inescapable conclusion that we must arrive at is that for any action of issuance of notice under Section 148 after 01.04.2021 the newly introduced provisions under the Finance Act, 2021 would apply. Mere extension of time limits for issuing notice under section 148 would not change this position that obtains in law. Under no circumstances the extended period available in clause (b) of sub-section (1) of Section 149 which we may recall now stands at 10 years instead of 6 years previously available with the revenue, can be pressed in service for reopening assessments for the past period. This flows from the plain meaning of the first proviso to sub-section (1) of Section 149. In plain terms a notice which had become time barred prior to 01.04.2021 as per the then prevailing provisions, would not be revived by virtue of the application of Section 149(1)(b) effective from 01.04.2021. All the notices issued in the present cases are after 01.04.2021 and have been issued without following the procedure contained in Section 148A of the Act and are therefore invalid. The subordinate legislation could not have travelled beyond the powers vested in the Government of India by the parent Act. Even otherwise it is extremely doubtful whether the explanation in the guise of clarification can change the very basis of the statutory provisions. If the plain meaning of the statutory provision and its interpretation is clear, by adopting a position different in an explanation and describing it to be clarificatory, the subordinate legislature cannot be permitted to amend the provisions of the parent Act. Accordingly, these explanations are unconstitutional and declared as invalid. We are unable to persuade ourselves to accept this analysis of the situation. In our understanding by virtue of notifications dated 31.03.2021 and 01.04.2021 issued by CBDT substitution of reassessment provisions framed under the Finance Act, 2021 were not deferred nor could they have been deferred. The date of such amendments coming into effect remained 01.04.2021. In the result we find that the notices impugned in the respective petitions are invalid and bad in law. The same are quashed and set aside. The learned Single Judge committed no error in quashing these notices. All the writ petitions are allowed. Appeals of the revenue are dismissed. 2022 (4) TMI 39 Initiation of assessment proceedings u/s 148 - Scope of new Section 148A - validity of the assessment proceedings initiated against assessees after 1st April 2021 under the provisions of the Act, as it existed before 1st April 2021, read with the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 (the Relaxation Act) and the notifications issued thereunder - HELD THAT:- As relying on SUDESH TANEJA WIFE OF SHRI CP TANEJA [ 2022 (1) TMI 1212 - RAJASTHAN HIGH COURT] no notice under Section 148 would be issued for the past assessment years by resorting to the larger period of limitation prescribed in newly substituted clause (b) of Section 149(1). This would indicate that the notice that would be issued after 01.04.2021 would be in terms of the substituted Section 149(1) but without breaching the upper time limit provided in the original Section 149(1) which stood substituted. No indication of surviving the past provisions after the substitution and in fact an active indication to the contrary, inescapable conclusion that we must arrive at is that for any action of issuance of notice under Section 148 after 01.04.2021 the newly introduced provisions under the Finance Act, 2021 would apply. Mere extension of time limits for issuing notice under section 148 would not change this position that obtains in law. Under no circumstances the extended period available in clause (b) of sub-section (1) of Section 149 which we may recall now stands at 10 years instead of 6 years previously available with the revenue, can be pressed in service for reopening assessments for the past period. This flows from the plain meaning of the first proviso to sub-section (1) of Section 149. In plain terms a notice which had become time barred prior to 01.04.2021 as per the then prevailing provisions, would not be revived by virtue of the application of Section 149(1)(b) effective from 01.04.2021. All the notices issued in the present cases are after 01.04.2021 and have been issued without following the procedure contained in Section 148A of the Act and are therefore invalid. The subordinate legislation could not have travelled beyond the powers vested in the Government of India by the parent Act. Even otherwise it is extremely doubtful whether the explanation in the guise of clarification can change the very basis of the statutory provisions. If the plain meaning of the statutory provision and its interpretation is clear, by adopting a position different in an explanation and describing it to be clarificatory, the subordinate legislature cannot be permitted to amend the provisions of the parent Act. Accordingly, these explanations are unconstitutional and declared as invalid. We are unable to persuade ourselves to accept this analysis of the situation. In our understanding by virtue of notifications dated 31.03.2021 and 01.04.2021 issued by CBDT substitution of reassessment provisions framed under the Finance Act, 2021 were not deferred nor could they have been deferred. The date of such amendments coming into effect remained 01.04.2021. In the result we find that the notices impugned in the respective petitions are invalid and bad in law. The same are quashed and set aside. The learned Single Judge committed no error in quashing these notices. All the writ petitions are allowed. Appeals of the revenue are dismissed. 2022 (4) TMI 38 Disallowance of interest expenditure u/s 14A read with Rule 8D - sufficiency of own funds - HELD THAT:- As the present assessee before us undeniably has sufficient self-owned funds available with it to explain the investments made in exempt income yielding assets, therefore, in the backdrop of our aforesaid deliberations the disallowance of interest expenditure made by the A.O. under section 14A r.w Rule 8D(2)(ii) cannot be sustained and is accordingly vacated. Before parting, we may herein observe, that as the assessee has in his grounds of appeal assailed the disallowance u/s 14A only qua the disallowance of interest expenses, therefore, we are confining our adjudication only to the said extent. Ground of appeal No.1 is partly allowed in terms of aforesaid observations. Disallowance out of management and development expenses for investments - attributing the same towards investments made in exempt income yielding assets - HELD THAT:- On the one hand the A.O. had worked out the disallowance of the administrative expenses to the extent the same were relatable to earning of the exempt income i.e, by triggering the provisions of Section 14A r.w Rule 8D, while for on the other hand he had separately, on a pro-rata basis, disallowed an amount out of the management and development expenses, for the reason, that the same to the said extent could be related to the investments made in exempt income yielding assets. We are unable to comprehend as to on what basis the A.O. had taken recourse to this double edged sword, on the basis of which, he had on the one hand worked out the disallowance under Sec. 14A as per the mechanism contemplated in Rule 8D, and thereafter, on a pro-rata basis made a separate disallowance of the amount debited in the P L A/c. We are unable to concur with the aforesaid novel disallowance made by the A.O. and set-aside the order of the CIT(A) to the extent he had upheld the same. Adhoc disallowance out of telephone and travelling expenses - HELD THAT:- We find that the disallowance made by the A.O was prompted by the fact that assessee had not maintained any log book. Admittedly, non-maintenance of a log book would raise serious doubts as regards the claim of the assessee of having incurred the entire amount of expenditure in question wholly and exclusively for its business purpose. Considering the fact that personal telephone expenses of the partners of the assessee firm were separately debited in their respective capital accounts, therefore, A.O should have considered the same while working-out the disallowance on account of personal usage/element of the said expenditure. Although, the involvement of the personal element of the aforesaid expenditure cannot be ruled out, however, in all fairness the same can safely be estimated at ₹ 50,000/- Appeal of the assessee is partly allowed. 2022 (4) TMI 37 Admission of certain additional evidences which are critical - CIT(A) not accepting the additional evidences filed by the assessee on the only ground that it was not accompanied by an affidavit - HELD THAT:- The appellate authority acted in violation of rule 46A and the acceptance of the documents as additional evidence de hors rule 46A of the Rules, because the appellant is not entitled to produce oral or documentary evidence afresh before the appellate authority, as a matter of right. Under special and certain circumstances only, as mentioned, in clauses (a), (b ), (c) and (d) of rule 46A(1) additional evidence can be adduced. Rule 46A itself contains the principles of natural justice. That being so, sub-rule (4) of rule 46A does not permit to accept any additional evidence in contravention of the provisions of sub-rules (2) and (3) of rule 46A. The appellate authority is not permitted to act whimsically while exercising the jurisdiction under rule 46A of the Rules. Accordingly,these additional evidences which are now sought to be admitted would be in the interest of proper adjudication of the issues at hand, the same are hereby admitted and the matter is set-aside to the file of AO to examine the same and decide the matter as per law after providing reasonable opportunity to the assessee as the earlier order disputed is also passed u/s 144 and therefore we deem it fit to remand it back to the file of AO. The impugned order passed by the Lower authority is hereby quashed and set aside. The appeal is remanded to the AO, who shall make an endeavour to dispose of the entire appeal in accordance with law - Appeal of the assessee is allowed for statistical purposes. 2022 (4) TMI 36 Disallowance relating to PF ESIC contribution - addition u/s 36(1)(va) r.w.s.2(24)(x) - scope of applicability of the amendments that have been made available on the statue vide the Finance Act, 2021, i.e, Explanation 5 to Section 43B and Explanation 2 to Section 36(1)(va) - HELD THAT:- We are of the considered view, that as the amendments made available on the statue vide the Finance Act, 2021 i.e Explanation 5 to Section 43B and Explanation 2 to Section 36(1)(va) are applicable w.e.f 01.04.2021, i.e, from A.Y 2021-22 onwards, therefore, the same would not have any bearing on the case of the assessee before us, i.e, for A.Y 2011-12. Accordingly, we, herein conclude, that as the employees contributions to PF and ESI was deposited by the assessee before the due date of filing of its return of income for the year under consideration, therefore, the same being saved by the provisions of Sec. 43B of the Act could not have been disallowed by the A.O. We, thus, in the backdrop of our aforesaid deliberations set-aside the order of the CIT(A) and vacate the disallowance made by the A.O. Ground of appeal No. 1 is allowed in favour of assessee. Inadmissible expenses u/s 14A r.w.r.8D - HELD THAT:- We are unable to persuade ourselves to subscribe to the disallowance worked out by the Assessing Officer u/s.14A of the Act, i.e, de-hors any exempt dividend income having been earned by the assessee during the year under consideration. We, thus, direct the Assessing Officer to vacate the disallowance made by him u/s.14A r.w.r 8D. Thus, the Ground of appeal No.2 raised in appeal by the assessee is allowed 2022 (4) TMI 35 Penalty u/s 271(1)(c) - defective notice u/s 274 - non specification of clear charge - HELD THAT:- Now when as per the settled position of law the two defaults, viz. concealment of income and furnishing of inaccurate particulars of income are separate and distinct defaults, therefore, in case the A.O sought to have proceeded against the assessee for either of the said defaults, then, it was incumbent on his part to have clearly specified his said intention in the Show cause notice, which we find he had failed to do in the case before us. The aforesaid failure on the part of the assessee cannot be dubbed as merely a technical default, because the same had clearly divested the assessee of its statutory right of being heard and defend its case. In the present case the failure on the part of the A.O to clearly put the assessee to notice as regards the default for which penalty under Sec. 271(1)(c) was sought to be imposed on it by specifying the default in the SCN , dated 30.03.2013, had left the assessee guessing of the default for which it was being proceeded against. In the backdrop of our aforesaid observations, we are of a strong conviction, that as the A.O had clearly failed to discharge his statutory obligation of fairly putting the assessee company to notice as regards the default for which it was being proceeded against, therefore, the penalty under Sec. 271(1)(c) imposed by him being in clear violation of the mandate of Sec. 274(1) of the Act cannot be sustained. We, thus, for the aforesaid reasons not being able to persuade ourselves to subscribe to the imposition of penalty by the A.O, therefore, set-aside the order of the CIT(A) who had upheld the same. - Appeal of assessee allowed. 2022 (4) TMI 34 Addition u/s 68 towards trade creditor outstanding for payment as on 31.03.2012 as per balance sheet of the Assessee company - Commissioner deleted the addition in hand - HELD THAT:- We have given our thoughtful consideration to the above factual position and determination made by the Ld. Commissioner. Before us the aforesaid facts remained un-controverted and even otherwise we do not find any material and/or any plausible reason to take a contrary view against the conclusion drawn by the ld. Commissioner. Consequently, ground no. 1 stands dismissed. TDS u/s 195 - Non-deduction of TDS qua payments of marketing expenses - HELD THAT:- Commissioner while considering the aforesaid claim of the Assessee and analyzing the provisions of section 9 195 of the Act, held that the DTAA between India and Ireland provides that the profits of the foreign enterprise shall be taxable only if it had carried on business in India through a permanent establishment ( PE ) situated therein. The Ld. Commissioner also observed that FII has certified that it has no permanent establishment ( PE ) in India and is a resident of Ireland for taxation purposes. Commissioner finally concluded that there was no liability of tax on payments made for advertising services to FII. Before us the aforesaid facts remained uncontroverted and even otherwise we do not find any material and/or any reason to take a contrary view against the conclusion drawn by the ld. Commissioner. Consequently, ground no. 2 also stands dismissed. 2022 (4) TMI 33 Levy of penalty u/s 271(1)(c) - defective notice u/s 274 - non specification of clear charge - addition of unexplained cash deposits in the bank account - - HELD THAT:- Notice u/s. 274 r.w.s. 271(1)(c) of the Act is to be issued to the assessee. The aforesaid notice should specifically indicate on which ground penalty is sought to be imposed, whether for concealment of income or for furnishing inaccurate particulars of income. In the present case, the perusal of assessment order passed by the AO reveals that in the Assessment Order, no specific finding has been recorded by the AO as to whether it is a case of concealment of income or a case of furnishing of inaccurate particulars of income. In the notice dated 26.12.2016, issued under Section 274 read with Section 271 of the Act, the copy of which is placed at page 2 of the paper book, the inapplicable portion or limb of Section 271(1)(c) of the Act has not been struck off. It is a settled law that the two limbs i.e. concealment of particulars of income and furnishing of inaccurate particulars of income carry different connotations. Various High Courts have held that Assessing Officer must indicate in the notice for which of the two limbs he proposes to impose the penalty and for this the notice has to be appropriately marked. If in a printed format of the notice the inapplicable portion is not struck off thus not indicating for which limb the penalty is proposed to be imposed, it would lead to an inference as to non application of mind, thus vitiating imposition of penalty. As relying on M/S. SAHARA INDIA LIFE INSURANCE COMPANY, LTD. [ 2019 (8) TMI 409 - DELHI HIGH COURT] penalty u/s 271(1)(c) was not leviable when the notice issued by AO did not specify as to whether the proceedings were initiated for concealment of particulars of income or for furnishing of inaccurate particulars of income. - Decided in favour of assessee. 2022 (4) TMI 32 Revision u/s 263 by CIT - as observed by the Ld. PCIT that as per proviso to Section 92C(4) of the Act no deduction u/s 10A or 10AA or under Chapter VI-A is to be allowed in respect of amount of income by which the total income of the Assessee is enhanced as a result of computation of arm s length price - error of allowing deduction on addition of transfer pricing adjustment resulted into under assessment of income and such under assessment resulted into short levy of tax under normal provisions including interest u/s 234B - claim of the Assessee that the orders under Section 143(3) and 154 of the Act have been passed after holding appropriate verification and necessary enquiry and perusing the documents/details submitted before the AO during the assessment proceedings HELD THAT:- From the soft paper book it clearly reflects that the Assessee had claimed as deduction u/s 10A of the Act and also given details of the same. The said deduction was inquired by the Assessing Officer by issuing a questionnaire/notice u/s 142(1) of the Act whereby Assessee was asked to submit the documents in respect of the deduction and exemptions claimed and also to give a brief note as to why deduction/exemption claimed be accepted by the Department. Assessee in response to the said notice/ questionnaire replied and filed the details of exemption claimed u/s 10A. The Assessee also filed a letter of permission issued by Software Technologies Parks of India, whereby the Assessee s unit was declared as hundred percent export oriented unit and permission was granted under the STP scheme for the development of computer software and IT enabled service. Assessee claimed that the Assessing Officer thoroughly considered the claim of the Assessee by perusing the details and documents submitted and note on justification of the deductions claimed u/s 10A of the Act and hence the order passed u/s 163 is liable to be set aside. Regarding the claim of the revenue that, no deduction is allowable u/s 92C(4) of the Act, we have perused the proviso again, wherefrom it is clear that no deduction 10A of the Act shall be allowed in respect of the amount of income by which the total income of the Assessee enhances after computation of income under this sub-section. The Assessee had claimed that it has not recomputed the claim of deduction u/s 10A, however just claimed the deduction of INR 317,480,850 which is same as that computed at the time of filing return of income as clearly reflects from Form 56F. The claim under Section 10A is not enhanced on account of transfer pricing addition and since the Assessee is not claimed deduction u/s 10A on enhanced assessed income and therefore the proviso to Section 92C(4) shall not apply. We have given out thoughtful consideration to the rival claims of the parties and came to the considered view that here the case is not of the enhancement of income as the deduction was not allowed against the enhanced assessed income and therefore the proviso to Section 92C(4) as specifically referred by the Ld. DR, at all is not applicable to the instant case. - Assessee appeal allowed. 2022 (4) TMI 31 Revision u/s 263 - deduction u/s 80IB(10) - HELD THAT:- AO raised the query and Assessee submitted the copy of certificate of completion of housing projects as well as the audit report for claiming deduction under section 80IB in form No.10 CCB - the assessee gave complete details of the stock, sales of flats vide letter dated 19th December, 2017 - details of closing stock showing flat no was also submitted - we find that the assessee has submitted whatever details were asked for by the AO and thereafter allowed the claim of the assessee. As also shown to him that these appeals for AY 2015-16 and the assessee is claiming deduction under section 80IB(10) of the Act since 2008-09. There has been no dispute with respect to the satisfaction of condition relevant to that section. Therefore, this issue was also examined by the learned AO during the assessment proceedings. The issue remains that the PCIT while passing the order has stated that assessee did not comply with date of hearing on 20th February, 2020 and therefore, order was passed without considering the explanation of the assessee. We find that assessee has sent email on 19th March, 2020 explaining the reasons that on account of provision of Section 263 cannot be exercised for the impugned assessment year. However, this explanation was not considered by the learned PCIT though order u/s 263 was passed on 24/3/2020. It is apparent that assessee did not attend the hearing on 20/2/2020 but before the order was passed assessee submitted its reply. Therefore in the interest of justice , we direct the assessee to produce the copy of the mail before the ld PCIT and raise all the contention once again on the issue of allowability of claim u/s 80 IB (10) of the Act. When this proposition was expressed at the time of hearing , both the parties agreed to it - we set aside the matter back to the file of the learned PCIT to examine the submission of the assessee sent through email dated 19th March, 2020 and then to decide the issue whether the order of the learned Assessing Officer is erroneous and prejudicial to the interest of the Revenue or not, only on the aspect of claim of deduction under section 80IB(10) of the Act. PCIT on consideration of the explanation submitted by the assessee, if he feels that still the jurisdiction lies with him and the order passed by the learned Assessing Officer is still erroneous so far as prejudicial to the interest of the Revenue, grant opportunity for hearing to the assessee and then decide the issue on its merit. In view of this, Ground no 1 2 of the appeal are partly allowed. 2022 (4) TMI 30 Recovery of Tax - Company under liquidation under the IBC - Disallowance on account of loss incurred out of trading in shares - HELD THAT:- Assessment year involved is 2015-16, and the AO has passed the assessment order on 27.12.2017, and the appellate order thereupon was passed on 27.12.2018. While NCLT has passed Resolution plan on 22.11.2017, and in the absence of any Resolution Plan, it was ordered to be liquidated vide order dated 22.11.2017. On completion of liquidation process, assessee-company was dissolved by the NCLT vide order dated 30.6.2020. Claim of the Department was prior to the date of Resolution Plan approved by the NCLT, and therefore, the present income tax proceedings is hit by section 31(1) of Insolvency and Bankruptcy Code, 2016, which has overriding effect vis-a-vis. the Income Tax Act, 1961. All these events are within the knowledge of the Income Tax Department, as the OL of assessee-company has intimated the Department from time to time in writing, but no action has been taken by the Department. Once a company is dissolved it becomes a non-existent party and therefore no action can be brought in its name. Therefore, in view of overriding effect of IBC code to the Income Tax proceeding, we hold that Revenue is not entitled to recover the claim, if any arising from the present proceedings for Asst. year 2015-16, as the same is not part of the resolution plan. 2022 (4) TMI 29 Deductibility of tax at source on year-end provisions - No TDS remitted to the Government account - assessee submitted before the AO that provisions were made on ad hoc basis for the services received during the month of March and these provisions were reversed in the subsequent month i.e. in the month of April. Therefore tax was not deducted at source - As per DR even the amounts credited to the provision account instead of the party account by the assessee are clearly within the liability for the tax deduction under the provisions of the Act - HELD THAT:- As relying on M/s.Toyota Kirloskar Motor Pvt. Ltd [ 2021 (4) TMI 276 - KARNATAKA HIGH COURT] that the demand u/s 201(1) shall not be raised, when the assessee subsequently deducts tax at source at the time of payment. We also notice that the Tribunal has visualised various other possibilities also and dealt with them in accordance with law. Following the above said decision, we set aside the orders passed by Ld CIT(A) and restore all the issues to the file of the assessing officer for re-examining the issue in the light of principles - Appeal of the assessee is treated as allowed for statistical purposes. 2022 (4) TMI 28 Assessment u/s 153C - incriminating seized material found in search or not? - HELD THAT:- We are dealing with the search in question dated 11.03.2010 in M/s. MBS Jewellers (P) Ltd. And that the corresponding satisfaction on the AO's part had to be to the effect that the specified incriminating seized material belongs to a person other than the searched party. Coupled with this, learned Counsel has already filed a copy of the tribunal's order in M/s. Ashi Plywood Industries is the very search that the Assessing Officer had not recorded a valid satisfaction u/s. 153C as well. We thus follow the judicial consistency to affirm the CIT's identical lower appellate findings in the absence of any distinction on facts and circumstances involved herein. Revenue appeal dismissed. 2022 (4) TMI 27 Assessment u/s 153A - valid satisfaction recorded u/s. 153C or not ? - specified incriminating seized material belongs to a person other than the searched parties - HELD THAT:- DR could hardly rebut the fact that the Assessing Officer herein had only recorded the corresponding seized material as relates to the assessee whereas the said statutory expression stood inserted in the Act w.e.f. 1.6.2015 only. We are dealing with the search in question dated 11.03.2010 in M/s. MBS Jewellers (P) Ltd. and that the corresponding satisfaction on the Assessing Officer's part had to be only to the effect that the specified incriminating seized material belongs to a person other than the searched parties. Coupled with this, learned counsel has already filed a copy of the tribunal's order in M/s. Ashi Plywood Industries relating to the very search that the Assessing Officer had not recorded a valid satisfaction u/s. 153C as well. We thus follow judicial consistency to affirm the CIT(A)'s identical lower appellate findings in the absence of any distinction on facts and circumstances involved herein. 2022 (4) TMI 26 Assessment u/s 153A - assessee has failed to substantiate his claim with necessary evidences, including books of account to reconcile undisclosed income determined by the Assessing Officer on the basis of net worth method - AO computed undisclosed income on the basis of net worth method, when the assessee has failed to produce necessary books of account and other details to reconcile various incriminating materials found during the course of search - CIT(A) rejected books of account on the ground that same were reconstructed after date of search and said finding appears to be reasonable - HELD THAT:- When the assessee has filed reconciliation explaining difference in undisclosed income computed by the AO when compared to undisclosed income returned by the assessee with certain explanation, then the CIT(A) ought to have been entertained arguments of the assessee. In this case, CIT(A) has summarily rejected arguments of the assessee and sustained additions made by the assessee towards undisclosed income on net worth method. Assessee should get one more opportunity before lower authorities to explain his case - DR vehemently argued and requested to set aside appeals to the CIT(A) to re-examine claim of the assessee. Considering complexity involved in the case, we deem it appropriate to set aside appeals of the assessee to the file of the learned CIT(A) and direct the CIT(A) to reconsider the issues afresh in light of various additional evidences filed by the assessee, including reconciliation filed for explaining undisclosed income computed by the AO - Appeal filed by the assessee for the assessment year 2009-10 is treated as allowed for statistical purposes. 2022 (4) TMI 25 Revision u/s 263 - CIT revised the assessment order passed by the AO u/s.143(3) r.w.s. 153B on the ground that assessment order passed by the AO is erroneous insofar as, it is prejudicial to the interests of revenue on the issue of loan liability shown by the assessee in the name of Mr. P.Udhayashankar for the year ending 31.03.2015 - HELD THAT:- We find that during the course of assessment, neither the assessee furnished necessary explanation with regard to loan liability in the name of Mr. P.Udhayashankar, nor the AO has examined the issue in light of relevant provisions of the Act. Therefore, we are of the considered view that assessment order passed by the AO u/s.143(3) r.w.s. 153B of the Act, is erroneous insofar as, it is prejudicial to the interests of revenue. As regards claim of the assessee that CIT ought not to have revised assessment order on the basis of statement of facts filed before the Income-tax Settlement Commission and confession statement of Mr. P. Udhayashankar, we find that purported lender categorically denied of having any loan transactions with the assessee. Moreover, facts brought out by the CIT clearly shows that Mr. P. Udhayashankar has not admitted loan transactions of the assessee in the application filed before the Income-tax Settlement Commission. Even before the High Court in the Writ Petition, the Hon'ble High Court noticed that the petitioner could not able to establish that he approached the settlement commission with clean hands and element of true and full disclosures as contemplated u/s.245C had not been established. Purported loan transaction of the assessee with Mr. P.Udhayashankar is not explained. AO neither examined the issue nor called for any explanation from the assessee. Therefore, there is no error in the reasons given by the CIT to hold that assessment order passed by the Assessing Officer as erroneous insofar as, it is prejudicial to the interests of revenue. Hence, we are inclined to uphold order passed by the learned CIT u/s.263 and dismiss appeal filed by the assessee. 2022 (4) TMI 24 Discount on share under the ESOP as an allowable deduction - HELD THAT:- The assessee has not placed on record the stock of option plan 2009, namely, Flight Raja Employees Stock Option Plan 2009 nor the further amended plan vide Flight Raja Employees Stock Option Plan 2013 (ESOP). The Hon'ble High Court in the case of CIT v. Biocon Limited [ 2020 (11) TMI 779 - KARNATAKA HIGH COURT] had held that deduction of discount on ESOP is to be spread over the vesting period in accordance with the accounting in the books of account. The assessee has not produced the employee stock option plan 2009 and the amended plan, hence, we are not in a position to determine whether the vesting was in a graded manner over the period of four years or not. Therefore, in the interest of justice and equity, the matter is restored to the files of the A.O. A.O. is directed to follow the judgment of the Hon'ble jurisdictional High Court in the case of CIT v. Biocon Limited [ 2020 (11) TMI 779 - KARNATAKA HIGH COURT] - AO shall afford a reasonable opportunity of hearing to the assessee. The assessee shall cooperate with the A.O. for the expeditious disposal of the matter. 2022 (4) TMI 23 Penalty u/s 272A(2)(k) - assessee failed to furnish the quarterly TDS statements within the time prescribed under section 200(3) - as per AO assessee failed to file any reply with supporting evidences to establish that there was reasonable cause for late filing of the TDS statements - HELD THAT:- Employees of the assessee were not well acquainted with the procedure of e-filing of TDS return which was made effective from assessment year 2008-09. Assessee had submitted, the employees were still at learning stage, as far as computerized system of filing is concerned, since, the bank in the near past had switched over itself from old system to CBS system and the employees are getting acquainted with the new banking software - aforesaid submissions made by the assessee constitute a reasonable explanation under section 273B - there is no justifiable reason for imposing penalty, merely, because there is delay in furnishing the TDS quarterly statements - Commissioner (Appeals) has not gone into the merits of the issue and dismissed assessee's appeal in limine. Even, accepting that assessee's version of delay is not correct and actual delay is of 80 days, in our view, such delay not being fatal should have been condoned as the assessee has made out a case for condonation of delay. When the appeal filed by the assessee is against the imposition of penalty under section 272A(k), we fail to understand what more clarification was required by Commissioner (Appeals) regarding the nature of relief sought by the assessee. In view of the aforesaid, we delete the penalty imposed under section 272A(2)(k) - Decided in favour of assessee. 2022 (4) TMI 22 Reopening of assessment u/s 147 - reopening beyond four years - HELD THAT:- Assessee was reopened u/s 147 after a period of four years from the end of the assessment year. The proviso to section 147 which mandates that the re-opening beyond 4 years from the end of relevant assessment year can only made if underassessment or escapement is by reasons of the failure of the assessee to disclose any material facts. Thus reopening of assessment after expiry of four years can only be made if the condition as laid down in the proviso to Section 147 of the Act are satisfied that is failure on the part of the assessee to truly and fully disclose any material fact or information which ultimately leads to escapement of income. Assessee has made full disclosure of these transactions in the books of account which have been examined at length by the AO during the course of original assessment proceeding. Therefore, the reopening of assessment u/s 147 in the present case, without any reference to failure on the part of the assessee to disclose all facts regarding the said loans in the return of income books of account and also during the assessment proceeding, is not justified and is in violation to proviso to section 147 - The case of the assessee finds support from the decision of New Delhi Television Ltd. [ 2020 (4) TMI 133 - SUPREME COURT] wherein it has been held that where the assessee has disclosed all material facts qua the issuance of convertible bonds, thus there was no failure on the part of the assessee to disclose material facts and therefore notice issued to the assessee u/s 147 of the Act after a period of 4 years has been quashed. Assessment was completed u/s 143(3) and thereafter the AO received the information from Investigation Wing that the assessee has received bogus loans in the form of accommodation entries and on that basis the case of the assessee was reopened. The assessment was reopened after a period of more than 4 years on the ground that sources of loan funds were not explained. Considering the facts of the present case before us in the light of the aforesaid decisions, we are inclined to hold that the reopening of assessment is invalid and is accordingly quashed. The cross objection of the assessee is allowed. 2022 (4) TMI 21 Validity of order passed u/s 144C(13) - computation of total income and tax liability in the draft assessment order - HELD THAT:- A perusal of the ITR acknowledgement exhibited shows that total income returned by the assessee - If the computation of tax liability in the draft assessment order is seen with the total income returned by the assessee, it clearly shows that the Assessing Officer did not intend to make any variation in the income of the assessee. Therefore, the assessment order should have been framed as per the provisions of section 153 r.w.s 143(3) of the Act, meaning thereby that the assessment order dated 29.09.2019 is barred by limitation. In light of the facts discussed hereinabove, we have no hesitation to hold that the assessment order is barred by limitation. Since we have held that the assessment order is barred by limitation, we do not find it necessary to dwell into the merits of the case. 2022 (4) TMI 20 Disallowance u/s 14A r.w. Rule 8D(2)(ii) and 8D(2)(iii) on account of expenditure incurred for earning of tax exempt income - HELD THAT:- As decided in SOUTH INDIAN BANK LTD. VERSUS COMMISSIONER OF INCOME TAX [ 2021 (9) TMI 566 - SUPREME COURT] the proportionate disallowance of interest is not warranted under Section 14A of Income Tax Act for investments made in tax free bonds/ securities which yield tax free dividend and interest to Assessee Banks in those situations where, interest free/own funds available with the Assessee, exceeded the investments. As Hon ble Supreme Court in the case of CIT (LTU) vs. Reliance Industries Ltd.[ 2019 (1) TMI 757 - SUPREME COURT] wherein it has been held that if the assessee is possessed of sufficient interest free funds to meet the investments, then, under the circumstances presumption will be that the interest free advances/investments have been made by the assessee out of owned funds/interest free funds. In view of above discussion, no disallowance is attracted on account of interest expenditure u/s 14A of the Act read with Rule 8D(2)(ii) of the I. T. Rules. Disallowance of administrative expenditure u/s14A of the Act read with Rule 8D(2)(iii) the issue is squarely covered by the decisions of the Hon ble Delhi High Court in the case of Joint Investments Private Ltd[ 2015 (3) TMI 155 - DELHI HIGH COURT] and further in the case of ACB India Limited vs. ACIT [ 2015 (4) TMI 224 - DELHI HIGH COURT] wherein it has been held that for computing the average value of investment u/s 14A of the Act read with rule 8D(2)(iii), only the investment yielding non-taxable income have to be considered and not the entire investment. In view of this, the Assessing Officer is directed, accordingly, to consider only the investments yielding tax exempt income for computation of disallowance under Rule 8D(2)(iii) of the I.T. Rules. In view of the above discussion, the impugned order of the CIT(A) is set aside. Appeal of the assessee stands partly allowed. 2022 (4) TMI 19 Addition u/s 68 - bogus accommodation entry in the guise of share capital and premium - HELD THAT:- Facts on record show that the assessee received investment from M/s Blue Bay Hospitality Pvt. Ltd through banking channel and the fair value of the shares have been determined as per the guidelines of the RBI. The undisputed fact is that on a reference made by the competent authority to FT TR,I CBDT, the Mauritius authorities have confirmed the transaction. Mauritius Taxing Authority have also confirmed that Shri Joseph Thomas is the ultimate beneficial owner of M/s Blue Bay Hospitality Pvt. Ltd and has given unsecured loan to the company. The Mauritius Taxing authority have also confirmed that the entire transaction has been done through banking channel and have also forwarded the bank statement of M/s Blue Bay Hospitality Pvt. Ltd. The funds were received with the permission from the RBI. Source of the source of the investment received by the assessee from M/s Blue Bay Hospitality Pvt. Ltd has been conclusively explained by the assessee and such source of source have been confirmed by the Manutius Revenue authority vide letter dated 04.05.2015 to the FT TR division. Addition stands deleted. Ground No. 1 is dismissed. Capitalization of travelling expenses - HELD THAT:- AO has made a general observation that these expenses were incurred by the directors for personal purposes whereas we find that after verifying the documentary evidence brought on record, the ld. CIT(A) was convinced that the travelling expenses were incurred by the directors for business purposes of the appellant for putting up hotel in Goa. There is no evidence brought on record by the Assessing Officer to prove that these expenses were of personal in nature. Therefore, we do not find any reason to interfere with the findings of the ld. CIT(A). Ground No. 2 also stands dismissed. 2022 (4) TMI 18 Levy of penalty u/s 271(1)(c) - Defective Notice u/s 274 - Non specification of charge - HELD THAT:- In assessment proceedings under Section 143(3) of the Act has though initiated penalty has not given any specific satisfaction as to how the penalty should be imposed as well as no specific charge was mentioned in the original assessment order. The notice u/s 271(1)(c) read with Section 274 of the Act dated 26.12.2016 also does not mention exactly as to which charge of the levy of penalty should be taken into account in assessee s case. The penalty order is also not revealing under which charge the Ao has levied penalty - AO has simply made observation hat the assessee evaded the income details and thereby concealed the particulars of income or furnished inaccurate particulars. But the intention of the provision of Section 271(1)(c) has given a mechanism as to on which specific limb penalty has to be levied. If the assessee furnished inaccurate particulars then the penalty proceedings will be separate and the reasoning will be separate to that extent. If the assessee has concealed the particulars of income, the reasoning has to be given by the AO to that extent. If both the limbs has been observed or identified in any particular assessee s case then for both the limbs the AO has to give the reason either in assessment order or in penalty order itself, but that is a lacuna in the present penalty order under challenge. Therefore, on this ground the penalty does not sustain. Admittedly, in assessment order, in the penalty order and before the CIT(A), the CIT(A) also undisputedly quoted that the assessee offered profit at 1.1% in his return of income. Thus, the assessee has given full disclosure in his return of income itself and that cannot be held as inaccurate particulars of income or concealing of the income. Thus, Section 271(1)(c) of the Act does not apply in the present case. -Decided in favour of assessee. 2022 (4) TMI 17 Cessation of liability relating to sundry creditors as per the provisions of section 41(1) - claim of expenditure relating to the impugned creditors CIT-A deleted - HELD THAT:- The expenditure relating to the impugned creditors resulting only in work in progress and no sales having been made by the assessee, surely the same has not resulted in any claim by way of expenditure made by the assessee in its assessment for the years to which it relates, being accumulated in work in progress account only. The aforesaid facts were not disputed by the Ld. DR before us who also fairly admitted that no expenditure had been claimed by the assessee relating to the impugned creditors in view of the said facts. Having said so, there arises no question of invoking the provision of section 41(1) of the Act in the present case at all since it fails to fulfill the basic criteria enunciated in the said section. Therefore, for this reason alone, the addition made u/s. 41(1) by the Assessing Officer deserves to be set aside and order of the Ld.CIT(A) be upheld - we uphold the order of the Ld. CIT(A) deleting the addition made to the income of the assessee u/s 41(1) - Decided in favour of assessee. Insolvency & Bankruptcy 2022 (4) TMI 16 Initiation of CIRP - Period of limitation - NCLAT held that the debt arose during the period from 11.08.2013 to 02.09.2013 and that the six cheques purportedly issued towards part payment of the liability having been issued on 5.12.2017, will not save limitation - HELD THAT:- There was no discussion at all about the letter dated 28.09.2015. According to the operational creditor, the six cheques in question were handed over along with the letter dated 28.09.2015. The cheque numbers and the bank on which the cheques were drawn, given in the letter dated 28.09.2015 tallied with the particulars of those six cheques allegedly lost by the corporate debtor in March 2017. It is needless to point out that the law relating to the applicability of Section 18 of the Limitation Act, 1963 is fairly well settled. In JIGNESH SHAH ANOTHER VERSUS UNION OF INDIA ANOTHER [ 2019 (9) TMI 1121 - SUPREME COURT] , this Court pointed out that when time begins to run, it can only be extended in the manner provided in the Limitation Act. For holding so this Court made a reference to Section 18 of the Limitation Act. The law as it has developed on the applicability of Section 18 of the Limitation Act and the circumstances in which it would apply, have also not been examined by NCLAT. Therefore, the order of NCLAT is liable to be set aside and the matter liable to be remanded back for a fresh consideration - Appeal allowed by way of remand. 2022 (4) TMI 15 Approval of Resolution Plan - HELD THAT:- This Court, after hearing learned counsel for the parties as well as perusing the record of the case alongwith the precedent laws cited at the Bar, is of the firm opinion that once the application under Section 7 of the Code of 2016 was admitted by the NCLAT at the instance of the Bank, and thereafter, the IRP was confirmed by the resolution professional in their meeting dated 28.05.2018 which was further affirmed by the NCLAT vide its order dated 14.11.2018, then only option left to the State was to contest the same. Thus, once the Hon ble Apex Court in on 19.11.2018 in Civil Appeal No.10998 of 2018 [ 2018 (11) TMI 1608 - SUPREME COURT ] has categorically laid down the law that once a resolution plan is duly approved by the Adjudicating Authority under Sub-section (1) of Section 31, the claims as provided in the resolution plan shall stand frozen and all the parties including the Corporate Debtor, employees, members, creditors, including the Central Government, any State Government or any local authority, guarantors and other stakeholders shall be bound down by such plan. The writ petitions are allowed. 2022 (4) TMI 14 Parity between class of Operational Creditors and class of Financial Creditors - great disparity between the amount offered to the Operational Creditors as compared to payment of dues offered to the Financial Creditors - HELD THAT:- In the present case, there is payment of different percentages to the Financial Creditors and the Operational Creditors. The Appellant s case is not that they are getting payment which is less than the liquidation value to which they are entitled under Section 53 r/w Section 32. The Hon ble Supreme Court in Essar Steel India Ltd. Committee of Creditors vs. Satish Kumar Gupta [ 2019 (11) TMI 731 - SUPREME COURT ] has occasion to consider this very issue and held that equality should be looked into with regard to same class of creditors. It is also held that there cannot be equality between class of Operational Creditors and class of Financial Creditors. The Appellant cannot claim any parity in payment offered to the Financial Creditors - there are no arbitrariness and inequality vitiating the order passed by the Adjudicating Authority - appeal dismissed. 2022 (4) TMI 13 Initiation of CIRP - Going Concern - Corporate Debtor failed to make repayment of its dues - Operational Creditors - existence of debt and dispute or not - service of demand notice - HELD THAT:- In the Application filed under Section 9, there is specific mention of notice dated 06.04.2019 issued by the Operational Creditor. Notice dated 06.04.2019 specifically mentioned in the List of Dates and Events as well as in Part-IV of the Application and copy of notice dated 06.04.2019 was filed as Annexure A-4 along with the Application. In the reply, which was filed by Corporate Debtor dated 18.09.2019, there was no plea that notice dated 06.04.2019 was not served on the Corporate Debtor. Both in the preliminary objection and reply on merits, there is no specific denial of non-receipt of notice dated 06.04.2019, which clearly supports the submission of learned Counsel of the Operational Creditor that notice was duly issued on correct address and was served on the Respondent Corporate Debtor. The learned Counsel for the Appellant relied on judgment of this Tribunal in ANIL SYAL VERSUS SANJEEV KAPOOR [ 2020 (1) TMI 472 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, NEW DELHI] as well as JAYA PATEL VERSUS GAS JEANS PVT. LTD. ORS. [ 2018 (10) TMI 1909 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, NEW DELHI] and contends that service of notice under Section 8 is sine qua non for proceedings under Section 9 of the Code. There can be no doubt about the above proposition laid down by this Tribunal in the above cases - However, present is a case where, notice was duly served by the Operational Creditor on the correct address of the Appellant-Corporate Debtor. Operational Debt due or not - HELD THAT:- The mere fact that when the Corporate Debtor did not pay the amount, suit for recovery was filed in the year 2016 by the Operational Creditor, which was also Decreed on 08.09.2016, does not in any manner effect the transaction out of which the amount fell due. The fact that amount was adjudicated and a Decree was passed, in no manner take away the nature of operational debt - the Application filed by Respondent under Section 9 was fully maintainable and the claim of the Respondent was a claim of operational debt and there are no merit in the submission of the learned Counsel for the Appellant that there was no operational debt . The provisions of the Code namely under Section 238 shall have an overriding effect. Hence the Application under Section 9 filed by the Operational Creditor cannot be defeated on the ground that any Application for execution was pending, more so, when inspite of Decree passed on 08.09.2016, no payment was made by the Corporate Debtor. Even when a going concern is unable to discharge its debt, the Operational Creditor is entitled to invoke Section 9, hence, the Application filed by Operational Creditor under Section 9 cannot be said to be non-maintainable on the ground that Corporate Debtor is a going concern - there are no substance in any of the submission of the learned Counsel for the Appellant - appeal dismissed. 2022 (4) TMI 12 Deliberate and wilful disobedience - Contempt Proceedings - clear cut stand of the Appellant/Applicant is that the Insolvency Resolution Professional is to maintain integrity by being honest, straight forward, forthright in all his professional relationships and that the Insolvency Resolution Professional is not to misrepresent any fact situation and refrain himself - HELD THAT:- The Adjudicating Authority is to adhere to the procedural aspects, while determining the question of priorities, question of law and facts, arising out of an order, of course, depending on the issue involved - In fact, the Appellant/Applicant in IA/971/IB/2021 in IBA/1099/2019 had prayed for the removal and replacement of the 2nd Respondent as Resolution Professional of the 1st Respondent immediately on account of suppression of facts about the Contempt Proceedings and to report to the IBBI relating to the conduct of the Resolution Professional and to state a frivolous Arbitration Proceedings at Madras High Court filed by the Respondent. Although, an emphatic argument is projected on the side of the Appellant/Applicant that the Appellant/Applicant is empowered to prefer an Application under Section 27 Read with Section 60 (5) of the I B Code, 2016 this Tribunal is of the considered view that the Appellant/Applicant is not showered with any Locus to prefer an Application praying for Displacement/Replacement of the Resolution Professional. In fact, Section 27 speaks of Replacement of Resolution Professional by the Committee of Creditors - Section 60(5) deals with Question of Priority or Question of fact relating to the I B Code. When there is an express Provision namely Section 27 of the Code, which unerringly deals with Replacement of Resolution Professional by the Committee of Creditors, then, the same is to be followed/adhered to by the Litigant/Stakeholders and others connected with the I B Code. Even the saddling of penalty by the Disciplinary Committee is permissible as per Section 220(3) of the I B Code, 2016 and only when the said Committee is subjectively satisfied there exists a sufficient cause in imposing a penalty upon the deviant. Looking at from any angle, the Appeal sans merits - Appeal dismissed. 2022 (4) TMI 11 Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Personal Guarantors - existence of debt and dispute or not - HELD THAT:- From the report of the Resolution Professional there does not appear any request for issuance of any direction for the purpose of conducting negotiations between the Personal Guarantor and the Financial Creditor for arriving at the repayment plan. Based on the reasons recorded in the report submitted by the Resolution Professional, the application is hereby admitted under Section 100 of the IBC, 2016. The Insolvency Resolution Process is initiated against the Applicant/Personal Guarantor and moratorium is declared in place of interim moratorium, which begins with the date of admission of the application and shall cease to have effect at the end of the period of 180 days, as provided under Sec 101 of IBC 2016. Application admitted - moratorium declared. 2022 (4) TMI 10 Maintainability of petition - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - clubbing of two separate operational debts - time limitation - existence of the debt and the liability - pre-existing disputes between the parties in respect of the claimed debts or not - HELD THAT:- There is no bar under the IBC from filing a single C.P., so long as the Operational Creditor and the Corporate Debtor are the same and the total claim crosses the minimum threshold limit. In the present case, the claim satisfy the said requirement. Since the instant C.P. filed before enhancement of threshold limit to Rs. One Crore, there is no impediment in entertaining the same - Even as per the Respondent/Corporate Debtor, the last invoice with regard to the Project Nitesh Flushing Meadows was issued on 23.03.2015. The instant C.P. was filed on 09.01.2018, i.e. well within the limitation period of three years. Hence the C.P. is within limitation. The other amount claimed is pertaining to 5% retention amount retained by the Respondent. The retention money was liable to be released immediately after expiry of 12 months from the date of raising the last bill on completion of the work in respect of 'Nitesh Logos' project. The last invoice was raised on 07.03.2015, which was duly paid by the Respondent. Hence the limitation of 3 years for the unreleased retention money commences on 07.03.2016 and since the instant C.P. having filed on 09.01.2018, is well within limitation. Once the maximum period from the date of completion of the project expire, and when there was no specific demand from the Respondent to complete any unfinished work or to repair any defective finished work, subsequent to completion of work, the Respondent is liable to release the retention amount to the Petitioner. Simply mentioning defect in work without specifically linking the same for returning the retention money, cannot be treated as a pre-existing dispute with regard to the retention money. Petition admitted - moratorium declared. 2022 (4) TMI 9 Seeking permission to carry out the sale of the Corporate Debtor, as a going concern - Sections 35(1)(N) 60(5)(C) of The Insolvency Bankruptcy Code, 2016 read with Regulation 44(2) Of Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations, 2016 - HELD THAT:- It is seen from the record, that the Stakeholder Committee Meeting, held on 11.11.2021, where they have already approved the aforesaid proposal, with more than 83.37% voting share, as mentioned at Para 26 of the present application. The Corporate Debtor is an Engineering Procurement and construction contractor and has been executing projects in many states of India. The Corporate Debtor was brought under Liquidation vide order 21.08.2018. The amount realised is based on the sale of the property of the corporate debtor, which has been distributed to the stakeholders. Few more assets of the Corporate Debtor are available at the project sites, which are required to be sold, as a going concern and value maximisation will be affected and beneficial to the stakeholders. These two projects required further time, resources and efforts and the liquidator. Therefore, it seems appropriate that it should be sold as a going concern, to that effect the stakeholders have already given their consent - application allowed. PMLA 2022 (4) TMI 8 Money Laundering - Ponzy Scheme - scheduled offence - issuance of general or special authorization for Officers on deputation to be Deputy Director in the office of the Directorate of Enforcement, under the PML Act - Directorate of Enforcement could have bestowed powers on such an Officer to be an Officer as provided under Section 48 of the PML Act or not - validity of registration of ECIR by an Officer acting as Deputy Director the PML Act, in the absence of general or special authorization - provisional attachment order - Section 45(1A) of the PML Act - HELD THAT:- It is the specific case of the petitioner that Central Government did not issue any special authorization for the officer on deputation to be worked as deputy director and Assistant Director in the office of the Directorate of Enforcement and PML Act. As such, no powers conferred on those officers under Section 48 of the PML Act, absolutely there is no authority or filing the complaint by the Assistant Director against the petitioner under the PML Act. The vacancy circular also not available to show the exercise of power under Section 49(1) of PML Act and on the deputation basis as authority for the purpose of investigation no special order has been passed therefore, the action taken by the respondent under the PML Act is nonest in the eye of law. On bare reading of Sub-section (2) to the 2nd proviso to the section 45 (1) of PML Act empowers any officer of the Central Government or a State Government authorize in writing in this behalf by a Central Government by a general or special order made in this behalf by that Government. The amendment to provision 45 i.e., 45 (1-A) provides that no police officers shall investigate into an offence under this Act unless specifically authorized by Central Government by a general or special order and subject to such conditions as may be prescribed - the complaint in this case has been filed by respondent 2 who is the Assistant Director, working in Enforcement Directorate, (ED) filed the complaint by exercising the power under the PML Act. The question of considering the power of the respondent No.1 cannot be dealt with by this Court in this petition. Respondent No.2 has filed the complaint as Assistant Director which is in the nature of charge sheet and there are two different proceedings in view of the order passed under Section 5 and filing complaint under section 45 of the PML Act. Therefore, the contention of the petitioner's counsel at paragraphs 7 and 8 of the petition questioning the authority of respondent Nos.1 and 2 is not sustainable and the respondents are the authorities under the PML Act and who have been duly appointed by the Central Government and they exercised their power under the Act which is within the jurisdiction under the PML Act. On perusal of the entire records, respondent No.2 is an authorised officer under the PML Act appointed as per Section 49 of the PML Act and he is one of the officers specified under Section 48 of the PML Act. By issuing the notifications, the Central Government has empowered the officer to file the complaint before the Special Court and respondent No.2 is not officer who comes below the rank of the Assistant Director. Therefore, the question of quashing the complaint/challan filed by the respondent No.2 before the Special Court does not call for any interference. Petition dismissed. CST, VAT & Sales Tax 2022 (4) TMI 7 Adjustment of eligible exemption amount as against the certified exemption limit - raw material purchased by the Petitioner - exemption limit to be calculated at the rate of 16% as held by the Tribunal as against the rate of 4% claimed by the Assessee? - Entry- 43 (a) of the Finance Department Notification No.41261-CTA-106/92-F dated 23.09.1992 - HELD THAT:- While it is true that the legal position became clear after the decision of this Court in Luis Packaging Pvt. Ltd. (supra) where the Court categorically holding that the benefits available to the dealers under the IPR would be over and above what was provided in the OST Act, the fact remains that in the present case the Petitioner had already availed, for AY 1997-98, benefit under the IPR-92 to the extent of ₹ 10,79,821/- leaving a balance of ₹ 87,107/-. It would not have been possible therefore for the Petitioner to have filed a Form I-D (92) for the entire sum of purchase of manganese ore as was done by the Petitioner. The Court therefore is unable to find any error committed in the AA requiring the Petitioner to pay sales tax @ 16% on the balance purchase of manganese ore of the value of ₹ 6,13,404.87/-. At the highest, a sum of ₹ 87,107/- can be adjusted against tax liability so determined. The revision petition is disposed of. 2022 (4) TMI 6 Rejection of declarations in Form-IV, which were furnished by the purchasing dealers to the Petitioner, for purchase of logs, as manufacturers - contravention of either the 5th proviso to section 5(1) of the Act or entry 48 of the list C of the Rate Chart - HELD THAT:- It must be noted that the declaration contained in Form IV, which is set out under Entry 81 (which at the relevant time was Entry 48) of List C of the Rate Chart appended to the OST Act is to the effect that the goods purchased shall be used in the manufacturing/processing of goods for sale/in mining/generation or distribution of electricity or any form of power . It is reasonable to expect that the Petitioner as a selling dealer would go by the above declaration instead of undertaking an investigation into whether such declaration has rightly made. The Department has no answer to the plea of the Petitioner that if it had declined to accept the Form IV furnished to it by the saw mill manufacturers, it may have been in violation of Section 9-B (3) of the OST Act. The Court enquired from Mr. Padhy whether any instructions were issued by the Department to the selling dealers in general asking them not to accept Form IV if it was either furnished by a saw mill manufacturer or anyone else whom the Department has ascertained not to be engaging in any activity of manufacturing or processing or even where the sale of goods is a first point sale? The answer was in the negative. The Tribunal was in error in rejecting the declaration in Form IV furnished by the purchasing dealers to the Petitioner for the purchase of logs. Contravention of either the 5th proviso to section 5(1) of the Act or entry 48 of the list C of the Rate Chart - HELD THAT:- In terms of 5th proviso to Section 5(1) of the OST Act, and in terms of the declaration made, the purchasing registered dealer is located within the State of Odisha and he has undertaken to use such goods in the manufacture or processing thereof for sale within the State of Odisha. The proviso makes it clear that if such purchasing dealer utilizes the goods for any other purposes outside the State of Odisha, such purchasing dealer shall pay the difference in tax. In other words, if there is a contravention of the 5th proviso to Section 5 (1) of the OST Act by the purchasing dealer, the Department ought to go after the purchasing dealer for such violation and not the selling dealer - the Petitioner in the present case has not contravened either the 5th proviso to Section 5 (1) of the OST Act nor Entry 48 (now Entry 81) of List C of the Rate Chart appended to the OST Act. The revision petition is disposed of. 2022 (4) TMI 5 Scope to examine the assessment record particularly when the question of jurisdiction as regards initiation of proceeding under Section 12(8) of the Orissa Sales Tax Act, 1947, has been raised by the Petitioner - Inclusion of transport charges, which is separately charged by the Petitioner, while determining sale price of the ballasts - non-consideration of certificate issued by the Railway authorities which has got probative value and was available on record - Orissa Sales Tax Tribunal committed error of law and fact in substituting its reasons with that of the ACST and/or the STO when the order of the ACST is supported by cogent reasons set out founded on materials available on record or not - application of independent quasi judicial mind - reversal of finding recorded by the first appellate authority supported by cogent reason and based on evidence available on respective records. Whether on the facts and in the circumstances of the case, the Tribunal is justified in holding that it has little scope to examine the assessment record particularly when the question of jurisdiction as regards initiation of proceeding under Section 12(8) of the Orissa Sales Tax Act, 1947, has been raised by the Petitioner? - HELD THAT:- The Court finds that the reopening of the assessment was based on the reports of the Circle IST and the AG Audit. Both objected to taxing of the works contract @ 4% whereas the contract involved supply of ballast. According to both reports, the said supply had to be treated as sale of ballast. Therefore, without entering at this stage into the question whether such opinion formed by the Circle IST and the AG Audit was right, the Court finds that the reopening of the assessment by the STO was not on a mere change of opinion but on the basis of the above materials made available to the STO - the Court is of the view that reopening the assessment cannot be said to be without jurisdiction - question is therefore answered in favour of the Department and against the Assessee. Whether on the facts and in the circumstances of the case, the Tribunal is correct in including transport charges, which is separately charged by the Petitioner, while determining sale price of the ballasts? - Whether on the facts and in the circumstances of the case, the Tribunal is correct in not considering the certificate issued by the Railway authorities which has got probative value and was available on record? - HELD THAT:- The finding of the First Appellate Authority that the works contract was one composite contract with the costs of supply of ballast and transportation not being shown separately and therefore, not amenable to be separately treated, has attained finality as far as the Assessee is concerned - Even otherwise, the Court finds that if the payment was a composite one which included the elements of supply of ballast and the cost of transportation till the site of stacking then, the Assessee cannot possibly seek to avoid including the transportation cost by relying on Section 5 (2) (A) (iii) of the OST Act - Issues are answered in favour of the Department and against the Assessee and it is held that the Tribunal was right in including the transport charges as part of the taxable turnover. As regards other issues, the Court finds that as a logical corollary of treating the contract as one composite contract where the elements of supply of ballast and its transportation are not separately treated, is that the Department could not have proceeded to reopen the assessment on the basis that the contract must be treated as only for supply of ballast, which should be construed as a sale and nothing else. In other words, the entire consideration for the performance of the contract cannot be treated as a consideration for sale of ballast by the Assessee. Thus, the Tribunal erred in treating the entire sum received by the Assessee for the performance of the works contract to be sale consideration which would attract tax at 12% - the Court finds that there is no justification in reopening of the assessment. In effect, this Court affirms the order of the ACST while setting aside the orders of the STO and the Tribunal. The amount of tax already paid by the assesses will be adjusted while raising the final demand or refund of the excess amount as the case may be in accordance with the applicable rules - petition disposed off. 2022 (4) TMI 4 Reassessment order - attachment of movable and immovable properties of the petitioner - Section 26E of the SARFAESI Act - HELD THAT:- On perusal of the material on record and particularly, the order passed by the Trial Court and the Trial Court came to the conclusion that memo deserves to be dismissed for the reason that the present recovery application is filed for recovery of arrears of tax from the respondent. According to the applicant, it is the respondent who is liable to pay arrears of tax. When such is the case, it is not necessary to issue notice to the said bank. The very proviso which brought to the notice of this Court Section 26E of the SARFAESI Act which is clear that notwithstanding anything contained in any other law for the time being in force, after the registration of security interest, the debts due to any secured creditor shall be paid in priority over all other debts and all revenues, taxes, cesses and other rates payable to the Central Government or State Government or local authority. This proviso is not brought to the notice of the Trial Court while arguing the matter. In the case on hand, there is no dispute with regard to the fact that already there was a charge in favour of the bank. The Trial Court also in the order mentioned that no doubt, the respondent has said that charge over the movable and immovable properties of the respondent has been created in favour of the bank but comes to the conclusion that when this Court is proceeding as per Section 421 of Cr.P.C, the grounds urged by the respondent are not acceptable to issue notice to the said bank - it is appropriate to set aside the order passed by the Trial Court and issue notice to the bank as sought in terms of the memo and Trial Court proceed in the matter in accordance with law. The revision petition is allowed. 2022 (4) TMI 3 Maintainability of petition - Recovery of arrear of tax - tax periods from 01.04.2013 to 30.09.2015 - HELD THAT:- It is apt to say that writ petition is not entertainable against the Show Cause Notice in view of parameters laid down in Union of India Vrs. Coastal Container Transporters Association [ 2019 (2) TMI 1497 - SUPREME COURT] . It is clear that the writ petition challenging the notice in Annexure-1 is premature inasmuch as the notice impugned in the writ petition is a notice contemplating initiation of recovery proceeding. Thus, it is open for the petitioner to appear before the Joint Commissioner of CT GST-opposite party No.3 and file its reply/objection, and participate in the proceeding for recovery, in case the same has not yet been concluded. The writ petition is disposed of. 2022 (4) TMI 2 Restraint from selling or alienating the property - Priories of secured creditors over State against tax dues - Seeking to remove the entries relating to the attachment order to enable the petitioner to transfer the Katha with respect to the schedule property - HELD THAT:- The admitted facts being that the proceedings under the SARFAESI Act were earlier in point of time. The decision was taken on 15.06.2018 as per the Possession Notice at Annexure-'Q'. The proceedings by the State were subsequent in point of time and recovery notice by the Department was issued on 01.08.2018 and the attachment order was passed thereafter on 10.08.2018. The respondent bank lodged its creation of security before the Central Registry of Securitisation Asset Reconstruction and Security Interest of India as is evidenced from the search result at Annexure-'AB' and 'AC' with respect to the properties which is the subject matter of present petition. The search result indicates the date of search as 31.07.2018 which would imply that lodging of creation of interest as regards the property by the bank was prior to 31.07.2018 while the recovery notice by the State was only subsequent to 01.08.2018 and the attachment order was on 10.08.2018. In the present case, it is clear that the charge that would have a priority is that of the bank as it is prior in point of time and also in light of Section 26E of the SARFAESI Act - It must be noted that as on date, the State not having enforced its attachment under the provisions of KVAT Act, Section 26E would be applicable and accordingly, the rights of secured creditors would rank higher and would over-ride the charge of the State that has been created subsequently. The petition stands disposed off. Indian Laws 2022 (4) TMI 58 Jurisdiction of the Council under the MSME Act - dispute between the appellant and the respondent - place of provision of services - HELD THAT:- It is not in dispute that the contract/agreement between the appellant and the respondent has been executed on 24.08.2020. Therefore, the laws of India applicable at the time of contract/agreement shall be applicable and therefore the parties shall be governed by the laws of India prevailing/applicable at the time when the contract was executed. It is admitted position that the date on which a contract/agreement was executed i.e. on 24.08.2020 the appellant was not registered MSME. Considering the relevant provisions of the MSME Act more particularly Section 2(n) read with Section 8 of the MSME Act, the provisions of the MSME Act shall be applicable in case of supplier who has filed a memorandum with the authority referred to in subsection (1) of Section 8. Therefore, the supplier has to be a micro or small enterprise registered as MSME, registered with any of the authority mentioned in sub-section (1) of Section 8 and Section 2(n) of the MSME Act. It is admitted position that in the present case the appellant is registered as MSME only on 28.08.2020. Therefore, when the contract was entered into the appellant was not MSME and therefore the parties would not be governed by the MSME Act and the parties shall be governed by the laws of India applicable and/or prevailing at the time of execution of the contract. If that be so the Council would have no jurisdiction to entertain the dispute between the appellant and the Respondent no.1, in exercise of powers under Section 18 of the MSME Act - the order passed by the learned Single Judge confirmed by the Division Bench holding the Council would have no jurisdiction with respect to Respondent No.1 is not required to be interfered with. Thus, with respect to the dispute the appellant and the Respondent No.1 the Council would have no jurisdiction under Section 18 of the MSME Act - appeal dismissed. 2022 (4) TMI 1 Violation of principles of natural justice - permission to petitioner to cross-examine the complainant was declined - Dishonor of Cheque - HELD THAT:- From the perusal of the same, it appears that CW-2 Kulwant Singh was not cited as a witness in the said complaint. Admittedly, respondent No.1-Manvir Singh was examined as CW1 in the trial Court and in his examination-in-chief, respondent No.1 remained silent about getting any amount from aforesaid Kulwant Singh and thereafter, respondent No.1 tendered aforesaid Kulwant Singh as CW2 and his examination-in-chief by way of affidavit is Annexure P-3. From the perusal of the said examination-in-chief, it appears that he is close friend of respondent No.1-Manvir Singh. Section 311 Cr.P.C. confers a wide discretion on the Court to act as the exigencies of justice require to summon a witness or recall or re- examine any person already examined if his evidence appears to it to be essential to the just decision of the case. Further it is the duty of every Court to ensure that a fair and proper opportunities are granted to the accused for just decision of the case. Thus, it stands established that certain new facts surfaced in the examination-in-chief of CW-2/Kulwant Singh. In these circumstances, interest of justice demands that opportunity be given to the petitioner to further cross-examine respondent No.1-Manvir Singh with regard to facts which came on record for the first time in the examination-in-chief of CW-2 Kulwant Singh. The application under Section 311 Cr.P.C. preferred by the petitioner is allowed
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