8 August 2022


High Court of Delhi

Rajnish Puri vs. Assistant Commissioner Of Income Tax



Direct Taxation

Allegation in the notice issued under Section 148A(b) of the IT Act has to be precise not vague

Present writ petition has been filed challenging the order passed under Section 148A(d) of the Income Tax Act, 1961 and the consequential notice issued under Section 148 of the IT Act for the Assessment Year 2014-15.

In the present matter, the assessment of the Assessee was reopened on the basis of information uploaded on INSIGHT portal stating that search under Section 132 of the Act had been conducted on 11th September, 2018 in the case of Jignesh Shah and Sanjay Shah of Ahmedabad and the search had resulted in seizure of unaccounted cash of Rs.19.37 crores (relating to accommodation entries and commission earned thereon), along with incriminating digital as well as documentary evidences. As per the impugned Order, the Assessee, was found to be a beneficiary of accommodation entry of fictitious loan of Rs.63,06,250 during Financial Year 2013-14.

Learned counsel for the Petitioner contends that, the information on which the reassessment proceeding had been initiated was incorrect and the assumption of jurisdiction was completely flawed.

Both in the notice issued under Section 148A(b) of the IT Act as well as in the Dissemination of Information note supplied to the Petitioner, the allegation is of a 'fictitious loan' and not 'fictitious long term capital gain' of Rs.63,06,250.

This Court is of the view that, the allegation in the notice issued under Section 148A(b) of the IT Act has to be precise, so that the assessee has a fair and reasonable opportunity to put forward its defence. In the event, the allegation in the notice under Section 148A(b) of the IT Act is incorrect or vague, the Assessee would be deprived of an opportunity of putting forward its defence and Section 148A(b) would be rendered nugatory.

The impugned order passed under Section 148A(d) of the IT Act and the notice issued under Section 148 of the Act are set aside and the Petitioner-Asseessee is given an opportunity to file a response to the notice under Section 148A(b) of IT Act. The Assessing Officer is directed to pass a fresh order under Section 148A(d) of the IT Act within four weeks thereafter. Petition disposed off.

Tags : Assessment Notice Legality

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Supreme Court

Jai Prakash Tiwari Vs. State of Madhya Pradesh




Accused is not required to prove his defence beyond a reasonable doubt but only by preponderance of probabilities

The present appeal arises from the judgment passed by the High Court dismissing the Appellant's appeal against judgment passed by the First Additional Sessions Judge, confirming his conviction under Section 307 of the Indian Penal Code, 1860 ('IPC') and Sections 25 and 27 of the Arms Act, 1959 ('Arms Act').

In the present case, the Courts below failed to scrutinize the defence version put forward by the Appellant-Accused in his statement. The object of Section 313 of the Code of Criminal Procedure, 1973 (CrPC) is to establish a direct dialogue between the court and the Accused. The purpose of Section 313 of CrPC is to provide the Accused a reasonable opportunity to explain the adverse circumstances which have emerged against him during the course of trial. A reasonable opportunity entails putting all the adverse evidences in the form of questions so as to give an opportunity to the Accused to articulate his defence and give his explanation.

It is an established principle of criminal law that, the burden of proving the guilt of the Accused beyond reasonable doubt is upon the prosecution. Where an Accused sets up a defence or offers an explanation, it is well-settled that he is not required to prove his defence beyond a reasonable doubt but only by preponderance of probabilities. Further, it has been held by this Court in Parminder Kaur v. State of Punjab, that "once a plausible version has been put forth in defence at the Section 313 of CrPC examination stage, then it is for the prosecution to negate such defence plea".

Moreover, it is the solemn duty of the Courts below to consider the defence of the Accused. The same must be considered with caution and must be scrutinised by application of mind by the judge. The Court may accept or reject the same; however it cannot be done cursorily. The reasoning and the application of mind must be reflected in writing. However, in present case, Courts below have failed to undertake this solemn duty. Rather, the evidence of the Accused has been dealt by the Court in a casual manner.

When there is absence of independent evidence corroborating the statements made by complainant, serious doubts regarding the recovery of the alleged motorcycle and the country made pistol, no connection proved between the alleged recovered items and the alleged incident, and the plausible version put forward by the Accused-Appellant in his Section 313 statement has not been satisfactorily responded to by the prosecution, the case against the Accused-Appellant cannot be sustained.

It is the duty of the Court to separate the grain from the chaff and to extract the truth from the mass of evidence. The case of the prosecution is based on mere conjectures and surmises. The High Court and the trial Court failed to consider the circumstances while rendering the judgment convicting the Accused. The evidence brought on record by the prosecution is insufficient to prove the case against the Appellant beyond reasonable doubt. The conviction and sentence passed against the Appellant are set aside. Appeal allowed.

Tags : Conviction Evidence Credibility

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Customs, Excise and Service Tax Appellate Tribunal

Girish Kumar Singh vs Commissioner of Customs




No penalty can be imposed without proving the role of person being charged

The issue in present appeal is whether penalty of Rs. 10 lakhs has been correctly imposed on the Appellant under Section 112(b) of the Customs Act, 1962. The Appellant is working as clearing agent of imported goods, but not having any CHA/CB license.

Pursuant to investigation, show cause notice was issued proposing to confiscate the cigarette and imposed penalty on various persons including Appellant. Vide order-in-original, the consignment of cigarette was absolutely confiscated and penalty of Rs. 5 lakhs was imposed on Ankit Enterprises, the IEC holder. Further, penalty of Rs. 50 lakhs was imposed each on Habib-uz-Zaman and Badi-uz-Zaman under Section 112(a) of the Act. Penalty of Rs. 10 lakhs was also imposed on Appellant under Section 112(b) of the Customs Act, 1962.

Being aggrieved, this appellant preferred appeal before the Commissioner (Appeals) who vide the impugned order has been pleased to reject the appeal observing that, it was this Appellant who has arranged the meeting between the IEC holder Ankit Enterprises and Habib-uz-Zaman who is the actual importer. Being aggrieved, the Appellant is before present Tribunal.

It is a settled law that, for making out a case, the Department is required to categorically mention the provision which was made basis for imposition of penalty. The decision of this Tribunal in the case of Green Port Shipping Agency vs. CC-2021 wherein it has been held that no penalty can be imposed without proving the role of person being charged.

The only allegation against present Appellant is that he introduced the actual importer Habib-uz-Zaman and Badi-uz-Zaman to the IEC holder, who agreed for the use of his IEC on consideration agreed to be provided by Habib-uz-Zaman. Thereafter, there is no role of this Appellant forthcoming. None of the co-noticee has stated anything against this Appellant save and except that, he has introduced the importer and the IEC holder. Thus, none of the condition as stipulated in Section 112(b) of the Act is attracted for imposing penalty. Accordingly, the impugned order is set aside. Appeal is allowed.

Tags : Penalty Imposition Legality

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Supreme Court

Noor Mohammed Vs. Khurram Pasha




If a statute prescribes a method for exercise of power, by necessary implication, the other methods of performance are not acceptable

Present appeal challenges the correctness of the judgment and order passed by the High Court. The instant proceedings arise out of Complaint Case instituted by the Respondent herein in respect of offence punishable under Section 138 of the Negotiable Instruments Act, 1881. High Court observed that, the conduct of the Appellant in not depositing the interim compensation as directed, showed that he was only interested in protracting the proceedings for one reason or the other

The remedy for failure to pay interim compensation as directed by the court is provided for by the Legislature. The method and modality of recovery of interim compensation is clearly delineated by the Legislature. It is well known principle that if a statute prescribes a method or modality for exercise of power, by necessary implication, the other methods of performance are not acceptable.

The concerned provision nowhere contemplates that an Accused who had failed to deposit interim compensation could be fastened with any other disability including denial of right to cross-examine the witnesses examined on behalf of the complainant. Any such order foreclosing the right would not be within the powers conferred upon the Court and would, as a matter of fact, go well beyond the permissible exercise of power.

Since the right to cross-examine the Respondent was denied to the Appellant, the decisions rendered by the Courts below suffer from an inherent infirmity and illegality. Therefore, decisions of all three courts are set aside with further direction that Complaint Case shall stand restored to the file of the Trial Court. The Trial Court is directed to permit the Appellant to cross-examine the Respondent and then take the proceedings to a logical conclusion. Appeal allowed.

Tags : Cross-examination Denial Legality

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High Court of Bombay

Sunderabai Vishwanath Piparwar Vs. The Sub-Divisional Magistrate, Rajura and Ors.




Non-compliance of the mandatory requirement of drawing up a preliminary order vitiates the entire proceedings

The Petitioner is challenging the conditional order passed by the Sub-Divisional Magistrate ('SDM'), in term of Section 133 of the Code of Criminal Procedure, 1973 (CrPC), by which the Petitioner including Municipal Council, Rajura were directed to remove or demolish dilapidated building within stipulated period.

Bear reading of Section 133 of the CrPC indicates that in case of public nuisance, the first step is about passing of conditional order to remove the nuisance. In case, the said conditional order was not obeyed then the objector has to be called to appear and respond the show cause notice, as to why the order should not be made absolute. Show cause notice must be preceded with a conditional order for removal of nuisance. In case at hand, the Respondents are unable to show that the impugned order is preceded by any conditional order of SDM. The Supreme Court in case of C.A. Avarachan Vs. C.V. Sreenivasan and Another, ruled that non-compliance of the mandatory requirement of drawing up a preliminary order vitiates the entire proceedings.

The SDM though termed impugned order as a conditional order, however has not issued show cause notice to the other side for the purpose of inquiry. Section 138 of the CrPC contemplates that after passing of preliminary order followed by show cause notice, the SDM is bound to make inquiry by taking evidence in the matter. On his satisfaction, the order can be altered or made absolute. There is no record to indicate that, the show cause notice was served on any one or notified by proclamation so as to give an opportunity to the objectors. The impugned order apparently shows that no opportunity was given to the other side, as it was not preceded by the preliminary order of issuing show cause notice. Apparently, the essential requirements of Section 133 of the CrPC have not been followed. In the circumstances, impugned order and the order passed in revision would not sustain in the eyes of law.

The impugned order passed by the SDM and consequential order passed in revision are quashed and set aside. The matter is remitted back to the SDM for its fresh consideration in accordance with law. All the objections raised by the petitioner including maintainability are kept open. Petition disposed of.

Tags : SCN Non-compliance Mandatory requirement

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Income Tax Appellate Tribunal

Deputy Commissioner Of Income Tax vs. Franke Faber India Pvt. Ltd, Pune



Direct Taxation

Transfer pricing adjustment should be restricted only to the international transactions and not the entity level transactions

In facts of present case, the assessee filed its return declaring loss of Rs.1.55 crore. Certain international transactions were reported in Form No.3CEB. The Assessing Officer (AO) made a reference to the Transfer Pricing Officer for determining the Arm's Length Price (ALP) of the international transactions. Present Tribunal is concerned only with the transactions of Purchase of raw materials, Purchase of traded goods and Sale of finished goods, which have been clubbed by the assessee under the head "Manufacturing Function".

The AO did not dispute the applicability of the Transactional Net Margin Method (TNMM) as the most appropriate method. Out of four comparables chosen by the assessee, the TPO excluded Gorani Industries Limited and worked out the adjusted arithmetic mean of the Operating Profit/Operating Revenue of the remaining companies at 6.16%. Applying it as arm's length margin, the TPO worked out the transfer pricing adjustment at Rs.7,30,13,424. The learned CIT(A) directed to include GIL in the list of comparables, against which the Revenue has come up in appeal.

The issue of restricting the transfer pricing adjustment to the extent of international transactions rather than the entity level is no more res integra in view of several judgments rendered by various higher forums including the Hon'ble jurisdictional High Court in CIT Vs. Phoenix Mecano (India) Pvt. Ltd. holding that the transfer pricing adjustment should be restricted only to the international transactions and not the entity level transactions. The High Court in has held that the transfer pricing adjustment made at entity level should be restricted to the international transactions only. The impugned order is set aside and it is directed that the transfer pricing adjustment should be restricted only to the extent of the international transactions.

The impugned order on the issue of transfer pricing adjustment of the international transactions of Purchase of Raw Material, Purchase of traded goods and Sale of finished goods is set aside and the matter is remitted to the file of the AO/TPO for a fresh determination. Assessee will be allowed reasonable opportunity of hearing in fresh proceedings. Appeal the Revenue is allowed and the cross objection of the assessee is partly allowed.

Tags : Assessment Transfer pricing International Transaction

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