TaxTMI Updates e-Newsletter
Jan 03,2022

Chargeability of GST on royalty paid for minerals - interim stay of show cause notice - interim protection pending decision of a higher bench

Chargeability of GST on royalty paid for minerals - interim stay of show cause notice - interim protection pending decision of a higher bench - Stay of the show cause notice dated 25.11.2021 seeking GST for the tax period 2018-19 to 2021-22 (upto August, 2021). - HELD THAT: - The Court granted interim relief because the determinative question whether GST is chargeable on minerals in respect of which royalty has already been paid is already under active consideration before a Nine Judges Bench of the Hon'ble Supreme Court. Noting that similar matters have received interim protection and that the controversy is pending at the higher forum, the petitioner was held to have made out a case for a temporary stay of the impugned notice. The matter is directed to be listed after disposal of Writ Petition (Civil) No.1076 of 2021 and SLP(C) No.37326 of 2017. Interim relief is limited to staying the specific show cause notice and the parties are permitted to mention the matter after the specified Supreme Court cases are disposed; meanwhile pleadings are to be completed. [Paras 7, 8, 9]

The show cause notice dated 25.11.2021 is stayed pending disposal of Writ Petition (Civil) No.1076 of 2021 and SLP(C) No.37326 of 2017; the matter to be listed thereafter and pleadings completed in the meantime.

Final Conclusion: Interim stay granted on the impugned show cause notice dated 25.11.2021 (relating to tax period 2018-19 to 2021-22 (upto August, 2021)) in view of the identical question pending before a larger Bench of the Supreme Court; matter to be listed after disposal of the specified Supreme Court matters and pleadings to be completed meanwhile.

Limitation period for filing appeal - electronic filing requirement - failure to upload order on GST portal - interplay of uploading and filing - condonation of delay - treatment of manual appeals where electronic mode unavailable

Limitation period for filing appeal - electronic filing requirement - failure to upload order on GST portal - Limitation for filing an appeal under the Act begins only when the adjudication order is uploaded on the GST portal where electronic filing is the prescribed mode, and does not commence merely on physical receipt of the order when upload has not occurred. - HELD THAT: - The Court examined sections 107(1) and 107(4) of the Central Goods and Services Tax Act, 2017 and Rule 108(1) of the Rules, noting that the statutory scheme contemplates electronic presentation of appeals. Where the impugned orders, though dated, were not uploaded on the web portal, the assessee was deprived of the prescribed electronic channel to present the appeal. In that factual matrix the period of limitation cannot be held to have begun to run from the date of physical communication of the order. The Court emphasised that uploading the order and filing the appeal are intertwined activities under the new regime and, until the order is uploaded so as to enable electronic filing, the statutory time bar should not be applied against the appellant. The Court rejected reliance on internal circulars not notified under the Rules and took a pragmatic approach in the transition phase of GST where technical glitches impeded electronic processes. [Paras 7, 9, 10, 11, 12]

Period of limitation to prefer an appeal did not commence before the order was uploaded on the GST portal; physical receipt of the order, in the absence of upload, does not trigger the limitation period.

Treatment of manual appeals where electronic mode unavailable - condonation of delay - Appeals filed manually after receipt of the physical order but prior to an opportunity to file electronically, where delay resulted from the department's failure to upload the order, are to be treated as filed within time and must be decided on merits. - HELD THAT: - Given the admitted non-uploading of the orders on the portal and the absence of any notified procedure permitting manual filing as a substitute for electronic filing, the Court held it would be unjust to penalise the petitioner for delay arising from the department's failure. The Court aligned with the Gujarat High Court view that, in such circumstances, rejecting manually filed appeals as time-barred is unsustainable. Consequently, the appellate orders dismissing the appeals on limitation grounds were set aside and the appellate authority was directed to treat the appeals as having been filed within time and decide them on merits after affording the petitioner an opportunity of hearing. [Paras 9, 13, 14, 15]

Extant appellate orders rejecting the appeals as barred by limitation are set aside; the appeals are to be treated as timely and remitted for fresh consideration on merits with opportunity of hearing.

Final Conclusion: Writ petitions allowed: appellate orders rejecting the refund appeals as time barred are set aside; the appeals shall be regarded as filed within time due to non uploading of the impugned orders on the GST portal and the appellate authority must decide the appeals on merits after affording opportunity of hearing.

Service of notice under Section 169 - Deeming fiction of service - Section 129(3) of the Central Goods and Services Tax Act - adjudication and release on bank guarantee - Right to pursue statutory remedies and appeal under Section 107 - Issuance of certified copy of order to enable pursuit of remedies - Suspension/abeyance of invocation of bank guarantee pending statutory remedy - Condonation of limitation by Supreme Court orders

Service of notice under Section 169 - Deeming fiction of service - Whether the order issued under Section 129(3) of the Act was served on the petitioner. - HELD THAT: - Section 169 prescribes modes of service including registered post with acknowledgement and creates a deeming fiction as to service. The respondent produced the dispatch register and the acknowledgement card evidencing dispatch on 28.01.2020 and receipt on 03.02.2020. In light of the statutory deeming provision and the material placed on record, the order is to be treated as having been served on the petitioner on 03.02.2020. The statutory fiction of deemed service applies and leaves no room to assume non-service where registered post with acknowledgement is proved.

Order under Section 129(3) was deemed served on the petitioner on 03.02.2020.

Issuance of certified copy of order to enable pursuit of remedies - Right to pursue statutory remedies and appeal under Section 107 - Suspension/abeyance of invocation of bank guarantee pending statutory remedy - Condonation of limitation by Supreme Court orders - Whether the petitioner should be furnished a certified copy of the adjudication order and whether invocation of the bank guarantee should be stayed to enable the petitioner to pursue statutory remedies. - HELD THAT: - Although the order was deemed served, the petitioner's contention that he had not received or may have misplaced the order and that he should be able to pursue an appeal (including reliance on Supreme Court directions regarding condonation of limitation) warranted consideration. Exercising discretion, the Court directed the respondent to issue a certified copy of the order forthwith so that the petitioner may pursue available statutory remedies. The Court also ordered that invocation of the bank guarantee shall be kept in abeyance and the guarantee kept alive for 60 days from the date of the order to enable the petitioner to pursue remedies.

Respondent directed to furnish certified copy of the order; invocation of bank guarantee stayed and guarantee to remain alive for 60 days to enable petitioner to pursue statutory remedies.

Final Conclusion: The writ petition is disposed of by holding that the adjudication order was deemed served on 03.02.2020, directing the respondent to furnish a certified copy of the order forthwith, and keeping invocation of the bank guarantee in abeyance with the guarantee to remain alive for 60 days to enable the petitioner to pursue statutory remedies.

Recall of criminal court order - Power of Criminal Court to review or recall its orders under Section 362 of the Code of Criminal Procedure, 1973 - Distinction between recall and review - Principles of natural justice as a ground for recall - Pre-arrest bail under Section 438 of the Code of Criminal Procedure, 1973

Recall of criminal court order - Distinction between recall and review - Principles of natural justice as a ground for recall - Pre-arrest bail under Section 438 of the Code of Criminal Procedure, 1973 - Application to recall the common oral judgment dated 14.10.2021 rejecting pre-arrest bail applications was dismissed. - HELD THAT: - The applicants sought recall of the common oral judgment dated 14.10.2021 in proceedings under Section 438 of the Code, urging that various factual and legal contentions were not adverted to and that certain complaint documents did not name them. The Court examined the limited circumstances in which a criminal court may recall an order - principally where an order has been passed in breach of principles of natural justice or without affording an affected party an opportunity to be heard - as reflected in the decisions relied upon by the parties. The Court found that the earlier judgment had recorded and considered the submissions of the applicants and the prosecution, including references to the statutory provisions and the confidential compilation placed by the prosecution; specific paras of the earlier order record the contentions and the provisions relied upon. The present applications amounted to an attempt to re-argue the merits or to obtain a review of the Court's decision, which is not permissible under Section 362 of the Code. As the applicants did not demonstrate that the earlier order was passed in breach of natural justice or in any other exceptional circumstance warranting recall, the recall petitions could not be entertained. [Paras 12, 13, 14, 15, 16]

Applications to recall the common oral judgment dated 14.10.2021 are dismissed and the Rule is discharged.

Final Conclusion: The applications for recalling the Court's common oral judgment dated 14.10.2021 were dismissed on the ground that the applicants merely sought re-argument/review and failed to establish any breach of principles of natural justice or other exceptional circumstances warranting recall.

Exemption under Notification No.12/2017 - services "in relation to any function" entrusted to a municipality under Article 243W - municipal functions in the Twelfth Schedule - meaning of "in relation to" / "relating to" requiring a direct and immediate link

Exemption under Notification No.12/2017 - services "in relation to any function" entrusted to a municipality under Article 243W - meaning of "in relation to" / "relating to" requiring a direct and immediate link - Whether accommodation services supplied by the applicant to GHMC for conduct of the State Legislative Assembly elections are exempt under Sl. No. 3 of Notification No.12/2017. - HELD THAT: - The Advance Ruling applies the exemption at Sl. No. 3 only to pure services that are directly related to functions entrusted to a municipality under Article 243W read with the Twelfth Schedule. Authoritative exposition of the phrase "in relation to" ("relating to") requires that the service be brought into a direct and immediate relation or connection with the municipal function; it cannot have an independent existence outside that nexus. The applicant supplied accommodation to GHMC officials for conduct of the State Legislative Assembly elections. That activity - providing lodging for election officials - does not have the requisite direct and immediate connection with any of the municipal functions enumerated in the Twelfth Schedule. Applying the legal tests and authorities cited, the Authority finds the supply does not qualify as a service "in relation to" an Article 243W municipal function and therefore does not attract the exemption under Notification No.12/2017. [Paras 7, 8]

The services provided to GHMC for the conduct of the State elections are not exempt under Sl. No. 3 of Notification No.12/2017.

Final Conclusion: The Advance Ruling clarifies that accommodation services supplied to GHMC for conduct of the State Legislative Assembly elections do not fall within the exemption at Sl. No. 3 of Notification No.12/2017 because they lack the direct and immediate nexus to functions entrusted to a municipality under Article 243W.

Disallowance under Section 40(a)(ia) / 40(a)(i) - tax deduction at source under Section 195 - scope of taxable income under Section 9(1) - disallowance under Section 14A and application of Rule 8D - amendment to withholding provisions and temporal applicability - binding effect of prior final adjudication - income accrual and situs of commission/fees

Personal use of company aircraft and business expenditure disallowance - Deletion of disallowance of portion of expenditure on aircraft operations - HELD THAT: - The Tribunal's deletion of the disallowance was upheld. The Court observed that the identical question for an earlier assessment year had been the subject-matter of a revenue appeal dismissed by the Division Bench on 23rd July, 2018, and that decision has attained finality and is binding on the revenue. Consequently the substantial question raised with respect to the aircraft expenditure stands rejected.

Disallowance deleted; substantial question answered against the revenue.

Tax deduction at source under Section 195 - income accrual under Section 9(1) - Deletion of disallowance under Section 40(a)(i) for professional and consultancy charges to non-residents - HELD THAT: - The Tribunal's finding that such amounts did not give rise to taxable income in India for the relevant circumstances was affirmed. The Court relied on the Division Bench's prior adjudication in ITAT/53/2017 which considered the nature of the services and held the addition to be erroneous; that determination is final and binds the revenue. Additionally, discussion of the law (including reference to Supreme Court authorities) supports that liability to deduct TDS cannot be imposed retrospectively beyond the factual legal position applicable for the year.

Deletion of disallowance under Section 40(a)(i) upheld; question answered against the revenue.

Taxability and source of advertisement/sales promotion expenses - tax deduction at source under Section 195 - Deletion of disallowance under Section 40(a)(i) for advertisement, publicity and sales promotion payments to non-residents - HELD THAT: - The Tribunal's deletion was affirmed on the basis that the identical issue had been decided adversely to the revenue in the earlier Division Bench judgment and that the Tribunal had correctly held that such expenses did not accrue or arise in India for the facts found. The Court further noted that precedents, including interpretations concerning the limits of Section 195 liability, support the outcome.

Disallowance deleted; substantial question answered against the revenue.

Evidentiary requirement to produce supporting documents for claimed expenses - reasonableness of advertisement and related expenses - Deletion of disallowance on account of non-production of documents for advertisement and sales expenses - HELD THAT: - The Tribunal's deletion was sustained. The Court observed that the Division Bench had previously considered and rejected similar contentions by the revenue; accordingly the Tribunal's conclusion stands and the revenue is bound by the earlier final decision. The finding that the assessing officer had not sufficiently justified disallowance was accepted.

Deletion of disallowance upheld; question answered against the revenue.

Application of Section 14A and computational method under Rule 8D - requirement of reasons when rejecting assessee's explanation - Deletion of disallowance under Section 14A computed by applying Rule 8D in respect of exempt income - HELD THAT: - The Court found that the assessing officer rejected the assessee's explanation without recording reasons and proceeded mechanically to apply Rule 8D. The Tribunal rightly deleted the disallowance because the assessing officer neither examined the assessee's accounts nor recorded satisfaction justifying rejection. The Tribunal also relied on precedent decisions (including DCIT vs. Selvel Advertising) supporting deletion where proper inquiry and reasons are absent.

Disallowance under Section 14A deleted; question decided against the revenue.

Imputed interest on interest-free advances and source of funds - Deletion of addition of imputed interest on interest-free advances to subsidiaries - HELD THAT: - The Tribunal's deletion was upheld on the basis that the question was identical to an issue which the revenue did not press in ITAT/53/2017 and was therefore rejected by the Division Bench. The Court treated that earlier final determination as binding, and maintained that the Tribunal's conclusion that advances were made out of assessee's own funds (and not borrowed funds) was not to be disturbed.

Addition of imputed interest deleted; question answered against the revenue.

Withholding tax under Section 194H and retrospective applicability of amendments - temporal application of statutory amendment - Deletion of disallowance for failure to deduct tax at source on commission and sitting fees to directors - HELD THAT: - The Tribunal correctly held that the amendment to Section 194J (relating to withholding) took effect from 1st July, 2012 and could not be applied to assessment year 2008-09. The Court affirmed this temporal applicability principle and noted that analogous observations in authoritative decisions support excusing an impossible retrospective obligation. Accordingly, the disallowance was rightly deleted.

Disallowance deleted; question decided against the revenue.

Commission to foreign agents, situs of income and Section 9(1) - tax deduction at source under Section 195 - Deletion of disallowance under Section 40(a)(i) for commissions paid to non-residents - HELD THAT: - The Tribunal's finding that commissions paid to foreign agents outside India did not accrue or arise in India was held to be final in light of the earlier Division Bench decision in ITAT/53/2017. The Court observed that that prior judgment rejected the revenue's claim and therefore binds the revenue in the present appeal, leading to dismissal of the challenge.

Disallowance deleted; question answered against the revenue.

Final Conclusion: The revenue's appeal under Section 260A is dismissed. All substantial questions of law raised are answered against the revenue and in favour of the assessee for assessment year 2008-09; the Tribunal's deletions and findings are upheld, the connected application for stay is dismissed.

Wilful and deliberate default to furnish return of income - prosecution for non-filing of return where duplicate PAN has been surrendered - departmental duty to verify and issue PAN - quashing of criminal proceedings as futile where acknowledgment of surrender of PAN is on record

Wilful and deliberate default to furnish return of income - prosecution for non-filing of return where duplicate PAN has been surrendered - Whether criminal prosecution for willful failure to furnish return can be continued where a duplicate PAN, in respect of which no transactions were made, was surrendered and acknowledgment obtained and returns were filed under the other PAN for the same assessment year. - HELD THAT: - The court found that two PANs were issued to the petitioner and that, although applying for two PANs may be improper, the department had the duty to verify before issuing PANs. The petitioner repeatedly requested surrender of the second PAN and ultimately surrendered it, obtaining an acknowledgment dated 10.02.2012. The prosecution was launched on the premise that no return or tax payment was made for Assessment Year 2013-14 in respect of the second PAN. Having regard to the surrender and acknowledgment, and the fact that the petitioner had filed returns under the primary PAN (including for AY 2013-14), continuation of criminal proceedings for alleged wilful and deliberate default in filing the return in respect of the surrendered PAN was held to be a futile exercise. The court therefore concluded that prosecution could not be permitted to continue under those circumstances and was liable to be quashed.

Proceedings in E.O.C.C.No.223 of 2016 quashed and related petitions closed.

Final Conclusion: The Criminal Original Petition is allowed and the criminal proceedings in E.O.C.C.No.223 of 2016 pending before the Additional Chief Metropolitan Magistrate, Economic Offences-I, Egmore, Chennai, are quashed in view of the surrender of the duplicate PAN and the acknowledgment thereof, rendering continuation of prosecution for failure to file return in respect of that PAN futile.

Disallowance under section 14A - Remand to Assessing Officer for fresh quantification - Enhancement by first appellate authority limited to items dealt with in assessment - Dividend stripping under section 94(7) - Accrual of interest on doubtful debts - Taxability of refund under section 41(1) - Capitalisation versus revenue treatment of technical know how fees - Depreciation entitlement under clause (ii) to section 32(1)

Disallowance under section 14A - Remand to Assessing Officer for fresh quantification - Disallowance under section 14A was not finally quantified by the Tribunal and the matter is restored to the Assessing Officer for fresh determination. - HELD THAT: - The Tribunal noted that its earlier orders in the assessee's own case had sustained a disallowance attributable to administrative expenses at 10% of dividend income and that subsequent Tribunal decisions had followed that approach. Applying the principle of consistency and having regard to Maxopp and extant law, the Tribunal directed restoration to the file of the AO for redetermination of the section 14A disallowance after giving the assessee an opportunity of hearing. The Tribunal limited the scope of reassessment in the set aside proceedings by directing that any disallowance by the AO shall not exceed 10% of the amount of dividend income. [Paras 3]

Restored to the AO for fresh adjudication of section 14A disallowance; any disallowance shall not exceed 10% of dividend income.

Accrual of interest on doubtful debts - Addition of interest income on Inter Corporate Deposits (ICDs) held doubtful of recovery was deleted. - HELD THAT: - On the facts the ICDs aggregating to the specified amount had been rendered doubtful of recovery and recovery proceedings (including criminal and civil action) had been initiated. The Tribunal observed that the Revenue had accepted the contrary view in later assessment years and relied on judicial authorities holding that where the principal was doubtful of recovery there was no real accrual of interest. Following those precedents and the consistent view adopted in subsequent years, the Tribunal vacated the addition of interest made by the AO. [Paras 4]

Addition of interest on doubtful ICDs deleted.

Taxability of refund under section 41(1) - Refund of excise duty received subject to furnishing a bank guarantee was held to be taxable in the year of receipt under section 41(1). - HELD THAT: - The assessee had received an excise duty refund on condition of furnishing a bank guarantee and relied on a professional opinion to treat it as non taxable. The Tribunal followed the decision of the High Court of Delhi in CIT v. Bharatpur Nutritional Products Ltd., holding that furnishing a bank guarantee does not alter the fact of receipt for the purposes of section 41(1). Accordingly, the Tribunal upheld the addition made by the AO and confirmed the finding of the CIT(A). [Paras 5]

Refund of excise duty held exigible to tax in the year of receipt; assessment upheld on this point.

Enhancement by first appellate authority limited to items dealt with in assessment - Dividend stripping under section 94(7) - Enhancement by the CIT(A) under section 94(7) in respect of an item not considered by the Assessing Officer was vacated for want of jurisdiction. - HELD THAT: - Relying on settled jurisprudence, the Tribunal reiterated that the CIT(A)'s power to enhance under section 251(1)(a) is confined to items or sources of income that were dealt with in the assessment order or arose for consideration in the appeal. Where the AO did not consider the dividend stripping issue in the assessment, the first appellate authority had no jurisdiction to introduce and enhance income on that ground. Applying that principle, the Tribunal held the CIT(A)'s enhancement of the short term capital loss under section 94(7) to be beyond jurisdiction and vacated the enhancement. [Paras 6]

Enhancement under section 94(7) set aside for lack of jurisdiction of the CIT(A).

Capitalisation versus revenue treatment of technical know how fees - Depreciation entitlement under clause (ii) to section 32(1) - Payment to foreign supplier for use of technical know how was held to be revenue expenditure and allowable as deduction; lower authorities' recharacterisation as capital expenditure was set aside. - HELD THAT: - The Tribunal examined the licence and supplementary agreements and the surrounding facts. It emphasised that clause (ii) to section 32(1) applies where expenditure is of a capital nature on acquisition of know how; it does not automatically convert every payment for technical know how into capital expenditure. The agreements evidenced a non transferable, non exclusive licence permitting use of know how to run the assessee's existing business more effectively; ownership and IPRs remained with the foreign party and no royalties were in fact paid in the year under consideration. The Tribunal found the precedents relied upon by the lower authorities distinguishable on facts and concluded the payments were revenue in nature. The CIT(A)'s subsidiary finding treating 25% of alleged royalty as capital was also vacated because no royalty was paid in the year. [Paras 7]

Payment for technical know how allowed as revenue expenditure; orders of AO and CIT(A) recharacterising it as capital expenditure set aside and AO directed to allow deduction.

Final Conclusion: The appeals are partly allowed: the section 14A disallowance is remanded to the AO for fresh determination (not to exceed 10% of dividend income); addition of interest on doubtful ICDs deleted; excise duty refund held taxable and upheld; CIT(A)'s enhancement under section 94(7) vacated for lack of jurisdiction; amounts paid for technical know how held to be revenue expenditure and allowed as deduction. Appeals disposed accordingly.

Condonation of delay - sufficient cause - intimation under section 200A for levy of fee under section 234E - prospective operation of statutory amendment - preference for substantial justice over technicalities - remand for fresh consideration and opportunity of hearing

Condonation of delay - sufficient cause - preference for substantial justice over technicalities - Whether the delay in filing appeals before the CIT(A) should be condoned. - HELD THAT: - The Tribunal accepted the assessee's explanation that intimations issued under section 200A were not brought to the assessee's notice because the tax professional who downloaded them did not communicate the same and subsequently left service. Applying settled principles that 'sufficient cause' must receive a liberal construction to advance substantial justice, and relying on precedents that emphasise deciding matters on merits rather than technicalities, the Tribunal found the assessee's submissions not to be false and that there was prima facie merit on the substantive issue. In light of these factors and the absence of any finding of mala fides, the delay in filing the appeals was held to be satisfactorily explained and deserving of condonation. [Paras 7]

Delay condoned and appeals restored for adjudication.

Intimation under section 200A for levy of fee under section 234E - prospective operation of statutory amendment - remand for fresh consideration and opportunity of hearing - Whether levy of late fee under the mechanism of intimation issued under section 200A for periods prior to 01.06.2015 was permissible and how the matter should be dealt with by the first appellate authority. - HELD THAT: - The Tribunal noted the decision of the jurisdictional High Court holding that the substitution to section 200A enabling computation and intimation for fee under section 234E could only be read as having prospective effect from 01.06.2015 and could not be applied to make demands for periods prior to that date. The Tribunal observed that prior to 01.06.2015 there was no statutory enabling provision in section 200A to levy fees under section 234E by adjustment through that provision. Although the Tribunal indicated that the issue on merits was prima facie covered in favour of the assessee by the Karnataka High Court decision, it did not itself decide the merits on record and instead directed that the question of levy be remitted to the CIT(A) for fresh consideration. The CIT(A) was directed to afford the assessee a reasonable opportunity of being heard before adjudicating the matter on merits. [Paras 7, 8]

Matter remitted to the CIT(A) for fresh decision on merits with a direction to afford the assessee a reasonable opportunity of hearing; no levy upheld by the Tribunal at this stage.

Final Conclusion: Appeals allowed for statistical purposes: delay in filing appeals before the CIT(A) condoned; issue of levy of fee under section 234E through intimation under section 200A for periods before 01.06.2015 remitted to the CIT(A) for fresh adjudication after affording the assessee a reasonable opportunity of hearing.

Penalty based on additions set aside in quantum appeal - remand to lower authority for factual verification - penalty does not survive where foundation addition is vacated - liberty to initiate fresh penalty proceedings after remand - assessment and appellate proceedings interrelation

Penalty based on additions set aside in quantum appeal - penalty does not survive where foundation addition is vacated - Validity of penalty imposed by the Commissioner where the additions on which penalty was founded have been set aside and remanded in the assessee's quantum appeal. - HELD THAT: - The Tribunal noted that the additions which formed the basis for the penalty were set aside by a coordinate Bench in the assessee's own quantum appeal and the matter was remanded to the lower authority for fresh consideration and factual verification. Since the impugned penalty was levied on the income determined by the Commissioner in the quantum order, and that determination has been set aside and restored for fresh adjudication, the Tribunal held that the penalty premised on that determination could not be sustained. The Tribunal allowed the appeal and set aside the penalty, while clarifying that the Commissioner retains the statutory liberty to initiate penalty proceedings afresh in accordance with law after completion of the remand proceedings, if warranted by the facts and legal position established on reconsideration.

Penalty set aside as unsustainable because the underlying additions were vacated and remanded; appeal allowed, with liberty to the Commissioner to initiate fresh penalty proceedings in accordance with law.

Final Conclusion: The appeal is allowed: the penalty imposed by the Commissioner is set aside because the additions on which it was based have been set aside and remanded in the quantum appeal; the Commissioner may, if appropriate after reconsideration on remand, initiate fresh penalty proceedings in accordance with law.

Revisionary power under section 263 - erroneous and prejudicial to the interest of revenue - application of section 194C(6) - compliance by furnishing Permanent Account Number (PAN) - requirement of enquiry by the Assessing Officer - possible view versus lack of enquiry - rectification proceedings under section 154 - abatement and effect on assesssment

Revisionary power under section 263 - erroneous and prejudicial to the interest of revenue - requirement of enquiry by the Assessing Officer - possible view versus lack of enquiry - Whether the order of the Principal Commissioner under section 263 setting aside the assessment order was justified. - HELD THAT: - The Tribunal found that the Assessing Officer had called for and considered the payment details, ledger of freight charges, PAN particulars and other documents during the course of scrutiny and had made enquiries before passing the assessment order. The material placed before the AO and the replies elicited constituted a possible view which the AO was entitled to take. The mere availability of an alternative view or the fact that the Principal Commissioner preferred a different conclusion does not render the AO's order "erroneous and prejudicial to the interest of revenue" so as to justify exercise of the revisionary power under section 263. The fact that rectification proceedings under section 154 were initiated and later abated does not convert the AO's enquiries into absence of inquiry; the Tribunal held the AO's action cannot be characterized as lack of enquiry. Following settled authorities about the limited scope of section 263, the Tribunal quashed the revisionary order and restored the assessment order. [Paras 11, 15, 17]

Impugned order under section 263 set aside by the Principal Commissioner quashed; assessment order upheld as a possible view taken by the AO after enquiry.

Application of section 194C(6) - compliance by furnishing Permanent Account Number (PAN) - rectification proceedings under section 154 - abatement and effect on assessment - Whether the assessee complied with the exemption under section 194C(6) for payments to transport operators by furnishing PAN and whether lack of PAN at the time of payment vitiated the AO's order. - HELD THAT: - For the assessment year 2014-15 the legislative position was that payments to transport contractors were exempt from deduction of tax at source on furnishing of PAN, without restriction as to number of goods carriages. The assessee had furnished PAN particulars, RC extracts and affidavits from the payees during scrutiny and before the Principal Commissioner. The Tribunal recorded that furnishing of PAN during the assessment process met the statutory requirement applicable for the year under consideration and that the AO's acceptance of the documents represented a tenable view. The Tribunal also noted the amendment history of section 194C(6) and the relevant CBDT explanations, and held that on the facts the AO's approach could not be faulted merely because the Principal Commissioner considered further verification necessary. [Paras 12, 13, 15]

The assessee's compliance with section 194C(6) by furnishing PAN and supporting documents was a tenable basis for the AO's conclusion; absence of PAN at an earlier date did not render the assessment order erroneous in the circumstances.

Final Conclusion: The Tribunal allowed the appeal, quashed the order passed under section 263 and held that the Assessing Officer had made enquiries and taken a possible view-therefore the exercise of revisionary jurisdiction was not justified; the assessee's compliance under section 194C(6) for AY 2014-15 was acceptable on the material on record.

Exemption under section 11 of the Income tax Act, 1961 - deduction under section 11(1)(d) of the Income tax Act, 1961 for corpus donation - registration under section 12AA of the Income tax Act, 1961 and its relevance to claim of exemption - treatment of multiple PANs for a single assessee and regularisation of returns - requirement to furnish audited accounts of separate funds (building fund) for claiming exemption - remand for verification and duty to afford opportunity of hearing (natural justice)

Treatment of multiple PANs for a single assessee and regularisation of returns - registration under section 12AA of the Income tax Act, 1961 and its relevance to claim of exemption - remand for verification and duty to afford opportunity of hearing (natural justice) - Whether the two PAN numbers relate to the same assessee and how the returns should be regularised for assessment - HELD THAT: - The Tribunal noted that the first appellate authority after field verification found that there is only one church which had obtained two PANs (old PAN and new PAN) and accepted the assessee's explanation for obtaining a new PAN. Those facts were not available to the Assessing Officer. In the interest of natural justice and proper adjudication, the Tribunal directed that the Assessing Officer should accept that both PANs belong to the same assessee, verify the assessee's claim that the new PAN was surrendered and cancelled in the system, and regularise the assessment by substituting the old PAN (under which registration under section 12AA exists) in accordance with the prescribed procedure. The Tribunal further directed that all returns filed under both PANs for the same year must be combined into a single assessment, ensuring that the same income is not taxed twice, and that any ad hoc deduction made to remedy a filing defect (under section 139(9)) which is not supported by material cannot be allowed. The Tribunal observed that these matters require factual examination by the AO and therefore remitted them for fresh consideration after affording the assessee adequate opportunity of being heard. [Paras 12, 15, 16]

Finding of first appellate authority on single entity with two PANs accepted for the purpose of further proceedings; matter remanded to the Assessing Officer to verify surrender/cancellation of new PAN, regularise returns under the old PAN, combine all returns for the year preventing double assessment, and afford the assessee opportunity of being heard.

Exemption under section 11 of the Income tax Act, 1961 - deduction under section 11(1)(d) of the Income tax Act, 1961 for corpus donation - requirement to furnish audited accounts of separate funds (building fund) for claiming exemption - remand for verification and duty to afford opportunity of hearing (natural justice) - Whether the corpus donations collected as 'building fund' qualify for exemption under section 11 and deduction under section 11(1)(d) and whether the building fund may be kept in separate books - HELD THAT: - The Tribunal recorded that the Assessing Officer had disallowed exemption on the ground that corpus donations collected as a building fund were not brought into the main books of account and that returns and audit reports were filed under different PANs. The CIT(A) accepted the assessee's explanation that a separate receipts and payments account and separate audited statement were maintained for the new church building (building fund), and directed allowance of exemption. The Tribunal observed that the documents and explanations relied upon by the CIT(A) were fresh materials not before the AO and that, in the interest of natural justice, the AO should be given the opportunity to examine them. The Tribunal emphasised that if separate books are maintained for the building fund, the assessee should furnish the income & expenditure account and balance sheet for the building fund along with the audit report at the time of return. Consequently, the Tribunal set aside the CIT(A)'s order on this point and remitted the issue to the AO to examine the building fund accounts, the audited statements and the returns, and to decide the allowability of exemption/deduction in accordance with law after giving the assessee an opportunity to be heard. [Paras 13, 14, 16]

The question of allowability of exemption under section 11 and deduction under section 11(1)(d) in respect of the building fund is remitted to the Assessing Officer for fresh examination of the building fund accounts, audited statements and related documents, with directions to afford the assessee adequate opportunity of being heard and to ensure proper accounting and avoidance of double assessment.

Final Conclusion: The Tribunal set aside the order of the CIT(A) and remitted the matters to the Assessing Officer for fresh consideration: (i) to verify and regularise the position regarding the two PANs (accepting they pertain to the same assessee subject to verification and cancellation of the new PAN), combine returns under a single PAN and ensure no double assessment, and (ii) to examine the claim of exemption under section 11 and deduction under section 11(1)(d) in respect of the building fund after scrutiny of the building fund accounts and audit report; the assessee must be afforded adequate opportunity of being heard. The appeal is treated as allowed for statistical purposes.

Deduction under Section 37 as expenditure wholly and exclusively for business - club membership fees as business expenditure - club expenses reported under Form 3CD Clause 21(a) and their evidentiary effect - addition in intimation under section 143(1)(a)

Deduction under Section 37 as expenditure wholly and exclusively for business - club membership fees as business expenditure - club expenses reported under Form 3CD Clause 21(a) and their evidentiary effect - Club membership/subscription fees debited by the assessee are allowable business expenditure under Section 37 and the disallowance made by the AO was to be deleted. - HELD THAT: - The Tribunal examined whether subscriptions and membership fees paid to various clubs, though reported in Clause 21(a) of Form 3CD, were incurred wholly and exclusively for the purposes of business. Relying on binding and persuasive precedents which hold that club subscriptions incurred to foster business relationships and promote business (even if incidental personal benefit accrues to directors or employees) qualify as business expenditure, the Tribunal found the facts to be similar and accepted the assessee's case that the payments were for entertaining customers and business promotion. The Tribunal accordingly concluded that the disallowance under section 37(1) was not sustainable and directed the AO to delete the addition. The Tribunal expressly left other legal issues raised in the appeal open. [Paras 6, 7, 8]

Disallowance of club membership fees deleted and appeal allowed on merits; other legal issues left open.

Final Conclusion: The Tribunal allowed the assessee's appeal on merits, holding that the club membership/subscription fees were allowable business expenditure under Section 37 and directing deletion of the addition; other ancillary legal contentions were not decided.

Depreciation on assets received pursuant to a demerger - Actual cost for depreciation where assets are transferred on state reorganisation - Recognition of income under mercantile system versus requirement of real income - Taxation in year of receipt where disputed amounts are crystallised by regulatory settlement

Depreciation on assets received pursuant to a demerger - Actual cost for depreciation where assets are transferred on state reorganisation - Deletion of addition of depreciation disallowance made by AO in respect of assets transferred from UPJVNL to UJVNL. - HELD THAT: - The Tribunal affirmed the CIT(A)'s deletion of the AO's addition because the matter was squarely covered by a sequence of appellate orders in the assessee's own case. The Tribunal accepted that the transfer of assets on reorganisation amounted to a demerger-like situation and that the assets were reflected at written down value in the books of the transferee. The assets could not be treated as acquired "free of cost" when the corresponding capital/reserve structure and recognized liabilities represent the cost attributable to those assets. In view of the earlier coordinated appellate decisions (including ITAT and CIT(A) orders) which allowed depreciation and the reasoning that the written down value on demerger represents the cost for depreciation purposes, the Tribunal declined to interfere with the deletion of the addition. [Paras 11, 12, 14]

Addition of Rs. 4,13,68,564/- by way of disallowed depreciation deleted; claim for depreciation on transferred assets allowed following earlier appellate decisions.

Recognition of income under mercantile system versus requirement of real income - Taxation in year of receipt where disputed amounts are crystallised by regulatory settlement - Deletion of addition of disputed capacity charges, deemed generation charges and capacity index incentive made by AO. - HELD THAT: - The Tribunal upheld the CIT(A)'s conclusion that the addition could not be sustained in view of subsequent crystallisation of the disputed amounts by the State regulatory authority (UERC) and the fact that the assessee had offered the correct amount to tax in the year of receipt (FY 2015-16 / AY 2016-17). The Tribunal relied on the principle that under the mercantile system income must be real and ascertainable to be taxed, and that where a regulatory determination fixed the payable amount and the assessee has been taxed in the year of receipt, it would be inappropriate to tax the same amount again in an earlier year. Having regard to the UERC settlement and the assessee's acceptance of taxability in the year of receipt, the Tribunal directed deletion of the addition for the year under appeal. [Paras 11, 13, 14]

Addition of Rs. 45,31,58,363/- on account of capacity charges and related items deleted; only the crystallised amount was taxed in the year of receipt and no addition sustained for AY 2012-13.

Final Conclusion: Both additions made by the Assessing Officer-disallowance of depreciation on assets transferred from UPJVNL and the addition in respect of disputed capacity/deemed generation/capacity index incentives-were deleted by the CIT(A) and the Tribunal, which followed prior appellate decisions in the assessee's own case and the subsequent regulatory settlement and tax treatment in the year of receipt; Revenue's appeal is dismissed.

Admission of additional evidence under Rule 29 of the Income-tax Rules - relevance and sufficiency of opportunity to produce evidence - verification and remand for fresh consideration - peak credit computation in bank deposits - bearer cheque cash withdrawals as claimed source of deposits - requirement of proof that cash withdrawn by third parties was handed over to assessee - taxing the right person

Admission of additional evidence under Rule 29 of the Income-tax Rules - relevance and sufficiency of opportunity to produce evidence - verification and remand for fresh consideration - Whether the additional confirmations and identity proofs filed before the Tribunal should be admitted and referred back for verification - HELD THAT: - The Tribunal applied the criteria under Rule 29 and examined (i) whether sufficient opportunity had been afforded to the assessee to produce the material before the authorities below and (ii) whether the documents were prima facie relevant to the claim. The record shows requests by the Assessing Officer to produce the persons who allegedly withdrew cash and limited time before assessment and the CIT(A) order. On the documents tendered, the Tribunal found the confirmations and identity proofs prima facie relevant to the question whether cash withdrawn by others had been handed over to the assessee and would assist in resolving the peak credit issue. Decisions relied upon by the Revenue were held distinguishable on facts. In consequence the Tribunal admitted the documents and remanded the matter to the CIT(A) with directions to follow due procedure, verify the documents in light of bank records, and afford the assessee a proper opportunity of hearing.

Additional evidence admitted; matter remanded to the CIT(A) for verification and fresh consideration in accordance with law and after giving the assessee proper opportunity.

Peak credit computation in bank deposits - bearer cheque cash withdrawals as claimed source of deposits - requirement of proof that cash withdrawn by third parties was handed over to assessee - verification and remand for fresh consideration - Whether cash withdrawals made by persons other than the account-holder (by bearer cheque) ought to be treated as cash available with the family/assessee for computing peak credit - HELD THAT: - The Tribunal did not adjudicate the merits of the peak-credit addition on the facts but directed verification. The Assessing Officer had excluded cash withdrawn by third parties where there was no evidence they handed over the cash to the account-holders; the assessee contended withdrawals were on his behalf and produced bearer cheques. Given the admission of confirmations and identity proofs, the Tribunal remanded the issue to the CIT(A) to verify the tendered evidence against bank statements and other records and to decide afresh whether such withdrawals can be treated as cash available to the assessee for peak-credit calculation.

Issue remanded to the CIT(A) for fresh consideration and verification of the newly admitted evidence; no final decision on the merits by the Tribunal.

Taxing the right person - verification and remand for fresh consideration - Whether interest income and capital gains attributable to a bank account were rightly assessed in the individual assessee's hands or ought to be assessed in the HUF's hands (Assessment Year 2008-09) - HELD THAT: - The Tribunal accepted the submission that the account and sale proceeds pertained to the HUF and recalled the settled principle that the tax officer must tax the right person who is liable under law. Relying on that ratio, the Tribunal did not decide the taxability itself but remanded the question to the CIT(A) to compute tax and decide the matter in accordance with law, without being prejudiced by earlier views of the authorities below.

Issue remanded to the CIT(A) to determine and tax the right person (HUF or individual) in accordance with law; no final adjudication by the Tribunal.

Final Conclusion: The Tribunal admitted the additional evidence filed by the assessees and remanded the matters to the CIT(A) for verification and fresh consideration (including re-examination of peak-credit computations and the effect of bearer-cheque withdrawals). The question of whether interest/capital gain items belong to the HUF or the individual for AY 2008-09 is also remanded to the CIT(A) to tax the right person. All appeals are allowed for statistical purposes.

Reopening of assessment under section 147/148 on belief that income has escaped assessment - deemed dividend under section 2(22)(e) on loans/advances to a closely-held company - commercial expediency / business purpose defence to avoid characterization as deemed dividend - protective reopening based on hypothetical contingency - requirement of cogent and credible evidence to establish commercial transaction

Reopening of assessment under section 147/148 on belief that income has escaped assessment - protective reopening based on hypothetical contingency - Validity of notice of reopening under section 148/147 in view of earlier assessment/actions in the related company - HELD THAT: - The Tribunal examined the reasons recorded by the Assessing Officer for reopening and found them to be specific and fact based rather than founded on hypothetical contingencies or mere protective speculation. The Jurisdictional High Court authority relied upon by the assessee (concerning impermissible reopening based on future contingencies) was held factually distinguishable because the AO's reasons in the present case set out concrete material and belief that income had escaped assessment. Consequently, the reopening was not vitiated as being based on a hypothetical contingency. [Paras 6]

Notice of reopening upheld and additional ground challenging validity of reopening dismissed.

Deemed dividend under section 2(22)(e) on loans/advances to a closely-held company - commercial expediency / business purpose defence to avoid characterization as deemed dividend - requirement of cogent and credible evidence to establish commercial transaction - Whether amounts advanced by Hextech Engineers India Pvt. Ltd. to Zetex Engineers Pvt. Ltd. constituted deemed dividend in the hands of the common shareholder - HELD THAT: - The facts established that Hextech advanced funds to Zetex and the assessee was the dominant/common shareholder in both companies (shareholding above 90%). The company was not a money lending concern; no interest was charged and no documentary or cogent evidence was produced by the assessee to demonstrate that the transactions bore a commercial character or were made in the course of a money lending business. The CIT(A)'s reasoning (paras 5.14-5.17) that the elements of commercial exchange, remuneration or consideration were absent was accepted. Applying the statutory concept of deemed dividend, the loan/advance to the extent of the accumulated profits was liable to be treated as deemed dividend in the hands of the shareholder and the addition was sustained. [Paras 7, 8, 9]

Addition on account of deemed dividend to the extent of accumulated profits upheld and grounds on merits dismissed.

Final Conclusion: Both appeals for AY 2008 09 and AY 2009 10 are dismissed: the reopening notice was valid on the recorded reasons, and the loan/advance given by Hextech to Zetex was held to constitute deemed dividend in the hands of the common shareholder for the extent of accumulated profits, in absence of cogent evidence of a commercial/business purpose.

Condonation of delay under section 253(5) of the Income Tax Act - Sufficient cause - Directory nature of filing under section 139(1) read with section 139(4) - Compliance for the purposes of Section 80AC - Deduction under section 80IB(10) - Admissibility of architect's certificate and circumstantial/indirect evidence for completion

Condonation of delay under section 253(5) of the Income Tax Act - Sufficient cause - Delay of 363 days in filing the appeal was condoned and the appeal admitted for adjudication on merits. - HELD THAT: - The Tribunal applied the established principle that the expression 'sufficient cause' is elastic and must be interpreted to sub-serve the ends of justice. The assessee's explanation - death of the counsel who handled the matter, inability of the counsel's office to produce the file, and the assessee's prolonged incapacity following a fracture - was examined and found not to disclose culpable negligence or mala fides. In light of the statutory power to admit appeals beyond the limitation period where sufficient cause is shown, and following the Supreme Court's guidance favouring substantial justice over technical forfeiture, the Tribunal was satisfied that the reasons furnished constituted sufficient and reasonable cause to condone the delay and admit the appeal for hearing on merits. [Paras 4, 5, 6]

Delay condoned and appeal admitted for adjudication on merits.

Directory nature of filing under section 139(1) read with section 139(4) - Compliance for the purposes of Section 80AC - Deduction under section 80IB(10) - Admissibility of architect's certificate and circumstantial/indirect evidence for completion - Claim for deduction under section 80IB(10) partly allowed: (a) return filed under section 139(4) treated as sufficient compliance for Section 80AC so disallowance on that ground is rejected; (b) validity of completion for the project remanded to the Assessing Officer for consideration of architect's certificate and circumstantial evidence. - HELD THAT: - On the first ground, the Tribunal found that although the return was filed 27 days late, the tax audit report was filed in time and the return was within the period prescribed by section 139(4). Applying the ratio of the cited authorities, including the jurisdictional High Court decision that sub-sections (1) and (4) of section 139 must be read together, the Tribunal held that a return filed within the time specified in section 139(4) is to be treated as having been filed within the period of section 139(1) for the purposes of Section 80AC; consequently, the disallowance of deduction under section 80IB on the ground of belated filing was not warranted. On the second ground, the Assessing Officer had disallowed the deduction for want of a completion certificate. The Tribunal noted that for the subsequent assessment year the first appellate authority allowed the claim on the basis of the architect's completion certificate and other circumstantial evidence and that the Revenue had effectively admitted completion in that year. In view of that coordinate-bench precedent and the material placed on record, the Tribunal directed that the issue be restored to the file of the Assessing Officer to consider the architect's certificate and other circumstantial/indirect evidence; if the assessee satisfies the conditions as laid down by the Coordinate Bench (New High Rise Construction), the Assessing Officer is to allow the deduction under section 80IB(10). [Paras 14, 17]

Disallowance on account of belated return rejected; issue of completion remanded to the Assessing Officer to consider architect's certificate and circumstantial evidence and grant deduction if conditions are fulfilled.

Final Conclusion: The Tribunal condoned the delay in filing the appeal and admitted it for adjudication. On merits, the assessee succeeds in principle on the ground that a return filed within section 139(4) is sufficient compliance for Section 80AC and therefore the deduction under section 80IB(10) cannot be denied on that basis; the question of project completion is remanded to the Assessing Officer to examine the architect's certificate and circumstantial evidence and allow the deduction if conditions are met, resulting in the appeal being partly allowed.

Disallowance under section 40(a)(i) for non-deduction of tax at source - classification of payments as "fee for technical services" / managerial or consultancy services - income deemed to accrue or arise in India through business connection / Explanation 2 to section 9(1)(vii) - obligation to withhold under section 195 where payment is chargeable to tax in India - transfer pricing adjustment and selection/exclusion of comparable companies - working capital adjustment in determination of arms' length margin

Disallowance under section 40(a)(i) for non-deduction of tax at source - classification of payments as "fee for technical services" / managerial or consultancy services - income deemed to accrue or arise in India through business connection / Explanation 2 to section 9(1)(vii) - obligation to withhold under section 195 where payment is chargeable to tax in India - whether commission/marketing payments made to foreign agents were taxable in India and liable to disallowance under section 40(a)(i) for non-deduction of tax at source - HELD THAT: - The Tribunal examined the nature of services actually rendered by the foreign agents and the agreement clauses relied upon by the CIT(A). The record of services furnished by the assessee shows primarily marketing support and incidental administrative and logistical assistance (visa, travel, meeting arrangements, local support). These services were held not to be managerial, technical or consultancy services contemplated by Explanation 2 to section 9(1)(vii). As the services were rendered abroad and no operations of business by the non-resident agents were carried out in India, the commission income did not accrue or arise in India. Following the coordinate-bench decisions in the assessee's own earlier years and the Karnataka High Court's decision in the assessee's case for AY 2013-14, the Tribunal concluded that the payments were not chargeable to tax in India and therefore there was no obligation to deduct tax under section 195; consequently the invocation of section 40(a)(i) to disallow the expenses was unsustainable. [Paras 10, 11, 13]

The disallowance under section 40(a)(i) in respect of payments to foreign agents is deleted in all three assessment years; the payments are held to be for marketing/support services rendered abroad and not taxable in India, so no TDS obligation arises.

Transfer pricing adjustment and selection/exclusion of comparable companies - working capital adjustment in determination of arms' length margin - whether the TPO's transfer pricing adjustment for AY 2012-13 should stand, including the selection of comparables and treatment of negative working capital adjustment - HELD THAT: - The Tribunal considered the comparables selected by the TPO and the objections by the assessee. Applying the approach of co-ordinate benches, the Tribunal directed exclusion of Infosys Ltd., Larsen & Toubro Infotech Ltd. and Persistent Systems Ltd. as not functionally comparable to the assessee. With regard to the negative working capital adjustment adopted by the TPO (which produced a negative rate and was added to arrive at an adjusted margin), the Tribunal observed that the issue required application of principles established by the Tribunal in ACIT v. e4e Business Solutions India P. Ltd.; accordingly the matter of working capital adjustment was restored to the file of the TPO with directions to follow those principles when recomputing the arms' length margin. [Paras 14, 18, 19, 20]

Infosys Ltd., Larsen & Toubro Infotech Ltd. and Persistent Systems Ltd. are excluded from the comparable set; the negative working capital adjustment issue is remitted to the TPO for reconsideration and recomputation in accordance with the Tribunal's principles (e4e Business Solutions India P. Ltd.).

Final Conclusion: All three appeals are allowed: the disallowances under section 40(a)(i) in AYs 2012-13, 2014-15 and 2015-16 are deleted as payments to foreign agents are held to be for marketing/support services rendered abroad and not taxable in India; the transfer pricing adjustment for AY 2012-13 is modified by excluding three specified comparables and remitting the working-capital adjustment to the TPO for recomputation in accordance with Tribunal principles.

Deductibility under Section 36(1)(va) of employees' contribution to EPF/ESI paid after statutory due date but before filing return - non-retrospective application of Explanation 5 inserted by Finance Act, 2021 (effective 01.04.2021) - precedential effect of decisions of the jurisdictional High Court on coordinate appellate authorities - interaction between Section 36(1)(va) and Section 43B in relation to timing of payment

Deductibility under Section 36(1)(va) of employees' contribution to EPF/ESI paid after statutory due date but before filing return - interaction between Section 36(1)(va) and Section 43B in relation to timing of payment - non-retrospective application of Explanation 5 inserted by Finance Act, 2021 (effective 01.04.2021) - precedential effect of decisions of the jurisdictional High Court on coordinate appellate authorities - Deletion of disallowance made under section 36(1)(va) / read with section 43B in respect of employees' EPF/ESI contributions paid after the statutory due date but before filing return for AY 2018-19. - HELD THAT: - The Tribunal found the facts identical to earlier decisions of Coordinate Benches which held that where employees' contributions to EPF/ESI were deposited after the due date under the respective statutes but before filing the return under section 139(1), such amounts are allowable and cannot be disallowed under section 36(1)(va) read with section 43B. The bench noted that the amendment by Finance Act, 2021 (Explanation 5) is prospective with effect from 01.04.2021 and therefore does not apply to the assessment year before the Tribunal. Given divergent High Court precedents, the Tribunal followed binding decisions of the jurisdictional High Court and earlier Tribunal decisions favorable to the assessee. Reliance was placed on coordinated Tribunal orders and High Court authorities to conclude that the impugned disallowances, made while processing returns, are not sustainable for the year under consideration and hence must be deleted. [Paras 9, 10, 11]

Impugned additions/disallowances relating to delayed deposit of employees' EPF/ESI made prior to filing the return for AY 2018-19 are deleted; appeals allowed.

Final Conclusion: Appeals allowed: disallowances sustained by the CIT(A) in respect of employees' contributions to EPF/ESI, which were deposited after statutory due date but before filing return for AY 2018-19, are deleted in view of binding coordinate and jurisdictional precedents and since the Finance Act, 2021 amendment (Explanation 5) applies prospectively from 01.04.2021.

Nullity of assessment passed against amalgamated/dissolved company - Successor-in-interest and effect of scheme of amalgamation - Substantive illegality versus procedural irregularity - Condonation of delay due to COVID-19

Condonation of delay due to COVID-19 - Whether the delay in filing the appeal was to be condoned. - HELD THAT: - The assessee filed the appeal 75 days beyond the prescribed time and attributed the delay to the COVID-19 pandemic, relying on the Supreme Court's suo motu directions. The Revenue raised no opposition to condonation. Having considered the Supreme Court directions and the factual assertion that the delay was neither deliberate nor intentional, the Tribunal exercised its discretion to condone the delay and admit the appeal for adjudication on merits. [Paras 2]

Delay condoned; appeal admitted for hearing on merits.

Nullity of assessment passed against amalgamated/dissolved company - Successor-in-interest and effect of scheme of amalgamation - Substantive illegality versus procedural irregularity - Validity of the final assessment order passed in the name of a company which had ceased to exist on account of an earlier sanctioned scheme of amalgamation. - HELD THAT: - The assessee notified the Department, by letter dated 25 October 2019 and accompanying documents, that Trizetto Services India Private Limited had been amalgamated into Cognizant Technology Solutions India Private Limited with effect from the appointed date of 1 April 2018, and produced the Regional Director's confirmation order dated 06.09.2019. Notwithstanding this, the Assessing Officer and DRP issued draft and final assessment orders in the name of the amalgamating (now non existent) company. Following the Supreme Court's position-that framing assessment against an amalgamated and dissolved company is not a mere procedural irregularity but a substantive illegality-the Tribunal found the final assessment to be void. The Tribunal noted that the DRP itself had directed the AO to mention the present name and the former name in the final order, a direction that was not complied with; on the facts and in view of the sanctioned scheme and communications to the Department, the assessment framed in the name of the non existent entity vitiates the order and goes to the root of jurisdictional validity. [Paras 9, 11]

Final assessment order dated 27.03.2021 passed in the name of the amalgamated/dissolved company is null and void and is quashed.

Final Conclusion: The Tribunal condoned the delay in filing the appeal and allowed the appeal on the legal ground that the final assessment was framed in the name of a company which had ceased to exist by virtue of a sanctioned scheme of amalgamation; the final assessment order is quashed as null and void.

Rule of Limitation - Status Holder Incentive Scrip (SHIS) - audit objection - demand/recovery notice as distinct from adjudicated final order - exhaustion of statutory remedies - judicial review under Article 226 - directory nature of limitation - opportunity of hearing/enquiry before recovery

Status Holder Incentive Scrip (SHIS) - audit objection - demand/recovery notice as distinct from adjudicated final order - Characterisation of the impugned order dated 13.02.2015 - HELD THAT: - The Court examined the impugned communication and concluded that although it is styled as a recovery order, it operates as a demand requesting repayment of duty credit availed under the SHIS and is founded on audit objections raised by the CRA. The order was passed without any adjudication on merits or by conducting an enquiry; it records a proposed demand based on audit findings rather than a final adjudicated determination. Consequently the communication must be treated as a demand notice which obliges the issuing Authority to conduct a proper enquiry and afford opportunity to the affected parties before arriving at a final recovery order. [Paras 14, 15, 16, 20, 29]

The impugned order is a demand based on audit objection and not a final adjudicated recovery order; it must be treated accordingly.

Rule of Limitation - directory nature of limitation - judicial review under Article 226 - exhaustion of statutory remedies - Appropriate forum and stage for adjudication of merits including the plea of limitation - HELD THAT: - The Court held that questions of limitation and other merits arising from the audit objection are to be adjudicated by the competent quasi judicial/Appellate Authorities who can examine original records and evidence. The power of judicial review under Article 226 is supervisory and concerned with the legality of the process rather than substituting the primary fact finding and adjudicatory functions of specialized authorities. The Court observed that limitation can be a complex, fact sensitive issue and that limitations prescribed by statutes may be construed as directory in certain circumstances; therefore simple arithmetic comparison of dates by this Court would be inappropriate without examination of underlying records. Accordingly, the petitioners must exhaust statutory remedies before invoking writ jurisdiction for merits adjudication. [Paras 21, 23, 24, 25, 26]

Merits, including the contention on limitation, are to be decided by the competent Authorities/Appellate Authority after adjudication; the High Court will not ordinarily adjudicate those merits in the first instance.

Opportunity of hearing/enquiry before recovery - exhaustion of statutory remedies - Directions for further action by the Authority and procedural steps to be followed - HELD THAT: - Given that the impugned communication is a demand founded on audit objections without prior adjudication, the Court directed that the petitioners submit their objections, explanations and documents to the Additional Director General of Foreign Trade within four weeks from receipt of the order. On receipt, the Additional Director General was directed to conduct an enquiry by affording opportunity to the petitioners and to decide the matter on merits and in accordance with law (including the point of limitation) within eight weeks from receipt of the petitioners' submissions. Thereafter, aggrieved parties may approach the appellate forum (Director General of Foreign Trade) and subsequently this Court, if necessary, after exhausting statutory remedies. [Paras 26, 27, 28, 30, 31]

The Authority shall conduct a fresh enquiry after hearing the petitioners and decide within the prescribed timeframe; statutory appellate remedies must be exhausted before approaching the Court.

Final Conclusion: Writ petitions disposed by holding that the impugned communication is a demand based on audit objection and not a final adjudicated recovery; petitioners must submit objections within four weeks, the Additional Director General of Foreign Trade shall conduct an enquiry and decide on merits (including limitation) within eight weeks, and statutory appellate remedies remain available thereafter; no order as to costs.

Principles of natural justice - remand for fresh adjudication - authorization requirement for customs broker - obligation to advise clients on regulatory compliance - duty to verify IEC/GSTIN and client identity

Principles of natural justice - remand for fresh adjudication - Impugned order setting aside customs broker licence and imposing penalty was vitiated for failure to furnish relied-upon documents and denial of requested cross-examination, and therefore required remand. - HELD THAT: - The appellant repeatedly sought production of relied-upon documents and sought cross-examination of witnesses whose statements the adjudicating authority proposed to rely upon. The appellate Tribunal found that the relied-upon documents forming the basis of the proceedings were not supplied to the appellant and that the request for cross-examination was not granted. For these reasons the Tribunal concluded that the impugned order was passed in breach of the principles of natural justice. The Tribunal expressly declined to decide contested questions regarding the mandatoriness of the time limits under Regulation 17, noting conflicting authorities, because the decision on natural justice was dispositive. Consequently the Tribunal set aside the impugned order and remanded the matter for fresh adjudication after providing all relied-upon documents and permitting cross-examination of witnesses the adjudicating authority wishes to rely upon. [Paras 4, 5]

Impugned order set aside; matter remanded for fresh adjudication after furnishing all relied-upon documents and allowing cross-examination of witnesses.

Final Conclusion: The appeal is allowed by way of remand: the order revoking the customs broker licence and imposing penalty is set aside and the matter is remitted for re-adjudication after furnishing the relied-upon documents and permitting cross-examination of witnesses the adjudicating authority proposes to rely upon.

Jurisdiction of investigative agencies in relation to Companies Act and Penal Code offences - Scope and exclusivity of Serious Fraud Investigation Office (SFIO) under the Companies Act, 2013 - Application of special law vis-a -vis general law - Inherent powers under Section 482 CrPC

Jurisdiction of investigative agencies in relation to Companies Act and Penal Code offences - Scope and exclusivity of Serious Fraud Investigation Office (SFIO) under the Companies Act, 2013 - Investigation by CID into alleged offences committed by an employee in her individual capacity is not barred by the Companies Act or by the jurisdiction of the SFIO. - HELD THAT: - The Court examined the scheme of the Companies Act, 2013, including the provisions establishing the SFIO and the circumstances in which the Central Government may assign investigation to it. Section 210-212 and related provisions relate to investigation into the affairs of a company and to matters where the Central Government, on specified grounds, directs SFIO to investigate. Section 212(2) prevents other investigating agencies from proceeding only where a case has been assigned to SFIO by the Central Government under the Act. The allegations in the FIR concern alleged criminal acts by the petitioner in her personal capacity (conspiracy, criminal breach of trust, cheating, forgery and misappropriation) which attract offences under the IPC and, on the materials before the Court, do not fall squarely within the definition of fraud under Section 447 of the Companies Act such that SFIO's exclusive jurisdiction is invoked. The SFIO's domain does not automatically oust police jurisdiction to investigate cognizable offences arising out of conduct of an employee; parallel or independent police investigation is not precluded unless the statutory precondition of assignment to SFIO is satisfied. Applying these principles, the Court found no illegality in CID registering and investigating the FIR. [Paras 22, 23, 24, 28, 29]

The CID may lawfully investigate the FIR alleging offences under the IPC against the petitioner; the Companies Act/SFIO does not oust such investigation in the circumstances of this case.

Inherent powers under Section 482 CrPC - Quashing of FIR where alternative statutory procedure exists - Exercise of the Court's inherent power under Section 482 CrPC to quash the FIR was not warranted. - HELD THAT: - The Court reiterated that Section 482 CrPC is an exceptional remedy to be exercised sparingly to prevent abuse of process or miscarriage of justice. Given the contested legal questions about jurisdiction and the respondent's case that the offences charged attract IPC provisions and are properly triable following police investigation, there was no basis to invoke Section 482 to quash the FIR at the present stage. The Court observed that it should not minutely examine the veracity of evidence while investigation is ongoing and noted binding and persuasive authorities that police investigation into cognizable offences should ordinarily be permitted to proceed unless clearly barred by statute. Accordingly, the petition for quashing was refused and the interim stay was vacated to allow investigation to continue. [Paras 30, 31, 32]

The petition under Section 482 CrPC to quash the FIR is dismissed; the interim order is vacated and investigation may proceed.

Final Conclusion: The petition seeking quashing of the FIR and CID P.S. Case No.03/2020 is dismissed. The Court held that SFIO's statutory role does not automatically preclude CID investigation into alleged IPC offences committed by an employee in her individual capacity and that exercise of inherent power under Section 482 CrPC was not justified; the interim stay is vacated so investigation may proceed.

Sanction of scheme of amalgamation under Sections 230-232 of the Companies Act, 2013 - Vesting of assets and liabilities on amalgamation - Dissolution of transferor companies without winding-up - Continuation of pending proceedings against transferee - Deemed transfer of employees on amalgamation - Compliance with statutory requirements and liability for violations - No exemption from payment of stamp duty, taxes or other charges - Role of Regional Director, Registrar of Companies and Official Liquidator in company scheme approvals

Sanction of scheme of amalgamation under Sections 230-232 of the Companies Act, 2013 - Role of Regional Director, Registrar of Companies and Official Liquidator in company scheme approvals - Sanction of the Scheme of Amalgamation submitted by the applicant companies under Sections 230-232 of the Companies Act, 2013. - HELD THAT: - The Tribunal considered the petition, the Scheme placed on record, the affidavit of publication and service of notices, and the reports/representations filed by the Regional Director, Registrar of Companies and the Official Liquidator. The Regional Director recorded that filings were up to date and found the Scheme to be in line with Sections 230-232. The RoC furnished a factual report with no adverse observations under Section 230(5). The Official Liquidator raised no objection and reported no complaints or prejudice to members or public interest. Certificates from statutory auditors confirmed accounting treatment conformed with the Accounting Standards. The Tribunal noted that where members and creditors have approved a commercial corporate decision, the Tribunal will not ordinarily interfere and found no impediment to sanctioning the Scheme on the material placed before it.

Sanction granted to the Scheme under Sections 230 to 232 of the Companies Act, 2013.

Vesting of assets and liabilities on amalgamation - Dissolution of transferor companies without winding-up - Continuation of pending proceedings against transferee - Deemed transfer of employees on amalgamation - Consequences of sanction: transfer and vesting of property, rights, liabilities and employees, and dissolution of transferor companies. - HELD THAT: - The Tribunal ordered that, upon the Scheme taking effect, all property, rights and powers of the Transferor Companies shall stand transferred to and vest in the Transferee Company without further act or deed, and that all liabilities and duties shall similarly transfer and become those of the Transferee Company. Pending proceedings by or against the Transferor Companies shall be continued by or against the Transferee Company. Employees in service immediately before the effective date shall become employees of the Transferee Company without any break and on terms not less favorable than those subsisting prior to amalgamation. The Tribunal directed that certified copy of the order be filed with the Registrar of Companies for registration and consolidation of files, upon which the Transferor Companies shall be dissolved without following winding-up.

All assets, liabilities and employees of the Transferor Companies vest in the Transferee Company; transferor companies to be dissolved without winding-up; pending proceedings to continue against the Transferee Company.

Compliance with statutory requirements and liability for violations - No exemption from payment of stamp duty, taxes or other charges - Obligations notwithstanding sanction: requirement to comply with statutory requirements and absence of any exemption from taxes or duties. - HELD THAT: - The Tribunal expressly clarified that the petitioners remain bound to comply with statutory requirements in accordance with law. The sanction does not operate as an exemption from payment of stamp duty, taxes or any other charges, nor does it bar action being taken in accordance with law if any deficiency or violation of enactments, rules or regulations is found. The Transferee Company filed an affidavit undertaking to pay tax/statutory dues of the Transferor Companies pursuant to sanction of the Scheme as directed by the Tribunal.

Petitioners must comply with statutory requirements; sanction does not exempt payment of taxes, stamp duty or other charges and does not preclude lawful action for violations.

Final Conclusion: The Tribunal, having considered the Scheme, publication and service of notices, the reports of the Regional Director, Registrar of Companies and Official Liquidator, and auditor certificates, sanctioned the Scheme of Amalgamation under Sections 230-232 of the Companies Act, 2013; ordered vesting of assets, liabilities and employees in the Transferee Company, dissolution of the Transferor Companies without winding-up, continuation of pending proceedings by or against the Transferee Company, and recorded that statutory compliance and payment of applicable taxes, duties and responsibilities remain obligatory and unaffected by the sanction.

Restoration of company struck off under Section 248 - exercise of discretionary power under Section 252(3) - requirement of demonstrating running business at the time of strike off - obligation to file pending statutory returns and payment of late fees - conditions for restoration including costs, affidavits and undertakings - non-automatic revival of director's status where disqualification subsists

Restoration of company struck off under Section 248 - exercise of discretionary power under Section 252(3) - requirement of demonstrating running business at the time of strike off - Whether the Tribunal should restore the name of the Company struck off under Section 248 by invoking its discretion under Section 252(3) in light of the Company's pleaded business activity and mitigating circumstances. - HELD THAT: - The Tribunal found on the material on record, including utility bills, bank statements and expense bills, that the Company had been carrying on business in the two years preceding the date of strike off and that mitigating circumstances were established by the explanation that default in filing arose from failure of an appointed consultant. While noting that such explanation does not absolve the statutory duty to file returns, the Tribunal held that Section 252(3) confers discretion to restore a struck off company where it demonstrates a running business as on the date of strike off and where restoration is just and in the interest of stakeholders. Balancing the duty to enforce statutory compliance with the interests of members, employees and revenue, the Tribunal exercised its discretion in favour of restoration subject to conditions aimed at safeguarding compliance and stakeholders' interests. [Paras 6, 7, 8, 9]

Application allowed and the Registrar of Companies, Chennai ordered to restore the Company's name in the register, treating it as if not struck off.

Obligation to file pending statutory returns and payment of late fees - conditions for restoration including costs, affidavits and undertakings - non-automatic revival of director's status where disqualification subsists - What conditions and consequential directions should accompany restoration of the Company's name. - HELD THAT: - The Tribunal conditioned restoration on (a) filing all pending annual returns and balance sheets for the period of default within 30 days of restoration with requisite fees and additional late charges; (b) payment of a specified cost through the MCA portal for revival; (c) filing an affidavit of compliance within two months; and (d) submission by shareholders of an undertaking regarding non-use of accounts for tainted transactions during demonetization. The Tribunal also clarified that restoration of the company's name does not automatically revive any director's status where disqualification under the statute subsists, and preserved the Registrar's power to proceed against the Company or its directors for alleged late filing or other statutory non-compliances. [Paras 9]

Restoration granted subject to the specified directions including filing of documents, payment of costs, affidavit and undertaking; directors' disqualification not automatically removed and Registrar's enforcement powers remain preserved.

Final Conclusion: The Tribunal allowed the application under Section 252(3) to restore the Company's name struck off under Section 248, on finding that the Company was carrying on business and that mitigating circumstances existed, and directed restoration subject to filing of pending returns with late fees, payment of revival costs, filing of an affidavit and shareholder undertaking; it clarified that director disqualifications are not automatically removed and that statutory enforcement by the Registrar remains open.

Dispensation of statutory meetings under a scheme of amalgamation - consent affidavits of shareholders and creditors as basis for dispensing meetings - convening of meetings of equity shareholders, secured creditors and unsecured creditors - filing of second motion in a Companies Act amalgamation proceeding

Dispensation of statutory meetings under a scheme of amalgamation - consent affidavits of shareholders - Dispensation of convening, holding and conducting of a meeting of the equity shareholders of the Transferee Company. - HELD THAT: - The Tribunal recorded that the Transferee Company has three equity shareholders and that consent affidavits from all three shareholders have been placed on record along with the chartered accountant's certificate. In view of the unanimous consents evidenced by affidavit and the supporting certification, the Tribunal dispensed with the necessity of convening and holding a meeting of the equity shareholders in relation to the proposed Scheme of Amalgamation. [Paras 11]

The convening and holding of a meeting of the equity shareholders is dispensed with.

Dispensation of statutory meetings under a scheme of amalgamation - consent affidavits of secured creditors - Dispensation of convening, holding and conducting of a meeting of the secured creditor(s) of the Transferee Company. - HELD THAT: - The Tribunal noted that there is one secured creditor of the Transferee Company and that the consent affidavit of that secured creditor has been placed on record together with the chartered accountant's certificate. Relying on the representation and the filed consent, the Tribunal found it unnecessary to convene and hold a separate meeting of secured creditors for the purposes of approving the Scheme. [Paras 11]

The convening and holding of a meeting of the secured creditor is dispensed with.

Dispensation of statutory meetings under a scheme of amalgamation - consent affidavits of unsecured creditors - Dispensation of convening, holding and conducting of a meeting of the unsecured creditors of the Transferee Company. - HELD THAT: - The Tribunal observed that the Transferee Company has three unsecured creditors (and GST payable for January) and that a consent affidavit from one unsecured creditor representing 97% of the total claim has been placed on record together with the chartered accountant's certificate. Given the overwhelming consent demonstrated by the creditor holding 97% of the claims, the Tribunal dispensed with the necessity of convening and holding a meeting of the unsecured creditors. [Paras 11]

The convening and holding of a meeting of the unsecured creditors is dispensed with.

Dispensation of statutory meetings under a scheme of amalgamation - unsecured trade creditors - Dispensation of convening, holding and conducting of a meeting of the unsecured trade creditors of the First Transferor Company. - HELD THAT: - The Tribunal accepted the representation that the First Transferor Company had no unsecured trade creditors (nil), as certified in the papers. On that basis, there was no requirement to convene or hold a meeting of unsecured trade creditors in relation to the Scheme. [Paras 11]

The convening and holding of a meeting of the unsecured trade creditors is dispensed with.

Filing of second motion in a Companies Act amalgamation proceeding - Direction to file the application for the Second Motion within a specified time period. - HELD THAT: - After disposing of the applications for dispensation of meetings, the Tribunal directed procedural continuation of the amalgamation process by requiring the Applicant Companies to file the application for the Second Motion. The Tribunal fixed a timeline to ensure progression of the statutory process. [Paras 12]

Applicant Companies directed to file the application for the Second Motion within fourteen days from receipt of the order.

Final Conclusion: Application allowed: meetings of equity shareholders, secured creditor, unsecured creditors and unsecured trade creditors are dispensed with on the basis of filed consents and certifications; applicants directed to file the Second Motion application within fourteen days.

Restoration of company name under section 252(3) - judicial discretion to restore struck-off company - protection of immovable property pending restoration - filing of outstanding statutory records as condition of restoration - payment of costs to public fund as condition for restoration - setting aside freezing of bank accounts consequential on restoration

Restoration of company name under section 252(3) - protection of immovable property pending restoration - judicial discretion to restore struck-off company - Restoration of the appellant-company's name in the register should be ordered. - HELD THAT: - The Tribunal examined the appellant's possession of immovable property registered in the company's name and relevant precedent recognizing the risk to land and property where a company remains struck off. Applying the discretionary power to restore a company's name where it is carrying on business or where restoration is just and equitable, the Tribunal found it would be just and fair to allow restoration. The Tribunal noted the Income tax Department raised no objection and relied on earlier decisions allowing revival where similar circumstances obtained. [Paras 10, 11]

The appeal is allowed and the name of the appellant-company shall be restored in the register as if it had not been struck off.

Filing of outstanding statutory records as condition of restoration - payment of costs to public fund as condition for restoration - Restoration is subject to conditions of payment of costs and filing outstanding statutory documents and fees. - HELD THAT: - The Tribunal imposed conditional restoration: the appellant must pay specified costs to public funds and furnish proof within the stipulated time, and must file all outstanding documents for the defaulting years and pay any late fees or charges leviable under law. These conditions are necessary to regularise the company's statutory compliance before entry in the Registrar's records is made effective. [Paras 12, 13]

Restoration is directed subject to payment of the prescribed costs and compliance with filing and fee requirements; proof of payment and filings to be furnished to the Registry.

Setting aside freezing of bank accounts consequential on restoration - Any freezing of the appellant-company's bank account(s) shall be set aside consequential to restoration. - HELD THAT: - The Tribunal directed that where freezing of accounts was on the ground of the company being struck off, that direction shall be set aside immediately to enable the company to carry out its business operations, subject to compliance with the restoration conditions. The respondent is directed to give effect to this consequential relief within the time fixed for compliance. [Paras 14]

Directions to lift freezing of bank account(s) consequential on restoration and to implement the restoration's effects within the prescribed time.

Final Conclusion: The appeal is allowed: the company's name shall be restored in the Registrar's register as if not struck off, subject to payment of the directed costs to public funds, filing of all outstanding statutory documents and payment of applicable late fees, with any bank account freezing consequentially set aside upon compliance; proof of compliance to be filed within the time directed.

Scheme of arrangement and amalgamation - Sanction under sections 230 to 232 of the Companies Act, 2013 - Fair and reasonable and not contrary to public policy - Transfer of assets and liabilities pursuant to section 232 - Dissolution of transferor companies without winding up - Compliance with statutory and accounting requirements - Filing of certified order and scheme (e-form INC-28) - Adjudication of stamp duty

Scheme of arrangement and amalgamation - Sanction under sections 230 to 232 of the Companies Act, 2013 - Fair and reasonable and not contrary to public policy - Compliance with statutory and accounting requirements - Sanction of the joint scheme of arrangement and amalgamation between the three petitioner companies. - HELD THAT: - After hearing counsel and considering the report of the Regional Director (Western Region) and the rejoinder and undertakings filed by the petitioner-companies, the Tribunal found that the scheme satisfies statutory requirements and the clarifications and undertakings furnished in response to observations (including accounting and memorandum/object related undertakings) are acceptable. No objector appeared to oppose the scheme. The Tribunal concluded on the material on record that the scheme is fair and reasonable and not contrary to public policy, and therefore the petition for sanction was allowed. The Tribunal also noted receipt of the Registrar of Companies' observations and the petitioner-companies' detailed replies and undertakings which were accepted for the purpose of sanctioning the scheme. [Paras 9, 10, 11, 12, 16]

The scheme is sanctioned under sections 230 to 232 of the Companies Act, 2013 as fair and reasonable and not contrary to public policy.

Transfer of assets and liabilities pursuant to section 232 - Dissolution of transferor companies without winding up - Effect of the sanctioned scheme on assets, liabilities and the corporate status of the transferor companies. - HELD THAT: - The Tribunal directed that upon sanction the assets and liabilities, including taxes and charges if any, and duties of the transferor companies shall stand transferred to and become the liabilities and duties of the transferee company in accordance with section 232 of the Companies Act, 2013. Having found all requisite statutory compliances fulfilled, the Tribunal ordered that the transferor companies be dissolved without winding up. [Paras 17]

All assets and liabilities shall transfer to the transferee company and the transferor companies are dissolved without winding up.

Filing of certified order and scheme (e-form INC-28) - Adjudication of stamp duty - Post-sanction directions relating to filings and stamp duty adjudication. - HELD THAT: - The Tribunal directed the petitioners to file a certified copy of the order along with the scheme with the concerned Registrar of Companies electronically in e-form INC-28 within the prescribed period. The petitioners were further directed to lodge a certified copy of the order and scheme with the concerned Superintendent of Stamps for adjudication of stamp duty within the stipulated period. The Tribunal also left liberty to any interested person to apply for further directions if necessary. [Paras 18, 19, 20]

Petitioners must file the certified order and scheme in e-form INC-28 and present the order and scheme for stamp duty adjudication within the periods directed.

Final Conclusion: The Tribunal allowed the company application, sanctioned the scheme of arrangement and amalgamation between the petitioner companies subject to the accepted undertakings and statutory compliances, directed transfer of assets and liabilities to the transferee company and dissolution of the transferor companies without winding up, and gave consequential directions for filing the certified order and scheme and for stamp duty adjudication.

Presumption of security interest under Regulation 21A - Obligation to pay liquidation and CIRP costs where secured creditor realises security interest - Consequences of failure to comply with Regulation 21A(2) - asset vesting in liquidation estate - Right of secured creditor to realise security interest under Section 52(1)(b) - Verification of security interest by the liquidator under Section 52(3)

Presumption of security interest under Regulation 21A - Consequences of failure to comply with Regulation 21A(2) - asset vesting in liquidation estate - Whether the asset subject to the secured creditor's security interest becomes part of the liquidation estate for failure to comply with Regulation 21A(2) of the Liquidation Process Regulations, 2016 - HELD THAT: - The Tribunal examined the combined scheme of Section 52 of the Code and Regulation 21A of the Liquidation Process Regulations. Regulation 21A(1) casts an obligation on a secured creditor to inform the liquidator of its decision to relinquish or realise the security interest; the proviso creates a presumption in favour of inclusion in the liquidation estate where no intimation is given within thirty days. Regulation 21A(2) requires that a secured creditor choosing to realise its security interest must, within ninety days from the liquidation commencement date, pay to the liquidator the amount equivalent to the share it would have borne under clause (a) and sub clause (i) of clause (b) of sub section (1) of section 53 (insolvency process costs and liquidation costs), and further obligations as to remittance of excess realisation value are prescribed. Regulation 21A(3) explicitly provides that failure to comply with sub regulation (2) results in the asset subject to the security interest becoming part of the liquidation estate. Applying these provisions to the materials - including the respondent's email electing to realise the security interest and the liquidator's communications calling for payment in compliance with Regulation 21A(2) - the Tribunal found that the respondent failed to comply with the payment obligations under Regulation 21A(2). Consequently, under the clear mandate of Regulation 21A(3), the asset (the specified vehicle) vests in the liquidation estate and must be handed over to the liquidator. [Paras 6]

The asset subject to the secured creditor's security interest shall become part of the liquidation estate for non compliance with Regulation 21A(2), and the respondent is directed to hand over possession of the asset to the liquidator.

Final Conclusion: The Tribunal, applying Regulation 21A read with Section 52, held that the secured creditor's failure to comply with Regulation 21A(2) resulted in the asset becoming part of the liquidation estate and directed immediate handing over of the asset to the liquidator.

Admission of application under section 9 of the Insolvency and Bankruptcy Code, 2016 - operational debt and default - service of demand notice under section 8 of the IBC, 2016 - jurisdiction of the Adjudicating Authority - appointment of Interim Resolution Professional - security/expense deposit by Operational Creditor to IRP - moratorium under section 14 of the IBC, 2016

Operational debt and default - admission of application under section 9 of the Insolvency and Bankruptcy Code, 2016 - The application under section 9 was admitted on account of an admitted unpaid operational debt and established default. - HELD THAT: - The Tribunal found that the applicant provided forwarding services to the corporate debtor and raised invoices for the period recorded in the pleadings. Part payment was made by the corporate debtor, leaving an admitted outstanding sum. The applicant filed the statutory demand notice in Form 3 under section 8, served on the corporate debtor, and filed an affidavit under section 9(3)(b) affirming absence of a notice of dispute. The corporate debtor did not contest the claim or file a reply and was proceeded ex parte. On these facts the Tribunal concluded that default of an operational debt was established and the application met the requirements for admission under section 9(5) of the IBC, 2016. [Paras 2, 3, 4, 8, 10]

Application under section 9 admitted as the operational debt and default were established and remained uncontroverted.

Service of demand notice under section 8 of the IBC, 2016 - service of application on corporate debtor - The demand notice and the section 9 application were duly served on the corporate debtor. - HELD THAT: - The Tribunal recorded that the demand notice in Form 3 was sent by speed post to the registered address as per master data and the tracking report indicated delivery. The section 9 application was also served via email and speed post at the registered address, with delivery confirmed. The corporate debtor did not raise any dispute in response to the notice or application. These findings supported proceeding ex parte and admission of the application. [Paras 4, 5, 6]

Service of the demand notice and the application was held to be effective and unchallenged.

Jurisdiction of the Adjudicating Authority - This Bench has jurisdiction to entertain and try the application as the registered office of the corporate debtor is situated in Delhi. - HELD THAT: - The Tribunal noted the registered office of the corporate debtor is located in Delhi and, on that basis, concluded that the Tribunal has territorial jurisdiction to hear the section 9 application. [Paras 9]

Application entertained by the Tribunal having jurisdiction over the corporate debtor's registered office.

Appointment of Interim Resolution Professional - conditions for appointment and disclosures - The Tribunal appointed the proposed person as Interim Resolution Professional subject to prescribed conditions and disclosures. - HELD THAT: - The applicant nominated Ms. Nisha Malpani as IRP. The Tribunal appointed her as Interim Resolution Professional subject to the condition that there be no pending disciplinary proceedings against her and directed filing of specific consent in Form 2 and disclosures under the relevant IBBI regulations within one week of the order. [Paras 11]

Nominee appointed as Interim Resolution Professional subject to consent and regulatory disclosures.

Security/expense deposit by Operational Creditor to IRP - The Operational Creditor was directed to deposit an amount to meet IRP's initial expenses, subject to accounting and adjustment by the Committee of Creditors. - HELD THAT: - Relying on regulation 6 of the IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016, the Tribunal directed the operational creditor to deposit a sum with the IRP within one week to meet expenses in performing statutory functions. The amount is to be accounted for by the IRP and is subject to adjustment by the Committee of Creditors and repayment to the operational creditor as per the IRP's accounts. [Paras 12]

Operational Creditor directed to deposit the specified sum with the IRP for statutory expenses, subject to later adjustment.

Moratorium under section 14 of the IBC, 2016 - On admission under section 9, the moratorium under section 14(1) of the IBC applies to the corporate debtor, with sections 14(2) to 14(4) operative as applicable. - HELD THAT: - The Tribunal held that consequence of admitting the section 9 application is the invocation of the moratorium under section 14(1) of the Code, thereby triggering the prohibitions provided in the provisos. The Tribunal also recorded that the other provisions of section 14 (subsections 2 to 4) shall operate during the moratorium period as applicable. [Paras 13]

Moratorium under section 14 declared to be in force consequent to admission of the application.

Final Conclusion: The application under section 9 of the Insolvency and Bankruptcy Code, 2016 was admitted on proof of an unpaid operational debt and default; service was found effective and the Bench exercised jurisdiction; the nominated IRP was appointed subject to consent and disclosures; the Operational Creditor was directed to deposit an amount for IRP's expenses; and the moratorium under section 14 was declared to follow on admission.

Duty of suspended directors to hand over books, records and assets to the Resolution Professional - liability of suspended directors for non-cooperation during CIRP - power to initiate criminal proceedings under Section 70 of the IBC for failure to hand over documents - liberty to withdraw application and to file fresh application under Sections 43 and 66 of the IBC

Liberty to withdraw application - Permission to withdraw IA/5253/2020 with liberty to file a fresh application under Sections 43 and 66 of the IBC - HELD THAT: - The applicant sought leave to withdraw IA/5253/2020 and requested liberty to file a separate application under Sections 43 and 66 of the IBC. The Tribunal, after hearing submissions, granted permission to withdraw IA/5253/2020 and dismissed it as withdrawn, while expressly granting liberty to the applicant to file a fresh application under the stated provisions in accordance with law. [Paras 2]

IA/5253/2020 dismissed as withdrawn with liberty to file a fresh application under Sections 43 and 66 of the IBC.

Duty of suspended directors to hand over books, records and assets to the Resolution Professional - liability of suspended directors for non-cooperation during CIRP - power to initiate criminal proceedings under Section 70 of the IBC for failure to hand over documents - Whether the suspended directors (respondent nos. 1 and 2) could be excused from handing over documents and information to the Resolution Professional and the consequent remedy for non-cooperation - HELD THAT: - The Resolution Professional filed IA/4480/2020 under Section 19(2) seeking directions for suspended directors to hand over books, records, fixed assets and to cooperate with the RP. Respondent no. 1 contended that documents were not in his possession, were under control of respondent no. 2, and that his medical condition and COVID-19 related lockdowns impeded cooperation. The Tribunal observed that both respondent nos. 1 and 2 were directors prior to initiation of CIRP and thus cannot evade responsibility by shifting it to the other director. Having failed to furnish information or hand over documents as required under the Code, both suspended directors were held liable for non-cooperation. The Tribunal directed the Resolution Professional to institute criminal proceedings against both suspended directors under Section 70 of the IBC along with other relevant provisions of law. [Paras 7, 8]

Both suspended directors held accountable for failure to hand over documents and furnish information; RP directed to institute criminal proceedings under Section 70 of the IBC and other relevant sections; IA/4480/2020 disposed of.

Final Conclusion: IA/5253/2020 dismissed as withdrawn with liberty to file a fresh application under Sections 43 and 66 of the IBC; IA/4480/2020 disposed of with both suspended directors held liable for non-cooperation and the Resolution Professional directed to initiate criminal proceedings under Section 70 of the IBC and other relevant provisions.

Initiation of Corporate Insolvency Resolution Process against a Financial Service Provider - application by the Appropriate Regulator under Rules 5 and 6 for initiation of CIRP - default constituting financial debt - jurisdiction of the Adjudicating Authority over a company registered under the Companies Act - appointment of Administrator for an FSP pursuant to RBI action and the Rules - moratorium during CIRP - public announcement requirement upon initiation of CIRP

Jurisdiction of the Adjudicating Authority over a company registered under the Companies Act - This Bench has jurisdiction to adjudicate the petition against the respondent company. - HELD THAT: - The respondent is a company registered under the Companies Act and carries a valid CIN. The Adjudicating Authority therefore possesses territorial and subject-matter competence to deal with the petition filed under the Code against the Financial Service Provider. [Paras 4]

Jurisdiction of the Adjudicating Authority established.

Application by the Appropriate Regulator under Rules 5 and 6 for initiation of CIRP - default constituting financial debt - The petition by the Appropriate Regulator proves existence of debt and default, meets the threshold under section 4, and is within limitation; petition is complete and admits for CIRP under the Code and Rules. - HELD THAT: - Documents placed on record, including the claim and supporting documents from a financial creditor, demonstrate a default dated 13.10.2019 and aggregate debt exceeding the statutory minimum prescribed under section 4(1). The petition, filed on 02.12.2021 by the Appropriate Regulator in terms of Rule 5 read with Rule 6, satisfies the requirements of section 7 of the Code as applied to FSPs. The Adjudicating Authority is satisfied that the default and financial debt are established and that the petition is not barred by limitation. [Paras 11, 12, 14]

Petition admitted; CIRP initiated against the Financial Service Provider.

Appointment of Administrator for an FSP pursuant to RBI action and the Rules - Appointment of Mr Nageswara Rao Y as Administrator is validly proposed by RBI and accepted by the Administrator; he is appointed to carry out functions under the Code. - HELD THAT: - RBI exercised its powers to supersede the board and proposed the Administrator. The proposed Administrator has given written consent in the prescribed form. In terms of the Rules and the notification of RBI, the Adjudicating Authority appoints the proposed person as Administrator to perform the duties and functions envisaged under the Code. [Paras 7, 13, 14]

Mr Nageswara Rao Y appointed as Administrator to carry out functions under the Code.

Moratorium during CIRP - public announcement requirement upon initiation of CIRP - Moratorium under the Code shall operate from the date of the order until completion of CIRP or approval of a resolution plan or liquidation; public announcement of CIRP to be made immediately. - HELD THAT: - On admission of the petition, the Adjudicating Authority directed the statutory moratorium to apply in respect of the Financial Service Provider for the duration prescribed by the Code. The Administrator is directed to ensure immediate public announcement of the CIRP as required by the Code. Further directions place management of the FSP in the Administrator and require cooperation by officers and managers and communication of the order to statutory authorities. [Paras 14]

Moratorium imposed and public announcement to be made; management vests in Administrator with ancillary directions.

Final Conclusion: The Adjudicating Authority admitted the petition filed by the Appropriate Regulator, initiated CIRP against the Financial Service Provider, appointed the proposed Administrator to discharge statutory functions, directed the operation of the moratorium and immediate public announcement, and issued ancillary directions for implementation.

Summary order. [Notice issued in the appeal; Lucky Holdings Pvt. Ltd. and Edelweiss Asset Reconstruction Company Ltd. impleaded as respondents; amended memo of parties to be filed within ten days; matter listed for hearing on 24 January, 2022; parties directed to complete pleadings and file documents before the next date; until the next date, status quo to be maintained qua the assets of PSL Limited, a company in liquidation.]

Temporary bail - humanitarian grounds - gravity of economic offences and bail jurisprudence - medical evidence and genuineness of medical certificates - conditions of bail including bond, cash security, surrender of passport and reporting - non-tampering with prosecution evidence - custodial vigilance by investigation agency during temporary liberty

Temporary bail - humanitarian grounds - medical evidence and genuineness of medical certificates - gravity of economic offences and bail jurisprudence - Whether the accused should be released on temporary bail on humanitarian grounds despite the seriousness of the economic offence and prior rejection of regular bail. - HELD THAT: - The Court examined the medical papers produced by Dr. Umesh Shetty detailing serious injuries to the accused's wife, the absence of any prima facie material from the Enforcement Directorate impugning the authenticity of those medical records, and the fact that the applicant had been in custody since 23.01.2021 with his family left without adequate care. While observing the settled law that economic offences are grave and bail must be approached with caution, the Court treated the present prayer as purely humanitarian and temporary, distinct from an application for regular bail which had earlier been rejected and not challenged. The Court accepted that there was no allegation or material before it to show the medical certificates were issued fraudulently or for extraneous consideration. Balancing the humanitarian need of the minor children and the wife's medical condition against the concerns about the seriousness of the offence, the Court concluded that limited temporary liberty could be granted subject to stringent conditions to mitigate risks of tampering with evidence or absconding. The Court therefore allowed temporary bail for a specific short period with conditions including furnishing of bond and security, surrender of passport, prohibition on contacting prosecution witnesses, deputation of ED staff for vigilance, and mandatory return by a fixed date, and made clear no extension or further similar application would be entertained. [Paras 6, 8, 9, 10]

Temporary bail granted on humanitarian grounds from 06.12.2021 to 15.12.2021 subject to specified conditions including furnishing of bond and cash security, surrender of passport, non-contact with prosecution witnesses, custodial vigilance by ED staff, and mandatory surrender by 15.12.2021; order treated as first and last chance and no extension will be permitted.

Final Conclusion: Temporary bail was allowed on narrowly confined humanitarian grounds based on medical evidence and family hardship, notwithstanding the gravity of the economic offence; release was made conditional on stringent safeguards to protect the integrity of the prosecution and ensure return to custody.

Fraudulent availment of CENVAT credit - issuance of invoices without corresponding supply - penalty under Rule 26(2) of the Central Excise Rules, 2002 - corroboration by transporter statements and RTO report - reduction of penalty for mitigation of quantum

Fraudulent availment of CENVAT credit - issuance of invoices without corresponding supply - corroboration by transporter statements and RTO report - Liability of the appellant for issuing invoices enabling fraudulent CENVAT credit and imposition of penalty under Rule 26(2). - HELD THAT: - The Tribunal upheld the finding of the Commissioner (Appeals) and the adjudicating authority that the appellant had issued invoices without corresponding supply of inputs to M/s Nisha Industries, thereby facilitating the fraudulent availment of CENVAT credit. The revenue's case was supported by documentary evidence and statements-particularly statements of transporters and the RTO report-that the vehicles mentioned in the invoices were incapable of carrying the quantities stated and that transportation was denied. The appellant's explanation of clerical errors in vehicle numbers lacked independent corroboration that the goods were transported in the vehicles claimed. The fact that M/s Nisha Industries availed of SVLDRS for the disputed demand was noted as indicative of acceptance of the demand against them, reinforcing the conclusion that credit was taken without receipt of goods. On these findings the Tribunal concluded that the appellant was liable for penalty under Rule 26(2). [Paras 8, 9, 10, 11, 12]

Appellant held liable for issuing invoices without corresponding supply and therefore liable to penalty under Rule 26(2).

Penalty under Rule 26(2) of the Central Excise Rules, 2002 - reduction of penalty for mitigation of quantum - Appropriate quantum of penalty to be imposed on the appellant under Rule 26(2). - HELD THAT: - Although the Tribunal sustained the liability for penalty, it exercised discretion in mitigation of quantum. Noting that the adjudicating authority had imposed the maximum penalty permissible under Rule 26(2)(ii), the Tribunal found it appropriate, in view of the overall facts and circumstances, to moderate the quantum. The penalty was accordingly reduced from the amount imposed by the lower authority to a mitigated sum. [Paras 4, 5]

Penalty confirmed in principle but reduced to a mitigated amount of Rs. 5,00,000.

Final Conclusion: Appeal partly allowed: liability for issuing invoices without corresponding supply and consequent penalty under Rule 26(2) is affirmed; quantum of penalty reduced and the matter disposed by substituting the reduced penalty.

Forfeiture of tax collected - excess TDS - statutory appellate forum / alternative departmental remedy - reluctance of writ court to short circuit departmental remedy - application of discretionary writ jurisdiction in revenue matters

Forfeiture of tax collected - excess TDS - statutory appellate forum / alternative departmental remedy - Whether the High Court should exercise writ jurisdiction to interfere with the assessment order forfeiting alleged excess TDS or require the petitioner to avail the statutory appellate remedy. - HELD THAT: - The Court declined to interfere with the assessment order at this stage. The impugned order involves factual determinations and documentary/evidentiary materials (including separate treatment of components and computation of excess collection) which the Court considered more suitably examined by the departmental appellate authority. The statute provides a specific appellate forum; the Court was not persuaded to bypass that remedy and noted that interlocutory review by the High Court is not appropriate where the departmental appellate process is available. The Court referred to precedent on the limited circumstances in which writ relief may be granted in tax matters but found those conditions not satisfied here. Consequently the petitioner was directed to file an appeal before the Appellate Deputy Commissioner (CT), Tirupathi, within three weeks, and the Appellate Deputy Commissioner was directed to consider and decide the appeal on merits in accordance with law after giving the petitioner an opportunity of hearing. [Paras 5, 6]

Writ petition disposed with direction to file appeal before the Appellate Deputy Commissioner (CT), Tirupathi within three weeks; appellate authority to decide the appeal on merits after hearing.

Final Conclusion: The High Court refused to set aside or stay the assessment forfeiture at this stage and disposed the writ by directing the petitioner to pursue the statutory appellate remedy before the Appellate Deputy Commissioner (CT), Tirupathi, who is to decide the appeal on merits after hearing.

Dishonour of cheque - Section 138 of the Negotiable Instruments Act - Insufficiency of funds or arrangement - Dishonour due to stop payment or account closed - Dishonour due to incomplete or mismatched signature - Presumption under Section 139 - Binding precedent and overruling/per incuriam

Dishonour of cheque - Section 138 of the Negotiable Instruments Act - Dishonour due to incomplete or mismatched signature - Binding precedent and overruling/per incuriam - Dishonour of a cheque on account of incomplete or mismatched signatures constitutes an offence under Section 138 of the Negotiable Instruments Act and criminal proceedings may be permitted to continue. - HELD THAT: - The Court examined the scope of Section 138 and the judicial expansion of its ambit beyond dishonour for insufficiency of funds or exceeding arrangements to include situations such as stoppage of payment and account closure. It noted that an earlier Supreme Court decision in Vinod Tanna had held that dishonour for incomplete drawer's signature did not attract Section 138, but that subsequent Supreme Court authority in Laxmi Dyechem treated Vinod Tanna's ratio as per incuriam and held that dishonour on grounds including absence/mismatch of signature does not preclude prosecution under Section 138. Applying the later binding precedent, the Court rejected the petitioners' submission that incomplete signatures fall outside Section 138 and allowed criminal proceedings to continue. The Court therefore upheld the Magistrate's taking of cognizance and issuance of process, directing the trial court to proceed in accordance with law. [Paras 11, 13, 14, 15, 16]

The petitioners' challenge to the complaint and the order issuing process was dismissed and the trial court was directed to proceed.

Final Conclusion: The petition is dismissed; the High Court upheld the Magistrate's order taking cognizance and issuing process under Section 138, and directed the trial court to proceed in accordance with law.

Material alteration - presumption under Section 118 of the Negotiable Instruments Act - authority to complete a negotiable instrument - effect of Section 20 of the Negotiable Instruments Act - void instrument consequent to material alteration - burden to rebut presumption of validity

Material alteration - presumption under Section 118 of the Negotiable Instruments Act - effect of Section 20 of the Negotiable Instruments Act - burden to rebut presumption of validity - Whether the promissory note was materially altered and whether the plaintiff overcame the statutory presumptions so as to sustain the claim on the instrument - HELD THAT: - The Court found that the signature on the promissory note was admitted to be that of the defendant and that the defendant also admitted having written the character '4' on the instrument. Plaintiff's attesting witness and scribe gave evidence explaining the apparent correction. Applying the legal test for material alteration - whether the alteration changes the rights, liabilities or legal effect of the instrument - the Court held that the defendant did not discharge the burden to show a material alteration. The Court observed that where a signatory admits signature and the signatory's conduct amounts to authorising completion, Section 20 operates to treat the instrument as duly completed; consequently the presumption under Section 118 in favour of the holder stands unless successfully rebutted. The defendant failed to produce relevant, substantial evidence to rebut that presumption or to establish that the instrument had been improperly or materially altered to the defendant's prejudice. On this basis the appellate court's reliance on Section 20 and its conclusion that the defendant was liable were affirmed. [Paras 13, 16, 17, 18, 19]

Material alteration was not proved; the statutory presumption in favour of the instrument was not rebutted and the defendant is liable on the promissory note.

Final Conclusion: The second appeal is dismissed; the judgment and decree in favour of the plaintiff are affirmed and no costs are awarded.

Validity of compromise in negotiable instruments cases - Revisional jurisdiction under Section 401 Cr.P.C. to give effect to genuine compromise - Application of the Damodar S. Prabhu principle - Compounding of offence by consent of complainant and court's power to quash conviction - Conditional relief subject to deposit of agreed percentage of cheque amount

Validity of compromise in negotiable instruments cases - Application of the Damodar S. Prabhu principle - The genuineness and effect of the compromise between the complainant and the accused in a prosecution under Section 138 of the Negotiable Instruments Act. - HELD THAT: - The High Court examined the affidavit of compromise executed by the complainant, who stated that the dispute had been settled, that nothing was due from the accused and that she had no objection to grant of bail and closure of the case. Both parties' counsel represented that the compromise was genuine and bona fide. The Court relied on the principle laid down in Damodar S. Prabhu and earlier High Court precedent holding that where a compromise in a cheque bounce case is genuine, the revisional jurisdiction can be exercised to do justice between parties and permit the compromise to operate as an effective bar to continued prosecution. Applying these authorities, the Court found the present compromise to be valid, genuine and free from coercion or undue influence and therefore capable of being given effect to in exercise of its revisional jurisdiction.

Compromise found to be genuine and valid and capable of being acted upon; conviction may be quashed on that basis.

Revisional jurisdiction under Section 401 Cr.P.C. to give effect to genuine compromise - Compounding of offence by consent of complainant and court's power to quash conviction - Conditional relief subject to deposit of agreed percentage of cheque amount - Whether the conviction and sentence under Section 138 can be set aside and the revision allowed, and on what terms. - HELD THAT: - Applying the settled principle that courts may set aside conviction on a genuine compromise in negotiable instrument cases, the High Court exercised its revisional jurisdiction to quash the conviction and sentence recorded by the trial court and the order of the appellate court which dismissed the appeal for want of prosecution. However, consistent with Damodar S. Prabhu, the Court made the quashing conditional upon the accused depositing 15% of the cheque amount with the High Court Lawyers' Welfare Fund within one month. The Court directed that failure to make the deposit within the stipulated time would render the revision ineffective and the criminal revision would be deemed dismissed. The order disposes of all pending miscellaneous applications accordingly.

Conviction and sentence set aside and revision allowed on terms: deposit of 15% of cheque amount within one month with the High Court Lawyers' Welfare Fund; failure to deposit will render the revision dismissed.

Final Conclusion: The High Court allowed the criminal revision by quashing the conviction and sentence under Section 138 of the Negotiable Instruments Act on the basis of a genuine compromise, subject to the petitioner depositing 15% of the cheque amount with the High Court Lawyers' Welfare Fund within one month, failing which the revision shall be deemed dismissed.

Section 138 of Negotiable Instruments Act - legally enforceable debt - presumption under Section 139 of Negotiable Instruments Act - substituted security - Section 73 of the Transfer of Property Act - inherent powers under Section 482 Cr.P.C. - scope of quashing proceedings - trial on disputed questions of fact

Section 138 of Negotiable Instruments Act - legally enforceable debt - presumption under Section 139 of Negotiable Instruments Act - substituted security - Section 73 of the Transfer of Property Act - Whether the criminal complaints under Section 138 of the Negotiable Instruments Act relating to dishonour of cheques can be quashed on the ground that the secured creditor received compensation for the mortgaged property and thereby discharged the debt. - HELD THAT: - The Court found that the parties do not dispute execution of the loan, the mortgage in favour of the respondent and receipt by the respondent of a part compensation for the acquired property. Section 73(2) of the Transfer of Property Act embodies the doctrine of substituted security permitting the mortgagee to claim payment out of compensation; it does not automatically extinguish personal liability for any shortfall. The enquiry whether the compensation fully discharged the debt, or whether the mortgage or its effects were vitiated by acquisition proceedings, involves disputed questions of fact and title which cannot be resolved by a roving exercise in a petition under Section 482 Cr.P.C. The statutory presumption under Section 139 of the Negotiable Instruments Act operates in favour of the cheque-holder once issuance is admitted and is rebuttable only by evidence at trial. Reliance on authorities where repossession/realisation left no balance was noted, but the Court held those facts are different and that here a shortfall has been alleged by the respondent; hence the defence that the debt stands discharged must be established at trial. [Paras 19, 20, 21, 23, 24]

The petitions seeking quashment of proceedings under Section 138 were dismissed; the question whether the debt stands discharged by compensation is to be decided at trial.

Inherent powers under Section 482 Cr.P.C. - scope of quashing proceedings - trial on disputed questions of fact - Whether the High Court, in exercise of its inherent jurisdiction under Section 482 Cr.P.C., can examine and decide disputed factual questions regarding existence or discharge of debt so as to quash complaints under Section 138 at the threshold. - HELD THAT: - Relying upon Supreme Court precedents, the Court reiterated that the power under Section 482 Cr.P.C. to quash criminal complaints is circumscribed and does not permit delving into disputed questions of fact which require evidence. Where the accused admits issuance of cheques, the presumption under Section 139 of the N.I. Act continues unless rebutted by evidence; defences such as discharge of debt by receipt of compensation or validity of mortgage are matters to be established at trial. Consequently, except in cases where legal bars (like limitation) or pure questions of law are manifest, quashing on the merits of factual disputes is inappropriate. [Paras 20, 21, 22, 23, 24]

The Court declined to exercise inherent jurisdiction to decide factual disputes and refused to quash the Section 138 proceedings on that ground.

Final Conclusion: The three petitions to quash the criminal complaints under Section 138 of the Negotiable Instruments Act are dismissed; factual disputes about discharge of debt and entitlement to compensation fall to be proved and adjudicated at trial, and the petitioners' personal appearance before the trial court is dispensed with subject to limited exceptions.

Statutory requirement of service of demand notice within thirty days - existence of enforceable debt or liability - presumption of liability under Section 139 of the Negotiable Instruments Act - standard of proof to rebut statutory presumption (preponderance of probabilities) - scope of appellate re-appreciation in appeals against acquittal

Statutory requirement of service of demand notice within thirty days - existence of enforceable debt or liability - Whether the complainant complied with the statutory requirement of issuing the demand notice within thirty days of receiving information of dishonour and established existence of any enforceable debt or business relation with the accused. - HELD THAT: - The trial court found that the complainant had admitted in cross-examination that she came to know of the cheque dishonour on 12.01.2015 and yet the demand notice was issued only on 02.03.2015, beyond the thirty day period. The complainant did not state in the legal notice that she was out of station, and in her evidence she failed to produce any documentary proof to establish absence from station between 12.01.2015 and 30.01.2015 or any bank intimation from her banker showing delayed knowledge of dishonour. The trial court therefore treated the delay in serving the notice as a vital and fatal flaw and doubted the existence of any debt or liability in favour of the complainant, further noting the complainant's own statement in cross-examination that she had no business relation with the accused. On re-appreciation, the High Court observed that although another view might have been possible on the evidence, the trial court's view was plausible and not to be disturbed in an appeal against acquittal. Accordingly, the complainant failed to establish compliance with the statutory notice requirement and failed to prove an enforceable debt or business relation. [Paras 12, 13, 14, 15, 18]

Findings of the trial court that the demand notice was not issued within thirty days and that the complainant failed to prove an enforceable debt or business relation with the accused are upheld; acquittal on this ground is maintained.

Presumption of liability under Section 139 of the Negotiable Instruments Act - standard of proof to rebut statutory presumption (preponderance of probabilities) - Whether the presumption under Section 139 of the Negotiable Instruments Act was rebutted by the accused. - HELD THAT: - The High Court noted the settled legal position that the standard required to rebut the presumption arising under Section 139 is the preponderance of probabilities. Having considered the evidence, the court concluded that the accused had successfully rebutted the statutory presumption on the balance of probabilities. This conclusion followed the trial court's appreciation of inconsistencies and the complainant's failure to prove timely notice and the existence of a debt, which provided adequate basis for displacing the presumption of liability. [Paras 16, 17, 18]

The accused is held to have rebutted the presumption under Section 139 on the preponderance of probabilities, supporting the trial court's order of acquittal.

Final Conclusion: The appeal is dismissed; the High Court affirms the trial court's acquittal on the grounds that the complainant failed to comply with the thirty day notice requirement and failed to establish an enforceable debt, and that the accused rebutted the presumption under Section 139 on the preponderance of probabilities.

Prospective operation of Section 143A of the Negotiable Instruments Act - interim compensation under Section 143A of the Negotiable Instruments Act - non-applicability of amended provision to complaints instituted before 1.9.2018 - power under Article 227 of the Constitution and Section 482 Cr.P.C. to quash interim directions

Prospective operation of Section 143A of the Negotiable Instruments Act - interim compensation under Section 143A of the Negotiable Instruments Act - non-applicability of amended provision to complaints instituted before 1.9.2018 - Section 143A is prospective and cannot be applied to proceedings instituted before 1.9.2018; the order directing interim compensation under Section 143A in proceedings initiated on 25.4.2018 is not valid. - HELD THAT: - The Court applied the precedent in Vinod Kumar v. Mukesh Kumar, which relies on the decision in G.J. Raja v. Tejraj Surana, holding that Section 143A (introduced by Amending Act No. 20 of 2018 with effect from 1.9.2018) operates prospectively. Section 143A authorises interim compensation during trial under Section 138, but this provision cannot be invoked in matters where the alleged offence under Section 138 was committed prior to the section's enactment. In the present matter the complaint was instituted on 25.4.2018 in respect of a cheque dated 20.12.2018 and the proceedings thus predated the operative date of Section 143A; accordingly the trial court's direction to deposit interim compensation under Section 143A was unsustainable. Exercising jurisdiction under Article 227 and Section 482 Cr.P.C., the Court quashed the impugned interim compensation direction of the trial court. [Paras 6, 7, 8]

Impugned order dated 22.10.2021 directing deposit of interim compensation under Section 143A is quashed and the petition is allowed.

Final Conclusion: The petition is allowed; the trial court's direction to the accused to deposit interim compensation under Section 143A in proceedings initiated before 1.9.2018 is set aside.

Direction to deposit interim compensation under Section 148 of the Negotiable Instruments Act - treatment of an order to pay cheque amount as award of compensation - bar on alteration of a finally signed judgment under Section 362 Cr.P.C. - power of appellate court to impose interim monetary condition during pendency of appeal

Treatment of an order to pay cheque amount as award of compensation - direction to deposit interim compensation under Section 148 of the Negotiable Instruments Act - The trial Court's direction to pay the cheque amount was to be read as an award of compensation and the Appellate Court was validly entitled to direct deposit of a percentage of that compensation under Section 148 of the NI Act during the pendency of the appeal. - HELD THAT: - The trial Court's operative order sentenced the convict to imprisonment and directed payment of the cheque amount. Although the trial Court did not use the word 'compensation', the direction to pay the cheque amount must be read as an award of compensation in view of the powers conferred by Section 357 Cr.P.C. permitting fine or part thereof to be directed as compensation and Sub section (3) enabling payment to the victim. Section 148 of the NI Act (as amended with effect from 01.09.2018) permits an Appellate Court to order the appellant to deposit a minimum percentage of the fine or compensation awarded by the trial Court as an interim measure. The Appellate Court's omission in its earlier order to direct such deposit arose from a misreading of the trial Court's order; the subsequent direction to deposit 25% of the compensation during the pendency of the appeal was therefore within the Appellate Court's power under Section 148 and not impermissible.

The direction to pay the cheque amount is to be treated as an award of compensation and the Appellate Court's order directing deposit of 25% of that compensation during the appeal is valid.

Bar on alteration of a finally signed judgment under Section 362 Cr.P.C. - power of appellate court to impose interim monetary condition during pendency of appeal - Section 362 Cr.P.C. does not bar the Appellate Court from imposing an interim deposit condition during the pendency of an appeal where the matter has not been finally disposed of. - HELD THAT: - Section 362 Cr.P.C. prohibits alteration of a judgment or final order that finally disposes of a case; it renders a court functus officio once a matter is finally disposed of. That bar applies only to finally signed judgments or final orders. The Appellate Court's order of 24.02.2020 was not a final disposal of the controversy insofar as interim measures under Section 148 were concerned; accordingly, the subsequent imposition of a condition to deposit 25% of the compensation does not amount to an impermissible review or alteration barred by Section 362. The court relied on the principle that the prohibition in Section 362 operates only after final disposal, as explained in the cited precedent.

Section 362 Cr.P.C. did not preclude the Appellate Court from directing the interim deposit during the pendency of the appeal; the later direction to deposit 25% is not barred by Section 362.

Grant of additional time for compliance with interim deposit direction - The petitioner was granted an extension of time to comply with the Appellate Court's direction to deposit 25% of the cheque amount. - HELD THAT: - Having regard to the petitioner's representation of financial difficulty and consistent with the approach in earlier appellate precedents which have permitted short extensions for making interim payments, the High Court found no infirmity in the Appellate Court's direction but exercised judicial discretion to grant further time for compliance. The Court accordingly extended the period for deposit for a limited duration measured from receipt of certified copy of the order.

The petition is dismissed, but the petitioner is granted thirty days from receipt of certified copy of this order to deposit 25% of the cheque amount as directed by the Appellate Court.

Final Conclusion: The petition challenging the Appellate Court's direction to deposit 25% of the compensation is dismissed: the trial Court's order to pay the cheque amount is to be read as compensation, the Appellate Court validly directed interim deposit under Section 148 of the NI Act and Section 362 Cr.P.C. does not bar such a direction during pendency of appeal; however, the petitioner is granted thirty days from receipt of certified copy of the order to make the deposit.

Presumption under Section 118 of the Negotiable Instruments Act - rebuttable presumption of consideration - filling up of blank promissory notes - application of Section 20 of the Negotiable Instruments Act to unfilled promissory notes - proof of execution and entitlement to enforce promissory notes

Presumption under Section 118 of the Negotiable Instruments Act - rebuttable presumption of consideration - filling up of blank promissory notes - proof of execution and entitlement to enforce promissory notes - Whether the suit promissory notes were proved to have been executed by the defendant and whether the presumption under Section 118 in respect of consideration was rebutted. - HELD THAT: - The defendant's written statement did not specifically deny her signature on the suit promissory notes and thus amounted to an implied admission of execution (albeit alleged to have been executed as blank notes). The trial Court and the first appellate Court evaluated the oral and documentary evidence, including the notices and the unregistered deed relied upon by the plaintiff, and found execution of Ex.A1 to Ex.A3 proved. The courts applied the statutory presumption under Section 118 of the Negotiable Instruments Act that consideration has passed where a promissory note is proved to be executed by the maker. The defendant's contentions - that the notes were given as security to a third party, that they were blank when handed over and were subsequently filled up, and that suspicious circumstances (three notes, delay in suit, alleged want of means of the plaintiff) rebut the presumption - were examined against the record. The Court found that those circumstances were not satisfactorily established on the evidence, that relevant suggestions and pleadings were not made or proved, and that the presumption under Section 118 was not successfully rebutted. Consequently the courts' conclusion that the plaintiff had proved execution and consideration was sustained. [Paras 15, 16]

Execution of Ex.A1 to Ex.A3 by the defendant was proved and the presumption under Section 118 was not satisfactorily rebutted; the plaintiff was entitled to enforce the promissory notes.

Application of Section 20 of the Negotiable Instruments Act to unfilled promissory notes - proof of execution and entitlement to enforce promissory notes - Whether the courts below erred in applying the presumption under Section 118 instead of treating the unfilled promissory notes under Section 20 and whether the findings of fact called for interference in second appeal. - HELD THAT: - The contention that the unfilled promissory notes should have been dealt with under Section 20 rather than by applying the presumption under Section 118 was considered but the Courts below addressed the totality of evidence and concluded that the plaintiff had proved execution and consideration. This Court, on review of the record, found no error in the factual appreciation by the trial and first appellate courts. Given that the courts below reached conclusions based on oral and documentary evidence and that the findings are supported by the record, there was no jurisdictional or legal error necessitating interference in the second appeal. The appeal court therefore declined to reopen or re-evaluate the findings of fact in this proceeding. [Paras 17, 18]

Courts below correctly applied the relevant legal principles to the evidence; no interference with their factual findings or decrees is warranted.

Final Conclusion: The second appeal is dismissed. The judgments and decrees of the trial and first appellate courts, confirming the plaintiff's entitlement to recover on the promissory notes, are upheld and do not call for interference.

Closure pursuant to settlement and proviso to Section 9A - functional integrality - distinction between closure and retrenchment - applicability of Section 25-O - requirements of Section 25-F not being condition precedent for closure - unfair labour practice under Item 9 of Schedule IV - competence of a registered trade union to institute proceedings - jurisdiction of Industrial Court to entertain complaints under the Act of 1971

Closure pursuant to settlement and proviso to Section 9A - Closure of the Regional Accounts Office at Nagpur was effected pursuant to settlements between the Federation and Management and therefore attracted the proviso to Section 9A. - HELD THAT: - The court accepted the learned Single Judge's findings that multiple settlements entered into between the Federation and the Management governed restructuring and closure modalities. Those settlements provided for phased re-organisation, closures and options to employees (voluntary retirement or re-deployment). Having found that the closure was carried out pursuant to those settlements, the proviso to Section 9A applied and no separate notice of change under Section 9A was required. The Union failed to demonstrate that the notice dated 05.01.2001 was not pursuant to the settlements relied upon.

The closure was governed by the settlements and the proviso to Section 9A applied, validating the course adopted by the Management.

Functional integrality - applicability of Section 25-O - distinction between closure and retrenchment - The Regional Accounts Office was not functionally integral to manufacturing establishments and therefore Section 25-O did not apply. - HELD THAT: - On the evidence the Regional Accounts Office at Nagpur was found not to form part of the manufacturing process nor to satisfy the test of functional integrality, interdependence or componential relationship with factories. Given that factual conclusion, the Court held that the provisions of Section 25-O(1) were not attracted. The alteration was characterised as closure carried out under the settlements rather than retrenchment of a live industry, and thus the legal consequences attendant to Section 25-O and retrenchment did not arise.

Section 25-O was not attracted as the RAO lacked functional integrality with manufacturing units; the action was a closure under the settlements, not retrenchment.

Requirements of Section 25-F not being condition precedent for closure - Non-compliance with the procedural requirements of Section 25-F did not render the closure invalid where the closure was effected pursuant to settlements and characterised as closure rather than retrenchment. - HELD THAT: - The Court agreed with the Single Judge that the conditions under Section 25-F pertain to retrenchment and are not a condition precedent to a permanent closure effected pursuant to settlement terms. Once the closure was established on the basis of settlements, there was no occasion to treat the action as an alteration of service conditions invoking the mandatory clauses of Section 25-F.

Compliance with Section 25-F was not a condition precedent to the validated closure; its non-observance did not vitiate the closure effected under the settlements.

Unfair labour practice under Item 9 of Schedule IV - The notice dated 05.01.2001 did not constitute an unfair labour practice under Item 9 of Schedule IV because the closure was in accordance with the settlements. - HELD THAT: - The Industrial Court's finding of unfair labour practice was set aside. Having accepted that the closure was effected pursuant to the settlements between the Federation and Management, the Court held that the notice of closure issued by the Management did not amount to unilateral alteration in breach of the settlements that would attract Item 9 of Schedule IV.

The notice of closure did not constitute an unfair labour practice under Item 9 of Schedule IV given that the closure was effected pursuant to binding settlements.

Competence of a registered trade union to institute proceedings - jurisdiction of Industrial Court to entertain complaints under the Act of 1971 - The registered Union and its General Secretary were competent to file the complaint and the Industrial Court had jurisdiction to entertain the complaint under the Act of 1971. - HELD THAT: - The Single Judge's findings that the complaint was filed by a registered union and that the General Secretary was competent to institute proceedings were upheld. The settlements did not provide a modality that rendered the issue non-local; hence the Union could espouse the case of its members at Nagpur without impleading the Federation. Item I of Schedule IV was not invoked, and the substantive claim under Item 9 of Schedule IV properly fell within the Industrial Court's jurisdiction.

The Union and its General Secretary were competent to file the complaint and the Industrial Court rightly exercised jurisdiction to entertain it.

Final Conclusion: The letters patent appeal and cross-objection are dismissed. The Single Judge's judgment setting aside the Industrial Court's order is confirmed: the closure of the Regional Accounts Office at Nagpur was effected pursuant to settlements (bringing the proviso to Section 9A into play), the RAO was not functionally integral to manufacturing (Section 25-O inapplicable), the action did not amount to an unfair labour practice under Item 9 of Schedule IV, and the registered Union was competent to institute the complaint; parties to bear their own costs.