Issues: (i) Whether the manufacturing-segment transfer-pricing adjustment required consideration of adjustments for capacity underutilisation and customs-duty differences, and re-evaluation of comparables under Rule 10B(3) of the Income-tax Rules, 1962; (ii) Whether the ECB interest adjustment based on a single comparable with materially different credit, scale and risk attributes could be sustained.

Issue (i): Whether the manufacturing-segment transfer-pricing adjustment required consideration of adjustments for capacity underutilisation and customs-duty differences, and re-evaluation of comparables under Rule 10B(3) of the Income-tax Rules, 1962.

Analysis: Rule 10B(3) requires an uncontrolled transaction to be treated as comparable only where differences do not materially affect profit, or reasonably accurate adjustments can eliminate their material effects. The first year of commercial operations involved a substantially higher depreciation ratio owing to underutilised capacity and a substantially higher customs-duty burden than the selected comparables. The claims were rejected without examining audited data to determine whether quantified adjustments could neutralise these differences. Functional comparability of the final set of comparables also required fresh examination.

Conclusion: The manufacturing-segment adjustment was set aside for fresh determination of the arm's length price after examination of material differences, quantified comparability adjustments, and functional comparability.

Issue (ii): Whether the ECB interest adjustment based on a single comparable with materially different credit, scale and risk attributes could be sustained.

Analysis: Benchmarking under Section 92C of the Income-tax Act, 1961 remains necessary despite compliance with RBI all-in-cost ceilings. A single comparable transaction involving an entity with fundamentally different credit profile, scale and risk attributes could not provide a reliable benchmark for the ECB interest rate.

Conclusion: The ECB interest adjustment was set aside for fresh arm's length benchmarking after considering an appropriate set of comparable transactions.

Final Conclusion: Both transfer-pricing determinations require fresh, fact-specific comparability analysis after affording the assessee a reasonable opportunity to substantiate its claims.

Ratio Decidendi: Material operational or credit-risk differences affecting transfer-pricing margins or price must be evaluated through reasonably accurate comparability adjustments, and a benchmark founded on a materially dissimilar single comparable cannot be sustained.

Issues: Whether the ex parte adjudication could stand where the show-cause notice and adjudication order were uploaded only under the GST portal's "Additional Notice and Orders" tab without separate intimation, preventing the petitioner from replying.

Analysis: Proceedings under Section 73 require observance of principles of natural justice, including adequate notice and a meaningful opportunity to respond. Uploading the show-cause notice and adjudication order only under the specified portal tab, without separate intimation, prevented the petitioner from responding to the notice and constituted a breach of natural justice.

Conclusion: The ex parte adjudication order was quashed for violation of principles of natural justice, with a direction to permit a reply and undertake fresh reasoned adjudication after affording a hearing.

Issues: Whether the concurrent finding that the creditors lacked creditworthiness for purposes of the unsecured-loan addition under Section 68 was perverse.

Analysis: Section 68 places the initial burden on the assessee to establish the identity of the creditor, the creditor's financial capacity, and the genuineness of the transaction through cogent evidence. Confirmations or cheque payments do not by themselves establish creditworthiness where the creditors deny the loans or cannot satisfactorily explain the source of funds and preceding cash deposits. The concurrent factual appreciation by the assessing and appellate authorities disclosed failure to discharge that burden.

Conclusion: The finding on lack of creditworthiness was not perverse; the question was answered against the assessee and in favour of the Revenue.

Issues: (i) Whether transfer of the entire business undertaking without consideration to a distinct registered person constitutes a supply under GST. (ii) Whether the transfer is a supply of goods or a supply of services. (iii) Whether the transfer is covered by Serial No. 2 of Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017. (iv) Whether stock and fixed assets are taxable where the business does not qualify as a going concern.

Issue (i): Whether transfer of the entire business undertaking without consideration to a distinct registered person constitutes a supply under GST.

Analysis: Section 7 of the Central Goods and Services Tax Act, 2017 has an inclusive scope and encompasses specified supplies made without consideration. The proposed arrangement transfers the entire undertaking, including assets, liabilities, employees, rights, customers and operations, from one registered person to another. Such comprehensive transfer was treated as a supply notwithstanding that it is without consideration and is not in the ordinary course of business.

Conclusion: The transfer of the entire business undertaking constitutes a supply under GST.

Issue (ii): Whether the transfer is a supply of goods or a supply of services.

Analysis: Entry 4(c) of Schedule II excludes a business transferred as a going concern from deemed supply-of-goods treatment on cessation of taxable person status. A business undertaking transferred as a whole is not movable property qualifying as goods under Section 2(52); being neither goods, money nor securities, it falls within services under Section 2(102).

Conclusion: The transfer of the business undertaking amounts to a supply of services.

Issue (iii): Whether the transfer is covered by Serial No. 2 of Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017.

Analysis: Serial No. 2 grants nil-rate treatment to services by way of transfer of a going concern as a whole or an independent part thereof. Although the arrangement provides for continuity of operations, employees, assets and liabilities, no documentary evidence was furnished to establish that the business satisfies the requirements of a going concern.

Conclusion: The transfer is covered by Serial No. 2 of Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017 only if the business qualifies as a going concern.

Issue (iv): Whether stock and fixed assets are taxable where the business does not qualify as a going concern.

Analysis: Under Entry 4(c) of Schedule II, goods forming part of business assets are deemed supplied immediately before cessation of taxable person status unless the business is transferred as a going concern. The going-concern exception is therefore unavailable where that condition is not met.

Conclusion: Stock, closing stock and other business assets are supplies of goods and are taxable at the rates applicable to the respective goods if the business does not qualify as a going concern.

Final Conclusion: A comprehensive transfer of the undertaking is characterised as a supply of services, with nil-rate treatment dependent upon proof that the undertaking is transferred as a going concern; otherwise, the transferred business goods attract tax as deemed supplies.

Ratio Decidendi: Transfer of a business undertaking as a going concern is a supply of services eligible for the Serial No. 2 exemption, whereas failure of the going-concern condition results in deemed supply-of-goods treatment for business assets upon cessation.

Issues: Whether a complete e-rickshaw kit supplied in completely knocked down condition is classifiable as the finished electrically operated vehicle and taxable at 5% GST.

Analysis: Rule 2(a) governing interpretation of the Import Tariff permits classification of a complete article supplied unassembled where the goods retain the essential character of that article. Tariff item 87038040 covers three-wheeled vehicles propelled solely by an electric motor, and Serial No. 441 of Schedule I to Notification No. 11/2017-Central Tax (Rate) prescribes 5% GST for electrically operated vehicles. Classification as an e-rickshaw in CKD condition requires cumulative satisfaction of four conditions: all components necessary for one complete e-rickshaw must be supplied together as a single identifiable kit; the kit must require only assembly without addition of an essential component; the purchase order, invoice, packing list and contemporaneous records must consistently describe an e-rickshaw in CKD/SKD condition; and the actual consignment must correspond with those records.

Conclusion: On fulfilment of all four conditions, the CKD kit is classifiable as the finished electrically operated three-wheeled vehicle under tariff item 87038040 and attracts GST at 5% (2.5% CGST and 2.5% SGST) on its composite value. Failure to fulfil any condition results in classification as individual parts taxable at the rate applicable to those parts.

Issues: (i) Whether the milling, fortification and packing of Government-supplied food grains for distribution through the Public Distribution System is a composite supply eligible for exemption under Serial No. 3A of Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017; (ii) The GST rate applicable to that composite supply if the value of goods exceeds the 25% threshold under Serial No. 3A.

Issue (i): Whether the milling, fortification and packing of Government-supplied food grains for distribution through the Public Distribution System is a composite supply eligible for exemption under Serial No. 3A of Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017.

Analysis: The contractual arrangement required milling of wheat, fortification with micronutrients and packaging of the resultant flour for delivery to the State Government. These supplies were naturally bundled, with milling being the principal supply and fortification and packaging being ancillary supplies; therefore, the arrangement constituted a Composite Supply under Section 2(30) of the Central Goods and Services Tax Act, 2017.

Analysis: The agreed Value of Supply was Rs. 260.48 per 100 kilograms of wheat, including cash payment and the agreed Non-Cash Consideration represented by retention of gunny bags, bran and refractor. The goods component, comprising fortification and packing materials, was Rs. 60, or 23.03% of the total value. Distribution through the Public Distribution System is covered by Entry 28 of the Eleventh Schedule and is a Function Entrusted to a Panchayat under Article 243G of the Constitution of India. Circular No. 153/09/2021-GST requires the 25% goods-value condition to be determined on the facts of each case.

Conclusion: On the stated valuation, the composite supply qualifies for exemption under Serial No. 3A of Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017, provided that the value of goods does not exceed 25% of the value of the composite supply.

Issue (ii): The GST rate applicable to that composite supply if the value of goods exceeds the 25% threshold under Serial No. 3A.

Analysis: Exceeding the prescribed 25% value threshold renders the composite milling supply ineligible for the Serial No. 3A exemption. The applicable rate in that event is prescribed under Serial No. 26(i)(f) of Notification No. 11/2017-Central Tax (Rate).

Conclusion: Where the value of goods exceeds 25% of the value of the composite supply, GST is chargeable at 5% on the total consideration, comprising CGST at 2.5% and SGST at 2.5%.

Final Conclusion: Milling, fortification and packing of food grains for Public Distribution System distribution remains exempt while the goods component stays within the 25% statutory threshold; otherwise, the supply is taxable at the specified concessional rate.

Ratio Decidendi: A naturally bundled Government supply of milling, fortification and packaging for the Public Distribution System is eligible for the Serial No. 3A exemption only where the value of goods used in the composite supply does not exceed 25% of its total value.

Issues: Whether fees charged for university diploma and certificate programmes constitute exempt educational services under Entry No. 66(a) of Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017.

Analysis: Entry No. 66(a) exempts services supplied by an educational institution to its students. Under clause 2(y)(ii), the institution must provide education as part of a curriculum leading to a qualification recognised by law. A structured diploma or certificate course is education forming part of a curriculum. The statutory power to institute diplomas and certificates, together with the powers to regulate courses, curricula and syllabi, establishes that qualifications awarded through the approved programmes are recognised by law. The applicable circulars distinguish long-duration programmes leading to recognised qualifications from short-duration programmes or participation certificates. Diploma and certificate programmes must therefore have a duration of one year or more to fall within the exemption.

Conclusion: Fees for diploma and certificate programmes of one year or more are consideration for exempt educational services supplied to students. Fees for short-duration diploma or certificate programmes are not covered by the exemption.

Issues: Whether the assessments under the combined ambit of Sections 143 and 147 were invalid because the returns and profit and loss accounts had not been rejected and the books of account were unavailable.

Analysis: The assessments were not made by the best judgment method under Section 144, but under the combined ambit of Sections 143 and 147. The books of account and supporting documents were not produced despite opportunities, while the profit and loss accounts reflected expenditure variations grossly disproportionate to the turnover increase. In these circumstances, reliance on industry-standard income and profit parameters for determining taxable income was justified.

Conclusion: The assessments under Sections 143 and 147 were valid, and the question is answered against the assessee.

Issues: (i) Whether unsecured loans were assessable as unexplained cash credits under section 68 of the Income-tax Act, 1961; (ii) Whether 6% of contractual and labour payments could be disallowed on an ad hoc basis; (iii) Whether alleged cash loans inferred from third-party search material could be assessed under section 69D of the Income-tax Act, 1961 through sections 147 and 148 rather than section 153C; (iv) Whether purchases and alleged related commission were disallowable under sections 37(1) and 69C of the Income-tax Act, 1961; (v) Whether section 50CA of the Income-tax Act, 1961 applied to a shareholder's buyback receipt covered by sections 10(34A) and 115QA of the Income-tax Act, 1961; (vi) Whether seized cash recorded in the cash books could be treated as unexplained money under section 69 of the Income-tax Act, 1961; and (vii) Whether penalty under section 271D of the Income-tax Act, 1961 could be imposed for an alleged contravention of section 269SS of the Income-tax Act, 1961.

Issue (i): Whether unsecured loans were assessable as unexplained cash credits under section 68 of the Income-tax Act, 1961.

Analysis: The lenders' identity, financial capacity, confirmations, audited accounts, bank statements, loan ledgers and subsequent repayments were evidenced. No defect in this material or contrary inquiry was shown. The evidence satisfied the requirements governing an Unexplained Cash Credit, and the assessee discharged the Onus of Proof, which the Revenue did not rebut.

Conclusion: The unsecured-loan additions under section 68 were unsustainable, in favour of the assessee.

Issue (ii): Whether 6% of contractual and labour payments could be disallowed on an ad hoc basis.

Analysis: The payments were supported by contractual records, bills, work orders, tax deduction, banking records, labour records and responses to verification notices. The services and payments were accepted, while the audited books and financial results remained intact. Absent Rejection of Books of Account, an Ad Hoc Disallowance merely to guard against a perceived revenue leakage had no evidentiary basis.

Conclusion: The estimated 6% disallowances of contractual and labour expenditure were unsustainable, in favour of the assessee.

Issue (iii): Whether alleged cash loans inferred from third-party search material could be assessed under section 69D of the Income-tax Act, 1961 through sections 147 and 148 rather than section 153C.

Analysis: The third-party receipts did not identify the assessee, the alleged multiplication of the recorded amounts was conjectural, and no supporting material was found in the assessee's search. No effective opportunity of cross-examination was provided. Further, for the impugned third-party search material, section 153C provided the special statutory mechanism, requiring the prescribed satisfaction and transfer of material. The principle that a Special Provision Prevails Over General Provision precluded recourse to reassessment provisions without complying with section 153C.

Conclusion: The alleged cash-loan additions under section 69D lacked both evidentiary foundation and lawful jurisdiction, in favour of the assessee.

Issue (iv): Whether purchases and alleged related commission were disallowable under sections 37(1) and 69C of the Income-tax Act, 1961.

Analysis: Invoices, lorry receipts, e-way bills, material-receipt notes and banking evidence established delivery and use of the goods in project work. The seized notings did not displace these records or establish unexplained commission expenditure.

Conclusion: The purchases were genuine and neither the purchase addition nor the estimated commission addition could survive, in favour of the assessee.

Issue (v): Whether section 50CA of the Income-tax Act, 1961 applied to a shareholder's buyback receipt covered by sections 10(34A) and 115QA of the Income-tax Act, 1961.

Analysis: Income from the qualifying buyback was exempt to the shareholder under section 10(34A), while the company undertaking the buyback had paid the statutory tax under section 115QA. Section 50CA is a machinery provision for Deemed Consideration in computing chargeable capital gains and could not apply where the buyback receipt was statutorily exempt in the shareholder's hands.

Conclusion: Section 50CA did not apply to the buyback receipt, in favour of the assessee.

Issue (vi): Whether seized cash recorded in the cash books could be treated as unexplained money under section 69 of the Income-tax Act, 1961.

Analysis: The cash advance and corresponding balance were recorded in the cash book and cash day book seized by the Department. The alleged link between unrelated electronic messages and the seized cash was not established. Section 69 applies only to money not recorded in the books, and Suspicion Cannot Replace Evidence.

Conclusion: The seized cash was not unexplained money under section 69, in favour of the assessee.

Issue (vii): Whether penalty under section 271D of the Income-tax Act, 1961 could be imposed for an alleged contravention of section 269SS of the Income-tax Act, 1961.

Analysis: The alleged loan receipt was founded on third-party material that neither established a transaction involving the assessee nor identified the relevant amount or counterparty. Actual taking or acceptance of a prohibited loan is the Jurisdictional Fact for penalty under section 271D. The corresponding alleged cash-loan additions had also failed.

Conclusion: The penalty under section 271D had no factual foundation and could not be sustained, in favour of the assessee.

Final Conclusion: The disputed credits, estimated expenditure disallowances, alleged cash-loan assessments, purchase and commission additions, deemed buyback-value computation, unexplained-cash addition, and cash-loan penalty did not survive.

Issues: Whether the disallowance of commission paid to the assessee's wife's proprietary concern as excessive or unreasonable under Section 40A(2)(b) was sustainable.

Analysis: Section 40A(2)(b) applies to payments made to specified related persons, but does not mandate an automatic disallowance. The expenditure must be assessed with reference to the fair market value of the services, the legitimate needs of the business, and the benefit derived by the assessee. The 30% commission benchmark was adopted by comparison with businesses dealing in Ayurvedic products, whereas the assessee's Herbalife distribution and team-building model was materially different. No comparable material was produced to establish that the commission was excessive or unreasonable. Although related-party payments require verification of the actual services and commercial justification, comparison with an unrelated line of business alone could not sustain the disallowance.

Conclusion: The statutory conditions for treating the commission expenditure as excessive or unreasonable were not established; the disallowance under Section 40A(2)(b) was unsustainable.

Issues: Whether survey-disclosed on-money from sale of flats is assessable upon receipt or in the assessment years in which the sale deeds are registered and title is transferred.

Analysis: Under the project-completion method, income from sale of flats accrues upon execution of the sale deed and transfer of title, rather than upon receipt of advance consideration or on-money. The consistent recognition of the disclosed on-money in the respective years of registration, including subsequent disclosures and undertakings to offer the balance within specified years, warranted the same treatment as had been extended for earlier years.

Conclusion: The sustained balance additions were set aside for limited verification. Amounts found to have been offered to tax in the relevant subsequent years are to be deleted, while any portion not so offered may be assessed in the assessment year under appeal; no further deferment beyond the undertaking period is permitted.

Issues: (i) Whether the interest payable on unconverted CCDs could be assigned a nil arm's length price by treating the CCDs as equity; and (ii) Whether the entire CCD interest was alternatively disallowable under sections 36(1)(iii) and 37(1).

Issue (i): Whether the interest payable on unconverted CCDs could be assigned a nil arm's length price by treating the CCDs as equity.

Analysis: The arm's length principle under Chapter X requires pricing of the actual international transaction. Rule 10AB calls for evidence from a comparable uncontrolled transaction or a sufficiently analysed similar transaction. The CCD terms required future conversion but preserved the issuer's pre-conversion coupon obligation; the holder had neither voting nor dividend rights before conversion. The conversion price was linked to fair market value at the conversion date, and no predetermined conversion ratio was established.

Analysis: Future conversion, long tenure and absence of cash redemption may require comparability adjustments, but do not by themselves establish a nil return. Transaction recharacterisation requires established exceptional circumstances, including a divergence between economic substance and legal form or a commercially irrational arrangement that prevents reliable pricing. No evidence showed that the coupon obligation was sham, that the issuer bore no obligation to pay it, or that a comparable uncontrolled transaction warranted a nil price. The assessee's stated or effective coupon rate was not independently affirmed as arm's length.

Conclusion: The nil arm's length price adjustment is deleted, in favour of the assessee.

Issue (ii): Whether the entire CCD interest was alternatively disallowable under sections 36(1)(iii) and 37(1).

Analysis: The alternative denial rested substantially on the premise that the unconverted CCDs already represented issued equity. No separate and supported finding established that the funds lacked business utilisation or that the interest was otherwise inadmissible. Whether interest is currently deductible or requires capitalisation of interest depends on the utilisation of funds and the assessee's records. The consequential reduction of the capital work-in-progress or capital asset base also depended on the unsustainable nil-price premise.

Conclusion: The alternative disallowance of the CCD interest is set aside, in favour of the assessee.

Final Conclusion: Compulsory future conversion cannot, by itself, make a present contractual coupon valueless or sustain the associated alternative denial of the interest claim.

Ratio Decidendi: A compulsorily convertible debenture's future conversion into equity, absent evidence satisfying the exceptional recharacterisation standard and a comparable-based analysis under the prescribed transfer-pricing method, cannot alone justify pricing its pre-conversion contractual interest at nil.

Issues: Whether an order concerning confiscation of a domestic conveyance and Indian currency, redemption fine and penalty is appealable to the Appellate Tribunal under Section 129A of the Customs Act, 1962, or revisable by the Central Government under Section 129DD of the Customs Act, 1962.

Analysis: Section 129A provides an appeal to the Appellate Tribunal against an appellate order, except matters falling within the first proviso, including goods imported or exported as baggage, specified un-unloaded import goods, and drawback. The disputed orders concerned a domestically registered car, Indian currency and penalties; these were neither imported nor exported goods, and the vehicle had not been loaded with smuggled goods when seized. The matter therefore did not fall within the statutory exceptions excluding the Appellate Tribunal's jurisdiction. Since an appeal lay under Section 129A, the revisional jurisdiction under Section 129DD was unavailable.

Conclusion: The proper remedy was an appeal before the Appellate Tribunal under Section 129A of the Customs Act, 1962, and the revision application under Section 129DD was not maintainable. The issue was decided against the assessee.

Issues: (i) Whether reassessment initiation based on an alleged deduction of health and education cess was valid when no such deduction had been claimed; and (ii) Whether interest on borrowings used for investment in a subsidiary could justify reassessment under Section 36(1)(iii) of the Income-tax Act, 1961.

Issue (i): Whether reassessment initiation based on an alleged deduction of health and education cess was valid when no such deduction had been claimed.

Analysis: The reassessment notice under Section 148A(1) was founded on an audit objection alleging deduction of health and education cess. The record established that no such deduction had been claimed. The material supplied in response to the assessee's request did not disclose verification of this objection before initiation of proceedings. Reassessment action based on an unverified factual premise reflected non-application of mind.

Conclusion: Reassessment based on the alleged deduction of health and education cess was invalid; the issue was decided in favour of the assessee.

Issue (ii): Whether interest on borrowings used for investment in a subsidiary could justify reassessment under Section 36(1)(iii) of the Income-tax Act, 1961.

Analysis: Interest on borrowed funds used for investment in a subsidiary is allowable where the investment is supported by commercial expediency and bears nexus with the business purpose. The business purpose need not be confined to the assessee's own immediate profit-making activity, and the Revenue cannot substitute its commercial judgment for that of a prudent businessman. No distinguishing circumstance was shown to displace the application of this principle to the investment in the subsidiary.

Conclusion: The proposed disallowance of interest on borrowed funds invested in the subsidiary was unsustainable; the issue was decided in favour of the assessee.

Final Conclusion: Neither audit objection furnished a valid legal foundation for reopening the assessment.

Ratio Decidendi: Reassessment cannot be sustained where the audit-objection basis is factually unverified or fails to disclose a legally sustainable disallowance.

Issues: Whether the intimation computing taxable income, and the consequential rejection of the rectification and revision applications, were sustainable despite the disclosed expenditure having not been addressed.

Analysis: The statutory processing, rectification and revision mechanisms under Sections 143(1), 154 and 264 of the Income-tax Act, 1961 require consideration of material particulars in the return and a Reasoned Order. The computation was confined to receipts and the exemption claim while disregarding the expenditure disclosed in the return. The revision order did not address this material aspect, demonstrating Non-application of Mind. The communication rejecting rectification was also devoid of reasons.

Conclusion: The intimation and the orders rejecting rectification and revision were unsustainable and were set aside; a fresh rectification application was directed to be decided afresh in light of the return and the stated observations.

Issues: Whether revisional jurisdiction under section 263 could be exercised where the reassessment had been completed after inquiries on the same information relied upon for revision.

Analysis: Exercise of revisionary jurisdiction requires the assessment order to be both erroneous and prejudicial to the interests of the Revenue. The reassessment record showed that notices were issued, the assessee furnished explanations and supporting material, and the assessment was completed after considering that material. The revision was founded on the same portal information that formed the basis of reassessment, but no error or discrepancy in the assessee's explanation was identified and no further inquiry was undertaken to displace the material already on record. A perceived need for further inquiry, without establishing a lack of inquiry or a demonstrable error causing prejudice, could not justify revision.

Conclusion: The prerequisites for invoking section 263 were not satisfied, and the revisionary order was invalid; the conclusion is in favour of the assessee.

Issues: Whether the purchase and holding of agricultural land in the appellant's name constituted a benami transaction.

Analysis: The analysis applied the indicia of source of consideration, possession, custody of title documents, relationship between the persons involved, motive and subsequent conduct. The appellant's statement under Section 19(1) of the Prohibition of Benami Property Transactions Act, 1988 disclosed limited financial means and stated that he signed the sale deed at another person's direction for payment. His later affidavit claiming personal funds was rejected as unsupported, inconsistent with the registered sale consideration, delayed, and containing an implausible future-date reference. Documentary evidence concerning the compensation amount, its cash withdrawal by a person associated with the alleged beneficial owner, and the links between the persons involved corroborated the original statement and disproved the asserted independent purchase.

Conclusion: The transaction was benami; the appellant was the benamidar and the other person was the beneficial owner.

Issues: (i) Whether prior Customs adjudication precluded determination of contraventions under FEMA; (ii) Whether the seized electronic records and statement recorded under Section 108 of the Customs Act could establish the FEMA contraventions; (iii) Whether the FEMA contraventions and the individual appellant's liability could extend to projected amounts beyond documented transactions.

Issue (i): Whether prior Customs adjudication precluded determination of contraventions under FEMA.

Analysis: Customs proceedings concerned valuation of imported goods and duty assessment under the Customs valuation framework, whereas the foreign-exchange proceedings concerned unlawful dealing in or transfer of foreign exchange. The rejection of transaction-value redetermination based on extrapolation in the Customs proceedings did not bar an independent determination founded on the requirements and evidence applicable under FEMA.

Conclusion: Prior Customs adjudication did not preclude determination of the FEMA contraventions. The issue was decided against the appellants.

Issue (ii): Whether the seized electronic records and statement recorded under Section 108 of the Customs Act could establish the FEMA contraventions.

Analysis: Section 39 of the Foreign Exchange Management Act, 1999 required a presumption of truth, unless rebutted, for documents seized under that Act or another law. The electronic records were linked with manufacturer and supplier invoices, packing lists, banking entries and the statement under Section 108 of the Customs Act, 1962. The forensic examination recorded intact seals and identified the seized hard disks, pen drive and flash drive. No material established tampering or rebutted the statutory presumption. The standard applicable to the adjudication was preponderance of probabilities rather than the criminal standard of proof.

Conclusion: The seized electronic records and the Section 108 statement were accepted as reliable evidence of the FEMA contraventions. The issue was decided against the appellants.

Issue (iii): Whether the FEMA contraventions and the individual appellant's liability could extend to projected amounts beyond documented transactions.

Analysis: The documentary data supported foreign-exchange contraventions in relation to 363 import bills involving USD 14,01,850, approximately equivalent to Rs. 7,42,27,152. Allegations founded solely on projections or extrapolation beyond the documented entries lacked corroborative evidence and could not be sustained. The individual appellant was in charge of, and responsible for, the company's business and was consequently liable for the proved contraventions under Section 42(1) of the Foreign Exchange Management Act, 1999.

Conclusion: Liability was confined to the documented contraventions and did not extend to projected amounts. The penalties were reduced to Rs. 75,00,000 for the company and Rs. 25,00,000 for the individual appellant. This issue was decided in favour of the appellants.

Final Conclusion: The foreign-exchange determination was sustained only to the extent supported by the seized and corroborated records, while unsupported extrapolated allegations were excluded and the penalties were recalibrated accordingly.

Ratio Decidendi: An unrebutted statutory presumption under Section 39 of the Foreign Exchange Management Act, 1999, supported by corroborative electronic and documentary material, can establish foreign-exchange contraventions on a preponderance of probabilities, but liability cannot be extended to amounts based only on uncorroborated extrapolation.

Issues: Whether penalty under Rule 26 of the Central Excise Rules, 2002 could be imposed where the show-cause notice neither proposed confiscation of the goods nor established that the goods were liable to confiscation.

Analysis: Rule 25 of the Central Excise Rules, 2002 requires consideration of whether the offending goods are liable to confiscation. Penalty under Rule 26 is attracted only where the person concerned knows or has reason to believe that the goods are liable to confiscation. The show-cause notice did not propose confiscation, and the orders below did not record any finding that the goods were liable to confiscation.

Conclusion: The statutory preconditions for penalty under Rule 26 were not met; the penalty imposed on the assessee was unsustainable and was set aside in favour of the assessee.