Why PNB Bank 10% today and whats the Case of fraud in PNB:
You think your money is safe with the banks.??
Case study on PNB bank Fraudulent transactions of $1.77 billion
Whats the Case:
According to details included in the initial complaint filed by PNB with the CBI, the issue was detected at the bank’s mid corporate branch at Brady House, Mumbai in mid-January.
Three firms – M/s Diamonds R US, M/s Solar Exports, M/s Stellar Diamonds – approached the bank for ‘buyers credit’ to make payments to overseas suppliers. According to the complaint, Nirav Modi, Nishal Modi, Ami Nirav Modi and Mehul Choksi were partners in these firms.
What is Buyers Credit:
Buyers credit is short term credit (90-180 days) provided by international banks (or international branches of Indian banks) to an importer. This credit is typically provided based on a ‘letter of comfort’ issued by the importer’s local bank.
When the above three firms approached PNB in January for buyers credit via a ‘letter of comfort’, the concerned official sought a 100 percent cash margin since there was no pre-sanctioned limit for these firms.
What This Means for PNB
Shares of PNB fell 9.8 percent in trade on Wednesday following the disclosure made by the lender.
Bankers who BloombergQuint spoke to said that typically the final liability in such cases lies with the bank which has issued the LoU. In its statement, PNB said that its liabilities in the case were “contingent in nature” and that they would be paid out depending on genuineness of the underlying transactions.
Action taken as of now:
CBI will initiate the proceedings in this case.
10 PNB officials has been suspended after the reporting of the incidents.
Conclusion:
As of the December 2017 ended quarter, PNB had bad loans amounting to 12.11 percent of total loans. The bank, which reported a profit of Rs 207 crore during the October-December quarter, just received capital infusion of Rs 5,473 crore via the government’s recapitalisation bonds.
This is not the first time that PNB has seen trouble emerging from its dealings with the gems and jewelry sector. The bank was one of the lead lenders in the Winsome Diamonds case, where the company’s promoters defaulted on nearly Rs 5,000 crore in bank loans.
What we have learnt:
- Big PSUs banks also not safer these days and due to mismanagement at the higher level such cases emerged.
- Govt. is trying to infuse more capital to these bonds and ultimately they’re using the Investors money or taxpayers money.
- One day these banks will collapse and Govt. have to bail out these banks from the tax payers money.
- Due to weak Law and order, Persons who’re involving in these remained free at the end or they leave the country like Vijay Mallaya.
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CBEC decides not to file Review Petitions and SLPs in 63 cases to Reduce Litigations
Read more at: http://www.taxscan.in/cbec-decides-not-file-review-petitions-slps-63-cases-reduce-litigations/17912/
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Compensation Received from Let Out of Terrace Antenna and Hall Booking is Taxable as Business Income: ITAT [Read Order]
Read more at: http://www.taxscan.in/compensation-received-let-out-terrace-antenna-hall-booking-taxable-business-income-itat/17921/
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Fact that Developer required to Layout Roads and undertake other activities before Delivery of Completed Sites would not make Agreement a “Works Contract”: ITAT [Read Order]
Read more at: http://www.taxscan.in/fact-developer-required-layout-roads-undertake-activities-delivery-completed-sites-not-make-agreement-works-contract-itat/17874/
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CBEC issued Circular No 1063/2/2018 - CX on orders by Supreme Court, High Courts and CESTAT accepted by the Department and on which no review petitions, SLPs have been filed.
GST Council is expected to meet early next month to finalise a new & simplified monthly return filing format.
CBEC vide DO Letter dated Feb. 6 to all Chief & Principal Comm said that “a few field offices have requested clarification as to whether LUT for exports would be accepted by Customs or GST Officials. It is clarified that LUT would have to be accepted by GST Officials.”
To check Status of Last 5 Returns filed by taxpayer, enter GSTIN in Search Taxpayer option on www.gst.gov.in without logging into account.
SEBI in consultation with stakeholders has decided to make some changes in extant regulatory provisions to ease the access norms for investment by Foreign Portfolio Investors (FPIs).
The government will change the base year to 2017-18 for the calculation of gross domestic production (GDP) and Index of Industrial Production (IIP) numbers.
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All Apartments received under Development Agreement would become “One House” for the purpose of s. 54 Exemption: ITAT [Read Order]
Read more at: http://www.taxscan.in/all-apartments-received-under-development-agreement-would-become-one-house-for-the-purpose-of-s-54-exemption-itat/17894/
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📺 *Updates*
➡1. AO can't make ad hoc disallowance with regards to an international transaction under TP study: ITAT
Safilo India (P.) Ltd. v. Deputy Commissioner of Income-tax, Circle- 15 (3) (2), Mumbai*
➡2. Adjudicating Authority can't interfere with committee of creditor's decision to reject resolution plan: NCLT
Vivek Vijay Gupta v. Steel Konnect (India) (P.) Ltd.
➡3. Retail Individual Investors to get compensation if bankers fails to allot share in an IPO: SEBI
Circular SEBI/HO/CFD/DIL2/CIR/P/2018/22
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CBEC decides not to file Review Petitions and SLPs in 63 cases to Reduce Litigations
Read more at: http://www.taxscan.in/cbec-decides-not-file-review-petitions-slps-63-cases-reduce-litigations/17912/
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GST - OBTAIN UIN ,WHERE ITS NOT POSSIBLE TO OBTAIN PAN
*COMMISSIONER CAN NOTIFY*
Unique Identification Number, UIN, is a special class of GST registrationfor foreign diplomatic missions and embassies which are not liable to taxes in the Indian territory. Any amount of tax (direct or indirect) collected from such bodies is refunded back to them.
1. *Who can apply for UIN under GST?*
The following organizations can apply for a UIN:
A specialized agency of the United Nations OrganizationA Multilateral Financially Institution and Organization notified under the United Nations (Privileges and Immunities) Act, 1947,Consulate or Embassy of foreign countries. *Any other person or class of persons as notified by the Commissioner*
2. *What is the purpose of a UIN?*
The organization listed above will be granted a Unique Identification Number (UIN). This allows the body to receive tax refund on inward supplies of goods and services (purchases).
3. *What is the difference between GSTIN and UIN?*
GSTIN and UIN are two different types of identification numbers under GST.
Goods and Services Tax Identification Number (GSTIN) is allotted to regular taxpayers who are required to collect GST and file GST returns
UIN is allotted to only the above-mentioned organization.
4. *How to register as a UIN?*
The organization must apply for UIN using FORM GST REG- 13.
If the proper officer is satisfied, he will assign a UIN and issue a certificate in FORM GST REG-06 within 3 working days from the date of the submission of the application.
Here’s a format of FORM GST REG- 13
5. *What returns should be filed by a UIN holder?*
Every UIN holder must file GSTR-11 by 28th of next month in order to claim refund of the taxes paid on his inward supplies. GSTR-11 will contain details of such supplies of taxable goods and/or services.
GSTR-11 will contain details of such supplies of taxable goods and/or services.
A UIN holder will not be allowed to add or modify any details in GSTR-11. The Information will be auto-populated information from seller’s GSTR-1 (sales).
6. *What should a seller supplying to a UIN holder ensure?*
The taxable supplier (normal registered taxpayer under GST) while supplying to a UIN organization must:
Mention the UIN on the invoicesTreat such sales as supplies to another registered person (B2B)
Invoices should be uploaded in the same manner as for normal B2B sales.
7. *What is the last day for claiming a refund on purchases by a UIN holder?*
As mentioned before, refunds can be claimed only through GSTR-11. The return must be filed within 6 months from the last day of the quarter in which supply was received.
For example, consider a UIN holder that received purchases on 10th October 2017.
The last day of the quarter of receiving the supplies is 31stDecember 2017.
The deadline to claim the refund is 6 months from then, 30th June 2018.
Beyond the 6 month deadline, the refund will lapse.
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ICAI Extends due date for Online Application for Empanelment of Chartered Accountants Firms/LLPs with CAG
Read more at: http://www.taxscan.in/icai-extends-due-date-online-application-empanelment-chartered-accountants-firms-llps-o-o-cag/17905/
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👉🏻Govt asks fraud-hit PNB to conduct Forensic Audits*
(Govt has asked fraud-hit PNB to conduct a forensic audit and give a detailed report on why the loans given to jeweller Nirav Modi and his associates, based on fraudulent letters of undertaking (LoUs)
👇🏻 👇🏻 👇🏻
https://goo.gl/DNoHXg
*👉🏻Price Waterhouse can audit clients till March 2019 - SAT*
( The Securities Appellate Tribunal (SAT) granted partial relief to Price Waterhouse (PW), allowing it to audit existing clients till March 31, 2019, or until a new bench is formed.)
👇🏻 👇🏻 👇🏻
https://goo.gl/jEyCuh
*👉🏻RBI asks banks to accept notes & coins of small denominations tendered at their counters*
( RBI has directed all banks to accept small denomination notes and coins tendered at their counters. The apex bank issued a notification in Mumbai yesterday)
👇🏻 👇🏻 👇🏻
https://goo.gl/p2aHZb
*👉🏻CBDT releases Explanatory Notes to provisions of the Finance Act, 2017*
(Finance Act, 2017 ─ Explanatory Notes to the Provisions of the Finance Act, 2017. Circular No. 2/2018, Dated 15th February, 2018)
👇🏻 👇🏻 👇🏻
https://goo.gl/GyxSjF
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No Service Tax on Consideration Received for Sale of Books and Materials to the Franchise: CESTAT [Read Order]
Read more at: http://www.taxscan.in/no-service-tax-consideration-received-sale-books-materials-franchise-cestat/17898/
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Last date to file Income Tax Returns (ITRs) for AY 2016-17 and AY 2017-18 is 31st March 2018.
Authority of Advance Rulings has held that the salary income of a non resident individual for services rendered overseas cannot be taxed in India, even when such salary is paid into a bank account in India. Case TN Santosh Kumar.
Another petition has been filed before the Delhi High Court on ground of technical glitches in the Goods and Services Tax Network (GSTN) wherein the petitioners, M/s Bhargava Motors were unable to file GST TRAN-01.
GST Network Chairman Ajay Bhushan Pandey has said the company will try to ensure that stakeholders become fully familiar with the technology system before the re-rollout of the e-way bill system.
Sebi is readying a framework for issuance of participatory notes (p-notes) from international financial services centres such as GIFT City. It is in talks with FPIs, which act as issuers of p-notes, sources said.
C&AG empanelment : Extended the last date for submission of the application from 15th February, 2018 to 22nd February, 2018.
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Provisions of Deemed Dividend applicable only to extent of ‘Accumulated Profits’ and not to Capital Subsidy/Grant: ITAT [Read Order]
Read more at: http://www.taxscan.in/provisions-deemed-dividend-applicable-extent-accumulated-profits-not-capital-subsidy-grant-itat/17887/
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PNB Fraud - An Overview*
*What’s the scam*
The two employees of the state-owned lender “Punjab National Bank” directly used SWIFT — the global financial messaging service used to move millions of dollars across borders every hour — and bypassed the core banking system (CBS) which processes daily banking transactions and posts updates.It was a ploy to avoid immediate detection: the SWIFT messages used to raise overseas credit were not readily available in PNB's FINACLE software system as these were issued without entering into the bank’s CBS.
*What Really Happened*
It began with diamond firms approaching PNB for opening “letters of credit(LC)” for import of rough stones. As per the terms of the LC, a common banking tool, PNB would pay the overseas suppliers on behalf on Nirav Modi's firms within a certain period (typically three months) and recover the money from Modi. It's a market practice to extend the LC if the client (i.e, NM) is unable to cough up the money at the end of the LC tenure.
*Fake Letter of Understanding (LOU) were issued*
PNB employees issued fake LoUs, on the back of which foreign branches of a few Indian banks — including Axis and Allahabad Bank — gave dollar loans to PNB. These foreign currency loans were used to fund PNB's Nostro accounts and from these accounts funds moved to certain overseas parties. A Nostro account is the account an Indian bank (here, PNB) has with an overseas bank.
According to the note, LoUs were opened for pearl import for which total time period allowed by RBI is 90 days. Some of the overseas branches of Indian banks overlooked the rule. PNB has alleged "clear criminal connivance" of group companies of Modi and Gitanjali with some officials of PNB and other banks.
*Overall Impact*
In total 30 banks are affected due to this fraud among various state owned banks and PSUs’, some private lenders are also involved such as ICICI, Axis, IndusInd and Standard Chartered Bank
Companies involved in exports sector may also get affected as lenders might do more scrutiny and be more cautious ahead while issuing LOU’s and LC’s
[2/18, 8:57 AM] CA Rohit Jaiswal: Karnataka HC Confirms Withdrawal of 12AA Registration since Trust Collected Capitation Fee under Innocuous Name of Anonymous Donations [Read Judgment]
Read more at: http://www.taxscan.in/hc-confirms-withdrawal-12aa-registration-trust-collected-capitation-fee/17734/
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Conversion of Un-garbled Pepper to be fit for Human Consumption is not ‘Production’ for granting IT Deduction: Kerala HC [Read Judgment]
Read more at: http://www.taxscan.in/conversion-of-un-garbled-pepper-to-be-fit-for-human-consumption-is-not-production-for-granting-it-deduction-kerala-hc/17853/
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GSTO/AC authorized to process Refund claims under Delhi GST Act [Read Order]
Read more at: http://www.taxscan.in/gsto-ac-authorized-to-process-refund-claims-under-delhi-gst-act/17862/
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GST Update : CBEC prescribes monetary limit for SCN / order issuance by various officers*
CBEC prescribes monetary limit for purpose of issuance of show cause notice (SCN) and passing of orders by different level of central tax officers;
👉While SCN shall be issued by Central tax officers of Audit Commissionerates and Directorate General of Goods and Services Tax Intelligence (DGGSTI), same shall be adjudicated by competent central tax officer of Executive Commissionerate in whose jurisdiction the noticee is registered;
SCN shall be adjudicated by the competent central tax officer in whose jurisdiction noticee from whom the highest demand has been made falls in case there are more than one noticees falling in multiple Commissionerates;
Moreover, adjudication shall be done by an officer of the rank of Additional Director/Commissioner (not on strength of DGGSTI and working there) where principal places of business of noticees fall in multiple Commissionerates and amount of central tax and IGST (including cess) exceeds Rs. 5 crores;
👉Further, amends Circular No. 3/3/2017-GST to empower Superintendent of Central Tax to issue show cause notices/orders, thus, assigning all officers up to rank of Additional/Joint Commissioner of Central Tax as 'proper officer' in terms of Section 73 and 74 of CGST Act and Section 3 r/w 20 of IGST Act:
CBEC Circular No. 31/05/2018-GST dated February 9, 2018
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CAs cannot mention them as GST Consultant: Providing Trainings, Seminars to Non-Existing Clients amount to Ethical Violation, says ICAI [Read FAQs]
Read more at: http://www.taxscan.in/cas-cannot-mention-gst-consultant-providing-trainings-seminars-non-existing-clients-amount-ethical-violation-says-icai-read-faqs/13516/
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# *MCA* has Revised the version of eForms PAS-3, DPT-3, MGT-6, MGT-15, MGT-14, ADT-1, ADT-2, SH-7 and URC-1. The revised forms will be available on the portal on the portal of MCA shortly.
# *MCA* has made amendments to the Companies (Registered Valuers and Valuation) Rules, 2017. Accordingly, A person who is allowed under any provision of the Act or rules made thereunder or under any other law to act as a registered valuer may continue to act as such, without getting registered under these Rules, can continue to act as such upto the extended period of 30th September, 2018 instead of 31st March, 2018.
# *IT*: Reopening of the assessment - sanction u/s 151 - When the Revenue Department is manned by highly qualified officers they are to evolve legally sustainable standard operating procedure for discharging quasijudicial function – ITO Vs. Virat Credit & Holdings Pvt. Ltd. & Vice-Versa (2018 (2) TMI 871 - ITAT Delhi).
# *TODAY* (15.02.2018) is the last date for:
• C&AG: Online Empanelment of CA Firms / LLPs for the year 2018-19.
• GSTR-1 for Quarter - DEC’ 2017.
• TDS Certificate issue for Quarter – DEC 2018.
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LUTs shall be continued to be accepted by GST Officials: Govt [Read Circular]
Read more at: http://www.taxscan.in/luts-shall-be-continued-to-be-accepted-by-gst-officials-govt/17842/
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12AA Registration cannot be denied to a Trust created for carrying out CSR Activities: ITAT [Read Order]
Read more at: http://www.taxscan.in/12aa-registration-cannot-denied-trust-created-carrying-csr-activities-itat/17838/
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👉🏻PNB fraud turns up heat on India's banking reforms*
( India’s financial institutions keep finding fresh ways to screw up. Punjab National Bank (PNB), the country’s second biggest public sector bank, has uncovered $1.8 billion (about Rs11,363 crore) of “fraudulent and unauthorized” transactions from a single branch in Mumbai)
👇🏻 👇🏻 👇🏻
https://goo.gl/ZbdCvx
*👉🏻ICAI to come out with concept paper on virtual currencies*
( ICAI is looking into various aspects of virtual currencies and will come out with a concept paper on the same, according to its President CA. Naveen N D Gupta.)
👇🏻 👇🏻 👇🏻
https://goo.gl/4aZ1Fm
*👉🏻GST e-way bill software set to be overhauled*
(Govt is looking at complete overhaul of the electronic-way-bill (e-way-bill) system under the goods and services tax (GST) regime instead of tinkering with its structure or scrapping it altogether)
👇🏻 👇🏻 👇🏻
https://goo.gl/5s3Zb5
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📺 *Updates*
➡1. ICAI revises SA 720 The Auditors Responsibilities Relating to Other Information
➡2. Sec. 68 additions justified if summons issued to shareholder came back unserved due to non-availability of address
konark Structural Engineering (P.) Ltd. v. Dy. Commissioner of Income-tax-9(2).
➡3. No DTAA benefit to Mauritian Co. on Cap gains if it had merely lent its name for making investments
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CBDT said : soon-to-be rolled out pan India e-assessment system for scrutiny cases of taxpayers will not be applicable to instances where a raid has been conducted against an assessee by the Income Tax dept.
Last date for submitting GSTR 3B and payment of taxes for Jan 2018 is 20th Feb 2018.
An advisory has been issued by the Goods and Services Tax (GST) portal to the Exporters for filing Table 6A of GSTR-1.
RBI revised guidelines would help clean up the bad loan mess in one go within a strict timeframe.Expressing the government’s firm commitment to deal with the problem of NPAs Financial Secretary Rajiv Kumar said.
SEBI will meet credit rating agencies this week to explore ways to have quicker access to information on loan defaults by corporates. With the RBI having so far refused to share the sensitive information beyond the banking industry.
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Amount received for providing Common facilities is subject to Service Tax under the head ‘renting of immovable property’: CESTAT [Read Order]
Read more at: http://www.taxscan.in/amount-received-for-providing-common-facilities-is-subject-to-service-tax-under-the-head-renting-of-immovable-property-cestat/17832/
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👉Non-deposit of compensation in court under section 31(2) of the Act of 1894 does not result in a lapse of acquisition under section 24(2) of the Act of 2013. Due to the failure of deposit in court, the only consequence at the most in appropriate cases may be of a higher rate of interest on compensation as envisaged under section 34 of the Act of 1894 and not lapse of acquisition. Once the amount of compensation has been unconditionally tendered and it is refused, that would amount to payment and the obligation under section 31(1) stands discharged and that amounts to discharge of obligation of payment under section 24(2) of the Act 195 of 2013 also and it is not open to the person who has refused to accept compensation, to urge that since it has not been deposited in court, acquisition has lapsed. Claimants/landowners after refusal, cannot take advantage of their own wrong and seek protection under the provisions of section 24(2).
👉Ind AS 107: Foreign currency risk should be disclosed irrespective of accounting treatment.
👉IT raid cases not to fall under e assessment, says CBDT.
👉Govt. eases norms for closure of PPF Account under Small Savings Scheme.
👉RBI withdraws SDR, S4A, which provided bank 180 day time for NPA resolution since IBC in place now.
🙏🏻Have a wonderful day ahead 🙏🏻
