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Tax Cases Weekly Round-Up: 19 June To 25 June, 2022

Mariya Paliwala
26 Jun 2022 9:04 AM GMT
Tax Cases Weekly Round-Up: 19 June To 25 June, 2022
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Delhi High Court Right To File Objection To SCN Can't Be Denied Due To One Day Delay: Delhi High Court Case Title: Ernst & Young, US LLP Versus ACIT Citation: 2022 LiveLaw (Del) 586 The Delhi High Court bench of Justice Manmohan and Justice Manmeet Pritam Singh Arora ruled that the right to file an objection to the Show Cause Notice cannot be denied owing to a...

Delhi High Court

Right To File Objection To SCN Can't Be Denied Due To One Day Delay: Delhi High Court

Case Title: Ernst & Young, US LLP Versus ACIT

Citation: 2022 LiveLaw (Del) 586

The Delhi High Court bench of Justice Manmohan and Justice Manmeet Pritam Singh Arora ruled that the right to file an objection to the Show Cause Notice cannot be denied owing to a one-day delay.

Just 3 Days' Time Granted To Respond To The Income Tax Notice: Delhi High Court Remands The Matter Back To Assessing Officer After Setting Aside

Case Title: Shubham Thakral Vs ITO

The Delhi High Court bench of Justice Manmohan and Justice Manmeet Pritam Singh Arora has remanded the matter back to the assessing officer as just 3 days' time was granted to respond to the income tax notice.

Whether Income Tax Demand And Penalty Extinguished In CIRP? Delhi High Court Stays Demand Notice

Case Title: Indo Enviro Integrated Solution Limited Versus ACIT

The Delhi High​​ Court bench of Justice Manmohan and Justice Manmeet Pritam Singh stayed an income tax assessment order and consequential demand and notice of penalty, which were assailed on grounds of being in contravention of the order of the National Company Law Tribunal (NCLT).

Bombay High Court

Service Recipient Liable To Pay GST On Interest Amount Under Arbitral Award For Delayed Payment: Bombay High Court

Case Title: M/s Angerlehner Structural and Civil Engineering Company Versus Municipal Corporation of Greater Bombay

The Bombay High Court has held that the service recipient is liable to pay the GST to the government on interest under an arbitrary award and it can not be deducted from the dues payable to the service provider.

The single bench of Justice B.P. Colabawalla has observed that service tax is an indirect tax, and it is possible that it may be passed on. Therefore, an assessee can certainly enter into a contract to shift its liability for service tax.

Madras High Court

Deliberately Concealing The Income, Assessee Can Be Prosecuted :Madras High Court

The Madras High Court has ruled that an assessee can be prosecuted for willfully and deliberately concealing his income by not filing his income tax return within the stipulated time, even after the return belatedly submitted by the assessee is accepted by the revenue authorities on the basis of which an assessment order is passed.

The Single Bench of Justice G. Chandrasekharan observed that the concealment and suppression of income by the assessee came to light only after a survey operation was conducted and that the assessee had filed his return only after a statutory notice was issued to him under Section 148 of the Income Tax Act, 1961. Therefore, the Court held that the assessee had willfully and deliberately concealed his true income by not filing his income tax return within the stipulated time.

Madhya Pradesh High Court

Signature Of the Person Present Obtained in Panchanama, Madhya Pradesh High Court Refuses Re-measuring of Stock

Case Title: Sanjay Trading Company Versus State Of Madhya Pradesh

The Madhya Pradesh High Court has refused to direct the re-measuring of the stock of coal lying in the premises as the search team has obtained the signatures of the persons present while carrying out the Panchanama.

The division bench of Justice Sheel Nagu and Justice Maninder S. Bhatti perused the panchanama and observed that on the date of search itself, the amount of tax and a penalty were deposited by the petitioner as discrepancies were found in the stock, and thus there was no question of any kind of seizure.

Advance Ruling Can't Be Sought After The Receipt Of The Notice:Madhya Pradesh High Court

Case Title: M/s Saisanket Enterprise Versus Authority of Advance Ruling

The Madhya Pradesh High Court has ruled that the application under section 97 of the CGST Act for obtaining the advance ruling cannot be made before the Authority of Advance Ruling (AAR) during the pendency of the issue before the authority and after the receipt of the notice.

The division bench of Justice Vivek Rusia and Justice Amar Nath has observed that the petitioner approached the authority to obtain the advance ruling only after a search was conducted in which the evasion of SGST was found, which has resulted in the issuance of a show-cause notice. By the notice, the petitioner has been called upon to pay the remaining amount of GST/SGST liability and submit the reply. Since the petitioner has not paid GST at 18%, the issue is treated as pending before the authorities.

Gujarat High Court

Gujarat High Court Directs Dept. To Refund IGST On Ocean Freight Along With The Interest

Case Title: ADI Enterprises Versus Union Of India

The Gujarat High Court bench of Justice A.J. Desai and Justice Bhargav D. Karia has directed the department to refund IGST on ocean freight along with the interest.

Meghalaya High Court

Justifiable Doubts Regarding The Independence Of Empanelled Arbitrators Would Always Exist: Meghalaya High Court

Case Title: Jaguar Overseas Limited versus Union of India & Anr.

Citation: 2022 LiveLaw (Meg) 20

The High Court of Meghalaya has held that if a contractor/ tenderer does not accept the names of the possible arbitrators that are listed on the panel prepared by the tenderee, the panel cannot be enforced since there would always be justifiable doubts regarding the independence or impartiality of the empanelled arbitrators.

The Single Bench of Chief Justice Sanjib Banerjee held that even if a person is named as an arbitrator in the arbitration agreement entered into before the occurrence of the dispute, and whose appointment would otherwise fall foul of the Seventh Schedule, a party is not barred from objecting to the agreed arbitrator taking up reference. The Court added that the proviso to Section 12(5) of the Arbitration and Conciliation Act, 1996 (A&C Act) specifically refers to a post- dispute waiver of the applicability of the Seventh Schedule and not a pre-dispute waiver.

ITAT

Reassessment Order Can't Be Made Until There Has Been Service Of Notice: ITAT

Case Title: Naveen Tyagi Versus ITO

The Delhi Income Tax Appellate Tribunal (ITAT) consisting of C.N. Prasad (Judicial Member) has observed that reassessment cannot be made until there has been service of notice.

Other Income Tax Additions In Reassessment Proceedings Cannot Be Sustained If Addition on Primary Grounds Is Not Made: ITAT

Case Title: Shri Satyawan Versus ITO

The Delhi Bench of the Income Tax Appellate Tribunal (ITAT) consisting of C.N. Prasad (Judicial Member) has observed that if the Assessing Officer does not make any addition on the primary ground on the basis of which proceedings under Section 147 of the Income Tax Act were initiated, he cannot make other additions.

Notice Didn't Contain Categorical Indication Of Furnishing Inaccurate Particulars Or Concealment Of Particular Income: ITAT Quashes Penalty Proceedings

Case Title: DCIT Versus M/s. Minerals Managements Services India Pvt. Ltd.

The Delhi Bench of the Income Tax Appellate Tribunal (ITAT)has quashed the penalty proceedings as the notice issued to the assessee did not mention a categorical indication of specific violation in respect of furnishing inaccurate particulars or concealment of particular income.

The two-member bench headed by G.S. Pannu (President) and Anubhav Sharma (Judicial Member) have observed that in the assessment order and penalty order there is apparent ambiguity as to what was the basic ground for penalty. It was also established that the notice issued under section 274 of the Income Tax Act was defective as it was not clear as to which limb the penalty was levied.

ITAT Upholds Addition On Account Of Manipulation And Rigging Of Shares Via Penny Stock Company

Case Title: Aditya Saraf HUF Versus ITO

The Delhi Bench of the Income Tax Appellate Tribunal (ITAT), consisting of Saktijit Dey (Judicial Member), has upheld the addition on the grounds that there was an astronomical increase in the price of the shares due to price manipulation and rigging.

Section 41 Disallowance Can Only Be Made With Cogent Evidence Of Cessation Of Liability: ITAT Remands The Matter Back To AO

Case Title: Jain Peripherals Pvt. Ltd. Versus DCIT

The Delhi Bench of theIncome Tax Appellate Tribunal (ITAT)has held that the issue of the genuineness of the purchases will be applicable only if the purchases belong to the current year.

The two-member bench of Anubhav Sharma (Judicial Member) and Shamim Yahya (Accountant Member) has observed that if the department is of the opinion that purchases were made in earlier years but now the liability has ceased to exist, disallowance can only be made if cogent evidence is brought on record for cessation of liability.

Income Tax Penalty Can't Be Imposed For Inadvertent And Bonafide Mistake : ITAT

Case Title: M/s. Rane Industries Pvt. Ltd. Versus DCIT

The Pune Bench of the Income Tax Appellate Tribunal (ITAT)Income Tax Appellate Tribunal (ITAT), headed by R.S. Syal (Vice President) and Partha Sarathi Chaudhury (Judicial Member), has deleted the penalty on the grounds that the excess claim of deduction was made due to a bona fide and unintentional mistake.

CESTAT

Service Tax Cannot Be Levied On Reimbursement Of Expenses Incurred By The Service Provider: Reiterates CESTAT Delhi

Case Title: M/s Seher versus Commissioner of Service Tax, Delhi – II

The Delhi Bench of CESTAT has reiterated that service tax cannot be levied on reimbursement of expenses incurred by the service provider.

The Bench, consisting of Justice Dilip Gupta (President) and P.V. Subba Rao (Technical Member), held that since Rule 5 of the Service Tax (Determination of Value) Rules, 2006 has been held to be ultra vires by the Supreme Court in the case of Union of India versus Intercontinental Consultants and Technocrats Pvt. Ltd. (2018), the nature of services does not make any difference and that no service tax can be levied on reimbursements.

Assessee Entitled To Refund Of Education Cess And Krishi Kalyan Cess Lying Unutilized In CENVAT Account: CESTAT

Case Title: M/s. International Seaport Dredging Pvt. Ltd. Versus Commissioner of GST & Central Excise

The Chennai Bench of Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has ruled that the assessee is entitled to a refund of education cess and Krishi Kalyan Cess lying unutilized in the CENVAT account.

Unit Located In The SEZ Shall Be Treated As A Distinct Identity From Its Other Units: CESTAT Ahmedabad

Case Title: Tega Industries Limited versus C.C.E. & S.T.-Vadodara

The Ahmedabad Bench of CESTAT has held that if a unit of an enterprise is located in the Special Economic Zone (SEZ), the said SEZ Unit shall be treated as having a distinct identity from the other units of the said enterprise which are located outside the SEZ.

Therefore, the Single Bench of Judicial Member Ramesh Nair held that a claim for refund of the service tax paid by a SEZ Unit on the services received by it from its units located in a Domestic Tariff Area (DTA) could not be denied, even if the SEZ Unit was not a separate legal entity.

AAR

No GST Payable For Movement Of Goods Between Two Units Working Under Same GSTIN: Rajasthan AAR

Applicant's Name: M/s Mody Education Foundation

The Rajasthan Bench of Authority of Advance Ruling, consisting of Vikas Kumar Jeph and M.S. Kavia has ruled that GST is not payable on the movement of goods between two units working under the same GSTIN.

No GST Payable On Work Of 'Shaheed Dwar' At Banjarawala, Dehradun: Uttarakhand AAR

Applicant's Name: M/s Garhwal Mandal Vikas Nigam Limited

The Uttarakhand Authority of Advance Ruling (AAR) consisting of Anurag Mishra and Rameshvar Meena has ruled that no GST is payable on the work of 'Shaheed Dwar' at Banjarawala, Dehradun.

GST Not Payable On RCM Basis On Commission Paid To The Overseas Commission Agent: AAR

Applicant's Name: M/s. Dry Blend Foods Pvt Ltd

The Uttarakhand Authority of Advance Ruling (AAR)consisting of Anurag Mishra and Rameshvar Meena has ruled that GST is not payable on the basis of the Reverse Charge Mechanism (RCM) on the commission paid to the Overseas Commission Agent.

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