ISSUES PRESENTED AND CONSIDERED

1. Whether refund of customs duty is admissible where self-assessment included a notional 2% high-seas-sales (HSS) commission instead of the actual trade margin evidenced in purchase order/records.

2. Whether a Bill of Entry (BOE) filed on self-assessment can be amended under Section 149 of the Customs Act, 1962 to correct an error in assessment post-clearance, when the supporting documents for the proposed amendment were available in the records at the time of assessment.

3. Whether Board Circular No. 32/2004 (11.05.2004) and the principle that actual HSS/service charges are includable in CIF value (transaction value under Rule 4, Customs Valuation Rules, 1988) preclude the notional addition of commission absent documentary proof establishing the actuals.

4. Whether this Tribunal should entertain the fresh plea for amendment of BOE or remit the matter to the Original Authority for adjudication under Section 149, keeping all contentious issues open.

ISSUE-WISE DETAILED ANALYSIS

Issue 1 - Admissibility of refund where self-assessment used notional 2% HSS commission instead of actual trade margin

Legal framework: Customs Act, 1962 (self-assessment regime); Rule 4, Customs Valuation Rules, 1988 (transaction value); Board Circular No. 32/2004 (11.05.2004) interpreting inclusion of actual HSS/service charges in CIF value.

Precedent treatment: Board Circular relies on Supreme Court ruling recognising service charges/HSS commission actuals as includable in CIF value (referred to the decision in Hyderabad Industries). The appellant relied on later authorities (ITC Ltd. (2021) and Sony India (2021)) to support remedy via amendment/rectification mechanisms; the Tribunal noted these but did not decide the valuation question finally.

Interpretation and reasoning: The Tribunal observed that the valuation principle in the Board Circular mandates establishment of actual HSS contract price by furnishing the full chain of documents, payment details and contract evidence. In the present record the department found no documentary proof showing how the Rs.33/MT trade margin was arrived at. The adjudicating authority rejected the refund as the appellant had not challenged the self-assessment earlier and had not produced documentary evidence to comply with the Circular.

Ratio vs. Obiter: The observation that actual HSS charges are includable in CIF (as per the Circular and Supreme Court authority) is treated as binding legal framework (ratio in context). The finding that no documentary proof was produced is a case-specific factual ratio for denial of refund at the adjudication stage. Any broader comment on merits of valuation without fresh evidence is obiter.

Conclusions: Refund cannot be sustained on the present record without documentary proof establishing the asserted trade margin; the procedural/default failure to challenge self-assessment was a factor in the authorities' rejection of the refund claim.

Issue 2 - Power to amend BOE under Section 149 to correct self-assessment error where supporting documents existed at time of clearance

Legal framework: Section 149, Customs Act, 1962 (amendment of documents/rectification of clerical errors); related statutory provisions for assessment/reassessment (Sections 17 and 128); Board Circular No.32/2004 as interpretative guidance on valuation.

Precedent treatment: The appellant relied on Sony India (Telangana HC, 2021) upholding Section 149 as a remedial mechanism where amendments are based on documents already in existence and part of the records at time of clearance. This Tribunal also noted its own prior consideration in M/s. Valeo India Pvt. Ltd. Vs Commissioner of Customs (Final Order No. 40393/2023). The Respondent pointed to separate statutory provisions (Sections 17, 128) governing assessment and reassessment to argue against post-facto change of self-assessment.

Interpretation and reasoning: The Tribunal recognised Section 149 as a potential procedural remedy to correct an error in a BOE where the proposed amendment is founded on documents that were in existence at clearance and already part of records. The Tribunal distinguished such corrective/rectificatory action from reopening of assessment under other statutory provisions, but emphasised that the Original Authority must examine the request afresh. The Tribunal concluded that the appellate role is not to usurp the Original Authority's jurisdiction on fact/findings but to remit the matter for appropriate consideration under Section 149, with all issues left open for decision there.

Ratio vs. Obiter: The core holding that Section 149 can be invoked to correct BOE errors when supported by documents already in record and that such requests should be examined by the Original Authority is treated as the operative ratio for remand. Observations about the limits of appellate intervention and the distinction from reassessment provisions (Sections 17/128) are binding guidance but include analytical application to facts (ratio for procedure here); ancillary remarks about case law cited by parties are obiter insofar as they were not finally adjudicated on merits.

Conclusions: Section 149 is an available remedy for correcting a BOE error of the nature alleged, subject to the Original Authority's examination of records and compliance with statutory/circular requirements; remand is appropriate where the appellant seeks amendment based on documents alleged to have been on record at assessment.

Issue 3 - Applicability of Board Circular No. 32/2004 and evidentiary requirement for establishing actual HSS/service charges

Legal framework: Board Circular No. 32/2004 reiterating Supreme Court position on includability of actual HSS/service charges in CIF; rules under Customs Valuation Rules, 1988 (Rule 4).

Precedent treatment: Circular anchors on Supreme Court precedent (Hyderabad Industries) mandating documentary chain to establish transaction value attributable to HSS contracts and services/commissions.

Interpretation and reasoning: The Tribunal highlighted the Circular's requirement that the last buyer's contract price and supporting chain of documents, details of commissions/service charges must be furnished to establish transaction value. In the absence of those documents or their production at assessment, notional addition (e.g., blanket 2%) is not appropriate for claiming actuals. The Tribunal noted that the appellant asserted the purchase order was available at assessment but the lower authorities found nondisclosure of the margin calculation.

Ratio vs. Obiter: The requirement to produce the full chain of documents to establish actual HSS commission is treated as binding interpretive ratio stemming from Circular and judicial precedent; the factual finding of nondisclosure in this case is case-specific ratio for the authorities' earlier denial.

Conclusions: Board Circular No. 32/2004 governs valuation of HSS transactions and mandates documentary proof of actuals; absent such proof before the Original Authority, notional additions cannot be accepted as establishing transaction value.

Issue 4 - Appropriate appellate disposition: remand versus deciding afresh

Legal framework: Principles of appellate function (limited scope to correct errors of lower authority without usurping primary fact-finding jurisdiction); references to hierarchical appellate principles as applied to quasi-judicial fora.

Precedent treatment: The Tribunal relied on higher court guidance (scholarly distinctions in recent apex jurisprudence cited) that appellate authorities should not usurp the primary authority's function and should act within their corrective remit. The Tribunal also noted its own earlier treatment of BOE amendment issues.

Interpretation and reasoning: Applying the appellate restraint principle, the Tribunal found it improper to decide the amendment request in the first instance; instead, the proper course is to remand to the Original Authority to examine the Section 149 application, permit the appellant to file written submissions, and give an opportunity to be heard. The Tribunal fixed a 90-day timeline for the Original Authority's final order and kept all issues open for fresh adjudication.

Ratio vs. Obiter: The decision to remit for fresh consideration under Section 149 and to keep all issues open constitutes the operative ratio of the appeal disposition. The emphasis on not usurping the Original Authority's fact-finding and procedural functions is binding appellate principle applied here.

Conclusions: The appeal is disposed by setting aside the impugned order and remitting the matter to the Original Authority to examine the Section 149 amendment request afresh within 90 days, with liberty to the appellant to file submissions; consequential relief available as per law depending on the outcome.

ISSUES PRESENTED AND CONSIDERED

1. Whether the activities undertaken under the Memoranda of Understanding (MOUs) constituted services falling within the definition of "real estate agent" or "real estate consultant" and were therefore taxable under Section 65(105)(v) read with Sections 65(88)-65(89) of the Finance Act, 1994 for the period 1 October 2004 to 31 March 2007?

2. Whether the extended period of limitation under the proviso to Section 73(1) of the Finance Act, 1994 could be invoked on the ground of deliberate suppression of facts by the assessee, thereby justifying recovery beyond the normal limitation period?

ISSUE-WISE DETAILED ANALYSIS - I. Whether the transactions constituted taxable "Real Estate Agent"/"Real Estate Consultant" services?

Legal framework: Sections 65(88) and 65(89) (definitions of "real estate agent" and "real estate consultant"), Section 65(105)(v) (taxable service event), and the exception to "service" in Section 65B(44)(a)(i) (transfer of title in immovable property not being a service) provide the statutory matrix for characterisation.

Precedent treatment: The Court considered and cited recent authority emphasising economic reality and risk/reward analysis in distinguishing agency/service from trading/intermediary transactions. Prior administrative and judicial approaches treating "real estate agent" as service-centric and covering facilitation, advice or consultancy were noted.

Interpretation and reasoning: The definitions in Sections 65(88)-65(89) were held to be service-centric; a person falls within them only where he is "engaged in rendering any service" in relation to sale, purchase, leasing or renting, or renders advice/consultancy/technical assistance in relation to real estate activities. The Court examined the MOUs' terms (delineating fixed average rate per acre, respondent's obligation to procure land, undertake documentation, obtain approvals, bring owners for registration, and the mechanism whereby respondent's gain/loss depended on spread between amounts paid and fixed average rate). The Court found there was no fixed commission, consultancy or service charge: respondent bore procurement risk and could incur losses, and gains arose from price spread - features of a trading/intermediary purchase-and-resale arrangement rather than an agency-for-fee model. The MOUs established sale/conveyance mechanics (transfer of title to the principal/nominee) and payment through banking channels, supporting characterisation as transfer of title rather than provision of taxable service.

Ratio versus obiter: Ratio - A person is a "real estate agent/consultant" under Sections 65(88)-65(89) only where there is an attributable act of rendering a service (e.g., commission/consultancy/advice) and a contract of agency/principal-agent relationship; transactions structured as purchases with risk of profit/loss and transfer of title fall outside the definitions and are covered by the statutory exception to "service" (Section 65B(44)(a)(i)). Obiter - Observations on dictionary/Real Estate (Regulation and Development) Act definitions were analytic/contextual and not necessary to the core holding but support statutory interpretation.

Conclusion: The Court upheld the Appellate Tribunal's conclusion that the MOUs did not create an agency or consultancy relationship and that the respondent's activities were transactions of sale/transfer of immovable property falling within the exception to "service." Consequently, the demand and penalties premised on classification as "real estate agent" services were not sustainable and were rightly set aside.

ISSUE-WISE DETAILED ANALYSIS - II. Whether extended limitation under proviso to Section 73(1) could be invoked for deliberate suppression?

Legal framework: Proviso to Section 73(1) permits recovery beyond the standard limitation where non-levy/payment is due to deliberate suppression, wilful mis-statement, fraud or collusion; standard period is eighteen months from the relevant date.

Precedent treatment: The Court relied on recent controlling precedents reiterating that invocation of extended period requires proof of active, deliberate conduct to evade tax - mere non-payment or failure to seek clarification does not constitute suppression. The Court treated such precedents as binding guidance on the requisite mens rea and evidentiary burden for invoking extended limitation.

Interpretation and reasoning: The Department's case rested on allegation of wilful suppression by non-registration and non-filing of ST-3 returns. The Court found the appellant failed to demonstrate any positive act of concealment: transactions passed through banking channels, were recorded in books of account, and the respondent advanced an arguable bona fide position that the transactions were not taxable services. No evidence established intent to mislead or that material facts were hidden from authorities. Absent demonstrable fraud, collusion, wilful mis-statement or deliberate concealment, the statutory precondition for invocation of extended period was not satisfied.

Ratio versus obiter: Ratio - Extended limitation under proviso to Section 73(1) cannot be invoked unless there is proof of deliberate suppression or a positive, intentional act to evade tax; mere non-payment or omission to register/return-file without concealment does not suffice. Obiter - The Court's recitation of procedural expectations regarding seeking clarifications is advisory, not a mandatory duty creating liability.

Conclusion: The Court held that the appellant failed to establish deliberate suppression by the respondent; therefore, invocation of the extended period of limitation was unjustified. Given the primary conclusion that transactions were non-taxable, extended limitation analysis reinforced setting aside the demand beyond the normal limitation rationale.

OVERALL CONCLUSION (RATIO):

The transactions under the MOUs were characterised as purchases and transfers of immovable property, not the rendering of services by a "real estate agent" or "real estate consultant" within Sections 65(88)-65(89) of the Finance Act, 1994; they fell within the exception to "service" under Section 65B(44)(a)(i). Further, the appellant did not prove deliberate suppression warranting invocation of the extended limitation in proviso to Section 73(1). The Appellate Tribunal's setting aside of demand and penalties was therefore affirmed.

ISSUES PRESENTED AND CONSIDERED

1. Whether the value of duty-paid bought-out items delivered directly at the buyer's site must be included in the assessable value of a boiler cleared in completely knocked down (CKD) condition for central excise duty assessment.

2. Whether the product resulting from assembly/erection at the buyer's site qualifies as "excisable goods" (i.e., movable "goods") under the Central Excise Act, 1944, or becomes immovable on erection so as to be non-excisable.

3. Whether the valuation/transaction value provisions (Section 4 as amended w.e.f. 01.07.2000) may be invoked to determine excisability or to include bought-out items in assessable value prior to establishing the taxable event under the charging section (Section 3).

4. Whether reliance on tariff classification alone determines exigibility of excise duty.

5. Whether the extended limitation period (proviso to Section 11A(1)) applies because of alleged wilful suppression/misstatement by the assessee to evade duty.

6. Whether collection or recovery of amounts from the buyer (including alleged reimbursement of duty) establishes excisability or substitutes for statutory remedies under Section 11D.

ISSUE-WISE DETAILED ANALYSIS

Issue 1-3 (Interrelated): Inclusion of bought-out items in assessable value; role of Section 3 (charging) vis-à-vis Section 4 (valuation/transaction value)

Legal framework: Section 3 is the charging provision: duty of excise levied on excisable goods "produced or manufactured in India." Section 4 prescribes valuation (transaction value) where duty is chargeable with reference to value. The 2000 amendment to Section 4 introduced transaction value rules; Section 2(d) defines "excisable goods" by reference to Schedules.

Precedent treatment: The Court reiterated the distinction repeatedly recognized in precedent that Section 3 defines the subject-matter (nature of tax) and Section 4 provides the measure. Bombay Tyre and other decisions emphasize that the measure cannot determine the subject of the levy; valuation follows, and cannot create, exigibility. Quality Steel, Mittal Engineering and Sirpur Paper establish the movability/marketability test for excisability and hold that erection/installation of plant that becomes immovable is not excisable.

Interpretation and reasoning: The Court held that the sequence is: (i) determine whether a taxable event (manufacture of excisable goods) occurs under Section 3; (ii) if yes, compute duty under valuation provisions (Section 4). The amended Section 4's transaction value becomes relevant only after excisability is established. Revenue's reliance on contract price/transaction value to contend bought-out items are includible conflates valuation with charging. Thus Section 4 cannot be used to establish that the assembled product is an excisable movable good.

Ratio vs. Obiter: Ratio - valuation provisions cannot determine excisability; charging under Section 3 must be established first. Obiter - commentary on the correct sequence and cautionary note on administrative conflation between Sections 3 and 4.

Conclusion: The value of bought-out items cannot be included in assessable value by relying on transaction value (contract price) unless and until the resultant product is held to be an excisable movable good under Section 3.

Issue 2 (expanded): Whether the assembled boiler/steam generating plant is an "excisable good" (movability/marketability test)

Legal framework: "Excisable goods" are goods specified in the Tariff Schedules. The Act does not define "goods"; judicial application relies on movability and marketability tests (Sale of Goods Act interpretations, General Clauses Act, Transfer of Property Act). Tests include whether item is attached to earth, can be dismantled and sold without substantial damage, or becomes immovable by being imbedded or permanently fastened.

Precedent treatment: Quality Steel and Mittal Engineering hold that plants erected and embedded to earth cease to be goods and are not excisable; Sirpur Paper qualifies that attachment for operational efficiency does not automatically make machinery immovable if it can be dismantled and sold; CBEC circular clarifies that items that cannot be dismantled without substantial damage are non-movable and not excisable.

Interpretation and reasoning: The Court examined contract clauses (scope, definitions, payment milestones, civil works obligations) and found the contract contemplated a composite steam generating plant assembled/erected at site using CKD parts and bought-out items, involving civil works (bricks, cement, refractory, ducting). Given the magnitude/specifications (50 TPH, high pressure) and the civil integration, the resultant plant becomes permanently affixed and cannot be dismantled and reassembled without substantial damage. The object of the contract is erection/installation of an immovable plant; therefore, the final product is not a movable "good" for excise purposes.

Ratio vs. Obiter: Ratio - where assembly/erection at site produces a plant permanently affixed to earth and not reasonably dismantlable without substantial damage, the product is immovable and not excisable. Obiter - factual observations distinguishing cases where attachment is merely for operational efficiency and where dismantling remains feasible.

Conclusion: The assembled steam generating plant is immovable upon erection and thus not an excisable good; consequently bought-out parts delivered at site cannot be included in the assessable value of an excisable boiler.

Issue 4: Tariff classification and "utility"/part v. accessory debate

Legal framework: Presence of an item in the Tariff Schedule creates susceptibility to excise only if the item satisfies charging provisions (i.e., is a good and produced/manufactured). Distinction between "part" and "accessory" is relevant only after excisability is established.

Precedent treatment: Moti Laminates cautions that tariff classification alone does not alter the basic character of leviability; Quippo (referred) sets functional test for part v. accessory but does not override charging requirement.

Interpretation and reasoning: The Court found revenue/tribunal misplaced focus on whether bought-out items were "essential parts" (utility test). That question is subordinate and irrelevant where the resultant product is not excisable. Even if bought-out items are functionally essential, inclusion in assessable value depends on the underlying product being excisable.

Ratio vs. Obiter: Ratio - tariff presence and utility/part analysis cannot substitute for the initial excisability inquiry. Obiter - elaboration that the part/accessory debate is consequential only upon an affirmative finding of excisability.

Conclusion: Tariff classification and part/accessory analysis do not establish exigibility; they are inapplicable where the assembled product is immovable and non-excisable.

Issue 6: Recovery/collection from buyer and applicability of Section 11D

Legal framework: Section 11D provides statutory mechanism to recover amounts collected from buyers as representing excise duty in excess of payable duty; recovery under Section 11A is separate and depends on non-levy/short-levy etc.

Precedent treatment: Court emphasized statutory remedy (Section 11D) for recovery of amounts collected from buyers rather than treating collection as proof of excisability.

Interpretation and reasoning: The Court held that even if sums were recovered from the buyer as "reimbursement of duty," such recovery does not by itself confer excisability on the final product. If revenue thought excess amounts were collected, it should have proceeded under Section 11D. Collection by assessees cannot be used to bootstrap excisability where charging section is not satisfied.

Ratio vs. Obiter: Ratio - collection/recovery from buyer is not determinative of excisability; Section 11D is the proper statutory channel for such recovery. Obiter - critique of revenue's procedural choice.

Conclusion: Alleged recovery from buyer does not justify including bought-out items in assessable value; revenue should have invoked Section 11D where appropriate.

Issue 5: Validity of show cause notice under extended limitation proviso to Section 11A(1)

Legal framework: Section 11A(1) normally permits notice within one year; proviso extends to five years where non-levy/short-levy/erroneous refund is by reason of fraud, collusion, wilful misstatement or suppression of facts or contravention of provisions with intent to evade duty. Jurisprudence requires strict construction and proof of deliberate conduct/positive act amounting to wilful suppression.

Precedent treatment: Pahwa Chemicals and Continental Foundation: mere omission or failure to declare is not sufficient; revenue must prove deliberate suppression/misstatement with intent to evade; burden lies on revenue to establish mental element.

Interpretation and reasoning: The Court examined record and found the immovability contention was raised in the assessee's reply to the show cause notice and accepted by the Assistant Commissioner earlier; RT-12 returns had been filed; no material establishes deliberate concealment or positive act intended to evade. Revenue had access to particulars and did not demonstrate wilful suppression. Invocation of extended limitation was therefore unsustainable.

Ratio vs. Obiter: Ratio - extended limitation cannot be invoked absent proof of wilful misstatement/suppression or intent to evade; mere failure or difference of view does not suffice. Obiter - admonition that proviso is to be construed strictly and burden rests on revenue.

Conclusion: Extended limitation under proviso to Section 11A(1) was improperly invoked; show cause notice issued on that basis is invalid and proceedings based thereon are quashed.

ISSUES PRESENTED AND CONSIDERED

1. Whether a writ in the nature of mandamus directing the regional environmental authority to decide a pending representation seeking cancellation of pollution clearance and licence should be issued.

2. Whether the High Court should call for counter-affidavits and adjudicate the substantive merits of the petitioner's claim regarding fraudulent change of partners and alleged misuse of the clearance/licence, or whether the matter can be disposed of by directing the administrative authority to decide within a fixed time.

3. The propriety of final disposal of a writ petition without entering into merits where the administrative authority has already made a recommendation and the matter is under consideration by the competent authority.

ISSUE-WISE DETAILED ANALYSIS

Issue 1 - Mandamus to compel administrative decision on representation for cancellation of pollution clearance/licence

Legal framework: The Court considered the scope of writ jurisdiction under Article 226 to issue mandamus compelling a public authority to perform a public or statutory duty, specifically to decide pending representations relating to environmental clearances and licences administered by a pollution control board.

Precedent Treatment: No specific precedents were cited in the judgment; therefore, no prior authority was followed, distinguished or overruled in the Court's reasoning.

Interpretation and reasoning: The Court recognized that a petitioner seeks a writ of mandamus to direct the regional officer to decide a representation dated 19.03.2025 requesting cancellation of an air pollution clearance on the ground of alleged fraudulent change in partnership and continued operation. The Court treated the relief sought as an order for administrative decision rather than obtaining substantive adjudication on contested facts such as forgery or fraud. The Court noted that the regional officer had already forwarded a recommendation to the Chairman for necessary orders, indicating that the administrative process was in motion.

Ratio vs. Obiter: Ratio - The Court's direction that where an administrative authority has a pending representation concerning licence/clearance, the Court may direct the authority to decide the representation within a specified timeframe rather than itself deciding the underlying factual disputes.

Conclusions: The Court did not grant an order cancelling the clearance/licence directly; instead, it exercised supervisory writ power to compel expeditious administrative decision-making by directing that, if the recommendation has been placed before the competent authority, a decision be taken within six weeks upon presentation of a certified copy of the order.

Issue 2 - Whether to call counter-affidavits and adjudicate merits or to remit to administrative authority

Legal framework: The Court considered the institutional competence of judicial review under Article 226 vis-à-vis administrative competence to assess and decide on regulatory licences and cancellation applications, and principles governing premature or interlocutory judicial intervention where administrative proceedings are pending.

Precedent Treatment: The judgment did not cite or apply specific precedent authorities concerning the duty to call counter-affidavits or the scope of merits adjudication when administrative remedies are available and being pursued; hence there is no precedent treatment recorded.

Interpretation and reasoning: The Court observed that the factual matrix involved allegations about internal partnership changes and purported fraudulent deeds affecting GST registration and licence holders. Given that the pollution control regional officer had already recommended placing the matter before the Chairman and the matter was under consideration, the Court found it inappropriate to keep the writ petition pending for further pleadings or to call for counter-affidavits. The Court refrained from entering into the merits because the administrative process was ongoing and the relief sought (cancellation of licence) was within the competence of the pollution control authority. The Court accepted the parties' consent to final disposal without substantive adjudication.

Ratio vs. Obiter: Ratio - Where administrative authorities are seized and the matter is under active consideration, the Court may refuse to call for counter-affidavits and may refuse to decide disputed facts on merits, preferring to direct a timely administrative decision instead.

Conclusions: The Court exercised restraint from calling for counter-affidavits and declined to adjudicate merits. It disposed of the writ by directing the administrative authority to decide within a time-bound period, thereby preserving the administrative determination as primary and judicial review as supervisory.

Issue 3 - Final disposal of a writ petition without entering into merits where administrative recommendation has been placed before the competent authority

Legal framework: The judgment relied on the Court's supervisory power to ensure administrative compliance with statutory duties and to provide effective relief by directing administrative authorities to act within reasonable timeframes, while avoiding premature judicial determination of contested facts.

Precedent Treatment: No precedents were invoked or distinguished in the text; the Court's approach is applied to the facts of the instant matter without reliance on earlier reported authority in the judgment itself.

Interpretation and reasoning: The Court balanced competing considerations: the petitioner's entitlement to a timely administrative decision on a representation seeking cancellation of environmental clearance versus the avoidance of judicial intrusions into fact-intensive administrative determinations. Because the regional officer had made a recommendation and the matter rested with the Chairman, the Court concluded that final judicial resolution on merits was unnecessary and inappropriate at that stage. The Court thus disposed of the petition by imposing a six-week deadline for the administrative decision after presentation of a certified copy of the order.

Ratio vs. Obiter: Ratio - It is appropriate for the Court to finally dispose of a writ petition, without deciding substantive issues of fact, by directing the competent administrative authority to decide a pending representation within a specified period where the authority has already taken preliminary steps (e.g., made recommendations) and the matter is under active consideration; such disposal serves judicial economy and respects administrative competence.

Conclusions: The writ petition was finally disposed of by a direction for administrative decision within six weeks; the Court explicitly declined to enter into the merits and declined to call for counter-affidavits, thereby leaving determination of cancellation and related factual disputes to the pollution control authority.

Cross-references and Ancillary Observations

1. The Court's disposal is conditioned on the procedural fact that the regional officer's recommendation has been placed before the competent authority; if so, the six-week timeline applies from the presentation of a certified copy of the order. (See Issue 1 and Issue 3 above.)

2. The Court's order reflects the broader principle that judicial intervention by way of mandamus can be limited to compelling a timely administrative decision rather than substituting the Court's judgment for the administrative authority on contested factual matters, preserving the primacy of administrative adjudication on licence/cancellation issues. (See Issues 1-3.)

3. No precedent authority was applied, followed or overruled; the Court's reasoning rests on the facts, the stage of administrative proceedings and the parties' consent not to pursue further affidavits or merits in the Court.

1. ISSUES PRESENTED AND CONSIDERED

1. Whether an Assessing Officer can treat the absolute incremental difference in cash deposits between two assessment years as unexplained cash credit and make an addition under section 68 read with section 115BBE of the Income Tax Act solely on that basis.

2. Whether acceptance of books of account (audited under section 44AB) and contemporaneous cash books, sales and purchase records, and bank statements can preclude an addition under section 68 where the Assessing Officer accepts part of the source but rejects the remainder without independent or concrete evidence of concealment.

3. Whether deposits during the demonetization period (or reliance on decisions concerning deposits of specified bank notes) are material to uphold an addition where the Assessing Officer has not specifically held that SBNs were deposited.

2. ISSUE-WISE DETAILED ANALYSIS

Issue 1: Legality of adding the absolute incremental difference in cash deposits between two assessment years as unexplained cash credit under section 68 read with section 115BBE.

Legal framework: Section 68 permits taxation of unexplained cash credits where the assessee fails to satisfactorily explain the nature and source of credited sums. Section 115BBE provides for special rate and treatment for unexplained cash credits. The Assessing Officer must form a satisfaction on the existence of unexplained credit based on evidence.

Precedent Treatment: The Court/Tribunal considered authority applying to deposits of specified bank notes during demonetization as distinguishable where the AO's case is premised solely on inter-year comparison of deposits. Decisions addressing SBN deposit taxation were relied upon by the Department but were not applied on facts.

Interpretation and reasoning: The Tribunal found that mere numerical increase in cash deposited in bank in one year vis-à-vis a prior year does not, without more, establish an unexplained cash credit. The AO accepted part of the source (deposits in the earlier year) but arbitrarily rejected the excess deposit in the subject year despite common source (cash sales). The assessee's books showed substantial cash balance before expenses, turnover increase was recorded, books were audited under section 44AB, and contemporaneous records (cash book, bank statements, confirmations) were produced. The Tribunal reasoned that an absolute difference is not proof of concealment; absent specific contrary evidence, such as independent material showing undisclosed receipts or SBN deposits, presumptive treatment of the difference as unexplained is impermissible. The Tribunal illustrated the absurdity of the AO's presumption by pointing out that year-to-year variations could equally indicate a subsequent decrease, which would not justify presuming suppression in that later year.

Ratio vs. Obiter: Ratio - An Assessing Officer cannot, as a matter of law, base an addition under section 68 read with section 115BBE solely on the absolute incremental difference in cash deposits between two assessment years where the assessee has produced audited books and supporting contemporaneous records indicating a common source for deposits. Obiter - Illustrative observations on the hypothetical implications of turnover fluctuation across years.

Conclusion: The addition based solely on the inter-year incremental difference was illegitimate and unsustainable; the Tribunal deleted the addition under section 68.

Issue 2: Effect of audited books and contemporaneous records where the AO accepts part of the source but rejects other deposits without concrete evidence.

Legal framework: Acceptance of books of account audited under section 44AB is a significant factor in assessing the credibility of claimed sources. The Assessing Officer bears the onus of displacing such recordal by adducing material showing inaccuracies, omissions, or mala fide concealment.

Precedent Treatment: The Tribunal relied on co-ordinate decisions from the same Bench/Tribunal that held deletion of additions where the AO arbitrarily accepted part of source and rejected part without demonstrating defects in audited records or independent contradictions.

Interpretation and reasoning: The Tribunal observed that the AO's selective acceptance-and-rejection of the same source (cash sales) for different tranches of deposits lacks rational basis. Where the books are audited and no defect is pointed out by the lower authorities, and where contemporaneous documents (cash book, sales, bank statements, creditor confirmations) support the source, the AO must produce contrary evidence to justify treating any portion as unexplained. Mere suspicion or an arithmetic inter-year comparison cannot supplant evidentiary proof of escapement.

Ratio vs. Obiter: Ratio - Audited books and contemporaneous records, when not properly impeached by the Revenue, preclude treating part of identical-sourced deposits as unexplained merely because another part was accepted; an AO must demonstrate concrete contrary material to justify an addition. Obiter - Comments on what would constitute adequate contrary evidence (e.g., material discrepancies, independent documentary contradictions).

Conclusion: Because the books were audited under section 44AB and contemporaneous records were produced and not shown to be defective, the Tribunal held that the AO's selective rejection was arbitrary and deleted the impugned addition.

Issue 3: Relevance of demonetization/SBN deposit authorities where the AO did not specifically hold SBN deposit and the reassessment was under the pre-amendment regime.

Legal framework: Taxation of deposits of specified bank notes (SBN) during demonetization has been treated in specific authorities where the presence of SBN deposits was a material finding; the legal regime applicable to reopening (old vs new) affects the validity of reassessment in some contexts.

Precedent Treatment: The Revenue relied on decisions concerning SBN deposits and on reopening-regime jurisprudence. The Tribunal acknowledged the Revenue's contention that the reopening was under the old regime but treated the question of escapement on its merits.

Interpretation and reasoning: The Tribunal emphasized fact-specificity: where the AO does not find or record that SBNs were deposited, authorities dealing with SBN deposits are distinguishable. The present addition was premised exclusively on inter-year deposit comparison, not on a finding of SBN deposit; therefore, reliance on SBN authorities was misplaced. The Tribunal also noted that applicability of new-regime reopening jurisprudence was not determinative of the escapement issue adjudicated.

Ratio vs. Obiter: Ratio - Authorities on SBN deposits are not applicable where there is no finding of SBN deposit; distinguishing such precedents is warranted on facts. Obiter - Observations accepting the Revenue's submission on regime applicability but declining to make it dispositive in the absence of a specific SBN finding.

Conclusion: The Tribunal distinguished SBN-centric authorities as inapposite and proceeded to delete the addition on evidentiary grounds notwithstanding the Revenue's reliance on such authorities.

Overall Disposition

The Tribunal concluded that the Assessing Officer's addition under section 68 read with section 115BBE, based solely on the absolute increase in cash deposits between two assessment years and effected despite audited books and supporting contemporaneous records, was arbitrary and unsustainable; the addition was deleted and the appeal allowed in part. Corresponding proceedings were declared infructuous in consequence of the decision on the main issue.

ISSUES PRESENTED AND CONSIDERED

1. Whether reopening of assessment under section 147 is bad in law and without jurisdiction (as argued by assessee).

2. Whether unsecured loan of Rs. 50,00,000 received from a third party can be treated as unexplained cash credit under section 68 despite being received and repaid through banking channels, with interest and TDS, and with lender confirmation.

3. Whether repayment of the entire loan in a subsequent assessment year with interest and TDS precludes addition under section 68 and/or tax under section 115BBE.

4. Whether the Assessing Officer's failure to issue summons/notice to the alleged lender under section 133(6), and alleged denial of documents/opportunity to cross-examine, vitiates the addition on principles of natural justice.

5. Whether levy of interest under sections 234A/B/C/D and initiation of penalty proceedings under section 271(1)(c) are justified in light of the deletion of the addition.

ISSUE-WISE DETAILED ANALYSIS

Issue 1 - Legality of reopening under section 147

Legal framework: Reopening of assessment under section 147 requires jurisdictional facts and satisfaction that income has escaped assessment; procedural fairness and jurisdictional compliance are prerequisites.

Precedent treatment: No specific precedent was relied upon by the Tribunal to set aside reopening on jurisdictional grounds in this decision; the Tribunal focused on merits rather than striking down reopening per se.

Interpretation and reasoning: The Tribunal did not find it necessary to quash the reopening order on jurisdictional grounds because the substantive challenge to the reassessment rested on the correctness of the addition under section 68 and the factual record showing receipt and subsequent repayment through banking channels. The Court proceeded to decide on the merits of classification of the loan as unexplained credit.

Ratio vs. Obiter: Obiter in that the Court did not lay down a general principle invalidating reopening in similar facts; ratio limited to allowing the appeal after considering substantive evidence furnished by the assessee.

Conclusion: Reopening per se was not adjudicated as independently bad in law; the appeal succeeded on substantive grounds relating to section 68, rendering separate disposal of reopening unnecessary.

Issue 2 - Treatment of unsecured loan as unexplained credit under section 68

Legal framework: Section 68 treats sums shown as income from "other sources" or unexplained cash credits where identity, creditworthiness and genuineness of the shareholder/lender must be established by the assessee; once primary onus is discharged, burden shifts to AO to produce contrary evidence.

Precedent treatment: The Tribunal relied on binding/precedential decisions of the jurisdictional High Court holding that subsequent repayment with bank trail and corroborative documents negates the basis for an addition under section 68; those High Court decisions were followed.

Interpretation and reasoning: The Tribunal examined ledger entries, bank statements, lender confirmations, interest payments and TDS records. It noted loans of Rs. 13 lakhs and Rs. 37 lakhs crediting the assessee's bank on consecutive dates, interest paid with TDS for relevant year and subsequent year, and full repayment through banking channels on a later date. There was no allegation of cash trail by the Revenue. Given these records, the assessee discharged primary onus as to identity, genuineness and creditworthiness. In absence of corroborative contrary evidence from AO (including no summons/notice to lender under section 133(6)), addition under section 68 was unsustainable.

Ratio vs. Obiter: Ratio - where a loan is routed through banking channels, interest paid with TDS, lender confirmation furnished and loan repaid in subsequent year through banking channels, such evidence discharges the assessee's onus and, absent rebuttal/corroboration by AO, an addition under section 68 cannot be sustained.

Conclusion: The addition of Rs. 50,00,000 under section 68 was deleted as the assessee proved identity, creditworthiness and genuineness; the Tribunal followed jurisdictional High Court authority to reach this conclusion.

Issue 3 - Effect of subsequent-year repayment on addition and applicability of section 115BBE

Legal framework: Subsequent repayment of alleged loans, supported by bank records and interest/TDS, can be material to negate the inclusion as unexplained cash credit under section 68; section 115BBE applies to income from undisclosed sources (specific applicability depends on characterisation of income as unexplained cash credit).

Precedent treatment: Jurisdictional High Court rulings relied upon by the Tribunal held that acceptance of repayment in subsequent year precludes addition under section 68; the Tribunal followed those rulings.

Interpretation and reasoning: The Tribunal held that since the entire loan was repaid through banking channels with interest and appropriate TDS (and Revenue did not contest the repayment/trail), the basis for invoking section 115BBE (which taxes undisclosed income) fell away because the purported undisclosed credit was shown to be genuine and extinguished by repayment. The AO had not produced evidence to contradict repayment facts.

Ratio vs. Obiter: Ratio - subsequent repayment through banking channels, with interest and TDS, is significant evidence negating classification as unexplained credits and undermines invocation of section 115BBE absent contrary evidence.

Conclusion: Invocation of section 115BBE was not sustained; deletion of the addition necessarily removed any basis to apply section 115BBE.

Issue 4 - Failure to issue notice/summons to lender under section 133(6) and breach of principles of natural justice

Legal framework: AO may summon third parties under section 133(6) for corroboration; principles of natural justice require opportunity to cross-examine and disclosure of material relied upon.

Precedent treatment: The Tribunal recorded the assessee's contention that AO did not issue summons to the lender; it treated the absence of AO's independent corroboration as material when assessee had provided primary evidence.

Interpretation and reasoning: The Tribunal noted that the AO did not undertake steps such as issuing notice/summons to the lender to verify genuineness or obtain contradictory evidence. Given the assessee had produced bank evidences, ledger entries, lender confirmation, interest and TDS particulars and full repayment, lack of AO inquiry or contrary corroboration weighed against sustaining the addition. Allegations of inadequate opportunity and short response time were noted by the assessee, but the Tribunal decided the substantive evidentiary position in favour of the assessee.

Ratio vs. Obiter: Obiter with respect to natural justice defects - while the Tribunal referred to lack of AO action as material, the decisive factor was the sufficiency of the assessee's documents and repayment, rather than an independent holding that procedural lapses alone would nullify the addition.

Conclusion: The AO's failure to summon the lender and lack of any contrary evidence rendered the AO's addition unsustainable; the Tribunal thus deleted the addition without needing to quash the reassessment solely on procedural grounds.

Issue 5 - Interest under sections 234A/B/C/D and penalty under section 271(1)(c)

Legal framework: Interest under sections 234A/B/C/D arises on tax defaults; penalty under section 271(1)(c) depends on concealment or misreporting of income.

Precedent treatment: The Tribunal did not elaborate separate precedent on interest/penalty but addressed these consequential issues by allowing the appeal and deleting the addition.

Interpretation and reasoning: Since the substantive addition under section 68 was deleted, the tax demand that generated interest and the foundation for penalty proceedings no longer stood. The Tribunal thus allowed the appeal, which by necessary consequence removes the basis for associated interest and penalty to the extent they relate to the deleted addition.

Ratio vs. Obiter: Ratio - deletion of the impugned addition nullifies the basis for related interest and penalty arising solely from that addition; any consequential relief follows the substantive decision.

Conclusion: Interest and penalty founded on the deleted addition could not be sustained; appeal allowed and additions deleted, with attendant consequences to interest and penalty insofar as they arise from the impugned addition.

ISSUES PRESENTED AND CONSIDERED

1. Whether reopening assessment under section 147/148 was validly initiated on the basis of "reasons to believe" arising from AIR information of sale of immovable property.

2. Whether approval under section 151 for issuance of notice beyond four years was valid or mechanically granted.

3. Whether the proviso to section 147 (escapement by failure to disclose truly and fully all material facts) was required to be complied with where the return was processed under section 143(1) and not scrutinised under section 143(3) or previously reassessed under section 147.

4. Whether reassessment proceedings were vitiated for want of valid service of notice under section 143(2) and for lack of DIN on departmental communication.

5. Whether cost of acquisition and indexed cost of improvement (one-third share) claimed by a co-owner is allowable without production of independent documentary proof where the co-owner's share and indexed renovation/ improvement expense have been accepted in a co-owner's scrutiny assessment.

6. Whether exemption under section 54 (investment in new residential property) is maintainable where construction/possession was delayed beyond statutory time due to developer/authority delay (possession/registration delayed), and whether such delay disentitles the assessee from section 54 relief.

ISSUE-WISE DETAILED ANALYSIS

Issue 1 - Validity of reopening under sections 147/148 based on AIR information

Legal framework: Reopening requires "reasons to believe" that income chargeable to tax has escaped assessment; AIR (registrar) information is a recognised source that can give rise to such reasons.

Precedent treatment: The Tribunal considered jurisdictional and other High Court authorities recognizing that receipt of PAN-based AIR information can constitute a basis for recording reasons to believe; contrasting authorities on strictness of reasons were noted by the parties.

Interpretation and reasoning: The Court reproduced the reasons recorded by the AO which stated receipt of PAN-based AIR information indicating sale consideration, followed by enquiries under section 133(6) and the assessee's incomplete documentary response. The AO specifically noted failure to furnish documents to substantiate cost of acquisition/improvement and exemption claim, and concluded that capital gain remained unexplained.

Ratio vs. Obiter: Ratio - AIR information, coupled with enquiries and lack of substantiation, suffices to constitute "reasons to believe" for reopening under section 147. The Tribunal treated this as binding for the facts of the case; ancillary observations comparing case law were obiter to the extent they discussed general standards.

Conclusion: The reopening was validly initiated on the basis of reasons recorded from AIR information and subsequent enquiries; grounds attacking the substance of the reasons were dismissed.

Issue 2 - Validity of approval under section 151 (sanction beyond four years)

Legal framework: For notices issued beyond four years, approval of the specified authority under section 151 is a statutory requirement; the authority must be satisfied with the reasons recorded by the AO.

Precedent treatment: The Tribunal relied on authorities holding that the approving authority need not record elaborate independent reasons but must apply mind and record satisfaction; contrasted with authorities invalidating perfunctory single-word approvals.

Interpretation and reasoning: The approval recorded by the PCIT stated satisfaction that it was a fit case for issuance of notice under section 148. The Tribunal held that this recording demonstrated application of mind and was not a mechanical stamp of approval. Distinguishing precedents where approval amounted to a single word, the Court held the present approval sufficient.

Ratio vs. Obiter: Ratio - A concise recorded satisfaction by the specified authority, reflecting that the authority considered the reasons placed before it, suffices under section 151; failure to record elaborate reasons is not fatal. Observations distinguishing other authorities constitute explanatory obiter.

Conclusion: Approval under section 151 was validly granted; challenge to mechanical grant was rejected.

Issue 3 - Applicability of proviso to section 147 concerning failure to disclose truly and fully all material facts

Legal framework: The proviso to section 147 (as interpreted by higher courts) is engaged when an assessment or reassessment is being reopened on the ground that income escaped due to failure to disclose truly and fully material facts, particularly when a return had previously been subject to scrutiny under section 143(3) or earlier reassessment under section 147.

Precedent treatment: Authorities require strict adherence to the proviso where the return was scrutinised previously; however, where the return was only processed under section 143(1) and not scrutinised, the triggering condition for the proviso may not arise.

Interpretation and reasoning: The Tribunal observed the return was processed under section 143(1) and not scrutinised under section 143(3) or earlier reassessed under section 147. Therefore, the obligation to apply proviso 1 to section 147 was not triggered. The Tribunal held no legal lacuna in the reasons recorded by the AO for failing to invoke that proviso.

Ratio vs. Obiter: Ratio - Proviso 1 to section 147 is not applicable where the return was only processed under section 143(1) and not subjected to scrutiny under section 143(3) or prior reassessment; absence of such compliance does not vitiate reopening. Ancillary comparisons to other authorities were obiter.

Conclusion: No invalidity arises from non-compliance with proviso 1 to section 147 in the present factual posture; challenge dismissed.

Issue 4 - Validity of service of notice under section 143(2) and absence of DIN

Legal framework: Valid service of notices is a jurisdictional requirement; procedural formalities (such as DIN) prescribed by CBDT circulars are relevant when applicable.

Precedent treatment: Procedural defects can be curable depending on timing and statutory regime; requirement of DIN became mandatory only from a specified later date by CBDT circular.

Interpretation and reasoning: Record showed notice under section 143(2) dated 13.09.2019 was issued and served (service noted on 18.09.2019). The DIN requirement became mandatory only from October 1, 2019; the notice predated that requirement. The assessee's contention that the recipient named was unauthorized was noted, but the Tribunal accepted the departmental record including a show-cause and a response filed on 18.09.2019.

Ratio vs. Obiter: Ratio - Notice dated prior to mandatory DIN requirement cannot be invalidated for absence of DIN; factual service established by departmental record precludes quashing for non-service. Observations about curability of defects are explanatory.

Conclusion: Service of notice under section 143(2) was valid; challenge based on non-service and DIN absence is dismissed.

Issue 5 - Allowability of one-third share of indexed cost of acquisition and indexed cost of improvement claimed by co-owner

Legal framework: Co-owners may compute capital gains in proportionate shares; where one co-owner's indexed renovation/improvement expenses are accepted in assessment, question arises whether other co-owners must independently prove identical documentary evidence.

Precedent treatment: The Tribunal relied upon a High Court decision holding that once indexed renovation expense of a co-owner is accepted, other co-owners need not produce separate proof to claim their proportional share.

Interpretation and reasoning: Facts show co-owners jointly inherited property; the assessee and co-owners each computed one-third share. The Department had accepted the one-third share including index cost of improvement and transfer expenses under section 143(3). The Tribunal treated the cited High Court authority as directly applicable and held that the assessee is not required to produce separate documents for his share where acceptance in co-owner's scrutiny exists.

Ratio vs. Obiter: Ratio - Where indexed improvement/renovation expenses of a co-owner have been accepted, a co-owner need not independently prove the same to claim proportionate indexed costs; such allowance is required. Ancillary discussion of evidence standards is obiter.

Conclusion: Cost of acquisition and cost of improvement (one-third share) are allowable; related grounds allowed.

Issue 6 - Entitlement to exemption under section 54 despite delay in construction/possession due to developer/authority

Legal framework: Section 54 provides exemption subject to acquisition or construction of a new residential house within specified time limits; jurisprudence allows purposive interpretation where delay is for reasons beyond assessee's control.

Precedent treatment: The Tribunal relied on domestic decisions (including higher court and tribunal authorities) that granted section 54 relief where delay in construction/possession resulted from developer or authority actions (e.g., farmers' unrest, delayed possession by authority) and applied purposive interpretation in favour of the assessee.

Interpretation and reasoning: The assessee had booked a plot with a development authority in 2009, made payments over years, but was unable to construct before the statutory cut-off because possession and registration were delayed by the authority until 2015 (actual possession in 2023). The Tribunal found the delay attributable to the authority (YEIDA) and held the jurisprudence favoring relief applicable. The Tribunal applied purposive interpretation and concluded that amounts invested in the plot/allotment qualify as investment for section 54 where the assessee intended and acted to acquire/construct within the allowable period but was prevented by circumstances beyond control.

Ratio vs. Obiter: Ratio - Where delay in completing acquisition/construction arises from developer/authority conduct beyond assessee's control, exemption under section 54 should not be denied; purposive construction of section 54 applies. Supporting citations and policy reasoning are explanatory obiter to the extent they discuss scope of mens rea/intent.

Conclusion: Exemption under section 54 is allowable given the factual matrix of authority delay; related grounds are allowed.

Overall result reached by the Court: Reopening and procedural aspects under sections 147/148/151 and service under section 143(2) upheld; substantive relief granted to the assessee in respect of indexed cost (acquisition/improvement) for co-owner share and allowance of exemption under section 54. The appeal is partly allowed accordingly.

ISSUES PRESENTED AND CONSIDERED

1. Whether additions of Rs. 5,00,00,000 made under Section 68 (cash credits/unsecured loans) are sustainable where the assessee produced documents to establish identity, genuineness and creditworthiness of lenders and repayments were made subsequently through banking channels.

2. Whether disallowance of interest expenditure of Rs. 51,39,694 under Section 37 (alleged bogus interest on the above loans) is sustainable once the primary addition under Section 68 is deleted.

3. Whether the higher rate taxation provision in Section 115BBE (applying to income represented by cash credits under Section 68) is applicable to the credits in question given the dates of the transactions and the relevant notification/notification effective dates.

4. Ancillary legal question addressed in submissions: whether mis-recital or non-mentioning of an enabling provision in assessment proceedings vitiates the assessment (principle of substance over form / Section preserving validity despite clerical errors).

ISSUE-WISE DETAILED ANALYSIS

Issue 1 - Validity of addition under Section 68 for unsecured loans / cash credits

Legal framework: Section 68 permits treating unexplained cash credits as the assessee's income where identity, genuineness or creditworthiness of the lender or source of funds is not satisfactorily explained. The onus is on the assessee to explain nature and source of such receipts; once identity/genuineness/creditworthiness and mode of payment (banking channel) are proved, the addition is not warranted and the department, if aggrieved, may proceed against the lender.

Precedent treatment: The Court/Tribunal applied settled principles from prior authorities that (a) receipts through doubtless banking channels and proof of investor identity/creditworthiness tend to defeat an addition under Section 68; (b) where direct evidence of lender capacity exists, reliance on precedent holding to the contrary (where such proof was absent) is inapposite and facts must be distinguished; and (c) additions under Section 68 can be made even without rejection of books where deposits in bank accounts remain unexplained.

Interpretation and reasoning: The Tribunal examined documentary proof provided for each lender: company master data, incorporation certificate, PAN/ITR acknowledgments, lenders' bank statements and financials, ledger confirmations, assessee's bank statements evidencing receipt and interest payments, and repayment in succeeding year(s). It noted payment of interest at 9% with TDS deduction, full repayment through banking channels in succeeding F.Y., absence of adverse departmental action against repayments, and sufficient net worth of lenders. The Tribunal applied the principle that where identity, genuineness and creditworthiness of lenders and banking channel receipts are established, the addition under Section 68 is unwarranted and the correct course for Revenue is to examine and, if necessary, proceed against lenders rather than impute income to the assessee on conjecture.

Ratio vs. Obiter: The holding that the assessed additions under Section 68 were unwarranted on the facts before the Tribunal is ratio for the matter at hand (binding for the present dispute). The general observations distinguishing other precedents for lack of direct evidence in those cases are treated as explanatory reasoning (obiter) but used to justify the differentiation of factual matrices.

Conclusion: Addition of Rs. 5,00,00,000 under Section 68 was deleted because the assessee satisfactorily established identity, genuineness and creditworthiness of lenders, payments and repayments were through banking channels, interest was paid with TDS and lenders had requisite net worth; therefore the AO's addition was unwarranted and set aside.

Issue 2 - Disallowance of interest under Section 37 once principal addition under Section 68 is deleted

Legal framework: Section 37 disallows business expenditure if shown to be bogus; however, interest payments legitimately made on genuine loans are allowable. Disallowance predicated on the loans being bogus collapses if loans themselves are held genuine.

Precedent treatment: The Tribunal followed the logical and established approach that interest disallowance for being bogus is consequential on the characterization of the underlying loan; deletion of the loan addition removes the foundation for treating interest payments as bogus.

Interpretation and reasoning: Because the Tribunal concluded that the unsecured loans were genuine and properly evidenced, interest paid on such loans (with TDS) cannot be characterized as bogus expenditure. Consequently, the AO's disallowance was reversed as consequential to deletion of the Section 68 addition.

Ratio vs. Obiter: The reversal of interest disallowance is ratio in the present appeal (consequential and necessary to final disposition).

Conclusion: Disallowance of interest of Rs. 51,39,694 under Section 37 was deleted consequent to deletion of the Section 68 addition.

Issue 3 - Applicability of higher tax under Section 115BBE to the impugned credits (timing of notification / effective dates)

Legal framework: Section 115BBE applies a higher rate of tax to income represented by cash credits under Section 68 as amended; applicability depends on the effective date of the amendment/notification and the dates of the underlying transactions/credits.

Precedent treatment: The Tribunal invoked principles on construction of taxing statutes and temporal application of amendments/notifications; it referred to ratio in an earlier apex decision (Kasimtharuvi Tea Estate principle) concerning temporal effect and retrospective/non-retrospective operation of tax notifications and statutes.

Interpretation and reasoning: The Tribunal observed that the CIT(A) omitted adjudication of the ground asserting non-applicability of amended Section 115BBE because the credits predated the relevant notification (15.12.2016/notification dated 18.12.2016 and the 01.04.2016 reference in submissions). Applying the cited ratio on temporal effect, the Tribunal concluded that the higher rate provision did not apply to the credits that arose prior to the relevant notification/effective date and therefore the cross-objection raising this point succeeded.

Ratio vs. Obiter: The conclusion that Section 115BBE was not applicable to the credits in question given their timing is ratio as accepted by the Tribunal for the cross-objection.

Conclusion: The Tribunal accepted the cross-objection on this point and held that Section 115BBE (higher rate on cash credits) was not applicable to the credits which anteceded the relevant notification/effective date.

Issue 4 - Effect of mis-recital or wrong/omitted reference to legal provisions in assessment proceedings

Legal framework: Provision preserving validity of assessments despite clerical mistakes prevents invalidation of proceedings solely because of non-mentioning or wrong citation of a legal provision; principle of substance over form applies where proceedings are otherwise valid.

Precedent treatment: The Tribunal noted authorities holding that wrong quotation/non-mention of a Section is not fatal to proceedings and that assessments may not be invalidated solely on such grounds; the Tribunal emphasized the need to read judgments in factual context and not apply precedents without distinguishing facts.

Interpretation and reasoning: Submissions raising this principle were acknowledged; the Tribunal treated the principle as supporting the view that technical recitals do not automatically vitiate otherwise valid proceedings, but the Court's ultimate decision rested on substantive proof of identity/genuineness/creditworthiness and timing of transactions rather than on any purely formal infirmity.

Ratio vs. Obiter: Observations on the non-fatality of mis-recital are explanatory (obiter) in the context of this judgment, cited to counter arguments that procedural misstatements should invalidate the AO's action.

Conclusion: Clerical errors in citing statutory provisions do not automatically invalidate assessment proceedings; however, here the outcome turned on substantive evidentiary findings and temporal construction of the taxing provision.

ISSUES PRESENTED AND CONSIDERED

1. Whether a domestic company incorporated after the relevant previous year (2014-15) can be treated as having "total turnover or the gross receipt in the previous year 2014-15" not exceeding Rs. 5 crore for the purpose of application of the 29% tax rate under Paragraph E(i) of the First Schedule to the Finance Act, 2017.

2. Whether an Assessing Officer correctly exercised rectification jurisdiction under section 154 of the Income Tax Act, 1961 to alter tax charged from 29% to 30% on the ground that charging at 29% was an "obvious mistake apparent from the record."

3. Whether a cited decision holding a different factual/legal proposition is binding or distinguishable on the present issue (treatment of turnover for a company not in existence in the relevant previous year).

ISSUE-WISE DETAILED ANALYSIS

Issue 1 - Applicability of 29% rate where company did not exist in previous year 2014-15

Legal framework: Paragraph E of the First Schedule to the Finance Act, 2017 prescribes two alternative rates for a domestic company: (i) 29% where "its total turnover or the gross receipt in the previous year 2014-15 does not exceed five crore rupees"; and (ii) 30% for cases not covered by (i).

Precedent Treatment: No binding precedent was applied to expand clause (i) to companies not yet in existence in 2014-15; a decision cited by the appellant on turnover components (Kluber Lubrication India Pvt. Ltd.) was relied on but treated as factually distinguishable.

Interpretation and reasoning: The Court construed clause (i) as applicable only to a domestic company that was in existence during the previous year 2014-15 and whose turnover/gross receipts in that year did not exceed Rs. 5 crore. A juridical-entity approach was adopted: a company incorporated on 02.08.2016 (financial year 2016-17) could not logically or legally be said to have turnover or gross receipts in the previous year 2014-15 because it did not exist then. The analogy equating non-existence to a nil turnover was rejected as unreasonable (described metaphorically as expecting "an unborn child to have an income").

Ratio vs. Obiter: Ratio - Clause (i) is confined to companies in existence in the specified previous year; a company incorporated later cannot fall within clause (i). Obiter - The Court's rejection of the analogy and the childbirth metaphor are explanatory but not separate holdings.

Conclusion: Clause (i) of Paragraph E is inapplicable to companies that came into existence after the previous year 2014-15; such companies fall under clause (ii) and are chargeable at 30%.

Issue 2 - Validity of rectification under section 154 to change tax rate from 29% to 30%

Legal framework: Section 154 permits rectification of "mistakes" apparent from the record. The AO used this power to alter tax charged from 29% to 30% after noting the company was not in existence in 2014-15.

Precedent Treatment: The Court applied established principles that rectification under section 154 may be exercised where an error is obvious from the record; no precedent was cited to limit the use of section 154 in this factual matrix.

Interpretation and reasoning: Because the tax rate applicable depends on the company's existence and turnover in 2014-15, and the record indisputably showed incorporation in 2016-17, the original charging of 29% was an evident error apparent on the face of the record. The Court found no debatable point of law or fact that would preclude rectification; the rectification was not a re-opening of issues but correction of a manifest mistake.

Ratio vs. Obiter: Ratio - Rectification under section 154 was properly invoked where the record plainly demonstrated the company could not meet the statutory precondition for the 29% rate, making the original 29% charge an obvious mistake. Obiter - Observations on the scope of rectification beyond the immediate facts are explanatory.

Conclusion: The AO validly exercised section 154 jurisdiction to change the tax rate to 30%; the rectification was justified as correction of a mistake apparent from the record.

Issue 3 - Treatment of cited authority and distinction

Legal framework: Judicial decisions that address elements of turnover or inclusion/exclusion of specific items (e.g., excise duty) inform but do not determine application where foundational facts (existence of the company in the relevant year) differ.

Precedent Treatment: The appellant relied on a decision examining whether excise duty forms part of turnover; the Court held that such a question presupposes that the company was in existence in the relevant year and thus is inapplicable to a company incorporated subsequently.

Interpretation and reasoning: The Court found the cited decision factually distinguishable because the turnover question there arose only after establishing company existence; in the present case the threshold issue of existence in 2014-15 is determinative and not in dispute. Therefore, the authority did not create a debatable legal point to impede rectification.

Ratio vs. Obiter: Ratio - A decision dealing with composition of turnover is distinguishable where the company did not exist in the reference year; such precedents do not assist an appellant whose primary contention rests on imputing turnover to a non-existent entity. Obiter - Remarks in the cited case about turnover components are not binding here.

Conclusion: The cited authority is distinguishable on facts and does not prevent application of clause (ii) or the exercise of rectification under section 154 in the present circumstances.

Cross-reference: Issues 1 and 2 are interlinked - the factual finding on non-existence in the previous year (Issue 1) directly supports the conclusion that charging at 29% was an apparent error remediable under section 154 (Issue 2).

ISSUES PRESENTED AND CONSIDERED

1. Whether an assessee can be treated as an "assessee in default" under Section 201(1) of the Income-tax Act for non-deduction of tax at source on year-end provisions of expenses where (a) no payee was identified and (b) the provisions were made only for accounting accruals.

2. Whether tax deduction at source provisions (Chapter XVII-B) apply to year-end provisions where no income is credited to a specific payee and liability has not crystallized.

3. Whether disallowance under Section 40(a)(ia) in the year of provision precludes or limits invocation of liability under Section 201(1) / interest under Section 201(1A) for non-deduction of TDS on such provisions.

4. Whether subsequent deduction and deposit of TDS in the following accounting year (upon receipt of invoices/identification of payees) negates the assessee's status as assessee-in-default and affects computation of interest under Section 201(1A).

5. Whether initiation of penalty proceedings under Sections 221(1) and 271C is warranted where non-deduction on year-end provisions is claimed to be bona fide and the assessee subsequently complies.

ISSUE-WISE DETAILED ANALYSIS

Issue 1 & 2: Applicability of Section 201(1) / TDS provisions to year-end accounting provisions where payees are not identified

Legal framework: Section 201(1) renders the payer an assessee-in-default where tax is required to be deducted at source under the relevant provisions of Chapter XVII-B and such deduction is not made. Chapter XVII-B requires deduction when income is payable/credited to a payee and the payer is in a position to identify the payee to whom payments are made.

Precedent treatment: The Tribunal relied on two precedents from the judgment text: a High Court decision holding that where year-end provisions are accounting entries without identifiable payees, TDS is not triggered until liability crystallizes; and a coordinate ITAT decision which examined sample provision entries and held that amounts were credited to a general accrual head (not to individual vendors) and reversed on first day of next year, so TDS did not arise at provisioning stage. An earlier authority cited by Revenue (distinguished in the judgment) involved identified payees, and was thus treated as inapplicable.

Interpretation and reasoning: The Court reasoned that mere accounting provision entries made to comply with accrual accounting (Section 145 context) do not amount to crediting income to specific payees. Where the provision posts to an accrual/general expenses head and no vendor/party is credited, the liability has not crystallized and the payee has not been credited with income for purposes of triggering TDS obligations. Consequently, absent factual identification of payees at year-end, the legal requirement to deduct TDS is not engaged.

Ratio vs. Obiter: Ratio - TDS provisions do not apply to year-end provisions where no payee is identified and no income is credited; such provisions do not, by themselves, create an assessable default under Section 201(1). Obiter - distinctions with authorities involving identified payees and other fact patterns noted by the Court.

Conclusion: The Tribunal concluded that year-end provisioning entries, where no payee is identifiable and entries are to an accrual/general expenses account, do not attract TDS at the provisioning stage; the question of default therefore hinges on factual verification whether payees were identified and whether TDS was subsequently deducted when liability crystallized.

Issue 3: Effect of disallowance under Section 40(a)(ia) on liability under Section 201(1)

Legal framework: Section 40(a)(ia) disallows certain expenditures in computation of income where tax was not deducted; Section 201(1) imposes separate liability for deduction and payment of TDS. The provisions operate in their respective spheres (computation of income vs. TDS compliance).

Precedent treatment: The Tribunal observed that disallowance under Section 40(a)(ia) does not, by itself, oust the applicability of Section 201(1). The Revenue relied on this principle; the Tribunal nonetheless treated this as separate from the central factual issue of whether TDS obligation arose at provisioning stage.

Interpretation and reasoning: The Court accepted that Section 40(a)(ia) operates independently and that claiming disallowance is not determinative of TDS liability. However, where provisions do not legally require TDS because payees were unidentified, invoking Section 201(1) is unsustainable without factual proof of non-deduction when liability crystallized. Thus, disallowance does not automatically justify treating the assessee as in default for provisions that did not create an identifiable credit to payees.

Ratio vs. Obiter: Ratio - Section 40(a)(ia) disallowance does not eliminate inquiry under Section 201(1); fact of identification/crystallization of liability is decisive. Obiter - procedural interactions between assessment disallowance and TDS proceedings were discussed but not expanded into a broad holding.

Conclusion: Disallowance under Section 40(a)(ia) does not conclusively establish an assessee-in-default for year-end provisions; factual determination remains necessary to determine whether TDS was required at the time of provisioning.

Issue 4: Effect of subsequent deduction and deposit of TDS; computation period for interest under Section 201(1A)

Legal framework: Section 201(1A) prescribes interest for failure to deduct or remit TDS; interest period and computation depend on the date of deduction/payment. Chapter XVII-B contemplates that deduction must be made when sum is credited or paid as per applicable section.

Precedent treatment: Tribunal relied on precedents recognizing that where TDS was deducted and remitted in the subsequent year upon crystallization of liability, the period for which interest is payable should be limited to the period up to actual payment; and that subsequent bona fide compliance can affect final liability.

Interpretation and reasoning: The Tribunal held that if factual verification confirms that TDS was deducted and deposited in the following year upon receipt of invoices (i.e., when liability crystallized), the assessee should not be held an assessee-in-default for the earlier year as to those amounts. Interest under Section 201(1A) should be computed only up to the date of actual TDS payment (not until the date of the order), and the assessee must be given opportunity to produce evidence of deduction and remittance.

Ratio vs. Obiter: Ratio - Subsequent deduction and deposit of TDS upon crystallization of liability negates a finding of default for the earlier provisioning year insofar as amounts for which TDS was later deducted; interest under Section 201(1A) is to be computed only up to the actual payment date. Obiter - observations on natural justice and double TDS outflow were explanatory.

Conclusion: The Tribunal remanded the matter to the assessing authority for limited factual verification of whether TDS was deducted and deposited in the subsequent year; directed that interest be restricted to the period up to actual TDS payment if compliance is proved; and required opportunity of hearing and production of evidence by the assessee.

Issue 5: Initiation of penalty proceedings under Sections 221(1) and 271C

Legal framework: Penalty provisions require existence of default and, for certain penalties, culpable/deliberate conduct; bona fide compliance and subsequent rectification can bear on penalty imposition.

Precedent treatment: The Tribunal did not make a definitive substantive ruling on penalties in the operative reasoning but observed the assessee's claim of bona fide practice and subsequent compliance.

Interpretation and reasoning: Because the primary finding was that the factual question of subsequent deduction/remittance had not been verified and that provisioning per se may not trigger TDS, imposition of penalties premised on an unverified finding of deliberate default would be premature. The Court therefore did not sustain penalty measures in the impugned order as adjudicated in favour of the assessee on other grounds.

Ratio vs. Obiter: Obiter/ancillary - The judgment's directions effectively require reassessment of penalty necessity in light of factual verification; no conclusive, standalone ratio on penalties was rendered.

Conclusion: Penalty proceedings should not be sustained without factual determination of whether (i) payees were identifiable at provisioning, (ii) TDS was subsequently deducted and remitted, and (iii) there was deliberate default; the matter must be examined after remand and opportunity to the assessee.

Remedial direction and overall conclusion

The Tribunal allowed the appeals for statistical purposes and remanded to the assessing officer for limited factual verification solely to determine whether TDS in respect of the impugned year-end provisions was duly deducted and deposited in the subsequent financial year. If deduction and deposit are shown, the assessee should not be treated as an assessee-in-default for those amounts; interest under Section 201(1A) is to be levied only up to the date of actual payment. The assessee must be given adequate opportunity of hearing and to produce necessary evidence. Related appeals with identical facts to be disposed of mutatis mutandis.

ISSUES PRESENTED AND CONSIDERED

1. Whether a resolution plan was approved by the requisite voting share under Section 30(4) read with Section 25A(3A) where the Committee of Creditors consists solely of homebuyers forming a financial creditor class.

2. Whether the Adjudicating Authority rightly admitted additional documents filed late by an objector and correctly refused admission of an e-mail from the Ministry of Corporate Affairs sought to be relied on by the successful resolution applicant (SRA) in rebuttal.

3. Whether the SRA was ineligible under clauses (c), (e), (g), (i) and (j) of Section 29A of the Insolvency and Bankruptcy Code as held by the Adjudicating Authority.

4. Whether deposit of the Performance Bank Guarantee (PBG) by an investor/third party (and not directly by the SRA) violated Regulation 36B(4A) of the CIRP Regulations and rendered the plan non-implementable.

5. Whether alleged non-disclosure of pending criminal proceedings rendered the resolution plan non-compliant with Regulation 38(3) of the CIRP Regulations.

6. Whether the SRA met the net-worth eligibility criterion contained in the Request for Resolution Plan (RFRP) where individual promoters' net worths were below the threshold but collectively exceeded it.

ISSUE-WISE DETAILED ANALYSIS

Issue 1 - Approval by requisite votes (Section 30(4) and Section 25A(3A))

Legal framework: Section 30(4) requires approval by not less than 66% of voting share of financial creditors. Section 25A(3A) directs the authorised representative of a financial creditor class to cast its vote in accordance with the decision taken by a vote of more than fifty percent of the voting share of the financial creditors it represents (of those who cast their votes).

Precedent treatment: Supreme Court authority interpreting Section 25A(3A) confirms that where the authorised representative acts pursuant to the majority of voting share (of those who voted) in a class of homebuyers, that decision binds the class and may be treated as approval (including being treated as 100% when the authorised representative votes accordingly).

Interpretation and reasoning: The minutes showed that among homebuyers who cast votes the majority decision exceeded 50% for each of the two competing plans; consequently the authorised representative cast the class vote in favour and such class vote was treated as 100% for the purposes of the CoC. Application of the co-ordination/tie-breaker formula (adopted by CoC) resolved competing approvals where both plans secured class assent, making the plan with higher actual individual voting share the approved plan.

Ratio vs. Obiter: Ratio - where a financial-creditor class is represented by an authorised representative, the authorised representative's vote pursuant to Section 25A(3A) binds the class and may result in effective approval consistent with Section 30(4). Obiter - factual remark on tie-breaker formula specifics.

Conclusion: The SRA's plan was lawfully treated as approved in compliance with Section 30(4) read with Section 25A(3A); no infirmity in treating the authorised representative's class vote as constituting approval.

Issue 2 - Admission of additional documents and rejection of MCA e-mail

Legal framework: Adjudicating Authority may allow additional documents where relevant to adjudication; parties must be afforded opportunity to rebut new material. Competent official communications (e.g., from MCA) are relevant where they address statutory disqualifications.

Precedent treatment: Principles of procedural fairness require that when late documents are admitted the opposing party should be permitted to place rebuttal material on record and be heard on the new material.

Interpretation and reasoning: The Adjudicating Authority admitted several non-judicial documents filed late by the objector without expressly considering or permitting the SRA's rebuttal materials; conversely it refused to admit the MCA e-mail offered by the SRA which directly addressed disqualification. The admitted documents were not solely judicial pronouncements as characterized by the Adjudicating Authority. Given relevance of the MCA communication to the disqualification issue, rejection of that document was unsustainable.

Ratio vs. Obiter: Ratio - discretion to admit documents must be exercised with attention to relevance and fairness, including admitting rebuttal material and official communications on status of director disqualification. Obiter - criticism of Adjudicating Authority's characterization of the nature of documents.

Conclusion: Admission of the objector's additional documents without providing for or considering the SRA's rebuttal materials was procedurally improper; the MCA e-mail should have been admitted and is taken on record.

Issue 3 - Eligibility under Section 29A (clauses (c), (e), (g), (i) and (j))

Legal framework: Section 29A lists disqualifications for submission of a resolution plan; clause (c) (NPA classification) is subject to Section 240A exemption for MSMEs; clause (e) disqualifies persons statutorily barred from acting as directors; clause (g) bars promoters/management of corporate debtors where certain transactions have been found by adjudicating authority; clause (i) concerns disabilities under foreign law; clause (j) applies where a connected person is ineligible. Explanation defines "connected person."

Precedent treatment: Courts require specific record and statutory findings to attract disqualification; activation of DIN and competent authority determinations are significant; application of Section 240A exempts MSME-related CIRPs from clauses (c) and (h).

Interpretation and reasoning: (a) Clause (c): The corporate debtor was an MSME and Section 240A(1) exempts clauses (c) and (h) from application - therefore clause (c) ineligibility cannot be sustained. (b) Clause (e): Objector relied on earlier disqualification lists; SRA produced court and tribunal orders and documentation showing revival/activation under condonation schemes and an MCA e-mail confirming removal of disqualification dates; Adjudicating Authority failed to consider this material before finding disqualification - such a finding was perverse given active DIN status and authoritative communications. (c) Clause (g): Objector alleged association with transactions in a different corporate insolvency; there was no material showing the SRA had been promoter/management of the corporate debtor where the offending transactions occurred; application of clause (g) was unwarranted. (d) Clause (i): No pleading or evidence of foreign-law disability; the finding was unsupported. (e) Clause (j): No specific connected person was shown to be ineligible under clauses (a)-(i); the Adjudicating Authority gave no reasons identifying such connected person.

Ratio vs. Obiter: Ratio - disqualifications under Section 29A must be founded on pleaded facts and admissible evidence; statutory exemptions (Section 240A) and authoritative records (court orders, MCA communication, active DIN status) negate claimed disqualifications. Obiter - comments on pattern of delay by objector in litigating objections.

Conclusion: The Adjudicating Authority's findings of ineligibility under clauses (c), (e), (g), (i) and (j) are unsustainable; the SRA was eligible to submit the resolution plan.

Issue 4 - Validity of PBG furnished by investor (Regulation 36B(4A))

Legal framework: Regulation 36B(4A) contemplates that the resolution applicant shall provide performance security as specified in the RFRP; the RFRP/Resolution Plan may specify the nature, value, source and timing of performance security and may permit relaxations in limited circumstances (e.g., associations of allottees).

Precedent treatment: Implementation provisions of an approved resolution plan are to be read in light of terms of the plan and RFRP; where the plan itself contemplates third-party funding or implementation arrangements, the source of the PBG consistent with plan terms is permissible.

Interpretation and reasoning: The Resolution Plan expressly identified an investor/co-developer who committed to provide funds including the PBG and additional equity/fund infusion; communications and plan terms indicated the investor furnished the PBG "on behalf of" the SRA. The Adjudicating Authority did not advert to these plan clauses before holding a Regulation 36B(4A) breach. Where the plan itself contemplates third-party funding and the investor's obligations are contractually incorporated, acceptance of investor-provided PBG does not inherently violate Regulation 36B(4A).

Ratio vs. Obiter: Ratio - compliance with Regulation 36B(4A) is to be judged against the RFRP and the approved plan's express terms; party-specification of the source of PBG that the plan contemplates is permissible. Obiter - observations criticising Adjudicating Authority's failure to read plan terms.

Conclusion: Deposit of the PBG by the investor in conformity with the Resolution Plan's terms did not constitute a violation of Regulation 36B(4A) rendering the plan unimplementable.

Issue 5 - Non-disclosure of criminal proceedings (Regulation 38(3))

Legal framework: Regulation 38(3) (as originally framed) required certain disclosures; however the provision was subsequently substituted to focus the resolution plan's demonstrable feasibility, viability and implementation capacity. Section 29A post-amendments links disqualification to convictions for specified offences.

Precedent treatment: Courts give effect to the statutory text as in force at the relevant time; mere pendency of investigations or FIRs (without conviction where required by statute) does not automatically attract Section 29A disqualification unless constitutive of a specified clause.

Interpretation and reasoning: The Adjudicating Authority relied on an earlier version of Regulation 38(3) that was not on the statute book at the time the plan was submitted; the substituted regulation does not impose the same disclosure requirement relied upon. Further, disqualification under Section 29A arises upon conviction for specified offences; the record did not disclose convictions undermining eligibility. The SRA had disclosed relevant criminal filings and the timing showed chargesheets followed the plan submission in large part; the presence of interim judicial orders further complicated any suggestion of suppression.

Ratio vs. Obiter: Ratio - compliance with disclosure obligations must be judged against the regulatory text in force at plan submission; pendency of criminal proceedings absent convictions does not ipso facto render a plan non-compliant. Obiter - reproach of reliance on inapplicable regulation.

Conclusion: The finding that nondisclosure of criminal proceedings rendered the plan non-compliant was unsustainable.

Issue 6 - Net-worth eligibility under RFRP

Legal framework: RFRP may prescribe net-worth thresholds for eligible resolution applicants; where multiple promoters act jointly and in concert as the resolution applicant, aggregate net worth of the named promoters is relevant to satisfy the eligibility requirement.

Precedent treatment: Eligibility criteria in RFRP are to be applied to the resolution applicant(s) as presented in the plan; where the application is by persons acting jointly and in concert, combined resources/net worth are germane.

Interpretation and reasoning: The SRA comprised multiple promoters whose individual net worth certificates were below the threshold but whose collective net worth (including the daughter/promoter) exceeded the Rs. 50 crore criterion. The objector had itself pleaded that the resolution applicants acted jointly and in concert; accordingly the aggregate net worth satisfied the RFRP requirement. The Adjudicating Authority's contrary conclusion ignored this composition and pleaded facts.

Ratio vs. Obiter: Ratio - net-worth thresholds in an RFRP are satisfied by the aggregate/net worth of the resolution applicant(s) as constituted in the plan where they act jointly and in concert. Obiter - emphasis on treating pleadings consistently.

Conclusion: The SRA met the RFRP net-worth eligibility criterion; the Adjudicating Authority's contrary finding was erroneous.

OVERALL CONCLUSION

Adjudicating Authority's order holding the SRA ineligible under multiple clauses of Section 29A, quashing the approved plan and dismissing the plan approval application was procedurally and legally unsustainable. The authorised representative's class vote lawfully effected approval under Section 25A(3A) and Section 30(4); the MCA communication should have been admitted and relied upon; ineligibility findings under clauses (c), (e), (g), (i) and (j) lack basis; investor-provided PBG, where provided for in the plan, did not breach Regulation 36B(4A); purported non-disclosure of criminal matters was not a valid ground of non-compliance in the circumstances; and the aggregate net worth satisfied the RFRP threshold. Accordingly the Adjudicating Authority's order was set aside and the plan approval application was restored for adjudication.

1. ISSUES PRESENTED AND CONSIDERED

1. Whether termination of a contract by a counterparty during a pre-existing corporate insolvency resolution process is barred by the moratorium under Section 14 of the Insolvency and Bankruptcy Code when the termination is alleged to have been triggered by the insolvency.

2. Whether the Adjudicating Authority has residuary jurisdiction under Section 60(5)(c) of the Code to adjudicate and stay a contractual termination that is said to arise from or relate to the insolvency of the corporate debtor.

3. Whether facts in the record establish that the termination was motivated by insolvency (ipso facto) or by antecedent contractual breaches unconnected to the insolvency, and the legal consequences of that factual determination for reliefs such as setting aside termination, release of retention/holding amounts, and removal of blacklisting.

4. Whether the Tribunal should exercise equitable or discretionary powers to grant monetary and ancillary reliefs (release of retention money, final payments, lifting of blacklisting) where the contract has been re-awarded and liquidation has been ordered, rendering many remedies potentially infructuous.

2. ISSUE-WISE DETAILED ANALYSIS

Issue 1 - Applicability of Section 14 moratorium to contract termination

Legal framework: Section 14 imposes a moratorium during CIRP prohibiting institution or continuation of proceedings against the corporate debtor, and Section 60(5)(c) confers residuary jurisdiction to the Adjudicating Authority over questions arising from or in relation to insolvency proceedings.

Precedent treatment: The Tribunal relied on the principle articulated by the Supreme Court in the line of authority addressing ipso facto terminations and the scope of NCLT's jurisdiction to restrain contractual terminations where such termination is motivated solely by insolvency and is central to the success of CIRP.

Interpretation and reasoning: The Tribunal examined the sequence of contractual notices, extensions, inspection reports, repeated communications of deficiency, show cause notices, committee inquiries and actions by the counterparty prior to and during CIRP. It found the termination to be the culmination of prolonged contractual non-performance and enforcement of express contractual remedies (forfeiture, termination, blacklisting) contemplated by the agreement rather than a step taken solely in response to the CIRP. The Tribunal emphasized that moratorium protection under Section 14 is inapplicable where termination is founded on legitimate antecedent defaults unconnected to insolvency.

Ratio vs. Obiter: Ratio - moratorium under Section 14 does not bar a counterparty from terminating a contract for pre-existing, legitimate contractual breaches; termination is not protected by moratorium unless termination was occasioned solely by insolvency and its preservation is central to CIRP. Obiter - observations on the non-visit of the RP to the site and procedural correspondence are ancillary.

Conclusion: The moratorium under Section 14 did not protect the corporate debtor from the termination in the facts of the case because the termination was grounded in antecedent contractual breaches and legitimate enforcement of contractual remedies, not triggered by insolvency alone.

Issue 2 - Scope of Section 60(5)(c) residuary jurisdiction to intervene in contractual terminations

Legal framework: Section 60(5)(c) gives the Adjudicating Authority power to adjudicate questions of law or fact arising from or in relation to insolvency resolution proceedings; judicial doctrine limits this jurisdiction to disputes having a nexus with the insolvency.

Precedent treatment: The Tribunal applied the Supreme Court's delineation that NCLT/NCLAT may restrain terminations only where the dispute arises solely from or relates to insolvency and, crucially, where termination would jeopardize the CIRP by threatening the corporate debtor's survival as a going concern.

Interpretation and reasoning: Applying the precedent, the Tribunal found absence of the requisite nexus: the contractual dispute arose from sustained non-performance, repeated notices, and documented deficiencies prior to CIRP, not from an ipso facto clause or reaction to insolvency. The Tribunal further held that the termination was not central to the success of CIRP (it did not amount to the corporate debtor's sole contract or render the corporate death inevitable), and hence Section 60(5)(c) could not be invoked to stay the termination.

Ratio vs. Obiter: Ratio - Section 60(5)(c) cannot be used to restrain terminations that arise independently of the corporate debtor's insolvency or are not central to CIRP; only disputes with a genuine nexus to insolvency and capable of frustrating CIRP attract jurisdiction. Obiter - cautionary remarks on future exercise of residuary powers in light of precedent.

Conclusion: The Adjudicating Authority lacked jurisdiction under Section 60(5)(c) to adjudicate or stay the termination because the dispute did not arise out of or relate to insolvency in the requisite sense and the termination was not central to CIRP.

Issue 3 - Factual determination as to motivation for termination and legal consequences for reliefs claimed

Legal framework: Determination of causation (whether termination was motivated by insolvency) is fact-driven; if termination is not ipso facto, moratorium and NCLT's residuary powers do not ordinarily protect the corporate debtor from enforcement of contractual remedies.

Precedent treatment: The Tribunal applied the factual approach mandated by precedent requiring analysis of the trajectory of events leading to termination to determine whether insolvency was the motivating factor.

Interpretation and reasoning: The Tribunal reviewed documentary evidence - correspondence, show cause notices, inspection reports, deadline extensions, Committee inquiries and failure to perform multiple work heads - and concluded the counterparty acted on contractual defaults evidenced before and independent of CIRP. The Tribunal noted the counterparty's documented financial loss, re-awarding of residual work, and measurement findings showing incomplete work. It also observed that the Resolution Professional did not complete measurements or visit the site in a timely manner, weakening the contention that the counterparty's action was unjustifiably motivated by insolvency.

Ratio vs. Obiter: Ratio - where the factual record demonstrates legitimate pre-existing defaults and responsive contractual enforcement, the termination is not attributable to insolvency and cannot be set aside under moratorium principles. Obiter - comments on the RP's conduct are ancillary to the core finding.

Conclusion: Factual matrix established termination on legitimate contractual grounds; thus protective remedies (setting aside termination, release of retention money, lifting blacklisting) were not warranted and became largely infructuous after re-award and liquidation.

Issue 4 - Appropriateness of discretionary reliefs (release of monies, removal of blacklisting) after contract re-award and liquidation

Legal framework: Reliefs ancillary to setting aside termination (monetary releases, lifting of blacklist) require both legal entitlement and practical utility; liquidation and re-award may render such reliefs nugatory or commercially impracticable.

Precedent treatment: The Tribunal took heed of the principle that reliefs should not be granted where the underlying entitlement is not established or where the remedy would not serve CIRP objectives.

Interpretation and reasoning: Given the Tribunal's factual conclusion that termination was lawful, and that the contract had been re-awarded and liquidation ordered, it found the monetary and ancillary claims to be either unsupported or rendered infructuous. The Tribunal declined to exercise equitable power to grant such reliefs where the legal basis to set aside termination was absent and the claimed reliefs would not materially assist revival or realization of value in liquidation.

Ratio vs. Obiter: Ratio - ancillary monetary or administrative reliefs cannot be granted where the primary challenge to termination fails and where subsequent events (re-award, liquidation) render such reliefs ineffective. Obiter - observations on how such reliefs might aid stakeholders in a different factual matrix.

Conclusion: Claims for release of retention money, final payments, and removal of blacklisting were refused as either unsupported by law on the facts or rendered infructuous by re-award and liquidation; the appeal was dismissed as devoid of merit.