TMI Tax Updates - e-Newsletter
July 4, 2022
Case Laws in this Newsletter:
GST
Income Tax
Customs
Corporate Laws
Insolvency & Bankruptcy
Central Excise
CST, VAT & Sales Tax
Indian Laws
Highlights / Catch Notes
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GST:
Refund of accumulated Input Tax Credit - input and output supplies are same - Violation of Article 14, and Article 300A of the Constitution of India and Section 54 of the Central Goods and Services Tax Act, 2017 or not - the circular dated 31.03.2020, being a subordinate legislation, is repugnant and conflicting to the parent legislation i.e. Section 54(3)(ii) of the CGST Act and hence, the same cannot be applied to oust the legitimate claim for accumulated ITC refund filed by the petitioner - HC
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GST:
Seeking Bail - Pre-trial incarceration - fraud related to GST invoices - The petitioner is in custody since 26-01-2022, i.e., for five months. Given the period of incarceration viz-a-viz the amount fallen to the petitioner’s share, coupled with the petitioner being a senior citizen, further pre-trial incarceration might not be justiciable. - the petitioner makes a case for bail, subject to the conditions - HC
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GST:
Profiteering - purchase of fiats - it is alleged that the benefit of input tax credit had not been passed on to the Applicant No. 1 and Applicant No, 2 by way of commensurate reduction in prices - Contravention of section 171 of CGST Act - the Authority finds that. the profiteered amount required to be returned/passed on by the Respondent is Rs, 2,86,32,474 (inclusive of GST @ 12%/ 8% on the base price) as is evident from the above Report - NAPA
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GST:
Seeking of regular bail - availment of fraudulent ITC on the basis of goods less and bogus purchase invoices from nonexistent and fraudulent firms - fake/bogus firms - Considering the gravity and the nature of the allegations levelled against the applicant-accused and the fact that the investigation of the case is at nascent stage and further considering the fact that now a days economic offences are rampant and should be dealt with the firmness, this court does not deem it proper to grant the concession of bail to both the applicants-accused at this stage - DSC
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Income Tax:
Addition u/s 68 - Unexplained credit - scope of amended provisions of section 68 - onus to prove source of source - Although, the issue before us pertains to assessment year 2012-13 where amended provisions of section 68 do not apply, however, considering the facts of the case, the assessee has to explain the source of the source, as the assessing officer has pointed out the trail of money, and in that circumstances owns shifts on the assessee to provide suitable explanation to Assessing Officer. - AT
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Income Tax:
Income accrued in India - sum received for advisory assistance for design and construction of hotel - Indo-US tax treaty - Amounts in question are not taxable in terms of the provisions of the applicable tax treaty and the findings of the co-ordinate bench still hold good in law, we have no reasons to take any other view of the matter than the view so taken by the coordinate bench - CIT(A) was quite justified in the following a binding judicial precedent - AT
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Income Tax:
Revision u/s 263 - period of limitation - CIT may enhance, modify or cancel the assessment order and may also direct the AO to cause examination of the details and further pass an order. But he can do so only after granting assessee an opportunity of hearing. However according to the provisions of sub-section (2), such order could be passed only within the period of two years from the end of the financial year in which the order sought to be revised was passed. - AT
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Income Tax:
Income from house property - notional rental income - no efforts were made by the Assessing Officer to determine the monthly rental/rate at which the Leased Property might have been reasonably expected to be let out in terms of Section 23(1)(a) - actual annual rent received by the Appellant cannot be substituted by a notional rent without the Assessing Officer arriving at a finding that the Leased Property is can be reasonably expected to be let out for a higher sum. - AT
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Income Tax:
Disallowance being amount of State Value Added Tax (VAT) paid for earlier years - Deduction u/s 80IB claimed - Assessee became liable to pay VAT for earlier years - The assessee had not claimed any deduction on account of VAT in the computation of income for earlier years. It was only during the year under consideration that the assessee claimed such deduction on paying the VAT amount of earlier years. In that view of the matter, deduction of such VAT has to be allowed in this year itself. - AT
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Income Tax:
Deduction u/s 80IB - whether freight charges recovered from the customers are eligible for deduction under section 80IB ? - since the department has allowed the claim of the assessee in previous years, hence the genuineness of the claim should not be doubted. For the current assessment year, the assessee has furnished relevant documents and evidences to fulfill the conditions for claiming deduction under section 80IB of the Act, as noted above, therefore we are of the view that assessee is entitled to claim deduction under section 80IB - AT
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Income Tax:
Protective assessment - Addition u/s 69/69C - Unaccounted investment ad unaccounted commission - CIT(A) has confirmed the substantive additions on the three entities so the protective addition made in the hands of the assessee has been deleted by him which action of the CIT(A) does not require any interference from our side because we note from the AO’s report placed before us in respect of this appeal that these three entities in whose hands the substantive additions have been confirmed by the CIT(A) by his order has not preferred any further appeal against the action of Ld. CIT(A) before this Tribunal, so the impugned action of CIT(A) deleting the protective addition in the hands of assessee company is upheld. - AT
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Indian Laws:
Departmental inquiry proceedings against the Commissioner of Income Tax - allegation of corruption - assets have grown grossly disproportionate to his known sources of income - seeking stay on the ground that, petitioner was being prosecuted on the criminal side and a charge-sheet had been framed under various provisions of Prevention of Corruption Act - The petitioner cannot be allowed to blow hot and cold at his own convenience. - HC
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IBC:
Joint and severable liability of respondent to make good the losses suffered by the applicant - the applicant did not approach this Adjudicating Authority when the Resolution Plan was under consideration and had come before this Adjudicating Authority after the approval of the plan, this Adjudicating Authority is of the opinion that he has no right to file any application or seek any relief at this stage - Tri
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Central Excise:
Violation of principles of natural justice - Recovery of central excise duty, interest and penalty without service of adjudication order - absence of actual proof of any service of the adjudication order upon the petitioner - Section 37C of the Central Excise Act, 1944 - interim relief granted - directed to take immediate steps for refund of the amount recovered in excess of 20 per cent of the demand - HC
Articles
Notifications
News
Case Laws:
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GST
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2022 (7) TMI 73
Refund of accumulated Input Tax Credit - input and output supplies are same - Violation of Article 14, and Article 300A of the Constitution of India and Section 54 of the Central Goods and Services Tax Act, 2017 or not - HELD THAT:- Section 54(3)(ii) of the CGST Act is absolutely unambiguous and does not carve out any exception that Input Tax Credit under the Inverted Tax Structure would not be applicable where the input and the output goods are the same. For the purpose of clarification, the Government of India, Ministry of Finance, Central Board of Indirect Taxes and Customs issued a notification dated 18.11.2019 para No.59 whereof reproduced infra, which makes it clear that the supplier who supplies goods at a concessional rate to companies involved in specified projects is entitled to refund under the inverted tax structure as per Clause (ii) of first proviso to Sub-section (3) of Section 54 of the CGST Act. The circular dated 31.03.2020 (Annexure-2) on the strength whereof the petitioner’s claim for ITC refund has been rejected, clarifies that refund of accumulated ITC under Clause (ii) of Sub-section (3) of Section 54 of the CGST Act would not be applicable in cases where the input and output supplies are the same.
This circular is in the nature of an explanation and was issued on 31.03.2020 whereas the petitioner’s claim for refund was a prior period between September, 2018 to September, 2019 on which date, the clarification dated 18.11.2019 was in force which clearly stipulates that a registered dealer who supplies goods at concessional rate is eligible for refund under the Inverted Tax Structure. Clause (ii) of Sub-Section (3) of Section 54 of the CGST Act does not indicate that ITC would be admissible only if the goods supplied had been subjected to some process. The provision allows refund of credit accumulated on account of supplies and does not mention that the credit could be claimed only if the supplier has made any value addition/ enhancement to the goods supplied - The Central Government Notification dated 28.06.2017, in unambiguous terms stipulates that upon being satisfied that it is necessary in the public interest to do so, on the recommendations of the council, intra State supply of goods, was being exempted/taxed at lower tax rates.
Thus, the circular dated 31.03.2020, being a subordinate legislation, is repugnant and conflicting to the parent legislation i.e. Section 54(3)(ii) of the CGST Act and hence, the same cannot be applied to oust the legitimate claim for accumulated ITC refund filed by the petitioner. Otherwise also, the claim for refund of ITC filed by the petitioner was for a period prior to issuance of the circular dated 31.03.2020 - petition allowed.
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2022 (7) TMI 72
Detention of vehicles - supply of hydraulic excavators for the purpose of sale within the State - HELD THAT:- There is no justification for the detention memo and show cause notice issued in respect of the aforesaid excavator and the same is quashed.
The explanation set out in defence of the impugned order is that though the invoice undoubtedly contain the name of a registered dealer as recipient, the place of business set out does not tally with the place of business, as per the records of the Department - The Court, prima facie, appreciates the apprehension of the respondent in this regard as such a practice might well would lead to a situation where a registered dealer may lend his name for supply of material at various locations.
Seeing as the matter is pending only at the stage of response to the show cause notice, it would be appropriate that the petitioner furnish its explanation to the show cause notice. Let the same be considered by the respondent and orders passed within seven days from date of receipt of objections/reply, in accordance with law.
Petition disposed off.
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2022 (7) TMI 71
Seeking Bail - Pre-trial incarceration - fraud related to GST invoices - petitioner contends that the pre-trial incarceration would cause an irreversible injustice to the petitioner and family - HELD THAT:- A perusal of para 6 of the status report filed by concerned Dy SP, it is revealed that the petitioner had confessed during his interrogation that a sum of Rs.10 lacs had fallen to his share. The petitioner is in custody since 26-01-2022, i.e., for five months. Given the period of incarceration viz-a-viz the amount fallen to the petitioner’s share, coupled with the petitioner being a senior citizen, further pre-trial incarceration might not be justiciable.
In GURBAKSH SINGH SIBBIA VERSUS STATE OF PUNJAB [1980 (4) TMI 295 - SUPREME COURT], a Constitutional Bench of Supreme Court held that the bail decision must enter the cumulative effect of the variety of circumstances justifying the grant or refusal of bail - In KALYAN CHANDRA SARKAR VERSUS RAJESH RANJAN @ PAPPU YADAV & ANR. [2005 (1) TMI 704 - SUPREME COURT] a three-member Bench of Supreme Court held that the persons accused of non-bailable offences are entitled to bail if the Court concerned concludes that the prosecution has failed to establish a prima facie case against him, or despite the existence of a prima facie case, the Court records reasons for its satisfaction for the need to release such person on bail, in the given fact situations. The rejection of bail does not preclude filing a subsequent application. The courts can release on bail, provided the circumstances then prevailing requires, and a change in the fact situation.
The possibility of the accused influencing the investigation, tampering with evidence, intimidating witnesses, and the likelihood of fleeing justice, can be taken care of by imposing elaborative and stringent conditions. In SUSHILA AGGARWAL AND OTHERS VERSUS STATE (NCT OF DELHI) AND ANOTHER [2020 (1) TMI 1193 - SUPREME COURT], the Constitutional Bench held that unusually, subject to the evidence produced, the Courts can impose restrictive conditions.
Without commenting on the case's merits, in the facts and circumstances peculiar to this case, and for the reasons mentioned above, the petitioner makes a case for bail, subject to the following terms and conditions, which shall be over and above and irrespective of the contents of the form of bail bonds in chapter XXXIII of CrPC, 1973.
The petitioner is allowed to be release subject to fulfillment of various condition imposed - bail application allowed.
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2022 (7) TMI 66
Seeking of regular bail - availment of fraudulent ITC on the basis of goods less and bogus purchase invoices from nonexistent and fraudulent firms - fake/bogus firms - HELD THAT:- The allegations against the applicant-accused Gaurav Dhir pertains to being instrumental in filing of refund claims on behalf of the Firms, which were later on found to be fake and non-existing and for the said purpose he also issued CA certificate by forging signatures of co-accused Sunil Mehlawat and uploaded the same for the purpose of facilitating the said refund. The allegations qua the applicant-accused Sunil pertains to giving his UDIN and password to the co-accused Gaurav Dhir and also sharing his OTP with him for the said purpose.
There is no dispute with the fact that the same was issued by the applicant-accused Gaurav Dhir by forging signatures of co-accused Sunil. Even learned counsel for applicant-accused Sunil has alleged so and the said fact is not denied by learned counsel for the applicant-accused Gaurav Dhir.
The question that if there was any legal requirement to file said certificate or not, has become irrelevant especially when the forged document has been presented before the concerned authorities for the purpose of facilitation of refund. The entire argument that there was no legal requirement for the applicant-accused Gaurav Dhir to file such certificate as CA falls to the ground when the said certificate has been forged by the accused and used for the purpose of refund. It is not the matter of mere initiation of refund under the CGST Act only, rather now it appears to have become an offence punishable under Sections 420/467/468/471 of IPC wherein the maximum punishment prescribed is imprisonment for life.
So far as offences punishable under Section 132 of CGST Act, 2017 is concerned, as already discussed above, apart from these offences, the offence punishable under Sections 420/467/468/471, IPC are also prima facie made out against the applicants-accused Gaurav Dhir and Sunil. The authorities relied upon by learned counsel for the applicants-accused are not applicable to the facts of the present case especially when the applicants-accused have been involved in forging certificate and submitting the same to the concerned authorities for the purpose of taking refund claim and thus, creating a picture in the mind of the concerned agencies that the professional CA i.e. the person who has issued the certificate had gone through the entire record and had verified the same.
Considering the gravity and the nature of the allegations levelled against the applicant-accused and the fact that the investigation of the case is at nascent stage and further considering the fact that now a days economic offences are rampant and should be dealt with the firmness, this court does not deem it proper to grant the concession of bail to both the applicants-accused at this stage - keeping in view the gravity and seriousness of the offences, both the present bail applications filed on behalf of the applicants-accused are hereby dismissed.
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2022 (7) TMI 67
Profiteering - purchase of fiats - it is alleged that the benefit of input tax credit had not been passed on to the Applicant No. 1 and Applicant No, 2 by way of commensurate reduction in prices - Contravention of section 171 of CGST Act - penalty - HELD THAT:- The Respondent has benefited from the additional ITC to the extent of 6.55% of the turnover during the period from 01.07.2017 to 31.03.2019 amounting Rs.4,74,88,840/- It has been verified by the DGAP that the Respondent has already passed on benefit amounting to Rs.1,88,56,367/- to 772 homebuyers. Hence. the Authority finds that. the profiteered amount required to be returned/passed on by the Respondent is Rs, 2,86,32,474 (inclusive of GST @ 12%/ 8% on the base price) as is evident from the above Report dated 28 08.2020. Hence, the Authority holds that the provisions of Section 171 (1) of the CGAT Act, 2017 have been contravened by the Respondent.
The Respondent has realized an additional amount of Rs.34,418/- each from Applicant no, 1, 2 & 3. Rs.36,120/- from the Applicant no. 4. Rs.27,510/- each from Applicant no. 5, 7, 8, 9. 10, 11. 12,15. Rs.36.120/from the Applicant no. 6, Rs.48,029/- from the Applicant no. 13, Rs.70.068/from the Applicant no. 14. and Rs.71,868/-from the Applicant no. 16 and an additional amount of Rs.2,80,46,934/- from 772 flat buyers other than the above Applicants. The details of the amount of benefit of ITC passed on - These buyers are identifiable as per the documents placed on record. Therefore, the Respondent is directed to pass on an amount of Rs.34,418/- each to Applicant No. 1, 2 & 3, Rs.36,120/- to the Applicant No. 4, Rs.27.510/- each to Applicant No. 5, 7, 8. 9, 10. 11. 12.15, Rs.36,120/to the Applicant No, 6, Rs.48,029/- to the Applicant No. 13. Rs.70.068/- to the Applicant No. 14, and Rs.71,868/- to the Applicant No. 16 and Rs.2,80,46,934/- to the other 772 home buyers respectively along with the interest @ per annum from the dates from which the above profiteered amount was collected by him from them till the payment is made as prescribed under Rule of the CGST Rules. 2017. The Authority directs the Respondent to comply with this Order within a period of three months from the date of receipt of this order failing which the said amount shall be recovered in terms of the CGST Act, 2017.
This Authority under Rule 133 (3) (a) of the CGST Rules, 2017 orders that the Respondent shall reduce the prices to be realized from the buyers of the flats of the above Project commensurate with the benefit of ITC received by him - This Authority as per Rule 136 of the CGST Rules 2017 directs the Commissioners of CGST/SGST Gurugram, Haryana to monitor compliance of this order under the supervision of the DGAP by ensuring that the amount profiteered by the Respondent. as determined by this Authority, is passed on to all the eligible buyers. It may be ensured that the benefit of ITC is passed on to each homebuyer as per Annexure- A attached with this Order along with interest @18%.
This Order having been passed today falls within the limitation prescribed under Rule 133(1) of the CGST Rules, 2017.
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2022 (7) TMI 70
Sublato fundamento cadit opus - Absence of proper show-cause notice - Interest liability - delay in furnishing GSTR-3B return - Liability to be imposed without any adjudication proceeding under Section 73 or 74 of the CGST Act which has been done admittedly or not - HELD THAT:- These writ petitions are fully covered by the judgment rendered by this Court in the case of M/S NARSINGH ISPAT LIMITED THROUGH ITS DIRECTOR SRI AJAY KUMAR SINGH VERSUS UNION OF INDI A THROUGH THE SECRETARY, MINISTRY OF FINANCE, (DEPARTMENT OF REVENUE) , NEW DELHI, THE SPECIAL SECRETARY & MEMBER, MINISTRY OF FINANCE (DEPARTMENT OF REVENUE) CENTRAL BOARD OF INDIRECT TAXES AND CUSTOMS, NEW DELHI, THE PRINCIPAL COMMISSIONER OF CENTRAL TAX, GOODS & SERVICES TAX & CENTRAL EXCISE, RANCHI COMMISSIONERATE, RANCHI, THE DEPUTY COMMISSIONER OF STATE TAX & GST, JAMSHEDPUR, THE SECRETARY CUM COMMISSIONER OF STATE TAXES, RANCHI [2022 (3) TMI 1047 - JHARKHAND HIGH COURT] and R.K. TRANSPORT PRIVATE LIMITED, PHUSRO, BOKARO. VERSUS THE UNION OF INDIA THROUGH THE PRINCIPAL COMMISSIONER, CENTRAL GOODS AND SERVICES TAX AND CENTRAL EXCISE, RANCHI., ASSISTANT COMMISSIONER, CENTRAL GOODS AND SERVICES TAX AND CENTRAL EXCISE, RANCHI. [2022 (2) TMI 1051 - JHARKHAND HIGH COURT].
It was held in the above cases that Since the proceedings have been held to be vitiated on failure to follow the principles of natural justice and the procedure prescribed under section 73(1) of JGST Act, 2017, no comments on the merits of this contention raised by the petitioner is made at this stage. The impugned Summary of the Order contained in Form GST DRC-07 dated 26.02.2020 in the respective writ petitions relating to different tax periods in question are accordingly quashed - Learned counsel for the Respondent-State is not in a position to dispute the application of ratio rendered by this Court in the case of Narsingh Ispat Limited and R.K.Transport Pvt. Ltd.
Post these cases on 27th June, 2022 under the heading ‘For Orders’.
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2022 (7) TMI 69
Seeking permission to petitioner to pay the GST arrears as demanded in the demand notice in 24 equal monthly instalments - HELD THAT:- This Court directs the first respondent to consider the representation of the petitioner, dated 27.04.2022 and pass appropriate orders as per Section 80 of the Tamil Nadu Goods and Services Tax Act, 2017, within a period of three weeks from the date of receipt of a copy of this order.
The writ petition disposed off.
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2022 (7) TMI 68
Seizure order - articles belonging to the petitioner - HELD THAT:- Learned Assistant Government Pleader under instructions state that as and when the details are retrieved from the aforesaid electronic gadgets which are yet to be returned by the respondent-authority, the same shall be released and handed over to the petitioner but not later than 31st July, 2022.
The petitions would not survive and are disposed of accordingly.
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Income Tax
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2022 (7) TMI 63
Determination of income - adopting the profit margin of 8% on the turnover - case of the assessee was selected for “cash deposits in savings bank account(s) more than the turnover” - HELD THAT:- As AO in the order passed u/s 143(3) after analyzing the submissions made by the assessee found that the assessee has a turnover and thereafter adopting the profit rate of 8% determined the total income of the assessee - We find the CIT (A) in her ex-parte order sustained the additions made by the AO since nothing was brought before her to take a contrary view than the view taken by the AO - It is the submission for the assessee that in the interest of justice, the assessee should be given an opportunity to explain his case before the CIT (A).
Considering all deem it fit and proper to restore the issue to the file of the CIT (A) with a direction to grant one final opportunity to the assessee to substantiate his case and decide the issue as per fact and law. The assessee is also hereby directed to appear before the CIT (A) without seeking any further adjournment under any pretext failing which the CIT (A) is at liberty to pass appropriate order as per law - The grounds raised by the assessee are accordingly allowed for statistical purposes.
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2022 (7) TMI 62
Disallowance being amount of State Value Added Tax (VAT) paid for earlier years - Deduction u/s 80IB claimed - HELD THAT:- It is seen as an admitted position that the assessee separately maintained books of account for 80IB(10) projects and non-80IB(10) projects. Corresponding Profit and loss accounts were also drawn accordingly. There is no dispute that the amount of VAT was paid by the assessee during the year under consideration which pertained to earlier years. In fact, the question as to whether the VAT was payable by Builders was sub judice at the material time.
Assessee became liable to pay VAT for earlier years - The assessee had not claimed any deduction on account of VAT in the computation of income for earlier years. It was only during the year under consideration that the assessee claimed such deduction on paying the VAT amount of earlier years. In that view of the matter, deduction of such VAT has to be allowed in this year itself.
Whether the deduction of VAT should be allowed against profits from 80IB(10) projects or non-80IB(10) projects? - There is no question of claiming its deduction against non-80IB(10) projects notwithstanding the fact that there was no revenue from 80IB projects for the year under consideration. Non-availability of profits from 80IB projects would not per se make the assessee entitled to deduction against profits from non-80IB projects. It is, therefore, held that the VAT should be allowed as deduction only in the Profit and loss account of 80IB(10) projects which would lead to the corresponding increase in the closing work-in-progress thereof as there was no revenue under this stream for the year. Thus, the closing figure of work-in-progress in the 80IB(10) projects would increase by the sum on Rs.1.13 crore. However, income for the year under consideration from non-80IB(10) projects, which is otherwise chargeable to tax and not eligible for the deduction, would increase accordingly as the amount of VAT paid and claimed as deduction therein shall get disallowed on moving to the Profit and loss account of 80IB(10) projects.
Whether Disallowance u/s.14A cannot be countenanced because deduction is admissible under 80IB(10) projects and the assessee admittedly did not have any income from such projects? - As the amount being, the VAT paid by the assessee during the year relating to 80IB(10) projects will not be allowed as deduction against the profit of non 80(IB(10) projects, which will consequently increase the total income for the current year; the closing figure of work-in-progress of the 80IB(10) projects will correspondingly increase; and no disallowance u/s.14A of the Act is called for on this score.
Disallowance of interest - HELD THAT:- As neither the assessee firm paid nor received any interest to/from the partners. If the amount of interest that ought to have been charged from Mr. S.K. Kotkar at Rs.13.54 lakh is considered as income on hypothetical basis, then the corresponding deduction on account of interest that ought to have been paid by the assessee to Ms. Jyoti Shamkant Kotkar on hypothetical basis comes at Rs.53.94 lakh. The net effect of both the interest hypothetically charged/paid would tend to reduce the income of the firm by Rs.40.40 lakh (interest of Rs.53.94 lakh payable to Ms. Jyoti Shamkant Kotkar minus interest of Rs.13.54 lakh receivable from Mr. S.K. Kotkar). As neither the firm has charged nor paid any interest to the partners and the partners in their individual capacities have also not shown any such hypothetical interest income or expenditure, there is no logic in sustaining the addition of Rs.13.54 lakh towards the amount of interest that ought to have been earned by the assessee, therefore, order to delete this addition.
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2022 (7) TMI 61
Revision u/s 263 - revision of the assessee”s reassessment, proceedings for which were initiated in view of the discrepancies that came to the notice of AO in the assessee”s share trading transactions, found to be in order in assessment, was the claim for exemption u/s. 54EC - HELD THAT:- The matter in the instant case, as is apparent, is rather purely legal, so that there is no scope of any inquiry. As regards the different interpretation of s. 54EC by the ld. Pr. CIT, which is the basis of his order, we find no such limitation in the (first) proviso to sec. 54EC(1), which (limitation) rather stands introduced w.e.f. 01/04/2015, i.e., AY 2015-16 onwards, and which itself clarifies that no such limitation obtained prior thereto.
Reference, with profit, in this context, be made to the decision in DIT vs. Mitsubishi Corporation [2021 (9) TMI 875 - SUPREME COURT] explaining the relevant principle of interpretation of statues. Both the conditions, being of investment at no more than Rs. 50 lacs in any one financial year and, two, of investment in a notified asset, to be made within six months of the date of transfer (of the relevant long-term capital asset), prescribed by the section, are met, and on which aspect no doubt stands expressed by the ld. Pr. CIT. There is, in our view, no incorrect application of law by the AO, which would render his order infirm and, thus, liable for revision u/s. 263, which accordingly fails. The impugned order is not sustainable in law, and is accordingly cancelled. Assessee appeal allowed.
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2022 (7) TMI 60
Disallowance of expenditure considering it to be a capital expenditure -CIT-A deleted the addition HELD THAT:- When the matter was carried before the Ld. CIT(A) he noted that in A.Ys. 2009-10 to 2014- 15 the addition made by the A.O. has been deleted by his predecessor. He also noted that for those years the order of Ld. CIT(A) has been upheld by the Tribunal.
Before us, no fallacy in the findings of the Ld. CIT(A) has been pointed-out by Revenue nor has Revenue placed on record any material to demonstrate that the order of Tribunal in assessee’s own case for earlier years has been set aside, overruled or modified by higher judicial forum. We, therefore, find no reason to interfere with the order of the Ld. CIT(A) and thus dismiss the grounds of the Revenue.
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2022 (7) TMI 77
Addition u/s 68 - Unexplained credit - scope of amended provisions of section 68 - onus to prove the source of source for the period prior to such amendment - genuineness of transactions and creditworthiness of the payer as well as even the source of the payer for making investment in the share capital of the appellant proved or not? - HELD THAT:- When assessing officer has examined the source of the source and asked the assessee to explain, then onus shifts on the assessee to explain the same. Thus, at the cost of repetition we state that credit-worthiness of the company is not established and the amount introduced as share capital is that of received from M/s Texworld Fashions Pvt. Ltd. and M/s Sita Fabric Mills Pvt. Ltd and these two companies had no liability to repay the said unsecured loan. As far as the genuineness of the transaction is concerned when M/s Lily enclave Pvt. Ltd has introduced Rs.55 lakhs as share capital in the books of assessee-company from the amount it was not due to receive, the transaction cannot be termed as genuine.
When assessing officer asked the assessee to explain these inter-connected transactions, it was the duty of the assessee to explain the same. In this regard, a useful reference may be made to the decision of the Hon`ble Apex Court in the case of Biju Patnaik [1986 (5) TMI 2 - SUPREME COURT] wherein it was held that in appropriate cases even the source of source has to be proved by the assessee under section 68 of the Act.
Although, the issue before us pertains to assessment year 2012-13 where amended provisions of section 68 do not apply, however, considering the facts of the case, the assessee has to explain the source of the source, as the assessing officer has pointed out the trail of money, and in that circumstances owns shifts on the assessee to provide suitable explanation to Assessing Officer.
It is the appropriate case to prove source of the source. At the cost of repetition, we state that when Assessing Officer observed that M/s Tax World Fashions Pvt. Limited and M/s Sita Fabric Pvt. Limited had no liability to repay loan, so it was the assessee`s money which came back to the assessee by way of share capital. In that situation, the assessee ought to have proved with evidence that it was not assessee`s money, however, assessee has failed to do so.
Therefore, considering the complex nature of transactions, we are of the view that one more opportunity should be given to the assessee to explain the transaction before the assessing officer - remand the issue raised by the assessee in the grounds of appeal before CIT(A), for fresh consideration by the assessing officer with a liberty to the assessee to prove his case by producing sufficient evidence/material - Appeal of the assessee is allowed for statistical purposes.
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2022 (7) TMI 59
Deduction u/s 80IB - whether freight charges recovered from the customers are eligible for deduction under section 80IB ? - HELD THAT:- As Assessee submitted before us the invoices of various parties containing GST number and CST number, on the invoices, in respect of transportation charges, (freight charges received from purchaser). The assessee submitted Form No.10CCB from a Chartered Accountant, balance sheet and profit and loss account - The fresh charges received from purchaser have been shown under the head “income from other sources”. The assessee also submitted the letter which was submitted before Assessing Officer, showing the details of freight income - The assessee also submitted the details of freight income - Therefore, these facts clearly prove that assessee’s claim is genuine and assessee deserves for deduction u/s 80IB
As assessee has been claiming deduction under section 80IB of the Act since a long and department has been allowing the claim of the assessee under section 80IB of the Act, in previous years, therefore since the department has allowed the claim of the assessee in previous years, hence the genuineness of the claim should not be doubted. For the current assessment year, the assessee has furnished relevant documents and evidences to fulfill the conditions for claiming deduction under section 80IB of the Act, as noted above, therefore we are of the view that assessee is entitled to claim deduction under section 80IB - Appeal of assessee allowed.
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2022 (7) TMI 58
Disallowance of legal and professional charges - HELD THAT:- Assessee was unable to furnish any supporting evidence to demonstrate that the amount was actually incurred for the purpose of business. Thus, in absence of any supporting evidence, disallowance, in our view, is justified
Expenditure being payment made to contractor for building, designing and interior, while, assessee has claimed it as revenue expenditure, the departmental authorities have treated it as capital expenditure - HELD THAT:- From the description of the expenditure as per the material available on record, it appears to be expenditure incurred for creating an asset. No contrary material has been brought on record by assessee to demonstrate that by incurring the expenditure, assessee has not derived any enduring benefit. That being the factual position, we cannot accept assessee’s claim as revenue expenditure. However, as directed by Commissioner (Appeals), once, the expenditure is treated as capital expenditure, assessee must be granted benefit of depreciation in accordance with law.
Disallowance u/s 40A(3) - cash payment made by assessee exceeds the threshhold limit of Rs.20,000 per day as per section 40A(3) - HELD THAT:- Before Commissioner (Appeals), assessee had claimed that the expenditures are in the nature of reimbursement of petrol expenses incurred by the employees and have been made against various bills. Assessee had claimed that no single bill is more than Rs.20,000. However, assessee has not furnished any documentary evidence to back its claim.
Assessee appeal dismissed.
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2022 (7) TMI 57
Proportionate disallowance of interest on ad hoc basis after noting that assessee had both interest bearing funds and interest free funds at his disposal - HELD THAT:- We note that the disallowance has been made on ad hoc basis on the plank that interest bearing funds have been diverted. This was done by the AO despite noting that assessee had interest bearing funds as well as interest free funds. It is settled law that if assessee has sufficient interest free funds the right of attribution lies with the assessee and AO cannot insist upon one to one nexus between the funds. This view is duly corroborated by Hon’ble Mumbai High Court in the case of CIT vs. Reliance Utilities & Power Ltd. [2009 (1) TMI 4 - BOMBAY HIGH COURT] and CIT vs. HDFC Bank Ltd. [2014 (8) TMI 119 - BOMBAY HIGH COURT].
This aspect needs to be considered by the AO in making the disallowance which has not been done.
Authorities below have shown that there is abnormal increase in sale to related parties, hence the debt is not normal. In our considered opinion, this plank is not acceptable as Revenue authorities are accepting the sales and no disallowance has ever been done in this regard. Moreover, the genuineness of the debtors cannot be doubted without any enquiry in this regard. In this view of the matter, in our considered opinion, the matter needs to be remitted back to AO. AO is directed to decide the issue afresh in the light of our observation herein above. Appeal of the assessee is allowed for statistical purposes.
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2022 (7) TMI 56
Penalty u/s. 271(1)(c) - assessee's claim of short term capital gain was treated as business income - disallowance u/s. 14 was made as AO and100% claim of 80G deduction was reduced to 50% - HELD THAT:- On the issues aforesaid on which penalty has been sustained, no cogent case has been made out of concealment or furnishing of inaccurate particulars. When all the details are before the Revenue authorities and the claim is not accepted, this fact ipso facto cannot lead to levy of penalty u/s. 271(1)(c) - This view is duly expounded in the case of Reliance Petro Products Pvt. Ltd.[2010 (3) TMI 80 - SUPREME COURT] - In our considered opinion, assessee's claim as aforesaid cannot be said to be ex-facie bogus. Hence, we set aside the orders of authorities below and decide the issue in favour of assessee.
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2022 (7) TMI 76
Income accrued in India - sum received for advisory assistance for design and construction of hotel - Indo-US tax treaty - AO was of the view that the amount so received by the assessee is taxable in the hands of the assessee as fees of included services under article 12 of the US Tax Treaty and also as fees for technical services u/s. 9(1)(vii) - HELD THAT:- Amounts in question are not taxable in terms of the provisions of the applicable tax treaty and the findings of the co-ordinate bench still hold good in law, we have no reasons to take any other view of the matter than the view so taken by the coordinate bench - CIT(A) was quite justified in the following a binding judicial precedent and no specific reasons have been pointed out to us either, for the said judicial precedent, which is binding on us as well, must be deviated from. In view of these discussions and bearing in mind entirety of the case we uphold the relief granted by the learned CIT(A) and decline to interfere in the matter. The grievance raised by the Assessing Officer, does not meet our approval.
Appeal filed by the Assessing Officer is thus dismissed.
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2022 (7) TMI 75
Revision u/s 263 - reopening of assessment concluded against assessee - period of limitation - HELD THAT:- The principal Commissioner of income tax has been bestowed upon with a power under section 263 of the Act that he may call for and examine the records of any proceedings under this act. On such examination, if he considers that any 'order' passed in those proceedings by the AO is erroneous in so far as it is prejudicial to the interest of the revenue, he may revise such order as the circumstances of the case justify. He may enhance, modify or cancel the assessment order and may also direct the AO to cause examination of the details and further pass an order. But he can do so only after granting assessee an opportunity of hearing. However according to the provisions of sub-section (2), such order could be passed only within the period of two years from the end of the financial year in which the order sought to be revised was passed.
Similar issue in case of R K Steel Syndicate [2007 (4) TMI 397 - ITAT MUMBAI] considered that in case no additions are considered necessary by the assessing officer on the issues on which reassessment proceedings are resorted to, it cannot be open to him to make any other additions also. Therefore by allowing PCIT extended time limit of 2 years will amount to allow revenue to do something indirectly which act prohibits directly.
Thus the order under Section 263 of the Act dated 23rd March, 2021 is held barred by limitation and hence, quashed. - Appeal of assessee allowed.
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2022 (7) TMI 55
Disallowance for late depositing of employee’s contribution of Provident Fund and ESI - adjustment u/s 143(1) - HELD THAT:- We note that the issue involved in the present appeal of assessee is covered against the assessee, as the assessee has not deposited Employees Provident Fund (EPF) with the prescribed authority within stipulated time, therefore as per the judgment of the Hon'ble Gujarat High Court in the case of Gujarat State Road Transport Company (2014 (1) TMI 502 - GUJARAT HIGH COURT] the issue had already been decided against assessee.
As against the order of the Hon'ble jurisdictional High Court, the SLP has been filed by the assessee which has not been adjudicated yet therefore we are of the view that the issue may be remitted back to the file of the Ld. CIT(A) to decide the matter after taking into account the SLP filed by assessee (supra) before the Hon'ble Supreme Court as and when will be passed by the Hon'ble Supreme Court. Appeal filed by the assessee is allowed for statistical purposes.
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2022 (7) TMI 36
Revision u/s 263 by CIT - Deduction u/s 36(1)(viia) - assessee’s claim u/s. 36(1)(viia) is not correct or in excess as per CIT - HELD THAT:- CIT has merely chosen to ignore the assessee’s clear and pointed reply in the matter. It would be a different matter, we may clarify, where the assessee had not satisfactorily replied or suitably addressed the concerns of the competent authority. Also, this, we are conscious, may not be feasible in all cases, and there may be circumstances, as where verification of facts and figures is required, in which case the ld. Pr. CIT would be justified in, stating the reason/s, directing the assessing authority suitably. How could in the instant case, then, the assessee’s claim, which, qua this limb (of the deduction), works to Rs. 156.88 lacs (i.e., Rs. 175.73 lacs – Rs. 18.85 lacs), be said to be in excess?
It is only, where so, even if prima facie, that the revisionary authority can be regarded as within his province to say that the AO had not examined the same, remitting it back for necessary verification. Even here, there is scope for the assessee to explain his claim on the basis of admitted facts and law, as it may well be that the revisionary authority has misconstrued or not assumed the facts correctly. In other words, there must be scope for enquiry and verification, for which the revision is being proposed to be made by the revisionary authority.
Without this basic condition being met, serving as a primary check, the exercise may degenerate into a probing exercise, which could then extend to every aspect of an assessee’s return. It is to be borne in mind that it is the non-application of mind, that the absence or lack of inquiry exhibits, which renders an order erroneous and, thus, liable for revision (Malabar Indl. Co. Ltd. [2000 (2) TMI 10 - SUPREME COURT] - The words “which should have been made” in Explanation 2 to sec. 263, in our view, and at the cost of repetition, provide the necessary perspective and framework, suggestive of there being circumstance/s warranting enquiry by the AO, which he has failed to. No such circumstance is available on record or otherwise brought to our notice in the instant case, thus failing the exercise of power of revision u/s. 263. Assessee appeal allowed.
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2022 (7) TMI 74
Income from house property - notional rental income assessed in the hands of Appellant by the Assessing Officer in respect of area leased out by the Appellant to the Lessee - for Leased Property CIT(A) did not grant benefit of vacancy allowance for the period commencing from 19.10.2012 to 31.12.2012 - case of the Appellant that during the aforesaid period, despite making best efforts, the Leased Property could not be rented - HELD THAT:- In the case of Premsudha Exports (P) Ltd. [2007 (5) TMI 348 - ITAT MUMBAI] it has been held by the Tribunal that even the intention to let out the property would be sufficient to invoke provisions of Section 23(1)(c).
The fact that Appellant intended to rent the Leased Property and made efforts for the same has not been doubted by the Assessing Officer or by the CIT(A). Accordingly we hold that the Appellant is entitled to benefit of vacancy allowance in terms of Section 23(1)(c) of the Act for the period commencing from 19.10.2012 to 31.12.2012 during which the Leased Property was actually vacant.
Notional interest charged for the period commencing from 01.01.2013 to 31.03.2013 forming part of the rent free period of five months - Appellant documentary evidence in the forms of approvals obtained by the Lessee from the Electrical Department, Bangalore, Govt. of Karnataka and the civil & interior works contract entered by the Lessee for making the Leased Property fit for occupation. However, the same were simply brushed aside by the CIT(A) - it is admitted facts that no rent has actually been received by the Appellant for the period of three months commencing from 01.01.2013 to 31.03.2013.
In absence of any allegations by the Revenue regarding the bonafides of the transactions, the agreement between the parties is to be accepted. In our view, the Assessing Officer erred in attributing a notional rent for a period of three months without appreciating the nature of transactions - no efforts were made by the Assessing Officer to determine the monthly rental/rate at which the Leased Property might have been reasonably expected to be let out in terms of Section 23(1)(a) - actual annual rent received by the Appellant cannot be substituted by a notional rent without the Assessing Officer arriving at a finding that the Leased Property is can be reasonably expected to be let out for a higher sum. In view of the aforesaid, we delete the addition of notional rent made by the Assessing Officer for the period of three months commencing from 01.01.2013 to 31.03.2013.
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2022 (7) TMI 54
Protective assessment - Addition u/s 69/69C - Unaccounted investment ad unaccounted commission - addition on protective basis in hands of assessee - CIT(A) deleting the protective addition on the issue of unaccounted investment and on the issue of unaccounted commission u/s 69C - HELD THAT:- We find that the Ld. CIT(A) has passed the impugned order by taking note that he has confirmed the substantive additions on the three entities so the protective addition made in the hands of the assessee has been deleted by him which action of the CIT(A) does not require any interference from our side because we note from the AO’s report placed before us in respect of this appeal that these three entities in whose hands the substantive additions have been confirmed by the CIT(A) by his order has not preferred any further appeal against the action of Ld. CIT(A) before this Tribunal, so the impugned action of CIT(A) deleting the protective addition in the hands of assessee company is upheld. Nevertheless, as an abundant caution for the interest of revenue, in-case if these three entities had preferred or prefers an appeal later, then the revenue would be at liberty to take appropriate action to recall this order in accordance to law.
Coming to the protective addition based on the purported commission income also we note that the same have been substantively confirmed in the hands of the three parties namely M/s. First-winner Textile (India) Pvt. Ltd., M/s. Bhagat Textile Pvt. Ltd. and M/s. Starwood Exports Pvt. Ltd.
CIT(A) has deleted the protective addition in the hands of the assessee on the same reason for deleting the addition on the aforesaid ground. Therefore, on the same reasoning (mutatis and mutandis) as stated for confirming the action of the Ld. CIT(A), we uphold this action of the Ld. CIT(A) also. And coming to the revenue appeal for AY 2012-13, we note that there is no difference in facts (except of figures) as well as law and additions made are also identical and the grounds of appeal are also same, so on same reasoning (mutatis mutandis) we dismiss both the appeals of the revenue.
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2022 (7) TMI 65
Validity of Reopening of assessment u/s 147 - As per revenue petitioner failed to reply and respond to the proceedings initiated - as argued adequate opportunity to the petitioner to respond to the draft assessment orders not given - HELD THAT:- The petitioner has shown disregard to the statutory notices issued by the Income Tax Department. The fact that the petitioner has not responded earlier and has sought for further time after giving a partial reply shows that the petitioner has not been diligent in complying with the time line set out by the respondents to complete the assessment - no merits in interfering with the impugned orders merely because the petitioner gave a partial reply to the two show cause notices dated 24.03.2022 and 29.03.2022. Under these circumstances, we are inclined to dismiss these writ petitions. However, the petitioner is at liberty to file a statutory appeal before the Appellate Commissioner in the manner known to law. WP dismissed.
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2022 (7) TMI 64
Reopening of assessment u/s 147 - notice issued u/s new section 148A - Petitioner is aggrieved by issuance of impugned notice u/s 148 on the grounds that the same is barred by limitation - scope of statutory formalities under section 148A as prescribed by the Finance Act, 2021 which are applicable with effect from 1st April 2021 before issuance of notices under section 148 of the 1961 Act on or after 1st April 2021 - HELD THAT:- In considered view that this case clearly falls under the amended Act relating to proceedings under section 147 of the Act under which issuance of notice under section 148A of the Act is mandatory before issuing any notice under section 148 of the amended Act which has not been complied with in this case.
Considering the above facts and circumstances of the case and in view of the order of this court in the case of Bagaria Properties and Investment Private Limited & Anr. v. Union of India & Ors. [2022 (1) TMI 742 - CALCUTTA HIGH COURT] and also in the case of Monoj Jain v. Union of India [2022 (1) TMI 741 - CALCUTTA HIGH COURT] the impugned notice under section 148 of the Act and all subsequent proceedings are not sustainable in law and the same are quashed.
However, quashing of the impugned notice and proceeding will not debar the respondent-authority concerned to issue any fresh notice in future in accordance with law.
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Customs
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2022 (7) TMI 53
Amendment in the shipping bills under Drawback - the bills can be amended to be filed under MEIS scheme after the export of the goods and against the mandate of Section 149 of the Customs Act, 1962 or not? - violation of the DGFT Public Notice No. 09/2015-20 dated 16.05.2016 - HELD THAT:- The issue involved herein is no longer res integra and is decided against the Revenue, in various decisions by several High Courts. One such decision is in the case of BOMBARDIER TRANSPORTATION INDIA PVT LTD VERSUS DIRECTORATE GENERAL OF FOREIGN TRADE [2021 (3) TMI 9 - GUJARAT HIGH COURT] by the Gujarat High Court, where it was held that the writ-applicant becomes entitled to the MEIS benefits once it exports the notified goods to the notified market. This benefit cannot be defeated due to procedural infirmity of missing to mark/tick “Y” in the rewards column.
This court is of the opinion that there is no substantial questions of law arisen for consideration herein - Appeal dismissed - decided against Revenue.
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Corporate Laws
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2022 (7) TMI 52
Seeking restoration of name in the Register of Companies - Section 252 of the Companies Act, 2013 - HELD THAT:- The material available on record indicates that the failure of the Company to furnish the statutory returns with the RoC was not intentional. Apparently the Company has been carrying on its operations, as the financial statements would indicate. Unless the Company's name is restored, it will prejudicially affect its prospects and adversely influence the Directors in their future endeavours. The Shareholders of the Company as well as the Applicant are keen to carry on and perform the objects of the Company in right earnest. There have been substantial investments in the project. The Company is continuing its business. Unless the name of the Company is restored in the Register of Companies, it would suffer financially and may go out of business. The directors of the company would also face disqualification.
As regards the locus standi of the Applicant to file the Application according to Section 252, it is only the company, a member, creditor or workman that has to file the Application. But this Application is filed by a Director who does not hold any shares in the Company. However, the Applicant, subsequent to the filing of the Application, filed an authorization of the shareholder by name Mr. Tirumala Satya Sridhar Kandavalli who is shown as the 90% shareholder of the Company in the annual returns - considering that the authorization is given by shareholder, who according to Section 252 of the Companies Act, 2013 can file the Application, it is held that the name of the Company should be restored in the Register of Companies.
Application allowed.
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Insolvency & Bankruptcy
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2022 (7) TMI 51
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial Creditors - existence of debt and dispute or not - HELD THAT:- The Financial Creditor has completely failed to prove any financial debt due and payable by the Corporate Debtor. Whatever documents have been placed on record by the Financial Creditor, do not prove any financial debt against the Corporate Debtor.
The petition and documents placed on record by the Financial Creditor are not at all satisfying - there is no substance in this petition for initiation of CIRP against the Corporate Debtor.
Petition dismissed.
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2022 (7) TMI 50
Joint and severable liability of respondent to make good the losses suffered by the applicant - losses as suffered by the applicant to be considered as part of the CIRP cost and be accordingly disbursed to the applicant or not - delivery of stainless steel flat in terms of the purchase orders immediately - seeking to set apart a sum of Rs. 5,70,90,760/- from the fund allocated for CIRP Cost till disposal of this instant application - HELD THAT:- Admittedly the applicant in the present IA under consideration was not applicant before this Adjudicating Authority when the plan was filed by the Resolution Professional and was considered - It is an admitted position that the present applicant never approached the Adjudicating Authority when the Resolution Plan was pending approval.
It is not understood in what capacity Resolution Professional could have addressed any communication after the approval of the Resolution Plan on 7th of April, 2022, thereby advising the applicant to do anything as stated in his e-mail dated 25th of April, 2022. It is an established position of law that once the Resolution Plan is approved the role of Resolution Professional comes to an end.
It is thus opined that the role of the RP came to an end after the Resolution Plan was approved and therefore, he could not have addressed the communications being relied upon by the applicant in this application.
In view of the admitted position the applicant did not approach this Adjudicating Authority when the Resolution Plan was under consideration and had come before this Adjudicating Authority after the approval of the plan, this Adjudicating Authority is of the opinion that he has no right to file any application or seek any relief at this stage - Application rejected.
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2022 (7) TMI 49
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - privity of contract - existence of debt and dispute or not - HELD THAT:- There was no acceptance by the Operational Creditor of the purported assignment done by the Corporate Debtor. Therefore, the plea of the Corporate Debtor is untenable and the same is hereby rejected.
It is an admitted position that the tender was floated by Corporate Debtor and the work was executed by the Operational Creditor. The Operational Creditor is not a party to the assignment sought to be made by Corporate Debtor to Barnopraichay Book Mall Pvt. Ltd. Therefore, the privity of contract between Corporate Debtor and the Operational Creditor never came to an end and accordingly, the payment of outstanding dues continues to remain the contractual obligation of the Corporate Debtor.
It is clear that there was a debt due and there is default by the Corporate Debtor in payment of its dues. A demand notice under Section 8 of IBC was issued by Operational Creditor to the Corporate Debtor and the same was issued dated 9th of August, 2019 served upon the Corporate Debtor and to which the Corporate Debtor furnished its reply on 23rd of August, 2019. The said reply does not raise any pre-existing disputes regarding the quality of goods supplied - This application is complete in every respect.
The application under section 9 of the Code read with rule 6(1) of the Insolvency & Bankruptcy (Application to Adjudicating Authority) Rules, 2016 for initiating CIRP against the Corporate Debtor being Bengal Shelter Housing Development Limited is admitted - Moratorium declared.
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2022 (7) TMI 48
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial Creditors - existence of debt and dispute or not - time limitation - HELD THAT:- The Financial Creditor has indicated the last date of payment as 21st August 2020. Further, the table showing the computation of the amount claimed to be in default and days of default annexed to the Petition as “Exhibit D” clearly displays the date of default as 31st December 2020.
It is pertinent to note that vide IBC (Second Amendment) Act 17 of 2020, the Insolvency and Bankruptcy Code, 2016 was amended and Section 10A was inserted to the Code where provisions regarding Suspension of initiation of corporate insolvency resolution process are detailed - This suspension was further extended by subsequent Notifications issued by the Ministry of Corporate Affairs until 25th March 2021.
Since the date of Default falls within the said time period of suspension, this Petition is barred by Section 10A of the Code. Even though an “Event of Default” as stipulated under the terms of the Agreement dated 10th October 2018 has occurred, the filing of this Petition is expressly barred by Section 10A of the Code.
Petition dismissed.
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Central Excise
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2022 (7) TMI 47
Violation of principles of natural justice - Recovery of central excise duty, interest and penalty without service of adjudication order - absence of actual proof of any service of the adjudication order upon the petitioner - Section 37C of the Central Excise Act, 1944 - HELD THAT:- So far as question of filing of appeal and payment of demand against the aforesaid adjudication order dated 17th October, 2012 which was never served upon the petitioner and which was disclosed for the first time by the respondents in their affidavit-in-opposition on 25th March, 2022 in course of hearing of this Writ Petition, petitioner has already filed Appeal before the Appellate authority concerned by making statutory pre-deposit by treating the date of receipt of the said order annexed the affidavit-in-opposition to this Writ Petition for the first time as the date of order which was served upon the petitioner in course of hearing of this Writ Petition and as such respondents’ allegation of latches on the part of the petitioner in filing Appeal is not sustainable in law and it is nothing but an attempt to cover up respondent’s own latches.
So far as action of the respondents’ action of recovery of the amount of the demand in question on the basis of adjudication order dated 17th October, 2012 is concerned which was never served on the petitioner earlier and since now appeal has been filed by the petitioner by making statutory pre-deposit, action of the respondents making recovery of demand more than the statutory pre-deposit amount required to be made in filing Appeal against adjudication order, from the other refundable amount by attachment of bank account and recovery from the bank account of the petitioner by way of demand draft is not sustainable in law in view of the facts and circumstances as appears from record.
The respondents authority considered are directed to take immediate steps for refund of the amount recovered in excess of 20 per cent of the demand from the petitioner on the basis of adjudication order dated 17th October, 2012, from its bank and pass necessary order for withdrawal of impugned order of attachment of bank account in question of the petitioner within seven days from date since the statutory pre-deposit amount for filing Appeal against the adjudication order dated 17th October, 2012 has already been made by the petitioner which is matter of record - petition disposed off.
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CST, VAT & Sales Tax
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2022 (7) TMI 46
Validity of Attachment notice - recovery of money due under Rule 9(4) of the Tamil Nadu Value Added Tax Rules, 2007 - It is the specific case of the petitioner that the Assessment Order, pursuant to which, the impugned recovery notice in Form-U has been issued is now the subject matter of review before the Commercial Tax Officer, Thirumullaivoyal Assessment Circle/first respondent herein - HELD THAT:- Considering the fact that the petitioner has not continued the business due to outbreak of Covid-19 and considering the fact that the petitioner has already deposited a sum of Rs.1,52,165/- being 25% of the disputed tax, the lifting of the attachment order in the impugned notice in Form-U under Rule 9(4) of the Tamil Nadu Value Added Tax Rules, 2007, is ordered, subject to the petitioner paying/depositing another sum of Rs.50,000/-. As and when, the aforesaid amount of Rs.50,000/- is deposited by the petitioner, the impugned notice for recovery of money due shall stand automatically vacated.
Writ Petition stands disposed of.
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2022 (7) TMI 45
Validity of Pre-Assessment Notice and the impugned Assessment Order - HELD THAT:- As far as the petitioner in W.P.No.13292 of 2022 is concerned, the writ petition is pre-mature. Therefore, this Writ Petition is disposed off by directing the petitioner to file a reply to the pre-assessment notice dated 08.04.2022 within a period of 30 days from the date of receipt of a copy of this order. On receipt of such reply, the respondent shall pass appropriate orders on merits and in accordance with law.
As far as the petitioner in W.P.No.13300 of 2022 is concerned, it appears that the petitioner had not replied to the pre-assessment notice dated 07.03.2022 and thus the impugned order has been passed.
Considering the fact that the petitioner in W.P.No.13300 of 2022 was heard before the impugned Assessment Order was passed, the impugned Assessment Order dated 04.04.2022 is quashed and the case remitted back to the respondent to pass a speaking order. The impugned order which stand quashed, shall be treated as corrigendum to the impugned preassessment notice dated 07.03.2022.
Writ petiton disposed off.
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2022 (7) TMI 44
Levy of tax - sale of motor spirit and diesel oil - sale by the petitioner company to other oil marketing companies - tax has already been paid by the Oil Companies on the sale of same motor spirit and diesel oil at a much higher price on which the tax is sought to be levied from the selling oil companies to the other oil companies - U.P. Sales of Motor Spirit, Diesel Oil and Alcohol Taxation Act - HELD THAT:- Considering that the relief could not be granted by the authorities to the revisionist only because he could not adduce the bifurcation of the sales but it is admitted that the sale made to the Oil Companies for which tax has already been paid subsequently they cannot be taxed again and, hence, to the extent that on the subsequent sales tax has been realized assessing the revisionist to the tax again would be unjust, illegal and arbitrary and to that extent interference is required in the present case.
The matter is remitted back to the prescribed authority to proceed further with the matter and after recording the evidence as to whether the tax has been realized for the subsequent sale, the benefit of the judgment shall be granted to the revisionist after ascertaining the said facts which shall be inquired by him and if it is satisfied that the said subsequent sale has been taxed and the same has been deposited with the State Government, the revisionist cannot be made liable of the sale of said goods.
Revision allowed.
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2022 (7) TMI 43
Violation of principles of Natural Justice - Period of limitation - whether the claim of the Petitioner seeking payment of tax @ 4% has to be accepted, more so, having regard to the different stand taken by the Appellate Authority as well as by the Revisional Authority in the suo motu revision? - HELD THAT:- In the present case, neither there is breach of any fundamental rights or an excess of jurisdiction nor is there a challenge to the vires of the statue or delegated legislation.
The learned Counsel for the Petitioner mainly submits that, his case would fall under the category of violation of ‘principles of natural justice’, but, the record nowhere indicate any order being passed without hearing the Petitioner. A perusal of the interim order would show that personal hearing was accorded on 31.01.2022. Therefore, even the said ground may not be available to the case of the Petitioner. Further, a perusal of the order impugned, dated 04.02.2022, would show that the Commercial Tax Officer, Chittoor Circle-I, passed a detailed order dealing with various aspects and ultimately held that the dealer has committed an offence under AP VAT Act, 2005. The Order also indicates that the Petitioner has got an opportunity of preferring an appeal before the Appellate Deputy Commissioner, within 30 days from the date of receipt of the order.
Having regard to the fact that the Petitioner has got remedy of Appeal, wherein, he can raise all the pleas taken now, the present Writ Petition is dismissed leaving it open to the Petitioner to avail the remedy available under law.
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Indian Laws
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2022 (7) TMI 42
Dishonor of Cheque - amicable settlement of disputes between the parties - compounding of offences - section 138 of NI Act - HELD THAT:- The respondent No.1 complainant is permitted to withdraw the complaint and matter is compounded and complaint arising out of dishonor of cheque, under Section 138 of the Negotiable Instruments Act, is treated to be withdrawn and judgments of conviction and sentence passed by the Courts below are quashed and set aside. Petitioneraccused is acquitted of the accusation framed against him.
The petitioner submits that petitioner is facing poor financial condition and is not able to pay compounding fee @ 15% and, therefore, a prayer has been made by learned counsel for exempting the compounding fee, keeping in view ratio of law laid down by the Apex Court in DAMODAR S. PRABHU VERSUS SAYED BABALAL H. [2010 (5) TMI 380 - SUPREME COURT] as clarified by the Apex Court in MADHYA PRADESH STATE LEGAL SERVICES AUTHORITY VERSUS PRATEEK JAIN & ANOTHER [2014 (10) TMI 528 - SUPREME COURT] - Considering the entire facts and circumstances and ratio of law laid down by the Apex Court in aforesaid cases, instead of 15% of the cheque amount, petitioner/accused is directed to deposit Rs.3,000/as compounding fee with the H.P. State Legal Services Authority, Shimla within four weeks from today.
Petition disposed off.
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2022 (7) TMI 41
Dishonor of Cheque - fund insufficient - vicarious liability on management of the company - applicability of section 141 of Negotiable Instruments Act, 1881 - HELD THAT:- On perusal of the complaint, it is found that the complaint is bald regarding the role played by each of the Directors of the Company. In the light of the rulings cited by the learned Counsel for the Petitioner in NK. WAHI VERSUS SHEKHAR SINGH & ORS [2007 (3) TMI 671 - SUPREME COURT], SMS PHARMACEUTICALS LTD. VERSUS NEETA BHALLA [2007 (2) TMI 311 - SUPREME COURT] and ASHOKE MAL BAFNA VERSUS M/S UPPER INDIA STEEL MFG. & ENGG. CO. LTD. [2017 (3) TMI 907 - SUPREME COURT], the averments in the complaint is found bald regarding the role played by each of the Directors of the Company. Under those circumstances, the complaint filed by the Respondent/Complainant before the learned Judicial Magistrate, Fast Track Court, Ambattur is not maintainable in law.
This Criminal Original Petition is allowed.
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2022 (7) TMI 40
Dishonor of Cheque - legally enforceable debt - rebuttal of presumption - acquittal of the accused - section 138 of NI Act - HELD THAT:- Admittedly, the accused has not repaid the alleged loan amount to the complainant even after the issuance of notice to him. Thus, the presumption about existence of legally enforceable debt form in favour of the complainant in both the cases. However, the said presumption is rebuttable - In order to rebut the presumption, the complainant has taken a defence of general denial of the loan transaction in C.C. No. 1051/2011 and a common defence that the cheques in question were given to the complainant Sri. D.T. Patel, his brother by name Sri. Shanthi Bhai and the accused together as a security. However, those cheques have been misused by them. Naturally, the complainants in both the cases have denied the suggestions made to that effect from the accused side, in their cross-examinations.
There is no explanation available anywhere as to why should the accused give blank cheques to all the three persons i.e., both the complainants herein and one Sri. Shanthi Bhai when even according to accused, the alleged transaction of a sum of Rs. 50,000/- was only between himself and said Sri. D.T. Patel. Therefore, the defence of the accused creates a doubt in the mind of the court.
The accused could not able to rebut the presumption about the existence of legally enforceable debt formed in favour of the complainants in both the cases under Section 139 of N.I. Act. Thus, both the Trial Court as well as the First Appellate Court since after proper appreciation of evidence placed before them, have rightly come to a conclusion holding the accused guilty of the alleged offence in both the matters and have sentenced him proportionate to the proven guilt, there are no reason to interfere in the impugned judgments in both the matters.
The Criminal Revision Petition is dismissed.
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2022 (7) TMI 39
Dishonor of Cheque - no letter of authorization from the respondent/complainant, at the time of filing of the complaint - It is contended that subsequently, during the cross-examination, the letter of authority was marked and therefore, the complaint as such was filed without any authority - merger of the company - whether complaint is construed as the one filed by a non-existing person and therefore, it is not maintainable? - HELD THAT:- As far as the contention of the petitioner that there was no authorization issued to the complainant to file the complaint is concerned, it is seen that the same is technical in nature and when the technical flaw has been subsequently cured by producing authorization letter under Ex.P18, it would be no longer open for the petitioners to make such a hyper technical contention. In any event, the non production of authorization letter along with the complaint and producing it belatedly is not a ground for acquittal - As far as the contention relating to take over is concerned, there is difference between the take over of the management and merger of the company. It is the case of the accused that the company has merged and the same being a public document it was very much open for the petitioners, to apply for certified copies from the Registrar of Companies and produce the same before this Court.
A complete reading of cross-examination would make it clear that in the first sentence P.W.1 admitted the company has been taken over and in the next sentence he denied the same and stated that it was not taken over on the date of complaint and further, he answered that the complainant company is still in existence and therefore, it is entitled to continue the complaint. Therefore, the admission of P.W.1 does not lead to acquittal of the accused. As rightly pointed out by the Trial Court it is the defence of the accused and therefore, they are duty bound to produce clinching evidence in respect of the same and when they have not done so, the Trial Court has rightly rejected the said defence.
Final contention of the learned counsel for the petitioners is that there was no pleading as to the prejudice or loss for grant of compensation. It is not a case, where any offence like bodily injury is committed, where the complainant has to show some proof that they sustained loss for the purpose of determining compensation. It is an offence under Section 138 of the Negotiable Instruments Act and it is statutory mandate to order compensation of the cheque amount including twice the cheque amount. Therefore, considering the nature of the offence under Section 138 of the Negotiable Instruments Act, the argument of the learned counsel based upon the Section 357 of Cr.P.C., is without any merits. Therefore, the learned counsel is unable to establish any point so as to upturn the findings of conviction and sentence imposed by the Courts below.
This Criminal Revision Case is dismissed.
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2022 (7) TMI 38
Dishonor of cheque - insufficiency of funds - order granting 10% interim compensation in terms of Section 143A of the Act - HELD THAT:- On a conjoint reading of the objects and reasons, amendment made, and the purport of the provisions, what would unmistakably emerge is that the learned Magistrate is empowered to exercise his discretion in the grant of interim compensation which would in any given case range from 1% to 20%. Once the discretion by the learned Magistrate happens, the rigour of the statute sets in as the words in the statute depicts that the Court may in a given case grant such compensation and once granted consequences follow. Therefore, the learned Magistrates are required to exercise discretion by recording reasons in writing which would demonstrate application of mind, as application of mind and reasons in an order are inseparable. Application of mind is discernible only when the order reflects adequate reasons being given for exercise of such discretion.
There is no reason recorded by the learned Magistrate that the accused in the case at hand has adopted any of the factors as narrated hereinabove that would entail consideration of an application under Section 143A of the Act. With the reason that is rendered by the learned Magistrate as quoted (supra), the order granting 10% compensation, in the case at hand, becomes unsustainable. This Court is flooded with litigation with regard to grant of compensation under Section 143A of the Act by criminal courts. In several cases discretion is exercised for grant of compensation and in several other cases there are no reasons for exercise of such discretion. Therefore, it has become necessary to direct learned Magistrates that while considering applications filed under Section 143A of the Act, to notice at the outset, the conduct of the accused. If the accused has been unnecessarily evading the proceedings by seeking adjournments, consideration of the application would become imperative as the amendment itself is introduced to compensate such payees of delay tactics adopted by unscrupulous drawers of cheques.
The amount involved in the transaction is Rs.5,56,71,208/- and 10% of the said amount would mean Rs.55 lakhs. Therefore, it was necessary for the learned Magistrates to apply his mind, record such reasons which would demonstrate application of mind and then allow the application for grant of compensation in terms of the Act - it is deemed appropriate to exercise my discretion under Section 482 of the Cr.P.C., set aside the order impugned and remit the matter back to the hands of the learned Magistrate to pass appropriate orders on the application, bearing in mind the observations made in the course of the order.
The Criminal Petition is allowed.
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2022 (7) TMI 37
Departmental inquiry proceedings against the Commissioner of Income Tax - allegation of corruption - assets have grown grossly disproportionate to his known sources of income - seeking stay on the ground that, petitioner was being prosecuted on the criminal side and a charge-sheet had been framed under various provisions of Prevention of Corruption Act - HELD THAT:- It is settled principle that no hard and fast rule is applicable that the departmental proceedings have to be stayed at the instance of the employee at the asking. Due regard has to be taken to the fact that departmental proceedings cannot always be delayed, which in the present case have already lingered for over a decade - In the present case even though there were directions issued by the Tribunal vide order dated 28.10.2014 (Annexure A-8) at the instance of the petitioner himself that the inquiry proceedings would be concluded expeditiously, the same have not been concluded.
The Tribunal has noticed that various inquiry officers have changed and it is a matter of fact that the petitioner also retired on 30.09.2015 and, therefore, at this stage the threat as such of dismissal will no longer loom over him. It is to be seen that many times departmental proceedings are sought to be stayed on this ground, if the same are conducted expeditiously, which might result in dismissal of the employee, whereas on criminal side he might get the benefit of acquittal on the same set of allegations.
A comparison of the charge-sheet issued on the departmental side and the charge framed by the criminal Court would go on to show that they operate within a different ambit regarding the non-disclosure of the properties which had been purchased without obtaining prior permission, which is nothing to do with the factum of the prosecution on the criminal side. Similarly, the charge of maintaining absolute integrity in the duty and had acting in a manner unbecoming of public servants as contravened the provisions of service rules and nothing is interconnected with criminal proceedings and, therefore, the departmental proceedings are operating within a different framework.
It is also noticed that the delay which has occurred in the present case is on account of large number of witnesses which had been arrayed by the CBI. Therefore, it is opined that no such benefit is liable to be granted for staying the proceedings as asked for, since the matter has already lingered for the last over a decade and the Tribunal has rightly directed the monitoring of the said case, so that it can be concluded at the earliest.
In KENDRIYA VIDYALAYA SANGATHAN & ORS. VERSUS T. SRINIVAS [2004 (8) TMI 682 - SUPREME COURT], the High Court had upheld the order of the Tribunal staying the departmental proceedings on the ground that the charge was inter-connected. The Apex Court held that the seriousness of the charge which pertained to acceptance of illegal gratification and the desirability of continuing the appellant in service when he was guilty of such conduct, once the mode of enquiry and the rules governing the enquiry and trial in both the cases are distinct, would not justify in staying of the proceedings. It was, accordingly, held that the stay of disciplinary proceedings is not must in every case.
Keeping in mind the cumulative weightage of the precedents which are against the petitioner, we are of the considered opinion that keeping in view the allegations levelled against him, which go deep into the misconduct of the public servant, it would not be appropriate to stay the departmental proceedings. The fact that on an earlier occasion the petitioner himself was keen that the same should be conducted within a time bound frame is also being kept in mind. The petitioner, thus, cannot be allowed to blow hot and cold at his own convenience.
Petition dismissed.
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