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TMI Tax Updates - e-Newsletter August 30, 2022 Case Laws in this Newsletter: GST Income Tax Customs Corporate Laws Insolvency & Bankruptcy Service Tax Central Excise CST, VAT & Sales Tax Highlights / Catch Notes GST: Cancellation of petitioners GSTIN Registration - time limitation - While some of them filed appeal beyond the statutory period of limitation, there was further delay in filing the writ petition - no useful purpose will be served by keeping those petitioners out of the Goods and Services Tax regime, as such assessee would still continue to do business and supply goods/services - Petition allowed. - HC Visit to Get Source GST: Violation of principles of natural justice - ex-parte order - No sufficient time was afforded to the petitioner to represent his case; (b) order passed ex parte in nature, does not assign any sufficient reasons even decipherable from the record, as to how the officer could determine the amount due and payable by the assessee. The order, ex parte in nature, passed in violation of the principles of natural justice, entails civil consequences.- HC Visit to Get Source GST: Seeking grant of Regular Bail - availing and utilizing wrongful input tax credit - fake firms who have availed and passed on fake input tax credit on the strength of goods-less invoices - Economic offence having deep rooted conspiracies and involving huge loss of public funds needed to be viewed seriously and considered as grave offences affecting economy of Country as a whole and thereby posing serious threat to financial health of country. As such, it is required that we should take serious note of such economic offences. - Bail application rejected - DSC Visit to Get Source Income Tax: Tax liability confirmed while processing of return of income by CPC - wrong reporting of income - whether relief could be claimed only by filing revised return for which statutory timeline has already expired? - the addition has been made only due to wrong reporting of income by the assessee which cannot be sustained. Therefore, in our opinion, the Ld.CIT(A) has committed an error in dismissing the appeal filed by the assessee. Accordingly, we allow the Assessee’s Grounds of Appeal No. 1 and 2. - AT Visit to Get Source Income Tax: Validity of Reassessment order passed against the dead person - In this case, during assessment proceeding, assessee was alive, notices were served on him and he replied, but before passing of the order, assessee has passed away. So it is not the case that notices have not been served on assessee. This ground of appeal warrants no merit and is hereby dismissed. - AT Visit to Get Source Income Tax: Assessment u/s 153A r.w.s. 153C - Block period - Period of limitation - Where two assessments may result, in the case of a searched entity and the related person, both emanating from the same search, but relating to two different sets of assessment years. This certainly cannot be the intention of the Legislature. In fact, the decisions of the Delhi High Court are dated 30.10.2015 and 17.08.2017 and this, perhaps, would have been the reason for insertion of the portion within parenthesis in Section 153C(1). That is, and in the interests of clarity, the block period as applicable to a noticee under Section 153C will be the same as the years constituting the block in the case of the noticee under Section 153A. The two periods are aligned. This issue is accordingly answered, adverse to the petitioner. - HC Visit to Get Source Income Tax: Non deduction of TDS - year-end provisions - disallowance u/s 40(a)(ia) - liability to make payment did not accrued on the appellant - Break-up of provision for expenses needs to be examined factually based on evidences in order to decide the applicability of TDS provisions. - Matter restored back - AT Visit to Get Source Income Tax: Revision u/s 263 - As the assessment was completed after making required amount of enquiry and there was no lake of enquiry or investigation by the AO on the issues which was raised by the ld. Pr. CIT under the provision of section 263 proceedings. Therefore, the findings of Ld Pr. CIT that order passed by AO was passed without conducting necessary enquires and without verifying necessary details was without any basis or without any evidence on record and mere guess work that that the ld AO has not conducted the enquiry.- AT Visit to Get Source Income Tax: Revision u/s 263 - Correct source of income - special rate of tax u/s. 115BBE - As per CIT income of the assessee should have been assessed as unexplained cash credit, rather than business income - In assessee’s case the amount is not recorded in the books of accounts and directly offered to tax in the statement of computation (page 12 of paper book) as additional income under the head profits and gains of business or profession. - Provisions of section 68 not applicable - Revision order is not valid - AT Visit to Get Source Income Tax: Revision u/s 263 by CIT - genuineness of Share Capital Investment - the Assessing Officer accepted the genuineness of the share application money and unsecured loans received by the assessee. Such a view of the Assessing Officer was a plausible view and the same cannot be considered as erroneous or prejudicial to the interest of revenue. - AT Visit to Get Source Income Tax: Disallowance of depreciation on the Project Berth - cost of construction / development - Circular can be applied retrospectively in respect of deductions claimed in previous assessment years. We therefore direct the Ld. AO to amortize the cost of buildings, structures, berths, wharves, equipment and other immovable and movable assets constructed, installed, located, created as provided by the Licensee after deducting depreciation claimed by the assessee and allowed by the revenue in earlier years so that the amortization claimed for the year under consideration shall be the difference between the initial cost and the depreciation already claimed by the assessee which needs to be amortized over the remaining license period. - AT Visit to Get Source Customs: Rate of customs duty on import of power tillers - Concessional rate of 2.5% - The contention that power tillers are different from rotary tillers are based on erroneous premises and thus unsustainable. Power Tillers imported by the importers herein are therefore entitled to the benefit of concessional rate of basic customs duty of 2.5% - AT Visit to Get Source IBC: Sale of assets of Corporate debtors - Validity of order of NCLAT permitting the Private Sale of the composite assets of the Corporate Debtor instead of taking the Second Swiss Challenge Process to its logical conclusion – the Core Committee constitutes 70.3% of the financial creditors and when they have weighed in to support the stand taken by the Liquidator to continue the bid process commenced on 24th August, 2021, there are no reason to foist the view of the NCLAT on the Liquidator that he ought to restart the process for sale of the composite assets of the Corporate Debtor from the scratch after issuing an open notice to the prospective buyers. - SC Visit to Get Source IBC: CIRP - Recovery of customs duty - adjudication of Bill of entry after initiation of Corporate Insolvency process - priority of IBC over the Customs Act - It is to be noted that the Customs Act and the IBC act in their own spheres. In case of any conflict, the IBC overrides the Customs Act. - the Customs department could only initiate assessment or reassessment of the duties and other levies. They cannot transgress such boundary and proceed to initiate recovery in violation of Sections 14 or 33(5) of the IBC - SC Visit to Get Source IBC: Company under liquidation as per IBC - Validity of arbitration order while moratorium ordered by the NCLT was still in operation - This Court finds that the learned Tribunal has decided an application made to it by the petitioner and the orders squarely falls under the provisions of Section 16 of the Act of 1966. Therefore, it cannot be said to be an order patently lacking in jurisdiction and therefore perverse and liable to be interfered with by this Court under Article 227 of the Constitution. - HC Visit to Get Source IBC: Oppression and mismanagement - Jurisdiction of NCLT to decide the issue - Principle of natural justice - the remedy provided under the Companies Act, 241 and 242 is a specific statutory remedy which has to be decided by the Tribunal in accordance with law. The issues which has been raised in Application under Section 241 and 242 are issues which are not arbitrable and the Adjudicating Authority committed error in allowing Section 8 Application filed by the Respondent No. 1. We thus find the Order dated 31st May, 2021 unsustainable due to this reason. - AT Visit to Get Source IBC: CIRP - personal Guarantor to Corporate Debtor - Australian National - lack of any Agreement of Guarantee - invalidity of any such Guarantee, even if issued - the Appellant/Personal Guarantor (in the instant case), whether he resides in India or outside India, when a Petition is filed against him, as Personal Guarantor of the Corporate Debtor, the Adjudicating Authority, (National Company Law Tribunal) has jurisdiction, in whose territorial jurisdiction, the Registered Office of the Corporate Person is located - the residence of Personal Guarantor is not taken into account when proceedings against Personal Guarantor are initiated- AT Visit to Get Source IBC: CIRP - Principles of res-judicata - Once the order of the Adjudicating Authority attains finality on account of affirmation by the Hon’ble Apex Court in appeal, the same cannot be reopened. But the simple reason that the Appellants did not raise such issue and consequently, it is hit by the doctrine of constructive resjudicata, though the principle of resjudicata is a part of CPC, the doctrine is applicable to the proceedings in IBC. - AT Visit to Get Source IBC: CIRP - the debt of the Respondents was declared as Financial Debt - Though the learned Counsel for the Appellants would contend that the Adjudicating Authority lacks inherent jurisdiction, this contention holds no substance as the Adjudicating Authority is exclusively invested with inherent jurisdiction to decide the petition filed either under Section 7, 9 or any of the provisions of IBC - It appears that the learned Counsel for the Appellants invented such ground for the first time without any factual foundation in the pleadings before the Adjudicating Authority during 1st round of litigation - there are no merits in the contention of the learned Counsel for the Appellants. - AT Visit to Get Source Service Tax: Refund claim - quantification of credit by formula as prescribed by Notification No.05/2006 - the lower authorities have been in error while deducting the amount of the credit that would have been utilized for payment of the taxes/duties in respect of the domestic clearances from the total CENVAT Credit taken while determining the Net CENVAT Credit for application of formula as per Rule 5. - AT Visit to Get Source Central Excise: Levy of equal amount of penalty imposed under the provisions of Rule 25(1)(d) of the Central Excise Rules, 2002 read with Section 11AC of the Central Excise Act, 1944 - in the absence of any such specific allegation in the show cause notice, the authority cannot mechanically impose penalty under Section 11AC of the Act - The provisions of Section 11AC of the Act are attracted in the event of establishing fraud, collusion or suppression of facts or made any wilful misstatement with an intent to evade payment of duty. This has not been done in the present case. - AT Visit to Get Source Central Excise: Reversal of CENVAT Credit - trading of goods on High Seas Basis - appellant complying with the direction of CERA Audit, has reversed the proportionate credit - Moreover, the activity of Trading of Goods on High Seas Basis was clearly in the knowledge of the department. Therefore, no suppression of fact can be alleged against the appellant. Hence, the demand is also not sustainable on the ground of time bar. - AT Visit to Get Source Articles Can the bank exercise a freeze on the CASA account, and refuse to maturity amount for non-compliance with the KYC review? WHETHER LIABILITY OF INTEREST UNDER SECTON 50 OF CENTRAL GOODS AND SERVICES TAX ACT, 2017 IS AUTOMATIC? SEARCH AND SEIZURE UNDER GST LAW (PART-1) No Service Tax to be levied on fitment and preparation of scalp to make Wig Service Tax cannot be levied on affiliation fees and rent collected by universities Notifications Companies Law G.S.R. 658 (E) - dated 24-8-2022 - Co. Law Companies (Removal of Names of Companies from the Register of Companies) Second Amendment Rules, 2022 DGFT 30/2015-2020 - dated 27-8-2022 - FTP Amendment in Export Policy of items under HS Code 1101 29/2015-2020 - dated 27-8-2022 - FTP Amendment in Export Policy of items under HS Code 1101 GST - States ERTS (T) 65/2017/Pt. III/225 - dated 13-7-2022 - Meghalaya SGST Amendment in Notification No. 02/2022-Central Tax (Rate), dated the 31st March, 2022 ERTS (T) 65/2017/Pt. III/224 - dated 13-7-2022 - Meghalaya SGST Amendment in Notification No. ERTS (T) 65/2017/5, dated the 29th June, 2017 ERTS (T) 65/2017/Pt. III/223 - dated 13-7-2022 - Meghalaya SGST Amendment in Notification No. ERTS (T) 65/2017/3, dated the 29th June, 2017 ERTS (T) 65/2017/Pt. III/222 - dated 13-7-2022 - Meghalaya SGST Amendment in Notification No. ERTS (T) 65/2017/2, dated the 29th June, 2017 ERTS (T) 65/2017/Pt. III/221 - dated 13-7-2022 - Meghalaya SGST Amendment in Notification No. ERTS (T) 65/2017/1, dated the 29th June, 2017 ERTS (T) 65/2017/Pt. III/220 - dated 13-7-2022 - Meghalaya SGST Amendment in Notification No. ERTS (T) 65/2017/13, dated the 29th June, 2017 ERTS (T) 65/2017/Pt. III/219 - dated 13-7-2022 - Meghalaya SGST Amendment in Notification No. ERTS (T) 65/2017/12, dated the 29th June, 2017 ERTS (T) 65/2017/Pt. III/218 - dated 13-7-2022 - Meghalaya SGST Amendment in Notification No. ERTS (T) 65/2017/11, dated 29th June, 2017 Circulars / Instructions / Orders SEBI - SEBI/HO/DDHS/DDHS_Div3/P/CIR/2022/0115 - dated 26-8-2022 Amendments to guidelines for preferential issue and institutional placement of units by a listed InvIT SEBI - SEBI/HO/DDHS/DDHS_Div3/P/CIR/2022/0116 - dated 26-8-2022 Amendments to guidelines for preferential issue and institutional placement of units by a listed REIT DGFT - 23/2015-20 - dated 29-8-2022 Amendment in Para 2.107 (TRQ under FTA/CECA) of Handbook of Procedure 2015-2020. News Integration of One District One Product (ODOP) initiative with Open Network for Digital Commerce (ONDC) will help in further expanding the frontiers of ODOP- Shri Piyush Goyal Shri Piyush Goyal reviews the progress of Government e Marketplace Pradhan Mantri Jan Dhan Yojana (PMJDY) - National Mission for Financial Inclusion, completes eight years of successful implementation Case Laws: GST 2022 (8) TMI 1175 Cancellation of petitioners GSTIN Registration - time limitation - The petitioner attempted to file a representation to revoke the cancellation of registration. The same was not accepted, since the request for revocation is not filed within the statutory period of 90 (30+60) days. The representation for revocation of cancellation of registration could not be done. HELD THAT:- This Court is of the view that restoring the registration would not cause any harm to the department on the other hand it would be beneficial for the state to earn revenue. Further, in the case of TVL. SUGUNA CUTPIECE CENTER VERSUS THE APPELLATE DEPUTY COMMISSIONER (ST) (GST) , THE ASSISTANT COMMISSIONER (CIRCLE) , SALEM BAZAAR [ 2022 (2) TMI 933 - MADRAS HIGH COURT ]. There some of the petitioner filed an appeal beyond the period of limitation either for filing application for revocation of cancellation, while some of them had directly filed a writ petition against the order cancelling the registration. While some of them filed appeal beyond the statutory period of limitation, there was further delay in filing the writ petition - no useful purpose will be served by keeping those petitioners out of the Goods and Services Tax regime, as such assessee would still continue to do business and supply goods/services - Petition allowed. 2022 (8) TMI 1174 Transitional credit (ITC) - CENVAT Credit - amendment effected to Section 140 of the Central Goods and services Tax Act, 2017, and the Karnataka Goods and Services Tax Act, 2017, by Section 128 of the Finance Act, 2020 - prospective effect or not - permission to Petitioner to file a revised form GST TRAN-1 either on the common portal or manually to claim the balance of transitional credit - submission of revised form GST TRAN-1 - extension of time limit for filing revised Form GST TRAN-1 - refund of CENVAT credit by way of cash or by way of credit in the Electronic Cash Ledger. HELD THAT:- The issue in controversy involved in the present petition is directly and squarely covered by the decision of the Hon ble Division Bench this Court rendered in UNION OF INDIA MINISTRY OF FINANCE, DEPARTMENT OF REVENUE, THROUGH ITS SECRETARY (REVENUE) VERSUS M/S ASAID PAINTS LIMITED [ 2021 (3) TMI 953 - KARNATAKA HIGH COURT] where it was held that insertion of sub-rule (1A) to Rule 117 with effect from 10.09.2018 was effected. Even thereafter, the sub-rule was amended not once, but thrice so as to extend the time from 31.03.2019 to 31.03.2020 and ultimately, it was extended to 31.08.2020. The last extension upto 31.08.2020 was in exercise of the powers conferred under Section 168A of the Act by insertion of Section 117(1A) of the Act by way of an amendment. This was on the recommendation of the GST Council whereby, earlier Notification No.35/2020-CT dated 03.04.2020 was amended. This was done by extending the time period granted upto 30.06.2020 by the Notification dated 03.04.2020 issued in the interregnum. Petitioner is permitted to file the revised TRAN-1 either mechanically or manually or physically within a period of two months from the date of receipt of a copy of this order - petition disposed off. 2022 (8) TMI 1173 Violation of principles of natural justice - ex-parte order - fair opportunity of hearing not granted - Denial of Input tax Credit - credit denied for having been claimed after expiry of due date under Section 16(4) of the Bihar GST Act, 2017 for having been passed without issuance of any show cause notice to the petitioner - period April 2018 to March 2019 - HELD THAT:- This Court, notwithstanding the statutory remedy, is not precluded from interfering where, ex facie, it is opined that the order is bad in law. This is for two reasons- (a) violation of principles of natural justice, i.e. Fair opportunity of hearing. No sufficient time was afforded to the petitioner to represent his case; (b) order passed ex parte in nature, does not assign any sufficient reasons even decipherable from the record, as to how the officer could determine the amount due and payable by the assessee. The order, ex parte in nature, passed in violation of the principles of natural justice, entails civil consequences. Petition disposed off. 2022 (8) TMI 1172 Condonation of delay in filing appeal - it is the specific allegation of the petitioner that no full text of the order along with summary order was furnished to the petitioner at any point of time - violation of principles of natural justice - HELD THAT:- It appears from record that the summary order dated 18th March, 2020 is one line order without containing any detailed supporting reason and that the order of the appellate authority is also one line order dismissing the appeal of the petitioner on the ground of delay in filing the appeal without going into the merit of the appeal, this writ petition is disposed off by setting aside the impugned order of the appellate authority dated 28th July, 2022 and remanding the matter back to the appellate authority concerned to pass a fresh speaking order in accordance with law on merit of the said appeal without insisting on the issue of limitation, within a period of eight weeks from the date of communication of this order without granting any unnecessary adjournment to the petitioner. Petition disposed off by way of remand. 2022 (8) TMI 1171 Seeking grant of Regular Bail - availing and utilizing wrongful input tax credit - fake firms who have availed and passed on fake input tax credit on the strength of goods-less invoices - HELD THAT:- The present case is a serious economic offence under Section 132(1)(c)(e) read with Section 16(2) (b) of CGST Act, 2017. and it is required to be dealt with zero tolerance. Economic offences constituted a class apart and needed to be visited with a different approach in matter of bail. Economic offence having deep rooted conspiracies and involving huge loss of public funds needed to be viewed seriously and considered as grave offences affecting economy of Country as a whole and thereby posing serious threat to financial health of country. As such, it is required that we should take serious note of such economic offences. The Hon ble Punjab and Haryana High Court in RAKESH ARORA VERSUS STATE OF PUNJAB [ 2021 (2) TMI 41 - PUNJAB AND HARYANA HIGH COURT] , while dealing with the regular bail of co-accused, has observed that GST was introduced with the object of One Nation, One Tax , as there is chain of sellers and purchasers, who are inter-connected, as the purchasers get the credit of the tax paid or suffered by the sellers - In the said case also, the bills were procured from the firm based at Delhi, where no purchase was made and transactions were issued by the firms, not only for availing ITCs, but for getting the refunds by showing the sales. Thus, no ground is made out to grant the bail to the accused-applicant. As such, the bail application stands dismissed. Income Tax 2022 (8) TMI 1192 Validity of Reopening of assessment u/s 147 - assessment is reopened after 4 years but within 6 years under the provisions of Section 143(3) - deduction u/s 35(1)(iv) disallowed - HELD THAT:- Assessment is not reopened on the allegation that there is no true and full disclosure by the assessee. In fact, it is not the case of the respondent-authority at all. Their case is that the claim of deduction under Section 35(1)(iv) of the Income Tax Act as claimed by the petitioner was wrongly granted. The revenue is not in a position to dispute the aforementioned facts. In the instant case, for the aforementioned reasons, the reopening of assessment for the assessment years 2011-12 and 2012-13 and authorities assuming jurisdiction for the same has to be held invalid. Under the given facts and circumstances of the case, the writ petition deserves to be allowed on this preliminary ground itself. There is no necessity to examine the other contentions raised by petitioner. Thus issued under Section 148(1) is set aside. - Decided in favour of assessee. 2022 (8) TMI 1191 Addition u/s 68 - Unexplained cash credit - HELD THAT:- In its return submission assessee has merely relied upon several judicial precedents however did not produce any evidence with respect to the creditworthiness and genuineness of the depositors. According to the provisions of Section 68 it is the duty of the assessee to show if any sum is credited in the books of accounts, the nature and source of such credit is by producing relevant details such as identity of the depositors, creditworthiness of the depositors and genuineness of the transaction of depositing such sum. The assessee has failed to demonstrate the same before the lower authorities. In view of this we do not find any infirmity in the order of the learned that lower authorities in confirming the addition u/s 68 - ground no. 1 of the appeal of the assessee is dismissed. Disallowance u/s 14A - CIT(A) restricted the addition/disallowance only with respect to the administrative expenditure at the rate of 0.5% of the average value of investment whereas the AO made the disallowance of ₹ 45,1927 - HELD THAT:- As the disallowance confirmed by the learned CIT(A) is ₹ 55,511/ . We do not find any infirmity in the order of the learned CIT(A). Accordingly, his order is confirmed. Ground number 2 is dismissed. 2022 (8) TMI 1190 Disallowance u/s 54F - A.O found from the return of income that the assessee was owner of more than one house property and hence as per provisions of section 54F, he was not liable to get such exemption - HELD THAT:- Before us, the assessee had filed a registered transfer deed wherein 50% of the share of the assessee in one flat has been transferred in favour of his wife. That apart, we find as per the observations in MR. AJIT THOMAS DIRECTOR A.V. THOMAS LEATHER ALLIED [ 2016 (8) TMI 1545 - MADRAS HIGH COURT] the application of section 27 of the Act in this case is mis-placed so far as the department is concerned since it has been categorically observed in the aforestated judicial pronouncement that the deeming provisions are for the purpose of computation of income from house property and are applicable for provisions of sections 22 to 26 of the Act for computing annual value of the property. However, section 54F is an independent provision for granting exemption in respect of capital gain of transfer of certain capital asset. The assessee in this case satisfies the condition provided under the said provision. Therefore, placing reliance on the aforestated decision and the facts of this case we do not find any reason why the assessee should not be granted exemption u/s 54F of the Act. In view thereof, we set aside the order of the ld. CIT(A) and allow the appeal of the assessee. 2022 (8) TMI 1189 Tax liability confirmed while processing of return of income by CPC - wrong reporting of income - whether relief could be claimed only by filing revised return for which statutory timeline has already expired? - whether service receipts are not even taxable in the hands of the Appellant by applying the beneficial provisions of Article 12 of the India-USA Double Taxation Avoidance Agreement? - HELD THAT:- As per India US Tax Treaty, the service rendered by the assessee do not specify the make available clause of India US Tax Treaty . It is also emerges from the record that for the Assessment Year 2018-19 a similar adjustment i.e. taxing a service receipt 40% was levied by CPC, Bangalore in the case of assessee s group company i.e. Heidrick and Struggles Pvt. Ltd. Singapore, Heidrick and Struggles Pvt. Ltd. UK, the said assessee has preferred an application for rectification wherein the rectification applications have been allowed by the CPC on 27/02/2020 and 30/01/2020. It is not in dispute that as per India US Tax Treaty the impugned income is not chargeable to tax as per the provisions of Article 12 of India USA Tax Treaty. As in the case of Madhabi Nag [ 2016 (1) TMI 684 - ITAT KOLKATA] Tribunal held that the revenue authorities ought not to have rejected the application u/s 154 of the Act on the ground that the assessee has not filed the revised return of income. Further in the case of CIT v. Bharat General Reinsurance Co. Ltd. [ 1970 (12) TMI 5 - DELHI HIGH COURT] the Hon ble High Court held that merely because the assessee wrongly included the income in its return for a particular year, it cannot confer jurisdiction on the department to tax that income in that year even though legally such income did not pertain to that year. In our opinion, the addition has been made only due to wrong reporting of income by the assessee which cannot be sustained. Therefore, in our opinion, the Ld.CIT(A) has committed an error in dismissing the appeal filed by the assessee. Accordingly, we allow the Assessee s Grounds of Appeal No. 1 and 2. Directing the CPC to brand TDS Credit - As assessee submitted that the assessee is eligible for claiming TDS credit amounting to Rs. 2,78,10,114/- as appearing in the Form No. 26AS of the Company. During the recall order dated 24/10/2019, the assessee was granted TDS credit of Rs. 2,55,55,337/- only vis- -vis the TDS Credit claim in the assessee return of income Rs. 2,78,10,114/-. In our opinion, the issue involved in Ground No. 3 deserves to be set aside to the file of CPC, Bangalore with a direction to grant eligible TDS credit in accordance with law. Accordingly, Ground No. 3 is allowed for statistical purpose. 2022 (8) TMI 1188 Penalty passed u/s 271(1)(c) - Non-deduction of the TDS of payment to sub contractor - HELD THAT:- The Hon'ble Supreme Court in the case of Reliance Petro Product Pvt. Ltd. [ 2010 (3) TMI 80 - SUPREME COURT] wherein it is held that merely because the assessee has claimed expenditure, which claim was not accepted or was not acceptable to the Revenue, that, by itself, not attract the penalty u/s 271(1)(c). We are of the opinion that there is neither concealment nor furnishing of inaccurate particulars by the assessee in the case on hand. Resultantly, the Grounds of Appeal filed by the assessee are allowed. 2022 (8) TMI 1187 Penalty u/s. 271(1)(b) - As per AO assessee has not complied with the notice issued u/s 143(2) as neither anybody appeared nor adjournment application was received by the AO - AY 2015-16 - HELD THAT:- From the assessment order itself, it is clear that in compliance to the notices issued under section 143(2)/142(1) Sh. Ajeet Kumar Sarraf FCA and Sh. A.C. Bharadwaja, Advocate appeared from time to time and filed reply and details as well as produced bills and vouchers. These details and evidence produced by the assessee were also examined by the AO at length. Thus, from the assessment order, it is manifest that there was a due compliance by the assessee to the notices issued under section 143(2)/142(1) of the Act and further the AO has also not recorded any satisfaction in the assessment order for initiating the penalty under section 271(1)(b) - Thus the penalty levied by the Assessing Officer under section 271(1)(b) for the assessment year 2015-16 is not justified and the same is deleted. AY - 2016-17 - AO levied the penalty for non compliance of the notice issued under section 143(2) and 143(1). The Assessing Officer has not specified in the order as against which notice, whether issued under section 143(2) or 143(1), the penalty was levied. We further note that in the assessment order, the Assessing Officer has recorded the fact that in compliance to notice under section 142(1), the assessee furnished reply online alongwith audit report under section 44AB computation of income, balance-sheet , profit loss account and details of interest claimed during the year. The assessee also furnished the details regarding monthly opening and closing stock as well as ledger copy of interest paid and interest received. After considering these details and explanation filed by the assessee in compliance to the notice issued under section 142(1), the Assessing Officer framed the assessment of return of income. Thus, it is clear that initially there was no compliance on behalf of the assessee to the notice issued under section 143(2) and 142(1) of the Income Tax Act but subsequently, the assessee furnished its reply along-with audit report as well as all the requisite details as recorded by the AO in the assessment order - AO was satisfied with the reply as well as the details and record produced by the assessee. Therefore, though the assessee made the compliance belatedly but it was prior to the assessment order and the Assessing Officer was satisfied with the reply and supporting evidence produced by the assessee and consequently the assessment was framed on the returned income. - Decided in favour of assessee. 2022 (8) TMI 1186 Disallowance u/s 14A read with Rule 8D(2)(iii) - Mandatory requirement of recording satisfaction - HELD THAT:- It is undisputed position that the appellant company made investments in partnership firm and in equity shares, income from which is exempt from tax. It is contention of the appellant that no expenditure was incurred to earn the exempt income and, therefore, the question of disallowance u/s 14A does not arise. It is mandatory on the part of the AO to record a satisfaction as to the correctness or otherwise of claim of the assessee regarding the expenditure incurred to exempt income. In the absence of recording of such satisfaction by the AO resort to the provisions of section 14A cannot be made as held by the Hon ble Bombay High Court in the case of PCIT vs. Reliance Capital Asset Management Limited [ 2017 (10) TMI 177 - BOMBAY HIGH COURT] The law is settled to the extent that without recording the satisfaction as to correctness or otherwise, the claim of the assessee that no expenditure was incurred to exempt income, the Assessing Officer cannot resort to the provisions of section 14A of the Act. In the present case, from the perusal of the assessment order as well as the order of the ld. CIT(A), it would clearly reveal that the appellant had asserted that no expenditure was incurred. The Assessing Officer had not recorded any finding on the submissions made by the appellant company - Therefore, we remit the issue to the file of the ld. CIT(A) to adjudicate the contention of the appellant company that in the absence of recording of satisfaction, no disallowance u/s 14A can be made in accordance with law. Accordingly, these grounds of appeal no.2 and 4 stands partly allowed. Addition on account of notional rental value of unsold flats lying in stock-in-trade - HELD THAT:- This issue is decided in favour of the appellant company by this Tribunal in the case of Kumar Properties and Real Estate Pvt. Ltd [ 2021 (4) TMI 1163 - ITAT PUNE] , KUMAR CONSTRUCTION AND PROPERTIES PRIVATE LIMITED [ 2021 (10) TMI 441 - ITAT PUNE] . Addition on account of provision for expenses which has been made in respect of properties which are completed and the expenses had to be incurred - HELD THAT:- It is settled position of law that if liability for expenditure had crystallized during the previous year relevant to the assessment year under consideration, then the deduction should be allowed, although the liability is discharged at future date. Reliance in this regard can be placed on the decision of the Hon ble Apex Court in the case of Bharat Earth Movers [ 2000 (8) TMI 4 - SUPREME COURT] Thus without examining the crystallization of liability for the expenditure, the Assessing Officer had made disallowance. This approach of the Assessing Officer cannot be upheld. Accordingly, we remit this matter back to the file of the Assessing Officer to examine the allowability of this claim for provision for expenses on being satisfied that the liability for this expenditure had been crystallized during the previous year relevant to the assessment year under consideration and these expenses are incurred in respect of flat already sold and the balance of the expenditure is carried to the closing work-in-progress. Grounds partly allowed for statistical purposes. 2022 (8) TMI 1185 Validity of Reassessment order passed against the dead person - HELD THAT:- We find that the assessee has not produced any evidence to prove that the legal heirs have intimated the AO about the demise of the assessee except for an affidavit which authorises one of the legal heirs of the assessee, Shri Dnyaneshwar Shankar Ghorpade to represent the appeals before the ITAT on behalf of the other legal heirs of the assessee. Apart from this, the assessee has failed to substantiate the fact that inspite of intimation, the AO has erred in passing the assessment order on the deceased person. In this case, during assessment proceeding, assessee was alive, notices were served on him and he replied, but before passing of the order, assessee has passed away. So it is not the case that notices have not been served on assessee. This ground of appeal warrants no merit and is hereby dismissed. Capital gain on sale of part of TDRs received by the assessee from Kulgaon-Badlapur Municipal Council (KBMC) as compensation on compulsory acquisition of assessee s agricultural land - lower authorities have rejected the contention that the said short term capital gain was exempt under section 10(37) - HELD THAT:- Ingredients of the provision manifest that the land which is transferred should have been used for agricultural purpose two years immediately preceding the date of transfer and that the acquisition by the government bodies should have been compulsory acquisition. In the present case in hand, the assessee has failed to produce any documentary evidence to show that the land was used for agricultural purpose nor has he proved that the acquisition was compulsory. The assessee has also failed to prove the same before us as well as before the lower authorities. We do not find any justification in holding that the assessee is eligible for exemption as per the provisions of section 10(37) - Therefore, we do not find any infirmity in the decision of the lower authorities. The grounds raised by the assessee is dismissed. AO adopting the assessable value of land over value of stamp duty - cost of acquisition of TDR received by the assessee in consideration of the surrender of the said land to KBMC instead of fair market value of the TDR while computing capital gain on sale of TDR - HELD THAT:- We hereby direct the Assessing Officer to calculate the cost of acquisition for the purpose of deduction by following the decision in the case of Atul G Puranik [ 2011 (5) TMI 576 - ITAT, MUMBAI ] - Additional ground No.2 is partly allowed. 2022 (8) TMI 1184 Reopening of assessment u/s 147 - notice issued in the name of non - existence entity - As argued assessment order is beyond the jurisdiction of the AO in as much as notice u/s 148 was issued in the name of an entity which was struck off from register of companies - HELD THAT:- Admittedly the name of directors of the assessee company were disqualified by ROC u/s 164(2) of the Companies Act with effect from 01.11.2016 till 31.10.2021 leading to struck off of the name of company from Register of Companies and consequential dissolution with effect from 07.06.2017 vide order dated 30.06.2017. The same was in pursuant of powers under sub section 5 of section 248 of the Companies Act r.w.r. 3 and 9 of the Companies (removal of names of companies from Register of Companies) Rules, 2016. This dissolution after struck off the name of company by Register of Companies has to be distinguished with dissolution pursuant to orders of Hon ble High Court or amalgamation of the Companies. AO had approached the NCLT for restoration of the name of company as the reassessment proceedings were pending before him which were getting time barred on 31.12.2018. The restoration of name of the company will have a retrospective effect as if name of company was never struck off, however the stringent law of limitation under the Act would have debarred the Ld. AO from passing re-assessment order after 31.12.2018. Even if the petition u/s 252(1) r.w.s. 252(3) of the Companies Act was allowed and the name of company was restored, as if, it was never struck off, that would not have revived the limitation for re-assessment which had started to run and would have ended on 31.12.2018. Therefore, the impugned assessment order cannot be said to be void ab initio having been passed on a non-existing entity. Like protective assessments, the preemptive assessments made against companies whose name have been stuck off by Registrar of Companies, for the statutory defaults under the Companies Act, are valid and cannot be set aside on Jurisdictional defect. More so when revival application is sub judice. So there is no substance in the grounds raised. As the Ld. Counsel for assessee claims that the assessee has good case on merits but same require verification of facts and assessee was ex-parte in assessment proceedings. The ends of justice will be served by letting assessee appear before Ld. AO and justify its claim to the satisfaction of Ld. AO. Appeal is allowed for statistical purposes 2022 (8) TMI 1183 Unexplained cash credit - Addition u/s 68 - increased share capital - HELD THAT:-. Honourable Delhi High Court in the case of Steller Investment Ltd. [ 1991 (4) TMI 100 - DELHI HIGH COURT] held that it is evident that even if it be assumed that the subscribers to the increased share capital were not genuine, nevertheless, under no circumstances, can the amount of share capital be regarded as undisclosed income of the assessee. It may be that there are some bogus shareholders in whose names shares had been issued and the money may have been provided by some other persons. If the assessment of the persons, who are alleged to have really advanced the money is sought to be reopened, that would have made some sense but we fail to understand as to how this amount of increased share capital can be assessed in the hands of the company itself. As assessee has successfully discharged its onus by proving the identity, genuineness of the transaction and the creditworthiness of these two share applicants namely Sadgi Agarwal and Milestone Commosales Pvt. Ltd. which utilised the loan taken from another company namely M/s. Tobu Engineering Ltd. for making investment in the assessee company and also under the given facts and circumstances where the share application money received from M/s. Tobu Engineering Ltd. by the assessee stands explained before Ld. CIT(A), we find no merit in the addition made by Ld. AO. We, therefore, reverse the finding of Ld. CIT(A) and delete the addition made u/s 68. - Decided in favour of assessee. 2022 (8) TMI 1182 Addition u/s 56 - income from other sources - interest income earned on surplus funds during the pre-commencement of business - contention of assessee that the deposits are inextricably linked with the funds taken for capital projects - margin money deposit for bank guarantee and deposits for foreign currency buyer s credit - AO found that the said FDRs had been made out of surplus fund available to the assessee - As observed that, the assessee has failed to established that, the deposits are inextricably linked with the funds taken for capital projects HELD THAT:- As observation made by the Ld. CIT (A) without bringing on record of any materials and without appreciation of the relevant records on the issue to came to such conclusion and decided the Appeal in favour of the assessee. The Ld. CIT (A) while relying on the documents produced by the Assessee, ought have called for the remand report from the Assessing Officer and should have examined issue. But on going though the Order of the CIT (A), we are unable to understand the basis for such observations and the conclusion arrived by the CIT(A) in favour of the Assessee. Thus, the said approach of the CIT (A) is found to be erroneous. CIT (A) should examine the cash/fund flow statement to decide as to whether the interest on FDR s from the surplus funds or not. Further the Ld. CIT(A) has to call for the remand report from the AO and after providing the opportunity to the Assessee and there after shall come to the conclusion in the matter. If the Assessee is found with any earned interest on FD made out of the surplus funds, such income should be treated and assessed as income from other sources as held in the case of Tuticorin Alkali Chemicals and Fertilizers Ltd [ 1997 (7) TMI 4 - SUPREME COURT] We deem it appropriate to remit the issue in dispute to the file of Ld. CIT(A) to decide in light of our above observations. Accordingly we partly allow the revenues grounds. 2022 (8) TMI 1181 Rejection of books result - estimation of turnover - gross profit of the assessee has been estimated at 2.98% of the turnover - HELD THAT:- Assessee has been consistently following the trading pattern and its trading results have been accepted by the A.O in prior and subsequent periods. Mere no availability of stock register cannot be sufficient to reject trading results when the audited final accounts and other sources including the VAT data are available to cross verify the trading results including the sales verification. It is not the case of the Revenue that the A.O has not doubted the bonafide of the purchases or sale, nor there is an allegation of any manipulation in purchases or sales. A.O has also accepted the turnover declared by the assessee and also accepted the books of accounts by not pointing out any specific defect therein In our opinion, rejection of trading results in isolation is not proper and the same is erroneous. Further, it is not in dispute that an assessment order was made u/s 143(3) of the Act for the AY 2012-13 and 2015-16 wherein the declared results were accepted, the facts of those Assessment Years are similar that of the year under consideration. As seen that the gross loss during the Assessment Year 2015-16 is 11.32% against the gross loss of 0.41% during the year under consideration which indicates significant increase. Therefore, the action of the A.O in rejecting the trading result is not found to be tenable. Mere none production of stock register particularly when the quantitative details of opening stock, purchase, sales and closing stock is available cannot be ground to reject the declared trading results and the submission is supported by the said judgments. CIT(A) has considered all the above factual aspects and came to a just conclusion in deleting the additions made by the A.O. Therefore, we are of the considered opinion that the order of CIT(A) requires no interference. Accordingly, we dismiss the grounds of Appeal of the Revenue. 2022 (8) TMI 1180 Revision u/s 263 - deduction claimed u/s 80IA - as per CIT owing to amalgamation the deduction claimed by the assessee under section 80IA should not be allowed in terms of section 80IA(12A) of the Act as the company is formed by the consequence of amalgamation - HELD THAT:- The appointed date is to be reckoned for the purpose of taking into consideration the transfer of assets and liabilities for the purpose of claim of deduction under section 80IA - From the Certificate of Commissioning of the two eligible Power Undertakings situated at Rajasthan placed on record, admittedly, it is a fact that the two Units were commissioned on 31.03.2012 and 05.01.2013 respectively. Since their commissioning date falls after the appointed date of 01.10.2011, there cannot be any occasion of transfer of these two eligible Power Undertakings under the Scheme of Amalgamation. Further, we also note that these two eligible Power Undertakings situated at Rajasthan do not form part of the schedule of assets referred in scheduled B to the Approved Scheme of the Amalgamation. It is also a fact noted from Form 10CCB placed on record that the claim of deduction u/s 80IA has been made for the first time in A.Y. 2015-16 in respect of these two eligible Power Undertakings situated at Rajasthan. We are inclined to find favour with the submissions made assessee to take into consideration the appointed date of 01.10.2011 for the purpose of transfer of assets and liabilities under the Approved Scheme of Amalgamation and, therefore, we are of the considered view that the said Windmill Undertakings situated at Rajasthan were not transferred from the erstwhile IPCL into the assessee under the Scheme of Amalgamation. Accordingly we hold that the provisions of section 80IA(12A) are not attracted in the present set of facts and circumstances. Having so held, the very foundation on which the present proceedings were initiated under section 263 by the ld. Pr. CIT falls apart. We find that in the present facts and circumstances, the legal maxim sublato fundamento cadit opus is applicable, meaning thereby a foundation being removed, the superstructure falls . Once the basis of a proceeding is gone, the action taken thereon would fall to the ground. Thus, in the absence of such foundation, exercise of a suomotu power is impermissible. It should not be presumed that initiation of power under suomotu revision is merely an administrative act. It is an act of a quasi-judicial authority and based on formation of an opinion with regard to existence of adequate material to satisfy that the decision taken by the Assessing Officer is erroneous as well as prejudicial to the interests of the revenue. We find that it is an issue, purely on facts which is verifiable from the records of the assessee relating to the approved scheme of amalgamation which contained specifics about the effective date of scheme becoming applicable and the assets and liabilities which existed under the said approved scheme for transfer from the amalgamating company to the amalgamated company. Furthermore, examination and verification of certificate of commissioning of the two windmills undertakings also revealed the correct state of their coming into operations for the purpose of getting eligibility for claim u/s 80IA of the Act. Ld. PCIT and the ld. CIT, DR could not bring any material on record to controvert this verifiable factual position - thus no action u/s 263 of the Act is justifiable - Decided in favour of assessee. 2022 (8) TMI 1179 Long term capital gain - Real owner of property - transfer of right of assessee on the subject property to Jayantilal Oswal - whether the assessee can be taxed on account of capital gain in the absence of receipt of sale consideration? - Deed of transfer sold the subject property to Jayantilal Oswal - HELD THAT:- Assessee transferred her right on the said property by receiving sale consideration of Rs.51,00,000/- in favour of Jayantilal Oswal on 12-06-2009 and registered a Power of Attorney in favour of the said Jayantilal Oswal to sell that property as Power of Attorney holder by Clause E We find force in the arguments of ld. AR that it is not correct to be taxed in the hands of assessee when the same was taxed in the hands of Jayantilal Oswal. Therefore, when the assessee not received the said sale consideration of Rs.2,00,00,000/- vide registered Deed of Assignment dated 13-01-2013 and the same was received by the said Jayantilal Oswal as a consenting party which was disclosed by him under the head capital gain by Schedule 18 of his return of income, again, taxing the same in the hands of assessee is not justified. Thus, the order of CIT(A) in confirming the order of AO in taxing the assessee on account of capital gain is not justified and it is set aside. Thus, ground raised by the assessee are allowed. 2022 (8) TMI 1178 Rejection of books of accounts - estimating the profit on turnover declared by the assessee - HELD THAT:- We are of the considered view that for mis-match of figure of sales and inventory was duly replied by the assessee giving reconciliation of the sales figure and inventory value. AO without pointing out any error in such reconciliation nor pointing out any other mistake in the audited book result rejected the same. Find no merit in this action of the ld. CIT(A) confirming the action of the ld. AO rejecting the book results without assigning any plausible reason. We, therefore, reverse the finding of ld. CIT(A) and delete the addition of estimated profit made in the hands of the assessee. All the grounds raised by the assessee are allowed. 2022 (8) TMI 1177 Addition u/s. 43B and 36(1)(va) - delayed payment of employees' contribution deposited by employer with the EPF and ESIC authorities - Payment beyond the due date specified under the relevant laws but before the due date for filing the return of income under section 139 of the Act - scope of amendment in section 36(1)(va) as well as section 43B - HELD THAT:- The explanatory memorandum to the Finance Act, 2021 proposing amendment in section 36(1)(va) as well as section 43B is applicable only from 01.04.2021. These provisions impose a liability on an assessee and therefore cannot be construed as applicable with retrospective effect unless the legislature specifically says so. The aforesaid amendment is applicable only prospectively i.e., from 1.4.2021. We are therefore of the view that the impugned additions made under section 36(1)(va) of the Act, deserves to be deleted. - Decided in favour of assessee. 2022 (8) TMI 1176 Penalty u/s 271(1)(c) - Defective notice u/s 274 - addition on account of provision for diminution in the value of investment AND on account of prior period expenditure - allegation of non specification of charge - HELD THAT:- On perusal of the aforesaid notice it is clear that A.O has not specified whether the penalty is levied on account of concealment of particular of income or furnishing of inaccurate particulars of income. In this regard we have gone through the case of jurisdictional High Court referred by ld. Counsel in the case of Mohd. Farhan A. Shaikh Vs. DCIT[ 2021 (3) TMI 608 - BOMBAY HIGH COURT ] Since the issue on hand being squarely covered following the principle of consistency, we find merit in the submission of the assessee and direct the Assessing Officer to delete the penalty since, the notice issued under section 274 read with section 271(1)(c) was bad in law. - Decided in favour of assessee. 2022 (8) TMI 1170 Assessment u/s 153A r.w.s. 153C - Block period - Period of limitation - HELD THAT:- Section 153B sets out the time limit for completion of assessment u/s 153A and under the first proviso states that in cases of assessment under Section 154C, the period of limitation for completion of assessment/re-assessment shall be nine months from the end of financial year in which books of accounts/documents/assets seized or requisitioned are handed over under Section 153C to the Assessing Officer having jurisdiction over the other person, the petitioners herein, whichever is later. Notwithstanding that the limitation expires on 31.12.2018, a further period of one year or till such time information was received by the Assessing Officer pursuant to request made to the competent authority would be available to the officer to complete the assessment. Since the language used in Clause (xii) above is that the limitation is to be determined with respect to the 'date on which the information requested is last received', the file was called for to determine the specific nature of information called for and when the relevant information was received. On verification of the file, that the information has been received in two installments, the later installment on 16.08.2019. Thus, in this case as well, the period of one year is seen to be available to the respondent and the completion of assessment on 31.12.2019 is found to be in order. Where two assessments may result, in the case of a searched entity and the related person, both emanating from the same search, but relating to two different sets of assessment years. This certainly cannot be the intention of the Legislature. In fact, the decisions of the Delhi High Court are dated 30.10.2015 and 17.08.2017 and this, perhaps, would have been the reason for insertion of the portion within parenthesis in Section 153C(1). That is, and in the interests of clarity, the block period as applicable to a noticee under Section 153C will be the same as the years constituting the block in the case of the noticee under Section 153A. The two periods are aligned. This issue is accordingly answered, adverse to the petitioner. It is apparent that there has been proper application of mind by the officer at the time of recording of satisfaction. That apart, the Assessing officers, both of the searched person as well as the other person, in this case, the petitioner, are one and the same. There is no difference of opinion on this fact. The satisfaction recorded contains all required references to the seized materials and no infirmity is made out in regard to the same. This argument is also rejected. Challenge to the validity of the search - The petitioner has been seeking copies of panchanama as well as documents on the basis of which the impugned assessments have been made. Copies of panchanama have been supplied that indicate prima facie, certain defects therein. For instance, the first column in the Panchanama, column A, is to contain the name of the entity in whose case the warrant was issued. Column A contains the name of the entity as M/s.RK Power Gen Pvt. Limited . It is an admitted position that no warrant has been issued in the name of RKM Power Gen Private Limited and it is upon the strength of the warrant under Section 132 in the name of Sri.VR.Venkatachalam and Ramachandra University Trust, that the impugned assessments have been framed. This error is seen to percolate through all four warrants issued, dated 24.11.2015, 09.12.2015 13.01.2016 in the case of RKM Power Gen Limited Chennai and 24.11.2015 in the case of RKM power Gen in its premises at Chattisgarh. In the present case, the warrant issued stands in the name of VR.Venkatachalam and Ramachandra University and contains an endorsement obtained from the Company Secretary and the Assistant General Manager of RKM Power Gen Private Limited dated 24.11.2015. There is no endorsement thereupon by any official of RK Power Gen Pvt. Ltd., Chennai. Prima facie, this may well vitiate the search and assessments made in the case of RK Power Gen Pvt. Ltd. There are, admittedly, absolutely no pleadings in regard to this aspect of the matter and the petitioner has not challenged the veracity of the search. Learned Senior Standing Counsel points out that it is only upon receipt of the copy of the Panchanama that the above factual position had been noticed by the Court. Be that as it may, and seeing as these matters pertain to assessment years 2010-11 to 2014-15 and have been hanging fire before this Court from 2019 onwards, we are not inclined to keep these matters pending any further to await completion of yet another round of pleadings. Appellate authority can well consider this argument and would also be in a better position to appreciate the facts, since the entirety of the records would be before him. No other legal infirmities are pointed out in the orders impugned apart from those elucidated and answered above. Faced with this position, the petitioner seeks, and is granted liberty to approach the first appellate authority by way of statutory appeals. The petitioner is permitted to raise all grounds, barring those of limitation and challenge to validity of the satisfaction note, that have been decided adverse to it. Barring the aforesaid two issues, any other observation made in regard to the merits of the issues that have been dealt with under this order are only for adjudication of these Writ Petitions and will not bind the appellate authority in the disposal of the appeals. Let the appeals be filed within a period of four (4) weeks from date of receipt of a copy of this order in which event they shall be taken on file without reference to limitation. 2022 (8) TMI 1169 Default u/s 201- disallowance u/s 40(a)(ia) - deductibility or otherwise of tax at source on year-end provisions - not deducting tax at source under section 194C, 1941 and 194J of the Act from the year end provisions made by the appellant for payments - HELD THAT:- Break-up of provision for expenses needs to be examined factually based on evidences in order to decide the applicability of TDS provisions. We therefore remit this issue back to the AO for verification of each of the above line item of the break-up of details based on evidences and examine the issue factually for deciding the applicability of TDS provisions. AO is directed to keep in mind the ratio laid down by the coordinate bench of the Tribunal in the case of Biocon Ltd. [ 2022 (4) TMI 795 - ITAT BANGALORE] which is followed in assessee s own case for the assessment year 2012-13 and 2013-14 wherein the Hon ble Tribunal has envisaged various scenarios with regard to the liability to deduct tax at source, the levy u/s.201(1) and the method of calculation of interest u/s.201(1A). Needless to say that assessee may be given opportunity of being heard. Appeal by the assessee is allowed for statistical purposes. 2022 (8) TMI 1168 Revision u/s 263 - disallowance u/s 14A - how is order of AO is erroneous and prejudicial to the interest of the revenue? - HELD THAT:- One of the pre-requisite before invoking S. 263 and the allegation of the Ld. Pr. CIT is that there has been incorrect assumption of fact and law by the Assessing Officer. However, despite our deep and careful consideration of the material on record including the finding recorded in the subjected Assessment order dated 27.12.2019 and in the findings recorded in the order under challenge, we do not find any incorrectness and incompleteness in the appreciation of facts made by the AO.In the light of these observations, we do not agree on this aspect to this extent with Ld. Pr. CIT Whether the AO has also incorrectly appreciated and assumed the law while making the subjected assessment to be termed, as erroneous and prejudicial to the interest of the revenue ? - The facts are not disputed that the assessee has submitted the proof of identity of shareholders, capacity by showing the gift received and genuineness of the transactions as the shareholder and company both have supplied the information related to these transactions. Even the issue was similar in assessment year 2016-17 wherein the investor shareholders being same and the investment made by the shareholder were accepted and even the proceedings u/s. 143(3) r.w.s. 263 read with section 144B of the Act for the assessment year 2016-17 has after giving the detailed show cause and considered the submission of the assessee and accepted the fact that the investment made by the shareholder is genuine and no addition was made in the case of the company what else the ld. AO can do in this case so as to prove the investment made by the shareholder in the assessee company. Even the factual input made by the ld. AR that the case of shareholders are re-opened to check the genuineness of the investment made by them in that circumstances we believe the plausible view was taken by the AO on this issue. As regards, the disallowance under section 14A r.w.r. 8D the ld. AR of the assessee has submitted that there is no exempt income for the year under consideration and there is no expenditure incurred to earn the exempt income. This view and argument were accepted by the AO. Pr. CIT acted beyond jurisdiction in holding that the assessment order for A. Y. 201718 passed by the AO is held erroneous in so far as it is prejudicial to the interests of the revenue for the purpose of section 263 of the Income Tax Act. As the assessment was completed after making required amount of enquiry and there was no lake of enquiry or investigation by the AO on the issues which was raised by the ld. Pr. CIT under the provision of section 263 proceedings. Therefore, the findings of Ld Pr. CIT that order passed by AO was passed without conducting necessary enquires and without verifying necessary details was without any basis or without any evidence on record and mere guess work that that the ld AO has not conducted the enquiry. Appeal of assessee allowed. 2022 (8) TMI 1167 Revision u/s 263 - Correct source of income - As per CIT income of the assessee should have been assessed as unexplained cash credit, rather than business income and added back as income u/s. 68 taxed at special rate u/s. 115BBE - PCIT noticed the fact that the assessee has admitted Rs.3 crores as business income in the hands of the assessee during the search proceedings and no explanation as regards the source and nature of receipts was submitted - HELD THAT:- In the present case, the PCIT has not brought out any material on record to substantiate that the source of the amount declared during the search proceedings is anything other than the income from business of the assessee. The AO has given a clear finding with respect to additional income offered by the assessee as business income. PCIT in his order has stated that further enquiry would have revealed that the additional income is from an undisclosed source and would have resulted in unexplained income to be taxed u/s.115BBE - view of the ld. PCIT, in our opinion, is not the right reason for exercising revisionary powers u/s. 263 as the error envisaged by Section 263 of the Act is not one that depends on possibility as a guess work, but it should be actually an error either of fact or of law. Assessee has no other source of income other than business income which fact has been repeatedly submitted by the assessee before the lower authorities. AO has conducted enquiry and perused the details submitted and has taken a decision to accept the explanation provided by the assessee after proper application of mind. It is also to be noted that impugned sum is already offered to tax as business income and when the only source of income is business income, then the provisions of section 115BBE cannot be invoked to tax the income as deemed income . PCIT has stated that the AO ought to have treated the income as unexplained cash credit that should have been added u/s.68. This contention is not tenable since for the purpose of invoking section 68, the cash credit should have been recorded in the books of accounts of the assessee for which he offers no explanation about the nature and source thereof or the explanation offered by him is not, in the opinion of the AO, satisfactory. In assessee s case Rs.3 crores is not recorded in the books of accounts and directly offered to tax in the statement of computation (page 12 of paper book) as additional income under the head profits and gains of business or profession. We are of the considered view that the PCIT is not justified in setting aside the order of the AO for examining the source of income Already offered to tax as business income. Accordingly the impugned order of the PCIT is quashed. Appeal of assessee allowed. 2022 (8) TMI 1166 Revision u/s 263 by CIT - AO accepted claim of genuineness of Share Capital Investment by various persons without making inquiries or verification of the claim, as prescribed in clause (a) (b) of first proviso to Section 68 - HELD THAT:- Though the original assessment order passed by the Assessing Officer is a cryptic order without much discussion on the verifications made by the A.O. and the explanation offered by the assessee. As can been seen from the Paper Book filed by the assessee, wherein assessee s detailed reply wherein details above the unsecured loans remained outstanding at the end of the 31.03.2018 with copy of the Ledger account, Income Tax Return of the respective parties, computation of income, balance sheet, Profit and Loss account were enclosed. Assessee also replied that no commercial production is started during this assessment year, therefore raw material on purchased is shown as closing stock in the books of accounts and no other expenses debited in the profit and loss account. Assessee also further submitted name and addresses of the sundry creditors and sundry debtors. Further contra ledger of sundry creditors also filed. Similarly, the assessee enclosed list of shareholders with shareholding pattern in assessee s company with copy of the ledger account, copy of the Income Tax Return and copy of the bank statement were submitted to the Assessing Officer vide Exhibit-H. It is further seen on these documents were electronically uploaded by the assessee in reply to the 143(2) notice, the A.O. having been satisfied with the explanation offered by the assessee. AO has accepted the explanations and completed the assessment order u/s. 143(3) of the Act. It is not the case of the assessee that the A.O. has not conducted necessary inquiry, verification before passing the assessment order. The assessing officer has verified the share application money which were being routed through banking channels and the respective Income Tax Return by the investors were also been verified by the Assessing Officer. Similarly, on the unsecured loans the same were received by the assessee company through banking channels by way of cheques and the bank statements were also been produced before the Assessing Officer for verification along with Return of Income filed by the respective assessees/creditors. Thus, the Assessing Officer accepted the genuineness of the share application money and unsecured loans received by the assessee. Such a view of the Assessing Officer was a plausible view and the same cannot be considered as erroneous or prejudicial to the interest of revenue. Thus it is not open to the Ld. PCIT to revise the issues on mere apprehensive and surmises that the A.O. has not made proper verification before passing the assessment order. It is settled principle of law by the Hon ble Apex Court in the case of CIT vs. Shreeji Prints (P.) Ltd. [ 2021 (9) TMI 108 - SUPREME COURT] when Assessing Officer made enquiries in detail and accepted the genuineness of loan received by the assessee such view of the Assessing Officer was a plausible view and same cannot be considered as erroneous or prejudicial to the interest of revenue. Thereby the revision proceedings initiated invoking to Explanation 2 to Section 263 of the Act is held to be invalid and the same is not sustainable in law. Thus it is evident that the ld. Assessing Officer has made due inquiries by issuing notices and the assessee also filed detailed submissions with evidences. Even though the assessment order does not discuss all these aspects in detail with regards to the submissions of the assessee, it cannot be held the assessment order is erroneous and prejudicial to the interest of the Revenue. - Decided in favour of assessee. 2022 (8) TMI 1165 Reopening of assessment u/s 147 - Change of opinion - depreciation - cost of construction / development - deduction of interest and bad debts - HELD THAT:- We find from the reasons provided to the assessee with regard to reopening of the assessment U/s. 147 that the AO has merely changed his opinion and without any additional material available before him, the AO has sought to reopen the assessment U/s. 147 - No doubt this issue has been decided against the assessee by the Ld. CIT(A) and assessee has not challenged that order but it can take up this issue before the Tribunal with the aid of Rule 27 because Rule 27 provided that assessee can agitate any ground, which has been decided against it, but if those arguments are being accepted by the Tribunal then the order of the Ld. CIT(A) can be upheld even on other issues, because the issue regarding reopening is going to hit the root and the moment it is held that reopening is bad in law then all other consequent proceedings would become redundant. A bare perusal of the annexure to the Notice u/s 142(1) dated 10/10/2007 and 15/11/2007 which was issued in the original assessment proceedings u/s 143 makes it clear that the point on which re-assessment proceedings were initiated, was well considered in the original proceedings. We are of the considered view that the Ld. AO has erred in reopening the assessment u/s. 147 of the Act merely by changing his opinion which is unsustainable in law and therefore deserves to be quashed. Therefore, the grounds raised by the Revenue against the order passed U/s. 143(3) r.w.s 147 do not have any legs to stand and hereby dismissed. Disallowance of depreciation on the Project Berth - AR argued that as per the License Agreement entered into with Visakhapatnam Port Trust (VPT) by the assessee, the assessee is owner of the asset for a period of 30 years - HELD THAT:- As per the License agreement the assessee is entitled for the Terminal Value at the end of the License period, at the time of transfer to the Licensor. Therefore the assessee needs to recover the cost incurred in the construction of the Berths, which is out of the fees to be collected from users. The benefit of earning revenue from the berth constructed by the assessee, but not legally owned by the assessee, arises from the license granted by the Licensor (VPT). Considering this peculiar situation to recover the cost of construction, where the assessee could not claim depreciation, CBDT Circular No. 09/2014 has clarified the treatment of such expenditure incurred in BOT agreements. Therefore, in our considered view the assessee is entitled for the amortization of the assets developed under BOT project over the lease period of the asset. The CBDT Circular No. 09/2014 being a clarificatory Circular this can be applied retrospectively for the AY 2007-08 also. Circular can be applied retrospectively in respect of deductions claimed in previous assessment years. We therefore direct the Ld. AO to amortize the cost of buildings, structures, berths, wharves, equipment and other immovable and movable assets constructed, installed, located, created as provided by the Licensee after deducting depreciation claimed by the assessee and allowed by the revenue in earlier years so that the amortization claimed for the year under consideration shall be the difference between the initial cost and the depreciation already claimed by the assessee which needs to be amortized over the remaining license period. It is ordered accordingly. Thus, this ground no.2 raised by the assessee is allowed for statistical purposes. Disallowance of Interest - AR argued that the interest did not pertain to acquisition of any assets nor there any expansion of business. Therefore, he pleaded that the interest was incurred in the normal course of business - HELD THAT:- We find that the assessee has submitted an effective disallowance of Rs. 69 lakhs and the Ld. CIT(A) had therefore allowed the balance of Rs. 1,22,00,000/-. We find from the submissions made by the assessee before CIT(A), that the assessee has voluntarily admitted an effective disallowance of Rs 69,00,000/-, where the LD.CIT(A) has rightly considered the same. Therefore, in view of such voluntary admission of Rs 69,00,000/- before the Ld.CIT(A), we are of the view that the assessee cannot now freshly contest before us. We therefore find that no interference in the order of LD.CIT(A), is required on this issue. Accordingly, this ground raised by the assessee is dismissed. Disallowance of provision for doubtful debts - HELD THAT:- We find that the provision for doubtful debts is not a bad debt and which needs allowance under the Act. Section 36(1)(vii) of the Act which clearly states that the amount of any bad debts or part thereof which is written off as irrecoverable in the accounts for the previous year shall be allowed as a deduction. In the instant case, the assessee has merely made a provision for doubtful debts and has not written off as bad debts in the books of account. The Vijaya Bank [ 2010 (4) TMI 46 - SUPREME COURT] case relied on by the Ld.AR cannot be applied in the instant case as it relates to provisions made by Banks. Therefore, we are of the view that a provision being contingent in nature shall not be an allowable deduction u/s 36(1) of the Act. Therefore, this ground raised by the assessee is dismissed. Customs 2022 (8) TMI 1164 Rate of customs duty on import of power tillers - Concessional rate of 2.5% in terms of Notification No. 12/2012-Customs dated March 17, 2012 [Sl. No. 399(X)] - to be classified under CTH 8432 or not - HELD THAT:- CTH 8432 classifies agricultural, horticultural or forestry machinery for soil preparation or cultivation, lawn or sports ground rollers. CTH 8432 8020 refers to rotary tiller under the sub-heading other machinery (8432 80). There is no separate tariff sub-heading for power tiller in the Customs Tariff - the power tillers are also to be classified under CTH 84.32. It has also been made clear that Circular No. 45/2001 dated August 7, 2001 had been withdrawn. Circular No. 45/2001-Customs dated August 7, 2001, which has been relied upon on behalf of the Revenue, had clarified that pedestrian tractors / power tillers were classifiable under CTH 87.01, whereas rotary tillers were classifiable under CTH 84.32. In view of the clarification this circular no longer survives. Further, the coordinate Bench of the Tribunal (South Zonal Bench of the Tribunal, Bangalore), in the case of VST TILLERS TRACTORS LTD. VERSUS COMMR. OF C. EX., BANGALORE [ 2005 (5) TMI 537 - CESTAT, BANGALORE] has also held that Power Tillers are classifiable under CTH 84.32 of the Central Excise Tariff (which is pari materia to CTH 84.32 of the Customs Tariff). From the product literature of various manufacturers of power tillers/rotary tillers sold internationally under various brands, submitted by BTL, it is also evident that rotary tillers and power tillers are self same goods. To similar effect is the declaration dated December 16, 2019 of the Chinese manufacturer of the power tillers imported by BTL. The said declaration clarifies that the primary function of a power tiller is nothing but a modified rotary tiller, inbuilt with an engine as source of power. The contention that power tillers are different from rotary tillers are based on erroneous premises and thus unsustainable. Power Tillers imported by the importers herein are therefore entitled to the benefit of concessional rate of basic customs duty of 2.5% in terms of the said notification, as per Sl. No. 399(x) of the Table thereof. Appeal allowed. 2022 (8) TMI 1148 Smuggling - Import of Crane Betel nuts - Betel Nut would fall under Customs Tariff Heading 2106 and Sub-Heading 21069030 or not - Circular No.22/2004-Customs, dated 03.03.2004 - HELD THAT:- It is the consistent view of this Court that in case of provisional assessment, provisional release is permissible, in fine the direction given in the aforesaid batch of Writ Petitions is extended to the present matter as well. Hence, this Court permits the petitioner to make an application for provisional release under Section 110-A, on such application, when received, shall be disposed of by the Adjudicating Authority, after hearing the petitioner and simultaneous with a prima facie determination of the classification of the commodity, within a period of two (2) weeks from the date of receipt of the application. The Commissioner of Customs (Imports) is hereby directed to release the cargo covered under Bill of Entry No.7102157, dated 17.01.2022, provisionally subject to furnishing of PD bond for full value of the goods and furnishing of bank guarantee at 50% of the differential duty considering, Duty Free Tariff Preference Scheme for Least Developed Countries (LDC) benefit - Petition allowed. Corporate Laws 2022 (8) TMI 1163 Oppression and mismanagement - Jurisdiction of NCLT to decide the issue - Principle of natural justice - Transfer application - Jurisdiction of NCLT / its bench - Allegation that forged documents have been filed before the CLB - Appeal is maintainable under Section 421 of the Companies Act, 2013 or not - Whether the Impugned Order dated 31st May, 2021 allowing the Section 8 filed under Section 241 and 242 of the Companies Act is a valid order passed in accordance with the law? HELD THAT:- Company Appeal (AT) No. 31 of 2022: The Acting President has rightly observed that the Bench which has been hearing is competent to decide the Company Petition and there is no occasion for asking for re-assignment of the Petition to a Division Bench that has logistical capability to decide CA-18 of 2019 and complete Company Petition. The bench was fully competent and hence no orders were required to be passed in the above context. We do not find any error in the Impugned Order passed by the Acting President refusing to re-assign the Company Application No. 18 of 2019 and Company Petition. The Acting President has rightly observed that Bench which has been hearing the Company Petition and Company Application has reserved the Orders on some applications and was fully competent to decide the Company Petition. Order dated 31st May, 2021 passed by the Acting President does not require any interference in exercise of our Appellate Jurisdiction. Company Petition No. 144 of 2016 was an Application alleging oppression and mismanagement. The remedy provided under Section 241 to any Member of a Company is a statutory remedy which has been provided to serve particular Objectives. The Tribunal has been conferred with ample power under Section 242, wide enough which encompasses expression make such order as it thinks fit . Sub-Section 2 of Section 242 as extracted above provides for, without prejudice to the generality of the powers, different orders which can be passed; The power under Section 242 entrusted to the Tribunal by statute are statutory powers which cannot be exercised by any arbitrator which is appointed in pursuance of any agreement between the parties. The question as to which disputes are arbitrable and which disputes are not arbitrable has come up for consideration before the Hon ble Supreme Court in large number of cases. A two Member Bench Judgment of Hon ble Supreme Court in BOOZ ALLEN AND HAMILTON INC. VERSUS SBI HOME FINANCE LTD. OTHERS [ 2012 (10) TMI 459 - SUPREME COURT] has occasion to consider the question regarding arbitrability of different nature of disputes. The Hon ble Supreme Court held that The well recognized examples of non-arbitrable disputes are : (i) disputes relating to rights and liabilities which give rise to or arise out of criminal offences; (ii) matrimonial disputes relating to divorce, judicial separation, restitution of conjugal rights, child custody; (iii) guardianship matters; (iv) insolvency and winding up matters; (v) testamentary matters (grant of probate, letters of administration and succession certificate); and (vi) eviction or tenancy matters governed by special statutes where the tenant enjoys statutory protection against eviction 19 and only the specified courts are conferred jurisdiction to grant eviction or decide the disputes. On looking into the statutory scheme of the Companies Act in light of the ratio of the judgements of Hon ble Supreme Court it is clear that specific remedy which is specific statutory remedy provided under Section 241, 242 clearly exclude arbitration of such disputes by an arbitrator. It is further noticed that the provisions of Section 430 of the Companies Act clearly exclude the jurisdiction of Civil Court. When there is a clear bar of jurisdiction to be exercised by the Civil Court in respect of any matter which the Tribunal is empowered to determine under the Companies Act, the bar is implicit to the arbitration proceeding on the subject which is covered under Section 241 and 242 - it is clear that the remedy provided under the Companies Act, 241 and 242 is a specific statutory remedy which has to be decided by the Tribunal in accordance with law. The issues which has been raised in Application under Section 241 and 242 are issues which are not arbitrable and the Adjudicating Authority committed error in allowing Section 8 Application filed by the Respondent No. 1. We thus find the Order dated 31st May, 2021 unsustainable due to this reason. The order dated 31.05.2022 allowing application under Section 8 of the Arbitration and Conciliation Act, 1996 is set aside. Further, following directions are issued: a. The Company Petition No. 144 of 2016 be decided by the Adjudicating Authority on merits at an early date preferably within six months of the date on which copy of this order is produced before the Adjudicating Authority. b. Both the parties are retrained from filing any Company Application, Affidavit or Interlocutory Application in the Company Petition No. 144 of 2016 henceforth. c. The Adjudicating Authority shall decide the Company Petition No. 144 of 2016 on the basis of materials already on record. Appeal disposed off. Insolvency & Bankruptcy 2022 (8) TMI 1162 Sale of assets of Corporate debtors - approval by the Core committee by majority - Validity of order of NCLAT permitting the Private Sale of the composite assets of the Corporate Debtor instead of taking the Second Swiss Challenge Process to its logical conclusion R.K. Industries was declared as an Anchor Bidder - Validity of direction to respondent No.2 Liquidator to restart the entire process of Private Sale after issuing an open notice to prospective buyers instead of confining the process to those parties who had participated in the process earlier. HELD THAT:- On a conjoint reading of the aforesaid provisions of the IBC and the Liquidation Regulations, it is evident that the Liquidator is authorized to sell the immovable and movable property of the Corporate Debtor in liquidation through a public auction or a private contract, either collectively, or in a piecemeal manner. The underlying object of the Statute is to protect and preserve the assets of the Corporate Debtor in liquidation and proceed to sell them at the best possible price. Towards this object, the provisions of the IBC have empowered the Liquidator to go in for a public auction or a private contract as a mode of sale - Regulation 8 of the Liquidation Regulations refers to the consultative process with the stakeholders, as specified in Section 35 (2) of the IBC and states that they shall extend all necessary assistance and cooperation to the Liquidator for completing the liquidation process. Regulation 31A has introduced a Stakeholders Consultation Committee that may advise the Liquidator regarding sale of the assets of the Corporate Debtor and must be furnished all relevant information to provide such advice. Though the advice offered is not binding on the Liquidator, he must give reason in writing for acting against such advice. In the instant case, the first Swiss Challenge Process did not succeed as the highest offerer failed to deposit the EMD. In the second round of the Swiss Challenge Process, as against the base price of ₹460 crores fixed for the Dahej Material and scrap, the appellant made a bid of ₹431 crores that was accepted. Thereafter, the respondent No.2 Liquidator did publish an advertisement inviting bidders to submit their bids against the Anchor Bid in response whereto, the appellant, respondents No.3, 4, 5, and 6 submitted their bids, but before the process could be taken further, on an application moved by the respondent No.1, the Adjudicating Authority (NCLT) passed an order directing the respondent No.2 Liquidator to carry forward the stage upto announcement of the highest bidder, while deferring the rest of the process. A bare perusal of the clauses of the Anchor Bid Document and the Second Swiss Challenge Process Document, leave no manner of doubt that the prospective bidders were informed that the Liquidator had reserved the right to abandon/cancel/terminate/waive the said process and/or part thereof at any stage; that issuance of the Anchor Bid Document did not create any binding obligations on the Liquidator to proceed with the sale of the assets of the Corporate Debtor; that the Anchor Bid Document did not constitute an offer/commitment or an assurance of the Liquidator. Identical rights were reserved with the Liquidator even in the Second Swiss Challenge Process Document - It is a different matter that the earlier eauctions turned out to be unsuccessful, thus compelling the respondent No.2 Liquidator to explore other options, including the option to sell the assets in smaller lots. Thus, it is not for the court to question the judiciousness of the decision taken by the respondent No.2 Liquidator with the idea of enhancing the value of the assets of the Corporate Debtor being put up for sale. The right to refuse the highest bid or completely abandon or cancel the bidding process was available to the respondent No.2 Liquidator. The appellant has not been able to demonstrate that the decision of the respondent No.2 Liquidator to discontinue the Second Swiss Challenge Process and go in for a Private Sale through direction negotiations with prospective bidders was a malafide exercise. It is a well-settled principle that in matters relating to commercial transactions, tenders, etc., the scope of judicial review is fairly limited and the court ought to refrain from substituting its decisions for that of the tendering agency. The powers vested in and the duties cast upon the Liquidator have been made subject to the directions of the Adjudication Authority (NCLT) under Section 35 of the IBC. Once the Liquidator applies to the Adjudicating Authority (NCLT) for appropriate orders/directions, including the decision to sell the movable and immovable assets of the Corporate Debtor in liquidation by adopting a particular mode of sale and the Adjudicating Authority (NCLT) grants approval to such a decision, there is no provision in the IBC that empowers the Appellate Authority (NCLAT) to suo motu conduct a judicial review of the said decision - The Appellate Authority cannot don the mantle of a supervisory authority for overseeing the validity of the approach of the respondent No.2 Liquidator in opting for a particular mode of sale of the assets of the Corporate Debtor. It is thus noted that the Core Committee constitutes 70.3% of the financial creditors and when they have weighed in to support the stand taken by the respondent No.2 Liquidator to continue the bid process commenced on 24th August, 2021, there are no reason to foist the view of the NCLAT on the respondent No.2 Liquidator that he ought to restart the process for sale of the composite assets of the Corporate Debtor from the scratch after issuing an open notice to the prospective buyers. The impugned judgment dated 10th December, 2021, passed by NCLAT to the extent that it has modified the order dated 16th August, 2021 passed by the NCLT and directed restraining of the Private Sale Process, is quashed and set aside - Appeal dismissed. 2022 (8) TMI 1161 CIRP - Recovery of customs duty - adjudication of Bill of entry after initiation of Corporate Insolvency process - Release of certain goods lying in the Customs Bonded Warehouses without payment of custom duty and other levies - waterfall mechanism under Section 53 of the IBC - priority of IBC over the Customs Act - Power of respondent to claim title over the goods and issue notice to sell the goods in terms of the Customs Act when the liquidation process has been initiated. HELD THAT:- In the present case, the Corporate Debtor as part of its business used to regularly import and warehoused goods in the custom bonded warehouses from at least 2011. As has already been mentioned above, the CIRP process commenced against the Corporate Debtor on 01.08.2017 by the order of the NCLT. It appears from the record that no notices were issued by the respondent against the Corporate Debtor with respect to the warehoused goods prior to initiation of the CIRP. In fact, all the duty demand notices issued by the respondent were from March 2019 onwards. It is in this context that it is necessary for us to ascertain whether the IBC overrides the Customs Act or vice-versa. Insolvency and Bankruptcy Code came into force in India from 28.05.2016 to combine provisions relating to insolvency found across different statutes into a single comprehensive instrument. Under the earlier legal regime, different statutes were resulting in multiple parallel proceedings, which inevitably resulted in uncertainty for the creditors over their recovery. One of the objectives behind the enactment of the IBC was to end the conflict between different statutes. One of the motivations of imposing a moratorium is for Section 14(1)(a), (b), and (c) of the IBC to form a shield that protects pecuniary attacks against the Corporate Debtor. This is done in order to provide the Corporate Debtor with breathing space, to allow it to continue as a going concern and rehabilitate itself. Any contrary interpretation would crack this shield and would have adverse consequences on the objective sought to be achieved - the IBC, being the more recent statute, clearly overrides the Customs Act. This is clearly made out by a reading of Section 142A of the Customs Act. It is to be noted that the Customs Act and the IBC act in their own spheres. In case of any conflict, the IBC overrides the Customs Act. In present context, this Court has to ascertain as to whether there is a conflict in the operation of two different statutes in the given circumstances. As the first effort, this Court is mandated to harmoniously read the two legislations, unless this Court finds a clear conflict in its operation. Thus, the respondent could only initiate assessment or reassessment of the duties and other levies. They cannot transgress such boundary and proceed to initiate recovery in violation of Sections 14 or 33(5) of the IBC. The interim resolution professional, resolution professional or the liquidator, as the case may be, has an obligation to ensure that assessment is legal and he has been provided with sufficient power to question any assessment, if he finds the same to be excessive. It is thus concluded that:- i) Once moratorium is imposed in terms of Sections 14 or 33(5) of the IBC as the case may be, the respondent authority only has a limited jurisdiction to assess/determine the quantum of customs duty and other levies. The respondent authority does not have the power to initiate recovery of dues by means of sale/confiscation, as provided under the Customs Act. ii) After such assessment, the respondent authority has to submit its claims (concerning customs dues/operational debt) in terms of the procedure laid down, in strict compliance of the time periods prescribed under the IBC, before the adjudicating authority. iii) In any case, the IRP/RP/liquidator can immediately secure goods from the respondent authority to be dealt with appropriately, in terms of the IBC. Appeal allowed. 2022 (8) TMI 1160 Company under liquidation as per IBC - Validity of arbitration order while moratorium ordered by the NCLT was still in operation - petitioner s application was made mainly on the ground that the claim and counter claim had been filed during the period of moratorium under Section 14 of the I B Code - HELD THAT:- The learned Tribunal came to the conclusion that the Section itself provides that first of all the claimant shall file a claim. Thereafter the respondent shall file his defence. After Section 23(2-A) being added with effect from 23.10.2015 the respondent in support of his case may also submit a counterclaim which has to be also adjudicated upon by the Tribunal. It held therefore that the language of Section 23 (2-A) of the Act made it clear that both claim and counterclaim should be decided together by the Arbitral Tribunal. It also observed that in a proceeding before the Arbitral Tribunal, if the respondent wants to file a counterclaim it can only file the same before the Arbitral Tribunal along with his defence of a claim. It held that the respondent had a right to move a counterclaim. It also held that the Arbitral Tribunal had a duty to adjudicate the same along with the claim. The learned Tribunal thereafter looked into the I B Code and the language of Section 14 which provides for a moratorium. It quoted the entire Section 14 and held that from the language of Section 14 (1) (a), it was clear that on the date of commencement of the CIRP, the NCLT could impose a moratorium prohibiting the institution of a suit or continuation of a pending suit or proceeding against the corporate debtor including execution of any judgement, decree or order in any court of law, Tribunal, Arbitral Panel or other Authority - Only after determination of objections under Section 34, the party may move a step forward to executing such Award and in case the objections are settled against the corporate debtor, then its enforceability against the corporate debtor certainly shall be covered by the moratorium of Section 14(1) (a). The Learned Tribunal thereafter observed that it is clear from a perusal of the observations made by the Delhi High Court that until and unless the effect of continuation of proceedings results in endangering, dissipating or adversely affecting the assets of the corporate debtor, it would not be prohibited under Section 14 (1) (a) of the I B Code 2016. A counterclaim would be in the nature of a suit against the plaintiff which was the corporate debtor. The Tribunal also observed that strictly speaking thus under Section 14 (1) (a) of the Code a counterclaim would be covered by the moratorium which prohibits the institution of suit or continuation of pending suits or proceedings against the corporate debtor, and counterclaim would be a proceeding against the corporate debtor, however, the counterclaim raised against the corporate debtor is integral to the recovery sought by the Corporate Debtor and is related to the same transaction. Section 14 has created a piquant situation i.e. the corporate debtor undergoing Insolvency proceedings can continue to pursue its claim but the counterclaim would be barred under Section 14 (1)(a). When such situations arise, the Court has to see whether the purpose and intent behind the imposition of the moratorium is being satisfied or defeated - When the counterclaim is adjudicated and the amount to be paid/recovered is determined, at that stage or in an execution proceeding, Section 14 could be triggered. Till such adjudication of claim and counterclaim is carried out by the appropriate forum i.e. the Arbitral Tribunal, Section 14 would not come into play. The important question that the Court needs to consider is the nature of the proceedings i.e. whether it is in favour or against the corporate debtor. Proceedings against an Award in favour of the corporate debtor would be like stalling the Corporate debtor s efforts to recover its money and hence would not fall within the embargo of Section 14 (1) a of the I B Code. If a counterclaim is allowed then section 14 (1) (a) of the Code would immediately come into play and the decree would not be Executable against the corporate debtor. In P Mohan Raj and others versus Shah Brothers Ispat Private Limited, [ 2021 (3) TMI 94 - SUPREME COURT] , a three judges bench of the Supreme Court was considering whether criminal complaints filed by the respondent against the Company and the appellants under Section 138 read with Section 141 of the Negotiable Instruments Act could be allowed to continue during the moratorium period. The NCLAT had held that Section 138, being a criminal law provision, cannot be held to be a proceeding within the meaning of Section 14 of the IBC. The Supreme Court observed that Section 138 proceedings although a criminal proceeding is in essence initiated only to recover an amount of the bounced cheque against the assets of the Company, and would therefore be included in the term proceedings against the corporate debtor. It is evident from the careful consideration of the entire judgement rendered in P Mohan Raj that the observations made by the Supreme Court were in the context of the facts of the case where it had been argued before it by the respondents that criminal proceedings as well as quasi-criminal proceedings can go on against the corporate debtor or its directors as they do not strictly fall within the definition of proceeding under Section 14 (1) of the Act. The court held that a Section 138/141 proceedings under the Negotiable Instruments Act is against the corporate debtor is covered by Section 14 (1)(a) of the I B Code. It however clarified that in the case before it such proceedings under the Negotiable Instruments Act could continue against the company as well as the Appellants for the reason that the Insolvency Resolution Process did not involve a new management taking over and the moratorium period had come to an end. The Supreme Court has repeatedly emphasised in its judgements the importance of keeping handsoff approach where arbitration matters are concerned. This Court finds that the learned Tribunal has decided an application made to it by the petitioner and the orders squarely falls under the provisions of Section 16 of the Act of 1966. Therefore, it cannot be said to be an order patently lacking in jurisdiction and therefore perverse and liable to be interfered with by this Court under Article 227 of the Constitution. This petition is dismissed as not maintainable. 2022 (8) TMI 1159 Validity of Resolution Plan - admissibility of claims - improper classification of claim - HELD THAT:- The Resolution Plan was approved by 95.15 % of voting share in 31st Committee of Creditors Meeting dated 13.11.2019. Thus, as per the requirement of Section 30(2)(b) of the Code, the operational creditors of the Corporate Debtor including the Appellant herein, are entitled to a minimum payment of their liquidation value which is Nil in the present case, and therefore the resolution plan of SPTL which proposes NIL payments towards the claims of operational creditors, cannot be called in question on the ground that it contravenes provisions of Section 30(2) of the Code. Hon ble Supreme Court in the case of Ghanashyam Mishra and Sons Private Limited Vs. Edelweiss Asset Reconstruction Company Limited Ors. [ 2021 (4) TMI 613 - SUPREME COURT] has held that all the dues including the statutory dues owed to the Central Government, any State Government or any local authority, if not part of the resolution plan, shall stand extinguished and no proceedings in respect of such dues for the period prior to the date on which the Adjudicating Authority grants its approval Under Section 31 could be continued. Appeal dismissed. 2022 (8) TMI 1158 CIRP - Period of limitation - NCLT admitted the application - personal Guarantor to Corporate Debtor - Australian National - lack of any Agreement of Guarantee - invalidity of any such Guarantee, even if issued - non-performing assets - date of default - Regulation 3A of the Foreign Exchange Management (Guarantees) Regulations, 2000 - HELD THAT:- In the instant case, the Statement of Account filed together with the Company Petition before the Adjudicating Authority proves that the Sum is due and payable by the Personal Guarantor. Added further, the execution of Revival Letter dated 10.08.2016 by the Appellant / Personal Guarantor, acknowledging its Liability, in respect of the 1st Respondent/Bank/Financial Creditor, after two years from the date of Execution of the Guarantee Agreement, acknowledging its Liability shows the Subsistence of a Valid Guarantee Agreement. In terms of the ingredients of Section 95 of the I B Code, 2016, the 1st Respondent/Bank has, in the instant case, proved the Debt and Default committed by the Appellant/Personal Guarantor and undoubtedly, the Default is more than Rs.1,000/- and that the Company Petition, on the file of the Adjudicating Authority, is well within the Limitation Period which is evident from the Statement of Account, Guarantee Agreements, Revival Letters, Loan Documents, which are quite explicit, self-explanatory and admits of no exception, as opined by this Tribunal. This Tribunal holds that the Appellant as a Personal Guarantor of the Corporate Debtor, cannot wriggle out of his Liability under the Guarantee Deed. Whether the Impugned Order passed by the Adjudicating Authority is not a speaking one and is in negation of the principles of natural justice? - HELD THAT:- It cannot be brushed aside that a reasoned/speaking order, passed by an Adjudicating Authority, will have an appearance of justice. An unreasoned order will be just and valid from the point of view of the Authority who passes the same, but to the Affected Person, the said order is an unreasonable and an illegal one - An Appeal, in law, is an elongation of Original Proceedings of the Adjudicating Authority and an Appellate Tribunal, has same powers of an Adjudicating Authority (Tribunal). In fact, the Propriety, Legality, Validity of the impugned order, passed by an Adjudicating Authority (Tribunal) is the primary consideration in an Appeal. Because of the fact that the Appellant/Personal Guarantor had executed the Revival Letters, the Revival Letter dated 10.08.2016 acknowledging its liability in respect of the 1st Respondent/Bank/Financial Creditor (after 2 years from the date of execution of Guarantee Agreement), the Petition on the file of the Adjudicating Authority (National Company Law Tribunal, Hyderabad Bench I, Hyderabad), is well within the period of limitation and therefore, the Contra Plea taken on behalf of the Appellant/Personal Guarantor, is not acceded to by this Tribunal. The Appellant/Personal Guarantor (in the instant case), whether he resides in India or outside India, when a Petition is filed against him, as Personal Guarantor of the Corporate Debtor, the Adjudicating Authority, (National Company Law Tribunal) has jurisdiction, in whose territorial jurisdiction, the Registered Office of the Corporate Person is located, the right showered upon the 1st Respondent/Bank/Financial Creditor under Section 95 (1) of the Code being an independent and special proceeding, which can be invoked by the Financial Creditor (without any fetter), despite, availability of any other Fora, as per Section 60 (1) of the Code, the residence of Personal Guarantor is not taken into account when proceedings against Personal Guarantor are initiated, without any hesitation, comes to a consequent conclusion that the view taken by the Adjudicating Authority, (National Company Law Tribunal, Hyderabad Bench) in admitting CP(IB) No. 401/95 (IBC) /HDB/2020, is free from any legal flaws. Appeal dismissed. 2022 (8) TMI 1157 CIRP - Principles of res-judicata - the debt of the Respondents was declared as Financial Debt - specific contention of the Appellants is that the overruling of judgment invalidated the order/judgment itself but when the order/judgment attained finality, acted upon, the same cannot be reopened on account of overruling of the judgment in different proceedings as the attainment of finality is the basic principle of our legal system - HELD THAT:- Once the rights of parties have been considered and declared, the proceedings cannot be reopened on the basis of the judgment which overruled the earlier judgment, since, the purpose of the decision is to crystalise the rights of the parties based on the law prevailing on that date. If such practice of recalling the order passed in subsequent judgment, which overruled the earlier judgment, then litigation will continue forever. To give quietus and settle the rights of the parties, prospective overruling may be applied normally, if the Court directs such prospective application of the law. Once the order of the Adjudicating Authority attains finality on account of affirmation by the Hon ble Apex Court in appeal, the same cannot be reopened. But the simple reason that the Appellants did not raise such issue and consequently, it is hit by the doctrine of constructive resjudicata, though the principle of resjudicata is a part of CPC, the doctrine is applicable to the proceedings in IBC. It is undoubtedly true that once the proceedings are concluded in appeal before the Hon ble Apex Court, the same cannot be reopened and recalled on the ground passed on subsequent judgment which overruled the earlier judgment. Though the learned Counsel for the Appellants would contend that the Adjudicating Authority lacks inherent jurisdiction, this contention holds no substance as the Adjudicating Authority is exclusively invested with inherent jurisdiction to decide the petition filed either under Section 7, 9 or any of the provisions of IBC - It appears that the learned Counsel for the Appellants invented such ground for the first time without any factual foundation in the pleadings before the Adjudicating Authority during 1st round of litigation - there are no merits in the contention of the learned Counsel for the Appellants. Appeal dismissed. 2022 (8) TMI 1156 Liquidation against M/s. Khator Fibre and Fabrics Limited (Corporate Debtor) - Section 33(2) of the Insolvency and Bankruptcy Code, 2016 - HELD THAT:- In view of the satisfaction of the conditions provided under Section 33 of the Code, the Corporate Debtor, M/s. Khator Fibre and Fabrics Limited is directed to be liquidated in the manner as laid down in Chapter III of the Code. The Corporate Debtor is ordered to be liquidated - Application allowed. Service Tax 2022 (8) TMI 1155 Refund claim - certain credits which have been taken for computation of the refund in terms of Rule 5 of the Cenvat Credit Rules are ineligible credits - quantification of credit by formula as prescribed by Notification No.05/2006 - HELD THAT:- Admittedly no proceedings have been initiated against the appellant for denial of such credit in terms of Rule 14 of the Cenvat Credit Rules. In absence of such proceedings, the lower authorities cannot be justified in modifying the refund claims for this reason. On perusal of the Form A at Sl No 3, it is quite evident that for computation of the Net CENVAT Credit is done on the basis of total cenvat credit taken on inputs and input services. From the total CENVAT Credit taken deductions is made of the amounts reversed under Rule 5C of the CENVAT Credit Rules, 2004. The formula is very clear on this aspect that no deduction from the total cenvat credit taken will be made on any other account while computing the Net CENVAT Credit. The formula under Rule 5 determines the maximum eligible refund to the assessee (10, 11 of the Form A). Whatever taxes are paid utilizing the cenvat credit availed during the period will automatically get deducted because if an assessee has utilized certain portion of the credit, then that amount would not be available as a balance on the close of the month/quarter in which the refund is sought. This Balance of CENVAT Credit is stated at Sl No 12 in the Form A. It is also clear that that while filing the refund claim claimant has to debit the amount claimed by him as refund under Rule 5 from his CENVAT Account. Above prescriptions clearly show that the lower authorities have been in error while deducting the amount of the credit that would have been utilized for payment of the taxes/duties in respect of the domestic clearances from the total CENVAT Credit taken while determining the Net CENVAT Credit for application of formula as per Rule 5. Appeal allowed - decided in favor of appellant. Central Excise 2022 (8) TMI 1154 Valuation - adoption of valuation in respect of their finished goods cleared to depot at Gaziabad Branch on the basis of transaction value under Section 4 (1)(a) of the Central Excise Act, 1944 instead of Rule 7 of the Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000 as amended - suppression of facts or not - levy of equal amount of penalty imposed under the provisions of Rule 25(1)(d) of the Central Excise Rules, 2002 read with Section 11AC of the Central Excise Act, 1944 - HELD THAT:- In the peculiar facts and circumstances of this case, the plea for vacating the penalty is tenable. The substantive dispute between the Department and the Assessee revolved around the question whether valuation adopted by the assesse on the basis of transaction value under Section 4(1)(a) of the Central Excise Act, 1944 or should have followed the provisions of Rule 7 of the Central Excise Valuation (Determination of price of Excisable Goods) Rules, 2000. The penalty provision stands attracted where duty of excise has not been levied or paid or has been short-levied or short-paid by the reason of fraud, collusion or any willful mis-statement or suppression of facts or contravention of any of the provisions of the Act or the Rules made thereunder with intent to evade payment of duty. Thus, the prerequisite being there should be material to establish either fraud, collusion or willful mis-statement or suppression of facts or contraventions of the provisions of the Act or the Rules and all these have been committed with an intent to evade payment of duty. In the show cause notice dated 10-06-2016, except for stating that the assessee has contravened the provisions of the Rules, there is no specific allegation so as to hold the assessee guilty of having committed fraud, collusion or suppression of facts or made any wilful misstatement with an intent to evade payment of duty. The authority is bound to record a prima facie finding that there was an intent to evade payment of duty by suppressing the material facts or by making wilful misstatement or by committing fraud or collusion. Thus, in the absence of any such specific allegation in the show cause notice, the authority cannot mechanically impose penalty under Section 11AC of the Act - The provisions of Section 11AC of the Act are attracted in the event of establishing fraud, collusion or suppression of facts or made any wilful misstatement with an intent to evade payment of duty. This has not been done in the present case. Tribunal has all along taken a consistent view that when the entire demand along with applicable interest has been paid by the Appellant before issuance of show-cause notice, there was no occasion to issue any show-cause notice - the penalty is set aside - appeal allowed. 2022 (8) TMI 1153 Reversal of CENVAT Credit - common input service attributed to taxable as well as exempt goods - activity of manufacture of its own, manufacture on job work basis - clearance of inputs in as such condition - trading of goods on High Seas Basis - Rules 6 of Cenvat Credit Rules, 2004 - applicability of N/N. 214/86-CE dated 25.03.1986 - suppression of facts or not - time limitation. Goods on job work basis - HELD THAT:- The appellant have manufactured goods on Job work Basis in terms of Notification No.214/86-CE dated 25.03.1986. In terms of Rule 3 of Cenvat Credit rules, 2004, it is specifically provided that input and input service used in the manufacture of job work goods under Notification No. 214/86-CE, the credit is admissible. In view of basis explicit provision credit of input or input service used in relation to job work goods cannot be denied - the demand related to manufacture of job work goods is clearly not sustainable. Trading of Goods on High Seas Basis - time limitation - suppression of facts or not - HELD THAT:- This issue has been raised by the auditors and auditors accepting that the proportionate credit in respect of common input service attributed to Trading of Goods on High Seas Basis should be reversed and the appellant complying with the direction of CERA Audit, they have reversed the proportionate credit of Rs. 5,857/-. In this peculiar fact no further demand invoking Rule 6 can be raised. Moreover, the activity of Trading of Goods on High Seas Basis was clearly in the knowledge of the department. Therefore, no suppression of fact can be alleged against the appellant. Hence, the demand is also not sustainable on the ground of time bar. Trading of goods by way of removal of input as such - HELD THAT:- Undisputedly the removal of input as such was made on payment of duty in terms of Rule 3(5) of Cenvat Credit Rules, 2004. As per this provision for all the purposes the removal of goods is treated as removal of goods of payment of duty. In this clear position by any stretch of imagination, it cannot be said that the goods cleared on payment duty is exempted goods or service. Therefore, there is no application of Rule 6(3) for payment of an amount as prescribed therein. The demand raised in terms of Rule 6 of Cenvat Credit Rules, 2004 by both the Lower Authorities is not sustainable - Appeal allowed - decided in favor of appellant. 2022 (8) TMI 1152 Levy of penalties u/r 26 of the Central Excise Rules - Clandestine Removal - Cigarettes - reliability upon the statements recorded and third party records - HELD THAT:- There are no case of transporting, removing, depositing, keeping, concealing, selling or purchasing, or in any manner dealing with, any excisable goods, which he knows or has reason to believe are liable to confiscation under the Act or the rules thereunder, is made out. Accordingly, it is held that penalty under Rule 26 is not imposable on this appellant. Levy of personal penalty on Directors - it is alleged that these two were Directors of the company M/s Musk Tobacco, when it was incorporated - HELD THAT:- Admittedly, these appellants have resigned from the Directorship Smt. Bushra Gupta on 25.01.2007 and Smt. Megha Gupta on 21.10.2005. Thus, it is found that these two Directors have resigned before commencement of production of cigarettes in June, 2007, which is not disputed. Thus, it is held that these two appellants had no role in transporting, removing, depositing, keeping, concealing, storing etc., as required for imposition of penalty under Rule 26 of the Central Excise Rules. Accordingly, the appeals are allowed and the penalty imposed are set aside. Sh. Vidyut Gupta - it is alleged that he along with his father Sh. Raj Kumar Gupta has played an active role in setting up of factory/ procurement of machine, monitoring of payment, monitoring of raw material supply etc. - HELD THAT:- Admittedly this appellant was neither a Director nor an employee of M/s Musk Tobacco. It appears that this appellant along with his father Sh. R. K. Gupta had provided the infrastructure and machinery for manufacture of cigarette to M/s Musk Tobacco. Further, they also gave guidance as and when required by the then Directors of M/s Musk Tobacco due to their experience in cigarette manufacturing. Considering the facts and circumstances and the documents on record, it is found that this appellant was not involved in day-to-day affairs of M/s Musk Tobacco and further was not involved in transporting, removing, depositing, keeping, concealing, etc., of excisable goods. Accordingly, the penalty imposed on this appellant is set aside. Sh. Shankar Lal Pradhan - It is alleged that this appellant was involved harbouring and safe keeping in records of clandestine production, clearance and procurement by M/s Musk Tobacco - HELD THAT:- This appellant is neither a Director nor an employee of M/s Musk Tobacco. Further, he is not connected either as a supplier or buyer of finished goods. Only he has provided space in his residence to store the documents of M/s Musk Tobacco, without any knowledge that this relates to clandestine production and removal by M/s Musk Tobacco. Further, this appellant has given a cogent explanation with regard to the documents, registers, loose papers etc. found at his residence that these are regarding Indira Awas Yojna‟ and birth/ death record of the Gram Panchayat - this appellant is also not liable to penalty under Rule 26 of Central Excise Rules as he has not done nor has been concerned in transporting, removing, depositing, keeping, concealing, etc., of excisable goods. Accordingly, the penalty imposed on this appellant is set aside. The impugned order so far these appellants are concerned are set aside - appeal allowed. 2022 (8) TMI 1151 CENVAT Credit - electricity generated - period from April 2016 to June 2017 - Rule 6 of the CCR - HELD THAT:- It is not a dispute that the issue involved in this appeal is same as was examined by the Commissioner (Appeals) in the order dated 17.01.2019 for the subsequent period from April, 2016 to June, 2017 - The Commissioner (Appeals), after analysing the factual position and the provisions of law, allowed the appeal and the appeal filed by the department before the Tribunal was dismissed in COMMISSIONER OF CENTRAL GST CENTRAL EXCISE, MEERUT VERSUS M/S NANGLAMAL SUGAR COMPLEX [ 2019 (6) TMI 1681 - CESTAT ALLAHABAD] Thus, when the issue stands covered by the decision of the Tribunal in the matter of the respondent itself for the subsequent period, there is no informity in the order dated 23.07.2019 passed by the Commissioner (Appeals). Appeal dismissed - decided agaist Revenue. 2022 (8) TMI 1150 SSI Exemption - manufacture of air coolers by using the registered brand of others - mis-utilising the benefit of SSI Notification No. 08/2003-CE dated 01.03.2003 - admissibility of evidences - presence of corroborative evidences or not - HELD THAT:- On date of search Smt. Tej Kiran Kothari, the present respondent was not the proprietor of M/s Zenox Product. On this date of the search the proprietors of M/s Zenox India and M/s Zenox Products were Shri Kunal Chaudhary and Smt. Ranjana Chaudhary who are related as mother and son. Hence the allegations in the show cause notice exists as against Smt. Ranjana Chaudhary only she being the proprietor of M/s Zenox Products for almost an year prior the date of impugned search. There appears no denial on behalf of the Department that Smt Tej Kiran Kothari while she transferred the business of firm M/s Zenox Products to Smt. Ranjana Chaudhary she had wound up her entire business under the said firm and had withdrawn everything from the premises of her business and had handed over the vacant possession thereof to the new landlord. M/s Zenox Products continued from the same premises thereafter but under the proprietorship of Smt. Ranjana Chaudhary. Hence it becomes clear that whatever articles including 106 coolers of Zi Zenox brand at the time of search, were found in those premises the ownership thereof and liability thereupon can be fasten only upon Smt. Ranjana Chaudhary but cannot be extended to Smt Tej Kiran Kothari. The Department has failed to bring on record any bill book, challan book or price list or packing material or invoice with respect to M/s Zenox Products which pertain to the period prior to August 2015. Above all it is apparent on record that M/s Zenox India under the proprietorship of Shri Girdhari Singh Kothari was in existence since February, 2012. No such similar documents logo plates etc., of the period during February, 2012 to August, 2015 have been produced by the Department. In absence thereof the allegations raised in the impugned Review Order and appeal though stands established against Smt. Ranjana Chaudhary the proprietrix of M/s Zenox Products but cannot be extended to Smt. Tej Kiran Kothari the previous proprietrix of said M/s Zenox Products. There is no evidence of similar arrangement of wrongly availment of SSI exemption to ever existed between M/s Zenox India and M/s Zenox Products when former was under proprietorship of Shri G S Kothari and later was under proprietorship of Smt. Tej Kiran Kothari - there are no reason to differ with the findings of Commissioner (Appeals) - appeal dismissed. CST, VAT & Sales Tax 2022 (8) TMI 1149 Levy of turnover tax - Section 7(3) of the KGST Act - assessment year 2010-11 - HELD THAT:- By following the principle laid down by the Full Bench in M/S. HOTEL AIDA VERSUS REPRESENTED BY ITS MANAGING PARTNER, MOHAN JACOB VERSUS STATE OF KERALA REPRESENTED BY ITS SECRETARY, TAXES DEPT. THIRUVANANTHAPURAM [ 2022 (4) TMI 1437 - KERALA HIGH COURT] , where it was held that By applying the rule of Noscitur-a-sociis, we hold that for the purpose of Section 7(b) the turnover tax payable by the dealer as conceded either in the return or accounts or the turnover tax paid for the previous consecutive three years is the deciding factor. So interpreted, we hold that the construction adopted by the Tribunal which reads as follows is the correct and literal construction available in the circumstances of the case., the questions of law are answered against the dealer, in favour of the Department. Revision dismissed.
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