TMI Tax Updates - e-Newsletter
August 3, 2024

Case Laws in this Newsletter:

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

TMI Short Notes

1. Reassessment Proceedings: Navigating the Complexities

  Income Tax:

2. Faceless Assessment of Income Escaping Assessment: Validity of Notice Issued by the Jurisdictional Assessing Officer

  Income Tax:

Articles

1. BUDGETARY CHANGES ON CAPITAL GAINS UNDER INCOME TAX ACT, 1961

   By: DR.MARIAPPAN GOVINDARAJAN

News

1. Advisory in respect of Changes in GSTR 8

2. Gross and Net GST revenue collections for the month of July, 2024

3. Advisory for Biometric-Based Aadhaar Authentication and Document Verification for GST Registration Applicants of Jammu & Kashmir and West Bengal

4. India’s seafood exports increased by over 30 percent in last four years, stand at Rs. 61043.68 Crore in 2023-24

5. Record 7.28 crore ITRs filed for AY 2024-25 till 31st July, 2024

6. IICA and HP launch first batch of ‘HP Future Impact Leader – IICA Certified ESG Professional Programme’

Notifications

GST - States

1. 50/2023 - State Tax - dated 30-5-2024 - Chhattisgarh SGST

Amendment in Notification No. 66/2017–State Tax, No. F-10-93/2017/CT/V(172), dated 15th November, 2017

2. 12/2023 - State Tax (Rate) - dated 30-5-2024 - Chhattisgarh SGST

Amendment in Notification No. 11/2017–State Tax (Rate), No. F-10-43/2017/CT/V(79), dated the 29th June, 2017

3. 11/2023 - State Tax (Rate) - dated 30-5-2024 - Chhattisgarh SGST

Amendment in Notification No. 1/2017–State Tax (Rate), No. F-10-43/2017/CT/V(69), dated 28 June, 2017

SEZ

4. S.O. 3067(E) - dated 29-7-2024 - SEZ

Amendment in Notification No. S.O.2205(E) dated 11.05.2022 for inclusion of new members in SEEPZ SEZ Authority

Highlights / Catch Notes

GST

• Excess stock triggers GST Act Sections 73/74, not Section 130. Court quashes orders invoking Section 130 for excess stock found during survey.

  Case-Laws - HC : Excess stock found during survey triggered initiation of proceedings against petitioner. Court held if excess stock found, proceedings u/ss 73/74 of GST Act should be invoked, not Section 130 read with Rule 120. Court relied on previous judgment holding excess stock attracts Sections 73 & 74, not Section 130 read with Rule 122. Law is clear Section 130 proceedings cannot be initiated if excess stock found during survey. Impugned orders invoking Section 130 quashed, petition allowed.
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• Petitioner allowed to rectify GST returns beyond time limit u/s 39(9) as no revenue loss. Respondents to open portal for amendment.

  Case-Laws - HC : Petitioner sought rectification of errors in GST returns due to non-compliance with time limitation u/s 39(9) of CGST Act. Court held no revenue loss if rectification permitted, relying on Star Engineers case. Respondents directed to open portal within a week to enable petitioner to amend GSTR-1 and GSTR-3B within a week. Petition disposed.
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• Petitioner challenged ITC mismatch order. Court set aside order, remitted case for fresh orders considering amended Rule 36(4).

  Case-Laws - HC : Petitioner challenged order u/s 74 of TNGST Act, 2017 for assessment year 2017-18 due to mismatch between GSTR 3B and auto-populated GSTR 2A regarding input tax credit. Court held that respondent failed to consider changes in CGST Rules, 2017, particularly Rule 36(4). Difference between GSTR 2A and GSTR 3B attributable to mismatch for supplies by RAMCO, constituting 10.53% of total credit, less than 20% as per amended Rule 36(4) till 09.10.2019. Impugned order set aside, case remitted to respondent to pass fresh orders considering amended provisions under Notification No. 49/2019-Central Tax. Recovery proceedings kept in abeyance pending remand orders. Petition allowed by way of remand.
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• Geo Membrane classified under Chapter 59, not 39 as per CTM case. GST 12% from 15.11.2017, not 18%. Discounted rate applies.

  Case-Laws - HC : Classification dispute regarding Geo Membrane manufactured by petitioner - whether to be classified under Chapter 59 or Chapter 39 of Tariff. Court relied on Coordinate Bench decision in MESSERS CTM TECHNICAL TEXTILES LTD case, holding product falls under Chapter 59, not Chapter 39 as ruled by Gujarat Advance Ruling Authority. Petitioner liable to pay GST at 12% from 15.11.2017 under HSN Code 59111000, not 18%. Respondent authority directed to apply discounted 12% GST rate on petitioner's product. Petition allowed.
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• Refund claim time limit challenged. Online GST appeal filed timely on 31.10.2022. Hard copy not required. Impugned order set aside.

  Case-Laws - HC : Refund claim time limitation was challenged - Appeal filed online on GST portal on 31.10.2022 within prescribed period as per Rule 108(1) of GST Rules - Order appealed against was uploaded on common portal, thus filing hard copy not required u/r 108(3) proviso - Even otherwise, hard copy filing merely procedural - Impugned order rejecting appeal set aside, appellate authority directed to receive and dispose appeal on merits.
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• Petition Dismissed: Alternative Remedy Available Under GST Act Section 107; Disputed Facts Require Appellate Review.

  Case-Laws - HC : The petition is dismissed as an alternative efficacious remedy is available to challenge the impugned order u/s 107 of the GST Act. While violation of natural justice and vires of Section 16(2)(c) are grounds to entertain the writ, disputed questions of fact regarding opportunity of hearing and composite invocation of Section 16(2)(b) and 16(2)(c) necessitate thorough analysis, precluding interference at this stage. The petitioner can raise contentions on merits, including interpretation of Section 16(2)(b) read with Rule 36 and Section 155, before the Appellate Authority u/s 107.
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• Seat covers permanently fitted over raw foam seats by OEMs/seat manufacturers are classifiable under HSN 9401 or Sl. No. 435A, not 940120 or 8708.

  Case-Laws - AAAR : Seat covers designed to permanently fit over raw foam seats of vehicles by OEMs or seat manufacturers are classifiable under HSN 9401 as "Seats and parts thereof other than aircraft seats" or Sl. No. 435A under Schedule III of N/N. 1/2017-Central tax (rate) dt. 28.06.2017 as amended. Seat covers are accessories for protection and comfort, distinct from seats covered under 940120. To be classified under 8708, parts/accessories must be solely/principally for motor vehicles of 8701-8705, which seat covers satisfy. AAAR ruled seat covers merit classification under 8708 as usable only for motor vehicles.
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• Mangala Borosan and G1 Not Classified as Fertilizers Due to Lack of Essential Elements; Upheld by AAAR Decision.

  Case-Laws - AAAR : Mangala Borosan and Mangala G1 are not classifiable under Chapter Heading 3105 as Fertilisers as they lack essential fertilizing elements like Nitrogen, Phosphorus, or Potassium as stipulated by Chapter Notes. Classification is determined by product description, inclusion/exclusion in Section/Chapter Notes, and General Rules of Interpretation, not claimed usage or results. Appellant's contention of Nitrogen emanation during usage is untenable as products are assessed based on form and contents at presentation/supply. Definition of "Fertiliser" under relevant law requires essential plant nutrients like Nitrogen, Phosphorous, and Potassium, irrespective of State Government's notification of micronutrients. AAAR upheld classification outside Chapter 31.
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• Applicant's Services to Agriculture Not Composite Supply Under GST; No Joint Venture with Shell per Section 2(30.

  Case-Laws - AAAR : Supply of support services to agriculture, forestry, fishing, animal husbandry by applicant is not a composite supply under GST law. Applicant makes distinct supplies to Shell and farmers, not a single supply to one recipient. Supplies to Shell and farmers cannot be clubbed as composite supply per Section 2(30) of CGST/SGST Acts. Applicant obtains carbon credits from farmers to supply to Shell, but does not act as Shell's agent or in joint venture. Shell has no connection with farmers. Carbon credits trading aspect not discussed. Since supply is not composite, question of principal supply is irrelevant. Non-speaking/non-reasoned order violates natural justice.
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Income Tax

• Reopening of Tax Assessment Overturned Due to Lack of New Evidence and Full Disclosure by Assessee.

  Case-Laws - HC : Reopening of assessment u/s 147 was based on reasons to believe the difference between total cash sales and cash sales reflected in books. Held: Reopening was made only based on discrepancy noticed from impounded material relevant to the year under consideration. AO during regular assessment verified the same impounded material and issued notice u/s 142(1) for explanation regarding transactions in impounded documents. AO also called for further details regarding impounded material found during survey relevant to the assessment year, explaining total difference in day-wise amount. Hence, during regular assessment, the issue of totaling difference in impounded material was considered. Therefore, it cannot be said that the impugned notice was issued based on any new tangible material having live nexus with escaped income. AO had access to impounded material during regular assessment and after processing revised return filed by assessee, impugned reopening notice is not tenable as it would amount to change of opinion. As the impugned notice was issued beyond four years and assessee made disclosure based on impounded material, it cannot be considered failure to make full and true disclosure. Decided in favor of assessee.
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• Reassessment proceedings initiated beyond 3 years sans sanction from authorized authority u/s 151(ii) rendered invalid.

  Case-Laws - HC : Reassessment proceedings u/s 148 were sought to be undertaken more than three years after the end of the relevant Assessment Year. Sanction was required to be granted u/s 151(ii) of the Act since the period exceeded three years. However, the sanction was granted by the Principal Commissioner of Income-tax-3, who was not the specified authority empowered u/s 151(ii). Section 151 contains an inherent check and balance, requiring application of mind by more senior authorities when reopening is initiated after a longer period. Since the sanction was not granted by the authority having jurisdiction u/s 151(ii), the High Court disposed of the petition on this ground without expressing any opinion on other facets of law and issues raised.
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• Reassessment notice beyond 6-yr limit quashed. Statutory time can't be extended judicially/invoking other provisions. Writ allowed.

  Case-Laws - HC : Reassessment proceedings initiated beyond statutory time limit prescribed under pre-amended Section 149(1)(b) quashed. Notice u/s 148 issued after expiry of six-year period from end of relevant assessment year held impermissible. Statutory time limit not extendable through judicial interpretation or by invoking other provisions. Writ petition allowed, impugned order u/s 148A(d) and consequential notice u/s 148 quashed.
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• Computer software payments not taxable as royalties. Follows SC's Engineering Analysis, Reliance & Lucent precedents. Income tax law applied.

  Case-Laws - HC : The issue pertains to the taxability of income in India, specifically whether payments received by the respondent/assessee for supplying computer software are liable to be taxed as royalties u/s 9(1)(vi). The Court held that the issue stands covered by its previous order in Lucent Technologies, where it was observed that the supplier of software cannot be treated differently, and the same legal parameters would apply. Considering the Supreme Court's decision in Engineering Analysis Centre of Excellence and its own orders in Reliance Industries and Lucent Technologies, the High Court dismissed the appeal.
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• Appeal Challenges Tribunal's Nullification of Tax Assessment Beyond 30 Days Without Timely Objection to Jurisdiction.

  Case-Laws - HC : The appeal is admitted on substantial questions of law regarding the jurisdiction of the Assessing Officer to complete the assessment after the expiry of 30 days from the date of notice u/s 142(1) of the Act. The questions pertain to whether the Tribunal was justified in quashing the assessment order despite the assessee's participation in the proceedings without raising the jurisdictional issue within the time limit u/s 124(3)(a), and whether the Tribunal's order is perverse for ignoring the ratio laid down in DCIT (Exemption) Vs. Kalinga Institute of Industrial Technology, wherein Section 124(3) precludes the assessee from questioning the AO's jurisdiction if not invoked within the specified time frame. The appellant is directed to file requisite documents, and service of notice on the respondent's advocates is waived.
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• Assessment Reopening Invalidated Due to Incorrect Exemption Denial; Trust's Charitable Purpose Misunderstood by Authorities.

  Case-Laws - HC : The reopening of assessment u/s 147 cannot be sustained as the exemption u/s 11 was wrongly denied. The notice claimed the petitioner engaged in commercial activities, rendering it ineligible for exemption. However, the Supreme Court's ruling in Yogiraj Charity Trust case clarified that if the primary purpose of a trust is charitable, an ancillary non-charitable object would not invalidate its charitable nature. The trust deed did not confer uncontrolled discretion to the trustees to engage in commercial activities. Mere receipts from charitable activities do not constitute income from commercial activities. There must be tangible material to conclude income escaped assessment to reopen the case. The reasons for reopening lacked application of mind, erroneously citing a non-existent assessment order and misattributing a Supreme Court judgment. The case was decided in favor of the assessee.
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• Salaried employee can opt for 115BAC without Form-10-IE. ITAT upholds procedure, overrules Revenue Authorities' denial.

  Case-Laws - AT : Assessee opted for special tax rate u/s 115BAC but CPC denied benefit citing non-filing of Form-10-IE. ITAT held that Section 115BAC(5)(ii) allows salaried employees to exercise option without filing Form-10-IE, applicable only for business/profession income. Assessee followed procedure under Act, hence ITAT set aside Revenue Authorities' order and allowed assessee's appeal.
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• Sanction from appropriate authority prerequisite for issuing notice u/s 148 after 4 years. Defect not curable, vitiates notice.

  Case-Laws - AT : Sanction of specified authority u/s 151(1) is a condition precedent for issuing notice u/s 148 if the period of four years has elapsed from the end of the relevant assessment year. In the present case, the notice u/s 148 was issued on 28.03.2014 for the assessment year 2007-08, and the sanction was obtained from the Joint Commissioner instead of the Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner as mandated by section 151. The failure to obtain prior permission from the appropriate authority as required by the statute vitiates the notice u/s 148. Such defect is not curable u/s 292B. The issue of notice u/s 148 is bad in law.
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• Co-op Housing Society's Income Report: Maintenance Charges Non-Taxable, Offset Deficit, and Net Surplus Taxed.

  Case-Laws - AT : Co-operative Housing Society declared income from maintenance charges under 'Income from other sources' with deficit of Rs. 13,86,671/-. Rental and interest income also offered under same head. Section 70 and 71 allow set off of deficit against rental and interest income having nexus with society affairs. Collection from members for maintenance not taxable due to mutuality principle. Interest income arose from interest-free deposits invested in FDs. Rental income from letting common terrace area. Proceeds utilized for society maintenance. Net surplus of Rs. 73,520/- offered after 80P(2)(c)(ii) deduction. No bar on set off of maintenance deficit against rental and interest income attributable to society affairs. Revenue did not allege inflated expenses or tax avoidance. Surplus offered for taxation. Assessee's appeal allowed based on facts and Maruti Employees case.
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• Tribunal upheld reasonable cause for Tax Audit Report delay due to dispute over interim dividend declaration delaying audited results. Penalty deleted.

  Case-Laws - AT : Tribunal found assessee had reasonable cause for delay in furnishing Tax Audit Report due to delay in finalization of statutory audit arising from dispute between Board of Directors and Government nominee director regarding interim dividend declaration. Revenue authorities erred in dismissing assessee's explanation as unreasonable. Irrespective of reason for dispute, audited results were delayed, consequently delaying Tax Audit Report filing. Penalty u/s 271B for delayed filing of Tax Audit Report deleted as assessee had sufficient cause for delay.
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• Assessments u/s 153A Need Incriminating Material; Reopening Requires Seized Evidence, Not Just Statements.

  Case-Laws - AT : Assessment u/s 153A - Validity examined. Assessments cannot be framed without incriminating material found during search u/s 132. Completed assessments u/s 143(3) cannot be reopened u/s 153A without relevant seized material. Assessing Officer directed to examine relevance of seized material for assessment years 2011-12 and 2012-13. Jurisdiction u/s 132(1) upheld considering retrospective amendment. Assessee entitled to revise position, additions cannot be solely based on statement u/s 132(4) without corroborative evidence. Additional evidence admitted, Assessing Officer to re-examine in light of new evidence. Approval u/s 153D not found mechanical. Notice u/s 153A for assessment years 2011-12 and 2012-13 may be barred by limitation, matter restored to Assessing Officer to decide after examining handover date of seized documents.
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Customs

• Customs Tribunal Reinstates CHA License After Overturning Suspension for Alleged Smuggling Involvement.

  Case-Laws - AT : The Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) allowed the appeal against the revocation of the Custom House Agent (CHA) license and forfeiture of security deposit. The appellant was found guilty of violating regulations 13(b) and 13(j) of the CHALR, 2004, for aiding and abetting in smuggling old and used computers, peripherals, and laptops. Despite the appellant's inability to provide certain documents during the inquiry/adjudication process, the primary invoice was made available. The presence of an outsider during the examination was not considered an irregularity. Considering the appellant's prolonged inability to conduct business, the Tribunal opined that the period of suspension was sufficient punishment and directed the immediate restoration of the CHA license.
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Corporate Law

• NCLT interim injunction order set aside for lack of reasoning, violating natural justice. Remitted for reconsideration.

  Case-Laws - HC : Impugned order by NCLT granting interim injunction against petitioners set aside for being non-speaking, unreasoned, cryptic, laconic without considering triple test for injunction relief, thereby violating principles of natural justice warranting interference under Articles 226 and 227 despite availability of alternative statutory appeal remedy; matter remitted to NCLT for reconsideration.
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Bill

• Tax exemption for closely-held cos on share issue premium from FY26. Excess consideration over fair value not taxable as income.

  Notes : Amendment to section 56(2)(viib) of Income-tax Act, 1961 to provide exemption from tax on consideration received by closely-held companies for issue of shares exceeding fair market value from assessment year 2025-26. Provision introduced in 2012 to tax excess consideration as income from other sources being sunset. Effective from April 1, 2025.
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• Presumptive tax regime for non-resident cruise operators: 20% of receipts deemed profits. Intra-group lease rentals exempt till 2030-31.

  Notes : A presumptive taxation regime is being introduced for non-resident cruise ship operators, deeming 20% of aggregate receipts as profits and gains from this business. Lease rentals paid by a company opting for this regime to a foreign company, if both are subsidiaries of the same holding company, will be exempt until assessment year 2030-31. Section 44B for presumptive taxation of non-resident shipping business will not apply to cruise ship operations. These amendments will be effective from April 1, 2025, applicable for assessment year 2025-26 onwards, to promote cruise shipping industry in India.
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• Block Assessment Rules Streamline Tax Searches & Requisitions: 60% Tax on Undisclosed Income, 50% Penalty if Not Declared.

  Notes : Introduction of block assessment provisions in cases of search u/s 132 and requisition u/s 132A for early finalization of search assessments, coordinated investigation, and reduction in multiplicity of proceedings. Block period consisting of previous years relevant to six assessment years preceding the previous year of search/requisition and period starting from 1st April of previous year of search/requisition till date of execution of last authorization. Regular assessments for block period to abate with one consolidated assessment. Assessment of total income including undisclosed income based on evidence found during search/requisition. Tax at 60% for block period without interest/penalty u/ss 234A/B/C and 270A. Penalty at 50% of tax payable on undisclosed income, nil if offered in return. Time limit of 12 months for block assessment, exclusion of 6 months from date of search to handing over of material. Evidence relating to international/specified domestic transactions after date of last authorization not considered for block period. Approval of higher authority required for notice/order. Section 144C not applicable.
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• Streamlining assessment/reassessment: New notice procedures, information definition, approval requirements, time limits, and transitional provisions.

  Notes : The provisions relating to assessment and reassessment under the Act are proposed to be rationalized. Key amendments include: substituting sections 148 and 148A to provide procedure for issuing notice before assessment, reassessment or recomputation; defining 'information' to include survey findings after September 1, 2024; requiring approval for notice based on information u/s 135A scheme; providing time limits in section 149 for issuing notices u/ss 148A and 148, ranging from 3 years to 5 years and 3 months based on specific cases; substituting section 151 to specify authority for approvals; and amending section 152 for transitional provisions.
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• Period for imposing penalties rationalized. Limitation calculated from appellate order date, not receipt by top officers. Effective 01/10/2024.

  Notes : Period of limitation for imposing penalties rationalized. Reference to date of receipt of appellate order by Principal Chief Commissioner or Chief Commissioner omitted from section 275 to remove ambiguity in calculating limitation period. Effective from October 1, 2024.
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• IT Act amended to allow withholding refund for 60 days post assessment if it adversely impacts revenue, with reasons recorded.

  Notes : Section 245 of the Income Tax Act empowers the Assessing Officer to adjust refund against outstanding tax demand and withhold refund where assessment or reassessment is pending. The Finance Act, 2023 integrated sections 241A and 245. Section 245(2) allows withholding refund if grant adversely affects revenue, with reasons recorded and approval. The amendment proposes retaining the phrase "for reasons recorded in writing" and extending the withholding period to 60 days from assessment date. Consequential amendment in section 244A disallows additional interest during withholding period. The amendment takes effect from October 1, 2024.
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• Section 253 amended for appeals to ITAT against tax orders. Includes undisclosed income penalties. Time-limit rationalized.

  Notes : Section 253 of the Income Tax Act governs appeals to the Income Tax Appellate Tribunal (ITAT) against orders passed by tax authorities. The proposed amendment aims to rationalize the time-limit for filing such appeals. It includes reference to Section 158BFA, enabling appeals against penalty orders related to undisclosed income in search cases. Additionally, it modifies the time-limit for filing appeals, allowing two months from the end of the month in which the order was communicated, aligning with the Faceless Appeal system's daily order uploads. This amendment takes effect from October 1, 2024.
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• Tax Exemption Shift: First Regime Ends Oct 2024, Transition to Second Regime with New Rules and Preserved Investments.

  Notes : There are two regimes for trusts, funds, or institutions to claim exemption. The first regime is under sub-clauses (iv), (v), (vi), or (via) of clause (23C) of section 10. The second regime is u/ss 11 to 13. To simplify procedures and reduce administrative burden, the first regime will be phased out gradually. Applications for approval under the first regime filed on or after October 1, 2024, will not be considered. Pending applications before that date will be processed under the first regime. Approved entities will continue to receive exemption under the first regime until the validity period. They can subsequently apply for registration under the second regime. Certain eligible investment modes under the first regime will be protected in the second regime through amendments to section 13. These changes will take effect from October 1, 2024.
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• Delay in filing trust registration can be condoned if reasonable cause exists. Effective Oct 1, 2024. Prevents permanent exit from exemption.

  Notes : Provision for condonation of delay in filing application for registration by trusts or institutions u/s 12AB, enabling the Principal Commissioner/Commissioner to condone the delay if reasonable cause exists. Applicable from October 1, 2024. Aims to prevent permanent exit from exemption regime due to delayed filing.
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• Amendment to Section 80G: Streamlined Timelines for Approval Applications to Enhance Charitable Donations and Tax Deductions.

  Notes : The proposed amendment rationalizes the timelines for funds or institutions to file applications seeking approval u/s 80G, which provides for deduction of donations to approved entities. It addresses situations where entities are unable to file applications within specified timelines, preventing unintended permanent exit from section 80G approval. The amendment aims to streamline the application process and timelines for approval u/s 80G, facilitating charitable donations and tax deductions. The amendments will take effect from October 1, 2024.
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• Faster processing for tax exemption applications from trusts/funds. 6 months from quarter-end, not month-end. Applies to new & renewal cases.

  Notes : Timelines for disposing applications by trusts, funds, or institutions seeking registration for exemption u/s 12AB or approval u/s 80G are rationalized. Applications will be processed within six months from the end of the quarter in which they were received, instead of six months from the end of the month. This applies to provisionally registered/approved entities applying for registration/approval and registered/approved entities applying for further registration/approval. The amendments take effect from October 1, 2024.
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• Merger of trusts/institutions rationalized. Accreted income may attract provisions. New section 12AC clarifies conditions for exemption.

  Notes : The proposal introduces provisions to rationalize the merger of trusts or institutions approved/registered under charitable trust regimes. When such entities merge, accreted income may attract Chapter XII-EB provisions. To provide clarity, new section 12AC prescribes conditions under which the merger shall not attract these provisions. The amendments are effective from April 1, 2025.
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• Trusts can claim exemptions u/s 10(23EA), (23ED), (46B) by choosing operative/inoperative 12AB registration. Rationalizes charitable trust provisions.

  Notes : Sub-section (7) of section 11 is proposed to be amended to include reference of clauses (23EA), (23ED), and (46B) of section 10, enabling trusts under the second regime to claim exemption under these specific clauses. The amendment aims to rationalize provisions for charitable trusts and institutions by allowing them to choose provisions for claiming exemptions, making registration u/s 12AB operative or inoperative accordingly. The amendment will take effect from April 1, 2025.
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• Capital gains tax simplified: 2 holding periods, 20% short-term rate on equity shares/funds, 12.5% long-term rate with Rs. 1.25L exemption.

  Notes : Taxation of capital gains proposed to be rationalized and simplified. Holding periods reduced to two categories: 12 months for listed securities, 24 months for other assets. Short-term capital gains rate on STT paid equity shares, equity oriented mutual funds, and business trusts increased to 20%. Long-term capital gains rate unified at 12.5% for all assets, with exemption of up to 1.25 lakh for STT paid equity shares, equity oriented funds, and business trusts. Indexation for long-term capital gains removed. Parity in taxation between residents and non-residents. Withholding tax provisions aligned. Changes effective from July 23, 2024.
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• Specified Mutual Fund definition clarified: >65% in debt/money market instruments or >65% in such funds. Fund-of-Funds included. Effective 04/01/2026.

  Notes : The definition of "Specified Mutual Fund" u/s 50AA is proposed to be amended to provide clarity regarding the proportion of investment in debt and money market instruments, and to clarify the investment requirements for Fund-of-Funds (FoFs). A specified mutual fund shall mean a mutual fund that invests more than 65% of its total proceeds in debt and money market instruments, or a fund that invests 65% or more of its total proceeds in units of such a fund. The amendment under clause (ii) of the Explanation of section 50AA is proposed to be effective from April 1, 2026, and applicable from the assessment year 2026-27 onwards.
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State GST

• Hybrid Annuity Mode: Unified Contracts for Highway Construction, Maintenance, and Continuous Service Payments.

  Circulars : Under Hybrid Annuity Mode (HAM) for National Highway Projects, concessionaire constructs new road and provides Operation & Maintenance over 15-17 years with payment staggered over years. HAM contract is single contract for construction and O&M, cannot be split into separate contracts. Payment is continuous supply of services u/s 2(33). Time of supply is date of invoice or receipt of payment, whichever is earlier, if invoice issued within prescribed period u/s 31(5). If invoice not issued within prescribed period, time of supply is date of provision of service or receipt of payment, whichever is earlier, with date of provision deemed as due date of payment. Tax liability arises at time of invoice or receipt of payment, whichever is earlier. Interest component in annuity/instalment is includible in taxable value u/s 15(2)(d).
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• Custodial services by banks/FIs to FPIs not treated as services to 'account holder' u/s 13(8)(a) IGST Act. Determined under default 13(2).

  Circulars : Clarification provided that custodial services provided by banks or financial institutions to Foreign Portfolio Investors (FPIs) are not treated as services provided to 'account holder' u/s 13(8)(a) of IGST Act. Such services are not covered u/s 13(8)(a). Place of supply of custodial services to FPIs is to be determined under default provision i.e. sub-section (2) of Section 13 of IGST Act, not u/s 13(8)(a).
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Indian Laws

• Court Upholds Summary Trial for Cheque Dishonor; Dismisses Petition to Convert to Summons Case, Citing Insufficient Grounds.

  Case-Laws - HC : Dishonour of cheque - no order for conversion into summons triable matter - application of Section 145(2) of Negotiable Instruments Act, 1881 - violation of natural justice - insufficient time granted, recall application rejected. Proceedings u/s 138 conducted as summary procedure unless Magistrate concludes need for conversion. Complainant's affidavit evidence with bank slip and dishonour material suffices, unnecessary to record further preliminary evidence. Affidavit treated as examination-in-chief, examinable u/s 264 CrPC. Summary procedure mandates judgment on not guilty plea unless Section 145(2) recall application filed. Supreme Court directions on expeditious trial, deeming service of one complaint as service for related cheque dishonour complaints. Complainant's affidavit evidence need not be re-deposed, can be considered at all trial stages. Accused has right to summon complainant/witnesses but must disclose probable grounds for recall. Court bound to summon on probable grounds disclosed. Petitioners failed to apply u/s 145(2) disclosing probable defence for recall. No grounds to recall or interfere in extraordinary jurisdiction. Petition dismissed.
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• Presumption rebutted. Defence proved. Petitioner failed evidence. Acquittal justified. Presumption of innocence strengthened.

  Case-Laws - HC : Presumption u/s 139 read with Section 118 NI Act rebutted. Respondent proved defence through testimony on 'preponderance of probabilities'. Petitioner failed to substantiate contentions regarding cash loan and pro-note. Respondent's acquittal justified due to petitioner's lack of evidence and improbable financial capacity. Decision of acquittal strengthens presumption of innocence. Appellate court should be slow in reversing acquittal. No ground to grant leave to appeal, petition dismissed.
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IBC

• High Court Upholds Removal of Liquidator for Lack of Authorization; Petition to Overturn Dismissed.

  Case-Laws - HC : The High Court dismissed the petition filed by the petitioner seeking removal of his removal as Liquidator due to incomplete qualifications. The petitioner's application for authorization assignment was rejected by the Insolvency Bankruptcy Board of India (IBBI) as per Regulation 12A of IBBI Regulations. The Tribunal removed the petitioner as Liquidator u/s 16 of the General Clauses Act, 1897 and Section 276 of the Companies Act, 2013. The Appellate Tribunal also dismissed the petitioner's appeal, confirming his removal as Liquidator for not having valid authorization. Sections 199 to 205 of the Insolvency and Bankruptcy Code, 2016 provide for insolvency professional agencies, and Section 206 mandates enrollment as a member of an insolvency professional agency and registration with IBBI u/s 207 to render services as an insolvency professional. The High Court found no infirmity or illegality in the orders passed by the respondents and dismissed the petition.
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• Appeal Dismissed Due to 466-Day Delay; Financial Difficulties Not Accepted as Justification by Appellate Tribunal.

  Case-Laws - AT : Delay of 466 days in filing appeal deemed inordinate and unexplained. Financial crunch cited as ground for delay not accepted as satisfactory, given appellant received substantial amount u/s 36(4)(a)(iii). Adjudicating authority rightly rejected plea for condonation of delay. Appeal dismissed by Appellate Tribunal on ground of limitation, not warranting interference.
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PMLA

• Bail Denied in Money Laundering Case: Court Cites Sufficient Evidence and Manageable Health Conditions for Applicant.

  Case-Laws - HC : The Court observed that Article 21 of the Constitution guarantees the right to personal liberty, and bail is the rule while jail is an exception. However, considering the nature of the offence, multi-layered transactions, and nation-wide nexus, further investigation is ongoing. The Court elucidated factors for deciding bail applications and the need for judicious exercise of discretion. It examined the twin conditions u/s 45 of PMLA and found prima facie sufficient material showing the applicant's involvement in money laundering and connecting the monies to the predicate offence as 'proceeds of crime'. The Court invoked the statutory presumption u/s 24 of PMLA and held that the applicant failed to satisfy the twin conditions for bail u/s 45(1) of PMLA. Regarding medical ailments, the Court noted the applicant did not establish that the ailments cannot be treated in jail or referral hospitals. Consequently, the bail application was dismissed.
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• ED Must Release Seized Properties After Adjudicating Authority Drops PMLA Attachment Confirmation Request.

  Case-Laws - HC : When authorities of Enforcement Directorate (ED) have reasons to believe, based on material, that any person possesses proceeds of crime and is likely to conceal or create encumbrance to frustrate confiscation proceedings, ED would be justified in issuing provisional attachment order of such properties and seeking confirmation from Adjudicating Authority. Provisional attachment u/s 5(1) of PMLA is valid for 180 days. u/s 5(3), provisional attachment ceases after 180 days. When ED sought confirmation of provisional attachment before Adjudicating Authority and it was dropped, provisional attachment lapses due to limitation u/s 5(1). Consequently, there is no attachment over subject properties. Direction to ED to revoke and release attachment and seizure of movable and immovable properties of petitioners within two weeks - Petition allowed.
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Service Tax

• Hydro-Electric Project Services Qualify for Tax Exemption; Tribunal Dismisses Revenue's Appeal on Dam Construction.

  Case-Laws - AT : The respondents rendered services related to site formation, clearance, excavation, earthmoving, and demolition for a hydro-electric project. The issue was whether these services qualified for the exemption under Notification No. 17/2005-ST for construction of a dam. The Tribunal held that hydro-electric projects are inseparable from dams, and the services rendered were towards dam construction, eligible for the exemption. Regarding the time limitation, the Tribunal opined that the respondents had a bona fide belief that the services were not taxable, and the Revenue failed to establish reasons for invoking the extended period. Consequently, the Tribunal dismissed the Revenue's appeal, finding merit in the respondents' case on both substantive and limitation grounds.
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• Extended Limitation Period u/s 73(1) Needs Proof of Intent to Evade Tax, Mere Non-Disclosure Insufficient.

  Case-Laws - AT : Invocation of extended period of limitation under proviso to section 73(1) of Finance Act, 1994 requires wilful suppression of facts with intent to evade service tax payment. Mere non-disclosure in returns cannot presume intent to evade. Department must prove positive act indicating suppression. If dispute involves interpretation of legal provisions, extended limitation cannot be invoked. Assessee's bona fide belief, even if incorrect, does not render it mala fide. No suppression of facts from department. Extended limitation wrongly invoked. Impugned order set aside. Appeal allowed.
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• Tribunal Dismisses Service Tax Demands on Management Consultancy, IP Rights, Job-Work, and Banking Services.

  Case-Laws - AT : Non-payment of service tax on management consultancy services, royalty services, intellectual property right services, business auxiliary services, and banking and financial services was challenged. The Tribunal held that no service tax was payable on management consultancy services provided to the Baddi unit as it was a constituent entity. The demand for intellectual property right services for the period October 2004 to March 2012 was set aside as it became taxable only from September 2004. The job-work charges did not amount to rendering of business auxiliary services as finished goods emerged after job work. The demand for banking and financial services was set aside as no such services were rendered by the holding company, and transactions between constituent entities do not attract service tax. The demand for the extended period was also set aside due to the time limitation and lack of suppression, as the appellant had filed returns and paid service tax on management consultancy services.
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• Tribunal Allows Cenvat Credit for Appellants; Unsigned Invoices Accepted, Service Descriptions Not Grounds for Denial.

  Case-Laws - AT : Cenvat credit eligibility on service tax paid by appellants on invoices issued by automobile dealers examined. Department alleged dealers provided insurance services illegally against Insurance Act, 1938 and IRDA Regulations. Credit rejected on grounds of unsigned computer-generated invoices and different service description in invoices by service provider. Held, department cannot deny credit at recipient's end without reopening assessment at dealer's end. Unsigned computer-generated invoices allowed as tax paid not disputed and signatures not required post-2015. Different service description in invoices by service provider not a ground to deny credit to recipient. Impugned orders set aside, appeal allowed. Tribunal followed jurisdictional High Court and Tribunal precedents.
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VAT

• Tax Refund Rules Clarified: Interest Applies After Statutory Period; Filing DVAT-21 Not Required for Refund in Return.

  Case-Laws - HC : The Court held that the Commissioner has powers to first apply excess amount towards recovery of any other dues under the DVAT Act. Section 38(3)(a)(i) & (ii) clarify interest accrual timeline on delayed refunds based on tax period being monthly or quarterly. If notice u/s 58 or additional information u/s 59 is sought, refund is carried forward as tax credit. Filing DVAT-21 is not required once refund claim is in return itself. No delay was attributable to the petitioner, and statutory timeframe for refund had elapsed. Subsequent proceedings like Section 59(2) notice and default assessment order were non-est. Interest u/s 42(1) cannot be denied merely due to investigation or legal issues ultimately decided in petitioner's favor. At 6% interest rate, impugned orders were set aside, and petition allowed.
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Case Laws:

• GST

• 2024 (8) TMI 145
  Refusal to grant certified copies of the order sheet/note sheet and search warrant - Non-payment of GST - Works Contract Services - it was held by High Court that This Court is not inclined to entertain the prayers of the Petitioners. HELD THAT:- It is not required to interfere with the impugned judgment and order passed by the High Court. Hence, the Special Leave Petition is dismissed.

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• 2024 (8) TMI 144
  Initiation of proceedings u/s 130 of the GST Act or u/s 73/74 of the GST Act - excess stock is found at the time of survey - HELD THAT:- It is not in dispute that survey was conducted at the business premises of the petitioner on 12.06.2018. It is also not in dispute that excess stock was found, which triggered the initiation of the present proceedings against the petitioner. On various occasions, this Court has held that if excess stock is found, then proceedings under sections 73/74 of the GST Act should be pressed in service and not proceedings under section 130 of the GST Act, read with rule 120 of the Rules framed under the Act. Recently, this Court in S/s Dinesh Kumar Pradeep Kumar [ 2024 (8) TMI 71 - ALLAHABAD HIGH COURT] has held This Court on various occasions has held that if the excess stock was found then the proceedings under Sections 73 74 of the UPGST Act will come into play and not proceedings under Section 130 read with Rule 122 of the Act. The law is clear on the subject that the proceedings under section 130 of the GST Act cannot be put to service if excess stock is found at the time of survey. The impugned order dated 16.04.2024 passed by the respondent no. 1, the first appellate authority, as well as the impugned order dated 08.10.2018 passed by the respondent no. 2 cannot be sustained in the eyes of law. The same are hereby quashed - petition allowed.

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• 2024 (8) TMI 143
  Challenge to adjudication passed u/s 73 of the U.P. GST Act for the period July, 2017 to March, 2018 - gross violation of Sections 75(4) and 75(7) of the Act - HELD THAT:- Reliance has been placed on orders passed by the coordinate benches of this Court in Mahaveer Trading Company Vs. Deputy Commissioner State Tax and Another [ 2024 (3) TMI 334 - ALLAHABAD HIGH COURT] , M/S Shree Salasar Steels Vs. State of U.P. and 2 Others [ 2024 (3) TMI 1 - ALLAHABAD HIGH COURT ] and M/S Virat Agencies Vs. State of U.P. Through The Principal Secretary [ 2024 (4) TMI 275 - ALLAHABAD HIGH COURT] , where it was held that The impugned order cannot be sustained in the eyes of law. It has been passed in gross violation of fundamental principles of natural justice. The self imposed bar of alternative remedy cannot be applied in such facts. If applied, it would be of no real use. Facts being identical, in similar circumstances, the earlier such adjudication orders are set aside. The matter is remitted to the respondent authority to pass a fresh order in accordance with law after affording due opportunity of personal hearing to the petitioner - Petition disposed off.

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• 2024 (8) TMI 142
  Rectification of errors in GST returns - non-compliance with time limitation prescribed under Section 39 (9) of CGST Act for correction - request in writing to the concerned authorities to permit rectification which has not been granted - HELD THAT:- There is no dispute that there were certain errors with no loss of revenue to the State in the GST returns filed. It was held in Star Engineers (I) Pvt Ltd. Vs. Union of India Ors. [ 2023 (12) TMI 729 - BOMBAY HIGH COURT ] where it was held that the State Tax officer ought to have granted the petitioner s request to rectify / amend the Form GSTR-1 for the period July 2021, November 2021 and January 2022, either through Online or manual means. The facts of this case is almost identical in as much as, there is no loss to revenue if, petitioner is permitted to amend the GST returns filed. The respondents are directed to open the portal within one week from the date of this order being uploaded and inform petitioner to enable them to amend / rectify Form GSTR-1 and GSTR-3B within one week - petition disposed off.

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• 2024 (8) TMI 141
  Enhancement of tax - levy of penalty and additional tax - without providing any opportunity to the petitioner, adverse adverse material has been used against the petitioner - violation of principles of natural justice - HELD THAT:- It is evident from the appellate order that the appeal of the petitioner was partly allowed and the taxable turnover has partly been reduced. Further, the record shows that by a letter, report was submitted by the proper officer about the survey dated 24.03.2008, which has adversely been taken against the petitioner to which, no opportunity was given. The Hon ble Apex Court in the case of Oryx Fisheries Private Limited [ 2010 (10) TMI 660 - SUPREME COURT ] has held that It is no doubt true that at the stage of show cause, the person proceeded against must be told the charges against him so that he can take his defence and prove his innocence. It is obvious that at that stage the authority issuing the charge- sheet, cannot, instead of telling him the charges, confront him with definite conclusions of his alleged guilt. If that is done, as has been done in this instant case, the entire proceeding initiated by the show cause notice gets vitiated by unfairness and bias and the subsequent proceeding become an idle ceremony. Once the material used against the petitioner has not been confirmed, the impugned order cannot sustain in the eyes of law and the same is hereby set aside - The matter is remanded to the authority concerned to decide the case de-novo - Petition allowed by way of remand.

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• 2024 (8) TMI 140
  Challenge to order under Section 74 of TNGST Act, 2017 for assessment year 2017-18 - Mismatch between the Return filed by the petitioner in GSTR 3B and the auto populated information relating to the input tax credit in its Form GSTR 2A - HELD THAT:- The provisions of the CGST Rules, 2017, has undergone series of changes from its inception. Rule 36(4) particularly has undergone changes. This aspect ought to have been considered by the respondent while passing the impugned order. P rima facie , the difference that is attributable between the GSTR 2A and GSTR 3B is on account of mismatch for the supplies made by RAMCO. It is 10.53% of total credit, which is less than 20% as per the amended provisions of Rule 36(4) as it stood till 09.10.2019 vide Notification No. 49/2019-Central Tax. Since aspect has not been considered by the respondent, the impugned order is set aside and the case is remitted back to the respondent to pass fresh orders in the light of the provisions as it stood amended by Notification No. 49/2019-Central Tax dated 09.10.2019. All the recovery proceedings are therefore directed to be kept in abeyance pending orders in the remand proceedings - Petition allowed by way of remand.

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• 2024 (8) TMI 139
  Classification of goods - Geo Membrane manufactured by the petitioner - to be classifed under Chapter 59 or Chapter 39 of the Tariff? - HELD THAT:- This issue is no more res-integra in view of the decision of the Coordinate Bench of this Court in case of MESSERS CTM TECHNICAL TEXTILES LTD VERSUS UNION OF INDIA [ 2020 (12) TMI 1100 - GUJARAT HIGH COURT] wherein the Coordinate Bench after considering the issue of alternative remedy as well as entertainability of the writ petition with regard to merits of the case, has held The matter is remitted to the respondent no.2 for fresh consideration of all the issues discussed. It is not deemed fit to reiterate the same and adopting the same reasoning, we hold that the product manufactured by the petitioner being Geo Membrane is classifiable would fall under Chapter 59 and not under Chapter 39 as held by the respondent No. 4 the Gujarat Advance Ruling Authority relying upon the decision of the Hon ble Madhya Pradesh High Court in case of Raj Packwell Ltd. The petitioner, therefore, is liable to pay the GST @ 12% from 15.11.2017 onwards and not @ 18%. The respondent authority is, therefore, directed to apply the discounted rate of 12% of the GST on the product manufactured by the petitioner under HSN Code 59111000 of the Tariff. Petition allowed.

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• 2024 (8) TMI 138
  Refund claim - Time limitation - time limit for filing appeal was up to 28.11.2022, on account of the hard copy of the appeal being submitted on 02.08.2023, the appeal was rejected - HELD THAT:- The petitioner has placed on record evidence that the appeal was filed in Form GST APL-01 through the online mode on the GST portal on 31.10.2022. Such filing was in accordance with Rule 108(1) of the Central Goods and Services Tax Rules, 2017 (the GST Rules) and within the prescribed period of limitation. Sub-rule(3) of Rule 108 of the Central Goods and Services Tax Rules, 2017 indicates clearly that the requirement of filing a self-certified copy of the order appealed against becomes applicable, as per the first proviso thereto, only where the order appealed against is not uploaded on the common portal - In the case at hand, the order was duly uploaded on the common portal. In such event, the date of online filing is the date of filing of the appeal. Even otherwise, the filing of a hard copy is a purely procedural requirement. Consequently, the impugned order is not sustainable. The impugned order dated 13.03.2024 is set aside and the appellate authority is directed to receive and dispose of the appeal on merits - petition disposed off.

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• 2024 (8) TMI 137
  Maintainability of petition - alternative remedy available to the petitioner to challenge the impugned order - Applicability of provision of Section 16 (2)(b) and 16 (2) (c) of GST Act - vires of the statute being challenge to Section 16 (2) (c) - reversal of the Input Tax Credit - impugned order is a non speaking order - no opportunity of hearing was provided to the petitioner - violation of principles of natural justice. Maintainability of petition - alternative remedy available to the petitioner to challenge the impugned order - HELD THAT:- Hon ble Supreme Court in the case of M/s. Commercial Steel Ltd. [ 2021 (9) TMI 480 - SUPREME COURT ] in the similar facts has held that in view of remedy available under Section 107 of the Act instead of the petitioner should be relegated to avail such remedy instead of availing remedy, present petition should not be entertained if the exception stated therein are non-existent. In the facts of the case that two conditions namely violation of the principle of natural justice and a challenge to the vires of the statute or delegated legislation can be said to be attracted to entertain this petition as canvassed on behalf of the petitioner. The petitioner has contended that no personal hearing was given and therefore, there is violation of principle of natural justice and the petitioner has challenged the vires of Section 16 (2) (c) of the GST Act and therefore, the petitioner should not be entertained instead of relegating the petitioner to avail alternative efficacious remedy. Violation of principle of natural justice - HELD THAT:- As it emerges from the facts of the record, there are disputed questions of fact with regard to granting opportunity of hearing to the petitioner. On one hand as the respondent-authority has categorically recorded that the personal hearing was provided and the petitioner did not remain present, whereas, on the other hand, the petitioner has disputed such statement in the impugned order by contending that no notice for personal hearing was served upon the petitioner. Therefore, such issue with regard to providing opportunity of hearing has given rise to the disputed questions of fact which cannot be considered while in this writ proceeding under Article 226 of the Constitution of India. Vires of the statute being challenge to Section 16 (2) (c) - HELD THAT:- When, it is a composite invocation of Section 16 (2)(b) and Section 16 (2) (c) of the GST Act even if, the vires of Section 16 (2) (c) GST Act are challenged in the present proceedings, the question of ascertaining the facts and the documents produced on record for the adjudication vis-a-vis the violation of Section 16 (2) (b) is concerned, it would require thorough analysis of the documents on record - this is an exceptional circumstances as held by the Hon ble Apex Court in the case of M/s. Commercial Steel Ltd, so as to entertain this writ petition on the grounds canvassed by the petitioner. With regard to the other contentions of the petitioner, the same are on merits which the petitioner is entitled to raise with regard to the interpretation of Section 16 (2) (b) read with Rule 36 and Section 155 of the Act relating to the burden of proof can be raised before the Appellate Authority in the appeal which may be filed by the petitioner under Section 107 of the GST Act. It is opined that no interference is required at this stage in view of the availability of the alternative an efficacious remedy, and the petitioner is not precluded for taking recourse to the appropriate remedy which is available in terms of Section 107 of the GST Act to pursue the grievance with regard to challenge the impugned order dated 22.2.2024 passed by the respondent-authority under Section 74 (5) read with Section 74 (9) of the CGST Act, 2017. Petition dismissed.

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• 2024 (8) TMI 136
  Classification of goods - original car seat covers which are manufactured and designed to permanently fit over the raw foam seat of the vehicle by the OEMs as well as the seat manufactures who further sell to OEMs - classifiable under HSN 9401 as Seats (other than those of heading 9402) whether or not convertible into beds, and parts thereof other than seats of kind used for aircraft or not - Sl. No. 435A under Schedule III of N/N. 1/2017-Central tax (rate) dt. 28.06.2017 as amended by N/N. 41/2017 Central Tax (rate) dt. 14.11.2017. HELD THAT:- The seat covers fit to be mounted on the existing seat of the motor vehicles. These seat covers are meant for the protection of the seats and the functional value of seat cover is the comfort and convenience it extends to the driver and passengers. Thus the seat cover is nothing but an accessory, which is generally bought by the customer for protection and comfort. The features of the seat cover are distinct and clearly distinguishable from seat - The heading 940120 covers seats for motor vehicles whereas the appellant is not manufacturing seats as such but only a seat cover which is fitted over the seat already factory manufactured. Thus the product manufactured by the appellant is not covered under 940120. In order for motor vehicle parts or accessories to be classifiable under heading 8708, they must satisfy all the three following conditions: They must be identifiable as being suitable for use solely or principally with motor vehicles of headings 8701-8705 - On the test of sole use / principal use also, the seat covers merit classification under-8708 as they are only usable and used for motor vehicles and not of general use.

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• 2024 (8) TMI 135
  Classification of goods - Mangala Borosan and Mangala G1 - classifiable under Chapter Heading 3105 as Fertilisers or not - HELD THAT:- It is clearly evident that as per said Chapter Notes, for a product to be classified under Heading 3105 as Other Fertilisers, the same should contain at least one of the fertilizing elements namely - Nitrogen (N), Phosphorus (P), or Potassium (K). Further, in all the headings referring to Fertilizers, there is a clear necessity that the said products should contain one or more of the fertilizing elements viz. Nitrogen, Phosphorous or Potassium . The appellant is aware that their product does not contain the essential constituents of Nitrogen, Phosphorous or Potassium as stipulated by the Chapter Notes. This is also evidenced by the constituents furnished by the Appellant and which was reproduced above. While the Appellant is claiming the same to be Fertilisers, yet for the purpose of taxation, the relevant Entry in the Tariff determines the Tax rate - Further, while Fertilizers are classified under Chapter 31 of the Tariff, however, classification of a product is a function of not only the description of the Entries therein, but the inclusion / exclusions mentioned in the Section Notes and Chapter Notes further read with the General Rules of Interpretation. Thus, the appellant s contention that the Nitrogen is emanated during the use of the products in question and thus eligible for classification under Chapter 31 of the Customs Tariff is not tenable. Products are to be assessed based on the form and contents at the time of presentation / supply and not on the results of their usage. In the Explanation under the said Section 2(h) it is clarified that for the purpose of Fertilizer, Essential plant nutrients include Primary Nutrients (Nitrogen, Phosphorous and Potassium) ... It may be noted that in the definition under Section 2(h) cited, Fertiliser means any essential substance used or intended to be used to provide essential plant nutrients . As per the Explanation, such essential plant nutrients should contain Nitrogen, Phosphorous and Potassium. Relying on this definition does not change the ingredients required under the Customs Tariff / GST Rate Notification for determination of a product as Other Fertilizer / Fertilizer - It may be a fact that micronutrients mentioned by the Appellant are those Notified by the State Government, However, this does not change the classification of the product under the GST law.

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• 2024 (8) TMI 134
  Classification of activities of the applicant - Support services to agriculture, forestry, fishing, animal husbandry - composite supply under GST law with Principal Supply or not - applicability of SL No 24 of Notification 11/2017-Central Tax (Rate) dated June 28, 2017 (as amended time to time) having SAC code 9986 - applicable taxable rate - trading in carbon credits - non-speaking/non-reasoned order - violation of principles of natural justice. Whether the supply is a Composite Supply ? - HELD THAT:- A combined reading of both the Recitals and the Representations and Warranties, it is clearly evident that Shell and AIF are independent entities who entered into an agreement wherein Shell would support AIF in its endeavour for which Shell is to be granted the full, legal, beneficial and unencumbered title to 100% of the VCUs generated by the Project. The agreement between the two entities is not a Joint Venture and further there is no agency relationship between both the parties. While the Appellant is trying to project the entire gamut of operations as one cohesive supply, between AIF and SHELL, however, it is evident that the appellant is making different supplies to SHELL and different supplies to the Farmers. From a business point of view which is relevant to taxation matters, the appellant is engaged with the Farmers for the sole purpose of gaining the Carbon Credits which are to be transferred to their client viz., SHELL - The end result of the supply to the Farmers is the accruing of Carbon Credits. AIF then supplies these Carbon credits to SHELL on a Principal-to-Principal basis. Thus, it cannot be disputed that there are multiple supplies to different recipients. Whether those supplies can be clubbed together and be categorised as Composite Supply ? - HELD THAT:- The appellant is making some supplies to SHELL and some supplies to Farmers. The law envisages that for an act to be categorized as a Composite Supply there should be a Principal Supply with other naturally bundled supplies to a single recipient. Whereas, in the transactions narrated by the Appellant, the supply provided to the Farmers is a distinct transaction between two parties viz., the Appellant and the Farmers; and the supply provided to SHELL is another distinct transaction, between the Appellant and SHELL. These disjoint supplies to multiple recipients cannot be claimed to be a Composite Supply in terms of Section 2 (30) of the CGST / SGST Acts. As evidenced by the Agreement cited above, AIF is neither acting as an agent of SHELL nor are the two engaged in a Joint Venture. As such, the interactions of AIF stop with SHELL and SHELL has no connection with the Farmers. It is indeed AIF who separately engages with the Farmers and derives the Carbon Credits from them so as to make the same available to SHELL as its part of the agreement. As there is a distinct division of supplies and the supplies are rendered to two different entities by AIF, the said supplies cannot be covered under the definition of Composite Supply Carbon Credits Trading - HELD THAT:- No discussion made on the aspect of Carbon Credits Trading, however, the fact remains that the entire focus of AIF is to obtain the Carbon Credits accruing to accruing to the Farmers so that the same could be supplied to SHELL for the consideration received. What is the Principal Supply? - HELD THAT:- As the said supply itself is not a Composite Supply, the question of what is the Principal supply is irrelevant.

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• Income Tax

• 2024 (8) TMI 133
  Delay in filling SLP - delay of 340 days - Disallowance u/s 14A deleted by HC - HELD THAT:- After having perused the application for condonation of delay, we find that there is absolutely no explanation for a delay of 340 days in preferring the Special Leave Petition. Hence, the Application seeking condonation of delay in preferring the Special Leave Petition is rejected. Consequently, the Special Leave Petition stands dismissed on the ground of delay. However, question of law, if any, is kept open.

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• 2024 (8) TMI 132
  Validity of Faceless assessment of income escaping assessment - Challenge to notice u/s 148 as non-compliance with Section 151A of the Act - notices issued by JAO instead of FAO - HELD THAT:- JAO would not have jurisdiction to issue the impugned notices more particularly in view of the clear provisions of Section 151A read with notification dated 29 March, 2022 issued by the Central Government. As fairly conceded on behalf of the revenue, the challenge in the proceedings would stand covered by the decision of this Court in Hexaware Technologies Ltd. ( 2024 (5) TMI 302 - BOMBAY HIGH COURT] . The impugned notices would be required to be held to be illegal and invalid as and there is no dispute that the JAO had no jurisdiction to issue the impugned notice. We, accordingly, allow this petition in favour of assessee.

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• 2024 (8) TMI 131
  Reopening of assessment u/s 147 - reasons to believe - difference between the total cash sales and the cash sales reflected in the books - HELD THAT:- Reopening is made only on the basis of the discrepancy noticed from the impounded material relevant to the year under consideration. From the material placed on record it is not in dispute that the AO during the course of the regular assessment has verified the very same impounded material and issued the notice u/s 142 (1) calling upon the petitioner to show as to how the transaction appearing in the impounded documents have been reflected in the books of accounts and thereafter, during the course of the assessment proceedings further details was also called for with regard to the impounded material found during the course of survey which took place on 09.02.2016 relevant to AY 2016-17 explaining in detail regarding total difference in sum total in day wise and amount as mentioned. Hence, during the course of regular assessment, the very issue of totaling difference in the impounded material was considered. Therefore, it cannot be said that the impugned notice is issued on the basis of any new tangible material having live nexus with the escaped income. AO during the course of the regular assessment was having access to the impounded material and once the same is processed by accepting revised return filed by the petitioner subsequently, on the same issue, impugned notice for reopening is not tenable as it would amount that to change of opinion on the part of the respondent AO. Also as the impugned notice is issued beyond the period of four years on 04.05.2020 and therefore, there is no failure on part of the petitioner to make fully and true disclosure of all material facts as the petitioner has made disclosure of Rs. 78.94 Lakhs on the basis of the impounded material and later on, when the respondent has found that there was a total difference of the impounded material, the same cannot be considered as failure on the part of the petitioner to make full and true disclosure. Decided in favour of assessee.

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• 2024 (8) TMI 130
  Reassessment proceedings u/s 148 - reassessment sought to be undertaken more than three years after the end of the relevant AY - sanction accorded as required to be granted u/s 151 (ii) or not? - HELD THAT:- It is apparent that the sanction accorded in the instant case was required to be granted u/s 151 (ii) of the Act since more than three years had lapsed from the end of the relevant Assessment Year. The period of three years would expire on 31st March, 2020 while the first notice (which now was purported to be a notice under Section 148A), came to be issued on 30th June, 2021 i.e. one year and three months after the lapse of three years. The sanction in the instant case has been granted by the Principal Commissioner of Income-tax-3. For cases where the reassessment is sought to be undertaken more than three years after the end of the relevant AY, the specified authorities who may sanction the reassessment are of a more senior and higher rank. Section 151 of the Act contains an inherent check and balance when the reopening is sought to be initiated after a longer period, application of mind by the specific authorities who are even more senior (as compared with the authorities who are relatively subordinate, who are listed in Section 151 (i) to sanction reassessments initiated within three years) would have to be involved. It is an admitted position that the sanction in the instant case had not been granted by any authority empowered u/s 151 (ii). We make it clear that having disposed of this Petition on the ground of absence of sanction by the specified authority having jurisdiction u/s 151 (ii) of the Act, we express no opinion on other facets of the law and issues based in the Writ Petition.

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• 2024 (8) TMI 129
  Validity of reassessment proceedings - Time limit for notice u/s 149 - whether a proposed reassessment pertaining to a period prior to 01 April 2021 would sustain based on the time frames as they existed prior to the promulgation of Finance Act, 2021? - HELD THAT:- Undisputedly, Section 149 (1)(b) as it stood prior to the introduction of the amendments by way of Finance Act, 2021 prescribed that no notice u/s 148 shall be issued if four years but not more than six years have elapsed from the end of the relevant assessment year. Thus the period of six years stood erected as the terminal point which when crossed would have rendered the initiation of reassessment impermissible in law. The impugned notice when tested on the anvil of the pre-amendment Section 149 (1) (b) in order to be sustained would have to meet the prescription of six years. Undisputedly that period in respect of AY 2016-17 came to an end on 31 March 2023. We thus find ourselves unable to sustain the impugned action of reassessment and which was commenced pursuant to the notice dated 29 April 2024. It would be important to note that the respondents also do not attempt to sustain the initiation of action on any other statutory provision and which could be read as extending the time limit that applied. We also find ourselves unable to read Twylight Infrastructure as empowering them to reopen assessments contrary to the negative covenant which forms part of Section 149 of the Act. We accordingly allow the present writ petition and quash the impugned order under Section 148A (d) as well as the consequential notice u/s 148 of even date.

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• 2024 (8) TMI 128
  Exemption u/s 10 (2A) from share of income - notional net business loss - total loss was claimed to be carried forward to the next year under the head capital gain - ITAT set aside the order of CIT (Appeals) and held that the income set off derived by the assessee under the head capital gain was accessible as income under the head income from business or profession . The assessee was held to be a dealer in share and the matter was, therefore, remanded back to the AO - subsequently ITAT directed the AO to allow the carry forward of business loss to subsequent years. HELD THAT:- As we find that the fall in the value has been worked out based on the market quotation in Ludhiana Stock Exchange, wherein prior to the right issue on 13.10.1992, last-cum-right price of the shares were Rs. 610/- per share and the first Ex.-right price of the share on 11.11.1992 was Rs. 400/- per share, resulting in fall in the price of the share by Rs. 210/- per share. This aspect has not been disputed by the revenue. We further find that the judgments passed by the Hon ble Supreme Court in Miss Dhun Dadabhoi Kapadia [ 1966 (10) TMI 52 - SUPREME COURT ] and Bombay High Court in K.A. Patch [ 1970 (2) TMI 39 - BOMBAY HIGH COURT ] have been followed by this Court in the case of Naveen Jindal vs. ACIT [ 2005 (8) TMI 44 - PUNJAB AND HARYANA HIGH COURT ] wherein identical issue was decided in favour of the assessee. Keeping in view that the question of law stand already decided and no substantial question of law arises for fresh adjudication before this Court, the appeal is dismissed.

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• 2024 (8) TMI 127
  Taxability of income in India - payments received by the respondent / assessee for supplying Computer Software - liability to be taxed as royalties under the provisions of Section 9 (1) (vi) or not? - HELD THAT:- As seen that from the order passed by this Court in Lucent Technologies [ 2024 (7) TMI 969 - BOMBAY HIGH COURT ] the Court not only considered the case of the purchaser of the software but also the supplier of the Software, when the Court had observed that the assessee therein (Lucent Technologies) who had in fact supplied the software cannot be treated differently and same parameters of law would be required to be applied. We find ourselves in agreement with the learned counsel for the parties that the issue would stand squarely covered by such order passed by this Court. In view of the decision of the Supreme Court in Engineering Analysis Centre of Excellence (P.) Ltd. [ 2021 (3) TMI 138 - SUPREME COURT ] and the orders passed by this Court in Reliance Industries [ 2024 (6) TMI 1069 - BOMBAY HIGH COURT ] and Lucent Technologies [ 2024 (7) TMI 969 - BOMBAY HIGH COURT ] the appeal is accordingly dismissed.

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• 2024 (8) TMI 126
  Validity of Faceless assessment of income escaping assessment - Challenge to notice u/s 148 as non-compliance with Section 151A of the Act - notices issued by JAO instead of FAO - HELD THAT:- JAO would not have jurisdiction to issue the impugned notices more particularly in view of the clear provisions of Section 151A read with notification dated 29 March, 2022 issued by the Central Government. As fairly conceded on behalf of the revenue, the challenge in the proceedings would stand covered by the decision of this Court in Hexaware Technologies Ltd. ( 2024 (5) TMI 302 - BOMBAY HIGH COURT] . The impugned notices would be required to be held to be illegal and invalid as and there is no dispute that the JAO had no jurisdiction to issue the impugned notice. We, accordingly, allow this petition in favour of assessee.

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• 2024 (8) TMI 125
  Reopening of assessment - addition u/s 56(2)(x)(c) - in absence of the valuation given by the assessee, it was believed that the shares received by the assessee is below fair market value and therefore, provision of the said section gets attracted and therefore was an escapement of income - HELD THAT:- The reasons assigned by the respondent-Assessing Officer for coming to the conclusion that it is a fit case to reopen the assessment for A.Y. 2019-2020 are totally at variance and contents of the observations in the impugned order are not at all referred to as there was no reference to section 56 (2) (x) (c) of the Act. We also fail to understand as to how the amount can be said to be an escapement of income more particularly, when the same is invested in the shares by the assessee and such transaction cannot be said to be unexplained in view of the detailed reply filed by the assessee. In such circumstances, we are of the opinion that the impugned notice u/s 148A (b) of the Act and the consequent order u/s 148A (d) and the notice u/s 148 of the Act are not tenable and are accordingly quashed and set aside. However, it is made clear that AO shall be at liberty to take necessary steps in accordance with law, if permissible.

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• 2024 (8) TMI 124
  Validity of assessment order u/s 144 r.w.s.144B - without issuing show cause notice - HELD THAT:- We are of the opinion that the impugned assessment order passed u/s 144 r.w.s. 144B of the Act would not be tenable in absence of the show cause notice to the petitioner. Accordingly, the impugned order is hereby quashed and set aside and the matter is remanded back to the respondent AO so as to enable the petitioner to give reply to the show cause notice to be served in accordance with law. Such exercise shall be completed within a period of 12 weeks from the date of receipt of the copy of this order. The petition is accordingly allowed.

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• 2024 (8) TMI 123
  Validity of assessment order passed u/s 144B - difference between the show cause notice in form of a draft assessment order and the impugned assessment order passed by the AO after issuance of notice u/s 133 - HELD THAT:- It is not in dispute that the AO has not issued notice u/s133 (6) of the Act prior to the issuance of show cause notice u/s 144B of the Act comprising the draft assessment order. Therefore, the assessee could not respond to the findings which are accorded in the impugned assessment order by the Assessing Officer on the basis of the inquiry made by him pursuant to the notice under Section 133 (6) of the Act. Accordingly, the impugned assessment order is in clear violation of the principles of natural justice. There is a clear variance between the show cause notice in form of a draft assessment order and the impugned assessment order passed by the Assessing Officer after issuance of notice u/s 133 (6) of the Act. Therefore, the entire assessment order passed by the AO is contrary to the scheme of the faceless assessment as prescribed u/s 144B of the Act. Thus, quash and set aside the impugned assessment order and remit the entire matter back to the Assessing Officer for de novo consideration and to pass a fresh assessment order after providing all the relied upon documents like the reply received pursuant to the summons and notice under Section 133 (6) of the Act as well as the other relevant documents of the parties who did not reply to the summons providing opportunity of cross-examination, if requested, and after giving an opportunity of hearing to the petitioner, fresh de novo assessment order may be passed in accordance with law.

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• 2024 (8) TMI 122
  Validity of reassessment proceedings - deposit of a substantial amount of cash in the bank account during the relevant financial year - deposit was immediately debited from the account through cheque, erroneous fund transfer and RTGS to the petitioner-Bank - HELD THAT:- It is not in dispute that the petitioner is a registered Cooperative Bank carrying out banking business i.e. dealing in cash of the customers. It is also apparent from the documents placed on record that the accounts of the petitioner are duly audited and the search audit report, audited balance-sheet, profit and loss account along with audit report under Section 44AB is already filed along with return of income. Petitioner was also subject to the statutory audit by the NABARD. Thus, the petitioner-Bank who has carried out the normal banking transaction by depositing cash of the customers in its current account maintained with Indusind Bank for carrying out banking transaction on behalf of the customers, by no stretch of imagination can result into escapement of income. The reasons recorded by the Assessing Officer so as to assume the jurisdiction are therefore, contrary to the basic account accounting principles of banking industry whereby the cash is received from the customer can never be said to partake a character of cash credit by depositing the same in the bank account of the petitioner-Bank kept with other bank. In such circumstances, when there is no escapement of income, the reopening of assessment cannot be permitted merely for the purpose of verification or for fishing inquiry and the impugned notice u/s 148 of the Act is not tenable in eye of law. Assessee appeal allowed.

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• 2024 (8) TMI 121
  Interpretation of Section 124(3)(a) - assessment framed by the ACIT, Central Circle 2(1), Kolkata is without jurisdiction as it violates the instructions given by the CBDT in CBDT Instruction no.1-2011 - revenue is in appeal before this Court contending that the assessee is precluded from raising such a point in the light of the embargo under Section 124(3)(a) of the Act - HELD THAT:- The facts of the case are that the assessee filed its return on 19th November, 2014. Thereafter, the AO has issued the notice u/s 142(1), dated 31st August, 2014 calling upon the assessee to produce before him the points and/or the documents which have been specified in the notice. The question would be whether the assessee is entitled to raise jurisdiction of the AO to complete the assessment after the expiry of 30 days from the date on which the notice u/s 142(1) of the Act had been served on the assessee. This question needs to be considered and answered and therefore, the appeal is admitted on the following substantial questions of law. a) Whether on the facts and in the circumstances of the case the Learned Income Tax Appellate Tribunal was justified in law to quash the assessment order passed under Section 143(3) on the ground that the valid notice under Section 143(2) of the Act was not issued in accordance with law despite the fact that the assessee had participated in the assessment proceeding pursuant to the said statutory notices and had never called in question the jurisdictional issue in terms of Section 124(3) of the Income Tax Act, 1961 ? b) Whether on the facts and in the circumstances of the case the order of the Learned Income Tax Appellate Tribunal suffer from perversity as it has ignored the facts emanating from record that the assessee had participated in the assessment proceeding pursuant to the said statutory notices and had never called in question the jurisdictional issue within one month from the date of service of notice or after completion of assessment whichever is earlier, as specified in Section 124(3)(a) of the Income Tax Act, 1961 ? c) Whether on the facts and in the circumstances of the case the Learned Income Tax Appellate Tribunal was justified in law to quash the assessment order passed under Section 143(3) of the Act without appreciating the ratio laid down in the case DCIT (Exemption) Vs. Kalinga Institute of Industrial Technology [ 2023 (6) TMI 1076 - SC ORDER] by Hon ble Apex Court wherein while dealing with the question of jurisdiction it has been held inter alia that section 124(3) of the Act precludes the assessee from questioning the jurisdiction of the Assessing Officer, if the same is not invoked within 30 days of receipt of notice issued under Section 143(2) or 142(1) of the said Act ? The appellant shall file requisite number of informal paper book prepared out of Court including therein all relevant papers and documents within 10(ten) weeks from date by serving copies thereof on the learned Advocate for the respondent. Settlement of index and all other formalities are dispensed with. Since the respondent is represented by their learned Advocates, service of notice of this appeal on them is waived.

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• 2024 (8) TMI 120
  Disallowance u/s 14A - interest paid on borrowed capital utilized to earn tax-free interest on bonds is liable to be disallowed - HELD THAT:- In the present set of facts, the assessing officer although noted certain facts and figures and certain other paragraphs of the assessment order which discloses that the assessee was also engaged in the business of purchase and sale of bonds and units and it was only for a period of about 2.1/2 months that he borrowed a sum of Rs.7.25 crores whereas the purchases of tax free bonds were made even prior to taking finance and subsequent to the repayment of finance. Therefore, when the Tribunal or the authorities below were of the view that interest on finance taken by the assessee was invested in the tax free bonds which earned some tax free income, then they must have applied their mind on the questions of apportionment, particularly in view of the law laid down in the case of Maxopp. Investment Ltd [ 2018 (3) TMI 805 - SUPREME COURT] and South Indian Bank Limited [ 2021 (9) TMI 566 - SUPREME COURT] afore-quoted. We are of the view that since the impugned order of the ITAT suffers from perversity and examination of facts needs to be made by the fact finding authority i.e., the AO with regard to apportionment or proportionate disallowance, therefore on the aforequoted substantial question of law No.(1) the case deserves to be remanded to the assessing officer. The substantial question of law No.(1) is answered accordingly and the matter is remanded to the assessing officer for apportionment or proportionate disallowance of the interest incurred as expenditure, to the extent related to the tax free interest on bonds. Deduction u/s 80M - deduction from the unit dividend income as interest expenditure incurred in relation thereto and consequent reduction of relief u/s 80M - HELD THAT:- As in Distributors (Baroda) Pvt. Ltd. [ 1985 (7) TMI 1 - SUPREME COURT] the Constitution Bench of Hon ble Supreme Court held that deduction under Section 80M is liable to be calculated with reference to the amount of dividend computed in accordance with the provisions of the Act and forming part of gross total income and not with reference to the full amount of dividend received by the assessee. The aforesaid judgment of Hon ble Supreme Court was rendered in the year 1985 while the aforesaid two judgments of Coordinate Bench of this Court are later judgments taking contrary view. It appears that aforesaid judgment of Hon ble Supreme Court was not noticed by the Coordinate Benches of this Court in the aforesaid two judgments. Therefore, the judgments of Coordinate Benches of this Court in the case of National And Grindlays Bank Ltd. [ 1991 (5) TMI 4 - CALCUTTA HIGH COURT] and in Kanoria Investments (P.) Ltd [ 1998 (2) TMI 97 - CALCUTTA HIGH COURT] are per incuriam and are not binding precedent. On Section 80M the aforesaid judgment of Hon ble Supreme Court in Distributors (Baroda) Pvt. Ltd. (supra) is binding. The view taken by the ITAT in the impugned order is in consonance with the law laid down by Hon ble Supreme Court. Thus, substantial question of law No. (2) is answered in favour of the revenue and against the assessee. Interest chargeable u/s 201(1A) - HELD THAT:- It is wholly unreconcilable and totally unjustified that when the ITAT has itself found that a separate order was required to be passed for interest chargeable u/s 201(1A) and the AO has not passed a separate order then dismissing the appeal for the aforequoted reason cannot be sustained. Therefore, the substantial question of law answered in favour of the assessee.

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• 2024 (8) TMI 119
  Revision u/s 263 - whether in the second round of litigation Commissioner of Income Tax was justified in invoking his power u/s 263? - HELD THAT:- We find that the Tribunal has examined the factual position thoroughly and it has noted that in compliance with the direction issued by the Commissioner under Section 263 by order the assessing officer commenced his scrutiny proceedings. The manner in which such scrutiny was done was taken note of the Tribunal. Tribunal noted the AO also called for the details of the share application money received during the year by the letter dated 6.5.2016 and also to the reply given by the assessee wherein full details were provided about the type of business carried on by the assessee, the audited financial statement, auditor s report note, NBFC auditors report from Reserve Bank, list of directors, details of trade payables, details of sundry debtors, list of purchases during the year. Tribunal also noted that the assessee had filed the details of allotment of equity shares to the three share subscribers and also the date-wise details which were filed regarding the information received from banking channels. Thus we find that the Tribunal was fully justified in concluding in favour of the assessee after noting that the assessing officer had conducted extensive enquiry on issues and directions mentioned in the order passed u/s 263 of the Act. Thus we find no grounds have been made out to interfere with the order passed by the learned Tribunal. Before parting we would like to observe that the understanding of the legal position by the PCIT , Kolkata IV in his order is incorrect. As observed that any order passed subsequent to the order u/s 263 must be in favour of the revenue. As been observed that earlier there is income which could be enhanced or could be the same as earlier order but with the enhanced enquiry so that the addition should be strengthened to pass the test of appellate proceedings, this proceedings is erroneous when the Commissioner exercised power u/s 263 of the Act the twin conditions which have been laid down and reiterated in several decisions including the decision of the Hon ble Supreme Court in the case of Malabar Industrial Co. Ltd. [ 2000 (2) TMI 10 - SUPREME COURT ], CIT vs. Max India Limited [ 2007 (11) TMI 12 - SUPREME COURT ] has to be complied with. In absence, of such compliance the question of making an addition similarly the proceedings has been drawn u/s 263 is an incorrect interpretation of the legal position.

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• 2024 (8) TMI 118
  Revision u/s 263 - Addition of unsecured loans - as per CIT AO had not carried the verification and inquiry as to the creditworthiness of the two depositors in particular - HELD THAT:- In the instant case, it is not a case of change of opinion; rather it is a case where the assessment order is erroneous and is prejudicial to the interest of revenue due to lack of inquiries/verification by the original AO with regard to the claim of the Assessee regarding the source and details of introduction of capital. The law is also well settled as has been held by the Hon ble Apex Court in the case of Rampyari Devi Sarawagi [ 1967 (5) TMI 10 - SUPREME COURT] and Tara Devi Agarwal [ 1972 (11) TMI 2 - SUPREME COURT ] where a sum not earned by a person is assessed as income in his hand on his so offering the order passed by the Assessee officer accepting the same as such will be erroneous and prejudicial to the interest of revenue. Thus the instant appeal is allowed and the substantial questions of law formulated by this Court goes in favour of Revenue.

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• 2024 (8) TMI 117
  Reopening of assessment u/s 147 - lack of opportunity to protest the proceedings - non providing hearing to assessee - petitioner submits that all subsequent communications were issued to an email address, which was not being used by the petitioner s accountant and, therefore, the petitioner did not receive the notices and could not reply thereto - HELD THAT:- The documents on record reveal that the petitioner replied to the notice issued under Section 148 of the Act on 23.01.2020. The petitioner also replied to the notice dated 15.04.2021 under Section 142 (1) of the Act. These notices were issued to the petitioner at the following e-mail address: [email protected]. The subsequent e-mails, including the e-mail issued on 21.04.2021, were issued to the following address: [email protected]. It should also be noticed that these communications were issued during the second wave of the Covid-19 pandemic. The impugned re-assessment order came to be issued in the above facts and circumstances without hearing the petitioner. Therefore, the impugned reassessment order and proceedings consequential thereto call for interference. For reasons set out above, the impugned re-assessment order and the demand notices issued pursuant thereto are quashed - Thus, matter is remanded for re-consideration. The petitioner is permitted to issue a response both in relation to the disposal of the petitioner s objections and to the show cause notice. Such consolidated response shall be submitted within (2) two weeks from the date of receipt of a copy of this order.

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• 2024 (8) TMI 116
  Disallowance of interest framed u/s 36(1)(iii) - failure on the part of the assessee to show that the wholly owned subsidiary was in the same line of business or would be said to qualify the prerequisites of the benefits which would flow from Section 36(1)(iii) - HELD THAT:- We thus note that while it is true that the ITAT has proceeded to adopt the decision rendered by it and referable to AY 2009-2010 on an overall consideration of the facts which stood placed before the CIT (A) the deletion of the benefits that were claimed would not be sustained. Disallowance u/s 14A - As fairly concedes that the same is liable to be answered against the Revenue in light of the decision rendered in PCIT v. Era Infrastructure (India) Ltd. [ 2022 (7) TMI 1093 - DELHI HIGH COURT ]

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• 2024 (8) TMI 115
  Reopening of assessment u/s 147 - exemption u/s 11 denied - notice claimed the petitioner was engaged in commercial activities and therefore not eligible for exemption - HELD THAT:- The reopening cannot be sustained. This is because in the case of Yogiraj Charity Trust [ 1976 (3) TMI 5 - SUPREME COURT] the Apex Court held that if one of the objects of the trust deed is not of a religious or charitable nature and the trust deed confers full discretion on the trustees to spend the trust funds for an object other than of a religious or charitable nature, the exemption under section 4(3)(i) of the 1922 Act is not available to assessee. If the primary or dominant purpose of a trust is charitable, another object which by itself may not be charitable but which is merely ancillary or incidental to the primary or dominant purpose would not prevent the trust from being a valid charity. The court also held that where in a trust deed providing for many charitable objects, the trustees were authorised to open and maintain commercial institutions where work at living wages could be provided to the poor and to contribute to commercial, technical or industrial concerns, institutions, associations or bodies imparting any type of training or providing employment to persons; and the deed gave uncontrolled discretion to the trustees to spend the whole of the trust fund on any of the non-charitable objects of the trust, then income of the trust was not exempted from tax under the said Act. There is not even an allegation that uncontrolled discretion or authority to open or maintain commercial institution was in the object of petitioner. There is not even a finding to that effect. Just because there are certain receipts received by petitioner while conducting its charitable activities, would not make those receipts whatever may be the quantum, to be income from commercial activities. Therefore, there has to be a tangible material to come to the conclusion that there is an escapement of income from assessment to exercise the power to reopen. But if the reasons to believe indicate non application of mind as submitted by Mr. Singh, with whom we concur, the reasons to believe itself cannot be sustained. The reasons to believe proceeds on the basis that an assessment order u/s 143(3) of the Act has been passed when the assessment has been processed only u/s 143(1) of the Act, and also on the basis of judgment, which according to the AO is of Delhi High court, when in reality is that of the Apex Court. All these indicate that the reasons to believe has been formed mechanically and without application of mind. Decided in favour of assessee.

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• 2024 (8) TMI 114
  Revision u/s 263 - AO rejected the books of accounts and estimated a net profit of 6% on the gross receipts of the assessee to which the other incomes were added - CIT u/s 263 found the assessment erroneous for not considering sundry creditors and unverified tax deductions - HELD THAT:- In the present case, the Assessing Officer had estimated the gross profit at 6% of the total receipts and had completed the assessment after adding the income from other sources also. The sundry creditors, as is seen from the explanation offered by the assessee before the Commissioner for the subject assessment year, came to Rs. 3,44,84,318/-; out of which, the liability in the previous year was Rs. 1,92,98,140/-. Hence the sundry credit claimed by the assessee came to Rs. 1,51,86,178/-. Obviously, this was not noticed by the AO and presumably the same was not accounted in the total receipts, as undisclosed income. If the sundry credits are not explained properly, then disclosing that in the books of accounts would amount to a device employed to suppress the income received, as a credit taken by a third party, with whom the assessee had a transaction. In the present case, the assessee was a works contractor as is disclosed from Annexure-2 order u/s 263 of the Act , who had executed contracts awarded by various State government departments. There is no question of the credit being attributed to any of the awarders; which even if existing, there was no difficulty in establishing the same. We also have to notice that in the assessment order, the assessee has income from different sources; from a firm, house property and other sources. Hence, the income declared by the assessee is not solely from the contract work. When the assessment made is of income from one single source, if the total contract receipts are taken to estimate the gross profit, necessarily there cannot be any further additions made. In consonance with the reservation made by us, while dealing with Prasad Construction Co. [ 2016 (4) TMI 1180 - PATNA HIGH COURT] applied to the present case; if the gross receipts are taken, on which the net profit is assessed, the entire receipts are not reflected, then definitely there is scope for addition, to the receipts. The sundry creditors, if not explained will have to be added to the contract receipts before the net profit is assessed or otherwise added in the income from other sources, bringing in that quantum, as unexplained income. Hence, either way, whether the unexplained sundry credits are added to the contract receipts or as income from other sources definitely the tax payable by the assessee would be higher than that paid by a mere estimation of net profit; looking at the quantum returned, on which no explanation was sought. We also have to notice that in the present case the Commissioner under Section 263 of the Act had also reckoned non-payment of tax deducted at source. Essentially, the Commissioner has found the order to be erroneous for reason of non payment into the treasury, of the tax deducted at source having not been verified and also the sundry creditors having not been examined; the latter of which ground results in the finding that the estimation of profit on the contract receipts alone would be an erroneous exercise and it causes prejudice to the interest of the revenue. We find absolutely no reason to interfere with the order of the Commissioner and set aside the order of the Tribunal answering the questions of law against the assessee and in favour of the Revenue - The order of the Tribunal setting aside the order under Section 263 of the Act is annulled.

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• 2024 (8) TMI 113
  LTCG - quantum of deduction allowable u/s 54F on account of purchase of new residential house[joint name] - Assessee allowed 50% of claim as assessee has purchased new residential house in joint name with her daughter - HELD THAT:- It has been held time and again that the provisions of section 54F are beneficial provisions intending for the purchase and construction of new residential house. The assessee and her husband admittedly are old aged. The house has been purchased in joint name with their only daughter who is the only legal heir of the assessee and her husband. In our view, the lower authorities were not justified in denying the deduction of the beneficial provisions of section 54F to the assessee, mainly because of the assessee is an old aged lady, has included the name of his daughter in the purchase deed who is the only legal heir and life support in their old age. As decided in SHRI GURNAM SINGH [ 2008 (4) TMI 28 - PUNJAB AND HARYANA HIGH COURT] deduction u/s 54B could not be denied merely because the land was purchased in joint name of assessee and his only son who was bachelor and dependent upon him. Also in the case of CIT Vs Kamal Wahal [ 2013 (1) TMI 401 - DELHI HIGH COURT] in respect of claim of deduction u/s 54F has held that where the new house was purchased in the name of the wife of the assessee and it was established that the purchase consideration was invested out of the property sold by the assessee, the deduction cannot be denied u/s 54F of the Act. Thus, the assessee is entitled to 100% of the deduction claimed u/s 54F of the Income Tax Act. Accordingly, the appeal of the assessee stands allowed.

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• 2024 (8) TMI 112
  CIT(A) dismissed the appeal filed by the assessee ex parte - assessee has failed to comply with the notices issued for hearing - HELD THAT:- We find that the assessee filed the written submissions on 17/11/2021, 05/11/2022, and 08/05/2023. From the perusal of the written submission filed on 08/05/2023, we find that the assessee also filed various documents/supporting evidence before the learned CIT(A). However, as evident from the perusal of the impugned order, CIT(A) without considering any of these written submissions/documents, and, inter alia, by placing reliance upon the decision of B.N. Bhattacharya [ 1979 (5) TMI 4 - SUPREME COURT] dismissed the appeal filed by the assessee, without adjudicating the grounds of appeal raised by the assessee on merits. From the perusal of the assessment order we find that AO concluded the assessment on best judgment basis u/s 144 in absence of complete details being filed by the assessee. In view of the above, we are of the considered opinion that in the interest of justice, the assessee be granted one more opportunity to represent its case on merits before the AO. Appeal by the assessee is allowed for statistical purposes.

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• 2024 (8) TMI 111
  Denial of special rate of taxation u/s 115BAC as opted by the assessee - CPC has denied the benefit stating that the Form-10-IE was not filed by the assessee opting for New Tax Regime - HELD THAT:- As per section 115BAC sub-section (5) clause (1) assessee who is having income from business or profession shall only exercise option under the New Tax Regime by filing Form 10-IE of the Act and it is not applicable for the salaried employees. In the instant case, the assessee as per provisions of section 115BAC(5)(ii) has exercised his option to opt for new tax regime and hence has followed the procedure laid down under the Act. We therefore have no hesitation to set-aside the order of the Revenue Authorities and allow the appeal of the assessee.

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• 2024 (8) TMI 110
  Validity of sanction of the specified authority u/s. 151(1) for issue of notice u/s. 148 - scope of reassessment proceedings - HELD THAT:- In the present case, the original assessment was completed under the provisions of section 143(3). The sanction of the specified authority u/s. 151(1) is a condition precedent for issue of notice u/s. 148. The provisions of section 151 mandates that prior sanction of Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner is required to be obtained for issuance of notice u/s. 148 if the period of four years had elapsed from the end of the relevant assessment year. In the present case, the notice u/s. 148 of the Act was issued on 28.03.2014 and the relevant A.Y. is 2007-08. Thus, there is no dispute that period of more than four years had elapsed from the end of the relevant assessment year and the approval is required to be obtained only from the Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner, as the case may be, whereas the sanction was obtained from the Joint Commissioner of Income-tax. The failure of the AO to obtained prior permission from the Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner as the case may be is against the provisions of section 151. As evident from the assessment order, the AO had not sought the sanction from the Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner, but of the Joint Commissioner of Income-tax. It is trite law that when the statute mandates the satisfaction of the particular functionary for the exercise of power, the satisfaction must be of that authority. Where a statute requires something to be done in a particular manner it has to be done in that manner and in no other manner. The sanction obtained from a wrong authority vitiates the notice u/s. 148 of the Act. The issue of notice u/s. 148 of the Act in the instant case is bad in law. Further, such defect is not curable under the provisions of section 292B of the Act as held in the case of Dhadda Exports and ITO and Another [ 2015 (4) TMI 304 - RAJASTHAN HIGH COURT] - Decided in favour of assessee.

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• 2024 (8) TMI 109
  Short granting of interest u/s. 244A and TDS refund - While processing the return there was a short TDS credit of Rs. 7.84 lakhs and interest u/s. 244A was granted. But on second rectification interest u/s. 244A was revised and accordingly there is a demand generated - HELD THAT:- CIT(Appeals) has not properly appreciated the present facts of the case, whereas the CPC had accepted the rectification petition u/s. 154 and again assessee filed rectification petition for the previous rectification order passed u/s. 154, therefore the CIT(Appeals) should not have rejected the appeal of the assessee summarily. Therefore, we remit this issue back to the file of AO for the purpose of verification and after verifying the documents compute the correct claim of TDS and interest u/s. 244A on refund granted to the assessee. Needless to say that reasonable opportunity of hearing be given to the assessee. Accordingly the appeal is allowed for statistical purposes.

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• 2024 (8) TMI 108
  Addition in relation to the expenses claimed by the Appellant against the income that it earned u/s 57 - set off of deficit arising from shortfall in collection from its members towards maintenance of society - whether interest income earned from FD, rent income, interest from member, Saving Interest and Torrent interest income should not be treated as income from other sources and should not be brought to tax, without allowing any expenditure, since no expenditure claimed was incurred wholly and exclusively for earning the interest income? - assessee has now filed second appeal with the Tribunal, and the Ld. Counsel for the assessee submitted that the assessee is a Co-operative Housing Society - HELD THAT:- Deduction u/s 80P is listed as one of the deductions allowed under Chapter VI-A for co-operative societies. The income is to be computed under the five different heads, and if there is a loss w.r.t. one source of income or under one head of income, set off of the said losses are allowed as provided under Chapter VI for Set off or Set off and carried forward of losses in the manner so provided under the said chapter. The assessee has declared income with respect to its activities as Housing Society for maintaining the residential society under the head Income from other sources , and there is a deficit from the said source of income to the tune of Rs. 13,86,671/- (if rental income as well interest income are not considered). The said rental income and interest income are also offered to tax by the assessee and sought to be taxed by Revenue, under the head income from other sources . We not find any bar in Section 70 and 71 as also other sections under Chapter VI dealing with Set off or Set off and carried forward for set off of the said loss against income from rent as well interest income earned by the assessee. Assessee income from collection of maintenance charges from its members is not chargeable to tax keeping in view the concept of mutuality as no body can make profits by dealing with itself and hence on the same analogy losses are to be ignored, as the said collection of maintenance charges are applied towards the incurring of maintenance expenses for the upkeep/maintenance of the housing society which is for the benefit of the members of the housing society and there is a direct correlation between participant and the contributors. So far its collection from members of maintenance charges falling short of incurring of expenses for maintaining the housing society is concerned, there is a deficit w.r.t. this source of income In the instant case, the interest income as well rental income has a nexus and attributability with the conduct of affairs of the housing society, as the interest income has mainly arisen from the interest free deposit raised from its members which stood invested in FDR with banks as well rental income is also from letting of common terrace area of the housing society itself, and further that the proceeds of interest income as well rental income are also utilized for furtherance of the main objects of the society i.e. the maintaining the housing society for the benefit of the Members, as could be seen that there is only net surplus of Rs. 73,520/-, of which Rs. 73,520/- has been offered to taxation after claiming deduction u/s 80P(2)(c)(ii). Thus, in the instant case based on peculiar factual matrix as is emerging from the records, find no bar of set off of deficit arising from shortfall in collection from its members towards maintenance of society vis- -vis expenses incurred for maintaining housing society, against rental and interest income earned by the assessee which has nexus and attributability to the conduct of the affairs of the assessee. There are no allegations by authorities below that the assessee s claim of expenses towards maintenance of the housing society in its Audited Income and Expenditure account to the tune of Rs. 27,34,671/- is bogus or inflated or not genuine. It is also not the case of the Revenue that the assessee has adopted an illegitimate device by seeking aforesaid set off as an tax avoidance measure or to evade taxes or to defraud revenue. It is also not the case of the Revenue that the surplus earned by the assessee to the tune of Rs. 23,520/- (after claiming deduction of Rs. 50,000/- u/s 80P(2)(c)(ii) ) was not offered for taxation. Thus, we find merit in the appeal filed by the assessee, which stood allowed., more so keeping in view judgment and order in the case of Maruti Employees [ 2009 (5) TMI 504 - PUNJAB HARYANA HIGH COURT] which supports the stand of the assessee.

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• 2024 (8) TMI 107
  Levy of penalty u/s 271B - delayed furnishing of Tax Audit Report as required u/s 44AB - cause for the delay was attributed to the delay in finalization of the statutory audit of the assessee-company due to dispute between the Board of Directors with one of the nominee directors of the Government of Gujarat undertaking who refused to allow the payment of interim dividend declared by the Board during the year. HELD THAT:- We find that the assessee had reasonable cause for the delay. Since its audited accounts itself were delayed for finalization, it is but obvious that the Tax Audit Report could be prepared only thereafter. As gone through the order of the AO and CIT(A), find that no reason has been given by both of them for finding this explanation of the assessee to be unreasonable. AO in his order states that the assessee was required in the first place to take approval from the nominee-director of the Govt. undertaking while declaring interim dividend which it failed to do so, which ultimately led to all disputes and finally the delay in getting the audit results finalized and approved and the Tax Audit Report being subsequently filed. AO contends that this failure of the assessee-company to adhere to the agreement cannot be said to be a reasonable cause for delay in filing the Tax Audit Report. CIT(A) agrees with the AO. No merit in this reasoning of the Revenue Authorities for dismissing the assessee s explanation as being unreasonable. Whosoever may have been responsible for the dispute and standoff between the Board of Directors of the assessee-company and the nominee-director of the Govt. undertaking, the fact remains that the audited results of the assessee were delayed for approval, as a consequence of which the Tax Audit Report was also delayed for filing since it was dependent on the audited results. We, hold that there was sufficient cause adduced by the assessee for the delay in filing the Tax Audit Report and, therefore, there is no case for levying any penalty u/s 271B of the Act. The penalty so levied, directed to be deleted. Appeal of the assessee allowed.

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• 2024 (8) TMI 106
  Validity of assessment u/s 153A - whether assessments are not pending on the date of search? - As argued unabated assessment cannot be framed without any incriminating material found during the course of search action conducted u/s 132 - HELD THAT:- During the course of search proceedings at M/s. John Distilleries Pvt. Ltd., Bangalore, certain incriminating documents/materials pertaining to assessee were found and serzed. Statements were recorded under oath from the employees, the key persons and the CMD of the Assessee Company. HELD THAT:- In this case, the assessment was already completed u/s 143(3) for the assessment years 2011-12 and 2012-13 u/s 153A. 2 In our opinion, at this stage, we cannot quash the assessment u/s 153A of the Act is bad in law. However, the ld. AO has to examine whether the seized material referred in these two assessment years marked is having any relevance to for making addition in these two assessment years. If this seized material has no relevance in these assessment years 2011-12 2012-13, in such circumstances, these two assessments are being concluded assessments and these assessments cannot be reopened u/s 153A of the Act. In other words, if the assessee s case falls under below category for these two assessment years, the assessment cannot be reopened u/s 153A of the Act without any seized material found during the course of search action. AO is directed to examine this issue in the light of above observation and decide accordingly. This ground of appea is partly allowed for statistical purposes. Assuming jurisdiction u/s 132(1) of the Act is bad in law as there was no valid satisfaction recorded for conducting search action - In our opinion, this ground cannot be entertained at this stage in view of the insertion of explanation to section 132(1) with retrospective effect from 1.4.1962 by Finance Act, 2017. The said explanation prefers the appellate authorities to go into the reasons recorded by the concerned Income Tax authority for directing the search against the assessee. This view is fortified by case of Pratibha Jewellery House [ 2017 (11) TMI 1744 - KARNATAKA HIGH COURT] Addition merely on statement recorded u/s 132(4) /131(1A) - whether the assessee is entitled to revise its position in departure with the original stand that is taken in the return filed u/s 139 of the Act prior to search or filed u/s 153A of the Act. In other words, whether assessee entitled to revise its claim and alter its original position in accordance with law or not? - HELD THAT:- Authorities under the Income tax are not sacrosanct obligation to act in accordance with law. Tax could be collected as provided under the Act. If an assessee on a mistake, misconception are not being properly instructed is either assessed or over assessed, the authorities under the Act are required to ensure that only legitimate tax dues are collected. This view which flows from enumerable judgements including CIT Vs. Shelly Products [ 2003 (5) TMI 4 - SUPREME COURT ], S.R. Kosti [ 2004 (12) TMI 62 - GUJARAT HIGH COURT ], CIT Vs. Prithvi Brokers and Shareholders [ 2012 (7) TMI 158 - BOMBAY HIGH COURT ] and so on. Therefore, the assessee is within legitimate right to alter wrong position taken earlier in the course of proceedings. In the instant case, assessee wanted to alter its position in the return filed u/s 153A of the Act filed in pursuance to such proceedings, wherein assessee has offered certain additional income in respect of issue raised before us and assessee prayed before us that the assessment in the case of assessee to be completed on the basis of audited books of accounts and not on the basis of admission or offer made in the course of search action vide statement recorded u/s 132(4)/131 of the Act. In our opinion, these additions cannot be based alone on statement recorded u/s 132(4) of the Act, it should be corroborated by seized material/incriminating material suggesting impugned additions. AO cannot solely rely on the statement recorded u/s 132(4) of the Act without appropriate corroborative materials as recently held by Hon ble Delhi High Court in the case of PCIT Vs. Pavitra Realcon Pvt. Ltd. [ 2024 (5) TMI 1408 - DELHI HIGH COURT ] Statements recorded u/s 132(4) of the I.T. Act, 1961 solely cannot constitute as incriminating material so as to make these additions. Admission of additional evidences - We direct the ld. AO to determine the income of the assessee in these assessment years only on the basis of seized material/incriminating material in the assessment year 2011-12 to 2016-17 and not solely on the basis of statement recorded u/s 132(4) of the Act. More so, assessee has been continuously before the ld. AO as well as ld. CIT(A) requesting to do the assessments on the basis of books of accounts and evidence found during the course of search since the declaration made by assessee during the course of search was lumpsum basis as there was no enough time to verify the correctness of the records which were voluminous. Before us, assessee filed additional evidence, those are admitted as discussed in the earlier para of this order and it is required to be examined by the authorities as they have vital impact on the computation of income of the assessee. Hence, the issue relating to the admission of additional income by the assessee in the returns filed u/s 153A of the Act and addition made by ld. AO while framing assessment u/s 153A of the Act is required to be re-examined in the light of additional evidences filed by the assessee. Approval given u/s 153D of the Act is mechanical - For this purpose, Assessee relied on the judgement in the case of PCIT Vs. Sapna Gupta [ 2022 (12) TMI 887 - ALLAHABAD HIGH COURT ] and in the case of CIT Vs. Anju Bansal [ 2023 (7) TMI 1214 - DELHI HIGH COURT ]. However, the assessee was not able to demonstrate how there was no subjective satisfaction recorded for granting approval u/s 153D of the Act by competent authority. Hence, this ground of appeals is dismissed. Validity of notice u/s 153A - order was passed u/s 153C of the Act on 28.12.2018 as the time limit to issue notice for those assessment years has been already lapsed, as such no notice u/s 153C of the Act to be issued for the assessment years 2011-12 2012-13 - AY 2011-12 2012-13 - HELD THAT:- In the instant case search of JDPL was conducted on 03.11.2016, then in his case, the Assessing Officer was empowered to initiate the proceedings for assessment/reassessment for the assessment years 2016-17, 2015-16, 2014-15, 2013-14, 2012-13 2011-12. It was because the assessment year relevant to previous year in which search took place was the assessment year 2017-18 (previous year 2016-17), but when provisions of proviso to section 153C are applied, then date of search is substituted by date of handing over of the documents by the Assessing Officer of the person searched to the Assessing Officer of the other person (present assessee). Even if we consider the issue of notice u/s153C of the Act was on 7.9.2018, which fell in the assessment year 201920. The Assessing Officer could reopen the assessment for six assessment years preceding this assessment year. They were assessment years 2018-19, 2017-18, 2016-17, 2015-16, 2014-15 2013-14. Thus, the assessment for the assessment years 2011-12 2012-13 was barred by limitation, so far as the present assessee was concerned. In any case, the instant issue was raised for the first time before the Tribunal and, thus, it had not been examined by the lower authorities, therefore, the matter was to be restored to his file for considering the date when the relevant documents were handed over by the Assessing Officer of the person searched to the Assessing Officer of the present assessee and decide this issue accordingly, in the light of our above observations.

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• 2024 (8) TMI 79
  Penalty u/s 271(1)(c) - estimation of income of bogus purchases - additions made on estimated basis on account of difference in gross profit margin from sales against purchases from the party alleged to be non-genuine - HELD THAT:- In the case of the assessee the supporting material of the assessment order was furnished however the addition on estimation basis of 12.5% of the purchase amount was made on the ground of extra profit earned by the assessee on such purchases because the parties were involved in issuing accommodation bills of purchases as per the information supplied by the Sales Tax Department. It is clear that in the case of the assessee the addition was made on estimation basis therefore following the decision of ITAT in JATIN ENTERPRISES VERSUS ACIT-19 (2) , MUMBAI [ 2024 (3) TMI 1073 - ITAT MUMBAI] we consider that penalty levied in the case of the assessee on estimated addition is not sustainable. Therefore, the penalty levied is deleted. Accordingly, both the grounds of appeal of the assessee are allowed.

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• Customs

• 2024 (8) TMI 105
  Revocation of Custom House Agent licence - forefeiture of security deposit in terms of regulation 20(1) of the CHALR 2004 - violation of the provisions of Regulation 13 (b) and 13 (j) of CHALR, 2004 for aiding and abetting in smuggling of old and used computer, peripheral laptops etc - HELD THAT:- While it is an admitted position that certain documents could not be made available by the appellant to the authorities during the course of enquiry/adjudication process. However, the time interlude between the conduct of the said proceedings and the clearance of the imported goods need to be noted. In any case the primary documents like invoice was made available to the authorities. It is however nobody s case that any time lag in sourcing for document was sufficient enough to provide amnesty from the breach of the regulatory provisions. However, the admitted lapse need to be considered with rational implications. It is borne from records that Shri Tapan Kumar, the G card holder and Shri Chakradhar, the H Card holder of the firm were regularly associated with clearance of subject imports. Shri Sanjeev Kumar has reiterated the fact of examination of the imported goods in the presence of his own officers. The fact of any outsider named Sri Pappu however remaining present during the course of such examination cannot be considered an irregularity, illegality on the part of the appellant. If the department was so awry of an outsider s presence at the time of examination, it was for them to have directed such unauthorised outsider to be dispersed. It is found from records that the question of livelihood of the appellant has been in jeopardy for well over a decade - it is opined that the length of time having remained out of business, is more than sufficient punishment for lapses to which they have been pronounced guilty by the lower authority - the immediate direction for restoration of the appellant s CHA license at the earliest is made - appeal allowed.

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• 2024 (8) TMI 104
  Refund of SAD - rejection only on the ground that there is no specific declaration on the invoice with respect to the condition mentioned at para 2(b) of N/N. 102/2007 - principles of unjust enrichment - HELD THAT:- The Jurisdictional customs officer i.e., the Adjudicating Authority observed that the declaration on the invoice reads as Note-No Cenvat Credit is admissible instead of specifically indicating in the invoice that in respect of the goods covered therein, no credit of the additional duty of customs levied under sub-section (5) of section 3 of the Customs Tariff Act, 1975 shall be admissible , therefore rejected the refund claim. It is found that the declaration made by the appellant on the sale invoice though is not as per the phrase used in the Notification it conveys the purpose of such required declaration. Hence rejection of refund claim on this ground is not sustainable. It is found that in the impugned order it is held that; the appellants have failed to comply with stipulated requirements of the notification which stipulates that the importer shall specifically indicate in the sales invoices regarding non-admissibility of cenvat credit; the Chartered Accountant s Certificate does not rule out the aspect of unjust enrichment. It is found that the declaration of the appellant on the sales invoices would suffice the requirement at Para 2(b) of N/N. 102/2007-Cus dated 14.09.2007 as regards the declaration of non-admissibility of Cenvat credit. Further, the Chartered Accountant s Certificate clearly mentions that the burden of 4% of additional duty is not being passed on to the buyer or any other person. Further, as regards the sales invoices being raised prior to the Out of Charge the submissions of the appellant are tenable in the circumstances of the case. The refund claim needs to be allowed - Appeal allowed.

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• Corporate Laws

• 2024 (8) TMI 103
  Wilful violation / disobedience committed by the petitioners - Grant of injunction against the petitioners till disposal of the main proceedings - HELD THAT:- The triple test / requirement before granting interim injunction viz., prima facie case, balance of convenience and irreparable injury and loss / hardship has not even been adverted to, much less, considered or appreciated by the NCLT before passing the impugned order which is clearly a non-speaking, unreasoned, cryptic and laconic order without assigning any reasons as to why and how the respondents 1 to 5 would be entitled to an order of interim injunction against the petitioners and on this short ground alone, it is opined that the impugned order passed by the NCLT deserves to be set aside. In the case of CENTRAL BOARD OF TRUSTEES VERSUS INDORE COMPOSITE PVT. LTD. [ 2018 (7) TMI 2206 - SUPREME COURT ], the Apex Court held Time and again, this Court has emphasised on the courts the need to pass reasoned order in every case which must contain the narration of the bare facts of the case of the parties to the lis, the issues arising in the case, the submissions urged by the parties, the legal principles applicable to the issues involved and the reasons in support of the findings on all the issues arising in the case and urged by the learned counsel for the parties in support of its conclusion. A perusal of the remaining portion of the impugned order will clearly indicate that except for merely / summarily stating at paragraph-16, no other reasons, much less, valid or cogent reasons as required in law are forthcoming in the impugned order, which stands vitiated on this score alone. A perusal of the impugned order will clearly indicate that as stated supra, the same is an unreasoned, cryptic, laconic and non-speaking order without application of mind, thereby being violative of principles of natural justice warranting interference by this Court under Articles 226 and 227 of the Constitution of India; under these circumstances, the contention urged by the respondents 1 to 5 that in view of availability of equally efficacious alternative remedy by way of an appeal under Section 421 of the Companies Act, 2013, the present petitions are not maintainable cannot be accepted in the facts and circumstances of the instant case which establish that there has been violation of principles of natural justice in the impugned order and consequently, availability of the remedy of appeal would not come in the way of this Court entertaining the present petitions. The impugned order passed by the NCLT deserves to be set aside and the matter remitted back to the NCLT for reconsideration - Petition allowed by way of remand.

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• Insolvency & Bankruptcy

• 2024 (8) TMI 102
  Direction to respondents to pay compensation of Rupees one crore to the petitioner - seeking removal of the petitioner as Liquidator on account of his incomplete qualifications - petitioner had filed an application for the authorization for assignment and the same was rejected by the Insolvency Bankruptcy Board of India (IBBI) on 14.01.2020, as per Regulation 12 A of the IBBI Regulations - HELD THAT:- The third respondent filed application before the Tribunal seeking removal of the petitioner as Liquidator on account of his incomplete qualifications. On hearing both sides, the petitioner was removed as Liquidator by an order dated 01.07.2022, as per Section 16 of the General Clauses Act, 1897 with aid from Section 276 of the Companies Act, 2013. Aggrieved by the order passed by the Tribunal, the petitioner also filed an appeal before the Appellate Tribunal and the same was also dismissed, thereby confirmed the removal of the petitioner as Liquidator on the ground of not having valid authorization. Section 199 to 205 of the Insolvency and Bankruptcy Code, 2016 provides for insolvency professional agencies. As per Section 206 of the Insolvency and Bankruptcy Code, a person can render his service as an insolvency professional only after being enrolled as a member of an insolvency professional agencies and registered with the first respondent as an insolvency professional under Section 207 of the Insolvency and Bankruptcy Code subject to other conditions. This Court finds no infirmity or illegality in the orders passed by the respondents and the prayer sought for in the writ petition is devoid of merit and liable to be dismissed - Petition dismissed.

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• 2024 (8) TMI 101
  Direction to the Respondents to pay the wages due as per the orders passed by the learned Labour Court - seeking Condonation of Delay of 466 days in filing appeal - reasaonable ground for delay exists or not - Section 42 of the I B Code, 2016 - HELD THAT:- When the instant Appeal was being argued today, the learned Counsel for the Respondent/Liquidator, had contended that much confidence cannot be reposed to the reason, which has been taken by the Appellant for seeking condonation of delay in an Appellate proceedings under Section 42, for the reason being that for the purposes of gratuity and other past service dues, he has already been awarded an amount, under Section 36(4)(a)(iii) to the tune of Rs.3,23,758/- and paid the same to the Appellant in 2022 itself and that would be sufficient enough for the Appellant to meet out the expenditures of preferring the Appeal, before NCLT, Chennai. Hence, the financial crunch which is the ground taken in the Condone Delay Application, cannot to be taken as to be a satisfactory ground for overcoming the embargo of limitation of 14 days, as prescribed under Section 42 of the I B Code, 2016, and for the purposes of seeking condonation of an inordinate delay of 466 days, which is too in-ordinant and unexplained. On account of the reasons which have been assigned by the learned Adjudicating Authority for not accepting the plea taken by the Appellant and that no reasonable ground has been taken by the Appellant for seeking condonation of delay, the Appeal has been correctly dismissed on the ground of Limitation, which does not call for any interference, by this `Tribunal , in the exercise of its Appellate Jurisdiction. Appeal dismissed.

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• PMLA

• 2024 (8) TMI 100
  Seeking grant of Regular Bail - Money Laundering - scheduled offence - Proceeds of Crime - right to personal liberty - applicability of the proviso to Section 45 of PMLA - HELD THAT:- There is no gainsaying that Article 21 of the Constitution of India guarantees right to personal liberty to every individual and that bail is the rule and jail is an exception. This Court is also conscious of the fact that in the present case charge sheet has been filed against the applicant albeit as stated in the status report considering the nature of offence, multi-layered transactions and the nation-wide nexus, further investigation is on-going. In PRASANTA KUMAR SARKAR VERSUS ASHIS CHATTERJEE AND ORS. [ 2010 (10) TMI 1199 - SUPREME COURT ] the Supreme Court elucidated the factors to be considered while deciding a bail application, where it was held that It is trite that this Court does not, normally, interfere with an order passed by the High Court granting or rejecting bail to the accused. However, it is equally incumbent upon the High Court to exercise its discretion judiciously, cautiously and strictly in compliance with the basic principles laid down in a plethora of decisions of this Court on the point. From a conspectus of the judgements in Satyendar Kumar Jain [ 2024 (3) TMI 862 - SUPREME COURT ] and Vijay Madanlal [ 2022 (7) TMI 1316 - SUPREME COURT ], it is clear that the present bail application will have to be considered on the touchstone and anvil of the twin conditions under Section 45 of PMLA and Court will have to arrive at a prima facie satisfaction that the applicant crosses the threshold. Based on the evidence disclosed in the predicate offence, present ECIR was registered against the applicant. Conscious of the settled legal position that at the stage of considering a bail application this Court is not to enter into a meticulous examination of the statements of the witnesses or hold a mini-trial, the case set up by the ED and the defence set up by the applicant examined only to satisfy whether there are reasonable grounds for believing that the applicant is not guilty of the alleged offence under the PMLA and that he is not likely to commit any offence while on bail as required by Section 45 of PMLA. There is prima facie sufficient material to show the involvement of the applicant in the alleged offence of money laundering and/or connecting the monies involved in the various transactions to the predicate offence as proceeds of crime , under Section 3 of PMLA. This Court is prima facie unable to agree with the applicant at this stage that the monies generated from cattle smuggling and concealed through various transactions, purchases and shell companies formed only for accommodation entries were not from criminal activities relating to scheduled offence. As held in Tarun Kumar [ 2023 (11) TMI 904 - SUPREME COURT ], as per the statutory presumption permitted under Section 24 of PMLA, the Court or the Authority is entitled to presume, unless the contrary is proved, that in any proceedings relating to PoC under PMLA, in the case of a person charged with the offence of money laundering under Section 3 of PMLA, such PoC are involved in money laundering. In view of the above, more particularly, the role ascribed to the applicant, he has failed to meet and satisfy the test of twin conditions under Section 45 (1) of PMLA for this Court to come to a prima facie conclusion that there are reasonable grounds for believing that the applicant is not guilty of the alleged offence. The Bombay High Court in Mahendra Manilal Shah v. Rashmikant Mansukhlal Shah, [ 2009 (6) TMI 1022 - BOMBAY HIGH COURT ], held that the nature of the sickness needs to be seen as to whether the accused can be treated in the government hospitals and custody. In the bail application, applicant has not set out a case that the medical ailments, from which he allegedly suffers, are such that they are not being treated or cannot be treated either in the Jail hospital or the referral hospitals and therefore, benefit of Proviso to Section 45 of PMLA cannot accrue to the applicant on this ground. The bail application is dismissed.

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• 2024 (8) TMI 99
  Money Laundering - Seeking to revoke and release the attachment and seizure of all the movable and immovable properties of the petitioners - HELD THAT:- When the authorities of the ED have reasons to believe, on the basis of the material, that any person in possession of any proceeds of crime and are likely to conceal or create any encumbrance in order to frustrate any proceedings relating to confiscation of proceeds of crime, the ED would be justified in issuing a provisional attachment order of such properties and thereafter seek for confirmation of the attachment by making a complaint before the Adjudicating Authority. The provisional attachment order under Section 5(1) of PMLA shall be valid only for a period of 180 days. Under Sub-section 3 of Section 5, the provisional attachment made under Sub-section 1, ceased to have effect after a period of 180 days. Admittedly, when the ED has sought for confirmation of the provisional attachment of movable and immovable properties of the petitioners before the Adjudicating Authority and the same has been dropped, the provisional attachment also would lapse, in view of the limitation prescribed under Section 5(1). Consequently, it requires to be declared that as on date, there is no attachment at all over the subject properties. There shall be a direction to the Enforcement Directorate/4th respondent herein to revoke and release the attachment and seizure of all the movable and immovable properties of the petitioners, within a period of two (2) weeks from the date of receipt of a copy of this order - Petition allowed.

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• Service Tax

• 2024 (8) TMI 98
  Non payment of service tax - Banking and other financial services - foreclosure charges - penal charges - insurance administration fees - period from 01.07.2003 to 30.03.2008 - Invocation of extended period of limitation - suppression of facts or not - interest - penalty - the CESTAT set aside the demand and allowd the appeal. HELD THAT:- There are no reason to interfere with the judgment of the Customs, Excise Service Tax Appellate Tribunal - appeal dismissed.

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• 2024 (8) TMI 97
  Gross violation of principles of natural justice - impugned order were not served on the petitioner - liability of service tax - case of the petitioner is that the petitioner is a Civil Contractor, who is not liable to tax as the petitioner has not provided any services to the Government institutions and therefore, the withdrawal of exemption under Mega exemption N/N. 25/2012-ST, dated 20.06.2012 as amended by N/N. 6/2015-ST, dated 01.03.2015 would not apply to the petitioner. HELD THAT:- Prima facie the petitioner has been in default in complying with the requirements of Chapter V of the Finance Act, 1994, in as much as the petitioner has failed to obtain service tax registration. The fact that the petitioner has been providing civil contract service indicate that the petitioner was indeed liable to pay service tax. The petitioner cannot blame the department as the petitioner had not given the correct particulars to the department for either issuance of the show cause notice or to the personal hearing notices thereafter or for communication of the impugned order. Prima facie the Court is of the view that the petitioner is indeed liable to pay service tax for the services provided to various private parties. Unless the petitioner is able to establish that the petitioner s turn-over was below the turn-over specified in the notifications exempting a service provided from payment of service tax, the demand cannot be questioned. The demand in the impugned order pertains to the period between 01.04.2016 to 30.06.2017. The interest will continue to mount on the petitioner on the demands as assessment under the provisions of the Finance Act, 1994 and the Service Tax Rules, 1994 are based on self-assessed returns that were required to be filed under the provisions of the aforesaid Act and Rules. The impugned order is quashed and the case is remitted back to the file of the 2nd respondent to pass fresh orders on merits and in accordance with law - petition disposed off by way of remand.

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• 2024 (8) TMI 96
  Construction of a dam or not - services of site formation and clearance, excavation and earthmoving and demolition - exemption under N/N.17/2005-ST dated 07.06.2005 - whether the services rendered by the respondents are in relation to the construction of a dam and thus, the respondents are eligible for the exemption contained in Notification No.17/2005 dated 07.06.2005? - time limitation. HELD THAT:- The respondents rely upon the case of C.P. Systems [ 2023 (2) TMI 665 - CESTAT NEW DELHI] wherein the Principal Bench has upheld the order of the Adjudicating Authority in holding that standalone dam or water channel system would be quite useless unless it is combined with other structures like Hydro Electric Plant. It is found that the case involves identical facts and the Tribunal has gone into the very same question as to whether services rendered in relation to a Hydro Electric Project would amount to work rendered towards the construction of dams to be eligible for the exemption contained in Notification No.17/2005 dated 07.06.2005. In view of the decision of the Tribunal in the case of Continental Constructions Ltd. [ 2018 (2) TMI 1256 - CESTAT NEW DELHI] , it is found that the issue is no longer res-integra and is decided in favour of the respondents. We find that the Hydro Electric projects have no separate existence from the dams. The construction of a Hydro Electric project, pre-supposes the existence or construction thereof of a dam. The Hydro Electric projects are always associated with the dam and therefore, such dams are often referred to as multi-purpose hydel projects. Thus, there is no merit in the grounds of appeal of the Department. Time Limitation - HELD THAT:- It is found that other than making casual allegation that the appellants intended to avoid proper discharge of service tax and suppressed the facts and did not file ST-3 Returns, Revenue has not highlighted any specific commission or omission on the part of the respondents so as to necessitate the invocation of extended period. Therefore, relying on the cases cited by the respondent and the other cases, it is opined that the respondent had bona fide reasons to believe that the services rendered by them to M/s Patel Gammon J V Engineering Ltd. are not exigible to service tax. Therefore, no case has been made by the Revenue to invoke the extended period. There are no merit in the appeal and there are no reasons as to why the impugned order should be interfered with - the respondents have a case in their favour on merits as well as limitation - the appeal filed by the Revenue is dismissed.

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• 2024 (8) TMI 95
  Invocation of Extended period of Limitation contemplated under the proviso to section 73 (1) of the Finance Act, 1994 - relevant date - suppression of facts or not - recovery of service tax not levied or paid or short levied or short paid or erroneously refunded - Services rendered to STPI units - Services rendered to US Library of Congress and US Commercial Services - Service Tax on the above services during 2006-07 and 2007-08 - Utilization of Credit in excess of 20% - Short-payment of Service Tax - Non-payment of Service Tax on services rendered to SEZ units during 03.03.2009 to 20.05.2009 - Interest on late payment of Service Tax. HELD THAT:- It would be seen from a perusal of sub-section (1) of section 73 of the Finance Act that where any service tax has not been levied or paid, the Central Excise Officer may, within one year from the relevant date, serve a notice on the person chargeable with the service tax which has not been levied or paid, requiring him to show cause why he should not pay amount specified in the notice. Section 73 (1) of the Finance Act does not mention that suppression of facts has to be wilful since wilful precedes only misstatement. It has, therefore, to be seen whether even in the absence of the expression wilful before suppression of facts under section 73(1) of the Finance Act, suppression of facts has still to be willful and with an intent to evade payment of service tax. The Supreme Court and the Delhi High Court have held that suppression of facts has to be wilful and there should also be an intent to evade payment of service tax. In PUSHPAM PHARMACEUTICALS COMPANY VERSUS COLLECTOR OF C. EX., BOMBAY [ 1995 (3) TMI 100 - SUPREME COURT ], the Supreme Court examined whether the Department was justified in initiating proceedings for short levy after the expiry of the normal period of six months by invoking the proviso to section 11A of the Excise Act. The proviso to section 11A of the Excise Act carved out an exception to the provisions that permitted the Department to reopen proceedings if the levy was short within six months of the relevant date and permitted the Authority to exercise this power within five years from the relevant date under the circumstances mentioned in the proviso, one of which was suppression of facts. It is in this context that the Supreme Court observed that since suppression of facts has been used in the company of strong words such as fraud, collusion, or wilful default, suppression of facts must be deliberate and with an intent to escape payment of duty. It is, therefore, clear that even when an assessee has suppressed facts, the extended period of limitation can be invoked only when suppression is shown to be wilful with intent to evade the payment of service tax. The show cause notice, therefore, presumes that there was intent to evade payment of service tax merely because the appellant had not disclosed the correct service tax liability in the service tax returns. The show cause notice does not disclose why the appellant had an intent to evade payment of service tax. Merely because the correct service tax liability had not been disclosed, it cannot be presumed that there was an intent to evade payment of service tax. The burden of proving that the appellant had suppressed facts with an intent to evade payment of service tax was clearly upon the department. It was necessary for the department to illustrate any positive act on the part of the appellant. According to the appellant, it was under a bonafide belief that it was not liable to pay service tax and the matter also involved interpretation of various provisions of the Finance Act as well as the services rendered to the SEZ Units and to the STPI Units. The appellant had been filing the service tax returns and an audit of the records of the appellant had also been conducted in 2010 for the period 2006-07 to 2009-10. The show cause notice was, however, issued on 19.10.2011 after a substantial lapse of time. In this connection, it would be pertinent to refer to the judgment of the Supreme Court in Commissioner of C. Ex. Customs vs. Reliance Industries Ltd. [ 2023 (7) TMI 196 - SUPREME COURT] . The Supreme Court held that if an assessee bonafide believes that it was correctly discharging duty, then merely because the belief is ultimately found to be wrong by a judgment would not render such a belief of the assessee to be malafide. If a dispute relates to interpretation of legal provisions, it would be totally unjustified to invoke the extended period of limitation. The Supreme Court further held that in any scheme of self-assessment, it the responsibility of the assessee to determine the liability correctly and this determination is required to be made on the basis of his own judgment and in a bonafide manner. There is no suppression of material facts from the department, much less with an intent to evade payment of service tax. The extended period of limitation contemplated under the proviso to section 73(1) Finance Act, therefore, could not have been invoked in the facts and circumstances of the case. It will, therefore, not be necessary to examine the contention raised by learned counsel for the appellant that the order should be set aside as the time limit specified in section 73(4B) of the Finance Act had not been adhered to. The impugned order 30.12.2016 passed by the Commissioner, therefore, cannot be sustained and is set aside - Appeal allowed.

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• 2024 (8) TMI 94
  Taxability - Appellant is an Authorized Branch of Punjab National Bank (PNB) that carries out Central State government transactions for States of Punjab, Haryana Himachal Pradesh - service provided for Discharge of Sovereign or Statutory functions of the State or not - HELD THAT:- It is found that the main services rendered by the appellant to the RBI are exempt from service tax vide N/N. 22/2006-ST dated 13.04.2006. Further, it is found that this issue is no more res integra and the Larger Bench of the Tribunal in the case of CCE S.T. CHANDIGARH VERSUS STATE BANK OF PATIALA [ 2016 (10) TMI 800 - CESTAT NEW DELHI-LB ] has settled the said issue and has held once State Bank of Patiala has been appointed as agent of RBI, it is transacting Government business which is in the nature of a sovereign function performed on behalf of the Government and hence not liable to Service Tax. The impugned order is not sustainable in law and the same is set aside - Appeal allowed.

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• 2024 (8) TMI 93
  Non-payment of service tax - Management consultancy Services (Royalty services) - Intellectual Property Right Services (IPR) - Business Auxiliary services (Job-work charges) - Banking and financial services - time limitation. Management Consultancy service - Royalty services - HELD THAT:- The appellant has been recording the Service Tax pertaining to the Management Consultancy services amount paid to their holding company. Payment were made towards expenses incurred by the Joka unit as well as by the Baddi unit. In case of Baddi since they are not in a position to claim the Cenvat Credit. The Service Tax amount and the Management consultancy amounts have been apportioned to their expenses account. This is no way allows the department to come to a conclusion that the appellant provided any service to the Baddi unit. Therefore, on this count itself, the confirmed demand of Rs. 1,44,964,85 is required to be set aside. Intellectual Property Right Services (IPR) - HELD THAT:- The intellectual Property Services have become exigible to Service Tax with effect from 10.09.2004. Accordingly the confirmed demand of Rs. 1,30,28,482 for the period of October, 2004 to December, 2010 and Rs. 29,52,461 for the period of January, 20111 to March, 2012 are legally not sustainable and the same is set aside on merits. Business Auxiliary services - Job-work charges - HELD THAT:- It is found from the documentary evidence that the finished goods are emerging after the job work in terms of Sec 2(f) of the CEA 1944. Therefore, the same would not amount to rendering of service in BAS Section 65 (19) of the Finance Act, 1994. Accordingly, the confirmed demand of Rs. 3,15,625 and Rs. 4,36,398 are being set aside on merits. Banking and financial services - HELD THAT:- It is found that no such services was rendered by the holding company to the appellant. The banking charges paid by the holding company initially was recovered from the present appellant. It cannot be viewed that banking and financial services were rendered by the company. It is also to be noted that transaction is between the company and the appellant which would amount to self service. The Tribunal in the case of Precot Mills Vs. CCE [ 2005 (3) TMI 594 - CESTAT, BANGALORE] has held that where the transaction is between two constituents of the same entity, there is absence of client-service provider relationship. Hence, no Service Tax is payable. Therefore, the confirmed demand of Rs. 3,39,652 set aside on merits. Time Limitation - HELD THAT:- The appellant has been paying Service Tax on the Management Consultancy Services and were filing their ST-3 Returns. As per the normal accounting practice they have charged portion of Service Tax amount and Management consultancy services to their Baddi unit. Their bonafide belief that no Service Tax is required to be paid by them, cannot be faulted - Service Tax is actually not payable by them. Apart from this, the transactions are between the constituent entities. In such a case the party cannot be fastened with the allegation of suppression to confirm the demand for the extended period. Hence the confirmed demand in respect of the extended period is being set aside on account of time bar also. Appeal allowed.

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• 2024 (8) TMI 92
  CENVAT Credit - service tax paid by them on the invoices issued by automobile dealers - it is the case of the department that the dealers have been providing insurance services to the appellants illegally against the provisions of Insurance Act, 1938 and IRDA Regulations - rejection on the ground that computer generated invoices are not signed - rejection of credit on the ground that the invoices issued by M/s. TVS Sundaram Motors (service provider) contains a different description of the service - Difference of Opinion. HELD THAT:- In view of the difference of opinion between the Members, the questions framed for resolving the difference - As the different of opinion has been set aside by the Hon ble High Court, the order passed by Member (Judicial) as recorded would be applicable. Follwing was held by the member (Judicial). Whether the appellant is eligible to avail credit of the service tax paid by them on the invoices issued by automobile dealers? - HELD THAT:- In the case on hand, the department does not dispute the payment of tax. The department has not initiated any proceedings against the dealers alleging that there are no services provided and that no tax has to be paid by them. The SCN is issued to the appellant alleging that the credit availed on such services is ineligible. The Cenvat Credit Rules,2004 provide for a mechanism to the service provider to avail and utilize credit of the tax paid on input services used for providing output services. This credit scheme ensures smooth flow of duties , eliminating the cascading effect of duties /taxes. The very same issue came up for consideration before the Tribunal in the case of Cholamandalam MS General Insurance Company Ltd. [ 2021 (3) TMI 24 - CESTAT CHENNAI ]. The facts and allegations are identical. The Tribunal followed the decision of the Jurisdictional High court in the case of Modular Auto Ltd. [ 2018 (8) TMI 1691 - MADRAS HIGH COURT ] and it was held that It is not disputed that the dealer has paid Service Tax on the services described in the invoices. If that be so, the denial of credit at the recipient s end cannot be justified by the Department without reopening the assessment at the dealer s end. Similar view was taken by the Tribunal in the case of ICICI Lombard General Insurance Company Vs CCE, Mumbai Central [ 2023 (2) TMI 1093 - CESTAT MUMBAI ]. It is held that after appreciating the facts and evidence, and by applying the ratio in the above decisions the denial of edit cannot be justified. Denial of credit on the ground that computer generated invoices are not signed - HELD THAT:- The second proviso to the Rule 9 states that if the document does not contain all the particulars, but contains the details of duty or service tax payable, the description of goods or taxable service, service tax registration number, person issuing the invoice etc., the Deputy Commissioner or the Assistant Commissioner of Central Excise can verify the same and if satisfied can allow the credit. This means, when the tax paid is in order, the credit has to be allowed even though the invoice may be technically deficient for want of some particulars. In the present case, it is not disputed that the tax has been paid by the appellant. Merely because the computer generated invoice does not contain the signature, it cannot be said that the credit is ineligible. Further, for the period after 2015, the Board has clarified that signatures are not required in the case of computer generated format - credit allowed. CENVAT Credit - rejection of credit on the ground that the invoices issued by M/s. TVS Sundaram Motors (service provider) contains a different description of the service - HELD THAT:- It is not disputed that the tax has been paid as per the invoices. Appellant who is the service recipient cannot be found fault for the description mentioned in the invoice maintained by the service provider. Appellant has no control over the accounts maintained by the service provider (dealer). The credit at the recipient s end cannot be denied for this reason. The denial of credit on this reason is not justified. The impugned orders are set aside - Appeal allowed.

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• 2024 (8) TMI 91
  Classification of service - security agency service or commercial training and coaching center services - agreement for execution of project under Swarnjayanti Gram Swarozgar Yojana for placement of the rural BPL youth in Bundelkhand district of Madhya Pradesh - HELD THAT:- The matter is no longer res integra as the principal bench of this Tribunal by its order in case of M/S ILFS CLUSTERS DEVELOPMENT INITIATIVE LTD. VERSUS COMMISSIONER, CUSTOMS, CENTRAL EXCISE SERVICE TAX, NOIDA [ 2018 (10) TMI 1007 - CESTAT ALLAHABAD] have decided the issue wherein it has been held that the grant-in-aid received by the appellant from Government of India is not taxable under the category of commercial coaching or training service. The impugned order in appeal is without any merit and is set aside - appeal allowed.

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• 2024 (8) TMI 90
  Non-payment of service tax - taxable value reflected in the ST-3 returns was less than what was shown in the Income tax returns - discrepancy on the basis of third party data - HELD THAT:- It is found that the Original authority has wrongly computed the amounts of service tax by taking the figures of Rs. 49,64,538/- as the value of services but the Original authority has not considered the payment of service tax of Rs. 5,41,582/- which is shown as an expense in the financial statement produced on record. Further, as per the reconciliation statement which is in annexure I produced, showing wrong computation of the service tax @ 14.05% whereas the effective rate of service tax during the said Finance year was 12.36% for the months of April, 2015 and May, 2015, 14% for the period of June, 2015 till November, 2015 and 14.5% till March. But, the Original authority has calculated the service tax @ 14.5% which is wrong. It is found that both the authorities have not examined the nature of service whether the same falls under works contract service or not In view of these discrepancies in the impugned order, the matter needs to be remanded back to the Original authority with the direction to examine various issues raised by the appellant in their appeal, namely, correct valuation of service tax, service tax rate as applicable during the relevant period, the nature of service rendered by the appellant and thereafter pass a fresh order, after following the principles of natural justice and pass a reasoned order. Appeal allowed by way of remand.

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• Central Excise

• 2024 (8) TMI 89
  Clandestine removal - shortage of goods - Whether the Tribunal is correct in holding that duty on 17943 kgs. of billets seized on 27.3.1999 is payable though the evidence recording quantity of goods and consumption thereof as well as s clearance of final product on payment of duty was available and placed on record? - HELD THAT:- In view of the concurrent findings of fact recorded by the Tribunal in respect of the 17,943 kgs of billets seized on 27.03.1999 by the respondent Department, it is not in dispute that the said billets were utilized by the appellant assessee without permission from the Competent Officer and could not have been produced at the time of inspection carried out on 04.07.2000. The CESTAT was therefore justified in holding that as per the material available on record and in absence of any evidence produced by the appellant to show that such final products manufactured by them out of the seized billets was recorded in RG-1 Register for the same was cleared under the cover of Central Excise, on payment of duty, the CESTAT was justified in confirming the demand, so far as the 17,943 kgs of billets found which were supposed to be kept in the custody of the appellant at the relevant time. With regard to the contention raised by the appellant that the CESTAT has committed an error by not adopting the same reasonings which were given for granting relief in respect of 9247.5 kg of billets which were alleged to have been found shortage on the ground as recorded in para no.7 of the Impugned Order passed by the CESTAT, it is not tenable in view of the fact that the CESTAT has distinguished shortage of 17,943 kg of billets on the ground that the same was seized on 27.03.1999 whereas the shortage of alleged 92475 kg of billets was set aside only because in view of the finding arrived at by the CESTAT that there was no actual shortage of billets and that same was only pseudo and there was no evidence on record produced by the revenue to show that the billets are being used in the manufacture of final products clandestine. The question of law is answered against the assessee and in favour of the revenue as there is no infirmity in the impugned order passed by the Tribunal - Appeal dismissed.

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• 2024 (8) TMI 88
  100% EOU - Rebate claim/Refund of Cenvat credit under Rule 5 of the Cenvat Credit Rules - cash refund - transition of credit - time limitation - Revenue s contention is that the Cenvat credit could have been transitioned as ITC under GST by filing Form TRAN-I - time limitation - HELD THAT:- It is undisputed that Cenvat credit was available to the appellant after the order of the Commissioner was passed in the remand proceedings. It is true that the appellant could have transitioned the credit under TRAN-I as ITC under GST. The appellant could also have claimed refund of this amount under Rule 5 of CCR. However, since the department had agitated the matter before the High Court, the appellant waited for the order of the High Court and only thereafter filed the refund claim. The appellant should have filed refund claim under Rule 5 of the CCR, but wrongly filed it under Rule 18 of the CER. The undisputed legal position is that Rule 5 of the CCR provides for refund of Cenvat credit in cash in respect of the goods exported. It is a settled legal position in this case that the appellant was entitled for Cenvat credit of Rs. 76,72,000/-. Instead of claiming refund under Rule 5 of CCR, the appellant claimed it citing Rule 18 of CER. The Assistant Commissioner also wrongly sanctioned it quoting Rule 18 of CER. However, there cannot be any dispute about the fact that the appellant was entitled to refund of the said amount under Rule 5 of CCR because it pertained to exports and the appellant was a 100% EOU. The appellant was not required to only transition the credit through TRAN-I. Section 142 (3) of the CGST Act provides for cash refund. The appellant was entitled to refund of Cenvat credit of Rs. 76,72,000/- under Rule 5 of CCR. This substantive benefit of the appellant cannot be taken away because the appellant had quoted the wrong rule in filing its refund claim and the Assistant Commissioner also sanctioned the refund quoting the wrong rule. Time Limitation - HELD THAT:- It was the Revenue which agitated the matter and appealed to the High Court. It is true that without waiting for the judgment of the High Court, the appellant could have filed the refund claim but the appellant waited the judgment of the High Court dated 13.12.2017 [ 2017 (12) TMI 1272 - DELHI HIGH COURT] and thereafter filed the refund claim on 08.01.2018. Thus, the claim was not hit by limitation. The impugned order is set aside - appeal allowed.

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• 2024 (8) TMI 87
  Rejection of the appellant s application towards fixation of special rates - duty exemption on the value addition - benefit of N/N. 20/2007-CE dated 25/4/2007 - valuation of Aerated Water - Applicability of Section 4A valuation for goods falling under Chapter 22 - whether discounts and incentives will have to be removed from the total turnover to arrive at the net turnover? - HELD THAT:- N/N. 20/2007-CE dated 25/4/2007 specifies that for the goods covered under Serial No. 16, the minimum value addition shall be to the extent of 36%.This Notification grants Excise Duty exemption for this value addition of 36%. In terms of Para 3(1), if the value addition is more than 115% of this rate, the assessee can seek fixation of special rate. In this case, in order to be eligible for fixation of special rate, the value addition should be 41.4% (being 115% of 36%). Even after considering both VAT amount and discount as not part of the turnover, still the turnover comes to Rs. 52,29,41,710, whereas the appellant/Chartered Accountant has taken the turnover as Rs. 52,85,90,385/-. Based on their figure of Rs. 52,85,90,385/-, the appellant has arrived at the figure of value addition of 91.57%. If the turnover is considered as 52,29,41,710/-, still, the value addition would be more than 85%, whereas the value addition required in this case is to the extent of 41.4%. Rejection of turnover on account of discount - HELD THAT:- There are no merits in the arguments of the appellant. It is on record that the appellants have given the discount to the buyers in the same year and as a matter of fact the Chartered Account has removed this amount while arriving at the net turnover. Therefore, the Adjudicating Authority was correct in removing the discount/incentive amount from the total sales so as to arrive at the net sales turnover. The goods in question Aerated Water fall under Chapter 22. In terms of Notification No. 49/2008-CE (NT) dated 24/12/2008, the goods are subjected to Section 4A valuation. As per Section 4A Valuation, the Excise Duty is required to be paid based on the abatement given as a percentage of Retail Sale Price. Therefore, the provisions contained in Section 4 and Valuation Rule 2000 cannot be applied to arrive at the transaction value - even the Chartered Accountant has removed this amount, from the total turnover to arrive at the Valuation @ 91.57%. Hence, the appellant s arguments for including the VAT amount for arriving at the net turnover, cannot be accepted. Even if the turnover figure given by the appellant is different from the figure arrived at as per above calculation, still the value addition is likely to be more than 85%. Therefore, the matter remanded to the Adjudicating Authority to consider these aspects and arrive at the correct value addition. If it is found that the value addition is more than 41.4%, the request of the appellant towards fixation of special rate should be entertained. Appeal disposed off.

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• 2024 (8) TMI 86
  CENVAT Credit - only allegation is that suo moto recredit is not allowed under the Central Excise provisions - HELD THAT:- The refund of any duty has to be claimed through Section 11B of the CEA 1944. Hence the question of suo-moto credit/refund is not admissible as any duty paid by the appellant has to be refunded only through the process of Section 11B of the Central Excise Act, 1944. As rightly argued by the Revenue it has been categorically held by the Hon ble Supreme Court in the case of Mafatlal Industries [ 1996 (12) TMI 50 - SUPREME COURT] , Sahakari Khand Udyog Mandal Ltd. [ 2005 (3) TMI 116 - SUPREME COURT ] and by the Larger Bench in the case of BDH Industries Ltd. [ 2008 (7) TMI 78 - CESTAT MUMBAI-LB] that unless the duty is held to be unconstitutional there is no question of claiming refund under any other provisions other than what is specified in the Central Excise Act,1944. Therefore, the fact that the appellant should not have taken recredit of duty but should have filed a refund claim under Section 11B of the Central Excise, 1944. Time Limitation - HELD THAT:- The refund claim could have been could have been filed at any given point of time. As rightly claimed by the appellant, there is no suppression of fact as the amount of recredit taken by the appellant was clearly shown in their cenvat credit account. There is nothing on record to show that this fact was suppressed except for stating that it came to notice of the Department only at the time of audit and the impugned order does not mention anything on suppression or invoking of proviso to Section 11A for demanding duty beyond the normal period. The Commissioner (Appeals) in the impugned order does not deal with suppression nor has given any reasons to invoke proviso to Section 11A except for confirming the demand along with interest under Section 11AB and penalty under Section 11AC. In view of the above, the demand being beyond the normal period cannot be sustained. There were conflicting decisions which ultimately got settled by the Larger Bench, the question of suppression cannot be alleged against the appellant. Moreover, since the duty was paid under protest, there was no time limit for filing a claim of refund, that itself proves the fact that the allegation of suppression cannot be established against the appellant. The impugned order is set aside - appeal allowed.

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• 2024 (8) TMI 85
  100% EOU - Concessional Rate of duty for Fabrics of cotton and man-made fibres - entitlement for DTA sale under Para 9.9(b) and 9.20 of the EXIM Policy - contention of the department is that the Appellant had made clearances of their finished goods including rejects and wastes for DTA sales on the basis of 50% of the deemed export including rejects and waste for DTA sale on the basis of 50% of the deemed export value instead of 50% of the FOB value of actual physical exports - whether the appellant is eligible for benefit of exemption Notification No. 20/98 CE as claimed by them or they were required to pay higher rate of duty under Notification No. 13/98-CE as held by Ld. Commissioner? HELD THAT:- The Appellant during the period October 2000 to January 2001 had cleared rejects of Polyester Grey Fabrics classifiable under Chapter 52 of the CETA on payment of duty @50% of duty specified in the first schedule to the Central Excise Tariff Act, there is no dispute about the facts that the finished goods are manufactured wholly out of the indigenous raw materials and that the finished goods fall under chapter 52 and 54 as specified in the above Notification. Therefore, there are no irregularity in Appellant s claim related to exemption notification. The Department, however, took the view that Notification No. 13/98, dated 2-6-1998 is applicable, as per which, the Appellant was liable to pay duty at the rate of 30 per cent as this product was manufactured by 100% EOU and cleared in DTA and demanded differential duty - it is found that where there are multiple Notifications operating simultaneously in respect of the same commodity and extending different benefits, an option must be given to the assessee to choose the Notification that would be most beneficial to it. The assessee has to be permitted to elect and choose the Notification of its choice and the Department cannot thrust a Notification of its choice upon the assessee - the view is supported by two judgments of the Supreme Court in the case of H.C.L. Limited v. Collector of Customs, New Delhi, [ 2001 (3) TMI 971 - SC ORDER ] and Collector of Central Excise, Baroda v. Indian Petro Chemicals [ 1996 (12) TMI 66 - SC ORDER ] where the Full Bench and Division Bench of the Supreme Court respectively have categorically confirmed the position that the option to select the benefits provided under Notification is clearly within the realm of choice of an assessee. The appellant are entitled to the exemption under N/N. 20/98-CE. - the impugned orders are set aside - appeal allowed.

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• CST, VAT & Sales Tax

• 2024 (8) TMI 84
  Refund of the amount claimed for the 4th quarter of assessment year 2016-17 and the first quarter of Assessment Year 2017-18 - Entitlement of the petitioner to interest on delayed refund under the DVAT Act - HELD THAT:- The Commissioner has powers to first apply such excess amount towards the recovery of any other amount due under the DVAT Act. Section 38 (3) (a) (i) (ii) make it further clear that where the tax period for claiming the refund is one month, interest would accrue from the date one month elapses after the date of filing of the return or the date when the claim for refund is lodged. Where, however the dealer s tax period for claiming the refund is a quarter, interest accrues two months after the return is filed or a claim for refund is made. If a notice is issued under Section 58 or an additional information is sought under Section 59, the refund will be carried forward to the next tax period as a tax credit. If a notice is issued under Section 58 or an additional information is sought under Section 59, the refund will be carried forward to the next tax period as a tax credit. Requirement to file DVAT-21 was considered by this Court in Flipkart India Private Limited Vs. Value Added Tax Officer [ 2023 (8) TMI 987 - DELHI HIGH COURT ]. This Court had held that once a claim for refund stands embodied in the return itself, there is no obligation upon the assessee to file Form DVAT-21. There is no material on record to indicate that Petitioner was in any manner responsible for the delay in processing of the refund. There is not even any such allegation in the Impugned Orders dated 11.04.2023 and 10.05.2023. In terms of the statutory time frame which stands constructed by Section 38 (3) (a) (ii) of the DVAT Act, the said amount had become refundable post 1st August 2017 and 29th September 2017 respectively. The proceedings undertaken thereafter i.e. issuance of notice under Section 59 (2) followed by Default Assessment Order dated 29.08.2020 are to be regarded as non-est in the eyes of law - Petitioner cannot be denied interest on the amount of interest withheld unjustifiably. Since the refund was withheld, assessee automatically becomes entitled to the interest under Section 42 (1) of the DVAT Act. The petitioner is entitled for interest on refund and such claim cannot be defeated on the mere ground of investigation and involvement of legal issues, which ultimately came to be decided in favour of the petitioner by orders passed by the High Court - Admittedly, statutory rate of Interest is 6% by virtue of notification dated 30.11.2005. Accordingly, the Impugned orders dated 11.04.2023, 10.05.2023 03.10.2023 passed by the Respondents are set aside. Petition allowed.

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• 2024 (8) TMI 83
  Maintainability of petition - availability of alternative remedy - Challenge to Assessment Orders - petitioner was providing service to non-members - HELD THAT:- This Court had already passed an order dated 06.01.2022 in W.P.No.11607 of 2019 in the case of M/S. OOTACAMUND CLUB VERSUS THE PRINCIPAL COMMISSIONER OF GST CENTRAL EXCISE, COIMBATORE [ 2022 (2) TMI 735 - MADRAS HIGH COURT] by following the decision of the Hon ble Supreme Court in STATE OF WEST BENGAL ORS. VERSUS CALCUTTA CLUB LIMITED AND CHIEF COMMISSIONER OF CENTRAL EXCISE AND SERVICE ORS. VERSUS M/S. RANCHI CLUB LTD. [ 2019 (10) TMI 160 - SUPREME COURT] . A similar order was passed by this Court in RAILWAY OFFICERS CLUB VERSUS THE ADDITIONAL COMMISSIONER OF SERVICE TAX [ 2020 (2) TMI 119 - MADRAS HIGH COURT] . The above view has been followed by this Court in several cases. It is not required to relegate the petitioner to file appeals before the Appellate Authority as no useful purpose will be served by relegating the petitioner to file appeals before the Appellate Authority under the provisions of the Tamil Nadu Value Added Tax Act, 2006. The impugned orders are liable to be quashed and are quashed. Thus, these Writ Petitions are allowed.

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• 2024 (8) TMI 82
  Challenge to Revision Assessment Orders and demand notices - petitioner filed Petitions under Section 84 of the Tamil Nadu Value Added Tax Act, 2006 to rectify the error in the Assessment Orders - HELD THAT:- The impugned Revision Assessment Orders indicate that the Department has issued summons to the three persons namely, Tvl.R.Suresh Kumar, Tvl.S.Saravanan and Tvl.Kaleeswari Agencies through RPAD on 04.07.2022, 08.08.2022 29.08.2022. Two of these persons have acknowledged having received the summons. Summons issued to one of them was returned with the remarks no such addressee at the address . The petitioner itself requested a voluntary arrangement for the cross-examination of these persons but failed to take any steps to bring them before the respondent. In my view, the petitioner s witnesses cannot be summoned by the Department. It is for the petitioner to bring them as witnesses. In any event, if the said witnesses are produced by the petitioner, it is for the Department to cross-examine them. Be that as it may, since the petitioner had deposited a sum of Rs. 50,00,000/- as per direction of this Court, partial relief granted by quashing the impugned Revision Assessment Orders and remitting the case back to the respondent to pass fresh orders on merits subject to the petitioner producing the so-called persons as the petitioner s witnesses for cross-examination by the Department - Since the petitioner had already deposited a sum of Rs. 50,00,000/-, there shall be a further direction to the petitioner to deposit another sum of Rs. 25,00,000/- in three installments (Rs. 10,00,000/-, Rs. 10,00,000/- Rs. 5,00,000/- respectively), within a period of three months from today. There are 21 properties of the petitioner which have been attached pursuant to the impugned Revision Assessment Orders dated 14.03.2024. The respondent is directed to raise the order of attachment by restricting the order of attachment to cover the balance amount of tax due from the petitioner. The application shall be disposed of on merits within a period of 6 months thereafter. Petition disposed off.

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• Indian Laws

• 2024 (8) TMI 81
  Dishonour of Cheque - no order passed for conversion of present complaint into summons triable matter - Application of Section 145(2) of the Negotiable Instruments Act, 1881 - Violation of principles of natural justice - no sufficient time was granted to the petitioner in the present matter and an application for recall of the order is rejected. HELD THAT:- Admittedly proceedings under Section 138 of the Act are required to be conducted as summary procedure unless the Magistrate comes to the conclusion that there is need to convert it into summons triable matter. There is no such order passed by the learned Magistrate in the present complaint to convert it into summons triable matter. The evidence of the complainant is given on affidavit supported with bank slip and the material regarding dishonour of the cheque, it is unnecessary for the Magistrate to record any further preliminary evidence of the complainant. Such an affidavit in evidence though produced at the time of verification can be read as evidence at all stages of the trial and other proceedings. Manner of the examination of the person giving affidavit is as per Section 264 of Cr.P.C. Since the scheme is to follow summary procedure, Section 264 of Cr.P.C., provides judgment to be passed when the accused pleads not guilty unless an application is filed for recall of the witnesses as provided under Section 145 (2) of the Act. These provisions are required to be read in tandem. In Expeditious Trial of Cases under Section 138 of the N. I. Act, 1881 [ 2021 (4) TMI 702 - SUPREME COURT] , the Constitutional Bench of the Apex Court discussed the power of Magistrate to try summary and procedure adopted by the Magistrate to convert summary trial into summons triable mechanically, considered in detail provisions and the mandate of Section 143 of the Act. The main issue in that proceeding was the power of the Court under Section 258 of Cr.P.C. to stop the proceedings and in that context observations in the case of Meters and Instruments Private Limited [ 2017 (10) TMI 218 - SUPREME COURT] were considered as inappropriate. However, specific directions were issued to the High Court to issue practice directions to the trial Court to treat service of summons in one complaint confirming part of the transactions as deem service in respect of all complaints filed before the same Court relating to dishonour of the cheque issued in part and the same transaction. It is clear that there is no need for the complainant to further depose what he has stated in affidavit in evidence at the time of verification of the complaint and that such affidavit in evidence could be considered as examination in chief of the complainant and his witnesses - As quoted in the case of Meters and Instruments Private Ltd, evidence of the complainant could be given on affidavit subject to Court summoning such complainant and his witnesses for examination, it is not necessary for the Magistrate to record further preliminary evidence. Such an affidavit could be read in evidence at all stages of the trial. It is no doubt true that the accused is having a valuable right to summon the complainant and his witness, however, has to disclose probable grounds on which recall of such witness is required. Once such probable grounds are disclosed in the application, a Court is duty bound to summon the complainant and his witness, who have already deposed on affidavit. It is no doubt true that the accused is having a valuable right to summon the complainant and his witness, however, has to disclose probable grounds on which recall of such witness is required. Once such probable grounds are disclosed in the application, a Court is duty bound to summon the complainant and his witness, who have already deposed on affidavit. Petitioners failed to apply before the Court under Section 145 (2) of the Act disclosing their probable defence for the purpose of recalling the complainant. Thus, there is no ground even to recall the order of closing of cross examination as no purpose would be served since there is no application disclosing probable grounds for the purpose of cross examination of the complainant - no fault could be attributed to the order passed by the learned trial Court and much less any illegality or perversity so as to interfere in the supervisory and extra ordinary jurisdiction of this Court. Petition dismissed.

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• 2024 (8) TMI 80
  Dishonour of Cheque - leave to appeal against the judgement of acquittal - rebuttal of presumption under Section 139 read with Section 118 NI Act - presumption of innocence - HELD THAT:- This Court finds no illegality or infirmity in the judgement passed by the learned MM. While the petitioner had failed to substantiate his contentions relating to the grant of Rs. 9,00,000/- as cash loan to the respondent and further the pro-note sought to be relied upon by the petitioner was also rightly found to be irrelevant, the respondent had duly rebutted the presumption raised against him. The respondent, while proving the factum of handing over of the subject cheques to Ramesh, had been able to prove its defence through the testimony of DW3-Khilor Chandra on preponderance of probabilities and in the absence of the petitioner being able to provide any further evidence to substantiate his case, respondent No. 2 s acquittal is justified. The factum relating to the financial capacity of the petitioner, which weighed heavily upon the learned MM, also holds a crucial position in the acquittal of the respondent, since the same made the case of the petitioner highly improbable. Further, a decision of acquittal, strengthens the presumption of innocence in the favor of the accused. At the same time, the appellate court, while considering a leave to appeal, has a duty to satisfy itself if the view taken by the trial court is both possible and plausible. The appellate court should be slow in reversing an order of acquittal passed by the trial court. This Court finds no ground to grant leave to appeal - the leave petition is dismissed.

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