Issues: (i) Whether refunds of GST, sales tax and service tax not routed through the profit and loss account were taxable as business income under section 41(1) or section 28(i) of the Income-tax Act, 1961. (ii) Whether the addition made towards margin on finished goods converted into capital assets amounted to a double addition when the amount had already been disclosed and offered to tax in the return of income.

Issue (i): Whether refunds of GST, sales tax and service tax not routed through the profit and loss account were taxable as business income under section 41(1) or section 28(i) of the Income-tax Act, 1961.

Analysis: The assessee consistently followed the exclusive method of accounting for indirect taxes, under which GST, sales tax and service tax were not debited to the profit and loss account and were maintained as statutory liabilities. The refunds, therefore, did not arise from any expenditure earlier claimed as deduction. In that background, the mere receipt of refund could not be treated as remission or cessation of a liability so as to attract section 41(1), nor could it be characterised as income under section 28(i) merely because it represented a business-linked inflow. The tax authorities failed to appreciate the accounting treatment and the real nature of the receipt.

Conclusion: The refund of GST, sales tax and service tax was not taxable on the facts of the case, and the addition was deleted in favour of the assessee.

Issue (ii): Whether the addition made towards margin on finished goods converted into capital assets amounted to a double addition when the amount had already been disclosed and offered to tax in the return of income.

Analysis: The record showed that the margin on stock converted into fixed assets had been separately disclosed in the tax audit report and had also been included in the computation of income in the return. Once the same amount had already been offered to tax, a further adjustment on the same item resulted in duplication of taxation. The adjustment under section 143(1)(a) could not survive where the income had already been brought to tax by the assessee itself.

Conclusion: The impugned addition constituted double taxation and was deleted in favour of the assessee.

Final Conclusion: The appeals succeeded on the two substantive additions, while the interest-related grounds were treated as consequential.

Ratio Decidendi: Where indirect taxes are consistently accounted for on an exclusive basis and are not claimed as expenditure, their refund is not taxable as remission of liability or business income; likewise, an amount already disclosed and offered to tax cannot be added again as income.

Issues: (i) Whether the reopening was invalid because the reasons recorded under section 147 were furnished after issuance of the notice under section 148; (ii) Whether the reassessment was invalid for want of approval under section 151.

Issue (i): Whether the reopening was invalid because the reasons recorded under section 147 were furnished after issuance of the notice under section 148.

Analysis: The record showed that the Assessing Officer had already recorded the reasons to believe and the assessee was later furnished those reasons in compliance with the directions governing reassessment procedure. The sequence reflected furnishing of reasons after notice, not recording of reasons after notice.

Conclusion: The first additional ground was rejected and the reopening was held to be valid.

Issue (ii): Whether the reassessment was invalid for want of approval under section 151.

Analysis: The assessee was unable to place the approval on record and sought time or a direction to the department to produce it. The Tribunal held that the ground could not succeed in the absence of the requisite material in the record and found no merit in the contention.

Conclusion: The second additional ground was rejected and the reassessment was not invalidated on this basis.

Final Conclusion: The reassessment challenge failed on both additional grounds and the appeal was dismissed.

Ratio Decidendi: Furnishing reassessment reasons after issuance of notice does not by itself invalidate the reopening where the reasons were recorded earlier, and a challenge to reassessment based on lack of section 151 approval fails when the approval is not shown on the record.

Issues: Whether rejection of registration under section 12AB could be sustained on the basis of alleged benefit to specified persons and disputed loan or rent transactions, and whether such matters fell within the scope of enquiry at the registration stage.

Analysis: The scope of enquiry under section 12AB is confined to the charitable character of the objects, the genuineness of activities, and compliance with other applicable laws material to the objects. Allegations that income was applied for the benefit of specified persons, or that transactions were excessive or unreasonable, relate to the allowability of exemption and application of income at the assessment stage. Section 13 operates to regulate exemption under sections 11 and 12 and does not authorise refusal of registration. The material on record showed that the assessee was running an educational institution and there was no finding that its objects were non-charitable, its activities were fictitious, or that any statutory non-compliance or false information attracting section 12AB(4) was established.

Conclusion: Rejection of registration was unsustainable, and the assessee was entitled to registration under section 12AB.

Ratio Decidendi: At the stage of registration, enquiry is limited to charitable objects, genuineness of activities, and relevant legal compliance, while alleged misuse of income or benefit to specified persons is a matter for assessment and cannot by itself justify of registration.

Issues: (i) whether the Revenue's appeal fell within the exception to the monetary limit under Circular No. 5/2024 dated 15/03/2024 in view of alleged accommodation entries and external intelligence, and (ii) whether the addition on account of bogus purchases was to be restricted to 0.2% of the purchases or sustained at a higher rate.

Issue (i): Whether the Revenue's appeal fell within the exception to the monetary limit under Circular No. 5/2024 dated 15/03/2024 in view of alleged accommodation entries and external intelligence.

Analysis: The appeal was based on information received from the Investigation Wing concerning accommodation entries and bogus purchases. Such a fact situation was treated as falling within the exception carved out for organised tax evasion cases based on external intelligence, thereby permitting the appeal to be heard on merits despite the monetary threshold.

Conclusion: The objection to maintainability was rejected and the Revenue's ground on this issue was allowed.

Issue (ii): Whether the addition on account of bogus purchases was to be restricted to 0.2% of the purchases or sustained at a higher rate.

Analysis: The estimation of profit embedded in bogus purchases was examined in the light of the assessee's own earlier years, where the Tribunal had restricted the addition to 0.2% and those decisions had attained finality. The books of account were not rejected, the quantitative details of purchases and sales were not found defective, and the same facts prevailed for the year under consideration. Applying the rule of consistency and judicial discipline, the earlier view was followed.

Conclusion: The addition was rightly restricted to 0.2% of the disputed purchases and the Revenue's challenge on the quantum failed.

Final Conclusion: The appeal succeeded only on the maintainability objection and failed on the substantive addition, leaving the estimate of profit on bogus purchases unchanged at 0.2%.

Ratio Decidendi: Where the facts are identical across assessment years and the earlier decision on bogus purchases has attained finality, the profit element embedded in such purchases may be estimated consistently at the rate previously upheld, unless a material change in facts or law is shown.

Issues: (i) whether additional evidence was rightly admitted under Rule 46A in assessments completed ex parte under section 144 read with section 153A of the Income-tax Act, 1961; (ii) whether cash deposits and bank credits were rightly treated as unexplained under section 68; (iii) whether partner capital contributions were unexplained for want of source of source; (iv) whether unsecured loans were non-genuine merely because no loan agreement was produced; and (v) whether the cash found during search could be assessed under section 69A and on a protective basis in the assessee's hands.

Issue (i): whether additional evidence was rightly admitted under Rule 46A in assessments completed ex parte under section 144 read with section 153A of the Income-tax Act, 1961.

Analysis: The appellate authority accepted that the assessments were completed without effective compliance and that the assessee had shown sufficient cause for non-production of evidence earlier. The documents produced were directly relevant to the disputed additions, and the Assessing Officer was given an opportunity to verify them in remand. The admission of evidence was therefore aligned with fair procedure and the principles of natural justice.

Conclusion: The additional evidence was rightly admitted.

Issue (ii): whether cash deposits and bank credits were rightly treated as unexplained under section 68.

Analysis: The assessee produced cash book, bank book, bank statements and return particulars showing cash receipts and cash-in-hand that were substantially higher than the cash deposits in dispute. For the relevant years, the recorded receipts and opening cash balances were found sufficient to explain the deposits, and the Revenue brought no cogent material to show that the deposits represented income over and above the recorded receipts. Where the basic evidentiary burden under section 68 was discharged, the onus shifted to the Revenue, which remained unmet.

Conclusion: The cash deposits and explained bank credits were not taxable as unexplained cash credits.

Issue (iii): whether partner capital contributions were unexplained for want of source of source.

Analysis: The capital contributions were routed through banking channels and were supported by bank statements, confirmations, income-tax returns and linked financial records. The authority held that, in the case of a partnership firm, section 68 requires explanation of the nature and source of credits in the firm's own books, and the first proviso to section 68, which concerns companies, did not apply. The source of funds in the partners' hands was also sufficiently traced on the record, and the Revenue did not rebut the documentary trail.

Conclusion: The partner capital contributions were rightly accepted as explained.

Issue (iv): whether unsecured loans were non-genuine merely because no loan agreement was produced.

Analysis: The loan entries were supported by bank records, confirmations, audited financial statements and income-tax returns of the lender, and the lender's creditworthiness was evidenced by available reserves and surplus or other funding sources. The loans were also repaid in one instance, which strengthened the genuineness of the transactions. Mere absence of a formal loan agreement, without any adverse material disputing identity, creditworthiness or genuineness, was held insufficient to sustain an addition under section 68.

Conclusion: The unsecured loans were genuine and the additions were not sustainable.

Issue (v): whether the cash found during search could be assessed under section 69A and on a protective basis in the assessee's hands.

Analysis: The assessee's books showed substantial opening cash balance and cash availability, and the remand proceedings accepted that sufficient cash was available to explain the amount found. In relation to the protective addition, the cash was ably linked to another entity in whose hands it had already been assessed substantively, and that entity had not disputed ownership of the cash. Once ownership and substantive taxability stood fastened elsewhere, the protective addition in the assessee's hands could not survive.

Conclusion: The addition under section 69A and the protective addition were rightly deleted.

Final Conclusion: The Revenue failed to dislodge the factual and legal findings supporting deletion of the additions, and the consolidated result is that the assessees' explanations for the disputed credits and cash were accepted.

Ratio Decidendi: When an assessee produces credible documentary evidence establishing the identity, creditworthiness and genuineness of credits, and the Revenue brings no adverse material, additions under sections 68 and 69A cannot be sustained merely on technical objections such as absence of a loan agreement or party-wise cash details; in the case of a partnership firm, source of source is not required to be proved as if it were a company.

Issues: (i) Whether the books of account could be rejected and the business income estimated by treating the transactions with Hardiyal Milk Products Pvt. Ltd. as accommodation entries; (ii) Whether the disallowance of tanker running expenses was justified.

Issue (i): Whether the books of account could be rejected and the business income estimated by treating the transactions with Hardiyal Milk Products Pvt. Ltd. as accommodation entries.

Analysis: The partial rejection of book results was not supported by cogent defects in the accounts. The ledger pattern showed purchases and sales arising from the assessee's milk processing business model, where milk was procured, pasteurised and sold back in the ordinary course of trade. The existence and operation of the counterparty's milk chilling plant was also supported by the departmental inspection report. In these facts, the impugned transactions could not be characterised as mere accommodation entries, and the basis for treating the ledger flow as non-genuine failed.

Conclusion: The rejection of books on this ground and the consequent estimation confined to the transactions with Hardiyal Milk Products Pvt. Ltd. were not sustainable, and the issue was decided in favour of the assessee.

Issue (ii): Whether the disallowance of tanker running expenses was justified.

Analysis: The tanker activity was found to be incidental and inextricably linked to the assessee's milk business. Although complete supporting details for the expenses were not fully furnished, the record as a whole called for a fair and reasonable estimation of overall profit rather than a separate disallowance of the entire expenditure. On the comparative results of earlier years, the business profit was worked out at a rate that was lower than the income already declared by the assessee.

Conclusion: The full disallowance of tanker running expenses was not justified, and no separate addition survived on this account, in favour of the assessee.

Final Conclusion: The additions made by the assessing authority did not survive on the facts found, and the returned income was directed to be accepted.

Ratio Decidendi: A partial rejection of books and a transaction-specific profit estimate cannot be sustained without cogent defects in the accounts, and where the business model and surrounding evidence support genuineness, the profit must be determined on a fair overall basis rather than by treating isolated ledger flows as accommodation entries.

Issues: (i) Whether the amount attached in the appellant's hands was correctly quantified as proceeds of crime; (ii) whether the presumptions and procedure under the money-laundering provisions were wrongly applied; (iii) whether the order of attachment was vitiated for want of reasons to believe; and (iv) whether the impugned order was non-speaking and mechanical.

Issue (i): Whether the amount attached in the appellant's hands was correctly quantified as proceeds of crime.

Analysis: The attachment was based on the funds advanced through the appellant's holding company, the direct payment made to Noida Development Authority, the suppression in the share purchase arrangement, and the deductions already given by the authority. The claimed deductions based on alleged later receipts, inter-company transactions, and amounts said to have been paid to third parties were found unsupported or irrelevant to the core computation. The Tribunal held that the respondents had made a fair quantification on the material before them and that the appellant's contrary calculations rested on misstatement of facts.

Conclusion: The quantification of proceeds of crime was upheld against the appellant.

Issue (ii): Whether the presumptions and procedure under the money-laundering provisions were wrongly applied.

Analysis: The Tribunal held that the statutory presumption and reverse burden operated once the authority had placed prima facie material showing involvement of the property in money laundering. The notice and adjudicatory process under the Act were found to have afforded opportunity to the appellant, and the material relied upon by the respondents was considered sufficient to sustain the attachment.

Conclusion: The challenge based on the presumptive burden and adjudicatory procedure failed.

Issue (iii): Whether the order of attachment was vitiated for want of reasons to believe.

Analysis: The Tribunal found that the provisional attachment order disclosed the basis for the belief that the property represented proceeds of crime and set out the figures and links relied upon by the authority. The objection that no reasons were recorded was rejected because the order, read with the material discussed, sufficiently disclosed the basis of action.

Conclusion: The objection that the attachment lacked reasons to believe was rejected.

Issue (iv): Whether the impugned order was non-speaking and mechanical.

Analysis: The Tribunal recorded detailed consideration of each contention and reasoned findings on the factual and legal questions raised. On that basis, it concluded that the order could not be characterised as non-speaking or mechanical.

Conclusion: The contention that the order was non-speaking was rejected.

Final Conclusion: The attachment and the confirmation order were sustained, and the appeal was held to be without merit.

Ratio Decidendi: Where the authority records prima facie material linking property to proceeds of crime and the attachment order discloses the basis for that belief, the statutory presumptions and provisional attachment under the money-laundering law will be sustained unless the appellant rebuts them with credible material.

Issues: Whether time should be granted to complete the balance statutory pre-deposit for the appeal and, on such compliance, the appeal should be restored and heard on merits.

Analysis: The record showed that a substantial part of the required pre-deposit had already been paid. The remaining balance of the mandatory 10% deposit was stated to be small, and the delay in filing the appeal was only seven days. In these circumstances, the Court found it to permit compliance within a short time and to restore the appeal upon deposit of the balance amount.

Conclusion: The appellant was granted time to deposit the remaining balance of the required pre-deposit, and on such deposit the appeal is to be restored and decided on merits.

Issues: (i) whether the rejection of the application for approval under section 80G on the ground of delay in filing Form 10AB could be sustained without considering the assessee's additional ground and evidence showing earlier approval and eligibility for revalidation; and (ii) whether foreign expenditure incurred towards subscriptions, affiliation and software services amounted to application of income outside India in violation of section 11(1)(c).

Issue (i): whether the rejection of the application for approval under section 80G on the ground of delay in filing Form 10AB could be sustained without considering the assessee's additional ground and evidence showing earlier approval and eligibility for revalidation.

Analysis: The assessee placed on record additional evidence showing that it had an earlier approval and claimed that the application was one for revalidation under the amended regime. The additional material went to the root of the controversy and was relevant to determine whether the application was to be treated as time-barred or as a valid revalidation request. As these aspects were not examined by the lower authority, the issue could not be finally decided on the existing record.

Conclusion: The matter on delay and rejection of the approval application was set aside and restored to the file of the Commissioner of Income Tax (Exemptions) for fresh adjudication after considering the additional ground, evidence and reasonable opportunity to the assessee.

Issue (ii): whether foreign expenditure incurred towards subscriptions, affiliation and software services amounted to application of income outside India in violation of section 11(1)(c).

Analysis: The foreign payments were found to be incidental to the assessee's activities carried on in India and were made for subscription, affiliation and software services used in furtherance of its charitable functions within India. Such remittances did not represent application of income outside India. The conclusion was supported by the principle that expenditure incurred abroad for carrying out charitable activity in India does not by itself attract the mischief of section 11(1)(c).

Conclusion: The allegation of violation of section 11(1)(c) was rejected and the issue was decided in favour of the assessee.

Final Conclusion: The impugned order was interfered with to the extent of one issue being remitted for fresh consideration, while the foreign-expenditure objection was deleted, leaving the appeal partly successful.

Ratio Decidendi: Where additional evidence bearing directly on eligibility for revalidation under section 80G is material to the controversy, the approval issue requires fresh consideration, and foreign remittances made only to support charitable activities undertaken in India do not amount to application of income outside India.

Issues: Whether the challenge to the Tribunal's order quashing revision under section 263 of the Income-tax Act, 1961 gave rise to any substantial question of law, or whether the controversy was confined to questions of fact concerning the adequacy of enquiry by the Assessing Officer.

Analysis: The assessment had been completed under section 143(3) after scrutiny under section 143(2), and the Principal Commissioner invoked section 263 on the footing that the Assessing Officer had not made proper enquiry on the taxability of a payment, the claim for deduction under section 35(2AB), and commission expenditure. The Tribunal, on appreciation of the record, held that enquiry had in fact been made and that the assessment order could not be revised merely because the revisional authority preferred a different view. The High Court held that the real controversy was whether enquiry had been conducted and whether the Assessing Officer had taken a plausible view on the materials placed before him. That question was treated as one of fact, already decided by the Tribunal, and did not generate any substantial question of law.

Conclusion: The revision under section 263 was not revived, and the assessee succeeded because the appeal failed to raise any substantial question of law.

Issues: Whether the authorities were justified in rejecting the assessee's claim without considering the request to treat the exemption as one under Section 54EB and whether the assessment required fresh consideration of the long-term capital gains exemption claim.

Analysis: The assessee had disclosed the transaction and the investment in the return but had cited the wrong exemption provision. The reply to the revisional notice specifically sought correction of that mistake and asked for examination of the claim under the appropriate provision. None of the authorities considered whether the assessee was entitled to exemption under any other applicable provision, and the claim was rejected in a mechanical manner. Such an approach was held to be unfair and to disclose non-application of mind.

Conclusion: The rejection of the claim was unsustainable. The assessment and the orders of the authorities below were set aside and the matter was directed to be reconsidered afresh, with the assessee permitted to place all relevant material regarding exemption on investment of long-term capital gains.

Final Conclusion: The appeal succeeded and the assessment issue was remitted for fresh adjudication on the exemption claim.

Ratio Decidendi: Where an assessee has disclosed the material transaction and seeks timely correction of a mistaken statutory reference, the tax authority must consider the claim under the provision actually applicable and cannot reject it mechanically without examining entitlement on merits.

Issues: Whether the activities undertaken under the project development agreement between the co-venturers constituted a taxable service liable to service tax.

Analysis: The agreement was treated as a joint venture arrangement entered into to achieve a common commercial objective, with each co-venturer discharging defined obligations in furtherance of the venture. The discharge of such obligations was held to be in the co-venturer's own interest and as part of its capital contribution to the venture, not as a service rendered by one distinct person to another for consideration. In the absence of an identifiable service-provider/service-recipient relationship and in the absence of proof that the money flow represented consideration for a taxable activity, service tax could not be fastened. The valuation demand also could not survive once the underlying activity itself was found not to be taxable service.

Conclusion: The impugned demands of service tax were unsustainable and were set aside. The appellant was held not liable to pay service tax on the activities under the project development agreement.

Issues: (i) Whether the reassessment proceedings initiated under Section 148 of the Income-tax Act, 1961 were without jurisdiction because the case allegedly arose from a search and therefore ought to have proceeded only under the search assessment provisions; (ii) Whether the assessment order was vitiated for breach of natural justice and liable to be quashed with a remand.

Issue (i): Whether the reassessment proceedings initiated under Section 148 of the Income-tax Act, 1961 were without jurisdiction because the case allegedly arose from a search and therefore ought to have proceeded only under the search assessment provisions.

Analysis: The amended scheme under Sections 153A and 153C of the Income-tax Act, 1961, as substituted by the Finance Act, 2021 with effect from 01.04.2021, applies only where the search or requisition was initiated up to 31.03.2021. For searches initiated on or after 01.04.2021, those provisions do not govern the assessment of the searched person or other persons, and the reassessment machinery under Section 148 remains available, subject to the limitation contained in Section 149. The record did not disclose the date of the alleged search, and the challenge on jurisdiction could not succeed. The notice under Section 148 was issued on 31.03.2022 after the Section 148A procedure, and the proceedings were held to be within limitation and in accordance with the amended reassessment framework.

Conclusion: The jurisdictional challenge to the Section 148 proceedings failed and was decided against the assessee.

Issue (ii): Whether the assessment order was vitiated for breach of natural justice and liable to be quashed with a remand.

Analysis: The petitioner was unable to effectively participate in the reassessment proceedings because the notices were sent to an email account that had ceased to be used and were also uploaded on the portal. The explanation for non-participation was accepted as a reasonable cause. On that factual basis, the assessment order was found to have been passed without adequate opportunity, amounting to a violation of natural justice. The proper course was to set aside only the assessment order and remit the matter for a fresh decision, while preserving the assessee's right to urge all other defences except the jurisdictional objection to the Section 148 notice.

Conclusion: The assessment order was quashed and the matter was remitted for fresh assessment, in favour of the assessee on this issue.

Final Conclusion: The reassessment notice under Section 148 was sustained, but the assessment order was set aside for want of effective opportunity, and the matter was sent back for fresh adjudication on merits.

Ratio Decidendi: After the 2021 amendments, reassessment under Section 148 remains available for cases not governed by the post-amendment search assessment scheme under Sections 153A and 153C, and an assessment order passed without effective opportunity of hearing is liable to be quashed for breach of natural justice.

Issues: (i) Whether the reassessment notice and the consequential order were barred by limitation under the amended reassessment regime read with the relaxation provisions and the directions in the cited Supreme Court decisions; (ii) Whether the reassessment notice was invalid for want of approval by the competent specified authority under the reassessment provisions.

Issue (i): Whether the reassessment notice and the consequential order were barred by limitation under the amended reassessment regime read with the relaxation provisions and the directions in the cited Supreme Court decisions.

Analysis: The assessment year in question fell within the transition from the old reassessment regime to the substituted provisions. The earlier notice issued on 30.06.2021 was treated as a deemed notice under the new regime, the assessee was then issued a notice under section 148A(b), and the reply was received on 13.07.2022. The computation of limitation had to account for the substituted section 149, the exclusion of time contemplated by the relaxation legislation, and the exclusions flowing from the Supreme Court directions. On that basis, the notice under section 148A(b) was held to be within time, the order under section 148A(d) was passed before the expiry of the permissible period, and the consequential assessment order was also within limitation.

Conclusion: The reassessment proceedings were not time-barred and the challenge on limitation failed.

Issue (ii): Whether the reassessment notice was invalid for want of approval by the competent specified authority under the reassessment provisions.

Analysis: Under the amended section 151, the specified authority depends on whether more than three years have elapsed from the end of the relevant assessment year. For a case beyond three years, approval by the higher specified authority is sufficient if it falls within the statutory class of authorities named in the provision. The notice in the present case had the approval of the Director General of Income Tax (Investigation), who fell within the statutory category of specified authority applicable to the case. No jurisdictional defect was shown on this ground.

Conclusion: The challenge based on lack of proper approval failed.

Final Conclusion: The writ petition was held to be without merit on both limitation and sanction, and the reassessment action was sustained; the petitioner was nevertheless left to pursue the statutory appellate remedy.

Ratio Decidendi: In a reassessment initiated after the substitution of sections 148 to 151, limitation and approval must be tested with the amended statutory scheme, the relaxation provisions, and any binding Supreme Court directions governing exclusion of time; where the notice and the section 148A(d) order are passed within the recomputed period and approval is granted by a statutory specified authority, writ interference is not warranted.

Issues: (i) Whether the insolvency application under Section 7 of the Insolvency and Bankruptcy Code, 2016 was barred by limitation in view of the acknowledgement of liability dated 09.06.2016 and the effect of the court closure on the filing date; (ii) Whether the communication of 09.06.2016 and the corporate debtor's books and written materials established debt and default; (iii) Whether Section 7(3) of the Insolvency and Bankruptcy Code, 2016 required strict proof of default at the admission stage or only prima facie disclosure; (iv) Whether a plea first taken in written submissions could defeat the claim on limitation.

Issue (i): Whether the insolvency application under Section 7 of the Insolvency and Bankruptcy Code, 2016 was barred by limitation in view of the acknowledgement of liability dated 09.06.2016 and the effect of the court closure on the filing date.

Analysis: The acknowledgement of liability dated 09.06.2016 was treated as an admitted written acknowledgement, attracting a fresh period of limitation under Section 18 of the Limitation Act, 1963. The filing on 10.06.2019 was also held to be saved by Section 4 of the Limitation Act, 1963 because the limitation period was affected by the intervening court closure on the preceding weekend. The limitation objection had not been effectively raised in the original pleadings and could not be sustained on the facts as accepted on record.

Conclusion: The application was not barred by limitation and the finding against the appellant was set aside.

Issue (ii): Whether the communication of 09.06.2016 and the corporate debtor's books and written materials established debt and default.

Analysis: The communication of 09.06.2016, the balance-sheet material, and the written submissions of the corporate debtor were read together as admissions of an existing unsecured liability. The plea that the acknowledgement was made "inadvertently" was not accepted because execution of the document and the underlying liability were not effectively denied. The record was treated as sufficient to show an admitted financial debt and default.

Conclusion: Debt and default were held to be established in favour of the appellant.

Issue (iii): Whether Section 7(3) of the Insolvency and Bankruptcy Code, 2016 required strict proof of default at the admission stage or only prima facie disclosure.

Analysis: Section 7(3) was construed as an enabling provision requiring the financial creditor to place prima facie material showing the existence of debt and default, not strict proof at the threshold stage. The provision was held not to authorise rejection of the application merely because the tribunal preferred a narrower reading of the supporting record.

Conclusion: Section 7(3) did not justify rejection of the application on the reasoning adopted by the adjudicating authority.

Issue (iv): Whether a plea first taken in written submissions could defeat the claim on limitation.

Analysis: Written submissions were held not to be pleadings within the meaning of the NCLT Rules, 2016. A new limitation plea introduced for the first time in written submissions, without having been taken in the original counter, could not be used to non-suit the appellant, especially when it would remain unrebutted as a matter of procedure.

Conclusion: The belated limitation plea in written submissions was not accepted.

Final Conclusion: The impugned order was set aside, the insolvency application was directed to proceed, and the corporate debtor was to be dealt with in accordance with the insolvency resolution framework including moratorium.

Ratio Decidendi: A written acknowledgement of liability within the limitation period, read with the effect of court closure under Section 4 of the Limitation Act, 1963, can save a Section 7 insolvency from limitation, and Section 7(3) requires only prima facie disclosure of debt and default at the admission stage.

Issues: (i) whether the observations on the appellant's alleged related-party status could stand when the claim was to be re-determined by the resolution professional; (ii) whether the direction permitting initiation of avoidance proceedings under Sections 43, 45, 50 and 66 of the Code was within the scope of the appeal concerning rejection of claim.

Issue (i): whether the observations on the appellant's alleged related-party status could stand when the claim was to be re-determined by the resolution professional;

Analysis: The appeal arose from an order remitting the claim for fresh consideration by the resolution professional. An observation on related-party status at that stage was held not to foreclose independent consideration of the claim on its merits. The resolution professional was to examine the material and determine the claim first, with the related-party issue, if necessary, to be decided in the appropriate forum thereafter. The observation that the appellant did not appear to be detached from the corporate debtor was therefore not required to continue operating against the appellant.

Conclusion: The observations on related-party status were quashed and will not impede independent consideration of the claim.

Issue (ii): whether the direction permitting initiation of avoidance proceedings under Sections 43, 45, 50 and 66 of the Code was within the scope of the appeal concerning rejection of claim;

Analysis: The controversy before the tribunal was confined to rejection of the claim and its re-determination. Directions touching possible avoidance proceedings were beyond that limited scope. Since those proceedings concern a separate statutory exercise, the impugned observation was held unnecessary in the claim-verification proceedings and liable to be set aside.

Conclusion: The direction enabling reliance on avoidance proceedings was quashed.

Final Conclusion: The appeal succeeded to the extent that the impugned observations on related-party status and avoidance proceedings were removed, while the claim remained to be reconsidered independently by the resolution professional within the extended time granted.

Ratio Decidendi: In claim-verification proceedings, observations that are not necessary for deciding the claim and that may prejudice independent adjudication cannot be sustained, and the resolution professional must determine the claim on its own merits without being influenced by such extraneous observations.

Issues: Whether the recusal applicants established a reasonable and legally sustainable apprehension of bias on the basis of the order dated 09.03.2026, earlier judicial observations in connected matters, the expeditious listing of the case, alleged ideological association, alleged conflict of interest arising from relatives' professional engagements, and other related circumstances.

Analysis: The grounds urged for recusal were examined against the settled test of a fair-minded and informed observer and not the subjective unease of a litigant. The order dated 09.03.2026 contained only prima facie observations made at an interim stage and could not, by itself, establish pre-judgment or bias. Service on counsel who had represented the accused before the Trial Court was treated as valid advance service in the circumstances, and the stay of remarks and consequential departmental action against the Investigating Officer was held to be a normal interim protection. Earlier detailed judgments in matters arising from the same dispute, including challenges relating to arrest and bail under the Prevention of Money Laundering Act, 2002, were confined to the statutory tests then in issue and did not create a disqualifying predisposition for later proceedings. Allegations based on attendance at legal programmes, public statements by a political functionary, or professional engagements of relatives were found too remote and speculative to establish a real conflict of interest or reasonable apprehension of bias. The Court also held that expeditious hearing in MP/MLA matters and adverse rulings in earlier cases do not, without more, furnish a ground for recusal.

Conclusion: The applicants failed to establish any real or reasonable apprehension of bias, and the request for recusal was rejected.

Outcome: Special leave petitions were dismissed with liberty to proceed in accordance with law.

Issues: Whether service tax could be levied on crushing and transportation charges when excise duty and VAT were already being collected on the same activity.

Outcome: The appeal was dismissed after hearing the parties, and the challenge to the proposed levy did not succeed.

Issues: (i) Whether construction of canals under a turnkey/EPC contract for Government irrigation projects falls within Works Contract Service; and (ii) whether Notification No. 41/2009-ST dated 23.10.2009 could be applied to the disputed period.

Issue (i): Whether construction of canals under a turnkey/EPC contract for Government irrigation projects falls within Works Contract Service.

Analysis: The contract was for construction of canals linked with reservoirs and dams for irrigation or drinking water purposes, awarded by the Government and undertaken for a non-commercial objective. The governing larger-bench ruling had held that construction of canals for irrigation or water supply, even when executed as a turnkey/EPC contract, falls within the exclusionary treatment in Section 65(105)(zzzza) of the Finance Act, 1994 and is not exigible to service tax when the work is for non-commercial, non-industrial purposes. Applying that binding classification principle, the activity could not be treated as taxable Works Contract Service.

Conclusion: The activity was not classifiable under Works Contract Service and the demand could not be sustained.

Issue (ii): Whether Notification No. 41/2009-ST dated 23.10.2009 could be applied to the disputed period.

Analysis: The notification granting exemption for canal construction was held to be prospective and not retrospectively applicable. However, once the activity itself was found to fall outside the taxable category, the question of exemption under the notification ceased to affect the liability.

Conclusion: The notification was not retrospectively applicable, but that did not alter the result because taxability itself failed.

Final Conclusion: The demand, penalty, and related tax consequences were set aside because the canal construction activity was excluded from the taxable category on merits.

Ratio Decidendi: Construction of canals for irrigation or water supply under a turnkey/EPC contract for Government projects, when undertaken for non-commercial and non-industrial purposes, is excluded from Works Contract Service under Section 65(105)(zzzza) of the Finance Act, 1994.