TMI Tax Updates - e-Newsletter
April 20, 2021
Case Laws in this Newsletter:
GST
Income Tax
Customs
Corporate Laws
Insolvency & Bankruptcy
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
Highlights / Catch Notes
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Income Tax:
Interest on interest u/s 244A - Whether Tribunal was right in its conclusion that the department should pay interest on interest especially when there was no inordinate delay in the payment of refund? - the substantial questions of law are decided in favour of the appellant-Revenue - HC
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Income Tax:
Capital gain computation - CIT(A) determined the sale consideration on the basis of Form 26AS - Section 53A of the Transfer of Property Act expressly requires that the contract must be in writing by him or on his behalf from which the terms necessary to constitute the transfer can be ascertained with reasonable certainty. Thus s. 53A does not recognize an oral contract. The writing is an essential sine qua non for the applicability of the doctrine of part-performance. The lower authorities must have considered the relevant sale deed so as to compute the correct value of sale consideration and during the year of assessment. - Being so, the assessment framed on the basis of Form 26AS is set aside. - AT
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Income Tax:
Addition u/s 69B - Cash transactions in the seized documents during a search operation - cash against sale of flat - When no material has been found that assessee has made any booking for the flat, a mere entry in a pen drive of a third party cannot ipso facto fasten the liability of on money transaction upon the assessee without further corroborative material brought on record. As a matter of fact as noted by the learned CIT(A) the other materials further support the view that the addition in the hands of the assessee is not sustainable in as much as there was a booking of flat by the assessee’s wife with the same developer which was duly cancelled and booking was refunded prior to the entry of on money cash transaction. - AT
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Income Tax:
Revision u/s 263 - merger of the order - the entire issue of limited scrutiny, reasons for selection, the Bank accounts in questions were before the ld. Pr. CIT. On this issue of turnover, the order of the Assessing Officer has merged with the order of the ld. CIT(A) - What the Assessing Officer missed, is also missed by the ld. CIT(A). The ld. Pr. CIT cannot order the Assessing Officer to follow the order/directions of the ld. CIT(A) on issues which were not part of the appellate order of the ld. CIT(A) - AT
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Customs:
Refund of Customs Duty - Import of Caustic Soda - It cannot be said that the peitioner had indulged in any offence while importing the goods. On the other hand, the petitioner is an victim of fraud perpetrated by the Chinese. - The petitioner has paid a sum as Customs duty in good faith on the goods declared in the Bill of Trading namely Remelted Lead Ingots - That being the case, the petitioner is entitled for refund of the Customs duty paid in good faith. The amount that was paid for imported the Remelted Lead Ingots cannot be retained. - HC
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Indian Laws:
Rejection of registration of a partnership firm constituted by the petitioner - whether LLP can be treated as a person which can be permitted to form a partnership with an individual? - Section 4 of the Partnership Act permits Constitution of a firm or partnership between one or more persons. In this case the partnership deed was executed between an individual and an LLP which is a body corporate having a legal entity and coming within the definition of “person”. The individual liability of the partners of LLP would not be relevant when the LLP itself would have liability independent of the liability of the partners. - HC
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Indian Laws:
Dishonor of Cheque - service of notice - The finding recorded by the Court below regarding service of notice through registered post holding that there is no proper service of notice is contrary to Section 138 of N.I. Act - the respondent-accused has failed to rebut the presumption by placing cogent and convincing evidence. - HC
Articles
Notifications
News
Case Laws:
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GST
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2021 (4) TMI 754
Vires of Explanation (a) to Rule 89(5) of the CGST Rules 2017 - HELD THAT:- Since a large number of petitions are pending in the High Courts on the same issue, it is appropriate that we list the present batch of cases at an early date, which we do by posting the cases for final hearing on 28 April 2021. The entire batch of petitions shall be listed at the top of the Board on that date. The Registry shall ensure that the PDF format together with consecutive pagination is circulated to all the learned counsel appearing in the matter so as to ensure that the page references which are made available to the Court are also made available to all the learned members of the Bar for facilitating their submissions. List the Special Leave Petitions on 28 April 2021 at the top of the Board.
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2021 (4) TMI 743
Alleged fraudulent availment of inward ITC - attachment of bank accounts of petitioner - HELD THAT:- Till date no proceeding under Section 74 of the CGST Act, 2017 has been initiated by the Department nor any order under Section 83 of the CGST Act, 2017 has been passed for attachment of bank account of M/s. Shree Shyam Ji Traders, Delhi. Put up this case as fresh on 15.04.2021.
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2021 (4) TMI 741
Rejection of refund claim - order of rejection passed without granting any hearing - violation of principles of natural justice - HELD THAT:- This writ petition can be disposed of with a direction upon the officer concerned to grant one week time to the petitioner to rectify the deficiencies as per the letter dated December 18, 2019. The petitioner shall be required to rectify the deficiencies within one week peremptorily, and thereafter, the authority concerned shall grant an opportunity of hearing to the petitioner and pass a reasoned order with regard to the refund claimed by the petitioner within seven weeks from date.
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Income Tax
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2021 (4) TMI 752
Interest on interest u/s 244A - Whether Tribunal was right in its conclusion that the department should pay interest on interest especially when there was no inordinate delay in the payment of refund? - HELD THAT:- As following the judgments of the Hon'ble Supreme Court reported in [ 2013 (10) TMI 117 - SUPREME COURT] (SC) and [ 2009 (12) TMI 35 - SUPREME COURT] (SC), the Hon'ble Division Bench of Delhi High Court in CIT Vs. Indian Farmer Fertilizer Co-operative [ 2015 (3) TMI 280 - DELHI HIGH COURT] held that to the extent it directs payment of any sum over and above interest payable under Section 244A(1) to the assessee cannot be upheld. Following the ratio laid down by the Apex Court and the Delhi High Court, the substantial questions of law are decided in favour of the appellant - Revenue and the order passed by the Income Tax Appellate Tribunal is set aside and the matter is remitted back to the Assessing Officer for fresh consideration. The Assessing Officer is directed to decide the matter afresh, following the ratio laid down by the Hon'ble Supreme Court of India in the judgments reported in CIT Vs. Gujarat Fluoro Chemicals [ 2013 (10) TMI 117 - SUPREME COURT] AND CIT Vs. H.E.G. Ltd. [ 2009 (12) TMI 35 - SUPREME COURT] and pass orders after giving notice to the assessee.
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2021 (4) TMI 746
Expenditure incurred towards foreign education and training expenses of a partner and son of partner - allowable business expenditure - HELD THAT:- In the Tax Case Appeal in respect of the very same assessee [ 2018 (9) TMI 967 - MADRAS HIGH COURT] decided the question of law that has been raised in the present appeal in favour of the assessee and against the revenue. This Court took into consideration the Judgments of this court reported in M.Subramaniam Bros. vs. Commissioner of Income Tax [ 2000 (12) TMI 67 - MADRAS HIGH COURT] and Commissioner of Income Tax vs. R.K.K.R Steels [ 2001 (11) TMI 20 - MADRAS HIGH COURT] and decided the question of law in favour of the assessee.
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2021 (4) TMI 745
Correct head of income - rental income received by the assessee by letting out properties - 'income from other sources' OR 'income from house property' - HELD THAT:- It is not disputed by the learned counsel on either side that the issue has been decided by the Hon'ble Division Bench of this Court in favour of the assessee and against the Revenue in the appeals filed by the Revenue in the assessee's own case [ 2020 (8) TMI 21 - MADRAS HIGH COURT] wherein held where the facts of the cases are undisputed that Assessees in the present case carry on the business of earning the rental income, as per the Memorandum of Associations only and the fact is that they were not carrying on any other business, compels us to come to the conclusion that the present appeals of the Assessees are required to be allowed. The same are accordingly allowed and the question of law framed above is answered in favour of the Assessee
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2021 (4) TMI 739
Validity of reopening of assessment u/s 147 - no valid notice issued/served u/s 148 - HELD THAT:- Notice u/s 148 of the Act was handed over to the notice server and the area inspector on the very same date and the notice was served through affixture on the same date instead of first attempting to serve the same in person or through post. therefore, find merit in the arguments of the learned counsel for the assessee that no notice u/s 148 of the Act was ever served to the assessee and even if it is accepted that such a notice is served through affixture even then also the same is not valid service being served after office hours and the notice so affixed does not bear the name of any witness of the localities other than the Ward Inspector who accompanied the notice server. The chronology of events that has taken place clearly shows that no notice u/s 148 was ever served upon the assessee before 31.03.2015 and therefore, find force in the arguments of the learned counsel for the assessee that since no notice u/s 148 of the Act was served on the assessee before 31.03.2015, therefore, such reassessment proceedings are not in accordance with law and has to be quashed. - Appeal of the assessee is allowed.
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2021 (4) TMI 738
Reopening of assessment u/s 147 - re-opening is beyond the period of four years - HELD THAT:- It is a clear case of change of opinion and hence the re-opening of assessment based on mistake of opinion is bad in law. Even otherwise the re-opening is beyond the period of four years and the original assessment was completed u/s 143(3) of the Act on 08.12.2011. In the reasons recorded, there is no whisper that the assessee has failed to disclose truly and fully all material facts required for assessment. In the absence of such an allegation the reopening is bad in law as the proviso to Section 147 comes into play. - Decided in favour of assessee.
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2021 (4) TMI 737
Capital gain computation - CIT(A) determined the sale consideration on the basis of Form 26AS - what is correct value of sale consideration? - HELD THAT:- Admittedly in this case, the CIT(A) determined the sale consideration on the basis of Form 26AS without seeing the actual sale deed entered by the assessee with concerned parties. In our opinion, sale consideration cannot be determined only on the basis of Form 26AS. The provisions of s.2(47)(v) can be applied only if there is a written contract coupled with the transfer of possession in terms of s.53A of the Transfer of Property Act. In English law, the contract to which the doctrine of part-performance applies may be oral. Section 53A of the Transfer of Property Act expressly requires that the contract must be in writing by him or on his behalf from which the terms necessary to constitute the transfer can be ascertained with reasonable certainty. Thus s. 53A does not recognize an oral contract. The writing is an essential sine qua non for the applicability of the doctrine of part-performance. The lower authorities must have considered the relevant sale deed so as to compute the correct value of sale consideration and during the year of assessment. Being so, the assessment framed on the basis of Form 26AS is set aside. However, we make it clear that if the revenue finds that there is material evidence in support of the transfer of land by assessee to M/s. Nambiars Pvt. Ltd. who had deducted TDS in anticipation of transfer of land in this A.Y. under consideration that to be brought to tax. if the revenue finds that there was a transferable land by the assessee in favour of the deductor of TDS i.e. Nambiars Pvt. Ltd. in the A.Y. by executing a proper sale deed towards transfer of the impugned property, the same may be examined in accordance with law. At this stage, we refrain from committing anything on status of the assessee in whose name capital gain to be taxed as we have set aside the assessment. It is kept open. Appeal filed by the assessee is partly allowed.
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2021 (4) TMI 734
Undisclosed income - receipt not included in the Profit Loss Account of the assessee - contractual receipt under Marketing Assistance Programme (MAP) as per Agreement executed - HELD THAT:- As decided in own case [ 2018 (10) TMI 1888 - ITAT DELHI] MAP payment received by the assessee comes with certain conditionalities, such as, the assessee has to provide bank guarantee and there is an obligation to lift the stocks. In case the assessee does not succeed in lifting the stock etc., the proportionate part would not be available to it for onward payment to sub-contractors. The assessee has been consistently following this practice of accounting the amounts under MAP Agreement and the same has been accepted in the assessments completed u/s 143(3) for the two immediately preceding assessment years, namely, 2009-10 and 2010-11. CIT(A) has recorded a categorical finding to this effect which has not been controverted by the ld. DR. In the absence of any factual difference in the manner of receipt, disbursement or accounting of the marketing assistance payment received under the MAP Agreements in the preceding year vis- vis the year under consideration, we are satisfied that the ld. CIT(A) rightly appreciated the facts and was justified in deciding this issue in favour of the assessee Disallowance of commission expenditure paid to two ladies - HELD THAT:- We find that the assessee has paid commission to the same two ladies namely Ms. Inderjeet Kaur and Ms. Paramjit Kaur and assessee failed to lead any evidence about the genuineness of the transaction of payment of commission and any services rendered by them. In that order also the ld AR explaining the nature of payment with same distributors necessitated of making payment to these ladies as part of their incentive under MAP agreement. The coordinate bench also considered the same in para 7. As the co-ordinate bench after examining the facts held that the assessee failed to adduce any evidence of rendering of services by these persons, which necessitated to make such payments and therefore the disallowance was confirmed. We do not find any reason to deviate from the judgment, facts quoted by the ld AR are also duly considered therein. However, in view of any evidence of rendering of any services by the above two persons to the assessee, in absence of any change in facts and circumstances of the case this year, we respectfully following the decision of the co-ordinate bench confirm the disallowances of ₹ 7 lakhs of commission paid to them. ground No. 1 of the appeal is dismissed. Addition of outstanding in the account of Ms Grace Enterprises - HELD THAT:- We find that the above amount was outstanding in the books of account of the assessee and assessee could not produce the confirmation of such outstanding sum. Out of several creditors, this was the only party whose confirmation could not be produced. Nonetheless, the fact was not denied that the liability arose on purchase of goods as trading transactions with this party in earlier year and liability still exists. It is not case that assessee has written back the above liability in its books of accounts; it is carried as liability in books. Thus, the liability to pay such sum is accepted by the assessee for this year. There is no evidence that the transaction resulting into credit in the name of the above party pertains to this year, in fact, it pertains to earlier year. Merely because the assessee could not furnish the confirmation of one of the several creditors naturally the liability to pay such party does not ceases to exist. In view of this, we reverse the order of the lower authorities directing the ld AO to delete the addition outstanding in the name of Ms Grace Enterprises. Disallowances out of telephone tours, and other expenses including depreciation on the car stating that involvement of the personal element of the partners of the firm - HELD THAT:- On careful consideration and after hearing both the parties we find that the ld AO has made an ad hoc disallowances on this expenditure without pointing out any element of such personal expenditure. During the course of assessment, proceedings, the assessee has given complete details to the various queries raised by the AO. Ld AO has failed to point out any evidence of incurring personal expenditure of partners in the books of account of the partnership firm. Thus, the above disallowance made by AO was purely on adhoc basis without any evidences of personal expenditure of partners claimed as deduction by assessee. The ld CIT (A) has also confirmed the same without giving any reason. As the adhoc disallowances without any evidence is cannot be upheld, therefore, we reverse the orders of the lower authorities and direct the ld AO to delete the disallowances of 1/10th of such expenditure of ₹ 1,75,679/-. Thus, ground No. 3 of the appeal is allowed.
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2021 (4) TMI 733
Exemption under Section 10(23C)(vi) denied - Appellant institution not solely for educational purposes - HELD THAT:- As decided in own case [ 2016 (10) TMI 593 - ITAT BANGALORE] Admittedly, the Tribunal in the earlier year for AY 2014-15 only relied on clause (d) (g) of the Memorandum of Association of the assessee college and overlooked clause (a) (b) of the Memorandum of Association. However, at this stage, we are not in a position to take a decision in favour of the assessee, since the decision of the Tribunal is not disturbed by any higher forum. However, in the interests of justice, it is appropriate to remit the issue in dispute to the file of the CIT(Exemptions) for appropriate decision, after the final judgment of the Hon ble High Court of Karnataka in the case of assessee for the AY 2014-15. With these observations, we remit the issue to the file of the CIT(Exemptions). Appeal by the assessee is allowed for statistical purposes
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2021 (4) TMI 731
Rejection of grant of registration under section 12AA - charitable activity u/s 2(15) - HELD THAT:- CIT(Exemption) should examine whether the objects of the Trust or Institution are charitable in nature or not and as to whether the activities of the Trust/Institution are in consonance with these objects. We find that the objects of the Society are charitable in nature. We also find that the activities of the Society are in accordance with the objects. The findings of Assessing Officers all dated 28. 03. 2015 for assessment years 2009- 10, 2010 - 11 2011- 12 are similar to the findings of Assessing Officer for Assessment Year 2012- 13 and these findings of the Assessing Officers support the fact that the objects of the assessee is charitable in nature and its activities are in accordance with the objects of the Society. Thus we direct the ld. CIT(Exemption) to grant registration to the assessee under section 12AA of the Act. - Decided in favour of assessee.
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2021 (4) TMI 730
Revision u/s 263 - assessee paid cash aggregate of/which is exceeding ₹ 20,000/- in a single day for the purchases made - HELD THAT:- DR fails to dispute the clinching fact that the Pr.CIT s impugned order has nowhere held the assessment in question dated 06.01.2015 as an erroneous one so far as it causes prejudice to the interest of Revenue as per Sec.263 of the Act. Ld.Pr.CIT has rather directed the Assessing Officer to cancel his corresponding assessment in issue in other words. We find no reason to sustain either of the two courses adopted by the learned Pr.CIT herein. Hon ble apex court s land mark decision Malabar Industrial Co. vs. CIT [ 2000 (2) TMI 10 - SUPREME COURT] , CIT vs. Max India Ltd. [ 2007 (11) TMI 12 - SUPREME COURT] and CIT vs. Kwality Steel Suppliers Complex [ 2017 (7) TMI 620 - SUPREME COURT] held that an assessment or re-assessment, as the case may be, could only be revised in case it satisfies the twin conditions of erroneous as well as causing prejudice to the interest of revenue; simultaneously. There is no such indication in the Pr.CIT s above extracted directions. Coupled with this, he has also directed the Assessing officer to cancel the assessment himself which the latter has no jurisdiction to do so as per Sec. 263 of the Act. We thus annul the impugned revision order itself for the precise twin afore mentioned reasons.
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2021 (4) TMI 729
Misc. expenditure disallowance - assessee had failed to prove the same by way of filing cogent supportive evidence before the Assessing Officer - CIT-A deleted the addition - HELD THAT:- We find no merit in Revenue s instant grievance. There is no dispute qua the clinching fact that the assessee s books had been duly audited and its Annual Report was also available. And that the Assessing Officer had disallowed assessee s entire expenses in drug manufacturing business thereby enhancing its profit to the maximum level. The assessee has already explained the reason of non-production of audited books of account to the fact that there was a tenancy dispute culminating in locked up premises in the corresponding span of time. So far as the Revenue s case that the CIT (A) deleted the impugned disallowance without verification, it has come on record that he had duly sought for a remand report from the Assessing Officer s side. We therefore find no reason to revive the impugned disallowance going by the Revenue s pleadings. - Revenue s appeal is dismissed.
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2021 (4) TMI 727
Disallowance u/s 14A - as per assessee no exempt income was earned by the assessee company and the action is unjustified and unwarranted - HELD THAT:- We find that in the case of PCIT-6 v. Kohinoor Project (P.) Ltd., [ 2020 (1) TMI 1161 - BOMBAY HIGH COURT] in unequivocal terms had concluded that section 14A would not apply if no exempt income was received or was receivable by the assessee during the relevant previous years. Also, a similar view had been taken by the Hon'ble High Court in the case of PCIT v. Red Chillies Entertainment (P.) Ltd., [ 2019 (8) TMI 1490 - BOMBAY HIGH COURT] Accordingly, in the backdrop of the fact that the no exempt income was received or was receivable by the assessee during the year in question i.e. A.Y. 2010-11, we agree with the claim of the Ld.A.R that no disallowance u/s. 14A was called for in the hands of the assessee.- Decided in favour of assessee.
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2021 (4) TMI 726
Reopening of assessment u/s 147 - taxability of long term capital gain contained u/s 45 - Whether assessee is not owner of the house? - assessee as general power of attorney holder sold the property on behalf of Smt Tripta Nurpuri for a sale consideration vide conveyance deed registered with sub-registrar, Alwar - HELD THAT:- Assessee has produced the necessary documents and also the affidavit of Smt Tripta Nurpuri that she had sold the property and had received the sale consideration from the assessee and thus, has discharged the primary onus cast on her and where the AO still harbours any doubt, it was incumbent upon the AO to conduct further enquiry by issuing summons and calling Smt Tripta Nurpuri for necessary examination which the AO has failed in the instant case. Therefore, basis material available on record, it cannot be said that the assessee has sold the property in capacity as owner of the property rather the same has been sold in the capacity of power of attorney holder and on behalf of Smt Tripta Nurpuri and any capital gain tax liability on such transaction arises in hands of Smt Tripta Nurpuri and not in hands of the assessee. AO has failed to conduct any enquiry and bring any material or fact to establish that the assessee has initially acquired the property in question at the time of Power of Attorney dated 3.1.2008 and subsequently sold the same vide sale deed dated 23.09.2009 in the capacity and in her right as an owner of the property. While computing capital gains in the hands of the assessee, the AO has allowed the cost of acquisition of ₹ 289,582 which was actually the cost of acquisition paid by Smt Tripta Nurpuri at the time of initial allotment way back in year 1998 which cannot be inferred as cost of acquisition in hands of the assessee as on the date of execution of power of attorney on 3.1.2008. The same thus shows that the AO himself was not clear as to the taxability of the transaction in the hands of the assessee in absence of requisite enquiry and examination. Thus the addition made by the AO in the hands of the assessee is not warranted and the same is directed to be deleted. - Decided in favour of assessee.
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2021 (4) TMI 724
Addition u/s 69B - Cash transactions in the seized documents during a search operation - cash against sale of flat - As argued disputed flat, whose booking has been cancelled prior to search of the builder, belonged to the wife of the assessee - HELD THAT:- We find that addition in the hands of the assessee is based upon search seizure operation at the premises of Nish Developers Private Limited. The source is a pen drive entry recovered from an employee of the said developer. The said pen drive purported to have an entry that cash against sale of flat was received from the assessee who is having's office at Kalbadevi. After detailed submission ld. CIT(A) has found that actually the wife of the assessee had booked a flat in the property of the said developer. That the said booking was done by making cheque payments. That the booking was cancelled and the amount of booking was duly refunded by the developer to the wife of the assessee. CIT(A) has found that this shows that the entry, that on money was paid for sale of flat to the assessee is not at all correct and is a result of a mistaken identity. He found that the said entries for on money cash payments are all dated after the cancellation of booking by the wife of the assessee and refund of money to her by the developer. Hence, he was of the opinion that there is no reason why after the cancellation of booking anybody would pay on money cash amounts. CIT(A) has also noted that AO has not disputed the details about the booking of flat by the wife of the assessee, the cancellation thereof and the refund of booking amount to her by the developer. Learned CIT(A) also noted that the assessee's address is also not the same as mentioned in the said pen drive. The above reasoning of the ld. CIT(A) in deleting the addition in the hands of the assessee are cogent. When no material has been found that assessee has made any booking for the flat, a mere entry in a pen drive of a third party cannot ipso facto fasten the liability of on money transaction upon the assessee without further corroborative material brought on record. As a matter of fact as noted by the learned CIT(A) the other materials further support the view that the addition in the hands of the assessee is not sustainable in as much as there was a booking of flat by the assessee s wife with the same developer which was duly cancelled and booking was refunded prior to the entry of on money cash transaction. - Decided against revenue.
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2021 (4) TMI 723
Validity of reopening of assessment u/s 147 - eligibility of reasons to believe - reopening notice was admittedly issued beyond 4 years but within 6 years from the end of the relevant assessment year - HELD THAT:- From the reasons recorded it could be seen that there is absolutely no mention of any failure on the part of the assessee in disclosing fully and truly all material facts necessary for the assessment during the original assessment proceedings. Admittedly the original assessment proceedings were completed u/s 143(3) of the Act on 26.11.2009. We find that the law is now very well settled that the reasons recorded by the ld AO for reopening the assessment should duly mention the failure, if any, on the part of the assessee in disclosing full and true information relevant for the assessment if the reopening is made beyond 4 years from the end of the relevant assessment year; and that the reasons recorded cannot be substituted at a later point in time by subsequent evidences by the ld AO and that the reasons recorded should speak by itself and duly express the clear mind of the ld AO which enabled him to frame an opinion that income of the assessee had escaped assessment within the meaning of section 147. As relying on HINDUSTAN LEVER LTD. [ 2004 (2) TMI 41 - BOMBAY HIGH COURT] we have no hesitation in holding that the reopening of assessment made for the Asst Year 2007-08 is to be declared void abinitio and is hereby quashed. - Decided in favour of assessee.
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2021 (4) TMI 716
Capital gain computation - capital gains in respect of the property given on development in the year under consideration instead of assessing the same in the year of construction permission - AO has adopted the SRO value for arriving at the value of land and building as on 1.4.1981 - HELD THAT:- We find that the assessee has submitted registered valuer s report, whereas the AO has adopted the SRO value for arriving at the value of land and building as on 1.4.1981. It is settled law that where an assessee disputes the SRO value, and the AO is not satisfied with the report submitted by the assessee, in such circumstances, the AO ought to have referred the matter to the Valuation Officer u/s 55A of the I.T. Act. The assessee had relied upon various case laws in support of this contention As relying on Shri Barjinder Singh Bhatti [ 2015 (7) TMI 1216 - ITAT CHANDIGARH] , Padarti Venkata Rama Chandra Rao [ 2016 (11) TMI 203 - ITAT VISAKHAPATNAM] and Ajanta Tubes Ltd. [ 2019 (10) TMI 601 - ITAT DELHI] we remand the issue to the file of the AO with a direction to refer the valuation of the property to the Valuation Officer and after obtaining his report, the AO shall recompute the taxable capital gain
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2021 (4) TMI 715
Validity of assessment - non issue of any notice u/s. 143(2) of the Act - transfer of case u/s 127 - assessment continued by new officer/ITO - HELD THAT:- Once the proceedings u/s. 143(3) are commenced, the case can be transferred from one AO/ITO to another AO/ITO by an order of the Commissioner as provided u/s. 127 of the Act. In case, the case is reallocated by the JCIT, in that event, the concerned AO to whom the case is reallocated, should have commenced the assessment proceedings by way of issuance of the statutory notices. It has been held by the Hon'ble Supreme Court in the case of ACIT Vs. Hotel Blue Moon [ 2010 (2) TMI 1 - SUPREME COURT] that the service of the statutory notice u/s. 143(2) of the Act is sine the qua non to initiate/commence the assessment proceedings u/s. 143(3) of the Act. In this case, the AO, who has passed the impugned assessment order u/s. 143(3) of the Act, did not issue notice u/s. 143(2) of the Act. But the said notice was issued by earlier AO/ITO u/s. 143(2) of the Act. The case of the assessee was not transferred by competent Officer i.e. Commissioner as per provision of section 127 of the Act. Therefore, the proceedings could not have been continued by the new officer/ITO from the stage it was left by ITO, Ward-Itanagar. In the circumstances, the assessment framed by ITO, Ward-Tezpur is invalid for non-issuance of mandatory notice u/s. 143(2) of the Act. Therefore, the impugned assessment is legally invalid and the same is hereby quashed. - Decided in favour of assessee.
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2021 (4) TMI 714
Reopening of assessment u/s 147 - ITO, Ward-2(2) jurisdiction under the provisions of section 127 to issue notice - assessee may not have accounted for the income earned from derivative transactions - HELD THAT:- The only reason mentioned was that it appears that the assessee may not have accounted for the income earned from derivative transactions whereas the assessee replied that the said income was duly accounted for in the return of income. But without application of mind and without considering this reply, the ACIT, Circle-2 transferred the case to the ITO, Ward-2(2) for framing of reassessment. In this case, neither the Officer framing the assessment himself has formed the view that the income of the assessee has escaped assessment nor the Officer who had recorded reasons applied his mind to the submissions of the assessee that there was no escapement of income on the issue raised by the ACIT, Circle-2. Moreover, the case has been transferred by the ACIT, Circle-2 himself for which he did not have the jurisdiction under the provisions of section 127 of the Act. So, in this case, the ITO, Ward-2(2) had no jurisdiction to continue with the assessment which was transferred by the ACIT, Circle-2, rather, as per the provisions of the Act, the ITO, Ward-2(2) if wanted to make reassessment of the assessment, he himself should have formed the belief of the escapement of income or in the alternative, the case might have been transferred to him by the order of the Commissioner as per the provisions of the Act. Therefore, the reassessment framed in this case is bad in law and the same is hereby quashed - Decided in favour of assessee.
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2021 (4) TMI 712
Revision u/s 263 - Deduction u/s 35(2AB) allowability - as per CIT-A although the case was selected for scrutiny to examine the deduction claimed u/s 35, 35(2AA) and 35(2AB), however, the Assessing Officer has not mentioned a single word about the allowability of the same in the body of the assessment order - HELD THAT:- We find, the Tribunal in assessee s own case in the immediately preceding assessment year [ 2018 (4) TMI 1864 - ITAT DELHI] has restored this matter to the file of Pr. CIT for deciding the issue afresh stating ssessee categorically stated before the ld.CIT that: the ld. A.O. during the course of assessment proceedings u/s 143(3) did not call for any detail nor raised any query in regard to claim u/s 35(2AB). The ld. AR submitted that this information was erroneously given to the ld. CIT inasmuch as the Assessing Officer did make enquiry as was evident from his order sheet entry dated 03.02.2014 by which certain enquiry was conducted qua deduction u/s 35(2AB) of the Act. Without going into the authenticity of the claim of deduction, we find that the ld. CIT set aside the assessment order primarily on the assessee s submission that the Assessing Officer did not call for any detail nor raised any query. Since this position does not prima facie appear to be correct, we set aside the impugned order and remit the matter to the file of CIT for deciding it afresh. Respectfully following the decision of the Tribunal in assessee s own case for the immediately preceding assessment year, we deem it proper to restore this issue to the file of Pr.CIT for deciding the issue afresh - Decided in favour of assessee for statistical purposes.
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2021 (4) TMI 711
Revision u/s 263 - merger of the order - case of assessee was selected for limited scrutiny through CASS as that Cash deposits in savings bank account(s) is more than turnover - CIT proposing to revise the assessment order passed by the Assessing Officer u/s 143(3) - HELD THAT:- When the Assessing Officer completed assessment u/s 143(3) of the Act, after examining the issues for which the case has been selected for limited scrutiny, then it cannot be held that there is an error in the order of the Assessing Officer, for the reason that he has not sought permissions to examine other reasons. If the Assessing Officer has not examined any other aspect, than the reasons for which the assessment was selected for scrutiny, in our view, no fault can be found with the Assessing Officer. Thus, in our view, non-seeking of permission for conversion of limited scrutiny to complete scrutiny in terms of para 4 of the CBDT Instruction No. 7/2014, does not per se render the assessment order u/s 143(3) of the Act, erroneous. Even otherwise, the entire issue of limited scrutiny, reasons for selection, the Bank accounts in questions were before the ld. Pr. CIT. On this issue of turnover, the order of the Assessing Officer has merged with the order of the ld. CIT(A) dt. 28/04/2017. What the Assessing Officer missed, is also missed by the ld. CIT(A). The ld. Pr. CIT cannot order the Assessing Officer to follow the order/directions of the ld. CIT(A) on issues which were not part of the appellate order of the ld. CIT(A). Under these circumstances, the ld. Pr. CIT cannot exercise his powers u/s 263 of the Act, to revise the order that has merged with the order of the ld. CIT(A). For these reasons, we uphold the technical contention of the assessee and quash the order passed by the ld. Pr. CIT u/s 263 of the Act and allow the appeal of the assessee.
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2021 (4) TMI 710
Stay demand - stay on the recovery of the outstanding demand was granted by the Tribunal subject to a rider that 15% of the rectified demand shall be deposited by the assessee on or before 31st March, 2019 - HELD THAT:- Post extension of the stay on the recovery of the outstanding demand the hearing of the appeal for the year in question i.e A.Y. 2014-15 was adjourned from time to time, for the reason, that the assessee s appeal for A.Y. 2013-14 which involved an issue having a direct bearing on the disposal of the appeal for the year in question was pending before the Tribunal. On an application filed by the assessee seeking extension of the stay on the recovery of the outstanding demand, the Tribunal, vide its order dated 13th March, 2020 was pleased to allow the same. At this stage, we may herein observe that the Tribunal while extending the stay on the recovery of the outstanding demand vide its aforesaid order dated 13th March, 2020, had after taking cognizance of the fact that the assessee had already paid 15% of the outstanding demand for the year in question, had therein directed the A.O to recover/adjust the balance 5% of the outstanding demand from the refund that had accrued pursuant to the order passed by the Tribunal in its case for A.Y. 2012-13. As pointed out by the ld. A.R the department despite the aforesaid specific direction had failed to carry out the necessary adjustment till date. Be that as it may, in our considered view as the delay in disposal of the appeal for the year in question cannot be attributed to any lapse or failure on the part of the assessee, and an amount of 20% of the outstanding rectified demand in the backdrop of the aforesaid directions which were given by the Tribunal on the last occasion while extending the stay on the recovery of the outstanding demand vide its order dated 13th March, 2020 can safely be held to have been deposited by the assessee, therefore, in our considered view the application filed by the assessee for extension of the stay on the recovery of the outstanding demand for the year in question i.e A.Y. 2014-15 merits acceptance. We herein extend the stay on the recovery of the outstanding demand for a period of 180 days from the date of this order or till the disposal of the appeal, whichever is earlier. Before parting, we may herein observe that in case the assessee at any stage seeks an adjournment except for certain unavoidable reasons then the extension of stay granted vide the present order shall stand vacated.
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2021 (4) TMI 709
Addition of cash deposit in bank account as undisclosed income - HELD THAT:- As during the assessment, the assessee was given ample opportunity to explain the source and nature of cash deposit. Initially, the assessee not disclosed the saving bank account maintained in RBS, however later on admitted the said bank account. The fact remains that assessee failed to substantiate the source of cash deposit in the said bank either before the Assessing Officer or before the ld. CIT(A). Before us, the assessee has neither filed any written submission, nor any documentary evidence to substantiate the grounds of appeal. We have further noted that due to non-cooperation of assessee his Counsel has withdrawn from the proceedings - no merit in the ground of appeal raised by the assessee, thus, we affirm the order passed by the ld. CIT(A). - Decided against assessee.
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2021 (4) TMI 708
Additions under section 40A(2) - Interest expenses paid the related parties in excess of interest @15% per annum - AO noted that assessee has paid interest to certain related parties @18% per annum and treated the interest rate @15% as reasonable based on rate of interest on other loans i.e. to non related parties and, accordingly worked out disallowance under section 40A(2) - HELD THAT:- Before us, the Ld. AR for the assessee vehemently argued that interest @18% per annum to related parties is reasonable as funds obtained from related parties are without any security; such funds are not to be repaid in the near future and since the loans are without any security and are not to be repaid short, the same falls within the high risk category thus on account of the above factors, loans obtained from related parties deserve some premium as compared to loans obtained from outsiders which are usually against any security, need to be repaid in the specified time and do not fall within the high risk category. We find convincing force in the above submissions of the Ld. AR for the assessee. The Hon'ble Gujarat High Court in CIT Vs Sarjan Realities Ltd [ 2014 (8) TMI 206 - GUJARAT HIGH COURT] held that unless payment of interest was in excess of market rate, merely because the assessee has paid interest at the different rate to different companies, payments of interest could not be held to be excessive or unreasonable. In view of the above factual and legal discussions, ground No. 2 of the appeal is allowed. TDS u/s 194J OR 194C - Disallowance of exhibition expenses u/s 40(a)(ia) - no tax was deducted at sources while making payment made to Focus Trade Fairs Pvt. Ltd -assessee submits that it is not a case of non-deduction of tax at source, rather it is a case of short deduction of tax at source - HELD THAT:- The Hon'ble Calcutta High Court in CIT Vs SK Tekriwal [ 2012 (12) TMI 873 - CALCUTTA HIGH COURT] and CIT Vs Prayas Engineering Ltd. [ 2014 (11) TMI 1086 - GUJARAT HIGH COURT] held that there is nothing in this section to treat the assessee as a defaulter where there is a shortfall of the deduction. It was also held that section 40(a)(ia) of the Act refer only to the duty to deduct tax and pay to Government account. If there is any shortfall due to any difference of opinion as to taxability of any item or the nature of payments falling under the TDS provisions, the assessee can be declared in default under section 201 of the Act no disallowance can be made by invoking the provisions of section 40(a)(ia) of the Act. In view of the aforesaid factual ground No. 3 of the appeal is allowed. Disallowance in respect of foreign tour expenses - CIT(A) has upheld the ad hoc disallowance - assessee submits that the books of accounts are duly audited under section 44AB and the expenses in question are supported by documentary evidences - HELD THAT:- Before us the assessee has filed certain documentary evidences with regards to foreign travel expenses, consisting of ledger of foreign expenses, receipt of travel agencies, insurance receipts and foreign exchange receipts only. No documents with regard to purpose and place of visits or meetings details in overseas countries if place on record to substantiate the expenses. We have further noted that the assessing officer has already allowed substantial part of the foreign tour expenses and disallowed only ₹ 1.00 lakhs. In absence of sufficient evidence, we do not find any merit in the ground of appeal raised by the assessee. In the result this ground of appeal is dismissed. Disallowance of job-work expenses - Addition for the want of verification of bills and vouchers and non-maintenance of karigar register containing the details of job work and charges thereof - HELD THAT:- Before us the Ld. AR for the assessee vehemently argued that job-work done from outsiders and not from in-house labourers. Hence, there is no requirement to maintain any such karigar register. No such plea was raised before the lower authorities. Now the assessee has come with new pleas, which was not raised before lower authorities. The new explanation given by the assessee does not inspire confidence. Further, we have noted that the assessing officer have made ad hock disallowance of ₹ 2.00 lakhs only, out of the total job work expenses of ₹ 34 Lakhs claimed by the assessee. Considering the above discussions, we do not find any merit in the ground of appeal raised by the assessee. In the result this ground of appeal is dismissed.
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2021 (4) TMI 707
Contribution to PF/ESI by employer - Disallowance u/s 36(1)(va) or 43B - HELD THAT:- AR of the assessee fairly submits that issue of disallowance under section 36(1)(va) raised by the assessee is covered against him by the decision of Hon'ble Gujarat High Court in case of CIT vs. Gujarat State Road Transport Corporation [ 2014 (1) TMI 502 - GUJARAT HIGH COURT] - However, instead of keeping the matter alive, the case was restore to Ld. CIT(A) to give effect to the order of the Tribunal in accordance with the decision of Hon'ble Supreme Court in SLP in Gujarat State Road Transport Corporation CORPORATION - Thus we restore the case to the file of the Ld. CIT(A) to follow the outcome of SLP in case of GSRTC (supra).
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2021 (4) TMI 706
CIT(A) disposing off the appeal for the alleged failure by the appellant to file it electronically - HELD THAT: - CIT(A) dismissed the appeal of the assessee due to technical reason as Rule 45 of Income tax Rules 1962 was amended w.e.f. 01.03.2016 and that appeal was instituted on 05.04.2016. CIT(A) dismissed the appeal for technical reasons and without discussing the merit of the case as mandated under section 250(6) As further noted that, though the Rule 45 amended w.e.f. 01.03.2016, without corresponding amendment in Section 249 of Income Tax Act. It is settled position of law that Rule cannot substitute the statutory provision. Hence, keeping in view of the aforesaid facts, the appeal is restored back to the file of Ld. CIT(A) to adjudicate the appeal on merit. The assessee is also directed to comply the procedure for filing appeal electronically as per the amended Rule 45 of Income Tax Rules 1962, if no such appeal is filed electronically. The assessee is given liberty to file proper application for seeking condonation of delay, if so required for admission of appeal before the Ld. CIT(A). The Ld. CIT(A) is further directed to consider the application for condonation of delay, if so filed, sympathetically - Appeal of the assessee is allowed for statistical purpose.
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2021 (4) TMI 705
Grant exemption u/s.10(23C)(vi) declined - appellant institution was not solely for educational purposes - as per assessee various activities carried on by the appellant were towards educational purposes of the banking staff and consequently the appellant had fulfilled all the conditions required u/s.10(23C)(vi) of the Act to avail the exemption as provided therein - HELD THAT:- Admittedly, the Tribunal in the earlier year for AY 2014-15 [ 2016 (10) TMI 593 - ITAT BANGALORE] only relied on clause (d) (g) of the Memorandum of Association of the assessee college and overlooked clause (a) (b) of the Memorandum of Association. However, at this stage, we are not in a position to take a decision in favour of the assessee, since the decision of the Tribunal is not disturbed by any higher forum. However, in the interests of justice, it is appropriate to remit the issue in dispute to the file of the CIT(Exemptions) for appropriate decision, after the final judgment of the Hon ble High Court of Karnataka in the case of assessee for the AY 2014-15. With these observations, we remit the issue to the file of the CIT(Exemptions). Appeal by the assessee is allowed for statistical purposes.
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Customs
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2021 (4) TMI 751
Violation of principles of natural justice - material on the basis of which the show-cause notice and the impugned order were issued, has not been supplied and no reply has been received to these representations - HELD THAT:- The order putting the Petitioner in the DEL category was a temporary order. The Petitioner was given an opportunity to file a reply to the said order and the said order was sent to the Petitioner along with a show-cause notice. In the show-cause notice also, the Petitioner has been asked as to why the Petitioner ought not to be continued to be placed in the DEL. Thus, there was no finality, and no period was mentioned, as to for how long the Petitioner was put on the DEL - Since there has been no reply whatsoever in response to the repeated communications of the Petitioner, directions are liable to be issued so that the matter reaches a conclusion. The documents relied upon by the Respondent shall be supplied to the Petitioner within a period of four weeks i.e., by 15th May 2021 - Petition disposed off.
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2021 (4) TMI 742
Refund of Customs Duty - Import of Caustic Soda - customs duty paid at the time of filing of Bill of Entry under the self assessment procedure under the Customs Act, 1962 - whether the petitioner is entitled to have the impugned show cause notice issued by the respondent quashed or should be relegated to participate in the said proceedings? - HELD THAT:- The show cause notice delayed considerably. Even though, there is no limitation prescribed under 124 of the Customs Act, 1962, the peitioner is entitled to abandon the imported goods abandoned under Section 23 of the Customs Act, 1962. It cannot be said that the peitioner had indulged in any offence while importing the goods. On the other hand, the petitioner is an victim of fraud perpetrated by the Chinese. The petitioner has paid a sum of ₹ 13,58,794/- as Customs duty in good faith on the goods declared in the Bill of Trading namely Remelted Lead Ingots - That being the case, the petitioner is entitled for refund of the Customs duty paid in good faith. The amount that was paid for imported the Remelted Lead Ingots cannot be retained. There is no justification in not ordering refund of ₹ 6,85,687/- being the difference in the above amount to the petitioner. The respondent Customs Department can at best order confiscation of the imported Caustic soda and Industrial Salt with an option to the petitioner to pay fine in lieu of confiscation under Section 125 of the Customs Act, 1962. It cannot force Customs Duty on imported goods on the petitioner - there is no justification in not refunding the aforesaid differential amount of ₹ 6,85,687/- to the petitoner. Once the goods are ordered to be consficted assuming they are liable to be confisated, they become the property of the Union of India under Setopm 126 of the Customs Act, 1962. Petition allowed.
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2021 (4) TMI 719
Valuation - import of some spares and accessories related to the system filing appropriate bills of entry - import from a parent company by its subsidiary in India - importer and their foreign supplier are related persons in terms of Rule 2 (2) (v) of Customs Valuation Rules (CVR), 2007 or not - HELD THAT:- The Customs Valuation Rules, 1988 and the Section 14 as applicable prior to 2007 were not considered or applied to the main system by the Commissioner (Appeals) as was required. Both sides agreed that the issue needs to be remanded to the Commissioner (Appeals) to determine the valuation in terms of Section 14 and the Customs Valuation Rules, as applicable to each of the consignments - Appeal is allowed by way of remand.
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Corporate Laws
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2021 (4) TMI 750
Seeking permission for travelling abroad - Validity of Look Out Circular (LOC) issued against him by Respondent Nos 3 and 4 i.e., the Ministry of Corporate Affairs (MCA) and the Serious Fraud Investigation Office (SFIO) - case of Respondents is that the Petitioner is guilty of conniving and conspiring with the Promoters of M/s Techpro Systems Limited - HELD THAT:- There is no criminal case pending against the Petitioner. His role is also yet to be ascertained by the investigating authorities. Phrases such as economic interest or larger public interest cannot be expanded in a manner so as to include an Independent Director who was in the past associated with the company being investigated, without any specific role being attributed to him, as in the present case. The Petitioner poses no flight risk given the fact that his wife and children are residents of Delhi/NCR. This Court is inclined to suspend the operation of the LOC, subject to the conditions imposed. The Petitioner shall present himself in the Indian Embassy in Oman on the 1st and 3rd Monday of every month - The Petitioner shall file an undertaking in this Court, which would be supported with an undertaking by his wife, that the Petitioner would be present before the authorities upon being issued 15 days notice. The Petitioner s wife shall not leave India without seeking leave from the Court - application disposed off.
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2021 (4) TMI 747
Disqualification of the Petitioner from Directors - deactivation of DIN/DSC - non-filing of annual returns and balance sheets in one of the companies - HELD THAT:- Considering the legal position as laid down by this Court in MUKUT PATHAK ORS., YOGESH KHANTWAL, AARTI KHANTWAL, AND VINEET WADHWA VERSUS UNION OF INDIA AND ANR. [ 2019 (11) TMI 319 - DELHI HIGH COURT] and since the disqualification of the Petitioner took place prior to 7th May, 2018, the Petitioner s disqualification qua the other active companies is set aside and his DINs/DSCs is directed to be reactivated. The present order shall be served by the Petitioner on the ROC, Delhi and Mumbai and the Petitioner s DIN/DSC shall be reactivated within a period of 10 days from service of the order - Petition disposed off.
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Insolvency & Bankruptcy
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2021 (4) TMI 753
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - financial creditors - existence of debt and dispute or not - applicability of limitation act - HELD THAT:- Considering that the Limitation Act applies only to courts, unless made statutorily applicable to tribunals, the Committee was of the view that such Act should be made to apply to the IBC as well, observing that though the IBC is not a debt recovery law, the trigger being default in payment of debt would render the exclusion of the law of limitation counter-intuitive . Thus, it was made clear that an application to the IBC should not amount to resurrection of time-barred debts which, in any other forum, would have been dismissed on the ground of limitation - it is clear that the principle of Section 9 of the Limitation Act is to be strictly adhered to, namely, that when time begins to run, it cannot be halted, except by a process known to law. One question that arises before this Court is whether Section 18 of the Limitation Act, which extends the period of limitation depending upon an acknowledgement of debt made in writing and signed by the corporate debtor, is also applicable under Section 238A, given the expression as far as may be governing the applicability of the Limitation Act to the IBC. Whether an entry made in a balance sheet of a corporate debtor would amount to an acknowledgement of liability under Section 18 of the Limitation Act? - HELD THAT:- Several judgments of this Court have indicated that an entry made in the books of accounts, including the balance sheet, can amount to an acknowledgement of liability within the meaning of Section 18 of the Limitation Act - Reliance placed in the case of MAHABIR COLD STORAGE VERSUS COMMISSIONER OF INCOME-TAX [ 1990 (12) TMI 3 - SUPREME COURT] . The majority decision of the Full Bench in V. PADMAKUMAR VERSUS STRESSED ASSETS STABILISATION FUND (SASF) ANR. [ 2020 (3) TMI 1244 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, NEW DELHI] is contrary to the aforesaid catena of judgments. The minority judgment of Justice (Retd.) A.I.S. Cheema, Member (Judicial), after considering most of these judgments, has reached the correct conclusion. Appeal allowed.
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2021 (4) TMI 732
Validity of Liquidation Proceedings against Corporate Debtor - Appellant claims that the Liquidator instead of reviving the Company through Settlement under Section 230 of the Companies Act, 2013 sought to close the business of the Company - Appellant is claiming that the Liquidator should have taken steps to sell the assets of the Corporate Debtor as a going concern. HELD THAT:- When present matter is appreciated it is apparent that the Appellant and the management concerned who brought about the situation where the three companies are in Liquidation is trying to take over coming up with the scheme where there is no infusion of additional funds and the liabilities are sought to be discharged in the name of amalgamation. It is not in tune with expectations of a Resolution Plan under IBC. At the time of arguments, now effort is being made to take benefit of Section 240A of IBC calling upon this Tribunal to go into the definitions of Micro, Small and Medium Enterprise and hold the Company to be Micro or Medium Industry. We however find that the caution recorded by the Hon ble Supreme Court is important. We have noticed the worry recorded of Insolvency Law Committee. We can see the effect of our intervention in importing Section 230 of Companies Act, into Liquidation stages under IBC. There are simply delays. In the present matter, we need not decide the question of Section 29A of IBC. Alternatively, even if the said Section was to be considered, although the Learned Counsel for the Appellant is arguing that this Court should record finding on Micro, Small and Medium Enterprises on the basis of definition in the MSME Act, and records of the three Companies, we decline to go into those details in the absence of memorandum under MSME Act. When we find that it is not necessary for us to pursue Section 230 of the Companies Act at the stage of Liquidation, the same not being part of Procedure of IBC when the Corporate Debtor is in Liquidation, both the Appeals must fail, not having substance in the contentions raised - the appeal also needs to be dismissed as the Appellant is pushing forward a scheme of amalgamation compromise and arrangement for three companies which are already in Liquidation under IBC. Appeal dismissed.
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2021 (4) TMI 728
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - existence of debt and dispute or not - demand notice received within time or not - H ELD THAT:- The demand notice was sent on 20.08.2019 and the reply of the demand notice is also on record. The only contention of the Operational Creditor is that it was received after 10 days of the delivery of the demand notice and hence, cannot be taken into consideration and it is presumed that no dispute was raised. It is an admitted fact that the reply to the demand notice was received on 05.09.2019, whereas Ld. Counsel for the Corporate Debtor contended that it was sent on 02.09.2019 after receiving the demand notice on 22.08.2019. Since, this reply dt. 22.05.2017 to the demand notice 12.05.2017 is prior to receiving of the demand notice under Section 8 of the IBC and the amount has already been disputed, therefore, in view of the decision referred Supra even if the reply of the demand notice is not sent within ten days of the delivery of demand notice under section 8(2) of IBC 2016. If the documents available on the record establish the pre-existing dispute, then that shall be taken into consideration and the reply cannot be rejected merely on technical grounds - the Corporate Debtor, by referring to the correspondence made between the parties, have succeeded to establish that there is a pre-existing dispute between the parties prior to the issuance of Demand Notice. In this case, the claim of the applicant is based upon the invoices but it appears from the demand notice that the applicant has not enclosed the invoices rather in column VII of Form 3, the petitioner has mentioned that true copy of dishonoured cheques along with the corresponding bank memos are annexed herewith collectively as Annexure-A and no other document is enclosed. This means that in terms of Section 8(1) of the IBC, the Petitioner has neither enclosed the invoices nor sent the notice in Form-4. Rather it sent the demand notice in Form-3 - the demand notice delivered in the present case is not a valid one in terms of Section 8(1) of IBC,2016 read with Rule 5(1)(b) of the the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016. The Corporate Debtor had raised the dispute regarding the existence of debt and the Operational Creditor has also failed to deliver the proper demand notice u/s 8(1) IBC 2016 before filing the petition u/s 9 of IBC, 2016 - the Operational Creditor has falsely sworn in an affidavit under Section 9 (3) (b) stating that no notice was given by the Corporate Debtor relating to the payment of the unpaid operational debt. In terms of Section 9 (5) (ii) (a) and (d), the Application being incomplete and the fact that notice of existence of dispute has been raised by the Corporate Debtor, this Adjudicating Authority has no option but to reject the Application of the Operational Creditor - Petition dismissed as not maintainable.
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2021 (4) TMI 725
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditor - default and the debt is due and payable or not - time limitation - HELD THAT:- In the instant case, the applicant has placed on record enough documents evidencing the default and hence, the present application deserves to be admitted - On perusal of the record it is also found that the instant petition filed by the applicant is well within limitation and there is no pre-existing dispute regarding the operational debt from the side of the corporate debtor. In the instant application, from the material placed on record by the Applicant, this Authority is satisfied that the application is complete in all respect and the Corporate Debtor committed default in paying the operational debt due and payable to the Applicant - The documents produced by the operational creditor clearly establish the 'debt' and there is default on the part of the Corporate Debtor in payment of the 'operational debt. This adjudicating authority is of the considered view that operational debt is due to the Applicant and it fulfilled the requirement of I B Code. No dispute has been raised by the respondent at any point of time. That, Applicant is an Operational Creditor within the meaning of Section 5 sub-section 20 of the Code. From the aforesaid material on record, petitioner is able to establish that there exists debt as well as occurrence of default and the amount claimed by operational creditor is payable in law by the corporate debtor as the same is not barred by any law of limitation and/or any other law for the time being in force. The corporate debtor has committed default in payment of operational debt and, therefore, it is a fit case to initiate Insolvency Resolution Process by admitting the Application under Section 9(5)(1) of the Code - Application admitted - moratorium declared.
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2021 (4) TMI 722
Dissolution of Corporate Debtor - Section 54 of the IBC, 2016 read with Regulation 44(1) 45(3)(b) of IBBI (Liquidation Process) Regulations, 2016 - HELD THAT:- The facts and circumstances of the case have established that due process of Liquidation as per extant provisions, was followed by the Liquidator to liquidate the assets of Company and the realized amounts were also distributed to the respective claimants. Therefore, the liquidation process was deemed to have been completed under Chapter III of Part II of the Code and thus it would be just and proper for the Adjudicating Authority to dissolve the Company, by directing the Liquidator to deposit the balance amount of ₹ 1,25,000/- into Companies Liquidation Account in the Public Account of India, as per law. No party is going to be affected by dissolving the company. M/s. Oasis Agro Infra Limited., the Corporate Debtor, is hereby dissolved with immediate effect - Liquidator is permitted to close the pending Liquidation Bank Account within three weeks from the date of receipt of copy of this order - application allowed.
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2021 (4) TMI 721
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial Creditors or not - existence of debt and dispute or not - HELD THAT:- The application filed in the prescribed Form No. 1 is found to be complete. The present petition being complete and having established the default in payment of the Financial Debt for the default amount being above ₹ 1,00,000/-, the petition is admitted in terms of Section 7(5) of the IBC and accordingly, moratorium is declared in terms of Section 14 of the Code. Application admitted - moratorium declared.
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2021 (4) TMI 720
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - dismissal of earlier CP filed by operational creditor, a bar for filing another CP in respect of the same debt, or not - petition filed within the time limitation or not - HELD THAT:- The respondent-corporate debtor admitted the liability on 18.11.2015. Once an admission is made by the corporate debtor with regard to the liability towards the operational creditor, the same is required to be considered as an acknowledgment of debt and accordingly, it can be safely concluded that the instant CP filed on 13.11.2018 is well within the limitation period of three years from 18.11.2015 i.e. date of Annexure P-8 e-mail dated 18.11.2015. None of the decisions on which the learned counsel for the respondent placed reliance stated that the admission of debt made in an e-mail cannot be considered as an admission of debt and does not extend the period of limitation. It is the settled principle of law that dismissal of earlier CP filed by operational creditor is not a bar for filing another CP in respect of the same debt, if the petitioner is able to prove the subsistence of a legally enforceable debt and if the subsequent CP is filed within the period of limitation. The application is complete in all aspects and also no objections are being raised to the completeness of the application filed under Section 9(2) of the Code - Petition admitted - moratorium declared.
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Service Tax
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2021 (4) TMI 713
Levy of penalty u/s 76 and 77 of FA - Non-filing/late filing of service tax returns - demand on the ground that the Service tax deposited through e-lekha but not deposited the service tax electronically as required under Rule 6(B) to Service Tax Rules 1994 - HELD THAT:- The appellant was having temporary registration without PAN, they could not get the user id and password for filing returns on the net portal. Further, in spite of pursuance with the Service Tax Department, the Pan number could not be taken because Post Office was a Central Government Department under the Department of Post Telegraph. The appellant was issued online user Id and password on their temporary registration number and the pass word was activated in the year 2013-2014 and thereafter, they were able to file their returns. Further, the appellant had made sufficient compliance as service tax was already paid in time. The third proviso under Rule 7(C) of Service Tax Rules 1994 provides that, where the gross amount of service tax payable is nil, the central excise officer may, on being satisfied that there is sufficient reason for not filing the returns, reduce or waive the penalty. There is genuine reasons for not filing or late filing of the service tax returns. Further, admittedly, the appellant had paid the service tax and thus, there was no intention to evade payment of service tax - Penalty set aside - appeal allowed in part.
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Central Excise
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2021 (4) TMI 736
Refund claim - rejection on the ground that the required documents not produced - time limitation - HELD THAT:- In view of the fact that appellants claim for refund was rejected only on the ground that duty paying document was not produced which is contrary to the text of sub-Section 2 of Section 11B of Central Excise Act, 1944 and contrary to the evidence available on record being admission of respondent-department throughout the proceedings including at CESTAT that this amount was additionally claimed from the appellant and paid by it, it is found to be a fit case for remand to the adjudicating authority to get himself satisfied with the certified copy of the order of CESTAT passed on dated 17.03.2017 and to dispose of refund application in accordance to the law with due regard to the findings of CESTAT. The appeal is allowed by way of remand to the original adjudicating authority for re-adjudication of refund proceedings.
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2021 (4) TMI 735
CENVAT Credit - input services - Group Insurance Services for insurance of staff - rejection of credit on the ground that the input services were not used either in or in relation to the manufacture of final product and it is not covered under inclusion category of input services and it fall in the exclusion category provided from 01/04/2011 - HELD THAT:- The very same issue even for the period post amendment in Rule 2(l) of Cenvat Credit Rules, whereby certain services were excluded from the ambit of input services has been considered by the Hon ble Madras High Court in the case of M/S. GANESAN BUILDERS LTD. VERSUS THE COMMISSIONER OF SERVICE TAX [ 2018 (10) TMI 269 - MADRAS HIGH COURT] wherein after interpreting the term Group Insurance with the exclusion clause held that the group insurance service is admissible input service and credit was allowed. From the judgment it can be seen that identical issue has been considered by the Hon ble Madras High Court in detail after interpreting the definition of input services and also the inclusion clause. Therefore, there is nothing more to add after the aforesaid judgment was passed. Group Insurance Service is admissible for Cenvat Credit - appeal allowed - decided in favor of appellant.
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2021 (4) TMI 718
Clandestine removal - evasion of huge amount of excise duty - reliance placed on the third party evidence - evidentiary value of the third party evidence - HELD THAT:- Reliance placed in the case of BAJRANGBALI INGOTS STEEL PVT. LTD., SURESH AGARWAL VERSUS CCE, RAIPUR [ 2019 (1) TMI 966 - CESTAT NEW DELHI] where it was held that findings of clandestine removal cannot be upheld based upon the third party documents, unless there is clinching evidence of clandestine manufacture and removal of the goods. The order under challenge is not sustainable - Appeal allowed - decided in favor of appellant.
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2021 (4) TMI 717
Compounded levy scheme - levy of penalty - clearance of stock of finished goods relating to December, 2010 and January, 2011, admittedly, cleared during May, 2011 - violation of provisions of Rule 10 of Chewing Tobacco and Unmanufactured Tobacco Packing Machines (Capacity Determination and Collection of Duty) Rules, 2010 - HELD THAT:- Rule 10 of 2010 Rules, provides for abatement in case of nonproduction of goods (in case of factory did not produce the notified goods during for continuous period of fifteen days or more). It is found from the admitted facts on record that the appellant, being engaged in production during the period December, 2010 to 31.01.2011, admittedly have not sought for any abatement, and are not entitled to any abatement under Rule 10 of 2010 Rules. Thus, the view of the Department, first proviso of Rule 2010 is attracted is misconceived. Where a Rule is not attracted, the proviso thereunder does not attract. Under the Rules of Interpretation, a proviso is sub-servent to the Rule, and does not override the provisions of the Rule, of which it is a proviso. The Ist proviso to Rule 10 of 2010 Rules is not attracted under the admitted facts and circumstances - appeal allowed - decided in favor of appellant.
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CST, VAT & Sales Tax
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2021 (4) TMI 744
Price variation clause - validity of production of credit notes issued towards the price variation - Appellate Deputy Commissioner refused to accept those documents on the ground that the assessee/dealer did not produce the same either before the Investigating Officer or before the Assessing Officer - HELD THAT:- The legal issue as to whether the Appellate Deputy Commissioner can accept documents filed by the assessee is no longer res integra and has been decided in several cases in favour of the assessee, holding that the First Appellate Authority or the Tribunal has requisite power to find out whether any register, record, account book or document produced before it was genuine, so as to find out whether the assessee was entitled to certain concession or benefit - It is beneficial to refer to the decisions of the Division Bench of this Court in the cases of The Deputy Commissioner (C.T.), Coimbatore Division, Coimbatore-2 Vs. New Ajantha Wines [1978 (10) TMI 135 - MADRAS HIGH COURT], State of Tamil Nadu Vs. Shah Moolchand Kasthurchand and another [2009 (10) TMI 826 - MADRAS HIGH COURT] which was decided in favour of the assessee/dealer. In the light of the above decision, it has to be necessarily held that the First Appellate Authority as well as the Tribunal can receive documents subject to the genuinity being proved. In the order passed by the First Appellate Authority, dated 13.12.2021, it is stated that the materials produced by the assessee/dealer before the First Appellate Authority cannot be considered as genuine. However, this finding does not stem out of any enquiry or investigation done with regard to the veracity of documents and what the First Appellate Authority states to be not genuine is the conduct of the assessee/dealer, i.e., the assessee/dealer did not produce the documents either before the Investigating Officer or before the Assessing Officer. The Assessing Officer would be well justified in considering the genuinity of the documents produced by the assessee/dealer - matter is remanded to the Assessing Officer and the assessee/dealer shall produce all the documents/credit notes in original before the Assessing Officer - appeal allowed by way of remand.
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Indian Laws
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2021 (4) TMI 749
Rejection of registration of a partnership firm constituted by the petitioner - whether LLP can be treated as a person which can be permitted to form a partnership with an individual? - HELD THAT:- In the present case an individual agreed with an LLP to share the profits of the business. LLP is a body corporate, independent legal entity having a common seal and perpetual succession, capable of suing and of being sued. Once a partnership is formed the LLP, which is a partner would have to abide by the partnership Act. The respondent's objection is based on the liability of the partners of LLP, stating that the same is confined to the terms in the agreement - The liability of partners of LLP and liability of the LLP as a partner under the Partnership Act would be different. The liability of partners in an LLP cannot have any relevance when the LLP itself becomes a partner, when it would be bound by the provisions in the Partnership Act. The liability of the LLP would be as in the case a company which joins a firm after entering into a partnership. Section 4 of the Partnership Act permits Constitution of a firm or partnership between one or more persons. In this case the partnership deed was executed between an individual and an LLP which is a body corporate having a legal entity and coming within the definition of person . The individual liability of the partners of LLP would not be relevant when the LLP itself would have liability independent of the liability of the partners. Therefore, the difference in the provisions under the Partnership Act relating to liability of the firm or the individual partners would not stand in the way of constitution of a partnership with an LLP - LLP cannot have a disqualification from entering into a partnership with an individual or other persons. There shall be a direction to the respondent to reconsider the request of petitioner for registration and to take appropriate action on the same within a period of one month from the date of receipt of a copy of the judgment - Petition allowed - decided in favor of petitioner.
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2021 (4) TMI 748
Dishonor of Cheque - correctness of the finding of acquittal - rebuttal of presumptions - Sections 118 and 139 of Negotiable Instruments Act - HELD THAT:- It is the settled proposition of law that once the execution of the document is admitted or proved, the complainant is entitle to draw the presumptions under Sections 118 and 139 of the Act. In the decision reported in Bir Singh v. Mukesh Kumar [ 2019 (2) TMI 547 - SUPREME COURT ]. The Hon'ble Supreme Court has held that if a signed blank cheque is voluntarily presented to a payee, towards some payment, the payee may fill up the amount and other particulars and itself would not invalidate the cheque - Thus after admitting issuance of Ext. P2 cheque, and having regard to the circumstances led to the issue of the instrument, the first respondent is estopped from taking contentions. Much has been argued about the Ext. D2 counter foils of cheques kept by him. In my assessment, no inference can be drawn on the arguments based on Ext. P2. It can be assumed that it is a document maintained in regular course of business. Even otherwise, the other circumstances adverted to earlier give a clear upper hand to the appellant. He has proved execution of Ext. P2 cheque and thus is entitled to draw the presumptions under Sections 118 and 139 of the Act. The first respondent could not rebut the presumptions. The learned Magistrate has failed to consider these relevant aspects on its proper perspective. The judgment is liable to be interfered with. The finding that the first respondent has not committed the offence is liable to be reversed. He is found guilty of offence punishable under Section 138 of the Act, convicted and sentenced to pay a fine of ₹ 81,500/- which shall be paid as compensation to the appellant - Appeal allowed - decided in favor of appellant.
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2021 (4) TMI 740
Dishonor of Cheque - service of notice - legal notice sent, returned as claimed - acquittal of accused - rebuttal of presumption - HELD THAT:- The postal cover sent through RPAD returned as not claimed does not mean due service of notice. Even during the course of cross-examination of P.W.1, nothing has been elicited regarding service of notice. When the appellant-complainant has not sent the legal notice to the respondent-accused under certificate of posting, there is no presumption of due service of notice to the respondent-accused. It is pertinent to note that the respondent-accused has not placed rebuttal evidence to prove that the notice was not sent to the correct address and the respondent-accused was not working at the address shown in the envelope sent through legal notice. Ex.P-12 is the legal notice postal cover, the address shown in the said postal cover and the address shown in the cause title of the complaint are one and the same. The respondent-accused has not at all denied that he was working as Health Inspector at the City Municipality Council, Davanagere. When a sender has dispatched the notice through registered post with correct address written on it, Section 27 of General Clauses Act could be profitably imported and in such a situation service of notice deemed to have been effected on the sender unless he proves that it was really not served and he was not responsible for such non-service. In the present case, there is no rebuttal evidence to show that the complainant has deliberately and intentionally sent the legal notice to the wrong address and the accused was not working at the place and address shown in the registered envelope. The finding recorded by the Court below regarding service of notice through registered post holding that there is no proper service of notice is contrary to Section 138 of N.I. Act - the respondent-accused has failed to rebut the presumption by placing cogent and convincing evidence. Therefore, this Court is of the view that the findings recorded by the Court below cannot be sustained in law. Appeal allowed - decided in favor of appellant.
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