TMI Tax Updates - e-Newsletter
June 1, 2021

Case Laws in this Newsletter:

GST Income Tax Customs Corporate Laws Insolvency & Bankruptcy PMLA Service Tax Indian Laws

Articles

1. ‘MAT’ and necessary adjustments. Views earlier expressed by author find support in recent judgment of the Supreme Court.

   By: DEVKUMAR KOTHARI

2. ANALYSIS OF THE RECOMMENDATIONS OF 43RD GST COUNCIL MEETING HELD ON 28TH MAY 2021

   By: Vivek Jalan

3. Decoding GST on Cryptocurrency

   By: VAIBHAV SINGH

4. ITC Mismatch in GSTR-3B vs GSTR-2A/2B - Rule 36 (4) & its Constitutional Validity

   By: Manish Gupta

5. BORROWINGS BY SECTION 8 COMPANIES UNDER COMPANIES ACT

   By: Dr. Sanjiv Agarwal

6. REGISTRATION OF FRESH GST NUMBER OF THE CORPORATE DEBTOR

   By: DR.MARIAPPAN GOVINDARAJAN

News

1. Provisional estimates of Annual National Income, 2020-21 and Quarterly estimates (Q4) of Gross Domestic Product, 2020-21

2. Monthly Review of Accounts of Union Government of India for the month of April 2021 for the Financial Year 2021-22

3. Accounts of the Union Government of India (Provisional/Unaudited) for the Financial Year 2020-21

4. Emergency Credit Line Guarantee Scheme (ECLGS) expanded - ECLGS 4.0 for onsite oxygen generation, wider coverage of ECLGS 3.0 and increase in tenor for ECLGS 1.0

Notifications

DGFT

1. 06/2015-2020 - dated 31-5-2021 - FTP

Export of Red Sanders wood by Directorate of Revenue Intelligence - Extension of time regarding

GST - States

2. 48/2020– State Tax - dated 28-5-2021 - Delhi SGST

Delhi Goods and Services Tax (Sixth Amendment) Rules, 2020

Circulars / Instructions / Orders

SEBI

1. SEBI/HO/CFD/CMD-2/P/CIR/2021/567 - dated 31-5-2021

Format of compliance report on Corporate Governance by Listed Entities

2. SEBI/HO/IMD/IMD-II DOF3/P/CIR/2021/566 - dated 31-5-2021

Disclosure of the following only w.r.t schemes which are subscribed by the investor: a. risk-o-meter of the scheme and the benchmark along with the performance disclosure of the scheme vis-à-vis benchmark and b. Details of the portfolio

FEMA

3. 05 - dated 31-5-2021

Investment by Foreign Portfolio Investors (FPI) in Government Securities: Medium Term Framework (MTF)

Highlights / Catch Notes

GST

• High Court Quashes Magistrate's Order for Police Investigation After Cognizance u/s 200 Cr.P.C.

  Case-Laws - HC : Validity of order of Magistrate in which he has ordered for police investigation after taking cognizance - the two twin facts namely, the perusal of the case record by the Magistrate and the decision that he arrived on upon perusal of the case records of examining the witnesses under Section 200 of Cr.P.C. would leave no manner of doubt that on 27.11.2020 itself he had taken cognizance of the offences. It was thereafter not open for him to change the course and revert back to the initial option of requiring police investigation and calling for police report. - Unfortunately, on 02.01.2021 this is precisely what he did - the impugned order dated 02.01.2021 is quashed - HC
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• High Court Vacates Attachment Order; Section 67 Misapplication Alleged to Violate Article 19(1)(g) Rights.

  Case-Laws - HC : Attachment of property - allegation against the petitioner company is that the petitioner company had fraudulently availed input tax credit on fictitious invoices to discharge the GST liability - petitioner submits that Section 67 cannot be against the future receivables so as to strangulate the entire business module of the petitioner - the attachment proceedings cannot be at the cost of right of provision under Article 19(1)(g) of the Constitution of India - Order of attachment vacated subject to conditions - HC
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• Cinemas Found Guilty of Profiteering on Movie Tickets Under Rs. 100; Violated Section 171 of CGST Act Before March 2019.

  Case-Laws - NAPA : Profiteering - supply of Services by way of admission to exhibition of cinematograph films where the price of admission ticket was one hundred rupees or less - despite the reduction in the rate of GST, the benefit had not been passed on - contravention of section 171 of CGST Act - though profiteering has been established against the Respondent in the categories of First class and Second class movie tickets, the computation of profiteering merits to be limited only up to 10-3-2019 as the Respondent had reduced the base prices commensurately for the First class and Second class movie tickets after 11-3-2019. - NAPA
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Income Tax

• Section 147: Reopening Assessment on Penny Stocks Hinges on Differentiating "New Ground" vs. "New Reasons" with Due Diligence.

  Case-Laws - HC : Reopening of assessment u/s 147 - penny stock purchases - “new ground” v/s “new reasons” - We take the notice of the fact that, the copy of the approval has been provided to the assessee at the stage of passing the order of disposing the objections raised by the assessee. Therefore, it is evident that, in the instant case, the authorities concerned have given approval after due application of mind and expressed their satisfaction with regard to the reasons recoded for reopening of the assessment. - HC
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• IDR Dividend from SCB-India Not Taxable in India Due to Indo-Mauritius Treaty Protections under Article 22(1).

  Case-Laws - AT : Income chargeable to tax in India - IDR dividend received from SCB-India - As regards the submissions about unintended benefit to the assessee, from an overall global perspective, we are not really concerned with such a question at this stage. All we have to examine is whether the impugned income taxable in India is treaty-protected in the hands of this assessee or not, and, so far as this question is concerned, for the detailed reasons set out above, our answer is in affirmative. The income in question is treaty-protected inasmuch as it cannot be taxed in the hands of the assessee, in India, by virtue of Article 22(1) of the Indo Mauritius tax treaty. - AT
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• Taxpayer's Penalty Upheld for Late Audit Report Filing u/s 271B; Inconsistent Explanations Provided Without Evidence.

  Case-Laws - AT : Penalty imposed u/s. 271B - non filing of audit report within stipulated time - the assessee kept on changing its version for causing delay of filing tax audit report and without any evidence substantiating the said reasons. Having perused the entire record and find no valid reasons supporting the reasons stated by the assessee for delay in filing tax audit report - Levy of penalty confirmed- AT
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• Court Invalidates Assessment: AO's Additions Beyond Original Reasons Violate Section 147, Assessment Must Be Quashed.

  Case-Laws - AT : Reopening of assessment u/s 147 - No addition being loan given forming the main `reason for escapement of income’ u/s 147 of the Act has been made by the AO and instead, the additions have been made on new different grounds, it can be very fairly said that reasons recorded did not exist and hence the assessment framed u/s 147 read with section 143(3) of the Act deserves to be quashed. A.O. had no jurisdiction to travel beyond the reasons for reopening the assessment. - AT
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• Tax Department Accepts Agricultural Income as Source for Unexplained Cash Deposits, Deletes Income Additions u/s 69A.

  Case-Laws - AT : Unexplained income u/s 69A - undisclosed cash deposit in bank a/c - Department had also accepted the generation and availability of cash because of agricultural income for the year under consideration, therefore, there was no reason for ignoring the availability of cash with the assessee due to accumulative/past savings of the preceding years - Additions deleted - AT
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• Limited Scrutiny to Complete Scrutiny Conversion Challenged Due to Lack of Credible Evidence and CBDT Mandate Violation.

  Case-Laws - AT : Conversion of limited scrutiny into complete scrutiny assessment - AO has not referred to any credible or reliable material or information to form the view that there was a possibility of under assessment of income in this case. The AO has merely made certain disallowance on ad hoc basis without pointing out any information or material available to him which has a direct nexus to show that there was possibility of under assessment of income. - Conversion of limited scrutiny into complete scrutiny is against the spirit of CBDT mandate which is binding on the AO. - AT
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• Court Rules Unexplained Cash Not Linked to Credits or Investments, Sections 68-69D, 115BBE Not Applicable.

  Case-Laws - AT : Unexplained cash found during the search action - AO has not pointed out any unexplained credit in the books of account, any unexplained investment, any unexplained money, bullion or jewellery, any unexplained expenditure or any amount of loan repaid in the assessment order in this respect. Therefore, the provisions of Section 68, 69, 69A, 69B, 69C and 69D, the provisions of Section 115BBE are not attracted on the surrendered . - AT
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• Reopening Assessment u/s 147 Invalid Due to A.O.'s Lack of Due Diligence and Incomplete Facts.

  Case-Laws - AT : Reopening of assessment u/s 147 - the very basis of reopening of assessment is based on incomplete or wrong facts available on record as the said transaction of sale of the property has already been duly disclosed by the assessee in her return of income and the assessee had also filed her return of income. All these facts reflect non-application of mind by the A.O. while recording the reasons and it cannot be held that there is the nexus between the material available on record and formation of belief that the income has escaped assessment. - AT
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• No Penalty for Late Filing as Educational Institution Had No Income Obligation u/s 272A(2)(e.

  Case-Laws - AT : Penalty u/s 272A(2)(e) - return in this case was filed on 12/07/2017 as late by 2537 days - the assessee has filled its return of income declaring the nil income and assessment has also 'been completed at nil income vide assessment order dated 25.12.2017 u/s 143((3)/148 of the Act in the status of educational institution. The assessee was not required to file the return on or before 31.07.2010 and thus, in this way, no penalty could have been imposed u/s 272A(2)(e) - AT
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• On-Money Receipts u/s 68 Confirmed as Business Income for Builder Based on Loose Sheets and Mobile Data.

  Case-Laws - AT : Addition of on-money - Additions of on-money made u/s 68 on the basis of notings in loose sheets and data retrieved from the mobiles - when the A.O had in the assessment order mentioned the flat wise and year wise receipts of on-money thus, the same leaves no iota of doubt that the same were in the nature of “business receipts” which were inseparable from the assessee‟s business of a builder and developer. - AT
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• Sales tools expenses u/s 37 deemed revenue expenditures and deductible; departmental challenge unsuccessful. Consistent application in subsequent years.

  Case-Laws - AT : Addition of sales tools expenses u/s 37 - the logic given by the coordinate bench equally applies to the sales tool expenses also. The above decision was also followed by the coordinate bench in subsequent year. The learned departmental representative also could not show that why the above logic does not apply to the sales tool expenses incurred by the assessee. - since tool expenses incurred by the assessee is a revenue expenditure allowable to the assessee as deduction. - AT
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• No Penalty for Non-Deduction of TDS: Section 271(1)(c) Conditions Not Met, India-Singapore DTAA Applied.

  Case-Laws - AT : Penalty u/s 271(1)(c) - disallowance of professional fees for non-deduction of TDS - Merely not filing appeal on the contesting issues does not tantamount to concealment of income and furnishing inaccurate particulars of income. These two elements along with Explanation 1 of Section 271(1)(c) are not present in assessee’s case for imposing penalty or initiating penalty proceedings. As related to payment made to control risk, the same also does not impugned to FTS as per the provisions of Article 12(4) of India Singapore DTAA as the same does not result in making available technical knowhow to the recipient. - No penalty - AT
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• Section 263 Review: Assessing Officer's Acceptance of Corpus Fund Donation Upheld; Inquiry Deemed Comprehensive and Correct.

  Case-Laws - AT : Revision u/s 263 - Manner of presentation of the corpus fund in the final accounts of the assessee - donation - where the A.O. has taken a broad view by accepting the issue of corpus donation by carefully examining and satisfying himself with evidences produced by the assessee during the course of hearing, then order of the A.O. cannot be held to be erroneous on the ground of lack of inquiry.- AT
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Indian Laws

• Court Upholds Presumption of Liability for Dishonored Cheque, Rejects Accused's Oral Denial as Insufficient Evidence.

  Case-Laws - HC : Dishonor of Cheque - The financial capacity of the complainant to lend money to the accused also can be gathered from the evidence. As such, the other point of argument of learned counsel for the petitioner on that aspect is not convincing - the entire defence of the accused about denial of the loan transaction has just confined to a mere oral denial made to PW-1. However, the same is not sufficient to rebut the presumption which has been formed in favour of the complainant - HC
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• High Court erred by intervening prematurely in dishonored cheque case; trial court's decision requires thorough evidence review.

  Case-Laws - HC : Dishonor of Cheque - This court is of the considered view that the High Court should not have interfered with the cognizance of the complaints having been taken by the trial court and High Court should not discharge the accused from his liability at the threshold. Unless the parties are given opportunity to lead evidence, it is not possible to come to a definite conclusion as to what was the date when the alleged possession of Kvory plant was handed over to him and while the police complaint was given against the complainant and his son-in-law and what was the lease agreement executed between the parties - HC
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IBC

• RBI's Role Limited in DHFL Resolution: No Intervention Allowed Beyond No-Objection Requirement per Rule 5(d) FSP Insolvency Rules.

  Case-Laws - Tri : Once the CoC (Respondent No. 2) has approved the Resolution Plan, the Administrator of the DHFL, has to obtain no-objection from RBI in accordance with Rule 5(d) of the FSP Insolvency Rules. Apart from the same, neither the Code nor the FSP Insolvency Rules, casts any other obligation on RBI vis-à-vis the CIRP process, which is left to be run by the resolution professional along with the CoC as per its commercial wisdom. The RBI cannot intervene in the CIRP process, and the reliefs as sought for by the Applicant qua RBI seeks RBI to intervene in the CIRP process, which is completely contrary and inconsistent with the spirit of the Code and will have the effect of derailing the CIR Process. - Tri
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• Court Nullifies Trademark Transfer and Agreements; Orders Restoration of "Net4" and Return of Business Assets to Debtor.

  Case-Laws - Tri : CIRP proceedings - illegal transfer of IPR and business by the corporate debtor - the declaration of assignment of trademarks in the name of R1 is declared null and void and execution of Master Reseller Agreement in favor of Net4 Network is invalid, and direct R1 to restore the trade name "Net4" to the Corporate Debtor and R2 to restore the business of the corporate debtor it has taken through Master Reseller agreement from the Corporate Debtor with immediate effect. Likewise, we hereby declare the Share Transfer Agreements reflecting transfer of Pipetel shares held by CD to Trak Online and transfer of Net4 Network shares to Trak Online as null and void. - Tri
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Service Tax

• Court Grants Refund for Unutilized Education, Secondary & Higher Education, and Krishi Kalyan Cess in Cenvat Credit.

  Case-Laws - AT : Refund - Education Cess, Secondary & Higher Education Cess and Krishi Kalyan Cess cannot be transferred to GST account and as they were lying unutilized in their cenvat credit account on 30.06.2017, the assesee is entitled to claim the refund thereof. In other words, if the appellant could have filed the refund claim before 30.06.2017 of Education Cess, Secondary & Higher Education Cess and Krishi Kalyan Cess, the same is admissible to the appellant. - AT
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Case Laws:

• GST

• 2021 (5) TMI 982
  Validity of order of Magistrate in which he has ordered for police investigation after taking cognizance - it is alleged that the Magistrate had the power to call for police investigation, but he had previously not taken cognizance of the offences - prime contention of the petitioner is that the Magistrate having previously taken cognizance of the offences, cannot revert to calling for police investigation - Non-payment of GST - HELD THAT:- The Magistrate had taken cognizance of the offences disclosed in the complaint. His action of perusal of the case record which led to his decision to examine the witnesses under Section 200 of Cr.P.C. at a later date clearly establishes application of mind on his part onthe allegations made in the complaint and which led to his making up his mind about the requirement of carrying out examination under Section 200 of Cr.P.C. Had the Magistrate perused the case records and was of the opinion that before deciding to take cognizance of the offence it was necessary to call for the police investigation, it was open for him to do so - The very fact that after perusal of the case record he was persuaded that there is a requirement of examination under Section 200 of Cr.P.C, would establish that he had already taken cognizance of the offence. It is well settled that the stage of examination of witness under Section 200 of Cr.P.C. would not arise before taking cognizance by the Magistrate. Thus, these two twin facts namely, the perusal of the case record by the Magistrate and the decision that he arrived on upon perusal of the case records of examining the witnesses under Section 200 of Cr.P.C. would leave no manner of doubt that on 27.11.2020 itself he had taken cognizance of the offences. It was thereafter not open for him to change the course and revert back to the initial option of requiring police investigation and calling for police report. - Unfortunately, on 02.01.2021 this is precisely what he did. In the said order, he has recorded that after hearing the learned P.P. and after perusal of the complaint, he was of the opinion that before taking cognizance, the matter may be investigated by the police. In the process, the learned Magistrate lost sight of the fact that the stage of taking cognizance had already been crossed on 27.11.2020 itself. This does not put an end to the complaint lodged before the concerned Magistrate, who shall proceed further in accordance with the law from the stage of taking cognizance of the offences disclosed - the impugned order dated 02.01.2021 is quashed - Petition allowed.

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• 2021 (5) TMI 980
  Attachment of property - allegation against the petitioner company is that the petitioner company had fraudulently availed input tax credit on fictitious invoices to discharge the GST liability - petitioner submits that Section 67 cannot be against the future receivables so as to strangulate the entire business module of the petitioner - Section 83 of the Central Goods and Services Tax Act, 2017 - HELD THAT:- Admittedly, an amount of Rs. 5.68 Crores, which was lying in the account has been appropriated till date. The petitioner has also agreed to remit another sum of Rs. 1 Crore. Thus, as against the proposed/estimated tax due involved i.e. Rs. 21 Crores, the petitioner has already discharged a sum of Rs. 5.68 Crores i.e. 27.05%. After all, there is a mechanism provided under the Act for proper adjudication of the tax due and determination under Sections 73 and 74 of the Act. Therefore, there is no meaning in attaching the bank accounts further - The respondents have reportedly commenced the investigation during October, 2020. The respondents can issue notice under Section 73 of the CGST Act, 2017 and thereafter, determine the amount due and recover the amounts. The impugned attachment orders dated 12.01.2021 and 28.01.2021 are required to be interfered with - It is made clear that the attachment proceedings cannot be at the cost of right of provision under Article 19(1)(g) of the Constitution of India - the petitioner shall deposit a sum of Rs. 1 Crore within a period of one week from the date of receipt of a copy of this order, as was undertaken by the learned Senior Counsel for the petitioner. On such deposit of Rupees One Crore, the impugned attachment orders shall stand vacated - petition allowed.

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• 2021 (5) TMI 936
  Refund claim of excess tax paid - time limitation - refund claims were liable to be rejected on the grounds hit by limitation of time limit as the appellant has filed refund claims after expiry of 2 years from the relevant dates - also the refund claim was filed in the category of excess payment of tax and excess payment of tax falls under the phrase any other amount paid as prescribed under sub-section (1) of Section 54 of the CGST Act, 2017 - HELD THAT:- It is clear from the provision of Section 54(1) that any application for refund for any amount paid under CGST Act, 2017 has to be filed within two years from the relevant date. In the instant case, relevant date is the date of filing of GSTR 3B return. The appellant has never made any concerted efforts for rectification of errors made while filing their FORM GSTR-3B nor any corroborative evidence regarding the above has been provided whereas, sufficient period of time was made available to the appellant for rectification of errors through various circulars and guidelines issued from time to time. Moreover, in the present case, the appellant has confessed himself that the excess amount of tax has been paid inadvertently due to mistake of their staff and the mistake has been committed by the appellant himself not by the department. The adjudicating authority while passing the Orders in Original has taken the relevant date for refund claims i.e. the GSTR-3B filing date as per Section 54(1) of the CGST Act, 2017 for counting the limitation period of two year and on this basis the adjudicating authority has held that the refund claims filed by the appellant is barred by limitation. The refund claims were required to be filed within two years from the relevant date (i.e. the GSTR-3B filing date) but the appellant has failed to do so. There are no reason to interfere in the impugned orders passed by the adjudicating authority - refund claims had been correctly rejected on the grounds as hit by limitation as per Section 54(1) of the CGST Act, 2017 - appeal dismissed.

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• 2021 (5) TMI 935
  Detention of goods alongwith the conveyance - Quantity loaded in the conveyance found excess than the quantity mentioned in the invoice - HELD THAT:- It is found from the records that the quantity of goods in the conveyance found excess than the quantity mentioned in the invoice. Less quantity of goods shown in the invoice with intent to evade the GST and tried to escape from correct liability. The contention of the appellant cannot be agreed with, that the measurement taken by the officers was wrong and unjustified and copy of calculation of quantity has not been served and the proceedings under Section 130 is wrong and illegal and only one fine i.e. on goods or conveyance can be imposed under the said section - it is clear that the impugned goods found excess i.e. quantity 3947 Sq. Ft on physical verification than the quantity mentioned in invoice were loaded intentionally to evade the GST. The excess quantity was supplied without declaring in the invoice with intent to evade the payment of tax therefore, the Section 130 of the Act was rightly invoked and the said section also provides for confiscation of goods or conveyance and find in lieu of confiscation. The excess found goods were loaded intentionally to evade the payment of GST - Appeal dismissed - decided against appellant.

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• 2021 (5) TMI 934
  Profiteering - supply of Services by way of admission to exhibition of cinematograph films where the price of admission ticket was one hundred rupees or less - despite the reduction in the rate of GST, the benefit had not been passed on - contravention of section 171 of CGST Act - HELD THAT:- The Central and the State Governments had reduced the rates of GST on Services by way of admission to exhibition of cinematograph films where the price of admission ticket was above one hundred rupees from 28% to 18% and Services by way of admission to exhibition of cinematograph films where the price of admission ticket was one hundred rupees or less from 18% to 12% w.e.f. 1-1-2019, vide Notification No. 27/2018-Central Tax (Rate), dated 31-12-2018, the benefit of which was required to be passed on to the recipients by the Respondent as per the provisions of Section 171 of the above Act. In this case, since the Respondent has increased the price of the movie tickets of the First and the Second class categories only in the month of May, 2019, this price increase cannot be correlated to provisions of Section 171 of the CGST Act, 2017. It is also a fact that the DGAP has reported that in the post-tax-rate reduction period, the Respondent has maintained the same base prices in respect of the Upper and Lower Balcony categories of movie tickets and hence, it is observed that there is no profiteering in the above category of these movie tickets. Therefore, though profiteering has been established against the Respondent in the categories of First class and Second class movie tickets, the computation of profiteering merits to be limited only up to 10-3-2019 as the Respondent had reduced the base prices commensurately for the First class and Second class movie tickets after 11-3-2019. No profiteering can thus arise for the period after 11-3-2019. Therefore, this case is a fit case for recomputation of the amount of profiteering - under the provisions of Rule 133(4) of the CGST Rules, 2017, this Authority directs the DGAP to recompute the amount of profiteering in line with the observations made in the preceding paragraph. The DGAP is further directed to furnish his Report under Rule 129(6) of the CGST Rules, 2017. As per the provisions of Rule 133(1) of the CGST Rules, 2017 this order was required to be passed within a period of 6 months from the date of receipt of the Report from the DGAP under Rule 129(6) of the above Rules. Since the present Report has been received by this Authority on 30-10-2019 the order was to be passed on or before 29-4-2020. However, due to the prevalent pandemic of COVID-19 in the Country, this order could not be passed on or before the above date due to force majeure. Accordingly, this order is being passed today in terms of the Notification No. 65/2020-Central Tax, dated 1-9-2020 issued by the Government of India, Ministry of Finance (Department of Revenue), Central Board of Indirect Taxes Customs under Section 168A of the CGST Act, 2017 - application disposed off.

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• Income Tax

• 2021 (5) TMI 978
  Permission to file paper return - justification for not fling electronic return of the income tax - HELD THAT:- The Petitioner is permitted to file paper return for the assessment year 2020-21 before 31st May, 2021 subject to the further orders that may be passed by this court at the stage of admission or thereafter till this writ petition is finally decided. All contentions of the parties are kept open. It is made clear that whether such paper return proposed to be filed by the Petitioner is incompliance with the Income Tax Act or Rules or not is also kept open. The Petitioner would be at liberty to file rejoinder to the affidavit in reply dated 20th May, 2021 filed by the Respondents within a period of two weeks from today and serve a copy thereof upon the Respondents Advocate.

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• 2021 (5) TMI 970
  Reopening of assessment u/s 147 - penny stock transactions - information received from ITO (CIB-1), Mumbai at DIT (I CI, Mumbai) that as per the penny stock transaction data assessee had sold 3300 shares of Karma Ispat Limited and earned long term capital gain - HELD THAT:- Applying the principle of law, in the case of Aayojan Developers [ 2011 (2) TMI 738 - GUJARAT HIGH COURT ] to the facts of the present case, we are of the view that, the facts mentioned in the affidavit by the revenue could not be termed as new ground or new reasons to supplement the reasons recorded by the AO. Therefore, the contention raised by the learned counsel for the writ applicant that, by way of affidavit in reply, the revenue has improved the reasons recorded, has no any merit and cannot be accepted to hold that, the exercise to reopen the assessment is without jurisdiction. Independent finding as to how the income has escaped assessment - AO as satisfied with regard to the information and other material on record, formed an opinion that, the income has escaped assessment. Therefore, when the information was specific with regard to transactions of penny stock entered into by the assessee with the Karma Ispat Ltd., and the AO had applied his independent mind to the information and upon due satisfaction, led to form an opinion that, the amount of claim of LTCG claimed by the assessee is chargeable to tax has escaped assessment, which facts suggests that, there is live link between the material which suggested escapement of income and information of belief. Under the circumstances, we are satisfied that, there was enough material before the AO to initiate proceedings under Section 147 of the Act. We do not agree with the contention that, merely on the information, the AO has recorded the reasons and on the basis of borrowed satisfaction, he formed an opinion with respect to the income chargeable to tax has escaped assessment. As examined the issue of valid sanction as raised by the learned counsel for the writ applicant. We take the notice of the fact that, the copy of the approval has been provided to the assessee at the stage of passing the order of disposing the objections raised by the assessee. Therefore, it is evident that, in the instant case, the authorities concerned have given approval after due application of mind and expressed their satisfaction with regard to the reasons recoded for reopening of the assessment. No hesitation to hold that it could not be said to have that there was no material or grounds before the AO and the assumption of jurisdiction on the part of the AO under Section 147 of the Act to reopen the assessment by issuing impugned notice under Section 147 of the Act is without authority of law, which render the notice unsustainable. Therefore, the assessee failed to make out a case. - Decided against assessee.

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• 2021 (5) TMI 969
  Reopening of assessment u/s 147 - penny stock purchases - new ground v/s new reasons - information in respect of the penny stock transaction made by assessee - HELD THAT:- Though the reopening of the assessment after expiry of four years from the end of the relevant assessment year, it is not necessary for the AO to show that, there was any failure to disclose fully or truly all material facts necessary for the assessment. When return is processed under Section 143 (1) of the Act and intimation sent to the assessee, it is not an assessment . Therefore, when reopening is sought of an assessment, the initial return was processed u/s 143(1) of the Act, the AO can form reason to believe that income has escaped assessment by examining the return and/or the documents accompanying the return. It is not necessary in such case for the AO to come across some fresh tangible material to form reason to believe that the income has escaped assessment. Applying the principle of law, in the case of Aayojan Developers [ 2011 (2) TMI 738 - GUJARAT HIGH COURT ] to the facts of the present case, we are of the view that, the facts mentioned in the affidavit by the revenue could not be termed as new ground or new reasons to supplement the reasons recorded by the AO. Therefore, the contention raised by the learned counsel for the writ applicant that, by way of affidavit in reply, the revenue has improved the reasons recorded, has no any merit and cannot be accepted to hold that, the exercise to reopen the assessment is without jurisdiction. Whether AO failed to record an independent finding as to how the income has escaped assessment? - AO himself was satisfied with regard to the information and other materials on record, he formed an opinion that, the income has escaped assessment. Therefore, when the information was specific with regard to transactions of penny stock entered into by the assessee with the Tuni Textiles Ltd., and the AO had applied his independent mind to the information and upon due satisfaction, led to form an opinion that, the amount of claim of LTCG claimed by the assessee is chargeable to tax has escaped assessment, which facts suggests that, there is live link between the material which suggested escapement of income and information of belief. Under the circumstances, we are satisfied that, there was enough material before the AO to initiate proceedings under Section 147 of the Act. We do not agree with the contention that, merely on the information, the AO has recorded the reasons and on the basis of borrowed satisfaction, he formed an opinion with respect to the income chargeable to tax has escaped assessment. As examined the issue of valid sanction as raised by the learned counsel for the writ applicant. We take the notice of the fact that, the copy of the approval has been provided to the assessee at the stage of passing the order of disposing the objections raised by the assessee. Therefore, it is evident that, in the instant case, the authorities concerned have given approval after due application of mind and expressed their satisfaction with regard to the reasons recoded for reopening of the assessment. No hesitation to hold that it could not be said to have that there was no material or grounds before the AO and the assumption of jurisdiction on the part of the AO under Section 147 of the Act to reopen the assessment by issuing impugned notice under Section 147 of the Act is without authority of law, which render into the notice unsustainable. Therefore, the assessee failed to make out a case.

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• 2021 (5) TMI 968
  Income chargeable to tax in India - IDR dividend received from SCB-India - receipts from India based depository, i.e., Standard Chartered Bank- India, in respect of shares of Standard Chartered Bank plc- UK represented by the India Depository Receipts (IDRs) - business connection between this income and India - assessee before us is a company incorporated in, and fiscally domiciled in, Mauritius - when is the amount, so distributed to the IDR holders on account of dividend receipts, can be said to be received in the hands of the IDR holders- at the point of time when the amount is received by BNY Mellon outside India, on behalf of the SCB-India, or when is it received by the IDR holders in India from the SCB-India? - HELD THAT:- We find that it is an admitted position all along that SCB-India is a branch office of Standard Chartered Bank UK, and there is no material before us to dislodge this position. Because a depository must only be an Indian company under the law, even if that be so, does not mean that even when a domestic depository is admittedly branch of a foreign company, it must be treated as an Indian company. The approval by the SEBI to SCB-India, being a domestic depository for the issuance of IDRs representing equity shares in SCB-UK is a reality; we cannot wish it away, and we must interpret the tax liability in the light of this reality. Even today, there is nothing more than a suspicion lurking in the mind of the learned Commissioner (DR) that the SCB-India could be a company incorporated in India. If the approval given by the SEBI to the Indian depository is given wrongly, that is something which has no bearing on the issue that we are dealing with, and that is tax implications flowing from distribution of dividend by the domestic depository. Learned counsel has also pointed out that the expression depository and domestic depository are expressions with distinct connotations and the requirements of depository cannot be read into the requirements of domestic depository . As learned counsel rightly points out, the expression domestic depository is defined, under rule 3(i)(c) of the Companies (Issue of Indian Depository Rules, 2004), as custodian of securities registered with the Securities and Exchange Board of India, hereinafter referred to as SEBI and authorised by the issuing company to issue Indian Depository Receipts . The objection raised by the learned Departmental Representative is thus devoid of legally sustainable merits. As regards the submissions about unintended benefit to the assessee, from an overall global perspective, we are not really concerned with such a question at this stage. All we have to examine is whether the impugned income taxable in India is treaty-protected in the hands of this assessee or not, and, so far as this question is concerned, for the detailed reasons set out above, our answer is in affirmative. The income in question is treaty-protected inasmuch as it cannot be taxed in the hands of the assessee, in India, by virtue of Article 22(1) of the Indo Mauritius tax treaty. In view of the above discussions, the reasoning adopted by the Dispute Resolution cannot meet our judicial approval. We reject the stand of the DRP as devoid of legally sustainable merits. As the taxability of the IDR dividends fails, in terms of the provisions of the applicable tax treaty, i.e., Indo-Mauritius tax treaty, and as the provisions of the applicable tax treaty, being more beneficial to the assessee, override the provisions of the domestic law, the taxability of the dividends on the IDRs fails. The addition being IDR dividend received from SCB-India, thus stands deleted. It must, however, be clarified that relevant treaty provision of Article 22 having been subjected to significant change by insertion of sub-article (3) thereto, this decision on treaty protection will hold good only for the pre-amendment period i.e., pre-1st April 2017. Decided in favour of assessee.

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• 2021 (5) TMI 967
  Unexplained sundry/trade credits - CIT-A deleted the addition - HELD THAT:- The observations of the CIT(A) are worth to mention here that it is relevant to observe that the claims of the expenses relatable to the credits under reference were not denied by the AO, and there was no disallowance to the extent, as could be seen from the assessment order. It was not the case of the AO to show that such amounts are not allowable as business expenses. Where the expenses, which were not denied to be allowed as business expenses, if the liability related to such expenses may not be treated as unexplained liability or credit and catena of judicial decisions supports this view. We, therefore, do not find any reason to interfere with the order of CIT(A) in deleting the addition and upholding the same, we dismiss the ground raised by the revenue on this issue. Appeals of the revenue are dismissed.

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• 2021 (5) TMI 966
  Addition for unaccounted cash - HELD THAT:- As perusal of the statement, AO has observed that the assessee has purchased a land of 2 acres in his name as well as purchased a house in Hyderabad in his wife s name - This transaction itself has accepted by the assessee during the course of search proceedings at question answer No. 15. Therefore, we are of the view that the AO has rightly made the addition for unaccounted cash. The assessee has submitted before the CIT(A) wrong facts that in the particular land there was a well and bore-well, but, on perusal of the sale deed executed on 02/08/2012, nowhere it has been mentioned under the Declaration that there is a well or bore-well -When the property was purchased in 2001 was a dry agricultural land, but, subsequently, when sale was materialized on 02/08/2012, nowhere it is mentioned in the translated document that the land was agricultural land. Before the CIT(A) at para (c) the assessee has submitted agricultural operation is carrying on and the source of irrigation for the agricultural operations is the open well and also a borewell situated in the land. Therefore, the argument of the assessee that the said land is an agricultural land cannot be accepted. Earlier the sale agreement was made on two times i.e. 13/03/2012 and 23/07/2012 for a consideration of Rs. 62,00,116/- per acre and the same property has been sold on 02/08/2012 at Rs. 12,67,500/-, which is clearly proved that something has been concealed and during search the assessee clearly stated the actual facts which is clear from the statements recorded during the search and seizure. The statements are also supported that the assessee has made investment of Rs. 2 crore as per question answer No. 15 As relying on SUMATI DAYAL [ 1995 (3) TMI 3 - SUPREME COURT] and DURGA PRASAD MORE [ 1971 (8) TMI 17 - SUPREME COURT] we set aside the order of the CIT(A) and restore the order of AO in making the addition on account of unaccounted cash towards sale of land. Accordingly, the grounds raised by the revenue on this issue are allowed.

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• 2021 (5) TMI 965
  Correct head of income - whether the very amounts could also be allowed to be assessed under the head business once they have been assessed as income from other sources ? - HELD THAT:- As assessee has itself conceded its challenge to correctness of learned lower authorities action treating the impugned sums; assessment-year wise as income from house property and business income; as the case may be; respectively. Faced with this situation, we deem it appropriate to restore the instant issue back to the file of Assessing Officer to this limited extent only to the extent that whatever is the income assessed as income from other sources in the assessee s hands out of its books/P L A/c of the corresponding assessment years, shall not be assessed under the head business income as well so as to avoid double addition. It is made clear that it shall be the assessee s risk and responsibility only to file on record all the relevant details proving that the very sums of additions before us have also been assessed under the head income from house property and business income; as the case may be. Un-explained cash credits u/s.68 - Revenue s vehement contention before us is that the assessee has not been able to prove the corresponding nexus between the impugned addition viz-a-vis the sum assessed in M/s.J.B.Educational Society, Hyderabad s hands - HELD THAT:- Fact remains that the Assessing Officer appears to have filed a remand report dt.22-04-2014 prima facie indicating the alleged nexus. Be that as it may, since much water is flown down the stream since 2013, we deem it appropriate to restore the instant second issue as well back to the file of Assessing Officer for his afresh factual re-conciliation to ensure that the impugned double addition is not made in the assessee s group entities hands. It is further made clear that it shall be a risk and responsibility of the assessee only to file its supportive evidence proving live nexus of the impugned sister concern.This second issue also accepted partly for statistical purposes in foregoing terms

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• 2021 (5) TMI 964
  Disallowance u/s 14A of interest expenditure - assessee has disallowed suo motto u/s 14A - As argued AO failed to record any satisfaction as to the correctness of the claim of the assessee - HELD THAT:- The details reasons given of the ld AO at page 7 and 8 of the assessment order clearly shows that AO has recorded proper satisfaction as provided u/s 14A(2) of the act - when the assessee was questioned about the suo motto disallowance of Rs. 2 lacks, its basis and its working the assessee failed to provide the same to the AO. AO also held that this itself shows that the assessee is contradicting its own stand that it has not incurred any expenditure for earning of the exempt income. In view of this, we do not find any infirmity so far as the recording of the satisfaction u/s 14A(2) of the AO is concerned for invoking provision of Rule 8D of the Income tax Rules. The details reasons given of the ld AO of the assessment order clearly shows that AO has recorded proper satisfaction as provided u/s 14A(2) of the act. However, when the assessee was questioned about the suo motto disallowance its basis and its working the assessee failed to provide the same to the ld AO. The ld AO also held that this itself shows that the assessee is contradicting its own stand that it has not incurred any expenditure for earning of the exempt income - we do not find any infirmity so far as the recording of the satisfaction u/s 14A(2) of the AO is concerned for invoking provision of Rule 8D of the Income tax Rules. Administrative and managerial expenditure attributable to the exempt income @0.5% of the average of investment - We do not find any infirmity in the confirming the disallowance of Rs. 13.20 lakhs because the assessee itself has disallowed a sum of Rs. 2 lakhs for which no bifurcation is available. Therefore, only alternative is left is to apply the percentage prescribed under that Rule. The stand of the assessee that it has not incurred any expenditure is devoid of any merit as assessee itself has disallowed a sum of Rs. 2 Lakhs. In view of this, solitary ground of appeal of ld AO and ground No. 2 of the appeal of the assessee are dismissed. Disallowance towards corporate social responsibility expenditure - HELD THAT:- On examination of the above expenditure, we find that for allowable of expenditure u/s 37(1) of the Act the expenditure should have incurred by the assessee wholly and exclusively for the purpose of the business. In the present case no evidence are adduced before us to show that these expenditure are wholly and exclusively incurred for the purpose of the business of the assessee. However, it was merely an statement of the assessee it will increase the goodwill of the assessee, however, no evidence were produced that why such expenditure not related to the business of the assessee could have fallen into allowability domain of section 37(1) of the Act. In view of this we do not find any infirmity in the order of the lower authorities in deleting the above sum u/s 80G (5) of the Act as well as also not allowing the same as an expenditure u/s 37(1) of the Act. Disallowance u/s 35AC - assessee failed to furnish the certificate required under that section and therefore, deduction were denied - HELD THAT:- Naturally when the assessee does not have a requisite certificate u/s 35AC2(b) in the prescribed format, deduction u/s 35AC is correctly disallowed. Alternative claim of relief u/s 80G - This contention was also negated in view of the fact necessary details could not be produced before the lower authorities. However, before us the assessee has submitted that all the receipt of donation of Himalaya School Society wherein, donation of Rs. 6 lakhs is given and it was acknowledged vide receipt No. 142 dated 22.09.2008. The assessee has also submitted certificate issued to the above society u/s 80G(5) dated 12.09.2008 which is applicable for the period of 01.04.2008 to 31.03.2010. In view of this, we direct the ld AO to allow the deduction u/s 80G of the Act on the donation of Rs. 6 lakhs which has been correctly disallowed by him u/s 35AC of the Act. Accordingly, ground No. 4 of the appeal is partly allowed. Credit of tax deduction at source as claimed by the assessee in its revised return of income - grievance of the assessee is that credit towards TDS is reflected in Form No. 26AS was not allowed - HELD THAT:- CIT (A) directed the ld AO to verify the claim of the TDS made on account of the assessee and allowed TDS credit admissible as per 26AS. According to us the ld CIT (A) has categorically directed to the ld AO to grant credit of TDS as per Form No. 26AS. We do not find that such direction would have caused any grievance to the assessee to that extent. The assessee may have certain TDS certificates validly issued by the deductor not appearing in form no 26AS, there is no reason why assessee should not get credit for the same. Even otherwise, we direct the ld AO to verify the credit claimed by the assessee in return of income and TDS certificates available with it and give credit for the same as pre paid tax in accordance with the law. He may carry out necessary verification , if ld AO deems fit. In the result, ground No. 5 of the appeal is allowed.

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• 2021 (5) TMI 963
  Reopening of assessment u/s 147 - value of shares purchased by the assessee as penny stocks were treated as unexplained investment u/s 69B - HELD THAT:- As relying on SRI NARENDER KUMAR GUPTA VERSUS ASSTT. CIT CIRCLE 7 (1) HYDERABAD [ 2021 (5) TMI 887 - ITAT HYDERABAD] this appeal of the assessee is also remitted to the file of the Assessing Officer with a direction to supply the assessee, the reasons for reopening of the assessment and only after disposal of the objections, if any, raised by the assessee to the reopening, the Assessing Officer shall proceed to recompute the income of the assessee in accordance with law. Needless to mention that the assessee shall be given a fair opportunity of hearing. Assessee s appeal is treated as allowed for statistical purposes.

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• 2021 (5) TMI 962
  Exemption u/s 11 12 - Charitable activity u/s 2(15) - exemption denied as assessee was involved in trade, commerce or business as there was a restaurant run in the name of Dilli Dastarkhwan in the premises of the assessee and the assessee was receiving income from the restaurant - HELD THAT:- We find that the Ld.CIT(A) has followed the decision of the Tribunal pertaining to Assessment Year 2009-10. [ 2014 (7) TMI 1339 - ITAT DELHI] - The Revenue has not brought any other binding precedent into our notice. Therefore, we find that there is no reason to interfere in the findings of Ld.CIT(A). Ground No.1 raised by the Revenue in this appeal is dismissed. Allowance of depreciation on fixed assets - CIT-A allowed deduction - HELD THAT:- CIT(A) has followed the judgement of Hon ble Delhi High Court in the case of DIT(Exemption) vs Charanjiv Charitable Trust [ 2014 (3) TMI 760 - DELHI HIGH COURT] and also the judgement in the case of DIT(Exemption) vs Indraprashta Cancer Society [ 2014 (11) TMI 733 - DELHI HIGH COURT] No infirmity in the order of Ld. CIT(A) and same is hereby affirmed. Thus, Ground No.2 of the appeal raised by the Revenue is dismissed.

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• 2021 (5) TMI 961
  Penalty imposed u/s. 271B - non filing of audit report within stipulated time - assessee filed two sets of written submissions before the CIT(A) - HELD THAT:- The first reason has canvassed by the assessee that the Hard Disk of Computer has been corrupted and data therein is vanished for F.Y. 1999-2000 relating to A.Y. 2000-01 which is the year under consideration but however as rightly pointed by the Ld. DR no supporting evidences filed what steps the assessee has taken for the year under consideration and also for subsequent years. DR demonstrated that there was no evidence before two Revenue authorities below and also before this Tribunal substantiating the steps taken by the assessee supporting the cause for delay canvassed by it. In our opinion, the cause of Hard Disk Drive of Computer system being corrupted and the data is vanished is no valid reason for non-filing of tax audit report. Another reason given by the assessee in its written submissions before the CIT(A) that the Chartered Accountant who looks after all the statutory obligations of the assessee could not able to complete the statutory obligations and compliances u/s. 44AB of the Act in time due to his wife illness - We find force in the submissions of Ld. DR that one Chartered Accountant fails to do compliances, the duty of the assessee to make compliances legal obligations by appointing new Tax Auditor but however the contention of the assessee has due to ill health of wife of Chartered Accountant could not file the tax audit report in time, in our opinion it is also no valid reason that non-filing of tax audit report in time. In the second written submissions dated 17-08-2017, the assessee contends that Shri Sachin Deshpande was appointed as Authorized Representative to look after tax work and he did not file audit report in time and it is the fault of Authorized Representative but not the assessee. No evidence on record either before the two lower authorities or before us that the tax audit report was prepared and the said Authorized Representative Shri Sachin Deshpande could not file the same in time in the proceedings before the AO. Therefore, in our opinion, as rightly pointed by the Ld. DR that the assessee kept on changing its version for causing delay of filing tax audit report and without any evidence substantiating the said reasons. Having perused the entire record and find no valid reasons supporting the reasons stated by the assessee for delay in filing tax audit report, therefore, we do not find any infirmity in the order of CIT(A) and it is justified. Thus, the only ground raised by the assessee is dismissed.

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• 2021 (5) TMI 960
  Reopening of assessment u/s 147 - borrowed satisfaction v/s independent application of mind - additions on different ground - HELD THAT:- Heart of the Section 147 is the formation of belief by the A.O. that income has escaped assessment. The reasons so recorded have to be based on some tangible material and that should be evident from reading the reasons. This is the bare minimum mandatory requirement of the first part of Section 147(1) of the Act. Merely saying that `loan has been advanced or `ITR has not been filed , without disclosing the reasons, which led the A.O. to hold such a belief, does not confer valid jurisdiction on the A.O. to take action u/s 147 and 148 as has already been held by the Hon ble Gujarat High Court in the case of Birla VXL Ltd. [ 1995 (9) TMI 45 - GUJARAT HIGH COURT] In the case of ITO v. Lakhmani Mewal Das [ 1976 (3) TMI 1 - SUPREME COURT] the Hon ble Supreme Court affirmed the decision of the High Court and held that there was nothing to show in the confession made by a third party related to the loan taken by the assessee much less a loan which was shown to have advanced by that person to the assessee and, therefore, live link or close nexus, which should be there between the material and the belief formed by the Assessing Officer was missing or was too tenuous to provide a legally sound foundation for initiation of assessment proceedings under section 147. If the primary burden u/s 147, lying on AO, remains un-discharged, then the entire proceedings would crumble. No addition being loan given forming the main `reason for escapement of income u/s 147 of the Act has been made by the AO and instead, the additions have been made on new different grounds, it can be very fairly said that reasons recorded did not exist and hence the assessment framed u/s 147 read with section 143(3) of the Act deserves to be quashed. A.O. had no jurisdiction to travel beyond the reasons for reopening the assessment. We are of the view that reopening proceedings initiated by the A.O were uncalled for and without jurisdiction, therefore, we quash the same.- Decided in favour of assessee.

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• 2021 (5) TMI 959
  Unexplained income u/s 69A - undisclosed cash deposit in bank a/c - HELD THAT:- From the cumulative consideration of both the charts i.e. chart containing agriculture income disclosing the return of income and also the chart containing cash flow statement, we noticed that the department had given benefit of the current year s agricultural income to the tune of Rs. 25,17,195/- - from the cash flow statement, it was reflected that during the year under consideration, total cash generation was Rs. 50,48,966/- and the opening cash balance for the year under consideration was Rs. 22,91,771/-, therefore, under such circumstances, the explanation put forth by the assessee that the cash deposited by the assessee was from the agricultural and other income as well as from the accumulative past savings of the preceding years appears to be reasonable. Department had also accepted the generation and availability of cash because of agricultural income for the year under consideration, therefore, there was no reason for ignoring the availability of cash with the assessee due to accumulative/past savings of the preceding years. Thus we direct to delete the addition sustained by the ld. CIT(A) qua this issue. - Decided in favour of assessee.

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• 2021 (5) TMI 958
  Conversion of limited scrutiny into complete scrutiny - HELD THAT:- Instruction of the CBDT instruction No. 5/2016 dated 14.07.2016 shows that to convert the limited scrutiny into complete scrutiny, the Assessing Officer shall be required to form a reasonable view that there is a possibility of under statement of income and that view should be based on credible material or information available on record and such a view should not be based on mere suspicion, conjecture or unreliable resources and there should be a direct nexus between available material and formation of view. However, the above conditions are not fulfilled in this case. AO has not referred to any credible or reliable material or information to form the view that there was a possibility of under assessment of income in this case. The AO has merely made certain disallowance on ad hoc basis without pointing out any information or material available to him which has a direct nexus to show that there was possibility of under assessment of income. Conversion of limited scrutiny into complete scrutiny is against the spirit of CBDT mandate which is binding on the AO. Therefore, the conversion of limited scrutiny into complete scrutiny being not valid, the consequential additions made by the AO on ad hoc basis and further confirmed by the CIT(A) are not sustainable in the eyes of law. Same are ordered to be deleted. Appeal of the assessee stands allowed.

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• 2021 (5) TMI 957
  Reopening of assessment u/s 147 - assessee had shown fixed assets but he had not offered any income from the said property except agriculture income - HELD THAT:- In our view this is a vague reason. Merely possession of a fixed asset does not mean that the assessee might have earned any income from the said asset which would have escaped assessment. Admittedly the assessee owns agricultural land where upon certain construction has been made by the assessee. It has been used for its own purposes. The reasons recorded by the Assessing Officer do not disclose that the assessee has used any of his assets for any business or rental purposes. The formation of belief by the AO in this case regarding the escapement of income of the assessee, in my view is based on just assumptions and presumptions and there was no reliable material available with the AO to form the belief that the income of the assessee had escaped assessment. In this view, re-opening of the assessment in this case, in my view is bad in law and the same is therefore quashed. Proportionate construction expenses - AO had adopted the Current Value of the construction exp. and added the proportionate const, exp.- AO not making any reference to DVO - HELD THAT:- First of all, it is seen that there was no evidence before the AO regarding the date of the construction of the property. Consequently, the value of the property has been made on estimation basis. Assessee has brought my attention to the report of the Valuer obtained from Punjab Vigilance Bureau upon which the AO has relied upon, wherein, the year of construction has been mentioned as 2008 to 2011. The value of the property, however, has been assessed as on 3.3.2015. Therefore, the value of the property has been estimated in the year 2015 and the addition has been made on proportionate basis taking the value of the property as on 3.3.2015, whereas, it is own case of the department that the property has been constructed from 2008 to 2011. The assessee had further requested the AO to get all the details in this respect from M/s. ICRMS company, however, the AO totally ignored the aforesaid request of the assessee and simply relied upon the report of the valuer attached alongwith the report of the Punjab Vigilance Bureau. As observed the said valuation was done as per the value of the construction in the year 2015. In this case, even the AO did not make any independent query. Moreover, the AO in the circumstances was supposed to refer the matter to the Departmental Valuation Officer to get approximate date of construction of the property as well as value of the property on the date of construction. No such exercise has been done by the AO. The addition has been made just on estimation basis on the borrowed satisfaction of the Punjab Vigilance Bureau without any independent investigation in the matter by the AO. Such an addition made on the basis of mere suspicion, in my view, is not sustainable in the eyes of law. This addition is accordingly set aside. Addition made by the AO as income from other sources as against declared by the assessee as agricultural income - HELD THAT:- As before this Tribunal, assessee has submitted that the assessee has continuously been offering the agricultural land on Batai and that the aforesaid amount was earned by the assessee from agriculture operations. The ld. counsel has further submitted that during the subsequent years, the said lessee was examined by the AO and statement was also recorded and after having satisfied, no addition has been made in this respect in the subsequent years. Moreover, it has not been denied by the AO that the assessee is in possession of agricultural land and the lessee has admitted that he has paid aforesaid amount of Rs. 1.20 lacs as batai to the assessee. In view of this,we do not find any justification on the part of the AO to make the impugned addition. In view of this, the addition made by the AO on this issue is deleted.

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• 2021 (5) TMI 956
  Unexplained cash found during the search action - assessee has submitted that neither any incriminating material nor any unexplained expenditure was found during the search action in respect sum surrendered by the assessee company - HELD THAT:- A separate surrender of Rs. 97.11 lacs has been made by Shri SB Bajaj Director of the assessee company on account of unexplained cash found during the search action. However, so far as the surrender of Rs. 15 lac to cover any discrepancy is concerned, the AO has not pointed out any unexplained credit in the books of account, any unexplained investment, any unexplained money, bullion or jewellery, any unexplained expenditure or any amount of loan repaid in the assessment order in this respect. Therefore, the provisions of Section 68, 69, 69A, 69B, 69C and 69D are not attracted on the surrendered . The said amount of Rs. 15 lacs was offered in case any discrepancy is found in the books of account. However, in actual neither any unexplained investment nor any unexplained expenditure or otherwise any unexplained asset was found during the search action so far as the aforesaid surrender of Rs. 15 lacs was concerned. In these circumstances, the aforesaid surrender of Rs. 15 lacs can be said to have been offered to cover up the discrepancies in respect of likely disallowances of claims, if any, relating to its business income. Since the aforesaid surrender is not covered under the provisions of Section 68, 69, 69A, 69B, 69C and 69D, the provisions of Section 115BBE are not attracted in this case. The action of the lower authorities in invoking provisions of Section 115BBE on the surrender income is set aside and the AO is directed to compute the said surrendered income under normal provisions as applicable to the business income of the assessee. Appeal of the assessee stands allowed.

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• 2021 (5) TMI 955
  Penalty u/s.271(1)(c) - Defective notice u/s 274 - HELD THAT:- As per the record, the assessment order speaks about levying the penalty on account of taken the action in view of provisions u/s 274 r.w.s. 271 (1)(c) of the Act but the notice nowhere specify any limb to levy the penalty. The notice is not justifiable in view of the law settled by the Bombay High Court in the case of CIT-11 Vs. Samson Perinchery. [ 2013 (11) TMI 369 - ITAT MUMBAI] It is quite clear that the penalty is not leviable in accordance with law. Further, we noticed that the penalty was levied on account of filing the return of income in pursuance of notice u/s 153 r.w.s 153C of the Act. In the case of Kirit Dahyabhai Patel [ 2015 (1) TMI 201 - GUJARAT HIGH COURT] . It is quite clear that the no penalty is leviable in the said circumstances, therefore, we delete the penalty. - Decided in favour of assessee.

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• 2021 (5) TMI 953
  Reopening of assessment u/s 147 - transaction of sale of immovable property for the specified consideration - as argued notice issued U/s 148 of the Act was without jurisdiction and bad in law - HELD THAT:- From perusal of the record, we noticed that in the present case, the A.O. had recorded the reasons for reopening of assessment by mentioning that the assessee has not field its return of income. Later on, it was noticed that the assessee has sold a property of Jaipur to Smt. Meena Sharma during the F.Y. 2008-09 for sale consideration of Rs. 18,75,000/-, however of the Sub-Registrar had adopted final face value of such property at Rs. 16,37,653/- for the purpose of charging of stamp duty. But on verification of the department portal it was noticed that the assessee had not shown capital gain. We have a reason to believe that the income to the extent of Rs. 18,75,000/- has escaped assessment with in meaning u/s 147/- of the IT Act. After having gone through the facts of the present case, we noticed that the A.O. had recorded the reasons for reopening of assessment in the case of assessee on wrong facts as according to records put forth before us, it is reflected that the assessee was regularly income tax assessee and filing here return of income as well as for the year under consideration also. As the assessee had filled her return of income and disclosed the said transaction and despite the material available on record which had not been taken in to consideration before recording the reasons by the A.O. which shows that the notice has been issued by the A.O. only on factually incorrect facts and on the presumption, assumption and suspicion and without any material on record. Therefore, we are of the view that the very basis of reopening of assessment is based on incomplete or wrong facts available on record as the said transaction of sale of the property has already been duly disclosed by the assessee in her return of income and the assessee had also filed her return of income. All these facts reflect non-application of mind by the A.O. while recording the reasons and it cannot be held that there is the nexus between the material available on record and formation of belief that the income has escaped assessment. where the very foundation for reopening the case is vitiated given that the assessee has filed her return of income disclosing the transaction of sale of immovable property for the specified consideration and offering the same to tax, therefore, there cannot be any reason to believe that income has escaped assessment for the very same transaction. The assumption or jurisdiction u/s 147 of the Act cannot be sustained and thus, the subsequent proceedings are also liable to be set-aside and is therefore, set aside - Decided in favour of assessee.

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• 2021 (5) TMI 951
  Penalty u/s 272A(2)(e) - return in this case was filed on 12/07/2017 as late by 2537 days - HELD THAT:- Assessee being an educational institution whose total receipts were less than Rs. 1.00 crore and thus falls U/s 10(23C)(iiiab) of the Act. Therefore, the entire income of the assessee was exempt and as per provisions of Section 139(4C)(e) of the Act the person is required to file the return where its income exceeds the maximum amount which is not chargeable to income tax. However, in this case, the assessee has filled its return of income declaring the nil income and assessment has also been completed at nil income vide assessment order dated 25.12.2017 u/s 143((3)/148 of the Act in the status of educational institution. The assessee was not required to file the return on or before 31.07.2010 and thus, in this way, no penalty could have been imposed u/s 272A(2)(e) - Decided in favour of assessee.

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• 2021 (5) TMI 950
  Addition of on-money - Quantification of the income assessable - assessee argued estimation of the profit element embedded in the on-money receipts @20% by the CIT(A) be substituted by that shown by the assessee @12% - Quantification of the income assessable - HELD THAT:- s the receipt of on-money is inextricably interlinked and in fact interwoven with the corresponding sale transaction accounted for by the assessee in its books of account, the same, thus, cannot be divorced therefrom, and the income element therein embedded would be required to be brought to tax in the same year in which the sale transaction had been accounted for or would be accounted for by the assessee as per its regular method of accounting that has been accepted by the department.Our aforesaid view that the conduct of search and seizure operation in a particular year does not lead to an inference that the undisclosed income detected as a consequence thereof has to be taxed in the assessment year relevant to the previous year in which search was conducted, and the accounting of such income have to be made on the basis of the method of accounting followed by the assessee is supported by the order of the ITAT, Pune bench in the case of Dhanvarsha Builders and Developers Pvt. Ltd [ 2005 (10) TMI 276 - ITAT PUNE-A] - We, thus, direct the A.O to subject the income element embedded in the onmoney received by the assessee to tax in terms of our aforesaid observations.The Ground of appeal No. 1 raised by the assessee is allowed in terms of our aforesaid observations Addition w.r.t the income element of the amount of on-money - change in the method of accounting adopted by the assessee - HELD THAT:- Where the change in the method of accounting adopted by the assessee is for a bonafide reason and such new method of accounting is thereafter regularly employed by the assessee, no fault can be found with the same. Our aforesaid viewis fortified by the judgment of the Hon ble High Court of Bombay in the case of Bajaj Auto Ltd. [ 2016 (9) TMI 1047 - BOMBAY HIGH COURT] .Also, the Hon ble High Court of Bombay in its earlier judgment passed in the case of Melmould Corporation [ 1993 (2) TMI 82 - BOMBAY HIGH COURT] relying on the decision of Corporation Bank Ltd. [ 1988 (8) TMI 90 - KARNATAKA HIGH COURT] had held that where the change in the method of accounting is a bonafide one which was thereafter consistently followed by the assessee year after year, then, the change would have to be accepted irrespective of the fact that during the year when the change wsa brought about a deteriment was caused to the revenue. As observed by us hereinabove while disposing off the assessee s appeal above as the receipt of on-money is inextricably interlinked and in fact interwoven with the corresponding sale transaction accounted for by the assessee in its books of account, the same, thus, cannot be divorced therefrom, and the income element therein embedded would be required to be brought to tax in the same year in which the corresponding sale transaction had been accounted for or would be accounted for by the assessee as per its regular method of accounting that has been accepted by the department. Our aforesaid view that the conduct of search and seizure operation in a particular year does not lead to an inference that the undisclosed income detected as a consequence thereof has to be taxed in the assessment year relevant to the previous year in which search was conducted, and the accounting of such income have to be made on the basis of the method of accounting followed by the assessee is supported by the order of the ITAT, Pune bench in the case of Dhanvarsha Builders and Developers Pvt. Ltd.[ 2005 (10) TMI 276 - ITAT PUNE-A] . We, thus, direct the A.O to consider our aforesaid observations while subjecting the income element embedded in the on-money received by the assessee to tax. Additions of on-money made u/s 68 on the basis of notings in loose sheets and data retrieved from the mobiles - HELD THAT:- We are unable to comprehend that as to on what basis the revenue is seeking inclusion of loose sheets and data retrieved from mobile phones within the scope and gamut of the definition of books or books of accounts as provided in Sec. 2(12A) of the Act. Alternatively, we also find substance in the observation of the CIT(A), that as both the Investigation wing and the A.O had held that the impugned notings were the on-money received by the assessee on sale of flats/shops in the building projects undertaken by it thus, in absence of any dispute as regards the nature of such receipt, the same, was liable to be assessed as a business receipt and not as an income u/s 68 of the Act. We concur with the view taken by the CIT(A) that now when the A.O had in the assessment order mentioned the flat wise and year wise receipts of on-money thus, the same leaves no iota of doubt that the same were in the nature of business receipts which were inseparable from the assessee s business of a builder and developer. Accordingly, on the basis of our aforesaid deliberations, we are of a strong conviction that no infirmity arises from the order of the CIT(A) who in our considered view had rightly concluded that the impugned additions could not have been made u/s 68.

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• 2021 (5) TMI 949
  Adjustment on account of export commission and royalty paid to associated enterprises - HELD THAT:- We find that the both the issues of transfer pricing adjustment with respect to determination of ALP of Rs. Nil on export commission and payment of royalty are decided in favour of the assessee. The ld. DR could not show as well as the ld. AR vehemently submitted that there is no change in the facts and circumstances of the case. In view of this Ground Nos. 2 to seven of the appeal are allowed. Expenses of signage - revenue expenditure OR capital expenditure - HELD THAT:- The expenditure was incurred on signage for display of the name of the assessee at the dealer s premises. However, once the same is fixed at dealers site then the Courts have held that it does not satisfy the test of ownership with the assessee and the expenditure is to be allowed as revenue expenditure, We find support from the ratio laid down by the Hon ble Delhi High Court in CIT vs Honda Siel Power Products Ltd.[ 2017 (6) TMI 524 - SUPREME COURT] .Thus, we are of the view that the expenditure to the extent claimed by the assessee is to be allowed in the hands of the assessee and not/the entire expenditure. Addition of sales tools expenses u/s 37 - HELD THAT:- We find that though the tribunal has considered the material facts for allowance of sales tool expenses however as we could understand referred to the signage expenses. However, in respect of the above apparent error, we find that the logic given by the coordinate bench equally applies to the sales tool expenses also. The above decision was also followed by the coordinate bench in subsequent year. The learned departmental representative also could not show that why the above logic does not apply to the sales tool expenses incurred by the assessee. Therefore, respectfully following the order of the coordinate bench in assessee s own case we hold that since tool expenses incurred by the assessee is a revenue expenditure allowable to the assessee as deduction. Capitalization of the royalty being 25% being treated as a capital in nature as it resulted in an enduring benefit to the assessee - HELD THAT:- On careful perusal of the order, we find that the coordinate bench on identical facts and circumstances has held that the royalty paid by the assessee to the associated enterprises concern is fully revenue in nature and not the capital expenditure. Thus, the coordinate bench deleted the disallowances erred by the ld. AO that 25% of the royalty paid by the assessee is capital in nature. The coordinate bench in 2021 [ 2020 (9) TMI 62 - ITAT DELHI] in assessee s own case considered the decision of the honourable Supreme Court in relying on the decision of the honourable Delhi High Court allowed the claim of the assessee. Disallowance of deduction of technical know-how claimed - HELD THAT:- As decided in own case [ 2020 (9) TMI 1180 - ITAT DELHI] held there is no merit in the said exercise carried out by the Assessing Officer and accordingly we direct the Assessing Officer to allow the running Royalty as business expenditure in entirety.

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• 2021 (5) TMI 945
  Exemption u/s 11 - tax liability has been raised on the assessee trust on the premise of non-availability of registration u/s 12A - admission of additional evidence - HELD THAT:- We find merit in the plea of the assessee for admission of additional evidence in the circumstances narrated above. It is a matter of fact that the Income Tax Department itself has issued certificate under s. 12AA of the Act registering the assessee for the purposes of Section 11/12 of the Act. The delinquency in non-production of registration before CIT(A) is therefore viewed benignly. The additional evidence in the form of order under s. 12AA of the Act dated 31.10.2017 is therefore admitted by the Tribunal for adjudication of dispute. Having regard to the fact that the order under s. 12AA of the Act was not presented before the first appellate authority for its consideration, we refrain ourselves from expressing our view on merits of the eligibility of deduction under s. 11/12 - Appeals of the assessee are allowed for statistical purposes.

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• 2021 (5) TMI 940
  Disallowance u/s 37(1) - HELD THAT:- While dealing with the issue, the Tribunal in [ 2019 (6) TMI 1621 - ITAT MUMBAI] having found that in assessee s own case for assessment year 2012-13, the Tribunal has deleted similar addition made by assessing officer, followed the same and upheld the decision of learned Commissioner of Income-tax (Appeals) in deleting the additional disallowance made by the assessing officer. Facts being identical, respectfully following the aforesaid decision of the Tribunal in assessee s own case, we uphold the order of learned Commissioner of Income-tax (Appeals) on the issue. Ground raised is dismissed. Disallowance u/s 14A - HELD THAT:- Having considered rival contentions, we find from materials on record that in the year under dispute, the assessee had not actually earned any exempt income. That being the case, the question of disallowance under section 14A r.w.r.8D would not arise. In fact, while considering identical issue in assessee s own case in assessment year 2014-15 [ 2019 (6) TMI 1621 - ITAT MUMBAI] the Tribunal in the order referred to above, deleted the disallowance made by the assessing officer in absence of any exempt income earned during the year. In view of the aforesaid, we uphold the decision of learned Commissioner of Income-tax (Appeals) by dismissing the ground.

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• 2021 (5) TMI 938
  Penalty u/s 271(1)(c) - disallowance of professional fees for non-deduction of TDS - HELD THAT:- Expenses disallowed u/s 40(a)(i) on account of non withholding of taxes was subject to payments made to vendors based in Thailand who are in the business of providing movers and packers Services to its client. This was in relation to the expats transfer movement. The service related to Movers and Packers cannot be characterized as royalty income in the hands of those vendors under the provisions of India Thailand DTAA and the same does not quality as technical service as it does not include the element of technical services relating to FTS. The tax relating to Section 40(a)(i) will not be applicable in assessee s case and is a contesting issue. Merely not filing appeal on the contesting issues does not tantamount to concealment of income and furnishing inaccurate particulars of income. These two elements along with Explanation 1 of Section 271(1)(c) are not present in assessee s case for imposing penalty or initiating penalty proceedings. As related to payment made to control risk, the same also does not impugned to FTS as per the provisions of Article 12(4) of India Singapore DTAA as the same does not result in making available technical knowhow to the recipient. Thus, these two elements upon which the penalty has been imposed by the Revenue Assessment Year contesting in nature and the assessee though has not opted for any appeal, it cannot be stated that these are the element of concealment of income and furnishing of inaccurate particulars. The case laws given by the assessee are clearly applicable in assessee s case specially that of Reliance Petroproducts Pvt. Ltd.[ 2010 (3) TMI 80 - SUPREME COURT ] . Hence we delete the penalty and allow the appeal of the assessee.

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• 2021 (5) TMI 937
  Revision u/s 263 - Manner of presentation of the corpus fund in the final accounts of the assessee - donation so received was received for a specific purpose and use, hence it was Corpus Donation. The corpus donation cannot be treated as part of Income and Expenditure account - HELD THAT:- As far as the accounting principles/methods are concerned the Capital has to be shown in the balance sheet of the assessee. The capital shall not be treated as part of the income and expenditure account. Therefore, act of the assessee is correct - Hence, this fund is a nature of Capital Receipts and is required to be shown in the balance sheet not in the income and expenditure account. Therefore, the assessee has correctly shown the same in the books of accounts and final accounts of the assessee. Since the assessee received certain amounts for the specific use i.e. for construction of building and this fact has been mentioned on the donation receipts also, copies of the some of the receipts are reproduced by the Ld. CIT(E) in his order itself, wherein it is categorically mentioned the purpose of donation. This fact has been duly examined by the then assessing officer and mentioned that he is satisfied with the submission and evidences. Even otherwise the directions of the doner a mutual trust has been created between the doner and donee and because of this the donee is bound to use that specific fund into the specifically directed activities for which it was donated. The same has to be kept as liability of the assessee till the utilization of the entire fund into the specified activities. Hence the same is required to be shown in the balance sheet not in the Income and expenditure account. We also observe that the fund in question is a capital fund/corpus fund therefore, it is out of preview of the provisions of section 11(2) of the Act. Section 11 of the Act deals with the utilization of income of a trust. This section is not having any provision about the utilization of corpus donation / fund like general fund or other receipts. The amount so received to the assessee is a Corpus fund / donation, therefore is out of preview of the provisions of section 11(2) of the Act. Therefore, we are of the view that any amount received as donation with specific direction shall be treated as Corpus of the assessee and because of specific directions this is not taxable as per the provisions of section 11(1)(d). Thus we are of the view that where the A.O. has taken a broad view by accepting the issue of corpus donation by carefully examining and satisfying himself with evidences produced by the assessee during the course of hearing, then order of the A.O. cannot be held to be erroneous on the ground of lack of inquiry. Notice issued by the ld. CIT(E) was on the basis of proposal of subsequent ITO, therefore, this act does not provide such powers to the ITO U/s 263 - In the present case, the proposal was sent by the subsequent A.O. to the CIT(E) on the basis of which a show cause notice was issued which is against the provisions of the Act. However, on this proposition, our view is not in favour of the ld AR as we convinced with the arguments of the ld. CIT-DR who had submitted that there is no prohibition U/s 263 of the Act for the Commissioner to act on the basis of proposal by the A.O. if other conditions under the said Section are satisfied. In this regard, the ld. CIT-DR has relied on the decision in the case of Apollo Tyres Ltd.[ 1997 (10) TMI 98 - ITAT DELHI-E] and Stewarts and Lloyds of India Ltd.[ 2016 (3) TMI 178 - ITAT KOLKATA] therefore, we reject this contention raised by the assessee. Since, keeping in view our above discussion and reasoning mentioned in detail, we are of the view that the order passed by the A.O. was not erroneous and prejudicial to the interest of the revenue and thus we allow this ground raised by the assessee and set aside the order passed by the ld. CIT(E). - Decided partly in favour of assessee.

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• Customs

• 2021 (5) TMI 979
  Refund of IGST - principles of natural justice - HELD THAT:- As the Respondents have not taken any final decision on the refund sought, it is directed the concerned Respondents to decide the claim of the Petitioner for refund of the aforesaid amount under the Integrated Goods and Service Tax Act, 2017 as expeditiously as possible and practicable in accordance with law, rules, regulations, Government policies including principles of unjust enrichment as propounded by Hon ble Supreme Court in MAFATLAL INDUSTRIES LTD. VERSUS UNION OF INDIA [ 1996 (12) TMI 50 - SUPREME COURT] and on the basis of evidence on record. Petition disposed off.

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• 2021 (5) TMI 976
  Smuggling - Gold - It is the case of the petitioner that since the respondent appeared to have committed offences punishable under Sections 132 and 135 of the Customs Act, 1962 - HELD THAT:- Perusal of the record shows that the respondent is a native of Afghanistan and there is every possibility that he would abscond and fail to return to India in case he is permitted to go to his country at this stage and thus misuse his liberty. The investigation in the present case is still underway and charge sheet is yet to be filed. In case, the petitioner is allowed to leave the country, the same will hamper further investigation of this case and the filing of the charge sheet. Moreover, keeping in view the nature and gravity of the allegations, it is not a fit case where permission to go abroad should be granted. The petition stands allowed.

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• Corporate Laws

• 2021 (5) TMI 941
  Seeking reduction of share capital of the Petitioner Company - HELD THAT:- The Special Resolution as approved by the shareholders in their Extraordinary General Meeting held on 13.05.2020 is hereby confirmed. The Company shall, within thirty days hence, publish the confirmation of the reduction of share capital in the same newspapers (i.e. Free Press Journal and Navshakti) having circulation in the state of Maharashtra, as required under section 66(4) of the Act. It may also be published on the website, if any, of the Company. The Petition for reduction of share capital is allowed.

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• Insolvency & Bankruptcy

• 2021 (5) TMI 948
  Liquidation of Corporate Debtor - section 33(1)(a) of the Insolvency Bankruptcy Code, 2016 - HELD THAT:- No resolution plan has been called during the 180 days and extension for the for time limit of this CIRP as per section 12(2) was put before CoC for voting in the last CoC meeting. The voting as received on 12.03.2020, 66% positive vote has not been received from CoC members as mandate for it. Hence, applicant filed this application for initiation of liquidation order u/s. 33 of IBC, 2016 read with regulation 3 of the IBBI (Liquidation Process) Regulations, 2016. This is a fit case for liquidation - Liquidation order granted - application allowed.

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• 2021 (5) TMI 947
  Moratorium - relevance of section 14 of the Code - Whether appointment of the Corporate Debtor as the developer of the property could be terminated during the pendency of the CIRP? - HELD THAT:- A plain reading of the salutary provision of Section 14, would indicate that on the Insolvency Commencement Date (ICD/08.05.2019), the institution of the suits or continuation of pending suits or proceedings against the Corporate Debtor before any authority or any court of law shall be prohibited. In this case there is no dispute that the property in respect of which the development agreement was executed is not an asset of the Corporate Debtor. The Corporate Debtor only was permitted to develop it in terms of the development agreement. The fact that the Corporate Debtor was the developer in respect of the property and had undertaken certain constructions thereon in pursuance to the development agreement. This would unequivocally indicate that the property was under its occupation as on the ICD. For the purpose of this case, it would thus be sufficient to hold that on the date of Insolvency Commencement, the property was occupied by the Corporate Debtor and the Corporate Debtor was in possession thereof. The Hon ble Supreme Court in RAJENDRA K. BHUTTA VERSUS MAHARASHTRA HOUSING AND AREA DEVELOPMENT AUTHORITY AND ANOTHER [ 2020 (3) TMI 34 - SUPREME COURT] have in clear terms delineated the extent of this Code and limits of the other Authorities in dealing with a Corporate Debtor under CIRP. The termination of the Corporate Debtor as the developer would essentially result in the property being taken out of its possession. Both of which are prohibited under Section 14(1) of the Code. Therefore, the order dated 17.07.2019 being violative of the mandatory provision cannot be held to be valid and operative in law. The issues are answered in the negative - application allowed.

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• 2021 (5) TMI 946
  Directions to Respondent No. 3 to place the settlement proposals of this Applicant before Respondent No. 2 through Respondent No. 1 - section 60(5), 227 and 239(2) of the Insolvency and Bankruptcy code, 2016 - HELD THAT:- From a bare perusal of Section 12A and Regulation 30A of the CIRP Regulations, it is amply clear that for any withdrawal of an admitted application it is the Original Applicant, that must present such withdrawal application for approval of the CoC. Once the CoC (Respondent No. 2) has approved the Resolution Plan, the Administrator of the DHFL, has to obtain no-objection from RBI in accordance with Rule 5(d) of the FSP Insolvency Rules. Apart from the same, neither the Code nor the FSP Insolvency Rules, casts any other obligation on RBI vis- -vis the CIRP process, which is left to be run by the resolution professional along with the CoC as per its commercial wisdom. The RBI cannot intervene in the CIRP process, and the reliefs as sought for by the Applicant qua RBI seeks RBI to intervene in the CIRP process, which is completely contrary and inconsistent with the spirit of the Code and will have the effect of derailing the CIR Process. Without prejudice to the aforesaid, it is pertinent to mention herein that the Applicant is the ex-promoter of DHFL against whom various proceedings, civil and/or criminal, have been filed, alleging cheating, fraud, siphoning of funds and such other serious offences. The Applicant is presently in judicial custody and most regulatory agencies like CBI, EOW, ED etc. are at present investigating against the Applicant. It is beyond any cavil that RBI has been unnecessarily impleaded as a party Respondent in the present Application and been dragged in such litigation. RBI cannot and ought not to intervene in the CIR Process and direct the Administrator to conduct himself in a manner which is contrary to the Code. Further, considering that the CIRP is at a very advanced stage, passing any ad-interim reliefs as sought for by the Applicant will completely derail the process and force DHFL into liquidation, which will be completely against the spirit of the Code. This being so, it is necessary in the interest of justice, equity and good conscience that the Application as against RBI be dismissed in limine and costs be imposed upon the Applicant for filing such frivolous and vexatious application against the RBI. Hon ble Supreme Court in its decision in the matter of Swiss Ribbon Vs. Union of India [ 2019 (1) TMI 1508 - SUPREME COURT ], has pleased to held that Corporate Debtor may come for settlement in post admission stage before the constitution of CoC and the Adjudicating Authority may exercise its power conferred to the NCLT under rule 11 of the NCLT Rules. After constitution of the CoC an application can be entertained under the procedure of section 12A of the IB Code. Hence the present application appears to be a pre-stage process of an application under section 12A. That can be considered by this AA, if it is filed by the main petitioner in the IB Petition (RBI/Administrator) with having requisite majority of more than 90% voting of the Members of the CoC. Hence there can be no prejudice to either parties if CoC gives due consideration as per norms and in its commercial wisdom to examine feasibility of such proposal of settlement for Approx. Rs. 91,000/- Crores (Rupees Ninety-one Thousand Crores) and above. The CoC may take appropriate decision by taking in to consideration the paramount interest of the Creditors, Fixed Depositors, and Stakeholders of the Corporate Debtor involved in the present matter. CoC ought to have considered such settlement proposal of the applicant as per norms and its commercial wisdom which we did not to have been followed by the CoC in the present matter. From the Submissions of the respondents, they treat this Settlement Proposal as a resolution plan but factually that is not case as discussed - We are conscious about our jurisdiction that this Adjudicating Authority cannot substitute its view of over the Commercial Wisdom that may be exercised by the CoC in respect of the present Applicant, however there appears to be some procedural irregularity by not considering a settlement proposal which is around 150% higher value of the Resolution Plan approved. Hence it needs due consideration and cannot be kept aside nor contention of the applicant in the present IA can be brush aside that an Ex-promoter cannot move a proposal of settlement. This Adjudicating Authority hereby directs the Administrator to place the 2nd Settlement Proposal of the applicant Mr. Kapil Wadhawan before COC for its consideration, decision, voting and inform the outcome of the same within 10 days from today and list the matter on 31.5.2021 - Petition disposed off.

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• 2021 (5) TMI 944
  CIRP proceedings - illegal transfer of IPR and business by the corporate debtor - Failure on the part of Promoter-Director Jasjit Singh Sawhney to provide information to the RP for discharging his functions during the CIRP - avoidance of preferential transactions, undervalued transactions and fraudulent and wrongful trading and diversion of the business of the Corporate Debtor. Non-co-operation of promoter-director and his men - HELD THAT:- Initially, the Resolution Professional/the applicant sent emails dated 14.03.2019, 18.03.2019 to its promoter director (Rl-Sahweny) seeking information of the corporate debtor, to which Mr. Sawhney on 19.03.2019 replied seeking time to provide information, subsequent to it, one of the employees of the Corporate Debtor namely Mr. Sumit Gupta sent an email on 31.03.2019 along with some information. As that information was not sufficient to discharge CIRP functions, this Applicant had mailed on 02.04.2019, 15.04.2019, 16.04.2019, 23.04.2019 and 07.05.2019 requesting Mr. Sawhney and Mr. Sumit Gupta to provide information, but whereas Mr. Sumit Gupta wrote back on 13.05.2019 seeking time to provide pending documents as Mr. Sawhney was not feeling well. In this application, R1 has filed reply for the first time disclosing that the shares of Pipetel Communications Private Limited (Pipetel) and Net4 Network Services Limited (Net4 Network) held by the CD were transferred to Trak Online Net India Private Limited (Trak Online), the business of the CD was transferred to Net4 Network through Master Reseller Agreement (MSA) and Trade Marks of the CD were assigned to the promoter director Mr. Sawhney - This Bench also directed Mr. Sawhney to provide information on passing various orders 03.07.2019, 22.07.2019, 02.09.2019, 27.10.2019 and 20.12.2019, but till date no progress, except providing piece meal information, which is not enough to figure out the transactions of the Corporate Debtor. Avoidance of preferential transactions, undervalued transactions and fraudulent and wrongful trading and diversion of the business of the Corporate Debtor - HELD THAT:- It is evident that the directors fraudulently transferred the shareholding of the Corporate Debtor in their subsidiary companies to Trak Online to take out the holding of the corporate debtor over Net4 Network so that the corporate debtor will not have any right over the business of the corporate debtor subsequently transferred to Net4 Network, that the Corporate Debtor entered into undervalued and fraudulent transactions such as execution of Assignment Agreement of trade marks in favor of its director (R1) and execution of Master Reseller Agreement in favor of Net4 Network (R2) for keeping the assets of the Corporate Debtor beyond the reach of the Creditors so as to defraud the Creditors - the declaration of assignment of trademarks in the name of R1 is declared null and void and execution of Master Reseller Agreement in favor of Net4 Network is invalid, and direct R1 to restore the trade name Net4 to the Corporate Debtor and R2 to restore the business of the corporate debtor it has taken through Master Reseller agreement from the Corporate Debtor with immediate effect. Likewise, we hereby declare the Share Transfer Agreements reflecting transfer of Pipetel shares held by CD to Trak Online and transfer of Net4 Network shares to Trak Online as null and void. For the transactions mentioned being declared as null and void, u/s. 66 67 of the Code, whatever business so far Net4 Network held from the date of alleged transfer of business shall be inspected by an auditor appointed by this Bench on the suggestion made by the RP within 15 days thereof, and the auditor shall determine the opportunity loss to the CD within 30 days from the date of his appointment. Upon approval of the said report by this Authority, the promoter director Mr. Jasjith Singh Sawhney (R1) shall pay back the loss estimated by the auditor to the CD because R1 is the person caused all these fraudulent transactions happened. R1 shall produce all relevant records within seven days from the date of receipt of request from the auditor to be appointed by this Bench. Application disposed off.

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• 2021 (5) TMI 943
  Rejection of claim filed by the Applicant (FC and OC) before the Respondent in respect of operational debt due and payable by the Corporate Debtor, by RP - rejection on the ground that the amount claimed is disputed and is pending adjudication before Arbitral Tribunal District Court - HELD THAT:- The admission of CIRP of the Corporate Debtor was passed on 09.08.2019. The IRP was confirmed as RP by the CoC as it first meeting on 09.09.2019. The IRP issued public announcement in Form A to receive claim from creditors of Corporate Debtor. The last date filing of the claim as per the public announcement was 07.11.2019, whereas the applicant lodged its claim on 12.11.2019 - In the instant case the arbitration proceedings were initiated by the Corporate Debtor and a counter claim was filed by the Applicant herein and the same was pending adjudication before the Arbitral Tribunal. The said claim was filed on 12.11.2019 and whereas the last date of submission of claim was 07.11.2019, this Bench condones the delay of four days of filing the claim before the IRP. The Applicant who has filed a counter claim before the Arbitral Tribunal is said to have a claim and is contingent upon adjudication by the Arbitral Tribunal and hence, such a claim is necessarily to be declared as contingent claim by the Resolution Professional in the information memorandum - Application allowed in part.

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• 2021 (5) TMI 942
  Seeking extension of time period of the CIRP of the Corporate Debtor by a period of 90 days effective 30.03.2020 - sections 12 and 60 of the Insolvency and Bankruptcy Code, 2016 - HELD THAT:- As per the facts of the present case, there is no resolution for Liquidation of the Corporate Debtor. As per section 33(1) of the IBC, 2016 which contemplates that if the maximum period permitted for completion of the CIRP has expired then this Tribunal has to order for the liquidation of the Corporate Debtor. Since this Tribunal has not granted the extension of the CIRP beyond the stipulated period of 180 days, as per operation of Section 33(1) of the IBC, 2016, the Corporate Debtor should be ordered for liquidation. Section 33(1) of the IBC, 2016. The Resolution Professional expressed his willingness to continue as the liquidator and also a perusal of the same discloses the fact that the Resolution Professional is willing to act as the Liquidator of the Corporate Debtor, if appointed by this Tribunal. The Liquidator shall strictly act in accordance with the provisions of IBC, 2016 and the attendant Rules and regulations including Insolvency and Bankruptcy (Liquidation Process) Regulations, 2017 as amended upto date enjoined upon him - Application disposed off.

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• 2021 (5) TMI 939
  Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial Creditors or not - existence of debt or dispute or not - HELD THAT:- It is found that due to defaults committed by the respondent/CD, the account of the CD was classified as NPA on 27.12.2018. Subsequently, the FC has issued Demand Notice dated 08.01.2019 (page 73) under section 13(2) of SARFAESI Act demanding total outstanding dues. Unable to get response from the CD, the FC has taken symbolic possession of properties on 07.06.2019 and 20.06.2019. Both the parties have preferred proceedings before different forums. The respondent/had preferred a writ petition before the Hon ble High Court of Telangana - the Adjudicating Authority admits this Petition under Section 7 of IBC, 2016, declaring moratorium for the purposes referred to in Section 14 of the Code - Petition allowed.

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• PMLA

• 2021 (5) TMI 981
  Money Laundering - freezing of petitioner s bank account - It is the petitioner s case that the impugned order had been passed without providing it with a copy of the show-cause notice or an opportunity to place on record its objections thereto - HELD THAT:- In order to avoid any further controversy in this matter, it would be in the interest of justice to grant an opportunity to the petitioner to respond to the Show-Cause Notice. The petitioner is granted 10 days time to respond to the Show-Cause Notice dated 08.10.2020. The Adjudicating Authority will thereafter pass a fresh order in accordance with law, after duly considering the petitioner s response to the show cause notice - Petition allowed.

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• 2021 (5) TMI 977
  Hawala transaction - proceeds of crime - Scheduled offences - Section 44 of PMLA - HELD THAT:- Keeping in mind the health of the petitioner and also the fact that the petitioner is in custody since 15.01.2021, this Court is inclined to grant interim bail to the petitioner for 30 days from the date of his release on the conditions imposed - application allowed.

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• Service Tax

• 2021 (5) TMI 983
  Petitioner awes certain amount to the Government of India on account of settlement of certain dispute which was resolved under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 - petitioner approached the authorities for allowing him to pay the due amounts in instalments, which, however, did not elicit any positive response from the authorities - HELD THAT:- This Court is of the opinion that it may not necessary to dwell on the aggregate amount the petitioner is supposed to pay, except the amount which the petitioner has admitted and willing to pay in this petition. As regards other liabilities, if any, it is a matter to be considered by the authorities on its own merit in accordance with law. However, as far as the amount of Rs. 12,36,844.40/- is concerned which is the subject matter of consideration in this petition, the petitioner shall pay the aforesaid admitted amount of Rs. 12,36,844.40/- within 45 days from today. As regards the dues mentioned by Mr. Keyal, it is for the petitioner to approach the competent authority for payment and in instalments, if the authorities agree. It is made clear that till payment of the aforesaid amount of Rs. 12,36,844.40/- within the aforesaid 45 days, no coercive action shall be taken against the petitioner as regards the said amount. Petition disposed off.

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• 2021 (5) TMI 972
  Maintainability of appeal - appropriate Forum - Refund of the amount already remitted - Allegation is that mandatory formalities such as issuing notice were not complied with - Questions of facts involved - HELD THAT:- Since factual aspects are involved, the petitioner can as well avail the alternative remedy of appeal. Taking note of the facts and circumstances of the case, if the appeal is filed before the appellate authority within a period of three weeks from the date of receipt of a copy of this order, the appellate authority will entertain the same without reference to limitation. Petition dismissed.

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• 2021 (5) TMI 954
  Refund of Education Cess, Secondary Higher Education Cess and Krishi Kalyan Cess filed by them lying unutilized in their cenvet credit account - Time Limitation - GST credit or not - HELD THAT:- As the appellant has reversed the said amount in their GST account, in terms of the amendment to Section 140 of the CGST Act, 2017 on 30.08.2018, the said amount shall remain lying unutilized in their cenvat credit account on account of Education Cess, Secondary Higher Education Cess and Krishi Kalyan Cess as good as on 01.07.2017. Further, as admitted by both the sides that in terms of Section 140 of the Act, the amount of Education Cess, Secondary Higher Education Cess and Krishi Kalyan Cess cannot be transferred to GST account then it is only a cenvat credit of Education Cess, Secondary Higher Education Cess and Krishi Kalyan Cess lying unutilized as on 01.07.2017 in their cenvat credit account. Therefore, the contention of the ld. AR that it is a GST credit, is not acceptable when the provision of law is very much clear that the said credit cannot be transferred to GST Regime. Whether the refund claim filed by the appellant is barred by limitation or not? - HELD THAT:- The amendment to Section 140 came after one year of the switching to the GST Regime on 30.08.2018 which is applicable retrospectively. In that circumstances how the appellant could have filed the refund claim within one year from 01.07.2017 till 30.08.2018, when there was no provision of law existed, when amendment itself takes on 30.08.2018, therefore, the relevant date of filing the refund claim shall be 30.08.2018 and within one year of the said date, the refund claim has been filed by the appellant - the refund claim filed by the appellant is not barred by limitation. Whether the decision in the case of M/S BHARAT HEAVY ELECTRICALS LTD. (EXCISE TAXATION DIVISION) VERSUS COMMISSIONER CENTRAL GOODS SERVICE TAX, CENTRAL EXCISE CUSTOMS, BHOPAL (MADHYA PRADESH) [ 2019 (4) TMI 1896 - CESTAT NEW DELHI] can be relied in this case or not? - HELD THAT:- In the case of M/s Bharat Heavy Electricals Ltd, this Tribunal laid down in law That Education Cess, Secondary Higher Education Cess and Krishi Kalyan Cess cannot be transferred to GST account and as they were lying unutilized in their cenvat credit account on 30.06.2017, the assesee is entitled to claim the refund thereof. In other words, if the appellant could have filed the refund claim before 30.06.2017 of Education Cess, Secondary Higher Education Cess and Krishi Kalyan Cess, the same is admissible to the appellant. The appellant is entitled to file the refund claim; accordingly, the impugned order is set aside - refund claim is allowed which is subject to verification of the records - appeal allowed - decided in favor of appellant.

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• 2021 (5) TMI 952
  Interest on delayed Refund of service Tax - time limitation - calculation of interest on refunds after three months from the date of filing of the claim of refund - HELD THAT:- The decision of the Hon ble Apex Court in the case of RANBAXY LABORATORIES LTD. VERSUS UNION OF INDIA AND ORS. [ 2011 (10) TMI 16 - SUPREME COURT] , wherein the Apex Court has cleared that if the assessee filed the refund claim and the same is to be sanctioned within three months from the date of filing of the refund claim and the same is not sanctioned, then the Revenue has to pay the interest thereon on till its realization after three months from the date of filing of the refund claim although there may be litigation in the matter.. Admittedly, the appellants have filed the refund claims during the period 2006-09 and 2009-10 respectively and the same have not sanctioned within three months from the date of filing of the refund claim. In these circumstances, the appellants are entitled to claim interests on delayed refunds after three months from the date of filing of the refund claim till its realization. The claim of interest is allowed - appeal allowed - decided in favor of appellant.

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• Indian Laws

• 2021 (5) TMI 975
  Dishonor of Cheque - legally enforceable debt - financial incapacity to repay the debt - Whether the judgments under revision are perverse, illegal and erroneous warranting interference at the hands of this Court? - service of notice - HELD THAT:- In the instant case, the notice has been sent to the correct address of the accused and since he has refused the same, the Registered Post Acknowledgement Due was returned to the sender and also since the accused did not come forward to make good the amount of the cheque immediately after he coming to know about the institution of the criminal case, the argument of the learned counsel for the petitioner that there is no service of notice upon the accused under Section 138 of N.I. Act, is not acceptable. The financial capacity of the complainant to lend money to the accused also can be gathered from the evidence. As such, the other point of argument of learned counsel for the petitioner on that aspect is not convincing - the entire defence of the accused about denial of the loan transaction has just confined to a mere oral denial made to PW-1. However, the same is not sufficient to rebut the presumption which has been formed in favour of the complainant under Section 139 of N.I. Act regarding the existence of legally enforceable debt. The trial Court for the proven guilt of the accused for the offence punishable under Section 138 of N.I. Act, had sentenced the accused to undergo simple imprisonment for a period of six months and to pay a fine of Rs. 5,19,300/-, in default of payment of fine, to undergo simple imprisonment for a period of six months, in which, a sum of Rs. 5,14,300/- was ordered to be paid to the complainant. The Sessions Judge s Court in Criminal Appeal No. 69/2013 has confirmed the order on sentence. Criminal Revision Petition is partly allowed.

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• 2021 (5) TMI 974
  Dishonor of Cheque - Section 138 of the Negotiable Instruments Act, 1881 - allegation is that neither any witness was examined nor any documents were marked as exhibits - time limitation - rebuttal of presumption - Whether the judgments under revision are perverse, illegal and erroneous warranting interference at the hands of this Court? - HELD THAT:- The first point of argument of the learned counsel for the petitioner/accused that, the cheque was returned on 22-07-2010 whereas the notice was sent on 09-09-2010, thus the notice is barred by limitation, is not acceptable. Thus, from the date of the second dishonour of the cheque which was on 31-08-2010, the notice has been sent within the statutory period as has come out in the evidence of PW-1. Even though the alleged legal notice dated 09-09-2010 sent on behalf of the complainant to the accused is not marked as an exhibit, but the reply to the said notice which is at Ex. P-11 acknowledges the receipt of the said notice dated 09-09-2010 sent on behalf of the complainant by the accused. It is only after acknowledging the receipt of the said notice, the accused has proceeded to give his reply through Ex. P-11. Therefore, in the light of the un-denied and undisputed evidence of PW-1, which is further corroborated by the evidence of postal receipt and acknowledgement at Exs. P-7 to P-10, and more particularly, in the light of the acknowledgment of receipt of the notice by the accused through his reply at Ex. P-11, the mere non-marking of a copy of the legal notice sent by the complainant to the accused is not fatal to the case of the complainant. As such, the second and the final point of argument of the learned counsel for the petitioner/accused on the said aspect is also not sustainable. Rebuttal of presumption - HELD THAT:- The un-denied evidence of PW-1 which is further corroborated by Exs. P-1 to P-12 would clearly go to show that, in response to the loan availed by the accused of a sum of Rs. 11,00,000/-, he had issued the cheque at Ex. P-3 to the complainant, which came to be dishonoured, when presented for its realisation, for the reason of insufficiency of funds. Thereafter, despite making a demand for payment of the cheque amount within time, the accused has failed to make good the payment of the same, as such, not only the presumption that has arisen in favour of the complainant under Section 139 of the N.I. Act, but also the un-denied evidence of PW-1 which is further corroborated by Exs. P-1 to P12 crystalises the said presumption in favour of the complainant proving the accused guilty of the alleged offence. Both the Trial Court as well the Sessions Judge s Court since have held the accused guilty of the alleged offence and since the Trial Court has passed an order on sentence proportionate to the gravity of the proven guilt, there are no perversity, illegality or irregularity, warranting interference at the hands of this Court. Criminal Revision Petition stands dismissed as devoid of merits.

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• 2021 (5) TMI 973
  Grant of approval under Non-Automatic route as stipulated under Section 7 of the Industrial Park Scheme 2002 - Notification dated 08.01.2008 - HELD THAT:- The Industrial Park scheme, for which, the petitioner applied had expired on 31.03.2006. The Government of India Notification issued on 1st April 2002 unambiguously contemplates the period of the operation of the scheme. As per the period of operation, the scheme shall be applicable for any undertaking which develops, develops and operates or maintains and operates an Industrial Park for the period beginning on the 1 st day of April 1997 and ending on the 31st day of March 2006 - However, the application itself was filed by the petitioner on 10th October 2006, after the lapse of the scheme itself. When the application itself was belated and more specifically, after the expiry of the period of operation of the scheme, the very relief sought for in the present writ petition deserves no merit consideration - Also, the petitioner admitted that the I.T Park became functional only after the expiry of the period of operation i.e., 31st March 2006. Petition dismissed.

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• 2021 (5) TMI 971
  Dishonor of Cheque - disputed questions of fact are involved - case of applicant is that there was no legal dues to be paid to the complainant as the cheque was given only for the security purpose - legally enforceable debt or not - HELD THAT:- Considering the facts of the present case, question of snatching possession of the Kvory plant from the applicant by threatening and beating him on 27.02.2020 by the complainant and the contents of the police complaint filed by the applicant-accused against the complainant and his son-in-law are disputed question of facts and they can only be considered after recording evidence by the prosecution/accused before the learned Trial court. Non producing the lease agreement executed between the parties and no legal debt of the complainant would be also a question of facts, which can be considered by the trial court that after recording evidence and examination/cross examination of the complainant. This is a case wherein the disputed questions of fact are involved. Under these circumstances, when there is disputed question of fact is involved and there is prima facie material showing that the cheques were issued by the accused to the complainant with his signature and there was monetary transaction between them, then in such case, inherent powers under Section 482 of the Code of Criminal Procedure cannot be exercised. This court is of the considered view that the High Court should not have interfered with the cognizance of the complaints having been taken by the trial court and High Court should not discharge the accused from his liability at the threshold. Unless the parties are given opportunity to lead evidence, it is not possible to come to a definite conclusion as to what was the date when the alleged possession of Kvory plant was handed over to him and while the police complaint was given against the complainant and his son-in-law and what was the lease agreement executed between the parties - Admittedly, cheque was under the signature of the present applicant given to the complainant. The purpose of alleged security, as argued by learned advocate for the applicant, can be decided before the trial Court on recording evidence. The present applicant is dismissed at the stage of admission without issuing any notice to the other side.

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