TMI Tax Updates - e-Newsletter
May 3, 2022

Case Laws in this Newsletter:

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

Articles

1. Comparative Analysis of Attachment of Criminal Properties under different Acts - PMLA Vs. Other Acts

   By: Commissioner CESTATHyderabad

2. FAKE INVOICES AND GST FRAUDS (PART-2)

   By: Dr. Sanjiv Agarwal

News

1. Advisory to composition taxpayers

2. GST Revenue collection for April 2022 highest ever at Rs 1.68 lakh crore

3. DRI seizes 8 kg Cocaine worth Rs 80 crore from inbound passengers at Hyderabad International Airport

4. India-UAE Comprehensive Economic Partnership Agreement (CEPA) enters into force 

5. India’s Pharma exports grow by 103% since 2013-14

Notifications

Customs

1. 24/2022 - dated 30-4-2022 - Cus

Exemption to specified goods from the whole of levy of Social Welfare Surcharge. - Seeks to amend the notification No. 11/2018 Customs to align the HS Codes with the Finance Act, 2022, w.e.f 01.05.2022

2. 23/2022 - dated 30-4-2022 - Cus

Seeks to amend the various Customs Tariff notifications in order to align the HS Codes of the said notifications with the Finance Act, 2022, w.e.f. 01.05.2022

3. 22/2022 - dated 30-4-2022 - Cus

Seeks to give effect to the first tranche of India UAE CEPA

4. 39/2022 - dated 30-4-2022 - Cus (NT)

Customs Tariff (Determination of Origin of Goods under the Comprehensive Economic Partnership Agreement between India and the United Arab Emirates) Rules, 2022

Circulars / Instructions / Orders

DGFT

1. 06/2015-2020 - dated 1-5-2022

Amendment in Para 2.107 (TRQ under FTA/CECA) of Handbook of Procedure 2015-2020.

Highlights / Catch Notes

GST

• Court Upholds Notice for Property Sale under GST Act Section 79; Petitioner Must Comply with Proceedings.

  Case-Laws - HC : Notice for attachment and for sale of the immovable property under Section 79 of the GST Act, 2017 in Form GST DRC -16 - Attachment of various properties - Since the matter has been remitted back, it is not open for the petitioner to now seek for quashing of the Form GST DRC-16. It is sufficient to state that the petitioner should participate in the proceedings before the respondent in terms of the notice - HC
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• High Court Grants Bail in Tax Evasion Case Under GST Act; Offense Amount Below Rs. 5 Crores Deemed Bailable.

  Case-Laws - HC : Seeking grant of Bail - tax evasion - sham companies - offence u/s 132 - It is not disputed by the department that if the tax evasion of the applicant is less than Rs.5 crores, then it will be a bailable offence as per the provisions of Section 132(1)(i) read with Sections 132(4) and 132(5) of the Gujarat GST Act and the Central GST Act, 2017. Considering the aforesaid observations, the applicant has carved out his case for grant of bail under the provision of section 438 of the Cr.P.C. - Bail granted - HC
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• Court Dismisses Challenge to Show Cause Notice on ITC Eligibility; Petitioner Must Respond with Detailed Reply.

  Case-Laws - HC : Scope of SCN - Eligibility of ITC claimed based on the movement of goods - Missing Vehicle details - discrepancies between purchase register and inward E-way bills - There are no merits in challenge to the impugned show cause notice by the petitioner - The petitioner are directed to file a detailed reply including objections which has been raised in this writ petition before the respondent - HC
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Income Tax

• New Rule 12AC Mandates Submission of Updated Income Tax Return via Form ITR-U in 2022 Amendments.

  Notifications : Updated return of income to be summitted in Form ITR-U - New Rule 12AC inserted - Income-tax (Eleventh Amendment) Rules, 2022 - Notification
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• Court Upholds Reopening of Assessment u/s 147 Due to Incomplete Disclosure, Rejects Sole Legal Question Argument.

  Case-Laws - HC : Reopening of assessment u/s 147 - Unexplained cash deposits - we are unable to accept the submission made on behalf of the petitioner that presumptive income is purely a question of law and has to be decided as per provisions contained in Section 44 AD and 44 BBB. As we have already held that the petitioner had failed to disclose fully and truly all material facts necessary for the assessment, the bar of four years would not apply. - HC
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• Court Stresses Objective Assessment for Bad Debt Claims in Money Lending; Honest Decision Required on Debt Recovery Impossibility.

  Case-Laws - HC : Claim of bad debt/ trading loss of the amount advanced by assessee in the course of its money leading activity - it is necessary to make an objective decision on the facts as to the impossibility of collection/recovery of the debt, such an opinion must be honest and ought to be made after taking into account all the relevant factors - HC
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• Court Rejects Petition Against Reopening of Tax Assessment u/s 147; No Grounds for Intervention Found.

  Case-Laws - HC : Reopening of assessment u/s 147 - On considering the fact that the proceedings under Section 148 of the IT Act, 1961, which had started with the issuance of the notice on 26.03.2021 and the petitioner has taken part in the proceedings, this Court is not inclined to entertain the present petition. - HC
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• Manufacturing Integration Costs Classified as Revenue, Not Capital Expenditure, for Tax Purposes.

  Case-Laws - AT : Legal and professional charges - Backward or forward integration of the activities of a manufacturing business cannot be considered to be establishment of a new enterprises to consider such legal and professional expenses to be for acquiring new assets and to not treat them revenue expenditure. - AT
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• Interest Deduction on Loan for Multiple Let-Out Flats Disputed; Taxpayer Challenges Decision by AO and CIT (Appeals.

  Case-Laws - AT : Disallowance of interest on loan taken for acquiring few let-out flats - Income from house property - nexus of use of the loan amount for acquiring the house property - AO as well as the learned CIT(A) ought to have accepted the claim of interest paid to DCB Bank by the assessee - AT
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• Support Service Charges Disallowed Due to Lack of Evidence; Chapter X Provisions Take Precedence Over General Income Tax Rules.

  Case-Laws - AT : TP Adjustment - Disallowance of support service charges to ultimate holding company in absence of evidence of service availed - once the transaction is undisputedly subject matter of chapter X 'Special Provisions relating to Avoidance of Tax' of the Act, then other general provisions of the Act cannot be applied simultaneously. - AT
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• Taxpayer Cleared of TDS Payment Delay; Additions Deleted as TDS Considered Received Under Cash Accounting System.

  Case-Laws - AT : Disallowance on account of outstanding TDS payable - as such TDS deducted by the assessee is deemed to have been received by the recipient of the income and as such it cannot be held that the assessee has not paid the amount of tax deductible at source on or before the due date. So it cannot be held that the aforesaid amount of TDS has not been paid by the assessee while following the cash system of accounting - additions deleted - AT
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Customs

• Amendment to Notification No. 34/2022-CUSTOMS Adjusts Exchange Rate for South African Rand to Indian Rupees for Customs Purposes.

  Notifications : Rate of exchange of one unit of foreign currency equivalent to Indian rupees - South African Rand - Seeks to amend Notification No. 34/2022-CUSTOMS (N.T.), dated 21st April, 2022 - Notification
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• New Tariff Values Set for Edible Oils, Brass Scrap, Areca Nut, Gold, and Silver to Ensure Compliance.

  Notifications : Fixation of Tariff Value of Edible Oils, Brass Scrap, Areca Nut, Gold and Silver - Notification
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• EOU's Packing Activity Qualifies as Manufacturing, Securing Duty Exemption; Authority's Classification of Goods as Non-Manufactured Overturned.

  Case-Laws - AT : 100% EOU - eligibility for exemption from duty - The condition that the goods to be re-exported have to be the manufactured goods has been fulfilled or not? - The packing activity amounts to manufacture, it is held that the second condition of the impugned exemption notification that the goods have to be manufactured goods also stands complied with by the appellant. Adjudicating authority is held to have committed an error by holding the repackaged goods as non manufactured goods. - AT
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• Goods Confiscated for Mis-declaration in Import General Manifest; No Amendment Requested Before Bills of Entry Filed u/s 111(f).

  Case-Laws - AT : Confiscation of goods - the appellant had not filed the IGM correctly inasmuch as there is mis-declaration of goods furnished therein. Further, no amendment of IGM had ever been sought by the person in-charge of the vessel, before filing the B/Es by the appellants. Since there is incorrect mention of dutiable goods in the IGM, the same are liable for confiscation in terms of Section 111(f) of the Customs Act, 1962. - AT
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• Appellant Seeks Refund of Anti-Dumping Duty on PVC Resin; Claims Payment Made Post Notification Expiry.

  Case-Laws - AT : Refund of Anti Dumping duty deposited by the appellant - import of PVC Resin (Emulsion) Grade - appellant has claimed that due to oversight they deposited Anti Dumping duty as per Notification No. 15.2013-Cus. (ADD) dated 03.07.2013, which had expired on 24.06.2015 - Refund to be granted within 45 days - AT
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DGFT

• India Restricts Import of Precious Metal Waste and Scrap: DGFT Notification Alters Trade Rules.

  Notifications : Import policy - Changed from Free to Restricted - WASTE AND SCRAP OF PRECIOUS METAL OR OF METAL CLAD WITH PRECIOUS METAL; OTHER WASTE AND SCRAP CONTAINING PRECIOUS METAL OR PRECIOUS METAL COMPOUNDS - Notification
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• India-UAE CEPA: Electronic Preferential Certificate of Origin Streamlines Export Process, Boosts Trade from May 1, 2022.

  Circulars : Electronic filing and Issuance of Preferential Certificate of Origin (CoO) for India’s Exports under India-UAE Comprehensive Economic Partnership Agreement (India-UAE CEPA) w.e.f. 01st May 2022
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• Amendment to Appendix 2B: Updated List of Agencies for Certificates of Origin under Foreign Trade Policy 2015-2020.

  Circulars : Amendment of Appendix 2B [List of Agencies Authorised to issue Certificate of Origin (Preferential)] of Foreign Trade Policy, 2015-2020. - Public Notice
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Indian Laws

• CAs Can Represent Clients in Tribunal Cases, Ensuring Equal Legal Representation for Both Parties Under Article 14.

  Case-Laws - HC : Right to of Chartered Accountant (CA) to appear as counsel to appear before the Tribunal to defend the case on behalf of the JDA - Both appellant/applicant and the respondents are equal for the authorities hearing the matter. When once right or legal representation through CA/CS/Cost Accountant and lawyer has been given to the applicant then deprivation of his right to the respondent amounts to violation of right of equality of the respondent contained under Article 14 of the Constitution of India. - HC
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IBC

• Appellant Challenges Payment for Preventive Measures on Vessel 'Tag 22' Ordered by Liquidator Despite Admiralty Jurisdiction Invocation.

  Case-Laws - AT : Liquidation process costs - expenses for preventing any damage due to possible collision between the vessels - The liquidator took action after receiving consent from the Appellant for preservation and protection of vessel Tag 22 during 3rd – 5th October, 2019 much after the Appellant had invoked Admiralty Jurisdiction of Hon’ble Bombay High Court to realise its security charge in vessel Tag 22. Subsequently, when invoice received from K.E. Salvage Company was sent for payment to the Appellant by the liquidator, the Appellant went for litigation against making payment of said invoice. - payment to be made by the Appellant - AT
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SEBI

• SEBI Revises Guidelines: SEBI to Issue FPI Registration Numbers, Depositories to Host Common Application Form for Investors.

  Circulars : Modification in the Operational Guidelines for Foreign Portfolio Investors, Designated Depository Participants and Eligible Foreign Investors - SEBI to generate FPI registration number and both the Depositories to host the CAF. - Circular
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Service Tax

• Court Upholds Transfer of Unutilized CENVAT Credit in Amalgamation; Compliance with Rule 10 Confirmed by Proper Documentation.

  Case-Laws - AT : Transfer of CENVAT Credit lying unutilized - amalgamation of entities - it cannot be said that the appellants had not duly reflected the credit particulars in their books of accounts for the satisfaction of the Department officers - the appellants had duly complied with the requirements of Rule 10 ibid for availment of the cenvat credit lying unutilized in the books of the transferor‟s company and thus, denial of the cenvat benefit by the original authority will not stand judicial scrutiny. - AT
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Central Excise

• Appeal Status Challenged Over 7.5% Pre-Deposit Requirement Under Amended Section 35F of Central Excise Act 1944.

  Case-Laws - HC : Maintainability of appeal before the Tribunal - non-fulfillment of the condition of pre-deposit of 7.5% of the duty subject to the amount specified in the first proviso to Section 35(F) of the Central Excise Act, 1944 - Since the Order-in-Original itself is dated 29th November, 2017, i.e., much after Section 35F has been amended with effect from 6th August, 2014, the Petitioner cannot avail a benefit of second proviso to Section 35F Act (post amendment). - Considering the fact that the Petitioner has deposited the amount as condition for entertainment of appeal as required, no coercive measure for recovery of the rest of the demand raised shall be taken - HC
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• Refund Claim Denied: Appellant Failed to Meet Clause 2(A) of Notification No. 33/99-CE Conditions; Section 11B Not Applicable.

  Case-Laws - HC : Rejection of refund claim - eligible exemption - In the facts of the present case, there are no clear averments made by the appellant that conditions prescribed under Clause 2(A) of the Notification No. 33/99-CE dated 08.07.1999 has been fulfilled by the appellant. Rather entire thrust of the appellant’s case is that notwithstanding the delay of about nine (9) years in claiming the refund, since limitation under Section 11B of the Central Excise Act, 1944 is not attracted for claiming benefits under the notification, the appellant is entitled to the refund claims made. - Appeal dismissed - HC
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• Pink Duplicate Invoices Found in Factory; No Evidence of Double Transport or Payments.

  Case-Laws - AT : Clandestine removal - Invoices pink coloured [Duplicate for transporter] are found in factory, hence, it can also be inferred logically that goods were not transported out of factory against the said Invoices named as parallel Invoices in facts of this case. - There is no corroborative evidence of removal of goods twice on the same Invoice or on parallel Invoices and receiving payment twice for Invoices. It is found that except statements, there is nothing on record to establish Revenue’s case of clandestine manufacture or removal of goods from Appellant’s Factory, in the facts of this case. - AT
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Case Laws:

• GST

• 2022 (5) TMI 67
  Seeking grant of Bail - tax evasion - sham companies - offence under Section 132(1)(i) read with Sections 132(4) and 132(5) of the Gujarat GST Act and the Central GST Act, 2017 - bailable offence or not - HELD THAT:- The details of the tax evasion of the respective accused arraigned in the complaint, reveal that the total tax evasion of the applicant s Company Heugo Metal is shown as Rs.4,51,05,130/- which is less than 5 crores. It is further revealed that the tax liability of other company being Dattatrey Corporation, concerning the accused No.3, is also added and the total tax evasion of both the companies, is shown as Rs.7,55,76,378/-., i.e. above 5 crores. Both the companies are a seperate and distinct identity having different GST numbers. The residential premises of the applicant was raided in the year 2019 by now more than three years have been passed. Vide orders passed by the Division Bench of this Court, the action of cancellation of the registration of the firm M/s.Heugo Metal was also allowed. The attachment orders have also lost its validity. Even, if the tax evasion is taken more than 5 crores, the maximum punishment which can be imposed is five years. It is not disputed by the department that if the tax evasion of the applicant is less than Rs.5 crores, then it will be a bailable offence as per the provisions of Section 132(1)(i) read with Sections 132(4) and 132(5) of the Gujarat GST Act and the Central GST Act, 2017. Considering the aforesaid observations, the applicant has carved out his case for grant of bail under the provision of section 438 of the Cr.P.C. The applicant is ordered to be released on bail in the event of his arrest registered with the Office of the Assistant Commissioner of State Tax-1, Unit-75, 1st Floor, Bahumali Bhawan, Bhavnagar registered with the Office of Assistant Commissioner of State Tax, Unit-9, Division (1), Anmedabad, on his executing a personal bond of Rs.10,000/- with one surety of like amount on the conditions imposed - application allowed

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• 2022 (5) TMI 66
  Reopening of portal to file/upload in GST TRAN-I form and intended to file TRAN-I form and/or revised TRAN-I form - HELD THAT:- Since the order impugned in this appeal is identically worded as that of the orders which were impugned in NODAL OFFICER, JT. COMMISSIONER, IT GRIEVANCE, GST BHAWAN VERSUS M/S. DAS AUTO CENTRE AND OTHERS [ 2021 (12) TMI 835 - CALCUTTA HIGH COURT] , where it was held that It is clearly clearly brought out the difficulties faced by the assesses and also as to how the assesses having substantially complied with the requirement under law and having been entitled to credit on account of transition to the GST regime which is beyond the purview of the assessee and the assessee cannot be put to prejudice on account of technicalities - the above order will squarely apply to the case on hand. Thus, by following the above decision, the appeals and connected applications are disposed of and the order and direction issued by the learned Single Bench is modified by granting liberty to the respondents/assessees to file individual tax credit in GSTR-3B Forms for the month of April 2022 in the month of May 2022 and the concerned authorities/assessing officer would be at liberty to verify the genuineness of the claim and proceed in accordance with law - appeal disposed off.

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• 2022 (5) TMI 65
  Notice for attachment and for sale of the immovable property under Section 79 of the GST Act, 2017 in Form GST DRC -16 - Attachment of various properties - seeking stay of Form GST DRC-16 dated 20.11.2021 - time limitation - HELD THAT:- The present writ petition challenging the Form GST DRC-16 is belated and therefore, the writ petition is liable to be dismissed. That apart, in Form GST DRC-16 merely attaches immovable properties. There is no attachment of any bank accounts. The petitioner appears to be interested in dragging on the proceeding though the petitioner appears to be in arrears of huge amount of tax for these assessment years. Since the matter has been remitted back, it is not open for the petitioner to now seek for quashing of the Form GST DRC-16. It is sufficient to state that the petitioner should participate in the proceedings before the respondent in terms of the notice dated 14.02.2022. The respondent is directed to proceed further in terms of notice dated 14.02.2022 and bring a closure to the issue one way or the other in terms of the order of the learned single Judge as affirmed by the Division Bench of this Court within a period of 3 months from the date of receipt of a copy of this order - Petition disposed off.

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• 2022 (5) TMI 64
  Scope of SCN - Eligibility of ITC claimed based on the movement of goods - Missing Vehicle details - discrepancies between purchase register and inward E-way bills - Suspicion with respect to movement of goods to related parties - discrepancies in GSTR-3B and GSTR-2A for the Month of April 2018, May 2018 and June 2018 - Discrepancies between sales register and outward e-way bills - HELD THAT:- The assessment order which was earlier passed on 02.03.2020 has been set aside by this Court by its order, dated 31.08.2020. There is no restriction or qualification in the said order. The order dated 02.03.2020 completely stands quashed. Therefore, the department s appeal was also dismissed as not maintainable. Therefore, the contention of the learned counsel for the petitioner cannot be accepted. The petitioner has to answer to the proposals contained in the show cause notice dated 20.12.2019, content of which has been incorporated in the impugned show cause notice dated 07.01.2022. The so-called new proposals appears to be prima facie covered by the first six proposals in the show cause notice, dated 20.12.2019. They are inter connected. There are no merits in challenge to the impugned show cause notice by the petitioner - The petitioner are directed to file a detailed reply including objections which has been raised in this writ petition before the respondent - petition allowed.

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• Income Tax

• 2022 (5) TMI 63
  Compounding offences pertaining to late deposit of Tax Deducted at Source (TDS) committed by the Petitioners herein under Section 279(2) - HELD THAT:- This Court is of the view that compounding of offences cannot be taken as the matter of right. It is for the law and authorities to determine as to what kind of offences should be compounded, if at all, and under what conditions. (See: Vikram Singh vs. Union of India Ors. [ 2018 (1) TMI 1115 - DELHI HIGH COURT] ) This Court is of the opinion that the guidelines issued by the CBDT clearly stipulate that after compounding of the first offence, if the same person comes forward for compounding of another offence through any subsequent application, the applicable rate will be five per cent instead of three per cent. This Court is also of the view that the expression after compounding of the said offence means when the offence has been compounded, meaning thereby, not only the stage after the compounding order has been passed but also after the conditions stipulated in the said order have been complied with like payments. In fact, there is a rationale behind imposing a higher rate for subsequent offences as the respondents want to incentivize compliance and want the public to deduct TDS and pay to the Government. Since, in the present case, the petitioners company is a repeat offender , this Court is of the view that the respondents are entitled in law to impose a higher compounding fee i.e. five per cent instead of three per cent. Accordingly, the first submission advanced by learned senior counsel for the petitioner is rejected. Compounding fee is payable only by the main accused by treating Mr. Rakesh Kumar as the Principle Officer instead of all the Directors of the petitioners - This Court is of the view that matter requires examination especially in view of the fact that in the Year 2012-13 the compounding fee was levied only on one Director (Mr. Aman Gulati) and not on the other Directors. This Court is also of the view that if the Chartered Accountant who had represented the petitioner before the Commissioner did not have a power of attorney or a vakalatnama in his favour at the time when he had filed the written submission, the Commissioner should have given time to the authorized representative to file the power of attorney/Vakalatnama instead of levying the compounding charge on all the Directors. To await instructions, list on 18th May, 2022.

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• 2022 (5) TMI 62
  Validity of Reopening of assessment u/s 147 - Petitioner has issued shares at premium - addition of excess premium u/s 56(2)(viib) - e Goodwill was internally generated by erstwhile firm and not acquired or purchased by paying any consideration, the cost of the same should have been shown at Nil and internally generated Goodwill should not be recognised as an asset - HELD THAT:- The reason to reopen is purely on the basis of change of opinion Indisputably queries have been raised during the assessment proceedings regarding large share premium received during the year, the details of investors and petitioner has provided all details sought for. While providing the workings, petitioner also explained that the Goodwill of Rs.26 Crores has been factored while arriving at the share premium. Even in the assessment order, the Assessing Officer has referred to notice issued under section 143(2) as well as 142(1) of the Act and the Assessing Officer has also confirmed having received all information. There can be no doubt in the present facts that very issue of share premium and Goodwill was a subject matter of consideration by the Assessing Officer during the original assessment proceedings. In our view, the reopening of assessment by impugned notice dated 30.03.2021 is merely on the basis of change of opinion of the Assessing Officer from that held earlier during the course of assessment proceedings and this change of opinion does not constitute justification and/or reason to believe that income chargeable to tax has escaped assessment. Since all these details have been disclosed in the documents filed along with return of income including balancesheet and answers to all queries raised have been provided, admittedly it cannot be stated that there was any failure on the part of petitioner to truly and fully disclose any material facts. Statement in the reasons recorded that there was failure to fully and truly disclose material facts, in our view, is only to get over the restrictions provided in proviso to section 147 - Decided in favour of assessee.

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• 2022 (5) TMI 61
  Validity of Reopening of assessment u/s 147 - four years from the end of the relevant assessment year - rejecting petitioner s objections to re-opening - Validity of sanction granted under Section 151 - as argued sanction has been given by the Additional Commissioner of Income Tax and not Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner of Income Tax - HELD THAT:- In the case at hand, the assessment year is 2015-2016 and, therefore, the six years limitation will expire only on 31st March 2022. Certainly, therefore, the Relaxation Act provisions will not be applicable. In any event, the time to issue notice may have been extended but that would not amount to amending the provisions of Section 151 of the Act. In our view, since four years had expired from the end of the relevant assessment year, as provided under Section 151(1) of the Act, it is only the Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner who could have accorded the approval and not the Additional Commissioner of Income Tax. On this ground alone, we will have to set aside the notice dated 26th March, 2021 issued under Section 148 of the Act, which is impugned in this petition. In view thereof, the consequent orders and notices will also have to go.

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• 2022 (5) TMI 60
  Reopening of assessment u/s 147 - Scope of Section 148A as newly inserted - Comparison between old and new provisions for reassessment - Individual identity of Section 148 as prevailing prior to amendment - applicability of the newly inserted provisions of Section 148A and the amendments brought inter alia w.e.f. 1.4.2021 - identity of Section 148 as prevailing prior to amendment and insertion of section 148A - Whether after introduction of new provisions for reassessment of income by virtue of the Finance Act, 2021 with effect from 01.04.2021, substituting the then existing provisions, would the substituted provisions survive and could be used for issuing notices for reassessment for the past period? - HELD THAT:- As relying on SUDESH TANEJA WIFE OF SHRI CP TANEJA [ 2022 (1) TMI 1212 - RAJASTHAN HIGH COURT] no notice under Section 148 would be issued for the past assessment years by resorting to the larger period of limitation prescribed in newly substituted clause (b) of Section 149(1). This would indicate that the notice that would be issued after 01.04.2021 would be in terms of the substituted Section 149(1) but without breaching the upper time limit provided in the original Section 149(1) which stood substituted. Under no circumstances the extended period available in clause (b) of sub-section (1) of Section 149 which we may recall now stands at 10 years instead of 6 years previously available with the revenue, can be pressed in service for reopening assessments for the past period. This flows from the plain meaning of the first proviso to sub-section (1) of Section 149. In plain terms a notice which had become time barred prior to 01.04.2021 as per the then prevailing provisions, would not be revived by virtue of the application of Section 149(1)(b) effective from 01.04.2021. All the notices issued in the present cases are after 01.04.2021 and have been issued without following the procedure contained in Section 148A of the Act and are therefore invalid. By virtue of notifications dated 31.03.2021 and 01.04.2021 issued by CBDT substitution of reassessment provisions framed under the Finance Act, 2021 were not deferred nor could they have been deferred. The date of such amendments coming into effect remained 01.04.2021. In the result we find that the notices impugned in the respective petitions are invalid and bad in law. The same are quashed and set aside. The learned Single Judge committed no error in quashing these notices. All the writ petitions are allowed. Appeals of the revenue are dismissed.

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• 2022 (5) TMI 59
  Reopening of assessment u/s 147 - Unexplained cash deposits - identity, creditworthiness and genuineness of the depositors were not verified during the course of assessment proceedings and the A.O. had made an addition of merely 25% of the deposits on presumptive basis without verification of the depositors and this had led to escapement of income as per the audit objection raised by the audit party - HELD THAT:- Examining the reasons for reopening of the assessment we find that the petitioner had not made full and true disclosure of all the material facts and on the basis of the audit objection, the A.O. has formed reason to believe that income had escaped assessment and this, in our opinion, was sufficient reason for initiating reassessment proceedings under Section 147 Change of opinion - As in the present case all material facts relating to identity, creditworthiness and genuineness of the investors relevant for the assessment on the issues under consideration were not produced during the assessment proceedings and, therefore, in absence of the entire relevant material, the A.O. could not have examined the issues and could not have formed appropriate opinion regarding the same during the original assessment proceedings. Therefore, it is not a case of change of opinion and challenge to the notice under Section 148 of the Act on the ground that it seeks to initiate reassessment on the ground of change of opinion, cannot be accepted. Issue of presumptive income is purely a question of law on which no reassessment could have been done on the basis of audit objection - It is not the petitioner s case that its total turnover or gross receipts in the previous year did not exceed the amount of one crore rupees and, therefore, it does not fall within purview of an eligible assessee engaged in an eligible business and, therefore, Section 44 AD does not apply to the petitioner.Section 44 BBB of the Act contains Special provision for computing profits and gains of foreign companies engaged in the business of civil construction, etc., in certain turnkey power projects. Undisputedly, the petitioner is not a foreign company and, therefore, Section 44 BB would also not apply to it. Therefore, we are unable to accept the submission made on behalf of the petitioner that presumptive income is purely a question of law and has to be decided as per provisions contained in Section 44 AD and 44 BBB. As we have already held that the petitioner had failed to disclose fully and truly all material facts necessary for the assessment, the bar of four years would not apply. We find that there is no need for the paper containing approval being received physically before issuing the notice and the A.O. can proceed to issue a notice under Section 148 of the Act if the approving authority has granted his approval and the approval has been communicated to the A.O. in any manner including by uploading the approval on the portal of the Department. The notice under Section 148 of the Act is not vitiated on the ground that the paper containing approval under Section 151 was received by the A.O. after issuing the notice. Thus we are of the considered opinion that the petitioner did not make a true and full disclosure of all the material facts and the A.O. had reason to believe that the petitioner s income for the relevant year had escaped assessment.- Decided against assessee.

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• 2022 (5) TMI 58
  Assessment u/s 153C for the referred assessment years more particularly when the Limited Liability Partnership came into existence for the first time in 2016 - respondent submit that this Court, in exercise of its extraordinary jurisdiction under Article 226 of the Constitution may not interfere at the stage of Section 153C - HELD THAT:- Having heard the learned counsel appearing for the parties and having gone through the materials on record, we are of the view that we need not enter into any debate as regards the constitution or registration of the LLP. We say so because when the assessment orders are not passed for the A.Y. 2013-14, 2014-15, 2015-16 and 2016- 17 respectively, the matter ends over here. So far as 2017-18 and 2018-19 are concerned, as the assessment orders have already been passed, we decline to go into any other issues with respect to these two notices. In view of the aforesaid, this writ application succeeds in part. The impugned notices with respect to A.Y.2013-14, 2014-15, 2015-16 and 2016-17 are hereby quashed and set aside. So far as the assessment orders which have already been passed with respect to A.Y.2017- 18 and 2018-19, it shall be open for the writ applicant to file appropriate appeal in accordance with law.

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• 2022 (5) TMI 57
  Reopening of assessment u/s 147 - Eligible reasons to believe for reopening the assessment qua the petitioner/assessee - HELD THAT:- Having heard the learned counsel for the parties and perused the record, we are of the view that the petitioner/assessee, at this juncture, has established a prima facie case. The balance of convenience is, presently, in favour of the petitioner/assessee, as, if the assessment proceedings are allowed to continue, it may cause detriment to the petitioner s/assessee s interest. What is required to be noticed in the matter, at this stage, is that the AO has formed a belief, according to us, erroneously, that the entire amount which the petitioner/assessee is said to have invested in bonds/debentures will form part of its taxable income. Investment in bonds/debentures, ordinarily, constitutes a loan transaction. Interest, if any, earned on such investment would possibly form a part of the investor s taxable income. However, at this juncture, there is no material to reach a conclusion either way.

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• 2022 (5) TMI 56
  Validity of reopening of assessment u/s 147 - Scheme of amalgamation completed - whether notices referred could be said to be without jurisdiction as those have been issued in a wrong name or rather to an assessee which was not in existence on the date of the issue of the notices? - HELD THAT:- In view of the intimation as regards the merger / amalgamation way back on 17th January 2019, the two impugned notices could not have been issued. This writ application succeeds and is hereby allowed. Both the impugned notices for the relevant assessment years issued under Section 148 of the Act are hereby ordered to be quashed. - Decided in favour of assessee.

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• 2022 (5) TMI 55
  Stay of demand - Pre- deposits - Challenge to order passed by DCIT u/s 220(6) rejecting the petition for stay of demand filed by the appellant /assessee for the assessment year 2018-19 and directing to pay at least 20% of the total demand within 15 days from the date of receipt of the order to consider for stay of collection of remaining demand - HELD THAT:- Once the court finds the assessment order to be illegal and decides to set aside the same, there cannot be imposition of any condition; and the levy and collection of tax must be under the four corners of law. Whereas, in this case at hand, the appellant challenged the assessment order by filing an appeal before the Appellate Authority. Pending the same, they sought an order of stay, which was rejected for want of deposit of 20% of the disputed tax. Therefore, it is apparent that the assessment order passed by the respondent is neither quashed nor stayed by the Appellate Authority. Considering the grievances of the appellant, the learned Judge, while granting interim protection, has shown some indulgence by directing them to pay 20% of the demand raised, by way of installment, which in the opinion of this court, seems to be reasonable and warrants no interference. Having regard to the bona fide contentions raised on the side of the appellant that the livelihood of about 3200 families of the farmers depends on the functioning of the company and the payment of huge sum on every month would severely affect the working capital of the appellant; and the appellant has already made payment of Rs.25,00,000/- and is prepared to pay Rs.10,00,000/- per month till 20% of the disputed demand is made, this court is inclined to modify the order impugned herein to the effect that the petitioner shall pay a sum of Rs.15,00,000/- per month, instead of Rs.30,00,000/- per month till the entire amount of Rs.2,98,81,885/- is paid and the same shall be paid by the petitioner by 5th of every month, with effect from 05.03.2022 . Except the same, the order of the learned Judge remains unaltered.

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• 2022 (5) TMI 54
  Claim of bad debt/ trading loss of the amount advanced by assessee in the course of its money leading activity - ITAT rejected the claim - Substantial question of law or fact - HELD THAT:- We find that the claim of bad debts made by the appellant / assessee was found unacceptable by the Tribunal, inasmuch as for treating a debt as having turned bad, it is necessary to make an objective decision on the facts as to the impossibility of collection/recovery of the debt, such an opinion must be honest and ought to be made after taking into account all the relevant factors, whereas the opinion of the appellant was not honest nor objective, keeping in view the relevant factors. Therefore, the Tribunal rejected the plea of the assessee and confirmed the order of the Commissioner of Income Tax (Appeals). Whether a debt turned bad is a question of fact, which would clear from the Judgment of the Supreme Court in Travancore Tea Estates Co. Ltd. v. CIT [ 1997 (12) TMI 10 - SC ORDER] wherein held as well settled that whether a debt has become bad or the point of time when it became bad are pure questions of fact We find no reason to interfere with the concurrent findings of the Authorities below inasmuch as whether a debt is bad, being essentially a question of fact. As the appellant has not made out any question of law much less substantial question of law, this tax case appeal deserves to be dismissed and is accordingly, dismissed.

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• 2022 (5) TMI 53
  Revision u/s 263 - Revision challenged by the Petitioner is that notices prior to the assessment hearings purportedly issued to the Petitioner and served upon him on 28th December 2020, 22nd January 2021 and 23rd February 2021 and 14th September 2021 were in fact not served on him physically - HELD THAT:- For the AO to conclude in the impugned assessment order that despite the above notices no compliance was made by the Assessee, does not appear to be correct, particularly when no hearing took place admittedly after 1st February, 2021. The impugned assessment order was passed on 29th September, 2021, almost eight months after 1st February, 2021, the last date of hearing. It is thus apparent that no hearing took place after 1st February, 2021 and yet notices were supposed to have been served on the Assessee on at least two dates after the last hearing date. In the circumstances, the Court is satisfied that the Petitioner was not given an effective opportunity of hearing before the impugned assessment order was passed. The impugned assessment order as well as the consequential penalty notices under Sections 271(1)(c) and 273 (1)(b) of the Act are hereby set aside and the matter is remanded to the AO i.e. the ACIT (Central Circle-2), Bhubaneswar (Opposite Party No.3) for passing a fresh assessment order after an effective opportunity of hearing is given to the Petitioner. For this purpose, the matter will be listed before Opposite Party No.3 on 14th February, 2022. A fresh assessment order after hearing the Petitioner shall be passed in accordance with law within a further period of three months thereafter. The Court clarifies that the present order has proceeded only on the procedural illegalities and does not touch upon the merits of the case.

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• 2022 (5) TMI 52
  Reopening of assessment u/s 147 - petitioner s counsel submits that in view of the fact that the respondents have not taken into consideration the reasons given by the petitioner with respect to the alleged income, which was alleged to have escaped assessment, the procedure pending before the respondents under Section 148 of the IT Act should be set aside - Income Tax Department submits that the final decision with respect to the proceedings under Section 148 of the IT has not been made by the respondents till date and as such, the present case is a pre-mature - HELD THAT:- On considering the fact that the proceedings under Section 148 of the IT Act, 1961, which had started with the issuance of the notice on 26.03.2021 and the petitioner has taken part in the proceedings, this Court is not inclined to entertain the present petition. Further, the respondents have not taken a final decision with regard to the above proceeding and as such, the present writ petition is found to be premature. WP dismissed.

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• 2022 (5) TMI 51
  Petition under Direct Tax Vivad se Vishwas Act, 2020 - According to the respondent, the petitioner has preferred appeal before this Court without filing Civil Application for condonation of delay as can be seen from the screen short and therefore, he has not satisfied the condition prescribed under the Act - HELD THAT:- The case of the petitioner would squarely fall under the scheme of the VsV Act particularly under Section 2(1)(a)(ii) being the appellant whose time for filing appeal had not expired on a specified date i.e. on 31.01.2020. Even without the certified copy having been received, which indeed was at a belated stage, the period of limitation for preferring the appeal before this Court was not over when the authority concerned chose to reject the application of the respondent on 12.04.2021. There appears to be total non-application of mind on the part of the respondent authority while rejecting the application and declaration form 1 and 2 without much effort and on simple comprehension of its own provision under Section 2(1)(a)(ii) of VsV Act read with Section 260(A)(2)(a) of the IT Act, it was easy to grasp that on the specified date on 30.01.2020, the time for filing any appeal was still alive. Therefore, the petitioner would surely in the context of this VsV Act can be said to be the appellant and therefore this petition deserves to be allowed quashing and setting aside the rejection of Form 1 and 2 on the part of the respondent dated 12.04.2021. Let the declaration of the petitioner be accepted by the respondent within three (3) days from the receipt of copy of this order and the petitioner shall follow the requirement of payment of tax as the last date is of 30.09.2021

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• 2022 (5) TMI 50
  Refund on appeal u/s 240 - Interest on refund - HELD THAT:- Learned counsel for the respondent states that after the last date of hearing, an appeal effect order has been passed. In view thereof, the Assessing Officer is directed to issue the refund along with applicable interest within eight weeks. With the aforesaid direction, the present writ petition stands disposed of.

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• 2022 (5) TMI 49
  Validity of Faceless Assessment Order - petitioner states that the respondent passed the impugned assessment order without issuing any show-cause notice and draft assessment order - HELD THAT:- It is settled law that the Government is bound to follow the rules and standards they themselves had set on their pain of their action being invalidated (See: Amarjit Singh Ahluwalia v. State of Punjab [ 1974 (12) TMI 76 - SUPREME COURT] and Ramana Dayaram Shetty v. International Airport Authority of India [ 1979 (5) TMI 144 - SUPREME COURT] Since in the present case no prior show-cause notice as well as draft assessment order had been issued, there is a violation of principles of natural justice as well as mandatory procedure prescribed under Faceless Assessment Scheme . Keeping in view the aforesaid facts, the impugned assessment order, notice of demand and notice for initiation of penalty proceeding passed by the National Faceless Assessment Centre, Delhi under section 143(3) read with sections 143(3A) and 143(3B), section 156 and section 270A of the Act, are set aside and the matter is remanded back to the Assessing Officer, who shall issue a draft assessment order and thereafter pass a reasoned order in accordance with law.

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• 2022 (5) TMI 48
  Deprecation claim of trust - claim of depreciation allowable on the value of assets, the acquisition cost of which claimed as application u/s 11 - HELD THAT:- In our considered view, the issue is no more res integra, the Hon ble Supreme Court in the case of CIT Vs Rajasthan and Gujarati Charitable Foundation Poona 2017 (12) TMI 1067 - SUPREME COURT as settled the issue in favour of assessee Allowability of depreciation on assets where the full value of assets was on the previous occasion claimed as application of income , we are mindful to elucidate that, even in the present case, the assessee had claimed the cost of asset as application of income u/s 11 of the Act in any of the previous year or years up to AY 2014-15 and is allowed in the light of judicial precedents, the claim of depreciation thereagainst for the year under consideration is not hit by the amended provision of section 11(6) of the Act, as the amended provision of section 11(6) de future prospective in nature and effective from AY 2015-2016 as held in the case of DIT V/s Al-Ameen Charitable Fund Trust [ 2016 (3) TMI 462 - KARNATAKA HIGH COURT ]. Ergo, in the light of judicial precedents stated herein above hold that, the appellant trust is eligible for depreciation up to the AY 2014-2015, consequently we direct the Ld. AO to delete the disallowance of depreciation. - Decided in favour of assessee.

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• 2022 (5) TMI 47
  Addition u/s 68 of receipt in advance pertaining to the subsequent year has been treated as income in the year under appeal - whether C.I.T. (Appeal) was not justified in confirming an addition ignoring the relevant documents placed on the record that the amount received has been shown as income in the subsequent year - whether CIT (Appeal) had failed to appreciate the submission that it is practice since from the incorporation of the company that the proportionate receipt had always been carried forward related to the subsequent year? - HELD THAT:- It is the submission of the assessee that the AO and the ld. CIT(A) without properly appreciating the nature of business done by the assessee and the accounting method consistently followed has made the addition which is not correct. According to the ld. Counsel for the assessee when the payment is made by Samsung India Electronics Private Limited it becomes revenue expenditure in their hands but if the assessee gives the vouchers over a period of ten months or so and when the advance is received in the month of February, then certain amount is shown as advance received in the hands of the assessee, which is shown as advance from customers in the balance-sheet. It is also his submission that assessee is following this method since past so many years. From the order of the lower authorities, we find the assessee has not even filed the bank statement details to substantiate that the said amount has in fact been received from Samsung India Electronics Private Limited. Considering the totality of the facts of the case and in the interest of justice, we deem it proper to restore this issue to the file of the AO with a direction to grant one more opportunity to the assessee to substantiate with evidence to his satisfaction that the amount was in fact received from Samsung India Electronics Private Limited only and not from any other person - Ground allowed for statistical purposes. Addition being commission paid - HELD THAT:- We find the AO in the instant case made addition being commission paid to Mr. Mukesh Bathla and Ms. Sangeeta Bathla since, the assessee failed to substantiate with evidence to his satisfaction regarding the above commission. The ld. CIT(A) sustained the addition made by the AO . We do not find any infirmity in the order of the ld. CIT(A) on this issue. We find subsequently when the AO confronted the assessee, the assessee filed the bills raised by above two persons against Samsung. Even the confirmation from the assessee to the above two parties says the commission on sale. The assessee is changing the stand for reasons best known to them. Even though they have received commission for introducing Mr. Uday of Samsung to the assessee, these two persons do not have details of Mr. Uday. Further, Ms. Sangeeta Bathla refused to appear before the AO. The findings given by the AO as well as the ld. CIT(A) could not be controverted by the ld. counsel for the assessee by filing any other evidence before us so as to take a contrary view than the view taken by the lower authorities. Merely stating that the expenditure has been incurred for commercial expediency in our opinion is not sufficient for allowing the commission It is the settled proposition of law that for claiming of any expenditure as allowable, the onus is always on the assessee to substantiate with evidence to the satisfaction of the AO that the same has been incurred wholly and exclusively for the purposes of business. The assessee in the instant case has miserably failed to substantiate the same except by furnishing certain papers which do not substantiate the allowability. - Decided against assessee.

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• 2022 (5) TMI 46
  Rectification of mistake u/s 154 - excess interest expenses allowed - AO revealed that partnership deed had not authorized any payment of interest to any partner, however, the Assessee had claimed deduction being interest paid to the partners in its computation of income/ P L account - HELD THAT:- The Hon ble Apex Court in the case of TS Balaram Vs. Volkart Brothers [ 1971 (8) TMI 3 - SUPREME COURT] clearly held that a mistake apparent on the record must be an obvious and patent mistake and not something which has to be established by a long drawn process of reasoning on points where there may conceivably be two opinions cannot be said to be an error apparent on the face of the record. A decision on a debatable point of law is not a mistake apparent from the record. Coming to the instant case it is not in dispute that the AO has passed the order u/s 154 of the Act on a debatable issue, which cannot be construed rectification of any mistake apparent from the recordand by virtue of provisions of section 154 of the Act, the AO is not empowered to do so, hence respectfully following the aforesaid dictum of the Hon ble Apex Court, we are inclined to quash the order passed by the ld. AO u/s 154 of the Act itself. Ordered accordingly. Consequently, the impugned order is set aside. In the result the appeal filed by the Assessee is allowed.

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• 2022 (5) TMI 45
  Unexplained Cash Credit u/s 68 - assessee failed to substantially explain the creditworthiness and genuineness of the transactions - HELD THAT:- It is evident that according though the copy of account of the concerned creditor and the confirmation was filed by the assessee, but the AO failed to make any enquiry. CIT(A) accepted the impugned sum of credit as explained considering evidences filed by the assessee in the form of confirmation by the concerned party by merely noticing that the AO did not specify what more was required for him to be satisfied. CIT(A) has erred in accepting the claim inasmuch as there is no positive finding as to how the ingredients of section 68 of the Act are satisfied. Section 68 of the Act is a rule of evidence and the onus is on the assessee to establish the source and nature of the credits in question. In the impugned order, CIT(A) has accepted the claim without any verification exercise or opining about the quality of the evidences. In our considered opinion, it would meet the ends of justice, if the matter is sent back to the file of the AO for carrying out the necessary verification exercise and to thereafter decide the same afresh as per law. Needless to say the AO shall allow the assessee adequate opportunity of being heard and then decide as per law. Thus, Ground No.1 raised by the Revenue is allowed for statistical purposes. Disallowance u/s 14A r.w..r 8D - HELD THAT:- We do not see any infirmity in the above finding of Ld.CIT(A) as the Revenue has not disputed the fact that the assessee has not earned any exempt income during the year under consideration. Therefore, Ld.CIT(A) has rightly followed the decision of the Hon ble Delhi High Court in the case of Cheminvest [ 2015 (9) TMI 238 - DELHI HIGH COURT] . This ground raised by the Revenue is thus, dismissed. Adhoc disallowance @ 15 % as against 30% made by the AO - HELD THAT:- There is no dispute with regard to the fact that the disallowances have been made on adhoc basis. AO has not pointed out any specific instance of non-providing of bills and vouchers in support of his claim. Therefore, we do not see any reason to interfere in the finding of Ld.CIT(A).

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• 2022 (5) TMI 44
  Legal and professional charges - disallowance of expenses as no services have been rendered by the professionals - Assessee argued that the appellant company had made payment to reputed professionals to assist it in entering into negotiations with M/s Garnett Specialty Papers Ltd. for firstly commencing of purchase of paper from the supplier of paper thereafter takeover of the supplier company - HELD THAT:- CIT(A) has confirmed the addition by stretching too far the rules of prudence. AO himself observed in the order that the services engaged were from top most legal professionals. If that was the view of Ld. Tax Authorities then it was not justified to discredit the bills raised by them for services holding that assessee failed to provide substantive evidence and it could not succeed in getting supply of paper during the year or even failed to take over the company. The business uncertainties are infinite and to discredit any professional service on basis that concerned business activity having failed inspite of professional service, is not prudent approach. The very purpose of availin such services of professionals is to ensure that the entrepreneur understands well the SWOT analysis of prospective business activity. Entrepreneur s own experience is not a ground for tax authorities to question the wisdom of assessee to have engaged the expert. While factually otherwise also, in the next year, assessee had purchased paper worth from M/s. Garnett Specialty papers Ltd. as is evident from the details of invoices given. So there is evidence which shows that having failed to take over the said company in relevant year, material was still purchased from it in next year. Next, Ld. CIT(A) has also fallen in error in observing that as expenses were incurred for acquiring or taking over of the company they could not be revenue in nature and not allowable as claimed by the appellant. Backward or forward integration of the activities of a manufacturing business cannot be considered to be establishment of a new enterprises to consider such legal and professional expenses to be for acquiring new assets and to not treat them revenue expenditure. Hon ble Delhi High Court in Commissioner of Income Tax vs. Priya Village Roadshows Ltd. [ 2009 (8) TMI 765 - DELHI HIGH COURT] has held that expenses incurred in preparation of feasibility report in the same line of business has to be treated as revenue expenditure. In this judgment itself Hon ble High Court has also taken into consideration that if the project is shelved that does not make the expenditure made upon feasibility study to be disallowed as business expenditure u/s 37. In Krishak Bharati Cooperative ltd. vs. Jt. Commissioner of Income Tax [ 2014 (9) TMI 99 - ITAT DELHI] had held that the expenditure which were made by the said assessee to obtain consulting report/ feasibility study on connected business activity, which was ultimately abandoned can be debit under the head legal and professional charges as a revenue expenditure. - Decided in favour of assessee.

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• 2022 (5) TMI 43
  Sale of agricultural land to be income which arose from An Adventure In The Nature of Trade - HELD THAT:- We find that the assessee herein was a co owner of an agricultural land situated at approx. eight kilometers on Wardha Road, Nagpur and as per the revenue records the said land is still agricultural land. The said land was sold by the assessee - The return of income was filed by the assessee, however, no enquiry was made by the authorities below. The other co owner was assessee s father Shri Ratanshi Malji Patel who was residing at Ghatkopar, Mumbai. We observe that if the Revenue have doubt over the sale of the said piece of land by the assessee, the Assessing Officer was at Nagpur and the property of the assessee was situated at Nagpur and the Assessing Officer ought to have visited the site and found the fact. In this regard, both the authorities below have failed to make any enquiry on the sale of land. Since the said plot is still vacant, it is obvious that the assessee had not derived any benefit out of the said plot. We have no other choice except to follow the aforesaid decision of the Tribunal rendered in assessee s Father s case [ 2012 (10) TMI 710 - ITAT MUMBAI] wherein the Tribunal has set aside set aside the order passed by the learned CIT(A) and restored the order of the Assessing Officer. Consequently, in view of the decision of the Tribunal rendered in assessee s Father s case, we uphold the impugned order passed by the learned CIT(A) by dismissing the grounds raised by the assessee.

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• 2022 (5) TMI 42
  Disallowance of interest on loan taken for acquiring few let-out flats - Income from house property - nexus of use of the loan amount for acquiring the house property - assessee claimed interest on loan taken for acquiring few let-out flats for which the assessee borrowed three loans for making re-payment of housing loan taken from India Bulls Housing Finance Ltd. (IBHFL) for acquiring the aforesaid flats - as per AO claimed home loan interest repayment was not justified properly by the assessee - HELD THAT:- Provisions of section 24(b) of the Act which state that (b) where the property has been acquired, constructed, repaired, renewed or reconstructed with borrowed capital, the amount of any interest payable on such capital and in our view the Assessing Officer and the learned CIT(A) ought to have considered the claim of interest in lieu thereof. We further find that the ass has shown income under the head Income From House Property and the assessee is also deriving income from business and we agree with the argument of the learned Counsel that had it been interest on business loan the assessee has right to claim it from business income and computed total income (loss) would have been the same We do not find any justification in learned CIT(A) stating that he has allowed interest claimed under section 24(b) of the Act at Rs. 1,50,000 for the reason that interest certificate does not justify for housing home loan whereas the learned CIT(A) himself has admitted that the assessee was sanctioned loan of Rs. 9.8 crore from India Bull against residential property for the four flats cited supra. It is also evident from the findings of the learned CIT(A) s order that the assessee obtained loan from DCB Bank for repayment of this housing loan and stated that the borrower namely Mrs. Subra Subir Kumar Banerjee, have jointly been granted business loan. In view of the forgoing discussions, we are of the considered opinion that the AO as well as the learned CIT(A) ought to have accepted the claim of interest paid to DCB Bank by the assessee and consequently, we set aside the impugned order passed by the learned CIT(A) and direct the Assessing Officer to allow interest paid to DCB bank by deleting the addition made in lieu thereof and the returned income is hereby directed to be accepted. Accordingly, grounds no.1 to 4, raised by the assessee are allowed.

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• 2022 (5) TMI 41
  Revision u/s 263 by CIT - AO has not made proper enquiry in regard to the difference in the receipts as reflected in the 26AS statement and the profit and loss account - HELD THAT:- The orders of the co-ordinate Bench for AY 2008-09, 2011-12 and 2012-13, wherein revenue recognition method adopted by the assessee are accepted. Undoubtedly, it is not the case of the Revenue that the amounts received by the assessee as disclosed in form no.26AS has not been offered by assessee as its income in terms of the agreement with the parties or it is in violation of method of accounting followed consistently. We also found that amount of sum received from Goodwork Communication Pvt. Ltd there is no difference between amount received as per from no. 26AS and amount shown as income. With respect to Reliance Big Entertainment Pvt. Ltd. the amount of receipt shown in form no. 26AS is related to agreement for five years. This amount has been offered for taxation by the assessee in five different years. Similarly, amount received from EPIC channel was provided in agreement for three years and same has also been disclosed as income in three different years - assessee has shown party wise, assessment year wise income offered by it. Such working was based on number of days. In view of this, we hold that learned Assessing Officer has made complete inquiry between mismatch of receipt as per 26AS and income recognized in profit and loss account. Further, as assessee has a method of recognizing revenue as per terms of agreement, over a period of time on the basis of program telecast on number of days, which is also approved by ITAT in its own case, consistently followed by assessee, we do not find that following that method makes the order of learned Assessing Officer erroneous. - Decided in favour of assessee.

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• 2022 (5) TMI 40
  Addition u/s 68 - untraceable credits in bank - HELD THAT:- We find that assessee has shown untraceable credit entries in the bank account as a separate item. Such is the amount shown under the head Sundry debtors (others) having the credit items. Before us, it is shown that the entry dated 30 September 2016 is a TDS receivable for Assessment Year 2015-16 which has been taxed under section 68 of the Act by the learned Assessing Officer. ] Looking at the details placed we find that the same entry relates to TDS credit receivable for Assessment Year 2015-16 amounting to Rs.40,157/-. In view of the above facts, we find that the same amount cannot be added under section 68 of the Act. However, as same amount is related to credit received in the bank account, we direct the learned Assessing Officer to verify that whether any interest component is involved in it or not. If there is any interest component, it may be taxed; the balance amount is not chargeable to tax. Accordingly, we direct the Assessing Officer to delete the addition and only tax interest component, if any. In the result, the ground no.1 of the appeal is allowed. Disallowance under section 37(1) in respect of delayed payment of service tax, provident fund, and VAT - HELD THAT:- We find that identical issue has been decided by the co-ordinate Bench in case of Emdee Digitronics Pvt. Ltd [ 2019 (7) TMI 86 - ITAT KOLKATA] held that interest expense on late deposit of VAT, service tax, TDS etc are allowable expenditure under section 37(1) of the Act. In view of the above fact, respectfully following the decision of Kolkata Bench of ITAT, we hold that such expenses are not disallowable under section 37(1) of the Act. Further, VAT laws, provident laws and service tax laws clearly provide for payment of interest if there is a delay in payment of fees. Therefore, it is apparent that those respective laws allowed the belated payment along with interest. Therefore, those are not affected by explanation 1 to section 37(1) of the Act. Disallowance of provision made in respect of purchase of TDRs - For this year, assessee has claimed a provision on the basis of percentage of area sold - HELD THAT:- It is apparent that the cost of the TDR is ascertained and liability related to the area sold by the assessee required to be provided, when income offered for taxation. Further, the assessee is claiming deduction since 2009-10 and has already been allowed deduction on the same methodology up to 31st March 2015. We do not find any reason to disturb it. Even otherwise, in percentage completion method the Revenue is recognized based on percentage of work completed and therefore all probable expenditure up to that percentage level are to be recognized as expenditure. In view of this, we reverse orders of the lower authorities and direct learned Assessing Officer to delete the disallowance on account of TDR. Thus, ground no. 3 of the appeal is allowed.

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• 2022 (5) TMI 39
  Revision u/s 263 by CIT - scope of enquiry under Explanation 2(a) to section 263 - Validity of order was passed u/s 153A of the Act r.w.s. 143(3) - AO is directed to verify/examine the claim of exemption u/s. 10(38) of the Act in respect of long term capital gain from the sale of shares of Look Health Care Service Ltd - HELD THAT:- After consideration of material placed on record, Ld. AO allowed claim of exemption on sale of shares of M/s Looks Health Care services Ltd. u/s 10(38) of the Act. Now on the issue that the Ld. AO passed a cryptic order and did not discuss in detail regarding assessee s claim of the allowability of exemption u/s 10(38) of the Act on sale of shares of M/s Looks Health Care services Ltd, in our view it is a well settled position of law that if from the assessment records, it is evident that the Ld. AO has made due enquiries in response to which assessee has filed detailed submissions, then even if the assessment order does not discuss all aspects in detail with regards to claim of the assessee, it cannot be held that the order is erroneous and prejudicial to the interests of the Revenue. The above proposition has been upheld in the case of CIT v. Reliance Communication [ 2016 (4) TMI 173 - BOMBAY HIGH COURT] , Smt. Anupama Bharat Gupta [ 2021 (4) TMI 1000 - ITAT AHMEDABAD] , Goyal Private Family Specific Trust [ 1987 (10) TMI 43 - ALLAHABAD HIGH COURT] , CIT v. Mahendra Kumar Bansal [ 2000 (2) TMI 10 - SUPREME COURT] . We thus find no error in the order of Ld. AO so as to justify initiation of 263 proceedings by the Ld. Pr. CIT. The Ground of appeal raised by the assessee is thus allowed.

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• 2022 (5) TMI 38
  Assessment completed u/s 153A - Assumption of jurisdiction to make addition without invoking the provisions of section 153C - material seized during the course of search show undisclosed income and are incriminating in nature - whether assessment order is barred by limitation - HELD THAT:- As the last of the panchnama was drawn on 10.04.2007 and on that date there was a seizure as per Annexure-A/D/SCPL (refer page 66 of PB Vol.1). Consequently, reckoning the search proceedings to be completed on 10.04.2007, the assessment completed on 31.12.2009 is well within the time limited prescribed u/s 153B of the I.T.Act. The Hon ble Karnataka High Court in the case of IBC Knowledge Park Private Limited v. CIT [ 2016 (5) TMI 372 - KARNATAKA HIGH COURT] had held that unless in the material seized during the course of search show undisclosed income and are incriminating in nature, jurisdiction u/s 153C of the Act cannot be assumed. The ratio of the above decision would apply to section 153A of the Act also. Snce the additions u/s 80IA(4) of the I.T.Act is not based on incriminating material found during the course of search in the premises of the assessee and the assessments for assessment years 2001- 2002 to 2005-2006 have already been concluded on the date of search, the A.O. cannot make an addition u/s 153A of the I.T.Act, insofar as the claim of deduction u/s 80IA of the I.T.Act is concerned. As regards other additions are concerned for all the assessment years, since it is based on the material found in the course of search of Sri.V.Sambamoorthy and in absence of initiation of proceedings u/s 153C of the I.T.Act, the other additions also cannot be made in a proceedings u/s 153A of the I.T.Act. It is ordered accordingly.

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• 2022 (5) TMI 37
  Disallowing House property loss - AO disallowed the loss by holding that the assessee has not produced copy of rent agreement to prove genuineness of rental income - HELD THAT:- On absence of rent agreement, the assessee has placed on record confirmation of the tenant, along-with PAN number and also bank statement reflecting receipt of rent through banking channels. The same has not been disputed by the Department and therefore, in our view the assessee has adequately substantiated that the premises have been given on rent. Municipal valuation/standard rent - Department has also not come up with any alternate figure of rent for which the property should have been let out. It has cast the upon the assessee to furnish such alternate figure albeit without disputing the fact that the assessee has received monthly rent of Rs. 30,000/- per month which has also been correctly reflected in the return of income. Section 23 of the Act deals with the method of the determination of the annual value of a house property. Section 23(1)(a) defines the annual value of a house property as the sum for which the property might reasonably be expected to let from year to year . AO has not disputed the receipt of monthly rent of Rs. 30,000/- as having been received by the assessee. Further, the Ld. AO has not brought anything to on record to prove that the value of rent reflected by the assessee did not reflect the reasonable rent for which the property could have been let out or that the value of rent has been undervalued by the assessee. AO has simply denied the entire deduction of interest paid against rental income without bringing on record anything to dispute any of the documents furnished on record by the assessee. - Decided in favour of assessee.

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• 2022 (5) TMI 36
  Delayed deposit of employees contributions towards PF and ESI - disallowance under section 36(1)(va) - HELD THAT:- We note that the issue is squarely covered against the assessee by the Jurisdictional High Court decision in case of Gujarat State Road Transportation Corporation [ 2014 (1) TMI 502 - GUJARAT HIGH COURT] wherein it was held that where assessee did not deposit employees contribution to employees account in relevant fund before due date prescribed in Explanation to section 36(1)(va), no deduction would be admissible even though he deposits same before due date under section 43B of the Act. Again the Gujarat High Court in the case of Pr. CIT v. Suzlon Energy Ltd. [ 2020 (2) TMI 792 - GUJARAT HIGH COURT] held that where assessee had not deposited employees contributions towards PF and ESI within prescribed period in law and Assessing Officer by invoking provisions of section 36(1)(va) read with section 2(24)(x) made addition of aforesaid amount to income of assessee, impugned addition made to income of assessee was justified. - Decided against assessee.

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• 2022 (5) TMI 35
  TP Adjustment - Disallowance of support service charges to ultimate holding company in absence of evidence of service availed - HELD THAT:- We do not find any substance in the arguments advanced by the Ld. DR that the Ld. CIT(A) admitted evidence of Agreements without affording opportunity to the Ld. AO as the same were already on the records of the Ld. AO which he duly mentioned in his assessment order. We are also unable to convince ourselves that the Ld. TPO did not apply his mind to all the international transactions entered into by the assessee with its AEs while making adjustment under section 92C of the Act necessitating the Ld. AO to make additional impugned adjustment by resorting to the provision of section 37(1), section 40(a)(i) and section 40A(2) of the Act. Argument of the Ld. DR that section 92CA does not debar the Ld. AO to make adjustment over and above what adjustment is proposed by the Ld. TPO, in his assessment order passed after the receipt by him of the Ld. TPO s order under section 92CA(3) - A bare reading of the above provision 92CA reveals that the AO may refer the computation of the ALP in relation to the international transaction, with the previous approval of the Commissioner. Where a reference is made to the TPO, he will allow the assessee to produce the evidence in support of the computation made by the assessee of the ALP of the international transaction. After hearing such evidence etc. and after taking into account all relevant materials, the TPO shall pass an order in writing determining the ALP in accordance with Section 92C(3) and send a copy of his order to the AO and to the assessee. The decision of Bangalore Bench of Tribunal in Herbalife International India (P) Ltd. [ 2015 (10) TMI 2794 - ITAT BANGALORE] applies with full force to the case at hand before us. The crux of the matter is that once the transaction is undisputedly subject matter of chapter X Special Provisions relating to Avoidance of Tax of the Act, then other general provisions of the Act cannot be applied simultaneously. We, therefore, hold that the arguments of the Ld. DR is bereft of any legal substance.Perusal of the appellate order of the Ld. CIT(A) extracted in para 4 above reveals that the Ld. CIT(A) recorded his findings that the TPO considered all international transactions in his order and TP adjustment was only suggested to Employees Secondment and Business Restructuring and therefore, these issue should not have been re-examined by the AO afresh. We entirely agree with above findings of the Ld. CIT(A). We are of the view that the Ld. CIT(A) has deleted the impugned addition made by the Ld. AO after recording cogent reasons backed by precedents. We, therefore, decline to interfere with the order of the Ld. CIT(A). Appeal of revenue dismissed. Disallowance of Support Service charges paid by the assessee to its ultimate holding company (EMCOR Group) and consequent addition to the income of the assessee - HELD THAT:- Before us, no new plea was taken by the Ld. DR. All his arguments in respect of the same addition have been dealt with by us earlier in our order of the preceding assessment year 2013-14. The submissions of the Ld. AR also remained the same. We have once more carefully perused the orders of the Ld. AO/CIT(A) and arrived at the same conclusion that the Ld. CIT(A) has recorded cogent reasons supported by the precedents with which we agree. Hence we endorse his findings and hold that the impugned disallowance/addition is not justified and the Ld. CIT(A) rightly deleted the impugned addition/disallowance. Accordingly, the appeal of the Revenue for assessment year 2014-15 also fails.

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• 2022 (5) TMI 34
  TP Adjustment - assessee has submitted that the TPO has done fresh/TP analysis but did not furnish the search process and the accept/reject matrix, while selecting fresh set of comparables - Assessee is objecting to search process and key words used - HELD THAT:- This issue is not addressed by the TPO or DRP. On the issue of comparable selection, we observe that the DRP has not properly analyse the submissions of the Assessee. The DRP has made general observation that TNMM requires broadly similar comparables and exactly similar companies are not required. This is not proper reason and TPO/DRP are duty bound to specifically analyse the comparables submitted by the Assessee and the Assessee s objection to the comparable selected by the TPO. The Assessee is also duty bound to file the annual reports and make specific submissions with respect to the comparables. These aspects are not analysed in proper perspective. In these given facts and circumstances of the case, we deem it fit and proper that the issue with regard to determination of ALP should be remanded to the AO/TPO for determination a fresh in the light of observations made by us in this order. The AO/TPO shall afford assessee opportunity of being heard. Accordingly, the order of the AO is set aside and issue is remanded to the AO/TPO. Foreign exchange fluctuations adjustment - HELD THAT:- We observe that the TPO and the DRP have not properly analysed the submissions of the Assessee. There is no analysis whether there was any adverse foreign exchange fluctuations during the relevant assessment year, which is abnormal in nature and what is its effect on the operating margin of the Assessee and the comparables. These aspects needs to be analysed. In the given facts and circumstances of the case, we are of the view that it would be just and appropriate to set aside the impugned Order on this issue and remand the issue to the TPO. Not granting of working capital adjustment - HELD THAT:- We have considered the rival submissions and perused the material on record, including the judicial pronouncements cited. We find that the assessee has filed the computation of working capital adjustment before the DRP, but the DRP has not considered the same. We also find that the Co-ordinate Bench of this Tribunal in the case of Huawei Technologies India (P.) Limited [ 2018 (10) TMI 1796 - ITAT BANGALORE] has discussed all the reasons on the issue and held that working capital shall be allowed - Thus we also hold that the working capital adjustment is to be allowed as per actual on the final set of comparables. The TPO/AO are accordingly directed. TP adjustment to be restricted to AE transactions - HELD THAT:- We find that the Assessee has rightly contended that section 92 of the Act can be applied only in respect of international transactions i.e., transactions with AE - we hold that the transfer pricing adjustment should be restricted only to the AE related transactions of the assessee.

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• 2022 (5) TMI 33
  Disallowance u/s 40(a)(ia) - interest paid to various NBFC - Scope of second proviso to section 40(a)(ia) of the Act, inserted by Finance Act, 2012 w.e.f. 01.04.2013 - HELD THAT:- The assessee though has taken the plea on the basis of second proviso to section 40(a)(ia) of the Act, however, failed to establish or prove that NBFCs had paid income tax on interest received from the assessee. Accordingly, the CIT(A) upheld the disallowance made by the Assessing Officer. Now, in the present appeal, the assessee by way of additional evidence has produced copies of Form No. 26A in support of its aforesaid plea based on second proviso to section 40(a)(ia). We deem it appropriate to admit the additional evidence filed by the assessee before us. We are further of the view that this issue be remanded to the Assessing Officer for de novo adjudication as per law after necessary verification of details as submitted by way of additional evidence before us. Before concluding on this issue, we may add that in respect of interest paid to Citicorp Finance Ltd. and Indiabulls Finance Ltd., if the assessee is able to furnish similar details before the Assessing Officer, same shall be taken into consideration while deciding the issue as per law. As a result, ground No. 1 in assessee s appeal is allowed for statistical purpose. Disallowance u/s 40(a)(ia) of the Act on account of salary paid to Directors - HELD THAT:- In the present case, it is an undisputed fact that salary was paid to the Directors of the assessee company and the Directors had offered the same in the return of income filed. The only basis on which CIT(A) dismissed the appeal filed by the assessee on this issue was that the assessee has not furnished the certificate as required under first proviso to section 201(1) of the Act. As the assessee has now furnished the said certificate issued under Form No. 26A, we deem it appropriate to remand this issue to the file of Assessing Officer for necessary verification of the details furnished by way of additional evidence before us and decide the issue de novo as per law. As a result, ground No. 2 in assessee s appeal is allowed for statistical purpose. Disallowance under section 40(a)(ia) of the Act on account of rent paid - HELD THAT:- The assessee neither during the course of assessment nor in the proceedings before us placed any cogent material on the basis of which it can be concluded that the rent was required to be paid separately to Mr. Pandharinath Mali and Mrs. Pratiksha Mali - assessee has not furnished any additional evidence to the effect that the payee have offered the rent income in the return of income and paid taxes thereon. Thus, as there is no dispute that as per leave and license agreement, assessee is required to pay Rs. 1,50,000 per annum which is below the threshold required for deducting tax at source on the payment of rent, we direct the Assessing Officer to delete the disallowance under section 40(a)(ia) covered by the aforesaid leave and license agreement. As a result, ground No. 3 raised in assessee s appeal is partly allowed. Ad hoc disallowance out of diesel, petrol and oil expenses and freight expenses - HELD THAT:- The assessee is engaged in business of transporters. It cannot be doubted that being in such business the assessee would have incurred freight expenses and diesel, petrol and oil expenses on daily basis - the expenditure incurred in cash in comparison to the freight income is very minuscule. We are of the view that assessee being engaged in business of transporters such expenses are unavoidable and at the same time it is difficult to maintain proper documentation in respect of such cash expenditure. Further, the Assessing Officer has also not provided any basis for making disallowance on an ad hoc basis. Accordingly we direct the Assessing Officer to delete the disallowance out of diesel, petrol and oil expenses and freight expenses. As a result, ground No. 4 raised in assessee s appeal is allowed.

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• 2022 (5) TMI 32
  Disallowance on account of outstanding TDS payable - only reason of the impugned disallowance is that the assessee had not paid it before the end of the financial year - HELD THAT:- We find that identical issue arose for consideration before the Tribunal in the case of M/s. Gagrat Co [ 2020 (2) TMI 457 - ITAT DELHI] when the assessee has duly deposited the TDS before filing the return of income for the year under assessment, the same is allowable u/s. 43B of the Act. No doubt, the assessee is following the cash method of accounting and has made cash payment to various parties after deducting TDS, the portion of which has been allowed by the AO as deductible expenditures, U/s 198 of the Act tax deducted at source by the assessee as per Income Tax Act is deemed to be income received by the recipient of the said income and as such TDS deducted by the assessee is deemed to have been received by the recipient of the income and as such it cannot be held that the assessee has not paid the amount of tax deductible at source on or before the due date. So it cannot be held that the aforesaid amount of TDS has not been paid by the assessee while following the cash system of accounting - thus we delete the impugned disallowance and direct the Ld. AO to modify the assessment order accordingly. Disallowance out of expenses - AO made adhoc disallowance of 10% for personal use and for unverifiable bills/vouchers - HELD THAT:- We are of the view that adhoc disallowance out of expenses claimed by the assessee without bringing on record any adverse material deserves to be deleted being purely on conjecture and surmises alone - As relying on Thakur Vaidyanath Aiyar Co. [ 2021 (8) TMI 817 - ITAT DELHI] we delete the impugned disallowance and direct the Ld. AO to modify the assessment order accordingly. Assessee appeal allowed.

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• Customs

• 2022 (5) TMI 31
  Maintainability of second anticipatory bail - scams and GST evasion - HELD THAT:- Counsel appearing for the respondents are ad idem that the petitioner despite being issued summons is not appearing. Considering the fact that there is no change of circumstances and it is the case of the department that the petitioner is not putting appearance, the second petition is dismissed.

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• 2022 (5) TMI 30
  Condonation of delay - considerable unexplained delay in conducting the enquiry proceedings or not - Whether the findings of the CESTAT that the Respondents were conducting their business through their employee is based on no evidence or partly relevant or partly irrelevant evidence and is otherwise perverse and arbitrarily? - revocation of the CB Licence - forfeiture of the entire amount of Security Deposit - HELD THAT:- This court observed that there cannot be any absolute principle which can be laid down to determine as what would be reasonable period but it would be dependent on the facts and circumstances of the each case - The Tribunal has listed a chronology of dates and events before the inquiry officer. The Tribunal has made factual observations that from the date sheet, as submitted, there appears to be considerable unexplained delay in various steps of proceedings. Mr. Deshmukh submitted that in the findings of the inquiry officer he has explained the delay. In our view also the delay has not been satisfactorily explained, particularly upto 14th August 2014. The Tribunal has not committed any perversity or applied incorrect principles to the given facts and when the facts and circumstances are properly analysed and correct test is applied to decide the issue at hand, then, we do not think that question as pressed raises any substantial question of law. Appeal dismissed.

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• 2022 (5) TMI 29
  Duty drawback - Switch-over from EOU to Export Promotion of Capital Goods Scheme (EPCG) - Rule 12 of the Customs and Central Excise Duties and Service Tax Drawback Rules - HELD THAT:- This court is of the view that there is no necessity to appreciate the factual matrix of the case in detail. Admittedly, two different authorities had taken different views as regards the claim of the respondent seeking duty draw back. Therefore, the learned Judge, while disposing of the writ petitions, directed both the authorities to take a uniform and consistent approach in deciding the respondent s claim. Though the learned senior panel counsel appearing for the appellants submitted that the two different authorities have exercised their respective discretions under the Act and the same have nothing to do with the consideration of the claim of the respondent, the same cannot be countenanced by this court, as it is eminently desirable that there should be an uniformity of construction by the authorities in applying the relevant provisions of the Act and policy. The application of the respondent seeking duty drawback, be placed before an independent officer in the rank of Chief Commissioner, within a period of two weeks from the date of receipt of a copy of this order. The said officer shall re-visit the issue relating to the eligibility of the respondent and decide the same, on merits and in accordance with law, after affording opportunity of hearing to them - Appeal disposed off.

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• 2022 (5) TMI 28
  Reclassification of goods and re-determination of the value - vessel URU BHU, V.W053 - imposition of anti-dumping duty - confiscation of goods - imposition of redemption fine - HELD THAT:- The appellant in this case had declared the country of origin as Malaysia, as against the actual country of origin as Europe. Thus, in this regard, mis-declaration is evident and the declared value is liable for rejection in terms of Rule 12 of the CVR, 2007. It is an admitted fact on record that the Bills of Entry were filed on 21/12/2009, much after the date of issuance of the Notification No. 38/2009-Cus. dated 22/04/2009, in imposing the anti-dumping duty. Hence, the stand taken by the appellants that such duty cannot be levied on the appellant is factually incorrect. It is also a fact on record that the appellant had not filed the IGM correctly inasmuch as there is mis-declaration of goods furnished therein. Further, no amendment of IGM had ever been sought by the person in-charge of the vessel, before filing the B/Es by the appellants. Since there is incorrect mention of dutiable goods in the IGM, the same are liable for confiscation in terms of Section 111(f) of the Customs Act, 1962. Since, the appellants herein have not submitted any plausible evidence or records to prove the case otherwise, the impugned order passed by the appellate authority cannot be interfered with at this juncture - Appeal dismissed - decided against appellant.

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• 2022 (5) TMI 27
  Refund of Anti Dumping duty deposited by the appellant - import of PVC Resin (Emulsion) Grade - appellant has claimed that due to oversight they deposited Anti Dumping duty as per Notification No. 15.2013-Cus. (ADD) dated 03.07.2013, which had expired on 24.06.2015 - HELD THAT:- Admittedly the Anti Dumping notification was valid till 24.06.2015 and the same have admittedly lapsed w.e.f. 25.06.2015, and as such no anti dumping duty was payable by the appellant with respect to the Bill of Entry filed on 26.06.2015. The Adjudicating Authority is directed to grant the refund within a period of 45 days from the date of receipt of a copy of this order alonwtih interest as per rule - Appeal allowed - decided in favor of appellant.

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• 2022 (5) TMI 26
  Refund of SAD - rejection on the ground that the application for refund was time barred as it was filed after one year which was the time limit specified in the N/N. 102/2007-Cus dated 14.09.2007 as amended by N/N. 93/2008 dated 01.08.2008 - HELD THAT:- Revenue s submission is that the case of SONY INDIA PVT. LTD. VERSUS THE COMMISSIONER OF CUSTOMS [ 2014 (4) TMI 870 - DELHI HIGH COURT] pertained to situations where goods were imported prior to issue of Notification No. 93/2008-CUS but were sold thereafter. According to the Revenue, in that particular context, Delhi High Court has held that the limitation of time for filing refund claim imposed by the Notification No 93/2008-CUS does not apply. Although the question framed by the Delhi High Court in Sony India was in the context of imports made prior to the issue of Notification, No. 93/2008-CUS and sold after the issue of this Notification, the operative part of the judgment categorically holds that the amending Notification No. 93/2008-Cus must be read down to the extent that it is imposes a limitation period. Therefore, the limitation in the Notification does not apply. The Commissioner (Appeals) has committed no error in relying on Sony India and allowing refund - Appeal dismissed - decided against Revenue.

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• 2022 (5) TMI 25
  100% EOU - eligibility for exemption from duty while clearance of re-imported goods despite that the procedure as incorporated in notification no. 52/2003 w.e.f. 30.6.2017 under which said exemption was claimed was not followed by the appellant - Whether the condition that the goods to be re-exported have to be the manufactured goods has been fulfilled by the appellant or not? - HELD THAT:- Condition no. 2 of N/N. 42/2003 as amended vide notification no. 68/2017 has come into effect from 30.06.2017 which require the compliance of Rule 5 of Customs (Import of Goods at Concessional Rate of Duty) Rules, 2017 - the procedure required under the said rule was the submission of the application in a prescribed format accompanied with certain other documents as that of continuity bond with the surety or security. This perusal makes it clear that the condition in Rule 5 / condition no. 2 of the impugned notification were purely procedural. The rule is absolutely silent to highlight that the non compliance of the said procedure irrespective it was a condition precedent but would have caused any major inconvenience to the Department. In the present case, there is nothing brought on record by the Department as to what administrative inconvenience would have been caused to the Department. There is no denial to the fact that the adoption of the impugned procedure was very much recent introduction at the relevant time of impugned bill of entries. The said condition was not required to be followed since the year 2003 till the year 2017. There is nothing on record to show that the exemption as claimed, irrespective in the absence of the said procedure, there is any element of fraud has been committed by the appellant. In such circumstances, it cannot be ruled out that the non observance of the impugned condition was mere lack of knowledge of the amendment as was introduced vide notification no. 68/2017 that too in June 2017 (the impugned bill of entries are of year November 2017 to January 2018). The procedural condition of Rule 5 of the Customs (Import of Goods at Concessional Rate of Duty) Rules, 2017 were not at all the substantive condition but was merely a technical condition. Apparently the benefit of exemption from customs duty to a 100% EOU is a substantive benefit. Such substantive benefit cannot be denied for want of the compliance of technical procedural conditions. Thus, the denial of exemption to the appellant is absolutely wrong. The adjudicating authority has failed to observe that the substantive benefit has been disallowed to the appellant on mere technical grounds. The said findings are therefore not sustainable. The order under challenge is liable to be set aside on this score. The condition that the goods to be re-exported have to be the manufactured goods has been fulfilled or not? - HELD THAT:- There is no denial for the appellant to be a 100% EOU nor for the fact that the goods in question were initially exported by appellant, which for some reason, have been returned back. It is apparent from the record that the appellant while replying to the show cause notice as well as making submission in defence before the adjudicating authority below has specifically mentioned that the goods in question after being imported were stored in 100% Export Oriented Unit and after processing such as cleaning and re-packing that the goods were re-exported. It is submitted that this particular activity satisfies the compliance of all the condition of notification no. 52/2003 read with notification no. 45/2017. This Tribunal in the case of COMMISSIONER OF CUSTOMS, NEW DELHI VERSUS WESTON ELECTRONICS [ 1999 (9) TMI 369 - CEGAT, NEW DELHI] while relying upon the similar circular as mentioned above has held that packing of the goods into different packs amounts to manufacture and while exporting such goods, the activity of packing / repacking entitles the EOU to claim exemption from the customs duty while exporting such repacked goods - there is no denial nor it is the case of the Department that the goods in question were not repacked by the appellant before exporting goods in question were not repacked by the appellant by exporting those goods again. The packing activity amounts to manufacture, it is held that the second condition of the impugned exemption notification that the goods have to be manufactured goods also stands complied with by the appellant. Adjudicating authority is held to have committed an error by holding the repackaged goods as non manufactured goods. The order under challenge to that extent is also liable to be set aside. Appeal allowed - decided in favor of appellant.

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• Corporate Laws

• 2022 (5) TMI 24
  Sanction of the Scheme of Amalgamation - Section 230(6), read with Section 232(3) of the Companies Act, 2013 - HELD THAT:- From the material on record, the Scheme appears to be fair and reasonable and is not violative to any provisions of law, nor is contrary to public interest - Since all the requisite statutory compliances have been fulfilled, the Company Petition is allowed. The scheme is approved - application allowed.

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• 2022 (5) TMI 23
  Sanction of Scheme of Amalgamation for merger - Sections 230-232 and other applicable provisions of the Companies Act, 2013 - HELD THAT:- Various directions with regard to holding, convening and dispensing with various meetings issued - directions with regard to issuance of various notices also issued. The scheme is approved - application allowed.

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• 2022 (5) TMI 22
  Sanction of the Scheme of Amalgamation - Section 230(6) read with Section 232(3) of the Companies Act, 2013 - HELD THAT:- The scheme of Amalgamation is approved. Various directions with regard to holding, convening and dispensing with various meetings issued - directions with regard to issuance of various notices also issued. Application allowed.

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• Insolvency & Bankruptcy

• 2022 (5) TMI 21
  Liquidation process costs - expenses for preventing any damage due to possible collision between the vessels - responsibility was upon the liquidator - expenses incurred should be part of the overall liquidation process costs or not - HELD THAT:- It is noted that the liquidator, who is responsible for preservation and protection of the assets in the liquidation estate, exchanged email communications starting with an e-mail dated 2.10.2019 (emails attached at pp.45-48 of the appeal paperbook) to both Appellant/Hero Fincorp and United Bank of India, under whose charges the vessels Tag 22 and Tag 6 were held respectively, that the two vessels have come close to each other and may come into contact leading to potential damage, whereupon vide e-mail dated 3.10.2019 (attached at pg. 45 of the appeal paperbook) the Appellant communicated its unreserved willingness to contribute funding needed for securing Tag 22 and also requested the liquidator to undertake the securing operation - it is clear that proportionate CIRP cost and payment of expenses incurred by the liquidator in securing m.v. Tag-22 has been ordered by the Adjudicating Authority which has to be paid by the Appellant. The actions relating to protection and preservation of two vessels Tag 22 and Tag 6 were taken by the liquidator during the period 3rd to 5th October, 2019, as is clear from the e-mails exchanged between the charge holders of two vessels, namely United Bank of India and Hero Fincorp and the liquidator (emails attached at pp. 45-48 of appeal paperbook) and also from the tax invoice submitted by K.E. Salvage (attached at pg. 49 of the appeal paperbook). Therefore, the action relating to securing the two vessels was taken much after the Appellant had obtained order from the Bombay High Court under its Admiralty Jurisdiction on 18.3.2019 and 23.4.2019 and therefore the vessel Tag 22 had become the asset of the Appellant. Thus, it is clear the any action taken thereafter for securing the vessel Tag 22 was undertaken by the liquidator with the explicit consent of the Appellant/Hero Fincorp in pursuance of Hero Fincorp s interest in protecting and preserving its asset Tag 22, and the action being taken for liquidation of the Corporate Debtor is under the provisions of the IBC - Regulations 16 and 18 of the Liquidation Process Regulations enjoin upon the creditors to file their claim before the liquidator in a prescribed time period. In the present case, the financial creditor Hero Fincorp Limited did not file its claim before the liquidator ostensibly because it wanted to realise its security interest in the vessel Tag 22. The liquidator took action after receiving consent from the Appellant for preservation and protection of vessel Tag 22 during 3rd 5th October, 2019 much after the Appellant had invoked Admiralty Jurisdiction of Hon ble Bombay High Court to realise its security charge in vessel Tag 22. Subsequently, when invoice received from K.E. Salvage Company was sent for payment to the Appellant by the liquidator, the Appellant went for litigation against making payment of said invoice. The Appellant shall pay a cost of Rs. One Lakh as litigation expenses to the liquidator, which shall go into the liquidation estate. Both, the proportional share of the Appellant in securing the two vessels Tag 22 and Tag 6 and the litigation cost shall be paid by the Appellant within 15 days of this judgment - appeal dismissed.

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• 2022 (5) TMI 20
  Filing of fresh Company Petition in accordance with the provisions of the code instead giving liberty to resume the CIRP against the Corporate Debtor - whether the Adjudicating Authority s decision in directing that failing to adhere to terms and conditions of one time settlement, the Appellant Bank is entitled to file fresh Company Petition is justifiable? - non-application of mind - violation of principles of natural justice - HELD THAT:- This Tribunal comes to a resultant conclusion that the Adjudicating Authority in the impugned order dated 17.08.2020 in I.A. No. 273 of 2020 in CP 199 of 2018 with regard to sub para 4 of para 9 of the impugned order regarding the observation/liberty to file a fresh Company Petition by the Appellant Bank is erroneous and without application of mind and without following the Principles of Natural Justice and not adhering to the decision of this Tribunal being the Appellate Authority, is hereby quashed and set aside. Appeal allowed.

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• 2022 (5) TMI 19
  Seeking to implead the Applicant as Respondent No. 4 in main Company Appeal - HELD THAT:- This Tribunal taking note of the surrounding facts and circumstances in a conspectus fashion and keeping in mind that the Applicant/Bank has not filed appropriate Application to get itself impleaded either before the Hon ble High Court or before the Hon ble Supreme Court of India, comes to a consequent conclusion that in a subject matter pending before the Hon ble Supreme Court of India in SLP(C) No.9252 of 2020, the Applicant/Bank is to wait for the final determination of the Hon ble Supreme Court of India, or to take necessary steps to implead itself before the Competent Forum, if it so desires / advised. Viewed in this perspective, this Tribunal without any haziness, holds that the Applicant/Bank is not entitled to file I.A.No.450 of 2021 in Comp. App (AT) (CH) (INS) No. 215 of 2021 (Impleading Application) and accordingly the I.A.No.450 of 2021 fails. Application dismissed.

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• 2022 (5) TMI 18
  Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial Creditors - debt became due and payable or not - liability of Guarantor - liability of the Guarantor being coextensive with the Principal Borrower or not - validity of Letter of Invocation/Demand - HELD THAT:- The term Guarantee is a continuous one and therefore, the right to sue accrues when the Guarantee Agreement was invoked and the date when the Corporate Debtor had failed to discharge its obligation, in terms of Guarantee - there is no two opinion of a primordial fact that the liability of the Guarantor being coextensive with the Principal Borrower, in terms of the ingredients of Section 128 of the Indian Contract Act, 1872. The liability of a Guarantor will be cemented up on the document like Guarantee Deed, Mortgage by Deposit of Title Deeds, etc. In the instant case, one cannot remain oblivious of the fact that the outstanding debt Viz., the defaulted sum of the Corporate Debtor stood at Rs. 1,50,39,59,607.73 paise, which was payable on 27.09.2018, on the date when the Account as Non Performing Asset - the Appellant in its One Time Settlement had recognised itself as the Debtor in respect of the outstanding sum to be paid to the Rs. 1st Respondent/Applicant/Financial Creditor, in the latter s position as Assignor. The other vital fact to be kept in mind is that the Guarantee has a Live Force and that the Appellant s obligation is not wiped out in discharging its liability. It is to be remembered that under the I B Code, 2016, the Quantum of Liability is not a relevant factor to be taken into account and has no nexus in respect of the Initiation of Corporate Insolvency Resolution Process, in as much as the Default of a Debt is equivalent to Rs. 1 Crore and above. An Adjudicating Authority is not to determine a money claim or suit. The I B Code, 2016, requires an Adjudicating Authority only, to find out and record satisfaction in a summary adjudication, in regard to the occurrence of Default, as per ingredients of Section 4, before admitting a Petition. In the light of foregoing detailed Qualitative and Quantitative discussions, this Tribunal taking into account of the fact that in the instant case that the Debt was assigned by the Applicant/Financial Creditor/State Bank of India to the Rs. 1st Respondent/ASREC (INDIA) Limited and bearing in mind another fact that the Corporate Debtor had not replied to the Letter / Notice of the Rs. 1st Respondent/Financial Creditor in pressing into service the Corporate Guarantee Agreement dated 19.07.2018 and considering the cumulative attendant facts and circumstances of the instant case, which float on the surface, comes to an inescapable, inevitable and irresistible conclusion that the impugned order passed by the Adjudicating Authority (National Company Law Tribunal, Division Bench I, Chennai) in CP(IB)/82/CHE/2021 in arriving at the conclusions that the Financial Debt was proved by the Rs. 1st Respondent/Applicant/Financial Creditor and that the Default was committed by the Corporate Debtor and ultimately admitting the Application (filed under Section 7 of the Code by the 1st Respondent/Applicant/Financial Creditor) are free from any legal infirmities. Appeal dismissed.

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• 2022 (5) TMI 17
  Revival of the petition of the Operational Creditor - Settlement agreement entered upon - HELD THAT:- Since the parties had entered into terms of settlement, any breach of the said terms of settlement would give rise to a different cause of action, and not the restoration of the underlying petition to file. The intention of the Code is not to enforce settlement, but to resolve insolvency of the Corporate Debtor. Application dismissed.

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• 2022 (5) TMI 16
  Seeking issuance of no-objection certificate for transfer of the premises - extension of time for making payment by the application under the resolution plan approved - directions to compute the time to make the payment under the Resolution plan on and from the date of the order to be passed - HELD THAT:- Even though the upfront payment of Rs. 5.0 Cr was made as per the plan, the SRA was not able to make the requisite payment as per the plan due to intervention by Pandemic and also due to the fact that two units of the business of the corporate debtor were not handed over to him by the IMC. The payment plan got further derailed due to holding back of the NOC by the financial creditors/IMC - In terms of the approved resolution plan attached with the application, it is seen that the SRA had proposed to dispose of non-business assets of the CD in accordance with Regulation 37(a) (d) of the CIRP regulations, and had stated that the same may be used for payment of the Resolution amount proposed under the plan. The Applicant had at least twice written to Respondent Nos. 2 and 3 dated 24.03.2021 and 20.09.2021 seeking NOC for sale of the asset but the respondent did not issue the same. Had this NOC been issued on time the remaining proceeds of the plan could have been met from the sale of the assets which were otherwise provided for in the resolution plan. Further whereas IMC had extended the time for payment till 11.03.2021 as depicted in the minutes of the 4th meeting of the IMC, still on 22.02.2021, chose to file I.A. No. 252/2021 before this Tribunal for proceeding with the liquidation of the corporate debtor and pursued the application despite receiving sizeable payments in March 2021, thus showing their disinterest in putting the Corporate Debtor back on its feet in accordance with the approved resolution plan. Application allowed.

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• 2022 (5) TMI 15
  Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - existence of debt and dispute or not - HELD THAT:- It is seen from the records that notice of default under Section 8 has been delivered and an affidavit under Section 9(3)(b) of IBC has also been filed - On perusal of records, it is found that a clear case of the default has been made out by the Applicant and the present application under Section 9 IBC needs to be admitted. Application admitted - moratorium declared.

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• 2022 (5) TMI 14
  Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial Creditors - existence of debt and dispute or not - time limitation - HELD THAT:- The main objections raised by the proposed interveners and loan recall notice dated 17.01.2018 is baseless, illegal and hence, there is no default committed by the respondent corporate debtor. There is also an issue raised of limitation in respect of financial debt which according to Corporate debtor is time barred since corporate debtor was declared NPA on 31.03.2012 and this application is filed in 2018 much later after expiry of the limitation. Further, the respondent/interveners have raised objection regarding legality of the loan agreement dated 27.04.2017. Further, to note that the interveners/respondent corporate debtor never disputed that the loan amounts were disbursed by the applicant financial creditor, even the loan disbursal after the execution of additional loan agreement dated 27.04.2017 have never been denied by the corporate debtor. On the contrary corporate debtor, promoters and strategic investors are shouting loud that money was disbursed after due diligence and on GOMP standing as guarantors along with recommendation from Ministry of Power and Finance. The only objection is that debt is not due, because of the conduct of the applicant while sitting in management of corporate debtor, causing such default which does not hold any water. In the present matter the applicant has succeeded in demonstrating that the debt is payable and default is committed by the respondent time and again. The default of financial facilities of various other financial creditors are also committed by corporate debtor who also have filed various applications under section 7 of the Code pending before this Bench. The main objection of the respondent is that the default is committed by applicant itself, while sitting in management of the corporate debtor since, applicant had major equity in the corporate debtor - Admittedly, as in reply, the respondent never denied the fact of debt and default, but has also admitted debt and default stating default is time barred in view of all of Corporate debtor becoming NPA in 2012 and application filed in 2018. The Corporate debtor pointed out the conduct of applicant because of which default had occurred, which cannot be determined in the proceeding under Section 7 of the Code. The registered office of the Corporate Debtor is situated at Madhya Pradesh and therefore this tribunal has jurisdiction to entertain and try this application - The date of default as per Form 1 part IV is 15/01/2018 and application is filed in February, 2018 hence is within limitation and not barred by limitation It is evident from the record that the application has been filed on the proforma prescribed under Rule 4 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016 read with Section 7 of IBC and is complete. Evidently, a default has occurred and the application under Section 7 is complete - application admitted - moratorium declared.

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• Service Tax

• 2022 (5) TMI 13
  Violation of principles of Natural Justice - procedure of pre-consultation before issuance of show cause notice has not been adhered to - HELD THAT:- The process of pre-consultation as done in the instant case appears to have not been a statutory procedure but a procedure carved out by the Central Board with a view to promote compliance and to reduce the necessity for issuing the show cause notice. The object behind such process can be culled out from the master circular issued by the Central Board dated 10th March, 2017. The record of the proceedings has been minuted on 13th October, 2016. Though the learned Advocate for the appellant would contend that the record of pre-show cause notice consultation meeting held on 13th October, 2016, is not comprehensive, it indicates the contentions, which were advanced by the appellant. The net result is thus if the Central Board has evolved a procedure to balance the interest of the assessee as well as the revenue, such procedure should be given due regard. This is precisely the reason the Central Board in its master circular dated 10th March, 2017 has directed that the authority, who has issued the pre-consultation notice, should be the authority, who shall issue the show cause notice and adjudicate the same in cases where pre-consultation does not resolve the dispute. That apart, it is also noted that in the show cause notice dated 14th October, 2016 issued by the Audit- II Commissionerate, there is no reference to the pre-consultation process. This is incorrect as when the department has evolved a procedure, such procedure should be a meaningful procedure. At least a brief discussion is required to be made as the appellant was invited to participate in the pre-consultation before issuance of the show cause notice with a view towards trade facilitation and promoting voluntary compliance and to reduce the necessity of issuing the show cause notice in terms of the instruction issued by the Board dated 13th October, 2016. The matter is remanded to the file of the Commissioner, Central Excise Service Tax, Bolpur Commissionerate, West Bengal with a direction to issue show cause notice to the appellant within 15 days from the date of receipt of the server of this judgment and order wherein brief discussion with regard to the pre-consultation procedure, which was adopted shall be given - Appeal allowed by way of remand.

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• 2022 (5) TMI 12
  Constitutional Validity of Rule 5(1) of Service Tax (Determination of Value) Rules - levy of service tax - Bank charges, CCTL charges, CFS charges from their clients payable to the respective Banks, it was specifically mentioned in the invoices that these charges are Non Taxable Services - reimbursement of expenses or not - HELD THAT:- The issue involved herein is squarely covered by the decision of the Honourable Supreme Court in UNION OF INDIA AND ANR. VERSUS M/S. INTERCONTINENTAL CONSULTANTS AND TECHNOCRATS PVT. LTD. [ 2018 (3) TMI 357 - SUPREME COURT] in which, the order of the Delhi High Court declaring Rule 5 of Service Tax (Determination of Value) Rules as ultra vires and unconstitutional, was affirmed. On a perusal of the order impugned herein, it is seen that the aforesaid decision was not taken into consideration by the learned Judge, while hearing the writ petitions filed by the appellant questioning the order / notices issued by the respondent authorities, demanding service tax towards non taxable services ; and the appellant was simply directed to approach the appellate authority by filing statutory appeals, after having observed that the issues involved are factual in nature. This court is of the view that such course adopted by the learned Judge cannot be countenanced. Therefore, the order of the learned Judge dated 17.06.2021 passed in the writ petitions is liable to be set aside and is accordingly, set aside. Consequently, the matters are remanded back to the authority concerned for fresh consideration. Appeal disposed off.

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• 2022 (5) TMI 11
  Transfer of CENVAT Credit lying unutilized - amalgamation of entities - utilization of unutilized credit by transferree company - transfer of CENVAT credit by transferee entities and availment of the same by the appellants were disputed by the Department on the ground that as per the requirement of Rule 10(3) ibid, the transfer can only be effective, when stock of inputs as such or in process or the capital goods are also transferred from the transferor units to the transferee unit - CENVAT credit of service tax paid on the input services, can be availed by the transferee unit upon sale/merger with the business units of the transferors or not? - HELD THAT:- On a cogent reading of sub-rules (1) and (2) of Rule 10 ibid, it transpires that transfer and availment of unutilized cenvat credit is permissible under the statute, subject to fulfillment of the conditions that transfer of business must be on account of change of ownership or on account of sale, merger, amalgamation etc.; that there should be specific provision for transfer of liabilities of the business of service provider; that transfer is allowed only if stock of input as such or in process, or the capital goods are also transferred along with the business premises to the transferee company; and that the credit particulars are duly accounted in the books for satisfaction of the jurisdictional officer of Central Excise. Learned Commissioner appears to have erred in finding that transfer of cenvat credit on input services is permissible only on the amalgamation whereas in terms of Rule 10 (1) (2) of Cenvat Credit Rules, such a transfer is permissible on transfer of business on account of sale, merger, amalgamation, lease or transfer of business to a joint venture without specific provision for transfer of liabilities of such business. It is found that there is no provision in the statute that each one of the situations mentioned therein should be approved by the Hon ble High Court. It is also noted that in the column 5B in the ST-3 return, titled as cenvat credit taken and utilized , the appellants had reflected therein the credit particulars as - , which means that as a result of merger, only cenvat credit of service tax was available in the books of accounts of the transferor company and no input or capital goods credits were available with them. Thus, it cannot be said that the appellants had not duly reflected the credit particulars in their books of accounts for the satisfaction of the Department officers - the appellants had duly complied with the requirements of Rule 10 ibid for availment of the cenvat credit lying unutilized in the books of the transferor s company and thus, denial of the cenvat benefit by the original authority will not stand judicial scrutiny. There are no merits in the impugned order, insofar as it has confirmed the adjudged demands on the appellants - appeal allowed - decided in favor of appellant.

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• 2022 (5) TMI 10
  Rejection of refund claim - non-supply of documentary evidence by which can be establish that the said amount is not utilised for discharging any other tax liability, and the said amount was lying in excess - revenue deposit - applicability of time limitation - HELD THAT:- The appellant had deposited the said amount of Rs. 2,00,000/- on 02.08.2019 during the course of audit and the said amount has been recognised in the audit report, although, it was deposited under the new registration number. Further, it is evident that the said amount has not been adjusted at the adjudication stage nor at the stage of settlement under the SVLDR scheme - Thus, under the facts and circumstances, the said amount is lying with the Department by way of revenue deposit. For such amount of Revenue deposit, there is no question of any limitation as provided under Section 11B of the Act and the appellant is entitled to refund of the said amount. The Adjudicating Authority is directed to grant refund of Rs.2,00,000/- with interest under Section 11BB as per rule - Appeal allowed - decided in favor of appellant.

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• Central Excise

• 2022 (5) TMI 9
  Maintainability of appeal before the Tribunal - non-fulfillment of the condition of pre-deposit of 7.5% of the duty subject to the amount specified in the first proviso to Section 35(F) of the Central Excise Act, 1944 - Valuation of goods - method of valuation - iron ore pellets - applicability of Rule 8 of the Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000 or Rule 4 of said Rules - related party transaction or not - Demand of differential duty alongwith interest and penalty - HELD THAT:- As is revealed from the record, it is admitted fact that the petitioner had not deposited as statutorily required to do under Section 35F of the Central Excise Act. However, enclosing copy of e-receipt to the Memo dated 19.04.2022 the counsel for the petitioner submitted that the petitionercompany has made a payment of Rs.10,00,00,000/- (rupees ten crores) which is the maximum amount specified under the first proviso to Section 35F of the Central Excise Act for compliance of mandatory requirement for entertainment of appeal. The position as of now stands can be summarized as: prior to 06.08.2014, the pre-deposit of percentage of duty confirmed or penalty imposed for filing appeal before the Commissioner (Appeals) or the CESTAT was not mandatory and decision in this regard was to be taken by the Commissioner (Appeals) and/or the CESTAT on the merit of the case. The Appellate Authority was vested with discretion to decide the amount of pre-deposit required to be made by the appellant after taking into consideration the merits of the case and/or considering financial hardship caused to the assessee. This apart, safeguard of the interest of revenue was also one of the factors. The Appellate Authority was even competent to order for partial predeposit or to waive the pre-deposit altogether. However, with effect from 06.08.2014, such discretion of the Commissioner (Appeals) and/or CESTAT has been dispensed with. If the prescribed pre-deposit is not made by the time of entertainment of the appeal, the appeal is liable for rejection. It is an undisputed position that a right to file an appeal is not an absolute right but a right bestowed by the statute. Thus, such a statutory right of appeal can be made subject to conditions. However, though the right of appeal has been made conditional by Section 35F of the Central Excise Act, 1944 it is unambiguously suggested that a party who desires to challenge the Order-in-Original in appeal shall have to deposit in terms of provisions contained in Section 35F of the Central Excise Act. The requirement to make such deposit is to be fulfilled for the purpose of entertainment of appeal and not filing of the appeal - Since the Order-in-Original itself is dated 29th November, 2017, i.e., much after Section 35F has been amended with effect from 6th August, 2014, the Petitioner cannot avail a benefit of second proviso to Section 35F Act (post amendment). By the date of entertainment of appeal no evidence was placed on record by the petitioner-appellant to show that it had complied with the condition hedged for entertainment of appeal . However, in view of the undisputed contents of the Memo dated 19.04.2022 and the application accompanied by the affidavit and no objection being raised by the counsel for the Revenue to take up the main writ petition for hearing and setting aside the order dated 19th March, 2018 passed by the CESTAT - Considering the fact that the Petitioner has deposited Rs.10,00,00,000/- as condition for entertainment of appeal as required under Section 35F of the Central Excise Act, 1944 in consonance with the amended provision, this Court directs for no coercive measure for recovery of the rest of the demand raised pursuant to Orderin- Original dated 29th November, 2011 by the Commissioner of Central Tax, GST CX Commissionerate, Rourkela be taken till disposal of the appeal by the CESTAT. Petition disposed off.

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• 2022 (5) TMI 8
  Rejection of refund claim - eligible exemption, after the expansion of the installed capacity in their factory in terms of N/N. 33/99-CE dated 08.07.1999 - procedural lapses - applicability of time limitation - HELD THAT:- A perusal of the Notification No. 33/99-CE dated 08.07.1999 reveals that the procedure for claiming exemptions under the notification is provided for under Clause-2 of the said Notification. Clause 2(a) provides that a statement of duty paid from the account current is to be submitted by the manufacturer (the appellant herein) to the Assistant Commissioner or Deputy Commissioner as the case may be, by the 7th of the next month in which the duty has been paid other than the amount of difference paid by utilization of CENVAT credit under CENVAT Rules, 2001. In view of the procedures laid down by the Notification No. 33/99-CE dated 08.07.1999 under Clause 2(A) of the said Notification, it is clear that refunds are to be claimed by filing a statement of duty paid to the Assistant Commissioner or Deputy Commissioner of Central Excise as the case may be, by the 7th of next month by the manufacturer - Although in the show-cause reply, it is stated that RT-12 Returns were regularly filed but there is no pleading with regard to any statement of fact as to whether the RT-12 Returns filed by the appellant/assessee were as per the procedure prescribed under Clause-2(a) of the Notification No. 33/99-CE dated 08.07.1999. There is completely no statement to that effect. Rather categorical statement is made in the show-cause reply that because of different stands taken by the Department at different times the manufacturer/appellant did not submit their claims at the relevant point in time. Applicability of time limitation under Section 11B of the Central Excise Act, 1944 - HELD THAT:- In the proceedings before the Department there is no finding that the procedure prescribed under Clause 2(a) of the Notification No. 33/99-CE dated 08.07.1999 had been duly followed by the appellant. Rather in its reply to the show-cause Notice, the appellant only cited reasons for late filing of its refund claims. In the facts of the present case, there are no clear averments made by the appellant that conditions prescribed under Clause 2(A) of the Notification No. 33/99-CE dated 08.07.1999 has been fulfilled by the appellant. Rather entire thrust of the appellant s case is that notwithstanding the delay of about nine (9) years in claiming the refund, since limitation under Section 11B of the Central Excise Act, 1944 is not attracted for claiming benefits under the notification, the appellant is entitled to the refund claims made. Since in the absence of facts necessary not pleaded and no finding of fact being returned by the Departmental Authorities as well as by the CESTAT, no substantial question of law arises - Appeal dismissed.

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• 2022 (5) TMI 7
  Clandestine removal - Ceramic Tiles - clearance against parallel Invoices recovered from Labourer s room in factory - demand based on statements relied upon - cross-examination of statements not done - levy of penalty on partner - HELD THAT:- Appellant s Factory was searched on 01-01-2010 and some Invoices pink coloured [Duplicate for Transporter] were found. Inculpatory statements of partners were recorded. But, no variation in inventory of finished goods or raw materials was found during search. In follow up actions, business premises of the three dealers namely M/s Arbuda Marketing, Himatnagar, M/s Jain Jain, Himatnagar and M/s Trimurti Enterprise, Himatnagar were searched and their relevant purchase sales Bills were withdrawn for months August 2009 to December 2009. No offending goods were recovered from any of these premises or from any other premises. During Enquiries with Transporters, the document like bilty issued to Appellant for November 2009 and December 2009 were also withdrawn. During inquiry at Buyer s end, Statements of 9 persons were recorded. SCN for the duty demand of Rs. 14,04,620/- was issued on 04-07-2013. Revenue has not produced any clinching positive evidence of receipt of goods by the buyers. Revenue has not proved their case in respect of 115 Invoices, where duty is confirmed by Order-In-Original dated 31-08-2018. There is no evidence either in the form of their statements or any other corroborative evidence in respect of those 115 Invoices and buyers who are shown in Annexure A-2 as buyers of goods in respect of Invoices. The Commissioner (Appeals) has also not examined these facts critically. There is no clear evidences of removal of goods from factory premises, except statements relied upon, whose examination/cross examination has not been allowed u/s 9D of Central Excise Act 1944. Invoices found are pink coloured [Duplicate for transporter], but it is not coming out from records that goods were actually transported out of factory against those Invoices relied upon. Invoices pink coloured [Duplicate for transporter] are found in factory, hence, it can also be inferred logically that goods were not transported out of factory against the said Invoices named as parallel Invoices in facts of this case. Duty demand of Rs.8,66,588/- is confirmed without ascertaining actual manufacture of goods and removal thereof from factory - Revenue has relied upon statements, without cogent evidence of receipt and consumption of quantity of basic raw materials and packing materials required for manufacture of goods cleared on parallel Invoices, payment for procuring excess raw materials and packing materials used for manufacture of goods cleared. There is no corroborative evidence of removal of goods twice on the same Invoice or on parallel Invoices and receiving payment twice for Invoices. It is found that except statements, there is nothing on record to establish Revenue s case of clandestine manufacture or removal of goods from Appellant s Factory, in the facts of this case. It is well settled by decisions of Tribunals and higher forums that for cases of such alleged clandestine manufacture and clearances, fundamental criteria have to be established by the Revenue and there should be tangible evidence of clandestine manufacture and clearance of such goods and not undue inferences or unwarranted assumptions. There should be clinching positive evidence on record in support of case of clandestine manufacture and clearances. Statements made under Section 14 of Central Excise Act, 1944 becomes admissible evidence, when person is examined and his/her cross examination is allowed under Section 9D of Central Excise Act 1944. Separate penalty is imposed on Shri Dineshbhai Patel - HELD THAT:- The penalty Separate penalty imposed is not justified following the decision of the Hon ble Gujarat High Court in the case of PRAVIN N. SHAH VERSUS CESTAT [ 2012 (7) TMI 850 - GUJARAT HIGH COURT] and in RATHI RE-ROLLING MILLS VERSUS COMMISSIONER OF CENTRAL EXCISE [ 2015 (2) TMI 1125 - BOMBAY HIGH COURT] , where it was held that Penalty has been imposed on the firm, no separate penalty can be imposed on its partner - Such penalty imposed on Shri Dineshbhai Patel deserves to be set aside. Demand do not sustain - appeal allowed - decided in favor of appellant.

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• CST, VAT & Sales Tax

• 2022 (5) TMI 6
  Penalty proceedings initiated under section 54(1)(14) of the UP VAT Act - books of accounts was not produced whereas the requirement of documents to be carried during transit of goods u/s 50(4) of the Act - filing of all the columns of form 38 for the purposes of section 50 of the Act was not mandatory prior to amendment made in clause (a) and clause (b) of subsection (2) of section 50 of UPVAT Act, or not - Intent to evade tax, present or not - HELD THAT:- The Division Bench of this Court in M/S. RAMA PULSES VERSUS STATE OF UP. AND OTHERS [ 2009 (10) TMI 885 - ALLAHABAD HIGH COURT] has held that the intention to evade payment of tax has been found to be necessary ingredient before imposing the penalty under the Act. The material on record shows that no such intention to evade payment of tax was there. The penalty order cannot be sustained in the eyes of law - revision allowed.

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• 2022 (5) TMI 5
  Recovery of arrears of VAT - priority of charge over the land - right of secured creditors - Registration of deed of conveyance - mutation of entry in registered sale deed - HELD THAT:- It appears that although the Sub-Registrar has registered the sale deed yet the sale deed has not been released on account of the claim of the State over the subject land. What came to be purchased by the writ applicant in the auction proceedings conducted by the Bank of Baroda was a secured asset under the provisions of the SARFAESI Act. In such circumstances, the State cannot claim preference over the subject property for the purpose of recovery of the dues towards VAT. It is not in dispute that the first charge was created in favour of the Bank of Baroda and the Bank in exercise of its powers under the SARFAESI Act, was entitled to auction the subject land and recover the requisite amount towards the dues incurred by the Company. The pivotal issue raised in the present writ-application is no longer res-integra in view of the decision in BANK OF INDIA VERSUS STATE OF GUJARAT 3 OTHER (S) [ 2020 (1) TMI 1197 - GUJARAT HIGH COURT] and KALUPUR COMMERCIAL CO-OPERATIVE BANK LTD. VERSUS STATE OF GUJARAT [ 2019 (9) TMI 1018 - GUJARAT HIGH COURT] where it was held that We have no hesitation in coming to the conclusion that the first priority over the secured assets shall be of the Bank and not of the State Government by virtue of Section 48 of the VAT Act, 2003. It is hereby declared that the State cannot claim any first charge over the subject land by virtue of Section 48 of the GVAT Act, 2003. The impugned order passed by the Sales Tax Authority, Annexure H as well as the entry No. 15774 mutated in the revenue records with respect to the subject land is hereby quashed and set aside - Application disposed off.

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• 2022 (5) TMI 4
  Rejection of application for refund of tax allegedly due - appealable order under Section 55 of Kerala Value Added Tax Act, 2003 - assessment years 2010-11 and 2011-12 - HELD THAT:- A perusal of the impugned order Ext.P12 shows that the Assessing Officer has considered the contention of the petitioner and entered into a finding after perusing the records produced. It is held in the impugned order that the delivery book produced by the petitioner and alleged to have been maintained by the accountant contains only a vague marking with ink as evidence of acknowledgment from the office of the State Tax Officer. It was after an appreciation of the facts and records that it was concluded that the delivery book did not contain any identifiable name, authenticating signature or even the designation of the official apart from absence of office seal. It is clear from a reading of the impugned order that the findings have been entered into by the 1st respondent after appreciating the facts and circumstances arising in the case. Though an alternative remedy is not a complete bar for this Court to exercise its jurisdiction under Article 226 of the Constitution of India, burden is upon the assessee to prove that circumstances exists warranting an interference by this Court. No such circumstances have been brought to my notice to warrant the exercise of jurisdiction under Article 226 of the Constitution of India. Since the contentions raised by the petitioner can effectively be considered by the Appellate Authority, it is only appropriate that petitioner pursues its statutory remedies rather than invoke the jurisdiction under Article 226 of the Constitution of India. Petition dismissed.

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• 2022 (5) TMI 3
  Provisional Attachment of Bank Accounts - no demand of pre-deposit to be made - powers under Section 44 of the VAT Act - HELD THAT:- There need not be any adjudication of the present writ application in details in view of the order passed by the Gujarat Value Added Tax Tribunal at Ahmedabad dated 14th March 2022. The appeals filed by the writ applicant herein are now to be heard on their own merits by the first appellate authority. As on date, there are no proceedings pending on the strength of which Section 45 of the Act can even be invoked. Section 45 is with respect to the provisional attachment. Section 45 can be invoked during the pendency of any proceeding of assessment or re-assessment. The assessment has already been undertaken. Section 44 of the Act will also have no application because Section 44 is with respect to the special mode of recovery and it is more in the nature of a garnishee provision. Section 46 confers special powers upon the tax authorities for recovery of tax as arrears of the land revenue. This provision also will have no application at this point of time. In view of the specific order passed by the Tribunal that the recovery proceedings shall continue to remain stayed till the final disposal of the first appeals, the attachment of the current bank account of the company maintained with the State Bank of India cannot operate any further - the impugned order of attachment passed by the State Tax Officer (4), Unit 6, Ahmedabad is hereby quashed and set aside - Application disposed off.

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• Indian Laws

• 2022 (5) TMI 2
  Dishonor of Cheque - settlement arrived between the parties - compounding of offences - HELD THAT:- The revision application is required to be allowed and the parties be permitted to compound the offence - it appears that the dispute is settled between the parties. The revision application is allowed.

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• 2022 (5) TMI 1
  Right to of Chartered Accountant (CA) to appear as counsel to appear before the Tribunal to defend the case on behalf of the JDA - Section 56 of the Rajasthan Real Estate (Regulation and Development) Act, 2016 - HELD THAT:- The right of legal representation through chartered accountants/company secretaries/cost accountants/lawyers is a part of principles of natural justice in any proceedings before the Tribunal or the regulatory authority - The concept of natural justice though not provided in Indian Constitution but it is considered as necessary element for the administration of justice. Natural justice is a concept of common law which has its origin in on jua natural which means a law of nature. Natural justice has a very wide application in administrative discretion. It aims to prevent arbitrariness and injustice towards citizen with an act of administrative authorities. Initially, the concept of natural justice was confined to judicial proceedings only but with passage of time, this concept is applicable even in quasi-judicial proceedings. In order to pass the test of permissible classification, two conditions must be fulfilled, viz., (i) that the classification must be founded on an intelligible differentia which distinguishes persons or things that are grouped together from those that are left out of the group; and (ii) that differentia must have a rational relation to the objects sought to be achieved by the statute in question. Non-inclusion of the word Respondent under Section 56 of the RERA Act sound harsh, unreasonable and contrary to constitutional spirit - It is the settled principle of law that two equals should be treated as equal. Both appellant/applicant and the respondents are equal for the authorities hearing the matter. When once right or legal representation through CA/CS/Cost Accountant and lawyer has been given to the applicant then deprivation of his right to the respondent amounts to violation of right of equality of the respondent contained under Article 14 of the Constitution of India. Thus, the clarification made by the legislature in not providing the right and legal representation to the respondent is not in conformity with the provisions of the Constitution. The provision under challenge violates the fundamental rights of the respondent citizens. Thus, this provision is arbitrary and discriminatory. Hence, in view of the settled position of law, as held by the Hon ble Supreme Court in the case of the INDEPENDENT THOUGHT VERSUS UNION OF INDIA AND ANR. [ 2017 (10) TMI 1602 - SUPREME COURT] , Court can either hold the law to be totally unconstitutional and strike down the law or the Court may read down the law in such a manner that the law read down does not violate the Constitution. The word Respondent under Section 56 of the Act of 2016, the respondent would also have the right of representation (like the applicant or appellant) to either appear in person or authorize one or more Chartered Accountants or Company Secretaries or Cost Accountants or Legal Practitioner or of its officer to present his or its case before the Appellate Tribunal or Regulatory Authority or the Adjudicating Officer, as the case may be - Petition allowed.

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