TaxTMI Updates e-Newsletter
Feb 04,2026

Validity of electronically issued assessment orders and digital signatures - Document Identification Number / RFN as proof of digital authentication - laches and delay in approaching the Court - HELD THAT:- It is not in dispute that the assessment order was passed in October, 2023 and the same was uploaded in the portal. Further, the summary of the order was uploaded on 26.12.2024. Admittedly, there is no explanation whatsoever was offered by the petitioner for the delay in approaching this Court in the affidavit filed in support of the writ petition. In the absence of any explanation, the writ petition is liable to be dismissed on the ground of laches.

In the instant case the summary of the order contains Reference Number and therefore, by no stretch of imagination it can be said that the summary order does not contain Document Identification Number/Reference Number. Further, the said number would be exclusively assigned to a particular order. In view of the same, the contention raised by the petitioner that summary order does not contain DIN is liable to be rejected.

Be that as it may, as observed, the petitioner despite having access to the portal, so as to view the orders passed against it, for the reasons best known it, did not approach this Court immediately after passing the orders under challenge. Further, there is no explanation was offered for the delay caused in preferring the present writ petition. None of the grounds raised in the writ petition are tenable and view from any angle, there are no merits in the present writ petition.

Accordingly, the writ petition is dismissed.

Delay and laches in filing writ petitions - service through GST portal constitutes valid service - denial of a proper opportunity of hearing - access to GST portal notwithstanding cancellation of registration - assessment concluded after compliance with statutory procedure - HELD THAT:- On perusal of the record, it is evident that the Assessment order was passed on 11.11.2024 after following the procedure contemplated under the Act and the petitioner was served with notice under DRC-01A, dt.30.08.2024 and show cause notice under DRC-01, dt.20.09.2024. Apart from the same, the petitioner having questioned the order of cancellation before this Court and having filed application for revocation, for the reasons best known to the petitioner did not pursue the matter thereafter.

From the averments made in the affidavit, it is succinctly clear that the petitioner is aware of the initiation of proceedings of audit and inspection in respect of its business. Further, it is also apparent from the record that the 1st respondent having followed due procedure under law passed the assessment order in question. Though, the order was passed on 11.11.2024, no explanation whatsoever has been offered by the petitioner for the delay in filing the present writ petition. The only explanation offered by the petitioner is that it could not access the portal as its registration was cancelled. The said contention of the petitioner is liable to be rejected inasmuch as, though the registration of the petitioner was cancelled by order dated 15.07.2023, still the petitioner can access the portal inasmuch as, the assessment order was passed in relation to period from December, 2021 to June, 2023 and therefore, there is no restriction on the petitioner to access the portal. In such circumstances, the contention of the petitioner cannot be countenanced.

In the case on hand, as already record supra, the petitioner has not offered any explanation for the delay in approaching this Court and therefore, the present writ petition cannot be entertained at this distance of time.

Writ petition is dismissed.

Transfer of business as a going concern - scope of "supply" u/s 7 - sale of goods in the course or furtherance of business - exemption for transfer of going concern under Notification No. 12/2017 - transfer of unutilised input tax credit - change in the constitution of the registered person - distinct persons by virtue of separate registrations u/s 25 - HELD THAT:- Notification No. 12/2017 treats the transfer of a going concern as a whole or an independent part, thereof as supply of services and exempts the same from payment of tax. There is a doubt as to whether such services could have been brought within the purview of the GST regime, once the GST Act itself does not provide for taxation of supply of services or to even treat transfer of business as a going concern, as a supply of service. However, this Court is leaving this issue open inasmuch as the petitioner would still be entitled to the benefit of exemption by virtue of the notification.

In the case of a sale, the transaction would be between a seller and buyer, who are two separate persons or entities. There would not be any change on account of a sale. However, the language of Section 18(3) provides for transfer of input tax credit in cases of sale also. Similarly, in the case of a merger or amalgamation or lease, the registered person who is transferring the business goes out of the picture and it is only the transferee of the business that would be given the benefit of transfer of input tax credit. In such cases also, there would be no change in the constitution of the registered person.

In the circumstances, full meaning and benefit cannot be given to the phrase “change in the constitution of the registered person” if it is understood to mean that there has to be an internal change, in the registered person, on account of certain forms of transfer/supply or that the business itself moves from one registered person to another person. Any such interpretation would cut out same of the forms of transfer such as sale, merger, lease of business etc. To that extent, it would have to be held that change in constitution cannot be taken to be change in the constitution of the transfer or and that the benefit of transfer of input tax credit would not be available to a transferee which is a separate entity. This phrase would have to be understood to mean that there can be transfer of input tax credit from the ledger of the transferor to the transferee.

Thus, the input tax credit available, in the ledger of the transferor, arises out of the tax component paid on the goods, by the transferor, etc. The input tax so credited has to be used, to discharge further liability, to the tax authorities. This is one of the assets available with the transferor. In the case of a sale of the entire business, it would only be reasonable that this asset, in the form of input tax credit, is also transferred. Section 18(3) is giving a statutory basis for such transfer.

We do not foresee any such problems in relation to the input tax credit available under the Central GST Act or the IGST Act, as the authority administering these Acts is the Central Government. In the case of transfer, of input Tax Credit, from the APGST Act to the KGST Act, any decision would affect the State of Andhra Pradesh and the State of Karnataka. However, the State of Karnataka, is not before us. As such, it would be appropriate that this issue should be placed before the authorities, under the KGST Act as well as the APGST Act, for a decision, as to the admissibility of such a transfer between the APGST Act and the KGST Act. The petitioner, may approach the authorities, in this regard and agitate it’s rights.

Accordingly, this writ petition is disposed of, by setting aside the ruling of the Appellate Authority for Advance ruling, dated 10.11.2020. Further consideration of the issue, by the authorities, shall be on the basis of the observations, in this order.

Opportunity of hearing - personal hearing - service of show cause notice - quashing and remand - Section 75(4) of the Central Goods and Services Tax Act, 2017 - HELD THAT:-The department was under a statutory obligation to give a personal hearing to the proprietor/ representative of the petitioner firm especially when wrong documents have been uploaded by the department itself and no detailed SCN was served upon the petitioner by the department.

Admittedly, in the present case wrong documents had been uploaded, the petitioner made a request in writing and without affording an opportunity of personal hearing, the impugned order dated December 25, 2025 was passed. Therefore, this Court unhesitatingly holds that the impugned order dated December 25, 2025 passed by respondent No. 2-CTO is quashed/set-aside. The matter is remanded back to respondent No. 2 to pass a fresh order after uploading the correct documents and affording personal hearing to the representative of the petitioner firm.

With the aforesaid directions, the writ petition, being CWP is allowed.

Payment of admitted tax liabilities - deferment of recovery proceedings - stay of recovery - remittal to Assessing Officer - interest of justice - HELD THAT:- The petitioner had restricted his relief to the extent to request this Court to grant time period of 4 weeks to the petitioner to make the payment of admitted tax liabilities for the remaining assessment years, viz., 2017-2018, 2018-2019 & 2020-2021 since it will be sufficient to meet out the case of the petitioner.

Therefore, by considering the above submissions and in the interest of justice, this Court passes the orders - petitioner is directed to make payment of admitted tax liabilities - Writ petition is disposed of.

Procedural irregularity - service of notice - summary adjudication - interim deposit to secure revenue - consequence of non-compliance -HELD THAT:- The petitioner has not produced the entire extract of the e-mail communication of the petitioner’s Director, as to whether intimations/reminders were received by them or not, whether was deleted or transferred to Spam.

The interest of the Revenue has to be secured, particularly, when the person, who is said to have promoted the business has left the Company for a mother to defend the proceedings, who appears to be a Senior Citizen and a Homemaker. Therefore, to secure the interest of the mother and the Revenue, there will be a direction to the petitioner represented by its Director particularly, her son Mr. Kishen Raphael to deposit a sum of Rs. 25,00,000/- (Rupees Twenty Five Lakh only) of the disputed tax within a period of 30 days from the date of receipt of a copy of this order.

In case of any failure on the part of the petitioner or her son, the petitioner being represented by Director Molly Rafi, is directed to deposit the aforesaid sum, failing which, the respondents are are liberty to proceed against the petitioner, by deeming as, if the Writ Petition is dismissed in limine along with other steps to extradite the petitioner’s son.

Writ Petition stands disposed of.

Judicial review of audit report - challenge to show cause notice u/s 74 - interim relief pending adjudication - direction to decide on merits - opportunity of hearing before final order - remand for fresh consideration - HELD THAT:- Upon verification of the records and reconciliations submitted by the taxpayer, and based on the provisions of the CGST/TNGST Act, 2017, it is respectfully recorded that Defects 1,2,3,4,5 and 6 do not warrant the confirmation of demand, as the factual submissions and statutory documentation provided sufficiently address the issues raised, and no evidence of suppression, misstatement or intent to evade tax has been established.

It is noticed that in view of the interim order dated 13.09.2024 of this Court, no final orders have been passed.

Since the second respondent has decided to proceed against the petitioner based on the personal statement dated 08.12.2025, the second respondent is directed to bring conclusion to the issues by passing appropriate orders on merits pursuant to the Audit report and the show cause notice impugned in these writ petitions respectively, as expeditiously as possible, preferably within a period of three months from the date of receipt of a copy of this order.

These writ petitions stand disposed of with the above observations.

Liability of legal representative after death - determination against deceased - validity of show cause notice issued to a deceased person - scope and interpretation of Section 93 of the Goods and Services Tax Act, 2017 - HELD THAT:- Undisputed facts are that the show cause notice, reminders and determination of tax have been made after the death of the proprietor of the firm.

Once the provision deals with the liability of a legal representative on account of death of the proprietor of the firm, it is sine qua non that the legal representative is issued a show cause notice and after seeking response from the legal representative, the determination should take place.

In view thereof, the determination made in the present case wherein the show cause notice was issued and the determination was made against the dead person without issuing notice to the legal representative, cannot be sustained.

Writ petition is allowed.

Penalty u/s 270A - no under reporting of income because the income offered to tax, in the return of income, was as per the decision of Ghatge Patil Transports Ltd [2014 (10) TMI 402 - BOMBAY HIGH COURT] - What if income assessed u/s 143(3) is not greater than the income processed u/s 143(1)(a)?

HELD THAT:- Section 270A (6) [the provision under which penalty is levied], inter alia stipulates that under reported income, for the purposes of Section 270A, shall not include, amongst other things, the amount of income in respect of which the assessee offers an explanation and the AO or the Joint Commissioner (Appeals) or the Commissioner (Appeals) or the Commissioner or the Principal Commissioner, as the case may be, is satisfied that the explanation is bona fide and the assessee has disclosed all the material facts to substantiate the explanation offered.

In the present case, the explanation offered by the Petitioner is that on the date of the filing of the return of income, the Petitioner was entitled to the deduction as per the decision of this Court in Ghatge Patil Transports Ltd. (supra) . Once this is the case, the explanation was bona fide and the Assessing Officer could never have come to the conclusion that there was any under reporting of income. If there was no under reporting of income, there was no question of levying any penalty under Section 270A.

This is apart from the fact that under reporting of income can arise [under Section 270A (2)] only when the income assessed under Section 143(3) is higher than the income determined in the return processed under Section 143(1)(a) of the IT Act.

In the present case, atleast prima facie, the assessed income [under Section 143(3)], as per the Appellate Order, is not greater than the income processed under Section 143(1) (a). On this count also, atleast prima facie, we find that no penalty proceedings could have been initiated or any order passed under Section 270A of the IT Act.

There will be ad-interim relief staying the operation of the penalty order.

Denial of exemption u/s 11 - application filed for condonation of delay in filing Form 10BB u/s 119(2)(b) as required u/s 12A(b)(ii) as been rejected - reasons stated in the application for condonation of delay were that the Managing Trustee of the Petitioner Trust/aged about 68 years and is a senior citizen was suffering from medical aliments, resulting in the delay in filing Form 10B.

HELD THAT:- The benefit of statutory exemption or redemption cannot be denied to an assessee who is otherwise entitled to such exemption, merely due to a procedural lapse.

A mere failure to file the Return of Income or the prescribed form within the stipulated time should not stand in the way of granting legitimate exemptions or redemptions available under the provisions of the Act.

This Court has consistently taken the view that the Income Tax Department is primarily concerned with the collection of cess and cannot saddle an assessee with tax liability when the assessee is otherwise entitled to benefits in the nature of redemption or exemption.

Following the decision of Unichem Laboratories [2002 (9) TMI 110 - SUPREME COURT] held that it is not on the part of the duty of the Department to collect or to retain the tax amount, which is not due to it, and is legitimately due to an assessee.

Considering the fact that the application for condonation of delay was filed only on 05.02.2024, there shall be a direction to the petitioner to pay a sum of Rs. 50,000/-.

Addition u/s 68 - onus to prove - assessee had received accommodation entries from three concerns - year of assessment - addition has been made merely on the basis of information received from the Investigation Wing and the statement recorded during the course of search

HELD THAT:- It is well-settled that the provisions of section 68 of the Act can be invoked only in respect of a sum credited in the books of the assessee during the relevant previous year. In the absence of any such credit entry in the year under appeal, the very jurisdictional fact for invoking section 68 fails.

AO has not brought on record any material to controvert the ledger accounts produced by the assessee or to demonstrate that any amount was, in fact, received by the assessee from the said parties during the year under consideration. The addition has been made merely on the basis of information received from the Investigation Wing and the statement recorded during the course of search, without correlating the same with the actual entries appearing in the books of the assessee for the relevant year.

We also find merit in the contention of the assessee that similar addition has already been made in AY 2019–20 in respect of transactions with the very same parties and the appeal for that year is pending before the first appellate authority. In such a situation, making the same addition again in the present year, when no fresh credit has arisen, would result in taxing the same amount twice, which is impermissible in law.

As primary evidence in the form of ledger accounts demonstrates that no such receipt has taken place in the impugned year. In the absence of any contrary material brought by the Revenue, the addition cannot be sustained merely on surmises and general allegations of accommodation entry business. Decided in favour of assessee.

Validity of reopening of assessment - recording of reasons for reopening obtaining prior approval of the PCIT, Faridabad - HELD THAT:- No specific submissions were made in respect of Ground challenging the initiation of proceedings u/s 147 of the Act. Further, in the given facts of the case, we are of the considered view that the notice issued u/s 148 of the Act dated 30.03.2021 was validly issued. Hence, ground no. 1(i) is dismissed.

Estimation of Gross receipts - gross profit of the milk business of the assessee - Rejection of books of account - Reference to spillages, putrefaction and other wastages - HELD THAT:- A reasonable estimate of the gross profit of the milk business would meet the end of justice. The plea of the assessee relying upon the above decision to estimate net profit @ 0.5% will be too low in the given facts of the case. Therefore, we estimate the gross profit of the milk business of the assessee @ 5% of the gross receipts as declared by the assessee in its audited accounts and the Assessing Officer is directed to compute the net profit after allowing eligible deduction as per law. Ground of the appeals are partly allowed.

Disallowance of deduction made u/s 14A r/w Rule 8D - shares are held as stock-in-trade - HELD THAT:- As in the case of Maxopp Investment Ltd [2018 (3) TMI 805 - SUPREME COURT] deleting disallowance u/s. 14A where shares are held as stock-in-trade, we are of considered view that disallowance u/s. 14A of the Act is unsustainable in the instant case.

Disallowance of the claim for amortisation of the lease premium paid in respect of various leasehold properties of the assessee -Amortization of lease premium paid in respect of various lease hold properties is in the nature of capital expenditure, then the learned ACIT be directed to allow depreciation u/s. 32 of the Act on the same and reduce the total income accordingly.

Exclusion of income of foreign branches situated in countries with which India has entered into the Double Taxation Avoidance Agreement - AR fairly agreed that this issue has been decided against the assessee in its own case by the Coordinate Bench of the Tribunal in [2020 (12) TMI 862 - ITAT MUMBAI] notification deals with connotations of the expression "may be taxed", appearing in the tax treaties entered into by India, and there is absolutely no basis whatsoever to support the proposition that the effect of the notification has to be restricted in its application to non-business income only. No such differentiation in treatment of business and non-business income is envisaged in the said notification, nor to do we see any justification for inferring the same. Learned counsel does not have any material whatsoever in support of the proposition canvassed by him, nor does this proposition make any sense on the first principles- inasmuch as once the notification is issued without any such specific restriction for application to business income, we cannot infer a restriction in its application. We, therefore, reject the plea of the assessee, and thus decline to interfere in the matter. We uphold the action of the Assessing Officer in including the profits of the assessee's overseas branches in its taxable income in India.

Computation of income from foreign branches as per the provisions of the income tax laws of the respective countries and not the Income Tax computed as per the provisions of the Act - AR fairly agreed that the same has been decided against the assessee by the Coordinate Bench of the Tribunal in DCIT vs. Bank of Baroda [2019 (6) TMI 1209 - ITAT MUMBAI] held that income of the foreign branches of the assessee shall also be taxable in India, that is, it would be included in the return income filed by the assessee in India and whatever taxes have been paid by the branches in the other countries credit of such taxes shall be given. We find that the Tribunal as above has not held that it is only that income of the foreign branches which was taxed in that foreign country which is to be included in the return of income filed by the assessee. Hence, we are in agreement with the revenue plea that Ld. CIT-A has not properly followed the Tribunal decision as referred by him. A reading of the notification canvassed by the Ld. Counsel by the assessee also does not help the case of assessee. The notification also does not support the direction of Ld. CIT-A. The doctrine of stare decisis mandates that we follow the coordinate bench decision as above and hold that the income of the branches of assessee situated abroad shall also be taxable in India and whatever tax have been paid by the branches in the foreign country, credit of such taxed shall be given. Accordingly, we allow the ground raised by the revenue.

Grant of credit towards foreign taxes - As decided in the assessee’s own case in the preceding year, this issue is restored to the file of the AO for de novo adjudication in compliance with the directions as rendered by the Tribunal in the preceding year as held in case the assessee furnishes the requisite details of the taxes paid abroad in respect of the profits of these branches, no tax credit has been claimed in respect of the same so far, and in case the claim so made is admissible in terms of the provisions of the related double taxation avoidance agreement, the Assessing Officer will allow the tax credit, to the extent admissible, for the taxes so paid abroad on incomes of the branches abroad earned in tax jurisdictions with which India has entered into double taxation avoidance agreement. While granting the tax credit, the Assessing Officer will examine the provisions of the respective tax treaty, and compute the admissible tax credit separately for each jurisdiction in accordance with the scheme of related treaty.

Adding back the provision made towards country risk - During the hearing, the learned AR submitted that the exact working of the crystallised country risk during the year could not be furnished before the learned CIT (A). It was further submitted that, given another opportunity, the assessee can furnish the details, as the amount of country risk represents crystallised loss out of the amount provided as per the RBI guidelines. Accordingly, in the interest of justice, we deem it appropriate to restore this issue to the file of the AO for de novo adjudication.

Disallowance of bad debts written off - AO held that as per the computation of the assessee, it was claiming double deduction of bad debt written off twice under section 36(1)(vii) as well as section 36(1)(viia) - HELD THAT:- Since the provision for bad and doubtful debt account maintained under section 36(1)(viia) of the Act does not have any credit balance as on 01/04/2015, we agree with the submissions of the assessee in claiming the deduction of the entire bad debt written off as an irrecoverable under section 36(1)(vii) of the Act. Accordingly, the impugned addition made by the AO on this issue is deleted. As a result, Ground raised in assessee’s appeal, is allowed.

MAT Applicability of the provisions of section 115-JB of the Act to the assessee bank - We find that a similar issue came up for consideration before the Special Bench of the Tribunal in Union Bank of India [2024 (9) TMI 789 - ITAT MUMBAI] for the assessment year 2015-16, the Special Bench of the Tribunal deciding the issue in favour of the assessee banks, including the assessee in appeal before us, held that clause (b) to sub-section (2) of section 115JB of the Act inserted by Finance Act, 2012, w.e.f. 01/04/2013, i.e., from the assessment year 2013-14 onwards, are not applicable to the banks constituted as corresponding new banks in terms of the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970 and therefore, provisions of section 115- JB of the Act cannot be applied and consequently, tax on book profit (MAT) are not applicable to such banks.

Disallowance of broken period interest - revenue OR capital expenditure - HELD THAT:- We find that the Hon’ble Supreme Court in Bank of Rajasthan [2024 (10) TMI 875 - SUPREME COURT] held that where an assessee bank purchase government security and paid broken period interest since said securities was treated as stock-in-trade, the broken period interest could not be considered as capital asset and would have to be treated as revenue expenditure.

Disallowance of the premium of HTM securities - CIT(A), vide impugned order, following the decision of the Tribunal rendered in assessee’s own case for the assessment year 2015-16 [2020 (12) TMI 862 - ITAT MUMBAI] correctly deleted the addition made by the AO on this issue and allowed the loss on account of amortisation of investment held in HTM category.

Disallowance of losses written off - As we find that this issue is recurring in nature, and in preceding years, the learned CIT(A) directed the AO to carry out necessary verification, which directions were also issued in the year under consideration. Undisputedly, these findings in the preceding year were not challenged by the Revenue before the Tribunal.

Disallowance of interest on perpetual bonds - We find that the Coordinate Bench of the Tribunal in State Bank of India (successor to State Bank of Bikaner and Jaipur) [2022 (9) TMI 1640 - ITAT MUMBAI] while allowing the interest paid on perpetual debt under section 36(1)(iii) held that perpetual bond are not in the nature of equity.

Addition on account of the commission receipt on the deferred payment bank guarantee - We find that the Hon’ble Jurisdictional High Court in BNP Paribas SA [2013 (2) TMI 712 - BOMBAY HIGH COURT] held that guarantee which has been issued for a certain period of time are cancelled by the client before the expiry of the tenure of the guarantee, resulting into the respondent- assessee returning to its clients the part of the guarantee commission attributable to the unexpired period of the guarantee. This finding of fact was upheld by the Tribunal while following the decision of Bank of Tokyo Ltd. [1993 (5) TMI 172 - CALCUTTA HIGH COURT] wherein it has been held that the income earned from deferred guarantee commission did not accrue or arise to an assessee in the year in which the guarantee agreements were entered into but should be spread over the period of the guarantee proportionally.

Addition of unrealised interest income on Non-Performing Assets (“NPA”) - assessee has not recognized an amount which was interest on sticky advances, which remained NPA for a period of more than 90 days but less than six months as its income for the year under consideration - HELD THAT:- We find that while deleting the similar interest pertaining to NPA, the Coordinate Bench of the Tribunal in State Bank of India [2020 (2) TMI 1350 - ITAT MUMBAI] as noted that this issue is squarely covered by the decision of American Express Bank Ltd [2015 (8) TMI 1584 - BOMBAY HIGH COURT] wherein it is held that there is no credit entry in the books of the account in respect of the interest on such NPAs, no addition can be made. As in the case of American Express Bank Ltd. [2012 (11) TMI 499 - ITAT MUMBAI] has considered this issue and held that where the AO has not contested that the policy adopted by the assessee is not in accordance with RBI guidelines, the incidence of taxation of interest on bad and doubtful debts will be either when the same is credited to the profit and loss account for the year or in the year in which it is actually received. Mere crediting of the interest to a reserve cannot be said to be an incidence by which the said interest could be charged to tax. Hence, we delete the addition of interest income.

Disallowance being a loss on the sale of assets to the Asset Reconstruction Company (“ARC”) - We find that while deciding a similar issue in favour of the assessee, the Coordinate Bench of the Tribunal in assessee’s own case in Bank of India [2017 (11) TMI 1812 - ITAT MUMBAI] following of RBI instruction by a banking company cannot be basis for denying or allowing any claim. It is said that the entries in the books of accounts are not conclusive proof of taxability of any income. What has to be seen is the substance of the transaction. Considering the fact that the assessee had suffered loss while carrying out normal business activity i.e. selling its assets. Therefore, we hold that there was no justification for disallowing the loss suffered in the transaction.

Grant of credit of taxes paid by foreign branches in countries or territories with whom India does not have any agreement under section 90 - We restore this issue to the file of the AO for de novo adjudication with a direction to grant the credit of tax as per the provisions of section 91 of the Act after necessary verification of the relevant facts as per law. With the above, Ground raised in assessee’s appeal, is allowed for statistical purposes.

Disallowance of the penalty paid by the assessee for non-compliance with norms/regulations - Nature of non-compliance for which the penalty was levied in the said decision is nowhere similar to the nature of non-compliance for which the penalty is levied on the assessee’s Singapore Branch, i.e. for violation of rules/regulations on Prevention of Money Laundering and Countering the Financing of Terrorism. Therefore, the reliance placed on the decision of the Coordinate Bench in IDBI Bank Ltd [2021 (6) TMI 661 - ITAT MUMBAI] by the learned CIT(A) is completely misplaced. Accordingly, penalty of Rs. 21.64 crore levied on the assessee’s Singapore Branch falls within the ambit of provisions of Explanation-1 to section 37(1) of the Act and, therefore, cannot be allowed as deduction to the assessee while computing its income chargeable under the head “profits and gains of business or profession” and, therefore, the same is sustained. Accordingly, Ground No.6, raised in Revenue’s Appeal, is partly allowed.

Adjustment u/s 36(1)(va) - late deposit of PF and ESI of employees’ share - intimation u/s 143(1) - debatable issue - HELD THAT:- Coordinate Bench in Parv Buildcon [2024 (1) TMI 1275 - ITAT RAIPUR] and Satpal Singh Sandhu [2023 (5) TMI 1274 - ITAT RAIPUR] has decided the identical issue in favour of the assessee as held disallowance made by the CPC, Bangaluru / AO, u/s 36(1)(va) of the Act by issuing intimation u/s 143(1) of the Act is not legally sustainable and is accordingly set aside. Decided against revenue.

Addition u/s 68 - treating credit card payments as unexplained cash credits - assessment was selected for limited scrutiny - HELD THAT:- We observe that the core issue involved is verification of the source of payments made towards credit card bills, which is a factual aspect requiring examination of supporting evidence such as reimbursements, confirmations, bank entries and nexus with personal or third-party expenditure.

The assessee has consistently contended that a substantial portion of the payments were made on behalf of relatives and family friends and were reimbursed subsequently, and that such payments were not claimed as expenditure in the computation of income.

The assessee has now placed on record confirmation letters and supporting material. We find merit in the contention that these evidences were not properly examined or verified by the AO.

Interests of justice would be served by restoring the issue to the file of the Assessing Officer for a fresh examination of the source of credit card payments, strictly within the framework of law and after granting adequate opportunity to the assessee.

Addition u/s. 68 - assessee had deposited substantial cash in its bank accounts during the demonetization period - explanation to be satisfactory and acceptable on the touchstone of human probabilities.

Assessee explained that these cash deposits were made out of opening cash balance and cash withdrawn earlier from its bank accounts from time to time AND due to business difficulties, disputes among partners and apprehension of heavy tax liability, the partners had withdrawn cash and kept it in hand, which was later redeposited during demonetization.

HELD THAT:- As both the AO and the CIT(Appeals) have recorded concurrent findings that the assessee has failed to furnish any cogent, convincing or contemporaneous reason as to why such huge amounts of cash were required to be accumulated over a long period. The explanation that cash was kept for future tax payments or due to disputes among partners is vague and unsupported by any evidence. No details of any immediate or unavoidable cash requirement have been brought on record.

We also note that the assessee continued to make further withdrawals even when, as per its own cash flow statement, substantial cash was already available in hand, which clearly weakens the explanation of mere redeposit of earlier withdrawals.

The argument of assessee that once withdrawals and deposits are from the same bank account, the source automatically stands explained cannot be accepted as a universal proposition.

Courts have consistently held that mere availability of withdrawals is not sufficient and the assessee must also establish that the withdrawn cash remained unutilised and was available for redeposit. In the case of CIT v. P. Mohanakala [2007 (5) TMI 192 - SUPREME COURT] Court has held that the explanation of the assessee must be satisfactory and acceptable on the touchstone of human probabilities.

In the present case, the assessee has failed to demonstrate that the cash withdrawn over several months remained intact and unutilised and that there was any compelling business necessity for such accumulation of cash. The findings recorded by the lower authorities are based on appreciation of facts and probabilities and have not been controverted by any material evidence before us - Decided against assessee.

Revision u/s 263 - bogus political donations - assessee had claimed deduction u/s 80GGC on account of donations allegedly made to four political parties - According to the Principal CIT, except for Bharatiya Janata Party, the remaining three entities were found to be bogus and were allegedly involved in scams relating to tax evasion through bogus donations - HELD THAT:- Revision u/s 263 is not founded on a mere change of opinion or on a later external event alone. It is based on concrete factual discrepancies found in the assessment record itself, including incorrect donation receipts and lack of verification of the genuineness and eligibility of the donee political parties.

Principal CIT has demonstrated, with reference to the material on record, that the AO failed to examine vital aspects of the claim and did not go into the issue of deduction under section 80GGC in respect of the entire amount claimed.

We also find merit in the reliance placed by the Principal CIT on the judgment of BSES Rajdhani Power Ltd [2023 (6) TMI 1146 - SC ORDER] wherein it has been held that non-examination of an issue in respect of the whole claim constitutes an error amenable to revision under section 263. In the present case, the Assessing Officer’s failure to verify the genuineness of the political parties and the correctness of the donation receipts has clearly rendered the assessment order erroneous. Since such error has resulted in allowance of an inadmissible deduction and consequent loss of revenue, the order is also prejudicial to the interests of the Revenue. Thus, the twin conditions for invoking section 263 stand fully satisfied.

No infirmity in the order passed by the Principal CIT. Decided against assessee.

Applicability of the tax rate on dividend paid to non-resident shareholders - India-UK DTAA - HELD THAT:- It is undisputed fact that section 115-0 of the Act prescribes DDT rate at 20.36%. Whereas, the DTAA between India and United Kingdom provides for a lower rate of tax on dividend at 10% of the gross amount of dividend. The assessee company, with respect to the non-resident shareholders which are the tax residents of UK, inadvertently computed the DDT liability by applying the rate prescribed u/s 115-0 of the Act instead of the lower rate of tax as provided in the India-UK, DTAA. Accordingly, the Assessee company paid excess DDT under the provisions of the Act, as against the DDT liability, if the benefit of Article 11 of the India-UK DTAA was adopted i.e., at 10% and claimed refund of excess DDT paid.

Very recent judgement in the case of M/s. Colorean Asia Pvt. Ltd. [2025 (12) TMI 677 - BOMBAY HIGH COURT] clearly over ruled the Special Bench decision of the Mumbai Tribunal in M/s. Total Oil India (P) Ltd. [2023 (4) TMI 988 - ITAT MUMBAI (SB)] and held that the Assessee is eligible for the benefit of the lower rate of 10% prescribed under Article 11 of the DTAA on the DDT paid.

Hon’ble Bombay High Court held that the Authority has erred in not appreciating that DDT erroneously collected in excess of 10% as provided by India-UK DTAA, which is contrary to law and violative of Article 265 of the Constitution of India. Thus, Hon’ble High Court concluded that the assessee is entitled to restrict the tax rate on dividends distributed by it to resident share-holders at United Kingdom at 10% under Article 11 of the India -UK Tax Treaty. Respectfully following the above judicial precedent we therefore direct the Jurisdictional Assessing Officer to charge DDT only to the extent of 10% invoking Article 11 of DTAA between India- UK and grant refund of the excess DDT paid by the assessee company. In the result the ground no. 1 raised by the assessee is allowed.

Levy of additional interest u/s 234B and 234C pursuant to the Advance Pricing Agreement entered into with the CBDT - The incremental income got crystallized and determined only pursuant to the signing of the APA on 19-08-2019, which is a subsequent event which could not have been foreseen by the Assessee, it was impossible for the Assessee to estimate the increment in income pursuant to APA. Thus, advance tax could not have been paid on such incremental income and was accordingly, advance tax was paid only on the current income of the Appellant.

On identical case in the case of M/s. Colt Technology Services (I) Pvt Ltd.[2022 (5) TMI 272 - ITAT DELHI] held that, the levy of interest u/s 234B and 234C of the Income Tax Act on additional income agreed as per advance pricing agreement entered between appellant and the CBDT is illegal.

Thus, we hereby direct the JAO to delete the levy of additional interest u/s. 234B and 234C of the Act and refund the same as per the provisions of law.

Short grant of credit of Tax deducted at source (TDS) - JAO is directed to verify the same and grant TDS credit as claimed in the modified return and as per the provisions of law.

Unexplained income of the assessee u/s 69A r.w.s. 115BBE - Unaccounted sales as mentioned under the head “802” in the seized diaries - Admissibility of seized diaries (dumb documents)

HELD THAT:- Major dispute is with regard to sales mentioned under code “802” which are unaccounted sales transactions by the assessee. These sales have not been considered in assessee’s return of income. It is admitted fact that the assessee does not have any other source of income and therefore, the receipts and payments, as noted in the seized diaries, would exclusively pertain to assessee’s business activity of manufacturing and sale of liquor only. It is also trite law that same income could not be taxed twice since the same is against basic principle of taxation.

Once accounted as well as unaccounted sales are considered for addition, the payments / investments made out of the same could not be added in the hands of the assessee again. The jewellery acquired out of said payments could also not be added since the same would amount to same income being taxed thrice.

In our considered opinion, once the profit is estimated on unaccounted sales, the same would take care of leakage of revenue in the hands of the assessee. It is quite evident that Ld. AO has taxed entire business receipts as recorded on left hand of these diaries and also taxed the payment / investments made out of said receipts which are recorded on right hand side. Further, all the receipt transactions have been presumed to be the sales receipts of the assessee which is not the case as sufficiently demonstrated by Ld. AR.

The action of Ld. AO violate well accepted judicial principle that once the receipt has been taxed then payment / investment made out of such receipts could not be added again since there is clear nexus between the receipts and payments as both are found recorded in the same material. Once entire receipts are considered as business receipts and profit has been estimated on the same, there is no further scope of taxing the payment made out of said business receipts and which have been found recorded in the same material. In principle, we concur with these submissions of the assessee and find substantial merit in the same.

Quantum of unaccounted sales as mentioned under the head “802” in the seized diaries - Considering the factual matrix as well as profitability trend of the assessee, we hold that Net Profit (NP) addition of 2.5% on entire gross business receipts as found recorded in the seized diaries would adequately take care of the revenue leakage on unaccounted sales transactions / other transactions. The addition would be over and above the returned income of the assessee. The estimation so made by us translates into profit margin of more than Rs. 27/- per box for the assessee. This estimation is way higher than the regular average net profit as reflected by the assessee in its return of income.

Addition for respective AYs as per above tabulation stands sustained by us as assessee’s business income u/s 28. The addition thus sustained by us for all the years aggregate to Rs. 303.66 Lacs (as tabulated above). The same would be over and above the returned income of the assessee. The corresponding grounds of assessee’s appeals, in all the years, stand partly allowed accordingly.

Payment to M/s Jai Diamond for Rs. 265 Lacs has been found duly recorded in Annexures A-1 to A-3 and these payments have clearly made out of business receipts only which have already been taxed by applying net profit rate. This party, evidently, has supplied gold jewellery and gold bars to the assessee. In other words, the payment has been made towards acquisition of gold jewellery, the ultimately source of which is nothing but business receipts of the assessee. We have already sustained business income addition in the hands of the assessee which far exceeds the value of jewellery as found during search on the assessee. Therefore, separate addition of payment to M/s Jia Diamond as well as addition of gold jewellery and bar, in all the years, stands deleted. The corresponding grounds of assessee’s appeal stand allowed in all the years accordingly.

Payment to Shri Sunil Bansal - There is no admission of any cash payment or cash receipt by the assessee in the recorded statement. Neither there is any such admission by Shri Sunil Bansal. No tangible investment has been identified against alleged payments. In the absence of such critical evidences, the impugned addition could not be sustained in law. Pertinently, the name of this party does not figure in the seized diaries. Even otherwise, the cash payment / cash receipt against this entry stand subsumed in total cash receipts while estimating business income of the assessee. It is trite law that no addition could be made on mere presumptions, assumptions and surmises. Therefore, separate addition against this entity is devoid of any merits. The addition made by Ld. AO, in all the years, in this regard, for alleged cash payments as well as for cash receipts, stands deleted.

Addition of alleged cash payment - addition is merely on the basis of statement of Shri Anup Kumar Aggarwal - No such payment has been found noted in the seized diaries and no material evidence is available on record to sustain this addition. The addition is merely on loose notings. Post-search proceeding, the seller of the land was summoned by Ld. AO wherein he denied having any cash transaction in the deal. Therefore, this addition as made by Ld. AO is devoid of any merits and therefore, could not be sustained in law.

Addition of purchase of Mercedes Car - The car was purchased way back during FY 2019-20 and the payment of Rs. 15 Lacs was made through banking channels. Even as per the allegation of Ld. AO, the payment of Rs. 10.50 Lacs could not be made in cash considering the fact that the amount of Rs. 15 Lacs was already paid through cheque. No independent enquiry is shown to have been carried out by Ld. AO with the other party. The conclusion drawn stood controverted by the documentary evidences as furnished by the assessee. Therefore, no such addition of alleged cash payment could be made by Ld. AO.

Addition of cash found - AR has pleaded for benefit of telescoping of the addition - On the given facts, the benefit of telescoping could be granted since the assessee is shown to have no other sources of income. In such an eventuality, the cash could be deemed to be generated out of unaccounted business profits. Therefore, this separate addition stand deleted.

Revision u/s 263 - Estimation of income on bogus purchases - lack of inquiry v/s inadequacy of inquiry - phrase 'prejudicial to the interests of the revenue' has to be read in conjunction with an erroneous order passed by the AO

HELD THAT:- We find force in the argument of the assessee that the plausible view in the factual matrix of the case having been taken by the AO cannot be substituted by the Ld. PCIT by assuming Jurisdiction u/s 263 of the Act - See Malabar Industrial Co. Ltd [2000 (2) TMI 10 - SUPREME COURT]

As necessary statutory notices u/s 142(1) and 143(2) of the Act were issued along with show cause notice to which detail submission were made by the assessee. AO has also issued notice u/s 133(6) of the Act to the various entities from whom the alleged bogus purchases were made and after due deliberation and consideration of all the submissions, the assessment order was passed wherein the reply of the assessee was not considered and instead of granting relief, disallowance of expenditure spent on purchases was made and as such clause b of explanation 2 to Section 263 of the Act does not get attracted.

We are of the considered opinion that the Ld. PCIT has assumed the Jurisdiction wrongly and his observation that the assessment order is hit by Clause b and d of Explanation 2 of Section 263 of the Act are found to be not supported by facts and the law.

AO has adopted one of the courses permissible in law and there is nothing brought to our notice which may suggests that the view taken by the AO is unsustainable in law. Impugned order is not sustainable and accordingly set aside. The question framed is accordingly decided in negative i.e. against the revenue and in favour of the assessee.

Profit on Unaccounted Sales - addition was made u/s 28 - allegation of Ld. AO primarily stem from the fact that the sales figures as reported by the assessee in regular Tally Data and the sales figures as reported in POS Cash / Restaurant counter & bills books found during search proceedings differ in value - HELD THAT:- It is quite logical that POS counter sales would show gross sales inclusive of GST component since this data would reflect gross billing as done to assessee’s customers. As against this, the assessee follows accounting policy of reflecting sales net of GST component in regular books and the two data would certainly vary to the extent of GST component.

It is also logical that mere stock-transfer would not constitute sales for the assessee and the same could not lead to a conclusion of unrecorded sales in the hands of the assessee. Considering totality of facts and circumstances of the case, we would hold that the assessee had substantially discharged its onus to reconcile the impugned differences. On these facts, we direct Ld. AO to restrict impugned addition to lumpsum amount of Rs. 5 Lacs as ‘business income’ to plug possible leakage of revenue. The remaining addition stands deleted. The corresponding ground stand partly allowed.

Cash difference as computed by AO books were updated and cash-in-hand ledger was furnished by the assessee in support of its cash-in-hand. By furnishing the same, the assessee, in our considered opinion, had duly discharged the onus of proving the quantum of cash as found during the search. The same is in tune with the statement made by the assessee at the time of search. No specific defect has been pointed out by Ld. AO in the books of accounts of the three concerns and the claim has been rejected without any logic. Since the assessee has duly substantiated the cash with its regular books of accounts, the impugned addition as made in the hands of the assessee as well as his wife Smt. Pooja Aggarwal is not sustainable.

Addition of jewellery as found during search - Quantum of jewellery as found during search stood explained substantially. The mere difference of 10.960 Grams could only be considered as negligible difference for which no addition is warranted. Therefore, in our considered opinion, the impugned addition as made by Ld. AO in the hands of the assessee as well as in the hands of Smt. Pooja Aggarwal is not sustainable.

Validity of the assessment order on the ground of limitation as per the provisions of section 144C(13) r.w.s. 153 - Limitation for passing final assessment order - Interplay of Sections 144C and 153 - HELD THAT:- Limitation for passing the final assessment order under section 144C(13) of the Act is to be seen only with reference to the timeline specified u/s. 144C of the Act only without referring to provisions of section 153 of the Act.

We find that identical submissions were made by the Department before the Hon’ble Madras High Court in the case of Roca Bathroom Products P. Ltd. [2022 (6) TMI 848 - MADRAS HIGH COURT]rejected the arguments of the Department and held that provisions of section 144C and 153 of the Act are mutually inclusive as both contain provisions relating to section 92CA of the Act and are inter-dependent and are overlapping. Hence, the period of limitation for passing the final assessment order u/s. 144C(13) of the Act has to be determined with reference to section 144C r.w.s 153 of the Act.

In view of the ratio laid down in the case of Roca Bathroom Products Pvt. Ltd (supra) and Teva Pharmaceutical & Chemical Industries India Private Limited [2026 (1) TMI 1123 - ITAT DELHI] in order to follow the principals of consistency as mere keeping the captioned Appeal pending in the Tribunal will not serve any purpose, by respectfully following those binding precedents, we hold that the impugned Final Assessment Order passed u/s 143(3) r.w.s. 144C(13) is barred by limitation as per Section 153 r.w. Section 144C of the Act. Accordingly, the impugned Final Assessment Order is hereby quashed.

Since above issue of Limitation is pending adjudication before the Hon'ble Supreme Court in case of Shelf Drilling Ron Tappmeyer Ltd. [2023 (9) TMI 1529 - SC ORDER] and to be reached finality by the Larger Bench of the Hon'ble Supreme Court, we grant liberty to the parties to get the present Appeal revived for adjudication of the other issues on merits if the decision of the Hon'ble Supreme Court on this issue necessitates modification of this order.

Addition on account of difference in opening cash balance -unexplained money of the assessee -Presumptive taxation u/s 44AD - HELD THAT:- Assessee had explained that the difference arose due to a clerical/typographical error while filing the return of income for the preceding year. The cash balance was sought to be supported by past agricultural and business income. It is also an undisputed fact that the assessee has declared income under section 44AD and was not maintaining regular books of account. No material has been brought on record before us by the Revenue to establish that the impugned amount represented unexplained money of the assessee. Therefore, the addition is unsustainable and is directed to be deleted.

Addition treated as unexplained cash credit - Amount represents recovery from sundry debtors arising out of business transactions. It was submitted that these amounts also form part of the receipts for computation of profits u/s 44AD of the Act during the year. The explanation of the assessee has not been disproved by the AO with any cogent evidence. Accordingly, the addition is also directed to be deleted.

Addition by applying section 50C/43CA - We note that the property sold was held as stock-in-trade and the assessee had already declared income on presumptive basis. Addition has been made merely on the basis of stamp duty valuation without bringing any material on record to show that the assessee had received consideration over and above the stated sale consideration. In such circumstances, the addition is not justified. Hence, the same is directed to be deleted.

Appeal of the assessee is allowed.

Application of precedent Commissioner of Customs v. Canon India Pvt. Ltd. [2024 (11) TMI 391 - SUPREME COURT (LB)] - Remand to High Courts - Remand to CESTAT - De-tagging from batch - Disposal of writ petitions in terms of precedent - Infructuous disposal - HELD THAT:- Revenue submitted that out of 75 matters falling in Category No.1, 71 matters are to be remitted to the respective High Courts and 4 matters are to be sent back to the CESTAT.

We direct that in accordance with the list, the abovementioned 71 appeals are remanded to the respective High Courts.

With the aforesaid, the appeals are disposed of.

Revenue brought to our notice that the following matters in Category II, although in a way covered by the decision of this Court in the case of Canon [2024 (11) TMI 391 - SUPREME COURT (LB)], yet there are other issues also which require adjudication and, therefore, these matters will have to be heard.

All the aforesaid Appeals are ordered to be de-tagged from the batch of Canon matters and shall be notified separately for hearing in due course.

Accordingly, all these Writ Petitions are disposed of in terms of the order passed by this Court, referred to above.

Show cause notice - Time-bar u/s 110(2) - Adjudication proceedings - Remand to Adjudicating Authority - Burden of proof as to service - HELD THAT:- The case of the department seems to be that the notice was issued to the petitioner by way of a Gmail on her Id. This fact is seriously disputed.

We are of the view that as the adjudication proceedings are pending before the Adjudicating Authority, it shall be open for the petitioner to make good her case that the department failed to issue the show cause notice within the mandatory time period of six months as prescribed under Section 110(2) of the Act and therefore the adjudication should be dropped and the gold bars be given back to the petitioner.

Since the petitioner is a foreign national, we request the Adjudicating Authority to see that the proceedings are concluded within a period of six months from today.

Concessional Basic Customs Duty - Carrier Ethernet Switch - Enterprise Ethernet Switch - classification based on end-use - temporal applicability of administrative circulars - Whether the Assessee/Respondent’s imports of various models of CISCO (CATALYST 3850 SERIES ETHERNET) SWITCHES falling under Customs Tariff Item 85176290 are entitled to the concessional Basic Customs Duty (“BCD”) at the rate of 10% ad valorem in terms of Notification No. 57/2017-Customs dated 30th June 2017 as amended by Notification No. 75/2018-Customs dated 11th October 2018 by treating the same as a “Non-Carrier Ethernet Switch” -

Whether the Switches imported by the Assessee are Non-Carrier Switches/Enterprise Switches, and therefore entitled to the benefit of the notification - HELD THAT:- We find that the issue as to whether the Switches imported by the Assessee are Non-Carrier Switches/Enterprise Switches, and therefore entitled to the benefit of the notification, has been answered by CESTAT in the impugned order. The CESTAT has given this finding after examining the facts of the case and the evidence produced before it. The CESTAT also noted that the arguments made by the Assessee in paragraphs 3.1 and 3.2 of the impugned order, wherein the Assessee had clearly set out the difference between the “Catalyst Ethernet Switches - CISCO 3850 Series” (the impugned Switches) and the “Carrier Ethernet Switches - CISCO ME 3800X Series”, and which are Carrier Ethernet Switches. The distinction between two switches was brought out by the Assessee as reflected in these paragraphs of the impugned order.

Despite all this material, and to ensure that the Revenue is not short-changed, the CESTAT, by an interim order dated 18th September 2023, directed that a proper inspection be carried out by experts in the field [of the impugned Switches] to ascertain whether in fact the Switches imported by the Assessee were Carrier Ethernet Switches or Non-Carrier Ethernet Switches/Enterprise Ethernet Switches.

After going through the detailed order passed by the CESTAT, we find that the entire issue is fact based. The findings given by the CESTAT are all fact driven. The CESTAT is the last fact-finding authority. It is not even the case of the Revenue that the findings given by the CESTAT are contrary to the record. Once this is our view, in our opinion, no substantial question of law arises as projected by the Revenue. In fact, three questions of law, namely questions pressed before us, itself clearly establish that these questions would arise only on the basis whether impugned Switches are Enterprise Switches or Carrier Ethernet Switches. This factual finding has been given by the CESTAT and we do not find anything legally perverse in the findings rendered by the CESTAT on this issue. Hence, in our opinion, questions do not give rise to any substantial question of law.

Applicability of the Circular issued by the CBIC, being Circular No.08/2023 - The Tribunal has in fact given a categorical finding that these instructions apply to imports made with effect from 1st April 2023, whereas the imports in the present case relate to the period November 2020 to February 2022. This apart, the Tribunal noted that even if the said Circular were to apply, the Switches in the present case do not fall within the exclusion as set out in the said Circular.

Thus, we are of the view that even question does not give rise to any substantial question of law requiring an answer by this Court.

It is therefore dismissed. However, there shall be no order as to costs.

Confiscation u/s 111(d) and 111(o) - Recovery of duty by recourse to an undertaking given at import - Post-import condition breach - Condition No.104 / Serial No.347B of the exemption notification - use for non-scheduled (passenger) or non-scheduled (charter) services - Meaning of 'air transport service' requiring remuneration for non-scheduled services - Penalty u/s 112 and abetment u/s 112(a) - mens rea/knowledge requirement - Inapplicability of Section 28 for post-importation condition violations - HELD THAT:- A perusal of the show cause notice indicates that reference has also been made to the undertaking given by the appellant under Condition No. 104 of the Exemption Notification. It is true that the show cause notice refers to demand of duty under section 28 of the Customs Act, but if the entire show cause notice is read as a whole, it is clear that reference has been made to the undertaking. It is not disputed that in terms of the undertaking given by the appellant, the duty amount could have been recovered by taking recourse to the undertaking. The contention advanced by the learned counsel for the appellant, therefore, cannot be accepted.

It is clear from the undertaking given by the appellant that it refers to the Bill of Entry for import of the Helicopter by the appellant for non-scheduled air transport services (passenger) as per the licence dated 13.10.2005. It is apparent that it is by mistake that at Serial Number 3 of the undertaking the appellant mentioned that it shall pay on demand the tariff as per Serial Number 347A of the Exemption Notification. It is clear from the undertaking that the appellant had intended to give the undertaking under Serial Number 347B of the Exemption Notification with Condition No. 104 and not 347A of the Exemption Notification with Condition No. 103. Serial No. 103 of the Exemption Notification is in connection with the aircraft imported by the Aero Club of India recognized as a National Sports Federation by Ministry of Youth Affairs or a Flying Training Institute approved by the competent authority in the MCA. The appellant does not satisfy either of the two conditions.

In the present case, it is seen from the aircraft log book details that leaving aside test/ferry flights, about 80% of the hours flown by the Helicopter were used by the appellant for private purpose without any remuneration earned from such flights. Only 20% of the flight hours were used for charter purpose, but the reaming 80% of the hours flown by the Helicopter were used by the appellant for private purposes without any remuneration earned from such flights. There is, therefore, no substantial compliance of Condition No.104 of the Exemption Notification. The appellant has, therefore, clearly violated the terms of the Exemption Notification.

The Helicopter has been confiscated as the undertaking given by the appellant has been violated. There is no error in this finding recorded by the Commissioner as the appellant has violated Condition No. 104 of the Exemption Notification.

Whether penalties could be imposed upon Baijayan Panda, Vice-Chairman of the appellant, and Rajeev Lala, Senior Manager (Corporate affairs), of the appellant. - Penalty has been imposed upon Rajeev Lala for the reason that he gave an undertaking before the customs and the imported aircraft violated the provision of the Exemption Notification and was not used for the specified purposes for which the undertaking was given. Penalty has been imposed upon Bansidhar Panda as he was using the aircraft for personal use which would be in violation of the Exemption Notification.

The impugned order does not state that the aforesaid two persons were aware of the fact that use of the Helicopter without payment of remuneration would lead to violation of the Exemption Notification. Mere violation of the Exemption Notification would not result in imposition of penalties upon them. Thus, penalties under section 112 of the Customs Act could not have been imposed upon Baijayan Panda, Vice-Chairman of the appellant and Rajeev Lala, Senior Manager (Corporate affairs) of the appellant.

It has been found that penalties could not have been imposed under section 112 of the Customs Act. Thus, there is no question of any enhancement in the penalties. The appeal filed by the department would, therefore, have to be dismissed.

Fraudulent trading - Wrongful Trading - Resolution Professional - Regulation 35A of the CIRP Regulations, 2016- Validity of the Adjudicating Authority's finding that transactions between the corporate debtor and the appellant constituted fraudulent trading u/s 66(1) and the consequent direction for contribution to the corporate debtor's assets - HELD THAT:- To qualify under Section 66(1) of IBC, 2016, the transaction should be knowingly transacted with a dishonest intention to defraud the creditors of the CD, while under Section 66(2) of IBC, 2016, which deals with ‘Wrongful Trading’, Liability can only be fixed upon only ‘Director’ or ‘Partner’ and for a transaction to qualify under this Sub Section it must be shown that the parties to such transaction knew, or ought to have concluded that there was no reasonable prospect of avoiding insolvency proceedings and they did not take due diligence with a view to minimizing the potential loss to the creditors of the company. Thus both these sub sections of Section 66 of the Code takes care of two different situations and also the scope of sub - section (1) and (2) of Section 66 of IBC, 2016 is different.

It is a crystal clear case where false entries have been made in the financial statements of the CD in collaboration with the Appellant and in this background the financial accounts of the appellant and CD, which appears to have been made subsequently may not be given much weightage and appears to be only paper work.

No need to say that the facts alleged and evidence produced must satisfy the ingredients of this section and the facts from which the intention to defraud may be deduced must be proved to satisfy of the conscience of the ‘Tribunal’ certainly on the scale of ‘preponderance of probability’. However, no strait jacket formula can be formulated to fit in all factual situations and it will depend on the facts and evidence placed in each case to asses as to whether the particular transaction may be treated as fraudulent or not.

On identical facts with regard to the same CD and same Directors, in the case of Baiju Trading and investment Pvt. Ltd. vs. Mr. Arihant Nenawati (liquidator for RRPL & Ors.) the orders passed by the NCLT under Section 66 of the IBC, was upheld by this Appellate Tribunal vide order dated 29.03.2023, and similarly in case of Tridhaatu Kriti Developers LLP vs. Arihant Nenawati (liquidator for RRPL & Ors.) [2023 (1) TMI 455 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, PRINCIPAL BENCH, NEW DELHI] against the same Respondents the order of NCLT passed under Section 66 of the Code was affirmed and the order of this Appellate Tribunal was challenged before the Hon’ble Supreme Court in TRIDHAATU KIRTI DEVELOPERS LLP [2023 (2) TMI 1301 - SC ORDER] and the order of this Appellate Tribunal was upheld by the Hon’ble Supreme Court.

Therefore, keeping in view all the facts and circumstances of the case and for the reasons given herein before we are not having any iota of doubt in our mind that simply by making fraudulent entries in the accounts books and statements the receivables to the appellant to an amount of Rs. 98,96,82,438/- has been wiped out and in this way the genuine creditors of the CD has been defrauded without any actual sale of gold. Thus, we do not find any good ground on the basis of which any interference in the impugned judgment may be made.

Resultantly, the appeal lacks merit and is hereby dismissed.

Debt and default - One Time Settlement (OTS) and Swiss Challenge Method - Fraudulent or malicious initiation of proceedings - Assignment of debt and transfer of loan exposure - Adjudicating Authority admission and appointment of IRP - RBI Master Directions (Transfer of Loan Exposure) Directions 2021 - HELD THAT:- The present is a case where Section 7 application was filed on 29.09.2024 and the application was founded on debt and default committed by Corporate Debtor. The debt and default is not even questioned and submission of number of OTS proposals by the Corporate Debtor fully proves debt and default. Financial Creditor is fully entitled under the IBC to initiate process under Section 7 when debt and default is committed. Adjudicating Authority has heard the application and has rejected the same vide order dated 17.11.2025 holding that the initiation of application cannot be said to be malafide or fraudulent purpose.

We, thus, do not find any error in the order of the Adjudicating Authority rejecting an application filed by the Corporate Debtor under Section 65.

Appellant has submitted that even as on date Appellant is ready to settle all debt of the Prudent ARC and it has made an offer to deposit the entire amount by 31.03.2026, as noted above, the CoC has already been constituted in December 2024. Any proposal for settlement has to be now gone into and considered as per Section 12A as per law laid down by the Hon’ble Supreme Court in “Glas Trust Company LLC vs Byju Raveendran & Ors. [2024 (10) TMI 1185 - SUPREME COURT (LB)]”. It shall be thus, open for the parties to take steps under Section 12A which submission has also been advanced by Respondent No.3 that course open is to proceed under Section 12A.

Freezing of bank accounts as an action under the PMLA - Validity of executive communication vis-à-vis statutory order - Officer authorised u/s 17(1) - High Court's exercise of judicial review - Directorate of Enforcement powers and possession of alleged tainted money - Section 17(1A) of the Prevention of Money Laundering Act, 2002 - HELD THAT:- Section 17(1A) of the PMLA specifically speaks of two separate actions - first, the officer authorized under Section 17(1) of the PMLA has to make an order freezing the property, whereupon such property cannot be transferred or otherwise dealt with, except with the permission of that officer; and the secondly, a copy of such order should be served on the person concerned.

Admittedly, no separate order was passed by the officer authorized under Section 17(1) of the PMLA and only an email addressed by him to the bank is stated to constitute the order. As the PMLA contemplates two separate actions, that is, the passing of an order and the communication thereof, it is not open to the DoE to club both the actions into one and claim that the communication itself amounts to the passing of the order.

The freezing of the bank accounts, therefore, cannot be sustained and the order passed by the High Court, to the extent that it did not grant such relief, is liable to be set aside. The freezing of the bank accounts shall stand lifted forthwith in its entirety.

The impugned judgment/order is partly set aside and the appeal is allowed to the extent indicated above.

Legality of arrest u/s 19(1) of the PMLA - Scope of judicial review of 'material in possession' and 'reasons to believe' - Consideration of exculpatory material and effect of subsequent additions to ECIR - principles of Wednesbury reasonableness - Compliance with procedural safeguards u/s 19(2) of the PMLA - Judicial review under Articles 226/227 of the Constitution - Remand orders by Special Court / Sessions Judge in PMLA proceedings - HELD THAT:- It is apparent that on the day of arrest there was no scheduled offence against the petitioners, and there was no basis for their arrest. The ‘reasons to believe’ as well as the ‘grounds of arrest’ are completely silent about the fact whether the FIRs were alive and what was the basis of arrest. The authorised officer has neither taken into account the stay order passed by this Court, nor the acceptance of cancellation reports.

Relevant facts relating to the scheduled offences were not gathered by him, resulting in the exculpatory material being ignored/not considered which rendered the arrest illegal. In support of the contentions reliance was placed on the law laid down in Vijay Madanlal Choudhary and others v. Union of India and others, [2022 (7) TMI 1316 - SUPREME COURT (LB)]

As apparent on record, the first FIR, 428 of 2019, was registered pursuant to an order passed by the Magistrate under Section 156(3) Cr.P.C., dated 09.07.2019, on a complaint filed by a home buyer. The order has been stayed by this Court on 19.07.2019 while entertaining a criminal miscellaneous petition against it which is still pending adjudication. The argument on behalf of the petitioners essentially is, when the very basis of registration of the FIR, the Magistrate’s order, has been stayed, the consequent FIR could not have been registered, nor could it have been taken into account for arresting them. The argument does not cut much ice for the reason, despite the order of stay the aforesaid FIR stands registered on 19.07.2019, and there is no restrain on further proceedings or investigation pursuant thereto by any Court of law. Nor has the registration of FIR been questioned by the petitioners. In these circumstances, non-consideration of interim order, dated 19.07.2019, by the authorised officer cannot be fatal to the impugned order of arrest passed against the petitioners under the PMLA.

So far as the second and third FIRs, 430 of 2019 and 431 of 2019, are concerned, there is no denying the fact that despite settlement(s) dated 21.01.2020, having been arrived at between the parties thereto prior to the date of petitioners’ arrest, the FIRs had not been cancelled at the time of registering the ECIR and carrying out investigation pursuant thereto.

Merely because these FIRs were made part of the ECIR later, by way of addendum dated 11.09.2025, it would not vitiate the petitioners’ arrest prior thereto on 21.07.2025. There is no restrain on the ED to investigate other FIRs noticed by it after registering the ECIR without making the same a part of the ECIR, nor is there any statutory provision creating such a fetter. Also, no procedure has been prescribed for taking on record new FIRs pertaining to scheduled offences that are discovered by the ED after registering the ECIR.

A perusal of the documents shows the similarity is primarily in the facts of the case recorded therein. In case the officer has deemed it appropriate to record the material facts pertaining to the case in the ‘grounds of arrest’ as well as the ‘reasons to believe’, before arriving at the conclusion and recording his belief regarding the guilt, no exception can be taken to it. It is not stated to be violative of any prescribed procedure. The facts are not irrelevant to the documents; besides, it is not the petitioners’ case that the conclusions arrived at by the authorised officer are not germane to the facts mentioned therein, or that there is no reasonable nexus between the two; nor can it be said to be violative of the principles of Wednesbury reasonableness. Additionally, the argument is to be discounted keeping in view the scope of judicial review in examining an order of arrest, as laid down in Arvind Kejriwal case (supra), which prohibits merits review of such documents.

There is no reason to believe that the mandatory procedure laid down under sub-section (2) of Section 19 PMLA has not been complied with by the ED. It goes without saying that dispute with regard to these facts, as raised by learned counsel representing the petitioners, cannot be gone into in exercise of power of judicial review.

No merit in the petitions and the same are dismissed.

Regular bail - Right to speedy trial under Article 21 - twin conditions u/s 45 of the PMLA - proceeds of crime - statutory presumption u/s 24 - Offences under Sections 3 and 4 PMLA - Triple test (flight risk, tampering with evidence, influencing witnesses) - Documentary evidence in custody of prosecution - HELD THAT:- In the present case, the prosecution has primarily relied upon statements of co-accused recorded under Section 50 of the PMLA to attribute the role of a “kingpin” to the applicant. At this stage, the Court prima facie finds merit in the contention of the applicant that such statements, which are contradictory inter se and largely uncorroborated by independent documentary or electronic evidence directly linking the applicant to the alleged foreign remittances, cannot by themselves conclusively establish the existence of “proceeds of crime” in his hands. Significantly, no forged Form 15CA/CB, bank account operated by the applicant for outward remittance, or direct flow of the alleged laundered funds into his accounts has been demonstrated prima facie.

The material placed on record further indicates that the transactions involving the applicant’s wife and mother have been explained, at least prima facie, as loans and commission income supported by bank statements, income tax returns, and TDS certificates. At the stage of bail, these explanations cannot be summarily rejected as illusory proceeds of crime without a clear and demonstrable nexus with the scheduled offence. In the absence of such foundational facts, the rigor of Section 45 stands diluted, as held by the Supreme Court in Vijay Madanlal Choudhary [2022 (7) TMI 1316 - SUPREME COURT (LB)], when the existence of proceeds of crime itself is seriously in doubt.

As regards the triple test, the applicant has deep roots in society, has no criminal antecedents, and there is no material on record to suggest any attempt on his part to influence witnesses or tamper with evidence after his arrest, the apprehension of flight risk or reoffending is purely speculative, particularly when stringent conditions can be imposed to secure his presence during trial. The gravity of the offence, though undeniable, cannot by itself be the sole ground to deny bail, especially when the investigation is complete and the trial is yet to commence. Notably, the prosecution has cited as many as 50 witnesses and 158 RUDs running into over 11,000 pages, and the likelihood of the trial concluding in the near future is remote, in this case continued detention of the applicant is not warranted.

Thus, continued incarceration of the applicant with no possibility of trial being completed in near future, restrictions provided under Section 45 of PMLA would not come in the way of ensuring the right of personal liberty and speedy trial under Article 21 of the Constitution. Hence, the continued detention of the applicant is not warranted, and his liberty can be adequately safeguarded by imposing appropriate conditions.

Accordingly, the present application is allowed and the applicant is admitted to regular bail, upon furnishing a personal bond alongwith a surety of the like amount to the satisfaction of the Trial Court/Duty MM and subject to the conditions.

Thus, the petition alongwith any pending application, if any, stand disposed of.

Restoration of property - provisional attachment under PMLA - effect of quashing of predicate offences on PMLA proceedings - Restoration of property - HELD THAT:- Respondent submits that in view of the order passed by the learned Appellate Tribunal impugned in the present appeal, the attachment of the properties in question has itself been held to be without jurisdiction, we are of the opinion that, in view of the subsequent developments, the present appeal has, in fact, been rendered academic in nature.

Accordingly, leaving the question of law open, we direct that, without prejudice to the rights and contentions of either of the parties, the subject properties be treated to have been restored under Section 8(8) of the PMLA and the possession handed over to the Resolution Applicant.

Appeal, alongwith the pending applications, is disposed of.

Quashing of FIR and challenge to ECIR - taking cognizance - primacy of special statute over general law - mala fide and ulterior motive - proceeds of crime - High Court writ jurisdiction under Article 226/227 - role of Enforcement Directorate and ECIR as investigative source - Special Court / cognizance by Magistrate - HELD THAT:- A petition seeking quashing of an FIR or the charge-sheet must be examined on the basis of the allegations of commission of a cognizable offence. There cannot be a roving inquiry into the matter and the merits of such allegations cannot be examined in a writ proceeding. The probative or evidentiary value of the materials collected in course of the investigation cannot be examined by the writ Court except in cases where it is demonstrable that the allegations assuming to be true and on its face value do not constitute a cognizable offence or the allegations disclose a purely civil dispute or the criminal proceeding is found manifestly attended with mala fide, malicious or instituted with an ulterior motive.

The offence of money-laundering is attracted where the Court finds prima facie evidence that the accused person indulged himself in any manner whatsoever with the proceeds of crime and it is not necessary that on such date the criminal activity was notified as a scheduled offence. Section 2(1)(u) of the PMLA defines the expression “proceeds of crime” to mean any property derived or obtained, directly or indirectly, as a result of criminal activity relating to a scheduled offence, including its value. The offence of money-laundering as defined under section 3 of the PMLA requires the involvement of the accused persons in any process or activity connected with the proceeds of crime derived or obtained as a result of the criminal activity relating to or in relation to a scheduled offence. The definition of money-laundering encompasses every possible manner of involvement of the person with the proceeds of crime derived or obtained as a result of that crime. The expression “criminal activity” covers all activities of an accused person concerning the predicate offence and the use of the expression “every attempt” in section 3 signifies its wide scope and ambit.

The ED alleges that there was no further valuation of the shares and the ESOPs were valued at Rs. 45.32 per share which was the valuation in December 2021. The proposal to raise Rs.300 crores through the rights issue @ Rs. 110 per share was made by the petitioner on behalf of the REL and the price was decided by the CHIL in which REL held 64% stakes and it was controlled by the petitioner.

It is alleged that Rs. 192 crores out of Rs. 250 crores were invested by the REL where the petitioner and Nitin Aggarwal were key decision makers. The funds of REL were diverted to subscribe to the rights issue of CHIL @ Rs. 110/- per share whereas the ESOPs of the same company were given to the petitioner and others at substantially low price of Rs. 45.32 per share. Quite apparently, there is abundance of incriminating materials collected by the ED to file a Prosecution Complaint against the petitioner.

Thus, we do not find any substance in these writ petitions which are, accordingly, dismissed.

Proceeds of crime - influencing the public servants to engage in unauthorized downstream investment -value of any such property - property equivalent in value / deemed tainted property - attachment of property of equivalent value under second limb - Provisional Attachment Order - Adjudicating Authority - appeal u/s 26 - Commission of offence punishable u/s 120-B read with Section 420 of Indian Penal Code, 1860 and Sections, 8, 13(2) & 13(1)(d) of Prevention of Corruption Act, 1988 - HELD THAT:- It is not dispute that the attached property was acquired in year 1994 by the appellant i.e. much prior to the commission of crime. However, the record would reveal that the attachment has been made under the second limb of the definition of the “proceeds of crime” under the Act of 2002. The argument has been raised in ignorance of the definition of “proceeds of crime” having three limbs out of which the second limb of the definition can be applied when the proceeds of crime acquired or derived directly or indirectly out of the predicate offence is not found available with the person and cannot be otherwise traced out, having been siphoned off.

In such case, the respondent can attach the property of equivalent value to the value of the proceeds of crime and in the instant case, the second limb of the definition of “proceeds of crime” has been applied. In that case, the property acquired prior to commission of crime can be attached for equivalent value to the proceeds. The issue aforesaid has been settled by this Tribunal in the case of Sadananda Nayak Versus The Deputy Director, Directorate of Enforcement [2024 (10) TMI 1619 - APPELLATE TRIBUNAL UNDER SAFEMA AT NEW DELHI]

Thus, we do not find that the only ground raised by the appellant is made out to cause interference in the impugned order.

It is stated that what can be attached is not only proceeds of crime acquired directly or indirectly but also for value equivalent. It is not taking only first limb of the definition of proceeds of crime to attach the property only when it is directly or indirectly obtained or acquired out of predicate offence. If the proceeds are not found available or traceable having been laundered, the property of equivalent value would fall within the definition of proceeds of crime which can be attached as per the judgment of the Apex Court in the Vijay Madanlal Choudhary [2022 (7) TMI 1316 - SUPREME COURT (LB)] The recent judgment has been given by the Division Bench of the Hon’ble Punjab and Haryana Court in the Dilbag Singh [2024 (11) TMI 833 - PUNJAB AND HARYANA HIGH COURT]

Thus, we do not find any case to cause interference in the impugned order. Accordingly, appeal fails and is dismissed.

Proceeds of crime - property of equivalent value - burden of proof under Section 24 - confirmation of provisional attachment - provisional attachment and notice u/s 8(1) - third-party bona fide interest -statements u/s 50(2) and 50(3) - appeal u/s 26 - non-traceability of proceeds -definition of "proceeds of crime" in Section 2(1)(u) - HELD THAT:- There is no loan document on record and even the bank statement to show that the amount of consideration for purchase of property was taken on loan. It has been admitted by the appellant that no repayment towards the alleged loan has been made. Even no bank document has been placed on record to substantiate the facts, therefore, respondents have rightly taken the property for provisional attachment because the amount acquired by the appellant’s son out of the commission of crime was not found traceable. In such circumstances, the property of equivalent value can be attached even if it was purchased prior to the commission of crime.

The view is supported by the detailed judgment of this Tribunal in the case of Shri Sadananda Nayak Vs. Directorate of Enforcement, Bhubaneswar [2024 (10) TMI 1619 - APPELLATE TRIBUNAL UNDER SAFEMA AT NEW DELHI] and recent judgment of the Punjab and Haryana High Court in the case of Dilbag Singh @ Dilbag Sandhu Vs. Union of India & Ors. [2024 (11) TMI 833 - PUNJAB AND HARYANA HIGH COURT] The reference of the judgments has been given for consideration on the issue and to show that even if property was acquired prior to the commission of crime, then it can be attached if the proceeds of crime is not found available having been vanished and thus not traceable. The respondents have attached the property taken it to be out of proceeds of crime but alternatively we have referred to the judgment holding that if the proceeds of crime are not found traceable, the property of equivalent value can be attached.

Thus, we do not find any reason to cause interference in the impugned order because consideration for purchase of property has been taken out of the source of the accused son Suresh Kumar and that remains the reason that the appellant could not disclose his own tenable source for purchase of property. The appeal is accordingly dismissed.

Levy of service tax - Reverse charge mechanism - Principles against taxation by inference or analogy - Extended period of limitation u/s 73(1) - Suppression, willful misstatement, fraud or collusion - Jurisdictional error - Assumption of jurisdiction - Writ jurisdiction under Article 226 - Alternative statutory remedies and exhaustion - HELD THAT:-From a reading of the order of adjudication it is clear that gross injustice has been done to the petitioner because of the high handed and palpably illegal and arbitrary order and therefore it is held that the present writ petition is maintainable notwithstanding the availability of statutory alternative remedy and the impugned show cause notice as well as order of adjudication are liable to be set aside and quashed.

It is the view of this Court that while demand and recovery of taxes as ordinarily prescribed under the provisions of the Act requires careful consideration of the facts and circumstances and satisfaction of all the parameters prescribed upon, the demand and recovery under the extended period of limitation under section 73(1) being an exception to the General Rule, requires a higher degree of responsibility and diligence on the part of the revenue authorities before they can proceed to invoke the powers conferred under section 73(1).

It is a trite law that greater the power prescribed under the statute greater will be the responsibility on the authorities on whom it has been bestowed to ensure that no infraction of the provisions of the Act and the Rules are made and no injustice is caused to the assessee during the process of demand and recovery.

It is not a case that the documents which were called for required to be submitted were not furnished. The ST-3 Returns filed by the petitioner assessee were available in the records of the revenue authorities and which would have given a complete picture of the services rendered by petitioner assessee and/or whether such services come within the ambit of service taxes or are excluded by any circular or notification issue. However, there is no finding by the revenue authorities as to why this aspect was not examined. There is no conclusion of the revenue authorities in this aspect of the matter as is evident from the impugned order in original.

Therefore, under such circumstances the invocation of extended period of limitation under section 73(1) has been held by this Court to be invalid and contrary to the prescriptions mandated by law. This being a position, it is a clear case of assumption of jurisdiction by the Revenue authorities where the statutes did not confer them such jurisdiction by default. A Writ Court while exercising its powers under Article 226 can certainly examine whether the Tribunal or the quasi-judicial authority by exercising its jurisdiction mandated under the statute has fulfilled the necessary pre-conditions prescribed by the statute itself.

It is the conclusion arrived at by this Court that such preconditions mandated by law under section 73(1) having not been fulfilled by the Revenue authorities, their assumption of jurisdiction under section 73(1) of the GST Act was completely unwarranted and revenue authorities could not have assumed the jurisdiction under section 73(1) unless these pre-conditions mandated and a conclusion thereto has been arrived at by the Revenue authorities before assumption of such jurisdiction. It is under these circumstances that notwithstanding the availability of statutory alternative remedy, this Court considers it an appropriate case to invoke its jurisdiction under Article 226 to interfere with the impugned order in original and to set aside and quash the order-in-original.

There is also no quarrel with the general proposition of law that in the face of statutory alternative remedy being available, a Writ Court would ordinarily not invoke its power of issuance of prerogative Writs. Since this Court has held that the levy of service tax on the petitioner by extending the limitation is contrary to the provisions of law, the natural corollary that would follow is that the levy of all penalty, surcharge and interest are also not leviable on the petitioner, this Court therefore issues a writ of certiorari setting aside the impugned order in original and it is ordered accordingly.

Therefore the writ petition stands accordingly allowed. However no order as to cost. Pending I.A.s are also dismissed and the interim order if any stands merged.

Management, Maintenance or Repair Service - cleaning activity exclusion - Business Auxiliary Service -exemption for production/processing on behalf of client under Notification No. 8/2005-ST - negative list exclusion of processes amounting to manufacture - reconciliation of accounts and payment-receipt versus accrual basis for service tax - extended period of limitation invoked after statutory audit - penalty under Rule 15(3) of the CENVAT Credit Rules, 2004 -HELD THAT:- We find that the appellant have provided the services of maintenance of lawns and gardens comprised of growing of grass, plants, trees, regular mowing of lawns, pruning and trimming of shrubs and cleaning of garden. In our view, such activities would fall within the ambit of ‘Management, Maintenance or Repair service’. Further, we also take note of the fact that the appellant has been paying Service Tax for the said service for the period after 01.07.2012, during the Negative List regime. Thus, we do not find any merit in the claim of the appellant that the said services are exempted from payment of Service Tax. In this regard, we observe that the appellant could not submit copy of any agreement towards rendering of such service. Therefore, we are of the opinion that for the purpose of verifying the correctness of the claim of rendering the said services and quantifying the correct Service Tax payable, the issue needs to be remanded back to the adjudicating authority.

As regards the activity processing of fly ash bricks provided by the appellant, we find that the demand of service tax on the said service has been confirmed under the category of Management, Maintenance and Repair service. The Appellant has submitted that the said services provided by them were exempt vide Notification No. 8/2005–ST dated 01.03.2005 as amended vide Notification No. 19/2005–ST dated 25.04.2006 till 30.06.2012 and thereafter vide entry S. No. 30 (c) of Notification No. 25/2012-ST dated 20.06.2012.

The demand of Service Tax confirmed in respect of the issue (E) of the Table has been claimed by the appellant as double demand. If it is established by the appellant as double demand, then the said demand confirmed in respect of the issue (E) (supra) would not survive.

Regarding the demand of Rs.10,00,000/- [pertaining to issue (F) supra], the appellant has claimed that it was due to clerical error. This claim of the appellant needs to be verified. If the same is due to a clerical error, as claimed by the appellant, then the said demand would not survive.

Thus, we are of the view that these issues [i.e., issues (C), (D), (E) and (F) supra] need to be remanded back to the adjudicating authority for the purpose of verification of the correctness of the claims made by the appellant.

Limitation. - HELD THAT:- In this regard, we observe that audit of the appellant’s unit had been conducted during 07.07.2014 to 10.07.2014 and the impugned Show Cause Notice has been issued to them on 16.10.2014, which is within a one-year period from the date of audit. We observe that the Department had no occasion to scrutinize the records of the appellant before the audit and therefore, we find that issuance of the instant Show Cause Notice, within the one-year period from the date of audit, by invoking the extended period of limitation is legally sustainable. Accordingly, we do not agree with the above submission made by the appellant as to the extended period of limitation being not invocable to demand Service Tax in the present case. Consequently, we hold that the extended period has been rightly invoked to demand Service Tax in this case.

Regarding the appellant’s prayer for setting aside the penalty in respect of the demand for recovery of CENVAT Credit, as imposed vide the impugned order, we take note of the fact that the said credit had been paid back by the appellant along with interest, vide e-Receipt bearing CIN No. 0005347 19122015 01363. We observe that the above payment made by the appellant stands appropriated in the impugned order. Therefore, taking a lenient view, we set aside the penalty imposed on the appellant under Rule 15(3) of the CENVAT Credit Rules, 2004.

We set aside the demands of Service Tax confirmed in the impugned order.

Refund of unutilized CENVAT credit of input service - nexus between input services and output services - eligibility of services as input service under CENVAT Credit Rules, 2004 - exclusion of specified services from definition of input service - computation of refund under Notification No.27/2012 and Rule 5 of CCR, 2004 (gross v. net CENVAT credit) - remand for de novo adjudication and verification of supporting documents

Exclusion of specified services from definition of input service - refund of unutilized CENVAT credit of input service - Whether refund claimed in respect of general (health) insurance for employees is admissible - HELD THAT: - The Tribunal examined the nature of the general/health insurance claimed and compared it with the statutory and rule-based exclusions from the definition of input service for the relevant period. The earlier decision relied upon by the appellant was found distinguishable because that case turned on a statutory requirement (Employees State Insurance or similar statutory obligation) which is absent in the facts before the Tribunal. In the absence of any statutory mandate making such insurance integral to the appellant's activity during the relevant period, and given the specific exclusion of such services from the definition of input services for the period in question, the Tribunal upheld the adjudicatory finding denying refund of the said claim. [Paras 23, 29]

Denial of refund relating to general (health) insurance is upheld and claim is rejected.

Nexus between input services and output services - eligibility of services as input service under CENVAT Credit Rules, 2004 - remand for de novo adjudication and verification of supporting documents - Admissibility of Cenvat credit/refund for various categories of services (Business Support Services, Clearing & Forwarding, Management Consultancy, Commercial Training, Cleaning & Housekeeping (other than specified exclusions), Maintenance/Testing, Sponsorship, Accommodation, Goods Transport Agency, Manpower Recruitment/Supply, and related services) - HELD THAT: - The Tribunal recognised that many of these categories had been allowed for earlier periods in the appellant's own files or addressed in tribunal/orders cited by the appellant, and that nexus must be ascertained by reference to the actual invoices and supporting records. However, because the bulk of relevant documentary material and invoice-level correlations were not usefully examinable on the record before the Tribunal, the Tribunal declined to decide entitlement on merits for the impugned period. Instead, it directed that each category be reconsidered by the Adjudicating Authority (denovo) with opportunity to produce and verify documents, and with reference to prior findings in the appellant's earlier periods and applicable precedents. [Paras 24, 26, 29]

Matters relating to nexus and eligibility for the listed service categories are remanded to the Adjudicating Authority for de novo adjudication and documentary verification.

Computation of refund under Notification No.27/2012 and Rule 5 of CCR, 2004 (gross v. net CENVAT credit) - refund of unutilized CENVAT credit of input service - Proper method of computing maximum refund - whether refundable amount under Rule 5/Notification No.27/2012 is to be calculated on gross CENVAT credit availed during the quarter (less only ineligible credit) or on net CENVAT credit after utilization towards domestic liability/reversals - HELD THAT: - The Tribunal noted inconsistency between the adjudicating authority's computation (which deducted amounts utilized for domestic liability/reversals before applying the refund formula) and the approach taken in the appellant's earlier final order. Having regard to the Tribunal's prior final order in the appellant's own case and the need to apply the correct formulaic approach under Rule 5/Notification No.27/2012, the Tribunal held that the issue is no longer res integra and requires redetermination. The Tribunal therefore remanded the matter directing the Original Authority to compute eligible refund by deducting only ineligible Cenvat credit, if any, from the Cenvat credit availed during the quarter and then applying the export turnover ratio, instead of first netting off amounts utilized for domestic liability/reversals as was done in the impugned order. [Paras 16, 17, 27]

Computation method is remanded: Original Authority to reassess refund applying Rule 5/Notification No.27/2012 by deducting only ineligible credit from gross Cenvat credit before applying export turnover ratio.

Remand for de novo adjudication and verification of supporting documents - invoices addressed to SEZ and proof of consumption in STPI unit - Validity of denial of credit/refund where invoices are addressed to SEZ/STPI and documentary proof of exclusive consumption in the claimant's STPI unit was not placed before the authorities - HELD THAT: - The Tribunal observed that certain claims were rejected because invoices were addressed to SEZ/other units and there was no record to demonstrate exclusive consumption in the claimant's STPI unit. The appellant asserted that these services were exclusively used in the STPI unit and offered to produce corroborative documents. The Tribunal therefore remanded these claims for verification, directing the Adjudicating Authority to examine the documents to determine whether the services were exclusively consumed in the claimant's unit and to pass reasoned orders. [Paras 19, 28]

Denials based on invoices addressed to SEZ/absence of consumption proof are remanded for verification and de novo adjudication upon production of documents.

Refund of unutilized CENVAT credit of input service - Treatment of amounts which the appellant did not dispute before the Tribunal - HELD THAT: - The Tribunal noted that certain small sums were not appealed by the appellant and hence were admitted/accepted. The Tribunal treated those admitted amounts as not in dispute and upheld the same. [Paras 22, 29]

Amounts not appealed (Rs.7,33,415 as recorded) are upheld.

Entitlement to credit for employee recoveries where service tax discharged on recoveries - remand for verification of records - Whether appellant is entitled to credit to the extent of amounts collected from employees (for transportation, life insurance etc.) where appellant has discharged service tax on such recoveries - HELD THAT: - The Tribunal found that entitlement in such cases depends on factual verification - whether amounts were in fact collected from employees and whether appropriate service tax was discharged on those recoveries. Because the details and records required to establish the recoveries and tax discharge were not on record before the Tribunal, it remanded these claims to the Adjudicating Authority for verification of the payments collected from employees and the discharge of tax, and directed that if such records establish discharge of tax, credit may be allowed to that extent. [Paras 25, 29]

Claims based on employee recoveries (transportation/life insurance) are remanded for verification; credit allowable to the extent tax on recoveries was discharged upon verification.

Final Conclusion: The Tribunal partially allowed the appeals: it upheld the denial of refund for general (health) insurance and upheld amounts not appealed; all other disputed categories and computation issues were remanded to the Adjudicating Authority for de novo adjudication and documentary verification (including recalculation of refund under Rule 5/Notification No.27/2012), with directions to afford opportunity of hearing and to complete the adjudication within four months.

Condonation of delay in filing appeal - limitation and statutory period for preferring appeal - forum shopping and invocation of writ jurisdiction - appellate authority's power to condone delay - exclusion of Section 5 of the Limitation Act and applicability of Section 14 - proviso to Section 85(3A) of the Finance Act, 1994 - HELD THAT:-It is clear that the matter was fixed for final hearing with the consent of Counsel but see fails to appear today i.e. 15.01.2026. The matter was adjourned either on account of non presence of the counsel or on the request of counsel on 29.09.2025, 06.11.2025, 28.11.2025 and on 06.01.2026. The matter was fixed for hearing after seeking the convenience of counsel and on assurance of presence today. The proviso to Section 35C (1A) restricts the total number of exemptions that could be granted to either side in appeal to three. Thus, do not find any reason to further adjourn this matter in absence of any request.

It is observed that the appeal was to be filed before the Commissioner (Appeal) after the condonable period from the date of the receipt of the Order-in-Original by the appellant. As per the proviso Commissioner (Appeal) has been granted the power to condone delay of one month in filing the appeal on sufficient cause being shown. In the present case appeal was filed before the Commissioner (Appeal) after expiry of condonable period from the date of receipt of Order-in-Original. Hence Commissioner (Appeal) has rightly held that appeal was filed beyond the prescribed period of limitation and has dismissed the same on this ground alone.

This issue is squarely covered by the decision of Hon’ble Supreme Court in the case of M/s Singh Enterprises [2007 (12) TMI 11 - SUPREME COURT], wherein it has been held that Commissioner (Appeals) could not condone the delay beyond the 30 days in filing the appeal before him.

Accordingly, No find merits in this appeal filed by the appellant.

Appeal is dismissed.

Place of removal - FOR contract / delivery to buyer's premises - Transfer of ownership and risk in transit - Point of sale / sale at destination - Inclusion of freight charges in transaction value - Valuation u/s 4 - Circular No. 1065/4/2018-CX., dated 8-6-2018 - Statutory interest u/s 11AA - Penalty u/s 11AC - HELD THAT:- In Ispat Industries [2015 (10) TMI 613 - SUPREME COURT], the issue involved was whether by virtue of a transit insurance policy in the name of the manufacturer, excise duty is liable to be recovered on freight charges incurred for transportation of goods from the factory gate to the buyer’s premises, treating the buyer’s premises as the place of removal.

In view of the two Larger Bench decisions of this Tribunal in The Ramco Cements Limited [2023 (12) TMI 1332 - CESTAT CHENNAI-LB] and Sweety Industries [2024 (2) TMI 1393 - CESTAT AHMEDABAD (LB)] a Division Bench of the Tribunal in M/s. Hindustan Zinc Ltd. [2024 (4) TMI 817 - CESTAT NEW DELHI]examined the issue at length and held that the cost of transportation from the factory premises to the premises of the buyer when the sale is on FOR basis would have to included in the transaction value. The division bench extensively referred to the Circular dated 08.06.2018 and the decision of the Supreme Court in Roofit Industries [2015 (4) TMI 857 - SUPREME COURT]. The decision of the Tribunal in Hindustan Zinc is based on the two Larger Bench decisions of the Tribunal in The Ramco Cements and Sweety Industries.

The aforesaid discussion leads to the inevitable conclusion that the value of freight charges would have to be included in the transaction value of the goods as the contract was on FOR basis.

The order passed by the Commissioner (Appeals), therefore, cannot be sustained and is set-aside. The appeal filed by the department is, accordingly, allowed.

Manufacture - Rava/Suji - roasting at an appropriate temperature 60 - 80% resulting into reduction in the moisture content - definition of manufacture under Section 2(f) of the Central Excise Act, 1944 - HSN Explanatory Note - change in character, use or marketability test - Whether Rava/Suji after being subjected to the process of ‘Single Roasting’ or ‘Double Roasting’ results into ‘manufacture’ and consequently the resultant product attract classification under Chapter Heading 1901 of Central Excise Tariff Act, 1985 as ‘food preparation’. - HELD THAT:-In the case of Commissioner of Central Excise, Mumbai – IV vs. Fitrite Packers [2015 (10) TMI 1047 - SUPREME COURT] observed that processing of conversion of wheat into ‘single roasted Rava’ or ‘double roasted Rava’ amounts to ‘manufacture’.

Following the same, the Rava/Suji itself is a finished product falling under Chapter 1103 ready to be used and sold in the market; the process of ‘single roasting’ or ‘double roasting’ of Rava does not bring any change in the item itself nor any change in its physical properties/characteristics, only the process of roasting reduces the moisture content of Rava/Suji. Plain Rava/Suji when subjected to first roasting and/or second roasting, no transformation takes place nor the resultant roasted product having an altogether distinct character and use; similarly to the process of repeated sterilisation as held in the above case, every time Rava/Suji is roasted i.e. either first time or second time or thereafter would not bring out any new commodity so as to make the process of roasting/ heating as ‘manufacture.

Therefore, the finding of the learned Commissioner that the process of roasting i.e. ‘single roasting’ and/or ‘double roasting’ of the plain Rava/Suji resulted into manufacture, in our opinion, cannot be sustained. Since, we have come to the opinion that the process of roasting undertaken by the appellant does not result into manufacture, further discussion about change in its classification becomes academic, hence, not dealt into.

Thus Rava/suji when subjected to the process of roasting does not result into “manufacture” within the definition of Section 2(f) of Central Excise Act, 1944, hence, not leviable to excise duty. In the result, the impugned order is set aside and the appeals are allowed with consequential relief, if any, as per law.

Refund of accumulated unutilised cenvat credit relating to Education Cess and Secondary Education Cess - transitional provisions of GST - claim for refund under GST regime - HELD THAT:- Appellants seeks to rely on two decisions which as per him squarely cover the matter i.e. USV Private Limited vs Commissioner of CGST-Kolhapur [2023 (2) TMI 230 - CESTAT AHMEDABAD], which allowed in the similar circumstances the refund of Education Cess, Secondary & Higher Education Cess lying on balance in 30.06.2017 and he also seeks to place reliance on the decision of this Court (different Constitution) whereby cash refund vide matter in USV Private Limited vs CCE&ST Daman [2023 (2) TMI 230 - CESTAT AHMEDABAD] was allowed by this court.

In view of the matter having been covered by the decisions quoted by the advocate, appeal is allowable. Same is allowed with consequential relief.

Challenged the personal penalty imposed under Rule 26 - HELD THAT:- We find that this Tribunal in the case of JPFL Films Private Limited & Others [2023 (12) TMI 304 - CESTAT CHANDIGARH] held that once the main appeal is settled under SVLDRS, 2019, the appeals filed by the co-noticees challenging the personal penalty arising out of the same impugned order cannot be sustained. This view of this Tribunal has been followed in the case of Shri Raghavendra, Plant Manager [2024 (5) TMI 1335 - CESTAT BANGALORE] Consequently, the appeal filed by the appellant deserves to be allowed and the same is allowed.

Liability of directors in offences committed by a company - Section 138 of the Negotiable Instruments Act - Summoning order and discharge of accused - Section 168 Companies Act, 2013 - resignation of director - Section 251 Cr.P.C. - application to drop proceedings - inherent jurisdiction to quash proceedings - Sleeping director - HELD THAT:- The most significant document is Form-32 of the Company, which shows that she was a Director in the Company. Not only this, she was a signatory to the cheques and also was a co-signatory to the Balance Sheets, which were being submitted on behalf of the Company. For her to claim that she was not involved in the affairs of the Company, is not supported by the documents on record. Pertinently, she has claimed herself to be the Sleeping Director, which is not borne from the record. The Summoning Order against Ms. Sandhya Gupta, is justified as the documents clearly reflect that she was involved in the day-to-day affairs of the Company. It is her defence that she was not actively involved, which she may prove during the trial. At this stage, the Summoning Order cannot be faulted and she has been rightly summoned as an Accused.

In the present Case, the Form-32 clearly records that Mr. Abhishek Gupta had resigned from the Company on 01.10.2013, which is fully corroborated by the Minutes of the Meeting of the Board of Directors. There is cogent independent evidence on record, reflecting the resignation of Mr. Abhishek Gupta before the cause of action arose in the aforesaid Complaints under Section 138 NI Act. In no way, can he be said to be involved in the affairs of the Company, after his resignation.

Therefore, entitled to be discharged and the Summoning Order dated 03.05.2017 vis-à-vis Mr. Abhishek Gupta, is hereby quashed.

Dishonour Of cheque -Presumption of liability in cheque dishonour cases - Onus to prove absence of consideration - Suppression of material facts / clean hands doctrine - Requirement of statutory notice in proceedings under the Negotiable Instruments Act - Doctrine of coming to court with clean hands - Probabilization of defence by the accused - Section 138 of Negotiable Instruments Act, 1881 - HELD THAT:- It is seen that appellant prior to filing complaint under Section 138 of Negotiable Instruments Act, 1881, issued statutory notice (Ex.P3) to respondent. The statutory notice is with regard to issuance of cheque (Ex.P1) by respondent and dishonour of cheque (Ex.P1) and filing of complaint there is no details further given. Even in the complaint and in sworn statement, there is no reference to any of earlier transaction between appellant and respondent. When the appellant was cross examined by the respondent, the appellant was specifically questioned with regard to earlier sale agreement (Ex.D1), power of attorney (Ex.D2), cancellation of power of attorney (Ex.D3), filing of civil suit by appellant's father-in-law and other aspects. The appellant denied the same and feigns ignorance. The sale agreement is a registered document in No.5002 of 2011 dated 17.08.2011, power of attorney is document No.331 of 2011 dated 10.11.2011, cancellation of power of attorney is document No.1317 of 2013 dated 26.03.2013. These documents clearly referred to in the civil suit notice and its reply (Exs.D7 & D8).

In this case, the proof affidavit filed on 20.11.2018, but there is no reference about these registered documents and the transactions between appellant and respondent, all details disclosed by the respondent when he examined himself as defence witness (DW1) and marked documents as defence exhibits (Exs.D1 to D8). It is apparent that the appellant had not come with clean hands and he suppressed material facts.

In the civil suit, the specific stand is that at the time of sale agreement, a promissory note and signed blank security cheques collected from the respondent. One of the cheque filled up and the complaint filed. Hence cheque issued pursuant to the sale agreement as security and cheque not in discharge of any loan liability.

On proper appreciation of evidence and materials the trial Court rightly held that the respondent probablized his defence by way of defence witness and documents and the appellant failed to prove the case beyond all reasonable doubt.

This Court finds no reason to interfere with the judgment of acquittal dated 29.01.2020 in STC.No.90 of 2015 passed by the learned Judicial Magistrate No.I, Perambalur and the same is hereby confirmed.

In the result, this Criminal Appeal stands dismissed.

Dishonour of cheque - Presumption in favour of holder under Section 139 of the Negotiable Instruments Act - Presumptions as to negotiable instruments u/s 118 (rebuttable presumption) - Probable defence proven on preponderance of probabilities - Signed blank cheque and filling of particulars by third party - Failure to rebut statutory presumption resulting in conviction u/s 138 - Punitive and compensatory object of proceedings u/s 138 - HELD THAT:- It is pertinent to note that though the accused having received the statutory notice, has not chosen to send reply immediately and after lodging of the private complaint, the accused sent the reply notice on 16.02.2016 under Ex.P.5.

It is pertinent to note that the complainant as P.W.1 and her husband as P.W.4 gave evidence reiterating the complaint contentions and deposed about the liability of the accused, issuance of cheque therefor, dishonor of cheque, issuance of statutory notice and the failure of the accused to pay the amount within stipulated time. On considering the evidence of P.W.1 and also the admission of the accused with respect to Ex.P.1 (cheque) and the signature found therein, this Court has no other option but to draw a presumption under Sections 118 and 139 of the NI Act.

No doubt, as rightly contended by the learned counsel appearing for the accused, the presumptions available under Sections 118 and 139 of the NI Act are rebuttable in nature. It is settled law that the accused, in order to rebut the presumption drawn in favour of the complainant under Sections 118 and 139 of the NI Act, is not required to adduce any evidence and he can very well prove his probable defence through the evidence adduced by the complainant and that the standard of proof required is of preponderance of probabilities.

Even assuming that the contents of cheque were not filled by the accused, the same is wholly irrelevant.

As rightly contended by the learned counsel appearing for the complainant, despite lengthy cross-examination, the testimony of P.W.1 and the evidence of P.W.4 remained unshaken and the defence failed to elicit any material discrepancies or doubts that could undermine the prosecution case.

This Court is satisfied that the accused has failed to rebut the presumption drawn in favour of the complainant under Sections 118 and 139 of the NI Act. The learned Magistrate's findings are perverse, having relied on immaterial factors, while overlooking crucial evidence. Consequently, this Court concludes that the impugned judgment of acquittal is liable to be set aside and that the accused is guilty of the offence punishable under Section 138 of the NI Act.

Taking into account the nature of the offence and the cheque amount, the accused is sentenced to pay a finewithin a period of two months from the date of receipt of copy of this judgment, in default, to undergo simple imprisonment for six (6) months. Upon payment, the trial Court shall disburse the fine as compensation to the complainant under Section 357 Cr.P.C.

In the result, the Criminal Appeal is allowed.