TaxTMI Updates e-Newsletter
Jan 24,2023

Opportunity of personal hearing - Section 75(4) of the CGST Act, 2017 - ex-parte order - quash and remand for fresh adjudication - service by electronic portal and requirement of physical service

Opportunity of personal hearing - Section 75(4) of the CGST Act, 2017 - ex-parte order - quash and remand for fresh adjudication - Whether the ex-parte assessment order in Form GST DRC-07 dated 14.04.2022 is vitiated for want of personal hearing as required by Section 75(4) and liable to be quashed and remanded for fresh adjudication. - HELD THAT: - The Court observed that personal hearing had not been granted and the order in Form GST DRC-07 was passed ex-parte. Reliance was placed on earlier decisions of this Court interpreting Section 75(4), which mandates that an opportunity of hearing must be granted where an adverse decision is contemplated, even if no written request for hearing is made by the taxpayer. The Department's reliance on online service through the portal did not cure the absence of personal hearing. In view of the settled principle that absence of the mandatory personal hearing vitiates an adverse adjudicatory order, the impugned order was quashed. The matter was remitted to the authority to proceed from the stage where proceedings had been left, after effecting service physically (in addition to portal service) and affording a reasonable opportunity of hearing to the petitioner; directions were given that documents, if any, be furnished within specified time and that the authority decide the matter in accordance with law. [Paras 4, 5, 6, 7]

Impugned ex-parte order in Form GST DRC-07 dated 14.04.2022 quashed; matter remitted for fresh adjudication after physical service and affording opportunity of personal hearing, with liberty to the respondents to proceed from the stage where proceedings stood.

Final Conclusion: Writ petition allowed; impugned assessment order set aside for failure to provide the mandatory personal hearing under Section 75(4) and remitted for fresh consideration after physical service and affording reasonable opportunity of hearing.

Pre-deposit requirement under Section 107(6) - Stay of recovery on pre-deposit under Section 107(7) - Provisional attachment under Sections 79 and 83 - Revocation of attachment upon compliance with deposit and clearance of outstanding demands

Pre-deposit requirement under Section 107(6) - Stay of recovery on pre-deposit under Section 107(7) - Provisional attachment under Sections 79 and 83 - Whether provisional attachment of the petitioner's debtors and immovable property could continue after filing statutory appeals with the pre-deposit required by Section 107(6) and the effect of Section 107(7). - HELD THAT: - A combined reading of Sections 107(6) and 107(7) of the Himachal Pradesh GST Act, 2017 shows that filing an appeal after making the deposit mandated by Section 107(6) (including the 10% pre-deposit of the remaining disputed tax) results in recovery proceedings in respect of the balance amount being deemed stayed under Section 107(7). The appellate authority's interim order (Annexure P-6) de-freezing the bank accounts corroborates that the required pre-deposit was made for the appeals relating to assessment years 2019-20 and 2020-21. Consequently, provisional attachments effected under Sections 79 and 83 could not legitimately continue in respect of amounts for which the statutory pre-deposit has been made and the stay under Section 107(7) applies. The Court, however, conditioned revocation of attachments on the petitioner clearing outstanding demands for assessment years 2017-18 and 2018-19 and making the pre-deposit for 2021-22 where not already demonstrably made; upon such compliance the attachments of immovable property and debtors must be revoked forthwith.

Petitioner's statutory pre-deposit under Section 107(6) operates to stay recovery under Section 107(7); accordingly, upon the petitioner clearing the dues for 2017-18 and 2018-19 within ten days and demonstrating the required pre-deposit for 2021-22, the respondents shall revoke the provisional attachment of the petitioner's immovable property and debtors forthwith.

Final Conclusion: Writ petition disposed directing revocation of attachments of immovable property and debtors if the petitioner, within ten days, clears outstanding demands for 2017-18 and 2018-19 and satisfies the pre-deposit condition in respect of 2021-22; pending applications disposed.

Filing of Form GST ITC-01 - switch over from Composition Scheme to Normal/Regular Taxpayer - extension of time under the proviso to Rule 40(1)(b) of the JGST Rules, 2017 - power of the Commissioner, State Tax to extend time - technical glitches on the GSTN portal

Filing of Form GST ITC-01 - extension of time under the proviso to Rule 40(1)(b) of the JGST Rules, 2017 - power of the Commissioner, State Tax to extend time - switch over from Composition Scheme to Normal/Regular Taxpayer - Petitioner's request for permission to file Form GST ITC-01 after the prescribed date and the exercise of power by the Commissioner, State Tax to grant extension - HELD THAT: - The record shows the petitioner attempted to file Form GST ITC-01 by the due date and made complaints to GSTN when the form could not be submitted. The State Nodal Officer communicated to GSTN requesting reopening of the portal for the petitioner, while GSTN maintains no technical glitch was established at its end. The proviso to Rule 40(1)(b) of the JGST Rules, 2017 contemplates extension of the time limit by the Commissioner of State Tax. The court refrained from finally interpreting Rule 40(1)(b) or resolving the factual dispute about portal malfunction. Given the borderline factual matrix and the statutory mechanism for extension, the appropriate course is to require the petitioner to place his representation before the Commissioner, State Tax and for that authority to decide the request in accordance with law. The court therefore directs administrative consideration rather than adjudicating the extension on merits at this stage.

Petitioner directed to approach the Commissioner, State Tax with a representation for extension of time; the Commissioner shall consider and decide the representation within four weeks from receipt of the order and representation.

Final Conclusion: Writ petition disposed by directing the petitioner to seek extension from the Commissioner, State Tax; the Commissioner to decide the representation within four weeks, without the High Court expressing a definitive interpretation of Rule 40(1)(b) or making final findings on the alleged portal technical glitch.

Speaking order doctrine - reasoned order - natural justice - cancellation of GST registration - show cause notice under Rule 22 - revocation of registration - limitation for filing appeal - condonation of delay

Speaking order doctrine - reasoned order - natural justice - cancellation of GST registration - show cause notice under Rule 22 - Validity of the show cause notice dated 24.05.2019 and the cancellation order dated 04.07.2019 and whether those orders comply with the requirement of giving reasons and principles of natural justice. - HELD THAT: - The Court found the show cause notice and the consequential cancellation order to be cryptic and non-speaking, lacking requisite reasons. Citing the settled principle that reasons are integral to natural justice and the speaking order doctrine, the Court held that an order which does not disclose jurisdictional facts or the basis for adverse conclusion cannot be sustained. Having regard to the absence of cogent reasons or any computation of tax and relying on the principles articulated in the cited authority, the Court concluded that the impugned show cause notice and cancellation order were vitiated for want of reasons and transparency and therefore liable to be set aside. The appellate order premised on limitation was also interfered with to the extent it flowed from the defective base order. [Paras 9, 11, 12, 15]

The show cause notice dated 24.05.2019 and the cancellation order dated 04.07.2019 are quashed and set aside; the appellate order is also quashed to the extent it is founded on the impugned order.

Revocation of registration - condonation of delay - limitation for filing appeal - Relief to be granted and further proceedings where the base order is quashed - whether cancellation should be revoked and whether the authority may proceed afresh. - HELD THAT: - On finding the base order unsustainable, the Court revoked the cancellation of registration. The Court also quashed the appellate authority's order which had rejected the appeal as time-barred, noting that the defective nature of the base order precluded sustaining subsequent proceedings based on it. However, the Court made clear that its decision does not preclude the tax authority from reopening the matter: the authority may, after issuing a fresh show cause notice with requisite details and following the procedure established by law (including giving reasons and observing principles of natural justice), proceed to determine the matter. Thus the appellate and adjudicatory proceedings are set aside but the matter is remitted to the authority for fresh consideration in accordance with law. [Paras 14, 15]

Cancellation of registration is revoked; the impugned proceedings are quashed, and the matter is remitted to the authority to, if justified, issue fresh show cause notice and determine the matter after following due procedure.

Final Conclusion: The petition is allowed: the show cause notice dated 24.05.2019 and the cancellation order dated 04.07.2019 are quashed and set aside, the cancellation of registration is revoked, the appellate order is quashed, and the authority is permitted to proceed afresh by issuing a properly reasoned show cause notice and deciding the matter in accordance with law.

Application of Double Taxation Avoidance Agreement (DTAA) where DTAA is more beneficial - interaction between provisions of tax deduction at source and treaty override under section 90(2) - scope and application of section 206AA to non-resident deductees - deduction of tax at source under provisions of section 195 read with applicable DTAA

Application of Double Taxation Avoidance Agreement (DTAA) where DTAA is more beneficial - scope and application of section 206AA to non-resident deductees - deduction of tax at source under provisions of section 195 read with applicable DTAA - interaction between provisions of tax deduction at source and treaty override under section 90(2) - Whether, in respect of payments to non-residents who have not furnished PAN, the payer may deduct tax at the beneficial rate prescribed by the relevant DTAA or is obliged to apply the higher rate under section 206AA. - HELD THAT: - The Tribunal affirmed the view that where the provisions of a DTAA are more beneficial to the non-resident recipient, those provisions prevail by virtue of the statutory scheme embodied in section 90(2), and therefore the payer is entitled to deduct tax at the treaty rate even if the non-resident has not furnished PAN. The court treated section 206AA as a procedural provision governing collection and deduction and held that it cannot be read to override the overriding effect conferred on DTAAs by section 90(2). The Tribunal relied on precedents including Serum Institute of India Ltd. and other High Court and Tribunal decisions which have held that tax withholding obligations under section 195 must be applied having regard to the scope and rates prescribed by the DTAA, and that section 206AA cannot be invoked to nullify a beneficial treaty rate. Applying this principle to the facts, where the assessee in each case had deducted TDS at the beneficial treaty rates, the invoking of section 206AA by the assessing officer to demand tax at the higher rate was not sustainable, and the CIT(A)'s deletion of the demand was correctly affirmed. [Paras 6, 7, 9, 11]

The demands raised by invoking section 206AA were deleted and the appeals by the Department were dismissed as the assessee was entitled to deduct TDS at the beneficial DTAA rates despite non-furnishing of PAN by the non-resident recipients.

Final Conclusion: All eighteen departmental appeals were dismissed and the assessing officer's demand for higher TDS by invoking section 206AA was rejected, the Tribunal holding that treaty rates under the relevant DTAAs prevail where they are more beneficial to the non-resident recipients.

Long-term capital gains exemption under section 10(38) - Addition as unexplained cash credit / addition under section 68 - Genuineness of share transactions - Onus of proof discharged by production of contract notes, bank payment and demat statements - Suspicion or mere high profits insufficient to treat transactions as bogus - Need for cogent material and opportunity for cross-examination before treating transactions as sham - Transactions in penny stocks to be examined on their own facts

Long-term capital gains exemption under section 10(38) - Addition as unexplained cash credit / addition under section 68 - Genuineness of share transactions - Onus of proof discharged by production of contract notes, bank payment and demat statements - Need for cogent material and opportunity for cross-examination before treating transactions as sham - Suspicion or mere high profits insufficient to treat transactions as bogus - Whether the Assessing Officer was justified in treating the long term capital gains on sale of shares as bogus and making addition under section 68 despite documentary evidence produced by the assessee. - HELD THAT: - The Tribunal affirmed the CIT(A)'s finding that the assessee had discharged the onus of proving genuineness by placing on record application/allotment documents, share certificates, bank cheque evidencing payment, demat statements, contract/transaction memos and broker records showing sale on the stock exchange and receipt of consideration through banking channels. The AO's conclusion was founded on suspicion arising from suspension/resumption of trading and the magnitude of gains, but no independent material was brought on record to demonstrate collusion, cash payment, or a live link between the assessee and any entry operators. The authorities below also did not afford opportunity for cross examination of third party statements relied upon by the AO. The Tribunal relied on precedent holding that mere astounding price rise or general allegations about penny stock scams do not justify treating documented transactions as bogus without cogent evidence (Parasben Kasturchand Kochar , and coordinate High Court/Tribunal decisions such as Himani M. Vakil and Maheshchandra G. Vakil ; and other co ordinate Bench decisions cited in the order ). Applying these principles, the Tribunal held that in absence of material disproving the documentary evidence and without an opportunity to test third party statements, the AO was not justified in making the addition under section 68 and denying exemption under section 10(38). [Paras 7, 8]

The addition under section 68 treating the long term capital gains as bogus was not sustainable and was deleted; the claim for exemption under section 10(38) stands.

Final Conclusion: The Revenue's appeal is dismissed. The Tribunal upholds the deletion of the addition and the assessee's entitlement to long term capital gains exemption on the documented sale of shares for AY 2015 16.

Reopening of assessment - Reason to believe - Scope of reassessment - Explanation 3 to Section 147 - Requirement of fresh notice under Section 148 - Jurisdiction to assess other income

Reopening of assessment - Reason to believe - Explanation 3 to Section 147 - Requirement of fresh notice under Section 148 - Validity of reassessment proceedings where the Assessing Officer reopened the assessment on certain recorded reasons but made additions on different grounds (cash deposits) not reflected in the reasons for reopening. - HELD THAT: - The Assessing Officer recorded reasons to believe that income had escaped assessment on account of commodity transactions and purported undisclosed income of Rs.10,00,000/-, and issued notice under section 148. During proceedings the AO did not make any addition on that recorded ground but instead made an addition in respect of unexplained cash deposits in the bank account. The Tribunal examined the effect of Explanation 3 to section 147 and the authorities cited. Explanation 3 permits the AO, in the course of valid reassessment proceedings, to assess other income which comes to his notice; however, it does not override the substantive requirement of section 147 that the AO must assess or reassess the income which formed the basis of his reason to believe. Where the AO, after issuing notice, accepts the assessee's contention that the income originally believed to have escaped assessment did not in fact escape assessment, he cannot continue to assess unrelated items without issuing a fresh notice under section 148. Applying this principle to the facts, since no addition was made on the very issue recorded as the basis for reopening and the AO proceeded to assess a different item, the reassessment proceedings lacked the requisite jurisdictional foundation and were quashed. [Paras 6, 8]

Proceedings initiated under section 147/148 were quashed and the appeal was allowed.

Final Conclusion: The Tribunal held that the reassessment was not sustainable because the AO did not assess the income which formed the basis of the reason to believe and, having failed to do so, could not proceed to make additions on unrelated grounds without issuing a fresh notice; the reassessment proceedings under sections 147/148 were therefore quashed and the appeal allowed.

Draft assessment order and requirement of forwarding to Dispute Resolution Panel under Section 144C - Final assessment order and issuance of notice of demand as conclusive stage of assessment - Non-compliance with mandatory statutory procedure rendering assessment void ab initio - Binding effect of Dispute Resolution Panel directions

Draft assessment order and requirement of forwarding to Dispute Resolution Panel under Section 144C - Final assessment order and issuance of notice of demand as conclusive stage of assessment - Non-compliance with mandatory statutory procedure rendering assessment void ab initio - Validity of assessment where the Assessing Officer passed an assessment order, issued notice of demand and initiated penalty proceedings at the stage when a draft order should have been forwarded to the DRP, and whether such non compliance vitiates the assessment. - HELD THAT: - The Tribunal found that the Assessing Officer passed an order dated 26.02.2021 and issued demand and penalty notices instead of first forwarding a draft of the proposed assessment to the assessee and the Dispute Resolution Panel as mandated by the statutory scheme. The court noted the settled position that the assessment process culminates with issuance of the notice of demand and that issuance of demand at the draft order stage effectively finalized the assessment prematurely. The Assessing Officer thereafter acknowledged that he had erroneously passed an assessment order instead of a draft order and that no final assessment order pursuant to the DRP directions had been passed. Reliance was placed on coordinated Tribunal and High Court authorities treating non observance of the mandatory procedure under Section 144C as not a curable irregularity but one that renders the resultant assessment void. Applying that principle to the facts, the Tribunal held that issuance of demand and initiation of penalty at the draft order stage vitiated the assessment and consequent final order could not stand. [Paras 10, 11, 12]

Assessment order passed in violation of the mandatory procedure was set aside as null and void; the appeal of the assessee is allowed.

Final Conclusion: The Tribunal set aside the assessment (and related consequential action) as void ab initio for failure to follow the mandatory draft order/DRP procedure, and allowed the assessee's appeal.

Employer-employee relationship - assignment/secondment of employees - characterisation of reimbursements as salary v. fee for technical services - withholding obligation under section 195 - TDS under section 192 - allowability of deduction for delayed provident fund contribution - precedential effect of Checkmate Services Pvt. Ltd.

Employer-employee relationship - assignment/secondment of employees - characterisation of reimbursements as salary v. fee for technical services - withholding obligation under section 195 - TDS under section 192 - Payment of Rs.1,85,20,176/- made as reimbursement to the parent company in respect of assigned employees is in the nature of salary and not fee for technical services, and there was no obligation to withhold under section 195. - HELD THAT: - The Tribunal examined the assignment agreements and factual matrix and held that the agreements expressly provided that the assigned persons would be employees of the assessee, that the assessee would exercise full employer rights and supervision, and that the parent company would surrender employer rights during the assignment. The payments, though routed through the parent company by contractual arrangement and cross-charged by debit notes, were treated as salary by the assessee with tax deducted under section 192 and supported by Form No.16 and tax returns filed by the assigned employees. These features establish an employer-employee relationship for practical purposes and distinguish the facts from authorities treating genuine secondment as rendering of FTS. Applying this factual and legal analysis, the Tribunal held that the disputed payments represent salary costs of the assigned employees and therefore cannot be characterised as FTS under section 9(1)(vii) or Article 12 of the India-Japan DTAA; consequently section 195 withholding was not attracted and the addition was deleted. [Paras 7, 8, 9, 11, 12]

Addition of Rs.1,85,20,176/- deleted; ground allowed.

Allowability of deduction for delayed provident fund contribution - precedential effect of Checkmate Services Pvt. Ltd. - Disallowance of Rs.2,11,199/- for delayed payment of employees' provident fund contribution is upheld and the deduction denied. - HELD THAT: - It was undisputed that the employer's contribution to the Provident Fund was not deposited within the statutory time prescribed under the PF Act. The assessee's contention that the payment made before the filing due date under section 139(1) should be allowable was rejected by the Tribunal in view of binding precedent of the Hon'ble Supreme Court in Checkmate Services Pvt. Ltd., which disposes of the contention adverse to the assessee. On that basis the Tribunal found no merit in the ground and sustained the disallowance under the relevant provision. [Paras 13, 14, 15]

Ground dismissed; disallowance upheld.

Final Conclusion: The appeal is partly allowed: the addition of Rs.1,85,20,176/- relating to reimbursement for assigned employees is deleted as salary (no withholding under section 195 required), while the disallowance for delayed PF contribution is sustained; appeal otherwise dismissed.

Unexplained cash deposits and addition to income - burden on assessee to prove source of cash deposits - faceless appeal and procedural opportunity to be heard - remand for verification and fresh consideration - initiation of penalty proceedings as a separate process - mandatory levy of interest upon satisfaction of statutory conditions

Unexplained cash deposits and addition to income - burden on assessee to prove source of cash deposits - faceless appeal and procedural opportunity to be heard - remand for verification and fresh consideration - Whether the addition of Rs. 11,59,789 as unexplained cash deposited in bank accounts should be sustained or requires fresh verification - HELD THAT: - The Tribunal observed that the assessee, an LIC commission agent and authorized premium collector, attributed the bank deposits to premiums collected on behalf of clients and produced LIC authorisation and portal records, but that the AO had treated excess deposits over cash-book balances as unexplained and added them to income. The Tribunal found that the appellant had not been given adequate opportunity by the ld. CIT(A) and that equity and justice require verification of the revised computation and the documentary evidence produced before the Tribunal. Rather than adjudicating the merits on the existing record, the Tribunal directed restoration of the matter to the file of the AO for verification of the revised computation, examination of documentary evidence concerning the nature and source of the deposits, and fresh decision in accordance with law, with the assessee directed to cooperate and produce records. Consequently the appeal was allowed for statistical purposes and the addition was not finally upheld by the Tribunal but remanded for fresh consideration.

Matter restored to the file of the AO for verification of the revised computation and documentary evidence and fresh decision; appeal allowed for statistical purposes.

Final Conclusion: The appeal is allowed for statistical purposes; the assessment concerning the unexplained cash deposits is remitted to the AO for verification of the assessee's revised computation and documentary evidence, with directions to afford opportunity and decide afresh in accordance with law.

Regular trading loss versus manipulated or bogus short term capital loss - onus on Revenue to establish sham transactions and furnish independent corroborative inquiry - reopening of assessment on information from investigation wing requires independent verification by Assessing Officer - contract notes, broker notes and Demat statements as prima facie documentary evidence of genuine trading - treatment of share transactions as business income rather than capital loss where shares are held for trading

Regular trading loss versus manipulated or bogus short term capital loss - onus on Revenue to establish sham transactions and furnish independent corroborative inquiry - contract notes, broker notes and Demat statements as prima facie documentary evidence of genuine trading - reopening of assessment on information from investigation wing requires independent verification by Assessing Officer - Whether the addition of the loss of Rs.2,19,22,836 as a bogus short term capital loss could be sustained where the assessee claimed the loss as trading loss and furnished contract notes, broker notes and Demat statements, and the Assessing Officer relied primarily on information from the Investigation Wing without independent inquiry. - HELD THAT: - The Tribunal found on the material on record that the assessee is engaged in the business of share and stock broking and that the accounts and ledgers reflect trading receipts and expenditures, including consideration from sale of shares, Demat charges and STT, supporting a trading classification. The Assessing Officer reopened the assessment on information from the Investigation Wing, Kolkata, and made the addition by treating the losses as short term capital loss on the basis of statements alleging a modus operandi in penny stocks. However, the AO did not conduct independent verification of those allegations, did not summon or examine the SEBI registered broker through whom transactions were effected, nor did he bring any direct adverse material connecting the assessee to manipulative activity. The assessee produced system generated contract notes, broker notes and Demat account entries which, together with trading entries in the books, constituted direct documentary evidence of genuine trading. The Tribunal applied the principle that where the revenue relies on investigatory information to impugn transactions as bogus, it must discharge its initial onus by independent inquiry and produce corroborative material; mere reliance on third party investigation statements, without affording the assessee an opportunity to cross examine or without examining brokers, is insufficient to overturn direct documentary evidence. Applying these principles and the reasoning of the authorities relied upon by the CIT(A) and the Tribunal, the addition was held unsustainable and deleted. [Paras 9, 10]

Addition of Rs.2,19,22,836 treated as bogus short term capital loss is deleted; the loss is accepted as a regular trading loss and the Revenue's appeal is dismissed.

Final Conclusion: The ITAT dismissed the Revenue's appeal for AY 2011-12, upholding the CIT(A)'s deletion of the addition of Rs.2,19,22,836 by holding that the assessee's documented trading records and lack of independent enquiry by the AO made the Revenue's allegation of bogus transactions unsustainable.

Revisionary jurisdiction under section 263 - genuineness of unsecured loans - prejudice to Revenue - verification versus categorical error - creditworthiness of lender - materiality of transactions

Revisionary jurisdiction under section 263 - genuineness of unsecured loans - prejudice to Revenue - Validity of the Pr. CIT's exercise of revisionary power under section 263 in setting aside the assessment on account of alleged non-verification of unsecured loans. - HELD THAT: - The Tribunal found that the alleged anomalies in respect of unsecured loans from Kalpana S. Shah and Monali H. Shah were demonstrably addressed by the assessee during the revision proceedings and were reflected in the bank statements and ledger records which were part of the assessment record. The Pr. CIT's order recorded that certain transactions did not appear in the lenders' bank statements or that the lenders' creditworthiness was not established, but he nevertheless remitted the matter to the AO for verification without first undertaking the verification himself or reaching a conclusive finding of error causing prejudice to the Revenue. The Tribunal emphasised that invocation of section 263 requires the Pr. CIT to point out a categorical error in the AO's order and not merely mandate a verification exercise; where the anomalies were shown to be non-existent on the materials before the Pr. CIT, there was no jurisdictional basis to revise the assessment. Applying these principles to the facts, the Tribunal held that the Pr. CIT's exercise of revisionary jurisdiction was unjustified and set aside his order. [Paras 16, 20]

The Pr. CIT's order under section 263 is set aside as there was no demonstrable error causing prejudice to the Revenue warranting revision.

Verification versus categorical error - genuineness of unsecured loans - Whether the Pr. CIT was entitled to restore the issue to the AO for verification where the assessee had produced bank statements and ledger entries during revision showing the transactions. - HELD THAT: - The Tribunal noted that the assessee had filed his own bank statements and the lenders' bank statements and ledger entries before the Pr. CIT; in particular, entries in the assessee's bank account corresponded to the amounts the Pr. CIT had held to be unexplained. The Pr. CIT reached his conclusions without adequately considering the assessee's bank records and merely directed the AO to verify the statements. The Tribunal held that a mere direction for verification, when the Pr. CIT himself had not carried out the verification despite having the records, did not satisfy the requirement for exercise of revisionary power. If the Pr. CIT had found the records insufficient after proper verification, revision could be justified; in the present case the required verification either would have shown the absence of an error or was not undertaken, rendering the revision improper. [Paras 11, 12, 15, 16]

Restoring the matter to the AO for verification in the face of documentary material before the Pr. CIT was not a valid exercise of revisionary jurisdiction.

Creditworthiness of lender - materiality of transactions - Whether failure to establish the creditworthiness of Ms. Kalpana S. Shah and the quantum of net funds received justified revision under section 263. - HELD THAT: - The Tribunal examined the ledger and bank records and observed that transactions with Ms. Kalpana S. Shah predominantly represented transfers from the assessee to her and subsequent repayments, leaving a small net amount (~Rs.1.5 lakhs) as the assessee's receipt. The Pr. CIT himself had accepted that repayment entries prima facie reconciled the Rs.22 lakhs entry earlier queried. Given the small net amount involved, the Tribunal held that the limited quantum was too minor to invoke revisionary jurisdiction on the ground of non-establishment of the lender's creditworthiness. The Tribunal therefore found no substantive error in the AO's acceptance of the loans in respect of materiality and creditworthiness. [Paras 17, 18, 19]

Non-establishment of creditworthiness and the minor net quantum did not justify exercise of section 263; there was no error in the AO's order on this ground.

Final Conclusion: The order passed by the Pr. CIT under section 263 is set aside and the assessee's appeal is allowed, since the alleged anomalies concerning unsecured loans were shown by the assessee from records before the Pr. CIT, the Pr. CIT did not perform required verification before purporting to revise the assessment, and the net amount involved was not material to justify revisionary jurisdiction.

Penalty under section 271(1)(b) of the Income-tax Act - non-compliance of notice under section 142(1) - reasonable cause for non-compliance - limitation/bar of time as a constraint on postponement of penalty proceedings

Penalty under section 271(1)(b) of the Income-tax Act - non-compliance of notice under section 142(1) - reasonable cause for non-compliance - Validity of the penalty imposed under section 271(1)(b) for alleged non-compliance with notices issued under section 142(1) for A.Y. 2010-11. - HELD THAT: - The Assessing Officer imposed penalty under section 271(1)(b) for the assessee's alleged failure to comply with notices issued under section 142(1). The Tribunal examined whether the default fell within the description of defaults contemplated by clause (b) of section 271(1) and considered the documentary record of replies and requests for abeyance submitted by the assessee (including communications dated 14.06.2022, 20.06.2022 and 04.08.2022). The Bench observed that replies had been served and that the explanations furnished constituted bonafide and reasonable cause which the CIT(A) had not taken into account. The Tribunal also noted the AO's concern about limitation which constrained postponement of penalty proceedings, but found that on the material before the authorities the case for levy of penalty was not sustained. Applying the statutory scope of section 271(1)(b) and the factual record, the Tribunal concluded that the penalty was not justified and ought to be deleted. [Paras 7]

Penalty imposed under section 271(1)(b) for A.Y. 2010-11 deleted; appeal allowed.

Penalty under section 271(1)(b) of the Income-tax Act - mutatis mutandis application of precedent - Whether the reasoning and result in respect of penalty for A.Y. 2010-11 apply to A.Y. 2012-13. - HELD THAT: - The Bench held that the issue raised in ITA No. 120/Jodh/2022 for A.Y. 2012-13 was identical to that decided in ITA No. 119/Jodh/2022 for A.Y. 2010-11. Accordingly, the Tribunal applied the same conclusion to the later year without rehearing the same facts and reasons, observing that the decision on the earlier appeal governs the similar controversy in the subsequent appeal. [Paras 8]

Penalty for A.Y. 2012-13 deleted by applying the reasoning in the A.Y. 2010-11 decision; appeal allowed.

Final Conclusion: The Tribunal set aside the CIT(A)'s confirmation of penalty and deleted the penalty imposed under section 271(1)(b) for both assessment years 2010-11 and 2012-13, allowing both appeals.

Fair market value as on 01-04-1981 - Section 50C - adoption of stamp authority/DLC value as sale consideration - Discounting of subsequent stamp registry rates to determine historical FMV - Deduction under Section 54 - claim to be supported by documentary evidence

Fair market value as on 01-04-1981 - Discounting of subsequent stamp registry rates to determine historical FMV - Section 50C - adoption of stamp authority/DLC value as sale consideration - Adopted fair market value (FMV) as on 01-04-1981 for computation of long term capital gain - HELD THAT: - Both parties accepted the DLC value of Rs.60 per sq. ft. determined by the Registrar in 1983 as the starting point for arriving at FMV as on 01-04-1981. The Assessing Officer adopted Rs.35 per sq. ft. after applying an average decrease derived from movements in later years, while the assessee's registered valuer discounted the 1983 DLC rate by Rs.9 per sq. ft. to arrive at Rs.42 per sq. ft. The Tribunal rejected the method of using average increases observed in periods subsequent to 1983 for discounting, observing that plot values commonly change with development activity and that extrapolating backwards from later increases is not sound. The Tribunal found the approach and discount factor adopted by the approved valuer to be more acceptable on the facts, held that FMV as on 01-04-1981 is Rs.42 per sq. ft., and directed recomputation of long term capital gain by adopting that FMV (while noting that the adoption of the DLC value as sale consideration under Section 50C was not disputed). [Paras 7, 8, 9]

FMV as on 01-04-1981 is to be taken at Rs.42 per sq. ft.; orders of the CIT(A) set aside and AO directed to recompute LTCG accordingly.

Deduction under Section 54 - claim to be supported by documentary evidence - Assessment remitted to AO for examination of assessee's claim for deduction under Section 54 where the claim was first made on appeal without documentary proof - HELD THAT: - The assessee did not claim deduction under Section 54 in the original return and first raised it before the CIT(A) without producing documentary evidence. The CIT(A) dismissed the claim for lack of evidence. The Tribunal exercised its supervisory power to afford the assessee an opportunity to produce necessary documents before the AO. The matter is restored to the file of the AO for examination of the claim and appropriate decision in accordance with law after the assessee furnishes supporting evidence. [Paras 10]

Order of the CIT(A) on the Section 54 claim set aside; issue remitted to the AO for examination after the assessee furnishes documentary evidence.

Final Conclusion: Appeals admitted; for both assessees FMV as on 01-04-1981 fixed at Rs.42 per sq. ft. and AO directed to recompute long term capital gains; in Shri Uttam Chand Singhi's case the Section 54 claim is remitted to the AO for fresh examination on production of supporting documents.

Denial of charitable exemption - Violation of provisions of section 13(1)(c) and 13(1)(d) - Beneficial ownership - Modes of investment under section 11(5) - Imputation of notional interest - Addition under section 40A(3) - Remand for fresh adjudication

Denial of charitable exemption - Violation of provisions of section 13(1)(c) and 13(1)(d) - Whether exemption under section 11 was correctly denied on account of alleged violation of section 13(1)(c) and 13(1)(d) in respect of shareholding in M/s. Prithivimeda Panchgavya Utpad Pvt. Ltd. - HELD THAT: - The Tribunal noted that the Assessing Officer rejected the assessee's claim for exemption under section 11 on the ground that the trust held share capital in the company, which the AO treated as contravening section 13(1)(d). The assessee contended the shares were received as a gift and resisted the finding. The Revenue sought further examination. The parties agreed that these factual and legal contentions required fresh consideration by the tax authorities. Consequently, the Tribunal set aside the appellate order on this point and restored the issue to the file of the CIT(A) for fresh adjudication with opportunity to the assessee to be heard.

Issue remanded to the CIT(A) for fresh adjudication; appellate order set aside.

Beneficial ownership - Modes of investment under section 11(5) - Violation of provisions of section 13(1)(d) - Whether investment in agricultural land purchased in the names of trustees/employees (allegedly name-lenders) amounted to a violation of the investment restrictions under section 11(5) and section 13(1)(d), thereby disentitling the trust to exemption. - HELD THAT: - The assessee asserted the land was purchased in the names of individuals due to legal impediments and that beneficial ownership vests in the trust, pointing out that investment in immovable property is a mode contemplated by section 11(5). The AO viewed the purchases as non-compliant and denied exemption. The Tribunal observed that these are mixed questions of fact and law requiring detailed examination by the tax authorities and accordingly remitted the matter to the CIT(A) for fresh adjudication, directing that the assessee be afforded adequate opportunity of hearing.

Issue remanded to the CIT(A) for fresh consideration; appellate order set aside.

Imputation of notional interest - Addition under section 40A(3) - Whether the additions made by the AO - imputed notional interest on amounts invested in land held in others' names and the disallowance under section 40A(3) - were sustainable. - HELD THAT: - The AO computed additions by imputing interest on investments held in the names of individuals and by invoking section 40A(3). The assessee contended that these additions would not survive if exemption under section 11 is allowed. The Revenue maintained that fresh factual and legal scrutiny was required. The Tribunal held that these contentions involve examination of facts and law and therefore set aside the appellate confirmations and restored these issues to the CIT(A) for de novo adjudication, with opportunity to the assessee to be heard.

Issue remanded to the CIT(A) for fresh adjudication; appellate order set aside.

Final Conclusion: The Tribunal set aside the CIT(A)'s order and restored the contested issues (denial of exemption based on alleged contraventions of section 13(1)(c)/(d) in relation to shareholding and land, and the additions by way of notional interest and under section 40A(3)) to the file of the CIT(A) for fresh adjudication, directing that the assessee be given an adequate opportunity of being heard; appeal treated as allowed for statistical purposes.

Jurisdiction of assessing officer - Faceless Assessment Scheme - Centralisation of cases to Central Charge - Transfer of cases under section 127 - Validity of assessment framed by non jurisdictional officer - Admission of additional ground under Rule 11 of the ITAT Rules, 1963

Admission of additional ground under Rule 11 of the ITAT Rules, 1963 - Additional ground alleging lack of jurisdiction of the AO was admitted for adjudication. - HELD THAT: - The Tribunal considered the petition filed on 05.12.2022 seeking permission to raise an additional ground that the assessment order dated 20.04.2021 was passed without jurisdiction because the case had been centralized to Central Circle 3(1), Chennai by notification dated 19.03.2021. The Tribunal held that the ground was purely jurisdictional, required no investigation of new facts and that relevant facts were already on record; the Revenue did not controvert these factual points. Consequently, the Tribunal exercised its discretion under Rule 11 to admit the additional ground and proceeded to decide it on merits. [Paras 2, 3]

Admitted the additional ground and directed adjudication on the jurisdictional challenge.

Jurisdiction of assessing officer - Faceless Assessment Scheme - Centralisation of cases to Central Charge - Validity of assessment framed by non jurisdictional officer - Transfer of cases under section 127 - Assessment framed by National e Assessment Centre, Delhi was without jurisdiction because the assessee's case had been centralized to DCIT, Central Circle 3(1), Chennai prior to the date of assessment. - HELD THAT: - The Tribunal examined the CBDT directions under the Faceless Assessment Scheme and the departmental notifications which provided that cases selected under section 133A with impounded material were to be transferred to Central Charges and that assessment orders were to be passed by NEAC except where cases are assigned to Central Charges. The record showed a survey under section 133A on 12.01.2021 during which books were impounded, and the Chief Commissioner issued Notification No.119/2020-21 dated 19.03.2021 centralizing the assessee's case to DCIT, Central Circle 3(1), Chennai. The Tribunal noted the AO was aware of the impounded material and that the assessing officer transferring the file was obliged to inform the assessee and give transfer details. As the assessment order was passed by NEAC on 20.04.2021 after centralisation had taken effect w.e.f. 19.03.2021, the Tribunal concluded the assessment was framed by a non jurisdictional officer and therefore was legally invalid. [Paras 4, 5, 6]

Quashed the assessment framed by the non jurisdictional AO; allowed the appeal.

Final Conclusion: The ITAT admitted the additional jurisdictional ground and, on the merits, held that because the assessee's case had been centralized to DCIT, Central Circle 3(1), Chennai prior to the assessment, the assessment order dated 20.04.2021 passed by NEAC, Delhi was without jurisdiction and was quashed; the appeal was allowed.

Validity of notice issued under section 153C of the Income tax Act - Seized documents must 'belong to' the other person for invocation of section 153C (pre 1 June 2015 law) - Quashing of assessment completed on foundation of seized documents not shown to belong to the assessee

Validity of notice issued under section 153C of the Income tax Act - Seized documents must 'belong to' the other person for invocation of section 153C (pre 1 June 2015 law) - Quashing of assessment completed on foundation of seized documents not shown to belong to the assessee - Seized documents relied upon by the Assessing Officer did not belong to the assessee and therefore the notice and assessment under section 153C/143(3) were unsustainable. - HELD THAT: - The Tribunal examined the seized documents relied upon by the Assessing Officer and observed that the receipts/ agreement to sell dated 28.03.2009 and the subsequent receipt did not bear the name of the appellant company and pre dated the company's incorporation (08.04.2009). On that factual matrix, and applying the legal position prevailing at the relevant time, the Tribunal held that section 153C can be invoked only where the seized material 'belongs to' a person other than the one in whose case proceedings under section 153A are being conducted. The Tribunal relied on the principles laid down in decisions cited in the impugned order, including Singhad Technical Education Society , Dreamcit Buildwell Pvt. Ltd. and Ankit Gupta , for the proposition that it was incumbent on the Revenue to show that the incriminating material belonged to the other person and not merely 'pertained to' that person. Applying that principle to the present facts, the Tribunal concluded that the documents exhibited by the Assessing Officer were not documents belonging to the appellant company and therefore the statutory foundation for the assessment under section 153C was absent. Consequently, the additional finding of the Commissioner (CIT(A)) deleting the amount corresponding to the pre incorporation receipt was upheld but the remainder of the assessment based on the seized material was quashed as the assessment lacked jurisdictional foundation. [Paras 16, 17, 18, 20]

Additional ground raised by the assessee is allowed; the assessment order passed under section 153C/143(3) is quashed as the seized documents did not belong to the assessee.

Final Conclusion: The appeal is allowed; assessment for Assessment Year 2010-11 completed on the basis of seized documents under section 153C is quashed because the seized material was not shown to belong to the assessee, and consequential orders stand set aside.

Addition based on loose papers found in third party's possession - corroborative evidence requirement for seized documents - presumption under search provisions and evidentiary limitations of entries in diary/loose sheets - treatment of unsigned/unenacted agreements as evidence - valuation by District Valuation Officer and application of the 10% rule under stamp/valuation comparison - explanation of unexplained cash deposits from proprietary business cash balance - invocation of provisions for unexplained investments/amounts

Addition based on loose papers found in third party's possession - corroborative evidence requirement for seized documents - presumption under search provisions and evidentiary limitations of entries in diary/loose sheets - Deletion of additions made on the basis of notings/loose sheets (LP-1 pages) seized from a third party for purchases of certain shops (A.Y. 2018-19). - HELD THAT: - The Tribunal applied the settled principle that entries in a third party's diary or loose sheets require corroborative evidence before being treated as reflecting actual transactions of the assessee. The coordinate bench's detailed review of the seized pages and surrounding material showed absence of any independent evidence (no field enquiries, no evidence from sellers, no corroboration of fair market value higher than recorded sale deeds, and no opportunity afforded for cross-examination). In that factual matrix the notings found at the third party's premises could not be treated as reliable proof of undisclosed cash payments or higher consideration; reliance upon such uncorroborated entries would amount to addition founded on conjecture and surmise. Following binding precedents that writing in a third party's diary is not by itself reliable, the Tribunal deleted the additions made by the AO and confirmed by the CIT(A). [Paras 6, 7, 8]

Addition deleted and assessee's appeals allowed.

Valuation by District Valuation Officer and application of the 10% rule under stamp/valuation comparison - treatment of DVO report as relevant evidence - Whether addition based on difference between DVO valuation and consideration declared in registered sale deed (restriction of addition to the difference of Rs. 9.02 lakh) should be sustained (A.Y. 2015-16). - HELD THAT: - The Tribunal held that the DVO report called by the Directorate of Investigation was a relevant piece of evidence which the AO should have considered rather than ignoring it. The difference between the consideration shown in the registered deed and the DVO's valuation was less than 10% (indeed less than 5% in the particulars), and in that circumstance the third proviso to the statutory valuation rule and precedent require that such small difference be ignored for purposes of deeming value. The first appellate authority had properly considered the DVO report and restricted the addition to the small difference; there was no perversity or valid reason to interfere with CIT(A)'s conclusion. [Paras 15, 16]

Revenue's challenge dismissed; addition not sustained and assessee's ground allowed to the extent indicated.

Explanation of unexplained cash deposits from proprietary business cash balance - invocation of provisions for unexplained investments/amounts - Deletion of addition made by AO in respect of alleged unexplained cash deposits into saving bank accounts (Rs. 9,00,000) based on available cash balances of assessee's proprietary concern (A.Y. 2015-16). - HELD THAT: - The Tribunal accepted the CIT(A)'s factual finding that the assessee, being proprietor of a business concern, had sufficient cash withdrawals and balances in the proprietary firm's books which explained the deposits in the saving accounts. The AO did not find deficiencies in the books of account and the ledger entries supported the chain of withdrawals and deposits. In absence of any contrary material, the appellate authority's deletion of the addition was sustainable and there was no justification to reverse that conclusion. [Paras 17, 18, 19]

Addition of Rs. 9,00,000 deleted; revenue's ground dismissed.

Treatment of unsigned/unenacted agreements as evidence - corroborative evidence requirement for seized documents - Deletion of addition of Rs. 54,00,000 made u/s 69A on basis of an alleged agreement (unsigned by assessee) found during search (A.Y. 2018-19). - HELD THAT: - The Tribunal examined the seized document and noted it was not signed by the assessee, was not acted upon, and there was no independent corroborative evidence (no cheques/UTR numbers, no proof of payment, no bank encashments) to show that the alleged transaction had occurred. Where a document recovered from premises is unsigned or unenacted and no independent enquiries (for example of the seller) or corroborative material are available, it cannot be the sole basis for invoking the statutory unexplained money provisions. Precedents and coordinate bench decisions were applied to hold that additions founded solely on such unsigned/unenacted papers are not sustainable. [Paras 32, 34, 35]

Addition under section 69A deleted; assessee's appeal allowed and consequential levy under section 115BBE became academic.

Addition based on loose papers found in third party's possession - corroborative evidence requirement for seized documents - Revenue's appeal challenging deletion of addition relating to shop GF-289 (alleged 60% on-money) was dismissed (A.Y. 2017-18). - HELD THAT: - The CIT(A) distinguished the present allotment from other family-member cases on the basis that seized material did not contain any mention of cash payments specific to shop GF-289. The AO's reliance on parallels with other allottees was not justified where the seized pages did not evidence cash payment for the appellant's shop and where the appellant produced documentary material distinguishing his case. In absence of seized material pointing to cash payment in respect of GF-289 and no independent corroboration, the appellate deletion was sustained. [Paras 21, 24, 25]

Revenue appeal dismissed and deletion of addition sustained.

Final Conclusion: The Tribunal allowed the assessee appeals and dismissed the revenue appeals to the extent indicated: additions founded solely on notings/loose sheets recovered from third parties or on unsigned/unenacted documents without independent corroboration were deleted; a small valuation difference shown by the DVO (less than the statutory threshold) was not to be treated as addition; and the deletion of an addition relating to alleged cash payments for a specific shop was sustained where the seized material did not support that finding.

Unexplained credit under section 68 - proof of identity, creditworthiness and genuineness - burden of proof shifting to revenue under section 68 - valuation of unquoted shares under section 56(2)(viib) and Rule 11UA - Discounted Cash Flow (DCF) method as prescribed valuation method - assessing officer cannot substitute valuation or reject valuer's report without contrary material - mandatory notice under section 250(1) for enhancement by CIT(A) - commercial expediency and role of revenue

Unexplained credit under section 68 - proof of identity, creditworthiness and genuineness - burden of proof shifting to revenue under section 68 - Deletion of addition made under section 68 in respect of share capital/premium received from three investor companies. - HELD THAT: - The Tribunal found that the assessee produced bank evidence of receipt, share application forms, share certificates, certificates of incorporation, audited financials and ITR acknowledgements of the investor companies which satisfied the initial onus under section 68. In the absence of any contrary material brought on record by the revenue, the burden could not be shifted back to the assessee. The Tribunal applied the Supreme Court precedent (Rohtak Chain Co.) and other authorities to hold that once identity, creditworthiness and genuineness are established, revenue cannot treat the receipt as unexplained merely because shares were issued at a premium; commercial decisions on premium cannot be substituted by the Department. Accordingly the addition of Rs. 42,50,000 made under section 68 was deleted. [Paras 12, 13, 14, 15]

Addition under section 68 deleted in respect of the specified investors.

Mandatory notice under section 250(1) for enhancement by CIT(A) - principles of natural justice - Validity of enhancement of assessed income by the CIT(A) without issuing notice under section 250(1). - HELD THAT: - The Tribunal held that where the Commissioner (Appeals) proposes to enhance the assessed income, a mandatory notice under section 250(1) must be issued. The record did not show that any such notice was served before enhancement. The absence of the statutory notice rendered the enhancement procedurally infirm and violative of principles of natural justice, requiring deletion of the enhancement. [Paras 16, 17]

Enhancement set aside for non-issuance of notice under section 250(1); Grounds allowing challenge to enhancement upheld.

Valuation of unquoted shares under section 56(2)(viib) and Rule 11UA - Discounted Cash Flow (DCF) method as prescribed valuation method - assessing officer cannot substitute valuation or reject valuer's report without contrary material - commercial expediency and role of revenue - Sustainability of addition under section 56(2)(viib) by rejecting the assessee's DCF valuation under Rule 11UA and substituting/second guessing the valuation. - HELD THAT: - The Tribunal observed that Rule 11UA permits valuation of unquoted shares by DCF method certified by a merchant banker or accountant and that the assessee adopted the DCF method certified by its chartered accountant. Valuation by DCF depends on projections and is not an exact science; an assessing officer cannot reject a valuation done by a prescribed valuer or substitute his own valuation without bringing contrary material or an enabling provision in the Act or Rules. The Tribunal followed coordinate bench precedents (including Cinestan Entertainment) and other authorities holding that revenue cannot sit in the armchair of a businessman to question commercial judgments reflected in valuation projections. On the facts, the Tribunal found no justification to disturb the assessee's valuation and deleted the addition under section 56(2)(viib). [Paras 19, 20, 21, 22, 23]

Addition under section 56(2)(viib) deleted; valuation by DCF accepted.

Final Conclusion: The appeal is allowed: the additions made under section 68 and section 56(2)(viib) were deleted for lack of contrary material and for improper rejection of a prescribed DCF valuation respectively, and the enhancement by the CIT(A) was set aside for non-compliance with the mandatory notice requirement under section 250(1).

Seizure under section 110 of the Customs Act, 1962 - Provisional attachment of bank account under section 110A of the Customs Act, 1962 - Release of seized goods pending investigation - De-freezing bank account on receipt of bond and security - Consideration of representations on merits and in accordance with law - Investigatory role of Air Customs Investigating Unit

Seizure under section 110 of the Customs Act, 1962 - Release of seized goods pending investigation - Consideration of representations on merits and in accordance with law - Investigatory role of Air Customs Investigating Unit - Direction to consider and decide the petitioner's representation for release of the export consignment seized under section 110 of the Customs Act, 1962. - HELD THAT: - The Court recorded that the petitioner's export consignment has been seized under section 110 and that the petitioner has not been put on notice of reasons for seizure, though they have cooperated and submitted representations and statements asserting the export's validity. The Court declined to express any view on the merits because the respondents had not filed a counter and an investigation by the Air Customs Investigating Unit was pending. Instead of granting substantive relief, the Court directed that the petitioner must file a fresh comprehensive representation seeking release of the export consignment and that on receipt the designated Customs authorities shall pass final orders on merits and in accordance with law within four weeks, taking into account the ongoing investigation and relevant statutory provisions governing seizure and release. [Paras 3, 4, 13, 14, 15]

Petitioner ordered to file a fresh comprehensive representation; respondents directed to decide the representation for release of the seized export consignment on merits and in accordance with law within four weeks of receipt.

Provisional attachment of bank account under section 110A of the Customs Act, 1962 - De-freezing bank account on receipt of bond and security - Consideration of representations on merits and in accordance with law - Direction to consider and decide the petitioner's representation for de-freezing the bank account provisionally attached under section 110A of the Customs Act, 1962. - HELD THAT: - The Court noted that a communication from the Customs authorities resulted in the petitioner's bank account being frozen and that the petitioner had not been given a copy of that communication or a reasoned notice. While acknowledging the statutory mechanism in section 110A permitting operation of a provisionally attached bank account on receipt of a proper bond and security, the Court declined to grant immediate de-freezing in view of absence of respondent's counter and ongoing investigations. The petitioner was directed to file a fresh comprehensive representation for de-freezing the account; on receipt, the Customs authorities were to decide the representation on merits and in accordance with law, considering section 110A, within the prescribed four week period. [Paras 5, 6, 7, 14, 15]

Petitioner ordered to file a fresh comprehensive representation; respondents directed to consider and pass final orders on the petitioner's request to de-freeze the bank account on merits and in accordance with law within four weeks of receipt.

Final Conclusion: Writ petitions disposed by directing the petitioner to file fresh comprehensive representations for release of the seized export consignment and for de freezing the bank account; on receipt the Customs authorities shall decide both representations on merits and in accordance with law (including consideration of section 110A) within four weeks. No costs.

Jurisdiction of Customs authorities in the Domestic Tariff Area (DTA) vis-a -vis Special Economic Zone (SEZ) authorities - exclusive enforcement jurisdiction under the Special Economic Zones Act, 2005 - confiscation of imported goods lying in an uncleared area at an airport - provisional release and presentation of Bill of Entry for imported goods - remand to appellate authority for fresh consideration - application of interpretive principle favourable to taxpayer not displacing jurisdictional fact finding

Jurisdiction of Customs authorities in the Domestic Tariff Area (DTA) vis-a -vis Special Economic Zone (SEZ) authorities - exclusive enforcement jurisdiction under the Special Economic Zones Act, 2005 - application of interpretive principle favourable to taxpayer not displacing jurisdictional fact finding - Whether the Officers of the Customs Department had jurisdiction under the Customs Act, 1962 to act in respect of alleged unauthorised removal/imports of gold discovered in the DTA despite parallel provisions in the SEZ Act conferring enforcement powers. - HELD THAT: - The Court examined the sequence of events and the situs where illegalities were detected and found that the searches, seizure and recoveries central to the Customs proceedings occasioned in the DTA. Sections 21 and 22 of the SEZ Act empower designation of enforcement officers for offences committed in an SEZ, but that statutory scheme does not oust the jurisdiction of Customs authorities to act under the Customs Act in respect of violations detected in DTA. The Tribunal's reliance on a taxpayer favourable interpretive principle to deny Customs jurisdiction was misplaced because the question required appreciation of jurisdictional facts and the demarcation of powers between SEZ authorities and Customs; where violations are noticed in the DTA, Customs retain power to demand duty, confiscate and impose penalties under Act 1962. For these reasons the Court held the CESTAT's reversal of the Order in Original insofar as it denied Customs jurisdiction was unsustainable. [Paras 8]

Answered in favour of the Revenue; Customs officers have jurisdiction under the Customs Act in respect of violations noticed in the DTA and the CESTAT's contrary finding on jurisdiction is set aside.

Confiscation of imported goods lying in an uncleared area at an airport - provisional release and presentation of Bill of Entry for imported goods - Whether the 4 kg of gold lying uncleared at the Air Cargo Complex could be confiscated under the Customs Act or was entitled to release. - HELD THAT: - The Court considered the factual matrix: the 4 kg consignment had been imported when the unit had authorisation and was lying in an uncleared area at the airport; there was no finding that the import itself was unlawful at the time of importation. The Tribunal's conclusion that confiscation of the 4 kg was premature and rested on assumptions was accepted. The High Court sustained the CESTAT's conclusion that confiscation of the 4 kg was unsustainable and directed remedial steps for release subject to applicable customs procedure and duties. [Paras 10]

The CESTAT's setting aside of confiscation of the 4 kg gold is upheld; the importer is entitled to release subject to presentation of Bill of Entry and payment of applicable duty.

Remand to appellate authority for fresh consideration - procedural fairness and adequacy of opportunity in appellate adjudication under SEZ/FTDR provisions - Whether the appellate orders under the SEZ/FTDR proceedings (orders dated 07.09.2018 and 19.06.2020) required interference or remand for fresh consideration. - HELD THAT: - On review of the record the Court found that certain documentary material relied upon before the Development Commissioner had not been fully addressed before the appellate authority and that the appellate authority had not afforded a complete opportunity to the importer on some hearing dates. While the Development Commissioner's order was based on materials on record, the High Court concluded that the appellate authority should re examine the objections and materials afresh to ensure procedural fairness and complete consideration of the importer's contentions. [Paras 16]

Appellate orders dated 07.09.2018 and 19.06.2020 are set aside and the matter is remitted to the appellate authority for fresh consideration and decision.

Provisional release and presentation of Bill of Entry for imported goods - What interim directions should be given for release of the 4 kg consignment following the CESTAT finding in favour of the importer. - HELD THAT: - Given the confirmation by CESTAT that confiscation of the 4 kg was unsustainable, the High Court directed that the importer may present a Bill of Entry enclosing a copy of this judgment; the Customs authority shall entertain the Bill of Entry, apply the rate of duty and tariff prevailing on presentation, and, following extant procedure, provisionally release the consignment within four weeks subject to payment of applicable duties and compliance with procedure. [Paras 18]

Petitioner permitted to file Bill of Entry; Customs to entertain it, assess at rates prevailing on presentation and provisionally release the consignment within four weeks on payment of applicable duty and compliance with procedure.

Final Conclusion: The High Court set aside the CESTAT's jurisdictional conclusion that had denied Customs authority in DTA, holding Customs competent to act under the Customs Act for violations noticed in the DTA; upheld the CESTAT's quashing of confiscation of the 4 kg gold and directed release subject to Bill of Entry and payment of duty; remitted the SEZ appellate orders for fresh consideration by the appellate authority; consequential reliefs and directions were granted as recorded.

Export Promotion Capital Goods Scheme - export obligation - Export Obligation Discharge Certificate - prematurity of show cause notice - liability for duty on non-fulfilment of export obligation - natural justice

Export obligation - prematurity of show cause notice - Export Promotion Capital Goods Scheme - The show cause notice dated October 14, 2015 was prematurely issued insofar as it alleged non-fulfilment of the export obligation under the EPCG licence which specified a twelve year export obligation period with 50% due by December 05, 2016. - HELD THAT: - The licence dated December 06, 2006 expressly recorded a twelve year export obligation period. Under the notification, where the obligation period is twelve years, 50% of the export obligation falls to be fulfilled by the end of the tenth year, i.e. by December 05, 2016. The show cause notice was issued on October 14, 2015, before that block period had expired, and therefore proceeded on the incorrect premise that the obligation period was eight years. The adjudicating authorities (Additional Commissioner and Commissioner (Appeals)) did not dispute that the licence recorded a twelve year period but nonetheless treated the obligation as shorter. On the correct construction of the licence and the notification, the notice was premature and could not form a valid basis for declaring breach of the notification. [Paras 3, 4, 12, 13, 16]

Show cause notice dated October 14, 2015 was premature and could not sustain a finding of violation of the export obligation.

Export Obligation Discharge Certificate - liability for duty on non-fulfilment of export obligation - natural justice - Delay by the Director General of Foreign Trade in issuing the Export Obligation Discharge Certificate (EODC) after the appellant had applied for it does not render the appellant liable for the duty claimed for non fulfilment. - HELD THAT: - The appellant applied to the DGFT for the EODC on November 09, 2016, before the expiry of the tenth year, and the certificate was issued on December 09, 2016. The tribunal accepted that where the DGFT delays issuance of the EODC despite a timely application by the importer, such delay cannot be attributed to the importer. The authorities' emphasis on non submission of the certificate overlooked that the application had been made in time; authorities cannot treat pendency of the DGFT process as culpable delay by the appellant. The tribunal also noted that principles of natural justice and the factual matrix examined in relevant precedence support the view that the appellant should not be penalised for administrative delay by DGFT. [Paras 6, 14, 15, 16]

Appellant not liable for customs duty on account of delay in issuance of EODC by DGFT where the appellant had applied for the certificate within the prescribed period.

Final Conclusion: The appeal is allowed. The order dated September 05, 2019 of the Commissioner (Appeals) is set aside and the findings of breach of the EPCG licence conditions are quashed; consequential reliefs follow.

Liability of directors for omissions in directors' report under Section 217(3) and exceptions under Section 217(5) of the Companies Act, 1956 - status and legal consequences of appointment as Additional Director versus Director - vicarious liability of directors and requirement of material showing active role and mens rea - quashing of criminal proceedings under inherent powers of the court - General Circular No.1/2020 - protection of independent/non-executive/non KMP directors

Status and legal consequences of appointment as Additional Director versus Director - Form DIR 12, DIR 11 and Ministry records as evidence of directorship - Whether the petitioner was an Additional Director/Director/Independent Director at the time the Board's report for FY 2013 2014 was filed and whether records established his directorship during the relevant period. - HELD THAT: - The Court examined the documentary record (invitation letter, consent, Form DIR 12, Ministry portal entries and Form DIR 11) and recorded that the petitioner was appointed as an "Additional Director" with effect from 2.6.2014, was shown on records as an Additional Director from 02.06.2014 to 30.09.2014, and as a Director from 30.09.2014 until 31.12.2016. The Board's report for the year ending 31.03.2014 was filed on 5.9.2014, a date on which the petitioner was reflected in the records as an Additional Director. The Court noted that no complaint was lodged by the petitioner with the Ministry regarding any alleged incorrect portal entries. On the evidence before it, the Court treated the petitioner as an Additional Director on the date of filing of the report and found that resolution of competing contentions about whether he was an Additional Director, a regular Director or an Independent Director at the material time required adjudication at trial.

On the documentary record the petitioner was an Additional Director when the Board's report was filed on 5.9.2014; factual disputes about precise status and legal characterization require trial-level determination.

Liability of directors for omissions in directors' report under Section 217(3) and exceptions under Section 217(5) of the Companies Act, 1956 - vicarious liability of directors and requirement of material showing active role and mens rea - General Circular No.1/2020 - protection of independent/non-executive/non KMP directors - quashing of criminal proceedings under inherent powers of the court - Whether the criminal proceedings against the petitioner should be quashed at this stage or permitted to continue to trial. - HELD THAT: - Applying established principles on corporate and individual criminal liability, the Court observed that criminal liability of directors is not ipso facto and ordinarily requires material showing active role or statutory vicarious liability. The Court referred to Supreme Court authority emphasising that individual prosecution requires sufficient material of active role and criminal intent. However, because the petitioner was shown on records as an Additional Director at the time the board report was filed, and given the plea of guilty by other accused and the factual questions raised (attendance at meetings, signing of the report, applicability of Section 217(5) exceptions and the Government circular), the Court concluded these are mixed questions of fact and law which ought to be tried. The Court held that exercising inherent powers to quash the proceedings would amount to abuse of process and miscarriage of justice in the circumstances, and therefore declined to quash the prosecution, leaving the issues to be considered by the trial court.

Revision petition to quash proceedings dismissed; criminal proceedings to continue and the trial court to decide the factual and mixed questions including applicability of statutory exceptions and the Government circular.

Final Conclusion: The petition for quashing the criminal proceedings was dismissed. The High Court found on the material before it that the petitioner was recorded as an Additional Director when the Board's report was filed and that the factual and mixed questions concerning liability, exceptions under the statute and the scope of the Government circular require adjudication by the trial court; quashing at this stage would be an abuse of process.

Validity of Section 66(1) of the Insolvency and Bankruptcy Code under Article 14 - Scope of jurisdiction under Section 66(1) - power to fix liabilities but not to avoid past transactions - Limitation of standing under Section 66(1) - application only by the resolution professional - Non-extension of Section 66(1) to impose liability on unrelated third organizations or persons - Distinctness of remedies under Section 66(1) and Sections 43, 45, 47, 49, 50 of the IBC - No bar on independent civil or criminal actions by other fora

Validity of Section 66(1) of the Insolvency and Bankruptcy Code under Article 14 - Section 66(1) of the IBC is not unconstitutional or manifestly arbitrary under Article 14. - HELD THAT: - The Court examined the scope, object and text of Section 66(1) in light of the IBC's remedial scheme and concluded that the provision does not suffer from manifest arbitrariness. The legislature deliberately confined Section 66(1) to permit the adjudicating authority to fix liabilities of persons responsible for fraudulent or wrongful trading during CIRP or liquidation, rather than to declare transactions void. The provision's limited and tailored scheme, its relationship with the IBC's revival-focused object and the distinct remedial architecture for avoidable transactions support the conclusion that Section 66(1) is constitutionally sustainable. The Court therefore found no merit in the petitioner's challenge seeking to declare Section 66(1) ultra vires Article 14. [Paras 19, 20]

Petition to declare Section 66(1) unconstitutional under Article 14 dismissed.

Limitation of standing under Section 66(1) - application only by the resolution professional - Scope of jurisdiction under Section 66(1) - power to fix liabilities but not to avoid past transactions - Section 66(1) contemplates an application only by the resolution professional and empowers the adjudicating authority to fix personal liability to contribute to the corporate debtor's assets, not to avoid or declare past transactions void. - HELD THAT: - The Court contrasted Section 66(1) with the Companies Act provisions and with other IBC avoidance provisions (Sections 43, 45, 47, 49, 50), noting that those provisions provide for avoidance or reversal of transactions and may be invoked by liquidators, resolution professionals or, in specified cases, creditors, whereas Section 66(1) is a distinct provision aimed at fixing personal liability for fraudulent or wrongful conduct. The legislative choice to permit only the resolution professional to bring an application under Section 66(1) was held to be deliberate and constitutionally permissible. The Court also observed that Section 66(1) applies during CIRP as well as liquidation but does not grant the authority power to set aside past transactions - that function is assigned to other sections of the IBC. [Paras 7, 16, 17, 19]

Section 66(1) is restricted to applications by the resolution professional and to ordering contributions by persons responsible; it does not enable avoidance of past transactions.

Non-extension of Section 66(1) to impose liability on unrelated third organizations or persons - No bar on independent civil or criminal actions by other fora - Section 66(1) cannot be used to fasten liability on persons who are heads of other organisations or on third parties not responsible for the corporate debtor's conduct; independent civil or criminal proceedings remain available. - HELD THAT: - Relying on the statutory text and authorities dealing with analogous provisions under the Companies Acts, the Court held that Section 66(1) is directed at persons who were knowingly parties to carrying on the business of the corporate debtor in a fraudulent or wrongful manner. The Court rejected the petitioner's submission seeking extension of Section 66(1) to other organizations or to persons merely carrying on business with the corporate debtor. It further clarified that an application under Section 66(1) does not bar separate civil suits for recovery or independent criminal investigations and prosecutions under appropriate laws. [Paras 13]

Section 66(1) does not extend to imposing liability on unrelated third-party organisations or persons; it leaves unaffected independent civil or criminal remedies.

Distinctness of remedies under Section 66(1) and Sections 43, 45, 47, 49, 50 of the IBC - The remedies under Section 66(1) are distinct from, and do not supplant, the avoidance and restitution remedies provided by Sections 43, 45, 47, 49 and 50 of the IBC. - HELD THAT: - The Court analysed the different statutory schemes: Sections 43, 45, 47, 49 and 50 enable avoidance or restoration of certain transactions (preferential, undervalued, extortionate, defrauding creditors) and can be invoked by liquidators, resolution professionals or specified stakeholders; Section 66(1) is aimed at fixing liability for fraudulent or wrongful trading. The legislative architecture contemplates separate, complementary remedies with different pleading and factual thresholds. The Court observed that IBC contains adequate mechanisms for seeking avoidance and for pursuit of fraudulent trading liabilities and that these provisions operate in a coordinated manner rather than by subsumption. [Paras 6, 16, 17]

Section 66(1) constitutes a distinct remedy and does not merge or expand the avoidance powers under the other specified sections of the IBC.

Final Conclusion: The writ petition challenging Section 66(1) of the IBC was dismissed: Section 66(1) is constitutionally valid, confined to applications by the resolution professional, limited to fixing liabilities of persons knowingly responsible for fraudulent or wrongful trading (and not to avoiding past transactions or imposing liability on unrelated third parties), and does not bar independent civil or criminal proceedings; petition dismissed.

Condonation of delay - extension of limitation due to COVID orders - Section 5 Limitation Act, 1963 - Article 120 of the Limitation Act, 1963 (limitation for impleading legal representatives) - legal representatives - definition of "legal representative" under Section 2(11) CPC - Order 22 Rule 4 CPC (impleadment of legal representatives) - class I heir under the Hindu Succession Act, 1956

Condonation of delay - Section 5 Limitation Act, 1963 - extension of limitation due to COVID orders - Article 120 of the Limitation Act, 1963 (limitation for impleading legal representatives) - Whether delay in filing application to implead legal representatives of deceased Respondent No.1 is to be condoned - HELD THAT: - The Tribunal found that Respondent No.1 died on 26.04.2021 and that the appellant first learnt of the death on 12.07.2021. The appellant filed an interlocutory application on 29.11.2021 seeking details of the legal representatives; that application was decided on 24.08.2022 and particulars were provided on 08.09.2022, following which the impleadment application was filed on 12.09.2022. In assessing sufficiency of cause under Section 5, the Tribunal applied the Supreme Court orders excluding the period from 15.03.2020 to 28.02.2022 for computation of limitation and granting a 90 day grace from 01.03.2022 where applicable. On the facts, the limitation under Article 120 was rendered non operative for the excluded period, the interlocutory application remained pending without fault of the appellant, and the impleadment application was filed promptly after receipt of particulars. The Tribunal therefore concluded that either there was no effective delay or, alternatively, sufficient cause existed to condone any delay. [Paras 21, 22]

Application under Section 5 Limitation Act for condonation of delay is allowed.

Legal representatives - definition of "legal representative" under Section 2(11) CPC - Order 22 Rule 4 CPC (impleadment of legal representatives) - class I heir under the Hindu Succession Act, 1956 - Whether the widow of deceased Respondent No.1 is a legal representative and should be impleaded - HELD THAT: - The Tribunal noted that 'legal representative' is not defined in the Code and relied on Section 2(11) CPC which includes persons who represent the estate of a deceased or intermeddle with it. The widow, being a class I heir under the Hindu Succession Act, 1956, prima facie represents the estate. The Tribunal also observed that the effect of Sections 66 and 67 of the Code on transfer of estate arising from alleged fraudulent transactions can only be examined after impleadment. On this basis the Tribunal found merit in the impleadment application and accepted that the widow falls within the definition of legal representative for the purposes of bringing her on record under Order 22 Rule 4 CPC. [Paras 28, 29, 30]

The widow and the two sons are impleaded as the legal representatives of deceased Respondent No.1; amended memo of parties is taken on record.

Final Conclusion: The Tribunal allowed the application for condonation of delay under Section 5 Limitation Act and permitted impleadment of the three legal representatives (the widow and two sons) of the deceased Respondent No.1, taking the amended memo of parties on record.

Time bound realisation of assets under the Insolvency and Bankruptcy Code, 2016 - rights and obligations of a secured creditor in liquidation regarding realisation and relinquishment of security interest - inclusion of unrelinquished security in the liquidation estate and duty to hand over possession to the liquidator - priority of distribution under Section 52 and 53 of the Insolvency and Bankruptcy Code, 2016 - liquidation cost liability of stakeholders - application of IBBI (Liquidation Process) Regulations, 2016 - time limits for realisation by secured creditors

Inclusion of unrelinquished security in the liquidation estate and duty to hand over possession to the liquidator - time bound realisation of assets under the Insolvency and Bankruptcy Code, 2016 - The Adjudicating Authority rightly directed the secured creditor to hand over possession of the immovable property to the Liquidator and to bring the asset into the liquidation estate. - HELD THAT: - The Appellate Tribunal examined the NCLT's findings (recorded at paras.11-18 of the impugned order) that the secured creditor had been granted sufficient opportunities and that prolonged retention of the asset would erode its value, prejudicing the liquidation process which requires time bound realisation. The Tribunal noted that the NCLT followed precedent and relevant liquidation principles, and that the property being the substantial asset of the corporate debtor ought to form part of the liquidation estate for proactive sale by the liquidator. On that footing the direction to hand over possession within seven days and to include the property in the liquidation estate was held to be lawful and not requiring interference. [Paras 11]

Direction to hand over possession to the Liquidator and to include the property in the liquidation estate affirmed.

Rights and obligations of a secured creditor in liquidation regarding realisation and relinquishment of security interest - application of IBBI (Liquidation Process) Regulations, 2016 - time limits for realisation by secured creditors - The Adjudicating Authority correctly declined to grant the further six month extension sought by the secured creditor to realise the security interest. - HELD THAT: - The Tribunal accepted the NCLT's evaluation that the secured creditor had been given time and opportunities to effect sale, that prior auctions had failed and prolonged inaction had occurred, and that further extension would unduly delay and imperil the liquidation process. The Tribunal observed the regulatory framework requiring time bound realisation by secured creditors and noted that the NCLT's exercise of discretion in refusing the extension was consistent with those principles and with cited precedent. Consequently, there was no error in denying the requested extension. [Paras 11]

Refusal to grant the additional six month extension to the secured creditor affirmed.

Liquidation cost liability of stakeholders - priority of distribution under Section 52 and 53 of the Insolvency and Bankruptcy Code, 2016 - The direction that the Applicant is liable to pay the liquidation cost as determined by the Tribunal was sustained. - HELD THAT: - The Appellate Tribunal observed that the NCLT had directed payment of liquidation cost (as per its earlier order) and that there was no material irregularity or patent illegality in that assessment. The Tribunal agreed with the Adjudicating Authority's approach that liquidation costs are payable in accordance with the liquidation process and that the distribution of sale proceeds must follow the statutory priority under Sections 52 and 53 of the IBC. The appellate forum found no reason to interfere with the liability to pay the liquidation cost. [Paras 17]

Requirement to pay the liquidation cost as directed by the Adjudicating Authority upheld.

Final Conclusion: The appeal is dismissed. The NCLT order directing the secured creditor to hand over possession of the specified immovable property to the Liquidator, refusing the further extension to realise the security interest, and requiring payment of the liquidation cost is affirmed; the Liquidator is to sell the property and distribute proceeds in accordance with the IBC and its regulations.

Maintainability of subsequent application after earlier withdrawal - liberty to file fresh application - abuse of process of court - judicial propriety and public policy

Maintainability of subsequent application after earlier withdrawal - liberty to file fresh application - judicial propriety and public policy - Whether a fresh application seeking revival and relisting of an earlier appeal, after an earlier identical application was withdrawn by the applicants, is maintainable before the Tribunal where no change in circumstances and no express liberty was granted by the higher court. - HELD THAT: - The Tribunal examined the history of proceedings, including the earlier I.A. Nos. 3431-3433 of 2022 which were argued and then withdrawn by the applicants with a request to avail other remedies, and the subsequent proceedings before the Hon'ble Supreme Court where the applicants sought withdrawal with a stated intention to move a fresh application before the Tribunal. The Tribunal found that the Supreme Court did not expressly grant liberty to file a fresh application on the same cause of action; rather, the applicants themselves proposed to file a fresh application and withdrew their applications. The Bench held that permitting a party to file repetitive, identical applications after voluntarily withdrawing an earlier one, without any intervening change in circumstances or an express order of liberty from the higher court, would be contrary to judicial propriety and public policy and would encourage unending litigation. On that basis the Tribunal concluded that the present application, being on the same cause of action and containing similar prayers as the earlier withdrawn application, was not maintainable. [Paras 14, 15]

Present application dismissed as not maintainable; no costs.

Final Conclusion: The application for revival and relisting of CA (AT) (Ins) No. 627 of 2019, which repeated an earlier withdrawn application without any change in circumstances or an express liberty from the Supreme Court, is dismissed as not maintainable on grounds of judicial propriety and to prevent abuse of the process of court.

Operational debt - maintainability of petition under Section 9 - summary proceedings under the Insolvency & Bankruptcy Code - exercise of inherent powers under Rule 11 of NCLT Rules, 2016 - competent forum for contractual/commercial claim

Maintainability of petition under Section 9 - exercise of inherent powers under Rule 11 of NCLT Rules, 2016 - Validity of the Adjudicating Authority's disposal of CP (IB) No.128/BB/2020 by directing the Corporate Debtor to sympathetically consider payment to the Petitioner despite finding the petition not maintainable under the Code. - HELD THAT: - The Adjudicating Authority had found that the petition under Section 9 was not maintainable but, invoking its inherent powers under Rule 11 of the NCLT Rules, 2016, disposed of the petition with a direction that the Corporate Debtor sympathetically consider payment to the Petitioner. The Tribunal noted that the Code provides for summary proceedings and is inbuilt and self-contained, and found no reason to interfere with the Adjudicating Authority's order. The Tribunal also recorded that the Corporate Debtor had already paid the Petitioner a sum in respect of services rendered, including payment made pursuant to the Adjudicating Authority's direction. Having considered the factual position and the nature of the proceedings under the Code, the Tribunal agreed with the Adjudicating Authority's conclusion and refused to set aside the disposal order. [Paras 8, 9, 10, 14]

The disposal of CP (IB) No.128/BB/2020 by the Adjudicating Authority, including the direction to the Corporate Debtor to consider payment, is upheld and not interfered with.

Operational debt - summary proceedings under the Insolvency & Bankruptcy Code - competent forum for contractual/commercial claim - Whether the Appellant's claim for professional fees, characterised as operational debt, required adjudication before the Adjudicating Authority or should be pursued before a competent forum. - HELD THAT: - The Tribunal observed that the Respondent asserted payment had been made to the Appellant for services rendered and emphasised that the Code's summary nature limits the proceedings before the Adjudicating Authority compared to a civil suit. Given the Respondent's stand that payments were effected and the summary jurisdiction of the Code, the Tribunal considered it appropriate to decline interference and to leave open the Appellant's remedy to pursue his contractual or monetary claims before a competent forum in accordance with law. The Tribunal expressly clarified that dismissal of the appeal would not preclude the Appellant from seeking redress elsewhere. [Paras 11, 12, 13, 14]

The Appellant is not precluded from approaching the competent forum for recovery of the claimed fees; the appeal is dismissed without prejudice to pursuing remedies in law.

Final Conclusion: The appeal is dismissed. The decision of the Adjudicating Authority disposing CP (IB) No.128/BB/2020 by directing the Corporate Debtor to consider payment is upheld; the Appellant remains free to seek recovery of any outstanding contractual claim before the appropriate forum in accordance with law.

Audi alteram partem - admission of application under Section 7 of the Insolvency and Bankruptcy Code, 2016 - reinstatement/revival of Corporate Insolvency Resolution Process - reservation of order and correction of hearing record - remand for fresh hearing - right to be heard

Audi alteram partem - reservation of order and correction of hearing record - right to be heard - Whether the impugned order admitting revival of the Section 7 petition could be maintained despite the Adjudicating Authority having recorded the appellant's presence when in fact there was no representation and the order was reserved. - HELD THAT: - The Tribunal found a fundamental defect in the proceedings before the Adjudicating Authority: the hearing record of 01.09.2022 incorrectly showed the Corporate Debtor's counsel as present when the order was reserved, but that recording was subsequently corrected on 22.09.2022 to acknowledge the absence. That correction demonstrates that there was no representation for the Corporate Debtor when the Adjudicating Authority heard and later passed the impugned order. The error deprived the Corporate Debtor of the opportunity to be heard, thereby violating the salutary principle of audi alteram partem. Because the absence of representation was material to the fairness of the proceedings, the Tribunal concluded that the impugned order could not stand without providing the Corporate Debtor a fresh opportunity to contest the application for revival of the Section 7 petition. [Paras 7]

Impugned order set aside for want of compliance with the principle of audi alteram partem; matter remanded for fresh hearing.

Reinstatement/revival of Corporate Insolvency Resolution Process - admission of application under Section 7 of the Insolvency and Bankruptcy Code, 2016 - remand for fresh hearing - Procedure to be followed upon remand: whether the Adjudicating Authority should decide the application afresh after affording opportunity of hearing to the Corporate Debtor and within a specified time. - HELD THAT: - The Tribunal did not express any opinion on the merits of the revival/application under Section 7 of the Code. Instead, having found procedural infirmity, it directed that the Adjudicating Authority decide the application afresh after giving the Corporate Debtor an opportunity to be heard. The Tribunal specified that the parties appear before the Adjudicating Authority on the listed date and requested expeditious disposal preferably within two months of appearance, and directed the Registry to send this order to the concerned Adjudicating Authority for compliance. [Paras 8]

Proceedings remitted to the Adjudicating Authority to decide the application afresh after hearing the Corporate Debtor; parties to appear on the notified date and the Adjudicating Authority to endeavour to decide the matter preferably within two months.

Final Conclusion: The appeal is allowed: the impugned order reviving the Section 7 petition is set aside for violation of the appellant's right to be heard, and the matter is remanded to the Adjudicating Authority for fresh consideration after affording the Corporate Debtor an opportunity of hearing; no opinion expressed on merits; no costs.

Offence of money-laundering - proceeds of crime - projection as untainted property - knowingly assists or is party to any process or activity connected with proceeds of crime - predicate offence - continuing activity - construction of "and" as "or" in Section 3

Offence of money-laundering - proceeds of crime - knowingly assists or is party to any process or activity connected with proceeds of crime - predicate offence - Validity of criminal complaint and charges under Section 3 of the PML Act against the petitioner (A-5) and whether the prosecution should be quashed - HELD THAT: - The Court examined whether the allegations that the petitioner, as a bank manager, sanctioned and disbursed a loan fraudulently would bring him within Section 3 of the PML Act. The Court applied the definition of "proceeds of crime" and the scope of Section 3 as expounded in Vijay Madanlal and subsequent Supreme Court rulings, noting that Section 3 extends to any person who directly or indirectly attempts to indulge in, knowingly assists, or is a party to any process or activity connected with proceeds of crime. The Court observed that the amended Explanation to Section 3 and the construction treating the conjunctive "and" as effectively covering alternative modes (including projecting as untainted property or other modes of dealing with proceeds) broaden the provision beyond the pre-amendment requirement that projection as untainted property be essential. On the facts alleged in the complaint - that but for the petitioner's role the loan (characterised as proceeds of crime) could not have been sanctioned and disbursed - the Court held that prima facie the allegations attract Section 3. Reliance was placed on Padmanabhan Kishore to the effect that active participation or assistance in processes connected with proceeds of crime falls within the net of Section 3. The Court considered earlier conflicting Division Bench decisions of this High Court based on Nikesh Tarachand but held they are no longer persuasive in view of Vijay Madanlal and subsequent authority. The Court concluded there were no grounds for quashment at this stage and that available defences are matters for trial. [Paras 12, 13, 14, 15, 16]

Criminal proceedings and charges under Section 3 of the PML Act against the petitioner (A-5) are not quashed; petition dismissed.

Final Conclusion: The petition under Section 482 Cr.P.C. seeking quashment of the prosecution and charges against the petitioner under Section 3 of the PML Act is dismissed; the prosecution may proceed and the observations are confined to disposal of this petition.

Renting of Immovable Property Services - service tax demand - service provider - ownership: right to possess, right to enjoy and right to dispose - clubbing of receipts for levy of service tax

Renting of Immovable Property Services - service provider - clubbing of receipts for levy of service tax - ownership: right to possess, right to enjoy and right to dispose - Whether the appellants (associations) are liable to service tax on renting of immovable property given that individual owners executed the lease with the Bank and received rent separately. - HELD THAT: - The Tribunal found on the record that 39 individuals owned the rented premises in their individual names, executed lease deeds signed by each owner, and produced municipal tax bills in their names. The State Bank of India paid rent to the individual owners separately and in differing amounts according to each property. Therefore the crucial determinants are the parties to the lease, who received the payments, and who performed the service. Since the individual owners alone executed the lease with the Bank and received the rent, they were the service providers in respect of their respective properties. The amounts received by individual owners could not be aggregated and attributed to the associations for the purpose of imposing service tax. The associations were neither absolute owners nor recipients of rent; accordingly the demand of service tax against the appellants was legally unsustainable. [Paras 4, 5]

Demand of service tax and penalties imposed on the appellants is set aside as the appellants were not the service providers and the individual owners received rent separately.

Final Conclusion: Appeal allowed; impugned order confirming service tax demand and penalties against the associations set aside as the individual owners, not the associations, were the providers of the renting service and received the rent separately.

Refund of accumulated CENVAT credit carried forward as opening balance - Nexus between input services and exported services for refund under Rule 5 - Bar on belated denial of refund where availment of credit was not earlier disputed - Application of departmental circulars in refund claims

Refund of accumulated CENVAT credit carried forward as opening balance - Application of departmental circulars in refund claims - Opening balance in the CENVAT register can be considered for computation of refund under Rule 5 where carried forward from previous quarters. - HELD THAT: - The Tribunal relied upon the Board's Circular No. 120/01/2010 which permits carry forward of closing balance of a previous quarter as the opening balance for the subsequent quarter and allows refund claims in subsequent quarters for credits availed in past periods. The circular's illustration demonstrates that credit availed in an earlier quarter may be utilised for export-related refund in a later quarter, and service providers exporting 100% of services may claim refund irrespective of when credit was taken. Applying this clarification, the Commissioner (Appeals) was not justified in rejecting the refund on the ground that the opening balance should be ignored. [Paras 3]

Opening balance carried forward from earlier quarter should be taken into account for grant of refund under Rule 5; the rejection on that ground was set aside.

Nexus between input services and exported services for refund under Rule 5 - Bar on belated denial of refund where availment of credit was not earlier disputed - Department cannot deny refund under Rule 5 on the ground of lack of nexus between input services and exported services when availment of the CENVAT credit was not questioned at the relevant time and no recovery proceedings under Rule 14 read with Section 73 were initiated. - HELD THAT: - The Tribunal noted that where the availment of credit was not disputed contemporaneously, the Department cannot later challenge the refund claim on nexus grounds unless recovery proceedings have been initiated under the appropriate provisions. The decision follows earlier Tribunal precedents which hold that while granting refund under Rule 5 read with the relevant notification, the Department cannot object to the claim on the basis that input services lacked nexus with exported services. Consequently, the Commissioner (Appeals)'s denial of refund for want of nexus was unsustainable. [Paras 4, 5]

Refund cannot be denied on nexus grounds in the absence of earlier challenge to availment of credit or recovery proceedings; the denial was set aside.

Final Conclusion: The impugned order rejecting the refund application was set aside; the appeal is allowed and the appellant is entitled to the refund with consequential benefits as per law.

Transitional provision under Rule 11(3) of the Cenvat Credit Rules, 2004 - distinction between conditional exemption and absolute exemption under section 5A - lapsing of Cenvat credit on availing exemption - obligation to pay amount equivalent to Cenvat credit in respect of inputs in stock, in process or contained in final product - option to avail notification versus unilateral absolute exemption

Transitional provision under Rule 11(3) of the Cenvat Credit Rules, 2004 - distinction between conditional exemption and absolute exemption under section 5A - lapsing of Cenvat credit on availing exemption - Whether Cenvat credit balance standing in the appellant's account on the date of opting for Notification No.30/2004-CE lapses and becomes non-utilisable for payment of duty. - HELD THAT: - The Tribunal examined Rule 11(3) CCR, 2004 and the language separating sub clauses (i) and (ii) by a semicolon and the disjunctive 'or', concluding that the two alternatives are distinct. Sub rule (3)(i) applies where an assessee opts for an exemption issued under section 5A that is conditional; it requires payment of an amount equivalent to Cenvat credit in respect of inputs lying in stock, in process or contained in finished goods but does not mandate lapse of the remaining balance. Sub rule (3)(ii) applies only where the final product is exempted absolutely under section 5A, in which event, after deduction of the specified amount, any remaining Cenvat balance shall lapse and cannot be utilised. Notification No.30/2004 CE dated 09.07.2004 carries a condition excluding goods for which credit has been taken and is therefore a conditional notification. Applying the settled coordinate bench precedents cited in the judgment, the Tribunal held that Rule 11(3)(i) governs the appellants' case; accordingly, the balance credit after reversal limited to inputs, WIP and inputs contained in finished goods does not lapse and may be carried forward and utilised for payment of duty as permitted under law.

The balance Cenvat credit did not lapse on account of the appellants opting for Notification No.30/2004 CE (a conditional exemption); Rule 11(3)(i) applies and the appellants are entitled to carry forward and utilise the remaining credit subject to the payment/reversal obligations specified in that provision.

Final Conclusion: Following the settled interpretation of Rule 11(3) and the distinction between conditional and absolute exemptions under section 5A, the impugned orders were set aside and the appeals allowed: Notification No.30/2004 CE being conditional does not cause lapse of the balance Cenvat credit after the specified reversals, and the appellants are entitled to carry forward and utilise such credit as permitted by Rule 11(3)(i).