TMI Tax Updates - e-Newsletter
August 25, 2022
Case Laws in this Newsletter:
GST
Income Tax
Customs
Corporate Laws
Insolvency & Bankruptcy
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
Highlights / Catch Notes
GST
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Validity of adjudication orders - not following the statutory provisions as enshrined under JGST Act - a proper show cause notice under Section 73 (1) of the JGST Act and proper opportunity of hearing was not afforded to the petitioner before the adjudication order was passed covering the tax period from July, 2017 to March, 2018. - Matter restored back - HC
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Agriculture extension services - Benefit of Exemption from GST - the applicant, through mara mitras, provides education and training to the farmers for cultivation of plants / trees, by applying scientific research and knowledge. All the other activities of the applicant carried out through mara mitras from selection of saplings to assisting in transportation & planting, to monitoring the survival of plants are related to agricultural extension activity. Thus the services of the applicant are covered under agricultural extension services. - AAR
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Classification of goods - Benefit of exemption from GST - parts & accessories suitable for use solely with the hearing aids - the exemption is applicable only to the supply of goods described under column (3) and not to all the goods falling under the corresponding entry in column (2) - It is clearly evident from the entry no.142 that the said entry covers only goods described as “hearing aids” and not the “parts & accessories of the hearing aids”. Thus the entry is not applicable to the instant case. - AAR
Income Tax
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Assessment u/s 153A - Authorisation and assessment in case of search or requisition - Constitutional validity of Section 292CC - As however a fact that the CIT(A) and ITAT cannot consider the “reason to believe” or “reason to suspect” on merit, but was only for limited purpose. In view of the above, even if the explanations to the provisions referred to above have been added by the Finance Act, 2017, it cannot be said to be offending Articles 14, 19 or 21 of the Constitution of India and otherwise retrospectivity of the amendment is permissible unless it remains otherwise unconstitutional. Thus, we summarily reject the challenge to the addition of Explanations to Sections 132(1), 132(1A) and 132A(1) of the Act of 1961 by the Finance Act of 2017 and hold it to be constitutionally valid. - HC
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Reopening of assessment u/s 147 - re-assessment proceedings have been initiated beyond a period of four years - there has been full disclosure by the assessee in relation to the issues flagged in the reasons for re-assessment and the Department has not in this case discharged the statutory burden as set out in the proviso to Section 147. The impugned proceedings are held to be barred by limitation and the impugned orders are quashed. - HC
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Search u/s 132 - Entitlement refund of the seized cash which is otherwise declared ‘unaccounted money’ and taxed in the hands of the searched person - This Court does not find any fault with the department of having refused to release the seized amount at the relevant point of time or even the refund thereafter. At the same time, declaring the income in the case of the writ- applicant being not taxable, will not ipso facto result into refund of the seized cash, which has otherwise been realized from the searched person. - HC
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Deduction u/s 54F - Denial of deduction as building was constructed for commercial purposes - It is clear that even before the building was let out on lease, the structural changes were made to make it suitable for running a hostel. As we held in the preceding paragraphs that the need to have such a huge building for a single dwelling unit is not established, and at the same time the demarcation for multi-dwelling units is not possible in the structure of the building. - the assessee constructed the building for commercial purposes only. The findings of fact recorded by the authorities below do not warrant any interference and we accordingly uphold the same. - AT
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Addition u/s 69C - payment of License Fee - When the AO has accepted the gross sales reflected by the assessee in its ledger account and also not doubted the License Fee shown in the ledger account, there was no occasion to deny the benefit of the payment of License Fee which was reduced from the gross sales by the assessee. - AT
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TP Adjustment - MAM selection - A categorical finding was given that the advertisement publicity and business development expenses are not at all related to the distributor function of purchase and sale of online media transaction. The finding was also given that assessee is a startup company and is expanding its operations in India, therefore, It incurred such expenses for increasing its valuation. - Order of CIT(A) affirmed - AT
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Capital gain - assessee has not received any sale consideration - Since the property was registered from the seller to the buyer and the landlord registered the sale transaction as completed, it gives rise to capital gains as defined u/s 2(47) of the Act and attracts short term capital gains u/s 45 of the Act. On this aspect, the assessee has not filed any evidence to establish that the buyer did not present the cheques in the bank due to some personal reasons - AT
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Addition u/s 69 - cash deposits unexplained - the authorities below ought to have given a clear finding regarding withdrawals made by the assessee during the year under consideration. - the assessee deserves to get benefit of tele-scoping if the benefit of tele-scoping is allowed then the entire addition would not survive. - AT
Corporate Law
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Jurisdiction - power of High Court in issuing extra-ordinary directions - Investigation under the provisions of Section 212 and Section 219 of the Companies Act, 2013 - At this stage, the Union Government was only ordering an investigation and it would be inappropriate to place a burden of recording elaborate reasons when the purpose of the investigation is to ensure that a full enquiry into the affairs of the companies is carried out. - The High Court was not justified in staying the investigation and in passing the consequential directions which have been passed in the impugned orders at the interlocutory stage - SC
Indian Laws
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Dishonor of Cheque - requirement of payment of interim compensation - The remedy for failure to pay interim compensation as directed by the court is thus provided for by the Legislature. The method and modality of recovery of interim compensation is clearly delineated by the Legislature. It is well known principle that if a statute prescribes a method or modality for exercise of power, by necessary implication, the other methods of performance are not acceptable. - SC
IBC
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Approval of Resolution Plan - Sub-section (1) of Section 31 of the I&B Code, 2016 - The Committee of Creditors invariably examine the Resolution Plan and an assessment is made through their team of experts in that regard - Further, there is no such mechanism under the Code that gives the right to the Unsuccessful Resolution Applicant to challenge the score granted as per the evaluation matrix prepared by the CoC and the Resolution Professional as per the provisions of CIRP Regulations. - AT
Service Tax
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Levy of service tax - Works contract services - demand on the basis of 26AS statements - it is found that the show cause notice was issued in violation of instruction issued by CBIC as observed by the various High Courts the instructions are mandatory in the instant case also the instruction were not complied with. The Departmental instructions are binding on the departmental officers. Therefore, any action taken in violation of the instructions is to be treated as nonest. - AT
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Levy of Service Tax - Intellectual Property Service - permission granted to the CBUs / TMUs to affix the brand name / trade name belonging to them on the IMFL manufactured - The ultimate beneficiary of the technical know-how are the intellectual property if any for that matter is the appellant themselves and therefore, it is incorrect to say that there is any transfer of temporary leasing of intellectual property. Therefore, the entire case of the Department is based on a false surmise. - AT
Articles
Notifications
GST - States-
54/GST-2 - dated
23-8-2022
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Haryana SGST
Amendment of notification no. 17/GST-2, dated 31.03.2022 to implement e-invoicing for the taxpayers having aggregate turnover exceeding Rs. 10 Cr. from 1st October, 2022 under the HGST Act, 2017.
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51/GST-2 - dated
23-8-2022
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Haryana SGST
Amendment of notification no. 03/ST-2, dated 09.01.2018 to extend the waiver of late fee for delay in filing FORM GSTR-4 for FY 2021-2022 under the HGST Act, 2017.
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50/GST-2 - dated
23-8-2022
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Haryana SGST
Amendment of notification no. 57/GST-2, dated 26.04.2019 to extend the due date of furnishing FORM GST CMP-8 for the quarter ending June, 2022 till 31.07.2022 under the HGST Act, 2017.
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49/GST-2 - dated
23-8-2022
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Haryana SGST
Notification under first proviso to section 44 to exempt taxpayers having AATO upto Rs. 2 Crores from the requirement of furnishing annual return for FY 2021-2022 under the HGST Act, 2017.
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S. R. O. No. 818/2022 - dated
18-8-2022
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Kerala SGST
Seeks to amend Notification G.O.(P) No.24/2018/TAXES. dated 9th March, 2018
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S. R. O. No. 767/2022 - dated
2-8-2022
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Kerala SGST
Waiver of interest for some specified Electronic Commerce Operators
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G.O. Ms. No. 127 - dated
2-8-2022
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Tamil Nadu SGST
Amendment in Notification No. II(2)/CTR/232(h-5/2020, dated 13th April, 2020
Circulars / Instructions / Orders
News
Case Laws:
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GST
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2022 (8) TMI 978
Liability of Interest - whether liability of interest under Section 50 of the JGST Act can be raised without initiating any adjudication proceeding either under Section 73 or 74 of the JGST Act in the event assessee has rai sed a dispute towards liability of interest? - HELD THAT:- The reference may be made to the case ofMAHADEO CONSTRUCTION CO. VERSUS THE UNION OF INDIA, ASSISTANT COMMISSIONER, CENTRAL GOODS SERVICES TAX AND CENTRAL EXCISE, SUPERINTENDENT, CENTRAL GOODS SERVICES TAX AND CENTRAL EXCISE [ 2020 (4) TMI 666 - JHARKHAND HIGH COURT] wherein this Court has held that it appears that if any assessee disputes the liability of interest under Section 50 of the JGST Act then the revenue will have to follow the specific procedure as stipulated under Section 73 or 74 of the JGST Act. In the instant case admittedly a notice was issued to the petitioner dated 6.11.2018 thereafter, the petitioner duly replied in form of objection with regard to non payment of interest vide its reply dated 9.1.2019. However the respondent department vide letter dated 28.1.2019 repeated its earlier stand and refused to accept the petitioner s stand and the petitioner was directed to pay the balance amount of Rs.40,71,403/- towards interest payment after adjustment of refund amount sanctioned in favour of the petitioner. Thus, it clearly transpires that the respondents have not followed the procedure as enshrine d in Section 73 or 74 of the JGST Act. Thus the issue involved in the writ applications is squarely covered by the decision passed by this Court in the case of Mahadeo Construction. The matter is remitted back to the re venue to initiate a fresh proceeding with regard to the liability towards interest under Section 50 of JGST Act in accordance with law as stipulated in JGST Act. It goes without saying that after following the procedure and dependant on the proceedings, fresh refund order be issued in accordance with law - application allowed.
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2022 (8) TMI 977
Detention of goods alongwith the vehicle - detention of goods on the ground that same was not covered by valid documents - Section 129 of the Central Goods and Services Tax Act, 2017 - HELD THAT:- The provisions of Section 129 of the Central Goods and Services Tax Act, 2017 dealing with detention, seizure and release of goods and conveyances in transit, permit the release of the goods upon payment of penalty, equal to 200 percent. The petitioner, on instructions, submits that the petitioner is willing to furnish a bank guarantee, in terms of the provisions of Section 129(1)(a) of the Act and the learned Government Advocate, on instructions, would submit that nothing stands in the way of the respondent accepting the bank guarantee - the petitioner is granted liberty to furnish bank guarantee in terms of Section 129(1)(a) of the Act, upon furnishing of which impugned order dated 28.06.2022, will stand quashed. Petition disposed off.
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2022 (8) TMI 976
Disallowance of CENVAT Credit, carried forward by filing TRAN-1 - Section 140 of CGST Act, 2017 - HELD THAT:- There is a distinction between CENVAT Credit carried forward from the previous regime and the Input Tax Credit specifically mentioned in Section 73 of the CGST Act. Based on these submissions, the very jurisdiction of the Adjudicating Authority under CGST Act, 2017 in disallowing the CENVAT Credit available to the petitioner, has been questioned. It is submitted that the proceeding being without jurisdiction any recovery of tax or penalty pursuant thereto would be improper in the eye of law. Learned counsel for the Respondent CGST Mr. Amit Kumar has opposed the prayer. He has referred to the wordings of Section 73 of CGST Act, 2017 wherein the proper officer is empowered to initiate proceeding for wrongful availment or utilization of Input Tax Credit. However, he seeks and is allowed three weeks time to file counter affidavit. One week time thereafter is allowed to the petitioner to file reply, if so advised. List the case on 15.09.2022.
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2022 (8) TMI 975
Validity of adjudication orders - not following the statutory provisions as enshrined under JGST Act - Service of notice - specific case of the petitioner is that no show cause notice, summary of show cause notice, adjudication order and summary of order was ever served to the petitioner - principles of violation of natural justice - HELD THAT:- Even after going through the entire order sheet it clearly transpires that on 16.05.2019 there was an order for issuance of DRC-01 but after that there was no mention of issuance of DRC-07; rather all of a sudden, 08.09.2021, there was a direction to issue DRC-13. This clearly goes to show that there is serious discrepancy and incongruity in the assessment proceedings, inasmuch as, there is no whisper of issuing DRC-07. Thus, it clearly transpires that a proper show cause notice under Section 73 (1) of the JGST Act and proper opportunity of hearing was not afforded to the petitioner before the adjudication order was passed covering the tax period from July, 2017 to March, 2018. There is no other document to suggest that the petitioner was given due opportunity of hearing, inasmuch as, in the notice issued under notice under Section 73 of the Act, in the column of date time and venue of personal hearing it was indicated by the respondents as NA which means not applicable. This clearly indicates that no opportunity of personal hearing has been given and merely a form has been issued just to cover up the discrepancies committed by the respondent-State. Thus, it clearly transpires that the statutory requirements as enshrined under Section 73 and 75 of the JGST Act has not been followed and as a matter of fact principles of natural justice has also not been followed and thus, both these writ applications are maintainable - the impugned adjudication order in both these writ application are not in accordance with the procedure prescribed in law and deserves to be quashed and set aside on the ground of non-compliance of statutory provisions of the JGST Act and for non-compliance of principle of natural justice. The matter is remitted back to the adjudicating authority to issue a fresh show cause notice and after giving due opportunity to the petitioner pass an order afresh - application allowed.
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2022 (8) TMI 974
Furnishing of status reports to the counsel for the petitioners - installation of GSTN portal - HELD THAT:- In this exercise, Infosys, which has installed the GSTN portal and is also responsible for maintaining it, will also be involved. The concerned representative of Infosys will participate in the meetings convened with Mr Agarwal, Mr Singh and Mr Naqvi. Infosys is represented by Mr Bagaria, senior advocate with Mr Debnath - the other technical team is represented by Tech Mahindra. It is exhorted that the technical teams of both Infosys and Tech Mahindra, to also, participate in the meetings - list the matter on 26.09.2022.
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2022 (8) TMI 973
Cancellation of registration of petitioner - allegation of non existent firm and not conducting business from the principal place of business and are engaged in availing/passing on fraudulent ITC - section 30 of the Central Goods and Services Tax Act 2017 - HELD THAT:- As per section 30 of the Act, any aggrieved person, whose registration is cancelled by the proper office on his own motion, may apply to such officer for revocation of cancellation of the registration in the prescribed manner within thirty days from the date of service of the cancellation order registration. When the application is already filed and has remained undecided, the proper course to be followed by this court would be to require the competent authority of the respondents to decide the said revocation application treating it to have been made in accordance with section 30 of the Act more particularly with regard to the time limit within which it was required to be made. The competent authority of the respondent is hereby directed to take a decision in accordance with law on the said revocation application within a period of six weeks from the date of receipt of this order - Petition allowed.
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2022 (8) TMI 972
Maintainability of Advance Ruling application - Levy of GST - donation amount - rate of GST applicable on the said donation is 18% or not - HELD THAT:- Advance ruling can be sought under Section 97 only for supply of goods or services or both being undertaken or proposed to be undertaken by the applicant. Supply, as per Section 7(1), includes all forms of supply of goods or services or both, made or agreed to be made for a consideration by the applicant in the course or furtherance of business. In the instant case the applicant admittedly is not involved in supply nor intends to supply any goods or services or both to the donor and thus the first limb of the Section 7(1) is not fulfilled. Also admittedly there is no quid pro quo involved to treat the amount as consideration and there is no business relationship between the donor and the applicant and hence the receipt of donation is not towards any supply - the applicant admittedly is neither undertaking nor proposed to undertake any supply of goods or services or both to the donor in respect of the donation received and thus there is no supply in terms of Section 7(1) of the CGST Act 2017 and hence the instant application does not qualify as an application for advance ruling in terms of Section 97 read with Section 95(a) and Section 7(1) of the Act, ibid, and is liable for rejection in terms of Section 98(2) of the CGST Act 2017. The application is rejected as inadmissible, in terms of first proviso to Section 98(2) of the CGST Act 2017.
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2022 (8) TMI 971
Agriculture extension services - Benefit of Exemption from GST - service contract - agriculture extension services for agro forestry is being carried out by Isha Outreach in collaboration with the Forest Department, Horticulture Department, Rural Development Panchayati Raj Department and Sericulture Department of Government of Karnataka - HELD THAT:- The applicant furnished a copy of service contract with M/s Isha Outreach, Coimbatore, from which it is observed that the applicant appoints Mara Mitras who are Agriculture Extension Workers (AEW), to educate train farmers with regard to agro forestry by applying scientific research and knowledge. They also appoint Taluka Managers, District Managers and the Project Managers for coordinating and supervising the works under the project. In terms of service contract the applicant allocates the Mara Mitras to the taluka or gram panchayat on need basis. Mara Mitras, then visit the farmers in their allocated jurisdiction to enroll them into CC promoted agroforestry schemes, register demand for saplings and document the data - from the scope of work it is seen that the applicant through their mara mitras not only educate and train farmers with regard to agro forestry through scientific research and knowledge, but are also involved in hand holding the farmers from recording demand for saplings, picking up the samplings from nurseries to their plantation and also monitoring post plantation survival. Whether the activities of the applicant are covered under Agriculture Extension services? - HELD THAT:- In the instant case, the applicant, through mara mitras, provides education and training to the farmers for cultivation of plants / trees, by applying scientific research and knowledge. All the other activities of the applicant carried out through mara mitras from selection of saplings to assisting in transportation planting, to monitoring the survival of plants are related to agricultural extension activity. Thus the services of the applicant are covered under agricultural extension services. In the instant case the farmers are into cultivation of various plants for agricultural produce and the services of the applicant are agricultural extension services and hence are exempted under entry number 57 of the notification.
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2022 (8) TMI 970
Classification of goods - Benefit of exemption from GST - rate of tax - parts accessories suitable for use solely with the hearing aids - exemption by virtue of Sl.No.142 of 2/2017-CT(R) as amended from time to time - HELD THAT:- The hearing aids are covered under heading 9021, under 4-digit classification; Hearing aids, excluding parts and accessories are covered under 9021 40, under 6-digit classification; Frequency modulated hearing aid system used for hearing by handicapped persons in group situation are covered under 9021 4010, under 8-digit classification and remaining are covered as others under 9021 4090. Thus it is clearly evident that the heading 9021 40 covers only the hearing aids but not parts accessories thereof. The parts accessories of hearing aids are specifically covered under heading 9021 9010. Note 2(a) clearly specifies that parts and accessories which are goods included in any of the headings of this Chapter (90) or of Chapter 84, 85 or 91 (other than heading 8487, 8548 or 9033) are in all cases to be classified in their respective headings. In the instant case, the parts accessories of hearing aids are goods that are specifically covered under heading 9021 9010 and hence they merit classification in their respective heading i.e. 9021 9010. Also Note 2(b) implies that it covers only those other parts and accessories which can't be classified in terms of Note 2(a) - In other words Note 2(a) is applicable to the instant case and Note 2(b) has to be considered in case Note 2(a) is not applicable. Thus the parts accessories of hearing aids are rightly classifiable under heading 9021 9010. The exemption is applicable only to supply of goods, the description of which is specified at column (3) of the schedule falling under the tariff item, sub-heading, heading chapter as specified at corresponding entry at column (2). Thus the exemption is applicable only to the supply of goods described under column (3) and not to all the goods falling under the corresponding entry in column (2) - It is clearly evident from the entry no.142 that the said entry covers only goods described as hearing aids and not the parts accessories of the hearing aids . Thus the entry is not applicable to the instant case. It is clearly evident that hearing aids are excluded from entry no.221 of Schedule II, which attracts GST rate of 12%. The only entry that covers the parts accessories of hearing aids is 453 of Schedule III, which attracts the GST @ 18%.
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Income Tax
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2022 (8) TMI 969
Deduction u/s 57 (iii) - interest expenditure and public issue expenses incurred in respect of the funds which gave rise to interest income assessable u/s 56 - Whether the Tribunal was justified in law in upholding the taxation of interest received - HELD THAT:- The interest earned on the deposits was at a time when commercial production had not yet commenced. Admittedly, the interest was from short term deposits made by the Assessee out of the borrowed capital. The question is no longer res integra. A similar question has in fact been answered in favour of the Assessee by this Court by its judgment in M/s. Neelachal Ispat Nigam Limited [ 2021 (11) TMI 685 - ORISSA HIGH COURT] In the said decision, after considering the judgments in Tuticorin Alkali Chemicals Fertilizers Ltd., Madras [ 1997 (7) TMI 4 - SUPREME COURT] ; Commissioner of Income Tax, Bihar II, Patna v. Bokaro Steel Ltd. [ 1998 (12) TMI 4 - SUPREME COURT] and Commissioner of Income Tax v. Karnal Co-operative Sugar Mills Ltd. [ 1999 (4) TMI 7 - SC ORDER] , this Court held that interest earned on short term deposits from the borrowed capital would be capital and not revenue in nature. Consequently, Question (b) is answered in the negative in favour of the Assessee and against the Department. In view of the above decision of this Court holding the interest received on short term deposits from borrowed capital to be capital in nature, the question of treating it as income from other sources does not arise. Therefore, Question (a) need not be answered. Deduction u/s 35AB - Whether on a true and proper interpretation of Section 35AB commencement of manufacture is a condition for allowance of the deduction and the tribunal was justified in law in holding that deduction under the said section was not allowable since manufacture had not commenced even though the Assessee had commenced its business? - HELD THAT:- The deduction is sought of 1/6th of the expenditure on acquiring the know-how. It has been disallowed only because in the previous year in question, the manufacturing activity of the Assessee had not commenced. As explained by the Madhya Pradesh High Court in the aforementioned decision, this is not one of the conditions on which the deduction is allowable. As long as the technical know-how is acquired and payment therefor is made in the same previous year, then irrespective of whether manufacturing commenced during the said previous year, the 1/6 th amount would be eligible to be claimed as deduction Consequently, Question (c) is answered in the negative i.e. in favour of the Assessee and against the Department.
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2022 (8) TMI 968
Assessment u/s 153A - Authorisation and assessment in case of search or requisition - Constitutional validity of Section 292CC inserted by the Finance Act, 2012 alleging it to be violative of Articles 14, 19 and 21 of the Constitution of India - non-disclosure of reason to believe or reason to suspect - constitutional validity of the provisions has been challenged mainly on the ground that they could not have been made retrospectively to take away the existing rights - violation of principles of natural justice - HELD THAT:- The revenue cannot be allowed to take a stand in contradiction to what was taken by them in the earlier W.P and an order without a clarification that the reliance of the statement of witness would be for corroboration of the material collected during the course of search and seizure. It could have been otherwise after affording an opportunity of cross-examination to the assessee, because even for corroboration, the statement was used against the petitioner firm. The loose sheets could not have been relied upon in the absence of supportive evidence to prove it. Therefore, we conclude the issue aforesaid in favour of the assessee and against the revenue. The matter would thus require to be remanded for a fresh assessment. Maintainability of writ petition - Assessment order has been passed in violation of the principles of natural justice as held by us while dealing with the issue aforesaid, the writ petitions to challenge the assessment orders would be maintainable even if we ignore that the constitutional validity of certain provisions has been challenged. In fact, violation of the principles of natural justice would itself be a ground to allow the jurisdiction of this court under Article 226 of the Constitution of India because it violates Articles 14 and 19 of the Constitution of India. It is also when challenge to the authorization of warrant for search has also been made for want of competence of the officer. It is alleging that warrant for search was not issued by the competent officer and, therefore, the search itself would vitiate. In view of the aforesaid, the writ petitions would be maintainable. Constitutional validity of Section 292CC of the Act of 1961 brought by the Finance Act of 2012 giving retrospective effect - Explanations added to Section 132(1), 132(1A) and 132A(1) of the Act of 1961 have been given retrospective effect for the purpose given in the objects and reasons for such amendment. The retrospectivity of the amendment is affecting the case on hand, because at the time when search was conducted, the Explanations introduced by the Finance Act, 2017 were not available. The reason to believe or reason to suspect is to be examined at the time of hearing of the appeal by the CIT(A) or the ITAT, but in view of the addition of Explanations by the Finance Act of 2017, the aforesaid power would not be available to the CIT(A) and the ITAT as such, though the said restriction does not apply to the High Court and the Supreme Court. As however a fact that the CIT(A) and ITAT cannot consider the reason to believe or reason to suspect on merit, but was only for limited purpose. In view of the above, even if the explanations to the provisions referred to above have been added by the Finance Act, 2017, it cannot be said to be offending Articles 14, 19 or 21 of the Constitution of India and otherwise retrospectivity of the amendment is permissible unless it remains otherwise unconstitutional. Thus, we summarily reject the challenge to the addition of Explanations to Sections 132(1), 132(1A) and 132A(1) of the Act of 1961 by the Finance Act of 2017 and hold it to be constitutionally valid. Non consideration of Special Audit Report - The special audit has contained three figures based on the extent of expenses allowable under the Act of 1961, whereas the question of disallowance under Section 37 of the Act of 1961 lies entirely with the assessing authority and can be challenged only on merits before the Commissioner of Income Tax (Appeals). The case of the revenue is that the special audit report is relied by the petitioner only to the extent that there is no link to trace the evidence against the petitioner. The said opinion was given by the special auditor in contradiction. However, these arguments have been raised, but the reasons do not find place in the assessment orders, which very summarily refused to rely on the special audit report. We conclude the issue holding that though the special audit report is not binding on the revenue, the reasons for discarding it have to be recorded by the assessing authority after proper discussion and could not have been discarded summarily, thus needs to be considered appropriately on remand of the case. Validity of warrant of Authorisation - We have gone through the search panchanamas and find that other than one search warrant issued under the authorization of the Additional Commissioner of Income Tax, the other warrants of authorisation were issued by the Deputy Commissioner of Income Tax and other officers below the rank of Additional Commissioner of Income Tax, who are not having authority for issuance of authorisation on their own, unless so authorised by the Principal Director General or Director General or Principal Director or Director or the Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner or Additional Director or Additional Commissioner or Joint Director or Joint Commissioner. The petitioner has raised an issue on the authorisation of the warrants because if the Deputy Commissioner of Income Tax has authorised the warrant of search without authorisation in his favour, it would offend Section 132 of the Act of 1961 and the issue goes to the root of the case. Thus, we find a case to remand the issue to the assessing authority keeping it open to the assesse to raise the argument aforesaid and in that case, the assessee would be disclosed and allowed to peruse the authorisation of warrant of search. It is not only that authorization should be of the competent authority, but it is on satisfaction of the authority that search warrant can be issued and it can be only of the competent officer. Therefore, we hold that if the search warrant was not issued by the competent officer, then it would vitiate the search and, accordingly, the issue aforesaid would be analyzed by the assessing authority while passing the assessment order afresh on remand of the case. It would be in the light of the finding recorded above. Proceedings u/s 153A - As considered the rival submissions of the parties and find that the panchanamas issued by the respondents in certain cases were in the names of three individuals and in some cases it is even in the name of the firm, apart from the three individuals. The material collected pursuant to the search jointly conducted against the three persons and the firm would not require to be dealt with under Section 153C, but would be under Section 153A of the Act of 1961. It is, however, necessary to clarify that if the material collected in the search against such person is used against other person, then proceeding can be taken under Section 153C of the Act of 1961 and not under Section 153A of the Act of 1961. Whether the material collected in the case of search upon the individuals can be considered in the hands of the firm without following the mandate of Section 153C and in the order under Section 153A of the Act of 1961 would be permissible in law is another issue that requires consideration. Thereby on remand, the assessing authority would examine the issue aforesaid. Addition of Income based on same set of material against two assessee - AO has assessed the income with addition of income in the hands of the yard owners and at the same time the same material was used against the petitioner firm and, therefore, one and the same material was used for addition of income in the hands of the yard owner and the petitioner firm. The approach of the same assessing authority in doing so is wholly illegal. In fact, same material could not have been used for addition of income of the yard owner and the petitioner firm. Search was conducted in the joint names of three persons, namely Mr.Prem Kumar, Mr.K.Sreenivasalu and Mr.J.Sekar Reddy, and if the material collected therein was to be used for addition of the income of the petitioner firm, the assessing authority should have arrived at a conclusive satisfaction that the said material belongs to the petitioner firm and represents and discloses its income. Instead of discharging the onus of such satisfaction before using the material against the petitioner firm, the assessing authority strangely first used the same material for addition of income of the yard owners showing it to be their income and in contrast made addition of income on the basis of some material subsequently in the hands of the petitioner firm. The assessment against the yard owners named above was completed under Section 153C of Act of 1961 on 29.8.2021. The same assessing authority thereafter passed the assessment order against the petitioner firm, though prior to it he was satisfied that material found from the search belongs to the yard owners. Therefore, addition of income in the hands of the petitioner firm becomes illegal. The issue aforesaid goes to the root of the case and, therefore, on remand the assessing authority would be directed to make assessment afresh eliminating the material used in the assessment of the yard owners to make addition of income of the petitioner firm. Disallowance u/s 40A(3) - It was not a case where the petitioner firm has claimed certain expenditure where the question of its allowance or disallowance would become relevant. It is a case of computation of income of the petitioner firm by the assessing authority on the basis of certain seized documents comprising loose sheets, etc., keeping the regular books of accounts of the petitioner firm aside. The disallowance under Section 40A(3) of the Act of 1961 could not have applied in these circumstances. We find substance in this argument, however, we are not dealing with quantum of income in this order and the same be considered in remand proceedings. While we hold the provisions of Section 292CC and the Explanations added to Sections 132(1), 132(1A) and 132A of the Act of 1961 to be constitutionally valid, an interference with the assessment orders is made for the reasons recorded above and, accordingly, the assessment orders are set aside with remand of the case to the assessing authority to pass assessment orders afresh and it would be after taking into consideration the findings recorded by this court. The assessee would be at liberty to advance all the submissions in that regard. Writ petitions are disposed of.
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2022 (8) TMI 967
Reopening of assessment u/s 147 - re-assessment proceedings have been initiated beyond a period of four years - HELD THAT:- The return of income filed had been taken up for scrutiny and the respondent assessing officer had, as part of the records, the tax audit report in Form 3CD containing, interalia, appendices 7 and 8. The appendixes set out the particulars of the expenditure incurred under Section 43B also referring to the rates and taxes of land tax, leave encashment, gratuity and others. Specifically, in column No.5, the petitioner makes reference to the amount transferred on demerger of the petitioner company. The sum total of the amounts which is the amount representing income that has, allegedly escaped assessment, as seen from the reasons for re-assessment. The proceedings were concluded by an order of assessment passed under scrutiny on 24.03.2016 after taking note of the submissions of the petitioner. Thus, in light of the discussion as above, we find that there has been full disclosure by the assessee in relation to the issues flagged in the reasons for re-assessment and the Department has not in this case discharged the statutory burden as set out in the proviso to Section 147. The impugned proceedings are held to be barred by limitation and the impugned orders are quashed. The Court makes it clear that there is nothing improper found in the procedure followed by the Assessing Authority in passing of the impugned order of re-assessment.
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2022 (8) TMI 966
Validity of assessment u/s 153A - Whether did not exist any incriminating material for issuing notice under section 153A? - HELD THAT:- Having given our anxious consideration, we are in respectful agreement with the authorities in IBC Knowledge Park Pvt. Ltd. [ 2016 (5) TMI 372 - KARNATAKA HIGH COURT] Kabul Chawla [ 2015 (9) TMI 80 - DELHI HIGH COURT] and Delhi International Airport Pvt. Ltd. [ 2021 (11) TMI 928 - KARNATAKA HIGH COURT] substantial question of law is answered in favour of the assessee and against the Revenue.
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2022 (8) TMI 965
Addition on account of low GP in manufacturing activity as well as trading activity as compared to previous years - Assessment made invoking provisions of section 145(3) - HELD THAT:- The concurrent findings were recorded by the Appellate Authority as well as the Income Tax Appellate Tribunal in holding that the invocation of section 145(3) of the Act and the consequential addition in respect of gross profit by the Assessing Officer was not proper. The findings arrived at were based on the material before the Appellate Authority in the appeal proceedings. The material was appreciated and therefrom the Commissioner of Income Tax (Appeals) could justify fall in the gross profit. The addition was accordingly directed to be deleted by the Appellate Authority and was confirmed by the Tribunal. The finding recorded based on appreciation of materials and documentary evidence are in the realm of finding of fact. No substantial question of law.
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2022 (8) TMI 964
Reopening of assessment u/s 147 - Eligibility of reasons to believe - HELD THAT:- Non-application of mind on the part of the AO while recording the reasons for reopening of the assessment. It also cannot be said that his conclusion was merely based on the observations and information received from the Investigation Wing. AO could be said to have applied his mind to the same. AO could not be said to have merely concluded without verifying the facts that it is the case of reopening of the assessment. We do not find merit in the vociferous submission of the learned counsel appearing for the writ applicant that the contents of the reasons recorded by the AO for the reopening of the assessment is merely an introduction about the investigations conducted by the Investigation Wing, the modus operandi of the entry provided, the summing up of inquiry of the Investigation Wing, the information received from the Investigation Wing etc. We have examined the belief of the AO to a limited extent to look into whether there was sufficient material available on record for the AO to form a reasonable belief and whether there was a live link existing of the material and the income chargeable to tax that escaped assessment. The case on hand is not one where it could be argued that the AO, on absolutely vague or unspecific information, initiated the proceedings of reassessment without taking the pains to form his own belief in respect of such materials.
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2022 (8) TMI 963
Search u/s 132 - Entitlement refund of the seized cash which is otherwise declared unaccounted money and taxed in the hands of the searched person - case of the Revenue that the said entry was made by the firm after the seizure of the cash and the same is clearly borne out from the said book entry itself which narrates the factum of litigation of the seized cash in the Court of CJM - HELD THAT:- It is pertinent to note that nothing has been placed on record by the writ-applicant to suggest that the proceedings undertaken by the department u/s 132 of the Act, were objected to by the writ-applicant at the relevant point of time. In fact, the inaction on the part of the writ-applicant firm as against the statement of the searched person Bhuraram Patel, AO has been made to form a reasonable belief of treating the seized cash in the hands of the searched person Bhuraram, for initiation of the proceedings under Section 153A of the Act as against Bhuraram only. It was only when the said fact was noticed in the proceedings before the Rajasthan High Court challenging the criminal proceedings arising out of Section 457 Cr.P.C. that the papers related to the writ-applicant were placed before the Revenue Department, which culminated into the reopening proceedings u/s 148 - Court further finds that the reopening proceedings in the case of the writ-applicant has been carried out in terms of Section 143(3) read with Section 147 of the Act rather than Section 153C of the Act. Again, there is no challenge to the order declaring the seized cash in the hands of Bhuraram Patel as unaccounted income of the searched person. Even, there is no challenge to the order of penalty and the seized cash being adjusted towards the same. We find that there is no irregularity or illegality in the order passed by the Assessing Officer, treating the seized cash as unaccounted income in the hands of the searched person Bhuraram Patel.. This Court does not find any fault with the department of having refused to release the seized amount at the relevant point of time or even the refund thereafter. At the same time, declaring the income in the case of the writ- applicant being not taxable, will not ipso facto result into refund of the seized cash, which has otherwise been realized from the searched person. It is well-settled legal position that prerogative writs under Article 226 of the Constitution can be issued only in grave cases where the subordinate tribunals or bodies or officers act wholly without jurisdiction, or in excess of jurisdiction, or in violation of principles of natural Justice, or refused to exercise jurisdiction vested in them, or there is error apparent on the face of record which has resulted in manifest injustice. As rightly observed that the legal formulations cannot be enforced divorced from the realities of the fact situation of the case. While administering law, it is to be tempered with equity, and if the equitable situation demands after setting right the legal formulations, not to take it to the logical end, the High Court would be failing in its duty if it does not notice the equitable consideration and mould the final order in exercise of its extraordinary jurisdiction. Any other approach would render the High Court a normal Court of Appeal, which it is not.
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2022 (8) TMI 962
Denial of natural justice - CIT-A not granting the proper opportunity being heard before dismissing the appeal in merit - HELD THAT:- As per the assessee, the documents now sought to be filed by way of additional evidence were not sought by the lower authorities and only in the remand proceedings, the Assessing Officer required the bank statements. It is submission of the assessee that before the compliance could have been made, the learned CIT(A) dismissed the appeal filed by the assessee. In view of the aforesaid submissions, additional evidences filed by the assessee are admitted. As is evident from the record, assessee filed detailed submission before the CIT(A), in respect of same, remand report from the AO was also sought. However, as per assessee, appropriate reply could not be filed by the assessee against the aforesaid remand report in time due to change in jurisdiction of the learned CIT(A) from Pune to Thane. In view of the above, we deem it appropriate to remand this issue to the file of learned CIT(A) for de novo adjudication after granting proper opportunity to the assessee of hearing and to file reply against the remand report of the AO. Appeal by the assessee is allowed for statistical purpose.
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2022 (8) TMI 961
LTCG - sale of premises (Godown) as the appellant could not show the evidence u/s. 50 - HELD THAT:- As per the assessee, the report from the aforesaid Department Valuation Officer, was sought by the learned CIT(A) during the pendency of its appeal. Since the impugned addition under the head Long Term Capital Gain , which was upheld by the learned CIT(A), has been made on the basis of value determined by the Registration Authority without taking into consideration the report of the Department Valuation Officer, we deem it fit and proper to restore this issue to the file of the AO for de novo adjudication. The Assessing Officer is directed to compute the capital gains after considering the value, as determined by the Department Valuation Officer. As a result, grounds no.1, 2 and 3, raised in assessee‟s appeal are allowed for statistical purpose. Disallowance of cost of improvement as claimed by the assessee - HELD THAT:- In the present case, we find that the claim of the assessee was denied by the lower authorities in the absence of proof with regard to cost of improvement claimed by the assessee. Even during the hearing before us, apart from showing certain photographs, the assessee has not produced any supporting bills, vouchers, source of funds, etc., in respect of its claim on account of cost of improvement and in the absence of these supporting details, we do not find any infirmity in the orders of the lower authorities denying the claim of the assessee on this issue. Accordingly, ground no.4, raised in assessee‟s appeal is dismissed.
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2022 (8) TMI 960
Deduction u/s 54F - Denial of deduction as building was constructed for commercial purposes - AO recorded that except reiterating their original stand that the building in question was constructed for residential purpose, photographs would establish the same, the building is located in predominantly a residential area with all the facilities necessary for a residential building, assessee did not furnish any of the information sought by the learned Assessing Officer - HELD THAT:- As on the date of verification, the physical features of the building and actual usage of the same do not suggest that the same is a residential building, but it is only a commercial building fit for running a hostel. There is no evidence whatsoever produced by the assessee to suggest that originally the building was constructed for residential house, but subsequently it was converted for commercial usage. Law presumes the continuance of a state of affairs once shown to have prevailed, and such presumption of continuity can be drawn not only forward but backward also. Court can presume that such state of affairs might have existed in past also unless discontinuity is proved. In the instant case, it is found that the building in question is a structure, not fit for residential house, but to exploit the same for commercial usage. Absolutely, there is no affirmative evidence on record to show that originally, the plaintiff constructed the building as a residential building but subsequently, it was converted into a hostel at the request of the lessee. The contention of the assessee that the tenant used the property according to their convenience is also appears to be not acceptable because by way of agreement the lessee was prevented from making any additional alterations or structural changes of any kind whatsoever in such building. It is therefore clear that even before the building was let out on lease, the structural changes were made to make it suitable for running a hostel. As we held in the preceding paragraphs that the need to have such a huge building for a single dwelling unit is not established, and at the same time the demarcation for multi-dwelling units is not possible in the structure of the building. When we look at this fact from the angle of the assessee and for that matter anyone used the building for residential purpose at no point of time, coupled with the fact that the assessee obtained the loan from M/s Narayana Educational Society even before the building is complete shows that the construction of the building itself was for commercial purposes. The lessee is prevented by way of agreement from making any structural changes and also that the lessee shall obtain requisite permission of the concerned authorities for carrying out the business at such premises at their own cost from time to time. All these things cumulatively lead to the inference that the assessee constructed the building for commercial purposes only. The findings of fact recorded by the authorities below do not warrant any interference and we accordingly uphold the same. Consequently we find the grounds of appeal as devoid of merits and dismissed the same. - Decided against assessee.
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2022 (8) TMI 959
Revision u/s 263 by CIT - Deduction u/s 54F - HELD THAT:- When ld. PCIT concluded that the assessee was wrongly taxed for the capital gains which did not accrue to her, then ld. PCIT had no jurisdiction to proceed further under section 263 of the Act and examine the deduction u/s 54F. There was error of taxing wrong person but there was no prejudice caused to the revenue. The ld. PCIT has to be satisfied of twin conditions, namely (i) the order of the AO sought to be revised is erroneous; and (ii) it is prejudicial to the interests of the Revenue. If any one of them is absent then Section 263 cannot be invoked. Every loss of revenue as a consequence of the order of the AO cannot be treated as prejudicial to the interest of the Revenue. It is pertinent to mention that if the AO has adopted one of the two or more courses permissible in law and it has resulted in loss of revenue, or where two views are possible and AO has taken one view with which ld PCIT does not agree, it cannot be treated as an erroneous order and it is prejudicial to the interest of the Revenue, unless the view taken by the AO is totally unsustainable in law. In this regard, we draw strength from the decision of the Hon'ble Supreme Court in the case of Malabar Industrial Co. Ltd. [ 2000 (2) TMI 10 - SUPREME COURT] We do not concur with the findings of the ld. PCIT. Thus the order passed u/s 263 of the Act, by the ld. PCIT is quashed. Hence, the appeal of the assessee is allowed.
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2022 (8) TMI 958
Deduction u/s 80P - activities of the appellant extended to non-farm sector and also to non-members without giving any opportunity to the assessee - disallowing the deduction u/s 80P while recording a finding that the activities of the appellant extended to non-farm sector and also to non-members without giving any opportunity to the assessee - HELD THAT:- While considering a claim of deduction u/s 80P AO has required to conduct inquiry into the factual situation as to the activities of the assessee society and arrived at the conclusion whether benefit can be extended or not in the light of the provisions of sub section 4 to section 80P of the Income Tax Act, in the instant case. We understand that it is appropriate and rather prerequisite to first ascertain the facts of the case before applying the principle laid down by the higher judicial forums as relied upon by both the sides. Considering the contention of the that the appellant assessee has not been granted adequate opportunity of being heard by the Ld. CIT(A), Bathinda while confirming the action of AO while rejecting the deduction u/s 80P and hold that the activities of the appellant extended to non-farm sector and also to non-members and by way of wrong interpretation to the definition of Primary Co-operative Agricultural Rural Development Bank as given in Explanation to section 80P(4) of the Act. In the alternative plea, the assessee required to restore the matter to the CIT(A) to adjudicate the issue of the claim of deduction u/s 80P of the appellant bank by recording a finding of fact afresh by passing speaking order by way of enquiry into the activities of the society bank in consonance to the objectives, law an byelaws as per mandate, particularly whether the activities of the appellant extended to non-farm sector and also the non-members by calling for a remand report from the AO and rebuttal to the appellant assessee. Accordingly, we consider that it is fit case to be remanded to the file of the CIT(A) to pass a fresh order after granting adequate opportunity of being heard to the assessee. The assessee shall cooperate in the fresh proceedings before the CIT(A). Appeal of the assessee is allowed for statistical purposes.
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2022 (8) TMI 957
Computation of Deduction u/s 80P - calculation of gross contractual value - HELD THAT:- In its fact, that the gross receipt should be determined by allowing the reasonable deduction of the items like TDS, VAT, security letter cess and other deduction. Accordingly, the assessee made a correct calculation related to calculation of the contract receipt. Both the Revenue authorities cannot go beyond the jurisdiction of all the orders of Hon ble ITAT. Hon ble ITAT directed denavo assessment it does not mean that the essence of the judgment should be avoided in any means. For, the deduction u/s 80P(2)(a)(vi) of the Act the assessee is eligible. Respectful observation of the order in the case of CIT v. Gurdaspur Hardochhenni Coop. L/C Society [ 2 007 (2) TMI 214 - PUNJAB AND HARYANA HIGH COURT ]. Accordingly, the gross receipt of the assessee is restricted amount to Rs.69,02,988/-. There is no change in the profit per centage. Accordingly, the assessee is eligible u/s 80P(2)(a)(vi).
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2022 (8) TMI 956
Reopening of assessment u/s 147 - Scope of the reasons recorded - Mandatory requirement of Disposal of objections - Change of opinion - HELD THAT:- AO was expected to deal with the factual assertions of such vital nature and give a conclusive finding in this regard in accordance with law - AO has failed to do so. AO has declined to entertain the objection of the assessee only on the abstract reasoning that where no opinion has been formed in the original assessment. On this issue, the question of change of opinion does not arise. We totally disagree with the course adopted by the AO while disposing of the objection. The explanation offered by the assessee is plain and simple and the AO could not have shunned aside such explanation without dealing with it. Before us as well, Mr. Jain, assessee has demonstrated on facts that the additional depreciation was claimed on the per centage of the entitlement due to partial use of assets in the earlier year for lesser number of days. Assessee was entitled in law to claim remaining additional depreciation in the current year when the asset was under use. The admission of the claim by the AO in the original assessment thus cannot be said to be in defiance of law. Clearly, the AO has proceeded on wholly erroneous presumption of facts not being in the nature of liability in the first instance. There being no escapement, the reopening on this count was not justified at all. Adverting to the second reason, we take notice of the plea on behalf of the assessee that the provisions for doubtful debts cannot be termed as unascertained liabilities in the light of the judgment in the case of CIT vs. HCL Comnet Systems Services Ltd., [ 2008 (9) TMI 18 - SUPREME COURT] - The plea of the assessee being the tune of law laid down by the Hon ble Supreme Court, we find merit in the plea of the assessee. A debt being an asset and not a liability, consequential provisions on account of doubtful recovery cannot be alleged to be an unascertained liability as correctly pleaded. Thus, no adjustment was required as per the extant law while computing the book profit on account of impairment / diminution of assets. For arriving at such conclusion, we also notice that clause (i) to Explanation-1 appended to sub Section 2 of Section 115JB does not feature in the reasons recorded and the solitary basis for escapement is allegation towards unascertained liability. As noticed earlier, the provision for doubtful debt does not bear the nature of liability per se and therefore, the foundation for claiming escapement by Assessing Officer is shaken to its roots. As regards provisions of Retirement Benefit, it was contended in the objection that the said provision was on account of leave encashment on the basis of actuarial valuation and therefore the provision was in the nature of ascertained liability in contrast to observation of the Assessing Officer and thus does not qualify for addition/adjustment for the basis of computation of book profit under the special provisions of Section 115JB - We find merit in the aforesaid plea in the light of the factual matrix. The second reason for reopening is also thus without any legal basis. The assessment was completed in the instant case under Section 143(3) of the Act and all these facts were made available before the AO - Assessing Officer was not justified in making allegation of escapement qua book profit on this score. The third ground for reopening is based on allegation of lower reporting of prior period income - action of the AO in the original assessment cannot be assailed and the allegation of escapement could not have been made in the factual backdrop. The action of Assessing Officer is thus in the realm of review based on change of opinion which is not permissible in law. We thus find justification in the plea of the assessee on this score too as noted. Noticiably, the Assessing Officer has failed to deal with any of the objection raised before him and passed a summary order without dealing with any of the objection by a speaking order as called upon him in the judgment of the Supreme Court rendered in GKN Driveshaft[ 2002 (11) TMI 7 - SUPREME COURT] - This has defeated the very purpose of the procedure laid down in GKN Driveshaft (supra) for meeting the objections raised on behalf of the assessee. Notwithstanding, on scrupulous examination of factual backdrop, we are satisfied that the reasons recorded does not prima facie indicate any actual escapement and does not satisfy the pre-requisites of Section 147 in the instant case where the assessment was completed under Section 143(3) of the Act. The notice issued under Section 148 is without legal foundation and thus requires to be quashed. The re-assessment order framed on the basis of such notice is without sanction of law and thus does not survive. Re-assessment order being bad in law, we do not consider it necessary to go into the merits under challenge on behalf of the assessee.
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2022 (8) TMI 955
Addition u/s 69C - payment of License Fee - explanation of the assessee that net sale after deducting License Fee paid was recorded in the books - HELD THAT:- In the present case, for the year under consideration the assessee instead of debiting the License Fee in the purchase account reduced it from the sales as such the impact on the profitability was NIL because the License Fee if not reduced from the sales then the figure of the sales account will increase with the same amount of the License Fee which was to be debited separately under the head License Fee in the Trading and P L Account. When the AO has accepted the gross sales reflected by the assessee in its ledger account and also not doubted the License Fee shown in the ledger account, there was no occasion to deny the benefit of the payment of License Fee which was reduced from the gross sales by the assessee. In that view of the matter we do not see any justification on the part of the Ld. CIT(A) in sustaining the addition made by the AO. Accordingly the same is deleted. Disallowance on account of possible leakage in the revenue out of the various expenses - HELD THAT:- In the present case it is noticed that the AO disallowed the expenses under the head Wages, Salary, Welfare expenses, Travelling expenses, Misc expenses and Telephone expenses totaling to Rs. 1040710/-. He disallowed 1/5th of the said expenses. However no specific defect was pointed out to substantiate that a particular expense was incurred for non business purposes. CIT(A) also sustained the disallowance of Rs. 1,00,000/- without pointing out any specific instance where the expenses were not incurred for the business purposes. At the same time, some of the expenses were unvouched and in such type of cases personal use out of Travelling, Telephone, Welfare expenses and Misc. expenses cannot be ruled out. The assessee incurred the expenses under these heads amounting to Rs. 27200/-, Rs. 32150/-, Rs. 68520/- and Rs, 35940/- totaling to Rs. 1,63,810/-. We therefore in order to cover any possible leakage in the revenue and to meet the ends of justice deem it appropriate to sustain the disallowance of Rs. 50,000/- out of the aforesaid expenses. Accordingly the assessee will get further relief of Rs. 50,000/-. Appeal of assessee partly allowed.
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2022 (8) TMI 954
Addition of cash deposited in the bank - HELD THAT:- It is a fact that since the assessee has not been able to produce any such evidence to justify the genuineness of the deposit made to the bank account before the authorities below. But the Ld. Counsel appearing for the assessee before us prayed for another opportunity to be given to the assessee to substantiate the genuineness of source of cash deposit in the bank and thus the issue may be remanded to the file of the Ld. AO for deciding the same afresh as contended by him. Thus we find it fit and proper to give a further opportunity to the assessee to submit the source of cash deposit by supporting the evidence for proper adjudication of the matter. We, therefore, dispose of this issue by remitting the same to the file of the Ld. AO to decide the same afresh by passing a reasoned order upon giving an opportunity of being heard to the assessee. Addition for non-deduction of tax in respect of payment made to legal consultant in U.K. - HELD THAT:- Particular documents relied upon by the assessee's counsel as aforesaid we find that for the ends of justice the assessee be given a further opportunity of being heard in order to substantiate the claim for non-deduction of TDS. Hence, we dispose of this ground of appeal by remitting the same to the file of the AO to consider the issue afresh and to pass a reasoned order upon giving an opportunity of being heard to the assessee and upon considering the evidences in respect of the claim made by the assessee in regard to the remittances which the assessee may choose to file at the time of hearing of the matter. This ground of appeal is, thus, disposed of for statistical purposes. Addition on account of non-deduction of tax on rent paid - HELD THAT:- It is the case of the assessee that all the payments were made below the amount and therefore, tax was not deducted. Another opportunity of being heard has been requested to be given to the assessee by the Ld. A.R. before us in order to substantiate the claim of the assessee before the authorities below which has not been controverted by the Ld. D.R. Keeping in view the submissions made by the parties for the ends of justice we are disposing of this ground by remitting the issue to the file of the Ld. AO to consider the same afresh upon giving an opportunity of being heard to the assessee and upon considering the evidences which the assessee may choose to file at the time of hearing of the matter. This ground of appeal preferred by the assessee is allowed for statistical purposes. Addition in respect of disallowance of 1/5th of the ticketing and travelling expenses - HELD THAT:- It appears that before the Ld. AO, nothing has been submitted by the assessee in support of his claim. Before the First Appellate Authority the bank statement substantiating the payment has only been made by the assessee. However, as to how the expenditure is being made as business purpose that has not been clarified before the First Appellate Authority which according to us seems to be justified and hence upheld. This ground of appeal preferred by the assessee thus fails and dismissed. Disallowance of miscellaneous expenses - HELD THAT:- It appears that in the absence of relevant bills/evidences in support this claim made by the assessee the addition was made by the authorities below. However, for the ends of justice we are remitting the issue to the file of the AO to consider it afresh and to pass a reasoned order upon giving an opportunity of being heard to the assessee and upon considering the evidence which the assessee may choose to file at the time of hearing of the matter. This ground of appeal preferred by the assessee is allowed for statistical purpose.
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2022 (8) TMI 953
Exemption u/s 11 - grant of registration u/s 12A - Whether CIT erred in issuing order granting registration which imposed conditions on the basis of which the registration was granted, even though there is no provision under the Income Tax Act which permits the Commissioner of Income Tax to grant the conditional registration - HELD THAT:- There are specific provisions of law which govern the cancellation of registration, and these provisions can neither be diluted or supplemented by the learned Commissioner. The consequences of any lapses by the assessee, even with respect to the points covered by these conditions, cannot simply be, or confined to be, cancellation of the registration, as is stated in the impugned, unless the law specifically so provides. To give a simple example, learned Departmental Representative cannot even seriously argue that if the appellant fails to quote PAN in its communication with the income tax department, this lapse per se can be reason enough for the cancellation of registration under section 12A, but then, going by the words of the impugned order, that is what the impugned order states. That brings home the short point that no matter what the conditions attached to the registration granted under section 12A state, these conditions are to be tested on the scheme of the law, and, if that be so- as indeed is the case, these conditions serve no purpose in law. We are therefore unable to see any legally sustainable merits in the approach adopted by the learned Commissioner. Ld.Commissioner s guidance about the conduct of the assessee- which is what in substance, the conditions attached to the registration, signify, cannot be treated, no matter how well intended is it, as a condition attached to the registration, nor this fact per se will govern, or limit, the consequences of lapses in this regard. While the assessee will be well advised to bear in mind and carefully examine his conduct vis- -vis the points made by the Commissioner, these observations cannot be construed as legally binding in the sense that non-compliance with such guidance will not have any consequence, unless and beyond what is specifically envisaged by the statute- such as in Section 12AB(4) and (5) as indeed elsewhere, nor the implications of not doing what is set out in the conditions will remain confined to the cancellation of registration when the law stipulates much harsher consequences. To this extent, and in these terms, the legal effect of these conditions, as visualized in the conditional grant of registration dated 24th September 1991, stands vacated. Appeal is allowed in the limited terms indicated above, and subject to the observations as above.
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2022 (8) TMI 952
Reduction into book loss owing to disallowance made u/s 14A - Whether the provisions of section 115JB are attracted only when there are book profits? - HELD THAT:- We are of the considered view that the assessee seeks to agitate the reduction into book loss owing to disallowance made u/s 14A - However, the reduction to book loss has no potential to cause any prejudice to the assessee at present or in future as per scheme of the act. Hence, the litigation by the assessee is a futile exercise. Therefore, we are not inclined to engage in disposal of such litigation on merit. Hence, the grounds raised by the assessee are rejected.
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2022 (8) TMI 951
Assessment of the returned agricultural income as income from other sources - HELD THAT:- Assessee, was unable to answer as to why the assessee, maintaining accounts, duly audited, wherein both the determinants of agricultural income (receipt expenditure) stand booked could not produce any evidence in respect of carrying out agricultural activities, including qua agricultural inputs. He was specifically asked by the Bench if the vouchers in this respect, i.e., material inputs; labour; electricity, etc. were available or produced for the other years being relied upon, to again no answer. Now, if these evidences were available for the other years which makes them thus distinguishable, why could not the same be produced for the current year, which appears to be the first year when the same were called upon to by the assessing authority. And if not available, the acceptance of the assessee s claim for the relevant years has no evidentiary value. As regards the sale proceeds from Krishi Upaj Mandi Samiti, the same is again to no consequence as the sale of agricultural produce does not in any manner show that the same stands cultivated by the seller, for which the assessee ought to have produced the revenue record. The assessee s claim is wholly unproved. The returned income is, accordingly, directed to be assessed as income from other sources. Unexplained cash credits - HELD THAT:- We are completely at loss to understand the Revenue s case. The very fact that the money credited by VSPL to the assessee s account in it s books, originates from the assessee s bank account; rather, ought to be the reason for regarding the source of investment or movable property (in the form of loan) as explained instead of unexplained. Further, the same, duly accounted for in their regular accounts, both by the debtor (lendee) (VSPL) and the creditor (lendor), what, then, is the issue? The only concern and, further, for the reason that the source of the said credit/s is not referable to the assessee, is for the balance credit of Rs. 3 lacs. The ld. CIT(A) confirmed the same in the absence of any corroborative evidence furnished by the assessee. How could, one wonders, the assessee furnish one such, when, as per it, it has not made any investment, nor does the Revenue have any evidence in respect of the said investment as being by the assessee? The burden of proof in relation to a sum representing a transaction of the nature specified under s. 69/69A/ 69B/ 69C, etc., is on the Revenue. It is only when the Revenue has with it material exhibiting an investment/asset/expenditure, etc. qua the assessee, that the latter can be called upon by it to explain the nature and source thereof and, in the event of it being not satisfactorily explained, deem it as the assessee s income. In the instant case, the evidence relied upon, being a credit in the assessee s name in the books of a lendee, stands explained by the assessee who cannot be called upon to prove a negative, as not attributable to it, and which stands identified by the debtor-lendee, a related concern, as being received from another, correcting it s accounts in admission of the mistake, corroborating the assessee s claim/s. There is thus no adverse material with the Revenue in its respect. We find no merit in the said addition and, accordingly, direct its deletion. Disallowance of labour expenses at 5% - HELD THAT:- As claim was not supported by proper bills or vouchers. The disallowance at 5% was accordingly made by him. And confirmed on the same basis; the assessee being unable to controvert the AO s finding of the labour expenditure being not supported by proper vouchers. The fact that the tax had been deducted would not by itself absolve the assessee from maintaining proper accounts. Even before us, the assessee s case continues to be the same, and which we find unacceptable for the same reasons as inform the order by the ld. CIT(A). We decide accordingly. Unexplained credit in the assessee s accounts - difference in credit entries in the accounts of MRI to the assessee s account therein - HELD THAT:- It is only on the assessee handing over the drafts thereto, that MRI recorded it in it s books. For all we know, it may have been allowed credit in respect of the said bank drafts by MMC, as in fact appears to be the case, even as explained during hearing, with the assessee making a further payment of Rs. 29.50 lacs thereto during the current year, debiting it, again, to the account of MMC, to no explanation. MMC could not possibly allow credit against the impugned sums to two parties, both of which record the same as payments thereto in their accounts. Quizzical indeed. None of the payments , it is apparent, have been realized by MMC during the preceding year. How has the amount been adjusted in the assessee s accounts in future, with even the account for the current year, i.e., f.y. 2013-14, being conspicuous by its absence, is also relevant. The matter requires a thorough and proper examination, also bringing on record, where and the extent required, evidence from both MMC MRI; the assessee being wholly unable to explain the transactions and, as appears to us from his submisions by Shri Usrethe, in a confused state of mind. The matter being wholly indeterminate, we, vacating the findings by the first appellate authority, set aside the matter for fresh adjudication by the AO, who shall decide it in accordance with law upon issuing definite findings of fact, and after allowing the assessee a reasonable opportunity of being heard, as well as, as afore- stated, seeking evidence from MMC MRI in the matter. Disallowance of bonus expenses - HELD THAT:- CIT(A) agreed with the AO in principle, but found no reason to extend the disallowance to other names, no doubt in respect of which had been expressed by the AO. He, accordingly, restricted the disallowance to the payments against the names at serial nos. 28-30, allowing the assessee relief for Rs. 6.25 lacs. Even as we do not find the inference drawn by the ld. CIT(A) as infirm, in our view he ought to have under the circumstances caused further investigation in the matter, or conducted it himself; his powers being coterminous powers with the AO. We further observe that the payments, beginning serial no. 28, extend to serial no. 32, aggregating to Rs. 36,500, with none being for Rs. 5000, as presumed by the ld. CIT(A). We, accordingly, direct the deletion at Rs. 6.035 lacs, and confirm the disallowance at Rs. 36,500. We decide accordingly.
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2022 (8) TMI 950
Assessment u/s 153A - Whether incriminating material seized in search? - HELD THAT:- No addition is called for in the absence of any incriminating material found and seized during the search seizure operation conducted u/s. 132. Addition of interest income from HSBC Bank Account - On perusal of the record, we find that the amount of Rs. 16,23,822/- mentioned by the Ld. CIT(A) be read as Rs. 12,22,265/- which was addition made by the AO on account of interest received as per para No. 3.4 of the Assessment Order. Not allowing the benefit of loss incurred by the assessee on sale of investment - With regard to loss incurred the matter is being referred to the file of the AO to determine the type of loss viz. speculative, non-speculative or business and allow the same in accordance with the provisions of law. Appeals of the assessee are allowed
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2022 (8) TMI 949
Revision u/s 263 - During the survey operations, deficit cash balance was found in the hands of the assessee - HELD THAT:- AO has carefully considered the additional income offered by the assessee during the survey proceedings and concluded that the assessee has paid the tax including the undisclosed income detected during the survey. Explanation 2 to section 263 of the Act requires the AO to cause enquiries and verification before passing the assessment order. We find from the order of the AO that the show cause notice was issued to the assessee to disclose the undisclosed income and pay tax accordingly. The assessee has rightly discharged his duty of disclosing the undisclosed income as intimated to the assessee by the AO and paid taxes accordingly, which was also recorded in the order of the AO. We, therefore, find that the order of the AO is neither erroneous nor prejudicial to the interest of the revenue. We hereby set aside the order of the Ld. Pr. CIT passed u/s.263 of the Act and restore the order of Ld. AO - Appeal of assessee allowed.
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2022 (8) TMI 948
Determination of income - applying the G.P. rate of 8% on the entire deposit made by the assessee - whether peak credit is not applicable where deposits remain unexplained under section 68 of the Act? - HELD THAT:- As there is a clear cut findings given by the CIT(A) that the assessee during the course of assessment proceedings as well as appellate proceedings inspite of repeated request he did not produce bills/vouchers relating to sales and purchase, purchase and sales ledger etc. and accordingly, the AO has no other option but to assessed the income of assessee by adopting gross profit of 8% on total deposits and estimated the business income of assessee accordingly. As the appellant has completely failed to give any satisfactory reply about the proof of the nature of his business, therefore, AO had no other option but made an addition and the same was confirmed by the ld. CIT(A) also. In the light of the above facts and circumstances, we note that conclusion arrived by the ld. CIT(A) does not require any interference therefore, we confirmed the orders of ld. CIT(A) and accordingly dismiss the grounds raised by the appellant.
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2022 (8) TMI 947
Estimation of income - Bogus purchases - CIT(A) restricting the disallowance made on account of bogus purchases at 12.5% - HELD THAT:- We find that The report of the task group for diamond sector submitted to Department of Commerce suggested that the net profit that could be derived in the diamond manufacturing ranges from 1.5% to 4.5% and in trading activity thereof, the profitability range is 1% to 3%. This Tribunal in number of times had placed reliance on the said task force report and had estimated the profit percentage within the aforesaid range. Considering the documents submitted by the assessee and also considering the fact that assessee had not proved the veracity of the purchases beyond reasonable doubt in the instant case, we hold that estimation of profit percentage @3% of value of disputed purchases would meet the ends of justice. Accordingly, the grounds raised by the assessee are partly allowed.
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2022 (8) TMI 946
TP Adjustment - MAM selection - justification of Resale Price Method (RPM) as most appropriate method - HELD THAT:- The assessee is primarily in the business of buying and selling of online advertisement space and act as a distributor. The Function, Assets and Risk ( FAR ) analysis placed before the lower authorities also show that assessee is acting as a distributor. Therefore, resale price method generally should have been adopted as the most appropriate method. The learned Transfer Pricing Officer because of the level of expenses incurred by assessee came to conclusion that assessee is providing value added services however, no such services were identified by the learned Transfer Pricing Officer. The learned CIT(A) following the decision in case of CIT vs. L'Oreal India Pvt. Ltd [ 2015 (2) TMI 407 - BOMBAY HIGH COURT] confirmed that in case of assessee, resale price method is the most appropriate method for benchmarking of international transaction. A categorical finding was given that the advertisement publicity and business development expenses are not at all related to the distributor function of purchase and sale of online media transaction. The finding was also given that assessee is a startup company and is expanding its operations in India, therefore, It incurred such expenses for increasing its valuation. The above findings are not controverted by the Revenue authorities. We also do not find any infirmity in the order of the learned CIT(A) and therefore, we confirm his order. Accordingly, ground no.1 to 4 of the appeal of learned Assessing Officer is dismissed.
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2022 (8) TMI 945
TP adjustment - disallowance of cost of administrative support services for internal audit support, clearing and treasury support functions and the disallowance of mark-up of 10% on the cost of administrative support of service received from the AEs - only reasoning given by the lower authorities to disallow the payments made by the assessee towards treasury clearing services to M/s IBG LLC was that similar services had been rendered to the assessee by other AEs as well - HELD THAT:- According to us, this could not be the sole basis for upholding the transfer pricing adjustment, as held by this Tribunal, in the case of L Oreal India Pvt Ltd ( [ 2021 (4) TMI 442 - ITAT MUMBAI] - In the decided case, this Tribunal had an occasion to examine as to what is the approach that has to be adopted for intra-group services, including situations where duplicate services have been received from different AEs. We are unable to countenance the reasoning given by the lower authorities to determine the ALP of treasury and clearing services at NIL. Having held so, we however are of the view that the onus still lies upon the assessee to demonstrate that such services had indeed been rendered by the AE and the costs paid to them commensurate with the arm s length principle. In the paper book filed before us, the assessee has only placed the audit questionnaire issued by NSE, inter-office memorandum prepared for internal audit general policies of the company. No material has been placed on record, which would demonstrate the nature of activities and services rendered by M/s IBG LLC for which it was reimbursed costs along with a mark-up. Even in respect of the clearing and treasury services, the assessee has placed only sample three to four email correspondences by way of proof of services rendered by the AE to the assessee. In our considered view, these documents do not offer sufficient proof of any services being actually rendered by these AEs viz., internal audit, treasury and clearing services. In our opinion, mere filing of questionnaire issued by NSE, copies of general office policies, sample correspondences etc., are not sufficient enough to substantiate the nature of services rendered. It is also noted that, the TPO instead of examining the services provided by AEs had stressed more on the corresponding benefit derived by the assessee. According to us therefore, the primary question as to, whether intra group services have been rendered has neither been properly demonstrated by the assessee nor has it been properly analyzed by the TPO, and therefore the question of determination of its arm s length price at this juncture does not arise. We accordingly set aside the issue with regard to determination of ALP in respect of payments made by the assessee to IBG LLC (US) to the TPO for fresh consideration. TPO cannot question the necessity for incurring of the expenses but has to confine his enquiry only with regard to the question whether the price for the services is what an independent enterprise would have paid. In such a situation the question would be to determine as to whether the costs claimed to have been apportioned between the various group companies has not been inflated or whether they are allocated on a proper basis. We deem it appropriate to restore this issue to the file of the TPO/AO for fresh consideration in the light of the directions given above. We therefore allow Ground No. 1 of the assessee for statistical purpose on this issue. The TPO/AO will afford opportunity of being heard to the assessee in the set aside proceedings. Benchmarking of the mark-up of 10% charged by the AEs on the cost of intra-group services rendered by them to the assessee (including the costs whose reimbursements were allowed by Ld. DRP) - It is true that there is no estoppel in law, but at the same time, the assessee is required to explain as to why the TP study in which assessee was considered to be a suitable tested party was now being rejected/discarded or why foreign AE is a better suited tested party. We note that even the basis on which foreign comparables were identified is unclear from the details/secondary study submitted by the assessee. On conspectus of the overall facts and circumstances, and having regard to the fact that, the assessee has not been able to explain its changing stand with regard to the manner of application of most appropriate method, we hold it to be a fit case to be sent back to the TPO to adjudicate this issue afresh and ascertain both the most appropriate method and its manner of application, for benchmarking the international transaction undertaken by the assessee. At this stage, we are thus not adjudicating the issue, as to which method is to be applied, and the TPO is at liberty to decide the issue after giving reasonable opportunity of hearing to the assessee as to the most appropriate method for benchmarking the mark-up charged over the cost of intra-group services, after considering the various aspects raised by the assessee. Ground No.2 of the appeal raised by the assessee is thus, allowed for statistical purposes.
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2022 (8) TMI 944
Disallowance u/s. 36(1)(iii) - computing proportionate interest expenditure incurred on borrowed capital corresponding to interest free advance given - as argued the appellant had adequate pool of interest free funds by way of share capital and reserves, which were far in excess of impugned interest free advance - HELD THAT:- If there are funds available, both, interest-free and overdraft and/or loans taken, then a presumption would arise that investments would be out of interest-free funds generated or available with company, provided said funds are sufficient to meet investments. Again ITAT in the case of Assetz Infrastructure [ 2020 (12) TMI 117 - ITAT BANGALORE] held that since the interest free funds available with the assessee is more than the interest free loans given to subsidiaries, it should have to be presumed that the loans have been given out of interest free funds. As in the case of CIT vs. HDFC Bank Ltd [ 2014 (8) TMI 119 - BOMBAY HIGH COURT] held that if the own funds and interest free funds available with the assessee is more than the investment in tax free securities, then it should be presumed that the said investments have been made out of interest free funds available with the assessee. In view of the consistent position taken by the Gujarat High Court and other Courts/ Tribunals discussed above, as applied to the facts of the instant case, in our considered view, no disallowance is called for in respect of interest expenses on account of being interest expenses for non-business purpose, when the assessee is having sufficient interest-free funds at the disposal in excess of amount given as interest free advances. Appeal of the assessee is allowed.
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2022 (8) TMI 943
Long term capital gain computation - lower authorities action disallowing his payment made to his mother for the purpose of computing long term capital gains - HELD THAT:- Sale in issue dated 15.02.2012 as well as sought to place reliance on the assessee s family tree starting from the common ancestor Shri Sakharam P. Pathare. His case is that this assessee had paid the impugned sum to his mother so as to meet out the latter s share in the land sold. And that the above-stated sale deed not only comprise of this assessee as seller but also approvers and confirming parties wherein it was duly agreed with the vendee/developer that the corresponding advances received would be liable to be distributed amongst all the said parties. We find no merit in the assessee s foregoing argument. It is made clear that apart from the learned lower authorities having doubted genuineness in assessee s impugned payment claim, there is no material or stipulation in the sale deed that he had acted or sold anything over and above his own share in the land sold. Learned counsel could not refer to any clause therein that this assessee s share concerned contained any charge or encumbrance or share of his mother so as to be satisfied on a future date. Fact with this situation, we find merit in Revenue s vehement argument supporting this impugned disallowance/addition of Rs.32 lakhs. The assessee fails in his sole substantive grievance. AO has accepted identical claim of payment made by his brother and therefore, both the lower authorities ought to have been consisted in their respective stands. Mr. Joshi has also filed a catena of case law as well. I find no substance in assessee s instant latter argument once he has failed to prove the payment in issue in light of the relevant stipulation in the sale deed. Assessee appeal rejected.
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2022 (8) TMI 942
Estimation of income - bogus purchases - HELD THAT:- CIT (A) relying on the decision of Hon'ble Gujarat High Court in case of CIT vs. Smith P Seth [ 2013 (10) TMI 1028 - GUJARAT HIGH COURT ] wherein, it has been held that once the sale is accepted, the purchases cannot be questioned and entire purchases cannot be added but only profit element embedded therein could be added. The learned CIT (A) therefore has computed the profit margin at the rate of 6.5% of the purchases. DR did not question the profit rate of 6.5%. We also find that the learned CIT (A) has taxed the element of profit therein. There cannot be any standard or fixed benchmark of such estimate disturbing sales, we disagree with that because some profit has already been offered by assessee by showing sales. Further, 6.5% of profit in Imitation Jewellery business also cannot be said either too low or unreasonable. In view of this, the order of the learned CIT (A) is upheld. Accordingly, Ground nos. 1 to 3, are dismissed.
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2022 (8) TMI 941
Capital gain - main contention of the assessee is that the assessee has not received any sale consideration, therefore, capital gains does not arise - contention of the revenue is that the statement was recorded u/s 131 and the assessee has confirmed that the assessee along with 8 others executed the sale deed and received his share of sale consideration through cheques - HELD THAT:- Since the property was registered from the seller to the buyer and the landlord registered the sale transaction as completed, it gives rise to capital gains as defined u/s 2(47) of the Act and attracts short term capital gains u/s 45 of the Act. On this aspect, the assessee has not filed any evidence to establish that the buyer did not present the cheques in the bank due to some personal reasons. Assessee has not substantiated his case except orally pleaded before the AO, CIT(A) and even before us and has not filed any document. Inspite of receipt of notice the assessee did not appear before the ITAT to substantiate his case with proper evidence. In the absence of such evidence, we do not find any infirmity in the orders passed by the lower authorities. Therefore, we uphold the order passed by the CIT(A) and dismiss the grounds raised by the assessee.
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2022 (8) TMI 940
Reopening of assessment u/s 147 - unexplained cash deposits - HELD THAT:- As incumbent upon the taxpayer to explain the amount credited into his Saving Bank Account by way of cash deposits. The assessee was required to explain the source of such cash deposits. In the absence of any material placed before the AO explaining the source of cash deposits in his Saving Bank Account, AO was justified in treating the cash deposited in Saving Bank Account having escaped the assessment. The case laws as relied by assessee are distinguishable on the facts of the present case despite having given notices, the assessee did not give any explanation regarding deposits of cash prior to issuance of notices u/s 148 - AO had reason to form belief that the cash deposited and presented the income escaped assessment.Ground Nos. 1 2 raised by the assessee in this appeal are devoid of any merit, the same are therefore, dismissed. Sustaining 50% of addition on estimate basis - HELD THAT:- Contention of the assessee that he was engaged in the business of mobile recharging business is devoid of merit as he failed to furnish supporting evidences - assessee stated that looking to the fact that in the present case, there were repeated deposits and withdrawals from the bank account. Therefore, the AO should have worked out to peak credit of such transactions - assessee has also placed reliance on various case laws in the written submissions. Revenue could not controvert the fact that there has been frequent deposits and withdrawals by the assessee out of his saving bank account. No evidence is available on record suggesting that the money as withdrawn by the assessee was used for any other purpose. In the absence of such evidence prayer for adopting peak cannot be brushed aside. In the light of the binding precedents, we hereby direct the AO to work out peak credits and restrict the addition to the extent of peak credits and he would also allow telescoping under the facts and circumstances of the present case, as prayed by the assessee. This Ground of the assessee is allowed in terms indicated above.
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2022 (8) TMI 939
Addition u/s 69 - cash deposits unexplained - case was taken for limited scrutiny regarding cash deposits in the bank account was more than the turnover - HELD THAT:- The objection of the assessee regarding the AO having exceeded his jurisdiction in view of the Instruction No.20/15 dated 29.12.2015 issued by CBDT is misplaced as the assessee was required to explain the source of cash deposits in the bank account. It is seen from the records that the AO has restricted the scrutiny to verify the cash deposits in the bank account. Hence, the objection of the assessee that the AO exceeded the jurisdiction is ill-founded hence, rejected. Account does not belong to the assessee - As bank A/c No.50053185861 maintained with Kangra Central Co-op Bank Ltd., Mubarkpur, it was recorded by the AO that during the year under consideration, the assessee made cash deposits in the said account - AO that till the finalization of the assessment, the assessee could not substantiate with documentary evidence about the basis of her gross total turnover disclosed in the Income Tax Return filed on 03.12.2015. Therefore, cash deposited in the bank account No. 50053185861 was treated as unexplained. It is seen from the bank statement furnished by the assessee for the period 01.04.2014 to 31.03.2015, there are deposits and withdrawals from the bank account of the assessee. The total deposits are Rs.8,24,000/- and withdrawals of Rs.9,35,084/-. The AO has not given any finding regarding withdrawals of such amount. Thus considered view that the authorities below ought to have given a clear finding regarding withdrawals made by the assessee during the year under consideration. Therefore, in view of the facts of the present case, there are debit entries in the bank statement of the assessee. The addition of entire deposits as unexplained was not justified. Hence, the assessee deserves to get benefit of tele-scoping if the benefit of tele-scoping is allowed then the entire addition would not survive. The AO is therefore, directed to delete the addition. Thus, grounds raised by the assessee are partly allowed.
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2022 (8) TMI 938
Penalty u/s 271D - period of limitation - as argued penalty orders barred by limitation - contravention to the provisions of section 269SS of the Act in view of accepting cash loan more than prescribed limit - HELD THAT:- As only the Joint Commissioner can initiate proceedings for levy of penalty. Such initiation of proceedings could not have been done by the Assessing Officer. The statement in the assessment order that the proceedings under sections 271D and 271E are initiated is inconsequential. On the other hand, if the assessment order is taken as the initiation of penalty proceedings, such initiation is by an authority who is incompetent and the proceedings thereafter would be proceedings without jurisdiction. If that be so, the initiation of the penalty proceedings is only with the issuance of the notice issued by the Joint Commissioner to the assessee to which he has filed his reply . Therefore, in our considered view, the 271D order is not barred by limitation and as validly pointed out by the Ld. CIT(A) in his order, the Joint Commissioner, who is the prescribed authority to initiate 271D proceedings, has passed order within the period of limitation prescribed i.e. within 6 months from the end of the month from the date of initiation of 271D proceedings on 15.07.2015. In view of the above discussion, we are of the considered view that Ld. CIT(A) has not erred in law and on facts in holding that the order u/s 271D of the Act is not barred by limitation. Amount received by the assessee from his wife and his father - As in view of the decision of the jurisdictional Gujarat High Court in the case of Dr. Rajaram L. Akhani [ 2016 (6) TMI 1051 - GUJARAT HIGH COURT] and other case laws cited above, as applicable to the facts of the case, in our view so far as receipt of Rs.22,50,000/- by the assessee from his wife and father is concerned, in our view the provisions of section 269SS do not stand attracted. There is nothing on record to show that the amount was taken as a loan or deposit by the assessee from his father/wife and also there is nothing on record to establish that the assessee was under an obligation to repay that the same (with our without interest) and therefore in view of the judicial precedents cited above, in our view provisions of section 269SS cannot be invoked so far as the amount of Rs.22,50,000/- is concerned. Receipts from Mr. Mahispatsinh assessee has failed to discharge its burden proving that there was a reasonable cause for accepting the sum of Rs.15 lakhs in cash from Mr. Mahispatsinh. The Ld. CIT(A) in in his order has specifically noted that further, it is also seen that during the assessment proceedings the assessee, well knowing that he had also taken cash loans of Rs.15 lakhs did not deem it necessary to make submissions regarding the same before the AO in spite of the fact that the issue of applicability of section 269SS was being discussed in his case . In light of the above discussion, we are of the considered view that the Ld. CIT(A) has not erred in facts or in law in confirming penalty in respect of the sum of Rs.15 lakh received in cash from Mr. Mahispatsinh in violation of the provisions of section 269SS . Assessee appeal is partly allowed.
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Customs
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2022 (8) TMI 937
Provisional release of the consignments for the purpose of re-export - permission of re-export without charging any demurrage/detention charges - import of consignment of betel nut - HELD THAT:- The petitioners therein to file applications seeking provisional release under Section 110A, if they were so inclined and directed the respondent to consider and dispose the applications in accordance with law within a time frame that had been fixed. Simultaneous therewith, it is also directed that the respondents would engage in determination of the adjudication of the commodity in order that the nature of the consignment/goods imported would be determined to facilitate a decision being taken in the context of provisional release. The same order is passed in the present case as well. In fine, a direction is issued to R4 to dispose the application of the petitioner dated 25.06.2022 seeking provisional release for the purpose of reexport, after hearing the petitioner and simultaneous therewith, R4 shall also engage, with the assessees and the officials of the Directorate of Revenue Intelligence in the determination of classification of the goods, within a period of three (3) weeks from date of receipt of a copy of this order. Petition disposed off.
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2022 (8) TMI 936
Refund of Special Additional Duty of customs - time limitation - section 3 (5) of the Customs Tariff Act, 1975 - HELD THAT:- In the Premier Timber [ 2022 (7) TMI 885 - DELHI HIGH COURT] , we had examined the judgements rendered by coordinate benches of this Court in Sony India Pvt. Ltd. v. Commissioner of Customs, New Delhi, [ 2014 (4) TMI 870 - DELHI HIGH COURT] , where it was held that The imposition of a period of limitation for the first time, without statutory amendment, through a notification, therefore could not prevail. Thus, in line with the judgment rendered in Premier Timber, the appeal preferred by the revenue is dismissed.
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Corporate Laws
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2022 (8) TMI 935
Jurisdiction - power of High Court in issuing extra-ordinary directions - Investigation under the provisions of Section 212 and Section 219 of the Companies Act, 2013 in respect of several corporate entities in the Sahara group - whether the High Court was justified in passing an interim direction staying the operation of the two orders dated 31 October 2018 and 27 October 2020 and interdicting all subsequent actions including the issuance of look-out circulars? HELD THAT:- The first reason which has weighed with the High Court in regard to the construction of Section 212(3) is ex facie contrary to the law, as has been laid down by a two judge Bench of this Court in SFIO vs Rahul Modi [ 2019 (3) TMI 1411 - SUPREME COURT ]. While elaborating upon the provisions of Section 212(3), this Court has held that the statute does not contain any specific prescription of time and the reference to the completion of the investigation within a stipulated period is directory and not mandatory. This Court in Neeharika Infrastructure Pvt. Ltd. vsState of Maharashtra and Others [ 2021 (4) TMI 1244 - SUPREME COURT ] cautioned the High Courts against passing blanket interim orders directing no coercive steps to be taken by the investigating authorities as that might hamper the investigation at an early stage. Having due regard to the material which has been placed on record, it cannot be said that the Union Government had not indicated reasons for the exercise of its jurisdiction under Section 212 and Section 219 - At this stage, the Union Government was only ordering an investigation and it would be inappropriate to place a burden of recording elaborate reasons when the purpose of the investigation is to ensure that a full enquiry into the affairs of the companies is carried out. The High Court was not justified in staying the investigation and in passing the consequential directions which have been passed in the impugned orders at the interlocutory stage - Appeal allowed.
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Insolvency & Bankruptcy
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2022 (8) TMI 934
Approval of Resolution Plan - Sub-section (1) of Section 31 of the I B Code, 2016 - HELD THAT:- As per the provision and procedure prescribed with regard to approval of Resolution Plan and the powers and functions of the Committee (CoC) as detailed out, the CoC has evaluated the plan after detailed deliberations on feasibility and viability of each Resolution Plan as discussed in 9th CoC meeting. This Tribunal does not find any contravention of law by the Committee regarding approval of the plan of 3rd Respondent - It is apt to point out that the Appellant has failed to point out the contravention of any provision by the CoC in approving the plan. This Tribunal is of the view that the CoC has meticulously evaluated the matrix in approving the plan of the 3rd Respondent and it is not the case of the Appellant that they are challenging the RFRP, however, it is their case that the steps prescribed in RFRP are not followed. This Tribunal cannot go into the technical issues when there is no contravention of the provisions of law. From the record and the order passed by the Adjudicating Authority, this Tribunal finds that there is neither any material regularity nor contravention of any provisions of law by the CoC and the plan has been rightly approved by the Adjudicating Authority - the plan has been approved by the sole member of CoC with 100% voting share in their commercial wisdom as contemplated under the law. Therefore, the commercial wisdom of the creditors is paramount and cannot be interfered with by the Adjudicating Authority or this Tribunal. It is the settled proposition of law that the commercial wisdom of the Committee of Creditors in approving or rejecting a resolution plan is essentially based on a business decision which involves evaluation of resolution plan based on its feasibility besides the Committee of Creditors being fully informed about the viability of the Corporate Debtor. The Committee of Creditors invariably examine the Resolution Plan and an assessment is made through their team of experts in that regard - Further, there is no such mechanism under the Code that gives the right to the Unsuccessful Resolution Applicant to challenge the score granted as per the evaluation matrix prepared by the CoC and the Resolution Professional as per the provisions of CIRP Regulations. This Tribunals comes to an irresistible and inescapable conclusion that there is no legal infirmity or illegality in the order passed by the Adjudicating Authority - Appeal dismissed.
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2022 (8) TMI 933
Attachment of Immovable property - attachment during the period when Moratorium under Section 14 of the Insolvency Bankruptcy Code, was in force - evasion of duty - benami transactions - HELD THAT:- It must be borne in mind that in the act / transaction of Money Laundering, there is Washing the Money. In case of a Benami Transaction, to evade or avoid Tax or defrauding the Revenue, the Victim is the State and not the individual, which in Law is species of fraud - The onus of establishing that a particular sale is Benami and the apparent purchaser is not the real owner, rests upon the person asserting it to be so. The burden is to be strictly discharged by letting in evidence of a definite character, which will either directly prove the fact of Benami or establish circumstances, unerringly and reasonably and raising an inference of that fact, as per decision of the Hon ble Supreme Court in Jeydayal Poddar V Bibi Hazre [ 1973 (10) TMI 55 - SUPREME COURT ]. It comes to be known that the provisional Attachment dated 01.11.2019 was affirmed on 10.11.2021 by the Competent Authority, under Section 24 (3) of The Benami Transactions (Prohibition) Act, 1988. Also, it is crystalline clear that the Applicant / Appellant cannot embark upon a method to avoid / evade / supplant or circumvent the procedural hierarchy, as envisaged under the The Benami Transactions (Prohibition) Act, 1988, to be fulfilled by an aggrieved / affected person - the ingredients of Section 29 (A) of the The Benami Transactions (Prohibition) Act, 1988 (Amended 2016 by Act 43) deals with the aspect of Benami Transactions. This Tribunal on a careful consideration of divergent contentions, keeping in mind, the entire gamut of the facts and circumstances of the instant case in a conspectus and holistic fashion / manner comes to an inevitable, irresistible and inescapable conclusion that the Applicant in Law is not entitled to prefer an Application before the Adjudicating Authority. Suffice it for this Tribunal to pertinently observe that the said Miscellaneous Application is misconceived one, in the eye of Law, and the same is per se is not maintainable. Application dismissed.
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2022 (8) TMI 932
Resolution Plan approved, with some modifications - forwarding all records relating to conduct of the corporate insolvency resolution process and the resolution plan to the IBBI to be recorded on its database - section 31(1) of I B Code - HELD THAT:- Hon ble Supreme Court in the case of Ghanashyam Mishra and Sons Private Limited Vs. Edelweiss Asset Reconstruction Company Limited Ors. [ 2021 (4) TMI 613 - SUPREME COURT ] has held that once a resolution plan is duly approved by the Adjudicating Authority Under Sub-section (1) of Section 31, the claims as provided in the resolution plan shall stand frozen and will be binding on the Corporate Debtor and its employees, members, creditors, including the Central Government, any State Government or any local authority, guarantors and other stakeholders. On the date of approval of resolution plan by the Adjudicating Authority, all such claims, which are not a part of resolution plan, shall stand extinguished and no person will be entitled to initiate or continue any proceedings in respect to a claim, which is not part of the resolution plan. This appeal is covered by the aforesaid judgement - the impugned order is hereby affirmed - appeal dismissed.
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2022 (8) TMI 931
Contravention of the scheme for compromise and arrangement - whether the fees payable to the Appellant/Liquidator will become payable only upon occurrence of the events of respective receipts and disbursals at specified rates payable and not otherwise? - Principles of law of estoppel - Section 53 of the IBC read with Regulation 4(3), 42 and 44 of the I B Code (Liquidation Process) Regulations, 2016 - HELD THAT:- This Tribunals takes serious note on the part of the Appellant that the Appellant failed to disobey the orders of the Adjudicating Authority dated 20.07.2020 in toto and also it is evident from the observations of the order itself. Further, the Respondents also clearly mentioned that the Appellant purposely delayed in handing over the reins of the Corporate Debtor to the Respondents for the reasons best known to him. It was only a partial handing over was done by the Appellant to the Respondents. Keeping in view of the of the paramount interest of the Corporate Debtor, this Tribunal directs the Appellant to handover the books of accounts to the Respondents, within a period of one week from the date of receipt of copy of this judgment, if not already handed over. This Tribunal comes to a resultant conclusion that the Appellant has not made out any case either on law or on facts. Further, this Tribunal holds that the Appeal is frivolous and vexatious and the same is dismissed.
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2022 (8) TMI 930
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - existence of debt and dispute or not - HELD THAT:- The applicant has brought on record all the documents to substantiate its claim. On perusal of the record it is found that email dated 18.09.2021 written by the applicant calling upon the corporate debtor to clear the outstanding debt was replied by the corporate debtor vide email dated 20.09.2021 - it is established that the debt is due and payable and default has occurred. Moreover, the corporate debtor has admitted its debt within limitations and has shown its inability to clear the outstanding debt. The present application is admitted, in terms of section 9 (5) of IBC, 2016. Application admitted - moratorium declared.
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Service Tax
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2022 (8) TMI 929
Maintainability of appeal - condonation of delay in filing appeal - exclusionary part of Section 35G of the Central Excise Act, 1944 will lie with the Supreme Court - quantum of tax involved is below the threshold limit prescribed in the circular dated 22.08.2019 - HELD THAT:- Having regard to the fact, that the substantial period of the delay falls within the time-frame that Covid restrictions had kicked in i.e., since March 2020, we are inclined to condone the delay. We need not delve upon the first objection raised by Ms Lakshmikumaran i.e., that the appeals, if at all, ought to have been filed before the Supreme Court. Since the instructions/circulars dated 17.08.2011, 26.12.2014 and 22.08.2019 are binding on the appellant/revenue and the revenue involved in each of the appeals is, admittedly, below the prescribed threshold, these appeals will have to be dismissed. Appeal dismissed.
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2022 (8) TMI 928
Levy of service tax - Works contract services - demand on the basis of 26 AS statements - whether the show cause notice is issued in violation of the instruction issued by the Board in Circular 1053/02/2017-CX dated 10.03.2017? - mandating of pre show cause notice consultation, for show cause notice involving duty demand of Rs. 50 Lakhs and above - benefit of N/N. 25/2012-ST dated 20.06.2012 - HELD THAT:- As the department is alleging that the appellants have evaded payment of service tax, it is incumbent upon the department to prove the same with reliable evidence. It is found from the impugned proceedings that the details of payment received by the appellant were gleaned from the 26 AS statements and other document, like ledger, profit and loss account, balance sheet etc. Thereafter, the appellant was asked to submit the necessary details like work orders, invoices etc. No other investigations to prove that the appellants have rendered taxable service and received remuneration for the same, were conducted. The Department has not even bothered to collect necessary documents from the respective government authorities at whose behest, the appellant is alleged to have under taken the works orders. The nature of such works alleged to have been under taken by the appellants, the taxability thereof under Finance Act, 1994 and exemption if any available was not discussed at all in the impugned order. The Department has not discharged its onus to prove that the appellant is liable to pay service tax. It is settled principle of law that unless and until the clear analysis of the activity done by the assessee is carried out, demand of service tax cannot be confirmed. It has been held in various cases that non adherence to the instructions issued regarding pre-show cause consultation vitiate the proceedings and further reason the impugned show cause notices and order are liable to be set aside - reliance can be placed in the case of AMADEUS INDIA PVT. LTD. VERSUS PRINCIPAL COMMISSIONER, CENTRAL EXCISE, SERVICE TAX AND CENTRAL TAX COMMISSIONERATE [ 2019 (5) TMI 669 - DELHI HIGH COURT] where it was held that In the present case, the Court is satisfied that it was necessary in terms of para 5.0 of the Master Circular for the Respondent to have engaged with the Petitioner in a pre SCN consultation, particularly, since in the considered view of the Court neither of the exceptions specified in para 5.0 were attracted in the present case. Thus, it is found that the show cause notice was issued in violation of instruction issued by CBIC as observed by the various High Courts the instructions are mandatory in the instant case also the instruction were not complied with. The Departmental instructions are binding on the departmental officers. Therefore, any action taken in violation of the instructions is to be treated as nonest. The impugned show cause notice and the order do not survive - Appeal allowed - decided in favor of appellant.
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2022 (8) TMI 927
Levy of Service Tax - Intellectual Property Service - permission granted to the CBUs / TMUs to affix the brand name / trade name belonging to them on the IMFL manufactured - value of taxable service - 2% of net sale realization as held by the Commissioner or the total amount paid by the CBUs / TMUs as contended by Revenue in their appeals - eligibility for CENVAT Credit - extended period of limitation - HELD THAT:- In the facts and circumstances of the case, the brand owner has not transferred any intellectual property relating to the trade name, trade mark, brand name, technical know-how etc. pertaining to the goods manufactured by the Contract Bottling Units; the Contract Bottling Units are in no position to commercially exploit or to avail any financial benefit out of the above; they are paid fixed charges as per the agreements and the surplus whatever accrues to the brand owner appellant. When the transferee is not in a position to use the technical know-how etc., it cannot be said that the Contract Bottling Units have availed any services with respect to intellectual property rights from the brand owner appellants. It is seen that it is the brand owner himself who is using his own brand and technical know-how albeit the manufacturing activity is outsourced to the Contract Bottling Units. The ultimate beneficiary of the technical know-how are the intellectual property if any for that matter is the appellant themselves and therefore, it is incorrect to say that there is any transfer of temporary leasing of intellectual property. Therefore, the entire case of the Department is based on a false surmise. The issue is no longer res integra and is decided in favour of the appellants. The Apex Court has decided a similar case in respect of THE COMMISSIONER CENTRAL EXCISE, MEERUT VERSUS M/S. BDA PVT. LTD. [ 2015 (11) TMI 1585 - SC ORDER] holding that in such cases, the brand owner does not give any right to the TMU to use his brand. Thus, the Department has not made out any case against the appellants for demand of service tax on Intellectual Property Services. The Revenue has filed appeals contesting the valuation for the purpose of levy of service tax adapted by the appellants - the appellants are not liable to pay service tax therefore the issue of valuation becomes redundant to that extent. Admissibility of CENVAT Credit - HELD THAT:- The learned Commissioner observes that the appellant was not found to have furnished any evidence or argument that without the use of such input services, they would not be able to provide the output service i.e. Intellectual Property Service, to the satisfaction of the recipient of the output service; therefore, he considers that the credit availed by the appellants on all such aforesaid input and services, considering them to be input and input services, are not eligible to CENVAT credit, as such input services are not found to fulfil the definition of input and input service as defined in the CENVAT Credit Rules - there is considerable force in the averments of argument of the learned Commissioner. As per the scheme of the CENVAT credit, the appellants have a responsibility thrust upon them to show the nexus between the inputs/input services to the ultimate output/output services, as the case may be. The appellants are also required to follow the procedure contained in Rule 6 of CENVAT Credit Rules. The appellants did not specify the nexus between the credit availed and the output services provided. During the hearing or in the written submissions no clarification was given, except relying on the interim order of this bench granting stay - As per the available records, it cannot also be ascertained as to whether the appellants have maintained separate accounts to show the inputs/input services which are used in exempted and dutiable products. The issue requires to go back to the adjudicating authority to verify the claims of the appellants on the issues eligibility of CENVAT credit on inputs/inputs services, the nexus between the input/ input services with the output/output services and the adherence of the appellants to the procedure prescribed under Rule 6 of CENVAT Credit Rules - Appeal allowed in part and part matter on remand.
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Central Excise
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2022 (8) TMI 926
Allowance of proper interest under Section 35FF of Central Excise Act - HELD THAT:- Division Bench of this Tribunal in Parle Agro Limited [ 2021 (5) TMI 870 - CESTAT ALLAHABAD] , wherein the amount was deposited during the stage of investigation/audit, this Tribunal have held that on being successful in appeal, interest is allowable under Section 35FF from the date of deposit till the date of refund. Further, following the ruling of the Apex Court in the case Sandvik Asia Ltd. [ 2006 (1) TMI 55 - SUPREME COURT] , it has been held that interest shall be payable @ 12% p.a. Further, Single Member Bench of this Tribunal in the case of Riba Textiles Ltd vs. CCE S.T., [ 2020 (2) TMI 602 - CESTAT CHANDIGARH] have also granted interest @ 12% p.a. under Section 35FF. The impugned order(s) modified to the effect that the appellant shall be entitled to interest under Section 35 FF @ of 12% p.a. from the date of deposit till the date of grant of refund - the Adjudicating Authority is directed to grant the balance amount of interest as modified herein within 45 days of receipt or service of this order. Appeal allowed.
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CST, VAT & Sales Tax
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2022 (8) TMI 925
Validity of assessment order - principal ground of challenge is that the orders have been passed without following principles of natural justice - Opportunity of personal hearing not provided - Section 9(2) of Central Sales Tax Act, 1956 for the period 2014-2015 - HELD THAT:- Despite request made by petitioner, reports/documents relied upon have not been provided and before passing the order on the rectification application, no personal hearing has been granted though the law mandates personal hearing to be given. This shows a complete failure to the observance of rule of law on the part of respondent no.3. A huge demand has been raised by respondents against petitioner without following the rule of law. Imposition of cost upon the authority by enhancing the cost equivalent to the tax and penalty levied - HELD THAT:- Though it is not intended to impose such high cost, since the attitude of respondent no.3 smacks of deliberate failure to the observance of rule of law, the said officer should be saddled with costs to be paid by him personally - The Allahabad High Court in the judgment pronounced in the matter of SR COLD STORAGE VERSUS UNION OF INDIA AND 3 OTHERS [ 2022 (8) TMI 806 - ALLAHABAD HIGH COURT] , has lamented about the abysmal state of affairs reflecting the absence of any effective system of accountability of the erring officers, the harassment of the assessees and breach of principles of natural justice by the Officers. Petition disposed off.
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Indian Laws
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2022 (8) TMI 924
Dishonor of Cheque - acquittal of the accused - cross-examination of witnesses - requirement of payment of interim compensation as directed in terms of Section 143A of the Act is not complied with - HELD THAT:- After empowering the court to pass an order directing the accused to pay interim compensation under Sub-Section 1 of Section 143A, Sub-Section 2 then mandates that such interim compensation should not exceed 20 per cent of the amount of the cheque. The period within which the interim compensation must be paid is stipulated in Sub-Section 3, while Sub-Section 4 deals with situations where the drawer of the cheque is acquitted. Said Sub-Section 4 contemplates repayment of interim compensation along with interest as stipulated. Sub-Section 5 of said Section 143A then states the interim compensation payable under this Section can be recovered as if it were a fine . The expression interim compensation is one which is payable under this Section and would thus take within its sweep the interim compensation directed to be paid under Sub-Section 1 of said Section 143A. The remedy for failure to pay interim compensation as directed by the court is thus provided for by the Legislature. The method and modality of recovery of interim compensation is clearly delineated by the Legislature. It is well known principle that if a statute prescribes a method or modality for exercise of power, by necessary implication, the other methods of performance are not acceptable. Since the right to cross-examine the respondent was denied to the Appellant, the decisions rendered by the courts below suffer from an inherent infirmity and illegality - There are no hesitation in allowing this appeal and setting aside the decisions of all three courts with further direction that Complaint Case No. 244 of 2019 shall stand restored to the file of the Trial Court. Appeal allowed.
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