TMI Tax Updates - e-Newsletter
September 16, 2022
Case Laws in this Newsletter:
GST
Income Tax
Customs
Corporate Laws
Securities / SEBI
Insolvency & Bankruptcy
Service Tax
Central Excise
CST, VAT & Sales Tax
Wealth tax
Indian Laws
Highlights / Catch Notes
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GST:
Cancellation of GST registration of petitioner - joint owner of the premises (not in consensus with each other) - requirement of amicable settlement between the joint owners - In the instant case, till dispute between the petitioner and respondent No.5 is settled and two, either jointly apply or property is partitioned and fall in the share of the person applying, no license can be issued by the designated authority under the Act. - HC
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GST:
Seeking grant of Anticipatory Bail - fraud related to GST invoices and getting credits - allegation of cheating the State by claiming input credit through fake invoices by using fake addresses of the firms created - Given the nature of allegations, custodial interrogation is required. An analysis of the allegations and evidence collected does not warrant the grant of bail to the petitioner. - HC
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GST:
Maintainability of petition - availability of alternative remedy of appeal - Detention of goods - If the petitioner is not satisfied with the reasons given for detention of the goods in question and the order passed under Section 129(1) of the Act, the same is appellable before the appellate forum under Section 107 of the Act - HC
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Income Tax:
Reopening of assessment u/s 147 - unexplained cash credit - ITAT quashed the notice - Unfortunately, the tribunal failed to examine any of the factual details which have been brought out by the AO as well as the CIT(A) but merely went on the basis as to what are the conditions to be fulfilled in order to reopen the assessment. As pointed out earlier, reasons given by the learned tribunal to distinguish the decision in Peass Industrial Engineers is not tenable. - HC
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Income Tax:
Validity of reopening of assessment u/s 147 - AO cannot be stated to be empowered to make a roving enquiry into other issues which according to him came to his notice during the reassessment proceedings. The foundation of a reassessment proceeding is a valid notice and if this notice is held to be invalid the entire edifice sought to be raised on such foundation has to collapse. - HC
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Income Tax:
Reopening of assessment u/s 147 - reliance on material obtained in the course of a search or a survey - the condition set out under Section 149(1)(b) is satisfied - We find no merit in the submission of the petitioner to the effect that the information available with the officer is vague, non-specific or does not relate to the Risk Management Strategy of the Department. - HC
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Income Tax:
Penalty u/s 271(1)(c) - Addition for unsecured loan u/s 68 - the assessee was not found able to substantiate the explanation pertaining amount of unsecured loan received, but the assessee successfully proved that the explanation is bona fide and all the material facts relating to the same was disclosed by him before the authorities below - No penalty - AT
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Income Tax:
Reopening of assessment u/s 147 - Addition u/s 68 - No infirmity in the order of the CIT(A). The information that there was no return filed by the assessee and there was substantial cash found deposited in the bank account of the assessee was sufficient for formation of belief of escapement of income, when the assessee did not explain the source of the same to the Revenue in the investigation conducted prior to the issuance of notice under section 148 - AT
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Income Tax:
Powers of ITAT in dealing with the claim otherwise than by revised return - whether claim not allowed in the assessment proceedings be allowed during the appellate proceedings? - Denial of claim of exemption u/s 10(38) as assessee did not claim deduction - Contention of revenue rejected - AO directed to consider the issue and decide - AT
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Income Tax:
Estimation of income - garnered transportation receipts - Applicability u/s 44AD for receipts on account of truck plying business - If in case the assessee is unable to substantiate his claim of having garnered transportation receipts, as claimed, to the satisfaction of the AO, then, the estimation of his income as worked out by the AO i.e @8% of the gross receipts shall be sustained. - AT
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Income Tax:
Intimation u/s 143(1) - change of status of the Assessee without intimation - charging higher rate of income tax - assessee is trust - assesse furnished return of income mentioning status as any other AOP/BOI and mentioned code no. 8. - The Ld. A.O. CPC however change the status to any other AOP / BOI artificial judicial person and thus change the status. - Matter restored back - AT
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Income Tax:
Addition u/s 68 - share capital issued at the premium - unexplained cash credit - Assessee has fully discharged its onus cast under section 68 of the Act and proved the genuineness of the credit of the share capital and premium in its books of account. Once the transaction of share capital and premium thereon held to be genuine, there is no question of any commission expenses for getting alleged bogus entry on account of such transaction. - AT
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Corporate Law:
Legislative power of state government - Matter covered within the scope of Companies Act - aharashtra Protection of Interest of Depositors (In Financial Establishments) Act 1999 (MPID Act) - The State Legislature could never have framed an enactment or a legislation on any entry that falls within List I. There was simply no legislative competence for it. If this be so, the MPID Act cannot possibly be said to cover any portion of the field that is fully occupied by the Companies Act - HC
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Corporate Law:
Oppression and mismanagement - the EC meeting held on 30 Oct 2018 as null and void and contrary to the AOA - EC meeting are not conducted as per AOA and no President for FHRAI functioned since 30.10.2018. It is the turn of the Eastern Region for the election of the post of the President, in the interests of justice, we hereby direct that an EC meeting will be conducted afresh. - Tri
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Indian Laws:
Alleged misconduct on Chartered Accountants - The Court notes that before proceeding to reject that objection, it was incumbent upon the ICAI to have duly considered whether the petitioner was in fact severely handicapped from submitting a response to the allegations levelled in the complaint as also whether there was material and evidence available on the basis of which the enquiry could be proceeded with. - HC
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Indian Laws:
Dishonor of cheque - vicarious liability of the Proprietor Individual when proprietorship firm not sued - section 141 of NI Act - When the arraigning of the sole proprietary concern rather was a condition precedent for making the complaint well constituted, as it becomes the principal offender, and, with its remaining un-impleaded, as such, the absence of its impleadment cannot make the instant complaint to be well constituted, nor, any valid prosecution can in its absence, be drawn, even against the accused petitioner, who can be assigned only a vicarious liability alongwith it. - HC
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IBC:
Maintainability of present suit - liquidator is appointed and liquidation proceedings commenced - If Sections 63 and 231 of the IBC are interpreted in the manner canvased by the counsel for the Liquidator, the provision of Section 33(5) of the IBC would be rendered otiose and the moratorium under Section 33(5) of the IBC, which was to apply only in respect of fresh suits would also apply to pending suits. This cannot be the intention of the legislature. - HC
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IBC:
Prayer to guide the NCLT on how to adjudicate cases pending before it - The learned NCLAT has relegated the petitioner to the learned NCLT keeping in mind all issues of fact and law alive. The learned NCLAT has wiped the slate clean. The tabula is, thus, once more rasa. It is open, therefore, to the petitioner to again attempt to convince the learned NCLT regarding the interpretation that the petitioner seeks to place on Sections 33 and 35 of the Stamp Act. - Petition dismissed - HC
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IBC:
Initiation of CIRP - The Adjudicating Authority has rightly come to the conclusion that Corporate Debtor raised a bonafide dispute regarding the ‘operational debt’ wherein the Appellant- Operational Creditor had assigned the debt to HSBC Bank and HSBC Bank has not instituted this proceeding under Section 9 of the IBC, therefore, taking in the above facts, the Application under section 9 is not maintainable as the reasons assigned by the Adjudicating Authority is cogent and require no interference. - AT
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IBC:
Initiation of CIRP - The Assignment to Suraksha is not a bona fide one, peculiar to the facts of the attendant case and the loan amounts do not satisfy the essential requisites of a ‘Financial Debt’ as envisaged under the Code. This Tribunal observed that the fundamental scope & objective of IBC is ‘Resolution’ and ‘Maximization of Assets’ and not ‘Recovery’ of loans which do not strictly fall within the definition of ‘Financial Debt’ as defined under Section 5(8) of the Code. - AT
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Service Tax:
Rejection of declarations vide SVLDRS-01 application - It is crystal clear that a person making ‘Voluntary Disclosure’ after being subjected to any enquiry or investigation or audit is clearly ineligible to avail the benefit of the Scheme of 2019 and, therefore, ineligible to proceed further under the ‘Voluntary Disclosure’ category. - HC
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Service Tax:
Maintainability of Reference to Third to member - Difference of opinion - Classification of services - internet telecommunication service or not - The decisions, on which reliance has been placed by learned authorized representative, would not come to the aid of the Department as it has been found as a fact in the present case that the learned Members have set out the point on which they differ and it is not that the entire matter has been referred to the Third Member. - AT
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Service Tax:
Levy of Service Tax - Collection of penalties or liquidated damages - The recovery of liquidated damages/penalty from the other party cannot be said to be towards any service per se, since neither the appellant is carrying on any activity to receive compensation nor can there be any intention of the other party to breach or violate the contract and suffer a loss - Demand set aside - AT
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Central Excise:
Clandestine Removal - Confectionery Items - this manufacturer was availing SSI exemption benefit due to which there was no necessity to prepare the statutory records. The department had put no effort to examine the computerized records. There is no evidence even about any cash flow which may prove the element of any mens rea / bad intention to evade the duty, question of imposition of penalty does not at all arise. - AT
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VAT:
Seeking waiver of penalty as provided under the Karasamadhana Scheme, 2021 - The contention urged by the respondents that waiver of penalty levied upon the petitioner under Section 70(2) in the reassessment orders dated 24.09.2020 and 27.04.2021 do not come within the scope and ambit of the scheme since Section 70(2) does not find a place in Clause No.3 of the scheme is concerned, the said contention is clearly erroneous in as much as the said penalty is undisputedly in relation to reassessment proceedings, which were completed on 24.09.2020 and 27.04.2021 much prior to the cut off date dated 21.07.2021 as contemplated in Clause 2 of the Scheme - HC
Articles
Notifications
Circulars / Instructions / Orders
News
Case Laws:
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GST
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2022 (9) TMI 667
Cancellation of GST registration of petitioner - joint owner of the premises (not in consensus with each other) - requirement of amicable settlement between the joint owners - HELD THAT:- In the instant case, indisputably, petitioner and respondent No.5, who are joint owner of the premises, do not see eye-to-eye with each other. Both have lodged their respective claims before the authorities concerned including the designated authority under the Act for grant of license and registration etc. The licensing authority would not be in a position to grant license under the Act with respect to the premises, ownership and possession whereof is claimed by the petitioner as well as respondent No.5 nor it would be possible for the licensing authority to name any of them to be the Food Business Operator i.e. the person responsible to carry on the food business and comply with the terms and conditions of the license. The decision of the designated authority under the Act not to renew the license in favour of respondent No.5 is, thus, completely in consonance with law. The petitioner and respondent No.5 are required to settle their dispute amicably or through the intervention of Court. The petitioner or for that matter respondent No.5 shall not be entitled to registration under the Goods and Services Tax Act, 2017 (GST). Chapter-VI of the GST deals with registration. In terms of Section 22 of the GST, every supplier shall be liable to be registered under the GST Act in the State or Union Territory from where he makes a taxable supply of goods or services or both, if his aggregate turnover in a financial year exceeds twenty lakh rupees - there is not even an iota of doubt that person running a restaurant and selling the goods and providing restaurant services would be a Supplier‟ within the meaning of term defined under Section 2(105) of GST Act and, therefore, would require registration under the Act, if aggregate turn over in a financial year exceeds rupees twenty lakh. In the instant case, till dispute between the petitioner and respondent No.5 is settled and two, either jointly apply or property is partitioned and fall in the share of the person applying, no license can be issued by the designated authority under the Act. This Court arrives at the conclusion that neither the petitioner nor respondent No.5 is entitled to have a license under the Act or registration under the GST Act in his favour to the exclusion of other. They may, if they so desire, bury the hatchet and apply jointly for grant of requisite license and registration for running the food business of Samci Restaurant jointly. If they do so, there would be no difficulty either for the designated authority under the Act or the competent registering authority under the GST Act to grant license and registration for facilitating the running of food business of Samci Restaurant in favour of the petitioner and respondent No 5 - there is hardly any need to advert to the case law cited on both sides. This Court has neither entered in the arena of adjudication of complicated disputed questions of fact nor has it relegated the parties to the remedy of appeal before the authority under the Act and GST Act respectively in view of peculiar facts and circumstances of the case. This writ petition is disposed of by holding that so long as the premises to be licensed under the Act remains under dispute between the petitioner and respondent No.5, the designated authority under the Act is well within its power not to grant or renew the license under the Act in favour of one and to the exclusion of other. The parties need to settle their dispute either amicably or through intervention of the Court.
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2022 (9) TMI 666
Maintainability of petition - availability of alternative remedy of appeal u/s 107 of CGST Act - suppression of material facts - violation of the principles of nature justice - HELD THAT:- We do not propose to delve into the issue of concealment of material facts and would rather relegate the petitioner to approach the appellate authority by filing appeals against the impugned orders by taking recourse of the procedure provided under Section 107 of the CGST Act. Petition dismissed.
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2022 (9) TMI 665
Seeking grant of Anticipatory Bail - fraud related to GST invoices and getting credits - allegation of cheating the State by claiming input credit through fake invoices by using fake addresses of the firms created through different proprietors and defrauded the State to the extent of more than Rs. One crore - HELD THAT:- A perusal of the FIR and investigation points out towards the existence of a prima facie case against the petitioner. When the allegations against an accused are of cheating and the amount involved is massive, like the present case, where it is more than rupees one crore, the investigating agency's demand for custodial interrogation is based on the following judicial precedents, which bind all the investigating agencies - The petitioner took enormous advantage of the loopholes and defects in the GST software, the system put in place, and the lack of efficient standards to ensure that it becomes impossible to misuse the scheme. Given the nature of allegations, custodial interrogation is required. An analysis of the allegations and evidence collected does not warrant the grant of bail to the petitioner. Petition dismissed.
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2022 (9) TMI 664
Refund of IGST paid on Zero rated supplies - Petitioner claims to have informed the Department that they have already filed refund application for the tax periods February 2019 to August 2019 and the said applications were filed manually on 21.08.2019 due to non-availability of electronic refund module - applicability of Circular No. 125/44/2019-GST, dated 18.11.2019, issued by the Government of India, Ministry of Finance, Department of Revenue, Central Board of Indirect Taxes and Customs, GST Policy Wing - HELD THAT:- The Writ Petition is disposed of directing the Petitioner to make a fresh application for refund claim enclosing necessary supporting documents in terms of Circular No. 125/44/2019- GST, dated 18.11.2019, issued by the Government of India, Ministry of Finance, Department of Revenue, Central Board of Indirect Taxes and Customs, GST Policy Wing, within a period of three [03] weeks from today. In which event, the authorities shall dispose of the same on merits and in accordance with law as early as possible, preferably within a period of Three weeks thereafter.
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2022 (9) TMI 663
Maintainability of petition - availability of alternative remedy of appeal - Detention of goods - Levy of penalty - Teak Sawn Timber not tallying with the declaration made in the E-way bill - contravention of Section 68 read with Section 129 and Rule 138 of GST Act and rules - HELD THAT:- The issue involved is highly disputed question of fact with regard to registration of the Teak Sawn Timber not tallying with the declaration made in the E-way bill and invoices and further there is no existence of consignor at his registered place of business, this Court in exercise of constitutional writ jurisdiction under Article 226 of the Constitution of India cannot act as a fact finding and verification authority over transported the goods in question. If the petitioner is not satisfied with the reasons given for detention of the goods in question and the order passed under Section 129(1) of the Act, the same is appellable before the appellate forum under Section 107 of the Act - petition disposed off.
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Income Tax
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2022 (9) TMI 661
Reopening of assessment u/s 147 - unexplained cash credit - HELD THAT:- Genuineness of the transactions were not established by the assessee and the summons which were issued to those entities were also non complied with. These facts which were brought on record during the reassessment proceedings was re-examined by the CIT(A) who has also recorded its independent findings while upholding the order passed by the assessing officer. CIT (A) not only considered the findings of the assessing officer but also examined the remand report and held that it has been established by detailed enquiry that the fund transferred into the account of the assessee were mostly from entry operators based companies who are only giving accommodation entries and similarly funds have been transferred from the assessee to the operators based companies who are also engaged in the business of providing accommodation entries and bogus billings. CIT(A) also noted that during the scrutiny proceedings and remand proceedings none other directors of the said company appeared before the assessing officer and the AO rightly identified nine shell companies who are providing bogus purchase bills and accordingly held that the assessee has deposited its own unaccounted cash in the bank account and confirmed the findings of the assessing officer. Unfortunately, the tribunal failed to examine any of the factual details which have been brought out by the AO as well as the CIT(A) but merely went on the basis as to what are the conditions to be fulfilled in order to reopen the assessment. As pointed out earlier, reasons given by the learned tribunal to distinguish the decision in Peass Industrial Engineers is not tenable. We are of the view that the order passed by the tribunal has ignored the crucial aspects of the matter which are relevant to the reopening of the assessment. Thus, we are of view that the order impugned calls for interference. Appeal of revenue allowed.
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2022 (9) TMI 660
Validity of reopening of assessment u/s 147 - reopening the assessment on other grounds not mentioned in the reasons for reopening - different items of income not connected or related with the reasons to believe - whether any other income chargeable to tax which has escaped assessment and which has come to the notice of the AO in the course of the proceedings, can also be taxed and that there are two parts to the Section and they which had been joined by the words and also , cannot be treated as conjunctive but has to be disjunctive? - HELD THAT:- Even if the reasons recorded do not refer to a particular issue, the assessing officer would be entitled to assess the income or reassess the computation of income with regard thereto, if the same comes to his notice during the course of the proceedings for reassessment, however this can be done provided there is a valid notice u/s 148 that the assessing officer the jurisdiction to adopt proceedings u/s 147 of the Act and if the notice is illegal, the reassessment proceedings are invalid. We should bear in mind the decision in the case of GKN Driveshafts (India) Limited [ 2002 (11) TMI 7 - SUPREME COURT] wherein it was held that the assessing officer is bound to furnish reasons within a reasonable time and the noticee is entitled to file their objection to such notice and the assessing officer is bound to dispose of the same by passing a speaking order. Though the Explanation 3 inserted by the amendment empowers the assessing officer to assess the income in respect of any issue which has escaped assessment when such issue comes to his notice subsequently in the course of the proceedings under Section 147 notwithstanding that the reasons for such issue have not been included in the reasons recorded under Sub-Section 2 of Section 148, the prerequisite is there should be a valid notice. Admittedly, in the case on hand, the notice was held to be not sustainable. If that be so, AO cannot be stated to be empowered to make a roving enquiry into other issues which according to him came to his notice during the reassessment proceedings. The foundation of a reassessment proceeding is a valid notice and if this notice is held to be invalid the entire edifice sought to be raised on such foundation has to collapse. We are of the considered view that the tribunal was right in granting relief to the assessee.
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2022 (9) TMI 659
Disallowance of Notional Forex Loss - ITAT deleted the addition relying upon the decision of CIT Vs. Woodward Governor India Ltd. [ 2009 (4) TMI 4 - SUPREME COURT] - ITAT held that the CBDT Circular/Instruction is contrary to the decision of the Supreme Court in the case of CIT Vs. Woodward Governor India Ltd (supra) - HELD THAT:- This Court is of the opinion that the issue of law raised by the petitioner has been conclusively settled by the Supreme Court in CIT Vs. Woodward Governor India Ltd (supra) and Oil and Natural Gas Corporation Ltd., Dehradun [ 2010 (3) TMI 81 - SUPREME COURT] Validity of CBDT Circular No.3/2010 dated 23rd March, 2010 - CBDT Instruction has been issued in respect of loss on account of trading in foreign exchange derivatives. In the present case, however, the assessee had entered into derivative contracts in order to hedge its exchange risk in respect of export proceeds receivable by it in foreign exchange. Forward contracts entered into by the assessee were not by way of trading per se in foreign exchange derivatives. Consequently, CBDT Circular No.3/2010 dated 23rd March, 2010 has no application to the facts of the present case. This Court is of the opinion that no substantial question of law arises for consideration in the present case.
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2022 (9) TMI 658
Reopening of assessment u/s 147 - reliance on material obtained in the course of a search or a survey - as argued notice had been issued after 01.04.2021 though relating to an assessment year prior to 01.04.2021, requiring adherence to the new scheme of re-assessment u/s 148A - Whether condition set out under Section 149(1)(b) satisfied ? - HELD THAT:- Challenge to jurisdiction in this case cannot be sustained. As regards the first objection, the Central Board of Direct Taxes (CBDT) has issued two Circulars, one dated 10.12.2021 and the second dated 13.12.2021 that deal with the e-Verification Scheme, 2021 as well as provides information on the implementation of Risk Management Strategy. On a combined reading of the above two Circulars, there can be no fetters placed on the powers of an Assessing Authority to gather information on the basis of which proceedings for reassessment may be initiated. In fact, in the celebrated case of Pooran Mal Vs the Director of Inspection (Investigation), New Delhi and Ors . [ 1973 (12) TMI 2 - SUPREME COURT] the Hon'ble Supreme Court has affirmed the position that material obtained in the course of a search or a survey that might itself not confirm to the parameters of a legally conducted search, would still qualify as information that may be used by an Authority in the course of assessment. No doubt, the provisions of Section 148A does not contain such an expanded description of the sources that remain limited to those mentioned therein, including Foreign Tax and Tax Research (FT TR) references. In addition, the Department has set up a specific post designated as Director of Income Tax (Investigation and Criminal Intelligence), with a team of officers, to probe and locate instances of evasion of tax/avoidance of tax for appropriate action. We find no merit in the submission of the petitioner to the effect that the information available with the officer is vague, non-specific or does not relate to the Risk Management Strategy of the Department. The term 'Risk Management Strategy' is merely a phrase connoting an evolving strategy developed by the Income Tax Department to address and cover all resources from where information may be collated and there must be no limitation placed on one s understanding of this concept. In fact, the officer has, in the reasons, clearly referred to information received from the Director of Income Tax (Investigation and Criminal Intelligence) and for the purposes of Section 148A, this would suffice. A perusal of the reasons indicates that, prima facie, the condition set out under Section 149(1)(b) is satisfied insofar as the income chargeable to tax that is represented in the form of the movable property transferred by the petitioner far in excess of the required amount of Rs.50,00,000/-. Grant of sanction in terms of Section 151 - petitioner submits that there has been no sanction accorded as statutorily required. However, upon a perusal of the impugned notice u/s148 we find that sanction has been duly obtained from the Principal Commissioner of Income Tax/R2 and thus, this argument fails. No infirmity is pointed out in the sanction as accorded. Thus the challenge to the re-assessment proceedings is rejected. The re-assessment will now proceed on the merits of the matter, in accordance with law.
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2022 (9) TMI 657
Long term capital gain - correct valuation of the land - Reference to DVO - Difference in cost adopted by the assessee and the cost of asset suggested by DVO - what should be the fair market value of the asset as on 01.04.1981 as the assessee has acquired the said asset on 04.08.1965? - HELD THAT:- DVO has mentioned in its report that while taking the sale instances the factors affecting the land rates such as size, shape, situation, location, utility, specification, long time future prospect and PUC were considered and average value of three instances @ Rs. 21/- per square meter was suggest. We find that no details of various factors considered by DVO is mentioned in his report. And all the factors are mentioned just to fulfil the requirement of contents of report. Also perused the report of registered valuer who suggested the value of land @ Rs. 98,000/- per acre and arrived at the value of asset at Rs. 7,35,000/-. No factors affecting the land rates such as size, shape, situation or location is mentioned in his report. Now, before us, we find two expert reports about the valuation of the same land, however, on their perusal we find that there is very minor difference of rates in both reports. The DVO has referred three sale instances which are with regards to small pieces of land, but the size of land under dispute is very large comparative to the comparable. If we take the average of comparable No. 1 3, and excluded comparable No. 2 for the reasons of its size, which is otherwise on very low side i.e Rs. 11/- per square meter, the average of remaining two comparable comes to Rs. 27.49/-. The assessee has already adopted the rate at Rs. 25.69/- per square meter, which is reasonable and acceptable to us. Considering the facts that we have accepted the rate @ Rs. 25.69 per square meter, therefore, all the submissions of ld AR on legal or factual issues have become academic. In the result, the grounds of appeal raised by the assessee are allowed.
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2022 (9) TMI 656
Ex parte proceedings concluded by CIT-A - penalty levied u/s 271(1)(c) - unexplained cash credit in the bank account of assessee by taking a view that despite giving opportunity, the assessee has not offered any explanation about the nature and source - HELD THAT:- We find that ld. CIT(A) despite recording clear finding that all the notices were returned unserved has not taken any step to serve the assessee by way of alternative modes as prescribed under Section 282 of the Act. CIT(A) has not adjudicated the grounds of appeal raised by assessee as per mandate of Section 250(6) of the Act. Section 250(6) mandates that order of ld. CIT(A) must contain facts of the case, points of determination and decision thereon and reasons of such decision. Considering the fact that ld. CIT(A) passed the ex parte order, in our view, the assessee was not offered sufficient and reasonable opportunity of hearing, therefore, the order of ld. CIT(A) is set aside and all the grounds of appeal raised by the assessee are restored back to the file of ld. CIT(A) to decide all the grounds of appeal afresh and in accordance with law. Needless to direct that before passing the order, the ld. CIT(A) shall grant reasonable opportunity of hearing to the assessee. Appeal of assessee is allowed for statistical purposes.
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2022 (9) TMI 655
Penalty u/s 271(1)(c) - Addition for unsecured loan u/s 68 - HELD THAT:- Assessee claimed an amount as unsecured loan from M/s Ramfin Fortunes Pvt. Ltd., which was clearly shown in the balance sheet as well as other audited financial statements of the assessee and this fact has never been controverted by the authorities below at any stage of assessment or penalty proceedings. At this stage, it is also relevant to consider the judgement in the case of CIT vs. Baroda Tin Works [ 1995 (9) TMI 18 - GUJARAT HIGH COURT] wherein their Lordships held that even though the addition u/s 68 was made on admission of the assessee, the Tribunal, after considering the relevant material and evidence on record drew a conclusion that the presumption under Explanation u/s 271(1)(c) stood rebutted, it was justified in deleting the penalty in the absence of any positive evidence brought by the Department. When we consider the proposition rendered by the coordinate Bench of ITAT Mumbai in the case of Pfizer Ltd. [ 2012 (4) TMI 261 - ITAT MUMBAI] then we find ourselves in agreement with the contention of the ld. Counsel that for invoking clause (B) of Explanation 1 to section 271(1)(c) of the Act and both the conditions must be cumulatively satisfied so as to bring a case within the scope of imposing of penalty u/s 271(1)(c). If only one condition is satisfied and the other is not, the penalty would not follow. In the present case, the assessee was not found able to substantiate the explanation pertaining amount of unsecured loan from M/s Ramfin Fortunes Pvt. Ltd., but, the assessee successfully proved that the explanation is bona fide and all the material facts relating to the same was disclosed by him before the authorities below - In absence of cumulative satisfaction of both the conditions as per the requirement of clause (B) of Explanation 1 to section 271(1)(c) penalty imposed by the AO and confirmed by the ld.CIT(A) cannot be held as sustainable and, thus, the AO is directed to delete the penalty - Decided in favour of assessee.
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2022 (9) TMI 654
Reopening of assessment u/s 147 - Addition u/s 68 - unexplained cash deposits in bank account - HELD THAT:- CIT(A) has noted from the relevant facts before her that reopening was resorted to not merely on the information that no return had been filed by the assessee and cash was found to be deposited in the bank account of the assessee, but she noted that thereafter necessary inquiry was sought to be made by the Revenue from the assessee seeking explanation of the cash deposited. And since no response was forthcoming from the assessee, it is only thereafter that the AO recorded reasons for forming belief of escapement of income. No infirmity in the order of the CIT(A). The information that there was no return filed by the assessee and there was substantial cash found deposited in the bank account of the assessee was sufficient for formation of belief of escapement of income, when the assessee did not explain the source of the same to the Revenue in the investigation conducted prior to the issuance of notice under section 148 - CIT(A) has relied upon judicial decisions in this regard, therefore see no reason to interfere in the order of the ld.CIT(A) dismissing the assessee s ground for holding the assessment order passed, as has been invalid on the ground of insufficiency of material for forming the belief of escapement of income. As no notice under section 143(2) was issued, the assessment order passed was invalid - In the present case since no return has been filed by the assessee, we are in agreement with the ld.DR that no notice under section 143(2) of the Act was required to be issued to the assessee . The non issuance of notice u/s 143(2) of the Act in the present case where no return was filed by the assesee, does not render the reassessment proceedings as invalid ,we hold. This ground raised by the assessee is also dismissed. Addition to the salary income of the assessee and on account of unexplained cash credit under section 68 - As appellant has not filed any specific written submission either in the assessment proceedings or in the appellate proceedings, hence both the additions made are confirmed and related grounds of appeal are dismissed. Assessee appeal dismissed.
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2022 (9) TMI 653
Nature of receipt - excise duty and interest subsidy - Revenue or capital receipt - HELD THAT:- The decision of the ld. Commissioner on the issue in hand is not only based on the peculiar facts and circumstances but also upon the judgment of Shree Balaji Alloys Ors. [ 2011 (1) TMI 394 - JAMMU AND KASHMIR HIGH COURT] wherein while considering the Central Excise Notifications No. 56/57 of 11.11.2002 which arepari-materiato the notifications No. 56/57 dated 14.11.2012 issued by the Central Excise Department as involved in the instant case, on the basis of which the Assessee had claimed deduction u/s. 80IB for its unit at Samba and Udhampur ( Jammu Kashmir), has clearly held that excise duty refund and interest subsidy were production incentives and capital receipts in the hands of the Assessee. The said judgement of the Hon ble High Court has also been scrutinized and approved by the Hon ble Apex Court in Shri Balaji Alloys [ 2016 (4) TMI 1161 - SC ORDER] wherein dismissed the appeal filed by the Revenue by holding that the issue raised in these appeals is covered against the Revenue. Assessing Officer in the subsequent cases for the A.Y. 2014-15 and 2015-16, has allowed the excise duty refund and interest subsidy as capital receipts . Addition made under MAT provisions - Once the foundation lost its existence, then the building would automatically collapse. In simple meaning, once it is determined that receipt is not in the nature of income, then it cannot be considered in the book profit for the purpose of computation u/s. 115JB of the Act. As the addition in the instant case could not survive under normal provision of the Act, thus the addition under MAT provisions also will not survive, hence stands deleted. Consequently, decision of the ld. Commissioner on this issue is set aside and the appeal of the Assessee is allowed.
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2022 (9) TMI 652
Disallowance of Material Expenses - second round of litigation - allowability of business expenses - HELD THAT:- It is observed that the assessee produced books of accounts before the authorities below and claim is made that complete details of bills/vouchers were furnished . The ledger account of Material Expenses is also furnished before us. Thus, in the facts and circumstances of the case, where the assessee is satisfactorily able to provide details and establish genuineness of Material Expenses claimed to be incurred for business of the assessee - Disallowance by authorities below of which even specific details/breakup of the expenses which are disallowed is not furnished by the authorities below with no specific defects being pointed out, we hold that disallowance as were made by authorities below is not sustainable and we allow these Material expenses which stood disallowance by authorities below, and we order deletion of these additions. As assessee produced books of accounts as well vouchers/bills before the authorities below and primary onus which lay on the assessee stood discharged, and it is now for the authorities below to bring out specific defects in the books of accounts as well bills and vouchers furnished by the assessee after making necessary enquiries and investigation and the authorities are to point out which expenses are not allowable and reasons thereof, which has not been done by authorities below in this case. Same is the fate of other expenses on account of staff welfare, repairs and maintenance, telephone and mobile expenses and travelling and conveyance, which disallowance also stood deleted. - Decided in favour of assessee.
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2022 (9) TMI 651
Powers of ITAT in dealing with the claim otherwise than by revised return - whether claim not allowed in the assessment proceedings be allowed during the appellate proceedings? - Denial of claim of exemption u/s 10(38) as assessee did not claim deduction - HELD THAT:- We note that in the said order, Goetze (India) Ltd. [ 2006 (3) TMI 75 - SUPREME COURT] the Hon ble Apex Court has expounded that the said decision would not impinge upon the powers of ITAT in dealing with the claim otherwise than by revised return. Accordingly, we direct the Assessing Officer to consider this issue and decide as per law. Addition invoking section 56(2)(vii)(a) - difference of share price and FMV as deemed income u/s 56(2)(viia) - Valuation of shares for the purpose of calculation of FMV as done by CA u/r 11UA(1)(e) on 10.09.2014 @ Rs. 103/- - HELD THAT:- Rules in this regard contained in section 11UA are already reproduced by us earlier. The same clearly provide for taking the book value of shares as in the balance sheet for the computation. The same was amended by the Income Tax Rules 2017 with effect from 1.4.2018 where instead of book value, fair market value of share is mentioned. The Act does not provide that this amendment is retrospective. It is clearly mentioned that this amendment is with effect from 1.4.2018. Hence, Assessing Officer's adoption of fair market value for making the computation which is not in accordance with the extant provisions has rightly been deleted by the learned CIT(A). It is not disputed that when the book value of the shares is adopted as per the extant rules the addition will not be justified. Hence, we do not find any infirmity in the same. We note that nothing has been brought before us by the revenue as to why the Assessing Officer has applied the same retrospectively - we agree with the submission of the ld. Counsel of the assessee and remit back the issue to the file of the AO to examine the issue on the basis of exposition in the case law pointed above. Needless to add, the assessee should be granted adequate opportunity of being heard. Disallowance of Processing fees under the head Interest Finance Costs - HELD THAT:- As assessee submitted that the revenue authorities have erred in disallowing the expenditure by holding that processing fee for purchase of capital asset is capital expenditure relied upon the decision of Hon ble Supreme Court in the case of India Cements Ltd. [ 1965 (12) TMI 22 - SUPREME COURT] as expounded that loan is neither an asset nor any business advantage and that nature of expenditure incurred in raising a loan is not dependent upon nature and purpose of loan. Accordingly, we set-aside the order of authorities below and decide the issue in favour of the assessee. Allowability of loss - shares continue to be held as capital assets and have not been transferred during the year - whether diminution in the value of the investments can be claimed as revenue expenses? - HELD THAT:- Assessee s justification regarding the allowability of this loss is without any basis whatsoever and is against the basic principles of accounting. As we find that authorities below are correct in holding that this claim of Bad Debts is not justified. Hence, we uphold the order of the ld. CIT(A). Appeal of the assessee is partly allowed for statistical purpose.
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2022 (9) TMI 650
Revision u/s 263 by CIT - Admissibility of deduction u/s 80P - As per CIT AO has erroneously allowed the deduction u/s 80P(2)(d) which does not apply to the assessee on the ground that the interest received from investment was made with co-operative banks as the same is not eligible for deduction - HELD THAT:- Interest income derived by a co-operative society by way of investment made with a co-operative bank would be entitled to claim of deduction under section 80P(2)(d) of the Act. For this proposition, we would like to place our reliance on the decision of M/s Petit Towers Co-op. Housing Society Ltd [ 2021 (9) TMI 232 - ITAT MUMBAI] Thus we hold that the Ld.PCIT has erred in concluding that the assessment order passed by the Assessing Officer under section 143(3) was erroneous insofar as it is prejudicial to the interest of the revenue as per the provisions of section 263 we set aside the order of the Ld.PCIT and restore the order passed by the Assessing Officer - Decided in favour of assessee.
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2022 (9) TMI 649
Dismissal of the appeal by the CIT(A) for non-prosecution - HELD THAT:- Once an appeal is preferred before the CIT(A), then, it is obligatory on his part to dispose off the same on merits. We are of a strong conviction that it is not open for the CIT(A) to summarily dismiss the appeal on account of non-prosecution of the same by the assessee. Rather, a perusal of Sec.251(1)(a) and (b), as well as the Explanation to Sec. 251(2) reveals that the CIT(A) remains under a statutory obligation to apply his mind to all the issues which arises from the impugned order before him. As per the mandate of law the CIT(A) is not vested with any power to summarily dismiss the appeal for non-prosecution. Our aforesaid view is fortified by the judgment of the Hon ble High Court of Bombay in the case of CIT Vs. Prem Kumar Arjundas Luthra [ 2016 (5) TMI 290 - BOMBAY HIGH COURT ] We, thus, not concurring with the dismissal of the appeal by the CIT(A) for non-prosecution, therefore, set-aside his order with a direction to dispose off the same on merits.
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2022 (9) TMI 648
Estimation of income - garnered transportation receipts - Applicability u/s 44AD for receipts on account of truck plying business - sustainability of the assessee s claim of having garnered a sum from his transportation business i.e, plying of five heavy goods vehicles - assessee had failed to produce the agreements with parties for whom work was claimed to have been executed, assessee had failed to furnish details of expenses incurred in the course of his transportation business and claim of the assessee of having garnered gross receipts from plying of five trucks during the year was beyond comprehension - HELD THAT:- We would not hesitate to observe that the claim of the assessee of having garnered gross receipts from plying of five heavy goods vehicles during the year (majority of which were put to use only for part of the year) is beyond our comprehension. In so far the gross receipts as had figured in the assessee s Form No. 26AS i.e against the parties referred at Sr. No. 3 to 7 of the aforesaid chart are concerned, we are of the considered view that there was no justification on the part of the AO to have summarily rejected the same. We, thus, direct the AO to accept the assessee s claim of having garnered gross receipts in lieu of transportation services provided to the aforementioned parties and thus accept his income as disclosed u/s 44AE to the said extent. Garnered transportation receipts from M/s Coal Feeder, Raipur - As a word of caution, we may herein observe that the AO shall in the course of the set-aside proceedings not remain oblivion of the probability of existence of an unholy nexus between a coal trader/transport contractor and a small time transporter/subcontractor (owning less than ten heavy goods vehicles), pursuant whereto on the basis of such connivance a bogus claim of freight expenses raised by the coal trader/transport contractor in the garb of payment of transport charges to such small time transporter/sub-contractor (owning less than ten heavy goods vehicles) who had opted to be assessed at a fixed deemed amount on a per vehicle basis as per the deeming provisions contemplated u/s 44AE the exchequer would be divested of its legal dues. If in case the assessee is unable to substantiate his claim of having garnered transportation receipts, as claimed, from M/s Coal feeder, Raipur to the satisfaction of the AO, then, the estimation of his income as worked out by the AO i.e @8% of the gross receipts under consideration i.e Rs. 3,09,93,450/- shall be sustained. On the other hand to the extent the assessee is able to substantiate his claim of having garnered amount from plying of his five heavy goods vehicles for/on behalf of the aforesaid party, viz. M/s Coal feeder, Raipur, the amount to the said extent shall be excluded by the AO from Rs. 3,09,93,450/- (supra) for estimating his income i.e @8%. As regards the balance amount of Rs.53,88,774/-(supra) for which no explanation as regards the service recipient/payer had been given by the assessee, we finding no infirmity in the estimation of income as regards the said amount @8%, thus, uphold the same to the said extent. The Ground of appeal No. 2 is partly allowed/allowed for statistical purposes in terms of our aforesaid observations.
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2022 (9) TMI 647
Intimation u/s 143(1) - change of status of the Assessee without intimation - charging higher rate of income tax - assessee is trust - assesse furnished return of income mentioning status as any other AOP/BOI and mentioned code no. 8. - The Ld. A.O. CPC however change the status to any other AOP / BOI artificial judicial person and thus change the status . - HELD THAT:- It is pertinent to note that Intimation under section 143(1) of the Act shows the status of the assessee as AOP/BOI and the contention of the assessee is that the assessee is trust. But without verifying as well as intimating the assessee about the change of status taken by the department as AOP/BOI, the intimation u/s 143(1) has directly mentioned that the Tax payable is Rs. 1,04,496/-. The Ld. AR enclosed the decision of the Rajkot bench of Tribunal in case of Jalia Sevak Samaj [ 2022 (7) TMI 1317 - ITAT RAJKOT ] which is identical to the present assessee s case. CIT(A) has only considered the aspect of Section 115C of the Act, but has not dealt with the issue of change of status of the Assessee without its intimation by the department. Therefore it will be appropriate to remand back this issue to the file of the Assessing Officer, CPC with the direction to verify the status of the assessee after taking cognizance of the Trust Deed and other relevant material and pass appropriate order. Needless to say, the assesse be given opportunity of hearing by following principles of natural justice.
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2022 (9) TMI 646
Disallowance of payment made on account of Administrative Service charges - CIT-A deleted the addition - HELD THAT:- Under the head Human Resource and Development , the assessee has referred to various e-mails exchanged during the year between it and TACO concerning with the human resource development. Such detailed e-mails have been placed on record in second and third paper books. We have examined some of the e-mails on test-check basis and found the same to be pertaining to the assessee s business. Similar is the position regarding e-mails received for rendition of Legal and taxation advisory services; Vendor management services; Internal audit; IT support services/IT Infrastructure; and Monitoring of operations etc. Such email exchanges amply demonstrate the receipt of services by the assessee. In that view of the matter, it is difficult to accept the AO s point of view that the assessee did not receive any services. Once the factum of receipt of services is established, the next question is about the deductibility of payment of Administrative Service charges to TACO on legal basis. It is seen that the AO made similar disallowance in the case of the assessee for the A.Y. 2009-10. The matter finally travelled to the Tribunal [ 2019 (9) TMI 852 - ITAT PUNE] has upheld the action of the CIT(A) in deleting the disallowance. The ld. AR submitted that the AO himself did not dispute the deductibility of such expenses from the A.Ys. 2010-11 to 2015-16 and allowed the deduction for the same. Our attention was also drawn towards the orders passed by the Tribunal in other group companies wherein the payments made to TACO towards Administrative Service charges have been allowed by the Tribunal. - Decided against revenue.
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2022 (9) TMI 645
Addition u/s 68 - share capital issued at the premium treated as unexplained cash credit - HELD THAT:- The action of the AO is not justifiable for the reason that the assessee has discharged the onus cast upon it under section 68 of the Act by furnishing necessary details to prove identity, genuineness of transaction and creditworthiness of the parties. However, the AO without pointing out any defect in the documentary evidences submitted by the assessee and investor companies in compliance to notice under section 133(6) treated the impugned transaction of share capital and premium as unexplained merely on basis of some surmise and conjecture. AO has nowhere brought any material on record suggesting any defect in the evidences available before him. Similarly, there was no allegation that there were cash exchanged between assessee and investor companies. In the absence of any conclusive finding it is difficult to reach to the conclusion that the amount of share capital and premium received from outside companies are nothing but unaccounted money of the assessee taken in books in guise of share capital premium. The action of the AO is nothing but surmises and conjecture. It is trite law that suspicion how strong it is cannot be made basis for making any adverse inference against the assessee Assessee has fully discharged its onus cast under section 68 of the Act and proved the genuineness of the credit of the share capital and premium in its books of account. Once the transaction of share capital and premium thereon held to be genuine, there is no question of any commission expenses for getting alleged bogus entry on account of such transaction. Therefore we do not find any reason to interfere in the finding of the learned CIT-(A). - Decided in favour of assessee.
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Customs
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2022 (9) TMI 644
Rejection of refund claim - CESTAT has concurrently held that the price was provisional and this fact was known to the Department at the time of filing the bills of entry and accordingly, dismissed the appeal - HELD THAT:- It is settled that CESTAT is the last fact finding Authority. Both the Commissioner of Customs (Appeals) and CESTAT have concurrently recorded a finding that the price of USD 715 was provisional and it was within the knowledge of the Department. It is also not in dispute that the import duty has been paid on the import of material computed at USD 715 and after rectification of bills of entry, the Assistant Commissioner of Customs has ordered the refund. The first substantial question of law is whether on the facts and in the circumstances of the case, the CESTAT was correct in holding that the price was provisional. Answer to the said question must be in the affirmative because the finding of the fact recorded by the Commissioner of Customs (Appeals) is based on the finding of the Assistant Commissioner of Customs. The second substantial question of law is whether Tribunal was correct in holding that the assessee was entitled to produce additional evidence - Rule 5(1)(b) of the Customs (Appeals) Rules, 1982, permits an assessee to produce the evidence where he was prevented by sufficient cause from producing the evidence which he was called upon to produce by the authority. Therefore, answer to this question also must be in affirmative. Appeal dismissed.
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Corporate Laws
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2022 (9) TMI 643
Legislative power of state government - Matter covered within the scope of Companies Act - Beneficial provisions of the Maharashtra Protection of Interest of Depositors (In Financial Establishments) Act 1999 (MPID Act) - whether the provisions are entirely denuded and reduced to meaninglessness when the financial establishment in question is a corporate entity in liquidation? - HELD THAT:- MPID Act does not contemplate a situation of a company in liquidation at all. There are two reasons for this. The first is that the MPID Act deals with a financial establishment as defined. It is not limited to a company. In that scenario, i.e. where the financial establishment is not a company, no question of winding up arise. Second, it appears from a careful reading Section 4 that the MPID Act is in fact predicated on the financial establishment (where it is a company) not being in liquidation and of it being an active and going concern. This is inter alia apparent from the provisions of Section 4 which speaks of an ongoing action not only against the financial establishment but also against a promoter, director - and then come the other words - partner, manager or member of the financial establishment. Mr Kumbhakoni s construct, if read in its strictest fashion, would probably result in a liability attaching to shareholders of the company because they would be members of the financial establishment in question, i.e., the company. The State Legislature could never have framed an enactment or a legislation on any entry that falls within List I. There was simply no legislative competence for it. If this be so, the MPID Act cannot possibly be said to cover any portion of the field that is fully occupied by the Companies Act - there are no provision in the MPID Act to support the stand taken by the State Government. There can be no divesting of the powers and authority of the company Court and of the OL only on account of the MPID Act. Appeal dismissed.
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2022 (9) TMI 642
Sanction of Scheme of Amalgamation - Section 230 to 232 of the Companies Act, 2013 read with Companies (Compromises, Arrangements and Amalgamation) Rule, 2016 - HELD THAT:- In view of Section 230(9) of the Companies Act, 2013, the Tribunal is empowered to dispense with calling of a meeting of creditors or class of creditors where such creditors or class of creditors, having at least ninety percent value, agree and confirm, by way of affidavit, to the scheme of compromise or arrangement. Application allowed.
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2022 (9) TMI 641
Oppression and mismanagement - Seeking appointment of Presidential Nominee of Petitioner No. I to act as the President of FHRAI with the stipulated Term of 1 year from the date such Presidential Nominee assumes charge as President of Respondent No. 1 - seeking restraint on Respondent Nos. 2 to 15 from making any changes to the Articles of Association of Respondent No. 1 unless such changes have been made with the leave of this Hon'ble Tribunal - interpretation of Article 52 of the Constitutional document of Respondent No. 1 - HELD THAT:- It is seen from the facts submitted by the Petitioners and not denied by the Respondents that many other names of candidates of HRAEI were proposed/nominated to be elected act as President, but they declined to accept the position saying that it is the Petitioner No. 11 who was nominated by the members of the EC of HRAEI. If the objective of equal representation is not given effect, it goes against the grain of AOA of Respondent 1 and its objects. It is evidently clear from the Minutes of the Executive Committee meeting, that inspite of having a nomination from die Eastern Region, few members of other regions took upon themselves the task to nominate some other member from the Eastern Region for the post of die President for the Year 2018-19. Even the Chairman highlighted that usually voting does not take place in FHRAI for the post of President . This is in complete contradiction of the established practice of election to die post of President for the Federation, as enjoined in the AoA. What is glaring in this case is that members of other regions are proposing names to the post of President without the consent of the individual and they decline. It is the rule of law that a person who is to be appointed to a post or position has to give his consent unequivocally. It cannot be thrust on him by any person. In this case, members of other region were regretfully attempting to thrust the Presidentship of Respondent Company 1 on unwilling Eastern Region's EC Members. The conduct of the outgoing President of Respondent 1 and members of EC of other regions proposing names in violation of the convention in implementing Article 52 will clearly make out a case of oppression. Conducting of EC meeting dated 30.10.2018 and Election of the President for the year 2018-2019 - HELD THAT:- On perusal of the minutes of the meeting dated 30.10.2018, it is found that Election of office bearers has taken place and continued under the chairmanship of Mr. Garish Oberoi, who had ceased to be a member of EC on completion of his tenure at that time. One of the Member Mr. Ashoke Singh (Petitioner No. 9) pointed out in the meeting itself that as per the tradition, the new President in consultation with the Executive Committee appoints the office bearers but not the outgoing president. Another member of the EC also made a mention that the due process was being circumvented and suggested to take a legal opinion on the point - this event of election of office bearers of EC (Election of Mr. Dilip Datwani from western Region for the post of Honorary Secretary, Mr. DVS Somaraju from southern region as Honorary Treasurer, Mr. Pradeep Shetty from Western Region and Dr. Venkadasubbu from the southern Region for the post of Joint Honorary Secretary) was not as per the established practice of the Federation and is in violation of AOA. Election of office bearers should not have done in absence of newly appointed President. Thus, the EC meeting held on 30 Oct 2018 as null and void and contrary to the AOA. Hence, all actions in furtherance of the EC meeting dated 30 Oct 2018 are invalid except to the extent of the orders passed by this Tribunal from time to time in various interim orders for statutory compliance - EC meeting are not conducted as per AOA and no President for FHRAI functioned since 30.10.2018. It is the turn of the Eastern Region for the election of the post of the President, in the interests of justice, we hereby direct that an EC meeting will be conducted afresh. The tenure of some members in the EC has already been expired. Petition allowed.
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Securities / SEBI
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2022 (9) TMI 640
SEBI Settlement Scheme, 2022 - opportunity for settlement has been provided to the entities who have executed reversal trades in the stock option segment of Bombay Stock Exchange Ltd. during the period April 1, 2014 to September 30, 2015 - HELD THAT:- We dispose of the appeal directing the appellant to file an appropriate application for settlement before the authority concerned within two weeks from today. If the same is filed, the authority will accept the settlement application in terms of proposed SEBI Settlement Scheme 2022 as an application filed in a pending proceeding and pass appropriate orders. The appeal is disposed of. This order will be digitally signed by the Private Secretary on behalf of the bench and all concerned parties are directed to act on the digitally signed copy of this order. Certified copy of this order is also available from the Registry on payment of usual charges.
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2022 (9) TMI 639
SEBI Settlement Scheme, 2022 - opportunity for settlement has been provided to the entities who have executed reversal trades in the stock option segment of Bombay Stock Exchange Ltd. during the period April 1, 2014 to September 30, 2015 - HELD THAT:- We dispose of the appeal directing the appellant to file an appropriate application for settlement before the authority concerned within two weeks from today. If the same is filed, the authority will accept the settlement application in terms of proposed SEBI Settlement Scheme 2022 as an application filed in a pending proceeding and pass appropriate orders. The appeal is disposed of. This order will be digitally signed by the Private Secretary on behalf of the bench and all concerned parties are directed to act on the digitally signed copy of this order. Certified copy of this order is also available from the Registry on payment of usual charges.
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Insolvency & Bankruptcy
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2022 (9) TMI 638
Seeking clarification of the order to the effect that this Court never prohibited Respondent No.1-bank from initiating or maintaining proceedings under the Insolvency and Bankruptcy Code, 2016 (IBC) against the Appellant-Zee - HELD THAT:- This Court is of the view that the clarification application as to whether the order dated 03rd December, 2021 intended to restrain Respondent No.1-bank from exercising its rights under IBC is not in the nature of a review. In fact, the present application has been filed in accordance with liberty granted to the parties to approach the Court if the need arises. Consequently, the preliminary objection raised by the Appellate-Zee is untenable in law. This Court is of the view that every individual has a right to file any legal proceeding till specifically prohibited by law or by a stay/injunction order granted by a competent Court. In the present case, the Appellant-Zee is seeking to restrain the respondent No.1-bank from initiating IBC proceeding on the strength of the order dated 03rd December, 2021 passed by the learned predecessor Division Bench. However, the order dated 03rd December, 2021 modified the earlier restraint order dated 25th February, 2021 and permitted the Respondent No.1-bank to file recovery proceeding - assuming that IBC proceeding initiated by Respondent No.1bank is not a recovery proceeding, one will have to examine if IBC proceeding initiated by Respondent No.1-bank is violative of order dated 25th February, 2021. It is settled law that IBC proceeding is neither coercive nor adversarial to the interest of corporate debtor and guarantor. Further, it is a settled proposition of law that no interim injunction can be granted where permanent injunction cannot be granted. Accordingly, this Court is of the prima facie opinion that the learned Single Judge rightly held that if the interim injunction was to be granted it would debilitate the Respondent No.1bank s ability to take recourse to remedies which are available to it in law. Thus, it is clarified that this Court never prohibited Respondent No.1-bank from initiating or maintaining proceedings under the IBC against the Appellant-Zee. Accordingly, there is no disobedience or violation of this Court s orders dated 25th February, 2021 and 3rd December, 2021 and the contempt petition is without any merit - petition dismissed.
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2022 (9) TMI 637
Maintainability of present suit - liquidator is appointed and liquidation proceedings commenced - whether upon commencement of liquidation proceedings against the defendant no.1 company under the provisions of the Insolvency and Bankruptcy Code, 2016 (IBC) and Liquidator being appointed, the present suit can proceed or not? - HELD THAT:- From the language of Section 33(5) of the IBC, it is clear that the bar/moratorium is only in respect of fresh suits or legal proceedings. Unlike the moratorium under Section 14 of the IBC, where it is clearly noted that the moratorium is in respect of institution of suits or continuation of pending suits or proceedings against corporate debtor, the words continuation of pending suits or proceedings are conspicuously absent in Section 33(5) of the IBC - under Section 446 of the Companies Act, 1956, once the Official Liquidator was appointed as the provisional liquidator, neither a fresh suit nor a pending suit could be proceeded against the company except with the leave of the Company Court/Tribunal. Similar position has been maintained under the Section 279 of the Companies Act, 2013. However, the word pending is missing in Section 33(5) of the IBC. A reading of Section 63 of the IBC would reveal that the bar on the Civil Court is only to entertain any suit or proceeding in respect of any matter on which NCLT has the jurisdiction under this Code . This would not apply to suits, which were already pending before the commencement of liquidation proceedings. Section 231 of the IBC, inter alia states that no injunction shall be granted by a Court in respect of action taken in pursuance to any order passed by the Adjudicating Authority. The intent is clear that the bar is only in respect of civil suits filed after an order has been passed by the Adjudicating Authority. In my view, the aforesaid bar under Sections 63 and 231 of the IBC would only be in respect of fresh suits. Sections 63 and 231 of the IBC cannot be read in manner so as to defeat the provisions of Section 33(5) of the IBC. If Sections 63 and 231 of the IBC are interpreted in the manner canvased by the counsel for the Liquidator, the provision of Section 33(5) of the IBC would be rendered otiose and the moratorium under Section 33(5) of the IBC, which was to apply only in respect of fresh suits would also apply to pending suits. This cannot be the intention of the legislature. The bar under Sections 33(5), 63 and 231 of the IBC will not apply to the present suit and therefore, the proceedings in the present suit shall continue - the bar/moratorium under Sections 33(5), 63 and 231 of the IBC would not apply to the present suit, the aforesaid claim of the plaintiff can only be adjudicated in the present proceedings. The plaintiff cannot pursue two separate remedies in respect of the same claim. Therefore, the Liquidator is directed not to adjudicate the claim filed on behalf of the plaintiff before the Liquidator. List the suit along with pending applications before the Roster Bench on 19th September, 2022.
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2022 (9) TMI 636
Prayer to guide the NCLT on how to adjudicate cases pending before it - Proceedings under Section 9 of the Insolvency and Bankruptcy Code (IBC) - proceedings were instituted by the Standard Chartered Singapore (SCS) before the learned NCLT - it is alleged that the documents cited by SCS in its support could not be relied upon in view of Sections 33 and 35 of the Indian Stamps Act, 1899 - HELD THAT:- It appears that the petitioner has completely misconstrued the scope of Article 227 of the Constitution of India. Article 227 is a power which recognises the superintending jurisdiction of the High Courts over courts or judicial fora hierarchically below it. The jurisdiction vested by the Article 227 of the Constitution of India is supervisory in nature. Where authorities who are subject to the superintendence of the High Court function in a manner which calls for supervisory correction, the High Court can step in. In no other circumstance is the High Court expected to exercise jurisdiction under Article 227. In the present case, ironically, the petitioner does not challenge any order of the learned NCLT which is presently holding fort. The petition itself is in fact manifestly premature. The learned NCLT has adequately taken a view, albeit at an interim stage, that Section 238 of the IBC would prevail over Sections 33 and 35 of the Stamp Act. That view may be right or may be wrong. The petitioner appealed against the said decision. The learned NCLAT has relegated the petitioner to the learned NCLT keeping in mind all issues of fact and law alive. The learned NCLAT has wiped the slate clean. The tabula is, thus, once more rasa. It is open, therefore, to the petitioner to again attempt to convince the learned NCLT regarding the interpretation that the petitioner seeks to place on Sections 33 and 35 of the Stamp Act. No case, therefore, exists for this court to interfere at this stage, under Article 227 of the Constitution of India - Petition disposed off.
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2022 (9) TMI 635
Initiation of CIRP - Assignment of debts - Operational Creditors - existence of debt and dispute or not - Settlement is already arrived at between parties - HELD THAT:- The Application filed under Section 9 of the IBC has rightly been rejected by the Adjudicating Authority in view of the Settlement Agreement dated 21.07.2015 arrived between the Appellant Sansing Limited with HSBC and Respondent APL Metals Limited. The Adjudicating Authority has rightly come to the conclusion that Corporate Debtor raised a bonafide dispute regarding the operational debt wherein the Appellant- Operational Creditor had assigned the debt to HSBC Bank and HSBC Bank has not instituted this proceeding under Section 9 of the IBC, therefore, taking in the above facts, the Application under section 9 is not maintainable as the reasons assigned by the Adjudicating Authority is cogent and require no interference. Appeal dismissed.
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2022 (9) TMI 634
Maintainability of claim filed in form C - whether the claim submitted by NHSH is under limitation based on the documents submitted alongwith the claim in Form C? - whether the RP has looked into the veracity and genuineness of the said claim in the light of provisions of IBC and regulations 13 and 14 of CIRP Regulations? HELD THAT:- The Adjudicating Authority has considered various documents submitted by NHSH regarding its claim along with Form C and held that RP has considered and screened all the documents properly as per the provisions of IBC and CIRP Regulations and further the allegations made by the Appellant have not been substantiated. In addition, he has held that the application is also bad for non-joinder of two directors of the corporate debtor, who had signed the confirmations of ledger account. As a result, the application filed by P.M. Cold Storage Pvt. Ltd. before the Adjudicating Authority was dismissed by the Impugned Order - we are unable to place reliance of balance sheets for the relevant FY 2016-17, FY 2017-18 and FY 2018-19 regarding acknowledgment of debt. Since they were prepared on 12.3.2020, and contain the admitted claim of NHSH which is in question. Thus, in view of the fact that the last payment by the corporate debtor was made to the financial creditor NHSH on 5.8.2016 and the claim was filed on 26.2.2019. We find that the claim is barred by limitation. The fact that the corporate debtor has paid TDS on interest payable cannot be considered as acknowledgment in writing of the liability by the corporate debtor and therefore, such TDS payment will not have any effect of being an acknowledgment of said debt. The documents on which the RP relied on in accepting and admitting the claim of NHSH and inducting it as a member of CoC does not inspire confidence and should not have been relied upon by the RP in admitting the claim of the NHSH being within limitation. The Adjudicating Authority has, therefore, committed an error in upholding the admission by RP of claim of NHSH - appeal disposed off.
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2022 (9) TMI 633
Approval of the Resolution Plan - Resolution Plan challenged on the ground that all claims/demands/liabilities owed or payable to the Operational Creditors including the Appellant itself ought not to be permanently extinguished - HELD THAT:- Keeping in view of the fact that the Resolution was already approved vide Impugned Order dated 19.10.2020 and almost two years have passed and specifically that there are contrary stands taken by both parties with respect to the possession and the ownership of the subject land and also taking into consideration the Order of the Adjudicating Authority dated 02.02.2021 taking on record the terms of settlement between Mr. Pradeep Agarwal and the Resolution Applicant regarding the subject land, it is found a fit case to grant liberty to the Appellant to proceed in accordance with law in an appropriate forum. Appeal allowed in part.
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2022 (9) TMI 632
Seeking to Recall the original order dated 05.05.2022 and to issue a fresh order, appointing the Resolution Professional and directing him to submit a Fresh Report, after affording an opportunity to the Appellant/Applicant - Principles of natural justice - HELD THAT:- In view of the fact that the Adjudicating Authority (National Company Law Tribunal, Kochi Bench) has not yet finally arrived at a conclusion, cementing upon the Report of the Resolution Professional, and despite the earlier observation made by the Adjudicating Authority (National Company Law Tribunal, Kochi Bench) in CP(IBC)/24/KOB/2022 dated 05.05.2022 that Debt and Default were proved, yet in the considered opinion of this Tribunal, the Adjudicating Authority (National Company Law Tribunal, Kochi Bench) had provided an opportunity to the Appellant/ Applicant to file a Reply Statement on or before 17.06.2022 and posted the matter on 21.06.2022 For Hearing (vide Order dated 16.06.2022 in CP(IBC)/24/KOB/2022). Also keeping in mind of another fact that the Appellant / Applicant was provided with an opportunity to approach the Resolution Professional in IA/IBC/147/KOB/2022 filed by the Applicant/Appellant, this Tribunal holds that IA/IBC/147/KOB/2022 filed by the Applicant / Appellant was rightly dismissed by the Adjudicating Authority (National Company Law Tribunal, Kochi Bench) on 29.06.2022 by holding that Tribunal has no power to Recall or Review its Order or Decision etc. and opines that it is open to the Applicant / Appellant to file Reply before the Resolution Professional appointed in CP(IBC)/24/KOB/2022 for redressal of his grievances, if he so desires / advised. Application disposed off.
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2022 (9) TMI 631
Initiation of CIRP - Assignment of debts - Financial Creditors - NCLT admitted the application - disputes regarding the term-loans by engaging in settlement discussions with Mr. Rana Kapoor and other HDIL Promoters - illegal attachment of loans - HELD THAT:- Merely because there is a debt and a default it cannot be construed that a Section 7 Application is required to be admitted. The Adjudicating Authority ought to have examined the nature of these financial transactions having regard to the Investigation Reports which were filed by the Appellant herein, the violation of the Articles of Association and assessed whether the transactions were collusive in nature or not and used its discretion whether to admit such an Application or not, keeping in view the scope and objective of the Code. It is appropriate at this juncture, to rely on the Judgement of the Hon ble Supreme Court in M/S EMBASSY PROPERTY DEVELOPMENTS PVT. LTD. VERSUS STATE OF KARNATAKA OTHERS [ 2019 (12) TMI 188 - SUPREME COURT ], in which the Hon ble Apex Court has clearly noted that the Adjudicating Authority has the jurisdiction to enquire into allegations of fraud when there is a prima facie case of fraudulent initiation of CIRP. The Assignment to Suraksha is not a bona fide one, peculiar to the facts of the attendant case and the loan amounts do not satisfy the essential requisites of a Financial Debt as envisaged under the Code. This Tribunal observed that the fundamental scope objective of IBC is Resolution and Maximization of Assets and not Recovery of loans which do not strictly fall within the definition of Financial Debt as defined under Section 5(8) of the Code. Appeal allowed.
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2022 (9) TMI 630
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial Creditors - Non-Performing Assets - existence of debt and dispute or not - time limitation - HELD THAT:- In the instant petition, the date of default as mentioned by the Financial Creditor is 31.03.2017, which means originally, the period of limitation would end on 31.03.2020. Beside the fact that Hon'ble Supreme Court of India in Suo Moto Writ Petition (Civil) No. 3/2020, regarding cognizance for extension of limitation on account of Covid-19 has excluded the period from 15.03.2020 to 14.3.2021, the limitation has got extended due to a written acceptance by the Corporate Debtor which has been placed by the Financial Creditor in the shape of a letter dated 09.10.2018 (Annexed on pages 264 to 269) as issued by the Corporate Debtor to State Bank of India with a copy marked to the Financial Creditor. In view of the above facts based on record, the present petition made by the Financial Creditor is complete in all respect as required by law. The petition establishes that the Corporate Debtor is in default of a debt due and payable and that the default is more than the minimum amount stipulated under section 4(1) of the Code, i.e., Rupees one crore. Petition admitted - moratorium declared.
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2022 (9) TMI 629
Maintainability of petition - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial Creditors - existence of debt and dispute or not - time limitation - authority of the Assistant General Manager - HELD THAT:- It is evident that the said Company Petition has been filed on the basis of a letter of authority of the Assistant General Manager (Administration), State Bank of India, to Sri Sourav Kumar Sharma. The said Sri Sourav Kumar Sharma is an Assistant General Manager of the rank of a Scale V Officer of the State Bank of India - In terms of the Gazette Notification of the Government of India published on 2nd May 1987 all officers of State Bank of India of a grade of SMGC-IV and above are empowered to sign all documents, accounts, receipts, letters etc. In the circumstances, the CP has been affirmed by an authorized and competent officer of the State Bank of India. Existence of debt and dispute or not - HELD THAT:- It is found on the basis of record that the Corporate Debtor has in clear terms acknowledged its debt in its balance sheets from the year ending 31st March, 2018 and 31st March, 2019 which are at page 531, 532 and 613 of the petition under section 7 of the Code. Time Limitation - HELD THAT:- The payment was made within the period of three years from the date of NPA i.e. on 05.08.2013 and when this payment was made on 07.06.2016, a fresh period of limitation under Section 19 of the Limitation Act, 1963 commenced. There is clear acknowledgement of debt by the Corporate Debtor in its balance sheets mentioned above for the year ended 31st March, 2018 and 31st March, 2019. Present petition has been filed on 24.03.2021, therefore the same in within the limitation period. The Corporate Debtor for One Time Settlement. This in itself is an admission of having availed the loan facilities from the applicant Bank and also the default to repay the same - The amount in default is over and above the threshold limit of Rs. One Crore and thus this application is maintainable before this Adjudicating Authority. Application admitted - moratorium declared.
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2022 (9) TMI 628
Maintainability of application - initiation of CIRP - failure on the part of the Corporate Debtor to refund the refundable security deposit amount relating to sub-licensing transaction in immovable property - Operational Debt or not - Operational Creditor - existence of debt and dispute or not - HELD THAT:- The Operational Creditor's claim is based on the fact that a sum of Rs. 27,10,656/- was paid by the Operational Creditor to the Corporate Debtor as 50% refundable security deposit for sub-licensing office space at tower -2, 702/B Konnectus Bhavbhuti Marg, New Delhi in terms of MOU dated 30th March 2017, which could not be acted upon due to failure on the part of Corporate Debtor to hand over the said office space on account of termination of Concession Agreement in their favour by DMRC. It is advantageous at this juncture to refer to the recent decision of the Hon'ble NCLAT in the matter of VIBRUS HOMES PVT. LTD. VERSUS ASHIMARA HOUSING PVT. LTD. ANR. [ 2022 (4) TMI 1448 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL PRINCIPAL BENCH, NEW DELHI] wherein it has been laid down that an interest free security deposit received in respect of a lease or licence transaction with regard to an immovable property will qualify as an operational debt under IBC. On consideration of submissions of the Operational Creditor for the claims towards the advance payment made as Security Deposits, it appears that the same shall also fall within the ambit of the definition of operational debt and the applicant will qualify as an Operational Creditor in terms of section 5(20) of the Code - Since the Corporate Debtor has chosen not to avail the due and sufficient opportunity of being heard as granted on various dates, the averments of the applicant stating that there is a 'debt' which the corporate debtor was liable to pay but failed to do so, remain unrebutted. Therefore, this Adjudicating Authority has no other option but to admit the Corporate Debtor into CIRP under the provisions of the Code. Application admitted - moratorium declared.
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Service Tax
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2022 (9) TMI 627
Rejection of declarations vide SVLDRS-01 application filed under the category of Voluntary Disclosure for relaxation of applicable interest and penalty - HELD THAT:- (Sabka Vishwas) (Legacy Dispute Resolution) Scheme, 2019 was introduced by the Finance (No.2) Act, 2019, which was notified in the Gazette of India, Extra Ordinary on 01.08.2019. Statement of objects and reasons with which the Scheme was introduced was that the Scheme is a one time measure for liquidation of past disputes of Central Excise and Service Tax as well as to ensure disclosure of unpaid taxes by a person eligible to make a declaration - It was also stated that the Scheme provides certain immunities including reliefs against penalty, interest or any other proceedings under the Central Excise Act, 1944 or Chapter V of the Finance Act 1994 to those persons, who pay the declared tax dues. The Scheme has twin objectives of liquidation of past disputes pertaining to Central Excise and Service Tax on the one hand and disclosure of unpaid taxes on the other hand, the primary focus is to unload the baggage of pending litigations in respect of Service Tax and Central Excise from pre-GST regime so that the business can move on. It is crystal clear that a person making Voluntary Disclosure after being subjected to any enquiry or investigation or audit is clearly ineligible to avail the benefit of the Scheme of 2019 and, therefore, ineligible to proceed further under the Voluntary Disclosure category. Once we have considered the statutory Scheme based on admitted facts on record and thereby reached at the conclusion based on our own reading of clause (f) of Sub-Section (1) of Section 125 of the Finance (No.2) Act, 2019, in our considered opinion, as also in view of the foregone conclusion, only on the ground that the opportunity of hearing was not afforded to the petitioner, we are not inclined to interfere with the decision of the respondents in rejecting petitioner s declaration holding ineligible to avail the benefit of the Scheme of 2019. The subsequent challenge to the legality and validity of audit proceedings, internal audit report and show cause notice must also fail - Petition dismissed.
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2022 (9) TMI 626
Maintainability of Reference to Third to member - Difference of opinion - Classification of services - internet telecommunication service or not - services provided by MTNL to customers through National Internet Exchange of India [NIXI] - extended period of limitation - HELD THAT:- The findings recorded by the learned Member (Technical) are based primarily on the fact that MTNL had raised an invoice on the INXI on 09.10.2020 after initiation of the investigation by Directorate General of Central Excise Intelligence. Thus MTNL had, in a way, admitted service tax liability on the services provided to ISPs through NIXI in the form of peering arrangement. The learned Member (Technical) further held that it was not material whether any payment was received by MTNL against the invoice dated 09.10.2013 because service tax is payable from the date of invoice, in view of the provisions as they existed w.e.f. 01.04.2011, when the Point of Taxation Rules, 2011 came into effect. The questions framed by the Division Bench clearly relate to the aforesaid issues addressed by the learned Member (Technical) and the learned Member (Judicial) in their separate orders. According to the order, it has to be determined as to whether the learned Member (Judicial) was correct in holding that MTNL was not liable to pay service tax on the invoice raised by NIXI as NIXI was not a service provider and hence not liable to pay service tax or whether the learned Member (Technical) was correct in holding that MTNL is liable to pay service tax since it raised an invoice for the services provided. The decisions, on which reliance has been placed by learned authorized representative, would not come to the aid of the Department as it has been found as a fact in the present case that the learned Members have set out the point on which they differ and it is not that the entire matter has been referred to the Third Member. The appeal may now be listed on October 07, 2022 to enable the parties to make submissions.
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2022 (9) TMI 625
Levy of Service Tax - Collection of penalties or liquidated damages - levy of penalty and liquidated damages collected by the appellant towards late supply of service or goods on the ground that the said amount is collected for agreeing to tolerate the act of late supply of goods by the suppliers - declared service or not - HELD THAT:- Liability has been fastened upon the appellant under section 65B read with section 66E(e) of the Finance Act for the period from July 2012 till June 2017 for the reason that by collecting the said amount the appellant agreed to the obligation to refrain from an act or to tolerate the nonperformance of the terms of the contract by the other party - Section 65B (44) defines service to mean any activity carried out by a person for another person for consideration, and includes a declared service. Under section 66E (e), a declared service shall constitute agreeing to the obligation to refrain from an act, or to tolerate an act or situation, or to do an act. Section 66 B provides that service tax shall be levied at the rate of 12 per cent on the value of all services, other than those services specified in the negative list, provided or agreed to be provided in the taxable territory by one person to another and collected in such manner as may be prescribed. Section 66D contains a negative list of services, while section 66E contains a list of declared services. Section 65B(44) defines service to mean any activity carried out by a person for another for consideration. Explanation (a) to section 67 provides that consideration includes any amount that is payable for the taxable services provided or to be provided. The recovery of liquidated damages/penalty from the other party cannot be said to be towards any service per se, since neither the appellant is carrying on any activity to receive compensation nor can there be any intention of the other party to breach or violate the contract and suffer a loss. The purpose of imposing compensation or penalty is to ensure that the defaulting act is not undertaken or repeated and the same cannot be said to be towards toleration of the defaulting party. The expectation of the appellant is that the other party complies with the terms of the contract and a penalty is imposed only if there is non-compliance. Two Division Benches of the Tribunal in M.P. POORVA KSHETRA VIDYUT VITRAN CO. LTD. VERSUS PRINCIPAL COMMISSIONER CGST AND CENTRAL EXCISE BHOPAL [ 2021 (2) TMI 821 - CESTAT NEW DELHI] and M/S SOUTH EASTERN COALFIELDS LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE AND SERVICE TAX, RAIPUR [ 2020 (12) TMI 912 - CESTAT NEW DELHI] have held that the amount recovered towards penalties/liquidated damages cannot be included as consideration towards any service or declared service. Levy of service tax - Wheeling charges and Cross Subsidy Charges - levy of service tax on the ground that they are consideration towards provision of declared service as defined under section 66E(e) of the Finance Act - HELD THAT:- Wheeling is nothing but transmission of electricity undertaken by the appellant Discom using its infrastructure as the power producer is not permitted to transmit electricity. Transmission is not leviable to service tax. Even assuming that the wheeling charges are collected as charges for permitting the power producer to transmit its electricity using the infrastructure of the appellant, since it is an activity related to transmission of electricity and also that the main activity of transmission is done by the appellant, wheeling charges would not be leviable to service tax in view of the decision of the Gujarat High Court in Torrent Power. Collection of cross subsidy charges is provided under the Electricity Act and the Regulations to meet the requirements of current level of cross subsidy within the area of supply of the distribution licencee. It is also in relation to transmission and distribution of electricity and cannot be treated as a declared service since it is not for agreeing to tolerate an act of any other person - It is not generated out of any service provided by the appellant and, therefore, service tax cannot be levied. Levy of service tax - Supervisory charges and Testing charges, and Transformer and Meter Testing Charges - HELD THAT:- The appellant collects supervision charges in relation to service connection or any other works as a part of the amount paid by it to the contractors to ensure that the network being provided is as per the standards fixed under the Electricity Act and Regulations framed thereunder. Under rule 45 of Indian Electricity Rules, 1956, no electrical insulation work shall be carried out for the purpose of distribution of electricity except by the licensed contractor under the direct supervision of a Department person to ensure that the quality of line/ instrument and safety checks for protection/ safety of consumers - In M.P. POORVA KSHETRA VIDYUT VITRAN CO. LTD. VERSUS PRINCIPAL COMMISSIONER CGST AND CENTRAL EXCISE BHOPAL [ 2021 (2) TMI 821 - CESTAT NEW DELHI] , it has been held that the amount collected towards these charges cannot be subjected to levy of service tax. The same would be the position for the other charge under this head. Extended period of limitation - suppression of facts or not - HELD THAT:- Even when an assessee has suppressed facts, the extended period of limitation can be evoked only when suppression is shown to be willful and with an intent to evade payment of service tax. In the present case, the Department could not establish conclusively that the appellant had suppressed material facts with an intention to evade payment of service tax. Only a general statement has been made by the Commissioner that the appellant had willfully mis-stated that the consideration received by the appellant for providing the services was not leviable to service tax. Thus, it is not possible to sustain the demand made for the extended period of limitation - The demand under this head for the normal period of imitation is sustained. The Department shall calculate the amount of service tax for the normal period of limitation as the demand made for the extended period of limitation cannot be sustained. The impugned order passed by the Commissioner is, accordingly, set aside except in so far is it seeks to confirm the demand of service tax for the amount collected towards rent from the contractors for the normal period of limitation - Appeal allowed in part.
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Central Excise
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2022 (9) TMI 624
Refund of erroneously paid Central Excise duty - Erroneous calculation of Central Excise duty @ 10.30% instead of 12.36% which was discharged as excise duty in the month of March 2012 - Instead of paying differential duty, inadvertently the Appellant once again paid the entire amount of excise duty @ 12.36% - refund claimed denied on the presumption that the incidence of duty has been passed on by the Appellant to the buyer (Rail Wheel Factory) in terms of Section 12B of Central Excise Act, 1944 - principles of unjust enrichment - HELD THAT:- It is found from the records that the Revenue has not controverted the Certificate of the Chartered Accountant. It is settled law that if the assessee has not received the amount from the buyers, it cannot be held, that the Appellant will be unjustly enriched. The decision of the Tribunal in the case of MHATRE ENGINEERING PVT. LTD. VERSUS COMMISSIONER OF C. EX., BELAPUR [ 2008 (5) TMI 179 - CESTAT MUMBAI] and the judgement of the Hon ble High Court of Madras in the case of COMMR. OF C. EX., PONDICHERRY VERSUS SOUTHERN AGRIFURANE INDUSTRIES LTD. [ 2006 (7) TMI 222 - HIGH COURT OF JUDICATURE AT MADRAS] are very much on the point, where it was held that Revenue has not controverted the certificate of the purchaser and certificate of the Chartered Accountant. It is settled law that if the assessee has not received the amount from the suppliers, it cannot be held, that the appellant will be unjustly enriched. Thus, it has to be held that the impugned order is not sustainable - appeal allowed - decided in favor of appellant.
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2022 (9) TMI 623
CENVAT Credit - capital goods/iron and steel goods - Appellant submits that the impugned iron and steel goods are utilized by them for manufacture of capital goods such as Hopper, Conveyor, components, accessories of Crushing machine and EOT Cranes - HELD THAT:- On examination of the observations made in Para 5.4 of the appeal order wherein the Ld.Commissioner(Appeals) has relied on the decision of the Larger Bench in the case of VANDANA GLOBAL LTD. VERSUS CCE [ 2010 (4) TMI 133 - CESTAT, NEW DELHI (LB)] to disallow the credit, it is found that the said decision of the Tribunal (Larger Bench) was challenged by the assessee before the Hon ble Chhattisgarh High Court in M/S VANDANA GLOBAL LIMITED AND OTHERS VERSUS COMMISSIONER, CENTRAL EXCISE AND CUSTOMS, CENTRAL EXCISE [ 2018 (5) TMI 305 - CHHATTISGARH, HIGH COURT] , wherein the Tribunal s decision had been set aside - the contentions of the Appellant is agreed upon that the very basis followed by the Ld.Commissioner(Appeals) has now been settled in their favour. In the facts of the present case, it is not in dispute that the various steel items have been used for the purpose of setting up of coal washery plant as also certified by the Chartered Engineer and have been duly verified by the lower authorities at the adjudication stage. Therefore, applying the user test principle, as followed by various High Courts, the assessee is entitled to avail credit on the steel items. Appeal allowed.
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2022 (9) TMI 622
Clandestine Removal - Confectionery Items - suppression of actual production and by purchasing raw material in cash without cover of documents such as invoices - demand based on third party evidences - corroboration of evidences - penalty u/r 26 of CER - Time Limitation - HELD THAT:- The element of clandestine removal are the serious allegations and are required to be established beyond doubt by production of sufficient and positive evidence. The apprehension however strong cannot be converted into evidence so as to confirm the demand. In the present case, it is observed that there is no inculpatory statement by any of the representative of the manufacturers; the department had not conducted any investigation to prove clandestine manufacture - It is well settled law that neither the shortage/ excess of one or more of the raw material nor the unaccounted finished goods found lying in the premises of manufactures during the course of search can lead to inevitable conclusion of clandestine manufacturer and removal. In the present case also, there are no evidence which establishes beyond doubt or which is a positive evidence to establish beyond doubt the allegation of clandestine removal of the finished goods by the appellants manufactures. The doubt and apprehension as mentioned in the show cause notice remains incorroborated due to the lack of any evidence. The Adjudication Authority below while confirming the demand have given their finding on the fact that manufacturer failed to produce any relevant document either in the form of invoices / bill or in the form of stock register / RG I register but non production of these documents cannot be sole basis for demanding duty on the allegations of clandestine removal. Thus, the allegations of clandestine removal of the goods against both the manufactures and their office bearers/ owner (also appellants herein) are without any cogent basis and accordingly, are not sustainable. Imposition of penalties upon the office bearers/ incharge of the manufacturers - HELD THAT:- It has been settled law that the mens rea is a pre-condition and is normally required to be shown that there was n intent to evade the duty. It is this mens rea which is utmost relevant for the imposition of penalty - It is observed from the statement of Shri Shankar Lal Dhingra dated 23.10.2013 that he informed the officers about the maintaining the computerized record. Otherwise also this manufacturer was availing SSI exemption benefit due to which there was no necessity to prepare the statutory records. The department had put no effort to examine the computerized records. There is no evidence even about any cash flow which may prove the element of any mens rea / bad intention to evade the duty, question of imposition of penalty does not at all arise. There is no proof of any willful mis-conduct on part of these manufacturers-appellants nor there has been any show cause notice for confiscation of the goods. These observations are sufficient to hold that penalty upon the manufactures and their office bearers / incharge/ owner has wrongly been imposed in terms of Rule 26 of Central Excise Rules, 2002. Penalty under Rule 26 is otherwise imposable upon any firm or company. Penalty upon the dealers of the manufactures who are M/s. Amber Sales Corporation and M/s. Satyam Traders - HELD THAT:- It is a fact on record that Shri Parmamnad Jha, incharge of godown informed the officers that the main office of the firm is at Azad Market and all the goods were received and dispatched under proper invoice/bills. But the departmental officers had put no efforts to collect the documents from the said office. They normally proceeded based on their apprehensions about the dealers role in holding the manufacturer for clandestine removal of their excisable goods. Penalty under Rule 25 / Rule 26 of Central Excise Rules, 2002 cannot be imposed even upon these dealers also for the reasons as are mentioned in the findings in respect of imposition of penalty upon the manufactures - imposition of penalty upon the non registered dealers herein that too under Rule 25 and Rule 26 of Central Excise Rules is absolutely unreasonable, infact is beyond the statutory provisions. Accordingly, the same is to be set aside. Imposition of penalty upon the truck driver, Shri Jhabbu Singh - HELD THAT:- The imposition of penalty upon him under any of the Rules or both of these Rules is highly illegal. Above all, there is no corroboration to his statement which has been considered as the sole basis for confirming the duty demand on the allegation of clandestine removal. The penalty against him is also therefore, liable to be set aside. None of the deponent has been examined by the Adjudicating Authority as is mandatorily required in terms of section 9D of Central Excise Act, 1944. In absence of said compliance the contents of the statements cannot be the proof of relevant fact. Confirmation of demand and imposition of penalty based on such statements which have not put to test of veracity is highly uncalled for and is actually against the statute. Appeal allowed.
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2022 (9) TMI 621
Liability of central excise duty on removal of iron ore fines/iron ore concentrates - levy of penalty - Iron ore fines/iron concentrates - Cenvat credit availed at the time of receipt in the factory but at the time of removal proportionate was not been reversed under provisions of Rule 3(5) of Cenvat Credit Rules, 2004 - receipt of short quantity of coal by 266.420 MT in their factory premises as compared to the quantity shown in the bill - HELD THAT:- So far as the demand under Rule 3(5) ibid on clearance of Iron Ore Fines/Iron Ore Concentrate is concerned, the issue is no more res integra in view of the decision of this Tribunal in the matter of CCE, RAIPUR VERSUS M/S. NUTAN ISPAT POWER LTD. [ 2016 (11) TMI 924 - CESTAT NEW DELHI] in which also the issue was whether the Iron ore fines, which are not used by the assessee in further manufacture and cleared, will attract the provisions of Rule 3(5) ibid and the Tribunal while giving the finding in favour of the assessee therein, rejected the appeal of the revenue. In the instant case while explaining the procedure, learned counsel submits that during the manufacturing process of the sponge iron, iron ore fines are generated at the time of screening/grading and crushing, which is nothing but waste and in order to keep the production at a constant pace the aforesaid process of screening is essential and indispensable and iron ore and coal fines contents have to be removed else it would stick on the inner wall of the kiln and reduce the space inside the kiln, called accretion. Therefore it can safely be concluded that the fines etc are by-product or incidental product which cannot be said to be inputs as such which by any stretch of imagination cannot be said to attract the provisions of Rule 3(5) ibid - This issue is decided in favour of the Appellant. Short receipt of 268.420 MT of coal - HELD THAT:- There is no allegation or any evidence of clandestine removal of the said quantity of coal. Mere shortage cannot ipso facto lead to the allegation of clandestine removal - According to learned counsel the said short receipt is sometimes due to transit loss/theft and as per industrial practice 4% is permissible. Since this short receipt cannot be treated as clandestine removal therefore there is no reason not to accept the submission/explanation given by the learned counsel. Therefore on this issue also demand cannot be sustained. Wrongly availed Cenvat credit of Rs.9,768/- on input service paid on GTA service against sponge iron received back from the customers - HELD THAT:- This issue is also covered in favour of the assessee in view of the decision of a coordinate Bench of the Tribunal in the matter of CHITRAKOOT STEEL POWER PVT. LTD. VERSUS COMMR. OF C. EX., CHENNAI [ 2007 (11) TMI 135 - CESTAT, CHENNAI] in which it has been held that no demand can be made for input services if the finished goods are received back. As in view of facts of this case, all the issues involved herein are decided in favour of the appellants therefore, the issue of extended period of limitation need not be addressed. Appeal allowed - decided in favor of appellant.
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CST, VAT & Sales Tax
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2022 (9) TMI 620
Seeking waiver of penalty as provided under the Karasamadhana Scheme, 2021 - completion of reassessment - only penalty in arrears relating to reassessment - HELD THAT:- In the instant case, it is an undisputed fact that no penalty is sought to be levied against the petitioner under Section 72 (1)(a), 72(1)(b), 74(4) or 72(3-B) of the KVAT Act and consequently, clause No.3 would have no application to the facts of the instant case in so far as the petitioner is concerned - On the other hand, as rightly contended by the learned Senior counsel for the petitioner, it is Clause No.2 of the Scheme that would be applicable to the facts of the instant case and in the light of the undisputed fact that the reassessment was completed on 24.09.2020 and 28.04.2021 as can be seen from the reassessment orders, which is clearly much prior to 31.07.2021, the cut off date under the scheme, the petitioner would be entitled to the benefit of 100% waiver of penalty sought to be levied upon him under Section 70(2) R/w Section 39 of the KVAT Act as per the reassessment orders dated 24.09.2020 and 27.04.2021. It is also significant to note that the material on record also indicates that the petitioner is not charged with any arrears of tax, which was liable to be paid on or before 31.10.2021 so as to attract Clause No.5.1 of the Scheme; on the other hand, in view of the undisputed fact that the petitioner did not have any arrears of tax but only arrears of penalty relating to reassessment, which was already completed on 24.09.2020 and 27.04.2021, much before the cut off date dated 31.07.2021, the petitioner would clearly be entitled to the benefit of waiver of 100% penalty and consequently, the impugned endorsement passed by respondents No.2 and 3 are illegal, arbitrary and contrary to the letter and spirit of the scheme and the same deserves to be quashed. The contention urged by the respondents that waiver of penalty levied upon the petitioner under Section 70(2) in the reassessment orders dated 24.09.2020 and 27.04.2021 do not come within the scope and ambit of the scheme since Section 70(2) does not find a place in Clause No.3 of the scheme is concerned, the said contention is clearly erroneous in as much as the said penalty is undisputedly in relation to reassessment proceedings, which were completed on 24.09.2020 and 27.04.2021 much prior to the cut off date dated 21.07.2021 as contemplated in Clause 2 of the Scheme, which is applicable to the facts of the instant case as is clear from the reassessment orders dated 24.09.2020 and 27.04.2021, which have been passed under Section 70(2) R/w Section 39 of the KVAT Act and consequently, Clause No.3 of the Scheme is clearly inapplicable to the petitioner and the said contention cannot be accepted. Petition allowed.
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2022 (9) TMI 619
Maintainability of petition - appealable orders - stay on auction proceedings - whether goods being unloaded/stored was not the place where the products were intended to be transported the goods? - seizure of such goods - HELD THAT:- Admittedly, the impugned orders passed are appealable under Section 107 of the KGST Act/CGST Act and the petitioner has an alternative efficacious remedy of appeal. Hence, the writ petition is liable to be dismissed reserving liberty to the petitioner to approach the Appellate Authority in accordance with law. However, taking into consideration that 06.07.2002 is fixed as date for opening of bids, if some interim protection is not granted to the petitioner, the entire proceedings and the appeal it may file challenging the impugned orders would become infructuous. The writ petition is dismissed reserving liberty to the petitioner to approach the appropriate forum and challenge the impugned orders in accordance with law.
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Wealth tax
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2022 (9) TMI 618
Reopening of wealth tax assessment - Escaped assessment of wealth chargeable to tax - urban land as provided under Wealth tax Act - Whether property in question is exempt under the Wealth tax Act as the alleged plot in question was not exceeding 500 sq.mts in area and it is exempt u/s. 5(vi) of the Act ? - HELD THAT:- We find force in the contention of the Ld. AR as both the properties in question as stated in impugned order does not fall under the definition of asset(s) u/s. 2(ea) of the Act and falls under exempted asset under the definition of Wealth tax Act and accordingly we direct the Authority below to delete property(s) in question from the preview of net wealth for calculating the wealth tax, since we find that property(s) in question were exempted properties under the provisions of Wealth tax Act and does not attract any Wealth tax as determined by the Authority below. Appeal filed by the assessee is allowed.
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2022 (9) TMI 617
Reopening of wealth tax assessment - Escaped assessment of wealth chargeable to tax - assessee was liable for wealth tax but has not filed wealth tax returns - HELD THAT:- As the assessee has not furnished true particulars of wealth, we are of the considered opinion that the Assessing Officer has rightly reopened the assessment. Accordingly, the ground raised by the assessee is dismissed for both the assessment years. Land in question as an agricultural land - Going by the stand of the assessee, if the land in question is under land acquisition and notification for acquisition has been passed by the Government then how the assessee has shown the asset in the books of account. Secondly, on perusal of the reply of the assessee, AO has found that the names of the previous owner of the property are different than that of the names given by the assessee in his reply. The relevant findings of AO are reproduced hereinabove. In order to counter the findings of AO the assessee has not brought on record any material evidence to take a different view than the view taken by the Assessing Officer. Thus, the ground raised by the assessee is dismissed for both the assessment years.
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2022 (9) TMI 616
Wealth tax assessment - Nature of land sold - Valuation of land - Joint ownership - HELD THAT:- As property was held in joint names, however, for all practical purposes, the assessee was the sole owner of the property. All the other joint owners were former employee having no source of income. In fact, the assessee himself claimed Long Term Capital Loss on entire property while filing its Income Tax Returns. The same was also affirmed by the assessee in sworn statement which was never retracted. Even before constitutional authority, the assessee was declared to be the sole owner of the land. All these circumstantial evidences would show that the assessee was the sole owner of the land and other co-owners were namesake owners to avoid the provisions of Land Ceiling Act. Therefore, we find no infirmity in the impugned order on this issue. Plea that the asset is not a land but building is also without any cogent evidence on record. Except for mere submission, there is nothing on record which would suggest that the assessee constructed building on this land. This plea was raised for the first time during appellate proceedings. However, the submissions were not supported by any material evidence. No plausible material has been produced before us also to substantiate this fact. Therefore, this plea of the assessee has also been rightly rejected by Ld. CIT(A). Valuation of land - The extant rule required the assessee to value the land on valuation rate which the property would fetch if sold in the open market. CIT(A) has directed Ld. AO to considered year-on-year appreciation of 10%. We are of the considered opinion that considering the given factual matrix, this rate is on the lower side. Therefore, we direct Ld. AO to directed to adopt appreciation rate of 20% on year-on-year basis and recompute the value of the land. This ground stand partly allowed from AYs 2001-02 to 2004- 05 whereas this ground stand dismissed for AY 2005-06. Debt Owed denied as the assessee could not produce any evidence to substantiate that the same were in respect of assets as included in taxable wealth - The onus to prove the nexus of liabilities with the taxable wealth could not be discharged by the assessee. No new material has been placed before us to establish this nexus. Therefore, no relief could be granted to the assessee on this score. The grounds stand dismissed for all the years. Computation of interest is concerned, it would be suffice to direct Ld. AO to compute correct interest in accordance with law. This ground stand allowed for statistical purposes for all the years.
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2022 (9) TMI 615
Net wealth estimation - nature of the land sold - Whether land is required to be treated as agricultural land irrespective of the fact, it is situated in urban area? - HELD THAT:- Undoubtedly, the urban land has been defined under the Act under clause (b) of Explanation 1 to clause (ea) of Section 2 of the Act. From the perusal of the above definition, it is clear that the land though situated in the urban area, but it would not be classified as an urban land, if the land continues to be reflected in the government record as agricultural land and land being used for agricultural purposes. CWT(A) was required to seek a report from the Revenue Authority and find out whether during the relevant period the land purchased by the assessee continues to be agricultural land in revenue records or not and further it was used for agricultural purposes or not. In our view, Assessing Officer / ld.CWT(A) should have issued summons under the relevant provision of the Act and sought the documents / report about the nature of land and its uses during the relevant assessment years 2011-12 to 2013-14. We deem it appropriate to remand back all the three appeals with a common direction to the file of Assessing Officer for verification from the Revenue records as to 1) whether the land is situated in urban area; (2) if the land is situated in urban area, whether the same was mentioned in government records as agricultural land or not (3) whether the land is continued to be used for agriculture purpose during the relevant period and 4) Whether the predecessor in interest was carrying out the agricultural activities during the period. We deem it appropriate to remand back the matter to the file of Assessing Officer for denovo passing the assessment order afresh.
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2022 (9) TMI 614
Wealth tax assessment - Addition in hand in excess as part of the balance sheet and business asset not taxable under the provisions of Section 2(ea) of the Wealth Tax Act - CIT(A) deleted the addition by holding that the Assessee, an individual is engaged in the business and once he is maintaining the books of accounts and cash in hand is in the books of accounts, the same being business asset cannot be added under the provisions of Section 2(ea) - HELD THAT:- As the issue is squarely covered and the Assessee s cash in hand pertains to business and is kept as cash in hand as in the balance sheet of the business of the Assessee, the same cannot be treated as an asset u/s.2(ea) of the Act. Hence, this issue in the Revenue s appeal is dismissed. Addition made on account of the urban land at T.Nagar, Chennai - Once the building is under construction, whether to be treated as an asset for the purpose of Wealth Tax? - This issue has been answered by the Co-ordinate Bench of the Tribunal, Cochin Bench in the case of Federal Bank Limited [ 2005 (11) TMI 190 - ITAT COCHIN] we noted that this issue is covered in favour of the Assessee and hence respectfully following the Co-ordinate Bench of this Tribunal, we dismiss this issue of the Revenue s appeal.
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Indian Laws
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2022 (9) TMI 613
Dishonor of Cheque - discharge of legally enforceable debt or not - whether the petitioner issued the cheque in question towards the discharge of legally enforceable liability or debt which is an essential ingredient for invoking section 138 of the Negotiable Instrument Act, 1881? - time barred debt or not - HELD THAT:- The legal issue pertaining to the liability of accused under section 138 of the Negotiable Instruments Act, 1881 in time barred debt was considered and discussed by different High Courts. The Kerala High Court in Sasseriyil Joseph V Devassia [ 2000 (9) TMI 1081 - KERALA HIGH COURT ] considered the question whether the respondent who issued the cheque in question in discharge of a time barred debt is liable under Section 138 of the Negotiable Instruments Act, 1881. It is appearing from perusal of complaint that the respondent no 2 entered into Assured Return Agreements (Mark A and Mark ) with the petitioner and Jasween Sandhu on 16th September, 2011 and all transactions took place between the petitioner and the Jasween Sandhu in years 2011 as reflected from documents Ex. CW1/B1-B4 and as such whatever was due towards the respondent no 2 from the petitioner and Jasween Sandhu was in year 2011 - The accused cannot be prosecuted for offence under section 138 of the Negotiable Instruments Act, 1881 for issuance of cheque for time barred liability or debt. In the present case, the respondent no 2 in complaint admitted that the petitioner incurred liability towards the respondent no 2 in year 2011 but cheque in question was issued in year 2017 which clearly reflects that the cheque in question was issued towards discharge of time barred liability. The impugned order cannot be legally sustained qua the petitioner and as such the petition is allowed and impugned order is set aside qua the petitioner - Petition allowed.
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2022 (9) TMI 612
Alleged misconduct on Chartered Accountants - bar under Rule 12 of the Chartered Accountants (Procedure of Investigations of Professional and Other Misconduct and Conduct of Cases) Rules, 2007 - HELD THAT:- It would be pertinent to firstly note that Rule 12 does not expressly debar the Director Discipline from entertaining a complaint merely because it may relate to acts of misconduct committed seven years prior to the same being lodged. The said Rule also does not prescribe that a complaint would not lie if it be preferred seven years after the alleged misconduct was committed. Rule 12 is founded on the satisfaction of the Director Discipline that the circumstances envisaged and stipulated therein render it impracticable to conduct an enquiry. That satisfaction may be arrived at if the Director be of the considered opinion that it would be difficult to gather evidence in connection with the complaint made or where it be of the view that the member would find it difficult to lead evidence to defend himself effectively in the proceedings contemplated - The formation of opinion in this regard may rest on either a difficulty in securing evidence or even where it be found that the time lag between the commission of the misconduct and the making of the complaint would place the member under an unreasonable burden of collecting material and evidence which may be required to proffer a wholesome defense. The Court thus finds itself unable to accept the contentions advanced on behalf of the petitioner that the complaint proceedings must be interdicted merely because seven or more years have elapsed since the commission of the misconduct. The Court notes that before proceeding to reject that objection, it was incumbent upon the respondent to have duly considered whether the petitioner was in fact severely handicapped from submitting a response to the allegations levelled in the complaint as also whether there was material and evidence available on the basis of which the enquiry could be proceeded with. It was, in the considered opinion of this Court, incumbent upon the respondent to have recorded cogent reasons in support of its conclusion that the objection taken with reference to Rule 12 was unfounded or unjustified. Petition allowed.
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2022 (9) TMI 611
Dishonor of cheque - vicarious liability of the Proprietor Individual when proprietorship firm not sued - section 141 of NI Act - HELD THAT:- Clause (a) of the explanation as occurs in Section 141 of 'the Act' describes, a 'Company' to not only include any corporate body, but also makes a firm, or, other association of individuals, to become included within the realm of statutory coinage 'Company', and, besides when clause (b) thereof, when defines a 'Director', it makes the said statutory phrase, to in relation to a firm, to also include a partner in a firm - If so, when the statutory signification assigned to a 'Company', does visibly cover not only any corporate body, but also covers a firm, or other association of individuals, therefore, not only a corporate entity either private, or, public limited becomes a 'Company', for the purpose of application thereons of Section 141 of 'the Act', but also a firm, or, other association of individuals, do also, become covered by Section 141 of 'the Act', besides a partner in a firm when is given the colour of a Director of a firm, also does become covered for the relevant purpose. When the arraigning of the sole proprietary concern rather was a condition precedent for making the complaint well constituted, as it becomes the principal offender, and, with its remaining un-impleaded, as such, the absence of its impleadment cannot make the instant complaint to be well constituted, nor, any valid prosecution can in its absence, be drawn, even against the accused petitioner, who can be assigned only a vicarious liability alongwith it. Petition allowed.
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2022 (9) TMI 610
Dishonor of Cheque - insufficient funds - existence of legally enforceable debt or not - Acquittal of the accused - rebuttal of statutory presumption - section 138 of NI Act - HELD THAT:- As per the case of the complainant, the accused has availed hand-loan of Rs. 1,35,000/- from him and in discharge of the said debt, a cheque under Ex. P1 came to be issued. There is no serious dispute of the fact that the cheque belongs to the accused. Further, the accused has also no disputed his signature on the cheque. Hence, prima facie there is a statutory presumption in favour of the complainant under Sections 118 and 139 of the N.I. Act. However, the said presumptions are rebuttable presumptions. Apart from that, it is also important to note here that the complainant is required to prove his case beyond all reasonable doubt - If the accused is able to create some dent in the case of the complainant, then the statutory presumption stands rebutted and the burden again shifts on the complainant. The offence under Section 138 of the N.I. Act is attracted only if the cheque in dispute is being issued towards legally enforceable debt. In the instant case, though the complainant has asserted that he had advanced hand-loan of Rs. 1,35,000/-, the evidence discloses that, he has failed to establish his financial status to advance such a huge amount to the accused. Further, Ex. D3 discloses that, on behalf of Vajravelu, notice has been issued to the accused for repayment of the hand-loan - it is evident that the complainant has failed to substantiate his contention that Ex. P1 was issued in discharge of legally enforceable debt. Non-reply to the legal notice itself cannot establish the defence or financial status of the complainant. No illegality or infirmity is found in the judgment of acquittal passed by the trial Court. Considering these facts and circumstances, the point under consideration is answered in the negative. Appeal dismissed.
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