TaxTMI Updates e-Newsletter
Feb 14,2023

Anticipatory bail under Section 438 Cr.P.C. - interim protection pending filing of police report - cooperation with investigation - non-influence of witnesses - presence for investigation when summoned - restriction on leaving the country without court permission - parallel tax proceedings and appellate compliance in GST proceedings - release on furnishing personal bond and two sureties

Anticipatory bail under Section 438 Cr.P.C. - parallel tax proceedings and appellate compliance in GST proceedings - interim protection pending filing of police report - Grant of anticipatory bail (protective relief) to the applicants named in the FIR arising from alleged bogus invoices, subject to conditions. - HELD THAT: - The applicants are proprietors of GST-registered firms and have been implicated in an FIR lodged by the Joint Commissioner, Commercial Tax, arising from inspection of other firms alleged to have issued forged documents and bogus invoices. Though no specific criminal antecedents are shown and the applicants are participating in ongoing proceedings under the U.P. G.S.T. Act (including an appeal filed with deposit of 10% of disputed tax), the police have issued summons naming the applicants as accused and arrest is apprehended. Having regard to the pendency of parallel tax proceedings and the fact that remedies under the tax statute are being invoked, and applying the approach indicated in Sushila Aggarwal and others v. State (NCT of Delhi) and another, the court granted protective relief without entering into the merits of the allegations. Protection is limited in time (till filing of the police report) and conditional: applicants must furnish a personal bond and two sureties to the satisfaction of the arresting officer/I.O./S.H.O.; cooperate with the investigation; not influence witnesses; remain available for investigation and interrogation when summoned; and not leave India without prior permission of the Court. The order preserves the investigating agency's right to move for appropriate relief in case of default.

Applicants granted protection under Section 438 Cr.P.C. until filing of the police report on furnishing a personal bond and two sureties and subject to conditions of cooperation, non-interference with witnesses, attendance when called, and not leaving India without court permission.

Final Conclusion: Anticipatory bail granted in the terms indicated: interim protection until filing of the police report, conditional on bond and sureties and compliance with investigative and non-interference obligations; investigating agency free to seek appropriate relief upon default.

E-way bill - road permit - interim relief pending government decision - compliance with other statutory/transport conditions

E-way bill - road permit - Whether respondents can insist on production of a road permit when the petitioner is in possession of a valid e-way bill. - HELD THAT: - The Court found that, in the present state of the law and on the material before it, insistence on a separate road permit solely where a valid e-way bill is produced is not justified. The learned Standing Counsel for the Forest Department stated that the government has not finally decided the larger policy issue and, as of now, there is no insistence on road permits if an e-way bill is available. Applying this position, the Court directed that respondents should not insist upon a road permit from the petitioner so long as the petitioner is in possession of valid e-way bills. The direction was framed as an interim measure operative until the Government reaches a final decision on the requirement of road permits beyond the e-way bill. [Paras 4, 5]

If the petitioner has valid e-way bills, respondents shall not insist on a road permit; this protection is granted as an interim relief until the Government decides the issue.

Compliance with other statutory/transport conditions - interim relief pending government decision - Extent of other obligations or conditions which the petitioner must satisfy despite possession of an e-way bill. - HELD THAT: - The Court clarified that possession of an e-way bill is not the sole requirement for lawful transportation in all circumstances. The Forest Department informed the Court that certain categories of transportation remain subject to additional conditions - for example, restrictions on transportation outside the State (to be effected by Railways) and requirements such as passing the blue water mark for timber. The Court therefore limited its direction: non-insistence of a road permit applies while permitting the respondents to require compliance with other applicable formalities or conditions that lawfully govern specific kinds of transport. [Paras 4, 5]

The petitioner need not produce a road permit where valid e-way bills exist, but must still fulfill any other lawful formalities or conditions applicable to the particular transportation.

Final Conclusion: The writ petition is allowed in part by granting interim relief: respondents are directed not to insist on a road permit where the petitioner produces valid e-way bills, subject to the petitioner complying with other applicable transport or forest-related conditions; this direction remains in force until the Government takes a final decision on the requirement of road permits.

Erroneous factual finding - refund under Section 54 of the CGST Act - deemed receipt under Section 16(2)(b) - eligibility for input tax credit - burden to prove receipt of goods

Erroneous factual finding - refund under Section 54 of the CGST Act - The review order directing filing of appeal was founded on an erroneous factual finding and, consequently, the Revenue's appeal ought to have been rejected. - HELD THAT: - The Commissioner's review order directed an appeal on the basis that vehicles mentioned in two scrutinised invoices were not reflected on the e-vahan portal, and hence the larger set of 126 invoices were dubiously supported. The Appellate Authority itself found that the two vehicles were in fact registered on the e-vahan portal (paragraph 6.5), demonstrating that the foundational fact relied upon in the review order was incorrect. Since the review order's directive to prefer an appeal was premised solely on that erroneous finding and no other flaw in the original order or documentary particulars was established, the appeal had no valid foundation and should have been rejected outright. [Paras 8, 16, 17]

The review order was founded on an erroneous finding; the Revenue's appeal, having rested on that flawed foundation, had to fail.

Deemed receipt under Section 16(2)(b) - eligibility for input tax credit - burden to prove receipt of goods - The petitioner was not required to produce further vehicle registration details beyond what was already furnished where the foundational factual basis for doubt was disproved; there was no statutory provision mandating production of all vehicle registrations in the circumstances of this case. - HELD THAT: - Section 16 sets out conditions for availing input tax credit and contains an explanation deeming receipt of goods in specified circumstances. The respondents' submission that the petitioner was obliged to produce registration details of all vehicles used for transport was not supported by any provision of the Act; counsel for the respondents conceded there is no express statutory requirement to that effect. Having shown that the two vehicles relied upon for raising doubt were registered on e-vahan, and with no adverse finding that the invoices or particulars submitted were false, there was no legal basis to require the petitioner to go further and furnish registration for every vehicle referenced in the broader set of invoices. [Paras 10, 11, 12, 18]

No statutory requirement compelled the petitioner to produce details of all vehicles once the basis for suspicion was disproved; the petitioner was not required to furnish additional vehicle-registration evidence in these circumstances.

Refund under Section 54 of the CGST Act - The refund sanctioned by the Assistant Commissioner in the Order-in-Original was to be disbursed to the petitioner. - HELD THAT: - The Order-in-Original dated 12.09.2019 had allowed the petitioner's refund application and directed remittance. The subsequent review direction to appeal, being founded on an erroneous premise and not supported by any finding that the invoices or their particulars were untrue, could not prevent disbursement. The High Court set aside the impugned appellate order and directed respondents to disburse the refund as earlier sanctioned. [Paras 3, 19, 20]

Impugned appellate order set aside and the respondents directed to disburse the refund sanctioned by the Order-in-Original.

Final Conclusion: The review order directing an appeal was based on an erroneous factual finding; the appellate order allowing the Revenue's appeal was set aside and the refund earlier sanctioned by the Assistant Commissioner was directed to be disbursed to the petitioner, parties to bear their own costs.

Reopening of assessment under section 147 of the Income tax Act - Failure to disclose fully and truly all material facts as condition for reassessment beyond four years - Application of Explanation 1 to section 147 (embedded/non discoverable material facts) - Change of opinion - Use of departmental information (Insight Portal/AIR) to initiate reassessment - Duty of Assessing Officer to call for and reconcile demat records/Form 10DB/transactional details during original assessment - Jurisdictional competence to reopen assessment beyond four years

Reopening of assessment under section 147 of the Income tax Act - Failure to disclose fully and truly all material facts as condition for reassessment beyond four years - Change of opinion - Use of departmental information (Insight Portal/AIR) to initiate reassessment - Duty of Assessing Officer to call for and reconcile demat records/Form 10DB/transactional details during original assessment - Validity of reassessment proceedings initiated beyond four years on the ground of alleged non disclosure of transactions - HELD THAT: - The Court examined whether the Assessing Officer had jurisdiction to reopen the assessment for AY 2013 14 beyond four years on the ground that income had escaped assessment because material transactions were not disclosed. The statutory threshold for reopening beyond four years requires not only a reason to believe that income has escaped assessment but also that the assessee failed to disclose fully and truly all material facts necessary for assessment. The record shows that during the original scrutiny assessment the Assessing Officer issued specific notices and sought certified copies of auditors' report, balance sheet, profit and loss account, scrip wise details of opening stock, purchases, sales and closing stock, Form No.10DB reconciled with audited accounts, and copies of demat accounts; the petitioner furnished those documents and submitted reconciliation statements including response to the Annual Information Report/Insight Portal. The Assessing Officer nevertheless relied on departmental intelligence (Insight Portal/AIR) and treated the transactions as undisclosed, a presumption contrary to the documentary record. Having called for and received the requisite material during the original proceedings, there was no failure on the part of the assessee to disclose material facts fully and truly; the reassessment thus amounted to a change of opinion and lacked jurisdiction. For these reasons the reassessment order and consequential notices were quashed. [Paras 13, 14, 15, 16, 17]

Reassessment and consequential demand and penalty notices quashed as there was no failure to disclose material facts and the reopening amounted to a change of opinion.

Final Conclusion: The petition succeeds; the notice initiating reassessment, the order of reassessment for AY 2013 14 and all consequential demand and penalty notices are quashed for want of jurisdiction as the condition of non disclosure of material facts necessary for reopening beyond four years was not satisfied.

Part performance under Section 53A of the Transfer of Property Act, 1882 - Transfer within meaning of Section 2(47)(v) of the Income-tax Act, 1961 - Reopening of assessment under Section 147/148 of the Income-tax Act, 1961 - Licensee versus possession - legal meaning of possession - Jurisdiction to reopen assessment - reason to believe

Part performance under Section 53A of the Transfer of Property Act, 1882 - Transfer within meaning of Section 2(47)(v) of the Income-tax Act, 1961 - Reopening of assessment under Section 147/148 of the Income-tax Act, 1961 - Licensee versus possession - legal meaning of possession - Jurisdiction to reopen assessment - reason to believe - Whether the development agreement operating as a licence to the developer attracted Section 2(47)(v) by invoking Section 53A and justified reopening the assessment for AY 2013-14 under Section 147/148. - HELD THAT: - The Court applied the ratio of the Apex Court in Seshasayee Steels (P.) Ltd. and examined the terms of the development agreement which conferred rights on the developer to enter and develop the land as an exclusive licencee. The legal concept of possession for Section 53A requires that the transferee, in part performance, must have taken or continued in possession in a manner amounting to control of the property; a mere licence to enter and develop does not amount to such possession. Since the agreement conferred licence rights and did not effect possession within the meaning of Section 53A, the transaction did not fall within Section 2(47)(v) as a 'transfer' by part performance. In the absence of such a transfer, the assessing officer lacked material to form a bona fide reason to believe that income chargeable to tax had escaped assessment; consequently the reopening notice under Section 148/assessment under Section 147 was without jurisdiction.

The notice under Section 148 dated 22 March 2021 and the assessment-order dated 27 January 2022 were set aside.

Final Conclusion: The writ petition is allowed; the reopening notice and the consequent order are quashed because the development agreement operated as a licence and did not attract Section 2(47)(v)/Section 53A, leaving the assessing officer without jurisdiction to reopen the assessment for AY 2013-14.

Reopening of assessment under Section 147/148 - Failure to disclose material facts - Change of opinion doctrine - Permissibility of Discounted Cash Flow Method under Rule 11UA(2)(b) - Requirement of tangible material for reassessment

Reopening of assessment under Section 147/148 - Failure to disclose material facts - Requirement of tangible material for reassessment - Change of opinion doctrine - Validity of the notice under Section 148 and the order rejecting objections to reopening for assessment year 2015-16 - HELD THAT: - The Court examined the reasons recorded for reopening and the material on record from the earlier scrutiny assessment. The petitioner had disclosed the share issue and furnished valuation material during the original scrutiny assessment, including a CA-certified valuation by DCF which was considered by the Assessing Officer in passing the assessment order dated 08th November, 2017. In light of Kelvinator of India Ltd., the power to reopen under section 147 cannot be exercised as an instrument of review or mere change of opinion; reopening must be founded on "tangible material" establishing escapement of income and a live link between reasons recorded and formation of belief. The Court found no failure by the assessee to disclose fully and truly the material facts and no fresh tangible material justifying reassessment; the valuation controversy had been the subject of scrutiny and responded to. Accordingly, the reassessment notice and the order rejecting objections were held unsustainable and set aside. [Paras 6, 8, 9, 10, 12]

The notice dated 30th March, 2021 under Section 148 and the order dated 08th March, 2022 rejecting objections are set aside for lack of tangible material and improper change of opinion basis for reopening.

Permissibility of Discounted Cash Flow Method under Rule 11UA(2)(b) - Reopening of assessment under Section 147/148 - Whether the Discounted Free Cash Flow (DCF) method certified by the assessee's Chartered Accountant was a permissible mode of valuation under Rule 11UA as it stood for the relevant year - HELD THAT: - The Court noted that Rule 11UA(2) expressly provided an option to the assessee to determine fair market value either by the formula in clause (a) or by clause (b), which allowed valuation by merchant banker or an accountant using methods such as Discounted Free Cash Flow, as applicable for the relevant year prior to the 2018 amendment. Because the petitioner had exercised the clause (b) option and had furnished the CA-certified DCF valuation during the scrutiny assessment (and the AO had considered it in the assessment), the choice of DCF did not amount to non-disclosure of material facts or a ground for reopening the assessment. [Paras 6, 8, 9]

The DCF valuation certified by the Chartered Accountant was a permissible mode of determining fair market value under Rule 11UA(2)(b) for the relevant year, and its use did not justify reopening.

Final Conclusion: The petition is allowed; the notice dated 30th March, 2021 and the order dated 08th March, 2022 are set aside and the matter stands disposed of in favour of the petitioner.

Reopening of assessment - reason to believe - rational connection / live link between material and belief - jurisdictional requirement of Section 147 - notice under Section 148 - reasons recorded cannot be supplemented by affidavit

Reopening of assessment - reason to believe - jurisdictional requirement of Section 147 - Validity of the notice issued under Section 148 to reopen assessment for AY 2016-17. - HELD THAT: - The Court applied the statutory test under Section 147 that an assessing officer must have a bona fide "reason to believe" that income chargeable to tax has escaped assessment and that such reason must have a rational connection or live link with the formation of that belief. Relying on the principle in ITO v. Lakhmani Mewal Das, the Court held that material which is vague, remote or merely suggestive does not satisfy the jurisdictional threshold. On the material set out in the reasons for reopening - namely, information about a search and statements implicating an "Entry Operator" and a VAT return showing purchases by M/s Magnum Tradex Pvt. Ltd. from the petitioner - the reasons recorded did not show the required direct nexus or independent application of mind by the assessing officer to conclude that the petitioner's income had escaped assessment. The Court found the requirements precedent under Section 147 were not satisfied before issuing the Section 148 notice. [Paras 4, 5, 6, 11]

The notice under Section 148 was issued without satisfying the conditions precedent of Section 147 and is invalid.

Rational connection / live link between material and belief - reasons recorded cannot be supplemented by affidavit - Whether the reasons recorded adequately connected the petitioner's transactions with the alleged 'Entry Operator' and shell entity, and whether the assessing officer's reasons could be supplemented by the revenue's affidavit. - HELD THAT: - The Court examined the reasons and observed that the reasons did not allege or explain how M/s Magnum Tradex Pvt. Ltd. was connected to the named Entry Operator, nor did they set out material demonstrating that M/s Magnum Tradex was a shell entity rather than a bona fide purchaser. The Court emphasised settled law that the sufficiency of the assessing officer's reasons must be tested on the face of the reasons recorded and cannot be cured or supplemented by an affidavit or subsequent explanations filed by the revenue. Consequently, reliance on the reply affidavit to supply missing nexus or material was impermissible. [Paras 7, 8, 9, 10]

The reasons recorded lacked the requisite explanation and nexus, and could not be validated or improved upon by the revenue's affidavit.

Reopening of assessment - reason to believe - rational connection / live link between material and belief - Whether the assessing officer applied independent mind and made inquiries sufficient to form a bona fide belief that the transaction was not genuine. - HELD THAT: - The Court noted the reasons did not indicate any independent inquiry or application of mind by the assessing officer into the information received; the reasons merely recited the seizure, the statement of a third party, and transactional data from VAT returns. There was no material in the reasons showing the assessing officer had satisfied itself that the transaction was a paper transaction or that income of the assessee had escaped assessment. Absent such independent consideration, the formation of belief required by Section 147 was not established. [Paras 10, 11]

There was no independent application of mind reflected in the reasons; the assessing officer failed to form the requisite bona fide belief.

Final Conclusion: Petition allowed; the notice dated 30.03.2021 under Section 148 is quashed and the Order dated 24.02.2022 is set aside for failure to satisfy the jurisdictional requirements of Section 147.

Power of transfer under Section 127 - recording and communication of reasons for transfer - principles of natural justice - coordinated investigation / centralization of cases - Wednesbury unreasonableness - no fundamental right to be assessed in a particular locality - mala fide or arbitrary transfer

Power of transfer under Section 127 - coordinated investigation / centralization of cases - Wednesbury unreasonableness - Validity of the order transferring the appellant's income-tax case from Kolkata to Delhi under Section 127 upheld. - HELD THAT: - The Court held that exercise of power under Section 127 is an administrative exercise directed to facilitate assessment and coordinated investigation; interference by writ jurisdiction is limited and constrained by Wednesbury principles. The transfer followed issuance of a fresh show-cause notice setting out reasons, the appellant was given opportunity to respond and to be heard, and the authority recorded reasons in the transfer order explaining the necessity for centralization in the context of other related cases. The High Court's review of those reasons was confined to whether grounds for transfer existed and did not permit reappraisal of merits of the intended assessments. On that basis the appellate bench found adequate recorded reasons and no error in the decision-making process such as would merit quashing the transfer. [Paras 18, 22, 31, 34]

Order of transfer dated 23.02.2022 is valid and is upheld.

Recording and communication of reasons for transfer - principles of natural justice - Whether statutory requirement of reasons and observance of natural justice was satisfied in the fresh proceedings. - HELD THAT: - Relying on the requirement that reasons be recorded and the precedents that such reasons enable judicial challenge, the Court observed that the earlier order had been set aside for want of reasons and opportunity; the department thereafter issued a detailed show-cause notice and afforded personal hearing. The Court held that the appellant was precluded from re-opening the challenge that the show-cause was 'coloured by facts' because the fresh proceedings complied with the earlier directions and provided the appellant effective opportunity to place his case. [Paras 16, 27, 31, 33]

Requirements of recording reasons and affording opportunity to the appellant were met; the appellant's procedural challenge fails.

No fundamental right to be assessed in a particular locality - mala fide or arbitrary transfer - Whether the appellant has a vested right to be assessed at Kolkata or whether the transfer was mala fide/arbitrary. - HELD THAT: - The Court applied established authority that there is no fundamental right to be assessed in a particular area and that transfers under the statute are administrative. The record did not disclose mala fide or arbitrary exercise of power nor was such a plea properly pleaded or proved. The Court rejected the appellant's contention that he was entitled to assessment at Kolkata as a matter of right and found the allegation of mala fide to be unsubstantiated and specious. [Paras 14, 32, 33]

Appellant has no right to be assessed at a particular locality and the challenge on mala fides/arbitrariness fails.

Coordinated investigation / centralization of cases - Wednesbury unreasonableness - Whether the Court may examine merits of the underlying assessment or mobile-phone evidence when deciding validity of transfer. - HELD THAT: - The Court reiterated that judicial review of an administrative transfer must not convert the court into an appellate assessing authority; merits of the assessment and evidentiary disputes (including extent of material such as mobile-phone records) are outside the limited scope of writ review. The High Court's role is to test decision-making process and adequacy of reasons; it should refrain from detailed factual reappraisal that would prejudice the assessment in the transferee jurisdiction. [Paras 18, 22, 31]

Merits of assessment and detailed factual disputes are not to be adjudicated in the writ; such matters remain for the assessing officer in the transferee jurisdiction.

Power of transfer under Section 127 - Whether the appellant's contention that he was only a witness and thus his personal assessment could not be transferred was maintainable. - HELD THAT: - The Court found no material on record to accept the appellant's self-serving contention that he was only a witness and not otherwise connected; having regard to the material and reasons recorded, the contention was rejected. [Paras 29]

Contention that appellant was merely a witness is rejected; it does not invalidate the transfer.

Final Conclusion: The intra-court appeal is dismissed. The order transferring the appellant's case from Kolkata to Delhi under Section 127 is upheld; the writ challenge based on procedural infirmity, lack of reasons, mala fides, inconvenience and on merits of proposed assessments is rejected. No costs.

Power of revision under Section 263 - deemed dividend under Section 2(22)(e) - retrospective amalgamation and its effect on accumulated profits - plausible view doctrine in assessment - strict interpretation of deeming provisions

Power of revision under Section 263 - plausible view doctrine in assessment - Whether the Commissioner was justified in invoking jurisdiction under Section 263 to cancel the assessment on the ground that the assessing officer failed to include reserves and surplus of M.K. Shah Exports Ltd. when computing deemed dividend. - HELD THAT: - The Tribunal found on the material in the assessment records that the assessing officer had been fully aware of the controversy, had raised specific queries during the block assessment, had considered the assessee's detailed submissions and had recorded reasons for accepting the assessee's method of quantifying deemed dividend. Relying on the settled principle that where two plausible views exist and the assessing officer adopts one with reasons, such an order is not 'erroneous or prejudicial' so as to attract revision under Section 263, the Tribunal concluded that the twin tests for exercise of s.263 jurisdiction were not satisfied. The Court agreed with this conclusion, noting that the assessing officer took a considered and factually supported view and that mere disagreement by the Commissioner does not confer jurisdiction under Section 263.

The invocation of jurisdiction under Section 263 was unjustified and the Tribunal rightly set aside the revision order.

Retrospective amalgamation and its effect on accumulated profits - deemed dividend under Section 2(22)(e) - strict interpretation of deeming provisions - Whether the retrospective amalgamation order (with effect from 18.05.1998) required inclusion of reserves and surplus of M.K. Shah Exports Ltd. for computation of accumulated profits relevant to deemed dividend on the dates when loans/advances were made. - HELD THAT: - The Tribunal examined the legal import of deeming provisions and applied the rule of strict construction for such provisions. It noted that the assessing officer had considered authorities including a decision holding that a subsequent event of amalgamation, even if given retrospective effect, may not be significant for the purpose of quantifying deemed dividend at the time of advancing the loan. On the facts, the assessing officer accepted the assessee's computation based on the accumulated profits shown in the books of the transferor company as on the loan dates. The Court endorsed the Tribunal's view that the retrospective order of amalgamation did not automatically require recalculation of deemed dividend where the assessing officer had taken a reasoned view to the contrary.

Retrospective amalgamation did not compel a different quantification of deemed dividend in the circumstances and the assessing officer's approach was sustainable.

Reliance on precedents binding at the relevant time - deemed dividend under Section 2(22)(e) - Whether reliance on the earlier Calcutta High Court decision in M.K. Shah vs. CIT (reported in 277 ITR 128 (Cal)) by the assessing officer/tribunal was impermissible because the deemed dividend there was declared while in the present case it was not. - HELD THAT: - The Tribunal observed that on the date the Commissioner sought to exercise jurisdiction under Section 263, the Calcutta High Court decision in M.K. Shah vs. CIT was in force and binding on the Department; a subsequent reversal at a higher forum could not retrospectively invalidate the position when the Commissioner assumed jurisdiction. The assessing officer's application of the then-binding precedent formed part of a plausible, reasoned view. The Court agreed that reliance on a binding decision available at the relevant time does not render the assessment erroneous or prejudicial merely because factual distinctions were argued by the revenue.

Reliance on the Calcutta High Court decision was permissible in the circumstances and did not justify revision under Section 263.

Final Conclusion: The High Court upheld the Tribunal's order allowing the assessee's appeal, holding that the assessing officer had taken a plausible, reasoned view on the quantification of deemed dividend, that retrospective amalgamation did not mandate a different computation on the facts, and that the Commissioner lacked jurisdiction under Section 263; the revenue's appeal is dismissed.

Reopening of assessment under Section 148 of the Income Tax Act - opportunity to file objections in terms of GKN Driveshafts - requirement of a speaking order by the Assessing Officer - duty to furnish material to the assessee before hearing - right to personal hearing of authorised representative

Reopening of assessment under Section 148 of the Income Tax Act - opportunity to file objections in terms of GKN Driveshafts - requirement of a speaking order by the Assessing Officer - Assessment and penalty orders passed pursuant to notices dated 30.03.2021 are set aside and reassessment proceedings remanded for fresh consideration after affording objections and a speaking order. - HELD THAT: - The Court found that the Assessing Officer had not crystallised the exact amount said to have escaped assessment and that the procedure prescribed by the Supreme Court in GKN Driveshafts required the assessee to be given an opportunity to file objections to the notices issued under Section 148. In accordance with that principle the assessment orders and penalty orders set out in the earlier order are set aside. The petitioner is directed to file objections to the Section 148 notices within six weeks. The Assessing Officer must consider those objections, accord a personal hearing to the authorised representative, deal with the objections and pass a speaking order. A copy of the speaking order is to be furnished to the petitioner and, if aggrieved, the petitioner remains free to pursue remedies available in law. The Assessing Officer is to complete this exercise within six weeks of receipt of the objections. [Paras 14, 15, 16, 17, 19]

Assessment and penalty orders set aside; reassessment proceedings remitted for objections, personal hearing and a speaking order to be passed within stipulated time.

Duty to furnish material to the assessee before hearing - right to personal hearing of authorised representative - Any information or material available with the Assessing Officer must be furnished to the petitioner prior to inviting objections, and the authorised representative must be given personal hearing. - HELD THAT: - The Court directed that if the Assessing Officer has any information or material relied upon, it shall be furnished to the petitioner so that the petitioner has an opportunity to respond before filing objections. Thereafter the Assessing Officer shall invite objections, afford personal hearing to the authorised representative and pass a speaking order dealing with the objections. [Paras 17, 18]

Assessing Officer to furnish material before objections are invited and to accord personal hearing as part of the remand process.

Reopening of assessment under Section 148 of the Income Tax Act - The petitioner recorded a concession that it will not contend that the new reassessment regime applies, and that statement is taken on record. - HELD THAT: - Counsel for the petitioner conceded that, since reassessment proceedings have been taken under the old regime, the petitioner will not take the stand that the new reassessment regime is applicable. The Court recorded that concession and took it on record. [Paras 20]

Petitioner's concession not to advance the new reassessment regime is recorded.

Final Conclusion: The writ petitions are disposed of by setting aside the impugned assessment and penalty orders and remitting the matters to the Assessing Officer to consider objections filed by the petitioner, furnish any material relied upon, afford personal hearing and pass a speaking order within the time prescribed; the petitioner's recorded concession regarding the reassessment regime is taken on record.

Addition under section 68 as unexplained cash credit - reopening assessment under section 147 - best judgment assessment under section 144 - peak bank balance as taxable income - onus on assessee to establish genuineness and source of cash deposits

Addition under section 68 as unexplained cash credit - onus on assessee to establish genuineness and source of cash deposits - Validity of deletion by CIT(A) of addition made by AO under section 68 in respect of large cash deposits where assessee did not file return and did not furnish satisfactory explanation during assessment proceedings - HELD THAT: - The Tribunal found that the assessee had not filed the return for the year and had failed to respond to notices during assessment proceedings; large cash deposits in the ICICI Bank account were prima facie unexplained. The AO reopened the assessment under section 147 and made addition under section 68 after noting absence of explanation and citing DGCEI investigations revealing shroff-operated accounts with huge cash deposits. The CIT(A) deleted the addition by taking the peak bank balance after examination of materials before him but did not record detailed findings explaining why the evidences lacked genuineness or creditworthiness or why the AO's conclusion was to be displaced. The Tribunal held that, on the material on record and in view of absence of necessary explanation from the assessee, the CIT(A) erred in deleting the addition; the onus remained on the assessee to establish source and genuineness of the deposits, which was not discharged, and therefore the AO's addition was restored. The Tribunal further observed that the case law cited for the assessee was distinguishable on facts and that the peak-balance approach adopted by the CIT(A) was not warranted in the circumstances where the deposits were unexplained and connected to the DGCEI findings. [Paras 3, 5, 7, 12]

Deletion by the CIT(A) set aside; addition under section 68 restored to the assessing officer's order for the relevant assessments.

Reopening assessment under section 147 - best judgment assessment under section 144 - Whether failure to remit bank statement and other documents to AO for verification during appellate proceedings vitiated the CIT(A)'s deletion - HELD THAT: - The Revenue argued that the assessee had furnished ICICI bank statements before the CIT(A) which were not remanded to the AO for verification and that the CIT(A) thereby deprived the AO of a fair opportunity to scrutinize the material. The Tribunal noted that the CIT(A) did not record detailed findings to justify deletion in the face of material shortcomings in the assessee's case and lack of explanation during assessment; having found that the assessee did not substantiate the source or genuineness of deposits, the Tribunal allowed the Revenue's appeals. Implicitly, the Tribunal treated the absence of AO verification and the CIT(A)'s limited reasoning as factors militating against the CIT(A)'s order of deletion and in favour of restoring the AO's addition. [Paras 2, 7, 8]

CIT(A)'s deletion, without remand for verification and without detailed findings, was set aside; appeals allowed in favour of Revenue.

Final Conclusion: All Revenue appeals for the assessment years 2006-07, 2007-08 and 2008-09 are allowed; the deletions made by the CIT(A) of the additions under section 68 are set aside and the assessing officer's additions are restored.

Penalty under Section 270A of the Income-tax Act - under-reported income - determination based on an estimate by the District Valuation Officer - exclusion of estimated additions from under-reported income under sub section (6)

Penalty under Section 270A of the Income-tax Act - determination based on an estimate by the District Valuation Officer - under-reported income - exclusion of estimated additions from under-reported income under sub section (6) - Whether penalty under Section 270A can be sustained where the only basis for addition is a valuation estimate made by the DVO. - HELD THAT: - The Tribunal examined the record and the DVO report and found that the value determined by the DVO was itself an estimate arrived at by considering rates of nearby properties and averaging them. Section 270A penalises under-reporting and sub-section (6)(b) excludes from 'under reported income' amounts determined on the basis of an estimate, provided the accounts are correct and complete to the satisfaction of the Assessing Officer. Since the impugned addition rested solely on the DVO's estimate and not on a conclusive discrepancy in the assessee's accounts, the addition could not constitute 'under reported income' for the purpose of imposing penalty under Section 270A. The Tribunal therefore concluded that the statutory exclusion applied and the penalty could not be sustained. [Paras 3, 4]

Penalty imposed under Section 270A deleted and the appeal allowed.

Final Conclusion: The Tribunal held that an addition founded only on a valuation estimate by the DVO falls within the exclusion in sub section (6) and therefore cannot form the basis for penalty under Section 270A; the penalty was deleted and the appeal allowed.

Penalty under section 271(1)(c) - allowability of deduction under section 35D - capitalisation versus revenue expenditure (rent and taxes) - doctrine of consistency

Penalty under section 271(1)(c) - allowability of deduction under section 35D - doctrine of consistency - Whether the penalty levied under section 271(1)(c) in respect of the disallowance under section 35D survives after the addition under section 35D was deleted by the appellate authorities. - HELD THAT: - The Tribunal noted that the identical claim under section 35D had been examined and deleted in the assessee's own proceedings by the coordinate Benches and that the High Court had set the matter back to the Tribunal which, by its common order, upheld deletion. The Appellate authorities applied the principle that where the initial claim has been probed and allowed, subsequent disallowance is constrained by the doctrine of consistency, particularly because section 35D spreads the expenditure over multiple years and the first year of claim is determinative. In these circumstances the deletion of the addition on merits removes the foundation for invoking penalty under section 271(1)(c) as there was no sustained concealment or furnishing of inaccurate particulars justifying penalty once the addition was held to be not tenable. [Paras 2, 4, 6]

Penalty under section 271(1)(c) relating to the disallowance under section 35D is deleted.

Penalty under section 271(1)(c) - capitalisation versus revenue expenditure (rent and taxes) - Whether the penalty under section 271(1)(c) survives in respect of the addition of rent and taxes which was deleted on appeal. - HELD THAT: - The Tribunal considered the facts that the assessee repeatedly incurred rent and taxes on land where activity had not commenced and that such payments were recurring and did not create any enduring advantage or fresh fixed asset. The coordinate Bench in the quantum appeal held these expenditures to be revenue in nature and upheld the deletion of the addition. Since the addition was thus set aside on merits, the Appellate Tribunal held that the consequential penalty under section 271(1)(c) could not subsist; the basis for imposing penalty having been removed by the deletion of the addition. [Paras 2, 4, 6]

Penalty under section 271(1)(c) relating to the disallowance of rent and taxes is deleted.

Final Conclusion: The appeal filed by the Revenue is dismissed; consequentially the penalties under section 271(1)(c) impugned in respect of the deletions made in the quantum proceedings for AY 2005-06 are deleted.

Condonation of delay - extension of limitation due to COVID-19 - revision under section 263 - erroneous and prejudicial to the interests of the revenue - Explanation 2 to section 263 - adequacy of inquiries versus lack of inquiry - assessing officer's plausible view

Condonation of delay - extension of limitation due to COVID-19 - Delay in filing the appeal was condoned - HELD THAT: - The appeal was filed 343 days late during the COVID-19 period. Relying on the Supreme Court dispensation extending limitation (limitation falling between 15-3-2020 and 14-3-2021 deemed to have 90 days from 15-3-2021), the Tribunal found no objection from Revenue and formally condoned the delay, allowing the appeal to be adjudicated on merits. [Paras 2]

Delay condoned and appeal admitted for adjudication on merits.

Revision under section 263 - erroneous and prejudicial to the interests of the revenue - Explanation 2 to section 263 - adequacy of inquiries versus lack of inquiry - assessing officer's plausible view - Revisional order under section 263 setting aside assessment was unsustainable and is quashed - HELD THAT: - The Tribunal examined whether the Assessing Officer (AO) had failed to make inquiries or verifications such that the assessment was 'erroneous' and prejudicial to revenue. The record showed the AO issued notice under section 142(1), elicited replies and received ledger confirmations, bank statements and ITR in respect of creditors, and accepted the genuineness of loans after considering material on record. Judicial precedents distinguish inadequate inquiry from lack of inquiry and hold that a revisional power under section 263 cannot be used to substitute the Commissioner's view for a plausible view taken by the AO. Further, the Principal CIT relied on Explanation 2 in his final order though Explanation 2 was not invoked in the show-cause notice, depriving the assessee of opportunity on that ground. In these circumstances, and since the AO had taken one of the possible views after inquiries, the revisional order was held to be unjustified. [Paras 11, 20, 21]

Revision under section 263 set aside; assessment framed under section 143(3) is not erroneous or prejudicial to revenue.

Final Conclusion: The Tribunal condoned the delay in filing the appeal and on merits quashed the Principal CIT's revision under section 263, holding that the AO had made inquiries and taken a plausible view and that invocation of Explanation 2 without prior notice was impermissible; the assessee's appeal is allowed.

Penalty under section 271(1)(b) - Penalty under section 271F - Reasonable cause - Section 273B - penalty not to be imposed in certain cases

Penalty under section 271(1)(b) - Penalty under section 271F - Reasonable cause - Section 273B - penalty not to be imposed in certain cases - Deletion of penalties levied under sections 271(1)(b) and 271F for non-compliance/non-filing where the assessee pleaded reasonable cause. - HELD THAT: - The Tribunal held that imposition of penalties under sections 271(1)(b) and 271F is discretionary (the statutory language uses "may") and thus capable of being avoided where the assessee proves a "reasonable cause". Section 273B operates to prohibit imposition of specified penalties where reasonable cause is established, and penalties under sections 271(1)(b) and 271F fall within its scope. In the present case the assessee had explained non-filing/non-compliance on the basis that total income was below the taxable limit and on account of the accountant's prolonged illness; those explanations were found to disclose a reasonable cause. The Assessing Officer and the CIT(A) did not adequately apply Section 273B in considering the explanation. Applying the statutory scheme and the facts, the Tribunal concluded that the penalties should not have been levied and therefore deleted both penalties. [Paras 7, 8, 9]

Penalties under sections 271(1)(b) and 271F are deleted as the assessee proved reasonable cause and Section 273B precludes imposition of those penalties.

Final Conclusion: The appeals are allowed; the penalties under sections 271(1)(b) and 271F for A.Y 2011-12 are deleted.

Taxability of share premium under Section 56(2)(viib) - proviso excluding transactions between a venture capital undertaking and a venture capital fund - meaning of "venture capital company", "venture capital fund" and "venture capital undertaking" as per the Explanation to clause (23FB) of Section 10 - relevance and admissibility of a valuer's report vis-a -vis AO's powers to substitute fair market value - allowability of professional fees as business expenditure under Section 37(1)

Taxability of share premium under Section 56(2)(viib) - proviso excluding transactions between a venture capital undertaking and a venture capital fund - meaning of "venture capital company", "venture capital fund" and "venture capital undertaking" as per the Explanation to clause (23FB) of Section 10 - Deletion of addition made by AO under Section 56(2)(viib) on account of share premium received on issue of shares. - HELD THAT: - Tribunal upheld the finding of the CIT(A) that the assessee was a venture capital undertaking and the investor, Forum Synergies India Trust, was a SEBI registered venture capital fund; those findings were not shown by the Revenue to be incorrect. The proviso to Section 56(2)(viib) excludes from its ambit consideration received by a venture capital undertaking from a venture capital company or fund. The AO's alternative valuation under Rule 11UA and consequent addition were rendered inapplicable once the statutory proviso applied. Revenue did not demonstrate any error in the CIT(A)'s acceptance of the documentary evidence and material relied upon to establish the character of the parties, nor did it show that the assessee's activities fell within the statutory negative list. On these conclusions, there was no reason to interfere with the deletion of the addition. [Paras 11]

Addition under Section 56(2)(viib) deleted; CIT(A) order upheld.

Allowability of professional fees as business expenditure under Section 37(1) - relevance of nature of expense (revenue v. capital) for allowability - Deletion by CIT(A) of disallowance of professional fee payment of Rs.1,36,000 claimed under Section 37(1). - HELD THAT: - CIT(A) found the payment to Vineet K. Gupta & Co. to be professional fees that included monthly retainership and incurred in the regular course of business, and therefore revenue in nature and allowable under Section 37(1). Revenue failed to point to any infirmity in that finding or demonstrate that the expense was capital in nature. In absence of any shown error in the appellate finding on the character and purpose of the expense, the Tribunal declined to interfere with the deletion of the addition. [Paras 16]

Disallowance of Rs.1,36,000 deleted; CIT(A) order upheld.

Final Conclusion: Revenue's appeal dismissed; the Tribunal upheld the CIT(A)'s deletion of the addition under Section 56(2)(viib) in respect of the share premium and the deletion of the disallowance of the professional fee under Section 37(1).

Addition under section 69A as unexplained cash - cash flow statement and peak cash shortage - opening cash-in-hand as source to meet bank deposits - onus on the assessee to substantiate bank deposits from own past savings - remand for verification and limited reconsideration by Assessing Officer - exemption under section 10(14)(i) in respect of conveyance allowance

Addition under section 69A as unexplained cash - cash flow statement and peak cash shortage - opening cash-in-hand as source to meet bank deposits - onus on the assessee to substantiate bank deposits from own past savings - remand for verification and limited reconsideration by Assessing Officer - Whether the addition of Rs. 2,11,505/- confirmed by the CIT(A) on account of peak cash shortage should be adjudicated afresh by allowing the assessee to substantiate opening cash-in-hand from past savings. - HELD THAT: - The Tribunal found merit in the assessee's submission that, where an assessee is a regular taxpayer with past years' savings, she must be afforded an opportunity to demonstrate availability of opening cash and bank savings to explain deposits during the year. The Assessing Officer had initially made a larger addition under section 69A for unexplained bank deposits, which the CIT(A) curtailed relying on the assessee's revised cash flow statement showing a negative peak balance of Rs. 2,11,505/-. The Bench rejected the Revenue's contention that the assessee had conceded the figure during appellate proceedings and emphasised that any opening cash relied upon must be from the assessee's own past income/savings and must not include transactions with relatives. The onus remains on the assessee to substantiate bank deposits by documentary evidence; once such explanation and documents are filed, the AO must examine them and decide in accordance with law after providing a reasonable opportunity. [Paras 6, 11]

Matter set aside to the file of the Assessing Officer for limited examination of the quantum and availability of opening cash-in-hand and its consideration in the cash flow statement; grounds 1 and 2 allowed for statistical purposes.

Concession during appellate proceedings - Whether a purported concession by the assessee's representative during appellate proceedings precluded the assessee from seeking to substantiate opening cash-in-hand before the Tribunal. - HELD THAT: - The Tribunal examined the record and the submissions made before the CIT(A) and concluded that there was no binding concession by the assessee's counsel which should foreclose the assessee from presenting evidence to establish opening cash-in-hand. The Bench held that allowing the assessee to file supporting documents and having the AO test such evidence is consistent with the principle that only real income is taxable and the Revenue must permit explanation supported by documentation. [Paras 11]

The Revenue's contention of an earlier concession is not accepted; the assessee is permitted to substantiate opening cash-in-hand and the matter is remanded to the AO.

Exemption under section 10(14)(i) in respect of conveyance allowance - requirement to substantiate expenditure for allowance - remand for verification and limited reconsideration by Assessing Officer - Whether the disallowance of conveyance allowance claimed as exempt under section 10(14)(i) should be sustained or the assessee be given opportunity to produce supporting documents. - HELD THAT: - The CIT(A) upheld the disallowance on the ground that the assessee failed to produce documentary evidence of actual expenditure, corresponding withdrawals, details of duties performed, dates and places of travel and other particulars necessary to substantiate the exemption. Before the Tribunal the assessee sought an opportunity to place documents (payment proofs for fuel and driver salary) which the CIT(A) had not considered. The Revenue raised no objection to permitting further examination. In these circumstances the Tribunal directed that the AO examine the submissions and documentation afresh, after giving the assessee a reasonable opportunity, and decide the claim as per law. [Paras 14, 16]

Matter set aside to the file of the Assessing Officer for re-examination of the claim for exemption under section 10(14)(i) after considering the additional submissions and documents; ground dismissed by CIT(A) is remanded for fresh adjudication.

Consolidation of common issues and mutatis mutandis application - remand for verification and limited reconsideration by Assessing Officer - Whether the directions and findings in the lead appeals apply to the remaining consolidated appeals involving identical facts and common issues. - HELD THAT: - The parties agreed, and the Tribunal recorded, that the appeals involve common questions of law and fact and that the findings in the lead matters (regarding unexplained deposits, cash flow reconciliation and conveyance allowance) are applicable to the other appeals, save for differences in amounts. Accordingly, the Tribunal disposed of the remaining appeals by applying the same directions and remands mutatis mutandis. [Paras 2, 17]

All other appeals disposed of by applying the Tribunal's directions in the lead matters; matters remanded to the AO for limited verification as directed.

Dismissal of ground as infructuous - Whether the ground challenging addition on the basis of completed assessment and seized material (ground no. 3) requires adjudication. - HELD THAT: - No arguments were advanced before the Tribunal on this ground. In the absence of any submissions, the Tribunal treated the ground as infructuous. [Paras 12]

Ground no. 3 dismissed as infructuous.

Final Conclusion: The Tribunal allowed limited relief to the assessees by setting aside relevant parts of the assessments to the file of the Assessing Officer for verification of opening cash-in-hand (to be from the assessee's own past savings and excluding intra-family transactions) and for reconsideration of the conveyance allowance claim after the assessee is given reasonable opportunity to produce supporting documents; other related grounds were disposed of accordingly.

Reopening of assessment - borrowed satisfaction - sanction for reassessment - supply of reasons to believe - unexplained cash credits arising from accommodation entries - opportunity to produce witnesses/beneficiaries and service of summons

Reopening of assessment - borrowed satisfaction - sanction for reassessment - supply of reasons to believe - Validity of reassessment proceedings initiated on the basis of information from investigation wing, including challenge of borrowed satisfaction, adequacy of sanction and whether copy of reasons to believe was furnished before notice under section 148. - HELD THAT: - The Tribunal accepted the finding of the Commissioner (Appeals) that the Assessing Officer recorded reasons linked to concrete material received from the investigation wing and FIU, and that the sanction for reopening was granted on the basis of the approval folder and supporting investigation files rather than mechanically. The CIT(A) recorded that the reasons recorded by the AO were part of the approval file sent to the sanctioning authority and that transaction details (including substantial single-party transactions and the fact that no return was filed) furnished a sufficient basis for sanction. The CIT(A) also noted from the AO's order-sheet that a copy of the reasons to believe was provided to the assessee's authorised representative. On these bases the Tribunal held that the reassessment was not vitiated by borrowed satisfaction, lack of proper sanction, or failure to furnish reasons prior to issuance of notice, and dismissed the related grounds of appeal. [Paras 5, 6, 7]

Reassessment proceedings were valid; grounds 1-5 are dismissed.

Unexplained cash credits arising from accommodation entries - opportunity to produce witnesses/beneficiaries and service of summons - Sustained addition of unexplained deposits assessed as undisclosed income where assessee admitted use of account for accommodation entries but failed to substantiate claim, produce beneficiary details or secure appearance of the alleged principal. - HELD THAT: - The assessee admitted opening and operating a bank account for accommodation entries and claimed a small commission but did not maintain records or furnish details of beneficiaries. The AO issued summons under section 131 to the named person but service attempts failed; the assessee explained an inability to trace parties after several years. The CIT(A) concluded that the AO had afforded ample opportunity to the assessee to produce the alleged principal and beneficiaries and that in absence of corroborative evidence, treating the deposits as unexplained cash credits was warranted. The Tribunal found no reason to interfere with the CIT(A)'s conclusion that the addition was sustainable given the assessee's failure to substantiate his case. [Paras 8, 9]

Addition of deposits as unexplained income upheld; grounds 6-10 are dismissed.

Final Conclusion: The Tribunal affirmed the CIT(A)'s order: reassessment was valid and the addition treating deposits as unexplained income was sustained; the assessee's appeal is dismissed.

Binding effect of appellate orders on subordinate authorities - requirement of an express stay to suspend operation of an appellate order - principle of judicial discipline - effect of mere filing of an appeal or revision on implementation of appellate orders - option to redeem confiscated goods under Section 125(1) and 125(3) of the Customs Act, 1962 - release of goods on verification of payment of redemption fine

Binding effect of appellate orders on subordinate authorities - requirement of an express stay to suspend operation of an appellate order - effect of mere filing of an appeal or revision on implementation of appellate orders - principle of judicial discipline - Whether respondent No.5 could refuse to release the petitioner's goods after the Commissioner (Appeals) had allowed the appeal and directed release, merely because the Department had preferred a revision or appeal against that order. - HELD THAT: - The Court applied settled precedent that orders of a higher appellate authority must be followed unreservedly by subordinate authorities unless their operation is stayed by a competent forum. Mere filing of an appeal or revision does not operate as a stay or suspension of the operative direction in the appellate order; if the Department considered the appellate order ought not to be implemented pending its remedy, it was required to obtain an express stay from the appropriate forum. Failure to follow an appellate order by subordinate officers undermines administrative discipline and causes undue harassment. Applying these principles to the facts, the communication dated 15.12.2022 withholding clearance on the ground that the Department had preferred a revision (without any stay) was impermissible and contrary to the binding effect of the Commissioner (Appeals)' order directing release on payment of duties, penalty and redemption fine. [Paras 12, 13, 18]

Order dated 15.12.2022 insofar as it declined release of the goods despite the Commissioner (Appeals)' direction was set aside; subordinate authorities were directed to comply with the appellate order unless and until it is stayed.

Option to redeem confiscated goods under Section 125(1) and 125(3) of the Customs Act, 1962 - release of goods on verification of payment of redemption fine - Whether the petitioner, having paid the redemption fine and other dues, was entitled to release of the goods and what verification was required before release. - HELD THAT: - The appellate authority had directed release of the goods on payment of applicable duties, penalty and redemption fine. The petitioner produced evidence of payment. In the absence of any stay of the appellate order, respondent No.5 was bound to release the goods. The Court therefore directed respondents to release the goods forthwith upon due verification of payment of the redemption fine, thereby requiring only ministerial verification of the payment before implementing the appellate direction. [Paras 6, 7, 19]

Petitioner's request for clearance shall be acceded to and the goods released immediately after verification of payment of the redemption fine and other applicable dues.

Final Conclusion: Writ petition allowed; order dated 15.12.2022 refusing release of the petitioner's goods set aside. Respondents directed to release the goods forthwith upon due verification of payment of the redemption fine and applicable duties/penalty, there being no stay of the Commissioner (Appeals)' order; no order as to costs.

Regularization of EPCG authorization - Status Holder Incentive Scheme (SHIS) - simultaneous availment - interpretation of Foreign Trade Policy by DGFT - quashing of administrative order

Regularization of EPCG authorization - Status Holder Incentive Scheme (SHIS) - simultaneous availment - quashing of administrative order - Validity of Order NO. 09/(10)ADG (Adj)/DRI/N. Delhi/2020-21 dated 31.08.2020 in relation to the petitioner's exit from EPCG authorizations and subsequent availment of SHIS scrips - HELD THAT: - The Court recorded that the petitioner had voluntarily exited the EPCG scheme by paying the customs duty with interest in terms of the Hand Book of Procedure and obtained exit letters from the Regional Licensing Authorities prior to issuance of SHIS scrips. The Directorate General of Foreign Trade (DGFT) in its counter-affidavit and the Directorate of Revenue Intelligence by revised instructions accepted that regularization of EPCG authorizations followed by availment of SHIS did not violate extant policy and that DGFT is the competent authority to interpret and regularize such matters under the FTP. The Court relied on the administratively accepted position and the principle, as explained in Titan Medical Systems Pvt. Ltd., that where the licensing/administrative authority has regularized or not questioned an authorization, revenue authorities cannot sustain a contrary claim based on alleged misrepresentation. In view of DGFT's position and the DRI's revised stand, the Court found no basis to sustain the impugned administrative order and therefore allowed relief in terms of the challenge to that order.

Impugned Order NO. 09/(10)ADG (Adj)/DRI/N. Delhi/2020-21 dated 31.08.2020 is quashed and the writ petition is allowed insofar as prayer (b) is concerned.

Final Conclusion: Writ petition allowed in part: the challenge to the administrative Order dated 31.08.2020 is upheld and that order is quashed; challenge to Para C of Public Notice 30/2015-2020 was not pressed.

Forgery of documents and offences under Indian Penal Code - Jurisdiction to investigate and prosecute under IPC versus Customs Act - Concurrent applicability of Customs Act and IPC - Validity of cognizance and summoning by criminal court on charge-sheet - Requirement of sanction for prosecution under Customs regime

Forgery of documents and offences under Indian Penal Code - Jurisdiction to investigate and prosecute under IPC versus Customs Act - Validity of cognizance and summoning by criminal court on charge-sheet - Concurrent applicability of Customs Act and IPC - Whether the CBI and the criminal court had jurisdiction to investigate and take cognizance under the IPC for alleged forging of shipping bills and related offences, notwithstanding overlapping offences under the Customs Act, and whether the proceedings require quashing. - HELD THAT: - The court found that the core allegation concerns forging of shipping bills and related offences such as cheating, which are not offences exclusively defined under the Customs Act. The judgment notes that while certain misconduct may also attract liabilities under the Customs Act, forgery and cheating fall within the ambit of the IPC. The presence of overlap between offences under a special statute and the IPC does not preclude registration of an FIR, investigation by a police agency (here the CBI) for IPC offences, or cognizance by a criminal court on a charge-sheet filed after investigation. The decision in the Union of India v. Ashok Kumar Sharma case relied upon by the petitioner was held distinguishable because that case concerned offences squarely covered by a special statute. Applying these principles, the court concluded that the CBI was justified in investigating the alleged forgery and filing a charge-sheet under Sections 120-B read with 420, 467, 468 and 471 IPC and that the criminal court rightly took cognizance and issued summons; accordingly, there was no basis to quash the proceedings. [Paras 21, 22, 23]

The petition challenging jurisdiction and seeking quashing of the charge-sheet and summoning order is dismissed; the trial court may proceed.

Final Conclusion: Petition under Section 482 Cr.P.C. dismissed; no interference with CBI investigation or the criminal court's cognizance and summons; trial to continue. Interim order, if any, vacated.

Binding nature of a CoC approved resolution plan - limited judicial review under Section 30(2) - maximisation of value of corporate debtor within CIRP timelines - remand of resolution plan for reconsideration by CoC

Binding nature of a CoC approved resolution plan - limited judicial review under Section 30(2) - Validity of the Adjudicating Authority's order sending back a CoC approved resolution plan for reconsideration before the CoC when no non compliance with Section 30(2) was alleged - HELD THAT: - The Tribunal held that a resolution plan approved by the Committee of Creditors is binding inter se the CoC and the successful resolution applicant and that the adjudicating authority's power of review is limited to verifying compliance with the requirements of Section 30(2). Reliance was placed on the law in Ebix Singapore to the effect that, absent a ground showing that the plan fails to meet the statutory parameters under Section 30(2), the CoC's commercial decision approving a plan must be respected. The Tribunal found no contention or material establishing that the approved plan violated Section 30(2) and observed that permitting the CoC to revisit its approval merely because higher offers surfaced after approval would allow an open ended process inimical to the time bound scheme of the IBC. Consequently, remitting a compliant CoC approved plan for reconsideration in the absence of statutory non compliance was held to be erroneous. [Paras 15, 16, 25]

Order remitting the CoC approved plan for reconsideration was set aside; the Adjudicating Authority must decide the pending application for approval of the plan.

Maximisation of value of corporate debtor within CIRP timelines - remand of resolution plan for reconsideration by CoC - Whether the Adjudicating Authority was justified in permitting reconsideration of the plan on the ground that improved offers emerged after the CoC's approval, particularly in the context of COVID 19 and changed market conditions - HELD THAT: - The Tribunal acknowledged that maximisation of value is an object of the CIRP, but emphasised that such maximisation must be achieved within the statutory timelines. While changed market conditions (including post pandemic improvements) and subsequent higher offers were relied upon by the CoC and some creditors, the Tribunal held that allowing reconsideration on that ground would permit an unending and time consuming reopening of the resolution process. The court distinguished situations where a plan is shown to be non compliant with Section 30(2), noting that in such cases remand is permissible. In the present matter there was no finding of procedural breach or manifest error justifying reconsideration; hence the CoC could not legitimately change its earlier approval merely because higher offers had later emerged. [Paras 17, 24, 25]

Reconsideration on account of post approval offers and changed market conditions was not justified; the Adjudicating Authority's direction to invite fresh offers was erroneous.

Remand of resolution plan for reconsideration by CoC - Direction to the Adjudicating Authority to pass a fresh order on IA No./851/AHM/NCLT/2020 - HELD THAT: - The Tribunal set aside the impugned order dated 06.09.2022 and remitted the matter to the Adjudicating Authority with a mandatory direction to decide the pending application for approval of the resolution plan. The Tribunal noted the long pendency of the plan since 2020 and imposed a three month timeline for the Adjudicating Authority to pass the final order upon production of a copy of this judgment. [Paras 27]

Matter remitted to the Adjudicating Authority to decide IA No./851/AHM/NCLT/2020 within three months; appeal allowed.

Final Conclusion: The impugned order remitting the CoC approved resolution plan for reconsideration was set aside. The Tribunal held that absent non compliance with Section 30(2) the CoC's approval is binding and cannot be reopened simply because higher offers emerged later; the matter is remitted to the Adjudicating Authority to decide the pending application for approval of the plan within three months.

Validity of recall of production warrant - Power to arrest and take into custody under the Prevention of Money Laundering Act during inquiry - Scope of ECIR registration vis a vis FIR and requirement of formal complaint - Interpretation of provisions empowering inquiry, arrest and attachment under PMLA - Revisional jurisdiction to set aside orders of the Special Court

Validity of recall of production warrant - Revisional jurisdiction to set aside orders of the Special Court - Order of the Learned Special Court dated 21.01.2023 recalling the production warrant, refusing custody to the Enforcement Directorate and directing release of the accused was legally unsustainable and liable to be set aside. - HELD THAT: - The High Court examined the order of the Learned Special Court which had recalled the production warrant and released the accused after construing the law in light of certain paragraphs of the Supreme Court's decision. The High Court found that the Special Court had misapplied the relevant reasoning and failed to take into account the scheme of the Prevention of Money Laundering Act and the observations in paragraphs 323 and 324 of the Supreme Court's judgment which explain the legislative scheme permitting inquiry and certain arrest/custody powers during inquiry under the PMLA. Having regard to those provisions and the proper legal approach to powers exercised under the PMLA, the High Court concluded that the foundation and conclusion of the Special Court's order were bad in law. Exercising revisional power, the High Court set aside the impugned order and allowed the revisional petition.

Order dated 21.01.2023 of the Learned Special Court is set aside and CRR 263 of 2023 is allowed.

Scope of ECIR registration vis a vis FIR and requirement of formal complaint - Power to arrest and take into custody under the Prevention of Money Laundering Act during inquiry - Interpretation of provisions empowering inquiry, arrest and attachment under PMLA - Contention that an ECIR can be registered or that the Enforcement Directorate cannot pursue investigation until finality is attained in criminal proceedings was rejected; authorities under PMLA may conduct inquiry and exercise arrest/custody powers in the inquiry stage as contemplated by the statute. - HELD THAT: - The Court considered submissions that ECIR registration and consequent action by the Enforcement Directorate are permissible only after finality in criminal proceedings. Having regard to the scheme of the PMLA and the Supreme Court's elucidation in paragraphs 323-324 regarding the dual role of authorities under the Act - to conduct inquiry for attachment/adjudication and to use inquiry materials for prosecution where warranted - the High Court held that the opposite parties' interpretation was not acceptable. The Court observed that the statute contemplates inquiries and, in appropriate cases and subject to statutory safeguards and objective reasons, arrest or custody may follow at the inquiry stage; consequently, the Special Court's approach that arrested the ED's investigative powers until the conclusion of other criminal proceedings was legally incorrect.

The submission that ECIR-based action is impermissible until finality of criminal proceedings is rejected; the Special Court's order based on that premise is set aside.

Remedial direction to restore custody for prosecution/production - Direction that the Enforcement Directorate shall take the accused into custody and produce them before the Learned Special Court by 3 p.m., with liberty to seek custody, was issued and implemented by the High Court. - HELD THAT: - Having set aside the Special Court's order, the High Court issued a consequential directive requiring the Enforcement Directorate to take the accused into custody and produce them before the Learned Special Court by the specified time and allowed the ED to advance applications for custody as necessary. This remedial direction implements the Court's decision restoring the position prior to the recalled production warrant and ensures immediate placement of the accused before the forum competent to hear custodial applications.

Enforcement Directorate directed to take accused into custody and produce them before the Learned Special Court by 3 p.m., with liberty to advance prayers for custody.

Final Conclusion: The revisional petition is allowed; the Special Court's order dated 21.01.2023 recalling the production warrant and directing release of the accused is set aside as legally unsustainable in light of the PMLA's scheme and relevant Supreme Court discussion, and the Enforcement Directorate is directed to take custody of the accused and produce them before the Special Court for consideration of custody.

Scheduled offences - Section 45 PMLA - twin conditions for grant of bail - Section 72 of the Information Technology Act - breach of confidentiality and privacy - Section 120B IPC - punishment for criminal conspiracy - Section 420 IPC - cheating and dishonest inducement - Section 13(1)(d) and 13(2) of the Prevention of Corruption Act - criminal misconduct by a public servant - Proceeds of crime under PMLA - Prima facie satisfaction for bail under PMLA

Section 72 of the Information Technology Act - breach of confidentiality and privacy - Scheduled offences - Whether the ingredients of Section 72 IT Act are made out against the applicant as a scheduled offence under PMLA. - HELD THAT: - The court examined Section 72 which penalises disclosure by a person acting in pursuance of powers conferred under the IT Act or rules thereunder. It found that neither the applicant nor NSE was vested with powers under the IT Act nor were they acting pursuant to such powers. The contract permitted recording of conversations and recording per se (sans consent) would fall, if at all, under the Telegraph Acts rather than Section 72. On the material before the court, invocation of Section 72 as a scheduled offence under PMLA is misplaced and its ingredients are not established prima facie. [Paras 16, 17, 18, 20]

Section 72 IT Act is not made out against the applicant and does not qualify as a scheduled offence in the present case.

Section 120B IPC - punishment for criminal conspiracy - Section 420 IPC - cheating and dishonest inducement - Scheduled offences - Whether the offences under Section 120B IPC read with Section 420 IPC are made out against the applicant as scheduled offences for attracting PMLA. - HELD THAT: - The court considered whether criminal conspiracy (section 120B) and cheating (section 420) are established prima facie. It observed that the prosecution's own pleadings and remand applications consistently treat section 120B as linked with sections 409/420 and not as an independent standalone scheduled offence. Material showed that call-recording at NSE pre-dated ISEC's engagement (recording existed since 1997), undermining the existence of an agreement evidencing criminal intent under section 120A/120B. As to section 420, the court recited the ingredients requiring cheating and dishonest inducement to deliver property; no complaint, victim or allegation of deception causing delivery of property by the applicant was shown. The documents disclosed that NSE and its management were aware that the scope included electronic monitoring. On these facts, the elements of section 120B read with 420 IPC are not made out prima facie. [Paras 33, 34, 35, 38, 40]

Prima facie no offence under Section 120B read with Section 420 IPC is established against the applicant.

Section 13(1)(d) and 13(2) of the Prevention of Corruption Act - criminal misconduct by a public servant - Whether the ingredients of criminal misconduct under Section 13(1)(d) read with Section 13(2) PC Act are made out against the applicant. - HELD THAT: - The court applied the settled tests: (i) whether the accused is a public servant, (ii) whether corrupt or illegal means were used or position abused, and (iii) whether any valuable/pecuniary advantage was obtained. The court noted the Division Bench stay of an earlier Single Judge order holding NSE to be a public authority, and that NSE is not established to be a public authority; consequently the applicant is not shown to be a public servant within the PC Act. Further, there is no material demonstrating that the applicant obtained any pecuniary advantage or that she abused a public office. On the record, the elements of Section 13(1)(d)/13(2) are not made out prima facie. [Paras 41, 42, 43, 44, 45]

Section 13(1)(d) read with Section 13(2) PC Act is not established against the applicant.

Proceeds of crime under PMLA - Scheduled offences - Whether, on the material, proceeds of crime under PMLA are shown to have been generated and whether PMLA is attracted to the case. - HELD THAT: - PMLA applies where property has been derived or obtained as a result of a scheduled offence and any process or activity connected with such proceeds is shown. The court held that since none of the scheduled offences (Section 72 IT Act, Section 120B r/w 409 & 420 IPC, Section 13 PC Act) are made out prima facie, there is no occasion to infer acquisition or retention of 'proceeds of crime' as defined under PMLA. No material was produced showing the applicant derived or concealed proceeds of crime or projected them as untainted property. Accordingly, the provisions of PMLA are not attracted prima facie. [Paras 46, 50, 51, 52]

PMLA is not attracted to the present case on the prima facie material; proceeds of crime are not established.

Section 45 PMLA - twin conditions for grant of bail - Prima facie satisfaction for bail under PMLA - Whether the twin conditions under Section 45 PMLA for grant of bail are satisfied and whether bail should be granted to the applicant. - HELD THAT: - Section 45 requires (i) opportunity to Public Prosecutor to oppose bail and (ii) court's satisfaction on reasonable grounds that the accused is not guilty of the offence and is not likely to commit an offence while on bail; a proviso permits discretion for certain categories (e.g., women). The court considered the second condition by examining whether scheduled offences were made out and whether proceeds of crime were shown. Having found that prima facie no scheduled offences or proceeds of crime are established against the applicant, the court concluded there are reasonable grounds to believe the applicant is not guilty and is not likely to commit an offence while on bail. The court recorded that the Public Prosecutor was given an opportunity to oppose the application. On that basis, and after satisfying the twin conditions, the court granted bail subject to conditions customary and specific to the case. [Paras 48, 49, 56, 58]

The twin conditions of Section 45 PMLA are satisfied on the prima facie material; bail granted to the applicant on specified conditions.

Final Conclusion: On the material placed before it the court found that prima facie no scheduled offences (under Section 72 IT Act, Section 120B r/w 420 IPC, or Section 13 PC Act) were made out against the applicant, that PMLA was not attracted and that the twin conditions of Section 45 PMLA for grant of bail were satisfied; accordingly the applicant was granted bail subject to specified conditions.