TMI Tax Updates - e-Newsletter
June 5, 2023

Case Laws in this Newsletter:

GST Income Tax Corporate Laws Insolvency & Bankruptcy Central Excise

Articles

1. Directed the AO to allow cross examination of witness by the assessee

   By: Bimal jain

2. Bird's-Eye View of the Concept of Permanent Establishment

   By: Sombir Singh

3. RECENT DEVELOPMENTS IN GST

   By: Dr. Sanjiv Agarwal

4. No excise duty demand on differential value of stock of finished or semi-finished goods

   By: Bimal jain

5. INCOME TAX RATE FOR AY 2023 - 24 UNDER OLD TAX REGIME AND NEW TAX REGIME

   By: DR.MARIAPPAN GOVINDARAJAN

News

1. RBI invites comments on draft Master Directions on Cyber Resilience and Digital Payment Security Controls for Payment System Operators

Notifications

Companies Law

1. G.S.R. 408 (E) - dated 31-5-2023 - Co. Law

Form CSR-2 shall be filed separately on or before 31st March, 2024 (for the financial year 2022-2023) - Companies (Accounts) Second Amendment Rules, 2023

DGFT

2. 10/2023 - dated 2-6-2023 - FTP

Amendment in Import Policy Condition 6 (Pet Coke) under Chapter 27 of Schedule –I (Import Policy) of ITC (HS) 2022

Highlights / Catch Notes

Income Tax

• High Court Grants Fair Opportunity to Petitioner After Technical Portal Issue in Sections 147 and 148A(b) Assessment Case.

  Case-Laws - HC : Reopening of assessment u/s 147 - notice issued u/s 148A(b) - non availing the opportunity to defend its case to the petitioner - As some technical snag on the portal, which deprived the petitioner of such opportunity. Petitioner deserves to be given due opportunity. - HC
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• Law Firm Partner Penalized u/s 271F for Not Filing Income Tax Return; Ignorance Not a Valid Excuse.

  Case-Laws - AT : Penalty u/s. 271F - non- filing of ITR - Reasonable cause for failure - assessee is an Advocate by profession and is also a partner in a law firm - ignorance of law is no excuse - The assessee is in a higher footing than any other person to be aware of the provisions of the statute nevertheless to mention that he has to abide by the said law. - AT
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• No Penalty u/s 271(1)(c) as Assessee Voluntarily Disclosed Interest Expenditure Before Assessment.

  Case-Laws - AT : Penalty u/s 271(1)(c) - Interest as obtained through interest bearing fund and used for non-business purposes - Assessee has voluntarily offered such interest expenditure during the assessment. Thus, the assessee is not to be penalized on such addition as he himself has offered before assessment proceedings. - no penalty - AT
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• CIT(A) cannot add new income sources beyond original assessment u/s 251; order set aside, additions deleted.

  Case-Laws - AT : Enhancement of income - Exercise of power by the CIT(A) u/s 251 - introducing new source of income - It is not open for the ld. CIT(A) to travel outside the assessment order with a view to find out new sources of income. There must be something in the assessment order to show that Ld. AO had applied his mind to the particular subject matter with a view to its taxability or its nontaxability and not to any incidental connection. - order of the CIT (A) set aside - Additions deleted - AT
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• Deemed Income Not Eligible for Exemption u/ss 11(1)(a) and 11(2) of Income Tax Act.

  Case-Laws - AT : Exemption u/s 11(1)(a) and Section 11(2) for Deemed income u/s 11(3) - Assessee would be allowed to accumulate the income if there is “real income” which is in possession of the assessee - something which is not in possession of the assessee cannot be accumulated or utilized at a later date. - Therefore “deemed income” u/s 11(3) of the Act is not eligible for claim of exemption under Section 11(1)(a) and Section 11(2) of the Act. - AT
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• Bombay High Court Rules Payment Under Consent Decree in Specific Performance Suit Not Subject to Capital Gains Tax.

  Case-Laws - AT : Long-term capital gains - receipts by the assessee as per the consent decree passed by the Hon”ble Bombay High Court - suit for specific performance of the Agreement to Sell - main allegation of the Revenue that the amount paid to the assessee is not in lieu of “right to sue”, rather the same was paid to the assessee since it transferred/sold its rights/interest in the property - pursuant to the consent decree in a suit for specific performance amount was paid, therefore, the said amount cannot be said to be liable to capital gains tax. - AT
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• Penalty u/s 271B Confirmed for Failing to File Audit Report by Chartered Accountant; Affidavit Deemed Unreliable.

  Case-Laws - AT : Penalty u/s. 271B - assessee had not filed audit report - Only a qualified CA is permitted to Audit books of account. In the affidavit it is claimed by the Accountant of the firm, that he had not given data to CA. Thus, in the affidavit he is not referring to books. However, for Audit, books of account are required. Therefore, the claims made in the affidavit are contradictory and hence not reliable. - Levy of penalty confirmed - AT
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• Income Tax Case Transfer Deemed Invalid Due to Lack of Valid Section 127 Order; Assessment Annulled.

  Case-Laws - AT : Transfer of case - order u/s 127 - a valid order u/s 127 which is required to be passed for transferring a case from one AO to another AO could not be brought on record, though claimed to have been mentioned in the referred documents. - the impugned assessment order as bad in law, liable to be struck down. - AT
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Corporate Law

• Company Faces Oppression and Mismanagement Allegations Over Share Allotment Without Rights Issue, Violating Companies Act Sections 395 & 396.

  Case-Laws - AT : Oppression and Mismanagement - Transfer of Shares - allotment of shares - Forum Shopping - It is clear that even as on 1998, there was no business conducted by the Company, and hence there was no need to infuse any additional Capital by allotting Shares specifically in the absence of any offer to the Petitioner/Respondent to subscribe to any Rights issue, as no Rights issue was ever offered. - in the absence of the Petitioner/Respondent who is the only other Director; all fall within the ambit of the ‘definition’ of ‘Oppression and Mismanagement’, as defined under Sections 395 and 396 of the Companies Act, 1956. - AT
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• Company's Name to be Restored After Missing Financial Filings for 2015-17, Subject to Conditions.

  Case-Laws - AT : Restoration of the name of the Company - The Appellant Company has failed to file its Financial Statements and Annual Returns for the Financial Years 2015-16 and 2016-17 due to change of circumstances - the Appellant Company is having substantial movable as well as immovable assets, therefore, it cannot be said that the Appellant Company is not carrying on any business or operations - name of the company directed to be restored, subject to the conditions to be fulfilled by the applicant - AT
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IBC

• Promoter Misses Deadline for Resolution Plan, Leading to Liquidation and Dissolution of Corporate Debtor Under IBC 2016.

  Case-Laws - AT : Dissolution of Corporate Debtor - The Insolvency Resolution Process under the I & B Code, 2016, is a Time Bound Process, and the Appellant / Promoter, having failed to project the Resolution Plan, within the specified time limit and later, the 1st Respondent / Resolution Professional, is not to accept any Plan - the end of Liquidation, requires complete Dissolution of an Entity - The order of dissolution passed by the adjudicating authority is proper, sustained - AT
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• CoC's Resolution Plan Stands Valid Despite Changes in Composition; New Member Inclusion Doesn't Affect Approval.

  Case-Laws - AT : CIRP - Objection to the Resolution Plan approved by the Committee of Creditor - decisions taken by the CoC are not invalidated by a subsequent change in the composition of the COC. Therefore, even though the Appellant was not in the COC when the Final Plan was approved, the approval of the Final Plan by the COC is not vitiated by the subsequent inclusion of the Appellant - AT
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Case Laws:

• GST

• 2023 (6) TMI 137
  Principles of Natural Justice - reply filed belatedly - contention of the petitioner that the impugned order passed is without affording an opportunity of hearing and that their reply filed in Form DRC 06 has been rejected as having been belatedly filed - HELD THAT:- Admittedly reply has been rejected stating that, it was beyond the period prescribed. However, it must be noticed that though the reply itself came to be rejected as having been filed belatedly, in the reply filed by the petitioner. The mandate under Section 75(4) of the CGST Act, 2017 is clear that, when a written request is made from the person chargeable with tax or penalty seeking for personal hearing, the same is required to be considered. Clearly there is violation of the mandate under Section 75(4) of the Act and the submission of the learned counsel for the Revenue that the request for personal hearing was made out in the reply, which having been rejected, the request for personal hearing is also to be rejected is a hyper technical interpretation which has resulted in rejection of the opportunity under Section 75(4) of the Act, which cannot be accepted. Accordingly, case is made out for setting aside the impugned order in the light of the violation of the non granting of opportunity of personal hearing under Section 75(4) of the Act and the respondents are directed to afford an opportunity of personal hearing before proceeding with the order. In order to meet the ends of justice, it is just and appropriate to direct the Authority to look into the reply that has been filed by the petitioner and also permit the petitioner to raise additional legal contentions as has been raised in the present writ petition. The petitioner however, is liable to pay costs of Rs. 10,000/- to the respondents for lapse in filing a delayed reply. The impugned order at Annexure-A is set aside - Appeal allowed.

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• 2023 (6) TMI 136
  Validity of audit report issued under section 65(6) of Bihar Goods and Services Tax Act, 2017 - non-consideration of the rectification application - petitioner argues that the order passed on audit report is amenable to the rectification under section 161 and without the same being considered, the show-cause notice issued by the Assessing Officer at Annexure- 5 cannot be proceeded with. HELD THAT:- The report was finalized as per Annexure-3, which specifically indicates that the representative of the tax payer appeared on different dates of hearing with books of accounts and other documents. Detailed analysis of the summary returns was also done with reference to the books of accounts and the relevant documents. The observations are found in page-2 of Annexure-3A, wherein it has been specifically noticed that the Jurisdictional officer may verify and ascertain actual turnover in accordance with the provisions of BGST Act, 2017 along with supporting documents . Hence the observation in an audit report is not the final decision and we also notice some discrepancies having been dropped on examination of the explanation. The show-cause notice indicates that the assessee made a specific request, to wait for disposal of the rectification application. The Assessing Officer rightly found that there is no error apparent on the face of the record, which could be rectified under section 161 and that in any event, section 73 proceedings have been initiated based on the final audit report. The Assessing Officer also alertly notes that if any submission is made by the tax payer that would be taken on record. The Proper Officer being the Assessing Officer has looked at the audit report and has recorded his satisfaction in the show-cause notice on items raised in the audit report and it also enables the assessee to raise objections against the same. There is no reason why the writ petition should be entertained specifically when the rectification application, on which basis the proceedings under section 73 is sought to be kept in abeyance, cannot be invoked fruitfully by the petitioner. If the Assessing Officer has not completed the proceedings, the petitioner would be entitled to file his objections and seek for consideration of the same before the Assessing Officer. Petition dismissed.

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• 2023 (6) TMI 135
  Cancellation of GST registration of petitioner - non-filing of returns for a continuous period of six months - HELD THAT:- The order dated 01.12.2020 clearly falls short of the requirement of Article 14 of the Constitution of India. The appellate order dated 30.12.2021 clearly exceeds the power conferred upon the appellate authority as it decides the appeal on the issues which were neither a part of the show-cause notice nor was a consideration when the order dated 01.12.2020 was passed. Both the orders i.e. 01.12.2020 30.12.2021 are set aside - the matter is remanded back to the authority concerned to pass a fresh order after giving an opportunity of hearing to the petitioner in accordance with law.

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• Income Tax

• 2023 (6) TMI 134
  Validity of Reopening of assessment - Time Limit for Notice - two consequential notices issued - as submitted reassessment proceeding has been triggered pursuant to a survey carried out against the petitioner - HELD THAT:- Information which emerged post the survey would be deemed to be considered as information, suggesting that income chargeable to tax has escaped assessment. As also since clause(a) to the first proviso appended to Section 148A does not refer to survey , the regime provided u/s 148A had to be applied to the petitioner, which is why notices were issued u/s 148A(b) of the Act. What emerges from the record is that, clearly, two notices were issued u/s148A(b) i.e., notice dated 28.03.2023 and 29.03.2023. What has also emerged is that the entire survey report was not submitted to the petitioner, since Mr Agarwal, during the course of his submissions, has said that the relied-upon portion of survey report was provided to the petitioner. Also submitted that information came to the fore only on 07.09.2022, when the survey was conducted, i.e., after the Finance Act 2022 kicked in. Petitioner submits that the expenditure was incurred prior to 01.04.2022, and therefore, the unamended provisions would apply and consequently, proceedings would be time-barred. In support of his plea, has relied upon Instruction No.1/2022 dated 11.05.2022 and the Memorandum Explaining the Provisions in the Finance Bill 2022. According to us, the matter requires examination. Besides this, as noticed above, it is, at least, prima facie, evident to us that Section 149 of the Act, as amended, may not be applicable. List the matter on 22.11.2023.

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• 2023 (6) TMI 133
  Reopening of assessment - addition u/s 68 - unexplained cash credit - shares were issued to the Director of assessee Company at Rs. 10 whereas, shares were allotted to M/s. Walden at a premium of Rs. 990, thus nature of money received from M/s. Walden was not satisfactorily explained - HELD THAT:- So far as any sum credited consists of share application money, the same is dealt by proviso to Section 68. Admittedly, the proviso had been inserted with effect from 01.04.2013. Admittedly the Assessment year in this case is 2008-09. Therefore as held in Kumar Nirman [ 2020 (3) TMI 340 - KARNATAKA HIGH COURT] the authority in NRA Iron Steel Pvt. Ltd[ 2019 (3) TMI 323 - SUPREME COURT] has no application. As decided in Gagandeep Infrastructure Pvt Ltd [ 2017 (3) TMI 1263 - BOMBAY HIGH COURT] pre-amended section 68 of the Act has held that where the Revenue urges that the amount of share application money has been received from bogus shareholders then it is for the Income-tax Officer to proceed by reopening the assessment of such shareholders and assessing them to tax in accordance with law. It does not entitle the Revenue to add the same to the assessee s income as unexplained cash credit. Decided in favour of assessee.

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• 2023 (6) TMI 132
  Assessment of trust v/ss trustees - Unexplained assets (money) seized - unexplained income in the hands of 2nd petitioner, the managing trustee - assessment in his individual capacity - scope and authority of the 2nd respondent to requisition the assets under clause (c) to sub- section (1) to Section 132A - HELD THAT:- Trust is an independent assessable unit for the purpose of income tax and distinct from the trustee viz., 2nd petitioner herein, who is subject to assessment in his individual capacity. A look at the facts would show that to resolve the controversy raised in the writ petition and to direct the return of the seized money, would necessarily require this court to examine the title over the assets seized from 2nd petitioner herien viz., whether it belongs to 1st or 2nd petitioner. Income Tax Department having already proceeded to find that the money seized belongs to the 2nd petitioner and having treated the same as income in the hands of the 2nd petitioner and orders of assessment having been made against the 2nd petitioner which is also the subject matter of challenge, it appears that examining the validity of the seizure would necessarily lead one to the question as to title of the assets seized from the 2nd petitioner which would think may not be appropriate in the light of the subsequent development viz., order of assessment in the name of the 2nd petitioner and the challenge to it by way of appeal inasmuch as there is no challenge to the order of assessment which is before this court and thus yet another reason which prompts me to think that it may not be appropriate to entertain the writ petition inasmuch as question of title over the assets/monies is essentially a question of fact which ought to be decided on the basis of the evidence which is to be let in and appreciation of such exercise is beyond the realm of jurisdiction under Article 226 of the Constitution of India. Writ petition cannot be entertained. However, it would be open to the petitioners to avail the statutory remedy against the impugned proceeding rejecting the petitioners claim for return of the assets (money) seized.

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• 2023 (6) TMI 131
  Reopening of assessment u/s 147 - notice issued u/s 148A(b) - non availing the opportunity to defend its case to the petitioner - HELD THAT:- There is no gainsaying that the impugned order and the notice passed u/s 148A(d) and 148 remain without availing the opportunity to defend its case to the petitioner. There was an evident breach of principles of natural justice. Observance of natural justice is essential part of quasi judicial process. When the provisions of section 148A themselves provide expressly for giving opportunity of hearing to the assessee, it was indispensable for the department to extend the reasonable opportunity to the petitioner to respond to the notice to put forth his case. As some technical snag on the portal, which deprived the petitioner of such opportunity. Petitioner deserves to be given due opportunity. The impugned order passed u/s 148A(d) and notice of even date passed u/s 148 are hereby set aside only on the ground that the petitioner was deprived of opportunity pursuant to notice u/s 140A(b) of the Act. The proceedings are remanded to the competent authority of the respondent.The competent authority of the respondents shall grant opportunity to the petitioner to file its reply to notice issued by the AO u/s 148A(b) in respect of Assessment Year 2018- 2019 allowing the petitioner two weeks time to respond. Reasonable opportunity shall be given to the petitioner.

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• 2023 (6) TMI 130
  Validity of Reopening of completed assessment - notice was issued to person who was dead - responsibilities of legal representative of the deceased assessee - HELD THAT:- As decided in Mitesh Goradhandas Somaiya [ 2022 (9) TMI 1252 - GUJARAT HIGH COURT] fact or circumstances to suggest that the legal representative of the deceased assessee in any manner submitted to the jurisdiction of the income tax authorities or in any way participated in the proceedings to persuade the court to hold otherwise. On the contrary, communication was sent to the Income Tax officer by the legal representative that the noticee/assessee had died. Thus the present petition deserves to be allowed. It is hereby allowed by holding that the impugned notice, which was against the dead assessee, could not be sustained. Decided against revenue.

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• 2023 (6) TMI 129
  TP Adjustment - period of limitation - Whether order of the TPO as barred by limitation u/s 92CA(3A)? - As contended sixty days period expired on 31.10.2019 and therefore, the impugned order of TPO the second respondent herein is barred by limitation - HELD THAT:- Since the Division Bench of this Court has already considered the very same issue, that has been raised in this writ petition, the benefit granted to those petitioners must also enure to the benefit of this writ petitioner also. Accordingly, the impugned order dated 01.11.2019 is hereby quashed on the ground that the same is barred by limitation and it has been passed beyond the time limit fixed under Section 92CA(3A) of the Income Tax Act.

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• 2023 (6) TMI 128
  Grant of approval for 12AB - No effective opportunity to refute the rejection given - denial of natural justice - HELD THAT:- CIT(E) without further opportunity to the appellant rejected the application in violation of principle of natural justice as commanded by proviso to section 12AA(1)(b)(ii) of the Act, thus action of the Ld. CIT(E) suffered from sufficiency of reasonable opportunity to the appellant to refute the rejection vis- -vis to comply with the requirements sought. Opportunity of being heard should be real, reasonable and effective and same should not be empty formalities, it should not be a paper opportunity. The doctrine of natural justice is a facet of fair play in action and no person shall be saddled with a liability without being heard. Remand the matter back to the file of Ld. CIT(E) for according reasonable effective opportunity to refute the rejection. Appeal allowed for statistical purposes.

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• 2023 (6) TMI 127
  Computation of capital gain on transfer of Plot - Adoption of certain amount as Cost of Acquisition - HELD THAT:- On an overview, it can be seen that there are basically two transfer transactions of the assessee, first, the transfer by compulsory acquisition of land by the Government of Maharashtra and the, second, of the transfer of plots to M/s. Shriram Builders Developers, which were allotted to the assessee in lieu of the compulsory acquisition. In a nutshell, the assessee was allotted the two plots as quid pro quo for the compulsory acquisition of his land after paying back Rs. Y. In that view of the matter, the fair market value of these two plots minus Rs. Y will constitute full value of consideration in the first transaction of transfer of agricultural land by compulsorily acquisition. AO, has observed that the first transaction of transfer by compulsory acquisition will not attract capital gain because it was a transfer of agricultural land - the date of allotment of the plots was 26-08-2011. Had the compulsory acquisition been of some non-agricultural land, the capital gain chargeable to tax would have resulted by taking the fair market value of the two plots minus Rs. Y as full value of consideration. Second transaction of the transfer of Plot Nos.20 20A taking place during the year, which happened on 12-09-2011, namely, around 15 days from the date of allotment of plots - Neither the original receipt of compensation in seclusion can be construed as the fair market value of the property in the first transaction of transfer nor its subsequent refund to CIDCO with certain addition in isolation as the cost of acquisition in the second transfer transaction. Cost of acquisition of the two plots in the second transaction of transfer is their fair market value on the date of their allotment to the assessee, which constituted the basis for the full value of consideration in the first transfer transaction. Thus capital gain in the second transaction needs to be computed by taking the assessee s share in Rs.10.75 crore as full value of consideration to be reduced by his proportionate share in the value of plot Nos. 20 20A, Sector-22, at Ulwe, Tal. Panvel, Dist. Raigad on 26-08-2011 allotted by CIDCO. Since the necessary figure of the fair market value of the two plots on 26.8.2011, being, the cost of acquisition in the second transaction is not available, we set-aside the impugned order and remit the matter to the file of the AO for determining it afresh. Appeal is allowed for statistical purposes.

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• 2023 (6) TMI 126
  Additions on account of sundry creditors - notices being issued to companies had failed to respond and gave confirmation of the outstanding credits - CIT-A deleted the addition - HELD THAT:- The order of ld. CIT(A) has showed that additional evidence was admitted and remand report was called from Ld. AO wherein no adverse comments was made with regard to reconciliation of account of STC, MMTC and PEC was given. Further the matter of fact is that all these three enterprises are public sector undertakings. Thus, the opinion of Ld. CIT(A) based upon the evidence before it and the aforesaid fact of the parties being Public Sector Undertakings to delete the additions on account of sundry creditors requires no interference. The appeal of revenue is dismissed.

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• 2023 (6) TMI 125
  Revision u/s 263 - allowability of the claim of deduction either u/s.80P(2)(a)(i) or u/s.80P(2)(d) - PCIT has held the assessment order to be erroneous and prejudicial to the interest of the Revenue only on the ground that the claim of deduction u/s.80P on the interest income was not in order - HELD THAT:- As observed that though co-operative banks, other than primary agricultural credit society or a primary co-operative agricultural and rural development bank, are not eligible for deduction pursuant to insertion of section 80P(4) w.e.f. 1.4.2007, but this provision does not dent the otherwise eligibility u/s 80P(2)(d) of a co-operative society on interest income on investments/deposits parked with a co-operative bank, which is a registered co-operative society as per section 2(19) of the Act, defining co-operative society to mean a co-operative society registered under the Co-operative Societies Act, 1912 or under any law for the time being in force. Similar view has been taken by the Pune Benches of the Tribunal in several cases including The Sesa Goa Employees Coop. Credit Society Ltd. [ 2022 (12) TMI 959 - ITAT PUNE] - We hold that the impugned order cannot be sustained. Decided in favour of assessee.

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• 2023 (6) TMI 124
  Assessee in default u/s 201(1) on non-payment of TDS - non deposit of TDS deducted to the account of the Central Government - assessee pleaded that in view of the second proviso to section 201(1) of the Act, the assessee cannot be treated as an assessee in default - CIT(A) observed that the second proviso to section 201(1) was introduced in the statute only w.e.f. 01.07.2012 and, hence, the said certificate filed by the assessee in Form No.26A from the Chartered Accountant of Payee cannot be used for the year under consideration as a shelter for not to be treated as an assessee in default. HELD THAT:- The second proviso to section 201(1) of the Act, though introduced w.e.f. 01.07.2012 have been held to be retrospective in operation by the decision of Ansal Landmark Township Pvt. Ltd. [ 2015 (9) TMI 79 - DELHI HIGH COURT] - Hence, the contention of the ld.CIT(A) in this regard is dismissed. AO in his order had treated the assessee as an assessee in default in respect of various payments made which falls within the ambit of provisions of sections 194C, 194A, 194I, and 194J, but on perusal of Form No.26A filed by the assessee we find that only the payments that are covered u/ss 194A and 194J of the Act were included therein. The said certificate is silent with regard to the payments that are covered u/s 194I and 194C of the Act. Moreover, the figures mentioned in Form No.26A does not exactly match with the figures pointed out by the ld. AO in his order. Thus we restore this issue to the file of AO for denovo adjudication in accordance with law. assessee is also directed to furnish complete reconciliation of the payments with the corresponding TDS element thereon and also reconcile the same with Form No.26A issued by the Chartered Accountant of SREI Infrastructure Finance Ltd - Appeal of the assessee is allowed for statistical purposes.

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• 2023 (6) TMI 123
  Suppression of income - Difference between service tax return and the revenue - as per books of accounts of the Assessee wherein reversal entry has been passed - case of the Assessee that since audit was initiated at the end of 2014, the service tax return could not be revised online as 90 days period was over and as found that the assessee had also tried to file revised return by manually to the service tax department which has not been accepted - HELD THAT:- There is no system of manual return filing/revised return by online due to expiry of limitation period. The assessee had tried to revise the service tax return, but the assessee was not successful in revising the service tax return. Considering the fact that the difference between service tax return and the revenue was occurred due to the wrong exchange rate applied to export income transaction while filing the service tax return, which being a genuine mistake and the Department has not alleged or proved any mens rea on the part of the assessee who has also tried to revise the service tax return. Thus, mere mistake in the service tax return does not mean that the income of the assessee has been suppressed. Decided in favour of assessee.

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• 2023 (6) TMI 122
  Penalty u/s. 271F - non- filing of ITR - assessee has failed to explain the reasonable cause for non filing of the returns inspite of having earned income from various sources - Reasonable cause for failure - assessee is an Advocate by profession and is also a partner in a law firm - HELD THAT:- Assessee has merely stated that owing to the financial crisis and his Accountant quitting the employment the assessee was unable to file returns, cannot be a reasonable cause for the failure on the part of the assessee. It is also pertinent to point out the fact that the assessee was on a bonafide belief that income of a partnership firm is exempted from tax, is an unacceptable contention that cannot be relied upon by a person like the assessee who is himself in the Advocacy of law. As well aware of the Latin maxim Ignorantia juris non excusat which means ignorance of law is no excuse , holds applicable not only to a common man but also to a person who has to hold the integrity of the law of land. The assessee is in a higher footing than any other person to be aware of the provisions of the statute nevertheless to mention that he has to abide by the said law. No reason stated by the assessee for the failure in filing the ITR is not a reasonable cause nor is it sufficient to delete the impugned penalty levied by the A.O. and confirmed by the ld. CIT(A) - Decided against assessee.

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• 2023 (6) TMI 121
  Estimation of profit from unaccounted sales - Profit estimation on total turnover - CIT(A) deleting the addition on account of estimation of profit from unaccounted sales made by the assessee from the clandestine removal of the goods - As stated by the D.R. in the Central Excise proceedings on the clandestine removal of the goods, the assessee settled the issue by availing Sabka Vishwas Scheme 2019 and paid the taxes on 12-11-2019 - HELD THAT:- As submitted by assessee, Tribunal in the case of Ganga Glazed Tiles Pvt. Ltd. [ 2018 (8) TMI 1847 - ITAT RAJKOT ] deleted addition following the judgment in the case of Vrundavan Ceramics (P.) Ltd. [ 2019 (7) TMI 547 - GUJARAT HIGH COURT ] Revenue s further appeal before the Hon ble High Court were dismissed and SLP filed before Hon ble Supreme Court [ 2020 (1) TMI 1502 - SUPREME COURT ] which were happened after the passing of the order by the Ld. CIT(A). Thus we are of the considered opinion, accepting the submissions made under Rule 27 of ITAT Rules and entertaining the judgments placed by the assessee, we deem it fit to set aside the matter back to the file of the Ld. A.O. to consider the above judgments placed by the assessee and determine the income in accordance with law. Appeal filed by the Revenue is hereby allowed for statistical purposes.

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• 2023 (6) TMI 120
  Exemption u/s 11 - application seeking registration u/s. 12AA rejected - assessee failed to furnish the details as called for under the provisions of the Act - HELD THAT:- The assessee filed Form No. 10AB on 28-09-2022 which clearly shows that the assessee filed said application well within the time i.e. before 30-09-2022 and the said application was rejected for noncompliance by the assessee in furnishing required documents as sought by the CIT(Exemption), but however, the CBDT vide Circular No. 6 of 2023 clarified the time for filing Form No. 10AB was further extended till 30-09- 2023. Assessee shall be given an opportunity to furnish all the required documents as called by the CIT(Exemption) in the interest of justice. The order of CIT(Exemption) is not justified in cancelling the provisional registration granted on 06-04-2022 u/s. 12AB - along with the Circular No. 6 of 2023 dated 24-05-2023 issued by the CBDT, we deem it proper to remand the matter to the file of CIT(Exemption) for its fresh examination. The assessee is liberty to file evidences, if any, in support of its claim. Thus, the grounds raised by the assessee are allowed for statistical purpose.

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• 2023 (6) TMI 119
  Penalty u/s 271(1)(c) - addition on account of agricultural income on the basis of average income of two years - HELD THAT:- Admittedly such addition is based on estimation of two years average income and on such estimation, no penalty is leviable. As it is settled law that on estimation addition no penalty is leviable. Interest as obtained through interest bearing fund and used for non-business purposes - Assessee has voluntarily offered such interest expenditure during the assessment. Thus, the assessee is not to be penalized on such addition as he himself has offered before assessment proceedings. Direct the AO to delete the entire penalty levied under section 271(1)(c) - Grounds of appeal raised by the assessee are allowed.

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• 2023 (6) TMI 118
  Reopening of assessment u/s 147 - assessee did not file his return of income - undisclosed capital gain - On the basis of the information available in AIR that the assessee along with 17 other co-owners has sold immovable property and since the assessee has not filed any return of income, therefore, no income under the head capital gains has been offered for taxation - HELD THAT:- If there is reasonable information on the basis of which a reasonable person can form a requisite belief that income chargeable to tax has escaped assessment, then proceedings u/s 147 can be validly initiated - sufficiency or correctness of the material is not a thing to be considered at the stage of recording reasons. Therefore we find no infirmity in the initiation of proceedings u/s 147 in the facts of the present case. Accordingly, grounds raised in assessee s appeal are dismissed. Year in which the transfer of immovable property has taken place - In the present case, it has not been disputed that the assessee has transferred the development rights in the plot of land to the builder/developer. possession of the land was also handed over to the builder/developer alongwith the development rights. Therefore, even though the Agreement for Sale was executed on 30/03/2010, the property was already transferred on 18/01/2008 at the time of execution of the Development Agreement, and thus, for all intent and purpose the land was transferred in the assessment year 2008-09. We are of the considered view that the aforesaid land was transferred by the assessee along with the other 17 co-owners to the builder/developer in the previous year relevant to the assessment year 2008-09 and therefore, capital gains, if any, thereon cannot be taxed in the year under consideration. As a result, ground no.3 raised in assessee s appeal is allowed.

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• 2023 (6) TMI 117
  Enhancement of income - Exercise of power by the CIT(A) u/s 251 - introducing new source of income - AO had not applied his mind to the question of taxability or non-taxability of the three issues raised - HELD THAT:- Power of enhancement u/s 251(2) of the Act is restricted to the subject matter arising out of assessment proceedings or the source of income which has been considered expressly or by clear implication by the Ld. AO from the point of view of taxability of the assessee. In the present case, it is manifest that ld. AO did not consider the issues relating to allocation of common expenses in terms of provisions contained in section 115VJ requiring a reasonable basis, disallowance to be made under section 14A of the Act and deduction claimed under section 80GGB and 80G of the Act. It is also manifest that ld. CIT(A) had raised the three above noted issues from the point of view of their taxability. Since ld. AO had not applied his mind to the question of taxability or non-taxability of the three issues, ld. CIT(A) had no jurisdiction in the circumstances of the instant case to enhance the taxable income of the assessee on these three issues. It is not open for the ld. CIT(A) to travel outside the assessment order with a view to find out new sources of income. There must be something in the assessment order to show that Ld. AO had applied his mind to the particular subject matter with a view to its taxability or its nontaxability and not to any incidental connection. It is not a case where the three issues have been considered but addition on that account is not made in the assessment order by the ld. AO. Had it been such a case, it would clearly follow that ld. AO had determined the same in the course of assessment by deciding not to make any addition empowering the ld. CIT(A) to invoke the provisions in respect of enhancement subject to fulfilment of conditions prescribed for the same u/s 251 of the Act. Exercise of power by the ld. CIT(A) to enhance the income of the assessee by raising the new issues not germane out of the assessment order is not tenable. Accordingly, additions/disallowances made by exercising such power are deleted. Grounds taken by the assessee in this respect are allowed.

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• 2023 (6) TMI 116
  Disallowances made u/s 143(1) - disallowance u/s 37, disallowance u/s 40(a)(ia) and disallowance u/s 43B - suo motu disallowances made by the assessee - HELD THAT:- The impugned order does not spell out how the ratio of the decisions referred to in the order were applicable to the facts of the case. The assessee is not disputing the nature of such expenditure - whether to be allowed or disallowed. The assessee itself says that such items of expenditure are inadmissible items and while computing the total income, they themselves disallowed the same. But there is no whisper as to the fact in the impugned order. We accept the contention of the assessee that these disallowances have to be deleted, after verification at the end of the jurisdictional AO - We, therefore, set aside the orders of the lower authorities and restore the issue to AO to verify the suo motu disallowances made by the assessee and if it is found that the assessee itself disallowed such items of expenditure, the fresh disallowance made by the CPC, Bangalore under section 143(1)(a) of the Act are not warranted and shall be deleted. In the result, this appeal of assessee is allowed.

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• 2023 (6) TMI 115
  Rectification of mistake u/s 154 - denial of claim for deduction u/s 80P by CPC u/s 143(1)(a) - CIT(A) dismissed the appeal of the assessee on the ground that denial of deduction u/s 80P(2)(d) does not amount to a mistake apparent from the record - HELD THAT:- CIT(Appeals) has dismissed the appeal of the assessee on the ground that the point of difference between computation of book profit made by CPC by denying the claim of deduction under Section 80P as such involved debatable issues and thus was outside the purview of Section 154 of the Act, but on the other hand he has upheld the denial of claim of deduction under Section 80P by way of adjustments u/s 143(1) which, in our view, covers within its scope correction of arithmetical mistakes and adjustment of incorrect claim u/s 143(1) through Centralized Processing of Returns. Also we observe that while the communication of proposed adjustment u/s 143(1) has given one basis for proposed adjustment, however, in the order / intimation issued by u/s 143(1) deduction of claim u/s 80P was denied to the assessee i.e. claim of deduction u/s 80P was denied to the assessee for the first time without any prior communication of proposed adjustment in respect of denial of claim u/s 80P - We observe that the assessee was denied any opportunity to file its objections to the adjustments made in the order / intimation issued by CPC with respect to denial of claim of deduction u/s 80P. Thirdly, we observe that in the instant facts it has not been disputed by the Department that the interest / dividend income was received by the assessee from other Co-operative Societies. On perusal of the return of income filed by the assessee also shows that the said deduction u/s 80P has been claimed by the assessee on the balance income after set off of current year and brought forward losses . Accordingly, there seems to be no justifiable basis for denying assessee s claim for deduction under Section 80P of the Act, in the instant set of facts. Decided in favour of assessee.

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• 2023 (6) TMI 114
  Exemption u/s 11(1)(a) and Section 11(2) for Deemed income u/s 11(3) - as per assessee apparently there is no such prohibition that deemed income u/s 11(3) shall not be eligible for claim of exemption - HELD THAT:- We observe that in the case of Prabhas Patan Jain vs. Income Tax Officer,[ 2023 (2) TMI 963 - ITAT RAJKOT] has held that exemption under section 11 is not available on deemed income and, therefore, assessee was not eligible to claim exemption under section 11(1)(a) and section 11(2) in respect of deemed income under section 11(3) of the Act. CIT(Appeals) has not erred in facts in law in holding that deemed income under Section 11(3) of the Act is not eligible for claim of exemption under Section 11(1)(a) and 11(2). Assessee would be allowed to accumulate the income if there is real income which is in possession of the assessee - something which is not in possession of the assessee cannot be accumulated or utilized at a later date. In the case of deemed income u/s 11(3) where the amount is already spent by assessee for purposes other than charitable purposes, it cannot be said that the assessee accumulated such income with an intention to apply it for rightful purpose. Therefore deemed income u/s 11(3) of the Act is not eligible for claim of exemption under Section 11(1)(a) and Section 11(2) of the Act. Decided against assessee.

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• 2023 (6) TMI 113
  Long-term capital gains - receipts by the assessee as per the consent decree passed by the Hon ble Bombay High Court in the suit for specific performance of the Agreement to Sell filed by the assessee t ransfer of any right, title, or interest in the property - main allegation of the Revenue that the amount paid to the assessee is not in lieu of right to sue , rather the same was paid to the assessee since it transferred/sold its rights/interest in the property, i.e. Villa Nirmala to R A Realty and therefore, capital gain arose to the assessee HELD THAT:- As decided in Sterling Construction Investments [ 2015 (4) TMI 838 - BOMBAY HIGH COURT] once the suit for specific performance has been refused then the receipt of monetary sum cannot be taxed as claimed by the Revenue as the same is in the nature of compensation in money for breach of the contract. Since in the present case also, pursuant to the consent decree in a suit for specific performance amount was paid, therefore, the said amount cannot be said to be liable to capital gains tax. As regards the reliance placed on Clause No.10 of the consent decree, we are of the considered view that the said clause is merely an arrangement amongst the parties, whereby the payment will be directly made to the partners as set out in the consent terms instead of the assessee and thus, cannot be said to be a relinquishment of any right in favour of the partners giving rise to any capital gains in the hands of the assessee. Thus the amount received by the assessee pursuant to the consent decrees dated 20/01/2011 and 15/07/2015 passed by the Hon ble Bombay High Court is not in respect of the transfer of any right, title, or interest in the property i.e. Villa Nirmala, and therefore, cannot be taxed under the head capital gains in the hands of the assessee. Decided in favour of assessee.

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• 2023 (6) TMI 112
  Addition u/s 69 - cash deposits unexplained - cash-gift received - time gap between gifts received and cash deposited in bank a/c. - HELD THAT:- CIT(A) observation regarding his observation that gifts were made in cash and not through banking channel, we find merit in the submission of Ld. AR that the assessee s father received sale consideration of property in cash and that is why he made cash gift to assessee. Regarding cash-gift received from mother, we find merit in the submission of Ld. AR that mother being a lady used to keep cash with her. In fact, this practice of ladies keeping cash is widely known to everyone. Therefore, making a gift of Rs. 1,50,000/- out of such cash held by her, is justified. Regarding another observation of CIT(A) that the assessee had not specified any occasion i.e. birth-day, wedding anniversary, etc. on which the gifts were given although normally people give complementary gifts on these occasions, we find that the assessee has received gift from family members, namely father and mother for personal use which do not require any special occasion like birthday, marriage, etc. The affidavit given by donors, being father and mother, themselves speak that they made gifts to assessee for personal use . Therefore, the observations made by CIT(A) are mere suspicious an presumptions which are not strong enough to negate the assessee s factual submissions. We accept all sources explained by assessee as genuine except the gift of Rs. 1,00,000/- claimed to have been received from grandmother wherein affidavit is given by assessee himself for supporting his own case, which unless corroborated by some independent or corroborative evidence, cannot be accepted. Decided in favour of assessee partly.

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• 2023 (6) TMI 111
  Penalty u/s. 271B - assessee had not filed audit report - Qualification of CA doing audit for assessee - assessee pleaded before the AO that assessee had submitted its books to his Chartered Accountant (CA), but he failed to audit the books, then there was some dispute with the CA - HELD THAT:- Assessee had not given books to a qualified CA. We do not know, the exact qualification of Mr.Kadam, who calls himself Accountant. As per Section 288 Explanation. In this section, accountant means a chartered accountant as defined in clause (b) of sub-section (1) of section 2 of the Chartered Accountants Act, 1949 (38 of 1949) who holds a valid certificate of practice under sub-section (1) of section 6 of that Act . Only a qualified CA is permitted to Audit books of account. In the affidavit it is claimed by the Accountant of the firm, that he had not given data to CA. Thus, in the affidavit he is not referring to books. However, for Audit, books of account are required. Therefore, the claims made in the affidavit are contradictory and hence not reliable. There was no valid reason for not filling Audit report - Decided against assessee.

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• 2023 (6) TMI 110
  Transfer of case u/s 127 - Assumption of jurisdiction of AO for the assessment - HELD THAT:- With the documentary evidences and the judicial precedence we are of view that the assessment is not in accordance with the provisions of law since the assessment order has been passed by ITO, Ward-1(1), Exemption, Kolkata whereas assumption of jurisdiction for the assessment was done by ITO, Ward-51(1), Kolkata who issued the notice u/s 143(2) - Also, a valid order u/s 127 which is required to be passed for transferring a case from one AO to another AO could not be brought on record, though claimed to have been mentioned in the referred documents. We, therefore, are inclined to allow the additional ground raised by the assessee in holding the impugned assessment order as bad in law, liable to be struck down. Accordingly, the additional ground taken by the assessee is allowed.

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• 2023 (6) TMI 109
  Assessment u/s 144 - addition applying net rate of 8% on total deposit in bank - cash deposited during demonetization - onus to prove - HELD THAT:- Finding of the AO that deposits in this bank account in the name of Yogi Enterprises are business receipts is without any basis and evidence on record. The onus is entirely on the assessee to file return of income as also to explain nature and source of each of the deposits in this account, and also to comply with the requirements of various provisions of statute as are concerning with the allowability of deductions towards business expenses while computing business income, such as provisions of Section 37(1), 40A(2) , 40A(3), 40(a)(ia), 36(1)(va) etc etc. The onus is squarely on the assessee to prove that he is carrying on business and compliance with provisions of statute before any business deduction is allowed to the assessee. Similarly, the onus is on the assessee to explain every source of deposits in his bank account . Similarly, for other addition being made by the AO which were the cash deposits in the bank accounts of the assessee during demonetization period (account no.13920100031032 and 501000186411596), for which no explanation was furnished by the assessee before the AO as well before ld. CIT(A). CIT(A) on its part has simply confirmed the assessment order, while he was required to give his independent reasoning by way of speaking order. Reference is drawn to provisions of Section 250(6) of the 1961 Act. Thus, restoring the entire matter back to the file of the AO for denovo assessment and orders of both the authorities are set aside and the matter is restored to its original status for framing denovo assessment by the AO - Assessee appeal allowed for statistical purposes.

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• 2023 (6) TMI 108
  Assessment of trust - Disallowance of payment of donation as non-genuine - HELD THAT:- We observe that assessee has made the donation on 30.01.2009 and assessee has submitted all the relevant information with regard to payment of donation and all these donations were made through banking channels. It is fact on record that the trust was searched on 27.10.2014 and subsequently registration of the trust was cancelled on 01.11.2016. As decided in Shri Mrunal H. Shah [ 2021 (5) TMI 794 - ITAT MUMBAI] assessee has duly discharged the onus casted upon him and it was incumbent upon Ld. AO to refute the same - no such inquiry has been conducted and the disallowance has been made on mere allegations. Therefore, respectfully following the earlier order, we delete the disallowance - Decided in favour of assessee.

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• 2023 (6) TMI 107
  Revision u/s 263 - AO has not verified the expenditure claimed by the assessee particularly EDP expenditure and royalty - HELD THAT:- We observe from the financial statements submitted before us that assessee has more or less claimed similar amount in the current Assessment Year compared to previous assessment year. It is brought to our notice that AO has issued various notices u/s. 143(2) and 142(1) and collected the various informations relating to TDS deduction on royalty payments as well as EDP expenses. It is not the case wherein AO has not made any enquiry, however, he has carried out enquiries but he failed to discuss the same in the Assessment Order. AO has carried out certain verification, therefore the provisions of section 263 in particular Explanation 2 cannot be invoked in the present case. Various verifications made by the Assessing Officer on royalty clearly indicates that Assessing Officer has taken one of the possible view. Therefore, in our considered view Ld.Pr.CIT has not clearly brought on record how the assessment passed u/s. 143(3) of the Act is erroneous and prejudicial to the interest of the revenue. - Decided in favour of assessee.

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• 2023 (6) TMI 106
  Addition of non-genuine purchases - assessee is an individual as engaged in the business of trading in diamonds - only the purchases from M/s Krishna Diam have been disputed by the Revenue on the basis of information received from the Investigation Wing - HELD THAT:- As, in the present case there is no dispute regarding the fact that the assessee is also in the business of trading in diamonds, therefore, respectfully following the case of Oopal Diamond [ 2022 (11) TMI 620 - ITAT MUMBAI] we deem it appropriate to restrict the disallowance to 3% being the profit element in the diamond trading business. As a result, other grounds raised by the assessee are partly allowed.

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• Corporate Laws

• 2023 (6) TMI 105
  Restoration of the name of the Appellant Company to the register of the Registrar of Companies, NCT of Delhi and Haryana - Section 252 of the Companies Act, 2013 - HELD THAT:- The Company is a juristic person, it takes birth with its incorporation which takes place in terms of Section 7 of the Act and after incorporation and registration, its effect has been mentioned in Section 9 of the Act. Section 248 of the Act provides the power to the Registrar to remove name of company from register of companies for the reasons mentioned from 248(a)to(e) and effect of the order passed under Section 248 is provided in Section 250 of the Act. However, the remedy to an aggrieved person against the order of the Registrar, passed under Section 248 is provided under Section 252 and in Section 252(3) it is provided that the Tribunal, if satisfied that the company at the time of its name was struck off, carrying on business or in operation or otherwise it is just that the name of the company be restored on the register of Companies it may pass the order that the name of the company be restored to the register of the Companies. It would be a hard case if the name of the company is struck off of the Companies and it falls under the just or otherwise category even if it is not being called in operation as stated. However, it cannot be lost sight of the fact that the Appellant has been remiss in its statutory obligation which became the basis for striking off the name of the Company from the register of the Registrar of the Companies, therefore, in the peculiar facts and circumstances, the end of the justice would meet with the restoration of the name of the Company to the Register of Registrar of the Companies with imposition of fine/cost. The present appeal is hereby allowed. However, subject to payment of Rs. 2 lakh as cost which shall be deposited by the Appellant with the RoC within a period of 30 days from the date of passing of this order.

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• 2023 (6) TMI 104
  Oppression and Mismanagement - Transfer of Shares - allotment of shares - Forum Shopping - Removal of Appellants No. 2 and 6 from the Directors of the Company and to declare them as unfit to be appointed as Directors in any Company - whether the Company Petition was barred by Limitation? - HELD THAT:- Keeping in view that the Form 32 for removal of the Respondent as Director was filed only on 01/12/2005 and the Petition was filed in April 2008, apart from the fact that the removal is interlinked with the subsequent development and form a continuous act, this Tribunal is of the considered view that the Petition is not barred by limitation. As regards the merits of the matter and the issues raised in this Appeal, this Tribunal address to whether the Resolution dated 05/02/1996 allotting 420 shares to Mr. T.S. Rathnasabapathy by himself was in accordance with Law. There is no documentary evidence on record to establish that the Notice of the Meeting stated to be sent to the Respondent are known to have been received. Even if the Notice of the Meeting was indeed dispatched and served, it is seen from the record that the requisite quorum as maintained under Law and as per the Articles of Association was not available for conduct of the 05/02/1996 Board Meeting, as the Petitioner/Respondent is holding 50% of the shares and is one of the two Directors. Annexure R-2 is the Notice issued by the Registrar of Companies to the 1st Appellant Company on 09/12/1998, which is reproduced as hereunder for better understanding of the case. It is clear that even as on 1998, there was no business conducted by the Company, and hence there was no need to infuse any additional Capital by allotting Shares specifically in the absence of any offer to the Petitioner/Respondent to subscribe to any Rights issue, as no Rights issue was ever offered. Keeping in view these aforenoted reasons, this Tribunal is of the considered view that the Resolution dated 05/02/1996 is null and void. It is not in dispute that the only asset of the Company , is the immovable Property, that is the subject land in question, which the Appellant contends has been sold legally with the knowledge of the Petitioner/Respondent. The documentary evidence on record does not substantiate that the subject land was sold involving the Petitioner/Respondent. Admittedly, disputes were raised before the Hon ble High Court of Karnataka in the Civil Court and in Company Law Board and when the Company Petition is pending, the act of the Appellants No. 2 to 5, in selling the Land without Notice to the Petitioner/Respondent is held to be a unilateral sale, constituting an act of Oppression and Mismanagement meaning thereby that the affairs of the Company were mismanaged by the Appellants, as the only asset of the Company was this Land - the subsequent act of the Appellants herein in selling the subject land, without informing the Respondent; in the absence of a specific Notice issued to the Petitioner/Respondent herein, as per the Provisions of Law; and increasing the Share Capital in the Board Meeting , once again in the absence of the Petitioner/Respondent who is the only other Director; all fall within the ambit of the definition of Oppression and Mismanagement , as defined under Sections 395 and 396 of the Companies Act, 1956. This Tribunal is of the earnest view, that there is no illegality or infirmity in the Impugned Order dated 11/10/2018 and hence this Company Appeal fails and is accordingly dismissed.

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• 2023 (6) TMI 103
  Seeking restoration of the name of the Company in the Register maintained by the Registrar of Companies - HELD THAT:- The Appellant Company has failed to file its Financial Statements and Annual Returns for the Financial Years 2015-16 and 2016-17 due to change of circumstances. Further, it is observed that the audited accounts for the Financial Years 2016-17 and 2017-18 shows that the company is in active and carrying on day-to-day business. Keeping in view of the above facts, the Appellant Company is having substantial movable as well as immovable assets, therefore, it cannot be said that the Appellant Company is not carrying on any business or operations. The name of the Company be restored to the Register of Companies subject to the compliances fulfilled - application allowed.

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• Insolvency & Bankruptcy

• 2023 (6) TMI 102
  Dissolution of Corporate Debtor - contention of the Appellant is that, when he was taking necessary all possible endeavours to revive the business of the Company, the 1st Respondent had filed an Application for early Dissolution of the Corporate Debtor, in terms of Regulation 14 of the Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations 2016, at the Corporate Insolvency and Resolution Process itself. HELD THAT:- Section 54 of the I B Code, 2016, provides that once the affairs of the Corporate Debtor, have been wound up, its Assets, completely liquidated, the Liquidator, has to prefer an Application, before the Adjudicating Authority (National Company Law Tribunal) for the Dissolution of the Corporate Debtor. It is to be noted that the Account of the Corporate Debtor, was classified as Non Performing Asset, by the 2nd Respondent / Bank, on 18.09.2016. There is no two opinion of the primordial fact that in the absence of any Resolution Plan(s) or Saleable Assets of the Company, the 1st Respondent / Resolution Professional, had no option, but to seek a Relief, for the Dissolution of the Corporate Debtor, and the fact of the matter is that the same was approved, by the Committee of Creditors - It is to be remembered that the Appellant was issued with a No Objection Certificate, dated 27.09.2018, and it has No Nexus with the present Controversy / Dispute, that the said No Objection Certificate, was no way concerned with the Corporate Debtor, because of the simple fact that it was issued to the Appellant, in his personal capacity as Corporate Debtor. One cannot remain oblivious of the candid fact that the I B Code, 2016, does not envisage that the Adjudicating Authority / Tribunal, ought to provide a Hearing to the Promoter / Corporate Debtor of the Company, at the time of passing of an Order for Liquidation. The Insolvency Resolution Process under the I B Code, 2016, is a Time Bound Process, and the Appellant / Promoter, having failed to project the Resolution Plan, within the specified time limit and later, the 1st Respondent / Resolution Professional, is not to accept any Plan - Suffice it for this Tribunal, to make a pertinent mention that in the absence of any Asset(s) / the Resolution Plan(s), the Resolution Professional, had no other go, but to pray for an Order of Dissolution, to be passed by the Adjudicating Authority. After all, the end of Liquidation, requires complete Dissolution of an Entity. This Tribunal, taking note of the facts and circumstances of the instant case, in a conspectus fashion, comes to a consequent conclusion that the impugned order, dated 24.06.2020 in IA No. 198 of 2020 in CP (IB) No. 180 / BB / 2018, passed by the Adjudicating Authority (National Company Law Tribunal, Bengaluru Bench), in passing an Order of Dissolution of the Corporate Debtor / Company (M/s. Air Pegasus Private Limited), with immediate effect, is free from any Legal Infirmities - Appeal dismissed.

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• 2023 (6) TMI 101
  CIRP - Objection to the Resolution Plan approved by the Committee of Creditor - rigged parameters used to fraudulently declare H2 bidder as H1 bidder - Appellant submitted that the CoC approved Swiss Challenge Method to get the best value out of the Resolution Plan and finally the proposal of M/s Serveall Land Developers Pvt. Ltd. (alleged second highest bidder) was approved - whether the approval of Resolution Plan and distribution of funds amongst the Creditors was legal and correct in accordance with law or otherwise? - HELD THAT:- The Appellant has taken shelter of the judgment of MK Rajagopalan [ 2023 (5) TMI 344 - SUPREME COURT] , where it has been held that the irregularity of not placing of the Revised Plan before the CoC and directing placing before the Adjudicating Authority cannot be ignored as mere technicalities and every aspect relating to the Resolution Plan particularly its financial layout, has to be considered by the CoC before could be considered by the Adjudicating Authority. This Appellate Tribunal notes that the total amount as provided by M/s Serveall Land Developers Pvt. Ltd. (SRA) was Rs. 50.40 Crores in his original Resolution Plan dated 22.08.2022 and after the Swiss Challenge Method dated 09.09.2022, the Resolution Plan amount was substantially enhanced to Rs. 61.70 Crores (approx.) which was recommended by the CoC and finally approved by the Adjudicating Authority vide impugned order dated 09.03.2023 - after Swiss Challenge Method, it was proposed to distribute Rs. 61,21,03,175/- to Sole Secured Financial Creditor and Rs. 48,96,826/- to two Unsecured Financial Creditors. Initially, there were two Unsecured Financial Creditors, namely, Damont Developers Pvt. Ltd. whose claim of Rs. 9,25,00,000/- was admitted and it was proposed to distribute Rs. 34,15,316/- to him and the other Unsecured Financial Creditors, namely, M/s Sikka Hotels Resorts Pvt. Ltd., whose claim of Rs. 4,01,25,000/- was admitted and Rs. 14,81,509/- was proposed to be distributed to him. The distribution between the Secured Financial Creditors and Unsecured Financial Creditors is in the same ratio as provided in the original Plan dated 22.08.2022 to Secured Financial Creditor (Bank of Baroda) and to Unsecured Financial Creditors. It is only due to judicial orders of the Adjudicating Authority which resulted into exclusion of M/s Damont Developers Pvt. Ltd. and inclusion of the Appellant in the list of Unsecured Financial Creditors and this obviously required some arithmetical changes in distribution between these two Unsecured Financial Creditors keeping the overall kitty as available to Unsecured Financial Creditors intact. Regulation 12(3) of Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 prescribes that decisions taken by the CoC are not invalidated by a subsequent change in the composition of the COC. Therefore, even though the Appellant was not in the COC when the Final Plan was approved, the approval of the Final Plan by the COC is not vitiated by the subsequent inclusion of the Appellant - the Resolution Plan is already under implementation and the hotels of the Corporate Debtor have already been handed over to the SRA and SRA has already paid Rs. 17,25,00,000/- to various Creditors, along with payment of the CIRP expenses of Rs. 4,68,00,000/-. There are no error in both the challenged impugned orders - appeal dismissed.

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• Central Excise

• 2023 (6) TMI 100
  Levy of Central Excise Duty - collection of outward freight chargers from their customers and paid lesser freight to the transporters - Department was of the view that the appellant has to pay excise duty on the amount of freight charges collected from the customers and not on the lesser freight paid to the transporters. Whether the appellant has to include the surplus freight charges that have been collected from the customers in the assessable value for discharging the Central Excise Duty? HELD THAT:- Undisputedly, the freight charges which has been paid to the transporters has been included in the assessable value for discharging excise duty. The issue as to whether the amount that has been collected as surplus and is a profit in the hands of the appellant is required to be added to assessable value was considered by the Honorable Apex Court in the case of Indian Oxygen Ltd. [ 1988 (7) TMI 58 - SUPREME COURT ] where it was held that It is clear from Section 4 that the delivery and collection charges have nothing to do with the manufacture as they are for delivery of the filled cylinders and collection of the empty cylinders. These charges have to be excluded from the assessable-value. Insofar as the loading charges Incurred for loading the goods within the factory are concerned, they are to be included in the assessable value, irrespective of who has paid for the same but the loading expenses incurred outside the factory gate are excludible. Duty is excise to a tax on the manufacture, not a tax on the profits made by a dealer on transportation. The demand cannot sustain - Appeal allowed.

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• 2023 (6) TMI 99
  Valuation - inclusion of amortised cost of the dies/moulds supplied free of cost to the appellant by their customers in the assessable value - Rule 6 of CVR - period July 2004 to March 2009 - extended period of limitation - HELD THAT:- Section 3 of the Central Excise Act, 1944, provides for the levy and collection of the duty of central excise. It is a levy on all excisable goods, other than salt, produced or manufactured in India. Section 4 of the Act lays down the valuation principles by reference to which the duty of central excise is to be assessed on all excisable goods. As per section 4(1)(a) the normal price is the transaction value, when it is the sole consideration for the sale of goods, otherwise the value is to be determined as per section 4(1)(b) as per which, if the price was not ascertainable as per section 4(1)(a) then, the nearest equivalent thereof had to be determined in terms of the Valuation Rules. The demand raised by Revenue is on the ground that the money value of the additional consideration by way of free supply of moulds and dies received by the appellant from their customers, has not been included in the price of aluminum die-castings sold to the said customers, for the purpose of arriving at the assessable value for discharge of central excise duty as required by Rule 6 of CVR. The price of goods in the normal course includes the cum-duty value of inputs both fixed and variable among other things that goes into its manufacture. Just because these inputs i.e. dies and moulds have discharged central excise at the time of their manufacture, it will not absolve their aggregate final price, inclusive of duty s paid, from being taken into consideration for the purpose of determining the assessable value of aluminum die-castings. By applying Rule 6 of CVR to the impugned goods it is seen that the value of the aluminum die-castings shall be deemed to be the aggregate of its transaction value and the amount of money value of any additional consideration flowing directly or indirectly from the buyer to the assessee, which in this case is the free supply of dies and moulds. Considering that the duty paid on inputs cause a cascading effect on the final price of the goods, government had introduced the MODVAT scheme to be later replaced by the CENVAT credit schemes so as to permit set-off of central excise duties paid by manufacturers on the inputs including capital goods purchased by them against the central excise duty payable on the final excisable goods manufactured and cleared by them. The benefit of credit under the schemes were in the nature of a concession given which could be availed only in the manner and in the circumstances mentioned in the respective rules. The appellant has referred to the Hon ble Mumbai Tribunal s judgment in the case of Mega Rubber Technologies [ 2016 (1) TMI 157 - CESTAT MUMBAI ], where in it was held that when Central Excise duty is paid on moulds at one time or recovered by amortizing the cost of goods produces it is the same. Whereas Revenue has relied on the Larger Bench judgment passed in the case of Mutual Industries Ltd. [ 2000 (3) TMI 74 - CEGAT, COURT NO. I, NEW DELHI ], wherein the Hon ble Tribunal held that additional value of the moulds must necessarily go in assessing the duty payable on the finished product under excise law. We find that although the larger bench decision of the Hon ble Mumbai in Mutual Industries Ltd. was brought to the notice of the Hon ble Tribunal in the case of Mega Rubbers, the same was not discussed in the order. The amortized cum-duty cost of the dies/moulds supplied free of cost to the appellant by their buyer-customers should be included in the assessable value of the aluminum die-castings. No deduction on account of excise duty of free supplied goods is permitted. Extended period of Limitation - HELD THAT:- The lower authority has not examined the submissions of the appellant that the issue on non-amortization of the mould cost have been raised by CERA and Internal Audit and were known to the department - this issue impacts the duty and interest demanded along with the penalty imposed and hence feel it proper that the appellant may place these facts and their replies on the audit objections, before the Commissioner (Appeals) who shall, there after examine the issue of limitation/time-bar, and pass a reasoned order as per law. The impugned order is upheld on merits - with regard to the issue of show cause notice being time barred, matter remanded to the Hon ble Commissioner (Appeals) on this limited issue, for passing a fresh order - appeal allowed by way of remand.

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• 2023 (6) TMI 98
  Penalty under Rule 26 of Central Excise Rules, 2002 - Clandestine Removal - BOPP bags by describing plastic bags, BOPP etc showing as bought out goods with a view to remain within the SSI exemption limit - Confiscation - HELD THAT:- As regard the facts of the case, the appellant though maintained that the goods dealt by the appellant is trading good. However, the appellant could not produce any evidence that the said goods were purchased from different parties other than M/s. Shubham Polymers. In the statement of 7 buyers, 4 buyers have accepted that they have received the Bopp bags which leads to the conclusion that the appellant have been dealing with the goods i.e. BOPP Bags manufactured by the M/s. Shubham Polymers with intention to avail SSI exemption by M/s. Shubham Polymers. With this undisputed fact the good dealt with by the present appellant are indeed liable for confiscation. Therefore, the penalty under Rule 26 was rightly imposed. However, considering that the entire goods dealt with by appellant all goods are not manufactured exclusively by M/s. Shubham Polymers. On the basis of the buyers statement. Accordingly, the penalty of Rs. 10 Lacs is on higher side and same deserves to be reduced. Hence, the penalty reduced from Rs. 10 Lacs to Rs. 4 Lacs. Appeal allowed in part.

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• 2023 (6) TMI 97
  Levy of Excise Duty - discount earned for early payment of Sales Tax - additional consideration or not - HELD THAT:- The entire issue in the present case is for the period prior to 01.07.2012 from which the law in respect of valuation was amended and concept of transaction value was introduce. The decision of Hon ble Supreme Court in the case of M/s Maruti Udyog Ltd [ 2014 (9) TMI 229 - SUPREME COURT] and M/s Super Syncotex (India) Ltd [ 2014 (3) TMI 42 - SUPREME COURT] are considering the issue after the amendments were made in the law regarding valuation. Above fact has been noted by the Hon ble Supreme Court in the case of COMMNR. OF CENTRAL EXCISE, JAIPUR VERSUS M/S. SHREE RAJASTHAN SYNTEX LTD. OTHERS [ 2015 (4) TMI 350 - SUPREME COURT ] wherein Hon ble Supreme Court has held the assessee/respondent herein will not be liable to pay any excise duty on the sales tax amount which was retained under the Incentive Scheme up to 30th June, 2000. However, this component of sales tax which was retained by the assessee after 1-7-2000 shall be includible in arriving at the transaction value and sales tax shall be paid thereon. There are no merits in the impugned order - appeal allowed.

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• 2023 (6) TMI 96
  Classification of goods - unprocessed Embroidered Fabrics - to be classifiable under 58.05 or it would be classifiable under the Chapters, under which base fabrics belong to, such as Chapters 52, 54, 55 or 60? - applicability of N/N. 106/95, 8/96-CE (Ref. No.58.10) 6/2000-CE (Sr.No.156), 3/2001-CE (Sr.No.159). HELD THAT:- The issue involved in the present case in the case of appellant has been considered by this tribunal in order no. A/88051- 88052/17/EB and the matter remanded back to the original authority for de novo consideration. In the remand proceedings issue is still pending. As the issue involved in the present case is also the same. These matters be also remanded to original authority for de novo consideration along with the matter remanded via the earlier order. Since the issue involved in present appeal is identical the appeal allowed by way of remand to the original authority following the earlier president decision.

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