TaxTMI Updates e-Newsletter
Jan 11,2021

Constitutional validity of revenue legislation - jurisdiction under Article 32 - remedy under Article 226 - procedure established by law (Article 21) - challenge to legality of investigation - prudential exercise of discretion to entertain constitutional petitions - relegation to High Court for considered view

Withdrawal of petitions with liberty - Writ Petitions W.P.(Crl) Nos.272/2020, 273/2020 and 276/2020 dismissed as withdrawn with liberty to move the High Court. - HELD THAT: - Mr. Mukul Rohatgi sought permission to withdraw the listed petitions and to be granted liberty to approach the High Court. The Court recorded the withdrawal and granted the prayed liberty, disposing of the petitions accordingly. [Paras 1, 2]

The writ petitions are dismissed as withdrawn with liberty to move the High Court in appropriate proceedings.

Jurisdiction under Article 32 - remedy under Article 226 - constitutional validity of revenue legislation - prudential exercise of discretion to entertain constitutional petitions - challenge to legality of investigation - relegation to High Court for considered view - W.P.(Crl.) No.298/2020 under Article 32 seeking declaration of certain CGST provisions and quashing of investigations was not entertained; petition dismissed and petitioners relegated to seek relief before the High Court under Article 226 or appropriate criminal forum. - HELD THAT: - The Court held that the petition raised an amalgam of challenges to the constitutional validity of provisions of the Central Goods and Services Tax Act, 2017 and objections to the conduct of investigations. Given the availability of efficacious remedies before the High Court under Article 226 (or by invoking Section 482 or analogous provisions of the Code of Criminal Procedure for matters relating to investigation), it would be desirable that the High Court have the opportunity to consider the constitutional challenge and the legality of investigation. The Court observed that Article 32 is a vital safeguard but its invocation requires a calibrated exercise of discretion; short-circuiting established remedies in revenue and criminal procedure would be inappropriate, especially in light of prior orders including a three-Judge Bench decline to entertain similar petitions. Accordingly, the petition under Article 32 was not entertained, and the petitioners were left free to pursue remedies in the appropriate fora. [Paras 6, 8, 9]

The writ petition under Article 32 is dismissed; petitioners are relegated to the High Court or appropriate criminal forum and may pursue available remedies in law.

Final Conclusion: Certain writ petitions were dismissed as withdrawn with liberty to approach the High Court; a separate petition under Article 32 challenging CGST provisions and investigations was not entertained and dismissed, with the petitioners directed to pursue remedies under Article 226 or appropriate criminal jurisdiction, the Court having exercised its discretion in favour of relegation to the High Court.

Freezing of bank accounts - provisional attachment and freezing under Section 83 of the Central Goods and Services Tax Act - notice under Section 74 of the Central Goods and Services Tax Act - search at premises and consequential action - overdraft facility - application for exemption

Notice under Section 74 of the Central Goods and Services Tax Act - freezing of bank accounts - The communications to banks wrongly stated that a notice under Section 74 had been issued; freezing of accounts proceeded as an exercise of powers following a search under the CGST Act. - HELD THAT: - The respondents' counsel conceded that the impugned communications to the banks incorrectly recorded that a notice under Section 74 of the Central Goods and Services Tax Act had been issued. The court recorded that a search had been conducted at the petitioner's premises on 17 January 2020 and that the freezing action was said to be exercised under Section 83 of the CGST Act consequent to that search. The court observed with surprise that, notwithstanding the search having taken place about a year earlier, no notice had been initiated, and noted the respondents' explanation that issuance of notice had been delayed because of the involvement of a large number of persons and difficulties in obtaining information from them. [Paras 4, 5, 6, 7, 8]

The court recorded that it was erroneous to state that a notice under Section 74 had been issued and that the freezing was in fact connected to a prior search under the CGST Act; it also noted the absence of any notice issuance despite the elapse of time.

Overdraft facility - freezing of bank accounts - Whether the petitioner may continue to access its overdraft facility despite freezing of its bank accounts. - HELD THAT: - In view of the hardship pleaded by the petitioner - including the limited balance in the accounts, its status as an MSME and the risk of default on repayments and salaries - the court granted an interim direction to permit the petitioner to use the overdraft facility from its bankers. The respondents were heard on advance notice and the court balanced the exigencies of enforcement with the petitioner's immediate operational needs in directing limited access to funds. [Paras 4, 10]

The petitioner is entitled to use the overdraft facility enjoyed from ICICI Bank, Standard Chartered Bank and Allahabad Bank.

Application for exemption - Whether the petitioner's application for exemption should be allowed. - HELD THAT: - The court considered the interlocutory application marked CM APPL. 479/2021 for exemption and allowed it subject to just exceptions and in accordance with extant rules, disposing of that application accordingly. [Paras 1]

The application for exemption was allowed subject to just exceptions and as per extant rules.

Final Conclusion: Interim relief granted permitting the petitioner to access its overdraft facilities from specified banks despite freezing of accounts; court recorded that communications misstated issuance of a Section 74 notice (freezing was linked to a prior search under the CGST Act) and allowed the interlocutory exemption application subject to exceptions and extant rules; matter listed for further hearing on 11 January 2021.

Mandamus - rectification of Form GSTR-3B - acceptance of manual GSTR-3B return - refund of input tax credit - decision of representation expeditiously and in accordance with law

Mandamus - decision of representation expeditiously and in accordance with law - rectification of Form GSTR-3B - Direct the competent authorities to decide the petitioner's representations filed on 15.11.2019 and 5.11.2019 concerning GSTR-3B for the period August, 2018 to August, 2019 - HELD THAT: - The Court, while noting the petitioner's reliance on the Delhi High Court decision permitting rectification of Form GSTR-3B for the relevant period, did not express any opinion on the merits of the claim. The writ petition was disposed of by issuing a mandate to respondent nos.4 and 5 (Joint Commissioner (I.T. Cell), Commercial Tax, Lucknow and Deputy Commissioner, Commercial Tax, State GST Department, Division-4, Jhansi) to decide the pending representations strictly in accordance with law and expeditiously. The Court recorded that if the representations remain pending the competent authority shall proceed to take a final call, without prescribing any specific outcome on rectification, acceptance of manual returns, or refund claims.

Respondent nos.4 and 5 directed to decide the representations of the petitioner strictly in accordance with law and expeditiously; the writ petition disposed of without expressing opinion on merits.

Final Conclusion: Writ petition disposed of by directing the designated Commercial Tax authorities to decide the petitioner's pending representations concerning GSTR-3B for August, 2018 to August, 2019 strictly in accordance with law and expeditiously; no expression of opinion on the substantive merits.

Reimbursement of differential tax on account of transition from VAT to GST - works contract - change of tax regime - implementation of revised guidelines dated 10.12.2018 - determination of GST-inclusive work value for balance work - supplementary agreement for revised work value - administrative consideration of representation - interim protection from coercive action

Reimbursement of differential tax on account of transition from VAT to GST - implementation of revised guidelines dated 10.12.2018 - determination of GST-inclusive work value for balance work - supplementary agreement for revised work value - Authority to consider petitioner's claim for reimbursement arising from change in tax regime in light of the revised guidelines dated 10.12.2018. - HELD THAT: - Petitioner challenged non-reimbursement of additional tax liability arising from the shift from VAT to GST for works contracts executed partly or wholly after 01.07.2017. The State filed the revised guidelines dated 10.12.2018 which set out the procedure to ascertain item-wise balance work, compute revised estimated work value as per Revised SoR-2014, apply tender premium/discount, add applicable GST and execute a supplementary agreement; reimbursement is directed where the revised GST-inclusive value exceeds the original agreement value. The Court directed the petitioner to make a comprehensive representation to the appropriate authority within two weeks and ordered the authority to consider and dispose of the representation expeditiously and in the light of the revised guidelines, thereby leaving the substantive claim to administrative determination under the specified procedure. [Paras 5, 6, 7, 8]

Petitioner to file representation within two weeks; authority to consider and dispose of the grievance in accordance with the revised guidelines dated 10.12.2018.

Administrative consideration of representation - interim protection from coercive action - Interim protection against coercive action and right to challenge the authority's decision. - HELD THAT: - The Court provided interim protection by restraining coercive action against the petitioner until 15.03.2021 to enable the petitioner to approach the authority and obtain its decision under the revised guidelines. The Court also expressly preserved the petitioner's right to challenge the authority's decision if aggrieved by it. [Paras 9, 10, 11]

No coercive action against the petitioner till 15.03.2021; petitioner free to challenge the decision of the authority if aggrieved.

Final Conclusion: Writ petition disposed by directing the petitioner to make a representation to the appropriate authority within two weeks; the authority to decide expeditiously in accordance with the Finance Department's revised guidelines dated 10.12.2018; interim protection granted against coercive action until 15.03.2021, with liberty to challenge the authority's decision thereafter.

Regular bail under Section 439 of the Code of Criminal Procedure, 1973 - prima facie satisfaction for grant of bail - consideration of nature and gravity of offence - investigation concluded - conditions of bail - cooperation with investigation and non-mischief with evidence - trial court's unfettered discretion at trial - release subject to non-liability in other offences

Regular bail under Section 439 of the Code of Criminal Procedure, 1973 - prima facie satisfaction for grant of bail - consideration of nature and gravity of offence - investigation concluded - Enlargement of the applicant on regular bail in connection with FIR Case No.CBIC-DIN-20200665VB00002SBJ10. - HELD THAT: - The Court, after hearing parties and perusing the record, noted that the FIR was registered on 07.08.2020 for an offence alleged to have occurred on 25.02.2020 and that the applicant had been in custody since 09.06.2020. It was recorded that investigation is concluded and prosecution has been launched. No special circumstances were placed on record by the prosecution to oppose bail. Without entering into a detailed appreciation of evidence, the Court was prima facie satisfied that the matter warranted exercise of judicial discretion to grant regular bail, having regard to the nature of allegations and the stage of investigation.

Application under Section 439 CrPC allowed and the applicant ordered to be released on regular bail subject to specified conditions.

Conditions of bail - cooperation with investigation and non-mischief with evidence - surrender of passport - restriction on changing residence and travel without permission - periodic presence before police - prohibition on entering specified local area until evidence recorded - release subject to non-liability in other offences - Specification of terms and conditions upon which bail is to be granted. - HELD THAT: - The Court imposed conditions as a precondition to release: execution of personal bond with one surety to the satisfaction of the trial court; prohibition on misuse of liberty; obligation not to obstruct investigation or tamper with evidence; surrender of passport within one week; prohibition on leaving the State without trial court's permission; monthly attendance at the police station for six months; furnishing and not changing residence without permission; and restraint from entering Taluka Anand until the prosecutrix's evidence is recorded. The release was also made conditional on the applicant not being required in connection with any other offence at the time of proposed release. The trial court was permitted to modify or relax these conditions in accordance with law.

Bail granted subject to the enumerated conditions; breach entitles the Sessions Judge to take appropriate action including issuance of warrant.

Trial court's unfettered discretion at trial - Effect of the High Court's preliminary observations on the trial court. - HELD THAT: - The Court expressly directed that its preliminary observations made while granting bail are of a preliminary nature and shall not influence the trial court at the trial stage. The trial court must decide the matter on evidence and law without being guided by the High Court's prima facie view recorded for the limited purpose of bail.

Trial court to proceed uninfluenced by the High Court's interim observations made in the bail order.

Final Conclusion: Bail application allowed: applicant released on regular bail in FIR Case No.CBIC-DIN-20200665VB00002SBJ10 on execution of bonds and compliance with specified conditions, subject to release only if not required for other offences and without prejudice to the trial court's independent adjudication.

Enlargement of time to pay admitted tax liability - recovery procedure under Section 76 of the Central Goods and Services Tax Act, 2017 - coercive action - admission of liability - writ of mandamus

Enlargement of time to pay admitted tax liability - admission of liability - coercive action - Prayer for directions restraining coercive action and for recalculation of the amount, and for grant of time to pay the admitted liability - HELD THAT: - The petitioner admitted liability for GST collected in respect of taxable supplies for the period June 2019 to January 2020 and sought only an enlargement of time to pay that admitted amount and a direction against coercive steps. The Court recorded that the departmental proceedings pursuant to the notice are not concluded and that, for recovery, a notice under Section 76 of the Central Goods and Services Tax Act, 2017 would have to be issued. Rather than grant the writ relief sought, the Court declined to order restraint or to direct recalculation or payment terms on its own motion and instead left the matter to the statutory process. The petitioner was granted liberty to make an appropriate request to the authorities for phased payment or extension; the authorities are directed to consider such a request in the light of the petitioner's admission of liability and strictly in accordance with law.

Writ relief not granted; petition disposed of with liberty to the petitioner to seek extension or phased payment from the authorities, who shall consider the request in accordance with law.

Final Conclusion: The petition is disposed of without any injunction or direction against coercive action; the petitioner may approach the revenue authorities for extension/ phased payment and the authorities shall consider the request in light of the admitted liability and the statutory recovery procedure.

Allocation of common administrative expenses - apportionment based on gross revenue and closing WIP - deduction under section 80IB(10) - transferable development rights as business activity - direct expenses versus head office/common expenses - reasonableness of allocation

Allocation of common administrative expenses - transferable development rights as business activity - deduction under section 80IB(10) - direct expenses versus head office/common expenses - apportionment based on gross revenue and closing WIP - Whether common administrative, marketing and other general expenses must be apportioned to the Classique project (eligible for deduction under section 80IB(10)) and whether sale of TDR forms part of the assessee's business for purposes of such apportionment, and if so, the basis of apportionment. - HELD THAT: - The Tribunal found that the assessee is engaged in real estate business which includes both construction/sale of flats and sale of transferable development rights (TDR). Consequently, expenses incurred in relation to sale of TDR fall within the assessee's business activities and are not a mere sundry activity excluded from apportionment. Applying the principle in Zandu Pharma that only expenses which relate to the concerned profit centre/undertaking can be deducted for that undertaking, the Tribunal held that while direct expenses of a project remain with that project, common/head office/administrative expenses that cannot be specifically linked to a single project must be allocated reasonably among all activities of the business. Given the absence of specific allocation in the assessee's books, the Tribunal accepted a reasonable apportionment on the basis of gross receipts (including closing work in progress) of the activities, as a proper yardstick to allocate common expenses among the two projects and the TDR activity. The Tribunal therefore directed the Assessing Officer to allocate the total common expenses to the Classique project in the ratio of total common expenses to total gross revenue including closing WIP, multiplied by the revenue from Classique project (i.e., total common expenses/total gross revenue including closing WIP x revenue from Classique), and recorded the computed allocation figure accordingly. The Tribunal rejected the contention that no or only token expenses should be allocated to Classique merely because sales were booked earlier, observing that attribution must reflect relevance to the profit centres and be exercised reasonably. [Paras 11, 12, 13]

TDR sales form part of the real estate business; common administrative and other general expenses are allocable to all business activities and projects; AO directed to apportion common expenses to Classique in the ratio of total common expenses to total gross revenue including closing WIP multiplied by Classique revenue, and to recompute deduction under section 80IB(10) accordingly.

Final Conclusion: Appeal partly allowed; assessment restored in part with direction to the Assessing Officer to allocate common expenses to the Classique project on the basis of gross revenue including closing WIP (as directed) and to recompute the deduction under section 80IB(10) accordingly.

Set off of unabsorbed depreciation - carry forward and adjustment of unabsorbed depreciation - interpretation of amended section 32(2) - availability of unabsorbed depreciation brought forward as on 01.04.1997

Set off of unabsorbed depreciation - carry forward and adjustment of unabsorbed depreciation - interpretation of amended section 32(2) - Unabsorbed depreciation relating to Assessment Year 1997-98 to 2000-2001 is eligible for set off against income of the appellant for Assessment Year 2005-06. - HELD THAT: - The Court, having heard limited submissions confined to the third question of law, followed the decisions of this Court and the Supreme Court referred to by the parties. Those authorities construed the amended provision of section 32(2) to permit carry forward and adjustment of unabsorbed depreciation brought forward as on 01.04.1997 and held that such unabsorbed depreciation may be set off against taxable business profit or income under any other head within the relevant period recognised by law. Applying those precedents to the facts before it, the Bench accepted the appellant's contention that the unabsorbed depreciation pertaining to Assessment Year 1997-98 to 2000-2001 could be set off in the assessment for Assessment Year 2005-06. The court therefore found the view of the Income Tax Appellate Tribunal unsustainable and set aside its order insofar as it disallowed the set off of the brought forward unabsorbed depreciation. [Paras 6, 8]

Third question of law decided in favour of the appellant; the Tribunal's order is set aside and the appeal is allowed.

Final Conclusion: The Tax Case Appeal is allowed on the ground that unabsorbed depreciation relating to Assessment Year 1997-98 to 2000-2001 is eligible for set off against income for Assessment Year 2005-06; the order of the Income Tax Appellate Tribunal is set aside. No costs.

Deduction under section 10B - profits and gains of the business of the undertaking - treatment of interest and miscellaneous income for deduction - nexus to search and seizure - remand for verification of source and purpose

Nexus to search and seizure - deduction under section 10B - Validity of reduction in claim of deduction under section 10B on the ground that it had no nexus to the search and seizure operation - HELD THAT: - The Tribunal observed that ground No.1 was not pressed by the assessee but proceeded to consider its merits. The assessment under section 143(3) was pending and was abetted by the subsequent search under section 132; therefore the Assessing Officer was justified in examining and disallowing claims in the course of the assessment completed under section 153A/143(3). The Court found no merit in the contention that the reduction in the claim under section 10B had no nexus to the search and seizure and rejected the challenge to the assessment on that basis. [Paras 8]

Ground No.1 dismissed; the reduction in section 10B claim was not invalidated for lack of nexus to the search and seizure.

Deduction under section 10B - profits and gains of the business of the undertaking - treatment of interest and miscellaneous income for deduction - remand for verification of source and purpose - Allowability of deduction under section 10B in respect of interest income and miscellaneous income for assessment year 2010-11 - HELD THAT: - The Tribunal examined precedents recognising that incomes such as interest, written-back provisions or sale of assets may, in appropriate circumstances, form part of profits of the undertaking for the purposes of section 10B(4). However, on the facts of the year under consideration the record did not disclose the source or purpose of the miscellaneous income (other than scrap, which was separately identified and already allowed) or whether the interest arose from business-linked deposits or was merely investment income. In view of these factual gaps and distinguishing features from earlier tribunal findings, the Tribunal held that the question could not be conclusively decided on the material before it and therefore restored the issue to the file of the Assessing Officer for fresh decision after verifying the source of the miscellaneous income and the interest and after affording the assessee an opportunity of being heard. The ground was allowed for statistical purposes to enable further fact-finding. [Paras 9]

Issue remanded to the Assessing Officer for verification and fresh decision on whether the interest and miscellaneous income qualify as profits of the undertaking for section 10B deduction (ground No.2 allowed for statistical purposes).

Deduction under section 10B - treatment of interest income for deduction - remand for verification of source and purpose - Allowability of deduction under section 10B in respect of interest income for assessment year 2011-12 - HELD THAT: - For the year 2011-12 the Tribunal noted that the record did not disclose whether fixed deposits or other instruments yielding interest were made for the purpose of the business of the undertaking or merely to earn interest. In the absence of such factual material before the Tribunal, it was not possible to determine eligibility for deduction under section 10B. Accordingly, the Tribunal restored the matter to the Assessing Officer to decide afresh after verifying facts and giving the assessee adequate opportunity to be heard. [Paras 11, 13]

Issue remanded to the Assessing Officer for fresh decision on the allowability of section 10B deduction in respect of the interest income for 2011-12.

Final Conclusion: Both appeals partly allowed for statistical purposes: challenge to disallowance for lack of nexus to the search seized was dismissed, while the question whether interest and specified miscellaneous income qualify as profits of the undertaking for deduction under section 10B was restored to the Assessing Officer for verification and fresh adjudication for the respective assessment years.

Disallowance under section 40A(2)(b) - Excessiveness of expenditure having regard to fair market value - Use of municipal annual rental value as basis for fair market value - Admissibility of additional evidence under Rule 46A - Remand for fresh consideration - Disallowance under section 14A - Application of Rule 8D - Requirement of AO's satisfaction before invoking Rule 8D - Restriction of disallowance to assessee's own computation

Disallowance under section 40A(2)(b) - Excessiveness of expenditure having regard to fair market value - Use of municipal annual rental value as basis for fair market value - Admissibility of additional evidence under Rule 46A - Remand for fresh consideration - Disallowance of rental payments under section 40A(2)(b) set aside and remitted to AO for fresh consideration of fair market rent. - HELD THAT: - The Tribunal held that section 40A(2)(b) requires examination of whether the expenditure is excessive with reference to the fair market value of the goods/services/facilities. The AO and CIT(A) treated the BBMP annual rental valuation as determinative of reasonable rent, but the Tribunal found that municipal annual rental value adopted for property-tax purposes is not a proper proxy for fair market rent under section 40A(2)(b). Neither the AO nor the CIT(A) examined the fair market value of rent of the premises; accordingly the matter cannot be finally adjudicated on the basis of the BBMP valuation or by refusing to admit the assessee's market-certificate without permitting fresh consideration. The Tribunal therefore set aside the disallowance and remanded the issue to the AO with direction that the assessee be given opportunity to furnish evidence to establish fair market rent and the AO to decide the claim in accordance with law after hearing the assessee. [Paras 5]

Issue remitted to the AO for fresh adjudication of fair market rent after affording the assessee an opportunity to produce evidence; impugned disallowance set aside for fresh consideration.

Disallowance under section 14A - Application of Rule 8D - Requirement of AO's satisfaction before invoking Rule 8D - Restriction of disallowance to assessee's own computation - Addition made under section 14A by applying Rule 8D deleted and disallowance limited to the sum claimed by the assessee. - HELD THAT: - The Tribunal found that the AO resorted to Rule 8D to compute disallowance under section 14A without recording the mandatory satisfaction required under section 14A(2) that the assessee's suo-moto disallowance was inadequate. Reliance was placed on the principle that Rule 8D cannot be applied in the absence of such a recorded satisfaction. Accordingly, the Tribunal restricted the disallowance to the amount already disallowed by the assessee and directed deletion of the additional addition made by the Revenue authorities. [Paras 8]

Addition under section 14A computed by invoking Rule 8D deleted; disallowance confined to the assessee's self- disallowance of Rs. 72,000/-.

Final Conclusion: The appeal is partly allowed: the rental disallowance under section 40A(2)(b) is set aside and remanded to the AO for fresh determination of fair market rent after giving the assessee opportunity to adduce evidence; the addition under section 14A based on Rule 8D is deleted and the disallowance is limited to the amount claimed by the assessee.

Natural justice - ex parte decision - opportunity to be heard - non-compliance due to pandemic lockdown - remand for fresh adjudication - setting aside and restoration for fresh consideration - registration under section 12AA(1)(b)(ii) of the Income Tax Act

Natural justice - ex parte decision - opportunity to be heard - Whether the order finalizing registration under section 12AA(1)(b)(ii) was rightly passed ex parte without affording the assessee an opportunity of being heard. - HELD THAT: - Tribunal found that the Ld. CIT(Exemption) had finalized the registration application ex parte after issuing portal notices to the assessee which remained unresponded. The assessee contended non-receipt or corruption of the first communication and inability to comply with subsequent portal requests because the office was closed during the pandemic. The Tribunal accepted that the order was passed without giving the assessee a proper opportunity to file the required documents and to represent on merits. Applying the principle of natural justice, the Tribunal held that where an application for registration is disposed of without hearing the applicant and without considering explanations of non-compliance, such disposal requires reopening to enable a fair hearing. [Paras 6]

Order of the Ld. CIT(Exemption) finalizing registration ex parte was set aside and the matter restored for fresh adjudication after affording the assessee an opportunity of being heard.

Non-compliance due to pandemic lockdown - remand for fresh adjudication - setting aside and restoration for fresh consideration - Whether non-compliance in uploading documents during the pandemic justified remand and grant of a final opportunity to the assessee. - HELD THAT: - The Tribunal observed that the relevant notices were issued during a period when Pune was subject to pandemic-related lockdowns, offices were closed and the assessee's representatives were unable to access records or upload documents. The assessee had sent emails reporting corrupted notices and technical difficulties and had attempted to seek redress through grievances. The Revenue did not oppose granting relief. In these circumstances the Tribunal concluded that the non-compliance was not shown to be deliberate and, in the interest of justice, directed a final opportunity for the assessee to supply the required particulars and evidence, remitting the case to the Ld. CIT(Exemption) for fresh adjudication in accordance with natural justice. [Paras 6]

Matter remitted to the file of the Ld. CIT(Exemption) for fresh adjudication after the assessee is given a final opportunity to furnish the requisite details and evidence.

Final Conclusion: Appeal allowed for statistical purposes; the order denying registration was set aside and the matter remitted to the Ld. CIT(Exemption) for fresh adjudication after affording the assessee a final opportunity to file the required documents and to be heard in accordance with principles of natural justice.

Penalty under Section 271(1)(c) for furnishing inaccurate particulars of income - Deduction under Section 80P-eligibility of Regional Rural Bank - Bona fide claim and pendency of appeal before the High Court as a bar to imposition of penalty - Precedent of a coordinate bench on identical facts

Penalty under Section 271(1)(c) for furnishing inaccurate particulars of income - Deduction under Section 80P-eligibility of Regional Rural Bank - Bona fide claim and pendency of appeal before the High Court as a bar to imposition of penalty - Precedent of a coordinate bench on identical facts - Deletion of penalty under section 271(1)(c) upheld where assessee made a bona fide claim of deduction under section 80P and identical question of law was pending before the High Court / decided by a coordinate bench on identical facts. - HELD THAT: - The Tribunal affirmed the Appellate Commissioner's deletion of the penalty imposed under section 271(1)(c). The reasoning rested on the fact that the assessee, a Regional Rural Bank, claimed deduction under section 80P raising the question of eligibility which was the subject matter of pending appeals before the jurisdictional High Court (substantial question of law framed for earlier years). A coordinate bench decision in the assessee's own case for AY 2011 12 was followed, which treated a bona fide claim supported by pendency before the High Court (and non finality of related Tribunal orders) as a circumstance that precludes sustaining a penalty under section 271(1)(c). In view of identical facts and absence of any contrary binding precedent brought on record by Revenue, the Tribunal held that the bona fides of the deduction claim could not be disputed and the penalty could not be sustained. [Paras 7, 8]

Penalty under section 271(1)(c) deleted; appellate order confirmed.

Final Conclusion: Revenue's appeal is dismissed and the penalty imposed under section 271(1)(c) for AY 2009-10 is confirmed deleted, the Tribunal following the coordinate bench precedent and holding that a bona fide claim of deduction under section 80P pending before the High Court precludes imposition of the penalty.

Business commencement - business as defined in section 2(13) - single transaction constituting business - adventure in the nature of trade - deletion of addition/disallowance of business loss

Business commencement - single transaction constituting business - adventure in the nature of trade - business as defined in section 2(13) - deletion of addition/disallowance of business loss - Assessee's business had commenced in the assessment year 2016-17 and the addition/disallowance of the claimed business loss was not sustainable. - HELD THAT: - The Tribunal found that the assessee effected a purchase and a corresponding sale of goods (Harpic) in the relevant year, supported by invoices and turnover particulars. Applying the established principle that a single transaction may constitute "business" under the statutory definition, and treating such a venture as an "adventure in the nature of trade" where appropriate, the Tribunal followed the precedent of the ITAT (Amrit Foods) which holds that neither repetition nor continuity is necessary to characterise a transaction as business where purchase is made with intention of resale and conduct indicates trade. On the facts-existence of purchase and sale in the year and documentary evidence-the Tribunal concluded that business had commenced during AY 2016-17 and therefore the Assessing Officer's disallowance (addition) founded on the premise that business had not commenced was deleted. The Tribunal further observed that once the addition was deleted other grounds argued by the assessee became academic and did not require adjudication.

Addition disallowing claimed business loss deleted; assessee's business held to have commenced in AY 2016-17 and appeal allowed.

Final Conclusion: The Tribunal allowed the appeal, holding that the assessee had commenced business in Assessment Year 2016-17 by reason of the purchase and sale transaction and deleting the addition/disallowance; other grounds were held to be academic.

Mistake apparent from record under Section 254(2) of the Income-tax Act, 1961 - remand for fresh adjudication / restoration of grounds - scope of appellate correction limited to clerical or apparent errors - treatment of write-back of depreciation vis-a -vis WDV for income-tax computation - tribunal's duty to do justice and adjudicate enhancements made by Commissioner (Appeals)

Treatment of write-back of depreciation vis-a -vis WDV for income-tax computation - mistake apparent from record under Section 254(2) of the Income-tax Act, 1961 - tribunal's duty to do justice and adjudicate enhancements made by Commissioner (Appeals) - Whether grounds challenging enhancement by CIT(A) of addition on account of write-back of depreciation (from Rs. 43.95 lacs to Rs. 292.92 lacs) were finally adjudicated by the Tribunal and whether those grounds should be restored for fresh consideration. - HELD THAT: - The Tribunal's appellate order recorded that excess depreciation of Rs. 292.92 lacs was written back as prior period income but the assessee had not increased the WDV of assets for income-tax depreciation; on that basis the Tribunal deleted the AO's disallowance of Rs. 43.95 lacs (the 15% figure). However the Tribunal did not examine the enhancement made by the Commissioner (Appeals) (who had increased the addition to Rs. 292.92 lacs) and dismissed certain grounds as not pressed, thereby restricting relief to Rs. 43.95 lacs. The Bench found that the Tribunal confined its decision to the limited deletion and did not adjudicate the enhancement issue requiring fuller consideration; in the interests of justice and in exercise of the limited powers under Section 254(2) to correct or direct further adjudication where a matter was not finally dealt with, Grounds No. 5 and 6 (relating to the enhancement) are to be restored to the file of the Tribunal for fresh adjudication. [Paras 6, 7]

Grounds No.5 and 6 relating to the enhancement on account of write-back of depreciation are restored to the file of the Tribunal for fresh adjudication; MA is partly allowed to this extent for statistical purposes.

Remand for fresh adjudication / restoration of grounds - scope of appellate correction limited to clerical or apparent errors - tribunal's duty to do justice and adjudicate enhancements made by Commissioner (Appeals) - Whether Ground No.7 (relating to additions under Section 145A and the AO's original addition of Rs. 16.4 lacs which was later enhanced by the CIT(A)) was appropriately left unadjudicated by the Tribunal and whether it should be restored for fresh hearing. - HELD THAT: - The Tribunal refrained from adjudicating the AO's original addition on the ground that an amendment to Ground No.7 was made after hearing, purportedly by the assessee's representative. The assessee filed three affidavits (including by an authorised company manager and by its practising chartered accountants) asserting that the amendment was made under instruction from the Bench and that the manager was authorised to make corrections. Without resolving the factual dispute as to who initiated the amendment, the Bench emphasised the Tribunal's duty to ensure correct computation of tax and, in the interests of justice, concluded that Ground No.7 should be restored to the Tribunal for fresh adjudication. The MA is therefore allowed insofar as it seeks restoration of Ground No.7. [Paras 7, 8]

Ground No.7 is restored to the file of the Tribunal for fresh adjudication; MA is allowed to this extent and registry to issue fresh notice for hearing.

Final Conclusion: The miscellaneous application is partly allowed for statistical purposes: Grounds Nos.5 and 6 (pertaining to the enhancement on account of write-back of depreciation) and Ground No.7 (pertaining to additions under Section 145A and the AO's original addition) are restored to the file of the Tribunal for fresh adjudication in ITA No.117/Alld/2011 (AY: 2007-08), and fresh notice is directed to be issued.

Statutory limitation under Section 254(2) - power to condone delay in filing miscellaneous petition under Section 254(2) - tribunal as creature of statute - power to condone delay in appeals under Section 253(5) - mistake apparent from the record - verification of tax payment by payee under proviso to Section 40(i)(ia)

Statutory limitation under Section 254(2) - power to condone delay in filing miscellaneous petition under Section 254(2) - tribunal as creature of statute - power to condone delay in appeals under Section 253(5) - Miscellaneous application filed beyond the six month period prescribed by Section 254(2) is barred by limitation and the Tribunal has no power to condone such delay. - HELD THAT: - The appellate order impugned was passed on 08.06.2016 and received on 22.06.2016; the MA for rectification under Section 254(2) was required to be filed within six months but was filed on 09.06.2017. The Tribunal, being a creature of statute, is governed by the Income tax Act; while Section 253(5) empowers the Tribunal to condone delay in presenting appeals or cross objections, Parliament did not confer any corresponding power to condone delay in miscellaneous petitions under Section 254(2). Consequently, the statutory limitation in Section 254(2) prevails and the Tribunal cannot extend the time for filing the MA. The view is supported by authority cited and the statutory scheme. Therefore the MA is barred by limitation and must be dismissed on that ground. [Paras 3]

MA is barred by limitation and cannot be condoned; it is to be dismissed on that short ground.

Mistake apparent from the record - verification of tax payment by payee under proviso to Section 40(i)(ia) - On the merits the appellate order contains no mistake apparent from the record; the Tribunal correctly held that freight booked separately was liable to TDS under Section 194C and properly directed verification under the proviso to Section 40(i)(ia). - HELD THAT: - The Tribunal examined the claim that freight/transportation charges formed part of purchase cost and found that, since supplies were on FOR basis, transportation to the assessee was the assessee's liability and was correctly booked under 'transportation charges' in the books. Consequently, the Tribunal rightly held that TDS under Section 194C was attracted and, in view of the amended proviso to Section 40(i)(ia), remitted the matter to the AO to verify whether the payee had paid income tax and to grant relief if proof of tax payment was furnished. No mistake apparent from the record was found in the Tribunal's reasoned order dated 08.06.2016. [Paras 3, 4]

There is no apparent mistake in the Tribunal's order; on merits the MA fails and is dismissed.

Final Conclusion: The miscellaneous application filed on 09.06.2017 challenging the Tribunal's order dated 08.06.2016 (ay: 2008-09) is barred by limitation and, additionally, lacks merit; the MA is dismissed.

Mistake apparent on record - limited jurisdiction under section 254(2) of the Income-tax Act - onus of proof regarding existence of construction - corroborative evidence for characterization of property - rejection of claim for indexed cost of improvement

Mistake apparent on record - limited jurisdiction under section 254(2) of the Income-tax Act - Miscellaneous application under section 254(2) seeking rectification of an alleged mistake apparent on record in the Coordinate Bench order. - HELD THAT: - The assessee contended that the Coordinate Bench erred in holding that the sale deed did not show construction, pointing to an express recital at page 2 of the sale deed and an attached site plan indicating covered area. The Tribunal examined the Coordinate Bench's reasoning and record and found that the Coordinate Bench had considered the sale deed, the site plan and also the agreement with the contractor and his affidavit. On that consideration the Coordinate Bench recorded an inconsistently described property in the sale deed and relied on absence of independent corroboration to reject the claim. Given that the Coordinate Bench's conclusion rested on appraisal of documentary and evidentiary material and the absence of corroborative evidence, the present Bench held that there was no demonstrable mistake apparent on the face of the record amenable to correction under the limited jurisdiction of section 254(2). The Coordinate Bench's decision was therefore not interfered with. [Paras 5]

Miscellaneous application under section 254(2) dismissed for lack of any mistake apparent on record and for lack of jurisdiction to disturb the Coordinate Bench's findings.

Onus of proof regarding existence of construction - corroborative evidence for characterization of property - rejection of claim for indexed cost of improvement - Whether the claim that the plot was sold with constructed area of 900 sq. ft. was substantiated so as to permit allowance of indexed cost of improvement. - HELD THAT: - The Coordinate Bench found inconsistencies in the sale deed (description as plot) despite an averment of construction, observed that the site plan did not clearly corroborate constructed area, and noted absence of independent corroboration such as buyer's affidavit or photographs. The Tribunal treated the agreement with the contractor and his affidavit as evidence of intention or arrangements to construct rather than as proof of actual construction and also observed the proximity between the alleged completion of construction and the sale as a factor diminishing credibility. On that factual appraisal the Coordinate Bench concluded that the assessee failed to discharge the onus of proving existence of construction at the time of sale and to substantiate the claimed cost of construction with verifiable evidence; the present Bench upheld this conclusion as a recorded factual finding not susceptible to correction under section 254(2). [Paras 4, 5]

Assessee's claim of sale of plot with constructed area and the allowance of indexed cost of improvement was held not proven; the disallowance was sustained.

Final Conclusion: The miscellaneous application seeking rectification of an alleged mistake in the Coordinate Bench order is dismissed; the Coordinate Bench's factual conclusion that the assessee failed to substantiate sale of the property as a constructed plot and accordingly rejecting the claimed indexed cost of improvement is upheld within the limited revisional jurisdiction under section 254(2).

Exemption under Section 54F - registration of sale deed not mandatory for claiming exemption - multiple flats in same apartment building treated as one residential house (pre-amendment) - effect of Finance Act 2014 amendment to Section 54F (operative from AY 2015-16)

Registration of sale deed not mandatory for claiming exemption - possession and contractual agreement as proof for purchase - Whether exemption under Section 54F can be denied because the sale agreement for the residential flats was not registered. - HELD THAT: - The Tribunal examined the paper book containing the agreement for sale and the builder's confirmation of delivery/possession. The Assessing Officer did not dispute the existence of the agreement but relied on the absence of registration to deny exemption. The Tribunal held that there is no mandatory requirement of registration at the time of entering into an agreement and, where possession is proved and confirmed by the builder, exemption under Section 54F cannot be denied solely for want of registration. The Tribunal therefore reversed the Assessing Officer's denial on this ground. [Paras 3]

Exemption under Section 54F cannot be denied only because the sale agreement was unregistered where possession and the purchase are otherwise established.

Exemption under Section 54F - multiple flats in same apartment building treated as one residential house (pre-amendment) - effect of Finance Act 2014 amendment to Section 54F (operative from AY 2015-16) - Whether the purchase of twelve independent flats in the same building qualifies as purchase of 'one residential house' for exemption under Section 54F for the assessment year in question. - HELD THAT: - The Tribunal considered the statutory text of Section 54F and authoritative High Court decisions holding that, prior to the Finance Act 2014 amendment (operative from AY 2015-16), the expression 'a residential house' could include multiple flats or residential units in the same apartment building. Relying on those precedents and noting that the amendment withdrawing exemption for more than one unit is effective only from AY 2015-16, the Tribunal concluded that, for the assessment year under consideration, multiple flats in the same building could be treated as one residential house and the assessee was therefore entitled to the benefit of Section 54F. [Paras 4, 5, 6]

Purchase of multiple flats in the same apartment building qualifies as acquisition of 'one residential house' for Section 54F purposes for the assessment year before the 2015-16 amendment; exemption to be allowed.

Final Conclusion: The Tribunal allowed the appeal, holding that (i) absence of registration of the sale agreement did not bar exemption under Section 54F where possession and purchase were established, and (ii) acquisition of multiple flats in the same building qualified as one residential house for Section 54F for the assessment year 2009-10 (the Finance Act 2014 amendment being effective only from AY 2015-16); the Assessing Officer was directed to grant the exemption.

Disallowance under section 40A(2)(b) - unreasonable or excessive remuneration - requirement of comparable evidence to justify disallowance - absence of tax-evasion motive as bar to disallowance - binding effect of CBDT Circular No.6-P (1968) where no evasion is shown

Disallowance under section 40A(2)(b) - requirement of comparable evidence to justify disallowance - absence of tax-evasion motive as bar to disallowance - Validity of the disallowance of Rs. 12,60,000 made under section 40A(2)(b) in respect of directors' remuneration. - HELD THAT: - The Tribunal examined whether the Assessing Officer had established that the remuneration paid to directors was excessive or a colourable device to siphon profits. Although there was a large percentage increase in directors' remuneration, the Assessing Officer did not bring any comparable evidence on record to show that the payments were excessive relative to remuneration for similar work and qualifications. The CIT(A)'s reduction of the disallowance was ad hoc and did not address the absence of comparables or any motive to evade tax. The Tribunal noted that both the company and the directors were in the highest tax bracket, undercutting a finding of tax-avoidance motive. Reliance was placed on the principle in CBDT Circular No.6-P dated 6 July 1968 that no disallowance under section 40A(2) should be made in respect of payments to relatives or related concerns where no attempt to evade tax is established. In the absence of any material showing excessiveness or evasive motive and with no comparables produced by the Department, the disallowance could not be sustained and the entire addition was required to be deleted.

The disallowance of Rs. 12,60,000 under section 40A(2)(b) is deleted and the appeal is allowed.

Final Conclusion: The appeal is allowed; the addition/disallowance under section 40A(2)(b) stands deleted for Assessment Year 2012-13 for lack of comparable evidence and absence of any established tax-evasion motive.

Reassessment notice under section 148 and issue date - limitation for issuance of reassessment notice - date of dispatch as date of handing over to postal authority - service by speed post and SPA/consignment tracking - service by email and ITBA portal - bar of limitation on proceedings under section 147 - reopening barred for want of valid notice

Reassessment notice under section 148 and issue date - limitation for issuance of reassessment notice - date of dispatch as date of handing over to postal authority - service by speed post and SPA/consignment tracking - service by email and ITBA portal - bar of limitation on proceedings under section 147 - Validity of the reassessment notice and whether proceedings under section 147/143(3) are barred by limitation - HELD THAT: - The Tribunal examined available dispatch evidence and independent records and found discrepancies in the Department's speed-post booking entry (erroneous SPA number) and inconsistency with the postal department's record showing receipt by the postal office and delivery dates after 31/3/2017. The notice sent by email was addressed to an incorrect email ID and the ITBA portal record showed activation only when the appeal was filed. Applying the legal principle that the date of issue for reckoning limitation is the date on which the notice is handed over for service to the proper officer, the material establishes that the notice was handed to the postal department only on 1/4/2017 (or later) and not on or before 31/3/2017. In the absence of trustworthy independent evidence to establish dispatch prior to expiry of the limitation period, the reassessment notice cannot be treated as validly issued within time. Consequently, the reassessment proceedings under section 147 are barred by limitation and cannot be sustained. [Paras 6, 7, 8, 9, 11]

The reassessment notice was not validly issued within time; proceedings under section 147/143(3) are barred by limitation and the assessment cannot be sustained.

Final Conclusion: The appeal is allowed: the reassessment framed under section 147/143(3) is set aside as barred by limitation because the notice was not shown to have been validly dispatched on or before the limitation date.

Exemption under section 11 - rejection for non-furnishing of audit report in Form No.10B - natural justice - opportunity of being heard - condonation of delay in furnishing Form No.10B - remand for fresh adjudication

Natural justice - opportunity of being heard - remand for fresh adjudication - Whether the order of the Commissioner of Income Tax (Appeals) dated 16.9.2020 could be sustained despite the assessee not having been afforded an opportunity of being heard. - HELD THAT: - The Tribunal found on the material on record that the appeal was posted for hearing on 4.9.2020, when the assessee sought an adjournment, and that the assessee filed written submissions on 30.9.2020. Notwithstanding this, the CIT(A) had passed the impugned order dated 16.9.2020 without hearing the assessee, and the order was received by the assessee only on 14.10.2020. The Tribunal treated the CIT(A)'s order as effectively ex parte and held that the failure to afford the assessee an opportunity of being heard amounted to a breach of the principles of natural justice. In the interest of justice and fairness the Tribunal concluded that the appropriate remedy was to set aside the CIT(A)'s order and restore the matters to the file of the CIT(A) for fresh adjudication after affording the assessee adequate opportunity to be heard. [Paras 7]

The CIT(A)'s order is set aside for breach of natural justice and the matter is remanded to the CIT(A) for fresh adjudication after affording the assessee an opportunity of being heard.

Exemption under section 11 - rejection for non-furnishing of audit report in Form No.10B - condonation of delay in furnishing Form No.10B - Adjudication of the assessee's claim of exemption under section 11 and related contentions including the correctness of the due date for filing Form No.10B and the pending condonation petition. - HELD THAT: - The Tribunal did not decide the merits of the rejection of exemption under section 11 or the competing contentions regarding the due date for filing Form No.10B (the CIT(A) having recorded an incorrect date according to the assessee) nor the claim for condonation of delay which is pending before the CBDT. Instead, having set aside the CIT(A)'s order for want of hearing, the Tribunal restored all issues to the file of the CIT(A. for fresh consideration. Those issues - including the validity of the rejection for non-furnishing of Form No.10B, the correct statutory or regulatory due date for filing that form for the year under consideration, and the effect of any condonation sought before the CBDT - are to be examined afresh by the CIT(A) after giving the assessee an opportunity to present its case. [Paras 7, 8]

The merits of the exemption claim, the question of the correct due date for filing Form No.10B and the consequences of the pending condonation petition are remitted to the CIT(A) for fresh adjudication.

Final Conclusion: The Tribunal allowed the appeal for statistical purposes by setting aside the CIT(A)'s order as passed without affording the assessee an opportunity of being heard, and restored all issues to the CIT(A) for fresh consideration after giving the assessee adequate opportunity to be heard.

Disallowance under section 40(a)(ia) for failure to deduct tax at source - effect where the deductee has included the receipt in its return of income - addition under section 68 in respect of loans treated as unexplained credits - discretion of the Assessing Officer in invoking section 68 (and comparable Section 69) where explanation is unsatisfactory

Disallowance under section 40(a)(ia) for failure to deduct tax at source - effect where the deductee has included the receipt in its return of income - Whether disallowance of interest of Rs. 1,71,801/- under section 40(a)(ia) was justified - HELD THAT: - The Tribunal set aside the disallowance and restored the matter to the file of the Assessing Officer for fresh determination. The Tribunal noted precedent (including the Supreme Court in Hindustan Coca Cola Beverage Ltd.) and recorded that disallowance under section 40(a)(ia) will not survive if the payee (deductee) has included the corresponding receipt in its return of income. The assessee was permitted to produce such evidence as may be necessary to justify non-deduction of TDS; the Assessing Officer was directed to make such enquiries of the payee as considered expedient to ascertain any loss of revenue and to delete the disallowance where the payee has included the receipt in its return. The issue is therefore remitted for factual and legal verification in accordance with law. [Paras 5]

Disallowance set aside and issue restored to Assessing Officer for fresh determination; ground allowed for statistical purposes.

Bad debt allowance under section 36(1)(viii) - treatment of business loss where not pressed - Allowance of bad debt of Rs. 4,50,000/- or its treatment as business loss - HELD THAT: - The assessee did not press Grounds Nos. 2 and 3 before the Tribunal. The Tribunal recorded that these grounds were not pressed and accordingly dismissed them. [Paras 7]

Grounds Nos. 2 and 3 dismissed as not pressed.

Addition under section 68 in respect of loans treated as unexplained credits - discretion of the Assessing Officer in invoking section 68 (and comparable Section 69) - Validity of additions of Rs. 22,91,000/- under section 68 attributable to loans from four parties - HELD THAT: - The Tribunal observed that repayment of loans aggregating Rs. 22,91,000/- (partly during the same financial year and partly by bank transfers thereafter) was recorded but not examined by the Assessing Officer. The assessee produced bank statements to evidence repayments. Applying the principle that the Assessing Officer has discretion whether to invoke section 68 (as explained by the Supreme Court in CIT v. P.K. Noorjahan), and that repayment through banking channels and absence of real benefit may discharge the assessee's onus, the Tribunal set aside the additions and remitted the matter to the Assessing Officer. The Assessing Officer was directed to verify factual aspects of repayment, including making enquiries from banks or lenders as expedient, and to grant appropriate relief if repayments are substantiated. [Paras 9, 10]

Additions under section 68 set aside and remitted to the Assessing Officer for verification of repayments and fresh adjudication; ground allowed for statistical purposes.

Final Conclusion: The appeal is partly allowed for statistical purposes: the s.40(a)(ia) disallowance and the s.68 additions are set aside and remitted to the Assessing Officer for fresh consideration in accordance with law and the directions given; Grounds Nos. 2 and 3 are dismissed as not pressed.

Anticipatory bail - Summons under Section 108 of the Customs Act, 1962 - Attendance and production in inquiry deemed judicial proceedings under Sections 198 and 228 I.P.C. - Conditions for grant of anticipatory bail - Verification of computerized copy of court order

Anticipatory bail - Summons under Section 108 of the Customs Act, 1962 - Attendance and production in inquiry deemed judicial proceedings under Sections 198 and 228 I.P.C. - Conditions for grant of anticipatory bail - Grant of anticipatory bail to the applicant in respect of summons issued under Section 108 of the Customs Act, 1962. - HELD THAT: - The Court observed that Section 108 of the Customs Act empowers a Gazetted Officer to summon persons to give evidence and produce documents in inquiry, and that persons so summoned are bound to attend and that such inquiry is deemed to be judicial proceedings within the meaning of Sections 198 and 228 I.P.C. Having heard rival contentions and having regard to earlier reasoning in a case under the analogous provision in the Central Goods and Services Tax Act, the Court granted anticipatory bail to the applicant. The bail was limited to a period of six weeks or until conclusion of the inquiry by the concerned Officer under Section 108, whichever is earlier, and was made subject to execution of a personal bond and two sureties and specific conditions including: making himself available for interrogation as required; not inducing or threatening witnesses; not leaving India without prior permission and depositing passport if held; filing a computer-generated copy of the order; verification by the concerned authority of the computerized copy from the High Court website; and automatic rejection of the anticipatory bail if the applicant fails to appear on a date fixed by the Gazetted Officer.

Applicant enlarged on anticipatory bail for six weeks or until the inquiry concludes, subject to bond, sureties and stated conditions.

Criminal miscellaneous exemption application - Allowance of the criminal miscellaneous exemption application. - HELD THAT: - The Court recorded that the exemption application was considered and allowed. The counter-affidavit filed by the opposite party no. 2 was taken on record and the court noted appearance/counsel details, then allowed the exemption application without further qualification in the order.

Criminal miscellaneous exemption application allowed.

Final Conclusion: The Court allowed the exemption application and granted anticipatory bail to the applicant for a limited period or until conclusion of the inquiry under Section 108 of the Customs Act, subject to bond, sureties and specified conditions; the Customs Officer may apply for cancellation of bail if unforeseen circumstances arise and the inquiry shall continue unimpaired by observations in the order.

Mistake apparent on the face of the record - Section 420(2) remedy for mistake apparent on the record - power to rectify or amend order - no jurisdiction to review its own order - bar on consideration of documents filed after prescribed deadline

Mistake apparent on the face of the record - Section 420(2) remedy for mistake apparent on the record - bar on consideration of documents filed after prescribed deadline - no jurisdiction to review its own order - Application under Section 420(2) read with Rule 11 seeking correction of the Tribunal's order and consideration of documents filed after the prescribed date was not maintainable and was dismissed. - HELD THAT: - The Tribunal recorded that clarifications were sought from the applicant on 05.10.2020 to be filed by 08.10.2020, whereas the applicant admitted that the requisite documents were filed only on 17.10.2020. Since the clarifications were directed to the applicant and were not supplied within the stipulated time, belated filing could not be treated as a mistake apparent on the face of the record in the order dated 21.10.2020. Allowing consideration of documents filed after the deadline would amount to reviewing the final order, a power not exercisable under Section 420(2) as construed by the NCLAT in Deepak Kumar Vs M/s Phoenix ARC Pvt. Ltd. and as guided by the principle that rectification is limited to removal of patent errors without disturbing finality; the Tribunal also relied on the principle in Lily Thomas V. Union of India that rectification must remove mistake without altering the order's finality. Consequently, the application seeking correction and consideration of belated documents was held to be without merit. [Paras 5, 6, 7]

Application dismissed; no rectification ordered and belated documents not considered.

Final Conclusion: The Company Application under Section 420(2) / Rule 11 was dismissed: the Tribunal found no patent mistake in its order of 21.10.2020 and declined to admit documents filed after the stipulated date since that would amount to an impermissible review of its order.

Restoration of name - carrying on business / in operation - discretion under Section 252(3) - compliance of filing outstanding statutory documents as condition for restoration - payment of costs as condition for restoration

Restoration of name - carrying on business / in operation - discretion under Section 252(3) - Whether the appellant company was carrying on business or was in operation at the time its name was struck off so as to warrant restoration of its name to the Register. - HELD THAT: - The Tribunal applied the statutory criteria in Section 252(3) and examined the documentary material placed on record by the appellant, including audited financial statements, bank statements showing transactions and closing balances, and filed income-tax returns for the relevant years. The Registrar of Companies raised no objection to restoration upon proof of operation and accepted that restoration could be permitted subject to compliance. On the basis of the financial records and filings, the Tribunal found that the company was not a defunct or dormant entity and satisfied the condition of being in operation when its name was struck off. Exercising the discretion vested by Section 252, the Tribunal held that it would be just and in the interest of stakeholders to restore the company's name. [Paras 14, 15, 16]

The company was held to have been in operation when struck off and the appeal for restoration of its name was allowed.

Compliance of filing outstanding statutory documents as condition for restoration - payment of costs as condition for restoration - What conditions should be imposed for restoration of the company's name. - HELD THAT: - While allowing restoration, the Tribunal imposed conditions to protect statutory and public interest: the company must file all outstanding statutory documents and returns with the Registrar, pay the appropriate filing fees together with additional fees and any late charges leviable under law, and comply with completion of all formalities. Further, the Tribunal directed payment of costs to a public fund as part of the restoration order. These conditions were treated as necessary preconditions to restore the name as if it had not been struck off. [Paras 16]

Restoration ordered subject to filing all outstanding documents with proper fees and additional charges, and payment of costs to the specified relief fund.

Final Conclusion: The appeal is allowed; the public notice striking off the company's name is set aside and the company's name shall be restored to the Register provided the company files all outstanding statutory documents with requisite fees and additional charges and pays the directed costs.

Restoration of company name under Section 252(3) of the Companies Act, 2013 - striking off of company under Section 248(5) of the Companies Act, 2013 - company carrying on business or in operation - power to restore on grounds "or otherwise" justifying restoration - judicial review of Registrar's striking off action

Restoration of company name under Section 252(3) of the Companies Act, 2013 - striking off of company under Section 248(5) of the Companies Act, 2013 - company carrying on business or in operation - power to restore on grounds "or otherwise" justifying restoration - Whether the Appellant Company's name should be restored to the Register of Companies under Section 252(3) on the ground that it was carrying on business or that it is otherwise just to restore the name, notwithstanding its striking off under Section 248(5). - HELD THAT: - The Tribunal found that the Appellant failed to establish that the company was carrying on business or in operation prior to the date of striking off. Documents relied on by the Appellant were either prepared after striking off or did not demonstrate business activity: the Income Tax return on record was for AY 2006-07 showing nil income and no subsequent e-filed returns; bank statements disclosed no significant transactions for the relevant period; balance sheets placed on record appear to have been prepared after the striking off and there was no evidence of utilisation of the leased plot. The ROC's report recorded that the company had not carried on operations for the two immediately preceding financial years as indicated by non-filing of financial statements. Applying the governing principle in the cited NCLAT precedent, the Tribunal held that the legislative phrase "or otherwise" permitting restoration cannot be invoked to circumvent a clear finding that a company was not in operation or carrying on business; restoration on equitable grounds is not permissible where the company has not shown it was operational and where striking off resulted from statutory non-compliance. In these circumstances the Tribunal was not persuaded to exercise the discretionary power under Section 252(3) to order restoration and declined to interfere with the ROC's action under Section 248(5). [Paras 11, 12, 13, 14, 15]

The appeal is dismissed and the action of the Registrar in striking off the company's name under Section 248(5) is upheld; restoration under Section 252(3) is refused.

Final Conclusion: The Tribunal dismissed the appeal and declined to restore the company's name, holding that the appellant failed to prove the company was carrying on business or that grounds existed to invoke the discretionary power to restore; the Registrar's striking off under the Companies Act, 2013 stands.

Scheme of Arrangement and Amalgamation - sanction of scheme - vesting of assets and liabilities pursuant to section 232(3) - reduction and cancellation of share capital - filing of amended Memorandum and Articles of Association and payment of differential fee - continuity of employment on amalgamation - protection of rights of tax authorities - Official Liquidator verification and payment of auditor remuneration - valuation report and allotment of Optionally Convertible Redeemable Preference Shares - compliance with applicable Indian Accounting Standards for accounting treatment

Scheme of Arrangement and Amalgamation - sanction of scheme - Sanction of the Composite Scheme of Arrangement and Amalgamation between the six Transferor Companies and the Transferee Company. - HELD THAT: - After considering the Scheme, the reports and responses of statutory authorities, the valuation and accounting certifications, and the absence of objections, the Tribunal concluded that the Scheme is prima facie beneficial and not detrimental to the interests of the companies' shareholders. The Tribunal noted that requisite statutory compliances were fulfilled and accordingly sanctioned the Scheme appended as Annexure A1 to the Company Petition. The sanction is subject to statutory rights remaining intact and does not imply exemption from any stamp duty, taxes or other charges payable under law. [Paras 10, 12]

Company Petition allowed and the Scheme sanctioned.

Vesting of assets and liabilities pursuant to section 232(3) - Vesting of all properties, rights, liabilities, powers, engagements, obligations and duties of the Transferor Companies in the Transferee Company. - HELD THAT: - The Tribunal ordered that, pursuant to section 232(3) of the Companies Act, 2013, all properties, rights and interests of Transferor Companies 1 to 6 shall, without further act or deed, be transferred to and vest in the Transferee Company; and all liabilities, powers, engagements, obligations and duties shall similarly stand transferred and become those of the Transferee Company. Pending proceedings by or against the Transferor Companies shall continue by or against the Transferee Company. [Paras 11]

Assets and liabilities of the Transferor Companies stand vested in the Transferee Company and pending proceedings shall continue against the Transferee Company.

Reduction and cancellation of share capital - reduction of Securities Premium Account - Reduction of the equity share capital and adjustment of the Securities Premium Account of the Transferee Company and cancellation of reduced shares on payment of consideration. - HELD THAT: - The Tribunal directed reduction of the Transferee Company's equity share capital from the stated number to the reduced number and reduction of the Securities Premium Account upon payment of the consideration per share. It directed that shareholders holding reduced shares, upon payment, shall furnish share certificates which shall be cancelled by the Transferee Company. [Paras 11]

Reduction of share capital and securities premium ordered; cancelled share certificates to be surrendered and cancelled on payment of consideration.

Filing of amended Memorandum and Articles of Association and payment of differential fee - Requirement that the Transferee Company file revised Memorandum and Articles of Association and make requisite payment of differential fee for enhancement of authorised capital after setting off fees paid by Transferor Companies. - HELD THAT: - The Tribunal noted RD's observation that the Scheme's clause exempting payment of fees for increased authorised capital was contrary to statutory requirements and directed the Transferee Company to file amended MoA/AoA with RoC, Chennai and make requisite payments of differential fee (if any) for the enhancement of authorised capital after setting off fees paid by Transferor Companies. The Transferee Company has undertaken compliance. [Paras 7, 11]

Transferee Company to file revised MoA/AoA and pay differential fees as directed.

Official Liquidator verification and payment of auditor remuneration - Acceptance of the Official Liquidator's report and direction for payment of auditor's remuneration for verification of Transferor Companies' affairs. - HELD THAT: - The Official Liquidator appointed a Chartered Accountant to verify affairs of the Transferor Companies and filed the report. Having taken the report on record, the Tribunal directed Transferor Companies 1 to 6 jointly to pay a sum to the Official Liquidator for payment of fees to the auditor who conducted the verification. [Paras 7]

Transferor Companies 1 to 6 jointly directed to pay the remuneration to the Official Liquidator for the auditor's fees.

Protection of rights of tax authorities - Treatment of tax demands and preservation of rights of Income Tax authorities post-sanction. - HELD THAT: - The Tribunal observed communications from Income Tax authorities raising certain demands and noted the petitioners' replies and submissions that some demands stood discharged or were not outstanding. The Tribunal reiterated that sanctioning the Scheme does not preclude tax authorities from recovering lawful dues and that rights of such authorities remain intact; the Transferee Company undertaking to satisfy demands as finally determined by competent forums was noted and accepted in the context of precedent. [Paras 7]

Rights of Income Tax authorities to pursue and recover dues preserved; Transferee Company remains liable to satisfy demands as finally determined.

Continuity of employment on amalgamation - Continuity of service of employees of the Transferor Companies on the Scheme taking effect. - HELD THAT: - The Tribunal ordered that all employees of Transferor Companies in service on the date immediately preceding the effective date of the Scheme shall become employees of the Transferee Company without any break or interruption in their service, thereby protecting employee rights post-amalgamation. [Paras 11]

Employees of Transferor Companies shall continue in service with the Transferee Company without break.

Valuation report and allotment of Optionally Convertible Redeemable Preference Shares - compliance with applicable Indian Accounting Standards for accounting treatment - Acceptance of the valuation recommendations for share consideration and certification of accounting treatment by statutory auditors. - HELD THAT: - The Tribunal noted the independent valuer's recommendations for issuance of Optionally Convertible Redeemable Preference Shares as consideration to shareholders of Transferor Companies and recorded that statutory auditors certified compliance of the accounting treatment with the proviso to section 230(7)/section 232(3) and applicable Indian Accounting Standards. These materials formed part of the basis for sanction. [Paras 8, 9]

Valuation report and auditors' certification accepted and taken into account in sanctioning the Scheme.

Appointed date - Appointed date for effectiveness of the Scheme. - HELD THAT: - The Tribunal fixed the Appointed Date for the Scheme as 1st April 2019 as specified in the Scheme, with consequences of vesting and continuity of proceedings and liabilities applying from that date. [Paras 11]

Appointed Date for the Scheme declared as 1st April 2019.

Final Conclusion: The Tribunal sanctioned the Composite Scheme of Arrangement and Amalgamation between the six Transferor Companies and the Transferee Company, subject to compliance conditions including filing revised MoA/AoA and payment of differential fees, preservation of tax authorities' rights, payment to the Official Liquidator for auditor remuneration, adoption of the valuation and accounting certifications, fixation of appointed date as 1 April 2019, and directions for continuity of employees and proceedings.

Classification of creditors as financial creditor versus operational creditor - definition of financial debt under section 5(8) of the Code - commercial effect of a borrowing - forward purchase agreement - liability under guarantee not treated as financial debt where principal transaction is not a financial transaction

Classification of creditors as financial creditor versus operational creditor - definition of financial debt under section 5(8) of the Code - commercial effect of a borrowing - forward purchase agreement - liability under guarantee not treated as financial debt where principal transaction is not a financial transaction - Whether the claims of Respondent Nos. 2 and 3 arising from the Forward Purchase Agreements and the deeds of guarantee qualify as financial debt making them Financial Creditors, or whether they are Operational Creditors. - HELD THAT: - The definition of "financial debt" in section 5(8) is inclusive and requires that a debt must have been disbursed against the consideration for the time value of money; further, amounts under a forward purchase agreement qualify only if they have the commercial effect of a borrowing. The character of the transaction is to be ascertained from the recitals and terms of the agreements. The FPAs between the sellers (Respondent Nos. 2 and 3) and the purchasers (the Corporate Debtor / its subsidiary) were forward contracts for supply of specified goods with fixed price/price-range, delivery obligations, inventory commitments and, in the commercial scheme, a separate financial guarantee to secure payment. The principal agreements did not envisage raising funds or disbursing amounts against the consideration for the time value of money and therefore did not exhibit the commercial effect of a borrowing. The deeds of guarantee bound the Corporate Debtor to pay in case of default on payment of the sale consideration; however, where the underlying contract is not a financial transaction falling within clause (f), the liability under the guarantee does not convert into a "financial debt" under clause (i). Applying these principles to the documents and recitals in the record, the FPAs and the attendant guarantees are transactional arrangements for sale and purchase (operational in nature) and do not meet the dual attributes required for classification as financial debt under section 5(8). Consequently, the IRP's classification of Respondent Nos. 2 and 3 as Financial Creditors is unsustainable. [Paras 13, 14, 20, 21, 22]

The decision admitting Respondent Nos. 2 and 3 as Financial Creditors is set aside; they shall be regarded as Operational Creditors and removed from the CoC, the list of creditors shall be redrawn and voting percentages reworked.

Final Conclusion: Application allowed in part: IRP's classification of the two claimants as Financial Creditors set aside; they are to be treated as Operational Creditors, CoC list and voting percentages to be amended; prayer to exclude time from CIRP not granted.

Effect of acknowledgment in writing under Section 18 of the Limitation Act - date of default as date of non-performing asset (NPA) for commencement of limitation in proceedings under Section 7 of the Insolvency and Bankruptcy Code, 2016 - restructuring agreement as restarting the period of limitation - application under Section 7 of the Insolvency and Bankruptcy Code, 2016

Date of default as date of non-performing asset (NPA) for commencement of limitation in proceedings under Section 7 of the Insolvency and Bankruptcy Code, 2016 - restructuring agreement as restarting the period of limitation - Effect of the restructuring agreement dated 29.04.2014 on the period of limitation given that the date of default was 06.08.2012 (date of NPA). - HELD THAT: - The Tribunal noted that the date of default recorded in the application is 06.08.2012, the date when the account became NPA. The applicant relied upon the Agreement for Restructuring of Credit Facilities dated 29.04.2014 and contended that, being an acknowledgment/restructuring within three years of the NPA, the limitation would be computed from 29.04.2014. The Tribunal accepted that if a valid restructuring agreement executed within three years of the NPA amounts to an acknowledgment for the purposes of Section 18 of the Limitation Act, the period of limitation would restart from the date of that agreement. The Tribunal referred to the principle that limitation ordinarily begins to run from the date of default/NPA in proceedings under Section 7 and treated the restructuring agreement of 29.04.2014 as the relevant event to compute a fresh period of limitation. [Paras 7, 12]

The restructuring agreement dated 29.04.2014 restarts the period of limitation (if treated as an acknowledgment), so limitation would run from 29.04.2014 rather than from 06.08.2012.

Effect of acknowledgment in writing under Section 18 of the Limitation Act - application under Section 7 of the Insolvency and Bankruptcy Code, 2016 - Whether the letter dated 24.03.2017 constitutes an acknowledgment of debt under Section 18 of the Limitation Act thereby further extending or restarting limitation. - HELD THAT: - The Tribunal examined the document dated 24.03.2017 relied upon by the applicant and considered the statutory test under Section 18 of the Limitation Act for an acknowledgment in writing signed by the party against whom the right is claimed. The Tribunal found that the 24.03.2017 communication, which addresses the "status of plant and repayment of loans" and urges pragmatic settlement measures, does not contain the clear, signed acknowledgment of liability comparable to the earlier restructuring agreement. Applying Section 18 and having regard to authorities cited (including the reasoning in Babulal Vardharji Gurjar as to the commencement of limitation from the date of NPA and limited scope for treating later communications as acknowledgments), the Tribunal held that the 24.03.2017 letter cannot be treated as an acknowledgment that restarts limitation under Section 18. [Paras 8, 10, 12]

The letter dated 24.03.2017 is not an acknowledgment of debt under Section 18 of the Limitation Act and does not extend or restart the period of limitation.

Final Conclusion: The application under Section 7 of the Insolvency and Bankruptcy Code, 2016 was held to be barred by limitation (the Tribunal having rejected reliance on the 24.03.2017 letter as an acknowledgment) and the petition was dismissed; notice on the Corporate Debtor was refused.

Summary order. Matter adjourned to 20.01.2021; if no one appears for the respondent on that date, the Court will proceed to hear the writ applicant on merits and pass an appropriate order.

Opportunity of hearing - eligibility under Sabka Vishwas (Legacy Dispute Resolution Scheme), 2019 - Designated Committee - inquiry pursuant to summons under Section 14 of the Central Excise Act, 1944 - challenge to validity of Clause (m) of Section 121 and Section 125 of the Scheme

Challenge to validity of Clause (m) of Section 121 and Section 125 of the Scheme - The writ applicant sought to withdraw the challenge to the validity of Clause (m) of Section 121 and Section 125 of the Sabka Vishwas (Legacy Dispute Resolution Scheme), 2019, as set out in para 7(A) of the writ petition. - HELD THAT: - The learned counsel for the writ applicant requested deletion of the prayer in para 7(A), thereby abandoning the challenge to the validity of the specified provisions of the Scheme insofar as they render an assessee ineligible based on an inquiry or summons. The Court recorded that this challenge has been given up and no longer forms part of the controversy for adjudication.

Prayer in para 7(A) withdrawn; challenge to the validity of the specified clauses is given up.

Opportunity of hearing - Designated Committee - eligibility under Sabka Vishwas (Legacy Dispute Resolution Scheme), 2019 - inquiry pursuant to summons under Section 14 of the Central Excise Act, 1944 - Whether the Designated Committee was obliged to give the writ applicant an opportunity of hearing before passing the impugned order dated 17.06.2020 refusing acceptance of the declaration of self-assessment on the ground that an inquiry had been initiated pursuant to a summons under Section 14 of the Central Excise Act, 1944. - HELD THAT: - The Court recorded the short question for consideration as to whether the Designated Committee should have afforded an opportunity of hearing prior to passing the impugned order which declined to accept the declaration of self-assessment on the basis that an inquiry had been initiated pursuant to a summons. The petitioner relied on decisions of other High Courts holding that the Designated Committee is obliged to give an opportunity of hearing before adjudicating eligibility under the Scheme. The Court, however, did not decide this question at the stage of the oral order; instead, it issued notice for final disposal to the respondents and directed service of the respondents by email, fixing the matter for hearing on the returnable date.

Question left open for final disposal; notice issued to respondents and matter listed for hearing on 19.01.2021.

Final Conclusion: The petitioner withdrew the challenge to the validity of the specified clauses of the Scheme (para 7(A)). The core question whether the Designated Committee must grant an opportunity of hearing before denying eligibility on account of an inquiry under summons was not decided; notice was issued to the respondents and the matter was adjourned for final disposal with service to be effected by email.

Tax Relief under SVLDR Scheme - deduction of deposits during audit/enquiry in computation of relief - obligation of Designated Committee to verify records under Rule 6 - irrelevance of appeal memorandum admissions where records show otherwise

Tax Relief under SVLDR Scheme - deduction of deposits during audit/enquiry in computation of relief - Whether the Designated Committee erred in refusing Tax Relief by ignoring deposits shown in the Audit Report and by relying on the Order in original, and whether the petitioner was entitled to Tax Relief after deducting the undisputed deposits. - HELD THAT: - The Court examined Section 124(2) of the SVLDR Scheme which requires deduction of any deposit made during enquiry, investigation or audit when issuing the statement indicating amount payable and provides that if the amount so paid exceeds the amount payable the declarant shall not be entitled to relief. The Audit Report recorded further deposits by the petitioner (reflected as part of total tax paid), which the Committee failed to take into account and instead relied on the Order in original that did not address those post SCN deposits. As the additional deposit reflected in the Audit Report was undisputed, the petitioner was entitled to have that deposit deducted in computing Tax Relief. The Committee's refusal to recognise the deposit and consequent restriction of Tax Relief therefore conflicted with the statutory scheme and was unsustainable. [Paras 9, 10]

The declarations in Form SVLDRS 2 and SVLDRS 3, insofar as they refuse Tax Relief without deducting the undisputed audit deposits, are quashed; the petitioner is entitled to Tax Relief subject to deduction of the undisputed deposits.

Obligation of Designated Committee to verify records under Rule 6 - irrelevance of appeal memorandum admissions where records show otherwise - Whether the Designated Committee could treat the figure stated in the petitioner's appeal memorandum as determinative of deposits for SVLDR purposes without verifying departmental records under Rule 6. - HELD THAT: - The Court held that the Designated Committee is statutorily obliged to verify records before issuing confirmation under the Scheme (Rule 6). The Committee cannot adopt a technical approach of treating a recital in an appeal memorandum as conclusive when departmental records (including the Audit Report) demonstrate undisputed additional deposits. The Committee's reliance on the Order in original and the appeal memorandum, without considering representations and verifying the record, was improper. The petitioner had made representations pointing to the audit recorded deposits which were not considered before issuing SVLDRS 3. [Paras 4, 5, 6, 8, 10]

The Committee erred in failing to verify records and in treating the appeal memorandum figure as decisive; the impugned SVLDRS forms are quashed and the Committee must verify records and issue an appropriate Discharge Certificate.

Final Conclusion: Writ petition allowed. Form No. SVLDRS 2 and Form No. SVLDRS 3 issued by the Designated Committee are quashed; the Committee is directed to verify departmental records, recognise the undisputed deposits reflected in the Audit Report and issue an appropriate Discharge Certificate in an expedited manner considering those deposits and the disputed liability.

Liability to pay service tax for provision of vehicle parking to general public - interpretation of exemption under Notification No.25/2012 - paragraph 24 (services by way of vehicle parking to general public) - distinction between providing parking service to public and leasing of space - scope of Mega Exemption Notification in relation to public parking services

Liability to pay service tax for provision of vehicle parking to general public - interpretation of exemption under Notification No.25/2012 - paragraph 24 (services by way of vehicle parking to general public) - distinction between providing parking service to public and leasing of space - Petitioner is not entitled to exemption under paragraph 24 of Notification No.25/2012 and is liable to pay service tax in respect of managing car and two wheeler parking serving the general public. - HELD THAT: - The petitioner was a successful bidder who entered into an agreement to manage car and two wheeler parking at a public bus station and collected fees from members of the public for permitting vehicles to be parked for specified periods. Paragraph 24 of Notification No.25/2012 exempts "Services by way of vehicle parking to general public excluding leasing of space to an entity for providing such parking facility." The Court construed this clause in light of the factual matrix and the statement of objections: where the operator renders the service of permitting the general public to park their vehicles for consideration, that activity constitutes the rendering of a parking service to the public and does not fall within the excluded category of leasing space to another entity. Consequently the exemption in paragraph 24 does not apply to the petitioner's activity of managing public parking and collecting fees, and the notices demanding service tax, interest and license fee were held to be unassailable. The petitioner therefore failed to establish entitlement to relief against the demand dated 06.03.2015.

Writ petition dismissed; demand for service tax upheld as the activity falls within taxable provision of parking services to the general public and is not covered by the exemption relied upon.

Final Conclusion: The High Court dismissed the petition, holding that the petitioner's management of public parking and collection of fees is a taxable service not exempted by paragraph 24 of Notification No.25/2012, and therefore the impugned demand/notice dated 06.03.2015 stands.

Interim relief - Section 45 notice for attachment of bank accounts - coercive action pending adjudication - expedited hearing in revenue matters

Interim relief - expedited hearing in revenue matters - Consideration of interim relief was deferred and the matter was directed to be listed for hearing on the specified date for disposal. - HELD THAT: - The Division Bench declined to express any opinion on the grant of interim relief at this stage and recorded that the writ petition shall be listed on 07.01.2021 for consideration of interim relief. The court placed reliance on the earlier daily orders and observed that the matter should be taken up and disposed of by the learned Single Judge at the earliest because the petition involves revenue to the State. The bench expressed expectation that counsel would cooperate to avoid adjournment and the Additional Advocate General undertook that the matter lies in a short compass and would be assisted for disposal on the listed date. [Paras 3, 5]

Interim relief not decided; matter remitted for fresh consideration on 07.01.2021 and the Single Judge requested to expedite hearing and disposal.

Section 45 notice for attachment of bank accounts - coercive action pending adjudication - Respondents were requested, but not injuncted, to refrain from taking coercive action including enforcement of the Section 45 notice pending the hearing on the listed date. - HELD THAT: - The court, while not granting an injunction, expressed hope and made a request that the respondents would not take coercive steps such as acting on the Section 45 notice issued to the appellant's bankers until the matter is heard on 07.01.2021. The undertaking and submissions of both counsel were placed on record: the appellant's counsel undertook not to seek adjournment and the Additional Advocate General fairly stated that the apprehensions were unfounded and that authorities would act in accordance with the hearing date. The bench thereby disposed of the writ appeal on that understanding without issuing a prohibitory order. [Paras 2, 4, 5]

No coercive action to be taken pending the hearing on 07.01.2021 - recorded as a request/expectation rather than an express injunction.

Final Conclusion: The writ appeal is disposed of by directing the writ petition to be listed for consideration of interim relief on 07.01.2021; the court declined to decide the interim relief, requested respondents not to take coercive action pending that hearing, and urged the learned Single Judge to expedite disposal. No order as to costs.

Interim relief - stay of recovery proceedings - bank account freezing and de-freezing - right to appeal and extension of time for filing appeal - refund of amounts recovered on successful appeal

Interim relief - stay of recovery proceedings - bank account freezing and de-freezing - right to appeal and extension of time for filing appeal - refund of amounts recovered on successful appeal - Whether interim protection should be granted restraining respondents from taking precipitous recovery action and ordering communication to the petitioner's banker to de-freeze the account for a limited period, allowing the petitioner to withdraw rectification proceedings and file an appeal. - HELD THAT: - The petition challenged a Recovery Notice issued after a best judgment assessment under the Central Sales Tax Act, 1956. The petitioner sought leave to withdraw its rectification application and to pursue an appeal, undertaking to file the appeal within the next ten working days, and pointed out that a portion of the demand had already been recovered. The State submitted that the petitioner remained free to avail statutory appellate remedies including seeking condonation and making requisite pre-deposit, and that refund proceedings could follow if the petitioner succeeded. Balancing these contentions and having regard to the limited window sought by the petitioner, the Court concluded that it was appropriate to restrain the respondents from taking any precipitous action for a short, specified period to enable the petitioner to file its appeal. The Court further directed issuance of appropriate communication to the petitioner's banker to de-freeze the account subject to further orders in the event the petitioner failed to file the appeal within the stipulated period. The order preserves the respondents' right to pursue refund procedures if the appeal ultimately succeeds and does not decide the merits of the assessment or recovery.

Respondents restrained from taking precipitous recovery action for ten working days and directed to communicate with the petitioner's banker to de-freeze the account, subject to further orders if the petitioner does not file an appeal within that period; liberty preserved to initiate refund action if the petitioner succeeds on appeal.

Final Conclusion: Writ petition disposed by granting limited interim protection restraining further recovery steps for ten working days and directing communication to the banker to de-freeze the account, with the petitioner permitted to file an appeal in that period and the respondents' rights as to refund or further action preserved.

Presumption under Sections 118 and 139 of the Negotiable Instruments Act - rebuttable onus on the drawer to establish probable defence - ingredients of offence under Section 138 of the Negotiable Instruments Act - vicarious/constructive liability under Section 141 of the Negotiable Instruments Act - agency/authority of steamer agent to collect freight on behalf of principal - concurrent factual findings and scope of revisional interference - sentence modulation in offences under Section 138 - imprisonment not mandatory

Presumption under Sections 118 and 139 of the Negotiable Instruments Act - rebuttable onus on the drawer to establish probable defence - Application of statutory presumptions in prosecution under Section 138 of the NI Act and the burden of proof on the accused to rebut them. - HELD THAT: - The Court held that once execution of the cheque is proved or admitted, Sections 118 and 139 cast a statutory presumption that the cheque was issued for consideration and in discharge of a debt or liability, thereby shifting the onus on the accused to set up a probable defence with cogent evidence. The accused led evidence asserting entrustment of a blank cheque to a third party, but failed to adduce sufficient proof to rebut the presumption. Concurrent findings by the trial and appellate courts that the presumption stood unrebutted are not liable to be disturbed in revision absent perversity. [Paras 9, 17, 18, 19]

The statutory presumption under Sections 118 and 139 applied; the accused failed to rebut it and therefore remained liable under Section 138 of the NI Act.

Agency/authority of steamer agent to collect freight on behalf of principal - ingredients of offence under Section 138 of the Negotiable Instruments Act - Whether the complainant (a public sector shipping company) conducting business through its local agent could enforce the claim and maintain the complaint. - HELD THAT: - The Court examined the contractual and transactional documents and evidence showing that the Shipping Corporation conducted the shipment through its local steamer agent and that freight was collected by the agent for remittance to the Corporation. The cheque was drawn in the name of the Shipping Corporation and statutory notice was issued in time. The Court found it illogical to hold that the amounts due on account of shipping were not payable to the Corporation merely because collection was through its agent, and there was no evidence to show payment was made to a different payee as alleged by the accused. Accordingly, the complainant was entitled to maintain the prosecution. [Paras 10, 13, 16]

The complaint by the Shipping Corporation, acting through its agent, was maintainable and supported by evidence; the transaction gave rise to a legally enforceable debt to the complainant.

Vicarious/constructive liability under Section 141 of the Negotiable Instruments Act - concurrent factual findings and scope of revisional interference - sentence modulation in offences under Section 138 - imprisonment not mandatory - Validity of convictions of the accused under Sections 138 read with 141 of the NI Act and the appropriate sentence. - HELD THAT: - The Court upheld the concurrent findings of the trial and appellate courts that the cheque was issued by the accused for discharge of liability and that the accused (including the partner) were liable under Section 141 where applicable. However, noting that imprisonment is not mandatory under Section 138 and that the object is recovery of the cheque amount, the Court set aside the mandatory term of imprisonment imposed by the trial court. The conviction was confirmed; sentencing was modified by imposing a fine equivalent to the cheque amount on the 2nd accused with default simple imprisonment for three months, and the Court granted six months' time to deposit the compensation and fine, failing which execution would follow. [Paras 5, 16, 17, 20, 21]

Convictions under Section 138 (and Section 141 where applicable) sustained; custodial sentence as originally imposed set aside and replaced by financial penalty and conditional default imprisonment with a six month period to deposit the amount.

Final Conclusion: The High Court dismissed the revision in part: concurrent convictions under Section 138 (and Section 141 as applicable) were upheld on the basis that statutory presumptions under Sections 118 and 139 were not rebutted and the complainant (Shipping Corporation acting through its agent) was entitled to maintain the complaint; the custodial sentences imposed by the trial court were modified to financial compensation/fine with default imprisonment and a six month period granted for payment, records being remitted to the trial court for execution as necessary.