Customs Brokers Licensing Regulations, 2013 [Regulations of 2013] / Customs House Agents Licensing Regulations, 2004[Regulations of 2004] - (i) Is a writ petition challenging an O-i-O on the ground of lack of jurisdiction maintainable, despite the availability of statutory alternative remedy?(ii) Are the time limits prescribed in Regulation 22 of the Regulations of 2004 and Regulation 20 of the Regulations of 2013 mandatory or directory?(iii) Is the SCN dated 23.6.2017 barred by limitation?(iv) If the answer to the third issue is in the affirmative, is the impugned O-i-O vitiated due to lack of jurisdiction?(v) Does citing the Regulations of 2013 in the impugned order vitiate it?(vi) To what relief or reliefs are the parties entitled to?.
HELD: High Court in Indair Carrier Pvt. Ltd. - 2016-TIOL-1111-HC-DEL-CUS has taken a view that an issue of limitation is an issue of jurisdiction and can be raised in a writ jurisdiction despite the availability of a statutory alternative remedy - it remands the matter to the adjudicating authority for consideration on the point of limitation - the writ petition raises issues with regard to limitation - such issues are required to be considered -the first issue is answered accordingly -Asian Freight (Unit of Esan Freight & Travel Pvt. Ltd.) & Anr. [ 2017 Volume 2 West Bengal Law Reporter page 221 ] is of a coordinate bench - no reason found to arrive at a different finding than that of Asian Freight (Unit of Esan Freight & Travel Pvt. Ltd.) & Anr. when it holds that, the time limit of Regulation 20 of the Regulation of 2013 is not mandatory - on a parity of the same reasoning Regulation 22 of the Regulations of 2004 is not mandatory, but directory - the second issue is answered accordingly -in the present case, the O-i-O, treated as an offence report, is not one which was issued by an adjudicating authority exercising jurisdiction under the Regulations of 2004 -therefore, no infirmity found in the authority treating the O-i-O dated 25.2.2015 as the offence report under Regulation 22 of the Regulations of 2004 -the fact that, the O-i-O dated 25.2.2015 was received by the authority concerned, invoking the provisions of the Regulations of 2004 on 27.3.2017, is not disputed on behalf of the petitioner -the SCN under the Regulations of 2004 was issued on 23.6.2017 -the impugned SCN is, therefore, within the period of 90 days from the date of receipt of the O-I-O dated 25.2.2015- consequently, the SCN issued on 23.6.2017 cannot be said to be barred by limitation -the SCN being within limitation, the authority acted within jurisdiction in issuing it and adjudicating thereon -the impugned order does not suffer for lack of jurisdiction -the third and the fourth issues are answered accordingly - in The Elphinstone Spinning - 2002-TIOL-360-SC-CX, the Supreme Court is of the view that, if the authorities have the power to issue a notice, the fact that, the notice refers specifically to a particular rule, which may not be applicable, will not make the notice invalid - in the facts of the present case, the petitioner invited the authorities to invoke the provisions of the Regulations of 2013 at the time of hearing, despite the notice to show-cause being issued under the provisions of the Regulations of 2004 - the authorities did have the power to pass the impugned order in the manner and to the extent as done, under the provisions of Regulations 2004 as well as under 2013 - the finding that, the petitioner is guilty of violation of Regulation 11(n) of the Regulations of 2013 has not been substantiated to be perverse - on the same facts, the authorities could have awarded the same punishment for violating Regulation 13(o) of the Regulations of 2004 - notwithstanding the claim of the petitioner before the adjudicating authority that, the proceeding should be governed by the Regulations of 2013, the proceeding is one under the Regulations of 2004 and should be deemed to have been concluded thereunder -in fact, the writing communicating the impugned order specifies that, the impugned order is appealable under Regulations of 2004 -the impugned order does not stand vitiated in the manner as contended by the petitioner or otherwise -the fifth issue is answered accordingly - in such circumstances, there is no merit in the present writ petition - W.P. is dismissed : HIGH COURT [para 8, 17, 21, 22, 24, 25]
Writ petition dismissed
2018-TIOL-1402-HC-MAD-IT
CIT Vs ABDUL WAHID AND COMPANY: MADRAS HIGH COURT (Dated: June 22, 2018)
Income Tax - Books of account & Treatment of discount.
The assessee had filed its return for the relevant AY. On assessment, the AO observed that the assessee had availed discounts on the purchase of materials from a certain concern and had treated such discounts as income in its books of accounts. However, the assessee subsequently changed the treatment of such discount in its books of account by adjusting such discount against the purchase of skins and chemical account at cost. However, the AO was not satisfied and disallowed the same. On assessee's appeal, the CIT(A) set aside the decision of the AO. On further appeal by the Revenue, the Tribunal upheld the decision of the CIT(A).
On hearing the matter, the High Court held that,
Whether mere mistake of the assessee regarding treatment of discount in its books of account can disentitle it from getting the benefit - NO: HC
Whether therefore, when lower authorities has rightly given their findings on facts, there is no need for the High Court to interfere with the same - YES: HC
++ no substantial question of law was involved in this appeal. After all, the Tribunal as well as the CIT(A) rendered their finding on facts. After due adjudication, it was accordingly held in favour of the assessee. There is no dispute on facts. The earlier stand taken by the assessee was at best a mistake of fact. Thus, that alone would not disentitle the assessee from getting the benefit which otherwise it is entitled in law. In any case, the consequence will be the same. Therefore, no substantial question of law is involved and hence, the tax case appeal stands dismissed.
Revenue's appeal dismissed
2018-TIOL-1401-HC-AHM-IT
PR CIT Vs GEETABEN CHANDULAL PRAJAPATI: GUJARAT HIGH COURT (Dated: July 10, 2018)
Income Tax - Sections 271(1)(c) & 275(1A).
Keywords: Fresh penalty order & Revised order.
A search and seizure operation was carried out at the residential premises of Shri Somabhai Ambalal Prajapati whereby, certain documents were seized. The searched person made a disclosure towards sale consideration of various plots of land. Based on the seized documents, it was found that the assessee was a co-owner of the land and hence, received an amount towards sale of such land however, no return was filed for AY 2006-07. Therefore, the related capital gain arising out of such sale remained untaxed. Accordingly, notice u/s 148 was issued to the assessee. In reply, the assessee had returned income and the same was assessed. Subsequently, the AO initiated penalty proceedings to which the assessee had filed a reply. The AO after considering the assessee's reply, passed an order dropping the penalty. Against the said assessment order, the assessee had filed an appeal before the CIT(A) which stood dismissed.
Thereupon, the AO had issued a fresh notice for imposing penalty u/s 271(1)(c) to which, the assessee had filed a reply. Meanwhile the existing AO was replaced by new AO and the new AO observed that the fresh notice was issued for fixing the date of hearing but, nobody appeared and no reply was filed. Consequently, the AO proceeded to impose penalty u/s 271(1)(c).
On appeal, the CIT(A) deleted the penalty levied u/s 271(1)(c). On further appeal, the Tribunal confirmed the order passed by the CIT(A).
On appeal, the High Court held that,
Whether in the absence of any revised assessment order which is required to be given effect to, fresh penalty proceeding by invoking the provisions of Sec. 275(1A) can be exercised - NO: HC
++ the CIT(A) simply dismissed the appeal and confirmed the order passed by the AO determining the assessee's total income at Rs.62,15,820/- and granted partial relief to the Revenue. Therefore, the assessment order was not in anyway modified by the CIT(A). Therefore, it can be said that there are no changed circumstances at all when the earlier penalty proceedings were dropped and thereafter when the fresh penalty proceedings were initiated. Therefore, in the facts and circumstances of the case, reliance placed upon Sec. 275(1A) is absolutely misplaced. On fair reading of Sec. 275(1A), it can be said that fresh penalty proceedings are permissible only with a view to give effect to the order of the higher Forum revising the assessment and a fresh penalty order can be passed and/or penalty can be imposed, enhancing, reducing or canceling the penalty or dropping the proceedings for the imposition of the penalty based on the assessment as revised by giving effect to such order of the CIT(A);
++ therefore, in a case where the assessment was not required to be revised pursuant to the order passed by the CIT(A) or the Appellate Tribunal or the High Court or the Supreme Court, as the case may be, the power u/s 275(1A) cannot be exercised and the fresh penalty proceedings cannot be initiated once earlier the penalty proceedings were dropped after considering the reply submitted by the assessee, as there is no revised assessment which is required to be giving effect to. Therefore, we are of the opinion that the CIT(A) as well as the Tribunal are justified in deleting the penalty imposed u/s 271(1)(c) faced with a situation that earlier the penalty proceedings were dropped after considering the reply submitted by the assessee and that thereafter the assessment was not required to be revised giving effect to the order passed by the CIT(A) as the CIT(A) simply confirmed the assessment order determining the income at Rs.62,15,820/. Thus, we confirm the order passed by the Tribunal deleting the penalty u/s 271(1)(c).
Revenue's appeal dismissed
2018-TIOL-1109-ITAT-CHD + Case Story
DCIT Vs SANGRUR INDUSTRIAL CORPORATION LTD: CHANDIGARH ITAT (Dated: June 18, 2018)
Income tax - Sections 68 & 271(1)(c)
Keywords - confirmation of parties - increase in shares - levy of penalty - unexplained share capital
The AO during the course of assessment proceedings noted that there was increase in the share capital of assessee company during the year by a sum of Rs. 47,65,600/-. Further, the ‘Securities Premium Account' had been shown at Rs. 6,67,18,400/- against nil amount during the preceding year. He, therefore, asked the assessee to furnish details of share capital account and the security premium account. The assessee furnished the required details and stated that 476560 numbers of shares of the face value of Rs. 10 each were allotted during the year under consideration at a premium of Rs. 140/- per share. The AO considered the details and confirmations received from the shareholders and asked to assessee to produce the persons involved. The assessee produced some of the persons on random basis from whom confirmations were received, and their statements were recorded. The AO however, noted that though the confirmations were received in most of the cases, however, no reply was received in some of the cases. Accordingly, he added a sum of Rs. 37,09,950/- on account of unexplained share capital u/s 68 and also initiated penalty proceedings u/s 271(1)(c).
On appeal, the CIT(A) deleted the penalty so levied by AO by observing that no case of concealment was made out simply because addition u/s 68 had not been challenged and, therefore, penalty u/s 271(1)(c) was not leviable.
On appeal, the ITAT held that,
Whether minimal insufficiency of evidence in respect of some shareholders, will not justify addition u/s 68, if almost maximum share capital receipts has been cross checked by AO through banks - YES: ITAT
++ the counsel for assessee has submitted that assessee had furnished all the details regarding share capital receipt which was cross checked by the AO and the assessee had been able to prove the source of deposits of about 95% of the amount. The assessee, however, could not provide confirmation only of 5% of the share allocation money received during the year. He submitted that the facts show that the assessee discharged the primary burden of proving the source of deposits / share application money. It was also explained to the AO that the assessee was public limited company with large number of shareholders and the share capital was received through banking channels. There was possibility that some of the letters sent to these persons for confirmations might not have reached to them because of numerous reasons such as shifting of their establishment, non-availability on a certain date etc. and that it was not a case of furnishing of inaccurate particulars of income or concealment of income but just a case of insufficiency of evidence in respect of some of the shareholders. Therefore, there is no reason to interfere in the order of the CIT(A) on this issue.
Revenue's appeal dismissed
2018-TIOL-1108-ITAT-DEL
DCIT Vs DLF UTILITIES LTD: DELHI ITAT (Dated: July 13, 2018)
Income Tax - Section 36(1)(iii).
Keywords: Business expenditure - Commercial expediency & Reasonableness.
The assessee-company, engaged in the business of real estate and other allied activities, filed return for the relevant AY and subsequently filed its revised return. However, the case of the assessee was selected for scrutiny and the AO noticed that the assessee had taken a loan for business purpose. However, the AO was of the opinion that the assessee couldn't prove nexus between such loan and its business. Accordingly, he disallowed the interest expenditure claimed by the assessee and made addition. On assessee's appeal, the CIT(A) deleted the addition.
On appeal, the Tribunal held that,
Whether the AO can disallow an expenditure by invoking provision of Section 36(1)(iii), if the same is for business purpose and incurred on basis of commercial expediency - NO: ITAT
++ the Tribunal in Assessment Year 2011-12 in assessee's own case relying on the decision of the Apex Court held that "an expenditure may not have been incurred under any legal objection but yet it is allowable as a business expenditure if it was incurred on the grounds of commercial expediency. We note that the Apex Court has also observed that the expression “commercial expediency” is an expression of wide import and includes such expenditure as a prudent businessman incurs for the purpose of business. The CIT (A) has also referred to the judgment of Delhi High Court in the case of CIT vs. Dalmia Cement (Pvt.) Ltd. wherein it had been held by the High Court that once it was established that there was a nexus between the expenditure and the purpose of business, the revenue cannot justifiably claim to put itself in the armchair of the businessman and take up the role to decide as to how much is reasonable expenditure having regard to the circumstances of the case. Thereafter, the CIT (A) has given a categorical finding that in the instant case the loans and advances have been given on account of commercial expediency. The Sr. Departmental Representative could not point out any factual inaccuracy in the findings of the Ld. CIT (A) nor could she point out how the order was not legally sustainable. Accordingly, we find no reason to interfere with the findings of the CIT (A) on this issue and we dismiss the grounds raised by the department;"
++ since the issue in the present year is identical to the Assessment Year 2008- 09 as well as 2011-12. Therefore, there is no need to interfere with the order of the CIT (A).
Revenue's appeal dismissed
