Just a moment...

⚠✕
❮ Top
☎ Help
☰
×

By creating an account you can:

Logo TaxTMI
Keyword Search :
AI Tools : New
Ask tax questions in natural language. Powered by AI trained on the TaxTMI legal database. Use AI Tools ➞
Call Us / Help / Feedback✕

Contact Us At :

✉ E-mail: [email protected]

✆ Call / WhatsApp at: +91 99117 96707

For more information, Check Contact Us

FAQs :

To know Frequently Asked Questions, Check FAQs

Most Asked Video Tutorials :

For more tutorials, Check Video Tutorials

Submit Feedback/Suggestion :

Email :
Please provide your email address so we can follow up on your feedback.
Category :
Description :
Min 15 characters0/2000
Make Most of Text Search ✕
  1. Checkout this video tutorial: How to search effectively on TaxTMI.
  2. Put words in double quotes for exact word search, eg: "income tax"
  3. Avoid noise words such as : 'and, of, the, a'
  4. Sort by Relevance to get the most relevant document.
  5. Press Enter to add multiple terms/multiple phrases, and then click on Search to Search.
    6. Text Search
  6. The system will try to fetch results that contains ALL your words.
  7. Once you add keywords, you'll see a new 'Search In' filter that makes your results even more precise.
    8. Text Search
╳
Add to...
You have not created any category. Kindly create one to bookmark this item!
✕
Create New Category
Hide
Title :
Description :
❮❮ Hide
❮ Default View
Expand ❯❯
Close ✕
🔎 TMI Notes - Adv. Search ❯
TEXT SEARCH:

Press 'Enter' to add multiple search terms. Rules for Better Search

Search In:
Main Text + AI Text ❯
  • Main Text
  • Main Text + AI Text
  • AI Text
Law:
---- All Laws----❯
  • ---- All Laws----
  • Benami Property
  • Bill
  • Central Excise
  • Companies Law
  • Customs
  • DGFT
  • FEMA
  • GST
  • GST - States
  • IBC
  • Income Tax
  • Indian Laws
  • Money Laundering
  • SEBI
  • SEZ
  • Service Tax
  • VAT / Sales Tax
Types:
---- All Types ---- ❯
  • ---- All Types ----
  • Act Rules
  • Case Laws
  • Circulars
  • Manuals
  • News
  • Notifications
Sort By: ?
In Sort By 'Default', exact matches for text search are shown at the top, followed by the remaining results in their regular order.
RelevanceDefaultDate
    NewsBills
    Discontinuance of Income-tax Settlement Commission
    NewsBills
    Reduction of time limit for completing assessment
    NewsBills
    Rationalisation of the provision of Charitable Trust and Institutions to eliminate possibility of do...
    NewsBills
    Taxation of proceeds of high premium unit linked insurance policy (ULIP)
    NewsBills
    Rationalisation of the provision of slump sale
    NewsBills
    Rationalisation of provision of transfer of capital asset to partner on dissolution or reconstitutio...
    NewsBills
    Provisional attachment in Fake Invoice cases
    NewsBills
    Rationalisation of the provisions of Equalisation Levy
    NewsBills
    Depreciation on Goodwill
    NewsBills
    Rationalisation of the provision relating to processing of returned income and issuance of notice un...
    NewsBills
    Adjudicating authority under the PBPT Act
    NewsBills
    Rationalisation of the provision of presumptive taxation for professionals under section 44ADA
    NewsBills
    Clarification regarding the scope of Vivad se Vishwas Act, 2020
    NewsBills
    Definition of the term “Liable to tax”
    NewsBills
    Income Declaration Scheme (IDS) amendment
    NewsBills
    Tax Deduction at Source (TDS) on purchase of goods
    NewsBills
    TDS/TCS on non filer at higher rates
    NewsBills
    Taxability of Interest on various funds where income is exempt
    NewsBills
    CUSTOMS
    NewsBills
    AMENDMENTS IN THE CUSTOMS ACT, 1962
❮
❯
❯❯
MaximizeMaximizeMaximize
0 / 200
Expand Note
Add to Folder

No Folders have been created

    +

    Are you sure you want to delete "My most important" ?

    NOTE:

    Open Link
    Notes
    Showing Results for :
    Reset Filters
    Results Found:
    Show All SummariesHide All Summaries
    NewsBills
    Discontinuance of Income-tax Settlement Commission
    Show AI Summary
    Discontinuance of Income-tax Settlement Commission: pending settlement cases transferred to Interim Boards with inherited powers.
    Income-tax Settlement Commission is discontinued and pending settlement applications will be handled by one or more Interim Boards of Settlement composed of three senior officers; the Interim Boards inherit the Commission's powers mutatis mutandis for disposal and rectification of orders, pending applications are deemed valid where invalidity was not declared, assessees may withdraw applications within a prescribed period causing proceedings to abate with specified exclusions to limitation and use of material, and the Central Government may notify a scheme to regulate settlement of pending applications and adapt Act provisions for transitional efficiency.
    NewsBills
    Reduction of time limit for completing assessment
    Show AI Summary
    Reduction of assessment time-limit shortens statutory window for completing income-tax assessments under faceless assessment reforms.
    The Finance Bill reduces the statutory time limit for completion of income-tax assessment proceedings, further shortening the window for passing assessment orders in scrutiny cases. The amendment is justified by the operational efficiencies of the Faceless Assessment Scheme-characterised by electronic, team-based, jurisdiction-less procedures-and aims to reduce taxpayer compliance burden and enable earlier detection of revenue leakages; it takes effect from 1 April, 2021.
    NewsBills
    Rationalisation of the provision of Charitable Trust and Institutions to eliminate possibility of do...
    Show AI Summary
    Double deduction prevention: corpus and loan-funded applications excluded unless reinvested or repaid from prior-year income.
    Voluntary contributions specifically directed to form part of corpus must be invested or deposited in prescribed modes maintained separately; application from corpus and from loans or borrowings will not qualify as application for computing the mandatory application threshold, except where reinvestment to corpus or repayment of loans from previous year's income is deposited into prescribed modes, which will then be allowed as application in that previous year. No set-off or allowance of excess application from years before the previous year shall be permitted.
    NewsBills
    Taxation of proceeds of high premium unit linked insurance policy (ULIP)
    Show AI Summary
    Exemption limits for ULIPs tightened, with excluded policies taxed as capital gains and included under equity-oriented fund rules.
    Amendments exclude from the exemption under clause (10D) of section 10 those ULIPs issued on or after 1 February 2021 whose annual premium for any policy year (or aggregate premium across multiple ULIPs held by a person) exceeds the prescribed threshold, while excluding death proceeds. Such excluded ULIPs are classified as capital assets, gains on redemption are to be taxed as capital gains under a new section 45(1B) with rules for computation, and will be treated as equity oriented funds for section 112A and 111A purposes. STT is made applicable on maturity or partial withdrawal of such ULIPs.
    NewsBills
    Rationalisation of the provision of slump sale
    Show AI Summary
    Slump sale definition expanded to include all forms of transfer, extending scope of capital gains computation.
    Amendment expands the scope of the slump sale definition so that any mode of transfer included in the statutory definition of "transfer" can constitute a slump sale for capital gains computation; this codifies the judicial principle that transactions in substance amounting to a sale - including those with non monetary consideration or alternative legal forms - fall within the slump sale regime and aims to prevent structuring to defeat the provision.
    NewsBills
    Rationalisation of provision of transfer of capital asset to partner on dissolution or reconstitutio...
    Show AI Summary
    Capital gains on dissolution: distributions in excess of capital account treated as entity income and valued at fair market value.
    Where a partner or member receives a capital asset on dissolution or reconstitution, profit or gain on that receipt is chargeable as capital gains and treated as income of the specified entity in the year of receipt, with fair market value on receipt deemed full consideration. The recipient's capital-account balance is calculated excluding increases from revaluation or self-generated goodwill/assets. Money or other assets received in excess of the capital-account balance are similarly taxed as capital gains, with the capital-account balance deemed the cost of acquisition.
    NewsBills
    Provisional attachment in Fake Invoice cases
    Show AI Summary
    Provisional attachment powers expanded to permit attachment during pending false-entry penalty proceedings when large penalties are likely.
    Provisional attachment permits the Assessing Officer, with prior approval from designated senior tax authorities, to attach an assessee's property for six months to protect revenue, revocable on furnishing a bank guarantee which may be invoked if tax demand remains unpaid. The Finance Bill proposes to amend this provision to allow the Assessing Officer to exercise attachment powers during pending penalty proceedings for false or omitted entries where a high-value penalty is likely to be imposed.
    NewsBills
    Rationalisation of the provisions of Equalisation Levy
    Show AI Summary
    Equalisation levy broadened to cover sales and services regardless of operator ownership, with treaty-taxable royalties excluded.
    Amendments clarify that consideration chargeable to equalisation levy excludes amounts taxable as royalty or fees for technical services under a notified tax treaty; define e-commerce supply or services to include online acceptance of offers, purchase orders, payment and supply/provision (wholly or partly); broaden consideration to cover sale of goods irrespective of operator ownership and provision of services irrespective of whether provided or facilitated by the operator. These changes operate retrospectively from 1 April 2020, and section 10(50) is adjusted to the same definition and to exclude treaty-taxable royalty or FTS, effective for assessment years from 2021-22.
    NewsBills
    Depreciation on Goodwill
    Show AI Summary
    Depreciation on goodwill disallowed; purchase price treated as cost for capital gains with adjustment for prior depreciation.
    The proposal removes goodwill of a business or profession from the class of assets eligible for depreciation by excluding it from the definition of block of assets and from assets covered by section 32, provides transitional rules for blocks and capital gains where depreciation was earlier obtained, and preserves purchase price as cost of acquisition for capital gains subject to reduction by any depreciation claimed prior to the operative year.
    NewsBills
    Rationalisation of the provision relating to processing of returned income and issuance of notice un...
    Show AI Summary
    Statutory time limits shortened for intimation and notices after return filing, and audit-report income adjustments formalised.
    Amendments to section 143 revise processing of returned income to allow adjustments for income increases indicated in audit reports not previously accounted for, and provide consequential changes reflecting earlier amendments to relief provisions. The statutory time limit for issuing intimations under sub section (1) is shortened to nine months from the end of the relevant financial year, and the time limit for issuing notices under sub section (2) is shortened to three months; amendments take effect from 1 April 2021.
    NewsBills
    Adjudicating authority under the PBPT Act
    Show AI Summary
    Adjudicating authority under PBPT Act designated to SAFEMA Competent Authority; limitation period for orders extended to September.
    The Finance Bill designates the Competent Authority under SAFEMA as the Adjudicating Authority under the PBPT Act to commence functions from 1st July, 2021, replacing the interim discharge by the PMLA Adjudicating Authority. It also extends the time limit under sub section (7) of section 26 of the PBPT Act so that any order deadline expiring between 1st July, 2021 and 29th September, 2021 will be extended to 30th September, 2021.
    NewsBills
    Rationalisation of the provision of presumptive taxation for professionals under section 44ADA
    Show AI Summary
    Presumptive taxation for professionals clarified: LLPs excluded while individuals, HUFs and partnership firms remain eligible under existing conditions.
    The amendment clarifies that the presumptive taxation provision under section 44ADA applies to residents engaged in specified professions who are individuals, Hindu undivided families or partnership firms, but excludes Limited Liability Partnerships; existing eligibility conditions including the gross receipts threshold and the deemed proportion of profits remain unchanged, and the amendment is effective from 1 April 2021 for the assessment year 2021 22 onward.
    NewsBills
    Clarification regarding the scope of Vivad se Vishwas Act, 2020
    Show AI Summary
    Scope of Vivad se Vishwas Act clarified to exclude cases settled under IT settlement mechanism, with retrospective amendment.
    The Finance Bill clarifies that the Vivad se Vishwas Act, 2020 does not cover taxes arising from settlements under Chapter XIX-A of the Income-tax Act; amendments to the definitions of "appellant," "disputed tax," and "tax arrear" in VsV are proposed to expressly exclude Chapter XIX-A cases and to operate retrospectively from 17 March 2020.
    NewsBills
    Definition of the term “Liable to tax”
    Show AI Summary
    Liable to tax defined to include existence of tax liability under any country's law, including where exemption later granted.
    The proposal inserts clause (29A) into section 2 to define "liable to tax" as a liability to tax on a person under the law of any country, expressly including cases where an exemption is provided after imposition of that liability; the definition is to apply from the statutory effective date and to subsequent assessment years.
    NewsBills
    Income Declaration Scheme (IDS) amendment
    Show AI Summary
    Refund of excess tax under Income Declaration Scheme now payable without interest to specified persons, retrospectively effective.
    The proviso to section 191 of the Finance Act, 2016 is amended to permit refund of excess tax, surcharge or penalty paid pursuant to declarations under the Income Declaration Scheme, 2016 to a specified class of persons without payment of any interest; this amendment is to take effect retrospectively from 1st June, 2016. Section 187's deeming provision that a declaration is invalid if the tax, surcharge and penalty are not paid by the specified date remains in place.
    NewsBills
    Tax Deduction at Source (TDS) on purchase of goods
    Show AI Summary
    TDS on purchase of goods: new low-rate withholding applies to buyers exceeding turnover threshold and high-value purchases.
    Buyers whose turnover in the preceding financial year exceeds the turnover threshold must deduct tax at a very low prescribed rate on purchases from a seller where aggregate purchases from that seller exceed the specified high-value threshold in the previous year; Central Government may exempt persons by notification. Transactions subject to other withholding or collection are excluded except where concurrent collection would arise - then the purchase withholding applies. Board-issued guidelines, binding on authorities and deductors, and a higher rate where PAN is not provided, are provided for.
    NewsBills
    TDS/TCS on non filer at higher rates
    Show AI Summary
    Higher withholding for non-filers: TDS and TCS to be levied at enhanced prescribed rates on specified non filers.
    A special withholding regime imposes enhanced TDS and TCS rates on a "specified person" who failed to file returns for the two relevant prior assessment years after the filing deadline and whose aggregate TDS/TCS in each year meets a threshold; the TDS rate is the highest of twice the statutory rate, twice the rate in force, or a fixed base rate, and the TCS rate is the higher of twice the statutory rate or the fixed base rate. PAN based higher rates interact so that the greater rate applies; non residents without a permanent establishment are excluded.
    NewsBills
    Taxability of Interest on various funds where income is exempt
    Show AI Summary
    Exemption cap on provident fund interest limits tax-free interest for high contributions, effective for future assessment years.
    Clauses (11) and (12) of section 10 are amended by a proviso excluding from exemption the interest accrued in a previous year to the extent it relates to contributions exceeding the prescribed monetary threshold in that year, with computation rules to be prescribed and the amendment applying prospectively to specified assessment years.
    NewsBills
    CUSTOMS
    Show AI Summary
    Customs duty definition clarified under Finance Bill, with amendments generally commencing on enactment unless otherwise stated.
    Finance Bill, 2021 defines Basic Customs Duty as the customs duty levied under the Customs Act, 1962 and states that amendments made through the Bill will come into effect on the date of its enactment unless otherwise specified, with clause numbers shown in square brackets to indicate relevant provisions.
    NewsBills
    AMENDMENTS IN THE CUSTOMS ACT, 1962
    Show AI Summary
    Common portal enables electronic filing, service and automated amendments in customs procedures, with time limits and penalty enhancements.
    A common portal is introduced to enable electronic registration, filing of bills of entry and shipping bills, submission of prescribed documents, payment of duty and electronic service of orders; the customs automated system may permit risk based amendments and importer/exporter actions on the portal. Conditional exemptions will cease on a prescribed future 31st March unless extended, a two year (plus one year extension) limit is prescribed for proceedings culminating in a section 28 notice, bill of entry filing timing is tightened, pre trial disposal of seized gold requires Commissioner (Appeals) certification, inventories certified by that Commissioner gain evidentiary weight, and new confiscation and penalty provisions target wrongful refund claims and fraudulent invoices.

    TMI Notes

    Back

    All TMI Notes

    Showing Results for :
    Reset Filters
      No Records Found

      TMI Notes

      Home› TMI Notes › Indian Laws › Case-Laws › Category › This
      Back

      All TMI Notes

      whatsappJoin Channel
      Showing Results for : Reset Filters
      Indian Laws

      Ensuring Fair Procedure before declaring Fraud in Bank Loan: Providing Relevant Documents and Opportunity to be Heard

      10 August, 2024

      Contents
      Acts
      Plus +
      Summary
      Note

      Note

      -

      Bookmark

      Print

      Print

      Print Options

      Deciphering Legal Judgments: A Comprehensive Analysis of Case Law

      Reported as:

      2024 (5) TMI 1323 - DELHI HIGH COURT

      Introduction

      The judgement under analysis pertains to a writ petition filed by an ex-director and guarantor of a company (hereinafter referred to as "the Petitioner") against various banks (hereinafter referred to as "the Respondents"). The Petitioner challenged the Show Cause Notices (SCNs) issued by the Respondents for declaring the account of the company as 'Fraud'. The crux of the matter revolved around the alleged non-compliance with the agreed terms of the loan documents and various irregularities in the loan account, leading to suspicion of fraudulent activities.

      Arguments Presented

      Petitioner's Arguments

      The Petitioner contended that the SCNs were issued without providing the requisite documents, which formed the basis of the allegations. The Petitioner argued that the absence of such documents rendered it impossible to submit a proper reply to the SCNs. The Petitioner highlighted the following key points:

      Respondents' Arguments

      The Respondents contended that the requisite documents had already been provided to the Petitioner. The lead bank, State Bank of India (SBI), submitted that it was ready to grant an inspection of the company's records available with it. Additionally, the Respondents argued that:

      • No final decision had been taken by the banks, and only SCNs had been issued at this stage.
      • The judgments relied upon by the Petitioner were not applicable to the present case, and they did not provide for granting a personal hearing to the Petitioner.
      • The Respondents relied on the Supreme Court's order in Rajesh Agarwal's case to contend that granting a personal hearing by the banks was not mandatory.

      Discussions and Findings of the Court

      The Court discussed the settled principles of law regarding the applicability of the Principles of Natural Justice and the requirement to provide relevant documents forming the basis of a SCN. The Court relied on the Supreme Court judgments in Kanwar Natwar Singh & Kanwar Jagat Singh Versus Directorate of Enforcement - 2010 (10) TMI 156 - Supreme Court and T. Takano v. Securities and Exchange Board of India to emphasize the importance of disclosing relevant materials to enable an effective reply.

      The Court also referred to the Supreme Court's decision in State Bank of India v. Rajesh Agarwal, which held that the classification of an account as 'Fraud' under the Reserve Bank of India's Master Directions on Frauds leads to a credit freeze for the borrower. Consequently, the Principles of Natural Justice must be followed, and the borrower should be given an opportunity to be heard before classifying the account as fraud.

      Analysis and Decision by the Court

      The Court acknowledged that fair procedure and the Principles of Natural Justice require the provision of requisite documents forming the basis of a SCN to enable the concerned party to submit a proper reply. Failure to provide relevant documents would render the entire procedure of issuing a SCN and filing a reply an empty formality.

      The Court emphasized that the relevant documents forming the basis of the SCN must be provided to the concerned party to enable them to raise an effective defense. Denying this fundamental right by not providing the requisite documents would violate the Principles of Natural Justice.

      Considering the submissions made by the lead bank (SBI) and the Petitioner's counsel regarding the availability of the company's records with the RP, the Court issued the following directions:

      1. The Petitioner and/or his authorized representative shall be allowed to inspect the records of the company available with SBI (the lead bank).
      2. The Petitioner and/or his authorized representative shall also be allowed to inspect the records of the company available with the RP.
      3. Upon inspection, the Petitioner shall state the specific documents required from the company's records that form the basis of the SCNs. These documents shall be provided to the Petitioner.
      4. The cost of providing copies of the relevant documents shall be borne by the Petitioner.
      5. The process of inspection, stating the specific documents, and providing the relevant documents shall be completed within specified timelines.
      6. Upon receipt of the documents, the Petitioner shall file a reply to the respective SCNs within a specified timeline.
      7. The Petitioner is at liberty to request a personal hearing from the respective banks, which shall be considered accordingly.

      The Court disposed of the writ petition in terms of the aforesaid directions.

      Doctrine or Principle Discussed

      The primary doctrine discussed in the judgement is the Principles of Natural Justice, specifically the principle of audi alteram partem (hear the other side). The Court emphasized the importance of providing relevant documents and an opportunity to be heard before taking an adverse decision against a party.

      Comprehensive Summary

      The judgement dealt with a writ petition challenging Show Cause Notices (SCNs) issued by various banks for declaring the account of a company as 'Fraud'. The primary issue was the alleged non-compliance with the agreed terms of the loan documents and various irregularities in the loan account, leading to suspicion of fraudulent activities.

      The Petitioner, an ex-director and guarantor of the company, argued that the SCNs were issued without providing the requisite documents forming the basis of the allegations. The Petitioner contended that the absence of such documents rendered it impossible to submit a proper reply, violating the Principles of Natural Justice.

      The Court discussed the settled principles of law regarding the applicability of the Principles of Natural Justice and the requirement to provide relevant documents forming the basis of a SCN. The Court relied on various Supreme Court judgments, including T. Takano v. Securities and Exchange Board of India and State Bank of India v. Rajesh Agarwal, to emphasize the importance of disclosing relevant materials and providing an opportunity to be heard before taking an adverse decision.

      The Court acknowledged that fair procedure and the Principles of Natural Justice require the provision of requisite documents forming the basis of a SCN to enable the concerned party to submit a proper reply. Failure to provide relevant documents would render the entire procedure an empty formality.

      Considering the submissions made by the lead bank (SBI) and the Petitioner's counsel regarding the availability of the company's records with the Resolution Professional (RP), the Court issued directions for the Petitioner and/or his authorized representative to inspect the records of the company available with SBI and the RP. The Petitioner was directed to state the specific documents required from the company's records that formed the basis of the SCNs, and these documents were to be provided to the Petitioner within specified timelines.

      The Court also directed that upon receipt of the documents, the Petitioner shall file a reply to the respective SCNs within a specified timeline. Additionally, the Petitioner was granted the liberty to request a personal hearing from the respective banks, which shall be considered accordingly.

      The Court disposed of the writ petition in terms of the aforesaid directions, upholding the Principles of Natural Justice and the right to access relevant documents and be heard before an adverse decision is taken.

       

       

      Full Text:

      2024 (5) TMI 1323 - DELHI HIGH COURT

      Topics

      ActsIncome Tax
      Next ➔