TMI Tax Updates - e-Newsletter
May 29, 2023
Case Laws in this Newsletter:
GST
Income Tax
Customs
Corporate Laws
Insolvency & Bankruptcy
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
Highlights / Catch Notes
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GST:
Provisional attachment of cash-credit facility - Section 83 of the CGST Act - In the instant case, it relates to recovery of GST. Subsection 5 of Section 159 clearly gives adequate power to the petitioner to file objection for releasing the bank account or, in the instant case cash-credit facility - In view of such circumstances, when there is efficacious relief in the statute itself, this Court is of the view that the petitioner should adopt such efficacious relief and this Court is not inclined to afford any relief under Article 226 of the Constitution. - HC
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GST:
Place of supply of services. - In order to examine whether Section 13(3)(b) of the IGST Act is applicable, it is necessary to identify the service provider and the service recipient. In the present case, under the Service Agreement, the service recipient is McDonald’s USA and the petitioner is the service provider. The supply of services by the petitioner to McDonald’s USA does not require the physical presence of McDonald’s USA. We are unable to follow as to why the physical presence of the service recipient, that is, McDonald’s USA, in India is necessary for receiving the services rendered by the petitioner or any third-party supplier. - HC
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GST:
Levy of tax and penalty - E-way Bill lost its validity - Appellate authority directed to dispose of the appeal preferred by the petitioner manually expeditiously and preferably within a period of eight weeks from the date of receipt/ production of a copy of this order, since it has been submitted by the learned counsel for the petitioner that the memo of appeal submitted manually contains all the grounds on which he has assailed the impugned order dated 19.02.2021. - HC
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Income Tax:
Transfer u/s 127 - Power to transfer case under the Faceless Assessment Scheme - Even under the Central Charges, the assessment proceedings are conducted through the e-proceeding functionality, and as such, the assessee or its authorised representative would not be bound to physically appear before the Assessing Officer on each date of hearing. In view of the above, no prejudice shall be caused to the assessees on account of their cases being transferred to the Central Circle. - HC
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Income Tax:
Nature of receipts - treatment to toll charges during the project construction - capital receipt or revenue receipts - toll receipts received during the period of project construction were inextricably linked to the project because it was mandatorily required to be used for the construction of the project - thus correctly treated as capital receipts and held that assessee had rightly reduced the same from the cost of project. - AT
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Income Tax:
Rectification of mistake u/s 154 - salary income - denying the HRA Exemption claimed u/s 10(13) - taxing the perquisites value twice - Without rejecting the Form No. 16 by the revenue authorities they are bound to accept the income/exemption/deductions and other contents therein shown in the Form No. 16 issued by the employer. Section 192 has cast duty upon the employer for deducting tax on the estimated income of employees at per the rate in force for the particular financial year and the employer has to issue Form No. 16 as per Rule 31(1)(a) - AT
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Income Tax:
Capital gain - JDA - transfer of capital asset u/s 2(47) - There is no document by which the revenue can come to the conclusion that there was delivery of possession. The mere fact that development of the property cannot be done without possession, cannot be the basis to come to a conclusion that, possession was delivered in part performance of the agreement for sale in the manner laid down in Sec.53A of the Transfer of Property Act - Additions towards capital gain deleted - AT
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Income Tax:
TP Adjustment - Interest on delayed receivables - only two instances where there has been a marginal delay of 60 days and 26 days. Considering the nominal delay in the realization period and the overall average realization period being well before the grace period - there is no requirement to charge any interest towards receivables and, therefore, the TP adjustment made in this regard should be deleted - AT
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Income Tax:
Additions towards Bogus purchases - Estimation of profit - Purchases are to be removed, the corresponding sale is also required to be removed from the profit and loss account, sales is higher than the purchases in rupees terms, therefore, the addition would be only required to be made to the extent of lower gross profit on alleged bogus purchases then the regular gross profit. It is not the case of the AO that amount invested in acquiring the bogus purchases should also be considered as an addition, because the only addition is disallowance of bogus purchases, no further addition is warranted. - AT
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Income Tax:
Assessment u/s 153A - validity of granting the approval u/s 153D - The action of the JCIT granting approval in this case was a mere mechanical exercise, accepting the draft order as it is, without any independent application of mind on his part. His action of granting the approval was thus, a mere mechanical exercise accepting the draft order as it is without any independent application of mind on his part. - Assessment orders passed u/s 153A r.w.s. 143 (3) stand cancelled. - AT
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Customs:
Levy of penalty u/s 112(a) - under-invoicing the import goods - Power of DRI to issue SCN - In the present case, the order was adjudicated by the Joint Commissioner of Customs and there is no dispute that he had the jurisdiction to adjudicate the question of levy of penalty under Section 122 of the Customs Act - the question as to whether the officers of DRI are proper officers for issuance of notice u/s 28 of the Customs Act does not arise in the present case. - HC
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Customs:
Refund of Special Additional Duty (SAD) - Period of limitation - Conditions of a notification should be strictly construed. This being so, as per sub para (c) of para 2 of the amended notification, which was effective on the date of the appellant filing the claim, the importer should have filed his claim before the expiry of one year from the date of payment of the said additional duty of customs. This has not been complied with and hence the claim has been correctly rejected by the impugned order. - AT
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Customs:
100% EOU - Joint filing of import documents by the EOU / EPZ unit and the domestic leasing company - The appellant cannot be faulted if the EDI system did not permit a joint filing of the import documents. Revenue has not disputed the appellants claim. - The appellant-EOU imported the impugned goods they would have been eligible for the exemption. Similarly, if Amul had jointly filed a Bill of Entry and executed a bond along with the appellant, they (Amul) too would have been eligible for the exemption. - Benefit of exemption allowed - AT
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Customs:
Smuggling - burden to prove - invocation of Section 123 - the statement recorded under Section 108 of the Customs Act, 1962 made before the customs officers is not a statement recorded under Section 161 of Cr.PC., for customs officers not being the police officers. Therefore, the statement got recorded by customs officer is the material piece of evidence which can be used as substantive evidence connecting the deponent with the alleged contravention of the customs act. - AT
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Customs:
Levy of penalty u/s 112(a) Though adjudicating authority has invoked the provisions of Prohibition of Benami Property Transactions Act, 1988 without any empowerment to do so, and ostensibly to bring the appellant within the scope of Customs Act, 1962 in circumstances initiating proceedings even before bill of entry was filed, that law, intended to be invoked for prosecution as a consequence of holding property in ‘benami’ as well as for interdiction of such property, exists as an independent statute not amenable for concatenation with Customs Act, 1962 by any enabling provision. - AT
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IBC:
CIRP - Seeking restraint/ injunction on the Respondents from encashing or appropriating the Performance Bank Guarantee - The Resolution Plan has been approved with the intent and purpose to revive the Corporate Debtor, which revival is in accordance with objective and purpose of the IBC - MC Lenders shall not invoke the Performance Bank Guarantee in the facts of the present case as on date, and for invocation, if any, MC Lenders may take leave of the Adjudicating Authority. - AT
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IBC:
Territorial Jurisdiction for consideration of section 7 application - on the issue of jurisdiction it is unambiguously clear that Punjab National Bank (International) Limited as financial creditor is fully entitled and authorised to take action in respect of section 7 application against the corporate debtor under the IBC before the NCLT, Mumbai which shall be the Adjudicating Authority to adjudicate the section 7 application. - AT
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IBC:
Implementation of the approved Resolution Plan - At no point of time, the Appellant made an application praying for any direction to the Resolution Applicant towards implementation of the Plan alleging any non-implementation - The Lenders and Banks are obliged to discharge their obligations as per the Resolution Plan. The fact that directions have been issued to the Appellant, cannot mean that Resolution Applicant is not to perform its obligation as per the Resolution Plan. - AT
Articles
Notifications
Circulars / Instructions / Orders
Case Laws:
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GST
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2023 (5) TMI 1125
Provisional attachment of cash-credit facility - Section 83 of the CGST Act - HELD THAT:- It is found from the record of the case that even the petitioner has been paying GST from the said cash-credit account - Be that as it may, it is held by this Court that cashcredit facility is not a debt and therefore, it cannot be made attachable. This Court is bound by the above-stated precedent.
Efficacious and speedy remedy in the statute - HELD THAT:- The issue as to whether relief under writ jurisdiction should be granted in a case where there is alternative statutory remedy was called upon for determination before the Hon’ble Supreme Court in relation Section 13 and Section 17 of the SARFAESI Act.
In MARDIA CHEMICALS LTD. VERSUS UNION OF INDIA [2004 (4) TMI 294 - SUPREME COURT], it was observed by the Hon’ble Supreme Court while dealing with a constitutional challenge to the validity of Section 17 of the SARFAESI Act that borrowers cannot be left remediless in this case they have been wronged by a secured creditor, bank or financial institutions and that borrowers have a right to approach the DRT after measures are taken against the borrower under Section 13 (4) of the Act and the same provides reasonable protection to the borrower - The Supreme Court ultimately held that the High Court will not ordinarily entertained a petition under Article 226 of the Constitution of India, if an effective remedy is available to the aggrieved person and that this Rule applies with greater rigour in matters involving recovery of public money and the dues of the bank and other financial institutions.
In the instant case, it relates to recovery of GST. Subsection 5 of Section 159 clearly gives adequate power to the petitioner to file objection for releasing the bank account or, in the instant case cash-credit facility - In view of such circumstances, when there is efficacious relief in the statute itself, this Court is of the view that the petitioner should adopt such efficacious relief and this Court is not inclined to afford any relief under Article 226 of the Constitution.
Petition dismissed.
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2023 (5) TMI 1124
Maintainability of petition - appealable order or not - availability of equally efficacious alternative statutory remedy - Rejection of Refund claim - It is not the case of the petitioner that the authority, which has passed the order lacks jurisdiction or that the order impugned is passed in violation of principal of natural justice - HELD THAT:- The vires of any of the provision of GST Act 2017 is also not called in question in this petition. That being the position, this petition cannot be entertained. Accordingly, this petition is dismissed - The petitioner is at liberty to avail alternative statutory remedy available under Section 107 of the 2017 Act.
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2023 (5) TMI 1123
Refund of tax paid on inputs - services rendered to McDonald’s USA, its holding company, under the Service Agreement without payment of Integrated Goods and Services Tax - intermediary services or not - place of supply of services.
Whether the petitioner is an intermediary within the meaning of Section 2(13) of the IGST Act in respect of services rendered under the Service Agreement?
HELD THAT:- The petitioner is liable to pay an initial franchisee fee for each restaurant operated or franchised by it. In addition, it is also liable to pay royalty equal to 5% of the gross sales from the operation of all restaurants on a monthly basis. There is no controversy regarding the payments made by the petitioner to McDonald’s USA under the MLA - It is material to note that the scope of services as mentioned in the Service Agreement, read in isolation, do not entail procurement or facilitating services from third-party suppliers.
The Adjudicating Authority held that the petitioner was performing services on behalf of McDonald’s USA in the backdrop of McDonald’s USA’s obligations - the Adjudicating Authority rejected the petitioner’s claim for refund of ITC.
Rendering service on behalf of another person does not render the service provider an intermediary - However, if it is found that McDonald’s USA is obliged to perform certain services to third parties and the petitioner is facilitating or arranging such services from third-party suppliers; the services performed by the petitioner may fall within the scope of intermediary services. However, it is essential that the principal service, the supplier of such services, and the service purchaser are identified to ascertain whether the services performed by the petitioner are those of a facilitator or one that arranges such services. The Order-in-Original has not analysed the services rendered by the petitioner on the aforesaid anvil.
There are no basis for the Appellate Authority to have concluded that the petitioner acts as a mediator between joint ventures/ franchisees and McDonald’s USA. The Appellate Authority has not considered that the MLA, which entitles the petitioner to enter into sub-licenses with franchisees, is a separate agreement. Further, certain observations made in the impugned order also indicates that the Appellate Authority has proceeded on the basis that providing services on behalf of another party amounts to acting as an intermediary.
In order to examine whether Section 13(3)(b) of the IGST Act is applicable, it is necessary to identify the service provider and the service recipient. In the present case, under the Service Agreement, the service recipient is McDonald’s USA and the petitioner is the service provider. The supply of services by the petitioner to McDonald’s USA does not require the physical presence of McDonald’s USA. We are unable to follow as to why the physical presence of the service recipient, that is, McDonald’s USA, in India is necessary for receiving the services rendered by the petitioner or any third-party supplier. Section 13(3)(b) of the IGST Act contemplates the location of service, whereby the presence of a service recipient is necessarily to be in India.
Section 13(5) of the IGST Act contemplates the supply of services by way of admission to, or organisation of a cultural, artistic, sporting, scientific, educational or entertainment event. It also contemplates admission to, or organisation of a celebration, conference, fair, exhibition or similar events. Conducting interviews, making reference checks or performing any screening services in connection with potential joint venture partners, franchisees or employees has no connection with the services as contemplated under Section 13(5) of the IGST Act.
The impugned order as well as the order passed by the Adjudicating Authority set aside - matter remanded to the Adjudicating Authority to consider the petitioner’s case afresh - petition disposed off.
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2023 (5) TMI 1122
Levy of tax and penalty - E-way Bill lost its validity without any finding of evasion of tax - Section 129(1) and (3) of CGST Act - HELD THAT:- Since the petitioner has an alternative remedy of an appeal which he has already availed of in terms of Section 107 of the JGST Act by filing the same manually which is being kept dormant by the Department, this writ application is disposed off with a direction to the Joint Commissioner (Appeals), Dhanbad Division, Dhanbad to dispose of the appeal preferred by the petitioner manually expeditiously and preferably within a period of eight weeks from the date of receipt/ production of a copy of this order, since it has been submitted by the learned counsel for the petitioner that the memo of appeal submitted manually contains all the grounds on which he has assailed the impugned order dated 19.02.2021.
It is once again made clear that the Joint Commissioner (Appeals), Dhanbad Division, Dhanbad is to decide the appeal as directed on the basis of the memo of appeal submitted manually by the petitioner and which is said to be lying dormant.
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2023 (5) TMI 1121
Maintainability of petition - availability of statutory remedy of appeal - non-constitution of the Tribunal - recovery of GST alongwith penalty - ex-parte order - non-application of mind - HELD THAT:- The petitioner is desirous of availing statutory remedy of appeal against the impugned order before the Appellate Tribunal under Section 112 of the Bihar Goods and Services Tax Act - However, due to non-constitution of the Tribunal, the petitioner is deprived of his statutory remedy under Sub-Section (8) and Sub-Section (9) of Section 112 of the B.G.S.T. Act.
Under the circumstances, the petitioner is also prevented from availing the benefit of stay of recovery of balance amount of tax in terms of Section 112 (8) and (9) of the B.G.S.T Act upon deposit of the amounts as contemplated under Sub-section (8) of Section 112.
The respondent State authorities have acknowledged the fact of non-constitution of the Tribunal and come out with a notification bearing Order No. 09/2019-State Tax, S. O. 399, dated 11.12.2019 for removal of difficulties, in exercise of powers under Section 172 of the B.G.S.T Act which provides that period of limitation for the purpose of preferring an appeal before the Tribunal under Section 112 shall start only after the date on which the President, or the State President, as the case may be, of the Tribunal after its constitution under Section 109 of the B.G.S.T Act, enters office.
Subject to deposit of a sum equal to 20 percent of the remaining amount of tax in dispute, if not already deposited, in addition to the amount deposited earlier under Sub-Section (6) of Section 107 of the B.G.S.T. Act, the petitioner must be extended the statutory benefit of stay under Sub-Section (9) of Section 112 of the B.G.S.T. Act. The petitioner cannot be deprived of the benefit, due to non- constitution of the Tribunal by the respondents themselves. The recovery of balance amount, and any steps that may have been taken in this regard will thus be deemed to be stayed.
Petition disposed off.
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Income Tax
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2023 (5) TMI 1118
Transfer u/s 127 - Power to transfer case under Faceless Assessment Scheme - assessments of the petitioners transferred to the Central Circle without sanction of the Central Board of Direct Taxes (‘CBDT’) - HELD THAT:- Almost all the High Courts have held that transfer under Section 127 of the Act for the purpose of coordinated investigation is a sufficient reason for passing of such an administrative order. Consequently, it is settled law that a transfer order under Section 127 of the Act does not affect any fundamental or legal right of an assessee and the Courts ordinarily refrain from interfering with exercise of such power.
Whether Central Circle jurisdiction is not confined to search cases only? - Central Charge is also conferred with jurisdiction over non-search case where coordinated investigation is required. The Circular dated 25th April, 2014 makes it clear that there is no restriction upon transferring of non-search cases to Central Circle.
Whether the power u/s 127 is in any manner trammelled upon or negated by introduction of the E-assessment and Faceless Assessment Scheme vide two Notifications each dated 12th September, 2019 and 13th August, 2020? - This Court is of the view that though in the year 2019, the concept of E-assessment and in 2020, the concept of Faceless Assessment were introduced, yet the Jurisdictional Assessing Officer continues to exercise concurrent jurisdiction with Faceless Assessing Officer - pursuant to exercise of power u/s 120(5) which empowers CBDT to confer concurrent jurisdiction on two or more AO for proper management of the work, the CBDT has vide Notification No.64/2020 dated 13th August, 2020 conferred power upon the Income-tax Authorities of the National e-Assessment Centre to exercise the power and function of assessment “concurrently” while the original jurisdiction continues with the Jurisdictional Assessing Officer.
If the Faceless Assessment Scheme has not modified Section 127 of the Act, the powers under the said Section would continue to apply to all cases in an unmodified manner.
Clause (xxi) of the Notifications No. 61/2019 and 62/2019 dated 12th September, 2019 issued in exercise of powers under Sections 143(3A) and 143(3B) of the Act in order to give effect to the E-assessment Scheme authorises the National e-Assessment Centre to transfer the case of the assessee at any stage of the assessment (i.e., only when the assessment proceeding is pending before the National e-Assessment Centre) to the Assessing Officer having jurisdiction over such case, as the scope of power and functions of National e-Assessment Centre is limited to facilitating the conduct of E-assessment.
This Court is of the view that the two Notifications dated 12th September, 2019 enlarge and supplement the power of transfer by authorising the National e-Assessment Centre to transfer at any stage of assessment the case of the assessee to the Assessing Officer having jurisdiction over such case i.e., from Faceless Assessing Officer to Jurisdictional Assessing Officer (an Assessing Officer always having concurrent jurisdiction).
Transfer of a case under Section 127 of the Act is an altogether different power which continues to exist even after introduction of the E-assessment/Faceless regime. Accordingly, the said Scheme does not in any manner trammel upon or negate the existing powers contained in Section 127 of the Act to transfer the cases as provided for thereunder. Consequently, the power of transfer under Section 127 of the Act is not in any manner denuded by the Faceless Assessment Scheme when the transfer is sought to be made from a Jurisdictional Assessing Officer under one Principal Commissioner of Income Tax to another Assessing Officer under a different Principal Commissioner of Income Tax who are not exercising concurrent jurisdiction over the case.
Fundamental or vested legal right to be assessed by faceless AO u/s 143(3A) AND 143(3B) as amendment - As no assessee has any fundamental or vested legal right to be assessed by a Faceless Assessing Officer by virtue of amendment of Sections 143(3A) and 143(3B) - Section 143(3A) of the Act stipulates that the Central Government ‘may make a Scheme’ to eliminate the interface between the Assessing Officer and the Assessee. This implies that the Central Government has the discretion to frame or not to frame a Faceless Assessment Scheme. Consequently, the argument that Faceless Assessment is a vested right, fails to consider the language of the statute itself.
Secondly, the Notification No. 61/2019 dated 12th September, 2019 itself clarifies under the heading ‘3. Scope of the Scheme – The assessment under this Scheme shall be made in respect of such territorial area, or persons or class of persons, or incomes or class of incomes, or cases or class of cases, as may be specified by the Board’.
Even under the Central Charges, the assessment proceedings are conducted through the e-proceeding functionality, and as such, the assessee or its authorised representative would not be bound to physically appear before the Assessing Officer on each date of hearing. In view of the above, no prejudice shall be caused to the assessees on account of their cases being transferred to the Central Circle.
‘Guilt by association’ or ‘guilt due to relationship’ - Undoubtedly, the principle of law laid down by the Supreme Court in Chintalapati Srinivasa Raju vs. Securities and Exchange Board of India[2018 (5) TMI 931 - SUPREME COURT] is that there can be no ‘guilt by association’ or ‘guilt due to relationship’, yet in the present batch of writ petitions, the assessments of the petitioners have been transferred only for the purposes of coordinated investigation and meaningful assessment.
This Court clarifies that in the present batch of writ petitions, it has not relied upon the original files produced by the respondents, as there are sufficient reasons to justify the administrative decision to transfer the cases of the petitioners from Jurisdictional Assessing Officer to Central Circle.
Power to transfer cases u/s 127 as a two step process - The power under Section 127 of the Act to transfer the “case” or “all proceedings under the Act” is nowhere provided for under the aforesaid schemes. Moreover, the submission that the Notifications dated 12th September, 2019 and 13th August, 2020 permits transfer in the first instance only from National e-Assessment Centre to the Jurisdictional Assessing Officer is untenable in law as there may be cases where no assessment is pending before the Faceless Assessing Officer, yet the case of the Assessee is transferred to Central Circle. Consequently, Section 127 of the Act to the extent it permits transfer from one Assessing Officer under a Principal Commissioner of Income Tax to another Assessing Officer under another Principal Commissioner of Income Tax who are holding non-concurrent charges remains untouched and continues to apply in its pristine form.
Conclusion - This Court is of the view that the assessments of the petitioners have been transferred to the Central Circle in accordance with law by way of the impugned orders passed u/s 127 of the Act. Accordingly, the present writ petitions along with pending applications are dismissed.
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2023 (5) TMI 1112
Estimation of profit - Disallowance of expenses (operational cost and administrative expenses) for want of complete documents - HELD THAT:- CIT(A) goes to prove that since the assessee company has merged with Exterio and Interio Pvt. Ltd by the order passed by the Hon’ble Bombay High Court which was subsequently merged with Azura Projects Pvt. Ltd by NCLT despite numerous opportunities the assessee company could not produce the complete evidence so the ld CIT(A) proceeded to assess the profit of the company qua the receipt in question @3% on the basis of profit earned by it in the earlier years i.e. FY 2008-09 to 2010-11, wherein, profit was @2.27%, 3.85% and 3.26% respectively, which was subject to verification by the AO. Moreover, the ld CIT(A) proceeded to estimate the percentage of profit after rejecting the books of account of the assessee.
CIT(A) has taken a plausible view in the interest of justice and fair play. Decided against revenue.
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2023 (5) TMI 1111
Provision made to Shahenshah Scheme - whether contingent liability and therefore not allowable for deduction? - HELD THAT:- Co-ordinate Bench of Tribunal, while deciding identical issue in assessee’s own case for A.Y. 2006-07 has given a finding that the provision created by the assessee is on a scientific basis. Before us, no distinguishing feature in the facts of the case under consideration and that of earlier years has been pointed by Revenue. Revenue has also not placed any material to demonstrate that the order in assessee’s own case for earlier years has been set aside/stayed/overruled by higher judicial forum. No reason to interfere with the order of CIT(A) and thus the grounds of Revenue is dismissed.
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2023 (5) TMI 1110
Addition u/s 68 - sales made by the assessee to five parties assessed as income of the assessee - CIT-A deleted addition - HELD THAT:- No infirmity in the order passed by the Ld.CIT(A) in holding that the sales cannot be added u/s 68 unless they are proved as bogus on the basis of some reliable evidences. Decided against revenue.
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2023 (5) TMI 1109
Penalty order u/s. 271(1)(c) - assessee has not disclosed the capital gain earned on account of the JDA - HELD THAT:- Admittedly the assessee has not disclosed the capital gain arose to him on account of the JDA in ROI/assessment proceedings. In fact as rightly pointed out by the Ld.DR that the assessee has not disclosed the capital gain in any of the two assessment years.
Disclosure of the capital gain at the appellate stage - Having failed to disclose the capital gain in the assessment year and filing the return of income disclosing capital gain and paying the due taxes, CIT(A) had issued the enhancement notice to assessee. The additions were admitted by the assessee and thereafter the ld.CIT(A) had made the addition in the hands of the assessee. The disclosure of the capital gain at the appellate stage, was thus not voluntary as the said admission of capital gain only happened after receipt of the enhancement notice from the office of the CIT(A). Thus, the assessee had concealed the capital gain income while filing the ROI & before the AO.
Order passed by the Ld. CIT(A) is in accordance with law as there was lack of bona fideness and voluntaryness in declaring the capital gain in the return of income and thereafter also. Decided against assessee.
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2023 (5) TMI 1108
Addition on account of house hold drawings - assessee being a senior citizen was living at his own house with his wife with no other liabilities - HELD THAT:- The details of expenses mentioned elsewhere appears to be very reasonable as the expenses relating to electricity, gas, telephone were paid by account payee cheque also the medical expenses have been paid by cheque and no adverse inference have been drawn in respect of this detail.
AO has simply estimated the expenses whereas the assessee has furnished the actual details, therefore, considering the age of the assessee no merit in the addition made by the AO - Appeal of the assessee allowed.
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2023 (5) TMI 1107
Assessment u/s 153A - Addition u/s 68 - assessee neither furnished any explanation nor the party to the agreement responded to the summons issued by the AO - CIT (A) deleted the addition on the ground that the transaction of forfeited amount was accounted for by the assessee in the books of accounts and the agreement referred to by AO is not incriminating material found during search operation - HELD THAT:- Since the assessment year under consideration is a completed assessment year, any addition/disallowance ought to have been made by AO on the basis of /evidence as such incriminating material/evidence as found during the search proceedings including CIT Vs. Kabul Chawla [2015 (9) TMI 80 - DELHI HIGH COURT] - additions made by AO is not sustainable and deserve to be deleted as the addition had been made during the regular course of assessment proceedings and not on the basis of incriminating material/evidence found during the search proceedings.
No infirmity in the order passed by the ld. CIT (Appeals). Decided against revenue.
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2023 (5) TMI 1106
Nature of receipts - treatment to toll charges during the project construction - capital receipt or revenue receipts - HELD THAT:- As during the construction of the 6 lane toll road, assessee was not free to utilize the toll receipts but was obliged to use the toll receipts in construction of the project as per the overriding obligation under the Concession Agreement and Escrow Agreement and assessee had in fact utilized the toll receipts in the project construction - toll receipts received during the period of project construction were inextricably linked to the project because it was mandatorily required to be used for the construction of the project - thus correctly treated as capital receipts and held that assessee had rightly reduced the same from the cost of project. Decided against revenue.
Addition of interest income on fixed deposit as treated by AO as taxable income - As per AO interest income was Revenue in nature and it had no relation with the construction of capital assets which was 6 laning of highway - HELD THAT:- Assessee was required to provide Bank Guarantee to NHAI for the performance of its obligations under the concession agreement and for the purpose of opening such bank guarantee, assessee had to open an Fixed Deposit with Canara Bank as margin money and on such margin money assessee had received impugned interest. Contention of assessee that interest earned was inextricably linked to the construction of the project accepted. As in the case of Indian Oil Panipat Power Consortium Limited [2009 (2) TMI 32 - DELHI HIGH COURT] had decided the issue in favour of the assessee. Decided against revenue.
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2023 (5) TMI 1105
Rectification of mistake u/s 154 - salary income - denying the HRA Exemption claimed u/s 10(13) - taxing the perquisites value twice - HELD THAT:- On going through the Paper Book filed by the assessee in Form 16 in which the value of perquisite u/s 17(2) has been added into the income of the assessee whereas it has been twice considered by the CPC which is wrong. Therefore, the addition is to be deleted.
In Form 16, the employer has also given exemption u/s 10(13A) for HRA and employer has also granted deduction under Chapter VI A out of which part is breakup of LIC premium, unit linked insurance plan, housing loan principal repayment and employee PF has also been allowed under section 80C.
Without rejecting the Form No. 16 by the revenue authorities they are bound to accept the income/exemption/deductions and other contents therein shown in the Form No. 16 issued by the employer. Section 192 has cast duty upon the employer for deducting tax on the estimated income of employees at per the rate in force for the particular financial year and the employer has to issue Form No. 16 as per Rule 31(1)(a). Appeal of the assessee allowed.
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2023 (5) TMI 1104
Capital gain - JDA - transfer of capital asset u/s 2(47) - HELD THAT:- What is given is not possession contemplated u/s. 53A of the Transfer of Property Act and that it is merely a license to enter the property for the purpose of carrying out development. Invocation of the provisions of Sec.2(47)(v) on the basis of clause 1.1 of the JDA, in our view was not proper.
Obligation cast on the Transferee(developer) to possession in the present is traced to the joint development agreement which is in the nature of permissive possession and not possession in part performance of agreement for sale.
There is no document by which the revenue can come to the conclusion that there was delivery of possession. The mere fact that development of the property cannot be done without possession, cannot be the basis to come to a conclusion that, possession was delivered in part performance of the agreement for sale in the manner laid down in Sec.53A of the Transfer of Property Act - Appeal filed by assessee stands allowed.
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2023 (5) TMI 1103
Denial of foreign tax paid - assessee furnished the statement in Form 67 with a delay - effect of overriding provisions - HELD THAT:- We find from Article 25(2)(a) of the DTAA that where a resident of India derives income which, in accordance with the provisions of the convention, may be taxed in the United States, India shall allow as a deduction from the tax on the income of the resident an amount equal to the income tax paid, paid in the United States, whether directly or by deduction.
In view of this provision over riding the provisions of the Act, according to us, Rule 128(9) of the Rules has to be read down in conformity thereof. Rule 128(9) of the Rules cannot be read in isolation. Rules must be read in the context of the Act and the DTAA impacting the rights, liabilities and disabilities of the parties.
We allow the appeal, and direct AO to verify the details of the foreign tax paid by the assessee on the earnings at foreign source and take a view inconformity with the established law as discussed - Appeal of the assessee is allowed.
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2023 (5) TMI 1102
Assessment u/s 153A - incriminating material found in search or not? - HELD THAT:- As settled position of law says that in search cases no incriminating material is unearthed during the search, AO cannot assess or reassess taking into consideration the other material in respect of completed assessments/unabated assessments.
No error having been committed by the ld. CIT(A) in accepting the plea of the Assessee that there is no incriminating document which was seized in the course of search relating to the addition sought to be made on account of the capital gain so arising on account of compulsory acquisition, the land is already accepted and reflected in the return of income filed by the assessee in the all the past years and even the assessee is doing so consistently. Therefore, the jurisdictional requirement of Section 153A of the Act was not satisfied in this case. Decided against revenue.
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2023 (5) TMI 1101
TP Adjustment - Interest on delayed receivables - assessee is having some receivables outstanding from the AE and imputed interest @8% after considering 30 days’ grace period as per the terms of payment allowed by the assessee to its AE - HELD THAT:- Average realization period of the assessee is (-)47 days which would mean that on an average, the realization happens well before the due date. We also notice that only two instances where there has been a marginal delay of 60 days and 26 days. Considering the nominal delay in the realization period and the overall average realization period being well before the grace period, in our view, there is no requirement to charge any interest towards receivables and, therefore, we hold that the TP adjustment made in this regard should be deleted. This ground is allowed in favour of the assessee.
Interest on share application money - TPO charged interest @8% on the share application money - HELD THAT:- As relying on assessee own case [2022 (4) TMI 543 - ITAT MUMBAI] we hold that no interest shall be imputed on the share application money. It is ordered accordingly.
Imputing commission with respect to Corporate Guarantee - HELD THAT:- We direct the TPO to recompute the guarantee commission @0.5% for the year under consideration - assessee has raised specific objection before the Ld.DRP with regard to Stripes Farmaceutica Participacoes Ltd, Brazil that the guarantee was provided only in the next year and not in the year under consideration. DRP has not given any specific finding in this regard. We therefore direct the TPO to examine factually as to the year in which the guarantee was provided to Stripes Farmaceutica Participacoes Ltd, Brazil while recomputing the guarantee commission.
Plea of the assessee before the DRP that the guarantee commission should be restricted for the period of guarantee has not been considered and the TPO in the case of Starmore Ltd has computed the adjustment for the entire year though guarantee was provided only on 17th March, 2010. We direct the TPO to consider period of guarantee while re-computing the guarantee commission as per the directions in this order.
Upward adjustment to the consideration received towards sale of investments to AE - HELD THAT:- TPO while arriving at the value of the shares had not given any working as to how the value as arrived at but has just stated that the value is based on the financials as of 31st December 2010.
DRP has proceed to compute the value of shares by applying a DCF method by stating that the DCF is the most appropriate method. Valuation method adopted by the assessee cannot be rejected without scrutinizing the valuation done by the assessee though the DRP is well within its rights to examine the methodology adopted by the assessee and/or underlying assumptions and if not satisfied, it can challenge the same and suggest necessary modifications/alterations provided the same are based on sound reasoning and rationale basis. No such specific findings is given by the DRP - remit the issue back to the AO/TPO with a direction to examine the NAV method of valuation as adopted by the assessee afresh excluding the revaluation reserve for the year ended 31st December 2009 and decide in accordance with law.
Disallowance of deduction claimed u/s 10B - assessee's activity for area of work comprises of development of generic version of products by reformulating an existing innovative product - HELD THAT:- Assessee is entitled for deduction under section 10B of the Act in respect of STAR division.
Disallowance of FCCB Premium - HELD THAT:- The deduction claimed by the assessee for the year under consideration is a continuation of 1/5th of FCCB premium as claimed in AY 2008-09 and therefore the issue is covered by the above decision of the coordinate bench. DRP in assessee’s case for AY 2013-14 has directed the AO to allow the premium on redemption of FCCB of USD 100 Mn as a deduction provided the assessee withdraws the claim in 2009-10 to 2013-14. Direct the AO allow the deduction claimed by the assessee towards FCCB premium u/s. 37(1) of the Act taking into consideration the directions of the DRP for AY 2013-14.
Disallowance of FCCB issue expenses - included as part of FCCB premium expenses - HELD THAT:- We notice that the issue of disallowance of FCCB issue expenses have also been considered by the co-ordinate bench in assessee’s own case for A.Y. 2008-09 and the relevant part of the decision have been extracted in the earlier part of this order. Respectfully following the same, we hold that the FCCB issue expense is allowable.
Disallowance u/s 14A - HELD THAT:- AO and the DRP have not considered the submissions of the assessee and fact being identical to AY 2008-09 we remit the issue back to the AO for a fresh consideration. AO is directed to keep in mind the decisions of Delhi International Airport [2022 (10) TMI 300 - DELHI HIGH COURT] and Era Infrastructure [2022 (7) TMI 1093 - DELHI HIGH COURT] after giving a reasonable opportunity of being heard to the assessee.
MAT computation - DRP with respect to adjustments made in the book profits with respect to disallowance made u/s 14A and leave encashment, gave a direction to AO to exclude the component of leave encashment from the workings of the profit for the purpose of MAT computation, which was not followed - HELD THAT:- We direct the Assessing Officer to consider the directions given by the DRP and recompute the book profits accordingly.
Disallowance of weighted deduction u/s 35(2AB) - HELD THAT:- As assessee should be allowed the weighted deduction as has been claimed in the return of income and accordingly direct the assessing officer to delete the disallowance made in this regard.
Disallowance u/s 14A while computing book profits computed u/s 115JB - HELD THAT:- As we direct the AO to delete the addition of disallowance under section 14A while computing book profit under section 115JB of the Act.
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2023 (5) TMI 1100
Additions towards Bogus purchases - Estimation of profit - companies are engaged in providing accommodation entries or sending bogus foreign remittances to entities based in Hong Kong and UAE in guise of bogus import purchases - HELD THAT:- CIT- A has correctly considered that the purchases from these parties is genuine when part of purchases from the same parties is not disputed, even otherwise, even if it is held that the purchases from these parties are bogus, then also, the proper course would be to determine the profit arising from the purchases by looking at corresponding sales and what amount of gross profit is earned on alleged bogus purchases.
If the alleged bogus purchases show gross profit higher than the regular gross profit shown by the assessee, no further addition is required to be made in the hands of the assessee. The logic behind this is that sale is already accounted for on the credit side of the profit and loss account.
Purchases are to be removed, the corresponding sale is also required to be removed from the profit and loss account, sales is higher than the purchases in rupees terms, therefore, the addition would be only required to be made to the extent of lower gross profit on alleged bogus purchases then the regular gross profit. It is not the case of the AO that amount invested in acquiring the bogus purchases should also be considered as an addition, because the only addition is disallowance of bogus purchases, no further addition is warranted.
Disallowance of commission expenditure - HELD THAT:- As commission has been paid on export of diamond stating the details of exports made by the assessee, respective commission and details of service tax collected thereon. The assessee has also produced the details of other commission expenditure incurred by the assessee at page number 65 onwards, which are also identical. There is no reason to differentiate between the nature of services rendered by the commission expenditure accepted by the assessee as genuine and the details of alleged bogus commission expenditure. We do not find any infirmity in the order of the learned CIT – A in deleting the disallowance of commission expenditure. Therefore, ground number 3 of the appeal is dismissed.
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2023 (5) TMI 1099
Addition u/s 56(2)(x) - deemed sale consideration - stamp duty valuation of property being higher than the transaction value - assessee is claiming, stamp duty valuation of the flat as on the date of the agreement as deemed sale consideration for the purpose of section 56(2)(x)(b) invoking the first & second proviso to the said section - HELD THAT:- In the instant case, the son of the assessee has been allotted the concerned flat on 22.11.2010 and the assessee has become co-owner of the said property. The assessee has filed copy of the registered Deed which indicates that a cheque was paid in respect of the allotment of the property on 11.11.2010.
The assessee has also filed a copy of bank statement of Shri Ashish Modi from which it is seen that the said payment has been withdrawn from his bank account on 23.11.2010. As far as the condition of part payment is considered, it is not in dispute. CIT(A) and the AO has disputed the allotment letter. According to the AO and CIT(A), the allotment letter is not in the nature of the agreement for sale. However, we find that the Tribunal in the case of Parth Dasrath Gandhi vs Addl./Deputy/Asst. CIT [2023 (1) TMI 1253 - ITAT MUMBAI] held that “the allotment letter should be considered as agreement for sale.”
The assessee fulfills the requirement of proviso 1 & 2 of section 56(2)(x)(b) of the Act and therefore, we feel appropriate to restore this issue to the file of the AO for limited purpose of comparing the stamp duty valuation as on the date of the allotment with the transaction value recorded in the registration document. Accordingly, the AO shall give effect to this decision after affording adequate opportunity of being heard to the assessee in terms indicated above. The Grounds raised by the assessee are accordingly, allowed.
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2023 (5) TMI 1098
Stay on recovery of outstanding demand - demand arises because of treatment given to the gain derived by the assessee from sale of compulsory convertible preference shares (CCPS) as short term capital gain - assessee is a non-resident individual - HELD THAT:- As in the case of DIT vs. Mitsubishi Corporation [2021 (9) TMI 875 - SUPREME COURT] we find substantial merit in the submissions of assessee that interest u/s. 234B is not leviable as the assessee is a non-resident and tax has been withheld on the gain derived. So, if the interest component is removed, balance tax demand works out to Rs. 248,35,14,727/-. Whereas, the assessee has paid tax by way of TDS amounting to Rs.153,23,33,751/-, which covers more than 50% of the disputed tax liability of the assessee.
Therefore assessee cannot be directed to pay any further amount out of the disputed demand. However, considering the fact that the assessee is a non-resident, to secure the interest of Revenue, we direct the assessee to furnish a bank guarantee for an amount of Rs.10.00 crores before the Ao on or before 2nd of June, 2023, which shall remain in force till the disposal of the corresponding appeal of the assessee.
Subject to furnishing of such bank guarantee within the stipulated date, recovery of the balance outstanding demand shall be stayed for a period of 180 days from the date of this order or till disposal of the corresponding appeal of the assessee, whichever is earlier. It is made clear, in case the assessee seeks any adjournment without compelling reasons, there is likelihood of vacation of this stay order.
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2023 (5) TMI 1117
Reopening of assessment - order u/s 148A(d) - Appeal against appealable order - Single Bench had dismissed the writ petition on the ground that during the pendency of the writ petition, an order under Section 147 passed, which is an appealable order - HELD THAT:- It is true that the assessee had filed the writ petition only on 16th March, 2023. However, in the interregnum, the Assessing Officer has not passed the order u/s 147 - such an order was passed during the pendency of the writ petition presumably on the ground that no interim order was in force in the writ petition.
The opportunity afforded at the first instance should be an effective opportunity because the power of reopening of an assessment is a power, which is to be sparingly used for adequate reasons. Therefore, we are convinced to hold that there has been violation of principles of natural justice.
Appeal is allowed and the order passed in the writ petition is set aside and the writ petition is allowed and the order passed u/s148A(d) and the assessment order dated 22nd March, 2023 are set aside and the matter stands restored to the file of the respondents/Assessing Officer at the stage of the show-cause notice under Section 148A(b).
Assessee is directed to submit a comprehensive reply enclosing all documents in support of his claim and the Assessing Officer shall redo the process in accordance with law.
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2023 (5) TMI 1097
Assessment u/s 153C - Period of limitation - date of recording of satisfaction - satisfaction recorded in searched person and the person other than the searched person - Scope of amended provisions of section 153C - HELD THAT:- As decided in own case [2022 (2) TMI 1270 - ITAT DELHI] once the amended provisions of sections 153A and 153C are applicable in respect of search and seizure operation initiated u/s 132 or requisition made u/s 132A post 01.04.2017, the provisions of sections 153A and 153C would be applicable to the same set of assessment years, both in case of the searched person and the person other than the searched person.
In case of other person u/s 153C starting point for computation of the block period would be the date from on which based on the seized documents, notice is issued to the other person - As further held that the amendment made in section 153C by Finance Act 2017 w.e.f. 1st April 2017 which states that block period for the “searched person” as well as the “other person” would be same six AYs immediately preceding the year of search is only prospective. It makes the things clear that the search that took place in this case is prior to amendment unaffected by the amendment made by way of Finance Act 2017.
Impugned assessment order passed u/s 153C is wholly without jurisdiction, hence, invalid. Accordingly, we quash the same. Consequently, the order of Commissioner (A) is set aside. - Decided in favour of assessee.
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2023 (5) TMI 1096
Nature of liability - Adhoc provisions on account of contingent liabilities or ascertained liabilities - CIT-A deleted the addition - HELD THAT:- AO has erred in holding provision for unsettled claims as contingent liability. We find that ld. CIT (A) has passed correct order which does not need any interference from us. The liability in this regard is duly ascertained. Hence, this ground raised by the Revenue is dismissed.
Disallowance for provision for IBNR claims as contingent liability - CIT-A deleted the addition - HELD THAT:- We find that ld. CIT (A) has taken correct decision, which does not need any interference on our part. The case law from Kolkata Bench of ITAT in the case of DCIT vs. National Insurance Co. Ltd [2011 (10) TMI 669 - ITAT KOLKATA] duly holds that these are ascertained liabilities. Hence, we uphold the order of ld. CIT (A). Decided against revenue.
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2023 (5) TMI 1116
Assessment order based on an earlier assessment order passed in an entity going by the name ‘Caruna Bal Vikas’ [ CBV] - The contention being that AO in passing the impugned assessment order has extracted only a part of the reassessment order passed in the case of CBV - petitioner, says that the reassessment order as it stands today, is intact, although CBV has preferred an appeal qua the same - HELD THAT:- As the petitioner is entitled to seek a direction that while disposing of the appeal, respondent no. 2 should consider the entirety of the reassessment order passed in the matter concerning CBV, and the judgments that the petitioner has relied upon.
One of the judgments as adverted to, in this context, has been passed in the matter of Director of Income Tax vs. Society for Development Alternatives [2012 (1) TMI 77 - DELHI HIGH COURT].
We are inclined to dispose of the writ petition with the following directions:
Respondent no. 2 will dispose of all pending appeal at the earliest, though not later than three (3) months from the date of receipt of a copy of the judgment.
While adjudicating the appeal, respondent no. 2 will take into account the entirety of the reassessment order dated 31.12.2016 passed in the case of CBV and the judgments on the issue concerning restricted grant.
We may note that the source of the grant is an organization going by the name Compassion International (CI). Mr Jebraj says that CI channeled the grant to CBV, which, in turn, gave a restricted grant to the petitioner. These are the aspects that respondent no. 2 will deal with while adjudicating the pending appeal.
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2023 (5) TMI 1115
Reopening of assessment - validity of order passed u/s 148A(d) - reopening on new set of facts - giving less than three days time to the assessee to respond - as alleged show cause notice u/s 148A(b) issued and subsequently corrigendum was issued with a different allegation alleging that the assessee had entered into bogus transactions with a different person than the person who was named in show cause notice - HELD THAT:- The chain of events have been set out to show that there has been violation of principle of natural justice at different stages of the matter. The reopening of an assessment is a very serious matter and if such power is resorted to the assessee is entitled to an adequate opportunity to put forth their submissions.
In the order passed u/s 148A(d) names of 12 companies have been mentioned which was never the allegation when the show cause notice under Section 148A(d) of the Act was issued and, therefore, as submitted that the assessing officer proceeded on entirely a new set of facts which were never put to the assessee.
We are of the view that the reassessment proceedings has to be redone and even if the assessment order has been passed, the same is required to be set aside and the matter is to be restored to the assessing officer for a fresh consideration. Assessee appeal is allowed.
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2023 (5) TMI 1095
Unexplained cash deposits - HELD THAT:- As assessee need to be given one more opportunity to adduce evidence from Shri Indrajeet Chaterjee that after withdrawal of amount he has deposited the same in assessee’s/proprietary bank account as contended by assessee even though we are aware that assessee has changed the source of income from sale of cattle etc - set aside the impugned order of Ld. CIT(A) and restore the appeal back to the file of Ld. CIT(A) to decide afresh the issue as observed .
Unexplained cash credit - HELD THAT:- As the source of Rs.9.60 Lakhs stands proved and since its nature of transaction is loan as noted by AO in his remand report, it cannot be taxed. And since AO has accepted that Rs.10 Lakhs has been offered by assessee as income in his remand report as well as the fact that assessee has offered the same for taxation. Therefore Rs.9.60 Lakhs and Rs.10 Lakhs ought to have been deleted by the Ld. CIT(A) as observed in the remand report of AO. Therefore, we direct deletion of addition of Rs.19.60 Lakhs. Thus, Rs.19.60 Lakhs stands explained, so Rs.19.60 Lakhs is directed to be deleted; and the addition of Rs.4.73 crores is set aside back to Ld. CIT(A) as directed.
CIT-A power to issue directions to AO to reopen the assessment for earlier/subsequent AYs - Action of the Ld. CIT(A) directing the AO to assess the unexplained cash credit in the year in which it was received u/s150(1) - whether, while disposing of the assessee’s appeal for Assessment Year 2013-14, whether the Ld. CIT(A) has power to give directions to the AO to reopen the assessment for any other Assessment Year’s? - HELD THAT:- As per case of ‘N. KT. Sivalingam Chettiar [1967 (3) TMI 16 - SUPREME COURT] observed that a finding within the second proviso to section 34(3) must be necessary for giving relief in respect of the assessment of the year in question; and that the word “finding” only covers material questions which arise in a particular case for decision by the authority hearing the case or appeal which, being necessary for the subject of the controversy between the interested parties, or on which the parties concerned have been given a hearing.
Since no decision contrary to the above case laws has been brought to our notice, respectfully following the above decision of the Hon'ble Supreme Court, High Courts and the Tribunal in M/s. Sahara City Homes, Bareilly [2022 (2) TMI 171 - ITAT LUCKNOW] we are of the view that the Ld. CIT(A) had no power to issue directions to the Assessing Officer to reopen the assessment for earlier/subsequent Assessment Years which was not in appeal before him.
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2023 (5) TMI 1094
Assessment u/s 153A - validity of granting the approval u/s 153D - HELD THAT:- It is not mentioned in the approval that what is the amount of determination of income in each assessment year of each assessee. Approval was granted within 24 hours of proposal. Approval have been granted on the same day on 22.12.2017 despite the fact that A.O. was having his office at Jabalpur and JCIT was holding his Office at Bhopal in which there is a significant distance.
Not humanly possible to look into assessment records as well as draft assessment orders thereon and apply its own mind objectively by a senior designated authority involving such complex matters and grant approval as contemplated under section 153D - Not mentioned as to how the draft order and assessment record, if any, have been received by JCIT, if he has gone through the assessment record or that assessment record, about the mode, through which, assessment record was transmitted by AO at Bilaspur to JCIT, Raipur and vice-versa. It is also noted that the AO had time till September 2019 for passing the assessment order, why the approvals were granted within 24 hours and order also was passed. The approval given was a conditional approval and on the basis of presumption only
The action of the JCIT granting approval in this case was a mere mechanical exercise, accepting the draft order as it is, without any independent application of mind on his part. His action of granting the approval was thus, a mere mechanical exercise accepting the draft order as it is without any independent application of mind on his part.
Assessment orders passed u/s 153A r.w.s. 143 (3) stand cancelled. Decided in favour of assessee.
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2023 (5) TMI 1093
Validity of assessment order passed u/s 143(3) - scope of provisions of section 153(1) - period of limitations - due date for completing the assessment would be 60 days - HELD THAT:- As no information was sought by the Indian Tax Authorities from MRA after the receipt of information on 14.07.2015 qua the assessee herein. Hence the due date for completing the assessment would be 60 days from 14.07.2015 as per the proviso to Explanation 1 to Section 153 of the Act, which would be 12.09.2015.
We hold that the assessment order passed u/s 143(3) of the Act in the case of the assessee ought to be passed on or before 12.09.2015 in view of the provisions of section 153(1) read with Explanation 1 and proviso to the said explanation. The assessment order, having been passed on 30.03.2016 is clearly beyond the time limit of 12.09.2015 and hence we have no hesitation to conclude that the assessment order is time barred and bad in law. Decided against revenue.
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2023 (5) TMI 1120
Reopening of assessment u/s 147 - scope of enactment of Section 148A - benefit of relaxation/extension under the Taxation and Other Laws (Relaxation And Amendment of Certain Provisions) Act' (TOLA) 2020 - As directed by HC[2023 (2) TMI 1081 - ALLAHABAD HIGH COURT]reassessment proceedings initiated with the notice u/s148 (deemed to be notice u/s148-A), issued between 01.04.2021 and 30.06.2021, cannot be conducted by giving benefit of relaxation/extension under TOLA 2020 upto 30.03.2021, and the time limit prescribed in Section 149 (1)(b) (as substituted w.e.f. 01.04.2021) cannot be counted by giving such relaxation from 30.03.2020 onwards to the revenue.
Also proceedings where the first proviso to Section 149(1)(b) is attracted, benefit of TOLA' 2020 will not be available to the revenue.
HELD THAT:- Issue notice returnable on 10.07.2023.
In the meantime, the impugned judgment and order passed by the High Court is ordered to be stayed.
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2023 (5) TMI 1092
Revision u/s 263 - As per CIT AO without making enquiry allowed the expenses which are not allowable in nature as a business expenditure - HELD THAT:- No evidence or material coming from assessee to substantiate that the AO has made any enquiry with respect to the twin-expenses noted by PCIT.
No query having been raised by AO with respect to impugned twin-expenses claimed by assessee. AR is not able to demonstrate as to how the AO has enquired or verified the impugned claim of expenses made by assessee.
No hesitation in observing that the present case perfectly fits in Explanation 2 to section 263, as re-produced earlier, according to which an order passed by the AO is deemed to be erroneous if (a) the order is passed without making inquiries or verification which should have been made; or (b) the order is passed allowing any relief without inquiring into the claim. Being so, we uphold the impugned revision-order Decided against assessee.
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2023 (5) TMI 1091
Trading addition in Baddi unit - assessee maintained complete books of accounts as as rejected by the Ld. AO u/s 145(3) - HELD THAT:- Tribunal in its order for AY 2003-04 held that the assessee had maintained complete books which were produced before the statutory auditors as well as the Ld. AO. Therefore, the books of account could not have been rejected u/S145(3). no decline in GP rate as compared to the immediately preceding year. No justifiable reason has been brought on record to apply NP ratio on declared sales in Baddi unit. The impugned addition has rightly been deleted by the Ld. CIT(A). We, therefore, reject this ground of the Revenue.
Disallowance of expenses debited to P&L account - expenses are not verifiable for want of bills, vouchers etc. - HELD THAT:- The assessee has stated that month wise details of expenses were furnished before the Ld. AO duly supported with vouchers which were examined by him and no defect was pointed out. Books of account were produced along with supporting vouchers and CIT(A) test checked them and disagreed with the Ld. AO that the assessee failed to establish the genuineness of expenses incurred for business purposes. We agree with the view of the Ld. CIT(A) that disallowance made on ad-hoc basis is not justified and therefore decline to interfere and reject this ground of the Revenue.
Disallowance made out of R&D expenses - real utility of expenses incurred on R&D for assessee's own business is not verifiable and the products of the other concerns are developed by incurring such expenses - HELD THAT:- We do not agree. The nature of assessee's business is such that R&D expenditure is a must without which business cannot be run. It is the responsibility of the R&D department to ensure continuous development in the products. It also ensures the quality of raw material so that the products may not be harmful in any manner. Research work being of utmost necessity of the business of the assessee and there being no adverse material on record to substantiate that R&D expenses were incurred for purposes other than assessee's business, we sustain the findings of the CIT(A) and reject this ground of the Revenue.
Refund accrued out of excise duty paid - Revenue's case is that under the accrual system of accounting followed by the assessee, the excise duty refund sanctioned by excise department was required to be credited in P&L account which the assessee did not do - HELD THAT:- AO incorrectly interpreted that the said amount was refundable by excise department to the assessee and should have been shown as income which was not done. In fact, the assessee was not entitled to refund of excise duty paid on the amount of purchases (input) and the assessee asserted that no such amount has so far been received by the assessee. We concur with the finding of the Ld. CIT(A) that the claim of the assessee is bonafide. Since similar claim in the preceding year was allowed, we do not find any reason for the impugned addition which has rightly been directed by the Ld. CIT(A) to be deleted. Accordingly, we reject this ground of the Revenue.
Disallowance of wastage of Ayurvedic products - HELD THAT:- No addition on account of wastage was made in the preceding AY 2003-04 or in the succeeding AY 2005-06 though similar claim of wastage was made in those years also. For AY 2006-07 as well no such addition was made. Assessee explained that due to hot mixtures filled in the tubes, the tubes get leaked which were of no use and not saleable in the market. We agree with the Ld. CIT(A) that wastage in such a manufacturing unit is normal feature. The impugned addition is not sustainable. We uphold the findings of the Ld. CIT(A) and decide this ground against the Revenue.
Proportionate Interest paid to Bank and other disallowance - AO disallowed the entire claim of interest paid by him which included interest paid on secured and unsecured loans - HELD THAT:- CIT(A) found that the allegation of transfer of loan obtained from NEDFI to OPL was factually incorrect as no specific instance of diverting funds to OPL was brought on record by the Ld. AO. The Ld. AO made the impugned disallowance on ad-hoc basis which cannot be sustained. We endorse the findings of the Ld. CIT(A) and decide this ground against the Revenue.
Unsecured loans - assessee failed to discharge his onus of proving the genuineness of the transaction and creditworthiness of the lende - HELD THAT:- We concur with the finding of the Ld. CIT(A) that addition cannot be made for the unsecured credit balances brought forward. For the new unsecured loan obtained by the assessee, confirmation was brought on record. The creditor confirmed having advanced the loan; copy of ITR and bank statement was filed in support. The impugned addition is totally unjustified and the Ld. CIT(A) has rightly deleted the same. The Revenue's ground is rejected.
Disallowance out of sundry creditors - CIT-A deleted the addition - HELD THAT:- CIT(A) examined the ledger accounts of the creditors and found that in many of the accounts balances are being forwarded from the previous year. In independent inquiry made by the AO directly, no incriminating evidence could be brought on record. All the parties replied. As astonishing to notice that the entire sum of sundry creditors appearing in the balance sheet has been added without even examining the outstanding balance brought forward from the earlier year. None of the creditor denied the balance appearing in the ledger account in the books of the assessee. The ad-hoc addition is without any basis.
Expenses not relating to business - AO noticed from the details of fixed assets that the assessee incurred an expenditure towards furniture provided at the residence of one Shri Dipak Singh at Guwahati - CIT-A deleted addition - HELD THAT:- The impugned disallowance is totally unwarranted. The Ld. AO picked up the amount from addition made to assets. We agree with the Ld. CIT(A) that the amount spent towards purchase of asset for use in a remote area by an employee of the assessee cannot be disallowed as personal expense of the assessee. Decided against revenue.
Undisclosed income from sale of closing stock of preceding year - HELD THAT:- CIT(A) agreed with the contention of the assessee that after the new print of magazine, the old magazine has no value and refuted the view of the Ld. AO that the value of unsold stock not declared of the earlier year was having any value which was to be shown as closing stock - If the closing stock of the preceding year is considered as the opening stock of AY 2004-05, that would result in lowering of the income declared by the assessee. We agree with the reasoning given by the Ld. CIT(A) and uphold his decision to delete the impugned addition and reject this ground of the Revenue.
Deduction under section 80IB - AO Guwahati unit of the assessee is result of splitting of existing unit - HELD THAT:- There is no dispute that the facts remain identical with those in the preceding AY 2003-04 and the issue of deduction claimed by the assessee under section 80IB of the Act is fully covered by the decision of the Tribunal for the AY 2003-04. CIT(A) directed the Ld. AO to allow deduction to the assessee under section 80IB of the Act in view of the facts, evidences found on record - we endorse his decision on the issue and decide this ground of the Revenue against it.
Disallowance of various expenses - HELD THAT:- CIT(A) observed that no disallowance can be made as the Ld. AO has failed to indicate any instances where the expenditure is proved to be either bogus and/or of non-business in nature - order-sheet notings nowhere suggested that AO specially called for books of account to be produced for verification of expenditure along with the supporting documents. Findings and observations of the Ld. CIT(A) that ad-hoc disallowance of expenditure is not sustainable confirmed - Decided against revenue.
Disallowance of interest paid to banks - CIT-A deleted the addition - HELD THAT:- As in the absence of direct nexus established by the Ld. AO between the money borrowed for the purpose of business and diversion thereof for giving interest free loan to sister concern, disallowance out of interest paid to bank and other concerns cannot be made. CIT(A) has rightly deleted the impugned ad-hoc disallowance.
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2023 (5) TMI 1114
Reopening of assessment - order u/s 148A(d) - Appeal against appealable order - HELD THAT:- In view of the admitted position that final assessment order under Section 147 has already passed which is not the subject mater of challenge in this writ petition and further that the order under Section 147 of the Act is an appealable order, we are not inclined to entertain this writ petition and accordingly this writ petition is dismissed.
However, dismissal of this writ petition will have no impact if the appeal is filed by the petitioner against the aforesaid order under Section 147 of the Act, if so aggrieved. If the appeal is filed by the petitioner against the aforesaid order under Section 147 of the Act within 30 days from date, the same shall be considered on merits and the Appellate Authority concerned shall not raise the point of limitation.
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2023 (5) TMI 1113
On-money transaction - seized documents carry receipt of on-money in relation to the previous assessment years - ITAT deleted addition - HELD THAT:- Appellate authority as well as the Tribunal concurrently found that there was total dearth of evidence to come to conclusion that there was on-money transaction and that on such count it would not entitle the assessing officer to make addition in the income.
The material in the nature of loose papers were not reliable, it was observed. More particularly, it was not related to the Assessment Year 2015-2016 and nothing was there to show that the on-money was received in respect of sale of units/flats recognised to be the sale of assessment year concerned. The findings of the appellate authority and Tribunal are based on ground of absence of evidence. The decision is based on appreciation of evidence. No substantial question of law.
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2023 (5) TMI 1119
Exemption/ deduction u/s 54 - Purchase of land with superstructure - After demolishing the existing superstructure, the appellant assessee constructed a residential house - as per HC [2018 (8) TMI 864 - MADRAS HIGH COURT] it is not a requisite of Section 54 that construction could not have commenced prior to the date of transfer of the asset resulting in capital gain. If the amount of capital gain is greater than the cost of the new house, the difference between the amount of capital gain and the cost of the new asset is to be charged u/s 45 as the income of the previous year - HELD THAT:- As stated that the tax amount involved in the present case is less than Rs. 2 crores and in view of the Circular No. 17 of 2019 dated 08.08.2019, the present petition need not be decided due to low tax effect.
We dispose of the present Special Leave Petition, leaving the question of law open.
Pending application(s), if any, shall stand disposed of.
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Customs
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2023 (5) TMI 1089
Refund of Special Additional Duty (SAD) - rejection on the ground that the claims should have been filed within one year from the payment of duty, but here the claims were filed after one year - N/N. 102/2007-Cus. dated 14.09.2007 - Applicability of time limit as specified in Section 27 of the Customs Act 1962 - HELD THAT:- It is seen that in the absence of section 27 of the Customs Act being made applicable to notification No.102/2007-Customs dated 14.9.2007, the said provisions would not automatically apply to a claim of refund under the notification. On the same lines a clarification has also been given for the payment of interest in the circular. This being so in the absence of section 27 being made applicable in the said notification, the time limit prescribed in the section would not be automatically applicable to refunds under the notification.
It is clear by a plain reading of the amendment that it did not bring about any change in the rate of duty. The amendment tweaked a condition in the original notification to introduce a time limit for filing refunds under the said notification - it is not disputed that the appellants have filed the refund claim after one year of payment of duty. The order-in-original notes the date of filing the refund claim to be 22/01/2009 for 178 Bills of Entry cleared during the period from 01/10/2007 to 31/10/2007. It is also noted that the amending Notification No. 93/2008 is dated and came into effect from 01/08/2008. Hence this is case where the claim has been filed not only one year after the payment of additional duty but also after the amendment came into force bringing in a time limit of one year.
In the absence of specific provision of section 27 being made applicable in Notification No.102/2007-Customs dated 14.9.2007 as amended, the time limit prescribed in this section would not be automatically applicable to refunds under the said notification. Further the refund claim in the present case has been filed after the amendment to Notification No.102/2007-Cus. came into force. Conditions of a notification should be strictly construed. This being so, as per sub para (c) of para 2 of the amended notification, which was effective on the date of the appellant filing the claim, the importer should have filed his claim before the expiry of one year from the date of payment of the said additional duty of customs. This has not been complied with and hence the claim has been correctly rejected by the impugned order.
The impugned order is correct and is upheld - Appeal dismissed.
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2023 (5) TMI 1088
100% EOU - Joint filing of import documents by the EOU / EPZ unit and the domestic leasing company - Warehousing of goods imported for use in the units, from payment of Customs duties - duty exemption under Notification No. 52/2003-Cus dated 31.3.2003 - extended period of limitation - HELD THAT:- The Circular No. 88/95-Cus dated 1.8.1995 makes it clear that the Exim policy seeks to facilitate EOU’s who would like to source capital goods from leasing companies. Since imports by a leasing company for supply to EOU’s do not qualify for the exemption, a facility has been provided by the Exim policy for the domestic leasing company to jointly file the import documents along with the EOU to enable the import of the capital goods free of duty. Consequently, the bond for fulfilment of the conditions of the exemption notification has also to be executed by both the persons - the circular makes it clear that the Exim policy seeks to facilitate EOU’s who would like to source capital goods from leasing companies. Since imports by a leasing company for supply to EOU’s do not qualify for the exemption, a facility has been provided by the Exim policy for the domestic leasing company to jointly file the import documents along with the EOU to enable the import of the capital goods free of duty. Consequently, the bond for fulfilment of the conditions of the exemption notification has also to be executed by both the persons.
The allegation that import documents have not been filed jointly by the appellant-EOU and the owner-importer of the goods, Amul has been adequately explained by the appellant. The appellant cannot be faulted if the EDI system did not permit a joint filing of the import documents. Revenue has not disputed the appellants claim. As regards the bond for fulfilment of the conditions of the exemption notification having not been executed jointly by the appellant and Amul, the appellant has not provided a satisfactory answer and have been found to have erred. Revenue has stated that since in the agreement there is no provision for consideration i.e. amount of leasing rent, for leasing out the machines, then as per Section 25 of the Indian Contract Act, 1872 the said agreement is void and cannot be enforced in a court of law.
The appellant-EOU imported the impugned goods they would have been eligible for the exemption. Similarly, if Amul had jointly filed a Bill of Entry and executed a bond along with the appellant, they (Amul) too would have been eligible for the exemption. Moreover the learned Commissioner in the order has noted that the impugned goods have been received and put to use by the EOU and hence she did not find any grounds to confiscate the same, only strengthens the appellants plea that the impugned goods were put to proper use and were hence eligible for the benefits of Notification No. 52/2003-Cus dated 31.3.2003.
Extended period of limitation - HELD THAT:- There are considerable force in the views of the appellant that suppression of facts cannot be alleged by the department as the lease agreement was given to the Superintendent of Central Excise on 31.10.2008. After scrutiny of the lease agreement only, re-warehousing certificate was sent to customs authorities at Chennai. All operations inside the bonded warehouse are with the knowledge of officers. It is not the case of the department that the machines were diverted or not put to use for production of goods meant for export. It is true that the EOU scheme involves the close working of a number of different authorities. Two such authorities are the officers of the Customs department at the port of import who look after the import of goods meant for an EOU and in this case the Central Excise authorities have jurisdiction over the EOU. Producing one set of documents before one authority say Customs would not tantamount to the facts being in the knowledge of the Central Excise Authorities. However, no such allegation has been made by Revenue - The SCN is based on documents that were submitted to the department during the course of processing the imports of the impugned machines and completing the bonding process. No extra / hidden document that was not submitted to the department was unearthed by the department by way of an investigation etc while coming to a conclusion whether the exemption was eligible for the goods or not. Hence the charge of suppression of facts must fail. This being so the department was not justified in invoking the larger time limit while issuing the show cause notice.
The impugned order passed by the Commissioner of Central Excise, Chennai III is set aside - Appeal allowed.
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2023 (5) TMI 1072
Provisional release of the gold seized from the factory/warehouse - unaccompanied baggage - main contention of the respondent-Review Petitioner is that the quantity of 25299.68 grams gold jewellery was imported as baggage and that the requirement of filing of a B/E, which emanates from Section 46(1) of the Customs Act, in Chapter VII thereof, does not apply to baggage, in view of Section 44 - HELD THAT:- There were positive findings of fact, by the learned Tribunal, that the imported jewellery had been appraised and found to be the same as the jewellery which had earlier been exported - in exercise of the jurisdiction vested in us by Section 130 of the Customs Act, we could not revisit these findings, absent perversity, which we did not find to exist. Save and except for the consignment of 25299.68 grams forming subject matter of the present review petition, the decision of the learned Tribunal is upheld to permit provisional release of the remaining gold and gold jewellery, on furnishing of enhanced B/G.
The finding of the learned Tribunal regarding the identity of the imported gold jewellery with the exported jewellery also extends to the 25299.68 grams gold jewellery forming subject matter of the present review petition. By operation of Notification 45/2017-Cus, therefore, the plaintiff would, prima facie, be entitled to duty free clearance of the imported jewellery.
The only ground on which we had extended differential treatment to the 25299.68 grams gold jewellery, from the remaining gold seized in the warehouse/godown of the review petitioner and at the Airport, was that the B/E relating to the 25299.68 grams gold jewellery was unsigned by the customs authorities. We are convinced, prima facie, apply to the said gold jewellery in the first place. Moreover, the Show Cause Notice issued to the review petitioner, too, acknowledges that the jewellery was imported as baggage. In these circumstances, we are of the considered opinion that the review petitioner is justified in its prayer that the 25299.68 grams gold jewellery be extended the same treatment as has been extended to the remaining gold.
The judgment under review worked out the quantum of the bank guarantee to be furnished at ₹ 10 crores, as 30% of the total value of the gold seized, including the unreleased 25299.68 grams gold jewellery forming subject matter of the present review proceedings. That amount was enhanced by the Supreme Court to ₹ 15 crores - It is not possible, therefore, to direct furnishing of any further bank guarantee, as a condition, for release of 25299.68 grams gold.
Review petition allowed.
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2023 (5) TMI 1090
Levy of penalty under Section 112(a) of the Customs Act, 1962 - Import confectionary items - Evasion of customs duty by under-invoicing the goods and mis-declaring the transaction value and the retail sales price - clearance of goods on the basis of false invoices reflecting values, which were lower than the real consideration paid by the importer for the said goods - HELD THAT:- The contention that no penalty can be levied against the appellant since other co-noticees have settled the liability before the Settlement Commission is insubstantial. The show cause notices were issued to several persons. The fact that other co-noticees had approached the Settlement Commission and had settled their liability cannot absolve the appellant of its liability under the Customs Act. The appellant had full opportunity to approach the Settlement Commission but it chose to contest the proceedings before the Adjudicating Authority. The learned counsel for the appellant has been unable to point out any provision in the Customs Act, which would automatically extend the benefit of an order passed by the Settlement Commission in respect of a party, to other noticees as well.
Reliance placed by the appellant on the decision of the Supreme Court in Union of India v. Onkar S. Kanwar [2002 (9) TMI 101 - SUPREME COURT] is misconceived. The said decision was rendered in the context of Kar Vivad Samadhan Scheme, 1998 for settlement of disputes. The Government of India had also passed Kar Vivad Samadhan Scheme (Removal of Difficulties) Order, 1998 on 08.12.1998 clarifying that in certain cases the settlement in favour of the declarant under sub-section (1) of Section 90 shall be deemed to be full and final in respect of such other person also on whom a show-cause notice was issued on the same matter covered under the declaration - there is no provision in the Customs Act, which extends the immunity available to a party that has successfully settled the case before the Settlement Commission, to other persons. Thus, the decision in Union of India v. Onkar S. Kanwar has no application in the facts of the present case.
In A.M. Ahamed & Co. v. Commissioner of Customs [2022 (11) TMI 639 - MADRAS HIGH COURT], the Madras High Court had referred to the decision of the Supreme Court in Union of India v. Onkar S. Kanwar and observed that the effect of the settlement mechanism, as provided under the Kar Vivad Samadhan Scheme, 1998, would be applicable where orders are passed by the Settlement Commission under Section 127C (5) of the Customs Act. In that case, the importer had approached the Settlement Commission and made a true and fair disclosure relating to the import of goods. Accordingly, the importer was granted immunity from prosecution and fine/penalty. The Madras High Court held that in the circumstances, it would be unfair to continue the proceedings against the Custom House Agent (CHA) in relation to the very same transaction - the said view cannot be agreed upon.
In the present case, although the show cause notices were issued to various noticees, the proposal to impose penalties/liability were separate and severable. Discharge of liability of one of the noticees either by making payment without a contest, or by settlement before the Settlement Commission would not absolve the other noticees from their liability.
The contention that the officers of DRI had no jurisdiction to issue show cause notices to the appellant, is also unmerited. It is material to note that penalty has been imposed on the appellant under Section 112(a) of the Customs Act. The question as to levy of penalties is required to be adjudicated under Section 122 of the Customs Act. In the present case, the order was adjudicated by the Joint Commissioner of Customs and there is no dispute that he had the jurisdiction to adjudicate the question of levy of penalty under Section 122 of the Customs Act - the question as to whether the officers of DRI are proper officers for issuance of notice under Section 28 of the Customs Act does not arise in the present case. The learned Tribunal has rightly rejected the said contention on the ground that the show cause notice issued to the appellant was not under Section 28(4) of the Customs Act.
Appeal dismissed.
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2023 (5) TMI 1087
Smuggling - two gold pieces of rectangular bar and one irregular shaped piece of gold of foreign origin along with the Indian currency - cogent reason of any reasonable belief with the DRI Officers to opine the recovered gold to be a foreign origin or not - burden to prove - invocation of Section 123 of the Customs Act, 1962 - Absolute Confiscation - penalty.
Whether Section 123 of the Customs Act, 1962 is invocable in the given set of circumstances? - HELD THAT:- The burden of proof shifts under Section 123, when (a) there must be goods to which the section applies; (b) the goods must have been seized; and (c) the seizure must be under a reasonable belief that they are smuggled goods - in the present case, at the time of interception and preparing of Panchanama about recovery of gold from the appellant, in his statement, as was recorded under Section 108 of Customs Act, 1962, the appellant admitted that the gold in his possession was actually the gold of foreign origin, however, it got remelted for erasing the foreign markings but 99.9% purity mark was still got embossed thereupon - He also admitted to have no documents for proving that he was legally possessing that quantity of gold in the form of several number of uneven pieces. These particular admissions are sufficient for investigating officers to raise a presumption under Section 114 of Evidence Act that the gold has been illegally imported and thus to invoke the reverse burden of proof i.e. the burden of proof that the gold recovered is not the smuggled on lies upon the appellant in.
Otherwise also the statement as recorded under Section 108 of the Customs Act are admissible into evidence. Hon’ble Supreme Court in the case of NARESH J. SUKHAWANI VERSUS UNION OF INDIA [1995 (11) TMI 106 - SUPREME COURT] held that the statement recorded under Section 108 of the Customs Act, 1962 made before the customs officers is not a statement recorded under Section 161 of Cr.PC., for customs officers not being the police officers. Therefore, the statement got recorded by customs officer is the material piece of evidence which can be used as substantive evidence connecting the deponent with the alleged contravention of the customs act.
Question stands decided in favour of Revenue and it is held that Section 123 of the Customs Act, 1962 has rightly been invoked by the department.
Whether the gold recovered in question was actually the gold of foreign origin illegally imported into Indian Territory and thus is liable for confiscation? - HELD THAT:- There is no evidence to prove the retracted statement. Thus, the burden of proof upon the appellant stands undischarge. In absence thereof the only substantial piece of evidence is the admission of appellant as was recorded under Section 108 of the Act that the gold concealed on his waist is the gold of foreign origin which has been brought to Indian illegally. It is therefore sold at the cheaper rates and that the appellant knows that it is the smuggled gold.
With respect to the Indian currency in possession of the appellant, the appellant, under the theory of ‘reverse burden of proof’, could not produce any evidence to show that the same is not the sale proceed of the gold which he purchased from a person, the identify whereof has not been disclosed for the reason that the seller was inhabit of smuggling gold of foreign origin, getting it melted and selling it on the lesser prices to the appellant - the definition of import in Section 2(23) of the Customs Act, 1962 has no relevance as to who had brought the article into India from a place outside India. The expression is defined to mean an act of bringing into India from a place outside India. Section 2(23) of the Act defines prohibited goods.
It was the mandatory duty of the appellants to prove that too by way of documentary evidence that the gold in question is the part of such quantity of the gold as has been imported in furtherance of the said circular and the said policy. If they claim it to be of Indian origin they had to produce the document of their purchase. As already mentioned nothing is produced by the appellant - it is held that recovered gold has rightly been confiscated. Hence, this point of adjudication also stands decided in favour of the department.
Whether appellants are liable for penalty? - HELD THAT:- The appellant in this case had acquired possession of such gold which they could not prove to be of India origin nor the valid possession could be proved. There has been no denial that appellant was purchasing the gold at the cheaper rate. There is rather an acknowledgement that gold was smuggled one hence was cheaper. Section 112(b) of the Act is wide enough to penalise even a person acquiring possession or in anyway dealing with the goods which he knows or has reason to believe are liable for confiscation under Section 111. Confiscation has already been upheld. Thus it is held that the appellant had rendered them liable for imposition of penalty. There are no infirmity in the findings of the adjudication authorities below while imposing penalty upon the appellant.
The issue stands decided in favour of the Revenue and against the appellant - appeal dismissed.
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2023 (5) TMI 1086
Levy of penalty u/s 112(a) of Customs Act, 1962, and u/s 114AA of Customs Act, 1962 - mis-declaration of imported goods - allegation that import export code (EC) had been procured illicitly - HELD THAT:- It is on record that bill of entry had not been filed under section 46 of Customs Act, 1962 for imported of the said goods. Accordingly, scope for invoking of section 111(m) of Customs Act, 1962 for confiscation of goods arising from misdeclaration and, in the absence of documents available on record, the ingredients for invoking of section 114AA of Customs Act, 1962 did not exist. All documents available till then are limited to those mandated by section 30 of Customs Act, 1962 upon carrier of goods. Penalties are not imposable on the presumption that goods are likely to be misdeclared or to be attempted to be cleared against false declaration and incorrect material.
Confiscation under section 111(d) appears to have been invoked in a routine manner inasmuch as the impugned goods are not prohibited for import. Until bill of entry is filed, the identity of the importer, and lack of ‘import-export code (IEC)’ will not be known. Though adjudicating authority has invoked the provisions of Prohibition of Benami Property Transactions Act, 1988 without any empowerment to do so, and ostensibly to bring the appellant within the scope of Customs Act, 1962 in circumstances initiating proceedings even before bill of entry was filed, that law, intended to be invoked for prosecution as a consequence of holding property in ‘benami’ as well as for interdiction of such property, exists as an independent statute not amenable for concatenation with Customs Act, 1962 by any enabling provision.
The impugned order, failing to sustain under law, is set aside and appeal allowed.
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Corporate Laws
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2023 (5) TMI 1085
Seeking secured creditor of Malhotra Steel (Bombay) Ltd., (in liquidation) to deposit towards workers dues - at what point the workmen become entitled to distribution of sale proceeds? - HELD THAT:- Recourse to Sections 529 and 529A of the Act, 1956 becomes imperative. A conjoint reading of the provisions contained in Section 529 and 529A, would indicate that a secured creditor has the option to realise his security or relinquish his security. If the secured creditor exercises the option to realise his security, he is entitled to do so in a proceedings other than the winding up proceedings. The workmen of the company in winding up also acquire the status of secured creditors. Where a company is in liquidation, a statutory charge is created in favour of workmen in respect of dues over the security of every secured creditor and this charge is pari passu with that of the secured creditor. Such statutory charge is to the extent of workmen’s portion in relation to the security held by the secured creditors of the company as illustrated by Section 529 of the Act.
Point at which the secured creditor realised his security standing outside the liquidation process - HELD THAT:- It is well recognized that the filing of a Petition for winding up of a company does not preclude the secured creditor from enforcing his security. It is only when Liquidator is appointed, the secured creditor becomes liable to associate the Liquidator in sale assets of the company in liquidation. The fact that after the sale of the assets of the company in liquidation by the secured creditor by resorting to the provisions contained in the Recovery of Debts Due to banks and Financial Institutions Act, 1993 and/or The Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, the Company goes into liquidation does not warrant the reopening of the sale and appropriation of the sale proceeds by the secured creditor.
The Supreme Court in the case of Bank of Maharashtra Vs. Pandurang Keshav Gorwadkar and Others [2013 (5) TMI 269 - SUPREME COURT] has ruled in clear and explicit terms that if the company goes into the liquidation, before the sale proceeds are fully and finally disbursed, Section 529A read with Section 529(1) proviso come into operation and statutory charge is created in favour of workmen in respect of their dues over such proceeds. The Supreme Court has made it clear that the relevant date to arrive at the ratio at which the sale proceeds are to be disbursed among the workmen and secured creditors of the company is the date of winding up order and not the date of sale. These principles apply even where the Provisional Liquidator has been appointed in respect of the company.
Reverting to the facts of the case, it is pertinent to note that so far as the quantum of workmen’s portion i.e. Rs. 2,53,977.20/- which the Bank is stated to be liable to contribute, there is not much controversy. From the affidavit of the Bank especially averments in paragraph No. 15 under the, “caption dates on which amount was received” it becomes evident that all the amounts except a sum of Rs. 18,06,210/- were received by the Bank even before the appointment of the Provisional Liquidator.
Indisputably, the amount which came to be accumulated constituted the lease rent which the company in liquidation was entitled to receive. The lease rent clearly falls within the ambit of the property which forms part of the assets of the company in liquidation. In the circumstances, distribution qua the said amount paid to the Bank by the Tribunal-Receiver can not be said to have been fully and finally complete before the appointment of the provisional liquidator. The analogy of sale proceeds of the assets sold by secured creditor standing outside winding up can be applied to the said amount. Consequently, the provisions contained in Section 529 A read with the proviso to Section 529 (1) of the Act come into play and the charge of the workers dues operates on the said amount as well.
The report stands partly allowed - The Kotak Mahindra Bank Ltd., Noticee shall deposit a sum of Rs. 2,53,977.20/- with the Official Liquidator towards the workmen’s dues, within four weeks from today.
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Insolvency & Bankruptcy
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2023 (5) TMI 1084
Seeking permission for appointment of Board of Directors of the Corporate Debtor - HELD THAT:- The Application is not opposed by the SRA and it is stated that the appointment of Board of Directors to the Corporate Debtor is the step, which is essential for taking various regulatory actions as part of general corporate compliances under law - the prayer is allowed.
Seeking for exclusion of time prayed for in the Application from 16.11.2022 till the Company Appeal (AT) (Insolvency) Nos. 129 & 130 of 2023 is decided - HELD THAT:- SRA is entitled for exclusion of period from 16.11.2022 till 03.03.2023, when this Tribunal in the present Appeal passed an order declining the interim relief as prayed by the MC Lenders. IA Nos.2028-2029 is thus allowed, excluding the period from 16.11.2022 till 03.03.2023. As undertaken by the SRA, the IA No.1863 of 2023 pending before the Adjudicating Authority shall be withdrawn - Application allowed.
Invocation of performance Bank Guarantee - Seeking restraint/ injunction on the Respondents from encashing or appropriating the Performance Bank Guarantee and Ernest Money deposited by the Applicant/ SRA - HELD THAT:- When the Resolution Plan of the Corporate Debtor has received approval up to Hon’ble Supreme Court and the Monitoring Committee is constituted under the Plan to oversee implementation, the Monitoring Committee has to act as a facilitator for implementation of the Resolution Plan instead of finding fault and taking steps, which does not facilitate the implementation, rather delay the implementation. There is no doubt that Performance Bank Guarantee can be invoked by the MC Lenders, but the said invocation can only take place when SRA has failed to implement the Plan. Present is a case where directions have been issued to both MC Lenders and SRA to implement the Plan and the event of failure of the Plan has not yet arrived. When the Adjudicating Authority has directed on 13.01.2023 to take steps towards the implementation of the Plan and which order was not been stayed by this Tribunal on 03.03.2023, the steps ought to have been taken by the MC Lenders in furtherance of the implementation - The Resolution Plan has been approved with the intent and purpose to revive the Corporate Debtor, which revival is in accordance with objective and purpose of the IBC - MC Lenders shall not invoke the Performance Bank Guarantee in the facts of the present case as on date, and for invocation, if any, MC Lenders may take leave of the Adjudicating Authority.
Application disposed off.
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2023 (5) TMI 1083
Territorial Jurisdiction for consideration of section 7 application - territorial jurisdiction of the NCLT, Mumbai to consider the application - can lender can take proceedings relating to a dispute in any other courts, apart from courts in England, with jurisdiction to the extent allowed by law and the lender bank is also allowed to take concurrent proceedings in any number of jurisdictions? - HELD THAT:- A plain reading of the provision relating to jurisdiction makes it abundantly clear that clause 35.1 in the Loan Facility Agreement dated 17.11.2011 is for the benefit of the lender Punjab National Bank (International) Limited, and wherein clause 35.1(c) stipulates that the lender shall not be prevented from taking proceedings relating to a dispute in any other Courts than the courts of England and also that the lender is empowered to taking concurrent proceedings in any number of jurisdictions. Further, by clause 35.2, the borrower-corporate debtor has irrevocably and generally consented in respect of any proceeding anywhere and has also waived immunity on grounds of sovereignty or otherwise - on the issue of jurisdiction it is unambiguously clear that Punjab National Bank (International) Limited as financial creditor is fully entitled and authorised to take action in respect of section 7 application against the corporate debtor under the IBC before the NCLT, Mumbai which shall be the Adjudicating Authority to adjudicate the section 7 application.
The corporate debtor has not denied the issue or receipt of demand notice but has only claimed that it was unable to due repayment amount because of the severe financial and commercial stress experienced by the corporate debtor as a result of the Covid-19 pandemic - It is thus clear that the repayment of instalments of loan amounts due and payable to the corporate debtor on account of the two loan facility agreements are financial debts which are in default of repayment and the dates of the recall notice and filing of section 7 application make it clear that the application was filed within limitation.
The Adjudicating Authority has not committed any error in the Impugned Order, and hence it does not require any interference - Appeal dismissed.
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2023 (5) TMI 1082
Implementation of the approved Resolution Plan - exclusion of three years and nine months (after resolution plan approved) - no interim order passed by the Hon’ble Supreme Court staying the implementation of the Plan - HELD THAT:- Even before approval of the Resolution Plan by the CoC, the issue of ineligibility of Resolution Applicant was raised and against the order of the Adjudicating Authority, declaring the Resolution Applicant eligible, Appeals were filed by Punjab National Bank and RBL Bank, which Appeals were withdrawn on 23.03.2018 by an order of the Appellate Tribunal. Thereafter, Plan was approved on 18.04.2018. After approval of the Plan by the Adjudicating Authority, again a set of litigation was initiated by the Lenders, including the SBI. Four Appeals were filed challenging the Plan approval order. In the Appeal, which was filed by the Lenders against the Plan approval order, there was order passed by this Appellate Tribunal that decision regarding approval or rejection of the Plan, shall not be taken without leave of the Appellate Tribunal. Ultimately, the Appeals were dismissed by the Appellate Tribunal on 16.08.2019.
The fact that the Financial Creditors right from the very beginning, even before approval of the Resolution Plan have been raising ineligibility issue in respect of the Resolution Applicant and after approval of the Plan several Appeals were been filed by the Lenders themselves, challenging the approval order contending that Resolution Applicant is ineligible. When Lenders themselves were challenging the approval of the Plan, it is reasonable to comprehend that Lenders were not keen to implement the Plan. The Resolution Applicant has initiated contempt proceedings in which also subsequently the Adjudicating Authority while disposing of the contempt application directed the SBI to implement the Resolution Plan.
The Hon’ble Supreme Court in its order dated 18.01.2022 [2022 (1) TMI 811 - SUPREME COURT] made it clear that Resolution Plan has to be implemented as the Corporate Debtor being a on-going concern and Promoters have infused over Rs.63 crores. The Hon’ble Supreme Court also noticed that interest of over 23,000 shareholders and thousands of employees have to be taken care of. The observations made by the Hon’ble Supreme Court is clear and categorical that Plan is required to be implemented.
Present is not a case where Resolution Plan has been modified by the Adjudicating Authority. The Adjudicating Authority vide order dated 11.03.2022 has already granted extension by the impugned order for the period from 18.04.2018 to 18.01.2022, which period was taken in the litigation initiated by the Lenders themselves. It is also relevant to notice that while approving the Resolution Plan on 18.04.2018, the Adjudicating Authority has granted exclusion of 106 days. The Hon’ble Supreme Court in its judgment has approved the exclusion on account of litigation and proceedings.
In the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016, under Regulation 39, sub-regulation (9), a creditor is allowed to apply to Adjudicating Authority for direction in case there is any non-implementation of the Resolution Plan. At no point of time, the Appellant made an application praying for any direction to the Resolution Applicant towards implementation of the Plan alleging any non-implementation - The Lenders and Banks are obliged to discharge their obligations as per the Resolution Plan. The fact that directions have been issued to the Appellant, cannot mean that Resolution Applicant is not to perform its obligation as per the Resolution Plan.
The learned Counsel for the Resolution Applicant has undertaken to perform all its obligations under the Plan as and when it arises according to the Resolution Plan. Recording the aforesaid statement of the Resolution Applicant, there is no ground to interfere with the impugned order passed by the Adjudicating Authority, which order is clearly in aid of implementation of the Resolution Plan. The implementation of the Resolution Plan being obligation and duty of all stake holders as per the scheme of the IBC, as observed above, the Resolution Applicant shall also carry out its obligation under Resolution Plan promptly, while the Lenders will discharge their obligations in the Plan and as per directions issued in the impugned order by the Adjudicating Authority.
Appeal dismissed.
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Service Tax
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2023 (5) TMI 1081
CENVAT Credit - providing taxable as well as exempted services - non-maintenance of separate records - contravention of Rule 6 (3) of Cenvat Credit Rules, 2004 - availment of credit of input services utilized in the execution of works contract service.
HELD THAT:- The appellant has filed/submitted ST-3 returns for the period April to September 2009, in which they have certainly shown the amount received towards exempted services other than export in respect of Industrial or Commercial Construction Service and nil in respect of Residential Construction Service and Works Contract Service. However, on going through the ST-3 returns for the period 2009-2010, we do not find any such declaration on the part of the appellant. The appellant claimed that they have not availed Cenvat credit, either on inputs or on input services, in respect of exempted services, in the category of Commercial Construction Service or Residential Construction Service, wherever provided - it is incorrect on the part of the Adjudicating authority to came to a conclusion that the appellant availed Cenvat credit on the basis of ST-3 returns which shows income under exempted services. It is not the case of the appellant that he has not provided any exempted services.
It is found that the concept of partial exempted service came into effect from 01.07.2012 by virtue of Notification No. 28/2012. Therefore, the contention of the appellant is agreed upon that during the relevant time, there was no concept of partial exemption and even after 01.07.2012 such partial exemption was with the condition that the said exemption, if any, should be subject to non-availment of Cenvat credit on inputs and input services.
The appellant claimed Cenvat credit only in respect of input services used for providing Works Contract Service - It can be seen that there is no bar under the said rule for availment of Cenvat credit on input services. The bar was only on inputs. Moreover Adjudicating authority erred in holding that the appellant has availed simultaneous benefit of abatement and of Cenvat credit. The appellant submitted that the condition of non-availment of Cenvat credit has been fulfilled in respect of Construction Services and only in respect of Works Contract Service, where there is no express bar on the availment of Cenvat credit on input services, they have availed such credit.
Neither the SCN nor the impugned order identify the specific import services availed both for dutiable and exempted services; they do not qualify the credit availed on common input services. Without doing so confirming the demands on the basis of mere allegations in the SCN is not legally tenable.
The appellant has submitted a certificate dated 14.02.2011 issued by M/s Nirbhaya & Associates Chartered Accountant - the said certificate also provides site-wise credit availed by the appellant. The Adjudicating authority has not discussed anything about the said Chartered Accountant certificate. He has not recorded any findings as to why the Chartered Accountant certificate should be dis-regarded. It is not correct on the part of the Adjudicating authority to pass an order without going through the contents of the said Chartered Accountant certificate; without causing reasonable verification of the same and without negating in the same with cogent evidence and reasons. The Courts and the Tribunal have time and again held that a certificate issued by a professional cannot be dis-regarded or over-looked without adducing cogent evidence to prove that the said certificate is incorrect.
The impugned order is passed without properly going through the submission of the appellant and without going through the records of the case. Adjudicating authority’s findings in respect of availment of Cenvat credit in respect of ICCS, RCCS are factually incorrect. Adjudicating authority erred seriously in applying the concept of partial exemption which came into existence on 01.07.2012 to the impugned order period which is much before that date - Appeal allowed.
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2023 (5) TMI 1080
Recovery of Service tax with interest and penalty - levy of service tax on the amount deducted by the appellant from the vendors towards liquidated damages as they failed to supply the goods/execute the work within the stipulated time - HELD THAT:- For the period prior to 01.07.2012 collection of amount towards liquidated damages was not included in any of the specified taxable services under any of the clauses of sub-section (105) of section 65 of the Finance Act, 1994. Thus, no service tax could have been levied on the amount of liquidated damages so collected.
In M/S SOUTH EASTERN COALFIELDS LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE AND SERVICE TAX, RAIPUR [2020 (12) TMI 912 - CESTAT NEW DELHI], the Tribunal held that liquidated damages recovered on account of breach or non-performance of contract are not consideration in view of any service but are in the nature of deterrent imposed so that such a breach or non-performance is not repeated.
The Circular dated 28.02.2023 issued by the Central Board of Indirect Tax and Customs also provides that service tax cannot be levied on the amount collected for the said purpose.
It is, therefore, not possible to sustain the demand - Impugned order set aside - appeal allowed.
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Central Excise
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2023 (5) TMI 1079
CENVAT Credit - Distribution of CENVAT Credit - input services attributable to the final product on a pro-rata basis proportionate to the turnover of each unit between the manufacturing plants of Parle Biscuits and its contract manufacturing units, including the appellant - rule 7(d) of the CENVAT Rules - HELD THT:- A Division Bench of the Tribunal while hearing Excise Appeal No. 52692 of 2019, Excise Appeal No. 52693 of 2019 and Excise Appeal No. 52694 of 2019 expressed reservations about the proposition of law laid down by the Division Bench in SUNBELL ALLOYS CO OF INDIA LTD & MACHSONS PVT LTD VERSUS COMMISSIONER OF CENTRAL EXCISE & CUSTOMS [2014 (2) TMI 297 - CESTAT MUMBAI] and also noticed that a Division Bench of the Tribunal in COLGATE PALMOLIVE (INDIA) LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE [2011 (2) TMI 57 - CESTAT MUMBAI] had taken a contrary view.
The Larger Bench of the Tribunal in M/S. KRISHNA FOOD PRODUCTS, M/S. MARIAMMA R. IYER, M/S. PARLE BISCUITS PVT LTD. VERSUS THE ADDITIONAL COMMISSIONER OF CGST & C. EX [2021 (5) TMI 906 - CESTAT NEW DELHI] answered the reference holding that Parle was justified in distributing credits on input services attributable to the final product on a pro-rata basis proportionate to the turnover of each unit between the manufacturing plants of Parle and its contract manufacturing units, including the appellant (Krishna Food), under rule 7(d) of the CENVAT Rules.
The order passed by the Commissioner (Appeals) cannot be sustained and is set aside - The appeal is accordingly, allowed.
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2023 (5) TMI 1078
Default in paying Central Excise duty on monthly basis as per Rule 8 of Central Excise Rules, 2002 - contravention of Rule 8 (3A) of CER - HELD THAT:- The Rule 8(3A) in terms of which revenue has asked for recovery of the amounts paid by the appellant from their cenvat credit account have been quashed by the Hon’ble High Court of Gujarat in case of INDSUR GLOBAL LTD. VERSUS UNION OF INDIA & 2 [2014 (12) TMI 585 - GUJARAT HIGH COURT] observing that the condition contained in sub-rule (3A) of Rule 8 for payment of duty without utilizing the Cenvat credit till an assessee pays the outstanding amount including interest is declared unconstitutional. Therefore, the portion “without utilizing the Cenvat credit” of sub-rule (3A) of Rule 8 of the Central Excise Rules, 2002, shall be rendered invalid.
Thus, there are no merits in the appeal filed by the revenue - appeal dismissed.
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2023 (5) TMI 1077
Refund claim - nexus of specific inputs with its different rates to the manufacture of export goods cleared under various A.R.E. 1 (not established) - non-maintenance of records in a proper manner facilitating the possible co-relation of specific inputs to specific Outputs, as required under Rule 5 of Cenvat Credit Rules, 2002 - no sufficient corroborative evidence was available on records to link the input - HELD THAT:- Tribunal while remanding the matter to original authority has held that the appellant is entitled to the refund of the accumulated credit which shall be quantified by the authority below, after looking into their records for which purposes we remand the matter to the original adjudicating authority.
In the remand proceedings appellant submitted all the documents required for verification and quantification. All the documents were verified by the jurisdictional range officer and vide his report dated 25.11.2006/ 12.12.2006, referred in the order of original authority observed, “The calculation of refund claim on average basis is found in order.” If on verification of the documents submitted the quantum of refund claim has been found in order by the jurisdictional authorities have been found in order, then the in terms of the CESTAT Order, the refund should have been granted to the appellant. From the CESTAT order, it is observed that in the first round of litigation also the refund was rejected by the lower authorities for the reason that the claim was made on average basis. Tribunal has allowed the appeal and remanded the matter only for re-quantification. The impugned order travels beyond the directions in the order of tribunal and cannot be sustained.
Appeal allowed.
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2023 (5) TMI 1076
CENVAT/MODVAT Credit - waste and scrap of various items cleared - remanding duty on clearance of various types of waste and scrap under Rule 3 (5A) of Cenvat Credit Rules, 2004 - HELD THAT:- The issue is no longer res integra. In the Appellant’s own case COMMISSIONER OF C. EX. & S.T. (LTU) , MUMBAI VERSUS AMBUJA CEMENT LTD. [2015 (10) TMI 1781 - CESTAT MUMBAI] the issue has been settled and it was held that the issue is covered by the decision of the Hon'ble Supreme Court in the case of COMMISSIONER OF CENTRAL EXCISE VERSUS WEST COAST INDUSTRIAL GASES LTD. [2003 (4) TMI 110 - SUPREME COURT] read with Board's Circular No. 721/37/2003- CX., dated 6-6-2003. Following the said decision of the Hon'ble Supreme Court and the circular, I dismiss the appeal of the Revenue.
In case of PANASONIC CARBON INDIA CO. LTD. VERSUS COMMISSIONER OF C. EX., GUNTUR [2006 (7) TMI 88 - CESTAT,BANGALORE], it was held that all the items which were cleared are not dutiable. They were cleared from the workshop of the factory as Waste and Scrap on account of its wear and tear.
There are no merits in the impugned order setting aside the same - Appeals are allowed.
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2023 (5) TMI 1075
Use of Brand name of others - Simultaneous availment of SSI exemption benefit under Notification No. 8/2003-CE dated 01.03.2003 and CENVAT Credit - branded goods manufactured by the Assessee and cleared as well as goods processed by it as job worker and cleared under brand name of others, against which duty had been paid and CENVAT Credits had been availed.
HELD THAT:- The law is not static and it changes with the changing need of time and the judgment of the Hon'ble Supreme Court, in view of operation of Article 141 of the Constitution of India, is the law of land.
In the said COMMISSIONER OF CENTRAL EXCISE, CHENNAI VERSUS M/S. NEBULAE HEALTH CARE LTD. [2015 (11) TMI 95 - SUPREME COURT], while distinguishing other judgments including COMMISSIONER OF C. EX., AHMEDABAD VERSUS RAMESH FOOD PRODUCTS [2004 (11) TMI 103 - SUPREME COURT] it was held that once excise duty is paid by the manufacturer on such branded goods manufactured, the brand name whereof belongs to another person, on job work basis, the SSI Unit would be entitled to Cenvat/Modvat credit on the inputs which were used for manufacture of such goods as on those inputs also excise duty was paid. To put it otherwise, these branded goods manufactured by the SSI Units meant for third parties are regulated by the normal provisions of excise law and will have no bearing or relevance insofar as availing the benefit of those exemption notifications in respect of its own products manufactured by the SSI Units is concerned.
The period under dispute in this appeal is covered in N/N. 8/2003-CE. Having regard to the judicial precedent set by the Hon'ble Supreme Court in Nebulae Health Care Ltd. vis-a-vis insertion of proviso into the Notification w.e.f. 11.02.2009, Appellant is entitled to the SSI exemption available under Notification No. 8/2003-CE for clearance of its branded product and also entitled to avail CENVAT Credit on clearance of branded products of others cleared through payment of duty.
Appeal allowed.
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CST, VAT & Sales Tax
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2023 (5) TMI 1074
Delayed Service of SCN - whether the impugned order dated 03.02.2020 (Annexure P-4), which was served upon the petitioner on 29.12.2021 i.e. after 22 months, would render the revisional order without jurisdiction?
HELD THAT:- This aspect has already been considered by Hon’ble the Supreme Court in STATE OF ANDHRA PRADESH VERSUS KHETMAL PAREKH & M. RAMAKISHTAIAH AND CO. [1994 (2) TMI 260 - SUPREME COURT]. In that case, the Andhra Pradesh High Court had allowed the revision filed by the assessee on the ground that the Deputy Commissioner had passed the said order on 06.01.1973, but it was served on the assessee only on 21.11.1973. The High Court had accepted the submission of the assessee that the order, which was served beyond the period of limitation, could not have been passed before expiry of limitation on 06.01.1973. The order could have been communicated within a reasonable period. The High Court further held that the respondent-assessee was not bound by that order. The Hon’ble Supreme Court dismissed the appeal filed by the State of Andhra Pradesh and held that in the absence of any explanation whatsoever, the Court must presume that the order was not made on the date it purported to have been made.
Reference can also be made to a decision given by Hon’ble the Supreme Court in AJANTHA INDUSTRIES AND OTHERS VERSUS CENTRAL BOARD OF DIRECT TAXES AND OTHERS [1975 (12) TMI 1 - SUPREME COURT], wherein it has been held that non-communication of order is a serious infirmity.
The ratio of the above said judgments is directly applicable to the facts of the present case - In the present case, the assessment order was passed on 03.02.2014 (Annexure P-1) and notice for re-assessment was issued on 13.09.2019 (Annexure P-2). Even though, the final order was passed on 03.02.2020 (Annexure P-4), it was received by the petitioner on 29.12.2021 i.e. after 22 months of passing thereof. In the written statement filed on behalf of the respondents, no explanation has been given, as to why this delay took place and who was responsible for such a long delay in communicating the impugned order to the assessee.
Petition allowed.
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Indian Laws
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2023 (5) TMI 1073
Rejection of Technical Bids of petitioner - rejection on the ground that the Unique Document Identification Number (UDIN) is not generated in the balance-sheet - HELD THAT:- The bidders were required to submit the audited balance-sheet and profit and loss account statement, apart from the Chartered Accountant’s certificate to establish the minimum turnover required of Rs.5.00 Crores on an average for the post three years. The Technical Evaluation Committee which evaluates the bids of all the bidders undertakes the said exercise by sitting in its office. The Technical Evaluation Committee, therefore, is entitled to require the bidders to submit duly authenticated documents, which could be relied upon and verified, if necessary, from its own office.
The Technical Evaluation Committee is not expected to run around and gather information from departments, such as Income Tax Department, to verify the authenticity of the documents filed by the bidders. Such an exercise, if required to be undertaken by the Technical Evaluation Committee, would impede the process of the tenders and defeat the very purpose of tendering the works, which will generate revenue for the State - The notification dated 02.08.2019 clearly sets out the purpose of its issuance, and the reason for evolution of the UDIN mechanism. The Tax Audit Reports are mandatorily required to have the Unique Document Identification Number in the light of the aforesaid notification. The Tax Audit Reports, placed on record by the petitioner, do not have the UDIN.
That being the position, the Technical Evaluation Committee was justified in not relying on the same, since the authenticity of the Tax Audit Reports, produced by the petitioner along with the bids, could not be verified and established - the rejection of the petitioner’s technical bids on the ground that the Tax Audit Reports did not bear the UDIN appears to be completely justified, and therefore, there is no merit in these petitions.
Petition dismissed.
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