TMI Tax Updates - e-Newsletter
August 27, 2022

Case Laws in this Newsletter:

GST Income Tax Customs Insolvency & Bankruptcy PMLA Service Tax Central Excise CST, VAT & Sales Tax Indian Laws

Articles

1. SUPPLY OF SPACE FOR ADVERTISEMENT IN PRINT MEDIA – APPLICABILITY OF GST

   By: DR.MARIAPPAN GOVINDARAJAN

2. Interest on TDS late payment u/s 201(1A) of the Income-Tax Act 1961

   By: Pradeepta Pyne

3. Indivisible composite works contracts are not chargeable to Service tax prior to June 2007

   By: Bimal jain

4. SC’s suo moto extension of limitation period order is applicable even for condonation period

   By: Bimal jain

News

1. Dynamics of Inflation in South Asia (Keynote address delivered by Dr. Michael Debabrata Patra, Deputy Governor, Reserve Bank of India - August 24, 2022 - at the SAARCFINANCE Seminar hosted by India, New Delhi)

2. Infrastructure Finance Secretariat, DEA, organises workshop to sensitise Centre and State Governments officials regarding empaneled Transaction Advisers (TAs) for Public Private Partnership (PPP) Projects

Notifications

GST - States

1. 52/GST-2 - dated 23-8-2022 - Haryana SGST

Notification under section 168A to extend dates of specified compliances under the HGST Act, 2017.

2. 17/2022-State Tax - dated 25-8-2022 - Himachal Pradesh SGST

Seeks to amend Notification No. 13/2020-State Tax, dated the 23rd June 2020

3. S. R. O. No. 713/2022 - dated 18-7-2022 - Kerala SGST

Amendment in Notification No. 56/2019/TAXES, dated 30th March, 2019

4. S. R. O. No. 712/2022 - dated 18-7-2022 - Kerala SGST

Amendment in Notification No. 58/2019/TAXES dated 30th March, 2019

5. S. R. O. No. 711/2022 - dated 18-7-2022 - Kerala SGST

Rescind the Notification No. 169/2017/TAXES dated 15th November, 2017

Money Laundering

6. S.O. 4042 (E) - dated 16-8-2022 - PMLA

Court of Session designated as Special Court under the Prevention of Money laundering Act, 2002 - Area specified - substituted entries for Telangana - Amendment in Notification No. S.O. 372(E), dated the 5th February, 2016

Circulars / Instructions / Orders

SEBI

1. SEBI/HO/MRD/MRD-POD-2/P/CIR/2022/114 - dated 26-8-2022

Corrigendum to Master Circular for Depositories dated February 05, 2021 on Opening of demat account in case of HUF

2. SEBI/HO/IMD/IMD-I/DOF1/P/CIR/2022/112 - dated 26-8-2022

Circular for Portfolio Managers

3. SEBI/HO/DDHS/DDHS-RACPOD2/P/CIR/2022/113 - dated 25-8-2022

Enhanced Disclosures by CRAs and Norms on Rating Withdrawal

Highlights / Catch Notes

GST

• "Epic" Project: Section 171(1) of CGST Act 2017 Inapplicable Due to Lack of Pre-GST ITC Comparisons.

  Case-Laws - NAPA : Profiteering - construction of project - benefit of ITC not passed on to the buyers - all the relevant events for the project “Epic” took place in GST regime and the Respondent had not availed any CENVAT/ITC, related to ‘EPIC’ project, in pre-GST regime - there was no pre-GST tax rate or ITC structure which could be compared with the post-GST tax rate and ITC structure and therefore, the provisions of Section 171 (1) of the CGST Act, 2017 were not applicable against the Respondent’s project “Epic” - NAPA
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Income Tax

• Court Avoids Fact-Finding in Charitable Status Case Under Income Tax Act Section 11 and Section 2(15) Framework.

  Case-Laws - HC : Exemption u/s 11 - Whether activities of assessee are charitable in nature? - The critical issue continues to relate to the usage of funds by the petitioner as this would determine whether its activities are charitable or otherwise, This has then to be set and seen in the context of Section 2(15) of the Act. This exercise necessarily involves an appreciation of facts which this Court is not inclined to embark upon in terms of Article 226 of the Constitution of India. - HC
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• Court Upholds Educational Institution's Registration; No Evidence of Fund Misuse Found u/s 10(23C)(vi.

  Case-Laws - AT : Refusal of registration u/s 10(23C)(vi) - Although the ld. CIT (E) has said so, it nowhere stands proved that the funds/income of the Applicant are being utilised for other objects too, i.e., the objects, which are not educational objects in nature, or that the Applicant is part of an Institution which is engaged for the purpose of profit. Likewise, there is nothing on record to show that the surplus of the Applicant has been diverted for any use or purpose other than educational purposes. This being so, no violation of the Third Proviso to section 10(23C)(vi) stands proved. - AT
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• PCIT cannot mechanically revise orders u/s 263 based solely on audit objections; independent findings are essential.

  Case-Laws - AT : Revision u/s 263 - Revision based on Audit Objection - a mechanical exercise of revisionary powers u/s 263 by the Revisionary Authority by merely citing the Audit Objection cannot be said to be a valid exercise of Revisionary Powers. - PCIT is require to give an independent finding considering the record. The error in the order of the AO, that too such an error which is prejudicial to the interests of the Revenue, has to be pointed out by the Revisionary Authority in the order. The onerous power cannot be exercised mechanically and arbitrarily. - AT
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Customs

• High Court Overrules Misinterpretation of Section 110A, Orders Provisional Release of Defatted Coconut Imports.

  Case-Laws - HC : Seeking provisional release of de-stuffed imported perishable goods - Defatted Coconut - the respondents clearly erred in coming to the conclusion that the provisional release under Section 110A of the Act is permissible only when the proceedings are pending before the adjudicating officer and as such, the impugned order deserves to be quashed. - HC
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• Provisional Release of Imported Goods Denied Over Mill Test Certificate Authenticity and BIS Standards Non-Compliance Concerns.

  Case-Laws - AT : Rejection of provisional release of goods imported by the appellant - Secondary grade goods - Prime goods or not - Department is that the appellants forged Mill Test Certificate and that goods imported by the appellant, under seizure are not BIS compliant - The department should not have any objection in releasing the goods provisionally. However, we are of the opinion that at the same time the interest of the Revenue is to be safeguarded. - AT
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• Customs broker's license suspension under CBLR 2018 Regulation 16(1) overturned; alleged export overvaluation for tax fraud.

  Case-Laws - AT : Suspension of Customs Broker’s Licence - Regulation 16(1) of the CBLR, 2018 - facts and circumstances of the case pending further investigation and decision on revocation of licence or imposition of penalty under CBLR, 2018 - allegation is that CB had no idea of the valuation of the consignments and never tried to know the real value of the Ball Bearings - over- valuation of exports to defraud the Exchequer by getting the very high Input Tax Credit and export related incentives - Allegation are not provided - the impugned order confirming the suspension of the licence of the Appellant cannot be sustained - AT
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• Confiscation and penalty imposed on canalised goods import for re-export; duty rate challenge deemed academic.

  Case-Laws - AT : Rate of duty - Confiscation of goods - base oil grade-12 - Import of ‘high flash high speed diesel’ which is ‘canalised’ - Though appellant did challenge the denial of effective rates of duty, that grievance is academic in the backdrop of intention to re-export which restricts the present proceedings to confiscability of the goods and imposition of penalty. - AT
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Indian Laws

• High Court Reviews Charitable Hospital's Tax Exemption Eligibility u/s 123(e) of Coimbatore City Municipal Corporation Act 1981.

  Case-Laws - HC : Exemption u/s 123(e) of the Coimbatore City Municipal Corporation Act, 1981 - eligibility to the petitioner as a charitable hospital - Exemption u/s 123(e) of the Coimbatore City Municipal Corporation Act, 1981 - eligibility to the petitioner as a charitable hospital - HC
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• High Courts Risk Overload if Acting as Executing Courts for Arbitral Awards Under Article 226; Clear Role Needed.

  Case-Laws - SC : Execution of the award passed by the learned Arbitral Tribunal/Court - If the High Courts convert itself to the Executing Court and entertain the writ petitions under Article 226 of the Constitution of India to execute the award passed by the Arbitral Tribunal/Court, the High Courts would be flooded with the writ petitions to execute awards passed by the learned Arbitrator/Arbitral Tribunal/Arbitral Court. - SC
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• Hojai Court Can Hear Cheque Dishonor Cases u/s 142(2)(a) of Negotiable Instruments Act, Account Must Be in Hojai.

  Case-Laws - HC : Dishonor of Cheque - Jurisdiction of the Court - In view of the provision of section 142(2)(a) of the N.I. Act, the Court at Hojai which has jurisdiction to try the same. There is no quarrel at the Bar in this regard, that in view of section 142(2) (a) of the said Act, the learned court below has the jurisdiction to try the offence. Of course, the position would have been quite different if the petitioner had no account at Hojai. - HC
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IBC

• Financial Creditors Can Combine to Meet Rs. 1 Crore Threshold for CIRP Initiation Under Insolvency Code Section 7.

  Case-Laws - HC : Threshold limit for triggering CIRP - Validity of Section 7 of the Insolvency and Bankruptcy Code, 2016 - Initiation of CIRP by Financial Creditors - The statute i.e., Section 7 of the IBC as amended vide Gazette Notification dated 05.06.2020, admits no other interpretation except that a group of financial creditors can converge and join hands to touch the financial limit of Rs.1 crore stipulated under Section 7 so as to initiate a CIRP under the IBC. - HC
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Service Tax

• Court Orders Issuance of Discharge Certificate After Payment via E-Cash Ledger Under CGST Act.

  Case-Laws - HC : Refusal on the part of respondents to issue discharge certificate - Payment of amount through ECR maintained under GST Act - Petitioner has scrupulously abided by all the terms and conditions of the scheme. In the absence of any definition as to what amounts to “pay electronically through internet banking”, even payment made by electronic cash ledger maintained by petitioner under the CGST Act also amounts to payment through internet banking - Respondent No.4 is directed to issue within four weeks discharge certificate in Form SVLDRS – 4 through electronic form and if it cannot then it be issued in physical form. - HC
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• High Court Rules Improper Rejection of Petitioner's Tax Declaration Form Under SVLDRS Scheme, Cites Section 125 Compliance.

  Case-Laws - HC : Rejection of Form SVLDRS-1 - valid quantification and admission of duty/tax by Petitioner before 30th June, 2019 - Section 125 of the Finance Act, 2019 provides that all persons are eligible to make a declaration under the SVLDRS scheme with the exception of those falling within the exceptions set out in clauses (a) to (h) of sub-section (1) of Section 125. 'Tax dues' referred in section 124 is defined in section 123. It specifies various situations - The Respondent No.4 was completely unjustified in rejecting the Form SVLDRS-1 filed by Petitioner - HC
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Central Excise

• Revenue's Classification Change of Tobacco Product Lacks Evidence, Overlooks Re-test Report Matching BIS Standards, Says Commissioner.

  Case-Laws - AT : Classification of goods - Zarda - The Revenue has not produced any material evidence on record to support the change of classification by them from ‘Chewing Tobacco’ under heading 24039910 to ‘Jarda Scented Tobacco’ under heading 24039930 - the learned Commissioner has also not applied his independent mind in confirming the change in the classification and rather ignored the re-test report of the Jt. Director, CRCL which is in line with the parameters prescribed by BIS. - AT
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Case Laws:

• GST

• 2022 (8) TMI 1086
  Profiteering - construction of project - benefit of ITC not passed on to the buyers, by way of commensurate reduction in price - violation of section 171 of CGST Act - penalty - HELD THAT:- It has been observed that as per the Table A of the Report all the relevant events for the project Epic took place in GST regime and the Respondent had not availed any CENVAT/ITC, related to EPIC project, in pre-GST regime and that the Respondent neither raised any demand nor received any advance for this project in Pre-GST regime. Therefore, there was no pre-GST tax rate or ITC structure which could be compared with the post-GST tax rate and ITC structure and therefore, the provisions of Section 171 (1) of the CGST Act, 2017 were not applicable against the Respondent s project Epic - In view of the facts and records/documents cited and considered by the DGAP in its report dated 24.03.2021, the Authority concurs with the findings of the DGAP that the provisions of section l71 (1) of the CGST Act, 2017 does not get attracted in the present case for the said project Epic and for said period 01.07.2017 to 30.11.2020. This Order having been passed today falls within the limitation prescribed under Rule 133(1) of the CGST Rules, 2017.

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• Income Tax

• 2022 (8) TMI 1095
  Reopening of assessment u/s 147 - Period of limitation - eligible reasons to believe - whether petitioner has made a full and true disclosure ? - whether impugned reassessment is barred by limitation? - HELD THAT:- In the present case and in light of the admitted position that the issues featuring in reasons for re-assessment had been taken up for assessment originally but not pursued by the officer, the assessing officer being convinced by the explanation furnished by the petitioner, the petitioner has made a full and true disclosure originally, and the impugned proceedings are barred by law. There is also no material has been found by the officer post the original assessment. Thus, the impugned proceedings are barred by limitation and are not sustainable on any account. We may refer to the conclusion of the Hon ble Supreme Court in the case of Parasuram Pottery Works Co. Ltd. [ 1976 (11) TMI 1 - SUPREME COURT ] The Bench states that assessment proceedings must have a finality at some point, for a society to be referred to as civilized. Revisiting jaded issues time and again, without allowing them to rest would be contrary to the above dictum. All the more in a case such as the present where there is not even an allegation that the assessee/petitioner has supressed income and made an incomplete and untrue disclosure. In fact, the reasons proceed wholly on the basis of the materials furnished by the petitioner originally as well as on Instructions issued by the Central Board of Direct taxes that have been cited by the petitioner and noticed by the officer. The impugned proceedings are quashed and this writ petition is allowed.

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• 2022 (8) TMI 1094
  Reopening of assessment u/s 147 - Computation of book profit u/s 115JB - loss available was a sum of Rs.50.52 Crores and no book loss or depreciation was available to be deducted under Section 115 JB - HELD THAT:- It is a well settled position that in cases of reopening beyond the period of four years from the end of the relevant assessment year, the statutory pre-condition set out in the proviso to Section 147 of the Act must first be complied with prior to invoking the benefit under the Explanations. It is an equally well settled rule of construction that the interpretation of a statutory provision, must be in the sequence in which the sub-sections and clauses are arranged. Thus the construction of Section 147 is relevant and must be appreciated and applied in seriatim. The proviso is placed at the first instance and the Explanations thereafter and this would mean that the statutory condition and burden cast upon the Department by virtue of the first proviso must first be discharged by the officer, before he proceeds to avail benefit of the deeming explanations that follow thereafter. The test would thus be as to whether the disclosure made by the petitioner at the time of original assessment was full and complete. There is no dispute in this regard and all material in regard to the computation of tax under the provisions of MAT were available before the Assessing Authority. The reasons proceed on the basis that the methodology for computation is erroneous which premise, as noticed earlier, does not appear to be correct as the financials disclose the availability of depreciation. In such circumstances, the assumption of jurisdiction under Section 147 is held to be bad in law. Also find force in the submission that there is no allegation in the reason itself to the effect that there has been any incomplete disclosure or false statement made at the time of assessment that would justify the assumption of jurisdiction beyond the period of four years. The petitioner also raises the argument that the impugned proceedings are based on an audit objection though none of the documents on record would evidence this position. However, there is an averment in the affidavit to this effect and the counter filed by the respondent does not specifically deny this. Even on this score and following the settled position that an audit objection does not satisfy the requirement of the Assessing Officer having an independent reason to believe that income has escaped assessment, that too after the elapse of nearly six years from the end of the relevant assessment year, the impugned proceedings are vitiated. - Decided in favour of assessee.

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• 2022 (8) TMI 1093
  Disallowance of unpaid leave encashment provision of earlier year - HELD THAT:- We found from the fact that the assessee has already disallowed the unpaid amount before filling the return of income out of the total amount debited to the profit loss account no separate addition can be made considering the opening balance as the same has already been considered in the earlier years and therefore, we find force in the arguments of the ld. AR of the assessee and allow the Ground No. 1 is raised by the assessee and vacate the disallowance sustained by the ld. CIT(A) for an amount. Disallowance of claim of interest paid on late deposit of TDS - HELD THAT:- Looking to the fact that interest paid by the assessee is not of tax liability of his income and the interest paid by them is compensatory in nature and therefore, the same is required to be allowed. As relying on case of Resolve Salvage Fire India (P) Ltd. [ 2022 (4) TMI 906 - ITAT MUMBAI] we allow the ground no. 2 raised by the assessee and thus, we vacate the disallowance. Disallowance of prior period expenses - HELD THAT:- As per submission made in the paper book where in the assessee has given the details of the expenditure along with the reasons as to why the same is claimed in the year under consideration and the reasons being that the bill of the party received late and assessee being company without supporting documents it is the system of the assessee company not to book the claim of the expenditure. We find force in the arguments of assessee and in the absence of any adverse finding of the lower authorities the same is allowable in the year of its claim. Even there is no whisper in the order of the lower authorities about the allowability of the expenditure as the same was disallowed under the contentions that the expenditure are of prior period based on the reasoning submitted by the assessee company we vacate the disallowance and thus, the ground no. 3 raised by the assessee is allowed. Accrual of income - addition based on form 26AS - as argued assessee is a service provider in the health care sector and the assessee regularly following a particular method of accounting merely receipt shown in the form 26AS cannot be termed as income of the assessee company - HELD THAT:- As the details relating to the difference is placed before us as an additional evidence we admit that additional information and direct the jurisdictional Assessing Officer to verify the contentions of the assessee that the income from M/s E-meditek Solution Ltd. is in in fact receivable or not? If required, the Assessing Officer may call for the relevant confirmation from the payee and call for the reconciliation of income with that of the account and after giving proper opportunity of heard decide the issue in accordance with law so as to whether in fact the receipt as alleged is in fact received of the assessee company or not. Therefore, we restore the matter to the file of the Assessing Officer and with this remark, the ground no. 4 of the assessee is allowed for statistical purposes. Addition of writing bad debts - HELD THAT:- Assessee drawn our attention to the ledger account wherein amount written off by the assessee is duly reflected and ld. AR of the assessee respectfully submitted that these are being the small amount receivable of various assessee, the same is not reflected in the ledger account but it is duly recorded in the audited accounts and supporting vouchers as referred in the ledger account already placed on record. In the accounts the respective vouchers definitely shows the name of the parties whose amount is written off and therefore, assessee has submitted that if given a chance he is ready to give details to the jurisdictional Assessing Officer and can demonstrate the name and figure of each patient amount written off. Therefore, in the interest of justice, we deem it feet that to set aside this issue before the ld. Jurisdictional assessing officer with a direction that this issue may be decided on merits after giving the assessee a proper opportunity of being heard in the matter. Thus, this ground no 6 of the appeal is also allowed for statistical purposes. Completing the assessment without considering the revised return of income filed in time by the assessee company - HELD THAT:- CIT(A) has recorded his finding that the apex court in the case of Goetze India Limited [ 2006 (3) TMI 75 - SUPREME COURT] that the ITAT can consider such claim of the assessee made by the assessee in revised return of income. He further noted that the apex court did not consider this liberty to the CIT(A) and thus he has confirmed the view of the assessee. Since, there is no other adverse observation about the valid revised return of income filed by the assessee and considering the decision of the apex court as referred herein above, we direct the ld. AO to consider the revised return of income filed by the assessee and assessee s income be computed accordingly. In terms of this observations the ground no. 1 raised by the assessee is allowed. Ad-hoc disallowance of expenses - expenditure debited under the heads staff welfare expense and conveyance expenses with reference to ledger account - HELD THAT:- We respectfully following the Co-ordinate Bench decision in the case of M/s D.C. Construction [ 2019 (5) TMI 1941 - ITAT RAIPUR] where in the co-ordinate bench held that the AO has made a lump sum disallowance without pointing out any concrete evidence against the assessee and lump sum disallowances made by the AO was deleted. As the Assessing Officer and ld. CIT(A) could not find any defect on various claims made by the assessee, ad-hoc disallowance without pointing out any specific defect not sustainable. Being consistent with the above decision of the co-ordinate bench, we hold that the in absence of any specific defect no ad hoc disallowance can be made and thus the ground no. 4 raised by the assessee is allowed.

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• 2022 (8) TMI 1085
  Exemption u/s 11 - Whether activities of assessee are charitable in nature? - HELD THAT:- Decision on the entitlement of the petitioner trust to exemption would have to, in light of the prevailing law, take note of not just the dominant objects/purpose of the trust but the activities undertaken in pursuance of the objects. It must be ascertained as to whether the business activities fuel the charity or whether the charitable activities are merely incidental to the business of running the kalyana mandapam. The impugned orders of assessment have taken note of the object in clause 3(k) of the Trust Deed. At paragraph 3.2 of the impugned orders, the details of income generated from the hire of the Kalyana Mandapam as well as other sources, such as bank were taken note of. The expenses incurred have also been noted with a specific finding that the major expenses include maintenance of the Kalyana Mandapam. A perusal of the impugned orders not reveal the specific charitable activities that the petitioner has engaged in, though the show cause notice to the petitioner as to why the provisions of Section 2(15) not be invoked in its case, has evoked a reply to the effect that the main objects of the Trust are education, medical relief and relief to the poor. The critical issue continues to relate to the usage of funds by the petitioner as this would determine whether its activities are charitable or otherwise, This has then to be set and seen in the context of Section 2(15) of the Act. This exercise necessarily involves an appreciation of facts which this Court is not inclined to embark upon in terms of Article 226 of the Constitution of India. In any event, no legal infirmity is made out to warrant intervention in/with the impugned orders. Faced with this prospect, learned Senior Counsel for learned counsel on record, conveys that the petitioner wishes to withdraw the Writ Petitions, seeking liberty to file statutory appeals. Appeals challenging assessments for AYs 2009-2010 to 2012-2013 and 2016-2017 are stated to be pending before the first appellate authority. Seeing as all the appeals involve the claim of exemption under Section 11, it stands to reason that those appeals as well as the appeals that the petitioner has been granted liberty to file under this order, shall on institution, be consolidated, assigned to one appellate authority, the petitioner afforded personal hearing and orders passed thereafter, all within a period of six (6) months from the date of receipt of this order.

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• 2022 (8) TMI 1084
  Validity of assessment u/s 153A - incriminating material found during the search or not? - HELD THAT:- ITAT, upon appreciation of the documents on record, concluded that the documents referred to by the Assessing Officer as incriminating were admittedly not found from the address of the assessee. Further, upon appreciation of the material, the ITAT concluded that the said list of transfer of shares relied upon by the Assessing Officer could not be considered as an incriminating material, as it merely reflected the date, name of the transferor and transferee as well as the number of the shares. The documents did not record any unexplained investment made by the assessee. The ITAT concluded that no material was found during the course of search so as to indicate any unaccounted investment made by the assessee. The ITAT, therefore, determined that the Assessing Officer made the additions of the unaccounted investment merely on the basis of presumptions. ITAT, therefore, concluded that since no assessment was pending for the relevant assessment year 2010-11 on the date of search and no incriminating material was found during the course of search, the issue is covered in favour of the assessee by the judgment of this Court in the case of Commissioner of Income Tax vs. Kabul Chawla [ 2015 (9) TMI 80 - DELHI HIGH COURT] and Principal CIT vs. Meeta Gutgutia [ 2017 (5) TMI 1224 - DELHI HIGH COURT] as well as M/s Kapis Impex LLP [ 2020 (7) TMI 44 - ITAT DELHI] A predecessor Division Bench of this Court in Kabul Chawla (supra) has held that if no incriminating material is found during the course of the search in respect of an issue, then no addition in respect of such an issue can be made in the assessment under Sections 153A and 153C - Decided in favour of assessee.

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• 2022 (8) TMI 1082
  Denying exemption u/s. 54F - assessee failed to invest the capital gains towards purchase of a new flat before due date of filing of return of income u/s. 139 or further, failed to deposit the capital gains in the capital gain account - HELD THAT:- Admittedly the due date for filing of return of income u/s.139(1) is 31-07-2014 and the time limit available for assessee for filing of return of income u/s. 139(4) is 31-03-2015. Admittedly, there is no dispute that the assessee made investment in purchasing a new flat on 06-02-2015 and it is evident from the assessment order that the assessee filed e-return of income on 27-02-2015 which is u/s. 139(4) - As note that subsection (4) of section 54F is also clear that the net consideration which is not utilized for the purpose or construction of a new asset before due date of furnishing return of income u/s 139 the assessee has to mandatorily deposit before furnishing such return of income. It is clear from the record that the assessee made investment on 06-02-2015 i.e. before furnishing the return of income u/s. 139(4) of the Act on 27-02- 2015. The assessee cannot be held to be ineligible for claiming exemption u/s. 54F on the reason that the investments are not made before due date for filing of return of income u/s.139(1) - order of CIT(A) is not justified and it is set aside. We hold that the assessee made investments from capital gains arising out of transfer of original capital asset towards purchase of a new asset within specified period before filing of return of income u/s. 139(4). The order of CIT(A) is not justified and it is set aside - assessee made investments from capital gains arising out of transfer of original capital asset towards purchase of a new asset within specified period before filing of return of income u/s. 139(4) of the Act. Thus, the grounds raised by the assessee are allowed.

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• 2022 (8) TMI 1081
  Addition being the share application money received - accommodation entry transactions - Whether party did not respond to the notice u/s 133(6) of the Act could not ipso facto make the assessee liable for addition? - HELD THAT:- AO made addition on the basis that during the year under consideration, the assessee had received certain share application money from share applicants - During the course of assessment proceedings, the assessee issued notice u/s 133(6) to verify the genuineness of the transaction. However, the notice sent by the AO remained unreplied. The assessee has filed a Paper Book wherein a reply by the share applicant is enclosed. Share applicants filed their income tax return and furnished P L A/c, computation of income etc. It is seen that the assessee has also filed part of the bank statement. However, it is seen that the balance sheet and computation of P L A/c filed by the assessee is not commensurate with the investment made by the share applicants. It is also seen that the assessee has not filed the entire balance sheet of the share applicants for the AY 2012-13 - Appeal of the assessee is dismissed.

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• 2022 (8) TMI 1080
  Disallowance on account of agriculture expense at the ad hoc rate of 30% as unexplained cash in hand - CIT(A) deleted the substantial addition, observing that AO tried to disprove the claim of agriculture income by referring to discrepancies in the statement of Ranjit L. Thakur (mango contractor who entered into Kabala agreement with the assessee) - HELD THAT:- Out of total cash deposit of Rs.21,12,000/-, Rs.4,21,537/- is treated as unexplained cash in the hands of assessee. As regards the other credit entries, ld CIT(A) find that the assessee has explained the credit entries properly and the AO has not brought out any concrete evidences to reject the same. Most of the credit entries are found to be pertaining to opening balance in the said bank accounts, FD closure proceeds and other sources receipts. Thus, the addition of Rs.59,29,739/- pertaining to cash deposits and other credits was restricted to Rs.4,21,537/- by ld CIT(A). We note that ld CIT(A) failed to prove that amount of Rs. 4,21,537/- is out of unaccounted income. The assessee submitted enough proof and ld CIT(A) has not refuted or discredited these evidences. The ld CIT(A) does not mention why he is not accepting these evidences. Therefore, we delete the balance addition of Rs. 4,21,537/-. STCG on share market transactions and speculative gain in share transactions - HELD THAT:- Losses incurred in the trading of shares were adjusted in short term capital gain therefore these were not appearing in the original return of income, that is, losses were claimed in the original return of income, however, because of set off from short term capital gain, they disappeared. Hence, we do not find any merit in the submission of DR and therefore, the addition are hereby deleted. Hence, we allow ground No. 3 and 4 raised by the assessee. Addition pertaining to stamp duty in cash and LIC premium paid in cash - HELD THAT:- We do not agree with ld DR for the Revenue, as the assessee explained the source of payment stating that part payment was made from his wife account and from his parents. Considering these facts, we delete the additions. Cash deposit in the bank account - AO rejected the claim of the assessee by stating that the cash deposits made during the year is more than agriculture income claimed in her Return of Income - HELD THAT:- Once agriculture income was proved on the basis of record of title and possession and agriculture land and evidence of agriculture operations earning income therefrom, the same has not to be proved every year separately. Hence based on this factual position, we delete the addition.

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• 2022 (8) TMI 1079
  Penalty u/s 271(1)(c) - Defective notice u /s 274 - Addition on account of cash credits u/s 68 - allegation of non specicication of clear charge - HELD THAT:- There is no dispute with regard to the fact that the notice issued u/s 271(1)(c) of the Act is defective. The AO failed to strike down the correct limb under which he sought to impose penalty. Undisputedly, the AO was required to specify the charge. The Revenue has not pointed out from the record that any notice u/s 271(1)(c) of the Act specifying the particular charge was issued to the assessee. There is a complete non-application of mind by the assessing authority hence, has simply put her signature without stating the guilt of the assessee. The case laws as relied by Ld. Sr. DR are not applicable on the facts of the present case. On the contrary, the ratio of judgement of the Hon ble Delhi High Court in the case of Sahara India Life Insurance Company [ 2019 (8) TMI 409 - DELHI HIGH COURT] is squarely applicable. We hereby quash the penalty order and impugned penalty is thus, deleted. The grounds raised by the assessee are allowed.

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• 2022 (8) TMI 1078
  Reopening of assessment u/s 147 - unexplained source of cash deposited by the assessee - HELD THAT:- As the authorities below have brought on record that the assessee has been declaring business income. The assessee has not furnished proof in respect of any other source of cash deposits. Therefore, in considered view, the Ld. CIT(A) was justified in sustaining the addition made by the AO as the assessee grossly failed to substantiate his claim that the cash deposited in the bank account was not out of business receipts. It is incumbent upon the assessee to prove the source of cash deposits. No reason to disturb the finding of authorities below, the same is hereby affirmed. Thus, Ground raised by the assessee are dismissed.

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• 2022 (8) TMI 1077
  Addition u/s 68 - unsecured loans treated as unexplained cash credit - CIT-A deleted the addition - HELD THAT:- DR has not been able to dispute the fact that on verification of relevant details and documents furnished by the assessee, no adverse finding was recorded by the Assessing Officer in the remand report submitted to the Ld.CIT(A). He has only pointed out that there were credits found in the bank accounts of the concerned creditors/depositors just before giving loans/advances to the assessee in many cases. However, as noted by the CIT(A) in this regard, there was no allegation made by the Assessing Officer regarding any cash deposits made by the concerned creditors/depositors in their accounts before giving the loans/advances to the assessee in question. As observed by the Ld.CIT(A) in this regard, merely because there were funds transfer by depositors/creditors from another source of investment before giving loans/advances to the assessee, the transactions could not be doubted since depositors might have their funds lying elsewhere which were brought in for giving loans/advances to the assessee. Having regard to all the facts of the case, we therefore find no infirmity in the impugned order of the Ld.CIT(A) deleting the addition made by the Assessing Officer u/s.68 - Decided against revenue. Addition of unsecured loan received from Miss Pooja Manoj Haria and disallowance of interest paid thereon - HELD THAT:- The relevant details giving inter-alia her PAN were also furnished by Miss Pooja Manoj Haria which also proved that the loan in question was given by her to the assessee by A/c payee Cheque.CIT(A) held that the primary onus to establish the identity and creditworthiness of the concerned creditors as well as genuineness of the relevant transaction was duly discharged by the assessee and having regard to the relevant findings of fact recorded by the Ld.CIT(A) in his impugned order, which have unrebutted by the Ld.DR, we are of the view that the addition made by the Assessing Officer u/s.68 of the Act along with disallowance of corresponding interest of Rs.15,000/- was rightly deleted by the Ld.CIT(A). We therefore find no merit in ground No.2 of Revenue s appeal and hence the same is dismissed. Disallowance of deduction u/s.80G - deduction claimed in respect of donation made to Chief Minister Kanya Kelvani Nidhi was disallowed for want of original receipt since the assessee failed to submit the donation receipt - HELD THAT:- It is observed that eventhough the original receipt for payment of donation made to Chief Minister Kanya Kelvani Nidhi was not produced by the assessee as the same was lost or misplaced, sufficient evidence was produced by the assessee to support and substantiate its claim of having paid the said donation. Even the donation receipt issued by the Executive Engineer Panchayat Department Dahod evidencing payment of donation was produced by the assessee. CIT(A), in our opinion, has rightly deleted the disallowance of assessee s claim for deduction u/s.80G of the Act made by the Assessing Officer. Ground of Revenue s appeal.

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• 2022 (8) TMI 1076
  Rectification of mistake u/s 154 - disallowing depreciation and RTO tax insurance expenses and 40(a)(ia) disallowance on interest expense paid to NBFCs without making deduction as required u/s. 194A - HELD THAT:- We find that the ld. CIT(A) directed the assessing officer to verify whether the payee has already offered the amount as income in the Return of income. However concluded that the addition made by the A.O. is deleted, which is self-contrary to the findings made by the ld. CIT(A). Therefore it is appropriate to remit the case back to the file of the AO for limited purpose of verification, whether the payee has already offered the amount as income in the Return of Income and make appropriate disallowance pursuant to the verification thereon. Appeal filed by the Revenue is allowed for statistical purpose.

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• 2022 (8) TMI 1075
  Revision u/s 263 - allowability of deduction u/s. 80P(2)(d) - HELD THAT:- As relying on THE SARDAR PATEL CO-OPERATIVE CREDIT SOCIETY LIMITED [ 2022 (6) TMI 843 - ITAT AHMEDABAD] wherein held a similar issue involving identical facts and circumstances has been decided by the Tribunal in favour of the assessee and even the learned DR has not been able to dispute this position. We, therefore, follow the said decision of the Coordinate Bench of this Tribunal in case of the People Co-op. Credit Society Ltd. [ 2022 (3) TMI 71 - ITAT AHMEDABAD] and set aside the impugned order passed by the PCIT under Section 263 of the Act restoring that of the Assessing Officer passed u/s 143(3) of the Act. - Decided in favour of assessee.

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• 2022 (8) TMI 1074
  Addition u/s 68 - unexplained cash credit - liability on the assessee to provide the identity of the lenders, establish the genuineness of the transactions and creditworthiness of the parties - HELD THAT:- Undisputed fact that the majority amount of loan received by the assessee was refunded to the loan parties. It implies that the assessee was not the beneficiary of the loan received by it as alleged by the AO. The majority amount of loan has been repaid by the assessee in the year under consideration itself except a sum of Rs. 1,05,05,000.00. Therefore, it is difficult to hold that the assessee was the ultimate beneficiary of the impugned amount. Thus, we can assume that the impugned transaction was the business transactions between the assessee and the loan parties. We hold that the amount of loan received by the assessee represents the unexplained cash credit in its books of accounts. Accordingly, we set aside the finding of the CIT-A and direct the AO to delete the addition made by him. Hence, the ground of appeal of the assessee is allowed. Addition income from accommodation entries - HELD THAT:- There is no dispute to the fact that the assessee was engaged in providing the accommodation entries and this fact was admitted by the authorities below. Accordingly, the assessee has offered an income on estimated basis for Rs.53,22,075.00 being 0.5% of the total bank deposits in the bank which was also accepted by the revenue - addition was made by the AO on the basis of the admission made by the assessee during the assessment proceedings - assessee in the ground of appeal before us has challenged the impugned addition. To our understanding, the ground raised by the assessee is not sustainable for the reason that the addition was made on the concession of the assessee which is evident from the assessment order - AR has not brought out anything based on the documentary evidence that the income offered during the assessment proceedings was wrong. Accordingly, we do not find any merit in the ground raised by the assessee. Disallowance of bogus loss - As alleged by the authorities below that such loss was set off of against the income derived by the assessee from the sale purchase of property whereas there was no income added by the authorities below on account of sale purchase of the property. In fact the discussion was made about the profit which the assessee has earned on the transaction of sale purchase of the property but no addition was made. Thus it is clear that such loss was not set off against the profit from the sale purchase of the property - no addition can be made holding that the impugned loss is a bogus loss. Besides the above, once it has been admitted by the authorities below that the assessee has been engaged in providing the accommodation entries and accordingly the profit has been estimated based on the bank deposits of the assessee, thus, the impugned transaction of purchase and sale of the property on the same day is nothing but a part of accommodation entry at this was also accepted by the revenue. Accordingly, the question of making the addition on account of impugned loss does not arise. Thus the ground of appeal of the assessee is allowed.

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• 2022 (8) TMI 1073
  Revision u/s 263 by CIT - unexplained cash deposits - as per CIT neither assessee nor AO had given any logic/explanation about calculation instead of considering the whole amount of cash deposited in Akola Urban Co-op. Bank Ltd - Non enquiry/investigation by the AO against this cash deposit made Pr.CIT to rethink and proceed under section 263(1) - HELD THAT:- We do not found any force in the argument of the assessee that the view taken by the AO was one of the possible views; hence, Pr.CIT cannot exercise his powers under section 263(1) - This argument holds well where a proper verification, enquiry, justification were there in the order of the AO along with evidences and proper submission from the side of assessee. As in this case assessment was framed under section 144 and assessee had not even filed return of income under section 148 of the I.T. Act, there is no possibility of proper verification, enquiry, justification in the order of the AO along with evidences and proper submission from the side of assessee. We are not inclined to interfere in the order of Ld. Pr.CIT. In our opinion, the order of Ld. Pr.CIT (directing AO to re-verify the entries of cash deposit after giving assessee a proper opportunity of being heard) is of two fold, i.e. on the one hand it directs the AO to re-verify the matter to protect the interest of Revenue with proper justification and on the other hand it s an opportunity to the assessee also to substantiate his claim about the source of the cash deposit and its consequences thereafter. - Decided against assessee.

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• 2022 (8) TMI 1072
  Addition u/s 69A - Cash deposits in the bank account - HELD THAT:- Assessee has explained the source of cash deposits made by him during the demonetization period hence, we set aside the order of the CIT(A) and allow the grounds of appeal of the assessee.

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• 2022 (8) TMI 1071
  Exemption u/s 11 - cancellation of the registration u/s. 12AA - HELD THAT:- We find that since the Hon ble Tribunal has restored the registration u/s. 12A of the Act, the assessee is entitled to claim exemption u/s. 11 of the Act and hence the Ld. CIT(A() has rightly directed the AO to delete the additions made by the Ld AO. Accordingly, we therefore find no infirmity in the order of the Ld. CIT(A) on this ground and dismiss the grounds raised by the Revenue.

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• 2022 (8) TMI 1070
  Deduction u/s 80P - Amount of interest received from other than co-operative societies are not eligible for deduction - HELD THAT:- We note that issue under consideration is no longer res-integra. The Hon ble High Court of Gujarat in the case of Surat Vankar Sahkari Sangh Ltd. [ 2016 (7) TMI 1217 - GUJARAT HIGH COURT] has held that interest income received from Co-operative Bank is allowable u/s 80P(2)(d) - We note that assessee has not claimed Nationalized Bank interest in Section 80P (2)(d) it has only claimed Co-op Bank Interest and Co-op Dividend under section 80P(2)(d) of the Act. That is, assessee-society has claimed deduction under section 80P(2)(d) of the Act, on interest and dividend income received from Co-operative societies and Co-operative Bank. Therefore, assessee-society is eligible to claim deduction u/s 80P(2)(d) of the Act, as held by the Hon ble High Court of Gujarat in the case of Surat Vankar Sahkari Sangh Ltd. [ 2016 (7) TMI 1217 - GUJARAT HIGH COURT] . Therefore, we do not find any infirmity in the order of ld CIT(A).That being so, we decline to interfere with the order of Id. CIT(A) in deleting the aforesaid additions. His order on this addition is, therefore, upheld and the grounds of appeal of the Revenue are dismissed.

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• 2022 (8) TMI 1069
  Exemption u/s 11 - refusal of registration u/s 10(23C)(vi) Assessee-Society/Trust in its bylaws, contains various objects including education, whereas it was being maintained that the other objects, which are non-educational or ancillary - whether the mere existence of non-educational objects in the Deed of Declaration, despite the undisputed factum of no activity having been carried out in pursuance of such non-educational objects, would render the applicant ineligible for grant of approval for exemption under section 10(23C)(vi)? - HELD THAT:- In CIT vs. Geetha Bhawan Trust [ 1994 (11) TMI 71 - KERALA HIGH COURT] it has been held that exist means to be in presence, force, activity or effect at a given time. CIT (E) has not shown as to how the Applicant Trust was, at the relevant time, in force, activity or effect qua the non-educational objects of the Trust. Per contra, the applicant has given the details of Schools/Institutions run by it - These details, undisputedly were filed before the ld. CIT (E). Such details clearly evince that these are the Institutions pertaining to education only and regarding no other objects, non-educational in nature. Even the initial submissions filed before the CIT (E) by the Applicant, support the argument of the assessee that the assessee did not carry out any activity other than education, which is apparent from the fact that in the Income Expenditure Account placed only source of income is fee and other receipts from the students, along with interest from bank account and there is no other source of income, which proves the nature of the activity. Erstwhile section 10 (22), which now forms part of section 10(23C)(vi), speaks of a University or other Educational Institution existing solely for educational purposes, and not for the purposes of profit; and that what is relevant under this section, is the source of the income derived from an Educational Institution existing solely for educational purposes. Hence, this objection of the CIT (E) has no legs to stand on and the same is hereby disagreed with. Although the ld. CIT (E) has said so, it nowhere stands proved that the funds/income of the Applicant are being utilised for other objects too, i.e., the objects, which are not educational objects in nature, or that the Applicant is part of an Institution which is engaged for the purpose of profit. Likewise, there is nothing on record to show that the surplus of the Applicant has been diverted for any use or purpose other than educational purposes. This being so, no violation of the Third Proviso to section 10(23C)(vi) stands proved. Finding the grievance of the Applicant-Appellant, by way of the Grounds of Appeal, the same is accepted. The order under appeal is reversed - CIT (E) is directed to forthwith grant approval to the Applicant for exemption under section 10(23C)(vi). Appeal of assessee allowed.

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• 2022 (8) TMI 1068
  Disallowance of interest u/s 36(1)(iii) - interest bearing funds had been diverted to sister concern, in the form of loans and advances for non-business purposes - HELD THAT:- As from the material on record that no fresh loans and advances were made during the previous year relevant to the assessment year under consideration. All the loans and advances made to the sister concern were made in the earlier years, the additions made in the earlier assessment years by the disallowance of interest, came to be deleted by this Tribunal in assessee s own case for the assessment years A.Y. 2008-09 [ 2017 (6) TMI 1371 - ITAT PUNE] , A.Y. 2009-10 [ 2017 (2) TMI 1293 - ITAT PUNE] , A.Y. 2010-11 [ 2017 (12) TMI 1398 - ITAT PUNE] , A.Y. 2011-12 [ 2019 (8) TMI 1835 - ITAT PUNE] , A.Y. 2012-13 [ 2020 (11) TMI 602 - ITAT PUNE] . Therefore, even on the principle of consistency, no disallowance of interest u/s 36(1)(iii) is warranted. Accordingly, we do not find any illegality and perversity in the findings of the ld. CIT(A). Therefore, we do not find any merits in the ground of appeal no.2 and 3 filed by the Revenue. Disallowance u/s 14A - Admission of additional ground - HELD THAT:- The fact that the respondent-assessee company had not earned any exempt income is evident from the material on record, therefore, for adjudication this issue it does not require any verification of fact or enquiry into the facts. Thus, it is crystal clear that it pure question of law requiring no verification of facts. No illegality and perversity in admitting this additional ground of appeal by the ld. CIT(A) as it is in consonance with the settled position of law. Thus, the finding of the ld. CIT(A) that in the absence of any exempt income, resort to the provisions of section 14A cannot be made, cannot be faulted - The fact that the assessee company itself suo moto offered disallowance ipso facto cannot be reason for invoking the provisions of section 14A, as there cannot be estoppel against law. Therefore, we do not find any merits in the grounds of appeal no.4 and 5 raised by the Revenue. Accordingly, these ground of appeal no.4 and 5 raised by the Revenue stand dismissed.

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• 2022 (8) TMI 1067
  Revision u/s 263 by CIT - jurisdiction invoked merely on the basis of audit objection - Proof of independent application of mind by CIT - HELD THAT:- As in the instant case, merely because there is an Audit Objection, contention regarding the exercise of powers u/s 263 as invalid cannot be accepted. What is relevant to examine is whether there is a mechanical exercise of revisionary powers u/s 263 by the ld PCIT by merely citing the Audit Objection or there is due application of mind by him before exercise of such powers. In the instant case, impugned order wherein it was mentioned that the assessment records were called for by the ld PCIT and examined and thereafter on examination of the records, it was noted that the AO has not made proper and in depth enquiries and thereafter a show cause notice was issued by the Ld. Pr.CIT We therefore do not agree with the contention of the Ld. AR that there is non-application of mind on the part of the Ld. Pr.CIT and the jurisdiction u/s 263 of the Act has been invoked merely on the basis of audit objection. Rather, we find that the ld PCIT has taken into considered the entirety of material on record including audit objection as well as investigation report and thereafter, has considered it appropriate to exercise his revisionary jurisdiction u/s 263 as the perusal of such records prima facie demonstrated that the order so passed by the AO was erroneous as well as prejudicial to the interest of the Revenue. We therefore don t agree with the contention so advanced by the ld AR in this regard. - Decided against assessee.

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• 2022 (8) TMI 1066
  Revision u/s 263 - As per CIT Corpus Donation received by a Charitable Institution is required to be used as per the specific condition for receiving such donation. The assessee has passed on/transfer the money to other Organisation without utilising the same for the purpose for which donation was received - HELD THAT:- Assessee -Trust has taken an object of establishing Schools and Universities, Libraries and other Educational Institutions for the development of education. It has used major contribution of Rs.1,41,00,000/- out of the alleged Rs.1,76,00,000/- for constructing Smt. Kamla Devi Budhia Government School. If the details brought to our notice are fitted against the finding of ld. Commissioner recorded in the last paragraph, then it would reveal that ld. Commissioner has not applied his mind to any of the information given by the assessee. The above finding is factually incorrect. It suggests the power under section 263 has been exercised without evaluating the material available on record. Hence, the impugned order is not sustainable in the eyes of law. It is quashed. - Decided in favour of assessee.

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• 2022 (8) TMI 1065
  Assessment u/s 153A - only survey operation under section 133A - Whether valid search is conducted against the assessee u/s 132? - HELD THAT:- We find that the search has been initiated in the name of the assessee firm along with names of partners appearing on the warrant of authorization issued u/s 132(1) but no search was conducted at the business premises of the assessee firm. The address mentioned in the partnership deed, notice issued u/s. 133A, the PAN, IT Data base and ITR, copies of which were filed before us, clearly prove that 40, Deshmukh Apartments, Dattatray Nagar, Nagpur where the search was conducted is not the business address of the assessee firm. The search was concluded but no panchnama was drawn in the name of the assessee firm. Therefore, the conditions as stipulated for assuming the jurisdiction u/s. 153A, in our view, have not been satisfied. We do not agree with the contention of the CIT(A) that since, the premises belonged to the partners, search carried out at the residence of partners is a search conducted at the assessee firm. The firm is a separate taxable unit under the income tax act and in view of the Hon ble Bombay HC decision in the case of Tirupati Oil Corporation [ 2000 (2) TMI 42 - BOMBAY HIGH COURT] , Karnataka High Court decision in Nenmal Parmal [ 1991 (11) TMI 49 - KARNATAKA HIGH COURT] and in Govind G. Sarawagi HUF [ 2015 (11) TMI 993 - ITAT AHMEDABAD] it cannot be said that there was any search on the assessee firm. In view of these facts, we are of the opinion that the conditions stipulated u/s. 153A, for the issue of notice, are not satisfied. Until and unless the Assessing Officer assumes the valid jurisdiction u/s. 153A the assessment made in consequence of the notice issued u/s. 153A, in our view is invalid and void ab initio. Accordingly, ground No 1 raised by the appellant for all the assessment years is allowed and we quash the assessment order passed u/s. 153A r.w.s. 143(3).

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• 2022 (8) TMI 1048
  Revision u/s 263 - Revision based on Audit Objection - Allegation of non independent application of mind by CIT - Whether there is no specific finding in the order that the order of assessment is erroneous insofar as it is prejudicial to the interests of revenue in respect of any of the issues raised? - HELD THAT:- As exercise of Revisionary Powers in the facts of the present case cannot be upheld. The Revisionary Powers in the facts of the present case have been exercised mechanically and in undue haste without even caring to address the reply made available by the assessee on the IT Portal. The fact that patently on the face of the record it is an order passed in undue haste is further tainted by the fact that no effort was made by the ld. PCIT to give the assessee an effective hearing. The fixing of the hearing in the peculiar facts and circumstances of the present case where the Show Cause Notice dated 23.02.2022 issued thereafter fixing the hearing on 04.03.2020 patently was a rhetoric, meaningless exercise. Admittedly, reasonable time was not made available to the assessee to put in an effective hearing. Onerous responsibility to provide an effective and fair hearing was treated like a meaningless exercise of merely ticking the box. It is unfortunate that no effort was made to even address the written reply of the assessee received on the IT Portal. The exercise of Revisionary powers cannot be allowed to be exercised whimsically or arbitrarily. In the facts of the present case, ld. PCIT was conscious of the fact as to why the specific case was selected for scrutiny under CASS. The ld. PCIT also had the benefit of queries raised by the AO and the replies of the assessee. The fact that there was a shrinkage loss higher than the estimate, was also a fact available on record. In the facts of the present case the 263 action was triggered by the higher percentage loss as flagged by the Audit Objection is a fact on record. The fact that the issues were enquired into by the AO in the facts of the present case or that on the audit objections, the AO required the assessee to offer its explanation, the fact remains that the higher percentage or shrinkage loss is based on estimated percentages in regard to evaporation etc. and the occasions for higher spillage or transportation loss were also estimated percentages were facts considered by the AO are arguments which we have considered. We also find that the ld. PCIT did not even care to look into the reply of the assessee before the passing of the order. The prayer of the ld. CIT-DR at this stage that the matter may be remanded back, we find in the peculiar facts of the present case cannot be accepted. The fact that the twin conditions of error in the order and said error which can be said to be prejudicial to the interests of the Revenue, we find have not been met. The fact remains that the order has been passed in undue haste without caring to address even the reply of the assessee. Argument canvassed on behalf of the assessee that merely because there is an Audit Objection, the exercise of powers u/s 263 is invalid, we hold cannot be accepted. What we understand from the aforesaid decision and various other decisions cited on this proposition is that a mechanical exercise of revisionary powers u/s 263 by the Revisionary Authority by merely citing the Audit Objection cannot be said to be a valid exercise of Revisionary Powers. PCIT is require to give an independent finding considering the record. The error in the order of the AO, that too such an error which is prejudicial to the interests of the Revenue, has to be pointed out by the Revisionary Authority in the order. The onerous power cannot be exercised mechanically and arbitrarily. The sagacious arguments of the ld. CIT-DR to this extent, we find are well founded. Accordingly, considering the peculiar facts and circumstances of the case for the reasons given herein above, we find that the impugned order on facts deserves to be quashed. Appeal of assessee allowed.

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• Customs

• 2022 (8) TMI 1092
  Seeking provisional release of de-stuffed imported perishable goods - Defatted Coconut - classified as Tariff Item/CTH 23065020 or not - HELD THAT:- This Court has categorically granted liberty in favour of the petitioner to file an application for provisional release of the imported goods and by directing expedited decision on such application, since the subject goods are perishable in nature. In the light of the specific direction issued by this Court and liberty reserved in favour of the petitioner to file an application under Section 110A of the Customs Act, the respondents clearly misdirected itself in refusing to pass an order of release on the ground that the adjudicating authority had already passed an order against the petitioner by relying upon the order dated 31.12.2021 referred to in paragraph-3 of the impugned order, without appreciating that the same does not pertain to the adjudication proceedings in relation to the petitioner, since the same had already culminated in the order at Annexure- P dated 10.03.2021 itself, much prior to 31.12.2021. It is also relevant to state that though Section 110A of the Act refers to the proceedings before the adjudicating officer, in the light of the undisputed fact that the appeal had been preferred by the petitioner and a further appeal preferred by the respondents are merely continuation of the original adjudication proceedings, the respondents clearly erred in coming to the conclusion that the provisional release under Section 110A of the Act is permissible only when the proceedings are pending before the adjudicating officer and as such, the impugned order deserves to be quashed. The respondents are directed to release the subject goods in favour of the petitioner within a period of one week from the date of receipt of a copy of this order, subject to the petitioner complying with the requirement of Section 110A of the Customs Act, 1962 - Petition allowed.

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• 2022 (8) TMI 1064
  Suspension of Customs Broker License - non-examination of persons even when the statements made were retracted - cross-examination of co-accused not allowed - copy of the offence report was not given - failure to adhere to mandatory time schedule prescribed for every stage of proceedings, under CBLR, 2018 and CBEC s Circular dated 08.04.2010 - whether the appellant has involved himself in the undervaluation by the importer? - violation of principles of natural justice. HELD THAT:- In the instant case the appellant is accused of having the knowledge of the undervaluation committed by the importer and that he has not kept the Department informed and thus they have violated provisions of Regulations 10(d), 10(e) and 10(m) of CBLR, 2018. It is found that order of suspension was issued after about a year of recording of the statement of the accused - the action like suspension needs to be immediate and any delay, in this regard, would give an impression that the action was not warranted. In this case, the Department has not shown any case of urgency to suspend the license of the custom broker. The suspension of license of a custom broker, placed on a similar footing, alleged to have involved in the same offence committed by the importer at Mundra, has been revoked. The justice demands that when the allegations are common, action taken should be similar - the differential treatment meted out to the detriments of the appellants appears to be as a result of prejudice. Violation of principles of natural justice - time line for issuance of show cause notice under CBLR, 2018 have not been followed - HELD THAT:- The custom broker is bestowed with certain facilities as well as responsibilities, as far as customs clearance is concerned. The High Court have interpreted, the provisions regarding the issuance of show cause notice within 90 days of the receipt of offence report, differentially while some High Courts have held that the time line is mandatory, somehow held that it is only directionary. It is the case of the appellant that copy of the offence report/information against the appellant was not provided; suspension was ordered after lapse of around one year; while the custom broker at Kandla was allowed, by revoking the suspension, to continue his business, the appellant has been met to suffer - the Department has not made out any case for suspension of the custom broker license, as it could be seen that the action was too much delayed and therefore does not display any urgency - serious injustice was done to the appellant in comparison with the custom broker at Mundra. The impugned order is set aside and the suspension of the appellant-custom broker s license is revoked - Application allowed.

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• 2022 (8) TMI 1063
  Rejection of provisional release of goods imported by the appellant - Secondary grade goods - Prime goods or not - Department is that the appellants forged Mill Test Certificate and that goods imported by the appellant, under seizure are not BIS compliant - HELD THAT:- The impugned goods are manufactured by the some other manufacturer and supplied by someone else. We find that as per BIS standard and the control order cited above it is the goods that should be as per BIS specifications and the manufacturer should be licensed or registered by BIS (Bureau of Indian Standard). The rules do not specified that the supplier should be registered - as per the argument of the Department, as far as the genuineness of Mill Test Certificate is concerned, may be relevant to ascertain the bona fides of the appellant importer in the adjudication proceedings This is not relevant for provisional release as it is established that goods, independently tested after the import in India, are BIS compliant. The department should not have any objection in releasing the goods provisionally. However, we are of the opinion that at the same time the interest of the Revenue is to be safeguarded. We find that Learned Counsel for the appellants submits that they have already deposited about Rs 1.53 Cr which is very huge compare to the value of the seized goods i.e. less than 2 Cr. Learned Authorized Representative therefore, submits that the deposit made by the appellants was towards duty liability in respect of the past imports and not for the impugned goods. The importer has been suffering for the last 3 years. He had to approach the Honourable High Court and this Tribunal to get the goods tested and released provisionally. As per the submissions of both the parties, adjudication is not likely to be completed in near future - there is no reason as to why the appellant should suffer as, the goods are tested to be BIS compliant and the manufacturer of the goods is claimed to be registered with the BIS. The interest of justice would be met if the department issues a detention certificate, as applicable, for waiver of demurrage charges - the impugned seized goods shall be provisionally release subject to the conditions imposed - application allowed.

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• 2022 (8) TMI 1062
  Suspension of Customs Broker s Licence - Regulation 16(1) of the CBLR, 2018 - facts and circumstances of the case pending further investigation and decision on revocation of licence or imposition of penalty under CBLR, 2018 - allegation is that CB had no idea of the valuation of the consignments and never tried to know the real value of the Ball Bearings - over- valuation of exports to defraud the Exchequer by getting the very high Input Tax Credit and export related incentives - one of the exporter has been found to be non-existent at the declared place of business - employee of Custom Broker has not given truthful statement which implies that the Customs Broker is not willing to co-operate in the investigation. Non-verification of value of the export goods - HELD THAT:- The Appellant is correct in stating that the CBLR do not require or authorize the Customs Broker to determine the value of the imported or export goods. The power of valuation of the goods under section 4 of the Customs Valuation Rules rests on (a) the exporter/importer itself in the case of self-assessment; and (b) the proper officer who can reassess the Bill of Entry or Shipping Bill so self-assessed by the exporter under section 17. There is nothing on record to show that the Appellant had colluded with the exporter to over-value the goods - When the proper officers have themselves allowed the clearance of Shipping Bills, no blame whatsoever can be placed at the door of the Appellant on the ground that it had no idea of the price of the export goods. Processing of Shipping Bills with over-valued goods resulting in loss to the Exchequer - HELD THAT:- This is a very serious allegation not substantiated by any facts in the impugned order. The Shipping Bills once assessed are final unless they are appealed against before the Commissioner(Appeals). Therefore to allege the value is wrong, Shipping Bills must be appealed against before the Commissioner(Appeals) and the assessments modified. Nothing in the records shows that this has happened - the Customs Broker has no right or responsibility to modify the value in a Shipping Bill under the law. Non-existent exporter - HELD THAT:- It is noticed that the three suppliers of M/s. Bevyesh Trading Pvt.Ltd. were found to be non-existent at their declared place of business and the Appellant should have verified this. Firstly we do not think that the Regulation requires the Appellant to physically go to the premises of each of its clients and verify whether they are functioning from that place. Secondly, if the GSTIN Number is issued by the departmental officers, it is for them to verify whether they exist at that address or otherwise. Employees of Customs Broker, who was authorized to give voluntary statement, has not given truthful statement, which amounts to an offense under the Indian Penal Code - HELD THAT:- he lack of coordination in the various sections of the department for transparent investigation is also writ large in the matter. The department has ignored the submissions of the Appellant dated 28.10.2021 pointing out inter alia that even on net searching made on 27.10.2021 in respect of M/s. C.S. International it has been found that they have submitted their last GST return on 23.10.2021 for the financial year 2020-21-2022 for the same address at 278, Rabindra Sarani, Kolkata-700007. Therefore, the charge of violation of regulation 10(q) against the Appellant Customs Broker does not sustain. Also, the learned Principal Commissioner has not recorded in the impugned order that he is satisfied that there was an immediate need to stop the operation by the Appellant as required under Regulation 16 of the CBLR,2018 - the findings in the impugned order that the Appellants Customs Broker has violated Regulations 10(d), 10(m), 10(n) and 10(q) cannot be sustained. The impugned order confirming the suspension of the licence of the Appellant cannot be sustained and it needs to be set aside - Appeal allowed.

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• 2022 (8) TMI 1061
  Rate of duty - Confiscation of goods - base oil grade-12 - Import of high flash high speed diesel which is canalised - to be classified under tariff item 2710 1949 or under tariff item 2710 1971 of First Schedule to Customs Tariff Act, 1975? - HELD THAT:- It is not in dispute that the impugned goods are high flash high speed diesel which is canalised for import and did not conform to declaration in the bill of entry; consequently, the application of the appropriate rate of duty cannot be cause of cavil. Though appellant did challenge the denial of effective rates of duty, that grievance is academic in the backdrop of intention to re-export which restricts the present proceedings to confiscability of the goods and imposition of penalty. The impugned goods are permitted to be imported only by specified agencies; this is not a measure of protection but is mere extension of the scheme of petroleum product distribution in India. It, therefore, begs the question of wherewithal available to the appellant to undertake storage and marketing of diesel. It is also less than certain that potential customers could be persuaded to procure a commodity, that is considered to be adulteration-prone, from an unknown entity - the failure to ascertain the market value is in breach of section 125 of Customs Act, 1962. The fine demanded for redemption must be set aside on that count alone. Furthermore, in the light of the peculiarity of petroleum marketing and consumption in the country, private imports, even at much lower rates of duty and reduced pricing, commercially lack feasibility enough to give credence to the claim of the appellant that goods had been mistakenly despatched. The confiscation of goods under section 111 of Customs Act, 1962 as well the penalties imposed under section 112 of Customs Act, 1962 is set aside - appeal allowed.

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• Insolvency & Bankruptcy

• 2022 (8) TMI 1091
  Avoidance of rent - Creation of third party rights Rohtas Projects Limited without complying with the terms and conditions agreed upon vide agreement - the issue of rent is pending before the NCLT in proceedings under Section 66 - HELD THAT:- As of now the proceedings are pending under Section 66 of the IBC 2016 in respect to the rent of the premises in question before the NCLT as has already been noticed while mentioning the submissions of the rival parties hereinabove and prima facie the dispute does appear to be of a civil nature. Whether the proceedings are maintainable before the NCLT or not is an issue to be raised by the private opposite parties before NCLT. The dispute is essentially regarding rent for the period 2018 and thereafter, which is precisely the issue pending before the NCLT. It is a moot point as to how far element of criminality is involved in the matter if the dispute can be raised before other forums as per law and has been raised as claimed by the petitioner. Therefore, while investigation shall go on and the petitioner shall appear before the investigating officer to get his statement recorded, it is opined that the petitioner shall not be arrested in Case Crime No.0514 of 2022, under Sections 352, 406, 420, 447, 506 I.P.C., Police Station-Gomti Nagar, Lucknow, subject to his co-operation in the investigation - The investigating officer shall also take into consideration as to whether it is primarily a civil dispute and whether any criminal offence is made out against the petitioner in this regard or not. Let pleadings be exchanged between the parties within eight weeks - List immediately thereafter.

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• 2022 (8) TMI 1060
  Validity of Section 7 of the Insolvency and Bankruptcy Code, 2016 - Initiation of CIRP by Financial Creditors - threshold limit for triggering Corporate Insolvency Resolution Process qua the private financial creditors - Section 10A of IBC - HELD THAT:- Validity of Section 7 of the IBC was examined by Hon ble the Supreme Court in the case of Swiss Ribbons Pvt. Ltd. [ 2019 (1) TMI 1508 - SUPREME COURT ] and the same was found to be compliant to the Constitution of India and the challenge to the validity of the statute was repelled by Hon ble the Supreme Court in unequivocal terms. Despite that, the petitioner has ventured into questioning the validity of Section 7 of the IBC claiming that the challenge so laid is on a totally different proposition i.e., permissibility of a group of financial creditors jointly triggering CIRP without adhering to the requirement of default threshold of Rs.1 crore in individual capacity. On a plain reading of Section 7, it becomes clear that there is no ambiguity in the provision which requires any interpretation other than what is conveyed in its literary sense. The section clearly stipulates that the application for triggering CIRP may be initiated by a financial creditor either individually or jointly with other financial creditors. Previously the threshold default limit for filing the CIRP application was only Rs.1 lakh and it has been drastically increased to Rs.1 crore vide Gazette Notification dated 24.03.2020. It can easily be envisaged that in cases of MSMEs, there may not exist financial creditors whose individual debt is Rs.1 crore or above. If the threshold limit was to be fixed at Rs.1 crore qua each individual financial creditor, then there was no reason whatsoever for allowing joint applications by financial creditors. The statute i.e., Section 7 of the IBC as amended vide Gazette Notification dated 05.06.2020, admits no other interpretation except that a group of financial creditors can converge and join hands to touch the financial limit of Rs.1 crore stipulated under Section 7 so as to initiate a CIRP under the IBC. There are no merit in this writ petition - petition dismissed.

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• 2022 (8) TMI 1059
  Appointment of proposed IRP - HELD THAT:- It is observed that First Schedule under Regulation 7(2)(h) of the IBBI (Insolvency Professional) Regulations, 2016 at point 15 of the Code of Conduct for Insolvency Professionals, which states that An insolvency professional must make efforts to ensure that all communication to the stakeholders, whether in the form of notices, reports, updates, directions, or clarifications, is made well in advance and in a manner which is simple, clear, and easily understood by the recipients . The proposed IRP, Mr. Deepankur Sharma, in the present application is directed to adhere to the aforementioned Code of Conduct before giving his consent in an application under the Code - Since, no other IRP has been suggested thus, under sub section (4) of Section 9 of the Code, the Adjudicating Authority has to forward the name of Resolution Professional proposed to the Insolvency and Bankruptcy Board of India for its confirmation and shall make such appointment after the confirmation of Board. The term of appointment of Mr. Anil Arora shall be in accordance with the provisions of Section 16(5) of the Code - Application allowed.

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• 2022 (8) TMI 1058
  Maintainability of application - initiation of CIRP - Corporate Debtor committed default in payment of debt - Operational Debtor - existence of debt and dispute or not - HELD THAT:- The dispute as appears on record requires thorough inquiry/investigation before the Competent Authority/Court. It cannot be said that dispute as raised prior to demand notice by the Corporate Debtor is not a genuine dispute. This Adjudicating Authority cannot enter into details of the dispute. It is enough to come to the conclusion that the dispute as raised by the Corporate Debtor requires further investigation. Hence, the Corporate Debtor in CIRP as claimed by the Operational Creditor, cannot be admitted. Petition dismissed.

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• 2022 (8) TMI 1057
  Maintainability of application - initiation of application - Corporate Debtor failed to make repayment of its dues - Operational Creditors - existence of debt and dispute or not - HELD THAT:- This Adjudicating Authority having perused all the relevant papers and finding them in order notes that the Registered office of the Corporate Debtor is situated in Jodhpur, Rajastan and therefore this Adjudicating Authority has jurisdiction to entertain and try this application. Further, this matter is within the purview of the law of limitation, as the date of default is 08.10.2021, which is within the period of 3 years after the default occurred and the same has not been exhausted at the time of filing of this petition i.e. 04.01.2022. Therefore, the present application has been filed well within the prescribed period of limitation. Bare perusal of Section 5 (21) of IBC makes it clear that Operational Debt means a claim in respect of the provisions of goods of services arising in respect of dues arising under any law for the time being enforced. From the facts of the case it is clear that the Applicant was supplying Pet Coke, Steam Coal etc. to the Corporate Debtor against which it had also raised invoices which have been annexed at Annexure 2 of the Application. Copy of E-way bills have also been annexed at Annexure 3 of the petition which show the supply of goods - it is clear that the Applicant falls under the category of an Operational Creditor under Section 5(20) of the IBC and therefore has rightly filed this application claiming the amount of debt which is due to be paid by the Corporate Debtor. In the present matter at hand, there is a clear debt, repayment of which has been defaulted by the Corporate Debtor and there appears to be no pre-existing dispute between the parties. Any allusion to such dispute appears to be confirmed. Application admitted - moratorium declared.

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• 2022 (8) TMI 1056
  Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - existence of debt and dispute or not - Time limitation - service of demand notice - whether the demand notice in Form No.3 dated 23.11.2019 was served upon the Respondent? - HELD THAT:- The demand notice was sent via a registered post on 23.11.2019 to the corporate debtor and its directors. The postal receipt is attached on Page 198 (Annexure 5) of the Application. Whether the Respondent disputed the operational debt? - HELD THAT:- The Respondent has not filed a reply in this regard. However, considering communication on record between the parties, there is no dispute regarding the goods supply and quality. Thus, as per documents placed on record with the adjudicating authority, there is no dispute as to the outstanding liability of the Respondent/ Corporate Debtor towards the Applicant/ Operational Creditor. There is a total unpaid operational debt (in default) of Rs. 2,47,456/-, including the interest @ 18% per annum. It is observed that the Operational Creditor has issued various invoices (Annexure 3) for goods supplied to the Corporate Debtor. Operational Creditor has given demand notice in Form-3 dated 23.11.2019, duly served on the Respondent. This Adjudicating Authority has held above that the Operational Creditor correctly delivered the demand notice in Form No.3, and no pre-existing dispute is proved. It has been shown that the Corporate Debtor has failed to make payment of the aforesaid amount due as mentioned in the statutory notice to date. It is also observed that the conditions under Section 9 of the Code stand satisfied. Hence, this Adjudicating Authority is inclined to commence CIRP against the Corporate Debtor as envisaged under the provisions of IBC, 2016. Petition admitted - moratorium declared.

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• 2022 (8) TMI 1055
  Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - existence of debt and dispute or not - service of notice - time limitation - whether the demand notice in Form 3 dated 16.08.2019 was properly served? - HELD THAT:- The petitioner has placed a tracking report, whereunder it was stated that the speed post was delivered to the corporate debtor and reply to that has been duly received. Whether the operational debt was disputed by the corporate debtor? - HELD THAT:- It is to be noted that none appeared on behalf of the corporate debtor despite repeated service and has been set ex parte vide order dated 06.07.2022. Moreover, the petitioner has appended affidavit u/s 9(3)(b) stating that even after reply to the demand notice, the corporate debtor has not cleared the outstanding dues, which is reflected in the certificate issued under Section 9(3)(c) of the Code, for which the present petition has been filed by the operational creditor. Whether this application is filed within limitation? - HELD THAT:- This application was filed on 28.02.2019 vide Diary No.1015. Whereas the date of default is 09.05.2017, therefore, this Adjudicating Authority finds that this application has been filed within limitation. There is a total unpaid operational debt (in default) of Rs.22,40,288/-. The operational creditor has supplied goods to the corporate debtor and raised invoices attached as Annexure A-4. Accordingly, the petitioner proved the debt and the default, which is more than Rupees one lakh (prior to the amendment in threshold limit of one crore vide notification No. S.O.1205(E) dated 24.03.2020) by the respondent-corporate debtor. It is seen that the petition preferred by the petitioner is complete in all respects. The material on record clearly goes to show that the respondent committed default in payment of the claimed operational debt even after demand made by the petitioner. In view of the satisfaction of the conditions provided for in Section 9(5)(i) of the Code, the petition is admitted. Petition admitted - moratorium declared.

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• PMLA

• 2022 (8) TMI 1054
  Seeking grant of Bail - money laundering - foreign outwards remittances - admissibility of statements of accused - admissible evidences or not - twin conditions as contemplated under Section 45 of PML Act, satisfied or not - HELD THAT:- Insofar as the twin conditions as contemplated under Section 45 of PML Act, the Hon ble Supreme Court of India repeatedly held in many cases that the duty of the Court is to examine the jurisdictional facts including the mandate of Section 45 of the PML Act, which must be kept in mind. Even post Nikesh Tavachand Shah Vs. Union of Idia anr. case [ 2017 (11) TMI 1336 - SUPREME COURT] , the Section 45 of the PML Act saw amendment vide from 19.04.2018. After effecting amendment to Section 45(1) of the PML Act, the words under this Act are read to sub Section (1) of Section 45 of the PML Act. On a comparative reading of Section 45(1) of the PML Act, pre-amendment and post-amendment, as could be observed, original sub-Section 45(1)(ii) is neither revived or resurrected by the amending Act. The notification dated 29.03.2018 is silent about its retrospective applicability - Therefore, the legislature has not withdrawn the twin conditions from Section 45 of the PML Act, though in the case of Nikesh Tavachand Shah Vs. Union of Idia anr., the Hon ble Supreme Court of India has struck down the same as being unconstitutional. Therefore, the twin conditions under Section 45 of the PML Act still remain in the Statute book. The Hon ble Supreme Court of India has directed the concerned Court to hear the matters on merits, without application of the twin conclusion contained in Section 45 of the Act, as declared as unconstitutional. But the twin conditions still continue. The amendment Act of 2018 which introduces the expression under this Act to Section 45 of the PML Act, in no uncertain terms can obliterate or dilute the direction issued by the Hon ble Supreme Court of India - the twin conditions as contemplated under Section 45(1) of the amendment Act have to satisfy not withstanding of the judgment of the Hon ble Supreme Court of India in the case of Nikesh Tavachand Shah Vs. Union of Idia anr. That apart, during investigation it was found that the material evidence against the petitioner in carrying out the offence of money laundering in the matter of sending the proceeds of crime to the tune of Rs.59.47 crores to the undisclosed beneficial owner and end use at Hong Kong. Therefore, prosecution will be able to marshal all the evidence during the course of trial. Therefore, analysis of jargons like preponderance of probabilities and beyond reasonable doubts has no basis at the initial stage. Now the petitioner is facing trial for the commission of offence under Section 4 of PMLA. Further, this Court dismissed the earlier bail petition only on 24.06.2022 and there is no change of circumstances to consider the present bail petition - Petition dismissed.

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• Service Tax

• 2022 (8) TMI 1053
  Refusal on the part of respondents to issue discharge certificate - tax dues covered by the declaration in Form 1 under Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 (SVLDRS) - payment of amount indicated in accordance with the SVLDRS made within the permitted time but still the discharge certificate is not being issued - HELD THAT:- The circular dated 24th June 2019 has been issued prior to the Finance Act, 2019 came into force. There is no similar circular issued after the Finance Act, 2019 came into force. There is nothing to indicate what the definition of pay electronically or through internet banking . Admittedly, the amount has been paid by electronic cash ledger maintained by petitioner under the CGST Act. Therefore, the fact that the Government of India has received the amount of Rs.2,89,15,115/- cannot be disputed. SVLDRS is a statutory scheme, that provides some reliefs to the assessee in varying degrees. There is force in the submission of Mr. Nankani that the scheme in question, being for the benefit of assessees needs to be construed liberally to effectuate the purpose. There is no dispute that the SVLDRS Scheme was introduced by Finance (no.2) Act, 2019 and notified in the Gazette of India Extra-ordinary on 01.08.2019. SVLDRS was introduced by the Union of India to provide relief to tax payers in the form of both dispute resolution as well as amnesty - Respondents should adopt a reasonable and pragmatic approach so that a declarant can avail the benefits of the scheme and a declarant like petitioner cannot be put in a worse off condition than he was before making declaration under the Scheme. Here, petitioner has scrupulously abided by all the terms and conditions of the scheme. In the absence of any definition as to what amounts to pay electronically through internet banking , even payment made by electronic cash ledger maintained by petitioner under the CGST Act also amounts to payment through internet banking - Respondent No.4 is directed to issue within four weeks discharge certificate in Form SVLDRS 4 through electronic form and if it cannot then it be issued in physical form. Petition disposed off.

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• 2022 (8) TMI 1052
  Rejection of Form SVLDRS-1 filed by Petitioner under the provisions of the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 - valid quantification and admission of duty/tax by Petitioner before 30th June, 2019 - allegation is that the tax dues (as stated by Petitioner in the said Form) were not quantified as on 30th June, 2019, which is the cut off date prescribed in SVLDRS scheme - HELD THAT:- On going through the pleadings, the SVLDRS scheme, the SVLDRS Rules and the relevant Circular dated 27th August, 2019 and have come to the conclusion that the rejection of Petitioner s Form SVLDRS-1 by Respondent No.4 was contrary to the provisions of the said scheme and thus bad in law. Section 125 of the Finance Act, 2019 provides that all persons are eligible to make a declaration under the SVLDRS scheme with the exception of those falling within the exceptions set out in clauses (a) to (h) of sub-section (1) of Section 125. Tax dues referred in section 124 is defined in section 123. It specifies various situations - The Circular dated 27th August, 2019 issued by Central Board of Indirect Taxes and Customs (CBITC) clarified for all cases pending in adjudication or appeal (at any forum), the relief is to the extent of 70 percent of duty involved if it is Rs.50 lakhs or less and 50 percent if it is more than 50 lakhs. The Respondent No.4 was completely unjustified in rejecting the Form SVLDRS-1 filed by Petitioner for the reason so stated in the impugned communication - petition disposed off.

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• Central Excise

• 2022 (8) TMI 1090
  Inordinate delay on the part of respondents in adjudicating 16 Show Cause Notices - breach of principles of natural justice - classification of goods - electrical grade insulating papers - to be classified under Chapter heading 48.11 or Chapter heading 85.46 of the Central Excise Tariff Act - applicability of N/N. 64/88 dated 1st March 1988 as amended by N/N. 54/89 dated 1st March 1989 - HELD THAT:- After 31 years, petitioner having approached this Court impugning the show cause notice, cannot be made to suffer an order to facilitate conclusion of the proceedings which, because of the inordinate delay in its conclusion, is most likely to work out prejudicial to them. It would only be reasonable for petitioner to proceed on the basis that department was not interested in prosecuting the show cause notices and had abandoned it. If respondents wanted to keep the show cause notices alive, they should have strictly followed the instructions given in the CBE C circular dated 10th March 2017 referred to in paragraph 10 of RAYMOND LIMITED VERSUS THE UNION OF INDIA THROUGH THE MINISTRY OF FINANCE AND ANR. [ 2019 (8) TMI 962 - BOMBAY HIGH COURT] , where CBE C has directed the officers of the department to formally communicate to the party that the notices which have been issued to them, are being transferred to the call book. This circular only states the obvious because one would have expected the state even in the absence of such a circular, to formally issue such communication to a party. In this case, the show cause notices were kept in the call book not at the instance of petitioner, but by the revenue of its own accord. After having kept it in the call book, no intimation / communication was sent by respondent no.2 pointing out that the show cause notices had been kept in the call book. If only had been so communicated, petitioner would have been put to notice that the show cause notices are still alive and would be subject to adjudication after the show cause notices are retrieved from the call book on the dispute which led to keeping it in the call book, being resolved. Admittedly, this has not been done. Petition disposed off.

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• 2022 (8) TMI 1089
  CENVAT Credit - capital goods - clearance of goods both for home consumption as well as for export without payment of duty - exempt goods or not - allegation of the department is that the credit availed on capital goods is not eligible prior to 10.6.2010 for the reason that the appellant has been clearing the goods both for home consumption as well as for export without payment of duty in terms of Notification No.30/2004-CE dated 9.7.2004. HELD THAT:- N/N. 30/2004-CE dated 9.7.2004 exempts payment of duty when the goods are cleared domestically. The Corrigendum issued to the notification makes it clear that the exemption is available even if credit is availed on capital goods. In other words, this notification bars availment of credit on inputs only. Rule 6(4) prohibits the availment of credit on capital goods which are exclusively used for the manufacture of exempted goods. The question then arises whether the availment of benefit of Notification 30/2004 would give rise to a situation that the capital goods are used exclusively for manufacture of exempted goods - It is to be noted that a manufacturer is given an option to avail the benefit of Notification 30/2004. It does not make the goods completely exempted from payment of duty. If the manufacturer avails credit on inputs, then he cannot avail the benefit of the exemption provided under Notification No. 30/2004. Rule 6(4) bars the availment of credit on capital goods which are used exclusively in the manufacture of exempted goods. As per Rule 2(d) of CENVAT Credit Rules, 2004 exempted goods means excisable goods which are exempt from the whole of duty of excise leviable thereon, and includes goods which are chargeable to nil rate of duty . Thus, the goods cleared under Notification No.30/2004 without payment of duty is optional payment without duty and it cannot be said that these fall within the definition of exempted goods . Later, the appellant had availed the benefit of Notification No. 29/2004. As per this Notification, the domestic clearances get the benefit of concessional rate of duty. The department has denied the credit availed on capital goods for the period after 10.6.2010 alleging that though the appellant has paid duty on domestic clearance but the capital goods have also been used for manufacture of exported goods. Thus, they have considered the exported goods as exempted goods . This is legally wrong. The definition of exempted goods does not take in goods which are exported. The issue as to whether the benefit of both the notifications can be availed and the credit on capital goods is eligible was considered by the Tribunal in the case of ST. COTTEX EXPORTS (P) LTD. VERSUS COMMISSIONER OF C. EX., LUDHIANA [ 2010 (1) TMI 1048 - CESTAT NEW DELHI] . The decision of the Tribunal was upheld by the Hon ble High Court of Punjab and Haryana in COMMISSIONER OF C. EX., CHANDIGARH VERSUS ST. COTTEX EXPORTS PVT. LTD. [ 2011 (1) TMI 491 - PUNJAB HARYANA HIGH COURT] whereby the appeal filed by Revenue was rejected - it was held that Under sub-rule (4) of Rule 6 of Cenvat Credit Rules, 2004, capital goods Cenvat credit is inadmissible only in respect of those capital goods which are exclusively used in the manufacture of exempted goods - in present case it cannot be said that the capital goods in question had been used exclusively for the manufacture of fully exempted finished products. Jurisdiction - HELD THAT:- The learned AR has submitted that the writ petition filed by the appellant against the order of the Revisionary Authority is pending before the Hon ble High Court. The said writ petition is against the order of the Revisionary Authority in regard to rebate claims. The Tribunal has no jurisdiction to consider any order passed in regard to rebate claims. However, the jurisdiction for deciding the eligibility of credit as well as application of CENVAT Credit Rules lies within the Tribunal - In the present case, the demand has been issued for recovery of credit wrongly availed on capital goods and is fully within the jurisdiction of this Tribunal. The disallowance of CENVAT credit on capital goods is without legal or factual basis - Appeal allowed.

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• 2022 (8) TMI 1051
  Recovery of CENVAT Credit - contravention of rule 4(1) of CENVAT Credit Rules, 2004 by storing otherwise eligible inputs at unregistered premises and without taking statutory permission mandated under rule 8 of CENVAT Credit Rules, 2004 for the period from 1st May 2010 to 31st January 2011 - HELD THAT:- On the admitted facts, it is seen the disputed credit is attributable to inputs stored at premises that, though not included in the registration, was pending for approval of such inclusion. Considering that the approval was granted, and though belatedly, without any objections thereto, it is cause for wonderment that such delay was tolerated by the supervisory authority. It is also no less surprising that the officials engaged in EA 2000 Audit did not consider it necessary to ascertain the cause of such unalloyed breach of conditions; perhaps the nomenclature, permanently linked to its conception, is responsible for depriving it of the robustness that audit should be imbued with if it is to have continued relevance. The authority concerned would do well to give some thought to this. There is no allegation of mis-utilization of the input goods or that these were used for manufacture of non-entitled output goods. It is not found appropriate to uphold the impugned order in the light of the factual circumstances in which inputs were stored inappropriately - appeal allowed - decided in favor of appellant.

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• 2022 (8) TMI 1050
  Classification of goods - Zarda - to be classifiable under heading 24039910 as claimed by the Appellants or its Jarda Scented Tobacco classifiable under heading 24039930 as claimed by the revenue? - HELD THAT:- If any odoriferous substance is added to chewing tobacco it cannot change the classification form chewing tobacco to zarda scented tobacco. Examination of test reports in the light of BIS standards - HELD THAT:- The test for moisture content percentage and Nicotin percentage are very essential to arrive at the conclusion whether the sample is of chewing tobacco or of zarda, but none of these characteristics have been referred to or dealt with by the Chemical Examiner, CRCL in her report although she had referred to the characteristics given in the Table given in BIS specification in her statement - the conclusion arrived at by the Chemical Examiner, CRCL that sample has the characteristics of Jarda Scented Tobacco in the twelve reports of the 12 samples drawn on 3.12.2015 which have also been relied upon by the department while demanding higher rate of duty from the appellant, is without any basis. There is also no indication in the test report as to what is the definition of jarda scented tobacco and chewing tobacco and under which parameter test of sample conducted. The show cause notice is mainly based upon the test reports, opinion of Chemical Examiners, CRCL and also of the statements which uses the words compound . Whereas the learned commissioner while changing the classification substantially relied upon the statements of Director/Production Manager/Manager and came to the conclusion that since the appellants uses scent in their product therefore it can only be classified as zarda scented tobacco, which is totally contrary to the description by Indian Standard issued by BIS - In the instant matter neither in the show cause notice nor before the adjudicating authority or before us it is the case that the appellant have used jarda scent in their product. Even the statements relied upon by the department nowhere mention that jarda scent has been used by the appellant in their product. The learned commissioner mistook the pleasant odour as mentioned in CRCL test report as scent which is totally different from jarda scent , an essential ingredient for manufacturing jarda scented tobacco. The learned commissioner has grossly erred in completely ignoring the opinion of Jt. Director, CRCL in re-test of the same samples whose earlier test reports were relied upon by the revenue in changing the classification - The Director, CRCL is the only appellate authority in respect of re-test of samples and as per records no appeal has been made to the Director, CRCL against the opinion given by the Jt. Director, CRCL and therefore the opinion of Jt. Director, CRCL is final and it cannot be brushed aside just because it is not in favour of the department. In our view, the opinion of Jt. Director, CRCL is in line with Indian Standard prescribed by BIS. He did not classify the goods but gave his technical opinion that the sample is of chewing tobacco. The Revenue has not produced any material evidence on record to support the change of classification by them from Chewing Tobacco under heading 24039910 to Jarda Scented Tobacco under heading 24039930 - the learned Commissioner has also not applied his independent mind in confirming the change in the classification and rather ignored the re-test report of the Jt. Director, CRCL which is in line with the parameters prescribed by BIS. Appeal allowed.

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• CST, VAT & Sales Tax

• 2022 (8) TMI 1088
  Nomenclature and classification of imported Spectrum Analyser - to be classified under the HSN Code Nos.9022.90.90, 9022.19.00, 9027.90.90 and 9033.30.90 or not - taxable at the rate of 5% tax or at 14.5%? - Department based its decision on the opinion from the Executive Engineer Electronics Division - denial of opportunity to the dealer/ petitioner while making assessment orders - HELD THAT:- In matters involving classification, which would have an implication on the rate of tax applicable on the sale of the commodity, judicious and legal adjudication are expected and would be appreciated. Therefore, it is noticed that the orders in Exts.P15 and P16 have not recorded findings on the objections/reasons taken by the dealer. The writ petition, since is admitted, at this point of time, instead of directing the dealer to avail the remedy of appeal, where the very same ground, lack of proper consideration, would be urged; to avoid further delay, we are convinced to exercise our discretionary jurisdiction, set aside the orders in Exts.P15 and P16 and remit the matter to Assistant Commissioner for consideration and disposal afresh. On remand fresh assessment orders were made against Redlands Ashlyn Motors PLC dated 29.12.2018 and 01.01.2019. In the instant common order, we have considered the grounds raised against the said orders and have set aside the assessment orders, remitted the matter to the Assistant Commissioner for consideration and disposal afresh. The net effect of the above conclusion is that whether the classification issue pending before the Assistant Commissioner is present or not on the date when the common order was made by the Tribunal. The review of the order of remand in the batch of cases is not available since the issue of classification was pending before the Assistant Commissioner. The remand is justified and hence confirmed - Revision dismissed.

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• Indian Laws

• 2022 (8) TMI 1087
  Execution of the award passed by the learned Arbitral Tribunal/Court - Direction to appellant NHAI to deposit the entire compensation amount as awarded by the learned Arbitrator - HELD THAT:- Apart from the fact that the award dated 12.06.2018 has been challenged by the NHAI by initiating proceedings under Section 34 of the Arbitration Act which are reported to be pending, the High Court ought not to have entertained the writ petition under Article 226 of the Constitution of India seeking the reliefs to execute the award passed by the learned Arbitral Tribunal/Court, when the award passed by the learned Arbitral Tribunal/Court is to be executed by initiating an execution proceeding before the concerned Executing Court. But, by passing the impugned order/directions the High Court has virtually converted itself into Executing Court. Therefore, once the original writ petitioner was having an efficacious, alternative remedy to execute the award passed by the learned Arbitral Tribunal/Court, by initiating an appropriate execution proceeding before the competent Executing Court, the High Court ought to have relegated the original writ petitioners to avail the said remedy instead of entertaining the writ petition under Article 226 of the Constitution of India which was filed to execute the award passed by the Arbitral Tribunal/Court. If the High Courts convert itself to the Executing Court and entertain the writ petitions under Article 226 of the Constitution of India to execute the award passed by the Arbitral Tribunal/Court, the High Courts would be flooded with the writ petitions to execute awards passed by the learned Arbitrator/Arbitral Tribunal/Arbitral Court. The NHAI shall deposit 50 per cent of the compensation amount, as awarded by the Arbitral Court, with the Executing Court within a period of four weeks. The said amount shall be released to the land owners unconditionally - Application disposed off.

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• 2022 (8) TMI 1083
  Exemption u/s 123(e) of the Coimbatore City Municipal Corporation Act, 1981 - eligibility to the petitioner as a charitable hospital - petitioner submitted that since the petitioner is running a Charitable Hospital as its object is only to do charity, the petitioner is entitled for exemption from payment of property tax under Section 123(e) of the Coimbatore City Municipal Corporation Act, 1981 - HELD THAT:- District Collector of Coimbatore has issued a Certificate dated 12.01.1983 certifying that the petitioner was a Charitable Institution . It is not clear under what circumstances an application came to be filed on 06.12.1982 which prompted the Collector, Coimbatore to issue the aforesaid Certificate to the petitioner. A similar Certificate was once again obtained by the petitioner in the year 1986 from the office of the District Collector, Coimbatore on 17.07.1986. It appears that it was in pursuance to an application filed by the petitioner on 23.06.1986. Copies of these applications are not available for perusal - these Certificates were certainly issued to the petitioner after Coimbatore City Municipal Corporation Act, 1981 came into force and after the first respondent Commissioner of Municipal Corporation has issued a communication/ letter to the petitioner stating that the petitioner was not entitled to exemption from payment of property tax under Section 123(e) of the Coimbatore City Municipal Corporation Act, 1981. It was perhaps obtained for securing the exemption under Section 123(e) of the Coimbatore City Municipal Corporation Act, 1981. The records filed before the Court also do not indicate that the petitioner has obtained Section 12A Certificate from the Commissioner of Income Tax, under the provisions of the Income Tax Act, 1961. The petitioner has merely filed a copy of letter of the Income Tax Officer certifying that an application in the Form-10A was made by the petitioner before the Commissioner of Income Tax, Madras-1 on 17.04.1973. It was filed just at about the time when the petitioner was registered as a society under the Societies Registration Act, 1860, on 24.01.1973. There are no records to show that even the income tax department has allowed exemption under Section 11 of the Income Tax Act, 1961 to the petitioner. Merely because the petitioner is having certain out reach programmes which may be charitable in nature or that a section of patients are given free treatment would not automatically render the petitioner a charitable hospital. It would not mean that an exemption from payment of property tax can allowed to the petitioner. Under the Section 135 of the Companies Act, 2013 and the provisions of Companies Act, 1956, the companies enjoying the profits were/are required to contribute for public cause as Corporate Social Responsibility (CSR). The amount that has to be spent towards Corporate Social Responsibility is out of profits. However, that does not make such company as a Charitable Institution . If the amount are collected for treating the patients and a portion of the amount is used for doing charity, it would not mean that the hospital becomes a charitable hospital. This may be explained with an example. An individual may do a charity out of his earning by contributing the amount for charitable cause, but, such an individual cannot be labelled as a charitable person even though he may be doing charity. It means such a person is doing charity. At best of the act of the petitioner giving free treatment for few poor and needy patients while collecting fees for giving treatment to those patients who can afford is not sufficient to hold the petitioner Charitable Institution / Hospital. Few acts of benevolence and charity should not be construeed in such a manner to laber such a person as a Charitable Institution. We in agreement with the word of caution sounded by this Court in Sundaram Medical Foundation [ 2018 (3) TMI 1289 - MADRAS HIGH COURT] that the authorities are bound to be cautious, while scrutinizing all material facts and circumstances, for taking a decision. Therefore hold the claim for exemption under Section 123(e) of the Coimbatore City Municipal Corporation Act, 1981 by the petitioner is misconceived. Therefore, there are no merits in this Writ Petition.

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• 2022 (8) TMI 1049
  Dishonor of Cheque - bearer cheque - the court within whose jurisdiction the accused has an account has the jurisdiction or not - HELD THAT:- From the Annexure-1 and Annexure-2, of the petition, it appears that the petitioner has account, maintained in the State Bank of India, Hojai Branch. Being the holder of the cheque, and having his account maintained at State Bank of India, Hojai Branch, the petitioner had presented the cheque there for collection. He received the intimation about dishonor of the cheque in question through the State Bank of India, Hojai Branch In view of the provision of section 142(2)(a) of the N.I. Act, the Court at Hojai which has jurisdiction to try the same. There is no quarrel at the Bar in this regard, that in view of section 142(2) (a) of the said Act, the learned court below has the jurisdiction to try the offence. Of course, the position would have been quite different if the petitioner had no account at Hojai. This court is of the considered opinion that the impugned order, so passed by the learned court below has failed to withstand the test of legality, propriety and correctness and the same require interference of this court - the matter is remanded to the learned court below, with a direction to proceed with the same in accordance with law.

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