Income Tax Appellate Tribunal

Tasavver Husain, Farrukhabad vs. Income-tax Officer

MANU/IA/0024/2024

12.06.2024

Direct Taxation

Penalty is not leviable where there is a reasonable cause or where assessee establishes its bonafides

In present case, during the course of assessment proceedings, the Assessing Officer has levied penalty, under Section 271B and various other sections of the Income-tax Act. Thereafter, the Assessing Officer vide his order has levied penalty under Section 271B on the ground that the assessee failed to get his accounts audited despite the fact that the volume of assesee's turnover was covered by the provisions of Section 44AB of the Income Tax Act.

The Assessing Officer was of the view that, the assessee has violated the provisions of Section 44AB and hence, liable to be punished under Section 271B of the Act. Accordingly, the Assessing Officer levied penalty of Rs.72,378. Aggrieved with the order of Assessing Officer, the assessee filed appeal before learned CIT(Appeals). The learned CIT(Appeals) dismissed the appeal of the assessee vide impugned order.

In facts of the present case, the assessee was distributor of Mother Dairy, retired army personnel, under the bona fide belief that no books of accounts are required to be maintained since only source of earning income was commission as fixed by Mother Diary on sales of milk and other products, and there is no need of any audit of accounts appears to be bona fide belief of the assessee. Penalty is not leviable.

Section 273B of the Income Tax Act has categorically provided immunity from penalty under Section 271B to those assessees who establish, having regard to the facts, that there was a bona fide belief or a reasonable cause with respect to violation of provisions of Section 271B. There is catena of decisions, where in the context of Section 271B, Hon'ble Courts have held that, penalty is not leviable where there is a reasonable cause or where assessee establishes its bonafides. Therefore, the penalty levied in this case is legally not tenable.

There is a small delay of 40 days in filing of this appeal, for which there is an application for condonation of delay. Considering the smallness of amount and ordinate delay of 40 days, present Tribunal deem it fit to condone the delay in the interest of justice. It is settled position of law that, when technical consideration and substantial justice are pitted against each other, cause of substantial justice should be given credence. Appeal of the assessee is allowed.

Tags : Assessment Penalty Imposition

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High Court of Bombay

Somsay Dalasay Madvi and Ors. Vs. National Investigating Agency and Ors. (Neutral Citation: 2024:BHC-AS:22882-DB)

MANU/MH/3469/2024

11.06.2024

Criminal

Stringent the provisions of an Act are, the stricter is its compliance

Appeals are filed under Section 12 of the Maharashtra Control of Organised Crime Act, 1999 impugning the Orders passed by the trial Court rejecting their Applications for dropping the charges/provisions of the M.C.O.C. Act from the said case.

Appellants are being prosecuted for the offences punishable under Sections 302, 353, 427, 120-B, 121, 121A, 147, 148 and 149 of the Indian Penal Code, 1860 along with Sections 3, 4 and 5 of the Explosive Substances Act, Sections 16, 17, 18, 18B, 20, 38, 39 and 40 of the Unlawful Activities (Prevention) Act, 1967 and Sections 3(1)(i)(ii), 3(2) and 3(4) of the M.C.O.C. Act.

Hon'ble Supreme Court in the case of Mahipal Singh Vs. C.B.I. and Anr., on the date of lodgment of the crime to which the provisions of M.C.O.C. Act are applied, the cognizance of both the cases must have been taken by the trial Court, otherwise the prior approval granted by the concerned authority is bad in law and the accused cannot be prosecuted for the offence under the provisions of the said Act.

Submission of charge-sheet in more than one case and taking cognizance in such number of cases are ingredients of the offence under Section 3 of the M.C.O.C. Act and are to be satisfied on the date on which crime was committed or came to be known. It is the settled position of law that, stringent the provisions of an Act are, the stricter is its compliance.

In the present case, the offence in question was committed on 1st May, 2019 and it is registered on 2nd May, 2019. In Sessions Case, the concerned Court took cognizance on 30th May, 2019 i.e. much after the date of committal of crime and/or its registration on 2nd May, 2019. Thus, on the date of commission of the offence and/or on the date of its registration in Sessions case No.99 of 2019, the concerned Court had not taken cognizance and therefore it legally did not comply with the requirement of Section 2(d) of the M.C.O.C. Act.

Though the Competent Authority in the Order of Prior Approval under Section 23(1)(a) of the M.C.O.C. Act has stated therein that, more than 23 cases have been registered against the principal accused. It is thus clear that, the principle of law enunciated by the Hon'ble Supreme Court in the case of Mahipal Singh has not been followed by the Competent Authority. Therefore, present Court have no other option than to set aside the impugned prior approval dated 7th February, 2020 and to hold that, the Appellants cannot be prosecuted for the offence under Section 3 of the M.C.O.C. Act.

Perusal of impugned Orders indicates that, the trial Court has not taken into consideration the aforestated aspects and has considered the Applications of the Appellants on merits i.e. dealing with the evidence against the Appellants. The impugned Orders passed are set aside. Appeals allowed.

Tags : Charges Prosecution Prior approval

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High Court of Bombay

Tukaram Vs. Dileep and Ors. (Neutral Citation: 2024:BHC-AUG:10507)

MANU/MH/3472/2024

11.06.2024

Criminal

Fundamental burden is on complainant to prove existence of legally enforceable debt

The original complainant, who instituted proceeding under Section 138 of the Negotiable Instruments Act, 1881 (N.I. Act), is dissatisfied by the judgment and order of acquittal passed by the trial Court

Section 138 of the N.I. Act has three essential ingredients viz.;Firstly, that there is legally enforceable debt.Secondly, that the cheque was drawn from account of bank for discharge in whole or in part any debt or other liability which presupposes a legally enforceable debt.Thirdly, cheque so issued has been dishonoured.

Fundamental burden is on complainant to prove existence of legally enforceable debt and only if it is so proved, only then presumption available under law i.e. under Sections 118 and 139 of N.I. Act, automatically comes into play. The Hon'ble Apex Court in the case of Krishna Janardhan Bhat v. Dattatraya Hegde, has also clarified that existence of legally enforceable debt is not a matter of presumption. It merely raises a presumption in favour of the holder of the cheque that the same has been issued for discharge of any liability or debt. Only when accused fails to rebut the presumption, offence under Section 138 can be said to be brought home.

Initial burden on complainant is to first prove the foundational facts alleged by him regarding so called transaction of sale and purchase of sugarcane buds. On re- appreciating the entire evidence, it is noticed that, evidence of complainant is conspicuously silent as to exactly when and where said transaction took place. There is no oral or documentary supportive evidence of complainant to be involved in the business of sale of sugarcane buds and he selling buds to accused as is claimed by him. Where this transaction took place is not coming on record. There is no evidence to suggest that accused was also owning and possessing land which was available for cultivation of sugarcane crop.

Complainant failed to establish and demonstrate transaction and sale of sugarcane buds to accused worth Rs.46,000 and accused issuing cheque towards price of the buds and not otherwise. Acquittal from offence under Section 138 of N.I. Act cannot be said to be illegal or against evidence. No case is made out to interfere. Appeal dismissed.

Tags : Presumption Acquittal Legality

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Customs, Excise and Service Tax Appellate Tribunal

Eureka Stock & Share Broking Services Limited vs. Commissioner of Service Tax

MANU/CK/0166/2024

11.06.2024

Service Tax

Mere non-filing of the option letter should not be used to deprive the assessee from reversing the proportionate Cenvat Credit

The Appellant is engaged in providing "stock broking service" to their clients. On scrutiny of ST-3 Returns as well as cenvat credit records, it revealed that the Appellants have taken cenvat credit on common input services i.e. rent, banking, telephone, repair & maintenance, insurance, postage & courier, audit fees, internet broadband services, professional fee, software charges etc. These input services are used for providing output services, which are chargeable to tax as well as exempted services. During the said period, the Appellant did not maintain separate account for receipt and use of input services for provision of such exempted service and for provision of taxable output service. Accordingly, in terms of Rule 6 (3) of the Cenvat Credit Rules, 2004, they are required to pay 5%/6% of the value of exempted services.

Two show-cause notices were issued to the Appellant for payment of amount equal to 5%/6% of the value of exempted services.The appellant contested the show-cause notices, but the adjudicating authority passed the impugned order holding that, the Appellant is required to pay the amount equal to 5%/6% of the value of exempted services in terms of Rule 6 (3) of the Cenvat Credit Rules, 2004.

Although the Appellant is maintaining separate account for exempted as well as taxable services and reversed the proportionate cenvat credit attributable to the exempted services. For transaction charge services, the service tax paid by the Appellant was not proportionately reversed by the Appellant. But on pointing out by CERA audit, the Appellant has reversed the same. The same has been recorded by the adjudicating authority in the impugned order.

Further, as the Appellant has already reversed the proportionate cenvat credit attributable to exempted services, the Appellant is not required to pay any amount equal to 5%/6% of the value of the exempted services. The same view has been taken by this Tribunal in the case of Chryso India Private Limied Vs. Commissioner of CGST & Central Excise.

From the decisions of the Tribunals, it is seen that even prior to Rule 6 (3AA) coming into effect from 1st April, 2016, they have been taking the view that mere non filing of the option letter should not be used to deprive the assessee from reversing the proportionate Cenvat Credit. The very fact that the Rule 6 (3AA) has been brought into effect from 1st April, 2016 wherein the Adjudicating Authority is empowered to allow the assessee to reverse the Cenvat on proportionate basis on being pointed out, shows the legislative intent to allow the assessee to pay proportionate Cenvat Credit as the first option.

The demand confirmed for Rs.2,52,853 in terms of Rule 6(3)(i), i.e. on 5%/6% of value of exempted goods is not sustainable and the same is set aside. As the Appellant has already reversed the proportionate input cenvat credit attributable to exempted services, in that circumstance, the appellant is not liable to pay an amount equal to 5%/6% of the value of the exempted services. As no demand is sustainable against the Appellant, no penalty is imposable on the appellant. The impugned order is set aside. Appeal allowed.

Tags : Demand Penalty Legality

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High Court of Allahabad

Sameer Jain vs. State Of U.P. And Another (Neutral Citation: 2024:AHC:103016)

MANU/UP/2100/2024

10.06.2024

Criminal

Anticipatory bail cannot be granted to a proclaimed offender

In present case, the applicant has been implicated in present case along with 15 other co-accused persons for committing the offences alleged in the FIR under different sections of Indian Penal Code, 1860 (IPC).Learned Senior counsel for the Applicant submits that number of co-accused persons have been granted anticipatory bails, stay of arrest and regular bail. The offences alleged are of civil nature and engaging the attention of civil court hence, the applicant is also entitled to be enlarged on bail on anticipatory bail.

The informant / opposite party no. 2, has vehemently opposed the anticipatory bail application. The opposite party no. 2 has submitted that as per Section 84(2) of Code of Criminal Procedure, 1973 (CrPC), applicant was not entitled to file any objection since it is clear from Section 84(1) of CrPC that, the same can only be filed by a person, other than the proclaimed person, on the ground that the objector has interest in such property and it is not liable to attachment under Section 83 of CrPC. He has submitted that the applicant was a proclaimed offender and he had no right to file objection under Section 84(1)(2) of CrPC.

It is clear from Section 84(1) of CrPC that, a proclaimed offender had no right to file objection under Section 84(2) of CrPC. The applicant is clearly a proclaimed offender and an absconder. In the cases of Srikant Upadhyay and Ors. vs. State of Bihar and Another, Lavesh vs. State (NCT of Delhi) and Prem Shankar Prasad vs. The State of Bihar and Another, it has been held that anticipatory bail cannot be granted to a proclaimed offender. No law to the contrary has been placed before this court by the counsel for the applicant.The interim anticipatory bail granted to the applicant also stands cancelled. Anticipatory bail application is rejected.

Tags : Proclaimed offender Bail Grant

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Customs, Excise and Service Tax Appellate Tribunal

Century Infrapower Pvt Ltd vs. Commissioner of Central Excise and Service Tax

MANU/CE/0214/2024

07.06.2024

Excise

Freight charged separately in the invoices is not includable in the assessable value for the payment of excise duty

The Appellant is engaged in manufacture of transformer, aluminium, cables etc. Excise duty amounting to Rs.65,15,338 on the freight value of Rs.5,21,22,700received by the Appellant during the period from March 2016 to March 2017 is alleged to have been short paid by not including the same into the assessable value. The same is alleged to be the violation of Section 4 of Central Excise Act, 1944 read with Rule 4,6 and 8 of Central Excise Act, 2002. The said amount of Rs.65,15,338 therefore is proposed to be recovered from the Appellant along with the interest vide Show Cause Notice. Penalty is also proposed to be imposed.

The said proposal was initially confirmed vide Order-in-Original. The appeal against the said order has been dismissed vide the order under challenge. The issue to be adjudicated in the present case is:"Whether the value of freight and insurance charges should be included in the assessable value of final products."

There was an agreement between the Appellant and its buyers according to which prices were agreed to be on ex work basis as also have been mentioned in the invoices. The goods admittedly got cleared from the factory of Appellant on payment of appropriate sales tax. Invoice were prepared at the factory gate only in the name of the buyer, also, when the goods were handed over to the transporters, later issued the lorry receipts/consignment notes mentioning the buyer as the consignee. These apparent and admitted facts are sufficient to hold that sale of impugned goods had taken place at Appellant's factory gate only.

It has been categorically held by Supreme Court that, buyer's premises can never be the place of removal, hence, the freight charged separately in the invoices is not includable in the assessable value for the payment of excise duty.The demand for the entire period which includes one month of extended period of limitation has wrongly been confirmed. The order under challenge has wrongly held that the freight and insurance charges are includable in the assessable value.

Learned adjudicating authority has absolutely ignored Rule 5 of Determination of Value Rules which makes it clear that when goods are sold for delivery at a place other than place of removal transaction value of excisable goods shall not include actual cost for transportation from the place of removal up to the place of delivery of such excisable goods.The rule enunciates following criteria to allow deduction of cost of transportation from the assessable value:(i) The goods should be sold for delivery at a place other than place of removal.(ii) Cost of freight/insurance should be in addition to the price for the goods.(iii) Cost of transportation should be shown separately in the invoices.

These conditions have been met with in the present case. Hence, cost of transportation/ freight has to be deducted from the assessable value. So is true, in the given circumstances, for the cost of insurance.The order under challenge since has confirmed the demand based on inclusion of freight and insurance amount received by the Appellant, the order is held to not to be sustainable. The order in appeal/ order under challenge is set aside. Appeal allowed.

Tags : Freight Inclusion Demand

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