TaxTMI Updates e-Newsletter
Feb 11,2023

Regular bail under Section 439 CrPC - Parity in grant of bail - Documentary evidence and risk of tampering - Seriousness of offence not conclusive for denial of bail - Conditions of bail and cancellation for tampering

Regular bail under Section 439 CrPC - Parity in grant of bail - Documentary evidence and risk of tampering - Seriousness of offence not conclusive for denial of bail - Conditions of bail and cancellation for tampering - Application for regular bail by the accused was allowed subject to conditions. - HELD THAT: - The Court granted regular bail to the applicant on the basis that the chargesheet and a supplementary chargesheet have been filed and the investigation is complete, the applicant has been in custody since July 2021, and the evidence in the case is largely documentary making the risk of tampering with evidence unlikely. The Court also applied parity with a co-accused who had earlier been granted bail by a coordinate bench, observing that the factual matrix placed the applicant similarly. The prosecution's contention regarding ownership/use of an email was considered by way of an additional status report but did not persuade the Court to distinguish the applicant from the co-accused sufficiently to deny bail. The Court noted absence of prior criminal antecedents and that no useful purpose would be served by further custodial detention. Bail was therefore allowed but made subject to specified conditions including furnishing of bonds, reporting of address change, not leaving India without permission, furnishing and keeping operational mobile numbers, non-tampering with evidence, cooperation with investigation, and automatic cancellation of bail if tampering is established. The Court clarified that nothing in the order expresses any opinion on merits. [Paras 10, 11, 12, 13]

Bail granted on furnishing personal bond and sureties and subject to enumerated conditions; application disposed of.

Final Conclusion: The petition for regular bail under Section 439 CrPC is allowed; the applicant is admitted to bail on the terms and conditions specified, with liberty to the trial Court to enforce or cancel bail if conditions are violated.

Cancellation of GST registration - suo motu cancellation for non-filing of returns - remand for fresh consideration - opportunity of hearing - limitation for filing appeal under Section 107 of the CGST Act - absence of GST Tribunal and resultant remedy-gap

Cancellation of GST registration - suo motu cancellation for non-filing of returns - opportunity of hearing - remand for fresh consideration - Validity of the order cancelling the petitioner's GST registration and the remedy to be afforded - HELD THAT: - The Court set aside the order dated 12.11.2018 cancelling the petitioner's GST registration and the appellate order dated 30.01.2023 which affirmed the cancellation. Applying the principle in the earlier decision remanding similar matters for reconsideration, the Court concluded that the matter should be remitted to the primary authority for fresh consideration. The authority is directed to give the petitioner a reasonable opportunity of hearing and to decide the matter in accordance with law. The Court expressly left open the merits of the cancellation, and noted that on remand the petitioner may submit all returns as required under the statute. [Paras 6, 7]

Orders dated 12.11.2018 and 30.01.2023 set aside; matter remanded to respondent No.5 for fresh consideration after giving reasonable opportunity of hearing.

Limitation for filing appeal under Section 107 of the CGST Act - absence of GST Tribunal and resultant remedy-gap - Effect of limitation and lack of GST Tribunal on availability of remedy in cases of suo motu cancellation - HELD THAT: - Relying on prior authority, the Court observed that while the first appellate authority has limited power to condone delay under the statutory limitation scheme, where a registration has been suo motu cancelled on account of non-filing of returns and the GST Tribunal has not been constituted, the petitioner may be left remediless. In such circumstances and having regard to the factual matrix, the Court considered it just and proper to remit the matter to the primary authority to prevent denial of an effective remedy. The Court refrained from expressing any view on the merits of delay or condonation and confined itself to directing fresh adjudication with opportunity to the petitioner. [Paras 5]

Because the remedy before the appellate fora may be inadequate in the absence of the GST Tribunal, the matter is remitted to the primary authority for fresh consideration so that the petitioner is not left remediless.

Final Conclusion: Writ petition allowed in part; impugned orders cancelling GST registration and rejecting the appeal are set aside and the matter is remanded to respondent No.5 to decide afresh after affording the petitioner a reasonable opportunity of hearing; petitioner may, if necessary, furnish statutory returns on remand.

Double prosecution under Central and State GST - same subject matter - personal hearing - premature challenge to summons - adjudication on merits

Premature challenge to summons - personal hearing - The writ petition challenging the summons was premature because the petitioner had not participated in the impugned proceedings and was directed to attend the personal hearing. - HELD THAT: - The Court observed that the petitioner had been called to produce documents and for a personal hearing under the impugned summons but had not availed the opportunity and instead approached the Court. The Court recorded that truth as to whether the proceedings of the Central and State authorities relate to the same subject matter can be ascertained only if the petitioner participates in the enquiry and states his objections. In view of the non-participation, the petition was treated as premature and the petitioner was granted one more opportunity to appear and be heard. [Paras 4, 5, 6]

Writ petition disposed as premature and petitioner directed to appear for personal hearing on the fixed date and state all objections.

Double prosecution under Central and State GST - same subject matter - adjudication on merits - Whether the State Authority can proceed when the Central Authority has already initiated action was not decided on merits but remanded to the State Authority for consideration after hearing the petitioner. - HELD THAT: - The Court refrained from adjudicating the core controversy on whether the State can prosecute the petitioner when proceedings under the Central Act exist, noting that no final decision had been taken by the State authority and that the petitioner must first present his objections at the personal hearing. The Court directed the fifth respondent to consider the petitioner's written and oral objections on merits and in accordance with law and thereafter decide whether prosecution under the State Act may be initiated in view of existing Central proceedings. [Paras 7]

Matter remitted to the fifth respondent to decide on merits, after considering the petitioner's objections, whether prosecution under the TNGST Act, 2017 can proceed when proceedings under the CGST Act, 2017 have been initiated.

Final Conclusion: The petition was disposed as premature; the petitioner was directed to appear for personal hearing and the fifth respondent was directed to consider the petitioner's objections on merits and thereafter decide whether State proceedings may be continued in view of Central proceedings.

Violation of principles of natural justice - right to personal hearing - show cause notice with inconsistent timelines - ex parte adjudication on available records - quashing of order and remand for fresh consideration

Show cause notice with inconsistent timelines - violation of principles of natural justice - right to personal hearing - Principles of natural justice were violated by issuing a show cause notice that simultaneously allowed 15 days for a written reply but fixed an earlier personal/virtual hearing date, and by not affording the petitioner a personal hearing or considering its subsequent reply. - HELD THAT: - The show cause notice dated 21.11.2022 both called for submission of a reply within 15 days and separately required the petitioner to appear on 28.11.2022, which was within seven days of issuance. Having given a 15 day period to file a reply, the authority could not reasonably insist on a hearing within seven days. The petitioner thereafter filed a reply on 02.12.2022 and requested personal hearing; the authority did not afford such hearing nor consider the objections raised. The respondent's own counsel did not dispute the dates and events pleaded by the petitioner. On these facts, the court held that the inconsistency in the notice and the failure to grant a personal hearing amounted to a breach of the rules of natural justice, rendering the impugned order infirm. [Paras 3, 4, 5]

Findings recorded that principles of natural justice were violated and that the petitioner was not afforded the personal hearing requested.

Quashing of order and remand for fresh consideration - right to personal hearing - The impugned order rejecting the refund application was quashed and the matter remanded for fresh consideration with a direction to afford a personal hearing and decide on merits in accordance with law within a specified timeframe. - HELD THAT: - Because the proceedings before passing the impugned order breached natural justice, the appropriate remedy was to set aside the order and remit the matter to the respondent for re examination on merits. The court directed that the respondent shall adhere to the principles of natural justice, afford a personal hearing to the petitioner, and pass final orders in the matter after such hearing. A period of twelve weeks from receipt of the order was fixed for completion of the exercise. [Paras 6, 7]

Impugned order quashed; matter remanded for fresh consideration with directions to afford personal hearing and decide within twelve weeks.

Final Conclusion: The writ petition is allowed: the order rejecting the refund application is quashed for violation of natural justice and the matter is remitted to the respondent for fresh consideration on merits after affording a personal hearing, to be completed within twelve weeks; writ petition disposed of, no costs.

Penalty proceedings under the Central Goods and Services Tax regime - adjudication after opportunity of hearing - maintainability of substantive challenge at the show cause notice stage - liability of corporate officers during Corporate Insolvency Resolution Process - time bound adjudication of statutory notices

Show cause notice - adjudication after opportunity of hearing - time bound adjudication of statutory notices - Petitioners permitted to file replies to the impugned show cause notice and to press all available pleas; adjudicating authority directed to consider those pleas and conclude adjudication after hearing in a timebound manner. - HELD THAT: - Since adjudication proceedings had not commenced, the Court refrained from expressing any view on the merits and held that the appropriate course is to allow the petitioners to raise all contentions in reply to the SCN and for the adjudicating authority to deal with those pleas while affording an opportunity of hearing. The Court therefore issued directions fixing a final date for filing replies, permitted all pleas available in law to be urged in the reply, and directed the adjudicating authority to consider and decide those pleas in the adjudication order after affording hearing and considering requests to summon persons or documents in accordance with law. [Paras 7, 8, 9]

Petitioners to file replies by 1st March, 2023; permitted to urge all pleas in reply; adjudicating authority to consider and decide those pleas after hearing in a timebound manner; petitions disposed.

Maintainability of substantive challenge at the show cause notice stage - penalty proceedings under the Central Goods and Services Tax regime - Court declined to decide merits or express views on the petitioners' substantive contentions at the SCN stage. - HELD THAT: - Relying on the procedural posture that adjudication had not begun, the Court declined to adjudicate or comment on the substantive legal questions raised by the petitioners (including reliance on precedents and contentions about liability). The Court observed that those contentions can be agitated in the reply and will be considered by the adjudicating authority; if aggrieved by the adjudication order, petitioners remain free to pursue remedies in accordance with law. [Paras 6, 7, 8]

No expression of view on substantive contentions at present; remedies against final adjudication left open.

Liability of corporate officers during Corporate Insolvency Resolution Process - Corporate Insolvency Resolution Process - Contentions concerning liability of the petitioners for periods prior to or during the CIRP were not decided on merits and are to be raised before and considered by the adjudicating authority. - HELD THAT: - Although petitioners relied on the pendency of CIRP and decisions such as Ghanashyam Mishra to urge that they could not be made liable for pre plan dues, the Court did not resolve that legal question. Instead, it directed that such pleas be included in the replies to the SCN so that the adjudicating authority may examine and decide them in the adjudication proceedings. Thus the question of liability in light of CIRP and the Insolvency Resolution Plan remains for adjudication rather than being decided in the writ petitions. [Paras 5, 7, 8]

Substantive questions regarding liability during CIRP remitted for consideration in the adjudication proceedings; no interim relief granted.

Final Conclusion: Writ petitions disposed by directing petitioners to file replies to the SCN by 1st March, 2023, permitting them to raise all legal pleas therein, and directing the adjudicating authority to consider and decide those pleas after hearing in a timebound manner; Court declined to express any view on the merits and left remedies against the eventual adjudication order open.

Determination of ownership of detained goods where consignment is accompanied by tax invoice and e-way bill - deemed ownership of consignor or consignee where specified documents accompany consignment - role of proper officer to determine ownership where specified documents are not accompanying consignment - security in lieu of penalty under Section 129(1)(a)

Determination of ownership of detained goods where consignment is accompanied by tax invoice and e-way bill - deemed ownership of consignor or consignee where specified documents accompany consignment - role of proper officer to determine ownership where specified documents are not accompanying consignment - Challenge to the impugned order rejecting the petitioner's claim of ownership of detained goods; matter listed for further instruction and consideration. - HELD THAT: - The petitioner contested the Deputy Commissioner's order rejecting his ownership claim, relying on Clause 6 of the clarificatory Circular which treats consignor or consignee as deemed owner when the consignment is accompanied by an invoice or other specified documents, and contends that the detained consignment was accompanied by a tax invoice and e-way bill uploaded on the portal. The Court did not adjudicate the merits of the ownership dispute. Instead, the respondent was granted time to obtain and place written instructions on record so that the contention, including the applicability of the Circular's criteria and the factual question whether specified documents accompanied the consignment, can be duly considered on the next date. The order thus postpones final determination and requires the authority to take instructions for further consideration rather than resolving the ownership issue on merits at this stage.

Matter listed on 3rd January, 2023 for respondent to take written instructions and further consideration of the ownership claim; no adjudication on merits at this stage.

Security in lieu of penalty under Section 129(1)(a) - Petitioner's willingness to furnish security in relation to the detained goods and penalty liability. - HELD THAT: - The Court recorded the petitioner's expressed readiness to deposit security equivalent to the penalty under Section 129(1)(a) of the applicable GST enactment. This indication was noted to facilitate interim handling of the detained goods pending further instructions and consideration by the respondent authority. The Court did not, however, pass any order directing the deposit or fixing terms; it simply recorded the petitioner's willingness which may be acted upon by the parties or the authority on the next date.

Petitioner's readiness to furnish security equivalent to the penalty is recorded; action, if any, to be considered on the next date.

Final Conclusion: Proceedings adjourned for the respondent to obtain written instructions and further consider the petitioner's ownership claim in light of the documents accompanying the consignment; the petitioner's willingness to furnish security equivalent to the penalty is recorded for consideration on the next date.

Reopening of assessment under Section 148 read with Section 147 of the Income Tax Act - reasons to believe / reasons recorded - borrowed satisfaction - bona fide belief and requirement of tangible material / prima facie material - faceless assessment proceedings

Reopening of assessment under Section 148 read with Section 147 of the Income Tax Act - reasons to believe / reasons recorded - bona fide belief and requirement of tangible material / prima facie material - borrowed satisfaction - Validity of the notice under Section 148, the reasons communicated under Section 143(2) and the order disposing objections insofar as they rest on incorrect foundational facts and lack tangible material to form a bona fide belief that income had escaped assessment. - HELD THAT: - The Court examined the material on which the Assessing Officer recorded reasons and approved reopening. The record showed that the alleged foundational transaction referred to in the reasons (purchase of immovable property at C-152, Nirman Vihar, Delhi) did not in fact exist as the petitioner had not purchased any such property; the petitioner had disclosed purchase of land at Pali in its return and in Schedule-6 of the audited balance-sheet. The respondents admitted the Delhi address was inadvertently mentioned and that the information was supplied by the investigating wing. The authority's subsequent contention that the return did not disclose the transaction (by reason of non-uploading of Schedule-6) was factually incorrect on the record. In these circumstances the Court held that there was no tangible or prima facie material on record to justify the formation of a bona fide belief that income had escaped assessment; the proceedings were founded on conjecture and borrowed satisfaction from investigative inputs without independent application of mind by the Assessing Officer. The Court therefore concluded that the statutory requirement for a valid reasoned belief prior to issuing a notice under Section 148 was not satisfied.

The notice under Section 148, the reasons communicated under Section 143(2), and the order disposing objections were held to be invalid and are quashed for lack of material and because they were based on borrowed satisfaction and incorrect foundational facts.

Final Conclusion: The writ petition is allowed: the notice dated 31.03.2021 under Section 148, the reasons dated 28.06.2021 communicated under Section 143(2), the order dated 13.09.2021 disposing objections, and all consequential proceedings are quashed and struck down.

Notice under Section 148 - reopening of assessment - scheme of amalgamation - amalgamating company ceases to exist - jurisdictional notice issued to a non-existent entity - intimation of amalgamation in response to notice under Section 142 - no estoppel against law

Notice under Section 148 - scheme of amalgamation - amalgamating company ceases to exist - jurisdictional notice issued to a non-existent entity - Validity of notice issued under Section-148 in the name of a company which had ceased to exist on account of an approved scheme of amalgamation - HELD THAT: - The Court held that where an amalgamating (transferor) company has ceased to exist pursuant to an approved scheme of amalgamation, a jurisdictional notice issued under Section-148 in the name of that non existent entity is fundamentally illegal and without jurisdiction. The decision relies upon the principle that an amalgamating entity ceases to be a person amenable to assessment proceedings and that participation by or conduct of the extinct entity cannot create an estoppel against law. Applying these principles to the facts, the impugned Section 148 notice issued in the name of the amalgamated/ceased company was quashed.

Impugned notice under Section-148 issued to the amalgamated/ceased company quashed as void for want of jurisdiction.

Intimation of amalgamation in response to notice under Section 142 - reopening of assessment - no estoppel against law - Whether intimation of the amalgamation given in reply to a notice under Section 142 suffices to inform the department and precludes issuance of a subsequent Section 148 notice in the name of the extinct entity - HELD THAT: - The Court found that the petitioner had intimated the department of the approved scheme of amalgamation in response to the Section 142 notice and that such intimation, in absence of any prescribed format, was sufficient. The Court observed that the later issuance of a Section 148 notice by a different officer or circle, despite availability of electronic records and prior intimation, could not be justified by lack of inter departmental coordination. Consequently, the prior intimation supports quashing the later notice issued to the non existent entity; however the Court clarified this does not preclude the revenue from initiating proceedings lawfully against the transferee/transferee assessee.

Intimation of amalgamation given in reply to Section 142 notice construed as sufficient; subsequent Section 148 notice to the extinct entity set aside, without prejudice to lawful initiation of proceedings against the transferee.

Final Conclusion: The writ petitions are allowed: the Section 148 notices issued in the name of companies which had ceased to exist on account of approved schemes of amalgamation are quashed as legally without jurisdiction; prior intimation of amalgamation in response to a Section 142 notice was treated as sufficient, and the revenue remains free to proceed, if permissible, against the present petitioners in accordance with law.

Reopening of assessment under Section 147/148 - change of opinion doctrine - Reason to believe - computation of book profit under Section 115JA - Explanation (iii) - treatment of accumulated loss and unabsorbed depreciation on amalgamation - Section 72A - deduction limited to lesser of loss brought forward or unabsorbed depreciation as per books

Reopening of assessment under Section 147/148 - change of opinion doctrine - Reason to believe - Validity of reopening the assessment by issuance of notice under Section 148 read with Section 147 where the assessee had earlier completed assessment under Section 143(3) and had appellate proceedings. - HELD THAT: - The Court upheld the reassessment proceedings. It held that the Assessing Officer need only have 'reason to believe' that income has escaped assessment and is not required to base that belief on a final adjudication. The reopening was held not to be a mere change of opinion because the issue now under consideration was not dealt with at the time of the original assessment or at the earlier appellate stage; the AO had cause to form belief that the return contained incorrect entries and misleading deductions. Consequently, issuance of notice under Section 148 on 30.04.2004 and assessment under Section 143(3) r/w Section 147 were valid. [Paras 43, 44, 46, 47, 48]

Reopening of assessment under Section 148 r/w 147 was valid and not vitiated as a mere change of opinion.

Computation of book profit under Section 115JA - Explanation (iii) - deduction limited to lesser of loss brought forward or unabsorbed depreciation as per books - treatment of accumulated loss and unabsorbed depreciation on amalgamation - Section 72A - Whether the assessee was entitled to reduce book profits under Section 115JA by the aggregate of accumulated loss and unabsorbed depreciation of the amalgamating company or only by the lesser of the two as per books. - HELD THAT: - The Court applied Section 72A (as amended w.e.f. 01.04.2000) and clause (iii) of the Explanation to Section 115JA(1). Section 72A treats accumulated loss and unabsorbed depreciation of the amalgamating company as the loss/depreciation of the amalgamated company, but Explanation (iii) permits reduction of book profit only by the amount of 'loss brought forward or unabsorbed depreciation, whichever is less as per books of account.' The authorities below rightly rejected the assessee's contention that a single consolidated entry in the books absolved the statutory distinction. The Court endorsed the view that the accounts must be adjusted for tax computation where required and that only the lesser of loss brought forward or unabsorbed depreciation (as per books) is allowable for reduction of book profit under Section 115JA. [Paras 20, 21, 24, 25, 26]

Deduction under Explanation (iii) to Section 115JA is limited to the lesser of loss brought forward or unabsorbed depreciation as per the books; the assessee's claim to set off the aggregate was disallowed.

Formation of opinion in original assessment under Section 143(1) - reopening of assessment under Section 147/148 - Whether absence of any formation of opinion regarding business loss and unabsorbed depreciation in the original assessment under Section 143(1) precluded reopening under Section 148 read with Section 147. - HELD THAT: - The Court found that the matter was not adjudicated in the original assessment or at the earlier appellate stage and therefore could not be said to be a case of change of opinion. Given the erroneous entries in the return and the Department's consequent reason to believe that income had escaped assessment, the absence of an earlier formation of opinion did not bar reopening. The Court observed that the AO's belief need not rest on final adjudication and that where returns were misleading, reassessment is permissible. [Paras 30, 41, 42, 46, 48]

Absence of any adjudication on the specific issue in the original assessment did not preclude reopening; reassessment under Section 148 r/w 147 was maintainable.

Final Conclusion: The appeal is dismissed. The reassessment proceedings under Section 148 r/w Section 147 were held valid and the disallowance of the assessee's claim under Explanation (iii) to Section 115JA - limiting the deduction to the lesser of loss brought forward or unabsorbed depreciation as per books - was sustained.

Interest for defaults in payment of advance tax - Section 234B(2) 'or otherwise' - Charge of interest under Section 234B is mandatory - Waiver of interest under Section 234B - Adjustment of tax paid in one year against liability of another year

Section 234B(2) 'or otherwise' - Interest for defaults in payment of advance tax - Charge of interest under Section 234B is mandatory - Whether amounts remitted in subsequent years can be taken into account under Section 234B(2) for the purpose of reducing interest liability under Section 234B. - HELD THAT: - The Court examined the phrase 'or otherwise' in sub-section (2) of Section 234B and, applying the reasoning of Smt. LilaVati Bai v. State of Bombay, held that the words are of extension and must be given an inclusive meaning rather than read ejusdem generis with preceding particulars. Sub-section (2) expressly contemplates that tax paid under section 140A or 'otherwise' before completion of assessment reduces the interest chargeable under Section 234B; accordingly, payments made by the assessee in contexts other than expressly listed may be considered. The Court emphasised that the overall charge of interest under Section 234B is mandatory and any reduction must conform to the statutory prescription, and that adhoc or unrelated parkings of funds do not qualify. Applying these principles to the facts, payments made in the financial years relevant to AY 2012-13 and 2013-14 were not adhoc and were in the Department's possession; they therefore fall within the ambit of 'or otherwise' in Section 234B(2) and can be taken into account for computing interest, subject to adjustment for the delay in remittance. [Paras 15, 18, 20, 21, 22]

The phrase 'or otherwise' in Section 234B(2) is ejusdem non generis and embraces payments made in other contexts; such payments made in FY 2011-12 and 2012-13 relevant to AYs 2012-13 and 2013-14 can be considered in computing interest under Section 234B, but the mandatory charge of interest applies for the delay in remittance.

Waiver of interest under Section 234B - Adjustment of tax paid in one year against liability of another year - Whether the Assessing Officer's rejection of the petitioner's request to waive interest under Section 234B and to treat advance/self-assessment tax paid in subsequent years as payment for the earlier year was sustainable. - HELD THAT: - The Court rejected reliance on the departmental Notification (F.No.400/234/95-IT(B) dated 23.05.1996) to restrict the statutory meaning, holding that a Notification cannot curtail the statutory interpretation of Section 234B(2). On the facts, however, the Court observed that liability to advance tax arises in the financial year relevant to the assessment year (here FY 2010-11 for AY 2011-12) and that the payments relied upon were made one and two years late respectively. Consequently, while the Assessing Officer's categorical view that no amounts of one year can ever be adjusted against another year was incorrect in law, the petitioner remains liable for interest to the extent attributable to the delay. The Court set aside the rejection of the waiver to the extent indicated (i.e., permitting consideration of the payments under Section 234B(2) but maintaining interest for the period of delay), but declined to interfere with the appellate order confirming the year of transfer. [Paras 8, 9, 21, 22, 23]

The order refusing waiver was set aside insofar as payments 'otherwise' can be considered under Section 234B(2), but interest is payable for the delay (one and two years respectively); the appellate order confirming the transfer year was left undisturbed.

Final Conclusion: The writ challenging refusal to consider tax remitted in subsequent years under Section 234B(2) succeeds in part: the phrase 'or otherwise' is given an inclusive meaning permitting such payments to be taken into account, but the petitioner remains liable to interest for the period of delay; the appellate order confirming the year of transfer is not interfered with. W.P.No.950 of 2020 allowed, W.P.No.955 of 2020 dismissed.

Capital expenditure versus revenue expenditure - license as permissive right versus assignment of trademark - enduring benefit / accretion to profit-earning apparatus - characterisation of co-branding fees - depreciation on intangible asset

Capital expenditure versus revenue expenditure - license as permissive right versus assignment of trademark - characterisation of co-branding fees - enduring benefit / accretion to profit-earning apparatus - Whether the co branding payment made to AMW of Rs.6,50,00,000/- is capital in nature (an acquisition of an intangible asset attracting depreciation) or is revenue expenditure deductible in computing income. - HELD THAT: - The Tribunal examined the co branding agreement and found that the assessee was granted an exclusive, non transferable, time limited right and license to use AMW's name and logo on specified licensed products to be marketed through AMW's dealer/distributor network for specified purposes. The licence was for a fixed term of 60 months, contained post termination restrictions (including prohibition on further use of the mark after expiry) and did not confer proprietary ownership of the trademark on the assessee. The co branded products were for use in AMW vehicles and AMW was the sole/exclusive customer for those products under the agreement; marketing, distribution and other support obligations rested with AMW. On this factual matrix the Tribunal applied the principle that where the owner retains rights in the mark and the arrangement confers only a permissive right to use (i.e., a licence) without transfer of title or goodwill, the payment is consideration for permission to use the mark and not an acquisition of a capital asset. The Tribunal relied on the coordinate High Court decision in Hilton Roulunds Ltd. which sets out tests distinguishing licence from assignment and holds that payments for a licence which do not transfer ownership and do not confer enduring proprietary benefit are revenue in nature. Applying those tests to the agreement's terms (limited duration, retained rights of AMW, termination and forfeiture clauses, exclusivity limited to specified products and channels, and absence of acquisition of goodwill or title), the Tribunal concluded that no long term proprietary benefit accrued to the assessee and the expenditure is revenue in nature. Consequently, the addition made by the revenue authorities and the allowance of depreciation in lieu of deduction were reversed. [Paras 12, 13, 14, 15, 16]

The co branding fees paid to AMW are revenue expenditure (a licence to use the trade mark/logo for a limited period) and the addition made by the assessing authorities is deleted; the appeal is allowed.

Final Conclusion: The Tribunal allowed the appeal, holding that the payment for the co branding licence to AMW was revenue expenditure and not a capital acquisition of an intangible asset; the addition made by the revenue authorities is deleted.

Deduction under section 80IB(10) - date of first approval of building plan - Explanation to clause (iii) of sub-section (10) - first approval where approval obtained more than once - conditions precedent for exemption - onus on assessee to prove eligibility for deduction

Date of first approval of building plan - Explanation to clause (iii) of sub-section (10) - first approval where approval obtained more than once - deduction under section 80IB(10) - conditions precedent for exemption - onus on assessee to prove eligibility for deduction - Whether the respondent-assessee was entitled to deduction under section 80IB(10) having regard to the date on which the building plan of the housing project was first approved by the local authority. - HELD THAT: - The Explanation to clause (iii) of sub-section (10) of section 80IB treats a housing project as approved on the date when the building plan is first approved by the local authority where approval is obtained more than once. The tribunal examined the approvals on record and found that the original sanction of the housing plan was dated 01.07.2003 and that subsequent approvals (including the plan of 12.09.2005) expressly referred to the earlier sanction. The Assessing Officer's position that the first approval was 01.07.2003 therefore stood. Since completion under section 80IB(10) must occur within the statutory time-limit counted from the date of first approval, the project-completed on 23.03.2010-failed to meet the prescribed completion date (on or before 31.03.2008) and thus did not satisfy the conditions precedent for claiming the exemption. The tribunal emphasised the settled principle that exemption provisions are strictly construed and that the onus is on the assessee to prove compliance with conditions precedent; the assessee did not discharge that onus or demonstrate that the 12.09.2005 approval was the first approval. Reliance placed on foreign High Court decisions by the CIT(A) was held inapplicable to the facts. Having found non-compliance with the primary condition (timely completion from first approval), the tribunal declined to adjudicate other alleged violations of the section. [Paras 10, 11, 12, 13]

The assessee is not eligible for deduction under section 80IB(10) as the first approval of the building plan was on 01.07.2003, and the housing project was not completed within the prescribed time-limit; the CIT(A)'s order allowing deduction is reversed.

Final Conclusion: Revenue appeal allowed; assessment order restored as the assessee failed to establish that the first approval of the building plan was on 12.09.2005 and therefore did not satisfy the conditions precedent for deduction under section 80IB(10) for AY 2010-11.

Rectification under section 154 - consideration of Return of Income in rectification - speaking order - denovo adjudication - opportunity of being heard

Rectification under section 154 - consideration of Return of Income in rectification - speaking order - opportunity of being heard - denovo adjudication - Whether the order of the learned Commissioner of Income Tax (Appeals) required setting aside for de novo adjudication because it failed to consider the assessee's rectification application and the Return of Income and was non-speaking. - HELD THAT: - The Assessing Officer (ADIT CPC) passed a rectification order under section 154 without addressing the assessee's submissions and without giving reasons. The learned CIT(A) declined to entertain the grounds on the basis that they were beyond the scope of section 154, but did not examine the documents and computation placed on record in the Return of Income. The Tribunal found that the facts and figures relevant to the rectification emanated from the Return of Income and the rectification application, and that the learned CIT(A) failed to appreciate and discuss those materials or to pass a speaking order. In the interest of justice the Tribunal held that the matter ought to be reconsidered afresh by the learned CIT(A), who must examine the rectification application with reference to the Return of Income, grant the assessee an opportunity of being heard, and pass a reasoned order on merits. [Paras 5, 6]

Order of the learned CIT(A) set aside and matter remanded to the learned CIT(A) for de novo adjudication of the rectification, with opportunity of being heard and directions to pass a speaking, reasoned order after considering the Return of Income and the rectification application.

Final Conclusion: The appeal is allowed for statistical purposes by setting aside the CIT(A)'s order and remanding the matter to the CIT(A) for fresh adjudication of the rectification under section 154 after considering the Return of Income, affording the assessee a hearing and passing a speaking order.

Reopening of assessment after four years and requirement of failure to disclose fully and truly all material facts - change of opinion by Assessing Officer not a ground for reopening - disclosed income and particulars furnished during original assessment cannot be treated as escapement of income - initiation of reassessment quashed where AO had accepted items after verification in original assessment

Reopening of assessment after four years and requirement of failure to disclose fully and truly all material facts - change of opinion by Assessing Officer not a ground for reopening - disclosed income and particulars furnished during original assessment cannot be treated as escapement of income - Validity of initiation of reassessment proceedings issued after four years from the end of the relevant assessment year. - HELD THAT: - The assessment under section 143(3) had been completed and the notice under section 148 was issued after the four-year period. Under the proviso applicable at the time, reopening after four years required the AO to demonstrate that income chargeable to tax had escaped assessment by reason of the assessee's failure to disclose fully and truly all material facts necessary for assessment. The Tribunal found that the material relied upon by the AO - income from development activities, interest accrued and rents which were reflected in the assessee's Income & Expenditure account and responses furnished during the original assessment - were already disclosed and considered in the original assessment. The AO's subsequent contention that such items were under reported or improperly treated (including claim of depreciation on leased properties and classification of certain receipts as capital) amounted to a mere change of opinion. The reasons recorded did not point to any tangible material showing non disclosure by the assessee; reliance on the assessee's own audit report or on a change in accounting method, when those facts were available and accepted in the original proceedings, did not satisfy the statutory requirement for reopening. The Tribunal further considered the Revenue's reliance on Honda Siel Power Products Ltd. and held that it did not assist because in the present case the AO had already taken informed decisions in the original assessment after requisitions and replies. For these reasons the reassessment was held to be wrongly initiated and quashed. [Paras 9, 10, 11, 12, 13]

Reassessment proceedings initiated by notice dated 28-03-2013 were quashed as invalid; reassessment wrongly initiated and therefore set aside.

Final Conclusion: The assessee's appeal is allowed by quashing the reassessment initiated after the four year period for AY 2006-07 on the ground that there was no failure to disclose fully and truly all material facts; the Revenue's appeal is dismissed as academic.

Rectification of assessment under section 154 - scope of challenge in an appeal against a rectification order - assessment under section 143(3) - confirmation of rectification order by the National Faceless Appeal Centre

Rectification of assessment under section 154 - scope of challenge in an appeal against a rectification order - assessment under section 143(3) - Whether the appeal against the order passed under section 154 could sustain challenges to the original assessment order passed under section 143(3) which was not itself appealed. - HELD THAT: - The Tribunal held that the grievance advanced did not arise from the rectification order dated 03.12.2019 passed under section 154 but from the original assessment order dated 28.08.2019 passed under section 143(3). The appellant had not challenged the assessment order under section 143(3) before the appellate forum. Since the impugned order before the appellate forum was the order under section 154, matters that did not emanate from or were not within the scope of that rectification could not be raised in the appeal. The National Faceless Appeal Centre therefore rightly confined itself to the rectification and dismissed grounds which sought to reopen the original assessment that had not been separately challenged. [Paras 5]

Appeal against the order passed under section 154 dismissed for raising objections which related to the original assessment under section 143(3) that was not challenged.

Final Conclusion: The appeal is dismissed; the order of the National Faceless Appeal Centre confirming the action in the rectification under section 154 is upheld.

Deduction under section 54B - Requirement of agricultural use in the two years immediately preceding transfer - Evidentiary primacy of land revenue records (7/12 extract) - Onus on assessee to prove applicability of exemption - Strict interpretation of exemption provisions

Deduction under section 54B - Requirement of agricultural use in the two years immediately preceding transfer - Evidentiary primacy of land revenue records (7/12 extract) - Onus on assessee to prove applicability of exemption - Strict interpretation of exemption provisions - Denial of deduction under section 54B of the Income Tax Act in respect of capital gain on sale of land at Survey No.60/3, Village Mashrool. - HELD THAT: - The Tribunal affirmed the assessment and CIT(A) findings that the statutory conditions for section 54B were not satisfied because the land sold had not been used for agricultural purposes in the two years immediately preceding the date of transfer. The 7/12 extract for Survey No.60/3, produced in the paper book, records the land as ' ' for 2011-12, 2012-13 and 2013-14; hence no agricultural activity was shown in the two relevant preceding years. The assessee's reliance on receipts from the Nashik Agricultural Marketing Committee and a letter from the purchaser did not rebut the land revenue record. In view of the Rules under The Maharashtra Land Revenue Record of Rights and Registers (Preparation and Maintenance) Rules, 1971, entries made by the Talathi after field inspection carry authentic evidentiary value. The Tribunal reiterated that exemption provisions must be strictly construed and the burden to establish entitlement lies on the assessee; consequently the claimed deduction under section 54B was rightly disallowed. [Paras 7, 8, 10, 11, 12]

Claim for deduction under section 54B is rejected and the disallowance confirmed.

Opportunity of hearing / ex-parte allegation - Allegation that the CIT(A) passed an ex-parte order without giving opportunity to the assessee. - HELD THAT: - The Tribunal examined the CIT(A)'s order and records of proceedings and found that multiple opportunities were afforded to the assessee (dates recorded in the order). The CIT(A) considered the statement of facts filed by the assessee before passing the order. Therefore the contention of an ex-parte order was unfounded. [Paras 13]

Ground alleging ex-parte disposal is dismissed.

Final Conclusion: The appeal is dismissed; the disallowance of deduction under section 54B and the CIT(A)'s disposal are upheld.

Arm's Length Price - Transfer Pricing Adjustment - Transactional Net Margin Method - Comparable Uncontrolled Price (CUP) benchmarking using Fertilizer Market Bulletin - Admission of additional evidence on remand - Disallowance under Section 14A read with Rule 8D - Consideration of only exempt-yielding investments for Rule 8D computation - Funded Interest converted into Loan and deductibility under Section 43B - Requirement of lender's certification / documentary bifurcation for allowability

Arm's Length Price - Transfer Pricing Adjustment - Comparable Uncontrolled Price (CUP) benchmarking using Fertilizer Market Bulletin - Admission of additional evidence on remand - Determination of transfer pricing adjustments on import and export transactions with associated enterprise and admissibility of additional evidence. - HELD THAT: - The Tribunal found the benchmarking dispute to be confined to use of price ranges published in the Fertilizer Market Bulletin (FMB), differences between CIF and CFR rates, and adjustments for insurance and credit periods. The DRP had directed adoption of the mid-point of the FMB price band which reduced the TP adjustment; however, the assessee sought admission of additional agreements and supporting documents not earlier produced before the TPO. The Tribunal, concurring prima facie with the appellant that those documents may materially affect ALP determination, directed the TPO/AO to admit the additional evidence, allow the assessee to furnish requisite information, and rework the TP adjustments; it also invited consideration of safe-harbor/tolerance in accordance with law. The direction effectively remands the pricing determination to the TPO/AO for fresh consideration after receipt and examination of the newly admitted materials. [Paras 4]

TP adjustments remitted to TPO/AO for fresh adjudication after admission and re-examination of additional evidence; corresponding grounds allowed for statistical purposes.

Disallowance under Section 14A read with Rule 8D - Consideration of only exempt-yielding investments for Rule 8D computation - Validity and computation of disallowance under Section 14A read with Rule 8D in respect of dividend income. - HELD THAT: - The assessee had offered a suo motu disallowance and the AO computed a larger disallowance under Rule 8D, with the DRP directing exclusion of investments in foreign companies which do not yield exempt income in India. The Tribunal accepted the assessee's submissions supported by binding precedents that where own funds exceed investments and where investments are old (pre-existing) the interest disallowance may not arise; and that only investments yielding exempt income should be considered for computing disallowance under Rule 8D. Accordingly the Tribunal directed the AO to examine whether own funds exceed the investments and whether the investments are old so as to negate interest disallowance, and to restrict the Rule 8D computation to exempt-yielding investments. The matter is therefore remitted to the AO for verification and recomputation in accordance with these directions. [Paras 6]

Disallowance under Section 14A read with Rule 8D remitted to AO for re-examination and recomputation on specified principles; corresponding grounds allowed for statistical purposes.

Funded Interest converted into Loan and deductibility under Section 43B - Requirement of lender's certification / documentary bifurcation for allowability - Allowability of deduction for funded interest converted into loan (FITL) where earlier years had disallowed interest under Section 43B and assessee claims subsequent actual payment without satisfactory documentary bifurcation. - HELD THAT: - The AO and DRP denied the claim that previously disallowed funded interest became allowable in the subject year because the assessee failed to produce necessary evidence and computations to demonstrate actual payment or to segregate principal and interest components. The Tribunal agreed with the lower authorities that once an amount has been determined as interest payable, a mere change in nomenclature or subsequent repayment under varied arrangements does not automatically entitle the assessee to deduction under Section 43B without supporting documentary proof or lender certification; innumerable variations in repayment arrangements were noted and no bifurcation computations were placed before the Tribunal. On these facts, the Tribunal upheld the disallowance. [Paras 8]

Disallowance of funded interest converted into loan under Section 43B confirmed and the assessee's grounds in respect thereof dismissed.

Final Conclusion: The appeal is partly allowed for statistical purposes: transfer pricing and Section 14A issues are remitted to the TPO/AO for fresh consideration in light of admitted evidence and specified principles; the claim for deduction of funded interest converted into loan under Section 43B is dismissed and the disallowance confirmed.

Condonation of delay - fair market value versus actual cost of construction - restitution to assessing officer for fresh enquiry - role of Valuation Officer under Section 142A - burden of proof for claimed cost of construction

Condonation of delay - The four-day delay in filing the appeal before the Tribunal - HELD THAT: - The Tribunal examined the affidavit and reasons for belated filing and found that the delay could not be attributed to any laches on the part of the assessee and that sufficient cause existed for the delay. Accordingly, the Tribunal exercised its discretion to condone the four-day delay and proceed to decide the appeal on merits. [Paras 2]

Delay of four days in filing the appeal is condoned and the appeal is admitted for adjudication on merits.

Fair market value versus actual cost of construction - burden of proof for claimed cost of construction - restitution to assessing officer for fresh enquiry - role of Valuation Officer under Section 142A - Whether the Assessing Officer was justified in substituting the assessee's claimed actual cost of construction with the guidance/fair market value and the appropriate course of action - HELD THAT: - The Tribunal found the core dispute to be the adoption of guidance/ fair market value by the AO in place of the assessee's claimed actual construction cost. The AO relied on guidance value because, in his view, the assessee had not produced corroborative documentary evidence before him; the DRP confirmed that view and directed adoption of the DVO's FMV on receipt of a valuation report. The assessee, however, produced before the Tribunal a paper book containing statements of construction cost, bills, bank statements and payment details asserting payments to suppliers, contractors and labour. The Tribunal observed that confirmations from the builder/contractor and the architect were not on record and the paper book was not certified to show that the same material had been placed before the AO and DRP. In the interest of justice the Tribunal held that the matter required fresh examination by the AO. The AO was directed to afford a reasonable opportunity to the assessee to produce necessary proof (including confirmations from builder/architect and invoices) and, if the assessee satisfactorily proves the actual cost, to adopt that cost. If the assessee fails to establish the claimed cost, the AO is at liberty to refer the matter to the Valuation Officer for determination of construction cost, noting that the DVO's report must be obtained in accordance with the statutory timeframe and procedure under Section 142A. [Paras 10, 11, 12]

Issues restored to the file of the Assessing Officer for fresh examination; AO to admit and verify supporting evidence of actual construction cost and adopt it if proved, or else may refer the matter to the Valuation Officer; AO to afford reasonable opportunity and the assessee to cooperate.

Final Conclusion: The Tribunal condoned the four day delay and, on the substantive dispute over cost of construction, restored the matter to the Assessing Officer for fresh enquiry: the AO must verify the assessee's documentary proofs (including confirmations from builder/architect) and adopt the actual cost if proved, or else refer the valuation to the Valuation Officer; the appeal is allowed for statistical purposes.

Double taxation and credit for income already taxed - Telescoping doctrine - Unexplained cash credit under Section 68 - Condonation of delay

Condonation of delay - Whether the delay of 75 days in filing the appeal should be condoned. - HELD THAT: - The assessee explained non-receipt of the CIT(A)'s order and lack of communication from previous counsel; the Tribunal accepted these reasons as reasonable cause and, applying established principles that procedural defects should not bar substantial justice, held that the delay deserved to be condoned. [Paras 6]

Delay of 75 days in filing the appeal is condoned.

Double taxation and credit for income already taxed - Telescoping doctrine - Unexplained cash credit under Section 68 - Whether the addition of the sum shown as agricultural income in Assessment Year 2012-13 could be sustained when the corresponding advance had already been brought to tax as unexplained cash credit in Assessment Year 2011-12. - HELD THAT: - The Tribunal found on the material that the lease advance of Rs.43,50,000 appearing in the balance sheet for AY 2011-12 was assessed as an unexplained entry and taxed under Section 68 in AY 2011-12, and that a portion of that advance (Rs.21,75,000) was declared as agricultural income in AY 2012-13 from the opening balance. Applying the principle that the same income should not be taxed twice and the telescoping doctrine (income once assessed in an earlier year may be treated as the source for subsequent receipts or applications), the Tribunal accepted the assessee's contention that the AY 2012-13 amount represented the earlier taxed advance and not a fresh unexplained receipt. On that basis the addition made by the AO and confirmed by the CIT(A) was held to be unsustainable and deleted. [Paras 7, 8]

Addition of the amount declared as agricultural income in AY 2012-13 is deleted as it represents a portion of the advance already taxed in AY 2011-12.

Final Conclusion: The Tribunal condensed the appeal by condoning the delay and allowing the appeal on merits: the addition in AY 2012-13 was deleted because the amount represented advance already assessed in AY 2011-12, and the appeal is allowed.

Deemed income under section 69 - unexplained money / unexplained investment - presumptive taxation under section 44AD - afterthought books - double taxation - surrender during survey

Deemed income under section 69 - unexplained money / unexplained investment - surrender during survey - double taxation - Deletion of addition of Rs. 3,00,000 treated as unexplained money - HELD THAT: - Survey at assessee's premises produced a notebook with entries which the assessee initially described as advance gym receipts and, to avoid litigation, surrendered Rs. 3,00,000. The assessee subsequently filed a return under the presumptive scheme and produced a cash book showing total receipts of Rs. 16,00,600, which included the specific entries totalling Rs. 3,00,000. The Tribunal found that where entries in the cash book correspond to receipts reflected in the return (and accepted by Revenue) there was no warrant for a separate deemed income treatment of the same sums. The cash book entries were accepted as reflecting business receipts rather than unexplained investments, and the addition would amount to double taxation of amounts already offered under section 44AD. On that basis the addition of Rs. 3,00,000 made by the AO and sustained by the CIT(A) was directed to be deleted. [Paras 5]

Addition of Rs. 3,00,000 treated as unexplained money is deleted.

Unexplained investment - afterthought books - presumptive taxation under section 44AD - Deletion of addition of Rs. 4,50,000 treated as unexplained advances - HELD THAT: - A ledger/impounded documents and the assessee's statements showed entries described as advances. Although the assessee initially surrendered the amount during survey, he produced account details and evidence during assessment indicating that there were no fresh loan transactions in the year under consideration and that repayments by cheque existed. The Tribunal held that where the assessee reasonably demonstrated that the transactions related to an earlier year and that repayments were recorded (verifiable from bank statements), the addition based on survey surrender could not be sustained. Given the material on record and the explanation regarding timing and repayments, the addition of Rs. 4,50,000 was deleted. [Paras 6]

Addition of Rs. 4,50,000 on account of unexplained advances is deleted.

Unexplained investment - presumptive taxation under section 44AD - afterthought books - Deletion of addition of Rs. 8,05,000 treated as unexplained advances in separate appeal - HELD THAT: - Survey impounded a ledger showing advances. The assessee, engaged in DJ/artist services, filed returns under section 44AD and produced cash book, GST/Service Tax returns and other records showing gross receipts of Rs. 41,81,800 and cash availability. The Tribunal noted that the entries corresponding to business receipts were reflected in the books accepted by Revenue (including indirect tax filings) and that the advances were consistent with normal business practice of giving advances to artists. Where the cash book and corroborative filings demonstrated sufficient business receipts to fund the advances and the entries corresponded with accepted receipts, the addition as unexplained investment was not maintainable. Accordingly, the addition of Rs. 8,05,000 upheld by the lower authorities was deleted. [Paras 11, 13]

Addition of Rs. 8,05,000 on account of alleged unexplained advances is deleted.

Final Conclusion: Both appeals for A.Y. 2018-19 are allowed: the Tribunal deleted the additions made by the AO and sustained by the CIT(A) of Rs. 3,00,000, Rs. 4,50,000 and Rs. 8,05,000, holding that the impugned amounts were accounted for as business receipts/advances in books and returns (including filings under section 44AD and indirect tax returns) and that separate deemed-income additions were not warranted.

Capital gains exemption under section 54B - Transfer within the meaning of section 2(47)(v) - Assessment under section 144 for non-filing of return - Prospective amendment to return-filing requirement for set-off/exemptions - Remand for verification of factual compliance with exemption conditions

Transfer within the meaning of section 2(47)(v) - Assessment under section 144 for non-filing of return - Characterisation of the transaction as a transfer and assessment in absence of return - HELD THAT: - The Tribunal accepted the finding that the assessee executed a development agreement and transferred five acres of land, and that the transaction fell within the definition of "transfer" as envisaged by section 2(47)(v). The assessee did not file a return for the relevant year and failed to appear or respond during assessment proceedings; accordingly the Assessing Officer made the assessment under section 144 on the basis of available material and documentary evidence (including sub-registrar records) to determine cost of acquisition and short-term capital gain. The Tribunal recorded these factual and legal conclusions and found no dispute as to the characterisation of the transaction as a transfer or the power of the AO to proceed in the absence of the assessee's cooperation. [Paras 2, 8]

The transaction is a transfer within section 2(47)(v) and the AO's assessment under section 144 based on available material stands as the factual foundation of assessment.

Capital gains exemption under section 54B - Prospective amendment to return-filing requirement for set-off/exemptions - Remand for verification of factual compliance with exemption conditions - Entitlement to exemption under section 54B and effect of later amendment requiring return-filing - HELD THAT: - The assessee claimed exemption under section 54B, supported by deeds showing purchase of agricultural land after the transfer. The CIT(A)/NFAC had declined to entertain the claim on the ground that the assessee had not filed the return. The Tribunal examined the amendment (sixth proviso to section 139(1)) which mandates filing of return for certain exemptions but observed that such amendment was introduced by the Finance Act, 2019 with effect from 01.04.2020. Since the assessment year in question is 2006-07, the Tribunal held that the post-2019 amendment is not applicable retrospectively and therefore cannot be the basis for denying the exemption. However, the Tribunal also found that the factual satisfaction regarding fulfillment of conditions of section 54B (nature of lands, use for agricultural purposes, timing, and substantiation) was not examined by the authorities below. Consequently, rather than deciding entitlement on the record before it, the Tribunal remitted the matter to the Assessing Officer for verification of compliance with section 54B, directing the AO to afford the assessee three effective opportunities to produce substantiating documents and to decide the claim in accordance with law. [Paras 8]

The post-2019 return-filing amendment does not apply to AY 2006-07; the question of exemption under section 54B is remitted to the AO for factual verification and decision after affording opportunities to the assessee.

Final Conclusion: Appeal allowed for statistical purposes; assessment findings regarding transfer and computation stand as recorded, but entitlement to exemption under section 54B is remitted to the Assessing Officer for verification and decision in accordance with law, with directions to afford the assessee three effective opportunities.

Option to pay fine in lieu of confiscation - Discretion under Section 125 of the Customs Act - Prohibition on export and import of foreign currency - Concurrent findings and perversity standard for judicial interference under Article 226

Discretion under Section 125 of the Customs Act - Option to pay fine in lieu of confiscation - Prohibition on export and import of foreign currency - Whether the Original Authority, Appellate Authority and Revisional Authority rightly refused redemption of confiscated Indian and foreign currency under Section 125 of the Customs Act, 1962. - HELD THAT: - The Court accepted that Section 125 confers a discretionary option to impose a fine in lieu of confiscation, including in respect of prohibited goods. However, the authorities had concurrently found that the petitioner carried excess Indian and foreign currency in violation of Regulation 5 of the Foreign Exchange Management (Export and Import Currency) Regulations, 2015, that the confiscation order had attained finality, and that the petitioner failed to satisfactorily explain the source or ownership of the substantial currency seized. The Original Authority recorded specific reasons doubting the plausibility of the petitioner's claim and concluded that he likely carried the currency on behalf of others. Those reasons were examined and affirmed by the Appellate and Revisional Authorities. Given that the power under Section 125 is discretionary, the court will not substitute its view for a reasoned administrative exercise of discretion unless the impugned orders are perverse. The concurrent, reasoned findings by three fora, the existence of a statutory prohibition (Regulation 5), the finality of confiscation, and the absence of perversity justified non-interference under Article 226. [Paras 14, 18, 19]

The concurrent denial of redemption under Section 125 was upheld; the exercise of discretion by the authorities was not perverse and did not call for interference.

Final Conclusion: Writ petition dismissed; the refusal to grant redemption of the confiscated Indian and foreign currencies under Section 125 of the Customs Act, 1962, was held to be a justified exercise of discretion and not amenable to interference under Article 226.

Admissibility and evidentiary value of statements recorded under Section 108 of the Customs Act - requirement of independent corroboration for confessional or retracted statements - maintainability of appeals before the Tribunal where no penalty or revenue is involved in view of CBEC instructions - principles of natural justice relating to grant of opportunity for cross-examination

Maintainability of appeals before the Tribunal where no penalty or revenue is involved in view of CBEC instructions - Whether the Appeals by the Revenue are maintainable before the Tribunal when the Commissioner(Appeals) has not imposed any penalty and hence no revenue is involved. - HELD THAT: - The Tribunal accepted the respondents' submission based on the instruction of the Ministry of Finance, Department of Revenue, Central Board of Excise & Customs (F.No.390/Misc./163/2010-JC dated 17.12.2015) that appeals shall not be filed before the Tribunal where the subject matter involves less than a specified amount. Since the Commissioner(Appeals) had dropped the penalties and consequently no revenue was involved, the Tribunal held that the Appeals were not maintainable before it. The finding is recorded on the basis that the absence of any imposed penalty meant no revenue controversy remained to sustain the appeals. [Paras 7]

Appeals are not maintainable before the Tribunal as no penalty was imposed by the Commissioner(Appeals) and no revenue is involved.

Admissibility and evidentiary value of statements recorded under Section 108 of the Customs Act - requirement of independent corroboration for confessional or retracted statements - principles of natural justice relating to grant of opportunity for cross-examination - Whether the penalties could be sustained on the basis of statements recorded by DRI which were retracted and uncorroborated, without granting opportunity for cross-examination. - HELD THAT: - On the merits the Tribunal examined the material relied on by the Revenue and found that the only incriminating material were statements recorded by DRI on 10.06.2019 and 11.06.2019, which the respondents retracted on the first available opportunity before the Chief Metropolitan Magistrate on 12.06.2019. No other corroborative evidence was placed on record and no cross-examination was afforded. The Tribunal applied the settled legal proposition that a confession or statement recorded under Section 108, if retracted, cannot sustain penal consequences in the absence of independent and reliable corroboration; such statements cannot be accepted blindly. The Tribunal considered the precedents and facts distinguishing cases where recovery or other independent evidence existed, and concluded that, in the absence of corroboration and without grant of cross-examination, penalties under Section 112 could not be imposed. [Paras 8, 12]

Penalties imposed on the respondents are unsustainable and were rightly dropped by the Commissioner(Appeals) for want of corroborative evidence and absence of cross-examination.

Final Conclusion: The Appeals filed by the Revenue are dismissed: they are not maintainable before the Tribunal because no penalty/revenue is involved, and on merits the penalties could not be sustained as the DRI statements were retracted and uncorroborated and no opportunity for cross examination was afforded.

Section 446 of the Companies Act, 1956 - leave to proceed with suits against a company in liquidation - Effect of winding up order on pending suits - stay and forum control of the winding up court - Validation of proceedings commenced without prior leave - leave may be obtained subsequently - Decree passed without leave under Section 446 - voidable at instance of the official liquidator and not executable until leave is obtained

Section 446 of the Companies Act, 1956 - leave to proceed with suits against a company in liquidation - Effect of winding up order on pending suits - stay and forum control of the winding up court - Whether proceedings, decrees and orders passed by the Small Cause Court without obtaining leave of the Company Court under Section 446 of the Companies Act, 1956 can be acted upon or executed against the company or its auction purchaser. - HELD THAT: - The Court applied the settled principles in Harihar Nath and Erach Boman Khavar, holding that a winding up order brings suits and proceedings with respect to the company within the control of the winding up court and that no suit or proceeding can be proceeded with except by leave of that court. The Court recognised that an application for leave under Section 446 is interlocutory in character and that leave can be granted even after proceedings are initiated. However, until such leave is obtained the proceedings remain stayed vis a vis the company and the resultant decree is only voidable at the instance of the official liquidator. Consequently, decrees or orders passed by the Small Cause Court without compliance with Section 446 cannot be made executable against the company or affect the rights conferred by the Company Court's order, unless and until leave under Section 446 is granted and any conditions imposed by the Company Court are complied with. The Court found that the Small Cause Court had proceeded without securing the requisite leave despite the Company Court's earlier directions and without adequately taking the Official Liquidator's affidavit into account, and therefore those decrees/orders cannot be executed pending compliance with Section 446. [Paras 15, 16, 17]

Decrees and orders passed by the Small Cause Court without leave of the Company Court under Section 446 are not executable against the company/its auction purchaser until the provisions of Section 446 are complied with; the application is allowed to that extent and rule is made absolute.

Final Conclusion: The Court held that proceedings and decrees obtained in the civil courts without obtaining leave under Section 446 of the Companies Act, 1956 cannot be acted upon or executed against the company or its auction purchaser until leave under Section 446 is obtained; accordingly the challenged decrees/orders cannot be enforced pending compliance with Section 446 and the petition is allowed to that extent.

Striking off and restoration of company name - criteria for striking off relating to non-filing of financial statements and annual returns - relevance of post-strike-off filings and documentary evidence of assets and operations - natural justice - service of notice before striking off - conditional restoration with costs and compliance

Striking off and restoration of company name - criteria for striking off relating to non-filing of financial statements and annual returns - relevance of post-strike-off filings and documentary evidence of assets and operations - Validity of the action of Registrar in striking off the company's name and whether the company's name should be restored to the Register - HELD THAT: - The Appellate Tribunal examined the material on record, including the last filed Balance Sheet for 1998-99, acknowledgements of Income Tax returns up to assessment years 2012-13 to 2019-20, the lease deed from UPSIDC and evidence of ongoing activity at the Chandni Chowk shop. The Tribunal concluded that the available records demonstrated that the company possessed substantial movable and immovable assets and that it could not be categorically treated as not carrying on any business or operations. On that basis the Tribunal found the impugned orders of the Registrar and the National Company Law Tribunal unsustainable. The Tribunal therefore exercised its power to set aside the impugned order and to direct restoration, while making restoration conditional upon payment of costs and compliance with statutory filing obligations. The Tribunal also observed the Appellant's undertaking to file outstanding Annual Returns and Balance Sheets and to pay requisite fees and late charges, and recorded that RoC would remain free to take further action for non filing or late filing under the Act. [Paras 11, 12]

Impugned order set aside and the company's name restored to the Register subject to payment of costs and filing of all pending statutory returns and fees, RoC remaining free to take further steps as permitted by law.

Final Conclusion: The appeal is allowed to the extent that the company's name is restored to the Register of Companies; restoration is made conditional on payment of costs and completion of statutory filings and fees, with liberty to the Registrar to initiate any further lawful action for non compliance.

Restoration of company name to the register - striking off of company and statutory dissolution procedure - relevance of audited financial statements and existence of assets as evidence of carrying on business - reasonableness of Registrar's belief of non-operation based on non-filing - procedural notice requirements linked to removal from register - conditional restoration subject to compliance and costs - registrar's continuing power to initiate penal or other proceedings for non filing

Restoration of company name to the register - relevance of audited financial statements and existence of assets as evidence of carrying on business - reasonableness of Registrar's belief of non-operation based on non-filing - Whether the striking off of the appellant company was sustainable and whether its name should be restored to the Register of Companies. - HELD THAT: - The Tribunal and Registrar acted on the basis that the company was not in operation because financial statements were not filed after 31.03.2015; however, audited balance sheets for the years 2015-16 through 2019-20 showed that the company possessed substantial movable and immovable assets. The presence of such assets and the audited financial statements negatived a conclusion that the company was not carrying on any business or operations. In those circumstances the impugned order of the Tribunal upholding removal from the register was held unsustainable. The Appellate Tribunal accordingly set aside the NCLT order and directed restoration of the company's name, imposing conditional compliances. [Paras 7, 8]

Impugned order set aside; the company's name is restored to the Register of Companies subject to payment of costs and fulfilment of filing and fee compliances.

Conditional restoration subject to compliance and costs - registrar's continuing power to initiate penal or other proceedings for non filing - procedural notice requirements linked to removal from register - Terms on which restoration is ordered and the Registrar's rights following restoration. - HELD THAT: - Restoration was granted conditionally: the company must pay costs to the Registrar and file all outstanding annual returns and balance sheets, along with payment of applicable fees and late charges. The order preserves the Registrar's statutory rights to initiate any punitive or other actions under the Companies Act, 2013 for prior non filing or late filing against the company and its directors. The appellate direction thus restores the company while leaving regulatory and penal remedies of the Registrar intact. [Paras 8]

Restoration subject to payment of costs and filing of outstanding statutory documents; Registrar free to take further action for earlier non-compliance.

Final Conclusion: The NCLT order dismissing restoration was set aside; the company's name is restored to the register on payment of costs and completion of statutory filings and fees, without prejudice to the Registrar's right to pursue penal or other proceedings for past non filing.

Stay of operation - interim relief - reconstitution of the board of directors - rectification of the register of members/registration of shares - possession of share certificates as prima facie evidence of title - validity of share transfers and procedural compliance for transfer - requisition to the board for calling an Extraordinary General Meeting under Section 100 - freezing of bank accounts and fixed deposits as interim measure - decision to decide the main petition on merits

Stay of operation - interim relief - freezing of bank accounts and fixed deposits as interim measure - Whether interim stay should be granted against the Impugned Order dated 19.10.2022 and whether directions should be issued permitting operation of bank accounts or freezing/maintenance of fixed deposits. - HELD THAT: - The Tribunal considered the appellants' plea for interim relief to restrain operation of the NCLT order and to permit operation of the company bank accounts, relying on assertions about operational prejudice arising from banks freezing accounts. The Tribunal observed that the Impugned Order had been passed and that subsequent events (including the calling of an EGM) flowed from that order; it found no substantial grounds to grant a stay of the Impugned Order at the interlocutory stage and held that the main Company Petition must be decided on merits. The record also showed allegations (and balancesheet material) raising apprehensions of siphoning; the applicants in their rejoinder had stated they had no objection to freezing fixed deposits, and bank accounts were already frozen by banks. In view of these facts, the Tribunal declined to grant permission to operate the bank accounts and declined to pass separate freezing directions for fixed deposits, concluding that interlocutory relief was not justified pending adjudication on merits. [Paras 28, 29, 30]

Interlocutory prayer for stay of the Impugned Order and for permission to operate bank accounts denied; no separate freezing directions for fixed deposits granted.

Requisition to the board for calling an Extraordinary General Meeting under Section 100 - reconstitution of the board of directors - validity of share transfers and procedural compliance for transfer - Whether the EGM called on 28.12.2022 should be stayed or its resolutions frozen pending disposal of the appeal. - HELD THAT: - The Tribunal noted that the EGM dated 28.12.2022 was convened after the NCLT's Impugned Order which reconstituted the board. The respondents contended, and the Tribunal accepted prima facie, that in light of the NCLT directions there was no valid board existing for the appellants to invoke the protections in Section 100; consequently, the Tribunal found no sufficient ground at this interlocutory stage to stay the EGM or to preserve the pre-Impugned Order board composition. The Tribunal therefore declined to grant status quo relief in respect of the EGM or its resolutions and observed that any grievances about procedural non-compliance in calling the EGM would be open for consideration when the main appeal is heard on merits. [Paras 27, 28, 29]

Prayer to stay the EGM and to restore the composition of the board to pre-Impugned Order status refused; EGM and its consequences not stayed pending the main appeal.

Possession of share certificates as prima facie evidence of title - validity of share transfers and procedural compliance for transfer - decision to decide the main petition on merits - Whether the Tribunal should entertain interlocutory relief in the face of disputed primary facts concerning alleged family settlement, transfer deeds, possession of share certificates, and procedural irregularities in share registration. - HELD THAT: - The Tribunal examined the rival contentions on the factual matrix - including the appellants' assertions of a family understanding, witness affidavits and depositions, alleged handing over of transfer deeds and share certificates, and respondents' challenge to the probative value of witness evidence and to alleged fabrication of records. The Tribunal concluded that these contentions raised substantial factual disputes which required an adjudication on merits; absent such adjudication, interlocutory intervention to upset the Impugned Order was not warranted. The Tribunal therefore directed that the main Company Petition be decided at the earliest on merits, rather than by interlocutory orders. [Paras 29, 30]

The factual disputes regarding transfer validity and evidence are to be resolved on merits; interlocutory relief is inappropriate and the main petition will be decided on merits.

Final Conclusion: The Interlocutory Applications seeking stay of the NCLT order, permission to operate bank accounts, freezing directions for fixed deposits and stay of the EGM are dismissed. The Tribunal directed that the main Company Petition/Appeal be decided on merits and refused to grant any interim stay or status quo relief pending that adjudication. No costs.

Settlement of disputes under Section 18 of the Credit Information Companies (Regulation) Act, 2005 - Disputes relating to accuracy and completeness of credit information - Functions and duties of a credit information company (Sections 14 and 19) as determinative of 'business of credit information' - Legal fiction importing consent to arbitration under Section 18 - Scope and effect of the bar on jurisdiction under Section 31 of the Act of 2005 - Interim moratorium under the Insolvency and Bankruptcy Code and its effect on parallel proceedings

Disputes relating to accuracy and completeness of credit information - Functions and duties of a credit information company (Sections 14 and 19) as determinative of 'business of credit information' - Settlement of disputes under Section 18 of the Credit Information Companies (Regulation) Act, 2005 - Dispute concerning allegedly incorrect credit information placed by a credit information company and a credit institution pertains to the 'business of credit information' and is referable to conciliation or arbitration under Section 18 of the Act of 2005, in the absence of any remedy provided under the Act. - HELD THAT: - Section 14 identifies the forms of business permissible for a credit information company, including collection, processing, collation and provision of credit information and credit scoring. Section 19 imposes a duty on credit information companies and credit institutions to ensure that data maintained by them is accurate and complete. Read together, a dispute by a borrower or client about the accuracy or completeness of credit information collected, processed or collated by a credit information company and a credit institution falls within the 'business of credit information'. Where no other remedy is prescribed by the Act of 2005, such disputes are amenable to settlement by conciliation or arbitration under Section 18, which applies notwithstanding other laws by importing consent to arbitration. The Court found no alternate remedy pointed out by respondents that would exclude reference to arbitration under Section 18. [Paras 4, 5, 6, 7]

The present dispute is within the 'business of credit information' and, absent any remedy under the Act, may be referred to arbitration under Section 18.

Scope and effect of the bar on jurisdiction under Section 31 of the Act of 2005 - Settlement of disputes under Section 18 of the Credit Information Companies (Regulation) Act, 2005 - The bar in Section 31 of the Act of 2005 does not preclude a court from entertaining proceedings under the Arbitration and Conciliation Act for constitution of an arbitral tribunal in terms of Section 18 of the Act of 2005. - HELD THAT: - Section 31 is intended to preclude parties from seeking redress in any manner other than that prescribed by the Act. Where Section 18 itself prescribes dispute resolution by conciliation or arbitration and imports consent to arbitration, the bar under Section 31 does not operate to prevent a party from invoking the Arbitration Act for constitution of an arbitral tribunal to resolve a dispute in the manner prescribed by Section 18. Thus the jurisdictional bar in Section 31 is not a valid objection to the Section 11 petition seeking constitution of an arbitral tribunal under Section 18. [Paras 2]

Section 31 does not operate to bar constitution of an arbitral tribunal under Section 18 through proceedings under the Arbitration Act.

Legal fiction importing consent to arbitration under Section 18 - Settlement of disputes under Section 18 of the Credit Information Companies (Regulation) Act, 2005 - Section 18 of the Act of 2005 operates by legal fiction to import an agreement to arbitrate, and therefore absence of an express arbitration clause cannot be a ground to resist constitution of an arbitral tribunal under Section 18. - HELD THAT: - Section 18 provides that disputes falling within its scope shall be settled by conciliation or arbitration 'as if the parties to the dispute have consented in writing' to such determination; this statutory provision imports the necessary agreement for the purposes of the Arbitration Act. Consequently, a contention that no arbitration agreement exists is not a valid ground to reject a petition under the Arbitration Act for constituting a tribunal when Section 18 applies. [Paras 2]

Section 18 imports consent to arbitration by legal fiction; lack of an express arbitration clause is not a bar to constitution of an arbitral tribunal under Section 18.

Interim moratorium under the Insolvency and Bankruptcy Code and its effect on parallel proceedings - Settlement of disputes under Section 18 of the Credit Information Companies (Regulation) Act, 2005 - Constitution of an arbitral tribunal at this stage is premature because NCLT proceedings against the petitioner as guarantor have triggered the interim moratorium under the IBC, and the arbitral tribunal would necessarily need to examine the scope of the personal guarantee and liabilities which are the subject of the NCLT proceedings. - HELD THAT: - Section 96(1) of the IBC provides that an interim moratorium commences on filing of an application under Section 94 or 95 and that during the interim moratorium any legal action or proceeding pending in respect of any debt shall be stayed and creditors shall not initiate proceedings. Although the textual embargo is directed at debts of the debtor, in context the moratorium encompasses proceedings in which the liabilities of the borrower and guarantor are determined. The accuracy of credit information depends on the scope of the personal guarantee and liabilities thereunder; those issues are presently before the NCLT. An arbitral tribunal cannot finally determine the correctness of the credit information without adjudicating the guarantee and liabilities which are subject to the NCLT moratorium. Accordingly, constitution of an arbitral tribunal now would be premature; if after the moratorium ends and the petitioner succeeds before the NCLT, he may initiate proceedings for constitution of an arbitral tribunal under Section 18. [Paras 9, 10, 11]

Petition for constitution of an arbitral tribunal is premature while NCLT proceedings and the IBC moratorium subsist; petitioner may seek arbitration after moratorium ends if entitled to do so.

Final Conclusion: Petition disposed of without costs: the Court finds Section 18 permits arbitration of disputes about accuracy of credit information and imports consent to arbitrate; Section 31 does not bar the constitution of an arbitral tribunal under Section 18; however, because NCLT proceedings invoking the IBC moratorium presently engage issues of guarantee and liability integral to the dispute, constituting an arbitral tribunal at this stage would be premature - petitioner may pursue constitution of the arbitral tribunal after the moratorium ends and if entitled to do so.

Pre-existing dispute under Section 8(2) and Section 9(1) - requirement of demand notice and ten-day period - scope of adjudicating authority under Section 9(5) - plausibility test - proof of operational debt and default - effect of non-filing of rejoinder on pleadings - application under Section 9 - admit or reject

Pre-existing dispute under Section 8(2) and Section 9(1) - requirement of demand notice and ten-day period - scope of adjudicating authority under Section 9(5) - plausibility test - Corporate debtor not precluded from raising a pre-existing dispute in its reply to a Section 9 application even if it did not respond to the Section 8 demand notice within ten days. - HELD THAT: - The Tribunal held that neither Section 8 nor Section 9 bars the corporate debtor from establishing a pre-existing dispute by way of reply filed to the Section 9 petition. Section 9(1) permits the operational creditor to file after the ten-day window if no payment or notice of dispute is received, but the statutory scheme does not preclude the corporate debtor from bringing materials before the Adjudicating Authority to show a pre-existing dispute. The reasoning relies on the statutory text and prior appellate authority of this Tribunal, which explains that the Adjudicating Authority under Section 9(5)(ii) must reject an application where a notice of dispute is received by the operational creditor or there is a record of dispute in an information utility, and that the adjudicating authority's role is to test whether the asserted dispute is a plausible one requiring further investigation rather than to finally determine merits. [Paras 11, 12, 13]

Corporate debtor may plead and prove a pre-existing dispute in its reply to the Section 9 application despite not replying to the Section 8 demand within ten days; the Adjudicating Authority must apply the plausibility test under Mobilox when assessing such disputes.

Effect of non-filing of rejoinder on pleadings - Failure of the operational creditor to file a rejoinder does not amount to an admission of the allegations in the corporate debtor's written statement. - HELD THAT: - The Tribunal accepted that while Rule 42 permits filing a rejoinder, the law does not compel it, and non-filing cannot be treated as acceptance of the written statement's averments. Consequently, absence of a rejoinder cannot be used to infer that the operational creditor admitted the corporate debtor's contentions; the merits must be considered on the record. [Paras 14]

Non-filing of a rejoinder is not an admission of the corporate debtor's pleadings; the operational creditor's failure to file a rejoinder cannot by itself defeat the Section 9 application.

Proof of operational debt and default - application under Section 9 - admit or reject - scope of adjudicating authority under Section 9(5) - plausibility test - The operational creditor failed to prove that an operational debt was due and payable in respect of the claimed amounts for Seasons 2 and 3, and the Adjudicating Authority was justified in dismissing the Section 9 application. - HELD THAT: - On the record the Tribunal found disputes of claims and counterclaims as to contract value and payments. An agreement existed only for Season-2; no agreement supported the asserted liability for Season-3, and the materials showed competing contentions (including that a cheque was stopped and that payments were claimed to be in full and final settlement). Applying the Mobilox plausibility test, the Tribunal concluded the defence raised by the corporate debtor was not patently feeble or spurious and that the operational creditor had not discharged its burden to establish an unpaid operational debt that was due and payable. Thus the Adjudicating Authority's conclusion that the petitioner failed to prove debt and liability was upheld. [Paras 15, 16, 17, 18, 19]

Section 9 application dismissed: operational creditor failed to prove the existence of an unpaid operational debt that was due and payable for the disputed seasons; the defence was a plausible pre-existing dispute.

Final Conclusion: The appeal is dismissed; the Adjudicating Authority's order refusing to admit the Section 9 application is upheld because the corporate debtor was entitled to raise and substantiate pre-existing disputes in its reply and the operational creditor failed to establish an unpaid operational debt that was due and payable.