TMI Tax Updates - e-Newsletter
July 3, 2020
Case Laws in this Newsletter:
GST
Income Tax
Customs
Securities / SEBI
Insolvency & Bankruptcy
Service Tax
Indian Laws
Highlights / Catch Notes
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GST:
Classification of supply - Threaded metal nuts which function same as standard nut - We agree with both, the applicant as well as the jurisdictional officer that the subject goods namely, ‘Metal Nuts with metrical threads, Metal Nuts without metrical threads and Metal Spring Nuts’ should be classified under Chap.7318 16 00 since the said goods are being supplied to be used in many fields including electronic goods, solar energy and vehicles.
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GST:
Classification of supply - GTA Service - Sub-contracting activity - one consignment note issued by the contractor and second consignment note issued by the sub-contractor - applicant cannot issue another consignment note for the same goods and for the same transaction where consignment notes are already issued by POSCO. Hence the applicant, in respect of the subject transaction cane of be treated as a GTA and therefore cannot charge GST @12% under Forward Charge mechanism as a GTA.
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GST:
Wrongful availment of ITC - Section 67 of CGST Act - Keeping in view the serious allegations that have been levelled against the petitioner by the officers of DGGI as well as by the Commissioner of CGST, Delhi (East), this Court is of the view that ends of justice would be met if the DGGI is directed to conclude the investigation in the present case within a period of three months.
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Income Tax:
Exemption u/s 11 - Providing hostel facilities - The assessee is not admitting other persons in the building. It is providing facility only to the students, and there are lots of rules and regulations, bye-laws for admitting students, according to their merits in education. Thus, taking into account overall facts and circumstances, we are of the view that the assessee is entitled for benefit of sections 11 and 12 of the Income Tax Act.
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Income Tax:
Validity of reopening of assessment u/s 147 - Additions of sale consideration on sale of equity shares u/s 68 - Assessee has shown that he has earned long term capital gain in many companies in subsequent year, but many of those companies are also in the list of penny stock prepared by the Investigation wing such as UNNO Industries . Therefore we reject that argument.
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Income Tax:
Revision u/s 263 - the Ld Pr. CIT has correctly explained that the provisions of sec. 43A shall apply only to those fluctuations in foreign currency which arises at the time of making repayment of loan, i.e., it does not apply to marked to market loss arising on account of restatement of loan at the year end.
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Income Tax:
Income from other source OR Capital gain - Correct head of income - relinquishing the right acquired under the Agreement by the Assessee - income from relinquishing rights under an agreement should be assessed under the head income from capital gains. - However, as is clear from s. 48, before the income chargeable under the head capital gains is computed, the deductions set out in s. 48 has to be given to the assessee.
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Income Tax:
Assessment u/s 263 - The allegations made by the Pr.CIT in the instant case have been successfully rebutted on behalf of the assessee. In view of the domestic transaction with AE not falling in the sweep of Section 92BA of the Act at the threshold, any alleged inaction attributable to the AO in this regard would not vitiate assessment order as erroneous nor did it cause any prejudice to the interest of the Revenue.
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Income Tax:
Levy of late fee u/s 234E - Validity of intimation u/s 200A - Though the intimation issued U/s 200A of the Act is an appealable order, however, the said order can be challenged only on the ground that the adjustment made by the A.O. or intimation issued U/s 200A of the Act is not in accordance with the provisions of Section 234E or Section 200A of the Act. Only if the A.O. has failed to comply with the mandatory provisions of these Sections while making the adjustment and issuing the intimation, the same can be challenged in the appeal.
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Income Tax:
Levy of late fee u/s 234E - since the levy of late fee as prescribed U/s 234E of the Act is mandatory and consequential, therefore, the same cannot be deleted on the ground of reasonable cause as explained by the assessee.
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Income Tax:
Penalty u/s 271C - non deducting tax at source from the payment towards LTC consisting of foreign travel - for the first time, after the survey by the tax departments this issue arose for consideration and after the judgment of the Tribunal, the matter got clarified and the assessee bank has duly complied and deposited the outstanding demand along with interest and has taken corrective steps in subsequent years as well. - No penalty since there was reasonable cause u/s 273B.
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Customs:
Smuggling - Gold Bars - Import of Personal baggage - The appellant had made wrong declaration, therefore, it is clear that the appellant had a malafide intention to escape with the smuggled gold without payment of duty - the adjudicating authority has rightly exercised his discretion to absolute confiscate of gold bars
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Indian Laws:
Wilful Defaulters or not - petitioners contend that the Show Cause Notice was issued by an Assistant General Manager of the Bank, who did not qualify even for being a member of the WDIC - the scope of interference in writ jurisdiction logically ought to be wider in case of a violation of Section 13(3A), SARFAESI Act than a wilful defaulter declaration, the latter being somewhat more preliminary in nature and subject to further checks and bounds, particularly a confirmation by the review committee upon considering the legality and factual veracity of the declaration.
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Service Tax:
Industrial Construction Service - Works Contract Services - benefit of abatement - The levy of service tax on CICS/CCS would be applicable only in case of pure service contracts whereas composite contracts involving transfer of property in goods would be liable to service tax only under WCS from 01/06/2007 as statutory mechanism to arrive at the value of service has been prescribed only under WCS from 01/06/2007.
Articles
Notifications
Customs-
55/2020 - dated
2-7-2020
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Cus (NT)
Exchange Rates Notification No.55/2020-Custom (NT) dated 02.07.2020.
GST-
58/2020 - dated
1-7-2020
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CGST
Central Goods and Services Tax (Eighth Amendment) Rules, 2020.
GST - States-
S.O. 134 - dated
2-7-2020
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Bihar SGST
Bihar Goods and Services Tax (Sixth Amendment) Rules, 2020.
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Removal of Difficulty Order No. 01/2020- State Tax - dated
30-6-2020
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Bihar SGST
Bihar Goods and Services Tax (Removal of Difficulties) Order, 2020
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F.1/37/2003/Misc./L&B/WC/960-2020 - dated
26-6-2020
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Delhi SGST
Prescribe the due date for furnishing FORM GSTR-1 by such class of registered persons having aggregate turnover of more than 1.5 crore rupees in the preceding financial year or the current financial year, for each of the months from April, 2020 to September, 2020.
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34/2020 – State Tax - dated
25-6-2020
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Jharkhand SGST
Seeks to amend Notification No. 21/2019-State Tax, dated the 28th June,2019
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33/2020 – State Tax - dated
25-6-2020
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Jharkhand SGST
Amendment in Notification No. 4/2018– State Tax, dated the 20th February, 2018
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32/2020 – State Tax - dated
25-6-2020
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Jharkhand SGST
Amendment in Notification No. 76/2018–State Tax, dated the 24th January, 2019
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31/2020-State Tax - dated
25-6-2020
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Jharkhand SGST
Amendment in Notification S.O. No. 49 - State Tax, dated the 29 June, 2017
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30/2020-State Tax - dated
25-6-2020
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Jharkhand SGST
Jharkhand Goods and Services Tax (Fourth Amendment) Rules, 2020.
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29/2020 – State Tax - dated
25-6-2020
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Jharkhand SGST
Seeks to prescribe return in FORM GSTR-3B of JGST Rules, 2017 along with due dates of furnishing the said form for April, 2020 to September, 2020
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28/2020 – State Tax - dated
25-6-2020
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Jharkhand SGST
Seeks to prescribe the due date for furnishing FORM GSTR-1 by such class of registered persons having aggregate turnover of more than 1.5 crore rupees in the preceding financial year or the current financial year, for each of the months from April,2020 to September, 2020
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27/2020 – State Tax - dated
25-6-2020
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Jharkhand SGST
Seeks to prescribe the due date for furnishing FORM GSTR-1 for the quarters April, 2020 to June, 2020 and July, 2020 to September, 2020 for registered persons having aggregate turnover of up to 1.5 crore rupees in the preceding financial year or the current financial year.
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19/2020 – State Tax - dated
25-6-2020
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Jharkhand SGST
Seeks to specify class of persons, other than individuals who shall undergo authentication, of Aadhaar number in order to be eligible for registration
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18/2020 – State Tax - dated
25-6-2020
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Jharkhand SGST
Seeks to notify the date from which an individual shall undergo authentication, of Aadhaar number in order to be eligible for registration
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17/2020 – State Tax - dated
25-6-2020
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Jharkhand SGST
Seeks to specify the class of persons who shall be exempted from aadhar authentication
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(24/2020)-FD 03 CSL 2020 - dated
30-6-2020
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Karnataka SGST
Seeks to provide relief by waiver of late fee for delay in furnishing outward statement in FORM GSTR-1 for tax periods for months from March, 2020 to June, 2020 for monthly filers and for quarters from January, 2020 to June, 2020 for quarterly filers
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F.12(46)FD/Tax/2017-Pt.III-182 - dated
11-6-2020
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Rajasthan SGST
Seeks to amend Notification No. F.12(56)FD/Tax/2017-Pt-I-40 dated the 29th June, 2017
SEBI-
SEBI/LAD-NRO/GN/2020/20 - dated
1-7-2020
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SEBI
Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) (Third Amendment) Regulations, 2020.
Circulars / Instructions / Orders
News
Case Laws:
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GST
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2020 (7) TMI 50
Classification of supply - Threaded metal nuts which function same as standard nut - Various other products - Held that:- we do not take up all the products listed in the subject application for discussion. We shall take up applicant s query only with respect to the first question pertaining to classification of the product Metal Nuts with metrical threads, Metal Nuts without metrical threads and Metal Spring Nuts . The jurisdictional officer has agreed with the contention of the applicant that the said products are required to be classified under Tariff item 7318 16 00 of the CTA, but has also submitted that if all the clearances are made to automobile/auto part manufacturers, then the classification should be under the appropriate sub-heading of 8708. We agree with both, the applicant as well as the jurisdictional officer that the subject goods namely, Metal Nuts with metrical threads, Metal Nuts without metrical threads and Metal Spring Nuts should be classified under Chap.7318 16 00 since the said goods are being supplied to be used in many fields including electronic goods, solar energy and vehicles.
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2020 (7) TMI 49
Classification of supply - GTA Service - Sub-contracting activity - one consignment note issued by the contractor and second consignment note issued by the sub-contractor - GST liability to be discharged on Reverse Charge basis or Forward Charge Basis - Input Tax Credit (ITC) - In the transportation industry, as in the subject case, there are situations where one transporter (in this case, POSCO) takes the help of another transporter (in this case, the applicant) by way of sub-contracting the work. Held that:- Any services by way of transportation of Goods by road other than through GTA would be exempt supply as per the entry of notification as quoted in the above paragraph. In the subject case Applicant is providing the transportation service but not as GTA but only as a truck owner to POSCO. Further, a consignment note is proof of the custody of goods during the movement and transportation of goods. For a single transaction and the same movement. of goods, there cannot be multiple consignment notes. Hence there will be one consignment note for movement of goods to a place, to be issued by POSCO. Rate of Tax (GST) - Held That:- applicant cannot issue another consignment note for the same goods and for the same transaction where consignment notes are already issued by POSCO. Hence the applicant, in respect of the subject transaction cane of be treated as a GTA and therefore cannot charge GST @12% under Forward Charge mechanism as a GTA.
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2020 (7) TMI 26
Wrongful availment of ITC - Section 67 of CGST Act - HELD THAT:- Keeping in view the serious allegations that have been levelled against the petitioner by the officers of DGGI as well as by the Commissioner of CGST, Delhi (East), this Court is of the view that ends of justice would be met if the DGGI is directed to conclude the investigation in the present case within a period of three months. The present writ petition is disposed of with a direction to DGGI to conclude the investigation within three months.
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Income Tax
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2020 (7) TMI 48
Addition u/s 68 - Addition on account of confirmations not received from creditors - HELD THAT:- It is an undisputed fact that the AO has simply added the balance as on 31.3.2004 without realizing that the entire credit balance were the outcome of the purchases made during the year. It is also undisputed that in the immediately succeeding years the outstanding have been paid by the assesee. Addition on account of failure on the part of assessee in submitting confirmations regarding the reimbursement of Duty Draw Back - HELD THAT:- Assessee has furnished the complete details supported by vouchers. We find that the Duty Draw Back has been reimbursed by the assessee to supporting manufacturers through account payee cheques. We also find that during the assessment proceedings, the AO had issued the notices u/s 133(6) of the I.T. Act to the persons whose names were not therein in the list of Duty Draw Back. Therefore, there was no question of them confirming the transactions. The notices to 02 parties were sent correctly. The confirmations and the transaction considering the facts in hand in totality and in light of voluminous documentary evidences, we do not find any error or infirmity in the finding of the Ld. CIT(A), hence, we decline to interfere with the finding of the Ld. CIT(A). Accordingly, the ground no. 1 raised by the Revenue is dismissed. Excessive payment of salary to Director covered under section 40(A)(2)(b) - HELD THAT:- The undisputed fact is that the AO has not brought any comparable case to demonstrate that the payments made by the assessee were excessive/ unreasonable. A plain reading of Section 40A(2)(b) show that onus has been cast upon the AO to bring on record comparable cases to demonstrate that the transactions made by the assessee with the related parties are unreasonable and excessive. The AO has failed to bring such comparable case on record. Payees are also assessed to tax at the same rate of tax. The CBDT Circular No. 6-P dated 06.07.1968 states that no disallowance is to be made u/s. 40A(2) in respect of the payments made to the relatives and sister concerns where there is no attempt to evade tax. This Circular has been considered by the Hon ble Bombay High Court in the case of CIT vs. Indo Saudi Services (Travel) P. Ltd. [ 2008 (8) TMI 208 - BOMBAY HIGH COURT ]. - Considering the totality of the facts in light of the CBDT Circular (Supra), we do not find any reason to interfere with the findings of the Ld. CIT(A). Accordingly, the Ground No. 3 raised by the Revenue is dismissed. Additional ground - Revenue has challenged the admission of additional evidences by the Ld. CIT(A) which is in violation of Rule 46A of the IT Rules - HELD THAT:- We do not find any merit in this challenge of the Revenue. Since the additional evidences were transmitted to the AO and the AO responded the same by submitting 02 Remand Reports, therefore, it cannot be said that AO was not given any opportunity of being heard.
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2020 (7) TMI 47
Addition on account of additional payments - HELD THAT:- In the case of the assessee such payment was found to be of ₹ 6529376/-. As the identical additions have been made in the hands of the all other group concern the AO also made the above additions in the hands of the assessee. The matter reached before the ld CIT (A) wherein addition was deleted and addition as confirmed. Identical issue arose and in assessee s own case for Assessment Year 2010-11, wherein, the coordinate bench deleted addition. The coordinate bench in that year dealt with the above issue as per para No. 8 of that order. The coordinate bench followed the decision of the Hon'ble Delhi High Court in case of Vasundhara Promoters Ltd 2018 (6) TMI 74 - DELHI HIGH COURT That being a binding judicial precedent, respectfully following the decision of the coordinate bench in assessee s own case, we direct the ld AO to delete the addition on account of additional payment to the farmers/ land vendors. Accordingly, ground of the appeal of the assessee is allowed. Disallowance u/s 40A(3) - Cash payment made by the assessee for purchase of land disallowed - HELD THAT:- With respect to cash payment made by the assessee for purchase of land disallowed by the ld AO. The above issue is squarely covered in favour of the assessee by the decision of the coordinate bench in Westland Developers Pvt. Ltd 2014 (12) TMI 254 - ITAT DELHI The deletion of the addition is for the reason that assessee has neither debited the above sum in the profit and loss account and nor claimed in deduction of the above amount. Therefore, the coordinate bench have held that provision of section 40A(3) cannot apply in the above circumstances. In view of overwhelming judicial precedents in favour of the assessee deleting the above addition, respectfully following the same we direct the ld AO to delete the addition/ disallowance u/s 40A(3). Unexplained interest expenditure paid to the various vendors of the land through post dated cheque were issued - HELD THAT:- The assessee did not justify the above additional payment, hence, same were added. Against these two additions the assessee preferred appeal before the ld CIT(A). The ld CIT(A) upheld the addition on account of interest however, directed the ld AO to re-compute the interest on post dated cheque after 6 months from the date of issue of post dated cheques. Therefore, according to him no interest is chargeable for the first six months from the date of PDC. Assessment u/s 153C - HELD THAT:- Admittedly, no notice u/s 153C was issued for Assessment Year 2009-10 and assessment was concluded on 15.12.2011 u/s 143(3). In case of Shri Jasjit Singh 2015 (8) TMI 982 - DELHI HIGH COURT the revenue challenged the order of the coordinate bench dated 05.11.2014 wherein, it was held that in case of the assessee the date of receipt of the seized material would be the date of search and six year period would be reckoned from that date. The coordinate bench in that case quashed the assessment framed u/s 143(3) of the Act for Assessment Year 2009-10 where the satisfaction note was recorded and material belonging to the assessee was received on 16.06.2009. The Hon'ble Delhi High Court on appeal upheld the order of the coordinate bench quashing the assessment. In the present case also identical facts are on record. The satisfaction was recorded on 19.08.2009 and assessment for Assessment Year 2009-10 is passed u/s 143(3) of the Act. Therefore, respectfully following the decision of the Hon'ble Delhi High Court for CIT Vs. Jasjit Singh 2015 (8) TMI 982 - DELHI HIGH COURT we quashed the order passed by the ld AO u/s 143(3) of the Act for impugned assessment order. In view of this, additional ground raised by the assessee is allowed.
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2020 (7) TMI 46
Assessment u/s 153A - Assumption of jurisdiction - HELD THAT:- CIT(A) considered the first issue of assumption of jurisdiction under section 153C of the I.T Act in detail considering the material on record and in the light of Judgment of Hon ble Delhi High Court in the case of M/s. RRJ Securities Ltd., 2015 (11) TMI 19 - DELHI HIGH COURT The Ld. CIT(A) examining the issue in the light of provisions of Section 153Cof the I.T. Act found that six assessment years prior to the date of search in this case which is September, 2016 being the date on which documents etc., were handed-over to the A.O. of the assessee should be A.Ys. 2011-2012 to 2016-2017. Thus, there was no jurisdiction with the A.O. to proceed under section 153C for the A.Y. 2009-2010 under appeal. D.R. did not dispute that issue is covered in favour of the assessee by Judgment of Hon ble Delhi High Court in the case of M/s. RRJ Securities Ltd., (supra) in which it was held that the date of satisfaction would be when the A.O. assumes position as that of the A.O. of the other person Departmental Appeal has no merit and the same is liable to be dismissed. We may also note here that on other two issues, the Ld. CIT(A) has also granted relief to the assessee holding that no incriminating material was found during the course of search so as to make assessment against the assessee. The Revenue has not challenged these findings of the Ld. CIT(A) on these two issues. Therefore, even if the Departmental Appeal may be considered favourably in favour of the Revenue, it would not yield any result as the ultimate result would be that Ld. CIT(A) has correctly allowed the appeal of assessee. - Decided against revenue.
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2020 (7) TMI 45
Assessment u/s 153A - Addition u/s 69C - HELD THAT:- The facts on record show that assessment was framed u/s 143(3) of the Act vide order dated 25.03.2015 and search was conducted on 08.07.2015. In our considered opinion, completed assessment can only be reopened in a search case when there is some incriminating material found during the course of search. Otherwise the ratio laid down in the case of Kabul Chawla [ 2015 (9) TMI 80 - DELHI HIGH COURT] and Meeta Gutgutia [ 2017 (5) TMI 1224 - DELHI HIGH COURT] squarely apply on the facts of the case in hand wherein the Hon'ble High Court has held that completed assessment can be interfered with by the Assessing Officer while making assessment u/s 153A of the Act only on the basis of some incriminating material unearthed during the course of search. - Decided against revenue.
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2020 (7) TMI 44
Assessment u/s 153A - HELD THAT:- It is not in dispute that original return of income was filed by assessee for the assessment year under appeal on 28.09.2011 [PB-3]. The search has been conducted in the case of assessee on 08.07.2015 and on the date of search, the assessment under appeal was completed as the time period to issue notice under section 143(2) for this year was also expired. It is apparent from the record that no incriminating documents/material were found in the case of assessee during the search proceedings for making the assessment in this case under section 153A of the I.T. Act, 1961. No incriminating material is produced before us so as to indicate any infirmity in the Order of the Ld. CIT(A) for deleting the addition. As decided in KABUL CHAWLA [ 2015 (9) TMI 80 - DELHI HIGH COURT] Completed assessments can be interfered with by the A.O. while making the assessment under section 153A only on the basis of some incriminating material unearthed during the course of search or requisition of documents or undisclosed income or property discovered in the course of search which were not produced or not already disclosed or made known in the course of original assessment. Also see MEETA GUTGUTIA PROP. M/S. FERNS N PETALS [ 2017 (5) TMI 1224 - DELHI HIGH COURT]
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2020 (7) TMI 43
Levy of penalty u/s 271(1)(c) - Penalty proceeding u/s 271(1)(c) initiated for furnishing inaccurate particular of income - HELD THAT:- Admittedly the AO made an addition on estimated basis. It has been decided in a number of judgments that when income of assessee was determined on estimation basis of net profit, then no penalty u/s 271(1)(c) could be imposed for concealment and furnishing inaccurate particulars. The penalty order is fully silent on the issue as to how the satisfaction of concealment/furnishing of inaccurate of particulars of income was arrived at. The quantification of the alleged concealment/inaccurate particulars, is admittedly only an estimate. Needless to mention that it is settled principle of law that penalty is not attracted on estimated additions. In that view of the matter we find no justification imposing penalty for concealment of income or furnishing of inaccurate particulars of income by the assessee. Hence, penalty order is quashed. Order being pronounced after ninety (90) days of hearing - COVID-19 pandemic and lockdown - HELD THAT:- Taking note of the extraordinary situation in the light of the COVID-19 pandemic and lockdown, the period of lockdown days need to be excluded. See case of DCIT vs. JSW Limited [ 2020 (5) TMI 359 - ITAT MUMBAI ]
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2020 (7) TMI 42
Exemption u/s 11 - whether the hostel facilities providing to the needy students falls under the educational activities and, therefore, where the last limb the proviso to sec. 2(15) is applicable to the assessee trust? - HELD THAT:- On due analysis of record, we are of the view that the AO has unnecessarily created an artificial distinction. The assessee is not admitting other persons in the building. It is providing facility only to the students, and there are lots of rules and regulations, bye-laws for admitting students, according to their merits in education. Thus, taking into account overall facts and circumstances, we are of the view that the assessee is entitled for benefit of sections 11 and 12 of the Income Tax Act. We have no hesitation to find the assessee activities towards providing hostel facilities to the student is purely an educational activities and, therefore, not coming under the proviso to Sec. 2(15) of the Act. Hence, the Ld. AO is directed to give relief to the assessee on this issue. Order being pronounced after ninety (90) days of hearing - COVID-19 pandemic and lockdown - HELD THAT:- Taking note of the extraordinary situation in the light of the COVID-19 pandemic and lockdown, the period of lockdown days need to be excluded. See case of DCIT vs. JSW Limited [ 2020 (5) TMI 359 - ITAT MUMBAI ]
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2020 (7) TMI 41
Capital gain computation - invoking of provisions of section 50C - Adoption of rates of land on the sale date for computing the income from long term capital gains - where the difference between the declared value and 50C guidance value was about 2.6%, can the same be adopted for computing the income from long term capital gains ? - HELD THAT:- Once the assessee had entered into an agreement, the MOU, on 20.09.2002 then the rates as available on the date of actual transaction are to be adopted since, the assessee had received substantial amount on the date of entering into an agreement. Undoubtedly the development agreement was executed on 12.01.2004 but as is clear from the terms of the transaction, the assessee had already received substantial amount of consideration before 12.01.2004. Hence, we find no merit in the order of the AO in adopting the revised SR value as in 2004 for computing the income under the head long term capital gains, as the date of MOU (20.09.2002) is the relevant date for computing the terms of agreement between the parties. Hyderabad Bench of the Tribunal in bunch of matters with lead order of Sri. Mohd Imran Beg vs. ITO [ 2015 (12) TMI 987 - ITAT HYDERABAD] had laid down similar proposition of applying the SR rate on the date of agreement to sell and not on the date of sale deed if, there was gap between the two dates. Second proposition raised by the assessee that in case the difference between the sale value declared by the assessee and sale value adopted by the AO is less than 5%, then there is no merit in applying the 50C guidance value. It is a settled proposition of law that in case the difference between the value shown by the assessee and the valuation done by the Revenue authorities is less than 10%, where the value worked out by the Revenue authorities is estimated, then actual sale consideration is to be adopted for computing the income in the hands of the assessee. Such is the proposition laid down by the Hyderabad Bench of the Tribunal in ACIT vs. Smt. S. Suvarna Rekaha [ 2010 (10) TMI 1051 - ITAT HYDERABAD] and in M/s. Radhika Sales Corporation vs. ACIT [ 2018 (11) TMI 1788 - ITAT PUNE]. The objection of the learned DR at this juncture was that in case valuation had been referred to DVO as under the provisions of section 50C of the Act then, such proposition could be applied. We find no merit in the plea of the Revenue in this regard. The AO has applied 50C guidance value for computing the income from long term capital gains. There is no merit in the said exercise carried on by the AO and we reverse the same. The income from long term capital gains declared by the assessee is to be accepted. The ground of appeal in assessee in assessment years 2008-09 and 2009-10 are allowed. Adopted for indexation of cost of acquisition of the property - HELD THAT:- We find that the said issue now stands settled by the decision of Hon ble Bombay High Court in CIT vs. Manjula J. Shah [ 2009 (10) TMI 646 - ITAT MUMBAI] wherein it has been held that indexed cost of acquisition has to be computed with reference to the year in which the previous owner has held the asset. Applying the said parity of the reasoning, we find no merit in the case of the Revenue and the grounds of appeal raised by the Revenue are dismissed.
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2020 (7) TMI 40
Land Development Expenses - AO proceeded to disallow 20% assessee could not produce the relevant details - HELD THAT:- It is an undisputed fact that the assessee is in the real estate business and the expenses are on account of Land Development . It is also a fact that it is not the case of the Revenue that the expenses incurred by it under this head is bogus as is evident by the fact that AO has not disallowed the entire expenses but has only disallowed 20% of the expenses. Considering the totality of the aforesaid facts, we are of the view that the disallowance made by the AO at 20% is at a higher side. We are of the view that the interest of justice shall be met if the disallowance is restricted to 10% of the expenses. Deduction claim u/s 80G - AR s contention that the amount of donation has been made to SPYM through banking channels and has the relevant receipts but it could not be produced for verification before lower authorities - As further his prayer that an opportunity be granted to him to produce the same before the lower authorities - HELD THAT:- Assessee s submission that the approval of the Trust u/s 80G continues and has not been withdrawn has not been controverted by Revenue. Considering the aforesaid submission and undertaking given by the AR, we are of the view that one more opportunity be granted to the assessee to produce the relevant evidence of giving the donation. We, therefore, direct the assessee to produce the necessary evidence before the AO. The AO is directed to verify the evidence furnished by the assessee and after its verification the claim of the assessee is found to be correct, the assessee be allowed the claim of the deduction in accordance with law. Thus ground of assessee is allowed for statistical purposes.
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2020 (7) TMI 39
Exemption u/s 11 12 - Donation is a corpus donation - according to AO assessee was not carrying on educational activity in terms of Section 2(15) - HELD THAT:- According to Section 11(1)(d) of the Act wherein certain income are not to be included in the income of the recipient when income in the form of voluntary contribution made with a specific direction that they shall form part of the corpus of the trust. It is not the intention of the donee but the direction of the donor that is important to determine whether the voluntary contribution received by the assessee trust is towards corpus or not. Admittedly before us no such direction of the donor was placed. On a specific query by the Bench the learned Authorized Representative submitted that the same was never asked by the lower authorities and, therefore, the same was not submitted. However, she hurriedly agreed that same would be submitted. CIT (Appeals) also held that there is no letter of confirmation from the donor that the amount of donation is for the corpus fund and neither the receipt issued by the assessee say that the amount of donation is towards corpus of the trust. DR did not raise any serious objection to the fact that if the assessee produces a direction of the donor i.e. Unitech Southcity educational Trust that above sum of ₹ 1.30 crores received by the assessee is with a specific direction that it shall form the part of the corpus of the trust. Assessee does not have the directions of the donor that it shall form part of the corpus of the trust naturally benefit of Section 11(1)(d) cannot be given to the assessee. Assessee relied up on decision of dated 17.10.2011 of the Honourable Karnataka High court in the case of Director of IT Ors. v. V. Ramakrishna Seva Ashrama [ 2011 (10) TMI 369 - KARNATAKA HIGH COURT]. The issue before the honourable court was that even if the sum is credited to a specific account can it be considered to be corpus donation. There are no details that how this money is utilized as held by the high court in para no 16. Thus, it does not help the case of the assessee. In view of this we set aside this issue to the file of the Assessing Officer with a direction to the assessee to submit such direction of the donor , if available, as prescribed under Section 11(1)(d) of the Act within 60 days of this order. If the assessee fails to do so, the Assessing Officer is duty bound to consider it as voluntary contribution. In that circumstances the assessee would be entitled to benefit of Section 11 and 12 of the Act - Appeal of the assessee is allowed
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2020 (7) TMI 38
Validity of reopening of assessment u/s 147 - sale consideration on sale of equity shares under section 68 - HELD THAT:- In the present case, the assessee has furnished all the information available with him. The learned assessing officer had the investigation wing report available with him. Undoubtedly in the report of the Principal Director Of Investigation, Kolkata dated 27 April 2015 contains the name of 84 companies, out of which one company at serial number 71 is Nouvea global venture limited (NOUVEAU) wherein total alleged transactions took place. It is alleged to be bogus transaction. The assessee has shown that he has earned the long-term capital gain exempt u/s 10 (38) of the income tax act of this company. In the same report at Chapter number 3, the list of all these 84 companies are given with reference to action taken on them by Securities and Exchange Board of India [ SEBI]. At serial number 71 is the name of this company against which no such action has been mentioned. It has shown that there are 18 exit providers and 5 accommodation entry providers in the whole scheme. Thus, if it is true that assessee has obtained a bogus long-term capital gain, assessee should have obtained the accommodation entry of the purchase of those shares from any of the accommodation entry providers and when the shares are sold the sales should have been taken as a purchase by any of the exit providers. In such circumstances to prove that the assessee has obtained the bogus long-term capital gain. Financial of the above company of which assessee has sold the shares. It is shown before us a detailed chart showing the financials of the company for last several year - there is no allegation against the company about any wrongdoing either in the securities market or under The Companies Act - profit and loss account the assessee has shown payment of tax and therefore it is also income tax assessee - for year ended on 31st of March 2012 company that company has paid a tax of ₹ 24.50 lakhs and for the earlier year 26.14 lakhs. Therefore, it cannot be said to be penny stock company at all. The learned assessing officer has not brought on record any material to show that this company is not having the genuine shareholding. We disagree with the argument of the ld AR that assessee if he is a habitual investor cannot enter in to the penny stock transaction of obtaining bogus long term capital gain. Assessee has shown that he has earned long term capital gain in many companies in subsequent year, but many of those companies are also in the list of penny stock prepared by the Investigation wing such as UNNO Industries . Therefore we reject that argument. Addition in the hands of the assessee is not sustainable when the details furnished by the assessee were not at all controverted by bringing cogent material and investigation made thereon by the ld AO. The assessee has shown the long-term capital gain exempt u/s 10 (38) of the act amounting to ₹ 3,866,678. The purchase value of those shares was ₹ 1,756,121/ . The learned AO has made the addition of the full value of the consideration received by the assessee on sale of those shares amounting to ₹ 5,643,084/-. Thus, ground number two of the appeal of the assessee is allowed.
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2020 (7) TMI 37
Revision u/s 263 - disallowance u/s 14A read with Rule 8D - HELD THAT:- We modify the order passed by Ld Pr. CIT and direct the AO to examine the claim of the assessee and compute the addition to be made under clause (f) to Explanation 1 to sec.115JB of the Act independently without having regard to the provisions of sec.14A of the Act. Foreign exchange fluctuation loss arising on account of re-statement of outstanding foreign currency loan - AO did make enquiries on this issue and has accepted the explanations of the assessee - HELD THAT:- We notice from the above said letters furnished by the assessee before the AO that the assessee has explained as to how the loss has arisen, why the provisions of sec.43A are not applicable and why the claim is on account of revenue expenditure. We have noticed that the Ld Pr. CIT has correctly explained that the provisions of sec.43A shall apply only to those fluctuations in foreign currency which arises at the time of making repayment of loan, i.e.., it does not apply to marked to market loss arising on account of restatement of loan at the year end. We notice that the Ld Pr. CIT has brought out the fact that the notional foreign currency loan has been taken by the assessee for acquiring fixed assets and hence it has capitalized the foreign currency fluctuation loss arising on restatement of outstanding loan in its books of accounts. The Ld Pr. CIT has also placed reliance on the decision in the case of Sutlej Cotton Mills [ 1978 (9) TMI 1 - SUPREME COURT] wherein it has been held that the deduction of foreign currency fluctuation loss would depend upon the question as to whether the same is on capital account or revenue account. Admittedly, the AO did not examine this important aspect while completing the assessment proceedings. Hence, we are of the view that the assessment order is rendered erroneous, in view of the non examination of the issue in proper perspective. We have noticed earlier that the Ld Pr. CIT has also taken a view that the market to market loss is a notional loss. However, various case laws discussed above do not support the view taken by Ld Pr. CIT. Accordingly we set aside the said view of Ld Pr. CIT. We are of the view that the Ld Pr. CIT was justified in restoring this issue to the file of the AO.
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2020 (7) TMI 36
Income from other source OR Capital gain - Correct head of income - right acquired under the Agreement by the Assessee - claim of the Assessee that the said sum received is in the nature of capital gains and should be assessed under the head capital gains (as long term capital gain (LTCG) - HELD THAT:- Giving up of a right to claim specific performance by conveyance in respect to an immovable property, amounts to relinquishment of the capital asset. Therefore, there was a transfer of capital asset within the meaning of the Act. The payment of consideration under the agreement of sale, for transfer of a capital asset, is the cost of acquisition of the capital asset. Therefore, in lieu of giving up the said right, any amount received, constitutes capital gain and it is exigible to tax. However, as is clear from s. 48, before the income chargeable under the head capital gains is computed, the deductions set out in s. 48 has to be given to the assessee. It is only the amount thus arrived at, after such deductions under s. 48, would be the income chargeable under the heading capital gains. It is not necessary that in all such cases there should have been a lis between the parties and in such is the right to specific performance has to be given up. The CIT(A), in our view, fell into an error in holding that the Assessee did not file a suit for specific performance and therefore cannot claim the benefit of the ratio laid down by the Hon ble Karnataka High Court in the case of H.Anil Kumar 2011 (1) TMI 1159 - KARNATAKA HIGH COURT In the present case, there was no delivery of possession in part performance of the agreement for sale dated 09-02-2005 and therefore, there is no question of the agreement dated 09-02-2-005 being regarded as a document requiring compulsory registration. Therefore, the decision in the case of CIT Vs Balbir Singh Maini [ 2017 (10) TMI 323 - SUPREME COURT ] is not applicable to the facts of the present case. For the reasons given above, we are of the view that the sum in question is chargeable to tax under the head capital gains . We are of the view that income from relinquishing rights under an agreement should be assessed under the head income from capital gains. We hold accordingly. We however find that the AO/CIT(A) have not examined the claim of the Assessee under the head Capital Gain in accordance with the provisions of Sec.48 of the Act and also claim for deduction u/s.54F of the Act. We therefore remand the question of computation of Capital Gain to the AO after due opportunity of being heard afforded to the Assessee. The Appeal of the Assessee is accordingly treated as allowed for statistical purpose.
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2020 (7) TMI 35
Assessment u/s 263 - set aside for consequential enquiries on transactions undertaken by the assessee with sister concern having regard to provisions of Section 92BA of the Act - HELD THAT:- Merit in the case made out by the assessee that various clauses of Section 92BA of the Act were not applicable in the factual matrix. As a corollary, merely because a prescribed Form No. 3CEB was filed in accordance with Rule 10E r.w.s. 92BA would not make an assessee susceptible to onerous investigation proceedings on such transactions where the assessee prima facie demonstrates that Section 92BA is wholly inapplicable in any manner at the first instance. CIT was seized with the relevant facts and could have easily satisfied himself of such prima facie assertions. A lack of enquiry in a particular manner or as per certain procedures prescribed would possibly vitiate the assessment order only when it is found that the relevant provisions were applicable to the assessee and not otherwise. The allegations made by the Pr.CIT in the instant case have been successfully rebutted on behalf of the assessee. In view of the domestic transaction with AE not falling in the sweep of Section 92BA of the Act at the threshold, any alleged inaction attributable to the AO in this regard would not vitiate assessment order as erroneous nor did it cause any prejudice to the interest of the Revenue. The ingredients of Section 263 of the Act are thus clearly not fulfilled. Hence, revisional order passed u/s 263 of the Act seeking to set aside the assessment order passed under s.263 - Decided in favour of assessee.
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2020 (7) TMI 34
Levy of late fee u/s 234E - intimation u/s 200A - delay in filing quarterly statement - HELD THAT:- In case, there is a default or delay in submitting the TDS statements, a late fee is levied as contemplated U/s 234E of the Act and the A.O. while processing the statements of TDS shall make the adjustment on this account . In the present case we do not find any substance or merit in this appeal as the delay in filing the quarterly statement is accepted by the assessee. The only plea raised by the assessee before the ld. CIT(A) as well as before us is the explanation for such delay in filing quarterly statement. However, since the levy of late fee as prescribed U/s 234E of the Act is mandatory and consequential, therefore, the same cannot be deleted on the ground of reasonable cause as explained by the assessee. Though the intimation issued U/s 200A of the Act is an appealable order, however, the said order can be challenged only on the ground that the adjustment made by the A.O. or intimation issued U/s 200A of the Act is not in accordance with the provisions of Section 234E or Section 200A of the Act. Only if the A.O. has failed to comply with the mandatory provisions of these Sections while making the adjustment and issuing the intimation, the same can be challenged in the appeal. In absence of any such allegation that the A.O. has violated any of the provisions of Section 234E or Section 200A of the Act, the adjustment made by the A.O. on account of late filing fee U/s 234E of the Act cannot be deleted.- Decided against assessee.
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2020 (7) TMI 25
Penalty u/s 271C - non deducting tax at source from the payment towards LTC consisting of foreign travel - HELD THAT:- Assessee bank has undertaken reasonable steps in terms of verifying the assessee's claim towards their LTC claims and is aware of employees travelling to foreign countries as part of their travel itinerary but at the same time, there is an error of judgment on part of the assessee bank in understanding and applying the provisions of section 10(5). We are unable to accept the Revenues contention that the assessee bank has not deducted the tax intentionally, fully knowing that the LTC is applicable for travel in India only and no foreign travel is allowable as it is a case of error of judgment and no malafide can be assumed on part of the hank. Further, nothing has been brought on record which in any ways suggest connivance on part of the assessee bank or forged claims submitted by the employees and which has been discovered by the Revenue during the course of its examination. As fairly submitted by the assessee bank, while calculating the estimated tax liability of its employees, it always consider LTC claim as exempt under section 10(5) and the same position. Being followed and accepted consistently in the past years, was followed in the current financial year as well. However, for the first time, after the survey by the tax departments this issue arose for consideration and after the judgment of the Tribunal, the matter got clarified and the assessee bank has duly complied and deposited the outstanding demand along with interest and has taken corrective steps in subsequent years as well. We are of the considered view that there was reasonable cause in terms of section 273B of the Act for not deducting tax by the assessee Bank. In the result, the penalty's levied under section 271C is hereby directed to be deleted. - Decided in favour of assessee.
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Customs
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2020 (7) TMI 33
Revocation of CHA License - forfeiture of security deposit - penalty - fraudulent import of Areca Nuts and Black Pepper - misdeclaration of country of origin and thereby mis-using ISFTA and SAFTA - HELD THAT:- The respondent commissioner passed the impugned order of revocation and penalty without examining any evidence, and without ensuring that the appellant CHA/CB is given proper opportunity of hearing to meet the allegations in the show cause notice. Neither the evidence were seen by the Adjudicating Authority, nor a copy of the same was provided to the appellant, CB. This error is glaring, particularly in respect of the investigation by the DRI, Bangalore, as no report for the same is even cited in the show cause notice or suspension order. It is further evident that when the Adjudicating Authority himself did not have the relied upon documents, etc., there is no question of the same being made available to the appellant-CHA, resulting in gross violation of the process of the court, and the principles of Natural Justice. Mere reliance on the Suspension Order and the allegations in the show cause notice by the ld. Commissioner in passing the impugned order, has vitiated the impugned order, leading to mis-carriage of justice. There is violation of the provisions of Section 138 (B) and (C) of the Customs Act, as the evidence being statement of other persons relied upon in the adjudication proceedings, has not been examined nor made available for cross examination. Further, there is no certificate as provided under Section 138 (C) of the Customs Act, in support of the electronic record relied in the show cause notice like email, whatsapp conversation, etc. - The Suspension order and the SCN do not provide the detail of the said imports. Further, the SCN to those importers was issued after the issue of SCN to the appellant CB, thus cannot be read in evidence, unless the facts were incorporated in the SCN. Matter remanded to the Respondent Commissioner for de novo adjudication after providing RUD‟s, giving opportunity to cross-examine the witness of Revenue - appeal allowed by way of remand.
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2020 (7) TMI 32
Smuggling - Gold Bars - concealment of Gold Bars in the socks arriving from the Dubai Airport - Retraction of statements - Absolute Confiscation - Penalties - HELD THAT:- The appellant firstly concealed the gold bars in his Socks and also not declared to the Customs. This clearly shows the intention of the appellant to avoid declaration as well as evasion of duty. There is no evidence to show that the appellant had bona-fide belief and intend to declare the gold bars and pay the Customs duty. In this circumstances the gold bars brought by him from Dubai is clearly liable for confiscation. Confiscation of goods - Retraction of statements - HELD THAT:- even if the statement recorded under 108 is not considered the fact of smuggling of gold by the intercepting by the Customs Officer is not in dispute, therefore, the act of smuggling of gold is not in doubt. The appellant had made wrong declaration, therefore, it is clear that the appellant had a malafide intention to escape with the smuggled gold without payment of duty - the adjudicating authority has rightly exercised his discretion to absolute confiscate of gold bars. The absolute confiscation of gold bars ordered by the adjudicating authority is proper and legal - the penalty imposed by the adjudicating authority needs no interference - appeal dismissed.
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Securities / SEBI
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2020 (7) TMI 31
Restrained orders from accessing the securities market or dealing with the securities market directly or indirectly - BSE Limited ('BSE') was directed to appoint an independent auditor/audit firm for conducting a detailed forensic audit of the books of account of Ricoh India Limited - prima facie suspicion and vicarious liability attributable to a MD/CEO - HELD THAT:- The impugned order (quoted at paragraph 5 and 6 of this order) bring out only a suspicion about the role of the appellants. Moreover, we note that though the submissions of the appellants have been noted in detail in the impugned order they have not been dealt with appropriately. Question before us is how long the appellants would be kept out of the market through directions contained in an interim order and confirmatory order which are based on only a prima facie suspicion and vicarious liability attributable to a MD/CEO. This question becomes more relevant particularly in the facts of the case where we are told that the Company Ricoh itself is under liquidation and the appellants are not in-charge of the said Company and therefore not in a position to influence the decisions of the Company. Moreover, we also note that the submissions made by the appellants have not been dealt with in the impugned order in any meaningful manner thereby effectively confirming the interim directions without taking into account the submissions and the documents made available by the appellants. Given these factors we find it difficult to sustain the impugned order qua the appellants. Both the appeals succeed and the impugned order is quashed qua the appellants. However, SEBI is at liberty to issue a fresh show cause notice and proceed in the matter in case evidence against the appellants are available through the forensic audit report or through SEBI's own investigation
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Insolvency & Bankruptcy
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2020 (7) TMI 30
Maintainability of application - Restoration of currency of CIRP without the knowledge and/or consent of the Applicant - HELD THAT:- The contention that this application is not maintainable is found devoid of any merit. As per section 66(1) of the Code, if the AA is satisfied that during the corporate insolvency process the directors of the CD withdrawn money from the bank account of the CD with an intent to defraud creditors or for any fraudulent purposes, pass an order against the person liable to make such contributions to the assets of the CD. As per section 74 (1) if the AA is satisfied that the CD or any of its officer violates the provisions of section 14, any such officer who knowingly or willfully committed such contravention shall be punishable with fine not exceeding 3 lack or with imprisonment not exceeding 3 years or with both. The allegations leveled by the RP as against the directors are perfectly falls under these provisions. Therefore, contentions of the directors that this application is not at all maintainable is devoid of any merit. A prudent law obedient man never expected to do this kind of disobedience and breach of their own undertaking. What is attempted on the side of the directors is that they are willing to pay back the amount less ₹ 2 crore allegedly paid to the suppliers of raw materials as stated above and that for payment they need some more time due to disruption of bank transactions due to lock down. Neither the proposals discussed above seems to have genuine nor it would be workable. The conduct and approach of the directors indicates that they were willfully evading repayment on lame excuse under the guise of the lock down due to COVID-19. The directors were guilty of willful disobedience of the orders of the appellate Tribunal. The ingredients to be satisfied under section 74(1) of the Code stand proved - Being found guilty of violating the moratorium under section 14 of the code, the directors are punishable with imprisonment for a term which shall not be less than three years, but may extend to five years or with fine which shall not be less than one Lakh rupees, but may extend to three lakh rupees, or with both. However, this Adjudicating Authority has no power to impose sentence/imprisonment. So it is left to the RP to move application before the IBBI or to file criminal complaint before the police for trial of complaint cases by the designated special court under section 435 of the Companies Act, 2013. The directors/ Mr. Manoj Daga and Mr. Deepak Daga are directed to refund an amount of ₹ 5,50,12,170.22 to the account of the CD with in two weeks from the date of receipt of an email copy of this order - Application disposed off.
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2020 (7) TMI 29
Restoration of application - application was dismissed for non-prosecution - Government dues - Operational Creditor - HELD THAT:- It is clear that Government dues fall under the category of Operational Creditor inasmuch as 'a debt' in respect of the payment of dues arising under any law for the time being in force and payable to the Central Government, and State Government or any local authority are considered as 'Operational creditor' - To be more precise, these debts occur during the course of operation of the Corporate Debtor. Application disposed off.
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Service Tax
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2020 (7) TMI 28
Industrial Construction Service - Works Contract Services - benefit of abatement - N/N. 15/2004-ST dt. 10/09/2004, No.18/2005-ST dt. 07/06/2005 and No.1/2006-ST dt. 01/03/2006 - Commercial or Industrial Construction Service - Works Contract Services - benefit of abatement was sought to be denied on the ground that the appellant had not included the value of material supplied free of cost by the service recipient - HELD THAT:- This issue is no longer res integra in the light of the Larger Bench decision of the Tribunal in the case of COMMISSIONER OF SERVICE TAX ETC. VERSUS M/S. BHAYANA BUILDERS (P) LTD. ETC. [ 2018 (2) TMI 1325 - SUPREME COURT] wherein it has been held that while claiming abatement of 67% under these services, the value of material supplied by the customers need not be included. This decision of the Larger Bench has been upheld by the Apex Court reported in 2018(10) GSTL 118(SC). Further we find that from 01/06/2007, a new taxable service viz WCS was introduced under Section 65(105)(zzzza) of the Finance Act, 1994. There was considerable litigation on the issue whether service tax can be levied on individual WCS prior to its introduction from 01/06/2007 and the same was finally settled by the Hon ble Apex Court in the case of COMMISSIONER, CENTRAL EXCISE CUSTOMS VERSUS M/S LARSEN TOUBRO LTD. AND OTHERS [ 2015 (8) TMI 749 - SUPREME COURT] . In this case, the Apex Court laid down the law on various aspects of levy of service tax on WCS. The Apex court has held that since as per Section 67, service tax is leviable on gross amount charged . The levy of service tax on CICS/CCS would be applicable only in case of pure service contracts whereas composite contracts involving transfer of property in goods would be liable to service tax only under WCS from 01/06/2007 as statutory mechanism to arrive at the value of service has been prescribed only under WCS from 01/06/2007. The Apex Court held that since the Finance Act had not laid down any charge or machinery to levy and assess service tax on individual WCS prior to 01/06/2006, hence the levy on such composite WCS prior to that date has no constitutional validity. Demand raised for the reason that the appellant did not intimate the Department about their intention to opt for payment of service tax under composition scheme under WCS - HELD THAT:- The Tribunal in VAISHNO ASSOCIATES VERSUS C.C.E. S.T. -JAIPUR [ 2018 (3) TMI 417 - CESTAT NEW DELHI] had occasion to consider this issue and held that for sole reason of not filing the intimation opting to pay service tax under WCS, the demand cannot sustain. Time Limitation - Revenue has invoked extended period of limitation alleging suppression by the appellant - HELD THAT:- The appellants have been paying service tax under CICS and CCS by claiming abatement though no service tax was held to be payable. Further the levy of service tax on construction related activities has undergone several changes which led to lot of litigation during the relevant period and even the CBIC has recognized such confusions in various circulars issued by them. In such circumstances, there are no justification for invoking the extended period of limitation and the demand for the period from December 2005 to March 2009 is set aside being barred by limitation. Appeal allowed - decided in favor of appellant.
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Indian Laws
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2020 (7) TMI 27
Wilful Defaulters or not - petitioners contend that the Show Cause Notice was issued by an Assistant General Manager of the Bank, who did not qualify even for being a member of the WDIC - Oppression and Mismanagement - siphoning of funds - HELD THAT:- The writ petitioners in the instant case had avoided submitting their reply to the show cause notice of the bank, despite getting several opportunities, even within the extended time afforded by the bank. In spite of the delay, although the bank was under no obligation to do so, it dealt with the salient objections raised by the petitioners in their reply, in the impugned order declaring the petitioners to be wilful defaulters. Sufficient reasons were provided for the decision, the factual and legal merits of which are for the review committee, and not this court, under Article 226 of the Constitution, to enter into and decide. Moreover, the purview and context of a notice under Section 13 (2) under the SARFAESI Act are somewhat different from those of a wilful defaulter decision of the WDIC under the RBI guidelines of 2015. Not only are the scope and purpose of the two provisions different, but it is the legally constituted WDIC, and not the concerned bank, which passes such order in the latter case. The fallout of a notice under Section 13(2) is more serious and takes only about two more steps for the bank to take penal action against the borrower under the SARFAESI Act. Hence the scope of interference in writ jurisdiction logically ought to be wider in case of a violation of Section 13(3A), SARFAESI Act than a wilful defaulter declaration, the latter being somewhat more preliminary in nature and subject to further checks and bounds, particularly a confirmation by the review committee upon considering the legality and factual veracity of the declaration. Petition dismissed.
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