TMI Tax Updates - e-Newsletter
July 9, 2020
Case Laws in this Newsletter:
GST
Income Tax
Corporate Laws
Securities / SEBI
Service Tax
Indian Laws
Highlights / Catch Notes
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GST:
Maintainability of petition - availability of alternative remedy - imposition of tax and penalty - clerical error or not - In the circumstances equally efficacious remedy is prescribed by law for the petitioner. Further the matter does not stand in the footing of error or oversight or a slip. As such, the matter ought to have been agitated before the appellate authority as per law - petition dismissed.
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Income Tax:
Nature of stamp duty paid in relation to the leased business premises - Revenue or capital expenditure - lease was for a period of 10 years - The same is not a deferred revenue expenditure - AO directed to allow the stamp duty charges paid by the assessee as an expenditure for the current year holding it to be revenue expenditure in nature allowable u/s 37(1).
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Income Tax:
Approval u/s 80G - Donations - the appellant being engaged in safeguarding the rights, privileges and interest of the advocates, its dominating purpose is the advancement of general public utility within the meaning of section 2(15) of the Act, as such, genuineness of its activities and object of charitable purpose is proved, thus entitled for registration u/s 12AA and consequent exemption u/s 80G
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Income Tax:
Cash seized in search - Protective versus substantive addition - seized cash belongs to the company will not become income of the assessee merely for the reason the said company claimed the deduction u/s 80IA(4) of the Act. This reasoning given by the Assessing Officer is dismissed.
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Income Tax:
Addition on account of licence fee paid to DOT - if any expenditure on account of licence fee was payable up to 31.07.1999, it should be treated as capital expenditure and the licence fee on revenue sharing basis after 01.08.1999 should be treated as revenue in nature.
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Indian Laws:
Dishonor of Cheque - Vacation of the order of cognizance of offence on behalf of the accused / defendant - It is the case of the complainant (defendant / acccused) that he made inquiry and then he could come to know that with a dishonest intention, the cheques were presented before the Bank, thus the complainant felt cheated - The stand of the accused nothing but a sheer abuse of the process of this Court
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Service Tax:
Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 - penalty figure not declared - Evasion of service tax - suppression of material facts with intent to evade payment of Service Tax - Matter restored back for fresh orders.
Articles
Notifications
News
Case Laws:
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GST
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2020 (7) TMI 179
Maintainability of application - Revocation of the cancellation order - petitioner filed a First Appeal under Section 107 of the Act - HELD THAT:- The orders dated 2.11.2019 passed by the Assistant Commissioner, Sector-8, Jhansi and 31.12.2019 passed by the Additional Commissioner Grade -2 (Appeal) 1st Commercial Tax, Jhansi, are set aside. The application dated 19.10.2019 which was filed by the petitioner for the revocation of the cancellation order dated 19.1.2019 shall now be decided in accordance with law within a period of 15 days from the date of production of a copy of this order. Petition disposed off.
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2020 (7) TMI 178
Revocation of cancellation of Registration - section 30 of CGST Act - HELD THAT:- This petition is disposed of granting liberty to the petitioner to file necessary applications seeking revocation of cancellation of registration. If such application is submitted, respondent No.3 - the Assistant Commissioner of Commercial Taxes, Bengaluru, shall consider the same and pass appropriate orders, as expeditiously as possible and in any event, in an outer limit of two weeks from the date of receipt of a copy of this order.
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2020 (7) TMI 177
Maintainability of petition - availability of alternative remedy - imposition of tax and penalty - clerical error or not - Detention of goods alongwith conveyance - whether the result of imposing of tax and penalty is a mere wrong reading of the table or wrong calculation that could have been avoided by the respondent No.2? HELD THAT:- The appellate authority is stated to be Joint Commissioner of Commercial Taxes in the matter similar to the present one. Thus, when the appeal is provided and the authority is notified as stated above whether the Joint Commissioner or other authority the matter has to be agitated before the same and the writ remedy cannot be invoked by making High Court as middle authority or cannot be placed in between the prescribed authority (respondent No.2) and appellate authority as per Section 107 of the Central Goods and Services Tax Act. In the circumstances equally efficacious remedy is prescribed by law for the petitioner. Further the matter does not stand in the footing of error or oversight or a slip. As such, the matter ought to have been agitated before the appellate authority as per law - petition dismissed.
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Income Tax
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2020 (7) TMI 176
Penalty u/s. 271(1)(c) - deduction on expenditures - HELD THAT:- All the facts were disclosed and the claim was made for deduction on expenditures incurred by the assessee. As per record the assessee has made a bona-fide claim. AO as well as CIT(A) have not challenged the genuineness / bona-fides of the expenditures so incurred. The claim of the assessee is also supported by various decisions and documentary evidences placed on the record. Thus, penalty cannot be levied where a bona-fide claim of the assessee was rejected by the tax department. We observe that the instant case of the assessee is akin to the decision of the Hon'ble Supreme Court in the case of Price Waterhouse Coopers (P) Ltd vs. CIT [ 2012 (9) TMI 775 - SUPREME COURT] . In that case, the crux of the issue for consideration was whether there was a bona fide and inadvertent error on the part of the assessee, warranting no imposition of penalty u/s 271(1)(C). We are of the opinion that it is not a fit case for levy of penalty u/s.271(1)(C) of the Act. Hence, we set aside the order of the Ld. CIT(Appeal) and direct the Assessing Officer to delete the penalty from the hands of the assessee. Appeal of the assessee is allowed.
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2020 (7) TMI 175
Reopening of assessment u/s 147 - addition u/s 69A - as per CIT-A even if the above addition is deleted, it is still liable to be taxed u/s 2(22)(e) - HELD THAT:- The assessee had stated that she is the Managing Director of the SPRIIL and that advance to the extent of ₹ 30,89,000/- was received for purchase of plot by the said company from the assessee and, therefore, provisions of section 2(22)(e) are not applicable. CIT(A), thereafter, did not examine the business exigency or the purpose for which the assessee has received the advance from SPRIIL, but, has given a finding that the amount is liable to tax u/s 2(22)(e) of the Act also. Since the evidence filed by the assessee before the Tribunal is additional evidence and it goes goes to the root of the matter, I deem it fit and proper to admit the same and since the additional evidence was not filed before the authorities below, due to which, there was no occasion to examine the same by the AO and CIT(A), remand the matter to the file of the AO with a direction to examine the business exigency of the advances of ₹ 30,89,000/- received by the assessee and decide the issue in accordance with law after giving fair opportunity of hearing to the assessee. Accordingly, ground raised by the assessee is treated as allowed for statistical purposes.
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2020 (7) TMI 174
Disallowance of professional and legal expense, miscellaneous expenditure and travelling expenses - provision of expenses payable - concept of accounting on accrual basis - HELD THAT:- The provision of expenses payable account is naturally shown under the head sundry creditors/ expenses payable/ liabilities etc in the balance sheet at the close of the year. On the first day of next year, this account of Expenses payable is credited to the respective Expenses account of the next year. As and when those bills are received for, which provision was made in the last year, for which provision of Expenses payable reversed by crediting expenses account of next year, assessee debits the amount of invoices to that respective expenditure account. Thus, there is no impact on the profit and loss account of the next year. Reversal of the provision is merely a control account. Assessee also deducts tax at sources at the close of the year on such provisions, If it is not deducted same is disallowed u/s 40 (a) (ia) of the act. Assessee is a company and therefore it has to mandatorily maintain its books of accounts of Accrual basis of accounting. Accrual means Revenues and costs are accrued, that is, recognized as they are earned or incurred (and not as money is received or paid) and recorded in the financial statements of the periods to which they relate. The lower authorities have failed to understand the concept of accounting on accrual basis and practice followed by the assessee. Provision made by the assessee on accrual basis was on basis of reasonable estimates. It cannot be an unascertained and contingent liability. Similar is the fact of disallowance of legal and professional expense, miscellaneous expense and travelling expenses. Disallowance confirmed by the ld CIT (A) deserves to be deleted. Accordingly, we reverse the orders of the lower authorities and direct the ld AO to delete the disallowance of professional and legal expense, miscellaneous expenditure and travelling expenses. Nature of stamp duty paid in relation to the leased business premises - Revenue or capital expenditure - lease was for a period of 10 years - HELD THAT:- The issue is squarely covered in favour of the assessee by the decision of the Honourable Bombay High Court in CIT versus Reliance Industrial Infrastructure Ltd [ 2015 (8) TMI 1215 - BOMBAY HIGH COURT] wherein the assessee in that case took a land on lease for a period of 30 years and paid stamp duty in respect of deed of lease. Honourable Supreme Court in case of Taparia Tools Ltd versus The Joint Commissioner Of Income Tax [ 2015 (3) TMI 853 - SUPREME COURT] also held that same is also not a deferred revenue expenditure. In view of this, we direct the lower authorities reversing the decision to allow the stamp duty charges paid by the assessee as an expenditure for the current year holding it to be revenue expenditure in nature allowable u/s 37 (1) of the act.
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2020 (7) TMI 173
Addition u/s 68 - cash deposit in bank account - HELD THAT:- It is pertinent to note that the assessee has not maintained books of account and it s an admitted position. The other relevant fact is that the assessee has not mentioned the agricultural income while filing the returns. But during the course of assessment proceedings, the assessee produced the evidence of holding of agriculture land and confirmation from brother regarding receipt on 02.03.2013 as share in the agriculture income of HUF. As regards to explanation the same was submitted as family savings by the assessee. These aspects were not at all taken into account by the Assessing Officer as well as by the CIT(A). The contention of the Assessee that in absence of maintenance of books of accounts, no addition can be made u/s 68 of the Act on account of cash deposit in bank account, appears to be correct as the assessee is not maintaining any books as mentioned in Section 68 - assessee has given the details of cash deposits to the Assessing Officer as well as the same was produced before the CIT(A), but both the authorities ignored the same and sustained the addition under Section 68 of the Act which is not as per the provisions of the said Section. Deduction under section 54F - HELD THAT:- The assessee has filed a paper book consisting documents as additional evidence, which developed and possessed by the assessee post passing of order by CIT(A) on 24.01.2018. The assessee has filed affidavit along with application under Rule 29 of the Income Tax (Appellate Tribunal) Rules, 1963 along with the documents such as NOC from original Applicant to developer to include Balwant Singh as Joint owner also undertaking from new applicant along with detail of changes in the allottee/applicants. These documents were not before the Revenue authorities. Therefore, it will be appropriate to remand back this issue to the file of the Assessing Officer for proper verification and after verifying the same to decide whether the claim of the assessee is tenable or not - Appeal of the assessee is partly allowed for statistical purpose.
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2020 (7) TMI 172
Rejection of books of accounts - estimation of gross profit - AO proceeded to estimate the gross profit of the assessee at 12.78% as against actual gross profit ratio of 11% claimed by the assessee in its books of account - HELD THAT:- Earning of GP/NP ratio at any business house is not a mechanical process to be consistent in all the years as it depends upon numerous factors prevailing during the particular assessment year. When we examine net profit ratio earned by the assessee during the AYs 2007-08 to 2011-12 as depicted in table in preceding para no.5 of this order, it has never been consistent and is at variance. Even during the year under assessment, assessee s turnover has gone up and has shown GP ratio of 11% as against 8.22% of AY 2010-11. In case, we follow the decision rendered by coordinate Bench of the Tribunal in assessee s own case for AY 2010-11 by taking average of current year and two consecutive years in order to estimate the net profit ratio, assessee s own results would have come down. So action of AO/CIT(A) rejecting the books of account u/s 145 (3) is upheld. We are of the further considered view that GP ratio is required to be estimated keeping in view the historical background from AYs 2007-08 to 2011-12. So, we deem it fit to adopt the net gross profit ratio for the year under assessment by taking average of the current year as well as four preceding assessment years i.e. AYs 2007-08, 2008- 09, 2009-10 2010-11 which comes to 11.31%. AO is to quantify the gross profit ratio accordingly and to recompute the addition to be made in this case. We are of the considered view that since the Bench has preferred to proceed with GP addition on the basis of average of the current year and four earlier assessment years, the remaining other additions made by AO/confirmed by the ld. CIT (A) on account of disallowance of commission, on account of fines penalties and on account of interest on FDR respectively do not call for any separate addition, hence deleted. - Appeal filed by the assessee is allowed.
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2020 (7) TMI 171
Exemption u/s 11 - approved/notified institution for the purpose of section 10(23) - charitable within the meaning of section 2(15) - declining the registration u/s 12AA - exemption / approval u/s 80G - Bar Council of Delhi / Body of Advocates - HELD THAT:- Hon ble Delhi High Court in case of DIT vs. Foundation of Ophthalmic Optometry Research Education Centre [ 2012 (8) TMI 777 - DELHI HIGH COURT] has held to the extent that even if there is no commencement of charitable activities, registration u/s 12AA of the Act cannot be denied because the statute does not prohibit or enjoin the Commissioner from registering a trust solely based upon its objects without any activity in case of a newly registered trust. We are of the considered view that the CIT(E) has erred in declining the registration u/s 12AA of the Act on the ground that financials of FY 2018-19 have not been furnished by the appellant. Cursory findings returned by the ld. CIT (E) in the impugned order that, the provisions of section 11 to 13 specifically section 12AA are not applicable to such organisation or institution , is not correct interpretation of law as CIT vs. Bar Council of Maharashtra [ 1978 (8) TMI 14 - BOMBAY HIGH COURT] held that two provisions viz. section 11 section 10(23A) are not mutually exclusive but operated under different circumstances. So, merely on the basis of the fact that income of the appellant exempted u/s 10(23A) is not a bar to claim deduction in assessment u/s 11 of the Act, as such income is to be excluded u/s 11. Appellant had furnished financial of FYs 2016-17 2017-18 but the ld. CIT (E), without making any adverse findings on the same, proceeded to reject the registration on the ground that financials of FY 2018-19 have not been furnished. Thought it is not a requirement of law to furnish the financials as required by the ld. CIT (E) the appellant has come up with argument that now the financials of FY 2018-19 are available and they are ready to furnish the same. What has been discussed in the preceding paras, we are of the considered view that the appellant being engaged in safeguarding the rights, privileges and interest of the advocates, its dominating purpose is the advancement of general public utility within the meaning of section 2(15) of the Act, as such, genuineness of its activities and object of charitable purpose is proved, thus entitled for registration u/s 12AA and consequent exemption u/s 80G. Appeal filed by the appellant is allowed directing the ld. CIT (E) to provide registration u/s 12AA and consequent exemption u/s 80G of the Act to the appellant.
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2020 (7) TMI 170
Deduction u/s 80IA(4) on miscellaneous receipts - HELD THAT:- Miscellaneous receipts can be sub-grouped into three lots i.e. (i) the receipts covered by the earlier Tribunal s order; (ii) the receipts, assessee never claimed deduction; and, (iii) the business connected receipts or otherwise. So far as sub-group one is concerned, we find the receipts is covered by the order of the Tribunal in the assessee s own case for the assessment year 2008-09 [ 2012 (6) TMI 316 - ITAT, PUNE] . Assessing Officer is directed to follow the said order of the Tribunal scrupulously. When it comes to the balance of receipts, we find in respect of few receipts, the assessee never claimed the deduction. The Assessing Officer is directed to consider the same. Finally, regarding the rest of the receipts, if any, Assessing Officer shall examine each of them carefully qua the business nature, nexus to the business activity of the assessee etc and allow the deduction if they are of business nature. The Assessing Officer, after giving reasonable opportunity to the assessee, shall decide the issue in accordance with the law. Accordingly, the ground no.1 is partly allowed for statistical purposes. Deduction us. 80IA(4) - income offered by the assessee during the search and seizure action u/s 132 - HELD THAT:- We find the issue of granting of deduction u/s 80IA(4) of the Act in respect of the undisclosed business income of the assessee, is a covered issue by a series of judgements. A special reference is made here to the Co-ordinate Bench decision in the case of (i) M/s. Gajraj Constructions [ 2015 (10) TMI 1858 - ITAT PUNE] and (ii) Naresh T. Wadhwani [ 2014 (11) TMI 689 - ITAT PUNE] . In these cases, the Tribunal granted deduction u/s 80IA of the Act in respect of the undisclosed business income of the assessee. In our view, the issue is now covered one in favour of the assessee. Non-appropriation of seized cash toward the advance tax liabilities and consequent levy of interest u/s 234 - HELD THAT:- We find the seized cash is available for adjustment towards advance tax liability which constitutes any existing liability as defined in effect prior to the amendment by the Finance Act, 2013. This interpretation is supported by the Co-ordinate Bench of the Tribunal in the case of Happy Home Developers [ 2017 (9) TMI 1884 - ITAT PUNE] . - Decided in favour of assessee. Cash seized in search - Protective versus substantive addition - cash was added in the hands of Shri Shah is protective or substantive? - HELD THAT:- Referring to facts that seized cash from the residence of Sri Shah, the evidences gathered during the search action, statements recorded by the search team, offer of the explanation of the assessee why the said cash is discovered at his residence, and the fact of offering the same as an additional income of company etc. Shri Shah does not have any other source leave alone the business income sources to earn such huge cash. Assessee company offered the said income as income of the company and the same is approved by the CIT(A) and also confirmed the same by us in the Tribunal. Therefore, met the consistency, we are of the considered opinion, the Assessing Officer s attempt to make this as protective addition appears logical and reasonable. Alternative addition made by the Assessing Officer on substantive basis is unsustainable for the reason that the addition becomes substantial if the assessee company makes any deduction u/s 80IA(4) of the Act. This is not the reasoning for making any assessment of any assessee s income. The total income of an assessee has to be determined first based on the parameters laid down in the Income Tax Act. If the deductions are allowable as is a case in the case of LCESPL as held by us, the same should be allowed in accordance with the provisions of the Act. Therefore, seized cash belongs to the company will not become income of the assessee merely for the reason the said company claimed the deduction u/s 80IA(4) of the Act. This reasoning given by the Assessing Officer is dismissed.
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2020 (7) TMI 169
Disallowance u/s 14A - 10% of dividend income earned during the financial year - HELD THAT:- It is not in dispute that Rule 8D of the Rules is not applicable for the year under consideration. However, some reasonable expenditure needs to be allowed for earning exempt income. The ld. CIT(A) has restricted the disallowance to 10% of the dividend income. In our considered opinion, restriction by the ld. CIT(A) seems to be reasonable and, therefore, no interference is called for. Ground No. 1 is accordingly, dismissed. Adjustment of foreign currency expenditure and tele-communication charges for working out the deduction u/s 10A - main contention of the appellant is that the ld. CIT(A) erred in exceeding his jurisdiction u/s 251(1) of the Act in restoring the matter back to the file of the Assessing Officer - HELD THAT:- As decided in own case [ 2015 (1) TMI 924 - ITAT DELHI] we set aside the impugned order of the ld. CIT(A) on this issue and the AO is directed to reduce the expenses incurred in foreign currency and telecommunication from the export turnover as well the total turnover while working out the deduction u/s 10A Addition on account of licence fee paid to DOT - HELD THAT:- An identical issue was considered by the co-ordinate bench in assessee s own case [ 2015 (1) TMI 924 - ITAT DELHI] similar to the facts involved in the case of CIT Vs Bharti Hexacom Ltd. (Delhi) [ 2013 (12) TMI 1115 - DELHI HIGH COURT] we, therefore, restored this issue to the file of the AO to be decided in accordance with the findings given by the Hon'ble Jurisdictional High Court in the case of Bharti Hexacom Ltd. and if any expenditure on account of licence fee was payable up to 31.07.1999, it should be treated as capital expenditure and the licence fee on revenue sharing basis after 01.08.1999 should be treated as revenue in nature. Claim of foreign tax credit - HELD THAT:- As relying on WIPRO LTD.[ 2015 (10) TMI 826 - KARNATAKA HIGH COURT] Assessee would be entitled to only the tax paid for that relevant financial year in America, i.e., the income attributable to that year in America. In other words, the income tax paid in the same calendar year in United States of America is to be accounted for two financial years in India. Addition u/s 14A - HELD THAT:- It is a settled law that Rule 8D of the Rules is applicable from A.Y 2008-09 onwards. However, some reasonable expenditure needs to be disallowed for earning exempt income. Since the ld. CIT(A) has considered the reasonableness and restricted the disallowance to 5% of dividend income, we do not find any error or infirmity in the findings of the ld. CIT(A). Disallowance u/s 14A r.w.r 8D of the Rules - HELD THAT:- Income which does not form part of the total income and this can be done by taking into consideration the investment which has given rise to exempt income which does not form part of the total income - Tribunal in assessee s own case for A.Y 2011-12 has held that wherein dividend was received from investments made in mutual funds which were brought and sold during the year and since there was no opening and closing balance of investments from mutual funds, it is impossible to determine the average value of investments for the purpose of Rule 8D(2)(ii) of the Rule and accordingly, disallowance made u/s 14A of the Act r.w.r 8D of the Rules was deleted. Addition being advances given by the assessee in earlier year - HELD THAT:- It is not in dispute that ₹ 25.69 lakhs were paid to DOT as advance recoverable from DOT. The assessee may have taken wrong stand while claiming it as advance recoverable from DOT, but, at the same time, write off during the year under consideration cannot be brushed aside lightly as in case the same has to be considered as business loss. Now the only issue which needs our consideration is whether the same is prior period expenses. In our considered opinion, and looking to the returned income of the assessee, in earlier years, we find that there would be no revenue leakage as the assessee is consistently subjected to same rate of income tax. Therefore, in the interest of justice and fair play, we do not find any merit in the disallowance made. We, accordingly, direct the Assessing Officer to delete the addition
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Corporate Laws
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2020 (7) TMI 168
Maintainability of application - sections 241 and 242 of the Companies Act, 2013 - Oppression and Mismanagement - transfer of shares - nomination of shares - HELD THAT:- A bare reading of the provisions of section 72(1), every holder of securities has a right to nominate any person to whom his securities shall vest in the event of his death. In the case of joint holders also, they have a right to nominate any person to whom all the rights in the securities shall vest in the event of death of all joint holders. Sub section (3) of section 72 contains a non obstante clause in respect of anything contained in any other law for the time being in force or any disposition, whether testamentary or otherwise, where a nomination is validly made in the prescribed manner, it purports to confer on any person the right to vest the securities of the company, all the rights in the securities shall vest in the nominee unless a nomination is varied or cancelled in the prescribed manner. It is prima facie apparent that vesting is absolute, and the provisions supersede by virtue of a non obstante clause any other law for the time being in force. Prima facie shares vest in a nominee, and he becomes absolute owner of the securities on the strength of nomination. In WORLD WIDE AGENCIES PVT. LTD. AND VERSUS MRS. MARGARAT T. DESOR AND ORS [ 1989 (12) TMI 245 - SUPREME COURT] , this Court held that a legal representative has a right to maintain an application regarding oppression and mismanagement without being registered as a member against the securities of a company. However, the question of nomination was not involved in the said decision, as such, Court was not required to decide the question of the effect of nomination whether it vests all the rights in the securities in nominee to the exclusion of legal representatives. The basis of the petition is the claim by way of inheritance of 1/4th shareholding so as to constitute 10% of the holding, which right cannot be decided in proceedings under section 241/242 of the Act. Thus, filing of the petition under sections 241 and 242 seeking waiver is a misconceived exercise, firstly, respondent no.1 has to firmly establish his right of inheritance before a civil court to the extent of the shares he is claiming; more so, in view of the nomination made as per the provisions contained in Section 71 of the Companies Act, 2013. In the present case, respondent no.1, as pleaded by him, had nothing to do with the affairs of the company and he is not a registered owner. The rights in estate/shares, if any, of respondent no.1 are protected in the civil suit. Thus, we are satisfied that respondent no.1 does not represent the body of shareholders holding requisite percentage of shares in the company, necessary in order to maintain such a petition. In the facts and circumstances of the instant case, in order to maintain the proceedings, the respondent should have waited for the decision of the right, title and interest, in the civil suit concerning shares in question - it is deemed appropriate to direct the dropping of the proceedings filed before the NCLT regarding oppression and mismanagement under sections 241 and 242 of the Act with the liberty to file afresh, on all the questions, in case of necessity, if the suit is decreed in favour of respondent No.1 and shareholding of respondent No.1 increases to the extent of 10% required under section 244.
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Securities / SEBI
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2020 (7) TMI 167
Prohibition of Fraudulent and Unfair Trade Practices relating to Securities Market - Monetary penalties imposed on them under section 15HA of the SEBI Act, 1992 - HELD THAT:- SEBI was doing investigation during the interim and some delay though has happened on account of change in the AO. Though the impugned order deals with trading in the name of the minor, no action has been rightly contemplated against the minor. As regards the other noticees/appellants on appeal before us we note that though their relationship through common address, common mobile numbers etc. are matters of record and proved no motive has been attributed to their trading pattern. New LTP, NHP and a few first trades in the scrip have been created/done by these appellants which would prima facie points towards a manipulative effort. It is on record that the scrip was progressively doing well during the investigation period with substantial increase in both prices and volumes. No connection with the promoters of the Company or with the Company itself has been attributed to the appellants. There is no evidence or even any discussion on any fund transfer between the appellants or the appellants with any other entities in the absence of which motive for a collusive or manipulative effort becomes blunt. When a group of 16 entities themselves becomes parties to each other's trade in a circular fashion, though to a limited extent, the net amount of profits or losses also become negligible and only to the extent of their trades getting matched with entities outside the group. Looking at the trading pattern of the appellants; the LTP, NHP, first trades etc. it may be possible to arrive at a prima facie conclusion regarding violation of PFUTP Regulations. However, in the facts and circumstances of the matter, particularly the fact that the scrip involved was reasonably liquid and continued to become more liquid and hence increase in volume and prices and with no evidence of any fund transfer, motive for manipulation etc. we are of the considered view that no penalty can be imposed on the appellants. Without any other evidence, we are constrained to give some weight to the submissions of the appellant that they were trading in the scrip in a normal way because of the scrip itself being attractive through various public announcements supported by the fact of increase in volume of trading and rise in prices. Therefore, given these factors imposing a penalty becomes too harsh. At the same time since the trading behavior exhibited by these appellants is not normal and is amenable to invoking suspicion of a PFUTP violation, we would warn the appellants from indulging in similar trading practices in future.
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Service Tax
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2020 (7) TMI 166
Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 - penalty figure not declared - Evasion of service tax - suppression of material facts with intent to evade payment of Service Tax - HELD THAT:- The matter is remanded back to the authorities to reconsider the application/declaration furnished by the petitioner being ARN LD14012000001159 filed on 14.01.2020 and pass appropriate orders thereon in terms of the scheme and the rules framed there under. If the authorities require a fresh declaration then they shall permit the petitioner to file such declaration afresh. Petition allowed by way of remand.
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Indian Laws
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2020 (7) TMI 165
Dishonor of Cheque - allegation that the condition precedent for filing of the case under Section 138 of the Negotiable Instruments Act, 1881 was itself not satisfied - HELD THAT:- The learned appellate court erred in law in ignoring the mandatory time frame prescribed under section 138 of aforesaid Act of 1881 and held that the complaint case filed after 10 days of issuance of notice of bouncing of cheque was not fatal to the case on the ground that the purpose for issuance of notice has been fulfilled as the accused Anil Chandra had got knowledge about the dishonour of the cheque much before the filing of the complainant case and had not made payment of the cheque and that the accused had the opportunity to make payment in Court within fifteen days of receiving of Court's notice, if he was honest towards his cheque. This court finds that in the present case the notice regarding bouncing of cheque prior to filing of the case has not been exhibited and what has been exhibited is only a postal slip dated 02.05.2006 and the complaint case was filed on 12.05.2006 i.e. prior to expiry of 15 days from the alleged date of dispatch of notice regarding cheque bouncing - neither the notice dated 02.05.2006 has been exhibited nor the case has been filed after expiry of the stipulated time frame as per the said Act of 1881. Rather one legal notice dated 19.05.2006 and its postal receipt issued after filing of the complaint case has been exhibited. The aforesaid aspect of the matter has not been properly considered by the learned courts below and both the courts have erred in holding the petitioner guilty of offence under section 138 of the aforesaid Act of 1881 by resorting to the presumptions under section 139 of the Act of 1881 although the complaint itself was not maintainable on the day it was filed. The complaint was not maintainable on the day it was filed, the impugned judgements of conviction and sentence are set-aside - Petition allowed.
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2020 (7) TMI 164
Dishonor of Cheque - Vacation of the order of cognizance of offence on behalf of the accused / defendant - It is the case of the complainant (defendant / acccused) that he made inquiry and then he could come to know that with a dishonest intention, the cheques were presented before the Bank, thus the complainant felt cheated - HELD THAT:- It is an admitted case that after receipt of the notice under Section 138 N.I. Act and after a proceeding under Section 138 N.I. Act, which had been filed against the complainant, the complainant chose to file this complaint, which is the subject matter of this case. The Hon'ble Supreme Court in the case of SUNIL KUMAR VERSUS ESCORTS YAMAHA MOTORS LTD. AND ORS., [ 1999 (10) TMI 749 - SUPREME COURT ] , on amongst other, has held that a complaint and FIR after filing a complaint case under Section 138 N.I. Act, will amount to be an abuse of the process of the court. The complaint has been filed by the complainant by way of his defence to the proceeding under Section 138 N.I. Act, in which he is an accused. Further, the defence of the petitioner, which is the subject matter of the complaint, has been tested by two courts, i.e. Magistrate and the Sessions Judge and both of them rejected his version. The court below thus, has wrongly taken cognizance of offence under Sections 406/34 of the Indian Penal Code, and has issued summon to this petitioner. - application allowed.
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