No search proceedings against client due to seizure of CA's hard disk containing ITR data of client

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3 INCOME TAX No search proceedings against client due to seizure of CA's hard disk containing ITR data of client Delhi HC lays down principles to avoid vexatious proceedings u/s 153C against person other than person searched Court rules on relevant date for application of sec 153A where AO of searched is also AO of the other person If AO of the searched person and the other person is one and the same, date on which satisfaction is recorded by the AO that assets/documents belong to the other person is the relevant date for application of section 153A Hard disk seized from CA with data pertaining to ITR filing of client doesnt "belong to" client for invoking sec 153C The hard disk recovered from computer belonging to CA during search on CA's premises containing workings supporting client's ITR filing cannot be said to "belong to the client". Therefore, section 153C cannot be invoked against the client based on such seized hard disk. Merely because the data pertained to the client, the hard disk seized from CA cannot be said to belong to the client If is apparent that assets seized from another person do not pertain to assessee, AO cann't commence enquiry u/s 153C It is not necessary for AO to be satisfied that assets/documents seized during search of another person reflect assessee's undisclosed income before commencing an enquiry u/s 153C. However, it would be impermissible for AO to commence an enquiry u/s 153C if it is apparent that assets/documents seized from another person do not pertain to assessee, AO cann't commence enquiry u/s 153C (2015] 62 taxmann.com 391 (Delhi) HIGH COURT OF DELHI Commissioner of Income-tax.-7 vs.rrj Securities Ltd 1

4 Amount received by partner on his retirement is not chargeable to tax as capital gains The assessee, a partner in a firm, received Rs. 66 lakhs over and above his capital contribution on his retirement from the firm. The assessee claimed that the said sum was a capital receipt not chargeable to tax. However, the AO held that the retirement had resulted in a relinquishment of his pre-existing rights in the partnership firm and, therefore, the same was in the nature of capital gain on transfer of goodwill and liable to tax under s. 45 read with s. 2(47)(I (ii) of the Act. The CIT(A) and Tribunal (order not available but operative portion is reproduced in Rajnish M Bhandari, attached) reversed the AO on the ground that when a partner retires from the firm and receives his share of an amount calculated on the value of the net partnership assets including goodwill of the firm, there is no transfer of interest of the partner in the goodwill, and no part of the amount received is assessable as capital gain u/s 45 of the Act. It was also held that the decision of the Bombay High Court in Tribhuvandas G Patil 115 ITR 95 followed in N A Mody 162 ITR 420 has been reversed by the Supreme Court in Tribhuvandas G Patel 236 ITR 515 (SC) and that this legal position had been noted in Prashant S Joshi 324 ITR 154 (Bom). On appeal by the department to the High Court HELD dismissing the appeal: The Tribunal has correctly referred to the fact that N.A. Mody 162 ITR 420 (Bom) followed Tribhuvandas G. Patel 115 ITR 95 and that the same has been reversed by the Apex Court in Tribhuvandas G. Patel 263 ITR 515. This Court in Prashant S. Joshi 324 ITR 154 (Bom) has also referred to the decision of Tribuvandas G. Patel rendered by this Court and its reversal by the Apex Court. Moreover, the decision of this Court in Prashant S. Joshi placed reliance upon the decision of the Supreme Court in CIT v/s. R. Lingamallu Rajkumar 247 ITR 801 wherein it has been held that amounts received on retirement by a partner is not subject to capital gains tax Note: For the impact of s. 45(4) on retirement of partner/ dissolution of firm see the Full Bench decision in CIT vs. M/s Dynamic Enterprises (Kar) 2

5 Mere making of wrong claim in the return of income would not amount to furnishing inaccurate particulars of income for levy of penalty u/s 271(1)(c) Income Tax Appellate Tribunal (ITAT) Mumbai in a recent judgment, followed the Supreme Court and held mere making of wrong claim in the return of income would not tantamount to furnishing of inaccurate particulars of income for levy of penalty u/s 271(1) Case Details: ITA No /MUM/2015 ; AY Anurag Toshniwal / Arun Toshniwal (Appellants) vs DCIT (Respondent) Date of Order: Brief Facts of the Case: In both the cases the facts were quite similar. In ITA-211, the appellant filed his return of income declaring total income at Rs.88,33,904/- which comprised of income from salary from M/s. Toshbro Medicals Pvt. Ltd. and Chemito Technologies Pvt. Ltd. along with income from house property, income from capital gains and income from other sources. The assessment under section 143(3) of the Act was completed whereby the total income was assessed at Rs.5,88,33,904/-. The difference between the reported and the assessed income of Rs.5.00 crores was on account of Non-compete fees received by the assessee from M/s. Termo Electron LLS India Pvt. Ltd. In the return of income assessee had declared the said sum of Rs.5.00 crores as a long term capital gain (LTCG) against which he claimed deduction under section 54EC to the tune of Rs lacs and the balance amount of Rs.4.50 crores was deposited in the capital gain saving account. The Assessing Officer (AO) differed with the assessee and held that the Non-Compete Fee was liable to be treated as an income under the head profits or gains from business or profession on the strength of section 28(va) of the Income Tax Act, This stand of the AO had since been upheld by the CIT(A) as well as by the Tribunal. Subsequently, the AO held the assessee guilty of concealment/furnishing of inaccurate particulars of income within the meaning of section 271(1)(c). As per AO, the assessee had willfully claimed the Non-Compete fee as LTCG to avoid taxability of business income resulting in loss of revenue. CIT(A) also affirmed the penalty. Contentions of the assesses The assessee argued that assessee had made complete disclosure in the return of income filed and therefore there was no concealment. Secondly, the addition made by AO by invoking section 28(va) was merely based on an interpretation of law. According to the appellant, at the time of filing of ITR the decision of Mumbai Bench of the Tribunal in the case of Mrs. Hami Aspi Balsara Vs. ACIT, 126 ITD 100(Mum) supported the stand of the assessee and, therefore, the claim made by assessee was a bona-fide claim. It was pointed out that it is a case where a claim made in the return of income had been found to be unsustainable and, no penalty under section 271(1)(c) of the Act is leviable having 3

6 regard to the judgment of the Hon ble Supreme Court in the case of CIT vs. Reliance Petro Products Ltd., 322 ITR 158(SC). Also that there was no variation in the amount of Non-Compete fee disclosed and the amount assessed and merely the head of income had changed, which does not justify the levy of penalty which was supported by the judgment of the Hon ble Bombay High Court in the case of CIT vs. Bennet Coelman & Co. Ltd., Income Tax Appeal (LOD) No of 2012 dated 26/2/2013. Excerpts from the ITAT Judgment: the claim made by the assessee in his return of income to the effect that the Non-Compete fee and Non-Solicitation fee received from M/s. Termo Electron LLS India Pvt. Ltd. was a long term capital gain, cannot be construed to be non-bonafide or fanciful, because it was supported by the decision of the Tribunal in the case of Mrs. Hami Aspi Balsara(supra), which was prevailing at the relevant time. In fact the Ld. Representative for the assessee also referred to another decision of the Tribunal in the case of Savita Mandhana in ITA No.3900/Mum/2010 for Assessment Year dated 7/10/2011, wherein also the proposition laid down by the Tribunal in the case Mrs. Hami Aspi Balsara(supra) has been affirmed. The decision of the Special Bench of the Tribunal in the case of Dr. V.V. Raju (supra), which has disagreed with the earlier rulings has been pronounced on 13/02/2012, which is much after the return of income filed by the assessee on 30/07/2009. Therefore, in our view, the return of income filed by the assessee claiming the impugned sum as a long term capital gain cannot be construed as a claim made to avoid taxability of the business income, as charged by the Assessing Officer in the impugned penalty order. As per Hon ble Supreme Court, where no information given in the return of income is found to be incorrect or inaccurate, the assessee cannot be held guilty of furnishing inaccurate particulars. As per the Hon ble Supreme Court, mere making of wrong claim in the return of income would not tantamount to furnishing of inaccurate particulars of income... sustainable in law. As per the authoritative pronouncement of the Hon ble Supreme Court in the case of Reliance Petro Products Ltd. (supra), such a fact-situation does not amount to furnishing of inaccurate particulars regarding income within the meaning of section under 271(1)(c) of the Act. Thus, on this aspect itself the penalty is unsustainable. The Hon ble Bombay High Court in the case of M/s. Bennett Coleman & Co. Ltd.(supra) held that where there is only a change of head of income and in the absence of facts to show that the claim of the assessee was not bonafide penalty under section 271(1)(c) of the Act is not maintainable. Before parting, we may refer to the reliance placed by the CIT(A) as well as by the Ld. Departmental Representative on the judgment of Hon ble supreme Court in the case of Mak Data P. Ltd.(supra) to justify the levy of penalty in the present case. We have carefully perused the judgment of Hon ble Supreme Court and find that the said decision has been rendered under different facts and circumstances and the same is not applicable to the facts of the present case. 4

7 CBDT Directive Regarding Paperless Assessment Proceedings In order to improve the taxpayer services, enhance the efficiency and to usher in a paperless environment for carrying out the assessment proceedings, CBDT has decided to initiate the concept of using for corresponding with taxpayers and sending through s the questionnaires, notice etc. at the time of scrutiny proceedings and getting responses from them using the same medium on a pilot basis. This would eliminate the necessity of visiting the Income-tax Offices by the taxpayers, particularly in smaller cases, involving limited issues and where taxpayer is able to provide details required by the AO without necessitating his physical presence CBDT clarifies that due-date for obtaining and E-filing Tax Audit Report u/s 44AB for AY has also been extended till F.No.225/207/2015/ITA.II Government of India Ministry of Finance Department of Revenue Central Board of Direct Taxes North Block, ITA. II Division New Delhi dated the 29th October, 2015 Corrigendum with reference to order under Section 119 of the Income-tax Act, 1961 dated Vide order under section 119 of the Income-tax Act, 1961 ('Act') dated infile of even number, Central Board of Direct Taxes had extended the 'due-date' for E filing Return of Income from 30th September, 2015 to 31st October, 2015 in case of income-tax assessees which are covered under clause (a) of Explanation 2 to sub-section (1) of section 139 of the Act. In this regard, clarification has been sought whether the said extension is also applicable to the requirement to obtain and furnish 'reports of audit' under various provisions of the Act. It is hereby clarified that the "due-date" for obtaining and E-filing reports of audit under various provisions of the Act pertaining to such Returns of income also stands extended till vide the said order. (Ankita Pandey) DCIT-OSD (ITA.II) 5

8 Setting Up of Justice Easwar Committee with a view to simplify the provisions of the Income Tax Act, First Batch of Recommendations by Government of India Ministry of Finance Department of Revenue Central Board of Direct Taxes PRESS RELEASE New Delhi, 27th October, 2015 Subject: SETTING UP OF COMMITTEE WITH A VIEW TO SIMPLIFY THE PROVISIONS OF THE INCOME TAX ACT, 1961 With a view to simplify the provisions of the Income Tax Act, 1961, a Committee has been constituted with the following composition: (i) Justice R.V. Easwar, (Retd.), former Judge, Delhi High Court and former President, ITAT Chairman (ii) Shri V.K. Bhasin, former Law Secretary Member (iii) Shri Vinod Jain, Chartered Accountant Member (iv) Shri Rajiv Memani, Consultant Member (v) Shri Ravi Gupta, Sr. Advocate Member (vi) Shri Mukesh Patel, Chartered Accountant Member (vii) Shri Ajay Bahl, Consultant Member (viii) Shri Pradip P. Shah, Investment Adviser Member (ix) Shri Arvind Modi, IRS (IT:81009) Member (x) Dr. Vinay Kumar Singh, IRS (IT:95006) Member 2. The Terms of Reference (ToR) of the Committee shall be as follows: (i) To study and identify the provisions/phrases in the Act which are leading to litigation due to different interpretations; (ii) To study and identify the provisions which are impacting the ease of doing business; (iii) To study and identify the areas and provisions of the Act for simplification in the light of the existing jurisprudence; (iv) To suggest alternatives and modifications to the existing provisions and areas so identified to bring about predictability and certainty in tax laws without substantial impact on the tax base and revenue collection; and 3. The Committee shall set its own procedures for regulating its work. The Committee can also work in Sub-Groups and the draft prepared by the Sub-Groups can then be approved by the whole Committee. The Committee will put its draft recommendations in the public domain. After stakeholder consultations, the Committee will formalise its recommendations. The Committee can give its recommendations in batches. The first batch containing as many recommendations as possible shall be submitted by 31st January, The Term of the Committee shall be for a period of one year from the date of its constitution. (Shefali Shah) Pr. Commissioner of Income Tax (OSD) Official Spokesperson, CBDT 6

9 AP VAT Office of the Commissioner of Commercial Taxes A.P:: Hyderabad. CCT s Ref.No. AI (1)/126 /2015, Dated: CIRCULAR Subject: CST Act, Registration- Insisting of Security/Additional Security and Provisional Assessemnt under CST Act - Certain instructions - issued- Regd. * * * It has come to notice during the review of certain Circle offices that, many dealers of the sensitive commodities are obtaining CST Registration, taking huge number of CST waybills, camouflaging them as CST sales by availing concessional rate of and then closing business activities all of a sudden without giving any intimation to the Department. Further they are not submitting any statutory forms in respect of these transactions as prescribed in the CST Act. By the time these dealers are assessed, they are found absconding and the best judgement demands raised exparte remain uncollected. Mere taking these demands into the DMU serves no purpose. In order to curtail these kind of clandestine practices, certain proactive measures are to be taken by the Commercial Tax Officers/Registering Authorities. Therefore, keeping in view the above cited observations, the following instructions are issued. Obtaining Security: As per section 7 (3A) of CST Act, 1956 read with Rule 5(1) CST AP Rules, the Registering Authorities may insist for security and/or additional security at any time while such Registration Certificate is in force. Therefore, all the Registering Authorities are hereby directed to obtain security and/ or additional security from the Dealers dealing in Evasion Prone Commodities, based on the risk parameters stated below: The following commodities shall be treated as Evasion Prone Commodities for this purpose: i. All kinds of Pulses and Dhalls. ii. Granites iii. Hides and Skins iv. Automobile Spares and Accessories v. Iron and Steel including Scrap vi. Any other commodity with the consent of the DC concerned 7

10 The following are the risk parameters for considering a dealer as suspicious: a. Return Turnover less than Waybill Turnover b. CST Waybills heavy under invoicing c. High Non credible purchases d. Abnormal Waybill utilisation e. Abnormal Sales Vs Purchase ratio f. No purchases, but having CST sales, Branch and Consignment Transfers g. Huge Branch and Consignment Transfers h. Huge Indirect Exports (H form ) i. Any other parameter with the consent of the DC concerned. Quantification of the Security and /or additional security shall be done as per the sub-section 3BB of Section 7 of the CST Act, For the above purpose, a) For all existing dealers dealing in evasion prone commodities, the Registering authorities should watch and evaluate their performance based on the above parameters and should obtain Security/Additional Security, whenever necessity arises. b) For fresh Registrations in evasion prone commodities, the Registering authorities have to watch and evaluate the performance of the dealers based on the above parameters for 03 months and if the dealer is falling in the risky category, he should obtain security/additional Security immediately. c) Concerned DCs/CTOs/AC LTUs should monitor the issues mentioned in para (a) and para (b) above and should ensure that registering authority obtains security /additional security whenever necessity arises. The Registering Authorities should obtain the Security/ Additional Security only with the approval of the Commercial Tax Officer/AC LTU concerned. Provisional Assessment: Further, as per Rule 14-A(1)(b) of CST (AP) Rules, 1957 every dealer shall submit to the Assessing Authority along with return the originals of declarations in Form C, Form F, Form E-I and Form E-II. If the dealer fails to submit such declarations along with the returns, he may be assessed provisionally under Rule 14-A (4) of CST (AP) Rules, Therefore, all the Assessing Authorities are hereby directed to take-up provisional assessments inrespect of all those dealers (both existing as well as newly registered) identified as suspicious ( as per the criterion given above ) who fail to comply with Rule 14-A (1) (b) of CST (AP) Rules, The provisional assessments shall be done in cases where the dealers falling under the risk category fail to file the required statutory forms within the time time prescribed under the Act. 8

11 Forfeiture of Security: Further, all the Registering Authorities are hereby directed that the security/additional Security obtained by above means shall be forfeited for realizing any tax/penalty (including provisional demands) under the Act or in cases of misuse of statutory forms as envisaged under section 7 (3D) of CST Act, The above circular instructions should be followed scrupulously and any deviation will be viewed seriously. SERVICE TAX Sd/- J.Syamala Rao COMMISSIONER (CT) CBEC Allows Education Cess Credit to be used for payment of Service Tax Education Cess exempted on excise duty: Consequent to the increase in excise duty to 12.5% from 12% with effect from , the Government by Notification Nos. 14/2015-CE and 15/2015-CE dated exempted education cess' and Secondary and Higher Education Cess' on all excisable goods. So, from , no education cess was payable on excise duty. The Law - Credit of Education Cess can be used only for payment of education cess: As per Rule (3)(7)(b) of the CENVAT Credit Rules, the CENVAT Credit of education cess can be used only for payment of education cess - that is this credit cannot be used for payment of excise duty or Service Tax. But from , there was no education cess on excise duty. Then what to do with the credit of education cess? The Government rectified this anomaly by Notification No. 12/2015-CENT dated , after keeping the assessees under utter confusion for two months. By this notification, the CENVAT Credit Rules were amended to allow utilisation of CENVAT credit of education cess: 1. Paid on inputs or capital goods received in the factory of manufacture of final product on or after the 1st day of March, of balance fifty per cent. Education Cess and Secondary and Higher Education Cess paid on capital goods received in the factory of manufacture of final product in the financial year , and 3. paid on input services received by the manufacturer of final product on or after the 1st day of March, 2015, for payment of excise duty. Education Cess exempted on Service Tax: Consequent to the increase in Service Tax to 14% from 12% with effect from , education cess' and Secondary and Higher Education Cess' was done away with effect from The same problem as relating to excise duty arose now for Service Tax, but the Government allowed the assessees to wallow in confusion for five months without granting the same benefits as in the case of excise. Now they have woken up and amended the CENVAT Credit Rules again to allow utilisation of 9

12 CENVAT credit of education cess: 1. on inputs or capital goods received in the premises of the provider of output service on or after the 1st day of June, Balance fifty per cent. Education Cess and Secondary and Higher Education Cess paid on capital goods received in the premises of the provider of output service in the financial year , and 3. on input service in respect of which the invoice, bill, challan or Service Tax Certificate for Transportation of Goods by Rail (referred to in rule 9), as the case may be, is received by the provider of output service on or after the 1st day of June, 2015 for payment of service tax on any output service. Notification No. 22/2015-Central Excise (N.T.), Dated: October 29, 2015 To CBEC Circular 1009/16/2015-CX Guidelines for Launching of Prosecution under the Central Excise Act 1944 and Finance Act, 1994 regarding Service-tax F. No. 96/54/2014-CX.1 Government of India Ministry of Finance Department of Revenue Central Board of Excise & Customs Principal Chief Commissioner/ Chief Commissioner of Central Excise (All), Circular No. 1009/16/2015-CX New Delhi, dated the 23 rd October, 2015 Principal Chief Commissioner/ Chief Commissioner of Central Excise and Service Tax (All), Madam/ Sir, Sub: Central Excise Guidelines for launching of Prosecution under the Central Excise Act, 1944 and Finance Act, 1994 regarding Service tax-reg. I am directed to refer to following circulars/instructions issued by the Board regarding guidelines for launching of prosecution under the Central Excise Act, 1944 and the Finance Act, 1994: (1) Circular No. 15/90-CX.6 dated issued from F. No. 218/7/89-CX.6. (2) Circular No. 30/30/94-CX dated issued from F. No. 208/20/93/CX.6. (3) Letter F. No. 208/31/97-CX.6 dated regarding enhancement of monetary limit. (4) Circular No. 35/35/94-CX dated issued from F. No. 208/22/93-CX.6. (5) Letter F. No. 203/05/98-CX.6 dated regarding making DG, CEI competent authority to sanction prosecution in respect of cases investigated by DGCEI. (6) Letter F. No. 208/05/98-CX.6 dated (7) Letter F. No. 208/21/2007-CX.6 dated

13 (8) Circular no 140/9/2011-Service Tax dated In supersession of these instructions and circulars, following consolidated guidelines are hereby issued for launching prosecution under the Central Excise Act, 1944 and the Finance Act, Person liable to be prosecuted 3.1 Whoever commits any of the offences specified under sub-section (1) of Section 9 of the Central Excise Act, 1944 or sub-section (1) of section 89 of the Finance Act, 1994, can be prosecuted. Section 9AA (1) of Central Excise Act, 1944 provides that where an offence under this Act has been committed by a company, every person who, at the time offence was committed was in charge of, and was responsible to, the company for the conduct of the business of the company, as well as the company, shall be deemed to be guilty of the offence and shall be liable to be proceeded against and punished accordingly. Section 9AA (2) of Central Excise Act, 1944 provides that where an offence under this Act has been committed by a company and it is proved that the offence has been committed with the consent or connivance of, or is attributable to any neglect on the part of, any director, manager, secretary or other officer of the company, such director, manager, secretary or other officer shall be deemed to be guilty of that offence and shall be liable to be proceeded against and punished accordingly. Explanation to Section 9AA provides that (a) Company means anybody corporate and includes a firm or other association of individuals and (b) director in relation to a firm means a partner of the firm. These provisions under Section 9AA of Central Excise Act, 1944 have been made applicable to Service Tax also vide Section 83 of the Finance Act, Monetary Limit: In order to optimally utilize limited resources of the Department, prosecution should normally not be launched unless evasion of Central Excise duty or Service Tax, or misuse of Cenvat credit in relation to offences specified under sub-section (1) of Section 9 of the Central Excise Act, 1944 or sub-section (1) of section 89 of the Finance Act, 1994 is equal to or more than Rs. One Crore. 4.2 Habitual evaders: Notwithstanding the above limits, prosecution can be launched in the case of a company/assessee habitually evading tax/duty or misusing Cenvat Credit facility. A company/assessee would be treated as habitually evading tax/duty or misusing Cenvat Credit facility, if it has been involved in three or more cases of confirmed demand (at the first appellate level or above) of Central Excise duty or Service Tax or misuse of Cenvat credit involving fraud, suppression of facts etc. in past five years from the date of the decision such that the total duty or tax evaded or total credit misused is equal to or more than Rs. One Crore. Offence register (335J) may be used to monitor and identify assessees who can be considered to be habitually evading duty. 4.3 Sanction of prosecution has serious repercussions for the assessee and therefore along with the above monetary limits, the nature of evidence collected during the investigation should be carefully assessed. The evidences collected should be adequate to establish beyond reasonable doubt that the person, company or individual had guilty mind, knowledge of the offence, or had fraudulent intention or in any manner possessed mens-rea (guilty mind) for committing the offence. 9

14 5. Authority to sanction prosecution 5.1 The criminal complaint for prosecuting a person should be filed only after obtaining the sanction of the Principal Chief/Chief Commissioner of Central Excise or Service Tax as the case may be. 5.2 In respect of cases investigated by the Directorate General of Central Excise Intelligence (DGCEI), the criminal complaint for prosecuting a person should be filed only after obtaining the sanction of Principal Director General/ Director General, CEI. 5.3 An order conveying sanction for prosecution shall be issued by the sanctioning authority and forwarded to the Commissionerate concerned for taking appropriate action for expeditious filing of the complaint Procedure for sanction of prosecution 6.1 Prosecution proposal should be forwarded to the Chief Commissioner / Principal Chief Commissioner or Director General / Principal Director General of DGCEI ( in respect of cases booked by DGCEI) after the case has been carefully examined by the Commissioner/ Principal Commissioner or Additional Director General /Principal Additional Director General of DGCEI who has adjudicated the case. In all cases of arrest, examination of the case to ascertain fitness for prosecution shall be necessarily carried out. 6.2 Prosecution should not be launched in cases of technical nature, or where the additional claim of duty /tax is based totally on a difference of opinion regarding interpretation of law. Before launching any prosecution, it is necessary that the department should have evidence to prove that the person, company or individual had guilty knowledge of the offence, or had fraudulent intention to commit the offence, or in any manner possessed mens rea ( guilty mind ) which would indicate his guilt. It follows, therefore, that in the case of public limited companies, prosecution should not be launched indiscriminately against all the Directors of the company but it should be restricted to only against persons who were in charge of day-to-day operations of the factory and have taken active part in committing the duty /tax evasion or had connived at it. 6.3 Prosecution should not be filed merely because a demand has been confirmed in the adjudication proceedings particularly in cases of technical nature or where interpretation of law is involved. One of the important considerations for deciding whether prosecution should be launched is the availability of adequate evidence. The standard of proof required in a criminal prosecution is higher as the case has to be established beyond reasonable doubt whereas the adjudication proceedings are decided on the basis of preponderance of probability. Therefore, even cases where demand is confirmed in adjudication proceedings, evidence collected should be weighed so as to likely meet the test of being beyond reasonable doubt for recommending prosecution. Decision should be taken on case-to-case basis considering various factors, such as, nature and gravity of offence, quantum of duty /tax evaded or Cenvat credit wrongly availed and the nature as well as quality of evidence collected. 6.4 Decision on prosecution should be normally taken immediately on completion of the adjudication proceedings. However, Hon ble Supreme Court of India in the case of Radheshyam Kejriwal [2011(266)ELT 294 (SC)] has interalia, observed the following :- (i) adjudication proceedings and criminal proceedings can be launched simultaneously; (ii) 9

15 decision in adjudication proceedings is not necessary before initiating criminal prosecution; (iii) adjudication proceedings and criminal proceedings are independent in nature to each other and (iv) the findings against the person facing prosecution in the adjudication proceedings is not binding on the proceeding for criminal prosecution. Therefore, prosecution may even be launched before the adjudication of the case, especially where offence involved is grave, qualitative evidences are available and it is also apprehended that party may delay completion of adjudication proceedings. 6.5 Principal Commissioner/Commissioner or ADG (Adjudication) acting as adjudicating authority should indicate at the time of passing the adjudication order itself whether he considers the case to be fit for prosecution so that it can be further processed and sent to Principal Chief Commissioner/ Chief Commissioner or Principal Director General/ Director General of DGCEI, as the case may be, for sanction of prosecution. Where at the time of adjudication proceedings no view has been taken on prosecution by the Adjudicating Authority then the adjudication wing shall re-submit the file within 15 days from the date of issue of adjudication order to the Adjudicating Authority to take view of prosecution. Where, prosecution is proposed before the adjudication of the case, Commissioner/Principal Commissioner or Principal Additional Director General/Additional Director General, DGCEI who supervised the investigation shall record the reason for the same and forward the proposal to the sanctioning authority. The adjudicating authority shall also be informed of the decision to forward the proposal so that there is no need for him to examine the case at the time of passing of adjudication order from the perspective of prosecution. Principal Chief Commissioner/ Chief Commissioner or Principal Director General/ Director General of DGCEI may on his own motion also, taking into consideration the seriousness of an offence, examine whether the case is fit for sanction of prosecution irrespective of whether the adjudicating authority has recommended prosecution. 6.6 In respect of cases investigated by DGCEI, the adjudicating authority would intimate the decision taken regarding fitness of the case for prosecution to the Principal Additional Director General/ Additional Director General of the Zonal Unit or Headquarters concerned, where the case was investigated and show cause notice issued. The officers of unit of Directorate General of Central Excise Intelligence concerned would prepare an investigation report for the purpose of launching prosecution, within one month of the date of receipt of the decision of the adjudicating authority and would send the same to the Director General, CEI for taking decision on sanction of prosecution. The format of investigation report is annexed as Annexure-I to this Circular. 6.7 In respect of cases not investigated by DGCEI, where the Principal Commissioner/ Commissioner who has adjudicated the case is satisfied that prosecution should be launched, an investigation report for the purpose of launching prosecution should be carefully prepared within one month of the date of issuance of the adjudication order. Investigation report should be signed by an Assistant/Deputy Commissioner, endorsed by the jurisdictional Principle Commissioner/Commissioner and sent to the Principal Chief/ Chief Commissioner for taking a decision on sanction for launching prosecution. The format of investigation report is annexed as Annexure-I to this circular. A criminal complaint in a court of law should be, filed by the jurisdictional Commissionerate only after the sanction of the Principal Chief / Chief Commissioner or Principal Director General/Director General of DGCEI has been obtained. 9

16 6.8 Principal Commissioner/Commissioner or Additional Director General (Adjudication) shall submit a report by 10 th of every month to the Principal Chief /Chief Commissioner or the Principal Director General/ Director General of CEI, who is the sanctioning authority for prosecution, conveying whether a view on launching prosecution has been taken in respect of adjudication orders issued during the preceding month. 6.9 Once the sanction for prosecution has been obtained, criminal complaint in the court of law should be filed as early as possible by an officer of the jurisdictional Commissionerate authorized by the Commissioner It has been reported that delays in the Court proceedings are often due to non-availability of the records required to be produced before the Magistrate or due to delay in drafting of the complaint, listing of the exhibits etc. It shall be the responsibility of the officer who has been authorized to file complaint, to take charge of all documents, statements and other exhibits that would be required to be produced before a Court. The list of exhibits etc. should be finalized in consultation with the Public Prosecutor at the time of drafting of the complaint. No time should be lost in ensuring that all exhibits are kept in safe custody. Where a complaint has not been filed even after a lapse of three months from the receipt of sanction for prosecution, the reason for delay shall be brought to the notice of the Principal Chief/ Chief Commissioner or the Principal Director General or Director General of DGCEI by the Principal Commissioner/ Commissioner in charge of the Commissionerate responsible for filing of the complaint. 7.1 Prosecution, once launched, should be vigorously followed. The Principal Commissioner/Commissioner of Central Excise/Service Tax should monitor cases of prosecution at monthly intervals and take the corrective action wherever necessary to ensure that the progress of prosecution is satisfactory. In DGCEI, an Additional/ Joint Director in each zonal unit and DGCEI (Hqrs) shall supervise the prosecution related work. For keeping a track of prosecution cases, a prosecution register in the format enclosed as Annexure-II to this Circular should be maintained in the Prosecution Cell of each Commissionerate. The register shall be updated regularly and inspected by the Principal Commissioner/Commissioner at least once in every quarter of a financial year. 7.2 For keeping a track of prosecution cases, a prosecution register in the format enclosed as Annexure-III to this Circular should be maintained in the Zonal Units of DGCEI and DGCEI (Hqrs.) pertaining to cases investigated by them. 8.1 Principal Commissioner/Commissioner responsible for the conduct of prosecution or Principal Additional Director General or Additional Director General of DGCEI (in respect of cases booked by DGCEI), should study the judgement of the Court and, where it appears that the accused person have been let off with lighter punishment than what is envisaged in the Act or has been acquitted despite the evidence being strong, appeal should be considered against the order. Sanction for appeal in such cases shall be accorded by Principal Chief/ Chief Commissioner or Principal Director General/ Director General of DGCEI. 9. Publication of names of persons convicted: 9.1 Section 9B of the Central Excise Act, 1944 also made applicable to Service Tax vide section 83 of the Finance Act,1994 grants power to publish name, place of business etc. of the person 9

17 convicted under the Act by a Court of Law. The power is being exercised very sparingly by the Courts. It is directed that in deserving cases, the department should make a prayer to the Court to invoke this section in respect of all persons who are convicted under the Act Procedure for withdrawal of sanction-order of prosecution In cases where prosecution has been sanctioned but complaint has not been filed and new facts or evidences have come to light necessitating review of the sanction for prosecution, the Commissionerate or the DGCEI unit concerned should immediately bring the same to the notice of the sanctioning authority. After considering the new facts and evidences, the sanctioning authority namely Principal Chief/ Chief Commissioner or Principal Director General or Director General of DGCEI, if satisfied, may recommend to the Board (Member of the policy wing concerned) that the sanction for prosecution be withdrawn Procedure for withdrawal of Complaint already filed for prosecution In cases where the complaint has already been filed complaint may be withdrawn as per Circular No. 998/5/2015-CX dated which provides that where on identical allegation a noticee has been exonerated in the quasi-judicial proceedings and such order has attained finality, Principal Chief Commissioner/ Chief Commissioner or the Principal Director General/ Director General of DGCEI shall give direction to the concerned Commissionerate to file an application through Public Prosecutor requesting the Court to allow withdrawal of the Prosecution in accordance with law Transitional Provisions 11.1 All cases where sanction for prosecution is accorded after the issue of this circular shall be dealt in accordance with the provisions of this circular irrespective of the date of the offence. Cases where prosecution has been sanctioned but no complaint has been filed before the magistrate shall also be reviewed by the prosecution sanctioning authority in light of the provisions of this circular Compounding of offences 12.1 Section 9A(2) of the Central Excise Act, 1944 also made applicable to Service Tax vide section 83 of the Finance Act,1994 provides for compounding of offences by the Principal Chief/ Chief Commissioner on payment of compounding amount. Circular no. 54/2005-Cus dt and Circular no 862/20/2007-CX-8 dated on the subject of compounding of offences may be referred in this regard which inter alia provides that all persons against whom prosecution is initiated or contemplated should be informed in writing, the offer of compounding Inspection of prosecution work by the Directorate of Performance Management: 13.1 Director General, Directorate of Performance Management and Chief Commissioners, who are required to inspect the Commissionerates, should specifically check whether instruction contained in this Circular are being followed scrupulously and to ensure that reasons for pendency and non-compliance of pending prosecution cases are looked into during field inspections apart from recording of statistical data. 14. The field formations may suitably be informed. Receipt of this Circular may please be acknowledged. Hindi version will follow. 9

18 convicted under the Act by a Court of Law. The power is being exercised very sparingly by the Courts. It is directed that in deserving cases, the department should make a prayer to the Court to invoke this section in respect of all persons who are convicted under the Act Procedure for withdrawal of sanction-order of prosecution In cases where prosecution has been sanctioned but complaint has not been filed and new facts or evidences have come to light necessitating review of the sanction for prosecution, the Commissionerate or the DGCEI unit concerned should immediately bring the same to the notice of the sanctioning authority. After considering the new facts and evidences, the sanctioning authority namely Principal Chief/ Chief Commissioner or Principal Director General or Director General of DGCEI, if satisfied, may recommend to the Board (Member of the policy wing concerned) that the sanction for prosecution be withdrawn Procedure for withdrawal of Complaint already filed for prosecution In cases where the complaint has already been filed complaint may be withdrawn as per Circular No. 998/5/2015-CX dated which provides that where on identical allegation a noticee has been exonerated in the quasi-judicial proceedings and such order has attained finality, Principal Chief Commissioner/ Chief Commissioner or the Principal Director General/ Director General of DGCEI shall give direction to the concerned Commissionerate to file an application through Public Prosecutor requesting the Court to allow withdrawal of the Prosecution in accordance with law Transitional Provisions 11.1 All cases where sanction for prosecution is accorded after the issue of this circular shall be dealt in accordance with the provisions of this circular irrespective of the date of the offence. Cases where prosecution has been sanctioned but no complaint has been filed before the magistrate shall also be reviewed by the prosecution sanctioning authority in light of the provisions of this circular Compounding of offences 12.1 Section 9A(2) of the Central Excise Act, 1944 also made applicable to Service Tax vide section 83 of the Finance Act,1994 provides for compounding of offences by the Principal Chief/ Chief Commissioner on payment of compounding amount. Circular no. 54/2005-Cus dt and Circular no 862/20/2007-CX-8 dated on the subject of compounding of offences may be referred in this regard which inter alia provides that all persons against whom prosecution is initiated or contemplated should be informed in writing, the offer of compounding Inspection of prosecution work by the Directorate of Performance Management: 13.1 Director General, Directorate of Performance Management and Chief Commissioners, who are required to inspect the Commissionerates, should specifically check whether instruction contained in this Circular are being followed scrupulously and to ensure that reasons for pendency and non-compliance of pending prosecution cases are looked into during field inspections apart from recording of statistical data. 14. The field formations may suitably be informed. Receipt of this Circular may please be acknowledged. Hindi version will follow. Yours faithfully, (ROHAN) under Secretary to the Govt. of India 9

19 COMPANIES ACT,2013 Last date for filing of Financial Statements and Annual Return extended till Nov 30, 2015 SECTION 137 OF THE COMPANIES ACT, ACCOUNTS OF COMPANIES - COPY OF FINANCIAL STATEMENT - RELAXATION OF ADDITIONAL FEES AND EXTENSION OF LAST DATE OF FILING OF FORMS AOC-4, AOC-4 XBRL AND MGT-7 UNDER SAID ACT GENERAL CIRCULAR NO.14/2015 [F.NO.01/34/2013-CL.V], DATED In continuation of this Ministry's General Circular No.10/2015 dated , keeping in view the request received from various stakeholders, it has been decided to relax the additional fee payable on forms AOC-4 and AOC-4 XBRL upto 30th November, The additional fee requirement for MGT-7 E-Form is also relaxed for all such forms filed till 30th November, 2015, wherever additional fee is applicable. 2. This issues with the approval of competent authority. 9

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