TMI Tax Updates - e-Newsletter
August 10, 2022
Case Laws in this Newsletter:
GST
Income Tax
Benami Property
Customs
Corporate Laws
Securities / SEBI
Insolvency & Bankruptcy
Central Excise
CST, VAT & Sales Tax
Indian Laws
Highlights / Catch Notes
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GST:
Issuance of separate SCN with respect to same search and seizure operation - two proceedings by two authorities of GST department - it is unbelievable that two (not one), authority of the Mobile Squad of Commercial Tax Department chose to act with negligence - the officers are accountable for their acts. Therefore, let this order be communicated to the Commissioner Commercial Tax UP to look into the matter, call for explanation and take appropriate action commensurate to the misconduct, if any, that may be found committed by the erring officers and to take consequential and corrective action to avoid such occurrences, in future - HC
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GST:
Inadvertent error in applying for the e-way bill - There appears no doubt to the genuineness of the explanation furnished by the assessee that the mistake was inadvertent. Once the assessee had disclosed the place of shipment at Haridwar, Uttarkhand, there survived no occasion to fill up the place of destination at Madhya Pradesh with the pin code of the petitioner's office at Katni, Madhya Pradesh. Clearly, the mistake was bonafide as sometime occurs - Demand and penalty set aside - HC
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GST:
Rejection of revocation of the cancellation of the registration - the arbitrary exercise of power cancelling the registration in the manner in which it has been done has not only adversely affected the petitioner, but has also adversely affected the revenues that could have flown to the coffers of GST in case the petitioner was permitted to carry out the commercial activities. The actions are clearly not in consonance with the ease of doing business, which is being promoted at all levels. For the manner in which the petitioner has been harassed since 20.05.2020, the State Government is liable to pay a cost of Rs.50,000/- to the petitioner - HC
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GST:
Validity of summary SCN - The notices under section 73(1) of the Act of 2017 at Annexure-1 of the respective writ petition is in the standard format and neither any particulars have been struck off, nor specific contravention has been indicated to enable the petitioner to furnish a proper reply to defend itself. The show-cause notices can therefore, be termed as vague. - The impugned show-cause notices and Summary of the Show Cause Notice and Summary of Orders contained in Form GST DRC-07 are quashed - HC
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GST:
Right to file an appeal - whether a person who opts to make payment in terms of Clause (a) of Sub-Section (1) of Section 129 of the CGST Act / SGST Act to get goods/conveyance/documents detained or seized in proceedings under Section 129 released is deprived of his right to file an appeal against the proceedings - The fact that the system does not generate a demand or that the system does not contemplate the filing of an appeal without a demand does not mean that the intention of the legislature was different. - HC
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GST:
GST on works contract - estimation of value - contract period was extended beyond 01.07.2017 - the task of determining the differential GST, i.e. segregating labour, material, etc. is of the Authority vested with power under the CGST/OGST Act and not within the domain of any other. Such segregation can be made keeping in view inter alia Revised Guidelines dated 10th December 2018 issued by the Finance Department, Government of Odisha - The question whether, in fact, any amount is owed to the Petitioner by Opposite Parties on account of GST deducted from its bills or vice versa, has become a highly disputed question of fact. The claim of the Petitioner ultimately, in simple terms, is one for money which it seeks as reimbursement from Opposite Parties. It is not possible for this Court in its writ jurisdiction under Article 226 of the Constitution to calculate on a case to case basis - writ petition dismissed - HC
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GST:
Seeking grant of anticipatory bail - allegation of availment of fraudulent ITC from fictitious firms and passing on the said fraudulent ITC with an intention to evade payment of GST - The allegations against the applicant/accused are grave and serious in nature. Investigation is at the initial stage. The applicant/accused is the main conspirator and beneficiary of the alleged cheated amount. The custodial interrogation of the applicant/accused is required. In view of aforesaid facts and circumstances, anticipatory bail cannot be granted - DSC
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Income Tax:
Gift u/s 56(2) (vii) - scope of term relatives u/s 2(41) - Grant of exemption from income tax on gifts received - relatives as defined under Section 2(g) of the Senior Citizens Act - To be treated at par with ‘relative’ under Section 2(41) and Section 56 of the Income Tax Act, 1961 or not - a statutory definition in one context cannot be imported in another Act especially when the two Acts define the same term differently. - HC
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Income Tax:
Waiver of interest under Section 234B and 234C - Non deduction of TDS by the payer - prior to the financial year 2012-13, the amount of income-tax which is deductible or collectible at source can be reduced by the assessee while calculating advance tax, the Respondent cannot be held to have defaulted in payment of its advance tax liability. There is no doubt that the position has changed since the financial year 2012-13, in view of the proviso to Section 209 (1) (d), pursuant to which if the assessee receives any amount, including the tax deductible at source on such amount, the assessee cannot reduce such tax while computing its advance tax liability. - the claim of the assessees stands vindicated. - HC
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Income Tax:
TP Adjustment - selection of MAM - Tribunal held that resale price method adopted by the assessee in determining its ALP of international transactions with AE, is not applicable, while remanding the matter back to the TPO for fresh determination - Transfer Pricing Officer is directed to redo the entire process of determination of ALP of international transactions with AE, without being influenced by any observation made by the Tribunal and render an independent finding with regard to the issues involved herein - HC
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Income Tax:
Application before the settlement commission - The writ petition was pending when the Settlement Commission was abolished and Interim Board was brought into operation. This court is of the view that the restrictive circumstances under which an Interim Board can entertain an application, is applicable only when an application is filed afresh or pending and not applicable to cases where the High Court in exercise of its powers under Article 226 of the Constitution of India, set asides an earlier order and remands back the matter for fresh consideration. The powers of the High Court which emanate from the Constitution cannot be curtailed by a law made by the legislature, such law being subordinate to the Constitution. - Interim Board directed to consider and dispose of the application - HC
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Income Tax:
Revision u/s 263 - Capital gain on property of the respective HUFs or respective individual assessee's - Merely because land is divided, with a view to avoid family dispute, by the father between himself and his two sons, would not by itself make it a family property. No case, either on facts or in law is made out. To us, it is no more than a father dividing his property, self-acquired as well as that bequeathed to him by his father, between his two sons, also retaining a part for himself (5.45 acres). In short, the claim is without basis and wholly unproved; in fact, fatuous. - AT
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Income Tax:
Capital capital computation - expense deductible u/s 48 - payment made to a person who helped the assessee in obtaining favorable decision in her favour - it is apparently clear that right from the beginning of the agreement with that person that all the expenses involved in the process of obtaining vacant possession by evicting the Indian Navy would be borne by that person only - deduction allowed as cost of transfer - AT
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Corporate Law:
Permanent stay of winding up proceedings - Company failed to pay the debts - going concert - BIFR sanctioned the scheme of revival - This court cannot lose sight of the settled legal position that winding up should be resorted to as the last resort after exhausting all remedies. In the facts of this case and especially considering the fact that the Company is operating as a going concern, it is not in the interest of justice to direct winding up of the company. It is worth noting that a large sum of Rs. 170 crores is lying in deposit with the Registrar of this Court and possibility of some of the contesting parties having an eye on it cannot be ruled out. Hence, every effort is required to be made to ensure the amount is utilized for rightful purposes. - HC
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Direct Taxes:
Benami transactions - matter was heard by one authority and the judgment was pronounced by another authority - A writ is maintainable when there is a right. In the absence of any right, a writ cannot be passed. The Appellant has not been able to demonstrate violation of any right or breach of any notification which states that an Authority should pronounce the judgment in a matter heard by it even after the person, who heard the matter, has ceased to occupy the chair. - Petition dismissed - HC
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Indian Laws:
Dishonor of Cheque - the complaint was dismissed on the ground that it has been filed prematurely - the complaint which has not proceeded further in view of the fact that the same has been found to have been filed prematurely, a fresh complaint may be filed and in such cases the benefit of the provision contained under Section 142 (b) of The Negotiable Instrument Act, may also be granted to the complainant whose complaint has been dismissed prematurely. - HC
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IBC:
Initiation of CIRP - If IBC is purely used for the purpose of Debt Recovery, particularly when the amounts due are small, and the Company is a solvent entity and is a going concern, the question of ‘Reorganising’ or ‘Resolution of the Company’ does not arise - the Adjudicating Authority should use its discretion in admitting/ rejecting an Application. In the instant case, the Adjudicating Authority has rightly rejected the Application - AT
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SEBI:
Offence under SEBI - Whether SEBI is required to disclose documents in the present set of proceedings? - The approach of SEBI, in failing to disclose the documents also raises concerns of transparency and fair trial. Opaqueness only propagates prejudice and partiality. Opaqueness is antithetical to transparency. It is of utmost importance that in a country grounded in the Rule of Law, institutions ought to adopt procedures that further the democratic principles of transparency and accountability. Principles of fairness and transparency of adjudicatory proceedings are the cornerstone of the principles of open justice. - SC
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SEBI:
Manipulation of share price - guilty of violating provisions of Section 12A (a), (b), (c) of the SEBI Act - The securities market deals with the wealth of investors. Any such manipulation is liable to cause serious detriment to investors’ wealth. In this backdrop, the order which has been passed by the WTM cannot be regarded as disproportionate so as to result in the interference of this Court in the exercise of its jurisdiction under Section 15Z of the SEBI Act. - SC
Articles
Notifications
Customs-
67/2022 - dated
8-8-2022
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Cus (NT)
Passenger Name Record Information Regulations, 2022
GST - States-
S.O. 170 - dated
28-7-2022
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Bihar SGST
Amendment in Notification No. S.O. 52, dated the 7th March, 2019
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S.O. 169 - dated
28-7-2022
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Bihar SGST
Amendment in Notification No. S.O. 48, dated the 7th March, 2019
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6/2022-State Tax - dated
22-7-2022
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Himachal Pradesh SGST
Seeks to extend the due date of payment of tax, in FORM GST PMT-06, for the month of April, 2022
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5/2022-State Tax - dated
22-7-2022
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Himachal Pradesh SGST
Extends the due date for furnishing the return in FORM GSTR-3B for the month of April, 2022 till the 24th day of May, 2022
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11/2022-State Tax - dated
22-7-2022
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Himachal Pradesh SGST
Seeks to amend Notification No. 21/2019-State Tax, dated the 30th May, 2019
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10/2022-State Tax - dated
22-7-2022
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Himachal Pradesh SGST
Seeks to exempt taxpayers having AATO upto Rs. 2 crores from the requirement of furnishing annual return for FY 2021-22
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7/2022-State Tax - dated
4-7-2022
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Himachal Pradesh SGST
Seeks to amend Notification No. 73/2017- State Tax, dated the 16th January 2018
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F-A-3-81-2017-1-V (53) - dated
26-7-2022
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Madhya Pradesh SGST
Amendment in Notification No. F A-3-81-2017-1-V(144), dated 14th November 2017
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F-A-3-23-2017-1-V (55) - dated
26-7-2022
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Madhya Pradesh SGST
Seeks to amend Notification No. F-A-3-23-2017- 1-V(36), dated 17th May 2019
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F-A-3-14-2019-1-V (54) - dated
26-7-2022
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Madhya Pradesh SGST
Seeks to amend Notification No. F-A-3-14-2019-1-V(33) dated 17th May 2019
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F-A-3-04-2022-1-V (52) - dated
26-7-2022
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Madhya Pradesh SGST
Amendment in Notification No. F A 3-04-2022-1-V (23), dated 13th April 2022
Circulars / Instructions / Orders
News
Case Laws:
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GST
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2022 (8) TMI 410
Levy of penalty - Search and seizure operation at the petitioner's godown. - Issuance of separate SCN with respect to same search and seizure operation - deliberate negligence on the part of GST offices - two proceedings by two authorities of GST department - shortage of stock - validity of proceedings u/s 129(3) of UPGST Act - HELD THAT:- While no challenge has been made to the search and seizure operation that was conducted by the Special Investigation Branch of the Commercial Tax Department at the premises of the assessee on 07.08.2018, suffice to note, adjudication proceedings were separately initiated that are pending consideration in appeal. Therefore, no order is being made with respect to the same as may influence the outcome of the adjudication proceedings. Those would have to be tested on their own strength.
Insofar as seizure of goods and demand of tax under Section-129 of the Act is concerned, it is unbelievable that two (not one), authority of the Mobile Squad of Commercial Tax Department chose to act with negligence. The provision of Section 129(3) of the Act could not be invoked to subject a godown premises to search and seizure operation unmindful of the Act that no action was taken or contemplated under Section 67 of the Act, as that would have mandated existence of "reasons to believe", to subject that premise to search and seize goods or documents found therein. Also, both authorities of the Commercial Tax Department namely, Sri Vijay Kumar-VIII, Assistant Commissioner (Mobile Squad)-5, Agra and Sri Prashant Kumar Singh-I, Assistant Commissioner (Mobile Squad)-2 Agra chose to exercise powers vested in them to search a vehicle carrying goods during transportation to proceed against goods lying in a godown.
The Court does not wish to go deeper into the intention of the officers concerned in issuing such notices and drawing up such proceedings for which they had no jurisdiction as that would entail calling of personal affidavits of the officers at the cost of precious time of the Court. However, the officers are accountable for their acts. Therefore, let this order be communicated to the Commissioner Commercial Tax UP to look into the matter, call for explanation and take appropriate action commensurate to the misconduct, if any, that may be found committed by the erring officers and to take consequential and corrective action to avoid such occurrences, in future - Insofar as the present petitioner is concerned, the entire proceedings drawn up against it under Section 129(3) of the Act, are found to be without jurisdiction.
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2022 (8) TMI 409
Second Bail Application for grant of bail - evasion of GST - innocence of the applicant can be adjudged at pre-trial stage or not - HELD THAT:- After perusing the averments made in the present bail application as well as rejection order of the court below, this Court is of the opinion, that no such good ground has been brought on record for grant of bail to the applicant.
The application for grant of bail to the applicant is hereby rejected.
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2022 (8) TMI 408
Levy of tax and equal amount of penalty - petitioner made an inadvertent error in applying for the e-way bill - wrong address mentioned in the E-way bill - HELD THAT:- There is no doubt to the fact that the petitioner is an event management firm having its head office at Katni, Madhya Pradesh. It is also not in dispute that the petitioner was awarded some contract at Kumbh Mela, Haridwar, in the State of Uttarakhand. For that purpose, it was transporting LED panels on truck bearing registration no. HR- 55-V-5014. While in transit through State of U.P., the vehicle was stopped for inspection. It was found accompanying with the e-way bill disclosing transportation of LED panels from the petitioner's place of business at Katni to the petitioner's other place of business at Haridwar, Uttarakhand.
There appears no doubt to the genuineness of the explanation furnished by the assessee that the mistake was inadvertent. Once the assessee had disclosed the place of shipment at Haridwar, Uttarkhand, there survived no occasion to fill up the place of destination at Madhya Pradesh with the pin code of the petitioner's office at Katni, Madhya Pradesh. Clearly, the mistake was bonafide as sometime occurs - In absence of any allegation or material found of ill-intent on part of the assessee to transport the goods for the purposes of sale, the imposition of tax and demand of penalty is wholly unfounded. The goods are old. The breach was technical and not real.
Petition allowed.
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2022 (8) TMI 407
Validity of assessmnet order - extension period of limitation - wilful suppression of fact and fraud - intent to evade or not - HELD THAT:- The Tribunal has recorded a finding of fact that there was no wilful suppression of fact and, therefore, the extended period of limitation was not available. The Tribunal, after detailed discussions and after referring various judgments in service tax, held that the nature of work carried out by the respondent-assessee was exempted. The Tribunal also referred to its earlier decisions on the point of exemption.
The entire controversy is dealt with by the finding of fact and the settled position of law - no substantial question of law is involved in the impugned order of the Tribunal - Appeal dismissed.
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2022 (8) TMI 406
Rejection of revocation of the cancellation of the registration - allegation is that taxpayer found Non-functioning/Not Existing at the Principal Place of Business - no reply to notice to show cause has been submitted - HELD THAT:- A perusal of the show-cause notice at the first instance, clearly depicts the opaqueness of the allegations levelled against the petitioner, which were only to the ground that ''tax payer found non-functioning/non-existing at the principal place of business'. The said show-cause notice did not propose to rely upon any report or any inquiry conducted to form the opinion and on what basis was the allegation levelled that the tax payer was found non-functioning; it does not indicate as to when the inspection was carried. A vague show-cause notice without any allegation or proposed evidence against the petitioner, clearly is violative of principles of administrative justice. Cancellation of registration is a serious consequence affecting the fundamental rights of carrying business and in a casual manner in which the show-cause notice has been issued clearly demonstrates the need for the State to give the quasi-adjudicatory function to persons who have judicially trained mind, which on the face of it absent in the present case.
The order of cancellation of the registration on the ground that no reply was given is equally lacking in terms of a quasi-judicial fervor as the same does not contain any reasoning whatsoever. The show-cause notice issued after the petitioner had filed an application for revoking the cancellation of registration also smacks of lack of judicial training by the quasi-adjudicatory authorities under the GST Act as it merely shows that no satisfactory explanation was received within the prescribed time.
The order rejecting the application for revocation of cancellation of registration takes the matter to the height of arbitrariness inasmuch as no reasons are recorded as to why the request for revocation of cancellation of registration could not be accepted and discloses absence of application of mind with regard to the averments contained in the application filed by the petitioner for revocation of cancellation of registration. It is also not clear as to why the request of the petitioner to adjourn the matter because of the marriage of his daughter was not even considered prior to passing of the rejection order dated 15.07.2020.
Thus, the said authorities while passing the order impugned have miserably failed to act in the light of the spirit of the GST Act. The stand of the Central Government before this Court is equally not appreciable as on the one hand they are alleging that excess goods were found for which the petitioner is liable to pay duty and on the other hand there is justification to the order passed and impugned in the present petition.
In the present case, the arbitrary exercise of power cancelling the registration in the manner in which it has been done has not only adversely affected the petitioner, but has also adversely affected the revenues that could have flown to the coffers of GST in case the petitioner was permitted to carry out the commercial activities. The actions are clearly not in consonance with the ease of doing business, which is being promoted at all levels. For the manner in which the petitioner has been harassed since 20.05.2020, the State Government is liable to pay a cost of Rs.50,000/- to the petitioner - petition allowed.
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2022 (8) TMI 405
Seeking grant of Regular Bail - wrongful availment of Input Tax Credit - allegation is that the applicant had shown the suppliers only on paper without any actual transfer of the goods and in conspiracy with the shell companies had defrauded the Government Exchequer - compounding of offences - HELD THAT:- According to the applicant, the purchases have been made by tax invoices and E-Way Bills upon payment of applicable GST while dealing with the dealers having valid GSTIN. Taking into consideration the maximum punishment for the alleged offence and the provisions of compounding the offences, this Court deems it just and proper to exercise discretion is exercised in favour of the applicant, as trial will take its own time to conclude.
The applicant is ordered to be released on regular bail - Application allowed.
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2022 (8) TMI 404
Refund of IGST - IGST on Ocean Freight - seeking direction to respondents to grant refund of the IGST paid by the petitioner pursuant to Entry No. 10 of N/N. 10 of 2017 dated 28.06.2017 in respect of which no input tax credit is availed by the petitioner with interest - HELD THAT:- Similar issue came up for consideration before the co-ordinate Bench in ADI ENTERPRISES VERSUS UNION OF INDIA [2022 (6) TMI 849 - GUJARAT HIGH COURT], wherein the question was about refund of the IGST paid pursuant to the aforementioned Notifications. The court directed respondents to refund the amount of IGST already paid by the applicants pursuant to Entry No.10 of Notification No. 10 of 2017.
In view of the decision in MOHIT MINERALS PVT LTD VERSUS UNION OF INDIA & 1 OTHER [2020 (1) TMI 974 - GUJARAT HIGH COURT], since the impugned Notifications have already been declared as ultra vires, present petition deserves to be allowed.
The claim for refund of the petitioner towards IGST is liable to be favourably considered - Petition allowed.
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2022 (8) TMI 403
Refund of IGST - seeking direction to respondents to grant refund of the IGST paid by the petitioner pursuant to Entry No. 10 of N/N. 10 of 2017 dated 28.06.2017 in respect of which no input tax credit is availed by the petitioner with interest - HELD THAT:- Similar issue came up for consideration before the co-ordinate Bench in ADI ENTERPRISES VERSUS UNION OF INDIA [2022 (6) TMI 849 - GUJARAT HIGH COURT], wherein the question was about refund of the IGST paid pursuant to the aforementioned Notifications. The court directed respondents to refund the amount of IGST already paid by the applicants pursuant to Entry No.10 of Notification No. 10 of 2017.
In view of the decision in MOHIT MINERALS PVT LTD VERSUS UNION OF INDIA & 1 OTHER [2020 (1) TMI 974 - GUJARAT HIGH COURT], since the impugned Notifications have already been declared as ultra vires, present petition deserves to be allowed.
The claim for refund of the petitioner towards IGST is liable to be favourably considered - Petition allowed.
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2022 (8) TMI 402
Maintainability of petition - seeking direction to deposit of an amount of Rs.1.25 crores within seven days and was further directed to show certain documents which may reflect that his liability is lesser - HELD THAT:- In any case, it would be appropriate at least 20% of the GST to the tune of Rs.03.00 crores be deposited by the petitioner. The petitioner has already deposited an amount of Rs.2.28 crores approx.
In the circumstances, let the balance amount be deposited to make it Rs.3.00 crores, within eight weeks from today and the petitioner is directed to join the investigation as and when directed by the senior intelligence officer - List on 23.01.2023 and till then the petitioner be not arrested, subject to payment of aforesaid amount and also joining of investigation.
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2022 (8) TMI 401
Maintainability of petition - availability of alternative remedy of appeal - Vires of Clause (c) of Sub-Section (2) of Section 16 of the Odisha Goods and Services Tax Act, 2017 - Input tax credit - HELD THAT:- Issue notice for 15th November, 2021.
Seeking stay on further proceedings - HELD THAT:- The Petitioner is directed to deposit 20% of the tax as determined vide assessment order dated 12th May, 2022 passed under Section 73 of the OGST/CGST Act within a period of four weeks from today - In the event of such deposit, no coercive action shall be taken against the Petitioner till disposal of the writ petition.
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2022 (8) TMI 400
Validity of summary SCN - mismatch in GSTR-3B and GSTR-2A for the period in question - availment of undue ITC to which they were not entitled - violation of principles of natural justices - HELD THAT:- The notices under section 73(1) of the Act of 2017 at Annexure-1 of the respective writ petition is in the standard format and neither any particulars have been struck off, nor specific contravention has been indicated to enable the petitioner to furnish a proper reply to defend itself. The show-cause notices can therefore, be termed as vague.
This Court has, in the case of M/S. NKAS SERVICES PRIVATE LIMITED. VERSUS THE STATE OF JHARKHAND, THE COMMISSIONER OF STATE TAXES, RANCHI, DEPUTY COMMISSIONER OF STATE TAXES, GODDA [2021 (10) TMI 880 - JHARKHAND HIGH COURT] categorically held that summary of show cause notice in Form GST DRC-01 cannot substitute the requirement of a proper show cause notice under section 73(1) of the Act of 2017. It seems that the authorities have, after issuance of show-cause notice dated 28.08.2020 (Annexure-1) and Summary of show cause notices contained in GST DRC-01 (Annexure-2) of the same date, proceeded to issue Summary of the Order dated 12.12.2020 (Annexure-3). Respondents have also not brought on record any adjudication order.
Levy of penalty of 100% of tax dues reflected in the Summary of the Order contained in Form GST DRC-07 vide Annexure-34 in the writ petition is also in the teeth of the provisions of Section 73(9) of the Act of 2017, wherein while passing an adjudication order, the Proper Officer can levy penalty up to 10% of tax dues only. The above infirmity clearly shows non-application of mind on the part of the Deputy Commissioner, State Tax, Godda Circle, Godda. Proceedings also suffer from violation of principles of natural justice and the procedure prescribed under section 73 of the Act and are in teeth of the judgment rendered by this Court in the case M/s NKAS SERVICES PRIVATE LIMITED.
The impugned show-cause notices and Summary of the Show Cause Notice dated 28.08.2020 (Annexure-1 and 2) and Summary of Orders contained in Form GST DRC-07 dated 12.12.2020 (Annexure-3) are quashed - Petition allowed.
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2022 (8) TMI 399
Application for recording the appearance of the counsel who appeared for the petitioner on 15.07.2022 - HELD THAT:- The record will show that on 15.07.2022, Mr. Sethi was present in Court.
For the purposes of good order and record, Mr. Sethi will ensure that the affidavit is placed on record in the within the next ten days.
Application disposed off.
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2022 (8) TMI 398
Cancellation for GST registration of petitioner - demand cum recovery notices were received by the appellant on an assessment under Section 62 of CGST/SGST Act for the period from April 2018 to March 2019 - HELD THAT:- Taking note of the contention raised by the appellant that he had also filed returns within 30 days on receipt of the demand notice, gave liberty to the appellant to prefer an appeal against the assessment orders within a period of 6 weeks time. Until such time the demand notice was directed to be kept in abeyance to enable the appellant to move the appellate authority, to prefer a statutory appeal.
The learned single judge has relegated the appellant to avail remedy of statutory appeal available to him and he was given 6 weeks time to move the appellate authority. In view of the matter, we do not find any ground to interfere with the judgment of the learned single judge. But taking note of the circumstances of the case, the appellant is granted one months' time from today to file a statutory appeal before the authority - Appeal disposed off.
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2022 (8) TMI 397
Refund claim - time limitation - Section 54 of the Central Goods and Services Tax Act, 2017 - HELD THAT:- In view of the fact that the amounts qua which the refund claims were lodged have already been remitted, consequential directions need not be issued.
Petition disposed off.
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2022 (8) TMI 396
Non-appearance of petitioner inspite of summons issued many times - Section 70 of the Central Goods and Service Tax Act, 2017 - HELD THAT:- It is an admitted position that summons under Section 70 of the Central Goods and Service Tax Act, 2017 have already been issued to the petitioner for so many times. However, the petitioner did not appear before the concerned authority apprehending his arrest.
In the facts and circumstances of the present case, the petitioner is directed to join the enquiry and make himself available before the competent authority on the date given by the authority concerned and respond to the summon issued under Section 70. After appearance of the petitioner, the concerned authority will act as per law.
List the matter on 22.08.2022.
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2022 (8) TMI 390
Seeking grant of anticipatory bail - allegation of availment of fraudulent ITC from fictitious firms and passing on the said fraudulent ITC with an intention to evade payment of GST - HELD THAT:- In the present case there are allegations that the Page no.2 of total 4 applicant/accused is managing three firms i.e. M/s Shreya Impex, M/s Akshita Enterprises and M/s Modern Metal Industries. During investigation Smt.Babli Sharma, Proprietor of M/s Akshita Enterprises made the statement in the Office of Commissioner, GST that she has no idea of the business undergone by the said firm and all the affairs are being managed by the applicant/accused. Sh. Vikas Gupta Proprietor of M/s Modern Metal Industries also made a statement before the office of Commissioner GST that the applicant/accused used to pay him Rs.15,000/- to Rs.30,000/- per month for expenses and all the documents are maintained by the applicant/accused and he does not know about the turnover or income tax return of the said firm. Statements of Smt. Babli and Sh. Vikas gupta, Proprietors of other two firms prima facie establishes that the accused was managing these firms.
There are allegations of fraudulently availing Input Tax Credit(ITC) of Rs.10 crores approximately from 30 non existing firms. In the additional reply filed on behalf of department it is stated that on verification the mobile numbers of all the vendors were found to be fake.
The allegations against the applicant/accused are grave and serious in nature. Investigation is at the initial stage. The applicant/accused is the main conspirator and beneficiary of the alleged cheated amount. The custodial interrogation of the applicant/accused is required. In view of aforesaid facts and circumstances, anticipatory bail cannot be granted - bail application dismissed.
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2022 (8) TMI 395
Refund claim - Section 73(5) of the Delhi Goods and Services Tax Act, 2017 - HELD THAT:- The writ petition is disposed of with following directions:
(i) The petitioner’s authorized representative and/or advocate will present themselves before the concerned officer on 25.07.2022, at 11.30 AM.
(ii) The concerned officer will grant personal hearing to authorized representative and/or advocate of the petitioner.
(iii) The authorized representative/advocate of the petitioner will also be entitled to file written submissions, in support of its case.
(iv) After hearing the authorized representative and/or advocate of the petitioner, the concerned officer will pass a speaking order.
(v) The petitioner will be furnished a copy of the speaking order.
List the matter on 16.08.2022 for compliance.
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2022 (8) TMI 393
Right to file an appeal - whether a person who opts to make payment in terms of Clause (a) of Sub-Section (1) of Section 129 of the CGST Act / SGST Act to get goods/conveyance/documents detained or seized in proceedings under Section 129 released is deprived of his right to file an appeal against the proceedings - HELD THAT:- A reading of sub-section (3) of Section 129 of the CGST/SGST Acts, the provisions of Rule 142 referred to above and the provisions of the circular, cumulatively, compel me to hold that whether or not a person opts to make payment under section 129(1)(a) or to provide security under Section 129(1)(c), the responsibility of the officer to pass an order under sub-section (3) of Section 129 and to upload a summary of the order/demand in Form MOV 7 continues. The provisions of sub-section (5) or Section 129 which were pointed out by the learned Senior Government Pleader only contemplate that the procedure for detention on seizure of goods or documents or conveyances come to an end and it is always open to the person who suffers proceedings under 129 of the CGST/SGST Acts to challenge those proceedings if he feels that the demand has been illegally raised on him. This can be the only reasonable interpretation that can be placed on the provisions referred to above. Any other interpretation would clearly violate Article 265 of the Constitution of India.
The fact that the culmination of proceedings in respect of a person who seeks to make payment of Tax and Penalty under Section 129(1)(a) does not result in the generation of a summary of an order under Form DRC-07 cannot result in the right of the person to file an appeal under Section 107 being deprived. The fact that the system does not generate a demand or that the system does not contemplate the filing of an appeal without a demand does not mean that the intention of the legislature was different.
Petition allowed.
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2022 (8) TMI 394
Seeking grant of anticipatory bail - shell/defunct companies - issuance of invoices without providing any services - offences punishable under Sections 166, 167, 418, 420, 465, 468, 471, 409, 209, 109 read with 120b of the India Penal Code, 1860 (for short ‘IPC’) read with 13(1)(c), read with 13(1)(D) of Prevention of Corruption Act, 1988 - HELD THAT:- In P. CHIDAMBARAM VERSUS DIRECTORATE OF ENFORCEMENT [2019 (9) TMI 286 - SUPREME COURT] the Hon’ble Apex Court made it clear that granting anticipatory bail at the state of investigation will frustrate the investigating agency in interrogating the accused and in collecting the useful information and also the materials which might have been concealed. Success in such interrogation would elude if the accused knows that he is protected by the order of the Court and grant of anticipatory bail in economic offences would definitely hamper the effective investigation.
A perusal of the report lodged by the Chairman of the Corporation/APSSDC shows that as per the scrutiny of records by ADGGI, it is revealed that training software development including various sub-modules shown as supplied by M/s Skillar to Design Tech were purchased by Skillare from 1) M/s. Allied Computers International (Asia) Ltd. Mumbai (for short ‘ACI’), 2) M/s. Patrick Info Services Private Limited, M/s. I.T. Smith Solutions Private Limited, 3) M/s. Inweb Info Services Private Limited all based at New Delhi, 4) M/s. Arihanth Traders, New Delhi, 5) M/s. G.A. Sales Private Limited, New Delhi. According to the prosecution, out of five, petitioner purchased three shell companies. The prosecution also got information that wife of the petitioner is one of the Directors in two companies out of three companies purchased by the petitioner - Also, the petitioner avoided to appear before investigating officer during crucial period.
Though learned counsel for the petitioner contended that no documents were filed by the prosecution regarding the purchase of shell companies referred to supra, by the petitioner, this is not the stage where this Court goes into all those aspects. All these aspects will be considered during the course of trial.
Considering the amount involved in this crime is about Rs. 371,00,00,000/- keeping in view the gravity of the crime, it being socio-economic offence, petitioner is not entitled for pre-arrest bail - petition dismissed.
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2022 (8) TMI 392
Quorum of the Authority for Advance Ruling, Goods and Services Tax (GST), Delhi, nor complete - principal grievance of the petitioner is that its application dated 17.01.2019 has not been decided up - HELD THAT:- The Government of National Capital Territory of Delhi (GNCTD) had to be arrayed as a party - The Lieutenant Governor, GNCTD is arrayed as a party - Issue notice.
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2022 (8) TMI 370
Provisional attachment of Bank Accounts of petitioner - HELD THAT:- Mr Singla says that the necessary instructions will be issued to the concerned bank by the respondent/revenue, within the next five days.
Petition disposed off.
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2022 (8) TMI 389
Seeking grant of bail - Availment and passing of ineligible Input Tax Credit - fake invoices without supply of goods - evasion of GST - cancellation of registration of the three firms, with which the applicant was directly concerned - power of officers to issue summon - relevancy of statements made - HELD THAT:- It is pertinent to observe that appropriate officer under Section 70 of the CGST Act is given the powers to summon like a civil court. This power is only procedural, for compelling the attendance of the person summoned, this power does not have any direct bearing upon the manner in which such statements are to be used during inquiry, trial or other proceedings. Section 70(2) provides that every inquiry under Section 70(1) of the CGST Act shall be deemed to be “judicial proceedings”. However, this deeming provision is only for the purposes of Section 193 and 228 IPC, i.e. perjury and contempt on the face of the court - there is nothing specific in Section 70 of the CGST Act and Section 136 of the CGST Act to show that statements recorded under Section 70 of this Act can be used as confessional statements against the maker of the same.
In the present case, much reliance has been placed by the complainant department on the statements recorded under Section 70 of the CGST Act. The truth of these statements shall be seen at the time of trial - The applicant / accused has been examined thrice by the complainant. The time period for seeking custodial interrogation of the applicant / accused has already lapsed in terms of Section 167(2) CrPC.
The applicant / accused Aman Chhatwal @ Aman Singh S/o Ajit Singh is allowed to be released on bail on furnishing personal bond in the sum of Rs.5,00,000/- with two solvent sureties in the like amount to the satisfaction of the Ld. CMM concerned / Ld. Link CMM concerned / Ld. Duty MM concerned, subject to the conditions imposed - application allowed.
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2022 (8) TMI 391
Works Contract - estimation of value - contract period was extended beyond 01.07.2017 and execution of works was completed during GST regime - time limitation - HELD THAT:- The instant matter being similar to that of the case decided by this Court in CHANDRA SEKHAR JENA VERSUS STATE OF ODISHA AND OTHERS [2021 (10) TMI 1350 - ORISSA HIGH COURT], where it was held that the agreement in question is dated 26th April, 2016 with the time for completion being 11 months. Clearly, therefore, any claim now raised arising from the said contract would be time barred - The present writ petition is hereby dismissed in the similar fashion and, thus, this Court hold that the claim of the petitioner is hit by law of limitation.
This Court wishes to observe that the petitioner has made a prayer to restrain the opposite party No.5-CT&GST Assessment Unit, Rairangpur, CT&GST Circle, Mayurbhanj, from taking any coercive steps against the petitioner to recover amount of GST. Qua such a prayer, it is noteworthy to record that the task of determining the differential GST, i.e. segregating labour, material, etc. is of the Authority vested with power under the CGST/OGST Act and not within the domain of any other. Such segregation can be made keeping in view inter alia Revised Guidelines dated 10th December 2018 issued by the Finance Department, Government of Odisha - The question whether, in fact, any amount is owed to the Petitioner by Opposite Parties on account of GST deducted from its bills or vice versa, has become a highly disputed question of fact. The claim of the Petitioner ultimately, in simple terms, is one for money which it seeks as reimbursement from Opposite Parties. It is not possible for this Court in its writ jurisdiction under Article 226 of the Constitution to calculate on a case to case basis which component of the work executed by the Petitioner for reimbursement on account of GST and which is not.
This court while declining to exercise its power under Article 226 of the Constitution, dismisses the writ petition.
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Income Tax
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2022 (8) TMI 384
Delayed employees contribution towards EPF/ESIC - contribution made beyond the stipulated time period contemplated under the respective Employees Welfare Acts, but had deposited the same prior to the “due date” of filing of its return of income for the year under consideration - Scope of amendment - HELD THAT:- We find that the issue herein involved is squarely covered by the order passed by the Tribunal in the case of M/s Ind Synergy Limited [2022 (4) TMI 36 - ITAT RAIPUR] wherein held as the amendments made available on the statue vide the Finance Act, 2021 i.e “Explanation 5” to Section 43B and “Explanation 2” to Section 36(1)(va) are applicable w.e.f 01.04.2021, i.e, from A.Y 2021-22 onwards, therefore, the same would not have any bearing on the case of the assessee before us, i.e, for A.Y 2011-12. Accordingly, drawing support from the aforementioned judicial pronouncements, we, herein conclude, that as the employees contributions to PF and ESI was deposited by the assessee before the “due date” of filing of its return of income for the year under consideration, therefore, the same being saved by the provisions of Sec. 43B of the Act could not have been disallowed by the A.O. - Decided in favour of assessee.
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2022 (8) TMI 383
Revision u/s 263 - selection of the case of the assessee for limited scrutiny under CASS - Low income and high loans/advances/ investments - HELD THAT:- On the basis of observations, we are of a strong conviction, that as stated by the Ld. AR, and rightly so, the Pr. CIT had clearly traversed beyond the scope of his jurisdiction and revised the order passed by the Assessing Officer by holding the same as erroneous, for the reason that he had while framing the assessment failed to look into and carry out necessary verification and examination of the assessee’s claim of loss from derivatives i.e, an issue which was never the subject matter for selection of the case of the assessee for limited scrutiny under CASS.
Investment in unquoted equity shares and in unsecured loans/advances - We are principally in agreement with the view taken by the Pr. CIT that the order passed by the AO under Sec. 143(3)is erroneous in so far it is prejudicial to the interest of the revenue under Sec. 263, on the said count i.e, failure on the part of the AO in carrying out verifications as regards the substantial investments made in equity shares by the assessee during the year under consideration.
Although, we have principally concurred with the Pr. CIT on the aforesaid issue, but at the same time find some substance in the claim of the ld. AR, that as stated by the assessee before the AO in the course of the assessment proceedings, as the fresh investment in unquoted equity shares made by the assessee company during the year under consideration was sourced out of its old loans and advances that were received back during the year, therefore, the same were made out of it duly disclosed sources. Be that as it may, having principally concurred with the order passed by the Pr. CIT under Sec. 263 qua the aforesaid issue in hand i.e, failure on the part of the AO in carrying out verifications as regards the substantial investments made in equity shares by the assessee during the year under consideration, we herein direct the AO to consider the aforesaid claim of the assessee in the course of the set-aside proceedings.
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2022 (8) TMI 382
Reopening of assessment u/s 147 - Reassessment done on the basis of an audit objection - eligibility of reasons to beieve - HELD THAT:- As in the case before us, we find that as stated in the aforesaid “reasons to believe”, the case of the assessee was reopened not for any failure on the part of the assessee to disclose fully and truly all the material facts necessary for its assessment, but on the basis of an audit objection raised by Internal Audit Party (IAP), Bilaspur.Apart from that, we find that there is no whisper in the “reasons to believe” that the case of the assessee was being reopened for any failure on its part to disclose fully and truly material facts that were necessary for its assessment for the year under consideration.
As the assessment in the case of the assessee which was originally framed by the A.O vide his order passed u/s.143(3), dated 30.12.2010, had thereafter despite there being no failure on its part to disclose fully and truly all material facts necessary for framing of its assessment been reopened u/s.147 on 25.01.2014, i.e, beyond a period of four years from end of the relevant assessment year, therefore, we concur with the AR that the same not being as per mandate of the “first proviso” to Section 147 of the Act, is thus, not maintainable and is liable to be quashed on the said count itself.
We quash the assessment framed by the A.O vide his order passed u/s.143(3)/147 for want of valid assumption of jurisdiction by him. - Decidedin favour of assessee.
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2022 (8) TMI 381
Assessment u/s 153A - proof of incriminating material or evidence found during the course of search - CIT-A deleted addition - HELD THAT:- We find that CIT(A) while deleting the addition has given a finding that the assessment years under consideration were completed assessment years and the additions made by AO were not on the basis of any incriminating material or evidence found during the course of search proceedings. He thereafter by relying on the decision of Jurisdictional High Court in the case of Kabul Chawla [2015 (9) TMI 80 - DELHI HIGH COURT] held that no addition could have been made by AO. Before us, no fallacy in the findings of CIT(A) has been pointed out by Revenue nor has Revenue pointed to any contrary binding decision in its support. In such a situation, we find no reason to interfere with the order of CIT(A) and thus the ground of Revenue is dismissed.
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2022 (8) TMI 380
Disallowance u/s 40(a)(ia) - Addition on account of subscription fee paid - payment made to Deloitte Touche Tohmatsu India Pvt. Ltd. paid under different heads for the reason that these were reimbursement of expenses, hence no TDS was required - CIT (A) was of the opinion that tax is deductible at source in respect of payment of income or other sum comprising an element of income and that reimbursement of expenses cannot partake the nature of income in the hands of the payee of such expenses - HELD THAT:- We find that ld. CIT (A) has passed a reasoned order. His finding of fact that these are reimbursement of expenses which have not been disputed by the Revenue. Hence, in light of case laws referred above, we do not find any need to interfere in the order of ld. CIT (A). Accordingly, we uphold the same.
Disallowance of remuneration paid to partners - As submitted that remuneration paid to partners in terms of the partnership deed; that the aggregate of remuneration paid within the limit provided in section 40(b) as concerned partner has confirmed the receipt of remuneration and payment of tax on such remuneration - HELD THAT:- We find that we are in agreement with ld. CIT(A). He has factually examined the issue and given a finding of fact. This finding could not be rebutted by the Revenue. Hence, we uphold the order of ld. CIT (A).
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2022 (8) TMI 379
Revision u/s 263 - Capital gain on property of the respective HUFs or respective individual assessee's - Assessee not entitled to exemption u/s. 54F as allowed by the AO - whether the plot/s of land (capital asset) sold by the assessees belonged thereto, as claimed by the Revenue, or to the HUFs of which the respective assessees are members (as spouse of their husbands), as claimed by the assessee? - CIT(A) has held it to be the property of the respective HUFs, so that no capital gain arises and, consequently, is assessable in the hands of the two individual assessees, being the wives of the respective kartas, who are brothers - HELD THAT:- There is nothing to indicate that the agricultural land was held by BMB as a family property. In fact, the division of land, and which admittedly included his self-acquired land as well, is stated to be divided amongst three parties to avoid any family dispute. There is nothing to show that the family was living jointly, i.e., as a family. There is in fact no reference to any other property in the document, and also nothing to show that it was the only property held by the family. There is in fact no whisper of the Hindu Undivided Family (HUF) (or even family) in the said partition deed. There is again nothing to show that the income from the said property (or any other income) was being returned as family income, i.e., either of the larger family, or even the smaller families of the two sons, i.e., post partition.
There is nothing to show of any procedure in its respect having been followed, and at any stage; nay, of the property or income therefrom being returned as family property, either before or after the partition, which in that case would be partial. Was it followed by any subsequent partition, as indeed the share retained by father, which would in that case be of the larger HUF, may have been partitioned, also dividing any other assets of the erstwhile larger HUF, complying with s. 171, to which reference, drawing a blank, was made during hearing. That is, there is no evidence on record as to either the existence of the larger HUF or its subsequent partition.
As explained by the Apex Court in CIT v. Seth Govindram Sugar Mills [1965 (3) TMI 24 - SUPREME COURT] coparcenership is a necessary qualification for the managership of a joint family. A Hindu female is not a coparcener and has no legal qualification to become the manager (karta) of a joint Hindu family. The foregoing is stated to merely clarify the legal position even as there is, as afore-stated, nothing on record to exhibit that the property under reference is the joint family property.
Merely because land is divided, with a view to avoid family dispute, by the father between himself and his two sons, would not by itself make it a family property. No case, either on facts or in law is made out. To us, it is no more than a father dividing his property, self-acquired as well as that bequeathed to him by his father, between his two sons, also retaining a part for himself (5.45 acres). In short, the claim is without basis and wholly unproved; in fact, fatuous. All that the assessee was required to produce was the sale deed, the primary document evidencing the transfer, and which would itself bear out the owner of the property, as well as the status in which the assessees, where so, had executed the sale deed. As afore-stated, the property is, as we see it, the individual property of the two brothers, S1 & S2. This also explains as to why SB, the widow and legal heir of S1, executed the sale deed and, accordingly, returned the capital gain per her return, and also why, JB, despite notice u/s. 148(1) to her, did not. The assessee’s claim in this respect is accordingly dismissed.
Deduction u/ss. 54B & 54F - claim u/s.54-B, the same has been denied on the ground that the capital asset sold a residential plot/s and not agricultural land - As the assessee having sold 19 (18) residential plots to various persons, the list of which forms part of the assessment order dated 03/07/2013. That is, an admitted fact, to the legal implicatons of which we shall revert later. As regards the claim u/s. 54-F, the same is again not admissible inasmuch as what has been purchased is not a residential plot, but agricultural land, and which also explains the claim for deduction u/s. 54-B by SB per her return filed on 10/04/2013 in response to notice u/s. 148(1) dated 21/11/2012. This is, again, not denied at any stage, including before us, even as a bald claim/denial, without material in support, would be to no consequence. There is nothing on record to suggest either the conversion of land, i.e., for residential purposes, or even of construction of a residential house, much less its completion within the time frame provided u/s. 54-F. In other words, the assessee’s claim is wholly without any factual basis and, accordingly, merits dismissal.
We may though clarify that the (plots of) land sold falling to the share of JB is, as held by us, the property of S2 (Bhaskar Bhattacharya), the capital gain could only be assessed in his hands. That being the case, the question of exemption u/s. 54B or 54F to the assessee (JB), his wife, does not arise.
The assessees having sold residential plots, i.e., by plotting the agricultural land, the same can only be regarded as an adventure in the nature of trade. The date of conversion of the erstwhile agricultural land into a residential land or, in its absence, seeking permission for plotting or otherwise applying for civic amenities, viz. water, sewerage, electricity, etc., or, in its absence, the commencement of plotting itself, could be regarded as the date of conversion of the erstwhile capital asset into a business/trading asset. The stamp value on this date would stand to be deemed as the consideration in terms of s.45(2), and capital gain computed accordingly. This deemed consideration would then have to be appropriated over the number of plots, and business income computed on the basis of plots sold, with the balance being carried over at cost as a trading asset. No income, either as capital gain or business income, would however stand arise in case of JB, the investment by her in agricultural land, purchased along with SB, only representing an application of income, and no title thereto. The money invested by her, to the extent sourced from the sale of the residential plots, could be regarded as either a gift or a loan from her husband, Bhaskar Bhattacharya, to her or, in alternative, an investment by him benami in her name. There is, it needs to be appreciated, nothing on record to show that what stands sold by her is in her own right.
The matter, accordingly, shall go back to the file of the AO to compute the ‘capital gain’ and ‘business income’, where and to the extent assessable.
We found the assessee’s claim of the land sold as belonging to the HUF/s as being both factually unproved and legally not maintainable. This disposes the assessee’s COs. As regards the claim of it being a case of double taxation; the same income being also taxed in the hands of the HUFs, the same is not maintainable. Firstly, there is nothing on record to show so, with, in fact, as also afore-noted, it was the Revenue which was in appeal before the Tribunal, whose appeals before it stood dismissed u/s. 268A, and not recalled, as was the case for the assessees in the instant case. That apart, it is only where the same income is taxed twice in the case of an assessee, that it qualifies to be regarded as double taxation. In fact, even here, it is trite that income has to be taxed for the right year, and it being taxed in another year furnishes no ground for it being not taxed in the year in which it is assessable (refer: CIT v. Chunilal V. Mehta & Sons (P.) Ltd [1971 (8) TMI 4 - SUPREME COURT] - As regards it being taxed in the hands of HUFs, which claim to be valid would have to be, firstly, for both the additions and, two, also exhibit the denial of deduction u/s. 54B/54F. Two, it is only the right person who is to be taxed, and merely because a wrong person is taxed with respect to a particular income, the Assessing Officer is not precluded from taxing the right person with respect to that income See CH. ATCHAIAH [1995 (12) TMI 1 - SUPREME COURT].
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2022 (8) TMI 378
Depreciation on electrical fittings - @ 10% or 15% - HELD THAT:- This issue is squarely covered in favour of the assessee by the decision of Surat Bench of this Tribunal in assessee’s own case for AY 2012-13 [2019 (12) TMI 1294 - ITAT SURAT] wherein the claim of the assessee for electrical installation @ 15% was allowed by the Tribunal. Since the issue involved in the year under consideration as well as all the material facts relevant thereto are similar to AY 2012-13, we respectfully follow the decision of the Co-ordinate Bench of this Tribunal in assessee’s own case for the immediately preceding year and direct the Assessing Officer to allow the claim of the assessee for depreciation on electrical installation @ 15%.
Belated payment of employees’ contribution towards Provident Fund - HELD THAT:- As this issue is squarely covered against the assessee by the decision of Hon’ble Gujarat High Court in the case of CIT Vs. Gujarat State Road Transport Corporation [2014 (1) TMI 502 - GUJARAT HIGH COURT], we uphold the impugned order of the learned CIT(A) confirming the disallowance made by the Assessing Officer on account of belated payment of employees’ contribution towards Provident Fund and dismiss Ground of assessee’s appeal.
Addition of short receipts allegedly declared by the assessee as compared to the receipts reflected in 26AS - HELD THAT:- As assessee has submitted that the assessee is now in a position to produce the relevant documentary evidence to establish that the amounts in question represented advances on which taxes were deducted by the concerned parties and the same did not constitute the income of the assessee chargeable to tax in the year under consideration. He has urged that one opportunity may be given to the assessee to do so by sending the matter back to the Assessing Officer.
Since the learned DR has not raised any objection in this regard, we restore this issue to the file of the Assessing Officer for giving the assessee one more opportunity to establish on evidence that the amounts in question were received by it as advances and the same did not constitute its income chargeable to tax for the year under consideration. Ground No.3 is accordingly treated as allowed for statistical purposes.
MAT computation u/s 115JB - claim of the assessee for reduction of business loss or unabsorbed business loss, whichever is lower, from the book profit computed under Section 115JB - AO disallowed the claim of the assessee for set off of brought forward business loss against book profit - HELD THAT:- As this issue involved in the Revenue’s appeal is squarely covered in favour of the assessee by the decision of Hon’ble Gujarat High Court in the case of PCIT Vs. Surat Textile Mills Ltd [2017 (3) TMI 270 - GUJARAT HIGH COURT].
Addition on account of prior period expenses while computing book profit under Section 115JB - CIT-A deleted the addition - HELD THAT:- As this issue is squarely covered in favour of the assessee inter alia by the decision of Hon’ble Karnataka High Court in the case of CIT v . GMR Industries Ltd., [2020] 425 ITR 504, wherein it was held that prior period expenses charged to profit and loss account cannot be deducted from the profit of the year for the purpose of computing book profit under Section 115JB of the Act as the same does not fall within the purview of Section 115JB - To the similar effect is the decision of Shivshahi Punarvasan Prakalp Ltd. [2011 (10) TMI 153 - ITAT MUMBAI] wherein it was held that there is no provision for any adjustment on account of prior period expenses in Explanation-1 to Section 115JB(2) of the Act and, therefore, any addition on account of disallowance of prior period expenses while computing book profit is not permitted - we uphold the impugned order of the learned CIT(A) deleting the addition on account of prior period expenses while computing the book profit of the assessee-company under Section 115JB - Decided against revenue.
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2022 (8) TMI 377
Revision u/s 263 - Unexplained income - discrepancies found, confronted and accepted by the assessee during the course of survey attract the deeming provisions of section 68, 69, 69A, 69B & 69C and the income referred therein is chargeable to tax at rate prescribed under section 115BBE Act - As per CIT AO has failed to enquire about the source of income in order to assess the income under the appropriate head of income or the relevant deeming provisions and accordingly, the order so passed has been held as erroneous and prejudicial to the interest of Revenue - HELD THAT:- Merely stating that excess cash is clearly covered u/s 68 or 69A, excess stock is covered u/s 69 or 69B, construction of Shed/Godown is covered u/s 69B or 69C and advances made to Sundry Parties is covered u/s 69, 69B or 69D is like an open ended hypothesis which is not supported by any specific finding that the matter shall fall under which of the specific sections and how the conditions stated therein are satisfied before the said provisions are invoked. It is like laying a general rule, which to our mind is beyond the mandate of law, that wherever there is a survey and some income is detected or surrendered by the assessee, the deeming provisions are attracted by default and by virtue of the same, provisions of section 115BBE are attracted. The ld PCIT has to record his specific findings as to the applicability of the relevant provisions and how the explanation called for and offered by the assessee is not acceptable in the facts of the present case which is clearly absent in the instant case. Therefore, where the ld PCIT himself is not clear about the applicability of relevant provisions and in the same breath holding the Assessing officer to task by not invoking the said provisions is clearly shooting in the dark which cannot be sustained in the eyes of law and the order so passed therefore cannot be held as erroneous in the eyes of law.
There are documents in form of statement of the assessee recorded u/s 133A during the course of survey and the surrender letter dated 21.10.2016 submitted by the assessee at the time of survey and these documents are very much part of the records which is available at the time of assessment as well as at the time of examination by the ld PCIT. In the statement so recorded at the time of survey, the assessee was specifically asked about the source of his income and in response, he has submitted that he is getting income from Gandhi General Store and share of profit from partnership firm, M/s Gandhi Soap and Detergent Industries. Thereafter, in respect of excess cash found at the time of survey, the assessee was asked a specific question to explain the difference and in response, he has submitted that the difference or the excess cash is on account of sales realization during the previous days which he offers over and above his normal business income.
AO has duly taken cognizance of statement of the assessee recorded during the course of survey, the surrender letter and the return of income, and after examination thereof and due application of mind has not drawn any adverse inference and income has been rightly assessed under the head “business income”. In light of the same, we are of the considered view that the order so passed by the Assessing officer cannot be held as erroneous due to lack of enquiry or for that matter, requisite enquiry on the part of the Assessing officer. Where the Assessing officer after due appreciation of facts and circumstances of the case, assessed the income under the head “business income” and didn’t invoke the deeming provisions as so suggested by the ld PCIT, we do not believe that there is any error on part of the Assessing officer and the order so passed by him cannot be held as erroneous
The view so taken by the AO is after due application of mind and therefore cannot be held as unsustainable in the eyes of law. In the facts and circumstances of the present case, where there are specific questions asked during the course of survey regarding the nature and source of income and which has been adequately responded to by the assessee and thereafter acted upon in terms of disclosing the income in the return of income under the appropriate head of income and where the same is duly examined and taken into consideration by the Assessing officer during the course of assessment proceedings, the order so passed by the Assessing officer cannot be held as erroneous in nature. - Decided in favour of assessee.
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2022 (8) TMI 431
Penalty u/s 271B - Non specification of clear fault/charge - HELD THAT:- As penalty notice did not explicitly convey to the assessee the specific fault/charge the assessee is being proceeded for levy of penalty. Resultantly, the show cause notice is found to be defective/invalid, and therefore it is held to be bad in law. For doing that we rely on the decision of the Hon’ble Karnataka High Court in the case of CIT vs Manjunatha Cotton and Ginning Factory [2013 (7) TMI 620 - KARNATAKA HIGH COURT] and the Department’s SLP against it has been dismissed by the Hon’ble Supreme Court [2016 (8) TMI 1145 - SC ORDER].
We also find that Hon’ble Karnataka High Court in the case of CIT Vs. SSA’s Emerald Meadows [2015 (11) TMI 1620 - KARNATAKA HIGH COURT] endorsed the same view in Manjunatha Cotton and Ginning Factory [2013 (7) TMI 620 - KARNATAKA HIGH COURT].
As well as the binding decision of the Full bench decision of the Hon’ble jurisdiction High Court’s in the case of Mohd. Farhan A. Shaikh [2021 (3) TMI 608 - BOMBAY HIGH COURT] we direct the deletion of the penalty levied in this case. Appeal of assessee allowed.
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2022 (8) TMI 430
Disallowance u/s 14A r.w.r. 8D - expenditure on exempt income earned by the Assessee during the relevant previous year - Scope of amendments to Section 14A of the Act - HELD THAT:- We note that the Mumbai Bench of the Tribunal has, in the case of Assistant Commissioner of Income Tax- Circle 3(1)(1) Vs Bajaj Capital Ventures (P.) Ltd. [2022 (7) TMI 23 - ITAT MUMBAI] and also in the case of K Raheja Corporate Services Private Limited [2022 (7) TMI 1044 - ITAT MUMBAI] held that the amendments to Section 14A introduced by the Finance Act 2022 shall apply from Assessment Year 2022-23 and onwards. Further, Hon’ble Delhi High Court in the case of Principal Commissioner of Income-Tax (Central) -2 Vs. M/s Era Infrastructure India Ltd [2022 (7) TMI 1093 - DELHI HIGH COURT] has rejected the contention of the Revenue that amendments to Section 14A introduced by the Finance Act 2022 shall have retrospective effect. Accordingly, Ground No.1 raised by the Revenue is dismissed.
MAT computation - Disallowance u/s 14A computed as per the provisions of Rule 8D of the Rules for the purpose of computing book profits in terms of Section 115JB - HELD THAT:- This issues stands decided in favour of the Assessee by the decision of Special Bench of the Tribunal in the case of ACIT Vs Vireet investments Private Limited [2017 (6) TMI 1124 - ITAT DELHI]. Further, the Tribunal has, in the case of the Assessee for the Assessment Year 2013-14 and 2014-15 deleted identical adjustment made by the Assessing Officer while computing Book Profits for the purpose of Section 115JB - CIT(A) has granted relief to the Assessee by following the aforesaid decisions. It is not the contention of the Revenue that the operation of the aforesaid decisions has been stayed in appeal preferred by the Revenue. In view of the aforesaid and taking into account our findings in paragraph 7 above, we hold that there is no infirmity in the order passed by the CIT(A) on this issue. Accordingly, Ground No. 2 raised by the Revenue is dismissed.
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2022 (8) TMI 429
Revision u/s 263 - disallowance u/s 14A - HELD THAT:- PCIT invoked the provisions of section 263 of the Act on basis of the order passed u/s 143(3) r.w.s. 263 of the Act on 31.03.2016. The entire assessment order was generated as per the direction of the order of the Ld. PCIT u/s 263 of the Act passed on 30.03.2015 but this order u/s 263 of the Act has already quashed by the ITAT in order dated 18.04.2022.
Accordingly, this order passed u/s 263 of the Act has no leg to stand. The execution of order u/s 143(3) r.w.s. 263 is also has no life after the order of ITAT. The order passed u/s 263 of the Act on 13.03.2018 was generated on basis of nonest order. So entire foundation of the second round of order u/s 263 is beyond jurisdiction. Accordingly, the order passed u/s 263 of the Act on dated 13.03.218 is quashed.
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2022 (8) TMI 428
Addition on account of peak credit, being undisclosed capital in the bank accounts of the assessee - CIT(A) allowed part claim as genuine capital arises from past accumulated savings of assessee and remaining addition confirmed as undisclosed capital of the assessee - HELD THAT:- No reasons to disagree with the ld. CIT(A)’s findings where the CIT(A) regarding addition made by AO on account of peak credit being undisclosed capital in bank a/c’s of the assessee where the ld. CIT(A) viewed that sum of Rs. 4,00,000/- as genuine capital i.e. out of accumulated past savings and remaining amount of Rs. 4,01,210/- was confirmed as undisclosed capital i.e. total addition of Rs. 8,01,210/- - Rs. 4,00,000/- = Rs. 4,01,210/- as undisclosed capital and it was a reasonable order passed under the provisions of law and accordingly we sustained the order passed by the CIT(A). - Decided against assessee.
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2022 (8) TMI 376
Capital Gain on sale of land - application of provision of section 50C - HELD THAT:- Since the consideration was fixed and paid by the parties at the time of agreement of sale on 09.07.2010 and possession of the land was also given to the buyer, only the registration of the Sale Deed was pending which was done on 24.03.2012 i.e. these two events took place in two different assessment years. In such a situation amended provisions of Section 50C(1) of the Act brought by the Finance Act, 2016 will be applicable in the case of the assessee, which are retrospective. therefore, as per amended provisions of section 50C(1) for computation of Capital Gain in the hands of assessee, the AO should consider the guideline value of the land which the stamp duty authority has adopted for charging of stamp duty on the date of agreement to sale and not on the date of sale deed. We therefore find merit in the contention of the assessee and accordingly decide this issue in favour of the assessee.
Amount of consideration - As noted that the assessee has actually received a consideration of Rs. 4,36,000/- and Rs. 1,00,000/- i.e. in aggregate Rs. 5,36,000/- by way of 2 Sale Deeds for completion of the sale of parcel of land referred to in the Agreement to Sale dated 09.07.2010. Since, the actual consideration received by the Seller / Assessee for Rs.5,36,000/- is higher than the guideline value to be adopted following the judicial pronouncements with reference to the amended provisions of Section 50C(1) which is Rs. 4,08,000/- as discussed in preceding paras, therefore the consideration for calculation of Capital Gains would be higher of these two amounts which is the actual amount received by the assessee i.e. Rs. 5,36,000/-.
Deduction u/s.54F - AO has rightly and undisputedly already allowed the claim of the assessee for exemption u/s 54F of the Act for purchase of land and construction of house at Raipur for Rs.16,05,000/-, however, the only dispute was regarding the amount of consideration u/s section 50C(1) of the Act, which was taken by AO for Rs.2,16,08,500/, whereas the same should be Rs. 5,36,000/- as decided by us in terms of our observations as above.
Appeal of assessee is allowed.
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2022 (8) TMI 388
Gift u/s 56(2) (vii) - scope of term relatives u/s 2(41) - Grant of exemption from income tax on gifts received - relatives as defined under Section 2(g) of the Senior Citizens Act - To be treated at par with ‘relative’ under Section 2(41) and Section 56 of the Income Tax Act, 1961 or not - HELD THAT:- Gift of property was brought under the purview of tax with effect from 1st October, 2010 vide the Finance Act, 2010. To avoid misuse of gift of properties, the expression ‘relative’ was defined in a narrow and restricted manner in the IT Act. In the explanatory notes to the provisions of the Finance Act, 2010 it is stated that the “The provisions of Section 56(2) (vii) were introduced as a counter evasion mechanism to prevent laundering of unaccounted income. The provisions were intended to extend the tax net to such transactions in kind.” This means that the legislature deliberately left out the gifts received from people other than those specified in the provisions from being exempted from getting taxed.
Further, the Senior Citizens Act defines the term ‘relative’ under the said Act and that too with a stipulation “unless the context otherwise requires”.
This Court is of the opinion that it is clear from the object of both the Acts that the same expression ‘relative’ is not used in similar context. In fact, the term ‘relative’ being wholly context-specific, there is no reason to assume that the criteria used in defining it in one context will provide even a useful starting point in another context. The Courts have long rejected any attempt to force them to regard cross-contextual applications of definitions as binding.
Consequently, a statutory definition in one context cannot be imported in another Act especially when the two Acts define the same term differently.
General approach of the Courts is to ensure that they do not stray into usurping the legislative function - The general approach of the Courts is to ensure that they do not stray into usurping the legislative function. A specific instance of this approach is the rule that a casus omissus is not to be created or supplied, so that a statute may not be extended to meet a case for which provision has clearly and undoubtedly not been made.
Real intent is to ensure that gift tax is not levied on Donee. The present petition in no manner promotes the maintenance and welfare of senior citizens. Consequently, the reliance of learned counsel for the petitioner on Sections 3 and 4 of the Senior Citizens Act is untenable in law and the argument that the IT Act makes two classes of Senior Citizens Act is contrary to facts. The order issuing notice in Ms. X vs. The Principal Secretary Health and Family Welfare Department Govt. of NCT of Delhi [2022 (8) TMI 298 - DELHI HIGH COURT] also offers no assistance to the petitioner.
This Court is of the opinion that Section 23 of the Senior Citizens Act confers additional remedy upon senior citizens in certain circumstances. However, the said Section does not restrict the right of the Donee to challenge the gift/transfer made by a senior citizen in accordance with law. WP dismissed.
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2022 (8) TMI 427
Capital capital computation - expense deductible u/s 48 - payment made to a person who helped the assessee in obtaining favorable decision in her favour - it is apparently clear that right from the beginning of the agreement with that person that all the expenses involved in the process of obtaining vacant possession by evicting the Indian Navy would be borne by that person only - HELD THAT:- It is evident from the chronology of the events discussed (supra) and relying on the findings in the matter Mrs. Meher Rusi Dalal [2011 (9) TMI 1235 - ITAT MUMBAI], wherein coordinating bench of tribunal have allowed 33.33% of the total consideration to obtain a compensation as early as possible from the land acquisition authorities .Here also assessee availed the same services in the similar circumstances. A.O. and LD CIT (Appeal) himself observed that the matter was in litigation in court and compensation could be enhanced, if at all, only in a legal manner. It is not the case that there was no legal battle and just to avoid tax liability assessee as a matter of diversion of income opted for any colorable device by including Mr. Kishore Manusukhani the whole scenario of the matter clearly indicates that the assessee was suffering with the illegal occupancy of her land and requires a help to come out this adverse situation.
Without any advance payment or any commitment to Mr. Kishore Manusukhani other than on successful outcome. This material fact can’t be ignored by the authorities below and this amount is clearly not a diversion of income rather it’s an expense deductible u/s 48 of the act. This amount is in extricable part of the whole transaction hence allowable u/s 48, in the result ground no 1 and 2 of the assessee are allowed and A.O. is directed to delete the disallowance while computing the income of the assessee.
Cost inflation index (CII) till F.Y. 1994-95 instead of CII for Financial year 2010-11 - HELD THAT:- As in our considered view assessee is entitled for CII till F.Y. 2010-11 in the light of above Ground No. 3 of the appellant is allowed and A.O. is hereby directed to give effect of this finding while computing the income of assessee.
Quantum of interest received by the assessee on compensation up to the date of land acquisition by the Ministry of Defense/Special Land Acquisition Officer pursuant to the Supreme Court order - Whether to be tax the same under the head 'Capital Gain' in terms of section 45(5)(b) r.w.s. 48 and the balance interest paid to assessee for any delay in payment of the compensation, from the date of acquisition of the property in pursuance to High Court/Supreme Court order, as 'Income from Other Sources'? - HELD THAT:- As interest paid to the assessee for any delay in payment of the compensation from the date of acquisition of the property in pursuance to Hon’ble Supreme Court order, the same should be taxed under the head “Income from other sources” and compensation with interest received by the assessee up to the date of land acquisition pursuant to the Hon’ble Supreme Court order should be taxed under the head “Capital Gains”. We confirm the view of Ld. CIT (A) and resultantly dismiss the ground of appeal taken by revenue on this issue.
Deduction of 50% of that portion of the aggregate compensation received by the assessee liable to be taxed under the head “Income from Other Sources” - HELD THAT:- In this regard claim of the assessee is very much unambiguous and any income of the assessee falling under section 56(2)(viii) is liable for deduction @ 50% under section 57(iv). On this ground, we are not inclined to interfere with the findings of Ld. CIT(A), hence, this ground of Revenue is dismissed.
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2022 (8) TMI 387
Waiver of interest under Section 234B and 234C - Non deduction of TDS by the payer - whether interest is to be paid u/s 234B when no advance tax is payable by the assessee and when the deductor/ the employer abroad, had not deducted tax at source, but has subsequently paid the tax with interest and whether the assessee/payee can be charged with interest? - HELD THAT:- The view of the Bombay High Court in NGC Network Asia [2009 (1) TMI 174 - BOMBAY HIGH COURT] and the Uttaranchal High Court in Sedco Forex International Drilling Co.Ltd [2003 (10) TMI 40 - UTTARANCHAL HIGH COURT] has been upheld by the Hon’ble Apex Court in Mitsubishi Corporation [2021 (9) TMI 875 - SUPREME COURT] held that find no force in the contention of the Revenue that Section 234B should be read in isolation without reference to the other provisions of Chapter XVII. The liability for payment of interest as provided in Section 234B is for default in payment of advance tax. While the definition of “assessed tax” under Section 234B pertains to tax deducted or collected at source, the pre-conditions of Section 234B, viz. liability to pay advance tax and non- payment or short payment of such tax, have to be satisfied, after which interest can be levied taking into account the assessed tax. Therefore, Section 209 of the Act which relates to the computation of advance tax payable by the assessee cannot be ignored while construing the contents of Section 234B. As we have already held that prior to the financial year 2012-13, the amount of income-tax which is deductible or collectible at source can be reduced by the assessee while calculating advance tax, the Respondent cannot be held to have defaulted in payment of its advance tax liability. There is no doubt that the position has changed since the financial year 2012-13, in view of the proviso to Section 209 (1) (d), pursuant to which if the assessee receives any amount, including the tax deductible at source on such amount, the assessee cannot reduce such tax while computing its advance tax liability.
After dismissing the appeal filed by the revenue, the appeals of the Assessees on the same issue were allowed referring to the above judgment. Therefore, this is no longer res integra and the claim of the assessees thus stands vindicated.
Scope of Notification in F.NO400/234/95-IT(B) dated 23-5-1996 issued under Section 119 wherein the Chief Commissioner and the Director General of Income Tax may reduce or waive the interest charged under Section 234A or Section 234B or Section 234C of the Act in the classes of cases or classes of Income specified in paragraph 2 of the order for the period and to the extent the Chief Commissioner of Income tax/Director General of Income Tax deems fit - HELD THAT:- The law as applicable on the date of the application must be applied. In the present case, the appellant had the right to apply for waiver as per the notification dated 23-05-1996 by invoking clause 2 (e) which empowered an assessee to apply for waiver, when the return could not be filed for “unavoidable reasons”, when the application was filed in 2003. Once the applicant was found eligible to apply on the date of application, his application cannot be thrown out as not maintainable because of a subsequent notification. It is one thing to say that the relief is discretionary and another to state that the application is not maintainable. The subsequent notification will not affect the consideration of the applications pending on merit. Such an interpretation would not be against the law laid down by the Apex Court, but would also be arbitrary. Therefore, the contention of the revenue on this ground is rejected. Insofar as the merit is concerned, we have already seen that the legal issue as to chargeability till the financial year 2012-13 has been decided in favour of the assessee in Mitsubishi case (supra). Therefore, we find no ground to interfere with the findings of the Learned Judge by relying upon the Judgment in Chennai Port Trust case, to exclude the period till the decision was taken by AAR.
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2022 (8) TMI 386
TP Adjustment - selection of MAM - Tribunal held that resale price method adopted by the assessee in determining its ALP of international transactions with AE, is not applicable, while remanding the matter back to the TPO for fresh determination - HELD THAT:- Tribunal was of the view that the resale price method adopted by the assessee in determining its ALP of international transactions with AE is not applicable. At the same time, the Tribunal was of the further view that the CUP method adopted by the TPO is also not applicable, because the TPO has compared the price of bulk drugs and intermediates sold to non-AEs in small quantity on trial basis, located in Germany, Vietnam, Greece, Japan, Turkey, Argentina, Mexico, Saudi Arabia, Malaysia and Thailand with the AE located in USA on wholesale basis. Thus, it is evident that there were some contradictions in the findings of the Tribunal, with regard to the method adopted by the TPO in determining the ALP. However, the order passed by the Tribunal, in remanding the matter to the TPO for fresh determination of ALP, in the facts and circumstances of the case, need not be interfered, in the considered opinion of this court.
Transfer Pricing Officer is directed to redo the entire process of determination of ALP of international transactions with AE, without being influenced by any observation made by the Tribunal and render an independent finding with regard to the issues involved herein, after granting due opportunity of hearing to the appellant/assessee to put forth its case.
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2022 (8) TMI 385
Application before the settlement commission - Power of Settlement Commission to reopen completed proceedings - settlement application filed by the appellant was rejected by the second respondent commission by order u/s 245D(4) on the ground that the appellant has not disclosed the full and true income in its application and hence, the same is not maintainable - HELD THAT:- Admittedly, one can approach the settlement Commission only when there is an undisclosed income that escaped assessment. Therefore, it is completely unnecessary and beyond the scope of the commission to find fault or with the modus operandi of the assessee in arranging their tax liability, while deciding an application under Section 245D.
In the present case, we are satisfied that the assessee has fully disclosed all the primary facts and produced the documents in support of the same. At the cost of repetition, all the materials placed before the Commission are to be considered as per Section 245D (5). Therefore, we do not agree with the finding of the settlement commission that there is no full and true discloure of the income by the appellant and hence, the application is not maintainable. It is relevant to point out that no new materials were produced by the department to enable the settlement commission to take a different view that there was no true and full disclosure. Rather, the department and the settlement commission have embarked upon to alter their earlier view or inference, which cannot be a reason to thwart the application as not maintainable. The paradox in the functioning of settlement commission, comprising of senior members from the department, deviating from the neutrality of a quasi-judicial authority, would have invited our much attention if it had not been abolished and replaced with interim board.
We have no hesitation to hold that the order of the settlement commission has been passed in violation of the principles of natural justice and against the procedures prescribed under the Income Tax Act and hence, the same is liable to be set aside and the matter is remanded back for fresh consideration after giving opportunity to both the parties.
Whether the Interim Board can now decide the matter? - It is necessary to briefly take note of the relevant dates. The application before the settlement commission was filed on 02.03.2015. The order under section 245D(1) was passed by the settlement commission on 03.03.2015. After taking note of the reports filed by the department, the settlement commission rejected the application as not maintainable on 30.09.2016. The writ petition was filed before this Court in October 2016 and the same was dismissed on 03.09.2021. In the meantime, by Finance Act 2021, Sections 245A and 245B were amended by which the Settlement Commission ceased to exist, and “interim Board” was substituted. The Amendment Act came into force on 01/04/2021. By the amended provisions, initially, the Interim Board was entitled to entertain only applications which were pending.
By the amendment, it was made clear that no application will be entertained after 01.02.2021. Thereafter, the Central Government has constituted Interim Board for Settlement vide Notification no. 91 of 2021 dated 10.08.2021.
The said press release was issued after several High Courts issued directions to entertain the applications for settlement. It was further stated that the assessees, who were eligible to file an application as on 31.01.2021 and where assessments are pending, would be eligible to file their application till 30th September 2021. It was also made clear that the applications filed by the assessees based on the directions of the High Courts would be entertained. Following the press release, an order under Section 119 (2) (b) of the Act came to be passed.
The above order has been issued by exercising the powers under Section 119 in line with the press release dated 07.09.2021. In the present case, pending the assessment proceedings relating to the assessment years from 2007-08 to 2014-15, the appellant filed the settlement application, which was rejected by the Settlement Commission on 30.09.2016, the challenge to the same was accepted by this Court. The writ petition was pending when the Settlement Commission was abolished and Interim Board was brought into operation. This court is of the view that the restrictive circumstances under which an Interim Board can entertain an application, is applicable only when an application is filed afresh or pending and not applicable to cases where the High Court in exercise of its powers under Article 226 of the Constitution of India, set asides an earlier order and remands back the matter for fresh consideration. The powers of the High Court which emanate from the Constitution cannot be curtailed by a law made by the legislature, such law being subordinate to the Constitution.
Upon the matter being remanded, the application filed by the Appellant would have to be treated as a pending application and appropriate orders are to be passed after giving the appellant sufficient opportunity and by considering all the materials placed by them. Therefore, this court has no hesitation in remanding back the matter to the Interim Board, which shall dispose of the application within a period of six weeks from the date of receipt of this order on merits and in accordance with law, after giving sufficient opportunity to the appellant and the respondents and also by considering all the documents placed.
This appeal stands allowed by setting aside the order impugned in the writ petition as well as in this appeal.
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Benami Property
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2022 (8) TMI 426
Benami transactions - matter was heard by one authority and the judgment was pronounced by another authority - jurisdiction of Adjudicating Authority, Mumbai - scope of notification dated 17.09.2021 extending the time period from 30.09.2021 to 31.03.2022 for pronouncing judgments in cases where hearings had been completed and orders were reserved cannot be applied to the present cases - provisional Attachment Orders were passed by the Initiating Officer under the Prohibition for Benami Property Transactions Act - HELD THAT:- The notification dated 17.09.2021, would apply to such of those officers who had reserved orders, but had not pronounced it within the time as stipulated by the notification. The said notification cannot be extended to an officer who has ceased to occupy the post. Further, the notification dated 17.09.2021 only extended the period from 30.09.2021 to 31.03.2022 to deliver judgments in cases where the Adjudicating Authority was yet to deliver its judgments.
Mr. Hari Govind Singh had not pronounced any judgment prior to 08.10.2021 and on that day, Mr. Hari Govind Singh, who was only holding additional charge ceased to be Adjudicating Authority, New Delhi.
A writ is maintainable when there is a right. In the absence of any right, a writ cannot be passed. The Appellant has not been able to demonstrate violation of any right or breach of any notification which states that an Authority should pronounce the judgment in a matter heard by it even after the person, who heard the matter, has ceased to occupy the chair. This Court, therefore, does not find any reason to interfere with the judgment passed by the learned Single Judge in the Writ Petitions.
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Customs
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2022 (8) TMI 375
Smuggling - Gold - Toyota Fortuner - prohibited goods or not - retraction of statements - respondent retracted his earlier statement, where he had admitted that he had brought the gold from Rinchenghang, TAR, China and instead categorically denied its ownership - HELD THAT:- In terms of Section 245 of the Cr.P.C., the Learned Trial Court is indeed required to examine whether any case against the accused has been made out which if unrebutted, would warrant his conviction and in such a circumstance the Magistrate should discharge him. However, the Learned Trial Court cannot weigh the evidence furnished at this stage, on golden scales. The evidence is to be examined for the purposes of a prima facie case. In the instant matter it prima facie appears that gold had been smuggled into the country by the Respondent from Rinchenghang, TAR, seizure of which was made by the SHO, Sherathang P.S., in the presence of witnesses. That, in terms of Notification No.38/96-Customs dated 23-07-1996 as amended subsequently, Gold is not permitted to be imported from China into India by individuals.
A prima facie case has been made out by the Petitioner against the Respondent and the Order of discharge of the Respondent is thus perverse and not sustainable. The impugned Order is accordingly set aside - Petition disposed off.
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Corporate Laws
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2022 (8) TMI 425
Maintainability of application - Scheme of Compromise and Arrangement - independent Non-Government Director - application was dismissed on the ground that he is disqualified to submit a Compromise or arrangement as he is one of the Directors of company of Corporate Debtor and the Applicant, being a related person - HELD THAT:- Meaning of the word “control” is defined under the Companies Act and it shall include the right to appoint majority of the Directors or to control the management or policy decision exercisable by a person or person acting individually or in concert directly or indirectly including by virtue of their shareholding or management rights or shareholder’s arrangements of voting agreement or any other mean - Here in this case, the Appellant being an independent Non- Executive Director is neither having control as defined under the Companies Act, 2013 nor in the management of the company affairs. No disqualification can be attached to him as per Regulation 2B of Liquidation Process Regulations as amended, to submit Scheme of Compromise and Arrangement.
In the judgment of Arun Kumar Jagatramka [2021 (3) TMI 611 - SUPREME COURT], Arcelor Mittal India Private Limited [2018 (10) TMI 312 - SUPREME COURT] was considered only to the extent of intendment of IBC and not for any other principle however concluded that some scheme mentioned in Section 29A of IBC is applicable to Section 35(1)(f) of IBC. The Apex Court went on to consider the disqualification clause under Section 230(1) of the Companies Act, 2013 amended provisions i.e., proviso to the Regulation 2-B- Liquidation Regulation Act. The Apex Court undertook clarificatory exercise and concluded in the judgment that rationale which permeates the resolution process under Chapter-2 (by virtue of Section 29A of IBC) permeates the liquidation process under Chapter-3 of Section 35(i)(f).
There can be no doubt that the proviso to Regulation 2B of Liquidation Process Regulation, a person who is ineligible under Section 29A of IBC would not be permitted to propose a Compromise or Arrangement under Section 230 of the Companies Act, 2013. At the end of the judgment, the Hon’ble Supreme Court concluded that the disqualification placed by the Parliament in Section 29A and 35(i)(f) of IBC must also attach itself to Scheme of Compromise and Arrangement under Section 230 of the Companies Act, and when the Company is undergoing liquidation under the auspicious of IBC. As such, Regulation 2B of Liquidation Process Regulation, especially, proviso to 2B is also constitutionally valid.
Since, the dispute relates to pre-amendment to Regulation 2B of Liquidation Process Regulation and that no disqualification be attached to independent non-executive Director as per Regulation 2-B of Liquidation Process Regulation r/w Section 29-A and 35(1)(f) of IBC to submit Scheme of Compromise and Arrangement. The Appellant being independent non-executive is not disqualified to propose Compromise and Arrangement in the pendency proceedings relating to liquidation prior to commencement of amended proviso to Regulation 2-B of Liquidation Regulation.
Application is hereby set aside holding that the Appellant being independent nonexecutive Director to submit Scheme of Compromise and Arrangement during liquidation process - appeal allowed.
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2022 (8) TMI 374
Permanent stay of winding up proceedings - Company failed to pay the debts - going concert - BIFR sanctioned the scheme of revival - HELD THAT:- A bare reading of the Section 466 of Companies Act, clarifies, that following two conditions are required to be satisfied for bringing an order of permanent stay of winding up in existence:
(i) filing of an application either of the Official Liquidator or of any creditor or contributory for stay of winding up proceedings.
(ii) proof to the satisfaction of the Court that all proceedings in relation to the winding up ought to be stayed.
If the above two conditions are satisfied, the Company Judge has the discretion to stay the winding up proceedings, either altogether or for a limited time and impose appropriate terms and conditions. A copy of the order of the stay is required to be forwarded to the Registrar forthwith who is required to make a minute of the order in his books relating to the company - In the present case, applications for permanent stay of winding up proceedings being CA 191 of 2002 and CA 186 of 2001 are pending. Proof to the satisfaction of the Court as required by Section 466 is yet to be recorded by the Company Judge.
It is worth noting that Section 466(1) does not use the phrase “permanent stay” but the expression “order staying the proceedings altogether” has the effect of permanent stay of proceedings.
So far as the effect of order of permanent stay of winding up proceedings is concerned, in the case of SUDARSAN CHITS (I.) LTD. VERSUS O. SUKUMARAN PILLAI [1984 (8) TMI 242 - SUPREME COURT], Hon’ble Supreme Court has held in para 14 that when winding up order is kept in abeyance it is in the state of suspended animation meaning thereby it was effectively subsisting but inoperative for the time being.
This court cannot lose sight of the settled legal position that winding up should be resorted to as the last resort after exhausting all remedies. In the facts of this case and especially considering the fact that the Company is operating as a going concern, it is not in the interest of justice to direct winding up of the company. It is worth noting that a large sum of Rs. 170 crores is lying in deposit with the Registrar of this Court and possibility of some of the contesting parties having an eye on it cannot be ruled out. Hence, every effort is required to be made to ensure the amount is utilized for rightful purposes.
In the present case, for all practical purposes there is permanent stay of the winding up proceedings and only a formal order of permanent stay is required to be passed by Company Judge after obtaining audit report and recording a finding relating to satisfaction of settled conditions for such order.
The appeal is disposed off with certain modifications.
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2022 (8) TMI 424
Restoration of the name of the Appellant Company in the register of the Registrar of Companies - Section 252 of the Companies Act, 2013 - HELD THAT:- It is clearly established that the company was not undertaking business transaction before the striking off and that due to family differences the directors became negligent towards the annual filings. Moreover, the appellant has not provided sufficient documentary evidence to support its averments, that the business was in operation prior to after the striking off period. Therefore, it is concluded that the Appellant Company was neither in operation nor doing any significant business at the time when its name was struck off from the register of RoC.
This Bench is not inclined to interfere with the striking off action taken by the RoC against the Appellant Company under Section 248(5) of the Companies Act 2013 - Appeal dismissed.
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2022 (8) TMI 373
Sanction of composite scheme of demerger - dispensation of the meetings of Shareholders, Secured Creditors and Unsecured Creditors of both the Applicant Companies - Section 230-232 of the Companies Act, 2013 - HELD THAT:- Various directions with regard to holding, convening and dispensation with various meetings issued - directions with regard to issuance of various notices issued.
Application allowed.
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2022 (8) TMI 372
Sanction of Scheme of Arrangement - Section 230 to 232 and other applicable provisions of the Companies Act, 2013(hereinafter 'the Act') read with Companies (Compromises, Arrangements and Amalgamations) Rules, 2016 - HELD THAT:- After analyzing the Scheme in detail, this Tribunal is of the considered view that the scheme as contemplated amongst the petitioner companies seems to be prima facie beneficial to the Company and will not be in any way detrimental to the interest of the shareholders of the Company. In view of absence of any other objections having been placed on record before this Tribunal and since all the requisite statutory compliances having been fulfilled, this Tribunal sanctions the Scheme of Arrangement.
The scheme is approved - Application allowed.
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Securities / SEBI
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2022 (8) TMI 423
Offence under SEBI - Period of limitation - Whether this appeal is maintainable? - HELD THAT:- Any limitation prescribed under Section 468 of CrPC can be overlooked if sufficient cause is made out in the facts and circumstances of the individual case in the interest of justice. The said provision, while trying to balance public interest in initiating criminal prosecutions, has been restricted to peculiarities of individual case while clothing the Court with discretionary power. Such a discretion vested in the Court ought to be a principled exercise, wherein the facts and circumstances portrayed justify such an exercise. The intention of the aforesaid provision is to make the inquiry a question of fact and not of untrammelled discretion as to whether in a particular case, the Court should condone the delay.
The High Court is bound to consider the facts of the present case concerning the modus of initiation of the case and other factors, before considering the aspect of condonation of delay in terms of Section 473 of CrPC. The approach of the High Court of adjourning adjudication of the interim application seeking disclosure of documents cannot be appreciated. Ideally, the High Court ought to have considered the interim application before dealing with the limitation aspect.
Initiation of criminal action in commercial transactions, should take place with a lot of circumspection and the Courts ought to act as gate keepers for the same. Initiating frivolous criminal actions against large corporations, would give rise to adverse economic consequences for the country in the long run. Therefore, the Regulator must be cautious in initiating such an action and carefully weigh each factor.
In ordinary course, this Court would have remanded the matter for adjudication by the High Court on the interim application moved by the appellant seeking such disclosure. However, arguments have been extensively advanced before this Court touching upon important aspects of criminal jurisprudence which require consideration. Moreover, the facts stated above, clearly indicate that the acts which are sought to be prosecuted go back to the year 19921994, and over three decades have passed without there being any end to the litigation. In this regard, the Court intends to examine this important issue and pass appropriate orders to ensure that the adjudication is not delayed unnecessarily, ad infinitum.
Whether SEBI is required to disclose documents in the present set of proceedings? - whether the interim application seeking documents, filed by the appellant herein deserves to be allowed in the instant case? - In this case, the appellant has been pursuing SEBI for these documents as they believe that an attempt is being made by SEBI to suppress the Opinions and Reports as they are adverse to the cause of SEBI.
A cursory glance at the background of the matter would reveal that initially, a complaint was submitted to SEBI on 21.01.2002, wherein the appellant and its directors were purportedly involved in irregularities in allotment of NonConvertible Debentures in the year 1994. Accordingly, an Investigation Report was submitted by the Investigating Authority on 04.02.2005. SEBI in its counteraffidavit has admitted that the aforesaid Report was inconclusive and recommended further enquiry in this regard.
SEBI is a regulator and has a duty to act fairly, while conducting proceedings or initiating any action against the parties. Being a quasijudicial body, the constitutional mandate of SEBI is to act fairly, in accordance with the rules prescribed by law. The role of a Regulator is to deal with complaints and parties in a fair manner, and not to circumvent the rule of law for getting successful convictions. There is a substantive duty on the Regulators to show fairness, in the form of public cooperation and deference.
The duty to act fairly by SEBI, is inextricably tied with the principles of natural justice, wherein a party cannot be condemned without having been given an adequate opportunity to defend itself.
The approach of SEBI, in failing to disclose the documents also raises concerns of transparency and fair trial. Opaqueness only propagates prejudice and partiality. Opaqueness is antithetical to transparency. It is of utmost importance that in a country grounded in the Rule of Law, institutions ought to adopt procedures that further the democratic principles of transparency and accountability. Principles of fairness and transparency of adjudicatory proceedings are the cornerstone of the principles of open justice.
Even for adjudication of condonation of delay under Section 473, CrPC, the modus of initiation of criminal complaint and the conclusions reached therein are relevant in the facts and circumstance of the case.
The simple test in this case is whether SEBI has launched the prosecution on the basis of the investigation report alone. The answer seems to be ‘No’ by SEBI’s own admission in its reply where it states that the investigation report was inconclusive and hence further scrutiny of the transactions by experts was called for. That being the case, further Reports and opinions obtained, from whomsoever it may be, are only an extension of the investigation to help SEBI as a Regulator to ascertain the facts and reach conclusions for prosecution or otherwise.
We do not agree with the contention of the learned Senior Counsel for SEBI that the first opinion of Justice (Retd.) B. N. Srikrishna is covered by ‘legal privilege’ under Section 129 of the Evidence Act. Same is the case with the second opinion of Justice (Retd.) B. N. Srikrishna and the Report of Sh. Y. H. Malegam, which are nothing but a continuation of the fact finding exercise undertaken by SEBI to determine culpability.
Thus we are of the firm opinion that the defence taken by SEBI that they need not disclose any documents at this stage as such a request is premature in terms of the CrPC, cannot be sustained.
SEBI’s attempt to cherrypick the documents it proposes to disclose - There is a dispute about the fact that certain excerpts of the opinion of Justice (Retd.) B. N. Srikrishna, were disclosed to the appellant herein. It is the allegation of the appellant that while the parts which were disclosed, vaguely point to the culpability of the appellant, SEBI is refusing to divulge the information which exonerate it. Such cherrypicking by SEBI only derogates the commitment to a fair trial.. In the case at hand, SEBI could not have claimed privilege over certain parts of the documents and at the same time, agreeing to disclose some part. Such selective disclosure cannot be countenanced in law as it clearly amounts to cherrypicking. Appeal allowed.
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2022 (8) TMI 422
Manipulation of share price - guilty of violating provisions of Section 12A (a), (b), (c) of the SEBI Act read with Regulations 3 (a), 3(b), 3(c), 3(d), 4(1), 4(2)(a), 4(2) (e) and 4(2)(g) of the PFUTP Regulations - imposition of a penalty - huge sale order at a price higher than the last traded price of the company and thereafter to make a self-trade of only one share for that higher price, thus, establishing a new higher LTP - HELD THAT:- In the present case, the WTM, while imposing an order of debarment, has specifically applied her mind to the issue as regards the impact of such a manipulation. While dealing with this aspect, the WTM has observed that the manipulation of the price of scrips seriously impinges upon other counter parties in the securities market. In other words, the impact of a manipulation which is carried out by a participant in the securities market cannot be assessed only in terms of the gain which has been caused to the participants themselves, but in terms of the wider consequences of the action on the securities market.
In N. Narayanan v. SEBI [2013 (4) TMI 652 - SUPREME COURT] this Court observed that Section 12-A of the SEBI Act read with Regulations 3 and 4 of the PFUTP Regulations specifically aim to curb market manipulations which can have an adverse effect on investor confidence and the healthy growth of the securities market.
The securities market deals with the wealth of investors. Any such manipulation is liable to cause serious detriment to investors’ wealth. In this backdrop, the order which has been passed by the WTM cannot be regarded as disproportionate so as to result in the interference of this Court in the exercise of its jurisdiction under Section 15Z of the SEBI Act. Moreover, the WTM has prohibited the appellant from participating in its proprietary account for a specified period, leaving it open to the appellant to continue operation in their broking account. Appeal dismissed.
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Insolvency & Bankruptcy
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2022 (8) TMI 421
Validity of petition admitted - Corporate Debtor failed to make repayment of its dues - Financial Creditors - existence of debt and dispute or not - HELD THAT:- The Adjudicating Authority under Section 7 of the Insolvency & Bankruptcy Code, 2016 is to ascertain whether there is a Debt and Default committed by the Corporate Debtor. Always, it is open to the Corporate Debtor to point out that the Default has not occurred and the Debt / Default Claim is not due - this Tribunal on going through the Impugned Order passed by the Adjudicating Authority (National Company Law Tribunal, Hyderabad Bench, Hyderabad) is of the considered view that the aspect of Debt and Default were established.
When once the Debt due and payable in Law and in fact is established on the part of the Financial Creditor / Bank in a given case, then the rigour of Section 7 of the Insolvency & Bankruptcy Code, 2016 comes into operative plea. More importantly, the Default incurred by the Corporate Debtor / 3rd Respondent is not disputed on behalf of the Appellant before this Appellate Tribunal. To put it precisely, the Corporate Debtor had acknowledged that on 05.05.2019 a sum of Rs.63,36,61,897.26 was due and that was reflected in the Balance Sheet dated 31.03.2019.
This Tribunal unhesitatingly, comes to a consequent conclusion that the Adjudicating Authority (National Company Law Tribunal, Hyderabad Bench, Hyderabad) had rightly admitted the CP(IB) No.109/7/HDB/2020 on 27.06.2022 filed by the 1st Respondent / Financial Creditor / Bank (Syndicate Bank) and that the Impugned Order is free from legal flaws and consequently the instant Company Appeal fails.
Appeal dismissed.
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2022 (8) TMI 420
Initiation of CIRP - solvent debtor - NCLT ejected the Application - Corporate Debtor failed to make repayment of its dues - Operational Creditors - existence of debt and dispute or not - It is the main case of the Appellant/Operational Creditor that the Adjudicating Authority has wrongly observed that the demand notice under Section 8 of the Code was issued by an advocate and is therefore not valid - HELD THAT:- Notice sent by the Advocate on behalf of client is valid notice - Rejection application on this ground is not proper.
Rejection of application on the ground the debtor is MSME and a ‘going concern’ and a ‘viable entity’ - HELD THAT:- Unless the Operational Creditor along with its Application furnishes a copy of the invoices, the bank statements and the financial accounts, the Adjudicating Authority is empowered to reject an incomplete Application - The Preamble of IBC is carefully worded to describe the spirit and objective of the Code to be ‘Reorganisation’ and ‘Insolvency Resolution’, specifically omitting the word ‘Recovery’. The Parliament has made a conscious effort to ensure that there is a significant difference between ‘Resolution’ and ‘Recovery’. The Hon’ble Supreme Court has time and again observed that the fundamental intent of IBC is ‘maximising the value of assets’ in the process of ‘Resolution’.
If IBC is purely used for the purpose of Debt Recovery, particularly when the amounts due are small, and the Company is a solvent entity and is a going concern, the question of ‘Reorganising’ or ‘Resolution of the Company’ does not arise.
The Hon’ble Supreme court in Vidarbha Industries Power Ltd. vs. Axis Bank Ltd. [2022 (7) TMI 581 - SUPREME COURT] has observed that even if there is a ‘debt’ and ‘default’, the Adjudicating Authority should use its discretion in admitting/ rejecting an Application. In the instant case, the Adjudicating Authority has rightly rejected the Application on this ground too.
Appeal dismissed.
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2022 (8) TMI 418
Rejection of claims - time limitation - delay in filing the same as the extended period of 90 days under Regulation 12(2) of IBBI (CIRP) Regulations, 2016 in the present case had expired on 04.01.2022 - HELD THAT:- In the present case, the claims were filed on 07.02.2022/11.02.2022, and subsequently, the Resolution Plan was approved by the CoC on 28.02.2022. The operational creditor is a regular business associate of the corporate debtor having the principal amount of claim reflected in the Books of Account of the CD.Despite this back ground, it is apparent that the claims were not put up by the respondent-Resolution Professional with his observations before the CoC before the same was rejected. The issue of attachment of the wrong documents could have been addressed by the respondent-Resolution Professional by simply requisitioning the right documents and does not in itself give an excuse for not considering the claim.
Hon’ble NCLAT in the matter of SUMAT KUMAR GUPTA, RESOLUTION PROFESSIONAL, M/S VALLABH TEXTILES COMPANY LIMITED VERSUS M/S VARDHMAN INDUSTRIES LIMITED [2022 (7) TMI 1252 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , PRINCIPAL BENCH , NEW DELHI], wherein the Hon’ble NCLAT, inter alia, considered the issue of whether serious efforts were made by the Appellant/Resolution Professional in properly verifying the claim submitted before him by the Financial Creditor including classifying the debts into financial and operational debts.
In the present case the claim was received by the respondent-Resolution Professional before the approval of the resolution plan by the CoC in its 5th meeting held on 28.02.2022. Keeping in view of the above observations of the Hon’ble NCLAT, we hold that in the present case, an opportunity should have been given to the applicant by the respondent-Resolution Professional to rectify the mistakes in the claim form. The claim should not have been rejected summarily without presenting the complete facts to the CoC - Application allowed.
Direction to respondent-Resolution Professional to collate the claim of the applicant and to put the applicant’s name in the list maintained for this purpose - direction to respondent-Resolution Professional to give the voting rights to the applicant - HELD THAT:- In the present case, the claims were filed on 17.02.2022, and subsequently, the Resolution Plan was approved by the CoC on 28.02.2022. The operational creditor is a regular business associate of the corporate debtor having the principal amount of claim reflected in the Books of Account of the Corporate Debtor. Despite this background, it is apparent that the claims were not put up by the respondent-Resolution Professional with his observations before the CoC before the same was rejected - In the present case, the claim was received by the respondent-Resolution Professional before the approval of the resolution plan by the CoC in its 5th meeting held on 28.02.2022.
In the present case, an opportunity should have been given to the applicant by the respondent-Resolution Professional to rectify the mistakes in the claim form. The claim should not have been rejected summarily without presenting the complete facts to the CoC. In view of this, the respondent-Resolution Professional is directed to consider the claim of the applicant including its claim for voting rights on merits afresh and present the complete facts with his observations thereto before the CoC, for taking a final decision on the admissibility of the claim.
Application allowed.
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2022 (8) TMI 417
Legality of impugned orders and the recovery notices issued by the Respondent - breach of moratorium period admittedly, during the time when moratorium was imposed by Adjudicating Authority - HELD THAT:- The purpose of imposition of a moratorium has been expounded by the Hon’ble Supreme Court in the case of P. Mohanraj and Others vs. Shah Brothers Ispat Pvt. Ltd, [2021 (3) TMI 94 - SUPREME COURT] wherein the Hon’ble Supreme Court has held that the moratorium is imposed to shield the Corporate Debtor from pecuniary attacks to enable it to get a breathing space so that it can continue as a going concern to ultimately rehabilitate itself.
A plain reading of section 14 of the Code shows that there is complete prohibition imposed by the legislature on the institution of suits or continuation of proceedings against the Corporate Debtor including execution of any judgment, decree, or order in any court of law, tribunal, arbitration panel or other authority. Section 14 of the Code does not differentiate between any proceedings, whether they are assessment, quasi-judicial or judicial in nature. In fact, a moratorium is imposed on all proceedings irrespective of the nature. The object as succinctly put by the Hon’ble Supreme Court is clearly to shield the Corporate Debtor from all pecuniary attacks - In the case at hand, the proceedings initiated by the Respondent are not mere assessment proceedings as contented by the Respondent. The proceedings are legal proceedings as provided for in the circular dated 14.02.2020 issued by the Respondent, which encompass evidence to be led by parties to reach to a conclusion whether there is any amount which is due or payable under the EPF & MP Act. This is also evident from a reading of provision 7A of the EPF & MP Act, which describes the proceedings under the said section as judicial proceedings within the meaning of sections 193 and 228, and for the purpose of section 196, of Indian Penal Code.
The benefits such as provident fund and gratuity fund are required to be protected and prioritised which is also the intent of the Code. It therefore goes without saying that the setting aside of the orders passed by the Respondent will not come in way of the respective employees or workmen to file their respective claims, if any, with the Applicant under the provisions of the Code in respect of dues toward provident fund, pension fund and gratuity fund. The Applicant is duty bound, as per the Law laid down to ascertain and prioritise the payments of the social welfare dues.
Without expressing any opinion on the merits of the Orders passed by the Respondent, the orders being in violation of the moratorium imposed are liable to be set aside - Application allowed.
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2022 (8) TMI 419
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - existence of debt and dispute or not - HELD THAT:- The Operational Creditor has clearly admitted that it had not complied above conditions even after it was intimated by the Corporate Debtor as deficiency of service.
There is an unsettled pre-existing dispute between the Corporate Debtor and Operational Creditor and this case is covered by the celebrated decision of the Hon'ble Apex Court in Mobilox Innovations Private Limited Vs. Kirusa Software Private Limited [2017 (9) TMI 1270 - SUPREME COURT] wherein it was held that So long as a dispute truly exists in fact and is not spurious, hypothetical or illusory, the adjudicating authority has to reject the application.
Application dismissed.
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Central Excise
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2022 (8) TMI 411
Utilization of Cenvat credit of Basic Excise duty for payment of Education Cess and Higher Education Cess - benefit of N/N. 39/2001-CE. availed - HELD THAT:- This Tribunal has already taken a view that assessee is entitled to utilize the Cenvat credit of basic excise duty for payment of Education Cess and Higher Education Cess while availing Notification No. 39/2001-CE. Therefore, the issue is no more res-integra.
This Tribunal, in the case of M/S. GALLANTT METAL LTD VERSUS C.C.E. & S. T-RAJKOT [2019 (11) TMI 1742 - CESTAT AHMEDABAD] and in the case of M/S. ASR MULTIMETALS PVT LTD. AND GALLANTT METAL LTD VERSUS C.C.E. & S.T. -RAJKOT [2019 (7) TMI 1937 - CESTAT AHMEDABAD] has held that the appellant are entitled for utilization of credit of basic excise duty for payment of Education Cess and Secondary & Higher Education Cess.
Thus, the appellant is entitled for utilization of Cenvat credit of basic excise duty for payment of Education Cess and Secondary and Higher Education Cess - appeal allowed - decided in favor of appellant.
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CST, VAT & Sales Tax
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2022 (8) TMI 416
Seeking Enforcement of the fundamental rights of the petitioner guaranteed under Part-III of the Constitution of India - Violation of Articles 14, 19(1) (g) and 21 of the Constitution of India - Legality and validity of Notification dated 04.06.2018 issued by the Commissioner of Taxes, Government of Tripura - delegation of powers of the Commissioner of Taxes under Section 31 of the Act to all the Superintendent of taxes posted in Tax Audit Cell to be exercised within the State of Tripura with effect from 31.03.2018 - time limitation - HELD THAT:- The respondents have not placed any official gazette to show that the said notifications have been gazatted as contemplated under Section 85 of the Act. The counter affidavit is also silent about such Gazette Notification. In the absence of which, this court has no hesitation to draw an inference that the requirement under Section 85 has not been complied with. Hence, the notification under challenge is invalid.
A fair understanding in taxation law as (a) audit (b) assessment (c) demand/recovery/collection are three different stages and are dealt by different and competent authorities under the statute. Originally under notification dated 01.04.2006, certain powers have been delegated in favour of Superintendent of Taxes. But in notification dated 04.06.2018, the powers under Section 63 are delegated to all Superintendent of Taxes posted in Tax Audit Cell. This power is enhancing the action of the authority in audit cell also as an authority under assessment and an authority for demand and collection of Taxes including imposition of Interest & penalty. It is pertinent to mention that Section 28 has not been delegated.
The entire action involving the 5th respondent-authority for issuing the impugned notices imposing the penalty and collecting of interest are the one without jurisdiction. Under Rule 41, the audit authority shall only communicate their finding to the assessing authority. A reading of Section 28 and Rule 45 clearly indicates that role of the audit & assessment authorities under the Act are different. The powers of assessment under the statute are not vested on the audit cell. And in the absence of such, commissioner cannot delegate. The powers of commissioner under section 31 has been delegated to the Superintendent of Taxes by notification dated 01.04.2006 and also the Superintendent of Taxes posted in tax audit cell by notification dated 04.06.2018.
It is pertinent to note that the powers delegated under notification dated 01.04.2006 upon the Superintendent of Taxes and powers delegated by notification dated 04.06.2018 upon all the Superintendent of Taxes posted in Tax Audit Cell are altogether different - audit, assessment & collection are three different functions. Collection of penalty under Section 31 (5)(d) unless it is audited and assessment is made, it cannot be construed that the Assessee is liable to pay penalty and as well as interest upon the tax amount.
This court is of the opinion that the notification dated 04.06.2018 is in consonance under Section 85 of the Act and also the Superintendent of Taxes posted in Tax Audit Cell can only act as the Audit Authority and not as Assessing Authority or Collection Authority - the impugned notices be treated as audit reports only and the Audit authority shall forward it to the Assessing authority for taking action in accordance with law.
Petition disposed off.
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2022 (8) TMI 371
Deletion of demand of entry tax created under Section 12 of Uttar Pradesh Tax on Entry of Goods into Local Areas Act, 2007 - sale of sugar manufactured by the assessee - when it is found that delivery of sugar has been given at the factory gate and thereafter the purchaser was at liberty to transport the goods at his own choice - local sale made by the opposite party/dealer or not - delivery of sugar outside the State of U.P. or the export of the same outside the State not established - HELD THAT:- Undisputedly, the levy of entry tax under the Act arises on scheduled goods when they are proposed to be consumed, used or sold in another local area, within the State. By very nature of that levy, two exclusions arise. First, no Entry Tax may be levied on goods that are intended to be consumed, used or sold within the local area where they are produced. It is so because the levy of Entry Tax is only on the causing of entry of scheduled goods into a local area. It assumes goods to be taxed were in existence before their entry into that local area. Only then they may be brought into a different local area which would lead to levy of entry tax. Therefore, goods consumed, used and sold within the local area of their origin or manufacture would not attract levy of entry tax. This necessary exclusion is incorporated in the statute itself, under Section 4(1) of the Act.
The second exclusion that must always exist is with respect to goods that may be taken out of the local area where they are produced, to a local area outside the State of U.P. whether by way of export to another place within the country or in the course of export sale outside the country. That exclusion must exist as it is inherent in the Constitutional scheme - By using the phrase "intends to bring into the local area", the legislature had made it plain that the provision of Section 12 of the Act would apply only if the intention of the purchaser is to take the goods to a "local area" as defined under Section 2(d) of the Act. Those areas would be such as may fall within the territory of State of U.P. only and not outside it.
In the facts of the present case, the assessee relied on documents such as invoice, transportation documents and payments received through bank. On the contrary, the revenue only relied on the delivery of goods made at the factory gate of the assessee and, therefore, the sale being complete at that point of time. Hence intention to carry the goods outside the State was stated to be lacking.
Thus, for the purpose of applicability of Section 5 of the Central Act, it was necessary to establish existence of prior contract of sale occasioning the movement of goods, to outside the country. That issue is not before this Court, in the present case. It would arise and would have to be tested on its own merit, in the central assesment, if that issue arose. However, for the purposes of the Act, the lesser test would allow the assessee to successfully contend that no occasion arose as may have created the obligation on the assessee to charge and receive payment on entry tax act while making sale of goods that were intended to be carried outside the State of U.P.
In absence of any evidence led by the revenue to doubt the intention (to transport the taxable goods outside the State of U.P. for their consumption, use or sale at such other place), established on the strength of sale invoice, transportation documents and payments made, no liability arose under Section 12 of the Act. In absence of any evidence led by the revenue to establish that the goods were not actually exported and in absence of any credible material to doubt the evidence led by the assessee that the goods were taken outside the State of U.P., there is no perversity in the order of the Tribunal.
Revision dismissed.
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2022 (8) TMI 415
Levy of Entry Tax - aluminum extrusion - falls under Entry 11 of Part I of the Schedule of the OET Act or not - levy of penalty under Section 7(5) of the OET Act undisputedly when the assessment was completed under Section 7(3) of the OET Act - HELD THAT:- In K.V. MATHEW VERSUS DISTRICT MANAGER, TELEPHONES, ERNAKULAM AND ORS. [1983 (10) TMI 296 - KERALA HIGH COURT] the High Court was considering the expression ‘institution’ and in the context of scope of the expression, it was held that “the word et cetera does not share the character of an inclusive definition and cannot therefore enlarge the scope of the expression ‘institution'.
Where the entry is meant to include all kinds of products, the entry itself would read like it does in the case of Tobacco. In fact, in the context of entry ‘Tobacco and Tobacco products’, this Court has recently in M/S. PATEL BROTHERS & CO. VERSUS STATE OF ODISHA [2022 (8) TMI 253 - ORISSA HIGH COURT] has held that ‘bidis’ would form part of ‘tobacco products’. If Entry 11 had read ‘sheets, rods of non-ferrous metals including Aluminum and products thereof’, then it would have been arguable that it covered Aluminum extrusions as well. However, the word here used is ‘etc.’ and it is used soon after the words “sheets, rods” and, therefore, will include only a similar kind of product i.e. like sheets and rods. Aluminum extrusions, the pictures of which are readily available on the net, and which were viewed in the Court in the presence of the counsel, are distinct and different from ‘sheets and rods.’
The Court is of the view that Aluminum extrusions brought into Odisha from outside Odisha by the Petitioner is not exigible to entry tax @ 1% since it is not covered by Entry-11 of Part-I of the Schedule to the OET Act - application is answered in the negative by holding that the Tribunal was not justified in upholding the levy of penalty under Section 7 (5) of the OET Act - petition disposed off.
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Indian Laws
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2022 (8) TMI 414
Dishonor of Cheque - complaint filed by the applicant/appellant under Section 138 Negotiable Instrument Act dismissed on the ground that it has been filed prematurely without the occurrence of any cause of action has not granted liberty to the applicant-appellant to file complaint afresh - HELD THAT:- Perusal of the record of the trial Court in the background of the submissions advanced by learned counsel for the parties would reveal that the trial Court has dismissed/rejected the complaint filed by the applicant-appellant on the ground that the same has been filed prematurely. The trial Court was of the view that a notice for raising demand in respect to the cheque dishonoured was given on 26.06.2015 and the complaint has been filed by the complainant on 10.07.2015 i.e. before 15 days, thus, no cause of action had accrued to the appellant.
Perusal of the judgment of the Hon'ble Supreme Court passed in Yogendra Pratap Singh [2014 (9) TMI 1129 - SUPREME COURT], would reveal that the Hon'ble Apex Court has granted a liberty to those complainants whose complaint filed under Section 138 of The Negotiable Instrument Act has been found to be not maintainable on account of the fact that the same has been filed prematurely to file a fresh complaint - The above observation of the Hon'ble Supreme Court would make it clear that it has been opined by the Hon'ble Supreme Court that the complaint which has not proceeded further in view of the fact that the same has been found to have been filed prematurely, a fresh complaint may be filed and in such cases the benefit of the provision contained under Section 142 (b) of The Negotiable Instrument Act, may also be granted to the complainant whose complaint has been dismissed prematurely.
The judgment and order of the trial Court dated 13.08.2018 is modified to the extent that the applicant/appellant is now permitted to file a fresh complaint before trial Court with regard to the same cause of action and if such a complaint has been filed, with regard to the same cause of action, the trial Court shall also be under an obligation to provide the benefit of Section 142 (b) of The Negotiable Instrument Act to the applicant/appellant - Appeal allowed in part.
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2022 (8) TMI 413
Dishonor of Cheque - insufficiency of funds - summon of record - examination of witnesses - scope of Section 540 Cr.P.C. - HELD THAT:- A perusal of the record tends to show that a that a complaint under Section 138 of the Negotiable Instrument Act has been filed by the complainant before the learned Magistrate against the petitioner herein alleging that the cheque issued by him was dishonored by the Bank on account of insufficient amount - The said complaint filed by the complainant/respondent herein is pending since 20.03.2009. An application came to be file by the complainant/respondent herein for summoning the record from the J & K Bank, Patel Nagar Branch, Jammu with regard to the credit of an amount of Rs. 03 lacs in the account of petitioner-Filling Station owned by the petitioner herein from the account of the complainant.
Section 540 Cr.P.C. gives a power to the Court to summon any person as a witness or examine any person in attendance though not summoned as a witness or recalled and re-examine any person, already examined and the court shall summon and examine or recall and re-examine any person at any stage of enquiry, trial or proceedings and the second part of the said provision makes it mandatory for the Court to summon and examine or recall and re-examine any such person if his evidence appears to it essential to the just decision of the case. The learned Magistrate while dealing with the application (supra) has observed in of the impugned order that the summoning the Manager, J & K Bank Patel Nagar, Branch, Jammu is essential for just decision of the case.
As is clear from the reading of the Section 540 Cr.P.C., the said Section confers power in absolute terms to be exercised at any stage of the trial to summon a witness or examine one present in court or to recall a witness already examined, and makes this the duty and, obligation of the Court provided the just decision of the case - The learned Magistrate has rightly after having considered the provisions of Section 540 Cr.P.C. and by giving detailed reasons allowed the application of the complainant/respondent herein.
The learned Magistrate has passed a reasoned order, same does not suffer from any legal infirmity or impropriety and does not call any interference by this Court - Petition dismissed.
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2022 (8) TMI 412
Dishonor of Cheque - petitioner had denied his right to fair trial which is enshrined in Article 21 of the constitution of India - HELD THAT:- The ground for rejection is just and proper, in as much as the petitioner got sufficient opportunity to exhibit and prove the same while he had examined two defence witness. Filing of the petition after closing of the evidence, that too while the case was posted for argument, naturally raised doubt about the bonafideness of the petitioner. This court is not oblivious of the fact that a fair opportunity is required to be given to both the parties; else their right to fair trial will be impaired. But, at the same time this court is also conscious of the fact that where two views are reasonably possible and the lower court has taken one view, the revisional court should not substitute its own view.
The petitioner had admitted having issued the cheque in question to the complainant and also admitted his signature and also admitted that the seal thereon is of his firm. He further admitted having dues on Rs. 96,049/after payment of Rs. 10,000/, on 07.11.2016. He had also admitted having deals with J.S. Pharmaceuticals since 2014, and that he had issued the cheque in question as security to Mr. A.K. Saha, who was the Manager of J.S. Pharmaceuticals. This being the factual position, the petitioner cannot escape from discharging his reverse burden as held by the learned court below. This being the admitted factual position, the petitioner had no convincing answer as to what purpose will be served by sending the admitted cheque to the Central Forensic Science Laboratory for scientific opinion. Thus, to the considered opinion of this court, the learned court below has not committed any illegality or impropriety in rejecting the petition No. 7174, filed by the petitioner.
Petition dismissed.
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