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TMI Tax Updates - e-Newsletter June 1, 2022 Case Laws in this Newsletter: GST Income Tax Customs Service Tax Central Excise CST, VAT & Sales Tax Indian Laws Highlights / Catch Notes GST: Detention of goods alongwith the vehicle - new E-way bill - once the driver of the vehicle produces a valid e-way bill, the authorities concerned are responsible to honour the same and if any fault is found therein, action can obviously be taken up under the statute - The only lawful inference therefrom is that the said Rule has been complied with by the petitioner consequent to which fresh e-way bills were issued and produced before the concerned authorities. - HC Visit to Get Source GST: Provisional attachment of Bank Accounts - On what basis, the Commissioner has decided to invoke Section 83 to go for a provisional attachment before which, whether the Commissioner has formed an opinion to do so, before forming such opinion, what are all the tangible material available before him or placed before him, so as to enable him to form such an opinion, all these aspects have not been even indicated in the order of provisional attachment. - The order of provisional attachment made by the first respondent dated 20.12.2021, shall not stand in the legal scrutiny. - HC Visit to Get Source GST: Profiteering - purchased a flat in the Respondent's project - allegation is that the Respondent had not passed on the benefit of Input Tax Credit (ITC) to him by way of commensurate reduction in the prices - The amount of profiteering computed by the DGAP is hereby accepted as correct. The said profiteered amount is to be passed on to the said home buyers along with interest @ 18% thereon, from the date when the above amount was profiteered by him till the date of such payment, in accordance with the provisions of Rule 133 (3) (b) of the CGST Rules, 2017 - NAPA Visit to Get Source GST: Profiteering - supply of Services by way of admission to exhibition of cinematography films - It has been established that the Respondent has profiteered by way of increasing the base prices of his supplies of the three categories of movie tickets by maintaining the same selling prices of the movie admission tickets despite the reduction in GST rate on “Services by way of admission to exhibition of cinematograph films where price of admission ticket is one hundred rupees or less” from 18% to 12% w.e.f. 01.01.2019 to 30.06.2019. It is also clear that the Respondent has not passed on the benefit to his customers/recipients. - NAPA Visit to Get Source Income Tax: Exemption u/s 11 - whether the grant-in-aid received by the assessee was capital receipt or revenue receipt? - Even by way of amendment to Section 2(24) (xviii), exemption is available to the institutions like the assessee, as noticed above. - ITAT has definitely not considered the matter in the above noted context. The fact that the assessee received only one time grant with a specific purpose which nowhere suggested scope of profit generation or revenue for the assessee, the amount received by the assessee by way of grant-in-aid thus could not be termed to be revenue receipt. - HC Visit to Get Source Income Tax: Validity of Revision u/s 263 - Whether inquiry or verification was not made by the Assessing Officer - Appellant, Revenue, is not in a position to point out as to what are those inquiries or verification which should have been made but have not been made by the Assessing Officer in the present case so as to make the present case fall within Explanation 2 attached to Section 263 - HC Visit to Get Source Income Tax: Unaccounted credit in the savings bank account - unexplained investment u/s 69 - Though the learned counsel for the appellant raised a plea that the appellant was represented by an Income Tax Practitioner, who did not properly represent the case before the respondent and failed to give the details with regard to the credit in her savings bank account and explain the sources of credit of huge amount - in a proper manner, this court is not inclined to accept the same, in view of the categorical finding rendered by the appellate authorities, while dismissing the appeals filed by the appellant, to the effect that the appellant failed to co-relate the source of cash deposits. - HC Visit to Get Source Income Tax: Rectification u/s 154 - levy of interest u/s 234D of the Act from the date of grant of refund instead of date of receipt of cheque of refund, renders the issue to be debatable issue - the present case clearly falls beyond the ambit of the expression “mistake apparent from the record”, and thus, the rectification order dated 14/03/2017 passed under section 154 of the Act is set aside. - AT Visit to Get Source Income Tax: TP Adjustment - Engineering services and Administrative Support services - TPO has rejected the segmental approach adopted by the assessee for benchmarking its international transactions pertaining to provision of outbound engineering services - There is absolutely no doubt that the impugned expenditure has been incurred for the purposes of assessee’s business carried on by the assessee and that it was commercially expedient as well. - Addition deleted - AT Visit to Get Source Income Tax: TP Adjustment - Adjustment in respect of credit period - the contentions of Revenue and Assessee have not been thoroughly examined by the Ld. CIT(A) in proper perspective. We also observe that no remand report was called for by the Ld. CIT(A) to appreciate the contentions of Revenue as well as the Assessee. In the interest of justice we restore this ground to the file of the Ld. AO/TPO for denovo adjudication in accordance with law after providing adequate opportunity of being heard to the assessee. Grounds of appeal of the Revenue is allowed for statistical purpose. - AT Visit to Get Source Income Tax: TP Adjustment - benchmarking the international transactions u/s 92CA(1) - Safe Harbour Rules - At the outset, we find that Safe Harbour Rules are applicable from 18.09.2013, we have serious doubt as to how the definitions given in Safe Harbour Rules can be applied for characterization of a particular company for the purpose of identification of set of comparable entities. Therefore, we are of the considered opinion that the lower authorities fell into serious error in holding these comparables are KPO companies placing reliance on the definition given in Safe Harbour Rules. - AT Visit to Get Source Income Tax: Exemption u/s.11 - Treatment of pharmacy income as income of charitable trust - the income from running the pharmacy which is integral part of the hospital is eligible for exemption u/s.11 and hence the AO is directed to delete the addition made in this regard. - AT Visit to Get Source Income Tax: LTCG - Rejection of deduction claimed u/s 54F - Deduction u/s 54F of the Act only induces an assessee to make investment in residential house property. If the assessee has herein has given money for acquisition of the property either directly to the builder or as reimbursement to her husband, then the assessee should be given benefit of deduction u/s 54F of the Act for the cost of acquisition.- AT Visit to Get Source Income Tax: Reopening of assessment u/s 147 - LTCG - Whether agricultural land not a ‘capital asset’? - the report itself contents vague observation and cannot be used as evidence or conclusive or expert report based of any scientific evidence against the assessee. Moreover, said report was not provided to the assessee. Thus, by applying of such test we find that the land of the assessee acquired by Special Land acquisition officer is agriculture land. - Additions deleted - AT Visit to Get Source Income Tax: Addition u/s 69 - assessee has made investment in the property - Proof of source of investment - As merely in the absence of sales bills, expenditure details etc., the income in the hands of the family members of the assessee cannot be rejected. Likewise, the certificates issued by the gram panchayat have been rejected by the learned CIT (A) merely by assuming them as afterthought - The revenue being a tax authority having a lot of resources in terms of manpower and judicial powers under the provisions of Act but failed to exercise them. Thus the Revenue shall not be given another opportunity for conducting necessary enquiries. - Tri Visit to Get Source Customs: Anti-dumping duty - sunset review - Expiry of old notification, extension of existing duty for further one year and rescinding of anti-duty notification on the recommendation of designated authority - The Supreme Court emphasized that the vacuum would be only during the interregnum beyond the period of one year and till the issuance of fresh notification by the Central Government. It, therefore, follows that there is no requirement that a notification has to be issued by the Central Government under the first proviso to section 9A(5) of the Tariff Act only during the lifetime of the earlier notification imposing anti-dumping duty for a period of five years. - AT Visit to Get Source Corporate Law: An examination of the terms of "Oppression and Mismanagement" under the Companies Act, 1956 and 2013. - Notes Visit to Get Source Indian Laws: Sole Proprietorship whether it falls under international commercial arbitration. - Notes Visit to Get Source Indian Laws: Dishonor of Cheques- A study of the interrelation between the provisions of Code of Criminal Procedure, 1973 and Negotiable Instruments Act, 1881. - Notes Visit to Get Source Indian Laws: Dishonor of Cheque - forgery of signature in the cheque - if the permission to examine the handwriting expert is not permitted on the ground that the holder has the authority to fill the body of the cheque, then the accused cannot even begin to establish his defence that a cheque issued as security has been filled up by someone other than him and misused. Thus, it would be unfair to shut out the defence of the accused at the threshold. - HC Visit to Get Source Service Tax: Validity of SCN and audit notes issued - mandatory pre-show cause notice Consultation- A master circular issued by the department is binding upon its officers. The contention of the respondents, that the requirement of consultation contemplated therein is not binding upon Department as it is not a statutory requirement, cannot be countenanced. A circular issued by the department is binding upon the department and its officers. It is trite law that circulars are binding upon the department but not on the assessee or Courts. - SCN quashed - HC Visit to Get Source Service Tax: Principles of natural justice - Reply not given for notice served - There are no justification for the peremptoriness of the adjudicating authority in foreclosing grant of opportunity to reply to the notice which would serve in disposal of the proceedings in a fair and judicious manner. On the contrary, he seems to have taken elaborate pains to controvert the essentiality of compliance with principles of natural justice. The haste, so demonstrated, is unseemly. - AT Visit to Get Source Service Tax: Refund of service tax aid on input services - export of taxable output services - Service tax was paid on RCM basis - The subsidiaries/ branch offices provide the said services to the appellant and raise bill for the same on appellant for which the appellant are also discharging the service tax on reverse charge basis treating them as import of services. Thus these services are input services to the appellant for providing the services to their client overseas. - AT Visit to Get Source Central Excise: Claim of interest on delayed refund - excess paid Swachh Bharat Cess and Krishi Kalyan Cess - there cannot be any estoppel against a statute. Once the statute provides for payment of interest and the stipulated conditions are fulfilled, the respondent/revenue would be obliged, in law, to pay the interest. - HC Visit to Get Source Central Excise: 100% EOU - refund of cenvat credit accumulated - The order of the lower authority has denied the refund stating that the waste generated is more than the prescribed norms. The above ground cannot be a reason for denial of refund of such accumulated credit. If excess waste was generated, the same has also been cleared in DTA on payment of duty due on such waste. This automatically will take care of such accumulated credit. - AT Visit to Get Source Central Excise: Marketability/saleability/dutiability - The marketability for the purpose of levy of excise duty needs to be determined at the relevant time and evidences to that effect need to be adduced. Web- material is only hypothetical and also dynamic. Reliance placed on the web material as late as of 2019, to establish marketability during the period 1996 to 2005 cannot be accepted - AT Visit to Get Source VAT: Territorial Jurisdiction - situs of sale - whether alleged lease rentals could be brought to tax under the Haryana VAT Act by State of Haryana even though agreements in this regard have been executed at Chandigarh and as such no tax could have been levied? - The State cannot levy a tax on the basis that one of the events in the chain of events has taken place within the State. The delivery of goods may be one of the elements of transfer of right to use, but the same would not be the condition precedent for a contract of transfer of right to use goods. - HC Visit to Get Source TMI Short Notes Customs: Understanding the reasoning of classification under tariff item "8483" and tariff item "8708" of the Customs Tariff Act, 1975. Service Tax: Foreclosure of the right to reply to a notice by the Noticee is a violation of principles of natural justice/right to be heard. Corporate Laws: A Study of the terms "Oppression and mismanagement" under the Companies Act, 1956 and 2013. Corporate Laws: An examination of the terms of "Oppression and Mismanagement" under the Companies Act, 1956 and 2013. Articles Imposed fine of INR 50K on the Revenue Authority for illegal recovery of disputed tax demand USER FRIENDLY ONLINE DOCUMENTS - NEED TO MAKE EASY VIEW, SAVE AND PRINT OF ITR, INTIMATION, FORMS etc. WITH RELEVANT INFORMATION i.e. by omitting / deselecting rows having no values to save time and costs of all user of such documents including tax authorities , Tribunals ,Courts, return preparers, consultants, assesse and all user of such documents. Notifications Companies Law G.S.R. 401 (E) - dated 30-5-2022 - Co. Law Companies (Compromises, Arrangements and Amalgamations) Amendment Rules, 2022 Customs 17/2022 - dated 30-5-2022 - ADD Seeks to extend the Anti-Dumping Duty (ADD) on imports of "Styrene Butadiene Rubber" originating in or exported from European Union, Korea RP and Thailand, imposed vide Notification No. 43/2017-Customs (ADD) dated 30th August 2017, till 31st October, 2022. GST - States 231/2022/2(120)/XXVII(8)/2022/CT-40 - dated 31-3-2022 - Uttarakhand SGST Uttarakhand Goods and Services Tax (Second Amendment) Rules, 2022 218/2022/01(120)/XXVII(8)/2022/CTR-20 - dated 31-3-2022 - Uttarakhand SGST Seeks to amend Notification No. 731/2018/5(120)/XXVII(8)/2018/CTR-21 dated the 20th August, 2018 217/2022/01(120)/XXVII(8)/2022/CTR-19 - dated 31-3-2022 - Uttarakhand SGST Amendment in Notification No. 518/2017/9(120)/XXVII(8)/2017 dated the 29th June, 2017 216/2022/01(120)/XXVII(8)/2022/CTR-18 - dated 31-3-2022 - Uttarakhand SGST Seeks to amend Notification No. 514/2017/9(120)/XXVII(8)2017 dated the 29th June, 2017 Circulars / Instructions / Orders SEBI - SEBI/HO/MIRSD/MIRSD_RTAMB/P/CIR/2022/76 - dated 30-5-2022 Standard Operating Procedures (SOP) for dispute resolution under the Stock Exchange arbitration mechanism for disputes between a Listed Company and/or Registrars to an Issue and Share Transfer Agents (RTAs) and its Shareholder(s)/Investor(s) Central Excise - F.No.267/55/2020-CX.8/Pt-I - dated 30-5-2022 Manual processing of declarations filed by the co-noticees under Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 News Centre Clears Entire GST Compensation Due Till Date (31ST MAY, 2022) Accounts of the Union Government of India (Provisional/Unaudited) for the Financial Year 2021-2022 Monthly Review of Accounts of Union Government of India for the month of April 2022 for the Financial Year 2022-23 Revision of premium rates of Pradhan Mantri Jeevan Jyoti Bima Yojana (PMJJBY) and Pradhan Mantri Suraksha Bima Yojana (PMSBY) w.e.f. from 1st June 2022 Delhi Customs at IGI Airport organises 2-day workshop on “Combating Wildlife Trafficking" for all stakeholders of Aviation Sector Government orders for physical verifications of all documents to ensure strict compliance of provisions in wheat export registration process Case Laws: GST 2022 (5) TMI 1419 Detention of goods alongwith the vehicle - new E-way bill - once the driver of the vehicle produces a valid e-way bill, the authorities concerned are responsible to honour the same and if any fault is found therein, action can obviously be taken up under the statute - HELD THAT:- It appears from the facts of the present case that the consignor had sent the goods to the State of Tripura, however, due to various reasons cited in the petition including non-availability of land, etc. the consignor sought to take back the goods from Tripura to Guwahati and the necessary e-way bill for such transportation was also provided. Consequently, Rule 138 (10) of the Central Goods and Services Tax Rules, 2017 which applies in the present case and in particular second proviso thereof conceivable situation where e-way bills can either be amended or reissued for the self-same consignment, but bona fide reasons for such change must be justified. The only lawful inference therefrom is that the said Rule has been complied with by the petitioner consequent to which fresh e-way bills were issued and produced before the concerned authorities. There are no justification in further detention of the goods at the Churaibari check-post - the goods are directed to be released - petition allowed. 2022 (5) TMI 1418 Provisional attachment of Bank Accounts - during the pendency of the assessment proceedings, which was initiated under Section 67 by way of search and seizure, the first respondent has invoked Section 83 of the TNGST Act - HELD THAT:- With regard to the invocation of Section 83 of the TNGST Act, the provisions merely says that, where during the pendency of any proceedings under Section 62 or Section 63 or Section 64 or Section 67 or Section 73 and Section 74 of the Act, if the Commissioner is of an opinion that for the purpose of protecting the interest of the Government Revenue, it is necessary so to do, he may, by order in writing, attach provisionally any property, including bank account, belonging to the taxable persons - The simple language used in Section 83 of the TNGST Act may suggest that, if the Commissioner is of an opinion that, for the purpose of protecting the interest of the Government Revenue, he can invoke Section 83 of the TNGST Act and to attach the property provisionally including the bank account of the assessee. On what basis, the Commissioner has decided to invoke Section 83 to go for a provisional attachment before which, whether the Commissioner has formed an opinion to do so, before forming such opinion, what are all the tangible material available before him or placed before him, so as to enable him to form such an opinion, all these aspects have not been even indicated in the order of provisional attachment. The order of provisional attachment made by the first respondent dated 20.12.2021, shall not stand in the legal scrutiny. Therefore, it is liable to be interfered with, accordingly, it is set aside. As a sequel, the consequential order, informing the petitioner by the respondent Bank authorities dated 30.12.2021 is also set aside - It is made clear that, this order, setting aside the provisional attachment order and the consequential Bank communication in respect of these two cases, shall not stand in the way for the respondent / Revenue to invoke Section 83 once again, if they have reasons with tangible materials and records to form an opinion that in the interest of Revenue, such an invocation of Section 83 become inevitable and after recording such reasons that kind of invocation could be possible at the hands of the Revenue. Petition disposed off. 2022 (5) TMI 1417 Profiteering - purchased a flat in the Respondent's project - allegation is that the Respondent had not passed on the benefit of Input Tax Credit (ITC) to him by way of commensurate reduction in the prices - contravention of section 171 of CGST Act - penalty - HELD THAT:- It is clear from the plain reading of Section 171 (1) that, it deals with two situations:- one relating to the passing on the benefit of reduction in the rate of tax and the second pertaining to the passing on the benefit of the ITC. On the issue of reduction in the tax rate, it is apparent from the DGAP's Report that there has been no reduction in the rate of tax in the post GST period: hence the only issue to be examined is as to whether there was any net benefit of ITC with the introduction of GST. It is admitted fact that project was started in pre-GST period and several bookings/payments were made in the pre-GST period. The DGAP's Report reveals that CENVAT. as a percentage of the turnover, that was available to the Respondent during the pre-GST period (April-2016 to June-2017) was 0.00%. whereas, during the post-GST period (July-2017 to March-2019), it was 1.85%. This confirms that in the post-GST period, the Respondent has been benefited from additional ITC to the tune of 1.85% [1.85% - 0.00%] of his turnover and the same was required to be passed on by him to the eligible flat buyers, including the Applicant No. 1. The amount of profiteering computed by the DGAP is hereby accepted as correct. The said profiteered amount is to be passed on to the said home buyers along with interest @ 18% thereon, from the date when the above amount was profiteered by him till the date of such payment, in accordance with the provisions of Rule 133 (3) (b) of the CGST Rules, 2017 - this Authority under Rule 133 (3) (a) of the CGST Rules, 2017 orders that the Respondent shall reduce the prices to be realized from the home buyers commensurate with the benefit of ITC received by him. Penalty - HELD THAT:- The provisions of Section 171 (3A) of the CGST Act, 2017 have been inserted in the CGST Act, 2017 vide Section 112 of the Finance Act, 2019, and the same became operational w.e.f. 01.01.2020. Though the period of investigation was 01.07.2017 to 30.09.2020, however, the amount profiteered as determined above relates to the period from 1.07.2017 to 31.03.2019 only, as the Respondent had not profiteered after such date on account of the option exercised by him, under the Scheme issued vide Notification No. 03/2019-Central Tax (Rate) dated 29.03.2019, as detailed above. Therefore, the penal provisions under Section 171 (3A) are not applicable in this case as they cannot be made applicable retrospectively. Also, this Order falls within the limitation prescribed under Rule 133(1) of the CGST Rules, 2017. 2022 (5) TMI 1416 Profiteering - supply of Services by way of admission to exhibition of cinematography films - benefit of reduction in the GST rate not passed on - contravention of section 171 of CGST Act - penalty - HELD THAT:- It has been established that the Respondent has profiteered by way of increasing the base prices of his supplies of the three categories of movie tickets by maintaining the same selling prices of the movie admission tickets despite the reduction in GST rate on Services by way of admission to exhibition of cinematograph films where price of admission ticket is one hundred rupees or less from 18% to 12% w.e.f. 01.01.2019 to 30.06.2019. It is also clear that the Respondent has not passed on the benefit amounting to Rs. 1,31,754 (inclusive of GST) to his customers/recipients. Thus the profiteering is determined as Rs. 1,31,754/- as per the provisions of Section 171 read with Rule 133 (1) of the CGST Rules 2017 and accordingly the Respondent is directed to commensurately reduce the prices of the three categories of movie tickets in line with the provisions of Section 171 (1) read with Rule 133 (3) (a) of the CGST Rules 2017. Further, since the customers/ recipients, in this case, are not identifiable, the Respondent are directed to deposit the profiteered amount of Rs. 1,31,754/- along with the interest to be calculated @ 18% from the date when the above amount was collected by him from the recipients till the above amount is deposited, in two equal parts, in the Central Consumer Welfare Fund (CWF) and the Telangana State CWF as per provisions of Section 171 (1) read with Rule 133 (3) (c) of the CGST Rules 2017. Penalty - HELD THAT:- It is revealed that vide Section 112 of the Finance Act, 2019 specific penalty provisions have been added for violation of the provisions of Section 171 (1) which have come in to force w.e.f. 01.01.2020, by inserting Section 171 (3A). Since, no penalty provisions were in existence between the period from 01.01.2019 to 30.09.2019 when the Respondent had violated the provisions of Section 171 (1), the penalty prescribed under Section 171 (3A) can not be imposed on the Respondent retrospectively. Also this Order falls within the limitation prescribed under Rule 133(1) of the CGST Rules, 2017. Income Tax 2022 (5) TMI 1415 Exemption u/s 11 - whether the grant-in-aid received by the assessee was capital receipt or revenue receipt? - HELD THAT:- The assessee was under obligation to deposit the amount in a separate bank account and interest earned thereon was also liable to be accounted for and utilized for the same scheme/purpose. The funds could not be utilized for any other purpose. The grant-in-aid was one time assistance. Thus, there is no doubt that the assessee could not have spent the amount received by it through the grant-in-aid except for the purpose specified in the aforesaid communication. A sum of Rs.77 lacs was towards non-recurring expenditure, which as per the details noticed above, cannot be said to be receipt in the nature of revenue. Similarly, remaining amount of Rs.23 lacs was also towards the capital receipt. There is nothing on record to suggest that the assessee is a profit earning organization or has been constituted as a profit making venture. The matter can be viewed from another angle. The term income as defined in Section 2(24) is inclusive of various heads mentioned therein. Prior to amending Act 20 of 2015, there was nothing specific in Section 2(24) of the Act which would include grant-in-aid by the Central or the State Government called by whatever name. It was only by way of said amendment, made effective from 01.04.2016 that such monetary release by State or Central Government has been incorporated as income by way of Section 2(24) (xviii). Even in this clause exemption has been carved out in respect of subsidy or grant by Central Government for the purpose of corpus of a trust or institution established by the Central Government or State Government, as the case may be. This clearly illustrates the legislative intent that prior to 01.04.2016, the type of grant as is the subject matter of instant lis was not specifically included as income. The latter inclusion of such provision will not have retrospective application. Even by way of aforesaid amendment, exemption is available to the institutions like the assessee, as noticed above. In Kalpna Palace vs. Commissioner of Income Tax[ 2004 (8) TMI 65 - ALLAHABAD HIGH COURT] examined the fall out of the grant in aid and incentives etc., provided by the government. It was held that grant-in-aid received by assessee, in that case, was capital receipt. The grant -in-aid, in that case, was provided by the State Government for construction of permanent Cinema Halls during a specified period. The Court after analysing the facts found that since the grant-in-aid was only for specific purpose of construction of Cinema Halls in the rural areas, it could not be termed as revenue receipt. Applying the purpose test to the facts of that case, it was held that the payment received by assessee under the scheme was not in the course of a trade but was of a capital nature. In Ponni Sugars case [ 2008 (9) TMI 14 - SUPREME COURT] the incentive conferred was in the nature of higher free sale sugar quota and allowance to collect excise duty even on the sale price of free sale sugar. The purpose obviously was to promote the concerned business. ITAT has definitely not considered the matter in the above noted context. The fact that the assessee received only one time grant with a specific purpose which nowhere suggested scope of profit generation or revenue for the assessee, the amount received by the assessee by way of grant-in-aid thus could not be termed to be revenue receipt. Substantial questions of law No. (c) and (d) are accordingly decided in favour of the assessee and against the revenue. 2022 (5) TMI 1414 Validity of Revision u/s 263 - Whether inquiry or verification was not made by the Assessing Officer before passing the order? - HELD THAT:- The contention of Ld. Senior Standing Counsel that the order passed by the Assessing Officer will fall within the ambit of Explanation 2 (a) appended to Section 263 of the Act, cannot be accepted till it is pointed out as to which inquiry or verification was not made by the Assessing Officer before passing the order. Ld. Senior Standing Counsel is not in a position to deny the fact that prior to passing of order under Section 143(3) of the Act, a questionnaire was issued by the Assessing Officer in the course of assessment proceedings to the assessee. The specific issues addressed by the appellant in the present proceedings were part of the questionnaire. Appellant is not in a position to point out as to what are those inquiries or verification which should have been made but have not been made by the Assessing Officer in the present case so as to make the present case fall within Explanation 2 attached to Section 263 - The substantial questions of law sought to be raised of the grounds of appeal are pure questions of fact which have been adequately answered by the Tribunal. 2022 (5) TMI 1413 Assessment against the dead person viz., husband of the appellant - HELD THAT:- We are of the opinion that the assessment order passed by the first respondent against the dead person, that too without following mandatory procedure as contemplated under the Act and the consequential proceedings emanated therefrom, cannot be allowed to be sustained. However, the learned Judge erred in dismissing the writ petition on the premise that the appellant has exercised the option of appeal remedy. Keeping in view the aforesaid, we set aside the order of the learned Judge and the assessment order as well as the proceedings initiated pursuant thereto for the assessment year in question and remand the matter to the assessing officer, who shall consider all the materials furnished by the appellant and thereafter, pass a reasoned order on merits and in accordance with law, after granting an opportunity of hearing to the legal heir(s) of the deceased assessee / appellant. Such an exercise shall be completed within a period of three weeks from the date of receipt of a copy of this judgment. 2022 (5) TMI 1412 Unaccounted credit in the savings bank account - unexplained investment u/s 69 - According to the appellant, the said sum is to be taxed at 8% as per section 44AD as the same is her business receipts - HELD THAT:- There is no dispute with regard to the legal position that Section 44AD was inserted by Finance Act, 1994 with effect from 01.04.1994. Sub-section (1) of Section 44AD clearly provides that where an assessee is engaged in the business of civil construction or supply of labour for civil construction, income shall be estimated at 8% of the gross receipts paid or payable to the assessee in the previous year on account of such business or a sum higher than the aforesaid sum as may be declared by the assessee in his return of income notwithstanding anything to the contrary contained in Sections 28 to 43C - This income is to be deemed to be the profits and gains of the said business chargeable of tax under the head profits and gains of business. The said provisions are applicable where the gross receipts paid or payable does not exceed Rs.40 lakhs. As evident from the records that the appellant did not prove her nature of business and the source of credit of Rs.25,00,000/-; and she put forth different stand before the authorities below. Though the learned counsel for the appellant raised a plea that the appellant was represented by an Income Tax Practitioner, who did not properly represent the case before the respondent and failed to give the details with regard to the credit in her savings bank account and explain the sources of credit of Rs.25,00,000/- in a proper manner, this court is not inclined to accept the same, in view of the categorical finding rendered by the appellate authorities, while dismissing the appeals filed by the appellant, to the effect that the appellant failed to co-relate the source of cash deposits. No substantial question of law. 2022 (5) TMI 1411 Revision u/s 263 - whether proceedings u/s 263 can be initiated when the matter is already pending for appeal with the CIT(A)? - HELD THAT:- Respectfully following the decision of Coordinate bench of ITAT Jaipur [ 2022 (5) TMI 351 - ITAT JAIPUR] which is squarely applicable in the present case, accordingly provisions of Section 263 are correctly and lawfully invoked by the Ld PCIT and therefore, we dismiss this ground of the assessee. Whether the revisionary proceedings u/s 263 of the IT Act 1961 are bad in law in absence of any new fact, information, corroborative evidence or materials being made available by the Ld PCIT? - On perusal of the Order of CIT, it is emerged that the Ld AO has under assessed the income of the assessee which is evident from records that a disallowance was made u/s 80P(2)(a)(i) but the same has been escaped to be added in the taxable income of the assessee. Therefore the assessment order passed by the AO is deemed to be erroneous in so far as it is prejudicial to the interest of revenue and revisionary powers assumed by the PCIT in this case are justified. Deduction of Tax Source from the Commission to Agents was not responded by the assessee, however the same has been restored back to the AO with directions to make fresh assessment with a reasonable opportunity of being heard and to furnish required details and submissions. We observe that Ld PCIT has rightly decide the matter in the interest of justice, therefore we do not find it fit to interfere with the order of the Ld PCIT, accordingly this ground of assessee is also dismissed. 2022 (5) TMI 1410 Rectification u/s 154 - validity of rectification order u/s 154 - levy of interest under section 234D of the Act from the date of grant of refund instead of date of receipt of cheque of refund, renders the issue to be debatable issue - HELD THAT:- We are of the considered view that the very fact that assessee objected to the levy of interest under section 234D of the Act from the date of grant of refund instead of date of receipt of cheque of refund, renders the issue to be debatable issue As without commenting upon the merit of the issue, the fact that in Development Bank of Singapore [ 2013 (8) TMI 175 - ITAT MUMBAI] the Co-ordinate Bench of Tribunal held that interest under section 234D of the Act shall be chargeable from the date of grant of refund and while interpreting similar expression in section 244A, another Co-ordinate Bench of the Tribunal in M/s Small Industries Development Bank of India [ 2017 (9) TMI 1971 - ITAT MUMBAI] held that interest under section 244A shall be granted up to actual date of receipt of the refund by the assessee, also renders this issue to be a contentious issue, which requires long-drawn process of reasoning and arguments from both the sides. The Hon ble Supreme Court in T.S. Balaram, Income Tax Officer v/s Volkart Brothers, [ 1971 (8) TMI 3 - SUPREME COURT] held that for initiating proceedings under section 154 of the Act, the mistake apparent from record must be an obvious and patent mistake and not something which can be established by long drawn process of reasoning on points on which there may conceivably be two opinions. The point on which rectification under section 154 of the Act was done by the Assessing Officer in the present case is capable of divergent views and since, this issue is not alleged to have been settled by any decision of Hon ble Supreme Court, therefore, we are of the considered view that the present case clearly falls beyond the ambit of the expression mistake apparent from the record , and thus, the rectification order dated 14/03/2017 passed under section 154 of the Act is set aside. As a result, ground Nos. 1.1 and 1.2 raised in assessee s appeal are allowed. 2022 (5) TMI 1409 TP Adjustment - Engineering services and Administrative Support services - TPO has rejected the segmental approach adopted by the assessee for benchmarking its international transactions pertaining to provision of outbound engineering services (which is only 0.79% of the total turnover of the assessee) - HELD THAT:- As in the year of account the assessee availed the Engineering services and Administrative Support services from its AEs as per the service agreement dated 23.06.2006 entered into between the assessee and its AE for which the assessee incurred impugned expenditure. The expenditure has been incurred against invoices raised by the recipient AE which have also been examined during the course of transfer pricing proceedings. There is absolutely no doubt that the impugned expenditure has been incurred for the purposes of assessee s business carried on by the assessee and that it was commercially expedient as well. The objections raised by the Hon ble DRP have also been met by the assessee with cogent reasons given therefore. We, therefore, have no hesitation in holding that the impugned addition by way of transfer pricing adjustment is not called for. We direct the Ld. AO to delete the addition and modify the assessment. The assessee succeeds in its appeal. 2022 (5) TMI 1408 TP Adjustment - benchmark the international transaction of the assessee by using customs data - HELD THAT:- On perusal of the order of the CIT(Appeals), we observe that the assessee contended that the international transaction should be benchmarked using custom valuation data and relied on the decision in the case of Coastal Energy Pvt. Ltd. [ 2011 (7) TMI 154 - ITAT, CHENNAI] - CIT(A) following this decision directed the TPO to benchmark the international transaction for the purchase of fuel oil/HSD by the assessee by using customs data. Adjustment in respect of credit period - In view of the submissions of the assessee that TPO has accepted the assessee s claim for such adjustment in succeeding year i.e. 2013-14 the Ld. CIT(A) directed the AO/TPO to allow adjustment for credit period. It is the case of the Revenue that no such claim was accepted by the TPO in the assessment year 2013-14 and adjustment was not made in the said year as the variation was within the prescribed tolerance limit of +/- 5%. CIT(A) in directing the AO/TPO to consider entire set of transactions as against the transactions considered by the TPO in the order passed u/s 154 - In so far as bench marking the international transactions using customs data is concerned we sustain the order of the Ld. CIT(Appeals) as the Ld. CIT(A) observed that the Chennai Bench of the Tribunal in the case of Coastal Energy Pvt. Ltd. [ 2011 (7) TMI 154 - ITAT, CHENNAI] held that the valuation was made by custom authorities by assigning values to import goods on the basis of scientifically formulated methods as they were responsible for making fair assessment value of the imported goods according to internationally accepted protocols. Therefore, we see no infirmity in the order of the Ld. CIT(A) on this issue. Ground no. 1 of the Revenue is rejected. Adjustment in respect of credit period - We observe that the Revenue contended that no such adjustment in subsequent assessment year i.e. in 2013-14 was made and no such claim was accepted by the TPO for the reason that the variation was within the prescribed tolerance limit and, therefore, no adjustment was made in the said year in 2013-14. We observe that the above contentions of Revenue and Assessee have not been thoroughly examined by the Ld. CIT(A) in proper perspective. We also observe that no remand report was called for by the Ld. CIT(A) to appreciate the contentions of Revenue as well as the Assessee. In the interest of justice we restore this ground to the file of the Ld. AO/TPO for denovo adjudication in accordance with law after providing adequate opportunity of being heard to the assessee. Grounds of appeal of the Revenue is allowed for statistical purpose. 2022 (5) TMI 1407 TP Adjustment - benchmarking the above international transactions u/s 92CA(1) - Safe Harbour Rules - appellant had adopted TNM Method as most appropriate method in respect of Item No.1, 2, 7 and 9 and CUP Method as the most appropriate method in respect of Item No.3 8 - HELD THAT:- We find that the lower authorities had included this four companies merely because these companies fall under the characterization of software companies as well as KPO companies as defined under Rule 10TA(g) of the Safe Harbour Rules. At the outset, we find that Safe Harbour Rules are applicable from 18.09.2013, we have serious doubt as to how the definitions given in Safe Harbour Rules can be applied for characterization of a particular company for the purpose of identification of set of comparable entities. Therefore, we are of the considered opinion that the lower authorities fell into serious error in holding these comparables are KPO companies placing reliance on the definition given in Safe Harbour Rules. Therefore, we remand issue back to the file of the Assessing Officer/TPO to examine the comparability of these comparables afresh without placing reliance on the definition given under Safe Harbour Rules. Thus, this issue raised in the respective grounds of appeal stands partly allowed for statistical purposes. Comparability - As regard to the exclusion of two comparables, namely, Onward Technologies Limited and Cades Digitech Pvt. Ltd., we find from reading of the orders of lower authorities that the company Onward Technologies Limited came to be rejected by the TPO as well as by the ld. DRP on the ground that the said company fails to meet 75% export to total turnover filter. It is settled law that the filter of 75% of the export to total turnover is most appropriate filter. In these circumstances, we confirm the action of the lower authorities from excluding this company from the list of the comparables. Similarly, the company Cades Digitech Pvt. Ltd. had been excluded the TPO/ld. DRP from the list of comparables by recording a finding that this company is engaged in off shore operations. These findings remain uncontroverted. A company engaged in on-site operations is incomparable with assessee which is engaged in off shore operations as the business model is totally different. Therefore, we uphold the orders of the lower authorities in excluding this company from the list of the comparables. Disallowance of expenditure incurred on in-house R D facility - HELD THAT:- As in assessee s own case for the earlier assessment year 2021 (9) TMI 139 - ITAT PUNE we uphold the action of the lower authorities in disallowing the expenditure incurred on in-house R D facility. Accordingly, this issue stands dismissed. Nature of expenditure - expenditure incurred on product development expenses - revenue or capital expenditure - HELD THAT:- Respectfully following the decision of the Tribunal in assessee s own case for the assessment year 2011-12 2021 (9) TMI 139 - ITAT PUNE we hold that the expenditure incurred on product development expenses is revenue expenditure . Accordingly, this issue raised in ground of appeal no.4 stands allowed. 2022 (5) TMI 1406 Disallowance made on account of interest expenses u/s. 14A r.w.s. Rule 8D(2)(ii) and (iii) of the Rules - HELD THAT:- As only exempt income yielding investments have to be taken into consideration whilst computing administrative expenses disallowance u/s 14A r.w.r. 8D(2)(iii). Suffice to say, hon'ble jurisdictional high court's decision in REI Agro Ltd. case [ 2014 (4) TMI 713 - CALCUTTA HIGH COURT ] has already decided the very substantial question of law in assessee's favour. ALP determination for fee for corporate guarantee - HELD THAT:- It is sufficiently clear by now that the assessee s very arguments have been partly accepted through for benchmarking corporate guarantee transaction is issued @ 0.5% commission. We therefore adopt judicial consistency qua the instant issue as well to decline to Revenue s corresponding substantive ground in both of its appeals. Adjustment made by TPO for SDTs in respect of transfer of power from eligible unit to other manufacturing units - As gone through the orders of the Co-ordinate bench [ 2019 (3) TMI 687 - ITAT KOLKATA ] in the case of assessee itself which squarely covers the issues involved in the present two appeals before us. Nothing is brought on record to controvert to discussions made and findings given by the Co-ordinate Bench in the case of assessee itself [ 2017 (2) TMI 685 - ITAT KOLKATA ] and that there being no change in the fact pattern and the applicable law, we adopt the judicial consistency from the decisions cited supra, qua the instant issues in the present appeals to uphold the findings given by Ld. CIT(A). Accordingly, we dismiss both the appeals of the revenue. 2022 (5) TMI 1405 Exemption u/s.11 - Treatment of pharmacy income as income of charitable trust - assessee challenged the action of the A.O. before the CIT(A) contending that the assessee is running the pharmacy in the hospital premises itself, and therefore, it cannot be treated as business activity - as per AO assessee is not maintaining separate set of books though he was able to identify the pharmacy business related details from the ledger accounts maintained by the assessee - AO has also stated that the assessee is able to generate gross profit out of running the pharmacy and hence justified treatment of the same as business income - HELD THAT:- As running the pharmacy is very much an integral part of running the hospital as per the objects of the trust and the conditions of maintenance of books of account in respect of the business activity of trading of medicines, which is an integral part of the hospital activities, is not the requirement of the law on the facts of the case. When running of the pharmacy is part and parcel of the main activity of running the hospital, the incidental sale of medicines to outside public cannot be considered as the criteria for the denial of exemption and such distinction of to whom the medicines are sold is of no relevance. In any case the assessee is maintaining separate ledger accounts from where the profits are clearly identifiable and given that the transactions of pharmacy is incidental to the business of the hospital and the objects of the Trust, the conditions relating to maintenance of separate books of account are met within the meaning of section 11(4A) of the Act. We respectfully follow the decision of Karnataka Chinmaya Trust [ 2021 (11) TMI 1070 - ITAT BANGALORE] and the principle laid down by the Hon ble Chennai Bench in M/s.Franciscan Sisters of St.Joseph Society [ 2014 (1) TMI 1754 - ITAT CHENNAI] and hold that the income from running the pharmacy which is integral part of the hospital is eligible for exemption u/s.11 and hence the AO is directed to delete the addition made in this regard. The appeal is allowed in favour of the assessee. 2022 (5) TMI 1404 LTCG - Rejection of deduction claimed u/s 54F - expenditure incurred on the new house property for computing deduction u/s 54F - Whether assessee is entitled to claim deduction to the extent of 50% of the cost of acquisition computed by him? - HELD THAT:- We noticed that the agreement for the purchase of property was first entered by the assessee s husband in 2004. However the sale agreement for transfer of plot was registered only on 24.2.2007 and it was registered in the name of the assessee and her husband. Accordingly, the AO/Ld CIT(A) has taken the view that the assessee was already entitled to 50% of the right in the property - As held in the case of Mrs. Jennifer Bhide [ 2011 (9) TMI 161 - KARNATAKA HIGH COURT ] that the deduction u/s 54 of the Act should not be denied merely because the name of assessee s husband is mentioned in the purchase document, when the entire purchase consideration has flown from the assessee. In the instant case also, the plot was purchased in the name of the assessee and her husband. Hence, what is required to be examined is the question, viz., who has funded the acquisition? - Admittedly, in the instant case, the assessee s husband had advanced money initially. Subsequently, the admitted fact is that the assessee has reimbursed the money to her husband and finally, it is the assessee who has actually given funds for the acquisition of the property. CIT(A) has taken the view that the funds given by the assessee should not be taken in account and in our view, the said view of the Ld CIT(A) is not, in our view, correct in law. Deduction u/s 54F of the Act only induces an assessee to make investment in residential house property. If the assessee has herein has given money for acquisition of the property either directly to the builder or as reimbursement to her husband, then the assessee should be given benefit of deduction u/s 54F of the Act for the cost of acquisition. Plot was purchased jointly in the name of the assessee and her husband and hence it should be held that both held 50% right each and hence the assessee could have purchased only her husband s share only - We are unable to agree with this logic. There is no dispute that the assessee has actually given funds for the acquisition of the property. When the assessee s husband has not given money for purchase of property, how it can be held that her husband was owner of 50% of the property merely for the reason that his name appears in the conveyance agreement and also in the rental agreement. The deduction under sec.54F of the Act shall be given only to the person who has invested the money. In the instant case, it is the assessee who has invested the money and hence the assessee should be given deduction u/s 54F of the Act for the money invested by her. Cost of acquisition - The assessee claimed the cost of acquisition to be Rs.1,72,29,993/-. During the remand proceedings, the assessee herself has agreed for reduction of cost of acquisition by Rs.16,97,098/-, since she could not prove the incurring of expenses to that extent. Hence the cost of acquisition as per the assessee now stands at Rs.1,55,32,895/-. There is no dispute that the assessee has invested the money to the above said extent in acquisition of the property. CIT(A) has taken the view that the amount spent after the date of registration of land, i.e., 24.02.2007 for interiors, renovation, furnishing etc cannot be part of acquisition. The Hon ble Karnataka High Court has held in the case of Mrs. Rahana Siraj [ 2015 (1) TMI 1421 - KARNATAKA HIGH COURT ] that the money spent in additions, alterations, modifications and improvements on the new asset to make it habitable would be eligible for benefit of deduction u/s 54F of the Act. Accordingly, we set aside the view so taken by Ld CIT(A) as it is contradictory to the binding decision of jurisdictional High Court. Accordingly, we hold that the assessee is eligible for deduction u/s 54F of the Act in the amount spent on interiors, renovation, furnishing etc. - Appeal of assessee allowed. 2022 (5) TMI 1403 Reopening of assessment u/s 147 - LTCG - Whether agricultural land not a capital asset ? - HELD THAT:- CIT(A) after considering the submissions of the assessee took his view that notice under section 148 was issued within four years from the end of relevant assessment year. Therefore, provision of section 147 is applicable. Further, no assessment under section 143(3) was passed. AO issued noticed under section 148 after receiving information about payment of compensation to assessee. In the return of income filed under section 139 of the Act, the assessee has not shown any income under the head LTCG . AO issued notice after recording reasons for escapement of income. AO had formed his believe after recording all the aspects and Notification of Government of Gujarat about Notified area of Hazira - CIT(A) noted that Chapter XVI-A of Gujarat Municipalities Act, 1963 (GUJ 34 of 1964), defines the Notified area as urban area or part thereof specified as Notified area to be an Industrial Township Area under the provisions of Clause-(1) of Article 243Q of the Constitution of India. Essar Steel Ltd., is located in the said Notified area. The composition of Gujarat Panchayat Act, 1993 ceased to apply in respect of Notified area from the date of Notification. Further, as per section 264B of the said Act a person or committee appointed for assessment / recovery of taxes of such area shall be deemed to be the Municipal Borough . On the basis of such reasons, the Ld. CIT(A) held the re-opening as valid. Agricultural land OR capital asset - whether the land is a capital asset under section 2(14) r.w.s. 2(14)(iii)(a)? - HELD THAT:- As satellite images shows that no agriculture activities were carried on the land. DR also submitted that report of NRSC is scientific report and conclusive proof. We do not find merit in the submissions of the ld DR, as disclaimer, attach to the said report, NRSC, itself reported the shape file provided by CIT(A) did not match with field boundaries of the reference satellite data, with implication on accuracies of location area. Further, in absence in absence of adequate number of GCPs, rubber sheeting technique carried out also did not yield the desirable results. And that concurrent ground truth was not available for thus study and interpretation is exclusively based on the manifestation of features and experience of the interpreter, which could be subjective. It is also mention in the last para in the disclaimer that results have to be corroborative in association with the ground observation, available, if any. Thus, the report itself contents vague observation and cannot be used as evidence or conclusive or expert report based of any scientific evidence against the assessee. Moreover, said report was not provided to the assessee. Thus, by applying of such test we find that the land of the assessee acquired by Special Land acquisition officer is agriculture land. In the result, the assessee is also succeeded on this issue/ ground as well. Considering the facts that we have already held that the land of the assessee is not capital asset as the same does not fall in municipal area, Hazira Notified area is not a municipality or deemed municipality and on alternative plea also held eligible for exemption under section 10(37). AO treated part of compensation as income from other sources - On consideration of facts, we find that in some of the cases, there is payment against the built-up units/ pucca houses. Additional payments were also made only for those landowners who were holding such built-up unit. We find that no evidence was furnished by the land owners about the cost of acquisition or improvement thereof, either before the assessing officer or before ld CIT(A). Even before us, no such estimate of cost of such built-up structure is furnished. As recorded above the ld CIT(A) estimated the cost of acquisition of built-up units/ pucca structure @ 50% of the cost awarded for such built-up / pucca structure in the award. Considering the area where in the such built-up unit or pucca house is situated, it our view, the estimation of it s cost of acquisition is on lower side, therefore we deem it fit and proper to increase it to 60%, would be reasonable and fair. Therefore, we direct the Assessing officer to treat the cost of acquisition @ 60% of Rs. 13.00 lacs as cost of acquisition. In the result, the corresponding ground of appeal is partly allowed. Agriculture income as unexplained cash credit - Considering the facts that we have already held that the land of assessee was agriculture and was being used as such, therefore, the income offered by assessee as agriculture is also allowed and the assessing officer is directed to delete this addition. In the result, the corresponding ground of appeal is allowed. 2022 (5) TMI 1402 Suppressed receipt only on the basis of statement recorded u/s. 132(4) - additional disclosure offered while filling the return u/s 153A - assessee explained that the indoor patient receipts shown in the books was 75 % of the total amount as 25 % was given to the visiting doctors - HELD THAT:- As looking to the facts that in the absence of clear evidence for the past year, receipt @ 25 % cannot be added. The benefit of doubt based on the arguments advanced before us goes in favour of the assessee and it is evident that there was no such practice in past found based on the evidences found at the time of search. Her compliance and disclosing the additional income disclosing a sum of Rs. 29,44,800 in PMGKY, wherein she has disclosed a sum which is higher than the addition under dispute for all these years also suggest that no separate addition is called for considering the facts and arguments advanced before us on the offering of the additional income under PMGKY. We found merit in arguments of the assessee that there is no direct or indirect evidence that in past year the assessee got engaged and using same practice of following under-reporting of income in past year and based on the mistake found the assessee has already offered the additional income while complying the notice u/s. 153A of the Act wherein the AO has not found any fault that the said additional income offered is incorrect or under-reported, even the ld DR has not pointed that the past year addition made is based on the evidence found in the course of search. Thus, looking to these facts the addition merely based on the statement and that too for all the years at same rate @ 25 % as suppressed receipt proposed by AO is unwarranted and the same is not survived based on the finding and reasoning placed before us. Even the contention of the ld. CIT(A) sustaining the balance addition from the income already disclosed by the assessee will also not survive as there is no contrary arguments placed by the Ld. DR but mainly repeated the contentions of the AO and Ld. CIT(A). Based on the above finding, addition confirmed by the CIT(A) is deleted for A. Y. 2011-2012 and thus the ground raised by the assessee are allowed. Addition of expenditure from undisclosed source - revised capital account filed with the return of income filed in response to notice u/s. 153A - assessee has argued before us that the seized material is to be read together when the assessee has already disclosed additional income for the year under consideration and the expenses incurred is covered that such investment no separate addition is required to be made in the case of the assessee as she is having the additional income for her disposal to meet such investment in the capital asset - HELD THAT:- It is not disputed that the assessee has not disclosed the additional income. It is also not disputed that the investment made in AC is of the year under consideration and we find force in the argument of ld. AR of the assessee that the income and investment both cannot be taxed. Whereas, the Ld. DR and ld CIT(A) contended only the same is not disclosed in the original return and assessee cannot take benefit of that additional income merely by filing the revised capital account. This view is not correct as the additional income disclosed by the assessee has already suffered the tax and the said additional income is available with the assessee and the investment made in AC is not exceeding that income thus, the income and expenses both cannot be taxed and benefit of set off of income with that of the expenses of the same can be given and the thus the addition made to the extent of Rs. 27,500/- for purchase of AC is deleted. Thus the ground no 2 raised by the assessee in this appeal is allowed. Addition u/s 69A - AO observed that during the year, there is increase in the capital of assessee source of which has neither been explained nor any evidence in this regard is produced - HELD THAT:- During the course of hearing, the ld. AR of the assessee has drawn our attention to the revised capital account and original capital account wherein the credit of Rs. 75,000 is appearing in both the capital account. Thus, the findings of the lower authorities are incorrect on facts so far as to the contention that the same was in the revised capital account is incorrect that credit is already appearing in the old capital account already filed in the original return of income. Thus, the contention of the DR and lower authorities is incorrect that the same is filed or claimed or credited in the revised capital account is in fact not so, and thus in the absence of any incriminating material in respect of this credit the addition of credit already reflected in the original return of income can not be made in proceeding-initiated u/s. 153A of the Act considering the various decision relied upon. This addition has no merit and is required to be deleted. Thus, the Ground no. 3 raised by the assessee in this appeal is allowed. Jewellery as unaccounted purchase chargeable to tax u/s. 69C - HELD THAT:- DR has not disputed the fact that of the AR of the assessee that these ornaments are not found in the course of search in the absence of the assets it self at the time of purchase there is no case rest with the department that the assessee has made purchase and invested the said amount in the jewellery as unaccounted purchase chargeable to tax u/s. 69C of the Act. Not only that there is no details mentioned about the terms of the payment received, receivable or details of payment and its mode to be executed on this paper heavily relied upon by the department. Thus, in absence of the impugned asset being not available at the time of search the contention of the department has no force and there is no reasons so as to believe the arguments placed by the AR of the assessee that in the absence of the these jewellery not found the addition cannot be made. Looking to the force of argument of the Ld. AR of the assessee the addition merely based on this loose paper cannot be made and the same is required to be deleted. Thus, the Ground no. 2 raised by the assessee is allowed. Addition u/s 69C - purchase of fridge by the assessee - HELD THAT:- Looking to the bills and receipt shown and attached to assessee s paper book it is clear that the price of the fridge is Rs. 80,000 as the same has been paid by the assessee and signature of the person accepting that money is written and page 16 being the purchase bill consisting of cash memo which is for Rs 49,000/- this being read with the loose receipt it is not separately shown that bill amount of Rs. 49,000/- already given by the assessee. In absence of this details, the cost cannot be considered more than what is confirmed by the party in rough note at Rs. 80,000/- given at the time of delivery taken. This amount of Rs. 80,000/- included by the assessee in a revised capital account and withdrawal ledger filed by the assessee s paper book at page 41 42 and sufficient undisclosed income offered in the return filed u/s. 153A is already cover this investment/Expenditure for purchase of this fridge cannot be made separately as the source of this investment / expense already suffered the tax in the return filed in response to notice u/s. 153A - Ground no 3 raised by the assessee is allowed. Expenditure on construction work of basement flooring - HELD THAT:- This amount included by the assessee in a revised capital account and withdrawal ledger filed by the assessee s paper book and sufficient undisclosed income offered in the return filed u/s. 153A. This income already covers this payment made to M/s. Ratna Construction separately as the source of this payment already suffered the tax in the return filed in response to notice u/s. 153A of the Act. Thus, the Ground no 4 raised by the assessee is allowed. Unexplained expenditure - Set off of receipt against unexplained expenditure - HELD THAT:- Since, the addition for which set off against income is sought is allowed considering the merits of the addition thus, allowing of set off against income is already considered while dealing with each addition in ground no. 2,3 4 above. This ground becomes academic and needs not required to be adjudicated upon for technical purpose and the same is allowed. 2022 (5) TMI 1401 Validity of the assessment framed under section 143(3) read with section 147 - HELD THAT:- The assessee in the case on hand has filed the belated return under section 139(4) dated 31st March 2013 after the expiring of the time of filing the return of income provided under section 139(1) i.e. July 2012 - the time-limit for issuing notice u/s 143(2) was to be reckoned from the end of the year in which the return of income was furnished by the assessee. Consequently, the time-limit available to the AO for issuing notice under section 143(2) of the Act was to 30th September 2013. But the AO has not issued any notice till the time provided u/s 143(2) - Thus the notice was rightly issued within the provisions of law as provided under sections 148 r.w.s. 149 - Accordingly we disagree with the contention of the learned AR of the assessee and hence dismiss the technical ground raised by the assessee. Addition u/s 69 - assessee has made investment in the property for Rs. 50 lakh and stamp value of the property was of Rs. 57,06,000/- but the assessee failed to justify the source of investment in such property - HELD THAT:- As merely in the absence of sales bills, expenditure details etc., the income in the hands of the family members of the assessee cannot be rejected. Likewise, the certificates issued by the gram panchayat have been rejected by the learned CIT (A) merely by assuming them as afterthought - these are the documents which have been issued by the government departments/ authorities such department of land revenue local authority i.e. gram panchayat which cannot be rejected without carrying out the necessary verification and bringing contrary materials on record. The revenue has been given a lot of powers under the statute to discharge their responsibilities in effective manner so that the correct income should be brought to tax. Besides this, there are various supporting staff available with the income tax authorities such as inspector of income tax, tax recovery officer etc. But, the lower authorities despite having so many powers have rejected details furnished by the assessee on their face value - AO and learned CIT (A) was under the obligation of carrying out the necessary verification before rejecting the documents furnished by the assessee based on cogent reasons. Admittedly, the additional documents furnished by the assessee under rule 46A can be accepted by the CIT (A) only in the situations provided therein. In other words under the specific circumstances the learned CIT (A) was empowered to accept the additional evidences - In the present case, we find that the CIT (A) has called for the remand report and deleted the addition made by the AO in part which evidences that the learned CIT (A) has admitted the additional evidences - CIT (A) cannot reject the other additional documents filed by the assessee in piecemeal - CIT (A) either was to accept the additional documents in totality or reject the same in totality. As such he cannot pick and choose documents for the admission of additional evidences. Thus, once initial documents have admitted by the learned CIT (A) and remand report has been called upon from the AO, then the same cannot be rejected without any cogent reasons and conducting necessary enquiries. The revenue being a tax authority having a lot of resources in terms of manpower and judicial powers under the provisions of Act but failed to exercise them. Thus the Revenue shall not be given another opportunity for conducting necessary enquiries. We are not inclined to uphold the findings of the authorities below. 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. 2022 (5) TMI 1390 Reopening of assessment u/s 147 - notice u/s 148A on the basis of information available i.e. 'purchase of immovable property more than 20,00,000/-' and accordingly required the petitioner to explain the nature and source of above transaction along with documentary evidences - HELD THAT:- As per provisions of Section 148A Assessing Officer has been conferred power to conduct an enquiry before issuing any notice under Section 148, with respect to the information which suggests that the income chargeable to tax has escaped assessment. Clause (b) of Section 148A requires the AO to afford an opportunity of hearing to the assessee by serving upon him a notice to show cause as to why a notice under Section 148 should not be issued on the basis of information which suggests that income chargeable to tax has escaped assessment. Clause (d) of Section 148A of the Act provides that on the basis of material available on record including reply of the assessee, the Assessing Authority shall decide as to whether or not it is a fit case to issue a notice under section 148. Thus, under Section 148A of the Act, 1961, enquiry is to be conducted by the Assessing Officer with respect to the information received by him, show cause notice is to be issued by him to the assessee on the basis of that information and the order under clause (d) is to be passed by him with reference to the information received. Under the circumstances, we direct the respondent nos. 2 and 3 to file counter affidavit by means of their personal affidavits within three days, failing which, the respondent no. 3 shall remain personally present and shall show cause as to why exemplary cost be not imposed. Customs 2022 (5) TMI 1400 Anti-dumping duty - sunset review - Expiry of old notification, extension of existing duty for further one year and rescinding of anti-duty notification on the recommendation of designated authority - case of appellant is that in the absence of any notification issued by the Central Government imposing anti-dumping duty on the basis of the recommendation made by the designated authority in the final findings dated 10.04.2012, anti-dumping duty could not have been levied - HELD THAT:- In a sunset review, a notification is issued by the Central Government exercising powers under the first proviso to section 9A(5) of the Tariff Act, unlike the powers that are exercised by the Central Government under the second proviso to section 9A(5) of the Tariff Act for continuing the anti-dumping duty during the pendency of a sunset review for a maximum period one year. There is no requirement under the first proviso to section 9A(5) of the Tariff Act that the Central Government should issue the notification only during the lifetime of the earlier notification imposing anti-dumping duty. This aspect was considered by the Supreme Court in UNION OF INDIA AND ANOTHER VERSUS M/S. KUMHO PETROCHEMICALS COMPANY LIMITED AND ANOTHER [ 2017 (6) TMI 526 - SUPREME COURT ]. The Supreme Court observed that even if the review exercise is not completed within the extended period of one year under the second proviso, the effect would be that after lapse of one year there would not be any anti-dumping duty even if the review is pending. In such a situation it is only after the review exercise is completed and the Central Government forms an opinion that cessation of such duty is likely to lead to continuation or recurrence of dumping an injury, it can issue a notification for imposition of duty. The Supreme Court emphasized that the vacuum would be only during the interregnum beyond the period of one year and till the issuance of fresh notification by the Central Government. It, therefore, follows that there is no requirement that a notification has to be issued by the Central Government under the first proviso to section 9A(5) of the Tariff Act only during the lifetime of the earlier notification imposing anti-dumping duty for a period of five years. Central Government, by a notification dated 12.08.2021, rescinded the notification dated 08.08.2016, as amended by notification dated 30.06.2021, except as respects things done or omitted to be done before such rescission. Once it has been held that anti-dumping duty was validly imposed by notification dated 08.08.2016 for a period five years upto 07.08.2021, it would not be necessary to examine this issue. The challenge to the final findings dated 08.07.2016 of the designated authority and the consequential notification dated 08.08.2016 issued by the Central Government imposing anti-dumping duty, therefore fails - anti-dumping appeal is, accordingly, dismissed. Service Tax 2022 (5) TMI 1399 Validity of SCN and audit notes issued - mandatory pre-show cause notice contemplated under the Master Circular No.1053/02/2017 dated 10.03.2017 not issued - principles of natural justice - HELD THAT:- The contention regarding absence of DIN raised by the petitioner is not significant and the learned counsel for the petitioner did not persist with the said argument and rightfully so. The respondents have pointed out that audit notes have been issued with the DIN, but containing an extra digit by a mistake. On a perusal of the audit notes issued as Ext.P1 and Ext.P2, it is noticed that the presence of DIN in the said documents cannot be disputed, but by an inadvertent mistake, an additional digit was erroneously added to the said DIN. The said extra digit does not ipso facto make the document null and void on the ground of absence of DIN. By master circular No.1053/02/2017 dated 10.03.2017, issued by the Central Board of Excise and Customs, it is mandatory to issue a pre-show cause notice for consultation, prior to issue of a show cause notice, in cases involving demands of duty above Rs.50,00,000/- - the pre-show cause notice consultation is made mandatory from 21.12.2015 onwards, which is regarded as an important step towards trade facilitation and promoting voluntary compliance and also to reduce the necessity of issuing show cause notices. A master circular issued by the department is binding upon its officers. The contention of the respondents, that the requirement of consultation contemplated therein is not binding upon Department as it is not a statutory requirement, cannot be countenanced. A circular issued by the department is binding upon the department and its officers. It is trite law that circulars are binding upon the department but not on the assessee or Courts. The issuance of Ext.P7 show cause notice without following the mandatory requirement of pre-show cause consultation is arbitrary and against the circulars - Petition allowed. 2022 (5) TMI 1398 Principles of natural justice - Reply not given for notice served - alternative possibilities not considered - section 33A of Central Excise Act, 1944 - HELD THAT:- The impugned order has placed reliance on the decision of the Hon ble Supreme Court in JETHMAL VERSUS UNION OF INDIA [ 1970 (3) TMI 57 - SUPREME COURT ] and the decision of the Tribunal in PATEL WIDECOM INDIA LTD. VERSUS COMMR. OF CUS. (ICD), TKD, NEW DELHI [ 2004 (5) TMI 110 - CESTAT, NEW DELHI] . In Jethmal the issue arises from Sea Customs Act, 1878 which did not have a specific provision for issue of notice as exists in the present statute. The decision of the Tribunal in re Patel Widecom India Ltd arose from the refusal of the noticee to receive the show cause notice and is not in conformity with the circumstances in the impugned dispute. There are no justification for the peremptoriness of the adjudicating authority in foreclosing grant of opportunity to reply to the notice which would serve in disposal of the proceedings in a fair and judicious manner. On the contrary, he seems to have taken elaborate pains to controvert the essentiality of compliance with principles of natural justice. The haste, so demonstrated, is unseemly. We do not propose to dilate further on the inappropriateness of proceeding to adjudication without the benefit of some response from the noticee. Matter remanded back to the original authority for fresh adjudication after placing the appellant-noticee on notice of intent to take up, and complete, the adjudication process - appeal allowed by way of remand. 2022 (5) TMI 1397 Classification of services - Business Support Service or not - business of exhibiting cinematographic films across India in theatres owned by it or taken on rent - revenue sharing arrangement - whether the arrangement between the appellant and the distributors would lead to constitution of an Association of Persons or whether the same has to be treated on principal to principal basis? - HELD THAT:- Such an arrangement between a distributor/producer and an exhibitor of films was examined by a Division Bench of the Tribunal in Moti Talkies [ 2020 (6) TMI 87 - CESTAT NEW DELHI] . The Department alleged that the agreement was for 'renting of immovable property' as defined under section 65(90a) of the Finance Act. This contention was not accepted by the Tribunal and it was observed that the appellant did not provide any service to the distributors nor the distributors made any payments to the appellant as consideration for the alleged service. In fact, it was the appellant who had paid money to the distributors for the screening rights conferred upon the appellant. What also needs to be noticed is that if the appellant was providing such a service, it would be the producers/distributors who would be making payments to the appellant, but what comes out from a perusal of the Agreement is that in consideration for the distributor agreeing to grant to the appellant the license to exploit the theatrical rights of a motion picture, the appellant would have to pay such revenue share to the distributor as provided for in the said clause. In fact, the distributor agreed to grant to the Appellant the non exclusive license to exploit the theatrical rights of a motion picture during the term. This issue had come up for consideration before a Division Bench of the Tribunal in PVS Multiplex India [ 2017 (11) TMI 156 - CESTAT ALLAHABAD ]. The Bench observed that as the appellant was screening films on revenue sharing basis, the appellant was not liable to pay service tax on the payments made to the distributors for screening the films. In view of the decision of the Supreme Court in Faqir Chand Gulati [ 2008 (7) TMI 159 - SUPREME COURT ] and the decision of the Tribunal in Mormugao Port Trust [ 2016 (11) TMI 520 - CESTAT MUMBAI] , no service tax can be levied on the appellant under BSS. Appeal allowed - decided in favor of appellant. 2022 (5) TMI 1396 Refund of service tax aid on input services - export of taxable output services - Whether the Onsite services provided by subsidiary or branch of the Appellant located outside India can be treated as Export of Services and turnover thereof can be included in the Export Turnover of the Appellant under Rule 5 of the CCR? - HELD THAT:- The subsidiaries/ branch offices did not raised any bill/ invoice on the recipient of the services or received any payments from them. All the services provided by the appellant to their overseas client have been provided under umbrella of a single contract. The subsidiaries/ branch offices of the appellants located overseas do not provide any service to the clients of the appellant independently. No such contractual agreement exists between the subsidiaries/ branch offices of the appellant with the service recipient. The subsidiaries/ branch offices provide the said services to the appellant and raise bill for the same on appellant for which the appellant are also discharging the service tax on reverse charge basis treating them as import of services. Thus these services are input services to the appellant for providing the services to their client overseas. Whether CENVAT credit has been correctly disallowed by the Ld. Respondent in respect of various input services procured domestically? - HELD THAT:- The case of revenue is that the Commissioner (Appeal) has erred while determining the total turnover by deducting the value of onsite services provided by the overseas subsidiaries / branches directly to their clients, which do not qualify as export of services from the value of total turnover. The stand is itself erroneous, the said services which were not provided by the appellants cannot be treated as part of total turnover of the Appellant and the hence the order of Commissioner (Appeal) cannot be faulted on this account. Appeal dismissed - decided against Revenue. Central Excise 2022 (5) TMI 1395 Refund of excess paid Swachh Bharat Cess and Krishi Kalyan Cess paid in excess alongwith excess Service Tax paid, alongwith interest - Jurisdiction - Reopening of assessment - HELD THAT:- Considering the fact that assessment had already been carried out by the adjudicating authority via order dated 03.01.2019 and that the remand order of the appellate authority was confined two only two aspects, which is noticed that, there was no occasion for the adjudicating authority to pass a fresh assessment order reopening the entire assessment. In this case, since the amounts and period involved are not in dispute and because the adjudicating authority has not furnished an acceptable reason as to why the amount paid towards tax and cess i.e., Rs.36,27,615/- [Rs.36,94,642/- less Rs.67,027/] is not refunded, we are inclined to allow the writ petition insofar as the refund of the actual excess amount paid by the petitioner on account of the service tax and cess is concerned. It is not in dispute that statutory interest gets triggered under Section 11BB of the 1944 Act, once the stipulated period for refund of the amount gets over (in this case, the stipulated period is three months commencing from the date of receipt of application under sub-section (1) of Section 11BB of the 1944 Act) - there cannot be any estoppel against a statute. Once the statute provides for payment of interest and the stipulated conditions are fulfilled, the respondent/revenue would be obliged, in law, to pay the interest. The respondent/revenue will pay interest on Rs.2,32,09,285/- at the rate of 6% p.a. (simple), commencing from 02.02.2018 till the date of payment i.e., 03.01.2019 - The respondent/revenue will remit to the petitioner the excess amount paid towards tax and cess i.e., Rs.36,27,615/- (Rs.36,94,642 less Rs.67,027/, which, according to the petitioner was a calculation error. Petition allowed. 2022 (5) TMI 1394 100% EOU - refund of cenvat credit accumulated - export of goods under a bond or a letter of undertaking - quantum of waste generated/determined as per input output norms - denial of refund on the ground that waste generated is more than the prescribed norms - Rule 5 of Cenvat Credit Rules - HELD THAT:- The order of the lower authority has denied the refund stating that the waste generated is more than the prescribed norms. The above ground cannot be a reason for denial of refund of such accumulated credit. If excess waste was generated, the same has also been cleared in DTA on payment of duty due on such waste. This automatically will take care of such accumulated credit. Hence we find that excess waste generated cannot be a norm for denial of such credit. There are no merits in the impugned order. Even the appeal filed by Revenue is not sustainable for this reason only. Reliance can be placed in the case of M/S ASIL INDUSTRIES LTD VERSUS CCE, JAIPUR I [ 2015 (2) TMI 747 - CESTAT NEW DELHI ] where it was held that The appellant would be eligible for cash refund of the accumulated Cenvat credit taken in respect of inputs which have been used in the manufacture of goods which has been exported under bond/LUT and in this case, cash refund can be disallowed only to the extent the cenvated inputs are contained in the scrap cleared for home consumption on payment of duty. The appeals filed by the appellantassessee are allowed and the appeals filed by the Revenue are dismissed. 2022 (5) TMI 1393 Marketability/saleability/dutiability - manufacture of petroleum products and organic chemicals - Low Sulphur Heavy Stock (LSHS) - Long Residues (LR) - Refinery gases (RG) - captive consumption - eligibility for exemption under notification 67/95 - Whether the impugned goods are marketable and therefore dutiable? - HELD THAT:- Undisputedly the test of manufacture as per section 2(f) of Central Excise Act, 1944 and excisablity as per Section 2(d) is satisfied. The whole issue that needs to be determined is vis a vis the marketability of the impugned goods. Show Cause Notice issued to respondent, were silent on this aspect of marketability, so Commissioner himself conducted enquiries from the independent sources and on the basis of the enquiries conducted concluded that the impugned goods are not marketable and hence not dutiable. Commissioner was not required to take such an exercise and it was the investigating authority or the authority who had issued the show cause notice who should have conducted such enquiries from as many sources they desired and establish that these goods were marketable. Having not done so, in the appeal, revenue cannot default the enquiries conducted by the Commissioner. It is also settled legal position that burden to prove marketability is on the department and in the absence of any evidence being led in by the department to show that the goods in question are capable of being bought and sold, demand cannot be confirmed. Be that as it may be revenue has in the appeal sought to adduce the evidence from the numerous websites to show that the impugned goods have some possible use or are capable of being use, but they have not produced any evidence about the marketability of the said goods at the relevant time. Marketability is not synonymous with usability. Certain goods may be usable but just because they are usable, would determine the existence of the market for the said goods. The entire reliance placed by the revenue on the web material to establish marketability is devoid of any merits, and these web print outs cannot be relied in evidence at the stage of appeal or arguments as the marketability is not only a question of fact but is also very dynamic. With emergence of new technologies, products which were never marketable earlier may become marketable subsequently or the products which are marketable today may go in oblivion on a later date. The marketability for the purpose of levy of excise duty needs to be determined at the relevant time and evidences to that effect need to be adduced. Web- material is only hypothetical and also dynamic. Reliance placed on the web material as late as of 2019, to establish marketability during the period 1996 to 2005 cannot be accepted as evidence in any judicial proceedings. Hence the web print outs of the subsequent date as the evidence to establish the marketability of the impugned goods, is not admitted. Revenue having failed to establish marketability of the impugned goods in the present ten show cause notice which have been adjudicated as per the impugned order cannot succeed on the leviability of duty of excise on the impugned goods. Since the appeal of revenue cannot succeed on this ground, the other issues and ground of admissibility of exemption under Notification No 67/95-CE etc. need not be considered. The appeal filed by the revenue is dismissed. CST, VAT & Sales Tax 2022 (5) TMI 1392 Territorial Jurisdiction - situs of sale - whether alleged lease rentals could be brought to tax under the Haryana VAT Act by State of Haryana even though agreements in this regard have been executed at Chandigarh and as such no tax could have been levied? - validity of upholding levy of tax by treating the recovery of outstanding loan amount under One Time Settlement Scheme to be lease rentals? - HELD THAT:- By virtue of the impugned common order dated 29.08.2017 (Annexure A-8), the Tribunal has held that the amount of lease recovered by the appellant is covered by the definition of sale irrespective of the fact whether it is recovered as lease money, rental, higher purchase instalments or by whatever name it be called. With regard to territorial jurisdiction the Tribunal has taken a view that the appellant is an assessee registered at Panchkula under the Haryana VAT Act and has also paid some voluntary tax at Panchkula. Since the equipment/machinery/vehicles were leased out in the State of Haryana, therefore Haryana is the 'situs of sale'. It has further been observed by the Tribunal that if the goods are located within the State at the time of use, the State shall be deemed to be the 'situs of sale' and as such rejected the argument that merely because head office of assessee is at Chandigarh and agreements were entered into at Chandigarh, it would deprive the authorities in Haryana to levy tax on the transactions which have taken place within the State. The location or delivery of goods within the State cannot be made a basis for levy of tax on sales of goods. Under general law, merely because the goods are located or delivery of which has been effected for use within the State would not be the situs of deemed sale for levy of tax if the transfer or right to use has taken place in another State. The State cannot levy a tax on the basis that one of the events in the chain of events has taken place within the State. The delivery of goods may be one of the elements of transfer of right to use, but the same would not be the condition precedent for a contract of transfer of right to use goods. Where a party has entered into a formal contract and the goods are available for delivery irrespective of the place where they are located, the situs of such would be where the property in goods passes, namely, where the contract is entered into. Appeal allowed - issue decided in favor of assessee. Indian Laws 2022 (5) TMI 1391 Dishonor of Cheque - forgery of signature in the cheque - Rejection of application of the petitioner-accused to examine a handwriting expert in her defence - whether signatory of the cheque need to fill in the body of the cheque for the cheque to be a valid cheque? - proceedings initiated under section 138 of NI Act - HELD THAT:- A perusal of the judgments in T. NAGAPPA VERSUS Y.R. MURALIDHAR [ 2008 (4) TMI 789 - SUPREME COURT] , would clearly establish that when a contention is raised that the complainant has misused the cheque by filling up the body of the same, even in a case, where a presumption can be raised under Section 118(a) or 139 of the Negotiable Instruments Act, an opportunity must be granted to the accused for adducing evidence in rebuttable thereof. As the law places burden on the accused, he must be given an opportunity to discharge it. The complainant will invariably not disclose that the body of the cheque has been filled up by him or at his instance even where the signatures on the cheque has been accepted by the accused. Without doubt, the holder of the cheque has the authority to fill the same and the cheque would be a valid instrument but to start with, the first step available with an accused to rebut the presumption that the cheque had been issued for the discharge of a legally enforceable debt is by examining a handwriting to testify that the signatory and the author of the body of the cheque are different persons. Even if the difference in writing is established, the accused will still have to rebut the presumption under the Act, that the cheque is a valid tender and that he had made the payment to the complainant but despite that fact, the complainant filled up the cheque and presented the same leading to it's dishonouring - On the other hand, if the permission to examine the handwriting expert is not permitted on the ground that the holder has the authority to fill the body of the cheque, then the accused cannot even begin to establish his defence that a cheque issued as security has been filled up by someone other than him and misused. Thus, it would be unfair to shut out the defence of the accused at the threshold. The judgment in T. Nagappa's case lays down the law more elaborately and accurately, which only reiterate the position of law that the signatory of the cheque need not filled in the body of the cheque for the cheque to be a valid cheque. The petitioner-accused shall examine the handwriting expert as a defence witness within a period of four weeks. The application of the petitioner-accused is allowed - petition allowed.
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