TaxTMI Updates e-Newsletter
Jan 21,2026

Grant of bail - due procedure, contemplated under the BNSS, 2023 complied with or not - fraudulent availment of Input Tax Credit (ITC) - HELD THAT:- The appellants are the father and the son. Appellant No. 2, who is the son, is stated to be a student. Some custodial interrogation, of the appellants, has already taken place in West Bengal. In such view of the matter, the impugned order is set aside, insofar as appellant No. 2 is concerned, by restoring the order dated 07.06.2025 passed by the learned Chief Judicial Magistrate.

The investigation is not complete and the respondent-Union of India is of the view that custodial interrogation, of appellant No. 1, is required - custodial interrogation, of appellant No. 1 granted, for consecutive days starting from the 28th of January, 2026 to the 31st of January, 2026 till 5 p.m.

The interim custody, in the aforesaid terms, is granted, qua appellant No. 1, to the respondent-Union of India. Thereafter, he shall be released. The Trial Court shall impose such conditions, on appellant No. 1, as may be necessary. The appeal stands disposed of, in the aforesaid terms, insofar as appellant No. 1 is concerned.

Appeal allowed.

Large-scale evasion of GST - offences punishable under Section 132(1)(a), 132(a)(f) and 132(1)(i) of the CGST Act, 2017 - illegality of arrest - illegality of custody - Non-production before the Magistrate within 24 hours.

Ilegality of arrest - HELD THAT:- Arrest in any case is followed by police or judicial custody. Efficacious remedy against police or judicial custody is available in provisions of bail in relevant statutes. However, when the very arrest is illegal the same is amenable to challenge under extraordinary writ jurisdiction of the Court. In case of bail ordinarily it is not the mode of arrest, but the material on the basis of which such arrest is made that falls for judicial scrutiny,

In Radhika Agarwal [2025 (2) TMI 1162 - SUPREME COURT (LB)], the Hon’ble Apex Court has held that to a large extent, the ratio on the applicability of the Code to the Customs Act would equally apply to the GST Acts in view of section 4 and 5 of the Code. However it has been held in no uncertain term in para-61 of this case that even without a formal order of assessment, the Department/Revenue is certain that it is a case of offence under clause (a) to (d) to sub-section (1) of Section 132 and the amount of tax evaded falls within clause (i) Sub-section (1) to section 132 of the CGST Act with sufficient degree of certainty. The reason to believe must be explicit and refer to material and evidence underlying such opinion. There has to be a degree of certainty that offence has been committed and that such offence is non-bailable.

Thus, it is manifest that challenge to arrest by invoking writ jurisdiction cannot be made in a routine or casual manner. Only in cases where the arrest is made in flagrant breach of procedural safeguards with mala fide that may call for interference.

Whether materials existed before the authorities concerned, for reasons to believe that Petitioner had been involved in tax evasion so as to make out an offence under Section 69 of the 2017 Act? - HELD THAT:- The materials prima facie disclose offence under Section 132 of the CGST Act. Therefore, it cannot be said that authorities had entered into a fishing inquiry and had apprehended the Petitioner merely on suspicion. Grounds were disclosed in the complaint as well as in the notice furnished to the Petitioner.

Non-production before the Magistrate within 24 hours - HELD THAT:- The plea is not tenable, as the health condition of the Petitioner was such that he had to be moved to the higher centre for treatment. It does not appeal to reason that the accused even at the risk to his health and life should have been produced before the Magistrate. Such a course is not warranted either under statutory provision or under the guidelines of the circular Instruction No. 2/2022-23.

Under the aforesaid facts and circumstance of the case, this Court is of the view that Petitioner has failed to make out any substantive ground for interference in exercise of writ jurisdiction under Article 226 of the Constitution of India - petition dismissed.

Belated availing of Input Tax Credit - Retrospective amendment -Mismatch in Input Tax Credit between GSTR-2A and GSTR-3B - Quashing of impugned assessment order and remittal for fresh adjudication - Interim pre-deposit condition and vacating of bank attachment - High Court writ jurisdiction - Section 16(4) of the GST Enactments - HELD THAT:- As belated availing of Input Tax Credit in accordance with Section 16(4) of the respective GST Enactments is concerned, the issue is settled in favour of the assessee by way of a statutory intervention by virtue of the insertion of Section 16(5) and 16(6) to the respective GST Enactments inserted by Finance (No.2) Act, 2024 (15 of 2024) dated 16.08.2024, vide SO 4253(E) with retrospective effect from 01.07.2017, which would require re-adjudication.

As far as mismatch in details of Input Tax Credit in GSTR-2A and GSTR-3B is concerned, the matter has to be remitted back to the original authority for consideration after hearing the petitioner.

Thus, the impugned orders are quashed and the case is remitted back to the respondent subject to the petitioner depositing 50% of disputed tax confirmed on account of mismatch in details between GSTR – 2A and GSTR – 3B in cash from the Petitioner’s Electronic Cash Register within a period of thirty (30) days from the date of receipt of a copy of this order.

It is made clear that bank attachment shall be lifted subject to the petitioner depositing 50% of the disputed tax as ordered above and the Petitioner not being in arrears of any other amount barring the amount demanded under the impugned Order.

In case the Petitioner fails to comply with any of the stipulations, the Respondent is at liberty to proceed against the Petitioner to recover the tax in accordance with law as if this Writ Petition was dismissed in limine today.

Writ Petition stands disposed of

Vires of N/N. 11/2017-Central Tax (Rate), which was the basis to issue SCN - jurisdiction to issue the impugned SCN, more particularly when paragraph 2 of the said notification has been held to be ultra vires or illegal - HELD THAT:- Apart from the other issues on legality of the impugned SCN issued by respondent no. 1 u/s 74 of the CGST/MGST Act, the primary question which would arise for consideration in view of the decision(s) as rendered by the Gujarat High Court as also by the Delhi High Court in the context of N/N. 11/2017 dated 28 June, 2017, whether at all there was jurisdiction to issue the impugned show cause notice, more particularly when paragraph 2 of the said notification has been held to be ultra vires or illegal. This more particularly applying the principles of law that being a central circular under the Central Legislation, the decision of the Supreme Court in M/s. Kusum Ingots & Alloys Ltd vs. Union Of India & Anr. [2004 (4) TMI 342 - SUPREME COURT (LB)] on the pan-India applicability of the N/N. 11/2017 dated 28 June, 2017 and the law as laid down by the Supreme Court in the said decision in such context. This would be the basic jurisdictional issue which would arise for consideration.

The respondents are directed to file a reply affidavit on the preliminary issue as to whether considering the legal position, respondent no. 1 can be said to have jurisdiction to issue impugned show cause notice. Let such reply affidavit be filed within two weeks from today and copy of the same be furnished to the advocate for the petitioner two days prior to the adjourned date of hearing.

List the proceedings on 20 January, 2026 (H.O.B.).

Quashing of order and remittal - entitlement to Input Tax Credit - rectification of order without reference to limitation - writ remedy - Section 16(6) vide SO 4253(E) inserted by Finance (No.2) Act, 2024 with retrospective effect from 01.07.2017 -HELD THAT:- Although the Petitioner has approached this Court long after the impugned Order-in-Original No.105/2024-GST (supdt.RII), dated 29.08.2024 was passed by the Respondent, it is noticed that the issue is now covered in favour of the Petitioner in view of the statutory amendment to the provisions of the respective GST enactments with the insertion of Section 16(5) and 16(6) vide SO 4253(E) with retrospective effect from 01.07.2017 inserted by Finance (No.2) Act, 2024 (15 of 2024) dated 16.08.2024.

Thus, the impugned order is quashed and the case is remitted back to the respondent to pass a fresh order on merits as expeditiously as possible, in view of the aforesaid statutory intervention and notification issued thereunder.

The petitioner shall substantiate the claim for the Input Tax Credit with necessary documents to establish the entitlement to avail Input Tax Credit in light of the above statutory provisions.

Writ Petition is disposed of.

Input Tax Credit under Rule 86A - Formation of opinion for disallowing debit of electronic credit ledger - Mechanical exercise of power and borrowed satisfaction - Requirement of independent application of mind and speaking reasons - Extraordinary nature of blocking electronic credit ledger and need for circumspection - Writ jurisdiction of the High Court - Rule 86A of the respective GST Rules - Circular Ref No.CBEC-20/16/05/2021-GST dated 02.11.2021 - HELD THAT:- Petitioner would submit that the blocking of the Input Tax Credit of the petitioner is clearly contrary to the dictates of the Board in Circular dated 02.11.2021.

Taking note of theCircular dated 02.11.2021 referred to supraand also taking note of Rule 86A of the respective GST Rules, there shall be a direction to the 1st respondent to pass a fresh speaking order, as required under Rule 86A of the respective GST Rules.

Accordingly, this Writ Petition stands disposed of.

Levy interest u/s 234B on the addition made in Book Profit under MAT being provision for doubtful debts -delay of 217 days in filing this special leave petition

As decided by HC [2025 (1) TMI 1295 - BOMBAY HIGH COURT] where an assessee computed book profits as per the prevailing law, no interest u/s 234B could have been levied consequent to the inclusion of various items in computing book profits as per explanation to Section 115JB which were brought on the statute by the Finance Act, 2008 with retrospective effect from 1 April 2001.

HELD THAT:- There is a delay of 217 days in filing this special leave petition. The reasons assigned for seeking condonation of delay are neither satisfactory nor sufficient in law so as to condone the same. Hence, the application seeking condonation of delay is dismissed.

Consequently, the special leave petition is dismissed on the ground of delay.

Validity of reopening of assessment - valuation of share - delay of 366 days in filing this Special Leave Petition

As decided by HC [2024 (9) TMI 1860 - DELHI HIGH COURT] issue of valuation, if liable to be undertaken, had to follow the route as prescribed by Section 56(2)(vii)(c) of the Act read along with Rule 11UA of the Income Tax Rules, 1962. It was additionally found that the market value of the shares was in in any case found to be negative and far below the value which was paid by the respondent-assessee. WP allowed.

HELD THAT:- No plausible and bona fide explanation to condone this inordinate delay. Special Leave Petition is, accordingly, dismissed on the ground of delay.

Income deemed to accrue or arise in India - payments received by the Assessee for providing Customer Relationship Management (CRM) Services - As decided by HC [2024 (12) TMI 1598 - DELHI HIGH COURT] consideration received by the assessee from various customers on account of licensing of Customer Relationship Management CRM software is not royalty income within the meaning of Article 12(3) of the India Singapore Double Taxation Avoidance Agreements DTAA, thus decoding issue in favour of assessee.

HELD THAT:- We are not inclined to interfere with the impugned order(s) in exercise of our jurisdiction under Article 136 of the Constitution of India.

Special Leave Petitions are, accordingly, dismissed and the accompanying interlocutory application(s), if any, stands disposed of.

TP Adjustment - comparable selection - Deselection of companies as functionally dissimilar - delay of 530 days in filing this Special Leave Petition

HELD THAT:- We do not find any plausible and bona fide explanation to condone this inordinate delay. Special Leave Petition is, accordingly, dismissed on the ground of delay.

Directions to modify tax department software - Role of Assessing Officer in verifying TDS claims - Demand raised in the intimation issued u/s 143 (1) - employer of the petitioners did not pay the Tax Deducted at Source from the salary of the petitioners - petitioners are ex-employees of Karvy Stock Broking Limited and in spite of the fact that the tax was deducted from their salary but not deposited by the said Company

As decided by HC [2024 (11) TMI 88 - GUJARAT HIGH COURT] the impugned intimation issued under section 143 (1) of the Act and consequential demand raised upon the petitioners are liable to be quashed and set aside. The respondents are hereby directed to see that strict compliance of the provision of section 205 of the Act as well as Instruction issued by the CBDT are followed and necessary corrections be made in the software so as to see that no demand is raised in case of the deductee on account of failure to deposit the amount of Tax Deducted at Source by the deductor. The Instruction issued by the CBDT under section 119 of the Act are binding upon all the officers of the department including the computer center which is now almost doing the job of the Assessing Officer. The technology used cannot be made to cause inconvenience to the tax payers contrary to the provisions of the Act and the Instruction issued by the CBDT resulting into helplessness on the human agency who has created the software resulting into the slavery of the technology.

HELD THAT:- Learned Additional Solicitor General appearing for the appellants submitted that unless the Assessing Officer comes to know about the facts of the case regarding deduction of Tax Deducted at Source (TDS) by the person paying the amount to the assessee, the liability cannot be waived of. It is only in case any TDS has been deducted from the payments made to an assessee that he gets credit, despite the fact that the amount may not have been paid to the Department by the person who deducted the TDS. For that, certain facts will always be required to be verified. Any change in the software will not even point out the cases to the Assessing Officer where there may be a wrong claim made regarding deduction of tax. There can be other different factual situations, which may require manual examination after issuance of show cause notice to the assessee. Hence, change in the software may result in ignoring demands, which may be genuine. Technology are only meant for assistance and data processing, and not for adjudication of cases.

As the aforesaid directions issued have nothing to do with the case on merits and will not affect the respondent-assessee, in our opinion, the present appeal can be disposed of with the observation that the direction issued by the High Court in paragraph Nos. 10 and 11 of the impugned order for changes to be made in the software are set aside.

Credit for taxes paid and refund/release of cash seized, in the computation of the Petitioner’s liability/refund under the Direct Tax Vivad se Vishwas Act 2020 - As far as credit for taxes paid by way of challans is concerned, the stand of Respondent No. 1 is that the challans were not matching and hence credit for the same could not be given.

HELD THAT:- As during the pendency of this Petition, the Respondents have issued fresh Form No. 3 dated 10th December 2025 and Form No. 5 dated 11th December 2025, wherein credit for three challans has been allowed resulting in a refund amount but no credit is granted for the cash seized.

Respondents have filed their Reply dated 15th December 2025 wherein the fact of seizure of cash by the Department has been accepted. The Respondents state that the record of cash that was seized, was supposed to be with some other ward/circle, and there was no confirmation forthcoming from the said ward/circle despite making efforts towards the same, and hence the record/accounting treatment of the cash seized, could not be ascertained.

Today, Department accepts that the cash seized has to be released and the Respondents undertake to refund the cash along with accumulated interest, within 30 days from today, on similar lines as in Writ Petition No. 33180/2023. The Respondents have called for an Indemnity Bond from the Petitioner which the Petitioner has filed with the Respondents’ office.

Accordingly, the Respondents are directed to issue refund the cash seized along with accumulated interest, within 30 days from today. Similarly, the CPC is further directed to issue refund arising out of Form No. 5 dated 11th December 2025, which is towards taxes paid by way of challans by the Petitioner, within 30 days from today.

Rule is made absolute in the aforesaid terms and the Writ Petition is also disposed of in terms thereof.

Assessment u/s 144B - denial of the opportunity of a hearing - breach of principles of natural justice - HELD THAT:- Admittedly, in the facts of the present case, this request was made, and the video conference was scheduled for 25th March 2025. Despite this, the impugned assessment order was passed prior thereto, namely on 17th March 2025. For all these reasons, as mentioned earlier, the impugned Assessment Order cannot stand and is unsustainable.

Accordingly, we set aside the impugned Assessment Order and all notices issued pursuant thereto. The assessment is now restored to the file of the Assessing Officer at the stage of the Show Cause Notice dated 7th February 2025. The Assessing Officer is directed to consider the reply filed by the Petitioner, and thereafter, deal with the requests made by the Petitioner to provide copies of the replies received u/s 133(6) of the IT Act, and also the request to invoke the provisions of Section 144A.

Assessing Officer shall pass a speaking order after fully hearing the petitioner.

Validity of reopening of assessment - reasons to believe - approval from specified authority u/s 151 - whether absence of the sentence “Failure to disclose” in the reasons to believe would not make the notice u/s 148 of the Act invalid? - relaxation on account of the provisions of TOLA - scope of reopening beyond four years under the proviso to section 147.

HELD THAT:- We are in agreement with the primary contention of the Petitioner that the impugned notice issued under section 148 of the Act on March 31, 2021, for Assessment Year 2015-16, falls within the period of March 20, 2020 and March 31, 2021. Therefore, the relaxation on account of the provisions of TOLA stand applicable in respect of sanction under section 151 of the Act. Consequently, the impugned notice must be construed to have been issued within a period of four years from the end of the relevant Assessment Year 2015-16. In our view, the Apex Court in its decision in the case of Union of India v. Rajeev Bansal [2024 (10) TMI 264 - SUPREME COURT (LB)] has settled the issue and held that TOLA extends the period of limitation with respect to sanction u/s 151 of the Act.

Case of the Petitioner is governed by Section 151(2), where it is the Joint Commissioner, who should be satisfied with the reasons recorded by the Assessing Officer that it is a fit case for issuance of notice under section 148 of the Act. However, the notice under section 148 of the Act has been issued after obtaining the sanction of Respondent No. 5 i.e. the Principal Commissioner of Income-tax, Mumbai – 4, who is not the competent Authority to grant sanction under section 151 of the Act to the impugned notice dated 31st March 2021 issued under section 148 of the Act.

Where the Income-tax Act has conferred the power of sanction to a specified and distinct Authority, then the mandate of the statute must be strictly followed, and when the statute mandates the satisfaction of a particular functionary for exercise of the power, the satisfaction must be of that Authority alone and not of any other authority. This view is also supported by the decision of Ghanshyam K. Khabrani [2012 (3) TMI 266 - BOMBAY HIGH COURT]. Hence, the Petition is liable to succeed on this ground alone.

In the present case an assessment order was already passed on June 30, 2017 under section 143(3) of the Act. In the reasons as recorded for issuing the notice under section 148 of the Act, we see that there is not even an allegation that the income of the Petitioner has escaped assessment on account of failure on the part of the Petitioner to disclose fully and truly any material fact in relation to Assessment Year 2015-16. Further, there is nothing in the reasons which would even indicate that there is any failure to disclose any material fact necessary for the assessment. In the reasons recorded, Respondent No. 3 must disclose which fact or material was not disclosed by the assessee fully and truly necessary for assessment. Further, it is settled law that the reasons are required to be read as they were recorded by the Assessing Officer and cannot be allowed to be improved subsequently. The law, in this regard, has been settled by the decision of the coordinate bench of this Court in the case of Hindustan Lever Ltd. v. R.B. Wadkar, ACIT [2004 (2) TMI 41 - BOMBAY HIGH COURT]. The same is, in fact, followed by decision of this Bench in case of Stock Holding Corporation of India Ltd. [2025 (9) TMI 302 - BOMBAY HIGH COURT]. Decided in favour of assessee.

Disallowance u/s 14A r.w.r. 8D - Mandation of recording satisfaction before addition - need to assign any reason as to why the disallowance was computed by him with respect to the interest expenses under Section 14A r/w. Rule 8D(2)(ii).

HELD THAT:- In the present case, the ITO, when recording such satisfaction, has rejected the claim of the Assessee. However, the ITO has not recorded any dissatisfaction whilst disagreeing with the Assessee, with respect to the expenditure incurred by it, relating to the income, forming part of its total income, as required u/s 14A(2) before rejecting the claim of the Assessee. In the impugned order, the Tribunal has also followed the decision of Godrej and Boyce [2010 (8) TMI 77 - BOMBAY HIGH COURT] whilst confirming the order passed by the PCIT and dismissing the appeal filed by the Revenue.

As decided in Bajaj Finance Ltd. [2019 (4) TMI 378 - BOMBAY HIGH COUR] a similar question of law was sought to be proposed by the Appellant – Revenue therein. However, whilst dismissing the said Appeals, this Court reiterated that under Section 14A(2), the satisfaction of the AO about the correctness of the expenditure offered for disallowance by the Assessee is a pre-condition, which was not done in that case and therefore, the said Appeals were dismissed. We are not persuaded to differ with this view, which is the correct one.

Tribunal has neither committed any perversity nor applied incorrect principles to the given facts. The Tribunal and the PCIT are the final fact finding authorities which have held against the Revenue.

Addition u/s 69C - Bogus purchases - parties who had not responded to the notice issued u/s. 133(6) - HELD THAT:- Non-responding to the notice u/s.133(6) is not conclusive to come to conclusion that it is not un-genuine purchases. As held in the case of PCIT vs. Vaman Intl. P. Ltd. [2020 (2) TMI 464 - BOMBAY HIGH COURT] that the burden is on the revenue to demonstrate that it is the income of the assessee when the assessee had provided relevant evidences at its disposal.

AO had to investigate further and allow the assessee to examine or cross examine the relevant parties, if there are doubts about the authenticity of the transaction. Therefore, we are inclined not to disturb the findings of the Ld. CIT(A). In the result, ground raised by the revenue is dismissed.

Genuineness of non-deduction of tax at source from amount paid to contractors for freight by the assessee - AO observed that assessee has reported sundry debtors to the extent of Rs. 17,66,06,832/- and he has analysed the information contained in 26AS and asked the Assessee to furnish the details of TDS/TCS. After analyzing the details, AO had specifically recorded the reasons to accept the explanation offered by the Assessee at page no. 9 of the assessment order. Therefore, the ground raised by the revenue is misleading.

Disallowance u/s 80IA - concept of "initial assessment year" - AO disallowed the deduction u/s 80IA on the concept of ‘initial Assessment Year’ as mentioned in Section 80IA(5) is only to determine the period of deduction available for a consequent period of 10/15/20 years - CIT(A) observed that the concept of "Initial assessment year" and "First year" is not relevant to the facts of the present case for the relevance to the issue of setting off of (notional) losses of earlier years with the profit of the eligible undertaking/business/enterprises.

HELD THAT:- CIT(A) has considered the CBDT Circular 1/2016 dated 15.02.2016, which it does not address/comment on the issue of setting off of (notional) losses of eligible undertaking/business/enterprises. During the proceedings before the CIT(A), it was also contended by the Assessee that the notional carried forward losses since the year of commencement in eligible undertaking is not in accordance with the provisions of law as clarified by CBDT vide circular No.1/2016.

CIT(A) while adjudicating the Appeal, considered the Judgment of Prabhu spinning Mills (P) Ltd [2016 (3) TMI 1309 - MADRAS HIGH COURT] wherein after considered the CBDT circular No.01/2016 and sub section (5) of Section 80-IA of the Act for understanding the definition of ‘initial assessment year’ which provides a choice to the assessee for deciding the year from which it desires to claim the deduction u/s 80-IA of the Act. In the absence of any contrary judicial precedents brought on record and in view of the above facts and circumstances, we find no merits in the Ground No. 1 to 3 of the Revenue.

Disallowance u/s 14A r.w. Rule 8D - Limitation of exempt income - HELD THAT:- It is well settled law that disallowance u/s 14A of the Act cannot be more than the exempt income as held in the case of Joint Investment Private Limited Vs CIT [2015 (3) TMI 155 - DELHI HIGH COURT] and CIT Vs. Holcim India (P) Ltd [2014 (9) TMI 434 - DELHI HIGH COURT]

Revision u/s 263 - Penalty u/s 271E - effect of absence of satisfaction in the assessment order for initiating penalty u/s 271E - PCIT, while relying on the decision of Subramaniam Thanu [2024 (3) TMI 879 - ITAT CHENNAI] held that the AO was mandatorily required to initiate the penalty proceedings u/s 271E of the Act during the course of assessment proceeding itself and not by making a reference separately.

Allegation of repayments made otherwise than account payee cheque, bank draft or use of electronic clearing system through a bank account violating the ‘Modes of repayment of certain loans or deposits as prescribed u/s. 269T

HELD THAT:- We have perused the finding appearing in Nihal chand Rekyan [1999 (7) TMI 29 - DELHI HIGH COURT] has not specified its finding regarding to Section 271(1)(a) of the Act, as is observed by the Ld. PCIT while distinguishing the said case with the Hon’ble High Court case in the impugned order and the finding recorded by Hon’ble High Court are with respect to the initiation of penalty proceedings holding that the initiation of penalty proceeding is not a part of assessment proceeding and therefore, when the same are not initiated by the AO, the Commissioner cannot direct the initiation of penalty proceedings in absence of satisfaction.

Distinguishing of the Hon’ble Delhi High Court judgment on the issue by the Ld. PCIT is contrary to the finding recorded by the Hon’ble Supreme Court of India in CIT vs. Jai Laxmi Rice Mills Ambala City [2015 (11) TMI 1453 - SUPREME COURT] as categorically held that in the absence of satisfaction in the assessment order for initiating penalty u/s 271E of the Act, though, the AO wanted penalty proceeding u/s 271C of the Act, no such penalty could be levied or initiated u/s 271E of the Act in the absence of satisfaction in the assessment order.

As noticed that in the case before us, the ld. PCIT has gone a step further while assuming jurisdiction u/s 263 of the Act and directed for initiation of penalty proceeding u/s 271E of the Act in absence of any satisfaction by the AO which is the requirement of initiating proceeding as held by the Hon’ble Supreme Court of India in Jai Laxmi Rice Mills Ambala City (supra).

Thus, the impugned order is not sustainable and is accordingly set aside. Appeal of the Assessee is allowed.

Revision u/s 263 - taxability of interest received on enhanced compensation of compulsory acquisition of agricultural land u/s 28 of the Land Acquisition Act, 1894 - PCIT found that the AO did not conduct proper enquiry in terms of law laid down by Supreme Court and Punjab & Haryana High Court as well law provided in the Act in terms of section 56(2)(viii) r.w. 57(iv) read with section 145A - PCIT further found that the AO did not make any inquiry with regard to the eligibility of the assessee for claiming exemption u/s 10(37).

Whether the interest received under section 28 of the Land Acquisition Act on enhanced compensation for acquisition of land, is exempt u/s 10(37) or will be exigible to tax under the "income from other sources" in view of amendment w.e.f 01.04.2010 in the provisions of section 56(2)(viii) and 57(iv) of the Act?

HELD THAT:- The issue is no longer integra. The issue has been decided by the Delhi ITAT Benches in the case of Shri Bhim Singh [2024 (8) TMI 1607 - ITAT DELHI] against the assessee heldinterest on compensation or interest on enhanced compensation is chargeable to tax under the head “income from other sources‟ from 01.10.2010 onwards.

We are of the considered view that the language in section 56(2)(viii) and 145B(1) are plain, simple and unambiguous and that the correct legal position is that the interest received during the year on enhanced compensation under section 28 of the Land Acquisition Act, 1894 is exigible to tax u/s 56(2)(viii) r.w.s 145B(1). The assessee’s claim of the same being exempt u/s 10(37) of the Act is unsustainable as the provisions of section 10(37) deals with ‘compensation’ only and not “interest on compensation or enhanced compensation”.

We are of the considered view that the AO had not inquired all the aspect both in terms of law as in the statute book and law laid down by the Supreme Court and High Court, especially the jurisdictional High Court of Punjab & Haryana High Court in the case of Mahender Pal Narang [2020 (3) TMI 1115 - PUNJAB AND HARYANA HIGH COURT] and Puneet Singh [2019 (1) TMI 1068 - PUNJAB AND HARYANA HIGH COURT]. We therefore are of considered view that the PCIT rightly assumed the jurisdiction over the assessee u/s 263 as the reassessment order being erroneous and prejudicial to the interest of the Revenue.

Respectfully following the Hon’ble Supreme Court in Sham Lal Narula (Dr.) v[1964 (4) TMI 10 - SUPREME COURT] and the jurisdictional High Court in the case of Mahender Pal Narang and Puneet Singh (supra) and Hon’ble High Court of Delhi in the case of Inderjit Sodhi [2024 (4) TMI 408 - DELHI HIGH COURT] and that of Veena Shah [2024 (7) TMI 501 - ITAT DELHI] (which dealt with identical issue being revised u/s 263 of the Act) as cited above, we hold that the ld. PCIT order dated 14.03.2024 to recompute the interest on enhanced compensation in accordance with section 56(2)(viii) r.w.s. 145B(1) and allowing deduction u/s 57(iv) needs no interference. Grounds raised by the assessee dismissed.

Reopening of assessment - sanction granted u/s. 151 - borrowed satisfaction - eligibility of deduction u/s 80GGC - addition for the donation made to the Rashtriya Samajwadi Party (Secular) - as argued addition was made solely on the basis of unverified and uncorroborated extracts of the alleged third-party statements recorded u/s 132(4), without providing copies thereof to the appellant, in gross violation of principles of Audi Alteram Partem.

HED THAT:- From the perusal of the records related to the information details of search conducted at Rashtriya Samajwadi Party (Secular), the assessee’s name was categorically mentioned related to the donation given. Thus, ground no. 1 that the reopening is valid/void ab initio does not sustain as the 144AD order categorically mentions the deduction claimed u/s. 80GGC to the extent of Rs. 10,00,000/- and though in para 4 only the RSP amounting to Rs. 5,00,000/- was mentioned in para 8.2 of the said order, the total donation of Rs. 10,00,000/- claimed by the assessee as deduction was taken into account by the Assessing Officer. Thus, ground no. 2 does not sustain.

Though the ld. A.R. relied upon the case of Rajiv Bansal [2024 (10) TMI 264 - SUPREME COURT (LB)] it can be categorically mentioned that in the present case the assessee is not travelling beyond the show cause notice issued u/s. 148A(b) as the issue is related to the donations made to registered unrecognized political parties and claiming the deduction u/s. 80GGC.

Sanction u/s 151 - Sanction granted u/s. 151 as in the case of reopening the assessee’s case prima facie falls within the clause (c) of provision to section 148A of the Act. The ld. A.R. submitted that the said proviso categorically mandates the Assessing Officer as to draw satisfaction note with the prior approval of the Pr. CIT or Commissioner. But the assessee has ignored the total holistic interpretation of the proviso more specifically proviso (a) as in the present assessee’s case there was search and seizure action conducted by the revenue in respect of 23 Ahmedabad based registered un-recognized political parties (Date of search 07-0- 2022). Thus, the said contention will also do not apply in assessee’s case. Ground no. 4 is dismissed.

Additions are solely made on the basis of Investigation Wing and are fromborrowed satisfaction without allowing the assessee to cross examine those third parties - From the perusal of the records, the assessee has given the details of bank statements along with donations receipts as well as registration letter of political parties with the Election Commission of India. These documents were not taken cognizance by the AO as well as by the CIT(A). Therefore, it will be appropriate to remand back this issue to the file of the Assessing Officer for taking cognizance of these details and adjudicate the same as per Income Tax Statute. Thus, the appeal of the assessee is partly allowed for statistical purpose.

Penalty order u/s 271(1)(c) - Furnishing inaccurate particulars of income on account of lease operating expenses - Change in estimate of lease term for operating leases - parameters for judging justification for addition in the assessment proceeding - Difference of opinion in tax treatment

HELD THAT:- Assessee had claimed additional deduction on account of change in the method of claiming the lease rental expense on SLM basis. It is found that this fact was duly reported by the Auditor in the audited accounts at para 4.2 of Schedule-17 regarding “Significant accounting policies for the year ended 31st March 2011”.

There were two opinions on the allowability of incremental lease rental expense on SLM basis in accordance with AS- 19. In the present case, the assessee had adopted one of the plausible view and, therefore, the claim as made by the assessee cannot be held as furnishing of inaccurate particulars of the income.

It has been held in the case of Reliance Petroproducts P. Ltd. [2010 (3) TMI 80 - SUPREME COURT] that merely because the claim of the assessee was rejected by the revenue, that by itself could not attract penalty u/s 271(1)(c) of the Act. The assessee had furnished plausible explanation for the claim as made by it and the said explanation was not found to be false. The parameters for judging justification for addition in the assessment proceeding are different from the penalty imposed on account of concealment of income or filing inaccurate particulars of income. Merely because the addition was confirmed in appeal, the same cannot be the sole basis to come to a conclusion that assessee had concealed income or had furnished inaccurate particulars of income.

In the case of Granite Gate Properties Private Limited [2019 (1) TMI 655 - DELHI HIGH COURT] the assessee had incurred indirect project expenses which was disallowed during the relevant assessment year but was allowed in the next assessment years. On the issue of imposition of penalty under section 271(1)(c) of the Act, the Hon’ble Delhi High Court had held that the full details regarding the expense was disclosed by the assessee and no addition was made by doubting and disturbing figures of amounts as mentioned. Therefore, the penalty imposed under section 271(1)(c) of the Act was set aside.

In the present case also the assessee had made full and true disclosure in the respect of the claim for lease rental expense and the change in the method of the accounting in respect of this item, which was duly disclosed in the audited accounts. The additional lease rental expense as claimed by the assessee in this year was otherwise eligible and allowable as deduction in the subsequent years. It is not the case that the assessee had disclosed any inaccurate figure or had not acted in a bona fide manner. Therefore, we are of the considered opinion that the assessee should not be burdened with penalty under section 271(1)(c) of the Act for furnishing inaccurate particulars of the income.

Thus penalty order passed u/s 271(1)(c) of the Act in the present case for furnishing of inaccurate particulars of income, is quashed. Decided in favour of assessee.

Seeking provisional release of goods - Inshell Walnuts - condition imposed are onerous in nature or not - condition of Security Deposit/Bank Guarantee for the 100% estimated differential duty along with the requisite redemption fine under Section 125(1), and penalty u/s 112(a)/114A of the Customs Act, 1962 - requirement to furnish a Bank Guarantee even to secure the anticipated fine and anticipated penalties, in the absence of SCN issued to petitioner - HELD THAT:- Considering the peculiar facts of the present case, the conditions imposed by the Principal Commissioner of Customs to furnish a Bank Guarantee equal to 100% of the estimated differential duty and anticipated fine and penalties, would amount to inconsistency and therefore is required to be modified. This is because it is an admitted fact that the Respondents themselves have provisionally assessed the subsequent imports and allowed clearance of the goods for home consumption on the Petitioner’s providing a bond for the value of the goods and a Bank Guarantee of 50% of the estimated differential duty.

The condition of furnishing of the Bank Guarantee of Rs. 4,44,45,033/- is modified, and it is directed that the Petitioner’s goods seized vide Seizure Memo dated 22.12.2025, be released provisionally subject to the Petitioner furnishing a Bank Guarantee for 50% of the estimated differential duty. The rest of the conditions imposed by the Principal Commissioner of Customs shall remain unchanged and shall be complied with by the Petitioner - The Provisional Duty Bond as well as the Bank Guarantee shall be furnished by the Petitioner to Respondent No. 2 within a period of 1 week from today. On the aforesaid Bond and Bank Guarantee being furnished, the Customs Department shall provisionally release the said goods of the Petitioner covered by the six Bills of Entry [referred to paragraph 1 of this order] within a period of 1 week thereafter.

The matter placed on board for reporting compliance on 09.02.2026.

Maintainability of appeal - Whether an appeal against an order passed under the Customs Broker Licensing Regulations, 2018 made by the Department– Commissioner of Customs is maintainable or not - HELD THAT:- Since there are four decisions of Co-ordinate Benches of this Court holding that under Regulation 19 of Customs Broken Licensing Regulations, 2018, the Department would not be entitled to file an appeal, this Court follows the decision in Commissioner of Customs (Airport & General) [2023 (3) TMI 847 - DELHI HIGH COURT] and rejects the present appeal filed on behalf of the Department.

However, if there is any decision rendered by the Supreme Court which permits such an appeal, then the Department is free to approach the CESTAT for the purpose of revival of such appeal.

Present appeal is disposed of in these terms.

Penalty under Section 112(a) & (b) of the Customs Act, 1962 - Liability of consignee for smuggling by reason of concealment in transit - Burden of proof to connect consignee with illicit goods - Confiscation of goods concealed beneath legitimate cargo - Provisional release, redemption and appropriation of security

Penalty under Section 112(a) & (b) of the Customs Act, 1962 - Burden of proof to connect consignee with illicit goods - Liability of consignee for smuggling by reason of concealment in transit - Whether penalties imposed upon the appellant (consignee) under Section 112(a) & (b) are sustainable. - HELD THAT: - The Tribunal examined the material connecting the appellant to the illicit cigarettes found concealed beneath bundles of phool jhadu. Though the appellant had ordered phool jhadu and the consignment was supported by invoice and e-way bill, the goods actually recovered were short of the invoiced quantity and foreign-origin cigarettes were found concealed under the jhadu. The Tribunal found no evidence establishing that the appellant was the transporter, owner, or in-charge of the vehicle or that he assisted in loading or concealing the cigarettes. Reliance was placed on precedents where custodians/consignees/custodial agencies were not held liable in the absence of cogent evidence of positive acts, knowledge or control over the illicit stuffing or transport. In view of absence of any direct, proximate or cogent evidence linking the appellant to the illicit cigarettes or to active abetment of smuggling, the imposition of penalty on the appellant could not be sustained. The Tribunal, while noting that the phool jhadus and cigarettes were rightly confiscated and that provisional release/redemption and appropriation of security were matters of the adjudicating authority, restricted its order to the penalties imposed on the present appellant and modified the impugned order accordingly. [Paras 4, 5]

Penalties imposed on the appellant under Section 112(a) & (b) are set aside for lack of evidence connecting him with the illicit cigarettes; appeal allowed insofar as it challenges the penalty.

Final Conclusion: The appeal is allowed: the penalties levied on the appellant under Section 112(a) & (b) are set aside for want of evidence of his involvement with the illicit cigarettes; the confiscation and consequential provisions regarding provisional release/redemption/appropriation (as adjudicated) remain undisturbed and the order is modified only insofar as it imposes penalty on the present appellant.

Levy of penalty u/s 114 (iii) and 114AA of the Customs Act - conspiracy of mis declairing the destination of export of goods to the countries listed in special focus market but same were diverted to Dubai with a view to availing undue benefits under SFMS - HELD THAT:- As the Scrips were not cancelled before the issuance of the order by the Joint Commissioner, it is not possible to sustain the demand of duty and the imposition of penalty under section 114(iii) of the Customs Act.

It is seen that in the Bill of Entry and Bill of Lading issued by the Shipping Line to the exporter, the port of discharge is shown as Jebel Ali in Dubai. Therefore, the appellant had clear knowledge that the port of discharge was not Uzbekistan but Jebel Ali in Dubai, for which port the benefit of the Focus Market Scheme could not have been taken - It can, therefore, safely be concluded that the appellant had deliberately made a false statement in the Shipping Bill and the Bill of Lading.

There is no infirmity in the order passed by the Commissioner (Appeals) confirming the imposition of penalty under section 114AA of the Customs Act - the imposition of penalty under section 114(iii) upon the appellant is set aside but the penalty imposed upon the appellant under section 114AA is maintained - Appeal allowed in part.

Revocation of Customs Broker License of the appellant - forefeiture of whole amount of security deposit furnished by the appellant - levy of penalty - violation of provisions of Regulations 10(a), 10(d), 10(e) and 10(n) of CBLR 2018 - reliability of statements made u/s 108 of Customs Act, 1962 even though the procedure contemplated under section 138B of the Customs Act had not been followed.

Violation of Regulation 10(a) of the 2018 Regulations - HELD THAT:- Regulation 10(a) of the 2018 Regulations provides that the Customs Broker shall obtain an authorization from the person who employs him as a customs broker. It is not the contention of the department that there is no authorization letter duly signed by the person who has employed him, for what has been stated by the Commissioner in the impugned order is that the authorization was received from M/s Prime World Logistics and not from the importer. There is no requirement under Regulation 10(a) that the authorization should be received directly from the importer. The authorization dated 17.01.2022 is at page 269 of the appeal memo. It clearly authorizes the appellant as a customs clearing agent for clearance of the import consignment. The Commissioner has relied upon the statement of Rajeev Agarwal, Manager of the importer recorded on 04.06.2024 under section 108 of the Customs Act to hold that the Bills of Entries were filed by the appellant without proper authorization. A statement made under section 108 of the Customs Act cannot be relied upon if the procedure contemplated under section 138B of the Customs Act is not followed - In the absence of any denial by the importer that he had not issued the authorization letter dated 17.01.2022 in favour of the appellant, it cannot be said that the appellant did not have the authorization from the importer as is required under Regulation 10(a) of the 2018 Regulations.

Violation of Regulation 10(d) of the 2018 Regulation - HELD THAT:- Regulation 10(d) of the 2018 Regulation requires the Customs Broker to advise his client to comply with the provisions of the Customs Act and in case of non-compliance bring the matter to the notice of the Deputy Commissioner of Customs - The Commissioner has placed reliance on the statement of Deepak, proprietor of transport company called Krishna Kohli Tempo Services made under section 108 of the Customs Act wherein he stated that he was instructed by the H Card Holder of transport, the packages contained in the consignments imported under the two Bills of Entry dated 18.11.2023 and 27.01.2024 bore stickers marked “UN3481” indicating the presence of Lithium Ion Batteries and this fact should have been brought to the notice of the Deputy Commissioner - a statement made under section 108 of the Customs Act cannot be relied upon as the procedure contemplated under section 138B of the Customs Act was not followed. The charge of contravention of Regulation 10(d), therefore, is not established.

Violation of Regulation 10(e) of the 2018 Regulations - HELD THAT:- Regulation 10(e) of the 2018 Regulations requires the Customs Broker to exercise due diligence to ascertain the correctness of any information which he imparts to a client with reference to any work relied to clearance of cargo package. The main reliance by the Commissioner is on the statement of Deepak regarding the marking on the packages and from this, the Commissioner has concluded that the appellant failed to exercise due diligence to verify the nature and correctness of the goods. As noticed above, a statement made under section 108 of the Customs Act cannot be relied upon in the absence of procedure contemplated under section 138B of the Customs Act having been followed. This charge has, therefore, also not been established.

Violation of Regulation 10(n) of the 2018 Regulations - HELD THAT:- Regulation 10(n) of the 2018 Regulations requires the Customs Broker to verify the correctness of Importer Exporter Code Number (IEC), Goods and Service Tax Identification Number(GSTIN), identity of the client and functioning of the client at the declared address by using reliable, independent, authentic documents, data or information - It is not the case of the department that the requisite KYC documents were not provided as the only allegation is that they were provided by a third person and not directly by the importer. What is required is that the Customs Broker should verify the correctness of the documents. There is no allegation either in the show cause notice nor is there any finding in the impugned order of the Commissioner that the KYC documents were forged or manipulated. The appellant had clearly obtained the requisite KYC documents and, therefore, it cannot be said that the appellant had violated the provisions of Regulation 10(n) of the 2018 Regulations.

Thus, as the findings of the Commissioner on the violation of each of the Regulations cannot be sustained, the impugned order dated 28.07.2025 passed by the Commissioner deserves to be set aside and is set aside - Appeal allowed.

Classification of goods proposed to be imported - Flavoured Supari - to be classified under 21069030 along with concession of customs duty under S. No. 39 of Table 1 of Exemption Notification No. 68/2012-Cus. dated 31.12.2012 or not - HELD THAT:- In the case on hand, it is noted that since the subject goods are "floavored supari", the tariff heading 2106 merits consideration. The tariff heading 2106 covers "Food Preparations not elsewhere specified or included". The supplementary note 2 to the Chapter 21 also gone through wherein it is stated that, "In this Chapter "betel nut product known as Supari" means any preparation containing betel nuts. but not containing any one or more of the following ingredients, namely: lime, katha (catechu) and tobacco whether or not containing any other ingredients, such as cardamom, copra or menthol."

It is also noted that Heading 2106 covers the word 'preparation' in the description of Heading is fulfilled in this case as a detailed process is carried out on the betel nut to arrive at the product 'floavored Supari' viz. removing impurities, polishing, cleaning, cutting, grading and separation, dehydration and mixing of floavor. The betel nut after being subjected to the stated processing, a specific preparation emerges out which is known as Floavored Supari. This processing of betel nut distinguishes it from betel nut as specified in Chapter 8 of the Customs Tariff. In Chapter 21 "betel nut product known as Supari" means any preparation containing betel nuts, but not containing any one or more of the following ingredients, namely, lime, katha (catechu), and tobacco whether containing any other ingredients, such as cardamom, copra or menthol."

Further, by application of GIR 2(b) or for any other reason, the goods are, prima facie, classifiable under more than one Heading, Rule 3 (a) of the General Rules of Interpretation (GIR) of the Customs Tariff Act, 1975 comes into picture, and by application of this rule, the 'most specific description' is preferred. The Chapter 21 and Supplementary Note 2 of Chapter 21, there is a specific entry of "betel nut product known as 'supari" and Supplementary Note 2 to Chapter 21 clarifies that any preparation containing betel nuts not containing lime, katha (catechu) or tobacco would be covered under the said entry "betel nut product known as 'supari' against 21069030. Hence, by application of GIR, when there is specific entry of Floavored Supari found under Chapter 21 and Supplementary Note to Chapter 21, the same would prevail over the General Entry of Areca Nuts under Chapter 8, Sub-heading 080280 of the Customs Tariff.

It is clear that the bar that question raised in application is already pending in the applicant's case before any officer of customs, the Appellate Tribunal or any Court, is clearly limited to the applicant only. In case; any court is already seized of the matter of the applicant; the Act bars the Authority to entertain such application. This bar by no stretch of imagination can be construed bar on deciding other applicants' application whose question raised in application is not pending before the court. This is a matter of fact that on legal issues someone or other approaches courts and at any point of time, no issue is free from litigation. In case the reading of "already pending' is stretched beyond the applicant, it will make the operation of the provisions of Advance Ruling impossible. In any case as the act is specific about the applicant only - the stay on operation of Mumbai Advance Ruling order is not coming in way deciding the application on merit as applicant has mentioned that in their case no such question is pending before any officer of Customs or appellate Tribunal or Court.

So far as question of following previous rulings as contented by the department is concerned, it is opined that the authority being creation of law; requires to follow the judicial discipline. In present case, the applicant has quoted a High Court decision in case of M/s A.K. Impex [2024 (4) TMI 85 - MADRAS HIGH COURT] which has decided the classification of identical product under 21069030. The department in its comment has neither disputed the applicability of ratio of this judgement nor they have produced any evidence that this order has been challenged by the department and Hon'ble Supreme Court has granted any stay on operation of this order - the contention of department to issue ruling in light of previous rulings is rejected.

Further, the applicant has relied upon the CBIC Circular No 163/19/2021-GST dated 06.10.2021 in the present case, which was issued based on the recommendations of the GST Council in its 45th meeting held on 17th September, 2021 for clarifying classification aspects of the scented sweet supari and floavored coated illaichi. It is found that both the products will be subjected to the processes before their importation and hence, it is pertinent to consider the content of the CBIC circular noted earlier in view of the provisions of the Section 3(7) of the Customs Tariff Act, 1975.

Contents of the CBIC Circular No. 163/19/2021-GST, dated 6th October, 2021 are applicable to the present case by virtue of legal framework discussed supra. Classification and applicable rate of duty under GST are clarified in the paras reproduced from the CBIC Circular No. 163/19/2021-GST, dated 6th October, 2021 from F. No. 190354/206/2021-TRU where it was held that 'There cannot be a situation where same product is subjected to levy of basic customs duty under one CTH and levy of IGST under another CTH of the Customs Tariff Act, 1975. Hence, in view of supplementary Note 2 of Chapter 21 of Schedule 1 of the Customs Tariff Act, 1975 read with Para 7 of the C.B.I. & C. Circular No. 163/19/2021-GST, dated 6th October, 2021 from F. No. 190354/206/2021- TRU and the provisions of Section 3(7) of the Customs Tariff Act, 1975 the scented sweetened supari merits classification under CTH 2106 90 30.'

Thus, the subject goods covered under this application merit classification under CTI 21069030.

Applicability of exemption notification - whether the impugned goods are eligible for benefit of Sr. No. 39 of Table 1 of exemption Notification No 68/2012-Customs Dated 31.12.2012 which provide concession of customs duty is extended to all goods classified under Chapter 21 except compound of alcoholic preparations of a kind used for the manufacture of beverages, of an alcoholic strength by volume exceeding 0.5%, determined at a temperature of 20 degrees centigrade falling under 2106 90? - HELD THAT:- Upon perusal of the above serial number, it is aptly clear that the goods falling under the description "All goods (except compound alcoholic preparations of a kind used for the manufacture of beverages, of an alcoholic strength by volume exceeding 0.5% by volume, determined at a temperature of 20 degrees centigrade falling under 2106 90)," classifiable under Chapter 21, are eligible for concession of Customs Duty (BCD) under Serial No. 39 of Notification No. 68/2012. In the case on hand, as it has been established that the subject goods are classifiable under CTH 21069030, they are accordingly eligible for the benefit under Serial No. 39 of the aforementioned notification.

The goods viz. 'floavored supari', merit classification under CTI 21069030 - the goods floavored Supari is eligible for concession of Duty of Customs as provided under SI No 39 of Table 1 of Notification No 68/2012-Customs Dated 31.12.2012.

Seeking grant of bail - Money Laundering - proceeds of crime - prosecution is hit by the bar of Article 20(2) of the Constitution or not - protection of double jeopardy (nemo debet bis vexari pro una et eadem causa) - applicability of twin conditions u/s 45 of PMLA - HELD THAT:- The primary thrust of the petitioners' challenge—that the present prosecution is hit by the bar of Article 20(2)—is legally fragile. The protection against Double Jeopardy (nemo debet bis vexari pro una et eadem causa) is triggered only upon the conclusion of a prior trial resulting in conviction or acquittal. Since the trial of the prior ECIR is still pending, the threshold for a constitutional bar remains unmet.

Furthermore, it is required to distinguish between a static criminal act and a “continuing offense.” As elucidated in Vijay Madanlal Choudhary v. Union of India [2022 (7) TMI 1316 - SUPREME COURT (LB)], the offense of money laundering under Section 3 of the PMLA is not a frozen event but a persistent process. It continues as long as the accused is involved in any activity connected with the “Proceeds of Crime.” If the petitioners utilized their previous liberty to generate fresh illicit funds post-2016, such acts constitute a distinct cause of action. Article 20(2) is a shield for the innocent; it is not a license for prospective criminality nor does it provide an umbrella of immunity for subsequent illegalities committed during the pendency of a prior investigation.

The “Twin Conditions” under Section 45 of the PMLA are not mere formal hurdles but a statutory command. As held in Gautam Kundu v. Enforcement Directorate [2015 (12) TMI 1133 - SUPREME COURT], these conditions override the general provisions of the Cr.P.C. In the face of an unaccounted deficit of nearly ₹1,906 Crore and evidence of fresh layering post-2017, we are unable to record a satisfaction that there are “reasonable grounds” to believe the accused are not guilty.

It is a settled principle that economic offenses involving public money constitute a “class apart.” As held in Y.S. Jagan Mohan Reddy, that “The economic offences having deep-rooted conspiracies and involving loss of public funds need to be viewed seriously and considered as grave offences affecting the economy of the country as a whole, “the economic such offenses need to be viewed seriously as they affect the economy of the country as a whole.

In summation, the liberty of an individual cannot be viewed in isolation from the collective interests of thousands of defrauded investors. The petitioners' failure to discharge the “Twin Conditions,” coupled with their conduct as Proclaimed Offenders, creates a formidable legal barrier to their release.

There are no merit in the petition. This is not a fit case for the grant of regular bail - the prayer for bail is rejected.

Recovery of service tax with interest and penalty - demand has been confirmed on the basis of difference in the figures as per the ITR and 26AS - appellant has not able to provide a plausible explanation for the difference in the figures of ITR and 26AS - no specific reason has been stated for invoking the extended period of limitation - HELD THAT:- Appellant was not registered with the department and was not were not paying any service tax. In terms of the information received from income tax authorities, as per ITR appellant had shown amount received towards the sale of services as Rs.12,70,75,254/- and as per their Form 26AS they had received Rs.12,23,82,691/-. While receipt in form 26AS has been considered to be in respect of the services on which the service tax was to paid by the service recipient on reverse charge basis. Demand has been made only in respect of the remaining amount. Interestingly, the difference being talked of is not the difference between any service taxpaying documents but the same is vis-à-vis the difference in the receipt as per ITR and 26AS.

There are no reason recorded to show that the difference between the two was in respect of any taxable services provided or otherwise. No enquiry was conducted to determine the nature of the services provided. Only it has been determined that this amount is for providing taxable service. In absence of any investigations or determination of services provided against this amount, there are no position to determine where this amount should be subjected to tax or not. Further, there are no reason to hold that extended period could have been invoked in the present case for making this demand.

From Order-in-Original and the impugned order, it is evident that for the major portion of the receipt, which is more than 96% revenue itself is of the view that these are in respect of services on which service tax was to be discharged by the service recepient under reverse charge mechanism. That being so, it became much more necessary to investigate and find out the true nature of the remaining receipts, it might be this amount also would have been the amount received for which service tax was payable under reverse charge mechanism. In any case for the purpose of levy of service tax it is not only necessary to establish the service but also the contractual/transactional relationship between the service provider and the service recipient, which is missing in the present case.

Extended period of limitation - HELD THAT:- It is clearly a case where appellant has entertained a belief that in respect of all the receipts being received by them, the service tax was payable by the service recipient, when a person entertained such a bonafide belief extended period of limitation would not have been invoked. Hon’ble Supreme Court in the case of Uniworth Textiles Ltd. [2013 (1) TMI 616 - SUPREME COURT] has held that 'on account of the fact that the burden of proof of proving mala fide conduct under the proviso to Section 28 of the Act lies with the Revenue; that in furtherance of the same, no specific averments find a mention in the show cause notice which is a mandatory requirement for commencement of action under the said proviso; and that nothing on record displays a willful default on the part of the appellant, we hold that the extended period of limitation under the said provision could not be invoked against the appellant.'

The demand is hit by limitation and the findings recorded in the impugned order in this regard cannot stand in the eyes of law. Accordingly, the impugned order is set aside - appeal allowed.

Liability of appellant to pay service tax - taxable service of renting of immovable property alleged to have been not shown in the ST-3 Returns by suppression, as opposed to the figures shown in their Profit & Loss account for the Financial Years 2014-2015 to 2017-2018 (upto June, 2017) in terms of Chapter V of the Finance Act, 1994 - Suppression of facts or not.

HELD THAT:- The show cause proceedings were initiated and the impugned order confirming the original order in demanding service tax on the appellants was issued on the presumption that the entire value of ‘renting of immovable property’ totaling to Rs. 45,69,150/- are liable to service tax for an amount of Rs.6,68,666/- and such tax has not been paid by the appellants. However, as upheld by the learned Commissioner (Appeals) in the impugned order, the Original Authority while adjudicating the SCN had taken into account the submissions made by the appellants and had reduced the service tax demands to Rs. 91,605/-. This is apparent from the findings given by the authorities below in adjudication of the case.

The detailed ledger documents submitted by the appellants, duly supported the various individual entries made in their Financial Records for the Financial Years 2014- 2015 and 2015-2016, indicate that difference in actual figures indicated in the last column of the table above, to the extent of an amount of Rs. 4,36,869/- for FY 2014-2015 and Rs. 4,55,897/- for FY 2015-2016 have been accounted for rental income of residential quarters, recovered from their staff posted in Sikkim project. It has been held by the authorities below that there is no requirement for payment of service tax on such rental income for residential dwelling in terms of ‘Negative List’ entry “services by way of renting of residential dwelling for use as residence” provided at clause (m) of Section 66D of the Finance Act, 1994.

Differential amount of Rs. 5,19,599/- for the Financial Year 2017-2018 - HELD THAT:- The amount has been arrived at, by taking notional rental income of Rs.50,00,000/- deducted by the value of rental income declared in the ST-3 Return for the first quarter at Rs.44,80,401/-. However, from the Financial Records submitted by the appellants, it has also been demonstrated that the various individual entries made in their Financial Records for the first quarter of Financial Year 2017-2018, indicating the amount of Rs. 4,53,213/- has been accounted for rental income of residential quarters, recovered from their staff posted in Sikkim project and the rest of the amount of Rs.44,80,448/- has been accounted for non-residential income. Therefore, the total amount of rental income for the first quarter of the Financial Year 2016-2017 at Rs.49,33,661/- has been duly accounted for by the appellants.

Suppression of facts or not - HELD THAT:- There are no substantiation made by the authorities below for invoking deliberate suppression of facts, as the entire details of rental income had been duly accounted for in the books of accounts and the CERA audit have able see such records and raise the audit objection, which is the cause of the show cause proceedings.

There are no merits in the impugned order passed by the learned Commissioner (Appeals) to the extent it had upheld the confirmation of adjudged demands, without any substantiation and thus, it does not stand the scrutiny of law - the appeal is allowed in favour of the appellants.

Non-payment of service tax - commercial training or coaching services - renting of immovable property services - short time accommodation services - appellant were under the bonafide belief, based on advice of statutory auditors that being a charitable institution and registered under Section 12AA of the Income Tax Act, they were exempted from payment of service tax, by N/N. 25/2012-ST dated 20.06.2012 - invocation of extended period of limitation.

Commercial training or coaching services - HELD THAT:- The fact of rendering of certain services like training for competitive exams like IAS/RAS to needy members cannot be considered as rendering of commercial training or coaching centre, given the background of the organization working for purely noncommercial purpose/objectives, being in the realm of a charitable organization. The revenue has not disputed the charity objective/purpose and programmes carried out by the appellant. They have also not disputed the contention that sums received towards training for competitive exams like IAS/RAS for its community members, were utilized for various charitable activities concerned with the upliftment and skill development and advancing the quality of life of the downtrodden, poor and such other members of the community. Given the conspectus of the aforesaid matter, the Tribunal is not quite enamored with the department’s stance in the matter.

Renting of immovable property service - HELD THAT:- The authorities below have taken cognizance of the appellant’s submission that they are providing their immovable property, for purpose of social programmes of their community only. Moreover, the appellant has been showing in their financial records, income received thereto as ‘rental income’ and therefore the revenue authorities have held the rendering of renting of immovable property service by the appellant. We would add here that one swallow does not make a summer - The fact that there is no fixed and organized tariff structure laid out for the purpose, certainly goes in to support the appellant’s contentions. Mere showing of such income under ‘advance rent received/rent receivable’ as recorded in the appellant’s financial statements, cannot make their earnings questionable, in the maze of plethora of factual evidence furnished. The authorities hold that such entries corroborated the department’s version of rendering of the said services, as stated. It is also noted that this is a very narrow understanding and interpretation of the subject matter, and cannot be maintained.

Miscellaneous/other taxable income - HELD THAT:- Any duty/tax demand can only be sustained on the basis of hard, cogent, factual and demonstrative piece of evidence. The onus for which lies on the department. The appellant has stated before us that any such miscellaneous income, were all utilized for purpose of charity and funded their charitable activities and various other community development and welfare programmes undertaken. The Revenue has not controverted the said submissions, as to the fact of utilization of such amounts received by the appellant - there are no reason to find fault with the said business model of the appellant, or to dismiss the same as non-conduct of various philanthropic acts.

Invocation of extended period of limitation - HELD THAT:- It is noted from records that the authority below has mentioned that several letters were written to the appellant seeking information and pointed out the same in support of alleging malafide intention for evading payment of service tax. Thus, this is taken recourse, to allege suppressing of vital information from the department and hence the invocation of the extended period.

It is also noted that the revenue has not cast even an iota of doubt that the charitable activities were not carried out by the organization and that the appellant were not a profit promoting institution - The fact that the appellant was duly exempted under section 12AA of the Income Tax Act, apart from their registration under the Rajasthan Co-operative Registration Act, are sufficient enough to corroborate the premise that the appellant harboured a bonafide belief of being covered within the scope of the Mega Exemption Notification No. 25/2012- ST dated 20.06.2012, exempting charitable organizations.

The Tribunal’s decision in the case of Great Lakes Institute of Management Ltd. v. Commr. of S.T., Chennai [2008 (1) TMI 75 - CESTAT,CHENNAI] indeed comes to their aid rather quite strongly wherein it was expressly pointed out that as no individual stood to gain from profits of the establishment which were ploughed back for charitable purposes and hence the same was not held to be a commercial enterprise. Facts in the present matter are quite akin. It may also be mentioned in passing, that it is settled law that any delay in furnishing of information sought for by the Revenue from the appellant cannot be a reasonable ground for invocation of extended period.

The impugned order is liable to be quashed and therefore set aside - Appeal allowed.

Classification of turnover between sale of goods and sale of services - reliance on ST-3 returns and ITR for determination of taxable turnover - use of 26AS/TDS entries and VAT assessment order as evidentiary materials - burden of proof to substantiate reclassification of ITR figures - imposition of penalty under Section 78 and discretionary penalty under Section 77

Classification of turnover between sale of goods and sale of services - reliance on ST-3 returns and ITR for determination of taxable turnover - use of 26AS/TDS entries and VAT assessment order as evidentiary materials - burden of proof to substantiate reclassification of ITR figures - Whether the amount shown as sale of services in the ITR for FY 2016-17 could be reclassified as sale of goods and whether the taxable value of services is Rs.23,49,468/- as declared in ST-3 returns. - HELD THAT: - The Tribunal examined the ST-3 returns, the 26AS/TDS summary, the trading and profit & loss account and the VAT assessment order produced by the appellant. While the lower authorities treated the higher figure in the ITR as sale of services, the appellant produced the VAT assessment order and trading account showing that Rs.46,13,896/- related to sale of lubricants (nonVAT goods) and that the value of services was Rs.23,49,468/-, the amount declared and taxed in the ST-3 returns. The Tribunal found these documents sufficient to explain the difference between ITR and ST-3 figures and to establish that the excess in ITR was attributable to sale of goods, not taxable services. The Tribunal therefore held that the demand based on the higher ITR figure lacked merit and set aside the demand. [Paras 4]

Demand confirmed by the lower authorities on the basis of ITR figure is set aside; taxable service turnover for FY 2016-17 is as declared in ST-3 returns (Rs.23,49,468/-) and the portion shown in ITR as sale of goods (Rs.46,13,896/-) is not exigible to service tax.

Imposition of penalty under Section 78 and discretionary penalty under Section 77 - effect of absence of merits in demand on penalty - Whether the penalties imposed by the adjudicating authority should be sustained where the demand for service tax has been held without merit. - HELD THAT: - The Tribunal observed that since the substantive demand was found to be without merit on the evidence produced by the appellant (VAT order and accounts establishing sale of goods), the penalties premised on that demand could not stand. Applying the reasoning that a penalty predicated on an unsubstantial demand should be reconsidered, the Tribunal held that the penalties imposed by the adjudicating authority need to be set aside. The Tribunal therefore set aside the penalties; in the impugned appeal order the appellant's challenge to the mandatory penalty under Section 78 and other penalties was allowed to the extent recorded. [Paras 4, 5]

Penalties imposed by the adjudicating authority are set aside because there is no merit in the underlying demand.

Final Conclusion: The appeal is allowed: the Tribunal accepted the appellant's evidence that a portion of the ITR figure related to sale of goods (lubricants) and not taxable services, set aside the confirmed demand and quashed the penalties imposed by the adjudicating authority for FY 2016-17.

Recovery of dues - priority of debts between secured creditor vis-a-vis claim of Central Excise - Central Excise dues are unsecured debt and a Crown debt or not - HELD THAT:- The issue regarding priority of debts between secured creditor vis-a-vis claim of Central Excise is no longer res integra. The Supreme Court in Punjab National Bank Vs. Union of India and Ors [2022 (2) TMI 1171 - SUPREME COURT] has held that dues of the secured creditors will have priority over the dues of the Central Excise Department, as even after insertion of Section 11-E of the Central Excise Act, 1944 the provisions contained in the SARFAESI Act will have an overriding effect on the provisions of the Central Excise Act.

In the present case, the Petitioner – secured creditors has registered its charge over the said premises with CERSAI on 14th September, 2012. The use of the word ‘priority’ in Section 26E of the SARFAESI Act is that the rights accorded to ‘first charge’ holders by Central as well as State legislation would be subordinate to the dues of the Secured Creditor.

It has been further held by the Full Bench in the Jalgaon Janta Sahakari Bank Ltd. [2022 (9) TMI 163 - BOMBAY HIGH COURT] that the attachment order is required to be followed by a proclamation according to law and it is only then that the 'priority' accorded by Section 26E of the SARFAESI Act, and Section 31B of the RDDB Act, would not get attracted.

Considering that in the present case there is no attachment order and / or proclamation according to law, the Petitioner - secured creditor would have priority in respect of its dues over and above any claim made by Respondent No. 1 – Central Excise Department.

The impugned Letters dated 15th February, 2010; 25th April, 2012; 23rd January, 2014 and 26th August, 2015 issued by the Authorities of the Central Excise Department, are quashed and set aside - the petition is disposed off.

Irregular availment of credit on inputs and input services attributable to the portion of electricity wheeled out to the sister units of the appellant as well as electricity sold to the State Electricity Board - the said electricity was not used in the manufacture of dutiable excisable goods from the factory of the appellant - levy of penalty u/r 15(1) of Credit Rules - recovery of interest under section 11AA of the Central Excise Act read with rule 14 of the 2004 Credit Rues - HELD THAT:- The fact of reversal of CENVAT credit attributable to inputs and input service used in generation of electricity sold to the State Electricity Board has been provided by the appellant in the present appeal and it was also provided by the appellant to the Commissioner in the replies filed to the show cause notices, but the Commissioner has failed take notice of this fact in the impugned order. This fact was also indicated by the appellant in the corresponding ER-1 returns filed for the respective months. Thus, the finding recorded by the Commissioner that the appellant did not provide details or reversal of CENVAT credit is against the records and has to be set aside.

It is settled law that if CENVAT credit availed on inputs and input services attributable to electricity sold out to the State Electricity Board is reversed on monthly basis, even at a later stage, it would tantamount to not availing credit at all as was observed by the Supreme Court in Chandrapur Magnet Wires (P) Ltd. vs. Collector of C. Excise, Nagpur [1995 (12) TMI 72 - SUPREME COURT] and Commissioner of Central Excise & Customs vs. Precot Meridian Ltd [2015 (11) TMI 323 - SUPREME COURT].

The demand raised in the impugned order in respect of inputs and input services attributable to electricity sold to the State Electricity Board, therefore, has to be set aside.

Penalty u/r 15(1) of the 2004 Credit Rules read with section 11AC of the Central Excise Act - HELD THAT:- Penalty imposed upon the appellant under rule 15(1) of the 2004 Credit Rules read with section 11AC of the Central Excise Act cannot also be imposed because rule 15(1) is applicable only in a situation where the assessee has taken or utilized CENVAT credit in respect of input or input services wrongly. In the instant case, as noticed above, the appellant had not utilized CENVAT credit wrongly. Therefore, imposition of penalty upon the appellant is not justified.

Interest under section 11AA of the Central Excise Act read with rule 14 of the 2004 Credit Rues - HELD THAT:- Recovery of interest under section 11AA of the Central Excise Act read with rule 14 of the 2004 Credit Rues cannot also be sustained as reversal of input and input service credit amounts to not taking credit at all.

The impugned order dated 26.06.2024 passed by the Commissioner deserves to be set aside and is set aside - Appeal allowed.

Seeking withdrawal of Splecial Leave Petition - petitioners submitted that they have also filed similar Special Leave Petitions seeking withdrawal thereof and request that the same may also be taken on board and allowed to be withdrawn - HELD THAT:- The petitioners are permitted to go before the competent authority under the Amendment Act of 2025 and avail the appropriate relief.

If the petitioners apply with the competent authority of the State under the Amendment Act, 2025, the State shall allow the applications in terms of the Amendment Act and accept the applications filed by the petitioners.

The petitions stand dismissed as not pressed.

Levy of penalty u/s 62(3) of the Assam Value Added Tax Act, 2003 - failure on the part of the petitioner company to submit the audit report as required under the provisions of sub-section (2) of Section 62 of the Act of 2003 from the prescribed authority - applicability of time limitation - HELD THAT:- The assessment for the years 2005-2006, 2006-2007 & 2007-2008, having been completed, the provisions of Section 39 of the Act of 2003 mandates that no assessments under the provisions of Section 35 and 36 shall be permissible to be made after the expiry of 5 years from the end of the year to which the assessment relates. Although, the proviso to Section 39 of the Act of 2003 culls out an exception in cases of offence under the Act, for which proceedings for prosecution has been initiated; wherein, it mandates that the period of limitation shall not apply. However, the proviso would have no application to the issue arising in the present proceedings.

A perusal of the materials brought on record would reveal that within the period of limitation as mandated under the provisions of Section 39 of the Act of 2003, the respondent authorities had not initiated any audit assessment under the provisions of Section 36 of the Act of 2003, with regard to the returns submitted by the petitioner under the provisions of sub-section (2) of Section 35 of the Act for the years 2005-2006, 2006-2007 and 2007-2008 - In view of the bar existing in the provisions under the provisions of Section 39 to carry out an assessment upon the conclusions after lapse of 5(five) years from the end of the year to which the assessment relates, admittedly in the present case on the date of issuance of the notice dated 07.10.2015, five years in respect of all the 3 (three) assessment years, in question, having lapsed, this Court is of the considered view that it was not open to the respondent authorities to carry out an assessment in the matter on any ground including the ground of non submission of an audit report i.e., the violation of provision of Section 62(2).

A perusal of the notice dated 03.10.2015, would go to reveal that what was contemplated, therein was that the returns filed by the petitioner for the period 2005-2006 to 2007-2008 were selected for audit assessment - In terms of the provisions of Section 39 of the Act of 2003, the period of limitation for carrying out audit assessment under the provisions of Section 36 of the Act, i.e. for the years 2005-2006, 2006-2007 and 2007-2008 had lapsed on 31.03.2011, 31.03.2012 and 31.03.2013 respectively. Accordingly, this Court is of the considered view that the audit assessment sought to be made, invoking the provisions of Section 36 of the Act of 2003, vide issuance of the notice dated 03.10.2015, was clearly barred by limitation.

Accordingly, the assessment order dated 07.10.2015 issued upon an assessment made under Section 36 of the Act of 2003 r/w Section 9(2) of the CGST Act of 1956, would also mandate an interference from this Court - the Notices of Demand dated 07.10.2015 impugned in the above noted 3 writ petitions imposing upon the petitioner, penalty of Rs. 1,00,000/- for violation of the provisions of Sub-section 2 of Section 62 stands set aside - Further the assessment orders dated 07.10.2015, for the assessment years 2006-2007 as well as 2007-2008 also stand set aside.

Petition allowed.

Filing and continuation of complaint under Section 138 of N.I. Act, when CIRP proceedings had been initiated and IRP had been appointed prior to giving of demand notice - HELD THAT:- The controversy is no more res integra. In Vishnoo Mittal [2025 (3) TMI 839 - SUPREME COURT], an identical issue had arisen before the Hon’ble Supreme Court. In the said case, the cheques had been issued by a private limited company which were dishonoured on 07.07.2018, and the legal notice dated 06.08.2018 under Section 138 of N.I. Act was issued to the director of the company namely, Vishnoo Mittal, who failed to make the payment. Consequently, a complaint was filed for the offence under Section 138 of N.I. Act in September, 2018 - The Hon’ble Supreme Court placing reliance on Section 17 of IBC, observed that when the notice was issued to the director of the said company, he was not incharge of the corporate debtor as he was suspended from his position as director thereof from the day IRP was appointed on 25.07.2018, and all the powers vested with the Board of Directors were to be exercised by the IRP. Thus, all the bank accounts of the corporate debtor were operating under the instructions of the IRP, hence, it was not possible for the director of the said private limited company to repay the amounts. Accordingly, the Hon’ble Supreme Court quashed the summoning order, as well as, the complaint filed under Section 138 of N.I. Act.

In Govind Prasad Todi v. Govt. of NCT of Delhi, [2023 (6) TMI 534 - DELHI HIGH COURT], a Coordinate Bench while dealing with identical factual matrix, observed that when Resolution Professional has been appointed, the control of the operation of the bank accounts of the corporate debtor is taken over by the RP, the directors of the corporate debtor cannot be said to be in control of the affairs of the company. Accordingly, it was held that the erstwhile directors of the corporate debtor cannot be summoned under Section 138 of NI Act.

In the case in hand the two cheques in question were returned unpaid for the second time on 02.07.2022. The demand notices dated 14.07.2022 issued by respondent no.1/bank, which were dispatched on 21.07.2022, were received by the petitioners between 23.07.2022 and 26.07.2022. Even on the basis of the earliest date of service of demand notice i.e. 23.07.2022, the 15 days period for making payment in terms of demand notice had expired on 07.08.2022 - Thus, the offence under Section 138 of N.I. Act was complete on 07.08.2022 and it is thereafter, that the cause of action arose for filing the complaint under the said provision. However, in the meanwhile, the NCLT, Mumbai admitted the petition under Section 7 of IBC; initiated CIRP against respondent no.2/company; appointed the IRP, and imposed a moratorium under Section 14 of IBC.

The petitioners in their capacity as erstwhile directors were not incharge of respondent no.2/company’s [corporate debtor] affairs nor were having any authority to operate its bank accounts and to ensure honouring, or to prevent the dishonouring, of two cheques in question. Therefore, the petitioners could not have been summoned under section 138 of NI Act, and holding them guilty for the alleged offence does not arise.

The impugned summoning order dated 24.01.2023 is quashed - Petition allowed.

Liability of interest under Section 12, 12A and 12B - Waiver of interest -payment of advance interest tax - penal interest - voluntary filing of return - benefit of doubt to the assessee - CBDT circulars and administrative clarification - Jurisdiction to waive interest - Articles 226 and 227 of the Constitution of India - HELD THAT:- By not filing return and paying tax, it invited liability of interest under Section 12, 12A and 12B. The contention of respondent does not seem to be convincing and cannot be countenanced. If legal position was absolutely clarified by circular dated 25.03.1996, there was no occasion to direct assessing officers not to initiate proceedings by circular dated 16.07.1996. There was further no necessity to issue circular dated 13.01.1998. Issuance of circulars dated 16.07.1996 and 13.01.1998 made it clear that question of liability of interest on hire charges was not clear. The petitioner filed returns and discharged its liability as soon as the matter was finally clarified. It could not be subjected to liability of penal interest. The respondent has waived liability of penal interest for the Assessment Year 1994-95, 1995-96 which indicates that respondent was competent and had jurisdiction to waive interest. It is settled proposition of law that in case of doubt benefit should go to assessee. As per press note dated 29.10.1999 where return is filed voluntarily without detection by department, assessee is entitled to waiver of interest payable under Section 12, 12A and 12B. In the instant case, assessee voluntarily filed returns without detection by Department and delay took place on account of confusion which was prevailing across the country.

Thus, we are of the considered opinion that the impugned order deserves to be modified. Accordingly, impugned order is modified to the extent of denial of waiver of interest for the Assessment Years 1996-97 and 1997-98.