TMI Tax Updates - e-Newsletter
June 21, 2022
Case Laws in this Newsletter:
GST
Income Tax
Customs
Insolvency & Bankruptcy
Service Tax
Central Excise
Indian Laws
Highlights / Catch Notes
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GST:
Freezing of Bank Accounts of the petitioner - recovery of the amount of tax interest and penalty - In the given circumstance, in the opinion of this Court, staying the impugned order in the light of Sub Section (8) of Section 112 of the GST Act would in sum and substance amount to staying the effect of Section 16(4) of the GST Act which this Court would restrain from doing. - HC
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GST:
Detention of goods alongwith the vehicle - quantum of security for provisional release of goods - Clauses (a) and (b) deal with the quantification of the penalty, clause (a) in the case of voluntary payment by the assessee and clause (b) in cases where the assessee does not come forward to remit the penalty. In either case, the remittance of the penalty is to be by way of security equivalent to the amount payable under clauses (a) or (b), furnished in the prescribed manner. - HC
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Income Tax:
Safe Harbour Rule - Income-tax (18th Amendment) Rules, 2022 - Amends Rule 10TD - Notification
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Income Tax:
No TDS on on payment in the nature of lease rent or supplemental lease rent to the IFSC for lease of an aircraft - Central Government specifies that no deduction of tax shall be made under section 194-IA of the IT Act 1961 - Notification
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Income Tax:
Income-tax (Seventeenth Amendment), Rules, 2022 - Additional conditions required to be fulfilled by a specified fund for availing exemption u/s 10(4D) - Notification
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Income Tax:
Central Government notifies transfer of capital asset from NTPC Limited u/s 47(viiaf) - Notification
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Income Tax:
Cost Inflation Index for the Financial Year 2022-23 notified as 331
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Income Tax:
TP Adjustment - assessment barred by Limitation - Timelines u/s 92CA, 144C and 153 - the provisions of Sections 144C and 153 are not mutually exclusive, but are rather mutually inclusive. The period of limitation prescribed under Section 153 (2A) or 153 (3) is applicable, when the matters are remanded back irrespective of whether it is to the Assessing Officer or TPO or the DRP, the duty is on the assessing officer to pass orders. - The outer time limit of 33 months in case of reference to TPO under Section 153, would not refer to draft order, but only to final order and hence, the entire proceedings would have to be concluded within the time limits prescribed. - HC
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Income Tax:
Addition u/s 68 - addition in share capital and share premium, identity and creditworthiness of the share holders, valuation report - Since no cash was involved in transaction of said allotment of shares, conversion of these liabilities into share capital and share premium could not be treated as unexplained cash credits u/s 68 - AT
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Income Tax:
TP Adjustment made on account of interest chargeable on outstanding receivables - applying LIBOR rates - adoption of SBI prime lending rate @14.45% is definitely excessive and is not in order. In our considered opinion, applying LIBOR rates plus two basis points would be a reasonable rate of interest which should be adopted for benchmarking the international transaction of interest on outstanding receivables. - AT
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Income Tax:
Addition on account of notional increase in employee’s cost - surplus in planned assets - As the employee cost was reduced in the Profit & Loss Account, the said amount was also reduced from the income to nullify its effect. In the present case, it is not in dispute that the said entry is a notional entry. Thus, all the consequences in respect of the notional entries will follow and such an entry cannot be treated as an income if in excess / surplus. - No addition can be made - AT
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Income Tax:
Prior period expenditure - Addition of legal and professional charges - if the Tax Consultant following its general practice raises the invoice upon conclusion of the matter after passing of the order by the concerned authority, we are of the considered view that such expenditure cannot be treated as prior period expenses. Particularly, it is only when the invoices for legal and professional services are raised by the Consultant, the liability arises / crystallizes in the hands of the assessee and it is only in that year such expenditure will be allowable to the assessee - AT
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Income Tax:
Computation of refund and interest thereon under section 244A - The present case is not a case where interest on interest due was claimed by the assessee. The issue arising in the present case is regarding correct computation of refund. As per the Revenue, while computing the refund and interest thereon under section 244A of the Act, the refund already granted to the assessee should be adjusted against the tax component. However, as per the assessee, the refund already granted to the assessee should be first adjusted against the interest component and balance, if any, towards the tax component of the refund due. - - Decided in favor of assessee - AT
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Income Tax:
Taxable income to tax u/s 44BB v/s Section 44DA read with section 9(l)(vii) - The profit from this income was estimated at 25% and offered to tax at 40% plus applicable taxes as against income offered to tax under section 44BB of the Act ie profit being 10% of gross receipts. We find the ld.CIT(A) held that income from services and equipment of rentals involved have direct nexus with oil exploration or production. Accordingly, bifurcation of income between PSC and Non-PSC is to be deleted and held that income from the aforesaid streams are to be taxed under section 44BB - AT
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Income Tax:
Assessment u/s 153C - undisclosed income of the present assessee - As per the provisions of section 153C of the Act, incriminating material which was seized had to pertain to the assessment year under consideration. It is an undisputed fact that documents which are seized referred to in para 4 of this order do establish co-relation with the additions made in these assessment years - the addition made by the AO is based on seized material found in the course of search and therefore the framing of assessment u/s 153C of the Act is justified. - AT
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Income Tax:
Stay on collection/recovery of the tax and interest demands - There is no material change in facts and circumstances of the case as before Their Lordships as before us now. The two companies investing in the assessee before us are Mauritian companies and seem to be special purpose vehicles, and, at the stage of the hearing of stay petition and based on the material before us, it is not possible for us to, even prima facie, take a call on their bonafides and genuineness. - AT
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Customs:
Confiscation - levy of redemption fine and penalty - mis-classification of imported goods - The suo motu offer for making necessary rectification in the Bill of Entry was made before the Department pointed out or issue of any notice to the appellant. Thus, this is a case of simple clerical error and there is no case of contumacious conduct on the part of the appellant. - Confiscation and penalty both under Section 112(a)(ii) and 114AA of the Act set aside - AT
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Corporate Law:
National Financial Reporting Authority Amendment Rules, 2022 - Punishment in case of non-compliance - Notification
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IBC:
Insolvency and Bankruptcy Board of India (Grievance and Complaint Handling Procedure) (Amendment) Regulations, 2022. - Notification
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IBC:
Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) (Second Amendment) Regulations, 2022 - Notification
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IBC:
CIRP - seeking extinguishment of Property Tax/ Municipal Tax dues and Land Revenue Tax dues - The liquidator had followed the complete algorithm as enshrined in the Code for carrying out the liquidation process, which included public announcement for invitation for the claims. Despite that R2 & R3 have not cared to lodge their claim, if any, before the liquidator and have not taken any steps to approach this Adjudicating Authority in good time to make any representation in this regard and therefore now they are estopped from raising the claims at this date. - Tri
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Service Tax:
Refund of service tax - Appellant has one unit in SEZ and on in DTA - There is no dispute that the appellant’s service provider is located in Kolkata which is a DTA unit and the appellant’s unit is located in SEZ. As per Sub Rule (7) of Rule 19 of the Special Economic Zone Rules, 2006 it clearly provides that if an enterprise is operating both as Domestic Tariff Area Unit as well as a Special Economic Zone Unit, it shall have two distinct identities with separate books of account, but it shall not be necessary for Special Economic Zone unit to be a separate legal entity. With this clear provision under the Special Economic Zone Rules even if the appellant is not a separate legal entity, the unit being located in SEZ shall be treated as distinct identity, therefore, the denial of refund on this ground also not tenable.- AT
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Service Tax:
CENVAT Credit - duty paying document - invoices / challan - The appellant’s eligibility of credit is not on the basis of Rule 9(1)(bb) which is on the basis of Rule 9(1)(e) which provides that Cenvat Credit on challan which is evidence of payment of service tax on reverse charge mechanism therefore, the entire case of the department is on wrong footing. - AT
Articles
Notifications
Circulars / Instructions / Orders
News
Case Laws:
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GST
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2022 (6) TMI 852
Restoration of petitioner's GST registration - no opportunity being given to explain the reason - HELD THAT:- When the matter is taken up for hearing today (ie. 17.06.2022), the learned counsel appearing for the petitioner submitted that the petitioner would deposit 10% of the total amount of tax within a period of three (3) weeks and file appeal before the Appellate Authorities as per Section 107 (6) (b) of Central Goods and Services Tax Act. Recording the same, the petitioner is directed to deposit 10% of the total amount of tax, within a period of three (3) weeks from 20.06.2022 and he would make submission before the Appellate Authorities. Petition dismissed.
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2022 (6) TMI 851
Freezing of Bank Accounts of the petitioner - recovery of the amount of tax interest and penalty - infringement of the fundamental rights guaranteed to the petitioner under Article 14 and 19 (1)(g) and the constitutional right granted under Article 300A of the Constitution of India - non-constitution of GST council in the State of Bihar - remedy under Section 112 of the GST Act not available to petitioner - HELD THAT:- This Court finds that in the prayer portion of the writ application in paragraph 1 (L), the petitioner has prayed for quashing of the order dated 16.12.2021 and summary of the demand issue in form GST APL-04 dated 21.12.2021, the petitioner has also challenged the order passed under Section 73 of the GST Act and the summary demand issued in Form GST DRC-07 dated 03.03.2020 but from the tone and tenor of the prayer itself it is clear that such reliefs are by way of consequential reliefs and unless the petitioner succeeds in challenging the vires of Section 16(4), perhaps he may not get the relief as prayed in paragraph 1 (L) of the writ application. In the opinion of this Court, staying the impugned order in the light of Sub Section (8) of Section 112 of the GST Act would in sum and substance amount to staying the effect of Section 16(4) of the GST Act which this Court would restrain from doing - Application disposed off.
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2022 (6) TMI 850
Detention of goods alongwith the vehicle - quantum of security for provisional release of goods - discrepancies in the shipment of the goods and the documents accompanying the consignments - HELD THAT:- The statutory provision envisages detention and seizure, if the goods in question are found to have been conveyed in contravention of the provisions of the Act or Rules. Post such detention or seizure, the seized goods 'shall' be released subject to satisfaction of the conditions set out under clauses (a) to (c) of Section 129(1) of the Act. Clauses (a) and (b) deal with the quantification of the penalty, clause (a) in the case of voluntary payment by the assessee and clause (b) in cases where the assessee does not come forward to remit the penalty. In either case, the remittance of the penalty is to be by way of security equivalent to the amount payable under clauses (a) or (b), furnished in the prescribed manner. Let the petitioners furnish bank guarantees for the amounts quantified in terms of the impugned notices dated 01.06.2022, in proper form, upon receipt of which, the goods shall be released forthwith by the Officer - Petition disposed off.
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2022 (6) TMI 849
Grant of refund of the amount of IGST already paid by the applicants with appropriate interest on such refund - Entry No.10 of Notification No.10/2017-IGST (Rate) dated 28.6.2017 - HELD THAT:- The Division Bench of this Court vide judgment and order dated 23.1.2020 [ 2020 (1) TMI 974 - GUJARAT HIGH COURT ] passed in the captioned writ petition along with other writ petitions allowed the writ petitions and declared Entry No.10 of Notification No.10/2017-IGST (Rate) dated 28.6.2017 as ultra vires the Act. He would further submit that during the pendency of the present application, Civil Appeal No.1390 of 2022 and allied appeals preferred at the instance of the respondents also came to be dismissed by judgment and order dated 19.5.2022 passed by Hon'ble Apex Court. He, therefore, would submit that necessary direction may be issued to the respondents to refund the amount of tax already paid by the applicant. The present application requires consideration and hence, the same is allowed.
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Income Tax
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2022 (6) TMI 848
TP Adjustment - assessment barred by Limitation - Timelines u/s 92CA, 144C and 153 - Reference to DRP - order of remand passed by the Tribunal, the Assessing Officer has not taken up the assessment proceedings within a reasonable time and therefore, the entire proceedings are vitiated by reason of delay - as per assessee outer time limit u/s 153 is applicable to every proceedings on remand and the department having slept over the issue for several years, cannot now redo the proceedings afresh, after certain rights have vested with the assessees - main contentions of the Department,that Section 144C is a code in itself and hence on remand by the ITAT, the power of DRP to take up the dispute on additions by TPO, is not circumscribed by Section 153 and that in the absence of any express time limits contemplated under the Act, the time limits under Section 153 for reassessment cannot be read into Section 144C more particularly when the provisions of Section 153 are excluded by the non-obstante clause in section 144C(13) and hence the proceedings are not barred by limitation HELD THAT:- As rightly contended by the learned senior counsels and affirmed by the Learned Judge, the DRP proceedings is a continuation of assessment proceedings. To put it further, it is a part of assessment proceedings, once the objections are filed and under section 144C (12) a period of 9 months is prescribed, within which, directions are to be issued by the DRP, failing which any directions are to be treated as otiose. As seen from the timeline discussed in the earlier paragraphs, the original assessment proceedings are to be completed within 21 months and the additional time of 12 months is granted when proceedings before TPO is pending. The TPO has to pass orders before 60 days prior to the last date. Then 30 days time is given to the assessee to file their objection before the DRP and the DRP is given 9 months time and thereafter, within one month from the end of the month of receipt of directions from DRP, the final order is to be passed. This court is not in consonance with the contention of the learned senior panel counsel for the appellants/ revenue that the time period of 33 months, provided initially is for the draft order and not for the final order. A careful perusal of the timeline would indicate that the time limit is for the final assessment and not for the draft order. The anomaly in the argument is that in the present cases, no fresh draft order was passed, but the DRP had issued the notices. If the contention of the appellants / revenue was to hold some water, they must have passed the draft assessment order immediately on receipt of the order from the Tribunal, but instead, notice was issued by the DRP. In any case, it is a far cry for the revenue as because no order has been passed for more than 5 years. The assessment has to be concluded within 21 months when there is no reference and when there is a reference, it has to be concluded within 33 months. In the additional 12 months, the draft order is to be passed, the objections have to be filed, the DRP has to issue the directions and the final order is to be passed. The provisions under section 144C and section 153 are not mutually exclusive as both contain provisions relating to Section 92CA and are inter-dependant and overlapping. As rightly held by the learned judge, we are of the view that the DRP ought to have concluded the proceedings within 9 months from the date of receipt of the Tribunal s order, when it had issued a notice on 19.02.2014 and conducted the hearing as early as on 10.03.2014 and on several dates. DRP at Chennai, in fact ought to have passed orders before 19.11.2014, even if the date of receipt of the notice is taken as 19.02.2014. In that event, the assessing officer ought to have passed the order before 31.12.2014 or at the latest before 31.03.2015 considering that the order was received during the Financial year 2013-14. The transfer of the files to Bengaluru, after the lapse of the time, will not indefinitely extend the time and can have no impact on the time lines. It is an inter-department arrangement and it cannot defeat the rights of the assessee. Insofar as the non-obstante clause in Section 144C(13) is concerned, we concur with the view of the Learned Judge. The exclusion of applicability of Section 153 or Section 153 B is for a limited purpose to ensure that dehors larger time is available, an order based on the directions of the DRP has to be passed within 30 days from the end of the month of receipt of such directions. The section and the sub-section have to be read as a whole with connected provisions to decipher the meaning and intentions The limitation prescribed under the statute is for the assessing officer and therefore, it is his duty to pass order in time irrespective of whether the directions are received from DRP or not. As held by us above, the DRP will have no authority to issue directions after nine months and a further period of one month as per section 144C (13) and three months under section 153 (2A) is available, within which period no orders have been passed in the present cases. The reference made by the learned senior counsels on the judgments in Nokia India Private Ltd ( 2017 (9) TMI 1298 - DELHI HIGH COURT] and Vedanta Ltd ( 2020 (1) TMI 168 - MADRAS HIGH COURT] is well founded. The timeline given under the Act is to be strictly followed. We conclude as under: (a) The provisions of Sections 144C and 153 are not mutually exclusive, but are rather mutually inclusive. The period of limitation prescribed under Section 153 (2A) or 153 (3) is applicable, when the matters are remanded back irrespective of whether it is to the Assessing Officer or TPO or the DRP, the duty is on the assessing officer to pass orders. (b) Even in case of remand, the TPO or the DRP have to follow the time limits as provided under the Act. The entire proceedings including the hearing and directions have to be issued by the DRP within 9 months as contemplated under Section 144C (12) of the Income Tax Act, (c) Irrespective of whether the DRP concludes the proceedings and issues directions or not, within 9 months, the Assessing officer is to pass orders within the stipulated time, (d) In matter involving transfer pricing, upon remand to DRP, the Assessing officer is to pass a denova draft order and the entire proceedings as in the original assessment, would have to be completed within 12 months, as the very purpose of extension is to ensure that orders are passed within the extended period, as otherwise the extension becomes meaningless. (e) The outer time limit of 33 months in case of reference to TPO under Section 153, would not refer to draft order, but only to final order and hence, the entire proceedings would have to be concluded within the time limits prescribed, (f) The non-obstante clause would not exclude the operation of Section 153 as a whole. It only implies that irrespective of availability of larger time to conclude the proceedings, final orders are to be passed within one month in line with the scheme of the Act, (g) When no period of limitation is prescribed, orders are to be passed within a reasonable time, which in any case cannot be beyond 3 years. However, when the statute prescribes a particular period within which orders are to be passed, then such period, irrespective of whether it is short or long, shall be applicable.
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2022 (6) TMI 847
Interest u/s 244A - Withhold of refund exercising powers u/s 241A - HELD THAT:- As keeping in view the earlier order [ 2021 (3) TMI 848 - DELHI HIGH COURT] it is apparent that though the petitioner is entitled to interest in accordance with Section 244A up to the date of payment i.e., 28th May, 2021, yet it has been paid interest only up to 2nd October, 2019. Consequently, this Court directs the Respondents to issue applicable interest to the Petitioner for the period April 2018 to 28th May, 2021 within six weeks.
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2022 (6) TMI 846
Validity of Faceless Assessment u/s 144B - Violation of the principles of natural justice - according to the petitioner, the order of assessment has been issued without serving the show-cause notice and the draft assessment order, as contemplated under section 144B(1)(xvi)(b) - HELD THAT:- The provisions of section 144B, as mentioned earlier, requires the draft assessment order and the show-cause notice to be furnished to the assessee, eliciting his explanation. The impugned order of assessment has varied the alleged return filed by the petitioner. Since the mandate of the statue has been clearly infringed upon the assessment order falls foul of the principles of natural justice and hence is liable to be set aside. The decisions of the Delhi High Court in DJ Surfactants [ 2021 (6) TMI 1109 - DELHI HIGH COURT] and that in RMSI Private Limited [ 2021 (7) TMI 745 - DELHI HIGH COURT] in this context are relevant. Accordingly, Ext.P11 order of assessment is set aside. Consequently, Ext.P14 penalty order shall also stand set aside. Having regard to the circumstances of the case, the competent among the respondents shall serve the draft assessment order along with a show-cause notice to the petitioner, as expeditiously as possible, in a time bound manner and complete the proceedings in accordance with law, without further delay.
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2022 (6) TMI 845
Validity of order of Settlement Commissioner - scope of judicial review under Article 226 against an order made by the Settlement Commissioner under Section 245C - remand for re-verification by the Settlement Commissioner of advances - HELD THAT:- In Jyothindra Singhji case [ 1993 (4) TMI 1 - SUPREME COURT ], the Supreme Court has held that the scope of the enquiry whether by the High Court under Article 226 or before the Supreme Court in the appeal under Article 136 remains the same viz. to consider whether the order of the Settlement Commissioner is contrary to the provisions of the Income Tax Act, and if so whether it has prejudiced the petitioner. This is, of course, apart from grounds of lies, fraud and malice which constitute a separate and independent category. A reading of the judgment under appeal discloses that the principle in Jyothindrasinghji is applied by the learned Single Judge in appreciating whether the settlement in Ext.P1 is in accordance with the provisions of the Act or not. Om Prakash Mithal case [ 2005 (2) TMI 16 - SUPREME COURT ] lays down the object and procedure followed by the Commission in applications arising under Section 245D The procedure followed by the Settlement Commission in the case on hand in appreciating the advances, CFS etc. definitely desires a sort of consideration in accordance with the provisions of the Act. Ext.P1 tested on the principles enunciated by the Supreme Court in the case of Om Prakash Mithal the deficiency noted by the judgment under appeal is correct. The judgment of the Karnataka High Court in N.Krishnan case [ 1989 (3) TMI 77 - KARNATAKA HIGH COURT ] has stated that the scope of the judicial review is available where there is no nexus between the reasons given and the decision taken. In the case on hand, Ext.P1 could be held to be as not assigning reasons or reflecting the mind of the Settlement Commission for accepting the case of the appellants. The remand is justified in the circumstances of the case. We are also of the view that the scope of judicial review is relatable to the issues on hand both in fact and law in matters arising under Secs.245C 245D. It is not safe or suggested to convert the scope of judicial review into an abstract application of mathematical principle on abstract reasons and decide a core issue in the matter. The scope of judicial review is certainly a dynamic jurisdiction dependant on the circumstances of each case. In the case on hand the learned Single Judge has objectively and within the scope of review available under Article 226 against the orders made by the Settlement Commission, rightly interdicted and remitted the matter to the Settlement Commission. In the instant intra court appeal, we see no error of jurisdiction in the judgment under appeal. The appeal fails and dismissed.
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2022 (6) TMI 844
Penalty u/s 271(1)(c) - incorrect claim of deduction by the assessee on LTCG - Assessee s plea before the ld. CIT(A) that the same was on account of wrong advice by the counsel has been rejected by the ld. CIT (A) - CIT (A) made such observation that even after AO s pointing out that correct amount of claim as per documents be submitted for section 54B and 54F, the said counsel proceeded with the inflated claim - HELD THAT:- As in our considered opinion, the wrong claim of section 54B and 54F exemption not being in consonance with the documents invites the rigors of penalty. Further, the assessee s plea of having income voluntary offered, the same has rightly been rejected by the authorities below as it is clearly after the AO s confrontation with the assessee with the correct position, that the assessee offered the same. Hence, we uphold the order of Revenue authorities.
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2022 (6) TMI 843
Revision u/s 263 - as per CIT assessment completed by the AO u/s 143(3) is erroneous allowing the similar claim of the assessee for deduction u/s 80P(2) in respect of interest income earned on the deposits with Mehsana Urban Co-operative Bank - HELD THAT:- The issue involved in the present case is thus squarely covered by the decision rendered by the Tribunal in the case of the People Co-op. Credit Society Ltd. [ 2022 (3) TMI 71 - ITAT AHMEDABAD] wherein a similar issue involving identical facts and circumstances has been decided by the Tribunal in favour of the assessee and even the learned DR has not been able to dispute this position. We, therefore, follow the said decision of the Coordinate Bench of this Tribunal and set aside the impugned order passed by the PCIT under Section 263 of the Act restoring that of the Assessing Officer passed under Section 143(3) of the Act. - Decided in favour of assessee.
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2022 (6) TMI 842
Addition u/s 68 - unexplained cash credit - onus to prove - AO concluded that the creditworthiness and genuineness of the transactions had not been proved - summons u/s 131 could not be served because of sundry creditors were not traceable by the Jurisdictional Assessing Officer at the given address by the assessee goes to prove that the identity of the sundry creditors was bogus - As submitted by assessee Mere fact that the notices u/s 133(6) and summons u/s 131 could not be served, it does not lead to conclusion that the sundry creditors are bogus especially in the light of fact that the loans were repaid through banking channel along with interest after deduction of tax deducted at source in the subsequent assessment years - HELD THAT:- Indisputably, the assessee had discharged the onus lying upon him by filing all the necessary details and particulars such as PAN Numbers, copies of returns of income, bank statements etc. The mere fact that the sundry creditors had failed to respond to the notices issued u/s 131 could not justify any adverse inference being drawn against the assessee in the light of the judgement of the Hon ble Supreme Court in the case of CIT vs. Orissa Corpn, (P.) Ltd [ 1986 (3) TMI 3 - SUPREME COURT] The same ratio was followed by the Hon ble Delhi High Court in the case of CIT vs. Divine Leasing Finance Ltd. [ 2006 (11) TMI 121 - DELHI HIGH COURT] In the present case, though the Department is in possession all full particulars of loan creditors, such as bank passbook, etc, nothing more than mere issue notice u/s 131 of the Act was done by the Assessing Officer. There was no effort made to pursue the creditors. Even the Assessing Officer granted unreasonably short time to produce the sundry creditors before the Assessing Officer. Considering these circumstances, we are of the considered opinion that the Assessing Officer had not discharged the onus of burden of proving that had shifted to it that the sundry creditors are bogus and credits represent the income of the assessee. Therefore, the Assessing Officer as well as the ld. CIT(A) had failed to appreciate the facts and law in proper perspective. Accordingly, we set aside the orders of the lower authorities and direct the Assessing Officer to delete the addition - Decided in favour of assessee. Addition u/s 41(1) - AO made addition disbelieving the genuineness of the credit and brought the tax u/s 41(1) - CIT(A) considering the fact that the sundry creditors are not written off in the books of accounts held that the question of invoking provisions of section 41(1) does not arise - HELD THAT:- It is settled position of law that merely because the credit was outstanding for long time does not lead to conclusion that the sundry creditors are not payable. We find from the material on record that there is a material on record in the form of credit notes issued by the appellant as to how the amount became payable to these parties. This evidence was not reverted by the Department. The submission made by the assessee that these amounts were paid in the subsequent year through banking channel remained uncontroverted. The burden lies upon the Department to establish the cessation of liability before invoking the provisions of section 41(1) of the Act. Apparently, this burden was not discharged by the Revenue, inasmuch as, the amounts of sundry creditors were paid in the subsequent year then there is no scope to invoke the provisions of section 41(1) by the Assessing Officer. Thus, we do not find any illegality and perversity in the order of the ld. CIT(A) to delete the addition made u/s 41(1) of the Act. Thus, we do not find any merits in the ground of appeal no.3 filed by the Revenue dismissed.
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2022 (6) TMI 841
Addition u/s 68 - addition in share capital and share premium, identity and creditworthiness of the share holders, valuation report - Assessee has failed to discharge its onus of proving the identity and creditworthiness of the investors and genuineness of the transaction - HELD THAT:- Admittedly during the relevant year no cash was actually infused in the fund flow of company. There was mere dressing of accounts. As for the purpose of invoking Section 68 in the case of VR Global Energy Pvt. Ltd . [ 2018 (8) TMI 866 - MADRAS HIGH COURT] has held that where the assessee allotted shares to a company in settlement of pre-existing liability of assessee to the said company by way of adjustment and since no cash was involved in transaction of said allotment of shares, conversion of these liabilities into share capital and share premium could not be treated as unexplained cash credit u/s 68 of the Act. It was held that since the cash credits towards share capital were only by way of book adjustment and not actual receipts, therefore, the same could not be treated as receipt towards share subscription money. Since no cash was involved in transaction of said allotment of shares, conversion of these liabilities into share capital and share premium could not be treated as unexplained cash credits u/s 68. - Decided in favour of assessee. Allowable expenditure u/s 37(1) - HELD THAT:- As there is no matter on record to suggest that the expenses were examined on the basis of actual expenditure corroborated by evidence. Therefore the issue in regard to the disallowance of expenses is restored to the files of the ld AO with a direction to evaluate the genuineness of the expenses on actual expenditure basis and then pass fresh assessment order. Accordingly ground allowed in favour of the Assessee for statistical purposes.
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2022 (6) TMI 840
Deduction u/s.80P(2)(a)(i) - assessee society is a registered co-operative society under the Tamil Nadu Co-operative Societies Act, 1961 - CIT(A) deleted the addition and allowed the claim of deduction - HELD THAT:- Even this issue is now covered by the Co-ordinate Bench decision in the case of Tamilnadu Co-operative State Agriculture and Rural Development Bank Limited [ 2022 (6) TMI 770 - ITAT CHENNAI] wherein following the decision of Hon ble Supreme Court in the case of The Mavilayi Service Co-operative Bank Ltd., Mavilayi Service Co-operative Bank Ltd., vs. CIT, [ 2021 (1) TMI 488 - SUPREME COURT] decided both the issues raised by AO. Respectfully following the same, we allow the claim of deduction u/s.80P(2) of the Act. Accordingly, the appeal of the Revenue is dismissed.
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2022 (6) TMI 839
Deduction u/s.80IB(9) - interest income would be taxable as business income OR income from other sources - HELD THAT:- This Tribunal in assessee s own case for A.Y.2009-10 by holding the interest income be treated as income from business and not as income from other sources . We find that this Tribunal in assessee s own case for A.Y.2009-10 had held that temporary business funds were deposited by the assessee into the bank account till the date of its requirement and therefore by placing reliance on the decision of the Hon ble Jurisdictional High Court in the case of CIT vs. Lok Holdings [ 2008 (1) TMI 365 - BOMBAY HIGH COURT] the said interest income would be taxable as business income . Respectfully following the same, the ground No.1 raised by the Revenue is dismissed. Deduction u/s.80IB(9) on profit earned by the assessee from exploration of natural gas - As per AO the provisions of Section 80IB(9) of the Act which restricts the deduction to exploration of mineral oil - AO in his assessment order took a view that natural gas does not fall into the category of mineral oil and hence restricted deduction u/s.80IB(9) of the Act to the proportionate profit relating to sale of only crude oil - CIT-A allowed the deduction - HELD THAT:- In view of the aforesaid decisions of this Tribunal in the case of Reliance Industries Ltd. which is a 90% joint venture partner of assessee and the decision of the Hon ble Gujarat High Court in the case of Niko Resources Ltd., [ 2015 (3) TMI 986 - GUJARAT HIGH COURT ] which is a sister concern of the assessee, we hold that the ld. CIT(A) had rightly granted relief to the assessee by allowing deduction u/s.80IB(9) of the Act on profit earned by the assessee for exploration of natural gas. Accordingly, the ground No.2 raised by the Revenue is dismissed. TP Adjustment made on account of interest chargeable on outstanding receivables - applying LIBOR rates - HELD THAT:- It is not in dispute that the receivables from AE were outstanding for more than two years. Accordingly, the ld. TPO observed that the same constitutes indirect funding by the assessee to its AE and therefore, the imputation of interest need to be made on the same. Whether the transaction of imputation of interest on outstanding receivables from AE would constitute an international transaction or not, is not in dispute before us. For the purpose of imputation of interest, the ld. TPO proposed the interest rate at 14.45% being the SBI prime lending rate. We hold that adoption of SBI prime lending rate @14.45% is definitely excessive and is not in order. In our considered opinion, applying LIBOR rates plus two basis points would be a reasonable rate of interest which should be adopted for benchmarking the international transaction of interest on outstanding receivables. We direct the ld. TPO / ld. AO to make transfer pricing adjustment in this regard accordingly.
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2022 (6) TMI 838
Prior period expenditure - Addition of legal and professional charges - AO has disallowed the claim by treating such expenses as prior period expenses i.e., not pertaining to the year under consideration - as submitted relevant assessment year is the fifth year of existence of the assessee company pursuant to demerger of MSEB and pursuant to demerger, assets and liabilities of MSEB to the extent it pertained to and were specifically allocable to the transmission undertaking were transferred to the assessee - HELD THAT:- It cannot be denied that it is a general practice among the Consultants to raise their invoices upon conclusion of the matters before the concerned authorities after the orders are passed by the said authorities. It is highly unlikely in such a case that the orders are passed by the concerned authority within the very same assessment year to which the matter pertains. Even if we consider the assessment year under consideration, as an example, the assessment order was passed on 14/03/2013, and the impugned order was passed on 03/02/2015, while the assessment year under consideration is 2010 11. In such a scenario, if the Tax Consultant following its general practice raises the invoice upon conclusion of the matter after passing of the order by the concerned authority, we are of the considered view that such expenditure cannot be treated as prior period expenses. Particularly, it is only when the invoices for legal and professional services are raised by the Consultant, the liability arises / crystallizes in the hands of the assessee and it is only in that year such expenditure will be allowable to the assessee - Decided against revenue. Addition of overstatement of interest and finance charge - CIT(A) deleted the addition - HELD THAT:- We find that on similar issue, the Co ordinate Bench of the Tribunal in assessee s own case in ACIT v/s Maharashtra State Electricity Transmission Co. Ltd [ 2021 (7) TMI 490 - ITAT MUMBAI] held that the interest accrued liability was transferred to the assessee on demerger/unbundling of the erstwhile MSEB; and as the said liabilities in question pertained to the earlier year, the same, thus, could not have been added during the year under consideration as an unexplained cash credit u/s 68 - We find no infirmity in the impugned order passed by the learned CIT(A) on this issue. Accordingly, ground no.2, raised in Revenue's appeal is dismissed. Disallowance of prior period expenses - HELD THAT:- As relying on own cases [ 2021 (2) TMI 733 - ITAT MUMBAI] we find no infirmity in the order of the ld. CIT(A) granting relief to the assessee in respect of prior period expenditure - as the assessee is one of the successor companies to the erstwhile MSEB, thus, respectfully following the aforesaid decisions rendered in case of erstwhile MSEB, we find no infirmity in the impugned order passed by the learned CIT(A) on this issue. Thus, ground no.3, raised in Revenue s appeal is dismissed. Addition on account of notional increase in employee s cost - surplus in planned assets pursuant to valuation exercise by actuary on the investment held by the CPF Trust - HELD THAT:- On a perusal of the record, it is evident that surplus in planned assets pursuant to valuation exercise by actuary on the investment held by the aforesaid CPF Trust was for the purpose of complying with the requirements of Accounting Standard 15. The same was done to compute the fair market value of the investments held in CPF Trust and to arrive at the shortfall / surplus of the investments over the liabilities of the assessee. The assessee has reduced the surplus in planned assets while computing the employee cost for the year under consideration. As the employee cost was reduced in the Profit Loss Account, the said amount was also reduced from the income to nullify its effect. In the present case, it is not in dispute that the said entry is a notional entry. Thus, all the consequences in respect of the notional entries will follow and such an entry cannot be treated as an income if in excess / surplus. This being the accepted position, we do not find any infirmity in the impugned order passed by the learned CIT(A). Thus, ground no.4, raised in Revenue s appeal is dismissed. Disallowance being provision for interest shortfall on Provident Fund liability - Revenue has only denied the claim of the assessee on the basis that it is merely based on the provisions so made and there is no actual expenditure by the assessee during the year under consideration - HELD THAT:- It cannot be denied that in case of actual payment made by the assessee in respect of Provident Fund such payments are allowable under section 43B of the Act. However, in the present case, the claim made by the assessee is on the basis of the provisions made for interest shortfall on Provident Fund liability. As the assessee is following mercantile system of accounting, in view of the decision of the Hon'ble Supreme Court in Bharat Earth Movers [ 2000 (8) TMI 4 - SUPREME COURT] which has rightly been followed by the learned CIT(A,) such a liability which has arisen during the year under consideration is allowable even though the same may have to be discharged at a future date. In view of the above, we find no infirmity in the impugned order passed by the learned CIT(A) on this issue. Accordingly, ground no.5, raised in Revenue s appeal is dismissed. Addition with regard to advance paid by the assessee - assessee submitted that the advance paid for lease finance project was transferred / allocated to the assessee in terms of the transfer scheme notification no. Reform 1005/CR 9061(1) MRG 5, dated 04/06/2005, i.e., these amounts were received by the assessee in accordance with the transfer scheme and pertained to erstwhile MSEB for the earlier year - DR. submitted that the learned CIT(A) instead of deciding this issue has set aside the same to the file of the Assessing Officer - HELD THAT:- With effect from 01/06/2001, the learned CIT(A) no longer has power to set aside the matter and can only confirm, reduce, enhance or annul the assessment in an appeal against the assessment order. Thus, the impugned order on this issue to the extent the matter is restored to the Assessing Officer for de novo verification of the details as directed to be filed by the assessee is contrary to the provisions of section 251(1)(a) of the Act. In view of the above, we direct the learned CIT(A) to adjudicate this issue de novo. The learned CIT(A) shall have the liberty to seek remand report, if any, from the Assessing Officer. Needless to say that before passing any order, opportunity of hearing shall be granted to assessee. Accordingly, grounds no.6 and 6.1, raised in the Revenue's appeal are allowed for statistical purpose. Nature of expenses - Disallowance of expenditure on repairs of plant and machinery - AO making a disallowance of expenditure on repairs to plant and machinery by holding the same to be capital in nature - HELD THAT:- In the present case, it is an accepted fact that the assessee is engaged in the business of transmission of electricity and thus, it cannot be denied that the assessee is required to maintain the transmission lines for which in the normal course of business, the assessee is also required to incur certain expenditure for the purpose of same. As per the assessee, the expenditure incurred is required for preservation, maintenance, proper utilisation or for restoring the existing assets to its original condition and hence, the said expenditure is to be allowed under section 31(i) of the Act. In the present case, apart from a mere allegation by Revenue that by way of these expenditure substantial addition in the assets were made, the Revenue has not proved by way of any material that new asset has come into existence by incurring these expenditure by the assessee. Further, the Revenue has also not doubted the policy of assessee whereby assessee suo-moto capitalise its repairs and maintenance expenditure, which needs to be capitalised. Further, unlike other observations of the C AG on other aspects, the C AG has not found any wrong in accounts of the assessee on this issue. At this stage, it is also pertinent to note the description on sample invoices, forming part of the paperbook reads as Fixation of vibration dampers cum spacers by Hot Line method including replacement tightening of Nut bolts of Existing jumpers cone/dead end of towers. Thus, in view of the above, we direct the Assessing Officer to delete the disallowance made by treating the expenditure on repairs of plant and machinery as capital in nature. Accordingly, grounds raised by the assessee are allowed.
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2022 (6) TMI 837
Disallowance u/s 40(a)(ia) - scope of amendment - whether the second proviso to Section 40(a)(ia) would have retrospective effect? - HELD THAT:- Matter is squarely covered by the decision of Jurisdictional High court in case of PCIT v/s Perfect Circle India Pvt.Ltd.[ 2019 (1) TMI 1532 - BOMBAY HIGH COURT] held this proviso as beneficial to the assessee and curative in nature. The leading judgment on this point is in the case of CIT Vs. Ansal Land Mark Township P Ltd [ 2015 (9) TMI 79 - DELHI HIGH COURT] as held that Section 40(a)(ia) is not a penalty and insertion of second proviso is declaratory and curative in nature and would have retrospective effect form 1.4.2005 i.e the date from the main proviso 40(a)(ia) itself was inserted. Several High Courts have adopted the same lines. We may also note that the Supreme Court in the case of Hindustan Coca Cola Beverages P Ltd Vs. CIT [ 2007 (8) TMI 12 - SUPREME COURT] even in absence of second proviso to Section 40(a)(ia) had noticed that the payee had already paid the tax. Under such circumstances, the Court held that the payer / deductor can at best be asked to pay the interest on delay in depositing tax We find that the issue is no more res integra and respectfully following the decision of Hon ble Jurisdictional High court in the decision referred (supra), both the appeals filed by the Revenue are dismissed.
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2022 (6) TMI 836
Computation of refund and interest thereon under section 244A - HELD THAT:- We find that the Hon'ble Supreme Court in Gujarat Fluoro Chemicals [ 2013 (10) TMI 117 - SUPREME COURT] was considering the correctness or otherwise of the decision of the Hon'ble Supreme Court in Sandvik Asia Ltd. [ 2006 (1) TMI 55 - SUPREME COURT] - The Hon'ble Supreme Court, while clarifying, held that under section 244A of the Act, interest provided for under the statute can only be claimed by the assessee from the Revenue and no other interest on such statutory interest is payable. Also see M/S. GRASIM INDUSTRIES LTD. VERSUS DCIT CEN CIR 1 (4) , MUMBAI AND (VICE-VERSA) [ 2021 (2) TMI 526 - ITAT MUMBAI] AND UNION BANK OF INDIA VERSUS ACIT LTU, MUMBAI [ 2016 (8) TMI 688 - ITAT MUMBAI] The present case is not a case where interest on interest due was claimed by the assessee. The issue arising in the present case is regarding correct computation of refund. As per the Revenue, while computing the refund and interest thereon under section 244A of the Act, the refund already granted to the assessee should be adjusted against the tax component. However, as per the assessee, the refund already granted to the assessee should be first adjusted against the interest component and balance, if any, towards the tax component of the refund due. We find no infirmity in the directions issued by the learned CIT(A). Accordingly, grounds raised by the Revenue, which are common in all the years under consideration, are dismissed.
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2022 (6) TMI 835
Penalty u/s 271(1)(c) - Defect in notice u/s 274 - Addition towards difference in silver stock - assessee was having excess stock of silver of 30,423.95 grams - Neither any surrender was made on this score nor such an income was offered in the return filed - addition was made by the AO for such sum along with that on account of excess Gold found during the survey and Cash difference - HELD THAT:- Notice u/s. 274 r.w.s. 271(1)(c) was initially issued on 07-03-2014 at the time of completion of the assessment by keeping both the limbs intact, namely, concealed the particulars of income and furnishing of inaccurate particulars of income . After the passing of the order by the ld. CIT(A) in quantum proceedings, the AO issued notice u/s. 274 r.w.s. 271(1)(c) dated 05-03-2018 before imposing the penalty. This notice also talks of both the limbs of section 271(1)(c), namely, concealing the particulars of income and furnishing of inaccurate particulars of income . Thus, it is apparent that as against the sole addition of excess stock of silver, the AO issued notice u/s. 274 by keeping both the limbs of penalty u/s. 271(1)(c) alive As decided in MR. MOHD. FARHAN A. SHAIKH [ 2021 (3) TMI 608 - BOMBAY HIGH COURT] defect in notice of not striking out the irrelevant words vitiates the penalty even though the AO had properly recorded the satisfaction for the imposition of penalty in the order u/s. 143(3) . As it is clear that where the charge is not properly set out in the notice u/s. 274, viz., both the limbs stand therein without striking off the inapplicable limb, the penalty order gets vitiated.- Decided in favour of assessee.
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2022 (6) TMI 834
Revision u/s 263 - subsequent proceedings of revision - HELD THAT:- As perused the materials available on record and gone through the orders of authorities below. In this case, against the revision order under section 263 of the Act, the assessee preferred further appeal before the Tribunal [ 2019 (9) TMI 1651 - ITAT CHENNAI] the Tribunal quashed the revision order passed under section 263 of the Act. Therefore, the subsequent assessment order passed under section 143(3) r.w.s. 263 has no legs to stand and subsequent proceedings in lieu of order under section 143(3) r.w.s. 263 of the Act stands null and void. Accordingly, the appeal filed by the Revenue is not maintainable and liable to be dismissed. Thus, the appeal filed by the Revenue is dismissed.
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2022 (6) TMI 833
Taxable income to tax u/s 44BB v/s Section 44DA read with section 9(l)(vii) - revenue earned by the assessee from various entities on account provision of cementing services, well-testing services, wireline logging services etc. ( technical services ) - Bifurcated income between production sharing contractors ( PSC ) and Non-PSC contractors for income from rental of equipment treating the same as Royalty under section 9(l)(vi) of the Act and taxing income from non-PSC contractors under section 44DA - Receipts on account of reimbursement of service tax from PSC and Non-PSC included in the revenue chargeable to tax (under section 44BB and section 44DA respectively depending on the stream of income - HELD THAT:- We find the assessee is engaged in providing various services including equipment on rent connected with exploration, exploitation and prospection of oil and gas to its clients. During the year it has provided certain equipments on rent and provided various services, namely, drilling fluid services, coring services, completion services, cementing services, liner hanger services, drill stem testing services, AMC for software in relation to oil and gas exploration and production etc. The income from rental of equipment and provision of services were offered to tax under section 44BB. As in respect of income from rental of equipment to Non-PSC contractors and various services, the AO for various reasons mentioned in the assessment order held that income from services are to be taxed as FTS/ Royalty under section 9(1 )(vi)/ 9(1 )(vii) of the Act. The profit from this income was estimated at 25% and offered to tax at 40% plus applicable taxes as against income offered to tax under section 44BB of the Act ie profit being 10% of gross receipts. We find the ld.CIT(A) held that income from services and equipment of rentals involved have direct nexus with oil exploration or production. Accordingly, bifurcation of income between PSC and Non-PSC is to be deleted and held that income from the aforesaid streams are to be taxed under section 44BB We do not find any infirmity in the order of the CIT(A) on this issue. We find, the AO himself in subsequent years i.e., 2012-13 and onwards has accepted that revenues earned by the assessee on account of rental of equipments and provision of services are in the nature of section 44BB of the Act even in cases where such revenues were received from same contracts as AY 2011-12. We find for certain other streams of services in assessee s own case for AY 2013-14 [ 2021 (12) TMI 1360 - ITAT DEHRADUN] AO did not accept that the services are covered u/s 44BB. Tribunal [ 2012 (6) TMI 601 - ITAT DELHI ] held that income from provision of services having nexus with oil exploration or production should be taxed u/s 44BB - Decided against revenue. Assessee charged service tax on services rendered to various customers which was paid to the Government of India as per Service Tax Law - We find, the issue stands decided in favour of the assessee by the decision of the Hon ble Uttarakhand High Court (Full Bench) in Assessee s own case and Others [ 2019 (4) TMI 1177 - UTTARAKHAND HIGH COURT] wherein the Hon ble High Court has held that amount reimbursed to the Assessee by ONGC representing service tax paid earlier by Assessee to the Government of India and not on account of provision of services in connection with exploration and production of mineral oil , would not form part of aggregate taxable amount as referred under section 44BB. We find, the Tribunal in assessee s own case for AY 2012-13 [ 2021 (7) TMI 1356 - ITAT DELHI ] has also followed the above decision of the Hon ble High Court. Since the decision of the Hon ble High Court was not challenged before the Hon ble Supreme Court by the Revenue, a statement made by the ld. Counsel for the assessee at the Bar and not controverted by the ld. DR, therefore, the said issue, in our opinion, has reached finality. Once the Revenue has accepted a position in Assessee s own case, the same, in our opinion, needs to be followed and applied in the year under consideration. Levy of interest under section 234B - HELD THAT:- We find, the issue stands decided in favour of the assessee by the decision of the Hon ble Supreme Court in the case of DIT vs Mitsubishi Corporation [ 2021 (9) TMI 875 - SUPREME COURT] as held that the liability for payment of interest as provided in section 234B is for default in payment of advance tax. While the definition of assessed tax under section 234B pertains to tax deducted or collected at source, the pre-conditions of section 234B viz., liability to pay advance tax and non-payment or short payment of such tax, have to be satisfied, after which interest can be levied taking into account the assessed tax. Therefore, section 209 of the Act which relates to the computation of advance tax payable by the assessee cannot be ignored while construing the contents of section 234B. Amount received reimbursement of various expenses which include equipment lost in hole, reimbursement of customs duty, reimbursement of hotel cost, insurance cost, etc - HELD THAT:- We find the coordinate Bench of the Tribunal in the case of ACIT vs Transocean Offshore Deep Water Drilling Inc [ 2008 (10) TMI 669 - ITAT DELHI] has held that reimbursement of custom duty shall be exempt from tax while computing income under section 44BB of the Act. So far as the other reimbursements are concerned, we find the same are decided against the assessee by the decision of the Hon ble Supreme Court in the case of Sedco Forex International Inc [ 2017 (11) TMI 78 - SUPREME COURT] . The grounds raised by the assessee are accordingly partly allowed.
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2022 (6) TMI 832
Penalty u/s 271(1)(c) - Defective notice - HELD THAT:- Penalty was levied on the basis of concealment of income but we observed that the penalty notice u/s. 274 r.w.s. 271(1)(c) of the Act is issued without indicating on what basis the penalty proceedings was initiated. Normally, we fall back in such situation to the Assessment Order in which AO normally indicate on what basis penalty proceedings will be initiated. In this case we observed that in Assessment Order AO has indicated that penalty proceedings will be initiated on the basis of furnishing of inaccurate particulars of income whereas we observed that the penalty was levied ultimately on concealment of income. It clearly shows that Assessing Officer is not clear on what basis the penalty proceedings were initiated and completed. The facts are clearly falls under the category of issue of improper notice. Respectfully following the decision of the Hon'ble Jurisdictional High Court in the case of Mohd Farhan A Shaikh [ 2021 (3) TMI 608 - BOMBAY HIGH COURT] in which the penalty proceedings initiated based on the improper notice is bad in law. Accordingly, penalty levied by the Assessing Officer is accordingly, deleted. - Decided in favour of assessee.
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2022 (6) TMI 831
Assessment u/s 153C - undisclosed income of the present assessee - satisfaction recorded for the impugned assessment years is not in accordance with law and is no satisfaction at all - Whether the material belonging to the assessee company and found in the premises of the person searched are not incriminating in nature and do not represent any undisclosed income for the impugned assessment years and hence the satisfaction recorded to commence proceedings is bad in law? - HELD THAT:- In the present case, the proceedings of these assessments were not pending and did not get abated by virtue of 2nd proviso to section 153A(1) of the Act, which provides that in assessment proceedings for any of these assessment years set out in section 153A(1) of the Act, which is pending as on the date of initiation of search action u/s. 132 of the Act, such assessment proceedings would abate and AO will make assessment after considering the original return of income as well as material found in the course of search. The assessment proceedings which have been completed as on the date of search u/s. 132 however will continue to remain valid. Thus, the former proceedings are referred to as abated assessment proceedings and latter proceedings are referred to as unabated assessment proceedings . Therefore the scope of making assessment on total income u/s. 153C in an unabated assessment proceedings is limited and can be only of assessing income that is not disclosed which is detected or which emanates from material found in the course of search of some other person and which relate to the assessee. In the present case, the impugned addition made by AO is based on incriminating material found during the course of search. The addition can stand since there is seized material in support of the addition made by the AO. The assessee in the return of income disclosed certain transactions as discussed in the assessment order which is reproduced in earlier part of this order and that can be the basis to make addition while framing assessment u/s. 143(3) r.w.s. 153C of the Act. There is seized material found in the course of search which forms the basis for assessing income in the hands of the assessee for these three AYs. As per the provisions of section 153C of the Act, incriminating material which was seized had to pertain to the assessment year under consideration. It is an undisputed fact that documents which are seized referred to in para 4 of this order do establish co-relation with the additions made in these assessment years. The requirement u/s. 153C of the Act was satisfied which is essential under the provisions of section 153C which is a jurisdictional fact as held in Sinhgad Technical Edn. Society [ 2017 (8) TMI 1298 - SUPREME COURT] After taking note of the material as recorded in para 4 of this order, there was seized incriminating material so as to frame assessment for these three assessment years u/s. 153C of the Act. Since the assessment framed u/s. 153C of the Act is based on material found during the course of search which relate to or belong to the assessee and since we have held that there are seized material for addition made by the AO, we inclined to reject the arguments made by the ld. AR for the assessee that the condition precedent for initiating the proceedings u/s. 153C of the Act having not been satisfied in the present case. Accordingly, we hold that the addition made by the AO is based on seized material found in the course of search and therefore the framing of assessment u/s 153C of the Act is justified. We are inclined to hold that framing of assessment u/s. 143(3) r.w.s. 153C of the Act is valid. Undisclosed investment in residential house - In the present case as demonstrated earlier the material relied upon to arrive at the satisfaction to initiate proceedings u/s 153 C are not subject matter of addition and the material relied upon to make additions to income are not subject matter of satisfaction. In view of the above submissions every addition made in an assessment u/s 153C must be necessarily based on incriminating seized material pertaining to that assessment year as held the Hon'ble Supreme Court in the case of CIT Pune vs Sinhgad Technical Education Society (supra). In the present case, the addition made is not based on any incriminating seized material relied upon to initiate proceeding u/s 153C and, the seized material relied upon to arrive at a satisfaction to commence proceedings u/s 153C do not pertain to the assessment year on hand and accordingly the order of the CIT(A) is to be upheld. Further the AO has made a protective addition, which itself demonstrates that there is no satisfaction that the income belongs to the other person, who is to be assessed u/s. 153C. In the absence of this mandatory satisfaction no addition can be made in the assessment u/s. 153C. We have heard both the parties and perused the material on record. Since the issue relating to this addition was remitted in the case of H B Sudarshan [ 2022 (6) TMI 769 - ITAT BANGALORE] where the addition is made substantively, accordingly this issue is also remitted to the Assessing Officer to examine the issue afresh in the light of incriminating material found during the course of search including the CD retrieved from the computer of the searched person. Ordered accordingly. Additional profit from contract - I n the present case as demonstrated earlier the material relied upon to arrive at the satisfaction to initiate proceedings u/s 153C are not subject matter of addition and the material relied upon to make additions to income are not subject matter of satisfaction. In view of the above, it was submitted that the CIT(A) upheld the submissions of the Assessee company that the AO is not correct in estimating the income without proper rejection of books u/s. 145(3) of the Act, which clearly falls out of the Judgement of the jurisdictional High Court in the case of Karnataka State Forest Corporation Limited v. CIT [ 1992 (10) TMI 65 - KARNATAKA HIGH COURT] relied upon by the Assessee Company and accordingly, he deleted the addition on this count. After hearing both the parties, we are of the opinion that the issue is to be considered by the AO afresh. We direct the assessee to produce the books of account before the AO and the AO is directed to verify the same along with the incriminating material seized during course of search and decide the issue afresh in accordance with law. Whether no addition can be made as based on digital data belonging to the person searched in absence of corroborative evidence? - With regard to the evidentiary value of date recovered from computer in the form of digital data and other documents listed in earlier part of this order is concerned, section 132(4) of the Incometax Act, permits the authorised officer to seize books of accounts and other documents. As in the case on hand, it is an income tax proceeding before a quasi judicial authority. A Division Bench of the Madras High Court, in the case of Rangroopchand Chardia [ 2016 (5) TMI 879 - MADRAS HIGH COURT] and in the case of M.Vivek [ 2020 (11) TMI 953 - MADRAS HIGH COURT] relied upon by the ld. DR, while dealing with section 132 of the Income-tax of the Income-tax, similar to the case on hand, has held that loose sheets picked up during search under section 132 of the Income-tax Act, falls within the definition of document , mentioned in section 132(4) of the Income Tax and therefore, it had got evidentiary value. Therefore, the contention raised by the learned Counsel for the assessee that digital evidence seized during the search under section 132 of the Income-tax Act does not have any evidentiary value, is rejected. This issue is remitted to the AO in all assessment years for consideration along with the incriminating material found during the course of search and for fresh decision. Appeals by the assessee are partly allowed for statistical purposes.
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2022 (6) TMI 830
Reopening of assessment u/s 147 - addition u/s 68 - unsecured loan creditor - HELD THAT:- Assessee has taken unsecured loan from M/s. Navkar Diamonds and paid relevant interest to them. AO based on the information from investigation wing, reopened the assessment and based on the statement given by Shri Bhanwarlal Jain he made certain enquiries before the assessee as well as unsecured loan creditor by issuing relevant notices and came to the conclusion that this transaction is accommodation entry and assessee has not proved the genuineness and creditworthiness of the transactions. As relying on M/S.INDRAVADAN HANJARIMAL JAIN, VERSUS ACIT 31 (2) , KAUTILYA BHAVAN, BANDRA KURLA COMPLEX, MUMBAI [ 2021 (9) TMI 1396 - ITAT MUMBAI] Assessing Officer has issued notice u/s.133(6) of the Act and received the response. Therefore, we are inclined to set-aside the order of the Ld.CIT(A) and direct the AO to delete the addition. - Decided in favour of assessee.
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2022 (6) TMI 829
Levy of penalty u/s 271(1)(c) - defective notice u/s 274 - as argued irrelevant clause have not been struck off by the AO before issuing the notice. HELD THAT:- The first notice issued under section 274 r.w.s. 271(1)(c) is in Performa, without any application of mind by the AO. The irrelevant limb of section 271(1(c) of the Act has not been struck off. The Hon ble jurisdictional High Court in the case of Mohd. Farhan A. Shaikh [ 2021 (3) TMI 608 - BOMBAY HIGH COURT] has dealt with the issue where the notice was issued without striking off the irrelevant matter. The Hon ble High Court held that non-striking off irrelevant matter would vitiate the penalty proceedings. In the second notice dated 15.03.2019, the AO has mentioned both the charges of section 271(1)(c) of the Act. This shows ambiguity in the mind of AO with regard to charge under section 271(1)(c) of the Act, that is to be invoked. The Hon ble Apex Court in the case of T. Ashok Pai [ 2007 (5) TMI 199 - SUPREME COURT] has held the concealment of income and furnishing inaccurate particulars of income carry different connotations. Thus, the AO is duty bound to clearly convey to the assessee the limb for which penalty is to be levied. Where the position is unclear, penalty is unsustainable. Thus, the penalty levied under section 271(1)(c) of the Act is unsustainable on account of defect in statutory notice issued under section 274 of the Act, as well for the reason that penalty is levied on addition made on mere estimations.- Decided in favour of assessee.
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2022 (6) TMI 828
Stay on collection/recovery of the tax and interest demands - assessee had filed a petition, seeking blanket stay on demand during the pendency of the first appeal, before the learned Principal Commissioner of Income Tax-V, Mumbai - taxability of share premium under section 56(2)(viib) of the Act, and later as also under section 68 - HELD THAT:- As it is not a fit case for the grant of blanket stay- as prayed by the assessee. In any event, the matter has come up for consideration before Hon ble jurisdictional High Court, and Their Lordships have declined a similar prayer of the assesee, during the pendency of the first appeal, on merits. There is no material change in facts and circumstances of the case as before Their Lordships as before us now. The two companies investing in the assessee before us are Mauritian companies and seem to be special purpose vehicles, and, at the stage of the hearing of stay petition and based on the material before us, it is not possible for us to, even prima facie, take a call on their bonafides and genuineness. On the face of it, the computation of share premium is devoid of any basis inasmuch as once the person computing the net present value of the discounted cash flow, which anyway varies significantly in the different certificates issued by the same firm, is unable to form a well-considered opinion on the correctness of projected future cash flows, the entire valuation exercise is degraded to a mechanical calculation. That does not, in the absence of any additional material So far as foreign investors are concerned, based on the material before us at the stage of hearing of this stay petitions, prima facie the genuineness, a necessary ingredient of tests envisaged under section 68, is far from established. Additionally, so far as domestic investors are concerned, as of the stage of the hearing of this stay petition, there is no material whatsoever to show the reasonableness of the share premium received vis- -vis the fair market value of shares. The taxability under section 56(2)(vii) is thus far from even seriously challenged. While the assessee has the liberty to make detailed arguments, and also to bring to our notice any material demolishing these prima facie observations, as and when the occasion to do so arises, as the things are before us at present, we do not think it is a fit case for even the grant of stay- leave aside the grant of a blanket stay, as is prayed for by the assessee. We decline to interfere in the matter.
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2022 (6) TMI 816
Deduction u/s 80P - interest earned from co-operative banks - HELD THAT:- This issue is squarely covered in favour of the assessee by the decision of Hon ble Gujarat High Court in the case of State Bank of India [ 2016 (7) TMI 516 - GUJARAT HIGH COURT] wherein it was held that Section 80P(2)(d) specifically exempts interest earned from funds invested in co-operative societies and therefore, to the extent of the interest earned from investments made by it with any co-operative society, a co-operative society is entitled to deduction of the whole of such income under section 80P(2)(d). Interest earned from investments made in any bank, not being a co-operative society, is not deductible under Section 80P(2)(d) of the Act. In the present case, the amount of interest in question was earned by the assessee from co-operative banks and this being the undisputed position, said interest income is eligible for deduction under Section 80P(2)(d) of the Act. The impugned order passed by the learned CIT(A) on this issue is, therefore, set aside and the Assessing Officer is directed to allow the claim of the assessee for deduction under Section 80P(2)(d) - Decided in favour of assessee.
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Customs
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2022 (6) TMI 827
Confiscation - levy of redemption fine and penalty - mis-classification of imported goods - calcium phosphate - Clerical mistake in the classification of goods - HELD THAT:- There appears to be a genuine mistake in the nature of clerical mistake on the part of the Clerk of the appellant company. This fact is evident on the basis of record, as the appellant has suo motu approached the Department for making necessary rectification in the Bill of Entry with regard to the classification, and also offered to pay the differential duty. Such suo motu offer was made before the Department pointed out or issue of any notice to the appellant. Thus, this is a case of simple clerical error and there is no case of contumacious conduct on the part of the appellant. Confiscation and penalty both under Section 112(a)(ii) and 114AA of the Act set aside - appeal allowed - decided in favor of appellant.
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Insolvency & Bankruptcy
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2022 (6) TMI 826
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial Creditors - during pendency of proceedings under SARFAESI Act, 2002, petition under IBC filed - existence of debt and dispute or not - time limitation - HELD THAT:- The date of default in the instant petition is 30 June 2016 i.e. the date on which the accounts of the Corporate Debtor were declared NPA. The date of filing of this petition is 24 October, 2019, which would ordinarily mean that the petition would be barred by limitation. However, in light of the acknowledgement of the Corporate Debtor towards its debt due to the Financial Creditor in its balance sheets for years ending on 31 March 2018 and 31 March 2019 as well the admission of the said fact in the auditor's reports attached to the balance sheets, specifically at pages 36 and 169 respectively of the rejoinder, fresh limitation periods shall ensue from the date of the acknowledgements. As such the instant petition is well within the period of limitation. Further a demand letter under section 13(2) of the SARFAESI Act, 2002 was issued on 8 March 2017. The contention of the Corporate Debtor is that during the pendency of proceedings under SARFAESI Act, 2002, a petition under the Code cannot be filed. The said contention cannot be considered since actions under the Code and the SARFAESI Act are two different legislations in two different fields. The purpose of one is recovery and the purpose of the other is resolution of insolvency. Therefore, proceeding with one course of action cannot hinder with the right of the party to proceed with another. Keeping in view that a default in the payment of a financial debt has occurred and has been acknowledged by the Corporate Debtor, and that the said application is not barred by limitation, the instant application under section 7 of the Code is complete in all respects. Application admitted - moratorium declared.
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2022 (6) TMI 825
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - instant petition os filed after approval of Resolution Plan - HELD THAT:- The date of default mentioned by the Operational Creditor is 24 July 2013, and the instant petition was filed on 09 August 2019. It is to be noted that the Corporate Debtor had was admitted into CIRP vide order dated 20 April 2017 in Company Petition 150/2017. Subsequently, a resolution plan also been approved by this Adjudicating Authority vide order dated 17 October 2017. The Operational creditor had not filed any claim with the Resolution Professional after the Corporate Debtor was admitted into CIRP and has filed the instant petition after the approval of the resolution plan. The same indicates gross negligence on part of the Operational Creditor. The judgment of the Hon'ble Supreme Court in Ghanashyam Mishra Sons Pvt Ltd v Edelweiss Asset Reconstruction Company Ltd. [ 2021 (4) TMI 613 - SUPREME COURT ] lays down that when the resolution plan is approved by the Adjudicating Authority, the claims as provided in the resolution plan shall stand frozen and will be binding on the corporate debtor, and its employees, members, creditors, including the central and state government or any local authority, guarantors and other stakeholders. On the date of approval of resolution plan by the Adjudicating Authority, all such claims which are not a part of resolution plan shall stand extinguished and no person will be entitled to initiate or continue any proceedings in respect to a claim which is not part of the resolution plan. This Adjudicating Authority is satisfied that the right of the Operational Creditor to seek remedy under section 9 of the Code has been extinguished - Petition dismissed.
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2022 (6) TMI 824
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - existence of debt and dispute or not - HELD THAT:- From perusal of the record it is noticeable that the only rebuttal raised by the Corporate Debtor is pertaining to the amount due and payable. The Operational Creditor states that the outstanding due is of Rs.25,77,322/- (inclusive of interest calculated @ 18% p.a. till 06 December, 2018) whereas, the Corporate Debtor in its reply (at page 71) has categorically admitted that the outstanding due is of Rs.6,09,299/- This acceptance by the Corporate Debtor ticks the check box of debt and default. Further this instant application was filed on 02 April, 2019, hence, it falls within the threshold limit applicable then under the Code. As envisaged under section 9(3)(b) of the Code, an affidavit has been filed by the Operational Creditor and also, from the available record, it is evident that the Corporate Debtor had neither raised any dispute with respect to the services of the Operational Creditor. It is also pertinent to mention that no interest component has been mentioned in the invoices. Application admitted - moratorium declared.
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2022 (6) TMI 823
Seeking direction to Respondent No.1 to assist the Applicant and take necessary steps in procuring Valid Factory License and Valid Fire NOC for the Corporate Debtor by making payments from the Sale Consideration received by the Applicant - seeking extinguishment of Property Tax/ Municipal Tax dues and Land Revenue Tax dues - HELD THAT:- While it is true that the facts of each case need to be seen on their own merit and preferably on a standalone basis, it is equally true that the main objective of the Code should not be lost sight of. In the instant case, the corporate debtor has been sold as a going concern and is well functioning , in that it is on its way to complete the projects left halfway by the previous management and is trying to turn the so called corporate debtor into a viable enterprise. Any past liabilities that are sought to be raised by R2 R3 would burden the enterprise and may even push it back to the insolvency from which it has been successfully retracted by the Code. The liquidator had followed the complete algorithm as enshrined in the Code for carrying out the liquidation process, which included public announcement for invitation for the claims. Despite that R2 R3 have not cared to lodge their claim, if any, before the liquidator and have not taken any steps to approach this Adjudicating Authority in good time to make any representation in this regard and therefore now they are estopped from raising the claims at this date. Application disposed off.
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Service Tax
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2022 (6) TMI 822
Refund of unutilized CENVAT credit availed on Education cess, Secondary and Higher Education cess and Krishi Kalyan cess - Time Limitation - section 11B of the Central Excise Act - HELD THAT:- The Tribunal in the case of EMAMI CEMENT LIMITED, NU VISTA LIMITED VERSUS COMMISSIONER (APPEALS) , CGST, CENTRAL EXCISE, RAIPUR [ 2022 (3) TMI 1254 - CESTAT NEW DELHI] has held that The appellant is, therefore, clearly entitled to the refund of the balance amount of credit of cess and the decision to the contrary taken by the Commissioner (Appeals) cannot be sustained. Appeal allowed - decided in favor of appellant.
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2022 (6) TMI 821
Refund of service tax - Appellant has one unit in SEZ and on in DTA - rejection of refund claim on the ground that the service of marketing on which the refund claim was made is not listed in approved list of the approval committee for the Special Economic Zone - it is also alleged that the appellant and the service provider are one entity hence, it cannot be said that the appellant have received the services from the service provider - HELD THAT:- The Learned Commissioner (Appeals) have denied the refund on the ground that first the service is not included in the approved list, and secondly, the service provider and service recipient both are the same entity. It is found that as regard the inclusion of service in the approved list firstly, the invoice issued by the service provider is clearly in respect of Business Support Service - From the above approved list, it is clear that the Business Support Service is clearly included in the list approved by the approval committee. It is also found that even if it is assumed that the service falls under marketing service and same is not included in the approval list even then for this being a procedure lapse refund cannot be denied. It is also found that even if it is assumed that the service falls under marketing service and same is not included in the approval list even then for this being a procedure lapse refund cannot be denied. There is no dispute that the appellant s service provider is located in Kolkata which is a DTA unit and the appellant s unit is located in SEZ. As per Sub Rule (7) of Rule 19 of the Special Economic Zone Rules, 2006 it clearly provides that if an enterprise is operating both as Domestic Tariff Area Unit as well as a Special Economic Zone Unit, it shall have two distinct identities with separate books of account, but it shall not be necessary for Special Economic Zone unit to be a separate legal entity. With this clear provision under the Special Economic Zone Rules even if the appellant is not a separate legal entity, the unit being located in SEZ shall be treated as distinct identity, therefore, the denial of refund on this ground also not tenable. The appellant is clearly entitled for the refund under Notification No. 12/13-ST dated 01.07.2013 - Appeal allowed - decided in favor of appellant.
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2022 (6) TMI 820
CENVAT Credit - duty paying invoices - credit availed on the strength of challan by which the service tax was deposited under the reverse charge mechanism on pointing out by audit - Rule 9(1)(bb) of Cenvat Credit Rules, 2004 - HELD THAT:- The appellant have paid the service tax on reverse charge mechanism and taken the credit on the challans by which the service tax was paid. The department s case is that the appellant is not entitled to credit on such challans in terms of Rule 9(1)(bb) of Cenvat Credit Rules. The appellant s eligibility of credit is not on the basis of Rule 9(1)(bb) which is on the basis of Rule 9(1)(e) which provides that Cenvat Credit on challan which is evidence of payment of service tax on reverse charge mechanism therefore, the entire case of the department is on wrong footing. On plain reading of Rule 9(1)(e) of Cenvat Credit Rules, 2004, the appellant is entitled for Cenvat credit on the challan whereby, they have deposited the service tax on reverse charge mechanism - Credit allowed - appeal allowed - decided in favor of appellant.
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2022 (6) TMI 819
CENVAT Credit - input services - Cleaning Forwarding Agency Services - Maintenance and Repair Services - Business Auxiliary Services - Operation and Maintenance of Fly Ash System situated at Ukai Thermal Power Station - AMC Services - Management Consulting Engineering and Security Service for Wind Mill Operation Credit - credit denied on the ground that these services have no nexus with the manufacturing activity of the appellant - HELD THAT:- The use of the services are not in dispute. As regard the C F agency services the same was disallowed on the ground that the same was used beyond the factory premises. However, the C F Agency s premises is a place of removal and the services received at place of removal should be treated as services received upto the place of removal - reliance can be placed in the case of JK. COTTON SPG. WVG. MILLS CO. LTD. VERSUS SALES TAX OFFICER, KANPUR [ 1964 (10) TMI 2 - SUPREME COURT] - Accordingly, the credit is clearly admissible. Services received at Thermal Power Station - windmill services - HELD THAT:- Merely because the services were received outside the factory premises, the credit cannot be disallowed so long it is used in the manufacture of final product. The similar view is applicable in case of the services received for the purpose of windmill services located outside the factory - credit allowed. Housekeeping Services for Cleaning Toilets and Office premises at plant - Garden Maintenance services - Pest Control Services - HELD THAT:- All these services are essentially used in the factory in over all operation of the manufacturing activity. Therefore, the cenvat credit is admissible on these services. All these services have been held admissible input service - reliance can be placed in the case of RAMCO CEMENTS LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, CHENNAI-IV [ 2016 (12) TMI 1810 - CESTAT CHENNAI] . Each and every input services in question the issue is no longer res integra - all the input services in the present case are held to be admissible input services - Appeal allowed - decided in favor of appellant.
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Central Excise
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2022 (6) TMI 818
CENVAT Credit - input services - Air travels service - Authorized Service station - Clearing Forwarding Agent Services - Custom House Agent Services - Commercial or Industrial Constructions Services - GTA outward Services - General Insurance Services - Vehicle Repair Services etc. - nexus of subject services with the manufacturing activity of the manufacturer - HELD THAT:- Almost all the services have been considered time and again by this tribunal for the manufacturing units and the credit was allowed. Air Travel Agent Service - Used in relation to the travel of the company personal for the marketing, meetings for business purposes - HELD THAT:- Reliance can be placed in the case of M/S XILINX INDIA TECHNOLOGY SERVICES PVT. LTD. VERSUS THE COMMISSIONER. C.C. E ST, HYDERABAD-IV [ 2016 (7) TMI 598 - CESTAT HYDERABAD] - credit allowed. Authorised Service Station - Used in connection with the repair and maintenance of the vehicles belonging to the manufacturing unit - HELD THAT:- Reliance can be placed in the case of M/S. JSW STEEL LTD VERSUS COMMISSIONER OF CENTRAL EXCISE, CUSTOMS AND SERVICE TAX-BELGAUM (VICE-VERSA) [ 2021 (12) TMI 381 - CESTAT BANGALORE] - credit allowed. Clearing Forwarding Agent Service - For the imports of inputs or export of manufactured goods from the place of removal i.e. port - HELD THAT:- Reliance can be placed in the case of COMMISSIONER VERSUS DYNAMIC INDUSTRIES LTD. [ 2014 (8) TMI 713 - GUJARAT HIGH COURT] - credit allowed. Custom House Agent - For import and export related Customs clearance work - HELD THAT:- Reliance can be placed in the case of INGERSOLL-RAND INTERNATIONAL (INDIA) LTD. VERSUS COMMR. OF S.T., BANGALORE [ 2015 (12) TMI 484 - CESTAT BANGALORE] - credit allowed. Construction Service - Factory / office building Construction - HELD THAT:- Reliance can be placed in the case of M/S. SUNDRAM FASTENERS LIMITED VERSUS CCE, PUDUCHERRY [ 2017 (2) TMI 16 - CESTAT CHENNAI] - credit allowed. GTA Service - ST paid on RCM basis for outward is a valid input service - HELD THAT:- Reliance can be placed in the case of COMMISSIONER OF CENTRAL EXCISE, BELGAUM VERSUS M/S. VASAVADATTA CEMENTS LTD. [ 2018 (3) TMI 993 - SUPREME COURT] - credit allowed. Insurance Service - Insurance of Plant/machinery/stocks against fire, in the course of production activities - aw materials, mediclaim for staff and employee etc. also included - HELD THAT:- Reliance can be placed in the case of CANTABIL RETAIL INDIA LTD, RAJESH ROHILLA, ANIL BANSAL, DIRECTOR VERSUS CCE, DELHI-I AND (VICE-VERSA) [ 2017 (9) TMI 205 - CESTAT NEW DELHI] - credit allowed. Vehicle Repair Service - Related to repairs to business owned vehicles, used in the course and furtherance of manufacturing business - HELD THAT:- Reliance can be placed in the case of COMMR. OF C. EX., MYSORE VERSUS CHAMUNDI TEXTILES (SILK MILLS) LTD. [ 2010 (4) TMI 450 - CESTAT, BANGALORE] - credit allowed. It is clear that each and every service involved in the present case are admissible input service - credit allowed - appeal allowed - decided in favor of appellant.
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Indian Laws
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2022 (6) TMI 817
Dishonor of Cheque - valid service of demand notice or not - rebuttal of presumption under Section 27 of General Clauses Act read with Section 139 of N.I. Act - HELD THAT:- It may be observed that the summoning order passed by the court of Additional Chief Judicial Magistrate, Court No. 1, Meerut was quashed by the learned Sessions Judge, Meerut merely on the ground that in the complaint it has not been mentioned as to on which date the notice was served upon opposite party no. 2/drawer of the cheque and that in the absence of any such date of service of demand notice, the presumption under Section 27 of the General Clauses Act stands rebutted and thus, the mandatory conditions for institution of complaint under Section 138 of N.I. Act are not fulfilled. In view of law laid down in case of Ajeet Seeds [ 2014 (8) TMI 464 - SUPREME COURT ] and C.C. Alavi Haji [ 2007 (5) TMI 335 - SUPREME COURT ], it shall be deemed that notice has been served upon the drawer/opposite party no. 2 on 02.09.2015. The complainant was not required to aver in the complaint that in spite of return of notice unserved, it is deemed to have been served. In view of these facts and circumstances of the case and above-stated position of law, it appears that the learned Sessions Judge did not consider the matter in correct perspective and committed error by setting aside the summoning order. The impugned order dated 03.11.2020, passed by the learned Sessions Judge, Meerut is set aside and the summoning order passed by the court of Additional Chief Judicial Magistrate, Court no. 1, Meerut stand restored - Application allowed.
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