TMI Tax Updates - e-Newsletter
July 14, 2021
Case Laws in this Newsletter:
GST
Income Tax
Customs
Corporate Laws
Insolvency & Bankruptcy
PMLA
Service Tax
Central Excise
Indian Laws
Highlights / Catch Notes
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GST:
Classification of supply - rate of tax - banana chips - jackfruit chips - tapioca chips - supply without registration of brand name - jaggery coated banana chips (sarkaraupperi in Malayalam) - On a plain reading of the above entry it is evident that all the products that fall under Chapter Heading 2008 of the Customs Tariff Act, 1975 attract GST at the rate of 12 % [6% CGST + 6% SGST]. - AAR
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GST:
Classification of supply - supply of goods or supply of services - Classification code - activity of tanker body building on job work basis, on the chassis supplied by the customer - It is a supply of services. - The activity is liable to GST at the rate of 18% - AAR
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GST:
Supply or movement of goods otherwise than by way of supply - placement of specified medical instruments to unrelated customers like hospitals, labs etc for their use without any consideration for a specific period - The activity constitutes as supply - AAR
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GST:
Cancellation of petitioner's registration certificate - petitioner has omitted to file reply within time allowed and even within 30 days of receiving the notice - the proceedings of cancellation of registration cannot be kept hanging fire on any pretext, including that assessee failed to file reply within the time allowed. Authority issuing the notice is statutorily bound to pass order in terms of sub-rule (3) of Rule 22 of the Rules. - Matter restored back for fresh adjudication - HC
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Income Tax:
Constitutional validity and legality of Section 194N - Deduction of tax at source at the rate of 2% on cash withdrawals from, inter alia, a banking company exceeding ₹ 1 crore in a financial year - Considering the facts, we are inclined to grant an interim order restraining the respondents authorities concerned from deducting tax on source on the basis of the aforesaid provisions of Section 194N till 30th September, 2021. - HC
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Income Tax:
Reopening of assessment u/s 147 - reasons are communicated and the reasons would show that the expenditures are expressly disallowed under the deeming fiction created by the penal Section of IT Act, on account of infringement of law. - The assessee can not try to take shelter under the exception provided by the above proviso to Sec.147 that where an assessment order u/s 143 (3) has been completed, no action after the expiry of four years from the end of the assessment year can be taken. - HC
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Income Tax:
Penalty u/s 271(1)(c) - CIT(A) has given direction to the Assessing Officer to levy penalty equivalent to 100% tax under section 271(1)(c) of the Act. Mere estimate of income cannot fasten liability upon the assessee u/s.271(1)(c) of the Act. - it is settled law that learned CIT(A) has no power whatsoever to remit the matter to the Assessing Officer to pass a penalty order as per his direction. - AT
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Income Tax:
Refund of TDS to the deductor - CIT(A) allowed the refund - as per the CBDT’s Circular No.2/2011 dated 2.04.2011, there is a procedure for the deductor to claim refund before the AO. - the order of the CIT(A) cannot be sustained and the credit for TDS cannot be allowed to the assessee in facts and circumstances of the case - AT
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Income Tax:
TDS u/s 192 or 194J - There was no specific timing and attendance record maintained by hospital with respect to such doctors and this category of doctors was not be eligible for any leave, provident fund, gratuity, bonus etc. and were not subject to admission or retirement from services. They were not entitled to several benefits as allowed to regular employees such as medical reimbursement. Insurance, leave encashment etc. All these facts and features would bolster assessee’s claim that there was no employer-employee relationship between the assessee and consultant doctors. Therefore, the tax was rightfully deducted u/s 194J - AT
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Income Tax:
Penalty u/s 271(1)(c) - Excess depreciation claim - it is merely a case of difference arising out of the reworking of the carry forward depreciation by the AO by allowing more depreciation than claimed by the assessee company and not a case of concealing of income or furnishing of inaccurate of particulars of income. - No penalty - AT
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Income Tax:
Not allowing credit of TDS - assessee has submitted that he mistakenly registered itself as ‘local authority’ with the Income Tax department (PAN) and not as ‘association of persons’, therefore, the TDS amount claimed in the return of income has been denied to the assessee - If the assessee by mistake has wrongly registered itself under a wrong category that does not mean that the said mistake is not curable or that the assessee is to be punished for its bona fide mistakes - AT
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Income Tax:
Assessment u/s 153A - Addition for the pay-in from NBOT - AO was not justified as he cannot pick and choose the figures at his/her pleasure. Once it was decided to make the addition on the basis of gross transactions with NBOT then Ld. Assessing Officer was bound to consider both the figures of pay-in and pay-out. - AT
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Income Tax:
Assessment of trust - Transaction between the related concerns - Even collectively, the shareholding of the Trustees in ABHSL is far below the threshold of 20%. Hence CIT(A) held that in view of specific provisions of section 13 of the Act he held that ABHSL is not a related party under section 13(3) of the Act and thus addition made by the Assessing Officer is deleted. - Order of CIT(A) confirmed - AT
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Customs:
Condonation of delay in filing appeal - Revenue appeal - the delay was unexplained - The objective is to complete a mere formality and save the skin of the officers who may be in default in following the due process or may have done it deliberately. We have deprecated such practice and process and we do so again. We refuse to grant such certificates and if the Government/public authorities suffer losses, it is time when concerned officers responsible for the same, bear the consequences - SC
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Customs:
Status of an entity - GJEPC - comes under definition of 'State' or under 'other authority' - GJEPC is not discharging any public / state functions and as such not an ‘other Authority’ within the meaning of Article 12 of the Constitution of India and as such, the present petition under Article 226 of the Constitution of India is not maintainable. - HC
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Customs:
Recovery of duty of Customs from the successful Resolution Applicant - Orders of finalization of bills of entry of the Superintendent - the judgment of the Jharkhand High Court in the case of Essar Steel Limited is of no avail to the Department. - a resolution plan, once approved, is binding on all the creditors and stakeholders including the Central Government by virtue of Section 31(1) of the Code. - HC
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Corporate Law:
Seeking for reactivation of DIN/DSC of the Directors - Disqualified directors of struck off companies - The CFSS-2020 was last extended till 31st December 2020. If the scheme is extended beyond 30th December, 2020, directors who fall in any of the categories mentioned above ought to be given an opportunity to avail of the same. - Since the Petitioners wish to start a new business, their DIN/DSC ought to be reactivated within a period of one week to enable them to conduct their fresh business in accordance with law - HC
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Indian Laws:
Dishonor of Cheque - acquittal of the accused - rebuttal of presumption - legally enforceable debt or not - The complainant has failed to establish his financial capacity to advance loan. Hence, it cannot be presumed that the cheque was issued in discharge of legally enforceable debt or liability. As such, the presumption under Section 139 of the N.I. Act stands rebutted and the accused by cross-examining the complainant, has rebutted the said presumption. - HC
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Indian Laws:
Dishonor of Cheque - dues was against the company but the cheque was issued by the petitioner from his personal account - Legally enforceable debt or not, in personal capacity - The petitioner would still be convicted even if he issues his personal cheque in discharge of the dues of the company. The learned appellate court has rightly held that petitioner being signatory of the bounced cheque is clearly responsible for non- payment of the amount to the complainant and rightly upheld the conviction of the petitioner - HC
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Central Excise:
CENVAT Credit - failure to distribute credit on certain common input services and transition to GST - It is only a procedural lapse and it will not affect the substantive right of the appellant because the failure to comply with the provisions of ISD are at best may be termed as procedural irregularity and it has been consistently held by various Courts that substantive right cannot be denied merely on procedural irregularity. - AT
Articles
Notifications
Customs-
35/2021 - dated
12-7-2021
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Cus
Seeks to exempt basic customs duty on imports of specified API/ excipients for Amphotericin B and raw materials for manufacturing COVID test kits, till specified period.
GST - States-
S.O. 116 - dated
9-7-2021
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Bihar SGST
Amendment in Notification No. S.O. 206 dated the 23rd December, 2020
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38/1/2017-Fin(R&C)(211)/1596 - dated
8-7-2021
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Goa SGST
Supersession Notification No. 38/1/2017-Fin(R&C)(186), dated the 15th December, 2020
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38/1/2017-Fin(R&C)(05/2021-Rate) (Corri.)/1597 - dated
8-7-2021
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Goa SGST
Corrigendum - Notification No. 38/1/2017-Fin(R&C)(05/2021-Rate) dated 23-06-2021
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38/1/2017-Fin(R&C)(05/2021-Rate)/1531 - dated
23-6-2021
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Goa SGST
Providing the concessional rate of SGST on Covid-19 relief supplies, up to and inclusive of 30th September 2021
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38/1/2017-Fin(R&C)(04/2021-Rate)/1530 - dated
23-6-2021
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Goa SGST
Amendment in Notification No. 38/1/2017- -Fin(R&C)(11/2017-Rate) dated the 30th June, 2017
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ERTS (T) 65/2017/Pt. II/344. - dated
2-6-2021
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Meghalaya SGST
Amendment in Notification No. 06/2019-State Tax (Rate), dated the 29th March, 2019
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ERTS (T) 65/2017/Pt. II/343 - dated
2-6-2021
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Meghalaya SGST
Amendment in Notification No. ERTS (T) 65/2017/11, dated the 29th June, 2017
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ERTS (T) 65/2017/Pt. II/342 - dated
2-6-2021
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Meghalaya SGST
Amendment in Notification No. ERTS (T) 65/2017/1, dated the 29th June, 2017
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ERTS (T) 65/2017/Pt.II/347 - dated
1-6-2021
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Meghalaya SGST
Amendment in Notification No. 76/2018-State Tax, dated the 31st December, 2018
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ERTS (T) 65/2017/Pt. II/346 - dated
1-6-2021
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Meghalaya SGST
Amendment Notification No. ERTS (T) 65/2017/23, dated the 29th June, 2017
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ERTS (T) 65/2017/Pt. II/345 - dated
1-6-2021
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Meghalaya SGST
Amendment in Notification 83/2020 -State Tax, dated the 10th November, 2020
Income Tax-
79/2021 - dated
12-7-2021
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IT
U/s 35(1) (ii) of IT Act 1961 Central Government approved M/s Patanjali Research Foundation Trust, Haridwar
Circulars / Instructions / Orders
News
Case Laws:
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GST
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2021 (7) TMI 482
Classification of supply - rate of tax - banana chips - jackfruit chips - tapioca chips - supply without registration of brand name - jaggery coated banana chips (sarkaraupperi in Malayalam) - to be classified under Chapter 20 or under Heading 2106 - CGST Act, 2017 - Kerala GST Act, 2017 - HELD THAT:- All the vegetable, fruit or nut products or preparations made other than by the processes specified in Chapters 7, 8 or 11 are included in the Chapter 20. The processes specified in Chapters 7, 8 or 11 mainly include freezing, steaming, boiling, drying, provisionally preserving and milling. Therefore, any vegetable, fruit, nut or edible parts of plant which is prepared or preserved by any other process than these are liable to be classified under Chapter 20. Chapter Heading 2008 of the Customs Tariff covers all roasted and fried vegetable products. Frying and roasting are two popular cooking methods that both use high temperature. It is not necessary that both the conditions are to be cumulatively satisfied for classifying a product under the category of roasted and fried products. When according to chapter notes and description of tariff items the products are classifiable under specific headings of Chapter 20 they cannot be classified under Heading 2106 as food preparations not elsewhere specified or included. Applying the principles of interpretation in Rule 2 of the General Rules for Interpretation of the First Schedule to the Customs Tariff Act, 1975 the Banana Chips, Jackfruit Chips, Tapioca Chips and Jaggery Coated Banana Chips are classifiable under Tariff Heading 2008 19 40 of the Customs Tariff Act, 1975. The products falling under this Heading 2008 may be sweetened by adding sweetening agents or other substances like starch may also be added to the products. However, they do not alter the essential character of the product and they continue to be classifiable under Chapter Heading 2008. Sweetmeat means food rich in sugar or made of or covered in sugar or any sweet food or delicacy prepared with sugar. Therefore, sugar is one of the essential ingredients for classification of any sweet food item as sweetmeat. The findings in the decisions quoted by the applicant are also on the same lines that sweetmeats are sweet edible preparations rich in sugar or prepared with sugar. Therefore, only sweet edible preparations containing sugar can be considered as sweetmeats. Jaggery Coated Banana Chips - HELD THAT:- It is evident from Annexure - M and N of the application itself that jaggery is manufactured from sugarcane by a simple process which can be done in the farms by the farmers themselves but the manufacturing of sugar involves many processes that cannot be carried out in a farm. The only process that is common for manufacture of jaggery and sugar is the extraction of juice from sugarcane and its concentration. Moreover, Jaggery and Sugar are commercially distinct products having individual characteristics and economic value and both cannot be equated. Hence by no stretch of imagination Jaggery Coated Banana Chips be considered as a sweet edible preparation containing sugar. Thus, the products are classifiable under Tariff Item 2008 19 40 of Chapter 20 of the Customs Tariff Act, 1975. Rate of Tax - HELD THAT:- On a plain reading of the entry at Si No. 40 of Schedule II of Notification No.01/2017 Central Tax (Rate) dated 28.06.2017, it is evident that all the products that fall under Chapter Heading 2008 of the Customs Tariff Act, 1975 attract GST at the rate of 12%.
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2021 (7) TMI 481
Classification of supply - supply of goods or supply of services - Classification code - activity of tanker body building on job work basis, on the chassis supplied by the customer - applicable rate of GST - HELD THAT:- The applicant is collecting the charges for the activity which includes the cost of inputs / material used by the applicant and the labour charges for fabrication of the body. Thus it is evident that the applicant is fabricating body on the chassis belonging to the customer. The ownership of the chassis remains with the customer and at no stage of the process of fabrication of the body, the title in the chassis is transferred to the applicant. Therefore, the applicant is fabricating the body on the chassis belonging to another person and hence the activity is squarely covered under Para 3 of Schedule II of the CGST Act, 2017 as a treatment or process which is applied to another person's goods and accordingly is a supply of services. Classification of the activity - rate of GST applicable - HELD THAT:- As per the Scheme of Classification of Services notified as Annexure to Notification No. 11/2017 Central Tax (Rate) dated 28.06.2017 the Heading [Service Accounting Code] - 9988 pertains to manufacturing services on physical inputs (goods) owned by others - the value of the services in this Heading is based on the service fee paid, not the value of the goods manufactured. SAC - 99888 under Heading 9988 pertains to Transport equipment manufacturing services and Sub - Heading 998881 pertains to Motor vehicle and trailer manufacturing services. Therefore, the activity of the applicant as discussed above is appropriately classifiable under Service Accounting Code 998881. The activity is liable to GST at the rate of 18% as per entry at SI No. 26 (iv) - 9988 - Manufacturing services on physical inputs (goods) owned by others - Manufacturing services on physical inputs (goods) owned by others, other than (i), (ia), (ib), (ic), (id), (ii), (iia) and (iii) above of Notification No. 11/2017 Central Tax (Rate) dated 28.06.2017.
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2021 (7) TMI 480
Exemption from GST - lease rent charged by Municipality / Panchayath for land i.e., water channel used for fish farming - falls within the meaning of services relating to rearing of all life forms of animals- by way of renting or leasing of vacant land or not - Sl.No.54 of N/N. 12/2017 - Central Tax (Rate) dated 28-06-2017 and corresponding notification under Kerala GST - HELD THAT:- On a plain reading of entry at SI No. 54 of Notification No. 12/2017 - Central Tax (Rate) dated 28.06.2017, it is evident that the services relating to cultivation of plants and rearing of all life forms of animals by way of renting or leasing of vacant land with or without structures is exempted under the entry. Application allowed.
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2021 (7) TMI 479
Scope of Advance ruling application - Eligibility for deduction of TDS - suppliers of spare parts of agricultural machinery to Kerala Agro Machinery Corporation Ltd (KAMCO) - Relevant time for deduction of TDS - exemption from TDS if the particulars of refundable excess difference between our input tax and output tax are submitted in prior - mechanism for filing an application or formal request and get the excess tax refund payable to them be transferred to the TDS account - refund of the excess TDS in the same month of the supply, can be availed or not - supply of goods or supply of service? HELD THAT:- On a plain reading of the provisions of Section 51 of the CGST Act, it is evident that Section 51 of the CGST Act applies to prescribed and notified categories of persons receiving supplies of goods and / or services exceeding specified value and making payment to the supplier for the same and not to any supplier of goods and / or services. Admittedly, the applicant has preferred this application as a supplier of goods / services - the issues regarding applicability of Section 51 of the CGST Act are not in respect of any matter specified in Section 97 (2) of the CGST Act in relation to the supply of goods or services or both being undertaken or proposed to be undertaken by the applicant. Hence this authority has no jurisdiction to issue ruling on the above questions. Further the issues regarding exemption from TDS deduction, mechanism for application or formal request and claim of refund of excess deducted TDS are also not in respect of any matter that is specified in Section 97 (2) of the CGST Act in relation to the supply of goods or services or both undertaken or proposed to be undertaken by the applicant and accordingly this authority has no jurisdiction to issue any ruling on the questions. This authority has no jurisdiction to answer the questions.
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2021 (7) TMI 478
Supply or movement of goods otherwise than by way of supply - placement of specified medical instruments to unrelated customers like hospitals, labs etc for their use without any consideration for a specific period - whether the transaction / activity involve goods or services? - HELD THAT:- In the instant case it is stated that the applicant is placing its own specified medical equipments to identified hospitals or laboratories by executing an agreement. As per the agreement, the hospitals or laboratories where the equipment is installed have the right to use the machine during the period of contract; but the title and ownership of the instrument continues to be with the applicant and the instruments are to be returned to the applicant at the end of the specified period or at the earlier termination of the agreement. It is further stated that the users of the instruments under the agreement only possess a non-transferable right to use the said instruments during the tenure of agreement. Whether the transaction / activity is in the course or furtherance of business? - HELD THAT:- The definition of business is inclusive and wide in its scope and amplitude and the transaction / activity of the applicant is undoubtedly in the course or furtherance of business. Whether the transaction / activity is made for a consideration? - HELD THAT:- The consideration can be in monetary or non-monetary form or partly in monetary form and partly in non-monetary form. Clause (a) and (b) of the definition of consideration are independent clauses and not dependant on each other. Therefore, consideration can be payment in money or the monetary value of any act or forbearance. Monetary consideration includes payment by cash, cheque or credit card, bank transfer and deduction from bank account - On a plain reading of the preamble of the Agreement itself it is evident that the primary motivation for the applicant to enter into the Agreement to place the instrument at the premises of the customer is the agreement of the customer to purchase Products as defined in the Annexure B of the Agreement in accordance with the terms and conditions specified in the Agreement. It is settled position of law that where the language of the statute is plain and unambiguous, there does not arise a need for interpretation. In the instant case the term consideration is defined clearly and unambiguously in Section 2 (31) of the CGST Act, 2017 and there is no need for recourse to any construction interpretation to understand the meaning of the term. The meaning of the term consideration is clear from the plain language used in the definition. Hence there is no need for reference to the definition of consideration under Australian Law or the advisories issued there under. The placement of specified medical instruments to unrelated customers like Hospitals, labs etc for their use by the applicant constitutes supply of services under CGST Act, 2017.
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2021 (7) TMI 477
Levy of GST - Supply of services by India Branch to the customers located outside India - Inter Company Agreement with M/s. Sutherland Mortgage Services Inc. USA - location of the supplier of services - N/N. 09/2017 - Integrated Tax (Rate) dated 28.06.2017 as inserted by N/N. 15/2018 - Integrated Tax (Rate) dated 26.07.2018 - HELD THAT:- The explanations to Section 8 of the IGST Act, 2017 creates a legal fiction that the establishment of a person in India and any other establishment of the same person outside India are two separate legal persons for the purpose of goods and services tax law. In view of the legal fiction created by the explanations to Section 8 of the IGST Act, 2017 even though the applicant and SMSI, USA cannot be treated as distinct persons under the law of contracts or in commercial or accounting parlance they are separate legal persons / distinct persons as far as the applicability of goods and services tax law is concerned. Therefore, the recipient of services as per the agreement has to be determined in the light of the legal fiction. On a plain reading of the clauses of the Agreement it is evident that the services are provided by the applicant to SMSI, USA and not to the customers of SMSI, USA and the consideration for the services rendered is liable to be paid to the applicant by SMSI, USA. The applicant has submitted three flow charts showing different scenarios of the flow of services claiming that the actual flow of service is directly from them to the overseas customers of SMSI, USA - Even if it is assumed that the services are provided directly to the customers of SMSI, USA by the applicant, the applicant can only be considered as providing the services on behalf of SMSI, USA to the overseas customers. Thus, in any view of the matter the recipient of the services rendered by the applicant as per the Agreement is SMSI, USA the Head office of the applicant. Thus, the recipient of services of the applicant is SMSI, USA the Head office of the applicant and hence a distinct person in accordance with Explanation I in Section 8 of the IGST Act, 2017. Hence the condition at sub-clause (v) of clause (6) of Section 2 of the IGST Act, 2017 defining export of service that the supplier of service and the recipient of service are not merely establishments of a distinct person in accordance with Explanation 1 in section 8 is not satisfied and accordingly the service provided by the applicant do not constitute export of service as defined in Section 2 (6) of the IGST Act, 2017 and consequently the applicant is liable to pay IGST - In view of entry at SI No. 10F of N/N. 09/2017 Integrated Tax (Rate) dated 28.06.2017 as inserted by N/N. 15/2018 Integrated Tax (Rate) dated 26.07.2018 the services provided by the applicant is exempted from IGST from 27.07.2018 onwards.
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2021 (7) TMI 466
Cancellation of petitioner's registration certificate - reasonable opportunity of hearing was not granted before cancellation of license - petitioner did not reply to the notice as and when required - principles of natural justice - HELD THAT:- A perusal of Sub-rule (3) of Rule 22 of Rajasthan Goods and Service Tax Rules, 2017 clearly shows that the authority concerned is required to cancel the registration (if required) within a period of 30 days of the date of the reply to the show cause notice. True it is, that the petitioner did not file reply by 15.02.2021, as was required by the notice dated 04.02.2021, but then the notice dated 04.02.2021, requiring the petitioner-assessee to file reply within 7 days from the date of service of the notice itself was contrary to the statutory provisions. A bare reading of sub-rule (2A) reveals that the Assessing Authority is required to give 30 days time to explain the reason why the registration ought not to be cancelled. In the opinion of this Court, the proceedings of cancellation of registration cannot be kept hanging fire on any pretext, including that assessee failed to file reply within the time allowed. Authority issuing the notice is statutorily bound to pass order in terms of sub-rule (3) of Rule 22 of the Rules. Considering that the petitioner has omitted to file reply within time allowed and even within 30 days of receiving the notice dated 04.02.2021, the present writ petition is disposed of with a direction to the petitioner to put forth all the submissions including the submission about automatic revocation of suspension advanced before this Court - Application disposed off.
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Income Tax
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2021 (7) TMI 476
Entitled for deduction u/s 10B - whether the assessee in the instant case, has complied with the requirements as laid down in Section 10B(2) ? - Whether assessee is formed by splitting or reconstructing of business - tribunal dismissing the appeal preferred by the revenue by holding that the assessee is entitled for deduction under Section 10-B - Deemed dividend - Additional substantial question of law - Reserve and surplus show as accumulated profit - HELD THAT:- SLP dismissed.
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2021 (7) TMI 475
Withholding the refund u/s 241A - Approval granted by the Pr.CIT - whether claim for refund could not be issued, on account of the fact that there was an order passed against Petitioner u/s 241A - refund is primarily on account of issuance of tax deduction (TDS) certificates at considerably higher rate of 5%, in comparison to Petitioner s request of 3.12% - HELD THAT:- SLP dismissed. We are not inclined to exercise jurisdiction under Article 136 of the Constitution of India.
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2021 (7) TMI 473
Rejection of application for Nil rate of Tax Deduction at Source u/s 197 - HELD THAT:- The impugned order is a cryptic one and it gives no reasons for rejection of the petitioners application for Nil rate of Tax Deduction at Source under Section 197 of the Act. It is nowhere mentioned in the impugned orders that the information supplied by the petitioners were erroneous and incorrect. This Court in a number of judgments has held that the Assessing Officer cannot ignore the mandate of Rule 28AA and proceed on any other basis as the Government is bound to follow the rules and standards they themselves had set on pain of their action being invalidated - See BENTLY NEVADA LLC [ 2019 (7) TMI 1503 - DELHI HIGH COURT] and MANPOWERGROUP SERVICES INDIA PVT. LTD. [ 2020 (12) TMI 934 - DELHI HIGH COURT] Consequently, the impugned orders are set aside and the matters are remanded back to the Assessing Officer for de novo hearing. The Assessing Officer is directed to decide the applications filed by the petitioners within four weeks.
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2021 (7) TMI 471
Denial of principle of natural justice - petitioner did not have sufficient opportunity to reply to the notices u/s 142(1) - HELD THAT:- This Court finds that the principal of natural justice have not been adequately complied with in the present instance inasmuch as if the respondent s version is believed, the petitioner did not have sufficient opportunity to reply to the notices dated 21st April, 2021 under Section 142(1) of the Act, as there was a lockdown in Delhi between 19th April, 2021 at 10.00 P.M. and 07th June, 2021 at 5.00 A.M. The petitioner in his writ petitions in paragraph 25 has specifically mentioned in detail the particulars of a large number of documents that were in his possession and that he would have placed on record to clarify the issues raised by the Assessing Officer. This Court finds merits in the submission that there has been violation of principles of natural justice in the present instance. Matters are remanded back to the Assessing Officer to pass fresh assessment orders.
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2021 (7) TMI 470
Faceless assessment u/s 144B - assessment order is challenged on the ground of violation of principle of natural justice as no Video Conferencing or oral hearing opportunity was provided to petitioner despite specific request made - HELD THAT:- As decided in Predecessor Division Bench in Sanjay Aggarwal v. National Faceless Assessment Centre Delhi [ 2021 (6) TMI 336 - DELHI HIGH COURT ] it was incumbent upon the respondent/revenue to accord a personal hearing to the petitioner. The impugned assessment order is set aside and the matter is remanded back to the Assessing Officer, who shall grant an opportunity of hearing to the petitioner by way of a Video Conferencing and thereafter pass an order in accordance with law. With the aforesaid direction, the present writ petition along with pending applications stand disposed of.
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2021 (7) TMI 469
Faceless Assessment u/s 144B - violation of the principles of natural justice - no show cause notice-cum-draft assessment order was issued - HELD THAT:- The petitioner is correct in submitting that Section 144B of the Act has been violated and the assessment proceeding has been completed in the present case in violation of the principles of natural justice. Consequently, the impugned assessment order issued under Section 143(3) read with Sections 143(3A) and 143(3B) of the Act along with notice of demand arising therefrom are set aside. The respondents/revenue is given liberty to pass a fresh assessment order in accordance with law. The petitioner is also given liberty to challenge any action of the respondents/revenue in accordance with law, in the event it is aggrieved by the same.
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2021 (7) TMI 468
TDS u/s 194N on cash withdrawal - constitutional validity and legality of Section 194N - Deduction of tax at source at the rate of 2% on cash withdrawals from, inter alia, a banking company exceeding ₹ 1 crore in a financial year - HELD THAT:- On earlier occasion opportunity was given to the respondents to seek instruction as to whether the aforesaid order of the Kerala High Court has been further challenged or not to which Additional Solicitor General has submitted on instruction that no further appeal has been filed against the said order and the said interim order is still existing. It has also been submitted that series of orders have been passed by the Hon ble Kerala High Court on the same issue admitting the writ petition and staying deduction of tax on source under Section 194N of the Income Tax Act, 1961. Considering these facts, we are inclined to grant an interim order restraining the respondents authorities concerned from deducting tax on source on the basis of the aforesaid provisions of Section 194N till 30 th September, 2021.
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2021 (7) TMI 464
Reopening of assessment u/s 147 - HELD THAT:- This Court cannot go into such disputed facts regarding the materials scrutinized and the informations or details now available with the Assessing Officer for reopening of Assessment. All such details are to be gone into while undertaking the process of reassessment and now it is in the stage of disposing of the objections and therefore, the petitioner has to cooperate for reassessment. This Court is of the considered opinion that the disputed facts and circumstances based on the documents and evidences cannot be adjudicated in a writ proceedings under Article 226 of the Constitution of India. The facts relevant and the principles laid down in a particular judgment are to be considered while adjudication and this Court cannot enter into venture of adjudication of those disputed facts - reasons are communicated and the reasons would show that the expenditures are expressly disallowed under the deeming fiction created by the penal Section of IT Act, on account of infringement of law. By adding back the same item, the eligible profits got increased by these disallowances, resulting in excess claim. It is well settled principle that the deeming fictions created under any provisions of the IT Act, cannot be imported to a beneficial provision of the Act as held in the case of DCIT vs. Rameshbhai C Prajapati [ 2013 (1) TMI 208 - ITAT AHMEDABAD] -Therefore, the above dis allowance is required to be added back to the taxable income. The disposal of the objections in the impugned order reveals that mere production of account books or other evidence from which material evidence could with due diligence have been discovered by the AO does not necessarily amount to a disclosure within the meaning of the first proviso to Section 147 - necessary . It is to further to be stated here that It is possible with due diligence the Assessing Officer would have ascertained this fact at the time of original assessment also, but in view of the explanation (1) it does not mean that there was no default on the part of the assessee . The assessee can not try to take shelter under the exception provided by the above proviso to Sec.147 that where an assessment order u/s 143 (3) has been completed, no action after the expiry of four years from the end of the assessment year can be taken. WP dismissed.
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2021 (7) TMI 460
Penalty u/s 271(1)(c) - Power of CIT(A) to issue directions to the AO for levy of penalty on Estimation of income - Low GP - HELD THAT:- CIT(A) has proceeded as if he is setting in revision of the order u/s 263 and he has done enhancement. Enhancement is also on a very absurd reasoning that the GP is very low. Reasoning adduced by the assessee has totally been ignored. Just because the GP rate is low as compared to earlier years that is not conclusive proof that income is suppressed. Hon'ble Punjab Haryana High Court in the case of Commissioner of Income Tax Vs. Ajay Kumar Singla [ 2014 (10) TMI 709 - PUNJAB HARYANA HIGH COURT ] has held that lower GP may be cause for investigation but that is not the cause for increase in the assessment. Hence, this limb of learned CIT(A) s decision is totally devoid of cogency and the same is liable to be quashed An assessment based upon low GP without recording any reason of inaccurate particulars involved is not sustainable. Thereafter learned CIT(A) has given direction to the Assessing Officer to levy penalty equivalent to 100% tax under section 271(1)(c) of the Act. Mere estimate of income cannot fasten liability upon the assessee u/s.271(1)(c) of the Act. In Reliance petro products, it was held that mere disallowance cannot ipso facto fasten liability u/s.271(1)(c) of the Act. Further, it is settled law that learned CIT(A) has no power whatsoever to remit the matter to the Assessing Officer to pass a penalty order as per his direction. In this view of the matter order of learned CIT(A) is perverse and is liable to be quashed. - Decided in favour of assessee.
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2021 (7) TMI 459
Refund of TDS to the deductor - HELD THAT:- In the present case, the CIT(A) has allowed relief to the assessee on the basis that the refund to the deductor is not possible. DR has however rightly pointed out that as per the CBDT s Circular No.2/2011 dated 2.04.2011, there is a procedure for the deductor to claim refund before the AO. The basis on which the CIT(A) allowed relief to the assessee is therefore not sustainable. In the case of Escorts Vs. DCIT [ 2007 (5) TMI 362 - ITAT DELHI] the factual background under which credit for TDS was allowed was that the assessee claimed that the income which was subject to TDS was not taxable in his hands. In the present case, the assessee has not explained as to the status of the income as reflected in the TDS certificate The decision in the case of M/s. Bhooratnam and Co. [ 2013 (1) TMI 478 - ANDHRA PRADESH HIGH COURT] was a case where TDS certificates of an assessee were in the name of joint venture partners and credit was not given by the Department. The Hon ble Andhra Pradesh High Court held that credit should be given to the contractor whether certificate is issued in the name of joint venture or in the name of contractor. Thus, all the decisions cited by learned Counsel for the assessee are found distinguishable and not applicable to the facts of the present case. For the reasons given above, we are of the view that the order of the CIT(A) cannot be sustained and the credit for TDS cannot be allowed to the assessee in facts and circumstances of the case. Appeal of the Revenue stands allowed.
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2021 (7) TMI 458
TDS u/s 192 or 194J - payment made by assessee hospital to certain consultant doctors - Professional payments OR payment to salaried employees - HELD THAT:- As noted that the terms of arrangement with consultant Doctors was different from employee-doctors. The consultant doctors were paid based on the services rendered by them and on the basis of doctors fees collected by the hospital from the patients. The same is evident from the fact that the payment made to these doctors vary significantly in each month. This was so because fees payable to them was linked to services rendered and patients attended to by them during the relevant period - the consultant doctors were not entitled to any fix remuneration. There was no specific timing and attendance record maintained by hospital with respect to such doctors and this category of doctors was not be eligible for any leave, provident fund, gratuity, bonus etc. and were not subject to admission or retirement from services. They were not entitled to several benefits as allowed to regular employees such as medical reimbursement. Insurance, leave encashment etc. All these facts and features would bolster assessee s claim that there was no employer-employee relationship between the assessee and consultant doctors. Therefore, the tax was rightfully deducted u/s 194J.
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2021 (7) TMI 454
Penalty u/s 271(1)(c) - Excess depreciation claim - furnishing inaccurate particulars by the assessee company of its income - CIT (A) arrived at the findings that it is not a case of furnishing of inaccurate particulars of income as alleged by AO rather assessee company has furnished all information before the AO - HELD THAT:- Perusal of the assessment order shows that at the time of recomputing carry forward depreciation, AO reached the conclusion that the assessee has claimed excess depreciation which amounts to furnishing of inaccurate particulars of income, whereas it is not the case when the working made and examined by the ld. CIT (A) It is the case of some adjustment made by the AO for examining the issue of depreciation whereas exact depreciation claimed by the assessee of ₹ 6,35,84,390/- and not the depreciation of ₹ 7,14,24,272/- as made by the AO. When the assessee company had furnished all the necessary facts with complete working of the computation of income under the normal provisions of the Act as well as under MAT u/s 115JB of the Act, there is no question of furnishing inaccurate particulars of income. As in assessee's own case [ 2017 (8) TMI 915 - ITAT MUMBAI] decided the issue as to the claim of depreciation of the assessee without deducting the amount of conditional grant received by the assessee from the actual cost from the WDV of the plant and machinery in favour of the assessee. So, in view of the matter, we are of the considered view that it is merely a case of difference arising out of the reworking of the carry forward depreciation by the AO by allowing more depreciation than claimed by the assessee company and not a case of concealing of income or furnishing of inaccurate of particulars of income. Consequently, finding no illegality or perversity in the impugned order passed by the ld. CIT (A) who has rightly deleted the penalty levied by the AO, the appeal filed by the Revenue is hereby dismissed.
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2021 (7) TMI 453
Deduction u/s 80P(2) - income earned by the assessee from investment in SBI mutual fund - HELD THAT:- AO in the assessment order itself, the assessee-society was carrying on business of banking and providing credit facilities to its members and also taking deposits from its farmer members. Therefore, accepting deposits on interest is one of the activities of the assessee-society. In the business of banking or credit facilities, not only accepting deposits but also investment of the deposits is also the part of the business activity of such an entity. To invest the deposits accepted from the members or the surplus funds available with it, is part of the banking/credit business of the assessee-society. Therefore, the investment of the surplus amount in the mutual funds by the assessee-society cannot be said to be not related to the business activity of the assessee-society. Therefore, the interest/dividend income earned by the assessee for such investment, in my view, will be eligible for deduction u/s 80P(2) - AO is directed to allow the deduction on the income earned by the assessee from investment in SBI mutual fund. Not allowing TDS - assessee has submitted that he mistakenly registered itself as local authority with the Income Tax department (PAN) and not as association of persons , therefore, the TDS amount claimed in the return of income has been denied to the assessee - HELD THAT:- We are not convinced with the above observation of the CIT(A). If the assessee by mistake has wrongly registered itself under a wrong category that does not mean that the said mistake is not curable or that the assessee is to be punished for its bona fide mistakes. Therefore we restore this issue to the file of the Assessing Officer with a direction that an opportunity may be given to the assessee to cure the defects, if any, in its registration and thereafter, to allow to the assessee the eligible claims/TDS refund etc. if otherwise so admissible to the assessee under the provisions of the Income Tax Act.
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2021 (7) TMI 452
Interest on Investment - Addition debit of some amount out of interest income shown in earlier year(s) in the profit loss accounts - amount was debited on account of a wrong credit made - HELD THAT:- Admittedly, the assessee has not debited the said amount on account of any transaction of expenditure. The case of the assessee is that a wrong credit by mistake was made in the earlier year and that the rectification entry has been made in this year. DR has been fair enough to submit that if it is a case of any mistaken entry and rectification thereof, the matter may be restored to the file of Ld. AO for verification of the said fact. The assessee has also made similar request. Both the ld. Representative of the parties, this issue is restored to the file of the Ld. AO for the limited purpose for verification of the fact as to whether the aforesaid amount was debited on account of a wrong credit made in the earlier year by mistake. If the contention of the assessee is proved, then no disallowance will be attracted in this case.
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2021 (7) TMI 451
Disallowance u/s. 37(1) - Estimation of income on bogus purchases - suspicious purchases of wrist watches which were stated to be given to buyers as sales promotion - as per CIT-A it is reasonable to make an estimated addition of 12.5% against these purchases - HELD THAT:- We concur with the adjudication of Ld. CIT(A) that receipt and utilization of wrist watches could not be ignored. The assessee might have made savings by purchasing the goods from the open market. Therefore, it was quite reasonable to make estimated additions of 12.5% against the purchases so made by the assessee. Finding no infirmity in the impugned order, we dismiss the appeal.
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2021 (7) TMI 450
TDS u/s 194H - 'Commission and Shipping Charges' - Disallowing the expenses related to commission and shipping charges - HELD THAT:- We have gone through the record before us and find that the confusion arose owing to the deduction of TDS by the assessee u/s. 194H and dissimilar approaches taken by the assessee in recording the fact and the interpretation of the same by the revenue. We hold that the interest of justice would be well served if the matter is remanded back to the file of the AO with direction to the assessee to file proper reconciliation statements. AO would go through the same and deal with it in accordance with the approved accounting standards and provisions of the Income Tax Act. - Appeal of the assessee is allowed for statistical purposes.
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2021 (7) TMI 449
Disallowance of interest u/s 36(1)(viii) - allocation of the assessee on account of interest with regard to segmental reporting in respect of housing loan business, loan against property and other business - HELD THAT:- Similar issue has been decided by the revenue in favour of the assessee for A.Y. 2012-13 wherein held that AO has not examined the submissions furnished by the appellant company and simply disallowed the deduction. Deduction claimed u/s. 36(1)(viii) is duly supported by segmental accounting which includes apportionment of expenses, details of which are filed before the AO and in appellate proceedings - a more acceptable method for determining the profits from eligible business would be allocation of interest expenditure on the basis of turnover of the eligible and ineligible business segments. AO is directed to recompute the profit of eligible business deduction by allocating interest expenditure on the basis of turnover and not on the basis of balance of outstanding housing loan and loan against property recoverable at the end of the year as apportioned by the appellant company. Deduction u/s. 36(1)(viii) i.e. 20% shall be allowed on such profits and gains of the eligible business arrived after apportionment of the interest expenditure on the basis of turnover ratio of the two segments. Addition on account of cessation of trade liability - CIT(A) deleted the addition on the ground that the amount has not been remitted from the books of accounts of the assessee and not even three years have been passed, hence, they are beyond the provisions of the law of limitation and creditor can always claim the amount from the assessee - HELD THAT:- The debts still subsists. On going through the fact on record, we find no legal infraction in the decision of the Ld. CIT(A) and hence decline to interfere with the order of the Ld. CIT(A) on this ground.
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2021 (7) TMI 448
Maintainability of appeal - low tax effect - Penalty u/s. 271(1)(c) - HELD THAT:- It is a settled position of law that quantum proceedings and penalty proceedings are independent and distinct proceedings and confirmation of an addition cannot on a standalone basis justify imposition/upholding of a penalty u/s. 271(1)(c) of the Act. Adopting the same logic, we are of the considered view that unless a specific exception is provided in the CBDT Circular No. 3/2018 (supra) with respect to penalty also, it could, by no means be construed that penalty was to be treated at par with the quantum additions. As is discernible from Clause 10(e) of the aforesaid CBDT Circular No. 3/2018 (supra), the same applied only to additions that were based on information received from external sources. As noticed by us hereinabove, since the levy of penalty by no means could be construed as an addition within the meaning of Clause 10(e) of the aforesaid circular, therefore, the aforesaid exception carved out in the CBDT Circular No. 3/ would not take within its realm a penalty imposed under Sec. 271(1)(c) w.r.t. the additions made by the A.O. towards bogus purchases on the basis of information received from Sales Tax Department, i.e. an external agency. Accordingly, as the appeal of the revenue is covered by the CBDT Circular No. 17/2019, dated 08.08.2019, the same, thus, in our considered view is not maintainable.
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2021 (7) TMI 447
Assessment u/s 153A - incriminating material found during the course of search or not? - HELD THAT:- Considering the latest judgement in the case of Pr. CIT Ors. Vs. Meeta Gutgutia [ 2017 (5) TMI 1224 - DELHI HIGH COURT] come to the conclusion that since the assessment orders in question were concluded and non-abated assessments no addition can be made in the assessment proceedings u/s 153A of the act unless there is any incriminating material found during the course of search. We find no inconsistency in the finding of Ld. CIT(A) quashing the assessment proceedings u/s 153A of the Act since the additions were not made on the basis of any incriminating material found during the course of search. - Decided in favour of assessee. Addition for the pay-in from NBOT - HELD THAT:- So far as first contention of assessee that profit and loss has been shown by the respective clients in their Income Tax returns and the transactions are confirmed by them, we do not find any merit and the same is not accepted at our end because when any new client is added by a member of NCDX/NBOT, complete KYC is done and all the documentary evidence in support of identity, PAN No., Address are taken. Details of bank account are also available. Yearly confirmation also taken from the clients since the accounts of the members of such exchange are subject to audit by the exchange also. Second contention of assessee that Ld. AO should have taken the figures of Pay-in and pay-out from NBOT, in entirety, certainly has a merit in it. When the Ld. Assessing Officer was not able to lay hand on the documentary evidence to satisfy himself about the fact that profit and loss earned by various clients are genuine and have been shown in their regular return of income, he resorted to complete the assessment on the basis of the figures of pay-in from NBOT. AO however did not considered the figure of pay-out. This action of the Ld. Assessing Officer was not justified as he cannot pick and choose the figures at his/her pleasure. Once it was decided to make the addition on the basis of gross transactions with NBOT then Ld. Assessing Officer was bound to consider both the figures of pay-in and pay-out. Cumulative amounts for the years under appeal are negative and thus, no addition was called for A.Ys. 2007-08 2008-09 based on the transactions with NBOT as observed in the assessment order. Similar finding has been given by the Ld. CIT(A) in this regard which thus needs no interference and the same stands confirmed. Accordingly grounds of appeal raised by the Revenue dismissed.
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2021 (7) TMI 446
Reopening of assessment u/s 147 - Non service of notice - HELD THAT:- Admittedly, in the present case since AO had not mentioned the father's name of the assessee in the notice dated 31.03.2016 issued u/s. 148 of the Act, the same was received back unserved. So far as the contention of the AO that the notice was served under Order V Rule 20 of the CPC is concerned, the satisfaction recorded by the AO on 31.03.2016 (copy of which is available in paper book) does not establish that the notice was served upon the assessee in terms of Order V Rule 20 of the CPC because the AO has not mentioned the complete address of the assessee including father's name House No. and the premises where the notice was to be affixed. The Hon'ble Supreme Court in the case of R.K. Upadhyay vs. Shanabhai P. Patel [ 1987 (4) TMI 5 - SUPREME COURT] has held that the A.O. cannot initiate proceedings under section 147 of the Act, without service of notice under section 148. In the present case the documentary evidence on record establishes that the notice u/s. 148 was neither served to the assessee personally or by post nor served by affixing the copy thereof in terms of order V Rule 20 of CPC. On the other hand, there is no merit in the contention of the department that the AO had passed the reassessment order after serving notice to the assessee u/s. 148 of the Act. Hence, in our considered view, since the AO had passed the assessment order u/s. 147 of the Act, in violation of the mandatory provision under section 148 of the Act, the Ld. CIT(A) has wrongly affirmed the order passed by the AO, therefore the impugned order is not sustainable in law. - Decided in favour of assessee.
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2021 (7) TMI 445
Estimation of income - assessee was only earning commission income - addition by the Ld. AO with respect to the cash credited in the bank account of the assessee - HELD THAT:- We are of the view that, the above mentioned estimate of commission income earned by the assessee during the relevant assessment year seem to be reasonable. Hence, we are of the considered view that on the overall, the assessee s income should be estimated and assessed at ₹ 32,00,000/- (by r/o ₹ 31,38,600/-) worked by us hereinabove. Accordingly, we hereby direct the Ld. AO to assess the net taxable income of the assessee at ₹ 32,00,000/- as against the returned income of the assessee of ₹ 7,00,200/-. Consequently, the returned income of the assessee ₹ 7,00,200/-, the addition made by the Ld. AO of ₹ 94,04,800/- and the enhancement of the income by the Ld. CIT (A) of ₹ 5,76,98,279/- shall stand deleted. Appeal of the assessee is partly allowed
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2021 (7) TMI 443
Revision u/s 263 - penalty paid for late payment of tax inadvertently omitted to be disallowed in the computation of total income - HELD THAT:- In this case, the PCIT took up the issue u/s. 263 of the Act after giving due opportunity of being heard to the assessee. He set aside the order of AO and directed him to examine the aforesaid issues and to redo the assessment afresh. At the time of hearing, it is pointed out by the ld. AR that the assessee is only challenging the issues on merits which is not decided by the ld. PCIT and he has only remitted the matter back to the AO for fresh consideration in his order u/s. 263. As such, the ld. AR conceded that the issue raised by the assessee is pending before the AO for passing consequential order to the order passed u/s. 263 of the Act. He submitted that the appeal may be dismissed, as not pressed, with liberty to challenge the issues on merits, after passing the consequential order by the AO. Appeal by the assessee is dismissed as withdrawn.
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2021 (7) TMI 442
Disallowance of item of expenditure u/s 35(1)(ii) with reference to payment of Rupees Ten crores - HELD THAT:- The payee was duly approved when the payment was done. By no stretch of imagination it can be said that the assessee could have done the impossible and known that subsequently the approval will be withdrawn. We set aside the order of authorities below. The assessee is therefore held to be eligible for deduction u/s 35(1)(ii) of the Act. - Appeal filed by the assessee is allowed.
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2021 (7) TMI 441
Penalty u/s 271(1)(c) - Defective notice u/s 274 - AO failed to strike off the irrelevant default viz concealment of particulars of income or furnishing of inaccurate particulars of income - HELD THAT:- On a bare perusal of the SCN it can safely be gathered that the Assessing Officer himself was not aware as to for what default the assessee firm was being put to notice and therein called upon to explain as to why penalty may not be imposed on it. Be that as it may, it remains as a matter of fact borne from the record that the Assessing Officer had blatantly failed to validly put the assessee to notice as regards the default for which the penalty was sought to be imposed on it. In our considered view, as both of the two defaults envisaged in Sec. 271(1)(c) i.e concealment of income and furnishing of inaccurate particulars of income are separate and distinct defaults which operate in their respective independent and exclusive fields, therefore, it was obligatory on the part of the A.O to have clearly put the assessee to notice as regards the default for which it was being called upon to explain as to why penalty under Sec. 271(1)(c) may not be imposed on it. - Decided in favour of assessee.
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2021 (7) TMI 440
Assessment of trust - assessment of interest on accrual basis - assessee is following mercantile system of accounting as per its audit report and accounts - assessee's claim of exemption being the interest income accrued but not received during the previous year as the assessee followed the mixed system of accounting i.e. cash system for receipts and mercantile system for expenses - HELD THAT:- We are of the considered opinion that the system followed by the assessee of only accounting interest income on receipt basis is not sustainable. Assessing Officer is correct principally in holding that the assessee is required to account for the interest on accrual basis - Assessee is accounting for the interest on receipt basis. Hence, assessee must have accounted for the interest of earlier year which has been received during the year on receipt basis. Hence, by this change of method of accounting the assessee s income would include interest income of earlier year received during this year as well as interest income accrued for the year. This will amount to taxing more interest income than that what is legitimately taxable for this year. Hence we are of the opinion that from the interest accrued for the year the interest income of earlier year which had accrued in earlier year but were accounted for on receipt basis during this year should be reduced. The resultant figure should be added to the income of the assessee. Transaction between the related concerns - After examining shareholding pattern of the person specified, learned CIT(A) has given a finding that clause (a) to (d) of section 13(3) of the Act are not applicable - CIT(A) has given a finding with respect to section 13(3)(e) of the Act the said clause is not applicable here. CIT(A) has given a finding that he has examined the shareholding pattern of ABHSL and also compared the same with the list of the trustees of the appellant trust. He has found that Mrs. Rajshree Birla, Mr. B.L. Shah and Mr. Ashwin Kothari are the three people who are the Trustees of the Appellant Trust and shareholders of ABHSL. Total shares held by these three persons collectively are 30 shares as compared to the total share capital of 50,000 shares of ABHSL. Even collectively, the shareholding of the Trustees in ABHSL is far below the threshold of 20%. Hence CIT(A) held that in view of specific provisions of section 13 of the Act he held that ABHSL is not a related party under section 13(3) of the Act and thus addition made by the Assessing Officer is deleted. Apparently there is no error in the finding of learned CIT(A). Learned CIT(A)-DR could not cogently rebut the learned CIT(A) s finding but tried to make out of the case that the shareholder list of ABHSL may be obtained and thereafter further examination can be done. In this regard we are of the opinion that there is no such case made out by the Assessing Officer in the assessment order. He has simply made a presumption without actually analyzing the facts. It is settled law that mere presumption is not sustainable. Quantification of rent - We find that once the assessee is not falling the ambit of section 13(1) of the Act this issue does not arise. Application for accumulation of income in Form 10 for the previous year - HELD THAT:- CIT(A) has passed a correct order as held that it is not disputed that the Appellant had filed Form No. 10 along with its return of income. Thus, after giving effect to the appellate order if there is any surplus income for the current year for set off of past deficit, if any, then the AO is directed to consider Form No. 10 filed by the Appellant and compute the income as per law.
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2021 (7) TMI 439
Interest disallowance u/s 36(1)(iii) - CIT-A justification in treating the interest income from debentures to be taxed under the head income from other sources‟ as against income from business‟ offered by the assessee - HELD THAT:- There is absolutely no dispute that the borrowed funds from IBFSL had been utilized in investment in convertible debentures of M/s KA Hospitality Pvt Ltd (sister concern) of the assessee company. At the outset, we find that the borrowings were made in Asst Year 2012-13 and utilization of the same by way of making investment in convertible debentures of M/s KA Hospitality Pvt Ltd was also made in Asst Year 2012-13. The assessee had paid interest for the period 19.3.12 to 31.3.12 relevant to Asst Year 2012-13 and received interest income on debentures of ₹ 10,849/- in Asst Year 2012-13. The net interest paid for Asst Year 2012-13 was disallowed by the ld AO u/s 36(1)(iii) of the Act which was deleted by the ld CIT-A. As pointed out that the revenue could not prefer any appeal before this tribunal against this order on the ground of low tax effect on disputed issue due to circular issued by CBDT. Accordingly, we hold that the issue of allowability of interest paid on loans need to be examined independently in Asst Year 2013-14 dehors the fact of non-filing of appeal by the revenue before us for Asst Year 2012-13. CIT-A had enhanced the income by treating the interest income on debentures to be taxed under the head income from other sources and disallow the entire gross interest paid on loans u/s 36(1)(iii) of the Act. Since the aforesaid issue of allowability of interest paid is set aside to the file of the ld CITA this interconnected issue of interest income on debentures getting taxed as income from other sources is also set aside to the file of ld CITA for fresh adjudication in the light of aforesaid directions. Grounds raised by the assessee allowed for statistical purposes.
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2021 (7) TMI 438
Accrual of interest - interest on NCDs - HELD THAT:- It remains an admitted fact that for the assessment years 2015-16 and 2016-17 there was no objection from the AO in respect of non-inclusion of this particular interest on NCDs and the return was processed under section 143(1) of the Act. For the assessment year 2017-18, however, there was a scrutiny of the return of income and the assessing officer accepted the non-inclusion of the interest on NCDs and did not make any adverse comment the consequent addition. It is also an admitted fact that for the assessment year 2014-15 though the learned Assessing Officer made a similar addition as made in this year, in appeal, Ld. CIT(A) deleted the same. It is submitted by the Ld. AR that no appeal was preferred by the Revenue against the relief granted by the Ld. CIT(A) for the assessment year 2014-15 and it has become final. Though the AO had taken a similar objection for the assessment year 2014-15, it was returned down by the Ld. CIT(A) in appeal and the Revenue accepted the same. Such an acceptance of Revenue is not only for the assessment year 2014-15 but it continued for the subsequent years 2015-16 and 2016-17 and more particularly for the assessment year 2017-18 in which year though the learned Assessing Officer record the return for scrutiny under section 143(3) of the Act, did not take any objection in this regard. Above all, the submission of the assessee is that in the assessment year 2018-19 the assessee offered the entire interest income of ₹ 75, 75, 000/-to tax. The rule of consistency demands that the Revenue cannot approbate and reprobate in respect of the very same issue from year to year and finally remains silent when the entire interest amount was offered to tax in the assessment year 2018-19. We, therefore, find substance in the submissions made on behalf of the assessee and hold that the impugned addition cannot be sustained. We consequently direct the learned Assessing Officer to delete the impugned addition. Appeal of the assessee is allowed.
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2021 (7) TMI 436
Disallowance of 10% of expenses in nature of staff welfare expenses conveyance expenses, general expenses and office maintenance expenses - HELD THAT:- We notice that the AO disallowed the various expenses incurred by the assessee by observing that all the expenses were incurred by the assessee are booked by way of self-made vouchers and in some cases payments are made in cash and not supported by proper bills. Accordingly, he disallowed 10% of the total expenses. This issue was already considered by the Co-ordinate Bench and reduced the disallowance from 10% to 5% in assessee s own case in assessment year [ 2019 (8) TMI 1726 - ITAT MUMBAI] By respectfully following the above decision we are also inclined to direct the Assessing Officer to disallow only 5% of the total expenses. Accordingly, the amount raised by the assessee are allowed.
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Customs
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2021 (7) TMI 474
Condonation of delay in filing appeal - Revenue appeal - the delay was unexplained - HELD THAT:- We have repeatedly discouraged State Governments and public authorities in adopting an approach that they can walk in to the Supreme Court as and when they please ignoring the period of limitation prescribed by the Statutes, as if the Limitation statute does not apply to them. The objective is to complete a mere formality and save the skin of the officers who may be in default in following the due process or may have done it deliberately. We have deprecated such practice and process and we do so again. We refuse to grant such certificates and if the Government/public authorities suffer losses, it is time when concerned officers responsible for the same, bear the consequences - The irony, emphasized by us repeatedly, is that no action is ever taken against the officers and if the Court pushes it, some mild warning is all that happens. The amount to be recovered from the officers responsible for the delay in filing the Special Leave Petition and a certificate of recovery of the said amount be also filed in this Court within the same period of time - Appeal is dismissed as time barred.
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2021 (7) TMI 472
Scope of an entity - GJEPC - comes under definition of 'State' or under 'other authority' - GJEPC functions under the sponsorship of the Ministry of Commerce and Industry (MOCI) and the said Ministry has effective and all pervasive control over the GJEPC - substantial degree of control and regulation over the trading activities of GJEPC - funding of GJEPC - whether the respondent No.2 GJEPC falls under the definition of other Authority within Article 12 of the Constitution of India? HELD THAT:- It is not disputed that GJEPC is a Company registered under Section 25 of the Companies Act, 1956 and as such, not a statutory body. It was established by eight persons, not connected with the Government. It has a voluntary Membership and is not controlled by any State. The functions of GJEPC are primarily to support, protect, maintain increase and promote the export of gems and jewellery, a function, which is not a governmental function. As of today, there are 6506 Members, none of whom are representatives of the Central Government. The Committee of administration manages GJEPC consisting of 24 Members, who are neither appointed nor nominated by respondent No.1. The nominated Members of the Government cannot exceed three in number. The nominated Members have no voting rights and therefore, cannot participate in the decision making process of the Committee. The Committee controls the finances, staff and appointments, renewal, cancellation, suspension and termination of its Members. It is the Committee which make Rules in relation to conditions of service, appointment, promotion, dismissal etc. The primary source of funds is the subscription of Membership, which are sufficient for the proper functioning of the GJEPC. It is stated that no funding is provided by respondent No.1. The only funding received by GJEPC from the respondent No.1 is for a particular project as and when certain specific export, promotion activities under the MAI scheme and MDA scheme are taken up, and the said funds are used for the specific use and no portion is utilized for any other activity beyond the scheme - The respondent No.1 states that the only power exercised by the government is enumerated in clause 47 of the AoA. The said clause empowers the Central Government to give direction to the Council in the interest of national security, national economy and public interest. Surely the Government can have such a control on any person / entity within the country in the larger public interest. Connected to such a power is the power of the Central Government to call for reports with respect to property; affairs of the Council, foreign collaboration etc. Similarly, the alteration of AoA or MoA with the approval of the Central Government has to be read in conjunction with clause 47 of the AoA. Mr. Mishra is justified in stating that at no point of time, the grants exceeded more than 27%. GJEPC is not discharging any public / state functions and as such not an other Authority within the meaning of Article 12 of the Constitution of India and as such, the present petition under Article 226 of the Constitution of India is not maintainable. The plea of maintainability of the petition, advanced by learned counsel for the respondent No.2 need to be accepted and without going into the merits of the challenge to the termination of the petitioner, and the Judgments relied upon by the petitioner on the merits of the case, the present petition is liable to be dismissed. Petition dismissed - decided against petitioner.
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2021 (7) TMI 467
Validity of demand-cum-show cause cum notice - circular bearing no. 334/3/2011-TRU, dated 25.04.2011 - HELD THAT:- The petitioner, it appears, is aggrieved by the fact that respondent no.3 did not address the concerns of the petitioner with regard to the request for extension and proceeded to issue the impugned demand-cum-show cause notice, dated 31.05.2021 - Apart from anything else, in view of the fact that the city was under lockdown and the leeway given, according to the petitioner, was far too short, the matter requires further examination. List the matter on 31.08.2021.
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2021 (7) TMI 462
Recovery of duty of Customs from the successful Resolution Applicant - Orders of finalization of bills of entry of the Superintendent - no appeal filed by assessee - resolution plan approved under the Code binds the Central Government and Local Authority or not - Whether in the facts and circumstances of the present case the Tribunal was justified in directing the Commissioner (Appeals) to ignore the orders of finalization of bills of entry of the Superintendent despite no appeal having been filed by assessee? HELD THAT:- Once a resolution plan is approved, all the claimants in respect of a corporate debtor are dealt with under such plan as held by the Supreme Court in the case of Committee of Creditors of Essar Steel India Ltd. vs. Satisk Kumar Gupta Ors. [ 2019 (11) TMI 731 - SUPREME COURT] where it was held that [ 2019 (11) TMI 731 - SUPREME COURT] - but the judgment of the Jharkhand High Court in the case of Essar Steel Limited (Supra) is of no avail to the Department. Electrosteel [ 2020 (5) TMI 39 - JHARKHAND HIGH COURT] is distinguishable on facts as it proceeded on its peculiar facts pertaining to the criminal misappropriation of the statutory dues and cannot be made applicable to the facts of present case - Further, in Electrosteel [ 2020 (5) TMI 39 - JHARKHAND HIGH COURT] , the Registered office and principal place of business of the corporate debtor therein was in the State of Jharkhand. However, the public announcement was not published in any newspaper of Jharkhand but was published in the Business Standard, Kolkata Edition. In the facts of the present case, the public announcements were published by the IRP / RP in accordance with the Regulation 6 of the CIRP Regulations. The civil application succeeds and is hereby allowed
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Corporate Laws
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2021 (7) TMI 461
Seeking for reactivation of DIN/DSC of the Directors - disqualification of directors under Section 164 and 167 of the Companies Act, 2013 - HELD THAT:- In cases where directors have been disqualified prior to 7th May, 2018, the proviso to Section 167(1)(a) would not apply and the directors would continue to be directors in companies other than the defaulting company. The disqualification of such directors qua active companies would therefore be liable to be set aside and their DIN and DSC s reactivated. Directors who have been disqualified post 7th May 2018, qua other `active companies - HELD THAT:- The DINs and DSCs of disqualified directors of struck off companies, who are also directors in active companies, may be reactivated qua the active companies, in line with the spirit of the CFSS-2020. Directors of active companies who have been disqualified - HELD THAT:- In cases where directors of active companies have been disqualified, CFSS-2020 would squarely apply. Such directors would be entitled to avail of CFSS-2020 and file documents of the defaulting company. Disqualified directors of struck off companies seeking appointment as directors in other/new companies - HELD THAT:- This scheme has been introduced in view of the COVID-19 pandemic with the aim to enable a fresh start to defaulting companies and directors of such companies. The disqualification of defaulting companies was a step which was taken sometime in 2016-17 in order to ensure that filing of regular returns and compliances are undertaken strictly as per the provisions of the Act - A substantial part of the disqualification period has already been completed. The introduction of the CFSS is itself a step for `providing a fresh start . Under such circumstances, continuation of the disqualification would defeat the Scheme and its purpose. The CFSS-2020 was last extended till 31st December 2020. If the scheme is extended beyond 30th December, 2020, directors who fall in any of the categories mentioned above ought to be given an opportunity to avail of the same. Since the Petitioners wish to start a new business, their DIN/DSC ought to be reactivated within a period of one week to enable them to conduct their fresh business in accordance with law - Petition disposed off.
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2021 (7) TMI 444
Seeking sanction of the Scheme of Amalgamation - Sections 230 to 232 of the Companies Act, 2013 - HELD THAT:- From the materials placed on record, the Scheme of Amalgamation appears to be fair and reasonable and does not violate any provisions of law and is not contrary to public policy - Since all the requisite statutory compliances have been made under Sections 230 and 232 of the Companies Act, 2013, this Tribunal finds that the Scheme of Amalgamation annexed with the petition can be sanctioned and made absolute in terms of the prayer in the said Company Petition. The Scheme is sanctioned, which shall be binding on the Shareholders, Creditors and employees of the Petitioner Companies. The appointed date of the Scheme is fixed as opening hours of 1st April, 2019 for Cochin Surfactants Private Limited (Transferor Company) and Active Char Products Private Ltd. (Transferee Company). Petition disposed off.
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Insolvency & Bankruptcy
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2021 (7) TMI 456
Liquidation of Corporate Debtor - it is submitted by the respondent that the Corporate Debtor was not an MSME and during the pendency of the CIRP, Appellant procured the MSME Certificate without authority, copy of which has been filed in the Appeal - HELD THAT:- Although the Appellant heavily banked upon his efforts made to settle with the Operational Creditor and also with other creditors so as to bring about the withdrawal under Section 12(A) of IBC and also relied heavily on his efforts to show that the Appellant was trying to bring through a resolution plan filed by him and his resolution plan was required to be accepted, fact remains that the record does not show that Resolution Plan, as such of the Appellant, was approved by CoC by any given majority. Section 9 application was admitted on 19th July, 2018 and Liquidation order passed by the Adjudicating Authority on 11th December, 2020. This is more than two years of time. Clearly, if in the time prescribed under Section 12 of IBC resolution was not reached in the given time, liquidation is the only consequence which had to follow and which has been ordered though belatedly. There is yet another factor which is relevant and it is found that the Appellant has obtained Annexure-A-3 an MSME Certificate for which application had been made on 5th March, 2019. Clearly, CIRP with regard to the Corporate Debtor started on 19th July, 2018 and on 5th March, 2019 the Corporate Debtor was under the management of IRP/RP - After CIRP was initiated former Promoter/ Director cannot suppress from IRP/RP and apply for MSME Certificate and tide over ineligibility under Section 29A of the IBC. The Appeal is disposed of.
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2021 (7) TMI 455
Validity of parallel proceeding filed against the Principal Borrower - already CIRP had been initiated against the Corporate Guarantor and the claim of the Financial Creditor had already been accepted in the CIRP for the whole amount - HELD THAT:- Section 60(2) of IBC itself makes it clear that if CIRP or liquidation proceeding of a Corporate Debtor is pending before a National Company Law Tribunal, an Application relating to Insolvency Resolution of a Corporate Guarantor or Personal Guarantor, as the case may be, of such Corporate Debtor is filed it shall be filed before such National Company Law Tribunal - This Section speaks for itself that the parallel proceedings against borrower and guarantor are maintainable. Appeal disposed off.
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2021 (7) TMI 437
Seeking an exclusion of period of lockdown from calculation of period required for completion of Liquidation Process of the Corporate Debtor - Section 60(5) of Insolvency and Bankruptcy Code, 2016 Read with Regulation 40C of The IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 and Rule 11 of NCLT Rules, 2016 - HELD THAT:- The submissions of the applicant is satisfying that the liquidation period in respect of present Corporate Debtor needs to be extended. Hence the present IA is partly allowed. The liquidation period is further extended by six months from today. Further the period consumed during the lockdown period also needs to be excluded/exempted from counting the period prescribed for completing the process of liquidation as per the suo moto decision of Hon'ble Supreme Court in IN RE COGNIZANCE FOR EXTENSION OF LIMITATION [ 2021 (5) TMI 564 - SC ORDER ] by extending/exempting the period from 15th March 2020 till 14th March 2021 and again now until further order. Application allowed.
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2021 (7) TMI 435
Avoidance transactions - seeking to reject Resolution plan or to modify it - HELD THAT:- CoC has consciously decided that the money realised through these avoidance transactions would accrue to the members of the CoC and at the same time they have also consciously decided after lot of deliberations, negotiations that the monies realised if any under Section 66 of IBC i.e Fraudulent Transactions, CoC has ascribed the value of ₹ 1 and if any positive money recovery the same would go to the Resolution Applicant/future Corporate Debtor. CoC is comprised of 77 Financial Creditors and deliberations they have protected their interest and ascribed the value based on their Commercial Wisdom and Adjudicating Authority has limited jurisdiction to interfere with the same - The CoC by exercising its Commercial Wisdom have accepted, approved the resolution plan including the monies to be recovered if any from the Fraudulent Transactions - thus, Adjudicating Authority are reluctant to substitute our wisdom at this stage as against their Commercial Wisdom of the CoC. The Adjudicating Authority is of the confirmed view that CoC has already taken a conscious decision comprising of 77 members, therefore we restrain from making any comments and sending the plan back to CoC as pleaded by the applicant - Application dismissed.
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2021 (7) TMI 434
Reopening of assessment u/s 147 - expenditure not allowable under section 37 - HELD THAT:- Hearing concluded. Written submissions, if any, be filed on or before 09-07-2021.
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PMLA
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2021 (7) TMI 463
Money Laundering - proceeds of crime - scheduled offences - attachment of tainted property - respondents were of the view that since no tainted property of respondent No.5 was available for attachment the property which was acquired by untainted money could also be attached - HELD THAT:- A conjoint reading of the aforesaid provisions of SARFAESI Act and Bankruptcy Law makes it clear that the secured creditors have preferential right of realization of their dues against all other debts and government dues. Provisional attachment of the proceeds of crime under Section 5 of the PML Act is not an exercise for recovery of government dues of any nature; rather it is an exercise to seize /confiscate the property acquired by unlawful means of money laundering. Therefore, both the laws SARFAESI and Bankruptcy Act on the one hand; and PML Act on the other; operates in two different fields - the two statutes neither covers the same field nor overlaps against each other. Since SARFAESI Act only protects the interest of secured creditors against other debts and government dues. Whether in the facts and circumstances of the case, the petitioner should be relegated to the cumbersome litigation before the referred statutory body? - HELD THAT:- It is well settled by a catena of judicial pronouncements that the jurisdiction of the High Court under Article 226 of the Constitution of India is broad, plenary, equitable and discretionary one. It is equally settled that the writ jurisdiction of the High Court cannot be completely excluded by statute. However, certain self-imposed limitations are there. To illustrate the High Court should not act as Court of Appeal or entertain disputed question of fact while exercising writ jurisdiction under Article 226. Ordinarily, the High Courts should refrain to exercise jurisdiction under Article 226 if alternative remedy is there to the petitioner. In the case on hand what is noticeable that the statutory authority under Section 5 of the P.M.L.A., 2002 has not acted in accordance with the provisions of the enactment in question rather acted in defiance of the fundamental principles of judicial procedure and in total violation of the principles of natural justice. What can be provisionally attached under Section 5(1) of the P.M.L. Act is a proceeds of crime and to establish that the property attached is proceeds of crime , there must be material in possession of the authority to ventilate that the authority had reason to believe . In the case on hand, the authority appears to have passed the order contained in Annexure-3 in flagrant violation of the mandate of Section 5(1) of the P.M.L.A, 2002, as there was no material before the authority to come to the conclusion that the property-in-question was proceeds of crime or such proceeds of crime was likely to be concealed, transferred etc. - the property in question was not proceeds of crime as defined under the Prevention of Money-Laundering Act nor the impugned order reveals that there was a direct nexus between the property in question and the proceeds of crime. Therefore, evidently, there was no material before the authority concerned to have reason to believe that the property in question was proceeds of crime. Only perfunctory recording of the fact that the authority has reason to believe and has material before him for such belief would not suffice unless there is evident material for such belief. This is a fit case wherein this Court should exercise its jurisdiction under Article 226 of the Constitution of India - Application allowed without any costs.
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Service Tax
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2021 (7) TMI 465
Sabka Viswas (Legacy Dispute Resolution) Scheme - quantification of the amount to be paid - defence taken is that investigation in the matter is still on-going and that the duty component has not been quantified - Circular No.1071/4/2019-CX dated 27.08.2019 - HELD THAT:- The doubt that arises from the quantification in the statement is as to whether the amount is a sum of ₹ 98.00 lakhs or ₹ 75.00 lakhs. This would hinge upon the status of the petitioner as SSI unit or otherwise. Subject to a decision on this aspect, a quantification of duty in both instances has been made at the time of recording of statement seen in the light of Section 121(r) of the Scheme read with clause 10(g) of the Circular dated 27.08.2017. The matter remanded to the file of R1, who shall complete the exercise by determining this aspect of the matter alone. Had the respondent afforded proper opportunity as required in terms of Section 127 of the Scheme, heard the petitioner and passed a speaking order, this litigation might well have been avoided altogether - petition allowed by way of remand.
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Central Excise
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2021 (7) TMI 457
CENVAT Credit - failure to distribute credit on certain common input services and transition to GST - violation of Rule 7 of CENVAT Credit Rules, 2004 - denial of substantive right on the ground of procedural irregularity - extended period of limitation - revenue neutrality - HELD THAT:- In the present case, the learned Commissioner has confirmed the demand of CENVAT credit on the grounds that the appellant has failed to distribute the credit to its various units regarding common input service. The defence of the appellant that after the implementation of GST with effect from 01.07.2017, the appellants have taken single registration for all the 9 units working in the State of Karnataka in terms of Section 25 of the CGST Act, 2017. Further, it is found that the unutilized credit from ER-1 Returns and ST-3 Returns were transferred to Form GST TRAN-1 in terms of Section 140 of the CGST Act 2017 read with Rule 117 of CGST Rules 2017 and the same was further taken to Electronic Credit Ledger. Once the Department has not disputed the eligibility or entitlement of credit then the failure of the appellant to distribute the same and transition to GST after coming into force of GST is only a procedural lapse and it will not affect the substantive right of the appellant because the failure to comply with the provisions of ISD are at best may be termed as procedural irregularity and it has been consistently held by various Courts that substantive right cannot be denied merely on procedural irregularity. Extended period of limitation - revenue neutrality - HELD THAT:- The extended period of limitation invoked by the Department is not sustainable in the present case because the appellant has not concealed any information from the Department and all the documents were provided by the appellant to the Audit Party and on the basis of Audit Report, the SCN was issued - Further the entire demand in the present case results into revenue neutral because even if the appellant had distributed the credit, it would have been available for utilization by appellant post GST regime in terms of Section 25 of the CGST Act, 2017. It is found that pre-requisite of revenue neutrality is that there is no extra benefit to the assessee and no loss is caused to the Revenue and these two pre-requisites are fulfilled in the present case because even if the disputed credit was distributed to the units at a pro-rata basis, net effect of such transaction would have been NIL and in the present case, the SCN was issued to the appellant after the introduction of GST that at which point the issue has become revenue neutral because the appellant has taken one registration. The entire situation is revenue neutral - Appeal allowed - decided in favor of appellant.
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Indian Laws
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2021 (7) TMI 433
Dishonor of Cheque - dues was against the company but the cheque was issued by the petitioner from his personal account - Legally enforceable debt or not - specific case of the complainant was that the accused procured the supply of railway tickets in his favour from the complainant dishonestly with fraudulent intention and did not intend to pay the same - section 138 of Negotiable Instruments Act, 1881 - HELD THAT:- In the instant case, the cheque has been issued by the petitioner and the petitioner claims that the debt was legally enforceable against the company in which he was working and not against him as the petitioner was merely an employee of the company having office at Hyderabad. This Court finds that vide letter dated 25.11.2003 issued by the petitioner, the complainant was asked by the accused to hold the cheque for some time as it was likely that his company would issue appropriate cheque in discharge of the entire debt. The cheque was issued by the petitioner only to the extent of ₹ 88,355/- and the entire amount payable to the complainant-company was to the tune of 1,33,101/-. Thus, the cheque was certainly issued in discharge of the legally enforceable debt - The company having not cleared the dues of the complainant, the complainant presented the cheque which bounced twice. This Court finds that the presumption in connection with issuance of cheque that the same was issued against legally enforceable debt could not be rebutted by the petitioner and the only argument advanced by the petitioner is that there was no legally enforceable debt against the petitioner and the debt was only against his company - The present case is not related to any vicarious liability which arises when the cheque is issued by the company. In this case, the cheque is issued by the accused in his personal capacity and his specific case is that the debt was against the company and not against him. The petitioner would still be convicted even if he issues his personal cheque in discharge of the dues of the company. The learned appellate court has rightly held that petitioner being signatory of the bounced cheque is clearly responsible for non- payment of the amount to the complainant and rightly upheld the conviction of the petitioner for offence under Section 138 of the Negotiable Instruments Act, 1881. This Court does not find any irregularity, illegality or perversity in conviction of the petitioner for offence under Section 138 of the Negotiable Instrument Act, 1881 - the present revision petition is hereby dismissed.
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2021 (7) TMI 432
Dishonor of Cheque - acquittal of the accused - rebuttal of presumption - legally enforceable debt or not - offence punishable under Section 138 of N.I. Act took place or not - HELD THAT:- No doubt, the legal requirement of issuance of notice etc. have been complied. Further, the accused has not disputed the fact that the cheque belongs to him and bears his signature. As such, the presumption under Section 139 of the N.I. Act required to be drawn. However, it is not a conclusive presumption, but a rebuttable presumption. As per Section 139 of the N.I. Act, the complainant being the holder of the cheque and signature on the cheque having not been denied by the accused, the presumption shall be drawn that, the cheque was issued for discharge of any debt or other legal liability. However, the accused can rebut the said presumption regarding non-existence of liability, but at the same time, the complainant (prosecution) is required to prove his case beyond all reasonable doubt - the accused for rebutting presumption, need not to lead his own evidence and he can also rebut the presumption on the basis of the evidence placed by the complainant himself. The complainant has failed to establish his financial capacity to advance loan. Hence, it cannot be presumed that the cheque was issued in discharge of legally enforceable debt or liability. As such, the presumption under Section 139 of the N.I. Act stands rebutted and the accused by cross-examining the complainant, has rebutted the said presumption. As such, the appellant/complainant has failed to substantiate the contention that the cheque was issued towards legally enforceable debt, which is a mandatory requirement for attracting the offence under Section 138 of the N.I. Act. The learned Magistrate is justified in answering point under consideration in the negative - Appeal dismissed.
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2021 (7) TMI 431
Dishonor of Cheque - complainant could not be present before the trial Court - guilty for the charges leveled against or not - HELD THAT:- It is seen in the order sheet of the trial Court that even the matter was referred to the mediation to explore the possibility of settlement. However, subsequently when it is posted for cross-examination of the complainant, the accused has cross-examined the complainant fully. His statement under Section 313 of Cr.P.C. was also recorded and the matter was posted for defence evidence. At this stage, the accused remained absent and even the NBW issued repeatedly could not be executed. Notices to sureties were also issued by the trial Court. However, on 03.02.2020 the trial Court proceeded to dismiss the case for default i.e., for non-prosecution. The trial Court noticed that for several dates there was no representation on behalf of the complainant and there is no reason to adjourn the matter. The complainant could not be present before the trial Court. Absence of the complainant is not intentional or deliberate. Hence, the appeal may be allowed in the interest of justice - the impugned order dismissing the case for default could be set aside subject to terms - criminal appeal allowed.
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