TMI Tax Updates - e-Newsletter
April 4, 2022
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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GST:
Release of seized goods - expired E-way bill - In a case where there is no doubt that a transaction is made between two registered dealers and is covered by the necessary documents including the e-way bill even if the e-way bill has expired just prior to the date of entry into the State, such goods ought not to be stopped and instead an undertaking should be taken from the buyer or the seller and intimation should be provided to the assessing officer of both the parties before whom the buyer or seller may appear to make necessary compliance. Any hindrance in the movement of goods or fray amounts to an obstacle of the development of the nation. - HC
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GST:
Seeking grant of bail - evasion of tax - general offender/economic offender - the economic offender should not be dealt as general offender because economic offenders run parallel economy and they are serious threat to the national economy. - it is not considered a fit case to enlarge the petitioner on bail under Section 439 Cr.P.C. - HC
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GST:
Refund of the unutilized ITC accumulated on account of inverted tax structure - refund claimed on account of rate of tax on inputs being higher than the rate of tax on output supplies - By way of the circular, the Board is curtailing the said benefit and making refund permissible only if the input and output supplies are different. - The respondent authority ought not to reject the claim of the petitioners relying on the circular as the prayer made by the petitioners is permissible under the Act - it is held that the petitioners will be entitled to the refund as claimed - HC
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GST:
Seeking grant of anticipatory bail - passing on of fake ITC - The offence alleged against the accused is serious economic offence in which ITC was allegedly availed by different persons at the behest of the accused. Accused stated to have been managing the show from behind and has been the beneficiary of fraudulent availment of ITC - no ground for anticipatory bail is made out - DSC
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Income Tax:
Reopening of assessment u/s 147 - addition u/s 40(a)(ia) - If there is conscious application of mind on an issue during assessment, and this Court as in the circumstances of the case has already opined that there was such conscious application of mind and therefore a deemed opinion, there cannot be reassessment only because of an error in such opinion. The reasons offered by the A.O to justify reassessment cannot be accepted as an objective view based on any subsequent information in the absence of necessary material in this regard. - HC
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Income Tax:
Addition u/s 68 - unexplained credits - The provisions of Section 68 of the Act are attracted in case of unexplained credits during the relevant previous year. Since the outstanding loan/liability pertaining to BMPL and pertaining to SSL represent credits of earlier years, provisions of Section 68 would not be attracted in the facts and circumstances of the present case. - AT
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Income Tax:
Addition u/s 68 - purchase of alleged penny stock - Appellant has held the shares for over 13 years and it would be incorrect to treat sale of shares as bogus merely on the basis of suspicion and on account of fact that a substantial quantum of capital gains has been made by the assessee. In the present case, no material has been brought on record to suggest that purchase and sale of shares were bogus. Assessing Officer has not brought any material to support his finding that there has been collusion or connivance between the broker and the assessee for the introduction of his own unaccounted money. - AT
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Income Tax:
Revision u/s 263 - Not only the Pr. CIT had on the basis of a misconceived reading of the position of law directed the Assessing Officer to initiate penalty proceedings in the case of the assessee u/s 271AAB of the Act, but he had also exceeded his jurisdiction while issuing such directions. - AT
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Income Tax:
Exemption u/s 11 - Cancellation of registration u/s. 12AA post survey - Assessee contended that survey proceedings gets abated after search and assessment u/s 153A - even assuming proceedings had been initiated for the purpose of completing an assessment or re-assessment as a consequence of the survey, even those proceedings would stand abated as on the date of search. Thus clearly there is no assessment order nor any evidence specifically conclusively found or established against the assessee on the issues raised by the Ld. CIT(E) by an order of any quasi-judicial authority nor has the violation of any other law reached finality - AT
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Customs:
Levy of penalty u/s 112(a)/112(b)/114A/114AA of Customs Act - Smuggling - Gold Bars - Baggage Rules - Here in the case on hand, some of the officials are not even put on SCN, a few of the persons and some officials who were put on notice have been exonerated, crucial witnesses were not examined/questioned, nothing is forthcoming as to the fate of letter found and seized from Mr. Haris and hence, there are too many loose ends perhaps due to lack of proper investigation - there are no other sustainable evidence against any of the appellants and hence, the revenue has not made out any case against them. Consequently, penalty levied against them cannot be sustained. - AT
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DGFT:
Amendments to Foreign Trade Policy 2015-2020 - Extension of Integrated Good and Service Tax (IGST) and Compensation cess exemption under Advance Authorisation, EPCG and EOU scheme up to 30.06.2022 - Notification
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Indian Laws:
Dishonor of Cheque - insufficiency of funds - existence of legal debt or liability - The obligation is upon the complainant to establish, when a question is raised about the ability and the fact of having advanced a loan, that not only did the complainant have the financial capacity to advance the amount claimed to have been advanced but also that such an amount was actually advanced. The complainant failed to establish the same by any cogent and convincing evidence. - HC
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Indian Laws:
Dishonor of Cheque - vicarious liability - directors have resigned from the company - Impact of injunction order to initiate prosecution - it cannot be said that the Civil Suit instituted by the petitioners has stands in the way of filing the complaint by the respondent before the court of leaned CJM, Tinsukia, the process of which was started much prior to passing the impugned order on 03.01.2019, whereas the cheques were presented in the bank by the respondents on 21.11.2018 - there are no merit in the petition. - HC
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Central Excise:
Refund of Countervailing duty (CVD) - time limitation - case of Revenue is that right of availment of CENVAT credit was with the appellant since the year 2005 and hence the same should have been availed at the relevant time - Presumption of correctness is attached thereto. Same has not been rebutted by the department. Appellant in addition has produced the documents i.e. invoices etc. - all requirement of section 11B Central Excise Act have been met with by the appellant. Accordingly the appellants are entitled for the refund of CVD along with the interest to be calculated from the date of payment thereof. - AT
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Central Excise:
Demerger/amalgamation of unit - Liability of predecessor / successor - Extended Period of limitation - The Revenue received the duty on the very same dispatches covered under the Annexure A to the show cause notice at the time of initial clearance by the predecessor. Whether it be predecessor or successor, the excise duty liability is identified to both. There is no difference in the excise duty or interest in the present matter. There is no claim by anybody (including in particular by the predecessor) for any refund of duties already paid by the predecessor). Hence, the duty paid by predecessor ought to have been adjusted against the central excise duty, if any, payable by the writ applicant. Declining to do so, would lead to double taxation of the same transaction & clearly impermissible. - HC
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VAT:
Liability of interest - If an assessee fails to file correct returns and furnish required documents, the interest of the revenue cannot compromised. An assessee/dealer cannot take advantage of the lapses committed at a later point of time if subsequently it is found that the turn-over had escaped resulting in evasion of tax by such an assessee/dealer. - If there is a failure to tax in time, the dealers are required to pay interest as payment of Interest is consequential. - HC
Articles
Notifications
DGFT-
66/2015-20 - dated
1-4-2022
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FTP
Amendments to Foreign Trade Policy 2015-2020 - Extension of Integrated Good and Service Tax (IGST) and Compensation cess exemption under Advance Authorisation, EPCG and EOU scheme up to 30.06.2022
GST - States-
14/GST-2 - dated
31-3-2022
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Haryana SGST
Amendment of notification no. 31/GST-2, dated 08.03.2019 under the HGST Act, 2017
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13/GST-2 - dated
31-3-2022
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Haryana SGST
Amendment of notification no. 29/GST-2, dated 08.03.2019 under the HGST Act, 2017
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12/GST-2 - dated
31-3-2022
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Haryana SGST
Notification to implement Special Composition Scheme for Brick Kiln under the HGST Act, 2017
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11/GST-2 - dated
31-3-2022
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Haryana SGST
Amendment of notification no. 35/GST-2, dated 30.06.2017 under the HGST Act, 2017
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S. R. O. No. 326/2022 - dated
31-3-2022
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Kerala SGST
Amendment in Notification G.O. (P) No. 56/2019/TAXES dated 30th March, 2019
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S. R. O. No. 325/2022 - dated
31-3-2022
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Kerala SGST
Amendment in Notification G.O. (P) No. 58/2019/TAXES dated 30th March, 2019
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S. R. O. No. 324/2022 - dated
31-3-2022
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Kerala SGST
Seeks to provide for a concessional rate on inter state supply of bricks conditional to not availing the ITC
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S. R. O. No. 323/2022 - dated
31-3-2022
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Kerala SGST
Amendment in Notification G.O. (P) No. 62/2017/TAXES dated 30th June, 2017
Income Tax-
23/2022 - dated
1-4-2022
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IT
Income-tax (5th Amendment) Rules, 2022
Circulars / Instructions / Orders
News
Case Laws:
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GST
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2022 (4) TMI 122
Release of seized goods - expired E-way bill - whether a vehicle carrying goods for which the e-way bill has expired and the vehicle as well as goods ought to be seized or should the authority concerned release such goods and vehicle by seeking an undertaking from the assessee concerned either the buyer or the seller? - HELD THAT:- This Court is of the considered view since the transaction in question is between two registered dealers under the GST Act covered by the e-way bill and other documents where genuineness is not in doubt, vehicles carrying such goods ought to be permitted to continue with such carrying subject of course to either the check gate officer informing the assessing officer where the buyer is located and further direct the buyer to appear before the assessing officer to provide an opportunity to the buyer or seller to take such corrective steps as may be necessary in the matter - since the transaction admittedly is between two registered dealers located in two different states, there is no justification for stoppage in transit of the vehicle and goods.
In a case where there is no doubt that a transaction is made between two registered dealers and is covered by the necessary documents including the e-way bill even if the e-way bill has expired just prior to the date of entry into the State, such goods ought not to be stopped and instead an undertaking should be taken from the buyer or the seller and intimation should be provided to the assessing officer of both the parties before whom the buyer or seller may appear to make necessary compliance. Any hindrance in the movement of goods or fray amounts to an obstacle of the development of the nation.
The writ petition is disposed of directing the petitioner to appear before the check gate officer and to submit an undertaking or bond before the check gate officer and the check gate officer shall release the vehicle as well as the goods by accepting the undertaking or bond and such information as may be appropriate - petition disposed off.
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2022 (4) TMI 121
Seeking removal of suspension of GST Registration of the Petitioner - Constitutional Validity of Rule 21A of the CGST Rules - whether the SCN specify the reason as to why the cancellation proceedings have been initiated against the Petitioner - principles of natural justice - HELD THAT:- Issue notice. Mr. Anish Roy, Advocate accepts notice on behalf of the respondents. He states that he has instructions only to enter appearance. He prays for some time to obtain instructions on merits.
Since in the present case, the petitioner’s registration has been lying suspended for more than forty days on the basis of a show cause notice which is bereft of any reason or fact, this Court stays the impugned notice dated 14th February, 2022 and directs forthwith restoration of the GST Registration of the petitioner.
List on 4th August, 2022.
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2022 (4) TMI 120
Service of notice - notice was issued in GST DRC-01 instead the notice has been issued manually - HELD THAT:- These writ petitions are dismissed by giving liberty to the petitioner to file a statutory appeal before the Deputy Commissioner (Goods and Services Tax Appeals) under Section 107 of the respective Goods and Services Tax Act, 2017 - petition dismissed.
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2022 (4) TMI 119
Seeking grant of bail - evasion of tax - general offender/economic offender - applicability of provision of Section 173(8) Cr.P.C. - HELD THAT:- It is admitted position that the petitioner and Vinaykant Ameta were Director in M/s Miraj Products Private Limited. As per the prosecution story, they had evaded tax of ₹ 869 Crores. GST department had seized one truck which was being unloaded at their premises. The Hon’ble Apex Court in various pronouncement held that the economic offender should not be dealt as general offender because economic offenders run parallel economy and they are serious threat to the national economy.
Case of the petitioner is similar to the Vinaykant Ameta Vs. Union Of India [2021 (12) TMI 1306 - RAJASTHAN HIGH COURT] and bail of the Vinaykant Ameta was dismissed by this Court and Hon’ble Apex Court had granted the bail of Vinaykant Ameta on depositing of ₹ 200 Crores. So, after considering the submission put-forth by learned counsel for the parties and in the facts and circumstances of the present case and also looking to the seriousness of the offence(s) alleged against the petitioner without expressing any opinion on the merits of the case.
Thus, it is not considered a fit case to enlarge the petitioner on bail under Section 439 Cr.P.C. - the bail application stands dismissed.
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2022 (4) TMI 117
Seeking grant of anticipatory bail - passing on of fake ITC - HELD THAT:- In this case a huge amount of passing on of fake ITC has been alleged against the accused. He stated to have not provided the entire information during the investigation and after joining the investigation only once, he did not turn up. Apart from his involvement in the fraudulent ITC, it is also been alleged that there is his own GST liability to the tune of ₹ 1.7 crores. His previous involvement in another criminal case of similar nature registered by EOW, Rohtak is also brought into the notice.
Investigation in this case still going on and GST department is required to interrogate the accused to unearth the exact level of involvement of the accused in the entire offence in furtherance of recovery of hard disk and the server from the co-accused.
The offence alleged against the accused is serious economic offence in which ITC was allegedly availed by different persons at the behest of the accused. Accused stated to have been managing the show from behind and has been the beneficiary of fraudulent availment of ITC - no ground for anticipatory bail is made out - Application dismissed.
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2022 (4) TMI 118
Refund of the unutilized ITC accumulated on account of inverted tax structure - refund claimed on account of rate of tax on inputs being higher than the rate of tax on output supplies - rejection of refund relying on a circular issued by the Central Board of Indirect Taxes and Customs being Circular No. 135/2020-GST dated 31.03.2020 wherein it has been mentioned that the tax-payers cannot claim refund in terms of clause (ii) of Section 54(3) of the CGST Act, 2017 in cases where the input and output supplies remain the same.
Whether the benefit which is available under the Act can be taken away and/or restricted by the circular? - HELD THAT:- Any circular issued under Section 168(1) of the Act is only for the purpose of bringing uniformity in the implementation of the Act. The intention of the legislature as expressed in Section 54(3) of the Act is clear and unambiguous. The Section, in absolute uncertain terms, mentions that refund of any unutilized input tax credit may be claimed where credit has accumulated on account of rate of tax on inputs being higher than the rate of tax on output supplies. The Act does not restrict refund only in respect of supplies which are different at the input and output stage. The Board thought it fit to reduce the tax in respect of domestic consumers with effect from 25.01.2018 and there is no reason as to why the benefit of accumulated input tax credit will not be passed on to the petitioners - The circular dated 31.03.2020 is imposing a restriction to release certain benefits which are provided under the Act.
By way of the circular, the Board is curtailing the said benefit and making refund permissible only if the input and output supplies are different. The same amounts to overreaching the provisions as laid down in the Act - It cannot be said that the legislature was unmindful of the fact that there may be instances where the input and output supplies are the same. On the contrary, it can be said that the legislature consciously did not create any distinction for allowing refund in all cases where the input tax is more than the output tax. The said benefit is applicable to all similar cases.
The respondent authority ought not to reject the claim of the petitioners relying on the circular as the prayer made by the petitioners is permissible under the Act - it is held that the petitioners will be entitled to the refund as claimed - Petition disposed off.
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Income Tax
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2022 (4) TMI 112
Addition u/s 68 - unexplained credits - CIT-A deleted the addition - HELD THAT:- It is admitted position, as noted by the Assessing Officer, that the loan/liability pertaining to BMPL and SSL were brought forward from earlier years and had remained static for many years. The concern of the Assessing Officer was that the since the agewise analysis was not provided, the year in which these credits were made in the books was not clear. Therefore, it was never the case of the Revenue that the credits pertain to the previous year relevant to the Assessment Year 2005-06. The provisions of Section 68 of the Act are attracted in case of unexplained credits during the relevant previous year. Since the outstanding loan/liability pertaining to BMPL and pertaining to SSL represent credits of earlier years, provisions of Section 68 would not be attracted in the facts and circumstances of the present case. Therefore, in our view, the CIT(A) has arrive at the correct conclusion that additions made under Section 68 cannot be sustained.- Decided against revenue.
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2022 (4) TMI 111
Penalty u/s 271(1)(c) - AO disallowed the claim of exemption u/s 54F of the Act on the basis that the investment in the new property was made beyond the due date of filing of return of income u/s 139(1) of the Act and also that assessee had merely booked the flat which was yet to be completed to get the possession - HELD THAT:- The Bench is of firm view that the foundation of issuing show cause notice for penalty u/s 271(1)(c) being crumbled by a verdict of this Tribunal, by deletion of additions, the penalty order alone cannot stand by its own against the assessee.
The Hon’ble Allahabad High Court in the cases of Shadiram Balmukand [1971 (2) TMI 16 - ALLAHABAD HIGH COURT] and Dwarka Prasad Subhas Chandra[1972 (1) TMI 40 - ALLAHABAD HIGH COURT] and the Hon’ble Gujarat High Court in the case of Lakkdhir Lalji [1971 (9) TMI 33 - GUJARAT HIGH COURT] have also held that when the original basis of initiation of the penalty proceeding is altered or modified by the appellate authority, the authority initiating the penalty proceedings has no jurisdiction thereafter to proceed on the basis of the findings of the appellate authority. The Hon’ble Supreme Court in the case of K.C. Builders vs. ACIT [2004 (1) TMI 7 - SUPREME COURT] has made it crystal clear that where the additions made in the Assessment Order, on the basis of which penalty for concealment was levied, are deleted, by ITAT or otherwise, the penalty cannot stand by itself and is liable to be cancelled. - Decided in favour of assessee.
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2022 (4) TMI 110
Ex-parte order of CIT-A - HELD THAT:- We noted that the order of CIT(A) is ex-parte and he has not considered the issues raised on merits. Hence, we set aside the order of CIT(A) and remand the matter back to his file for fresh adjudication. Appeal filed by the assessee is allowed for statistical purpose.
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2022 (4) TMI 109
Credit of TDS - revenue offered to tax in earlier years - HELD THAT:- In the present case where the assessee has claimed to have offered the revenues for tax in previous years and the Ld. F.A.A. has directed Ld. AO to verify the same and Revenue does not dispute the fact that in present assessment year, in the form no. 26AS of the appellant, ₹ 18,06,910/- TDS was made by M/s. Coastal Gujarat Power Ltd., the assessee is entitled to its credit by way of refund, in spite of not offering any income for tax, arising from P & L Account, in present assessment year. Ld. FAA erred in making the credit dependent on offering of taxable income only. Thus, the ground no. 1 and 2 arising out of disallowing the credit of TDS deserve merit.
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2022 (4) TMI 108
Penalty u/s 271(1)(c) - As argued no satisfaction or specific charge for levy of penalty u/s.271(1)(c) - HELD THAT:- We noted that the Hon’ble Madras High Court in its latest decision in the case of Babuji Jacob,[2020 (12) TMI 574 - MADRAS HIGH COURT] has categorically held that there is no basis for issuance of notice u/s.271(1)(c) of the Act, where both limbs in the said provision do not get attracted. The Hon’ble Madras High Court has distinguished its own decision of Sundaram Finance Ltd.[2018 (5) TMI 259 - MADRAS HIGH COURT] and validity of notice issued u/s.271(1)(c) r.w.s. 274 of the Act was decided in favour of the assessee. Respectfully following the same, as in the present case the AO has not strike of the inappropriate charge, we delete the penalty levied by the AO and confirmed by CIT(A). We direct the AO accordingly. Appeal of assessee allowed.
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2022 (4) TMI 107
Reopening of assessment u/s 147 - notice sent to wrong address - HELD THAT:- This Bench conclude that their appears to be some apparent mistake or ambiguity in the address of assessee upon which notices were served by the AO. Most likely due to merger and re-name of Assessee. Order of ld. First Appellate Authority indicate that only one notice was issued on 28.08.2018 and the same was also through e-mail and not by post while postal address of the assessee was shown to be of village Ghamroj, Gurgaon Sohna Road, Tehsil Sohna, Gurgaon, Haryana and there was specific ground of appeal before Ld. FAA that Ld. AO issued notices on wrong address of Old DLF Gurgaon.
Thus, there appears to be an error in conduct of proceedings by both Ld. AO and Ld. FAA in not giving adequate and reasonable opportunity of hearing to the assessee after serving the assessee on correct postal address.
Even otherwise the order of Ld. First Appellate Authority has an inherent vice as can observed from discussion in para 4.1 to 5 of Ld. CIT(A) orders, reproduced above, that at one end the appeal is being dismissed for non prosecution on the other hand a discussion on merits has also been made to dismiss the appeal on merits.
Appeal deserves to be allowed on ground no. 1 alone requiring restoration of the appeal to the files of Ld. First Appellate Authority for fresh decision on merits after giving hearing opportunity to the assessee.
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2022 (4) TMI 106
Deduction u/s 80P(2)(a)(i) - AO held a conviction that as the assessee was hit by the provisions of Sec. 80P(4) of the Act, therefore, it was not eligible for claim of deduction under Sec. 80P(2)(a)(i) - HELD THAT:- We are of the considered view that as the assessee is a co-operative credit society and not a co-operative bank, therefore, it would not be hit by the provisions of Sec. 80P(4) of the Act.
As the assessee before us is a co-operative credit society and not a co-operative bank, therefore, it would not be hit by the provisions of Sec. 80P(4) as had been made available on the statute by the Finance Act, 2006 w.e.f 01.04.2007. In fact, as observed by us hereinabove, it is absolutely mandatory for a co-operative society to seek a licence from the Reserve Bank of India to form and operate as a co-operative bank.
A perusal of Circular No. 312 of the Reserve Bank of India reveals the process involved for conversion of a co-operative credit society into a primary co-operative bank. Admittedly, in the case before us, as the assessee being a co-operative credit society is neither authorized nor had undertaken any of the banking business activities as are carried out by a co-operative bank, but had only provided financial assistance/credit to its members, therefore, it can safely be concluded that it cannot be held to be a co-operative bank - we are unable to concur with the view taken by the A.O which thereafter had been sustained by the CIT (Appeals). We, thus, not finding favor with the view taken by the lower authorities set-aside the order of the CIT(A) and vacate the disallowance made by the A.O. - Appeal of assessee allowed.
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2022 (4) TMI 105
Payment of employees’ contribution towards provident fund contribution and ESI contribution - deposit on or before the due date of furnishing return of income u/s 139(1) - HELD THAT:- It is settled issue that no debatable issues are permitted to be made adjustments u/s 143(1) of the Act. In the instant case, what was added in the intimation u/s 143(1) was the employees contribution to PF. Hon’ble Madras High Court in the case of Redington (India) Ltd. [2020 (12) TMI 516 - MADRAS HIGH COURT] held that employees contribution to PF and ESI is also allowable deduction, if, the same is paid before the due date for filing the return of income. This Tribunal in the case of Andhra Trade Development Corporation[2021 (5) TMI 263 - ITAT VISAKHAPATNAM] held that debatable issues are not permitted to be made adjustments while processing the return of income u/s 143(1).
We hold that the addition made by the CPC u/s 143(1) is unsustainable, accordingly deleted. The appeal of the assessee is allowed.
Tribunal has consistently viewed that the employees contribution to PF and ESI is allowable deduction if the same is paid before the due date of filing the return of income - Tribunal in the case of Andhra Trade Development Corporation [2021 (5) TMI 263 - ITAT VISAKHAPATNAM] held that debatable issues are not permitted to be made adjustments while processing the return of income u/s 143(1) - Decided in favour of assessee.
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2022 (4) TMI 104
Levy of penalty u/s 271(1)(c) - Defective notice u/s 274 - non specification of charge - HELD THAT:- Penalty under Section 271(1)(c) was not leviable when the notice issued by Assessing Officer did not specify as to whether the proceedings were initiated for concealment of particulars of income or for furnishing of inaccurate particulars of income. Appeal of assessee allowed.
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2022 (4) TMI 103
Addition u/s 68 - unaccounted money has been brought in to purchase alleged penny stock - HELD THAT:- Assessee has brought to our notice the fact that the shares were sold in the range of ₹ 47.45 to 49.95 per share on the stock exchange though the price of share of the company subsequently rose up to ₹ 103 per share as on 01-10-2015 i.e. almost three years after the appellant sold his shares. Therefore, from the facts it is seen that the assessee has held the shares for a substantially long period of time before selling its shares during F.Y. 2012-13.
AO has not doubted the purchase of shares from the Bombay Stock Exchange. While making the additions, the ld. Assessing Officer has not brought any material how the assessee has brought its own unaccounted money for the acquisition of the shares specially when the purchase of shares was not doubted and shares have been sold on Bombay Stock Exchange - Assessing Officer has not brought on record statement of any persons through whom assessee’s own unaccounted money has been brought in.
Appellant has held the shares for over 13 years and it would be incorrect to treat sale of shares as bogus merely on the basis of suspicion and on account of fact that a substantial quantum of capital gains has been made by the assessee. In the present case, no material has been brought on record to suggest that purchase and sale of shares were bogus. Assessing Officer has not brought any material to support his finding that there has been collusion or connivance between the broker and the assessee for the introduction of his own unaccounted money. In the present case, the transaction of purchase and sale of shares were duly supported by contract note, demat account and payments were made through banking channel. - Decided in favour of assessee.
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2022 (4) TMI 102
Revision u/s 263 - order passed by him u/s.153A r.w.s.143(3) - HELD THAT:- We are of the considered view, that now when the AO acting well in conformity with the aforesaid view of the Hon’ble Jurisdictional High Court, had therein in the absence of any incriminating material in respect of the unabated assessment of the assessee for the year under consideration, not made any addition, therefore, the order passed by him u/s.153A r.w.s.143(3) on the said count could have been by any stretch of imagination held as erroneous by the Pr. CIT u/s.263.
We, thus, finding no infirmity in the view taken by the AO which as observed by us hereinabove falls within the four corners of the aforesaid judgment in the case of Continental Warehousing Corporation (Nhava Sheva) Ltd. [2015 (5) TMI 656 - BOMBAY HIGH COURT], therefore, set-aside the order passed by the Pr. CIT u/s.263 and restore the order passed by the AO u/s.153A r.w.s. 143(3) - Decided in favour of assessee.
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2022 (4) TMI 101
Levying penalty u/s.271(1)(c) - addition towards suppression of sale and addition u/s. 68 of bogus trading liability - HELD THAT:- Addition initially made by the Assessing Officer, had pursuant to the matter being set-aside by the Tribunal to the file of the Assessing Officer for fresh adjudication [2018 (1) TMI 1678 - ITAT RAIPUR] does no more survive, as the explanation of the assessee as regards both of the issues was accepted by the AO in the course of the set-aside proceedings, therefore, penalty that was imposed u/s. 271(1)(c) of the Act as regards the said issues have to meet the same fate and has to be knocked down.
Penalty u/s.271(1)(c) on account of ad hoc disallowance out of manufacturing expenses for want of proper vouchers and necessary verification, we are of the considered view, that as the said disallowance was made on an estimate basis and not on the basis of any concrete evidence which would irrefutably prove to the hilt raising of a bogus claim of expenditure by the assessee, therefore, no penalty u/s. 271(1)(c) of the Act as regards the same can be sustained.
We vacate the penalty imposed by the Assessing Officer u/s. 271(1)(c) of the Act. Appeal of assessee allowed.
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2022 (4) TMI 100
Revision u/s 263 - Pr. CIT was of the view that AO had wrongly initiated penalty proceedings u/s 271(1)(c) as the same in the case of a search initiated u/s.132 of the Act i.e, on or after 1st day of July, 2012 but before 15.12.2016 was governed by Section 271AAB - Whether or not the Pr. CIT remaining well within the realm of his jurisdiction u/s 263 of the Act has directed the Assessing Officer to initiate penalty proceedings under the correct section and, re-assess the income of the assessee on the basis of a speaking order.? - HELD THAT:- We are unable to concur with the direction of the Pr. CIT as regards initiation of penalty proceedings u/s. 271AAB of the Act in the case of the assessee before us i.e, in a case where cash had been requisitioned u/s.132A however, even otherwise, we are of the considered view that such a direction given by him in exercise of his revisionary jurisdiction u/s 263 of the Act is not sustainable in the eyes of law. In our considered view as section 271AAB of the Act makes a specific reference to the term “may”, thus, it vests a discretion with the Assessing Officer as to whether or not the assessee is to be visited with penalty under the said statutory provision. Backed by the aforesaid position of law, we are of the considered view that the Pr. CIT could not have in exercise of his revisionary jurisdiction u/s 263 of the Act stepped in to control or, in fact steer such discretion of the Assessing Officer. Our aforesaid view that where the CIT finds that the Assessing Officer had not initiated penalty proceedings in the assessment order, then, he cannot in exercise of his revisionary jurisdiction u/s 263.
Not only the Pr. CIT had on the basis of a misconceived reading of the position of law directed the Assessing Officer to initiate penalty proceedings in the case of the assessee u/s 271AAB of the Act, but he had also exceeded his jurisdiction while issuing such directions. We, thus,not being able to persuade ourselves to subscribe to the aforesaid view taken by the Pr. CIT set-aside the order passed by him u/s 263 of the Act, dated 10.12.2020 and restore the order passed by the Assessing Officer u/s 153A r.w.s.143(3) - Decided in favour of assessee.
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2022 (4) TMI 99
Disallowance u/s 36(1)(iii) towards Capital Work in Progress (“CWIP”) - HELD THAT:- As held that it was not a case of entirely a new project undertaken by the assessee and since it was an extension of existing business, the disallowance of interest was rightly deleted by the Tribunal by relying on the decision of Core Health Care Ltd. [2008 (2) TMI 8 - SUPREME COURT] - It is thus clear that the context in which the issue relating to disallowance of interest expenditure came to be decided in the case of Nirma Limited [2014 (10) TMI 388 - GUJARAT HIGH COURT] was entirely different and eventhough it was found as a fact in that case that it was a case of extension of existing business, the interest expenditure was allowed as deduction since the proviso to section 36(1)(iii) of the Act inserted by Finance Act, 2003, w.e.f. 01-04-2004 was not apparently applicable in that case. As rightly contended by the Ld. DR, the ratio of the decision in the case of Nirma Limited (supra), thus is not applicable in the present case and the reliance of the Ld. Counsel for the assessee thereon in support of the assessee’s case is clearly misplaced.
Similarly, the other judicial pronouncements cited by assessee are distinguishable on facts and even the assessment years involved therein were prior to the insertion of the first proviso to section 36(1)(iii) in the Statute with effect from 01/04/2004. We therefore find no justifiable reason to take a different view on this issue from the one taken by the Co-ordinate Bench of this Tribunal in assessee’s own case for AY 2012-13 and hold that the proviso to section 36(1)(iii) of the Act is clearly applicable in the facts of the present case as rightly held by the Ld. CIT(A) while confirming the action of the AO in capitalizing the interest expenditure.
As regards the alternative argument raised by the assessee that the assessee-company, at the relevant time, had own funds in the form of share capital, reserves and surplus to the extent of ₹ 33.83 crores and since the same were sufficient to acquire the assets in the form of CWIP of ₹ 3.08 crores, there was no utilization of borrowed funds for acquisition of the said assets, it is observed that a similar stand was taken by the assessee before the AO as well as before the Ld.CIT(A).
Keeping in view that the expenditure towards CWIP was incurred by the assessee from cash-credit account, it was held by the authorities below that there was a direct nexus between the interest-bearing borrowed funds and acquisition of assets by the assessee-company and this contention raised on behalf of the assessee-company was rejected by them. It is necessary to see overall financial position of the assessee as reflected in the balance-sheet as well as in the cash-flow statement to ascertain exactly as to whether the investment in acquisition of assets is made by the assessee from its owned funds or borrowed funds and the nexus theory as applied by the authorities below is not always a correct test which may sometime gives a misleading picture.
In this regard, assessee has made an attempt to support and substantiate the assessee’s case on this issue by referring to the relevant balance-sheet and cash-flow statement of the assessee-company (copies of which are placed in the paper-book). However, keeping in view that this aspect of the matter has not been examined either by the AO or by the Ld.CIT(A) having regard to the overall financial position of the assessee-company at the relevant time, we consider it fair and proper in the interest of justice to restore this issue to the file of the Assessing Officer for such examination - AO is directed to verify the claim of the assessee of having been made the investment in the asset (CWIP) from its own funds from the overall financial position of the assessee-company as reflected in the relevant balance-sheet and cash-flow statement and decide the issue afresh on such verification in accordance with law after giving the assessee a proper and sufficient opportunity of being heard. Grounds as originally raised in this appeal are thus treated as partly allowed for statistical purposes.
Deduction u/s 80-IB(11A) being profits and gains derived by the eligible undertaking engaged in the manufacturing of ice cream - HELD THAT:- As per the provision contained in sub-section (5) of Section 80A of the Act where the assessee fails to make a claim in his return of income for any deduction under any provision of Chapter VIA under the heading "C.-Deductions in respect of certain incomes", no deduction shall be allowed to him thereunder. In the case of EBR Enterprises [2019 (6) TMI 484 - BOMBAY HIGH COURT] as held that the provisions contained in sub-section (5) of Section 80A of the Act restrict the power of the Assessing Officer as well as the higher authorities and this decision in the case of Rachna Infrastructure Pvt Ltd [2022 (3) TMI 256 - GUJARAT HIGH COURT] wherein the decision of the Tribunal holding that the assessee having failed to make a claim for deduction under Section 80IA(4) in the original return, the same cannot be allowed to be raised for the first time in revision under Section 264 of the Act in view of sub-section (5) of Section 80A of the Act is upheld by their Lordships. Keeping in view the same, we dismiss the additional ground raised by the assessee at threshold.
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2022 (4) TMI 98
Revision u/s 263 - claim of the assessee for additional depreciation under Section 32(1)(iia) - scope of amendment to the provisions of Section 32(1)(iia) - PCIT, noted that the assessee-company engaged only in the business of distribution of electricity was not entitled to claim additional depreciation as per the relevant provision of Section 32(1)(iia) as applicable to the year under consideration, i.e. AY 2015-16 - HELD THAT:- As provisions of Section 32(1)(iia) of the Act, as amended from time to time, relating to the additional depreciation are applicable to the electricity companies across all the States on the basis of nature of business carried on by them and the benefit of the same thus is available uniformly to all the electricity companies irrespective of their States on the basis of the nature of their activities, notwithstanding the organizational set up decided by them. It, therefore, cannot be said that there is any hardship or discrimination causing to the electricity companies on the basis of their State if the provisions of Section 32(1)(iia) of the Act, as amended from time to time, are interpreted on the basis of language used therein which is plain, clear and unambiguous and applied accordingly.
Having regard to the language used while making the amendment to the provisions of Section 32(1)(iia) by the Finance Act, 2016 which is plain, clear and unambiguous and keeping in view the legislative intention behind the said amendment as explained in the relevant memorandum to extend the benefit of additional depreciation in respect of the cost of new plant or machinery acquired and installed even by the assessees engaged only in the business of distribution of electricity/power from a certain date, i.e. 1st April 2017, we are of the view that the same cannot be treated as declaratory/curative in nature so as to give retrospective effect to it as sought to be contended by the learned Counsel for the assessee. The said amendment made effective by the legislature clearly from 1st April 2017; thus is applicable in relation to Assessment year 2017-18 and subsequent Assessment Years; and the same, therefore, cannot be applied to the year under consideration, i.e. AY 2015-16, to allow the assessee additional depreciation under Section 32(1)(iia)
The assessment order passed under Section 143(3) of the Act allowing the said claim of the assessee thus was erroneous as well as prejudicial to the interest of the Revenue; and, the learned PCIT, in our opinion, was fully justified in revising the same by his impugned order passed under Section 263 - Decided against assessee.
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2022 (4) TMI 97
Validity of Revision u/s 263 - contravention of CBDT Circular No. 19 of 2019 - HELD THAT:- We find that Circular no. 19/2019 issued on 14th August, 2019 provided that to maintain proper audit trail of communication the Central Board Of Direct Tax (CBDT) in exercise of its power under section 119 of the Act has directed that no communication have been issued by income tax authorities relating to assessment, appeals, orders, statutory or otherwise, exemptions, inquiry, investigation, verification of information, penalty, prosecution, rectification and approval etc. to the assessee or to other person on or after the 1st October, 2019 shall have a computer generated document identification number allotted and is duly quoted in the body of such communication
Learned PCIT-8, Mumbai passed the order under section 263 of the Act on 10th March, 2021 - It does not contain any DIN and further any of the six paragraphs in her order shows that this communication is issued manually without having DIN as it falls in any of the exceptions, and any permission has been taken from the respective authorities. CBDT also issued press release explaining the above mechanism on PRESS RELEASE, DATED 14-8-2019. On 11 March, the ld PCIT sent a communication stating intimation letter for order under section 263 dated 11 March 2021 stating, “this is to inform you that order under section 263 of the Act dated 11th March, 2021 is having document No. (DIN) ITBA/REB/M/REB5/ 2020- 2021/ 1031404838(1).) This communication states that DIN for order passed under section 263 of the Act dated 11th March 2021 has some DIN. Surprisingly, no order was passed under section 263 of the Act in case of the assessee on 11th March 2021. Impugned order was as passed on 10th March 2021. Therefore, it is apparently clear that the order passed by the learned PCIT on 10/03/2021 was in clear violation of the instructions of Central Board Of Direct Taxes vide circular no. 19/2019 dated 14th August, 2019. For this reason, the order passed by the learned PCIT deserves to be quashed.
Unsecured loans - In absence of any independent bank account of M/s Sri Gopikrishna Trust no information is available about whether loan given by sources from sources of the corporate trustee or by the trust. Thus, sources of funds belonging to Gopikrishna Trust were also not clear. Thus, it is clearly demonstrated by the ld PCIT That the learned Assessing Officer has not made any inquiry worth its name about above loan. Mere disclosure in tax audit report does not show creditworthiness and genuineness of the loans. Further in factual matrix of assessee’s meager share capital, loan not commensurating with the financial of assessee, clearly needs proper examination of loans by ld AO . In view of this issue, we find that the learned Assessing Officer has failed to make any inquiry and therefore, the Ld PCIT after making due inquiries has correctly assumed the jurisdiction under section 263 of the Act. Ld PCIT carried out her own inquiry and set aside the matter back to the file of the learned Assessing Officer.
Outstanding ‘other payables’ as well as loans and advances - The assessee tried to explain before the Assessing Officer with respect to the schedules in the balance sheet along with names of the parties on 5th October, 2017. The letters dated 26th October 2017 submitted by the learned Authorized Representative vide page No. 26 of the paper book. The assessee vide letter dated 8th November, 2017 [ page 68 of paper book] stated details about serial No. 39 schedule details of payment made to ICRA and further vide serial No.42 submitted the copy of the Term sheet and agreement for loans and advances to Piramal Estate Pvt. Ltd. and Shri Hari trust. It also submitted agreement dated 2nd June 2014 before the Assessing Office . Thus the finding of the ld PCIT that assessee did not submit necessary details before the ld AO. is devoid of any merit. The learned Assessing Officer carried out due inquiries on this issue and therefore order of the learned Assessing Officer is neither erroneous nor prejudicial to the interest of the Revenue on this aspect.
As we have already held that order of learned PCIT on the issue of ‘other payables’ and ‘loans and advances’ is not sustainable in law. Therefore, There is no requirement of adjudicating about proper opportunity of hearing granted to the assessee by the learned PCIT. Appeal of assessee allowed.
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2022 (4) TMI 96
Addition of interest as paid as advance to one seller for purchase of land - whether the assessee is liable to be charged with interest on account of advance payment of ₹ 13,14,50,000/- made to the seller viz. Ravindrasingh Mittal since 2007 for purchase of land situated at Mouje Sahahwadi, Tal. City, Dist. Ahmedabad admeasuring 64977 sq.yards at the rate of 3500/- per square yard, which ultimately could not materialize due to non-performance of terms of agreement ? - HELD THAT:- The assessee has demonstrated before the appellate authority that the assessee has sufficient interest free funds available with it so as to make such dealing, which was not denied by the authority. Even in the earlier years the department has never questioned business advances shown in the books of accounts. In fact, the assessee did make such advances out of the interest free funds in the financial years 2007-08 and 2008-09 for the purchases of the land for the business expansion, which fact has also not been denied by the Department.
Case of the department was not borne out from any material evidences, rather out of assumption that the assessee would have earned interest out of such payment and advances were made out of interest bearing fund. But where is the proof to make such an assumption - We are unable to accept this view of the department in the absence of any piece of evidence. The assessee all through contended that the advances were made out of interest free funds, and because of substantial delay in execution and likely non-performance of the deal, the assessee has to forgo the interest, and accept return of money advanced. It is trite law that AO cannot question the reasonableness by putting himself in the arm-chair of the businessman and assume status or character of the assessee.
It is for the assessee to decide, whether the expenses should be incurred in the course of his business. Therefore, the action of both the authorities has no legal justification. In view of the above, and after considering the facts in entirety, we do not find any merit in the action of the Revenue authorities in making addition of interest charge on the impugned advances made to the seller. Accordingly, we delete the impugned addition, and allow this ground of appeal.
Disallowance of deduction claimed u/s 80IA - AO held quantum of deduction under section 80IA has to be computed after deduction of the notional brought forward loss, even though they have been set off against earlier years’ income - whether the profit earned by the assessee during the assessment year 2012-13 would be entitled for deduction under section 80IA of the Act without deducting the losses, which were absorbed in the earlier years or not? - HELD THAT:- We would say that the issue is no longer resintegra in view of the judgment of the Madras High Court in a case of Velayudhaswamy Spinning Mills P. Ltd. & Sudan Spinning Mills (P). Ltd [2010 (3) TMI 860 - MADRAS HIGH COURT] also confirmed by Apex court [2016 (11) TMI 373 - SC ORDER] - Decided in favour of assessee.
Disallowance under section 40(a)(ia) - payment to one Naroda Enviro Projects Ltd. towards land fill charges of solid waste - HELD THAT:- We find that the issue in question stands covered in favour of the assessee by the decision of Hon’ble Delhi High Court in the case of CIT Vs. Ansal Landmark Township P.Ltd [2015 (9) TMI 79 - DELHI HIGH COURT] held that the second proviso to Section 40 (a) (ia) of the Act is declaratory and curative in nature and has retrospective effect from 1st April 2005, merits acceptance. No substantial question of law arises - thus on the applicability of section 40(a)(ia) order of the ld.CIT(A) does not warrant our interference. Accordingly, this ground of Revenue is rejected.
Disallowance of excess depreciation in respect of computer software - assessee has claimed depreciation on computer software at 60% and according to the AO, since software being intangible asset, eligible depreciation rate is 25% - HELD THAT:- CIT(A) allowed the claim of depreciation by holding that the software purchased by the assessee is tangible assets, and therefore, as per Appendix-1 to Rule 5 of the IT Rules, assessee is entitled for depreciation at the rate of 60%. While holding so, he also observed that similar claim was allowed by the AO since beginning in the past, and therefore, there was no justification to restrict depreciation at 25%. Though the nature of acquisition, whether computer software was purchased outright or a license for use of any computer software was not clear, but the fact as recorded by the ld.CIT(A) that similar claim from beginning in the past was allowed by the department, and there was no addition during the year, cannot be said unjustifiable. Thus, we are not inclined to reverse the order of the ld.CIT(A) on this issue. This ground of appeal is also dismissed.
Disallowance of interest on Foreign Currency Convertible Bonds (“FCCB”) - HELD THAT:- We are of the view that both debentures or loan fall within the ambit of loan, and therefore, the assessee is entitled for deduction of the expenditure/loss incurred on redemption of bonds. Further, as recorded by the ld.CIT(A) in his impugned extracted that in the year 2009-10 and 2010-11, when the assessee company redeemed a FCCB, it has earned income and shown the same in the statement of income and offered to tax, which the department has accepted as income. However, when the assessee redeemed the balance bond in the year 2011-12, it has incurred loss and when the same was claimed as deduction in the statement of income, the same was rejected by the AO by treating the same as capital loss. Thus, the AO has taken different and inconsistent stand, which is not permissible in law. After going through the well-reasoned order of the ld.CIT(A), we do not find any merit in the ground of revenue, which we dismiss, and confirm the impugned order
Addition u/s 41(1) of the Act in respect of cessation of liabilities - CIT-A deleted the addition - HELD THAT:- As resort to section 41(1) can be taken only if the liability of the assessee can be said to have been ceased finally and there is no possibility or reviving it. No doubt, the impugned liability still exists in the books of accounts of the assessee and the same has not been written back. Since there is no evidence of cessation of the liability, the impugned amount cannot be assessed to tax. Since the order of the ld.CIT(A) is based on some authoritative judgments, our interference on this issue is unwarranted. Thus, the order of the ld.CIT(A) on this issue is accordingly confirmed, and this ground of revenue is dismissed.
Disallowance of interest u/s.36(1)(iii) of the Act in respect of capital-work-in-process - AO has made the impugned disallowance of interest on the presumption that the assessee would have utilized interest bearing funds for the capital work-in-process - CIT-A deleted the addition - HELD THAT:- Presumption by the AO was despite the repeated submission of the assessee that there was no borrowing for acquisition of any of the assets and the company has acquired these assets out of the cash profit generated during the year, and therefore, there was no question of disallowance of interest. This presumption is contrary to the settled position that when there is a sufficient interest free funds available with the assessee, then it can be presumed investment was made out of such funds, no disallowance should be made. This position of the assessee is clearly emerging out of the record, as noted by the ld.CIT(A) in his impugned order - No reason to interfere with the order of the ld.CIT(A) deleting addition of disallowance of interest u/s. 36(1)(iii) of the Act, which we uphold, and this ground of the Revenue stands rejected.
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2022 (4) TMI 116
Reopening of assessment in the name of company ceased to exist - HELD THAT:- In Principal Commissioner of Income Tax Vs. Maruti Suzuki India Ltd. [2019 (7) TMI 1449 - SUPREME COURT] the Apex Court held that the basis on which jurisdiction was invoked was fundamentally at odds with the legal principle that the amalgamating entity ceases to exist upon the approved scheme of amalgamation and notice issued to non existing company, is not curable defect under Section 292-B - Notice under which jurisdiction was assumed by the Assessing Officer was issued to the non existing company which amounts to substantive illegality and not a procedural violation of the nature adverted to in Section 292-B.
The Court held that such a notice can not be stated to be valid - notice issued to non existing entity is not valid. - Decided in favour of assessee.
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2022 (4) TMI 115
Deduction u/s 80P - scope of Section 80P of the Act, which was inserted under the Finance Act, 2006 with effect from 01.04.2007, the assessees, which are the cooperative credit societies, would be entitled to the benefit of Section 80P - HELD THAT:- Admittedly, in all these cases, the Assessing Officer has passed the orders of assessment determining the income of the respective respondent/ Cooperative Society and demanded tax. Challenging the said orders of assessment, the respondents have already filed appeals before the appellate authority and they are pending.
Therefore, it would be appropriate to direct the respondents herein to raise all the contentions including the eligibility of their claim under section 80P of the Act, in the appeals pending before the appellate authority. The appellate authority is also directed to consider the claim of the respondents/co-operative societies and pass orders, on merits and in accordance with law and also in the light of the decision rendered by the Honourable Supreme Court in Mavilayi Service Co-operative Bank [2021 (1) TMI 488 - SUPREME COURT]. Accordingly, the orders impugned herein, shall stand modified.
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2022 (4) TMI 95
Revision u/s 263 by CIT - Assessment u/s 153C - applicability of provision of Section 2(22)(e) - HELD THAT:- CIT has nowhere in his order pointed out any error in the order passed by the learned AO. It is a fact which staring on us that M/s. Artech Realtors Pvt. Ltd. had carried out the construction activity of the residential premises belonging the Directors in the normal course of its business. Hence the very premise about the applicability of provision of Section 2(22)(e) of the Act itself is clearly in violation of law and such transaction falls within the exception clause. Hence it can be safely concluded that the learned Pr. CIT had proceeded on incorrect application of law while invoking his revisionary jurisdiction under Section 263.
Assessee had duly furnished all these details before the learned AO during the course of assessment proceedings in response to the queries raised by the learned AO. Hence it can be safely concluded that the learned AO had indeed made necessary verification on the same and was convinced with the reply given by the assessees. Hence no error could be attributed in the order passed by the learned AO. It also cannot be said that the learned AO had not made any enquiry on this issue. The law is very well settled that the learned Pr. CIT could invoke jurisdiction under Section 263 of the Act only when there is lack of enquiry by the learned AO. Reliance in this regard has been rightly pled by the learned A.R. on the decision in the case of CIT vs. Sunbeam Auto Ltd. [2009 (9) TMI 633 - DELHI HIGH COURT]
Pr. CIT had merely directed the learned AO to examine the issue flagged by him in the order without pointing out where the order of the learned AO is erroneous. This only tantamount to directing the AO of fishing and roving enquires which is not permissible under Section 263 - Decided in favour of assessee.
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2022 (4) TMI 94
Carbon Credit Receipts - capital or revenue receipts - HELD THAT:- CIT(A) deleted the additions made by the AO by following the decision of Subhash Kabini Power Corporation [2016 (5) TMI 793 - KARNATAKA HIGH COURT] wherein it was held that income from sale of carbon credits is a capital receipt, not chargeable to tax - Decided against revenue.
Carbon credits should be excluded for the purpose of computing books profits u/s 115JB - Whether long term capital gain which was exempted under section 47(i)(v) of the Act under the normal provisions can be excluded while computing book profits under section 115JB - Tribunal held that it is only those items of income which are included in the P & L A/c and those that are excluded by the explanation to section 115JB of the Act than can be reduced for the purpose of computing book profits - HELD THAT:- Tribunal in holding as above referred to decision of ITAT, Lucknow Bench, in the case of ACIT Vs. L H Sugar Factory Ltd.[2016 (3) TMI 367 - ITAT LUCKNOW] and CIT Vs. Benami Industries Ltd [2016 (3) TMI 873 - ITAT KOLKATA] wherein similar propositions as canvassed by the assessee was accepted after considering decision of Special Bench in the case of Raintree Commodities [2010 (7) TMI 794 - ITAT HYDERABAD] - Decided against revenue.
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2022 (4) TMI 93
Revision u/s 263 - Debatable issue - payments of the employees' contribution has not been made within the time prescribed under the relevant PF and ESI statutes - HELD THAT:- A perusal of the assessment order passed u/s. 143(3) r.w.s. 147 of the Act, which was the subject matter of the order u/s. 263 of the Act, clearly mentions this decision and in respect of the employees' contribution to PF and ESI. Further, as rightly pointed out by the Ld. AR, there are catena of decisions in favour and against the assessee. In respect of the issue the Hon'ble jurisdictional High Court of Kerala [2019 (7) TMI 1092 - KERALA HIGH COURT] and [2015 (9) TMI 560 - KERALA HIGH COURT] has also rendered two decisions, which are divergent. This being so, the issue is a debatable issue the same cannot be made a subject matter of revision u/s. 263 of the Act. Consequently, order passed u/s. 263 of the Act by the Ld. Pr. CIT stands quashed. Appeal of assessee is allowed.
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2022 (4) TMI 92
Exemption u/s 11 - Cancellation of registration u/s. 12AA post survey - Assessee contended that survey proceedings gets abated after search and assessment u/s 153A - violations u/s.13(1)(c) and 13(1)(d) which would result in additions in the assessment and reassessment and such violations, if any to be assessed as income taxable at the marginal rate - HELD THAT:- A perusal of the provisions of Section 12AA(4) shows that the cancellation of registration is permissible in respect of trust/institution which has been granted registration if the activities of the trust or the institution are being carried out in a manner that the provisions of Section 11 and 12 do not apply to exclude either the whole or any part of the income of such trust or institution due to the operation of sub-section (1) of Section 13 or the trust or the institution has not complied with the requirements of any other law.
Reading of the provisions of Section 12AA(4) shows that there has to be primarily an order saying that the activities of the trust or the institution are being carried out in the manner that the provisions of Section 11 and 12 do not apply. That order primarily has to be done by the AO, who is a quasi-judicial authority. This is because it is the AO, who makes the assessment after examining all the evidences after putting the assessee to show cause and it is that assessment order itself which becomes the subject matter of appeal at various stages which could result in the confirmation of the assessment, reduction or modifications of the additions made.
The cancellation of registration without such an order is effectively precluding the AO to do the assessment in a free and fair manner. Admittedly, the Ld. CIT(E) is an Administrative Commissioner and once he gives a specific direction as he has made in the order cancelling the registration, the hands of the assessing authority gets tied down. The independence of the assessing authority gets infringed. This is not permissible. In fact reading of the provisions of Section 12AA(4) clearly shows that it is only after the quasi-judicial authority has completed its part, the violations can be even claimed to be there. In regard to the violation of any other law, the provisions of Section 12AA(4) clearly and categorically says that such violation or recording of such violation should have attained finality. Allegations per se cannot be the ground for the cancellation of registration. On this ground itself, the order passed by the CIT(E) is liable to be quashed and we do so.
Reading of proviso to Section 12AA(4) shows that there is liberty available with the assessee to show that there was reasonable cause for the activities to be carried out in the said manner. This proviso clearly shows that the assessee could reply or show reasonable cause only after the quasi-judicial authority being the assessing authority questions the assessee during the course of assessment - reading of 2nd proviso to Section 153A clearly shows that assessments/re-assessments which are pending for a period of six assessment years abates. This clearly shows that even assuming proceedings had been initiated for the purpose of completing an assessment or re-assessment as a consequence of the survey, even those proceedings would stand abated as on the date of search. Thus clearly there is no assessment order nor any evidence specifically conclusively found or established against the assessee on the issues raised by the Ld. CIT(E) by an order of any quasi-judicial authority nor has the violation of any other law reached finality. - Decided in favour of assessee.
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2022 (4) TMI 91
Taxing income from off-shore supplies - HELD THAT:- Case records suggest that this tribunal's co-ordinate bench order in assessee's own case itself [2017 (8) TMI 737 - ITAT HYDERABAD] has already decided the very issue of taxability of its off-shore supplies against the department
As DR argued the concept of res judicata too is indeed alien to income tax proceedings as per Radhasoami Satsang [1991 (11) TMI 2 - SUPREME COURT] wherein each and every assessment year involves its own facts and circumstances. He fails to pinpoint any distinction vis-à-vis the assessee's taxability in Assessment Year 2009-10 and all the five impugned assessment years during the course of hearing. We thus adopt judicial consistency to accept the assessee's instant substantive ground in very terms. It further succeeds in its corresponding substantive grounds in Assessment Years 2010-11, 2011-12 and 2014-15.
Disallowance of customs duty expenses - HELD THAT:- The assessee has strongly emphasized that the corresponding liability on account of customs duty has crystallized only in these twin relevant assessment years. Learned counsel invited our attention to assessment order for Assessment Year 2011-12 involving the corresponding vouchers between 31.08.2010 to 30.10.2011. We thus find prima facie merit in the assessee's argument indicating the impugned expenditure which have been crystallized much later in these assessment years and direct the Assessing Officer to verify the corresponding factual position and allow the same as per law in consequential proceedings. This identical later substantive ground in assessment years 2010-11 and 2011-12 is accepted for statistical purposes.
Assessments as non-est since the Assessing Officer had finalized the same without issuing the corresponding draft assessment order u/s. 144C(1) - HELD THAT:- Section 144C(1) of the Act herein envisages that the Assessing Officer shall "Notwithstanding anything to the contrary contained in this Act", in the first instance, forward a draft of the proposed order of assessment i.e. a draft assessment order to the eligible assessee. We thus observe that there would be hardly any denial to the fact that this section 144C(1) of the Act in issue contains a non-obstante clause having overriding effect over other provisions in the Act.
Both the draft assessments herein dt. 28.3.2013 and 14.3.2013 continue to hold the field as valid ones only as the latter notices would also in the nature of drafts only in light of 144C(1) of the Act. The assessee fails in its identical additional substantive ground raised in assessment year 2010-11 and 2011-12
Set off of brought forward losses is restored back to the Assessing Officer for his afresh factual verification in the very terms to be finalized within three effective opportunities of hearing.
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2022 (4) TMI 114
Reopening of assessment u/s 147 - Tangible material to justify reopening of assessment - addition u/s 40(a)(ia) - HELD THAT:- It is now settled that an assessment order can be passed either in terms of section 143(1) or 143(3) of the I-T Act, and when a regular order of assessment is passed in terms of section 143 (3), a presumption that such an order is passed on application of mind is attached to it. This presumption is raised with the aid of section 114(e) of the Evidence Act which stipulates that judicial and official acts are regularly performed. A useful reference in this regard could be made to the decision in Commissioner of Income Tax v. Kelvinator of India Ltd. [2010 (1) TMI 11 - SUPREME COURT] - In the considered opinion of this court, when it is undisputed that the AO asked for details relating to the details of the payments made as subcontractor charges and the TDS affected and the petitioner has furnished those details, with the AO issuing the assessment order dated 22.11.2016 without any additions, it must be deemed that the AO has opined in favour of the petitioner on the TDS deductions made.
The reason offered in justification of the notice issued under section 147 read with section 148 of the I-T Act is that on perusal of records it is observed by the AO that though the petitioner has paid subcontractor charges the petitioner has not deducted the TDS for the entire amount and therefore a sum cannot be allowed under section 40(a)(ia) of the I-T Act. If there is conscious application of mind on an issue during assessment, and this Court as in the circumstances of the case has already opined that there was such conscious application of mind and therefore a deemed opinion, there cannot be reassessment only because of an error in such opinion. The reasons offered by the A.O to justify reassessment cannot be accepted as an objective view based on any subsequent information in the absence of necessary material in this regard.
This Court is of the considered view that the impugned notice issued under Section 148 read with Section 147 by the Additional Commissioner of Income Tax, Special Range-I (the first respondent) cannot be sustained and must be quashed on the ground of lack of jurisdiction. - Decided in favour of assessee.
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2022 (4) TMI 90
Disallowance on account of late payments towards EPF and ESI u/s 36(1)(va) - Deposits were made prior to filing of return of income u/s. 139(1) - HELD THAT:- It is not in dispute that the assessee deposited the contribution of PF & ESI belatedly in terms of section 36(1)(va) of the Act. However, the said deposits were made prior to filing of return of income u/s. 139(1) of the Act. It is noticed that an identical issue having similar facts has already been adjudicated in RAJA RAM [2021 (11) TMI 370 - ITAT CHANDIGARH] wherein addition on account of deposits of employees contribution of ESI & PF prior to filing of the return of income u/s. 139(1) of the Act, in both the years under consideration prior to the amendment made by the Finance Act, 2021 w.e.f. 1.4.2021 vide Explanation 5, are deleted. - Decided in favour of assessee.
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2022 (4) TMI 89
Long Term Capital Gain - compensation received on account of compulsory acquisition of land on National Highway-64 covered under RFCTLARR Act - HELD THAT:- As relying on SHRI SATISH KUMAR, SMT. URMILA GARG C/O SNAGRUR SURGICAL AND LAPROSCOPE CENTRE VERSUS THE ITO WARD SANGRUR, SANGRUR [2021 (12) TMI 161 - ITAT CHANDIGARH] assessee received compensation for compulsory acquisition of commercial land during the F.Y. 2014-15 which was exempted under section 96 of the RFCTLARR Act, as clarified by the CBDT Circular No. 36/2016 dt. 25/10/2016. CIT(A) was not justified in confirming the action of the A.O. in not accepting the claim of the assessee for exemption of the compensation received on compulsory acquisition of land acquired by the Land Acquisition Officer from Income Tax. Accordingly the appeal of the assessee is allowed.
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2022 (4) TMI 113
Non-rural bad debts written off u/s 36(1)(vii) - HELD THAT:- In the present case, though there was no double deduction, as alleged by the appellant / Revenue, there was no clear vision about the advances made by the rural and non-rural branches of the bank and the quantum of deduction was not properly determined by the assessing officer based on the materials furnished by the respondent / assessee.
The quantum of deduction arrived at by the AO was not based on the documents produced by the respondent / assessee. The CIT(A) as well as the Tribunal also, did not look into those aspect, while allowing the deduction claimed by the respondent / assessee. Therefore, this court is of the opinion that for that limited purpose, the matter has to be re-examined by the assessing officer and the same has also been agreed upon by the learned counsel appearing for both sides.
In such view of the matter, the order of the Tribunal, which is impugned herein, is set aside and the matter is remitted to the assessing officer for quantification of the deduction allowable to the respondent. The assessing officer shall complete the said exercise, after providing due opportunity to the respondent for submission of both oral and documentary evidence, if any, and pass appropriate orders, on merits and in accordance with law, within a period of three months from the date of receipt of a copy of this judgment.
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2022 (4) TMI 88
Revision u/s 263 by CIT - proceedings initiated u/s 263 in the name of non-existent company - HELD THAT:- Jurisdiction assumed by ld PCIT by issuing show cause notice u/s 263 of the Act dated 08.09.2021 in the name of non-existent entity suffers from the substantive illegality and consequently the revisionary proceedings as well as order passed u/s 263 of the Act will not survive and have to be set aside as the very initiation of proceedings is invalid and nullity in the eyes of law.
Maruti Suzuki India Limited [2019 (7) TMI 1449 - SUPREME COURT] wherein it has been held that the jurisdictional notice issued in the name of non-existent company and consequent assessment order are to be set aside as the issue of jurisdictional notice on non entity is a substantive illegality and not procedural irregularity of the nature as referred to in section 292B - mere fact that the assessee has participated in the proceedings before the AO will not cure this substantive illegality and the mere participation of the assessee in the assessment proceedings cannot debar the assessee from challenging the proceedings on this ground as there is no estoppel against law.
Also in the case of BASF Ltd [2019 (11) TMI 1719 - ITAT MUMBAI] wherein it has been held that that assessment in the name of non-existent entity is invalid and has to be quashed - Decided in favour of assessee.
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Customs
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2022 (4) TMI 86
Refund of tax and interest, collected without authority of law - availability of exemption benefit under N/N. 79/2017-Cus. - HELD THAT:- The Commissioner (Appeals) has admitted that the benefit of exemption from IGST and cess was available to the appellant till 31.03.2018 under Notification No. 79/2017-Cus. It is found that the Court below have erred in holding that the exemption is not available to the appellant-assessee as the assessment/re-assessment of the Bill of Entry was finalised in September, 2018 (after 31.03.2018). The entitlement of exemption from duty on filing the Bill of Entry is with respect to the date of filing of the Bill of Entry. Thus, the exemption of IGST as well as BCD + cess was available in respect of Bill of Entry, which was filed on 14.03.2018 and 31.03.2018.
Further, the Government vide amending Notification No.01/2019-Cus. dt. 10.01.2019 have withdrawn the pre-import condition No. (XII) from Notification No.18/2015-Cus. in public interest.
The Adjudicating Authority is directed to grant refund of ₹ 97,032/- alongwith interest as per Rule, within a period of 45 days from the date of receipt of copy of this order - appeal allowed - decided in favor of appellant.
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2022 (4) TMI 85
Levy of penalty u/s 112(a)/112(b)/114A/114AA of Customs Act - Smuggling - Gold Bars - Baggage Rules - failure to satisfy the requirement of six months stay abroad stipulated for the import of gold as part of passenger baggage provided under Rule 3(1)(h) of the Foreign Trade (Exemption from Application of Rules in certain Cases) Order, 1993 - reliability of statements recorded - existence of cogent and corroborative evidence or not - HELD THAT:- In the impugned order, the Commissioner has summarised the penalties on various notices; insofar as Shri Ashruf Kullangal [appellant No.(iv)] and Shri T.K. Faiz [appellant No. (vi)], penalty has been imposed under Section 112(a) & (b). Section 112 can be invoked for imposing penalty on any person for violation specified under (a) ‘or’ (b) and it can never be for (a) ‘&’ (b) because, there is a clear and disjunctive ‘or’ between the two limbs (a) & (b), which gives no room to read the same as ‘and’ since the breach defined in (a) is distinct and that in (b) is distinct. Therefore, the penalty imposed under Section 112(a) ‘&’ (b) for alleged improper importation of goods etc. is unsustainable. For this reason alone, we are prima facie satisfied that the penalty levied at least on two of the appellants i.e., Shri Ashruf Kullangal and Shri T.K. Faiz cannot be sustained and accordingly, the same is set aside.
Admittedly, the ladies, i.e., the alleged gold carriers had gone out of the airport and it is also mentioned in the Order-in-Original that they were waiting for their fellow passenger outside the airport. Secondly, there was a search on Mr. Haris, the male passenger accompanying the alleged gold carriers, which had resulted in the seizure of a letter by M/s. AU Jewellery, Dubai. These two vital facts are not only ignored before levying the penalty, but has never been discussed in the OIO - hence, there has been some confusion on the part of the Revenue and it appears that there is something which is not properly explained and brought out either in show-cause notice or Order-in-Original.
Also, it is found that those statements are also inconsistent and hence reduced to be unreliable, and therefore, their evidentiary value would have to be very carefully examined before counting on them. Admittedly there are no independent eye witnesses who have been examined, nor any documentary evidence placed on record to corroborate statements recorded under Section 108 ibid - un-corroborated statement of one cannot become a conclusive proof to crucify another, without following the process of law. This becomes rather a necessity when only statements, that too which are inconsistent, are relied upon, like in the case on hand. Such statements therefore, could at best be a lead, requiring further investigation, by the concerned authorities. But to our dismay, apparently, there is no such move as could be seen from the OIO or the documents placed before us. Hence it is our responsibility to critically analyse, before applying such statements here.
36 Kgs of gold allegedly smuggled on the earlier occasions - HELD THAT:- Admittedly, there is no direct evidence for this. The same is based on the statements of so-called carriers. No one has seen them loading/unloading the gold, other than the entries in the respective passports. It is a pure ‘golden’ castle in the air built on statements again. Though the narration of the whole story is attractively designed, but the law requires that the preponderance of probabilities be in favour of this version, and of course seizure of the whole or any part of the same, to declare a person guilty.
So far as the gold alleged to have been smuggled on the earlier occasions of 36 kgs, the Revenue has simply relied on the statements of alleged careers and nothing else. Other than this there is not even a single piece of evidence to corroborate that 36 kgs gold bars were smuggled on earlier occasions. It is a different matter if at least the alleged gold bars were available or at least its destination was known - when the so-called carriers are said to have smuggled the gold, including the person to whom the same was delivered upon their arrival in India, no effort has ever been made to track that recipient, nor is there any follow-up action to ascertain its veracity. Hence, we totally disbelieve this part of the story and do not endorse levy of penalty insofar as it relates to 36 Kgs, against the appellants.
Reliability of statements recorded - HELD THAT:- A statement, if found vitiated by any means is clearly unreliable, in the absence any other corroborative piece of evidence, so also the magnanimous confession of a co-appellant inculpating other/s while gracefully exculpating himself, cannot have any evidentiary value, and hence, the benefit of doubt cannot be denied to the appellants.
Quality of statements recorded by the revenue on which sole reliance is placed by the revenue - HELD THAT:- Though only a part of the alleged gold was confiscated, but nevertheless none of the appellants did claim ownership of any of the gold bars and in any case the same was not seized/confiscated from them. Hence, the requirement of Section 112 insofar as it relates to confiscation from the passengers alone is satisfied, but not any of the limbs (a) or (b) of the said section. The links in the chain that resulted in confiscation of goods are not at all there which has thus left the chain incomplete in all respects.
Here in the case on hand, some of the officials are not even put on SCN, a few of the persons and some officials who were put on notice have been exonerated, crucial witnesses were not examined/questioned, nothing is forthcoming as to the fate of letter found and seized from Mr. Haris and hence, there are too many loose ends perhaps due to lack of proper investigation - there are no other sustainable evidence against any of the appellants and hence, the revenue has not made out any case against them. Consequently, penalty levied against them cannot be sustained.
Appeal allowed - decided in favor of appellant.
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2022 (4) TMI 84
Smuggling - foreign marking Gold Bars - failure to to show the source of procurement of the gold by licit means - notified item - Section 123 of the Customs Act, 1962 - Absolute Confiscation - whether at this stage, the seized gold can be released provisionally to the appellant or not? - HELD THAT:- After due investigation, it was concluded in the show cause notice that Sh. Mayank Agarwal (the appellant) is the mastermind behind the smuggling activity of foreign origin gold along with his associates who (the appellant) has claimed the ownership of the gold in question. Further it is noted that during the course of investigation, the statement of the supplier was also recorded. Statement of Sh. Rajat Gupta, prop. of M/s Shri Girraj Ji Jewellers, Mathura was also recorded who stated that he supplied 5 kgs gold bullion to Sh. Mayank Agarwal under Invoice No. 13 dated 30.06.2021 wherein the description of gold was not mentioned.
In the case in hand, gold is only notified item under Section 123 of the Customs Act, 1962 wherein the burden of proof of procurement of the said gold lies on the appellant that the same is procured through licit means and the appellant has produced a tax invoice to that effect. The decision in the case of ADDITIONAL DIRECTOR GENERAL (ADJUDICATION) VERSUS M/S ITS MY NAME PVT LTD [2020 (10) TMI 237 - SUPREME COURT] is directly applicable to the facts of this case, where it was held that Allegations in a Show Cause Notice are merely allegations, till proved, in adjudication. Were there to be no material, whatsoever, justifying clearance of the imported goods, such allegations may, conceivably, have a part to play, in examining the request for provisional release.
The balance of convenience in allowing provisional release lies in favour of the appellant - provisional release of the seized gold allowed subject to conditions imposed - appeal allowed.
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2022 (4) TMI 83
Valuation of goods - undervaluation - levy of penalty - denial of cross examination of the persons whose statements have been relied upon - violation of principles of natural justice - non-application of mind - Section 138(B) of the Customs Act, 1962 - HELD THAT:- The finding portion of the adjudication order is verbatim to the allegation made in the show-cause notice and there is no clearcut finding given by the adjudicating authority with regard to the defence taken by the appellant during the course of adjudication. Moreover, cross examination of the persons whose statements were relied upon by the adjudicating authority in adjudication order as well as while issuing the show-cause notice have not been granted.
There is violation of principles of natural justice and the impugned order needs to be set aside - matter remanded back to the adjudicating authority for de-novo adjudication after granting cross-examination of the persons whose statements have been relied upon for issuance of the show-cause notice - appeal allowed by way of remand.
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2022 (4) TMI 59
Classification of imported goods - API supari - areca nuts classifiable in chapter 8 of the First Schedule to Customs Tariff Act, 1975 or not - Denial of provisional release of goods - HELD THAT:- Classification of impugned goods may have to depend on tests for distinguishing rival claims between tariff item declared in bills of entry for free importability and against sub-heading 0802 80 of First Schedule to Customs Tariff Act, 1975 which, according to customs authorities, it is with implication of policy restriction. Certification by Food Safety and Standards Authority of India (FSSAI) is of no less importance but should originate from that authority and not on presumption, even if bona fide, emanating from amateurish swashbuckling. There are laws that restrict and credibility in enforcement of such law rests solely on conformity with procedure which the factual matrix does not inspire.
There are no harm in acceding to this plea; it would facilitate availability of expert opinion relevant for disposal of the appeal and accord credibility to the process that importers are subject to without jeopardizing either commercial considerations or public interest - immediate steps should be taken for drawal of representative samples, in the presence of importer, which conforms to the pre-requisites for testing under Customs Act, 1962 as well as Food Safety and Standards Act, 2006 and on any account to be not later than 14th February 2022 as the goods, intended for human consumption, should not be allowed to deteriorate.
This matter is adjourned till 9th March 2022 and, in the meanwhile, the respondent-Commissioner shall carry out the directions supra to enable the reports to be filed in the Tribunal before that date.
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Corporate Laws
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2022 (4) TMI 82
Sanction of Scheme of Amalgamation - Section 230-232 and Section 66 of Companies Act, 2013 and other applicable provisions of the Act read with Companies (Compromises, Arrangements and Amalgamations) Rules, 2016 - HELD THAT:- The Scheme contemplated between the petitioner companies, appears to be prima facie in compliance with all the requirements stipulated under the relevant Sections of Companies Act, 2013. In the absence of any objections and since all the requisite statutory compliance have been fulfilled, this Tribunal sanctions the Scheme of Amalgamation appended as Annexure “A-1” with the company petition.
The scheme is approved - application allowed.
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2022 (4) TMI 81
Refusal to pay the lease rentals to the legal heir - affected person - Fraudulent and Unlawful Activities committed by the 1st Respondent/Company - seeking to order an investigation as per Section 213 of the Companies Act, 2013 - Conveyance to and in favor of DLF - Income Tax dues and the GST dues - cause of action arose before the year 1996 - time limitation - HELD THAT:- The Appellant/Applicant is not a shareholder or a Creditor or a person related in any manner to the 1st Respondent/Club. As regards, the Title, in respect of the lands measuring 12.53 Acres is concerned, the same is a subject matter of litigation with numerous legal proceedings before the City Civil Court, Chennai.
Conveyance to and in favor of DLF - HELD THAT:- The same, according to the 1st Respondent/Club is a private transaction between the Club and another entity. As far as Madras School of Equitation is concerned, it is the stand of the 1st Respondent/Club that it is a part and parcel of the 1st Respondent/Club and the issue of Sub-Lease may not arise.
Income Tax dues and the GST dues - HELD THAT:- The Appellant/Petitioner being an alien under stranger to the 1st Respondent/Club has no Locus Standi to question the same. And in this regard, the Income Tax and GST Authorities are to take such action as they deem fit and proper, in the considered opinion of this Tribunal. By no stretch of imagination, these dues cannot be prudently considered as a basis praying for an Investigation, as per the ingredients of Section 213 of the Companies Act, 2013.
A cursory perusal of the relevant Provisions of the Companies Act, 2013 point out that there are prescribed procedures to deal with a contingency like Mismanagement of a Affairs of Company - there is no two opinion of a premodial fact that a person whose name is not on the Register of Members is not entitled to prefer a Petition before a Tribunal. It is for the concerned person to establish that he is a Member of a Company on the date of filing of a Petition/Application under the Companies Act, 2013. When a person is not a Member of the Company, he cannot even come out with an allegation of Oppression to invoke the ingredients of relevant Provisions of the Companies Act, 2013, as the case may be.
Time Limitation - HELD THAT:- If a Petition filed by a Petitioner/Applicant under the Companies Act, 2013 seeking certain reliefs, suffers from Delay and Latches, the same is not maintainable in Law. Although a plea of Limitation is not to be raised before a Tribunal because of the exercise of Equitable Jurisdiction in a proceeding initiated by an Applicant/Petitioner, the plea of Delay and Latches will squarely apply in a given case and the delay/latches will of course, begin undoubtedly, from the Date of Knowledge, in the considered opinion of this Tribunal.
In the Instant Case, the Appellant/Petitioner, has not made out an Ex-Facie case to avail the remedy under Section 213(b) of the Companies Act. The Power of a Tribunal/Appellate Tribunal is not to be exercised in an Arbitrary or capricious manner. Per contra, the power of the Tribunal is to be exercised with utmost care, caution and circumspection, based on its sound Application of Judicial mind and Discretion. A Tribunal cannot exercise its power under the Companies Act just for the asking of an Alien/Stranger, simply on the basis of allegations made by a Non-shareholder. Also, in the present case, no endeavor was made by the Appellant/Petitioner to avail/exhaust the remedies available, if any, under the Companies Act, 2013 as per procedure prescribed.
When the cause of action (Bundle of Facts) purportedly arose before the year 1996, in the present case, then the Company Petition filed by the Appellant/Petitioner before the National Company Law Tribunal, Chennai suffers from the Plea of Delay and Latches, as held by this Tribunal. Looking at from any angle, the main Company Petition CP/46/CHE/2021 filed before the National Company Law, Tribunal, Chennai is not maintainable either in Law or on facts. Viewed in that perspective, the Company Appeal sans merits.
Appeal dismissed.
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Insolvency & Bankruptcy
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2022 (4) TMI 80
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - existence of debt and dispute or not - HELD THAT:- It is pertinent to mention that on receiving a statutory notice in FORM 3, the Corporate Debtor neither disputed the services provided by the Operational Creditor nor denied the fact that there are any outstanding dues. Nevertheless, they themselves in their letter dated 24.05.2019 admitted that they are willing to settle the matter and clear the dues - Further, it is apparent from the record that the Ld. Counsel appearing on behalf of the Corporate Debtor last appeared on 13.02.2020 and undertook to file vakalatnama and affidavit-in-reply. However, none appeared on behalf of the Corporate Debtor since then. Neither any reply has been filed by the Corporate Debtor even after receiving Court Notices. The matter was set ex-parte on 30.11.2021.
The present petition made by the Operational Creditor is complete in all respect as required by law. The petition establishes that the Corporate Debtor is in default of a debt due and payable and that the default is more than the minimum amount stipulated under section 4(1) of the Code, i.e., Rupees one lakh, at the relevant time, and since there is no preexisting dispute, there is no defence available to the Corporate Debtor in these circumstances - Petition admitted - moratorium declared.
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2022 (4) TMI 78
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial Creditors - existence of debt and dispute or not - HELD THAT:- The Applicant has claimed the default on the part of the Respondent for an amount of ₹ 29 Lakhs. This is as a sequel to the booking of an office space by the Financial Creditor in a project launched by the Corporate Debtor. The Financial Creditor paid an amount of ₹ 20 Lakhs towards the said unit to the Corporate Debtor; however since the Corporate Debtor failed to give possession of the unit to the Financial Creditor, the Corporate Debtor and the Financial Creditor entered into a mutual agreement by which an amount of ₹ 41 Lakhs was to be paid by the Corporate Debtor to the Financial Creditor as buy back and the Financial Creditor would return the original agreement in respect of the allotment of the office space back to the Company.
It is to be noted here that the mutual agreement was not by itself an ab initio standalone agreement but it was a consequence of the Corporate Debtor not giving possession of the unit for office space to the Financial Creditor which he had agreed to give and for which consideration had been paid by the Financial Creditor. Therefore this mutual agreement/settlement under which the Corporate Debtor has defaulted is to be considered as such and not as an ab initio standalone agreement.
As per the IBC (Amendment) Act, 2020, for financial creditors who are allottees under a real estate project, an application for initiating corporate insolvency resolution process against the corporate debtor shall be filed jointly by not less than one hundred of such allottees under the same real estate project or not less than ten percent of the total number of such allottees under the same real estate project, whichever is less - the Petitioner having failed to modify the application to meet the mandatory threshold requirement, within the prescribed time period or even within the extended time period, should no longer be allowed to pursue the present application.
It remains an undisputed fact that the origin of the claim by the Applicant was by the virtue of him being an allottee. The subsequent mutual agreement cannot be treated as a standalone agreement and must be read in light of the original Space Buyer Agreement. Moreover, the mutual agreement has no component of interest as claimed by the Applicant. Further, it appears that after the IBC (Amendment) Act, 2020, the Applicant has twisted his line of arguments and is now relying on the subsequent mutual agreement without making any modification to his Application under Section 7 of the Insolvency and Bankruptcy Code, 2016. Therefore, the Tribunal is of the view that the said application is not in consonance with the IBC (Amendment) Act, 2020.
Application dismissed.
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2022 (4) TMI 77
Dissolution of the Corporate Debtor - section 54 of the Insolvency and Bankruptcy Code, 2016 (Code) read with regulation 45 of the Liquidation Process Regulations - HELD THAT:- On perusing the documents annexed to the application, it appears that affairs of the Corporate Debtor have been completely wound up and its assets have been completely liquidated. The bank account has also been closed and no liabilities of the stakeholders have been left unsatisfied.
There is no impediment to the Corporate Debtor being dissolved, and it is ordered accordingly.
Application disposed off.
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2022 (4) TMI 76
Seeking dissolution of the Petitioner Company - Section 59 of the Insolvency and Bankruptcy Code, 2016 read with Insolvency and Bankruptcy Board of India (Voluntary Liquidation Process) Regulations, 2017 - HELD THAT:- In the present case, it can be seen that the Company is incorporated to carry on the business of coal loading, coal transportation and allied materials and to enter into contracts, submit tenders and execute work orders. The company was incorporated on 25.06.2004 to carry on the business of transportation and loading of coal and it is not carrying on any business from last past many years and there is no business opportunities under consideration for future. Therefore, the Board of Directors in its meeting on 15.05.2017 have decided to voluntary liquidation of the company and members in EOGM dated 06.06.2017 have approved the resolution for voluntary liquidation of the company and approving the appointment of liquidator. Further, the liquidator has informed the concerned authorities i.e. IBBI, RoC and Income Tax Department and has also made paper publication in Form A in two newspapers - the Liquidator has completed the final distribution of assets. The voluntary liquidator has also prepared and submitted the final report to the IBBI and RoC vide speed post on 10.08.2019. The application is duly supported by the affidavit of the liquidator.
To meet the ends of justice the Petition Company is hereby dissolved in terms of Section 59(8) of the Insolvency & Bankruptcy Code, 2016 with effect from the date of the present order - Petition disposed off.
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2022 (4) TMI 75
Violation of principles of natural justice - ex-parte order passed - it is contended by the Applicant that no notice was received by him regarding the intimation to be present for hearing - opportunity of hearing not provided - HELD THAT:- It is clear from the provision of Section 19(2) of IBC that the Ex-Management shall be bound to co-operate with the Resolution Professional, enabling the Resolution Professional to carry out and complete the resolution process, which is time bound and in the event of non-1 cooperation by the Corporate Debtor, its promoters or any other person associated with the management of Corporate Debtor, the Resolution Professional is entitled to move the Tribunal and upon filing an Application by the Resolution Professional, the Tribunal is entitled to direct such personnel or other person to comply with the instructions of the Resolution Professional and to cooperate with him in collection of information and management of the Corporate Debtor.
In the case on hand, the minutes of CoC meeting dated 09.03.2021 categorically discloses that the Resolution Professional had brought to the notice of the members of CoC that information such as audited financial statements of Corporate Debtor for the years 2019, 2020 and provisional balance sheet as on the Insolvency Commencement date i.e. 18.01.2021 for preparation of Information Memorandum were not furnished and the Director of the Suspended Management Shri L.N. Sharma assured that he will arrange within 3 days. However, as there was no compliance, the CoC in its next meeting dated 14.06.2021, once again took up the same issue. Pursuant thereto, Shri L.N. Sharma, the Director of Ex-Management requested for two weeks' time to furnish all the details. But, once again he defaulted in complying his own undertaking, hence the issue of non-furnishing of the records once again came up before the CoC in its meeting dated 23.07.2021.
The Director of the Corporate Debtor, though assured to deliver the relevant records to the IRP, never kept his undertaking. Thus, breach of sub-section (1) of Section 19 is as clear as crystal, as such it is certainly open to the IRP to make an application to the Adjudicating Authority for necessary directions. In the instant case, this Adjudicating Authority, having found proof of non-cooperation by the Ex-Management, without going into the allegations, placing reliance on sub-section (1) of Section (19), passed a direction to hand over all the records and papers to the IRP, enabling successful completion of CIRP within the timeline. In passing such an order, there is no violation of principles of natural justice - there is clear violation of mandatory duty cast upon the ex-management in terms of Section 19(1) of IBC.
The Application stands dismissed.
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2022 (4) TMI 74
Right to use of the trade mark CONCEPT Educations - vested in the Corporate Debtor in accordance with Section 48(a) of the Code or not - account for the benefits received by it by use of the trade mark CONCEPT Educations till date and pay such sum to the account of the Corporate Debtor - appointment of independent expert to assess evidence relating to the value of the trade mark CONCEPT Educations - HELD THAT:- There was a partnership agreement dated 01/02/2019 between the CD and the Respondent no 1 whereby they agreed to carry on a business in the name of Potential and Concept Educations. Subsequently, there is a deed of Agreement dated 08/02/2019, a week after, in which the "right to use" of the above Trade Mark "CONCEPT Education" for 15 years is transferred in favour of the R1 for a mere ₹ 10 Lakhs (Rupees Ten Lakhs only) Furniture, fixtures and Electronics were also transferred in favour of R1 - Further, there is a Deed of Reconstitution of Partnership dated 19/09/2019 by which the CD is ousted and the spouse of the Respondent no 2 and 3 are inducted as partners - All the three Respondents have done all the above at their own will within the look back period of one year i.e. the Application filed under IBC was admitted on 26/02/2020 and all these agreements and transfer of right to use of the Trademark started taking place from 01/02/2019 and onward.
Both the R1 and R3 have agreed and given in writing that the RP has given wrong impression that Trade Mark has been sold to the Respondent No. 1. In fact, both the Respondents have confirmed that the CD has still ownership right over the Trade Mark "CONCEPT EDUCATION" and only right to use the Trade Mark is given for 15 years to R1 against payment of ₹ 10.00 lacs and imparting education for 300 students of the CD for a year. Respondents have further submitted that it was not exclusive transfer of Trade Mark but only right to use was granted for fifteen years meaning thereby that the Resolution Applicant has full right to use and having ownership of trade mark even after the aforesaid Deed of Agreement - Return of trademark to CD is the part of the Resolution Plan. Hence the "right to use" of the trade mark "CONCEPT Educations" is required to be cancelled.
There is no liability or any obligations from either side in relation to the use of Trademark from today but it is made clear that the matters of non-cooperation of the Suspended Management, their agreements with the Potential Coaching Institute Pvt. Ltd. for use of Trademark for ₹ 10.00 lacs for fifteen years and subsequent withdrawal from the partnership shall be heard along with other IAs filed by the RP under Sections 19, 43, and 66 of IBC 2016 - Application disposed off.
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2022 (4) TMI 73
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - existence of debt and dispute or not - HELD THAT:- The Corporate Debtor has not brought to light any pre-existing dispute while replying to the demand notice as required under the Code - The amount outstanding is above ₹ 1 lakh and since the present petition was filed before the amendment increasing threshold limit, the present petition is in compliance with section 4(1).
The application made by the Operational Creditor is complete in all respects as required by law. It clearly shows that the Corporate Debtor is in default of a debt due and payable, and the default is in excess of minimum amount stipulated under section 4(1) of the IBC. Therefore, the default stands established and there is no reason to deny the admission of the Petition. In view of this, this Adjudicating Authority admits this Petition and orders initiation of CIRP against the Corporate Debtor.
Petition admitted - moratorium declared.
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Service Tax
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2022 (4) TMI 72
CENVAT Credit - Common input services were used for rendering taxable service as well as sales activity / trading which is an exempted service - non-maintenance of separate records - compliance with Rule 6(3A) of CENVAT Credit Rules, 2004 or not - HELD THAT:- The appellant has not carried forward the CENVAT credit closing balance of ₹ 14,41,435/- in their returns for the period ending March 2011 to the returns for the period from April 2011 to October 2011. The returns establish that the appellant has not carried forward the credit from the previous period. The learned AR has submitted that this must have been an omission and not a conscious decision to reverse the disputed credit. However, it is to be noted that the appellant has not carried forward the credit and has not availed any benefit out of the credit as it has not been carried forward. It therefore has to be viewed that they have reversed the credit in their books of account. The liability to reverse therefore stands extinguished.
After perusing the ST-3 returns as well as the details of the calculations given by both sides, the appellant has no further liability to reverse the credit for the disputed period. The matter was adjourned to understand the confusions in the calculations in the Show Cause Notice and order passed by the original authority - Appeal allowed - decided in favor of appellant.
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Central Excise
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2022 (4) TMI 87
Refund of Countervailing duty (CVD) - time limitation - case of Revenue is that right of availment of CENVAT credit was with the appellant since the year 2005 and hence the same should have been availed at the relevant time itself - HELD THAT:- It is true that additional duty levied under section 3 of Customs Tariff Act, 1975 is in the nature of a countervailing duty to protect the interest of the domestic manufacturers and it is permissible under Cenvat Credit Rules, 2004 for it to be treated as Cenvat Credit. However, any refund of unutilized Cenvat Credit can be taken if it fulfils the conditions under section 11B of Central Excise Act, 1944.
In the present case, the CVD was paid on 07.03.2005. However the refund in question has been filed pursuant to the Final order of this Tribunal dated 04.10.2017 The relevant date in terms of section 11B of Central Excise Act for the impugned relief, was to be the date of this Final Order. The refund claim has been filed on 18.3.2018, i.e. well within the period of said one year from the relevant date. The appellant has contended that they were not able to utilise the Cenvat Credit during the relevant period.
Keeping in view that the certificate of origin was alleged to be incorrect, based whereupon the show cause notice was issued in the year 2005 itself. Nothing has been produced by the department to prove the said allegation. Per contra the Certificate of origin is admittedly on record. Presumption of correctness is attached thereto. Same has not been rebutted by the department. Appellant in addition has produced the documents i.e. invoices etc. - all requirement of section 11B Central Excise Act have been met with by the appellant. Accordingly the appellants are entitled for the refund of CVD along with the interest to be calculated from the date of payment thereof. There being apparent delay on part of the department authority in passing final assessment order.
The appellant is held to be entitled to the refund of the CVD with consequential benefits - Appeal allowed - decided in favor of appellant.
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2022 (4) TMI 69
100% EOU - Interpretation of statute - CENVAT Credit - entitlement to first time credit of education cess and secondary higher education cess or not - period April 2007 to January 2009 - whether the formula, prescribed for availment of CENVAT credit, by the domestic manufacturers in cases of procurement from EOUs, should be inclusive of education cess and secondary higher education cess, in terms of Rule 3(7) of CENVAT Credit Rules? - HELD THAT:- The Rule says that credit shall be limited to Fifty per cent. of [X multiplied by {(1+BCD/100) multiplied by (CVD/100)}], where BCD and CVD denote ad valorem rates, in per cent of basic customs duty and additional duty of customs leviable on the inputs or the capital goods respectively and X denotes the assessable value - Show-cause notice relies upon the words and expressions ‘BCD and CVD’ used in the Rule and contends that the formula does not give any scope for education cess and secondary higher education cess. The learned Commissioner relies on Rule 3(1) of CENVAT Credit Rules and finds that it is crystal clear that whatever duty specified is available as credit under CENVAT Credit Rules, 2004 and the total such credit availed is referred to in these rules as CENVAT Credit.
Wherever the term CENVAT credit appears in these rules, they refer to the credit of duty as specified in rule 3 and entirely include in the terms CENVAT credit. It is not merely talking about Basic Excise Duty and for that other duties individually. Thus, learned Commissioner concludes that CENVAT Credit as appears in the Rules is not limited to basic excise duty and for other duties also. Learned Commissioner appears to mean thereby, that the Rules do not contemplate any credit of cesses payable and paid.
This Tribunal had gone into the very same issue in the case of ENCORE HEALTHCARE PVT LTD VERSUS COMMISSIONER OF CENTRAL EXCISE, AURANGABAD [2017 (5) TMI 1379 - CESTAT MUMBAI] and have held that credit admissibility in such circumstances should be as per Rule 3(7) of CENVAT Credit Rules. Therefore, the impugned order does not require any interference inasmuch as the admissibility of credit of duty is concerned.
Interest - HELD THAT:- The appellants have wrongfully availed excess credit which they have reversed subsequently on being pointed out. However, as submitted by the learned Authorised Representative, interest requires to be paid in view of the Apex Court’s decision in the case of UOI AND ORS. VERSUS IND-SWIFT LABORATORIES LTD. [2011 (2) TMI 6 - SUPREME COURT].
Penalty - HELD THAT:- The contention of the appellant that penalty may not be imposed as the issue involved is about the interpretation of the provisions of a statute and no mala fides can be imputed per se. Moreover, the appellants have immediately reversed the credit on being pointed out by the investigation team and there is no mention of protest whatsoever. For this reason, the department has not made out any case for imposition of penalty - Penalty set aside.
The denial of excess credit availed by the appellant is upheld along with interest - penalty is set aside - Appeal allowed in part.
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2022 (4) TMI 68
Refund claim - rejection of application of the Appellant for fixation of special value addition rate for the period 2008- 09 to 2017-18 (up to June 2017) - time limitation - HELD THAT:- The issue has been dealt with by Hon’ble Gauhati High Court in the case of M/S. JYOTHY LABS LTD. (ERSTWHILE JYOTHY LABORATORIES LIMITED) VERSUS THE UNION OF INDIA AND 2 ORS. PRINCIPAL COMMISSIONER CGST COMMISSIONERATE GUWAHATI, THE ASSISTANT COMMISSIONER OF GST AND CENTRAL EXCISE GUWAHATI [2021 (3) TMI 1039 - GAUHATI HIGH COURT] wherein it has been held that As the Notification dated 27.03.2008 provides for a legal right to the assessee to claim for a special rate to be fixed in the event of there being any add-ons to the goods manufactured, we are of the view that without an appropriate decision being taken on such claim for special rate, it would be inappropriate for the department to proceed against the petitioners as per the rates provided in the Notification dated 27.03.2008.
Thus, by respectfully following the observations of the Hon’ble Gauhati High Court, the matter is remanded back to the Ld. Adjudicating authority to consider the application of the Appellant for fixation of special value addition rate for the period 2008-09 to 2017-18 (up to June 2017) in the light of the observations of Hon’ble Gauhati High Court and pass speaking order thereto - the appeal is allowed by way of remand to the Ld. Adjudicating authority.
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2022 (4) TMI 71
Input tax credit - Tribunal overlooked the statutory provisions enacted by parliament - rewriting of the provision and recorded perverse finding is required or not - availment of CENVAT Credit on invoices/debit notes issued by Input Service Distributor [ISD] prior to their registration, without proper appreciation of the scheme - Service Tax [Registration of Special Category of Persons] Rules, 2005 without proper appreciation of the scheme - HELD THAT:- The dispute involved herein is no more res integra in view of the judgment of the Hon'ble High Court of Gujarat in the case COMMISSIONER OF CENTRAL EXCISE VERSUS DASHION LTD [2016 (2) TMI 183 - GUJARAT HIGH COURT], which has been accepted by the Department in terms of the Circular dated 16.02.2018 - It was held in the case that there is nothing in the said Rules of 2005 or in the Rules of 2004 which would automatically and without any additional reasons disentitle an input service distributor from availing Cenvat credit unless and until such registration was applied and granted.
The CENVAT Credit claimed by the respondent-assessee on the basis of the Invoices/Debit notes issued by the head office for the months of March, July and August 2006 prior to its registration as ISD on 21.09.2006 being procedural irregularity and the view of the Hon'ble High Court of Gujarat being accepted by the Department, input tax credit cannot be denied - substantial questions of law are answered in favour of the assessee and against the Revenue.
Hence, Appeal stands dismissed.
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2022 (4) TMI 70
Demerger/amalgamation of unit - Liability of predecessor / successor - Extended Period of limitation - Failure to make proper invoices indicating the amounts to be paid towards the central excise duty - Contravention of provisions contained in Rule 11 of the Central Excise Rules, 2002 - failure to file the monthly return within the prescribed time - contravention of Rule 12 of Central Excise Rules, 2002 - HELD THAT:- The impugned Show cause notice has been issued on 31st December 2018, raising duty demand for the period December 2013 to March 2014. This is beyond the normal period of limitation of two years prescribed under Section 11A(1) of the Central Excise Act, 1944. The Extended/longer period of limitation of 5 years has been prescribed under Section 11A(4) of the Central Excise Act, 1944. The extended period of limitation of 5 years, applies when the duty of excise had not been levied or paid or short levied or short-paid by reason of either fraud or collusion or wilful misstatement or suppression of facts or contravention of any provisions of the Act or the Rules made thereunder with an intent to evade payment of duty - If in a given case, ex-facie, the ingredients for invoking the extended period of limitation are not attracted based on the very averments in the show cause notice, the notice would be ex-facie barred by limitation - It is now well settled that the question of limitation is a question of jurisdiction.
In STATE OF PUNJAB VERSUS BHATINDA DISTRICT CO-OP. MILK P. UNION LTD. [2007 (10) TMI 300 - SUPREME COURT] the Supreme Court held that the question of limitation being a jurisdictional question, a writ petition challenging the validity of a notice of revision of an order of assessment of sales tax, on the ground of the same being barred by limitation, would be maintainable, notwithstanding availability of an alternative statutory remedy.
Thus, in the case on hand, the facts are not in dispute. A pure question of law is to be decided based on the very averments made by the Respondent in the show cause notice. Therefore, the present writ application could be said to be maintainable.
Jurisdiction of the Central Excise authorities to question the legality and validity of the scheme approved by the High Court - HELD THAT:- In the present case, the Central Government was a party to the scheme through the Office of the Regional Director, Ministry of Corporate Affairs, Western Region Mumbai. Thus, the respondent No. 1 was aware of the Scheme at all times. Once, the Scheme has been approved by the High Court and has attained finality, the Respondent is now barred to raise any objection to the said scheme in the present proceeding.
Absence of mandatory pre-show cause notice consultation is fatal to the present SCN - HELD THAT:- Merely because in the present case, the case originated on account of investigation of the DGGI will not be a sufficient ground for not following the mandatory procedure prescribed by the Board which is binding on the department. Therefore, it was mandatory for the adjudicating authority in the present case to conduct the pre-show cause notice consultation and in absence of the same the present proceedings could be said to be bad in law and deserves to be quashed and set aside.
The Central Excise Department could be said to be aware of the fact that the new entity applied for registration in April 2014. The department could also be said to be aware of the fact that for the earlier period (F. Y. 2013-14), the old registration continued and the old entity i.e. the predecessor had issued invoices and filed monthly ER-1 return for the factory with the department for F. Y. 2013-14. It was within the knowledge of the department that the dispatches and payment of duty for the F. Y. 2013-14 had been done by the Larsen & Toubro. The writ applicant herein also applied for the transfer of the CENVAT Credit balance on 30th June 2014 and the same was allowed vide the order-inoriginal dated 30th April 2015 - we fail to understand why the department did not raise any objection as early as in the month of April or May 2014 itself.
The writ applicants could be said to have had a bonafide belief and that since the predecessor has discharged the excise duty liability wherever applicable and complied with the central excise provisions like issuing the invoice and filing of returns during the period in dispute, the writ applicant itself is not required to do so in its own name. Also, in terms of the Clause 4.5(a), the excise registration in the name of the predecessor stood vested in name of the writ applicant automatically and without anything more. Hence, none of the ingredients of Section 11A(4) are applicable to the present case.
The Revenue received the duty on the very same dispatches covered under the Annexure A to the show cause notice at the time of initial clearance by the predecessor. Whether it be predecessor or successor, the excise duty liability is identified to both. There is no difference in the excise duty or interest in the present matter. There is no claim by anybody (including in particular by the predecessor) for any refund of duties already paid by the predecessor). Hence, the duty paid by predecessor ought to have been adjusted against the central excise duty, if any, payable by the writ applicant. Declining to do so, would lead to double taxation of the same transaction & clearly impermissible.
Demand of Excise Duty of ₹ 96,20,02,091/- - goods cleared availing the benefit of exemption vide Sl. No. 336 of Notification No.12/2012-CE dated 17th March 2012. as detailed in Annexure – B to the show cause notice - HELD THAT:- During the Financial year 2013–2014 also, the predecessor i.e., the Larsen & Toubro supplied goods against the very same ICB contracts by availing exemption and cleared the goods without payment of the central excise duty. This is evident from the Excise Invoice No. 1000003536 dated 4th March 2014 (Annexure-4 of Rejoinder affidavit) issued by the predecessor against the Contract Note No.300068 dated 31st December 2012. This invoice is part of the Annexure B to the present show cause notice. However, the department has now raised the present demand in respect of the goods supplied against the very same ICB contracts during the F. Y. 2013–2014 - thus the sole basis to demand the excise duty of ₹ 96,20,02,091/- is that the writ applicant should have issued the invoice instead of the predecessor i.e., Larsen & Toubro Ltd.
The present impugned notice is raising excise duty demand on the very same goods on which the duty has already been paid by the L&T (albeit at nil rate availing the exemption) and accepted by the department. This also is a clear case of double taxation in the sense that same goods are being subject to excise duty against two person which is impermissible - despite the appointed date being 1st April 2013, the supplies already affected by the predecessor L&T Ltd. before 1st April 2013, to 16th January 2014 remain unaffected.
Thus, without anything more, the registration granted by the central excise department to the predecessor Larsen & Toubro Limited could be said to have automatically stood vested as a registration in favour of the writ applicant. The formal application made on 1st April 2014 by the writ applicant for fresh registration could be said to be a compliance of the procedural requirement out of the abundant caution and was an unnecessary step. It is more in the nature of intimation of the department to formally correct the name of the writ applicant in its record. Hence, the objection that the writ applicant has not taken a registration in its name prior to 1st April 2014 is also invalid.
Appeal allowed - decided in favor of appellant.
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CST, VAT & Sales Tax
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2022 (4) TMI 67
Refund of unutilised ITC on input services - Applicability of decision in UNION OF INDIA & ORS. VERSUS VKC FOOTSTEPS INDIA PVT LTD. [2021 (9) TMI 626 - SUPREME COURT] or not - petitioner submits that the decision of Gujarat High Court in VKC Footsteps India Private Ltd., vs. Union of India has been overruled by accepting the views of a Division Bench of this Court in TVL. TRANSTONNELSTROY AFCONS JOINT VENTURE, TVL. ESSA GARMENTS PRIVATE LIMITED, INDIA DYEING MILLS (P) LIMITED, M/S. VEEKESY FOOTCARE (INDIA) PVT. LTD., KALEESUWARI REFINERY PVT LTD., VICTUR DYEINGS VERSUS UNION OF INDIA, THE GOODS AND SERVICES TAX COUNCIL, ASSISTANT COMMISSIONER ST AND OTHERS [2020 (9) TMI 931 - MADRAS HIGH COURT].
HELD THAT:- This Writ Petition is dismissed.
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2022 (4) TMI 66
Liability of interest u/s 42(3) of the Tamil Nadu Value Added Tax Act, 2006 - barred by time limitation or not - HELD THAT:- The assessment under the Tamil Nadu Value Added Tax Act, 2006 is based on the self assessment by an assessee by filing proper returns declaring the income. Assessment is thus driven by the returns filed by an assessee or a dealer. The assessment will be completed based on the information furnished by an assessee/dealer in the returns and the books of accounts that are produced during assessment. If an assessee fails to file correct returns and furnish required documents, the interest of the revenue cannot compromised. An assessee/dealer cannot take advantage of the lapses committed at a later point of time if subsequently it is found that the turn-over had escaped resulting in evasion of tax by such an assessee/dealer.
A reading of Sub Clause 3 to Section 42 of the Act also makes it clear that on any amount remaining unpaid after the date specified for its payment as referred to in subsection (1) or in the order permitting payment in instalments, the dealer or person shall pay, in addition to the amount due, interest at 2% per month of such amount for the entire period of default. The specified date for making payment of tax is in terms of Rule 7 of the Rules.
Thus, the challenge by the impugned Notices are without any merits. If there is a failure to tax in time, the dealers are required to pay interest as payment of Interest is consequential.
Writ petition dismissed.
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2022 (4) TMI 65
Levy of interest for the delayed payment of tax - deferral agreement entered between the petitioner and the 1st respondent on 28.06.1996 has not been cancelled till date - Section 24(3) of the Tamil Nadu General Sales Tax Act, 1959 - HELD THAT:- There is no doubt that there was a delay in repayment of the tax, which was deferred under the Deferral Scheme as per the Eligibility Certificate (EC) issued to the petitioner by SIPCOT on 12.04.1996. Clause 8 of the Eligibility Certificate clearly states that in case of violation of any of the conditions in the Eligibility Certificate and the connected Government Orders will result in cancellation of deferral entirely. Thus, the petitioner having violated the milestone prescribed in condition No.5.1 of the Eligibility Certificate (EC) issued by the SIPCOT is liable to pay interest from the date on which the actual tax would have been paid for the deferral.
However, the clarification issued by the Principal Secretary/Commissioner of Commercial Taxes, which has been extracted, indicates that the violation in deferral scheme can take place at two stages ie.,during the first period when a dealer violates any of the conditions prescribed in the Eligibility Certificate and during the second time, when the repayment of the tax was to be made by the petitioner, which has been treated as interest free -loan.
The Principal Secretary/Commissioner of Commercial Taxes, vide letter dated 28.02.2014 bearing Letter No.Drafting Cell-I/28518/2012, has clarified that if violation happens during the second tenure, interest will start from the date of violation or from the date of default in payment of dues. If this concession is to be extended, the petitioner will be liable to pay the interest from the actual date of each default. In other words, the petitioner will be liable to pay interest for each of the period as per Clause 5.1 of the Eligibility Certificate - the intention of the Government is evident that though the agreement and the eligibility criteria contemplate a complete recovery of the amount as if there is no deferral at all, the revenue would be satisfied if proportionate interest is paid from the date of each default.
The writ petitions are disposed off by remanding the matter to the 2nd respondent to apply the conditions provided in Paragraph No.4 of the circular/clarification of the Principal Secretary/Commissioner of Commercial Taxes, vide letter dated 28.02.2014 bearing Letter No.Drafting Cell-I/28518/2012 to the facts of the case and requantify the interest to be paid by the petitioner and collect the same from the petitioner - petition disposed off.
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Indian Laws
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2022 (4) TMI 64
Dishonor of Cheque - civil wrong - compounding of offences - section 138 of NI Act - HELD THAT:- Unquestionably, the proceedings initiated under the provisions of Act, 1881’ is not the proceeding of recovery of amount of loan, but the proceeding is for getting an amount involved in the cheque, for which complaint under Section 138 of Act, 1881 has been filed. The object of introducing Section 138 of ‘Act, 1881’ was to enhance the acceptability of cheques in the settlement of liabilities. The drawer of cheque is made liable to prosecution on dishonour of cheque with safeguards to prevent harassment of honest drawers. It is basically made to facilitate smooth functioning of business transactions. The nature of offence as comes under Section 138 of Act is primarily related to a civil wrong but the same is made compoundable.
The accused can make an application for compounding the offence. It is for the Court to see as to which stage application is made and what amount of compensation or fine is required to be paid to the complainants.
There are no justification for remitting the matter before the trial court when it can be done here also, especially when the petitioners have filed this petition under Section 482 of Cr.P.C asking this Court to exercise its inherent power - when a petition under Section 482 of Cr.P.C has been filed asking this Court to exercise the inherent power and petitioners are ready to pay the amount involved in the cheques, there are no reason for not accepting the said offer and quash the proceedings instead of remanding the same to the trial court.
Petition allowed.
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2022 (4) TMI 63
Dishonor of Cheque - insufficiency of funds - failure on the part of the respondent to pay the amount despite demand - existence of legal debt or liability against the respondent - preponderance of probabilities - Section 145 of the Negotiable Instrument Act - HELD THAT:- The presumption enshrined under Section 139 of the Negotiable Instrument Act is not absolute and is rather rebuttable presumption. The accused would be discharged of the presumption, the moment an accused raises reasonable suspicion with respect to the due execution of the cheque. It is not incumbent upon an accused to lead evidence and even subjecting the complainant to cross-examination on such aspects can be taken as sufficient grounds to shift the burden upon the complainant to establish that the debt in question was duly advanced to the drawer of the cheque - the burden of proof would thereafter shift upon the complainant to prove that the cheque had been executed in discharge of a pre-existing liability/legally enforceable debt. Existence of legally enforceable debt is a pre-requisite for issuance of a cheque.
It is a settled proposition of law that presumption under Section 139 of the Negotiable Instruments Act is a presumption of law, as distinguished from a presumption of fact, such a presumption is a rebuttable presumption and the drawer of the cheque may dispel the same.
The law is thus well settled that in order to rebut the statutory presumption, an accused is not expected to prove his defence beyond reasonable doubt as is expected of the complainant in a criminal trial. The accused may adduce direct evidence to prove that the instrument in question was not supported by consideration and that there was no debt or liability to be discharged by him. The Court need not insist in every case that the accused should disprove the nonexistence of consideration and debt by leading direct evidence because the existence of negative evidence is neither possible nor contemplated - To disprove the presumption, an accused should bring on record such facts and circumstances, upon consideration of which, the Court may either believe that the consideration and debt did not exist or that their non-existence was so probable that a prudent man, would under the circumstances of the case, act upon the plea that they did not exist.
It is evident from a perusal of the facts and the position in law noticed above that the respondent-accused had taken a specific plea that there was no transaction ever amongst the complainant and the accused and that the cheque in question had been handed over by her to Priya Kapoor towards a chit fund committee and the same was not in discharge of any liability. The same was rather in the nature of an investment. The said cheque has been misused by Priya Kapoor in connivance with the appellant - Financial capacity of a person to pay would not necessarily mean that the amount in question had been advanced to an accused. The obligation is upon the complainant to establish, when a question is raised about the ability and the fact of having advanced a loan, that not only did the complainant have the financial capacity to advance the amount claimed to have been advanced but also that such an amount was actually advanced. The complainant failed to establish the same by any cogent and convincing evidence. All the material facts already stand examined by the Chief Judicial Magistrate Tarn Taran. It cannot be said that the finding so recorded by the Chief Judicial Magistrate, Tarn Taran is perverse or suffers from legal infirmity or impropriety or that the conclusion so drawn by the Chief Judicial Magistrate, Tarn Taran is not tenable upon reading of such evidence.
The appeal is dismissed.
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2022 (4) TMI 62
Dishonor of Cheque - insufficient funds - acquittal of accused - compounding of offence under Section 147 of NI Act - HELD THAT:- Since the accused has no objection to release entire amount of compensation deposited by him with learned trial Court and further the complainant also has no objection for compounding the offence, in the event of release of entire amount of compensation in his favour, this court sees no impediment in accepting prayer made on behalf of the accused for compounding of offence under Section 147 of Act and in terms of guidelines laid down by Hon'ble Apex Court in DAMODAR S. PRABHU VERSUS SAYED BABALAL H. [2010 (5) TMI 380 - SUPREME COURT], wherein Hon'ble Apex Court has categorically held that court, while exercising power under Section 147 of the Act, can proceed to compound the offence even after recording of conviction by the courts below.
The present matter is ordered to be compounded and impugned judgments of conviction and order of sentence passed by the courts below are quashed and set-aside. Petitioner-accused is acquitted of the charges framed against him under Section 138 of the Act - petition disposed off.
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2022 (4) TMI 61
Dishonor of Cheque - vicarious liability - directors have resigned from the company - Impact of injunction order to initiate prosecution - cognizance of the offence under Section 138 of the Negotiable Instrument Act, 1881 - HELD THAT:- it is apparent that a clear averment is made in the complaint that at the time of commission of the offence they were in charge of and responsible to the company for the conduct of business to the company and as such they are vicariously liable for a criminal offence under Section 141 of the N.I. Act.
It is to be mentioned here that in paragraph No. 21 of the complaint petition it has been categorically stated that the petitioner along with accused No. 2 in collusion and in connivance with each other, hatched up a criminal conspiracy against the respondent for making wrongful personal gain and acting upon such conspiracy they used to take advance payment from the complaint in lieu of supply of sugar and by restoring to cheating and foul play, created the huge liability payable to the complainant during the last 4 years and misappropriated the amount of the complainant for their wrongful and personal gain and after repeated request and demand they have arrived at a settlement and agreed to return ₹ 10 crore to the complainant and issued two cheques amounting to ₹ 5 crore each in favour of the complainant against discharge of their liabilities. But, they played foul play with the complainant and both the cheques were dishonoured and they issued the cheques knowing fully well that said cheque will be dishonoured and being the Director of the accused No. 1 Company they have committed the offence of criminal breach of trust and cheating and are liable to be punished accordingly.
Section 41 of the Specific Relief Act 1963 lays down in what cases injunction cannot be granted. Under Clause (a) an injunction cannot be granted to restrain any person from prosecuting a judicial proceeding pending at the institution of the suit in which the injunction is sought, unless such restraint is necessary to prevent a multiplicity of proceedings. According to Clause (b), an injunction cannot be granted to restrain any person from instituting or prosecuting any proceeding in a Court not subordinate to that from which the injunction is sought. According to Clause (d) injunction cannot be granted to restrain any person from instituting or prosecuting any proceeding in a criminal matter.
Thus, it cannot be said that the Civil Suit instituted by the petitioners has stands in the way of filing the complaint by the respondent before the court of leaned CJM, Tinsukia, the process of which was started much prior to passing the impugned order on 03.01.2019, whereas the cheques were presented in the bank by the respondents on 21.11.2018 - there are no merit in the petition.
Petition dismissed.
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2022 (4) TMI 79
Dishonor of Cheque - insufficiency of funds - discharge of debt and liability or not - rebuttal of presumption - money not returned even after receipt of notice of complainant - Whether on 08.06.2015 while the cheque was presented to the Triprua Gramin Bank, Udaipur it was dishounoured by the bank due to insufficient fund in the account of the accused? - HELD THAT:- As per Section 146 of NI Act the Court shall, in respect of every proceeding under Chapter XVII, i.e., in respect of proceeding under Section 138 of NI Act as this case, on production of banks slip or memo having thereon the official mark denoting that the cheque has been dishonoured, presume the fact of dishonor of such cheque, unless and until such fact is disproved. In this case, Ext.3 the bank slip there are Bank officials signature and mark denoting the cheque in question was dishonoured due to insufficient of fund in the account of accused and accused failed to adduce any evidence to disprove such presumption. The accused also failed to bring any material during cross-examination to disprove the said presumption - the trial court found that the complainant is able to prove the fact that the cheque vide no.445340, dated 08.06.2014 was dishonoured due to insufficient fund in the account of accused and also due to drawers signature differs - decided in affirmative and in favour of the complainant.
Whether the accused even after receipt of the notice of the complainant, did not return the money and did not make arrangement of sufficient fund in his account to make the transaction good and to honour the cheque? - HELD THAT:- The trial court has observed that evidence of PW 1 corroborated by Ext.4, the demand notice dated 12.06.2015 Ext.5 the postal receipt dated 13.06.2015 and Ext, the AD card, From Ext. 4 the trial court found that the complaint issued demand notice to accused on 12.06.2015. From Ext5, the trial court found that the complainant through his advocate sent demand notice to accused by registered post with AD. From Ext.6 the trial court found accused received demand notice issued by complainant through his advocate - In cross-examination, the defence failed to discard the mentioned evidence. No suggestion is given in cross-examination by defence that accused did not receive any demand notice. No plea is taken and no suggestion is given as to the fact that accused paid money to complainant after receipt of demand notice. Therefore, considering all this aspect, it can be said that the accused even after receipt of the notice of the complaint, did not return the money and did not make arrangement of sufficient fund in his account to make the transaction good and to honour the cheque - issue decided in favor of complainant.
Whether the accused Sri Dipankar Majumder on 08.06.2015 issued the cheque No.445340 in for ₹ 3,00,000/- in favour of complainant in discharge of his debt and liability? - HELD THAT:- The trial court found that the complainant Shri Apu Ranjan Debnath has been able to prove the fact the accused Sri Dipankar Majumder issued the questioned cheque in favour of complainant for an amount of ₹ 3,00,000/- to indemnify his debts and liability - issue decided in affirmative and in favour of complainant but against the accused.
Thus, this court is of the view that the basic ingredients which are required for transaction is not disputed. It has been well established fact that there was good acquaintance between the petitioner and the respondent No.1 prior to the transaction took place. Neither there is any dispute relating to the issuing of demand notice by the petitioner to the respondent No.1 - the instant criminal revision liable to be allowed.
Revision allowed.
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2022 (4) TMI 60
Corruption - Human Rights violation - Seeking copies of all the seniority list in respect of LDCs for the period of 1991 till date - seeking copies of the proposal for promotion of LDCs placed before the DPC together with copies of the Minutes of the Meetings and copies of the promotion orders issued on the recommendations of the DPC from time to time - Right to Information Act, 2005 - HELD THAT:- Undoubtedly, the Appellant is an intelligence and security organization specified in Second Schedule of RTI Act and is exempt from the purview of RTI Act except when the information pertains to allegation of corruption and human rights violation. Consequently, the submission made by Mr.Amit Mahajan is correct that the Appellant cannot be called upon to disclose information under the provisions of RTI Act except when the information sought pertains to the allegations of corruption and human rights violation.
This Court is of the opinion that the expression ‘human rights’ cannot be given a narrow or pedantic meaning. It does not refer to the rights of the accused alone. Human rights have been used for a variety of purposes, from resisting torture and arbitrary incarceration to determining the end of hunger and of medial neglect. In fact, the human rights are both progressive and transformative.
Non-supply of the information/documents is a human rights violation as in the absence of the same, respondent no. 2 would not be able to agitate her right to promotion - HELD THAT:- In fact, RTI Act is a tool which facilitates the employees and officers in airing their grievances systematically. According to Statement of Objects and Reasons, the intent and purpose of RTI Act is to secure access to information in order to promote transparency and accountability in the working of every public authority. It is said that ‘Sunlight is the best disinfectant’ and RTI Act promotes the said concept. Consequently, both service and RTI laws ‘act like a safety valve in the society’ - In the opinion of this Court, the employees of a security establishment cannot be deprived of their fundamental and legal rights just because they work in an intelligence and security establishment. To hold so would amount to holding that those who serve in these organizations have no human rights.
This Court is also not in agreement with the submission of learned counsel for the Appellant that only such information that is furnished by the exempted organization to the Government pertaining to allegations of corruption and human rights violation is to be provided - non-supply of the information/documents is a human rights violation as in the absence of the same respondent No.2 would not be able to agitate her right to promotion.
Information pertaining to proposals for promotion of third parties cannot be provided to the respondent in view of Section 11 of the RTI Act - HELD THAT:- This Court is of the view that information pertaining to proposals for promotion of third parties cannot be provided to the respondent in view of Sections 8(1)(j) and 11 of the RTI Act.
This Court directs the Appellant to provide copies of all the seniority list in respect of LDCs for the period of 1991 till date as well as copies of the proposal for promotion of respondent (LDC) placed before the DPC together with copies of the Minutes of the Meetings and copy of the promotion/rejection order issued on the recommendations of DPC from time to time - Appeal disposed off.
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