TMI Tax Updates - e-Newsletter
April 7, 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:
Rejection of refund application - In the show-cause notice, all that has been stated is that few relevant documents have not been furnished and in the absence of those, it was not possible for the authority to process the application for the refund of the ITC. There is not a single allegation beyond this in the show-cause notice. Upon the documents being furnished by the writ-applicant and while going through those documents, if the authority had any doubts with respect to all such transactions, it was expected of the authority to once-again give an opportunity to the writ-applicant to explain all such alleged dubious transactions. The authority could not have straightway proceeded to pass the impugned order incorporating all the details and taking the writ-applicant – firm by a surprise. - HC
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GST:
Refund of amount including CGST, SGST and cess - non-grant of personal hearing to the petitioner - the order of rejection i.e., the impugned order has given no reasons as to why refund sought by the petitioner was neither admissible nor payable. Mr Jain is right that the only ground given was that the supplier of the petitioner was reported as “risky”, which, to our minds, does not convey much - Matter restored back - HC
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Income Tax:
Reopening of assessment u/s 147 - Whether no proper sanction/approval on the date of issuance of notice under Section 148 is concerned, provision under Section 151? - In view of specific provision under the Act of 1961, the document i.e. sanction/approval under Section 151 of the Act of 1961 issued by Competent Authority in case of petitioners will be deemed to be an authenticated document. In the 'Note' appended at the bottom of sanction/approval under Section 151 it is mentioned that “if digitally signed”, the date of signature may be taken as date of document. - HC
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Income Tax:
Revision u/s 263 by CIT - since the assessee failed to deduct tax, the A.O was required to make disallowance of interest u/s 40(a)(ia) of the Act on account of non-deduction of TDS. A.O also did not notice that STDR with SBI is not a long term specified asset within the meaning of sec. 54EC of the Act and allowed the claim of the assessee without going through the facts. Therefore, the order passed by the A.O is erroneous and prejudicial to the interest of revenue. - AT
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Income Tax:
Ad-hoc disallowance carried out in the assessment without specific findings vis-à-vis reasoning - onus to prove - Disallowance of deduction under Section 37(1) - Once the assessee is absolved in aforesaid terms, the onus is then shifted on revenue to prove negative litmus test, deprecating the GSP and explanation tendered by the assessee by clear findings on record. More precisely such exercise shall require before arriving at percentile / percentage to be applied for each of the expense (head of expenditure) that disqualifies for allowance as non-deductible and in the absence of any such logic conclusion based upon such exercise, the AO is precluded from making any disallowance merely on surmise & conjecture. - AT
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Income Tax:
Revision u/s 263 by CIT - When the case of the assessee was selected under CASS to examine the capital gains then the AO was required to examine the case meticulously on all the issues including the applicability of Section 50C for determining the correct income of the assessee and should pass a speaking order. Not only that the claim of income under business head cannot be made in ITR-2. Looking to all these apparent error in the order of the AO, it leaves the assessment open to the invocation of provision of Section 263. - Revision order sustained - AT
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Income Tax:
Addition u/s 68 - The CIT(A) has observed that the transactions was part of the turnover/sale, whereas the addition has been made under Section 68 of the Act without reducing the corresponding sales. Such an act of the Assessing Officer tantamount to double addition; one under the head 'turnover' and other under Section 68 of the Act. Such course of action is manifestly unsustainable and cannot be countenanced in law - CIT(A) rightly deleted the additions - AT
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Income Tax:
Addition u/s 68 - Bogus share application money - Though in the present case, the issue is not all share capital, even then we note that there is no provision of examination of source of source in section 68 for the impugned assessment year. Still as noted above, the assessee has discharged its onus. The adverse inference drawn by the AO regarding some of the parties not appearing before him or that the summons could not be served at the address or that before the issuance of cheque amounts were deposited are all without specific detail and are also in the realm of surmise and conjuncture. - AT
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Income Tax:
Allowability of Education cess paid - in the Finance Bill, 2022 introduced in the Parliament an amendment to Section 40 was proposed by insertion of Explanation 3 with retrospective effect from 01.04.2005 clarifying that tax "shall include any surcharge or cess by whatever name called". Since the legislature proposed an amendment to Section 40 with retrospective effect clarifying that cess is part of tax we are of the considered view that this issue has to be examined by the Assessing Officer in the light of the proposed amendment and also keeping in view various decisions on the issue. - AT
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Income Tax:
Claim of foreign tax credit (FTC) u/s 90 or u/s 91 - Applicability or Rule 128 with retrospective effect - In view of Singapore Taxation Laws the income in question is taxable in Singapore even if the assessee has no PE in Singapore, on account of the fact that commission of Performance Guarantee fees is deductible expenses to the entity paying in Singapore. - Since income is also taxable in India, the assessee is eligible for payment of such tax much less income has suffered tax in Singapore by virtue of provisions of Section 90(1) of the Act. Thus, we direct the Assessing Officer to allow tax credit - AT
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Customs:
Seeking release of seized goods - gold/ornaments - personal belongings - case of the petitioners is that they were employed in Singapore for more than two years - All the four petitioners have purchased gold bangles weighing identically. The reasons given are also almost similar. However, it is noticed that the consistent view of this Court in all the writ petitions cited by the learned counsel for the petitioners indicate that gold ornaments can be released subject to the payment 50% of the customs duty payable. It is not, however, clear whether the petitioners have returned back to Singapore in connection with the avocation in Singapore. This would require a detailed adjudication by the authorities under the Customs Act - HC
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Customs:
Export of restricted goods - sandalwood oil in the guise of jasmin sambac essential oil and cypriol essential oil - Nothing could be produced by the appellant to show that he was dealing with both the kinds of oils. Appellant was asked repeatedly to submit the requisite documents including the sale and purchase letters, the balance sheet and or any other such documents which may prove the mistake was bondafide but despite the demand. No such evidence was produced by the appellant before the Adjudicating Authority Below. - AT
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Indian Laws:
Dishonor of Cheque - framing of charges against the Directors - vicarious liability - only directors of company is made the accused, leaving the company - commission of offence by the company is an express condition precedent to attract the vicarious liability of others and the word “as well as the company” makes it clear when the company can be prosecuted, then only the persons mentioned in the other categories could be vicariously liable for the offence subject to the averments in the petition and proof thereof that the company is a juristic person. - HC
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IBC:
Seeking approval of Resolution Plan - whether the Appellant herein was unfairly dealt with regarding the settlement of its Claim, under the subject Resolution Plan? - The Hon’ble Supreme Court has time and again observed that it is the CoC which has to decide the percentage of haircut, the sub classes between ‘Operational Creditors’ and the manner in which the amount is to be distributed. - AT
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Service Tax:
Levy of Service Tax - maintenance security deposit - whether any service on this amount was provided or not - The respondent has not received any consideration for maintenance of the complexes and the maintenance deposit was only held by it in custody for subsequent transfer to the society. - Demand of service tax do not sustain, as there is no rendition of any service, for the said amount - AT
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Service Tax:
Classification of services - Business Support Services or not - business of exhibiting cinematographic films across India in theatres owned by it or taken on rent - Association of Persons or not - principal to principal basis or otherwise? - The distributor/producer had granted the exhibitor the non exclusive license to exploit the theatrical rights of a motion picture and each party was entitled to conduct its business in its absolute and sole discretion. - no service tax can be levied on the appellant under BSS. - AT
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VAT:
Amnesty Scheme - Composite order of penalty u/s 67 and section 44(10) of the Kerala VAT Act, 2003 - screenshot of the web portal evidencing the rejection of petitioner's application, alleging expiry of time - Petitioner cannot be faulted for the denial of access. The system declined access to the petitioner, contrary to the terms of the scheme. If the error in the system was averted, petitioner would have been eligible to claim the option under the Amnesty Scheme 2020. - HC
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VAT:
Exercise of Revisional Jurisdiction after seven years - the bar of limitation, to initiate revisional jurisdiction under Section 46 (1) of the VAT Act, 2005 within five years of the notice of order sought to be revised, clearly applied to the facts of the instant case. The Revisional Authority could not revise the order dated 10.10.2002 passed by the Appellate Authority by exercising revisional jurisdiction initiated after lapse of five years. - HC
Articles
Notifications
Circulars / Instructions / Orders
News
Case Laws:
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GST
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2022 (4) TMI 297
Rejection of refund application - application rejected on the ground of non-furnishing of required documents - documents in the form of the purchase order received from the foreign buyer, copy of insurance, proof of outside supplies and the bank statement of each account maintained in different banks were not furnished - Scope of SCN - HELD THAT:- The impugned order in the Form GSD RFD-06 deserves to be quashed and set aside only on one ground and i.e. the impugned order travels beyond the scope of the show-cause notice. The fact is noted that in the impugned order, the authority concerned has gone into minutest of the details of the transactions of the writ-applicant firm with the other companies. These transactions have been found to be doubtful. In such circumstances, the authority thought fit to reject the claim of the writ-applicant firm for the refund of the ITC. In the show-cause notice, all that has been stated is that few relevant documents have not been furnished and in the absence of those, it was not possible for the authority to process the application for the refund of the ITC. There is not a single allegation beyond this in the show-cause notice. Upon the documents being furnished by the writ-applicant and while going through those documents, if the authority had any doubts with respect to all such transactions, it was expected of the authority to once-again give an opportunity to the writ-applicant to explain all such alleged dubious transactions. The authority could not have straightway proceeded to pass the impugned order incorporating all the details and taking the writ-applicant firm by a surprise. The matter is remitted to the authority concerned. The authority concerned shall issue a fresh show-cause notice furnishing all the relevant details including the details with respect to the transactions, which the authority has found to be doubtful so as to enable the writ-applicant firm to file an appropriate reply and explain all such transactions - application allowed.
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2022 (4) TMI 296
Refund of amount including CGST, SGST and cess - non-grant of personal hearing to the petitioner - applicability of proviso to sub-rule 3 of Rule 92 of the Central Goods and Service Tax Rules, 2017 - HELD THAT:- The respondent has been unable to discharge the onus, as to whether the hearing in the matter was fixed on 29.12.2020 - Since the respondent was mandatorily required to grant reasonable opportunity to the petitioner before rejecting its application for refund, there has been, as contended by Mr Jain, a breach of the principles of natural justice. Furthermore, the order of rejection i.e., the impugned order has given no reasons as to why refund sought by the petitioner was neither admissible nor payable. Mr Jain is right that the only ground given was that the supplier of the petitioner was reported as risky , which, to our minds, does not convey much - Upon a show cause notice being issued by the respondent, which is, dated 22.12.2020, the petitioner filed its reply on 23.12.2020, with due alacrity, even though the timeframe given was 7 days, which was, concededly, less than what is required to be granted under sub-rule 3 of Rule 92. The respondent shall hear the petitioner in support of its refund application, before passing a fresh order with regard to the same - respondent will pass a speaking order and a copy of the same will be furnished to the petitioner - petition disposed off.
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2022 (4) TMI 247
Seeking grant of Bail - fake transactions by floating bogus firms - framing of charges, not done - non-proceeding with the trial - offences punishable under section 132 of the Haryana Goods and Services Tax Act, 2017 - HELD THAT:- In the facts and circumstances as enumerated, since the charges have also not yet been framed and the trial has not been proceeding in view of the orders passed by a Division Bench of this Court in TARUN BASSI VERSUS STATE OF PUNJAB ORS. [ 2020 (6) TMI 728 - PUNJAB AND HARYANA HIGH COURT ], this Court deems it fit to extend the concession of bail to the petitioner as the trial will take considerable time to conclude and his further incarceration would not serve any useful purpose. In the case of TARUN BASSI, the trial Court has been directed to adjourn the case beyond the date fixed before that Court. The petitioner be admitted to bail to the satisfaction of the trial Court/Duty Magistrate concerned - petition is allowed.
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Income Tax
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2022 (4) TMI 295
Reopening of assessment u/s 147 - Whether no proper sanction/approval on the date of issuance of notice under Section 148 is concerned, provision under Section 151? - HELD THAT:- Perusal of Section 282-A of the Act of 1961 would show that this provision is brought into by way of amendment for the purpose of authentication of notice and other documents. Sub-section (2) of Section 282-A of the Act of 1961 envisages that every notice or other document to be issued, served or given for the purpose of this Act by any Income Tax authority shall be deemed to be authenticated if name and office of designated income tax authority is printed/stamped or otherwise written thereon. In view of specific provision under the Act of 1961, the document i.e. sanction/approval under Section 151 of the Act of 1961 issued by Competent Authority in case of petitioners will be deemed to be an authenticated document. In the 'Note' appended at the bottom of sanction/approval under Section 151 it is mentioned that if digitally signed , the date of signature may be taken as date of document. Further submission of learned counsel for respondents in this regard is that approval is an inter-departmental correspondence; notices issued to petitioners are digitally signed by AO. Hence, in view of aforementioned provision of law as also submission of learned counsel for respondents based on the Notification No.4/2017 dated 03.04.2017 documents granting sanction/approval under Section 151 of the Act of 1961 cannot be said to be an unauthenticated document. We not find present to be a fit case to interfere with proceedings of re-assessment initiated by respondent Department against petitioners upon issuance of notice under Section 148.
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2022 (4) TMI 294
Violation of principles of natural justice - notices under sections 148, 142 (1) and 143 (3) r/w 147 not served to assessee - petitioner contends notice u/s 148 issued by the 1st respondent, the Income Tax Officer, Ward I 1), Thrissur, was not received by the petitioner - petitioner contends notices under sections 148, 142 (1) and 143 (3) r/w 147 were served on wrong e-mail id/email id of the previous auditors of the petitioner and not in the email id of the petitioner available in the Income Tax Portal - HELD THAT:- Updated jurisdictional details as well personal details in the Income Tax Web Portal are vital for the communication of notice, summons, requisition, order and other communication by the Department, particularly in case of system generated communications. While the respondents contend that the petitioner did not update the profile and thereby communications were sent through the e-mail id mentioned as default, Ext. P2 personal details in the Income Tax Portal shows primary and secondary e-mail ids and fact remains that the notices and assessment order were not served on these e-mail ids. It is not evident as to when the changes in the personal details were made in the web portal. Since the petitioner did not receive notices, the petitioner did not get opportunity to put forth its response to the same. Thus, there is violation of principles of natural justice while issuing Ext.P6 assessment order. Without venturing into the question as to who is to be faulted for the non-service of communications, in the facts and circumstances, particularly, the fact that the petitioner did not get opportunity to put forth its responses to the notices leading to the issuance of Ext.P6 assessment order, to meet the ends of justice, I set aside Ext.P6 order of assessment and direct the petitioner to submit its response to Ext.P3 and subsequent notices within two weeks from the date of receipt of a copy of this judgment and the assessing officer shall consider the response of the petitioner to the notices and pass fresh assessment order within one month thereafter, after hearing the petitioner.
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2022 (4) TMI 293
Validity u/s 144B - AO did not consider the reply filed by the assessee - HELD THAT:- AO remained under an erroneous impression that the writ applicant - assessee has not filed his reply to the show cause notice. There is a detailed reply filed by the writ applicant asseessee, which is on record. The aforesaid is suggestive of the fact that the Assessing Officer failed to consider the reply filed by the assessee and proceeded to pass the impugned assessment order. We are inclined to quash and set aside the impugned assessment order and remit the matter to the Assessing Officer for a fresh consideration. While considering the matter afresh, the Assessing Officer shall take into consideration the reply, which has been filed by the assessee. The assessee shall also be heard before passing the final assessment order. We clarify that we have even otherwise not expressed any opinion on merits of the case. We have thought fit to interfere only on the ground that the case is one of violation of the principles of natural justice.
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2022 (4) TMI 292
Penalty u/s 271(1)(c) - non compliance of notices u/s 142(1) - HELD THAT:- This provision can be invoked only for non compliance of notice u/s 115WD (2) or Section 115WE(2) or Section 142(1) or 143(2) or directions issued u/s 142(2A) . Therefore, other than the default committed by the assessee specified in the clause (b) of section 271(1) the non compliance to the other notices or directions would not attract the penalty u/s 271(1)(b) of the Act. Assessee was not aware about the assessment proceedings, so the assessment order passed by the Ld. AO u/s 144 on ex parte basis. All the notices were sent by the Income Tax Department at DAV Central School, Vaishali Nagar, Jaipur, where earlier assessee was in Job. But when the proceedings was undergone at that time assessee settled in Behror (Alwar) and the address of assessee is W/o Gaurishankar, Hamidpur Road, Behror, Alwar, Rajathan-301701 as per the Adhaar card also. We have perused the documentary evidence of assessee s Aadhar Card for the change of address and Affidavit of the assessee dated 13.10.2021 in which there was reasonable cause principle. Assessee was served with the notices issued by the AO which was not known by the assessee due to the change of addresses . Further considering the facts and circumstances of the case that the assessee had already furnished the current address in his letter dated 13.10.2021 , the reasons explained by the assessee were bonafide and reasonable before the CIT (A) and which was not taken in consideration We set aside the order passed by ld. CIT(A) and the penalty imposed u/s 271(1)(b) of the Act for non compliance of Section 142(1) is deleted. Appeal of assessee allowed.
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2022 (4) TMI 291
Revision u/s 263 by CIT - power of suo motu revision u/s 263(1) - As per CIT claim of the assessee of the short term capital gains was accepted by the AO and the AO had failed to conduct necessary field enquiry/third party verification to examine the genuineness of short term capital gain offered by the assessee - HELD THAT:- The power of suo motu revision u/s 263(1) is in the nature of supervisory jurisdiction and the same can be exercised only if the circumstances specified therein exist. Two circumstances must exist to enable the Commissioner to exercise power of revision u/s 263, namely (i) the order is erroneous (ii) by virtue of being erroneous, prejudice has been caused to the interests of the Revenue. We find that to examine the issues for which the case of the assessee was selected for limited scrutiny, notice u/s 143(2) and 142(1) of the Act was issued by AO along with questionnaire and the assessee was also asked to submit the various details contained therein. The paper book filed by the assessee reveals that in response to the notice issued by AO, assessee had made submissions on various dates -assessee had inter alia filed the computation of capital gains, details from whom the shares were purchased, their PAN numbers, copies of purchase bills, copies of bank account evidencing payment to sellers, contract note for sale of shares, PAN number and SEBI registration number of the broker, copy of the DMAT account, copy of notice for listing of shares by BSE ledger account in the books of sellers, bank account evidencing payment to sellers, contract note for sale of shares. It is also a fact that the purchasing of shares being off market was also informed to the AO and the complete details from whom they were purchased by the Assessee was also furnished to the AO AO had applied his mind to the information and details furnished by the assessee and after considering the information, he was of the view that the short term capital gains has been correctly computed by the assessee and accordingly accepted the claim, and, which according to us is a possible view. Before us, no material has been placed by the Revenue to demonstrate that the view taken by the AO was wholly unsustainable in law. Further, it is a settled law that the order of the AO cannot be branded as erroneous if the Commissioner is not satisfied with the conclusion arrived by the Assessing Officer. The order can be brought within the purview of an erroneous order only if it involves an error by deviating from law or upon erroneous application of the legal principle. We also find that PCIT has observed that the present case was a case where it was a clear case of lack of inquiry. It is a settled law that the power of revision can be exercised only where no inquiry as required under the law is done. It is not open to enquire in cases of inadequate inquiry. In the present case, as noted above, the AO had raised various queries and the same were also replied by the Assessee. In such a situation it cannot be said that there was lack of inquiry from the end of AO On the issue of the order of AO being cryptic and therefore the order being passed by non application of mind resulting into justification of the invocation of powers u/s 263 being justified, we are of the view that if a query is raised during the assessment proceedings and responded to by the assessee, the mere fact that it is not dealt with in the assessment order would not lead to a conclusion that no mind had been applied to it. As far as the invocation of Explanation 2 to Section 263 by PCIT in the present case is concerned, we are of the view that only in a very gross case of inadequacy in inquiry or where inquiry is per se mandated on the basis of record available before the AO and such inquiry was not conducted, the revisional power so conferred can be exercised to invalidate the action of AO. PCIT was not justified in invoking the provisions of Section 263 of the Act to set aside the assessment order passed by AO u/s 143(3) of the Act. We therefore set aside the order of PCIT. Thus the grounds of the assessee are allowed.
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2022 (4) TMI 290
Revision u/s 263 by CIT - case was selected for scrutiny and notice u/s 143(2) was issued to the assessee - Non deduction of TDS - disallowance of interest paid u/s 40(a)(ia) - Claim of deduction u/s 54EC - HELD THAT:- We find that since the assessee failed to deduct tax, the A.O was required to make disallowance of interest u/s 40(a)(ia) of the Act on account of non-deduction of TDS. A.O also did not notice that STDR with SBI is not a long term specified asset within the meaning of sec. 54EC of the Act and allowed the claim of the assessee without going through the facts. Therefore, the order passed by the A.O is erroneous and prejudicial to the interest of revenue. See SESA STARLITE LIMITED, ERSTWHILE SESA GOA LTD. [ 2020 (11) TMI 102 - BOMBAY HIGH COURT] and M/S BALLARPUR INDUSTRIES LIMITED [ 2017 (8) TMI 530 - BOMBAY HIGH COURT] We are of the view that the order passed by the ld. Pr. CITM u/s 263 of the Act is proper and valid and does not call for any interference at our hands. We therefore, hold that the ld. Pr. CIT was right in invoking his jurisdiction u/s 263 of the Act and directing the A.O to make disallowance of interest u/s 40(a)(ia) of the Act on account of non-deduction of TDS and also in directing the Assessing Officer to make disallowance of the claim of deduction u/s 54EC of the Act with respect to such STDR with SBI. - Decided against assessee.
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2022 (4) TMI 289
Revision u/s 263 - allowing the donation of given by the assessee to another charitable trust after denying the exemption under section 11 of the Income-tax Act and held that the order passed by the AO is erroneous insofar as prejudicial to the interest of the Revenue - HELD THAT:- It is clear from the finding of the AO that he held the assessee trust is not eligible for any exemption under section 11 and consequently taxed the entire income of the assessee trust by denying the benefit of exemption under section 11 in totality. AO added the entire surplus to the income of the assessee. Therefore, the issue of claim of donation is directly consequential to the decision taken by the Assessing Officer on the eligibility of exemption under section 11 of the Act. Thus, the claim of donation allowed by the AO while passing the assessment order is contradictory to the decision taken by the Assessing Officer. To that extent we do not find any error or illegality in the impugned order of the Commissioner of Income-tax (Exemption) as well as invoking the provisions of section 263 - allowability of the claim on account of donation to another charitable trust is also subjected to the outcome of issue of denial of the exemption under section 11 in totality which is pending before the CIT(A). Therefore, even if the Assessing officer has to consider this issue of allowability of the claim of donation given to another trust, the same has to be finally decided as per the outcome of the appeal filed by the assessee. Sofar as objection raised by the assessee that the Commissioner of Income-tax (Exemption) cannot invoke the provisions of section 263 when the issue is pending before the CIT(A), we find that when the Assessing Officer has allowed the claim of donation without even without even examining such claim despite denial of benefit of exemption under section 11 in totality then the said issue cannot be said to have been pending in the appeal before the CIT(A). Even otherwise, as per clause (c) of Explanation 1 of section 263(1), the Commissioner has the power to such matter which has not been considered and decided in the appeal. Accordingly, we do not find any merit or substance in this contention and the issue raised by the assessee. We modify the impugned order of the Commissioner of Income-tax (Exemption) to the extent of para 4 and remit the issue of allowability of the claim of donation to the Assessing Officer instead of doing the assessment de novo. Appeal of assessee partly allowed.
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2022 (4) TMI 288
Ad-hoc disallowance carried out in the assessment without specific findings vis- -vis reasoning - onus to prove - Disallowance of deduction under Section 37(1) - HELD THAT:- Neither of the lower tax authorities had pointed any such vouchers, the genuineness of the expenditure therein claimed to have been incurred by the assessee wholly and exclusively for the purpose of its business did not inspire any confidence, nor it was the case of the revenue that any part of the expenditure in question was either found to be bogus or fictitious, nor was found to have not been incurred by the assessee wholly and exclusively for the purpose of his business. Indeed, it showcased an exercise of running around the circle by both the lower tax authorities while dealing with the present case. We neither could come across any provision in the present Income Tax Statute, nor it has been brought to our notice by either parties to dispute, which subscribes vis- -vis authorises the tax authorities to arrive at this logic of subscribing ad-hoc disallowances. Evidently, there has been no clear findings as to number of vouchers requiring denial of allowances with the amount of expenditure and nature of defects therein or therewith, moreover department could not bring out any deprecative material on record to substantiate its conclusion as logical Allowability or disallowance of any individual head of expenditure debited to P L account and claimed in the return of income filed by the assessee, unless put to aforesaid litmus test as envisaged in section 37(1) should not be arrived at. Where any expenditure is debited to P L account and claimed in the return of income as deductible, then the primary onus is undoubtedly casted upon the claimant assessee to vindicate that, each transaction falling within a particular head of expenditure foretaste litmus test, duly supported by genuine and satisfactory proof [for short GSP ], accompanied by reasonable explanation. Consequently, during course of assessment or reassessment proceedings, the burden of proof of deductibility of expense in relation to queried transaction stands discharged upon the submission of GSP accompanied by relevant voucher and reasonable explanation when called for. Once the assessee is absolved in aforesaid terms, the onus is then shifted on revenue to prove negative litmus test, deprecating the GSP and explanation tendered by the assessee by clear findings on record. More precisely such exercise shall require before arriving at percentile / percentage to be applied for each of the expense (head of expenditure) that disqualifies for allowance as non-deductible and in the absence of any such logic conclusion based upon such exercise, the AO is precluded from making any disallowance merely on surmise conjecture. Consequently, in the instant case, the Ld AO blatantly ignored the period of operation while comparing the figures of present year with that of earlier year and moreover failed to place any deprecative material qua rationale negativizing litmus test, hence is precluded from making any disallowance on surmise or conjecture and this aforesaid view is fortified by the judgment of the Hon'ble High Court of Madras in V.C. Arunai Vadivelan [ 2021 (2) TMI 501 - MADRAS HIGH COURT] - Thus direct Ld AO to delete the ad-hoc disallowance in its entirety and allow the ground/s raised by assessee.
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2022 (4) TMI 287
Revision u/s 263 - Deduction u/s 80P Admissibility - HELD THAT:- We are of the view that u/s 80P(2)(d) of the Act interest received from co-operative bank are allowable deduction, that is, the deduction is available in respect of interest received from co-operative bank for that reliance can be placed on the order in the case of Bardoli Vibhag GramVikas Co.Op. Credit Society Ltd. [ 2018 (12) TMI 1912 - ITAT SURAT] We note that on the identical issue, Ld. PCIT had exercised his jurisdiction u/s 263 of the Act and the Co-ordinate Bench in the case of Bardoli Vibhag GramVikas Co.Op. Credit Society Ltd. (supra) has quashed the order passed by Ld. PCIT u/s 263 of the Act. We see no reason to take any other view than the view so taken in above mentioned case, therefore respectively following the binding precedent we quash the order passed by Ld. PCIT u/s 263 of the Act. - Decided in favour of assessee.
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2022 (4) TMI 286
Penalty u/s 271(1)(c) - non specification of charge - Non striking of irrelevant portion of notice - HELD THAT:- On perusal of the notices for the year under consideration, we find that relevant limb of either concealment of income or furnishing inaccurate particular of income has not been striken out in the notices issued for penalties by the Assessing Officer. - Decided in favour of assessee.
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2022 (4) TMI 285
Disallowing employee contribution of EPF and ESI u/s 36(1)(va) deposited before filing income tax return - HELD THAT:- There is no dispute that prior to the amendment brought by the Finance Bill, 2021 in Section 36(1)(va) as well as Section 43B of the Act, the issue of allowability of employees contribution towards PF and ESI and depositing the same in the government account before the due date of filing of return of income U/s 139(1) of the Act was settled and decided in favour of the assessee by various binding precedents of Hon ble High Courts including the Jurisdictional High Court. Whether the amendment brought to Section 36(1)(va) as well as 43B of the Act is applicable retrospective or from assessment year 2021-22 as it is specifically stated in the memorandum of Finance Bill, 2021 ? - As decided in M/S KOGTA FINANCIAL (INDIA) LTD. VERSUS CPC, BENGALURU. [ 2022 (1) TMI 250 - ITAT JAIPUR] issue was decided in favour of the assessee by holding that amendment in Section 36(1)(va) as well as Section 43B of the Act by way of inserting the explanation vide Finance Bill, 2021 are applicable only from A.Y. 2021-22 and subsequent assessment years and therefore, the said amendment is not applicable to the assessment year under consideration. - Decided in favour of assessee.
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2022 (4) TMI 284
Revision u/s 263 by CIT- case was selected under scrutiny through CASS and the assessment u/s 143(3) was completed - Correct head of income - business income or capital gain - HELD THAT:- Not only that there is no discussion about the issue of show cause notice in the assessment order and its submission of the assessee on that reply. Why this fact has not been discussed in the assessment order which itself suggests that the order is non-speaking order and this order is prejudicial to the interest of Revenue and looking to this basic error in the order, the assessment order passed is prejudicial order and the invoking of provision section 263 is correct and no interference in the order of ld. PCIT-1, Jaipur is required. AO had erred in accepting the total income of the assessee under the head Business Profession instead of income declared under the head Capitals Gains without mentioning anything in the assessment order. It is clear from the assessment order that the AO had not examined or verified the reason for which the case was selected under CASS and even the specific show cause notice is not mentioned in the assessment order. When the case of the assessee was selected under CASS to examine the capital gains then the AO was required to examine the case meticulously on all the issues including the applicability of Section 50C for determining the correct income of the assessee and should pass a speaking order. Not only that the claim of income under business head cannot be made in ITR-2. Looking to all these apparent error in the order of the AO, it leaves the assessment open to the invocation of provision of Section 263. Pr. CIT has rightly invoked the provisions of Section 263 of the Act in the case of the assessee - Appeal of assessee dismissed.
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2022 (4) TMI 283
Reopening of assessment u/s 147 - eligibility of reasons to believe - Addition u/s 68 - HELD THAT:- The instant case being covered by 1st proviso to Section 147 could be reopened only when twin conditions co-exist namely, (i) the Assessing Officer holds reasons to believe about the escapement of chargeable income (which is not found to be satisfied as deliberated in the preceding paragraph); (ii) the escapement is due to failure on the part of the assessee to disclose fully and truly all material facts. As a logical corollary, the burden is on the Assessing Officer to form a prima facie opinion that the conditions embedded in first proviso is also found scrupulously satisfied when the same is challenged. Allegation of the Assessing Officer on the failure of assessee is therefore a first step to enable to the Assessing Officer to invoke proviso. Noticeably , the reason recorded by the Assessing Officer does not even allege any such failure in express terms. It is not known what fact giving perception of accommodation entries has not been fully disclosed. It is further not known as to which fact has not been truly disclosed which the Assessee was found privy to. AO appears to have drawn adverse inference which is not intelligible in the absence of any basic inquiry on the information in the peculiar facts of the present case. The stringent conditions of 1st proviso to Section 147 is thus not satisfied. Hence seen from any angle, we do not see any error per se in the process of reasoning adopted by the CIT(A) to uphold the plea of the assessee towards lack of jurisdiction. Hence, Ground No. 1 of the appeal of Revenue is dismissed. Addition u/s 68 - CIT(A) has also found total lack of merit in the impugned additions. The CIT(A) has observed that the transactions with Natwest Trade Link were offered as part of the turnover/sale, whereas the addition has been made under Section 68 of the Act without reducing the corresponding sales. Such an act of the Assessing Officer tantamount to double addition; one under the head 'turnover' and other under Section 68 of the Act. Such course of action is manifestly unsustainable and cannot be countenanced in law. Without reiterating each observations of the CIT(A), we find sound rationale in the discourse adopted by the first appeal on merits in favour of the assessee by the CIT(A). We thus decline to interfere. Appeal of revenue dismissed.
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2022 (4) TMI 282
Revision u/s 263 by CIT - ad hoc disallowance of expenses claimed - HELD THAT:- We clearly observe that the AO has not rejected books of account of the assessee but has made disallowance of 10% of claim of expenses on account of failure of the assessee to produce details of bills and vouchers in support of such claim of expenses made in the profit and loss account. Therefore, the contention that no further addition can be made on the basis same account, being devoid of merits, is dismissed. So far as non-consideration of reply to notice u/s. 263 on careful and vigilant reading of order dated 30.3.2014 u/s. 263 of the Act, we are of the considered view that the CIT has given thoughtful consideration to the submission of the assessee and also noted that the Ld. A.R. has not given any specific explanation with respect to issues raised in the show cause letter issued for initiation of proceedings u/s. 263. In view of this, the legal contention of the assessee as placed in Ground cannot be held as allowable and the same are also dismissed being devoid of merits. We find it just and proper to direct the AO to consider the contention, Explanation and relevant documentary evidences during reassessment proceedings in pursuance to order u/s. 263 by the AO and also during first appellate proceedings by the CIT(A). The CIT(DR) did not object to the prayer of the assessee for giving above direction to the AO.
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2022 (4) TMI 281
Computation of capital gain on sale of land - cost of acquisition of shares in the hands of the sister - unwarranted computation of capital gains at an inflated figure - HELD THAT:- We find that assessee has not made any fresh claim before the learned Assessing Officer but merely asked to correct wrong punching of the data of the cost of acquisition in the computation of the total income. According to us, only the correct income of the assessee should have been charged to tax. CIT(A) also did not consider the above claim on merit despite submitting the copy of account of cost of acquisition of those shares from the books of the sister of the assessee. The assessee has submitted that correct cost of acquisition is ₹ 20,25,000/- as shown in that account. The ledger account is also reproduced by the learned CIT(A) in his order but he did not consider the same. We find that the order of the learned CIT(A) itself shows that there is a confirmation available from the sister of the assessee about the correct cost of acquisition of these shares - no further proof is required. In the result, we find that the claim of the assessee is correct and therefore, we restore the grounds of appeal before the learned AO with a direction to compute the capital gain on sale of share of M/s. Liberty Urvarak Ltd. by taking the cost of acquisition of those shares at ₹ 20,25,000/- instead of ₹ 2,02,500/-. Accordingly, the orders of the lower authorities are reversed and appeal of the assessee is allowed.
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2022 (4) TMI 280
Addition u/s 68 - Bogus share application money - outstanding sundry credit balance found in account books of the assessee - HELD THAT:- The fact that the amount involved was received in the previous year has not been disputed by the revenue. CIT(A) has given a finding that the said amount was received in AY 2010-11. He has found that the copies of ledger account and bank statement have been examined and the same duly fortified the fact that these share application money were received in the earlier period. Once, it is clear that share application money has not been received in the current assessment year and the same have been received in preceding assessment year, the addition of the same u/s. 68 in the current assessment year is not permissible. The Hon ble Bombay High court in the case of PCIT vs Real Value Realtors Pvt.Ltd. [ 2019 (11) TMI 590 - BOMBAY HIGH COURT ] has held that when the share application was money received in earlier assessment year, it could not be added in the impugned assessment year. Similarly, Hon ble Bombay High Court in the case of Ivan Singh [ 2020 (2) TMI 850 - BOMBAY HIGH COURT ] has held that provision of section 68 cannot be invoked for outstanding sundry credit balance found in account books of the assessee for FY 2006-07 to income of assessee for AY 2009-10.Once, it is clear that the amount involved has not been received during the year, the same cannot be added u/s. 68. Undisclosed unsecured loan - disallowance of interest on these loans - The facts of the case clearly indicate that AO has not made any investigation of his own. He solely relied upon the examination by the investigation wing in the Bhanwaralal Jain case. Further, ld.CIT(A) has correctly observed that by not giving assessee the statements for rebuttal and an opportunity to cross examine coupled with the retraction by the party, the evidentiary value of the said statement is diminished. The AO has not even issued notice u/s. 133(6) to the parties. Once, it is undisputed that no independent verification was done by the AO and the assessee has provided all the basic documents, the onus upon the assessee stands discharged. Hence, we do not find any infirmity in the order of ld.CIT(A). Hence, we uphold the same. On the same reasoning, the disallowance of interest on these loans have been deleted by ld.CIT(A). We also uphold the said order. Disallowance of interest for diversion for non-business purpose - This issue has been addressed by the ld.CIT(A) by observing that assessee has actually not debited the amount in profit and loss account. Rather the entire interest has been debited to work in progress. Hence, ld.CIT(A) has agreed with the AO that there is diversion of interest, but he has directed that since the interest has been debited to work in progress, the said amount be reduced from work in progress. Hence, ld.CIT(A) has correctly appreciated the issue. We do not find any infirmity in the same. Thus, the revenue s appeal being misplaced is dismissed on this account. Addition u/s. 68 for investment in joint venture - Assessee has duly discharged the onus and given all the necessary documents for the identity, genuineness and creditworthiness of the parties. Ld.CIT(A) has duly examined the same and found the same to be correct. AO s order is only based upon surmise and conjecture. He has not dislodge any of the documents filed by the assessee. The assessment year before us is AY 2012-13. The source of source provision has been inserted by amendment u/s.68 of the Act w.e.f. 01.04.2013 effective from AY 2013-14 onwards. That is also for share capital, even in that case Hon ble Bombay High court has held that it is the pre-amendment provision of section 68 in respect of which the assessee has to discharge its onus. Though in the present case, the issue is not all share capital, even then we note that there is no provision of examination of source of source in section 68 for the impugned assessment year. Still as noted above, the assessee has discharged its onus. The adverse inference drawn by the AO regarding some of the parties not appearing before him or that the summons could not be served at the address or that before the issuance of cheque amounts were deposited are all without specific detail and are also in the realm of surmise and conjuncture. Such issue has been duly adjudicated by Hon ble Bombay High court in the case of CIT vs. Orchid Industries [ 2017 (7) TMI 613 - BOMBAY HIGH COURT ] - Decided against revenue.
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2022 (4) TMI 279
Reopening of assessment u/s 147 - Reliance on information of investigation wing Mumbai - Bogus purchases - HELD THAT:- We find that the assessing officer validly assumed the jurisdiction for making re-opening under section 147 on the basis of information of investigation wing Mumbai. So far as other submissions of the ld AR for the assessee that there is no live link of the reasons recorded, we find that the Hon ble Jurisdictional High Court in Peass Industrial Engineers (P) Ltd clearly held that when assessing officer received information from the investigation wing that two well-known entry operators of the country provided bogus entries to various beneficiaries, and assessee was one of such beneficiary, assessing officer was justified. Hence, the ground No. 1 in assessee s appeal is dismissed. Estimation of income on bogus purchases - CIT(A) restricted to addition to the extent of 12.5% of the total purchase shown from three parties - We are of the view the disallowance restricted by Ld. CIT(A) is on higher side. The profit margin in the industry is 5% to 7%. It is settled law in case of disputed purchases shown from such hawala dealers on the profit element embedded to avoid the possibility of revenue leakage is to be disallowed. No doubt made the assessee has shown extremely low G.P yet the disallowance at rate of 12.5% is on higher side. This combination in similar cases, wherein the purchases are shown from Bhawarlal Jain, have restricted or enhanced the addition to the extent of 6% of impugned or disputed purchases. Therefore, taking the consistent the disallowance of purchases in the present case is also restricted to 6% of the disputed purchases. In the result, the grounds of appeal raised by assessee is partly allowed.
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2022 (4) TMI 278
Addition u/s 68 - unexplained share capital - HELD THAT:- Before the lowers authorities, assessee has filed copy of the income tax return, PAN numbers of the concerned persons and also filed bank statements. But learned AO doubted the creditworthiness of the concerned persons. In support of its contention, the assessee/persons have not filed all the relevant details before the lower authorities, meaning thereby, the assessee has not discharged his onus. In our considered opinion, the abovesaid details do not prove the creditworthiness of the persons those have paid premium. So, in view of the above, we set aside this matter back to the file of the AO to revisit the issue and assessee is directed to file relevant details of the persons those have paid premium to the extent that they had creditworthiness of such huge payment. The learned CIT(A) has not passed reasoned and detailed order. Therefore, the captioned appeal filed by the Revenue is allowed for statistical purposes.
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2022 (4) TMI 277
Understatement of construction receipts - Rejection of book results - AO rejected the books of account on the basis that the books of accounts maintained by the assessee do not reflect the correct profit and applied ratio of 29.42% towards land cost and 70.5% against construction cost and worked out the income which has been understated by the appellant in his return of income - main arguments of the assessee are that the land cost varies from block to block and therefore the same is variable - HELD THAT:- The cost of land gets allocated through registered sale deed and the same is transferred to the land owner. The assessee of the project has been consistently following this methodology of cost allocation where through registered deed the consideration of cost of flat is determined and later transferred to the land owner - assessee has submitted that in case the consideration for land cost to the extent of 15% is again taxed in the hands of the assessee, it would lead to double taxation. This is the last year of the project and the methodology of cost allocation has been accepted in the prior two years as well. We are in agreement with contention of the ld. counsel that once having accepted this methodology for the past years, the Department cannot reject the methodology in the third year of the project, following the principle of consistency. We also note that the assessee has brought to our knowledge that the cost of land is allocated through registered sale deed and is determined at the time of entering the agreement which is then later transferred in the hands of the land owner. We also note that once the cost of land has already been taxed to the land owner and offered to tax in its hands, the adjustment done by the ld. Assessing Officer by ignoring the registered deed and consistent method of allocation would lead to double taxation AO erred in law and fact in rejecting the books of accounts of the assessee which the Department has accepted in prior years on the same set of facts. However, we note from the orders of ld. Assessing Officer and the ld. CIT(A) that the appellant has not produced any evidence in support of its claim that whatever advances have been shown by the appellant in the balance sheet, the same have been transferred to landowners and offered in the income tax return of the respective land owners. Since, the ld. CIT(A) has made a specific noting that no details were furnished to prove that this income has been offered for taxation in the hands of the land owner, in the interests of justice, we restore the matter back to the file of A.O. on the limited point to verify whether income has been transferred to the land owners and has been offered to tax in their return of income. Appeal of the assessee is treated as allowed as directed.
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2022 (4) TMI 276
Reopening of assessment u/s 147 - assessee submitted that the AO failed to supply reasons recorded for reopening of the assessment to the assessee - HELD THAT:- From the record it is seen that the AO has not recorded in the assessment order that the reasons for reopening were supplied to the assessee. Since the reasons for reopening goes to the root of the case and the assessee has legal right to make objection against reopening of the assessment, this being a valuable legal right of the assessee, the statutory authority cannot ignore the same. Therefore, we hereby set aside the impugned assessment order and restore the assessment to the file of the AO to frame the assessment afresh after providing the reasons recorded for reopening of the assessment and disposing of the objection, if any. Needless to say, the Assessing Officer would provide adequate opportunity of hearing to the assessee. Grounds raised in this appeal are allowed for statistical purposes.
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2022 (4) TMI 275
Transfer Pricing Adjustment on account of intra-group services - HELD THAT:- As decided in own case [ 2021 (12) TMI 1324 - ITAT DEHRADUN] we direct the Assessing Officer to delete the addition made on account of transfer pricing adjustment on intra-group services provided by the assessee to its AE. Granting interest u/s. 244A - As submitted that necessary directions may be issued to the Assessing Officer to correctly compute the interest u/s. 244A - HELD THAT:- DR has no serious objection for such directions we direct the Assessing Officer to look into the plea of the assessee and decide the same in accordance with law. This ground is allowed for statistical purpose. Allowability of Education cess paid - HELD THAT:- We noticed that the Tribunal following the decision of the Hon'ble Rajasthan High Court in the case of Chambal Fertilizers and Chemicals Ltd. [ 2018 (10) TMI 589 - RAJASTHAN HIGH COURT] and the decision of Sesa Goa Ltd [ 2020 (3) TMI 347 - BOMBAY HIGH COURT] held that the education cess is an allowable deduction while computing the income from business and profession. However, in the Finance Bill, 2022 introduced in the Parliament an amendment to Section 40 was proposed by insertion of Explanation 3 with retrospective effect from 01.04.2005 clarifying that tax shall include any surcharge or cess by whatever name called . Since the legislature proposed an amendment to Section 40 with retrospective effect clarifying that cess is part of tax we are of the considered view that this issue has to be examined by the Assessing Officer in the light of the proposed amendment and also keeping in view various decisions on the issue. Thus, we restore this ground to the file of the Assessing Officer to decide afresh in accordance with law.
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2022 (4) TMI 274
Claim of foreign tax credit (FTC) u/s 90 or u/s 91 - Applicability or Rule 128 with retrospective effect - withholding tax deducted by the Singapore company on the payment of performance guarantee commission - Income taxable in India - whether tax credit can be allowed to the assessee company on the income offered to tax in India on the tax deducted by the Singapore Company from the Performance Guarantee Commission during the year under assessment? - main reason for denial of the credit by the Assessing Officer and the ld. CIT (Appeals) is that, Performance Guarantee Commission received by the assessee is a business profit in India and directly linked to the business of the appellant HELD THAT:- AO and Ld. CIT (A) have misconstrued the facts and have given a finding that the provision of performance guarantee to the joint venture partner is for the strategic purpose in the course of business activity and it is therefore attributable to the business activity. They have concluded that the performance guarantee given by the appellant should be attributable to business activity and income earned in respect of performance guarantee should be treated as business profit. The appellant is not in the business of providing bank guarantee or performance guarantee as the business of the appellant is providing offshore drilling services to Exploration and production companies in India. P L reflects that the revenue of ₹ 739.69 Crore out of total revenue of ₹ 752.13 Crore is from the core activity of Service in oil sector. Assessing Officer on these facts cannot change the characteristic of one time income by way of performance guarantee commission as business profit to bring it under Article 7 of the DTAA, and hold that in order to avail tax benefit the assessee must have a PE under Article 7. Here, in this case, Singapore based company, DDHPL had entered into a put/call option deed to buy 12 million shares of another entity M/s. DODL. The seller/vendor is also a Singapore based company M/s. DOSPL. The assessee company provided a performance guarantee in favour of the buyer company i.e. DDHPL to the above vendor company M/s. DOSPL. A sum of USD 15 million was the consideration for which the assessee was to get fee @ 2%. Now this payment of commission of performance guarantee has been treated as business activity of the assessee by the Revenue authorities and then a view has been taken that it is a business profit of the assessee earned from Singapore and received in Singapore and since assessee does not have a PE under Article 7 of Singapore India DTAA, therefore, the entire profit is to be taxed in India. It is neither the case of the Assessing Officer or the assessee that the amount received by the assessee is otherwise not taxable in India. Assessee has offered it for tax under the head other income and not offered as income from business operations . The entire character of the transaction has been changed by the Revenue authorities to treat it as business income, without even examining the terms of the Agreement by which assessee received the fee or the nature of business activity carried out by the assessee. In view of Singapore Taxation Laws the income in question is taxable in Singapore even if the assessee has no PE in Singapore, on account of the fact that commission of Performance Guarantee fees is deductible expenses to the entity paying in Singapore. Thus, we are unable to subscribe to the view taken by the Assessing Officer and the CIT (Appeals) and the same is rejected. Since income is also taxable in India, the assessee is eligible for payment of such tax much less income has suffered tax in Singapore by virtue of provisions of Section 90(1) of the Act. Thus, we direct the Assessing Officer to allow tax credit in both the assessment years 2014-15 and 2015-16 Rule 128 read with Section 295(2)(ha) no longer, still Assessing Officer was obliged to allow withheld tax deductible in Singapore which is offered to tax in the impugned assessment years subject to the compliance under the Rules which shall be made to claim above benefit of tax. Though this Rule has been 1.04.2017, but the foreign tax credit is available to the assessee showing foreign income. Thus, we direct the Assessing Officer to allow tax credit. Appeal of assessee allowed.
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2022 (4) TMI 273
Penalty u/s 271(1)(c) - Non specification of charge - not recording the satisfaction of concealment and/or filing of inaccurate particulars of income - HELD THAT:- It is observed from the assessment order that after discussing the claim made by the assessee and disallowing the same, the AO has recorded, Penalty proceedings u/s 271(1)(c) are being initiated separately for concealment /furnishing inaccurate particulars of its income. Since, in the present case, the satisfaction of concealment/furnishing of inaccurate particulars of income have been recorded in the body of the Assessment Order, it can be said that the specific limb invoked for levy of penalty have not been clearly mentioned. Further, vide the penalty order dated 08.09.2016 at para 5, the ITO has imposed penalty u/s 271(1)(c) of the Income Tax Act, 1961 for concealment of income/furnishing of inaccurate particulars of income . Since the AO has not been specified u/s 274 as to whether penalty is proposed for alleged concealment of income OR furnishing of inaccurate particulars of such income , the penalty levied is hereby obliterated. - Decided in favour of assessee.
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2022 (4) TMI 272
Revision u/s 263 by CIT - assessment order u/s 143 r.w.s 147 - HELD THAT:- As assessee stated that the consequential order pursuant to the impugned revision order u/s. 263 of the Act, has been passed on 30.09.2021 by the Assistant Commissioner of Income Tax, Mumbai 4(3)(1), wherein the returned income of the assessee was accepted as assessed. Accordingly, the captioned appeal, as being filed against the order u/s. 263, has become infructuous. Thus, assessee seeks permission to withdraw the captioned appeal. Ld. Departmental Representative for the Revenue did not express any objection in this regard. Accordingly, the prayer of the assessee for withdrawal is granted. Appeal of the assessee is dismissed as withdrawn.
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2022 (4) TMI 245
Validity of reopening of assessment u/s 147 - discrepancy between the reasons of the reopening and the conclusion in the order disposing of the objection - assessee was found to be the beneficiary of fictitious losses in equity/derivative trading - HELD THAT:- In the communication the reasons for reopening of the assessment against the petitioner in respect of the assessment year 2015-2016 provides that the information had been received through the insight portal of the department regarding fictitious losses in equity and derivative trading and that the assessee was found to be the beneficiary of fictitious losses in equity/derivative trading. In the third paragraph thereof it is stated that during the scrutiny assessment u/s 143(3) of the Act, the assessee did not bring the said fact before the department and it was found that the same was a new fact/ information, which was not covered in the earlier proceeding. It appears a discrepancy between the reasons of the reopening and the conclusion in the order disposing of the objection dated 16.03.2022 that the assessee had not provided complete details of the losses from derivative which the assessee had incurred from forex trading. The respondents to file their affidavit as to why the reassessment proceeding had been initiated under Section 148 of the Act. Affidavit be filed before the next returnable date.Till the returnable date further proceeding under Section 148 initiated against the petitioner by the communication dated 31.03.2021 be not carried further.
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Customs
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2022 (4) TMI 271
Seeking release of seized goods - gold/ornaments - case of the petitioners is that they were employed in Singapore for more than two years and therefore they were not required to pay customs duty on their personal belongings - HELD THAT:- Though the learned counsel for the petitioners submits that these petitioners are not connected and had travelled independently, there is too much of coincidence as all them had carried gold bangles and the reason given is marriage in their family, the weight of the gold bangles carried by each of the petitioners and the reasons given in the affidavit filed in support of the writ petitions are almost identical except in the case of the petitioner. Prima facie it appears that they were working in tandens. All the four petitioners have purchased gold bangles weighing identically. The reasons given are also almost similar. However, it is noticed that the consistent view of this Court in all the writ petitions cited by the learned counsel for the petitioners indicate that gold ornaments can be released subject to the payment 50% of the customs duty payable. It is not, however, clear whether the petitioners have returned back to Singapore in connection with the avocation in Singapore. This would require a detailed adjudication by the authorities under the Customs Act - these writ petitions are disposed off by directing the respective petitioners to deposit 50% of the Customs duty payable as has been ordered in all these cases. These writ petitions are disposed of by directing the respective petitioners to pay 50% of customs duty in cash and furnish 50% security in the form of bank guarantee for the balance 50% of the customs duty. On production of such bank guarantee and payment of duty, the seized gold bangles are directed to be released forthwith.
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2022 (4) TMI 270
Jurisdiction - power of DRI to issue SCN - proper officer or not - HELD THAT:- The CESTAT is directed to decide the appeals on merits, including the question of jurisdiction of Commissioner of Customs (Preventive)/Directorate of Revenue Intelligence (DRI) i.e., whether the Commissioner of Customs (Preventive)/DRI is competent to issue the show cause, albeit, without being influenced by the decision rendered by this Court in Mangli Impex Limited [ 2016 (5) TMI 225 - DELHI HIGH COURT ] ; the operation of which is stayed by the Supreme Court? Appeal disposed off.
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2022 (4) TMI 269
Time Limitation - Smuggling - Gold - retraction of statements - confiscation - penalty - whether SCN is issued beyond the permissible period or not - applicability of Section 123 of the Customs Act - Reasons to believe - penalties - Whether the seizure of 3 kgs gold from Shri Jitendra Kumar Mishra is legal in and proper? - HELD THAT:- It is found that the Appellants Shri Jitendra Kumar Mishra changed his version in his two statements. Initially he stated that the gold was handed over to him at Calcutta by two persons namely Baikunth Nath and Balram working for Jalan at Calcutta and in his later statement he submits that the gold was purchased from Jaipur on 14.02.2015 in the account of Shri Sonu Verma. Though the Department has come to the conclusion that the changed version of Shri Jitendra Kumar Mishra cannot be agreed as his movements, as per call records of Shri Jitendra Kumar Mishra or Sonu Verma do not indicate their movement from Allahabad to Jaipur or their persons in Jaipur during the material time and that during the material time they were around Calcutta only. To this extent, the submission by Shri Jitendra Kumar Mishra could he held to be inconsistent if not totally wrong as held by the Department. The Department could have made enquiries with the said Indian Art Gallery regarding the licit purchase of the impugned gold, if any. Not having done so, the Department has lost an opportunity tofalsify the claim of Shri Jitendra Kumar Mishra, in a comprehensive manner. However, for that reason it cannot be said that the burden of proof has been discharged entirely by either side. However, smuggling of the gold being very sensitive issue, in the absence of definitive discharge of the burden of proof by the claimant along with documentary evidence, the benefit of doubt should go to the Revenue, therefore, not withstanding the claims of the Appellants, we find that the impugned gold has been rendered liable for confiscation on the merits of the case. Whether the penalties imposed on different persons are justified in the facts and circumstances of the case? - HELD THAT:- The retracted statement, that too the only evidence, cannot be a basis for imposing penalty on various persons, as above. Inclusion of various names in the investigation and seeking imposition of penalty, without adducing sufficient evidence, would not help the cause of the case and in fact would go to dilute the case. The roles of different persons, other than Shri Jitendra Kumar Mishra, have not brought out clearly by the investigation so as to render them liable for penalty under Section 112(a) of the Customs Act, 1962. It is found that Shri Jitendra Kumar Sharma has rendered himself liable for penalty as he has rendered the seized Gold Liable for confiscation. Whether the proceedings should stand scrutiny of law in view of the direction given by Hon ble High Court of Calcutta in THE UNION OF INDIA, THROUGH COMMISSIONER OF CUSTOMS, (PREVENTIVE) VERSUS JITENDRA KUMAR MISHRA [ 2018 (1) TMI 1679 - CALCUTTA HIGH COURT] in the impugned matter? - Appellants submits that Commissioner has flouted judicial discipline and the adjudication order is not maintainable due to the facts that no show cause notice was issued on the last date of limitation under Section 110 of Customs Act, 1962 - HELD THAT:- Hon ble High Court at Calcutta have not accepted the stand of the Department that under the statute, there was no necessity of giving opportunity of hearing on further matter notice to the person from whom goods have been seized for extension of time for issue of show cause notice. Notice was given in this case. The same was a superfluous exercise and not a legal necessity accepting the reliance placed by the Counsel for Shri Jitendra Kumar Mishra. The show cause notice issued by the Department to extend the time period under Section 110 ibid has been set aside by the Hon ble High Court at Calcutta. Under the circumstances, it is found that the show cause notice issued to extend the time period under Section 110 of the Customs Act, 1962 is nonest. Therefore, the show cause notice dated 11.02.2016 proposing confiscation of gold and imposition of penalties is to be held to have been issued beyond the limitation in terms of Section 112 the Customs Act, 1962 and, therefore, is liable to be set aside. There were reasons to believe and a reasonable belief that the impugned gold is liable for confiscation. However, following the order of Hon ble High Court, Calcutta that the show cause notice is time barred in terms of Section 110 of the Customs Act, 1962. There are no evidence is put forth to show any appeal has been filed against the order of the Hon ble High Court and if so, whether any stay is granted. Under the circumstances, following the principles of Judicial Discipline, we hold that the goods are required to be returned in terms of Section 110 of the Customs Act, 1962. Levy of penalty on Shri Jitendra Kumar Mishra u/s 112(a) of the Customs Act, 1962 - HELD THAT:- The imposition of penalty can be sustained despite the seizure being vacated. As Shri Jitendra Kumar Mishra, having rendered impugned goods liable for confiscation under Section 111 of the Customs Act, 1962, has rendered himself liable for penalty under Section 112 ibid - it is found that under the facts and circumstances of the case, penalty can be reduced as it is found that the penalty should be commensurate with the role played by the individual and the pecuniary gain if any that would of have accrued to the individual as a result of such acts of omission and commission in rendering the goods liable to confiscation - Penalty imposed on Shri Jitendra Kumar Sharma is reduced to 2,00,000/-. Appeal allowed in part.
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2022 (4) TMI 268
Export of restricted goods - sandalwood oil in the guise of jasmin sambac essential oil and cypriol essential oil - demand passed solely relying upon acknowledgment of the appellant about the Chemical Examiners report and the acknowledgement to the effect that the essential oil which was exported was actually the sandalwood oil instead of being Jasmine Sambac essential oil as was declared by appellant - Confiscation - redemption fine - penalty u/s 114 of CA - HELD THAT:- Though the learned Counsel has emphasised that the said wrong mention was absolutely inadvertent but perusal of entire record shows no single document to reveal any such circumstances due to which the said inadvertent mistake would have occurred by the appellant. In absence thereof, acknowledgement is nothing but the admission of noticed contravention of the provisions of Customs Act, 1962. Admissions are the best evidence and in terms of Section 52 of Indian Evidence Act admissions need no further proof. The Chemical examiner report of 05.12.2018 though has been impressed upon by learned Counsel for the appellant but the said report also reveals that the essential oil seized from the appellant was sandalwood oil instead of Jasmine Sambac oil which was mentioned on export consignment. Department has also investigated that the earlier also the appellant had been exporting the essential oil in the name of Jasmine Sambac essential oil and it also has been availing the duty draw back. Nothing could be produced by the appellant to show that he was dealing with both the kinds of oils. Appellant was asked repeatedly to submit the requisite documents including the sale and purchase letters, the balance sheet and or any other such documents which may prove the mistake was bondafide but despite the demand. No such evidence was produced by the appellant before the Adjudicating Authority Below. Appeal stands dismissed.
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Corporate Laws
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2022 (4) TMI 267
Seeking inspection of the records of the company with the help of an Auditor or any person, to video graph the entire proceedings and appoint an observer to the said meeting - HELD THAT:- This Tribunal, keeping in view the facts and circumstances of the attendant case on hand, specifically in the light of the fact that the main Application is still pending before the NCLT and only a few relief(s) have been addressed to and the AGM has been adjourned sine die, read together with the fact that the first Respondent who is an Ex-Managing Director, who resigned way back in 2016 is now seeking inspection of records of the subsequent period also in her capacity as a shareholder, the Impugned Order is set aside, and the matter remitted back to NCLT to decide the matter giving due opportunity to all parties to complete their pleadings, to the Appellants herein to file their objections and dispose of the case as expeditiously as practicable, but not later than three months from the date of this Order. Appeal allowed by way of remand.
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2022 (4) TMI 266
Seeking restoration of name of the Appellant Company in the Register of Companies, New Delhi - Section 252(3) of the Companies Act, 2013 - sufficient notice under Section 248(1(c) of the Act was not sent - proper opportunity to hear the case not provided - violation of principles of natural justice - HELD THAT:- Section 248 of the Act deals with the powers of Registrar to remove name of the company from register of companies. Section 248(1)(e) of the Act provides that a notice shall be sent to the Company and all the Directors of the Company, of his intention to remove the name of the company from the register of companies and requesting them to send their representations along with copies of the relevant documents, if any, within a period of thirty days of notice. The importance of the date cannot be undermined keeping in view that Section 248(1)(c) provides that a company should be carrying on business or operation for two immediately preceding financial years. On a query from the Bench to the Learned Counsel appearing for the First Respondent/RoC as to which Mode of Despatch the aforenoted Notice was sent, it was informed to the Bench that the Notice was sent by ordinary process. Hence there is no Proof of Service which could be ascertained. However, a general notice with respect to all the names which have been struck off from the RoC has been said to be listed on the website of Ministry of Corporate Affairs (MCA) - Having regard to the fact that the publication in the newspaper only refers to the link of the website of the MCA but it does not state anywhere the names of the companies, which are only reflected/specified in the website, and admittedly a general notice relating to thousands of companies, this Tribunal is of the considered view that notice in the proper form which is dated and sent by a Mode of Despatch establishing a Proof of Service would be considered sufficient notice , keeping in view the facts and circumstances of the attendant case on hand. A perusal of the Notices given for conducting AGM Meeting are 2.9.2015, 2.9.216, both which fall within the relevant period of two years prior to the 30.06.2017. This Tribunal is of the earnest view that there is reasonable cause to believe that the Company is carrying on business for the relevant period of two years keeping in view the Income Tax Returns filed between 2015-2020. The MOU, LOI entered into by the Appellant Company, notices of AGM which also fall within the relevant period, this Tribunal is of the considered opinion that it is otherwise just that the name of the company be restored. It is directed that the name of the Appellant Company be restored in the Register of Companies - application allowed.
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2022 (4) TMI 265
Violation of principles of natural justice - observations made in the Impugned Order against the Appellant Company, without putting the Appellant to Notice - revival of name of appellant, which is the third party to the proceedings - HELD THAT:- This is not deemed to be a fit case to delve deep into the merits of the matter regarding terms and conditions of the JDA, the possession of the land or otherwise but simply decide as to whether the observations made by the NCLT regarding the submissions made by the Applicant be expunged. The fact remains that there was a JDA between the parties and there are no force in the contention of the Appellant that these statements may cause harm, if used in any collateral proceedings. Also, RoC did not prefer any Appeal and that the Appellant Counsel has categorically stated that they do not have any objection to the name of the Ahuja Company being restored in the Register of Companies. There is no rebuttal by the Respondent with respect to the contention of the Appellant that they were not put to Notice or heard on that particular date as the matter was taken up allowing the early hearing Application. This Appeal by the Appellant Company is disposed of only with respect to modification of the Order Impugned expunging that It is submitted that an amount of 5 crores has been paid to respondent no. 6 and the land which is in possession of the company is to be developed and the flats are to be delivered to the home buyers. The Registry is directed to upload the Judgement on the website of this Tribunal and send a copy of this Judgement to NCLT (National Company Law Tribunal, New Delhi) forthwith.
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2022 (4) TMI 260
Jurisdiction - power of this Bench to appoint an independent Commissioner - appointment with the fact finding mission and to submit a report so that the information which is essentially required for the just adjudication of the list between the parties, is made available - HELD THAT:- Without delving deep into the merits of the matter, this Tribunal is of the considered opinion that the matter be remitted to NCLT for hearing and deciding the case on merits. Having regard to the facts and circumstances of the attendant case on hand, this Tribunal is of the earnest view that the contents of the report not be quoted or used, till all the pleadings are completed and due opportunity is given to the Appellant for filing their objections. Needless to add, NCLT may, if it feels fit, decide to place reliance on the report, but not before the pleadings are completed and due opportunity is given to the Appellants herein. The NCLT shall hear the matter afresh giving due opportunity to the second Respondent who sought a few days time to file a Detailed Reply before the NCLT - Appeal disposed off.
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Insolvency & Bankruptcy
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2022 (4) TMI 264
Challenge to approved Resolution Plan - applicability of Section 31 of I B Code - HELD THAT:- Considering the facts that the Resolution Plan was approved and also been executed, no merits are found in the Impugned Order - the Appeal is hereby dismissed.
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2022 (4) TMI 263
Maintainability of claim against Corporate Debtor or not - rejection of the claim by the Liquidator - Section 61 of the Insolvency and Bankruptcy Code, 2016 - HELD THAT:- It is an admitted fact that the Appellant did not file any claim during the Corporate Insolvency Resolution Process only after receipt of S3G demand notice, the Appellant filed its claim form (Form C ) as the Operational Creditor of the Respondent. The Insolvency and Bankruptcy Code stipulates a time bound Resolution Process. Keeping in view the ratio of the Judgment passed by Hon ble Supreme Court in the case of Ebix Singapore (P) Ltd. Vs. Educomp Solutions Ltd. (CoC), [ 2021 (9) TMI 672 - SUPREME COURT ], it can be held that in the absence of filing of the claim within the stipulated time, the Appellant now cannot seek realisation of the claim amounts at this belated stage. Appeal dismissed.
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2022 (4) TMI 262
Seeking Liquidation of Corporate Debtor - Section 33 of the Insolvency and Bankruptcy Code, 2016 - HELD THAT:- The Respondent No. 2 Company has availed three term loans facilities from Respondent No. 1 for an amount of ₹ 10 Crores each aggregating to ₹ 80 Crores. Accordingly, the Respondent No. 2 executed security documents for the grant of the loan amount by hypothecating the programme rights and pledging of its shares - the account of the Respondent No. 2 was declared NPA on 28.09.2017 when total outstanding in all loan accounts was a sum of ₹ 25.03 Crores. On 30.10.2018, the Respondent No. 1 Bank filed Petition under Section 7 of the IBC which was duly replied by the Respondent No. 2 Company and thereafter, the Ld. Adjudicating Authority vide its order dated 20.12.2019 admitted the Application filed by the Respondent No. 1 under Section 7 of the IBC and appointed Mr. Vijendra Kumar Jain as Interim Resolution Professional - It is also an admitted fact that during pendency of the Appeal behest of the Appellant that he wants to settle the matter with the Respondent No. 1 and further case was adjourned several times but no settlement arrived between the parties nor resolved the dispute. It is also an admitted fact that the 21st meeting of CoC was held at Mumbai on 24.08.2021, since the only Resolution Plan put forth by one M/s Pen India Ltd. was rejected by the CoC with 100% votes, a resolution was passed for liquidation of the Corporate Debtor and the CoC advised the Resolution Professional to circulate the resolution of approval of Liquidation through E-voting and accordingly, e-voting took place on 27.08.2021 and the Resolution was approved with 79.75% voting in favour of liquidation. Thus, it is directed that the Corporate Debtor be ordered and directed to go under liquidation as per Section 33(2) of the Insolvency and Bankruptcy Code, 2016 - application allowed.
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2022 (4) TMI 261
Seeking approval of Resolution Plan - Section 31 of the Code r/w Regulation 39 of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 - requirements of Section 30(2) of the Code fulfilled or not - whether the Appellant herein was unfairly dealt with regarding the settlement of its Claim, under the subject Resolution Plan? - HELD THAT:- The Appellant had claimed an amount of ₹ 1,24,37,16,022/- as an Operational Creditor on the ground that some instalments together with penal interest were due under the Higher Purchase Agreement and also under the head of FAR Charges. Therefore, the belated stand of the Appellant that the property belongs to them and therefore they should be included in the same category as the Claims of Financial Creditor is untenable - it is also to be noted that the Resolution Plan was approved way back two years ago on 17/03/2020 with a majority of 96.07% votes in the 12th CoC Meeting. The contention of the Learned Counsel for the Appellant is that the Resolution Plan was never communicated to the Appellant herein and that it was sent to the wrong email Id. - HELD THAT:- A brief perusal of the Form B reproduced in para 8 shows that email Id is upavp_emogzb@rediffmail.com. It is also seen from the record that the emails were sent to the Appellant on 26/12/2019, 15/01/2020, 20/01/2020, 22/01/2020, 21/02/2020, 04/03/2020 and 12/03/2020. On 11/08/2020, the Resolution Professional informed the Appellant about the approval of the Resolution Plan vide Order dated 04/08/2020. In a catena of Judgments, the Hon ble Supreme Court has laid down that the commercial wisdom of the CoC is non-justiciable unless it does not comply with the provisions of Section 30(2) of the Code - reliance can be placed in the case of K Sashidhar Vs. Indian Overseas Bank Ors. [ 2019 (2) TMI 1043 - SUPREME COURT ] - The Hon ble Supreme Court in the aforenoted Judgement has observed that commercial decision of the CoC is non-justiciable unless it is in violation of any law for the time being in force. The Adjudicating Authority has a very limited jurisdiction and should only examine whether the Resolution Plan meets the essential requirements as provided for under Section 30(2) of the Code. The Hon ble Supreme Court in Ghanashyam Mishra and Sons Private Limited Vs. Edelweiss Asset Reconstruction Company Limited Through the Director Ors. , [2021 (4) TMI 613 - SUPREME COURT], dealing with the issue of commercial wisdom CoC and the jurisdiction of the Tribunal to interfere in the same has observed that In the present case, Subsequent to the RP admitting the Claim of ₹ 1,23,07,52,746/-, the said Claim was included in the information memorandum and the Successful Resolution Applicant proposed an amount of ₹ 12,30,75,275/- which is 10% of the admitted Claim towards satisfaction of the Appellant dues, even though the Liquidation value due to the Appellant under Section 30(2)(b) of the Code was NIL - The Hon ble Supreme Court has time and again observed that it is the CoC which has to decide the percentage of haircut, the sub classes between Operational Creditors and the manner in which the amount is to be distributed. Thus, this Tribunal is of the considered view that there is no illegality or infirmity in the approval of the Resolution Plan by the Adjudicating Authority - appeal dismissed.
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2022 (4) TMI 259
Seeking direction to the Adjudicating Authority to adjudicate and dispose of the Applications - ex-parte order - advance copy of application not served to the appellant - HELD THAT:- The main plea of the Respondent No.1 in I.A No. 368 of 2020 is that if the DRT decides the counter claim of the Corporate Debtor no distribution be permitted in the liquidation process. The pendency of the counter claim of the Corporate Debtor before the DRT cannot be ground to stay the distribution to the Financial Creditors as per the claim admitted by the Liquidator. Proceedings under the IBC are time bound proceedings which has an overriding effect by virtue of Section 238. In the facts of the present case, I.A No. 555 of 2020 filed by the Corporate Debtor for recall of the ex parte order ought to have been allowed by the Adjudicating Authority. The Adjudicating Authority has not decided the said I.A for more than period of one year and five months. In spite of two orders passed by this Tribunal and judgment of the Hon ble Supreme Court dated 26.11.2021 and 14.02.2022, we see no justification in continuing the interim order dated 09.09.2020 staying the distribution to the Financial Creditor in the liquidation process. By order of the Adjudicating Authority, the claim of the Financial Creditor to receive the disbursement has adversely affected and they are not able to receive the disbursement as per their claim. Regulation 43 amply take care of any excess amount to any stakeholders. We may also notice that in the Application I.A. No. 368 of 2020, the Respondent No.1 has challenged the acceptance of the claim of the Appellant by the Liquidator. On the other hand, the Respondent No.1 has refuted the locus of the Appellant to challenge the decision of the Liquidator accepting the claim. It has been submitted before us that hearing in Application I.A. No. 368 of 2020 has already been commenced before the Adjudicating Authority in which next date is 07.04.2022 - in this Appeal the only Application I.A No. 555 of 2020 needs to be finally decided by modifying interim order dated 09.09.2020. Thus, the order dated 09.09.2020 is modified to the above extent and the interim order is recalled/ vacated. It shall be open for the Adjudicating Authority to proceed with the Application I.A No. 368 of 2020 and pass final order on the said Application - Application allowed.
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2022 (4) TMI 258
Approval of the Scheme of Amalgamation - main contention is that five Schemes were filed at the same time before different coordinate Benches of Hon ble NCLT New Delhi and due approval of Scheme I vide order dated 12.12.2019 into the Transferee Company/the Seventh Respondent herein existing and pending during the pendency of Scheme III in CAA-131(ND)/2019 no longer existed after the due approval of Scheme I of the Transferor Company into the Seventh Respondent - Section 230-232 of the Companies Act, 2013 - HELD THAT:- Keeping in view that the Appellant has given their unconditional approval for Scheme 1 and 3; that all the stakeholders have approved and given consent; that the rights of the stakeholders are not affected and the provisions under Section 230 of the Act is met, this Tribunal is of the considered view that the ratio of the Hon ble Supreme Court in MIHEER H. MAFATLAL VERSUS MAFATLAL INDUSTRIES LTD. [ 1996 (9) TMI 488 - SUPREME COURT] is applicable to this case and hence, there is no illegality or infirmity in the order of the Learned NCLT - It was held in the case of MIHEER H. MAFATLAL that if the stakeholders have approved the valuation after applying their commercial wisdom, the same need not be interfered with and has laid down the scope and ambit of the jurisdiction of the Company Court. Appeal dismissed.
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2022 (4) TMI 257
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - existence of debt and dispute or not - territorial jurisdiction - time limitation - HELD THAT:- As per Form V, Part IV, the Corporate Debtor is liable to pay an outstanding sum of ₹ 40,77,417/- along with interest 12% p.a. The date of default is 07.01.2017 as per Part IV but the acknowledgement by the corporate debtor in confirmation of account was made on 01.04.2019, hence the debt is not time barred and the application is filed within the period of limitation. The Applicant has filed an affidavit under section 9(3)(b) dated 28.01.2020 affirming that no notice of dispute has been given by the corporate debtor relating to dispute of the unpaid operational debt - The registered office of corporate debtor is situated in Delhi and therefore this Tribunal has jurisdiction to entertain and try this application. In the given facts and circumstances, the present application is complete and the operational creditor is entitled to claim its dues, which remain uncontroverted by the Corporate Debtor, establishing the default in payment of the operational debt beyond doubt. The present application is admitted, in terms of section 9 (5) of IBC, 2016. Application admitted - moratorium declared.
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2022 (4) TMI 244
Seeking expunging of name from the arrays of Respondents - HELD THAT:- Further, from perusal of the record, it appears that an application was filed by the Appellant No. 1 bearing I.A. No. 2884 of 2021, wherein, a prayer was made on behalf of Appellant No. 1 that during pendency of this Appeal, Respondent No. 6- Mr. Sushil Kumar Gupta passed away on 29.10.2021. So, the name may be expunged from the arrays of Respondents. Respondent No. 7 is subsidiary company of Respondent No. 4 - Nobody appears on behalf of the Respondent No. 8. Judgement Reserved .
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Service Tax
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2022 (4) TMI 256
Classification of services - mining services or not - providing contract to the respondent for loading and transfer of coal from one place to another in the licensed area of its mines - Non-payment of service tax - HELD THAT:- The taxable service of mining defined under section 65 (105) (zzzy) of the Act means any service provided or to be provided to any person by any other person, in relation to mining of mineral, oil or gas. The Commissioner has placed reliance upon the definition of mines under the Mines Act, 1952 and has observed that all processing including handling and movement of coal from one point of mines to dispatch point of mines are activities carried out in relation to mining of minerals. This issue was examined by the Supreme Court in SINGH TRANSPORTERS VERSUS COMMISSIONER OF CENTRAL EXCISE, RAIPUR [ 2012 (7) TMI 566 - CESTAT, NEW DELHI] . The issue involved was whether coal transported from pitheads of the mines to the railway sidings would fall within the taxable service defined under section 65 (105) (zzzy) of the Act. The Supreme Court held that the activity would appropriately be classified under the head transport of goods by road service and the activity does not involve any service in relation to mining of mineral as contemplated under section 65(105) (zzzy) of the Act. The Supreme Court also held that the definition of mines has no apparent nexus with the activity undertaken under the service rendered. The findings recorded by the Commissioner are in conformity with the judgment of the Supreme Court in the case of Singh Transporters - the service do not come under the scope of Mining services - demand do not sustain - appeal dismissed - decided against Revenue.
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2022 (4) TMI 255
Levy of Service Tax - maintenance security deposit - whether any service on this amount was provided or not - respondent maintained the complexes on its own expense and kept the amount collected as maintenance deposit as a liability to be transferred in toto to the society of the buyers once it was formed - mis-conception on the part of Revenue in interpreting this amount as maintenance charges - HELD THAT:- The appeal is filed by the Revenue under the wrong assumption that the maintenance deposit taken by the respondent from the buyers is to be utilized for maintenance of the complexes and any unutilized amount will be transferred to the society after it is formed. It is, therefore, the contention of the Revenue that merely because unutilized amount will be subsequently transferred to the society, the respondent does not get exempted from paying service tax on the amounts collected by it as maintenance deposit. It is evident that no amount of the maintenance deposit was to be utilized for maintenance of the complex by the respondent and the entire amount was to be transferred to the society once it was formed and was then to be used for major repairs, etc. As far as the respondent is concerned, it only held the deposit for the society to be formed later. The maintenance done by the respondent during the intervening period was at its own cost. No amount was charged for such maintenance nor was any amount, out of the maintenance deposit, spent by the respondent on the maintenance. The respondent has not received any consideration for maintenance of the complexes and the maintenance deposit was only held by it in custody for subsequent transfer to the society. Demand of service tax do not sustain, as there is no rendition of any service, for the said amount - appeal dismissed - decided against Revenue.
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2022 (4) TMI 254
Refund of Service Tax - rejection of refund on the ground that the appellant/assessee did not debit the amount of refund claimed, at the time of filing the refund claim, but have debited such amount subsequent to the filing of the refund claim but before adjudication - Rule 5 read with Notification No.27/2012-CE dated 18.06.2012 - Doctrine of Merger - HELD THAT:- The action of the Asstt. Commissioner, of issuing of fresh show cause notice, instead of granting refund, in terms of the Final Order of this Tribunal amounts to interference in the justice delivery system. It is also noticed that the appeal before this Tribunal was against order-in-appeal passed by the Commissioner (Appeals). Further, Revenue was not in appeal against the order of the Commissioner (Appeals). It seems that the Asstt. Commissioner, Shri Ravi Babu, has no regard for the order of the superior court/Tribunal, and also does not have any concept of doctrine of merger. Accordingly, the Asstt. Commissioner, Shri Ravi Babu, Central Goods and Service Tax Commissionerate, Delhi North Commissionerate, 17-B, IAEA House, I.P. Estate, New Delhi-110 019 is directed to show cause as to why the proceedings for contempt of court should not be drawn against him and referred to the jurisdictional High Court for further action in accordance with law - last opportunity is granted to the Asstt. Commissioner, Shri Ravi Babu to comply with the final order of this Tribunal and to file compliance, which should be filed before 25.04.2022. Put up for further hearing and order on 25.04.2022.
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2022 (4) TMI 253
Classification of services - Business Support Services or not - business of exhibiting cinematographic films across India in theatres owned by it or taken on rent - Association of Persons or not - principal to principal basis or otherwise? - HELD THAT:- The agreement in the present appeal is almost the same as the agreement in other appeals that have been decided including that in INOX LEISURE LTD. VERSUS COMMISSIONER OF SERVICE TAX, HYDERABAD [ 2021 (10) TMI 893 - CESTAT HYDERABAD] , where under similar situation, it was held that no service tax can be levied on the appellant under BSS. It would be seen from the agreement that the producer/distributor is engaged in the business of production and distribution of films, while the appellant is an exhibitor engaged in the business of exhibition of films and owns/operates a chain of multiplex theatres. The exhibitor decides which screens would play the motion picture, the numbers of shows, the show timings and the ticket pricing including the right to decide on a week to week basis, whether or not to continue to exhibit the motion picture. The distributor/producer had granted the exhibitor the non exclusive license to exploit the theatrical rights of a motion picture and each party was entitled to conduct its business in its absolute and sole discretion. In the present case the Department has alleged that the appellant is providing infrastructure support services to the producers/distributors of films under BSS - Such an arrangement between a distributor/producer and an exhibitor of films was examined by a Division Bench of the Tribunal in M/S. MOTI TALKIES VERSUS COMMISSIONER OF SERVICE TAX, DELHI I [ 2020 (6) TMI 87 - CESTAT NEW DELHI] . The Department alleged that the agreement was for renting of immovable property as defined under section 65(90a) of the Finance Act. This contention was not accepted by the Tribunal and it was observed that the appellant did not provide any service to the distributors nor the distributors made any payments to the appellant as consideration for the alleged service. This issue had come up for consideration before a Division Bench of the Tribunal in M/S PVS MULTIPLEX INDIA PVT. LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, MEERUT-I [ 2017 (11) TMI 156 - CESTAT ALLAHABAD] . The Bench observed that as the appellant was screening films on revenue sharing basis, the appellant was not liable to pay service tax on the payments made to the distributors for screening the films. Demand do not sustain - appeal allowed - decided in favor of appellant.
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Central Excise
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2022 (4) TMI 252
Clandestine Removal - cigarettes removed for testing within the factory - demand for the period from March 1973 to February 1983 - extended period of limitation - HELD THAT:- For the period from March 1983 to June 1985, it is found that the cigarettes were cleared on the basis of adjusted sale price as per Notification No. 36/83-CE dated 1.3.1983 and thereafter for the period March 1987 upto February 1987 as per Notification No. 201/85-CE dated 2.9.1985 again on adjusted sale price . The manner in which duties are to be levied and realised as per the said notification leaves no scope for any provisional assessments of the cigarettes cleared. The contention of the Appellant is agreed upon that the clearances of cigarettes during this period were on final assessment basis only - in respect of the entire period from July 1985 to December 1990 there was no scope of any provisional assessment in effecting clearance of cigarettes removed. All clearances during this period was on final assessment basis. In the instant case at all material times cigarettes were under physical control system. All samples were drawn during the manufacturing process and moved to the laboratory situated within the premises of the bonded factory of ITC which is under the physical control of the Central Excise authorities since May 1979. The movement of cigarette samples to the laboratory inside the factory was undertaken as a part of regular process of the manufacturing cigarettes and there is no material disclosed that there was attempt on the part of the appellant to conceal such movement or concealment of any material fact with regard to the removal of samples of cigarettes. Extended period of limitation - HELD THAT:- The demand of duty in respect of cigarettes cleared for testing purposes for the period March 1, 1983 to December 27, 1990 is sustainable only in respect of normal period of 6 months as contained in Section 11A(1) of the Central Excise Act, 1944 during the material period. The extended period of limitation contained in the Proviso to Section 11A(1) of the Act is inapplicable. Consequently, the demands beyond the period of 6 months from the respective dates of issuance of the SCNs in respect of cigarettes cleared during this period are barred by limitation and hence cannot be sustained. The instant appeal is allowed by way of remand to the Adjudicating Authority, to be decided after taking into account the observations and findings and upon extending an opportunity of personal hearing to the Appellant.
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2022 (4) TMI 251
100% EOU - benefit of concessional rate of duty - clearance of paper waste after segregation process of waste imported during the period October, 2003 to January, 2005 - activity undertaken by the appellant for segregation were covered by the definition of Manufacture w.e.f. 01.04.2002 as per EXIM Policy 2002 to 2007 or not - benefit of concessional N/N. 23/2003 dated 31.03.2003, denied on the ground that the appellant has not made any physical export and not taken permission for DTA sales - extended period of limitation - HELD THAT:- As the activity undertaken by the appellant amounts to manufacture, therefore, the appellant is entitled for the benefit of Notification no. 23/2003-CE dated 31.03.2003 for payment of duty at concessional rate. Appeal allowed - decided in favor of appellant.
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2022 (4) TMI 250
CENVAT Credit - CVD paid by debit entries in DEPB - rejection of credit on the ground that no credit can be availed on duty payment made through debit in their DEPB, stating that such debit does not constitute as payment of duty - Suppression of facts or not - barred by time limitation - HELD THAT:- Admittedly the appellant was a registered assessee and were maintaining proper books of accounts in the ordinary course of business. Further, the appellant was regularly filing their periodical returns with the Department. It is not the case of the Department that the appellant was not filing their periodical returns or had left any column in the return blank, resulting in suppression of any material information. The show cause notice is based on information derived from the record of the appellant. Further, the stand of the appellant in taking credit of CVD, which have been paid through DEPB (Duty Entitlement Pass Book) Scheme is bonafide. Also, such credit is held to be in order, as held by Delhi High Court in COMMISSIONER OF CENTRAL EXCISE AND SERVICE TAX LTU NEW DELHI VERSUS HAVELLS INDIA LTD [ 2015 (10) TMI 1553 - DELHI HIGH COURT] and in COMMISSIONER OF CENTRAL EXCISE COMMISSIONERATE, LUDHIANA VERSUS M/S NEEL KANTH RUBBER MILLS [ 2010 (4) TMI 281 - PUNJAB HARYANA HIGH COURT] . The show cause notice is hit by limitation, there is no element of suppression or fraud etc. - appeal allowed - decided in favor of appellant.
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CST, VAT & Sales Tax
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2022 (4) TMI 249
Composite order of penalty under section 67 and section 44(10) of the Kerala Value Added Tax Act, 2003 - Amnesty Scheme - HELD THAT:- By Ext. P8 letter dated 17-09-2020, petitioner had specifically intimated to the assessing officer that the Appellate Authority had directed the assessing officer to issue modified orders of penalty within two weeks. Petitioner had also pointed out that despite the lapse of five years, modified orders were not issued and since the petitioner intended to claim the benefit of the Amnesty Scheme of 2020, issuance of modified orders was urgent. It was thereafter that the second respondent issued a fresh assessment order on 27.01.2021 reducing the tax liability of the petitioner drastically. Since Ext.P13 modified assessment order was served on the petitioner only on 01-02-2021, a period of 30 days was available to the petitioner to claim the benefit of the Amnesty Scheme 2020. Accordingly, by letter dated 05-02-2021, petitioner sought to claim the benefit of the said Amnesty Scheme as per the request letter produced as Ext.P14. From the records produced before this Court, it is evident that petitioner's access to the Amnesty portal was rejected/denied, contrary to the provisions of the Amnesty Scheme and therefore declining to accept and grant the benefit of the Amnesty Scheme 2020 to the petitioner is without any basis. Petitioner cannot be faulted for the denial of access. The system declined access to the petitioner, contrary to the terms of the scheme. If the error in the system was averted, petitioner would have been eligible to claim the option under the Amnesty Scheme 2020. This Court holds that petitioner is entitled to the benefit of the Amnesty Scheme of 2020 and that the respondents were bound to accept petitioner's application exercising its option for the Amnesty Scheme 2020 - the second respondent is directed to accept the exercise of option by the petitioner for the Amnesty Scheme 2020 - the writ petition is disposed off.
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2022 (4) TMI 248
Exercise of Revisional Jurisdiction after seven years - Non-application of Section 46 (1) of the VAT Act, 2005 - Whether the saving clause provided under Section 64 (3) of the VAT Act, 2005 would apply to those proceedings also, which were initiated after coming into force of the Himachal Pradesh Value Added Tax Act, 2005? - HELD THAT:- There is no dispute as to fact situation that the Appellate Authority had passed the order under Section 30 of the HPGST Act, 1968 on 10.10.2002 and the Revisional Authority had initiated suo motu revisional proceedings in the year 2009 i.e. after lapse of a period of seven years - The VAT Act, 2005 came into force on 31st day of March, 2005. The HPGST Act, 1968 was repealed from the date of coming into force of the VAT Act, 2005. Such repeal, however, was subject to certain savings as provided in Section 64 of the VAT Act, 2005. On the date of coming into force of the VAT Act, 2005, admittedly no proceedings under the HPGST Act, 1968 were pending against the petitioner. Sub section (3) of Section 64 of the VAT Act, 2005 saved only those proceedings relating to assessment, appeal, revision or other proceeding arising under the HPGST Act, 1968 or the rules made thereunder which were pending before the competent authority under the said Act on the date of coming into force of the VAT Act, 2005 - the bar of limitation, to initiate revisional jurisdiction under Section 46 (1) of the VAT Act, 2005 within five years of the notice of order sought to be revised, clearly applied to the facts of the instant case. The Revisional Authority could not revise the order dated 10.10.2002 passed by the Appellate Authority by exercising revisional jurisdiction initiated after lapse of five years. In the facts of the instant case, the exercise of revisional jurisdiction after seven years by the Revisional Authority cannot be said to be reasonable period by any stretch of imagination. Revision Petition is allowed.
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Indian Laws
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2022 (4) TMI 246
Dishonor of Cheque - insufficiency of funds - framing of charges - vicarious liability - whether the complaint under Section 138 of Negotiable Instruments Act without arraigning the company as an accused would be maintainable? - HELD THAT:- Dealing with similar issue wherein only directors of company is made the accused, leaving the company, the complaint under Section 138 of Negotiable Instruments Act would not lie. In recent judgment in case of HINDUSTAN UNILEVER LIMITED VERSUS THE STATE OF MADHYA PRADESH [ 2020 (11) TMI 1021 - SUPREME COURT ] the Court held the person who is in charge of and responsible to the company for the conduct of business would be guilty of the offence. Likewise in case of HIMANSHU VERSUS B. SHIVAMURTHY ANR. [ 2019 (3) TMI 294 - SUPREME COURT] , the Supreme Court held that commission of offence by the company is an express condition precedent to attract the vicarious liability of others and the word as well as the company makes it clear when the company can be prosecuted, then only the persons mentioned in the other categories could be vicariously liable for the offence subject to the averments in the petition and proof thereof that the company is a juristic person. The petitions have been filed at the stage of framing of charges. Whether it would be maintainable ? In order to arrive at an answer to the query, the complaint and the orders summoning the accused is examined. Admittedly, the company was not made an accused in the cases expect the Directors, therefore, applying the law laid down by the Supreme Court as cited supra, it appears that while summoning the accused, the Magistrate has failed to see the principles of law and in turn when the objection was made, the learned Sessions Judge also failed to take into account the principles laid down by the Supreme Court - applying the principles as has been decided in case of M/S. PEPSI FOODS LTD. ANR VERSUS SPECIAL JUDICIAL MAGISTRATE ORS [ 1997 (11) TMI 518 - SUPREME COURT ] which mandates that the Magistrate has to carefully scrutinize the evidence brought on record and cannot be a silent spectator at the time of recording of preliminary evidence, the petition under Section 482 would be maintainable for the reason that both the Courts below have failed to take into account. Petition allowed.
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