TMI Tax Updates - e-Newsletter
August 4, 2021

Case Laws in this Newsletter:

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

Articles

1. Directors and its compliances under Companies Act, 2013

   By: Manish Gupta

2. OMNIBUS NOTICE IS VAGUE WHEN RELEVANT PORTION IS NOT CONVEYED CLEARLY AND IRRELEVANT PORTION ALSO REMAIN IN NOTICE- THIS RULE APPLY TO ALL PROCEEDINGS INCLUDING NOTICE U.S. 148

   By: DEVKUMAR KOTHARI

3. PAYMENT OF ELECTRICITY BILLS DURING MORATORIUM

   By: DR.MARIAPPAN GOVINDARAJAN

News

1. GST authorities recover more than ₹ 1,900 crore in tax evasion in FY 2021-22 (upto June 2021)

2. CGST authorities bust input tax credit fraud of more than ₹ 31,000 crore involving more than 7,200 cases in FY 2020-21

3. 12,889 shell companies struck off in FY 2020-21

4. For first time, Dragon Fruit grown by farmers of Gujarat & West Bengal exported to London, United Kingdom & Kingdom of Bahrain

5. INDIA’S MERCHANDISE TRADE: Preliminary Data July 2021

6. 8 resolved, 65 settled/withdrawn and 23 ordered for liquidation in insolvency cases under IBC in real estate sector

7. Entrepreneurs availed over 29.55 crore loans of ₹ 15.52 lakh crore under Pradhan Mantri Mudra Yojana (PMMY) since 2015

Notifications

GST - States

1. G.O.Ms.No.203 - dated 2-8-2021 - Andhra Pradesh SGST

Amendment in Notification G.O.Ms.No.82 dated 31-01-2019

2. G.O.Ms.No.202 - dated 2-8-2021 - Andhra Pradesh SGST

EXTENSION OF THE DUE DATE FOR FILING FORM GSTR-4 FOR FINANCIAL YEAR 2020-21 TILL 31.05.2021

3. G.O.Ms. No. 204 - dated 2-8-2021 - Andhra Pradesh SGST

Amendment in Notification No. G.O.Ms.No. 33, dated 24-01-2018

Circulars / Instructions / Orders

SEBI

1. SEBI/HO/MIRSD/MIRSD_DOR/P/CIR/ 605 / 2021 - dated 3-8-2021

Permitting non-scheduled Payments Banks to register as Bankers to an Issue

Highlights / Catch Notes

Income Tax

• Land Conversion to Stock-In-Trade: Revenue Neutrality in Long-Term Capital Gain Claims on Plotted Land Sales.

  Case-Laws - AT : Assessment of Long Term Capital Gain U/sec 45(2) - conversion of land as stock-in-trade - sale of land after plotting - The assessee’s claim to compute long term capital gain with reference to saleable plot is revenue neutral in as much as on the sale of plots as business income the resultant income would be much higher and would be taxed at a higher rate. - when on an issue the tax effect is neutral, the same should not be agitated. - AT
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• Section 153C: AO Must Clearly State Seized Documents Belong to Another for Tax Proceedings to Begin.

  Case-Laws - AT : Validity of initiation of proceedings u/s 153C - validity of satisfaction note - it is the duty of the AO to apply his mind and should consciously and mandatorily state in the satisfaction note that the seized documents belong to “other person”. Without recording such a satisfaction, it cannot be presumed that the seized materials belong to “other persons”, in which case the AO could not have initiated proceedings against the “other persons” u/s 153C of the Act. - AT
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• Royalty Payments to FCC Co. Ltd. for Technical Know-How Classified as Revenue Expenditure by High Court.

  Case-Laws - AT : Royalty payment to FCC Co. Ltd., Japan - revenue or capital expenditure - Either having 50% control or 100% control that will not change the colour of nature of expenditure, because the royalty payment is for manufacturing or sale of manufactured products using the technical information and know-how. Precisely on these facts and circumstances the jurisdictional High Court in series of judgments have held that such a nature of payment of royalty is always a revenue expenditure. - AT
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• Assessee Classified as Non-Resident for Tax Purposes Due to Less Than 182 Days in India Over Four Years.

  Case-Laws - AT : Income accrued in India - Status of Non Resident - Determinative test for the status of Non Resident being number of days of stay in India and in assessee's case in these four years, the days of stay being less than 182 days; even after considering the days as recorded by the AO in his order; the status to be applied in this case is to be held as Non Resident as claimed by assessee. Thus, the assessee will be liable to tax on income accrued in India only. - AT
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• Dispute Over Hotel Management Receipts as Fees for Technical Services and Permanent Establishment in India Resolved.

  Case-Laws - AT : Income accrued in India - receipts of the assessee from various activities of hotel management - Services in the nature of FTS whether constitutes FTS or not and whether the assessee has PE in India or not, was very well settled and was undisputed as per the submissions and records before the Assessing Officer as well as before the CIT(A). The Revenue is projecting a new case which was not part of assessment order as well as order of the CIT(A). Therefore, the written submissions made by the Ld. AR are just afterthought and cannot be taken into account as the same are not plausible. - AT
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• Court Upholds 15% Disallowance of Job Work Charges Despite Higher Profit Ratios for Assessment Year 2012-13.

  Case-Laws - AT : Disallowance of 15% of job work charges - GP and NP ratio of the assessee is better comparative to other similar business houses. In AY 2012-13, the assessee has shown NP @ 4.27%, however others have shown NP from 2.12% to 3.46% - 15% disallowance is reasonable to avoid the possibility of revenue leakage - AT
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• Assessee Gains Tax Benefits Despite Lack of Registration u/ss 12A and 10(23) for 2007-08 Assessment Year.

  Case-Laws - AT : Exemption u/s 10(23C)(vi) - In the year under consideration, the assessee was neither having registration under section 12 A of the Act nor was having approval under section 10 (23) of the Act. However, the activities of the assessee continued to be charitable and there was no change in activities of the assessee. In our view the assessee, though was registered on 25.9.2009, however the assessee, was entitled to the benefit of section 11, 12 and 13 of the income tax Act for the assessment year 2007-08 under consideration in terms of the proviso to section 12A - AT
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• Court Upholds CIT (A)'s Decision: Reopening of Assessment u/s 147 for Protective Addition Deemed Unjustified.

  Case-Laws - AT : Reopening of assessment u/s 147 - protective addition - Neither at the time of recording the reasons, nor at the time of framing the assessment, AO was’nt sure about whose income has escaped assessment. We do not find any reason to interefere with the findings of the CIT (A) that reopening for resorting to make protective assessment cannot be upheld - AT
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• Company Ineligible for Tax Benefits Due to Insufficient Shareholding u/ss 2(1B) and 72A.

  Case-Laws - AT : Set off of accumulated unabsorbed losses - scheme of amalagamtion conceived - As on 31.03.2013, the assessee company had only 26% of equity shares in the transferor company, and therefore, the provisions of section 2 (1B) r.w.s 72A of the Income Tax Act have not been complied with by the assessee. Since, the assessee company did not have 3/4th of the shares of the transferor company as on 31.03.2013, the appointed date being 01.04.2013, the assessee is not entitled to the claim of carry forward and the set off of loss of the transferor company as on 31.03.2013. - AT
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Customs

• Petitioner Seeks Anticipatory Bail in Smuggling Case, Claims Ignorance of Prohibited Materials, Blames Stuffing Agent.

  Case-Laws - HC : Seeking enlargement on anticipatory bail - smuggling - It is not in dispute that the owner of the materials, which were found in the container, as per the shipping bills, is the petitioner. However, the only claim of the petitioner is that he had signed the shipping bills, but was not aware of what was stuffed inside the container by the stuffing agent and he was under the premise that the stuff inside the container was cobble stones. If the stand of the petitioner that he is in no way connected with the prohibited seized material, the course that is open to the petitioner is to subject himself for enquiry and give all the details before the respondent for them to find out the truth of the matter and nab the culprit. - HC
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Indian Laws

• Cheque Bounce Case Dismissed: Complaint Invalid Without Naming Partnership Firm as Accused u/s 138 NI Act.

  Case-Laws - HC : Dishonor of Cheque - insufficiency of funds - non - impleading of the partnership firm as accused in the complaint case - it was imperative on the part of the complainant company to make the partnership firm of the accused as a co-accused in the complaint cases and on account of failure to do so, the petitioner could not be convicted for offence under Section 138 of Negotiable Instruments Act, 1881 as complaint only against the petitioner in both the cases was itself not maintainable - HC
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Service Tax

• Service Tax Limitation Period: Amendment Effective May 2016 Cannot Apply Retroactively to 2014-2015 Cases.

  Case-Laws - AT : Applicability of normal period of limitation - whether the normal period of limitation of 18 months is to be applied or 30 months to be applied for demanding service tax for the period 2014-2015 - It is found that on the date of amendment which was effective from 14/05/2016, the limitation period for April 2014 to September 2014 has already lapsed and the subsequent amendment cannot give life to the dead case - AT
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Central Excise

• CENVAT Credit Refund: Clarifying Time Limits and Relevant Dates for Duty on Export Goods u/r 5.

  Case-Laws - AT : Refund of CENVAT Credit - time limitation - Relevant Date - From the definition of ‘relevant date’, it can be seen that sub clause (a) of Clause (B) of definition of relevant date clearly covers the refund of duty paid in respect of the excisable material used in the manufacture of export goods. In the present case, the refund under Rule 5 is also in respect of the duty paid on the material used in the manufacture of export goods. Therefore, it cannot be said that there is no mention about the relevant date in respect of refund of the nature in the present case. - AT
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• CENVAT Credit Reversal on Empty Packaging Materials Not from Manufacturing Process u/r 2 of Cenvat Credit Rules, 2004.

  Case-Laws - AT : Reversal of CENVAT Credit - empty packaging material of inputs - On plain reading of the definition of ‘exempted goods’ as well as ‘final product,’ it is clear that the said goods should be arising out of the manufacturing activity even though after that the said goods may or may not be excisable goods - In the present case, the packaging material since not arising out of any manufacturing process the same will not fall either under Sub-clause (d) or sub-clause (h) of Rule 2 of Cenvat Credit Rules, 2004. - AT
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• Refund Claim Denied: Time-Barred u/s 11B for Duty, Interest, and Penalty Paid Post-Tribunal Order.

  Case-Laws - AT : Refund claim for the amount of duty interest penalty paid during investigation of demand case - rejection on the ground of time bar - The appellant has admittedly filed the refund after one year from the passing of the tribunal order whereby demand was set aside. Therefore, in terms of the sub clause (ec) of clause (B) of section 11B, the refund claim filed after one year from the relevant date is clearly time bar. - Since the appellant has paid duty, interest and 25% penalty voluntary to avail the benefit of reduced penalty, it cannot be said that the amount paid is not duty and Pre-deposit. - AT
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VAT

• Court Rules on Timeliness in Assessment Orders: Section 42(6) Proviso Under OVAT Act Deemed Ineffective Formality.

  Case-Laws - HC : Validity of assessment order - time limitation - the exercise of power in terms of the proviso to Section 42(6) of the OVAT Act was, on the fact of the present case, an empty formality defeating the very purpose of requiring the audit assessment proceedings to be completed in a time bound manner. Section 42 (7) of the OVAT Act underscores the importance of completion of assessment proceedings in a time bound manner and limits the discretion of the CST in allowing the extension beyond the period of six months. This makes it even more important for the CST to have applied its mind to the facts of the case before mechanically granting extension. - HC
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• Transporter Deemed Owner of Goods, Fails to Prove Dealer Status; Tax Evasion Interpretation Upheld Under 2003 Act.

  Case-Laws - HC : Validity of assessment order -Non-existing dealer - the petitioner being a transporter is deemed to be the owner of the taxable goods and is bound to comply with all the requirements of the Act of 2003. It is not the case of the petitioner that the consignor and the consignee are existent dealers and the consignment itself did not match with the documents. Therefore, there is no reason to doubt the action of the respondents in construing the consignment in question as an attempt to evade the tax. - HC
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Case Laws:

• GST

• 2021 (8) TMI 88
  Jurisdiction - power to issue order - Attachment of petitioner s Bank Account - contention of learned counsel for the petitioner is that Deputy Director not being of the rank of Commissioner did not have jurisdiction to pass such an order or issue such communication - Section 83 of the Central Goods and Service Tax Act, 2017 - HELD THAT:- Having considered the facts of the case and submissions made, and also the fact that subsequent to issuance of the communication dated 03.02.2021, impugned herein, another order dated 25.02.2021 has been passed by the Additional Director, freezing the same account, as such, communication impugned herein, even otherwise has outlived its utility, we do not find any reason to entertain this writ petition. Petition dismissed.

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• 2021 (8) TMI 51
  Revocation of cancellation of registration - non filing of GSTR returns for a continuous period of six months and non payment of Interest liability against late discharged cash payment - rejection of application due to not replied to the notice issued within the time specified therein - Rule 23 of the CGST Rules, 2017 - HELD THAT:- The appellant has filed returns upto date of cancellation of registration hence, it is found that the appellant has substantially complied with the said provisions of the CGST Act/Rules, 2017 in the instant case. The registration of appellant may be considered for revocation by the proper officer - the proper officer are directed to consider the revocation application of the appellant after due verification of payment particulars of tax, late fee, interest and status of returns - appeal allowed.

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• 2021 (8) TMI 50
  Refund claim - duty paid on supply of goods to SEZ units - rejection of refund on the ground that there is no payment of tax in Govt. Account, the refund of tax related to supply of Goods to SEZ Units - opportunity of personal hearing - principles of natural justice - HELD THAT:- Opportunity of personal hearing has been given but the appellant did not attend the same. The impugned orders have been passed against N/N. 35/2020-Central Tax, dated 3-4-2020 issued by the Government by virtue of which the time limit for completion or compliance of any action including filing of any appeal, reply or application or furnishing of any report by any person which falls during the period from 20th March, 2020 to 29th June, 2020 had been extended till 30th June, 2020. The said time limit has further been extended till 30-8-2020 by virtue of N/N. 55/2020-Central Tax. Further, he also stated that no notice of hearing has ever been received by them either through post/courier or on GST portal. No other opportunity of hearing was ever granted. Copies of Show Cause Notices were reflected on the portal but could not be downloaded/retrieved. Due to the said facts no proper opportunity to present the submissions has been given which violate the principle of natural justice and against the GST laws. There are force in the appellant s plea that the said impugned orders were passed without being heard to him. Further, the period involved in the instant cases are covered under the N/N. 35/2020-Central Tax, dated 3-4-2020. Further, amended N/N. 55/2020, dated 27-6-2020 by which time period has been extended for filing of reply upto 30-8-2020. Further, it is also provided in Rule 92(3) of CGST Rules, 2017 that no application for refund shall be rejected without giving the applicant an opportunity of being heard. Matter remanded back to the Adjudicating Authority for providing the proper opportunity of being heard to the appellant and pass the reason/speaking order - appeal allowed by way of remand.

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• Income Tax

• 2021 (8) TMI 89
  Faceless assessment u/s 144B - no hearing had been granted before passing the impugned assessment order - HELD THAT:- As relying on SANJAY AGGARWAL [ 2021 (6) TMI 336 - DELHI HIGH COURT] on the present case no hearing had been granted before passing the impugned assessment order, there is a violation of principles of natural justice as well as mandatory procedure prescribed in Faceless Assessment Scheme and stipulated in Section 144B of the Act. Consequently, the impugned assessment order dated 31st May 2021 and all proceedings initiated pursuant thereto are set aside and the matter is remanded back to the Assessing Officer, who shall grant an opportunity of hearing to the petitioner by way of Video Conferencing and thereafter pass a reasoned order in accordance with law. With the aforesaid directions, the present writ petition and pending application stand disposed of.

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• 2021 (8) TMI 82
  Assessment of Long Term Capital Gain U/sec 45(2) - conversion of land as stock-in-trade - sale of land after plotting - HELD THAT:- the assessee is making a claim to value the stock-in-trade only on the value of saleable plots which are stock-in-trade. The assessee s claim to compute long term capital gain with reference to saleable plot is revenue neutral in as much as on the sale of plots as business income the resultant income would be much higher and would be taxed at a higher rate. Moreover the road and peripheral development in isolation have no market value. In our considered opinion, this claim of the assessee would be revenue neutral. As held by the Hon ble Supreme Court in the case of Excel Industries Ltd.[ 2013 (10) TMI 324 - SUPREME COURT] when on an issue the tax effect is neutral, the same should not be agitated. In this view of the matter, in our considered opinion, this claim of the assessee by way of the ground raised above is allowable and accordingly, we allow the same. This is more so when assessee is not pressing the other grounds relating to cost of improvement, etc.

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• 2021 (8) TMI 81
  Reopening of assessment u/s 147 - Unexplained income of the assessee u/s 68 - HELD THAT:- Documents were available with the ld. Assessing Officer at the time of making original assessment under Section 143(3) - Assessing Officer asked for the detailed explanation of the assessee on these documents during the course of original assessment. Assessee also submitted its explanation in the original assessment proceedings and based on these documents assessee also surrendered certain income during the course of original assessment. Assessing Officer accepted the explanation of the assessee, passed the original assessment order under Section 143(3). Assessing Officer applied his mind on the same set of documents which were examined by him during the course of original assessment proceedings. Therefore it is evident that there is absence of any tangible material coming into his possession of the LD AO after passing of the original assessment order. It is imperative to re-open the case of the assessee that there has to be fresh tangible material in the possession of the AO which was not available during the course of original assessment order. Otherwise the ld. Assessing Officer does not have power to re-open the case of the assessee on same material, when the original assessment was made under Section 143(3) of the Act on the same set of documents. DR also could not show us that what was the fresh tangible material coming into the possession of the Assessing Officer after completion of the assessment - CIT (Appeals) has incorrectly upheld the action of the ld. Assessing Officer in re-opening of the assessment.- Decided in favour of assessee.

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• 2021 (8) TMI 80
  Disallowance u/s 14A - Assessee argued that A.O. has not recorded satisfaction before invoking the provisions of Rule 8D - HELD THAT:- A perusal of assessment order would show that the A.O. has discussed the applicability of the provisions of section 14A of the Act by duly considering the letters filed by the assessee before him. Hence, it is not a case of non-recording of dissatisfaction over the claim made by the assessee, as contended by Ld A.R. It is pertinent to mention here that the Act does not prescribe any particular method for recording satisfaction/dissatisfaction. Hence the satisfaction/dissatisfaction of the AO over the claim made by the assessee should be inferred from the observations made by him in the assessment order. A.O. has made detailed discussion in all the years under consideration on the applicability of sec.14A of the Act, that too, after considering the letter filed by the assessee. Meaning thereby, the assessing officer has shown that he was not satisfied with the claim of the assessee. Accordingly, we do not find any merit on the legal issue urged by the assessee. Accordingly, we reject the legal ground relating to recording of satisfaction/dissatisfaction by the A.O. Disallowance under Rule 8D(2)(ii) - Assessee has floated many sister concerns and there has been transfer of funds (interest free) between the sister concerns. Hence the assessee has shown both interest free funds received from the sister concerns and also advances given to other sister concerns in the above statement. A perusal of the above statement would show that the own funds and interest free funds available with the assessee are in excess of the value of investments in subsidiaries/related concerns and interest free advances given by the assessee. Hence, as per the decision rendered in the case of CIT Vs. Micro Labs Ltd. [ 2016 (4) TMI 219 - KARNATAKA HIGH COURT] no disallowance out of interest expenditure is called for under Rule 8D(2)(ii). Disallowance of other expenses under Rule 8D(2)(iii) - It is the case of the assessee that it has received exempt income only from one/two partnership concerns - as submitted that, for the purpose of computing average value of investments, only those investments which have yielded exempt income should be considered. This contention of the assessee gets support from the decision rendered in the case of Vireet Investments Pvt. Ltd. [ 2017 (6) TMI 1124 - ITAT DELHI] . Accordingly, we set aside the order passed by Ld. CIT(A) on this issue in all the years under consideration and direct the A.O. to recompute disallowances under Rule 8D(2)(iii) by considering only those investments, which have yielded exempt income for the purpose of computing average value of investments. In case the disallowance computed as per above formula works out to less than Rs. 5.00 lakhs in AY 2016-17, then the disallowance shall be made at the amount of Rs. 5.00 lakhs voluntarily disallowed by the assessee in that year.

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• 2021 (8) TMI 78
  Penalty u/s 271(l)(c) - Capital gain on sale of land - nature of land sold - capital asset or agricultural land - HELD THAT:- Reading the words inaccurate and particulars in conjunction, they must mean the details supplied in the return, which are not accurate, not exact or correct, not according to truth or erroneous. In this case, there is no finding that any details supplied by the assessee in its return were found to be incorrect or erroneous or false. Such not being the case, there would be no question of inviting the penalty under s. 271(l)(c). A mere making of the claim, which is not sustainable in law, by itself, will not amount to furnishing inaccurate particulars regarding the income of the assessee. Such claim made in the return cannot amount to the inaccurate particulars. The assessee had furnished all the details of its expenditure as well as income in its return, which details, in themselves, were not found to be inaccurate nor could be viewed as the concealment of income on its part. It was up to the authorities to accept its claim in the return or not. Merely because the assessee had claimed the expenditure, which claim was not accepted or was not acceptable to the Revenue, that by itself would not attract the penalty u/s 271(l)(c). If the contention of the Revenue is accepted then in case of every return where the claim made is not accepted by AO for any reason, the assessee will invite penalty u/s 271(l)(c). That is clearly not the intendment of the legislature.- Decided in favour of assessee.

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• 2021 (8) TMI 76
  Validity of initiation of proceedings u/s 153C - validity of satisfaction note - whether seized documents belong to the assessee? - HELD THAT:- A careful perusal of the satisfaction notes show that the assessing officer has recorded the fact of conducting of search in the premises of the assessees herein and seizure of certain documents - the search in the premises of the assessee is on the basis of warrant issued in the name of Sri B Nagendra. Hence the assessees herein are Other persons , as referred to in sec.153C - In none of the satisfaction notes, the AO has recorded a finding that the seized documents belong to the assessees herein. Hon ble Supreme Court has held in the case of Super Malls Private Limited [ 2020 (3) TMI 361 - SUPREME COURT] that the AO must be conscious and satisfied that the documents seized/recovered from the searched person belonged to the other person. Hence, it is the duty of the AO to apply his mind and should consciously and mandatorily state in the satisfaction note that the seized documents belong to other person . Without recording such a satisfaction, it cannot be presumed that the seized materials belong to other persons , in which case the AO could not have initiated proceedings against the other persons u/s 153C of the Act. Initiation of proceedings u/s 153C of the Act in the instant cases is bad in law - Decided in favour of assessee.

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• 2021 (8) TMI 75
  Deduction claimed during the assessment proceeding by filing a letter - disallowance of warranty expenses as the assessee did not claim the deduction in its return of income - disallowing the additional claim by filing an application made by the assessee during the course of assessment - whether the assessee without making a claim for deduction in its return of income, claim the same without filing revised return of income? - HELD THAT:- It is settled position of law that the Ld. CIT(A) enjoys plenary and co-terminus powers as that of AO and even has the authority to enhance the assessment. So the action of the Ld. CIT(A) to entertain the claim of assessee which was inadvertently omitted by the assessee while filing return of income is in order and is in the spirit of the CBDT Circular No. 114XL 35 of 1955 dated 11.04.1955 which says that the department should not take advantage of the assessee s ignorance and even if the assessee offers income which is not taxable, then the AO is duty bound to tax only the legitimate income. The assessee had been consistently following the same method from AY 2007-08 in respect of expenses relating to warranty and the department has accepted the same. So, taking into consideration these facts also, and coupled with the fact that the AO having accepted that in this relevant assessment year, the assessee has made actual payment out of the provision created for warranty expenses for AY 2014-15, the Ld. CIT(A) has rightly admitted new claim of warranty expenses actually paid by the assessee and allowed the same, which does not require any interference from our part and, therefore, we confirm the same and dismiss the appeal of the revenue.

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• 2021 (8) TMI 74
  Deduction u/s 80IC for the amount of profit determined - HELD THAT:- Admittedly, there is no effect on the tax liability on the assessee on account of the reduction made in the deduction claimed under section 80 IC of the Act - whatever amount of deduction is reduced by allocating the expenses which is resulting the deduction in the amount of profit that will get adjusted in the deduction available to the assessee under section 80 IC of the Act. Thus the entire exercise carried out by the Revenue is tax neutral. Accordingly, we hold that the appeals filed by the Revenue are not maintainable. As there is no demand of tax in th e appeals filed by the Revenue, these appeals are also not maintainable in view of the CBDT Circular No. 17 of 2019 dated 8-8-2019. As per the circular all pending appeals filed by the Revenue are liable to dismissed as a measure for reducing tax litigation where the tax effect does not exceed the prescribed monetary limit which is at Rs. 50 lakhs. Therefore, all the appeals filed by the Revenue are dismissed in limine.

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• 2021 (8) TMI 73
  Nature of expenditure - royalty payment to FCC Co. Ltd., Japan - revenue or capital expenditure - assessee was granted non-exclusive and non-transferable right and license to use IPR, technical know-how and technical information in order to manufacture and sell products and parts in India - whether any right has been given which is for use of technology or it has been given for acquiring the knowhow or transfer of technology; whether any exclusive right has accrued to the licensee or it is purely for use of technology for production and sale? - HELD THAT:- No way it can be inferred that the license agreement gave any exclusive right to the licensee or any technical know-how is being transferred or it will lead to creation of any capital asset in the hands of the licensee giving enduring benefit either during the term of license or in the year of termination of license agreement. FCC Co. Japan even having 50% stake holding with the assessee company will not lead to an inference that there is exclusive or transferrable technical know-how which is being acquired by the assessee company. It is purely for use of technology for manufacturing of clutch assembly for two wheelers and four wheelers and the royalty paid based on sale percentage thereon cannot be a capital expenditure. Either having 50% control or 100% control that will not change the colour of nature of expenditure, because the royalty payment is for manufacturing or sale of manufactured products using the technical information and know-how. Precisely on these facts and circumstances the jurisdictional High Court in series of judgments have held that such a nature of payment of royalty is always a revenue expenditure. Accordingly, we hold that in the facts and circumstances of the case the payment of royalty as revenue expenditure and is allowable. Thus all the appeals of the revenue are dismissed.

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• 2021 (8) TMI 70
  Validity of assessment u/s 153A - According to the assessee, no notice for scrutiny assessment was received within the time permitted under proviso to section 143(2) - HELD THAT:- As rightly contended by the DR, there is no requirement for an assessment made under section 153A of the Act being based on any material seized in the course of search. Further under the second proviso to section 153A pending assessment or re-assessment proceedings in relation to any assessment year falling within the period of six assessment years referred to in section 153A(b) of the Act shall abate.Assessing Officer gets jurisdiction for six years assessment years referred to in section 153A(b) of the Act for making an assessment or re-assessment. It is not the complaint of the assessee that any income, which is already subjected to assessment under section 143(3) or under section 148 of the Act completed prior to the search in respect of six assessment years referred to in section 153A(b) of the Act and in the second proviso to section 153A, has also been included in the assessment framed under section 153A of the Act. In such circumstances the plea of the assessee cannot be accepted. Accordingly, the action of the AO in issuing notice u/s. 153A in these assessment years 2009-10 to 2012-13 is justified. This ground of the assessee is therefore dismissed. As per clause (a) of sub section (1) of section 153A, at the stage of issue of notice u/s 153A, the only requirement is to ask the assessee to file return of income for relevant six years covered by section 153A and after filing of return of income, the assessment to be made by the AO will be assessment or reassessment has to be determined afterwards and not at the time of issue of notice u/s 153A. In this view of the matter, we find no merit in this technical objection raised by the assessee and the same is rejected. Income accrued in India - Status of Non Resident - number of days of stay in India - Whether the status of assessee is resident or non-resident ? - whether the assessee is to be treated as Non Resident or to hold him as Resident as being interpreted by the AO - test for determining the status as Non Resident - HELD THAT:- Determinative test for the status of Non Resident being number of days of stay in India and in assessee s case in these four years, the days of stay being less than 182 days; even after considering the days as recorded by the AO in his order; the status to be applied in this case is to be held as Non Resident as claimed by assessee. Thus, the assessee will be liable to tax on income accrued in India only. The assessee s grounds in this behalf are allowed. Additions u/s. 69C / 28(iv) - Whether payments made by RAL to various persons is for the benefit of the appellant and therefore, the above sums have to be added u/s 28(iv) of the Act or u/s 69C? - HELD THAT:- AO has failed to discharge the burden cast on him to prove that the appellant is the shareholder of RAL. AO has utterly failed to bring on record any tangible and acceptable material to hold that the appellant is the shareholder of RAL or is the beneficial owner of RAL. The AO also unjustly rejected the letter furnished by the Director of RAL that the appellant is not a shareholder. AO having failed to make further enquires to establish that the appellant is the shareholder or beneficial owner of RAL, could not have held so in the assessment order. Further, in our opinion the Appellant and M/s. RAL are Distinct Persons and it cannot be said that the business carried on by RAL is the business carried on by the appellant. There is no doubt that RAL is a separate legal entity, and the appellant is also a separate legal person. The Hon ble Supreme Court in Bacha F. Guzdar [ 1954 (10) TMI 2 - SUPREME COURT] has held that the shareholder and the company are two separate legal entities and the business carried on by the company cannot said to be a business carried on by the shareholder. Hence, the finding of the AO that the appellant will be taxed in respect of the activities carried out by M/s. RAL is totally untenable in law. While discussing the applicability of S.28(iv) of the Act the AO has held that the business of RAL is nothing but the conduct of the business of Shri. Jitendra Virwani. This finding is contrary to the decision of the Hon ble Supreme Court in Bacha F. Guzdar s case. The observations indirectly suggest that the AO has lifted the corporate veil in coming to the above conclusion. It is submitted that the corporate veil cannot be lifted at the whims and fancies of the AO. There has to be cogent and compelling reasons as to why the corporate veil has to be lifted. It cannot be lifted for an asking. The assessing officer has not discharged the burden cast on him to prove that the appellant is the shareholder/beneficial owner of RAL. The quantification of the addition based solely on the amounts mentioned in the Board resolution defies logic and is totally perverse. It is also not known whether the amount mentioned in the Board Resolution has been spent for the purpose mentioned therein. S.28(iv) of the Act is not applicable as the appellant is not carrying on any independent business. S.69C of the Act is not applicable for the very simple reason that the appellant has not incurred the expenditure and the source for various payments is the funds of RAL.No seized material to sustain the addition. Addition of house warming expenses - HELD THAT:- Once the farmhouse is owned by the above mentioned company, the relevant expenditure relating to that farm house to be relating to that company only. Just because the name of the assesse mentioned in the invitation as his house or he s staying in that premises that cannot be reason to treat the expenditure incurred by said company in hands of assesse. The assesse being Chairman and Managing Director got allotted that farmhouse for his stay in India and that cannot be reason to treat the housewarming expenses as deemed income of the assessee and being a Chairman of the company he invited the various dignitaries and customers of the company which is nothing but a sales promotion expenses in the hands of Embassy Knowledge Infrastructure Private Limited and at any stretch of imagination it could be considered as income for assessee u/s 28(iv) of the IT Act. Accordingly the addition is deleted. Farm maintenance charges disallowance - HELD THAT:- The fact that separate disclosure has not been made regarding the existence of farmhouse as an assets is also not relevant. The AO has failed to note that there is no requirement in law to make a separate disclosure. Statutory auditor of the company has not made any adverse comment on that. The guesthouse is disclosed as a fixed asset in the balance sheet of the company. The AO has failed to note the fundamental point that it is the company which owns the asset and therefore, it is its primary responsibility to maintain the asset i.e., the guesthouse. Just because the appellant is staying in the guesthouse it cannot be said that the guesthouse maintenance expenses are for the benefit of the appellant. Therefore the provisions of S.28(iv) of the Act are not applicable.

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• 2021 (8) TMI 69
  Income accrued in India - receipts of the assessee from various activities of hotel management ranging interalia from ticketing, reservation, marketing, advertising, operation, administration, catering, network support services, Starwood Portal Services, imparting of skill sets through trainings etc. - whether taxable as Fee for Technical Services (FTS) within the meaning and scope of section 9 of the Income Tax Act, 1961 as well as Article 12 of the India-US Double Taxation Avoidance Agreement (DTAA) - HELD THAT:- AO has simplicitor made addition in respect of FTS under Article 12 but no limb of Article 12 was given by the Assessing Officer and there is no specification which comes out from the assessment order as contemplated by the Ld. DR during the hearing. The main contentions of the Ld. DR which are totally new in the present assessment year and not presented before either of the Revenue Authorities in Assessment Year 2013-14 as well as 2014-15. These contentions are coming for the first time and are not emerging from the actual assessment order which is contested before this forum. Services in the nature of FTS whether constitutes FTS or not and whether the assessee has PE in India or not, was very well settled and was undisputed as per the submissions and records before the Assessing Officer as well as before the CIT(A). The Revenue is projecting a new case which was not part of assessment order as well as order of the CIT(A). Therefore, the written submissions made by the Ld. AR are just afterthought and cannot be taken into account as the same are not plausible. The issue involved is squarely covered by the Tribunal s decision in Assessment Year 2013-14 in case of Westin Hotel [ 2020 (1) TMI 1484 - ITAT DELHI] as well as by the decision of the Hon ble Delhi High Court in case of Sheraton [ 2009 (1) TMI 27 - DELHI HIGH COURT ] and hence both the appeals of the Revenue are dismissed. The appeals of the Revenue are dismissed.

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• 2021 (8) TMI 68
  Deduction u/s 80P(2)(a)(i) - HELD THAT:- Hon ble Apex Court in the case of Mavilayi Service Co-operative Bank Ltd. and Ors. v. CIT Anr. [ 2021 (1) TMI 488 - SUPREME COURT ] had held that expression Members is not defined under the Income-tax Act, hence, it is necessary to construe the expression Members in section 80P(2)(a)(i) in the light of the definition of that expression as contained in the respective State Co-operative Societies Acts. The Hon ble Apex Court had settled many issues in the decision rendered by it in the case of Mavilayi Service Co-operative Bank Ltd. and Ors. v. CIT Anr. (supra). Facts prevailing in the instant case needs to be examined afresh in the light of the principles enunciated by the Hon ble Apex Court. We are of the view that the issue of deduction u/s 80P(2)(a)(i) of the I.T.Act requires de novo consideration by the A.O. Accordingly, we set aside the orders of the CIT(A) for the assessment years 2015-2016 and 2016-2017 and restore them to the files of the A.O. for fresh consideration. A similar view has been held by the Bangalore Bench of the Tribunal in the case of M/s.Kadaba Sahakari Vyavasayika Bank Ltd.[ 2021 (8) TMI 1 - ITAT BANGALORE] - It is ordered accordingly. Deduction u/s 80P(2)(d) - HELD THAT:- We noticed that the issue raised is an alternative contention to the claim of deduction u/s 80P(2)(d). Since we have already restored the issue of claim of deduction u/s 80P(2)(d) to the files of the A.O., the issue raised in ground No.8 relating to the allowability of expenditure on income assessed as income from other sources is also restored to the files of the A.O.

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• 2021 (8) TMI 67
  Deduction of 15% of sale proceeds in respect of B mines retained towards SPV as an allowable business expenditure - HELD THAT:- The Co-ordinate Bench order of the Tribunal in the case of M/s.Veerabhadrappa Sangappa Co. [ 2020 (12) TMI 1145 - ITAT BANGALORE] on identical facts had allowed deduction of 15% of sale proceeds in respect of B mines retained towards SPV as an allowable business expenditure - we hold that 15% retained in the case of assessee by CEC is an allowable business expenditure. It is ordered accordingly. Amount retained towards SPV for mining and dumping sub-grade material outside the leased area - HELD THAT:- We hold that the amount retained towards SPV for mining and dumping sub-grade material outside the leased area is an allowable expenditure. It is ordered accordingly. Accrual of income - Sales accounted in Asst.Year 2014-2015, but added as income of the year - HELD THAT:- The Tribunal in the case of M/s.Veerabhadrappa Sangappa Co. [ 2020 (12) TMI 1145 - ITAT BANGALORE] had decided that the sale proceeds from disclosed stock accrued to the assessee during the year under consideration and has to be considered for determining income under the head profits and gains of business for the year under consideration. Tribunal held that the income accrued in the relevant assessment year and the taxability cannot be deferred to the subsequent assessment year. The Tribunal also held that the same income cannot be taxed twice and the assessee if moves an appropriate petition, the A.O. shall consider such an application. Difference in receipts as per 26AS treated as unaccounted receipts. (Asst.Year 2013-2014) - HELD THAT:- We direct the A.O. to consider the assessee s reconciliation statement, provided the assessee moves an application that there is no difference in the income disclosed and receipts as per Form No.26AS. With these directions, we dispose of ground No.4 for assessment year 2013-2014. Contribution to the Deputy Commissioner, Government of Karnataka, for Hampi Utsav (Asst. Year 2015-2016) - Allowable business expenditure - HELD THAT:- This issue we noticed is covered in favour of the assessee in assessee s own case for assessment year 2009-2010 in [ 2020 (5) TMI 667 - ITAT BANGALORE] wherein it was held that the contribution made towards Hampi Utsav is an allowable expenditure u/s 37(1) of the I.T.Act.

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• 2021 (8) TMI 66
  TP Adjustment - determining the ALP of the international transaction pertaining to payment for intra group services as Nil - determining ALP in the case of cost contribution agreement - TPO, AO DRP disallowed the expenditure on the ground that the ALP was Nil as no real services had been availed by the assessee and the arrangement was not genuine - whether intra group services are duplication of services for which the AE has already paid in addition to what is paid by way of allocation? - HELD THAT:- The assessee has in the present case filed material before the TPO to demonstrate the nature of services rendered. In the paper book filed before us the index of the paper book gives a description of the service - above description alone would not suffice. As we have already seen the TPO had specifically called upon the assessee to give details of the services rendered and how the same were utilized by the assessee and its relevance for the assessee s business. The evidence filed by the assessee in this regard is in the form of e-mails between parties, reports etc. As to how the evidence filed by the assessee was actually useful in its business has also to be highlighted as the assessee will be the best person to know these facts which are within its knowledge. It is only if such a stand is taken by the assessee can the TPO take the issue forward to arrive at a proper conclusion. In our opinion filing of voluminous correspondence, reports etc., would not be a proper way of discharge of assessee s burden to establish the ALP of expenditure in question. We would therefore direct the assessee to comply with the queries raised by the TPO in his show cause notice which has been set out in his order u/s. 92CA of the Act. We therefore allow the appeal of the assessee for statistical purpose on this issue. The order of the CIT(A) is set aside and the issue is remanded to the TPO/AO for fresh consideration in the light of the directions given above. The TPO/AO will afford opportunity of being heard to the assessee in the set aside proceedings. Disallowance u/s 14A - assessee is engaged in the business of insurance - plea of the assessee that the total income of the assessee has to be computed in the manner laid down under section 44 of the Act and therefore provisions of section 14A of the Act would not be applicable - HELD THAT:- As relying on assessee s own case [ 2021 (2) TMI 179 - ITAT BANGALORE] we hold that the assessee is governed by section 44 of the Act read with first schedule to the Act which has special provisions governing computation of income of insurance business and those provisions do not provide for making any addition to disallowance under section 14A of the Act. The addition made by the Revenue authorities in this regard is therefore directed to be deleted.

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• 2021 (8) TMI 65
  Disallowance u/s 14A - AO was of the opinion that to earn exempt income, the assessee must have incurred some expenditure and accordingly, computed the disallowance u/s 14A of the Act r.w.r 8D - HELD THAT:- As decided in own case [ 2017 (11) TMI 1545 - ITAT DELHI] AO has not even identified any specific item of expense he merely says that explanation of assessee is not correct as huge investment is made - There is no satisfaction of terms of s. 14A read with Rule 8 D. Copy of order for AY 08-09 is also placed as per which no disallowance u/s 14A was made, hence assessee is right in submitting that disallowance is also against the principle of consistency in the absence of any facts. - Decided in favour of assessee.

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• 2021 (8) TMI 64
  Disallowance of 15% of job work charges - AO held that out of nine parties except two Himmatbhai and Dhirubhai, all expenses for remaining seven job works parties are not genuine - CIT(A) while restricting the disallowance to the extent of 15% of total disallowance observed that all the payments to labour job work was paid through cheques. The assessee deducted tax at source while making payment to the job works parties - HELD THAT:- The role of the accountant who had allegedly prepared bills of the job workers and withdrawn the amount from the accounts of the Job workers was examined. CIT(A) find that such bills are signed by the job workers without verifying the details and the payments were withdrawn from the bank by the accountant. None of the worker could produce the original of the bills. CIT(A) after considering the decision of Tribunal in Ashwin Diamonds [ 2012 (5) TMI 847 - ITAT AHMEDABAD] held that in the said case the Tribunal restricted the labour and other expanses to the extent of 10%. But keeping in view, the basic difference in facts of the present case that original of Jangad was not verifiable as the same were not produced and some of the payments from the bankers of the job workers were withdrawn by the accountant of the assessee and for covering such discrepancies the ld CIT(A) restricted the disallowance to the extent of 15% of the total disallowance of labour expenses to meet the end of justice. GP and NP ratio of the assessee is better comparative to other similar business houses. In AY 2012-13, the assessee has shown NP @ 4.27%, however, Thumar Gems has shown NP @ 2.12 %, Jodhani Export @ 3.46% and K.N. Diamond @ 3.22% - we are also of the view that 15% disallowance is reasonable to avoid the possibility of revenue leakage. Hence, we affirm the order of ld CIT(A). Resultantly, the grounds of grounds of appeal raised by the revenue are dismissed.

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• 2021 (8) TMI 59
  Reopening of assessment u/s 147 - exemption u/s 10(23C)(vi) - objection raised to the initiation of proceedings u/s 147 were not responded by AO and no specific order was passed by AO disposing off objection raised by appellant - HELD THAT:- Quite interestingly, in the present case the assessee had filed objection to the reasons on 5.2.2015 and thereafter reiterated the same objection in the subsequent reply dated 23rd February 2015. The above said fact is clear from the reply dated 23rd February 2015 reproduced herein above which clearly mentioned that the assessee had filed the similar reply at the threshold on 5 February 2015. The order of the learned CIT(A), clearly shows that the assessing officer after considering the objections of the assessee had dispose of the objection by reason order dated 11 February 2015. When the assessing officer has dispose of the objection of the assessee vide order dated 11 February 2015 and also in the light of the judgement relied upon by the revenue in the case of Sunil Bhaseen vs Commissioner of Income Tax [ 2008 (11) TMI 665 - HIGH COURT OF PUNJAB AND HARYANA ] we are of the opinion that the ground raised by the assessee is devoid of merit and the same is liable to be dismissed and we accordingly dismiss the same. Exemption u/s 11 - Whether assessee s case was fully covered by amended provisions of section 12A as reproduced on account of addition of proviso to section 12A(2)? - The purpose of insertion of the new proviso in the act was to mitigate the hardship of the society/trust like assessee who were into charitable activities, and on account of some technical reasons, the registration has not been accorded or sought in time. Admittedly the assessee was running the educational institution and was having the requisite approval under section 10(23) for the year prior to the year under consideration and the assessee was granted the registration under section 12 A of the Act with effect from 25.9.2009. In the year under consideration, the assessee was neither having registration under section 12 A of the Act nor was having approval under section 10 (23) of the Act. However, the activities of the assessee continued to be charitable and there was no change in activities of the assessee. In our view the assessee, though was registered on 25.9.2009, however the assessee, was entitled to the benefit of section 11, 12 and 13 of the income tax Act for the assessment year 2007-08 under consideration in terms of the proviso to section 12A Thus the benefit of section 11 and 13 of the income tax Act considering the assessee as charitable institution should be accorded. In the result the 2nd ground raised by the assessee is liable to be allowed. As the assessee is entitled to the benefit of the section 11 and 13 of the Income Tax Act for the AY 2007-08, therefore we deem it appropriate to remand the matter to the file of the assessing officer with the direction to the assessee to produce the books of account before the assessing officer. The assessing officer is directed to give the benefit of section 11 and 13 to the assessee in accordance with law and complete the assessment

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• 2021 (8) TMI 58
  Reopening of assessment u/s 147 - protective addition and unexplained expenditure on account of brokerage - HELD THAT:- Amount mentioned in the income escaping assessment is incorrect, because only Rs. 4.63 crore was invested in Prakash Industries Ltd. during the relevant assessment year, and therefore, entire addition could not have been made u/s. 68 in this year. Another intriguing point is that protective addition was made in the hands of the appellant vide order dated 31.03.2015 even before the substantive addition was made in the hands of Prakash Industries Ltd. in order passed on 31.03.2016. Neither at the time of recording the reasons, nor at the time of framing the assessment, AO was nt sure about whose income has escaped assessment. We do not find any reason to interefere with the findings of the CIT (A) that reopening for resorting to make protective assessment cannot be upheld - AO has also not even verified the records that the alleged escapement of income of Rs. 8.32 crore was received in this assessment year or not. Thus, there is a fallacy in the reasons recorded itself, and therefore, we uphold the order of ld. CIT (A) in quashing the order passed by the Assessing Officer u/s.147. - Appeal of the Revenue is dismissed.

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• 2021 (8) TMI 57
  Validity of assessment u/s 153A - addition made under section 153C as barred by limitation - Calculation of six preceding assessment years - Addition u/s 68 - unexplained cash credits - HELD THAT:- Having gone through the facts of the case and applicable law, we would tend to agree with the appellant. The determining date for determination of six preceding assessment years that would lay upon under section 153C read with section 153A of the Act would decidedly be the date of handing over of the documents. Here the satisfaction note recorded by the A.O, of M/s Prakash Industries Ltd. is 19.9.2014 as well as by the A.O. of the appellant is on 19.9.2014 which is to be taken as the date of handing over of documents and date. Six preceding assessment years begin with A.Y. 2009-10 and end with A.Y. 2014-15. It would be the date of handing over the documents or date of recording of satisfaction will be the date for determining the date for calculating the preceeding six assessment years is well settled by the judgement of Hon ble Delhi High Court in the case of RRJ Securities [ 2015 (11) TMI 19 - DELHI HIGH COURT] We have to hold that no assessment under section 153C could have been made in respect of A.Y. 2008-09. It was clearly barred by limitation. Hence, there is no option but to annul the assessment and all consequent additions made in the assessment also stand deleted. - Decided in favour of assessee.

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• 2021 (8) TMI 56
  Validity of assessment u/s 153A - addition made under section 153C as barred by limitation - Calculation of six preceding assessment years - Addition u/s 68 - HELD THAT:- The determining date for determination of six preceding assessment years that would lay upon under section 153C read with section 153A of the Act would decidedly be the date of handing over of the documents. Here the satisfaction note recorded by the A.O, of M/s Prakash Industries Ltd. is 12.12.2015, as well as by the A.O. of the appellant is on 12.12.2015, which is to be taken as the date of handing over of documents and date. Six preceding assessment years begin with A.Y. 2010-11 and end with A.Y. 2015-16. It would be the date of handing over the documents or date of recording of satisfaction will be the date for determining the date for calculating the preceeding six assessment years is well settled by the judgement of Hon ble Delhi High Court in the case of RRJ Securities [ 2015 (11) TMI 19 - DELHI HIGH COURT] We have to hold that no assessment under section 153C could have been made in respect of A.Y. 2008-09. It was clearly barred by limitation. Hence, there is no option but to annul the assessment and all consequent additions made in the assessment also stand deleted. - Decided in favour of assessee.

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• 2021 (8) TMI 55
  Set off of accumulated unabsorbed losses - scheme of amalagamtion conceived - Shareholding pattern post amalgamation - assessee company was holding only 26% percent of equity shares as on 01.04.2013 which is the appointed dated as per the scheme approved by the Hon ble High Court of Madras - A O held that it is evident that the precondition for amalgamation , i.e. shareholders holding of not less than three-fourths in value of the shares in the amalgamating company becoming shareholders of the amalgamated company was not satisfied, thus assessee is not entitled to the claim of carry forward and set off of loss u/s Sec. 72A - HELD THAT:- In this case, the scheme of amalgamation has been approved by the Hon ble High Court of Judicature at Madras under the Companies Act, 1956 w.e.f. 01.04.2013. It is settled law that once amalgamation is approved, the amalgamating company ceasing to exist, it can t be regarded as a person u/s. 2(31) of the Act against whom assessment proceedings can be initiated or an order of assessment passed. Therefore, appointed date, 01.04.2013, is crucial in this case. As on 31.03.2013, the assessee company had only 26% of equity shares in the transferor company, and therefore, the provisions of section 2 (1B) r.w.s 72A of the Income Tax Act have not been complied with by the assessee. Since, the assessee company did not have 3/4th of the shares of the transferor company as on 31.03.2013, the appointed date being 01.04.2013, the assessee is not entitled to the claim of carry forward and the set off of loss of the transferor company as on 31.03.2013. The corresponding grounds of the assessee fail.

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• Customs

• 2021 (8) TMI 91
  Seeking enlargement on anticipatory bail - smuggling - export of Red Sanders Logs of various grades in the guise of cobble stones - petitioner submitted that the petitioner is not aware of the stuffing of the red sanders logs along with the cobble stones and that he had signed in the shipping bills purely on the basis of the trust, which he reposed in the third party - HELD THAT:- It is the admitted case of the petitioner even that he had signed the shipping bills relating to the shipment of cobble stones, for which stuffing of the same into the container was done by a third party. However, it is to be pointed out that the petitioner has not divulged the name of the third party, who had done the stuffing. The shipping bills were, thereafter, collected by the petitioner for submission once the container was sealed by the CFS - Opening of the container in the presence of the CFS revealed the red sanders logs, which were found stuffed along with the cobble stones. It is not in dispute that the owner of the materials, which were found in the container, as per the shipping bills, is the petitioner. However, the only claim of the petitioner is that he had signed the shipping bills, but was not aware of what was stuffed inside the container by the stuffing agent and he was under the premise that the stuff inside the container was cobble stones. If the stand of the petitioner that he is in no way connected with the prohibited seized material, the course that is open to the petitioner is to subject himself for enquiry and give all the details before the respondent for them to find out the truth of the matter and nab the culprit. This Court cannot lose sight of the fact that the petitioner having not revealed any information about the said Penchiliah, who is said to be the source of the red sanders logs, the respondent must conduct a full fledged investigation to find out the real culprit in the issue and at this point of time, allowing the prayer of the petitioner for anticipatory bail, would work hardship to the respondent in conducting the investigation as the interference by the petitioner in the investigation by the respondent cannot be ruled out. Therefore, acceding to the request of the petitioner for enlarging him on anticipatory bail at this point of time would be detrimental to the investigative process, this Court is not inclined to accede to the request of the petitioner. Petition dismissed.

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• Corporate Laws

• 2021 (8) TMI 62
  Approval of Scheme of Amalgamation - section 230-232 of Companies Act, 2013, and other applicable provisions of the Companies Act, 2013 read with Companies (Compromises, Arrangements and Amalgamations) Rules, 2016 - HELD THAT:- The Board of Directors of the Applicant Company vide meeting held on 21st December 2020 has unanimously approved the proposed Scheme as contemplated above and copies of resolutions passed thereon have been placed on record by the Transferor company - The Appointed date as specified in the Scheme is 1st April 2020, subject to the directions of this Tribunal. The Statutory Auditors of the Transferor Company have examined the Scheme in terms of provisions of Sec. 232 of Companies Act, 2013 and the rules made thereunder and certified that the Accounting Standards are in compliance with Section 133 of the Companies Act, 2013. The scheme is approved subject to directions issued - application allowed.

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• 2021 (8) TMI 61
  Approval of scheme of amalgamation - seeking orders and directions with regard to separate meetings of shareholders and creditors in connection with the Scheme of Amalgamation - Section 230(1) read with Section 232(1) of the Companies Act, 2013 - HELD THAT:- Directions regarding holding and convening of various meetings issued - directions regarding issuance of SCN also issued. The scheme is approved - application allowed.

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• 2021 (8) TMI 60
  Sanction of the Scheme of Amalgamation - Section 230(6) read with Section 232(3) of the Companies Act, 2013 - HELD THAT:- There appears to be no impediment in sanctioning the present Scheme. Consequently sanction is hereby granted to the Scheme under section 230 232 of the Companies Act, 2013 upon the directions imposed. Application allowed.

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• Insolvency & Bankruptcy

• 2021 (8) TMI 63
  Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial Creditors - adjudication of quantum of the liability - scope of enquiry in an application under Section 7 of I B code - existence of debt and dispute or not - HELD THAT:- The loan facilities were restructured in the year 2015 after consolidation of the accounts and accordingly, the Corporate Debtor executed all necessary loan documents in favour of the consortium of banks in pursuance of restructuring of the loan facilities. It is very surprising that after restructuring of the facilities and execution of the documents, and after committing default, the Corporate Debtor started demanding calculation and statement of accounts down from the year 2003 which is not legally permissible. Even otherwise adjudication of quantum of the liability is beyond the scope of enquiry in an application under Section 7 of the code. It is not the case of the Corporate Debtor that there was no debt or default in this case. Apart from that the Corporate Debtor also gave an OTS offer of repayment of 4 crores as full and final settlement vide their reply notice sent through their advocate without prejudice to their rights and contentions. Therefore, it is very clear from the above feeble contest raised by the Corporate Debtor that the debt and default are clearly established in this case and there is no merit in the contention raised by the Corporate Debtor. There are no valid grounds warranting the rejection of the above Company Petition as the debt and default are clearly established and the debt is also within limitation. The present petition is complete in all respects - petition admitted - moratorium declared.

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• 2021 (8) TMI 54
  Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - existence of debt and dispute or not - reply to the demand notice - HELD THAT:- In its reply to the Demand notice dated 02.12.2019, the Corporate Debtor does not dispute the liability towards Operational Creditor but sought for time to pay its debt, the Corporate Debtor is not in a position to pay of its liability - On the date of final hearing Counsel for the Corporate Debtor submitted that they are willing to settle the issue and ready to make entire payment within a period of Two years. The proposal of the Corporate Debtor is not acceptable to the Operational Creditor. The application made by the Operational Creditor is complete in all respects as required by law. It clearly shows that the Corporate Debtor is in default of a debt due and payable, and the default is in excess of minimum amount of one lakh rupees stipulated under section 4(1) of the IBC. Therefore, the debt and default stands established and there is no pre-existing dispute brought on record. Hence, there is no reason to deny the admission of the Petition. In view of this, Adjudicating Authority admits this Petition and orders initiation of CIRP against the Corporate Debtor. Petition admitted - moratorium declared.

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• 2021 (8) TMI 53
  Seeking Liquidation of Corporate Debtor - submission of application is that no prejudice is caused in the event an order for commencement of liquidation of the Corporate Debtor is passed by this Tribunal - Section 33 of Insolvency and Bankruptcy Code, 2016 - HELD THAT:- The Process of Liquidation of the Corporate Debtor Tribhovandas Bhimji Zaveri Sons Retail Private Limited shall commence as per the Chapter III of the I B Code from date of this Order. Application allowed.

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• 2021 (8) TMI 52
  Seeking approval of the Resolution Plan - Section 30(6) and 31(1) of the Insolvency and Bankruptcy Code, 2016 - HELD THAT:- In A. Sashidhar v. Indian Overseas Bank Others [ 2019 (2) TMI 1043 - SUPREME COURT ] the Hon ble Apex Court held that if the CoC had approved the Resolution Plan by requisite percent of voting share, then as per section 30(6) of the Code, it is imperative for the Resolution Professional to submit the same to the Adjudicating Authority (NCLT). On receipt of such a proposal, the Adjudicating Authority is required to satisfy itself that the Resolution Plan as approved by CoC meets the requirements specified in Section 30(2). In CoC of Essar Steel [ 2019 (11) TMI 731 - SUPREME COURT ] the Hon ble Apex Court clearly laid down that the Adjudicating Authority would not have power to modify the Resolution Plan which the CoC in their commercial wisdom have approved. The law thus settled, the instant Resolution Plan meets the requirements of Section 30(2) of the Code and Regulations 37, 38, 38(1A) and 39(4) of the Regulations. The Resolution Plan is not in contravention of any of the provisions of Section 29A of the Code and is in accordance with law - Application allowed.

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• PMLA

• 2021 (8) TMI 85
  Illegal quarrying - quarrying illegally in Government lands which were not allotted to appellant - scheduled offence or not - inadequate evidence/conclusion - case of petitioners is that when the report submitted by Mr. Sagayam, I.A.S. (who was appointed to conduct an enquiry into the allegations) itself has not been disclosed or made public and when the said report is also being contested by the licencees, the foundation for the present prosecution under the PML Act is weak - HELD THAT:- The issue decided by this Bench very recently in M. SURESH KHATRI AND M/S. MOHANLAL JEWELLERS PVT. LTD. VERSUS DIRECTORATE OF ENFORCEMENT DEPUTY DIRECTOR GOVERNMENT OF INDIA MINISTRY OF FINANCE [ 2021 (6) TMI 990 - MADRAS HIGH COURT] where it was held that The prosecution has to prove the offence, by adducing evidence and this opportunity has to be given to the prosecution in this case too. Petition dismissed.

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• Service Tax

• 2021 (8) TMI 83
  Refund claim of pre-deposit - Applicability of normal period of limitation - whether the normal period of limitation of 18 months is to be applied or 30 months to be applied for demanding service tax for the period 2014-2015 when show-cause notice is issued after 14/05/2016? - period from April 2013 to March 2015 - HELD THAT:- This issue is squarely covered by the decision of the Division Bench of this Tribunal in the case of M/S AVECO TECHNOLOGIES PVT. LTD. VERSUS COMMISSIONER OF CUSTOMS, HYDERABAD [ 2018 (2) TMI 1269 - CESTAT HYDERABAD] where it was held that The Finance Act, 2016 does not contain any provision according to a retrospective operation to the said Act. As such, demands which had already become irrecoverable as on 13-5-2015 could not, by virtue of the amendment with effect from 14-5-2016 get resurrected or revived. It is found that on the date of amendment which was effective from 14/05/2016, the limitation period for April 2014 to September 2014 has already lapsed and the subsequent amendment cannot give life to the dead case as held by the Division Bench of this Tribunal in Aveco Technologies Pvt. Ltd. The confirmation of demand for the period April 2014 to September 2014 is bad in law - as far as demand for the period October 2014 to March 2015, the matter is remanded back to the original authority for quantification of the demand and adjusting the demand against the mandatory predeposit and after doing the same, the remaining amount will be refunded to the appellant, if any - appeal allowed in part and part matter on remand.

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• Central Excise

• 2021 (8) TMI 84
  Refund of Excise Duty paid - necessary documents provided or not to prove the case, that the refund claim is barred by time limitation - sufficient opportunity of hearing not provided to the appellant - violation of principles of natural justice - HELD THAT:- The original authority has rejected the refund observing that the appellant has not produced necessary documents to process the refund. It is stated in the said order that the appellant has not submitted documents to establish that the refund is not hit by unjust enrichment. Countering this observation in the O-I-O, Ld. Consultant has argued that the appellant had filed all the necessary documents including the GRN before the original authority; that the refund was rejected by the original authority without issuing a show cause notice or granting an opportunity of personal hearing. In para-8 of the impugned order, the Commissioner (Appeals) has correctly taken note of all these facts and circumstances of the case. The matter has been thus remanded to the original authority for reprocessing the refund claim after granting the appellant sufficient opportunity to produce documents and also for personal hearing - Appeal allowed by way of remand.

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• 2021 (8) TMI 79
  Refund of CENVAT Credit - Relevant Date - Time limitation - refund claim rejected on the ground of amended Notification 5/2006-CE(NT) application of provision of section 11B of Central Excise Act, 1944 was inserted and applicability of Rule 5 of CCR - whether the refund under Rule 5 of Cenvat Credit Rules 2004 shall be governed by Provision of Section 11B of the Central Excise Act, 1944? HELD THAT:- From para 6 of N/N. 5/2006-CE (NT), it is clear that refund under Rule 5 must be filed before expiry of period specified in section 11B of the Central Excise Act, 1944, as there is specific mention. From the definition of relevant date , it can be seen that sub clause (a) of Clause (B) of definition of relevant date clearly covers the refund of duty paid in respect of the excisable material used in the manufacture of export goods. In the present case, the refund under Rule 5 is also in respect of the duty paid on the material used in the manufacture of export goods. Therefore, it cannot be said that there is no mention about the relevant date in respect of refund of the nature in the present case. This Tribunal in M/S. SPECTRAMIX PLASTICS VERSUS COMMISSIONER OF CENTRAL EXCISE ST., VAPI [ 2014 (5) TMI 682 - CESTAT AHMEDABAD] clearly made observation that refund claim in terms of Notification No. 5/2006-CE (NT) issued under Rule 5 of Cenvat Credit Rules, 2004 is subject to one year time bar as prescribed under Section 11B of Central Excise Act, 1944. The refund of the appellant is correctly rejected on time bar as the same was not filed within the stipulated period of one year - Appeal dismissed.

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• 2021 (8) TMI 77
  Reversal of CENVAT Credit - Exempted Goods - empty packaging material of inputs received for use in the manufacture of final product - Rule 6(3) of Cenvat Credit Rules - invocation of Explanation (1) (2) of Rule 6(1) of Cenvat Credit Rules - HELD THAT:- The Show Cause Notice was issued demanding the amount equal to 6% of the value of packaging material cleared by the appellant. The said packaging material is nothing but an empty packaging material in which input was received by the appellant. Therefore, it is the fact that the said packaging material is not arising out of manufacture process of any final product. On plain reading of the definition of exempted goods as well as final product, it is clear that the said goods should be arising out of the manufacturing activity even though after that the said goods may or may not be excisable goods - In the present case, the packaging material since not arising out of any manufacturing process the same will not fall either under Sub-clause (d) or sub-clause (h) of Rule 2 of Cenvat Credit Rules, 2004. As regard explanation (2), it is only for the purpose of value of the non-excisable goods to calculate the payable amount under Rule 6(3). Since the goods does not fall under the explanation (1), explanation (2) will obviously not be applicable therefore, the charges made in the Show Cause Notice are not tenable. An identical case has been considered by the Hon ble Supreme Court in the case of COMMISSIONER OF CENTRAL EXCISE VERSUS WEST COAST INDUSTRIAL GASES LTD. [ 2003 (4) TMI 110 - SUPREME COURT] , where it was held that the empty packaging material wherein, the input was received, the removal of the same will not attract any duty. The demand under Rule 6(3) is not sustainable - Appeal allowed - decided in favor of appellant.

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• 2021 (8) TMI 72
  Refund claim for the amount of duty interest penalty paid during investigation of demand case - rejection on the ground of time bar - ex-parte order - non consideration of application for restoration of appeal - principles of natural justice - HELD THAT:- It is clear that the amount paid by the appellant is indeed Excise duty, interest and penalty. Therefore, the refund of the same is clearly governed by the proviso of Section 11B of the Central Excise Act, 1944. The present refund claim is arising of consequential to the dropping of demand by the tribunal - it is clear that the amount which is paid prior to or after the adjudication of demand case will become refundable only after any order decree in court or tribunal. In section 11B, as regard relevant date in the case of the refund of any amount paid, the relevant date is from the date of the order by which such demand is dropped. In the present case one year period is applicable from the dropping of demand by this tribunal in the demand case. The appellant has admittedly filed the refund after one year from the passing of the tribunal order whereby demand was set aside. Therefore, in terms of the sub clause (ec) of clause (B) of section 11B, the refund claim filed after one year from the relevant date is clearly time bar. If any assessee pay duty, interest and 25% penalty no notice needs to be issued and this benefit was explicitly availed by the appellant as they have made the submission before the Adjudicating Authority in the submission dated 26.12.2019 and 20.07.2010 which was recorded in the Order-In Original. Since appellant have availed this benefit it is clear that the appellant has consciously paid the duty, interest and 25% penalty. Hence it cannot be said that the amount paid is not duty and Pre-deposit. This is a case of refund of duty and interest and the same is governed by Section 11B - Application being time bar not admissible to the appellant - appeal dismissed.

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• 2021 (8) TMI 71
  Clandestine removal - alleged excess stock of 102.415M.Tons of MS TMT Bars - excess quantity remained unaccounted due to failure of the concerned person - Confiscation - penalty - HELD THAT:- The Central Excise Officers during the visit recorded the panchnama in respect of physical stock of the finished goods. The panchnama started at 11.45 am on 13.01.2015 and lasted on 14.01.2015 at 6.30 am. I find that the officers have not taken into account the production which was continuing during their presence on 13.01.2015 till 14.01.2015 at 6.30 am. From the RG-1 Register it is evident that the production was continuously going all the days till 12.01.2015. Therefore, it cannot be presumed that there is no production on 13.01.2015 - it is obvious that whatever production have taken place from 13.01.2015 at 11.45 am till 14.01.2015 at 6.30 am the same could not have been entered in RG-1 Register as the same was taken by the officer with them. The said day s production was recorded by the appellant in new RG-1 Register. There is no iota of evidence that the appellant has any intention to clear suchalleged excess stock without payment of duty. In the Order-In Original the same day s production was not doubted. In this undisputed fact, this is not a case of non accountal of excisable goods as that accounting of the same day s production was supposed to be made on 14.01.2015 which was done by the appellant in their new Register, since the RG-1 Register which was available on 13.01.2015 was taken over by the officer. In these circumstances, the goods are not liable for confiscation. Appeal allowed - decided in favor of appellant.

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• CST, VAT & Sales Tax

• 2021 (8) TMI 90
  Validity of assessment order - Period of limitation - Power to extend the time limit for passing the assessment order - order is passed after lapse of more than six months to the date of completion of the Audit Visit Report (AVR) on 20th June, 2012 - periods from 2009-10 to 2011- 12 - grant of ex post facto extension of limitation by CST - proviso to Section 42 (6) of the Odhisa VAT Act - HELD THAT:- It is seen that Audit Assessment , which is triggered by the Audit Visit Report in terms of Section 41 (4) of the OVAT Act is different from a regular assessment as it is meant to enable the department to revisit the assessment for previous years on detection of suppression of purchases or sales or both, erroneous claims of deductions including input tax credit, evasion of tax or contravention of any provision of the Act affecting the tax liability of the dealer. - The non-obstante clause at the beginning of Section 42 (6) of the OVAT Act indicates the importance of completion of proceedings in a time bound manner. Section 42 (6) mandates the assessment should be completed within a period of six months from the date of receipt of the Audit Visit Report. In the present case, there is no dispute at all that the notice in Form VAT-306 was served on the Petitioner on 1st October, 2012. The six months period from that date ended on 31st March, 2013. The assessment was therefore required to be completed on or before 31st March, 2013. Viewed from another angle, the CST was presented with a fait accompli by the time he applied his mind to whether extension should be granted at all or not. There was already an assessment order passed on 15th May 2003 by the time he had to decide on the question of extension. The language of the proviso to Section 42 (6) requires the CST to assess the merit of each such case. It is not a case of automatic extension of time. The Court is unable to sustain the validity of the impugned assessment order dated 15th May 2013, which, on the date it was passed, was in violation of Section 42(6) of the OVAT Act - Petition allowed.

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• 2021 (8) TMI 86
  Validity of assessment order - penalty order under Section 53(12) of the KVAT Act - genuineness of the document - valid transit pass present or not - HELD THAT:- It is seen that 7 transit passes were obtained by the driver of the vehicles in question from entry check post at Shiradon, Bijapur stating that the goods were in transit from Delhi to Salem through Karnataka. The Commercial Tax Officer had called upon for the confirmation of the details of consigner and consignee and on investigation with the authorities of the Delhi Trade Tax, they confirmed that M/s. Sushil Trading Company was non-existent while registration of M/s. King Sales Corporation was cancelled on 04.08.2014. The petitioner could not dispute the above factual aspect. The petitioner could also not dispute the fact that the description, Brand and value of the actual goods transported did not correspond with the declarations made in the invoice and the lorry receipts. In so far as the contention that the respondent authorities were not empowered to check the goods that were in transit inside the State of Karnataka, it is relevant to note that Section 53 of the KVAT Act is devised to check cases of evasion of tax by erecting check posts or barriers at such places that they deem fit - In the present case, the petitioner being a transporter is deemed to be the owner of the taxable goods and is bound to comply with all the requirements of the Act of 2003. It is not the case of the petitioner that the consignor and the consignee are existent dealers and the consignment itself did not match with the documents. Therefore, there is no reason to doubt the action of the respondents in construing the consignment in question as an attempt to evade the tax. These revision petitions lack merit and are therefore rejected.

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• Indian Laws

• 2021 (8) TMI 87
  Dishonor of Cheque - insufficiency of funds - non - impleading of the partnership firm as accused in the complaint case - scope for reappreciation of evidences on record or not - authorization letter to file Complaint Cases - HELD THAT:- The authorization letter has been filed in the records of Complaint Case No. 86/2006, but it failed to consider that the same has not been exhibited and brought on record as the complainant did not produce the P.W-1 on recall in Complaint Case No. 86/2006 in spite of aforesaid opportunity granted by the learned Judicial Commissioner, Ranchi and the accused did not have any opportunity to cross examine P.W-1 on the point of authorization to represent the complainant company. This lacunae could not be filled up by referring to the authorization letter simply filed in the record of Complaint Case No. 86/2006. Accordingly, the appellate court s judgement also cannot be sustained in the eyes of law as the same suffers from perversity on this point - decided in favour of the accused/petitioner. Non - impleading of the partnership firm as accused in the complaint case - HELD THAT:- It is an admitted case on record that the cheques in both the complaint cases were issued under the signature of the accused, in the capacity of the partner of the partnership firm namely Mehta Transport Company i.e. for and on behalf of the said partnership firm; the Legal Notices in connection with the bouncing of cheques were also issued in the name of the accused being the partner of the said firm; the complaint case was also filed against the accused being the partner of the said firm. It is also an admitted fact on record that the specific case of the complainant in both the cases was that the accused being partner of Mehta Transport Company and on behalf of the partnership firm entered into hire purchase agreement for purchase of vehicle and the loan was to the extent of Rs. 12,00,000/- was extended to the partnership firm. In discharge of the said debt, the accused handed over two cheques in favour of the complainant which had bounced on account of insufficient fund . The cheques were issued from the account of the said partnership firm and the petitioner had signed the cheques as a partner - It is also not in dispute that the partnership firm has not been made accused in both the complaint cases and cognizance of the offence was taken only under Section 138 of the Negotiable Instruments Act, 1881. In the absence of the partnership firm being arraigned as an accused, both the complaint petitions against the petitioner (partner of the firm) for offence under Section 138 of the Negotiable Instruments Act, 1881 were not maintainable. No bar or impediment, legal or otherwise, has been reflected from the records of the two cases in making the partnership firm as an accused in the complaint cases and accordingly the doctrine of lex non cogit ad impossibilia is not attracted. The petitioner had signed the cheque in both the cases as a partner of the partnership firm, for and on its behalf. It is held that it was imperative on the part of the complainant company to make the partnership firm of the accused as a co-accused in the complaint cases and on account of failure to do so, the petitioner could not be convicted for offence under Section 138 of Negotiable Instruments Act, 1881 as complaint only against the petitioner in both the cases was itself not maintainable - Decided in favor of petitioner. The petitioner is discharged from his liabilities under the bail bonds furnished by him - petition allowed.

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