TMI Tax Updates - e-Newsletter
June 11, 2022

Case Laws in this Newsletter:

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

Articles

1. RESOLUTION OF DISPUTES UNDER MSMED ACT

   By: DR.MARIAPPAN GOVINDARAJAN

2. Supreme Court’s judgment on aspect of remuneration to Doctors in context of charitable institutions need a reconsideration.

   By: DEVKUMAR KOTHARI

3. Analysis of key recent developments under GST

   By: Amazon India

News

1. Shri Rao Inderjit Singh to inaugurate NFRA seminar on “High Quality Financial Reporting Framework through Effective Independent Oversight” as part of Azadi Ka Amrit Mahotsav celebrations under Ministry of Corporate Affairs tomorrow

2. Finance Minister Nirmala Sithraman to dedicate to the nation Dharohar – the National Museum of Customs and GST in Goa

3. Closing Ceremony of Azadi Ka Amrit Mahotsav Iconic Week of Ministry of Finance to be held in Goa on Saturday ‘Dharohar’ – the National Museum of Customs & GST to be dedicated to the nation by Finance Minister Nirmala Sitharaman

4. There is no alternative to the rules based multilateral trading system and that strong commitment to the WTO rules is the only way forward

5. APEDA participates in London Wine Fair for boosting India’s wine exports Ten exporters of Indian wine participate in the fair India exported alcoholic products worth of USD 322.12 million in 2020-21

6. Union Finance Minister Smt. Nirmala Sitharaman and Gujarat CM Shri Bhupendrabhai Patel inaugurate exhibition on “Contribution of CPSEs to Nation-Building” as part of celebration of Azadi Ka Amrit Mahotsav by Department of Public Enterprises in Gandhinagar

7. DIPAM to organise Conference on “Creating wealth through markets” as part of Azadi Ka Amrit Mahotsav Celebrations of Ministry of Finance tomorrow

Notifications

Companies Law

1. G.S.R. 436(E) - dated 9-6-2022 - Co. Law

Companies (Removal of Names of Companies from the Register of Companies) Amendment Rules, 2022.

GST - States

2. 40/2021-State Tax - dated 9-6-2022 - Delhi SGST

Delhi Goods and Services Tax (Tenth Amendment) Rules, 2021

3. 12/2021-State Tax (Rate) - dated 9-6-2022 - Delhi SGST

Exempts the goods specified.

4. 01/2022-State Tax - dated 9-6-2022 - Delhi SGST

Amendment in the Notification No. 13/2020 – State Tax, dated the 31st March, 2021.

Income Tax

5. 01 of 2022 - dated 9-6-2022 - IT

Compliance Check Functionality for Section 206AB & 206CCA of Income-tax Act 1961

Circulars / Instructions / Orders

DGFT

1. 13/2015-2020 - dated 9-6-2022

Amendments in Chapter 5 of the Handbook of Procedures 2015-20, related to Export Promotion Capital Goods Scheme to reduce 'Compliance Burden' and enhance 'Ease of doing Business'

2. 12/2015-2020 - dated 9-6-2022

Inclusion of agencies in Appendix 2G of Appendices and Aayat Niryat Forms of Foreign Trade Policy, 2015 20 in terms of Para 2.55 (d) of HBP 2015 20.

Highlights / Catch Notes

GST

• GST Scheme: Consignment Note Issuance by Goods Transport Agency Crucial for Lien Transfer and Safe Delivery.

  Case-Laws - AAR : Liability of GST - person liable to pay GST for transportation of goods - As per GST scheme of law, consignment note issuance, by whatever name called, is mandatory for a GTA. The issuance of consignment note indicates that the lien on goods has been transferred to the transporter and the transporter becomes responsible for the goods till its safe delivery to the consignee. This aspect is evident in the relationship between Vadilal and its GTA but is absent in the relationship between Vadilal and Celcius - the requirement of consignment note issuance by a GTA cannot be brushed aside - there are no merit to deem Vadilal as a GTA. - AAR
  Visit to Get Source

  ---

• Court Urges Fairness: Don't Block Electronic Credit Ledger Before Final Orders in Tax Credit Cases.

  Case-Laws - HC : Blocking of input tax credit / electronic credit ledger account - We should not be mistaken for saying as if errant dealer should be left scot free, if there is any illegal arrangement of input credit tax stringent action should be taken. However, till final orders are passed, if the credit which was not availed on the date when the blocking was done namely 16.02.2022 is also to be blocked, then it might cause prejudice to the dealer. - HC
  Visit to Get Source

  ---

• Opportunity to Show Cause Must Be Meaningful, Not Merely Formal; Ensure Fair Chance to Present Case Before Decision.

  Case-Laws - HC : When an opportunity is given to show cause it should be an effective opportunity and not an empty formality. The interest of the revenue has been sufficiently safeguarded as the goods have been released on furnishing of bank guarantee and bond. Therefore, adequate opportunity should be granted to the appellant and thereafter the authority should take a decision in the matter. - HC
  Visit to Get Source

  ---

Income Tax

• AO's Addition of Unproved Trade Liability Unjustified Without Evidence of Ceased Liability u/s 41(1) of Income Tax Act.

  Case-Laws - AT : Addition of unproved trade liability - the AO himself was not aware of the details about the suppliers of the services. Without those details, we are unable to understand as to how the AO could have entertained such kind of views. We also notice that the A.O. has not established that the liability has ceased to exist, which would warrant invoking of provisions of section 41(1) of the Act. Accordingly, in our view, the A.O. was not justified in treating part of liabilities,as unproved on presumptions, surmises and conjectures. - AT
  Visit to Get Source

  ---

• Interest and gains from pre-commencement investments not taxable as "income from other sources," confirms CIT(A) decision.

  Case-Laws - AT : Correct head of income - interest on FD and gain of sale of mutual funds invested out of unutilized borrowed fund - interest/gains earned by the assessee company during the pre-commencement was inextricably linked with the setting up of the capital structure of the assessee company and there was a direct nexus of the funds and income from interest and mutual funds out of the temporary investments and accordingly, the ld. CIT(A) has not erred in law in holding that receipts in question could not be taxed as “income from other sources” and “short term capital gains”. - AT
  Visit to Get Source

  ---

• No Income Addition for Service Charges: Assessing Officer Confirms Payments to Agents at 3.5% of Sales.

  Case-Laws - AT : Disallowance of service charges/commission payment - The assessee had admittedly appointed these agents to whom the payments were made to properly execute the sales orders and there is considerable efforts made by the agents in terms of statutory compliance, storage, inventorising etc. The assessee has admittedly paid these agents at 3.5% of the sales handled by them. As stated earlier, the amounts or fact of payments has not been disputed by the A.O. - No additions can be made - AT
  Visit to Get Source

  ---

• AO's Addition of 0.55% as Bogus Deleted Due to Lack of Section 41(1) Invocation and Industry Trend Analysis.

  Case-Laws - AT : Addition @ 0.55% of closing balances of creditors and debtors as bogus - If the AO is not satisfied about the books of the assessee,he can reject the same and make an estimate of the income based upon industry trend or past record of the assessee. No such exercise has been done by the AO. This is fatal to the assesseement here. More ever, outstanding creditors which are trade creditors can be added only under the provisions of section 41(1) of the Act. No case has been made out that section 41(1) has been invoked and there is disallowances as per provisions of section 41(1) - Additions deleted - AT
  Visit to Get Source

  ---

• Family Transaction u/s 69: Assessee's Claim of No Consideration Rejected Due to Sale Deed Details.

  Case-Laws - AT : Unexplained investment u/s 69 - family transaction - assessee has submitted that the assessee’s husband was a power of attorney holder of the property and could not convey the property as an agent and therefore, to avoid future litigation and to secure better title over the property, a sale deed in favour of the assessee, being the wife was executed - if we go by the narrations in the Sale deed, then the assessee’s claim that the impugned transaction is a “family transaction” where no consideration has passed is liable to be rejected since the actual vendor of the impugned property is not the Husband of appellant (POA holder) - AT
  Visit to Get Source

  ---

• Interest Subsidy Considered Income u/s 41(1) of Income Tax Act; Appeal Dismissed by High Court.

  Case-Laws - HC : Interest subsidy - deemed as income u/s. 41(1) - mercantile system of accounting - the C.I.T. (A) rightly held that the provision of Sec.41(1) would be applicable when there is actual remission or cessation of liability and which was during the accounting year relevant to assessment year 2002-03 and not in the year under consideration. - The matter is entirely factual Revenue appeal dismissed - HC
  Visit to Get Source

  ---

• High Court Dismisses Premature Petition Against Assessment Reopening u/s 148A; Jurisdiction Not Exceeded.

  Case-Laws - HC : Validity of reopening of assessment - notice under Section 148A (b) - The consistent view is that at the stage where the proceedings have not even been concluded by the statutory authority, the writ Court should not interfere at such pre-mature stage. Moreover it is not a case where from bare reading of notice it can be axiomatically held that the authority has clutched upon the jurisdiction not vested in it. The correctness of order under Section 148A(d) is being challenged on the factual premise - Petition dismissed - HC
  Visit to Get Source

  ---

• Exemption u/s 10(23B) granted despite technicality; Khadi Commission approval duration beyond assessee's control.

  Case-Laws - AT : Exemption claimed u/s.10(23B) - Mandatory approval from Khadi and Village Industries Commission - approval was granted for more than three assessment years and therefore the condition for claiming exemption u/s. 10(23B) was not fulfilled - It is pertinent to note that the time period for which the certificate has to be granted is not within the control of the assessee. In any case it is only a technical violation for which the assessee could not be penalized by denying the exemption otherwise allowable to the assessee. Thus, we hold that the assessee is entitled for exemption u/s. 10(23B) of the Act. - AT
  Visit to Get Source

  ---

• Tax Dispute Resolved: Assessing Officer to Accept Taxpayer's Sale Value Over Stamp Authority's Higher Valuation, Per Sections 69A & 50C.

  Case-Laws - AT : Addition u/s 69A OR 50C - difference between the sale consideration disclosed by the assessee and the value adopted by the Stamp Valuation Authority - the authorities below have taken contrary stands about the taxability of the difference between the value declared by the assessee and value adopted by the Stamp Valuation Authority. Moreover, in the light of the binding precedents, we hereby direct the AO to delete the addition - AT
  Visit to Get Source

  ---

• Court Rules Reassessment Requires AO's Independent Evaluation, Not Just Reliance on Investigation Reports u/s 153A.

  Case-Laws - AT : Assessment u/s 153A OR reopening of assessment u/s 147 - There is force in contention of counsel of assessee that as scrutiny assessment u/s. 153A in regard to assessee was conducted that all the more required to disclose the tangible material in regard to transaction requiring reassessment. There should have been an independent application of mind by the Ld. AO to the information out of the statement forming basis of allegations of accommodation entries. Merely reproducing the conclusions of investigation report in his own words is indeed borrowed satisfaction as contended by counsel for the assessee. Consequently, the Bench is inclined to decide these grounds of cross objection in favour of the assessee. - AT
  Visit to Get Source

  ---

• India-Thailand Treaty: No Tax on Fees for Technical Services Without Permanent Establishment, Classified as Business Income.

  Case-Laws - AT : Income accrued in India - Article for taxability of FTS under the India Thailand Treaty - Existence of PE in India - The assessee company has no Permanent Establishment (PE) in India. The income which has been earned in this case in absence of F.T.S. clause in DTAA would fall as business income. Their nature would not change to be that of other income. Hence the same cannot be taxed in India in absence of a PE. - AT
  Visit to Get Source

  ---

Customs

• Anti-dumping duties on Chinese pneumatic radial tyres to sunset; affects tyres with rim diameter over 16.

  Notifications : Sunset clause prescribed for Levy of anti dumping duty on New/unused pneumatic radial tyres with or without tubes and/or flap of rubber (including tubeless tyres) having normal rim dia code above 16 originating in, or exported from China - Notification
  Visit to Get Source

  ---

• Charges Against Export Unit Dismissed Due to Lack of Evidence in Alleged Clandestine Removal Case.

  Case-Laws - AT : 100% EOU - Clandestine removal - case of the department is on the ground that deemed export clearance were not genuine and were shown only on paper - The entire case of the Revenue is based upon the surmises and conjectures. No concrete, positive and tangible evidence appears on record. The evidences brought into the record by the department are incomplete, inconsistent and not a reliable piece of evidence to prove charges of clandestine removal - the charges of clandestine removal of the alleged goods not sustainable in the present matter - AT
  Visit to Get Source

  ---

• Customs Valuation Dispute: Enhanced Value Criticized for Rule 12 Violation, Lack of Notice, and Absence of Speaking Order.

  Case-Laws - AT : Valuation of imported goods - enhancement of assessable value - rejection of declared value - failure to issue notice of intent - There is nothing on record to demonstrate that the necessary pre-requisite in rule 12 of Customs Valuation (Determination of Value of Imported Goods) Rules, 2007 had been set in motion; indeed, the entire process, commencing with failure to issue notice of intent and culminating in refusal to issue speaking order, appears to be devoid of any cognition of the principles of natural justice. - AT
  Visit to Get Source

  ---

• Appeal Denied: Delay in Filing Not Justified, Illness Claim Vague Without Medical Records, Considered Time-Barred Maneuver.

  Case-Laws - AT : Condonation of delay in filing appeal - rejection of appeal on the ground of time bar - Heavy burden lies on such appellant to explain the delay sufficiently, for each day. The explanation on ground of illness, given by appellant is held to be absolutely vague in the present case as the appellant could not substantiate with any medical record. Hence, possibility of appeal filed before Commissioner (Appeals) to be an afterthought and a time gaining strategy cannot be ruled out. - AT
  Visit to Get Source

  ---

• PVC Kane Ace B-564 Correctly Classified Under CTH 390290000; Prior Decisions Ignored Key Statutory Provisions and Product Characteristics.

  Case-Laws - AT : Classification of imported goods - PVC Kane Ace B-564 - The Adjudicating Authority and the Commissioner (Appeals) have not considered this statutory provision of central excise tariff act, they have also not considered the chemical characteristics of the product therefore, the classification decided only on the basis of nomenclature that too picking up words from the full nomenclature of the name of the product is absolutely baseless and cannot be sustained. - The appellant has correctly classified the imported goods under CTH 390290000 - AT
  Visit to Get Source

  ---

FEMA

• Foreign Exchange Management Act 1999: No More Returns for Guarantees from Non-Residents, Easing Cross-Border Compliance Burden.

  Circulars : Discontinuation of Return under Foreign Exchange Management Act, 1999 - Details of guarantee availed and invoked from non-resident entities - Circular
  Visit to Get Source

  ---

Central Excise

• Appeal's maintainability affected by pre-deposit rules; SVLDRS-2019 scheme prevents appropriation of penalty and interest amounts.

  Case-Laws - AT : Maintainability of appeal - requirement of mandatory pre-deposit - appellate has deposited entire amount of duty (100% of duty) instead of 7.5% / 10% - Only demand of penalty and interest was left over - Appropriating demand and penalty with sanctioned rebate amount towards pre-deposit during pendency of appeal - The appellant’s demand case got settled under ‘SVLDRS-2019’, for this reason also, no amount shall be allowed to be appropriated. - AT
  Visit to Get Source

  ---

Case Laws:

• GST

• 2022 (6) TMI 467
  Blocking of input tax credit / electronic credit ledger account - Grant of interim order sought for in the writ petition - recovery of tax - HELD THAT:- This court is of the view that while declining to interfere with the order of the learned Single Judge, it is deemed appropriate to direct the concerned respondent to dispose of the representation dated 21.02.2022 by taking note of the legal position and also bearing in mind that unless the appellant, who is a registered dealer, is allowed to carry on business and tax cannot be recovered. We should not be mistaken for saying as if errant dealer should be left scot free, if there is any illegal arrangement of input credit tax stringent action should be taken. However, till final orders are passed, if the credit which was not availed on the date when the blocking was done namely 16.02.2022 is also to be blocked, then it might cause prejudice to the dealer. The appeal stands disposed of.

  ---

• 2022 (6) TMI 466
  Maintainability of petition - availability of alternative remedy of appeal - Violation of principles of natural justice - opportunity of being heard provided or not - HELD THAT:- The merits of the matter are not entertained but it is convincing that the arguments made by the learned counsel for the appellant that there has been violation of principles of natural justice. It is because of the fact that the appellant has been granted seven days time to submit its reply to the show cause notice dated 27.03.2022. The appellant s case is that they were not communicated with the same on 27.03.2022 but received the same only on 29.03.2022. Even going by the date of the show cause notice dated 27.03.2022, the appellant had time to submit its reply on or before 02.04.2022. However, the impugned order was passed on 31.03.2022 i.e. before the stipulated time limit. When an opportunity is given to show cause it should be an effective opportunity and not an empty formality. The interest of the revenue has been sufficiently safeguarded as the goods have been released on furnishing of bank guarantee and bond. Therefore, adequate opportunity should be granted to the appellant and thereafter the authority should take a decision in the matter. Appeal allowed.

  ---

• 2022 (6) TMI 465
  Freezing of Bank Accounts of petitioner - Rule 86A(3) of the CGST Rule 2017 - HELD THAT:- Issue Notice. List the matter on 31.08.2022.

  ---

• 2022 (6) TMI 464
  Freezing of Bank Accounts of petitioner - Rule 86A(3) of the CGST Rule 2017 - HELD THAT:- Issue Notice. List the matter on 31.08.2022.

  ---

• 2022 (6) TMI 463
  Cancellation of registration of petitioner - application of revocation filed beyond prescribed time - invocation of extended period of limitation - Section 30 of the CGST Act - erroneous reading of N/N. 34 of 2021 dated 29.08.2021 - HELD THAT:- Reliance placed in the case of case of AARCITY BUILDERS PRIVATE LIMITED, M/S. NAND SPARK SHINE COMPANY, M/S. VSL SECURITY SERVICES PVT. LTD. AND ORION AUTOMOBILES PVT. LTD. VERSUS UNION OF INDIA AND OTHERS, STATE OF HARYANA AND OTHERS [ 2021 (12) TMI 890 - PUNJAB AND HARYANA HIGH COURT] where it was held that Once the petitioners had already been granted benefit of the notifications dated 23.04.2019 (Annexure P-6), dated 25.06.2020 (Annexure P-7) and dated 29.08.2021 (Annexure P-10), the time limit for making such application should have extended up to the 30th day of September, 2021. The proposition of law laid down in Aarcity Builders Private Limited case need not be disputed - also it is not a case where a vested right has accrued in any of the parties by efflux of time. Thus, to hold that the plea of limitation would have an effect to defeat the right to livelihood vested in the petitioner, shall be against the spirit of Constitution of India. It is directed that in case, the petitioner now moves an application/appeal for revocation of cancellation (if necessary, manually) within a period of 30 days from the date of receipt of certified copy of this order, the same would be deemed to be within limitation and would be decided on merits, in accordance with law - petition allowed.

  ---

• 2022 (6) TMI 462
  Liability of GST - person liable to pay GST for transportation of goods of customers located by an independent agency engaged by the applicant - refrigerated vehicles used for transportation of the applicant s goods travelled back on return journey, after unloading and delivering the applicant s goods at the destination - person liable to GST for transportation of goods of the customers located by an independent agency when the vehicles used for transportation of the applicant s goods are used for further transportation, after unloading the applicant s goods at the destination of the applicant s branches or depots - person liable to pay GST in respect of goods transport agency service used for bringing back empty plastic trays belonging to the applicant from various places (like branches or depots) to the applicant s premises - Availment of Input Tax Credit of the entire amount of GST paid on the transaction of the applicant s goods in refrigerated vehicles although such vehicles travel empty (i.e. without the applicant s goods being loaded therein) during the return journey. HELD THAT:- The Serial no 1 to the Notification 13/ 2017-CT (R) dated 28-6-17 reads that the GST liability for supply of service by a GTA in respect of transportation of goods by road to a registered person shall be paid by the recipient of such services. We find M/s Vadilal liable to GST under RCM for the GTA service supplied to it. As per GST scheme of law, consignment note issuance, by whatever name called, is mandatory for a GTA. The issuance of consignment note indicates that the lien on goods has been transferred to the transporter and the transporter becomes responsible for the goods till its safe delivery to the consignee. This aspect is evident in the relationship between Vadilal and its GTA but is absent in the relationship between Vadilal and Celcius - the requirement of consignment note issuance by a GTA cannot be brushed aside - there are no merit to deem Vadilal as a GTA. Person liable to pay GST for transportation of goods of customer of Celcius (an independent agency engaged by Vadilal) - HELD THAT:- Vadilal has no locus standi, vide Section 95 CGST Act, to seek Ruling on the tax liability for a transaction entered between M/s Celcius and its (Celcius s) customers, wherein Celicus is the service provider and its customers are the service recipient - Section 103(1) CGST Act, which reads that Advance Ruling shall be binding only on the applicant who had sought it and on the concerned officer/ jurisdictional officer in respect of the applicant. In this case, our Ruling is binding on the Vadilal. This subject Ruling, vide Section 103(1) CGST Act is not binding on Celcius and its service recipients. Further, Section 95(a) CGST Act defines advance ruling as a decision provided in relation to the supply of goods or services or both being undertaken or proposed to be undertaken by the applicant.

  ---

• Income Tax

• 2022 (6) TMI 484
  TDS u/s 194A - Addition u/s 40(a)(ia) on account of interest paid to NBFC s. - HELD THAT:- We aptly agree with the contentions raised by the assessee in petition filed under rule 29 of ITAT Rules, 1963 and the additional evidence is admitted for adjudication on merits. But at the same time swayed from the argument of the ld. DR that the matter is required to be restored back to the file of the AO to decide about the admissibility of the amount of interest amount based on the CA certificate produced by the assessee firm. As the amount disallowed in the assessment order and amount reflected in the certificate of accountant under first provision to sub-section (1) of Section 201 of the Income Tax Act, 1961 for certifying the furnishing of return of income, are differing. Even based on this difference of the amount disallowed and the amount for which the assessee submitted a CA certificate in support for allowability of the interest needs verification at the end of the assessing officer. AO is directed to pass a speaking order in accordance with law after giving proper opportunity to the assessee as per the evidence placed on record within a reasonable time and allow the interest to that extent of evidence placed on record and the amount of interest claimed. Therefore, the ground no. 1 raised by the assessee is allowed. Addition on account of Office Expenses, Staff Welfare and Vehicle Expenses on presumptive basis - assessee has maintained proper books of account on the basis mercantile system of book keeping which is duly approved as per provision of I.T Act 1961. The books of account of the assessee are duly audited by qualified chartered accountant - HELD THAT:- As following judicial precedent DHAKESWARI COTTON MILLS LIMITED [ 1954 (10) TMI 12 - SUPREME COURT] the addition made by the Assessing Officer is hereby deleted as the Assessing Officer and ld. CIT(A) could not find any defect or various claims made by the assessee, ad-hoc disallowance without pointing out any specific defect not sustainable. Therefore, the addition made by the lower authorities deleted and this Ground No. 2 raised by the assessee is hereby allowed

  ---

• 2022 (6) TMI 483
  Unexplained share application money u/s. 68 - Assessment year - claim of the Ld. AR, that as the assessee company had not credited the amount in question in its books of account for the year under consideration - HELD THAT:- The amount in question was credited in its books of account in the previous year pertaining to the immediately preceding assessment year i.e., AY 2011-12 and not during the year under consideration, we find substantial force in the same. On a perusal of the bank account of the assessee i.e., bank account no. 016105005758 with ICICI Bank Ltd., Branch: Civil Lines, Raipur, we find that the aforesaid amount of Rs. 3 crore was undisputedly credited during the previous year relevant to the immediately preceding year i.e., AY 2011-12. As regards the support drawn by the department from the fact that the investment in the shares of the assessee company had been accounted for by the subscriber company viz., M/s. MSP Mines and Minerals Pvt. Ltd. in its balance sheet for the year under consideration i.e., AY 2012-13, we are afraid that the said fact would not assist the case of the department, for the reason that the same only refers to the period of allotment of shares which had occasioned during the previous year under consideration and not the credit of the amount in the books of account of the assessee company during the said period Our aforesaid view that an addition u/s.68 of the Act cannot be divorced from the year in which the same is credited in the books of account of the assessee is fortified by the judgment of the Hon ble High Court of Delhi in the case of CIT Vs. Usha Stud Agricultural Farms Ltd. [ 2008 (3) TMI 91 - DELHI HIGH COURT] - In its aforesaid order the Hon ble High Court while approving the order of the Tribunal, had held, that as the credit balance appearing in the accounts of the assessee did not pertain to the year under consideration, therefore, the A.O was not justified in making an addition of the same u/s. 68 . Also, our aforesaid view that where the assessee had received share application money in the earlier year and, only shares were allotted to the applicants during the year under consideration, then, the provisions of Section 68 of the Act could not be invoked to make an addition in the hands of the assessee during the subsequent year i.e, the year in which shares were allotted is supported by case of DCIT, Circle-1 Vs. Global Mercantiles (P). Ltd. [ 2016 (1) TMI 1370 - ITAT KOLKATA] . On the basis of our aforesaid deliberations, we are of the considered view, that as the amount of share application money of Rs. 3 crore (supra) was received and credited in the books of account of the assessee for the immediately preceding year i.e., AY 2011-12 and not in the year under consideration, therefore, there was no justification for the AO to have made an addition of the same as an unexplained cash credit u/s. 68 of the Act during the year under consideration i.e., AY 2012-13. - Decided in favour of assessee.

  ---

• 2022 (6) TMI 482
  Validity of Assessment u/s 153C - proof of incrementing material found in search or not? - objective satisfaction of documents belong to the assessee or not? - HELD THAT:- Section 153C of the Act shall come into play only, when the A.O. of the searched person comes to an objective satisfaction that the documents found during the course of search do not belong to the searched person. In that case, he would not be considering those documents for making any addition in the hands of the searched person. AO of the searched person has to record his satisfaction that the documents do not belong to the searched person and then transfer those documents to the A.O. having jurisdiction over the other person to whom the said document belong/pertain to. In the instant case, we noticed that there is merit in the contention of Ld A.R that the A.O. of the searched person Shri Somashekhar Reddy has not come to an objective satisfaction that the impugned documents belong to the assessee herein. This is evident from the fact that the AO of Shri Somashekara Reddy has assessed the investments found in those documents in the hands of Shri Somashekara Reddy. The addition should be made in the hands of other person to whom the documents belong/pertain to and this is the whole concept of sec.153C of the Act. Once these documents have been accepted to belong to the searched person and further the AO has assessed the investments found in the said documents in the hands of the searched person, the question of considering the same as belonging/pertaining to some other person will not arise. Hence the so called satisfaction recorded by the AO of the searched person can only said to be a mechanical satisfaction and not objective satisfaction as contemplated in sec.153C of the Act. It is a case of mechanical transfer of the impugned documents to the assessing officer of the assessee herein. We also noticed earlier that the AO of the assessee herein has not made any addition on the basis of the above said documents, which are said to belong to the assessee herein . This factfurther reinforces our view that, in the facts and circumstances of the case discussed above, there was no objective satisfaction as contemplated u/s 153C of the Act. Accordingly, we find merit in the contentions of the assessee that the very initiation of proceedings u/s 153C of the Act in the hands of the assessee for assessment year 2007-08 is not in accordance with the law and hence the assessment order is liable to be quashed. Addition of unproved trade liability - assessee could not effectively furnish the details to prove the trading liabilities - It is well settled proposition of law that the apprehension, howsoever strong, cannot substitute material evidences. In so far as the trading liabilities are concerned, it could be assessed only u/s 41(1) of the Act, when it ceases to exist. In our considered view, the inference drawn by the AO was that the suppliers of services are not having enough means to provide credit to the assessee. However, the AO himself was not aware of the details about the suppliers of the services. Without those details, we are unable to understand as to how the AO could have entertained such kind of views. We also notice that the A.O. has not established that the liability has ceased to exist, which would warrant invoking of provisions of section 41(1) of the Act. Accordingly, in our view, the A.O. was not justified in treating part of liabilities,as unproved on presumptions, surmises and conjectures. There are lacunae on the part of the assessee also, i.e., the assessee also could not furnish books of accounts and other details, since they have been seized by other statutory authorities. Hence, the action of the A.O. making addition could not found fault with altogether. The only point is that the quantum of addition determined by the AO is not supported by any evidence and it has been made on presumptions only. In view of the deficiency on the part of the assessee, in our view, some addition is called for in order to take care of deficiencies, if any. Since the assessee could not furnish information and explanations relating to trading liabilities outstanding as on 31.3.2008 before the A.O., we are of the view that this issue could be resolved by making addition on estimated basis in order to take care of revenue leakage if any. As noticed that the assessee has surrendered a sum of Rs.1.00 crore in order to take care of deficiencies in the maintenance of books of accounts and the assessee has already offered the same. Accordingly, we are of the view that this issue would meet ends of justice, if the addition made by the A.O. is restricted to Rs.50 lakhs and the same, in our view, would take care of further deficiencies, revenue leakages, if any, in the maintenance of books of accounts.

  ---

• 2022 (6) TMI 478
  Reopening of assessment u/s 147 - Short Term Capital Gain earned from the transactions in shares - HELD THAT:- As a matter of fact, the only addition made by the Assessing Officer on account of Short Term Capital Gain was very much based on ground on which reopening of the assessment was based and this being so, we do not find any merit in the additional ground raised by the assessee. The case of Mohmed Juned Dadani [ 2013 (2) TMI 292 - GUJARAT HIGH COURT] relied upon by the learned Counsel for the assessee in support of assessee s case on this issue is distinguishable on facts inasmuch as no addition in that case was made by the Assessing Officer in the order of reassessment on the ground on which reopening of the assessment was based and the reliance of the learned Counsel for the assessee on the same is clearly misplaced. The additional ground raised by the assessee is accordingly dismissed. STCG - The case of the assessee is that none of the notices issued by the Assessing Officer was received by the assessee and therefore the relevant details and documents to support and substantiate his case on the issue could not be furnished by the assessee. The learned Counsel for the assessee has submitted that these details and documents, however, were furnished by the assessee during the course of appellate proceedings before the learned CIT(A) with an application to admit the same as additional evidence under Rule 46A of the Income-tax Rules, 1962. He has contended that the learned CIT(A), however, did not entertain the same for the reason not so relevant and urged that one more opportunity may be given to the assessee to produce the same for verification before the Assessing Officer. Although the learned DR has raised objection in this regard, we consider it fair and proper and in the interest of justice to give one more opportunity to the assessee keeping in view all the facts of the case including especially the fact that the additional evidence sought to be filed by the assessee before the learned CIT(A) is relevant to decide the issue relating to the exact quantum of profit earned by the assessee from the share transactions entered into during the year under consideration. Appeal of the assessee is treated as partly allowed.

  ---

• 2022 (6) TMI 477
  Penalty u/s 271(1)(c) - Bogus creditors u/s 68 - increase in amounts of certain creditors during the year under consideration compared to the rest of creditors required proof of their genuineness., accordingly the expenses booked appeared to be bogus in nature to ld. AO - scope of words inaccurate - HELD THAT:- Mere disallowance of a claim, unless established by some positive evidence and not just presumption out of non submission of information by assessee, cannot be said to give rise to furnishing of inaccurate information. The Act does not incorporate any presumption of law of furnishing inaccurate information by virtue of failure of assessee to furnish the information to the satisfaction of Ld. Tax Authority. Therefore, in these circumstances levying of penalty and its sustenance in appeal deserve to be set aside - Decided in favour of assessee.

  ---

• 2022 (6) TMI 476
  Deduction u/s 80IB - delay in issuance of completion certificate - profits derived from the housing project - claim was denied by AO on the ground that the completion certificate was issued by PMC only 21.07.2012 after due date for completion of project. - HELD THAT:- We have carefully gone through the Explanation 2 appended to clause (iii) of sub-section (10) of section 80IB of the Act. The said Explanation 2 appended to clause (iii) of sub-section (10) of section 80IB states that the date of completion of the housing project shall be the date on which the completion certificate is issued by the local authorities. This Explanation has come up for interpretation before the Hon ble Bombay High Court in the case of Hindustan Samuh Awas Limited [ 2015 (10) TMI 2306 - BOMBAY HIGH COURT] as relying on TARNETAR CORPORATION [ 2012 (10) TMI 803 - GUJARAT HIGH COURT] held that if the application is moved well in time for seeking the completion certificate from the Municipal Corporation and delay in issuance of completion certificate is not attributable to the assessee. It should be deemed that the project is completed as on date of application. Applying the ratio of this judgement to the facts of the present case, we find the application seeking the completion certificate was moved by the respondent-assessee on 27.03.2012. The said application was accompanied by the Architect s certificate there was no material on record indicating that the PMC had pointed out any mistakes in the application moved by the respondent-assessee. Therefore, the grounds raised by the Revenue stands dismissed.

  ---

• 2022 (6) TMI 475
  Revision u/s 263 - Levy of penalty under section 271(1)(c) - assessee had disclosed the income only after the survey was conducted on the premise of the assessee company and the return of income was filed by the assessee only after the receipt of the notice under section 148 - AO allowed the exemption under section 54G of the Act by passing the assessment order under section 147 r.w.s. 143(3) - PCIT has issued a notice under section 263 that the assessment order passed by the Assessing Officer dated 24.03.2016 is erroneous and prejudicial to the interest of Revenue on the ground that the Assessing Officer has not examined the claim made by the assessee under section 54G - HELD THAT:- By considering the detailed reply filed assessee, the ld. PCIT set aside the assessment order passed by the Assessing Officer dated 24.03.2016 and directed him to examine the claim made under section 54G of the Act and redo the assessment afresh in accordance with law after giving due opportunity of being heard to the assessee by order dated 27.03.2018. The very revision order passed under section 263 of the Act by the ld. PCIT dated 27.03.2018 was subject matter in appeal before the Tribunal. Vide order in [ 2022 (5) TMI 1090 - ITAT CHENNAI] the Tribunal upheld the revision order passed under section 263 of the Act. In view of the above, the penalty levied by the Assessing Officer under section 271(1)(c) of Act and confirmed by the ld. CIT(A) cannot be adjudicated in the present penalty appeal. Therefore, we set aside the order passed by the ld. CIT(A) and remit the matter back to the file of the Assessing Officer to take appropriate action after passing the consequential order in pursuance to the order passed by the ld. PCIT under section 263 of the Act dated 27.03.2018. Thus, the ground raised by the assessee is allowed for statistical purposes.

  ---

• 2022 (6) TMI 474
  Disallowance u/s 14A r.w. Rule 8D - CIT(A) restricted the disallowance to the extent of dividend income earned by reducing the expenditure apportioned by the assessee and the balance amount of addition was confirmed - HELD THAT:- CIT(A) has rightly confirmed the disallowance under section 14A of the Act after reducing the expenditure apportioned by the assessee from the exempt income earned. Thus, we find no infirmity in the order passed by the ld. CIT(A) on this issue and accordingly, the ground raised by the Revenue is dismissed. Deemed dividend addition u/s 2(22)(e) - HELD THAT:- As decided in own case [ 2022 (4) TMI 173 - ITAT CHENNAI] the expression shareholder referred to in section 2(22)(e) of the Act refers to both a registered shareholder and the beneficial shareholder. And further that if a person is a registered shareholder but not a beneficial shareholder, then the provisions of section 2(22)(e) of the Act would not apply and likewise if a person is a beneficial shareholder but a registered shareholder then also the provisions of section 2(22)(e) of the Act would not apply. While in the case at hand the ITAT noted that the assessee was not a shareholder at all and hence the provisions of section 2(22)(e) of the Act would not apply. - Decided against revenue.

  ---

• 2022 (6) TMI 473
  Late deposit of employees Provident fund/ ESIC contribution - Addition u/s 36(1)(va) r.w.s. 43B - ESIC/PF not having been paid before due date under the respective Acts - disallowance made by the CPC u/s 143(1) - HELD THAT:- The Supreme Court in the case Saurashtra Kutch Stock Exchange Ltd [ 2008 (9) TMI 11 - SUPREME COURT] has held that not following decision of the Supreme Court or the jurisdictional High Court would constitute a mistake apparent from record. As in case of Gujarat State Road Transport Corporation [ 2014 (1) TMI 502 - GUJARAT HIGH COURT] has directly ruled on this issue against the assessee and has held that employees contribution (PF/ ESIC) to specified fund will not be allowed as deduction u/s.36(1)(va) if there is delay in deposit as per the due dates mentioned in the respective legislation, in our view, the Department is bound to follow the decision of the jurisdictional High Court. Tax Audit Report furnished by the assessee also specifically gives the suggestion of disallowance under section 36(1)(va) of the Act i.e. due dates as prescribed under section 36(1)(va) of the Act and the actual dates of payment reported, thus clearly indicates the deviation which attracts such disallowance. A plain reading of section 143(1)(iv) of the Act also specifically states that that an adjustment can be made in respect of disallowance of expenditure/increase in income indicated an audit report but not taken into account in computing the total income of the assessee in the return of income. CIT(A) has not erred in facts and law in coming to the conclusion that disallowance made by the CPC u/s 143(1) of the I.T. Act on account of appellant s failure to pay the employee s contribution of PF/ESI within the prescribed due dates as per section 36(1)(va) is strictly in accordance with law. - Decided against assessee.

  ---

• 2022 (6) TMI 472
  Correct head of income - interest on FD and gain of sale of mutual funds invested out of unutilized borrowed fund - interest earned from temporary fixed deposits and gains on sale of mutual funds during the pre-construction period could be treated as Income from Other Sources or whether the same would qualify as Capital Receipts and hence not in the nature of income - HELD THAT:- The assessee company which was formed primarily for the purpose of four laning of the Rohtak Panipat highway and the funds available with the assessee were to be utilised primarily for the above purposes for which the assessee company was set up. Consequentially, the interest / gains earned on fixed deposits/sale of mutual funds was also be to be utilised for the aforesaid purpose. Therefore, in our view, interest/gains earned by the assessee company during the pre-commencement was inextricably linked with the setting up of the capital structure of the assessee company and there was a direct nexus of the funds and income from interest and mutual funds out of the temporary investments and accordingly, the ld. CIT(A) has not erred in law in holding that receipts in question could not be taxed as income from other sources and short term capital gains . - Decided against revenue.

  ---

• 2022 (6) TMI 471
  Disallowance of service charges/commission payment - assessee is in the business of manufacture and sale of industrial explosives - HELD THAT:- The services rendered by the agents are remunerated by service charges , which is termed as commission . The assessee has produced copies of the agreement, the ledger extracts, the bank statement showing payments made, details of the TDS etc. The A.O. has not doubted the amounts paid nor the transaction done. The only reasoning of the A.O. for making disallowance of these payments is that the orders are received from PSUs based on public tenders for which no commission need to be paid. We find that the A.O. has not understood the nature of business of the assessee. The PSUs using explosives are mostly in mining sector, which are spread across the remote areas in the country. The assessee had admittedly appointed these agents to whom the payments were made to properly execute the sales orders and there is considerable efforts made by the agents in terms of statutory compliance, storage, inventorising etc. The assessee has admittedly paid these agents at 3.5% of the sales handled by them. As stated earlier, the amounts or fact of payments has not been disputed by the A.O. The CIT(A) has rendered a categorical factual finding, which has not been dispelled by the Revenue by placing any contra evidence. In the light of the a foresaid reasons, we reject grounds 2 and 3 raised by the Revenue. Disallowing the credit balance of various parties in the books of the assessee under the head creditors not verifiable - A.O. disallowed the sundry credits - HELD THAT:- The details of the parties, nature of transaction and the amounts of transaction are described in impugned order of the CIT(A). Each of the above parties transactions, it was found by the CIT(A) that the assessee has made the payment through bank accounts and had submitted copies of confirmation of transactions, the ledger extracts from all the parties evidencing payments made. The A.O. in the remand report has not raised any specific objections with regard to the submissions made by the assessee. It is in this context and after examining the evidences placed on record the CIT(A) has come to a factual finding that the amounts outstanding are genuine and explained. The above factual findings of the CIT(A) has not been controverted by the Revenue, hence, we confirm the order of the CIT(A) as correct and in accordance with law. - Decided against revenue.

  ---

• 2022 (6) TMI 470
  Disallowance of deduction u/s.35(1)(ii) towards donation given to M/s. School of Genetics and Population Health (SHG PH) - subsequent withdrawal of approval with retrospective effect - Whether or not the subsequent cancellation of registration to SHG PH vide CBDT order dated 15.09.2016 with retrospective effect can invalidate the assessee s claim of deduction under Sec. 35(1)(ii) - HELD THAT:- We find that the aforesaid research institution i.e, SHG PH as on the date of giving of donation by the assessee was having a valid approval granted under the Act. On a perusal of the aforesaid Explanation to Sec. 35(1)(ii) of the Act, it can safely be gathered that a subsequent withdrawal of such approval cannot form a reason to deny deduction claimed by the donor. As decided in Indian Council of Agricultural Research ( 1999 (10) TMI 55 - BOMBAY HIGH COURT] while dealing with an identical issue of denial of deduction under Sec. 35(1)(ii) of the Act due to a subsequent withdrawal of approval with retrospective effect, had observed, that such retrospective cancellation of registration will have no effect upon the deduction claimed by the donor, since such donation was given acting upon the registration when it was valid and operative. On a perusal of the aforesaid statutory provision i.e, Sec. 35(1)(ii) of the Act, as well as the ratio laid down in the aforesaid judicial pronouncements, it can safely be concluded that if an assessee acting upon a valid registration/approval granted to an institution had donated certain amount for which deduction is claimed, then, such deduction cannot be disallowed if at a later point of time the same is cancelled with retrospective effect. Also see M/S POOJA HARDWARE PVT. LTD. VERSUS THE ASSISTANT COMMISSIONER OF INCOME TAX 13 (1) (1) , MUMBAI [ 2019 (10) TMI 1281 - ITAT MUMBAI] .Thus we uphold the order of the CIT(A) who had vacated the disallowance of the assessee s claim for deduction u/s 35(1)(ii) - Decided in favour of assessee. Disallowance u/s.40A(2)(b) - payment of salary made to related party - HELD THAT:- A.O while working out the disallowance under the aforesaid statutory provision, had though observed that the payment of salary to the aforementioned two related parties in question was found to be excessive, but had fundamentally erred by not opining as to what as per him was the fair market value of the service which were being rendered by the aforementioned related persons, considering which the payments made to them by the assessee were to held as excessive. Before the CIT(Appeals) the state of affairs we find was no better, as he too without addressing the aforesaid fundamental and material requirement contemplated under Sec. 40A(2)(a) of the Act had though on an ad-hoc basis allowed some relief to the assessee, but had allowed the mistake of the AO to perpetuate. On the basis of our aforesaid observations, we are unable to concur with the view taken by either of lower authorities and holding a conviction that both of them had fundamentally erred in not appreciating the mandate of Section 40A(2)(a) of the Act in the right perspective, thus, set-aside the order of the CIT(Appeals) to the said extent and vacate the disallowance made by the A.O. - Decided against revenue.

  ---

• 2022 (6) TMI 469
  Reopening of assessment u/s 147 - addition of 100% creditors as unproved creditors - HELD THAT:- We find that the requisite material papers were filed by the assessee and placed before the CIT(A) in the appellate proceedings, but there was no reasons recorded by the CIT -A on rejecting the material information which goes to the roots of the case. Prima facie we find that the additions made by the AO is not supported with any valid reasons except on assumptions and presumptions as the amounts are being carry forwards from earlier years. The Ld.AR submissions are realistic and duly supported by the material information having evidenceial values. We considering the facts, circumstances, provisions of law are of the opinion that the creditors are trade creditors and the payments are made by the assessee in F.Y. 2014-15 cannot be doubted and the revenue has also accepted the payments. Accordingly, we set aside the order of the CITA) on this disputed issue and direct the AO to delete the addition. Addition @ 0.55% of closing balances of creditors and debtors as bogus - HELD THAT:- As relying on assessee own case [ 2022 (1) TMI 1255 - ITAT MUMBAI] disallowance of creditors @.55% of the total value is absolutely based upon the surmise and conjectures. If the AO is not satisfied about the books of the assessee,he can reject the same and make an estimate of the income based upon industry trend or past record of the assessee. No such exercise has been done by the AO. This is fatal to the assesseement here. More ever, outstanding creditors which are trade creditors can be added only under the provisions of section 41(1) of the Act. No case has been made out that section 41(1) has been invoked and there is disallowances as per provisions of section 41(1). Hence we set aside the orders of the authorities below and direct that the addition in this regard should be deleted. - Decided in favour of assessee.

  ---

• 2022 (6) TMI 461
  Deduction u/s 80HHC - Exclusion of royalty income received from the subsidiary company - AO rejected the claim of the appellant, after having held that royalty income claimed by them is not arising out of any business activity related to export and it is incidental in nature and hence, 90% of the royalty income was reduced from the profit of the business for computation of deduction under section 80HHC - HELD THAT:- Applying the ratio laid down in the aforesaid decision viz.Shiva Distilleries Ltd s case [ 2007 (2) TMI 103 - HIGH COURT, MADRAS ] which is squarely applicable to the facts of the present case, wherein, there is no concrete material produced by the appellant / assessee to prove that the royalty income received from the subsidiary company, are related to export business, this court is of the view that the Tribunal has rightly directed the assessing officer to exclude the royalty income from the business profits for the purpose of calculation of deduction under section 80HHC of the Act, which warrants no interference. - Decided against assessee.

  ---

• 2022 (6) TMI 460
  Estimation of income - bogus purchases - Addition based on relying on the rate of gross profit earned in the earlier year - disallowance on purchases restricted to the extent of 2.5% of the total turnover by CIT-A - HELD THAT:- Appellant / assessee did not furnish the relevant materials to substantiate their claim before the authorities below and they themselves admitted that they were unable to produce the supporting evidence for purchases, since the relevant records pertaining to the assessment year in question, were washed away in 2015 flood. The appellant / assessee filed the auditor s report, as per which, there was no adverse comment on books of accounts maintained by the appellant / assessee and the purchases debited into P L account, which fact was not disputed by the assessing officer. In such circumstances, the CIT(A), taking note of the fact that there was a decline in gross profit declared by the assessee for the assessment year in question compared to earlier financial year, directed the assessing officer to restrict the disallowance on purchases to the extent of 2.5% of the total turnover. The said finding of the CIT(A) was also affirmed by the Tribunal, based on the evidence adduced before the same. Such well considered findings of the appellate authorities do not warrant any interference at the hands of this court. See ALPASSO INDUSTRIES PVT. LTD. VERSUS INCOME TAX OFFICER WARD-1 (3) [ 2018 (8) TMI 761 - DELHI HIGH COURT] - Decided against assessee.

  ---

• 2022 (6) TMI 459
  Interest subsidy - deemed as income u/s. 41(1) - mercantile system of accounting - Tribunal held that the interest subsidy should be deemed as income u/s. 41(1) and though accrued in the Assessment year 2001-02 will be charged in the Assessment Year 2002-03, inspite of the respondent following the mercantile system of accounting - HELD THAT:- As per tribunal as per agreement between the assessee and IDBI, the loan was sanctioned on an interest rate of 21% per annum. From time to time, IDBI debited the assessee s account with the interest calculated @21%. The assessee also debited the same in its books of account and claimed the expenditure thereof. When the subsidy is granted to IDBI by IWAI, it credited to the account of the assessee on 18/4/2001. When the amount is credited to the account of the assessee, it was the remission of the liability of the interest which was already claimed as a deduction in the earlier years and, therefore, the C.I.T. (A) rightly held that the provision of Sec.41(1) would be applicable when there is actual remission or cessation of liability and which was during the accounting year relevant to assessment year 2002-03 and not in the year under consideration. The matter is entirely factual and the tribunal while approving the factual finding recorded by the CIT(A) has also taken note of the facts and re-appreciated the same and dismissed the appeal filed by the revenue. Thus, we find that there is no question of law much less substantial question of law arising for consideration in this appeal.

  ---

• 2022 (6) TMI 458
  Validity of reopening of assessment - notice under Section 148A (b) - as contented that the stand of the petitioner has not been taken into consideration resulting in miscarriage of justice - HELD THAT:- The debate is not new. While dealing with the similar situation under the old Act i.e. Indian Income Tax Act, 1922, Division Bench of this Court in Lachhman Das Nayar and others vs. Hans Raj Puri, Income-Tax Officer, Amritsar and others [ 1952 (9) TMI 45 - HIGH COURT OF PUNJAB AND HARYANA ] The consistent view is that at the stage where the proceedings have not even been concluded by the statutory authority, the writ Court should not interfere at such pre-mature stage. Moreover it is not a case where from bare reading of notice it can be axiomatically held that the authority has clutched upon the jurisdiction not vested in it. The correctness of order under Section 148A(d) is being challenged on the factual premise contending that jurisdiction though vested has been wrongly exercised. By now it is well settled that there is vexed distinction between jurisdictional error and error of law/fact within jurisdiction. For rectification of errors statutory remedy has been provided. We find that there is no reason to warrant interference by this Court in exercise of the jurisdiction under Article 226/227 of the Constitution of India at this intermediate stage when the proceedings initiated are yet to be concluded by a statutory authority. Hence, the writ petition stands dismissed.

  ---

• 2022 (6) TMI 457
  Reopening of assessment u/s 147 - notice issued to the petitioner u/s 148A (b) - Whether at this stage of notice under Section 148, writ Court should venture into the merits of the controversy when AO is yet to frame assessment/reassemment in discharge of statutory duty casted upon him under Section 147? - HELD THAT:- The consistent view is that where the proceedings have not even been concluded by the statutory authority, the writ Court should not interfere at such a pre-mature stage. Moreover it is not a case where from bare reading of notice it can be axiomatically held that the authority has clutched upon the jurisdiction not vested in it. The correctness of order under Section 148A(d) is being challenged on the factual premise contending that jurisdiction though vested has been wrongly exercised. By now it is well settled that there is vexed distinction between jurisdictional error and error of law/fact within jurisdiction. For rectification of errors statutory remedy has been provided. In the light of aforesaid settled proposition of law, we find that there is no reason to warrant interference by this Court in exercise of the jurisdiction under Article 226/227 of the Constitution of India at this intermediate stage when the proceedings initiated are yet to be concluded by a statutory authority. Hence the writ petition stands dismissed.

  ---

• 2022 (6) TMI 456
  Validity of assessment - service of notice u/s 143(2) - second round of litigation - HELD THAT:- The issue pertaining to service of notice under Section 143(2) of the Act was decided against the assessee in the first round of litigation and the said order had attained finality as the assessee had not preferred any appeal against such a finding. Therefore, the said issue was decided against the assessee. Validity of initiation of the proceedings for reassessment and as to whether the reassessment proceedings were barred by limitation - Tribunal examined as to whether the assessee was justified in contending that the reassessment proceeding was a case of change of opinion. We find from the order passed by the learned Tribunal all the decisions on the point have been noted and elaborate reasons have been given affirming the factual finding recorded by the CIT(A). Wherever the finding was rendered by the CIT (A) in favour of the assessee was also examined and ultimately the reassessment proceedings were held to be valid on facts. Taking note of the elaborate reasons given by the Tribunal, we find no question of law, much less substantial questions of law, arising for consideration in these appeals. Accordingly, the appeals are dismissed.

  ---

• 2022 (6) TMI 455
  Unexplained investment u/s 69 - family transaction - assessee has submitted that the assessee s husband was a power of attorney holder of the property and could not convey the property as an agent and therefore, to avoid future litigation and to secure better title over the property, a sale deed in favour of the assessee, being the wife was executed - AO not accepted the reply submitted by the assessee for the reason that the above sale is a Pucca Sale as the assessee had paid Stamp duty on the market value of the propert possession and the Title of the property was transferred in the assessee s name - HELD THAT:- As gone through the registered sale deed, which is part of appellate order, wherein, it has been clearly mentioned that Shri S.V. Rajagopal, represented by his Power Agent Shri V. Sekar as Vendor executed the sale deed, which was duly registered in SRO, Neelankari, in favour of Smt. Geetha Sekar, the assessee towards transfer of scheduled property for a sale consideration and the vendor also admitted and acknowledged the receipt of the sale consideration. In the appellate order, CIT(A) has observed that if we go by the narrations in the Sale deed, then the assessee s claim that the impugned transaction is a family transaction where no consideration has passed is liable to be rejected since the actual vendor of the impugned property is not Mr. V. Sekar, as is claimed, but Mr. S.V. Rajagopal is the actual owner of the property and Mr. V. Sekar is only the power agent acting on behalf of Mr. S.V. Rajagopal. CIT(A) was of the opinion that the transaction is not a family transaction as is being claimed. CIT(A) has further observed that even if it is presumed for a moment that the vendor is Mr. V. Sekar, husband of the assessee, the claim that the sale consideration was not received by the vendor is unproved and is difficult to believe in the light of the fact that the Sale Deed expressly states the facts to the contrary. Thus, we find no infirmity in the order passed by the ld. CIT(A) on this issue and accordingly, the ground raised by the assessee is dismissed. Rental receipts - As during the course of assessment proceedings, the Assessing Officer has asked the assessee to explain and reconcile the gross receipts with bank account - Before the Assessing Officer, the assessee has explained that the gross receipts of Rs..2,20,000/- was accumulated rental income received and deposited in the bank account on 08.01.2012 of Rs..1,72,000/- and on 15.03.2012 of Rs..50,000/-. However, the Assessing Officer has not accepted the reply and only allowed two month rent i.e. (Rs..12000 x 2) and the balance of Rs..1,98,000/- was disallowed and treated as income by stating that a businessman will not keep the rent received ideal. On appeal, the ld. CIT(A) confirmed the disallowance. We also find no error in the orders of authorities below on this issue and dismiss the ground raised by the assessee.

  ---

• 2022 (6) TMI 454
  Unaccounted income - undisclosed bank account maintained with Bank of Baroda - HELD THAT:- No meaningful purpose will be served by sending the matter back to Assessing Officer for verification keeping in view that the matter was already remanded by the learned CIT(A) to the AO earlier and in his remand report the AO himself accepted the claim of the assessee of having incurred the expenditure through the undisclosed bank account keeping in view the nature and entries appearing therein as well as the nature and character of the assessee s business. In the said remand report, AO had also opined that it would be fair and reasonable to estimate the income of the assessee as reflected in the entries appearing in the undisclosed bank account maintained with Bank of Baroda by applying net profit rate of 10%. Now, in the audited income and expenditure account prepared and furnished by the assessee, the net profit as reflected in the transactions appearing in the undisclosed bank account is shown at around 20% and keeping in view all the facts of the case including the fact that expenditure was incurred by the assessee in cash which is not fully verifiable,it would be fair and reasonable to estimate the income of the assessee from the transactions as reflected in the undisclosed bank account maintained with Bank of Baroda at 25% of the gross receipt of Rs.30,53,371/-. The impugned order of the learned CIT(A) on this issue is accordingly modified and the Assessing Officer is directed to restrict the addition made on this issue to 25% - Appeal of the assessee is partly allowed.

  ---

• 2022 (6) TMI 453
  Deduction u/s 10(10D) - 1st installment from LIC in respect of one-time premium policy (single premium policy) after deduction of TDS u/s 194DA - HELD THAT:- We are in agreement with the Ld. Counsel for the assessee that he would be entitled to be taxed on the maturity amount received in terms of CBDT Circular number 7/2003 dated 5-9-2003 on taxability of maturity of policies under section 10(10D) of the Act, as per which only net income is chargeable to tax in the hands of the assessee. Accordingly, in the interest of justice, we set aside the order passed by Ld. CIT(A) to the file of Ld. Assessing Officer for re-computing the taxable amount of maturity amount of LIC received by the assessee in light of the CBDT Circular No. 7/2003 dated 5-9-2003 referred to above. Assessing Officer is directed to work out the correct taxable amount in the hands of the assessee in terms of CBDT Circular No. 7/2003 dated 5-9-2003 referred to above. Appeal of the assessee is allowed for statistical purposes.

  ---

• 2022 (6) TMI 452
  Unexplained/ unaccounted income - Addition on account of mismatch of the cash shown in the cash book viz a viz audited financial statement at the end of the financial year as on 31st of March 2011 - whether the difference in the cash balance between the cash book viz a viz audited financial statement as on 31 March 2011 gives rise to the taxable income of the assessee? - HELD THAT:- Merely observing the difference in the manner as discussed above does not give any authority to draw an inference that there was unaccounted/undisclosed income of the assessee. The income cannot be determined merely on the basis of documents/papers until and unless it is corroborated by the tangible materials. There can be numerous reasons for the difference in the cash balance as discussed above but that difference does not lead to draw any adverse inference against the assessee. For example, there was the advance received by the assessee in cash which was entered in the cash book but the same was not incorporated in the balance sheet. Such advance received cannot be categorized as income of the assessee. Likewise there can be receipt of money from the debtors which can again not be categorized as income of the assessee. We are not in agreement with the basis adopted by the authorities below to draw an inference that there was unaccounted income/undisclosed income of the assessee until and unless it is based on some tangible materials. Accordingly, we set aside the finding of the learned CIT-A and direct the AO to delete the addition made by him. Hence the ground of appeal of the assessee is allowed. Penalty u/s 271(1)(c) - hundred percent of tax sought to be evaded on account of furnishing inaccurate particulars of income - HELD THAT:- Under the provisions of section 271(1)(c) of the Act the amount of penalty has been specified which shall not be less than hundred percent of the amount of tax sought to be evaded subject to the maximum limit of 300% of such amount. Under explanation 4 to section 271(1)(c) of the Act, the manner for quantifying the amount of tax sought to be evaded has been specified which has direct nexus with the additions/ disallowances made during the quantum proceedings. Therefore, where the quantum additions/disallowances have been deleted, then the manner of quantifying the amount of penalty under explanation 4 to section 271(1)(c) of the Act as discussed above fails. Accordingly, we are of the view that that there cannot be any penalty with respect to the quantum additions which have been deleted whether on merit or on technical grounds. Thus, we find no reason to uphold the order of the learned CIT-A and therefore the AO is directed to delete the penalty levied by him. Hence, the ground of appeal of the assessee is allowed.

  ---

• 2022 (6) TMI 451
  Accrual of Interest income - income from other sources - double taxation - assessee has already offered the yearly amount of interest in earlier years on accrual basis - assessee earned interest income which was offered to tax on accrual basis - HELD THAT:- In our considered view, we are in agreement with the assessee that since the interest income has been offered to tax in the respective assessment years (from AY 2011-12 to AY 2017-18) on accrual basis, the same income cannot be taxed in the impugned assessment year under consideration only for the reason that the deductor HDFC bank has deducted TDS on the entire interest amount at the time of payment on cash basis, since the same would amount to double taxation. Therefore, the order of Ld. CIT(A) is set aside and the appeal of the assessee is allowed.

  ---

• 2022 (6) TMI 450
  Reopening of assessment u/s 147 - bogus Long Term Capital Gain on share transaction by treating the same as undisclosed investment of the assessee - HELD THAT:- The very basis of reopening of the assessment as reflected in the reasons recorded by the Assessing Officer thus was unfounded and there being no claim of any Long Term Capital Gain made by the assessee much less a bogus Long Term Capital Gain as believed by the Assessing Officer, the reopening of assessment itself on the basis of such wrong and non-existent premises was bad in law as rightly contended by assessee and the assessment made in pursuance therein under Section 143(3) r.w.s. 147 of the Act is liable to be quashed being invalid. As further contended on behalf of the assessee before there learned CIT(A) as well as before the Tribunal, the entire value of share transactions cannot be treated as unexplained investment by the assessee and that too without giving the assessee an opportunity to explain the exact quantum of investment as well as source thereof and the addition so made by the Assessing Officer and confirmed by the learned CIT(A) on account of such unexplained investment allegedly made by the Assessing Officer is not sustainable on merit also. This appeal of the assessee is accordingly allowed.

  ---

• 2022 (6) TMI 449
  Revision u/s 263 - grant of deduction u/s 54 was not made in the original return filed under Section 139(1) - case of the assessee was reopened as assessee did not show capital gain in the original return of income - HELD THAT:- In the return in response to notice under Section 148 of the Act assessee disclosed Long Term Capital Gain as well as claimed deduction under Section 54 of the Act. The decision of the Hon ble Supreme Court in Geotz India [ 2006 (3) TMI 75 - SUPREME COURT] do not apply to the facts of the case as in the return in response to notice under Section 148 of the Act assessee claimed deduction in the return of income. Further, assessee can also claim eligible deductions from the escaped income in reassessment proceedings. AO also examined the details and allowed the claim. PCIT did not suggest any further enquiries which are required to have been made by the learned Assessing Officer in reassessment proceedings. Therefore, in our opinion explanation 2 to Section 263 of the Act cannot be applied. Further, the learned PCIT also could not show how the order passed by the learned Assessing Officer is erroneous and prejudicial to the interest of the Revenue. Hence, the order passed under Section 263 of the Act by the learned PCIT is not sustainable. Hence, we quash the same. Appeal of assessee allowed.

  ---

• 2022 (6) TMI 448
  GP estimation - Estimating the gross profit at 38% of the turnover - assessee is carrying out its manufacturing activity from the SEZ and eligible for exemption under section 10A - HELD THAT:- On perusal of the grounds of appeal raised by the assessee, we note that the assessee was aggrieved for estimating the gross profit at the rate of 38% of the turnover. But there was no contention raised by the learned counsel for the assessee in the written submission filed him qua the grievance raised in the grounds of appeal. In the written submission the assessee has sought the relief/ exemption under section 10A of the Act with respect to the profit arising to it from the trading of spare parts of the DC motors. AR in support of assessee s claim has also filed the order of the ITAT in the own case of the assessee which is placed on record. However, we note that the learned CIT-A has already allowed the relief to the assessee with respect to the profit arising to it from the trading activities of spare parts by allowing the exemption under section 10A of the Act. Accordingly, we hold that there was no grievance to the assessee with respect to the trading activities as contended in the written submissions. Thus we note that there is no grievance to the assessee with respect to the gross profit estimated by the AO at the rate of 38% of the turnover. Accordingly, the appeal filed by the assessee is not maintainable. Thus we dismiss the same as infructuous

  ---

• 2022 (6) TMI 447
  Reopening of assessment u/s 147 - Deduction u/s 54EC and 54F - HELD THAT:- As notice under section 148 of the Act was issued on 30.03.2016 for the assessment year 2009-10. Since action u/s 147 of the Act was initiated after four years from the end of the relevant assessment year 2009-10, which expired on 31.03.2014, both the conditions provided in section 147 should have been satisfied for the reopening proceedings to be valid. However, even assuming that the AO had reason to believe that income had escaped assessment, the second condition was not satisfied in the instant case as the assessee had disclosed fully and truly all necessary material facts in the course of original assessment proceedings and the AO has identically verified the same in para 7 and 8 of the assessment order under section 143(3) dated 08.12.2011. AO has not established that the assessee has not made a full and true disclosure of all material facts. Since the reasons recorded in the present case did not meet the conditions stipulated u/s 147 the reassessment proceedings could not be sustained in view of the judgement in the case of CIT v. Schwing Stetter India P. Ltd. [ 2015 (6) TMI 497 - MADRAS HIGH COURT] . Under the above facts and circumstances and respectfully following the judgement of Hon ble Supreme Court in the case of CIT v. Kelvinator of India Ltd. [ 2010 (1) TMI 11 - SUPREME COURT] and in the case of CIT v. Schwing Stetter India P. Ltd. [ 2015 (6) TMI 497 - MADRAS HIGH COURT] we set aside the order of the ld. CIT(A) on this issue and quash the reassessment order passed under section 143(3) r.w.s. 147 of the Act. The ld. DR could not file any counter statement against the cross objection filed by the assessee. Appeal of assessee allowed.

  ---

• 2022 (6) TMI 446
  Addition u/s 68 - Assignment of loan - unsecured loans obtained - Stephen financial services private limited advanced the loan to Dunlop India Ltd. who did not repay the same but assigned to the assessee - HELD THAT:- Huge unsecured loans obtained by Dunlop Limited and Falcon tyres Ltd were assigned to the companies like assessee. In case of Dunlop and falcon Tyres Limited along with Mr pavan Kumar Ruia Suneel Bhansali, S. Ravi, Damodar Dani and Mohanlal Chauhan were found to be involved in violation of securities and exchange board of India regulations along with the assessee and several other companies wherein the above assignment of loan was used for preferential issue of shares in the above two companies. The whole transactions were orchestrated by Dunlop and Falcon to violate the provisions of minimum public shareholding criteria in those companies under SEBI Laws. The assessee was used as a conduit company along with other companies to do the same. Mr Ruia and Mr Bhansali were part of the Board of Directors of Dunlop and Falcon. The complete history of transaction is also mentioned in the order of SEBI dated 24 March 2021. Over and above this, the finding of the learned CIT - A also notes in paragraph number 7.5 that Enforcement Director has also found money-laundering traces in the books of Falcon and Dunlop. Both these above companies are controlled by Mr Pawan Kumar Ruia. Therefore, amounts credited in the books of accounts of assessee lack genuineness. In view of above facts, we do not find any infirmity in the orders of the lower authorities in confirming the addition u/s 68 of the Act. Accordingly, we confirm the orders of the lower authorities.- Decided against assessee.

  ---

• 2022 (6) TMI 445
  Penalty levied u/s 271D - cash loan in violation of provision of section 269SS - HELD THAT:- CIT-A deleted the addition AO himself has recorded in the reasons to belief that cash loan was received by the two firms M/s Green Bird Pvt. Ltd. and P.D. Construction and name of the assessee was appearing in which contact person. Evidently if the loan has been received by the partnership firm/company wherein the assessee is a partner or director, the said loan cannot be added in the hands of the assessee. CIT(A) has rightly advised the AO to consider examination of the transactions in the hands of M/s P.D. Construction and M/s Green Bird Pvt. Ltd for any suitable action. The original statement of Shri Nilesh Bharani were never provided to the assessee despite repeated request for inspection of the original statement, wherein he stated of provided cash loan to two concerns namely P.D. Construction and M/d Green Bird Pvt. Ltd. Shri Nilesh Bharani even retracted his statement made u/s 132(4) of providing cash loan to two concerns. During the cross-examination by the assessee Shri Nilesh Bharani denied of giving any cash loan to the assessee or his concerns. When the issue-in-dispute is in respect of the receipt of loan and source of which is already available on record, it is not understandable how the same become undisclosed income in the hands of the assessee, as source of the same, is already within the knowledge of the Income Tax Department. Addition u/s 69A - AO has on the one hand added cash loan alleged to receipt by the assessee as unexplained cash credit of the assessee as its income and on the other hand, also levied penalty u/s 271D of the Act in contravention of provision of section 269SS of the Act i.e. receipt of the loan otherwise then by account payee cheque. CIT(A) has deleted the penalty. In view of the fact that the addition u/s 69A for receipt of cash loan itself was deleted and therefore said penalty u/s 271D for receiving cash loan in violation of provision of section 269SS cannot be survive.

  ---

• 2022 (6) TMI 444
  Exemption claimed u/s.10(23B) - Mandatory approval from Khadi and Village Industries Commission - AO was of the opinion that in the present case approval was granted for more than three assessment years and the condition for claiming exemption u/s. 10(23B) was not fulfilled - As per CIT certificate issued by the Khadi and Village Industries Commission was valid from 01.04.2016 to 31.03.2021 beginning from the FY 2016-17 relevant to AY 2017-18 onwards and, therefore, he held that assessee is not entitled to claim exemption for AY 2016-17 - HELD THAT:- Certificate issued by Khadi Village Industries Commission clearly show that it relates to the period from 11.06.2012 to 31.03.2016 and followed by the letter issued by the Commission to the ITO, Bijnore, Uttar Pradesh clearly shows that the assessee is entitled to claim exemption u/s. 10(23B) - The reason for denying the exemption by the AO is that the Commission has given certificate to the assessee for more than three years. It is pertinent to note that the time period for which the certificate has to be granted is not within the control of the assessee. In any case it is only a technical violation for which the assessee could not be penalized by denying the exemption otherwise allowable to the assessee. Thus, we hold that the assessee is entitled for exemption u/s. 10(23B) of the Act. Accordingly, the Assessing Officer is directed to allow the claim for exemption u/s. 10(23B) as claimed by the assessee. Appeal of assessee allowed.

  ---

• 2022 (6) TMI 443
  Fringe benefit on account of advertisement expenses - assessee had failed to submit complete documentary evidence which can prove that the expenditure falls within the purview of proviso to section 115W(2)(d) - HELD THAT:- We find ourselves in agreement with the proposition that the issue stands covered in favour of the assessee by the earlier as well as subsequent decision of the ITAT. For the present year, the matter was remanded to the assessing officer as complete details were not available. Now it is not the case of the Revenue that the details are not available. Rather the AO has repeated the disallowance without specifying as to what is the defect in the assessee s claim in detail. In this view of the matter, we do not find any infirmity in the order of ld. CIT(A). Hence we uphold the same. Revenue appeal dismissed.

  ---

• 2022 (6) TMI 442
  Addition u/s 69A OR 50C - difference between the sale consideration disclosed by the assessee and the value adopted by the Stamp Valuation Authority - HELD THAT:- There is no dispute with regard to the fact that the property which was sold by the assessee, was a lease hold property. The lease hold right was granted by Nitishree Builders Pvt. Ltd. in favour of the mother of the assessee. The fact that the lease hold rights were transferred is not disputed by the Revenue. Revenue has not brought any contrary material on record to rebut the contention of the assessee. We find that there are series of decisions on this issue by the Division Bench of the Tribunal, confirmed by the Hon ble Bombay High Court in the case of the CIT versus Greenfield Hotels Estate (P) Ltd.[ 2016 (12) TMI 353 - BOMBAY HIGH COURT] . As the Division Bench of Tribunal in Dy. Commissioner of Income Tax Central Circle VI, Kolkata versus Tejinder Singh [ 2012 (2) TMI 720 - ITAT KOLKATA] also ruled that where there is a transfer of lease hold rights, there would not be application of section 50C. Division Bench of the Tribunal in the case of Shri Atul G. Puranik [ 2011 (5) TMI 576 - ITAT, MUMBAI] ruled that As section 50C applies only to a capital asst, being land or building or both, it cannot be made applicable to lease rights in a land. As the assessee transferred lease right for sixty years in the plot and not land itself, the provisions of section 50C cannot be invoked. We, therefore, hold that the full value of consideration in the instant case be taken as Rs. 2.50 crores. Further, the assessee has placed on record the report of the registered valuer who has valued the fair market value of the property of Rs. 20,21,000/-. Therefore, where the authorities below have taken contrary stands about the taxability of the difference between the value declared by the assessee and value adopted by the Stamp Valuation Authority. Moreover, in the light of the binding precedents, we hereby direct the AO to delete the addition - Appeal of assessee allowed.

  ---

• 2022 (6) TMI 441
  Assessment u/s 153A OR reopening of assessment u/s 147 - as submitted on behalf of the assessee that the assessment order is violative of principle of natural justice and in breach of statutory safeguards - HELD THAT:- The reasons as recorded by the AO has no discussion of the material which was taken in account by the investigation wing. It was considered to be sacrosanct - The statement of Kishori Saran Goel is not part of the reasons to believe nor supplied and confronted to assessee, while issuing notice u/s.148 of the Act. There is force in contention of counsel of assessee that as scrutiny assessment u/s. 153A in regard to assessee was conducted that all the more required to disclose the tangible material in regard to transaction requiring reassessment. There should have been an independent application of mind by the Ld. AO to the information out of the statement forming basis of allegations of accommodation entries. Merely reproducing the conclusions of investigation report in his own words is indeed borrowed satisfaction as contended by counsel for the assessee. Consequently, the Bench is inclined to decide these grounds of cross objection in favour of the assessee. Decided against revenue.

  ---

• 2022 (6) TMI 440
  Income accrued in India - Article for taxability of FTS under the India Thailand Treaty - Existence of PE in India - CIT(A) justification in not holding that in absence of any specific article for taxation of Fees for Technical Services, it shall be governed by Article 22 of tax treaty and not as per Article 7 of the tax treaty between India and Thailand - assessee s plea that the entire receipts are clearly in the nature of business income of the assessee and would be taxed in accordance with Article 7 and would not fall under Article 22 - HELD THAT:- The assessee company has no Permanent Establishment (PE) in India. The income which has been earned in this case in absence of F.T.S. clause in DTAA would fall as business income. Their nature would not change to be that of other income. Hence the same cannot be taxed in India in absence of a PE. Revenue appeal dismissed.

  ---

• 2022 (6) TMI 439
  Delayed deposit of employees contributions towards PF ESIC - payment beyond due dates prescribed in respective funds and paid before the due date of filing of return of income u/s. 139(1) - addition on a debatable and controversial issue - adjustments u/s. 143(1) - HELD THAT:- In this present case before us, the additions have been made by way of adjustments vide intimation u/s. 143(1) of Income Tax Act, dated 23.03.2020. As on 23.03.2020, the aforesaid amendments to Section 36(1)(va) and Section 43B of Income Tax Act had not been enacted; but orders of Hon ble Delhi High Court (the jurisdictional High Court) in favour of assessee and against Revenue on this issue in aforesaid cases of CIT vs. AIMIL Ltd. [ 2009 (12) TMI 38 - DELHI HIGH COURT] ; and CIT vs. P.M. Electronics Ltd. [ 2008 (11) TMI 3 - DELHI HIGH COURT] were available. Accordingly, the aforesaid amount could not have been added to assessee s income as on 23.03.2020 in the light of these binding precedents of the Hon ble Delhi Court in favour of the assessee. Therefore, we are of the view that the aforesaid adjustments made by Revenue on 23.03.2020, whereby the aforesaid amount was added to assessee s income, were unfair, unjust, and bad in law. For this view, we respectfully take support from the order of Agra Bench of ITAT, in the case of Mahadev Cold Storage vs. Jurisdictional Assessing Officer [ 2021 (6) TMI 506 - ITAT AGRA] Revenue should have given due consideration to the fact that the issue was highly debatable and controversial. As already discussed earlier, adjustments u/s. 143(1) of Income Tax Act by way of intimation u/s. 143(1) of Income Tax Act, on debatable and controversial issues, is beyond the scope of section 143(1) of Income Tax Act. Revenue was clearly in error, in making the aforesaid adjustments u/s. 143(1) of Income Tax Act on 23.03.2020 on a debatable and controversial issue. We would like to make respectful mention of order of Jabalpur Bench of ITAT in the case of Nikhil Mohine [ 2021 (11) TMI 927 - ITAT JABALPUR] , in which similar view has been taken. Further, it is also well settled that retrospective amendment cannot be invoked to make addition by way of adjustment and intimation u/s. 143(1) of Income Tax Act. This view was taken by the Hon ble Supreme Court in the case of CIT vs. Hindustan Electro Graphites Ltd. [ 2000 (3) TMI 2 - SUPREME COURT] - Decided in favour of assessee.

  ---

• 2022 (6) TMI 438
  Addition as unexplained income of the assessee - Addition based on loose sheets found in search - HELD THAT:- Onus purely lies on the assessee to explain with cogent evidences. Since that loose sheet was seized from the preemies of the assessee, the presumption u/s. 292C of the Act would lie on the assessee and it is for the assessee to rebut the contents of the said loose sheet with cogent evidences. Moreover, it is trite law that the seized documents should be looked into in toto and both the Revenue as well as assessee could not ignore that portion of the same seized document which is detrimental to each. One part of the same seized document shows transactions carried out by cheques which are matching with the books of accounts of other group entities, the transactions carried out/proposed to be carried out in cash for purchasing demand drafts to make payment to R.D. Karas and Sons should also be treated as correct and that portion of the document alone cannot be ignored by the assessee. Hence, onus that prevail on the assessee had not been discharged here. However, we find that the Ld. CIT(A) had concluded that assessee had made payments to R.D. Karas and Sons in demand drafts by using unaccounted cash. This fact can be easily cross verified from the books of accounts of R.D. Karas and Sons which exercise has not been carried out by the lower authorities. Hence, we deem it fit and appropriate to remand this issue to the file of the Ld. AO for the limited purposes of carrying out the verification with R.D. Karas and Sons to check whether these demand drafts have been credited in the books of R.D. Karas and Sons. If the demand drafts are found credited in the books of accounts of R.D. Karas and Sons, then addition is to be confirmed in the hands of the assessee. If it is not found credited in the books of R.D. Karas and Sons, then the statement given by the assessee that demand drafts that were proposed to be taken but were never taken becomes true, and in such an event, no addition is made in the hands of the assessee. With these observations, we remand this issue to the file of the Ld. AO. Accordingly, the grounds raised by the assessee for A.Y. 2010-11 are allowed for statistical purposes.

  ---

• 2022 (6) TMI 437
  Delayed employees share of contribution to ESI/PF - HELD THAT:- Hon ble Karnataka High Court in the case of Essae Teraoka Pvt. Ltd., [ 2014 (3) TMI 386 - KARNATAKA HIGH COURT] has taken the view that employee s contribution u/s 36(1)(va) would also be covered under section 43B of the Act and therefore if the share of the employee s share of contribution is made on or before due date for furnishing the return of income under section 139(1) of the Act, then the assessee would be entitled to claim deduction. In this case there is no dispute that the assessee made payment of the Employees share of PF/ESI on or before the due date for filing return of income for AY 2017-18 u/s.139(1) - The next aspect to be considered is whether the amendment to the provisions to section 43B and 36(1)(va) of the Act by the Finance Act, 2021, has to be construed as retrospective and applicable for the period prior to 01.04.2021 also. On this aspect, we find that the explanatory memorandum to the Finance Act, 2021 proposing amendment in section 36(1)(va) as well as section 43B is applicable only from 01.04.2021. These provisions impose a liability on an assessee and therefore cannot be construed as applicable with retrospective effect unless the legislature specifically says so. In the decisions referred to by us in the earlier paragraph of this order on identical issue the tribunal has taken a view that the aforesaid amendment is applicable only prospectively i.e., from 1.4.2021. We are therefore of the view that the impugned additions made under section 36(1)(va) of the Act, deserves to be deleted. - Decided in favour of assessee.

  ---

• Customs

• 2022 (6) TMI 436
  Claim for SAD refund - rejection on the ground of time limitation - additional duty was paid on 05.11.2013 and 30.10.2013 respectively, but the application seeking refund was submitted on 14.11.2014 (i.e), after the expiry of one year from the date of payment of duty - Section 3 (5) of the Customs Tariff Act, 1975 - HELD THAT:- It is to be recollected that the claim for refund of SAD duty made by the respondent / assessee, in respect of two Bills of Entry dated 05.11.2013 and 29.10.2013, was rejected, by the adjudicating authority, by order-in-original dated 14.07.2016 on the ground that the said application was filed after the expiry of one year from the date of payment of duty. However, the said order-in-original was set aside by the appellate authority, on the premise that the right to refund arises from the date of sale of the goods and therefore, limitation shall start from the date of sale of the goods and not from the date on which SAD has been paid, following the decision of the Delhi High Court in SONY INDIA PVT. LTD. VERSUS THE COMMISSIONER OF CUSTOMS [ 2014 (4) TMI 870 - DELHI HIGH COURT] . The appellant submitted that the issue involved herein has already been decided by the Bombay High Court in M/S. CMS INFO SYSTEMS LIMITED VERSUS THE UNION OF INDIA OTHERS [ 2017 (1) TMI 786 - BOMBAY HIGH COURT] , wherein, after considering the decision of the Delhi High Court in SONY INDIA PVT. LTD. VERSUS THE COMMISSIONER OF CUSTOMS [ 2014 (4) TMI 870 - DELHI HIGH COURT] it was categorically held that the period of limitation as mentioned in the notification dated 14th September, 2007 as amended by the notification dated 1st August 2008 will operate with all the force and therefore, refund will be governed by the limitation as prescribed in the notification - It is also fairly brought to the notice of this court that the aforesaid decision of the Bombay High Court in CMS Info Systems Ltd s case was put to challenge before the Hon ble Supreme Court by filing Special Leave to Appeal (Civil)No.11646 of 2017 by the assessee and after granting leave, the same is now, pending consideration. This court, in the given facts and circumstances of the case, sets aside the orders-in-appeals passed by the Appellate Authorities and remands the matter to the Adjudicating Authority for fresh consideration of the application for refund in respect of two Bills of Entry dated 05.11.2013 and 29.10.2013, after providing opportunity of hearing to the parties, based on the outcome of the SLP filed against the order passed by the Bombay High Court in CMS Info System Limited, to be rendered by the Hon ble Supreme Court. Appeal disposed off.

  ---

• 2022 (6) TMI 435
  Valuation of imported goods - DCBS N or N Dicyclohexyl-2 Benzothiazole Sulfenamide - enhancement of assessable value - rejection of declared value - failure to issue notice of intent - non-speaking order - violation of principles of natural justice - HELD THAT:- Doubtlessly, rule 12 of Customs Valuation (Determination of Value of Imported Goods) Rules, 2007 empowers rejection of declared upon evidence to the contrary and, by default too, upon non-satisfaction of queries sought by the assessing officer. Two aspects are critical to such rejection: requiring such evidence to be furnished by importer as is necessary for acceptance of declared value as transaction value and, should the declared value be discarded, adoption of such value as is validated by the sequential alternatives in the Rules. There is nothing on record to demonstrate that the necessary pre-requisite in rule 12 of Customs Valuation (Determination of Value of Imported Goods) Rules, 2007 had been set in motion; indeed, the entire process, commencing with failure to issue notice of intent and culminating in refusal to issue speaking order, appears to be devoid of any cognition of the principles of natural justice. Even though the principles of natural justice stand breached by both the lower authorities, that need not concern the disposal of this dispute which, by the absence of evidence to displace the declared value, calls for the impugned order be set aside on merit. Appeal allowed.

  ---

• 2022 (6) TMI 434
  Condonation of delay in filing appeal - rejection of appeal on the ground of time bar - sufficient cause for delay given or not - HELD THAT:- No doubt the appeal was filed within the period of 90 days that is during such period for which the statute vests discretion in Commissioner (Appeals) for condoning the delay subject to being satisfied of the sufficient cause for the said delay. Reverting to the facts of the present case pertaining to limitation it is observed that the cause/ reason for delay was mentioned as critical mental health problem of the appellant, for which no medical evidence was provided by the appellant to Commissioner (Appeals). Appellant rather mentioned that he had not sought a medical opinion because his mental critical condition was only due to financial pressure because of the impugned Order-in-Original confirming the duty demand with interest penalty. These submissions are highly insufficient to be called as sufficient cause for Condonation of the impugned delay. Law of limitation is founded on the public policy. It is enshrined in the maxim interest reipublicue up sit finis litium which means it is for the general welfare that a period be put to a litigation. No doubt the rules of limitation are not meant to destroy the rights of the parties but simultaneously the objective of these rules is to see that the parties do not resort to dilatory tactics but should seek their remedy promptly - Hon ble Apex Court in the case of COLLECTOR OF C. EX., MADRAS VERSUS A. MD. BILAL CO. [ 1999 (2) TMI 70 - SC ORDER] declined to condone the delay therein for filing the appeal because there was no satisfactory or reasonable explanations rendered for condonation of delay. It has been held by Hon ble Apex Court that sometimes on certain occasions the Courts have taken a view that delay should be condoned with a liberal attitude, while on certain other occasions, the Court has taken stricter view and wherever the explanation was not satisfactory, the applications seeking condonation of delay have been dismissed. Heavy burden lies on such appellant to explain the delay sufficiently, for each day. The explanation on ground of illness, given by appellant is held to be absolutely vague in the present case as the appellant could not substantiate with any medical record. Hence, possibility of appeal filed before Commissioner (Appeals) to be an afterthought and a time gaining strategy cannot be ruled out. Appeal dismissed.

  ---

• 2022 (6) TMI 433
  Classification of imported goods - PVC Kane Ace B-564 - classifiable under CTH 39029000 or under CTH 39069090 - availability of benefit of exemption entry no. 457 (I) of Notification No.46/2011- CUS - non-consideration of statutory provision of central excise tariff act and chemical characteristics of the product - classification decided only on the basis of nomenclature that too picking up words from the full nomenclature of the name of the product - violation of principles of natural justice - HELD THAT:- In the present case it is the admitted fact that co-polymer does not have any single monomer unit which contributes 95% or more by weight. As per the above note, co-polymers are to be classified under the heading covering polymer of co-monomers unit which pre-dominates by weight over every single co-monomer unit. In the present case undisputedly the butadiene is pre dominantly constituent. The butadiene is nothing but the olefin - the products i.e. polymer of other olefin in primary form is classified under 390290000 and other. In the present case as given above the product imported by the appellant consisted of pre-dominantly of Butadiene which is an olefin therefore, in terms of Chapter note 4 to chapter 39 the product is correctly classifiable under CTH 390290000. The Adjudicating Authority and the Commissioner (Appeals) have not considered this statutory provision of central excise tariff act, they have also not considered the chemical characteristics of the product therefore, the classification decided only on the basis of nomenclature that too picking up words from the full nomenclature of the name of the product is absolutely baseless and cannot be sustained. The appellant has correctly classified the imported goods under CTH 390290000 - Appeal allowed.

  ---

• 2022 (6) TMI 432
  100% EOU - the case of the department is that Appellant have obtained 11 Advance Authorization from DGFT for duty free import of raw material under Notification No. 98/2009 -CUS. dated 11.09.2009 - It is alleged that in actual no clearances have taken place for availing benefit of Advance Authorization - HELD THAT:- It is settled that once in the 100% EOU the raw material imported duty free is used in the manufacture of final product and final product is cleared on payment of duty in DTA, for any reason the customs duty on the raw material which was used in the finished goods cannot be demanded therefore, the demand of Customs Duty on this ground also is clearly not sustainable. Clandestine removal - case of the department is on the ground that deemed export clearance were not genuine and were shown only on paper and finished goods were clandestine cleared in the open market - HELD THAT:- During the investigation, the department has sought verification report from the Jurisdictional Authority of EOUs units. It also appears that all the Concerned Officers have certified that EOUs have received the goods. In the said verification reports, officers, no-where pointed out that the EOUs have not received the materials form the Appellant. Further Authorized persons of EOUs units accepted the facts of receipts of materials and transporters and truck owners also accepted the transportation of goods from the factory of Appellant to EOU units - No statement of any buyer recorded to whom clearance was allegedly made, no transportation details provided, no evidence of any receipts of payment from open market buyers produced. Therefore, in the given set of facts and in absence of any adverse evidence, it cannot be said that finished goods were clandestinely cleared in open market. The entire case of the Revenue is based upon the surmises and conjectures. No concrete, positive and tangible evidence appears on record. The evidences brought into the record by the department are incomplete, inconsistent and not a reliable piece of evidence to prove charges of clandestine removal - the charges of clandestine removal of the alleged goods not sustainable in the present matter - the central excise duty liability cannot be fastened upon the appellant. Appeal allowed - decided in favor of appellant.

  ---

• Insolvency & Bankruptcy

• 2022 (6) TMI 481
  Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - existence of debt and dispute or not - Service of demand notice - HELD THAT:- The petitioner through has placed a tracking report, whereunder it was stated that the speed post was delivered to the corporate debtor Annexure (A-6). Whether the operational debt was disputed by the corporate debtor? - HELD THAT:- It is to be noted that none appeared on behalf of corporate debtor despite repeated service and has been set ex parte vide order dated 20.04.2022. Moreover, petitioner has appended affidavit u/s. 9(3)(b) stating that corporate debtor has not issued any notice or raised any dispute regarding the debt for which the present petition has been filed by the operational creditor. Whether this application is filed within limitation? - HELD THAT:- This application was filed on 18.11.2019 vide Diary No. 6401. Whereas the date of default is 01.07.2019, therefore, this Adjudicating Authority finds that this application has been filed within limitation. The application filed in the Form 5 and the same is found to be complete. There is a total unpaid operational debt (in default) of Rs. 9,50,000/- and interest amount of Rs. 17,112.31/-. The operational creditor has been appointed as CEO of the Corporate Debtor. Copy of appointment letter (Annexure A-3) and salary slip issued by the Corporate Debtor for the month of May 2019. Accordingly, the petitioner proved the debt and the default, which is more than Rupees one lakh (prior to the amendment in threshold limit of one crore vide notification No. S.O.1205(E) dated 24.03.2020) by the respondent-corporate debtor. The material on record clearly goes to show that the respondent committed default in payment of the claimed operational debt even after demand made by the petitioner. In view of the satisfaction of the conditions provided for in Section 9(5)(i) of the Code, the petition for initiation of the CIR Process in the case of the Corporate Debtor is admitted - application admitted - moratorium declared.

  ---

• 2022 (6) TMI 480
  Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial Creditors - existence of debt and dispute or not - whether the present application is filed within limitation? - HELD THAT:- It can be seen from the records that the date of default is 20.08.2021 and the present petition is filed vide Diary No. 01139 dated 22.10.2021. Therefore, the present petition is filed within limitation. Whether there is default in payment or not? - HELD THAT:- It is observed from the record that in the present case, the occurrence of default is evidenced by the copy of the acknowledgement by the corporate debtor and the account statement of the Petitioner/Applicant and the same are attached as Annexure-6 and Annexure-A-5 A-10 respectively of the petition. The respondent-corporate debtor has also filed a reply wherein it has been admitted that there is default in respect of financial debt and amount mentioned in the petition is due towards the petitioner and shown its incapacity to pay the liability. The application filed in the prescribed Form No.1 is found to be complete. The present petition being complete and having established the default in payment of the Financial Debt for the default amount being above threshold limit, the petition is admitted in terms of Section 7(5) of the IBC and accordingly, moratorium is declared in terms of Section 14 of the Code - Petition admitted - moratorium declared.

  ---

• Service Tax

• 2022 (6) TMI 479
  Sabka Vishwas (Legacy Dispute Resolution) Scheme 2019 - brokerage / commission services - declaration accepted but according to petitioner, respondents have not given credit to certain amounts which, according to petitioner, has been paid - HELD THAT:- One thing is very clear that it is the intention of Union of India also to put an end to a litigation where the declarant wants to put an end to. Any person can be a declarant except those excluded under Section 125 of the Finance Act. In our view, having considered the various provisions of the scheme alongwith circulars issued by respondent no.2, one thing that is certain is any amount paid either in cash or by virtue of input credit should be reduced at the time of determination of the final amount payable under the scheme. As held by this court in M/S. CODE ENGINEERS PRIVATE LIMITED THROUGH ITS DIRECTOR MR. ABIRAAJ RAJAN VERSUS UNION OF INDIA AND OTHERS [ 2021 (2) TMI 10 - BOMBAY HIGH COURT ] the crucial word is verify used in Section 126(1) of the Finance Act and Sub Rule (1) of Rule 6 of the Rules. The obligation of respondent no.3 is to verify the truth or truthfulness of the declaration made by petitioner. In our view, that would also include verification of petitioner s statement in the declaration that it has paid Rs.8,73,19,575/- including Rs.5,37,25,305/- by reversal of credit in service tax returns filed for the period April 2015 to September 2015. Mr. Mundra, as stated earlier, submitted that petitioner had given proof and details to respondent no.3 during the personal hearing. If that was the case, respondent no.3 ought to have verified the truthfulness of petitioner s statement whether the amount of Rs.5,37,25,305/- by reversal of credit in service tax returns was correct. By verifying this truthfulness would not, amount to disposing or hearing the appeal filed by petitioner on merits. Respondent no.3 should not take such pedantic approach and should keep in mind the purpose behind introducing the scheme, i.e., liquidation of past disputes so that the business can move ahead and the tax administration can also focus on the smooth implementation of the goods and services tax. Respondent no.3 is directed to consider all documents and records submitted by petitioner including proof of payment of Rs.5,37,25,305/- alongwith records available with the department and issue a fresh statement under Section 127 of the Finance Act - Petition disposed off.

  ---

• 2022 (6) TMI 468
  CENVAT Credit - Common input services used in manufacture of both taxable as well as exempt goods - non-maintenance of separate records - rule 6(3A) of CENVAT Credit Rules, 2004 - HELD THAT:- It is admitted in the orders of the lower authorities that, while letter DOF no. 334/8/2016-TRU dated 29th February 2016 of Ministry of Finance elaborating upon the amendment in rule 6 of CENVAT Credit Rules, 2004 may favour the appellant herein, the prospective intent of amendment in rule 6 of CENVAT Credit Rules, 2004 precludes such shelter for the period of dispute in this appeal. Furthermore, and strangely so after noting that the two orders relied upon in submissions were interim in nature, the original authority considered the decision in THYSSENKRUPP INDUSTRIES (I) PVT LTD VERSUS COMMISSIONER OF CENTRAL EXCISE, PUNE [ 2014 (10) TMI 476 - CESTAT MUMBAI] to be worthy of emulation. It does not seem to have occurred to the lower authorities that disposal of application for stay of recovery pending decision on the appeal did not warrant anything other than a preliminary survey of the law and, thereby, depriving it of status as binding precedent. CENVAT credit scheme is operated through the self-contained CENVAT Credit Rules, 2004 and its essence is availment and utilization in self-maintained records that, once reported in periodical returns, becomes irretractable except by revision in subsequent return. The filtration for availment is conformity with rule 3 of CENVAT Credit Rules, 2004 and utilization is governed by rule 4 of CENVAT Credit Rules, 2004. Recovery of ineligible credit is enabled through rule 14 of CENVAT Credit Rules, 2004. Rule 6 of CENVAT Credit Rules, 2004 is not, by any stretch, a substitute for either rule 3 or rule 14 of CENVAT Credit Rules, 2004 - it is clear that the signification of the formula for apportionment of credit relates to such credit as is not amenable to attribution according to the taxability, or otherwise, of goods manufactured or service rendered. Impliedly, such impediment arises from impossibility of recording, or unwillingness to maintain, separate account of deployment. The sole change brought about by the amendment of 2016 has, all the same, to do with the extent of detailing in the records of utilization of input / input service which was not explicitly articulated till then but, nonetheless, implicit. Total CENVAT credit is total to the extent that such credit has remained unattributed in the accounts to taxable goods or services. This dispute over the formula in rule 6(3A) of CENVAT Credit Rules, 2004 arose in consequence of exercise of that option, from among those in rule 6(3) of CENVAT Credit Rules, 2004, for neutralization of credit that, in conformity with the injunction in rule 6(1) of CENVAT Credit Rules, 2004, could not be continued and the obvious disinclination to resort to the mandate of rule 6(2) of CENVAT Credit Rules, 2004. The non obstante qualification of rule 6(3) of CENVAT Credit Rules, 2004 accords regularity to other modes of neutralization that, at best, are approximations of attribution. The impugned order is set aside and the re-computation restored to the original authority before whom the accountal of credit taken on input service shall be furnished by the appellant herein and to which the ratio in the formula is to be applied - Appeal disposed off by this specific remand.

  ---

• 2022 (6) TMI 431
  Classification of services - Survey and Exploration of Mineral service or not - activity of camp mobilisation and demobilisation in the nature of camp establishment and maintenance - preparation of camp ground - construction of sheds, bathrooms, toilets, bunk houses jacking up - electrical wiring and fitting, etc. - HELD THAT:- The Tribunal in the case of M/S. MOHABIR ENTERPRISES VERSUS COMMISSIONER OF GST CENTRAL EXCISE CHENNAI SOUTH [ 2019 (4) TMI 181 - CESTAT CHENNAI] , which is a sister concern of the appellant herein, for the period from January 2008 to December 2008, has analysed the issue and held that the activities do not fall under the said category of service. Appeal allowed - decided in favor of appellant.

  ---

• 2022 (6) TMI 430
  Refund claim alongwith the interest - rejection on the ground that period of limitation under Section 11 B expired - HELD THAT:- There is sufficient evidence on record that appellant had dispatched the refund applications by speed post on 8.11.2016, which were returned by the Department by refusing to accept. Further, refusing of refund by the Department is evident from the facts on record, as the Service Tax Division has been shifted from CGO Complex, New Delhi to Ambedkar Bhawan, Rohini, New Delhi. Thus, it is held that the appellant had dispatched the refund application well within the period of limitation, which was expiring on 14.11.2016. Such dispatch on 8.11.2016 is also proved by the fact that the appellant has soon thereafter receipt back of the mail with the remark refused to accept , has again filed the application by hand on 5.12.2011. In this view of the matter, it is held that the refund application has been filed within the limitation as prescribed under Section 102(3) of the Finance Act. Further in view of Section 102(1) and (2) of the Finance Act, the service tax deposited by the appellant has taken the changed character of revenue deposit, by operation of law as the Government of India extended exemption with retrospective effect vide notification no.9/2016-ST read with Section 102 introduced by Finance Act, 2016. Thus, the rejection of refund by Revenue is also hit by Article 265 of the Constitution of India - further it is held that no limitation is applicable for refund in the facts and circumstances of the present case, due to the amount lying with the Revenue having the nature of revenue deposit. The Adjudicating Authority is directed to grant refund within a period of 45 days from the date of receipt of this order along with interest under Section 11 BB - appeal allowed - decided in favor of appellant.

  ---

• Central Excise

• 2022 (6) TMI 429
  100% EOU - Partial rejection of claim for refund preferred under rule 5 of CENVAT Credit Rules, 2004 - inclusion of credit that had been restored consequent upon rejection of claims for previous periods in the computation of entitlement in subsequent claims - April 2016 to June 2016, July 2016 to September 2016 and October 2016 - HELD THAT:- Rule 5 of CENVAT Credit Rules, 2004 has been specially formulated for neutralizing tax/duty paid on input service/input used for generating exports. The disposal of claims for refund under this provision is, as already premised, is limited to ascertainment of quantum of exports and the application of the formula prescribed for ascertainment of attribution of such input service/input to exports. Any amount not sanctioned is to be recredited in the CENVAT credit account on the presumption of credit having been correctly availed under rule 3 of CENVAT Credit Rules, 2004 and, in the absence of proceedings initiated under the authority of rule 14 of CENVAT Credit Rules, 2004, availment of credit is not to be revisited. Therefore, the denial of refund on the presumption of ab initio ineligibility will not stand and refund procedure cannot be claimed to be a substitute for recovery. The denial on these grounds is without authority of law. Denial owing to padding up of eligible CENVAT credit of earlier periods that had to be re-credited following rejection of refund claim to that extent - HELD THAT:- An assessee such as the appellant, manufacturing primarily for the international market, has little scope for utilization of CENVAT credit in the normal course of discharge of duty liability. It is not the case of Revenue that the appellant had cleared goods domestically on payment of duty and was, through the refund route, attempting to recover the same; there is a certain lack of logic too in that. Any remnant by application of formula, and its precise intendment, can trace its origin to input lying unutilized or input service yet to be utilized for manufacture. Its utilization in some subsequent period can be reflected only by restoration of the rejected portion of a claim for refund. The restoration is permitted by law and the availment suffices to entitle inclusion for apportionment towards export of a subsequent quarter. The claim of the appellant has been wrongly discarded by the lower authorities - Appeal allowed - decided in favor of appellant.

  ---

• 2022 (6) TMI 428
  Maintainability of appeal - requirement of mandatory pre-deposit - appellate has deposited entire amount of duty (100% of duty) instead of 7.5% / 10% - Only demand of penalty and interest was left over - Appropriating demand and penalty with sanctioned rebate amount towards pre-deposit during pendency of appeal - HELD THAT:- From the section 35F, the appellant was required to pay only 10% (7,5% at Commissioner Appellate stage 2.5% at CESTAT appellate stage). When this appropriation was made on 12.09.14, the appellant not only paid this 7.5% or 10% as the case may be, but have paid the entire duty amount. The appropriation was made towards the penalty and interest only. Regarding recovery of dues when the appeal is pending, the Board has issued a Circular Circular No. 984/8/2014-CX., dated 16-9-2014 - From the circular, it is clear that against the adjudged dues, the appellant, for filing an appeal, is required to pay only 7.5% or 10% as the case may be. On payment of such amount, entire remaining amount stand stayed if this be so, out of the remaining amount no recovery can be made. As stated above, the appellant not only paid 7.5%/10% but the entire duty therefore, in terms of Section 35F read with Board Circular Circular No. 984/8/2014-CX., dated 16-9-2014, the revenue should not have recovered the amount of penalty and interest by way of appropriation from the sanctioned rebate claim. The appellant s demand case got settled under SVLDRS-2019 , for this reason also, no amount shall be allowed to be appropriated. Appeal allowed - decided in favor of appellant.

  ---

• 2022 (6) TMI 427
  Imposition of penalty under Rule 26 of the Central Excise Rules, 2002 - Advance Authorization scheme - diversion of imported goods procured duty free to the Appellant firm - HELD THAT:- The goods were diverted from AOPL to the appellant- M/s. Allure International, on the basis of email received from Allure International by AOPL. Thereafter, the Director, Shri Narinder Manghani of AOPL, used to send confirmation through return mail and on receipt of instruction, he himself as an employee used to take delivery of the goods from M/s. AOPL. The appellant - Shri Pankaj Khubani used to go to AOPL to take delivery on behalf of the Allure International, as per directions of the other partners and as he was the junior most in the firm. It is further observed in the impugned order that AOPL, Bhiwadi and their manufacturer suppliers took recourse to issue of fictitious documents to cover up the operations of the firm for diversion of duty free goods with intent to evade payment of duty on the said goods. It is further evident that in the course of investigation, Shri Pankaj Khubani, inter alia, stated that he was more or less a dummy partner in Allure International Ltd. and the actual persons controlling over the firm are Manghani Brothers. Further, he was working on the directions of the Manghani Brothers. Although AOPL procured duty free materials etc. for manufacture of goods for export but most of the time, such duty free inputs were transferred to DTA, without any accounting. It seems that the Adjudicating Authority has taken adverse view against the appellant Shri Pankaj Khubani based on the notings in the raw materials of register of AOPL, wherein, it is mentioned that on certain dates, certain inputs were issued to Pankaj Khubani or Shri Pankajji. Manghani Brothers are the actual master mind and this is also supported by fact that Manghani Brothers were the directors in AOPL and were also the partners in Allure International. Thus, there appears to be no role in decision making in diverting the duty free goods from AOPL, by Pankaj Khubani. However, in the facts and circumstances, it is found that other appellant, M/s. Allure International, a partnership firm has committed the act of omission and commission by receiving the duty free goods without proper documents, as required under law, from AOPL. It is further evident that Manghani Brothers have taken advantage of its position for the purpose of diversification of the goods to DTA. Penalty on Shri Pankaj Khubani is set aside - appeal allowed in part.

  ---

• 2022 (6) TMI 426
  Violation of principles of natural justice - proper opportunity of hearing not provided - calling report from the Jurisdictional Range officer for examining the documents in support of the claim of the Cenvat Credit - HELD THAT:- There is definitely lack of proper opportunity given to the appellant for hearing, as no further date was fixed in the matter after receipt of the report of the Range officer, nor a copy of the report of the Range officer was given to the appellant asking for the reply or comments. The matter is remanded to the original Adjudicating Authority with the direction to provide a copy of the Report of the Range officer to the appellant, and after perusal of the reply and hearing the appellant, to pass the reasoned order in accordance with law - Appeal allowed by way of remand.

  ---

• CST, VAT & Sales Tax

• 2022 (6) TMI 425
  Validity of assessment order - all the three authorities were of the view that no reconciliation statement has been produced, books of accounts have not been produced and therefore, the assessment was completed is in the nature of best judgment assessment - HELD THAT:- Partially the appellant has to be blamed for the present position. The transferor company stood amalgamated with the appellant with effect from 1st November, 2007 though the scheme of amalgamation was approved by this Court on 26th June, 2009. The period for which the assessment has been made, which is the 4th quarter ending 2009 is obviously much after the order of this Court approving the scheme of amalgamation dated 26th June, 2009. Be that as it may, by operation of law, the transferor company, namely, M/s. Metco Group Engineers Pvt. Ltd. loses its identity on and after 1st November, 2007 and whatever the liabilities, which are existing as on the said date has to be borne / defended by the appellant, who is the transferee company - the proper course the appellant should have adopted is to get itself substituted in the place of the transferor company, produce all the documents and details in support of its claim and thereafter contest the proposal made by the assessing officer and take order on merits. However, this course having not been adopted, it is only the appellant, who has to be held responsible for the present situation. The matter can be remanded to the lower authorities for fresh considerations - writ appeal allowed.

  ---